A US government audit of the FAA-managed airport improvement program (AIP) in 2008 reveals that an estimated 4% of the $4 billion in grants were made improperly, prompting calls for more stringent cost controls.
The US Department of Transportation's office of inspector general (OIG) analyzed 26 airport improvement program (AIP) grantees from 2008, finding that payments of $13 million made to 17 of the grantees were improper. The amount represents 5% of the total grants to all 26 grantees.
"Approximately $7 million of the $13 million was paid for work performed that grantees did not sufficiently document," the OIG states. "Almost $4 million was paid to grantees for ineligible or unallowable services. The remaining $2 million was paid to ineligible recipients, in the incorrect payment amount, or as a duplicate payment."
The OIG says the FAA had ranked 24 of the 26 grantees as "low risk", meaning they could receive funding without submitting documentation or obtaining prior approval from FAA, hurdles that high-risk grantees must clear before receiving funds.
The worst offender, according to the report, was the Panama City-Bay County airport in Florida, with almost $7 million in improper payments used for building the new Northwest Florida Beaches International airport, which opened for service in May.
The OIG says the airport received more than $4 million for construction work on temporary pollution and erosion control, but could not provide documentation that the work met FAA and contract requirements. Panama City also used $784,000 in grant money to pay financing costs for the new airport, a use that is prohibited under AIP guidelines, says the OIG.
"For more than two years, FAA was unaware that this grantee was receiving payments to fund these ineligible/unapproved tasks," the report states. "When a state auditor brought the matter to FAA's attention, instead of taking action to recover the funds, FAA's airport district office modified the grant agreement by incorporating and approving AIP eligible tasks already billed, and identifying other eligible tasks to compensate for the $784,000 paid for prohibited expenses".
The FAA disagreed with portions of the OIG's findings, saying that grants for $4.6 million of the $13 million in question were in fact proper.
Recommendations by the OIG for preventing improper payments in the future include revising the risk management procedures for categorizing grantees, developing procedures to prevent duplicate AIP payments from being made and finding ways to recover funds deemed to be improper.
Source: Air Transport Intelligence news
