GAO 

United States Government Accountability Office

Report to Congressional Committees

PUBLIC 

TRANSPORTATION 

Federal Project 

Approval Process 

Remains a Barrier to 

Greater Private Sector 

Role and DOT Could 

Enhance Efforts to 

Assist Project 

Sponsors 

October 2009 

GAO-10-19 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

October 2009

PUBLIC TRANSPORTATION 

Federal Project Approval Process Remains a Barrier 

to Greater Private Sector Role and DOT Could 

Highlights of GAO-10-19, a report to Enhance Efforts to Assist Project Sponsors

congressional committees 

As demand for transit and 

competition for available federal 

funding increases, transit project 

sponsors are increasingly looking 

to alternative approaches, such as 

public-private partnerships, to 

deliver and finance new, large-scale 

public transit projects more quickly 

and at reduced costs. GAO 

reviewed (1) the role of the private 

sector in U.S. public transit 

projects as compared to 

international projects; (2) the 

benefits and limitations of and 

barriers, if any, to greater private 

sector involvement in transit 

projects and how these barriers are 

addressed in the Department of 

Transportation’s (DOT) pilot 

program; and (3) how project 

sponsors and DOT can protect the 

public interest when these 

approaches are used. GAO 

reviewed regulations, studies, and 

contracts and interviewed U.S., 

Canadian, and United Kingdom 

officials (identified by experts in 

the use of these approaches). 

What GAO Recommends

The Federal Transit Administration 

(FTA) should incorporate greater 

flexibility in its pilot program 

through the use of existing tools, 

such as conditional approvals, to 

streamline the New Starts process, 

and develop a sound evaluation 

plan to assess the pilot program’s 

results. DOT should increase 

efforts to better equip project 

sponsors in using these 

approaches, including developing 

guidance and providing technical 

assistance. DOT agreed to consider 

our recommendations. 

In the United States, the private sector role in delivering and financing transit 

projects through alternative approaches, such as public-private partnerships, 

has been more limited than in international projects. The private sector role in 

U.S. projects has focused more on how they are delivered rather than how 

they are financed, while the private sector role in international projects has 

focused on both project delivery and financing. Since 2000, seven new largescale construction projects funded through FTA’s Fixed Guideway Capital 

Investment Program—New Starts program—have been completed using one 

of two alternative project delivery approaches, and none of these projects 

included private sector financing. In 2005, Congress authorized FTA to 

establish a pilot program to demonstrate the advantages and disadvantages of 

these alternative approaches and how the New Starts Program could better 

allow for them. 

Alternative approaches can offer potential benefits such as a greater 

likelihood of completing projects on time and on budget, but also involve 

limitations such as less project sponsor control over operations. The 

sequential and phased New Starts process is a barrier because it is 

incompatible with alternative approaches and thus does not allow for work to 

be completed concurrently, which can lead to delays and increased costs. 

Under its pilot program, FTA can grant major streamlining modifications to 

the New Starts process for up to three project sponsors, but has not yet 

granted any such modifications because FTA has found that none of the 

projects has transferred enough risk, in particular financial responsibilities, to 

the private sector. FTA has the ability within its pilot program to further 

experiment with the use of long-standing existing tools that could encourage a 

greater private sector role while continuing to balance the need to protect the 

public interest. This includes forms of conditional funding approvals used by 

other DOT agencies and international governments. FTA also lacks an 

evaluation plan to accurately and reliably assess the pilot program’s results, 

including the effect of its efforts to streamline the New Starts process for pilot 

project sponsors. Without such a plan, agencies and Congress will be limited 

in their decision making regarding the pilot program. 

Transit project sponsors protect the public interest in alternative approaches 

through, for example, the use of performance standards and financial 

assessments to evaluate the costs and benefits of proposed approaches. Other 

governments have established entities to assist project sponsors in protecting 

the public interest. These entities have better equipped project sponsors to 

implement alternative approaches by creating a uniform approach to 

developing project agreements and serving as a repository of institutional 

knowledge. DOT can serve as a valuable resource for transit project sponsors 

by broadening its current efforts, including providing technical assistance and 

encouraging the use of additional financial assessments, among other 

measures. View GAO-10-19 or key components.

For more information, contact Susan Fleming 

at (202) 512-2834 or flemings@gao.gov. 
Page i GAO-10-19 

Contents 

Letter 1

Background 4 

Private Sector Roles in the Delivery and Financing of U.S. Transit 

Projects Have Been Narrower Than in Some Other Countries 11 

While FTA’s Pilot Program Is Expected to Demonstrate Potential 

Benefits and Limitations in Using Alternative Approaches, New 

Starts Process Remains a Barrier for Pilot Projects 15 

Project Sponsors Have Sought to Protect the Public Interest in 

Various Ways and DOT Can Provide Guidance and Technical 

Assistance 30 

Conclusions 39 

Recommendations for Executive Action 41 

Agency Comments and Our Evaluation 41 

Appendix I Scope and Methodology 43 

Appendix II GAO Contact and Staff Acknowledgments 48 

Related GAO Products 49 

Tables 

Table 1: Completed U.S. New Starts Transit Projects That Have 

Used Alternative Approaches 11 

Table 2: Selected Ongoing and Completed Transit Projects in 

Canada and the United Kingdom That Have Used 

Alternative Approaches 13 

Table 3: Potential Benefits for Project Sponsors 16 

Table 4: Potential Limitations for Project Sponsors 19 

Figures 

Figure 1: Range of Private Sector Role in Transit Projects That Use 

Alternative Approaches 6 

Figure 2: New Starts Planning and Development Process 8 

 Private Sector Role in Transit Projects 
Abbreviations 

DOT Department of Transportation 

FTA Federal Transit Administration 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately. 

Page ii GAO-10-19 Private Sector Role in Transit Projects
Page 1 GAO-10-19 

 

United States Government Accountability Office

Washington, DC 20548 

 

October 29, 2009 

The Honorable James L. Oberstar 

Chairman 

The Honorable John L. Mica 

Ranking Republican Member 

Committee on Transportation and Infrastructure 

House of Representatives 

The Honorable Peter A. DeFazio 

Chairman 

The Honorable John J. Duncan, Jr. 

Ranking Member 

Subcommittee on Highways and Transit 

Committee on Transportation and Infrastructure 

House of Representatives 

Many Americans rely on mass transit to reach their jobs, schools, and 

other activities. In 2008, passengers took over 10.7 billion trips using 

public transportation, the highest level of ridership in 52 years and a 

modern ridership record. As national demand for mass transit services 

increases, more sponsors of transit projects are seeking available federal 

funding. The Federal Transit Administration (FTA) distributes federal 

funding to transit agencies for the construction of projects through a 

variety of formula and discretionary grant programs, including the New 

Starts grant program for new, large-scale projects.1

 As competition for 

these federal funds grows more intense, transit project sponsors are 

increasingly looking for alternative mechanisms to finance and deliver 

new, large-scale transit projects. Moreover, there is a belief by some in the 

United States that the conventional approach to delivering and financing 

infrastructure projects—in which contracts for the design and 

construction of the transit facility are awarded separately to the private 

sector—may not always be the most desirable. In transportation, public 

1

As used in this report, “New Starts program” refers generally to that part of the Capital 

Investment Grants program that funds new fixed-guideway capital projects. See 49 U.S.C. 

§ 5309. These systems use and occupy a separate right-of-way for the exclusive use of 

public transportation services. They include fixed rail, exclusive lanes for buses and other 

high-occupancy vehicles, and other systems. Selection of a project for assistance under 

this program results in the signing of a full funding grant agreement which establishes the 

terms and conditions for federal funds for the project, including the maximum amount of 

federal funds available, subject to available appropriations. 

 Private Sector Role in Transit Projects 
 

sector entities including state departments of transportation, local and 

regional governments, and transit providers are seeking unconventional or 

“alternative” approaches to delivering and financing their projects that 

may not only reduce project costs, but also deliver the projects more 

quickly and efficiently. Generally, these alternative approaches, which can 

include public-private partnerships, rely on the private sector assuming an 

enhanced responsibility for performing all or a significant number of 

functions in connection with a project, in some cases including financial 

liability. FTA defines public-private partnerships broadly as arrangements 

that do not use the conventional method of design-bid-build, and has 

encouraged the use of public-private partnerships to deliver and finance 

transit projects. 

Public-private partnerships for transit differ from those for highways in 

terms of their ability to generate sufficient revenue to pay for themselves 

and the need for ongoing public financial assistance. Alternative 

approaches are more common worldwide for highway projects. For 

example, as we described in a previous report, highway public-private 

partnerships are common in France, Spain, Australia, and the United 

Kingdom.2

 Highway public-private partnerships projects can take the form 

of the public sector entering into long-term agreements with the private 

sector (known as “concession agreements”) in which the private sector 

finances and constructs a new facility and then operates and maintains it 

over a specified period of time in return for the right to collect tolls to fund 

operations and maintenance and to receive a return on their investment. 

One key difference between highways and transit is that at least in some 

cases a private entity might be able to charge users sufficient tolls to 

profitably build and operate a highway, but transit almost always cannot 

pay for itself from farebox revenues. Public transit systems typically 

receive government funding to supplement farebox revenues in paying for 

construction as well operations and maintenance. Therefore, it is 

important to safeguard the public interest in transit public-private 

partnerships. In addition, whereas some highway public-private 

partnership agreements have given private entities substantial authority to 

set toll rates, governments often retain control of fare levels even when 

entering into agreements for transit projects that use alternative 

approaches because transit fare-setting considers, among other factors, 

 

2

GAO, Highway Public-Private Partnerships: More Rigorous Up-front Analysis Could 

Better Secure Potential Benefits and Protect the Public Interest, GAO-08-44 (Washington, 

D.C.: Feb. 8, 2008). 

Page 2 GAO-10-19 Private Sector Role in Transit Projects
 

keeping fares low to increase ridership and provide an affordable form of 

mobility for urban residents, including low-income citizens. 

To assist Congress as it prepares for its upcoming surface transportation 

reauthorization, you asked us to identify key issues as they relate to 

alternative project delivery and financing approaches, including publicprivate partnerships. In response to your request, this report addresses (1) 

the role of the private sector in the delivering and financing of U.S. transit 

projects compared to other countries; (2) the benefits and limitations of 

and the barriers, if any, to greater private sector involvement in transit 

projects and how these barriers are addressed in the Department of 

Transportation’s (DOT) Public-Private Partnership Pilot Program; and (3) 

how project sponsors and DOT can protect the public interest in transit 

projects that use alternative approaches. 

To address these issues, we reviewed pertinent federal legislation and 

regulations, including: Federal Register notices and guidance for FTA’s 

Public-Private Partnership Pilot Program and the New Starts Program; 

DOT’s 2007 Report to Congress on the Costs, Benefits, and Efficiencies of 

Public-Private Partnerships for Fixed Guideway Capital Projects; and 

other DOT reports. We also collected, summarized, and analyzed in-depth 

interviews with officials from the three FTA Public-Private Partnership 

Pilot Program projects—Bay Area Rapid Transit Oakland Airport 

Connector, Denver Regional Transportation District East Corridor and 

Gold Line, and Houston Metro North and Southeast Corridors—in addition 

to Minnesota Metro Transit Hiawatha Corridor and Denver Regional 

Transportation District Transportation Expansion. As part of the review, 

we collected descriptions of the projects, copies of the concession or 

development agreements, and documentation related to the financial 

structure of such projects. These projects were selected because they are 

recent examples of ongoing and completed transit projects in the United 

States that incorporated greater private sector involvement through the 

use of alternative project delivery or financing approaches or both. We 

focused solely on projects that have or are expected to go through FTA’s 

New Starts process given that it is the largest capital grant program for 

transit projects and that any such projects would be reviewed to protect 

the public interest. In addition to reviewing these domestic projects, we 

conducted extensive interviews with financial and legal advisors, experts, 

and private sector officials from Canada and the United Kingdom who are 

knowledgeable about private sector participation in the delivery and 

financing of transit projects. Further, we collected information on how the 

following project sponsors protect the public interest in the following 

international transit projects: Croydon Tramlink, Docklands Light Railway, 

Page 3 GAO-10-19 Private Sector Role in Transit Projects
 

London Underground, Manchester Metrolink, and Nottingham Express 

Transit in the United Kingdom, and the Canada Line in Vancouver, Canada. 

To collect the most valuable and relevant information for our review, 

these international projects were selected, in part, because they are 

examples of ongoing and completed transit public-private partnerships 

that incorporate a range of alternative project delivery or financing 

approaches, or both, and they are in countries that share a similar political 

structure to the United States. Finally, we conducted a literature review of 

domestic and international transit projects with greater private sector 

participation and interviewed FTA and other federal and local officials as 

well as private sector participants associated with the projects we 

selected. 

We conducted this performance audit from October 2008 through October 

2009 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. 

Private sector participation and investment in transit is not new. In the 

1800s, the private sector played a central role in financing early 

transportation infrastructure development in the United States. For 

example, original sections of the New York City Subway were constructed 

from 1899 to 1904 by a public-private partnership. New York City sought 

private sector bids for the first four contracts to construct and finance 

segments of the initial subway system. Ultimately, a 50-year private sector 

lease to operate and maintain the system was used. Another example is 

the City of Chicago’s “L” transit system, which was built from the 1880s 

through the 1920s and operated by the Chicago Rapid Transit Company, a 

privately owned firm. The construction of the system was financed by the 

private sector. In following years, transportation infrastructure 

development became almost wholly publicly funded. Conditions placed on 

federal transportation grants-in-aid limited private involvement in federally 

funded projects. More recently, there has been a move back towards 

policies that encourage more private and public blending of funding, 

responsibility, and control in transportation projects. The federal 

government has progressively relaxed restrictions on private participation 

in highway and transit projects serving public objectives. This change in 

federal policy toward considering transit projects that use alternative 

Background 

Page 4 GAO-10-19 Private Sector Role in Transit Projects
 

approaches has also created an opportunity for states to reexamine their 

own public-private partnership policies. 

Conventional transit projects generally follow a “design-bid-build” 

approach whereby the project sponsor contracts with separate entities for 

the discrete functions of a project, generally keeping much of the project 

responsibility and risk with the public sector.3

 FTA defines alternative 

approaches, including public-private partnerships, as those that increase 

the extent of private sector involvement beyond the conventional designbid-build project delivery approach. These alternative approaches 

contemplate a single private sector entity being responsible and financially 

liable for performing all or a significant number of functions in connection 

with a project. In transferring responsibility and risk for multiple project 

elements to the private sector partner, the project sponsor often has less 

control over the procurement and the private sector partner may have the 

opportunity to earn a financial return commensurate with the risks it has 

assumed (see fig. 1). 

 

3

Design-bid-build is the approach with which FTA’s New Starts project evaluation process 

is aligned. 

Page 5 GAO-10-19 Private Sector Role in Transit Projects
 

Figure 1: Range of Private Sector Role in Transit Projects That Use Alternative Approaches 

Extent of 

Type of alternative approach Private sector role in project delivery and finance 

Greater private sector role 

Lesser private sector role 

• Build-own-operate 

• Design-build-finance-operatemaintain 

• Design-build-finance-operate 

• Build-operate-transfer 

• Design-build-operate-maintain 

• Design-build-operate 

• Design-build 

• Constructs, owns, and operates the project (without 

transferring it to the public sector project sponsor); fully 

finances the project 

• Designs, constructs, operates, and maintains the project; 

partially or fully finances the project 

• Designs, constructs, and operates the project; partially or 

fully finances the project 

• Designs, constructs, and operates a project for a

specified time before transferring ownership to the public 

sector project sponsor 

• Designs, constructs, operates, and maintains the project; 

does not finance the project 

• Designs, constructs, and operates the project; does not 

finance the project 

• Designs and constructs the project; does not finance the 

project 

Source: DOT and GAO. 

private sector role

With these alternative approaches, many of the project risks that would 

normally be borne by the project sponsor in a design-bid-build approach 

are transferred to or shared with the private sector. Risk transfer involves 

assigning responsibility for a project risk in a contract so that the private 

sector is accountable for nonperformance or errors. Project sponsors can 

transfer a range of key project risks to the private sector, including those 

related to design, financing, construction performance and schedule, 

vehicle supply, maintenance, operations, and ridership. For example, 

design risk refers to whether an error causes delays or additional costs, or 

causes the project to fail to satisfy legal or other requirements. Ridership 

risk refers to whether the actual number of passengers on the transit 

system reaches forecasted levels. However, some risks may not be 

transferable. 

Much of the federal government’s share of new capital investment in mass 

transportation has come through FTA’s New Starts program.4

 Through the 

New Starts program, FTA identifies and recommends new fixed-guideway 

transit projects—including heavy, light, and commuter rail, ferry, and 

 

4

As used in this report, “New Starts program” refers generally to the capital investment 

grants program. See 49 U.S.C. § 5309. 

Page 6 GAO-10-19 Private Sector Role in Transit Projects
 

certain bus projects—for federal funding. Over the last decade, the New 

Starts program has resulted in funding state and local agencies with over 

$10 billion to help design and construct transit projects throughout the 

country and is FTA’s largest capital grant program for transit projects. 

Moreover, since the early 1970s, a significant portion of the federal 

government’s share of new capital investment in mass transportation has 

been initiated through the New Starts process, resulting in full funding 

grant agreements.5

 FTA must prioritize transit projects for funding by 

evaluating, rating, and recommending potential projects on the basis of 

specific financial commitment and project justification criteria. Using 

criteria set by law, FTA evaluates potential transit projects and assigns 

ratings to them annually. These evaluation criteria reflect a range of 

benefits and effects of the proposed project, such as cost-effectiveness, as 

well as the ability of the project sponsor to fund the project and finance 

the continued operation of its transit system. FTA uses the evaluation and 

rating process to decide which projects to recommend to Congress for 

funding. As part of the New Starts process, FTA approves projects into 

three phases: preliminary engineering (in which the designs of project 

proposals are refined),6

 final design (the end of project development in 

which final construction plans and cost estimates, among other activities, 

are completed), and construction (in which FTA awards the project a full 

funding grant agreement, providing a federal commitment of funds subject 

to the availability of appropriations)7

 (see fig. 2). 

 

5

Full funding grant agreements establish the terms and conditions for federal funds 

available for the project, including the maximum amount of federal funds available, subject 

to the availability of appropriated funds. 

6

To gain approval for entry into preliminary engineering, a project must (1) be identified 

through the alternatives analysis process; (2) be included in the region’s long-term 

transportation plan; (3) meet the statutorily defined project justification and financial 

criteria; and (4) demonstrate that the sponsors have the technical capability to manage the 

project during the preliminary engineering phase. 

7

Final design is the last phase of project development before construction and may include 

right-of-way acquisition, utility relocation, and the preparation of final construction plans 

and cost estimates. 

Page 7 GAO-10-19 Private Sector Role in Transit Projects
 

Figure 2: New Starts Planning and Development Process 

Planning

Preliminary

engineering

Final design

Final design

Systems

planning

Alternatives

analysis

Select LPA

FTA decision 

on entry into preliminary

engineering

FTA decision

on entry into final

design

FFGA

Preliminary engineering

Construction

Project 

management 

oversight

Construction

Source: FTA.

Decision point Major development stage

FFGA = full funding grant agreement

FTA = Federal Transit Administration

LPA = locally preferred alternative

Legend

We have previously identified FTA’s New Starts program as a model for 

other federal transportation programs because of its use of a rigorous and 

systematic evaluation process to distinguish among proposed New Starts 

Page 8 GAO-10-19 Private Sector Role in Transit Projects
 

investments.8 However, we and other stakeholders and policymakers have 

also identified challenges facing the program. Among these challenges is 

the need to streamline the New Starts project approval process. Our past 

reviews, for example, found that many project stakeholders thought that 

FTA’s process for evaluating New Starts projects was too time consuming, 

costly, and complex.9

 The New Starts grant process is closely aligned with 

the conventional design-bid-build approach, whereby the project sponsor 

contracts with separate entities for the design and construction of the 

project. 

In 2005, Congress authorized FTA to establish the Public-Private 

Partnership Pilot Program to demonstrate (1) the advantages and 

disadvantages of transit projects that use alternative approaches for new 

fixed-guideway capital projects and (2) how FTA’s New Starts program 

can be modified or streamlined for these alternative approaches.10 The 

pilot program allows FTA to study projects that incorporate greater 

private sector involvement through alternative project delivery and 

financing approaches; integrate a sharing of project risk; and streamline 

design, construction, and operations and maintenance. FTA can designate 

up to three project sponsors for the pilot program. Projects selected under 

the pilot program will be eligible for a simplified and accelerated review 

process that is intended to substantially reduce the time and cost to the 

sponsors of New Starts projects. This can include major modifications of 

the requirements and oversight tools. For example, FTA may offer 

concurrent project approvals into preliminary engineering and final 

design. Further, FTA may modify its risk-assessment process—which aims 

to identify issues that could affect a project’s schedule or cost—as well as 

other project reviews. The modification of any of FTA’s New Starts 

requirements and oversight tools will be on a case-by-case basis if FTA 

determines enough risk is transferred to and equity capital is invested by 

 

8

GAO, Public Transportation: Improvements Are Needed to More Fully Assess Predicted 

Impacts of New Starts Projects, GAO-08-44 (Washington, D.C.: July 25, 2008). 

9

GAO, Public Transportation: Better Data Needed to Assess Length of New Starts Process, 

and Options Exist to Expedite Project Development, GAO-09-784 (Washington, D.C.: July 

31, 2009); GAO-08-44; and GAO, Public Transportation: Future Demand Is Likely for New 

Starts and Small Starts Programs, but Improvements Needed to the Small Starts 

Application Process, GAO-07-917 (Washington, D.C.: July 27, 2007). 

10Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, Pub. 

L. No. 109-59, title III, § 3011 (c). 

Page 9 GAO-10-19 Private Sector Role in Transit Projects
 

the private sector.11 In addition to major modifications, FTA may also 

make use of other tools (not unique to the pilot program) to expedite the 

review process. These include Letters of No Prejudice that allow a project 

sponsor to incur costs with the understanding that these costs may be 

reimbursable as eligible expenses (or eligible for credit toward the local 

match) should FTA approve the project for funding at a later date.12 FTA 

can also use Letters of Intent to signal an intention to obligate federal 

funds at a later date when funds become available.13 Finally, Early Systems 

Work Agreements obligate a portion of a project’s federal funding so that 

project sponsors can begin preliminary project activities before a full 

funding grant agreement is awarded. FTA has employed a contractor to 

determine whether risk is effectively transferred from the public to private 

sector for its pilot program projects, and will consider private sector due 

diligence as a substitute for its own. 

From a public perspective, an important component of analyzing the 

potential benefits and limitations of greater private sector involvement is 

consideration of the public interest. Although, in transportation, no 

definition of public interest exists at the federal level, nor does federal 

guidance identify public interest considerations in transportation, 

consideration of the public interest in transit may refer to the many 

stakeholders in public-private partnerships, each of which may have its 

own interests. Stakeholders include public transit authorities, transit 

agency employees, mass transit users and members of the public who may 

be affected by ancillary effects of a transit public-private partnership or 

alternative project delivery approach, including users of bus and highways, 

special interest groups, and taxpayers in general. Moreover, defining the 

public interest is a function of scale and can differ based on the range of 

stakeholders in addition to the geographic and political domain 

considered. For the purposes of its pilot program, FTA has stated that the 

 

11Equity capital is money raised by a business by selling shares of ownership, or potential 

ownership, of the business. DOT has noted that transit public-private partnerships typically 

do not require the private partner to take on certain project risks (such as 

ridership/revenue) or involve a significant equity investment by the private partner. 

12Letters of No Prejudice also allow a project sponsor to incur costs using nonfederal 

resources, with the understanding that the costs incurred subsequent to the issuance of the 

letters may be reimbursable as eligible expenses or eligible for credit toward the local 

match should FTA approve the project for funding at a later date. 

13Through a Letter of Intent, FTA announces its intention to obligate an amount from future 

available budget authority to a project, subject to the availability of appropriations. 

Page 10 GAO-10-19 Private Sector Role in Transit Projects
 

public interest refers to the due diligence that FTA typically conducts as a 

public entity with a financial interest in a transit project. 

In the United States, the private sector has played a more limited role in 

the delivery and financing of transit projects than in some other countries. 

Since 2000, seven New Starts projects were completed using alternative 

approaches (see table 1). These projects have focused on delivery, rather 

than financing, and have used either the design-build or the design-buildoperate-maintain delivery approach, in which the private sector role is to 

design and construct the project or to design, construct, operate, and 

maintain the project, respectively. In addition, to date, no completed New 

Starts projects have been privately financed and therefore, none of these 

projects have used private equity financing. 

Private Sector Roles 

in the Delivery and 

Financing of U.S. 

Transit Projects Have 

Been Narrower Than 

in Some Other 

Countries 

Table 1: Completed U.S. New Starts Transit Projects That Have Used Alternative Approaches 

Project name 

Alternative 

approach used 

Year 

completed 

New Jersey Transit Hudson Bergen Minimum Operable Segment 1 Design-build-operate-maintain 2002 

Bay Area Rapid Transit Extension to San Francisco International Airport Design-build 2003 

Minneapolis Metro Transit Hiawatha Light Rail Design-build 2004 

Washington Metropolitan Area Transportation Largo Metrorail Extension Design-build 2004 

Denver Regional Transportation District Transportation Expansion Light Rail Design-build 2006 

New Jersey Transit Hudson Bergen Minimum Operable Segment 2 Design-build-operate-maintain 2006 

South Florida Commuter Rail Upgrades Design-build 2006 

Source: FTA. 

However, there have been very few examples of completed non-New 

Starts-funded new fixed-guideway projects that have been privately 

financed. One project, the Las Vegas Monorail, a 4-mile fixed-guideway 

system serving the resort corridor along Las Vegas Boulevard in Nevada, 

was financed with tax-exempt revenue bonds issued through the state of 

Nevada and with contributions from the area resorts and hotels.14

As previously mentioned, Congress authorized FTA to establish its PublicPrivate Partnership Pilot Program to demonstrate the advantages and 

disadvantages of these approaches in transit. As established, the pilot 

 

14GAO, Highways and Transit: Private Sector Sponsorship of and Investment in Major 

Projects Has Been Limited, GAO-04-419 (Washington, D.C.: Mar. 25, 2004). 

Page 11 GAO-10-19 Private Sector Role in Transit Projects
 

project studies those projects that use alternative approaches that 

integrate a sharing of project risk and incorporate private equity capital in 

order to illustrate where FTA can grant greater flexibility of some of its 

New Starts requirements to projects within the pilot program. However, to 

date, only one of the pilot projects is expected to incorporate private 

equity capital. FTA designated three project sponsors for its Public-Private 

Partnership Pilot Program in 2007: 

• Bay Area Rapid Transit—The Oakland Airport Connector project is 

to be a 3.2-mile system that will connect the Oakland International 

Airport to the Bay Area Rapid Transit’s Coliseum Station and the rest 

of the transit system. In its original iteration, the Oakland Airport 

Connector planned on using a design-build-finance-operate-maintain 

project delivery approach that included private sector financing. 

However, lower-than-expected ridership predictions due to the 

economic climate, among other factors, led Bay Area Rapid Transit to 

move forward with a different alternative approach for its project—

now design-build-operate-maintain—and undergo a new request for 

qualified bidders and request for proposals process. According to Bay 

Area Rapid Transit, a contract will be awarded in December 2009. 

• Metropolitan Transit Authority of Harris County (Houston 

Metro)—North and Southeast Corridor projects are to provide 

improved access to Houston’s Central Business District. This project 

was also originally to use a design-build-finance-operate-maintain 

approach that included private sector financing, but no bidders on the 

project proposed an equity investment, so it is instead using a designbuild-operate-maintain approach. Issues related to price and risk 

transference led Houston Metro to switch private partners and the new 

partner chose not to provide financing for the project. Groundbreaking 

for the construction of the two projects occurred in July 2009. 

• Denver Regional Transportation District—East Corridor and Gold 

Line pilot projects are to connect the city’s main railway station with 

its airport and other parts of the city. The project is using a designbuild-finance-operate-maintain approach, which includes financing by 

the private sector partner. The private sector partner will be selected 

through a competitive proposal process to deliver and operate the 

project under a long-term agreement. In September 2009, Denver 

Regional Transportation District released a request for proposals to 

prequalified teams. 

One ongoing New Starts project did not apply to be part of the pilot 

program, but is using an alternative approach. The Dulles Silver Line is 

Page 12 GAO-10-19 Private Sector Role in Transit Projects
 

using the design-build approach with partial funding of the local share 

coming from area businesses generated through a tax-increment financing 

district to connect Washington, D.C., metropolitan area’s transit system 

with one of the area’s three major airports. 

In contrast, international project sponsors have delivered transit projects 

using a wider range of alternative approaches, including public-private 

partnerships, beyond the more commonly used design-build in the United 

States (see table 2). According to World Bank officials and a World Banksponsored report, transit public-private partnerships have been 

implemented in Australia, Brazil, Canada, France, Hong Kong, Malaysia, 

the Philippines, South Africa, Thailand, and the United Kingdom. 

Furthermore, international project sponsors have incorporated private 

equity investment financing for some of their projects. According to World 

Bank officials, the United Kingdom and Canada are leading countries for 

private equity investment in transit, and the United Kingdom has the most 

experience using different public-private partnership models. International 

projects also generally require a government subsidy to supplement 

farebox revenues for construction as well as operations and maintenance. 

Table 2: Selected Ongoing and Completed Transit Projects in Canada and the United Kingdom That Have Used Alternative 

Approaches 

Project name Alternative approach used Year completed 

Docklands Light Railway Lewisham, London City Airport, and 

Woolwich Arsenal Extensions 

Design-build-finance-maintain 1999, 2005, and 

2009 

Croydon Tramlink light rail Design-build-finance-operate-maintain 2000 

Manchester Metrolink Phase II light rail Design-build-finance-operate-maintain 2000 

London Underground Maintenance Maintain 2003a

Nottingham Express light rail Design-build-finance-operate-maintain 2004 

Canada Line light rail Design-build-finance-operate-maintain 2009 

Source: World Bank and GAO. 

a

This refers to the date when the London Underground’s two maintenance contracts took effect. 

Examples of several projects in the United Kingdom and Canada that we 

reviewed include the following: 

• The Docklands Light Railway serves a redevelopment area east and 

southeast of London. Transport for London, the public sector project 

sponsor, used three separate design-build-finance-maintain concession 

agreements to construct system extensions as well as a single 

franchise to operate trains over the entire system. All three extensions 

Page 13 GAO-10-19 Private Sector Role in Transit Projects
 

were financed in part or full using private equity investment, and the 

Lewisham Extension was the United Kingdom’s first transportation 

public-private partnership for both project delivery and financing. 

• The Croydon Tramlink light rail project was a 99-year designbuild-finance-operate-maintain agreement to develop the new system. 

In this project, payments to the private sector partner during 

operations were based entirely on ridership revenue, but the project 

sponsor retained the authority to set fares. The private sector partner 

faced financial difficulties, and the concession was ultimately bought 

by Transport for London. 

• The Manchester Metrolink Phase II light rail project was a 17-

year concession agreement wherein the private partner had 

responsibility to design, construct, finance, operate, and maintain this 

project. The project was designed to expand the Metrolink System in 

order to connect two of the city’s existing stations. The private partner 

provided over one-half of the project’s funding for construction. The 

public sector terminated the concession to further expand the system. 

• The London Underground maintenance projects included 

agreements entered into between London Underground and two 

private sector partners to maintain and upgrade the system’s 

infrastructure, including track, tunnels, trains, and stations. In return, 

the private sector would receive periodic payments based on its 

performance. One of the two private sector partners subsequently 

went bankrupt, and the concession agreement was then taken over by 

Transport for London. 

• The Nottingham Express Transit light rail project used a 27-year 

contract to design, build, finance, operate, and maintain a new transit 

line. Payments to the private sector were based on performance and 

ridership revenue, meaning that the private sector assumed some risk 

that actual ridership would not reach forecasted levels. Along with this 

transfer of risk, the private sector was also given the ability to set 

fares. The project is in the ninth year of its contract. 

• The Canada Line light rail project in the Vancouver area is a 35-

year design-build-finance-operate-maintain concession agreement 

developed to link Vancouver with its international airport and 

neighboring employment and population centers in anticipation of the 

2010 Winter Olympics. A separate entity was created to oversee the 

project’s development and the private partner provided one-third of 

Page 14 GAO-10-19 Private Sector Role in Transit Projects
 

the project’s funding, including private equity capital, in exchange for 

periodic payments based on performance and ridership. 

While FTA’s Pilot 

Program Is Expected 

to Demonstrate 

Potential Benefits and 

Limitations in Using 

Alternative 

Approaches, New 

Starts Process 

Remains a Barrier for 

Pilot Projects 

Pilot Program to 

Demonstrate Potential 

Benefits and Limitations to 

Using Alternative 

Approaches 

FTA’s pilot program is expected to demonstrate potential benefits to using 

alternative approaches in transit.15 Project sponsors we interviewed cited a 

range of potential benefits, such as achieving cost and time savings, as 

well as potential advantages to the public sector, such as increased 

financing flexibility (see table 3). DOT outlined some of these same 

benefits and advantages in its 2007 Report to Congress on transit publicprivate partnerships and we similarly reported on them in 2008 for 

highway public-private partnerships.16 However, as we said then, benefits 

are not assured and should be evaluated by weighing them against 

potential costs and trade-offs. 

 

15Department of Transportation, Report to Congress on the Costs, Benefits, and 

Efficiencies of Public-Private Partnerships for Fixed Guideway Capital Projects 

(December 2007). 

16GAO-08-44. 

Page 15 GAO-10-19 Private Sector Role in Transit Projects
 

Table 3: Potential Benefits for Project Sponsors 

Potential benefits 

With the transference of risk, better adherence to cost and schedule targets 

Enhanced efficiencies and service improvements 

Increased financial flexibility and more predictable funding 

Source: GAO. 

Among the benefits from using alternative approaches, project sponsors 

told us that they may better meet cost and schedule targets as well as 

achieve cost and time savings by transferring risks to the private sector. 

With transit projects that use alternative approaches, project sponsors can 

transfer a range of key project risks to the private sector, such as those 

related to design and its effect on construction that would normally be 

borne by the project sponsor, so that the private sector is accountable for 

errors or nonperformance. By transferring these project risks, the project 

sponsor creates incentives for the private sector to keep the project on 

schedule and on budget as, for example, the private sector would be 

responsible for any excess costs incurred from design errors. In addition, 

when a project sponsor transfers multiple project risks to the private 

sector, it can potentially reduce the total cost and duration since a single 

contractor can concurrently perform project activities that would typically 

be carried out consecutively by multiple contractors under the 

conventional design-bid-build approach. 

Project sponsors, stakeholders, and transit experts we interviewed told us 

that potential cost and time savings can be key incentives for using 

alternative approaches. For example, FTA reported that Minnesota Metro 

Transit’s Hiawatha Corridor (one of the seven completed New Starts 

projects that used an alternative approach) was completed 12 months 

ahead of schedule compared to using the conventional design-bid-build 

approach by allowing design and construction schedules to overlap. This 

saved an estimated $25 million to $38 million since early completion led to 

avoided administration costs using a design-build alternative approach. 

Denver Regional Transportation District and the private sector completed 

the Transportation Expansion project 22 months ahead of schedule and 

within budget. In the United Kingdom, the three Docklands Light Railway 

extensions were built using design-build-finance-maintain approaches, and 

were completed 2 weeks to 2 months ahead of schedule. However, the use 

of alternative approaches does not guarantee cost and schedule benefits. 

For example, the design-build approach used by the South Florida 

Commuter Rail Upgrades saved 4 to 6 years by completing all upgrades as 

Page 16 GAO-10-19 Private Sector Role in Transit Projects
 

a single project, but incurred slightly higher costs than estimated for the 

conventional design-bid-build approach. 

Project sponsors may be able to benefit from certain efficiencies and 

service improvements by transferring long-term responsibility of transit 

operations and maintenance in addition to design and construction to the 

private sector. DOT’s 2007 Report to Congress on transit public-private 

partnerships stated that the private sector may be able to add value to 

transit projects through improved management and innovation in a 

project’s construction, maintenance, and operation. Project sponsors and 

stakeholders we interviewed stated that alternative approaches promote 

the use of performance measures (such as train capacity and frequency) 

rather than specific design details (such as the type of train). This allows 

the private sector to potentially generate and apply innovative solutions in 

the design of the transit system, adding value to the project. For example, 

because Denver Regional Transportation District’s Transportation 

Expansion Light Rail project (another of the seven New Starts projects) 

used a design-build approach, a lessons-learned report following the 

project’s completion stated that the project sponsor was able to 

incorporate 198 design modifications identified by the private sector 

partner during development to improve overall quality of the transit 

system while remaining on budget. A conventional design-bid-build 

contract is generally not flexible enough to allow for such design 

modifications without additional costs because contracts often specify the 

use of technical or other specifications. 

When the long-term responsibilities of transit operations and maintenance 

are transferred, the private sector potentially has a greater incentive to 

make efficient design decisions. This is because the private sector can be 

held responsible for the condition of a transit project for longer durations 

than under the conventional design-bid-build approach. Houston Metro 

officials told us that for an earlier project that used the conventional 

design-bid-build approach, the project’s warranty terms did not hold the 

construction firm responsible long enough to cover defects such as faulty 

track and concrete. As a result, Houston Metro had to file claims to 

remedy these defects. Houston Metro officials stated they chose to build 

its North and Southeast Corridor pilot project using design-build-operatemaintain contract in part to hold the private sector entity responsible for 

the quality of the project’s construction for a longer period of time. 

A greater private sector role in transit projects can also potentially offer 

certain advantages to the public sector, including increased financial 

flexibility and more predictable operations and maintenance funding. For 

Page 17 GAO-10-19 Private Sector Role in Transit Projects
 

example, Denver Regional Transportation District officials said that they 

will make payments tied to operations to the private sector over a number 

of years to, in part, pay for the private sector’s partial financing for the 

East Corridor and Gold Line pilot projects. By using the design-buildfinance-operate-maintain approach, Denver may have more financing 

flexibility by potentially extending the payments 20 years longer than if a 

bond were used and the private sector were not involved in financing the 

project. With a longer payment period, project stakeholders told us that 

the transit agency could conserve funds in the short term to help it 

construct other new transit projects on time.17 Additionally, alternative 

approaches may help ensure more predictable funding for maintenance 

and operations since these activities can be subject to unpredictable 

public sector budget cycles under the conventional design-bid-build 

approach. Because alternative approaches for transit projects may include 

operations and maintenance standards in the contract, the private sector 

might be responsible to fund these activities within the overall contract 

price. 

FTA’s pilot program is also expected to demonstrate the potential 

limitations to using alternative approaches in transit, including some of 

those addressed in DOT’s 2007 Report to Congress on transit publicprivate partnerships (see table 4). One limitation is that some project risks 

should not be transferred to the private sector. For example, it may be too 

costly for project sponsors to transfer certain risks, such as ridership and 

environmental remediation, because the private sector may want to charge 

an additional premium to take them on. Ridership risk refers to whether 

the actual number of passengers achieves forecasted levels. According to 

officials we interviewed, environmental remediation risk refers to whether 

the cleanup of hazardous materials and other conditions at a project site 

leads to increased project costs or schedule delays, and can encompass 

conditions that are identified as well as those that are not identified during 

surveys of a project site. Past experience in projects demonstrates the 

difficulty of transferring these risks to the private sector. 

 

17The East Corridor and Gold Line projects are part of Denver Regional Transportation 

District’s 12-year FasTracks initiative to expand transit by building six new transit 

corridors and extending three existing corridors. 

Page 18 GAO-10-19 Private Sector Role in Transit Projects
 

Table 4: Potential Limitations for Project Sponsors 

Potential limitations 

Not all risks can be transferred, including ridership and environmental remediation risk 

Reduced flexibility and control in operations 

Additional public sector costs, such as transaction costs and higher-priced financing 

Source: GAO. 

According to officials we interviewed, ridership risk may be difficult to 

transfer to the private sector if transit project sponsors are reluctant to 

forfeit full fare-setting authority. For example, Denver Regional 

Transportation District chose not to transfer ridership risk for its East 

Corridor and Gold Line pilot projects given that it wanted to retain the 

right to set fares in order to keep fares uniform systemwide. Another 

example is the United Kingdom’s Croydon Tramlink project, which 

transferred ridership risk but not the ability to set fares. Officials we 

interviewed stated that the private partner progressively faced financial 

difficulties due to low ridership revenue, which led to the collapse and 

ultimate buyback of the partnership by Transport for London. 

Additionally, if a transit project is built as an extension of an existing 

system, the private sector partner may not want to operate a single 

segment of a publicly owned system. According to officials, private 

investors are reluctant to assume ridership risk of any portion of a system 

operated by an entity they do not control. These officials said that in many 

cases, the private sector partner would need the authority to increase or 

decrease transit fares based on ridership trends and the number of transit 

users to assume greater ridership risk. However, because raising fares 

involves political considerations, including equity for low-income transit 

users, officials told us that most project sponsors retain the right to set 

fares and are unwilling to forfeit fare-setting control. 

Some project sponsors that have tried to transfer ridership risk while 

retaining fare-setting authority have run into difficulties. According to 

project sponsors and transit experts, the Bay Area Rapid Transit’s Oakland 

Airport Connector project initially tried but ultimately was unable to 

transfer ridership risk in part because the private sector concessionaire 

(under the project’s original iteration) would not have fare-setting 

authority. This was also the case with the Canada Line, where the 

agreement was structured to incorporate a limited transfer of ridership 

risk to the private sector partner. Although the project sponsor wanted to 

transfer full ridership risk to the concessionaire, it learned that private 

Page 19 GAO-10-19 Private Sector Role in Transit Projects
 

investors would not finance a deal with full ridership risk transfer due to 

their inability to control factors that influence ridership such as transit 

fares. As such, the project sponsor decided to transfer limited ridership 

risk to the private sector by basing 10 percent of its payments to the 

private sector partner during operations and maintenance on ridership 

figures.18 According to project sponsors, this transfer of ridership risk was 

done to induce the concessionaire to increase ridership by providing 

quality customer service. 

Officials we interviewed also stated that environmental remediation risks 

may be difficult to transfer to the private sector because of the additional 

premium the private sector charges to address unknown factors. Denver 

Regional Transportation District originally planned to transfer all 

environmental remediation risk for its East Corridor and Gold Line pilot 

projects’ long-term design-build-finance-operate-maintain concession. This 

caused the private sector to estimate a $25 million charge for taking on 

this risk, according to Denver Regional Transportation District officials we 

interviewed. When the project sponsor decided to retain one aspect of the 

environmental risk related to several unknown remediation elements, the 

private sector dropped the cost estimate of transferring the remaining 

environmental risk from $25 million to $9 million. Moreover, as we have 

previously reported regarding highway public-private partnerships, it may 

be inefficient and inappropriate for certain risks to be transferred to the 

private sector due to the costs and risks associated with environmental 

issues.19 Permitting requirements and other environmental risks may 

become too time-consuming and costly for the private sector to address 

and may best be retained by the public sector given its stewardship role 

within the government. According to officials we interviewed, although the 

Canada Line’s concession agreement transferred all key construction risks 

(i.e., cost overruns) to the private sector, the public authority retained 

risks associated with permitting and other environmental risks such as 

unknown contaminated soils. Further, for one early highway publicprivate partnership in California, the project sponsor attempted to transfer 

environmental permitting risk to the private sector. However, the private 

 

18Although Canada Line structured its concession agreement to transfer 10 percent of 

ridership risk to the private sector, a financial advisor ran sensitivity tests on the ridership 

risk and determined that the actual ridership risk transferred was 1 percent once risk 

variance was accounted for. 

19GAO-08-44. 

Page 20 GAO-10-19 Private Sector Role in Transit Projects
 

sector partner spent more than $30 million dollars over a 10-year period 

and never obtained final approval to proceed with construction.20

Another potential limitation in transit projects that use alternative 

approaches is the project sponsor’s loss of control and reduced flexibility 

in transit operations. Because the transit project sponsor enters into a 

contractual agreement that gives the private partner a greater decisionmaking role, the project sponsor may lose some control over its ability to 

modify existing assets or implement plans to accommodate changes over 

time such as extensions, service changes, and technology upgrades. For 

example, in the United Kingdom, the project sponsor for Manchester 

Metrolink had to break two existing public-private partnership concession 

agreements to accommodate extensions to its system. Consultants to the 

Manchester project told us that breaking a concession agreement can be 

very expensive and can damage the relationship between the project 

sponsor and the private sector partner. Similarly, to accommodate 

increased ridership, the project sponsor for Docklands Light Railway 

decided to build platform expansions. However, the private sector partner 

was not willing to take on this additional work, requiring the project 

sponsor to take the extra steps to hire another party to build the platform 

extensions and negotiate the handover of the platforms to the private 

sector partner for maintenance. 

Transit projects that use alternative approaches may also introduce 

transaction costs to the project sponsor through legal, financial, and 

administrative fees in addition to higher-priced financing in cases where 

the transit project is privately financed. According to officials we 

interviewed, transit public-private partnerships often require the advisory 

services of attorneys, financial experts, and private consultants to 

successfully execute the steps necessary to finalize the project’s 

agreement. These additional services and transaction fees represent 

additional public sector costs that the conventional project delivery 

approach may not necessarily require. For example, the project sponsor 

for the London Underground spent the equivalent of $112 million or 

approximately 1.1 percent of the concession agreement’s total price to 

cover legal expenses, financial services, and administrative fees. Officials 

we interviewed also stated that Denver Regional Transportation District 

anticipates spending $15 million in advisory fees for its East Corridor and 

Gold Line pilot projects’ request for proposals submittals. In addition to 

 

20GAO-04-419. 

Page 21 GAO-10-19 Private Sector Role in Transit Projects
 

transaction costs, public-private partnerships incur added costs when the 

private sector provides the financing for the project. The municipal bond 

market in the United States generally provides public transit agencies a 

cheaper source of funding because they can borrow more cheaply than the 

private sector. Officials also stated that the effects of the recent economic 

recession and failed credit markets have stymied the private sector’s 

ability to raise revenues and provide affordable long-term debt for large 

transit projects due to tight lending conditions. 

FTA New Starts Project 

Approval Process Is a 

Barrier to a Greater 

Private Sector Role in 

Transit 

While we have previously identified FTA’s New Starts grant program—

which funds new, large-scale transit projects—as a model for other federal 

transportation programs because of its use of a rigorous and systematic 

evaluation process to distinguish among proposed investments, the New 

Starts project approval process is not entirely compatible with transit 

projects that use alternative approaches in that the process is sequential 

and phased with approvals granted separately and at certain decision 

points. Therefore, the New Starts process serves as a potential barrier 

because transit projects that use alternative approaches often rely on the 

concurrent completion of project phases to meet cost and schedule targets 

and to accrue savings and other potential benefits. Congress recognized 

New Starts as a potential barrier, as it authorized FTA to establish a 

Public-Private Partnership Pilot Program in part to identify ways to 

streamline the process. According to DOT’s 2007 Report to Congress as 

well as project sponsors, their advisors, and private sector partners, the 

New Starts project approval process, while appropriate for the type of 

transit projects that have been developed over several decades, poses 

particular challenges for project sponsors using alternative approaches for 

their transit projects. The challenges they raised include (1) delays, (2) 

additional costs, and (3) the loss of other potential benefits, such as 

enhanced efficiencies and improved quality. 

The sequential and phased New Starts project approval process can create 

schedule delays as project sponsors await federal approval. The amount of 

time it takes for FTA to determine whether a project can advance can be 

significant. A 2007 study on the New Starts program by Deloitte, 

commissioned by FTA to review the New Starts process and identify 

opportunities for streamlining or simplifying the process, found that the 

New Starts process is perceived by project sponsors as intensive, lengthy, 

and burdensome. The Deloitte study found that FTA’s prescribed review 

times of 30 and 120 days for entry into the preliminary engineering and 

final design phases, respectively, are apparently arbitrary and actual 

review times are generally longer. In particular, the study found that FTA’s 

Delays 

Page 22 GAO-10-19 Private Sector Role in Transit Projects
 

risk-assessment process delayed project development.21 Consultants to the 

Dulles Silver Line project sponsor told us that through the New Starts 

process, FTA has complete control over a project’s schedule, and project 

sponsors have to put project work on hold while waiting for FTA’s 

approval to advance into the next project phase. They also told us that 

construction activities on the Dulles Silver Line could not begin until the 

approval of a full funding grant agreement—as design and construction 

activities cannot be completed at the same time—and so some of the timesavings benefits of the design-build approach were lost. For the East 

Corridor and Gold Line pilot projects, Denver Regional Transportation 

District officials also told us that since enough design work will be 

completed during the New Starts preliminary engineering phase to request 

bids from the private sector, no additional design work is needed during 

final design and construction of the project. However, Denver officials 

said that, as required by New Starts, they will again prepare the design 

documentation for the final design and full funding grant agreement 

approval phases, potentially contributing to schedule delays. FTA officials 

told us that the resubmission of the documentation is necessary because 

the private sector can bid to provide something different than what was 

agreed upon under preliminary engineering. Houston Metro’s private 

sector partner told us it would like to begin some construction activities 

on the North and Southeast Corridors, but will not be able to begin until a 

full funding grant agreement is awarded. As a result, the private sector 

partner has to delay its work until the funding process is completed. FTA 

officials responded that they allowed Houston Metro to carry out some 

construction activities in advance of their receiving a full funding grant 

agreement. Moreover, Houston Metro officials told us that FTA required 

them to submit and resubmit entire project documents to FTA multiple 

times, which led to delays. FTA officials told us the length of time for 

reviews depends on a number of factors, most importantly the 

completeness and accuracy of the project sponsor’s submissions, and that 

project sponsors could help to avoid such delays by improving their 

submissions.22 For example, FTA officials stated that Houston Metro’s 

projects have changed repeatedly, thus requiring multiple submittals. 

In addition to the costs of delays, the design of the New Starts project 

approval process—which is closely aligned with the conventional designbid-build approach—may also contribute to additional project costs borne 

Additional Costs 

 

21Deloitte Development LLC, New Starts Program Assessment (Feb. 12, 2007). 

22GAO-09-784. 

Page 23 GAO-10-19 Private Sector Role in Transit Projects
 

by the public sector when other alternative approaches are used. Project 

sponsors and other stakeholders for Denver Regional Transportation 

District’s East Corridor and Gold Line pilot projects told us that the 

private sector must maintain its financial commitment to a project for up 

to several months to allow for FTA, Office of Management and Budget, and 

congressional review of the full funding grant agreement.23 For example, 

Denver Regional Transportation District officials anticipate adhering to 

the sequential and phased New Starts approach to its project in order to 

accommodate delays from waiting for the reauthorization of the existing 

transportation bill, the Safe, Accountable, Flexible, Efficient 

Transportation Equity Act: A Legacy for Users, and awarding a full funding 

grant agreement for the project. However, Denver Regional Transportation 

District officials told us that following this approach will likely increase 

the cost of the project. FTA officials told us that these additional costs 

stem from a lack of funding available in a surface transportation 

authorization period rather than FTA’s New Starts requirements. 

Additionally, for the Dulles Silver Line, tax-increment financing funding—

funding from incremental tax revenue increases generated by new 

construction or rehabilitation projects around the new transit line—was a 

major funding source for the project, contributing up to $400 million to the 

$2.6 billion project. The Duller Silver Line project consultants told us that 

the project risked losing the tax increment financing funding as it took 5 

years to receive a full funding grant agreement when the project sponsor 

originally estimated that it would take 2 to 3 years. FTA officials stated 

that several factors, including the decision to reexamine a tunnel option, 

contributed to challenges surrounding the Dulles Silver Line. 

FTA’s New Starts project approval process may also limit other potential 

benefits, such as enhanced efficiencies and design improvements, when 

transit projects use alternative approaches. For example, Denver Regional 

Transportation District officials told us that the New Starts project 

approval process requires that specific design details be included and that 

this requirement can prohibit a project sponsor from instead leaving such 

design specifications to the private sector, thus possibly limiting the ability 

to find innovative and cost-effective solutions for the project. When a 

project sponsor specifies the exact number of vehicles for the project, the 

private sector partners must incorporate that design detail into their 

Loss of Other Potential 

Benefits 

 

23FTA’s funding recommendations are made in the President’s budget and are included in 

FTA’s annual New Starts Report to Congress, which is released each February in 

conjunction with the President’s budget. There is a 60-day statutory review period for 

Congress before the award of a full funding grant agreement. 

Page 24 GAO-10-19 Private Sector Role in Transit Projects
 

scope, whether or not that exact number of vehicles is really needed. Due 

to the New Starts requirements, another project sponsor told us that it had 

been discouraged from using an alterative project delivery approach again 

after having what it believed to be a prior successful experience that 

included enhanced efficiencies and design improvements. A Minnesota 

Metro Transit official told us it initially wanted to use the design-build 

approach for its ongoing Central Corridor project based on the success of 

previously using this approach for the Hiawatha Corridor—a completed 

New Starts project that received a full funding grant agreement in 2000. 

However, Minnesota Metro Transit determined that it would have to 

complete 60 percent of the Central Corridor project’s design to meet FTA’s 

New Starts requirements for final design. DOT’s 2007 Report to Congress 

also cited a similar challenge regarding project design requirements. These 

requirements are not consistent with alternative approaches where project 

sponsors look to involve the private sector after only one-third, for 

example, of the design work is completed. Therefore, Minnesota Metro 

Transit decided to use the conventional design-bid-build approach to 

construct the project. In commenting on a draft of our report, FTA officials 

recognize that while additional steps could be taken to facilitate 

alternative approaches to transit projects, they also believe that other 

barriers beyond the federal approval process affect the use of these 

approaches, including those beyond the immediate reach of the program 

such as reduced available private equity capital resulting from the recent 

economic recession. 

Greater Use of Existing 

Tools and an Evaluation 

Plan Can Help Strengthen 

FTA’s Pilot Program 

To address these challenges of the New Starts project approval process for 

transit projects that use alternative approaches, Congress and FTA have 

taken steps to streamline New Starts by establishing the Public-Private 

Partnership Pilot Program. And to date, FTA has agreed to provide all 

three of the pilot program project sponsors with some level of relief, 

including expediting its risk assessment and providing Letters of No 

Prejudice earlier than traditionally allowed in the New Starts process to 

Houston Metro, and granting a waiver from federal performance bonding 

requirements to the Bay Area Rapid Transit Oakland Airport Connector 

pilot project, which FTA has also done for non-pilot program projects.24

 

24The purpose of a performance bond is to provide project sponsor funds to complete the 

project in the event the private sector partner defaults on the contract. FTA’s standard 

contract language requires contractors on federally funded projects to hold performance 

bonds for 100 percent of the contract price to ensure the performance of the private sector 

partner. 

Page 25 GAO-10-19 Private Sector Role in Transit Projects
 

FTA has also stated its amenability to waiving its risk assessment—which 

aims to identify issues that could affect a project’s schedule or cost—and 

financial reviews, concurrently approving the project into the New Starts 

final design phase25 while awarding an Early Systems Work Agreement for 

Denver Regional Transportation District’s East Corridor and Gold Line 

pilot projects.26

However, because FTA officials told us that none of the pilot projects has 

demonstrated a sufficient transfer of risk or financial investment by the 

private sector to enable FTA to relax its normal New Starts evaluation 

requirements for such approvals, FTA has yet to grant three pilot project 

sponsors any major streamlining modifications of the New Starts project 

approval process, such as the awarding of concurrent approvals into the 

New Starts phases. Thus far, FTA has only assessed the Houston Metro 

pilot project to determine the extent to which FTA could streamline the 

New Starts process. In its November 2008 report, FTA determined that it 

would not relax, modify, or waive its risk assessment and financial 

capacity reviews prior to advancement into final design because Houston 

Metro retains risks in a number of critical risk areas including finance 

since there is no equity capital investment by the private sector partner.27

Houston Metro officials said that they considered transferring more risk to 

the private sector to meet FTA’s threshold to waive certain New Starts 

evaluation requirements, but decided against doing so because of their 

concern that the private sector assuming certain risks to meet FTA’s 

threshold may potentially increase private sector bids and that they would 

still be able to achieve some of the benefits of using an alternative 

approach without equity capital investment by the private sector. 

While it may be too early for FTA to grant major streamlining 

modifications with the other two pilot projects, FTA still has the ability as 

part of its pilot program to further experiment with the use of existing 

tools that could encourage a greater private sector role while continuing to 

 

25As part of the New Starts process, FTA approves projects into three phases: preliminary 

engineering (in which the designs of project proposals are refined), final design (the end of 

project development in which final construction plans and cost estimates, among other 

activities, are completed), and construction (in which FTA awards the project a full funding 

grant agreement, providing a federal commitment of funds subject to the availability of 

appropriations). 

26Because of limited funding commitment authority, FTA cannot entertain a full funding 

grant agreement at this time. 

27This report was prepared with the assistance of PricewaterhouseCoopers. 

Page 26 GAO-10-19 Private Sector Role in Transit Projects
 

balance the need to protect the public interest. FTA has the ability to use 

conditional approvals in the New Starts process, such as (1) Letters of 

Intent that announce FTA’s intention to issue a full funding grant 

agreement that would in turn agree to obligate a New Starts project’s full 

federal share from future available budget authority, subject to the 

availability of appropriations, provided that a project meets all the terms 

of a full funding grant agreement and (2) Early Systems Work Agreements 

that obligate only a portion of a New Starts project’s federal share for 

preliminary project activities, such as land acquisition. Over the past 30 

years, FTA has made very limited use of these tools by only granting three 

Letters of Intent and four Early Systems Work Agreements to transit 

projects. The Deloitte study noted that New Starts project sponsors miss 

the opportunity to use alternative methods including design-build and 

design-build-finance-operate-maintain because of the lack of early 

commitment of federal funding for the projects, suggesting that the greater 

use of these tools could be beneficial. However, use of these tools is not 

without risk. We have previously noted that limitations to FTA making 

greater use of these tools, including Letters of Intent, could be 

misinterpreted as an obligation of federal funds when they only signal 

FTA’s intention to obligate future funds. Furthermore, Early Systems Work 

Agreements require a project to have a record of decision for the 

environmental review process that must be completed under the National 

Environmental Policy Act28 and require the Secretary to find that a full 

funding grant agreement for the project will be made and that the 

agreement will promote more-rapid and less-costly completion of the 

project.29 Finally, under current statute, both of these tools—Letters of 

Intent and Early Systems Work Agreement—count against FTA’s available 

funding for New Starts projects under the current surface transportation 

authorization. 

We found that the governments of the United Kingdom and Canada use 

conditional approvals to help encourage a greater private sector role in 

transit projects. The United Kingdom’s Department for Transport grants a 

conditional approval announcing the government’s intent to fund a project 

 

28The National Environmental Policy Act requires federal agencies to evaluate and in some 

instances prepare detailed statements assessing the environmental impact of and 

alternatives to major federal actions significantly affecting the environment. In the 

transportation context, the National Environmental Policy Act evaluation may measure the 

impact of different alternatives by the extent to which the alternative meets the project 

purpose, need, and consistency with the goals and objectives of any local urban planning. 

29GAO-09-784. 

Page 27 GAO-10-19 Private Sector Role in Transit Projects
 

before it receives private sector bids provided that cost, risk transference, 

and scope do not change. If those conditions are not met, the project loses 

its government funding. This conditional approval occurs after the 

department reviews projects, in part to address the risk of cost increases, 

and thus provides a signal of project quality to the private sector to help 

maintain a competitive bidding process. Similarly, Transport Canada 

officials told us that it makes a formal announcement to state its intent to 

provide federal funds to a transit project after conducting its initial review 

of a project and before formally committing funds that allow project 

sponsors to move forward in development and engaging the private sector. 

If the agreed-upon cost, schedule, and risk transference are not met, the 

government withdraws its funding. United Kingdom Department for 

Transport officials told us that they have experience withdrawing funding 

when such conditions have not been met. 

We also found that other U.S. Department of Transportation modal 

administrations use similar conditional approvals to help encourage 

greater private sector involvement in projects. The Federal Aviation 

Administration uses Letters of Intent in its Airport Improvement Program 

to establish multiyear funding schedules for projects that officials said 

allow project sponsors to proceed with greater certainty regarding future 

federal funding compared to the broader program and also help prevent 

project stops and starts.30 The Federal Aviation Administration has granted 

90 of these multiyear awards since 1988. The Federal Highway 

Administration grants early conditional approvals to highway project 

sponsors seeking Transportation Infrastructure Finance and Innovation 

Act funds to streamline the process and allow private sector bidders to 

incorporate these funds into their financial plans without having to 

individually apply as otherwise required. The Federal Highway 

Administration has also carried out three pilot programs that have allowed 

projects to move more efficiently through its grant process by modifying 

some of its requirements. These pilot projects waived certain aspects of 

the federal-aid highway procurement provisions, such as moving forward 

with final decision prior to a National Environmental Policy Act decision, 

and allowed federally funded highway projects to use alternative 

approaches including design-build. One of these pilot programs is cited by 

the Federal Highway Administration as having helped pave the way for 

 

30According to Federal Aviation Administration officials, the agency annually grants a 

onetime, set amount of funding to project sponsors under the broader Airport 

Improvement Program. 

Page 28 GAO-10-19 Private Sector Role in Transit Projects
 

design-build to become the standard project delivery approach in highway 

projects. Another pilot program allowed the Federal Highway 

Administration to waive regulations and policies so project sponsors in 

two states could contract with the private sector at a much earlier point in 

the project development cycle than was previously allowed. 

In addition to not yet granting project sponsors any major streamlining 

modifications to the New Starts process, FTA does not have an evaluation 

plan to accurately and reliably assess the pilot program’s results, including 

the effect of its efforts to streamline the New Starts projects for pilot 

project sponsors. We have previously reported that to evaluate the 

effectiveness of a pilot program, a sound evaluation plan is needed and 

should incorporate key features including: well-defined, clear, and 

measurable objectives; measures that are directly linked to the program 

objectives; criteria for determining pilot program performance; a way to 

isolate the effects of the pilot program; a data analysis plan for the 

evaluation design; and a detailed plan to ensure that data collection, entry, 

and storage are reliable and error-free.31 Without such an evaluation plan, 

FTA is limited in its decision making regarding its pilot program, and 

Congress will be limited in its decision making about the pilot program’s 

potential broader application. FTA officials told us that they have not yet 

developed an evaluation plan for its pilot program given that the projects 

are all ongoing, far from completion, and still working through the New 

Starts project approval process. 

 

31GAO, Equal Employment Opportunity: DOD’s EEO Pilot Program Under Way, but 

Improvements Needed to DOD’s Evaluation Plan, GAO-06-538 (Washington, D.C.: May 5, 

2006) and GAO, Equal Employment Opportunity: Pilot Projects Could Help Test Solutions 

to Long-standing Concerns with the EEO Complaint Process, GAO-09-712 (Washington, 

D.C., Aug. 12, 2009). 

Page 29 GAO-10-19 Private Sector Role in Transit Projects
 

Project Sponsors 

Have Sought to 

Protect the Public 

Interest in Various 

Ways and DOT Can 

Provide Guidance and 

Technical Assistance 

Project Sponsors Protect 

the Public Interest in 

Various Ways, Including 

through Competitive 

Procurement Practices as 

Well as Performance 

Specifications and 

Standards 

The alternative approaches we reviewed have protected the public interest 

in various ways to ensure the public receives the best price for a project 

and to create incentives for the private sector partner so that the project 

progresses and operates based on agreed-upon objectives. 

Project sponsors we interviewed have attempted in part to protect the 

public interest in transit projects that use alternative approaches by 

ensuring the use of competitive procurement practices. These practices 

are not unique to alternative approaches and are sometimes used in 

conventional procurements. Competitive procurement practices are 

generally required to be used for federal funding. For example, federal law 

and regulations generally require federal contracts to be competed unless 

they fall under specific exceptions to full and open competition. 

Nevertheless, project sponsors told us that maximizing the use of these 

competitive procurement practices—such as encouraging multiple bidders 

to value and price projects—helps to ensure that the public sector receives 

the best bid when using these partnerships and approaches. European 

Union countries are required to have multiple bidders for procurements. 

Procurements with only one bidder are less competitive and can result in 

less attractive bids. For example, although Bay Area Rapid Transit 

prequalified three contractors for the first version of its Oakland Airport 

Connector, two contractors withdrew during the negotiation period due to 

concerns about the project affordability. Bay Area Rapid Transit 

negotiated with the sole remaining bidder on costs for nearly a year but 

Competitive Procurement 

Practices 

Page 30 GAO-10-19 Private Sector Role in Transit Projects
 

then let the Request for Proposals expire with no proposals submitted.32

To encourage the participation of multiple bidders, Minnesota Metro 

Transit Hiawatha Corridor and Denver’s Regional Transportation District’s 

Transportation Expansion light rail offered proposal stipends to private 

sector entities that submitted formal bids to help defray the costs of 

developing proposals. However, while serving as an incentive for potential 

private sector partners, stipends add costs that must be weighed against 

the benefits they provide. 

Project sponsors that we interviewed have also encouraged early and 

sustained interaction with the private sector to test the project’s 

marketability and whether and in what form private sector participation is 

advantageous. Such feedback can be obtained through bidder information 

sessions and from consultants. Project sponsors then conduct a request 

for qualified bidders to gain more detailed input from the private sector on 

a project prior to the issuance of a request for proposals (which solicits 

the formal bids). The request for qualified bidders can establish a higher 

threshold of responsibility for private partners compared to traditional 

procurements in which a private partner is selected based primarily on bid 

price. Thus, sustained and iterative interaction between the project 

sponsor and the private sector can refine the project’s scope and terms 

and determine how best to include the private sector. For example, all 

three of FTA’s pilot projects as well as Minnesota Metro Transit’s 

Hiawatha Corridor project used a request for qualifications to select 

bidders and solicit the private sector’s review of project details. In 

addition, Minnesota Metro Transit told us that input from the private 

sector produced several good ideas that were incorporated into the 

project, such as a shared risk fund to provide an incentive for the private 

sector to reduce construction delays. Furthermore, the Canada Line 

project sponsor used a list of essential elements agreed upon by the public 

agencies funding the project as a basis for negotiating with potential 

bidders. 

Project sponsors that we interviewed seek to protect the public interest in 

alternative approaches through an emphasis on performance. 

Performance specifications focus on desired project performance (such as 

frequency of train arrivals at a station) and not design details (such as the 

type of train). Project sponsors and consultants told us that detailed 

Performance Specifications 

and Standards 

 

32Bay Area Rapid Transit is currently undertaking another request for proposals for the 

project and is allowing a less-expensive cable-propelled technology to compete. 

Page 31 GAO-10-19 Private Sector Role in Transit Projects
 

specifications that have been in conventional project delivery approaches 

can restrict what bidders can offer. When specifications are focused on 

performance, bidders can offer a range of design and technology options 

as well as follow best practices that meet overall project objectives. 

According to Denver’s Regional Transportation District, the East Corridor 

and Gold Line pilot projects initially had a 700-page design specification 

document for their commuter rail vehicles. After industry review and 

feedback that the specifications would lead to customized vehicles that 

would be expensive and difficult to operate and maintain, the project 

sponsor responded by creating a 15-page performance specifications 

document for the vehicles. An advisor to the project sponsor noted that 

the use of design specifications is more challenging with transit projects 

than in highways and other sectors given the technology issues and 

environmental concerns. The advisor also said that projects with a range 

of technology options must undergo the environmental review process at 

the highest possible level of design given the effect of different 

technologies on the environment. In contrast, one project sponsor noted 

that performance specifications should not be used when conditions of the 

facility or surrounding environment, for example, are unknown as 

unforeseen circumstances could occur that would require more specific 

design specifications. 

Project sponsors we interviewed have also sought to use performance 

standards to protect the public interest. These standards are what the 

private sector partner must meet to be compensated during the project’s 

construction, operations, and maintenance phases, helping to ensure 

adequate performance. If the private sector partner does not meet the 

standards, then it is penalized with no, reduced, or delayed payments, and 

penalties can escalate if poor performance continues. Standards for 

construction include delivering a completed project or project element 

within a set schedule. For example, the Canada Line private sector partner 

had 400 milestones that it needed to complete and have certified in order 

to continue to receive timely payments during the project’s construction 

period. Performance standards for operations and maintenance, also 

called key performance indicators, cover all aspects of service including 

the availability, frequency, and reliability of service and conditions of 

facilities. For example, the London Underground chose to emphasize key 

performance indicators in four areas—availability, capability, ambience, 

and service points—by creating performance targets and to tie monthly 

payments to these based on the private sector partner’s actual 

performance. Some projects have also incorporated standards that link to 

increased ridership to provide incentives for the private sector partner to 

provide good customer service. For example, Nottingham Express Transit 

Page 32 GAO-10-19 Private Sector Role in Transit Projects
 

has 20 percent of its payments to the private sector based on ridership. 

Additionally, the draft concession agreement for Denver’s Regional 

Transportation District East Corridor and Gold Line pilot projects 

incorporate levels of payment deductions that accelerate when low 

performance, such as delayed trains and littered or unclean railcars, 

persists. If low performance continues over a period, the project sponsor 

can terminate the concession agreement and rebid the project to another 

private partner. 

Project sponsors we interviewed also protect the public interest in transit 

public-private partnership and other alternative approaches through the 

incorporation of private equity capital. When a private sector partner 

finances a project using equity capital, the private sector uses payments 

received from the project sponsor to repay its costs plus provide a return 

on investment. Since the private sector partner borrows to finance its 

costs—that is, it has equity at risk if it does not meet standards—it will be 

unable to meet its financial obligations from these milestone payments if 

those standards are not met. This situation can create incentives for the 

private sector partner to deliver according to the terms of the agreement. 

At the same time, financial advisors to project sponsors told us that bank 

lenders protect their investments by ensuring that the private sector 

properly develops a concession agreement and then delivers on it. The 

public interest is thus further protected by this integration of 

responsibilities because the bank lender and concessionaire provide 

additional project oversight through the monitoring of cost overruns and 

schedule delays, among other issues. According to the Canada Line private 

sector partner, it provided 17 percent equity in the project. For the 

Croydon Tramlink, the private sector partner contributed 30 percent of 

project costs. In the case of the Canada Line, the private sector partner did 

not miss any of its 400 payment milestones. 

Financial Mechanisms 

To better protect the public interest, project sponsors have also 

incorporated clauses into project agreements that allow for flexibility 

under certain circumstances. Project sponsors that we interviewed noted 

the importance of having the ability to periodically revisit agreement terms 

in long-term concessions to protect the public interest given that 

unforeseen circumstances may occur that make the concessionaire unable 

to meet performance standards. For example, Houston Metro’s North and 

Southeast Corridor projects’ concession agreement incorporated this 

flexibility by including an operations and maintenance agreement for the 

first 5 years after service begins with the option for renewal. According to 

a consultant that works on the project, this approach was chosen in part 

because the project sponsor wanted an option to revisit the contract. 

Flexibility

Page 33 GAO-10-19 Private Sector Role in Transit Projects
 

Internationally, both of the London Underground’s maintenance 30-year 

concession agreements are reviewed for scope of work and costs by a 

public-private partnerships arbiter every 7.5 years. Moreover, the 

concessionaire has the ability to request an extraordinary review by the 

arbiter if costs rise above a specified threshold due to circumstances 

outside the private sector partner’s control. 

Periodically revisiting terms, or shorter concession periods, can also allow 

for changes such as system extension. One of the Docklands Light Railway 

extensions has breakpoints at the years 2013 and 2020 in its concession 

agreement that give the project sponsor an option to break and buy back 

the agreement for a set price. In contrast, in the previously mentioned 

example of Manchester Metrolink, concessions for phase 2 were 

terminated by the project sponsor to allow for system expansion in a third 

phase which was not procured as a public-private partnership. According 

to consultants we interviewed, the terminations could have been avoided 

if the initial concessions had been shorter. Shorter concession periods are 

thus being used as a means to revisit terms and rebid if desired. 

In addition to clauses that allow project sponsors to revisit concession 

agreement terms, other clauses that allow for flexibility can also protect 

the public interest. For example, Denver Regional Transportation District’s 

draft concession agreement includes clauses specifying both triggers that 

could lead to default and terms of compensation in case of default as well 

as termination provisions that detail the condition of the transit asset at 

the end of the concession when it is transferred back to the project 

sponsor. These provisions help to minimize disputes. Other advisors to 

project sponsors told us that a clause specifying the sharing of 

“refinancing gains” between the project sponsor and concessionaire could 

also help to protect the public interest. Refinancing gains refer to savings 

that occur when the private sector revises its repayment schedule for its 

equity investment by taking advantage of better financial terms. As we 

have noted in our report on highway public-private partnerships, the 

private sector can potentially benefit through gains achieved in refinancing 

their investments and these gains can be substantial. The governments of 

the United Kingdom as well as Victoria and New South Wales, Australia, 

require that any refinancing gains achieved by private concessionaires 

generally be shared with the government. 

Page 34 GAO-10-19 Private Sector Role in Transit Projects
 

Some foreign governments have recognized the importance of protecting 

the public interest in public-private partnerships through the use of 

quantitative and qualitative public interest assessments. We have also 

previously reported that more rigorous, up-front analysis could better 

secure potential benefits and protect the public interest. 33 The use of 

quantitative and qualitative public interest tests and tools before entering 

into transit public-private partnerships can help lay out the expected 

benefits, costs, and risks of the project. Conversely, not using such tools 

can potentially allow aspects of the public interest to be overlooked. For 

example, a Value for Money analysis is a tool used to evaluate if entering 

into a project as a public-private partnership is the best project delivery 

option available. Internationally, the United Kingdom, and British 

Columbia in Canada, among others, require a Value for Money analysis for 

all transportation projects over a certain cost threshold. For example, all 

transportation projects in the United Kingdom that exceed about $24 

million must undergo a Value for Money analysis to receive project 

funding, while projects in British Columbia must conduct a Value for 

Money analysis if project costs total more than about $46 million. 

Domestically, Florida requires a Value for Money analysis for publicprivate partnerships, one of which was recently conducted on the I-595 

Corridor Roadway Improvements Project in Broward County. A Value for 

Money assessment was also completed for the Bay Area Rapid Transit’s 

Oakland Airport Connector at the request of FTA. 

Project Sponsors Also 

Protect the Public Interest 

by Using Financial 

Assessments 

In general, Value for Money evaluations examine total project costs and 

benefits and are used to determine if a public-private partnership 

approach is in the public interest for a given project. Value for Money tests 

are often done by comparing the costs of doing a proposed project as a 

public-private partnership against an estimate of the costs of procuring 

that project using a public delivery model.34 Value for Money tests examine 

not only the economic value of a project but also other factors that are 

hard to quantify, such as design quality and functionality, quality in 

construction, and the value of unquantifiable risks transferred to the 

private sector. In the United Kingdom, Value for Money analysis includes 

qualitative factors such as the viability, desirability, and achievability of 

the project in addition to the quantitative factors. 

 

33GAO-08-44. 

34This is known as the Public Sector Comparator, which is a hypothetical scenario that 

estimates the Net Present Value of the expected life-cycle costs to the public agency if it 

were to pursue the public-private partnerships project versus a traditional procurement. 

Page 35 GAO-10-19 Private Sector Role in Transit Projects
 

Provinces such as Canada’s British Columbia and Australia’s Victoria also 

include qualitative factors in their financial assessments, including Value 

for Money analysis. Government officials stated that including both 

quantitative and qualitative factors in financial assessments such as Value 

for Money analysis provides a more comprehensive project assessment. In 

addition to determining whether a public-private partnership is 

advantageous over a publicly delivered project, project sponsors and 

government officials noted that a Value for Money analysis is also a useful 

management tool for considering up front all project costs and risks that 

can occur during a project’s lifetime, which is not always done in a 

conventional procurement. 

Project sponsors can also use financial assessments such as Value for 

Money analysis for other reasons. For example, Value for Money analysis 

can assist in determining which project delivery approach provides more 

value. Project sponsors can assess if one public-private partnership option 

is more advantageous than another if it is decided that private 

participation in a project is beneficial. For example, Bay Area Rapid 

Transit used a Value for Money analysis in its original iteration of the 

Oakland Airport Connector to assess which alternative project delivery 

approach (design-build-operate-maintain or design-build-finance-operatemaintain) would be more advantageous. Project sponsors can also use 

Value for Money to give a range of possible project costs when coupled 

with a sensitivity analysis. For example, a sensitivity analysis developed 

for the Canada Line suggested that project costs could have varied from 

$47 million more to $270 million less than expected, depending on the 

level of risk. A further example of how project sponsors can use Value for 

Money is to enhance communication about a project. Project sponsors 

noted that since Value for Money analyses are often publicly available, 

such as in the United Kingdom, they can lead to more-informed 

discussions and provide transparency in the selection of the project 

delivery approach. Thus, they can be good planning and communication 

tools for decision makers. 

Government officials and consultants that perform financial assessments, 

such as Value for Money analysis, cautioned that the assessments are not 

without limitations. For example, officials and consultants told us that 

these analyses are inherently subjective and rely on assumptions that can 

introduce bias. Assessments can include the assumption that the public 

sector will likely have higher construction costs due to a history of cost 

overruns. In the United Kingdom, an “optimism bias” of 15 percent is 

added to the public sector comparator in part to account for this. 

Consultants noted that there is subjectivity in valuing risks as detailed data 

Page 36 GAO-10-19 Private Sector Role in Transit Projects
 

on the probability of particular project risks occurring are unavailable. 

Thus consultants use data from past projects and their own professional 

views to conduct the analysis. In sum, government officials and 

consultants noted that Value for Money analysis should be considered as a 

tool rather than the sole factor in assessing whether to do a public-private 

partnership. 

Although Limited in the 

United States, Some Other 

Countries Further Protect 

the Public Interest by 

Providing Guidance and 

Technical Assistance 

Some countries have further protected the public interest in transit 

projects that use alternative approaches by establishing quasigovernmental entities to assist project sponsors in implementing these 

arrangements. Entities such as Partnerships UK, Partnerships Victoria, and 

Partnerships BC are often fee-for-service and associated with Treasury 

Departments on the provincial and national levels. These quasigovernmental entities all develop guidance such as standardized contracts 

and provide technical assistance to support transit projects that use 

alternative approaches. According to an advisor for project sponsors, 

contracts for these partnerships and approaches generally follow a 

standard model such as a framework for assigned risk between the project 

sponsor and private sector, with the particularities of local legislation and 

project specifics written into them. The United Kingdom’s standard 

contract outlines requirements as well as factors to consider from a 

project’s service commencement through termination, which is 

periodically updated to reflect lessons learned.35 For example, after the 

government of the United Kingdom required the private sector to share 

any refinancing gains with the project sponsor, the standard contract was 

subsequently updated. Furthermore, the quasi-governmental entities 

provide technical assistance to support transit projects that use alternative 

approaches. For example, Partnerships BC provides project sponsors 

assistance on conducting a Value for Money assessment to determine 

whether private sector participation in a project is beneficial. In addition 

to this assistance, these entities provide other varied services to facilitate 

public-private partnerships across different sectors. For example, 

Partnerships UK reviews project proposals for the government; 

Partnerships Victoria offers training for the province; and Partnerships BC 

advises project sponsors to help develop and close public-private 

partnership contracts in British Columbia. 

 

35Her Majesty’s Treasury, Standardisation of Private Finance Initiative Contracts, 

Version 4 (London: March 2007). 

Page 37 GAO-10-19 Private Sector Role in Transit Projects
 

Quasi-governmental entities can further protect the public interest through 

the benefits they provide. According to government officials in the United 

Kingdom and Canada, these entities create a consistent approach to 

considering public-private partnerships, such as understanding a project’s 

main risks, which can reduce the time and costs incurred when 

negotiating a contract. Further, by using standardized contracts developed 

by these entities, project sponsors can reduce transaction costs—such as 

legal, financial, and administrative fees—of implementing transit projects 

that use alternative approaches. Moreover, project sponsors and 

consultants told us that entities like Partnerships UK and Partnerships BC 

can foster good public-private partnerships and help further protect the 

public interest by ensuring consistency in contracts and serving as a 

repository of institutional knowledge. Without the services provided by 

these quasi-governmental entities, project sponsors that plan to or use 

alternative approaches for a transit project will develop them on a case-bycase basis because they lack institutional knowledge and a centralized 

resource for assistance. 

While DOT has established an office to support project sponsors of 

highway-related public-private partnerships, DOT does not provide similar 

support for transit projects. In a previous GAO report, we noted that 

formal consideration and analysis of public interest issues had been 

conducted in U.S. highway public-private partnerships, and that DOT has 

done much to promote the benefits, but comparatively little to assist states 

and localities weigh potential costs and trade-offs of these partnerships.36

Since that report, the Federal Highway Administration’s Office of 

Innovative Program Delivery has been established to provide support for 

highway-related public-private partnerships by providing an easy, singlepoint of access for project sponsors and other stakeholders. The office is 

intended to offer outreach, professional capacity building, technical 

assistance, and decision-making tools for highway-related public-private 

partnerships. In addition, FTA officials told us that they have plans to 

develop an online toolset for employees to help them provide technical 

assistance to project sponsors on these alternative approaches. This 

assistance is to include checklists to help determine whether a project 

should use an alternative approach, risk matrices that provide an overview 

and explanation of risks transferred using such an approach, and a 

financial feasibility model that can be used to quantitatively compare the 

use of an alternative approach with the conventional approach to transit 

 

36GAO-08-44. 

Page 38 GAO-10-19 Private Sector Role in Transit Projects
 

projects. Furthermore, in June 2009, the House of Representatives’ 

Committee on Transportation and Infrastructure’s surface transportation 

reauthorization blueprint proposed that an Office of Expedited Project 

Delivery be created within FTA to provide assistance to transit project 

sponsors much as we have outlined earlier in this report.37 However, such 

support is not currently available for project sponsors of transit projects 

that use alternative approaches. Project sponsors and their advisors noted 

that as there is little public sector institutional knowledge about publicprivate partnerships in the United States, projects may be carried out 

without the benefit of previous experiences. It is even more challenging to 

conduct transit projects that use alternative approaches in the United 

States given the variation in relevant state laws and local ordinances that 

project sponsors and other stakeholders must navigate. Furthermore, 

FTA’s New Starts evaluation requirements for transit projects seeking 

federal funding do not include an evaluation of whether the public is 

receiving the best value for its money as compared to other delivery 

approaches. Thus project sponsors, advisors, and government officials 

noted that such an entity in the United States could be valuable in further 

protecting the public interest in public-private partnerships. 

FTA distributes billions of dollars of federal funding to transit agencies for 

the construction of new, large-scale projects; as such, it is critical that the 

public interest is protected and federal funding is spent responsibly. 

Project sponsors are looking to transit projects that use alternative 

approaches to deliver and finance new transit projects, along with federal 

funds. However, because of its sequential and phased structure, FTA’s 

New Starts program is incompatible with transit projects that use these 

approaches. Congress recognized this concern when it authorized FTA to 

establish the Public-Private Partnership Pilot Program to illustrate how 

New Starts evaluation requirements can be streamlined to better 

accommodate the use of alternative approaches in transit projects. 

However, the pilot program has not yet illustrated how this can be done. 

This is because, on the one hand, FTA has determined that no pilot project 

has demonstrated enough of a transfer of risk—in particular a financial 

investment by the private sector—for FTA to consider granting major 

modifications to streamline its New Starts evaluation requirements. On the 

Conclusions 

 

37House of Representatives, Committee on Transportation and Infrastructure, “The Surface 

Transportation Authorization Act of 2009: A Blueprint for Investment and Reform” (June 

18, 2009). 

Page 39 GAO-10-19 Private Sector Role in Transit Projects
 

other hand, the potential challenges posed by the New Starts 

requirements, including delays and additional costs, may discourage the 

private sector from assuming enhanced financial responsibility in these 

alternative approaches. 

Despite this apparent impasse, FTA sill has the unique opportunity to take 

advantage of the fundamental characteristic of a pilot program—

flexibility—to gain valuable insight on how to streamline the New Starts 

process to facilitate a greater private sector role in transit projects through 

the use of alternative approaches. FTA can introduce additional flexibility 

into its three pilot projects through, among other things, the use of 

existing, long-standing tools, such as Letters of Intent and Early Systems 

Work Agreements. Other agencies within DOT have used such tools 

successfully in the past to provide flexibility to their funding and approval 

processes and to advance and promulgate alternative project finance and 

delivery approaches. Moreover, some other countries have used 

conditional approvals to incorporate more flexibility into their funding 

processes and help encourage a greater private sector role in transit 

projects. FTA may want to turn to the experiences of these other modal 

administrations and governments and use existing, long-standing tools to 

incorporate more flexibility in the New Starts process to help facilitate 

transit projects that use alternative approaches. 

Without an evaluation plan to assess the results of its pilot program, FTA 

may also lose some valuable information Congress intended the agency to 

obtain through the pilot program’s establishment, including how the New 

Starts project approval process can be further streamlined. As more transit 

projects use alternative approaches, FTA may not be able to readily 

accommodate these approaches, ultimately disadvantaging transit project 

sponsors that seek to deliver their projects more quickly and efficiently 

and at a lesser cost to the public. 

In the past, DOT has done much to promote the potential benefits of 

transportation public-private partnerships. While these benefits are not 

assured and should be evaluated by weighing them against potential costs 

and trade-offs, DOT has done comparatively little to equip project 

sponsors to weigh the potential costs and trade-offs. Recently, DOT has 

taken a more integrated approach to a greater private sector role in 

transportation, as evidenced by its newly established Office of Innovative 

Program Delivery for public-private partnerships. Congress has taken a 

greater interest in facilitating alternative approaches as well. Quasigovernmental entities established by foreign governments have better 

equipped project sponsors to implement alternative approaches, including 

Page 40 GAO-10-19 Private Sector Role in Transit Projects
 

public-private partnerships, by creating a uniform method to considering 

the implications of alternative approaches, reducing transaction costs, 

ensuring consistency in contracts, and serving as a repository of 

institutional knowledge. FTA could consider these international models 

and expand its current efforts in transportation public-private partnerships 

to support a greater private sector role in transit directly to project 

sponsors. Expanded FTA efforts could facilitate the implementation of 

transit projects that use alternative approaches and protect the public 

interest through the use of tools such as standardized contracts, technical 

assistance, and financial assessments. 

To facilitate a better understanding of the potential benefits of alternative 

approaches in FTA’s Public-Private Partnership Pilot Program, if 

reauthorized, we recommend that the Secretary of Transportation direct 

the FTA Administrator to take the following actions: 

• Incorporate greater flexibility, as warranted, in the Public-Private 

Partnership Pilot Program than has occurred to date by making greater 

use of existing tools such as Letters of Intent and Early Systems Work 

Agreements in order to streamline the New Starts process. 

• Develop a sound evaluation plan for the Public-Private Partnership 

Pilot Program to accurately and reliably assess the pilot programs’ 

results that includes key factors such as: well-defined, clear, and 

measurable objectives; measures that are directly linked to the 

program objectives; criteria for determining pilot program 

performance; a way to isolate the effects of the pilot program; a data 

analysis plan for the evaluation design; and a detailed plan to ensure 

that data collection, entry, and storage are reliable and error-free. 

• Beyond its pilot program, build upon efforts underway in DOT to 

better equip transit project sponsors in implementing transit projects 

that use alternative approaches, including developing guidance, 

providing technical assistance, and sponsoring greater use of financial 

assessments to consider the potential costs and trade-offs. 

We provided a draft of this report to DOT and FTA for review and 

comment. DOT has agreed to consider our recommendations and provided 

comments through e-mail from FTA officials. In their comments, FTA 

officials stated that the agency has ongoing and planned efforts as part of 

its Public-Private Partnership Pilot Program that they believe address the 

intent of our recommendations. For example, FTA officials noted that the 

agency has, as we reported, made use of tools such as Letters of Intent and 

Recommendations for 

Executive Action 

Agency Comments 

and Our Evaluation 

Page 41 GAO-10-19 Private Sector Role in Transit Projects
 

Early Systems Work Agreements in the past in order to streamline the New 

Starts process, and that it will evaluate the potential for greater use of 

these existing tools in the future to incorporate greater flexibility into the 

pilot program. Additionally, FTA officials acknowledged the need for an 

evaluation plan to assess the pilot program’s results and stated they will be 

working to develop one. Further, FTA officials stated that FTA is working 

to develop technical assistance for its staff on how to structure and 

evaluate alternative approaches to transit projects; we revised our draft 

report to reflect FTA’s efforts. Because these efforts are either planned or 

in their early stages, we are retaining our recommendations. Finally, FTA 

officials provided technical comments, which we incorporated as 

appropriate. 

We are sending copies of this report to appropriate congressional 

committees and DOT. The report also is available at no charge on the GAO 

Web site at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact me 

at flemings@gao.gov or (202) 512-2834. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

Susan A. Fleming 

of this report. Key contributors to this report are listed in appendix II. 

Director, Physical Infrastructure Issues 

Page 42 GAO-10-19 Private Sector Role in Transit Projects
Appendix I: Scope and Methodology Appendix I: Scope and Methodology 

Our work was focused on transit projects that involve greater private 

sector participation than is typical in conventional projects. In particular, 

we focused on (1) the role of the private sector in the delivering and 

financing of U.S. transit projects compared with other countries; (2) the 

benefits and limitations of and the barriers, if any, to greater private sector 

involvement in transit projects and how these barriers are addressed in the 

Department of Transportation’s (DOT) Public-Private Partnership Pilot 

Program; and (3) how project sponsors and DOT can protect the public 

interest in transit projects that use alternative approaches. Our scope was 

limited to identifying the primary issues associated with using publicprivate partnerships for transit infrastructure and not in conducting a 

detailed financial analysis of the specific arrangements. 

In order to clearly delineate alternative delivery and financing approaches 

used in transit, first we identified three categories—traditional, innovative, 

and alternative—that describe the evolution of such practices. We defined 

traditional financing to include federal grants (such as New Starts program 

grants), state and local public grants, taxes, and municipal bonds, and 

defined conventional project delivery to refer to the design-bid-build 

approach. We defined innovative financing to include loan or credit 

assistance such as the Transportation Infrastructure Financing and 

Innovation Act, Private Activity Bonds, Tax Increment Financing, State 

Infrastructure Banks, Grant Anticipation Notes, and Revenue Bonds, and 

innovative project delivery to refer to the design-build approach. Finally, 

we defined alternative financing to refer to public-private partnerships that 

involve private equity capital such as concession agreements and defined 

alternative approaches as ones that transfer greater risk to the private 

sector including: design-build, design-build-finance, design-build-operatemaintain, build-operate-maintain, design-build-finance-operate, designbuild-finance-operate-maintain, build-operate-own, and build-own-operate, 

among others. 

We took several steps and considered various criteria in selecting which 

domestic transit projects to study as part of our review of alternative 

financing and project delivery practices. First, we reviewed transit project 

information from DOT, GAO, the Congressional Research Service, and 

other reports as well as conducted interviews with DOT officials, project 

sponsors, industry representatives, and academic experts to identify the 

potential universe of projects that fit at least one (alternative project 

delivery or alternative financing) or both of our established definitions. We 

also selected projects that were either completed or had already carried 

out substantial planning. The potential universe of projects contained 10 

completed projects including: Denver Regional Transportation District 

Page 43 GAO-10-19 Private Sector Role in Transit Projects 
Appendix I: Scope and Methodology 

Transportation Expansion Light Rail (design-build), South Florida 

Commuter Rail Upgrades (design-build), Minnesota Metro Transit 

Hiawatha Corridor Light Rail Transit (design-build), Bay Area Rapid 

Transit Extension to San Francisco International Airport (design-build), 

Washington Metropolitan Area Transit Authority Largo Metrorail 

Extension (design-build), Hudson-Bergen Light Rail Transit Minimum 

Operating Segment 1 (design-build-operate-maintain), Hudson-Bergen 

Light Rail Transit Minimum Operating Segment 2 (design-build-operatemaintain), John F. Kennedy Airtrain (design-build-operate-maintain), 

Portland MAX Airport Extension (design-build), and Las Vegas Monorail 

(design-build-finance-operate-maintain). We also included 3 ongoing 

transit projects as part of the universe: Bay Area Rapid Transit Oakland 

Airport Connector (design-build-operate-maintain), Denver Regional 

Transportation District East Corridor and Gold Line pilot projects (designbuild-finance-operate-maintain), and Houston Metro North and Southeast 

Corridor pilot projects (design-build-operate-maintain). Second, we 

determined that we would focus solely on projects that have or are 

expected to go through the Federal Transit Administration’s (FTA) New 

Starts process given that this is the largest capital grant program for transit 

projects and that any such projects would be reviewed to protect the 

public interest (i.e., projects not entirely funded by the private sector). 

This eliminated the John F. Kennedy Airtrain, Portland MAX Airport 

Extension, and Las Vegas Monorail projects. Third, we applied three of 

four criteria from FTA’s Report to Congress1

 to the remaining projects, 

including (1) project costs were reduced, (2) project duration was 

shortened, and (3) project quality was maintained or enhanced.2

 This 

eliminated the South Florida Commuter Rail Upgrades, Hudson-Bergen 

Light Rail Transit Minimum Operating Segment 1 and Minimum Operating 

Segment 2, and the Bay Area Rapid Transit Extension to San Francisco 

International Airport. 

We decided to select all three of the ongoing pilot projects—Bay Area 

Rapid Transit Oakland Airport Connector, Denver Regional Transportation 

District East Corridor and Gold Line, and Houston Metro North and 

 

1

Department of Transportation, Report to Congress on the Costs, Benefits, and 

Efficiencies of Public-Private Partnerships for Fixed Guideway Capital Projects 

(December 2007). 

2

FTA did not have sufficient information for most projects related to the fourth criterion—

procuring agencies funding sources were leveraged or enhanced. Therefore, we omitted 

this criterion. 

Page 44 GAO-10-19 Private Sector Role in Transit Projects
Appendix I: Scope and Methodology 

Southeast Corridors—given that FTA views these projects as currently 

having the most private sector potential and thus designated them as their 

three Public-Private Partnership Pilot Program projects. We also decided, 

given our limited resources, to select two of the remaining three 

completed projects—Minnesota Metro Transit Hiawatha Corridor and 

Denver Regional Transportation District Transportation Expansion—as 

DOT’s Report to Congress identified these two projects as having 

successful collaborations with their respective departments of 

transportation, including their highway counterparts, which have greater 

experience than transit in using alternative project delivery and alternative 

financing. This eliminated the Washington Metropolitan Area Transit 

Authority Largo Metrorail Extension. These projects were selected 

because they are recent examples of ongoing and completed transit 

projects in the United States that incorporated greater private sector 

involvement through the use of alternative project delivery or financing 

approaches or both. 

To select which international countries we would include as part of our 

review of alternative financing and project delivery practices, we 

conducted a literature review of international transit public-private 

partnerships as well as conducted interviews with DOT officials, project 

sponsors, industry representatives, and academic experts to identify the 

potential universe of countries with significant experience in transit 

public-private partnerships, including projects that fit at least one 

(alternative project delivery or alternative financing) or both of our 

established definitions. Second, we determined that we would collect the 

most valuable and relevant information from countries that share a similar 

political and cultural structure to the United States. Third, given our 

limited resources, we decided to select only two of the three remaining 

countries. Thus, we ultimately identified Canada and the United Kingdom 

for our international site visits. Issues discussed in the report related to 

the interpretation of foreign law, including the character of public-private 

partnership agreements, and their limitations, were evaluated as questions 

of fact based upon interviews and other supporting documentation. 

To determine how transit projects that use alternative approaches have 

been used in the United States, we collected and reviewed descriptions of 

the projects, copies of the concession or development agreements, 

planning documents, and documentation related to the financial structure 

of the projects in addition to academic, corporate, and government 

reports. We conducted, summarized, and analyzed in-depth interviews 

with project sponsors and private sector participants about their 

experiences with alternative financing and procurement in transit projects. 

Page 45 GAO-10-19 Private Sector Role in Transit Projects
Appendix I: Scope and Methodology 

We also reviewed pertinent federal legislation and regulations, including: 

Federal Register Notices and guidance for FTA’s Public-Private 

Partnership Pilot Program and the New Starts Program; DOT’s Report to 

Congress on the Costs, Benefits, and Efficiencies of Public-Private 

Partnerships for Fixed Guideway Capital Projects; and other DOT reports. 

To identify the potential benefits and potential limitations of transit 

projects that use alternative approaches, and what barriers project 

sponsors face in the United States, we conducted, summarized, and 

analyzed in-depth interviews with domestic project sponsors and private 

sector participants including private investors, financial and legal advisors, 

project managers, and contractors. In addition to these domestic experts, 

we conducted extensive interviews with various international 

stakeholders, experts, and private sector officials from Canada and the 

United Kingdom that were knowledgeable in greater private sector 

participation in the financing and procurement of transit projects. We also 

conducted a literature review; summarized and analyzed key benefits, 

limitations, and barriers to greater private sector participation; and 

interviewed FTA and other federal and local officials associated with the 

projects we selected as well as private sector officials involved with 

United States transit public-private partnership arrangements. 

To determine how project sponsors and DOT can protect the public 

interest in transit projects that use alternative approaches, we conducted 

site visits of selected transit public-private partnerships and visited the 

United Kingdom and Canada, which both had more experience conducting 

transit public-private partnerships. We conducted, summarized, and 

analyzed in-depth interviews with project sponsors, private sector 

participants, international stakeholders, and experts regarding the 

competitive procurement process, robust concession agreements, and 

Value for Money analyses, among other topics. We also examined 

international mechanisms that were implemented for projects including 

Croydon Tramlink, Docklands Light Railway, London Underground, 

Manchester Metrolink, and Nottingham Express Transit in the United 

Kingdom and the Canada Line in Vancouver, Canada, to provide insight on 

how project sponsors and DOT can protect the public interest in transit 

projects that use alternative approaches. We also held in-depth interviews 

with FTA on its steps to protect the public interest in federally funded 

transit projects with greater private sector participation including 

programs like FTA’s Public-Private Partnership Pilot Program and the New 

Starts Program. 

Page 46 GAO-10-19 Private Sector Role in Transit Projects
Appendix I: Scope and Methodology 

We conducted this performance audit from October 2008 through October 

2009 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. 

Page 47 GAO-10-19 Private Sector Role in Transit Projects
Appendix II: 

A

GAO Contact and Staff 

cknowledgments 

Page 48 GAO-10-19 

Appendix II: GAO Contact and Staff 

Acknowledgments 

Susan Fleming, (202) 512-2834 or FlemingS@gao.gov 

In addition to the individual named above, Steve Cohen, Assistant 

Director; Jay Cherlow; Patrick Dudley; Carol Henn; Bert Japikse; Joanie 

Lofgren; Maureen Luna-Long; Amanda K. Miller; Tina Paek; Amy 

Rosewarne; Tina Won Sherman; and Jim Wozny made key contributions to 

this report. 

GAO Contact 

Staff 

Acknowledgments 

 Private Sector Role in Transit Projects 
Related GAO Products Related GAO Products 

Equal Employment Opportunity: Pilot Projects Could Help Test 

Solutions to Long-standing Concerns with the EEO Complaint Process.

GAO-09-712. Washington, D.C.: August 12, 2009. 

Public Transportation: Better Data Needed to Assess Length of New 

Starts Process, and Options Exist to Expedite Project Development. 

GAO-09-784. Washington, D.C.: August 6, 2009. 

Public Transportation: New Starts Program Challenges and Preliminary 

Observations on Expediting Project Development. GAO-09-763T. 

Washington, D.C.: June 3, 2009. 

High Speed Passenger Rail: Future Development Will Depend on 

Addressing Financial and Other Challenges and Establishing a Clear 

Federal Role. GAO-09-317. Washington, D.C.: March 19, 2009. 

Highway Public-Private Partnerships: More Rigorous Up-Front Analysis 

Could Better Secure Potential Benefits and Protect the Public Interest.

GAO-08-1149R. Washington, D.C.: September 8, 2008. 

Public Transportation: Improvements Are Needed to More Fully Assess 

Predicted Impacts of New Starts Projects. GAO-08-844. Washington, D.C.: 

July 25, 2008. 

Highway Public-Private Partnerships: Securing Potential Benefits and 

Protecting the Public Interest Could Result from More Rigorous Up-front 

Analysis. GAO-08-1052T. Washington, D.C.: July 24, 2008. 

Highway Public-Private Partnerships: More Rigorous Up-front Analysis 

Could Better Secure Potential Benefits and Protect the Public Interest.

GAO-08-44. Washington, D.C.: February 8, 2008. 

Federal-Aid Highways: Increased Reliance on Contractors Can Pose 

Oversight Challenges for Federal and State Officials. GAO-08-198. 

Washington, D.C.: January 8, 2008. 

Railroad Bridges and Tunnels: Federal Role in Providing Safety 

Oversight and Freight Infrastructure Investment Could Be Better 

Targeted. GAO-07-770. Washington, D.C.: August 6, 2007. 

Public Transportation: Future Demand Is Likely for New Starts and 

Small Starts Programs, but Improvements Needed to the Small Starts 

Application Process. GAO-07-917. Washington, D.C.: July 27, 2007. 

Page 49 GAO-10-19 Private Sector Role in Transit Projects
Related GAO Products 

Public Transportation: Preliminary Analysis of Changes to and Trends 

in FTA’s New Starts and Small Starts Programs. GAO-07-812T. 

Washington, D.C.: May 10, 2007. 

Public Transportation: New Starts Program Is in a Period of Transition.

GAO-06-819. Washington, D.C.: August 30, 2006. 

Public Transportation: Preliminary Information on FTA’s 

Implementation of SAFETEA-LU Changes. GAO-06-910T. Washington, 

D.C.: June 27, 2006. 

Equal Employment Opportunity: DOD’s EEO Pilot Program Under Way, 

but Improvements Needed to DOD’s Evaluation Plan. GAO-06-538. 

Washington, D.C.: May 5, 2006. 

Highways and Transit: Private Sector Sponsorship of and Investment in 

Major Projects Has Been Limited. GAO-04-419. Washington, D.C.: 

March 25, 2004. 

(541047) Page 50 GAO-10-19 Private Sector Role in Transit Projects
GAO’s Mission The Government Accountability Office, the audit, evaluation, and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and policies; 

and provides analyses, recommendations, and other assistance to help 

Congress make informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of 

accountability, integrity, and reliability. 

The fastest and easiest way to obtain copies of GAO documents at no cost 

is through GAO’s Web site (www.gao.gov). Each weekday afternoon, GAO 

posts on its Web site newly released reports, testimony, and 

correspondence. To have GAO e-mail you a list of newly posted products, 

go to www.gao.gov and select “E-mail Updates.” 

Obtaining Copies of 

GAO Reports and 

Testimony 

Order by Phone The price of each GAO publication reflects GAO’s actual cost of 

production and distribution and depends on the number of pages in the 

publication and whether the publication is printed in color or black and 

white. Pricing and ordering information is posted on GAO’s Web site, 

http://www.gao.gov/ordering.htm. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 

TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card, 

MasterCard, Visa, check, or money order. Call for additional information. 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470 

Ralph Dawn, Managing Director, dawnr@gao.gov, (202) 512-4400 

U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Washington, DC 20548 

To Report Fraud, 

Waste, and Abuse in 

Federal Programs 

Congressional 

Relations 

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800 

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548 

Public Affairs 

Please Print on Recycled Paper