[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]


 
 TRANSFORMING THE FEDERAL AVIATION ADMINISTRATION: A REVIEW OF THE AIR 
   TRAFFIC ORGANIZATION AND THE JOINT PLANNING AND DEVELOPMENT OFFICE

=======================================================================

                                (109-11)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                                AVIATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 14, 2005

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure


                                   ____

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21-701                      WASHINGTON : 2006
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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                      DON YOUNG, Alaska, Chairman

THOMAS E. PETRI, Wisconsin, Vice-    JAMES L. OBERSTAR, Minnesota
Chair                                NICK J. RAHALL, II, West Virginia
SHERWOOD L. BOEHLERT, New York       PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee       ELEANOR HOLMES NORTON, District of 
WAYNE T. GILCHREST, Maryland         Columbia
JOHN L. MICA, Florida                JERROLD NADLER, New York
PETER HOEKSTRA, Michigan             ROBERT MENENDEZ, New Jersey
VERNON J. EHLERS, Michigan           CORRINE BROWN, Florida
SPENCER BACHUS, Alabama              BOB FILNER, California
STEVEN C. LaTOURETTE, Ohio           EDDIE BERNICE JOHNSON, Texas
SUE W. KELLY, New York               GENE TAYLOR, Mississippi
RICHARD H. BAKER, Louisiana          JUANITA MILLENDER-McDONALD, 
ROBERT W. NEY, Ohio                  California
FRANK A. LoBIONDO, New Jersey        ELIJAH E. CUMMINGS, Maryland
JERRY MORAN, Kansas                  EARL BLUMENAUER, Oregon
GARY G. MILLER, California           ELLEN O. TAUSCHER, California
ROBIN HAYES, North Carolina          BILL PASCRELL, Jr., New Jersey
ROB SIMMONS, Connecticut             LEONARD L. BOSWELL, Iowa
HENRY E. BROWN, Jr., South Carolina  TIM HOLDEN, Pennsylvania
TIMOTHY V. JOHNSON, Illinois         BRIAN BAIRD, Washington
TODD RUSSELL PLATTS, Pennsylvania    SHELLEY BERKLEY, Nevada
SAM GRAVES, Missouri                 JIM MATHESON, Utah
MARK R. KENNEDY, Minnesota           MICHAEL M. HONDA, California
BILL SHUSTER, Pennsylvania           RICK LARSEN, Washington
JOHN BOOZMAN, Arkansas               MICHAEL E. CAPUANO, Massachusetts
JIM GERLACH, Pennsylvania            ANTHONY D. WEINER, New York
MARIO DIAZ-BALART, Florida           JULIA CARSON, Indiana
JON C. PORTER, Nevada                TIMOTHY H. BISHOP, New York
TOM OSBORNE, Nebraska                MICHAEL H. MICHAUD, Maine
KENNY MARCHANT, Texas                LINCOLN DAVIS, Tennessee
MICHAEL E. SODREL, Indiana           BEN CHANDLER, Kentucky
CHARLES W. DENT, Pennsylvania        BRIAN HIGGINS, New York
TED POE, Texas                       RUSS CARNAHAN, Missouri
DAVID G. REICHERT, Washington        ALLYSON Y. SCHWARTZ, Pennsylvania
CONNIE MACK, Florida                 JOHN T. SALAZAR, Colorado
JOHN R. `RANDY' KUHL, Jr., New York
LUIS G. FORTUNO, Puerto Rico
LYNN A. WESTMORELAND, Georgia
CHARLES W. BOUSTANY, Jr., Louisiana
VACANCY

                                  (ii)



                        SUBCOMMITTEE ON AVIATION

                    JOHN L. MICA, Florida, Chairman

THOMAS E. PETRI, Wisconsin           JERRY F. COSTELLO, Illinois
HOWARD COBLE, North Carolina         LEONARD L. BOSWELL, Iowa
JOHN J. DUNCAN, Jr., Tennessee       PETER A. DeFAZIO, Oregon
VERNON J. EHLERS, Michigan           ELEANOR HOLMES NORTON, District of 
SPENCER BACHUS, Alabama              Columbia
SUE W. KELLY, New York               CORRINE BROWN, Florida
RICHARD H. BAKER, Louisiana          EDDIE BERNICE JOHNSON, Texas
ROBERT W. NEY, Ohio                  JUANITA MILLENDER-McDONALD, 
FRANK A. LoBIONDO, New Jersey        California
JERRY MORAN, Kansas                  ELLEN O. TAUSCHER, California
ROBIN HAYES, North Carolina          BILL PASCRELL, JR., New Jersey
HENRY E. BROWN, Jr., South Carolina  TIM HOLDEN, Pennsylvania
TIMOTHY V. JOHNSON, Illinois         SHELLEY BERKLEY, Nevada
SAM GRAVES, Missouri                 JIM MATHESON, Utah
MARK R. KENNEDY, Minnesota           MICHAEL M. HONDA, California
JOHN BOOZMAN, Arkansas               RICK LARSEN, Washington
JIM GERLACH, Pennsylvania            MICHAEL E. CAPUANO, Massachusetts
MARIO DIAZ-BALART, Florida           ANTHONY D. WEINER, New York
JON C. PORTER, Nevada                BEN CHANDLER, Kentucky
CHARLES W. DENT, Pennsylvania        RUSS CARNAHAN, Missouri
TED POE, Texas                       JOHN T. SALAZAR, Colorado
JOHN R. `RANDY' KUHL, Jr., New York  NICK J. RAHALL II, West Virginia
LYNN A. WESTMORELAND, Georgia        BOB FILNER, California
VACANCY                              JAMES L. OBERSTAR, Minnesota
DON YOUNG, Alaska                      (Ex Officio)
  (Ex Officio)

                                 (iii)

                                CONTENTS

                               TESTIMONY

                                                                   Page
 Brantley, Thomas, President, Professional Airways Systems 
  Specialists....................................................    28
 Carr, John, President, National Air Traffic Controllers 
  Association....................................................     7
 Chew, Russell G., Chief Operating Officer, Air Traffic 
  Organization...................................................     7
 Dillingham, Dr. Gerald L., Director, Physical Infrastructure 
  Issues, Government Accountability Office.......................     7
 Douglass, John, President and CEO, Aerospace Industries 
  Association....................................................    28
 Mead, Hon. Kenneth, Inspector General, U.S. Department of 
  Transportation.................................................     7
 Shane, Hon. Jeffrey N., Under Secretary for Policy, U.S. 
  Department of Transportation...................................     7

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Costello, Hon. Jerry F., of Illinois.............................    71
Oberstar, Hon. James L., of Minnesota............................   144
Porter, Hon. Jon, of Nevada......................................   148

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

 Brantley, Thomas................................................    34
 Carr, John......................................................    43
 Chew, Russell G.................................................    56
 Dillingham, Dr. Gerald L........................................    73
 Douglass, John..................................................   101
 Mead, Hon. Kenneth..............................................   109
 Shane, Hon. Jeffrey N...........................................   149

                       SUBMISSIONS FOR THE RECORD

 Chew, Russell G., Chief Operating Officer, Air Traffic 
  Organization:

   Response to a question from Rep. Costello.....................    18
   Response to a question from Rep. Mica.........................    62
 Douglass, John, President and CEO, Aerospace Industries 
  Association, response to a question from Rep. Costello.........   107
 Mead, Hon. Kenneth, Inspector General, U.S. Department of 
  Transportation, response to a question from Rep. Costello......   142

                        ADDITIONS TO THE RECORD

 Chew, Russell G., Chief Operating Officer, Air Traffic 
  Organization, additional response to a question from Rep. 
  Costello.......................................................   171
National Air Traffic Controllers Association, Ruth E. Marlin, 
  Executive Vice President, statement............................   154
National Association of Air Traffic Specialists. Kate Breen, 
  President, statement...........................................   162


 TRANSFORMING THE FEDERAL AVIATION ADMINISTRATION: A REVIEW OF THE AIR 
   TRAFFIC ORGANIZATION AND THE JOINT PLANNING AND DEVELOPMENT OFFICE

                              ----------                              


                        Thursday, April 14, 2005

        House of Representatives, Subcommittee on Aviation, 
            Committee on Transportation and Infrastructure, 
            Washington, D.C.
    The subcommittee met, pursuant to call, at 10:03 a.m., in 
Room 2167, Rayburn House Office Building, Hon. John L. Mica 
[chairman of the subcommittee] Presiding.
    Mr. Mica. Good morning. I would like to call this hearing 
of the House Subcommittee on Aviation to order. Today's hearing 
is entitled "Transforming the FAA: A Review of the ATO and 
JPDO."
    We will have as an order of business today opening 
statements by members, and then we have two panels of 
witnesses. So we will proceed. I have an opening statement. 
Then I will recognize other members good morning and welcome.
    This morning's hearing will continue the Aviation 
Subcommittee's oversight of the Federal Aviation 
Administration. We will be joined today by a number of 
distinguished panelists, including Honorable Jeff Shane and the 
COO of the Air Traffic Organization, Russ Chew.
    Since I joined the House of Representatives in 1993 the FAA 
has had a reputation as being one of the Federal Government's 
most dysfunctional agencies. Its record in modernizing air 
traffic control has been the poster child of how to not run a 
government program. Unfortunately, year after year, the FAA 
allowed its major modernization programs to falter.
    What began in 1983 as a 13-year, $2.5 billion effort has 
ballooned into a $35 billion enterprise that is still some 10 
years away from completing its original mission. FAA's 
operation of the National Airspace System has essentially 
remained unchanged since the 1960s. Four and a half decades 
ago, no one anticipated the growth of regional jets, the 
emergence of low-cost carriers, the current development of 
microjets, and the massive restructuring of large network 
carriers. The system, in its current configuration, is reaching 
a maximum capacity. I predict that clogged airspace, bad 
weather systems, and systems outages will, in fact, create 
massive delays and backups throughout our system this summer, 
and may, in fact, be routine for the future.
    The Agency's past failure to adopt a sensible business 
approach to both management and operations has kept it out of 
touch with the rest of the progress within our aviation 
industry. While the airlines have been struggling, focusing on 
cost-cutting and efficiency gains--those are some of the goals 
of the private sector--the FAA's operating costs have grown 
dramatically.
    If problems of the FAA are not addressed in the not-too-
distant future, our air traffic control system could become an 
"Amtrak in the sky."
    Air traffic is predicted to triple over the next few 
decades. If the demand for air transportation continues to 
outpace the FAA's ability to increase capacity, consumers could 
lose $30 billion annually by 2025, and that would be due to 
people and products not reaching their destination within the 
time periods that we take for granted today.
    While most air traffic control modernization programs have 
been over budget and behind schedule, I must say that FAA 
should be given credit for achieving the safest air traffic 
control system in the world, not to mention that our U.S. air 
traffic accounts for two-thirds of all of the world's aviation 
traffic.
    FAA has made numerous attempts at reform and Congress has, 
in fact, provided additional resources and unprecedented 
authority to address some of the unique needs of the Agency.
    To the credit of the current FAA leadership under 
administrator Blakey, FAA's recent record has shown some marked 
improvement.
    Today we will hear about our current organizational efforts 
that will hopefully give FAA the business-minded focus that it 
needs for the future.
    Over the past few years, Congress created the position of 
chief operating officer. After we created it, we had to 
redefine its role and also position compensation. We were 
pleased to have Russell Chew chosen to be the Agency's first 
COO after that long process.
    The Air Traffic Organization, under Mr. Chew, has been 
committed to serious reform, including the establishment of 
specific performance goals, deadlines, and deployment 
schedules. While others may have had good intentions, there is 
no question that Mr. Chew is serious about this. He has already 
eliminated 1,000 FAA executive positions.
    I joked with staff; I said, "And we haven't even missed 
those folks."
    Today we will hear additional details of his plans.
    One of the major challenges confronted by the ATO is how to 
replace its aging air traffic control facilities and obsolete 
legacy systems.
    According to the FAA's own analysis, two-thirds of its $30 
billion worth of assets are behind their useful life. Air 
traffic control towers average 30 years in age. TRACON 
facilities average 34 years. Primary en route radar systems 
average 27 years, and our en route control centers average 40 
years and are rated by the General Services Administration as 
being in poor condition. The FAA will require more than $30 
million over the next 10 years just to maintain the current 
condition of our system.
    FAA has indeed a very difficult task ahead of it. We have a 
limited window of opportunity to transform the FAA today and 
create a viable FAA for the future.
    I look forward to hearing from our witnesses today and 
their plans, their progress that they are making in instituting 
reforms we have talked about.
    I am pleased now to recognize our Ranking Member, Mr. 
Costello.
    Mr. Costello. Mr. Chairman, I thank you, and I thank you 
for calling this hearing today. I do have a lengthy opening 
statement that I would like to submit for the record and make 
brief comments.
    Mr. Mica. Without objection, so ordered.
    Mr. Costello. Mr. Chairman, as you noted, commercial 
aviation is on track to exceed 1 billion passengers by the year 
2015. At the same time, much of the FAA's infrastructure has 
passed its useful life. The GSA rates the average condition of 
the FAA's en route centers as poor and getting worse each year. 
You noted that the aviation industry has seen many changes over 
the years but the FAA's infrastructure has basically remained 
the same.
    The modernization program that started in 1983 and was due 
to be completed in 1996, we are 20 years past the start of the 
modernization program and 9 years past the completion date. 
Thirty billion dollars later, we are told now that it may be 5 
to 10 more years before the modernization program is, in fact, 
completed. So obviously we have a lot of work that the FAA and 
this Congress needs to do to move forward with the plan.
    I was pleased, as you noted, with the JPDO's release of the 
Next Generation Air Transportation System integrated plan last 
December. The plan provides, in general terms, a vision for the 
air traffic system. Unfortunately, the vision of this plan is 
challenged by the reality of severe budget cuts to the FAA's 
facility and equipment budget, the primary program for 
modernizing the National Airspace System.
    Just 2 years ago the FAA requested and received from the 
Congress a $3 billion a year authorization for its F&E program. 
However, the FAA is now proposing to cut the F&E program well 
below its authorized level. Also the FAA's latest capital 
investment plan would freeze F&E spending at roughly $2.4 
billion for the next 5 years. The Agency will now spend 53 
percent less over the next 4 years to enhance the system.
    Mr. Chairman, this subcommittee must demand specifics and 
ask tough questions about the how the FAA intends to implement 
the next generation plan. While the plan provides broad 
concepts, we need to know more about the specific technologies 
that are expected to transform the system. Additionally, we 
need to have a serious discussion about cost resources in 
financing.
    While the Congress must provide the resources necessary for 
the plan to succeed, we must not abandon our efforts to control 
the cost of the FAA's programs. The IG will testify here today 
that 11 of the 16 major FAA programs have experienced 
cumulative cost growth of 5.6 billion. Cost overruns on legacy 
systems cannot be allowed to crowd out our future. This 
subcommittee must continue vigorous oversight to ensure that 
the FAA's scarce resources are used effectively and efficiently 
as possible.
    I am pleased that Mr. Chew is here today and will be 
testifying before this subcommittee to talk about not only past 
problems but also what progress is being made.
    I look forward to hearing from all of our witnesses about 
the problems and progress at the ATO. I am glad to see that 
both the industry and union representatives, including the 
employees that operate the system, the National Air Traffic 
Controllers Association, and the Professional Airways System 
Specialists are here today. The JPDO will clearly need to build 
a consensus with employees and the industry in order to 
accomplish its mission.
    Mr. Chairman, again, I thank you for calling the hearing 
today, and I look forward to hearing from our witnesses.
    Mr. Mica. I thank the gentleman.
    Ms. Kelly.
    Mrs. Kelly. Thank you, Mr. Chairman. I thank you for 
holding this hearing today. I think it is an important one. I 
don't think there is any question we have to put forth a 
sustained effort to modernizing our air traffic control system.
    The U.S. maintains the safest system in the world, but 
without comprehensive modernization that title could be in 
jeopardy. In just 10 years we are looking at losing nearly 75 
percent of our air traffic control workforce. In the meantime, 
we find that some towers are understaffed and our controllers 
are definitely overworked. On top of this, traffic at all of 
our airports is increasing daily.
    Last year, Kennedy, La Guardia, and Newark, in the New York 
area, handled 94 million passengers. That is more than the 
records set before 9/11. Stewart Airport in my district is one 
of the fastest growing airports in the United States, which 
only adds to the burden of the New York Terminal Radar Approach 
Control. Despite the increased traffic, New York struggles to 
achieve an appropriate staffing level. They are authorized to 
have 270 controllers, but have to make do right now with only 
206. It is the busiest air space in the world and it is 
operationg without 76 percent of its workforce.
    I want you to know the FAA made great strides, and I want 
to thank you, Mr. Chew, for moving things forward. We want to 
thank you for your efforts. I look forward to hearing the 
testimony from all of our witnesses, but I specifically look 
forward to hearing testimony from COO Chew on how the Agency 
will deal with this increasingly dangerous problem and what he 
needs from us to help encourage and to help quickly makeover 
our national airspace, but especially with regard to these air 
traffic controllers.
    Thank you.
    Mr. Mica. Thank you.
    Mrs. Tauscher.
    Mrs. Tauscher. Mr. Chairman, I want to thank you for the 
opportunity to make a brief statement about the progress of 
meeting the Nation's air traffic demands. Unless we act now, we 
could face jeopardy in our international airspace.
    I wholeheartedly agree with Secretary Mineta. It is with 
importance that we address the needs today so that the future 
of the system remains and we can meet what the American people 
demand.
    It is no secret over the next few years air traffic demand 
is expected to grow significantly. At the 35 Nation's airports, 
total operations are expected to increase by more than 25 
percent by 2020. The FAA's Air Traffic Organization and Joint 
Planning and Development Office face both foreseeable and 
developing challenges while attempting to redevelop our 
Nation's Airspace System.
    We are facing aging passenger facilities and the need for 
additional capacity both on the ground and in the air, and the 
necessity of replacing our air traffic control system are all 
apparent needs. In fact, the FAA's own analysis found that two-
thirds of its $30 billion worth of assets are beyond their 
useful life.
    I believe it is also useful to understand our developing 
needs, the needs that we anticipate but may not yet be clear or 
definable. For example, what new demands will the changing 
business models of the low-cost air carriers and legacy 
airlines have on our air traffic demands? How will we deal with 
the need for additional air traffic controllers who will 
require increased knowledge of newly developed air traffic 
technologies? Finally, how will the FAA manage to accomplish 
this Herculean task with a shrinking pool of funding?
    I am particularly interested in learning from today's 
panelists if they believe they can meet all of the demands 
before them with the administration's budget request. It is 
unreasonable to assume that the FAA will have the ability to 
replace over $20 billion in aging infrastructure and meet the 
new capacity needs of the next two decades if we continue to 
underfund the Agency's core programs.
    Mr. Chairman, as you know, for several years I have 
questioned the FAA's procurement for modernization of terminal 
air traffic control facilities.
    In light of tightening budget streams which will be 
described here today, I continue to question why the STARS 
program is over 4 years behind schedule and nearly 900 million 
over budget. I believe this procurement practice deserves 
additional scrutiny, Mr. Chairman, and with your permission and 
because of time being limited, I ask to be able to submit these 
questions in writing and allow both Mr. Chew and Inspector 
General Mead to respond in writing.
    Thank you, Mr. Chairman, for the time. I look forward to 
the panelists' comments today and the opportunity to work with 
them as they continue to transform the Agency so it can meet 
the demands of the future. I yield back the balance of my time.
    Mr. Mica. I thank the gentlelady.
    Mr. Holden.
    Mr. Holden. Thank you, Mr. Chairman and Ranking Member 
Costello, for holding this important hearing today.
    I look forward to hearing the testimony from the 
administration witnesses and the various stakeholders on the 
progress and challenges facing the FAA's Air Traffic 
Organization and the Joint Planning and Development Office.
    I have a particular area of concern that I will raise with 
Mr. Chew later in the hearing concerning the FAA's proposal to 
close 42 air traffic control towers between the hours of 
midnight and 5 a.m.
    The Harrisburg International Airport in my congressional 
district is one of these 42 towers. It is my understanding the 
FAA used operations per hour as the sole criteria for choosing 
these 42 towers for possible closure overnight. Specifically, 
it added to its list of consideration any tower which averaged 
four or less operations per hour during the months of June, 
July, and August of 2004.
    The tower at Harrisburg International Airport averaged 3.7 
operations per hour during that time period. Operations per 
hour cannot be a sole criteria for considering whether or not 
to shut down an airport's tower overnight. During the hours of 
midnight to 5 a.m., the Harrisburg tower not only controls its 
own airspace, but that of the Reading Regional Airport, the 
Lancaster Airport, and the Capital City Airport in Cumberland 
County.
    The Harrisburg tower monitors the airspace at Three Mile 
Island and Peach Bottom Nuclear Power Plant for homeland 
security purposes on a 24-hour basis. Should the Harrisburg 
tower be shut down from midnight to 5 a.m., the airspace will 
be monitored by a New York center, a regional control center 
which is not capable of seeing below 5,000 feet. If a plane 
with malicious intent is flying below 5,000 feet near one of 
these nuclear power plants, there will be no one who could see 
it between midnight and 5 a.m.
    Mr. Chairman, I look forward to discussing these points and 
others concerning the Harrisburg International Airport with Mr. 
Chew later in the hearing.
    I yield back the balance of my time.
    Mr. Mica. I thank the gentleman.
     Additional opening statements?
    If there are no additional opening statements, what we will 
do is turn to our panel of witnesses.
    But before I turn to our panel of witnesses, I have an 
announcement for this subcommittee and those here in the 
hearing. Today is the last hearing of one of our senior 
aviation subcommittee staffers, Adam Tsao. Adam has been with 
us--well, as long as I think I have been Chairman--and done a 
wonderful job. He is abandoning us for the Homeland Security 
Committee, a higher position and higher salary, which I don't 
blame him for, but we will certainly miss him. Today is his 
last hearing.
    So on behalf of the subcommittee, we want to thank him. I 
followed him through bachelorhood, through marriage, through 
one child, and we have one coming in 2 weeks. Well, Adam is 
going to have a lot of excitement in his life. But maybe we 
will see him. I am sure we will see him when we have a great 
addition to the Homeland Security Committee he will be serving. 
So we want to thank Adam for your service.
    Mrs. Kelly. Mr. Chairman.
    Mr. Mica. Ms. Kelly.
    Mrs. Kelly. I simply want to say congratulations, Adam. 
Homeland Security's gain is our great loss. It has certainly 
been a great pleasure to have you here and work with you on the 
committee. Bon voyage.
    Mr. Mica. I am sure all of the others join in wishing Adam 
success.
    Ms. Norton. Mr. Chairman.
    Mr. Mica. Ms. Norton.
    Ms. Norton. If you would forgive me, I had not intended on 
making an opening statement, but since I may not be here 
throughout the hearing evening, I better. I have to be 
someplace at 11 o'clock.
    Mr. Mica. Thank you. You are recognized.
    Ms. Norton. Thank you, Mr. Chairman.
    I just want to put on the record that the Chairman and 
Ranking Member of this subcommittee and of the full committee 
and the Chairman and Ranking Member of the Government Reform 
Committee have both introduced bills that would allow general 
aviation to be resumed at Reagan National Airport. The Chairman 
has pressed this matter, including a hearing at the hangar at 
Reagan National last year. He included in the FAA 
reauthorization a mandate for a plan to be presented to the 
Congress for the reopening.
    It is quite extraordinary to have the Chairman and Ranking 
Members of two full committees put forward legislation 
essentially, overriding the Agency, because there has been no 
action for 4 years and because you have shut down a substantial 
amount of commerce and important business in the Nation's 
Capital.
    The impression has been left that either our agencies or 
our security officials are not able to protect their own 
Nation's Capital. That is not the view of this Congress, and we 
don't believe that is, in fact, the case. These bills simply 
mandate that after enactment, Reagan National will be--of 
general aviation--be open 6 months thereafter.
    In case I am not here, I want to thank the Chairman and the 
Ranking Member and indicate the seriousness of this matter, 
when two Chairmen and Ranking Members feel they have to 
override a Federal agency just to get ordinary business 
resumed, when the same kind of business goes on everywhere in 
the United States.
    Thank you very much, Mr. Chairman.
    Mr. Mica. I thank the gentlelady and associate myself with 
her remarks.
    We are going to move right along with our subcommittee 
hearing, and we will turn now to our first panel of witnesses. 
That panel includes Russell Chew, who is the Chief Operating 
Officer of the Air Traffic Organization of FAA.
    We have the Honorable Jeffrey Shane, Under Secretary for 
Policy of the United States Department of Transportation; 
Honorable Ken Mead, Inspector General at the Department. We 
have Dr. Gerald Dillingham, Director of Physical Infrastructure 
Issues with the Government Accountability Office.
    So I would like to welcome our witnesses. I think most of 
them have been here before and know the routine. If you have 
lengthy statements or information you would like included in 
the record, you can do so through the Chair.

  TESTIMONY OF RUSSELL G. CHEW, CHIEF OPERATING OFFICER, AIR 
 TRAFFIC ORGANIZATION; HON. JEFFREY N. SHANE, UNDER SECRETARY 
  FOR POLICY, U.S. DEPARTMENT OF TRANSPORTATION; HON. KENNETH 
MEAD, INSPECTOR GENERAL, U.S. DEPARTMENT OF TRANSPORTATION; AND 
  DR. GERALD L. DILLINGHAM, DIRECTOR, PHYSICAL INFRASTRUCTURE 
            ISSUES, GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Mica. So we will kick off our witnesses with welcoming 
back Russell Chew and hear from the COO of FAA.
    Welcome, and you are recognized.
    Mr. Chew. Is this working? Okay, good.
    Chairman Mica, Congressman Costello, Members of the 
Subcommittee. Thank you for the opportunity to talk about the 
FAA's Air Traffic Organization. This morning I will discuss our 
activities and achievements as well as some of the ongoing 
challenges we face as we continue to restructure the FAA's air 
traffic services organization.
    I know I speak for Administrator Blakey and Secretary 
Mineta when I say how proud we are to operate and maintain the 
largest and the safest air transportation system in the world. 
Our employees safely orchestrate the takeoff, landing, and 
routing of approximately 50,000 airplanes per day across U.S.-
controlled airspace. Last year we achieved the lowest airline 
fatal accident rate in history.
    Mr. Chairman, you and this committee have consistently 
focused on ways to make the FAA more customer-oriented and 
efficient by giving us the authority to reform and streamline 
our activities.
    Using this authority, we began one of the largest 
reorganizations ever undertaken in government. We realigned the 
ATO workforce into a more customer-focused bottom-line business 
designed to be more responsive to our customers and more 
fiscally accountable.
    This morning I will touch on some of the highlights of what 
we have accomplished this past year, but our activities and 
plans for the future are described in more detail in our first 
Annual Performance Report for the ATO, which we delivered to 
you yesterday.
    In February, we began removing layers of management, 
reducing our executive ranks by now 20 percent, and reducing 
the number of high-paid nonexecutive positions by 9 percent. We 
also streamlined administrative services by consolidating 
dispersed work groups under centralized support centers, 
reducing our overhead in Washington headquarters. There are now 
10 operations that support service units that are accountable 
for achieving specified and measurable results.
    Basically, in addition to reducing overhead, we moved 
everyone in the ATO closer to the customer, those people who 
use our air traffic system, whether a passenger or a pilot.
    Our efforts have started to produce results. Our unit cost 
is down and our productivity is up. For example, the FAA's 
average cost of controlling a single instrument flight rule 
flight fell $17, from $457 a flight to $440 per flight, as 
compared to 2003.
    In addition, we used the competitive sourcing opportunity 
outlined in the President's management agenda, more commonly 
referred to as the A-76 process, for the delivery of services 
now provided by our automated flight service stations. This was 
the largest public-private competition our government has ever 
attempted. As a result, we expect to save more than $2.2 
billion over the next 10 years.
    We also created financial baselines that began a 5-year 
strategic business planning process that incorporates both 
operational and financial commitments and is tied to the FAA's 
flight plan.
    By implementing cost accounting, labor distribution 
reporting and a new financial management system, we have 
established a basis for an ATO cost control program. This 
enables us to identify where costs can be managed and 
reinvested to meet the strategic initiative described in our 
business plan.
    By integrating our financial and operational perspectives, 
we can make long-term decisions about budgeting and staffing. 
Managing our costs enables us to manage our future.
    Now, I must acknowledge that along with our successes, we 
have a number of challenges. As the 11,000 controllers hired 
after the 1981 strike become eligible to retire, it is 
imperative that the ATO find a way to meet the demand for 
controllers without straining the hiring or training pipelines.
    We developed the air traffic controller workforce 
management plan which was delivered to Congress in December. 
This plan lays out a cost-saving mechanism that will allow the 
ATO to reduce previous staffing projections by 10 percent over 
the next 5 years, but full implementation of the plan is 
underway and will enable us to have the right people in the 
right places at the right time.
    Another challenge we face is upcoming labor negotiations 
with two of our bargaining units. With our labor costs 
accounting for almost 80 percent of our total costs, we must 
reach an equitable agreement that ensures financial solvency 
and corporate efficiency on all sides.
    These challenges make it critical for us to change the 
business-as-usual operating practices to businesslike 
practices. As we face our upcoming challenges, we must continue 
to ensure that the ATO is as streamlined and as efficient as 
possible in order to justify supporting our essential operating 
and capital costs as they compete with other important programs 
for limited fiscal resources.
    The ATO must deliver the safest, most efficient. Cost-
effective, and well managed services in order to serve our 
stakeholders and our customers well. I am proud of the work we 
have done in this last year and even more confident in the 
direction we are headed.
    As we progress in our transformation, we intend to retain 
our global leadership in delivering air traffic services by 
providing the greatest value to our customers, to our owners, 
and to our employees. We look forward to working with you to 
meet these challenges, and I am really grateful for the 
opportunity to be in a position to help.
    There is hard work ahead of us and tough choices, but I am 
confident that together we will do what needs to be done.
    Mr. Chairman, that concludes my prepared statement.
    Mr. Mica. Thank you. We will hold off questions until we 
have heard statements from all of our witnesses.
    We will now recognize Jeff Shane, who is Under Secretary 
for Policy at U.S. Department of Transportation. Welcome, and 
you are recognized, sir.
    Mr. Shane. Thank you, Mr. Chairman, I have a longer 
prepared statement.
    Mr. Mica. Without objection, we will put the whole thing in 
the record.
    Mr. Shane. I thank you for that.
    First of all, let me say on behalf of Secretary Mineta and 
Administrator Blakey and all of us at the Department of 
Transportation that we join you and other members in taking 
enormous pleasure in the fact that Russ Chew is one of our 
colleagues now. He is making a tremendous difference. I don't 
want to dwell on it at this point, but it is just a tremendous 
boost to everything that the FAA is doing to have him in the 
COO position.
    Mr. Chairman, Ranking Member Costello, I looked over my 
testimony and was thinking about how best to summarize it in 
the short time I wanted to take here this morning. As I read it 
over, it seemed to me it was rather more focused on bureaucracy 
rather than on the vision of the Next Generation Air 
Transportation System Initiative.
    So what I would like to do, if I might have your 
permission, is just give you a quick sense of that vision.
    There is no doubt that we have to do something dramatic if 
we are going to accommodate the levels of traffic that we know 
are coming at us. It is the case that we will have three times 
the number of operations in the system, by just about every 
estimate I have seen, by 2025. That means that as we continue 
to simply modernize the system in the very important ways we 
are doing now, leading up gradually to 2025, we will not have a 
system in place that is either intelligent enough or efficient 
enough or safe enough or secure enough to handle that measure 
of operations.
    Therefore, it was no surprise that the Commission on the 
Future of the Aerospace Industry in America concluded that we 
had to do something dramatic. No surprise that the industry 
felt that we had to do something pretty important. No surprise 
at all that Secretary Mineta came to the office with a 
conviction that we had to do something important.
    This Next Generation Air Transportation System Initiative 
is that important initiative. It recognizes that we have to do 
something special, that we need a new system. The best way I 
think I can perhaps describe it for you is just every member of 
the subcommittee, and indeed every Member of Congress, is an 
expert on the air transportation system. You are frequent users 
of the system.
    I ask you to simply remember the best day you ever flew. 
You came to the airport, there probably wasn't much traffic 
there, you didn't spend a lot of time in security. You got 
through it fairly quickly. You got onto the airplane fairly 
quickly. The airplane took off on time. It landed on time. You 
got off on time. You were home. You probably did not spend a 
single minute talking to your spouse about the experience you 
had in the air transportation system on that day. That is what 
we like to achieve for every traveler on every day, even the 
most crowded days, even with three times the number of 
operations in the system.
    I do not pretend to be a futurist. I do not know what the 
future system is going to look like. I know a lot of people are 
predicting microjets, composite jets, personal jets. I don't 
pretend to have a view of what the system is going to be. I 
just know that government's sole responsibility at this point 
in time is to ensure that whatever the market delivers in terms 
of demand, we have a system in place that can accommodate that 
demand.
    That is what we are striving for with the Next Generation 
Air Transportation System Initiative. It is different from what 
we have ever done before by virtue of it being governmentwide. 
It involves the Department of Transportation, the Department of 
Defense, the Department of Commerce, the Department of Homeland 
Security. It involves NASA. The White House's Office of Science 
and Technology Policy is playing an important role. It is being 
operated through a joint program and development office that 
includes participants from all of those agencies as well as the 
private sector. There is buy-in throughout the industry and 
throughout the government that this is an important initiative, 
that we cannot fail that. That is what is so different from 
what we have seen before.
    The board of directors--and I can use that phrase for this 
effort--is a senior policy committee that is chaired by 
Secretary Mineta. I have never seen in a lot of the years that 
I have spent in government anything to compare with it. You 
have deputy secretaries and administrators of all of the 
participating agencies coming to meetings and spending 2 or 
more hours thinking original thoughts about what the future air 
transportation system of this country needs.
    When they engage at that level, the importance of the 
initiative is not just at the working level. So that is why we 
have such engagement throughout the government, throughout 
these agencies, and particularly at the working level and the 
JPDO. I think we have created a template for the way government 
is do going to address large capital-intensive and technology-
driven projects in the future. It is something to behold and we 
are very, very proud of it.
    Thank you, Mr. Chairman and I look forward to any questions 
you might have on some of the specifics.
    Mr. Mica. Thank you, Mr. Chew. As I said, we will hold 
questions until we hear from our other witnesses.
    Ken Mead, Inspector General, we will hear from you now. 
Thank you.
    Mr. Mead. Thank you, Mr. Chairman, Mr. Costello.
    I think since its inception the ATO has worked to flatten 
its organizational structure and align responsibility for 
acquiring new systems with the organizations that provide the 
services. That was not the case before. Also, the ATO has 
showed a willingness to measure itself through better methods. 
That, too, is an improvement.
    But a great deal of the ATO's efforts thus far have focused 
on "dealing with the hand they were dealt", which was growing 
operating costs, a very high salary base, reduced funding, and 
a portfolio of systems that were substantially behind schedule 
and over budget. But the backdrop here is that the heavy 
lifting lies ahead, because there is an increasing number of 
passengers and aircraft operations. The ATO has to do all of 
this in a cost-effective way.
    I would like to look forward and highlight eight big next 
steps that I think should be areas of focus.
    First, reducing operational errors. This is where planes 
come too close in the sky. FAA has made some progress here, but 
still a good ways to go. The most serious types of operational 
error are occurring about once every 9 days. They have to come 
down. A significant concern here is that FAA was relying on a 
system of self-reporting these errors, and we have some serious 
reservations about the self-reporting system. One facility 
reported just two operational errors during the 6-month period 
from January 2004 following a whistle-blower complaint. We 
identified five operational errors in May and June alone.
    After instituting appropriate use of playback tools last 
June, the facility itself recorded 36 operational errors over 
the next 6 months. Twenty-eight of those were moderate to 
severe. I am pleased to say that the ATO has recently taken 
steps here by establishing an audit process at towers and 
TRACONs. That is a right direction. The key now will be follow-
through.
    Getting control of major acquisitions. That is item number 
two.
    For fiscal 2006, the ATO is requesting $2.4 billion for its 
capital account. That request is slightly less than last year's 
$2.5 billion, but significantly less than fiscal 2004 budget of 
$2.9 billion. An important point here I would like to make is 
that the current budget level of $2.4 billion is not 
sustainable, and the reason for that is fairly straightforward. 
The current systems have experienced so much cost growth that 
there is little room for FAA to pay for both the current 
systems and simultaneously take on new initiatives.
    I also want to point out that we recently reviewed 16 of 
the ATO's major acquisitions; 11 of those projects have 
experienced cumulative cost growth of about $5.5 billion, which 
is more than double FAA's 2006 request for its capital account. 
Delays for those systems have ranged anywhere from 2 years to 
about 12 years.
    I also want to point out here, though, that the bulk of 
that cost growth happened before the ATO's establishment and is 
mainly a reflection of the ATO's efforts to re-baseline those 
projects. A lot of those cost increases were pent up and simply 
had not been straightforwardly recognized.
    Item three, reducing the cost and development risk of ERAM. 
ERAM is an acronym for basically replacing the brain of the air 
traffic control system that controls high-altitude air traffic. 
Current price tag is $2.1 billion. We are already spending more 
than $240 million a year on the program. Any cost increase is 
going to have major cost cash-flow implications. In the past, 
FAA has had problems managing these types of contracting 
vehicles. I think FAA should look to make these more fixed-
price agreements rather than cost reimbursable agreements, 
which is where the government absorbs most of the risk.
    Fourth item, getting control of support service contracts. 
I would like to say several words on these. Over the past 3 
years we have seen an increase in support services contracts 
involving large contracts. Collectively, they have a value of 
over $2 billion. We are having problems telling what these 
contracts are for. They are broadly defined, nominally for 
information technology services, we found instances where they 
are used for acquiring services such as timekeeping. There is a 
lack of centralized control over them, and we are having 
serious questions about exactly how the contractors' work 
differs from the work FAA employees do.
    One example: We had an FAA employee who was earning 
$109,000 at the time of their retirement. They went right from 
retirement to work for one of these contractors, and the 
contractor is getting paid $206,000 for what this employee was 
getting paid 106,000 for before they retired.
    The fifth item is addressing the coming wave of controller 
retirements. I think the FAA has a good plan here but it is 
missing two key items. One, numbers by facility. Until you have 
numbers by facility, you really don't have "rubber-meets-the-
road" numbers.
    Number two, you need cost data. Cost data is not in the 
current plan. FAA's next report, I believe, will have both 
facility numbers and budget numbers.
    Item number six. This is negotiating a new collective 
bargaining agreement with the controllers' union.
    Airspace redesign is item number seven. These are very 
important when you lay new runways, you spend all that money 
for a ground infrastructure, you also have to do airspace 
redesign. FAA is working on overcoming problems with delays and 
budget problems with airspace redesign.
    Finally, I would like to say just a couple of words about 
the JPDO. This is the office that is charged with developing a 
vision for the future. I think looking 25 years ahead, Mr. 
Chairman, is important, but I think people need to be able to 
relate to what is going to happen in 5-, 10-, and 15-year 
benchmarks as well. The big imperatives this year are for the 
JPDO to determine what level of funding they actually require, 
how much other agencies are going to contribute, what specific 
capabilities will be pursued, and when they plan to implement 
them. Thank you.
    Mr. Mica. Thank you. Thank you, Mr. Mead.
    Now we will hear from Gerald Dillingham, Director of 
Physical Infrastructure Issues with GAO.
    Welcome, and you are recognized.
    Mr. Dillingham. Thank you, Mr. Chairman, Mr. Costello, and 
members of the subcommittee.
    As many of you know, the GAO has been reviewing the status 
of the ATC modernization program since its inception in 1981. 
Our annual reports to Congress have generally contained the 
same conclusions, that major projects are over budget and 
behind schedule.
    We have also identified some systemic causes of these cost 
and schedule problems, such as the influence of its 
organizational culture and the lack of key business processes. 
Because of the size and complexity and history of the program, 
the GAO included it on its high-risk list in 1995. We continue 
to include it on our list of high-risk programs today.
    My statement today focuses on two questions:
    First, what is GAO's assessment of the ATO's efforts to 
date in addressing some of the challenges associated with the 
modernization program?
    Second, what are some of the key challenges that lie ahead 
for the ATO, and what are some options for addressing those 
challenges?
    Regarding our assessment of ATO's efforts to date, we think 
that we could be at the beginning of a new chapter in the 
history of modernization. As you have heard, the ATO is 
currently implementing a new approach to modernization. It 
reflects many of the recommendations that we have made over the 
years, and includes many of the key practices that have 
consistently been associated with successful organizational and 
cultural transformation.
    We found that the ATO has taken a number of positive steps 
to address what we call the legacy cost and schedule problems 
that have beset the modernization program for the past two 
decades. Our current work shows that FAA has made improvements 
in these overall investment decisions. The fact that it met its 
acquisition goals for 2004 with over 90 percent of its major 
acquisitions meeting budget and scheduled targets is a very 
positive sign.
    The ATO has also demonstrated a willingness to cut major 
acquisitions, even after investing significant resources.
    The organization is utilizing FAA's long-awaited cost 
accounting system to improve its financial management 
capabilities.
    In addition, the ATO has improved its human capital 
management by linking individual performance criteria to FAA 
goals, and it has also recognized the fundamental importance of 
changing the organizational culture and has initiated efforts 
in this area as well.
    From the GAO's perspective, the ATO's key challenges for 
the future include finding a way to live within its means while 
increasing the capacity to safely and efficiently accommodate 
the forecasting increases in traffic. The ATO will also have to 
repair or replace its aging ATC facilities. A big issue is the 
hiring and training of thousands of air traffic controllers in 
the next decade.
    Assuming that the JPDO receives its authorized $50 million 
annually between now and 2010, the ATO will also need to work 
with the JPDO to ensure that research programs led by the 
diverse agencies support national goals.
    Our research points to a number of options that might be 
considered to address some of the challenges:
    First, the ATO must continue on the path of transformation. 
Transformation of the Nation's transportation system is 
directly tied to the Nation's economy, security, and defense.
    Second, it must continue to address both the cost and 
revenue sides of the ledger. On the cost side, the ATO must 
continue its ongoing efforts and initiatives that are aimed at 
cost reductions. This would include the ATO's decision to 
include the impact on the operations budget when evaluating 
proposed capital projects.
    It is important to point out that the information that we 
have reviewed to date suggest that the cost-saving initiatives 
that the ATO has identified will not even begin to close the 
reported gap of about $5 billion over the next 5 years in the 
operations budget.
    For additional potential cost savings, the ATO could 
evaluate its experience in outsourcing flight service stations 
and consider outsourcing other ATO services such as oceanic.
    Second, we find merit in the proposals such as that 
represented by Embry-Riddle University that could save millions 
of dollars annually in the hiring and training of air traffic 
controllers.
    Third, the ATO could evaluate the need for and expense of 
maintaining existing ground-based NAVAIDS.
    On the revenue side, in the short term the ATO must be 
prepared to live within its existing budget. It may be the case 
that the Nation's fiscal condition may not allow full funding 
for all needs. This will mean that some difficult choices will 
have to be made by the Agency and the Congress.
    In that regard, we believe that it is critical that the ATO 
increase the degree of transparency for the Congress and other 
stakeholders in how and why decisions are made regarding the 
modernization program.
    For example, the ATO could clarify the trade-offs it is 
making by supplementing its budget information with information 
that discusses the impact of the Agency's decisions to 
prioritize certain programs and reduce funding for others in 
order to reach budget targets. This kind of information will 
make transparent how the ATO is managing to live within its 
budget targets.
    Over the longer term, the ATO could choose to pursue a 
recommendation of the Mineta Commission to develop legislative 
proposals to allow it to incur debt.
    Mr. Chairman, we should recognize that the problems have 
been a long time in the developing, and they will not disappear 
overnight. The transformation that is underway will still 
require sustained attention of FAA management and the 
committees of the Congress to realize its potential.
    Thank you, Mr. Chairman.
    Mr. Mica. I thank you and I thank all of our witnesses on 
the first panel, and we will move right to questions.
    Mr. Chew, you have heard it, and Mr. Mead, if you continue 
to cut facility levels--and I think we have had a proposal by 
the administration from 2.9 to 2.4. That is not sustainable, I 
think, was his quote. You just heardMr. Dillingham OF GAO say 
we are looking at an operations budget shortfall of $5 billion.
    How do you respond? How are you going to make this work?
    Mr. Chew. Well, when we talk about investing in the new 
system and the F&E budget, which is a capital budget to 
modernize it, I think it's important to understand that 
sometimes making the wrong investment is worse than making no 
investment.
    Mr. Mica. Making the wrong investment--
    Mr. Chew. Is worse than making no investment. Because you 
live with the costs for many, many, many years. Because of that 
we have, ever since we started a reassessment of all of our 
capital programs, we are actively reviewing them all-- and 
there are hundreds and hundreds--even though we only tend to 
focus on the very large ones.
    We have actually already reduced spending on more than--
well, several hundred of those capital programs that really 
couldn't demonstrate that they could move the dial on safety, 
capacity, or efficiency.
    So focusing on making the right investments is crucial to 
understanding how to move to what the JPDO will build as a 
vision.
    That period of assessment will take place for the most part 
for the remainder of this year, after which we will probably 
have a very detailed plan on what investments should be made 
and what metrics we will use to ensure that they stay not only 
on constant schedule, but they will produce the kind of 
capacity, the kind of safety, and the kind of efficiency that 
we are all looking for.
    Mr. Mica. That brings me to my next question. I guess at 
the end of last year you all issued this Next Generation Air 
Transportation System, and in the center there is this sort of 
general outline of your plan. You list a number of various 
activities and goals, and then a sort of general timetable. It 
won't be until the end of the year that you have specifics on 
all of these. For example, you have got to establish a 
comprehensive proactive safety management approach, develop 
environmental protection that allows sustained aviation growth, 
and establish an agile air traffic system.
    All of these objectives are set out generally for 2005. 
When will we see the specifics? Can we get something to the 
subcommittee that would show us before the end of the year, 
different activities here, or objectives and some type of a 
better timetable? This is pretty general.
    Mr. Shane.
    Mr. Shane. Yes, Mr. Chairman. The intention is to have 
those specifics by the end of the year in order to be put into 
the deliberations over the 2007 budget requests of the 
administration. That is what is driving it right now. I don't 
want to move into that 2007 cycle without having those 
specifics, and that is what is driving the current timetable. 
So you will see greater specificity.
    Mr. Mica. Well, general visions and all of that are great, 
but specific deadlines and objectives are important.
    I don't want to take away from what you have done, Mr. 
Chew. Was I correct in saying you have eliminated 1,000 
positions?
    Mr. Chew. That is right. In 2004 we eliminated almost 1,400 
positions.
    Mr. Mica. Almost 1,400; over 1,000. So it is possible to do 
at least the same level--maybe even more--with less, if 
properly directed?
    Mr. Chew. Very definitely. If we were to focus our capital 
expenses and our investments on improving productivity, we 
could achieve more productivity. In recognition of that, in our 
review of our capital programs, our major capital programs, 
very few if any were actually aimed at productivity 
improvement.
    Now, it is important that any investment we make focus on 
safety, capacity, and efficiency in terms of productivity and 
cost savings. That is how everyone operates in the outside 
world, and it is how we are trying to get the ATO to operate as 
well.
    Mr. Mica. Let me ask you another important question. Do you 
as COO, or does the FAA have enough authority, and specific 
authority in regard to your budget and other activities that 
you plan to undertake, to make the changes necessary to bring 
FAA's costs under control and also to implement what goals and 
objectives you have set for the future?
    Mr. Chew. I think the level of authority that we have 
affects the speed with which we can make change, not 
necessarily whether we can make change. I think there are 
things that could help us to go faster. Being from the private 
sector, I find many of the government processes that are 
dictated by law to be very, very restrictive in my ability to 
move forward as well.
    Mr. Mica. You know that drives me nuts, too. I come from 
the private sector. Ii is so frustrating to deal with--anything 
dealing with government costs more, takes more people, and 
there is always some bureaucratic obstacle in the course.
    I would welcome any suggestions, anything you can give the 
subcommittee that we might incorporate in any of these 
processes. The acquisition process drives me crazy, and 
watching the acquisition--well, development of air traffic 
control modernization efforts. It took so long to get a request 
for proposal out. Then, by the time you did that and we had the 
competition and then we awarded it, we end up changing the 
specs, and we have everybody and his mother changing the specs. 
No vendor accountability. By the time this whole process of 
development takes place, the private sector has moved ahead and 
checked technology development. We have spent all this money 
chasing our tail and have nothing.
    Dillingham stole my line--that all the programs are over 
budget and behind schedule. Anything you can do to give us--to 
give you the authority to move forward on making these changes 
we would appreciate both from you, Mr. Shane, or you, Mr. Chew. 
Okay.
    Well, I have got a whole list of questions, but I am going 
to defer to Mr. Costello. Some we may submit. Maybe we will do 
another round.
    Mr. Costello.
    Mr. Costello. Mr. Chairman, thank you.
    Mr. Chew, let me follow up on the Chairman's questions and 
your comment. If I understood you correctly, you indicated that 
if you had more authority--that the lack of authority--you 
would be able to make more progress if you had more authority 
and get things done faster; is that correct?
    Mr. Chew. That is right.
    Mr. Costello. Can you be more specific; what authority are 
you looking for that you currently do not have?
    Mr. Chew. Well, I think if you look at the personnel reform 
and the acquisition reform that was put in place many years 
ago, because the ATO had not yet been formed, the treatment of 
it was aimed at accelerating certain things that held those 
processes back in the old organization.
    When you turn an organization from being input-oriented to 
output-oriented and performance-oriented, the types of changes 
that we want actually shift, and those kinds of authorities 
that you would need would accelerate those areas that you are 
trying to make change. Some of those areas would include the 
very mundane things that you might consider are not glamorous, 
but are as simple as human resources and basic administrative 
tasks, that government processes require but they are not very 
streamlined. So by being able to streamline that, we can 
actually move an organization faster.
    In the case of the ATO, when traffic literally changes 
every 30 to 60 days, our ability to be flexible and move not 
only our resources, but move our technologies and move our 
people quickly, are somewhat impeded by the traditional 
administrative processes that the government requires.
    I would be happy to provide more specific information to 
you, as I was really not prepared to answer these particular 
questions.
    Mr. Costello. I found it interesting that you had brought 
that up, and I would like to follow up on that and ask you, if 
you would, to submit specifics to the subcommittee, if you 
would.
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] T1701.001
    
    Mr. Costello. Another question I had for you and Mr. Shane 
as well, if I could ask both of you. Maybe Mr. Shane first; and 
you, Mr. Chew, second.
    Dr. Dillingham in his prepared statement recommends that 
the FAA should give detailed information to the Congress about 
their budget submission and the impact that the budget will 
have on the FAA's modernization program. Dr. Dillingham states 
specifically that the FAA should identify trade-offs.
    But if we are going to go forward with the modernization 
program, as we need and want to move forward with your budget 
submission, what are the trade-offs in order to accomplish the 
modernization? What are you going to give up? What are you 
going to cut?
    Mr. Shane, I wonder if you would go first, and then Mr. 
Chew.
    Mr. Shane. Yes, Congressman. I don't have specifics as to 
what the trade-off would be right now. I would just note that 
what you heard emphasized throughout Mr. Chew's presentation 
and his answers to questions are constant references to metric.
    This is something that we really have no press department 
for in the FAA as far as I can tell. Russ is bringing a measure 
of quantification to his assessment of what the FAA is doing 
now and what it will have to do in the future that really is 
unprecedented. And it is going to facilitate us making those 
trade-offs, I think, in a very precise way, even in an era of 
unlimited sources. And none of us should pretend we will not be 
in that period for a long period to come.
    It is going to be possible to maximize the bang we get for 
every dollar. That is what the ATO is doing. That is why it was 
the right thing for Congress to do, to create the organization, 
and again, without overdoing it, why we are so delighted that 
somebody with Mr. Chew's background, coming from industry in 
the way he did, is able to quantify this issue in a way we have 
never seen before.
    Mr. Costello. But you would agree that there have to be 
budget trade-offs within the FAA?
    Mr. Shane. Absolutely. Absolutely. I think, in fairness, 
one of the big problems the FAA has had, and one of the things 
that has led to the kind of results that the subcommittee has 
referred to over and over again is the lack of sufficient 
predictability in the funding stream. Mitre Corporation did a 
study a while back that attributed something like 50 percent of 
the cost overruns to that lack of predictability, that lack of 
stability in the availability of finances for capital 
investment and for maintaining the system.
    Those are issues that this administration wants to work 
with the subcommittee on. We need to figure out better ways of 
providing that predictability, such that the system can be 
modernized with deliberation in keeping with a strategic plan.
    Mr. Costello. Mr. Chew, let me move on to another question 
before I run out of time here.
    You have previously stated that there is a $5 billion gap 
in operations funding and a $3.2 billion gap in capital 
funding. And I wonder if you might tell the subcommittee how 
you and the FAA intend to close those gaps.
    Mr. Chew. The gap is the difference between the funding as 
it is today, and if we did business as usual, what it would be 
in 5 years. Of course, we have already started taking action on 
that gap, everything from trying to manage our premium pay 
practices, our paid leave practices, looking at the way we 
manage schedules, and things like that. Also, what would 
contribute to closing that gap would be the A-76 Flight Service 
Stations competitive sourcing project.
    So all those cost saving things will, in fact, contribute 
to closing the gap substantially. However, we are still 
continuing to look, because we--over that 5-year period, we 
still have not identified everything we would need to do to 
close that gap, and we have a number of things that we are 
looking at that will also help that.
    Unfortunately, again, we are in a fledgling stage with 
regard to our implementation of our accounting systems, so 
running the numbers to see how far out they will close the gap 
is still in progress.
    Mr. Costello. You heard the Inspector General, Mr. Mead, 
testify that the FAA's current capital budget is not 
sustainable. Would you agree?
    Mr. Chew. Well, it depends. With technology moving as fast 
as it is, I think we have to change our thinking a little bit, 
in that, yes, we have an old air traffic control system. We 
have, for instance, 40-year-old en route centers, but they have 
brand new pieces of automation in them. So rather than thinking 
of the system as one entity, think of the system as something 
that needs to be in a continuous state of refreshment as time 
goes on.
    As we showed in our first chart, there are 41,000 systems 
that make up the air traffic control system and they do not all 
age and expire at the same time. So the amount of capital we 
will need, and the capital budget forward, will be dependent on 
what needs to be replaced and when it needs to be replaced.
    We are looking very, very hard at that to see whether or 
not we can further reduce costs even more by potentially 
spending more capital in the early years instead of less.
    Mr. Costello. When will we be at a point where either you 
or Mr. Shane or others can come before this subcommittee and 
put a price tag on the Next Generation System?
    Mr. Shane. We can't do it today, that is quite clear. I 
believe that as we move into that 2007 budget cycle that I 
referred to earlier, we will have a better handle on what we 
think the overall costs are going to be and precisely how we 
plan to budget for it going forward.
    One of the real, I think, wins in the way we have 
structured the Next Generation plan is that we are finding 
money in the budget. We have pulled together all of these 
agencies that have been doing aeronautical research forever, 
but in a way that has not been sufficiently coordinated, and in 
some cases not coordinated at all with what the FAA has needed. 
That era has ended, and now every dollar that we are spending 
on aviation research, whether it is in NOAA on weather, whether 
it is in NASA, whether it is in the Department of Defense, it 
is being targeted at what the Next Generation System will look 
like.
    Mr. Costello. But to be specific, when can the subcommittee 
expect a deployment schedule and cost estimates?
    Mr. Shane. I would think you will see the specificity you 
are looking for for the first time in the 2007 budget 
submission.
    Mr. Costello. So in the 2007 budget submission we will know 
at that time the estimated cost and the deployment schedule?
    Mr. Shane. Yes, sir.
    Mr. Costello. Thank you.
    Thank you, Mr. Chairman.
    Mr. Mica. Thank you.
    Are there members with questions? Mr. Hayes.
    Mr. Hayes. Thank you, Mr. Chairman. A couple of questions 
for Mr. Chew.
    Some people are arguing that the general aviation component 
of air traffic imposes a significant cost on the system. As you 
know, general aviation has been banned from Washington Reagan 
National Airport for several years. While we want to restore 
the access for general aviation, how much money has the FAA 
saved while providing air traffic control service in DCA during 
the 3-1/2-year absence of general aviation?
    Mr. Chew. Actually, I'm not sure I can answer that 
question.
    Mr. Hayes. Sounds like a trick question, doesn't it?
    Mr. Chew. That is a good question, because we have never 
measured the access to DCA by general aviation in terms of 
cost. In working with our counterparts in security, the 
quantification of that has never risen as an issue. I do know 
that because of this latest activity, there is now some active 
scrutiny on this particular issue, and I know that there is 
optimism that things can move forward.
    Mr. Hayes. Well, I think the answer is clearly, it hasn't 
cost anything, and it hasn't saved anything because the system 
is still up and working.
    Those controllers are some of my favorites in the world, 
and they can obviously handle the traffic. But you see my 
point?
    How is general aviation involved in the modernization and 
the transformation? Are you consulting with GA, and what 
specific considerations are being used or given, Mr. Chew, or 
anyone else who would like to comment?
    Mr. Chew. Well, I can start. We work very closely with 
those who represent general aviation. The Aircraft Owners and 
Pilots Association was very supportive, for instance, of the A-
76 Flight Service Stations process. I think it was because they 
have been asking for a long time for more and more support in 
terms of the services they were getting.
    It is interesting that from 2003 to 2004 the number of 
actual contacts at our Flight Service Stations dropped by 12 
percent, yet the activity of many of our other general aviation 
types of automated services actually increased. So I think 
where we are headed with that--and we are working very closely 
with Aircraft Owners and Pilots Association--will yield even 
better services over time with our general aviation population.
    Mr. Hayes. I want to be sure and remind you, although I am 
sure you know this, that general aviation is GAMA, MBAA, AOPA 
and others, and I think what you are saying is, people like me 
have to learn to use that machine and quit calling up on the 
phone.
    It is good to say we are planning for 20 to 25 years out, 
but are we hearing from the ATO that there is--we are hearing 
there is an immediate need to invest in new technology and 
facilities.
    How are you keeping the processes properly aligned?
    Mr. Chew. What is interesting about that is the most 
important part of investing in new facilities or new equipment 
is that they actually do something positive for the operation, 
for the controllers who use them and for the customers who 
interact with them. That was the reason we moved our 
acquisition unit, which was stand-alone, into the actual 
operating service units. So whether it is en route or terminal, 
the acquisition processes now occur under that service unit.
    So that the conversion of an investment in technology 
results is a change to the operation. That was the reason they 
would so immediately be able to actually reduce spending on so 
many programs, because with so many, you were buying something, 
but it actually didn't change the operation. So that is our 
primary first step in ensuring that the things on which we do 
spend, whether new facilities or new equipment, actually result 
in a better, safer operation.
    Mr. Hayes. I am really proud of our air traffic controllers 
and the job they do. I still continue to be concerned about 
their numbers and retirements and making sure that we are fully 
staffed there.
    Is that factored into the equation long range, as well as 
short-term planning?
    Mr. Chew. In fact, our 10-year controller workforce plan 
was really a hallmark and one of the first plans we put 
together that included better workforce models.
    I actually share your concern a great deal. When I look at 
the challenge ahead with the number who are retiring, and being 
able to properly staff our facilities forward and have trained 
controllers in place, we must not deviate from the need to hire 
those controllers along that plan.
    The plan makes some very key assumptions: that the traffic 
grows at the rate we think it will grow; that the retirements 
occur at the rate they will occur; and that the training will 
happen in a way that is even throughout the year. So you can't 
just hire everybody in the last month of the year, because the 
training pipeline can't hold that many all at once. So we must 
train throughout the year.
    That is one of the reasons why stability of funding forward 
is important, because regardless of whether we are in a 
continuing resolution or not, I must hire those controllers to 
make sure I keep that pipeline full.
    Mr. Hayes. Thank you, gentlemen.
    Thank you, Mr. Chairman.
    Mr. Mica. Thank you.
    Mr. Holden.
    Mr. Holden. Mr. Chew, as I mentioned in my opening remarks, 
I am concerned about the FAA's proposal to close 42 towers 
overnight, specifically at Harrisburg International Airport in 
my district. I mentioned two reasons in my opening statement, 
the fact that they control the airspace at two nuclear power 
plants, and they are also responsible for the air traffic at 
three other airports, Reading Regional at Lancaster and Capital 
City. I would just like to give you a few other facts before I 
ask you a few questions that I think the FAA needs to consider 
as they are looking at their final decision here.
    The Harrisburg tower controls all ground movements on the 
airport of both aircraft and vehicles. And that is important 
because HIA is the maintenance facility for Piedmont-Allegheny, 
and they are constantly testing the engines during the evening.
    Harrisburg International Airport has also become a main 
diversion airport for Philadelphia, Baltimore, Ronald Reagan-
National and Dulles Airport, so I think you need to take that 
into consideration, as well as the fact that the 193rd Air Wing 
of the Air National Guard is based at HIA. And that is the 
Special Ops unit for the Air National Guard, and there is no 
telling when they would be called into service and they would 
need control help.
    And, lastly, in calendar year 2004, 39 lifetime flight 
operations took place at HIA between the hours of midnight and 
5 a.m. So I assume that you are early on in the process, and I 
am just curious exactly where you are in the process, if you 
can tell me that.
    Mr. Chew. I would be happy to answer that. Let me just 
clarify a couple of things.
    Everyone, I am sure, knows that when the tower is closed, 
the airport is not closed. It is a common misunderstanding by 
many who hear that the tower won't have controllers in it from 
midnight to 5 a.m.
    The second one is, we didn't release the list, and the 
reason we don't is that four operations per hour is just the 
starting point. That threshold was set back in the early 1990s 
as a threshold at which you begin to look at the airports. The 
reason is, there are more than 5,000 airports in the United 
States, and only about 10 percent have control towers.
    Now, it is important for us to maintain the highest level 
of safety standards that we do; that we apply a very strict 
discipline on applying standards of service and standards of 
safety, and we set thresholds so that we can begin to look at a 
situation, but there are a lot of other factors. Once any 
airport drops below that threshold, we look at the type of 
factors you talk about.
    We look at whether the pilots can control the lighting or 
not. We look at whether the weather services can be provided. 
We look at who is going to provide the crash fire and rescue 
services for the airport.
    As a pilot for American Airlines, I flew into airports with 
closed towers from time to time. And under the right 
conditions, it is perfectly safe. But it is up to us to make 
sure we evaluate all the special circumstances, such as the 
ones that you articulate, before we take any action. And, in 
fact, we will make sure to coordinate, as a standard practice, 
with the airport operator and local community and the 
representatives thereof.
    Mr. Holden. Okay, so operations per hour are not the only 
criteria you are looking at. And it is true that the airport 
would not be closing, but there would be no air coverage under 
5,000 feet if we went to New York Central. And that is a 
concern because of the nuclear power plants, and I think that, 
you really need to take a good, hard look at.
    Assuming that all 42 of those proposed would be shut down, 
what would be the savings annually for the FAA?
    Mr. Chew. The savings exceed--of the direct operating 
costs, the savings would be $6 million a year.
    Mr. Holden. And what percentage would that be of your total 
budget?
    Mr. Chew. About a tenth of 1 percent.
    Mr. Holden. A tenth of 1 percent. Well, I know we just had 
several questions about the need to tighten our belt and so 
forth, but I think if you would look at the savings of a tenth 
of a percent and then compare that to security and safety, I 
think we really need to take a good hard look at it.
    And I look forward to working with you as we move forward 
in this process.
    Thank you, Mr. Chairman.
    Mr. Mica. Thank you.
    Mr. Ehlers.
    Mr. Ehlers. Thank you, Mr. Chairman, and thank you for 
holding this hearing. I think this is one of the most 
important, if not the most important, issues facing us and the 
FAA over the next 20 years.
    I apologize I wasn't here to hear all the testimony. I had 
a meeting at the White House and I have two other committee 
meetings going on. But my lack of attendance is not because of 
lack of interest or because I do not think it is important. I 
believe it is extremely important.
    I would like to ask what is going on in our shop that is 
comparable to what Europe is doing today to try to build their 
new air traffic control system? Are we in touch with that? Are 
we going to be a participant in that at some point? Are we 
developing the same technology that they are using or are we 
working with them jointly to develop technology?
    Could you just give me an overview of that issue?
    Mr. Chew. I would be happy to.
    We work, as we have historically, very closely with our 
European air traffic counterparts in many, many ways. We have 
just recently expanded and signed an agreement with Euro 
Control, too, from just research to also operational 
cooperation, as all of these things unfold for Europe.
    Europe's Single Sky Program is advised by an industry 
consultation board, and the FAA holds a seat on that board. We 
have a counterpart advisory committee called the Air Traffic 
Management Advisory Committee, and the European Commission 
holds a seat on our Air Traffic Management Committee, as well. 
That is to enhance the communication across the ocean, across 
the Atlantic Ocean, on not only their Single Sky activities, 
but also their consultation board as advised by their new 
industry consortium, which are going to be suggesting 
technologies and operational changes to their system.
    We, in fact, are engaged in discussions with the European 
Commission in considering whether or not it makes a lot of 
sense for us to coordinate and synchronize our modernization 
activities with them, since most of their larger airplanes, in 
fact, fly to the United States and most of our U.S. carriers 
fly to Europe. So that is a very, very important focus for us 
on an international basis.
    Mr. Shane. If I could supplement that, Congressman, because 
what you have here is the immediate here and now, and I am 
looking at talking about some of the things we are planning for 
the more distant future.
    Europe is engaged in its own next-generation effort, if you 
will, which they call SESAME, and we anticipate that we are 
going to be in a lot of direct communication with Europe as 
these two efforts move forward in tandem. There is no question, 
and both of us understand this, of course, that we have to have 
a global system. Airplanes are flying globally, and they cannot 
have a proliferation of black boxes in each aircraft and make 
any sense to the system.
    So we will be talking to them as we move forward even in 
the longer term.
    Mr. Ehlers. A related question to that. It seems to me they 
are proceeding more rapidly and are further ahead on the curve 
than we are. My concern would be that they develop a system, 
and we end up basically having to purchase the same thing.
    The question is, where do our electronics folks in this 
country come into this equation?
    I am not talking so much about the businesses, but 
obviously, the manufacturers are going to be involved, you are 
going to be involved. If, in fact, we are behind the curve and 
we are going to end up buying their products, we once again do 
damage to the American aerospace industry when, in fact, we 
should be leading the curve and trying to help market our 
products in other countries.
    A response to that.
    Mr. Chew. I share exactly your concern. Our goals are not 
to follow them. Our goal is to maintain the global leadership 
for the United States.
    Mr. Ehlers. What are you doing to accomplish that?
    Mr. Chew. Well, I think the JPDO is one of those first 
steps to establish the vision in order to maintain the 
direction for our modernization activities because, to date, 
without that vision, we could, in fact, fall behind.
    Mr. Ehlers. You talk about maintaining your leadership. Are 
you sure that you are still the leader? I am not at all sure 
that you are.
    Mr. Shane. As a going-in proposition, I wouldn't accept 
that we are behind the curve, Congressman. I know there is a 
concern about it, and we should stay on our toes about that. 
Europe is proceeding ahead. But I think we are still very much 
leaders, and everything that we are doing right now is for the 
purpose of maintaining that leadership; working cooperatively 
with our friends across the Atlantic, ensuring that we have a 
coherent system by the time everything emerges, but not 
following at any point.
    Mr. Ehlers. Well, I hope you are right. I will be watching 
that with great interest.
    In closing, let me just associate myself with the remarks 
of my good friend, Mr. Hayes, who is a far, far better pilot 
than I could ever hope to be. But I am just totally befuddled. 
We have tried everything possible to get Reagan reopened for 
general aviation. I know that those of you sitting at the table 
play a small part in that decision, but let me once again go on 
the record and say, I think it is one of the most absurd things 
we have done, probably equaled only by the absurdity of 
requiring DCA passengers inbound and outbound to sit in their 
seats for 30 minutes beforehand.
    That is so obviously inane. If, in fact, we need that 
security measure, then the people departing Dulles should stay 
in their seats for at least 20 minutes, because in 10 minutes 
our plane has passed over Dulles. Or, in fact, eastbound Dulles 
passengers probably should sit in their seats for 40 minutes.
    And I have to blame you for part of that. Where do these 
inane ideas and regulations come from? But particularly keeping 
the GA out of Reagan Airport is a real disservice not just to 
the aviation industry, but to the government--because a lot of 
Members, such as Mr. Hayes, would like to be able to fly their 
airplanes into Reagan--but also the disservice to people who do 
fly into Reagan. We are costing them an extra hour, hour and a 
half of time every time they come in.
    It just does not make sense, and I want to add my voice to 
the comments that Mr. Hayes made.
    One thing I have always liked to do in government is to try 
to have government make sense. I am totally frustrated by this 
because it makes absolutely no sense, from any perspective, 
including security. And I just wanted to register my protest 
once again.
    Thank you, Mr. Chairman. Yield back.
    Mr. Mica. Thank the gentleman.
    Mr. Costello, you had additional questions?
    Mr. Costello. I do, Mr. Chairman, just two quick questions. 
But before I ask the questions, let me say that I agree with my 
friend from Michigan, and Mr. Hayes as well. That is one of the 
reasons why Chairman Mica and I, and Mr. Oberstar and Mr. Young 
have sent a letter to the FAA and introduced legislation saying 
that it is time to change this crazy policy and begin to let 
general aviation come back into Reagan.
    Quickly, two questions.
    Mr. Mead, you heard me ask the question about your 
testimony about the current budget level for the capital 
accounts not being sustainable. Last week, Mr. Oberstar and I 
sent a letter to the FAA expressing our concern that the 
administration's cuts to the FAA's F&E account, we are 
concerned that it is going to undermine the transformation of 
the air traffic control system. And I want to ask you 
specifically: Do you believe that the FAA can successfully 
transform the air traffic control system with a $2.4-billion-a-
year capital budget?
    Mr. Mead. The direct answer to that question is no. And the 
reason why is that they have a portfolio of systems that the 
FAA is now buying.
    The cash flow requirements of those come very close to the 
$2.4 billion mark. So if you are going to start new 
initiatives, you are going to have to get the money from 
somewhere, and it isn't there. That is not to say there are not 
some opportunities for savings at FAA, but you are not going to 
be able to save your way out of this problem.
    Mr. Costello. Mr. Shane, you heard Mr. Mead's opinion, "You 
are not going to be able to save your way out of the problem," 
and I wonder if you would like to respond.
    Mr. Shane. I hearken back to my reference to the way in 
which we are planning for the transformation of the system 
involving in a much more coherent way all of the agencies of 
government that do aeronautical research. So while we have, for 
example, only about $28 million allocated to the JPDO right 
now--that is $10 million from NASA, $18 million from FAA--if 
you total up the amount of money being spent on aviation 
research among all these agencies, you get pretty close to a 
$1.5 billion that would have been spent anyway. It just would 
not have been spent in a way that I am now treating as 
coherent.
    When you add that $1.5 billion of research and you focus it 
in the way we are doing through the JPDO process, you do begin 
to see real possibilities of transformation, notwithstanding 
the amount of money that is being made available to the FAA 
each year.
    Mr. Costello. Mr. Chew, the GAO's statement that was 
submitted to the subcommittee indicates that the funding gaps 
contribute to the cost schedule and performance problems for 
eight of your major system acquisitions; and my question is--
specifically to you, are the annual budget and appropriations 
process undermining your modernization efforts, and will it 
undermine the FAA's efforts to transform the system?
    Mr. Chew. I think I would have to answer this way: I think 
there are elements of the acquisition process and the 
appropriations process that make it difficult to sustain 
constant schedule and performance over time for many of the 
projects, because the projects, particularly the ones that are 
multiyear and are very large, and they go on literally for 5, 
6, 7, 8, 9 years. Our process of phasing some of those into 
useful segments will help.
    However, were there to be potential changes to the 
appropriations process or the way monies are allocated 
multiyear, that could serve to help stabilize the kind of 
funding and the kind of capital programs that we would need to 
impose in the system in the years forward.
    Mr. Costello. Mr. Chairman, thank you.
    Mr. Mica. Thank you. I have additional questions for Mr. 
Shane and Mr. Chew, which I will submit in writing and ask that 
we keep the record open for 3 weeks.
    Without objection, and Mr. Costello moves, without 
objection, so ordered.
    I want to thank our witnesses for their participation 
today, thank Mr. Chew and Mr. Shane for their service. You have 
a pretty daunting task ahead, and you are constrained by some 
of the resources we provide, so we wish you well.
    We hope to get some more specific details on time lines and 
costs. I think you heard that. It is sort of a unanimous 
concern from the panel today.
    Again, we will excuse this panel. Thank you for being with 
us and for your responses to our questions.
    We will call our second panel of witnesses this morning, 
which consists of Mr. John Douglass, President and CEO of 
Aerospace Industries Association; Mr. John Carr, President of 
the National Air Traffic Controllers Association; and Mr. 
Thomas Brantley, President of the Professional Airways Systems 
Specialists.
    I think all of you have been before us before, so you know 
the routine. If you have any lengthy documents or statements 
you would like to be made part of the record, please request 
that through the Chair.

   TESTIMONY OF JOHN DOUGLASS, PRESIDENT AND CEO, AEROSPACE 
  INDUSTRIES ASSOCIATION; JOHN CARR, PRESIDENT, NATIONAL AIR 
     TRAFFIC CONTROLLERS ASSOCIATION; AND THOMAS BRANTLEY, 
      PRESIDENT, PROFESSIONAL AIRWAYS SYSTEMS SPECIALISTS

    Mr. Mica. Welcome again, gentlemen, and let me first 
recognize Mr. John Douglass, President and CEO of Aerospace 
Industries, and then we will hear from our other two witnesses.
    Mr. Douglass, welcome.
    Mr. Douglass. Thank you, Mr. Chairman.
    First of all, let me begin by thanking you for your 
leadership, Mr. Chairman, as we have gotten into this issue, 
and for calling this important hearing today. I ask that my 
full statement be included in the record.
    Mr. Mica. Without objection, so ordered.
    Mr. Douglass. I have several key points that I would like 
to make that I would summarize from my written statement. My 
first and most important point is that the successful 
implementation of the Next Generation Air Transportation System 
will not be possible without the clear and consistent support 
of the legislative and executive branches of our government. 
The complexity and scope of this effort cannot be overstated.
    In regards to the legislative branch, I am referring 
specifically to the men and women who make up this 
subcommittee. Without your leadership, this project will 
languish in a manner that will ultimately do harm to our 
national security and to our economy.
    The current U.S. Air transportation system, designed in the 
1960s, is rapidly growing obsolete. Today, the system is 
stretched to its limit. It is clear it cannot handle the 
dramatic increases in traffic projected for the years ahead. 
The FAA and industry estimate, for example, a tripling of air 
passengers by 2025. The impact of this obsolescence is already 
costly. According to the Air Transport Association, delays due 
to equipment, runways, volume, and weather cost the airline 
industry $6.2 billion last year alone, and have been estimated 
to cost the economy as much as $30 billion a year by the 
President's Commission on the Future of the Aerospace Industry. 
It is clear that the time for government action to put a new 
system in place is now.
    My second point, Mr. Chairman, is that the leadership of 
this committee has gotten us off to a good start on the 
development of a new ATM system. This committee showed its 
leadership by requiring the administration to set up a joint 
planning and development office that can tap into the combined 
technological resources of the various departments of the 
Federal Government. This was one of the recommendations of the 
President's Commission, and you promptly implemented it.
    The JPDO, although still in its early stages, clearly shows 
promise. With the creation of its eight integrated product 
teams, or IPTs, the organization has established the necessary 
framework to allow for appropriate technical input into the air 
transportation development process from across the government. 
The access to this technology is critical.
    Furthermore, with the creation of the Next Generation Air 
Transportation System Institute, or NGATS, via AIA's affiliate, 
the National Center for Advanced Technologies, the JPDO has 
fulfilled an Aerospace Commission recommendation to make 
industry a partner in shaping the architecture of a modernized, 
integrated, air traffic management system. This will be 
critical for making sure that the architecture is one that will 
last a long time. And it is also going to be critical, Mr. 
Chairman, to getting industry investment in the system.
    These mechanisms will allow the JPDO to develop an 
adaptable, widely accepted plan that increases the security, 
safety, and speed of air travel for all Americans. To 
underscore the need for an adaptable and scalable system, one 
only has to open their mind to the volume of traditional air 
traffic the system will have to handle.
    And the new system is likely to emerge in the next 20 
years. Reuseable space vehicles, unpiloted vehicles of all 
types, air taxis, advanced vertical lift concepts, new kinds of 
recreational air vehicles, and who knows what else will enter 
the system during this period.
    My third point addresses the need for a reliable and 
consistent funding stream for this new program. For the Next 
Generation Transportation System to materialize, we must have 
clear direction from this committee, the Congress, and the 
administration that modernization of our air traffic system is 
a national priority. In particular, we must ensure that funding 
for NASA, the Department of Defense, FAA, and the other 
agencies required for the development and deployment of this 
new system remains a national priority through what we know 
will be a number of Congresses and future administrations.
    Our European competitors understand these facts and are 
moving ahead with the idea of deploying their new system ahead 
of ours and thus becoming a new global standard. Mr. Ehlers, 
this is the point you were making a few minutes ago.
    At the end of March, the Advisory Council for Aeronautics 
Research in Europe released a revised blueprint for improved 
management of the European air traffic management system and 
called for a $221 billion funding for this program over the 
next 20 years on five highly focused projects. At the same 
time, NASA funding for aeronautics programs here in the United 
States is moving in exactly the opposite direction, with 
proposed cuts of approximately 25 percent of its total 
aeronautics budget over the next 4 years.
    In closing my opening statement, Mr. Chairman, let me 
return to my first point: leadership. Due to the complexity of 
this task and the agencies involved, your leadership will be 
essential. Congress' role is always important. In this venture, 
it is going to be crucial.
    I will be glad to answer any questions, sir, at the 
appropriate time.
    Mr. Mica. Thank you, and we will hold questions. We will 
try to hear our next two witnesses before we go and vote.
    Mr. Carr.
    Mr. Carr. Mr. Chairman and members of the subcommittee, 
thank you for the opportunity to testify today as you review 
the ATO and the JPDO. I want to concentrate my remarks, if you 
will, on the ATO, and ask that my complete written statement, 
as well as the JPDO, be made a part of the record.
    Mr. Mica. Your entire statement will be part of the record.
    Mr. Carr. Thank you, sir.
    The ATO has made major strides in structural change. 
However, from inside of the ATO organization we have found 
significant barriers to continued success. We believe there is 
still an opportunity to correct these fundamental problems 
before they become institutionalized, and I am very pleased to 
have the opportunity to share our concerns with you.
    The COO for any major organization is responsible for 
managing the day-to-day operations of that organization. I 
believe that that is occurring today on the acquisition side of 
the ATO. However, when it comes to matters relating to 
personnel, that has not occurred.
    For those of us working inside the FAA, it seems that the 
COO is subordinate to the Human Resource Management staff when 
it comes to personnel matters. Considering that more than 
36,000 FAA employees, or 76 percent of the FAA workforce, is in 
the ATO, no rational organizational structure would keep Human 
Resources outside of the new organization.
    The current relationship between ATO and Human Resources 
creates excessive bureaucracy for even the simplest of tasks. 
The problem is structural, but the solution is not difficult. 
Congress took direct action in clarifying those lines of 
authority by making the COO subordinate only to the FAA 
Administrator. I do not believe it was the intent of the 
Congress to make the COO subordinate to the Assistant 
Administrator for Human Resource Management in every matter 
regarding personnel.
    As an example, the current air traffic controllers 
collective bargaining agreement was signed by FAA Administrator 
Blakey in December of 2003, and by the Agency's own estimates, 
currently saves them $40 million. If this agreement is reopened 
this summer, the chief negotiator will not be anyone from 
within the COO's chain of command. It will be someone from FAA 
human relations. Since this collective bargaining agreement 
deals primarily with technical issues related to the day-to-day 
operations of our Nation's air traffic control facilities, this 
persistent confusion in the lines of authority will increase 
the likelihood that these negotiations will take longer than 
necessary and lead to an agreement that does not even meet the 
needs of those charged with administering it.
    The biggest challenge, we believe, facing the ATO in the 
immediate future is addressing the staffing crisis that you 
have all heard about and spoken about. If the ATO is truly 
committed to ensuring that the right people are in the right 
place, it is essential to eliminate regional or service area 
boundaries that place artificial caps on transfers.
    FAA data will tell you that air traffic controllers who 
transfer to higher-level facilities qualify in half as much 
time as new hires, particularly in the terminal option. And 
there is currently a considerable willingness and desire within 
the existing controller workforce to transfer to fill vacancies 
at short-staffed facilities, but many of these transfers have 
been blocked due to artificial bureaucratic barriers.
    We have offered the ATO an innovative nationwide bidding 
process to allow the FAA to identify facilities where their 
need is greatest and to prioritize those transfers for maximum 
efficiency nationwide. This proposal does nothing more 
complicated than centralizing the bidding process to eliminate 
duplication of work across regional boundaries, while it allows 
the FAA to better manage their staffing on a national level. To 
date, neither the FAA nor the ATO has been able to take 
advantage of this simple idea.
    Another key area of inefficiency lies in the administration 
of training. The FAA has determined that the FAA Academy in 
Oklahoma City is no longer used as an applicant screening 
program. As NATCA testified before this committee last year, 
students who have graduated from FAA-approved Collegiate 
Training Initiative schools need not attend the FAA Academy for 
training purposes. There is absolutely no reason for either the 
FAA or the student to incur the delay and the expense of this 
additional training.
    I have personally visited CTI schools. I visited the 
University of North Dakota. I visited Embry-Riddle Aeronautical 
University, and I can tell you unequivocally that we would 
gratefully accept any of their graduates directly into any of 
our air traffic control facilities. These schools do a 
remarkable job. If CTI students are able to bypass academy 
training, the FAA could substantially revise the cost that they 
gave you in their workforce plan and reprogram those funds to 
accelerate facility-specific training. In fact, we believe the 
Agency could save upwards of $45 million per year by this zero-
cost policy decision alone.
    NATCA has always been willing to contribute our efforts to 
solving problems such as these. And while we continue to work 
within the FAA and the ATO to make the system as efficient as 
possible, no discussion of the ATO would be complete without 
addressing the emerging funding debate.
    We are very concerned that the current rhetoric is 
preventing a factual discussion of the issue. I have submitted 
NATCA's trust fund research with my written testimony, but I 
want to address a few key points.
    First, it is true the trust fund revenue did experience a 
temporary and quite predictable period of decline from 2000 to 
2003. However, we saw those revenues rebound in 2004. It serves 
no useful purpose to cloud the issue by discussing trust fund 
balances in decline or policy choices or framing the issue in 
terms of revenue per flight.
    To be perfectly honest with you, the cost of providing air 
traffic control service does not fluctuate on a per-flight 
basis. Costs are relatively constant until you reach the point 
of sector saturation, when you must open additional sectors or 
personnel are needed to expand capacity.
    Projected growth in trust fund revenues currently outpaces 
the projected growth in operations costs. These are not our 
numbers, they come from the FAA, they come from the Inspector 
General, and they come from the GAO. Trust fund revenues are 
increasing and growth is projected to continue. These are the 
facts. If we are to discuss changes to tax structures or how 
revenues are distributed, it is essential that we consider 
substantive data and not the rhetoric that continues to 
distract us from this important policy discussion.
    We have grave concerns with the headlong rush into changing 
decades-old funding mechanisms. We believe the safety of our 
skies is a sacred public trust, and it is the role of our 
elected officials to protect that trust.
    I have heard it said that our current funding system is the 
worst funding system in the world, with the possible exception 
of every other funding system in use. That, by the way, has 
also been said about our current system of government.
    In transforming the FAA, this committee has created a sound 
statutory framework and a sound financial vehicle. We applaud 
your efforts to continue to maintain vigilant oversight, to 
promote the transformation needed and to continue to provide 
the American people with the air traffic control system that 
leads the world.
    That concludes my statement, and I will be happy to answer 
any questions you may have.
    Mr. Mica. Thank you.
    We will try to hear now from Thomas Brantley.
    Mr. Brantley. Thank you. Mr. Chairman, Congressman 
Costello, and members of the subcommittee, thank you for 
inviting us to testify today on the ATO and the JPDO.
    The ATO was designed to bring a cost and performance 
management approach to the FAA. PASS strongly supports efforts 
aimed at increasing the FAA's focus on efficiency and 
effectiveness, and we believe that this must not be done at the 
expense of safety. When contemplating changes of this 
magnitude, the FAA should build on its strengths and look at 
sweeping changes where it is weakest.
    For the ATO to be successful, the Agency must hire enough 
technical employees to safely maintain and certify the national 
air space system. The Agency is currently over 400 below the 
minimum technical employee staffing level of 6,100, which the 
FAA agreed was the absolute minimum.
    Because of inadequate staffing, these employees are being 
forced to work longer hours and accumulate more overtime. 
Instead of hiring additional employees, however, the FAA is 
turning away from a maintenance and certification program, that 
has been in place for 30 years and has been a key element in 
maintaining the safest and most reliable air transportation 
system in the world.
    The new concept is to move away from a proactive 
maintenance philosophy towards a reactive one. Among the major 
consequences will be more unplanned outages and longer recovery 
times when equipment fails.
    Several years ago, the FAA attempted this approach under 
the corporate maintenance philosophy in Alaska, with less than 
favorable results. Under CMP, as with the new ATO concept, 
maintenance was eliminated, certification intervals were 
extended and staffing was reduced. The eventual rise in 
operational problems resulted in an increase in work beyond the 
capacity of the few remaining technicians. In PASS's view, if 
implemented nationally, the results will be the same as what 
occurred in Alaska.
    In addition, PASS believes that the future of the ATO is 
directly tied to adequate training of the technical workforce. 
Both the FAA and the Congress agreed that the most efficient 
method for training of FAA employees was to employ a 
decentralized model rather than the centralized training method 
that involves sending employees to Oklahoma City. 
Unfortunately, the FAA has since decided to return to the 
inefficient centralized approach.
    A focus on decentralized and on-the-job training would not 
only reduce the impact on operations caused by requiring 
employees to be away from facilities, but it would also save on 
the costs associated with a centralized training model, such as 
travel, per diem, and overtime. PASS believes the Agency can 
restructure and improve efficiency if it focuses on providing 
the services needed by users of the NAS.
    Among the FAA's greatest strengths are its safety record 
and the availability of services to customers. Combine this 
reputation for safety and service with a skilled and dedicated 
workforce, and you have the United States aviation system, the 
safest system in the world.
    PASS is interested in working closely with the FAA to 
realize a successful future for the Agency that is more cost 
effective and capable, while continuing to provide the highest 
level of safety and service to the American flying public.
    Thank you for allowing me to present our views, and I would 
be happy to answer any questions.
    Mr. Mica. Thank you. We have had a chance to hear all three 
witnesses from this panel. I want to thank you for your 
testimony.
    We are not going to ask you questions, because I have just 
been handed a note that we have three votes, and some 
parliamentary antics coming up, that will probably take about 
an hour. So what we are going to do is the same thing as we 
offered with the last panel, which is to submit questions in 
writing. We are leaving the record open, and your responses 
will be made a part of the record.
    So there being no further business before this 
subcommittee, we thank you again for participating. This 
hearing is adjourned.
    [Whereupon, at 11:53 a.m., the subcommittee was adjourned.]

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