Recovery Act: Use of Transportation Funds, Outcomes, and Lessons Learned
Published: 2011-05-04T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The American Recovery and Reinvestment Act of 2009 (Recovery Act) provided more than $48 billion to the Department of Transportation (DOT) to be distributed through existing programs and through two new competitive grant programs--high speed intercity passenger rail and the Transportation Investment Generating Economic Recovery (TIGER) program. As requested, this testimony addresses the (1) status and use of Recovery Act transportation funds, (2) outcomes and long-term benefits of Recovery Act transportation investments, and (3) lessons learned from DOT's and states' experiences implementing the Recovery Act. GAO reviewed prior and ongoing work, federal legislation, and guidance. GAO also analyzed Recovery Act data and interviewed federal, state, and local officials.
section_title: What GAO Found
paragraphs: As of March 31, 2011, more than $45 billion (about 95 percent) of Recovery Act transportation funds had been obligated for over 15,000 projects nationwide, and more than $26 billion had been expended. States and other recipients continue to report using Recovery Act funds to improve the nation's transportation infrastructure. Highway funds have been primarily used for pavement improvement projects and transit funds have been primarily used to upgrade transit facilities and purchase new vehicles. Recovery Act funds have also been used to rehabilitate airport runways and improve Amtrak's infrastructure. DOT continues to obligate funds for its high speed intercity passenger rail and TIGER grant programs. As of March 31, 2011, DOT had obligated nearly all of the $1.5 billion in TIGER funds for 51 surface transportation projects. The Recovery Act helped to fund transportation jobs, but long-term benefits are unclear. For example, according to available data, Recovery Act transportation projects supported about 50,000 full-time equivalents (FTE) in the three months from October through December 2010. The most recent data showed that highway projects accounted for about two-thirds of the transportation FTEs reported, and the remaining one-third of the FTEs were attributed to transit and other transportation projects. However, the impact of Recovery Act investments in transportation is unknown, and GAO has recommended that DOT determine the data needed to assess the impact of these investments. Although DOT has set broad performance goals for its high speed intercity passenger rail and TIGER programs--and is currently evaluating the best methods for measuring objectives and collecting data--it has not committed to assessing the long-term benefits of the Recovery Act investments in transportation. Certain Recovery Act provisions meant to stimulate the economy, but not typically required under existing DOT programs, proved challenging. For example, GAO has reported on numerous challenges DOT and states faced in implementing the transportation maintenance-of-effort requirement, which required states to maintain their planned levels of spending over approximately 18 months or be ineligible to participate in the August 2011 redistribution of obligation authority under the Federal-Aid Highway Program. A January 2011 preliminary DOT report found that 29 states met the requirement while 21 states did not. In this report, DOT also discussed how the maintenance-of-effort provision could be improved. With regard to the high speed intercity passenger rail and TIGER programs, GAO found that while DOT generally followed recommended grant-making practices, DOT could have better documented its award decisions. For example, the Federal Railroad Administration could have developed clearer records for how it made award decisions. Without a clear record of selection decisions, DOT is vulnerable to criticism about the integrity of its decisions. Likewise, DOT did not clearly document its final decisions and rationale for selecting recommended TIGER projects. This testimony does not include new recommendations. In our past work, GAO recommended that the Secretary of Transportation take several actions, such as directing the Federal Highway and Federal Transit administrations to determine the data needed to assess the impact of Recovery Act projects; we recently recommended that the Federal Railroad Administration and DOT better document decisions regarding their competitive grant programs. DOT has addressed some GAO recommendations, but others remain open. We will continue to track them. GAO provided a draft of this statement to DOT and incorporated its comments where appropriate.

section_title: Letter
paragraphs: We are pleased to be here today to discuss our observations on  Department of Transportation (DOT) programs funded under the  American Recovery and Reinvestment Act of 2009 (Recovery Act).  Congress enacted the Recovery Act in response to a serious economic  crisis to, among other things, preserve and create jobs, promote economic  recovery across the nation, and invest in transportation and other  infrastructure to provide long-term economic benefits. We have noted that,  given the nation’s long-term fiscal challenges, any economic stimulus  package should be timely, targeted, and temporary. The Recovery Act  provided more than $48 billion for transportation investments just over a  year after the onset of the recession, and stipulated that most of the funds  be obligated by September 30, 2010. The Recovery Act targeted the  majority of transportation funds for investments in infrastructure,  including airports and air navigation facilities, roads and bridges, public  transit systems, and high speed intercity passenger rail.
The Recovery Act assigned several roles to GAO, including reviewing how  selected states and localities used funds made available under the act. As  part of those reviews, we examined how Recovery Act transportation  funds are being used and whether they are achieving the act’s stated  purposes. We also recently issued reports on two competitive grant  programs funded under the Recovery Act, including the Federal Railroad  Administration’s (FRA) high speed intercity passenger rail program and  the Transportation Investment Generating Economic Recovery (TIGER)  grant program administered by the Office of the Secretary of  Transportation, both of which we discuss in this statement.
Our statement is based on our recently completed and ongoing work, and  addresses the (1) status and use of Recovery Act transportation funds, (2)  outcomes and long-term benefits of Recovery Act transportation  investments, and (3) challenges and key lessons learned from DOT’s and  states’ experiences implementing the Recovery Act. We conducted all of  our work in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to produce 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 statement  today. Additional information on our scope and methodology is available  in each issued report.
subsections: section_title: Background
paragraphs: The vast majority of the $48.1 billion of Recovery Act funding for  transportation programs went to the Federal Highway Administration  (FHWA), FRA, and the Federal Transit Administration (FTA) for highway,  road, bridge, rail, and transit projects. Indeed, more than half of all  Recovery Act transportation funds were designated for the construction,  rehabilitation, and repair of highways, roads, and bridges (see fig. 1). The  remaining funds were allocated among other DOT operating  administrations.
DOT administered most Recovery Act funds through existing  transportation programs. For example, highway funds were distributed  under rules governing the Federal-Aid Highway Program generally and the  Surface Transportation Program in particular. DOT also established new  grant processes to award high speed intercity passenger rail and TIGER  grants. For these programs, DOT published selection criteria, solicited and  reviewed applications, and awarded grants to applicants that it judged best  met the criteria and complied with legislative and regulatory requirements.
The Recovery Act included obligation deadlines to indicate the temporary  nature of the funds and to facilitate their timely use. Therefore, the  Recovery Act identified short deadlines for obligating most transportation  funds, and it required that preference be given to projects that could be  started and completed expeditiously. For example, highway and transit  funds were to be fully obligated by September 30, 2010. All TIGER funds  must be obligated by September 30, 2011, and all high speed intercity  passenger rail funds must be obligated by September 30, 2012.
The Recovery Act also introduced new requirements for existing programs  to help ensure that funds add to states’ and localities’ overall economic  activity, and are targeted to areas of greatest need. For example, the  Recovery Act required governors of each state to certify that their state  will maintain its planned level of spending for the types of transportation  projects funded by the act and also required states to give priority to  projects in economically distressed areas.
State and local agencies, contractors, and others that receive Recovery Act  funding are required to submit quarterly reports on the number of jobs  created or retained, among other data. These job calculations are based on  the number of hours worked in a quarter and funded under the Recovery  Act—expressed in full-time equivalents (FTE)—but they do not account  for the total employment arising from the expenditure of Recovery Act  transportation funds. That is, the data recipients report do not include  employment at suppliers (indirect jobs) or in the local community  (induced jobs).
section_title: Most Recovery Act Transportation Funds Have Been Obligated, and Expenditures for Infrastructure Continue to Increase
paragraphs: According to DOT data, as of March 31, 2011, DOT had obligated more  than $45 billion (about 95 percent) on over 15,000 projects and had  expended more than $26 billion (about 59 percent) of the $48.1 billion it  received under the Recovery Act (see table 1).
States and other recipients continue to report using Recovery Act funds to  improve the condition of the nation’s transportation infrastructure, as well  as invest in new infrastructure. For example, according to DOT data,  highway funds have been primarily used for pavement improvement  projects, such as resurfacing, reconstruction, and rehabilitation of existing  roadways, and public transit funds have been used primarily for upgrading  transit facilities and purchasing new vehicles (see fig. 2).
New ridge contrction ($0.5)
Operting assnce ($0.2)
Bridge improvement ($1.2)
Bridge replcement ($1.4)
Ril cr prchas nd rehabilittion ($0.3)
New contrction ($1.8)
Preventive mintennce ($0.8)
Other ($3.3)
Other cpitl expen($1.0)
Pvement widening ($4.7)
Vehicle prchas nd rehabilittion ($2.0)
Pvement improvement: resurfce ($6.1)
Trit infrastrctre ($4.5)
Pvement improvement: recontrction/rehabilittion ($7.1)
Transit obligations include Recovery Act funds that were transferred from FHWA to FTA. The  category “other” includes safety projects, such as improving safety at railroad grade crossings;  engineering; right-of-way purchases; and transportation enhancement projects, such as pedestrian  and bicycle facilities. “Transit infrastructure” includes engineering and design, acuisition,  construction, and rehabilitation and renovation activities. “Other capital expenses” includes leases,  training, finance costs, mobility management project administration, and other capital programs.
Highway data are as of December 1, 2010, and transit data are as September 0, 2010.
Recovery Act funding for aviation is reported to have gone to  rehabilitating and reconstructing airfield runways and taxiways, as well as  air navigation infrastructure such as air traffic control towers, engine  generators, back-up batteries, and circuit breakers. The Recovery Act  grant provided to Amtrak has been used to make infrastructure  improvements and return cars and locomotives to service. Because high  speed intercity passenger rail and TIGER were new grant programs, the  Recovery Act allowed additional time for DOT to develop criteria, publish  notices of funding availability for each program, and award grants. As a  result, projects selected for high speed intercity passenger rail and TIGER  were announced about a year after enactment, and DOT has been making  progress obligating Recovery Act funds for these programs. For example,  DOT selected one intercity passenger rail project to rehabilitate track and  provide service from Portland to Brunswick, Maine, at speeds up to 70  miles per hour. Another project was selected to initiate the first part of  California’s high speed rail system, which envisions service at more than  200 miles per hour between Los Angeles, San Francisco and the Central  Valley, and eventually, San Diego. DOT’s TIGER grants funded projects  across different surface transportation modes, including highways, transit,  rail, and ports. For example, the California Green Trade Corridor/Marine  Highway project is a collaborative effort of three regional ports in  California to develop and use a marine highway system as an alternative to  existing truck and rail infrastructure for transporting consumer goods and  agricultural products.
According to DOT, a variety of Recovery Act projects have been  completed. Approximately 68 percent of the completed highway projects  involve pavement improvement, according to FHWA, and completed  transit projects generally included preventative maintenance activities and  some vehicle purchases and facility construction, according to FTA.  Amtrak had also completed a variety of projects, including construction  station upgrades, right-of-way improvements, installing communications  and signaling systems, and replacing aging bridges, among other things.  While no high speed intercity passenger rail projects had been completed  as of March 31, 2011, 15 projects were under way, according to FRA. These  projects, which represent more than two-thirds of the allotted funding,  include track and signaling work to improve reliability and increase  operating speeds, improvements to stations, and the environmental  analysis and preliminary engineering required to advance projects to  construction.
section_title: The Recovery Act Helped Fund Transportation Jobs, but Long-Term Benefits Are Unclear
paragraphs: Recovery Act funds helped pay for jobs across various transportation  modes. At a time when the construction industry was experiencing  historically high unemployment and many states could not afford to  maintain existing infrastructure, transportation officials we met with told  us that the Recovery Act helped to keep the transportation industry in  operation while allowing states to tackle some of their infrastructure  maintenance priorities. According to the most recent recipient reported  data, Recovery Act transportation projects supported about 50,000 FTEs  from October 2010 through December 2010. Transportation recipients  reported the highest FTE counts during the quarter that ended September  2010, when many projects were under way (see fig. 3).
For the most recent reporting quarter, highway projects accounted for  approximately two-thirds of the transportation FTEs reported, and the  remaining one-third of FTEs were attributed to transit and all other  transportation projects. The relatively low portion of FTEs reported for all  other transportation projects is expected to rise in future reporting  quarters as more high speed intercity passenger rail and TIGER program  funds are obligated and projects get under way.
While FTEs reported for the high speed intercity passenger rail and TIGER  programs are expected to increase as these projects get under way, other  program areas have reported fewer FTEs in the most recent reporting  quarter. Recipient reported data for the quarter ending December 31, 2010,  showed fewer recipients reporting than in the previous quarter across all  program areas (highways, transit, and other). This may indicate that more  projects were completed in the quarter ending December 31, 2010, than  were started. Also in that quarter, the percentage of recipients that  reported any FTEs decreased compared to the previous quarter, which  may indicate that some projects are essentially completed but not closed  out financially or may reflect interruptions in work due to winter weather  for some projects in colder climates.
Although recipients reported jobs funded, other long-term impacts of  Recovery Act investments in transportation are unknown at this point.  Transportation officials in several states we visited told us that Recovery  Act funds helped reduce backlogs of “shovel-ready” resurfacing projects.  Some states have efforts under way to report on Recovery Act benefits,  but federal and state officials told us that attributing transportation  benefits to Recovery Act funds can be difficult, particularly when projects  are funded from multiple sources or when historic performance data is not  available for particular projects.
We recommended that DOT ensure that the results of Recovery Act  projects are assessed and a determination is made about whether these  investments produced long-term benefits. Specifically, in the near term,  we recommended that FHWA and FTA determine the types of data and  performance measures needed to assess the impact of the Recovery Act  and the specific authority they may need to collect data and report on  these measures. DOT officials told us that they expect to be able to report  on Recovery Act outputs, such as miles of roads paved, bridges built or  repaired, and transit vehicles purchased, which will help to assess the act’s  impact. DOT will not be able to report on outcomes, such as reductions in  travel time. DOT has not committed to assessing the long-term benefits of  Recovery Act investments in transportation. DOT stated that limitations in  its data systems, coupled with the fact that Recovery Act funds  represented only about one year of additional funding for some  transportation programs, would make assessing the benefits of Recovery  Act projects difficult. We continue to believe, however, that it is important  for organizations to measure performance to understand the progress they  are making toward their goals and to produce a set of performance  measures that demonstrates results.
For Recovery Act high speed intercity passenger rail and TIGER grant  programs, DOT has set broad performance goals and required recipients to  identify potential project benefits. Specifically, FRA has outlined goals for  developing high speed intercity passenger rail service in its strategic plan  and national rail plan and evaluated grant proposals based on the potential  project benefits they intended in their applications. However, the  identified goals are broad—such as providing for transportation safety and  economic competitiveness—and do not contain specific targets necessary  to determine how or when FRA will realize intended benefits. DOT also  incorporated performance measures tailored to each TIGER grant  awardee based on the project design and the capacity of the recipient to  collect and evaluate data. DOT is evaluating the best methods for  measuring objectives and collecting data and is working collaboratively  with applicants to weigh options for measuring performance. As many  TIGER projects are just being initiated, the effectiveness of these  measures will not be clear for some time.
section_title: Recovery Act Requirements Proved Challenging for DOT and Some States, Leading to Several Lessons Learned
paragraphs: Federal, state, and local transportation officials we contacted reported  that while Recovery Act transportation funds provided many positive  outcomes, they also provided lessons learned that may be relevant as  Congress considers the next surface transportation reauthorization. In  addition, our reports on high speed intercity passenger rail and the TIGER  grant program identified a number of challenges and key lessons learned.
subsections: section_title: Maintenance of Effort and Economically Distressed Area Requirements Proved Challenging
paragraphs: Certain Recovery Act provisions not typically required under existing DOT  programs proved challenging for some states to meet. We found that it  may have been difficult for states to meet these requirements for a number  of reasons, including rapidly changing state economic conditions.  Confusion among the states as to how to interpret and apply the new  requirements was also a contributing factor.
Maintenance of effort. We have reported that there were numerous  challenges for DOT and states in implementing the transportation  maintenance-of-effort provision in the Recovery Act. This provision  required the governor of each state to certify that the state would maintain  its planned level of transportation spending from February 17, 2009,  through September 30, 2010, to help ensure that federal funds would be  used in addition to, rather than in place of, state funds and thus increase  overall spending. A January 2011 preliminary DOT report indicated that 29  states met their planned levels of expenditure, and 21 states did not. States  had a monetary incentive to meet their certified planned level of spending  in each transportation program area funded by the Recovery Act because  those that fail will not be eligible to participate in the August 2011  redistribution of obligation authority under the Federal-Aid Highway  Program. States had until April 15, 2011, to verify their actual  expenditures for transportation programs covered by the Recovery Act.  DOT is reviewing this information to determine if any more states met  their planned levels of spending.
The DOT preliminary report summarized reasons states did not meet their  certified planned spending levels, such as experiencing a reduction in  dedicated revenues for transportation due to a decline in state revenues or  a lower-than-expected level of approved transportation funding in the  state budget. The preliminary report also identified a number of  challenges DOT encountered in implementing the provision, such as  insufficient statutory definitions of what constitutes “state funding” or  how well DOT guidance on calculating planned expenditures would work  in the many different contexts in which it would have to operate. As a  result, many problems came to light only after DOT had issued initial  guidance and states had submitted their first certifications. DOT issued  seven pieces of guidance to clarify how states were to calculate their  planned or actual expenditures for their maintenance-of-effort  certifications.
DOT invested a significant amount of time and work to ensure consistency  across states on how compliance with the maintenance-of-effort provision  is certified and reported. As a result, DOT is well-positioned to understand  lessons learned—what worked, what did not, and what could be improved  in the future. DOT and state officials told us that while the maintenance-of- effort requirement can be useful for ensuring continued investment in  transportation, more flexibility to allow for differences in states and  programs, and to allow adjustments for unexpected changes to states’  economic conditions, should be considered for future provisions. For  example, the Recovery Act allows the Secretary of Education to waive  state maintenance-of-effort requirements under certain circumstances and  allows states to choose the basis they use to measure maintenance of  effort. The maintenance-of-effort requirement for transportation  programs proved difficult for states to apply across various transportation  programs because of different and complicated revenue sources to fund  the programs. Many states did not have an existing means to identify  planned transportation expenditures for a specific period and their  financial and accounting systems did not capture that data. Therefore,  according to DOT, a more narrowly focused requirement applying only to  programs administered by state DOTs or to programs that typically receive  state funding could help address maintenance-of-effort challenges.
Consideration of economically distressed areas. Our previous reports  have identified challenges DOT faced in implementing the Recovery Act  requirement that states give priority to highway projects located in  economically distressed areas. For example, while an economically  distressed area is statutorily defined, we found that there was substantial  variation in how some states identified economically distressed areas and  the extent to which some states prioritized projects in those areas. We  reported instances of states developing their own eligibility requirements  for economically distressed areas using data or criteria not specified in the  Public Works and Economic Development Act. Three states—Arizona,  California, and Illinois—developed their own eligibility requirements or  interpreted the special-needs criterion in a way that overstated the number  of eligible counties, and thus the amount of funds, directed to  economically distressed areas. Officials in these three states told us that  they did so to respond to rapidly changing economic conditions. In May  2010, we recommended that DOT advise states to correct their reporting  on economically distressed area designations, and in July 2010 FHWA  instructed its division offices to advise states with identified errors to  revise their economically distressed area designations. In September 2010,  we recommended that DOT make these data publicly available to ensure  that Congress and the public have accurate information on the extent to  which Recovery Act funds were directed to areas most severely affected  by the recession and the extent to which states prioritized these areas in  selecting projects for funding. DOT recently posted an accounting of the  extent to which states directed Recovery Act transportation funds to  projects located in economically distressed areas on its website, and we  are in the process of assessing these data.
Most states we visited as part of our ongoing Recovery Act oversight  considered the requirement to prioritize projects in economically  distressed areas in addition to other immediate and long-term  transportation goals, as the Recovery Act required. For example, officials  in Washington state said that they considered federally-recognized  economically distressed areas as one of several criteria when selecting  projects. Other criteria included state economic data and projects that  would be ready to proceed in a short amount of time. However, state  officials were also uncertain what the economically distressed area  requirement was intended to accomplish, such as whether it was intended  to provide jobs to people living in those areas or to deliver new  infrastructure to those areas. The economically distressed area provision  proved difficult to implement because of changing economic conditions,  and it is unclear that it achieved its intended goal.
section_title: Better Documentation Could Reduce Challenges to the Integrity of Selection Decisions for High Speed Intercity Passenger Rail and TIGER Grant Programs
paragraphs: We have reported that allocating federal funding for surface transportation  based on performance in general, and directing some portion of federal  funds on a competitive basis to projects of national or regional  significance in particular, can more effectively address certain challenges  facing the nation’s surface transportation programs. In our recent reports  on the high speed intercity passenger rail and TIGER programs, we found  that while DOT generally followed recommended grantmaking practices,  DOT could have documented more information about its award decisions.
The Recovery Act and the Passenger Rail Investment and Improvement  Act of 2008 required FRA to implement a plan to award and oversee  billions of dollars for high speed intercity passenger rail grants. This was  challenging for FRA as it did not have a large-scale grantmaking  infrastructure in place and had to develop that capability within a short  time frame to meet Recovery Act goals. We mostly found that FRA  substantially followed recommended practices for awarding these grants,  including communicating key information to applicants and planning for  the grant competition. However, one area in which FRA could have done  better is to develop clearer records for how it made final grant award  decisions. Specifically, while FRA maintained detailed records on how  officials evaluated applications on technical merit, the documented  reasons for making final grant selections were typically vague and  provided little insight into why projects were or were not selected. In  addition, FRA provided only general reasons for adjusting applicants’  requested funding amounts. We recommended that FRA should better  document the rationales for award decisions in any future high speed and  intercity passenger rail funding rounds by including substantive reasons  why individual projects are or are not selected and for any changes made  to requested funding amounts. Without a clear record of selection  decisions, FRA is vulnerable to criticism about the integrity of its  decisions. This is important because FRA has already been criticized for  its award decisions and for providing incremental improvements to  existing systems rather than providing more funds to meet the  administration’s expectations of developing a true national high speed rail  intercity passenger network.
To evaluate the more than 1,450 TIGER grant applications it received, DOT  developed criteria to assess the merits of these projects. We evaluated  these criteria and concluded that DOT had followed key federal guidance  and standards. The criteria clearly indicated that projects should produce  long-term benefits, such as improving the state of repair of existing  transportation infrastructure, reducing fatalities and injuries, and  improving the efficient movement of workers or goods. To apply its  criteria, DOT used 10 Evaluation Teams of five reviewers to conduct a  technical review of all applications. The evaluators drafted narratives  explaining their assessments, assigned ratings such as “highly  recommended” and “recommended,” and advanced those that best met the  criteria for further review. A Control and Calibration Team, made up of  senior staff from the Office of the Secretary of Transportation, also  selectively reviewed and advanced applications throughout the process to  ensure consistency across Evaluation Teams’ ratings and to help meet  statutory requirements such as an equitable distribution of funds. The  Evaluation Teams advanced 115 highly recommended applications. The  Control and Calibration Team advanced an additional 50 recommended  applications as well as 1 application that was not recommended. Together,  the teams advanced 166 applications for further review. The TIGER  Review Team—composed of 12 senior DOT officials, such as the Deputy  Secretary and cognizant operating administrators—reviewed those 166  applications. This team—which considered a broader set of factors than  the Evaluation Teams, including project readiness and whether expected  project benefits outweighed costs—developed a final list of 51 projects  that it recommended to the Secretary of Transportation for award. All 51  projects were accepted by the Secretary, and the awards were announced  on February 17, 2010.
Of the 51 applications that received awards, 26 were from the highly  recommended applications advanced by the Evaluation Teams and the  other 25, which received one-third of the TIGER funds, were from the  recommended applications advanced by the Control and Calibration Team  (see fig. 4).
While DOT thoroughly documented the Evaluation Teams’ assessments  and the Review Team’s memorandum recommending projects to the  Secretary of Transportation for award described the strengths of projects  recommended for award, it did not document the Review Team’s final  decisions and its rationale for selecting recommended projects for half the  awards over highly recommended ones. DOT officials told us that some  highly recommended projects were not selected to achieve a more  equitable geographic distribution of award funds, as required by the  Recovery Act. Furthermore, our discussions with DOT officials indicated  that the Review Team raised some valid concerns about some highly  recommended projects, such as whether a project’s economic benefits  were overstated. However, without adequate documentation of final  decisions, DOT cannot definitively demonstrate the basis for its award  selections, particularly the reasons why recommended projects were  selected for half the awards over highly recommended ones. Developing  internal documentation is a key part of accountability for decisions, and  DOT guidance states that officials should explain how discretionary grant  projects were selected when projects with the highest priority in a  technical review were not funded. The absence of documentation can give  rise to challenges to the integrity of the decisions made, and DOT is  vulnerable to criticism that projects were selected for reasons other than  merit. We recommended that DOT document key decisions for all major  steps in the review of applications, particularly decisions in which lower- rated applications are selected for award over higher-rated applications,  and, in consultation with Congress, develop and implement a strategy to  disclose information regarding award decisions.
Both the high speed intercity passenger rail and TIGER programs  represent important steps toward investing in projects of regional and  national significance through a merit-based, competitive process. We  noted a natural tension between providing funding based on merit and  performance and providing funds on a formula basis to achieve equity  among the states as the formula approach can potentially result in projects  of national or regional significance that cross state lines and involve more  than one transportation mode not competing well at the state level for  funds. Given that the Recovery Act was intended to create and preserve  jobs and promote economic recovery nationwide, Congress believed it  important that TIGER grant funding be geographically dispersed. As we  noted in our recent report discussing the TIGER grant program, when  Congress considers future DOT discretionary grant programs, it may wish  to consider balancing the goals of merit-based project selection with  geographic distribution of funds and limit, as appropriate, the influence of  geographic considerations.
Chairman Mica, Ranking Member Rahall, and Members of the Committee,  this concludes my statement. I would be pleased to respond to any  questions at this time.
section_title: GAO Contact and Staff Acknowledgments
paragraphs: For further information regarding this statement, please contact Phillip R.  Herr at (202) 512-2834 or herrp@gao.gov or Susan A. Fleming at (202) 512- 2834 or flemings@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this  statement. Individuals making key contributions to this testimony were  Steve Cohen, Assistant Director; Heather MacLeod, Assistant Director;  James Ratzenberger, Assistant Director; Jonathan Carver; Matt Cook; John  Healey; Joah Iannotta; Bert Japikse; Delwen Jones; SaraAnn Moessbauer;  Josh Ormond; and Pamela Vines.
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