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Chao probe fallout: Concerns remain over freight project money

Billions in infrastructure grants awarded over five years require more scrutiny, according to watchdog

Chao’s gone but concerns linger over federal grant process. (Photo: Jim Allen/FreightWaves and U.S. DOT)

Results of an investigation into potential conflicts of interest involving former U.S. Secretary of Transportation Elaine Chao have renewed concerns about the agency’s ability to oversee a fair process when selecting grant winners for major infrastructure projects.

A report on the investigation’s findings released this week by the Department of Transportation’s (DOT) inspector general (IG) — at the request of U.S. House Democrats in 2019 — found no evidence that Chao used her office to steer federal grants issued by her department to highway projects in Kentucky — the state represented by her husband, Sen. Mitch McConnell, who was majority leader of the chamber at the time.

However, “consistent with departmental practice that spanned administrations, there was little information documenting the final project decision for all grants, including the ones we reviewed,” the IG report states. It pointed out that the Government Accountability Office (GAO) had also identified this as a problem, and had issued in June 2019 recommendations to DOT on improving transparency of its Infrastructure for Rebuilding America (INFRA) program, discretionary grants aimed at supporting transportation projects “of national and regional significance.”

GAO’s 2019 report concluded that DOT did not properly document or evaluate applications competing for $1.54 billion worth of INFRA money in the fiscal year 2017-2018 funding round. “If DOT does not clearly communicate and document its process regarding applicant follow-up, the process lacks transparency and the assurance of fairness,” GAO concluded.

The three recommendations GAO made to DOT are still pending, including that the DOT secretary ensures it is providing merit score information to applicants. “As of December 2020, DOT did not inform applicants how merit criteria scores are used to advance projects to the Secretary in the notice of funding opportunity, released in January 2020, as we recommended,” according to the latest information from GAO.

Asked to comment, a DOT spokesperson told FreightWaves, “The administration values transparency and is committed to addressing outstanding GAO recommendations.”

The issues raised by both the IG and GAO are lingering concerns for groups such as the Coalition for America’s Gateways and Trade Corridors (CAGTC), whose members have regularly competed for the over $4 billion worth of competitive DOT grant funds issued since 2016.

“We have had concerns about the lack of transparency in the competitive grant-making process, and we have encouraged DOT to document how the decisions are made in order to promote trust in the program and also to encourage the highest and best applications to be submitted for the programs,” CAGTC Executive Director Elaine Nessle told FreightWaves.

Nessle said a review conducted by her own group of fiscal year 2017 federal infrastructure grant applications found that there were $12 worth of requests for every $1 worth of available funds..

“So the importance of using the proper criteria to evaluate applications to get the projects that yield highest benefit for each federal dollar is really important,” Nessle said. “We would like to see the process improved and refined so that people have more trust and know they have a fighting chance. There will always be more projects than the amount of money to fund them, but maybe we can at least cut down on some of the ‘headscratchers’ that end up getting funded.”

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John Gallagher

Based in Washington, D.C., John specializes in regulation and legislation affecting all sectors of freight transportation. He has covered rail, trucking and maritime issues since 1993 for a variety of publications based in the U.S. and the U.K. John began business reporting in 1993 at Broadcasting & Cable Magazine. He graduated from Florida State University majoring in English and business.