FTA’s Oversight of Its Region 9 Recipients Is Insufficient To Confirm Compliance With CARES Act Funding Requirements

What We Looked At Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Federal Transit Administration (FTA) received $25 billion to help the Nation’s public transit agencies mitigate the impacts of COVID-19. FTA obligated over $4.4 billion of this funding to recipients within FTA’s Region 9, which contains the 4th, 10th, and 11th highest FTA CARES Act fund recipients nationwide. Although the Agency expanded its oversight of COVID-19 relief funding recipients, we previously found risks associated with these activities and FTA’s oversight of contract and grant expenditures. Given our previous findings and the magnitude of taxpayer funds involved, we initiated this audit to assess FTA’s oversight of its Region 9 recipients’ compliance with CARES Act funding requirements. Specifically, we evaluated (1) FTA’s oversight processes relevant to Region 9 CARES Act payments, and (2) the eligibility of CARES Act payments for a statistical sample of eight Region 9 recipients. What We Found FTA conducts limited oversight of its Region 9 recipients' CARES Act payments. Specifically, the Agency did not amend its standard automated grant payment process to account for elevated CARES Act fund risks and relies on contractor-conducted oversight reviews that are insufficiently scoped to identify CARES Act funding noncompliance. Further, despite FTA encouraging recipients to use these funds expeditiously, FTA Region 9 funds remain unexpended. These limited oversight activities put the Agency at greater risk its CARES Act funds will be subject to fraud and misuse. For instance, we identified a total of $192.8 million in unsupported costs and $4.2 million in ineligible expenses associated with CARES Act payments for six of the eight sample Region 9 recipients tested. These issues were due in part to FTA’s limited oversight and broad eligibility guidance. Overall, we estimate FTA paid up to $340 million in unsupported costs and $106.9 million in ineligible expenses across Region 9 CARES Act recipients—totaling $446.9 million in Federal funds at risk. Our Recommendations We made four recommendations to strengthen FTA’s oversight of its recipients’ compliance with CARES Act funding requirements. The Agency concurred with recommendations 1 through 3, which we consider resolved but open pending completion of planned actions. FTA did not concur with recommendation 4, which we consider open and unresolved.