    U.S. Infrastructure: Agencies' Approaches to Developing
    Investment Estimates Vary (20-JUL-01, GAO-01-835).

    The federal government has spent an average of $149 billion (in
    constant 1998 dollars) annually since the late 1980s on the
    nation's infrastructure. A sound public infrastructure plays a
    vital role in encouraging a more productive and competitive
    national economy and meeting public demands for safety, health,
    and improved quality of life. The federal government plays a
    prominent role in identifying the nation's infrastructure
    investment needs. Little, however, is known about the
    comparability and reasonableness of individual agencies'
    estimates for infrastructure needs. This report discusses
    information on infrastructure investment or "needs" estimates
    compiled by seven agencies--the U.S. Army Corps of Engineers,
    Environmental Protection Agency (EPA), Federal Aviation
    Administration (FAA), Federal Highway Administration (FHWA),
    Federal Transit Administration (FTA), General Services
    Administration (GSA), and the Appalachian Regional Commission
    (ARC). GAO focuses on the following infrastructure areas--water
    resources (inland and deep draft navigation, flood control, and
    shore protection), hydropower, water supply, wastewater
    treatment, airports, highways, mass transit, and public
    buildings. For these seven agencies and specified types of public
    infrastructure, GAO reviews (1) the agencies' estimates for
    infrastructure investment and how the estimates compare in terms
    of how they are developed and used and (2) the extent to which
    the agencies' procedures for developing the estimates embody
    practices of leading government and private-sector organizations.
    GAO found that the estimates ranged from GSA's calculation of
    $4.58 billion (in current dollars) over one to five years to
    repair public buildings to FHWA's estimate of $83.4 billion (in
    constant 1997 dollars) per year over 20 years to improve
    highways. The estimates prepared by the Army Corps (for water
    resources and hydropower) and GSA are for federal spending; the
    other estimates are for spending from federal, state, and local
    sources. Each of the seven agencies developed their investment
    estimate using data from localities, states, or agency regional
    offices. The estimates, however, were developed using different
    analytical procedures. The investment estimates cannot be easily
    compared or simply "added up" to produce a national estimate of
    infrastructure investment needs because of differences in the
    methods used, time periods covered, and spending sources. Each of
    the seven agencies has procedures for developing infrastructure
    investment estimates that reflect eight practices used by leading
    government and private sector organizations. No agency has
    procedures for all eight leading practices. The Army Corps has
    the highest conformance to the leading practices, with procedures
    that reflect six of the eight practices. Among the agencies, FHWA
    and FTA come closest to reflecting an important leading
    practice--conducting comprehensive assessments of the investments
    needed to meet outcomes by focusing on the amounts needed to
    maintain or improve the condition and performance of highways and
    transit systems.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-01-835
        ACCNO:   A01429
      TITLE:     U.S. Infrastructure: Agencies' Approaches to Developing
                 Investment Estimates Vary
         DATE:   07/20/2001
      SUBJECT:   Mass transit funding
    	     Public roads or highways
    	     Budget outlays
    	     Federal property management
    	     Comparative analysis
    	     Private sector practices
    	     Future budget projections
    	     Water supply management
    	     Wastewater management
    	     Public works
    	     Land management
    	     Appalachian Highway System
    	     Drinking Water State Revolving Fund
    	     FTA Transit Economic Requirements Model

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    GAO-01-835

    Report to the Ranking Minority Member, Subcommittee on Clean Air, Wetlands,
    Private Property, and Nuclear Safety

    United States General Accounting Office

    GAO

    July 2001 U. S. INFRASTRUCTURE Agencies? Approaches to Developing Investment
    Estimates Vary

    GAO- 01- 835

    Page i GAO- 01- 835 U. S. Infrastructure Letter 1

    Results in Brief 2 Background 4 Agencies? Procedures Reflect Some Leading
    Practices, but This

    Does Not Guarantee Accurate Estimates 17 GAO Observations 26 Agency Comments
    27

    Appendix I Objectives, Scope, and Methodology 29

    Appendix II Agencies? Infrastructure Investment Estimates 33

    Appendix III Comments From the Environmental Protection Agency 57

    Appendix IV Comments From the General Services Administration 59

    Appendix V GAO Contacts and Staff Acknowledgments 62

    Tables

    Table 1: Selected Agencies? Infrastructure Investment Estimates 12 Table 2:
    Federal Agencies and Types of Infrastructure Included in

    the Report 29 Table 3: Investment Estimates for Mass Transit 51

    Figures

    Figure 1: Selected Agencies? Roles in Developing Infrastructure 6 Figure 2:
    Infrastructure Spending for Selected Agencies, Fiscal

    Years 1990 Through 1999 9 Contents

    Page ii GAO- 01- 835 U. S. Infrastructure

    Figure 3: Agencies? Application of Leading Practices For Determining
    Investment and Funding Decisions 18 Figure 4: Selected Leading Practices
    Related to Infrastructure

    Investment Estimates 32 Figure 5: Strengths and Limitations of ARC?s
    Investment Estimate

    for Highways 34 Figure 6: Strengths and Limitations of the Army Corps?
    Investment

    Estimate for Water Resources and Hydropower Facilities 37 Figure 7:
    Strengths and Limitations of EPA?s Investment Estimate

    for Drinking Water Facilities 39 Figure 8: Strengths and Limitations of
    EPA?s Investment Estimate

    for Wastewater Facilities 42 Figure 9: Strengths and Limitations of FAA?s
    Investment Estimate 44 Figure 10: Strengths and Limitations of FHWA?s
    Investment

    Estimate 46 Figure 11: Strengths and Limitations of FTA?s Investment

    Estimates 50 Figure 12: Strengths and Limitations of GSA?s Investment

    Estimates 53

    Page 1 GAO- 01- 835 U. S. Infrastructure

    July 20, 2001 The Honorable George V. Voinovich Ranking Minority Member
    Subcommittee on Clean Air, Wetlands,

    Private Property, and Nuclear Safety Committee on Environment and Public
    Works United States Senate

    Dear Senator Voinovich: The federal government has spent an average of $149
    billion (in constant 1998 dollars) annually since the late 1980s on the
    nation?s infrastructure. 1 A sound public infrastructure plays a vital role
    in encouraging a more productive and competitive national economy and
    meeting public demands for safety, health, and improved quality of life. For
    example, transportation systems directly support the nation?s economy by
    facilitating the movement and manufacture of goods. Public office buildings,
    courthouses, and other facilities support noneconomic goals and allow
    federal agencies to carry out their missions. At least a portion of federal
    financed infrastructure has benefits that accrue primarily to the states and
    local communities rather than the nation as a whole. In addition, state and
    local governments and the private sector play important roles in developing,
    operating, and financing significant portions of infrastructure.

    The federal government plays a prominent role in identifying the nation?s
    infrastructure investment needs. Little, however, is known about the
    comparability and reasonableness of individual agencies? estimates for
    infrastructure needs. In fact, even the concept of infrastructure ?need? is
    difficult to define and to distinguish from ?wish lists? of capital
    projects. This report responds to your request for information on
    infrastructure investment or ?needs? estimates compiled by six federal
    agencies- the U. S. Army Corps of Engineers, Environmental Protection Agency
    (EPA), Federal Aviation Administration (FAA), Federal Highway Administration
    (FHWA), Federal Transit Administration (FTA), and General Services

    1 Infrastructure has been defined in a number of ways. Broadly defined,
    infrastructure can include facilities, structures, and land for public use
    and for other purposes, such as national defense. See U. S. Infrastructure:
    Funding Trends and Opportunities to Improve Investment Decisions (GAO/ RCED/
    AIMD- 00- 35, Feb. 7, 2000).

    United States General Accounting Office Washington, DC 20548

    Page 2 GAO- 01- 835 U. S. Infrastructure

    Administration (GSA)- as well as the Appalachian Regional Commission (ARC).
    2 As you requested, we focused on the following infrastructure areas- water
    resources (inland and deep draft navigation, flood control, and shore
    protection), hydropower, water supply, wastewater treatment, airports,
    highways, mass transit, and public buildings. For these seven agencies and
    specified types of public infrastructure, we agreed to address the
    following: (1) What are the agencies? estimates for infrastructure
    investment and how do the estimates compare in terms of how they are
    developed and used? (2) To what extent do the agencies? procedures for
    developing the estimates embody practices of leading government and private-
    sector organizations?

    We did not independently verify the agencies? investment estimates, but we
    did rely on past reviews of these data by us and others that examined the
    soundness and completeness of the methodology and/ or data used to develop
    the estimates. We incorporated findings from these reviews as appropriate.
    The amount of information we present concerning an estimate reflects the
    extensiveness of past reviews and does not imply that an estimate is better
    or worse than other estimates. For some agencies- ARC, the Army Corps, EPA,
    and FTA- we did not have past reviews related to the estimates to draw upon.
    We reviewed agencies? documentation of their procedures to develop the
    estimates, but we did not verify whether these procedures were followed. We
    compared agencies? procedures with some of the capital decisionmaking
    practices used by leading government and private sector organizations that
    we identified and reported on in 1998. 3 This report focuses on those
    leading practices that relate to developing and using investment estimates.
    We included practices such as establishing a baseline inventory of assets,
    using cost- benefit analysis to identify economically justified investments,
    and ranking and selecting projects for funding based on established
    criteria. See appendix I for additional information on our scope and
    methodology.

    The seven agencies we reviewed each estimated billions of dollars for
    investment in infrastructure. The estimates ranged from GSA?s calculation of
    $4.58 billion (in current dollars) over 1 to 5 years to repair public

    2 In this report, we will refer to all seven entities, including ARC, as
    agencies. 3 Executive Guide: Leading Practices in Capital Decision- Making
    (GAO/ AIMD- 99- 32, Dec. 1998). Results in Brief

    Page 3 GAO- 01- 835 U. S. Infrastructure

    buildings to FHWA?s estimate of $83.4 billion (in constant 1997 dollars) per
    year over 20 years to improve highways. The estimates prepared by the Army
    Corps (for water resources and hydropower) and GSA are for federal spending;
    the other estimates are for spending from federal, state, and local sources.
    Each of the seven agencies developed their investment estimate using data
    from localities, states, or agency regional offices and aggregating that
    information to produce a national estimate for infrastructure investment.
    The estimates, however, were developed using different analytical
    procedures. For example, FHWA used benefit- cost analysis for its highway
    estimate, while EPA used engineering- based approaches for its drinking
    water and wastewater estimates. The investment estimates cannot be easily
    compared or simply ?added up? to produce a national estimate of
    infrastructure investment needs because of differences in the methods used,
    time periods covered, and spending sources. A fundamental reason that the
    estimates are prepared differently and lack comparability is that they are
    developed and used for different purposes. The Army Corps and GSA use the
    information to help determine the financial resources needed to manage and/
    or repair their own assets. The other five agencies develop estimates at the
    request of the Congress to provide general information to decisionmakers or
    to help direct funding to recipients of federal assistance.

    Each of the seven federal agencies we reviewed had procedures for developing
    infrastructure investment estimates that reflected some practices used by
    leading government and private sector organizations. No agency had
    procedures for all eight leading practices. Not following a leading practice
    does not necessarily represent a deficiency on the part of an agency
    because, in some cases- such as ARC?s and EPA?s estimates- those practices
    that are not applied by the federal agency may be implemented by state or
    local governments. The Army Corps had the highest conformance to the leading
    practices, with procedures that reflected six of the eight practices. Among
    the agencies, FHWA and FTA came closest to reflecting an important leading
    practice-- conducting comprehensive assessments of the investments needed to
    meet outcomes by focusing on the amounts needed to maintain or improve the
    condition and performance of highways and transit systems. The remaining
    five agencies developed estimates that are summations of the costs of
    projects eligible to receive federal funding or projects identified by the
    Congress and others, rather than comprehensive estimates of investments
    needed to achieve outcomes. All seven agencies had procedures that called
    for reviewing data developed by states and others, and five agencies
    considered alternative noncapital ways to address unmet investment
    requirements. By comparison, the agencies were less likely to follow

    Page 4 GAO- 01- 835 U. S. Infrastructure

    practices such as developing a long- term capital plan, using cost- benefit
    analysis as the primary method to compare alternative investments, ranking
    and selecting projects for funding based on established criteria, and
    budgeting for projects in useful segments.

    We make several observations in this report. First, for the most part, these
    investment estimates are totals for the entire infrastructure network-
    involving all levels of government and the private sector. The federal
    government?s role in financing these amounts should be recognized and, in
    some cases, this role might be small compared to other levels of government
    or the private sector. Second, these investment estimates can change
    significantly over time, with changes in the efficiency of delivering
    infrastructure services or pricing strategies that alter the demand for
    services. Third, these investment estimates focus on the condition of
    facilities rather than the performance outcomes that can be expected from
    the investments. The passage of the Government Performance and Results Act
    signaled a shift in federal focus from inputs (such as the condition of
    highways and airports) to outcomes (such as improved mobility). In the
    infrastructure area, we caution against relying on measures of need based
    primarily on the condition of facilities and instead suggest comparing the
    costs and benefits of alternative approaches for reaching outcomes,
    including noncapital alternatives.

    To determine what would be sufficient to meet the nation?s demand for
    infrastructure services such as efficient and safe mobility and clean water
    is not simple. The investment requirements depend on (1) the supply of
    service- what facilities exist, their condition and maintenance, how
    efficiently they are operated, and how services might be provided other than
    through capital spending- and (2) the demand for such services by the
    public, which can be influenced, in part by the price charged for
    infrastructure services and the state of the economy. Infrastructure
    investment estimates can vary greatly depending on the extent to which such
    factors are considered in investment calculations. For example, the
    investment required to maintain or rehabilitate existing facilities could
    differ significantly from the investment required to meet a specified level
    of service. Moreover, focusing on the provision of service, rather than the
    condition of a structure or facility, can lead to the consideration of less
    costly, noncapital alternatives to meeting the demand for infrastructure.
    For example, to meet a specified level of service on roads, such as keeping
    traffic flowing at the speed limit, decisionmakers might consider changing
    the timing of traffic lights rather than building new lanes. Furthermore,
    future investment needs are not a predetermined reality and can be affected
    by more efficient use of existing infrastructure. For example, Background

    Page 5 GAO- 01- 835 U. S. Infrastructure

    technological improvements can increase the efficiency of infrastructure. In
    addition, pricing strategies can affect the use of infrastructure-
    relatively higher fees can encourage users to economize on their
    consumption.

    The seven agencies we reviewed develop information on infrastructure
    investment requirements because of their roles in financing and developing
    infrastructure. (See fig. 1.) ARC, the Army Corps, EPA, FAA, FHWA, and FTA
    provide funding for transportation, water supply, and wastewater treatment
    infrastructure that is owned, operated, and maintained by others. GSA and
    the Army Corps are directly responsible for acquiring and maintaining
    federal office buildings and dams and floodcontrol structures, respectively.
    Selected Federal Agencies?

    Roles in Developing Infrastructure

    Page 6 GAO- 01- 835 U. S. Infrastructure

    Figure 1: Selected Agencies? Roles in Developing Infrastructure

    Page 7 GAO- 01- 835 U. S. Infrastructure

    a For this report, we excluded bridges from our analysis and included only
    FHWA?s estimate for highways. b ARC also provides funds for economic
    development, sewer, and education projects.

    Page 8 GAO- 01- 835 U. S. Infrastructure

    c Appalachia includes all of West Virginia and parts of 12 states; Alabama,
    Georgia, Kentucky, Maryland, Mississippi, New York, North Carolina, Ohio,
    Pennsylvania, South Carolina, Tennessee, and Virginia. d GSA also leases
    facilities for federal agencies.

    Sources: ARC, the Army Corps, EPA, DOT, and GSA.

    At the request of the Congress, EPA, FAA, FHWA, and FTA periodically prepare
    long- term infrastructure investment estimates. Every 5 years, ARC prepares
    an estimate of the cost to complete the Appalachian Development Highway
    System, which it finances by distributing federal funds to states within
    Appalachia. GSA maintains information on the investment needs for public
    buildings and the Army Corps maintains information on the investment needs
    for water resources (inland and deep draft navigation, flood control, and
    shore protection), hydropower, water supply and wastewater treatment.

    The investment estimates developed by the seven agencies will be funded, at
    least in part, by federal financing. The Army Corps? estimate only includes
    the federal portion of investment. GSA?s estimate for investment in public
    buildings will be financed entirely with federal funds. Figure 2 shows the
    spending trends from fiscal years 1990 to 1999 for the seven agencies.
    Spending (in constant 2000 dollars) ranges from an average of $150 million
    per year for ARC to an average of $20.6 billion per year for FHWA. Although
    these seven agencies have made large investments in public infrastructure,
    state and local governments and the private sector play important roles in
    financing significant portions of some infrastructure, such as water
    treatment and supply and transportation.

    Page 9 GAO- 01- 835 U. S. Infrastructure

    Figure 2: Infrastructure Spending for Selected Agencies, Fiscal Years 1990
    Through 1999

    Note: All amounts are in constant 2000 dollars. Source: GAO?s analysis of
    OMB?s data.

    0 5,000

    10,000 15,000

    20,000 25,000 Dollars in millions.

    GSA EPA

    FTA FHWA

    FAA Army Corps ARC 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

    Page 10 GAO- 01- 835 U. S. Infrastructure

    Preparing investment estimates is a capital decisionmaking activity by
    federal agencies. In 1998, we identified the practices of leading government
    and private- sector organizations in capital decisionmaking. 4 During that
    review, we found that conducting a comprehensive needs assessment is an
    important first step in an organization?s decisionmaking process for
    infrastructure because it allows an organization to (1) consider its overall
    mission, (2) identify the resources needed to fulfill both immediate
    requirements and anticipated future needs on the basis of results- oriented
    goals and objectives that flow from the organization?s mission, and (3)
    consider both capital and noncapital approaches to addressing these goals.
    The following leading practices relate to developing and using investment
    estimates:

     conduct a comprehensive assessment of the resources needed to meet an
    agency?s mission and results- oriented goals and objectives;

     establish a baseline inventory of existing assets, evaluate their
    condition, determine if they are performing as planned, and identify excess
    capacity;

     consider alternative ways to address needs, including noncapital
    alternatives;

     use cost- benefit analysis as a primary method to compare alternatives and
    select economically justified investments;

     rank and select infrastructure projects for funding based on established
    criteria;

     budget infrastructure projects in useful segments;

     develop a long- term capital plan that defines capital asset decisions;
    and

     establish procedures to review data developed by others and using
    independent reviews of data and methods to further enhance the quality of
    estimates. 5

    The leading practices we identified reflect requirements that the Congress
    and Office of Management and Budget (OMB) have placed on federal agencies
    that are aimed at improving federal agencies? capital decisionmaking
    practices. These requirements relate to aspects of investment estimates,
    such as developing cost information, measuring the benefits of proposed
    investments, and using investment estimates as a first

    4 Executive Guide: Leading Practices in Capital Decision- Making (GAO/ AIMD-
    99- 32,

    Dec. 1998).

    5 This practice was identified as a result of information collected during
    this review. Leading Practices and

    Guidance to Improve Infrastructure Planning

    Page 11 GAO- 01- 835 U. S. Infrastructure

    step toward acquiring infrastructure. These requirements include, for
    example, the Chief Financial Officers? Act of 1990, which required the
    development of accounting and financial systems to report cost information
    and that the principles used in accounting for program costs be consistent
    with those used in developing program budgets. In addition, the Government
    Performance and Results Act of 1993 (Results Act) required agencies to
    develop mission statements, long- range strategic goals and objectives, and
    annual performance plans. The Results Act emphasized identifying and
    measuring outcomes, including benefits. In addition, the Congress enacted
    the Federal Acquisition Streamlining Act of 1994 to improve the federal
    acquisition process. Title V of the act was designed to foster the
    development of (1) measurable cost, schedule, and performance goals and (2)
    incentives for acquisition personnel to reach these goals. To help agencies
    integrate and implement these and other requirements, 6 OMB added a section
    to its annual budget preparation guidance (Circular A- 11) requiring
    agencies to provide OMB with information on major capital acquisitions and
    to submit a capital asset plan and justification. This guidance is
    supplemented by OMB?s Capital Programming Guide, which provides detailed
    steps on planning, budgeting, acquiring, and managing infrastructure and
    other capital assets. The steps in OMB?s guide include the concepts covered
    by our 10 leading practices.

    The seven agencies we reviewed produce investment estimates for water
    resources, hydropower, water supply, wastewater treatment, airports,
    highways, mass transit, and public buildings. Some estimates- for water
    resources, hydropower, and public buildings- are developed for federal
    spending; the other estimates are developed for spending from federal,
    state, and local sources. The estimates cannot easily be compared because
    they were developed using different methods, time periods, and funding
    sources. A fundamental reason that the estimates were prepared differently
    and lack comparability is that they are developed and used for different
    purposes. Some agencies use the information to determine the financial
    resources needed to manage and/ or repair their own assets, and

    6 In addition, the Clinger- Cohen Act of 1996 was enacted to improve the
    implementation and management of information technology projects by
    requiring that agencies engage in capital planning and performance and
    results- based management. The Statement of Federal Financial Accounting
    Standards, No. 6, Accounting for Property, Plant, and Equipment, requires
    agencies? financial statements to report deferred maintenance for all
    property, plant, and equipment. Agencies Develop and

    Use Investment Estimates Differently

    Page 12 GAO- 01- 835 U. S. Infrastructure

    other agencies develop estimates at the request of the Congress to provide
    general information to decisionmakers or to help direct funding to
    recipients of federal assistance.

    The seven agencies identified investment amounts that vary from GSA?s
    estimate of $4.58 billion over 1 to 5 years to repair public buildings to
    FHWA?s estimate of $83.4 billion each year over 20 years to preserve and
    improve the nation?s highways. The investment estimates are summarized in
    table 1.

    Table 1: Selected Agencies? Infrastructure Investment Estimates Agency
    Activities and assets included in

    estimate Activities and assets excluded from estimate Time period

    covered Total estimate (in billions)

    ARC Construction of highways within portions of 13 states Maintenance,
    retrofit, or

    improvements to completed highways

    1997- completion $8.5 a (1995 dollars)

    Army Corps Construction and major rehabilitation of water resources projects
    and major rehabilitation of hydropower projects nationwide

    Non- construction costs, projects not under construction, and critical
    operations and maintenance work

    2001- completion $38.0 a EPA Construction and upgrade of drinking

    water supply systems nationwide Costs due solely to population growth and
    costs not eligible for

    federal funding 1999- 2018 $150.9 a

    (1999 dollars) EPA Construction and upgrade of

    wastewater treatment collection facilities nationwide

    Costs due solely to population growth and costs not eligible for federal
    funding

    1996- 2016 $139.5 a (1996 dollars)

    FAA Construction, replacement, and rehabilitation of airport facilities
    nationwide

    Costs not eligible for federal funding 1998- 2002 $35.1

    (constant 1998 dollars) FHWA Improvements to the nation?s

    highways based on several scenarios b

    Costs to construct new roads 1998- 2017 $50.8 - $83.4 per year for 20 years
    b (constant 1997 dollars) FTA Replacement and refurbishing of

    mass transit vehicles and facilities nationwide based on four scenarios c
    and construction of new systems

    1998- 2017 $10.8 - $16.0 per year for 20 years c (constant 1997 dollars) GSA
    Repair and alteration of public

    buildings Buildings owned by federal agencies other than GSA Up to 5 years
    $4.58 a

    GSA Construction of border stations, federal office buildings, and
    courthouses

    Up to 7 years $0.75 to $0. 8 per year for 5 to 7 years a a Current year
    dollars.

    b FHWA modeled several scenarios- including cost beneficial investments
    needed to maintain the current physical condition- that provided a range of
    estimates. Source: GAO?s analysis of agencies? data.

    Agencies Have Identified Vast Amounts of Investment Estimates

    Page 13 GAO- 01- 835 U. S. Infrastructure

    c FTA?s analysis included scenarios that produced estimates ranging from
    investments needed to maintain current condition and performance of mass
    transit to investments needed to improve its current condition and
    performance.

    Note: Estimates for the Army Corps and GSA are federal investments.
    Estimates for the remaining agencies are a combination of federal, state,
    and other investment sources.

    The investment estimates cannot be easily compared or simply ?added up? to
    produce a national estimate of all infrastructure investment needs because
    of differences in the methods used, time periods covered, and funding
    sources. For example, EPA used engineering- based approaches to develop
    costs for its drinking water and wastewater treatment estimates. By
    contrast, FHWA developed a computer model to forecast the future condition
    of and improvements to highway segments that uses cost- benefit analysis as
    the primary criteria for including improvements in its overall investment
    estimate. In addition, the estimates involve differing time periods. For
    example, FAA?s estimate of airport infrastructure investment covers 5 years,
    while ARC and the Army Corps produce estimates of undefined time periods for
    highways and water resource projects, respectively. Some agencies prepared
    their estimates in constant year dollars- ARC?s estimate is in 1995 dollars-
    while other agencies, such as GSA, presented their estimates in current
    dollars. The estimates also include differing funding sources: estimates by
    the Army Corps and GSA include only the costs to the federal government,
    while estimates by the other five agencies include total costs to federal,
    state, and local organizations.

    Each of the seven agencies used data from various localities, states, or
    agency regional offices and aggregated those data to produce a national
    estimate for infrastructure investment. Each agency?s process for developing
    its investment estimate is summarized below. They are described in detail in
    appendix II.

    The Army Corps estimated that $38 billion in federal funds was required to
    complete water resources and hydropower infrastructure projects already
    under construction as of March 30, 2001. Infrastructure projects included in
    this estimate were initially identified by local governments, groups, and/
    or private citizens, who requested assistance from the local Army Corps
    district office. According to an Army Corps official, regional Army Corps
    personnel evaluate the requests and determine both the seriousness of the
    problems and the need for immediate solutions. Project costs are estimated
    by engineers and other professionals using existing industry data. The
    agency also uses cost- benefit analysis to determine which projects are
    economically justified and would assist the agency in reaching Estimates
    Used Data From

    Local, State, or Regional Sources

    Page 14 GAO- 01- 835 U. S. Infrastructure

    its goals, such as environmental protection and flood mitigation. The
    evaluation and cost estimate is sent to the agency?s headquarters, and
    selected projects are submitted for funding as part of the Department of
    Defense?s annual budget.

    FAA estimated that $35. 1 billion in federal and nonfederal funds was
    required for airport infrastructure from 1998 to 2002. Data for the
    investment estimate come primarily from airport plans- such as airport
    master plans and layouts-- which include proposals and cost estimates for
    specific infrastructure projects at individual airports. FAA officials in
    field offices review each project, and approved projects are entered into a
    FAA database. FAA officials in headquarters review the database for
    anomalies in the data, then add up the estimated cost of each project to
    produce an overall investment estimate. Because this estimate is not a
    spending plan, FAA has reported that it makes no attempt to prioritize the
    projects or determine if the benefits of specific projects would exceed
    their cost. This estimate is prepared and submitted to the Congress
    biennially, as required by statute.

    FTA also used local sources of data to estimate an investment of $10.8
    billion to $16.0 billion per year for mass transit systems (such as buses
    and railcars) from 1998 to 2017, depending on whether the condition and
    performance of mass transit systems would be maintained or improved. The
    estimates cover both federal and nonfederal shares of costs. FTA used data
    from local urban transit agencies to determine the age and condition of mass
    transit infrastructure and then estimated the cost of either maintaining or
    improving that infrastructure. FTA used an estimate developed by its Transit
    Economic Requirements Model. The model performed a benefit- cost analysis to
    determine if replacing an asset was economically justified. The model then
    aggregated the cost of all the infrastructure projects that were justified
    by benefit- cost analysis to determine the total investment estimate for the
    nation?s mass transit systems. FTA uses this estimate to provide general
    support for its budget and information on changes in mass transit systems.

    ARC estimated that it would cost $8.5 billion from state and federal sources
    to complete the Appalachian Development Highway System. To do this, it
    relied on state highway officials within Appalachia, who determined the
    estimated cost to complete individual highway corridors within their
    particular state that are part of the highway system. These estimates used
    engineering structural criteria to estimate the cost of constructing highway
    corridors. The estimate included costs for project design, environmental
    mitigation, rights of way access, and construction.

    Page 15 GAO- 01- 835 U. S. Infrastructure

    ARC officials provided instructions to the states for computing this
    estimate and reviewed the estimates by comparing the costs to the costs of
    similar highway projects within that state and to FHWA?s data on
    construction costs. The costs were not adjusted for inflation. ARC then
    aggregated the data from each state to produce an overall estimate of the
    cost to complete the entire highway system. ARC uses this estimate as the
    basis for allocating funds appropriated for the Appalachian Development
    Highway System. Specifically, ARC calculates each state?s percentage share
    of the total cost to complete the highway system and distributes funding to
    each state accordingly.

    In May 2001, GSA?s data indicated that $4.58 billion in federal funds was
    required over the next 5 years to meet the repair and alteration needs of
    public buildings. GSA estimated that an additional $250 million to $300
    million was required annually over the next 5 years to construct new border
    stations and federal office buildings, and $500 million annually was
    required over 5 to 7 years to construct new courthouses. Investment projects
    are identified by regional offices, which are expected to determine the best
    way to meet the agencies? space requirements. The cost data for projects
    that have estimated costs of between $10,000 and less than $1.99 million are
    developed using engineering criteria and are derived from various sources,
    including contractors, safety inspectors, and seniorlevel building
    management staff. Projects that have estimated costs greater than $1.99
    million are evaluated by headquarters officials and ranked in order of
    priority. GSA?s cost data are used as input in determining funding
    priorities.

    EPA estimated that $150.9 billion in federal, state, and local funds was
    needed for capital investment in drinking water facilities between 1999 and
    2018. Only costs eligible for funding under the Drinking Water State
    Revolving Fund were included. These costs were not adjusted for inflation.
    To develop the estimate, EPA surveyed all of the large water systems in the
    United States as well as a sample of the medium water systems. In addition,
    EPA conducted site visits to 599 small systems and extrapolated data from
    these surveys and site visits to compute the total investment estimate. The
    surveys and supporting cost documentation for medium and large systems were
    submitted to states for review and were subsequently reviewed by EPA. The
    agency uses the results of this estimate to allocate monies to the states
    for the Drinking Water State Revolving Fund based on each state?s share of
    the total investment amount.

    Page 16 GAO- 01- 835 U. S. Infrastructure

    In 1996, EPA estimated that $139.5 billion in federal and state funds was
    needed between 1996 and 2016 for water pollution control, primarily for
    capital investment in already- existing wastewater treatment facilities.
    Only costs eligible for funding under Title VI of the Clean Water Act were
    included in the estimate. These costs were not adjusted for inflation. EPA
    developed the estimate from a nationwide database of wastewater treatment
    facilities that is periodically updated by surveying the states. The states
    provided revised estimates of capital investment needs from their documented
    plans, which were supplemented by costs modeled by EPA when the state lacked
    this information. In addition, EPA modeled the costs for each state for
    combined sewer overflows and activities to control stormwater runoff and
    nonpoint sources of pollution. The Congress has used this information as one
    consideration in appropriating funds for capitalization grants to the
    states, through the Clean Water State Revolving Fund loan program. According
    to EPA, the estimate is also used to assist in program planning and
    evaluation.

    In May 2000, FHWA issued investment estimates for highways for the years
    1998 to 2017. These estimates ranged from $50.8 billion per year for cost-
    beneficial improvements that would maintain the current physical condition
    of highways to $83.4 billion per year for all improvements that would
    improve pavement condition and reduce highway users? travel costs. The
    estimates included both federal and nonfederal portions of funding and were
    in constant 1997 dollars. To determine the estimates, FHWA used data from a
    statistically drawn national sample of 125,000 highway segments as well as
    information from the states on forecasts such as travel growth. FHWA
    officials reviewed the data submitted by the states, looked for anomalies or
    unusual patterns, and asked the states to correct serious flaws and improve
    some data submissions. FHWA used a computer model to simulate the effects of
    infrastructure improvements on a sample of highway data and used a benefit-
    cost analysis to identify economically justified highway improvements.
    FHWA?s estimate is used by legislative and executive branch offices to
    obtain general information on the nation?s overall need for investment in
    highways.

    Page 17 GAO- 01- 835 U. S. Infrastructure

    The federal agencies we reviewed all had procedures for developing their
    infrastructure investment estimates that reflect some leading practices that
    we identified, although some agencies followed more leading practices than
    others. However, following the leading practices does not ensure a quality
    investment estimate and each estimate had limitations associated with the
    quality of the data used in developing it. The strengths and limitations of
    each investment are summarized in appendix II. 7 Correcting such limitations
    will improve the quality and reliability of the agencies? investment
    estimates.

    None of the agencies we reviewed had procedures for all eight of the leading
    practices. Not following a leading practice does not necessarily represent a
    deficiency on the part of an agency because, in many cases, when these
    practices are not applied by the federal agency, they are implemented at the
    state or local level. For example, for EPA?s drinking water investments, six
    of eight practices are undertaken at the local or state level, according to
    agency officials. The Army Corps had the highest conformance to the leading
    practices, with procedures that reflected six of the eight practices, such
    as establishing an inventory of assets and their condition and using cost-
    benefit analysis to select among investment alternatives. Among the seven
    agencies, FHWA and FTA came closest to conducting comprehensive assessments
    of the investments needed to meet results- oriented agency goals- the
    estimates were results oriented by focusing on the amounts needed to
    maintain or improve the performance of highways and transit systems; but the
    estimates did not consider alternative, noncapital ways to address
    investment needs. The remaining five agencies developed estimates that are
    summations of the costs of projects eligible to receive federal funding or
    projects identified by the Congress and others, rather than comprehensive
    estimates of investments needed to achieve outcomes. All seven agencies had
    procedures that called for reviewing data developed by states and others and
    four agencies considered alternative noncapital ways to address unmet
    investment requirements. By comparison, the agencies were less likely to
    follow practices such as developing a long- term capital plan, using cost-
    benefit analysis as the primary method to compare alternative investments,
    ranking and selecting projects for funding based on

    7 We considered agency procedures that reflected leading practices and
    factors that enhanced the soundness or completeness of an estimate to be
    strengths of an estimate. We considered factors that detracted from the
    soundness or completeness of an estimate or its source data to be
    limitations of an estimate. Agencies? Procedures

    Reflect Some Leading Practices, but This Does Not Guarantee Accurate
    Estimates

    Page 18 GAO- 01- 835 U. S. Infrastructure

    established criteria, and budgeting for projects in useful segments. Figure
    3 shows each agency?s level of conformance to the leading practices.

    Figure 3: Agencies? Application of Leading Practices For Determining
    Investment and Funding Decisions

    Source: GAO?s analysis of agencies? procedures for developing investment
    estimates. c b

    b a b c

    a

    Page 19 GAO- 01- 835 U. S. Infrastructure

    An important first practice of leading organizations is to conduct a
    comprehensive assessment or analysis of program requirements by identifying
    and documenting the resources needed to meet the organization?s results-
    oriented goals and objectives that flow from the organization?s mission.
    This type of assessment is results- oriented in that it determines what is
    needed to obtain specific outcomes- such as improved mobility on highways or
    reduced flight delays at airports- rather than identifying the resources
    needed on a project- by- project basis. Furthermore, placing the focus on
    results drives an organization to consider alternative, noncapital ways to
    fulfill program requirements. Until recently, agencies have not been
    required to relate their planned infrastructure spending to their missions
    and goals, so evaluating these plans has presented a challenge to agencies
    and the Congress. This situation changed with the enactment of the
    Government Performance and Results Act of 1993 and corresponding revisions
    to OMB Circular A- 11. Since then, federal agencies- including the seven we
    reviewed- were required to develop mission statements, long- range strategic
    goals and objectives, and annual performance plans and to link annual
    performance plans to capital planning efforts. The benefit of conducting a
    needs assessment linked to achieving objectives is that managers will be
    able to determine what is needed to obtain specific outcomes rather than
    what is needed to maintain or expand existing capital stock.

    Although each agency we reviewed prepared estimates directly related to
    their mission, no agency prepared a comprehensive assessment of the
    resources (and strategies) to achieve mission- focused outcomes. For
    example, an evaluation of the effectiveness of ARC?s highway construction
    estimate is directly related to its mission, which is to enhance economic
    development in Appalachia. 8 However, ARC?s investment estimate is a
    compilation of cost estimates to construct specific highway corridors,
    rather than a comprehensive determination of the resources needed to meet
    its mission.

    The investment estimates by FTA and FHWA come closest to being comprehensive
    assessments of resources needed to meet results- oriented goals. Both
    agencies focus on the resources needed to achieve specific outcomes-
    maintaining or improving the performance of the nation?s

    8 ARC evaluated the effectiveness of its highway construction program
    towards meeting its mission and concluded that the program (1) enabled the
    region to be better able to compete for economic opportunities; (2) created
    thousands of jobs; and (3) increased population, wages, and travel
    efficiencies in that area. Practice 1: Conduct a

    Comprehensive Assessment of the Resources Needed to Meet Mission and
    ResultsOriented Goals

    Page 20 GAO- 01- 835 U. S. Infrastructure

    mass transit systems and highways. Performance includes factors related to
    the quality of service such as congestion on highways and waiting times and
    reliability of transit service. FTA examines how these outcomes could be
    achieved by maintaining or improving existing transit facilities and assets
    and by constructing new systems to meet forecasted capacity needs. FHWA?s
    estimate models improvements to maintain or improve existing highways- it
    excludes new construction. However, these estimates do not comprehensively
    consider alternatives to meeting investment needs- for example, neither
    estimate considers alternative, noncapital ways to address investment needs.
    The remaining agencies do not prepare estimates to achieve outcomes. Rather,
    they prepare investment estimates that are summations of projects? costs:
    projects eligible to receive federal funding (EPA and FAA) and projects
    identified by others, including the Congress, local communities, and other
    federal agencies (ARC, the Army Corps, and GSA).

    Leading organizations establish an inventory of current assets and their
    condition and determine if the assets are performing as planned. By
    routinely assessing the condition of assets and facilities, decisionmakers
    can evaluate the capabilities of current assets and plan for their
    replacement. In addition, OMB?s Capital Programming Guide instructs agencies
    to evaluate the capacity of their existing assets for major programs, to
    determine if they are performing as planned. OMB?s instructions cover assets
    funded by federal grants for capital investment as well as those owned by
    federal agencies.

    Inventory information on infrastructure assets- including their condition
    and performance- can assist decisionmakers in identifying excess
    infrastructure capacity that is draining its resources. This is particularly
    important for federal buildings and facilities. For example, in 1998, the
    National Research Council reported that the number of excess federal
    facilities appeared to be increasing as agencies realigned their missions in
    response to changing circumstances. 9

    Of the agencies we reviewed, the Army Corps, FTA, and GSA maintain inventory
    and evaluation information on assets. For example, the Army Corps collects
    information on the condition of equipment at hydropower

    9 See Stewardship of Federal Facilities: A Proactive Strategy for Managing
    the Nation?s Public Assets, National Research Council (Washington, D. C.:
    1998). Practice 2: Inventory

    Existing Assets and Identify Their Condition and Performance and Excess
    Capacity

    Page 21 GAO- 01- 835 U. S. Infrastructure

    plants, particularly turbines, and uses this information to determine repair
    and rehabilitation needs. GSA maintains an inventory that identifies the
    location, type, and availability of its buildings. According to agency
    officials, GSA maintains separate information on the condition of these
    buildings. In addition, GSA has programs that oversee the disposal of excess
    and surplus real property. In contrast, ARC, EPA, FAA, FHWA do not maintain
    inventories, but some of them rely on inventories kept by state or local
    agencies. For example, states maintain highway inventories and provide input
    to FHWA?s investment estimate. According to EPA officials, local communities
    maintain inventories of their water and wastewater infrastructure. 10 Over
    the next few years, new financial reporting standards released by the
    Government Accounting Standards Board will require the financial statements
    of state and local governments to disclose information on capital
    infrastructure assets, such as their physical condition.

    Leading organizations consider a wide range of alternative approaches to
    satisfy their needs, including noncapital alternatives, before choosing to
    purchase or construct facilities or other capital assets. OMB incorporated
    this practice in its Capital Programming Guide, which suggests that federal
    agencies select alternatives to acquiring new capital assets to achieve the
    same programmatic goals whenever practicable and more cost beneficial. OMB
    also suggests that agencies consider options such as meeting objectives
    through regulation or user fees, using human capital rather than capital
    assets, and applying grants or other means beyond a direct service provision
    supported by capital assets.

    Army Corps, EPA (wastewater), FAA, and GSA indicated that efforts are made
    at their agencies to identify noncapital solutions to some of their
    investment needs and, where feasible, to implement those rather than
    acquiring new capital assets. However, it is not clear how routinely
    agencies follow this practice or, in some cases, what value is added by this
    practice. For example, according to EPA officials, decisions on pursuing
    noncapital ways to address infrastructure needs are often conducted at the
    local level. For example, a public water system may choose to implement a
    water conservation plan as an alternative to adding additional storage and
    treatment capacity to a system.

    10 EPA maintains a database of cost and technical information on publicly-
    owned wastewater facilities. Practice 3: Consider

    Alternative Ways to Address Investment Needs, Including Noncapital
    Approaches

    Page 22 GAO- 01- 835 U. S. Infrastructure

    Some leading organizations use cost- benefit analysis as a tool to ensure
    that the organization?s investment will obtain the greatest benefits for the
    least cost. A cost- benefit analysis, which OMB suggests for federal
    agencies, compares the costs and benefits of alternative investments in
    order to identify those investments that are economically justified
    (greatest net benefits) and achieve agency goals at the least cost. The
    types of analysis can range from a complete cost- benefit analysis- which
    includes full life- cycle costs, estimating and discounting cash flows, and
    determining the return on the investment based on a specified discount rate-
    to an analysis that compares alternatives and recommends the most cost-
    effective (least- cost) option for achieving a specific goal.

    Three agencies we reviewed- Army Corps, FHWA, and FTA- conduct cost- benefit
    analyses of proposed projects and use the results as a main factor in
    developing their investment estimates. For example, FHWA?s computer model,
    which is used to determine future investment requirements, simulates the
    effects of infrastructure improvements for highway segments and compares the
    relative benefits and costs associated with alternative improvement options.
    Only improvements for which the benefits exceed the cost are included in the
    overall estimate. According to EPA officials, cost- benefit analyses are
    done at the local level for drinking water and wastewater investment, as
    utility managers consider projects needed for public health and water
    quality purposes. In addition, according to an ARC official, states conduct
    cost- benefit analyses to help determine the routes of new highways.

    Leading organizations have defined processes for ranking potential
    infrastructure investments in order to find those that are the most cost
    effective for achieving organizational goals over the long- term, and for
    selecting and budgeting those projects for full up- front funding or funding
    in useful segments. The organizations implement these practices by
    establishing a framework for reviewing and approving decisions concerning
    infrastructure and other capital assets, ranking and selecting projects on
    the basis of established criteria and technical analyses, and preparing
    long- term plans for infrastructure and capital development. OMB?s guidance
    to federal agencies on the ranking and selecting of infrastructure
    investments advises them to consider the availability and affordability of
    the investment, and whether the costs and benefits of the new asset will
    merit their inclusion in the agency?s portfolio of proposed assets that are
    considered for funding. For the agencies that we reviewed, the Army Corps,
    FAA, and GSA have processes in place to rank and select investment projects
    for funding. For example, GSA staff assess the merits Practice 4: Use
    CostBenefit

    Analysis to Identify Economically Justified Investments

    Practice 5: Rank and Select Projects For Funding Based on Established
    Criteria

    Page 23 GAO- 01- 835 U. S. Infrastructure

    of proposed projects with the aid of computer- based software that uses five
    weighted criteria- including economic return, project risk, and project
    urgency- to rank projects that are competing for funding.

    In some cases- ARC, EPA, FHWA, and some FTA projects- state, local or other
    federal entities are responsible for determining which investment projects
    to fund. For example, officials with ARC and EPA told us that capital
    projects funded by their agencies are ranked and selected by the state
    agency or entity in charge of a particular project. Hence, while ARC
    provides funding for highways, the state departments of transportation
    prioritize and rank the highway investment needs for their particular state.
    Similarly, individual states rank drinking water projects that are funded
    through EPA based on a priority system that focuses on public health,
    compliance, and the economic needs of the community. FHWA and FTA projects
    that are funded by formula grants are also prioritized at the state or local
    level.

    A strategy that has proven useful to organizations in dealing with the
    problems posed by full funding in a capped budget environment is to budget
    for projects in useful segments. This means that when a decision has been
    made to undertake a specific capital project, funding sufficient to complete
    a useful segment of the project is provided in advance. OMB has defined a
    useful segment as a component that either (1) provides information that
    allows the agency to plan the capital project, develop the design, and
    assess the benefits, costs, and risks before proceeding to full acquisition
    (or canceling the acquisition) or (2) results in a useful asset for which
    the benefits exceed the costs even if no further funding is appropriated.

    For the agencies we reviewed, investment estimates, particularly those that
    involve the construction or rehabilitation of an asset, are often based on
    the full cost of projects. In two cases- FTA and GSA projects that exceed a
    dollar threshold- the projects are funded based on their full costs and the
    funds are spent over a period of years. However, funding for other federal
    agencies? investment projects are often made for only part of the estimated
    cost or part of a usable asset- a part that would not be usable if no
    further funding were provided. Such incremental funding is usually
    sufficient to cover obligations estimated to be incurred in one fiscal year.

    Incrementally funding infrastructure projects could affect the quality and
    reliability of investment estimates if the full estimated costs of projects
    are Practice 6: Budget for

    Projects in Useful Segments

    Page 24 GAO- 01- 835 U. S. Infrastructure

    not made apparent at the time that initial funding decisions are made. For
    example, most of the Army Corps? multiyear water resource projects are
    funded at each phase. For instance, in fiscal year 1986, the Army Corps
    estimated the federal share of work it intended to do on a water resources?
    project in Petersburg, WV at $14 million. The estimate did not include over
    $600,000 appropriated to the Army Corps between fiscal years 1986 and 1989
    to study the proposed project. The agency requested and received funds each
    fiscal year for various phases of the work until fiscal year 1997, by which
    time the total federal share of the work had increased to $20.4 million, due
    to inflation and cost overruns. As another example, ARC officials told us
    that prior to fiscal year 1999, it had been difficult for the agency to
    develop realistic estimates for the cost of completing the highways under
    its jurisdiction because funding was limited and was only sufficient to
    construct a few sections each year. Although ARC?s funding for fiscal year
    1999 was revised to guarantee a minimum level of funds each year, the amount
    does not fully fund the states? highway investment estimates. 11

    Leading organizations use capital plans, which generally cover multiyear
    periods, to establish priorities for implementing organizational goals and
    objectives and to manage resources and debts over the long- term. The
    capital plans are updated either annually or biennially, depending on the
    changing needs of the organizations or, in the case of federal agencies,
    legislative and/ or executive requirements. Developing a long- term capital
    plan enables an organization to review and refine a proposed project?s scope
    and cost estimates over several years, which helps to reduce cost overruns.
    While out- year cost estimates are preliminary, they help to provide
    decisionmakers with an overall sense of a project?s funding needs. As a
    project moves closer to the year of implementation, its scope becomes more
    clearly refined and cost estimates also can be refined to more accurately
    reflect actual project costs.

    Among the agencies we reviewed, the Army Corps prepares a long- term capital
    plan to document specifically planned projects, plan for resource use over
    the long- term, and establish priorities for implementation. FAA prepares a
    long- term plan that is an aggregate of local airport plans; priorities for
    implementation are established during the annual budget

    11 In some cases, states prefinance segments of the ADHS and are reimbursed
    over time by funds distributed by ARC. Practice 7: Develop a LongTerm

    Capital Plan That Defines Capital Asset Decisions

    Page 25 GAO- 01- 835 U. S. Infrastructure

    process and are not part of the long- term capital plan. In the case of GSA,
    its long- term capital plan for courthouse construction is prepared by the
    Judicial Conference of the United States. 12 However, the Conference?s role
    in this process is limited because it does not have independent authority to
    lease, construct, plan, or design space. In addition, we reported in 2000
    that GSA lacks a multiyear capital plan for repairs and alterations. 13 For
    the other agencies we reviewed, capital plans may be developed at the state
    or local levels or by other federal entities. For example, in the case of
    ARC and FHWA, the states are responsible for developing long- term capital
    plans for their highway and other transportation needs. According to EPA
    officials, local water and wastewater utilities develop capital improvement
    plans for infrastructure needs, the results of which are used by EPA in
    developing its estimates.

    The agencies we reviewed use data from a variety of sources, including
    states, municipalities, and contractors, to determine how much it will cost
    to acquire, construct, repair, or maintain federal and public
    infrastructure. The quality of the cost estimates prepared by federal
    agencies depends heavily on the quality of this data. By reviewing capital
    investment data prepared by others, agencies can enhance the quality of
    their investment estimates. In addition, an independent review of the data
    and methods used to develop the estimates can further enhance quality and
    help ensure that investment decisions are supported by quality information.
    All agencies we reviewed have procedures for reviewing the data provided by
    outside sources. FHWA also had independent reviews to critique and refine
    the methods used to produce the estimate. For example, FHWA?s computer model
    for developing its estimate was reviewed by transportation and economic
    experts to both assess and improve it. In June 1999, the experts found that
    FHWA has strengthened the model over time and that recent refinements have
    increased its applicability and credibility. In addition, FTA has under way
    a review of its methodology for determining transit investment estimates.

    12 The Judicial Conference of the United States is composed of the Chief
    Justice of the United States and other federal judges who consider policy
    and legislative and administrative issues affecting the federal courts.

    13 GSA told us that by the end of December 2001, it will establish a 3- to
    5- year capital plan for repair and alteration investments. That plan must
    then be coordinated with the Administration. Practice 8: Establish

    Procedures to Review Data Developed By Others, and Use Independent Reviews
    of Data and Methods to Further Enhance the Quality of Estimates

    Page 26 GAO- 01- 835 U. S. Infrastructure

    Nonetheless, officials at ARC, EPA, FAA, FHWA, FTA, and GSA acknowledged
    that the data used to develop their investment estimates might not have been
    sufficiently comprehensive or accurate. For example, EPA reported that its
    most recent investment estimates for drinking water supply, issued in
    February 2001, were derived from a 1999 nationwide survey of the documented
    needs of community water systems. However, EPA officials stated that the
    estimates might understate water supply needs because some water systems
    submitted cost estimates covering a 2to 5- year period, rather than the 20-
    year period requested by EPA.

    Inaccurate data and assumptions can affect the quality of investment
    estimates. For example, the National Academy of Sciences found that flawed
    data created unsound economic assumptions in the Army Corps? draft
    feasibility study for the navigation system infrastructure on the Upper
    Mississippi River and Illinois Waterway. This resulted in inadequate
    forecasts of future events, such as the level of barge shipping rates and
    grain demand, which compromised the integrity of analysis and led to an
    overstatement of the level of investment. Since this project is not yet
    under construction, it is not part of the Army Corps? $38 billion investment
    estimate.

    In addition to promoting inaccurate estimates of investment needs, erroneous
    data can affect agencies? assessments of repair and maintenance needs for
    existing infrastructure. For example, in March 2000, we reported that GSA?s
    database of needed repairs and alterations had numerous problems, such as
    repairs that were not included in the database, some repairs that were
    included but were already in progress or completed, some incorrect reporting
    of data, and some cost estimates for repairs that were not current. Since
    the review, GSA has taken steps to improve the quality of the data used to
    manage its inventory of buildings.

    Some perspective is called for in reviewing the investment estimates by the
    seven agencies. First, for the most part, these investment estimates are
    totals for the entire infrastructure network- involving all levels of
    government and the private sector. The federal government?s role in
    financing these amounts should be recognized; and, in some cases, this role
    might be small compared to other levels of government or the private sector.
    Second, these investment estimates can change significantly over time with
    changes in the efficiency of delivering infrastructure services or pricing
    strategies that alter the demand for services. For example, the
    consolidation of smaller water systems or the introduction of user charges
    can reduce the need to expand or replace infrastructure. Third, these
    investment estimates focus on the condition of facilities rather than the
    GAO Observations

    Page 27 GAO- 01- 835 U. S. Infrastructure

    performance outcomes that can be expected from the investments. The passage
    of GPRA signaled a shift in federal focus from inputs (such as the condition
    of highways and airports) to outcomes (such as improved mobility). In the
    infrastructure area, we caution against relying on measures of need based
    primarily on the condition of facilities and instead suggest comparing the
    costs and benefits of alternative approaches for reaching outcomes,
    including noncapital alternatives.

    We provided a draft of this report to ARC, EPA, DOT, GSA, and the Department
    of Defense (DOD) for review and comment. EPA said that the report clearly
    distinguishes between federal agencies that directly invest in
    infrastructure and agencies, such as EPA, that manage programs to fund
    infrastructure. GSA stated that the database used to derive the estimate for
    public building repair and alteration costs is continually changing as work
    items are tracked from identification to completion and that the database
    does not represent investment needs, rather it provides input to decisions
    that determine funding priorities. We revised this report to indicate that
    the data are used as input to funding decisions. GSA also stated that the
    draft report did not acknowledge that the agency uses costbenefit analysis
    as one criterion in making investment decisions and that GSA has made
    progress in improving the accuracy of its data. We did not make any changes
    to this report based on these comments because both items were already
    included. Written comments by EPA and GSA and our responses to GSA?s
    comments appear in appendices III and IV. ARC, EPA, DOT, and GSA provided
    technical clarifications, which we included in this report where
    appropriate. DOD had no comments on this report.

    We conducted our review between December 2000 and July 2001 in accordance
    with generally accepted government auditing standards. Agency Comments

    Page 28 GAO- 01- 835 U. S. Infrastructure

    We are sending copies of this report to the Secretaries of the Departments
    of Transportation and Defense; the Administrator, EPA; the Commissioners of
    GSA and ARC; and the Director, Office of Management and Budget. Copies will
    also be made available to others upon request. If you or your staff have any
    questions about this report, please call me at (202) 512- 2834. Key contacts
    and major contributors to this report are listed in appendix V.

    Sincerely yours, Peter F. Guerrero Director Physical Infrastructure

    Appendix I: Objectives, Scope, and Methodology

    Page 29 GAO- 01- 835 U. S. Infrastructure

    Our report focuses on infrastructure investment estimates compiled by six
    federal agencies- the U. S. Army Corps of Engineers, Environmental
    Protection Agency (EPA), Federal Aviation Administration (FAA), Federal
    Highway Administration (FHWA), Federal Transit Administration (FTA), and
    General Services Administration (GSA)- and the Appalachian Regional
    Commission (ARC). For these agencies and selected types of infrastructure
    (see table 2), we addressed the following objectives: (1) What are the
    agencies? estimates for infrastructure investment and how do the estimates
    compare in terms of how they are developed and used? (2) To what extent do
    the agencies? procedures for developing the estimates embody practices of
    leading government and private- sector organizations?

    Table 2: Federal Agencies and Types of Infrastructure Included in the Report
    Federal agency Infrastructure area ARC Army

    Corps EPA FAA FHWA FTA GSA Highways X X Water resources X Hydropower X Water
    supply X Wastewater treatment X Airports X Mass transit X Public buildings X

    To identify agencies? infrastructure investment estimates, we obtained and
    analyzed the most recent estimates reported by ARC, EPA, FAA, FHWA, and FTA.
    For the Army Corps, we used estimates for water resources and hydropower
    that the agency prepared in March 2001. The Army Corps does not develop
    investment estimates for water supply and treatment. For GSA, we obtained
    information from the Inventory Reporting Information System (IRIS)- a
    computerized database of information on building repairs and alterations.
    According to GSA database managers, the data we used were representative of
    the repair and alteration needs contained in IRIS as of May 2, 2001. GSA?s
    estimate for building construction was developed by GSA staff for the
    building priorities identified by the Judicial Conference of the United
    States and other federal agencies. We did not independently verify the
    agencies? investment estimates, but we did rely on past reviews by us and
    others that examined the soundness and completeness of the methodology and/
    or data used to develop the estimates. We incorporated findings from these
    reviews as appropriate. Appendix I: Objectives, Scope, and

    Methodology

    Appendix I: Objectives, Scope, and Methodology

    Page 30 GAO- 01- 835 U. S. Infrastructure

    To obtain information on the procedures agencies used to develop these
    investment estimates and how agencies used the estimates, we interviewed
    officials from ARC; the Army Corps? Planning and Policy Division, and
    Programs, Formulation and Evaluation Branch; EPA?s Office of Ground Water
    and Drinking Water and Office of Wastewater Management; the Department of
    Transportation?s FAA, FHWA, and FTA; and GSA?s Office of Portfolio
    Management. We reviewed agencies? documentation of the procedures used to
    develop the estimates, but we did not verify whether these procedures were
    followed. We also relied on our past reviews of FAA, FHWA, and GSA for
    information on how these agencies develop and use the investment estimates.

    To accomplish our second objective, we used leading practices contained in
    our report Executive Guide: Leading Practices in Capital DecisionMaking.

    We also reviewed laws and related guidance issued by the Office of
    Management and Budget (OMB), including the Government Performance and
    Results Act of 1993, the Federal Acquisition Streamlining Act of 1994, the
    Clinger- Cohen Act of 1996, OMB?s Executive Order 12893 (Jan. 26, 1994), OMB
    Circular A- 11, and OMB?s Capital Programming Guide. In addition, we
    reviewed the Statement of Federal Financial Accounting Standards, No. 6,
    Accounting for Property, Plant, and Equipment. We also reviewed reports by
    the U. S. Advisory Commission on Intergovernmental Relations, National
    Council on Public Works Improvement, the President?s Commission on Capital
    Budgeting, and the National Academy of Sciences. We compared the procedures
    used by each agency to develop infrastructure investment estimates with the
    leading practices, which are listed in figure 4. The first seven practices
    were identified in our executive guide.

    The eighth practice- establish procedures to review data developed by others
    and use independent reviews of data and methods to further enhance the
    quality of estimates- was identified as a result of information collected
    during this review. We found that each estimate relied to some extent on
    data provided by others, such as the states. In past reviews, we have noted
    problems with the consistency of data that is collected from states and
    other sources. For example, DOT collects information on pavement condition
    from the states. Our review of the statistic used to indicate pavement
    condition demonstrated that states reported no information on 7 percent of
    the miles on the National Highway System, varied in their approaches to
    measuring and reporting the statistics, and

    Appendix I: Objectives, Scope, and Methodology

    Page 31 GAO- 01- 835 U. S. Infrastructure

    did not follow uniformly DOT?s guidance for making these measurements. 14
    The independent review of data and analytical methods can enhance the
    quality of estimates. For example, given the uncertainty associated with
    predicting future impacts of regulatory alternatives, we recommended
    rigorous and independent peer review to enhance the analyses. 15
    Furthermore, it has been noted by others that over time FHWA has
    continuously improved its model to estimate investment needs. 16 FHWA has
    used an independent review of the model to help make improvements.

    14 Transportation Infrastructure: Better Data Needed to Rate the Nation?s
    Highway Conditions (GAO/ RCED- 99- 264, Sept. 27, 1999). According to DOT,
    the states reported pavement condition data for all of the sample pavement
    sections included in the department?s investment estimate. Therefore, the
    missing data on pavement condition did not effect DOT?s calculations.

    15 Regulatory Reform: Agencies Could Improve Development, Documentation, and
    Clarity of Regulatory Economic Analyses (GAO/ RCED- 98- 142, May 26, 1998).
    16 Highway Performance Public Works: A New Federal Infrastructure Investment
    Strategy for America, U. S. Advisory Commission on Intergovernmental
    Relations (Nov. 1993).

    Appendix I: Objectives, Scope, and Methodology

    Page 32 GAO- 01- 835 U. S. Infrastructure

    Figure 4: Selected Leading Practices Related to Infrastructure Investment
    Estimates

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 33 GAO- 01- 835 U. S. Infrastructure

    In 1997, the Appalachian Regional Commission (ARC) estimated that it would
    cost $8.5 billion (in current 1995 dollars) to complete the Appalachian
    Development Highway System (ADHS), a 3,025 mile system of highways that is
    designed to bring economic development to Appalachia. 17 The amount is for
    initial construction only- it does not include maintenance, retrofits, or
    safety improvements to completed segments of the highway system. According
    to ARC officials, this estimate is probably understated due to the limited
    amount of detailed information available in 1997 and because the estimate
    was prepared before obtaining public input or identifying and addressing
    environmental or historic preservation concerns about specific highway
    corridors. ARC plans to issue an updated estimate in 2002.

    The major strengths and limitations of ARC?s estimate are summarized in
    figure 5. We have not done prior work related to ARC?s investment estimate
    or data used for the estimate. The amount of information we present
    concerning the estimate does not imply that it is better or worse than
    others.

    17 Appalachia includes all of West Virginia and parts of 12 states: Alabama,
    Georgia, Kentucky, Maryland, Mississippi, New York, North Carolina, Ohio,
    Pennsylvania, South Carolina, Tennessee, and Virginia. Appendix II:
    Agencies? Infrastructure

    Investment Estimates ARC?s Investment Estimate for the Appalachian
    Development Highway System

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 34 GAO- 01- 835 U. S. Infrastructure

    Figure 5: Strengths and Limitations of ARC?s Investment Estimate for
    Highways

    Note: We considered procedures that reflected leading practices and factors
    that enhanced the soundness or completeness of an estimate to be strengths
    of an estimate. We considered factors that detracted from the soundness or
    completeness of an estimate or its source data to be limitations of an
    estimate. a Reflects a leading practice.

    To produce an estimate for the highway system, each of the 13 states within
    Appalachia estimated the cost to complete the system within their state, and
    ARC aggregated the estimates. ARC and the Federal Highway Administration
    (FHWA) distributed an instruction manual to each state that detailed the
    methods and criteria for arriving at the estimate. Each state?s department
    of transportation, in conjunction with the local FHWA office, then prepared
    a detailed estimate of the cost to complete the unfinished portions of the
    highway system within their state. The states produced these cost estimates
    using preliminary or final plans, specifications, and estimates to the
    extent they were available. At a minimum, ARC?s instructions indicated that
    the states should have preliminary layouts of the proposed road and all
    major structures and interchanges so that reasonably accurate estimates
    could be made for items such as construction and paving. In addition,
    qualified appraisers were used to help determine the cost of rights- of- way
    and any relocation expenses. ARC and FHWA reviewed states? estimates to
    ensure uniformity and accuracy. They assessed the reasonableness of the cost
    estimates by comparing them to the costs of similar highway projects within
    the state and FHWA?s data on construction costs. In addition, major changes
    to the scope and location of highways and the amount of the estimate had to
    be reviewed and approved by ARC, according to agency officials. ARC then How
    the Estimate Was

    Developed

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 35 GAO- 01- 835 U. S. Infrastructure

    totaled the estimates from each state and calculated the total cost to
    complete the highway system.

    Many of the estimates were made before the highway segments had undergone
    the planning process mandated by the National Environment Policy Act and,
    therefore, may be understated. This planning process includes obtaining
    input from the public, federal and state agencies, and historical societies
    and assessing any environmental or historic preservation concerns. Some
    states will not go through this planning process until a particular highway
    corridor is the next construction project. As a result, many of the highway
    estimates that ARC relied upon were made before this planning process
    occurred. As states go through this process, construction costs can rise
    dramatically if new concerns, such as environmental issues and historic
    preservation, result in changes to highway routes or even legal cases to
    determine the routes.

    ARC uses the estimate to distribute funding made available through the
    Highway Trust Fund to each state based on each state?s percentage share of
    the remaining highway system. For example, according to the latest estimate,
    15.3 percent of the cost to complete the highway system is for highways
    within West Virginia. As a result, ARC gives 15.3 percent of its annually
    appropriated monies for the highway system to West Virginia. Each state sets
    its priorities for completing the highway system within its state with the
    funds received from ARC.

    Appalachian Development Highway System: 1997 Cost to Complete Report,
    Appalachian Regional Commission, Aug. 1997.

    Appalachian Development Highways: Economic Impact Studies., Wilbur Smith
    Associates, July 1998.

    Instruction Manual for Preparation and Submission: 1997 Estimate of Cost to
    Complete the Appalachian Development Highway System,

    Appalachian Regional Commission, Sept. 1996. How the Estimate is Used

    Related Reports

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 36 GAO- 01- 835 U. S. Infrastructure

    The U. S. Army Corps of Engineers estimated that, as of March 30, 2001, it
    had about $38 billion in unmet water resources (inland and deep draft
    navigation, flood control, and shore protection) and hydropower
    infrastructure investment requirements for its civil works program. This
    estimate includes only projects that are already under construction. Of that
    amount, about $37 billion is for the construction of new water resource
    projects, $217 million is for the major rehabilitation of water resource
    projects, $400 million is for the major rehabilitation of hydropower plants,
    and $182 million is for other work at hydropower plants. In addition to the
    $38 billion, the Army Corps estimated that in fiscal year 2002, it would
    require $835 million to perform critical operations and maintenance work on
    water resources and related land projects, and $80 million in critical
    maintenance on the Mississippi River and tributaries? projects. The Army
    Corps does not develop an investment estimate for water supply and
    wastewater treatment requirements. Instead, the Congress and local interests
    estimate water supply requirements for individual projects, and local
    governments are responsible for determining wastewater investment
    requirements.

    According to Army Corps officials, the amount estimated for water resources
    and hydropower investments might be inadequate because it does not consider
    increases in the cost of completing a project over time due to changing
    economic conditions. Those officials stated that it takes an average of 12
    years for the Army Corps to complete most projects. During this time,
    increases in inflation and the costs of labor and material could result in
    higher project costs than anticipated. In addition, their are concerns that
    the quality of the estimate may be affected by inaccurate data and
    assumptions. For example, the National Academy of Sciences found that flawed
    data created unsound economic assumptions in the Army Corps? draft
    feasibility study for the navigation system infrastructure on the Upper
    Mississippi River and Illinois Waterway. This resulted in inaccurate
    forecasts of future events, such as the level of barge shipping rates and
    grain demand, which compromised the integrity of analysis and led to an
    overstatement of the level of investment needed. As a result of problems
    with this draft feasibility study, the Army Corps plans to redo it. Since
    this project is not yet under construction, it is not part of the Army
    Corps? $38 billion investment estimate.

    The major strengths and limitations of the Army Corps? estimate are
    summarized in figure 6. We have not done prior work related to the Army
    Corps? investment estimate or data used for the estimate. The amount of
    information we present concerning the estimate does not imply that it is
    better or worse than others. U. S. Army Corps of

    Engineers? Investment Estimate for Water Resources and Hydropower

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 37 GAO- 01- 835 U. S. Infrastructure

    Figure 6: Strengths and Limitations of the Army Corps? Investment Estimate
    for Water Resources and Hydropower Facilities

    Note: We considered procedures that reflected leading practices and factors
    that enhanced the soundness or completeness of an estimate to be strengths
    of an estimate. We considered factors that detracted from the soundness or
    completeness of an estimate or its source data to be limitations of an
    estimate. a Reflects a leading practice.

    The water resources and hydropower estimates were developed by aggregating
    the funds required to construct and rehabilitate specific projects.
    Initially, Army Corps? district offices submit lists of proposed water
    resource problems (projects) in their area- including those identified by
    local governments, organizations, and private citizens- to division
    commanders who assess the projects based on several criteria. 18 The
    criteria include (1) whether a project is in accord with the agency?s
    current policy; (2) the urgency of resolving the problem; (3) geographic

    18 The Army Corps refers to activities that are studied and/ or investigated
    before construction as ?problems.? For this report, we will use ?project.?

    How the Estimate Was Developed

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 38 GAO- 01- 835 U. S. Infrastructure

    distribution; (4) the economic viability of the recommended plan; (5) local
    support for the project; (6) the possibility of nonfederal participation in
    the project; (7) the scheduled project completion date; and (8) the impact
    on fish, wildlife, and/ or wetlands. A prioritized list of projects is
    submitted to the Assistant Secretary of the Army for Civil Works, who
    further screens the projects based on conformance to the administration?s
    priorities and political sensitivity. The projects selected by the Assistant
    Secretary are included in the Department of Defense?s budget submission to
    OMB and, if approved, in the President?s budget submission to the Congress.
    Ultimately, the Congress determines which projects to fund. Funded projects
    undergo several lengthy reviews by the Army Corps, including a feasibility
    study to investigate and recommend solutions to water resources problems.
    The costs of such studies and other nonconstruction costs are not part of
    the Corps? overall investment estimate.

    The estimate for hydropower investment is based on the Army Corps?
    inspections, tests, and evaluations of that equipment to determine service
    condition. If the results of those assessments show trends of unexpected
    deterioration, management decides whether the problem can be corrected by
    routine repairs or whether it is a capital need that requires rehabilitation
    or major repairs.

    The investment estimate for water supply is derived by local interests who
    engage the services of architectural and/ or engineering firms to determine
    the costs for water supply projects. The local interests can also request
    assistance from an Army Corps? field office in establishing a project?s
    cost. The local interests, rather than the Army Corps, relay that figure to
    the Congress.

    The Army Corps uses the water resources and hydropower investment estimates
    to determine the financial resources needed to manage, repair, and
    rehabilitate the assets under its jurisdiction and for new construction. The
    Army Corps uses the water supply estimate to provide planning, design, and
    construction assistance to projects sponsored by local interests when
    specifically directed, authorized, and funded by the Congress.

    Inland Navigation System Planning: The Upper Mississippi RiverIllinois
    Waterway, Report of the National Research Council (Feb. 28, 2001). How the
    Estimate is Used

    Related Reports

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 39 GAO- 01- 835 U. S. Infrastructure

    The Congress required the Environmental Protection Agency (EPA) to survey
    public water systems that are eligible for assistance from the Drinking
    Water State Revolving Fund (DWSRF) about their capital investment needs
    every 4 years. EPA?s second survey, issued in February 2001, estimated that
    $150.9 billion (in current 1999 dollars) was needed from 1999 to 2018. Of
    that amount, $31.2 billion was needed to comply with existing and proposed
    regulations of the Safe Drinking Water Act. The major strengths and
    limitations of EPA?s estimate are summarized in figure 7. We have not done
    prior work related to EPA?s investment estimate or data used for the
    estimate. The amount of information we present concerning the estimate does
    not imply that it is better or worse than others.

    Figure 7: Strengths and Limitations of EPA?s Investment Estimate for
    Drinking Water Facilities

    Note: We considered procedures that reflected leading practices and factors
    that enhanced the soundness or completeness of an estimate to be strengths
    of an estimate. We considered factors that detracted from the soundness or
    completeness of an estimate or its source data to be limitations of an
    estimate. a Reflects a leading practice.

    In contrast to EPA?s estimate, the Water Infrastructure Network (WIN)- a
    consortium of 21 industry, municipal, and nonprofit associations- EPA?s
    Investment

    Estimate for Drinking Water Facilities

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 40 GAO- 01- 835 U. S. Infrastructure

    estimated that investment needs for drinking water will average about $24
    billion per year through 2019 (expressed in constant 1997 dollars). Of the
    $24 billion estimated by WIN, $19 billion is for capital investment and $5
    billion represents financing costs.

    EPA?s estimate was derived from a nationwide survey mailed to medium and
    large- sized water systems. All of the nation?s largest systems (serving
    more than 40,000 people) and a random sample of medium systems (serving more
    than 3,300 people and fewer than 40,000 people) were included in the survey.
    The water systems were asked to submit documentation of the purpose and
    scope of each project so that EPA could verify that the projects met the
    eligibility criteria for funding by the DWSRF. EPA also required that each
    project cost be supported by documentation indicating that the cost had
    undergone an adequate degree of professional review. The systems returned
    the completed questionnaires and supporting documentation to the states for
    review. The states had the option of providing supplemental documentation on
    the project or its cost. The states then forwarded the completed
    questionnaires to EPA for review. EPA reviewed the project components that
    were included in cost estimates, modeled costs for projects that lacked cost
    documentation, and deleted projects that were ineligible for funding under
    the DWSRF. The infrastructure demands of small systems were obtained through
    site visits to approximately 599 systems, with at least 6 systems selected
    in each state. EPA conducted an additional 100 site visits to assess the
    demands of not- for- profit noncommunity water systems. The survey was
    designed to provide state- level estimates of medium and large systems and
    national- level estimates of small systems with a precision target of 95
    percent +/- 10 percent. A precision target of 95 percent +/- 30 percent was
    established for the not- for- profit noncommunity water systems.

    The estimates, however, might understate water supply needs because some
    systems submitted cost estimates covering 2 to 5 years rather than the 20-
    year period requested by EPA. Further uncertainties exist with the estimate
    because the water supply survey excluded costs arising solely from
    population growth.

    EPA uses the results of the most recent survey to allocate monies from the
    DWSRF to the states, basing each state?s allocation on its share of the
    total national investment amount, with a minimum allotment of 1 percent of
    available funds. Each state develops a priority system for funding projects
    How the Estimate Was

    Developed How the Estimate is Used

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 41 GAO- 01- 835 U. S. Infrastructure

    based on public health criteria specified in the 1996 Safe Drinking Water
    Act. In addition, EPA uses the survey as a tool for allocating the Tribal
    SetAside (up to 1.5 percent of the DWSRF annual appropriation) to American
    Indian and Alaskan native village water systems.

    Congressional Budget Office, Statement of Perry Beider before the
    Subcommittee on Environment and Hazardous Materials, Committee on Energy and
    Commerce, U. S. House of Representatives (Mar. 28, 2001).

    EPA Office of Water, Drinking Water Infrastructure Needs Survey: Second
    Report to Congress (EPA 816- R- 01- 004, Feb. 2001).

    Water Infrastructure Network, Clean & Safe Water for the 21st Century: A
    Renewed National Commitment to Water and Wastewater Infrastructure (undated,
    available from the American Water Works Association).

    EPA periodically reports to the Congress on the nation?s investment needs
    for municipal water pollution control facilities, primarily wastewater
    treatment facilities. In the 1996 clean water needs survey report, EPA
    estimated that $139.5 billion (in current 1996 dollars) was needed over the
    years 1996 to 2016 to satisfy water pollution control needs. The total
    included $44.0 billion for wastewater treatment, $10.3 billion for upgrading
    existing wastewater collection systems, $21.6 billion for new sewer
    construction, and $44.7 billion for controlling combined sewer overflows.
    The investment estimate included costs for facilities used in conveyance,
    storage and treatment, and recycling and reclamation of municipal
    wastewater. In addition, the estimate included the costs for structural and
    nonstructural measures to develop and implement stormwater and nonpoint
    source pollution programs. The overall investment estimate did not include
    costs that were ineligible for federal assistance under Title VI of the
    Clean Water Act, such as house connections to sewers and costs to acquire
    land that is not a part of the treatment process. The estimate did not
    include information on private wastewater treatment facilities and those
    serving Indian tribes and Alaskan native villages. More recently, EPA
    estimated that the amount may be closer to $220 billion because some needed
    work probably had not been documented and reported by the states. EPA
    expects to submit its next clean water needs survey report to the Congress
    in August 2002. Related Reports

    EPA?s Investment Estimate for Wastewater Facilities

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 42 GAO- 01- 835 U. S. Infrastructure

    The major strengths and limitations of EPA?s investment estimate for
    wastewater facilities are summarized in figure 8. We have not done prior
    work related to EPA?s investment estimate or data used for the estimate. The
    amount of information we present concerning the estimate does not imply that
    it is better or worse than others.

    Figure 8: Strengths and Limitations of EPA?s Investment Estimate for
    Wastewater Facilities

    Note: We considered procedures that reflected leading practices and factors
    that enhanced the soundness or completeness of an estimate to be strengths
    of an estimate. We considered factors that detracted from the soundness or
    completeness of an estimate or its source data to be limitations of an
    estimate. a Reflects a leading practice.

    EPA maintains a database of cost and technical information on publicly owned
    wastewater treatment facilities, which is used to develop the investment
    estimate. The database included about 16,000 wastewater treatment facilities
    and 21, 000 sewage collection systems in 1996, when the last estimate was
    made. The database includes information on individual facilities? projects
    and programs that target documented water quality or public health problems.
    EPA periodically requests information from the states to update this
    database. In the 1996 clean water needs survey, the states were asked to
    identify projects to build or expand treatment facilities to accommodate the
    capacity required by the existing How the Estimate Was

    Developed

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 43 GAO- 01- 835 U. S. Infrastructure

    population over the next 20 years. EPA also requested the states to update
    the documentation for projects already in the database with estimated costs
    greater than $5 million if the documentation was dated prior to 1990. EPA
    reviewed all documentation submitted by the states to ensure compliance with
    its established criteria. Generally, documentation- such as capital
    improvement plans- was acceptable if it included details concerning the
    proposed project, such as a definition of the problem, a description of the
    solution, and cost estimates. If the documentation lacked cost estimates,
    EPA estimated the cost using models. However, the documentation provided to
    EPA sometimes covered only a 5- year period- not the 20- year period asked
    for. Therefore, EPA officials believe the estimates are conservative.

    In addition, EPA modeled states? costs for combined sewer overflows
    (releases of raw sewage from systems that convey sewage and stormwater in
    the same pipes) and activities to control stormwater runoff and nonpoint
    sources of pollution. Furthermore, EPA reported that it believes the
    investment estimates were understated for sanitary sewer overflows (releases
    of raw sewage from sanitary sewer collection systems) and that it was
    developing updated cost estimates separately from the 1996 clean water needs
    survey.

    According to EPA, the clean water needs survey is also used to assist the
    federal government and the states in program planning, policy evaluation,
    and program management and to inform the Congress of the magnitude of the
    needs. Private firms, public interest groups, and trade associations use the
    survey information in marketing, cost estimating, and policy formation.

    EPA 1996 Clean Water Needs Survey (CWNS) Report to Congress (EPA 832- R- 97-
    003, Sept. 1997).

    In 1999, the Federal Aviation Administration (FAA) submitted to the Congress
    its most recent investment estimate for the nation?s airports- $35.1 billion
    (in constant 1998 dollars) for the years 1998 to 2002. A significant portion
    of this estimate is for projects that will bring existing airports up to
    current design standards (37 percent), develop passenger terminal buildings
    (16 percent), or add capacity to congested airports (13 percent) at 3,561
    airports and proposed airports in the United States. The estimate only
    includes projects that are eligible for funding under FAA?s Airport
    Improvement Program. The major strengths and limitations of the How the
    Estimate is Used

    Related Reports FAA?s Investment Estimate for Airports

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 44 GAO- 01- 835 U. S. Infrastructure

    estimate are summarized in figure 9. In a previous report, we reviewed the
    database used to develop the estimate, and we have included the results of
    that review in our analysis. The amount of information we present concerning
    the estimate does not imply that it is better or worse than others.

    Figure 9: Strengths and Limitations of FAA?s Investment Estimate

    Note: We considered procedures that reflected leading practices and factors
    that enhanced the soundness or completeness of an estimate to be strengths
    of an estimate. We considered factors that detracted from the soundness or
    completeness of an estimate or its source data to be limitations of an
    estimate. a Reflects a leading practice.

    FAA determined its investment estimate using the National Plan of Integrated
    Airport Systems (NPIAS) database. NPIAS includes the estimated cost of
    individual infrastructure investment projects requested by airports. The
    projects originate primarily from airport plans, including master plans.
    Airport officials may consider noncapital alternatives to address unmet
    infrastructure requirements when producing these plans. For example,
    officials may consider altering operational procedures or practices to allow
    more airplanes to use one runway instead of requesting funds for an
    additional runway. If noncapital alternatives do not exist, airport
    officials request funding for a capital project within their plans, which
    contain specific proposals and cost estimates for each project. FAA How the
    Estimate Was

    Developed

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 45 GAO- 01- 835 U. S. Infrastructure

    officials in field offices review each project within each airport plan to
    determine if the project is eligible and justified. A project is eligible if
    it qualifies for federal funds under the Airport Improvement Program. 19 A
    project is justified based on a judgmental decision by FAA district
    officials. For example, one airport in central Texas proposed adding four
    new runways to the airport, which FAA officials considered unjustified
    because the amount of air traffic served by the airport was insufficient to
    merit the additional runways. Projects and plans that are approved by FAA at
    the district level are then entered into the NPIAS database, along with the
    estimated costs. FAA officials in Washington then review the data in NPIAS
    and ensure that district officials have included only projects that are
    eligible for federal funding and are justified. FAA officials add up the
    estimated cost of these projects and produce an overall investment estimate.

    FAA submits the estimate to the Congress, as required by statute.

    Report to Congress: National Plan of Integrated Airport Systems (NPIAS)
    (1998- 2002). U. S. Department of Transportation, Federal Aviation
    Administration (Mar. 12, 1999).

    Airport Development Needs: Estimating Future Costs (GAO/ RCED- 97- 99, Apr.
    7, 1997).

    Airport Financing: Funding Sources for Airport Development

    (GAO/ RCED- 98- 71, Mar. 12, 1998). In May 2000, FHWA submitted to the
    Congress its most recent biennial estimate of a range of investment needs
    for the nation?s highway and bridge investment needs. First, it estimated
    that $83.4 billion 20 per year over 20 years (1998 to 2017) in highway
    investment would be economically justified based on the benefits of the
    investment exceeding the cost. Second, it estimated that $50.8 billion per
    year over 20 years would be

    19 Generally, the Airport Improvement Program allows for all types of
    airport development except for automobile parking structures, hangars, air
    cargo buildings, or the revenue producing areas of large terminals.

    20 FHWA?s estimate is in constant 1997 dollars. How Estimate is Used

    Related Reports FHWA?s Investment Estimate for Highways

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 46 GAO- 01- 835 U. S. Infrastructure

    needed to maintain the current physical condition of the nation?s highways.
    Third, it estimated that $53.9 billion a year over 20 years would be needed
    to maintain the current cost to users (such as travel- time costs, vehicle-
    operating costs, and crash costs). These estimates of highway investment
    cover all public road mileage- 3.95 million miles in 1997. 21 The major
    strengths and limitations of FHWA?s investment estimate are summarized in
    figure 10. In a June 2000 report, we reviewed FHWA?s model used to develop
    these estimates, and we have included the results of that review in our
    analysis. The amount of information we present concerning the estimate does
    not imply that it is better or worse than others.

    Figure 10: Strengths and Limitations of FHWA?s Investment Estimate

    Note: We considered procedures that reflected leading practices and factors
    that enhanced the soundness or completeness of an estimate to be strengths
    of an estimate. We considered factors that detracted from the soundness or
    completeness of an estimate or its source data to be limitations of an
    estimate. a Reflects a leading practice.

    21 While FHWA also includes bridge investment requirements in the report to
    Congress, we have only included FHWA?s estimate for highways in this
    analysis.

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 47 GAO- 01- 835 U. S. Infrastructure

    FHWA developed the estimate using data from a statistically drawn national-
    level sample of about 125,000 highway segments throughout the United States.
    This sample included data on a variety of highway conditions, including
    pavement roughness, traffic levels, and lane width. The states also provided
    FHWA with forecasts on such matters as travel growth. FHWA staff reviewed
    the data submitted by the states and looked for anomalies or unusual
    patterns. FHWA asked the states to correct serious flaws and improve data
    submission for minor flaws. Finally, FHWA division offices periodically
    reviewed state data collection procedures to ensure consistency among
    states. The corrected information was inputted into FHWA?s Highway
    Performance Monitoring System.

    FHWA primarily used the Highway Economic Requirements System (HERS) model to
    determine future investment requirements. It assessed the current condition
    of the sample highway segments and then projected future condition and
    performance of the segments based on expected changes in factors such as
    traffic volume. Based on this information, the model simulated the effects
    of infrastructure improvements for the highway segments and compared the
    relative benefits and costs associated with alternative improvement options.
    While FHWA?s model analyzes these sample sections individually, the model is
    designed to provide estimates of investment requirements valid at the
    national level and does not provide improvement recommendations for
    individual highway segments. FHWA acknowledges that some HERS data,
    particularly emissions data, varies in quality.

    To reach a total estimate for highway investment requirements, FHWA
    supplements results of this model with external adjustments to account for
    (1) classes of highways not included in either the statistical sample or the
    model 22 and (2) certain types of capital investment. FHWA acknowledges that
    the estimates are not based on benefit- cost analysis and are less rigorous
    than the HERS results. The model currently does not directly consider new
    roads or system enhancements- improvements primarily related only to safety,
    traffic operations, or environmental enhancements- as part of its analysis.
    According to FHWA?s most recent estimate, FHWA assumed those types of
    improvements will consume the

    22 Rural minor collectors, rural local roads, and urban local roads are the
    three classes of highways not included in the statistical sample, and their
    future needs are not estimated by the model. How the Estimate Was

    Developed

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 48 GAO- 01- 835 U. S. Infrastructure

    same overall percentage of highway capital investment as they have in the
    past.

    FHWA has had transportation and economic experts review the model to assess
    and improve it. In June 1999, the experts found that FHWA has strengthened
    the model over time and that recent refinements have increased its
    applicability and credibility. Also, FHWA staff and consultants continually
    look for ways to improve the model. For example, FHWA officials told us they
    plan to eliminate a computational shortcut for their next estimates, which
    they plan to issue in 2002. FHWA used this shortcut to approximate the
    lifetime benefits associated with an improvement. In addition, the National
    Cooperative Highway Research Program is reviewing FHWA?s methodology for
    determining its investment estimate.

    We found the model was reasonable despite some limitations. First, the model
    cannot completely reflect changes occurring among all highways in the
    transportation network at the same time, since the model analyzes each
    highway segment independently. Second, the model cannot estimate the full
    range of uncertainties within which its estimates vary because it is not
    designed to completely quantify the uncertainties associated with its
    methods, assumptions, and data. In making estimates, the model relies on a
    variety of estimating techniques and hundreds of variables, all of which are
    subject to some uncertainties. For example, we have reported that pavement
    roughness data reported by the states to FHWA are not completely comparable,
    partly because the states use different devices to measure roughness. Third,
    FHWA uses two different approaches in compiling the estimate. The benefit-
    cost analysis used in the HERS model is not comparable to the analysis used
    to estimate investment needs for roads outside the sample and other kinds of
    road projects. Nevertheless, FHWA combines these estimates and characterizes
    both as economically justified.

    The highway estimate provides federal officials a source of information for
    decisionmaking concerning investments. In particular, legislative and
    executive branch officials use the estimate to obtain general information on
    the nation?s need for infrastructure investments. Also, some groups may use
    the estimate in discussions about the level of federal funding for highways.
    How the Estimate is Used

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 49 GAO- 01- 835 U. S. Infrastructure

    1999 Status of the Nation?s Highways, Bridges, and Transit: Conditions &
    Performance. U. S. Department of Transportation, Federal Highway
    Administration and Federal Transit Administration (May 2, 2000).

    Highway Infrastructure: FHWA?s Model for Estimating Highway Needs Is
    Generally Reasonable, Despite Limitations (GAO/ RCED- 00- 133, June 5,
    2000).

    In May 2000, the Federal Transit Administration (FTA) submitted its biennial
    estimate to the Congress on the nation?s mass transit systems, including
    buses, rail cars, and ferries. The report covered 1998 to 2017 and estimated
    investment requirements under four scenarios, depending on whether the
    condition and/ or the performance of existing mass transit systems was
    maintained or improved. FTA estimated that the average cost for these four
    scenarios ranged from $10.8 billion to $16.0 billion per year (in constant
    1997 dollars). This estimate is based on incomplete data and imprecise
    predictions, which limit the usefulness of the estimate. The major strengths
    and limitations of FTA?s investment estimates are summarized in figure 11.
    We have not done prior work related to FTA?s investment estimate or data
    used for the estimate. The amount of information we present concerning the
    estimate does not imply that it is better or worse than others. Related
    Reports

    FTA?s Investment Estimate for Mass Transit Systems

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 50 GAO- 01- 835 U. S. Infrastructure

    Figure 11: Strengths and Limitations of FTA?s Investment Estimates

    Note: We considered procedures that reflected leading practices and factors
    that enhanced the soundness or completeness of an estimate to be strengths
    of an estimate. We considered factors that detracted from the soundness or
    completeness of an estimate or its source data to be limitations of an
    estimate. a Reflects a leading practice.

    FTA?s first scenario-? Maintain Conditions and Performance?- estimates the
    capital investment needed to maintain the average condition of mass transit
    assets over the 20- year period and add new capacity to maintain current
    vehicle usage levels as passenger travel increases. The second scenario-?
    Maintain Conditions and Improve Performance?- estimates the investment
    needed to maintain the average existing conditions of mass transit assets
    and to improve the service coverage and/ or frequency of mass transit
    service. The third scenario-? Improve Conditions and Maintain Performance?-
    estimates the investment needed to bring the average condition for each
    major asset type to ?good? while maintaining current vehicle usage levels as
    transit passenger travel increases. The fourth scenario-? Improve Conditions
    and Improve Performance?- estimates the investment needed to bring the
    average condition for each major asset type to ?good? and also improve
    service quality by increasing the area covered by mass transit and/ or
    increasing the frequency of mass transit service. The estimates for these
    four scenarios taken from the Department of Transportation?s 1999 Conditions
    and Performance report, are shown in table 3.

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 51 GAO- 01- 835 U. S. Infrastructure

    Table 3: Investment Estimates for Mass Transit Scenario Average annual cost

    (billions of dollars)

    Maintain conditions and maintain performance $10.8 Maintain conditions and
    improve performance $14.4 Improve conditions and maintain performance $11.1
    Improve conditions and improve performance $16.0

    FTA developed its investment estimates using the National Transit Asset
    Inventory. This inventory includes information on the age of buses and
    railcars and on maintenance facilities. FTA estimates the condition of buses
    and rail cars based on their age, using data gathered by the agency over
    time from surveys of the condition of vehicles. The information for this
    database is collected by every transit agency in an urbanized area that
    receives federal assistance, according to an agency official.

    FTA used the Transit Economic Requirements Model to determine the future
    infrastructure and asset needs for transit. This computerized model predicts
    the changes that will occur to transit infrastructure and vehicles over time
    and the investments needed to maintain or improve current conditions and
    performance of mass transit systems. To forecast needs for the condition of
    assets, the model includes aggregate data on the condition of assets based
    on a 1 to 5 scale and uses a benefit- cost analysis to determine if the
    benefit of replacing an asset (and thus improving its condition) outweighs
    the cost of the replacement. If the benefit outweighs the cost, the project
    is added to the final cost as reported by the model. To forecast needs for
    the performance of assets, FTA uses predictions of the number of future
    passengers developed by Metropolitan Planning Organizations (MPO). FTA uses
    this information to determine future capacity needs. Capacity needs are
    expressed as either more frequent service or a new system. The Transit
    Cooperative Research Program 7 is reviewing FTA?s methodology for
    determining its investment estimates. According to FTA, the results of this
    review will be considered in developing FTA?s next estimates in 2002.

    Missing data and imprecise predictions limit the accuracy of the investment
    estimates. For example, the database lacks future travel

    7 The Transit Cooperative Research Program is a cooperative effort of FTA,
    the Transportation Research Board, the Transit Development Corporation, and
    the American Public Transportation Association that conducts and
    disseminates transit information. How the Estimates Were

    Developed

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 52 GAO- 01- 835 U. S. Infrastructure

    forecasts for the New York City area. In addition, according to FTA, some
    MPOs submit data that vary in quality. According to FTA, the agency also
    does not have complete information on the condition of fare collection
    systems, stations, and maintenance facilities that are part of the mass
    transit systems. Finally, according to FTA, it is difficult to predict the
    growth in travel over time.

    According to FTA, the investment estimate is used to provide broad, general
    support for FTA?s budget and to help tie the budget to the levels of
    performance discussed in the estimate. The estimate provides information to
    FTA and the Congress on changes in the condition and performance of mass
    transit. Finally, the estimate serves as a baseline for performance goals
    mandated under the Government Performance and Results Act and identifies the
    performance goals FTA is likely to achieve in the future.

    1999 Status of the Nation?s Highways, Bridges, and Transit: Conditions and
    Performance, U. S. Department of Transportation: Federal Highway
    Administration and Federal Transit Administration (May 2, 2000).

    GSA?s data indicated that, as of May 2, 2001, it would cost $4.58 billion
    for repairs and alterations of public buildings. This estimate included both
    items currently needed and future work items to be undertaken over the next
    5 years. Examples of repairs and alterations include repairs to major
    building components, such as electrical, heating, ventilation, and air
    conditioning systems; fire alarm and sprinkler systems; and other fire and
    life safety items. In fiscal year 2001, GSA estimated that an additional
    $250 million to $300 million was needed annually over the following 5 years
    for new building construction for border stations and federal office
    buildings. In addition, in fiscal year 2001, the Judicial Conference
    estimated $500 million was needed annually over the following 5 to 7 years
    to construct new courthouses. 9 The major strengths and limitations of these
    investment estimates are summarized in figure 12. In previous reports, we
    reviewed the database used to develop the estimate of repairs and
    alterations, and we have included the results of that review in our
    analysis.

    9 The estimate for courthouse construction comes from the Judicial
    Conference of the United States? 5 to 7 year courthouse project plan. The
    Judicial Conference is composed of the Chief Justice of the United States
    and other federal judges who consider policy and legislative and
    administrative issues affecting the federal courts. How the Estimate is Used

    Related Reports GSA?s Investment Estimate for Public Buildings

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 53 GAO- 01- 835 U. S. Infrastructure

    The amount of information we present concerning the estimate does not imply
    that it is better or worse than others.

    Figure 12: Strengths and Limitations of GSA?s Investment Estimates

    Note: We considered procedures that reflected leading practices and factors
    that enhanced the soundness or completeness of an estimate to be strengths
    or an estimate. We considered factors that detracted from the soundness or
    completeness of an estimate or its source data to be limitations of an
    estimate. a Reflects a leading practice.

    GSA develops cost estimates when it determines that repairs and alterations
    are needed. 10 GSA?s overall estimate for repairs and alterations was
    derived from information contained in the Inventory Reporting Information
    System (IRIS), a database of projects. The projects are identified and
    entered into the database at the regional level. The projected cost data are
    derived from various sources, including contractors, safety inspectors, and
    building engineers. The database includes current and future projects. Work
    items in the database may be updated daily by regional office staff as new
    work is identified and completed work is deleted.

    10 GSA manages its infrastructure needs through the Capital Investment and
    Leasing Program. Under this program, it works with other agencies to
    determine space needs and then determines the best way to meet these needs
    within anticipated budget levels. How the Investment

    Estimates Were Developed

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 54 GAO- 01- 835 U. S. Infrastructure

    GSA?s process for developing investment estimates for new construction
    projects also begin, with evaluations at the regional level. GSA regional
    staff evaluate existing facilities, the availability of sites for new
    construction, and the disposition of old facilities. Using a computer model,
    GSA?s regional staff compare the cost of construction to the cost of leasing
    space. The computer model uses cost estimates based on benchmark values that
    are specified for locations around the country. The regional offices submit
    their recommendations for construction projects along with the computer
    analysis and other data to GSA headquarters for review.

    GSA identifies projects that make up its overall investment estimate as
    prospectus- level or nonprospectus- level: prospectus- level projects have
    estimated costs of $1.99 million or more, and nonprospectus- level projects
    have estimated costs greater than $10,000 and less than $1.99 million. 11
    GSA prioritizes prospectus- level investment projects as preparation for the
    annual budget process. The regions identify proposed projects and submit the
    proposals, along with supporting data, to GSA headquarters for review and
    funding consideration. There, headquarters staff and the capital investment
    panel 12 assess the merits of each proposed project and rank the projects
    with the aid of computer- based software called ?Expert Choice.? The model
    uses five weighted criteria to rank the projects that are competing for
    funding. These criteria consider, in weighted order, (1) economic return-
    whether the project will generate additional revenue for the Federal
    Building Fund, the source of funds for GSA?s repair and alterations and
    construction projects; (2) project risk- whether the project will begin in
    the planned fiscal year and use the authorized funding; (3) project urgency-
    whether the project will correct building conditions that are unsafe or
    involve severe deterioration; (4) community planning- whether the project
    will protect the building?s historic significance and positively impact the
    local community; and (5) customer urgency- the project will have a positive
    impact on the tenant agencies? operations or mission. GSA officials,
    however, stated that the Expert Choice model is not the sole basis for
    decisions; the model is not intended to replace the professional judgment
    and knowledge of staff. During the

    11 GSA?s Administrator is authorized to annually adjust the dollar threshold
    that defines prospectus- level projects. The threshold was $1. 99 million
    for fiscal year 2001 projects. GSA must provide detailed support for each
    prospectus- level project that it plans to undertake and have OMB approve
    and the Congress fund these projects before starting work.

    12 The members of the capital investment panel vary from year to year, but
    the panel always includes senior managers from GSA headquarters and regional
    offices.

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 55 GAO- 01- 835 U. S. Infrastructure

    assessment process, each project is assigned a numerical score and then
    ranked in order of priority. The projects with the higher scores usually
    became candidates for funding. For fiscal year 2001, GSA assessed the merits
    of 27 repair and alterations design projects proposed by its regional staff
    and selected 12 to recommend for funding.

    In 2000, we reported problems with the quality of data contained in IRIS.
    For example, we found that not all repairs were included, some repairs that
    were included were already in progress or completed, some data were
    incorrectly reported, and some cost estimates for repairs were not current.
    In addition, the projects that make up the estimate for repairs and
    alterations are expressed in unadjusted dollars; in some cases the year that
    the estimate was made is not included in the database. We have also reported
    that the lack of a multiyear plan for repairs and alterations affects the
    agency?s ability to make investment decisions.

    In response to recommendations made in our previous reports, GSA is engaged
    in several activities intended to improve its IRIS database and enhance the
    management of its inventory of buildings. For example, the agency is
    undertaking efforts to validate the quality and consistency of IRIS, such as
    revising work item codes to be more descriptive. In addition, the agency has
    significantly reduced the number of overdue work items in the database,
    thereby improving the quality of the database, according to GSA officials.
    GSA is also implementing a building condition assessment survey, which
    provides automated cost estimates using industry- accepted software. GSA
    began a pilot program in one region in 2000 and has expanded the program to
    its other 10 regions. The agency expects to complete initial building
    condition assessments on the entire inventory of buildings by the end of
    September 2001. It plans to review information gathered in these assessments
    and enter new work items into the IRIS database. Existing work items will be
    updated with the results of the condition assessments.

    GSA?s IRIS database is used as input in determining funding priorities. For
    prospectus- level projects, GSA?s headquarters staff review the estimates
    submitted by the regions, apply the Expert Choice model and professional
    judgment, and then select projects for inclusion in the agency?s budget
    proposal that is sent to OMB. For nonprospectus- level repairs and
    alterations projects, GSA?s headquarters staff allocate a portion of all
    funds for repairs and alterations to each regional office based on regional
    priorities. How the Estimate Is Used

    Appendix II: Agencies? Infrastructure Investment Estimates

    Page 56 GAO- 01- 835 U. S. Infrastructure

    Federal Buildings: Funding Repairs and Alterations Has Been A Challenge-
    Expanded Financing Tools Needed (GAO- 01- 452, Apr. 12, 2001).

    Federal Buildings: Billions Are Needed for Repairs and Alterations

    (GAO/ GGD- 00- 98, Mar. 30, 2000).

    General Services Administration: Many Building Security Upgrades Made but
    Problems Have Hindered Program Implementation (GAO- TGGD- 98- 141, June 4,
    1998).

    Federal Buildings: Actions Needed to Prevent Further Deterioration and
    Obsolescence (GAO/ GGD- 91- 57, May 13, 1991). Related Reports

    Appendix III: Comments From the Environmental Protection Agency

    Page 57 GAO- 01- 835 U. S. Infrastructure

    Appendix III: Comments From the Environmental Protection Agency

    Appendix III: Comments From the Environmental Protection Agency

    Page 58 GAO- 01- 835 U. S. Infrastructure

    Appendix IV: Comments From the General Services Administration

    Page 59 GAO- 01- 835 U. S. Infrastructure

    Appendix IV: Comments From the General Services Administration

    Note: GAO comments supplementing those in the report text appear at the end
    of this appendix.

    See comment 3. See comment 2. See comment 1.

    Appendix IV: Comments From the General Services Administration

    Page 60 GAO- 01- 835 U. S. Infrastructure

    Appendix IV: Comments From the General Services Administration

    Page 61 GAO- 01- 835 U. S. Infrastructure

    The following are GAO?s comments on GSA?s letter dated July 6, 2001. 1. We
    revised the report to indicate that the database is used as input to

    funding decisions. 2. We note in the report that GSA uses economic benefits
    as one criterion

    ranking and selecting projects for funding. 3. We note in the report that
    GSA is engaged in activities intended to

    improve the quality and consistency of its database on repairs and
    alterations and provide examples of those activities. GAO Comments

    Appendix V: GAO Contacts and Staff Acknowledgments

    Page 62 GAO- 01- 835 U. S. Infrastructure

    Peter F. Guerrero (202) 512- 2834 Teresa F. Spisak (202) 512- 2834

    Other key contributors to this report were Phillis Riley, Sharon Dyer, John
    Shumann, Christine Bonham, Catherine Colwell, Michael Curro, William Dowdal,
    Timothy Guinane, Trina Lewis, Lisa Turner, and Alwynne Wilbur. Appendix V:
    GAO Contacts and Staff

    Acknowledgments GAO Contacts Acknowledgments

    (395000)

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