Competition for Federal Grants Breeds Transportation Innovation

Last month’s unveiling of the winner of the Smart Cities Challenge got a lot of attention (congrats, Columbus!) That program, run by the U.S. Department of Transportation, awarded $140 million to accelerate the deployment of advanced technology throughout the regional transportation network.

While the gee-whiz nature of the tech grabbed much of the headlines, that federal initiative is also important as another example of how the government uses competitive programs rather than business-as-usual funding flows for transportation investments. The focus here is on the outcomes of a particular project and represents a significant departure from traditional formula-based grants.

These programs are designed and executed in slightly different ways but generally require applicants (often cities, states, and metropolitan entities) to adhere to certain criteria by which the submissions are scored and measured. The best ideas, the theory goes, are awarded the funding. In addition to the Smart Cities Challenge, other examples include transit New Starts and Small Starts, the Fostering Advancements in Shipping and Transportation for the Long-term Achievement of National Efficiencies (FASTLANE) program, and the Transportation Investment Generating Economic Recovery (TIGER), all of which are ongoing, as well as the now-suspended high speed rail program and Urban Partnership Agreement/Congestion Reduction Demonstration program.

At a time when the market for new ideas and approaches in transportation is hot, these initiatives matter because they naturally allow for competition and, in turn, a crowdsourcing of solutions. This new type of delivery channel fosters and utilizes the creativity of states and localities, allowing them to craft and execute personalized solutions to their transportation or infrastructure needs. Decentralizing and allowing problems to be solved outside the beltway gives states and localities more flexibility and fosters “bottom-up” innovation.

TIGER has been especially successful. Since it was birthed in the stimulus bill in 2009, the competitive grant program has awarded $5 billion to over 400 projects across the country, including 40 projects awarded last week. (Ed Note: ETW has the scoop on the latest round here for subscribers.) The idea behind TIGER is for the federal government to assist states and metropolitan areas in one of their most difficult tasks: transcending the stovepiping of disparate transportation, housing, energy, and environmental programs that remains a serious cause of undesirable outcomes.

These new competitive programs selection criteria also require carefully laid out metrics and data collection that allow for a high level of scrutiny. Over time this transparency and accountability should promote projects that are viewed as fair and accountable.

Unfortunately, it does not always work out that way.

Now that Congressional earmarks are famously banned, some deride the proliferation of transportation discretionary grants as “administrative earmarking.” The argument being that Congress has somehow ceded authority for choosing projects to bureaucrats and political appointees at the transportation department. The difference, of course, is that the competitive grants have to adhere to specific application procedures, with rigorous methodologies, and benefit/cost analyses.

But here is where there is ample room for improvement. A 2014 U.S Government Accountability Office report on the TIGER program raised serious questions about the “integrity of the evaluation process and the rationale for the decisions made.” There are also concerns that the high speed rail grants were awarded on political, rather than merit-based criteria. And one has to wonder what criteria were used to award a freight-focused FASTLANE grant for fixing the Arlington Memorial Bridge when trucks are banned from using it.

Despite these challenges, the experimentation with competitive, discretionary grant programs should continue. It is unlikely that these new approaches will apply to existing formula programs, but for new initiatives that come along. However, the federal government should consider some important reforms.

For one, let’s make sure these initiatives are paragons of transparency and accountability. Evaluation criteria and analysis should be publically disclosed. This will not only blunt accusations of arbitrary decision making, but applicants will be able to learn from their peers and apply new styles and approaches in future competitions.

The administration should also take seriously the GAO’s subtly-worded request about TIGER to balance the “goals of merit-based project selection with geographic distribution of funds.” The subtext: stop spreading projects around the country like political peanut butter and focus on the ones where you get the best bang for the buck.

This matters for cities and states that are not only seeking funding, but coming up with their own approaches to problem solving. For example, Washington state and Michigan created grant programs that allow for a wide swath of ideas to be proposed. Maryland recently devised a plan to solicit proposals for ideas to deal with congestion on the I-270 corridor. LA Metro’s Office of Extraordinary Innovation allows private sector organizations to submit new and innovative ideas to the agency unsolicited. There are no constraints on the type or size of the proposals; large scale P3s and small one-time projects are all welcome.

Allowing for competition fosters creativity. The next administration should continue to refine the way discretionary programs are managed in order to make sure that smart data are analyzed, fair metrics are considered, and transparency is embraced. That would help ensure that the best projects get done.

(Ed. Note: The Eno Center Policy team has researched this topic extensively. For more information check out Eno’s report Lessons Learned from the TIGER Discretionary Grant Program)

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