Financial and Procurement Performance

Improved financial performance is a key aspect of improving the government's performance. Knowing the full cost of the Department's and HTF's goods and services is a prerequisite to good program management. Good financial stewardship, excellent and efficient procurement and acquisition systems, and improved financial performance are cornerstones of excellent Departmental management. To achieve this goal, the Department has implemented Department-wide systems for accounting, procurement, personnel, and travel.

Financial Management

HTF received an unqualified or “clean” opinion on its FY 2003 and FY 2004 financial statements. Despite this success in FY 2003 and FY 2004, the audit identified material weaknesses and reportable conditions that the HTF modes, and principally FHWA, must address for future statement audits. During FY 2004, the HTF modes took significant corrective actions to improve financial management and accountability for those weaknesses identified in FY 2003.

FHWA

FHWA aggressively continued efforts to resolve problems identified from the conversion to the Department's new corporate accounting system, as reflected in the FY 2003 Financial Statement audit. In this light, FHWA completed the reconciliation of critical accounts for FY 2004 as part of an ongoing effort to produce sound data and financial statements. FHWA also developed and issued a wide range of financial management policies and procedures. These policies and procedures address financial statement preparation, reconciliation of accounts, journal voucher management, preparation of grant accruals, and suspense processing.

Finally, FHWA developed a plan for all finance-related positions in the field and at headquarters. As part of strengthening financial management, a special team was formed to review field financial positions, assess future direction for filling positions, and make recommendations for training and work activities to support strong financial management practices.

NHTSA

NHTSA developed “Financial Facts,” a series of charts and graphs that present financial and performance information to managers for decision-making. “Financial Facts” is an analytical tool, comparing year-to-date data (and when applicable, also performance) on each grant program for the last four years. This effort is one of four Departmental “proof of concept” pilots initiated in FY 2004 to demonstrate how financial information can be captured and made readily available to identify cost accounting information and reports. The financial data is pulled from the Departmental accounting system, summarizing the standardized cost information reporting from states and territories to NHTSA.

FMCSA

FMCSA made significant improvement to its financial processes. In FY 2004, FMCSA transferred its accounting and bill paying functions from FHWA to the Federal Aviation Administration's (FAA) operation in Oklahoma. FMCSA also instituted new business tools to promote fiscal discipline, reliability, and accountability. These actions enabled FMCSA to accelerate the production of financial statements, improve consistency between audited statements and internal reporting databases, and assist in adhering to the Department's accelerated end-of-year financial reporting and close out dates.

The table below depicts the performance measures and goals for Financial Stewardship. FHWA and FTA each had a part to improve the financial management and project management of mega-projects (projects with costs over $1 billion) identified as the first two measures.

FINANCIAL STEWARDSHIP – DEPARTMENTAL PERFORMANCE MEASURES AND GOALS

Performance Measures	Modal Administration	FY 2001 Actual	FY 2002 Actual	FY 2003 Actual	FY 2004 Target	FY 2004 Actual	FY 2004 Results
For major federally-funded infrastructure projects, percentage that meet schedule milestones established in project or contract agreements, or miss them by less than 10 percent	FHWA, FTA	N/A1 (Target N/A1)	85 (Target 95)	88 (Target 95)	95	95	Met
For major federally-funded infrastructure projects, percentage that meet cost estimates established in project or contract agreements, or miss them by less than 10 percent	FHWA, FTA	N/A 1 (Target N/A1)	85 (Target 95)	88 (Target 95)	95	75	Not Met
Percentage of transit grants obligated within 60 days after submission of a completed application	FTA	51 (Target N/A1)	67 (Target 60)	83 (Target 80)	80	91	Met

FY 2004 Results: The Department met its target to achieve 95 percent of schedule milestones for major federally-funded transportation infrastructure projects, or missed those milestones by less than 10 percent.

The Department did not meet its goal to achieve 95 percent of cost estimates for major federally-funded transportation infrastructure projects, or missed them by less than 10 percent. There were a total of 16 projects (4 in FTA and 12 in FHWA) that met the definition of major transportation infrastructure projects. In FY 2004, 12 of 16 projects (3 in FTA and 9 in FHWA) were within cost estimates established.

The Department met its transit grant obligation timeliness target.

Challenge

The OIG has stated that the Department's ability to achieve its strategic goals of increased mobility, improved safety, and sustained economic growth undoubtedly will be challenged in the face of an unprecedented federal deficit of about $374 billion. Aggressive oversight is needed to ensure that the over $37 billion annual federal investment in highway and transit projects is well managed and protected from fraud. Improvements to project oversight and efficiency can have major results. The Department must also ensure that all tax dollars due to the HTF are received.

FHWA

In 2004, FHWA issued new guidance on cost estimation for major projects. Such estimates are central to establishing the basis for key project decisions, establishing the metrics against which project success will be measured, and communicating the status of a project at any given point in time. Logical and reasonable cost estimates are also necessary in maintaining public confidence and trust throughout the life of a major project. FHWA recognizes that cost increases over and above the early planning and environmental estimates for major transportation projects have become an increasing concern to Congressional and political leaders, Federal and State executives, and auditing agencies.

To strengthen oversight on all construction projects in addition to mega-projects, FHWA issued the Construction Program Management and Inspection Guide to all its Division offices. A follow-up workshop will be delivered later in calendar year 2004. This document provides guidance on performing construction oversight at the program and project level. The guide focuses on construction inspection practices and techniques that can be used for ensuring effective oversight, and reflects current philosophy on construction program management and stewardship.

FTA

FTA had four mega projects (active New Starts projects with FFGAs that exceed $1 billion). The four projects are: New Jersey Hudson-Bergen – MOS II Light Rail, San Juan Tren Urbano Heavy Rail, Denver Southeast Corridor Project, and Seattle Central Link Light Rail. Three of these projects (New Jersey Hudson-Bergen, Denver Southeast Corridor, and the Seattle Central Link Light Rail) were within 10 percent of the cost estimate of their current FFGAs. San Juan Tren Urbano was 36 percent over the cost estimate in its current FFGA. FTA is working closely with the grantee to address the cost, schedule, and program management issues. Three of these projects (New Jersey Hudson-Bergen, Denver Southeast Corridor, and Seattle Central Link Light Rail) were within 10 percent of the schedule milestones of the current FFGAs.

FTA also initiated a risk assessment program for its major capital projects. The risk assessment for project cost and schedule is performed by FTA's Project Management Oversight (PMO) contractor and identifies and ranks the highest areas of risk. The report is then used as a guide to establish a risk mitigation plan with which to monitor risk through the completion of the project. The risk assessment received in FY 2004 enabled FTA and the grantee to proactively manage projects.

As part of its grant management improvement program, FTA accomplished several key activities to improve grant processing time. This included making improvements to the Transportation Electronic Award and Management (TEAM) system used to make grants, an expedited notification of certification by the Department of Labor, and faster start up of the grant process at the beginning of the fiscal year. In addition, FTA modified its internal business processes to expedite grant processing.

FTA obligated 91 percent of grants within 60 days, including some grant applications received in FY 2003 and obligated in FY 2004. As of the end of FY 2004, FTA had obligated 1,757 grants in 60 days or less. The average days-to-award was 30 days.