Mass Transit: Grants Management Oversight Improving, but Better Follow-up
Needed on Grantees' Noncompliance (Letter Report, 04/03/98,
GAO/RCED-98-89).

GAO reviewed the Federal Transit Administration's (FTA) grants
management oversight, focusing on: (1) FTA's initiatives that have
provided an increased focus on grants management oversight; and (2) the
improvements that can be made to correct grantees' noncompliance and
assess the program's effectiveness.

GAO noted that: (1) ongoing initiatives and related organizational
changes are continuing to strengthen FTA's oversight of federal transit
grants and thus decrease the risk associated with its
multibillion-dollar grants program; (2) by improving guidance and
training for staff and grantees, standardizing oversight procedures, and
using contractor staff, FTA has improved the quality and consistency of
its grants management oversight; (3) FTA has also made better use of
other specialized oversight tools at its disposal, and has demonstrated
a greater willingness to use enforcement actions to compel grantees to
resolve noncompliance issues; (4) although FTA is improving its
oversight of federal transit grants, the agency needs to give more
attention to issuing reports on triennial reviews in a timely manner;
(5) in addition, while GAO found that documentation pertaining to the
various grants management oversight reviews was adequately maintained by
most FTA regional offices, the almost total lack of documentation found
in FTA's New York Regional Office, the region that oversees the most
transit grant dollars, gives GAO little confidence that appropriate
followup on noncompliance findings was being performed there; (6)
furthermore, many grantees still frequently do not meet FTA's timeframes
for correcting the noncompliance findings and deficiencies identified by
oversight reviews; (7) in many cases, FTA regional officials told GAO
that these problems could often be attributed to the lack of staff
assigned to carry out oversight activities; (8) in this connection, GAO
noted that FTA never followed through on an internal task force's
earlier recommendation to look at how staff allocations are made between
program and oversight functions; (9) as a result, there is no strong
correlation between the number of grants, the number of staff performing
oversight, and the time spent on oversight from region to region; (10)
FTA does not know the full extent to which grantees' noncompliance with
federal requirements is putting federal dollars at risk because it is
not effectively using an established information system intended to
track the resolution of oversight findings; (11) the system is not
updated by regional staff as required, nor is it used by headquarters
officials to help manage or monitor the oversight activities of FTA's
regional staff--leaving FTA susceptible to, and unable to quickly
respond to, situations in any of its regional offices that might
compromise good oversight; and (12) officials said they are working to
improve this system.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-98-89
     TITLE:  Mass Transit: Grants Management Oversight Improving, but 
             Better Follow-up Needed on Grantees' Noncompliance
      DATE:  04/03/98
   SUBJECT:  Management information systems
             Grant monitoring
             Federal aid for transportation
             Noncompliance
             Internal controls
             Mass transit operations
             Grant administration
             Federal grants
             Human resources utilization
             Mass transit funding
IDENTIFIER:  FTA Triennial Review Program
             FTA State Management Review Program
             FTA Triennial Review Information System
             
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Cover
================================================================ COVER


Report to Congressional Committees

April 1998

MASS TRANSIT - GRANTS MANAGEMENT
OVERSIGHT IMPROVING, BUT BETTER
FOLLOW-UP NEEDED ON GRANTEES'
NONCOMPLIANCE

GAO/RCED-98-89

Mass Transit

(345621)


Abbreviations
=============================================================== ABBREV

  DOT - Department of Transportation
  FTA - Federal Transit Administration
  OIG - Office of Inspector General
  PMO - project management oversight
  TRIS - Triennial Review Information System

Letter
=============================================================== LETTER


B-277231

April 3, 1998

Congressional Committees

The Department of Transportation's (DOT) Federal Transit
Administration (FTA) administers a multibillion-dollar program of
financial assistance for grantees that provide urban and rural public
mass transportation.  In 1992, GAO designated FTA's management and
oversight of billions of dollars in federal transit grants as a
high-risk federal program that was especially vulnerable to fraud,
waste, abuse, and mismanagement.  Since that time, FTA has taken
several steps to address the oversight weaknesses that were
responsible for its high-risk designation.  In February 1995, as a
result of the various initiatives FTA was undertaking to improve its
grants management oversight, GAO removed FTA from its high-risk list
with the understanding that we would continue to monitor the progress
and implementation of FTA's oversight initiatives. 

This report discusses our latest review of FTA's grants management
oversight.  Specifically, the report discusses (1) FTA's initiatives
that have provided an increased focus on grants management oversight
and (2) the improvements that can be made to correct grantees'
noncompliance and assess the program's effectiveness.  The report
does not include an assessment of FTA's oversight activities in the
areas of civil rights, planning, and safety.  We are providing this
report to you because of your responsibilities for authorizing and
funding federal transit programs. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Ongoing initiatives and related organizational changes are continuing
to strengthen FTA's oversight of federal transit grants and thus
decrease the risk associated with its multibillion-dollar grants
program.  By improving guidance and training for staff and grantees,
standardizing oversight procedures, and using contractor staff, FTA
has improved the quality and consistency of its grants management
oversight.  In particular, FTA's risk assessment process has helped
to target limited oversight resources and has provided a strong
foundation for improved oversight.  Furthermore, the overhaul of the
Triennial Review Program, a performance evaluation of most grantees
performed at least once every 3 years, has given FTA better guidance,
training, and more resources to monitor grantees.  FTA has also made
better use of other specialized oversight tools at its disposal, such
as financial management and procurement reviews, and has demonstrated
a greater willingness to use stringent enforcement actions to compel
grantees to resolve noncompliance issues. 

Although FTA is improving its oversight of federal transit grants,
the agency needs to give more attention to issuing reports on
triennial reviews in a timely manner; these reviews help to ensure
that grantees are adequately safeguarding the billions of federal
dollars provided to them.  In addition, while we found that
documentation pertaining to the various grants management oversight
reviews was adequately maintained by most FTA regional offices, the
almost total lack of documentation found in FTA's New York Regional
Office, the region that oversees the most transit grant dollars,
gives us little confidence that appropriate follow-up on
noncompliance findings was being performed there.  Furthermore, many
grantees still frequently do not meet FTA's time frames for
correcting the noncompliance findings and deficiencies identified by
oversight reviews.  In many cases, FTA regional officials told us
that these problems could often be attributed to the lack of staff
assigned to carry out oversight activities.  In this connection, we
note that FTA never followed through on an internal task force's
earlier recommendation to look at how staff allocations are made
between program and oversight functions.  As a result, there is no
strong correlation between the number of grants, the number of staff
performing oversight, and the time spent on oversight from region to
region. 

FTA does not know the full extent to which grantees' noncompliance
with federal requirements is putting federal dollars at risk because
it is not effectively using an established information system
intended to track the resolution of oversight findings.  This system
has the potential to be a useful tool in tracking compliance,
identifying problems, and even assessing the effectiveness of the FTA
oversight program in meeting performance standards.  Currently,
however, the system is not updated by regional staff as required, nor
is it used by headquarters officials to help manage or monitor the
oversight activities of FTA's regional staff--leaving FTA susceptible
to, and unable to quickly respond to, situations in any of its
regional offices that might compromise good oversight.  FTA officials
say they are currently working to improve this system. 


   BACKGROUND
------------------------------------------------------------ Letter :2

FTA provides financial assistance to states and localities to
develop, operate, maintain, and improve mass transit systems.  Since
1964, over $85 billion in mass transit grants has been distributed to
states and local transit agencies.  In fiscal year 1997, FTA provided
more than $4.5 billion to over 600 grantees.  FTA currently oversees
about $42 billion in active grants. 

Recipients of FTA grants must comply with applicable federal statutes
and regulations.  Grantees certify to FTA that they have the ability
and intention to meet all of the requirements placed upon them.  For
example, all grant recipients must safeguard their federal investment
by (1) keeping accurate and current records on the use of federal
funds and (2) adequately controlling cash flow and inventory. 
Grantees must also make several certifications to FTA, including that
they (1) have the ability to provide satisfactory continuing control
and maintenance of FTA's property, (2) will purchase required
inventory competitively, and (3) will follow "Buy American"
provisions.  (Details on these and other certifications are contained
in app.  I.)

Whereas grantees are responsible for the day-to-day management of
their grants, FTA is responsible for overseeing grantees' compliance
with federal requirements and ensuring the proper use of federal
transit funds.  FTA headquarters, through its Office of Oversight
staff of 17, is responsible for developing policy and procedures for
carrying out grants management oversight.  FTA carries out these
responsibilities primarily through approximately 70 staff located in
10 regional offices throughout the United States.  (Fig.  1 shows the
location of each regional office and the states each region
encompasses.) Each regional office is responsible for overseeing
anywhere from 28 to 116 grantees and 172 to 872 grants.  (See app. 
II for a list of FTA's current grant allocations, by FTA region). 
FTA's Office of Oversight is responsible for ensuring that regional
office staff implement grants management oversight policies and
procedures in a similar and consistent manner. 

   Figure 1:  FTA's 10 Regions

   (See figure in printed
   edition.)

   Source:  FTA.

   (See figure in printed
   edition.)

FTA uses a number of "tools" to oversee federal grantees, the most
prominent of which is the triennial review--a performance evaluation
of most grantees performed at least once every 3 years.\1 Other tools
include financial management oversight reviews, procurement systems
reviews, and contractor-provided project management oversight.  FTA
staff also rely on site visits and day-to-day contact with grantees,
quarterly progress and financial reports, quarterly project review
meetings, grant closeout reviews, annual audits performed by
independent accounting firms, and reports issued by GAO and DOT's
Office of Inspector General (OIG).  Table 1 briefly describes these
tools and their main purpose. 



                                Table 1
                
                      FTA's Grant-Monitoring Tools

Monitoring tools                Purpose
------------------------------  --------------------------------------
Triennial review                Full review and evaluation of
                                grantees' performance in carrying out
                                projects, including specific reference
                                to compliance with statutory and
                                administrative requirements

Financial management oversight  Review of grantees' financial
review                          management systems to determine
                                whether they are sufficient to process
                                federal funds and perform accurately

Procurement systems review      Review of grantees' procurement
                                systems for compliance with
                                competitive bidding and other federal
                                contract qualification requirements

State management                Review of states' implementation of
review                          FTA's grant programs for rural areas
                                and the elderly and disabled

Quarterly progress and          Reports from grantees on project
financial reports               status and grant expenditures to
                                identify such things as cost overruns
                                and potential delays

Annual audit                    Audit performed by independent
                                accounting firm assessing grantees'
                                financial statements, control systems,
                                and compliance with applicable
                                requirements

Site visit and day-to-day       Evaluation of grantees' effectiveness
contact                         in implementing the projects in
                                conformance with the grant agreement

Closeout review                 Final reconciliation of grant to
                                determine that all agreed-upon work
                                has been completed and associated
                                records closed

Project management oversight    Monitoring provided by contractors to
                                ensure that major capital projects
                                progress on time, within budget, and
                                in conformance with approved plans

Quarterly project review        Forum at which larger grantees, FTA
meeting                         staff, and appropriate contractors can
                                discuss project status or emerging
                                problems

GAO and OIG                     Review of grantees' compliance and
reports                         FTA's efficacy in oversight
----------------------------------------------------------------------
FTA also has several enforcement tools to deal with grantees'
noncompliance, including warning letters, suspension of funds, and
grant termination.  However, traditionally, FTA was reluctant to use
these tools to enforce compliance, opting instead to work with
grantees in an effort to continually promote transit development. 

In 1992, GAO designated FTA's grants management oversight as a
high-risk federal program area on the basis of the results of a
series of reviews by GAO and DOT's Inspector General that identified
numerous weaknesses in FTA's oversight of grantees.\2

The reviews had shown that FTA was focusing more on awarding grants
than on ensuring the proper use of federal transit funds.  The
reviews also showed that FTA's oversight was superficial and
inconsistent and that FTA seldom used its enforcement authority to
compel grantees to correct weaknesses, even those that were
long-standing.  Consequently, federal dollars had been placed at
risk. 

In 1995, GAO removed FTA's high-risk designation as a result of FTA's
substantial progress in addressing its grants management oversight
weaknesses.\3 From 1992 to 1995, FTA demonstrated a concerted effort
to improve its oversight procedures through various initiatives which
provided a framework that would allow it to take a more proactive
approach to its grants management, oversight, and enforcement
responsibilities.  These initiatives included the establishment of a
risk assessment process for targeting oversight resources and the
overhaul of the Triennial Review Program.  We noted at that time that
we would continue to monitor FTA's implementation of these
initiatives. 


--------------------
\1 Section 5307 of title 49 requires that comprehensive performance
reviews be performed at least once every 3 years on grantees who
receive funds under this section.  Currently, section 5307 grantees
receive approximately 89 percent of all FTA funds. 

\2 High-Risk Series:  Federal Transit Administration Grant Management
(GAO/HR-93-16, Dec.  1992); Mass Transit Grants:  Scarce Federal
Funds Misused in UMTA's Philadelphia Region (GAO/RCED-91-107, June
13, 1991); Mass Transit Grants:  Improved Management Could Reduce
Misuse of Funds in UMTA's Region IX (GAO/RCED-92-7, Nov.  15, 1991);
Mass Transit Grants:  Noncompliance and Misspent Funds by Two
Grantees in UMTA's New York Region (GAO/RCED-92-38, Jan.  23, 1992);
Mass Transit Grants:  Risk of Misspent and Ineffectively Used Funds
in FTA's Chicago Region (GAO/RCED-92-53, Mar.  4, 1992); Mass Transit
Grants:  If Properly Implemented, FTA Initiatives Should Improve
Oversight (GAO/RCED-93-8, Nov.  19, 1992). 

\3 High-Risk Series:  An Overview (GAO/HR-95-1, Feb.  1995);
High-Risk Series:  Quick Reference Guide (GAO/HR-95-2, Feb.  1995). 


   FTA'S INITIATIVES ARE IMPROVING
   GRANTS MANAGEMENT OVERSIGHT
------------------------------------------------------------ Letter :3

Ongoing initiatives and related organizational changes are continuing
to strengthen FTA's oversight of federal transit grants and decrease
the risk associated with providing billions of dollars each year to
grantees.  FTA has developed better guidance for its staff and
grantees and has standardized its oversight procedures to improve the
quality and consistency of its grants management program.  In
particular, the establishment of a risk assessment process for
targeting limited oversight resources has provided a stronger
foundation for improved oversight, while changes made to the
Triennial Review Program have given FTA staff better guidance,
training, and more resources to carry out review procedures.  In
addition, FTA has made changes to more effectively use its other
oversight tools and has demonstrated a greater willingness to use
stringent enforcement tools to compel grantees to resolve
noncompliance issues. 

In June 1995, FTA reorganized its headquarters staff in an effort to
provide increased focus on and better direction to its oversight
program.  FTA merged existing oversight functions previously located
in three separate offices and created an Office of Oversight with the
responsibility to plan and manage the agency's oversight of federal
transit grants.  Through this central focus, FTA sought to increase
the effectiveness of its oversight program and the efficiency of its
staff.  Responsibility for the day-to-day implementation of oversight
procedures remained with the regional office staff.  FTA also,
through an Oversight Review Order adopted in 1994, established an
Oversight Review Council made up of both headquarters and regional
staff to oversee, coordinate, and ensure the quality of oversight
reviews.\4 The Council holds annual meetings at which FTA staff and
contractors assemble for discussions on oversight policies,
procedures, and lessons learned. 


--------------------
\4 In November 1994, FTA issued an Oversight Review Order that
describes the internal mechanisms for establishing grantees' risk
ratings, conducting oversight reviews, and taking corrective actions. 


      FTA'S OVERSIGHT BEGINS WITH
      ASSESSING RISKS
---------------------------------------------------------- Letter :3.1

Since 1992, FTA has attempted to provide a more comprehensive
strategy for staff and contractors to follow in overseeing grants
management.  The development of a risk assessment process has
provided a firm foundation for this strategy.  Formalized through an
Oversight Review Order issued in November 1994, the risk assessment
process was a key element in allowing FTA to target its resources to
ensure a coordinated, cohesive, and uniform level of oversight
activity.  The order also standardized the procedures for planning,
conducting, and following up on oversight reviews. 

FTA regional staff, in the seven regions we visited, were fully
utilizing the risk assessment process to coordinate and set
priorities for oversight activities.  The risk assessment process
requires regional staff to annually determine the level of risk each
grantee poses to the overall integrity of FTA's programs.  To make
such determinations, staff complete a form containing a series of
questions that assess each grantee's performance in such areas as
grant administration, financial management, and procurement
management.  The resulting risk ratings are used to develop a
regional oversight plan that sets priorities for individual oversight
strategies for each grantee.  These strategies identify the type and
level of resources to be dedicated to overseeing a grantee during the
next fiscal year.  For the fiscal year 1996 risk assessment process,
FTA added a multiplication factor to the process which "adds weight"
to the large grantees that receive most of the federal transit funds. 
This action ensures that these "higher-risk" grantees will be
targeted annually for special attention and given priority for
receiving increased oversight. 

According to our evaluation of all completed assessment forms for
fiscal years 1995 and 1996, the risk ratings themselves appeared to
be reasonable.  The recommended level and type of oversight for
grantees also appeared to be justified.  For example, in cases in
which the completed risk assessment forms identified grantees'
problems with financial management, regional staff recommended that
grantees receive financial management oversight reviews. 


      FTA HAS IMPROVED THE
      TRIENNIAL REVIEW PROGRAM
---------------------------------------------------------- Letter :3.2

The Triennial Review Program builds on the foundation established by
FTA's Oversight Review Order and the risk assessment process.  By
developing substantive guidance and training and making better use of
contractors, FTA has significantly improved the program.  We found
that FTA regional staff are conducting triennial reviews as required
by FTA's guidance. 

The triennial review is FTA's primary oversight tool to monitor most
grantees' compliance with federal regulations.  It also provides an
opportunity for FTA staff to help grantees understand the various
requirements and obligations with which they must comply.  In the
past, we have criticized FTA for the limited scope and depth of the
triennial reviews and cited the need for more specific guidance.\5 To
address our concerns, FTA revised its Triennial Review Order and
developed a comprehensive Triennial Review Handbook.  This guidance
provides explicit instructions on how to review grantees and includes
thorough descriptions of the most successful techniques for
ascertaining grantees' compliance with 21 "key" requirements.  (See
app.  III for summary statements of the 21 triennial review
requirements.) FTA has used this handbook to train FTA staff and
independent contractors responsible for conducting and overseeing the
reviews. 

In addition to training those responsible for conducting triennial
reviews, FTA has developed a grants management seminar aimed at
preparing grantees for what to expect during a triennial review. 
From fiscal year 1995 through fiscal year 1997, FTA conducted 11
seminars with 390 participants.  The seminar and the accompanying
handbook, based on the triennial review process, provide participants
with information on federal compliance requirements and FTA's formula
grant program. 

Prior to being designated a high-risk agency, FTA had not been
conducting triennial reviews as required by law and had been
criticized by us for not making better use of available financial
resources to hire contractors to perform these oversight reviews.\6
FTA has since improved its performance largely through the increased
use of contractor staff.  For example, in fiscal year 1990, only 20
percent of the triennial reviews were conducted by contractors, but
by fiscal year 1996, all triennial reviews were being conducted by
contractors.  By utilizing contractors, FTA has now been able to
ensure that all grantees receive a review at least once every 3
years; in the seven regions we visited, we found that each grantee
had received a review within the last 3 years.  While FTA regional
staff assist contractors in performing these reviews, FTA officials
indicate that the expanded use of contractors frees FTA staff to
follow up with grantees on problems and weaknesses identified during
triennial reviews. 

FTA's Triennial Review Order and Handbook provide guidance to FTA
regional staff for coordinating and overseeing the triennial review
process.  With the exception of report processing requirements, which
we address later, staff in the FTA regions we visited were generally
following this guidance.  Each region had appointed a triennial
review coordinator to implement and monitor the triennial review
process.  Furthermore, regional staff were overseeing contractors
performing triennial reviews by participating in initial desk audits,
accompanying contractors on site visits, and reviewing draft and
final reports. 


--------------------
\5 Mass Transit Grants:  If Properly Implemented, FTA Initiatives
Should Improve Oversight (GAO/RCED-93-8, Nov.  19, 1992). 

\6 GAO/RCED-93-16. 


      FTA IS MAKING BETTER USE OF
      SPECIALIZED REVIEWS AND
      OTHER AVAILABLE OVERSIGHT
      TOOLS
---------------------------------------------------------- Letter :3.3

In addition to triennial reviews, FTA has other grants management
oversight tools at its disposal.  These include specialized financial
management and procurement reviews, project management oversight, and
quarterly reports on grantees' progress.  Through better guidance,
training, and utilization of contractor staff, FTA has made better
use of these tools in an effort to strengthen its oversight of
transit grants. 

FTA has been able to conduct more specialized reviews by again making
better use of contractors.  For example, prior to 1992, FTA had not
performed any financial management reviews on transit grantees. 
However, since that time, as a result of contracting out with
accounting firms, FTA has been able to perform over 100 financial
management oversight reviews.  FTA has also developed a State
Management Review Program for overseeing individual states'
implementation of the FTA grant programs related to rural areas and
the elderly and disabled.  FTA has patterned these state management
reviews after the Triennial Review Program and has utilized
contractors to perform these reviews as well.  Table 2 shows the type
and number of specialized reviews conducted since fiscal year 1992. 



                                Table 2
                
                FTA's Specialized Reviews, Fiscal Years
                                1991-97

                              Number of specialized oversight reviews
                                             conducted
                              ----------------------------------------
                                FY    FY    FY    FY    FY    FY  Tota
Review                          92    93    94    95    96    97     l
----------------------------  ----  ----  ----  ----  ----  ----  ----
Financial management            10    12    29    19    28    12   110
 oversight
Procurement systems              7    23    10     5     8    14    67
State management                 0     0     1     9    13    17    40
======================================================================
Total                           17    35    40    33    49    43   217
----------------------------------------------------------------------
Source:  FTA's Office of Oversight. 

FTA also developed seminars and training courses to help improve
grantees' performance in the areas covered by its specialized
reviews.  Table 3 identifies available training courses and the
number conducted since fiscal year 1994. 



                                Table 3
                
                FTA's Specialized Seminars and Training
                     Courses, Fiscal Years 1993-97

                                   Number conducted
                        --------------------------------------
                                                                 Total
                                                                no. of
                                                                partic
Seminar/course           FY 94   FY 95   FY 96   FY 97   Total  ipants
----------------------  ------  ------  ------  ------  ------  ------
Grants management            0       4       5       2      11     390
Financial management         1       3       4       3      11     660
 systems
Third-party                  2       3       5       5      15     420
 contracting
Contract negotiation &
 cost and price              2       4       2       4      12     359
 analysis
Contract                     3       3       4       5      15     417
 administration
======================================================================
Total                        8      17      20      19      64   2,246
----------------------------------------------------------------------
Source:  FTA's Office of Oversight. 

FTA is also using project management oversight (PMO) contractors to
provide technical on-site monitoring of selected large construction
projects expected to cost over $100 million.  According to FTA, PMO
contractors are hired to monitor a specific transit project on a
continuing basis and provide frequent input to FTA regional staff on
the status of the project's cost, schedule, and performance.  As of
December 1997, FTA had 14 PMO contractors responsible for overseeing
85 major transit projects by 38 grantees.  In designating FTA as a
high-risk agency in 1992, we criticized FTA for not having written
procedures for its staff to use in overseeing PMO contractors.\7 In
June 1993, FTA revised its PMO guidance to include details on the
procedures that regional staff are to use to ensure that PMO
contractors are conducting their project oversight in an efficient
and effective manner.  In all of the seven regions we visited, FTA
officials were overseeing PMO contractors as required.  Their
activities included reviewing monthly PMO status reports, attending
quarterly project review meetings, and frequently contacting the
contractors. 

FTA staff are also making better use of the quarterly reports on
grantees' progress as an oversight tool.  Grantees' quarterly
financial and progress reports provide FTA an opportunity to identify
grantees' problems early and implement appropriate changes before
funds are wasted or mismanaged.  In 1992, we criticized FTA for not
ensuring that grantees submit these reports as required.\8 However,
since that time, FTA has reaffirmed the importance of the reports to
both its regional staff and grantees.  As a result, compliance with
the reporting requirement has improved significantly.  In December
1992, only 33 percent of grantees were submitting quarterly reports
to FTA as required.  As of June 1997, compliance had increased to 74
percent. 


--------------------
\7 GAO/RCED-93-16. 

\8 GAO/RCED-93-16. 


      FTA REGIONAL STAFF ARE USING
      ENFORCEMENT TOOLS MORE
      FREQUENTLY TO COMPEL
      GRANTEES' CORRECTIVE ACTION
---------------------------------------------------------- Letter :3.4

In the past, FTA did not make full use of its available enforcement
tools to correct grantees' noncompliance with federal regulations.\9
However, in response to our 1992 report, FTA established a new
enforcement policy, developed detailed guidance on carrying out
enforcement actions, and has demonstrated a greater willingness to
use these actions against grantees who do not comply with federal
transit requirements. 

In our prior report, we noted that FTA's usual practice of relying
primarily on notification letters and other correspondence rather
than on other available, more stringent enforcement tools failed to
compel grantees to correct noncompliance problems within a reasonable
time.\10 To address these concerns, FTA established enforcement
criteria in its 1994 Oversight Review Order, specifying the
conditions and time frames for using available enforcement tools. 
The order emphasizes the importance of compelling grantees to take
appropriate and timely action to correct noncompliance with federal
requirements.  It also provides guidance on the remedies and
sanctions that may be imposed on grantees who fail to take necessary
corrective actions. 

FTA regional staff are responsible for ensuring that grantees take
agreed-upon actions to correct noncompliance problems and
deficiencies identified by oversight reviews.  Available tools for
enforcing grantees' compliance include sending notification and
warning letters, reducing or withholding funds when federal
requirements have not been met, and seeking reimbursement when funds
have been misspent or mismanaged.  Our review of regional enforcement
and follow-up efforts identified a greater willingness to utilize the
more stringent enforcement tools when appropriate.  We found
instances in which FTA has held up progress payments to grantees,
suspended grant application reviews, and even terminated grants in an
effort to compel grantees to correct their problems and comply with
federal requirements. 

FTA's Atlanta Regional Office's approach to follow-up and enforcement
illustrates this improved enforcement.  Atlanta's regional management
sends letters advising grantees that are slow to resolve triennial
review findings that payments and grant application reviews may be
suspended.  When these letters fail to achieve the desired results,
regional staff follow through on these warnings.  For example, over
the last 3 years, the Atlanta Regional Administrator has suspended
the ability of two grantees to electronically withdraw available
grant funds because of their continual late submission of quarterly
reports and slowness in correcting triennial review deficiencies.  In
another instance, the Administrator terminated a grantee's transit
grant because of the grantee's continued failure to correct triennial
review deficiencies and submit quarterly reports. 

FTA's San Francisco Regional Office has also demonstrated its
willingness to take stringent action.  In one case, the San Francisco
Regional Administrator suspended a grantee's ability to draw down its
funding for operating assistance and placed special conditions on its
new grant because of significant procurement problems initially
identified by a triennial review.  The Regional Administrator also
held up new transit grants to one state after a state management
review found it to be noncompliant in all review areas. 


--------------------
\9 GAO/RCED-93-16. 

\10 GAO/RCED-93-16. 


   IMPROVEMENTS CAN BE MADE IN
   RESOLVING NONCOMPLIANCE AND
   ASSESSING THE PROGRAM'S
   EFFECTIVENESS
------------------------------------------------------------ Letter :4

Although FTA is continuing to strengthen its oversight of federal
transit grants, opportunities for improvement still remain.  For
example, FTA is still taking a long time to resolve grantees'
noncompliance issues and the deficiencies identified during its
various grants management oversight reviews.  In particular, FTA is
taking a long time to issue triennial review reports.  Also, the lack
of documentation in one region provided no support that appropriate
follow-up on noncompliance issues was being performed and that
transit funds provided to grantees were being properly controlled. 
Furthermore, many grantees still frequently miss deadlines for
correcting noncompliance findings from the various oversight reviews. 
FTA headquarters staff cannot accurately measure the full extent or
the impact of grantees' noncompliance with federal requirements
because FTA is not fully utilizing its established tracking system to
monitor noncompliance resolution.  Finally, FTA is not taking
advantage of this available resource to evaluate the extent to which
its regional staff are implementing oversight requirements or to
assess the overall effectiveness of its grants management program. 


      FTA IS NOT ISSUING TRIENNIAL
      REVIEW REPORTS IN A TIMELY
      MANNER
---------------------------------------------------------- Letter :4.1

For the most part, FTA regional staff have not been meeting the time
requirements for processing reports as prescribed in the Triennial
Review Order.  The order requires that final reports be processed
within 90 days of the site visit, and FTA's policy is to issue the
report to grantees within this time frame.  However, the average
report processing time greatly exceeds 90 days.  In some cases,
reports have taken over a year to be issued.  Because the due date
for resolving noncompliance findings is established once the final
report is issued, the length of time it takes for grantees to correct
noncompliance findings is extended.  Regional FTA officials
acknowledged the need to improve report processing time and cited
possible reasons for these delays that included too much internal
report review within FTA regions, delays on the part of contractors,
and a desire to allow grantees as much time as possible to correct
noncompliance findings before the issuance of the final report. 
According to these officials, regional staff often begin to work with
grantees to resolve noncompliance findings on the basis of the
findings highlighted in a draft report, and as a result, some
findings may be resolved before the final report is issued.  Table 4
shows average report processing times for triennial reviews by
regional office for fiscal years 1995 and 1996, the most recent time
for which data are available. 



                                Table 4
                
                Average Time to Process Triennial Review
                  Reports, by FTA Region, FYs 1995-96

                                    Average no. of days to process
                                       triennial review reports
                                --------------------------------------
Region                                     FY 1995             FY 1996
------------------------------  ------------------  ------------------
I                                              189                 214
II                                              \a                  \a
III                                            272                 273
IV                                             158                 208
V                                              178                 162
VI                                             278                  \a
VII                                            163                  \a
VIII                                            93                 134
IX                                             160                 213
X                                              143                  73
======================================================================
FTA's average                                  182                 182
----------------------------------------------------------------------
\a Data were unavailable because regional office staff had not
updated FTA's tracking system with this information. 

Source:  FTA's Triennial Review Information System database. 


      TRIENNIAL REVIEW
      DOCUMENTATION WAS
      INSUFFICIENT OR NONEXISTENT
      IN SOME REGIONAL OFFICES
---------------------------------------------------------- Letter :4.2

The Triennial Review Order also requires regional staff to maintain a
uniform filing system for completed triennial reviews.  For each
review, contractors' workpapers and relevant review documents are to
be maintained and organized by separate folders for each of the 21
triennial review elements.  According to the order, the files should
be organized in a manner that provides a clear audit trail, and all
findings should be fully documented. 

For the most part, the FTA regional staff in the offices we visited
were maintaining a filing system in accordance with the requirement. 
However, documentation related to the final report and follow-up on
noncompliance findings was found to be less than adequate.  In six
regional offices, because of the lack of documentation, we found some
instances in which we were unable to determine whether completed
oversight reviews still had unresolved noncompliance findings.  In
some instances, documentation was old, and there was no evidence of
recent contact with the grantee on resolving open noncompliance
findings.  However, in FTA's New York Regional Office--which oversees
the most transit grant dollars--the lack of documentation was more
serious and problematic.  Most of the triennial review files we
reviewed for fiscal years 1995 and 1996 at this regional office were
missing backup documentation, correspondence, and in some cases the
triennial review report itself.  In addition, the Triennial Review
Coordinator was unable to produce any files for fiscal year 1994
triennial reviews that, according to FTA's records, still contained
unresolved noncompliance findings.  When questioned about the lack of
documentation on follow-up, he noted that the office had lost a very
talented program manager in 1996 who had been responsible for many of
the grant oversight activities, including follow-up on review
findings.  This lack of documentation in FTA's New York Regional
Office provided little confidence that adequate follow-up on open
compliance issues was being conducted. 


      MANY GRANTEES STILL
      FREQUENTLY MISS DEADLINES
      FOR CORRECTING DEFICIENCIES
      NOTED IN OVERSIGHT REVIEWS
---------------------------------------------------------- Letter :4.3

FTA's grants management oversight responsibilities under its
triennial and other specialized review programs do not end with the
issuance of a report.  Through monitoring and follow-up, FTA regional
staff are responsible for ensuring that grantees take appropriate
actions to correct the noncompliance findings or deficiencies
identified by these reviews.  However, despite FTA's willingness to
use its enforcement tools more often, many grantees still frequently
miss FTA's deadlines for resolving oversight review findings. 
Inadequate staffing and FTA's failure to fully use its established
tracking system may be contributing to follow-up delays. 

In the seven regions we visited, many grantees were still frequently
not meeting FTA's time frames for corrective actions, and FTA, in the
spirit of working with grantees and fostering transit development,
often would allow compliance deadlines to be revised, which enabled
grantees to further delay completion of corrective action.  As a
result, we found findings still unresolved from fiscal years 1994 and
1995 triennial reviews.  These findings, for the most part, were
procedural in nature, such as not having a written policy for dealing
with Buy American provisions.  Other findings were more significant,
such as not conducting a required accounting of the grantee's asset
inventory or not carrying out required asset maintenance.  As we
reported to FTA in the past, failing to correct noncompliance in a
timely manner can send a message to grantees that federal
requirements are not important.\11 Moreover, as we discuss later, by
not fully utilizing the established tracking system, FTA officials
are unaware of the true extent to which serious noncompliance is
going uncorrected. 


--------------------
\11 GAO/HR-93-16. 


      STAFFING PROBLEMS MAY
      CONTRIBUTE TO FOLLOW-UP
      DELAYS
---------------------------------------------------------- Letter :4.4

Staffing issues may be a factor contributing to the length of time
taken to bring grantees into compliance.  When questioned about why
it was taking so long to resolve review findings, regional officials
attributed the delays, at least partially, to the need for more
oversight staff or to the existence of staff vacancies in critical
positions.  In following up with grantees on unresolved noncompliance
issues, these officials told us that, in the light of staffing
limitations, they give first priority to resolving the noncompliance
findings that they consider to be the most serious.  For example, the
officials explained that priority would be given to working with a
large grantee to correct noncompliance with FTA's "20-percent spare
ratio" policy over a smaller grantee's noncompliance because of the
absence of a particular clause in its written procedures dealing with
the requirements of the Americans With Disabilities Act.\12

In 1992, we criticized FTA for inconsistent and unfocused allocation
of oversight staff.\13

At the time, we found that FTA regions varied dramatically in the
number of staff and proportion of staff time they devoted to
oversight.  Despite FTA's assurance to address these concerns, we
found that this condition still exists today.  An internal task force
on staffing recommended in May 1993 that FTA consider doing a
detailed study of staff allocations to determine how regional and
headquarters staffs' oversight efforts should best be focused.  The
study was to include a determination of the regional staffing levels
necessary to perform oversight functions.  FTA ultimately did not
follow through on this recommendation.  According to FTA's Office of
Oversight, this issue was addressed as part of FTA's 1995
reorganization.  However, FTA's reorganization does not appear to
have resolved the inconsistent and unfocused allocation of staff to
oversee regional grants management. 

Comparing some of our observations of the New York and San Francisco
regions' follow-up efforts provides some insight on the impact that
staffing can have upon resolving review findings.  In the New York
Regional Office, the Director of Oversight has assumed sole
responsibility for follow-up.  As noted previously, we found little
evidence of follow-up on open review findings in this region. 
Conversely, in the San Francisco Regional Office, we observed the
positive impact the addition of staff could have on follow-up.  In
January 1997, the San Francisco Regional Office obtained an
additional experienced staff person as part of the establishment of
its Los Angeles Metro office.  In reviewing oversight review files,
we found numerous instances in which this staff person had taken
steps to compel grantees in the Los Angeles area to resolve old
triennial review findings. 

When FTA's high-risk designation was removed in 1995, FTA's budget
included an increase of 20 staff years.  FTA officials told us at
that time that these staff- years, along with 8 additional
staff-years transferred from headquarters to the regional offices,
would be used to supplement existing regional oversight staff. 
However, our current review found that staff increases in the area of
grants management oversight have not occurred in FTA's regional
offices.  According to regional officials, increases have occurred in
other areas, such as planning and civil rights oversight.  We also
noted vacancies in critical oversight positions in a number of the
regional offices we visited.  As a result, there is no strong
correlation between the number of grants, the number of staff
performing oversight, and the time spent on oversight from region to
region.  Table 5 identifies FTA's regional staffing levels, including
oversight vacancies, and the number of staff-years dedicated to
grants management oversight. 



                                         Table 5
                         
                         Grants Management Oversight Staffing in
                          FTA's Regional Offices as of July 1997


                        Oversight      Percentage          Number  Percentage  Percentage
                Total       staff    of oversight    of oversight          of    of grant
   Region       staff     years\a     staff years       vacancies    grants\c   dollars\d
---------  ----------  ----------  --------------  --------------  ----------  ----------
        I          16         4.6              29               1           9           4
       II          18         3.4              19               0           9          26
      III          23        6.15              27               0          10          11
       IV          21        4.68              22               1          14           6
        V          24        4.45              19               1          21          17
       VI          17         4.9              29             1\b           9           5
      VII          13         3.5              27               1           5           2
     VIII          10         2.6              26               1           4           1
       IX          23        4.75              21               3          12          12
        X          10         2.3              23               0           5           3
-----------------------------------------------------------------------------------------
Source:  FTA's Office of Oversight. 

\a Staff-years represent the total full-time-equivalent effort
dedicated to grants management oversight activities.  According to
FTA officials, this number was calculated on the basis of the
percentage of time each staff member spends on oversight activities. 

\b This vacancy was filled as of September 15, 1997. 

\c Percentage of total FTA transit grants. 

\d Percentage of total FTA transit grant dollars. 


--------------------
\12 Under FTA's policy, grantees should generally maintain an
inventory of spare buses that totals no more than 20 percent of the
buses currently in use. 

\13 GAO/HR-93-16. 


      ESTABLISHED SYSTEM NOT BEING
      FULLY UTILIZED TO TRACK
      CORRECTIVE ACTION OR ASSESS
      THE PROGRAM'S EFFECTIVENESS
---------------------------------------------------------- Letter :4.5

FTA is not making full use of its Triennial Review Information System
(TRIS) to track the resolution of triennial review findings or to
assess the effectiveness of the agency's oversight efforts.  TRIS has
the potential to be a very useful management tool for tracking
compliance, identifying problems, and assessing the effectiveness of
FTA's oversight.  However, FTA has not fully utilized or improved the
system for these purposes. 

TRIS is a computer database that is located on each regional and
headquarters office's local-area computer network and is designed to
catalogue and track the resolution of oversight review findings.  For
each triennial review, regional staff are to input such information
as the specific findings by triennial review issue, the corrective
actions required, the expected dates for corrective actions, and the
actual dates of corrective actions.  With such data in the system,
FTA should be able to generate periodic reports showing whether
grantees are complying with federal requirements and assess the
timeliness of resolving noncompliance findings. 

In fiscal year 1995, FTA headquarters officials stressed to regional
staff the importance of updating TRIS on a monthly basis and using
the system to monitor grantees' compliance with federal requirements. 
At that time, FTA was beginning to use the system to identify areas
in which improvements in grant oversight could be made.  For example,
on the basis of an analysis of the TRIS data, FTA officials
identified that regional staff were taking a long time to issue
triennial review reports and concluded that a better effort was
needed to bring grantees into compliance in a more timely manner. 
However, since that time, FTA has not maintained or expanded its use
of TRIS.  FTA regional staff have not been uniformly updating TRIS,
and FTA headquarters officials are not enforcing its use or utilizing
it as a management tool.  Except for FTA's Philadelphia Regional
Office, updates to TRIS by regional staff have been slow and
incomplete in many cases and practically nonexistent in others.  When
questioned as to why they were not updating or utilizing TRIS, some
regional officials stated that the system was not user-friendly, that
its capabilities needed to be expanded for more detailed analysis,
and that TRIS was a low-priority task in light of staffing
limitations and the need to continually follow up with grantees. 
Furthermore, FTA has not yet expanded the system to track findings
from its other specialized reviews, even through it said such an
expansion would take place in fiscal year 1995. 

Failure to use the system to monitor corrective actions may also be a
factor contributing to the length of time it is taking regional staff
to resolve noncompliance findings.  Regional staff are required,
according to the Oversight Review Order, to develop a means for
monitoring corrective actions.  However, the use of a tracking system
to monitor open findings varied significantly from region to region
and in some cases was nonexistent.  For example, staff at the New
York and Dallas regional offices were not using any formal or
informal mechanism to track open review findings.  On the other hand,
staff in the San Francisco Regional Office had established a
comprehensive, detailed process to track findings from triennial
reviews, financial management oversight, and procurement system
reviews.  This process utilized spreadsheets and separated oversight
review files with open findings from those that had been closed. 
FTA's Chicago Regional Office had also established a similar system. 

Even more important, if regional staff were updating TRIS, FTA's
Office of Oversight could use the system to identify problematic
trends and assess the overall effectiveness of FTA's oversight
initiatives.  For example, if staff in the New York Regional Office
had been updating TRIS, FTA's Office of Oversight could have
determined that there was a problem in resolving noncompliance
findings that needed attention.  However, the fact that the regional
office staff were not updating TRIS at all should have raised concern
about a potential problem. 

Similarly, knowing that grantees frequently miss deadlines for
correcting noncompliance findings, FTA could use TRIS to assess the
potential impact of such delays.  Through TRIS, FTA could determine
whether delays were occurring for minor noncompliance issues that put
no federal dollars at risk or whether serious noncompliance was going
uncorrected.  An analysis showing the latter might suggest the need
for FTA to reevaluate its grants management oversight staffing in its
regional offices. 

FTA could also use TRIS to assess the effectiveness of its oversight
initiatives over time for purposes of evaluating its performance
under the Government Performance and Results Act.  According to FTA,
a new tracking system is currently being developed to address these
concerns. 


   CONCLUSIONS
------------------------------------------------------------ Letter :5

Over the past several years, FTA has demonstrated a heightened
commitment to grants management oversight by implementing various
oversight initiatives.  FTA's risk assessment process has helped
target limited oversight resources and has provided a strong
foundation for improved oversight.  Furthermore, the overhaul of the
Triennial Review Program, FTA's primary tool for overseeing most
grantees, has given FTA better guidance, training, and more resources
to monitor grantees.  FTA has also made better use of other
specialized oversight tools at its disposal and has demonstrated a
greater willingness to use stringent enforcement actions to compel
grantees to resolve noncompliance issues.  As a result, FTA is
successfully reducing the risk associated with its grants management
program.  Nonetheless, opportunities exist for FTA to continue to
improve its grants management oversight and provide stronger
oversight of federal transit funds. 

FTA staff are not consistently applying established procedures for
correcting noncompliance findings.  For example, few regional staff
are consistently updating TRIS or using TRIS to monitor unresolved
noncompliance findings, while staff in other regional offices have
established their own monitoring systems.  FTA is also taking a long
time to issue triennial review reports and resolve grantees'
noncompliance findings and deficiencies identified during its various
oversight reviews of grants management activities.  In addition, many
grantees are still frequently not meeting FTA's time frames for
complying with federal transit requirements.  Also, while
documentation pertaining to the various oversight reviews generally
was being adequately maintained by FTA's regional staff, the lack of
documentation in one region provided no assurance that appropriate
follow-up on noncompliance findings was being performed or that
transit funds provided to grantees were being properly controlled. 

While FTA officials state that these problems could be attributed to
the lack of staff assigned to perform oversight activities, FTA never
followed through on a task force's earlier recommendation to assess
staff allocations between program and oversight functions.  As a
result, there is still no strong relationship between the number of
grants, the number of staff performing oversight, and the time spent
on oversight from one regional office to another. 

Finally, because most FTA regional staff are not providing or
updating information to TRIS as required, FTA headquarters officials
are not able to fully utilize this established tracking system to
monitor noncompliance resolution.  Currently, FTA officials are not
able to identify the full extent to which grantees are not complying
with federal transit requirements or evaluate the overall
effectiveness of the agency's oversight initiatives.  In theory, if
FTA is doing a good job overseeing its grantees, one would expect an
increase in the number of grantees that remain in compliance or at
least a reduction in the number of noncompliance findings.  TRIS
could be used to identify such trends; yet until FTA ensures that
regional staff input complete and timely data into the system, such
analyses cannot be performed. 


   RECOMMENDATIONS
------------------------------------------------------------ Letter :6

In order to continue FTA's progress in improving grants management
oversight on a nationwide basis, the Secretary of Transportation
should direct the Administrator, FTA, to require all regional staff
to consistently apply established procedures and practices for
monitoring and correcting grantees' noncompliance to ensure
standardization throughout FTA.  The Secretary should also require
the Administrator to (1) enforce the time frames established by FTA
for resolving noncompliance findings and closing out triennial
reviews and (2) abide by established reporting time frames.  The
Secretary of Transportation should further require that the
Administrator, FTA, have the Office of Oversight monitor the way
regional office staff are implementing oversight procedures and
policies to ensure dependable and consistent application throughout
the agency. 

In order to determine the regional staffing levels that are necessary
to effectively carry out the responsibilities of grants management
oversight in a timely manner, the Secretary of Transportation should
require the Administrator, FTA, to complete the detailed staffing
workload analysis recommended by an earlier internal task force. 

The Secretary of Transportation should also ensure that the
Administrator, FTA, requires all regional staff to provide
information on triennial reviews to the Triennial Review Information
System on a consistent basis so that it can be used as the monitoring
and tracking mechanism that FTA originally intended it to be.  FTA
should quickly move to incorporate the results of other specialized
reviews, such as financial management oversight and procurement
reviews, into the system so that all instances in which grantees are
not in compliance with federal requirements can be monitored and
tracked to their proper resolution. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

We provided copies of a draft of this report to the Department of
Transportation for its review and comment.  We met with FTA's
Associate Administrator for Program Management and other officials
from the Office of Oversight.  The officials agreed with the report's
findings and recommendations but provided some minor clarifications. 
We have incorporated their comments where appropriate. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :8

To identify FTA's initiatives that have provided an increased focus
on oversight and determine what improvements could be made to correct
grantees' noncompliance and assess the program's effectiveness, we
interviewed FTA officials in the Office of Oversight and reviewed
applicable legislation, regulations, and program guidance.  We
conducted site visits at 7 of FTA's 10 regional offices located in
Atlanta, Chicago, Dallas, New York, Philadelphia, San Francisco, and
Seattle.  We selected these regional offices on the basis of (1) the
number of grantees, (2) the number of grants, and (3) the amount of
grant dollars.  This selection also included the regional offices we
had evaluated in 1992 when we designated FTA as a high-risk agency. 
During our visits to FTA's regional offices, we interviewed officials
responsible for performing oversight activities, reviewed oversight
files, and discussed our observations with pertinent FTA staff.  We
did not include civil rights, planning, or safety reviews in our
review of FTA's oversight activities. 

We performed our work from May 1997 through January 1998 in
accordance with generally accepted government auditing standards.  We
did not assess the reliability of FTA's computer-generated data
because we based our analysis and findings primarily on source
documentation maintained at the various regional offices. 


---------------------------------------------------------- Letter :8.1

We are sending copies of this report to the Secretary of
Transportation; the Administrator, Federal Transit Administration;
the Director, Office of Management and Budget; participating
organizations; and interested congressional committees.  Copies are
available to other interested parties upon request. 

Major contributors to this report are listed in appendix IV.  Please
call me on (202) 512-3650 if you have any questions. 

Phyllis F.  Scheinberg
Associate Director, Transportation Issues



      LIST OF COMMITTEES
---------------------------------------------------------- Letter :8.2

The Honorable Frank R.  Wolf
Chairman
The Honorable Martin Sabo
Ranking Minority Member
Subcommittee on Transportation
Committee on Appropriations
House of Representatives

The Honorable Thomas E.  Petri
Chairman
The Honorable Nick J.  Rahall, II
Ranking Minority Member
Subcommittee on Surface Transportation
Committee on Transportation and Infrastructure
House of Representatives

The Honorable Richard C.  Shelby
Chairman
The Honorable Frank Lautenberg
Ranking Minority Member
Subcommittee on Transportation
Committee on Appropriations
United States Senate

The Honorable John W.  Warner
Chairman
The Honorable Max S.  Baucus
Ranking Minority Member
Subcommittee on Transportation and Infrastructure
Committee on Environment and Public Works
United States Senate


CERTIFYING GRANTEES
=========================================================== Appendix I

FTA requires grantees to provide numerous certifications and
assurances of compliance with federal requirements.  FTA categorizes
these submissions into three groups:  one-time, annual, and
grant-specific.  One-time submissions include a number of basic
project assurances that are submitted once and remain on file with
FTA, needing only to be updated as necessary.  Each fiscal year,
grantees must also submit various planning and operating statistics. 
Other submissions are required with each grant application.  FTA is
required to have current submissions meeting each applicable
requirement on file before funds can be provided to a grantee. 


      ONE-TIME SUBMISSIONS
------------------------------------------------------- Appendix I:0.1

FTA requires one-time submissions that include, among other things,

  -- an Opinion of Counsel that establishes the applicant's
     eligibility to apply for, contract for, and execute a grant;

  -- a list of labor unions to determine that fair and equitable
     arrangements are made to protect employees' interests;

  -- civil rights assurances to demonstrate that hiring, contracting,
     and other federally assisted activities are not discriminatory
     or exclusionary, together with a plan to maximize the
     participation of minority- and women-owned businesses; and

  -- standard assurances to comply with laws and administrative
     requirements common to all federal grant programs, such as
     requirements of the National Environmental Policy Act of 1969,
     Uniform Relocation Assistance and Real Property Acquisition
     Policies Act of 1970, and Flood Disaster Protection Act of 1973,
     as amended. 

For FTA's Urbanized Formula funds, grantees certify, among other
things,

  -- their legal, financial, and technical capacity to complete the
     project and protect federal funds;

  -- their ability to provide satisfactory continuing control and
     maintenance of FTA's funds and property;

  -- their agreement to maintain a uniform system of accounts,
     records, and reporting;

  -- their commitment to acquire or invest in rolling stock in
     conformance with FTA's guidelines, including FTA's 20-percent
     spare bus policy; and

  -- their commitment to have procurement systems that comply with
     federal procurement regulations. 

Grantees that have not made these certifications must submit
information on noncompetitive awards and procurements exceeding
$100,000 for FTA's preaward review, while those that have certified
need submit information only for contracts exceeding $1 million. 


      ANNUAL SUBMISSIONS
------------------------------------------------------- Appendix I:0.2

FTA requires grantees to provide a number of submissions each fiscal
year in which they receive federal funds.  The required information
may include (1) plans relating to transportation improvement
programs, including private-sector involvement; (2) plans and updates
to meet civil rights requirements and disadvantaged business
participation goals; and (3) reports on factors affecting transit
operations, such as ridership and revenues (required of Urbanized
Formula grantees). 


      GRANT-SPECIFIC SUBMISSIONS
------------------------------------------------------- Appendix I:0.3

In addition to the one-time and annual submissions, grantees must
also provide information with each grant application.  Grant-specific
submissions include (1) a statement of continued validity of one-time
submissions to be kept in the grantee's file, (2) a transmittal
letter identifying the commitment of local funds, (3) a program
outlining projects and budgets, (4) details on expenditures, and (5)
a state certification to ensure compliance with provisions for
notifying state organizations of proposed transit projects and state
review of proposals. 


FTA'S GRANT ALLOCATIONS BY REGION,
AS OF SEPTEMBER 30, 1997
========================================================== Appendix II

Region and headquarters          Number of           Net     Number of
location                          grantees   obligations        grants
----------------------------  ------------  ------------  ------------
I, Boston, MA                           42  $1,782,555,9           361
                                                      31
II, New York, NY                        41  10,810,221,8           393
                                                      29
III, Philadelphia, PA                   55  4,532,967,35           424
                                                       4
IV, Atlanta, GA                        116  2,594,347,60           582
                                                       9
V, Chicago, IL                         105  6,995,740,46           872
                                                       2
VI, Dallas/Forth Worth, TX              69  2,014,267,78           383
                                                       0
VII, Kansas City, MO                    31   857,806,072           218
VIII, Denver, CO                        28   446,280,894           172
IX, San Francisco, CA                   87  4,998,193,65           486
                                                       4
X, Seattle, WA                          35  1,413,230,84           226
                                                       7
Headquarters                             1  5,626,649,59            38
                                                       7
======================================================================
Total                                  610  $42,072,262,         4,155
                                                     029
----------------------------------------------------------------------

SUMMARY STATEMENTS OF TRIENNIAL
REVIEW REQUIREMENTS
========================================================= Appendix III

In carrying out its triennial review responsibilities, FTA ensures
that transit grantees are in compliance with the following
requirements. 

1.  Legal Capacity--FTA grantees must be authorized under state and
local law to request and receive federal funds and to administer
federally funded projects. 

2.  Financial Capacity--FTA grantees must demonstrate the capacity to
manage funds and meet financial obligations in accordance with all
federal requirements. 

3.  Technical Capacity--FTA grantees must possess sufficient
expertise and resources to implement all grant agreements and
contracts and satisfy all federal requirements. 

4.  Satisfactory Continuing Control--FTA grantees must maintain
control over federally funded property, ensure that it is used in
transit service, and dispose of it in accordance with federal
requirements. 

5.  Maintenance--FTA grantees must keep federally funded property in
good operating order. 

6.  Elderly and Persons With Disabilities/Medicare Half Fare--FTA
grantees must offer half fare to elderly and persons with
disabilities (and persons presenting medicare cards) during nonpeak
service hours on fixed-route service. 

7.  Competitive Procurement--FTA grantees must utilize a competitive
procurement process and protect procedures in accordance with all
federal requirements. 

8.  Buy American--FTA grantees and their contractors must comply with
all Buy American requirements. 

9.  Program of Projects--FTA grantees must develop an annual Program
of Projects (POP) in accordance with all federal planning
requirements. 

10.  Planning--FTA grantees must participate in a regional planning
process in compliance with federal requirements, including adequate
involvement of private operators. 

11.  Elderly and Persons with Disabilities Special Efforts--FTA
grantees must satisfy all federal requirements pertaining to
employment practices, program accessibility, and services for persons
with disabilities and must make special efforts in program
accessibility and services for the elderly. 

12.  Public Comment on Fare and Service Changes--FTA grantees must
solicit and consider public comment before implementing increases in
fares or restructuring in service. 

13.  Charter Bus--FTA grantees are prohibited from using federally
funded equipment and facilities to provide charter services when
there is a willing and able private operator, unless one of the
exceptions to FTA's Charter regulations apply. 

14.  School Bus--FTA grantees are prohibited from using federally
funded equipment to provide school bus service. 

15.  Section 15--FTA grantees must collect and report section 15 data
in accordance with the uniform system of accounts and records. 

16.  Civil Rights--FTA grantees must comply with all federal
requirements pertaining to nondiscrimination, equal employment
opportunity, and contracting opportunities for disadvantaged
businesses. 

17.  Safety and Security--Federal law authorizes FTA to investigate
unsafe operating conditions involving federally funded transit
facilities and equipment.  The grantee is required to report safety
(accident, death, injury) data under section 14 of the Federal
Transit Act.  Any recipient of section 9 funds must annually certify
that it is spending 1 percent of such funds for transit security
projects or that such expenditures for security systems are not
necessary. 

18.  Drug-Free Workplace--A federal regulation requires grantees to
ensure a drug-free workplace and to have an antidrug policy and
training program. 

19.  Integrity--To prevent fraud, waste, and abuse in federally
assisted transactions, FTA grantees must ensure that the
participants, including its principals and third-party contractors in
all federally assisted transactions, are not debarred, suspended,
ineligible or voluntarily excluded from participation in federally
assisted transactions. 

20.  Private Enterprise Participation--FTA grantees are required to
consider using private transportation providers when service changes
are contemplated. 

21.  Lobbying--Recipients of federal grants and contracts exceeding
$100,000 must certify compliance with federal requirements that
prohibit the use of these funds to attempt to influence the award or
amendment of any federal contract, grant, loan, or cooperative
agreement. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix IV

RESOURCES, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION, WASHINGTON,
D.C. 

Phyllis F.  Scheinberg, Associate Director
Ron Stouffer, Assistant Director
Paul J.  Bollea, Project Manager

ATLANTA FIELD OFFICE

Kirk Kiester, Evaluator-in-Charge


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