Welfare Reform: Competitive Grant Selection Requirement for DOT's Job Access Program Was Not Followed
Released: 2001-12-07T00:00:00

Letter

Background

TEA-21 authorized the Job Access program, through which DOT’s FTA provides grants to “qualified entities”—local agencies, nonprofit organizations, transit authorities, and others—to improve the mobility of welfare recipients and low-income individuals seeking employment.DOT’s two major goals for the program are to (1) provide transportation services in urban, suburban, and rural areas to assist welfare recipients and low-income individuals to gain access to employment opportunities and (2) increase collaboration among such parties as transportation providers, human service agencies, employers, metropolitan planning organizations, states, and communities in providing access to employment.

TEA-21 requires DOT to conduct a nationwide solicitation for Job Access grant applications and to select grantees on a competitive basis. TEA-21 also identifies factors for DOT to consider in awarding Job Access grants. These include the percentage of the population in the area to be served by a grant applicant who are welfare recipients, the need for additional services in the area to be served, the extent to which the proposed services would meet that need, and the extent to which an applicant identifies long-term financing strategies to support the services. In fiscal year 1999, FTA established a competitive selection process involving the evaluation of grant applications against published criteria, as well as the scoring and ranking of applications against each other on the basis of those evaluations. FTA selected and funded the highest ranked projects. FTA selects program grantees on an annual basis and makes no commitment for funding for more than 1 year. As a result, FTA undertakes a new selection process every year.

Under TEA-21, Job Access grants are subject to the terms and conditions applicable to recipients of urbanized area formula grants, as well as other terms and conditions established by DOT. After selecting projects for funding, FTA requires the applicants to provide assurances and documentation of compliance with these standard grant requirements, such as those concerning drug and alcohol testing, federal procurement standards, and state and regional transportation planning.

TEA-21 authorized up to $750 million for the program from fiscal year 1999 through fiscal year 2003. It also required DOT to allocate 60 percent of the program’s funds each year to projects in urban areas with populations of at least 200,000; 20 percent of the funds to projects in urban areas with populations of less than 200,000; and 20 percent of the funds to projects in nonurban areas. Job Access grantees are required to provide at least 50 percent matching funds from other sources, including other federal funds available for transportation services—for example, funds from the Temporary Assistance for Needy Families program.

FTA Noncompetitively Selected Most Job Access Projects for Fiscal Years 2000 and 2001

In response to funding designations contained in the conference reports accompanying DOT’s appropriations acts for fiscal years 2000 and 2001, FTA changed its selection process and adopted a two-track process for the selection of Job Access projects. Specifically, FTA adopted a noncompetitive process for the entities designated in the conference reports or applicants selected by those entities. FTA set aside funding for the designated entities and selected them without scoring and ranking their applications—that is, comparing them to those submitted by other applicants. FTA continued to implement its existing competitive process for other applicants. In fiscal years 2000 and 2001, FTA selected 199 projects for grants totaling $125 million on the basis of their designations in conference reports, rather than on the basis of its competitive review. According to FTA officials, the agency had determined that these projects met the program’s basic requirements and its selection criteria for competitively awarded grants. These 199 projects comprised about 61 percent of the 327 projects selected for grants during those 2 years and about 71 percent of the $175 million that was made available for the program during those 2 years.

The Department of Transportation and Related Agencies Appropriations Act for fiscal year 2000 provided $75 million for the Job Access program, and the conference report accompanying the appropriations act designated a total of $49.6 million in specified amounts for grants to identified states, localities, and other organizations. FTA’s March 2000 request for project proposals provided detailed information to prospective grantees, including requirements for eligibility and guidelines for preparing grant applications. It also set forth selection processes for entities identified in the conference report and other applicants, stating that Congress had allocated $49.6 million for specific states and localities and that the remaining $25.4 million, along with about $4 million in unobligated fiscal year 1999 funds, was available for competitive award.

FTA instructed entities identified in the conference report, or applicants selected by those entities, to submit applications responding to the same program selection criteria, including conformity with program requirements, as applicants for competitive awards. In addition, it advised applicants for “competitive grants” that—as in 1999—it would evaluate and score eligible applications according to four factors: (1) the degree of local coordination exhibited when a project was designed, (2) the demonstrated need for additional transportation services, (3) the extent to which proposed services would meet the need, and (4) the ability of an applicant to obtain resources to continue a project without grant funds. The notice indicated that, along with such factors as the time frame for implementation and the geographic distribution of project funding, these award criteria would provide the basis for project selections.

The Department of Transportation and Related Agencies Appropriations Act for fiscal year 2001 provided $100 million for the Job Access program, and the accompanying conference report designated about $75 million for identified states, localities, and other organizations. As in 2000, FTA proposed to allocate amounts to entities identified in the conference report for projects meeting basic program requirements, stating that it would “honor those allocated projects that meet the statutory intent of the program.” However, it did not solicit new proposals for competitive award; rather, it decided to make remaining selections from among proposals submitted in fiscal year 2000 that were not funded or only partially funded due to funding limitations in that year.

According to FTA, applicants for projects designated in the conference reports were notified by letter from the FTA regional administrators, as well as through its published notices, and instructed to submit project proposals addressing the criteria used for competitive awards, as well as standard FTA grant requirements. FTA officials noted that only those applications meeting the basic eligibility criteria for the Job Access program were awarded grants, explaining that FTA’s practice is to work with entities identified in the conference reports and include them in the program consistent with the underlying statutory requirements.

DOT’s Response to Conference Reports Decreased Opportunities to Fund Potentially More Promising Projects

During fiscal years 2000 and 2001, FTA’s two-track process for the selection of Job Access grantees decreased opportunities to fund projects that could have been identified as meritorious through the competitive evaluation process. Also, some projects selected in fiscal year 1999 were not selected for funding in fiscal years 2000 or 2001. As a result, according to grantee officials, some of these projects needed to reduce their services or ceased to operate.

Opportunities for Competitive Awards Were Significantly Decreased in Fiscal Years 2000 and 2001

In response to TEA-21, FTA designed a competitive process consistent with the factors identified in the statute to help ensure that the projects selected for funding would improve the access of low-income individuals to employment and employment-related services through coordinated efforts of transportation providers, human service agencies, and others. In fiscal year 1999, FTA allocated all of the program funds—$75 million—for projects that it had competitively selected by evaluating, scoring, and ranking them against each other. However, for fiscal years 2000 and 2001, FTA allocated $125 million out of the $175 million available to entities identified in the conference reports, or applicants selected by those entities, and only $50 million to competitively selected entities that were not identified in the conference reports. According to the Coordinator of the Job Access program and other program officials, as a result of funding projects designated in the conference reports, many other worthy projects could not be funded.

In fiscal year 2001, FTA did not solicit new proposals. Instead, it selected projects from among project proposals submitted for fiscal year 2000 that, according to FTA, were “meritorious” but had not been funded or had been only partially funded because of funding limitations. This change foreclosed opportunities for FTA to consider projects in fiscal year 2001 that may have been more promising than those actually selected in that year. In addition, FTA decreased the minimally acceptable score for project selection from 76.5 ranking points to 54.5 points. As a result, in fiscal year 2001, FTA selected some projects that it had evaluated and ranked in fiscal year 1999 or 2000 but had not found suitable for award in those years.

Some Projects Funded in Fiscal Year 1999 Did Not Receive Additional Job Access Funding

According to FTA program officials and grantees, the decrease in funding for competitively selected projects during fiscal years 2000 and 2001 meant that about one-fifth of the fiscal year 1999 Job Access projects did not receive continued funding. To explore the impact of the reduction in funding available for competitive grants, we sent a questionnaire to 186 fiscal year 1999 grantees. About 83 percent of these grantees—or 155— responded to our questionnaire. These respondents generally indicated they were satisfied or very satisfied with the Job Access program. Eighty- five percent said that they were satisfied with how the Job Access program has enabled their organization to help people get to work. However, 19 percent of the respondents—or 30 of them—faced reduced or discontinued funding during fiscal years 2000 and 2001. Furthermore, eight grantees reported that funding interruptions caused them to decrease the scope of service of their projects. For example, the Chesapeake Bay Agency on Aging (Urbanna, VA) reported that funding disruptions, accompanied by an inability to secure funding from alternative sources, resulted in some route cancellations and cutbacks in the number of riders served and the lengths of some routes. The Chesapeake Bay Agency on Aging and the Richmond (VA) Transit Authority stated that these service disruptions caused a loss of credibility with their clientele and cost some passengers their jobs. Three grantees that reported funding lapses said that, after their services were interrupted, they could not obtain alternative sources of funding, and their Job Access projects were permanently discontinued.

FTA’s Process for Selecting Grantees in Fiscal Years 2000 and 2001 Was Not Consistent With TEA- 21

In fiscal years 2000 and 2001, FTA selected 199 projects (about 61 percent of the 327 Job Access projects selected in those years) noncompetitively, based on language in the conference reports that accompanied the fiscal year 2000 and 2001 appropriations acts. This language designated specific dollar amounts for grants to states, localities, and organizations. FTA officials said that in administering the program, FTA complied with applicable statutory requirements for nationwide solicitation and competitive selection, while taking into account congressional views as expressed in this report language.

Section 3037 of TEA-21, which established the Job Access program, authorizes the Secretary of Transportation to make grants to assist qualified entities with financing eligible projects. It directs the Secretary to conduct a national solicitation for grant applications, and it requires that grantees be selected on a competitive basis. Although the statute does not define the phrase “competitive basis,” it does identify several factors for the Secretary to consider in awarding grants, including the percentage of welfare recipients in the population of the area to be served, the need for additional services, and the degree of coordination with existing transportation service providers. In implementing TEA-21, FTA combined the statutory factors into the four essential elements referenced in its March 2000 request for grant applications and assigned points to each, on the basis of relative importance. In December 2000, we concluded that FTA’s program guidance and practices of evaluating and comparing program applicants were appropriate for helping to ensure that grantees would be competitively selected on a consistent basis.

The fiscal year 2000 and 2001 appropriations acts for the Department of Transportation and Related Agencies made specified amounts available for the award of Job Access grants under section 3037. Although the conference reports accompanying those acts contained language designating entities for project funding, the designations were not carried over into the appropriations acts. It is well established that conference report language and other legislative history, indicating how funds should be spent, do not impose legally binding requirements; nor does legislative history supersede or repeal existing statutory requirements. Accordingly, FTA had no authority to use a noncompetitive process for the selection of Job Access grantees, including those designated in the conference reports.

In response to our inquiries concerning FTA’s legal justification for its practices in fiscal years 2000 and 2001, FTA officials emphasized that— notwithstanding the designations in the conference reports—only those applications meeting the eligibility criteria in section 3037 were awarded grants and that projects of questionable eligibility were specifically reviewed by the Office of Chief Counsel to ensure eligibility. FTA officials also said that the selection of Job Access projects reflected the requirement of section 3037 to allocate 60 percent of the available funds to large urban areas, 20 percent to mid-sized urban areas, and 20 percent to rural areas. According to Job Access program officials, including the Coordinator, FTA determined how many of the projects from entities identified in the conference reports fell into each funding category. FTA set aside funds for these projects in anticipation of awarding them grants. FTA then awarded grants with the remaining funds in each funding category to projects selected under the competitive process. FTA acknowledged that it did not undertake any effort to compare applications from entities identified in the conference reports to other applications for Job Access funds. While TEA-21 does not define “competitive basis,” competition necessarily requires the evaluation and comparison of applications for limited funding against other applications before making selections.

We have not assessed individual projects selected for Job Access grants in fiscal years 2000 and 2001 for compliance with program eligibility requirements or FTA’s processes for compliance with overall funding limitations. Thus, while we have determined that FTA’s two-track process for the award of Job Access grants did not conform to the statutory requirement to select grantees on a competitive basis, we have no basis to conclude that any specific grants, including those made as a result of conference report language, failed to satisfy the basic eligibility criteria or were otherwise not worthy of funding. In this respect, FTA has acknowledged the importance of ensuring that all grants, including grants to entities designated in conference reports, meet the requirements of the Job Access program.

Conclusion

In response to language in conference reports that accompanied DOT’s fiscal year 2000 and fiscal year 2001 appropriations acts, FTA implemented a noncompetitive selection process for entities designated in those reports, or applicants selected by those entities. At the same time, FTA sought to satisfy the requirements of TEA-21 by continuing to use a competitive process for grant applicants not designated in the conference reports. The noncompetitive process implemented by FTA did not satisfy the requirements of section 3037 of TEA-21. In addition, FTA’s manner of implementing the program in fiscal years 2000 and 2001 decreased its opportunities to select projects that were potentially more promising.

Recommendation

We recommend that, in the absence of statutory authority to select Job Access grantees on a noncompetitive basis, the Secretary of Transportation ensure that future grants to entities designated in conference reports, including grants to applicants selected by those entities, be made on a competitive basis.

Agency Comments and Our Evaluation

We provided copies of the draft report to the Department of Transportation for review and comment. DOT officials, including the Coordinator of the Job Access program and representatives from FTA’s Chief Counsel’s office provided verbal comments regarding our draft report. Overall, DOT officials stated that in implementing the program, FTA complied with applicable statutory requirements for nationwide solicitation and competitive selection, while taking into account congressional views as expressed in appropriations report language.

According to DOT officials, TEA-21 requires DOT to (1) conduct a nationwide solicitation for Job Access grant applications, and (2) select grantees on a competitive basis. According to DOT officials, FTA solicited applications through a broad agency announcement published in the Federal Register, and letters addressed to entities identified in appropriations report language. DOT agrees that report language and other legislative history indicating how funds should be spent do not impose legally binding requirements, nor supersede or repeal statutory requirements. However, it also emphasizes that the statutory language does not define the term “competitive selection,” leaving that to agency discretion. According to DOT officials, the agency employed separate competitive selection processes in fiscal years 2000 and 2001 for evaluating applications received in response to the different solicitation methods. DOT indicated that both pools of applicants were required to meet all statutory criteria for award. DOT maintains that both selection methods were competitive and represent a reasonable exercise of agency discretion in complying with applicable statutory requirements for nationwide solicitation and competitive selection, while taking into account congressional views, as expressed in appropriations report language.

DOT also stated that the draft report could benefit by more fully discussing the results of GAO’s survey. For example, DOT noted that 85 percent (132 of 155 respondents) were satisfied with the program, while 12 percent (19 of 155) had no opinion, and only 3 percent (4 of 155) were dissatisfied. DOT maintains that this high level of satisfaction among its partners clearly demonstrates FTA’s effective implementation of this very important program.

We agree that Congress left the determination of exactly how to implement the requirement of TEA-21 to select grantees “on a competitive basis” to FTA’s discretion. However, we do not agree that FTA employed competitive methods in selecting all Job Access grantees during this period or that the two-track approach it adopted in implementing the Job Access program represented a reasonable exercise of agency discretion. As noted in this report, the competitive selection of grantees necessarily requires a comparison of applications for available funding against each other, rather than a mere determination that they meet the criteria for award. Although DOT asserted that FTA used a competitive selection process for entities identified in the conference reports accompanying the fiscal year 2000 and 2001 appropriations acts, DOT officials also stated that FTA did not compare applications from entities designated in these conference reports, either to each other or to applications from entities that were not so designated. Applications from entities designated in the conference reports were neither scored nor ranked but were selected on the basis of the conference report language. FTA’s public notices support this characterization of FTA’s approach. These notices did not describe FTA’s process for those entities identified in the conference reports as “competitive”; rather, they distinguished between funds “reserved for specific projects” and funds “available for competitive award.” Importantly, FTA’s description of its Job Access formula proposal clearly stated with reference to the fiscal year 2000 and 2001 conference reports that “earmarking of funds does not allow for projects to emerge from a competitive process.” Therefore, DOT has not provided us with any basis to agree with its view that projects for entities identified in conference reports were competitively selected or to change our recommendation.

Regarding DOT’s comments concerning the results of our survey of fiscal year 1999 Job Access grantees, we have incorporated additional information about the survey in our report. However, the survey does not show whether FTA implemented the program effectively. Our survey’s respondents made no statement about FTA’s overall effectiveness in implementing the program. Instead, respondents generally indicated they were satisfied or very satisfied with how the program enabled them to help people get to work. As indicated in appendix III, respondents identified areas for improvement in the program’s implementation.

Scope and Methodology

TEA-21 requires us to report on DOT’s implementation of the Job Access program. As discussed in appendix I, we have issued four reports addressing various aspects of the program since May 1998. In connection with our last two reviews, we met with FTA officials, grantees, and others who suggested that funding designations contained in the conference reports accompanying the Department of Transportation and Related Agencies Appropriations Acts for fiscal years 2000 and 2001 had a significant impact on the operation of the program. In addition, in proposing the allocation of Job Access funds by formula, FTA stated that the funding designations resulted in many highly worthy applicants not receiving funding and pointed out that such designations did not allow some projects to emerge successfully from a competitive process. Accordingly, this report examines the Job Access program in fiscal years 2000 and 2001.

Specifically, this report addresses (1) how DOT implemented the program in fiscal years 2000 and 2001, including its response to funding designations contained in conference reports in those fiscal years; (2) the impact on the program of DOT’s response to the funding designations; and (3) whether the manner in which DOT interpreted and applied the conference report funding designations in fiscal years 2000 and 2001 was consistent with applicable statutory requirements. To address the first and second objectives, we interviewed FTA officials, examined Job Access program documentation, and conducted a mail survey of all of the fiscal year 1999 Job Access program grantees (see app. III). The rate of response to our survey was about 83 percent. A detailed description of our scope and methodology appears in appendix II. We also reviewed the strategic plans and reports that DOT filed under the Government Performance and Results Act of 1993. To address the third objective we reviewed the requirements of TEA-21, the appropriations acts for fiscal years 2000 and 2001, and applicable case law. We also sent a letter of inquiry to FTA to obtain its explanation of the actions taken in response to the designations in the conference reports that accompanied DOT’s appropriations acts for fiscal years 2000 and 2001. Our review focused on FTA’s processes for implementing the Job Access program. Our objectives did not include reviewing individual grants made in fiscal years 1999, 2000, or 2001 and the associated projects, or individual grant applications under the Job Access program. We conducted our review from July 2001 through November 2001 in accordance with generally accepted government auditing standards.

We are sending copies of this report to the cognizant congressional committees; the Secretary of Transportation; the Administrator, Federal Transit Administration; and other interested parties. We will make copies available to others on request. If you have any questions about this report, please call me at (202) 512-2834 or E-mail me at heckerj@gao.gov. Key contributors to this report are listed in appendix IV.

Appendix I: Brief Description of Previous GAO Reports on the Job Access Program

Without adequate transportation, welfare recipients face significant barriers in moving from welfare to work. In 1998, Congress found that three-fourths of welfare recipients lived in central cities or rural areas, but two-thirds of new, entry-level jobs were located in the suburbs. Public transportation facilities, such as buses or subways, often offer limited or no access to many of these jobs. Although the jobs can be reached by car, many welfare recipients do not have cars. To address this mismatch, the Transportation Equity Act for the 21st Century (TEA-21) authorized up to $750 million for fiscal years 1999 through 2003 to implement the Job Access and Reverse Commute (Job Access) program. The program authorizes the Department of Transportation (DOT) to provide grants to local agencies, nonprofit organizations, transit authorities, and others to improve transportation to employment. Within DOT, the Federal Transit Administration (FTA) is responsible for implementing the program. From fiscal year 1999 through 2001, FTA selected Job Access projects for grants totaling $247 million for 368 Job Access projects.

To date, we have issued four reports on the program: in May 1998—before the program was established—as well as in November 1999, December 2000, and August 2001. In May 1998, we reported that the proposed Job Access program would support reform of the nation’s welfare system by, among other things, providing additional resources to transport welfare recipients to work. We recommended that DOT (1) establish specific objectives, performance criteria, and goals for measuring the program’s progress; (2) require grantees to coordinate transportation strategies with local job placement and other social service agencies; and (3) work with other federal agencies to coordinate welfare-to-work activities. TEA-21 reflected these recommendations and required appropriate action by DOT.

In November 1999, we reported on the implementation of the program in fiscal year 1999—its first year. We found that DOT had implemented our second and third recommendations in carrying out TEA-21. DOT had also taken preliminary steps to implement our recommendation that it establish specific objectives, performance criteria, and goals for measuring the program’s progress. However, we also found that DOT’s process for selecting Job Access grant proposals was not consistent in fiscal year 1999, and the basis for some selections was unclear.

Our December 2000 report examined DOT’s implementation of the program in fiscal year 2000. We found that DOT had taken steps to improve its process for selecting Job Access proposals. For example, to promote greater consistency in the evaluation and selection of grantees, DOT developed a standard format for reviewing Job Access proposals and provided more detailed guidance to its reviewers. Almost 90 percent of the fiscal year 1999 Job Access grantees that responded to a GAO survey were satisfied with the goals and intent of the program. However, 51 percent said that satisfying various standard FTA grant requirements took too long—about 9 months, on average. As a result, about one-third of respondents reported experiencing problems in obtaining matching funds. Also, seven projects were withdrawn (about 4 percent of Job Access projects) for varied reasons, including, in one case, the loss of matching funds. Also, DOT implemented our recommendation that it develop specific objectives, performance criteria, and measurable goals for the Job Access program by developing an evaluation plan and by requesting specific data from the grantees. DOT developed a goal to increase new employment sites by 4,050 in fiscal year 2000 and 8,050 in fiscal year 2001.

Our August 2001 report provided our preliminary observations on (1) DOT’s proposal to use a formula for allocating grant funds to the states, (2) the status of obligations for the Job Access program, and (3) DOT’s plans for reporting on the program to the Congress. At the time of our report, DOT had proposed a change to the Job Access program, beginning in fiscal year 2002, under which it would allocate funding to the states via a formula, instead of to individual grantees. DOT proposed this change in response to language in the conference reports accompanying DOT’s appropriations acts for fiscal years 2000 and 2001 that designated Job Access funding for specific states, localities, and organizations. Second, as of August 7, 2001, DOT had obligated 94 percent of the funds for fiscal year 1999, 67 percent of the funds for fiscal year 2000, and 20 percent of the funds for fiscal year 2001. Third, DOT had missed its June 2000 deadline for a status report to the Congress but expected to report instead in September 2001. However, as of November 26, 2001, DOT had not sent the report to Congress.

Appendix II: Objectives, Scope, and Methodology

TEA-21 requires us to report on FTA’s implementation of the Job Access program. This report examines (1) how DOT implemented the Job Access program in fiscal years 2000 and 2001, including its response to funding designations in conference reports in those fiscal years; (2) the impact on the program of DOT’s response to the funding designations; and (3) whether the manner in which DOT interpreted and applied the conference report funding designations in fiscal years 2000 and 2001 was consistent with applicable statutory requirements.

To describe FTA’s continued implementation of the Job Access program in fiscal years 2000 and 2001, we obtained and analyzed documents and interviewed FTA officials about the agency’s solicitation, selection, and award procedures and how these were implemented. We also asked agency management to explain any changes made in the implementation of the program for projects selected in fiscal years 2000 and 2001.

We examined the consequences of changes in the manner in which FTA selected Job Access proposals by obtaining and analyzing FTA’s records regarding projects selected for award during fiscal years 1999 through 2001, including the operating status of the associated projects during those years and those projects that were withdrawn. In addition, we conducted a mail survey of the fiscal year 1999 grantees. (See app. III for the questionnaire and the results.) FTA identified 186 Job Access projects for fiscal year 1999. We mailed questionnaires to each of these grantees and received responses from 155 of them—a response rate of 83 percent as of September 30, 2001.

To examine the legality of FTA’s approach to the solicitation and selection of grantees in fiscal years 2000 and 2001, we reviewed TEA-21, the appropriations acts for fiscal years 2000 and 2001, and applicable case law. We also obtained the views of cognizant agency officials. Specifically, we asked FTA about its legal justification for its approach to implementing the Job Access program regarding entities identified in the conference reports accompanying recent DOT appropriations acts. Our examination was limited to FTA’s processes and did not include a review of awards designated to particular states, local governments, or organizations.

Appendix III: Survey of Fiscal Year 1999 Access to Jobs Program Grant Recipients

Appendix IV: GAO Contact and Staff Acknowledgments

GAO Contact

Acknowledgments

In addition, Sam Abbas, Alan Belkin, Helen Desaulniers, Ernie Hazera, Alex Lawrence, Bonnie Pignatiello Leer, Sara Ann Moessbauer, LuAnn Moy, and Frank Taliaferro made key contributions to this report.