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Project on Government Oversight

POGO Stumbles on Possible Revenue Sharing Violations in Traffic Data Contract

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February 27, 2009 | By: Scott H. Amey, J.D.

The Honorable Calvin L. Scovel
Inspector General
U.S. Department of Transportation
1200 New Jersey Ave., S.E., 7th Floor
Washington, DC 20590

Dear Inspector General Scovel:

As you might recall, on October 15, 2007, the Project On Government Oversight (POGO) wrote to Transportation Secretary Peters to encourage the USDOT Inspector General to investigate the administration of the federal Transportation Technology Innovation and Demonstration (TTID) program. Later, on July 24, 2008, we urged your office to conduct a comprehensive audit of this program back to its original authorization in the Transportation Equity Act for the 21st Century (TEA-21), rather than a more limited audit into whether or not some narrow aspect of the statutory language may have been satisfied.

POGO has recently discovered new information about this troubled program—specifically the contract for the initial Intelligent Transportation Infrastructure Program (ITIP) deployment in Pittsburgh and Philadelphia—that clearly shows most of the follow-on contracts for additional cities violated the law (the FY2002 Defense Appropriations Act) that appropriated $50 million to expand the ITIP program nationwide.

That law required that the same "revenue-sharing model" used for "the deployment in that initial deployment area under the program" be used for the "follow-on deployment areas under the contract." The revenue-sharing provisions in that initial contract called for payments back to the state/local agency partner (Pennsylvania Department of Transportation) to spend as it wished on the project. Eligible expenditures would clearly include enhancing the agency partner's own software or deploying new agency-owned traffic sensors. The agency would have full rights to use and/or share data from any new sensors deployed with these funds, contrasted with their highly restricted rights to use/share data from the TTID program's sensors.

Therefore, the follow-on contracts should likewise have called for payments to the state or local agency partner in each of the TTID cities. Yet initial indications show that at least 17 of the 23 follow-on contracts did not call for any such payment back to the state or local agency partner, instead letting the contractor (Traffic.com) retain those funds.

This failure appears to be a clear violation of the federal law. It's very possible that over the life of the ITIP/TTID program well over $10 million of revenue will never be shared with the state/local agency partners. This violation is particularly egregious in a climate of severely stressed state and local agency budgets.

POGO urges the USDOT OIG's audit team to determine if most of these follow-on contracts in fact violated law and, if so, to:

1.  Ascertain the amount of funds that should have been provided back to the state and local partners since the start of the program, and recommend that these payments be made retroactively.

2. Prescribe a resolution of this violation going forward, since the TTID contract for each city typically last 10 years or more.

Auditing the performance of the revenue-sharing provisions of the TTID program fits squarely within the objectives of your audit laid out by Assistant Inspector General Rebecca Anne Batts in her January 29, 2008, audit announcement, specifically "whether the TTID has met the statutory goals of building a traffic measurement infrastructure, providing commercial revenue generation initiatives, and aggregating and reporting surveillance data."

The revenue-sharing component of this program is, obviously, a key element of the statutory goal of "providing commercial revenue generation initiatives."

Thank you for your time and consideration. Please contact me at (202) 347-1122 or scott@pogo.org if you have any questions.

Sincerely,

Scott Amey
General Counsel

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