From the U.S. Government Accountability Office, www.gao.gov Transcript for: Watchdog Report: Recovery Act Funding of Transportation & Water Projects Audio interview by GAO staff with Phil Herr, Director, Physical Infrastructure, and David Trimble, Director, Natural Resources and Environment Related GAO Work: GAO-11-600: Funding Used for Transportation Infrastructure Projects, but Some Requirements Proved Challenging AND GAO-11-608: Recovery Act: Funds Supported Many Water Projects and Federal and State Monitoring Shows Few Compliance Problems Released on: June 29, 2011 [ Background music ] [ Narrator: ] Welcome to GAO's Watchdog Report, your source for news and information from the Government Accountability Office. It's June 29, 2011. In two recent reports, GAO reviewed the use and accountability of Recovery Act funds. One report looked at the more than 45 billion dollars that have been obligated to over 15,000 transportation projects nationwide. The other examined 6 billion dollars that have been awarded to clean water and drinking water projects. First, GAO's Jeremy Cluchey sat down with Phil Herr, a Director in GAO's Physical Infrastructure team, to learn more about the Recovery Act's funding of transportation projects. [ Jeremy Cluchey: ] What are some of the sorts of projects that have been funded by the Recovery Act money that's been expended on transportation so far? [ Phil Herr: ] All across the different programs, and there's a total of 48 billion dollars for programs for transportation in Recovery Act, and those range from relatively small amounts assistance--to small shipyards which was about 100 million dollars--up to highway infrastructure which was about 26 billion dollars. So in the highway and transit areas for example you have pavement improvement projects, pavement resurfacing, some pavement widening projects--those are all relatively simple projects to get under way in the transportation sphere. And transit you have things like transit infrastructure, vehicle purchases like buses, things of that nature. So again the focus of the Recovery Act was to do things quick, in a timely manner. And because of that, that affected the kinds of things that states and localities could get under way quickly. [ Jeremy Cluchey: ] And when you looked at the state oversight of the expenditure of these funds, how effective did you find that monitoring to be? [ Phil Herr: ] I think in general we found that states and the federal government had done a nice job in coordinating. There has not been a lot of reported problems with the expenditures in the sense of fraud investigations, things of that nature. The Chairman of the Recovery Act Accountability and Transparency Board recently testified that there was an extremely low level of fraud involving Recovery Act funds, which is a reassuring thing. As we looked through IG reports and also reports by state auditors, we also found there was a relevantly low incidence of problems being reported through those. Some folks link that to the recipient reporting requirement that was put into place for Recovery Act, so there was more transparency, things of that nature. [ Jeremy Cluchey: ] And your team also looked at the reporting of the effect that these funds have had on transportation jobs. What did you find there? [ Phil Herr: ] Using the information that's available through the current channels that were set up for the Recovery Act, which was somewhat unique, they're--the numbers--are quarterly numbers and they range from about 30,000 to 65,000 full-time equivalents. Those are based on reporting quarters starting in October of 2009 through March 31 of 2011. Now an important caveat for those numbers is that they cover only direct jobs so that doesn't mean indirect jobs, or what might be called induced jobs, so these would be people that would be active on a job site not necessarily say, for example, an asphalt manufacturer that's applying asphalt. That job wouldn't be captured so you're in that ballpark but those numbers of course they go up in the summer and they're down in the winter because of the seasonal nature of construction, too. Those are a couple of areas we talk about in the report in a little more depth. [ Narrator: ] Jeremy also talked with David Trimble, a Director in GAO's Natural Resources and Environment team, to learn more about how Recovery Act funds have supported clean water and drinking water projects. [ Jeremy Cluchey: ] What are some of the sorts of projects for which states have used these funds? [ David Trimble: ] Well it's a variety of projects. There's the clean water side and the drinking water side. On the clean water side, it supported a variety of treatment like sewage treatment projects, about half the money went to advanced and secondary sewage treatment. And then about 40 percent of the money went to sewers on the clean water side. On the drinking water side of the ledger, it's about 50 percent distribution-related projects and then about a quarter of it went to treatment projects. So it's really sort of your nuts and bolts kind of infrastructure kind of projects. [ Jeremy Cluchey: ] And your team looked at EPA's monitoring of the funding as well as its evaluation of the impact that the funding had. What did you find? [ David Trimble: ] You know the EPA's made good progress in following their oversight plan. They established an oversight plan at the beginning of the process in the use of the RF funds. Last year in a report we issued in May, we had made recommendations on improving their process; they implemented those recommendations and EPA and the states have been following them by in large. And overall there have been very few problems identified or reported. But this is an area that's, you know, bears watching, the states and the IGs are out there and keeping track of this very closely. [ Jeremy Cluchey: ] And states did identify some challenges in implementing the Recovery Act's requirements for these projects. Can you elaborate on this? [ David Trimble: ] Yeah the challenges really related to some of the unique requirements under the Recovery Act. For example, the requirement they use the funds and get the projects under contract within 1 year, the green requirement, and then the Buy America and the Davis-Bacon provisions. By in large the biggest challenge dealt with funding projects that were ready to proceed within 1 year. That was a big challenge just because not all projects were so positioned. And the the green projects also presented challenges because the state ranking systems that are typically used to fund these projects didn't necessarily highlight or value the green projects as high as they needed to be for the funding. [ Jeremy Cluchey: ] Finally, your team also noted an interesting finding that has to do with support for projects in disadvantaged communities. Can you explain what this was? [ David Trimble: ] Yeah the Recovery Act did not require in the state revolving fund programs that the money be targeted to disadvantaged communities. What we found when we did our field work in the nine states we looked at in this most recent report, is that the states did have data on how the money had gone to the support projects in these communities. And we found that notwithstanding the lack of requirement in this area, about 24 percent of the funds overall were going to projects that serve these disadvantaged communities. [ Background music ] [ Narrator: ] To learn more, visit GAO's Web site at GAO.gov and be sure to tune in to the next edition of GAO's Watchdog Report for more from the congressional watchdog, the Government Accountability Office.