Federal Aviation Administration + Federal Highway Administration + Federal Motor Carrier Safety Administration + Federal Railroad Administration + Federal Transit Administration + Maritime Administration + National Highway Traffic Safety Administration + National Transportation Safety Board + Office of the Secretary of Transportation + Pipeline and Hazardous Materials Safety Administration + Research and Innovative Technology Administration + Saint Lawrence Seaway Development Corporation + Surface Transportation Board + Transportation Security Administration + United States Coast Guard + Management & Financial + Acquisition & Procurement + Department-wide Audits + Disaster Relief Oversight + DOT Financial Management + Information Technology + Management Challenges + NTSB Financial Management + Recovery Oversight + Single Audits + Aviation + Acquisition & Modernization + Air Traffic Control Operations + Airports + Aviation Industry & Competition + Aviation Safety + Aviation Security + Capacity, Delays & Customer Service + Management & Finance + Highways + Highway & Vehicle Safety + Motor Carrier Safety + Maritime + Coast Guard + Saint Lawrence Seaway + Pipelines & Hazardous Materials + Railroads & Transit + Amtrak + Railroads + Transit + Criminal Investigations + Contract & Grant Fraud + Employee Integrity + Hazardous Materials & Pipelines + Other Fraud Investigations + Advisories + Announcements + ARRA Financial & Activity Reports + Audits + Correspondence + IMPACT Magazine + Investigations + Lobbyist Communications Disclosures + Press Releases + Semiannual Reports + Testimony + Top Management Challenges

ARRA Lessons Learned: Opportunities Exist for FAA To Further Improve Its Oversight of Airport Grant Payments

Eric.Weems — Mon, 22 Apr 2013 14:00:56 +0000

On April 18, 2013, we issued a report on the Federal Aviation Administration’s (FAA) oversight of airport grants funded by the American Recovery and Reinvestment Act of 2009 (ARRA). ARRA injected an unprecedented $1.1 billion into FAA’s Airport Improvement Program (AIP) grants program and established tight timeframes for distributing funds, emphasizing preference for projects that could be completed in 2 years. ARRA also called for an unprecedented level of oversight to prevent improper payments and misuse of Federal funds. However, we found that FAA’s oversight process was not sufficient to prevent or detect more than $1.4 million in improper payments (i.e., payments that were ineligible or insufficiently documented) for ARRA-funded work. These improper payments occurred in part because FAA over-relies on grantees to ensure their payment requests are accurate and supported. In addition, we found that FAA’s oversight also did not ensure that some airport expenditures fully met ARRA and AIP requirements. Shortfalls included allowing some grantees to (1) use ARRA funds to cover prior year work, (2) inappropriately mix ARRA and AIP funds, (3) accept single bids for projects without conducting cost comparisons, (4) inaccurately describe scope in project documents, and (5) not maintain sufficient records of ARRA-funded work. Our findings and recommendations highlighted opportunities to learn lessons from ARRA and further improve FAA’s grant oversight, and the Agency is revising its policies and procedures to achieve these improvements. FAA concurred with two of our recommendations and partially concurred with five. We are requesting that FAA provide additional information or reconsider its response for four recommendations.

FAA Oversight of Airport Grants Funded By ARRA^04-18-13.pdf

FRA Is Nearing Completion of Rules Required by the Rail Safety Improvement Act, but Needs to Improve Oversight

Eric.Weems — Fri, 19 Apr 2013 15:55:57 +0000

On April 17, 2013, we issued a report on the Federal Railroad Administration’s (FRA) progress in implementing the Rail Safety Improvement Act of 2008 (RSIA). Congress passed RSIA in response to several high profile accidents between 2002 and 2008. RSIA requires FRA to undertake several wide-ranging tasks that broaden its safety responsibilities. Among these new responsibilities are requirements that the Agency issue 17 rules to improve railroad safety. We found that FRA has issued 8 of the 17 RSIA-required rules and has made progress on finalizing the remaining 9. However, weaknesses in FRA’s planning for its rulemaking work delayed rule issuance. We also found that FRA did not provide its oversight staff with the guidance, training, and supervision required to oversee compliance with certain RSIA rules. We made six recommendations to improve FRA’s rulemaking process and strengthen the Agency’s oversight of railroad safety. FRA concurred or partially concurred with all six recommendations.

FRA Rail Safety Improvement Act Report^4-17-13.pdf

The Federal Aviation Administration’s Fiscal Year 2014 Budget Request: Key Issues Facing the Agency

Eric.Weems — Thu, 18 Apr 2013 14:08:05 +0000

On April 18, 2013, the Inspector General testified before the Senate Appropriations Subcommittee on Transportation, Housing, and Urban Development regarding the Federal Aviation Administration’s (FAA) fiscal year 2014 budget. The Inspector General focused on three challenges that FAA faces as it works to meet its mission in a restricted budget environment: (1) more effectively managing its workforce, (2) effectively managing its implementation of modernization programs and protecting its airport investments, and (3) continuing efforts to ensure the safety of the NAS. Specifically, the Inspector General noted that FAA has opportunities to improve the management of its workforce—the Agency’s largest cost driver—by strengthening its controller training program, revising its controller staffing and scheduling practices, and effectively allocating its safety inspectors. FAA’s second major challenge is protecting its multibillion-dollar investment in NextGen and other infrastructure improvements. This will require FAA to set priorities and establish sound management strategies to achieve near- and long-term benefits, enhance its contract oversight, and prevent misuse of airport revenue and grant funds. Finally, the Inspector General stressed that FAA’s top priority remains ensuring the continued safety of the NAS. FAA’s safety challenges include collecting and analyzing data to prevent air traffic controller operational errors, addressing the rise in runway incursions, implementing the remaining provisions of the Airline Safety Act, safely integrating unmanned aircraft systems into the NAS, and using safety data from air carriers to mitigate risks

FAA FY 14 Budget Testimony Statement^04-18-13.pdf

Audit Initiated of NTSB's Financial Statements for Fiscal Years 2013 and 2012

Eric.Weems — Thu, 18 Apr 2013 13:45:51 +0000

The Office of Inspector General (OIG) is initiating an audit of the National Transportation Safety Board's financial statements for fiscal years 2013 and 2012 in accordance with the Accountability of Tax Dollars Act of 2002. An independent audit firm, Leon Snead and Company, PC, will perform the audit—subject to OIG oversight—according to generally accepted Government auditing standards and the Office of Management and Budget’s (OMB) audit requirements. The audit report will be delivered to OMB by November 15, 2013.

FY 2013 NTSB Financial Statement Audit 4-17-13.pdf

Quality Control Review on the San Francisco Bay Area Rapid Transit District

Eric.Weems — Tue, 16 Apr 2013 18:27:42 +0000

On April 15, 2013, we issued a quality control report on a single audit issued by the Macias Gini & O'Connell LLP (MGO) on the San Francisco Bay Area Rapid Transit District’s use of U.S. Department of Transportation’s grants for the fiscal year ending June 30, 2011. During this period, the District expended more than $111 million from DOT’s grant programs. The DOT program determined to be major by MGO was the Federal Transit Cluster. We determined that MGO’s audit work was Acceptable with a Deficiency, and therefore, generally met the requirements of the Single Audit Act, OMB Circular A-133, and DOT’s major program. We found nothing to indicate that MGO’s opinion on DOT’s major program was inappropriate or unreliable.

April 15-2013-SF BART-MaciasGiniOConnell-2012 Plan.pdf

Quality Control Review on the Greater Cleveland Regional Transit Authority

Eric.Weems — Tue, 16 Apr 2013 17:49:23 +0000

On April 15, 2013, we issued a quality control report on a single audit issued by the Ciuni & Panichi, Inc (C&P) on the Greater Cleveland Regional Transit Authority’s use of U.S. Department of Transportation’s grants for the fiscal year ending December 31, 2011. During this period, the Authority expended more than $51 million from DOT’s grant programs. The DOT program determined to be major by C&P was the Federal Transit Cluster. We determined that the C&P’s audit work, was Acceptable with a Deficiency, and therefore, generally met the requirements of the Single Audit Act, OMB Circular A-133, and DOT’s major program. We found nothing to indicate that C&P’s opinion on DOT’s major program was inappropriate or unreliable.

April 15-Greater Cleveland RTA-CP-2013 Plan.pdf

FAA’s Progress and Challenges in Advancing Safety Oversight Initiatives

Eric.Weems — Tue, 16 Apr 2013 04:00:00 +0000

On April 16, 2013, the Assistant Inspector General for Aviation and Special Programs testified before the Senate Committee on Commerce, Science, and Transportation regarding the Federal Aviation Administration’s (FAA) progress and challenges in implementing safety oversight initiatives. The Assistant Inspector General focused on FAA’s (1) need for comprehensive data collection and analysis to enhance the safety of air traffic operations; (2) need to strengthen its risk-based oversight approach for repair stations and manufacturers; and (3) progress and challenges with implementing mandated safety requirements. Specifically, the Assistant Inspector General noted that, to reduce the risk of safety incidents such as air traffic controller operational errors, pilot deviations, wildlife strikes, and runway incursions, FAA needs to refine its processes for collecting data and analyzing root causes. In addition, the Assistant Inspector General described FAA’s challenges with establishing a risk-based oversight system for repair stations and aircraft manufacturers, as well as effectively determining how many inspectors it needs and where. Finally, the Assistant Inspector General noted that despite commendable progress on implementing key elements of the Airline Safety Act, FAA continues to be challenged with meeting provisions for improved pilot training, qualification, and screening requirements, as well as advancing safety initiatives at smaller carriers.

Aviation Safety Testimony_4-16-13.pdf

FAA Mechanic Sentenced for Theft of his FAA Issued Tools

Eric.Weems — Fri, 12 Apr 2013 19:08:38 +0000

On April 1, 2013, Perry Morrison, a mechanic employed by the Federal Aviation Administration (FAA), was sentenced in Oklahoma City District Court to a 5 year deferred sentence, 24 months of supervised release, and 80 hours of community service. He was ordered to pay a $200 fine, a $200 victim compensation assessment, and a court fee of $25. Morrison will also be required to pay $40 per month during his supervised release to the District Attorney's Office.

Morrison stole tools that were issued to him while working at the Mike Monroney Aeronautical Center, Oklahoma City, Oklahoma. Morrison then pawned the tools claiming he was the owner, in violation of Oklahoma State Statute.

Morrison's removal from FAA is pending.

Audit Initiated of the Costs and Controls Associated With the 2012 FAA/NATCA Collective Bargaining Agreement

Eric.Weems — Wed, 10 Apr 2013 14:58:46 +0000

The Office of Inspector General plans to conduct an audit of the 2012 Collective Bargaining Agreement (CBA) extension between the Federal Aviation Administration (FAA) and the National Air Traffic Controllers Association. We plan to (1) identify provisions of the 2012 CBA extension that put FAA at risk of unanticipated costs and (2) assess the effectiveness of FAA’s policies, procedures, and internal controls in preventing cost escalations.

NATCA Announcement Letter^4-9-13.pdf

ARRA Financial & Activity Report - March 2013

Eric.Weems — Fri, 05 Apr 2013 16:18:32 +0000

On April 5, 2013, we issued our monthly American Recovery and Reinvestment Act (ARRA) Financial and Activity Report for the month of March 2013. The report summarizes our cumulative ARRA and non-ARRA funds spent related to our ARRA oversight activities. The report also describes ARRA major actions, both taken to date and planned by our office and provides a list of our ARRA-related training events and outreach efforts.

ARRA Financial & Activity Report - March 2013.pdf

Maryland Man Pleads Guilty to False Statements for Submitting False Proposal to MARAD Official

Eric.Weems — Thu, 04 Apr 2013 21:39:54 +0000

On March 27, 2013 , in U.S. District Court, Washington, D.C., Luis Rodriguez pleaded guilty to false statements in conjunction with a contract proposal he submitted to the U.S. Department of Transportation, Maritime Administration (MARAD).

OIG's investigation revealed that Rodriguez submitted a proposal to a MARAD official, under the business name Guardian, for a lucrative contract providing maritime security services to combat Somali pirates attacking private merchant vessels off of the African Coast. Throughout the proposal, Rodriguez included numerous false representations concerning Guardian's capacity to carry-out the proposal's mission. For example, Rodriguez indicated that his company could provide a private, 3000 person army; however, his company did not have any employees, executive officers, or personnel.

We are conducting this investigation with assistance from MARAD.

President and Owner of a New York-based DBE Contractor Pleads Guilty

Eric.Weems — Fri, 29 Mar 2013 18:28:56 +0000

On March 21, 2013, Yona Jimenez, a/k/a "Yona J. Bocchino", the president and owner of Global Marine Construction Supply (GMCS), a certified DBE, pled guilty in United States District Court, White Plains, New York, to mail fraud.

On October 6, 2011, Jimenez was charged for her role as a pass-through disadvantaged business enterprise (DBE) purporting to provide structural steel on the FHWA-funded Cross Westchester Expressway Project. Between approximately June 2006 and October 2009, the general contractor claimed that GMCS had been awarded a subcontract valued over $6 million to supply structural steel to reconstruct bridges, although another company (a non-DBE) actually supplied the steel. The general contractor then claimed credit for the "services" provided by GMCS towards meeting its DBE goal. GMCS was paid approximately 1% of the subcontract value as a commission. Jimenez was arrested on May 4, 2011, in connection with the above conduct.

We are conducting this investigation jointly with the NYS-Metropolitan Transportation Authority OIG, and the Port Authority of New York and New Jersey OIG.

Improvements to DOT’s Governance Processes Are Needed To Enhance Oversight of Major IT Investments

Eric.Weems — Fri, 29 Mar 2013 15:55:12 +0000

On March 27, 2013, we issued our final report on DOT’s governance processes for its major information technology (IT) investments. We assessed whether: (1) DOT’s investment governance practices meet Federal and statutory investment oversight requirements and best practices; and (2) FAA and DOT provide sufficient oversight of FAA’s major IT investments.

We found that DOT’s investment oversight practices do not fully meet Office of Management and Budget requirements or DOT’s policies. For example, DOT does not have an active Investment Review Board or supporting boards to provide a comprehensive management framework for its major IT investments. Also, FAA and DOT face challenges in providing sufficient oversight of FAA’s major IT investments. For example, FAA’s Joint Resources Council has a comprehensive framework for investment governance, yet the Agency does not always follow the JRC’s approval and oversight processes. Until DOT and FAA address these shortfalls, their ability to effectively manage major acquisitions and make well-informed investment management decisions remains at risk, as does the Department’s ability to reap the benefits that accompany sound IT investment management and oversight strategies.

We made eight recommendations to improve DOT’s and FAA’s oversight of major IT investments. The Department concurred with all eight recommendations and stated that they have already implemented corrective actions for two recommendations, as of March 12, 2013. For the other six recommendations DOT provided sufficient planned actions with reasonable target dates.

DOT Major IT Investment Governance Processes^3-27-13.pdf

Amtrak's New Cost Accounting System Is a Significant Improvement But Concerns Over Precision and Long Term Viability Remain

Eric.Weems — Fri, 29 Mar 2013 15:55:10 +0000

On March 27, 2013, we issued a report on the results of our audit of Amtrak’s Performance Tracking (APT) system.

Implemented in 2010, APT, Amtrak’s new cost accounting system, allows Amtrak to capture and report on its financial performance by route, line of business and major activity as required by the Passenger Rail Investment and Improvement Act of 2008 (PRIIA). While APT is a significant improvement over its predecessor, implementation problems and heavy reliance on cost allocation have affected the timeliness and precision of its reports. Moreover, its highly customized design will make APT costly to maintain, raising concerns regarding its long-term utility. Finally, while not yet implemented, the avoidable cost methodology that FRA developed to determine the cost savings from a route’s discontinuation has significant limitations that would substantially reduce the value of estimates provided to Amtrak and Congress of the savings that could result from eliminating that route.

Amtrak's New Cost Accounting System Report^3-27-13.pdf

FHWA Provides Sufficient Guidance and Assistance To Implement the Highway Safety Improvement Program but Could Do More To Assess Program Results

Eric.Weems — Thu, 28 Mar 2013 16:00:49 +0000

On March 26, 2013, we issued a report on the Federal Highway Administration’s (FHWA) Highway Safety Improvement Program (HSIP). We found that FHWA provides sufficient guidance and assistance to the States to implement HSIP. We also found that FHWA conducts limited evaluations of State reported HSIP data to report on the program’s impact. We made two recommendations to FHWA to strengthen HSIP. FHWA concurred with both of our recommendations.

FHWA's Highway Safety Improvement Program^3-26-13.pdf

Pennsylvania Man Convicted in False Aircraft Inspection Scheme

Eric.Weems — Tue, 26 Mar 2013 04:00:00 +0000

On March 26, 2013, Joel Stout, of Elizabethtown, Pennsylvania, pleaded guilty in U.S. District Court, Philadelphia, Pennsylvania, to conspiracy and mail fraud related to his participation in a fraud involving unauthorized aircraft inspections and repairs at Flying Tigers, Inc., a former airplane repair business in Marietta, Pennsylvania. Stout's father, Jay Stout, the president of Flying Tigers, Inc., and Howard Gunter, a retired FAA examiner, were also previously charged in the scheme.

Joel Stout admitted that between October 2006 and October 2009, Flying Tigers charged customers for annual aircraft inspections that were either not performed by FAA certified mechanics, or were not performed at all. Joel Stout further admitted that Flying Tigers officials prepared fraudulent certifications and forged signatures of an unsuspecting certified inspector who had not performed the inspections. The fraud also included billing customers for the inspections that were not properly certified. Stout furthered the scheme by mailing invoices for the fraudulently performed inspections and receiving payments from customers.

The five year transportation safety investigation revealed that the defendants routinely altered airframe and engine logbooks and made false entries in the log books to conceal their actions. Flying Tigers conducted more than 75 questionable aircraft inspections between 2006 and 2009.

USAO, Eastern District of Pennsylvania - Press Release

Audit Initiated of New Participants in FAA’s Airport Disadvantaged Business Enterprise Program

david.wonnenberg — Mon, 25 Mar 2013 19:00:43 +0000

The Office of Inspector General (OIG) is initiating an audit of new participants in the Federal Aviation Administration’s (FAA) Airport Disadvantaged Business Enterprise (DBE) program. The FAA Modernization and Reform Act of 2012 requires OIG to report annually from 2013 to 2015 on new DBE participation at the Nation’s large and medium hub airports, and to identify reasons why some airports have been more successful than others at hiring new DBEs. Accordingly, our objectives will be to determine (1) the number of new and existing DBE firms hired at the Nation’s large- and medium-sized airports in 2012, and (2) what factors led some airports to award more contracts to new DBE firms.

Announcement Letter DBE participation at airports.pdf

DOT Has Opportunities To Address Key Risk Areas For Phase 2 of the Dulles Corridor Metrorail Project Upon Approval of Federal Financing

Eric.Weems — Mon, 25 Mar 2013 04:00:00 +0000

On March 20, 2013, we issued a report on DOT’s oversight of Phase 2 of the Dulles Corridor Metrorail project. Our audit found that DOT has not fully developed an oversight strategy for Phase 2 because the local funding partners—MWAA and Fairfax and Loudoun Counties—have yet to receive approval of Federal credit assistance for the project. Until Federal credit assistance is approved, there are no obligated Federal dollars to oversee. Therefore, we cannot yet determine if DOT’s oversight of Phase 2 will be sufficient. Further, our assessment of Dulles Toll Road revenue estimates suggests that the assumptions MWAA used to arrive at the estimates are generally reasonable. We are not making recommendations at this time because it is premature to do so until the project is approved for Federal credit assistance. However, several lessons learned from our past audits could be instructive as DOT finalizes its oversight strategy.

DULLES PHASE II FINAL.pdf

Office of Inspector General’s Review of FAA's Fiscal Year 2012 Drug Control Funds and Performance Summary Reporting

Eric.Weems — Thu, 21 Mar 2013 19:00:51 +0000

On February 1, 2013, we issued the final report on our review of the Federal Aviation Administration’s fiscal year 2012 Drug Control Obligation Summary and Performance Summary reports. No information came to our attention that would reverse management’s assertions that the reports complied, in all material respects, with the requirements of the Office of National Drug Control Policy Circular, Annual Accounting and Authentication of Drug Control Funds and Related Performance, dated May 1, 2007.

FAA Accounting for Drug Control Funds FY 2012^2-1-13.pdf

Former Dallas County Deputy Sentenced to 3 Years of Community Supervision and $2500 Fine

Eric.Weems — Thu, 21 Mar 2013 15:48:36 +0000

On March 8, 2013, Johnny Quarles, former Dallas County Deputy Sheriff, was sentenced in Dallas County Criminal Court, Dallas, Texas, in conjunction with his plea to tampering with governmental records. Quarles was sentenced to three years of community supervision and was ordered to pay a $2,500 fine, $240 in court costs, and $2,232 in community supervision fees. Quarles was also ordered to surrender his Texas police officer's license.

Quarles is one of three deputies who was indicted in Dallas County for submitting overtime reimbursement requests containing false information as to the times worked and number of traffic citations issued in 2009, 2010 and 2011 while working overtime under the Selective Traffic Enforcement Program (STEP), which is funded through a NHTSA grant. During this investigation, Dallas County has repaid $214,030 in ineligible costs to NHTSA.

We are conducting this investigation jointly with the Dallas County Sheriff's Office, with assistance from NHTSA and the Texas Department of Transportation.

DOT’s FY 2012 Improper Payment Reporting Generally Complies With IPERA

Eric.Weems — Mon, 18 Mar 2013 14:55:28 +0000

On March 14, 2013, we issued our report on DOT's improper payment reporting under the Improper Payments Elimination and Recovery Act (IPERA). Our objectives were to determine whether: (1) the improper payment information reported in DOT’s fiscal year 2012 Annual Financial Report was accurate; and (2) DOT complied with IPERA’s requirements. We found that DOT both accurately reported improper payment information in its fiscal year 2012 Annual Financial Report (AFR) and complied with IPERA, with some exceptions. We made two recommendations to assist the Department in its IPERA reporting. DOT agreed to provide a written response after receiving our final report.

DOT FY 12 Improper Payment Reporting Under IPERA^3-14-13.pdf

Wife of Former VRE Employee Sentenced to 6 Months Home Confinement for Concealing More than $200,000 in Bribes

Eric.Weems — Fri, 15 Mar 2013 04:00:00 +0000

On March 15, 2013, Angela Jannell, of Fredericksburg, Virginia, was sentenced in U.S. District Court, Alexandria, Virginia, to 6 months of home confinement, one year of supervised release and 40 hours of community service for concealing that her husband took more than $200,000 in bribes to ensure a Virginia Railway Express (VRE) subcontractor would be retained by VRE. VRE is a grantee of the U.S. Department of Transportation that receives millions of dollars each year to help improve passenger and freight rail service.

Our investigation revealed that from 2003 and continuing through March 2012, Jannell's husband accepted as much as $4,000 per month in return for giving favorable evaluations that would ensure an individual and this person's company would be retained as a subcontractor for VRE. Jannell was aware of this arrangement. Her husband concealed the bribes by sending monthly invoices to the subcontractor from a fraudulent company and falsely billing the company for services that were never rendered. Jannell signed the paperwork to create the fraudulent company for which she was the President. Jannell's husband was responsible for oversight of VRE landscaping contracts and maintenance of VRE stations and facilities.

The total amount of bribes paid was between $200,000 and $400,000. Jannell used the money to pay for household bills and expenses.

We are conducting this investigation jointly with the Federal Bureau of Investigation.

Top Management Challenges Facing the Department of Transportation

Eric.Weems — Thu, 14 Mar 2013 19:28:09 +0000

On March 14, 2013, the Inspector General testified before the House Committee on Appropriations, Subcommittee on Transportation, Housing and Urban Development, and Related Agencies, on the top management challenges facing the Department of Transportation. The Inspector General focused on three cross-cutting areas: (1) enhancing aviation and surface safety, (2) ensuring effective stewardship of the Department’s resources, and (3) effectively implementing transportation infrastructure programs.

TMC_Long Statement_3-14-13.pdf

Eight Charged in a Moving Company Scheme in Santa Clara County, California

Eric.Weems — Thu, 14 Mar 2013 18:35:36 +0000

On March 5, 2013, a grand jury in Santa Clara County, California, charged eight individuals who owned and/or were employed by ASAP Relocations, Incorporated (ASAP), San Jose, California, for their respective roles in a scheme to defraud customers who had hired ASAP to move their household goods. The individuals charged were: Roni Hayon, ASAP owner and Chief Executive Officer; Adii Therese Karter, Hayon's wife; Wayne Allen, ASAP Sales Manager; Adalinda Reyna-Mendoza, ASAP Customer Service and Dispatch Manager; Elazar Nisanov, ASAP Foreman; Moaz Kadesh, ASAP Foreman and Office Manager; Ido Or, ASAP Foreman and Office Manager; and Noam Israeli, ASAP Foreman and Office Manager. The charges include conspiracy to commit grand theft, extortion, money laundering, tax fraud, and filing false employment tax returns.

OIG has participated in several operations in conjunction with investigations of household goods moving companies with numerous complaints against them for holding customers' goods hostage until illegally inflated charges were paid. In January 2010, an OIG agent arranged for a move with ASAP from Nevada to California and received a telephone quote of $1,461. After the goods were loaded, the agent was informed that the move would cost $3,138, more than twice the original quote. Of the $1,677 in overages, $900 was for packing materials.

We are investigating this case jointly with the Santa Clara District Attorney's Office, Monterey County District Attorney's Office, the Alameda County District Attorney's Office, and the Federal Bureau of Investigation.

Note: An indictment, information, and criminal complaint are only accusations by the Government. All defendants are presumed innocent unless and until proven guilty.

Co-owner of a New Jersey Based Trucking Company Pleads Guilty to Embezzlement Scheme

Eric.Weems — Thu, 14 Mar 2013 18:18:39 +0000

On March 8, 2013, Gerardo (Jerry) Fusella pled guilty in U.S. District Court, Brooklyn, New York, to conspiracy to embezzle monies that were due to workers' benefits/pension plans.

On December 21, 2011, brothers Vincent and Gerardo Fusella, co-owners and operators of Fusella Group LLC. (FUSELLA), a New Jersey-based trucking company, were indicted by a federal Grand Jury in New York, New York. The Fusellas were charged with conspiracy, mail/wire fraud, filing false tax returns, embezzlement of union benefit funds, and false statements on projects receiving Federal Transit Administration (FTA) grant funds.

It was alleged that between approximately 2007 and 2009, the Fusellas engaged in a series of fraud schemes in connection with its subcontract work on the Port Authority New York New Jersey (PANYNJ) World Trade Center Transportation Hub project (WTC Hub Project). The Fusellas operated a company, Alpine Investment Group, and were alleged to have underreported the number of hours their employees trucked; hide driver's hours from the union; and failed to collect and pay to the IRS certain payroll taxes. The Fusellas were also alleged to have submitted false certified payrolls to the PANYNJ stating that they were paying the prevailing wage and fringe benefits to employees as required by the Davis Bacon Act.

The plea agreement requires Fusella to forfeit $970,755 to the government.

The FTA has committed in excess of $2.2 billion on the WTC Hub project.

We are investigating this case jointly with the U.S. Department of Labor, OIG.

Audit Initiated of DOT's Oversight of Long, On-Board Flight Delays

Eric.Weems — Thu, 14 Mar 2013 13:59:33 +0000

The Office of Inspector General plans to initiate an audit on long, onboard airline flight delays. The Federal Aviation Administration (FAA) Modernization and Reform Act of 2012 requires our office to assess the impact of flight delays and cancellations on air travelers. Accordingly, we plan to review the Department of Transportation’s oversight of airlines' and airports' compliance with contingency plans and other requirements relating to long, on-board flight delays.

Long On-Board Flight Delays Announcement.pdf

Audit Initiated of DOT’s Price Reasonableness Reviews of Fixed-Price Contracts

Eric.Weems — Wed, 13 Mar 2013 21:33:16 +0000

The Office of Inspector General is initiating an audit on the Department of Transportation’s (DOT) methods and practices to determine price reasonableness prior to awarding fixed-price contracts. Since 2011, DOT has obligated $2.1 billion annually in fixed-price contracts for goods and services to build and support a transportation system that meets national interests. According to the Federal Acquisition Regulations (FAR), agencies are to perform a fair and reasonable price determination—or price reasonableness review—prior to awarding a fixed-price contract. Our objective is to determine the extent to which and how DOT and its Operating Administrations obtain, perform, and use pre-award price reasonableness reviews to establish fair and reasonable prices on fixed-price contracts.

DOT Price Reasonableness_Announcement_3-13-13.pdf

Follow-Up Audit Initiated on DOT’s Suspension and Debarment Program

Eric.Weems — Wed, 13 Mar 2013 04:00:00 +0000

The Office of Inspector General is conducting a follow-up audit of the Department of Transportation’s (DOT) Suspension and Debarment (S&D) Program. Suspension and debarment actions are among the Government’s strongest tools to deter unethical and unlawful use of Federal funds. In January 2010, we reported that DOT’s S&D program lacked sufficient internal controls to exclude prohibited parties from obtaining contracts and grants. DOT took corrective actions to improve its S&D policies and procedures. However, recent work continues to shows delays in S&D decision making and raises concerns that DOT may not be sustaining its earlier improvements in S&D decision making and reporting. Given the importance of S&D, our audit objective is to determine if DOT suspends or debars prohibited parties and reports S&D activities in governmentwide tracking systems timely and accurately.

Suspension and Debarment Announcement Letter_3-13-13.pdf

ARRA Financial & Activity Report - February 2013

Eric.Weems — Mon, 11 Mar 2013 13:36:21 +0000

On March 7, 2013, we issued our monthly American Recovery and Reinvestment Act (ARRA) Financial and Activity Report for the month of February 2013. The report summarizes our cumulative ARRA and non-ARRA funds spent related to our ARRA oversight activities. The report also describes ARRA major actions, both taken to date and planned by our office and provides a list of our ARRA-related training events and outreach efforts.

ARRA Financial & Activity Report - February 2013.pdf

Audit Initiated of DOT's Oversight of Hurricane Sandy Relief Funds

Eric.Weems — Thu, 07 Mar 2013 05:00:00 +0000

In October 2012, Hurricane Sandy caused widespread damage in the mid-Atlantic and the northeastern United States, particularly to the area’s transportation infrastructure. The Disaster Relief Appropriations Act of 2013 (DRAA) designated more than $13 billion for infrastructure investments across several modes of transportation and funds for our office to oversee DOT’s administration of the relief funds. To comply with the DRAA, we are initiating a series of audits using a three-phase strategy: Phase 1 will be a proactive scan of risks and challenges associated with the Federal Transit Administration’s (FTA) Emergency Relief Program for Sandy relief; Phase 2 will be an evaluation of how the Department has executed Sandy relief awards and addressed the risks identified in Phase 1; and Phase 3 will be a series of Sandy relief post-award and oversight audits based upon significant risks that emerged during Phases 1 and 2. The objective for Phase 1 is to provide an early assessment of FTA’s readiness, processes, and procedures to meet DRAA’s legislative and regulatory requirements, including FTA’s planning efforts to implement its new Emergency Relief Program. We will develop specific audit objectives for the second and third review phases as our work progresses.

Announcement Letter for Audit of DOT's Oversight of Hurricane Sandy Relief Funds^March 7, 2013.pdf