FHWA Needs To Clarify Roles and Processes for Approving and Monitoring Public-Private Partnerships

What We Looked At Rising demands on the transportation system and constraints on public resources have led to greater private sector involvement in constructing highway infrastructure through public-private partnerships (P3s). The use of P3s marks a shift away from traditional ways of procuring and financing highway projects solely with Government funding. However, P3s must conform to the same Federal requirements as other Federal-aid projects. The Federal Highway Administration (FHWA) is responsible for stewardship and oversight of Federal-aid highway, bridge, and tunnel projects where P3s are being considered or implemented. We initiated this audit to determine whether FHWA is providing adequate oversight of P3 highway projects. Our specific objectives were to assess FHWA's (1) approval process for P3 highway and bridge projects that include Federal investments and (2) monitoring of P3s once approved. What We Found FHWA has not followed its procedures for ensuring compliance with a P3-related requirement. Specifically, FHWA has not followed its procedures to ensure project financial plans assess the appropriateness of a P3 for project delivery, as required by law. In addition, FHWA is not following its current guidance for approving P3 projects, which notes that P3 projects warrant additional stewardship considerations to address unique risks. Once P3 projects have been approved, FHWA enhances monitoring of P3 projects during construction when the project has been designated as a Major Project. However, FHWA has not established processes for providing additional monitoring of P3s that are not Major Projects, even though they may also pose risks. In addition, although FHWA's guidance states that P3s that remain funded by Federal loans warrant additional oversight during the Operations and Maintenance phase, we found that the Agency is not fully carrying out this guidance and has not clearly defined roles and responsibilities for this oversight. Our Recommendations FHWA concurred with all five of our recommendations to improve its processes for approving P3 projects and monitoring projects once approved. We consider all five recommendations resolved but open pending completion of planned actions.