Project sponsors can begin constructing and operating New Starts projects upon the successful completion of specific project development milestones and upon obtaining an FFGA from FTA. To obtain an FFGA, project sponsors are required by law to go through a planning and project development process, which is divided into three phases: alternatives analysis, preliminary engineering, and final design, followed by construction. In the alternatives analysis phase of the New Starts process, project sponsors identify the transportation needs in the corridor and evaluate a range of modal and alignment alternatives to address the locally identified problems in a specific corridor. Project sponsors complete the alternatives analysis phase by selecting a locally preferred alternative (LPA), which is the New Starts project that FTA evaluates for funding. During the preliminary engineering phase, project sponsors refine the design of the LPA, taking into consideration all reasonable design options and estimating each option’s costs, benefits, and impacts (e.g., financial or environmental). When the preliminary engineering phase is completed and federal environmental requirements are satisfied, FTA may approve the project’s advancement into final design, after which FTA may recommend the project for an FFGA. To help inform administration and congressional decisions about which projects should receive federal funding, FTA distinguishes among proposed projects by evaluating and assigning ratings to various statutorily prescribed evaluation criteria—including both project justification and local financial commitment criteria—and then assigning an overall project rating. Once a project obtains an FFGA, the project sponsor can begin constructing and, subsequently, operating it. PMOCs oversee project sponsors’ management of New Starts projects, starting when a project prepares to enter the preliminary engineering phase and continuing through the beginning of operations. The main oversight reviews that a PMOC conducts before FTA recommends a project for an FFGA include an evaluation of the project’s risk, scope, cost, schedule, and project management plan, as well as the project sponsor’s technical capacity and capability. (See table 1.) In addition, PMOCs conduct monthly and quarterly oversight reviews. For some reviews that PMOCs conduct, such as real estate reviews, PMOCs retain the services of subcontractors with specific industry experience. PMOCs perform many of these reviews repeatedly throughout the New Starts process, tailoring them to the stage of a project’s development. For example, FTA directs PMOCs to review a project sponsor’s technical capacity and capability three times—before the project enters the preliminary engineering phase, enters the final design phase, and again when the sponsor requests an FFGA. According to FTA guidance, some reviews, such as the technical capacity and capability review, require more detail during the early stages of a project (i.e., during preliminary engineering); however, during later stages of a project (i.e., during final design or FFGA) these same reviews may only require an update of earlier findings. See appendix II for a full list and description of the reviews PMOCs conduct. In contrast to PMOCs, who focus on project management oversight, FMOCs oversee how project sponsors will fund the capital and operating costs of the proposed project as well as the existing systems. FMOCs conduct two types of financial assessments: Local financial commitment assessments are short, less detailed reviews which evaluate whether a project is supported by a stable and reliable capital financial plan and whether the project sponsor can fund the operations and maintenance of an existing transit system once the new transit project is built. These assessments also review the amount of funding that comes from sources other than New Starts, such as federal formula grants and state and local funding. Financial capacity assessments, which are more detailed reviews, analyze a project sponsor’s financial condition and capability to fulfill its current and future financial obligations. While PMOCs provide continuous oversight of projects, FMOCs have oversight responsibilities at defined points in the project development process. Specifically, FMOCs conduct financial assessments before a project enters preliminary engineering and final design stages and before an FFGA is awarded. Figure 1 illustrates the New Starts project development process and shows when PMOCs and FMOCs conduct their oversight. FTA officials rely on PMOCs and FMOCs to provide critical input into FTA’s decisions on project advancement and funding. This input— including the PMOCs’ and FMOCs’ findings, recommendations, and professional opinions—comes through reports that PMOCs and FMOCs submit to FTA on the results of their reviews, as well as through discussions that these contractors have with FTA officials on these results. PMOC oversight efforts help FTA ensure that a federally funded transit project’s scope, schedule, and cost are well developed and that the project’s design and construction conform to applicable statutes, regulations, and guidance. Furthermore, these efforts keep FTA informed of a project’s status and support FTA’s decision on whether to advance the project to the next phase of development or recommend the project for an FFGA. For example, FTA officials said that based on a PMOC’s technical capacity and capability review, they determined that a project sponsor did not have sufficient staff—such as engineers and senior project managers— with the requisite qualifications and experience to advance the project from the preliminary engineering to the final design phase. Separately, FMOCs help ensure that project sponsors have sufficient financial capacity to build and operate the proposed project as well as the existing system. Specifically, FTA uses the analyses and reports that FMOCs prepare, such as local financial commitment assessments, to develop each project’s local financial commitment rating. FTA also uses FMOCs’ financial assessments to anticipate financing problems and to foster dialog with project sponsors about their ability to carry out planned projects. For example, one FMOC we interviewed said its cash flow analysis of a project found that the sponsor’s forecast of the project’s schedule and cost would result in a cash flow shortfall. As a result, the relevant FTA regional office had an early indication of possible problems, and both FTA and the sponsor were able to proactively address the project’s financing issues. In another instance, the FMOC determined that the project sponsor, as part of the review of one of the 10 projects in our sample, did not have the financial capacity to move forward on a project, and because of this FMOC’s recommendation to FTA, FTA did not advance the project to the next phase of development. FTA procures project management and financial management oversight services in accordance with the Federal Acquisition Regulation (FAR), which prescribes uniform policies and procedures for all executive agencies to acquire goods and services. Under these contracts, PMOCs and FMOCs provide oversight services, such as those described earlier, to support FTA’s oversight of a number of grant programs, including New Starts. FTA awards contracts for PMOC oversight services for 5 years and for FMOC oversight services for a base year, with four 1-year options to extend, for a maximum of 5 years. Funding for these contracts is provided through statutory set-asides made available annually for specific FTA grant programs. FTA is currently authorized to use up to 1 percent of section 5309 capital investment program funds for oversight, whic includes PMOC and FMOC activities. Federal agencies have discretion to determine what services they need to procure and, based on the services being procured, what procurement procedures are appropriate. One of the guiding principles of the FAR is to deliver products or services that represent the “best value”—that is, the acquisition outcome that provides the greatest overall benefit in response to the agency’s requirements. An agency can obtain “best value” by using, for example, the General Services Administration’s (GSA) Multiple Award Schedule program or using competitive negotiations. To acquire the services of FMOCs, FTA follows procedures prescribed in the FAR. For local financial commitment assessments, it uses GSA’s Multiple Award Schedule, as described in the FAR, and for financial capacity assessments, FTA uses eligible firms certified under the Small Business Administration’s (SBA) 8(a) Business Development Program. FTA recently revised its approach to procuring PMOC services for two primary reasons, the first of which was to expand the pool of available PMOCs. Prior to 2009, FTA awarded contracts for PMOC services to architectural and engineering firms in accordance with the Brooks Act and its implementing regulations in the FAR, which prescribe specialized policies and procedures for procuring “architect-engineer services.” However, during the August 2004 through September 2009 contract period, a growing number of mergers and acquisitions reduced the pool of available architectural and engineering firms from 16 to 13. Partly in response to this decrease in the number of contractors, FTA officials reviewed the services its PMOCs were providing and determined that they did not constitute “architectural and engineering services” within the meaning of the Brooks Act and the FAR. Accordingly, FTA stopped using Brooks Act procedures and, in 2009, began using the competitive negotiation procedures described in the FAR. Negotiated acquisitions allow trade-offs between cost or price and noncost factors and allow the government to accept other than the lowest priced proposal, provided that each factor’s relative importance is clearly stated in the contract solicitation. As part of the 2009 procurement process, FTA officials said, they separately evaluated the technical and cost proposals of potential contractors and considered both qualifications and cost before starting negotiations, whereas under the Brooks Act and its implementing regulations, they had ranked competing firms on the basis of their qualifications and then started negotiations on cost. FTA’s second primary reason for changing its procurement procedures was to reduce the potential for conflicts of interest. Many of the contractors who FTA could potentially use as PMOCs have the knowledge and skills not only to oversee transit projects for FTA, but also to support project sponsors directly through an independent contract between the contractor and a project sponsor.