A new report by the Office of the Inspector General shows that FHWA does not effectively account for Federal highway and bridge funds used for preliminary engineering, and as a result billions of dollars are missing.

The Federal Highway Administration (FHWA) authorizes billions of dollars in Federal-aid funding for preliminary engineering (PE) to assist States in the design and related ground work needed before a highway or bridge project advances to physical construction or acquires right-of-way. To achieve program efficiency, Federal law requires States to repay the Highway Trust Fund the full amount of Federal-aid expended on PE when a project does not acquire right-of-way or start construction within 10 years after Federal funds expended on PE were first made available.

The audit showed that the four FHWA Division Offices under review do not effectively assess whether States' systems and processes accurately account for PE projects, as required by FHWA Order 5020.1.

For example, a Division Office determined that a State lacked processes for monitoring whether PE requirements were followed at the 10-year limit; however, the Division Office did not follow up on these findings for 5 years, contributing to the State's PE expenditures that have yet to be repaid.

The report also goes on to list other factors, such as enforcement, lack of oversight, inaccurate tracking, and others contributing to the problem.

The full report can be viewed here.