US Officials Investigate for Fraud in $1.2t Infrastructure Spending

More than $110 billion in infrastructure funding has already been disbursed.

Source : Unsplash, Emilio Takas

June 16, 2022

Author : Alex Bustillos

With great power comes great responsibility, especially when money is involved.

Last November, President Biden signed the Bipartisan Infrastructure Law (BIL). It allocated $1.2 trillion to rebuild and repair the country's roads, bridges, and railway lines, expand access to clean drinking water, provide high-speed internet access, and tackle climate change and environmental concerns.

In the six months since the inception of the IIJA, more than $110 billion in funding has already been disbursed, and over 4,000 projects are already underway.

Federal agencies implementing this once-a-generation law have appointed senior officials to oversee the spending of the different departments involved. This step is being undertaken to prevent fraudulent activities that often plague such mammoth projects.

As earlier reported by Contractor News, Stephen Street, President of the National Association of Inspector Generals (AIG), a nonprofit membership organization, believes that fraudsters will pilfer at least 10% or approximately $120 billion of the federal infrastructure funds going to states and local governments for projects like roads, bridges, broadband, and others, over the next five years.

"Our experience has always been when you have a large amount of money — and this is pretty gargantuan — there will be an element of fraud built in," said Street, who also is Louisiana's inspector general.

According to advice from the White House budget office, agencies are now primarily responsible for monitoring the money distributed to states, cities, and specific projects at the federal level.

A "senior accountable official" was chosen to supervise implementation as the first stage.

The White House appointed former New Orleans mayor Mitch Landrieu as the law's top coordinator. The Department of Transportation, which is in charge of more than $283 billion of the $550 billion in new funding, named Katie Thomson as their implementation director for the first time in December.

One of the earliest directives by the White House to the various agencies was to start working with the Office of Inspector General (OIG), the government watchdogs in charge of locating and looking into waste, fraud, or mismanagement within a department.

President Joe Biden met with the inspectors general at the White House in late April and stated, "strong oversight is how we're going to deliver for the American people on time and on budget" and make sure investments "get to where they're supposed to go."

According to Jason Miller, deputy director for management of the Office of Management and Budget (OMB), this plan stems from President Biden's personal experience managing the Recovery Act of 2009. The chief watchdog over that money reported "less than 1 percent" in fraud losses, and the legislation also incorporated an oversight body with 11 inspectors general.

Republicans on the House Transportation and Infrastructure Committee, meanwhile, advocate for greater centralization of control.

Rep. Peter Meijer and Rep. Rodney Davis, the leading member of the Highways and Transit Subcommittee, presented legislation to establish a separate inspector general exclusively for the infrastructure law.

A concern for the OMB is how the spending is reported back to the agencies after the funds have been disbursed to the states, where it is further distributed among local agencies and individual projects.

The OMB has directed agencies to gather data for every individual project. But the hindrance in this is the lack of standardized, detailed reporting instructions among agencies.

Experts say that infrastructure fraud and abuse may range from bid-rigging to false invoices to kickbacks or even contractors using poor materials.

In June 2021, for example, an Ohio engineering firm pled guilty in a federal criminal case to conspiring to rig bids and deceive the North Carolina Department of Transportation to gain contracts for infrastructure projects. The corporation agreed to pay a $7 million criminal fine and $1.5 million in reparations to the state agency.

Category : Department of Transportation Federal Government Investment in Infrastructure State Government Public Works

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