Metro’s fiscal controls have apparently gone off the rails

April 1

FEDERAL FUNDS comprise almost $500 million of Metro’s overall $3 billion budget, including nearly half the money it spends annually on projects to expand and upgrade its rail system, the second-largest municipal system in the country. Since it relies so heavily on the feds, Metro can hardly afford to play fast and loose with federal rules governing how that money is spent and accounted. Yet that’s exactly what Metro appears to have been doing for some time.

A draft audit report commissioned by the Federal Transit Administration and obtained by The Post amounts to a failing grade for Metro’s record of compliance with federal regulations involving procurement, contracting and other administrative procedures. And the punishment, imposed by the FTA last week, is unusually harsh.

Starting immediately, Metro can no longer automatically access federal funding for ongoing projects on an as-needed basis, as it has done for all of its 38 years of existence. Instead, the agency will have to provide documentation and secure FTA approval whenever it needs to draw from those funds.

As far as Metro officials could remember, this is the first time that the authority has been so severely sanctioned. In fact, the FTA rarely metes out such a restriction; among large urban transit systems, only Miami-Dade Transit has been similarly handcuffed in recent years.

The risk to Metro and its passengers is real and urgent. In the absence of free-flowing federal dollars, Metro may have trouble completing projects on time and on budget. It could be facing a severe cash crunch just as it ramps up for what officials hope will be a sustained drive to modernize its aging and degraded network and equipment. This is more than a black eye; it’s a warning that something serious is amiss within the transit agency of the nation’s capital.

The FTA’s report describes an array of internal failures, some of them glaring, including the possibility of sweetheart contract deals as well as major cost overruns amounting to what the report called “poor budget management.” Metro officials, who are in the process of preparing their official response, say they have already taken steps to improve accounting, contracting and other internal procedures. There is clearly more to do.

Metro’s board of directors, justifiably alarmed, called an emergency meeting for early this month. That’s a heartening sign that it is taking the sanction seriously; it could hardly do less. Board members need to look at the problems identified in the federal report as broadly as possible. The goal should not be damage control; it should be to assess whether Metro’s current management is up to the job.

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