Joseph W. Com é Assistant Inspector General Surface and Maritime Program Audits

1. American Recovery and Reinvestment Act of 2009:Challenges Facing the Department of Transportation and the Office of Inspector General’s Strategy for Promoting Accountability Joseph W. Comé Assistant Inspector General Surface and Maritime Program Audits U.S. Department of Transportation WEBINAR July 29, 2009

2. Recovery Act Provided Billions to DOT, Adding New Challenges on Top of Longstanding Ones • Over $48 billion across aviation, highway, transit, maritime, and rail programs. • Funded existing programs, mandated new ones, and added substantial new requirements. • Department challenged to meet reporting and tracking requirements, oversee billions infused into existing programs, and create new mandated programs. • OIG’s response: assembled a team of auditors, investigators, and attorneys; developed a phased strategy; and initiated a new strategic planning effort.

3. Need For Accountability Is Critical • President and Congress emphasized accountability, efficiency, and transparency. • Recognized the role of Inspectors General and the Government Accountability Office. • Created the Recovery Accountability and Transparency Board. • Office of Management and Budget mandated additional requirements, e.g., weekly financial reports, to ensure effective implementation. • DOT’s initial actions included creation TIGER team and development of risk assessment tool.

4. OIG’s Risk-Based Strategy for Overseeing the Recovery Act : 3 Phased Approach • Phase 1: Conduct comprehensive review of prior to identify major challenges facing DOT and ongoing work with a direct link to the Recovery Act (completed- issued March 2009 comprehensive report) • Phase 2: Conduct structured reviews, or scans, of DOT agencies to identify vulnerabilities (underway) • Phase 3: Conduct audits of high-risk areas based on prior work and new areas identified during our scans

5. Results of Phase 1 Comprehensive Report:Major Challenges Facing DOT • Based on our review of prior work, we see three major Recovery Act oversight challenges facing DOT: • Ensuring that DOT’s grantees properly spend Recovery Act funds. • Implementing new accountability requirements and programs mandated by the Recovery Act in an effective manner. • Combating fraud, waste, and abuse. • Linked each challenge to 10 focus areas where prior work highlighted vulnerabilities.

6. Ensuring That Dot’s Grantees Properly Spend Recovery Funds- Related Focus Areas • Acquire sufficient personnel with relevant expertise to oversee grantees. • Adhere to existing Federal requirements for programs funded under the Act. • Evaluate the credibility and completeness of cost and schedule estimates. • Oversee grantees’ contracting management activities and ensure selection of appropriate contract types. • Address internal control weaknesses and identify unused funds for use on other eligible projects.

7. Implementing New Accountability Requirements and Programs Mandated By the Recovery Act- Related Focus Areas • Implement new Recovery Act tracking and reporting requirements that are designed to promote accountability and transparency. • Develop comprehensive plans and sound criteria for the new discretionary grant and passenger rail programs within statutory deadlines. • Develop appropriate oversight strategies for the new discretionary grant and passenger rail programs.

8. Combating Fraud, Waste, and Abuse- Related Focus Areas • Enhance understanding among DOT staff, grantees, and their contractors on how to recognize, prevent, and report potential fraud to the appropriate authorities. • Take timely and effective action to suspend or debar individuals or firms that have defrauded the Department so they do not receive future Federal contracts.

9. Phase 2: Agency Scans to Identify Major Vulnerabilities and Needed Improvements or Course Corrections • Evaluate vulnerabilities that could impede DOT’s ability to (1) provide effective oversight to recovery program projects and (2) meet new requirements mandated by the Recovery Act and OMB, including financial and job creation reporting. • Conduct scans at modes receiving recovery funds: FHWA, FRA, FTA, OST, FAA, and MARAD. • Use a standardized methodology, including assessment of actions DOT has taken or planned to address our 10 focus areas.

10. Timely Reporting of Results to Maximize Impact and Affect Change • Develop new reporting formats and expeditiously communicate results to ensure that DOT, Congress, and taxpayers have real-time information related to these scans. • Issue advisories to DOT as we identify vulnerabilities that warrant immediate attention—two advisories issued to date. • Issue a capstone report on the results of the scans for all of DOT this summer.

11. Phase 3: Long-term Audit Plan Focusing on High-Risk Areas • Use the results of agency scans to identify new areas that warrant additional work and reporting based on potential risks. • Develop a long-term plan outlining our Recovery Act audit and investigative initiatives and any supplementary skills needed. • Remain committed to protecting the Federal investment over the long term.

12. Conclusions • Need sustained efforts to ensure accountability, efficiency, and effectiveness. • OIG’s focus: assisting DOT officials in their efforts by identifying vulnerabilities, making recommendations for program improvements, and using new reporting techniques. • Recognize the importance of collaboration across the accountability community to best protect taxpayer interests and promote achievement of the Recovery Act’s goals.

13. For More InformationSee http://www.oig.dot.gov/recovery • DOT OIG Economic Recovery Oversight Plan • American Recovery and Reinvestment Act: DOT’s Implementation Challenges and the OIG’s Strategy for Continued Oversight of Funds and Programs • Testimonies: American Recovery and Reinvestment Act: DOT’s Implementation Challenges and the OIG’s Strategy for Continued Oversight of Funds and Programs- April 29, 2009 (House) and April 30, 2009 (Senate) • OIG’s Monthly Financial & Activity Report