Federal Highway Administration Highway Planning and Construction

High-priority program

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Program level Payment Integrity results

Sponsoring agency: Department of Transportation

The Federal Highway Administration’s (FHWA) Highway Planning and Construction (HPC) program supports State and Local Public Agencies in the design, construction, and maintenance of the Nation’s highway system as well as various federal and tribal owned lands. The program includes relief and infrastructure supplemental funding for the repair or reconstruction of highways and roads which have suffered serious damage because of natural disasters or catastrophic failures from external causes. FHWA HPC is not administered at the Federal level and overpayments are outside of FHWA control when grant recipients make administrative errors. The program is susceptible to improper payments and reported a phase 2 estimate for FY 2025.

View on Federal Program Inventory

PROGRAM METRICS

$49,472 M

in FY 2021 outlays, with a

98.6%

payment accuracy rate

PROGRAM METRICS

$48,440 M

in FY 2022 outlays, with a

98.9%

payment accuracy rate

PROGRAM METRICS

$51,107 M

in FY 2023 outlays, with a

100.0%

payment accuracy rate

PROGRAM METRICS

$54,460 M

in FY 2024 outlays, with a

98.0%

payment accuracy rate

PROGRAM METRICS

$61,789 M

in FY 2025 outlays, with a

96.1%

payment accuracy rate

  • Improper payment estimates over time
    View as:

    Chart toggle amounts:
    Proper payments
    Overpayment
    Underpayment
    Technically improper
    Unknown

Payment Integrity results

  • FY 2021 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    10/2019 - 09/2020


    Confidence interval:

    >95%


    Margin of error:

    +/-708.045

Overpayments

Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $0.0 M

Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $428.73 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $428.73 M

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $1.06 M
The amount of underpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of underpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of underpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $1.06 M

Technically improper payments

The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $266.89 M

Additional information

$267.94 M

Unknown Payment Details

Evaluation of corrective actions

FHWA’s HCF monitors FIRE Program findings and recommendations to address identified procedure and internal control weaknesses to ensure they are addressed by its accessible units (AU). The AUs develop responses for procedural and internal control weaknesses based on the various reviews completed for FIRE and other program evaluations. HCF monitors the AUs implementation periodically and assesses the AUs yearly performance documentation. The HCF monitors the AUs progress to ensure timely and effective response actions were completed.

Future payment integrity outlook

Federal Highway Administration Highway Planning and Construction has established a baseline.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $49,937 M
Current year +1 estimated future improper payments $499.37 M
Current year +1 estimated future unknown payments $0 M
Current year +1 estimated future improper payment and unknown payment rate 1.0 %

The program's current year improper payment and unknown payment rate of 1.41 % has not been achieved with a balance of payment integrity risk and controls and does not represent the lowest rate that can be achieved without disproportionally increasing another risk, therefore it is not the tolerable rate.

FHWA has the internal controls, human capital, and information systems necessary to identify and maintain improper payments to a tolerable rate.

Additional programmatic information

  • FY 2022 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    10/2020 - 09/2021


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-2.11

Overpayments

Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $0 M

Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $32.75 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $32.75 M

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $0 M
The amount of underpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.11 M
The amount of underpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of underpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $0.0 M

Technically improper payments

The improper payments are due to administrative errors by States. For FY 2022, FHWA identified improper payments when States requested the proper amounts of reimbursement against incorrect projects. The correction of the improper payments results in a net zero recovery once accounting adjustments are made to charge the correct project.
The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $516.1 M

Additional information

$516.2 M

Unknown Payment Details

Evaluation of corrective actions

FHWA's HCF monitors FIRE Program findings and recommendations to address identified procedures and internal control weaknesses to ensure they are addressed by its accessible units (AU). The AUs develop responses for procedural and internal control weaknesses based on the various reviews completed for FIRE and other program evaluations. HCF monitors the AUs implementation periodically and assesses the AUs yearly performance documentation. The HCF monitors the AUs progress to ensure timely and effective response actions were completed.

Future payment integrity outlook

Federal Highway Administration Highway Planning and Construction has established a baseline.

The reduction target aligns with the Organizational Excellence strategic objective within the Department's Strategic Plan to ensure responsible and transparent stewardship public resources. The plan includes a key performance indicator to achieve a 99% payment accuracy rate to demonstrate robust internal controls at both the Federal and grant recipient levels.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $50,235 M
Current year +1 estimated future improper payments $502.35 M
Current year +1 estimated future unknown payments $0 M
Current year +1 estimated future improper payment and unknown payment rate 1.0 %
Current year +1 estimated future improper payment and unknown payment reduction target 1.0 %

The program's current year improper payment and unknown payment rate of 1.13 % may or may not be the tolerable rate. The agency has not yet determined the tolerable rate for this program.

FHWA intends to evaluate and consider establishing a tolerable rate using OMB guidance throughout FYs 2023 and 2024. It is anticipated that a reasonable tolerable rate will be between 1 and 1.5%. This considers the fact that proper payment cost controls are significantly out of the Federal agency’s control due to statutory implementation requirements that provides that the State grant recipients assume substantial responsibility for administering the program.

The agency works with each grant recipient to address localized root causes of the improper payments as identified in testing. This effort addresses the weaknesses in controls that are outside the agencies direct authority and will improve improper payment results over the long term.

At the Federal level, the program has what is needed with respect to internal controls, human capital, and information systems to reduce improper payments and unknown payments to the tolerable rate.

The Bipartisan Infrastructure Law provides additional resources for administrative expenses as takedowns from the Highway Infrastructure Programs (HIP). The HIP administrative expenses funding will be used for information technology investments, contractual services, and other investments and services to support the implementation and administration. FHWA also requested specific funding for enhancements of Fiscal Management Information System (FMIS). Through FMIS, States are reimbursed for Federal-aid program costs, able to authorize and modify projects, as well as track and report on critical financial and program information.

Additional programmatic information

FHWA’s Highway Planning and Construction (HPC) program supports State and local governments in the design, construction, and maintenance of the Nation’s highway system. Additionally, the program includes relief and infrastructure supplemental funding for the repair or reconstruction of highways and roads which have suffered serious damage because of natural disasters or catastrophic failures from external causes. The program is susceptible to significant improper payments and plans to report a phase 2 estimate for FY 2023.

  • FY 2023 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    10/2021 - 09/2022


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-0.06

  • Actions taken & planned to mitigate improper payments

    Mitigation strategy Description of the corrective action Completion date Status
    Training
    FHWA compared identified improper payments with prior year findings and addressed specific issues with relevant Federal-aid Division Offices and grant recipients. If applicable, FHWA recovered overpayments from the grant recipient.
    FY2023 Q2
    Completed
    Training
    FHWA will work with grant recipients to improve project documentation and/or payment processes, or address training deficiencies as applicable for each improper payment. If applicable, FHWA will recover overpayments from the grant recipient.
    FY2024
    Planned

Overpayments

Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $0 M

FHWA’s Highway Planning and Construction program is not administered at the Federal level and overpayments are outside of FHWA control when grant recipients make administrative errors. The program supports States and Local Public Agencies (LPA) in the design, construction, and maintenance of the Nation’s highway system and various federally and tribal owned lands. FHWA funds provides the financial resources and mechanism to perform these activities. Tax dollars are allocated and distributed by FHWA directly to the State DOTs, as a direct-recipient, or LPAs, as sub-recipients, for eligible activities. In turn, the State DOTs provide oversight of LPA projects and ensure that local agencies that receive and deliver federally funded projects comply with Federal and State requirements. In recognition of FHWA’s assignment of responsibilities to the State DOTs, Congress requires that a formal written agreement be established between FWHA and each State DOT regarding the use of federal funds. The State DOT, acting on behalf of FHWA, is expected to exercise judgments similar to FHWA based on Federal laws, regulations, and policies. These responsibilities provide assurance that approval actions will be performed in accordance with State policies, practices and standards and all requirements of federal law. Two important characteristics of FHWA Highway Planning and Construction financial assistance are that it is both a reimbursable and a matching program. Reimbursable means that FHWA pays grantees and subrecipients the actual eligible expenses incurred. Money is not provided in advance, so a State DOT or LPA must initially finance the project and request reimbursement. A matching program means that the Federal funds are matched with State or local resources to cover the total project cost. Thus, State DOTs and LPAs are responsible for the accuracy of their reimbursement requests in accordance applicable Federal and State requirements. In summary, much of the authority for administering the FHWA financial assistance falls to the State DOTs, which are responsible for providing oversight and to ensure compliance with Federal and State requirements including the accuracy of payment requests.
Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $20.47 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $20.47 M

Overpayment type Eligibility element/information needed Eligibility amount
Overpayments Outside Agency Control Receiving Benefits from Other Sources $20.47 M

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $3.11 M
The amount of underpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of underpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of underpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $3.11 M

Eligibility element/information needed Eligibility amount
Receiving Benefits from Other Sources $3.11 M

Mitigation strategies taken Mitigation strategies planned
Training Training

Technically improper payments

The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $0.0 M

Additional information

$3.11 M

Unknown Payment Details

Evaluation of corrective actions

FHWA's Office of the Chief Financial Officer (HCF) monitors Financial Integrity Review and Evaluation (FIRE) Program findings and recommendations to address identified procedures and internal control weaknesses to ensure they are addressed by its accessible units (AU). The AUs develop responses for procedural and internal control weaknesses based on the various reviews completed for FIRE and other program evaluations. HCF monitors the AUs implementation periodically and assesses the AUs yearly performance documentation. The HCF monitors the AUs progress to ensure timely and effective response actions were completed.

Future payment integrity outlook

Federal Highway Administration Highway Planning and Construction has established a baseline.

The reduction target aligns with the Organizational Excellence strategic objective within the Department's Strategic Plan to ensure responsible and transparent stewardship public resources. The plan includes a performance goal to achieve a 99% payment accuracy rate to demonstrate robust internal controls at both the Federal and grant recipient levels.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $55,050.35 M
Current year +1 estimated future improper payments $550.5 M
Current year +1 estimated future unknown payments $0 M
Current year +1 estimated future improper payment and unknown payment rate 1.0 %
Current year +1 estimated future improper payment and unknown payment reduction target 1.0 %

The program's current year improper payment and unknown payment rate of 0.05 % may or may not be the tolerable rate. The agency has not yet determined the tolerable rate for this program.

FHWA intends to evaluate and consider establishing a tolerable rate using OMB guidance throughout FY 2024. It is anticipated that a reasonable tolerable rate will be between 1 and 1.5%. This considers the fact that proper payment cost controls are significantly out of the Federal agency’s control due to statutory implementation requirements that provides that the State grant recipients assume substantial responsibility for administering the program.

The agency works with each grant recipient to address localized root causes of the improper payments as identified in testing. This effort addresses the weaknesses in controls that are outside the agencies direct authority and will improve improper payment results over the long term.

At the Federal level, the program has what is needed with respect to internal controls, human capital, and information systems to reduce improper payments and unknown payments to the tolerable rate.

The Bipartisan Infrastructure Law provides additional resources for administrative expenses as takedowns from the Highway Infrastructure Programs (HIP). The HIP administrative expenses funding will be used for information technology investments, contractual services, and other investments and services to support the implementation and administration. FHWA also requested specific funding for enhancements of Fiscal Management Information System (FMIS). Through FMIS, States are reimbursed for Federal-aid program costs, able to authorize and modify projects, as well as track and report on critical financial and program information.

Additional programmatic information

FHWA’s Highway Planning and Construction (HPC) program supports State and local governments in the design, construction, and maintenance of the Nation’s highway system. Additionally, the program includes relief and infrastructure supplemental funding for the repair or reconstruction of highways and roads which have suffered serious damage because of natural disasters or catastrophic failures from external causes. The program is susceptible to significant improper payments and plans to report a phase 2 estimate for FY 2023.

  • FY 2024 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    10/2022 - 09/2023


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-2.19

  • Actions taken & planned to mitigate improper payments

    Mitigation strategy Description of the corrective action Completion date Status
    Training
    FHWA compared identified improper payments with prior year findings and addressed specific issues with relevant Federal-aid Division Offices and grant recipients. If applicable, FHWA recovered overpayments from the grant recipient.
    FY2024 Q2
    Completed
    Training
    FHWA will work with grant recipients to improve project documentation and/or payment processes, or address training deficiencies as applicable for each improper payment. Corrective actions will include: ensuring that all federal regulation requirements are adhered to for physical construction projects; confirming federal share amounts have been calculated correctly in accordance with contractual terms; confirming that contractual components are in place and that invoiced amounts have been calculated correctly in accordance with contractual terms; confirming that the receipt of goods or services has been verified in accordance with the contract; and validating that services were performed and received in accordance with the contract agreement. If applicable, FHWA will recover overpayments from the grant recipient.
    FY2025
    Planned

Overpayments

Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $0.0 M

The Federal Highway Administration's (FHWA) Highway Planning and Construction program is not administered at the Federal level and overpayments are outside of FHWA control when grant recipients make administrative errors. The program supports States and Local Public Agencies (LPA) in the design, construction, and maintenance of the Nation’s highway system and various federally and tribal owned lands. FHWA funds provide the financial resources and mechanism to perform these activities. Tax dollars are allocated and distributed by FHWA directly to the State DOTs, as a direct-recipient, or LPAs, as sub-recipients, for eligible activities. In turn, the State DOTs provide oversight of LPA projects and ensure that local agencies that receive and deliver federally funded projects comply with Federal and State requirements. In recognition of FHWA’s assignment of responsibilities to the State DOTs, Congress requires that a formal written agreement be established between FWHA and each State DOT regarding the use of federal funds. The State DOT is expected to exercise judgments similar to FHWA based on Federal laws, regulations, and policies. These responsibilities provide assurance that approval actions will be performed in accordance with State policies, practices and standards and all requirements of federal law. Two important characteristics of FHWA Highway Planning and Construction financial assistance are that it is both a reimbursable and a matching program. Reimbursable means that FHWA pays grantees and subrecipients the actual eligible expenses incurred. Money is not provided in advance, so a State DOT or LPA must initially finance the project and request reimbursement. A matching program means that the Federal funds are matched with State or local resources to cover the total project cost. Thus, State DOTs and LPAs are responsible for the accuracy of their reimbursement requests in accordance with applicable Federal and State requirements. In summary, much of the authority for administering the FHWA financial assistance falls to the State DOTs, which are responsible for providing oversight and to ensure compliance with Federal and State requirements including the accuracy of payment requests.
Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $1,063.94 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $1,063.94 M

Overpayment type Eligibility element/information needed Eligibility amount
Overpayments Outside Agency Control Receiving Benefits from Other Sources $1,063.94 M

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $0.8 M
The amount of underpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of underpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of underpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $0.8 M

Eligibility element/information needed Eligibility amount
Receiving Benefits from Other Sources $0.8 M

Mitigation strategies taken Mitigation strategies planned
Training Training

Technically improper payments

FHWA identified one technically improper payment in FY 2024. The technically improper payment was not made in accordance with all applicable requirements since the payment did not comply with the State DOT’s standard specifications for road and bridge construction. Specifically, a certification was missing two Buy American components even though the right amount was paid to the right recipient.
The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $3.63 M

Mitigation strategies taken Mitigation strategies planned
Training Training

Additional information

$4.43 M

Unknown Payment Details

Evaluation of corrective actions

FHWA's Office of the Chief Financial Officer (HCF) monitors Enterprise Financial Integrity Review and Evaluation (eFIRE) Program findings and recommendations to address identified procedures and internal control weaknesses to ensure they are addressed by its accessible units (AU). The AUs develop responses for procedural and internal control weaknesses based on the various reviews completed for eFIRE and other program evaluations. HCF monitors the AUs implementation periodically and assesses the AUs yearly performance documentation. The HCF monitors the AUs progress to ensure timely and effective response actions were completed.

In developing the corrective actions, FHWA considered the observations and remediation recommendations from FY 2024 testing and drafted agency-wide actions that directly address root causes for IPs. FHWA also evaluated historical improper payments and confirmed that two State recipients had improper payments in the past two years (FY 2023 and FY 2024) with one of the recipients having similar root causes in each year.

FHWA will work with grant recipients to improve project documentation and/or payment processes, or address training deficiencies as applicable for each improper payment. The corrective actions described above will address the five programmatic root cause categories of ineligible cost; incorrect federal share; contractual non-compliance; administrative error; and insufficient documentation.

In implementing and prioritizing the corrective actions, FHWA considered the observations and remediation recommendations from the prior year improper payment review. FHWA placed emphasis on ongoing technical assistance to strengthen controls and staff knowledge at the Division Office and recipient levels to improve project documentation, contractual adherence, adherence of federal regulation requirements, invoice verification and/or payment processes.

Future payment integrity outlook

Federal Highway Administration Highway Planning and Construction has established a baseline.

The reduction target aligns with the Organizational Excellence strategic objective within the Department's Strategic Plan to ensure responsible and transparent stewardship of public resources. The plan includes a performance goal to achieve a 99% payment accuracy rate to demonstrate robust internal controls at both the Federal and grant recipient levels.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $57,418.89 M
Current year +1 estimated future improper payments $574.19 M
Current year +1 estimated future unknown payments $0 M
Current year +1 estimated future improper payment and unknown payment rate 1.0 %
Current year +1 estimated future improper payment and unknown payment reduction target 1.0 %

The program's current year improper payment and unknown payment rate of 1.96 % may or may not be the tolerable rate. The agency has not yet determined the tolerable rate for this program.

FHWA intends to evaluate and consider establishing a tolerable rate using OMB guidance throughout FY 2025. It is anticipated that a reasonable tolerable rate will be between 1 and 1.5%. This considers the fact that proper payment cost controls are significantly out of the Federal agency’s control due to statutory implementation requirements that provides that the State grant recipients assume substantial responsibility for administering the program.

The agency works with each grant recipient to address localized root causes of the improper payments as identified in testing. This effort addresses the weaknesses in controls that are outside the agencies direct authority and will improve improper payment results over the long term.

At the Federal level, the program has what is needed with respect to internal controls, human capital, and information systems to reduce improper payments and unknown payments to the tolerable rate.

The Bipartisan Infrastructure Law provides additional resources for administrative expenses as takedowns from the Highway Infrastructure Programs (HIP). FHWA’s administrative funding supports salaries and benefits for approximately 2,800 employees, as well as rent, communications, utilities, contractual services, travel, supplies, and equipment to support the delivery of FHWA’s programs. The FY 2025 Administrative Expenses request will be used to effectively deliver and manage the $71.5 billion requested in the FY 2025 Budget for FHWA’s programs.

Additional programmatic information

FHWA’s Highway Planning and Construction program supports State and local governments in the design, construction, and maintenance of the Nation’s highway system. Additionally, the program includes relief and infrastructure supplemental funding for the repair or reconstruction of highways and roads which have suffered serious damage because of natural disasters or catastrophic failures from external causes. The program is susceptible to significant improper payments and plans to report a phase 2 estimate for FY 2025.

Accountability for detecting, preventing, and recovering improper payments

DOT focuses its accountability mechanisms on the closure of corrective actions associated with improper payment remediation plans. DOT's Deputy Chief Financial Officer (DCFO) is the senior accountable official responsible for completion of the improper payments-related remediation plans. The DCFO's performance plan contains accountability mechanisms, which include closure of corrective actions associated with improper payment remediation plans.

At the agency-level, FHWA's Office of the Chief Financial Officer (HCF) administers the implementation of the Administration's PIIA requirements. FHWA develops improper payment reduction targets, implements corrective actions and coordinates the recapture of improper payments identified during PIIA reviews. In addition to the PIIA-related sampling, FHWA conducts additional transaction testing of States and territories for improper payments under its Enterprise Financial Integrity Review and Evaluation (eFIRE) program. FHWA, through the eFIRE program and other risk-based oversight, incorporates additional reviews, including focus areas such as inactive projects, grant administration, and procurement under the administration of State DOTs using Federal funds. In order to effectively hold States and local governments accountable, the Division Office will refuse approval for project authorizations that do not meet federal requirements and will recover funding that was reimbursed but later determined to be improper.

  • FY 2025 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    10/2023 - 09/2024


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-2.46

Causes

FHWA identified two cause categories for the 16 improper payments identified in FY25, Failure to Access Data/Information and Statutory Requirements of Program Were Not Met.

All but one improper payment fell under the category Failure to Access Data/Information. In this category five (5) programmatic root causes were identified; 1) Contractual Non-Compliance; 2) Incorrect Federal Share; 3) Administrative Error; 4) Inconsistent Documentation; and 5) Ineligible Cost.

Only one improper payment fell under the cause category Statutory Requirements of Program Were not Met. The vendor was paid the contracted amount for qualified services/materials provided; however, at the time of payment the vendor failed to meet the statutory requirement of the Buy America Act by providing inadequate documentation.

Specific scenarios that caused the improper payments included non-compliance with period of performance regulations; payment for services that were not performed; not eligible to perform work programs; incorrectly charged quantities; federal share calculation errors; data entry - clerical errors; a quantity pay item materials error; equipment usage rate error.

Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $0.0 M
Amount of overpayments outside the agency's control $2,022.66 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
Amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
Amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $2,022.66 M

Underpayment root cause Underpayment amount
Amount of underpayments $88.24 M
The amount of underpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of underpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of underpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $88.24 M

The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $277.08 M

The amount that could either be proper or improper but the agency is unable to determine whether it was proper or improper as a result of insufficient or lack of documentation $0.0 M

Prevention

FHWA will work with grant recipients to improve project documentation and/or payment processes, or address training deficiencies as applicable for each improper payment. Corrective actions will include: ensuring that all federal regulation requirements are adhered to for physical construction projects; confirming federal share amounts have been calculated correctly in accordance with contractual terms; confirming that contractual components are in place and that invoiced amounts have been calculated correctly in accordance with contractual terms; confirming that the receipt of goods or services has been verified in accordance with the contract; and validating that services were performed and received in accordance with the contract agreement. If applicable, FHWA will recover overpayments from the grant recipient. FHWA plans to conduct quarterly checks, and all efforts are expected to be completed by October of 2026.
FHWA's Office of the Chief Financial Officer (HCF) monitors Enterprise Financial Integrity Review and Evaluation (eFIRE) Program findings and recommendations to address identified procedures and internal control weaknesses to ensure they are addressed by its assessable units (AU). The AUs develop responses for procedural and internal control weaknesses based on the various reviews completed for eFIRE and other program evaluations. HCF monitors the AUs implementation and periodically assesses the AUs yearly performance documentation to ensure timely and effective response actions were completed.

In implementing and prioritizing the corrective actions, FHWA considered the observations and remediation recommendations from the prior year's improper payment review. FHWA placed emphasis on ongoing technical assistance to strengthen controls and staff knowledge at the Division Office and recipient levels, to improve project documentation, contractual adherence, adherence of federal regulation requirements, invoice verification and/or payment processes.

Payment type Mitigation strategies taken Mitigation strategies planned
Overpayments Training Training
Underpayments Training Training
Technically improper payments Training Training

Eligibility element/information needed Description of the eligbility element/information
Receiving Benefits from Other Sources Beneficiary or recipient is receiving benefits from an additional source

Additional information

Beginning in FY 2026, the Federal Highway Administration (FHWA) will implement revisions to its improper payment testing procedures to ensure full compliance with Executive Orders 14249 and 14247. In accordance with the new Federal Program Inventory (FPI) requirements, the Highway Planning and Construction Program (HPCP) has been reclassified into numerous distinct Assistance Listing Numbers (ALNs). As a result of the new requirements, FHWA will transition to a one-to-one program assessment methodology. This approach will align improper payment testing with current federal requirements, strengthen (improper payment testing) program integrity, and enhance the accuracy and accountability of FHWA’s financial oversight processes.

Reduction target

2.86 %

At the Federal level, the program maintains its foundationally strong internal controls and skilled workforce capabilities. Ongoing evaluation and continuous improvement efforts will further strengthen the program’s improper payment testing program, increase fiscal integrity and accountability, and ensure compliance with Federal standards. Targeted investments in data systems/technology would further enhance the agency's ability to ensure sound financial stewardship.

FHWA’s administrative funding supports salaries and benefits for approximately 2,100 employees, as well as rent, communications, utilities, contractual services, travel, supplies, and equipment to support the delivery of FHWA’s programs. The FY 2026 Administrative Expenses request will be used to effectively deliver and manage the $72.6 billion requested in the FY 2026 Budget for FHWA’s programs.

At the agency-level, FHWA's Office of the Chief Financial Officer (HCF) administers the implementation of the Administration's PIIA requirements. FHWA develops improper payment reduction targets, implements corrective actions and coordinates the recapture of improper payments identified during PIIA reviews. In addition to the PIIA-related sampling, FHWA conducts additional transaction testing of States and territories for improper payments under its Enterprise Financial Integrity Review and Evaluation (eFIRE) program. FHWA, through the eFIRE program and other risk-based oversight, incorporates additional reviews, including focus areas such as inactive projects, grant administration, and procurement under the administration of State DOTs using Federal funds. In order to effectively hold States and local governments accountable, the Division Office will refuse approval for project authorizations that do not meet federal requirements and will recover funding that was reimbursed but later determined to be improper.

$365.32 M