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entitled 'Federal-Aid Highways: Increased Reliance on Contractors Can 
Pose Oversight Challenges for Federal and State Officials' which was 
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Report to the Chairman, Committee on Transportation and Infrastructure, 
House of Representatives: 

United States Government Accountability Office: 

GAO: 

January 2008: 

Federal-Aid Highways: 

Increased Reliance on Contractors Can Pose Oversight Challenges for 
Federal and State Officials: 

GAO-08-198: 

GAO Highlights: 

Highlights of GAO-08-198, a report to the Chairman, Committee on 
Transportation and Infrastructure, House of Representatives. 

Why GAO Did This Study: 

Pressure on state and local governments to deliver highway projects and 
services, and limits on the ability of state departments of 
transportation (state DOT) to increase staff levels have led those 
departments to contract out a variety of highway activities to the 
private sector. As requested, this report addresses (1) recent trends 
in the contracting of state highway activities, (2) factors that 
influence state highway departments’ contracting decisions, (3) how 
state highway departments ensure the protection of the public interest 
when work is contracted out, and (4) the Federal Highway 
Administrations’ (FHWA) role in ensuring that states protect the public 
interest. To complete this work, GAO reviewed federal guidelines, state 
auditor reports, and other relevant literature; conducted a 50-state 
survey; and interviewed officials from 10 selected state highway 
departments, industry officials, and FHWA officials. 

What GAO Found: 

State DOTs have increased the amount and type of highway activities 
they contract out to consultants and contractors. State DOTs are also 
giving consultants and contractors more responsibility for ensuring 
quality in highway projects, including using consultants to perform 
construction engineering and inspection activities as well as quality 
assurance activities. Many state officials reported that they expect 
the amount of contracted highway activities to level off over the next 
5 years, due to factors such as uncertain highway program funding 
levels. 

State DOTs indicated that the most important factor in their decision 
to contract out highway activities is the need to access the manpower 
and expertise necessary to ensure the timely delivery of their highway 
program, given in-house resource constraints. Officials said that they 
must contract out work to keep up with their highway programs. Of the 
50 departments that completed GAO’s survey, 38 indicated that they have 
experienced constant or declining staffing levels over the past 5 
years. While state DOTs consider cost issues when making contracting 
decisions, cost savings are rarely the deciding factor in contracting 
decisions, and none of the 10 departments that GAO interviewed had a 
formal process in place for systematically assessing costs and benefits 
before entering into contracts. 

State DOT officials that GAO interviewed believe that they have 
sufficient tools and procedures in place to select, monitor, and 
oversee contractors to ensure that the public interest is protected. 
However, implementation of these mechanisms is not consistent across 
states, and state auditors reported weaknesses in several states. State 
DOTs also face additional challenges in conducting adequate oversight 
and monitoring, given current trends in the use of consultants and 
contractors. For example, while state employees are always ultimately 
responsible for highway project acceptance, they are increasingly 
further removed from the day-to-day project oversight. Officials from 
all 10 state DOTs that GAO interviewed said that current trends may 
lead to an erosion of in-house expertise that could affect the state 
DOTs’ ability to adequately oversee the work of contractors and 
consultants in the long term. 

Because states have broad latitude in implementing the federal-aid 
highway program, FHWA has a limited role in states’ use of consultants 
and contractors. Typically, FHWA’s focus is on ensuring that state DOTs 
are in compliance with federal regulations when contracting out, such 
as ensuring that federal bidding requirements are met. FHWA has 
conducted both local and national reviews that have also identified 
various risks related to the increased use of consultants, including 
weaknesses in state quality assurance programs and an increased 
potential for conflicts of interest. While FHWA has identified these 
risks, it has not comprehensively assessed how, if at all, it needs to 
adjust its oversight efforts to protect the public interest, given 
current trends in the use of consultants and contractors. 

What GAO Recommends: 

GAO recommends that the Secretary of Transportation work with FHWA 
division offices in targeting their oversight activities to give 
appropriate consideration to identified areas of risk related to the 
increased use of consultants and to develop performance measures to 
help evaluate the effectiveness of state controls. The Department of 
Transportation did not comment on GAO’s recommendation but provided 
technical clarifications, which GAO incorporated as appropriate. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.GAO-08-198]. For more information, contact 
JayEtta Z. Hecker at (202) 512-2834 or heckerj@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

States Have Increased the Contracting Out of Highway Activities, and 
Consultants and Contractors Increasingly Have Substantial 
Responsibility for Ensuring Quality and Delivery of Highway Projects: 

State DOTs Indicate That Lack of In-house Staff and Expertise Are the 
Most Important Drivers in States' Contracting Decisions: 

State DOTs Use Various Controls to Protect the Public Interest, but 
They Face Additional Challenges Arising from Current Contracting 
Trends: 

FHWA Focuses Much of Its Oversight Efforts on Ensuring That State DOTs 
Comply with Laws and Regulations: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Summary of the Cost Comparison Studies That We Reviewed: 

Appendix III: Summary Tables of Our Survey Results: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Rules and Regulations That Pertain to States' Contracting 
Practices: 

Table 2: Number of State DOTs That Reported Factors as "Important" or 
"Very Important" in Decisions to Contract Out Activities: 

Table 3: Number of State DOTs That Reported Changes in Professional 
Staff over the past 5 Years: 

Table 4: Number of State DOTs Reporting Factors as "Of Little 
Importance" or "Of No Importance" in Decisions to Contract Out 
Activities: 

Table 5: Number of State DOTs Reporting Factors as "Important" or "Very 
important" in Decisions to Use Department Staff to Perform an Activity: 

Table 6: Correlation Coefficients: 

Table 7: Number of State DOTs That Reported Changes in Professional 
Staff over the past 5 Years: 

Table 8: Number of State DOTs That Reported Contracting Out Highway 
Activities in the Most Recently Completed Fiscal Year (Percentage of 
Total Expenditures for That Activity): 

Table 9: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Contract Out Some or All Preliminary 
Engineering Activities: 

Table 10: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Use Department Staff to Perform Some or 
All Preliminary Engineering Activities: 

Table 11: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Contract Out Some or All Design 
Activities: 

Table 12: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Use Department Staff to Perform Some or 
All Design Activities: 

Table 13: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Contract Out Some or All Construction 
Engineering and Inspection: 

Table 14: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Use Department Staff to Perform Some or 
All Construction Engineering and Inspection Activities: 

Table 15: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Contract Out Some or All Federal-Aid 
Eligible Preventive Maintenance Activities: 

Table 16: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Use Department Staff to Perform Some or 
All Federal-Aid Eligible Preventive Maintenance Activities: 

Table 17: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Contract Out Some or All Routine 
Maintenance Activities: 

Table 18: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Use Department Staff to Perform Some or 
All Routine Maintenance Activities: 

Table 19: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Contract Out Some or All Ongoing 
Operations Activities: 

Table 20: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Use Department Staff to Perform Some or 
All Ongoing Operations Activities: 

Table 21: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Contract Out Some or All Right-of-Way 
Activities: 

Table 22: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Use Department Staff to Perform Some or 
All Right-of-Way Activities: 

Table 23: Number of State DOTs Reporting Increasing, Decreasing, or 
Maintaining the Same Level of Contracting Out for Highway Activities 
over the past 5 Years: 

Table 24: Number of State DOTs Anticipating Increasing, Decreasing, or 
Maintaining the Same Level of Contracting Out over the Next 5 Years: 

Table 25: Number of State DOTs Using Broader Types of Contracting over 
the past 5 Years: 

Table 26: Number of State DOTs Using Alternative Bid Types and 
Techniques over the past 5 Years: 

Figures: 

Figure 1: Total Capital Spending on Highways, by Level of Government, 
Fiscal Year 2005 2: 

Figure 2: Number of State DOTs That Reported Increasing, Decreasing, or 
Maintaining the Same Level of Contracting Out over the past 5 Years: 

Figure 3: Number of State DOTs at Various Levels of Contracting Out: 

Figure 4: Number of State DOTs Using Different Types of Contracts over 
the past 5 Years: 

Figure 5: States' Use of Various Contracting Techniques: 

Figure 6: Number of States Anticipating Increasing, Decreasing, or 
Maintaining the Same Level of Contracting Out over the Next 5 Years: 

Abbreviations: 

AASHTO: American Association of State Highway and Transportation 
Officials: 

C.F.R.: Code of Federal Regulations: 

FHWA: Federal Highway Administration: 

state DOT: state department of transportation: 

U.S.C.: United States Code: 

United States Government Accountability Office: 

Washington, DC 20548: 

January 8, 2008: 

The Honorable James L. Oberstar: 
Chairman: 
Committee on Transportation and Infrastructure: 
House of Representatives: 

Dear Mr. Chairman: 

The nation's economic vitality and the quality of life of its citizens 
depend significantly on an efficient transportation network. For the 
past several decades, population, income levels, and economic activity 
have risen considerably, and with the increases in these areas have 
come considerable increases in travel demand. Transportation 
infrastructure has not kept pace with these increases. According to the 
Department of Transportation, investment by all levels of government 
remains well below the estimated amount needed to maintain the 
condition of the nation's transportation infrastructure, and to fund 
improvements to the performance of the network. In 2005, of the over 
$75 billion expended for capital outlays and maintenance for highways, 
the federal government accounted for about 40 percent and state and 
local governments accounted for about 60 percent (see fig. 1). 

As demands on the transportation system grow, states and localities are 
looking for alternatives to direct government provision of 
transportation infrastructure and services. Consistent with longer- 
term trends in privatization of public services, states and localities 
have looked to increased private sector participation in delivering 
highway infrastructure and services. A 2003 survey by the National 
Cooperative Highway Research Program found that the use of contractors 
and consultants had continued to increase and had also expanded into 
activities previously done principally by public agencies, such as 
activities related to inspection and quality assurance of highway 
facilities and activities related to obtaining right-of-way for highway 
infrastructure projects.[Footnote 1] 

Figure 1: Total Capital Spending on Highways, by Level of Government, 
Fiscal Year 2005: 

This figure is a pie chart showing total capital spending on highways, 
by level of government during fiscal year 2005. 

41.6%: $31.3: Federal government; 
32.1%: $24.1: State governments; 
26.3%: $19.8: Local governments. 

[See PDF for image] 

Source: Federal Highway Administration. 

[End of figure] 

Proponents of privatization have long suggested that using private 
sector, market-based incentives offers the potential advantages of 
obtaining infrastructure or services faster than if provided solely by 
the public sector, at a potentially lower cost. However, some critics 
have raised concerns that the increased use of consultants and 
contractors contributes to a loss of accountability, a decline in the 
skill levels and experience of public sector staff, lower quality 
projects, and the inefficient use of public funds. 

To assist Congress as it assesses the future of the federal surface 
transportation and highway programs, we studied the extent of 
contracting by state departments of transportation (state DOT). This 
report addresses (1) the recent trends in the contracting of state 
highway activities; (2) the factors that influence state DOTs in 
deciding whether to contract out activities and the extent to which 
state DOTs assess costs and benefits when making such decisions; (3) 
how state DOTs protect the public interest when work is contracted out, 
particularly when consultants and contractors are given substantial 
responsibility for project and service quality and delivery; and (4) 
the Federal Highway Administration's (FHWA) role in ensuring that 
states protect the public interest. 

To address these issues, we reviewed relevant literature and survey 
data to identify general trends in contracting and to establish a 
general baseline for comparison with current levels of contracting. We 
also reviewed the literature to identify available information 
regarding the costs and benefits of contracting out highway activities 
versus performing them with in-house staff. We sent an inquiry to state 
auditing agencies and received and reviewed state auditor reports from 
11 states that addressed issues relating to state DOTs' use of 
consultants and contractors. We also conducted a Web-based survey of 
all 50 state DOTs to determine the extent to which state DOTs contract 
for services across 7 categories of highway activities.[Footnote 2] We 
surveyed state DOTs to determine (1) the factors they say are leading 
them to contract out activities or to keep work in-house and (2) 
information about potential future trends in contracting. The survey 
also gathered data on state DOTs' use of a variety of different 
contract types and techniques, such as design-build contracts.[Footnote 
3] We received a 100 percent response to our survey. Appendix III 
contains tables summarizing the state DOTs' responses. We conducted a 
correlation analysis to identify factors--such as state economic and 
demographic measures--that may be associated with the level of 
contracting reported in the survey. We also interviewed state DOT 
officials in 10 different states to gather information on their 
perceptions of the costs and benefits of contracting, on the ways in 
which state DOTs define and seek to protect the public interest, and on 
how state DOTs' use of consultants and contractors is evolving. In 
selecting state DOTs to interview, we used a nongeneralizable sample, 
rather than performing random sampling. We chose this approach to 
ensure that the sample set included state DOTs with a range of 
outsourcing experiences and practices. We interviewed industry 
stakeholders from 6 different organizations knowledgeable about the 
outsourcing of highway activities to obtain additional perspectives on 
the costs and benefits of contracting and on how state DOTs seek to 
protect the public interest. Finally, we interviewed FHWA officials at 
the national level, as well as at 10 division offices[Footnote 4] 
corresponding to the state DOTs selected for interviews, to obtain 
information on FHWA's policies, guidance, and oversight of state 
contracting practices and on the role FHWA plays in ensuring that 
states protect the public interest. We reviewed program and process 
reviews from FHWA's national and division offices to identify key areas 
of oversight focus and key findings that have been reached in such 
reviews regarding states' contracting and quality assurance procedures. 

For this report, we limited the scope of our review to contracts where 
consultants or contractors are paid to provide a service related to 
highway infrastructure. Although essentially contractual relationships, 
we did not include public-private partnerships--where a private firm 
takes effective ownership of a facility and assumes control over it, 
usually for an extended period of time--in the scope of our work. 
Another GAO review focusing specifically on public-private partnerships 
related to highway infrastructure was under way concurrently with this 
review, and a final report will be issued later in January 
2008.[Footnote 5] We conducted this performance audit from November 
2006 through January 2008 in accordance with generally accepted 
government auditing standards. Those standards require that we plan and 
perform the audit to obtain sufficient, appropriate evidence to provide 
a reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a reasonable 
basis for our findings and conclusions based on our audit objectives. 
Appendix I contains more information on our objectives, scope, and 
methodology. 

Results in Brief: 

State DOTs have increased the amount of highway activities they 
contract out to consultants and contractors. More than half of the 50 
departments we surveyed reported that they had increased the amount of 
preliminary engineering, design, right-of-way, and construction 
engineering and inspection activities they had contracted out over the 
past 5 years. Fewer departments responded that they had increased the 
contracting out of operations and maintenance activities in this 
period. We also found from our survey and interviews that many 
departments are increasingly giving consultants and contractors more 
responsibility in ensuring the quality and delivery of highway 
infrastructure and services. For example, departments have increased 
the use of consultants to perform inspection activities, and the use of 
consultants as project managers to oversee and manage day-to-day 
activities on highway projects. Our survey also indicated that some 
states have broadened the types of contracts and contracting techniques 
they use, such as using design-build or lane rental contracts,[Footnote 
6] although the use of these techniques does not appear to be 
widespread across the states. The majority of departments reported in 
our survey that they expect the amount of contracted highway activities 
to level off over the next 5 years for all of the activities included 
in our study. State highway department officials attributed this 
leveling off to uncertainty about whether funding and staffing levels 
would change in the near future. 

State DOT officials indicated that the most important factor in their 
decision to contract out highway activities is the need to access the 
manpower and expertise necessary to ensure the timely delivery of 
highway infrastructure and services, given in-house resource 
constraints. In our survey, state DOTs listed "lack of in-house staff" 
as "very important" or "important" in their decision to contract out 
work more than any other factor for all 7 of the highway activities 
included in the study. Over the last several years, demand for highway 
infrastructure and services has continued to grow, while at the same 
time, the majority of the departments have experienced constant or 
declining staffing levels. In our survey, 38 of the 50 departments 
indicated that they employ either the same or fewer staff than they did 
5 years ago. While officials we interviewed said that costs are 
considered in contracting decisions, our survey results show that for 
almost all of the state DOTs, "to obtain cost savings" was not a key 
driver in the trend toward the increased use of contracting. In fact, 
our interviews with state DOT officials indicated that contracting out 
work is perceived to be somewhat more expensive than performing work in-
house, particularly for engineering services. Several studies have 
tried to formally compare the costs of in-house performed work with 
consultant and contractor performed work. Methodological issues and 
other limitations make it difficult to conclude that the use of 
consultants and contractors is more or less expensive than using public 
employees over the long term. In addition to staffing and cost issues, 
other considerations, such as the desire to maintain in-house 
expertise, can play a role in a state DOT's decision of whether to 
contract out highway activities or perform the work with in-house 
staff. 

In general, the state DOT officials we interviewed believe that they 
have sufficient tools and procedures to select, monitor, and oversee 
contractors to ensure that the public interest is protected, but that 
they face additional challenges in protecting the public interest, 
given current contracting trends. These officials highlighted various 
controls they employ throughout the consultant and contractor 
procurement process, including such things as prequalifying 
consultants, regularly monitoring the work of consultants and 
contractors, and including assessments of consultants and contractors 
in determinations for future contracts. States also have highway design 
standards, materials standards, and quality control and assurance 
guidelines that are applicable on all projects, regardless of who 
performs the work. However, implementation of these mechanisms is not 
consistent across states. Several state auditor reports we reviewed 
found weaknesses in state DOTs' procurement and oversight practices, 
such as the absence of aggressive price negotiations, failure to 
consistently assess the quality of consultant and contractor work, and 
failure to fully comply with quality assurance procedures. Such 
weaknesses can lead to lower-quality highway construction and the 
inefficient use of public funds. Other trends in contracting pose 
additional challenges to state DOTs in conducting adequate oversight 
and monitoring. While state employees are always ultimately responsible 
for highway project acceptance, they are increasingly further removed 
from the day-to-day oversight of the project and are more frequently 
overseeing a number of highway projects simultaneously, instead of just 
one project. Also, while officials from state DOTs we interviewed 
believe that their departments were equipped to adequately oversee 
consultants and contractors, all of the officials indicated that the 
decreasing number of experienced staff, combined with their 
departments' increased reliance on contractors and consultants, may 
erode in-house expertise at their departments, which could affect their 
ability to adequately oversee the work of contractors and consultants 
over the long term. Finally, with consultants and contractors involved 
in almost all highway activities, from design to final inspection, FHWA 
has found that more potential exists for conflicts of interest and for 
independence issues to arise. 

Given that state DOTs are primarily responsible for delivering highway 
infrastructure and services, FHWA has a limited role in determining how 
consultants and contractors should be used on highway projects. 
Generally, FHWA's role is to ensure that state DOTs have used 
consultants and contractors in compliance with applicable federal laws 
and regulations. FHWA primarily performs oversight of states' use of 
consultants through direct oversight over a limited number of projects 
and through its risk assessment process in which division offices work 
with their state DOTs to identify and address systematic 
vulnerabilities in the DOTs' processes and programs. Through such risk 
assessments, several division offices have identified issues related to 
the use of consultants and contractors and conducted process reviews in 
response. In addition to these reviews of individual states, FHWA has 
also conducted national reviews that involve issues related to the use 
of consultants and contractors that have also found areas of risk to 
the federal-aid highway program. In particular, one review found that 
the trend toward using more consultants in quality assurance creates 
additional possibilities for conflicts of interest, and that state 
DOTs' quality assurance programs are often not in full compliance with 
federal regulations. FHWA is developing a plan to address the issues 
found in this review. While FHWA has identified risks associated with 
the use of consultants and contractors, the agency has not 
comprehensively assessed how, if at all, it needs to adjust its 
oversight efforts to protect the public interest, given current trends 
in the use of consultants and contractors. 

To address the risk factors and oversight challenges associated with 
the increasing use of consultants and contractors, we are recommending 
that the Secretary of Transportation direct the Administrator of the 
Federal Highway Administration, in the context of its ongoing 
activities related to quality assurance programs and risk management, 
to work with the division offices to (1) give appropriate consideration 
to the identified areas of risk related to the increased use of 
consultants and contractors as division offices work to target their 
oversight activities and (2) develop and implement performance measures 
to better assess the effectiveness of state DOTs' controls related to 
the use of consultants and contractors to better ensure that the public 
interest is protected. 

We provided the Department of Transportation, including FHWA, with a 
draft of this report. DOT officials provided technical clarifications, 
which we incorporated as appropriate. 

Background: 

FHWA assists states' efforts in building and maintaining highways 
through the federal-aid highway program. The agency distributes highway 
funds to the states through annual apportionments established by 
statutory formulas and by allocating discretionary grants. The states 
may obligate funds for construction, reconstruction, and improvement of 
highways and bridges on eligible federal-aid highway routes and for 
other purposes authorized in law once FHWA has apportioned the funds to 
the states. About 1 million of the nation's 4 million miles of roads 
are eligible for federal aid. 

As a condition of receiving federal funds, states must adhere to 
federal laws and regulations. In particular, states must ensure that 
their highway program activities comply with title 23 of the United 
States Code (U.S.C.) and title 23 of the Code of Federal Regulations 
(C.F.R.), which contain provisions relating to the federal-aid highway 
program. FHWA has issued a number of regulations to implement and carry 
out these provisions. These provisions in title 23 relate specifically 
to states' use of consultants and contractors. For example, states must 
comply with the Disadvantaged Business Enterprise Program requirements 
of 49 C.F.R. Part 26, which requires that a certain percentage of 
contracts be awarded to small businesses owned and controlled by 
socially and economically disadvantaged individuals, including minority 
and women-owned businesses. Contracts for engineering and design 
services that are directly related to a construction project and use 
federal-aid highway funding must be awarded in the same manner as a 
contract for engineering and design services under certain provisions 
of the Brooks Architect-Engineers Act,[Footnote 7] which establishes a 
qualifications-based selection process in which contracts for 
architects and engineers are negotiated on the basis of demonstrated 
competence and qualification for the type of professional services 
required at a fair and reasonable price. While state DOTs are subject 
to many federal laws and regulations regarding contracting, they are 
not required to follow the Federal Acquisition Regulation when 
contracting for federally funded highway activities, except for the 
cost principles in 48 C.F.R. Part 31. Other specific federal provisions 
relating to state DOTs' contracting practices are summarized in table 
1. 

Table 1: Rules and Regulations That Pertain to States' Contracting 
Practices: 

Provision: Bidding requirements for letting of contracts; 
Source: 23 U.S.C. § 112; 
Detail: In all cases where the construction is to be performed by the 
state transportation department or under its supervision, a request for 
submission of bids shall be made by advertisement unless some other 
method is approved by the Secretary. The Secretary shall require such 
plans and specifications and such methods of bidding as shall be 
effective in securing competition. Construction of each project shall 
be performed by contract awarded by competitive bidding, unless the 
State transportation department demonstrates, to the satisfaction of 
the Secretary, that some other method is more cost effective or that an 
emergency exists. Contracts for the construction of each project shall 
be awarded only on the basis of the lowest responsive bid submitted by 
a bidder meeting established criteria of responsibility. Each contract 
for program management, construction management, feasibility studies, 
preliminary engineering, design, engineering, surveying, mapping, or 
architectural related services shall be awarded in the same manner as a 
contract for architectural and engineering services is negotiated under 
chapter 11 of title 40; or equivalent State qualifications-based 
requirements. 

Provision: Suitably equipped and organized transportation department; 
Source: 23 U.S.C. § 302(a); 
Detail: Any State desiring to avail itself of the provisions of title 
23 U.S.C. shall have a State transportation department which shall have 
adequate powers, and be suitably equipped and organized to discharge to 
the satisfaction of the Secretary the duties required by this title. In 
meeting the provisions of this subsection, a State may engage to the 
extent necessary or desirable, the services of private engineering 
firms. FHWA expects the State to provide full-time State 
representatives to be in responsible charge of "core functions" or 
"inherently governmental functions" of the State government that 
directly relate to the Title 23 duties for administering a Federal-aid 
project or program. 

Provision: Conflict of interest; 
Source: 23 C.F.R. § 1.33; 
Detail: No official or employee of a State or any other governmental 
instrumentality who is authorized in his official capacity to 
negotiate, make, accept or approve, or to take part in negotiating, 
making, accepting or approving any contract or subcontract in 
connection with a project shall have, directly or indirectly, any 
financial or other personal interest in any such contract or 
subcontract. No engineer, attorney, appraiser, inspector or other 
person performing services for a State or a governmental 
instrumentality in connection with a project shall have, directly or 
indirectly, a financial or other personal interest, other than his 
employment or retention by a State or other governmental 
instrumentality, in any contract or subcontract in connection with such 
project. No officer or employee of such person retained by a State or 
other governmental instrumentality shall have, directly or indirectly, 
any financial or other personal interest in any real property acquired 
for a project unless such interest is openly disclosed upon the public 
records of the State DOT and of such other governmental 
instrumentality, and such officer, employee or person has not 
participated in such acquisition for and in behalf of the State. It 
shall be the responsibility of the State to enforce the requirements of 
this section. 

Provision: Administration of design and engineering services contracts 
related to highway construction; 
Source: 23 C.F.R. Part 172; 
Detail: This part prescribes policies and procedures for the 
administration of engineering and design related service contracts 
intended to ensure that a qualified consultant is obtained through an 
equitable selection process, that prescribed work is properly 
accomplished in a timely manner, and at fair and reasonable cost. 
Recipients of federal funds shall ensure that their subrecipients 
comply with this part. Also contains provision that state DOTs must 
receive permission from FHWA before hiring a consultant to act in a 
management capacity on behalf of the department. 

Provision: State oversight of highway construction; 
Source: 23 C.F.R. 635.105(b); 
Detail: Although the state may employ a consultant to provide 
construction engineering services, such as inspection or survey work on 
a project, the state shall provide a full-time employed state engineer 
to be in responsible charge of the project. 

Provision: Design-build contracting; 
Source: 23 C.F.R. Part 636; 
Detail: This part covers FHWA's policies and procedures for approving 
design-build projects financed with federal-aid highway funds. 

Provision: Quality assurance procedures for construction; 
Source: 23 C.F.R. Part 637; 
Detail: This part prescribes policies, procedures, and guidelines to 
assure the quality of materials and construction in all Federal-aid 
highway projects on the National Highway System. Contractor test 
results are allowed to be used in the project acceptance decision of 
the state; independent verification testing is required to ensure that 
contractor testing conforms to applicable standards. 

Sources: United States Code and Code of Federal Regulations. 

[End of table] 

For projects using federal-aid funding, FHWA has also promulgated 
regulations that establish design, construction, and materials 
standards for highway projects that are on the National Highway 
System.[Footnote 8] In general, states' laws, regulations, directives, 
safety standards, design standards, and construction standards apply to 
highway projects that are off of the National Highway System. 

FHWA has authority to oversee any project that receives federal-aid 
highway funds. However, the agency has increasingly delegated 
responsibility for oversight to state DOTs since the passage of the 
Intermodal Surface Transportation Equity Act in 1991. Oversight roles 
and responsibilities are outlined in stewardship agreements that each 
FHWA division office executes with its respective state DOT. These 
stewardship agreements outline when FHWA will have project-level 
oversight, or what is known as "full oversight" over a project, and 
when that responsibility will be delegated to states. Stewardship 
agreements vary in how full oversight is determined. A stewardship 
agreement may indicate that full oversight occurs on only "high- 
profile" projects, which will be agreed upon by the state and the 
division office, or there may be a specific dollar threshold, such as 
all interstate projects that are over $1 million. Generally speaking, 
FHWA has project-level oversight for a relatively limited number of 
federal-aid projects. Recently, FHWA developed guidance on the 
development of stewardship agreements and encouraged its division 
offices to revise their agreements on the basis of this guidance to 
achieve more consistency throughout the agency. Among other things, the 
guidance encourages the division offices to use risk management 
principles to determine where to focus their stewardship activities. 
The guidance also recommends that division offices develop performance 
measures to better track the health of the federal-aid highway program 
in their states. However, the guidance gives state DOTs and division 
offices broad flexibility in determining how risks should be assessed 
and how performance should be measured. 

In addition to having oversight over some specific projects, FHWA 
division offices oversee state DOTs through reviews of the departments' 
programs and processes. Some of these reviews occur annually, and 
others are undertaken at the discretion of the division office on the 
basis of areas where there may be increasing risk to the highway 
program. These reviews are meant to ensure that states have adequate 
controls in place to effectively manage federally assisted projects and 
will generally result in recommendations and corrective actions for the 
state DOTs. 

Over the past several years, GAO has expressed concerns about FHWA's 
oversight role. For example, we reported in 2005 that FHWA lacked a 
comprehensive approach in its oversight efforts.[Footnote 9] We found 
that even though FHWA had made progress in improving its oversight 
efforts, such as establishing performance goals and outcome measures to 
limit cost growth and schedule slippage on projects, FHWA had not 
linked these efforts to its day-to-day activities and was not using 
them to identify problems and target oversight. More generally, we have 
also raised concerns about federal transportation policy. For example, 
we have reported that federal transportation funding is not linked to 
system performance; that the federal government does not have direct 
control over the vast majority of the activities that it funds; and 
that highway grant funds are apportioned to state and local governments 
by formula, without regard to the needs, performance, quality, or level 
of effort of recipients.[Footnote 10] Transportation and other experts 
recently told us that the nation's transportation policy has lost 
focus, and that the nation's overall transportation goals need to be 
better defined and linked to performance measures that evaluate what 
the respective policies and programs actually accomplish.[Footnote 11] 

States Have Increased the Contracting Out of Highway Activities, and 
Consultants and Contractors Increasingly Have Substantial 
Responsibility for Ensuring Quality and Delivery of Highway Projects: 

State DOTs have increased the amount and type of highway activities 
that they have contracted out to consultants and contractors over the 
past 5 years. In particular, state DOTs have increasingly contracted 
out preliminary engineering, design, right-of-way, and construction 
engineering and inspection activities. We also found that state DOTs 
have increasingly given consultants and contractors more responsibility 
for project quality through a growing trend to contract out 
construction inspection and engineering activities. Some state DOTs 
have used broader contracting types and techniques that give additional 
responsibility to consultants and contractors. For example, some state 
DOTs have used consultants to serve on their behalf as project managers 
or program managers to oversee and manage day-to-day activities on 
highway projects. 

States Have Increasingly Contracted Out Highway Activities: 

On the basis of our survey (see sidebar) and discussions with state 
officials, we found that states have increased the extent to which they 
contract out some types of highway activities to consultants and 
contractors (see fig. 2). Our survey results indicated that over the 
past 5 years, more than half the states have increased the amount of 
preliminary engineering, design, and right-of-way activities as well as 
construction engineering and inspection activities they have contracted 
out to third parties. A fewer number of states have increased 
contracting out of maintenance and operations activities. 

Preliminary Engineering: Includes activities such as surveying and 
mapping, locations studies, traffic studies, planning, and 
environmental impact analysis. 

Highway Activities Included in the GAO Survey: 

Design: Includes activities such as preliminary and final design work. 

Construction Engineering and Inspection: Includes activities such as 
inspections, materials testing, construction management, and schedule 
analysis. 

Federal-Aid Eligible Preventive Maintenance: Includes activities such 
as pavement preservation, safety improvements, and seismic retrofits. 

Routine Maintenance Not Eligible For Federal-Aid Program Funding: 
Includes activities such as snow plowing, litter removal, and mowing. 

Ongoing Operations: Includes activities such as intelligent 
transportation systems management, toll collections, and signal and 
sign systems. 

Right-of-Way: Includes activities such as land appraisals, land 
purchase negotiations, and assistance programs for individuals and 
businesses displaced by highway projects. 

Note: We did not include construction activities in our survey because 
state DOTs have contracted out virtually all highway construction work 
for over 60 years. 

Figure 2: Number of State DOTs That Reported Increasing, Decreasing, or 
Maintaining the Same Level of Contracting Out over the past 5 Years: 

This figure is a combination bar graph showing the number of state DOTs 
that reported increasing, decreasing, or maintaining the same level of 
contracting out over the past 5 years. The X axis represents the 
highway activities, and the Y axis represents the number of states. One 
bar in each group represents increased. One represents maintained same 
level, and one represents decreased. 

[See PDF for image] 

Source: GAO survey results. 

[End of figure] 

Several state DOT officials told us during our discussions that their 
departments had increased their use of consultants in different areas. 
For example, Illinois highway department officials told us that the 
state has contracted out preliminary engineering and design activities 
at various levels for 30 years, but that the state has only recently 
begun to increase its use of consultants to perform right-of-way 
activities. In addition, according to Georgia highway department 
officials, they now contract out 65 to 75 percent of their design work 
compared with very little design work being contracted out only a few 
years ago. 

The level of contracting varies considerably across the activities we 
surveyed (see fig. 3). For example, 23 highway departments reported 
that they were contracting out more than 75 percent of federal-aid 
eligible preventive maintenance activities, while the amount of routine 
maintenance activities that state DOTs contract out is still relatively 
low--nearly half of the states reported that they contracted out less 
than 25 percent of these activities. 

Figure 3: Number of State DOTs at Various Levels of Contracting Out: 

This figure is a combination bar chart showing the number of state DOTs 
at various levels of contracting out. The X axis represents the highway 
activities, and the Y axis represents the number of states. One bar in 
each group represents 0%. One represents 1-25%. One represents 26-50%. 
One represents 51-75%, and one represents 76-100%. 

[See PDF for image] 

Source: GAO survey results. 

[End of figure] 

Many States Have Increased the Use of Consultants and Contractors for 
Inspection Activities: 

Officials from 27 of the 50 states responding to our survey indicated 
that their states had increased the contracting out of construction 
engineering and inspection activities over the past 5 years, although 
half the states report contracting out 25 percent or less of this work. 
In our interviews, several states indicated that they have recently had 
to increase their use of consultants for construction inspection 
activities. For example, the South Carolina DOT began to increase its 
use of consultants to perform construction engineering and inspection 
work in 2000. Department officials estimated that they will contract 
out about 10 percent of construction engineering and inspection work 
next year. Prior to 2000, the South Carolina DOT only contracted out 
construction inspection and engineering work on certain large, complex 
projects. Maryland State Highway Administration officials also said 
that they have been giving what have been traditionally in-house 
construction engineering and inspection activities to consultants, 
contracting out about 60 percent of these activities. 

Officials from at least 3 state DOTs we interviewed indicated that they 
would prefer to keep construction inspection and engineering activities 
in-house to retain greater control over the quality of contracted work. 
For example, Illinois highway department officials said that they 
always assign an Illinois highway department engineer to oversee the 
consultant because they do not like to have consultants oversee other 
contractors and consultants, but that they need to contract out 
inspection activity for projects that require expertise they do not 
have in-house. The Maryland State Highway Administration officials also 
said that they would prefer to retain the construction engineering and 
inspection activities in-house, but they have been unable to hire a 
sufficient number of staff. According to Utah DOT officials, the agency 
has been able to avoid contracting out any construction engineering and 
inspection activities so far, but they would likely contract out such 
activities in the future if workload burdens on in-house highway 
department staff continue to increase. 

Some State DOTs Have Broadened the Types of Contracts and Contracting 
Techniques That They Use: 

Some state DOTs have used certain types of contracts where contractors 
assume more responsibility and risk for project delivery and day-to-day 
highway project oversight. For example, design-build contracts allow 
contractors to be involved in both the design and the construction of a 
highway project, and project management contracts (1) can assign 
additional oversight responsibilities to contractors or consultants and 
(2) can result in contractors overseeing other contractors. Figure 4 
shows the number of states using these types of contracts and the 
frequency with which they use them. 

Figure 4: Number of State DOTs Using Different Types of Contracts over 
the past 5 Years: 

This figure is a combination bar chart showing the number of state DOTs 
using different types of contracts over the past 5 years. The X axis 
represents the broader contracting, and the Y axis represents the 
number of states. One individual bar represents 0, one represents 1-10, 
and one represents 11 or more. 

[See PDF for image] 

Source: GAO survey results. 

[End of figure] 

As figure 4 shows, more than half of the state DOTs have used a design- 
build approach at least once, and 20 state DOTs have not let any design-
build contracts over the past 5 years. Our survey also indicates that 
many state DOTs still have constraints on their ability to use design-
build contracting. Fifteen state DOTs reported that they do not have 
authority to enter into design-build contracts, and an additional 10 
state DOTs reported that they have only limited design-build authority. 
Few states have experience with other contracting methods asked about 
in our survey. Five states reported that they had used project managers 
for more than 10 contracts, and 3 states reported having used 
construction managers/general contractors more than 10 times to oversee 
and manage the day-to-day activities of a project. 

Our survey also asked about a variety of other contracting techniques 
that state DOTs may use in an effort to help minimize construction time 
and cost, such as cost plus time bidding (A+B),[Footnote 12] incentive 
and disincentive contracts,[Footnote 13] and lane rental contracts. 
Almost two thirds of the states indicated that they used more than one 
of these contracting techniques at least occasionally. Of the 
contracting techniques included in the survey, states reported using 
incentives and disincentives and cost plus time bidding most often over 
the past 5 years (see fig. 5). 

Figure 5: States' Use of Various Contracting Techniques: 

This figure is a combination bar chart showing the states' use of 
various contracting techniques. The X axis represents the bid types and 
contract techniques, and the Y axis represents the number of states. 
One individual bar represents frequently, one represents occasionally, 
one represents rarely, and one represents not at all. 

[See PDF for image] 

Source: GAO survey results. 

[End of figure] 

While some states have used these contracting techniques in their 
highway projects, many states reported that they did not use them very 
often. For example, only 10 states reported using more than 1 technique 
frequently. Of these states, only 4 reported using more than 3 of these 
techniques frequently. Two states reported using these tools either 
rarely or not at all. 

While our survey results do not indicate widespread use of these 
different types of contracts and contracting techniques, these results 
do not indicate that the use of these contracts is not an important or 
growing trend in state contracting. State officials we interviewed told 
us that many of these types of contracts, which are relatively new to 
some state DOTs, are actively being considered and their use is likely 
to grow in the future. In addition, some techniques are more suited to 
projects in congested areas--such as lane rental contracts--and some 
states may have fewer such projects than others. Other contract types, 
such as design-build contracts, are often used for projects that are 
large and complex in scope, which may be relatively rare in some 
states. 

Most States Do Not Expect the Level of Contracting to Increase over the 
Next 5 Years: 

While many state DOTs have increased their contracting out of various 
activities over the past 5 years, officials at many highway departments 
anticipate a slowing of this trend. As figure 6 shows, most state DOTs 
reported that they expect to maintain their current level of 
contracting over the next 5 years. For some activities, a number of 
states even expect to see declines in their level of contracting. For 
example, 15 state DOTs reported that they expect their contracting of 
design activities to decrease over the next 5 years. State DOT 
officials responded in the survey that their expectations for their 
contracting levels over the next 5 years are based on their 
expectations for highway program funding levels, legislative 
considerations, anticipated workload, and staffing levels. For example, 
the Oregon DOT officials stated in our survey that they expect their 
funding levels for highway projects to greatly decline by 2010, thereby 
reducing their need for consultants. However, the department noted that 
if they are able to secure new funding, they anticipate continuing at 
their current level of consultant use, which is at a historical peak 
for the department. 

Figure 6: Number of States Anticipating Increasing, Decreasing, or 
Maintaining the Same Level of Contracting Out over the Next 5 Years: 

This figure is a combination bar chart showing the number of states 
anticipating increasing, decreasing, or maintaining the same level of 
contracting out over the next 5 years. The X axis represents the 
highway activities, while the Y axis represents the number of states. 
One individual bar represents increase, one represents maintain same 
level, and one represents decrease. 

[See PDF for image] 

Source: GAO survey results. 

[End of figure] 

Some states anticipated growth in their contracting for certain 
activities. For example, Pennsylvania and Utah DOT officials responded 
that they believe their state will increase contracting out work to 
consultants and contractors for all seven categories of highway 
activities. In addition, another state official indicated that its 
state DOT expects to increase its contracting out of federal-aid 
eligible preventive maintenance work in the next 5 years due to an 
anticipated shift in its program to focus on system preservation, 
rather than capital projects. 

State DOTs Indicate That Lack of In-house Staff and Expertise Are the 
Most Important Drivers in States' Contracting Decisions: 

State DOTs indicate that the most important factor in state DOTs' 
decision to contract out highway activities is the need to access the 
manpower and expertise necessary to ensure the timely delivery of their 
highway program, given in-house resource constraints. While state DOTs 
consider cost issues when making contracting decisions, cost savings 
are rarely the deciding factor in contracting decisions, and no state 
we interviewed regularly performs formal assessments of costs and 
benefits before deciding whether to contract out work. Several studies 
have attempted to compare the costs of in-house and contracted work, 
although limitations in the studies' methodology make it difficult to 
conclude that the use of consultants and contractors is more or less 
expensive than using public employees over the long term. In addition 
to staffing and cost issues, there are other considerations, such as 
the desire to maintain in-house expertise that can play a role in a 
state DOT's decision of whether to contract out highway activities. 

Need to Supplement In-house Staff and Access Expertise Are the Major 
Drivers in the Decision to Contract Out Work: 

In our survey, state DOTs listed "lack of in-house staff" as "very 
important" or "important" in their decision to contract out work more 
than any other factor for all seven of the highway activities included 
in the study, as shown in table 2. Furthermore, all of the highway 
department officials that we interviewed said that they do not have the 
in-house staff resources available to deliver their program in a timely 
manner, so they must contract out work to deliver projects and 
services. For example, Illinois DOT officials said that at this point, 
they rely on consultants to fulfill the department's work demands. 

Table 2: Number of State DOTs That Reported Factors as "Important" or 
"Very Important" in Decisions to Contract Out Activities: 

Factor: Lack of in-house staff; 
Number of state DOTs, by highway activity: Preliminary engineering: 45; 
Number of state DOTs, by highway activity: Design: 44; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 39; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 34; 
Number of state DOTs, by highway activity: Routine maintenance: 35; 
Number of state DOTs, by highway activity: Ongoing operations: 31; 
Number of state DOTs, by highway activity: Right-of-way activities: 44. 

Factor: To maintain flexibility or manage variations in department 
workload; 
Number of state DOTs, by highway activity: Preliminary engineering: 36; 
Number of state DOTs, by highway activity: Design: 36; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 32; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 19; 
Number of state DOTs, by highway activity: Routine maintenance: 25; 
Number of state DOTs, by highway activity: Ongoing operations: 17; 
Number of state DOTs, by highway activity: Right-of-way activities: 38. 

Factor: To access specialized skills or equipment; 
Number of state DOTs, by highway activity: Preliminary engineering: 31; 
Number of state DOTs, by highway activity: Design: 30; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 19; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 27; 
Number of state DOTs, by highway activity: Routine maintenance: 23; 
Number of state DOTs, by highway activity: Ongoing operations: 25; 
Number of state DOTs, by highway activity: Right-of-way activities: 26. 

Factor: To increase speed of completion or to meet specific time 
frames; 
Number of state DOTs, by highway activity: Preliminary engineering: 35; 
Number of state DOTs, by highway activity: Design: 32; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 12; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 21; 
Number of state DOTs, by highway activity: Routine maintenance: 19; 
Number of state DOTs, by highway activity: Ongoing operations: 14; 
Number of state DOTs, by highway activity: Right-of-way activities: 39. 

Factor: To meet federal or state legislative mandates, legal 
requirements, or policy initiatives; 
Number of state DOTs, by highway activity: Preliminary engineering: 20; 
Number of state DOTs, by highway activity: Design: 18; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 20; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 17; 
Number of state DOTs, by highway activity: Routine maintenance: 9; 
Number of state DOTs, by highway activity: Ongoing operations: 13; 
Number of state DOTs, by highway activity: Right- of-way activities: 
15. 

Factor: To identify innovative approaches or new techniques; 
Number of state DOTs, by highway activity: Preliminary engineering: 10; 
Number of state DOTs, by highway activity: Design: 14; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 4; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 11; 
Number of state DOTs, by highway activity: Routine maintenance: 4; 
Number of state DOTs, by highway activity: Ongoing operations: 11; 
Number of state DOTs, by highway activity: Right-of-way activities: 5. 

Factor: To obtain cost savings; 
Number of state DOTs, by highway activity: Preliminary engineering: 3; 
Number of state DOTs, by highway activity: Design: 3; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 1; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 10; 
Number of state DOTs, by highway activity: Routine maintenance: 9; 
Number of state DOTs, by highway activity: Ongoing operations: 3; 
Number of state DOTs, by highway activity: Right- of-way activities: 3. 

Source: GAO survey results. 

[End of table] 

In recent years, state DOTs have experienced a substantial growth in 
funding for their highway programs, without a commensurate increase in 
staffing levels. Results from our survey show that the majority of 
state DOTs have experienced constant or declining in-house staffing 
levels. State DOTs indicated that staff reductions occurred most 
frequently in the areas of design, construction engineering and 
inspection, and maintenance, as shown in table 3. 

Table 3: Number of State DOTs That Reported Changes in Professional 
Staff over the past 5 Years: 

Type of professional and technical staff: Planning and environment; 
Number of state DOTs, by staff change: Increased: 16; 
Number of state DOTs, by staff change: Decreased: 13; 
Number of state DOTs, by staff change: Stayed the same: 18; 
Number of state DOTs, by staff change: No basis to judge: 1. 

Type of professional and technical staff: Design (roadway, bridges, and 
traffic engineering); 
Number of state DOTs, by staff change: Increased: 4; 
Number of state DOTs, by staff change: Decreased: 28; 
Number of state DOTs, by staff change: Stayed the same: 17; 
Number of state DOTs, by staff change: No basis to judge: 0. 

Type of professional and technical staff: Construction engineering and 
inspections (inspections, materials testing, and scheduling); 
Number of state DOTs, by staff change: Increased: 9; 
Number of state DOTs, by staff change: Decreased: 20; 
Number of state DOTs, by staff change: Stayed the same: 20; 
Number of state DOTs, by staff change: No basis to judge: 0. 

Type of professional and technical staff: Operations (ongoing 
Intelligent Transportation Systems, toll collection, and signal and 
sign systems); 
Number of state DOTs, by staff change: Increased: 11; 
Number of state DOTs, by staff change: Decreased: 8; 
Number of state DOTs, by staff change: Stayed the same: 23; 
Number of state DOTs, by staff change: No basis to judge: 6. 

Type of professional and technical staff: Maintenance; 
Number of state DOTs, by staff change: Increased: 6; 
Number of state DOTs, by staff change: Decreased: 20; 
Number of state DOTs, by staff change: Stayed the same: 20; 
Number of state DOTs, by staff change: No basis to judge: 1. 

Type of professional and technical staff: Right-of-way and utilities; 
Number of state DOTs, by staff change: Increased: 7; 
Number of state DOTs, by staff change: Decreased: 15; 
Number of state DOTs, by staff change: Stayed the same: 24; 
Number of state DOTs, by staff change: No basis to judge: 2. 

Type of professional and technical staff: Other nonadministrative; 
Number of state DOTs, by staff change: Increased: 2; 
Number of state DOTs, by staff change: Decreased: 10; 
Number of state DOTs, by staff change: Stayed the same: 23; 
Number of state DOTs, by staff change: No basis to judge: 12. 

Type of professional and technical staff: Overall professional and 
technical staff; 
Number of state DOTs, by staff change: Increased: 12; 
Number of state DOTs, by staff change: Decreased: 21; 
Number of state DOTs, by staff change: Stayed the same: 17; 
Number of state DOTs, by staff change: No basis to judge: 0. 

Source: GAO survey results. 

[End of table] 

Of the 50 states that completed the survey, only 12 highway departments 
stated that they employ more professional and technical highway staff 
than they did in the past 5 years. The remainder of the highway 
departments said that their workforces have either stayed the same or 
decreased over the last 5 years. 

Analysis of Census of Governments data also illustrated these trends in 
staffing at state DOTs. From 1992 to 2005, employment at state DOTs 
across the country declined by a little over 0.5 percent 
annually.[Footnote 14] At the same time, state spending on highways 
increased by 0.2 percent annually, in real (inflation-adjusted) terms. 
These trends have resulted in an increase in the amount of highway 
spending per employee at state DOTs, with each state DOT employee on 
average having to "manage" a larger amount of his or her state's 
program. Overall, across the country, state DOT inflation-adjusted 
expenditures per employee have grown by 0.75 percent annually from 1992 
to 2005. 

Officials at every state DOT we interviewed also acknowledged 
challenges in delivering highway infrastructure and services demanded, 
given their in-house staffing situations. Several of the officials 
cited budgetary issues and political pressure to reduce the size of 
government as constraints on their ability to hire additional in-house 
staff. For example, Illinois DOT officials, whose staff has been cut 
nearly in half since the 1970s, stated that these staff reductions have 
been primarily linked to budget issues, such as those associated with 
the state's public employee pensions. In South Carolina, the 
legislature has not substantially changed the highway department's 
staffing levels despite the department's increased program size. 
Consequently, department officials stated that there is more work to do 
than the department can handle with its in-house staff alone. 

Officials from several state DOTs also mentioned that market 
conditions, including a lack of qualified engineers and the higher 
salaries paid in the private sector, limit their ability to hire and 
retain qualified personnel, even when they have the budget authority to 
do so. In Georgia, DOT officials said that the department is often 
engaged in bidding wars with private firms for prospective employees, 
and that they simply do not have the ability to offer equivalent 
compensation. 

In addition to supplementing ongoing shortages of in-house staff, many 
state DOTs viewed contracting as a valuable strategy for managing short-
term workload fluctuations. For example, Louisiana Department of 
Transportation and Development officials said that contracting is 
beneficial because it provides them with added flexibility and allows 
them to respond more rapidly to spikes in their highway program than if 
they had to bring new in-house staff on board. Once work slows, 
contracting also allows the state DOTs to draw down their workforce 
without having to lay off in-house employees. In our survey, state DOTs 
listed the desire to "maintain flexibility or manage variations in 
department workload" as "very important" or "important" more frequently 
overall than any other factor except "lack of in-house staff" in their 
decision to contract out work. 

In addition to increasing their overall level of manpower, state DOTs 
also frequently contract out work to access specialized skills or 
expertise they may not have in-house, according to our survey results 
and interviews with state highway officials. For example, the 
Pennsylvania DOT does not always have the specialized skills in-house 
to do certain geotechnical analyses and environmental impact 
assessments, so this work is contracted out. Several state DOTs also 
indicated that they tend to use consultants on complex projects that 
require more specific expertise. For example, Illinois DOT officials 
told us that they typically use consultants for larger, more complex 
projects that generally will have a higher associated dollar amount due 
to the need for specialized expertise. In addition, Louisiana 
Department of Transportation and Development officials said that they 
usually hire consultants to design the more complex and larger projects 
due to a decrease in design staff as well as in-house expertise. 
Maryland State Highway Administration officials also indicated that 
staff reductions in their agency have had a disproportionate effect on 
positions requiring more experience and has led to the agency using a 
greater proportion of consultants on large projects. 

Cost Savings Are Not a Major Driver in Decisions to Contract Out Work: 

Cost savings do not appear to be an important driver in the trend 
toward the increased contracting out of highway activities. Of the 
seven factors listed in the survey that might potentially lead a state 
DOT to decide to contract out an activity, "to obtain cost savings" was 
listed as "very important" or "important" the least number of times of 
any of the factors, across six of the seven highway activities studied. 
Furthermore, "to obtain cost savings" was listed by states as "of 
little importance" or "of no importance" the most times of any factor 
for five of the seven highway activities studied, as table 4 shows. 
During our interviews, no state DOT official cited cost savings as a 
primary reason for their departments' increased use of consultants and 
contractors in delivering their highway program. The Georgia DOT 
initially attempted to perform some cost-benefit analyses when the 
department was going through a surge in its contracting out work; 
however, the department abandoned these efforts after it became 
apparent that the results of the analyses did not matter since the 
department needed to contract out the work regardless. 

Table 4: Number of State DOTs Reporting Factors as "Of Little 
Importance" or "Of No Importance" in Decisions to Contract Out 
Activities: 

Factor: To obtain cost savings; 
Number of state DOTs, by highway activity: Preliminary engineering: 32; 
Number of state DOTs, by highway activity: Design: 37; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 36; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 24; 
Number of state DOTs, by highway activity: Routine maintenance: 20; 
Number of state DOTs, by highway activity: Ongoing operations: 22; 
Number of state DOTs, by highway activity: Right-of-way activities: 31. 

Factor: To identify innovative approaches or new techniques; 
Number of state DOTs, by highway activity: Preliminary engineering: 21; 
Number of state DOTs, by highway activity: Design: 23; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 34; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 15; 
Number of state DOTs, by highway activity: Routine maintenance: 20; 
Number of state DOTs, by highway activity: Ongoing operations: 14; 
Number of state DOTs, by highway activity: Right-of-way activities: 32. 

Factor: To meet federal or state legislative mandates, legal 
requirements, or policy initiatives; 
Number of state DOTs, by highway activity: Preliminary engineering: 17; 
Number of state DOTs, by highway activity: Design: 24; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 16; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 15; 
Number of state DOTs, by highway activity: Routine maintenance: 21; 
Number of state DOTs, by highway activity: Ongoing operations: 16; 
Number of state DOTs, by highway activity: Right-of-way activities: 26. 

Factor: To increase speed of completion or to meet specific time 
frames; 
Number of state DOTs, by highway activity: Preliminary engineering: 5; 
Number of state DOTs, by highway activity: Design: 6; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 22; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 5; 
Number of state DOTs, by highway activity: Routine maintenance: 9; 
Number of state DOTs, by highway activity: Ongoing operations: 8; 
Number of state DOTs, by highway activity: Right-of-way activities: 2. 

Factor: To access specialized skills or equipment; 
Number of state DOTs, by highway activity: Preliminary engineering: 4; 
Number of state DOTs, by highway activity: Design: 10; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 16; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 3; 
Number of state DOTs, by highway activity: Routine maintenance: 7; 
Number of state DOTs, by highway activity: Ongoing operations: 4; 
Number of state DOTs, by highway activity: Right-of-way activities: 10. 

Factor: To maintain flexibility or manage variations in department 
workload; 
Number of state DOTs, by highway activity: Preliminary engineering: 0; 
Number of state DOTs, by highway activity: Design: 2; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 6; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 5; 
Number of state DOTs, by highway activity: Routine maintenance: 3; 
Number of state DOTs, by highway activity: Ongoing operations: 9; 
Number of state DOTs, by highway activity: Right-of-way activities: 3. 

Factor: Lack of in-house staff; 
Number of state DOTs, by highway activity: Preliminary engineering: 1; 
Number of state DOTs, by highway activity: Design: 1; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 1; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 4; 
Number of state DOTs, by highway activity: Routine maintenance: 2; 
Number of state DOTs, by highway activity: Ongoing operations: 2; 
Number of state DOTs, by highway activity: Right-of-way activities: 3. 

Source: GAO survey results. 

[End of table] 

While cost savings are rarely the driver in the decision to contract 
out highway activities, the perception of higher contracting costs may 
influence states to continue to perform activities in-house, rather 
than contracting out the activities. In our survey, state DOTs listed 
the higher costs of consultants and contractors as a "very important" 
or "important" factor in the decision to use in-house staff to perform 
an activity more times overall than all but one factor, as shown in 
table 5. As an example, officials at the Pennsylvania DOT conducted an 
evaluation and found that it would be more expensive to contract out 
for highway line painting and decided to continue to do the majority of 
this work with in-house staff. 

Table 5: Number of State DOTs Reporting Factors as "Important" or "Very 
important" in Decisions to Use Department Staff to Perform an Activity: 

Factor: The need to retain key skills and expertise in-house; 
Number of state DOTs, by highway activity: Preliminary engineering: 33; 
Number of state DOTs, by highway activity: Design: 37; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 34; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 18; 
Number of state DOTs, by highway activity: Routine maintenance: 28; 
Number of state DOTs, by highway activity: Ongoing operations: 30; 
Number of state DOTs, by highway activity: Right-of-way activities: 33. 

Factor: Costs of consultants/ contractors are greater than using in- 
house staff; 
Number of state DOTs, by highway activity: Preliminary engineering: 24; 
Number of state DOTs, by highway activity: Design: 25; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 30; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 19; 
Number of state DOTs, by highway activity: Routine maintenance: 24; 
Number of state DOTs, by highway activity: Ongoing operations: 23; 
Number of state DOTs, by highway activity: Right-of-way activities: 24. 

Factor: Belief that work will be of higher quality if performed by in- 
house staff; 
Number of state DOTs, by highway activity: Preliminary engineering: 25; 
Number of state DOTs, by highway activity: Design: 28; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 24; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 12; 
Number of state DOTs, by highway activity: Routine maintenance: 18; 
Number of state DOTs, by highway activity: Ongoing operations: 13; 
Number of state DOTs, by highway activity: Right-of-way activities: 21. 

Factor: Belief that work can be performed more quickly using in-house 
staff; 
Number of state DOTs, by highway activity: Preliminary engineering: 16; 
Number of state DOTs, by highway activity: Design: 20; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 12; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 13; 
Number of state DOTs, by highway activity: Routine maintenance: 24; 
Number of state DOTs, by highway activity: Ongoing operations: 17; 
Number of state DOTs, by highway activity: Right-of-way activities: 27. 

Factor: Legal restrictions or policy initiatives regarding the use of 
consultants or contractors; 
Number of state DOTs, by highway activity: Preliminary engineering: 11; 
Number of state DOTs, by highway activity: Design: 11; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 13; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 7; 
Number of state DOTs, by highway activity: Routine maintenance: 9; 
Number of state DOTs, by highway activity: Ongoing operations: 10; 
Number of state DOTs, by highway activity: Right-of-way activities: 11. 

Factor: Required skills or expertise are not available in the private 
sector; 
Number of state DOTs, by highway activity: Preliminary engineering: 4; 
Number of state DOTs, by highway activity: Design: 3; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 7; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 2; 
Number of state DOTs, by highway activity: Routine maintenance: 6; 
Number of state DOTs, by highway activity: Ongoing operations: 7; 
Number of state DOTs, by highway activity: Right-of-way activities: 9. 

Factor: Concerns with liability or accountability for contracted work; 
Number of state DOTs, by highway activity: Preliminary engineering: 3; 
Number of state DOTs, by highway activity: Design: 3; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 10; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 4; 
Number of state DOTs, by highway activity: Routine maintenance: 11; 
Number of state DOTs, by highway activity: Ongoing operations: 7; 
Number of state DOTs, by highway activity: Right-of-way activities: 10. 

Factor: Lack of competition/ insufficient number of bidders; 
Number of state DOTs, by highway activity: Preliminary engineering: 3; 
Number of state DOTs, by highway activity: Design: 3; 
Number of state DOTs, by highway activity: Construction engineering and 
inspection: 3; 
Number of state DOTs, by highway activity: Federal-aid eligible 
preventive maintenance: 4; 
Number of state DOTs, by highway activity: Routine maintenance: 4; 
Number of state DOTs, by highway activity: Ongoing operations: 3; 
Number of state DOTs, by highway activity: Right-of-way activities: 3. 

Source: GAO survey results. 

[End of table] 

State DOTs Do Not Formally Assess Costs and Benefits before Contracting 
Out Work: 

Although state DOTs consider cost issues and estimate the costs of 
performing certain activities, none of the 10 departments from which we 
interviewed officials had a formal process in place to systematically 
or regularly assess the costs and benefits of contracting out 
activities before entering into contracts. State officials we 
interviewed acknowledged difficulties in accurately comparing costs of 
work performed in-house and work performed by contractors and 
consultants. For example, Minnesota DOT officials stated that they have 
difficulties in determining how to properly calculate overhead rates 
for in-house staff. Reports from state auditors in several states also 
acknowledged difficulties in comparing the costs of using consultants 
versus using in-house staff. Some reports also found that the highway 
departments in their states did not thoroughly or adequately study 
costs associated with the use of consultants compared with in-house 
staff to effectively manage the use of consultants, or actively 
negotiate with consultants to ensure that contract prices were fair and 
reasonable. 

While formal assessments are not undertaken, officials from several 
state DOTs we interviewed generally perceived contracting out to be 
more expensive than using in-house staff, particularly for engineering 
services. In fact, no state DOT official we interviewed perceived 
engineering work to be cheaper on an hourly basis when contracted out. 
However, some officials indicated that they found opportunities for 
cost savings in some circumstances for specific activities. For 
example, the Utah DOT found that it was cheaper to contract out its 
pavement management data collection work because it allowed the 
department to avoid having to invest in the expensive equipment 
required, which tends to become rapidly outdated. Officials from 
another state DOT acknowledged that there were potential cost 
efficiencies through contracting if contract employees were laid off 
during periods of reduced activity, such as during the winter months. 
This department conducted an analysis that found that if the agency 
laid off consultant construction inspectors for at least 3 months out 
of the year, the agency's cost for the inspectors would equal that of 
in-house employees. However, officials stated that the department has 
not laid off consultant inspectors consistently due to concerns that 
the department would not be able rehire them once their services were 
needed again. 

A number of studies have attempted to compare the costs of contracting 
out and using in-house staff for highway activities. In our review of 
these studies, we identified a series of methodological issues and 
other limitations that make it difficult to make any conclusions about 
whether consultants and contractors are more or less expensive than 
public employees over the long term.[Footnote 15] In addition, we 
reviewed other studies that have attempted to synthesize the results of 
existing cost comparisons and have raised many of these same issues. 
First, numerous challenges exist in obtaining accurate and reliable 
data to make comparisons. Such challenges include difficulties in 
properly assigning in-house overhead costs to specific projects and 
activities, finding "like" projects to compare, and using state DOT 
systems and records that have incomplete and unreliable data. Second, 
very few of the studies we reviewed sought to systematically determine 
the benefits resulting from contracted work or in-house work, thus 
providing an incomplete picture as to the extent to which contracting 
out highway activities might or might not be desirable. For example, 
additional costs of using consultants or contractors could be offset by 
benefits in completing the project more quickly than it would have been 
done by in-house staff, or the quality of the work may be worth the 
premium paid for the service. Finally, the studies did not adequately 
consider the long-term implications of contracting out work or 
performing it in-house, such as long-term pension obligations 
associated with in-house employees that are not incurred when work is 
directly contracted out. 

Additional Factors Can Also Play a Role in Contracting Decisions: 

In addition to the factors that we have previously discussed, other 
considerations can play a role in a state DOT's decision of whether to 
contract out certain activities. Next to the staffing issues that we 
have previously discussed, state DOTs most frequently reported using 
consultants to meet specific time frames or to increase the speed of 
completion of a task as an "important" or "very important" factor. 
State-level legislative requirements and policy mandates are also 
sometimes factors in state DOTs' decisions to contract out work. For 
instance, the South Carolina Legislature enacted a budget provision in 
1996, encouraging the highway department to use private contractors for 
bridge replacements; surface treatments; thermo-plastic striping; 
traffic signals; fencing; and guardrails, whenever possible. In our 
survey, the Alaska DOT responded that one of the reasons it contracts 
out preliminary engineering work is to satisfy direction that it has 
received from the state government on using consultants. Conversely 
some states may also have legislative limitations on their ability to 
contract out work. For example, the California DOT, until recently, had 
only limited authority to contract out engineering services under the 
California constitution. 

Regarding the decision to keep work in-house, the most commonly cited 
factor in both our interviews and our survey was the desire to retain 
key skills and expertise. State DOTs recognize that they need to 
maintain a core of employees with sufficient experience and expertise 
to be able to effectively oversee and manage consultants and 
contractors and to also develop the expertise of more junior highway 
department employees. In both our interviews and our survey, State DOT 
officials stated that they often consciously keep certain activities in-
house so that employees can improve their skills. 

The results from our survey indicated that state DOTs' perceptions 
regarding differences in quality between work performed in-house and 
work contracted out may at times be an important factor in decisions to 
keep work in-house. For preconstruction activities in particular, 
"belief that work will be of a higher quality if performed by in-house 
staff" was one of the factors most frequently listed as being "very 
important" or important" in the decision to perform work with in-house 
staff. Furthermore, one state DOT noted in the survey that the 
consultants they have used to perform construction engineering and 
inspection work did not have adequate experience to effectively do the 
job. In our interviews, few state officials expressed strong beliefs 
about differences in quality between in-house and contracted out work, 
although some departments acknowledged that the quality of work varies, 
depending on the firm being used, and that there have been issues 
regarding the performance of specific firms. 

We also performed a correlation analysis to determine whether the 
amount of work that state DOTs contract out is associated with certain 
demographic or economic conditions in the state.[Footnote 16] The level 
of correlation between most of the economic and demographic variables 
selected for the analysis and the percentage of work that state DOTs 
contract out was relatively weak or nonexistent. However, among the 
variables that we considered, the percentage of a state's population 
living in urban areas had the strongest positive correlation with the 
amount of work that states contract out in preliminary engineering, 
design, and construction engineering and inspection 
activities.[Footnote 17] This correlation may occur because, as state 
DOT officials told us, they are more likely to contract out larger and 
more complicated projects, and there may be more of these types of 
projects in those states that are more urbanized. Also, for the 
majority of activities studied, there appears to be a moderate positive 
correlation between the amount of work contracted out and the pace at 
which states' populations have grown. This correlation is consistent 
with the possibility that more rapidly growing states contract out 
greater amounts of work to help meet surges in their workload spurred 
by the increased demand for highways that growing populations foster, 
but may also be due to other factors. 

State DOTs Use Various Controls to Protect the Public Interest, but 
They Face Additional Challenges Arising from Current Contracting 
Trends: 

State officials we interviewed told us that they have sufficient tools 
and procedures in place to monitor and oversee contractors to ensure 
that the public interest is protected. These tools and procedures 
include such things as prequalification of contractors and consultants, 
regular monitoring procedures, assessments of work performed, and 
standards and requirements for certain types of work. However, 10 of 
the 11 state auditor reports we reviewed found weaknesses in state 
DOTs' contracting and oversight practices. With current trends in 
contracting state DOTs face additional challenges in conducting 
adequate oversight and monitoring. In particular, states' oversight has 
generally become further removed from the day-to-day work on a project, 
and state officials expressed long-term concerns in retaining adequate 
expertise and staff needed to adequately oversee a growing contractor 
and consultant workforce. 

State DOTs Use a Variety of Tools and Processes to Protect the Public 
Interest, Although Such Controls Are Inconsistently Applied: 

State DOTs' contracts with consultants and contractors include a 
variety of mechanisms and controls that are intended to address 
potential project risks and protect the public interest, and the state 
officials with whom we spoke believe that the controls they have in 
place are adequate to protect the public interest. For example, state 
DOTs may prequalify consulting firms and contractors to ensure that 
those bidding on projects will be able to successfully perform 
contracted activities. A previous survey on state contracting practices 
found that state DOTs use a prequalification process for about two 
thirds of the activities they contract out. The survey found that 
prequalification processes were most common for design, right-of-way, 
and operations activities, while prequalification processes where less 
common when contracting out for maintenance and construction work. A 
majority of state DOT officials we interviewed also stated that they 
have prequalification processes for at least some activities. As part 
of their prequalification requirements, state DOTs examine consultants' 
and contractors' previous job experience and work capacity to identify 
individuals and organizations from which the agency may accept a bid. 
In addition, for engineering services, state DOTs are required to use a 
qualification-based selection process to identify best-qualified 
bidders. It is only once these best-qualified bidders have been 
identified that the highway department enters into price negotiations 
to determine a "fair and reasonable" price for the contracted 
services.[Footnote 18] 

States also report that they have policies to regularly monitor and 
assess consultants and contractors during the project and upon project 
completion and may include these assessments into prequalification 
determinations for future projects. State officials indicate that a 
state employee is always ultimately responsible for any particular 
project or service and, therefore, are responsible for ensuring that 
consultants and contractors are performing the work according to 
contract provisions and other applicable standards and specifications. 
State DOTs may address poor performance on an ongoing project by 
requesting that the contractor or consultant replace a particular 
employee or by requesting that the contractor or consultant address any 
construction mistakes. In extreme circumstances, state DOTs can also 
withhold payment to consultants or contractors. A poor performance 
rating at the end of a highway project may result in a reduced chance 
of securing future contracts. 

All state DOTs have policies and rules governing consultant and 
contractor independence. For projects on the National Highway System, 
state DOTs require consultants and contractors to certify that they do 
not have any potential or perceived conflicts of interest. Some state 
DOTs have prohibitions against performing both design and construction 
inspection activities. 

State DOTs have also developed various standards, specifications, and 
policies to help ensure that the public interest is protected on 
highway projects. State DOTs require that standards and specifications 
be followed whether work is performed by department staff or contracted 
out. When work is contracted out, state DOTs outline all relevant 
standards and specifications--such as design and construction 
standards, and specifications regarding materials acquisitions--in the 
terms of the contract after a winning bidder has been selected. 

Finally, federal regulations require each state agency to have an 
approved quality assurance program for materials used in and the 
construction of federal-aid highway construction projects.[Footnote 19] 
Quality assurance programs identify contractors' materials sampling, 
testing, and inspection requirements as well as specific quality 
characteristics to be measured for project acceptance. The regulations 
also include requirements that each state DOT's quality assurance 
program provides for an acceptance program and an independent assurance 
program. In 1995, FHWA revised its regulations to allow state DOTs to 
use contractor material testing data in their acceptance decisions if 
accompanied by validation and verification procedures. However, state 
employees must always make the final acceptance decision. On full 
oversight projects, the state's FHWA division office is responsible for 
providing final acceptance of projects at the completion of 
construction, but the state is still responsible for providing project-
level acceptance of construction and materials quality during 
construction. 

State auditors in 10 of the 11 states that responded to our inquiry 
found numerous weaknesses in state DOTs' contracting and oversight 
practices. For example, one auditor's report found that the state DOT's 
prequalification procedures do not always ensure that the most 
qualified bidder is selected. Furthermore, auditors' reports in at 
least 5 states found that the state DOTs did not aggressively negotiate 
fair and reasonable prices when using qualifications-based selections, 
or had not established criteria to define what constitutes a reasonable 
price, resulting in negotiated prices that are perceived to be too high 
compared with national benchmarks, or compared with other states' 
experience. In addition, another auditor report found examples where 
the state DOT failed to consistently assess consultant and contractor 
performance, and examples where quality assurance procedures were not 
adequately followed, which can result in lower-quality highway 
construction. 

Current Trends in Contracting Out Pose Challenges for State DOTs in 
Conducting Adequate Oversight and Monitoring: 

State DOTs may encounter challenges in conducting sufficient oversight 
and monitoring for highway projects, given current trends in 
contracting out. For projects using federal-aid highway funds, FHWA 
requires that a state highway employee always have ultimate 
responsibility for successful project completion. However, when 
consultants and contractors have oversight or managerial roles on a 
project, the state highway employee may be further removed from the day-
to-day project activities. This situation has the potential to limit 
the ability of state DOT employees to identify and resolve problems 
that occur during construction. For example, the National 
Transportation Safety Board--in its report on an accident in Colorado 
in which a car collided with a steel girder that had fallen from an 
overpass--found that the state DOT did not conduct active oversight, 
and that it was the department's policy to avoid telling a contractor 
how to accomplish contracted work and to avoid interfering as the 
contractor carried out the work. 

In addition, state highway employees are increasingly moving into 
project manager roles in which they may oversee several projects. 
Several state DOT officials cited concerns and challenges in conducting 
adequate oversight in such situations. In some states, consultants 
oversee multiple projects as well. For example, the Maryland State 
Highway Administration is beginning to use construction management 
inspection contracts. Under these contracts, the contractor becomes 
responsible for managing work on specific projects as well as a 
portfolio of projects. 

Erosion of state DOTs' in-house expertise as a result of staff cuts and 
retirements also creates additional risk in the long term and creates 
challenges for state DOTs in effectively overseeing consultant and 
contractor work. All of the state DOT officials with whom we spoke 
believe that they currently have sufficient expertise in-house to carry 
out their highway programs and to oversee consultants and contractors. 
However, according to officials at several state DOTs, there is a 
"thinning" of expertise in their departments and fewer knowledgeable 
staff are available to oversee and monitor consultants. As we have 
previously stated, state DOTs have not been able to hire a sufficient 
number of staff to replace experienced staff who may soon be retiring. 
In addition, state DOTs compete with private firms for what in some 
states is a relatively small number of new engineers graduating from 
college. State highway officials in several states also commented that, 
given the limitations inherent in a state budget, college graduates 
often elect to either (1) go into the private sector right away or (2) 
receive training at the state DOT, and then leave for a higher paying 
job in the private sector. 

Ensuring that consultants and contractors are independent and free from 
conflicts of interest can be difficult. As we have previously 
discussed, state DOTs are using consultants and contractors for a 
greater variety of services, including project engineering and design, 
construction inspection, and highway maintenance. Officials from 
several state DOTs have expressed some concern because consultants and 
contractors may work on multiple state projects where they are the lead 
on one project and a subconsultant/subcontractor on another project. 
For example, one firm may have an undisclosed financial relationship 
with another firm beyond the work being done with the state DOT, and 
this situation could pose difficulties if one of these firms is hired 
to inspect the other. While some state DOT officials acknowledged that 
situations have arisen that present the potential for conflicts of 
interest, none of the state DOT officials with whom we spoke thought 
their agencies had any significant problems with contractor and 
consultant independence. 

FHWA Focuses Much of Its Oversight Efforts on Ensuring That State DOTs 
Comply with Laws and Regulations: 

The federal-aid highway program provides states with broad flexibility 
in deciding how to use their funds, which projects to pick, and how to 
implement these projects; therefore, FHWA has a limited role in 
determining how consultants and contractors should be used by state 
DOTs. FHWA performs project-level oversight on only a limited number of 
projects. FHWA division offices also conduct reviews of state programs 
and processes that are related to the use of consultants and 
contractors. These oversight activities are generally limited to 
ensuring compliance with federal rules and regulations. On a national 
level, FHWA has recently conducted some reviews that touch on states' 
use of consultants and contractors. Through these reviews, FHWA has 
identified a variety of risks associated with the use of consultants 
and contractors, but the agency has not fully assessed how to respond 
to these risks. 

FHWA Has a Limited Role in Determining How Consultants and Contractors 
Are Used on Highway Projects: 

FHWA has only limited authority over many aspects of state DOTs' 
programs, including their contracting practices. According to FHWA 
officials, the agency does not have any specific policy regarding 
highway departments' use of consultants and contractors beyond those 
requirements contained in existing laws and regulations. Furthermore, 
while federal law requires state highway departments to be "suitably 
equipped and organized," the law also includes a provision that a state 
may engage, to the extent necessary or desirable, the services of 
private engineering firms in meeting these provisions.[Footnote 20] 
According to FHWA, some FHWA division offices have interpreted this 
regulation as providing state DOTs with broad authority to use 
consultants to perform department work. FHWA has compiled relevant 
legislation and regulations regarding the contracting out of highway 
activities on its Web site to serve as guidance to state DOTs when 
contracting out highway activities. 

FHWA has also played a role in encouraging states to consider 
alternative contracting techniques and methods, and to consider greater 
involvement from the private sector through public-private partnerships 
to improve project delivery and seek out alternative sources of 
funding. For example, FHWA has encouraged contracting techniques and 
public-private partnerships through Special Experimental Projects 14 
and 15, with many of these techniques allowing consultants and 
contractors to assume additional responsibilities in the delivery of 
highway projects. 

Some FHWA Oversight Activities Are Associated with the Use of 
Consultants and Contractors: 

While state DOTs conduct project-level oversight on the majority of 
highway projects, FHWA retains project-level oversight on a limited 
number of projects, based on its stewardship agreement with the state 
DOT. Regarding states' use of consultants and contractors, the agency's 
oversight efforts are generally focused on ensuring compliance with 
existing laws and regulations. For example, the division office must 
concur in the award of certain contracts, and when providing 
concurrence for an engineering contract, a division office will seek to 
ensure that the state DOT has used an appropriate qualifications-based 
selection process, as required by law. 

When conducting project-level oversight, division office officials will 
also do at least some on-site monitoring of the work. During these on- 
site visits, FHWA will assess the project's status and verify that the 
project complies with plans and specifications. As part of this 
process, division office officials told us that they will often observe 
ongoing project activities to ensure that materials testing and other 
quality control and quality assurance procedures follow regulations. 
The amount of on-site oversight varies greatly, depending on the 
perceived project risk, which is generally determined according to the 
cost of the project, its complexity, and its visibility to and 
potential impact on the public. Division office officials told us that 
on projects with very high visibility, they will have an engineer on-
site up to several times a week. However, for other projects, they may 
not send an engineer out to the site more than once or twice over the 
life of a project. According to division office officials, even when 
conducting project-level oversight, they still rely on the state DOTs 
to properly administer the project and that much of FHWA's role is not 
to perform direct oversight, but rather to make sure that the highway 
department is doing appropriate oversight. Once the project is 
completed, FHWA is responsible for final inspection and project 
acceptance. 

FHWA also conducts oversight related to the use of consultants and 
contractors through reviews of state programs and processes that may 
involve consultants and contractors. To identify those areas that pose 
the greatest threats or opportunities to states' federal-aid programs 
and to assist the division offices in allocating their limited 
resources in the most effective manner, FHWA has encouraged a risk- 
based approach to identifying areas for review, and given division 
offices flexibility in determining which program areas to focus on in 
their risk assessments. Through this risk assessment process, many 
division offices have identified issues related to the use of 
consultants and contractors. We have identified at least 15 states 
where FHWA division offices have conducted process reviews specifically 
concerning the contracting out of work over the past 5 years. We have 
also identified at least 2 other states where FHWA division offices are 
currently conducting similar reviews. These reviews focus on a variety 
of issues related to the use of consultants and contractors, and many 
have recommendations for how state DOTs can improve their processes for 
procuring and administering consultants and contractors. 

As a result of division offices' identification of the use of 
consultants and contractors as an area of high risk, FHWA headquarters 
has also conducted national reviews that involve issues related to this 
matter. Under its recently created National Review Program, FHWA has 
completed reports on quality assurance and oversight of local public 
agencies that include discussions of issues associated with the 
contracting out of work. FHWA is also currently undertaking an 
additional review that is looking at the administration of consultant 
contracts. In addition to these reviews, FHWA has also conducted a 
series of annual reviews of state DOTs' quality assurance activities 
over the last several years that have highlighted concerns related to 
material testing conducted by consultants. 

A final way that FHWA exercises oversight relating to the use of 
consultants and contractors is through its approval of various state 
DOT documents. As part of their oversight responsibilities, division 
offices are responsible for approving a variety of state DOT manuals, 
standards, and policy documents that establish procedures for 
implementing the federal-aid highway program in the state. For example, 
state DOTs must develop written procedures outlining their process for 
procuring consultant services, which must be approved by FHWA.[Footnote 
21] FHWA must also approve other documents that may not be directly 
focused on the contracting out of work, but that address work that is 
often performed by consultants or contractors. For example, division 
offices are responsible for approving state DOTs' quality assurance 
programs for materials on construction projects. 

FHWA Has Identified Risks Associated with the Use of Consultants and 
Contractors, but It Has Not Fully Assessed How to Respond to These 
Risks: 

FHWA has identified many ways that the contracting out of work can pose 
risks to the federal-aid highway program. For example, a series of FHWA 
reviews of quality assurance activities found many critical 
deficiencies in state oversight of consultants in these activities, 
such as the lack of independent sampling of highway materials for 
verification tests; inadequate statistical comparisons of test results; 
and insufficient state control of test samples, sampling locations, and 
testing data. Such shortcomings in state DOTs' quality assurance 
programs could potentially have a detrimental effect. For example, in 
its quality assurance review, FHWA states that pavement on highways is 
deteriorating faster than expected and asserts that this is likely, at 
least in part, due to the identified weaknesses in state DOTs' quality 
assurance programs.[Footnote 22] In addition, another national FHWA 
study related to the use of local public agencies found that local 
agencies are often highly dependent on consultants to deliver the 
projects and may not have the expertise to adequately oversee the work 
of the consultants and to be sure of the quality of the services they 
are getting. The study further found that some states may not be 
conducting adequate oversight over these projects, and that the states' 
reviews tend to be reactive, rather than proactive. 

Division offices have also cited areas of risk associated with the 
growing use of consultants. For example, an Illinois Division Office 
process review raised concerns about the possibility that firms that 
had performed design work for a project might also do construction 
inspection work on the same project, which would pose the potential for 
conflicts of interest. In our interviews with division office 
officials, many cited the challenges that contracting out poses for 
state DOTs in regard to maintaining sufficient in-house expertise. 
Also, several division office officials perceived contracting out work 
to be more expensive than keeping the work in-house, resulting in an 
inefficient use of public funds. Division office officials we 
interviewed also pointed out that FHWA's division offices have also 
suffered reductions in staff and an erosion of expertise and 
experience, which can hamper their oversight activities. 

FHWA officials stated that many division offices also identified areas 
of risk related to the contracting out of work during FHWA's first 
national risk management cycle. Although the use of consultants and 
contractors was not one of the 49 key elements that division offices 
were required to assess, many division offices still identified it as 
an area of risk. According to FHWA, 23 division offices identified 
risks related to the use of consultants as one of their top risks, with 
division offices finding such risks present throughout various state 
DOT program areas, including in construction, design, and right-of-way. 
These risks included concerns that consultants do not have the 
necessary skills to complete tasks according to federal regulations, 
consultants are not supplying sufficient personnel or resources to 
complete jobs, and state DOTs have been overly relying on consultants 
to select and manage contractors. 

While FHWA has identified risks associated with the use of consultants 
and contractors, the agency has not comprehensively assessed how, if at 
all, it needs to adjust its oversight efforts to protect the public 
interest, given current trends in the use of consultants and 
contractors. Also, FHWA has not instructed its division offices to 
consider issues related to the amount and type of work contracted out 
when outlining oversight responsibilities in their stewardship 
agreements with state DOTs. Overall, FHWA division offices generally 
described their role as ensuring compliance with existing regulations 
and not assessing the performance of state DOTs in achieving 
transportation goals. This has the potential to limit the value of the 
agency's oversight activities. For example, FHWA acknowledges in its 
report on quality assurance in materials and construction that it is 
possible to have a quality assurance program for materials that is 
compliant with regulations, but is not performing effectively, and vice 
versa.[Footnote 23] This FHWA report also finds that division offices 
are often not fully aware of what components should be part of quality 
assurance programs, and, as a result, the effectiveness of these 
programs is not being adequately assessed. 

FHWA has made progress in addressing some of the concerns related to 
its oversight program and is considering additional steps to mitigate 
risks associated with the use of consultants and contractors in the 
future. The agency is currently developing an implementation plan in 
response to the recommendations in its quality assurance report. This 
plan may seek to address some of the risks associated with the 
involvement of consultants and contractors in the quality assurance 
process. Also, FHWA is continuing to refine its risk management 
approach to better identify risks throughout the country and to more 
fully develop methods for addressing identified risks. Finally, as we 
have previously discussed, FHWA division offices have been working to 
revise their current stewardship agreements to incorporate further 
considerations of risk and to also identify performance measures that 
will assist in increasing accountability in the federal-aid program, 
based on FHWA guidance. However, FHWA guidance gives state DOTs and 
division offices broad flexibility in how they assess risks and develop 
performance measures. As of October 2007, FHWA reported that 21 of the 
agreements had been revised, with 15 of them incorporating 
considerations of risk and performance measures. Five more agreements 
incorporated considerations of risk, but not performance measures. 

Conclusions: 

State DOTs have long used contractors and consultants to augment 
existing workforces. Recent trends suggest that consultants and 
contractors are used more than ever before and in a multitude of 
different activities--from designing projects, to appraising and 
acquiring rights-of-way, to managing and inspecting projects--and, in 
some cases, consultants and contractors may be responsible for projects 
from beginning to end. While there is no conclusive evidence of the 
long-term differences in costs and benefits between using consultants 
and contractors and obtaining additional state staff, this 
consideration is largely inconsequential to state DOTs because many are 
now dependent on consultants and contractors to deliver their growing 
highway programs. Given this reality, effective oversight and 
monitoring of consultant and contractor workforces become critical to 
state DOTs to ensure that work is performed according to standards and 
specifications, and that materials used meet quality and performance 
standards. While the state officials that we interviewed generally 
believe they have sufficient controls in place to conduct such 
oversight, there is some evidence from state auditor's reports that 
these controls are not always implemented effectively. Furthermore, 
state officials we interviewed recognize that there will be increased 
risk to the highway program over the long term, given (1) the growing 
potential for conflicts of interest and independence issues and (2) the 
reality of a changing workforce at state DOTs and difficulties in 
attracting and retaining staff with key skills. 

We have previously reported that there is a need for a fundamental 
reexamination of the highway program and a need for national 
transportation goals to be better defined and linked to performance 
measures to evaluate what the respective programs actually accomplish. 
Regarding the growing use of consultants and contractors by state 
highway departments, FHWA's oversight has generally been focused on 
ensuring that state processes related to this matter are in compliance 
with existing regulations, and has not sufficiently focused on the 
performance and effectiveness of those processes in protecting the 
public interest or in achieving national transportation goals. We 
recognize that FHWA has a number of efforts under way that are geared 
toward refining FHWA's approach to oversight of state DOTs, including 
developing a plan to address the issues raised in its national review 
of quality assurance programs, working to identify areas of 
vulnerability to the federal-aid highway program through its national 
risk management cycle, and continuing a national program review 
currently under way of consultant administration. In addition, division 
offices are continuing to revise their stewardship agreements to be 
more risk-and performance-oriented. However, further efforts to assess 
how best FHWA could adjust its oversight and focus its activities on 
consistently ensuring the performance and effectiveness of state DOTs' 
programs and processes as they relate to the management of consultants 
and contractors would increase the value of FHWA oversight in this 
area. In addition, while several stewardship agreements have recently 
been revised to incorporate a more risk-and performance-oriented 
approach to conducting federal oversight, most states have yet to 
revise their agreements, and some revised agreements have not 
incorporated performance measures. 

Recommendations for Executive Action: 

To more effectively and consistently ensure that state DOTs are 
adequately protecting public interests in the highway program, given 
current trends in the use of consultants and contractors, we recommend 
that the Secretary of Transportation direct the Administrator of the 
Federal Highway Administration, in the context of FHWA's ongoing 
activities related to quality assurance programs and risk management, 
to work with FHWA division offices to (1) give appropriate 
consideration to the identified areas of risk related to the increased 
use of consultants and contractors as division offices work to target 
their oversight activities and (2) develop and implement performance 
measures to better assess the effectiveness of state DOTs' controls 
related to the use of consultants and contractors to better ensure that 
the public interest is protected. 

Agency Comments: 

We provided copies of this report to the Department of Transportation, 
including FHWA, for its review and comment. DOT officials provided 
technical clarifications, which we incorporated as appropriate. The 
department took no position on our recommendation to work with FHWA 
division offices regarding state DOTs' increased use of consultants and 
contractors. 

We are sending copies of this report to interested congressional 
committees, the Secretary of Transportation, and the Administrator of 
the Federal Highway Administration. We will also make copies available 
to others upon request. In addition, the report will be available at no 
charge on the GAO Web site at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-2834 or at heckerj@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made major contributions 
to this report are listed in appendix IV. 

Sincerely yours, 

Signed by: 

JayEtta Z. Hecker: 

Director, Physical Infrastructure: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

This report addresses the following objectives: (1) the recent trends 
in the contracting out of state highway activities; (2) the factors 
that influence state departments of transportation (state DOT) in 
deciding whether to contract out activities and the extent to which 
state DOTs assess costs and benefits when making such decisions; (3) 
how state DOTs protect the public interest when work is contracted out, 
particularly when consultants and contractors are given substantial 
responsibility for project and service quality and delivery; and (4) 
the Federal Highway Administration's (FHWA) role in ensuring that 
states protect the public interest. 

To determine the recent trends in the contracting out of state highway 
activities, we performed a literature review of existing research and 
survey data to identify general trends over the periods covered by 
those surveys and to use as a general baseline for comparison with 
current levels of contracting out. We also surveyed and received 
responses from all 50 state DOTs, using a Web-based questionnaire. In 
developing the survey, we consulted a representative from the American 
Association of State Highway Transportation Officials (AASHTO) and also 
consulted a highway expert who is a former President of AASHTO, a 
former head of the Utah DOT, and an author of numerous studies on 
highway contracting issues. On the basis of the information received in 
these consultations, we revised our survey instrument. In addition, we 
conducted survey pretests over the telephone with state DOTs in 
Illinois and Maryland. We also revised our survey instrument on the 
basis of information we received in these pretests. We conducted the 
survey from mid-June to mid-September 2007. During this period, we sent 
2 rounds of follow-up e-mails to nonrespondents in addition to the 
initial e-mailing. We also made follow-up telephone calls and sent 
follow-up e-mails to several state DOTs to encourage them to complete 
the questionnaire. We then surveyed the state DOTs to learn about the 
extent to which they contract for services across 7 categories of 
highway activities, including preliminary engineering, design, 
construction engineering and inspection, federal-aid eligible 
preventive maintenance, routine maintenance activities not eligible for 
federal-aid program funding, ongoing operations, and right-of-way 
appraisals. We also surveyed state DOTs to determine how the levels of 
contracting for these activities have changed over the past 5 years and 
to gather information about potential future trends in contracting. In 
addition, we used the survey to identify which factors state DOTs said 
are driving them to contract out activities or to keep work in-house. 
Finally, the survey gathered data on state DOTs' use of alternative 
contract types and techniques and collected information on certain 
contracting concerns that are specific to design-build contracts. In 
developing the questionnaire and in collecting and analyzing the data, 
we took steps to minimize errors that could occur during those stages 
of the survey process. The detailed survey results are available in 
appendix III. 

Because this was not a sample survey, it has no sampling errors. 
However, the practical difficulties of conducting any survey may 
introduce errors, commonly referred to as "nonsampling" errors. For 
example, difficulties in interpreting a particular question, making 
sources of information available to respondents, entering data into a 
database, or analyzing these data can introduce unwanted variability 
into the survey results. We took steps in developing the questionnaire, 
collecting the data, and analyzing the data to minimize such 
nonsampling errors. For example, social science survey specialists 
designed the questionnaire in collaboration with GAO staff who have 
subject matter expertise. Then, as we have previously noted, our 
questionnaire was reviewed by experts in this field and was pretested 
in 2 states. When we analyzed the data, an independent analyst checked 
all computer programs. Since this was a Web-based survey, respondents 
entered their answers directly into the electronic questionnaire-- 
eliminating the need to key data into a database and further minimizing 
errors. 

To gather further information on the recent trends in the contracting 
out of state highway activities, we performed a series of in-depth 
interviews with highway department officials in 10 states throughout 
the country: Arizona, California, Georgia, Illinois, Louisiana, 
Maryland, Minnesota, Pennsylvania, South Carolina, and Utah. These 
interviews allowed the team to gather in-depth and contextual 
information on state DOT contracting practices that could not be 
obtained through a survey. We conducted all of the interviews using a 
data collection instrument that we developed. 

In selecting state DOTs to interview, we used a nongeneralizable 
sample, rather than performing random sampling. We chose this approach 
to ensure that the sample set included state DOTs with a range of 
contracting experiences and practices. When selecting which state DOTs 
to include in the sample, we considered a range of criteria, including 
(1) the region in which the state is located; (2) the degree to which 
the state DOT contracts out highway activities; (3) the range of 
contracting approaches the state uses, including nontraditional project 
delivery methods such as design-build or asset management as reported 
in previous reports; (4) the legal and policy requirements the state 
faces in regard to contracting out highway activities; and (5) the 
extent to which the state has performed analyses of the costs and 
benefits of contracting out highway activities. To select the states 
for the sample, we reviewed relevant academic, expert, state, and 
federal research and existing survey data on state outsourcing 
activities to make an initial assessment of where various state DOTs 
fell along the spectrum for each of the criteria and to identify any 
unique features of the states' outsourcing programs that would be 
particularly useful to study in greater depth. For example, we looked 
for criteria such as state DOTs that had developed unique contracting 
practices, state DOTs that were rapidly changing the way their 
departments conducted business, and state DOTs whose outsourcing 
experiences had been particularly successful or problematic. Lastly, we 
generally sought to avoid selecting states that had already been 
studied in great depth and whose contracting experiences are already 
well-documented, such as Florida. 

To determine the factors that influence state DOTs in deciding whether 
to contract out activities and the extent to which state DOTs assess 
costs and benefits when making such decisions, we used state DOTs' 
responses from our survey regarding the importance of various factors 
in their decisions to contract out various highway activities and in 
their decisions to continue to perform work with in-house staff. In 
addition, we relied on information gathered in our in-depth interviews 
to further determine the importance of various factors in contracting 
decisions and to gain important contextual information on these various 
factors that could not be achieved through the survey. We also reviewed 
the literature to identify existing studies that sought to consider the 
costs and benefits of contracting out highway activities versus 
performing them with in-house staff, and we compiled and summarized the 
results from various studies. We also identified methodological 
limitations associated with such studies and the potential impacts they 
have on the reliability of any findings. 

To determine whether states' decisions to contract out highway 
activities were associated with certain demographic or economic 
conditions in each state, we conducted a correlation analysis. For the 
analysis, we used data from our survey on the percentage of work that 
state DOTs contract out for 7 types of activities. Although all 50 
states completed the survey, some states did not provide values for all 
activities. The number of states that provided values ranges from 39 to 
46, depending on the activity. We then identified a series of state 
characteristics to test whether they are associated with the extent to 
which states contract out these activities. These variables included 
population, population density, population growth over the past 5 and 
10 years, the percentage of a state's population living in urban areas, 
annual vehicle miles traveled in the state, annual vehicle miles 
traveled per person in the state, total lane miles per person in the 
state, the number of road miles with a pavement international roughness 
index score greater than 170 (a measure of pavement quality, with a 
score greater than 170 indicating pavement of poor quality) per person 
in the state, state per capita income, state pension fund liabilities 
per person, state highway capital outlays per person, and the change in 
state highway capital outlays over the past 5 and 10 years. We selected 
these variables because we could identify plausible reasons that states 
with higher values of these variables might be either more or less 
likely than states with lower values to contract out highway 
activities. We identified reasons that each of these variables could 
impact either highway demand or supply conditions in a state, or could 
impact the state's ability to conduct highway activities with an in- 
house workforce. Data on these various state characteristics were 
compiled from the U.S. Census, FHWA, and the Public Fund 
Survey.[Footnote 24] We then calculated the correlation coefficients 
for the 98 relationships to be tested and analyzed the results to see 
if there were any clear positive or negative associations among the 
variables and to assess the strength of such associations, as shown in 
table 6. We did not, however, analyze the associations among these 
variables in a multivariable analysis because of the lack of a strong 
conceptual framework based in economic theory for determining an 
appropriate model. Given this, our analysis only considered the 
percentage of work contracted out singly with each economic or 
demographic characteristic selected and did not control for the effects 
of other characteristics on contracting levels. Multivariable analysis 
might have revealed more complex relationships among the state 
characteristics and between those characteristics and the level of 
contracting out highway activities. 

Table 6: Correlation Coefficients: 

Variables: Population density; 
Preliminary engineering: 0.434; 
Design: 0.327; 
Construction engineering and inspection: 0.244; 
Federal-aid eligible preventive maintenance: (0.141); 
Routine maintenance: 0.088; 
Ongoing operations: 0.147; 
Right-of-way: (0.101). 

Variables: Annual vehicle miles traveled per person; 
Preliminary engineering: (0.252); 
Design: (0.226); 
Construction engineering and inspection: (0.335); 
Federal-aid eligible preventive maintenance: 0.163; 
Routine maintenance: 0.034; 
Ongoing operations: (0.409); 
Right- of-way: (0.047). 

Variables: Total lane miles per person; 
Preliminary engineering: (0.251); 
Design: (0.282); 
Construction engineering and inspection: (0.213); 
Federal-aid eligible preventive maintenance: (0.039); 
Routine maintenance: (0.289); 
Ongoing operations: (0.294); 
Right-of-way: (0.046). 

Variables: Number of lane miles with an International Roughness Index 
>170 per total lane miles; 
Preliminary engineering: 0.179; 
Design: (0.053); 
Construction engineering and inspection: 0.028; 
Federal-aid eligible preventive maintenance: (0.092); 
Routine maintenance: (0.084); 
Ongoing operations: 0.111; 
Right-of-way: (0.174). 

Variables: Per capita income; 
Preliminary engineering: 0.221; 
Design: 0.059; 
Construction engineering and inspection: 0.322; 
Federal-aid eligible preventive maintenance: (0.153); 
Routine maintenance: (0.052); 
Ongoing operations: 0.082; 
Right-of-way: (0.113). 

Variables: Percentage of state population living in urban areas; 
Preliminary engineering: 0.409; 
Design: 0.411; 
Construction engineering and inspection: 0.452; 
Federal-aid eligible preventive maintenance: (0.021); 
Routine maintenance: 0.224; 
Ongoing operations: 0.372; 
Right-of-way: 0.131. 

Variables: State pension fund liability per person; 
Preliminary engineering: 0.003; 
Design: 0.107; 
Construction engineering and inspection: 0.211; 
Federal-aid eligible preventive maintenance: (0.006); 
Routine maintenance: (0.093); 
Ongoing operations: 0.055; 
Right-of-way: (0.040). 

Variables: Highway capital outlays per person; 
Preliminary engineering: (0.179); 
Design: (0.096); 
Construction engineering and inspection: (0.174); 
Federal-aid eligible preventive maintenance: (0.181); 
Routine maintenance: (0.224); 
Ongoing operations: (0.015); 
Right-of-way: (0.119). 

Variables: Population; 
Preliminary engineering: 0.030; 
Design: (0.057); 
Construction engineering and inspection: 0.288; 
Federal-aid eligible preventive maintenance: 0.043; 
Routine maintenance: 0.213; 
Ongoing operations: 0.220; 
Right-of-way: 0.010. 

Variables: Annual vehicle miles; 
Preliminary engineering: 0.034; 
Design: (0.042); 
Construction engineering and inspection: 0.270; 
Federal-aid eligible preventive maintenance: 0.061; 
Routine maintenance: 0.292; 
Ongoing operations: 0.238; 
Right-of-way: 0.000. 

Variables: Population growth (past 10 years); 
Preliminary engineering: (0.003); 
Design: 0.219; 
Construction engineering and inspection: 0.184; 
Federal-aid eligible preventive maintenance: 0.071; 
Routine maintenance: 0.226; 
Ongoing operations: 0.031; 
Right-of-way: 0.091. 

Variables: Population growth (past 5 years); 
Preliminary engineering: 0.013; 
Design: 0.224; 
Construction engineering and inspection: 0.191; 
Federal-aid eligible preventive maintenance: 0.082; 
Routine maintenance: 0.225; 
Ongoing operations: 0.064; 
Right-of-way: 0.084. 

Variables: Change in capital outlays (past 10 years); 
Preliminary engineering: 0.157; 
Design: 0.051; 
Construction engineering and inspection: 0.050; 
Federal-aid eligible preventive maintenance: (0.053); 
Routine maintenance: 0.249; 
Ongoing operations: 0.003; 
Right- of-way: 0.037. 

Variables: Change in capital outlays (past 5 years); 
Preliminary engineering: 0.051; 
Design: 0.124; 
Construction engineering and inspection: 0.184; 
Federal-aid eligible preventive maintenance: (0.229); 
Routine maintenance: 0.116; 
Ongoing operations: 0.017; 
Right- of-way: (0.109). 

Source: GAO survey results. 

[End of table] 

To determine how state DOTs protect the public interest when work is 
contracted out, particularly when consultants and contractors are given 
substantial responsibility for project and service quality and 
delivery, we used information from our in-depth interviews with the 
state DOTs. In our interviews with the state DOTs, we gathered 
information regarding the manner in which state DOTs define and 
determine the key interests of the public. We asked state DOTs about 
the various controls they put in place throughout the highway delivery 
process to ensure that the public interest is protected when work is 
contracted out. Along with this, we asked about prequalification 
procedures, bidding processes, the oversight and monitoring of 
consultants and contractors while work is being performed, and quality 
assurance programs, among other things. We also conducted interviews 
with industry stakeholders from six different organizations 
knowledgeable about the outsourcing of highway activities to obtain 
additional perspectives on how state DOTs seek to protect the public 
interest. In addition, we used state DOT responses from our survey to 
identify various alternative contract types and techniques that states 
use to achieve desired outcomes, such as time or cost savings, and to 
determine how frequently state DOTs use such techniques. Finally, we 
sent out a request to auditing agencies in all states for any reports 
available on the contracting out practices of state DOTs and reviewed 
additional reports discussed in the literature. We reviewed reports 
from 11 states that addressed their state DOTs' use of consultants and 
contractors. 

To determine FHWA's role in ensuring that states protect the public 
interest, we reviewed applicable federal laws and regulations as well 
as FHWA policy and guidance documents. We also interviewed FHWA 
officials at the national level as well as at 10 division offices 
corresponding to the 10 state DOTs we selected for in-depth interviews. 
FHWA headquarters offices we met with include the following: the Office 
of Infrastructure, the Office of Asset Management, the Office of 
Professional and Corporate Development, the Office of Program 
Administration, and the Office of Planning, Environment and Realty. In 
addition, we reviewed program and process reviews from FHWA's national 
and division offices to identify key areas of oversight focus and key 
findings that have been reached in such reviews regarding state 
contracting procedures and quality assurance procedures. 

For this report, we limited the scope of our review to contracts where 
firms are paid to provide a service related to highway infrastructure. 
Although essentially contractual relationships, we did not include 
public-private partnerships--where a firm takes effective ownership of 
a facility and assumes control over it, usually for an extended period-
-in the scope of our work. 

We conducted this performance audit from December 2006 through January 
2008 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Summary of the Cost Comparison Studies That We Reviewed: 

In our research, we identified a variety of studies that seek to 
compare the costs of performing highway activities with in-house staff 
versus contracting out the work. A variety of parties have conducted 
such studies, including highway departments, state auditing agencies, 
academics, industry groups, and employee unions. Some studies focused 
on one particular state, while other studies considered a range of 
states' experiences. Of the studies we identified, engineering 
activities (design, construction engineering and inspection, or both) 
were the most common focus, although we also reviewed several studies 
that examined the contracting out of maintenance activities. A few 
studies examined a range of activities within a state DOT's highway 
program. While some studies sought to do their own analyses, many 
simply reviewed and summarized other analyses that have been performed. 
In addition, several of the studies focused on the methodological 
challenges faced in conducting cost comparisons and sought to suggest 
ways that such studies could more effectively be structured, rather 
than actually performing any of their own cost comparison analyses. 

Findings on Costs: 

Of the studies we reviewed, almost all that considered engineering 
activities found contracting out to be more expensive. Generally, 
studies attributed this extra expense to higher salaries paid by 
private firms, higher overhead costs for private firms, private firms' 
need to earn a profit, and highway department contract administration 
costs. Among those studies that performed separate analyses for 
different types of engineering work, there was some indication that 
cost differentials may vary, with consultant and in-house costs being 
more comparable for certain types of engineering activities. For 
example, one study by PriceWaterhouseCoopers for the Texas DOT found 
that of the 13 design activities it considered, consultants were more 
expensive for 8 of these activities. The results were inconclusive for 
the other 5 activities. Among those 8 activities where consultants were 
found to be more expensive, the degree to which they were found to be 
more expensive varied from 27 to 97 percent, depending on the activity. 
Findings as to the degree by which consultants were more expensive than 
in-house staff also varied significantly amongst studies. For example, 
1 study that reviewed 16 other engineering cost studies found that of 
the studies that found consultants to be more expensive, consultants 
were found to be anywhere from less than 16 percent to over 100 percent 
more expensive. 

We reviewed only two studies that found that engineering consultants 
were less expensive than using in-house employees. The first study, 
which was performed by the state auditing agency in Alaska, found 
consultants to be on average 24 percent less costly. The second study 
was performed by the Wisconsin Department of Administration and sought 
to rebut findings in an earlier Wisconsin highway department study that 
had found consultants to be more expensive. We also have identified one 
other study discussed in the literature that found that the cost of 
professional engineering services, as a percentage of total 
construction costs, declined as the proportion of engineering work 
contracted out increased. A few studies also found either that there 
were no significant differences in costs between in-house and 
consultant performed engineering work, or that existing data 
limitations and difficulties in developing appropriate methodologies 
made the accuracy of cost results questionable. 

Among those studies that examined differences in costs between in-house 
and contracted out maintenance work, the picture was more mixed than 
for engineering activities, with some studies indicating the potential 
for cost savings through the contracting out of maintenance activities 
in at least some situations. Studies cited various reasons why 
contracting out maintenance work could potentially result in cost 
savings, including the reduced need for state DOTs to make capital 
investments in expensive equipment, added flexibility for the highway 
departments to reduce staffing during slow periods (such as the 
winter), and the increased competition generated by contracting out the 
work. Studies that identified cost increases associated with the 
contracting out of maintenance work pointed to difficulties in 
administering contracts and monitoring performance, to the lack of 
information to effectively negotiate prices, and to cost escalation 
after work is privatized. 

Methodological Issues and Other Limitations: 

We identified a series of methodological issues and other limitations 
that make accurate cost comparisons difficult and potentially impact 
the reliability of these studies' findings. One of the most problematic 
aspects of comparing in-house and consultant costs is establishing an 
appropriate overhead rate for in-house work. State DOTs' accounting 
systems are often not set up in such a manner that they accurately 
capture all relevant overhead costs and appropriately apportion them 
amongst individual projects or functional units in a highway 
department. Also, data on in-house costs are often incomplete or 
unreliable. For example, in-house staff may not accurately bill time 
spent on a specific project, thereby distorting in-house costs for that 
project. Many studies also leave out costs that may be relevant, such 
as state insurance costs. There are also other life-cycle costs, such 
as the pension costs associated with additional public employees that 
are difficult to quantify and not considered in most studies. Another 
problem encountered, is that many studies seek to identify "like" 
projects and compare the costs of those performed by in-house employees 
and those performed by consultants or contractors. No two projects are 
the same, however, and it is often difficult to isolate other variables 
that may have impacted costs. 

A final weakness with the studies that we reviewed is that very few of 
them sought to systematically determine the benefits of performing work 
in-house versus contracting it out, thereby providing an incomplete 
picture of the extent to which contracting out highway activities might 
or might not be desirable. Some of the studies did use testimonial 
evidence gathered through either surveys or interviews to attempt to 
make some assessments of differences in quality, depending on whether 
work was performed by in-house staff or contracted out. Of those 
studies, the majority found that quality did not vary significantly 
depending on whether the work was contracted out or performed in-house. 
Some studies also provide anecdotal information on some potential 
benefits or problems with contracting out work. Only one study that we 
reviewed sought to quantitatively assess differences in quality between 
in-house and consultant performed work. This study, performed by the 
state auditing agency in Alaska, compared the number of change orders 
on construction projects that had been designed by either in-house 
staff or consultants and the average costs of such change orders. Using 
this metric, the auditing agency found in-house performed design work 
to be of a higher quality. 

Given that the majority of the state DOTs with we whom we met told us 
that they tend to contract out larger, more complicated projects, or 
those requiring certain types of expertise not possessed in-house, 
relying simply on comparisons of cost may not be appropriate. If 
consultants are working on larger, more complicated projects, it is 
reasonable to expect that the costs of these activities, such as design 
work, may be higher. Also, it is not unreasonable to anticipate that a 
premium would be paid for specialized expertise. In addition, none of 
the studies sought to systematically quantify whether there are any 
time savings associated with contracting out work and what the value of 
such time savings would be for road users. 

[End of section] 

Appendix III: Summary Tables of Our Survey Results: 

This appendix presents selected results of GAO's Web-based survey of 
state DOTs (see tables 7 to 26). The purpose of this survey was to 
gather information from the state DOTs about recent trends in their 
contracting out of state highway activities. We surveyed the state DOTs 
about the extent to which they contract for services across 7 
categories of highway activities, including preliminary engineering, 
design, construction engineering and inspection, federal-aid eligible 
preventive maintenance, routine maintenance not eligible for federal- 
aid program funding, ongoing operations, and right-of-way. We also 
surveyed state DOTs to determine how the levels of contracting for 
these activities have changed over the past 5 years and to gather 
information about potential future trends in contracting. In addition, 
we used the survey to identify which factors state DOTs said are 
driving them to contract out activities or to keep work in-house. 
Finally, the survey gathered data on state DOTs' use of alternative 
contract types and techniques and collected information on certain 
contracting concerns that are specific to design-build contracts. We 
sent this survey to the 50 state DOTs. We received 50 completed surveys 
for a response rate of 100 percent. However, not all states responded 
to every survey question. Appendix I contains a more detailed 
discussion of our objectives, scope, and methodology. We administered 
this survey from mid-June to mid-September 2007. 

Table 7: Number of State DOTs That Reported Changes in Professional 
Staff over the past 5 Years: 

Staff: a. Planning and environmental; 
Number of state DOTs, by staff changes: Increased: 16; 
Number of state DOTs, by staff changes: Decreased: 13; 
Number of state DOTs, by staff changes: Stayed the same: 18; 
Number of state DOTs, by staff changes: No basis to judge: 1. 

Staff: b. Design (roadway, bridges, and traffic engineering); 
Number of state DOTs, by staff changes: Increased: 4; 
Number of state DOTs, by staff changes: Decreased: 28; 
Number of state DOTs, by staff changes: Stayed the same: 17; 
Number of state DOTs, by staff changes: No basis to judge: 0. 

Staff: c. Construction engineering and inspections (inspections, 
materials testing, and scheduling); 
Number of state DOTs, by staff changes: Increased: 9; 
Number of state DOTs, by staff changes: Decreased: 20; 
Number of state DOTs, by staff changes: Stayed the same: 20; 
Number of state DOTs, by staff changes: No basis to judge: 0. 

Staff: d. Operations (e.g., ongoing Intelligent Transportation Systems, 
toll collection, signal and sign systems, etc.); 
Number of state DOTs, by staff changes: Increased: 11; 
Number of state DOTs, by staff changes: Decreased: 8; 
Number of state DOTs, by staff changes: Stayed the same: 23; 
Number of state DOTs, by staff changes: No basis to judge: 6. 

Staff: e. Maintenance; 
Number of state DOTs, by staff changes: Increased: 6; 
Number of state DOTs, by staff changes: Decreased: 20; 
Number of state DOTs, by staff changes: Stayed the same: 20; 
Number of state DOTs, by staff changes: No basis to judge: 1. 

Staff: f. Right-of-Way and Utilities; 
Number of state DOTs, by staff changes: Increased: 7; 
Number of state DOTs, by staff changes: Decreased: 15; 
Number of state DOTs, by staff changes: Stayed the same: 24; 
Number of state DOTs, by staff changes: No basis to judge: 2. 

Staff: g. Other nonadministrative - Specify below; 
Number of state DOTs, by staff changes: Increased: 2; 
Number of state DOTs, by staff changes: Decreased: 10; 
Number of state DOTs, by staff changes: Stayed the same: 23; 
Number of state DOTs, by staff changes: No basis to judge: 12. 

Source: GAO survey results. 

[End of table] 

Table 8: Number of State DOTs That Reported Contracting Out Highway 
Activities in the Most Recently Completed Fiscal Year (Percentage of 
Total Expenditures for That Activity): 

Activity: a. Preliminary engineering; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 0: 0; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 1 to 25: 8; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 26 to 50: 14; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 51 to 75: 11; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 76 to 100: 10. 

Activity: b. Design; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 0: 0; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 1 to 25: 5; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 26 to 50: 15; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 51 to 75: 20; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 76 to 100: 4. 

Activity: c. Construction engineering and inspection; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 0: 4; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 1 to 25: 25; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 26 to 50: 10; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 51 to 75: 3; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 76 to 100: 1. 

Activity: d. Preventive maintenance; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 0: 5; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 1 to 25: 4; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 26 to 50: 3; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 51 to 75: 4; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 76 to 100: 23. 

Activity: e. Routine maintenance; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 0: 6; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 1 to 25: 23; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 26 to 50: 5; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 51 to 75: 3; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 76 to 100: 4. 

Activity: f. Ongoing operations; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 0: 8; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 1 to 25: 16; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 26 to 50: 5; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 51 to 75: 2; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 76 to 100: 8. 

Activity: g. Right-of-way; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 0: 1; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 1 to 25: 20; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 26 to 50: 16; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 51 to 75: 6; 
Number of state DOTs, by percentage of total expenditures contracted 
out for that activity: 76 to 100: 3. 

Source: GAO survey results. 

[End of table] 

Table 9: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Contract Out Some or All Preliminary 
Engineering Activities: 

Factor: a. To meet federal or state legislative mandates, legal 
requirements, or policy initiatives; 
Number of state DOTs, by importance of factor: Very important: 12; 
Number of state DOTs, by importance of factor: Number of state DOTs, by 
importance of factor: Important: 8; 
Number of state DOTs, by importance of factor: Moderately important: 
10; 
Number of state DOTs, by importance of factor: Of little importance: 9; 
Number of state DOTs, by importance of factor: Of no importance: 8; 
Number of state DOTs, by importance of factor: No basis to judge: 2. 

Factor: b. Lack of in-house staff; 
Number of state DOTs, by importance of factor: Very important: 28; 
Number of state DOTs, by importance of factor: Important: 17; 
Number of state DOTs, by importance of factor: Moderately important: 3; 
Number of state DOTs, by importance of factor: Of little importance: 1; 
Number of state DOTs, by importance of factor: Of no importance: 0; 
Number of state DOTs, by importance of factor: No basis to judge: 0. 

Factor: c. To access specialized skills or equipment; 
Number of state DOTs, by importance of factor: Very important: 11; 
Number of state DOTs, by importance of factor: Important: 20; 
Moderately important: 13; 
Number of state DOTs, by importance of factor: Of little importance: 4; 
Number of state DOTs, by importance of factor: Of no importance: 0; 
Number of state DOTs, by importance of factor: No basis to judge: 0. 

Factor: d. To increase speed of completion or to meet specific time 
frames; 
Number of state DOTs, by importance of factor: Very important: 12; 
Number of state DOTs, by importance of factor: Important: 23; 
Number of state DOTs, by importance of factor: Moderately important: 9; 
Number of state DOTs, by importance of factor: Of little importance: 4; 
Number of state DOTs, by importance of factor: Of no importance: 1; 
Number of state DOTs, by importance of factor: No basis to judge: 0. 

Factor: e. To obtain cost savings; 
Number of state DOTs, by importance of factor: Very important: 0; 
Number of state DOTs, by importance of factor: Important: 3; 
Number of state DOTs, by importance of factor: Moderately important: 
10; 
Number of state DOTs, by importance of factor: Of little importance: 
18; 
Number of state DOTs, by importance of factor: Of no importance: 14; 
Number of state DOTs, by importance of factor: No basis to judge: 4. 

Factor: f. To maintain flexibility or manage variations in department 
workload; 
Number of state DOTs, by importance of factor: Very important: 14; 
Number of state DOTs, by importance of factor: Important: 22; 
Number of state DOTs, by importance of factor: Moderately important: 
13; 
Number of state DOTs, by importance of factor: Of little importance: 0; 
Number of state DOTs, by importance of factor: Of no importance: 0; 
Number of state DOTs, by importance of factor: No basis to judge: 0. 

Factor: g. To identify innovative approaches or new techniques; 
Number of state DOTs, by importance of factor: Very important: 1; 
Number of state DOTs, by importance of factor: Important: 9; 
Number of state DOTs, by importance of factor: Moderately important: 
17; 
Number of state DOTs, by importance of factor: Of little importance: 
17; 
Number of state DOTs, by importance of factor: Of no importance: 4; 
Number of state DOTs, by importance of factor: No basis to judge: 1. 

Factor: h. Other reason(s); 
Number of state DOTs, by importance of factor: Very important: 1; 
Number of state DOTs, by importance of factor: Important: 1; 
Number of state DOTs, by importance of factor: Moderately important: 2; 
Number of state DOTs, by importance of factor: Of little importance: 0; 
Number of state DOTs, by importance of factor: Of no importance: 2; 
Number of state DOTs, by importance of factor: No basis to judge: 9. 

Source: GAO survey results. 

[End of table] 

Table 10: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Use Department Staff to Perform Some or 
All Preliminary Engineering Activities: 

Factor: a. Legal restrictions or policy initiatives regarding the use 
of consultants or contractors; Number of state DOTs, by importance of 
factor: Very important: 9; Important: 2; Moderately important: 2; Of 
little importance: 19; Of no importance: 15; No basis to judge: 1. 

Factor: b. Costs of consultants/contractors are greater than using in- 
house staff; Number of state DOTs, by importance of factor: Very 
important: 5; Important: 19; Moderately important: 13; Of little 
importance: 5; Of no importance: 5; No basis to judge: 1. 

Factor: c. The need to retain key skills and expertise in-house; Number 
of state DOTs, by importance of factor: Very important: 14; Important: 
19; Moderately important: 14; Of little importance: 0; Of no 
importance: 0; No basis to judge: 0. 

Factor: d. Lack of competition/insufficient number of bidders; Number 
of state DOTs, by importance of factor: Very important: 1; Important: 
2; Moderately important: 0; Of little importance: 17; Of no importance: 
24; No basis to judge: 4. 

Factor: e. Required skills or expertise are not available in the 
private sector; Number of state DOTs, by importance of factor: Very 
important: 1; Important: 3; Moderately important: 4; Of little 
importance: 20; Of no importance: 16; No basis to judge: 4. 

Factor: f. Belief that work can be performed more quickly using in- 
house staff; Number of state DOTs, by importance of factor: Very 
important: 5; Important: 11; Moderately important: 20; Of little 
importance: 6; Of no importance: 5; No basis to judge: 1. 

Factor: g. Belief that work will be of higher quality if performed by 
in-house staff; Number of state DOTs, by importance of factor: Very 
important: 3; Important: 22; Moderately important: 12; Of little 
importance: 7; Of no importance: 1; No basis to judge: 3. 

Factor: h. Concerns with liability or accountability for contracted 
work; Number of state DOTs, by importance of factor: Very important: 2; 
Important: 1; Moderately important: 6; Of little importance: 24; Of no 
importance: 13; No basis to judge: 2. 

Factor: i. Other reason(s); Number of state DOTs, by importance of 
factor: Very important: 3; Important: 2; Moderately important: 0; Of 
little importance: 0; Of no importance: 1; No basis to judge: 9. 

[End of table] 

Source: GAO survey results. 

Table 11: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Contract Out Some or All Design 
Activities: 

Factor: a. To meet federal or state legislative mandates, legal 
requirements, or policy initiatives; Number of state DOTs, by 
importance of factor: Very important: 11; Important: 7; Moderately 
important: 6; Of little importance: 13; Of no importance: 11; No basis 
to judge: 2. 

Factor: b. Lack of in-house staff; Number of state DOTs, by importance 
of factor: Very important: 25; Important: 19; Moderately important: 5; 
Of little importance: 1; Of no importance: 0; No basis to judge: 0. 

Factor: c. To access specialized skills or equipment; Number of state 
DOTs, by importance of factor: Very important: 8; Important: 22; 
Moderately important: 10; Of little importance: 9; Of no importance: 1; 
No basis to judge: 0. 

Factor: d. To increase speed of completion or to meet specific time 
frames; Number of state DOTs, by importance of factor: Very important: 
10; Important: 22; Moderately important: 12; Of little importance: 4; 
Of no importance: 2; No basis to judge: 0. 

Factor: e. To obtain cost savings; Number of state DOTs, by importance 
of factor: Very important: 0; Important: 3; Moderately important: 7; Of 
little importance: 18; Of no importance: 19; No basis to judge: 3. 

Factor: f. To maintain flexibility or manage variations in department 
workload; Number of state DOTs, by importance of factor: Very 
important: 13; Important: 23; Moderately important: 12; Of little 
importance: 2; Of no importance: 0; No basis to judge: 0. 

Factor: g. To identify innovative approaches or new techniques; Number 
of state DOTs, by importance of factor: Very important: 1; Important: 
13; Moderately important: 13; Of little importance: 20; Of no 
importance: 3; No basis to judge: 0. 

Factor: h. Other reason(s); Number of state DOTs, by importance of 
factor: Very important: 1; Important: 1; Moderately important: 0; Of 
little importance: 0; Of no importance: 1; No basis to judge: 11. 

[End of table] 

Source: GAO survey results. 

Table 12: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Use Department Staff to Perform Some or 
All Design Activities: 

Factor: a. Legal restrictions or policy initiatives regarding the use 
of consultants or contractors; Number of state DOTs, by importance of 
factor: Very important: 8; Important: 3; Moderately important: 5; Of 
little importance: 18; Of no importance: 14; No basis to judge: 1. 

Factor: b. Costs of consultants/contractors are greater than using in- 
house staff; Number of state DOTs, by importance of factor: Very 
important: 9; Important: 16; Moderately important: 14; Of little 
importance: 5; Of no importance: 5; No basis to judge: 0. 

Factor: c. The need to retain key skills and expertise in-house; Number 
of state DOTs, by importance of factor: Very important: 23; Important: 
14; Moderately important: 11; Of little importance: 1; Of no 
importance: 0; No basis to judge: 0. 

Factor: d. Lack of competition/insufficient number of bidders; Number 
of state DOTs, by importance of factor: Very important: 1; Important: 
2; Moderately important: 3; Of little importance: 15; Of no importance: 
25; No basis to judge: 3. 

Factor: e. Required skills or expertise are not available in the 
private sector; Number of state DOTs, by importance of factor: Very 
important: 0; Important: 3; Moderately important: 8; Of little 
importance: 18; Of no importance: 17; No basis to judge: 3. 

Factor: f. Belief that work can be performed more quickly using in- 
house staff; Number of state DOTs, by importance of factor: Very 
important: 3; Important: 17; Moderately important: 15; Of little 
importance: 7; Of no importance: 4; No basis to judge: 3. 

Factor: g. Belief that work will be of higher quality if performed by 
in-house staff; Number of state DOTs, by importance of factor: Very 
important: 5; Important: 23; Moderately important: 13; Of little 
importance: 4; Of no importance: 1; No basis to judge: 3. 

Factor: h. Concerns with liability or accountability for contracted 
work; Number of state DOTs, by importance of factor: Very important: 0; 
Important: 3; Moderately important: 7; Of little importance: 23; Of no 
importance: 14; No basis to judge: 2. 

Factor: i. Other reason(s); Number of state DOTs, by importance of 
factor: Very important: 4; Important: 2; Moderately important: 0; Of 
little importance: 0; Of no importance: 1; No basis to judge: 9. 

[End of table] 

Source: GAO survey results. 

Table 13: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Contract Out Some or All Construction 
Engineering and Inspection: 

Factor: a. To meet federal or state legislative mandates, legal 
requirements, or policy initiatives; Number of state DOTs, by 
importance of factor: Very important: 11; Important: 9; Moderately 
important: 7; Of little importance: 9; Of no importance: 7; No basis to 
judge: 2. 

Factor: b. Lack of in-house staff; Number of state DOTs, by importance 
of factor: Very important: 29; Important: 10; Moderately important: 5; 
Of little importance: 1; Of no importance: 0; No basis to judge: 0. 

Factor: c. To access specialized skills or equipment; Number of state 
DOTs, by importance of factor: Very important: 7; Important: 12; 
Moderately important: 10; Of little importance: 13; Of no importance: 
3; No basis to judge: 0. 

Factor: d. To increase speed of completion or to meet specific time 
frames; Number of state DOTs, by importance of factor: Very important: 
1; Important: 11; Moderately important: 11; Of little importance: 16; 
Of no importance: 6; No basis to judge: 0. 

Factor: e. To obtain cost savings; Number of state DOTs, by importance 
of factor: Very important: 0; Important: 1; Moderately important: 4; Of 
little importance: 15; Of no importance: 21; No basis to judge: 4. 

Factor: f. To maintain flexibility or manage variations in department 
workload; Number of state DOTs, by importance of factor: Very 
important: 12; Important: 20; Moderately important: 7; Of little 
importance: 3; Of no importance: 3; No basis to judge: 0. 

Factor: g. To identify innovative approaches or new techniques; Number 
of state DOTs, by importance of factor: Very important: 0; Important: 
4; Moderately important: 5; Of little importance: 18; Of no importance: 
16; No basis to judge: 2. 

Factor: h. Other reason(s); Number of state DOTs, by importance of 
factor: Very important: 0; Important: 0; Moderately important: 3; Of 
little importance: 0; Of no importance: 1; No basis to judge: 9. 

[End of table] 

Source: GAO survey results. 

Table 14: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Use Department Staff to Perform Some or 
All Construction Engineering and Inspection Activities: 

Factor: a. Legal restrictions or policy initiatives regarding the use 
of consultants or contractors; Number of state DOTs, by importance of 
factor: Very important: 12; Important: 1; Moderately important: 9; Of 
little importance: 15; Of no importance: 9; No basis to judge: 2. 

Factor: b. Costs of consultants/contractors are greater than using in- 
house staff; Number of state DOTs, by importance of factor: Very 
important: 11; Important: 19; Moderately important: 10; Of little 
importance: 3; Of no importance: 4; No basis to judge: 1. 

Factor: c. The need to retain key skills and expertise in-house; Number 
of state DOTs, by importance of factor: Very important: 18; Important: 
16; Moderately important: 10; Of little importance: 2; Of no 
importance: 1; No basis to judge: 0. 

Factor: d. Lack of competition/insufficient number of bidders; Number 
of state DOTs, by importance of factor: Very important: 1; Important: 
2; Moderately important: 6; Of little importance: 12; Of no importance: 
24; No basis to judge: 3. 

Factor: e. Required skills or expertise are not available in the 
private sector; Number of state DOTs, by importance of factor: Very 
important: 1; Important: 6; Moderately important: 8; Of little 
importance: 17; Of no importance: 13; No basis to judge: 3. 

Factor: f. Belief that work can be performed more quickly using in- 
house staff; Number of state DOTs, by importance of factor: Very 
important: 3; Important: 9; Moderately important: 13; Of little 
importance: 12; Of no importance: 7; No basis to judge: 3. 

Factor: g. Belief that work will be of higher quality if performed by 
in-house staff; Number of state DOTs, by importance of factor: Very 
important: 8; Important: 16; Moderately important: 9; Of little 
importance: 9; Of no importance: 4; No basis to judge: 2. 

Factor: h. Concerns with liability or accountability for contracted 
work; Number of state DOTs, by importance of factor: Very important: 3; 
Important: 7; Moderately important: 6; Of little importance: 19; Of no 
importance: 11; No basis to judge: 0. 

Factor: i. Other reason(s); Number of state DOTs, by importance of 
factor: Very important: 2; Important: 4; Moderately important: 0; Of 
little importance: 1; Of no importance: 1; No basis to judge: 5. 

[End of table] 

Source: GAO survey results. 

Table 15: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Contract Out Some or All Federal-Aid 
Eligible Preventive Maintenance Activities: 

Factor: a. To meet federal or state legislative mandates, legal 
requirements, or policy initiatives; Number of state DOTs, by 
importance of factor: Very important: 6; Important: 11; Moderately 
important: 8; Of little importance: 9; Of no importance: 6; No basis to 
judge: 0. 

Factor: b. Lack of in-house staff; Number of state DOTs, by importance 
of factor: Very important: 18; Important: 16; Moderately important: 2; 
Of little importance: 3; Of no importance: 1; No basis to judge: 0. 

Factor: c. To access specialized skills or equipment; Number of state 
DOTs, by importance of factor: Very important: 12; Important: 15; 
Moderately important: 9; Of little importance: 2; Of no importance: 1; 
No basis to judge: 0. 

Factor: d. To increase speed of completion or to meet specific time 
frames; Number of state DOTs, by importance of factor: Very important: 
7; Important: 14; Moderately important: 13; Of little importance: 5; Of 
no importance: 0; No basis to judge: 1. 

Factor: e. To obtain cost savings; Number of state DOTs, by importance 
of factor: Very important: 4; Important: 6; Moderately important: 4; Of 
little importance: 18; Of no importance: 6; No basis to judge: 2. 

Factor: f. To maintain flexibility or manage variations in department 
workload; Number of state DOTs, by importance of factor: Very 
important: 7; Important: 12; Moderately important: 15; Of little 
importance: 4; Of no importance: 1; No basis to judge: 1. 

Factor: g. To identify innovative approaches or new techniques; Number 
of state DOTs, by importance of factor: Very important: 0; Important: 
11; Moderately important: 11; Of little importance: 12; Of no 
importance: 3; No basis to judge: 3. 

Factor: h. Other reason(s); Number of state DOTs, by importance of 
factor: Very important: 2; Important: 2; Moderately important: 0; Of 
little importance: 0; Of no importance: 0; No basis to judge: 8. 

[End of table] 

Source: GAO survey results. 

Table 16: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Use Department Staff to Perform Some or 
All Federal-Aid Eligible Preventive Maintenance Activities: 

Factor: a. Legal restrictions or policy initiatives regarding the use 
of consultants or contractors; Number of state DOTs, by importance of 
factor: Very important: 6; Important: 1; Moderately important: 7; Of 
little importance: 10; Of no importance: 10; No basis to judge: 3. 

Factor: b. Costs of consultants/contractors are greater than using in- 
house staff; Number of state DOTs, by importance of factor: Very 
important: 7; Important: 12; Moderately important: 9; Of little 
importance: 4; Of no importance: 3; No basis to judge: 2. 

Factor: c. The need to retain key skills and expertise in-house; Number 
of state DOTs, by importance of factor: Very important: 7; Important: 
11; Moderately important: 9; Of little importance: 7; Of no importance: 
1; No basis to judge: 2. 

Factor: d. Lack of competition/insufficient number of bidders; Number 
of state DOTs, by importance of factor: Very important: 0; Important: 
4; Moderately important: 5; Of little importance: 10; Of no importance: 
14; No basis to judge: 5. 

Factor: e. Required skills or expertise are not available in the 
private sector; Number of state DOTs, by importance of factor: Very 
important: 0; Important: 2; Moderately important: 8; Of little 
importance: 11; Of no importance: 13; No basis to judge: 3. 

Factor: f. Belief that work can be performed more quickly using in- 
house staff; Number of state DOTs, by importance of factor: Very 
important: 6; Important: 7; Moderately important: 9; Of little 
importance: 9; Of no importance: 4; No basis to judge: 3. 

Factor: g. Belief that work will be of higher quality if performed by 
in-house staff; Number of state DOTs, by importance of factor: Very 
important: 3; Important: 9; Moderately important: 9; Of little 
importance: 10; Of no importance: 4; No basis to judge: 3. 

Factor: h. Concerns with liability or accountability for contracted 
work; Number of state DOTs, by importance of factor: Very important: 0; 
Important: 4; Moderately important: 4; Of little importance: 15; Of no 
importance: 12; No basis to judge: 3. 

Factor: i. Other reason(s); Number of state DOTs, by importance of 
factor: Very important: 1; Important: 0; Moderately important: 0; Of 
little importance: 0; Of no importance: 1; No basis to judge: 9. 

[End of table] 

Source: GAO survey results. 

Table 17: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Contract Out Some or All Routine 
Maintenance Activities: 

Factor: a. To meet federal or state legislative mandates, legal 
requirements, or policy initiatives; 
Number of state DOTs, by importance of factor: Very important: 4; 
Number of state DOTs, by importance of factor: Important: 5; 
Number of state DOTs, by importance of factor: Moderately important: 
10; 
Number of state DOTs, by importance of factor: Of little importance: 6; 
Number of state DOTs, by importance of factor: Of no importance: 15; 
Number of state DOTs, by importance of factor: No basis to judge: 1. 

Factor: b. Lack of in-house staff; 
Number of state DOTs, by importance of factor: Very important: 20; 
Number of state DOTs, by importance of factor: Important: 15; 
Number of state DOTs, by importance of factor: Moderately important: 4; 
Number of state DOTs, by importance of factor: Of little importance: 1; 
Number of state DOTs, by importance of factor: Of no importance: 1; 
Number of state DOTs, by importance of factor: No basis to judge: 0. 

Factor: c. To access specialized skills or equipment; 
Number of state DOTs, by importance of factor: Very important: 7; 
Number of state DOTs, by importance of factor: Important: 16; 
Number of state DOTs, by importance of factor: Moderately important: 9; 
Number of state DOTs, by importance of factor: Of little importance: 4; 
Number of state DOTs, by importance of factor: Of no importance: 3; 
Number of state DOTs, by importance of factor: No basis to judge: 2. 

Factor: d. To increase speed of completion or to meet specific time 
frames; 
Number of state DOTs, by importance of factor: Very important: 7; 
Number of state DOTs, by importance of factor: Important: 12; 
Number of state DOTs, by importance of factor: Moderately important: 
13; 
Number of state DOTs, by importance of factor: Of little importance: 5; 
Number of state DOTs, by importance of factor: Of no importance: 4; 
Number of state DOTs, by importance of factor: No basis to judge: 0. 

Factor: e. To obtain cost savings; 
Number of state DOTs, by importance of factor: Very important: 2; 
Number of state DOTs, by importance of factor: Important: 7; 
Number of state DOTs, by importance of factor: Moderately important: 9; 
Number of state DOTs, by importance of factor: Of little importance: 
14; 
Number of state DOTs, by importance of factor: Of no importance: 6; 
Number of state DOTs, by importance of factor: No basis to judge: 1. 

Factor: f. To maintain flexibility or manage variations in department 
workload; 
Number of state DOTs, by importance of factor: Very important: 10; 
Number of state DOTs, by importance of factor: Important: 15; 
Number of state DOTs, by importance of factor: Moderately important: 
12; 
Number of state DOTs, by importance of factor: Of little importance: 1; 
Number of state DOTs, by importance of factor: Of no importance: 2; 
Number of state DOTs, by importance of factor: No basis to judge: 1. 

Factor: g. To identify innovative approaches or new techniques; 
Number of state DOTs, by importance of factor: Very important: 0; 
Number of state DOTs, by importance of factor: Important: 4; 
Number of state DOTs, by importance of factor: Moderately important: 
15; 
Number of state DOTs, by importance of factor: Of little importance: 
12; 
Number of state DOTs, by importance of factor: Of no importance: 8; 
Number of state DOTs, by importance of factor: No basis to judge: 1. 

Factor: h. Other reason(s); 
Number of state DOTs, by importance of factor: Very important: 0; 
Number of state DOTs, by importance of factor: Important: 2; 
Number of state DOTs, by importance of factor: Moderately important: 0; 
Number of state DOTs, by importance of factor: Of little importance: 0; 
Number of state DOTs, by importance of factor: Of no importance: 1; 
Number of state DOTs, by importance of factor: No basis to judge: 8. 

Source: GAO survey results. 

[End of table] 

Table 18: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Use Department Staff to Perform Some or 
All Routine Maintenance Activities: 

Factor: a. Legal restrictions or policy initiatives regarding the use 
of consultants or contractors; 
Number of state DOTs, by importance of factor: Very important: 6; 
Number of state DOTs, by importance of factor: Important: 3; 
Number of state DOTs, by importance of factor: Moderately important: 6; 
Number of state DOTs, by importance of factor: Of little importance: 
15; 
Number of state DOTs, by importance of factor: Of no importance: 14; 
Number of state DOTs, by importance of factor: No basis to judge: 0. 

Factor: b. Costs of consultants/contractors are greater than using in- 
house staff; 
Number of state DOTs, by importance of factor: Very important: 7; 
Number of state DOTs, by importance of factor: Important: 17; 
Number of state DOTs, by importance of factor: Moderately important: 
11; 
Number of state DOTs, by importance of factor: Of little importance: 7; 
Number of state DOTs, by importance of factor: Of no importance: 1; 
Number of state DOTs, by importance of factor: No basis to judge: 2. 

Factor: c. The need to retain key skills and expertise in-house; 
Number of state DOTs, by importance of factor: Very important: 11; 
Number of state DOTs, by importance of factor: Important: 17; 
Number of state DOTs, by importance of factor: Moderately important: 
11; 
Number of state DOTs, by importance of factor: Of little importance: 4; 
Number of state DOTs, by importance of factor: Of no importance: 1; 
Number of state DOTs, by importance of factor: No basis to judge: 1. 

Factor: d. Lack of competition/insufficient number of bidders; 
Number of state DOTs, by importance of factor: Very important: 1; 
Number of state DOTs, by importance of factor: Important: 3; 
Number of state DOTs, by importance of factor: Moderately important: 
10; 
Number of state DOTs, by importance of factor: Of little importance: 
19; 
Number of state DOTs, by importance of factor: Of no importance: 9; 
Number of state DOTs, by importance of factor: No basis to judge: 3. 

Factor: e. Required skills or expertise are not available in the 
private sector; 
Number of state DOTs, by importance of factor: Very important: 1; 
Number of state DOTs, by importance of factor: Important: 5; 
Number of state DOTs, by importance of factor: Moderately important: 
14; 
Number of state DOTs, by importance of factor: Of little importance: 
14; 
Number of state DOTs, by importance of factor: Of no importance: 8; 
Number of state DOTs, by importance of factor: No basis to judge: 3. 

Factor: f. Belief that work can be performed more quickly using in- 
house staff; 
Number of state DOTs, by importance of factor: Very important: 7; 
Number of state DOTs, by importance of factor: Important: 17; 
Number of state DOTs, by importance of factor: Moderately important: 
12; 
Number of state DOTs, by importance of factor: Of little importance: 6; 
Number of state DOTs, by importance of factor: Of no importance: 1; 
Number of state DOTs, by importance of factor: No basis to judge: 2. 

Factor: g. Belief that work will be of higher quality if performed by 
in-house staff; 
Number of state DOTs, by importance of factor: Very important: 5; 
Number of state DOTs, by importance of factor: Important: 13; 
Number of state DOTs, by importance of factor: Moderately important: 
16; 
Number of state DOTs, by importance of factor: Of little importance: 7; 
Number of state DOTs, by importance of factor: Of no importance: 2; 
Number of state DOTs, by importance of factor: No basis to judge: 2. 

Factor: h. Concerns with liability or accountability for contracted 
work; 
Number of state DOTs, by importance of factor: Very important: 3; 
Number of state DOTs, by importance of factor: Important: 8; 
Number of state DOTs, by importance of factor: Moderately important: 7; 
Number of state DOTs, by importance of factor: Of little importance: 
16; 
Number of state DOTs, by importance of factor: Of no importance: 9; 
Number of state DOTs, by importance of factor: No basis to judge: 2. 

Factor: i. Other reason(s); 
Number of state DOTs, by importance of factor: Very important: 2; 
Number of state DOTs, by importance of factor: Important: 0; 
Number of state DOTs, by importance of factor: Moderately important: 0; 
Number of state DOTs, by importance of factor: Of little importance: 0; 
Number of state DOTs, by importance of factor: Of no importance: 2; 
Number of state DOTs, by importance of factor: No basis to judge: 5. 

Source: GAO survey results. 

[End of table] 

Table 19: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Contract Out Some or All Ongoing 
Operations Activities: 

Factor: a. To meet federal or state legislative mandates, legal 
requirements, or policy initiatives; 
Number of state DOTs, by importance of factor: Very important: 3; 
Number of state DOTs, by importance of factor: Important: 10; 
Number of state DOTs, by importance of factor: Moderately important: 8; 
Number of state DOTs, by importance of factor: Of little importance: 
10; 
Number of state DOTs, by importance of factor: Of no importance: 6; 
Number of state DOTs, by importance of factor: No basis to judge: 0. 

Factor: b. Lack of in-house staff; 
Number of state DOTs, by importance of factor: Very important: 20; 
Number of state DOTs, by importance of factor: Important: 11; 
Number of state DOTs, by importance of factor: Moderately important: 4; 
Number of state DOTs, by importance of factor: Of little importance: 0; 
Number of state DOTs, by importance of factor: Of no importance: 2; 
Number of state DOTs, by importance of factor: No basis to judge: 0. 

Factor: c. To access specialized skills or equipment; 
Number of state DOTs, by importance of factor: Very important: 13; 
Number of state DOTs, by importance of factor: Important: 12; 
Number of state DOTs, by importance of factor: Moderately important: 8; 
Number of state DOTs, by importance of factor: Of little importance: 3; 
Number of state DOTs, by importance of factor: Of no importance: 1; 
Number of state DOTs, by importance of factor: No basis to judge: 0. 

Factor: d. To increase speed of completion or to meet specific time 
frames; 
Number of state DOTs, by importance of factor: Very important: 6; 
Number of state DOTs, by importance of factor: Important: 8; 
Number of state DOTs, by importance of factor: Moderately important: 
15; 
Number of state DOTs, by importance of factor: Of little importance: 5; 
Number of state DOTs, by importance of factor: Of no importance: 3; 
Number of state DOTs, by importance of factor: No basis to judge: 0. 

Factor: e. To obtain cost savings; 
Number of state DOTs, by importance of factor: Very important: 0; 
Number of state DOTs, by importance of factor: Important: 3; 
Number of state DOTs, by importance of factor: Moderately important: 
11; 
Number of state DOTs, by importance of factor: Of little importance: 
11; 
Number of state DOTs, by importance of factor: Of no importance: 11; 
Number of state DOTs, by importance of factor: No basis to judge: 1. 

Factor: f. To maintain flexibility or manage variations in department 
workload; 
Number of state DOTs, by importance of factor: Very important: 7; 
Number of state DOTs, by importance of factor: Important: 10; 
Number of state DOTs, by importance of factor: Moderately important: 
11; 
Number of state DOTs, by importance of factor: Of little importance: 6; 
Number of state DOTs, by importance of factor: Of no importance: 3; 
Number of state DOTs, by importance of factor: No basis to judge: 0. 

Factor: g. To identify innovative approaches or new techniques; 
Number of state DOTs, by importance of factor: Very important: 1; 
Number of state DOTs, by importance of factor: Important: 10; 
Number of state DOTs, by importance of factor: Moderately important: 
11; 
Number of state DOTs, by importance of factor: Of little importance: 9; 
Number of state DOTs, by importance of factor: Of no importance: 5; 
Number of state DOTs, by importance of factor: No basis to judge: 1. 

Factor: h. Other reason(s); 
Number of state DOTs, by importance of factor: Very important: 0; 
Number of state DOTs, by importance of factor: Important: 1; 
Number of state DOTs, by importance of factor: Moderately important: 0; 
Number of state DOTs, by importance of factor: Of little importance: 0; 
Number of state DOTs, by importance of factor: Of no importance: 3; 
Number of state DOTs, by importance of factor: No basis to judge: 4. 

Source: GAO survey results. 

[End of table] 

Table 20: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Use Department Staff to Perform Some or 
All Ongoing Operations Activities: 

Factor: a. Legal restrictions or policy initiatives regarding the use 
of consultants or contractors; 
Number of state DOTs, by importance of factor: Very important: 7; 
Number of state DOTs, by importance of factor: Important: 3; 
Number of state DOTs, by importance of factor: Moderately important: 9; 
Number of state DOTs, by importance of factor: Of little importance: 
12; 
Number of state DOTs, by importance of factor: Of no importance: 11; 
Number of state DOTs, by importance of factor: No basis to judge: 1. 

Factor: b. Costs of consultants/contractors are greater than using in- 
house staff; 
Number of state DOTs, by importance of factor: Very important: 6; 
Number of state DOTs, by importance of factor: Important: 17; 
Number of state DOTs, by importance of factor: Moderately important: 
12; 
Number of state DOTs, by importance of factor: Of little importance: 6; 
Number of state DOTs, by importance of factor: Of no importance: 2; 
Number of state DOTs, by importance of factor: No basis to judge: 0. 

Factor: c. The need to retain key skills and expertise in-house; 
Number of state DOTs, by importance of factor: Very important: 9; 
Number of state DOTs, by importance of factor: Important: 21; 
Number of state DOTs, by importance of factor: Moderately important: 9; 
Number of state DOTs, by importance of factor: Of little importance: 3; 
Number of state DOTs, by importance of factor: Of no importance: 1; 
Number of state DOTs, by importance of factor: No basis to judge: 0. 

Factor: d. Lack of competition/insufficient number of bidders; 
Number of state DOTs, by importance of factor: Very important: 0; 
Number of state DOTs, by importance of factor: Important: 3; 
Number of state DOTs, by importance of factor: Moderately important: 5; 
Number of state DOTs, by importance of factor: Of little importance: 
16; 
Number of state DOTs, by importance of factor: Of no importance: 15; 
Number of state DOTs, by importance of factor: No basis to judge: 4. 

Factor: e. Required skills or expertise are not available in the 
private sector; 
Number of state DOTs, by importance of factor: Very important: 1; 
Number of state DOTs, by importance of factor: Important: 6; 
Number of state DOTs, by importance of factor: Moderately important: 6; 
Number of state DOTs, by importance of factor: Of little importance: 9; 
Number of state DOTs, by importance of factor: Of no importance: 19; 
Number of state DOTs, by importance of factor: No basis to judge: 2. 

Factor: f. Belief that work can be performed more quickly using in- 
house staff; 
Number of state DOTs, by importance of factor: Very important: 7; 
Number of state DOTs, by importance of factor: Important: 10; 
Number of state DOTs, by importance of factor: Moderately important: 
11; 
Number of state DOTs, by importance of factor: Of little importance: 
11; 
Number of state DOTs, by importance of factor: Of no importance: 3; 
Number of state DOTs, by importance of factor: No basis to judge: 1. 

Factor: g. Belief that work will be of higher quality if performed by 
in-house staff; 
Number of state DOTs, by importance of factor: Very important: 3; 
Number of state DOTs, by importance of factor: Important: 10; 
Number of state DOTs, by importance of factor: Moderately important: 
13; 
Number of state DOTs, by importance of factor: Of little importance: 
11; 
Number of state DOTs, by importance of factor: Of no importance: 4; 
Number of state DOTs, by importance of factor: No basis to judge: 2. 

Factor: h. Concerns with liability or accountability for contracted 
work; 
Number of state DOTs, by importance of factor: Very important: 2; 
Important: 5; 
Moderately important: 6; 
Of little importance: 18; 
Of no importance: 11; 
No basis to judge: 1. 

Factor: i. Other reason(s); 
Number of state DOTs, by importance of factor: Very important: 3; 
Number of state DOTs, by importance of factor: Important: 0; 
Number of state DOTs, by importance of factor: Moderately important: 0; 
Number of state DOTs, by importance of factor: Of little importance: 0; 
Number of state DOTs, by importance of factor: Of no importance: 2; 
Number of state DOTs, by importance of factor: No basis to judge: 5. 

Source: GAO survey results. 

[End of table] 

Table 21: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Contract Out Some or All Right-of-Way 
Activities: 

Factor: a. To meet federal or state legislative mandates, legal 
requirements, or policy initiatives; 
Number of state DOTs, by importance of factor: Very important: 8; 
Number of state DOTs, by importance of factor: Important: 7; 
Number of state DOTs, by importance of factor: Moderately important: 7; 
Number of state DOTs, by importance of factor: Of little importance: 
11; 
Number of state DOTs, by importance of factor: Of no importance: 15; 
Number of state DOTs, by importance of factor: No basis to judge: 0. 

Factor: b. Lack of in-house staff; 
Number of state DOTs, by importance of factor: Very important: 31; 
Number of state DOTs, by importance of factor: Important: 13; 
Number of state DOTs, by importance of factor: Moderately important: 1; 
Number of state DOTs, by importance of factor: Of little importance: 3; 
Number of state DOTs, by importance of factor: Of no importance: 0; 
Number of state DOTs, by importance of factor: No basis to judge: 0. 

Factor: c. To access specialized skills or equipment; 
Number of state DOTs, by importance of factor: Very important: 9; 
Number of state DOTs, by importance of factor: Important: 17; 
Number of state DOTs, by importance of factor: Moderately important: 
12; 
Number of state DOTs, by importance of factor: Of little importance: 6; 
Number of state DOTs, by importance of factor: Of no importance: 4; 
Number of state DOTs, by importance of factor: No basis to judge: 0. 

Factor: d. To increase speed of completion or to meet specific time 
frames; 
Number of state DOTs, by importance of factor: Very important: 20; 
Number of state DOTs, by importance of factor: Important: 19; 
Number of state DOTs, by importance of factor: Moderately important: 7; 
Number of state DOTs, by importance of factor: Of little importance: 0; 
Number of state DOTs, by importance of factor: Of no importance: 2; 
Number of state DOTs, by importance of factor: No basis to judge: 0. 

Factor: e. To obtain cost savings; 
Number of state DOTs, by importance of factor: Very important: 1; 
Number of state DOTs, by importance of factor: Important: 2; 
Number of state DOTs, by importance of factor: Moderately important: 9; 
Number of state DOTs, by importance of factor: Of little importance: 
15; 
Number of state DOTs, by importance of factor: Of no importance: 16; 
Number of state DOTs, by importance of factor: No basis to judge: 5. 

Factor: f. To maintain flexibility or manage variations in department 
workload; 
Number of state DOTs, by importance of factor: Very important: 20; 
Number of state DOTs, by importance of factor: Important: 18; 
Number of state DOTs, by importance of factor: Moderately important: 7; 
Number of state DOTs, by importance of factor: Of little importance: 2; 
Number of state DOTs, by importance of factor: Of no importance: 1; 
Number of state DOTs, by importance of factor: No basis to judge: 0. 

Factor: g. To identify innovative approaches or new techniques; 
Number of state DOTs, by importance of factor: Very important: 3; 
Number of state DOTs, by importance of factor: Important: 2; 
Number of state DOTs, by importance of factor: Moderately important: 8; 
Number of state DOTs, by importance of factor: Of little importance: 
14; 
Number of state DOTs, by importance of factor: Of no importance: 18; 
Number of state DOTs, by importance of factor: No basis to judge: 2. 

Factor: h. Other reason(s); 
Number of state DOTs, by importance of factor: Very important: 0; 
Number of state DOTs, by importance of factor: Important: 0; 
Number of state DOTs, by importance of factor: Moderately important: 0; 
Number of state DOTs, by importance of factor: Of little importance: 0; 
Number of state DOTs, by importance of factor: Of no importance: 4; 
Number of state DOTs, by importance of factor: No basis to judge: 8. 

Source: GAO survey results. 

[End of table] 

Table 22: Number of State DOTs Reporting the Importance of Various 
Factors in Their Decision to Use Department Staff to Perform Some or 
All Right-of-Way Activities: 

Factor: a. Legal restrictions or policy initiatives regarding the use 
of consultants or contractors; 
Number of state DOTs, by importance of factor: Very important: 7; 
Number of state DOTs, by importance of factor: Important: 4; 
Number of state DOTs, by importance of factor: Moderately important: 6; 
Number of state DOTs, by importance of factor: Of little importance: 
17; 
Number of state DOTs, by importance of factor: Of no importance: 14; 
Number of state DOTs, by importance of factor: No basis to judge: 1. 

Factor: b. Costs of consultants/contractors are greater than using in- 
house staff; 
Number of state DOTs, by importance of factor: Very important: 7; 
Number of state DOTs, by importance of factor: Important: 17; 
Number of state DOTs, by importance of factor: Moderately important: 
10; 
Number of state DOTs, by importance of factor: Of little importance: 9; 
Number of state DOTs, by importance of factor: Of no importance: 3; 
Number of state DOTs, by importance of factor: No basis to judge: 3. 

Factor: c. The need to retain key skills and expertise in-house; 
Number of state DOTs, by importance of factor: Very important: 18; 
Number of state DOTs, by importance of factor: Important: 15; 
Number of state DOTs, by importance of factor: Moderately important: 
12; 
Number of state DOTs, by importance of factor: Of little importance: 1; 
Number of state DOTs, by importance of factor: Of no importance: 0; 
Number of state DOTs, by importance of factor: No basis to judge: 3. 

Factor: d. Lack of competition/insufficient number of bidders; 
Number of state DOTs, by importance of factor: Very important: 0; 
Number of state DOTs, by importance of factor: Important: 3; 
Number of state DOTs, by importance of factor: Moderately important: 
12; 
Number of state DOTs, by importance of factor: Of little importance: 
17; 
Number of state DOTs, by importance of factor: Of no importance: 14; 
Number of state DOTs, by importance of factor: No basis to judge: 3. 

Factor: e. Required skills or expertise are not available in the 
private sector; 
Number of state DOTs, by importance of factor: Very important: 2; 
Number of state DOTs, by importance of factor: Important: 7; 
Number of state DOTs, by importance of factor: Moderately important: 8; 
Number of state DOTs, by importance of factor: Of little importance: 
14; 
Number of state DOTs, by importance of factor: Of no importance: 14; 
Number of state DOTs, by importance of factor: No basis to judge: 4. 

Factor: f. Belief that work can be performed more quickly using in- 
house staff; 
Number of state DOTs, by importance of factor: Very important: 5; 
Number of state DOTs, by importance of factor: Important: 22; 
Number of state DOTs, by importance of factor: Moderately important: 8; 
Number of state DOTs, by importance of factor: Of little importance: 9; 
Number of state DOTs, by importance of factor: Of no importance: 1; 
Number of state DOTs, by importance of factor: No basis to judge: 4. 

Factor: g. Belief that work will be of higher quality if performed by 
in-house staff; 
Number of state DOTs, by importance of factor: Very important: 6; 
Number of state DOTs, by importance of factor: Important: 15; 
Number of state DOTs, by importance of factor: Moderately important: 
10; 
Number of state DOTs, by importance of factor: Of little importance: 
13; 
Number of state DOTs, by importance of factor: Of no importance: 0; 
Number of state DOTs, by importance of factor: No basis to judge: 3. 

Factor: h. Concerns with liability or accountability for contracted 
work; 
Number of state DOTs, by importance of factor: Very important: 0; 
Number of state DOTs, by importance of factor: Important: 10; 
Number of state DOTs, by importance of factor: Moderately important: 5; 
Number of state DOTs, by importance of factor: Of little importance: 
17; 
Number of state DOTs, by importance of factor: Of no importance: 14; 
Number of state DOTs, by importance of factor: No basis to judge: 3. 

Factor: i. Other reason(s); 
Number of state DOTs, by importance of factor: Very important: 0; 
Number of state DOTs, by importance of factor: Important: 0; 
Number of state DOTs, by importance of factor: Moderately important: 0; 
Number of state DOTs, by importance of factor: Of little importance: 0; 
Number of state DOTs, by importance of factor: Of no importance: 2; 
Number of state DOTs, by importance of factor: No basis to judge: 9. 

Source: GAO survey results. 

[End of table] 

Table 23: Number of State DOTs Reporting Increasing, Decreasing, or 
Maintaining the Same Level of Contracting Out for Highway Activities 
over the past 5 Years: 

Activity: a. Preliminary engineering; 
Number of state DOTs, by changes in level of contracting out: 
Increased: 26; 
Number of state DOTs, by changes in level of contracting out: 
Maintained the same level: 21; 
Number of state DOTs, by changes in level of contracting out: 
Decreased: 3; 
Number of state DOTs, by changes in level of contracting out: Not sure: 
0. 

Activity: b. Design; 
Number of state DOTs, by changes in level of contracting out: 
Increased: 27; 
Number of state DOTs, by changes in level of contracting out: 
Maintained the same level: 13; 
Number of state DOTs, by changes in level of contracting out: 
Decreased: 10; 
Number of state DOTs, by changes in level of contracting out: Not sure: 
0. 

Activity: c. Construction engineering and inspections; 
Number of state DOTs, by changes in level of contracting out: 
Increased: 27; 
Number of state DOTs, by changes in level of contracting out: 
Maintained the same level: 15; 
Number of state DOTs, by changes in level of contracting out: 
Decreased: 6; 
Number of state DOTs, by changes in level of contracting out: Not sure: 
0. 

Activity: d. Federal-aid eligible preventive maintenance; 
Number of state DOTs, by changes in level of contracting out: 
Increased: 13; 
Number of state DOTs, by changes in level of contracting out: 
Maintained the same level: 28; 
Number of state DOTs, by changes in level of contracting out: 
Decreased: 2; 
Number of state DOTs, by changes in level of contracting out: Not sure: 
5. 

Activity: e. Routine maintenance activities not eligible for federal- 
aid program funding; 
Number of state DOTs, by changes in level of contracting out: 
Increased: 13; 
Number of state DOTs, by changes in level of contracting out: 
Maintained the same level: 32; 
Number of state DOTs, by changes in level of contracting out: 
Decreased: 1; 
Number of state DOTs, by changes in level of contracting out: Not sure: 
2. 

Activity: f. Ongoing operations ; 
Number of state DOTs, by changes in level of contracting out: 
Increased: 15; 
Number of state DOTs, by changes in level of contracting out: 
Maintained the same level: 24; 
Number of state DOTs, by changes in level of contracting out: 
Decreased: 4; 
Number of state DOTs, by changes in level of contracting out: Not sure: 
3. 

Activity: g. Right-of-way - appraisals, acquisitions, and relocation; 
Number of state DOTs, by changes in level of contracting out: 
Increased: 28; 
Number of state DOTs, by changes in level of contracting out: 
Maintained the same level: 18; 
Number of state DOTs, by changes in level of contracting out: 
Decreased: 3; 
Number of state DOTs, by changes in level of contracting out: Not sure: 
0. 

Source: GAO survey results. 

[End of table] 

Table 24: Number of State DOTs Anticipating Increasing, Decreasing, or 
Maintaining the Same Level of Contracting Out over the Next 5 Years: 

Activity: a. Preliminary engineering; 
Number of state DOTs, by changes in level of contracting out: Increase: 
9; 
Number of state DOTs, by changes in level of contracting out: Maintain 
the same level: 30; 
Number of state DOTs, by changes in level of contracting out: Decrease: 
9; 
Number of state DOTs, by changes in level of contracting out: Not sure: 
2. 

Activity: b. Design; 
Number of state DOTs, by changes in level of contracting out: Increase: 
9; 
Number of state DOTs, by changes in level of contracting out: Maintain 
the same level: 23; 
Number of state DOTs, by changes in level of contracting out: Decrease: 
15; 
Number of state DOTs, by changes in level of contracting out: Not sure: 
3. 

Activity: c. Construction engineering and inspections; 
Number of state DOTs, by changes in level of contracting out: Increase: 
7; 
Number of state DOTs, by changes in level of contracting out: Maintain 
the same level: 27; 
Number of state DOTs, by changes in level of contracting out: Decrease: 
11; 
Number of state DOTs, by changes in level of contracting out: Not sure: 
3. 

Activity: d. Federal-aid eligible preventive maintenance; 
Number of state DOTs, by changes in level of contracting out: Increase: 
12; 
Number of state DOTs, by changes in level of contracting out: Maintain 
the same level: 28; 
Number of state DOTs, by changes in level of contracting out: Decrease: 
2; 
Number of state DOTs, by changes in level of contracting out: Not sure: 
5. 

Activity: e. Routine maintenance activities not eligible for federal- 
aid program funding; 
Number of state DOTs, by changes in level of contracting out: Increase: 
10; 
Number of state DOTs, by changes in level of contracting out: Maintain 
the same level: 31; 
Number of state DOTs, by changes in level of contracting out: Decrease: 
5; 
Number of state DOTs, by changes in level of contracting out: Not sure: 
2. 

Activity: f. Ongoing operations; 
Number of state DOTs, by changes in level of contracting out: Increase: 
9; 
Number of state DOTs, by changes in level of contracting out: Maintain 
the same level: 30; 
Number of state DOTs, by changes in level of contracting out: Decrease: 
3; 
Number of state DOTs, by changes in level of contracting out: Not sure: 
3. 

Activity: g. Right of way - appraisals, acquisitions, and relocation; 
Number of state DOTs, by changes in level of contracting out: Increase: 
11; 
Number of state DOTs, by changes in level of contracting out: Maintain 
the same level: 29; 
Number of state DOTs, by changes in level of contracting out: Decrease: 
5; 
Number of state DOTs, by changes in level of contracting out: Not sure: 
4. 

Source: GAO survey results. 

[End of table] 

Table 25: Number of State DOTs Using Broader Types of Contracting over 
the past 5 Years: 

Contracts: a. Design-build; 
Number of state DOTs, by use of broader types of contracting: 0: 20; 
Number of state DOTs, by use of broader types of contracting: 1 to 10: 
20; 
Number of state DOTs, by use of broader types of contracting: 11 and 
up: 8. 

Contracts: b. Design-build operate-maintain; 
Number of state DOTs, by use of broader types of contracting: 0: 30; 
Number of state DOTs, by use of broader types of contracting: 1 to 10: 
3; 
Number of state DOTs, by use of broader types of contracting: 11 and 
up: 0. 

Contracts: c. Operations and maintenance management; 
Number of state DOTs, by use of broader types of contracting: 0: 30; 
Number of state DOTs, by use of broader types of contracting: 1 to 10: 
7; 
Number of state DOTs, by use of broader types of contracting: 11 and 
up: 8. 

Contracts: d. Project-management; 
Number of state DOTs, by use of broader types of contracting: 0: 30; 
Number of state DOTs, by use of broader types of contracting: 1 to 10: 
11; 
Number of state DOTs, by use of broader types of contracting: 11 and 
up: 5. 

Contracts: e. Construction manager/ general contractor; 
Number of state DOTs, by use of broader types of contracting: 0: 40; 
Number of state DOTs, by use of broader types of contracting: 1 to 10: 
6; 
Number of state DOTs, by use of broader types of contracting: 11 and 
up: 3. 

Source: GAO survey results. 

[End of table] 

Table 26: Number of State DOTs Using Alternative Bid Types and 
Techniques over the past 5 Years: 

Bid type or technique: a. Lane rental; 
Number of state DOTs, by use of alternative bid types or techniques: 
Frequently: 4; 
Number of state DOTs, by use of alternative bid types or techniques: 
Occasionally: 14; 
Number of state DOTs, by use of alternative bid types or techniques: 
Rarely: 13; 
Number of state DOTs, by use of alternative bid types or techniques: 
Not at all: 19; 
Number of state DOTs, by use of alternative bid types or techniques: No 
basis to judge: 0. 

Bid type or technique: b. Cost + time (A+B) contracts; 
Number of state DOTs, by use of alternative bid types or techniques: 
Frequently: 9; 
Number of state DOTs, by use of alternative bid types or techniques: 
Occasionally: 26; 
Number of state DOTs, by use of alternative bid types or techniques: 
Rarely: 8; 
Number of state DOTs, by use of alternative bid types or techniques: 
Not at all: 7; 
Number of state DOTs, by use of alternative bid types or techniques: No 
basis to judge: 0. 

Bid type or technique: c. Multiparameter bidding, including quality 
(A+B+C); 
Number of state DOTs, by use of alternative bid types or techniques: 
Frequently: 1; 
Number of state DOTs, by use of alternative bid types or techniques: 
Occasionally: 7; 
Number of state DOTs, by use of alternative bid types or techniques: 
Rarely: 8; 
Number of state DOTs, by use of alternative bid types or techniques: 
Not at all: 34; 
Number of state DOTs, by use of alternative bid types or techniques: No 
basis to judge: 0. 

Bid type or technique: d. Incentives/Disincentives provisions for early 
contract completion; 
Number of state DOTs, by use of alternative bid types or techniques: 
Frequently: 17; 
Number of state DOTs, by use of alternative bid types or techniques: 
Occasionally: 29; 
Number of state DOTs, by use of alternative bid types or techniques: 
Rarely: 1; 
Number of state DOTs, by use of alternative bid types or techniques: 
Not at all: 2; 
Number of state DOTs, by use of alternative bid types or techniques: No 
basis to judge: 0. 

Bid type or technique: e. Lump-sum bidding (no quantities); 
Number of state DOTs, by use of alternative bid types or techniques: 
Frequently: 6; 
Number of state DOTs, by use of alternative bid types or techniques: 
Occasionally: 8; 
Number of state DOTs, by use of alternative bid types or techniques: 
Rarely: 17; 
Number of state DOTs, by use of alternative bid types or techniques: 
Not at all: 19; 
Number of state DOTs, by use of alternative bid types or techniques: No 
basis to judge: 0. 

Bid type or technique: f. Warranties; 
Number of state DOTs, by use of alternative bid types or techniques: 
Frequently: 3; 
Number of state DOTs, by use of alternative bid types or techniques: 
Occasionally: 13; 
Number of state DOTs, by use of alternative bid types or techniques: 
Rarely: 21; 
Number of state DOTs, by use of alternative bid types or techniques: 
Not at all: 13; 
Number of state DOTs, by use of alternative bid types or techniques: No 
basis to judge: 0. 

Bid type or technique: g. Other type(s); 
Number of state DOTs, by use of alternative bid types or techniques: 
Frequently: 1; 
Number of state DOTs, by use of alternative bid types or techniques: 
Occasionally: 4; 
Number of state DOTs, by use of alternative bid types or techniques: 
Rarely: 2; 
Number of state DOTs, by use of alternative bid types or techniques: 
Not at all: 1; 
Number of state DOTs, by use of alternative bid types or techniques: No 
basis to judge: 5. 

Source: GAO survey results. 

[End of table] 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

JayEtta Hecker (202) 512-2834 or heckerj@gao.gov: 

Staff Acknowledgments: 

In addition, Andrew Von Ah (Assistant Director), Jay Cherlow, Steve 
Cohen, Greg Dybalski, Colin Fallon, Brandon Haller, Bert Japikse, 
Stuart Kaufman, Bonnie Pignatiello Leer, Jennifer Mills, Josh Ormond, 
Minette Richardson, and Ryan Vaughan made key contributions to this 
report. 

[End of section] 

Footnotes: 

[1] Thomas R. Warne, NCHRP Synthesis 313: State DOT Outsourcing and 
Private-Sector Utilization, A Synthesis of Highway Practice 
(Washington, D.C.: National Cooperative Highway Research Program, 
2003), for the Transportation Research Board of the National Academies. 

[2] The highway activities included preliminary engineering, design, 
construction engineering and inspection, federal-aid eligible 
preventive maintenance, routine maintenance activities not eligible for 
federal-aid program funding, ongoing operations, and right-of-way. 

[3] A design-build contract is a method of project delivery where the 
design-builder forges a single contract with the state transportation 
agency to provide for architectural and engineering design and 
construction services. 

[4] FHWA has 52 division offices--1 in each state, the District of 
Columbia, and Puerto Rico. 

[5] GAO, Highway Public-Private Partnerships: Potential Benefits and 
Risks Suggest Actions Are Needed to Protect Public and National 
Interests, GAO-08-44 (Washington, D.C.: Jan. 18, 2008). 

[6] Under the lane rental concept, a provision for a rental fee 
assessment is included in the contract. The lane rental fee is based on 
the estimated cost of delay or inconvenience to the road user during 
the rental period. The fee is assessed for the time that the contractor 
occupies or obstructs part of the roadway and is deducted from the 
monthly progress payments. 

[7] The Brooks Architect-Engineers Act (Pub. L. No. 92-582) established 
the procurement process by which the federal government selects 
architects and engineers for design contracts. 

[8] On projects that are not located on the interstate system but are 
part of the National Highway System, the states may assume 
responsibility for overseeing the design and construction of projects, 
unless the state or FHWA determines that this responsibility is not 
appropriate. 

[9] GAO, Federal-Aid Highways: FHWA Needs a Comprehensive Approach to 
Improving Project Oversight, GAO-05-173 (Washington, D.C.: Jan. 31, 
2005). 

[10] GAO, Highlights of a Forum Convened by the Comptroller General of 
the United States: Transforming Transportation Policy for the 21st 
Century, GAO-07-1210SP (Washington, D.C.: Sept. 19, 2007). 

[11] GAO-07-1210SP. 

[12] The contract award is based on a combination of the traditional 
bid for the contract items (the "A" component) and the bidder's 
estimated total number of calendar days required for project completion 
(the "B" component). 

[13] State highway departments may use incentive/disincentive 
provisions to motivate the contractor to complete the work on or ahead 
of schedule. 

[14] There was no Census of Governments employee survey in 1996; 
therefore, there are no employment data for that year. 

[15] See appendix II for a more detailed discussion of the cost 
comparison studies that we reviewed. 

[16] Although all 50 states completed the survey, some states did not 
provide values for all activities. The number of states that provided 
values ranges from 39 to 46, depending on the activity. 

[17] The correlation coefficient for population in urban areas ranged 
from 0.41 to 0.45 across the activities. 

[18] States are required to use the qualification procedures adopted by 
the Brooks Architect-Engineers Act (Pub. L. No. 92-582) when using 
federal-aid funds to procure contractors to provide architectural and 
engineering services (23 U.S.C. § 112). State and local agencies are 
also required to use the indirect cost rates established by a cognizant 
agency audit (23 C.F.R. § 172.7). 

[19] 23 C.F.R. Part 637. 

[20] 23 U.S.C. § 302(a). 

[21] 23 C.F.R. § 172.9. 

[22] U.S. Department of Transportation, Federal Highway Administration, 
Office of Professional and Corporate Development, Quality Assurance in 
Materials and Construction, Final Report (Washington, D.C.: June 2007), 
9. 

[23] Quality Assurance in Materials and Construction, 9. 

[24] The Public Fund Survey is an online compendium of key 
characteristics of 102 public retirement systems that administer 
pension and other benefits for 12.8 million active public employees and 
5.9 million retirees and other annuitants, and that hold more than $2.1 
trillion in trust for these participants. The membership and assets of 
systems included in the survey represent more than 85 percent of the 
nation's total public retirement system community. The survey is 
sponsored by the National Association of State Retirement 
Administrators and the National Council on Teacher Retirement. 

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