1. Understanding a Federal Audit
There are many agencies that can review what you do. FHWA-IN, FHWA-HQ, USDOT OIG, Congress’ GAO, etc.
Can occur from planning process through construction closeout.
Focus on project development and construction, and reviews done by FHWA-IN
Audit more focused on compliance, whereas review can be for other reasons.
Robert Dirks
Design and Construction Team Leader
Federal Highway Administration – Indiana Division

2. Topics to cover Why FHWA conducts reviews
FHWA-INDOT Stewardship and Oversight Agreement
Types of reviews
History of FHWA reviews
Program Risk Assessments
Program Reviews
Project Development Reviews
Construction Inspections
Closeout

3. Why FHWA conducts reviews
Required to do them by regulations
Stewardship reasons
Are Federal funds managed well?
Are programs managed well?
Oversight
Are Federal requirements met?
Required to by regulations – planning certification reviews in TMA areas, PS&E reviews prior to construction authorization
Stewardship – Are controls in place to identify and track non federal participating items?
Are common change orders evaluated by design to evaluate possible changes to design program?
Does INDOT have an adequate edge drop-off policy – when positive barrier? How well is INDOT providing stewardship of the LPA program?
Oversight– NEPA approval prior to ROW acquisition? Proper approvals if proprietary material called out? ADA addressed in PS&E? Design exceptions get proper approvals? ROW certifications done and done correctly? Contracts advertised correctly? Change orders approved correctly? Is each CO evaluated to determine if eligible for Federal funds? List goes on and on.

4. FHWA-INDOT Stewardship and Oversight Agreement
Each State is required to have one
What types of projects are delegated to INDOT to oversee
How both agencies will jointly manage the Federal-aid highway program in Indiana
Performance measures of FAHP in Indiana
Commitment measures to each agency
State-oversight, State-delegated

5. Types of Reviews Individual Project Reviews
FHWA Oversight
ARRA Projects
State Delegated Projects
Program Area Reviews (examples)
Design exception approval process
Waterway Permitting
PS&E approval process
Letting process
Change order approval process
Work zone traffic control
Materials testing
There are many names one may hear to describe various reviews done at least by FHWA over the years.
Process reviews, project development reviews, program reviews, project reviews, inspections-in-depth, and the list goes on.
I want to boil it down to the basics.
FHWA operates two broad categories of reviews:
Those done on individual projects.
Those done on a particular program area.
FHWA is required to identify FHWA-oversight projects, which are generally the larger 5 or so corridor projects in each District. We have to be involved in every step of project delivery on these projects.
For the other 2 types of projects, we are required to review a certain percentage of them – 5% of State-delegated and 10% of ARRA projects.
This is a small sample of the types of program reviews that FHWA may conduct.
you’re most likely to have a review if it is a recovery act project or a full-oversight project. For the state oversight projects, a small sample is reviewed every year – about 5 per district. These reviews tend to be 2 or so hours in length and cover several topics. Your participation is crucial in the review. After the review is completed, a report will be written and copied to your AE who should then forward it on to you.
Program reviews draw a random sample of projects and tend to focus on a certain aspect of a project, with the exception of the Annual Construction Program Review. This list is not a complete list of the program reviews conducted, but an example. The types and timing of program reviews are based on an annual risk assessment conducted by our office, and thus subject to change. This year there will be a Work Zone Review along with the Annual construction program review. Various people from our local Division office participate in these reviews. On rare occasions, staff from our headquarters or national review team will conduct a review. At the conclusion of these reviews, a single report for all projects reviewed will be written, noting best practices and opportunities for improvement.

6. History Many changes over years Pre-ISTEA (1991) Post-ISTEA to ~2005
Review/Inspect every FA project – frequently
Heavy focus on compliance
Little focus on overall program
Post-ISTEA to ~2005
Practically no reviews/inspections
Less little focus on “compliance”
Relied mostly on program reviews

7. History (continued) ~2005 – Recovery Act (2009) After Recovery Act
Little more focus on compliance
Mainly reviewed FHWA-oversight projects
Primarily relied on program reviews
After Recovery Act
Heavy focus on compliance
Still relatively high reliance on program reviews
Review FHWA-oversight and State-delegated projects
National goals for reviews of FHWA-OS, State-delegated and Recovery Act projects

8. Program Risk Assessments
Evaluate risks of each program area
Prioritize any reviews
Coordinate with INDOT managers/leadership
Include in Annual Performance Plan

9. Program Reviews Done by anyone in FHWA-IN
Reviews conducted jointly with INDOT are best
Identify team members
Develop workplan – Purpose, Scope, Schedule, questions, projects to review to validate process
Conduct review
Write report – observations, follow-up actions
Closeout with FHWA/INDOT managers/leadership
Complete follow-up actions
FHWA-HQ now tracking program reviews and follow-up actions
Compliance, as well as stewardship issues

10. Project Development Reviews
Conducted primarily on FHWA-oversight projects
By FHWA-IN Transportation Engineers, with input from Division specialists
Possibly at Stage 1, 2, or 3; definitely at PS&E
Looking for:
Specific items/issues in plans
INDOT’s prior comments and how addressed
Compliance of key requirements (PS&E)
Checklists
FHWA-HQ tracking now
Focus on compliance issues
Specific items – MOT plans, proprietary materials, triggers for other requirements (IJ, ADA); generally is it constructible as designed.

11. PS&E Review Specific contents of PS&E package
INDOT will do on all Federal-aid projects
2 Stage review for FHWA reviews (FHWA-OS)
~ RFC – plans & unique special provisions
2 weeks prior to advertisement – Remaining PS&E package
State-delegated – PS&E approved by INDOT
FHWA-OS – PS&E approved by FHWA
PS&E approved by [name] on [date].

12. Construction Inspections
Conducted primarily on FHWA-OS projects
1 per year or at least at project closeout
Constructed in accordance with contract?
Topics Covered:
EEO
DBE
Work Zone Safety
Materials
Progress Payments
Project Commitments
Change Orders / Claims
EEO & DBE
Bulletin boards
Interviews
Apprenticeships
DBE
Approved Subcontractors
Payrolls
CUF
Work Zone Safety
Compliance with IMUTCD
Plans
Police and local coordination
Maintenance of Devices
Training
Work Zone Traffic Control Supervisor
PPE and work site safety
Materials
Basis for use is satisfied
Documentation
Certified Testers
Buy America
Progress Payments
Accurate
Timely
Reasonable process to insure above
Project Commitments & Environmental Issues
Commitments
Indicated in contract documents
Known by field staff
Implemented
Environmental Issues
Erosion & Sediment Control
Permits
NEPA
Change Orders & Claims
Prior approval for Major COs
Justification and explanation (needed?)
Cost analysis for new items
Generally, do not contain proprietary items
Non- participating items indicated

13. Project Closeout
Final Acceptance
Final Inspections
Final Voucher

14. Conclusion
Robert Dirks