American history is filled with examples of infrastructure projects whose costs and timelines ballooned because of waste and fraud. To cite one of the most infamous cases, the “Big Dig” road infrastructure project in Boston cost millions more and took years longer than projected. The project was plagued by leaks, faulty construction and falling concrete that killed a motorist.
But the Big Dig is not unique. The quality of infrastructure construction can be difficult to monitor. Inferior products and materials can be substituted easily. Bids can be subject to collusion and bid rigging. And money will be wasted on unnecessary projects. Remember the Bridge to Nowhere in California?
To be sure, the nation urgently needs improvements in bridges, roads, railroads, the electrical grid, broadband and other important projects funded by the infrastructure spending bill. The nation’s bridges, in particular, are in woeful condition. The recent infrastructure bill provides over $1.2 trillion to fund desperately needed improvements.
We know that a portion of the infrastructure spending will be wasted or subject to fraud. However, well-funded, coordinated oversight of the infrastructure spending can help reduce the inevitable waste and fraud.
Individual inspectors general in federal agencies are on the front lines providing that oversight. Yet, the infrastructure bill did not create any structure to coordinate their oversight. As Boston University Assistant Professor Jetson Leder-Luis points out, the bill failed to focus on the potential for fraud, and “the word fraud appeared only seven times in the 2000-page bill.”
By contrast, previous large expenditure bills mandated coordinated inspector general oversight of the spending. For example, the 2009 Recovery Act, which allocated $800 billion in response to the 2008 Great Recession, created the Recovery Accountability and Transparency Board, known as the RAT Board (probably the worst government acronym in history). This board coordinated inspector general oversight of the recovery funds and built a public-facing website that graphically showed where the money was being spent. Anyone could click on the website’s map to see if funds were used in any zip code and report suspicious spending.
The board also built a data analytics center that used risk analysis to send leads to individual inspectors general highlighting likely fraud. The board was widely praised as a model of collaborative oversight and a strong deterrent to fraud. Unfortunately, its tools did not live on when the board went out of existence in 2015.
In 2020, the $2 trillion COVID-19 relief bill recreated a similar board, the Pandemic Response Accountability Committee (PRAC), to coordinate inspector general oversight of the spending. The PRAC eventually rebuilt data analytic tools and recreated a public database to track and make transparent the funds spent on pandemic relief, similar to the board’s website. The PRAC also established a hotline for citizens to report potential fraud and mismanagement related to the pandemic response.
Even so, the fight against fraud in the pandemic relief spending has been challenging. Large amounts of relief money went out the door quickly, without adequate internal controls or guardrails against fraud. For example, some Paycheck Protection Program loans were sent to fake businesses with no employees. Identity fraud in pandemic unemployment benefits wasted billions of dollars. Inspectors general will be chasing fraud in COVID-19 relief expenditures for years to come, trying to recover a portion of the misspent funds.
Despite that experience, the 2021 infrastructure bill did not establish a similar oversight group of inspectors general to coordinate the fight against fraud in infrastructure spending. Nor did the bill assign coordination of oversight to the existing PRAC. The White House did appoint a senior adviser, Former New Orleans Mayor Mitch Landrieu, to manage the disbursement of infrastructure funds. But coordinated oversight from independent watchdogs, like with the Recovery Act funding or the pandemic relief funding, is critical to reducing waste and fraud.
Congress and the Biden administration should fix that omission. The existing PRAC could be assigned responsibility for coordinating oversight of the infrastructure spending.
And if additional infrastructure or stimulus spending is enacted in the future, the same challenges to deterring fraud and waste would arise. The PRAC should be made permanent, given dedicated funding and assigned responsibility to coordinate oversight over other large expenditure bills.
In addition, individual inspectors general need more funding for their increased oversight responsibilities. The demands on their limited investigative and audit resources have dramatically expanded, and they have not received a commensurate increase in resources. That is short-sighted. Congress and the administration should provide modest additional amounts for oversight, both for inspectors general individually and for the coordination of their oversight. Those additional resources are a sound investment that would pay off for taxpayers.
Glenn Fine is a fellow at the Brookings Institution. He was formerly the inspector general of the Department of Justice and the acting inspector general of the Department of Defense.