Considerations in Implementing a Performance-Based Federal-aid Program

1. Considerations in Implementing a Performance-Based Federal-aid Program Jeffrey F. Paniati Secretary, Standing Committee On Performance Management February 23, 2009

2. FHWA Perspective • Time is right for performance-based program • SAFETEA-LU Commissions, GAO, Congressional Committees, AASHTO, USDOT all agree • Must not only refocus Federal program, but also establish accountability for performance • Clear expectation that performance approach will be implemented aggressively

3. Considerations • Key performance areas • Most appropriate performance measures • National goals • State performance targets • Accountability for performance

4. Goals of Performance-Based Program • Improve performance in key areas of national interest • Shift emphasis of Federal oversight from process to performance • Improve decision making • Improve accountability

5. Performance Areas • What are the most appropriate areas to be managed for performance? • Want a relatively few performance areas that broadly reflect national interests • Safety • Pavement and bridge condition • Congestion • Freight • Environment (?) • Other (?)

6. Performance Measures • Directly related to highway investment • Outcome oriented • Reflect most important aspects of performance • Not unduly burdensome to collect • Understood by public • Change within acceptable timeframe

7. National Performance Goals • Who sets national goals: Congress? USDOT? States? Collaborative process? • My Perspective: National goals should be set by USDOT in consultation with States and other stakeholders • USDOT then shares accountability for meeting those goals

8. Performance Goals, Targets • Performance targets should be aligned with available resources • Targets should recognize differences among States • Targets should have short enough timeframe to allow effective oversight

9. Accountability • Should influence decision making • Should be based on reasonable targets and expectations • Should be consequences for failure to meet targets • Options include funding flexibility and level of oversight • Loss of Federal funds generally not an effective option

10. Phased Implementation • Aggressive but realistic timeframe • Improve States’ capabilities to link investment to performance in key areas • Improve data required to measure performance • Perhaps institute pilot programs for more advanced States • Phase in measures to promote improved performance

11. Federal-State Relationships • Could represent significant change in Federal-State relationships • FHWA traditionally has managed for process, not performance • Not necessarily more oversight, just a different kind of oversight • “Performance Partnership” with both FHWA and the States being accountable

12. On-Going FHWA Efforts • Currently developing authorization proposal with underlying themes of performance and accountability • Two major research projects • One to provide support for developing legislative proposal • Another to provide technical basis for regulations to implement performance-based program • Must get this right for it to be effective