[Senate Hearing 109-]
[From the U.S. Government Publishing Office]



 
  DEPARTMENTS OF TRANSPORTATION, TREASURY, THE JUDICIARY, HOUSING AND 
URBAN DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 
                                  2007

                              ----------                              


                         THURSDAY, MAY 4, 2006

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 9:36 a.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Christopher S. Bond (chairman) 
presiding.
    Present: Senators Bond, Bennett, Stevens, Burns, Murray, 
Durbin, and Dorgan.

                      DEPARTMENT OF TRANSPORTATION

                    Federal Aviation Administration

STATEMENT OF HON. MARION C. BLAKEY, ADMINISTRATOR
ACCOMPANIED BY:
        DAVID DOBBS, ASSISTANT INSPECTOR GENERAL FOR AVIATION AND 
            SPECIAL PROGRAM AUDITS, OFFICE OF INSPECTOR GENERAL, 
            DEPARTMENT OF TRANSPORTATION

            OPENING STATEMENT OF SENATOR CHRISTOPHER S. BOND

    Senator Bond. Good morning. The Senate Appropriations 
Subcommittee on Transportation, Treasury, Judiciary, HUD and 
related agencies will come to order.
    It is a pleasure to welcome FAA Administrator Marion Blakey 
and thank her once again for appearing before us today to 
testify on the Federal Aviation Administration's budget request 
for fiscal year 2007.
    Madame Administrator, no matter what concerns I raise, I 
want you to know that I respect your dedication and commitment 
to the success of FAA. There are no simple issues. I know you 
have committed yourself to making the FAA a model agency. I 
want that to be on the record, because we will have many areas 
of difficult questions that we need to raise and I want 
everybody to understand how much we support your efforts.
    The administration's budget proposes $13.7 billion in new 
spending commitments for the FAA, a $560 million decrease from 
fiscal year 2006. While the FAA operational activities would 
see a 3.2 percent increase over the amount provided last year, 
the budget would impose a dramatic cut in Federal airport 
construction investment, most in funding reductions in the 
Airport Improvement Program.
    In addition, facilities and equipment would receive $2.5 
billion which is a 0.5 percent decrease from last year, and 
$607 million below the authorized level.
    Nevertheless, the real cut comes from the Airport 
Improvement Program, which would only get $2.57 billion, down 
$765 million from last year or a 22 percent decrease and $950 
million below the authorized amount.
    We have tried to make the case to the Office of Management 
and Budget, and anybody else who would listen, that the AIP 
program is critical to the future of commercial aviation in the 
Nation. My colleagues and I are ones who understand and use the 
airport services around the country and we know how important 
they are to the successful economic growth of our communities 
and the businesses, employers and employees who depend upon 
them.
    Unfortunately, this cut means increased funding for 
salaries and expenses, and the hiring of air traffic 
controllers and safety inspectors comes at the expense of 
funding needed for airport investment improvements under the 
AIP program.
    If the administration were to follow the blueprint of 
VISION-100, the authorizing legislation for aviation, in the 
same manner in which we funded needed highway improvements 
under SAFETEA, the AIP number for 2007 would be $3.7 billion 
rather than the $2.57 billion requested. Consequently, I need 
to understand the justification for this funding cut and how 
the administration and OMB intends to maintain a world class 
commercial aviation industry.
    In particular, I am very much concerned about what cuts to 
the AIP program formula will mean specifically to the 
construction needs of airports, especially small airports since 
larger airports tend to rely on per capita passenger facility 
charges or bond issues to pay for their capital development.
    As I understand it, the formula entitlement for primary 
airports would be cut by 44 percent under the budget request 
which would result in a drop from $1 million to $650,000 for 
primary airports.
    The formula entitlement for general aviation would also cut 
funding for general aviation airports by 29 percent, resulting 
in the elimination of the current $150,000 annual minimum per 
airport. In fact, many general aviation airports would lose 
funding altogether.
    In addition, and more importantly, the Aviation Trust Fund 
is slowly going broke and needs real reform. This is a key 
issue facing Congress and I urge the administration to announce 
its proposal on the funding of the Trust Fund as soon as 
possible. These are complex issues that deserve comprehensive 
consideration over a significant period of time. There are no 
quick or easy answers.
    In particular, the poor economic condition of the aviation 
industry has had a negative impact on the Trust Fund. Trust 
Fund revenues more than doubled from $4.9 billion in 1990 to 
$10.7 billion in 2000. The trend changed in fiscal year 2001 
when revenues fell slightly to $10.2 billion. In 2003 revenues 
again dropped slightly to $10.1 billion. Because aviation has 
remained constant, there has been a steady decline in the 
uncommitted balance in the Trust Fund, which stood at $4.8 
billion at the end of 2002. Over the next 2 years these funds, 
and any other collections, are expected to be fully spent on 
aviation activities.
    Also, over the next 15 years, passenger boarding is 
expected to grow by some 15 percent, including a 30 percent 
growth in air transport and commercial operations. At the 35 
busiest airports in the Nation, total operations are expected 
to grow by more than 34 percent by 2020.
    While the administration is expected to propose new ways to 
fund the Aviation Trust Fund, we cannot afford to shortchange 
our commercial air needs in the meantime. We need answers to 
all these issues but more importantly we need adequate funding.
    The bottom line is there needs to be a new approach to the 
Aviation Trust Fund to ensure the long-term stability and 
growth of the airline/aviation industry. First, all taxes that 
go to the Trust Fund will expire on September 30, 2007. As a 
result, I expect and understand the FAA has been doing outreach 
on alternative funding options, although I expect taxes and 
other fees to remain a significant part of any proposal.
    While there has been a lot of pressure by the major air 
carriers to balance out the funding of the Trust Fund, we need 
to ensure that we develop a healthy balance that supports the 
economic viability of all aspects of the aviation industry, 
from small planes and general aviation to the large carriers.
    This is a fragile industry, as you well know, and it must 
be respected. As a matter of perspective, the air traffic 
control system in fiscal year 2005 served some 739 million 
passengers and over 39 billion ton miles of freight, a number 
that is very difficult to comprehend because of its size.
    The FAA also maintains a system of some 70,000 facilities 
and equipment. There are FAA operated or contract operated 
towers at 500 airports with the FAA responsible for inspection 
and certification of 220,000 aircraft and 610,000 pilots. The 
size and the magnitude of the aviation industry is huge and we 
must balance how we pay and support the industry. This is 
critical to the economic vitality and the growth of our Nation 
and its economy.
    The FAA is facing many other important issues regarding 
oversight and administration of a number of contracts designed 
to modernize equipment. In particular, and this is an area of 
major concern to me, the FAA IG reviewed 16 major acquisitions 
in 2005 and found projects experience a growth cost of over 
$5.6 billion from $8.9 billion to $14.5 billion. In addition, 9 
of 16 projects had schedule delays ranging from 2 to 12 years, 
and 2 other projects were deferred pending further evaluation. 
Since the last report on these projects, the estimated cost of 
6 of the 16 has increased by nearly $1.7 billion.
    More importantly, the IG recently raised concern about the 
FAA Telecommunications Infrastructure Contract where the FAA 
intends to replace seven existing FAA-owned and leased 
telecommunication networks with a single network that would 
cost less to operate. Unfortunately, we understand that costs 
are growing, which means that the expected savings are eroding. 
I think this is a critical issue requiring your complete 
attention. The network needs to be implemented quickly and at a 
fair price if we are to make the change to save money.
    In addition, there are a number of other important issues 
facing the FAA, including the current impasse over the air 
traffic controller contract. Obviously, this is a tough issue. 
We have a fine group of air traffic controllers who are 
responsible for the management of our airways and we depend 
upon them for safety in our flight activities. They do a great 
job which places them under substantial stress.

                           PREPARED STATEMENT

    Nevertheless, I understand the FAA has tried to balance the 
contract needs of the air traffic controllers with the 
skyrocketing costs that have occurred under the last contract. 
I do not think the FAA contract proposal is a perfect document, 
but it appears the FAA has attempted in good faith to find a 
balance that is fair and equitable and ultimately this will 
mean savings that will free up funds for other staffing, 
redevelopment and capital needs. These are critical funds in a 
time of tight budgets.
    Again, I thank you for your hard work and I look forward to 
hearing your testimony. I now turn to my ranking member, 
Senator Murray.
    [The statement follows:]

           Prepared Statement of Senator Christopher S. Bond

    The Senate Appropriations Subcommittee on Transportation, Treasury, 
the Judiciary, HUD, and Related Agencies will come to order. We welcome 
FAA Administrator Marion Blakey and thank her for appearing before us 
today to testify on the Federal Aviation Administration's budget 
request for fiscal year 2007. Ms. Blakey, no matter what concerns I 
raise, I want you to know that I respect your dedication and commitment 
to the success of the FAA. There are no simple issues, and I know you 
have committed yourself to making the FAA a model agency.
    The administration's budget proposes $13.7 billion in new spending 
commitments for the FAA, a $560 million decrease from fiscal year 2006. 
While the FAA operational activities would see a 3.2 percent increase 
over the amount provided last year, the budget would impose a dramatic 
cut in Federal airport construction investment, mostly in funding 
reductions in the Airport Improvement Program (AIP). In addition, 
Facilities and Equipment would receive $2.5 billion, which is a half 
percent decrease from last year, and $607 million below the authorized 
level. Nevertheless, the real cut comes from the Airport Improvement 
Program, which would only get $2.75 billion, down $765 million from 
last year, or a 22 percent decrease, and $950 million below the 
authorized amount.
    As the administration knows, the AIP program is critical to the 
future of commercial aviation in the Nation. This cut means increased 
funding for salaries and expenses and the hiring of air traffic 
controllers and safety inspectors at the expense of funding needed for 
airport investment improvements under the AIP program. If the 
administration were to follow the blueprint of VISION-100, the 
authorizing legislation for aviation, in the same manner in which they 
funded needed highway improvements under SAFETEA, the AIP number for 
fiscal year 2007 would be $3.7 billion, rather than the $2.75 billion 
requested. Consequently, I need to understand the justification for 
this funding and how the administration intends to maintain a world-
class commercial aviation industry.
    In particular, I am very concerned about what cuts to the AIP 
program formula will mean specifically to the construction needs of 
airports, especially small airports since larger airports tend to rely 
on per capita passenger facility charges or bond issues to pay for 
their capital development. As I understand it, the formula entitlement 
for primary airports would be cut by 44 percent under the budget 
request which would result in a drop from $1 million to $650,000 for 
primary airports. The formula entitlement for general aviation would 
also cut funding for general aviation airports by 29 percent, resulting 
in the elimination of the current $150,000 annual minimum per airport. 
In fact, many General Aviation Airports would lose funding altogether.
    In addition, and more importantly, the Aviation Trust Fund is 
slowly going broke and needs real reform. This is a key issue facing 
Congress and I urge the administration to announce its proposal on the 
funding of the trust fund as soon as possible. These are complex issues 
that deserve comprehensive consideration over a significant period of 
time. There are no easy or quick answers.
    In particular, the poor economic condition of the aviation industry 
has had a negative impact on the trust fund. Trust fund revenues more 
than doubled from $4.9 billion in fiscal year 1990 to $10.7 billion in 
fiscal year 2000. The trend changed in fiscal year 2001 when revenues 
fell slightly to $10.2 billion. In fiscal year 2003, revenues again 
dropped slightly to $10.1 billion. Because aviation has remained 
constant, there has been a steady decline in the uncommitted balance in 
the trust fund, which stood at $4.8 billion at the end of fiscal year 
2002. Over the next 2 years these funds and any other collections are 
expected to be fully spent on aviation activities.
    Also, over the next 15 years, passenger boarding is expected to 
grow by some 15 percent, including a 30 percent growth in air transport 
and commercial operations. At the 35 busiest airports in the Nation, 
total operations are expected to grow by more than 34 percent by 2020. 
While the administration is expected to propose new ways to fund the 
aviation trust fund, we cannot afford to shortchange our commercial air 
needs in the meantime. We need answers to all these issues, but more 
importantly, we need adequate funding.
    The bottom line is there needs to be a new approach to the Aviation 
Trust Fund to ensure the long-term stability and growth of the airline/
aviation industry. First, all taxes that go to the Trust Fund will 
expire on September 30, 2007. As a result, I expect and understand that 
the FAA has been doing outreach on alternative funding options although 
I expect taxes and other fees to remain a significant part of any 
proposal. While there has been a lot of pressure by the major air 
carriers to balance out the funding of the Trust Fund, we need to 
ensure that we develop a healthy balance that supports the economic 
viability of all aspects of the aviation industry, from small planes in 
general aviation to the large carriers.
    This is a fragile industry that must be respected. As a matter of 
perspective, the air traffic control system in fiscal year 2005 served 
some 739 million passengers and over 39 billion ton miles of freight. 
FAA also maintains a system of some 70,000 facilities and equipment. 
There are FAA-operated or -contract towers at 500 airports with FAA 
responsible for the inspection and certification of about 220,000 
aircraft and 610,000 pilots. The size and magnitude of the aviation 
industry is huge and we must balance how we pay and support the 
industry. This is critical to the economic vitality and growth of the 
Nation.
    The FAA is facing many other important issues regarding oversight 
and the administration of a number of contracts designed to modernize 
equipment. In particular, the FAA IG reviewed 16 major acquisitions in 
2005 and found projects experiencing a growth cost of over $5.6 
billion, from $8.9 to $14.5 billion. In addition, 9 of the 16 projects 
had schedule delays ranging from 2 to 12 years and 2 other projects 
were deferred pending further evaluation. Since the last report on 
these projects, the estimated cost of 6 of the 16 projects has 
increased by nearly $1.7 billion.
    Most importantly, the IG recently raised concern about the FAA 
Telecommunications Infrastructure contract where the FAA intends to 
replace 7 existing FAA-owned and -leased telecommunications networks 
with a single network that would cost less to operate. Unfortunately, 
costs are growing which means any expected savings are eroding. This is 
a critical issue requiring your complete attention. This network needs 
to be implemented quickly and at a fair price.
    In addition, there are a number of other important issues facing 
FAA, including the current impasse over the Air Traffic Controller 
contract. Obviously a very tough issue. We have a fine group of air 
traffic controllers who are responsible for the management of our 
airways. They do a great job which places them under substantial 
stress. Nevertheless, the FAA has tried to balance the contract needs 
of the air traffic controllers with the skyrocketing costs that have 
occurred under their last contract. I do not think the FAA contract 
proposal is a perfect document but I do believe that the FAA has 
attempted in good faith to find a balance that is fair and equitable, 
and ultimately this will mean savings that will free up unneeded funds 
for other staffing needs, redevelopment and capital needs. These are 
critical funds in a time of tight budgets.
    Again, I thank you for your hard work and look forward to hearing 
your testimony. I now turn to my ranking member, Senator Murray.

                   STATEMENT OF SENATOR PATTY MURRAY

    Senator Murray. Thank you very much, Mr. Chairman, for 
calling this hearing and I join you in welcoming our FAA 
Administrator, Marion Blakey, before the subcommittee this 
morning.
    Commercial aviation is a critical part of our national 
economy and our future. In 2004, the U.S. civil aviation sector 
generated $1.37 trillion of output, supported 12.3 million 
jobs, and created $418 billion in personal earnings. That 
represents almost 9 percent of overall employment in this 
country, and in my State that percentage is even higher.
    Having a strong aviation sector requires a strong FAA that 
guarantees safety for all users. The FAA must ensure the safety 
of every flight, of every airplane part, and of the system 
overall. That requires a well-trained and fully staffed 
workforce of safety inspectors and air traffic controllers, and 
modern equipment.
    As I review the current status of the FAA and the agency's 
financial needs, I am sorry to say this Department deserves a 
much better budget. It also needs strong leadership and closer 
attention from this Congress.
    The Bush administration is seeking to cut the FAA by more 
than $560 million, almost 4 percent in direct appropriations. 
When you include all of the proposed funding rescissions in the 
President's budget, that cut rises to $937 million or 6.8 
percent. The biggest cut proposed by the administration is a 
whopping $750 million cut in capital investment in our Nation's 
airports.
    We know that passenger boardings are expected to grow by 60 
percent over the next 15 years. That means we should be 
investing more. But instead, the Bush administration wants to 
cut our support for America's airports.
    Mr. Chairman, thanks to your leadership, we have rejected 
cuts in airport capital investments in the past but we have not 
been successful in fending off all cuts within the FAA's 
budget, such as cuts to modernize our outdated air traffic 
control system.
    This year the Bush administration seeks to cut 
modernization by $50 million, and that comes on top of much 
larger cuts in prior years. If we accept the President's level 
for air traffic control modernization, we will have cut 
modernization by $518 million, or 17 percent, in just the last 
5 years.
    I must confess to being enormously frustrated with the way 
this administration has handled the FAA and its budget needs. 
My frustration stems in part from the administration's effort 
to play a continuing game of hide the ball when it comes to the 
budgetary realities of this agency.
    For the last several months, I have been asking for very 
simple answers to some very simple questions. It was not until 
this subcommittee actually scheduled hearings with the 
Transportation Secretary and the FAA Administrator that we have 
been able to get any answers. And then the Secretary's answers 
have contradicted the administrator's answers.
    For example, I have been asking, of the hundreds of 
aircraft safety inspectors that are expected to retire this 
year, how many will the agency be able to hire to fill those 
vacancies? Those safety inspectors represent some of the most 
critical air safety positions in the entire agency.
    We have received numerous reports from the Inspector 
General and the Government Accountability Office that we need 
more inspectors and better training because more domestic 
airlines are doing their aircraft maintenance overseas. It is a 
sad fact of life that at the present the FAA does not even have 
the manpower or ability to inspect some of the facilities that 
are conducting these critical maintenance activities.
    When I asked this question of Secretary Mineta back on 
March 16, he told me the Department was going to be in a 
position to hire the 238 safety inspectors that we called for 
in our appropriations bill. But just this past Friday the 
Administrator told us to expect about 30 percent fewer 
inspectors to be hired.
    So with all the requirements placed on our flight safety 
inspectors, their number will still be well below the level the 
Agency had back in 2003.
    Similarly, for months I have been asking how many air 
traffic controllers the FAA will be able to hire to make up for 
the hundreds of controllers that are expected to retire this 
year. Here again the Secretary gave me one number, the 
Administrator gave me another. The Secretary told me he would 
be funding the 1,249 controllers that were called for last 
year. The Administrator is now telling me that we should only 
expect 930.
    These disconnects highlight my concern that the 
administration does not have a real plan for dealing with the 
looming retirement crisis both in the inspector and controller 
workforce.
    Back in December 2004, the FAA released this multi-year 
controller staffing plan. At the time, the FAA assured us that 
this plan would be renewed annually and updated for market 
conditions and actual retirements. We were assured this plan 
would not be ignored by OMB and would not grow dusty sitting on 
a shelf. We were told the administration was committed to 
updating the plan every year and funding it.
    Well, now it is May 2006. The annual update for this plan 
was due more than 6 months ago and we still do not have it. The 
absence of this plan cannot be blamed on the fact that the FAA 
and the controllers do not have a contract. That should not 
influence this plan. To me, it is simply inexcusable that this 
critical safety plan is being ignored.
    The fact that the agency cannot afford to hire enough 
inspectors or controllers does not come as a complete surprise 
to me. There are a number of funding shortfalls that undermine 
the FAA's ability to hire enough staff. A small part of the 
problem is that Congress approved a larger pay raise than the 
agency budgeted for.
    A much larger part of the problem is that despite my 
efforts and the efforts of several other Senators, the Congress 
imposed a 1 percent across-the-board cut on all agencies, 
including the FAA's operation accounts. These across-the-board 
cuts have become some kind of annual ritual and they occur 
because the Republican budget resolutions impose an unrealistic 
ceiling on agency funding.
    Last year was no different. Despite the fact that the 
Transportation Treasury Bill included enough funding to hire 
enough controllers and inspectors at the level called for by 
our subcommittee, the Defense Appropriations Bill then cut all 
accounts by 1 percent. With the large operating account the FAA 
has, that 1 percent cut had a real impact.
    I must commend the FAA Administrator for sounding the alarm 
on this possibility. She sent me and the other managers of this 
bill a letter expressing her worry about the potential impact 
of another across-the-board cut. I was sufficiently concerned 
that I took to the Senate floor in December to warn my 
colleagues against imposing an across-the-board cut. I 
specifically cited the potential impact of this cut on the 
FAA's ability to hire sufficient safety staff.
    In fact, I put Administrator Blakey's letter into the 
record for all of my colleagues to see. Unfortunately, my 
speech and the Administrator's letter were not sufficient to 
spare the FAA from the across-the-board cut. And now we are 
seeing the results when it comes to critical safety staffing.
    So Congress is part of the problem here, but not all of the 
problem. A large share of the responsibility lies with the way 
the FAA has failed to manage major procurement projects. The 
FAA has had a long history of wasting millions and sometimes 
billions of dollars on mismanaged procurement for which the 
taxpayer and the flying public have gotten very little or 
inadequate results.
    Recently we received an Inspector General's report 
indicating that this pattern still persists. The report made 
clear that the FAA's efforts to modernize its 
telecommunications infrastructure are way behind schedule and 
over budget. And I will discuss that in greater detail later.
    The IG found that if the FAA had managed these projects 
effectively it would have saved $33 million last year in 
operating funds and more than $100 million this year. Those 
operating savings would have been more than enough to fully 
fund the FAA's controller staffing plan and would have hired 
enough safety inspectors to get us back to the 2003 level. But 
because the FAA mismanaged these projects, it never enjoyed the 
savings and its critical safety needs are now being 
shortchanged.

                           PREPARED STATEMENT

    So Mr. Chairman, I believe this agency deserves a better 
budget, it deserves better leadership from the Secretary on 
down, it needs better management when it comes to these 
multimillion dollar procurements, and it needs better attention 
from this Congress. Only then will the flying public know that 
this system is truly safe.
    I look forward to working with you to achieve all of these 
objectives. Thank you, Mr. Chairman.
    [The statement follows:]

               Prepared Statement of Senator Patty Murray

    Commercial aviation is a critical part of our national economy and 
our future. In 2004, the U.S. civil aviation sector generated $1.37 
trillion of output, supported 12.3 million jobs, and created $418 
billion in personal earnings. That represents almost 9 percent of 
overall employment in this country, and--in my State--that percentage 
is even higher.
    Having a strong aviation sector requires a strong FAA that 
guarantees safety for all users. The FAA must ensure the safety of 
every flight, of every airplane part, and of the system overall. That 
requires a well-trained and fully-staffed workforce of safety 
inspectors and air traffic controllers and modern equipment.
    As I review the current status of the FAA and the agency's 
financial needs, I am sorry to say that this department deserves a much 
better budget. It also needs strong leadership and closer attention 
from this Congress.
    The Bush Administration is seeking to cut the FAA by more than $560 
million--almost 4 percent in direct appropriations. When you include 
all of the proposed funding rescissions in the President's budget, the 
cut rises to $937 million or 6.8 percent.
    The biggest cut proposed by the administration is a whopping $750 
million cut in capital investments in our Nation's airports. We know 
that passenger boardings are expected to grow by 60 percent over the 
next 15 years. That means we should be investing more. But instead, the 
Bush Administration wants to cut our support for America's airports.
    Mr. Chairman, thanks to your leadership, we have rejected cuts in 
airport capital investments in the past, but we have not been 
successful in fending off all cuts within the FAA's budget--such as 
cuts to modernize our outdate air-traffic control system.
    This year, the Bush Administration seeks to cut modernization by 
$50 million. That comes on top of much larger cuts in prior years. If 
we accept the President's level for air traffic control modernization, 
we will have cut modernization by $518 million or 17 percent in just 
the last 5 years.
    I must confess to being enormously frustrated with the way this 
administration has handled the FAA and its budget needs. My frustration 
stems in part from the administration's effort to play a continuing 
game of ``hide the ball'' when it comes to the budgetary realities of 
this agency.
    For the last several months, I have been seeking very simple 
answers to some very simple questions. It was not until this 
subcommittee actually scheduled hearings with the Transportation 
Secretary or the FAA Administrator that we have been able to get any 
answers. And then, the Secretary's answers have contradicted the 
Administrator's answers.
    For example, I've been asking: Of the hundreds of air safety 
inspectors that are expected to retire this year, how many will the 
agency be able to hire to fill those vacancies? These safety inspectors 
represent some of the most critical air safety positions in the entire 
agency. We have received numerous reports from the Inspector General 
and the Government Accountability Office that we need more inspectors 
and better training because more domestic airlines are doing their 
aircraft maintenance overseas.
    It is a sad fact of life that, at present, the FAA does not even 
have the manpower or ability to inspect some of the facilities that are 
conducting these maintenance activities.
    When I asked Secretary Mineta about this back on March 16, he told 
me the department was going to be in a position to hire the 238 safety 
inspectors that we called for in our appropriations bill. But just this 
past Friday, the Administrator told us to expect about 30 percent fewer 
inspectors to be hired. So with all the requirements placed on our 
flight safety inspectors, their number will still be well below the 
level the agency had back in 2003.
    Similarly, for months I have been asking how many air traffic 
controllers the FAA will be able to hire to make up for the hundreds of 
controllers that are expected to retire this year. Here again, the 
Secretary gave me one number, and the Administrator gave me another. 
The Secretary told me he would be funding the 1,249 controllers that 
were called for last year while the Administrator is now telling me 
that we should only expect 930.
    These disconnects highlight my concern that the administration 
doesn't have a real plan for dealing with the looming retirement crisis 
both in the inspector and controller workforce. Back in December 2004, 
the FAA released this multi-year controller staffing plan. At the time, 
the FAA assured us the plan would be renewed annually and updated for 
market conditions and actual retirements. We were assured this plan 
would not be ignored by OMB and would not grow dusty sitting on a 
shelf. We were told the administration was committed to updating the 
plan every year and funding it.
    Well, it is now May 2006, the annual update for this plan was due 
more than 6 months ago, and we still don't have it. The absence of this 
plan cannot be blamed on the fact that the FAA and the controllers 
still do not have a contract. That shouldn't influence this plan.
    To me, it is simply inexcusable that this critical safety plan is 
being ignored. The fact that the agency cannot afford to hire enough 
inspectors or controllers does not come as a complete surprise to me. 
There are a number of funding shortfalls that undermine the FAA's 
ability to hire enough staff.
    A small part of the problem is that Congress approved a larger pay 
raise than the agency budgeted for. A much larger part of the problem 
is that, despite my efforts, and the efforts of several other Senators, 
the Congress imposed a 1 percent across-the-board cut on all agencies, 
including the FAA's operations account.
    These across-the-board cuts have become an annual ritual. They 
occur because the Republican budget resolutions impose an unrealistic 
ceiling on agency funding. Last year was no different. Despite the fact 
that the Transportation, Treasury bill included enough funding to hire 
enough controllers and inspectors at the level called for by our 
subcommittee, the Defense Appropriations bill then cut all accounts by 
1 percent. With the large operating account that the FAA has, that 1 
percent cut had a real impact.
    I must commend the FAA Administrator for sounding the alarm on this 
possibility. She sent me and the other managers of this bill a letter 
expressing her worry about the potential impact of another across-the-
board cut. I was sufficiently concerned that I took to the Senate Floor 
in December to warn my colleagues against imposing an across-the-board 
cut.
    I specifically cited the potential impact of this cut on the FAA's 
ability to hire sufficient safety staff. In fact, I put Administrator 
Blakey's letter into the record for all my colleagues to see. 
Unfortunately, my speech and the Administrator's letter were not 
sufficient to spare the FAA from this across-the-board cut. Now, we are 
seeing the results when it comes to critical safety staffing.
    So Congress is part of the problem here, but not all of the 
problem. A large share of responsibility lies with the way the FAA has 
failed to manage major procurement projects.
    The FAA has had a long history of wasting millions and sometimes 
billions of dollars on mismanaged procurements for which the taxpayer 
and the flying public have gotten very little or inadequate results.
    Recently, we received an Inspector General's report indicating that 
this pattern still persists. The report made clear that the FAA's 
efforts to modernize its telecommunications infrastructure are way 
behind schedule and over budget. I will discuss this in greater detail 
later.
    The IG found that if the FAA had managed these projects 
effectively, it would have saved $33 million last year in operating 
funds and more than $100 million this year. Those operating savings 
would have been more than enough to fully fund the FAA's controller 
staffing plan and would have hired enough safety inspectors to get us 
back to the 2003 level. But because the FAA mismanaged these projects, 
it never enjoyed the savings, and its critical safety needs are now 
being shortchanged.
    So in summary, Mr. Chairman, I believe this agency deserves a 
better budget, it deserves better leadership from the Secretary on 
down, it needs better management when it comes to these multi-million 
dollar procurements, and it needs better attention from this Congress. 
Only then will the flying public know that the system is truly safe. I 
look forward to working with you to try to achieve all of these 
objectives.

    Senator Bond. Thank you very much for your candid comments, 
Senator Murray.
    I will see if our other colleagues have brief opening 
statements. Senator Bennett.
    Senator Bennett. I do not, Mr. Chairman.
    Senator Bond. Senator Burns.
    Senator Burns. No, sir. Proceed.

                  STATEMENT OF SENATOR BYRON L. DORGAN

    Senator Bond. Senator Dorgan.
    Senator Dorgan. Mr. Chairman, I will be very brief.
    I wanted to mention, we have an Energy Committee hearing 
that I have to attend, but to Administrator Blakey, we have an 
issue in Bismarck, North Dakota with respect to the movement of 
the radar.
    As you know, the original FAA plan was to purchase the ASR-
11 radar in 2003 and deploy it by 2006. As a result of that, 
Bismarck took a number of actions. We have a blind spot in the 
radar in Bismarck that was to be updated with the ASR-11 order.
    They also took action to begin developing the Northern 
Plains Commerce Center, which has an impact on the radar. And 
so they took action expecting that radar to be deployed by 
2006.
    Now we are stuck and that has slipped. I would like to 
continue to work with you and your staff to find a way to solve 
the peculiar problem that exists in Bismarck.
    Let me mention one other point, if I might. I am concerned 
about this issue of the air traffic controller situation and 
the contract dispute. I know that you have sent it to the 
Congress on April 5. If no action is taken then you impose your 
own set of circumstances.
    I do not like the way that is set up. I know that is set up 
in law, but I also know they have indicated they want to come 
back and continue to negotiate on the three items that you said 
were at an impasse.
    I want a good air traffic control system. I want the 
controllers to be fairly paid, and I want them to be 
professional, and I want that system to work well. I think the 
American people do as well.
    I would much prefer to see a circumstance that it go to 
binding arbitration with a good panel to take a look at it.
    But however this ends up, I think the current circumstance 
is pretty well stacked against the controllers. I expect 
Congress will likely not take action. I expect there is plenty 
of energy here to block action. So the result is you will end 
up simply imposing your decision to begin cutting salaries. And 
that troubles me a great deal. I do not think that is the way 
we are going to end up with a good system.
    So Administrator Blakey, I want you to succeed in your job. 
But I wanted to mention both of these issues, both of which I 
am concerned about.
    Senator Bond. Thank you very much, Senator Dorgan. As I 
understand it, the FAA recommendation is a generous increase in 
salaries and not a cut, but we will allow the Administrator to 
make her opening comments.
    And then I am going to turn to my ranking member for her 
questions because she has to go to the floor and I will allow 
her to ask her--
    Senator Murray. I am happy to have you go first on 
questions and I can go second.
    Senator Bond. No, no, I want you to get your questions out 
there first.
    Senator Murray. He wants the supplemental out on the floor.

                   STATEMENT OF HON. MARION C. BLAKEY

    Senator Bond. Madame Administrator, thank you.
    Ms. Blakey. Thank you.
    Chairman Bond, Senator Murray, Senator Dorgan, Senator 
Bennett, Chairman Burns of our Aviation Subcommittee, I am 
delighted to see all of you this morning. And thank you very 
much for the opportunity this represents to talk about the 
FAA's fiscal year 2007 budget request.
    You are absolutely right, Mr. Chairman, the aviation 
industry is facing numerous challenges at this time and we 
strive to maximize our resources so that we can continue to 
operate and maintain the very safest and most efficient air 
transportation system in the world. And we are very proud of 
doing that.

                                 SAFETY

    Our safety record is impressive by any standards. In terms 
of sheer numbers alone, over 2 billion passengers have traveled 
on our system over the last 3 years. That is seven times the 
population of this great Nation.
    In fact, the fatal accident rate is at an all-time low. It 
is the diligence of the entire aviation community and the 
oversight of committees such as this one that make all of this 
possible. Our pilots, flight attendants, mechanics, inspectors, 
controllers, engineers, technicians, they all have contributed 
to this really phenomenal achievement.
    The President's $13.7 billion budget for 2007 addresses our 
needs. About 70 percent of that money goes to maintain and 
advance the safety of the system. You will also be pleased to 
know that the vast majority of our capital investment programs 
are on track and on budget. I sense we need to do a better job 
communicating with this committee about recent achievements on 
that front and we will do so. We are running the FAA much more 
like a business and we are seeing real results.

                          PROMISING TECHNOLOGY

    Our 2007 budget provides significant increases for two 
promising technologies that will serve as critical platforms 
for the next generation air transportation system, Automatic 
Dependence Surveillance Broadcast or ADS-B, and Systemwide 
Information Management or SWIM.
    The capabilities of ADS-B have already been demonstrated in 
the field. It provides the automatic broadcast of aircraft 
position, altitude, velocity and enhanced visibility not just 
of aircraft but of vehicular traffic, for pilots and air 
traffic controllers alike. It also uses GPS, which further 
reduces our reliance on ground-based infrastructure.
    Another innovative program is our Systemwide Information 
Management, SWIM for short. In essence, we are creating an 
aviation Internet to move information within the FAA and to 
other Government agencies faster, better, cheaper. Much like 
the world wide web revolutionized American commerce, SWIM lays 
the aviation information superhighway. It is going to lead to 
dramatic improvements in air transportation safety, security 
and capacity.

                          AVIATION TRUST FUND

    However, just as the chairman has noted, the FAA must 
remain focused on a much larger issue, and that is the Aviation 
Trust Fund. It is a constant reminder that unless we address 
this challenge and provide the Agency with a funding mechanism 
that is both reliable and consistent we will be unable to meet 
the needs of the flying public.
    Simply put, we need a funding stream that is linked 
directly to the actual cost of what it takes the Federal 
Government to serve the business of aviation. Right now we are 
tied to the Airport and Airway Trust Fund. The Trust Fund 
receives revenue from aviation excise taxes, including a 
domestic segment tax, an international passenger tax, and 
commercial and general aviation fuel taxes.
    But the primary source of income for the FAA's operations 
and capital accounts is a 7.5 percent tax on the price of 
commercial airline tickets. Obviously, with the advent of the 
low-cost carriers, low-cost tickets are great for all of us. 
But the price of those tickets has fallen dramatically. 
Competition has increased. And our revenue stream has suffered.
    At the same time, we see rising passenger levels and more 
planes in the sky as airlines fly a greater number of smaller 
jets and the workload of the FAA will go up accordingly. Our 
costs go up without a corresponding boost in revenues.
    As I have said before, we might as well tie our funding to 
the price of a gallon of milk.
    The taxes that fuel the Trust Fund will expire on September 
30, 2007. That may sound a bit of a way off at this point but 
history shows otherwise. Secretary Mineta and I continue to 
place a very high priority on finalizing our proposal. It is 
undergoing review right now at the most senior levels of the 
administration and I am confident resolution is just around the 
corner.

                          MORE LIKE A BUSINESS

    As you know, in striving to operate more like a business, 
we are constantly pushing to stretch our resources. Our 
business plans mirror the industry we serve. We have 
reorganized our entire air traffic services organization, 
cutting multiple levels of senior management, reducing our 
executive ranks by 20 percent. We have streamlined operations, 
eliminating and consolidating administrative staffs and support 
functions.
    Perhaps the single greatest impetus to operate like a 
business is our need to design, deploy and pay for the next 
generation system. Our existing infrastructure will not be able 
to handle the doubling or even potentially tripling of traffic 
that we know is coming.
    Under the leadership of Secretary Mineta, we are building a 
plan for the future system with four Cabinet-level agencies all 
combining their expertise. Unless a consistent and cost-based 
revenue stream is established to pay for it, this effort will 
likely be for naught. As it is, the agency is headed toward a 
balancing act among competing resources. Do we cut back on air 
traffic services? Do we slow the course of modernization? Do 
certification efforts for new aircraft take a slow roll? Those 
are choices none of us want to make.

              NATIONAL AIR TRAFFIC CONTROLLERS ASSOCIATION

    Now I would be remiss if I did not mention one of the 
largest issues on our plate currently, and that is our contract 
with the National Air Traffic Controllers Association, NATCA. 
Over 9 months of negotiation, including 4 weeks of mediation, 
the controllers union consistently refused to offer meaningful 
changes in the current pay structure to address the long-term 
affordability of their contract. Our proposal protects the 
existing workforce. It grandfathers the salaries and benefits 
of controllers already on board and preserves 82 percent of 
their premium pay, on average.
    We also bring the salaries of new controllers into line 
with other employees of the agency, reversing a trend that 
under the current contract has caused the pay differential to 
more than double.
    At the end of 2005, the average compensation package for 
our existing controllers, salary plus premium and benefits, is 
about $166,000 a year. Our proposal? Our proposal pushes that 
to $187,000 by the end of the agreement.
    New hires in training start at an average of just under 
$37,000 in base and locality pay, but get to over $93,000 with 
premiums in 5 years. Quite a generous pay package by anyone's 
standards.
    In 1996 Congress put in place the law that requires any 
contract impasse to be sent to the Hill before the agency can 
implement its proposal. As much as we did not want to do that, 
when NATCA refused to address the core issues our proposal was 
sent to Congress for a 60-day review. Unless Congress chooses 
to act, on June 5 we will be in a position to implement our 
proposal.
    As I have said before, we cannot and will not sign a 
contract we simply cannot afford.
    In closing, with the broad scope of the issues that face 
the agency, the Trust Fund, modernizing the system, safety, the 
new contract for our controllers, it is clear that the FAA must 
continue to find new ways operate more like a business.

                           PREPARED STATEMENT

    You have my firm commitment that we will continue to 
deliver the world's safest and most efficient form of 
transportation while doing so.
    Thank you very much.
    [The statement follows:]

                 Prepared Statement of Marion C. Blakey

    Chairman Bond, Senator Murray, members of the subcommittee, it is 
my pleasure to appear before you on behalf of the men and women of the 
Federal Aviation Administration (FAA) on our fiscal year 2007 budget 
request. Before discussing the request and the agency's short-term 
needs, I would like to highlight briefly our efforts to ensure the 
agency's long-term financial viability.
    The FAA's long-term financial outlook depends largely on the 
Airport and Airway Trust Fund (AATF or Trust Fund). Each year, the FAA 
receives appropriations drawn from the Trust Fund and from the General 
Fund. This year, about 82 percent of FAA's total budget will come from 
the Trust Fund and 18 percent from the General Fund. The Trust Fund 
receives revenues from several aviation excise taxes--including a 
domestic segment tax, an international passenger tax, and commercial 
and general aviation fuel taxes. However, the primary source of income 
for the Trust Fund is a 7.5 percent tax on the price of commercial 
airline tickets. While the sharp decline in airline ticket prices has 
been good news for consumers over the last several years, it has made 
the Trust Fund vulnerable due to its heavy reliance on the ticket tax. 
At the same time, FAA's workload and operating costs continue to rise 
due primarily to operational changes in the aviation industry. These 
changes include the increased use of smaller regional jets and business 
jets, both of which generate less revenue per flight for the Trust Fund 
than larger airline jets. Consequently, there is currently no nexus 
between the workload of providing air traffic services and how they are 
funded.
    In recent years, appropriations from the Trust Fund have been 
funded not only from the annual revenue and interest going into the 
Trust Fund, but also from drawing down the uncommitted balance of the 
Trust Fund, which was over $7 billion in 2001. In fiscal year 2005, the 
uncommitted balance of the Trust Fund was $1.9 billion and the 
President's fiscal year 2007 budget projects that it will dip to about 
$1.7 billion at the end of this fiscal year, less than 2 months of FAA 
spending at our current rate.
    As you know, all the taxes that go to the Trust Fund will expire on 
September 30, 2007. During the past year, we have worked closely with 
our stakeholder community to explore other financing alternatives. 
Under Secretary Mineta's leadership, we conducted a broad outreach to 
the aviation community to explore funding options that would be in the 
long-term best interest of the traveling public, the aviation industry, 
and the FAA. In my view the comments we received have greatly informed 
our decision-making. I look forward to discussing the specifics of the 
administration's funding proposal as soon as it is finalized.
    As I've often stated over the past year during our outreach, our 
belief in the need for funding reform for the FAA is not fundamentally 
about generating more money for the FAA. It is about creating a stable 
and predictable funding system that provides appropriate incentives to 
users and to the FAA to operate more efficiently and facilitating 
modernization of the aviation system on a more rational, equitable, and 
predictable basis.

             PERFORMING LIKE A BUSINESS IN FISCAL YEAR 2007

    The FAA operates 24 hours a day, 7 days a week, 365 days a year. We 
run a multi-billion dollar air traffic control system that in fiscal 
year 2005 served 739 million passengers and over 39 billion cargo 
revenue ton miles of freight. We operate and maintain a system 
comprised of more than 70,000 facilities and pieces of equipment. There 
are FAA-operated or contract towers at 500 airports, and we are also 
responsible for inspection and certification of about 220,000 aircraft 
and 610,000 pilots. We have some 43,000 dedicated government employees 
working to serve the traveling public and the businesses that depend on 
a reliable air transportation system.
    When Congress mandated the FAA to realign its operations and manage 
more like a business, we rose to the challenge. The FAA's efforts over 
the past 3 years have paid real dividends, not just to the flying 
public but to the taxpayer as well. By implementing improved management 
tools, including better cost accounting systems and instituting a pay-
for-performance program, we have made more efficient use of our 
resources. The tangible results are reflected in our fiscal year 2007 
budget request of $13.7 billion. This is a reduction of $561 million, 
or 4 percent less than the fiscal year 2006 enacted level. The request 
upholds our commitments to increase the safety, capacity, and 
efficiency of the national aviation system.
    The fiscal year 2007 budget provides $8.4 billion for our 
Operations account and reflects the FAA's rising labor costs and 
aviation industry challenges. Most of the funds requested for FAA 
operations in fiscal year 2007 support our paramount goal of 
maintaining and increasing aviation safety. It also reflects our 
continuing efforts to control our operating costs while maintaining the 
safest aviation system in the world.

                           CONTROLLING COSTS

    Our business and budget planning activities are more closely 
aligned than ever, and they both include explicit cost savings 
initiatives. Each organization must include at least one cost reduction 
activity in its annual business plan, which is then reviewed by the 
management board monthly for progress. These identified cost savings 
and avoidance initiatives are integral to FAA's strategy to absorb 
budget shortfalls (e.g., unfunded pay raises and rescissions).
    The agency's emphasis on bottom-line results has not been easy. The 
FAA has slashed costs where possible and slowed the rate of growth of 
our labor costs through productivity improvements and reducing 
overhead, as well as reducing management layers. We also continue to 
apply effective management and financial principles to our labor 
negotiations. The simple fact of the matter is that we cannot and will 
not sign a contract the taxpayer cannot afford. As you know, we are at 
an impasse with NATCA, the union representing our controller workforce. 
Since 1998, the first year of the current NATCA contract, the 
increasing imbalance in compensation between NATCA and the rest of the 
agency has cost the taxpayer a total of $1.8 billion. Neither the FAA 
nor the taxpayer can afford a repeat performance.
    The FAA and NATCA began negotiations to replace the current 
agreement in July 2005. Despite extensive negotiation over 9 months, 
including 4 weeks of mediation with the Federal Mediation and 
Conciliation Service, we failed to reach agreement on several of the 
key proposed articles affecting compensation, benefits, and work rules. 
Therefore, as required by law, we transmitted our proposal, along with 
NATCA's proposals and objections, to Congress on April 5, 2006.
    Long-term affordable pay structures are only a part of the 
equation. In addition, we are taking steps to achieve savings of 10 
percent by fiscal year 2010 in controller staff costs through 
productivity improvements. We achieved the first 3 percent of this goal 
in fiscal year 2005 which avoided about $23 million in costs last year. 
This fiscal year and in fiscal year 2007, we project a minimum of a 2 
percent productivity improvement each year.
    In December 2004, the Agency submitted our Air Traffic Controller 
Workforce Plan to Congress. We are updating the Plan, which will be 
released soon. This plan provides a comprehensive 10-year strategy to 
make sure we have the right number of controllers in place at the right 
time to address the controller retirement bubble. Our funding request 
of $18.2 million is consistent with the targets being developed for the 
updated staffing plan and will enable us to meet the future needs of 
the National Airspace System.

                            A-76 COMPETITION

    This year, we completed the largest non-military A-76 competition 
in Federal Government and will see the first installment of cost 
savings--$66 million--in fiscal year 2007. The Agency's network of 
automated flight service stations, which provide weather guidance and 
other assistance to the pilots of small airplanes, will be reduced from 
58 to 20. The contract not only saves money, it also commits the vendor 
to modernize and improve the flight services we provide to general 
aviation pilots. In addition, the employees who left Federal service as 
a result of this transition were given offers to work for Lockheed 
Martin, the successful bidder of the contract.

           PRIORITIZING FACILITIES AND EQUIPMENT (F&E) NEEDS

    We are requesting $2.5 billion for F&E to improve and modernize the 
airspace system. We are also scrutinizing our capital investments, 
revisiting business cases, and eliminating programs whose benefits no 
longer justify the costs. We are increasing our emphasis on programs 
that will save the agency money.
    We are making similar inroads with equipment. In fiscal year 2005, 
we removed 177 obsolete navigation aids from service, which saved the 
taxpayer about $2.7 million. This year, we plan to remove 100 more, 
followed by another 100 in 2007. We are taking steps to save wherever 
possible. The removal of these land-based navigation aids is consistent 
with our long-term goal of transitioning to satellite-based navigation.

                  KEEPING PACE WITH TODAY'S CHALLENGES

    Our resources and activities are closely linked with the dynamic 
industry we oversee and serve. The pace and depth of change in aviation 
is unparalleled. Business models evolve as rapidly as the technology 
changes: markets once dominated by wide body aircraft are now giving 
way to smaller jets. Entrepreneurs now are marketing microjets, which 
may one day become the ``personal taxi'' of the sky. Fractional 
ownership is making it easier for businesses to own and operate 
aircraft.
    Although our recent forecasts show a decline in operations from 
last year to this year, air travel now exceeds pre-September 11 levels 
and remains on track to carry more than 1 billion passengers by fiscal 
year 2015. Even with the financial shake-up in the airline industry, 
all major forecasts project the long-term demand for air travel will 
outstrip existing capacity. After a temporary drop this year in 
projected operations at airports with FAA or contract towers, we 
forecast an average annual growth of 2 percent in terminal and a 3 
percent growth for en route/oceanic operations from 2005-2017.

                    ENSURING A PATHWAY TO THE FUTURE

    The future portends a wide range of aircraft with divergent 
infrastructure, air traffic management, regulatory, and procedural 
requirements. We must be prepared to support a system that includes the 
Airbus Double Decker A380 and the microjet (and everything in between). 
We must be able to support airlines, large and small, national and 
regional. Recognizing that aviation represents about 9 percent of the 
U.S. Gross Domestic Product, we must provide this infrastructure in 
time to keep the Nation's economy growing while controlling the costs 
of that system.
    We are laying the foundation for our future with a commitment to 
increasing the system's capacity to accommodate the air transportation 
system's predicted growth. We will meet these future needs by 
harvesting new technologies that will support the Integrated National 
Plan for the Next Generation Air Transportation System (NGATS). This 
plan, submitted to Congress in December 2004, brings together four 
cabinet-level agencies and NASA in the Joint Planning and Development 
Office (JPDO) to eliminate duplication and wasted resources. The plan 
is a road map that will leverage Federal funds and allow us to provide 
the national aviation system that can handle the safety, capacity and 
security needs of the future. For the FAA, the plan will drive 
discussions about the: (1) size, role, and training needs of our 
workforce; (2) number of facilities maintained by the FAA; (3) 
transition from ground-based to satellite-based systems; and (4) 
redesign of airspace. For the FAA, the plan is already being 
incorporated into our budget. Specifically, the 2007 budget supports 
two cornerstones to the next generation air transportation system and 
begins to build this new infrastructure by committing to Automatic 
Dependent Surveillance Broadcast (ADS-B) and System Wide Information 
Management (SWIM).
    The budget requests $80 million for ADS-B--a technology that has 
already provided benefits in the field. ADS-B provides: (1) automatic 
broadcast of aircraft position, altitude, velocity, and other data; (2) 
enhanced ``visibility'' of aircraft and vehicle traffic for pilots and 
air traffic controllers; and (3) use of Global Positioning Systems, 
allowing us to reduce our reliance on ground-based infrastructure. 
Implementation of ADS-B throughout the national airspace system will 
reduce infrastructure costs, increase capacity and can have significant 
safety benefits as shown in the Alaska context, where this technology 
has already been fielded as part of a demonstration project. Some 
safety improvements result because ADS-B provides more complete 
coverage in remote and mountainous terrain than traditional radar-based 
surveillance systems.
    The backbone for the future system is an information network that 
can provide better data to more decision-makers--whether it be the 
controller, the pilot or the other agencies dealing with security or 
national defense. The FAA's request of $24 million for SWIM will begin 
to make these advanced information distribution and sharing 
capabilities possible. Every year, FAA builds applications for air 
traffic management systems that require unique interfaces between the 
new application and existing systems. SWIM will replace those unique 
interfaces with a reusable interface and provide many operational 
benefits (e.g., common situational awareness, standardized information 
security, and more cost-effective security implementation).

                         FLIGHT PLAN 2006-2010

    One of the major reasons we are confident in our stewardship of the 
FAA is our Flight Plan. The Flight Plan is FAA's rolling 5-year 
strategic plan that we first undertook in 2004. As scheduled, we 
updated it last fall, with input from our internal and external 
stakeholders. The Flight Plan is organized around the agency's primary 
goals: increased safety; greater capacity; increased U.S. international 
leadership; and organizational excellence. It is our blueprint for 
managing the agency. It serves to focus our efforts on what is most 
important to our stakeholders.
    The plan has made the FAA more businesslike, more performance-
based, more customer-centered and more accountable. It is dynamic, 
adaptable, and cost-driven. Most ``strategic plans'' are distinguished 
only by their place on a dusty bookshelf. Our Flight Plan is costed out 
and contains specific measures and targets that we track monthly at the 
most senior levels of our agency. It has become our marching order 
toward success. Our goal is to become more accountable to the taxpayer, 
and we work hard every day to reach it.
    As part of our Flight Plan, each FAA organization now has its own 
individual business plan. Each of these plans is linked to the Flight 
Plan, budgeted and tied to what the customers need. The agency's 
business plan goals have been built into a performance-based tracking 
system that are posted to the FAA website each quarter. It lists each 
of the agency's goals, performance targets, who is responsible, and the 
status of each. Using this data, the senior management team conducts a 
monthly review of our performance. When used with other cost and 
performance data, the Flight Plan information clearly and precisely 
identifies the effectiveness of a program across the entire agency. 
With this perspective, the agency is able to capitalize on successful 
strategies. Let me address our performance and budget requests under 
each of our goals.

                            INCREASED SAFETY

    As I noted earlier, safety remains our No. 1 priority and our No. 1 
success story, with the trends in both commercial and general aviation 
showing consistent improvement. The safety record we have achieved for 
air carriers is a remarkable accomplishment, which our entire 
workforce--inspectors, engineers, technicians, and controllers--shares 
with the broad aviation community. Over the past 4 years, 3 billion 
people have traveled safely in the air transportation system--that's 10 
times the population of the United States.
    Safety is not only a top public interest priority, it is also an 
economic necessity. People fly only if they feel safe. They must trust 
the system and their trust must be upheld. Although commercial aviation 
is in the safest 3-year period in transportation history, safety 
requires more than no accidents.
    The fiscal year 2007 budget reflects the agency's steadfast 
commitment to safety. Out of a total request of $13.7 billion, about 70 
percent, or $9.6 billion, will contribute to our efforts to improve our 
already historic safety record. This includes further progress in 
reducing commercial and general aviation fatality accidents, and the 
number of runway incursions and HAZMAT incidents. Our overarching goal 
is to constantly improve aviation safety.
    To increase aviation safety oversight commensurate with expanding 
activity and the introduction of new aviation equipment and business 
practices, the budget requests $18.5 million for additional staff and 
technical training. Within this total, $8 million is requested to add 
101 aviation safety inspectors to strengthen our safety oversight of 
the aviation industry. The request also funds 32 additional positions 
for the Air Traffic Safety Oversight office--a recently established 
office under the Associate Administrator for Aviation Safety with the 
responsibility for providing an independent safety oversight and review 
of the Air Traffic Organization (ATO) operations.
    Our efforts to run the FAA in the most effective and efficient 
manner are further reflected in our NAS Plan Handoff Program. Under 
this program, we transition capital assets from their deployment under 
the Facilities and Equipment (F&E) appropriation to operation and 
maintenance under the Operations appropriation, in accordance with 
generally accepted accounting principles (GAAP). Full funding for NAS 
Plan Handoff in our Operations appropriation allows us to provide for 
the operations, maintenance, and training for these new capital assets, 
and addresses congressional and GAO criticisms about covering the 
operating costs for new systems in F&E for an indefinite period.

                          INCREASING CAPACITY

    While safety is our primary concern, our mission includes expanding 
capacity throughout the aviation system--both in the air and on the 
ground. The fiscal year 2007 budget requests $3.1 billion to expand 
capacity and improve mobility. This request supports expansion of 
capacity on the ground with new runways, as well as the continued 
deployment of new technologies for increasing the efficiency of the 
existing system.
    Beginning in fiscal year 2005, FAA worked with our industry and 
government partners to deliver two key technologies: Domestic Reduced 
Vertical Separation Minimum (DRVSM) and Advanced Technologies and 
Oceanic Procedures (ATOP). DRVSM alone, by increasing en route capacity 
and the ability to avoid severe weather, is expected to result in 
savings for the airlines that could reach $5 billion through 2016. 
These two technologies helped operators participate in reduced 
separation standards and will allow them to fly more aircraft in a 
given airspace and the most fuel-efficient route safely.
    FAA continues to develop criteria and guidance materials that will 
be used for new area navigation (RNAV) and required navigation 
performance (RNP) routes and procedures. Use of RNP permits greater 
flexibility and standardizes airspace performance requirements. By 
adopting RNAV and RNP and leveraging existing and emerging cockpit 
capabilities, the FAA in collaboration with the aviation community will 
be able to improve airspace and procedures design, leading to increased 
capacity and improved efficiency.
    The fiscal year 2007 budget also includes $375.7 million to 
continue the En Route Automation Modernization (ERAM) initiative. This 
is a critical program that replaces obsolete hardware and software of 
the main host computer system that is the backbone of en route air 
traffic operations. The most significant ERAM benefits are improved 
efficiency, capacity, and safety by providing controllers with newer, 
faster, and more capable technology to manage the continuing growth in 
air traffic. The modern en route automation system will also 
accommodate the development of functions that are expected to provide 
significant savings to users through more fuel efficient routes, 
reduced flight times and delays, and increased controller productivity.
    In today's challenging budget environment, we have been forced to 
take a long hard look at all of our funding requirements. Our fiscal 
year 2007 budget request for Grants-in-Aid to Airports is $2.75 
billion, which is lower than recent authorized and enacted levels. 
Nevertheless, under our proposed budget, FAA will be able to support 
all high priority safety, capacity, security and environmental 
projects. There will be adequate funds to meet all current and 
anticipated Letter of Intent (LOI) commitments, which relate to high 
priority, multiyear projects within the national system. The 
President's fiscal year 2007 budget includes support of major capacity 
projects such as the Chicago O'Hare redesign, a new runway at 
Washington Dulles International Airport and major projects at Atlanta-
Hartsfield International. We will also be able to fund projects to meet 
the FAA's Flight Plan goal for improving runway safety areas (RSAs), 
help airports obtain security equipment and facilities required to meet 
their Transportation Security Administration (TSA) security 
requirements, and continue work on phased projects.

                        INTERNATIONAL LEADERSHIP

    Today, the FAA has operational responsibility for about half of the 
world's air traffic. We certify nearly three-quarters of the world's 
large jet aircraft. We have provided assistance to more than 100 
countries to help them to improve their aviation systems. Safety may be 
our most important export. Even so, we still must become even more 
globally focused to ensure that U.S. citizens can travel safely around 
the world. We also must continue to be a catalyst for the harmonized 
implementation of safety and capacity enhancing technology around the 
world. The fiscal year 2007 budget requests $35.5 million to support 
international leadership and global connectivity.
    It is clear the FAA's role in advancing the international 
leadership of the United States in aviation goes well beyond the 
borders of the Far East and Latin America. The numbers and the activity 
point to the need for a global approach to aviation and we are working 
to shape that destiny. We are working together with all our key 
regional partners to identify the next generation of air traffic 
management technologies and practices. The agency believes that 
together we can create a road map for the global community. To give us 
the safety tools that we need, we are working to negotiate and sign 
Bilateral Aviation Safety Agreements with key countries around the 
world. These agreements benefit everyone--passengers, the Agency, and 
the aviation industry. Also, through our efforts with other 
International Civil Aviation Organization members, we will continue to 
develop and implement global safety and certification standards to 
improve efficiency and trade.

                       ENVIRONMENTAL STEWARDSHIP

    As we increase capacity, we've been careful to ensure environmental 
responsibility. The fiscal year 2007 budget requests $391.2 million to 
support environmental stewardship for noise mitigation, fuel efficiency 
enhancements, and a comprehensive approach to addressing both noise and 
emissions.

                                SECURITY

    While the U.S. Department of Homeland Security's TSA now has 
primary responsibility for transportation security, the FAA still 
retains responsibility for the security of its personnel, facilities, 
equipment and data. FAA provides financial and other assistance to help 
airports meet security requirements. Security projects required by 
statute or regulation carry the highest priority for AIP funding. The 
agency works closely with TSA and other Federal agencies to support 
aviation security, transportation security, and other national security 
matters.
    FAA insures the operability of the national airspace system through 
the facilities, equipment, and personnel of the air traffic control 
system, which is essential to the rapid recovery of transportation 
services in the event of a national crisis. The budget request includes 
$173 million to continue upgrading and accrediting facilities, procure 
and implement additional security systems, and upgrade Command and 
Control Communications equipment to meet the increased national 
security demands since the September 11 attacks.

                       ORGANIZATIONAL EXCELLENCE

    To fulfill our mission the FAA must become a world-class 
organization. The agency is committed to finding and eliminating 
barriers to equity and opportunity. We believe that fairness and 
diversity fortify our strength. Further, we must give our staff the 
tools and resources they need to overcome the challenges we face and to 
become more accountable and cost-efficient. In turn, our employee 
compensation and salary increases are becoming increasingly 
performance-based. This allows the agency to pay for results and reward 
success.
    In simple terms, our objectives are to: strategically manage our 
human capital; improve our financial performance; and control costs 
while delivering quality customer service. The fiscal year 2007 budget 
requests $437 million for organizational excellence initiatives.
    In support of the President's Management Agenda (PMA), we're making 
significant strides in improving our financial management. Over the 
past several years, we have made increased progress in making cost 
control a priority throughout FAA. We have implemented information 
tools and processes to manage costs and productivity. Last year marked 
our fifth year of receiving a clean audit from the Department of 
Transportation's Office of the Inspector General. For the third 
consecutive year, the FAA has received the Certificate of Excellence in 
Accountability Reporting. This year we are wrapping up the 
consolidation of nine separate accounting operations into a single 
Finance Center located in Oklahoma City, Oklahoma. The benefits we see 
from this effort include annual cost savings on accounting operations, 
standardization of accounting practices, and improved quality and 
timeliness of financial information.
    Ongoing improvements in financial performance will focus on 
providing more timely and accurate financial information used by 
management to inform decision-making and drive improved results in FAA 
operations. Planned business process improvements will focus on quicker 
capitalization of our projects, streamlined processes for managing 
agency reimbursable agreements, and training and improvement efforts to 
reduce financial data quality problems.
    In particular, the FAA is planning to improve the utilization of 
information from Delphi, the DOT financial management system. Delphi 
gives the FAA more accurate financial data and allows the agency to 
better manage its spending on operations as well as capital investments 
in assets that will ensure the safety of the airways. To improve 
operational efficiency in accounting operations, imaging capability for 
invoices will be added to the Delphi system for fast and efficient 
payment processing.
    Each year, the FAA procures more than $1.3 billion in contract 
services. The newly created Office of Financial Controls will implement 
increased controls over agency procurements. It will ensure that 
funding used for contract services reflect wise investments, 
duplication of effort is avoided, and excessive labor rates are not 
included in contracts. Any procurement request resulting in contract 
award or increase in the scope of an existing contract, where the total 
value of the contract or added work exceeds $10 million, will be 
thoroughly reviewed by the Office of Financial Controls before it is 
processed.

                                CLOSING

    In closing, let me assure you that we continue to make difficult 
choices and take decisive steps to ensure that we manage the taxpayer's 
investment wisely. We are running more like a business and delivering 
the world's safest transportation system while doing so. I thank you 
for your time and look forward to discussing these issues in greater 
detail.

    Senator Bond. Thank you very much, Madame Administrator. 
And now we turn to Senator Murray for her questions.
    Senator Murray. Mr. Chairman, thank you so much for 
accommodating me and I do have a few questions I want to get in 
before I head to the floor.

                 AIR TRAFFIC CONTROLLER WORKFORCE PLAN

    Administrator Blakey, the FAA, as I said in my opening 
remarks, published an air traffic controller workforce plan 
back in December 2004. And at that time you promised in very 
clear terms that this workforce plan would be updated annually.
    It is now May and we have yet to see an update of that 
annual plan. And if we receive one at all this year it will be 
at least now 6 months late. How are we to believe that the 
administration has an updated workforce plan when it is 
unwilling to release it? And can you tell me why we have not 
received it yet?
    Ms. Blakey. Well, there are a couple of things about this. 
No. 1, it is going to be an annual plan. There is about 4 
months' slippage. We had said we would bring one out for this 
year. And it is in final clearance right now. So there is no 
issue about providing an annual plan.
    What I do think makes sense though is this: as you know, 
the plan last year was the first time we had done that. And you 
learn a lot from these things. One of the things that we 
determined was that that plan was based on a forecast that now 
is more than two forecasts back. It is very dated data that was 
in that plan because of the timing of the way we did it.
    Senator Murray. Which is why we are waiting for one.
    Ms. Blakey. Because the annual forecast comes out in March 
and we have revised the controller staffing plan and all the 
models based on that. As I say, it is in final clearance. So as 
you can appreciate, we are talking about a couple of months 
after the forecast.
    We will try to make it closer to March next year but right 
now you should see it shortly.
    Senator Murray. When is the date that we will see that 
then?
    Ms. Blakey. I do not know an exact date because, again it 
is in final clearance within the administration. But I think--
    Senator Murray. Are we talking days or weeks?
    Ms. Blakey. Something like that, yes.
    Senator Murray. Not months?
    Ms. Blakey. I cannot, again, commit other people. But I can 
tell you that it is certainly a matter of weeks, at most.
    Also, as you know, we have provided you a lot of the key 
data out of the plan. So I do not think there are any surprises 
there.

                       AVIATION SAFETY INSPECTORS

    Senator Murray. In March, Secretary Mineta testified before 
us that the FAA would be able to hire an additional 238 safety 
inspectors, in spite of the 1 percent across-the-board cut and 
in spite of the unfunded pay raise. But last week you told us 
the FAA would actually be able to hire only 171 inspectors.
    If the FAA is going to be hiring 171 additional inspectors 
this year, your staffing level is going to be below the level 
we had in 2003. Are you comfortable with that level of 
staffing?
    Ms. Blakey. I think it is important to look at the way we 
are approaching this because, as you know, you pointed out 
yourself, that we were handed a 1 percent across-the-board 
rescission in December, well after all those figures were 
developed and planned. Plus, of course, the unfunded pay raise.
    It is important to look at how much money was involved 
there because the rescission itself was overall for the FAA 
$144 million. The unfunded pay raise was not a small thing. It 
was $37.9 million, almost $38 million, and it resulted in a 
shortfall of $182 million.
    Now we have been scrambling since that occurred. And again, 
that was at the end of year on the rescission, to try to figure 
out: Are there any ways that we can reallocate funds and we can 
try to address what is clearly a shortfall?
    There are no if, ands or buts about it. This does not 
surprise anyone. We would love to have made that 238 figure, if 
we could have. And we tried very hard. But the best we could do 
was to ask you all, and the request is now coming up to you, 
the Secretary has just signed off on this, that we have 
reprogrammed or are requesting to reprogram monies from all of 
our other small staff offices. And we are using the authority 
that you all have granted us for unobligated funds from 
previous years, which would give us the ability to pull the 
number up to 171 for this year.
    Senator Murray. Let me ask you that again. I know all the 
reasons why. But as Administrator of the FAA, are you 
comfortable with the staffing of safety inspectors for the 
flying public?
    Ms. Blakey. You will see, again, that we are requesting 
more for 2007. And that certainly tells all of us, we need more 
safety inspectors.
    Senator Murray. So I take it your answer is no?
    Ms. Blakey. I am simply saying there is a very strong 
reason we are going to continue to increase the safety 
inspector ranks. And a lot of that is the dynamic that we see 
growth in a number of key areas that are really coming at us 
and we have to address that.
    Senator Murray. The DOT IG testified earlier to us this 
year that the staffing gains over the next couple of years are 
unlikely to offset the number of safety inspectors that are 
eligible to retire. By 2010, in fact, half of the inspector 
workforce is going to be eligible for retirement.
    You claim you have a comprehensive staffing plan to handle 
the retirements of air traffic controllers, even though we have 
not seen it yet. I wanted to know if you have a similarly 
comprehensive plan to handle the retirements among inspectors? 
And is OMB committed to funding that?
    Ms. Blakey. OMB has been very responsive and cooperative on 
the issue of our safety inspectors and that workforce, the 
manager of our safety programs has a very exact idea about how 
many we need to hire of what. So we have those figures. We have 
it on paper.
    It is not a large published plan in the same way that the 
controller staffing plan is. But we can make it a more formal 
document if that would be helpful to this committee.
    Senator Murray. I think we need that information.
    Ms. Blakey. Absolutely. We have the information and we can 
turn it into a formal plan if that would be helpful.

              FAA TELECOMMUNICATIONS INFRASTRUCTURE (FTI)

    Senator Murray. Okay. And you mentioned in your opening 
statement the replacement of the telecommunications 
infrastructure, and that you needed to update us. I want to 
give that opportunity.
    Because as I said in my opening statement, that program was 
supposed to achieve hundreds of millions of dollars in savings 
that would have helped us with much of the current situation. 
And at the start of the program in 1999 it was supposed to cost 
$1.9 billion. We are now being told it is going to be 27 
percent higher than that at $2.4 billion. And the DOT IG has 
told us it is going to cost even more. So we are not going to 
receive any savings on this in the foreseeable future, as I can 
see it.
    What can you tell us to give us your personal assurance 
that we are not going to continue to see this story?
    Ms. Blakey. The FTI contract, which is the capital 
investment program that you are referring to, of course, is the 
notable exception to the success we are having across the board 
in staying on schedule and on budget on all of our major 
capital investment projects. So I would point that out.
    That said, it is a contract to convert all of the FAA's 
legacy telecommunications networks to a network that is based 
on a service rather than an owned and operated business and 
pull it all into one unified system.
    It is a major logistics challenge, I will be straight up 
about this. And it has proven challenging to us.
    Now, we have put in place a recovery plan that we are 
seeing good results on. It still has a way to go. I will not 
make any bones about that. And I am as disappointed as anyone 
that we are not going to be seeing the cost savings over the 
existing contract that we had hoped and expected to this year. 
But that is what we are talking about here. We are talking 
about savings over the existing contract. These are savings 
that are deferred.
    What we are doing at this point is putting in place new 
metrics to start measuring all four stages. This is just as the 
IG has requested that we do. You referenced the fact that the 
IG has just brought out a report with recommendations. I think 
they are very good recommendations. They have given us very 
good advice on ways to more precisely track and measure the 
exact progress we are making on all four stages of the 
implementation.
    We were looking at it initially on the first stage, and I 
think we need to track all four in a master plan that we are 
putting in place.
    Senator Murray. You will probably get asked about this 
again. If you could get us really solid information, so we can 
see that we are not going to continue to see the same line 
going up on that, I would appreciate it.
    Ms. Blakey. We will work very hard. As I say, this is a 
challenging contract. But we are working very hard to hit the 
numbers.

                          MORE LIKE A BUSINESS

    Senator Murray. Let me ask you, in your testimony you said 
that you are operating more like a business in part because you 
have instituted a pay-for-performance program. And you have 
also proposed eliminating automatic pay raises for air traffic 
controllers, arguing that their pay increases should depend on 
performance on their job.
    Last year, however, the FAA awarded performance bonuses to 
11 senior employees based, in part, on their work on this FTI 
program. These bonuses were awarded at the same time the 
program was falling behind schedule and racking up costs. Can 
you explain why you gave these executives performance bonuses 
for deficient work product?
    Ms. Blakey. Well No. 1, the bonuses that were there were 
only in part, only 15 percent, related to the FTI contract. As 
I mentioned before, we are hitting our numbers on our major 
acquisition projects, which these executives are responsible 
for as well. There are a number of major capital investment 
programs that I am very proud, such as ERAM, that are 
absolutely on track and on schedule. So the bonuses are related 
to a much larger body of work than FTI.
    I also would point out that the contract initially was set 
up in tracking metrics on site acceptances. That is the very 
first stage of four stages of the FTI program. In that regard, 
we put in place a recovery plan. And as of August 2005, we 
really began hitting our numbers on that.
    Now, I do not think that is the key metric. What we have 
done, because I think the issue of performance in regard to the 
FTI contract, needs to be measured on all four aspects: site 
acceptance, service acceptance, when you actually cut over to 
the FTI network, and when you disconnect the legacy system. So 
all four of those benchmarks, if you will, are now built in to 
these executives' performance for this year.

                                 NATCA

    Senator Murray. Let me ask one final question here.
    The negotiations with NATCA has been mentioned several 
times here, and I believe that Congress should not be the venue 
for settling these kinds of contracts. But my objections do not 
change the fact that if Congress does not act to reverse your 
action in the next few weeks, your proposal for the final 
contract will be automatically put in place.
    That, in fact, will be the second time the FAA will have 
succeeded in resolving a dispute by those means, and I am 
concerned that we see a pattern emerging here where if the FAA 
does not get what it wants at the bargaining table it just 
submits it to Congress and counts on us not acting.
    FAA negotiates with 43 different bargaining units and many 
of these employees do not make six-figure salaries. Can you 
tell us, are we going to expect to see all of our future labor 
negotiations handled this way?
    Ms. Blakey. I certainly hope not. It is one reason why I 
feel so strongly that it is important that the mechanism that 
Congress rightly put in law for how an issue of this sort is 
resolved is one that Congress and all of us involved see 
through because it is an important way to balance what is an 
extraordinarily unusual privilege in government, and that is 
that the FAA is virtually unique in negotiating for pay with 
its employees.
    Other Federal agencies throughout the Government all are 
under the Civil Service or pay systems that involve no 
opportunity to negotiate for pay.
    Senator Murray. I assume you can understand that the morale 
of many of the employees is directly impacted by the fact 
that----
    Ms. Blakey. Senator Murray, I would refer you to a couple 
of things. Our pay scales at the FAA, on average, and I am 
going beyond the controllers, are somewhere between 8 and 14 
percent above market. That is something that is worth being 
aware of because it is reflected. When we have our employee 
attitude surveys, 70 percent of the FAA's employees across the 
board are very satisfied with their pay.
    Senator Murray. I appreciate the remarks and I do have 
other questions I would like to submit for the record. Mr. 
Chairman, thank you so much for accommodating me so I can get 
to the floor. And thank you, Administrator Blakey.
    Senator Bond. Thank you, Senator Murray. We will submit 
those questions for the record.
    Now we will turn to my colleagues; first, Senator Bennett.
    Senator Bennett. Thank you very much, Mr. Chairman.
    Madame Administrator, welcome. Thank you for your service.

                          AVIATION TRUST FUND

    I am impressed with your ability to respond to questions 
and your control of the detail. I have to get nostalgic for 
just a minute with your conversation about the Aviation Trust 
Fund, Airport Airway Trust Fund. It was my responsibility, as a 
member of the team under Secretary Volpe, to convince the 
Congress to pass the creation of the Airport Airways Trust Fund 
back in 1969. I was the head of Congressional Relations at the 
Department of Transportation and that was my first 
responsibility.
    I remember the glee with which Secretary Volpe called 
Secretary Nixon to tell him that we had succeeded in getting 
that passed, the first item of President Nixon's must-do list 
of legislation to pass the Congress. I went to the White House, 
had got my pen, and my picture taken with the President, and 
all the rest of it.
    Now I come back, basking in that nostalgia, to have you 
tell me it is not working anymore.
    I am perfectly willing to agree that it is not working 
anymore and the question is: ``What are we looking at as a 
replacement?'' You say, in your prepared testimony, that you 
have reached out to the industry and you are getting 
suggestions. Can you share with us some of the suggestions? 
Because I, with that background, and listening to you also, 
share the idea that the FAA should have a reliable source of 
funding. That was the whole idea behind setting up the Trust 
Fund in the first place, not have it subjected to the whims of 
the appropriations process.
    Now that I am an appropriator, I guess I like the 
appropriations process better than I did. But tell us what 
avenues you are pursuing as ways to go and places to look for 
some kind of stability in this situation.
    Ms. Blakey. The Trust Fund, as you and others set it up, I 
think very wisely at that point in time, worked very well for a 
long time. We have to remember that was before deregulation. 
And I do not think anyone could have anticipated at that point 
the dramatic changes in the airline industry and the plummeting 
price of tickets. So tying it to the price of a ticket at that 
point had a lot of relationship, I think, in those days to 
traffic volume and a variety of things.
    The situation now, I think, that we are faced with is one 
that virtually all of the stakeholders do acknowledge that the 
lack of relationship between costs and revenue produces a lack 
of accountability on both sides. The stakeholders ask for 
whatever they think they need but there is no issue of really 
how much it costs and that would affect, therefore, what they 
are charged and vice versa.
    So what I am seeing as the general aviation community, as 
the airlines, as the manufacturers, cargo folks all come in, is 
I think a real acknowledgment that we do need reform in terms 
of the Trust Fund.
    Senator Bennett. I understand all of it. Now where are we 
looking? You say facetiously it could be tied to the price of a 
gallon of milk. I am sure you are not looking at that as a way 
to do this. What specifics are people suggesting to you as a 
way to go?
    Ms. Blakey. I think what a number of people are suggesting 
is this: for parts of the community, a system that takes into 
account all of the activity in the system, numbers of flights, 
the usage of the air traffic control system, there are several 
ways to measure that. But you can run that activity data and 
you can show the usage of it by individual carrier or by 
stakeholder group. So there is a way which is done all over the 
world in a variety of ways to tie it to fees. And a fee-based 
system can be a part of the answer.
    Taxes, fuel taxes are also not as direct a measure of 
costs. But they work well for the general aviation community. I 
think there is much more support for fuel taxes coming from 
that group.
    Senator Bennett. Let me ask you one very parochial 
question, and this comes up every time we have an FAA 
Administrator before the subcommittee, so it is not going to 
surprise any of your staff.
    We are looking for an additional ASR radar system in Utah 
County, just south of Salt Lake County, to cover the blind 
spot. And we finally convinced the FAA to put one in during the 
Olympics, when we had a tremendous number of general aviation 
flights coming in. And because of the horror of having an 
accident occur in the Olympics, with that kind of traffic, they 
put one in.
    Now I advised them this may be a temporary radar, sink it 
as deep in concrete as you possibly can and surround it with a 
high fence. But it has disappeared now and we still need it. 
There is an increased use of regional jets that you are talking 
about. Salt Lake International Airport has seen an increase in 
traffic volume. This is a blind spot that we still need to have 
filled. And I take advantage of this opportunity to mention it 
to you once again and ask you to take a look at it.
    Ms. Blakey. Thank you very much. I certainly will.
    Senator Bennett. Thank you, Mr. Chairman.
    Senator Bond. Thank you very much, Senator Bennett.
    Now we will turn to Senator Stevens.
    Senator Stevens. Thank you very much. Administrator Blakey, 
it is nice to be here with you again.

                            SAFETY IN ALASKA

    I am constrained to say it looks as if this budget was 
prepared before the current attack on earmarks commenced. Let 
me just lay out a little problem I have.
    When the deregulation of CAB took place, Senator Cannon was 
chairman of the Commerce Committee and we reached an 
understanding. Before that time the FAA managed all of the 
airports in Alaska. We took over a considerable number of them. 
But the rural airports, roughly 160 of them, who serve small 
native villages were to receive under $150,000 annually for 
maintenance and light control and that sort of thing.
    This is the first time that those funds have not been 
requested. There is a reduction of $22.9 million, which adds up 
to $150,000 for 159 small airports.
    Secondly, our skies, as you know, have been the most 
dangerous skies in the world. Previously, in Alaska one out of 
11 pilots have died annually. We put into effect several safety 
programs and I do commend you. You certainly have been one of 
those who has helped us considerably. But the Medallion 
Program, which you and I helped establish, and which the 
Federal contribution was $5 million last year, has been zeroed 
out.
    In the period of time right at the beginning of this 
administration, you recall that a foreign airliner coming 
towards Alaska intersected the dust from one of the volcanoes 
along our chain and dropped about 20,000 feet before one of the 
engines was started. We established an Alaska Volcano 
Observatory. It is not only for local Alaska. It is for the 
planes that fly over our State. Your agency has contributed $5 
million a year to that observatory. That has been zeroed out.
    We have the Loran-C system for the northwest coast of the 
Pacific. Again, it is not really for Alaskans. It is for all 
the users of the North Pacific. This is the last station to be 
upgraded in that system, the Loran-C system. It has been zeroed 
out. There was $17.5 million last year for that.
    Now my problem is, all of those are aviation-related, 
aviation safety-related. But when I add the money back in, if I 
can be successful in convincing this subcommittee to do that, 
it is an earmark and it is going to be attacked as an earmark. 
And none of them really--well just the one, the first one, with 
159 small villages are Alaska-specific. Those are very 
important to Alaska. The rest are national expenses that are 
necessary to meet our United States' obligation to those who 
fly into or out of our airspace.
    I am really worried about the prospect that puts upon those 
of us who represent Alaska the duty of trying to reverse those 
budget cuts and be under attack again about earmarks.
    I really cannot ask you questions. I basically know where 
you are coming from. You had no alternative. But we have no 
alternative either to find some way to get that money back in 
there.
    There have been other cuts, one of them is the Capstone 
Program which again I thank you for your visit. You have come 
up and helped us recognize those people who have been part of 
that technology-focused safety program that have reduced the 
deaths in our State to where we are about the average now of 
aircraft accidents, despite the fact that 70 percent of our 
cities can be reached only by air. The Federal Government's 
assistance to that air system is less than any one city in the 
United States gets from the Highway Fund. We do not get money 
from the Highway Fund up there. We only get money from 
aviation.
    And I want to urge you to go back and talk to someone in 
the OMB and ask them if they understand that.
    Our people contribute rather heavily to the aviation funds 
because every time we get in an airplane we pay another $5 
towards that safety fund. And I have not heard very much reason 
why we should do it when we are flying planes that do not ever 
come near the size of the planes that were used in 9/11.
    But in any event, I really cannot justify the cutting of 
these Alaska-related aviation programs that are essential to 
safety. I would urge you, and I cannot even ask you a question, 
but I would urge you to talk to them about this. Even our Aid 
to Airports Program this year, it dropped $21.3 million in 2006 
and now it is going to drop another $10 million in 2007. And 
yet, as I said, we have the greatest demand on the aviation 
system per capita of any Americans.
    I just leave it before you and before the record. I do not 
know the answer to my questions. The only answer to my 
questions really is money. I do not see much leeway in this 
budget to even ask my friend from Missouri to take money from 
somewhere else and put it in these funds. The funds are safety-
related, I think. It is the worst example of budget cutting I 
have seen in 38 years.
    I think unless there is a budget amendment coming up here, 
it is going to be impossible to restore that money. And I 
predict without the Alaska Observatory for Volcanoes, we are 
going to be right back where we were to start with. Those 
volcanoes are active right now as we speak. And one of them, as 
you know, just stopped spewing out its smoke and debris just 
last month.
    I would hope you would go back and ask them to review what 
is going to happen to Alaska under this program.
    And I would tell the chairman, I really do not think I am 
going to be too cooperative as far as this bill is concerned 
until there is some change made in the FAA budget that affects 
my State.
    Senator Bond. Thank you very much, Senator Stevens, for 
that good news. As we said earlier, I am very much concerned 
about this budget and on a number of issues and I think this is 
an area where the Office of Management and Budget has not dealt 
well with what is very important to all of us, and that is air 
safety. Having flown in Alaska, on occasion, I understand the 
concerns you have there.
    Madame Administrator, Senator Bennett raised the question 
about getting something other than the Airport Trust Fund. It 
looks like the administration is trying to find some way to 
raise money that is outside the appropriations process. 
Obviously, those of us who are appropriators have a lot of 
issues that are very important and we would miss this 
opportunity to discuss those with you.
    What is the official administration position on why you 
would want to get out of the appropriations process?
    Ms. Blakey. I will tell you, Mr. Chairman, there is not an 
official administration position on this. If there were, we 
would have a proposal before you right now that we could be 
discussing.
    As you can appreciate, trying to restructure the taxes and 
fees that support the Aviation Trust Fund is difficult to do, 
particularly if we are trying to make very substantial changes. 
I cannot tell you that there is consensus on this right now or 
that there is a position with regard to the specific issue you 
raise.
    I can absolutely put forward the fact that it would be my 
expectation that the appropriators will have a very healthy 
role in whatever system is put forward. I think there is no 
question about the fact that that would be the view of this 
administration.
    Senator Bond. Obviously, we are just going on the Wall 
Street Journal article of February 4, so I am glad to know 
there is no official position.
    Ms. Blakey. Not at this point.

                      AIRPORT IMPROVEMENT PROGRAM

    Senator Bond. Would you explain the rationale for the part 
of the budget that would minimize the funding for airports, 
especially small airports, which would lose the majority of 
funding? What is the justification for the proposed cuts that 
would impact both small and large airports? And will this not 
result in projects underway being stopped or reduced?
    Ms. Blakey. Yes, and I would appreciate it if the record 
could show that we are very supportive of the safety programs 
in Alaska, as Senator Stevens listed those, and the needs of 
small airports all over the country. Particularly Alaska has 
some real safety challenges that we hope to address in other 
ways.
    What we are faced with on the AIP funding is simply the 
reality of the budget climate overall. It was extremely 
difficult to continue to match the levels of authorization that 
were put forward several years ago for the Airport Improvement 
Program without continuing to reduce the funding in F&E, which 
is the capital investments and modernization.
    And at this point we are doing everything we know to 
control our operating costs, which of course goes to the 
importance of the contract negotiations. But they still 
continue to escalate. So, in that universe, where we have real 
demands on the Federal budget because of broader issues that I 
know you all know all too well, we had to make some tough 
choices. And that is really what this comes down to.
    In terms of the reason for the drop, and for the smallest 
airport elimination, of the $150,000 a year, it is because the 
way the program is set up in statute when you drop below $3.2 
billion appropriation, $3.2 billion, the formula changes. And 
at that point it does eliminate funding for the smallest 
airports on a formula basis.
    Now last year, when we were in a position where that was an 
issue, we suggested that the Congress, in fact, could change 
the law on that and therefore not have the small airports drop 
below the salt if you will.
    The other thing I would point out is this, that we do have, 
of course, discretionary funding available for airports of all 
sizes. And safety programs take the highest priority for those 
discretionary funds. So there is a mechanism for the very small 
airports to come in and request support for various safety 
needs that they do have.
    Senator Bond. I am very much concerned over this and I 
understand the situation that you are in. But the low cost and 
regional carriers have 43 percent share of the air traffic 
market, while regional carriers represent 37 percent of the 
traffic at the Nation's 35 busiest airports. Yet the top 35 
airports are nearing capacity. They handle 73 percent of 
aviation passengers, a significant percentage of instrument 
operation. And the costs and delays are going to increase 
without a major growth in capacity.

                           INCREASED CAPACITY

    Is there anything you can do to increase capacity? And 
without increased funds in the AIP program, is there any way to 
meet the growing needs? And what do you see as the overall 
funding need to meet the anticipated growth of the airline 
passenger traffic?
    Ms. Blakey. Well, I will certainly say this, that the very 
strong record of funding for AIP has resulted in a remarkable 
number of new runways coming on board. The capacity that those 
runways have generated is certainly serving to relieve a great 
deal of the congestion at major places such as Atlanta, 
Cincinnati, and Miami. I could tick through the major runways. 
And of course, the major project that is now going on at 
O'Hare. This will certainly make a big difference.
    I would say that the AIP funding that we have put forward 
will continue to be able to honor all of those major letters of 
intent for these big projects and the runway projects that are 
planned currently.
    That said, there are several things that we are doing or 
have done that make a big difference procedurally. I would 
reference the fact that we are changing the way we use the 
airspace and that is generating huge fuel savings for the 
carriers.
    Just in this last year, we reduced the vertical separation 
in the upper airspace. This was a major leap forward. The 
airspace now is 1,000 feet vertical separation as opposed to 
2,000, which created a lot more lanes in the sky.
    What this has meant is that carriers now have much more 
efficient routing. They are able to be in the optimal points in 
terms of jet stream and direct routing that they could not have 
before. As we look at this over time, over the next 10 years, 
that is conservatively worth over $5 billion in fuel saving.
    The new system we put in over the Atlantic and Pacific, 
over the oceans, is reducing separation, and we have new 
airspace routes in places like Atlanta, which again are giving 
enormous fuel savings to carriers like Delta because they are 
able to fly very precise routes in and out.
    So all of that is immediate, near-term, and it is 
mattering. And then, of course, the next generation system that 
we are bringing on, and we have requested before this committee 
funding for both ADS-B and SWIM, which are going to be backbone 
technologies for really achieving a satellite-based system, 
which will be highly efficient.
    Senator Bond. Thank you. I will turn now to Senator Durbin 
for questions.
    Senator Durbin. Thank you, Mr. Chairman.
    Administrator Blakey, thanks for being here and thank you 
for your service to our country.
    I said when you came by my office, and I would like to say 
publicly, I think you do an exceptionally good job.
    Ms. Blakey. Thank you.
    Senator Durbin. You are hard-working and skillful and 
bright and responsive. And you answer phone calls and I 
appreciate that very much.
    Ms. Blakey. Thank you.

                            MIDWAY ACCIDENT

    Senator Durbin. So thank you for your service.
    Let me ask you first about Midway Airport. We had a 
terrible accident there last December where a plane skidded off 
the runway in a snowstorm and killed a young boy in a car that 
rode nearby. We love that little airport. It is not so little, 
but we love that airport and it is surrounded by neighborhoods. 
And we are trying to make it safer.
    I have worked with the city of Chicago on an EMAS 
technology, a soft concrete technology that would slow an 
aircraft down if it overruns the runway. They have an 
application before you at the FAA. Can you tell me what the 
status is?
    Ms. Blakey. I can tell you that we are working very closely 
with Midway on this. We have just received the final aspects of 
the specs on that proposal for the EMAS system and I expect us 
to move very expeditiously on it.
    EMAS has proven its worth in a number of airports around 
the country where you do not have as much land for the runway 
safety areas. I think Midway will be a very good application of 
that. So we are glad that you have worked with the city and we 
have that before us, so we will work very quickly on resolving 
it.

                                 NATCA

    Senator Durbin. Let me talk about air traffic controllers, 
which we did in my office, and we had a long conversation about 
your concerns and the state of negotiations.
    I can recall a time when my predecessor in the Senate, Paul 
Simon, created the concept of incentive pay because we could 
not find air traffic controllers to take certain positions. And 
so we created salary incentives for them to move to areas where 
the job might be a little more demanding. And now I understand 
you are phasing out the incentive pay as part of your budget 
proposal.
    I am concerned about it in this respect. When we talked in 
our office about hiring future air traffic controllers, I 
believe you told me that you were going to try to return to 
1997 salary levels. Is that a figure that you recall?
    Ms. Blakey. The 1998 Civil Service spectrum that adjusted 
for all of the increases that have occurred in the civil 
service salaries since then. So it is not those levels. It is a 
framework.
    It also is tied to professional salaries for people like 
engineers, pilots, et cetera, at the FAA. So there is some 
adjustment on that, but yes, that is roughly closely 
approximate.
    Senator Durbin. Let me show you a chart that I am going to 
give you a copy of so that you can take a look at it and 
perhaps get back to the committee.
    I took a look at some of those 1997 levels for facilities 
around Illinois and see that there is a rather substantial cut 
that has been proposed, in terms of the pay structure, that is 
even lower than the 1997 levels.
    If you can see, for Moline for example, the $55,360 and the 
proposed salary level was $44,750. And the list goes on. My 
concern, I want you to take a look and see if there is 
something missing here, if there is an element that we should 
be considering in this.
    But my concern goes back to my original point. I do not 
think we should assume automatically that there are lots of 
people who want to be air traffic controllers and have the 
skills to do the job and want to take the toughest assignments. 
We found in the past that sometimes that is not the case. I 
worry if the starting salaries that we are talking about here 
are a cutback from levels that we had 8 or 9 years ago.
    I would like you to address that, if you would.

                             CONTROLLER PAY

    Ms. Blakey. I cannot speak to exactly those without doing 
the analysis and which I would be very happy to do. I can tell 
you that salaries that we have proposed are ones that begin for 
the entry-level, developmental controllers, coming in with the 
salary and locality pay on average, base salary $31,700. Put in 
the locality pay and you are up to about $37,000, which by most 
people's standards, for someone coming right out of school with 
no experience is good--and by the way, as you know, for the 
first several years of a controller's service, it is mostly 
about training. So you have that prospect there.
    But after 5 years, on average, the base salary for 
controllers, with locality pay, is going to be about $84,000 a 
year. Now that is a pretty generous wage by almost anyone's 
standards. You put on the premium pays, and I am just talking 
about average premium pays here, and you are well up into the 
$90,000's.
    You put on the benefits, because as you know there is an 
enhanced retirement plan for controllers, average compensation 
for the new hires--and this is average--is $127,000 a year.
    Now I have not had anyone suggest to me so far that we will 
have any difficulty recruiting and retaining the best and 
brightest. I was anecdotally just at one of the collegiate 
schools up at La Guardia Airport that trains new controllers to 
come into our academy. And when I explained the proposal and 
what the benefits were, the only questions I got was were: 
``Are you sure you are going to keep up the hiring? How quickly 
are you going to be hiring more? And we are really looking 
forward. Where can we expect to be positioned?''
    That is the nature of the questions.
    Senator Durbin. Has there not been a period over the last 
several years where we did not hire though?
    Ms. Blakey. There was. And therefore they are hoping that 
we are going to keep up a steady state of hiring. And I was 
able to assure them that we absolutely will, that they are 
looking forward to a boom in hiring at the FAA on an ongoing 
basis for many years.

                                 NATCA

    Senator Durbin. As I said to you in my office, and I will 
say in closing here, I really hope that there is a way that you 
can work out a negotiated settlement with the air traffic 
controllers. I think it would be a terrible outcome if this is 
dumped in the lap of Congress to decide. There are too many 
factors involved in this, and frankly the information from both 
sides conflicts in some areas and it is tough for us to sort it 
out.
    It would be far better if you could reach agreement with a 
group that the FAA needs to work closely with for the years to 
come. So I hope that that happens.
    Ms. Blakey. We would very much have liked to have had a 
voluntary agreement on this, believe me. I wish that there had 
been a way to close this gap because it was a very difficult 
one, $600 million just in the 5 years of the contract. But most 
importantly, the ability to adjust our pay scale for the new 
hires. We keep the existing controllers financially whole. But 
for the new hires, so that they have a fair wage that we can 
provide salary increases as the years go on, and they are 
equitable to the rest of the FAA's workforce.
    Senator Bond. Thank you very much, Senator Durbin.
    Senator Durbin. Thank you.

                 FAA TELECOMMUNICATIONS INFRASTRUCTURE

    Senator Bond. We have unfortunately just a few more 
minutes. I want to go into several questions I raised earlier, 
for example, the FAA Telecommunications Infrastructure.
    The FTI is critical. I understand that it consists of 
25,000 telecommunications services at over 4,400 FAA sites. The 
Harris Corporation is a prime contractor and the contract has a 
minimum value of $303 million.
    But the FAA is critical to the management of this program. 
According to the IG, the major problem with the program is that 
the FAA did not develop a detailed master plan or an effective 
transition plan. And they suggest that the FAA would have to 
exercise its 1-year option to extend the Verizon contract and 
maybe retain those services at a substantial cost.
    Has the FAA responded to the IG recommendation? And are you 
looking at having to pick up the Verizon 1-year option and 
perhaps a possible second year option on this? What are the 
costs that you see in this?
    Ms. Blakey. Basically, we are looking at the fact that we 
had hoped to be seeing substantial cost savings, in other 
words, reduction in what we are paying right now on the 
existing legacy contract through this FTI contract. We have not 
yet. And cost savings, for example, this year if we had hit our 
numbers, would have been $100 million. That is real money by 
anyone's standards.
    Believe me, we are working as hard as we know how with 
Harris and its subcontractors. Verizon is the incumbent 
contractor, and also a subcontractor to Harris, as are a number 
of others on this contract.
    We do expect at this point that we are going to be adopting 
the recommendations from the Inspector General. I think the 
idea of a much more detailed master plan with all of the 
metrics that they recommend will help us keep this contract, 
will help us get the contract back on track and then help us 
monitor it very precisely. So we are doing that and that plan 
will be out in June.
    We also are going to look at the extension. We have already 
sat down with Verizon to start talking about an extension. So 
we have the latitude at the end that we probably will need.
    Senator Bond. What do you expect the savings to be from 
this changeover?
    Ms. Blakey. The savings in the long run on the contract, 
and this goes out to 2017, I believe, is somewhere over $600 
million. So it is a very big sum of money.
    We are trying, we are on the track for a recovery plan 
here, and have begun on a number of fronts to hit the numbers 
again. But we still have a hill to climb here. There is no 
question about it. This is a little like stacking bricks, I 
hate to tell you, because it is all logistics. It is all start 
stacking them faster and in better order to make it all work.
    And we have learned a lot over the first couple of years of 
this contract. So we are trying to work a lot smarter and make 
it work.
    Senator Bond. My family used to be in the brick business 
and I used to stack bricks, and I understand. That is why I 
went to law school.
    I would like a quick comment--I believe Mr. Dobbs, the 
Assistant IG for Aviation is here. Mr. Dobbs, do you have 
anything additional to add on this? If you would please come 
up. Obviously this is a major concern and we want to do what we 
can help you get it right.
    Mr. Dobbs. Administrator Blakey explained----
    Senator Bond. For the record, give your full name, would 
you please?

          REMARKS OF ASSISTANT INSPECTOR GENERAL FOR AVIATION

    Mr. Dobbs. I am David Dobbs, Assistant Inspector General 
for Aviation and Special Program Audits, Office of Inspector 
General, Department of Transportation.
    Senator Bond. Thank you, Mr. Dobbs.
    Mr. Dobbs. I think the Administrator's testimony was 
correct. Our audit focused on FAA's management structure of 
running a program. And as she said, they focused only on site 
acceptance. That is initially just putting equipment in.
    Because of that they were still paying for the legacy 
systems and they had to pay for Harris. And that is why costs 
eroded.
    FAA has agreed with our recommendations to develop a 
realistic master schedule and improve their transition 
planning. And the results of that, as the Administrator just 
said, are supposed to be out in June. That will give us and 
FAA, of course, a better idea of when the project can get done 
and what the savings will be. But until that happens, until you 
get a master schedule, I do not think anybody can tell you with 
any certainty what the savings will be or when it will get 
done.

                         NATCA AND RETIREMENTS

    Senator Bond. Thank you very much, Mr. Dobbs.
    Let me return to questioning for the Administrator.
    There are lots of charges going back and forth. You have 
talked about the salary under the proposal for the controllers' 
contract. Each side has various assessments of whether there 
will be waves of retirements. What do you foresee as 
retirements if the FAA proposal becomes law without further 
negotiations? Do you see any significant number of controllers 
retiring?
    Ms. Blakey. We know that because there are a large number 
of people who will be retirement-eligible and then hit the 
mandatory retirement age of age 56, that we are going to see 
significant numbers of retirements over the next 10 to 12 
years. That has been true all along. That is a structural thing 
because of the number of controllers that were hired right 
after the PATCO strike. We have got a huge generation that is 
moving on. That is why this issue of the salary structure for 
new hires is so important to get right.
    But I was very surprised that the union suggested that 
there would be retirements that would be triggered by the 
contract proposal we put forward. No. 1, we certainly do not 
see any. I can tell you that, and I check in with HR.
    Senator Bond. Under your proposal again, what will the 
existing controllers get? What kind of increase would they get 
over their current salary if the FAA proposal were to go into 
effect, which it appears it would?
    Ms. Blakey. Average compensation and benefits right now are 
$166,000 a year. It will go to $187,000 a year.
    Senator Bond. That includes benefits?
    Ms. Blakey. It includes benefit as well, that is correct. 
So when you take the benefits off, which I think are about 30 
percent, you can ratchet that down. But the key point is that 
our proposal does allow for locality increases every year. It 
also includes performance-based increases every year of the 
contract. And this is something that therefore will and can 
increase the existing controllers' salary and benefits as they 
move forward.
    The other thing I would point out is this, that the 
controllers' retirement is based on two things. It is not just 
based on their high three, which by the way can be any high 
three but their salaries are going up so this will benefit 
them.
    But that said, it is also based on years of service. It 
does not, in any way, incentivize people to leave early because 
every year that they go forward the years of service add 1 to 2 
percent to their overall retirement package.
    Senator Bond. And they would be getting a pay increase, 
which would be the basis of the last 3 years on which their 
retirement is based; is that----
    Ms. Blakey. Every year they would be----
    Senator Bond. So if they work an extra year they not only 
get the additional year's service, but they get a higher base 
number in the salary? For the computation of retirement?
    Ms. Blakey. The controllers that are within the pay bands, 
because we work on a pay band basis--I am sorry, thank you very 
much.
    Benefits are 20 percent, I was wrong, rather than 30 
percent. So I am exaggerating the difference there. Cash 
compensation goes to $140,000 at the end of the 5 years, so 
that is the figure that we are working with here.
    But let me go back to this issue of increases. The 
increases for the bonuses, if you will, if they are within the 
salary caps they go to base pay and they do therefore ratchet 
up for retirement. If they are above the salary caps, they are 
given as lump sum increases. So it depends on how high your 
salary is as to how much that increases your retirement. But 
your retirement, as I say, in addition to being based on an 
already very high salary level will also be based on the number 
of years of service.
    And when you realize that annuities--just think about 
$120,000, for example, as the salary for an existing 
controller, just pick that as an average. If they retire 
tomorrow, their annuity is going to be somewhere around half 
that. Now these are people in their late 40's, early 50's. 
There is not much incentive to turn around and leave the kind 
of money on the table that they would be on the basis of a 
contract which, as I say, continues to increase and continues 
to benefit them. Our controllers are a very smart work group 
and I know they are going to sit down and do the math.

                            WRIGHT AMENDMENT

    Senator Bond. One final question. This committee has had 
some activities involving the Wright Amendment which limits 
flights from Love Field to Texas and now eight other States. 
One of the things that we hear is that DFW is the second 
busiest airport in the United States and the sixth busiest in 
the world. From an air traffic control standpoint, is there any 
reason why more flights should not come out of Love Field to 
lessen the congestion at Dallas? Does that cause any air 
traffic control problems?
    Ms. Blakey. This is something that we have looked at a 
couple of times and obviously it depends a little bit on what 
kind of traffic is planned and all of the specifics of that. So 
I will not put out any kind of blanket assertions.
    But I will say this. A while back we had Mitre, who does a 
lot of work for us in terms of air space analysis, look at it. 
And I think that the flights that, at that point, they analyzed 
could be handled. They are doing another study right now and I 
will have some results on that relatively shortly, which I 
would be very happy to share with the committee as soon as I 
have that.
    Senator Bond. Would you do that?
    Ms. Blakey. But the one that they did before was only a 
partial basis.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Bond. Thank you very much, and I think that we may 
have one or two more questions but we appreciate your time. And 
we thank you very much for being here, and Mr. Dobbs as well.
    [The following questions were not asked at the hearing, but 
were submitted to the agency for response subsequent to the 
hearing:]

            Questions Submitted by Senator Pete V. Domenici

       UNMANNED AERIAL VEHICLES AND THE NATIONAL AIRSPACE SYSTEM

    Question. What information or test data does your organization need 
to allow expanded UAV border security flights beyond Arizona's borders?
    Answer. The Federal Aviation Administration has not received a 
request for expanding border security flights along the southern border 
using Unmanned Aircraft Systems (UAS). However, the FAA is prepared to 
work with the Department of Homeland Security (DHS) if it requests to 
expand the critical mission of patrolling our borders. In the short-
term, we will use Certificate of Authorizations and Temporary Flight 
Restrictions (TFRs) to meet mission needs. This will mitigate the risk 
to the public as we gain experience with UAS operations and develop 
standards for the necessary command, control, and communication systems 
and detect, sense, and avoid systems.
    UAS do not yet have proven levels of reliability that would provide 
an equivalent level of safety to today's aviation regulations contained 
in Title 14 of the Code of Federal Regulations (CFR 14). Compliance 
with the general operating rules, in CFR 14 part 91, would be 
especially difficult for this emerging technology's civil applications. 
Technology to solve critical functions, such as the ability to see and 
avoid other aircraft, does not yet exist. To mitigate this critical 
weakness in system development and to protect the flying public, the 
FAA established a TFR that extended over 340 miles in support of the 
DHS mission.
    Question. When do you expect to have a plan to allow UAVs to patrol 
the entire northern and southern international borders, and in 
particular New Mexico's southern border, where commercial flights are 
not routine?
    Answer. The Department of Homeland Security has not informed the 
Federal Aviation Administration of any plans or made any requests to 
expand its Unmanned Aircraft Systems (UAS) operations beyond the 
currently negotiated Temporary Flight Restriction (TFR).
    Although the impact to commercial traffic in this TFR may be 
minimal, it is likely the impact to general aviation (GA) aircraft will 
be significant. GA aircraft are not normally equipped with many of the 
safety features that are common on commercial aircraft, such as Traffic 
Collision and Avoidance System. Also, many of the GA aircraft operating 
in that area are not required to have an operating transponder, which 
makes them virtually invisible to ground-based and aircraft-based 
surveillance systems.
    Question. When do you expect to have a plan to allow UAVs to fly 
during and after national emergencies like Hurricane Katrina?
    Answer. The Federal Aviation Administration currently allows use of 
Unmanned Aircraft Systems (UAS) in response to national disasters 
through a Certificate of Authorization (COA) to the Northern Command 
Joint Forces Area Combatant Commander, signed on May 18, 2006. This 
COA, specifically for Department of Defense use in response to national 
disasters, allows deployment of Global Hawk or Predator UAS to the 
disaster area.
    Question. When do you expect to have a plan to allow UAVs to 
interoperate with manned aircraft in the National Airspace?
    Answer. The Federal Aviation Administration has processes that 
already allow many Unmanned Aircraft Systems (UAS) to operate in the 
National Airspace System (NAS). These processes, Certificates of 
Authorizations and Experimental Airworthiness Certificates, allow the 
FAA to set appropriate limitations to mitigate any technical risks in 
system design and operation while still maintaining the safety of the 
flying public.
    The FAA has tasked the Radio Technical Commission for Aeronautics 
(RTCA), an industry advisory committee, to develop regulatory standards 
in the areas of detect, sense and avoid and command, control and 
communication. The committee is expected to provide standards within 3 
to 5 years. Full integration of UAS into the NAS will require a 
significant effort in the areas of safety analysis, risk modeling, 
technology development, and policy changes. The FAA expects to complete 
a road map by the first quarter of 2007 that will outline, in detail, 
the work necessary for UAS to ``file and fly'' in the NAS.
                                 ______
                                 
            Questions Submitted by Senator Richard J. Durbin

    Question. Administrator Blakey, in 2000, Congress phased out the 
High Density Rule that slot-controlled O'Hare International Airport. 
The FAA has issued an NPRM that contemplates rules substantially 
similar to the HDR. When are you planning on coming back to the 
Congress to get authority to re-impose a slot system?
    Answer. The FAA has broad authority under 49 U.S.C. 40103 to 
regulate the use of the navigable airspace of the United States. This 
section authorizes the FAA to develop plans and policy for the use of 
navigable airspace and to assign the use that the FAA deems necessary 
to its safe and efficient utilization. It further directs the FAA to 
prescribe air traffic rules and regulations governing the efficient 
utilization of the navigable airspace.
    The proposed temporary rule is intended to relieve the substantial 
inconvenience to the traveling public caused by flight delays and 
congestion at O'Hare International Airport (O'Hare). After the phase-
out of the HDR at O'Hare, carriers had the opportunity to add flights 
and adjust schedules as they saw appropriate, which resulted in 
extensive delays for all operators at O'Hare and wide-ranging effects 
on the National Airspace System (NAS).
    This proposed rule provides a temporary regulatory solution 
necessary to maintain an acceptable level of operations at O'Hare 
without congestion and delay impacting the entire NAS until additional 
capacity becomes available to meet the persistent demand at O'Hare. 
There are significant differences between the HDR and the proposed rule 
that reduce restrictions to the minimum levels needed to address 
congestion, improve the potential for greater competition and access by 
carriers, and permit an increase in hourly limits under the rule 
consistent with any realized capacity increases.
    Question. The existing temporary flight caps were targeted to 
reduce delays by 20 percent. In the city's original comments to the 
proposed flight reductions they stated that the arrival rate was too 
low and would leave capacity on the table. Now, the FAA's own data 
shows that the FAA has over shot the reduction goal by 20 percent to 35 
percent. In addition, one carrier, Independence Air, has ceased 
operations at the airport leaving 10 slots unused. Yet, the FAA has not 
granted the city request to not leave capacity on the table and 
increase the arrival rate. Why is the FAA allowing valuable capacity to 
remain unused and starving the economic engine of my State and the 
surrounding region?
    Answer. FAA explained in the March 13, 2006 show cause order, to 
extend the August 2004 order which caps Arrivals at O'Hare, the 10 
arrival authorizations previously operated by Independence Air are not 
excess capacity. The FAA does not consider Independence Air's arrival 
authorizations to be excess capacity, because when negotiating schedule 
reductions expecting the August 2004 order, the FAA had to allocate 
arrival authorizations in some peak afternoon and evening hours at 
levels that exceed the peak-hour target of 88 scheduled arrivals per 
hour. In addition, the number and timing of international flights by 
foreign air carriers has not been limited by the FAA's order and these 
flights are also operated above the hourly cap.
    The Independence Air arrival authorizations, particularly in the 
peak afternoon and evening hours, if unused, would help offset these 
periods of continued scheduling over the operational target. At the 
same time, the daily, average operational performance for O'Hare was 
better than modeled. This is due in part to some carriers not fully 
utilizing their authorized arrivals under the order. The current order, 
which limits flights at O'Hare, does not have a minimum usage 
requirement. However, the proposed rule considers implementing a usage 
requirement, as well as a method for reallocating any arrival 
authorizations that are not being utilized (e.g. Independence Air). 
Until currently authorized flights are better utilized, it may not be 
practical to significantly change the scheduling limits.
    However, it is possible that air traffic procedural changes or 
other enhancements will result in a limited increase in arrival 
capacity over the duration of the proposed rule. Therefore, the FAA 
proposes to periodically reexamine the level of available capacity at 
O'Hare. Under the proposed rule, every 6 months, the FAA would review 
the level and length of delays, operating conditions at the airport and 
other relevant factors to determine whether more arrivals can be 
allowed.
    Question. The proposed NPRM has a sunset provision in 2008. But, 
some of the text leaves doubt in my mind whether that is absolutely 
true. Will you state for the record that if the NPRM were implemented, 
that the rule would absolutely sunset in 2008?
    Answer. As stated in the NPRM, FAA proposes a 2008 sunset date for 
the temporary rule. The city of Chicago's O'Hare Modernization Program 
will adequately increase airport capacity and reduce levels of delay. 
The first phase of the O'Hare Modernization Program, a new north 
runway, is expected to come on line in late 2008. In addition, recent 
improvements to the Instrument Landing Systems for runways 27L and 27R 
will also improve performance in adverse weather conditions.
    The 2008 sunset date for the FAA's proposed rule would address the 
present conditions at O'Hare until the benefits of any interim capacity 
enhancements are realized.
    Question. I am very excited about some recently implemented and 
impending improvements to Chicago's Airspace. The implementation of 
Category II/III operations on Runways 27-left and 27-right at O'Hare, 
the new MACE Routes in Cleveland Center, the Airspace Flow Program, and 
the impending addition of two new eastbound departure routes out of 
O'Hare should all go a long way towards increasing airspace capacity 
for the Chicago region and the Nation. I'd like to thank the 
Administrator for the dedication to improving Chicago's airspace.
    With the airspace and procedural improvements that have been 
implemented in the last couple of years at O'Hare and the upcoming 
improvements, how does the FAA plan to deal with this increase in 
capacity?
    Answer. The changes referenced above will improve efficiency in the 
airspace surrounding the greater Chicago Metropolitan Area. Included in 
these changes is the Midwest Air Space Enhancement (MASE) routes, 
implemented on June 8, 2006; the Chicago Airspace Project, with planned 
implementation starting in early 2007; and other non-airspace projects 
such as AFP.
    These efficiency improvements focus on enhancing how the airspace 
is used to reduce delays and restrictions, but not necessarily changing 
the airport capacity. Airport capacity improvements are more closely 
tied to airfield programs, i.e. the O'Hare Modernization Plan (OMP).
    When implemented, the airspace design changes in the Chicago 
Airspace Project will have significant impact on the airspace capacity 
supporting the Chicago metropolitan area. The Chicago Airspace Project 
will implement new departure routes and sectors, and new arrival 
procedures to complement the planned OMP runways. The FAA projects that 
the Chicago Airspace Project will reduce delays by 20 percent as the 
result of new departure routes and sectors. Eventually, delays will be 
reduced by 65 percent with the addition of the first new runway and the 
associated arrival route changes.
                                 ______
                                 
             Questions Submitted by Senator Byron L. Dorgan

    Question. When can Bismarck Airport expect its ASR-11 upgrade?
    Answer. A thorough study of ASR-8 lifecycle costs and upgrade 
benefits is underway to define the best value approach for continuing 
safe surveillance service at the 37 airports with ASR-8 radars, 
including Bismarck, ND. As directed by the Senate, FAA has thoroughly 
investigated the operational conditions at Bismarck Airport, and has 
concluded that there are no service or safety issues related to its 
current ASR-8 radar system. Given that, it is likely that deploying an 
ASR-11 radar at Bismarck may not be justified by the business case 
analysis. FAA expects to have final determination of what sites justify 
the significant expense of installing new ASR-11 radar systems by the 
end of fiscal year 2006.
    The ASR-8 radar system at Bismarck is performing well and provides 
safe surveillance service. Because the ASR-8 radar system is a good, 
highly reliable radar, it's likely the FAA will continue to rely on 
them at many airports for many years to come.
    Question. Are you ignoring this clear mandate from Congress by 
delaying the Bismarck upgrade?
    Answer. The FAA has ensured Bismarck continues to have safe and 
capable radar coverage. As stated in the previous response, the FAA is 
awaiting the results of the business case analysis for Bismarck. A 
thorough study of ASR-8 lifecycle costs and upgrade benefits is 
underway to define the best value approach for continuing safe 
surveillance service at the 37 existing ASR-8 radar sites, including 
Bismarck. The results are expected by the end of fiscal year 2006. 
Surveillance service safety will be maintained either through 
sustainment of the existing ASR-8 systems; installation of an ASR-11 
radar system if the benefits exceed the costs; or by using other 
technologies pending definition of the future architecture of ground 
based surveillance.
    The FAA has investigated the operational conditions at Bismarck 
Airport, including radar coverage provided by the existing ASR-8, and 
determined that there are no shortfalls in the air traffic service 
currently being provided.
    Question. What has the FAA done since this Congressional directive 
in fiscal year 2005 to move the Bismarck Airport closer to its ASR-11 
radar upgrade? Please provide me a detailed overview of your actions 
and communications with Bismarck Airport since the report language.
    Answer. The FAA has verified that safe surveillance services are 
currently being provided at Bismarck Airport. The FAA understands that 
the local landowner of the existing radar site and the airport wants to 
develop the land where the current ASR-8 radar system is located. 
Bismarck Airport is aware that the analysis is underway to determine 
which sites justify the expense of deploying new ASR-11 radar systems.
    While a detailed log of all communications between the FAA and the 
airport has not been maintained, the regional FAA representatives and 
the Bismarck Airport Manager have had numerous communications on this 
matter. The most significant of these communications are described 
below:
  --On 8/17/05, in response to an email inquiry, the FAA informed Mr. 
        Greg Haug, Airport Manager, that an ASR-11 program reassessment 
        was underway, and that Bismarck may not be approved for an ASR-
        11 radar system acquisition. The FAA also stated its intent to 
        conduct further analyses to determine the business case for 
        acquisition of additional ASR-11 radars.
  --On 10/6/05, in response to an email inquiry, the FAA informed Mr. 
        Haug that the ASR-11 program rebaseline had been approved and 
        Bismarck was not scheduled to receive an ASR-11 radar. The FAA 
        also informed him that a business case analysis would be 
        performed to determine need for additional ASR-11 radars and 
        that the results would be expected by the end of fiscal year 
        2006.
    Question. That said, is the FAA jeopardizing the safety of the 
American traveling public by not following through on its commitment on 
the Bismarck Airport radar upgrade?
    Answer. The ASR-8 provides safe, reliable coverage at Bismarck and 
36 other airports.
    Question. How long does the FAA expect to rely on ASR-8 radars? How 
long can we expect the ASR-8 radars to work without compromising 
safety?
    Answer. The decision whether to replace ASR-8 radars is expected by 
the end of fiscal year 2006. If the FAA decides it is cost-effective to 
continue using the ASR-8s, it will continue to ensure they provide safe 
surveillance service at those locations, including Bismarck. There are 
no service or safety issues related to Bismarck's current ASR-8 radar 
system. The overall class of ASR-8 radars has been exceeding the 
availability target goal of 99.5 percent. Bismarck specifically has 
achieved an availability target of 99.87 percent over the past 2\1/2\ 
years. Only one unscheduled outage has occurred at Bismarck during that 
time, lasting approximately 4 hours.
    Question. Can you guarantee the safety and effectiveness of these 
aging ASR-8 radars by using parts cannibalized from decommissioned 
radars?
    Answer. The costs and risks associated with maintaining these 
radars are being considered as part of the ongoing business case 
analysis. If the decision is made to retain the ASR-8 radar systems, 
the FAA will continue to ensure they provide safe surveillance service 
at Bismarck Airport and other facilities where they are in use. The FAA 
expects the effectiveness of the ASR-8 radars to continue meeting the 
agency's availability standards. The overall class of ASR-8 radars, on 
average has been achieving a 99.67 percent availability in recent 
years. This exceeds the availability target metric of 99.5 percent. 
Using spare parts from radars in storage will support the further use 
of these radars if a decision is made to retain them.
    Question. When does the FAA expect all airplanes, including the 
ones that service Bismarck Airport, to be equipped with this 
technology?
    Answer. The current program schedule calls for a Notice of Proposed 
Rulemaking (NPRM), to identify equipment required to operate in a 
designated airspace, to be issued in 2007. The specific provisions of 
the NPRM are still under development. However, when the NPRM is 
published it will specify the exact date that all aircraft will have to 
be equipped.
    Question. Can you guarantee that the ADS-B transition won't be 
delayed and plagued by problems like you have experienced with the ASR-
11 upgrade and many other FAA programs?
    Answer. The ADS-B management team has an integrated safety risk 
management program. It identifies risk at an early stage, and enables 
the FAA to implement a timely mitigation plan. The mitigation plan 
spells out the actions needed to minimize the potential adverse impacts 
that might delay the program.
    In addition, the ADS-B team will be developing and employing a 
detailed earned value management system. This system also supports the 
early identification of potential trouble spots and gives the 
management team an opportunity to implement solutions early enough to 
avoid major set backs.
    Question. Madam Administrator, in your letter dated April 24, you 
denied the National Air Traffic Controllers Association's formal 
request to reopen contract negotiations. You cited three reasons why a 
voluntary negotiated agreement could not be reached. These areas were 
reductions in new hire pay bands, performance-based compensation, and 
work rules. John Carr formally responded by offering `` . . . to meet 
you unconditionally at the bargaining table'' and that he would direct 
his contract team to ``bring you real and significant progress on these 
three important issues.'' If this is indeed the case, then why would 
you not make another attempt to negotiate an agreement at the 
bargaining table where this dispute should be solved?
    Answer. The Parties' negotiators made significant progress during 
the negotiations, especially in the area of work rules, where they 
reached a number of significant agreements, and I laud them for it. In 
the economic realm, however, the Parties were too far apart for further 
negotiations to be fruitful. The Parties began negotiations in July 
2005 and reached impasse in April 2006--a period of 9 full months. A 
mediator from the Federal Mediation and Conciliation Service (FMCS) 
assisted with the negotiations during the last 4 weeks. From the outset 
of negotiations, the FAA made clear to the Union the Agency's 
bargaining objectives: (1) meaningful reduction in new hire salaries; 
(2) introduction of a true performance-based compensation system; and 
(3) reform of work rules to allow the FAA to operate an efficient air 
traffic system. The FAA's negotiators communicated these objectives to 
the Union's negotiators at the bargaining table from the beginning and 
all of the agency's contract proposals reflected them. In addition, I 
reiterated these objectives publicly on numerous occasions. NATCA had 9 
months to make a serious, detailed proposal on compensation that 
addressed the agency's real needs. Instead the Union chose to wait 
until negotiations were almost over to do so and even then its final 
proposal did not result in a cost effective new hire pay structure.\1\ 
Parties reach impasse when one has no more room to move on its 
proposals. The FAA reached that point in April 2006 and the Union did 
when it submitted the dispute to the Federal Service Impasses Panel 
(FSIP).\2\
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    \1\ NATCA's final proposal was to raise the existing pay band 
minimums by 0.8 percent and then lower them by 3 percent, resulting in 
an effective decrease of only 2.2 percent, far short of what is needed 
to create a long-term, cost-effective, and fair new hire controller pay 
structure at the FAA.
    \2\ NATCA submitted the dispute to the Federal Service Impasses 
Panel (FSIP) for resolution on April 7, 2006, 2 days after impasse was 
declared. Presumably the Union would not have done so if it did not 
believe that the Parties were at impasse. The FAA's position is that 
the FSIP is not the proper forum for the dispute and argued to the FSIP 
that it did not have jurisdiction over the matter. The Parties are 
currently awaiting the FSIP's decision on jurisdiction. In a similar 
dispute in 2003 involving other NATCA bargaining units, the FSIP 
declined to assert jurisdiction.
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    Returning to the bargaining table and delaying the implementation 
of the new contract would be extremely costly. Even a reasonably short 
delay--through January 2007--would cost American taxpayers an estimated 
$214 million and a continued delay beyond that would jeopardize the 
entire $1.9 billion in savings. Most of the $214 million relates to a 
pay increase that would take effect in January 2007, the costs 
associated with which would be locked in and compound over time with 
future locality pay, premiums, benefits and raises tied to a larger 
base salary. NATCA's demands to return to the bargaining table appear 
designed principally to perpetuate the current, costly agreement. 
NATCA's president admitted as much in a March 31, 2006, press release: 
``There is absolutely no reason for NATCA to end talks. The current 
contract is better than our last, concession-laden contract proposal at 
the bargaining table, and our current contract stays in effect until 
there is a new contract. We could literally talk forever and continue 
to enjoy the contract we currently work under.'' NATCA has absolutely 
no incentive to conclude negotiations.
    Question. It is expected that 73 percent of the current air traffic 
controller workforce will be eligible to retire by 2015. In order to 
address this issue, the Federal Aviation Administration needs to hire 
11,500 air traffic controllers in the next decade. How do you expect to 
attract qualified candidates when you are proposing to create a lower 
pay scale for newly hired controllers that will limit their earning 
potential?
    Answer. The salaries provided for in the new pay system will be 
more than sufficient to attract and retain air traffic controllers in 
order to meet the FAA's staffing demands over the next decade. Under 
the new pay system, controllers hired in 2007 will earn an average of 
$93,400 in cash compensation by 2011 after 5 years on the job. Cash 
compensation includes base salary, locality pay, and premium pay such 
as overtime, Sunday pay, holiday pay, and night differential. In 
calculating the $93,400 average, the FAA used a system-wide average for 
locality and premium pay rates across all facilities. Applying actual 
locality and premium pay rates historically paid at specific facilities 
instead results in a higher weighted average cash compensation of 
$94,207 after 5 years. Regardless of the method used to calculate 
average cash compensation, under the FAA's new pay plan, air traffic 
controllers will continue to be one of the most highly compensated 
groups of employees in the Federal Government.

                         CONCLUSION OF HEARINGS

    Senator Bond. With that, this hearing is recessed.
    [Whereupon, at 11 a.m., Thursday, May 4, the hearings were 
concluded, and the subcommittee was recessed, to reconvene 
subject to the call of the Chair.]
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