FAA Did Not Fully Follow Its Processes When Awarding and Administering CARES Act-Funded Airport Development Grants and Contracts

What We Looked At  The Coronavirus Aid, Relief, and Economic Security (CARES) Act provided the Federal Aviation Administration (FAA) with $10 billion in funding, including about $525 million for airport development expenses. FAA distributed these funds through its Airport Improvement Program (AIP), which requires grant recipients to comply with various Federal procurement requirements, including Buy American Preferences. Previous Office of Inspector General (OIG) audits identified weaknesses in FAA’s processes for awarding and administering AIP grants and its oversight of CARES Act funds. Given the size of the funding allocation, its expeditious distribution, and related findings in prior reports, we initiated this audit. Our objectives were to evaluate FAA’s processes for (1) awarding and administering CARES Act-funded airport development grants and (2) overseeing associated recipient contracts to ensure compliance with Federal and Agency grant and procurement requirements.   What We Found  FAA did not always follow its processes for awarding and administering its CARES Act airport development grants. Specifically, FAA did not carefully review development grant applications before it distributed CARES Act funds over 20 percent of the time and did not always require sponsors to submit annual financial reports on time. Although the Agency strengthened its oversight of CARES Act-funded invoices, it did not effectively communicate and adhere to these changes. These oversight gaps prevent FAA from assuring that the program operates as intended and in a fiscally responsible manner. FAA’s CARES Act-funded airport development contracts also did not meet several key Federal requirements. The Agency did not ensure that sponsors met the requirements for completing cost or price analyses in more than 55 percent of contracts we reviewed. FAA also did not always ensure that Buy American waivers met all requirements prior to approval. Thus, FAA cannot be certain that project costs were reasonable or that sponsors complied with Made in America Laws. These issues result in a total of $106 million in funds at risk for better use.   Our Recommendations  We made eight recommendations to strengthen FAA’s oversight of CARES Act funds for airport development projects. FAA concurred with all eight recommendations and provided appropriate completion dates. We consider all recommendations resolved but open pending completion of the planned actions.