Sneak Preview: FTA To Review Blanket Approval for Change Orders

September 9, 2016 | By Jerry Ashworth | Post a Comment

xsass_bookshot(The following was excerpted from a recent article in the Single Audit Information Service.) The Federal Transit Agency (FTA) this fall plans to evaluate its policy regarding recipient use of blanket approvals for change orders under a federal award after a recent audit by the Department of Transportation Office of Inspector General (OIG) found that FTA’s internal controls did not prevent the Metropolitan Transportation Authority (MTA), and its subsidiary New York City Transit (NYCT), from making change orders in compliance with FTA policy related to Hurricane Sandy relief projects. In addition, the audit found that NYCT inappropriately drew down about $18 million in award funds for work unrelated to its Hurricane Sandy recovery awards.

Congress appropriated about $11 billion to FTA’s Public Transportation Emergency Relief Program for Hurricane Sandy recovery and relief efforts under the Disaster Relief Appropriations Act of 2013. As of November 2015, FTA had disbursed about $1.16 billion to four grant recipients — MTA, New Jersey Transit, the Port Authority of New York/New Jersey and the Part Authority Trans Hudson — with MTA receiving $821 million of those funds.

FTA developed its Hurricane Sandy Oversight Plan to ensure that it had adequate internal controls to identify improper payments and to identify whether award recipients are complying with federal requirements. Under the plan, recipients receiving more than $100 million in Hurricane Sandy relief funds are required to conduct several project monitoring activities including periodic reviews of payments and change orders. In addition, FTA conducts triennial, financial management oversight and procurement system reviews related to these funds.

However, the OIG audit found that FTA’s oversight practices did not ensure that NYCT was using Hurricane Sandy funds in compliance with federal procurement requirements. The OIG reviewed nine awards that NYCT received and determined that NYCT drew down $17.7 million for ineligible procurements for two of these awards, even drawing down funds after FTA had determined they were not eligible. A portion of these funds were spent on work that was not within the scope of the federal award.

(The full version of this story has now been made available to all for a limited time on Thompson’s Grants Compliance Expert site.)

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