Today’s guest post is from Shruti Shah, the President and CEO of the Coalition for Integrity (C4I), and Taylor Cerwinski, a consultant for C4I on various anticorruption and ethics issues.
The biggest item on the U.S. Congress’s legislative agenda right now is infrastructure. Last month, the Senate voted to pass a $1 trillion infrastructure bill focused on surface infrastructure and broadband projects, including $550 billion in funding for new projects. That bill is set for a House vote on Thursday, though the politics are complicated by the debates within the Democratic Party over the proposed $3.5 trillion federal budget bill that includes investment in “human infrastructure” via support of child care, education, healthcare, and other projects. While all eyes on Washington are focused on whether the Democrats will be able to hold together their progressive and centrist wings to pass both of these bills, there’s another important concern regarding the proposed infrastructure investment that ought to receive attention: the need for more effective oversight of how the money is spent.
While strong infrastructure is vital to ensure a healthy economy and thriving communities, the scope, complexity, and cost of the proposed infrastructure projects make it vital to ensure that there is clear and robust oversight, so that these projects are carried out in a fiscally responsible manner. Without such oversight, there is a substantial risk that infrastructure projects at the federal and state level will fall victim to waste, fraud and other abuses. Internationally, estimates of losses to bribery in construction are as high as 10 to 30 percent of construction costs. And the United States is not impervious to mismanagement and corruption in infrastructure projects. A review of prior high-profile projects such as the California High Speed train, the Central Artery Project in Boston (The Big Dig), and the awarding of contracts related to disaster relief and clean-up efforts in the aftermath of Katrina reveals cost overruns, fraud, and incidents of bribery and other forms of public corruption.
The infrastructure bill now pending before the House incorporates several measures to combat potential corruption. These include requirements that federal agencies award grants on a competitive basis, regularly publish reports on the implementation of grant programs, and fund oversight functions. While a good start, these measures do not go far enough. Assuming the infrastructure bill passes, agencies must—through implementing regulations and actual practice—go further to ensure transparency, accountability, and integrity in infrastructure spending. As a new Coalition for Integrity’s report on Oversight of Infrastructure Spending, there are a number of useful measures that would be helpful, including the following:
- The government should create a comprehensive public website to track projects that use federal infrastructure funds (similar what was done in implementing the Recovery Act), so as to make information in the public domain easier to access.
- Local agencies allocating federal infrastructure funds should hold hearings that allow citizen consultation on matters related to the design, cost, and timeline for infrastructure projects, which would both help ensure that contemplated projects are responsive to the community’s needs, and also help to educate the community on the considerations for such projects. Hearings also contribute to a culture of accountability for contractors and others responsible for the executing the projects.
- While each agency has its own inspector general, given that the proposed infrastructure projects may fall under the jurisdiction of multiple agencies, the government should set up a committee of the inspectors general of all the agencies responsible for administering infrastructure funds, so as to facilitate collaboration. A model or foundation for such a body is the Pandemic Response Accountability Committee (PRAC), which has overseen the disbursement of substantial federal spending, and already includes many of the inspectors general likely to oversee infrastructure funds. Congress should consider expanding the PRAC’s mandate to include oversight of future infrastructure spending and should accompany any expansion of the PRAC’s mandate with appropriations sufficient to allow the PRAC to make necessary investments in hiring and training. Alternatively, Congress could create and fund a distinct committee.
- The federal government should insist on strong state oversight for all infrastructure spending. Among other things, state and local government officials involved in infrastructure projects should be required to file annual conflict of interest disclosures with the state’s secretary of state or with the relevant state ethics agency to deter wrongdoing and improve detection when misconduct occurs.
- There should be regular audits of infrastructure projects—while the projects are ongoing, not just after they are completed.
- Agencies should require recipients of infrastructure funds to maintain effective internal controls and should consider the presence and demonstrated effectiveness of such controls in determining whether and how to award infrastructure funds.
- Agencies should insist on a competitive acquisition process to the maximum extent possible. At the state and local government level, relevant personnel should be provided with adequate training and resources in project planning and cost estimation, so that they are well-positioned to review contractor bids and make informed, competitive selections. Government procurement agencies might also consider incorporating outside monitors into the bidding process to bring an additional level of oversight, as has been done successfully in other countries (such as Australia). The participation of experienced external parties lends credibility to the bidding and contracting process which will ultimately benefit infrastructure projects as a whole
- It is vital to protect whistleblowers who come forward with information relating to the misuse of federal funds. Inspectors general should adopt the best practices developed by the Council of Inspectors General on Integrity and Efficiency, Whistleblower Protection Coordinators, and the Office of Special Counsel working groups.
Dear Shruti Shah,
This is an important and interesting post! Thank you for sharing your thoughts. You have provided some very good insights and ideas. I’m from Brazil and here we face some similar challenges.
Nevertheless, I would like to ask a few questions in order to better understand some of the recommendations you have done.
A) What role should the Government Accountability Office (GAO) and the Congress play in the audit and review of the public expenditure in infrastructure? What sort of audits or measures should they do?
B) How may the Agencies achieve the maximum competitive bids?
Thanks for the interesting and timely post.
Would your proposals for increased state oversight requirements include federal funding for these measures or would states be required to self-fund? On the one hand, it seems that congressional Republicans may be hesitant to accept further increases in the infrastructure bill’s cost, while on the other hand, it seems that without federal funding, states may face incentives to cut corners, particularly on these oversight functions.
Thank you for the insightful post.
It’s certainly the case that corruption and waste are real risks with the infrastructure bill, especially as the United States already spends more for less on infrastructure than most other developed countries. In terms of solutions, we might also think about insisting upon a more robust due diligence process for contractors and their sub-contractors. One way to do this might be mandatory ex-ante business viability, corruption, and waste risk rating for government contractors and their sub-contractors. If these were made public, they’d have the added benefit of burnishing the contractor’s reputation when it competes for business in the private sector while also penalizing bad actors.