Biden administration pushing to speed up transportation grants

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As the Infrastructure Investment and Jobs Act nears its second anniversary, the Biden administration is still striving to close the gap between awarding transportation grants and actually getting the cash to the states and cities that have won the money.

Shortening that timeline remains a top priority for the administration, Federal Highway Administration CFO Brian Bezio told state department of transportation officials Tuesday at the annual American Association of State Highway and Transportation Officials in Indianapolis.

“The timely obligation of grants is a number one priority for our administrator right now — he recognizes the issue,” Bezio said, referring to FHWA chief Shailen Bhatt.

Federal Highway Administrator Shailen Bhatt has said that speeding up the FHWA grant obligation process is a key priority.

Bloomberg News

Bhatt, who took office in January, has previously told Congress that a top priority is “turning awards into projects.”

Accelerating the grants process remains a priority for AASHTO, which has said it slows the full benefits of the IIJA.

The U.S. Department of Transportation’s watchdog is also keeping an eye on the process, USDOT Inspector General Eric Soskin said during a separate presentation.

“The extent to which the time to move from a grant award to grant agreement to obligation seems to be, along with some questionable statutory design, a big driver of a lot of challenges of the administration of the infrastructure act programs,” Soskin said. “That’s certainly a topic I’m going to go back and get with our audit leadership and [see] what recommendations we can make for how that can move more directly.”

The FHWA has launched a pilot program aimed at accelerating the grant process, Bezio said. The pilot processes 42 projects through the Fiscal Management Information System with a goal of getting all projects under obligation by the end of the year, he said.

“If it works well, we will argue that we should perpetuate it and expand it,” Bezio said. “We are all in this together, and it will help all of us if we can expand this.”

Separately, Bezio said that the FHWA, after having resolved the bulk of a $3.5 billion accounting error that threatened highway contract authority, is now turning its attention to resolving the remaining less than $1 billion.

The FHWA settled $2.5 billion of the $3.5 billion discrepancy that stemmed from a nearly 20-year-old accounting glitch between two accounting systems used by the federal government. States had feared that the money could be clawed back if the error was not resolved in their favor. The problem’s origin occurred sometime between fiscal years 2003 and 2005 when the accounting systems used by the Federal Highway Administration and the U.S. Department of Transportation were merged somewhat unsuccessfully. 

The FHWA will now turn its attention to fixing the remaining less than $1 billion, Bezio said.

After fixing the bulk of the problem in July, the agency had turned its attention to the question of redistribution of annual highway funds, another vexing challenge facing state DOTs, he said.

“Now we’re turning back to this,” he said. “We will have an answer soon and have to make a decision. There are lots of options and nothing is settled.”

The FHWA uses the Fiscal Management Information System to track and manage highway apportionments, programs, and projects. FMIS had showed an estimated $4.7 billion balance in contract authority prior to the IIJA, according to AASHTO.

The Department of Transportation uses the Delphi accounting system to record financial information, which showed a $1.2 billion balance. 

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