[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
   THE FEDERAL AVIATION ADMINISTRATION'S OVERSIGHT OF OUTSOURCED AIR 
                          CARRIER MAINTENANCE

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

                                (110-23)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                                AVIATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 29, 2007

                               __________


                       Printed for the use of the
             Committee on Transportation and Infrastructure

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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                 JAMES L. OBERSTAR, Minnesota, Chairman

NICK J. RAHALL, II, West Virginia    JOHN L. MICA, Florida
PETER A. DeFAZIO, Oregon             DON YOUNG, Alaska
JERRY F. COSTELLO, Illinois          THOMAS E. PETRI, Wisconsin
ELEANOR HOLMES NORTON, District of   HOWARD COBLE, North Carolina
Columbia                             JOHN J. DUNCAN, Jr., Tennessee
JERROLD NADLER, New York             WAYNE T. GILCHREST, Maryland
CORRINE BROWN, Florida               VERNON J. EHLERS, Michigan
BOB FILNER, California               STEVEN C. LaTOURETTE, Ohio
EDDIE BERNICE JOHNSON, Texas         RICHARD H. BAKER, Louisiana
GENE TAYLOR, Mississippi             FRANK A. LoBIONDO, New Jersey
JUANITA MILLENDER-McDONALD,          JERRY MORAN, Kansas
California                           GARY G. MILLER, California
ELIJAH E. CUMMINGS, Maryland         ROBIN HAYES, North Carolina
ELLEN O. TAUSCHER, California        HENRY E. BROWN, Jr., South 
LEONARD L. BOSWELL, Iowa             Carolina
TIM HOLDEN, Pennsylvania             TIMOTHY V. JOHNSON, Illinois
BRIAN BAIRD, Washington              TODD RUSSELL PLATTS, Pennsylvania
RICK LARSEN, Washington              SAM GRAVES, Missouri
MICHAEL E. CAPUANO, Massachusetts    BILL SHUSTER, Pennsylvania
JULIA CARSON, Indiana                JOHN BOOZMAN, Arkansas
TIMOTHY H. BISHOP, New York          SHELLEY MOORE CAPITO, West 
MICHAEL H. MICHAUD, Maine            Virginia
BRIAN HIGGINS, New York              JIM GERLACH, Pennsylvania
RUSS CARNAHAN, Missouri              MARIO DIAZ-BALART, Florida
JOHN T. SALAZAR, Colorado            CHARLES W. DENT, Pennsylvania
GRACE F. NAPOLITANO, California      TED POE, Texas
DANIEL LIPINSKI, Illinois            DAVID G. REICHERT, Washington
DORIS O. MATSUI, California          CONNIE MACK, Florida
NICK LAMPSON, Texas                  JOHN R. `RANDY' KUHL, Jr., New 
ZACHARY T. SPACE, Ohio               York
MAZIE K. HIRONO, Hawaii              LYNN A WESTMORELAND, Georgia
BRUCE L. BRALEY, Iowa                CHARLES W. BOUSTANY, Jr., 
JASON ALTMIRE, Pennsylvania          Louisiana
TIMOTHY J. WALZ, Minnesota           JEAN SCHMIDT, Ohio
HEATH SHULER, North Carolina         CANDICE S. MILLER, Michigan
MICHAEL A. ACURI, New York           THELMA D. DRAKE, Virginia
HARRY E. MITCHELL, Arizona           MARY FALLIN, Oklahoma
CHRISTOPHER P. CARNEY, Pennsylvania  VERN BUCHANAN, Florida
JOHN J. HALL, New York
STEVE KAGEN, Wisconsin
STEVE COHEN, Tennessee
JERRY McNERNEY, California

                                  (ii)

  
?

                        Subcommittee on Aviation

                 JERRY F. COSTELLO, Illinois, Chairman

BOB FILNER, California               THOMAS E. PETRI, Wisconsin
LEONARD L. BOSWELL, Iowa             HOWARD COBLE, North Carolina
RICK LARSEN, Washington              JOHN J. DUNCAN, Jr., Tennessee
RUSS CARNAHAN, Missouri              VERNON J. EHLERS, Michigan
JOHN T. SALAZAR, Colorado            STEVEN C. LaTOURETTE, Ohio
DANIEL LIPINSKI, Illinois            FRANK A. LoBIONDO, New Jersey
NICK LAMPSON, Texas                  JERRY MORAN, Kansas
ZACHARY T. SPACE, Ohio               ROBIN HAYES, North Carolina
BRUCE L. BRALEY, Iowa                SAM GRAVES, Missouri
HARRY E. MITCHELL, Arizona           JOHN BOOZMAN, Arkansas
JOHN J. HALL, New York               SHELLEY MOORE CAPITO, West 
STEVE KAGEN, Wisconsin               Virginia
STEVE COHEN, Tennessee               JIM GERLACH, Pennsylvania
NICK J. RAHALL, II, West Virginia    MARIO DIAZ-BALART, Florida
PETER A. DeFAZIO, Oregon             CHARLES W. DENT, Pennsylvania
ELEANOR HOLMES NORTON, District of   TED POE, Texas
Columbia                             DAVID G. REICHERT, Washington
CORRINE BROWN, Florida               CONNIE MACK, Florida
EDDIE BERNICE JOHNSON, Texas         JOHN R. `RANDY' KUHL, Jr., New 
JUANITA MILLENDER-McDONALD,          York
California                           LYNN A WESTMORELAND, Georgia
ELLEN O. TAUSCHER, California        MARY FALLIN, Oklahoma
TIM HOLDEN, Pennsylvania             VERN BUCHANAN, Florida
MICHAEL E. CAPUANO, Massachusetts    JOHN L. MICA, Florida
DORIS O. MATSUI, California            (Ex Officio)
MAZIE K. HIRONO, Hawaii
JAMES L. OBERSTAR, Minnesota
  (Ex Officio)

                                 (iii)

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    vi

                               TESTIMONY

Barimo, Basil J., Vice President, Operations and Safety, Air 
  Transport Association of America, Inc..........................    32
Brantley, Tom, President, Professional Airways Systems 
  Specialists, AFL-CIO...........................................    32
Campbell, David, Vice President for Base Maintenance at Alliance 
  Fort Worth and Kansas City, American Airlines..................    32
Filler, Marshall S., Managing Director and General Counsel, 
  Aeronautical Repair Station Association........................    32
Goglia, John J., Director, Center of Integrated Emergency 
  Management, Parks College of Engineering, Aviation and 
  Technology.....................................................    32
Little, James C., International President, Transport Workers 
  Union..........................................................    32
Sabatini, Nicholas, Associate Administrator for Aviation Safety, 
  Federal Aviation Administration, Accompanied by: James J. 
  Ballough, Director, Flight Standards Service, Federal Aviation 
  Administration.................................................     5
Scovel III, Hon. Calvin L., Inspector General, United States 
  Department Of Transportation...................................     5
Valeika, Raymond, Independent Aviation Advisor...................    32

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Carnahan, Hon. Russ, of Missouri.................................    51
Cohen, Hon. Steve, of Tennessee..................................    52
Costello, Hon. Jerry F., of Illinois.............................    53
Johnson, Hon. Eddie Bernice, of Texas............................    56
Kagen, Hon. Steve, of Wisconsin..................................    61
Matsui, Hon. Doris O., of California.............................    62
Mitchell, Hon. Harry E., of Arizona..............................    63
Oberstar, Hon. James L., of Minnesota............................    68
Salazar, Hon. John T., of Colorado...............................    71

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Barimo, Basil J..................................................    72
Brantley, Tom....................................................    84
Campbell, David..................................................    94
Filler, Marshall S...............................................    99
Goglia, John J...................................................   115
Little, James C..................................................   120
Sabatini, Nicholas...............................................   128
Scovel III, Hon. Calvin L........................................   137
Valeika, Raymond.................................................   155

                       SUBMISSIONS FOR THE RECORD

Filler, Marshall S., Managing Director and General Counsel, 
  Aeronautical Repair Station Association, FAA Repair Stations on 
  Foreign Soil by Country Code Listing...........................   113

                        ADDITIONS TO THE RECORD

Federal Aviation Administration, Aviation Safety/Flight Standards 
  - Repair Station Inspections and Results, response to request 
  for information from Subcommittee..............................   163
International Federation of Professional and Technical Engineers 
  AFL-CIO & CLC, remarks of Louis Lucivero, Vice President, IFPTE 
  Local 20.......................................................   226

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                    HEARING ON THE FEDERAL AVIATION 
    ADMINISTRATION'S OVERSIGHT OF OUTSOURCED AIR CARRIER MAINTENANCE

                              ----------                              


                        Thursday, March 29, 2007

                  House of Representatives,
    Committee on Transportation and Infrastructure,
                                  Subcommittee on Aviation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2167, Rayburn House Office Building, the Honorable Jerry 
F. Costello [Chairman of the Subcommittee] presiding.
    Mr. Costello. The Subcommittee will come to order. The 
Chair will ask all Members, staff and everyone in the room to 
turn off electronic devices or turn them on vibrate.
    The Subcommittee is meeting today to hear testimony on the 
Federal Aviation Administration's oversight of outsourced air 
carrier maintenance. Let me say that the Chair will give an 
opening statement. We will call on the Ranking Member for his 
opening statement or comments.
    I want to make note of the fact that the Ranking Member 
takes his responsibilities so seriously with this Subcommittee 
that instead of going to the White House this morning, he is 
here to hear your testimony. We appreciate Mr. Petri being 
here.
    I welcome everyone to this hearing on the Federal Aviation 
Administration oversight of outsourced air carrier maintenance. 
This hearing is the first in a series of hearings on aviation 
safety and the Federal Aviation Administration's oversight of 
outsourced maintenance.
    Although the United States has the safest air 
transportation system in the world, we must not be complacent 
about our success. The Department of Transportation's Inspector 
General lists aviation safety, performing oversight that 
effectively utilizes inspection resources and maintains 
aviation system safety, as one of the Department of 
Transportation's top 10 management challenges. Over the last 10 
years, there is a growing trend by airlines looking to trim 
costs to outsource their maintenance work to both domestic and 
foreign repair stations.
    The DOT IG will testify today that over the last 10 years, 
air carriers continue to increase the percentage of costs spent 
on outsourced maintenance from 37 percent to 62 percent in that 
10 year period. The IG also notes that more and more work is 
being outsourced to foreign repair stations.
    A July 2005 Wall Street Journal article stated that U.S. 
carriers pay between $65 and $75 per hour, including wages and 
benefits, while outside repair stations in North American, 
Europe and Asia pay about $40 to $50 an hour, and Latin 
American repair stations pay as little as $20 to $26 an hour. 
As a result, U.S. airlines are relying more heavily on foreign 
contractors to perform everything from routine maintenance to 
major overhauls. We must make certain that the FAA has a sound 
system to oversee maintenance work conducted outside the United 
States.
    According to the FAA, there are 4,231 domestic and 697 
foreign FAA-certificated repair stations with approximately 801 
FAA safety inspectors overseeing them. Both the DOT IG and the 
Government Accountability Office have expressed concerns about 
potential attrition in the FAA's inspector workforce. I am told 
that over one-third of the FAA inspectors will be eligible to 
retire by the year 2010. I am also told that since the end of 
fiscal year 2006, the FAA has already lost 77 inspectors.
    In addition, I am concerned about the level of staffing in 
the FAA's international field offices, which are responsible 
for overseeing foreign repair stations. The Singapore IFO only 
has 7 inspectors to oversee 103 repair facilities. In September 
of last year, this Subcommittee held a safety hearing where we 
had Mr. Sabatini who testified, among others. I asked the 
question at that time if in Mr. Sabatini's opinion we had 
adequate inspector staffing in Asia out of the Singapore office 
to inspect the 103 repair facilities. The answer was that we 
could always use more staff, but we have adequate staffing. 
When I asked the question, can you in fact tell this Committee 
that each of those facilities, the repair stations, the 103, 
had a physical visit, on-site visit by one inspector in a 12 
month period, he could not say that that was the case. When I 
asked if he could testify that those 103 facilities at least 
had a visit, physical visit, one time in a 2 year period, a 24 
month period, he could not state that they had.
    There is no question that we must make the investments in 
the FAA's work force now, so that they can meet the new 
challenges for maintaining the highest level of safety in this 
changing aviation environment, including ensuring proper 
oversight of domestic and foreign repair stations. Last year, 
the National Research Council reported that the FAA lacked 
staffing standards for inspectors and recommended that the FAA 
undertake a holistic approach to determine its staffing needs. 
It is incumbent upon the FAA to act on this recommendation, so 
that we can have a sufficient number of inspectors in the right 
places.
    Over the last few years, the DOT IG has made several 
recommendations with regard to the FAA's oversight of foreign 
and domestic repair stations, suggesting that inspectors focus 
their oversight on high-risk areas. The FAA has since moved to 
a high-risk based system for maintenance oversight. But full 
implementation has not happened yet.
    In a December 2005 report from the DOT IG, they found that 
an increasing amount of scheduled airline maintenance is being 
performed at non-certificated repair facilities and that the 
FAA was unaware of the extent of this practice. Non-
certificated facilities are not required to meet the same 
standards, such as quality assurance and training programs, as 
certificated FAA repair stations. The DOT IG made a 
recommendation to the FAA that it should consider limiting the 
type of work that these contractors can perform. I look forward 
to hearing from both the IG and FAA on the progress of that 
recommendation.
    The FAA inspector workforce has also raised concerns about 
staffing and insufficient funding for travel and their impact 
on conducting inspections, as well as moving to a risk-based 
oversight system. Mr. Tom Brantley, the President of the 
Professional Airway System Specialists, PASS, represents the 
FAA safety inspector workforce. He is here today and we will 
hear from him in greater detail about these concerns as he 
testifies on the second panel.
    Some have suggested that perhaps moving to some form of a 
standardized maintenance practice might improve safety. Each 
airline has different standards for maintaining their aircraft 
with repair stations required to perform their maintenance work 
in accordance with each individual air carrier's manual and 
maintenance program. I would like to hear from our witnesses as 
to how they feel about moving to some type of a standardized 
system.
    In contrast to the growing maintenance outsourcing trend, 
Mr. David Campbell from American Airlines has a commendable 
story to tell, as American performs 100 percent of their own 
heavy maintenance in-house. In addition, American has actually 
in-sourced work and I think we will hear his testimony this 
morning that in fact American will do about $175 million in 
third party revenue this year. So we look forward to hearing 
his testimony on quite a success story at American Airlines.
    In March of 2005, a joint team from American's aircraft 
maintenance and overhaul base in Tulsa announced a breakthrough 
goal to generate $500 million in value creation which would 
turn the maintenance facility base into a profit center. The 
Tulsa base announced just last month that it had reached the 
$501 million mark, exceeding its goal. American's innovation 
and cooperation between the airline and its unions demonstrates 
that in-house maintenance is working and is profitable.
    We must provide proper funding, close oversight and real 
standards of accountability to ensure that our aviation system 
remains the safest in the world.
    With that, I want to thank all of our witnesses for being 
here today and I look forward to hearing their testimony.
    Before I recognize the Ranking Member for his opening 
statement, I would ask unanimous consent to allow two weeks for 
all Members to revise and extend their remarks and to permit 
the submission of additional statements and materials by 
Members and witnesses. Without objection, so ordered.
    At this time, the Chair would recognize the Ranking Member 
for his opening statement or comments, Mr. Petri.
    Mr. Petri. Thank you, Mr. Chairman. I appreciate your 
holding this important hearing.
    Today we will explore how air carriers conduct and the 
Federal Aviation Administration oversees aircraft maintenance. 
We are holding this hearing at a time when the Nation's 
aviation system is the safest it has ever been in our Nation's 
history.
    Nevertheless, safety must be the number one priority for 
this Committee, for the FAA, for the airlines and for repair 
stations. Therefore, I look forward to hearing from 
representatives of all these groups today.
    It is no surprise that in reaction to and recovering from 
September 11th, severe acute respiratory syndrome, increasing 
air fuel prices, bankruptcies, a $35 billion net loss for 2001 
through 2005 as well as other impacts to the marketplace, the 
airline industry has made adjustment to how they conduct their 
business. Due to aggressive restructuring, we have a leaner 
airline industry, 800-plus fewer airplanes taken out of the 
system, 28 percent fewer airline employees and 26 percent less 
airline debt, sometimes through bankruptcy restructuring.
    At the same time, the aviation industry has become one of 
the most global-oriented markets in the world. U.S. carriers 
buy foreign-manufactured aircraft and foreign air carriers buy 
U.S.-manufactured aircraft. Both of the major commercial 
aircraft manufacturers have component parts made all over the 
world. The international influence of the industry is also 
present in aircraft maintenance. Aircraft repair facilities are 
a highly regulated and vital part of our economy, employing 
over 195,000 people in each of our 50 States and approximately 
697 foreign FAA-certificated repair stations. There are also 
over 1,000 European aviation safety agencies, certificated 
repair facilities, in our Country. Air carrier restructuring 
has also seen a shift in how aircraft maintenance is conducted 
by air carriers.
    While reducing costs is one reason for the shift, an 
argument is made that repair stations provide specialized 
expertise in areas such as engine repairs that the air carriers 
do not have in-house. According to the Bureau of Transportation 
statistics, in 2005 combined major national and regional air 
carriers, including cargo carriers, spent 35 percent of their 
$13.8 billion maintenance spending on outside maintenance 
companies. According to the National Transportation Safety 
Board, since 1997, only 8 percent of all commercial, commuter 
and on-demand air carriers accidents were attributable, at 
least in part, to maintenance issues.
    Representatives of the FAA and air carriers are here today 
to explain how maintenance oversight for both domestic and 
foreign repair stations is conducted in light of the changing 
and internationalized marketplace. I understand that in the 
past there have been some questionable maintenance practices at 
facilities, both in the United States and elsewhere. Obviously, 
the FAA should take appropriate and swift action in these 
situations, and I look forward to hearing how they address such 
situations.
    Likewise, I hope to gain better understanding of the 
allegations that the FAA does not have the manpower to inspect 
repair stations, particularly foreign repair stations. While 
these issues are not new to the Subcommittee, it is important 
that we receive periodic updates from the FAA and the industry, 
particularly in light of the changing marketplace.
    I look forward to hearing the witnesses' testimony, and Mr. 
Chairman, I yield back whatever time I have remaining.
    Mr. Costello. I thank the Ranking Member for his opening 
statement.
    Let me say to all Members that we did a unanimous consent 
request to enter opening statements into the record and we 
would ask you to do so. Is there any Member at this time that 
has an opening statement they want in the record? Mr. Carnahan, 
I understand you have a statement that you will enter into the 
record.
    Mr. Carnahan. Yes, Mr. Chairman, thank you.
    Mr. Costello. Thank you.
    Let me introduce our first panel of witnesses. Mr. Nick 
Sabatini, who has been with us many times, is the Associate 
Administrator for Aviation Safety at the FAA. He is here and 
has brought another valued member of his team at the FAA, Mr. 
Ballough. We also have the Inspector General of the U.S. 
Department of Transportation, who has testified before this 
Committee before, Mr. Scovel.
    I would ask at this time, Mr. Sabatini, you will be 
recognized. Your full statements all will be entered into the 
record. We have your statements and I have had an opportunity 
to review them. So we would ask that you summarize your 
statements in five minutes or less, so that we can have plenty 
of time for questions from Members.
    So at this time, Mr. Sabatini, you are recognized.

  TESTIMONY OF NICHOLAS SABATINI, ASSOCIATE ADMINISTRATOR FOR 
 AVIATION SAFETY, FEDERAL AVIATION ADMINISTRATION, ACCOMPANIED 
  BY: JAMES J. BALLOUGH, DIRECTOR, FLIGHT STANDARDS SERVICE, 
   FEDERAL AVIATION ADMINISTRATION; THE HONORABLE CALVIN L. 
  SCOVEL, III, INSPECTOR GENERAL, UNITED STATES DEPARTMENT OF 
                         TRANSPORTATION

    Mr. Sabatini. Good morning, Mr. Chairman Costello, 
Congressman Petri, Members of the Subcommittee. As you said, I 
am assisted here today by Jim Ballough, the Director of the 
Flight Standards Service.
    I am pleased to appear before you once again, this time to 
discuss FAA oversight of air carrier maintenance that is 
outsourced to repair stations, both domestically and abroad. I 
know the industry trend to outsource more of its maintenance in 
recent years has been a concern for some of you. The concern is 
that carriers are making maintenance decisions to cut costs, 
and that less costly maintenance is less safe maintenance.
    This assumption implies that safety is being compromised as 
more maintenance is being outsourced. I am here today to 
reassure you that the quality of maintenance is not compromised 
simply because it is not being done by an air carrier. No less 
an authority that the former Department of Transportation 
Inspector General, Ken Meade, testified before Congress that 
use of these stations is not a question of quality of 
maintenance, but rather an issue of oversight. We agree, which 
is why the FAA is continually improving and refining our 
oversight of maintenance, no matter where it is performed or by 
whom.
    Let me start by stating the obvious: the system is safe. As 
the Subcommittee well knows, this is the safest period ever in 
the history of aviation. Even so, our goal as always, is to 
continue to improve safety. I would like to share with you a 
chart that goes to the hearing of this hearing. The lines 
represent the percentage of maintenance that is being 
outsourced and the accident rate per 100,000 departures. I 
think this picture is worth 1,000 words.
    Although the percentage of outsourcing has never been 
higher, the accident rate has never been lower. These 
statistics amply demonstrate that aviation safety is not 
dependent on airlines performing their own maintenance. In 
recent years, we have refined the way in which we provide 
maintenance oversight. Previously, our oversight was based 
largely on inspector knowledge and information that was 
available as a result of individual inspections. This approach 
was the best we could do at the time, but it was far from 
comprehensive. The effectiveness of our oversight could vary 
from facility to facility.
    What we are doing now is managing risk and requiring system 
safety. Let me explain what I mean by system safety. System 
safety is extremely comprehensive. It is a sophisticated 
approach to ensuring that everything is in place to obtain the 
information that can identify areas of vulnerability in time to 
address it before safety is compromised. It must be clear who 
is responsible for different aspects of the operation. The 
responsible person must have the authority to take necessary 
action. There must be procedures in place to execute required 
actions. There must be controls in place to ensure that the 
system consistently provides the service or product it was 
designed to produce.
    There must be oversight and auditing procedures in place to 
independently evaluate the effectiveness and consistency of the 
operation. And lastly, there must be interface procedures in 
place to ensure that different parts of the organization are 
effectively talking to each other. Consistency is the goal.
    I would now like to turn my focus to foreign repair 
stations, because I know they have been of particular interest 
to this Subcommittee. As is the case with domestic repair 
stations, there is an incorrect perception that a carrier's use 
of a foreign repair station is somehow unsafe or done solely to 
reduce maintenance costs. I know there have been a number of 
efforts to restrict U.S. air carriers' ability to use foreign 
repair station.
    But I do not believe that these efforts would enhance 
safety. The foreign repair station must meet the same standards 
that we apply to repair stations in the United States, or we 
will simply not certify them. Safety is addressed because we 
require that all aircraft that are registered in the United 
States be maintained to U.S. standards, regardless of where 
they operate. Due to the global nature of aviation, we must 
have repair stations that meet U.S. standards throughout the 
world.
    Finally, keep in mind, as is the case when a carrier uses a 
domestic repair station, the carrier has the ultimate 
responsibility to ensure that the maintenance is being 
performed appropriately. All of this adds up to a great deal of 
supervision. The repair station has internal controls, foreign 
government oversight, airline oversight and FAA oversight. In 
fact, it is important to remember that by its nature, aviation 
is truly an international enterprise.
    An aircraft, especially in commercial aviation, contains 
parts manufactured all around the world. The original equipment 
manufacturer, the OEM, has a wealth of expertise in repairing 
their products. In addition, their parts have warranties. It 
would be extremely unwise to restrict a U.S. air carrier's 
ability to use OEM maintenance, even if the OEM is abroad. In 
fact, the expertise of OEMs is so considerable and their work 
so consistent that maintenance is often outsourced to them 
regardless of whether the maintenance being performed is on a 
part they manufacture.
    Just as aviation safety is in no way compromised by 
allowing U.S. carriers to fly aircraft made in Europe and 
Brazil or in Canada, so too is safety in no way compromised by 
allowing other countries to conduct repair and maintenance on 
our aircraft. I understand and appreciate this Subcommittee's 
concern about the increased use of repair stations in this 
Country and abroad. Obviously, we share a common goal to find 
ways to improve safety at a historically safe period in U.S. 
aviation.
    I can assure you that my office is totally committed to 
making whatever adjustments the situation demands when it comes 
to safety oversight. Hearings like the one today are a 
necessary dialogue. I think the refinements we have made to how 
we oversee maintenance in recent years are good ones. But we 
cannot sit still. There will always be ways to improve, and we 
will continue to look for them.
    This concludes my statement, Mr. Chairman. I will be happy 
to answer your questions at this time.
    Mr. Costello. We thank you, Mr. Sabatini. Are you prepared 
to make a statement as well, Mr. Ballough?
    Mr. Ballough. No, Mr. Chairman.
    Mr. Costello. Very good. The Chair then recognizes the 
Inspector General, Mr. Scovel.
    Mr. Scovel. Chairman Costello, Ranking Member Petri, 
Members of the Subcommittee, we appreciate the opportunity to 
testify this morning. At the outset, it is important to note 
that while the United States has the most complex aviation 
system in the world, it is also the safest. Multiple layers of 
controls and air carrier operations and maintenance process, 
along with FAA's oversight, are largely responsible for the 
high level of safety that we have seen in the last five years. 
Air carriers have outsourced maintenance for years, because 
external repair facilities can complete repairs for less cost 
and provide services such as engine repair that would otherwise 
require air carriers to have specialized expertise and staff.
    However, in recent years, the use of external repair 
facilities by air carriers has become prevalent. From 1996 to 
2005, nine of the largest air carriers increased the percentage 
of their outsourced maintenance from 37 percent to 62 percent, 
or nearly $3.4 billion of the $5.5 billion spent on 
maintenance.
    Mr. Chairman, it is important to note that the issue is not 
where maintenance is performed, but that maintenance requires 
effective oversight. Our past efforts have identified 
challenges in FAA's ability to effectively monitor the increase 
in outsourcing. For example, in July 2003, we reported that FAA 
had not shifted its oversight of aircraft maintenance to the 
locations where maintenance was being performed. FAA has taken 
a number of steps to improve its oversight.
    However, the continuous growth in outsourcing underscores 
the need for FAA to remain vigilant in its efforts to 
continually improve oversight. Today I would like to discuss 
three areas for strengthening FAA's oversight of outsourced air 
carrier maintenance.
    First, advancing risk-based oversight systems. FAA 
recognizes the challenges posed by increased outsourced 
maintenance, and has taken steps to move its oversight for air 
carriers and repair stations to risk-based systems. Both 
systems are designed to help FAA inspectors focus their 
oversight on areas that present the greatest safety risks, 
based on analysis of data. FAA is clearly on the right path.
    However, the risk-based systems are not yet at an end 
state. FAA's risk-based system for air carriers must be more 
comprehensive. In March 2006, FAA issued new guidance to aid 
inspectors in evaluating air carrier changes. By the end of 
this year, FAA plans to complete implementation of this risk-
based system to all carriers. Currently on 57 of the 118 
commercial air carriers are subject to it. As more air carriers 
are added, effective use of the risk-based system will become 
even more important.
    In September 2006, FAA began using an automated risk-based 
oversight system for repair stations. To avoid repeating the 
implementation problems experienced with its air carrier 
system, FAA must ensure that inspectors are well trained on the 
new system and effectively use it to oversee repair stations.
    Second, FAA must determine where the most critical 
maintenance is performed and how it should be monitored. FAA 
cannot effectively implement a risk-based system for oversight 
of aircraft maintenance if it does not know where the 
maintenance is performed. In July 2003 and December 2005, we 
reported that FAA did not have good systems for determining 
which repair facilities air carriers were using to perform 
their most critical maintenance.
    There are over 4,000 domestic and nearly 700 foreign FAA-
certified repair stations. In addition, there are about 900 
repair facilities in Canada that can be used by U.S. carriers. 
Air carriers also use domestic and foreign non-certificated 
repair facilities. In response to our 2003 report, FAA 
implemented a system in fiscal year 2007 for air carriers to 
report the top 10 critical maintenance providers used each 
quarter. However, this process is ineffective, in our 
estimation, because the reports are voluntary and FAA does not 
have inspectors to verify that information. As long as the 
process is voluntary, FAA cannot be assured that it is getting 
the accurate and timely information needed to determine where 
it should focus its inspections.
    FAA must also develop a mechanism to identify non-
certificated repair facilities performing critical maintenance 
for air carriers. Prior to our December 2005 review, FAA was 
unaware that air carriers were using non-certificated 
facilities to perform critical repairs, such as engine 
replacements. FAA does not know how many non-certificated 
maintenance facilities air carriers currently use. In our 
review, we sampled 19 air carriers and found that all 19 were 
using non-certificated facilities to some extent. FAA must 
determine which non-certificated facilities perform critical 
and scheduled maintenance and then decide if it should limit 
the type of work these facilities perform.
    Mr. Chairman, if I may ask for another minute? Thank you, 
sir.
    Third, ensuring inspectors are well positioned and properly 
trained to adequately oversee maintenance outsourcing. FAA has 
approximately 3,865 inspectors located in offices throughout 
the United States and in other countries to oversee air carrier 
maintenance operations, a task made more difficult by the 
rapidly changing aviation environment. This makes it imperative 
for FAA to maintain a sufficient number of inspectors to 
perform safety oversight. By 2010, 44 percent of the work force 
will be eligible to retire.
    However, maintaining an adequate work force is only one of 
the challenges FAA faces with its inspectors. FAA needs a 
process for determining the number of inspectors needed and 
where they should be placed. We found some inspectors were not 
assigned to locations where they were needed most and we also 
found inconsistencies in inspector work loads.
    At the request of this Subcommittee, in September 2006, the 
National Research Council completed a study of FAA's current 
methods for allocating inspector resources. The Council found 
FAA needs to develop an effective staffing model. The Council 
stressed that FAA must ensure that its safety inspectors are 
sophisticated data base users with knowledge of system safety 
principles and an analytical approach to their work.
    This concludes my statement, Mr. Chairman, and I would be 
happy to answer any questions that you or other Members of the 
Subcommittee may have.
    Mr. Costello. We thank you for your testimony.
    Mr. Sabatini, before I ask some questions, let me respond 
to a comment you made in your opening statement. You indicated 
that there is a perception that foreign repair stations are not 
safe and that you would contend that they in fact are. Let me 
just say that, let me go back to the point that, I don't think 
anyone is saying that there are repair stations that are 
unsafe.
    But the fact of the matter is that the last time you 
testified before this Subcommittee, in September, when I asked 
you the question, foreign repair stations, 7 inspectors for 103 
facilities, could you tell this Subcommittee that in fact, 
physically each of those 103 facilities received a physical 
inspection on-site by an inspector at least one time in a year, 
and you could not tell us that. And number two, when I asked 
the question, could you in fact testify and tell this 
Subcommittee that in a two year period that each of the three 
facilities had an inspector on-site and you could not tell us 
that.
    So it leaves the impression, certainly to me, and I think 
many others, that foreign repair stations do not come under the 
same scrutiny as domestic repair stations here in the United 
States. If it is because you do not have adequate staff, then 
we ought to get to that point and try and address it.
    But having said that, let me get into questions. We are 
going to have, I understand, our first vote at 10:45. So I 
would ask you, I have a series of questions, I would ask you to 
be very brief if you could in your answers.
    First, I am going to submit to you a list of questions and 
ask you to give us a written reply to the Committee. I plan on 
submitting several questions requesting data about foreign 
repair stations, the inspections, on-site inspections, 
locations of facilities and a number of other questions. We 
will get those to you and ask that you respond to them in a 
very short period of time.
    Mr. Costello. My first question today though is, you have 
heard the IG just state here again, he stated in his testimony 
and stated here that the FAA has to develop a process to 
determine where air carriers are sending their critical 
maintenance. Without this maintenance information, where the 
facilities are located, you cannot effectively come up with a 
risk-based oversight system that works.
    One, what have you done to identify, what has the FAA done 
to identify where these foreign repair stations that are 
performing critical maintenance are located?
    Mr. Sabatini. Thank you, Mr. Chairman. We have done a 
number of things, and we certainly welcome the recommendations 
that are made by the Office of the Inspector General.
    In a moment I would like to turn to Jim Ballough, the 
Director of Flight Standards, to address the specifics in terms 
of what we have done. But if I may, Mr. Chairman, on the points 
that you made from my earlier testimony, my response was, as 
you described it, accurately, sir, I will add, that in the 
moment, while I believe personally that we do have FAA presence 
on an annual basis, I did not have the data before me to answer 
for the record that in fact we do.
    Having followed up on that question, I can tell you that 
today, we have at the very least, presence once a year at 
repair stations. I would ask Jim to expand on that question you 
asked.
    Mr. Ballough. Mr. Chairman, in regard to the oversight of 
foreign repair stations and our once, at least once a year 
visit, there is a requirement on foreign repair stations to 
renew for the first time after 12 months and then 24 months 
thereafter. So that process is in place. We also have a 
requirement which we call----
    Mr. Costello. Let me interrupt you. I understand the 
processes in place. But the question is, have in fact those 
facilities had an inspector physically go to those 103 
facilities at least one time in the first year and at least one 
time in a two year period?
    Mr. Ballough. Yes, Mr. Chairman. I can definitely state for 
the record that we have a metric in place that our regions 
review the amount of completion. I can tell you that the 
activities for oversight of repair stations would indicate a 99 
percent, without checking the data and presenting the data in 
front of you, but I can tell you that our metric shows 99 
percent completion of all of our required inspection items for 
repair stations, yes, sir.
    Mr. Costello. So your testimony is that those 103 
facilities received at least one physical inspection by one of 
the 7 inspectors in a 12 month period?
    Mr. Ballough. Yes, Mr. Chairman, and I can provide that 
data.
    Mr. Costello. We would request that you please do that.
    Let me follow up on that point. The data that you have at 
the FAA as far as physical and on-site inspections, how far 
does it go back? Is it your testimony that this has been a 
process that has been taking place for some time or just in the 
last year or so?
    Mr. Ballough. The process has been in place for many years. 
I rely, obviously, on our management and our inspectors to 
fulfill the requirements that we put in front of them in 
policy. So I would expect that that was carried out, yes. It 
has been in place for years.
    Mr. Costello. Just so I understand here. You are relying on 
your managers, I understand that. Do you have records that 
indicate where they have filled out forms or some type of 
evidence that those facilities did receive a visit by an 
inspector?
    Mr. Ballough. Yes, we would have a record of that, sir.
    Mr. Costello. How far do those records go back?
    Mr. Ballough. I would say, the real time we could probably 
provide five years worth of that information and archive, I 
would say we could go back almost ten years.
    Mr. Costello. I would request that you go back five years 
and give us that data, to show us each facility, when they were 
visited in the five year period. You can go ahead and continue 
to answer the question that was posed to you by Mr. Sabatini.
    Mr. Ballough. Okay, so that is the response to the 
oversight we have of the repair station.
    In terms of the recommendations the OIG made to us in their 
two audits, we have concurred with those recommendations and 
have resolved a number of them. Let me state that the 
regulatory structure is in place today for us to know where 
that work is done. The carrier is required to list in its 
manual system every contract or every person that they arrange 
to perform maintenance on their aircraft. It is true that our 
inspectors don't have a copy of that in our field office. 
However, at a request of the carrier, they can certainly review 
that list and find out every carrier or every contractor that 
that carrier uses.
    Mr. Costello. Would you clarify that point for me? You were 
saying that the process is in place for the FAA to know where 
these facilities are located. But the question is, do you know?
    Mr. Ballough. A field office could not identify where each 
and every case, where that maintenance is performed, no, sir. 
They would have to go to the carrier and ask, request to see 
the list and go through the list themselves.
    Mr. Costello. So you would rely on the carrier to tell you 
where these facilities are located that are doing the 
maintenance in foreign repair stations?
    Mr. Ballough. The foreign repair station information we 
would have, what I was referencing is all the contractors that 
that air carrier users. We know every foreign repair station, 
our data will show every foreign repair station and what 
carrier uses that repair station. My previous reference was to 
a non-certificated facility, sir.
    Mr. Costello. The IG talked about the need for the FAA to 
determine which non-certificated facilities are performing 
critical and scheduled maintenance. Mr. Sabatini, what is your 
response to that, and what have you done to implement their 
recommendation?
    Mr. Sabatini. Well, the Flight Standards organization, 
under Jim's leadership, has undertaken positive steps to assure 
that the carriers share that information with the local field 
office. So we have procedures in place that are explicit, 
sufficiently explicit to make it clear that a field office is 
expected to know when they ask of an air carrier where these 
certificated or non-certificated entities are located and what 
type of work they are performing.
    So to address just a little bit of what Jim was speaking 
of, an air carrier certainly can contract for services either 
with a repair station or another facility that performs certain 
very specific functions, such as welding or coating of certain 
components. We know where those are, and if we don't have an 
active list at the point in time, we can certainly get it from 
the air carrier. So an inspector can, at any time, require the 
air carrier to provide that information.
    Mr. Costello. Mr. Scovel, this will be my last question, at 
least on this round. I have many others. There are other 
Members who have questions.
    Mr. Scovel, you just heard what the process is at the FAA. 
Is that sufficient?
    Mr. Scovel. Thank you, Mr. Chairman. No, we don't believe 
it is. And if I may refer back to an earlier statement in this 
hearing, it was offered for the record that domestic certified 
repair stations and foreign certified repair stations have 
equivalent standards in all respects. For the record, our 
research shows that that is not the case, in fact, because 
employees at foreign-certified repair stations are not 
required, generally, to undergo drug and alcohol testing. 
Employees at U.S.-based repair stations are required to undergo 
that kind of testing, and we think it is a good idea. We 
understand that for sovereignty reasons, it may not be entirely 
possible to impose that requirement on repair stations in 
foreign countries, but nevertheless, we would be in favor of it 
in every case where it is possible.
    To directly answer your most recent question, sir, from our 
July 2003 report, we recommended that FAA develop a process to 
effectively determine where air carriers send their 
maintenance. The FAA representatives here today have referred 
to a list that air carriers are required to provide which 
indicates substantial maintenance providers. My staff has 
reviewed those lists and we find that they are incomplete. In 
fact, in one instance, a carrier listed as a maintenance 
provider a repair station that it hadn't sent maintenance to in 
three years.
    So in fact, what we think some carriers have done in order 
to satisfy FAA's requirement is simply to list all facilities 
and repair stations where they may have contracts and where 
they may intend to send business. But there is no showing that 
they have indeed done so.
    So when we are talking about the integrity of the risk-
based oversight system, and FAA's ability to target its limited 
resources on the actual locations where maintenance is being 
performed, this substantial maintenance provider list is 
inadequate. In addition, in the first quarter of fiscal year 
2007, FAA instituted a request, if you will, that carriers 
provide quarterly utilization reports. The first such report 
was due December 31st.
    We do not believe that that is adequate to address our 
recommendation, either. The reason for that is first, as I 
mentioned, this has been a request from FAA, it is not 
mandatory. Until it is mandatory and until FAA has in place a 
system to validate or verify the information, perhaps only on a 
sampling basis, the information that has been provided by air 
carriers, then the agency can't be assured that the information 
is accurate. We know that as of the end of last week, two of 
the nine carriers who had been requested to provide this 
information had not done so. Those seven carriers who had 
provided information on the quarterly utilization reports had 
been inconsistent and incomplete in the information that they 
were providing to the agency.
    For those reasons, sir, we don't consider that either the 
standardized substantial maintenance provider list or the 
quarterly utilization reports satisfies our recommendation.
    Mr. Costello. That is a pretty troubling report, Mr. 
Sabatini. Do you want to respond?
    Mr. Sabatini. Let me begin by saying, Mr. Chairman, that 
this is an incredibly complex and dynamic industry. This safety 
record that has been achieved has been achieved because of the 
responsibility the individual certificate holders place upon 
themselves. We primarily have in this Country a system of 
voluntary compliance. I would offer to you, Mr. Chairman, that 
what the IG is describing would require essentially that I have 
FAA inspectors at the turning of every wrench. That would 
simply not be physically possible.
    We are striving and working very hard to respond to the 
recommendation that has been made where we can ascertain where 
the maintenance is being done. It seems to me that there has 
been an impugning of the integrity of the individual carriers 
who may have listed repair stations, or facilities that they 
may choose to use but have chosen not to use as to indicate 
some sort of nefarious reason for doing so. I really question 
that, because that is not an unsafe practice.
    And as far as standards are concerned, Mr. Chairman, all 
the safety standards that are required of a U.S. repair station 
are precisely the same as those required of a foreign repair 
station. Insofar as drug testing is concerned, if we could, we 
would do so, Mr. Chairman. Sovereignty is an issue and it goes 
far beyond the authority that the FAA has to impose that 
requirement.
    Mr. Costello. Let me say that I didn't take the IG's 
comments by any means to impugn anyone's character at any of 
the airlines. But let me ask just a final question, and I have 
other questions that I will go to on a second round.
    Is it your testimony today that the FAA gives the same 
scrutiny to foreign repair stations as domestic repair 
stations?
    Mr. Sabatini. I would say that the oversight and the 
approach that we take to ascertain, in combination, when we are 
talking about foreign repair stations, we not only rely on our 
own inspectors providing the oversight, which is equivalent to 
what we have here in the States. In fact, a foreign-based FAA 
inspector has less responsibility than a domestic-based 
inspector. Someone based abroad has the sole responsibility for 
the oversight of those repair stations. So when one draws an 
analogy of numbers to repair stations, one needs to keep that 
in mind.
    Mr. Costello. Is that a yes or a no?
    Mr. Sabatini. I would say, yes, sir, it is affirmative that 
we have the same oversight of those repair stations and apply 
the same standard.
    Mr. Costello. Very good. The Chair recognizes at this time 
the Ranking Member, Mr. Petri.
    Mr. Petri. Thank you very much, Mr. Chairman.
    It is a fascinating subject. I am sitting here listening, 
and I think there may be an elephant in the room that no one is 
talking about, and that is that all of these people who lease 
and own airplanes have insurance. There is a huge international 
insurance industry whose money is very much at risk if a plane 
goes down or there is a crash. They would not insure a plane if 
it is was poorly maintained or operated unsafely.
    So there has to be a big system of private regulation that 
you are not even really mentioning that hopefully you are 
coordinating with. They are not going to rely on occasional 
government inspection, whether it is the American Government or 
Italian government or any other government. They are going to 
have their own systems and they may coordinate with you if it 
is cost-effective and they are sure it is going to produce good 
results.
    Could you discuss how that is working? There are billions 
of dollars involved for the insurers if there is an airplane 
crash with a lot of passengers. I would think that duplicating 
or doing something that is secondary and not as effective as 
what is already going on in the industry doesn't make a whole 
lot of sense. Or are they just happily writing insurance 
policies for a billion dollars on a plane without any 
confidence that they are well maintained and insured? Could you 
comment on that, Mr. Scovel or Mr. Sabatini?
    Mr. Scovel. Thank you, Mr. Petri. I regret I do not have 
the research available to answer your question directly. I 
believe that your point is very well taken, however, and the 
private insurers in this Country and elsewhere would not 
underwrite insurance for aircraft were they not satisfied that 
maintenance was being properly done.
    Mr. Petri. So before recommending that we hire more 
inspectors and we do all this sort of thing, shouldn't we at 
least sort of see what is going on in the real world, so that 
we don't waste a lot of taxpayers' money duplicating in a less 
efficient way what is already being done?
    Mr. Scovel. That is an outstanding suggestion, sir. I would 
welcome the comments of the FAA representatives to see whether 
they have undertaken that study and have attempted to 
coordinate their oversight efforts with those of the insurance 
industry.
    Mr. Sabatini. Mr. Chairman, I don't have a study that I can 
refer to, since we have not undertaken that type of a study. 
But it is a point well taken. Certainly I can tell you that in 
the operations world, before pilots would even be considered to 
be employed, they have to demonstrate that they have a level of 
experience required by the insurance companies that are far and 
above what we require for initial entry into a particular level 
of pilot certification. I do know, although I cannot provide 
you with factual information, but anecdotally and from my 
personal experience, certainly insurance plays a very 
significant role in the equation that is at play for safety 
when one is operating an airplane, maintaining an airplane or 
transferring parts across the Country via air carrier.
    Mr. Petri. I guarantee you, the reinsurers in the aviation 
industry or the insurers directly, will quote much higher rates 
or will not insure unless there are various standards that are 
met. And it would be cost effective for the carriers to meet 
those standards. That is a pretty efficient way of having a 
flexible but modern insurance regulatory mechanism that keeps 
up with technology. They are competing with each other, so it 
is a competitive regulatory regime, which can be much more 
sensitive than what we can do where we review things every five 
years or the like.
    Yes, I think you are doing something like that with your 
ISO or certification or procedures there, if you would care to 
discuss that, Mr. Sabatini.
    Mr. Sabatini. Thank you, Congressman Petri.
    In fact, this past August, the Aviation Safety Organization 
achieved what is a world-renowned international standard, ISO 
9001, which basically is an international standard that 
distinguishes organizations that have achieved such 
standardization in terms of consistency and standardization in 
the processes that are in place. In essence, what has really 
taken place here is 6,500 inspectors, well, not 6,500 
inspectors, but 6,500 employees in the Safety Organization are 
now under a single quality management system, which means we 
have documented processes and have metrics applied to it so 
that we can in fact determine how well we are performing 
against what it is that we say we are doing.
    So we have a process in place that is recognized by an 
international body that has granted certification to the AVS 
organization which I will tell you is unprecedented in the 
Federal service. No other government entity has, given the 
size, scope, complexity and diversity of services and products, 
and the dispersion of our folks spread around not only the 
United States but also globally that have been granted that 
accreditation.
    So it has metrics in place, it has customer feedback for 
the internal customer, it has customer feedback for the 
external customer and it is constantly being audited. I would 
use as an example an organization like the Flight Standards 
Organization, where approximately one-third of that 
organization on an ongoing basis is going through the audit 
process in order for us to sustain and maintain this 
accreditation.
    Mr. Petri. My time is up, but let me just say that I visit 
a lot of manufacturing facilities in my district. I am very 
familiar with the ISO standards, that are global standards in a 
variety of different business processing operations. They are 
international and companies have to get their records, every 
procedure in place so that parts, what they do can be audited, 
and it is at the highest and a uniformly high standard. This is 
something companies will take five or six years struggling with 
to achieve, because once they achieve it, everyone who deals 
with them knows they are a first class outfit and there a lot 
of overheard costs that can be eliminated over time by getting 
to these common standards between manufacturers. You have done 
this, so you should be congratulated for it.
    Mr. Sabatini. Thank you.
    Mr. Costello. The Chair thanks the Ranking Member and 
recognizes the gentleman from Oregon, Mr. DeFazio.
    Mr. DeFazio. Thank you, Mr. Chairman.
    I would like to go to the point that was raised by the IG 
when we talked about whether or not we can track where the 
planes are going. We know a lot more planes are going to 
facilities that are not certificated in the United States for 
critical procedures. And, as I understand it Mr. Sabatini, we 
do not inspect those facilities, is that correct?
    Mr. Sabatini. Well, the answer to that question, 
Congressman DeFazio is, we can, we do, but we are not required, 
because they are not certificated under our----
    Mr. DeFazio. That's correct, okay. That's fine. I think we 
have a problem here between certificated and non-certificated. 
Why should someone who is doing critical work be non-
certificated? Certificated has to have a quality control 
system, establish and maintain a quality control system. Non-
certificated, no requirement. Report failures, malfunctions and 
defects. Required at a certificated facility. Not required at a 
non-certificated facility. Personnel, got to have supervisors, 
inspectors, wow, supervisors and inspectors? No, that is not 
required at non-certificated. Training program? It is required 
at certificated. Not required at non-certificated. There has to 
be one FAA certified mechanic wandering around the facility 
somewhere. And we aren't regularly inspecting them, are we? We 
are not, we don't go in and regularly inspect them?
    Mr. Sabatini. Well----
    Mr. DeFazio. How many are there, non-certificated, that are 
doing critical work on aircraft components?
    Mr. Sabatini. We can get that data, but I would have to 
provide it for the record.
    Mr. DeFazio. Okay, so we don't know how many there are. 
That is a little disturbing. And of those who are doing 
critical work, can you tell me every one that does critical 
work has been inspected on a regular basis, like a certificated 
facility? Why would someone want to be at a certificated 
facility, if you can do the same work over here? The trend is, 
the airlines are pushing this stuff downstream, and they are 
pushing it downstream because it is cheaper. That is how 
ValuJet happened. It is waiting to happen again.
    Yes, you have some great trend lines there. It only takes 
one ValuJet to kind of blow that whole thing out of the water. 
And I really just can't understand why we have a parallel 
system of non-certificated facilities doing critical work. Why 
don't we just say non-certificated facilities cannot do 
critical work? Why do we have--or why don't we just say, since 
the airlines you say are responsible, why don't we just do away 
with the whole system? Why certificate some and not certificate 
a whole bunch of others who are doing the same work? Why? Why? 
Just give me a brief answer if you could.
    Mr. Sabatini. Well, uncertificated entities is really a 
misnomer. One can require work or ask that work be done, but 
that work will ultimately be done by a certificated mechanic.
    Mr. DeFazio. Or overseen by a certificated mechanic?
    Mr. Sabatini. No, actually performed by a person who has an 
A&P. So I would like to ask Jim to give you----
    Mr. DeFazio. So if we aren't there watching them, how do we 
know that is going on?
    Mr. Sabatini. We do have a percentage of that system that 
is known to us, and we do perform surveillance----
    Mr. DeFazio. Known? A percentage is known? I would hope 
that 100 percent is known. Nick, I just don't understand it. 
You can't tell me that the airlines aren't pushing stuff to--
are the non-certificated facilities cheaper, generally, than 
the certificated facilities?
    Mr. Sabatini. Well, sir----
    Mr. DeFazio. Is the maintenance work less expensive? Yes or 
no.
    Mr. Sabatini. Well, I don't have financial data. I will 
tell you this----
    Mr. DeFazio. But the point is, why would the FAA tolerate 
that kind of a system? Why would you allow that to exist? If we 
need these things to be certified at certified repair stations, 
why don't we just say, well, you can be certificated if you 
just have an A&P mechanic do the work? I mean, why? Why do you 
have a parallel system?
    Mr. Sabatini. We really don't have a parallel system. A 
certified repair station is authorized to do specific work. No 
one else can do that kind of work. That----
    Mr. DeFazio. Yes, but isn't critical, critical work_work 
that would be in category 1, that could take a plane down_done 
at non-certificated facilities?
    Mr. Sabatini. Well, someone introduced the choice of word 
of critical work. That has a very specific meaning and----
    Mr. DeFazio. Well, you have a category 1, category 2 and 
those sorts of things in terms of parts. So how about we use 
that for maintenance? Category 1 is a critical component if it 
fails, it could cause emergency procedures or the plane to go 
down for an unapproved part. Let's apply that to air stations. 
Do we allow work that would be the same as a category 1 
unapproved part be done at non-certificated facilities? Yes or 
no?
    Mr. Sabatini. We would not permit someone who is not 
qualified----
    Mr. DeFazio. No, but do we allow it at the non-certificated 
facilities? Yes or no?
    Mr. Sabatini. The answer is that we would not allow anyone 
who was not properly authorized and certified to perform a work 
on a particular component. Now, someone can send a blade to be 
coated to a facility that doesn't need to have FAA 
certification to do plasma coating.
    Mr. DeFazio. I know, but you can't trivialize this concern. 
I think as just sort of, again--my time has expired. But we, a 
non-certificated facility with an A&P mechanic could do 
critical component work on an airplane that could take a plane 
down if it failed, and that is true, is that correct?
    Mr. Sabatini. I disagree, Mr. DeFazio.
    Mr. DeFazio. Oh, they couldn't do the work? It wouldn't be 
allowed? Is it barred?
    Mr. Sabatini. I would disagree with how you characterized 
that question, sir.
    Mr. DeFazio. No, I am not characterizing. I am just asking, 
over here at a certificated facility, you can do this work. It 
goes to a critical component, you have all these other 
requirements in place. But that same plane could be taking to a 
non-certificated facility, yes, correct? And an A&P mechanic, 
without any of these other strictures or controls in place that 
are required at certificated facilities, could do that same 
work if they were trained in that? Yes, that's true, isn't that 
correct?
    Mr. Sabatini. I would answer, sir, that an A&P mechanic who 
is on call for service to be provided to an air carrier would 
receive the instruction and the training that is required to do 
that very specific work. And an A&P mechanic is qualified to do 
that work? Although that person may not work in a facility that 
we would call a repair station.
    Mr. DeFazio. I know, but the point is, you have to look at 
it one or two ways. You say it is ultimately the carrier or 
owner's responsibility for the aircraft. If we are just having 
a faith-based system here that they are going to do what is 
necessary and they are going to oversee it, then why bother to 
have certificated repair stations at all? Why maintain that 
structure if the same work can go to a non-certificated--that 
is the point I am trying to get at here, and I just don't 
understand that. Because if we need these things to make things 
work out right at a certificated station, doing the same work, 
why don't we need all of those same things at a non-
certificated station? I just don't think that that is right. 
There is a lot to ask, I will have another round on foreign 
stations.
    Thank you, Mr. Chairman.
    Mr. Costello. Thank you.
    The Chair recognizes the gentleman from Wisconsin, Mr. 
Kagen.
    Mr. Kagen. Thank you, Mr. Chairman. I apologize from the 
beginning, my voice has been transported elsewhere.
    Mr. Sabatini, thank you for being here. You have a very 
challenging and difficult job, and I certainly wouldn't want to 
be sitting in your chair, at least today. It is certainly very 
difficult, everyone here in the room would agree that it is 
hard and perhaps impossible to inspect places when you don't 
know where they are. So it would be a great idea to find out 
where all these facilities are, to at least identify what needs 
to be inspected.
    Others here, our job as I see it as Congresspeople, our 
duty really is to help guarantee the safety of the traveling 
public and the people that work in the transportation industry. 
It really isn't to guarantee the profits of insurance companies 
or the airlines themselves. So having heard the testimony of 
our Inspector General, will you recommend that the quarterly 
utilization reports become mandatory? That's a yes or no.
    Mr. Sabatini. At this point in time, it is not required by 
regulation to report where these uncertificated entities may be 
located. It is being provided to us on a voluntary basis.
    Mr. Kagen. So will you recommend that it will become 
mandatory so we can move it away from a voluntary 
participation?
    Mr. Sabatini. We will certainly consider that.
    Mr. Kagen. So that is not yes.
    Mr. Sabatini. Well, rulemaking is a significant undertaking 
and we would like to assess the risk-based foundation upon 
which we would make such a recommendation, whether it would be 
warranted or not.
    Mr. Kagen. Thank you. In your mind, is there any difference 
between a licensed and non-licensed inspector or a licensed or 
non-licensed mechanic?
    Mr. Sabatini. That is a difficult question to answer the 
way it was asked.
    Mr. Kagen. Well, I can tell you, being a physician, there 
is a real difference between a licensed specialist and non-
licensed specialist.
    Mr. Sabatini. Of course, a repair station is certificated 
and has been granted authorization because they have 
demonstrated they have the competency and the qualifications. 
An individual holding a pilot's license, a doctor's license, 
can certain operate as an individual or can certainly operate 
within the context of a repair station. Each are properly 
certified to do the work that they would be doing.
    Mr. Kagen. So when you go to the doctor and have a 
procedure or a surgery performed, you would like someone who is 
very well skilled and licensed in that process, wouldn't you?
    Mr. Sabatini. I would choose a general practitioner for 
general health and a specialist if I needed a specialist.
    Mr. Kagen. Okay. Is it true that the FAA really has no 
process to determine the number of inspections that are 
necessary and where these people should be placed, is that 
true?
    Mr. Sabatini. Well, sir, I am assuming you might be 
referring to the recent study that was provided to us by the 
National Research Council of the National Academies. They have 
pointed out how we can improve in our staffing models. And I 
would agree, it is a science, and we need to improve on the 
methodology that we have today.
    Mr. Kagen. All right, thank you. I yield back my time.
    Mr. Costello. I thank the gentleman.
    The Chair now recognizes the gentleman from Missouri, Mr. 
Carnahan.
    Mr. Carnahan. Thank you, Mr. Chairman.
    And to the panel, while I think we are all pleased to see 
the trend lines of safety and accidents going down, I don't 
think anyone would be satisfied until those numbers get down or 
approach zero, that that is a continuing effort. I guess what 
strikes me is that there appears to be giant loopholes in the 
system that oversees our maintenance in terms of where it is 
done, how it is done, different standards in how things receive 
oversight.
    Ronald Reagan had a great phrase back during his 
presidency, trust but verify. We can't have a system that we 
just think is getting safer, and if we can identify areas that 
need improvement, we need to do that. I guess I would like to 
ask to Mr. Sabatini, what does the FAA intend to do to consider 
limiting the work that can be done at non-certificated 
facilities and how that will be, what kind of oversight and 
inspections that process would have?
    Mr. Sabatini. We have taken the recommendations along those 
lines that the Inspector General has made. We have put in place 
some procedures to begin to address that. I would like to turn 
to Mr. Ballough to give the specifics on what is what is being 
done in the Flight Standards Service.
    Mr. Ballough. Mr. Carnahan, in the IG's report on repair 
station oversight, it made nine recommendations. Of those nine, 
we concur, and we have closed all but two. Those two we are 
still working with the IG to come up with a solution we both 
would agree to.
    Mr. Carnahan. What are those two? I am curious.
    Mr. Ballough. One dealt with financial data and who should 
be collecting financial data. The second one is to develop a 
process to identify repair stations and carriers that perform 
aircraft maintenance. That is the recommendation we feel we 
have agreement on our approach, but we continue to work with 
the IG to close that one out as well.
    And the other seven are closed out with numerous things, or 
accomplishments that we have made regarding policy correction, 
policy enhancement, with better ways to analyze data with our 
safety performance and analysis system. That was one of the 
criticisms in that report, was that repair station data that 
was recorded by inspectors are overseas repair stations and air 
carrier data that is recorded by inspectors that oversee the 
air carriers, that both inspector work forces couldn't see the 
other data. The data was not merged, so to speak.
    We have enhanced that to where now, we can take a repair 
station such as Haeco in Hong Kong and identify every carrier 
that uses that facility, everybody that has been there. So that 
has been a huge enhancement for us in the past.
    Mr. Carnahan. Hold that thought, because I want to get a 
chance for the IG to weigh in on this as well. And I guess I 
would like you to comment on those outstanding items that were 
mentioned and any other items that were not in terms of 
limiting that scope of work at non-certified facilities.
    Mr. Scovel. Thank you, Mr. Carnahan.
    Our major concern was the second outstanding 
recommendation. As I mentioned in an earlier response to a 
question, we do not consider FAA's efforts to address our 
concerns adequate. I refer to the quarterly utilization reports 
and to the vendor or contractor lists which carriers are 
required to provide. We don't consider that answers our 
concerns in order to identify, first, where maintenance is 
going and second, which non-certificated facilities are 
performing critical maintenance.
    A point was made by Mr. DeFazio and Mr. Kagen, and I know 
it is a concern of yours, sir, with regard to non-certificated 
facilities. Before our December 2005 report, we surveyed 19 
carriers. All 19, as I mentioned in my oral statement, had used 
non-certificated facilities to some extent, 1,400 of them, in 
fact, 1,400 different non-certificated facilities. One hundred 
four of those were overseas. Of the 1,400 facilities, we found 
that 21 had performed critical maintenance. Of the overseas 
facilities, non-certificated, FAA inspectors had never visited 
them.
    Mr. Carnahan. Is there any safety data that would 
distinguish those different types of facilities?
    Mr. Scovel. I would need to check with my staff, sir. I can 
tell you generally that it is a concern of ours that as we go 
along the maintenance continuum, if you will, looking first 
from in-house maintenance performed by carriers themselves and 
moving along the axis to repair stations, certificated repair 
stations, and further out when we talk about non-certificated 
repair facilities, the level of oversight becomes more diffuse. 
As I mentioned in my statement, it is not where the maintenance 
is performed that is of concern for us, it is the oversight and 
the degree that is appropriate in order to ensure the safety of 
the traveling public.
    Mr. Carnahan. Thank you. I see my time has run out. But I 
would request, Mr. Chairman, that if your staff could gather 
any of that safety data that makes a distinction along that 
maintenance continuum, I think it would be helpful to this 
Committee. Thank you.
    Mr. Costello. I thank the gentleman from Missouri. We will 
announce to the Members that there is a vote on the Floor right 
now. We are down to about five minutes, so we will recess, go 
over. My understanding is we should expect one vote only, and 
come back immediately and continue our questions for the first 
panel.
    The Committee stands in recess.
    [Recess.]
    Mr. Costello. The Subcommittee will come to order.
    We would ask the witnesses to be seated and the Chair 
recognizes the gentleman from Oregon, Mr. DeFazio on a second 
round of questions. I have some questions but I am going to 
hold them until Mr. DeFazio is finished with him.
    Mr. DeFazio. Thank you, Mr. Chairman. I did want to get to 
the overseas issue.
    But I just want to return, Nick, we are having a failure to 
communicate, as they would say in Cool Hand Luke. Let me read 
from the IG's report and maybe this will make my point. Page 
14, it is talking about non-certificated facilities. In our 
view, it goes on to say, non-certificated facilities are not 
required to employ designated supervisors, inspectors, while 
their maintenance is being performed. Relying solely on the 
expertise of an individual mechanic to ensure the repairs are 
completed properly is an inadequate control mechanism. In our 
view, this is the reason FAA requires added layers of 
oversight, such as designated supervisors, inspectors and 
certificated facilities.
    That is one point I was trying to make. Perhaps I didn't 
articulate it well.
    Then the second point is critical work is being done in 
these non-certificated facilities, and they go on to use an 
example where people died. The importance of this issue became 
evidence in the aftermath of the January 2003 Air Midwest crash 
in Charlotte, North Carolina. Independent contract mechanics, 
certificated by FAA and working for a non-certificated company, 
completed maintenance on the aircraft the day before the 
accident. Mechanics incorrectly adjusted a flight control 
system that was ultimately determined to be a contributing 
cause of the crash. This work was approved by an FAA-certified 
mechanic employed by the non-certified company.
    We didn't have the other levels of fail-safe that we have 
at certificated facilities. That is the point I am trying to 
make. So the question is, why do we allow, I mean, given that 
crash, and the potential problems, why wouldn't we just say to 
the airlines, we certificate facilities for a reason, we 
believe it gives us a higher level of assurance that the work 
is supervised and reviewed, there is less possibility of 
killing people as we did at this case. And we are going to tell 
you that you can't take anything that involves critical 
components to a non-certificated facility.
    Now, why can't we do that? Congress could mandate that. Why 
doesn't the FAA do that as the safety watchdog?
    Mr. Sabatini. We in fact have very good controls over that.
    Mr. DeFazio. Well, what happened in this case? They died. 
People died, and this was an--this is making my point, Nick. 
Stop defending the indefensible at the agency. Just give me an 
honest answer. Why should we have this secondary system that 
can do--I mean, you want to have them out there and they want 
to take care of the seats or they want to do this or they want 
to wax the plane or paint it, I don't care. But why allow, 
people died in this case. I think it is arguable that if that 
had been done at a certificated facility that had supervisors 
and more regular work procedures that they might not have died. 
Why do we allow that to exist?
    The only reason the aircraft operators are going there is 
because it is cheaper. And you won't admit that, either. It is 
cheaper to go to a non-certificated facility. They don't have 
the overhead. They don't have that pesky supervisor. They don't 
have all these other requirements.
    Can't you just tell me that the system would be safer if we 
said, if the work is on a critical component, something that 
can cause either emergency procedures to be required or the 
aircraft to fail in flight, it must be performed at 
certificated facilities? Wouldn't that give us a safer system?
    Mr. Sabatini. I am all for putting in place any procedures 
that will continue to improve on the system safety. But I must 
tell you, Mr. DeFazio, that we have absolute control over the 
air carrier, and it is the air carrier's responsibility, or the 
repair station's responsibility, who is contracting out for 
that service with an entity that may not hold an FAA 
certificate. That product or component that has been repaired 
by that entity or that person must go back----
    Mr. DeFazio. I understand. But what is the recourse of the 
people who have died? Do we put anybody in jail because of 
this? Did we give someone the death penalty because of this? 
No. The point is, this is an industry that is desperately 
trying to survive or make a profit. They are going to seek out 
the cheapest maintenance they can find and they are going to 
hope, it is their responsibility, they are going to hope it 
holds together and works, or at least until that chief 
executive officer gets his bonus and moves on somewhere else.
    Mr. Scovel, since this is in your report, can you answer 
that question I asked? Would we have a system that had 
potentially a higher level of safety if we required critical 
work, as I have defined it, to be done at certified facilities?
    Mr. Scovel. Thank you, Mr. DeFazio. Before the recess, when 
you posed the question concerning non-certificated facilities 
and repairs and so forth, of course, our example from our 
testimony came to mind, the Air Midwest tragedy from several 
years ago.
    Mr. DeFazio. Not so many, only four.
    Mr. Scovel. Too recent, indeed. The question of what type 
of work non-certificated facilities should perform and whether 
it should be limited by law or regulation I believe is a policy 
question for you and for the Administration. I view the role of 
the IG as to pose that question and to pose it repeatedly. I 
don't view it as my role, however, to take a stand on that 
particular policy question.
    To the extent that we can, if we can provide data, safety-
related data to show that repairs performed by certificated 
facilities, especially with regard to critical maintenance, are 
indeed done more frequently, correctly, then we can bring that 
kind of information to the debate.
    Mr. DeFazio. Okay, thank you. My time has again expired. 
The Chairman has been generous. I assume that the Chairman will 
get more into the foreign facilities, or the full Committee 
Chairman I think will visit that issue.
    Mr. Costello. I thank the gentleman, and the Chair now 
recognizes the distinguished Chairman of the Full Committee, 
Chairman Oberstar.
    Mr. Oberstar. Thank you, Mr. Chairman, for the very 
substantial work you put into crafting this hearing, gathering 
the data, setting the stage. Mr. DeFazio, for your ever-
persistent advocacy of ever higher standards of maintenance and 
maintenance oversight.
    I think the context in which this hearing takes place is 
that of airline losses of over $35 billion over the last years 
since September 11th, elimination of 27,000 airline maintenance 
jobs at the mainline carriers since September 11th, closing of 
maintenance bases at the principal commercial airliners, 
outsourcing of maintenance. And what is particularly troubling 
is outsourcing of heavy maintenance, which now is reaching over 
40 percent, 42 plus percent of the $9 billion-plus that 
airlines are spending. That is a considerable amount of money. 
In the beginning of the 1990s, there was about $5 billion being 
spent by the airlines on maintenance.
    But we are seeing in the IG's report up to 60-plus percent 
of heavy maintenance outsourced by the airlines, by our 
commercial carriers. That was unthinkable in the 1980s. In the 
early and mid-1980s, airlines were the source of maintenance 
business coming to the United States from foreign carriers, 
being performed by the U.S. because of the high quality of 
maintenance performed at U.S. shops. United, American, 
Northwest, Delta, all were looking to foreign airliners as a 
source of business.
    Only American Airlines, among the major carriers, has kept 
its maintenance in-house, working with the Transportation 
Workers Union, they have set a goal of saving half a billion 
dollars in costs of operation. But they have done it in-house. 
Why the others have chosen to outsource is a continuing 
puzzlement to me. But it is clear that if you look at the 
contractual arrangements by other carriers, their costs of 
outsourced maintenance compared to doing it in-house is half. 
The answer to the question Mr. DeFazio asked of Mr. Sabatini is 
that indeed, cost is a huge factor. It is the reason they are 
outsourcing. The breakdown of the International Association of 
Machinists Union internally resulted in outsourcing by carries 
to other facilities.
    So in looking at the volume of outsourcing, the amount, we 
have 4,200-plus MROs in the domestic U.S. and nearly 700 
foreign repair stations. That is up from 440 in about 1990. And 
only 734 domestic inspectors. Is that right, Mr. Sabatini?
    Mr. Sabatini. Yes, sir.
    Mr. Oberstar. After the investigations that we conducted in 
the Subcommittee investigations and oversight on significant 
aviation failures due to maintenance in the 1980s, the then-
Chair of the authorizing committee, I was Chair of the 
Investigations Subcommittee, Mr. Mineta and I took to the Floor 
an appropriations bill, an increase of over $10 million a year 
to hire up to 1,000 inspectors. We succeeded. The inspector 
workforce was increased.
    But then, in your own testimony, that number is down, so 
you have gone to a risk-based and even that was recommended by 
the IG's office, not as an option but in light of the 
circumstances of a smaller workforce, more outsourcing of 
maintenance. In 2003, the IG said, well, you could do this job 
by shifting to what internally is known as ATOS, or a risk-
based system.
    I like your statement, Mr. Sabatini, that you have achieved 
the ISO 9001 certification. But I am troubled that you say, we 
adhere to the same safety standards as the businesses we 
regulate. That is not good enough. FAA is the standard. Those 
businesses you regulate are not. You are the standard. You make 
them come up to FAA.
    The opening paragraph of the 1958 organic act creating the 
FAA says, ``Safety shall be maintained at the highest possible 
level,'' not the level airlines can afford, not what they want 
to pay, not what they can outsource to pay, but the highest 
possible level. FAA is that guardian. You say consistency is 
the goal, inconsistency is troubling. But the inconsistency is 
in the IG's report, as Mr. DeFazio has insisted on, where you 
have different standard for differing facilities. In the non-
certificated and certificated--are you going to reconcile those 
two?
    Mr. Sabatini. Absolutely, Mr. Chairman. There is in essence 
no different on safety standards between a foreign repair 
station or a domestic repair station. The only difference that 
was pointed out this morning was that we require drug and 
alcohol testing in our Nation and that is not required in other 
sovereign states. If we could impose that, we would.
    Mr. Oberstar. In the foreign repair station arena, it is, 
the mode of operation of FAA is to accept a country's own 
standard, if they adhere to the ICAO standards, right? And 
accept the host country's certification of a facility? Is that 
correct?
    Mr. Sabatini. Not correct, sir. What we do in foreign, in 
issuing a certificate to a foreign repair station, that 
applicant at that point in time must demonstrate to the FAA 
that they in fact meet the very same regulatory requirement, 
FAR Part 145, to be certificated as a repair station abroad. So 
the certification rules are precisely the same, whether it is 
domestic or foreign-based.
    Mr. Oberstar. Now, does that mean that in that repair 
station that not only the facility must be certificated and 
meet U.S. FAA standards and ICAO standards, and that all of the 
maintenance personnel must be A&P equivalent certificated 
maintenance providers?
    Mr. Sabatini. Take a country like France, certainly a 
sophisticated and advanced society in terms of aviation safety, 
built some very fine airplanes and again, very sophisticated. 
That particular country does not require that they have what 
would be in our parlance an A&P certificate. But rather, it is 
an education level in the discipline of aviation maintenance.
    So in that regard, they would not require an A&P of that 
person there.
    Mr. Oberstar. How about El Salvador?
    Mr. Sabatini. Well, you know, Mr. Oberstar, Mr. Chairman, 
several weeks ago you brought that to my attention. Following 
that conversation, I asked Jim Ballough to go down to El 
Salvador and validate what we know from data to be data that 
suggests that it is performing in accordance with expected 
standards. I asked Jim if he would go down there and make a 
personal visit, and with your permission, sir, I would like to 
have Jim tell you about that visit.
    Mr. Oberstar. Proceed.
    Mr. Ballough. Thank you, Mr. Chairman. As Nick mentioned, I 
visited the TACA facility a few weeks ago and I would be glad 
to share what my views and thoughts were on that issue. Before 
I begin that, I would just like to make the point that 
regardless of what type of outsource or contract maintenance we 
are talking about, there are definite responsibilities for 
three entities. And I will demonstrate that when I talk about 
AEROMAN. Those three entities are obviously, the air carrier 
that is using that facility, they have some responsibilities. 
They can't just wash their hands of the activity because it is 
going to a repair station. Obviously a major role for the 
repair station as well, in making sure that they have the 
properly trained personnel, the equipment, and all the manuals 
and all the things that are required by our certification.
    And thirdly, it is our FAA oversight. We play a major role 
in making sure----
    Mr. Oberstar. That is all accepted. Tell me about what you 
found in El Salvador.
    Mr. Ballough. Very good. In that facility, you mentioned 
the certificated mechanics. Every technician, every mechanic 
that works on an airplane in that facility, is certified under 
the El Salvadoran process. That process is not a mirror image 
of ours, but it is closely aligned with the requirements that 
we have----
    Mr. Oberstar. Do they have an A&P mechanic certification 
system?
    Mr. Ballough. Yes, sir. Yes, they have----
    Mr. Oberstar. On what system is it patterned, since El 
Salvador--I made trips to El Salvador in the early 1980s, in 
the days of human rights abuses. I am quite familiar with this 
country. So tell me, where are they getting this?
    Mr. Ballough. It is based on our system. Not necessarily a 
mirror image.
    But they go a step further as well. They have 25 percent of 
their technicians, their mechanics, and they would do more if 
they could obtain more visas, but they have 25 percent of their 
mechanics they have sent to the U.S. who have tested and have 
received A&P certificates. So out of a workforce, mechanic 
workforce of 879, they have 167 that are in fact certificated 
A&P mechanics. They would like to have more certificated A&P 
mechanics. So we are working with them to see what it would 
take to provide them the opportunity to certificate more of 
those folks.
    Also, they are an ISO 9001 certified organization as well. 
They achieved that certification in 2003. They are a certified 
Airbus MRO network maintenance organization. If you think of 
the Airbus, the global nature of aviation today, Airbus 
recognizes just a handful of facilities that are qualified to 
repair their aircraft. And they recognize them as an Airbus MRO 
network operation.
    Mr. Oberstar. FAA performs oversight of that facility then, 
from the Miami FSDO, you call it something else?
    Mr. Ballough. Yes, sir, the Miami IFO. We in fact, my 
inspectors are in that facility once a quarter, they visit that 
facility.
    Mr. Oberstar. Once every three months?
    Mr. Ballough. Once every three months, they are there, yes, 
sir.
    Mr. Oberstar. But those inspectors from the Miami, you call 
it IFO now----
    Mr. Ballough. International Field Office, Mr. Chairman.
    Mr. Oberstar. I still call them FSDO. For 53 facilities in 
Central and South America?
    Mr. Ballough. Yes. We have, the number of personnel we have 
in the Miami office are 16 inspectors.
    Mr. Oberstar. They are on the road a lot going to one of 
these every quarter.
    Mr. Ballough. Yes, they are. In fact, fortuitous as my 
visit was, the inspectors were there when I was on scene as 
well. They do spend an awful lot of time on the road, yes, sir.
    Mr. Oberstar. Well, coming back to your personal 
observations and what you reported about, you are saying that 
the Salvadoran maintenance personnel, at least one-fourth of 
them have been trained in the U.S., FAA A&P standards?
    Mr. Ballough. Yes, sir.
    Mr. Oberstar. And they have an A&P certified supervisor in 
the shop who is overseeing the work, signing off on the work?
    Mr. Ballough. Yes, sir, Mr. Chairman. Also, there is 
another element here are as well. There are two major air 
carriers that use that facility today. And both of those air 
carriers have been seven and eight personnel on scene, so that 
every moment that airplane is in a check, they have their own 
airline personnel on staff, overseeing the work as well.
    Mr. Oberstar. Have you completed a written report on this 
for Mr. Sabatini?
    Mr. Ballough. No, I have not, sir.
    Mr. Oberstar. Are you going to?
    Mr. Ballough. I will, yes, Mr. Chairman.
    Mr. Oberstar. When you do that, submit that to the 
Committee. I think it is very important for us to have the 
facts. That would be very useful and we would like to evaluate 
it.
    There are facilities, though, MROs in the U.S. where there, 
where not all the mechanics are A&P certificated, where the FAA 
considers it sufficient for a supervisor to sign off. Is that 
not the case, Mr. Sabatini?
    Mr. Sabatini. There are circumstances where work can be 
performed by someone who may not have an A&P certificate, in a 
repair station context, who is trained and has been issued a 
repairman's certificate. But sign-offs are done under the 
supervision of a supervisor who would have authorization, such 
as an A&P and also authorized by the procedures manual to do 
that particular kind of oversight and sing-offs.
    Mr. Oberstar. I am concerned about that type of 
arrangement. I think FAA needs to raise the bar for those 
facilities, especially when you have so few inspectors. I will 
consult with Mr. Costello, the Chairman of our Subcommittee, 
and with the Ranking Member, about moving in the appropriation 
process to increase funding for the inspector workforce. I 
think you are way understaffed.
    Mr. Scovel, in the history of FAA oversight maintenance, 
record-keeping is critical. When an airline has either gone out 
of operation or has outsourced its maintenance, all the 
maintenance records, boxes and boxes of them, were transferred. 
In this day of electronics, however, I suppose those are CDs 
that are transferred.
    And now you have major airlines contracting maintenance out 
to the lowest cost provider. And then they re-bid the contract 
a year or so or two years later, sometimes it is three years. 
And the records are supposed to be transferred. Are you 
watching, is FAA watching over the transfer of records to be 
sure that they go from one facility to the next, and that trend 
lines are being followed and that down to the last detail, the 
surveillance is in place?
    Mr. Scovel. Thank you, Mr. Oberstar. I can speak from our 
experience in conducting surveys at a number of carriers. We 
have found that the carrier's maintenance records generally are 
good. And we are able to determine how their maintenance has 
been contracted out back over a number of years. It is based on 
that research that we have been able to determine when, for 
instance, non-certificated facilities have been used on certain 
repair operations versus repair stations, either here or 
overseas. And back to the days when some carriers were using 
in-house maintenance more extensively.
    Mr. Oberstar. So you are confident that, and Mr. Sabatini, 
are you confident that record-keeping is being transferred and 
sustained by subsequent maintenance providers as aircraft, 
airlines increasingly bid out their maintenance jobs, including 
heavy maintenance?
    Mr. Sabatini. Mr. Chairman, I am convinced that there are 
complete records on aircraft, no matter where that aircraft 
maintenance is performed or who owns that airplane. But I would 
ask Jim to give you more specifics on how that system works.
    Mr. Ballough. In the case of the AEROMAN visit, Mr. 
Chairman, there are records that are transferred both 
electronically in the moment as well as every hard copy record 
goes with that aircraft as it leave the check. More globally, 
when our certificate management office inspectors review the 
maintenance records, they will look at a work package, 
regardless of whether it is done in the States, done in-house 
or done overseas. So that is a responsibility that our 
certificate management office inspectors have as well, looking 
at those records. And they in fact make visits to those 
facilities as well.
    Mr. Oberstar. I think that is a very critical aspect, and I 
am not totally comfortable with ATOS, or risk management 
systems, that will increasingly rely upon record-keeping rather 
than hands-on. It is emblazoned in my mind, testimony that came 
in a hearing in the 1980s, from, well, I am quite sure it was 
the Miami FSDO, who said, we are so overworked, we are only 
looking at paperwork, we are not looking physically at engine 
work and airframe work. We are not on the shop floors as we 
need to be. And when the FAA oversight becomes distanced from 
the shop floor and is relying only on records, then you lose 
contact with the reality that this is an aircraft, not a piece 
of paper, not a document popping up on a computer screen. And I 
am much more comfortable with the hands-on than I am with the 
fingers on the keyboard and pop-up screens.
    Mr. Sabatini. Mr. Chairman, to put it perspective, we 
initiated risk-based before it was suggested that we continue 
in that direction. ATOS was introduced in 1998, which is system 
safety. It was an evaluation of what we have been doing for 
many years. And what we have today is a combination of touching 
metal and kicking tires, because that is how inspectors collect 
on-site information.
    But what is also very important to understand, that in a 
global, complex system like ours, where it is based on a system 
of voluntary compliance, where air carriers, repair stations, 
any entity that is certificated by the FAA is required by 
regulation to provide us with records which they must maintain. 
And it is a combination of looking at records, being on the 
shop floor and also rolling it up into what we call today 
system safety.
    And what we have required of the airlines is to redesign 
their system such that there are those attributes of system 
safety that come to play each and every moment, so that the 
system design produces the service or product in a consistent 
way. Unlike what we did in the past, when we see data, a 
combination of data collected by ourselves and combination of 
data provided because of the records that are required to be 
provided to us, we identify areas of risk and that is where we 
focus our attention.
    So we are smarter about where we bring our people. So it is 
a combination of in fact, touching metal and kicking tires, as 
well as the sophistication of system safety that brings 
auditing to bear.
    Mr. Oberstar. Thank you.
    Mr. Chairman, you have been generous with the time here, 
and I appreciate the opportunity to spend some time on this. It 
will take a good deal more inquiry.
    Just a parting thought, and that is, reconcile the 
differences in FAA certificated repair stations and non-
certificated, bring those together so there is no gap, as you 
said earlier. Consistency is the key to success in aviation 
safety oversight. Increase, we will work to increase the 
inspector workforce, to ensure that they have adequate numbers 
of inspectors and that the oversight work is being performed in 
a consistent manner.
    Thank you very much. Thank you, Mr. Chairman.
    Mr. Costello. Thank you, Chairman Oberstar.
    As Chairman Oberstar indicated, it will take a number of 
hearings in the future to address some of these issues. As I 
said from the outset, this is the first in what we expect to 
have other safety hearings concerning the outsourcing of 
maintenance as well as other issues.
    At this time, the Chair recognizes the gentlelady from 
Oklahoma.
    Ms. Fallin. Thank you, Mr. Chair.
    In Oklahoma, we have a maintenance repair organization for 
American Airlines. I had the opportunity to visit with them 
yesterday about their inspections and the FAA. They were 
staying that usually they have around 37 FAA inspectors who 
come to that facility and inspect it at different times. And 
they were also visiting with me about the outsourcing and 
maintenance to foreign countries.
    My question is, and I may have missed some of the testimony 
already and I apologize, but how to we assure, between the FAA 
inspectors in America versus the FAA inspectors who are going 
out of the country to inspect the foreign outsourcing of 
maintenance, how do we assure the same level of inspection?
    Mr. Sabatini. The regulation upon which a repair station is 
certified is the very same regulation that is used here in the 
States and abroad. The inspectors receive the very same 
training and the inspectors abroad are dedicated to solely 
oversight of those repair stations that they are responsible 
for in that geographic area. Here in the States, we do not have 
inspectors who have the sole responsibility for the oversight 
of a repair station. They may have a combination of other 
responsibilities as well.
    So in essence, the oversight is using the same standard, 
the same training, the same policies across the board. There 
are no differences. And as you said, you missed an earlier 
point that was made. There is a distinction between here and 
abroad. We require drug and alcohol testing here. We cannot 
impose that upon another sovereign state. And if we could, we 
would. But we don't have the statutory authority to do that.
    Ms. Fallin. Mr. Chairman, if I could do a follow-up. Is the 
ratio between the inspectors here and the inspectors in foreign 
countries, are they the same as far as numbers of inspectors?
    Mr. Sabatini. We do have some data, and I will ask Jim to 
share that with you.
    Mr. Ballough. Ms. Fallin, what I would like to mention is, 
the domestic repair station world, and I will make a 
distinction between repair station and air carrier oversight, 
since you mentioned American Airlines, in a moment.
    Domestically, we have 801 inspectors that oversee 4,231 
repair stations. Overseas, we have 697 repair stations, and 
they are overseen by 67 inspectors. So the ratio, and it is 
much more complicated than just dividing out and coming up with 
a ratio. Because the work assignments are very different. The 
folks in the States that have repair station oversight 
responsibility are inspectors, also have responsibility for FAR 
Part 135 operators, maybe flight schools, so a host of other 
activities. The inspectors that are assigned strictly to 
foreign repair stations, that is their primary work function. 
They have additional duties that may require oversight of a 
designated airway and its representative or another inspection 
authorization mechanic, but not near the complexity or the 
amount of certificates for the domestic repair station 
oversight personnel.
    But the issue that you raised regarding American Airlines 
and the 37 folks, those folks are from what we term a 
certificate management office or CMO. So there is a large 
number of folks that are inspectors dedicated for oversight of 
all of American Airlines. So in this case, where they use 
Tulsa, the program managers that have responsibility for 
certain fleet types visit Tulsa. In the case of an airline that 
outsources their heavy checks, outside the U.S., those same 
program managers also have a responsibility for oversight even 
though those checks go out of the Country.
    So no matter where those checks are done, and I will admit, 
not near to the level that you would see in Tulsa with it being 
such close proximity, but nonetheless, the oversight does get 
done by the certificated management office as well when that 
work is outsourced, that heavy check.
    Ms. Fallin. Mr. Chairman, if I could have one more. That 
brings up another interesting point, if the levels are a little 
different, have you ever compared or audited the safety records 
of the aircraft, the incidents that they might have, compared 
to the foreign operations and maintenance versus the U.S. 
operations and maintenance?
    Mr. Ballough. In the case of, I will use one example, one 
experience that I witnessed. That is the facility in El 
Salvador. When the checks leave that facility, that repair 
station, as well as the airline, tracks that aircraft for 30 
days. And they track that aircraft to see what type of 
discrepancies are written, what kinds of malfunctions the 
aircraft is having, to assure themselves that the quality of 
the work coming out of that repair station is as good as it can 
get. As a result, they do a customer survey of every customer 
that uses that repair station and consistently, they score in 
the 9.4 out of 10 in terms of the quality of product being 
released by that repair station. So the repair station also 
takes an active role in looking at the quality of the 
maintenance that is done once it leaves that facility.
    Ms. Fallin. One more question, Mr. Chairman.
    The cost of the inspectors going to the foreign MROs, what 
is the cost to the United States as far as the FAA and having 
those inspectors travel out of the Country?
    Mr. Sabatini. There are some figures that we do have, and 
just generally speaking, a domestically based inspector, fully 
loaded figure, would be approximately $100,000 a year, on 
average. A foreign-based inspector is slightly over $200,000 
per year.
    Ms. Fallin. So there are some that just live in the foreign 
country that inspect?
    Mr. Sabatini. I'm sorry?
    Ms. Fallin. There are some that just live in the foreign 
country that inspect?
    Mr. Sabatini. We have inspectors who live abroad. We have 
inspectors who are assigned to those geographic areas, in 
Frankfort, London, Singapore and well, those locations.
    Ms. Fallin. Thank you.
    Mr. Costello. The Chair thanks the gentlelady and 
recognizes now the gentlelady from Hawaii.
    Ms. Hirono. Thank you, Mr. Chairman.
    Since oversight is critical to the system and we clearly 
don't have enough inspectors, we need to deploy our resources 
as effectively as possible. The IG in his testimony noted that 
FAA needs to develop an effective staffing model. I would like 
to know whether you are in the process of developing such a 
staffing model as described the IG, and two, if you are doing 
that, whether you are involving affected persons such as the 
current aviation inspectors, and three, what would be your time 
frame for completing this model?
    Mr. Sabatini. We have followed up on the recommendation, 
and we are following the recommendations made by the National 
Research Council, which is a group within the National 
Academies of Sciences. I will turn it over to Jim, who was 
directly responsible in leading this effort for the contracting 
of the services to do exactly what you have asked.
    Mr. Ballough. We have recently entered into a contract with 
an organization that will begin to work, they have done some 
preliminary work for us already. So that will be in full swing 
here shortly.
    We had a few issues early on with the continuing resolution 
and we now have the contract in place and the work has begun. 
Ma'am, right now, I do not have an estimated time of completion 
of that. I would expect to have that and could supply that to 
the Committee at a later date, when I get that information.
    Ms. Hirono. What about my question relating to involving 
the people who would be impacted by such a staffing model, 
i.e., the aviation, the inspectors, safety inspectors?
    Mr. Ballough. I think that they will have to be involved. 
Obviously for a contractor to be able to develop for us a 
staffing model, they have to certainly understand our 
complexity and the contractor that is doing the work for us, 
has involved our work for us in some of the activities that 
they have been doing recently. So I fully expect that the 
stakeholders, all our inspectors will be involved.
    Ms. Hirono. I am a little bit confused as to why you would 
enter into a contract that does not have a completion time 
frame. So what is your time frame?
    Mr. Ballough. At this point in time, we have modified the 
statement of work, and they have not come back to us at this 
point in time yet with what a time line or what the action plan 
is to complete the activity. This is all recent developments, 
in the last month, once we receive our budget.
    Ms. Hirono. Mr. Chairman, since this model is very critical 
to the oversight capability of FAA, I would like to ask the 
Chair for you to follow up with FAA and give us that time frame 
for this model to be completed.
    Mr. Costello. The Chair will make that request and 
announce, I mentioned earlier that we will have written 
questions to submit to the FAA. We will put a time frame as to 
when we want the response back. I have several questions, five 
or six, that I am going to put in writing and we certainly will 
add your request to that as well.
    The Chair would like to thank all three of our witnesses 
for being here today and presenting their testimony. We look 
forward to additional responses from the FAA. At this time, the 
first panel is dismissed and we would ask the second panel to 
come forward. Thank you.
    I will begin introductions as the witnesses are moving 
forward, in the interest of time. The second panel will consist 
of Mr. Tom Brantley, the President of the Professional Airways 
Systems Specialists, AFL-CIO; Mr. James Little, International 
President of the Transport Workers Union; Mr. John Goglia, the 
Adjunct Professor of Aviation Science, Parks College of 
Engineering, Aviation and Technology, St. Louis University; Mr. 
Basil Barimo, the Vice President of Safety and Operations, Air 
Transportation Association of America; Mr. Marshall Filler, 
Managing Director and General Counsel of the Aeronautical 
Repair Station Association; Mr. David Campbell, the Vice 
President for Base Maintenance at Alliance Fort Worth and 
Kansas City, with American Airlines; and Mr. Ray Valeika, the 
Independent Aviation Advisor, Senior Vice President of 
Technical Operations with Delta Air Lines, Retired.
    Let me say to our witnesses, first, we welcome you and we 
thank you for being here today. You have submitted your written 
testimony and it will be entered into the record in full. Let 
me ask you, in the interest of time and so that we can get to 
questions, we have a number of questions, and hopefully in your 
remarks you will address some of the issues that were brought 
up with the first panel.
    But I would ask you to summarize your written statement in 
five minutes or less. The Chair will recognize Mr. Brantley for 
five minutes.

  TESTIMONY OF TOM BRANTLEY, PRESIDENT, PROFESSIONAL AIRWAYS 
 SYSTEMS SPECIALISTS, AFL-CIO; JAMES C. LITTLE, INTERNATIONAL 
     PRESIDENT, TRANSPORT WORKERS UNION; RAYMOND VALEIKA, 
INDEPENDENT AVIATION ADVISOR; JOHN J. GOGLIA, DIRECTOR, CENTER 
     OF INTEGRATED EMERGENCY MANAGEMENT, PARKS COLLEGE OF 
  ENGINEERING, AVIATION AND TECHNOLOGY; BASIL J. BARIMO, VICE 
PRESIDENT, OPERATIONS AND SAFETY, AIR TRANSPORT ASSOCIATION OF 
   AMERICA, INC.; MARSHALL S. FILLER, MANAGING DIRECTOR AND 
GENERAL COUNSEL, AERONAUTICAL REPAIR STATION ASSOCIATION; DAVID 
CAMPBELL, VICE PRESIDENT FOR BASE MAINTENANCE AT ALLIANCE FORT 
            WORTH AND KANSAS CITY, AMERICAN AIRLINES

    Mr. Brantley. Thank you. Chairman Costello, Congressman 
Petri and Members of the Subcommittee, thank you for inviting 
PASS to testify today.
    PASS represents approximately 11,000 FAA employees, 
including approximately 2,800 flight standards aviation safety 
inspectors. In addition to other oversight responsibilities, 
airworthiness inspectors are responsible for ensuring that 
maintenance work performed at more than 4,900 certificated 
repair stations in the United States and overseas is done in 
accordance with airline and/or manufacturer instructions and 
FAA regulations.
    In recent years, the overall dynamic of the aviation 
industry has been one of dramatic change, including airlines' 
increasing their reliance on outsourced maintenance. In fact, 
the IG has stated that the outsourcing of air carrier 
maintenance to repair facilities has grown to 62 percent of air 
carriers' maintenance costs in 2005.
    PASS and the inspector workforce that we represent have 
serious safety concerns regarding this escalating trend and the 
FAA's ability to oversee the outsourced work. Of primary 
importance, there must be an adequate number of experienced and 
trained FAA inspectors in place with appropriate support to 
accomplish the agency's mission of safety oversight. Inspector 
staffing has not kept pace with the explosion of outsourcing 
and nearly half of the inspector workforce will be eligible to 
retire by 2010.
    The FAA claims that it is impossible for the inspector 
workforce to increase at the same rate that the aviation 
industry is changing and is moving toward a risk-based approach 
in which data will be the primary tool to determine potential 
safety threats. We agree that the changing environment makes it 
essential to focus on anticipating risks. However, that does 
not reduce the need to raise staffing levels for the inspector 
workforce. As explained in our written testimony, risk analysis 
is only as good as the data upon which it is based. When 
inspectors are not doing enough inspections, the amount of 
needed data is simply not available.
    Therefore, PASS is requesting that Congress direct the 
agency to develop a staffing model for inspectors and follow 
the recommendations outlined in the recent study by the 
National Academy of Sciences with a deadline for completion. 
The inadequate level of inspector staffing is making it even 
more difficult to address other problems, with oversight of 
outsourced air carrier maintenance. For example, there are over 
690 foreign repair stations certificated by the FAA. However, 
due to a lack of inspector staffing and the abundance of 
bureaucratic red tape an inspector must cut through to gain 
access to these repair stations, many inspectors say they are 
not confident with the level of oversight.
    After an inspector waits a month or longer for 
authorization to visit a country, the repair station is fully 
aware of the visit and the element of surprise is non-existent, 
reducing the visit to a tour rather than an inspection. In 
addition, inspectors tell us of problems regarding the 
regulations governing foreign repair stations and the security 
at these facilities. If a foreign repair station wants to work 
on U.S.-registered aircraft or any aircraft that operate in 
this Country, those repair stations should be required to meet 
the same safety standards and regulations as domestic repair 
stations. Part of the growing threat is that repair stations 
are themselves sub-contracting out more and more maintenance 
work to other facilities, many of which are not certificated by 
the FAA and are therefore not subject to direct FAA oversight.
    Recent IG reports have highlighted the dangers involved 
with the escalating use of non-certificated repair facilities, 
empathizing that these facilities are performing far more work 
than minor services, with some even performing maintenance 
critical to the airworthiness of the aircraft. Despite the fact 
that these facilities are performing safety-critical work, FAA 
oversight is practically non-existent. This practice cannot 
continue without a significant increase in risk to aviation 
safety. PASS believes the most effective way to correct the 
disparity between work performed at certificated and non-
certificated repair facilities is for Congress to require that 
air carriers outsource maintenance work only to certificated 
repair stations, a standard that should apply to both domestic 
and international facilities.
    Oversight of outsourced maintenance is in critical need of 
attention and improvement. For too long, the FAA has responded 
to critical IG and GAO reports with sophisticated plans but no 
real action. In order for inspectors to continue to provide 
adequate oversight for the aviation system, the FAA must take 
immediate steps to increase staffing and funding for its 
inspector workforce so they are able to continue to ensure this 
Country's status as having the largest, safest and most 
efficient aviation system in the world.
    Thank you, and I would be happy to answer any questions.
    Mr. Costello. We thank you, Mr. Brantley.
    Mr. Little, you are recognized for five minutes.
    Mr. Little. Thank you, Mr. Chairman, and thank you, Members 
of the Subcommittee. I appreciate the opportunity of being here 
today.
    In 1989, the TWU testified before this same Subcommittee 
against the FAA elimination of our long-established 
geographical restrictions on performance of scheduled 
maintenance in favor of legislation to reverse that rule 
change. At that time, we predicted that the elimination of 
limits on movement of maintenance would result in the 
outsourcing and loss of tens of thousands of jobs to overseas 
facilities. The FAA would not have the capacity to follow the 
overseas work, and the work and the workers who performed it 
would not be subject to the same regulatory requirements that 
U.S. mechanics must function under.
    At that time, we were accused by the FAA and industry 
officials of grossly exaggerating those possibilities. I would 
suggest to the Committee that if it reviews the testimony it 
would find that in virtually every concern we expressed, 
unfortunately it has been validated. In particular, as pointed 
out in today's written testimony, the majority of heavy 
maintenance accomplished for scheduled U.S. carriers is no 
longer performed by those carriers, but is outsourced, and an 
ever-increasing portion is outsourced overseas.
    As my brother from PASS points out, this situation has been 
generated, at least in part, by the absurd system of double 
standards the FAA has created. Carriers seeking to limit 
exposure to costly regulations governing the performance of 
maintenance can do so by outsourcing the work, especially 
overseas.
    Rules comparable to the FAA rules on drug and alcohol 
testing is only one thing. Security, background checks, 
exposure to unannounced, and I underscore unannounced checks, 
are covered by legal enforcement which subjects persons 
performing maintenance to not only licenses suspension, there 
is revocation, there are fines for improper performance, either 
do not exist or are not really as rigorous as those in this 
Country.
    The system of double standards is an increasing disservice 
to U.S. airmen, the flying public and as PASS points out, makes 
the job of their Members far more difficult. At American, after 
extraordinarily difficult negotiations that were conducted in 
the shadow of potential bankruptcy filing, the TWU managed to 
secure contractual protections that maintained aircraft 
maintenance work in-house. There are 18 heavy checks performed 
at American, all are done in-house in bases of Tulsa, Kansas 
City and Alliance Fort Worth. I believe at present, American is 
one of the only major carriers that still does the majority of 
its own maintenance.
    However, while our contract protects such work over the 
long term, it is under continuing jeopardy if we retain the 
present regulatory system. Likewise, the chances of bringing 
work, as we have successfully done, in-house will be more 
limited over the long term.
    If this Committee believes that the desire of the situation 
we should continue the regulatory status quo. However, I 
believe that is not acceptable. We ask the Committee to 
comprehensively examine and remedy the system of double 
standards, and re-impose some sensible limits on the movement 
of aircraft.
    Again, I thank you for the opportunity to address this 
Committee, and I welcome any questions you may have.
    Mr. Costello. The Chair thanks you, Mr. Little, and would 
recognize under the five minute rule Mr. Valeika.
    Mr. Valeika. Good afternoon, Mr. Chairman, Members of the 
Committee. Thank you very much for the opportunity to air my 
views about aircraft maintenance and the changes and challenges 
that are occurring.
    First of all, just a brief background. I have spent 40 
years in aircraft maintenance, 20 of those years plus running 
maintenance operations at three major airlines, the last of 
which was Delta Airlines, where I retired as senior vice 
president. By the way, we did $300 million worth of in-sourcing 
before I left. Just to let people know that the streets have 
two lanes on it, going both directions. I have been involved in 
all of those activities that created this great maintenance 
system, such as MHG, aging aircraft, human factors, et cetera, 
over my career.
    The issues of outsourcing are not new. What is new is that 
the airlines in the past had extensive in-house capability that 
they are shedding in a very dramatic fashion. The other factor 
that is new is that it is happening on an unprecedented level 
in a very, very short period of time. Lastly, it is much more 
global than at any other time before.
    In the past, outsourcing from the major carriers occurred 
on an ad hoc basis and usually for very specific items. Labor 
agreements prevented wholesale outsourcing and most of it was 
accomplished either in the U.S. or Europe. Now, however, the 
scope, both in the content and geography has changed. There are 
many reasons for this, but most of them boil down to economics, 
obviously. Since deregulation, two types of airlines have 
existed: the legacy airlines, which have the burden of 
infrastructure and entrenched high costs; and the so-called low 
cost carriers, which do not. To shed costs, airlines have taken 
extreme measures and the results in many cases have been to 
outsource maintenance.
    Unfortunately, maintenance was burdened with many 
intractable rules and regulations, and management and labor 
were at odds, often resulting in bitter battles. For a variety 
of reasons, focus in the U.S. on in-house maintenance is 
diminished greatly. At the same time, globally it has 
flourished in parts, especially where low-cost maintenance is 
available. If you look at the investments in maintenance, the 
Middle East and the Far East and certainly Europe are making 
major investments in airline maintenance, where in the United 
States, for the most part, we have been diminishing those 
investments.
    As stated by most of the testimonies, the safety system 
which we have created has not been impaired, as witnessed by 
all the available data. This is due to many layers of safety 
and oversight that is in place. First of all, the quality of 
maintenance that is performed is very important. The standards 
that the airlines have had, the cushions that have been built 
into these airplanes of course is very important. The aircraft, 
and this has not been said too much today, but we really do 
have very good aircraft today, compared to what we relate to in 
1989 and so forth. We are looking at airplanes that are 
fundamentally much better, much easier to maintain and require 
fewer man hours and they are much safer. So there is a big 
change in aircraft.
    When you look at engines, it is phenomenal what an engine 
does today. When I was at Pan Am, we used to remove an engine 
every 600 hours or 700 hours in a 747. An engine now can go for 
30,000 hours without a removal. These factors are phenomenal. 
So there is a big change.
    It is also very important to point out that much of the 
work that is performed or outsourced is not critical from a 
safety standpoint. Most of the hours spent on a heavy check on 
aircraft are restorative, such as cabin upgrades, cleaning, 
opening and closing. Thus, treating outsourcing generally as 
being all critical misses the point. But there are many 
critical functions, and these must have the highest standards 
and oversight. And these are the areas that need focus and 
specific attention.
    Part of the economic problem that U.S. carriers have faced 
is the cost of the lower skill tasks versus the higher skill 
tasks. We tended to blur that distinction, and that is where a 
lot of our labor and management issues occurred, because for 
many of the lower skill tasks, we were paying very high wages. 
These were creating high costs.
    Outsourcing is here to stay, and in my opinion will grow 
even more as the new generation of aircraft and engines come on 
board. The issue clearly is not who does the maintenance but 
how it is done. In the past, it was quite easy to oversee the 
performance and maintenance as it tended to be accomplished at 
one or two locations under uniform standards and procedures. 
Now it is being dispersed and under different standards, 
procedures, different languages and different cultures. Most of 
the regulations in the past evolved from the way we did 
maintenance. Thus, the FAA evolved its many rules based on best 
practices, and these were relatively easy to enforce since most 
of the airlines were both centralized in their work performance 
and record keeping.
    What airlines have created was an integrated system 
approach of providing total support, albeit for themselves. 
What is currently happening is the disintegration of that 
system. The path that the airlines are taking today is 
dispersing the various functions and no one is amalgamating 
them into a one stop shop. As the airlines outsource more----
    Mr. Costello. If you could summarize very quickly, we have 
a vote on the Floor and we are going to try to get to Mr. 
Barimo as well.
    Mr. Valeika. Let me just get to what the FAA, in my 
opinion, really needs to do. The current operating 
specifications, which are totally in the house of the airlines, 
I believe, need to be expanded to the providers. It is clear 
now to me that the rules and the regulations have to include 
the providers of maintenance, so the reliability of maintenance 
programs, engineering, your question on standardization, a lot 
of these things have to change. The providers of maintenance 
will have to share much more in the information technology, 
record keeping and so forth, which right now is only in the 
airlines' purview.
    Mr. Costello. We will have some questions concerning those 
issues.
    Mr. Valeika. One last point I do have to make, though.
    Mr. Costello. It has got to be quickly.
    Mr. Valeika. It is very quick. I think that with good 
information technology, there is no reason why the United 
States cannot be the premier provider of maintenance services. 
I think we are arguing over labor rates, not arguing over the 
cost of the process.
    Mr. Costello. Thank you.
    Mr. Barimo, if you could summarize in five minutes or less. 
We do have a vote on the Floor, we are going to get your 
testimony in, and if you can do it in less than five minutes, 
we will go vote, there will be one vote on the Floor, we will 
immediately come back and resume the hearing.
    Mr. Barimo. We will do an on-time arrival.
    Good afternoon. I am Basil Barimo, Vice President of 
Operations and Safety for the Air Transport Association of 
America. I appreciate the opportunity to join you this morning 
as you consider how the expertise of highly qualified third 
parties can be applied to air carrier maintenance programs. 
Long and varied experience confirms that contract maintenance 
can be both safe and efficient, and we shouldn't be hesitant to 
accept its use.
    Before going any further, though, I want to emphasize that 
a starting point for any discussions that have aviation safety 
implications is this: safety is the constant, overriding 
consideration in our members' activities. They understand their 
responsibilities and they act accordingly. The U.S. airline 
industry's stellar and improving safety record is evidence of 
that.
    Thus, we have a commitment to safety, we have the 
operational and regulatory structures to fulfil that 
commitment, and the results, our safety record, confirm that 
commitment. Maintenance contracting in the airline industry is 
overtaken in this over-arching context of dedication to safety. 
It is no different than any other activities in our industry in 
that respect.
    Consequently, it is not a shortcut by which shoddy 
maintenance is tolerated. It is not a stray cutoff from an 
airline's overall maintenance program. And it is not adrift, 
detached from regulatory moorings. More decisively, the safety 
data don't offer a reason to question the use of contract 
maintenance. Outsourcing has increased over the past decade, 
but as this chart clearly shows, and this chart in fact goes to 
zero, the U.S. airline industry's maintenance safety record is 
the best it has ever been. If there were a systemic problem 
with contract maintenance, the safety data would have exposed 
it. This favorable outcome is expected and once again, context 
is crucial. Contract maintenance occurs in a highly structured, 
safety-oriented environment.
    To begin with, the decision to outsource is for each 
airline to make. An airline makes that decision as the 
certificate holder, the regulated entity that is ultimately 
responsible for the safety of its operations. If the airline 
elects to use third party maintenance, the airline is not 
sloughing off any of its statutory or regulatory obligations. 
On the contrary, the airline is making a well thought-out 
determination that outsourcing will contribute both in terms of 
results and efficiency to the airline's maintenance program.
    Contract maintenance is common and commonly accepted in the 
industry. Virtually every airline to some degree relies on 
contract maintenance, whether in the form of line, heavy or 
engine maintenance. And aircraft operators with demanding and 
sophisticated maintenance needs, including the various branches 
of the U.S. military, contract for maintenance services.
    We should also understand that highly respected aviation 
firms, including airlines, one of which is seated next to me 
today, performs third party maintenance. It is not an exotic 
practice wherever it is done. Oversight of contract maintenance 
is multi-layered and continuous and fully integrated into FAA's 
regulatory structure. The FARs explicitly recognize it. The FAA 
also certificates repair stations which must comply with an 
airline's FAA-approved maintenance program.
    In addition, as a certificate holder, the airline must 
monitor the quality of the maintenance that is performed. To do 
so, airlines conduct in-depth and frequent audits of the repair 
stations that they use. They employ independent auditors, they 
assign their own on-site representatives to monitor repair 
station performance. Finally, they measure the reliability of 
the products produced. Then the FAA has a compliance program 
that oversees both the performance of the airlines and the 
repair stations.
    Continued access to third party maintenance is the one 
ingredient in some airlines' efforts to remain competitive both 
here and abroad. That competitiveness is what enables 
passengers and shippers to receive the services that they want 
at prices that they are willing to pay. Compromise of safety 
can never be tolerated.
    But neither should efforts to limit airlines' ability to 
obtain necessary services consistent with the highest degree of 
safety as economically as possible. This search for efficiency 
has meant that some airlines have shifted where their 
maintenance work has done. Sometimes it meant moving the 
location of in-house facilities, other times it has meant 
contracting with a third party to perform certain maintenance 
functions.
    Neither type of change is pleasant. Both can adversely 
affect workers and their communities. It has, however, also 
meant job opportunities for some workers and new economic 
benefits for new communities. Far from resulting in the export 
of the majority of U.S. maintenance jobs overseas, it has meant 
that we have been able to retain those jobs in the United 
States. This is a key point in evaluating the effects of 
contract maintenance.
    Thank you for allowing me to briefly express our views this 
morning, and we look forward to more discussion.
    Mr. Costello. We thank you, and the Subcommittee will stand 
in recess. I would expect if we have the one vote and no 
unexpected votes, we will be back in about 20 minutes. The 
Subcommittee stands in recess.
    [Recess.]
    Mr. Costello. The Subcommittee will come to order, please.
    The Chair recognizes Mr. Campbell.
    Mr. Campbell. Thank you, Mr. Chairman, and good afternoon.
    Thank you for inviting American Airlines to participate in 
today's hearing on outsourced air carrier maintenance. My name 
is David Campbell, I am the vice president responsible for two 
of our three maintenance bases at Alliance Fort Worth and in 
Kansas City, Missouri. Our third maintenance base is located in 
Tulsa, Oklahoma.
    I cannot emphasize enough that safety is American's number 
one priority. As such, we welcome the diligent and continuous 
oversight of the FAA, and believe that it is an important 
component of our commitment to safety. I will explain in a 
moment our day to day activities with the FAA.
    First, however, I would like to describe how we have taken 
a substantially different path than other airlines in an 
industry where outsourcing is a trend. With employee 
cooperation and productivity improvements, we have been able to 
avoid bankruptcy and restore our company to a position of 
financial stability. We still have substantial amount of debt. 
We have been able to greatly improve our balance sheet and our 
economic future.
    We have achieved this financial turnaround in large part 
because of the partnership that we formed with the Transport 
Workers Union, or the TWU. Three years ago, American Airlines 
and the TWU committed to transforming our maintenance business 
from a cost center to a profit center. Today, we perform over 
90 percent of all maintenance work, and 100 percent of our 
heavy maintenance work at American Airlines facilities. 
Approximately 9,750 employees are working at our three 
maintenance bases, repairing and maintaining our fleet of 700 
large aircraft, as well as working on aircraft for dozens of 
other carriers.
    By partnering with our employees and by implementing 
continuous improvement processes, we have reduced costs, gained 
efficiencies and optimized operations. We have also been able 
to acquire and perform maintenance work for other airlines, 
despite the fact that we pay higher salaries and better 
employee benefits than virtually non-airline vendor.
    Two years ago, a joint team from our Tulsa maintenance base 
announced a breakthrough goal to generate $500 million in value 
creation. Last month, a Tulsa team proclaimed that they not 
only made the goal, but they beat it by $1 million. This year, 
we have a target of $175 million of additional third party 
revenue. In order to make that happen, I am proud to announce 
and pleased to announce that our board of directors agreed 
yesterday to invest $100 million into our maintenance and 
servicing groups. Over the next five years, American will 
update its maintenance facilities, invest in technology, make 
process improvements and increase productivity in order to 
offer world class, state of the art technical service and 
attract new customers. In other words, while many of our 
competitors have outsourced work to low labor cost regions 
around the world, we have actually in-sourced work from many of 
those same regions and look forward to acquiring more work.
    Now I would like to turn to our relationship with the FAA. 
The United States Code states that it is the duty of the air 
carrier to provide service with the highest possible degree of 
safety in the public interest. To assure that we meet this 
obligation, we work very closely with the 37 inspectors 
assigned to American Airlines. Every morning at 8:15, a safety-
related conference call is held with the FAA three principal 
inspectors. On this call, we have representatives from our 
maintenance and engineering team, flight, safety, security and 
environmental departments. We discuss mechanical issues, safety 
issues and any other relative concerns of the day. These same 
departments also participate in a weekly call where long-term 
issues and concerns are addressed.
    In addition to that, we also have executive roundtable 
meetings that we hold with senior management or senior 
executives from American and the principal inspectors. 
Inspectors who are assigned to American maintenance bases are 
dispatched from the agency to Dallas Fort Worth airport's 
certification office. They often arrive at our bases 
unannounced. Our employees know that the inspectors may talk to 
whomever they wish and review all records and logs without 
interference.
    We also agree with the FAA to adhere to a safety risk 
management program that allows our records and reports to be 
shared to enhance the oversight of the carrier by identifying 
risks and mitigating hazards. Inspections, unannounced reviews 
and oversight by the FAA are an integral part of our continuous 
improvement process, and we welcome their involvement. We 
believe that rigorous FAA oversight should be a critical part 
of any maintenance program, regardless of where the maintenance 
is being performed and by whom.
    I will be happy to take any of your questions. Thank you.
    Mr. Costello. Mr. Campbell, thank you for your testimony.
    Mr. Goglia, you are recognized under the five minute rule 
at this time.
    Mr. Goglia. Thank you, Mr. Chairman. It is a pleasure to be 
here in front of you today.
    I would like to announce to you that I have conducted a 
thorough review of the paperwork that you provided to us today 
outside on the table. I have observed your operation here today 
and I certify you to go forward for the next year and conduct 
these hearings.
    [Laughter.]
    Mr. Goglia. And that is about as thorough as a foreign 
repair station gets from the FAA, because we can't come back 
again, because we don't have any travel money, and we can't 
stay overnight, because we are not going to get reimbursed on 
the per diem. So as we talk about what the FAA does, keep that 
in mind, because that scenario is accurate.
    Now, we had a nice chat up in the hall in the very 
beginning about safety standards, safety records. A gentleman 
by the name of Jerome Lederer, who happened to be the person 
who founded the Flight Safety Foundation, is known as Mr. 
Safety. He passed away not to long ago at 100 years old. He 
came back from retirement to do the Challenger accident in the 
1980s. He has said repeatedly, and I don't know if this was an 
original statement of his or not, but he said that the absence 
of an accident is not an indicator of a safe operation. That is 
100 percent correct.
    Although I am a firm believer that the ATOS system and the 
SMS system is needed, that we can make great gains with it, it 
doesn't replace the physical presence. You have hit around the 
edges of it, but I want to share something with you. In my 
past, working for an air carrier, one of the tasks that I 
performed virtually every day at the end of the shift was a 
review of the paperwork. Because we were dinged repeatedly by 
the FAA on paperwork violations. So that paperwork, when it 
left my hands, was pristine, signatures in every box. I got 
creative writing 101 down to a science. Everything was done.
    If you base your monitoring system, ATOS, SMS, on what came 
out of my hands, you would think that operation was perfect and 
pristine. It was far from that. The operation was just like 
everyone else's operation, we had problems. So the paperwork 
review is not the only answer. You have to be there. Those 
inspectors have to be there when the work is done, and when the 
airplane, if it is nose to tail work, is finished. The number 
of complaints or gigs or non-routines that occur after we think 
the airplane is done and we start checking it, maybe a taxi 
check, maybe a ferry flight, a maintenance ferry flight to 
check things out, the number of items that come back from those 
events can be staggering. Yet most of them don't ever find 
their way into the data collection system. That is why the 
physical presence of an inspector is so important at the end.
    Now, maintenance is based upon good paperwork. That 
paperwork foundation comes from the instructions for continued 
airworthiness found in the certification requirements that are 
imposed upon the manufacturer. In the past, right to this 
minute, all the previous airplanes have lots of problems with 
those manuals. We call them maintenance manuals. Those 
maintenance manuals, those procedures are not verified, they 
are not validated. Unlike the flight deck, before a pilot can 
use a procedure, it is thoroughly vetted. The maintenance 
procedures are not vetted. Some are, but they are not 100 
percent vetted.
    That gives us, as a mechanic, and you go through the 
process, and you can't follow the procedures, after a while you 
don't even look at the procedures, whether or not they are good 
or not. Because you know how to do your job. We have become 
very good at doing our job looking at the illustrated parts 
catalog, we are very good at taking things apart and putting 
them back together the way we did it. The problem there comes 
from when I take it apart and he puts it together. There is a 
big disconnect there. And we have had a lot of problems in that 
area.
    To the FAA's credit, they have been working on this. There 
is a partnership in the works with SAE, which is an engineering 
organization, not for profit, PAMA, the Professional Aviation 
Maintenance Association, they are working on voluntary 
standards with the industry to try to raise that. But there 
needs to be a requirement up front that those procedures are 
validated, verified and known to be good. That was the reason 
why we killed those people in Charlotte, the Air Midwest crash 
that Congressman DeFazio mentioned earlier. That is why we 
killed a couple of people, with the exact same issue a few 
months later, in Hyannis, Massachusetts.
    The list goes on, I could go on and on about the fatals and 
the accidents and the role of procedures and manuals. We need 
to get a handle on it. SMS will help, but it needs to be 
robust. The FAA needs to get a higher buy-in in that process 
than they have today. We need to get more involvement by 
people, be it ASIs, the inspectors, involved with that system, 
especially the ones that don't agree with it.
    And I know I am out of time. I am a Washington windbag.
    [Laughter.]
    Mr. Costello. We thank you for your testimony and we will 
have some questions for you.
    The Chair recognizes Mr. Filler under the five minute rule.
    Mr. Filler. Thank you very much, Mr. Chairman.
    A couple of points I would like to make at the outset. I am 
Marshall Filler, Managing Director and General Counsel of the 
Aeronautic Repair Station Association. I have spent my 34 years 
in aviation and safety regulation, that is my line of work. I 
know it is very tempting to look at certain accidents as 
perhaps proving a global point. But I do want to just point out 
to the Subcommittee that no one, no one aspect of our industry 
has a monopoly on accidents. Indeed, when accidents happen and 
people are killed because of mistakes by anybody, it is tragic. 
Whether those mistakes are made by certificated mechanics, 
employees of a repair station, people who design aircraft or 
produce them, it is all something that we need to look at.
    So I think we just need to be careful about examining or 
giving too much credence perhaps to single events as possibly 
proving a greater point.
    I would like to also mention, Mr. Chairman, that you were 
very interested this morning with the FAA in where the air 
carriers contract out their maintenance to. One thing that I 
don't think came across as loudly as it should have is that 
every airline that I have ever been around has something called 
an approved vendors list, an AVL. That approved vendors list 
includes all of their maintenance vendors. Most of them, or 
virtually of them, have to undergo a pre-qualification audit. 
This is part of the FAA maintenance program that every airline 
has.
    I know that some carriers, even some in this room, provide 
on a quarterly basis to their FAA office a copy of that 
approved vendor list, showing them in very neat, nicely divided 
sections which of their vendors do substantial maintenance, 
which of them do component maintenance, et cetera. So I think 
that the FAA could certainly ask the airlines for this 
information.
    Another point that came up was the notion of critical work 
being done by these so-called non-certificated repair 
facilities. I do want to point out that there is a built-in 
limitation under Part 65 of the regulations so that when work 
is done by a certificated A&P mechanic under his own 
certificate, that person may not approve a major repair or a 
major alteration for return to service. So that must be done by 
a repair station, or it must be done by an air carrier. So that 
is a built-in limitation in the regulations.
    With respect to the Charlotte accident, there was a 
required inspection item which is by definition a critical 
inspection in Part 121 that was indeed performed by 
certificated people individually, not affiliated with the 
repair station. And certainly one of the things this Committee 
could explore is whether they wanted to expand that limitation 
in part 65 to include required inspection items. The vast, vast 
majority, Mr. Chairman, are done by repair stations and 
airlines' own employees.
    As far as foreign repair stations go, I know there is an 
awful lot of interest in this. A couple of points I would like 
to make about that. In Europe, and more than half of the 
foreign repair stations are actually located in the European 
Union, they require type ratings for their technicians, type 
ratings. We don't require that here. So that is an example, you 
can make an argument, that perhaps that is a higher level of 
safety. We look at it at ARSA as that is an equivalent level of 
safety. It is simply a different system. But it certainly gets 
us to where we need to be from a safety perspective.
    We disagree that an airline will go to a low-cost provider 
simply because they are a low-cost provider. If you are dealing 
in particular with airplanes, if that low-cost provider does 
shoddy work and something breaks, then by law what breaks has 
to either be fixed or deferred, as a matter of law. When that 
airplane has to be fixed and taken out of service, it doesn't 
make money.
    So before you know it, the air carrier that may have saved 
some money by contracting out to a cheaper provider, be it a 
U.S. or a foreign provider, now has eaten up that entire 
savings, if you will, because they have paid for it on the back 
end.
    I wanted to make the point also, and I know my time is--can 
I have one more minute, Mr. Chairman, and I will wrap it up?
    Mr. Costello. How about 30 seconds.
    Mr. Filler. All right, I will take 30 seconds. Thank you.
    With respect to security, the background check requirement 
in our security regulations attaches because people have 
unescorted access to the security identification display area 
at an airport. So if I work for a repair station and I need to 
have access to that SIDA area, I have to have a background 
check, every bit as much as if I were an airline mechanic. If I 
work in an industrial park 25 miles away, working on 
components, the risk from a security perspective is different. 
So we just should avoid the one size fits all tendencies 
sometimes that are based on, well, there is no security 
requirements for repair stations as there are for carriers.
    I know that I have exceeded my time. I would be very happy 
to answer any questions you have. Thank you, sir.
    Mr. Costello. Thank you. We wish that we had unlimited time 
as well, because there are a lot of issues we need to go into. 
That is why we are going to hold additional hearings at a later 
date.
    Let me begin by asking a few questions. Mr. Brantley, in 
your testimony you talk about when a problem is detected that 
because of a lack of time and reduced staffing that it is very 
difficult to follow up to make sure that the problem is 
corrected. I wondered if you might expand on that and tell us 
what can be done to change that, so when a problem is detected 
there is sufficient time and sufficient personnel.
    Mr. Brantley. Thank you, Mr. Chairman.
    What we are being told by our inspectors in the field is 
that one, the inspections of a repair facility, an outsource 
facility, are going to be pretty rare, maybe one or two a year, 
maybe a handful where they are able to get there more often. 
And when they go, they are not going to be there for a few days 
to do anything in-depth. They are going to be going for the 
day, which means with travel time, it really cuts down the 
amount of time they can spend at the facility.
    So if they do find something, one, they need to do their 
investigation and gather any materials they need, whatever they 
think they are going to need to follow up with at that time, 
because they are not going to be there tomorrow and they are 
not going to come back next week. And then depending on the 
problem, the appropriate actions will be taken. But it is very 
rare that the inspector will be allowed to go back and actually 
see if the problem has been corrected. It is identified, but it 
is not something that is followed up on by the agency.
    Mr. Costello. The issue of insufficient funding for travel, 
you brought it up in your testimony and Mr. Goglia brought it 
up in his testimony. I wonder if you might touch on that and 
tell us, is that in fact a problem, the lack of sufficient 
travel funding available?
    Mr. Brantley. Yes, absolutely, Mr. Chairman. Again, it is, 
there are times when an inspector is going to a facility that 
they, they actually plan out an inspection ahead of time based 
on why they are going there. It may be that two or three people 
are needed, at a minimum maybe two, a maintenance and an 
avionics inspector and that they are going to need a couple of 
days to do the kind of in-depth review that they feel they need 
to do.
    And more often than not, if they are allowed to go, they 
are told, one of you are going, you are going to go for the 
day. And they are told it is because there is not enough money 
for the travel.
    Mr. Costello. So you are actually told, the inspectors are 
told that, look, you can go, but you can only go for a day 
because we don't have enough travel money?
    Mr. Brantley. Yes, sir. Many times they are told, there is 
not enough money for it.
    Mr. Costello. Does this happen on a regular basis, or is it 
at a particular time of year, at the end of the fiscal year, or 
is it a constant problem?
    Mr. Brantley. No, sir, it is a constant problem. An 
inspector will say they request the funds to go do an 
inspection. It may take a couple of months even before they are 
told no. But it is a continuous problem.
    Mr. Costello. You talked about some of the repair 
facilities, and they may be visited once or twice or a few 
times a year. Are there unannounced visits ever? Do they always 
notify the facility that hey, we are coming next Wednesday, or 
do they ever do unannounced visits?
    Mr. Brantley. Something I would like to touch on that I 
heard from the FAA this morning, several times, that they can 
do unannounced inspections or the regulations allow unannounced 
inspections. That is true. But what I am talking about is what 
they actually do. It is extremely rare for an inspector to do 
an unannounced inspection.
    Quite frankly, if they do, they are more likely than not to 
be punished for it. A customer service initiative can be filled 
out against them, claiming they are disrupting the operation 
showing up unannounced. And that inspector is going to be 
reassigned, they won't be going to that facility any more. So 
they have learned that regardless of what the regulations say, 
this is how you are going to conduct business.
    Mr. Costello. Mr. Goglia, I wonder if you might follow up 
on that question, both the issue of unannounced inspections and 
also the travel, lack of funding for travel, both of those 
issues.
    Mr. Goglia. I will start with the travel. Oftentimes the 
travel budgets are stripped out of some of these FSDOs to fund 
other projects within the agency. Sometimes that can occur very 
early in the fiscal year.
    The unannounced visits, it is very difficult for an 
inspector to just start an unannounced visit. But under the 
CMO, certificate management office process that the FAA has, 
there is much more latitude. There is one little bright spot in 
what is going on in the FAA today, in that Mr. Ballough is 
actually trying the certificate management office process for a 
larger repair station. I happen to believe that the certificate 
management office concept should be at every repair station 
that does nose to tail work. Nose to tail means the airplane is 
in the hangar when they are working on it. Not that you have 
taken an engine off and sent it to a repair facility or any 
component and sent it to a repair facility, because that is a 
different oversight process. I think that we do a pretty decent 
job of that.
    But the nose to tail work is where we see the biggest 
number of problems. It is the most difficult to oversee, and it 
is the one where the FAA really needs to have a presence while 
that work is going on.
    Mr. Costello. Let me follow up with a couple of quick 
questions, then I will go to Mr. Petri and Mr. DeFazio. I 
mentioned in my opening statement that it has been suggested 
that we should standardize the procedures and the manuals in 
order to save time and to bring more efficiency to the process. 
I wonder if you might comment on that.
    Mr. Goglia. That has been a goal of the Air Transport 
Association and many in the industry for a long time. Many of 
the airlines believe that they are unique, that they need their 
own set of procedures to do things. It has been my experience 
when I have visited facilities and look at people accomplishing 
certain tasks that I have accomplished as a mechanic or as an 
inspector myself, that regardless of the paperwork, we tend to 
do them all the same. In other words, the work is accomplished 
the same way, regardless of what the paperwork says. I think we 
can benefit by a real concerted effort to standardize 
procedures.
    Mr. Costello. Mr. Barimo, a quick question. PASS has 
suggested that air carriers should only be allowed to outsource 
their maintenance to certificated repair stations. I wonder if 
you might comment on that.
    Mr. Barimo. I am glad to, Mr. Chairman. I have read the IG 
report that addresses non-certificated repair stations. We have 
gone back to our members and confirmed that ATA members are 
using that type of maintenance service for strictly low level, 
on-call service type of repairs, not scheduled maintenance, not 
critical maintenance, as it has been defined today.
    So let me start by saying, I think we have a misconception 
out there that this is a widespread practice. Having said that, 
air carriers use certificated mechanics for ad hoc work. It is 
at locations where an airplane might break and they need to 
just move the airplane to the next station, and we are talking 
about maybe deactivating a system, checking fluid levels, 
something very straightforward.
    I am not familiar with any of our members out there 
changing engines or replacing critical flight controls using 
this type of low-level maintenance service.
    Mr. Costello. The Chair recognizes the Ranking Member, Mr. 
Petri.
    Mr. Petri. Thank you very much.
    I apologize for missing the underlying testimony. So maybe 
the questions have been asked already, but I have a couple of 
questions. I don't know if you are exactly the people to ask 
them of.
    Mr. Campbell, I am kind of interested in the issue of 
safety and maintenance of planes and Government inspection, I 
guess, as the subject of this hearing. American Airlines 
clearly insures its planes, people who will lose money if they 
crash have some interest in the safety of the operations and 
the maintenance of the operations. Are you at all familiar with 
that?
    Mr. Campbell. No, sir, I am not.
    Mr. Petri. Okay. Well, because it seems to me that there is 
a whole, huge, regulatory private system out there, there has 
to be. They are not going to insure a plane unless they are 
pretty confident everything is being done to make sure it is 
operated as safely as possible. That airline gets a lower rate 
if they do that, and they are going to pay a high rate or not 
get insurance if they don't.
    Yes, sir?
    Mr. Goglia. Mr. Petri, while I was at the NTSB, and after 
the ValuJet accident in 1996, I had the opportunity to see the 
precursor to ATOS, which was a work that was done out of 
Rutgers University and TSI was a contractor at Volpe in 
Massachusetts, where I live. So I was interested in that 
process. And they actually had ten areas which they could 
identify risk in any airline. Those indicators showed at that 
point in time that ValuJet was a ten times greater risk than 
U.S. Air.
    So I found that to be more than fascinating. And I pursued 
that line of thought that you just had with the insurers, 
starting with USAIG and AAAU in New York, and quickly found out 
that it had to go to a higher level, which meant Lloyds in the 
secondary market. Over about a two year period of time, I made 
repeated visits to London, to Lloyds, pitching this program at 
the very highest levels of the underwriting. And the bottom 
line to all of that is that they would accept the certification 
of the FAA as the standard, if you had a certificate, that is 
all they looked for.
    One of the things that I found really painful was the fact 
that their own attorneys said that if they were to stick their 
nose in and require their assureds to collect this information 
and report it to the CEO, was what I was asking, because he has 
the fiduciary responsibility for the corporation, that they 
would then become involved in the lawsuits. So it was just a 
total hands-off from the insurers. As long as they held a 
certificate from the FAA, that is as far as they wanted to go.
    Mr. Petri. You are not aware, then, of any insurance 
industry councils or studies or, you would think there would be 
some feedback, they would at least want some input on what 
those standards are. And they insure, of course, fleets all 
over the world. You would think there would be a competitive 
advantage for one of these insurers as opposed to another to 
select the safer flights. They must have some way of doing 
that, or maybe they just decide they will take that risk 
without--it doesn't make sense to me.
    Mr. Goglia. It didn't make sense. And they do have some 
internal looks that they do, but nowhere near the depth that we 
are talking about here today.
    I will share with you one other thing that was said to me 
during those meetings. It was after the hurricane hit 
Homestead, Florida and we had all that devastation. One of the 
people that was present, in a rather small group of that 
insurance group, I am talking about senior management, one of 
them had taken a considerable hit with payments in Florida. He 
had low-balled his bid to a U.S. operator for the insurance. A 
U.S. operator that I knew, that I worked for, and I don't hold 
in high regard. He told me face to face that he was rolling the 
dice because he could use the premium money.
    So that is a whole different set of drivers in that 
business that doesn't make sense to you and me to go off and 
buy insurance in this rate shots and this risk and all of that. 
It doesn't equate in this business.
    Mr. Petri. Mr. Valeika?
    Mr. Valeika. In my role both at Delta as a senior VP and 
Continental and Pan Am, all three where I was in charge of 
maintenance, we did have meetings, the insurance people would 
meet with me. I would, I don't want to say certify, but they 
certainly would verify some of the data where the maintenance 
was done, things of that nature. We did have those meetings. It 
was part of a standard operating procedure. I can only speak 
for those airlines because that is where I was involved in it.
    But I personally, as the head of the maintenance division, 
met with the insurers, usually on an annual, maybe a semi-
annual basis. And the questions would be asked, where are your 
airplanes maintained, what kind of problems you have had, just 
a general kind of discussion. But that did happen on a routine 
basis.
    Mr. Costello. The Chair thanks the gentleman and recognizes 
the gentleman from Oregon, Mr. DeFazio.
    Mr. DeFazio. I thank the Chair.
    So Mr. Barimo, then is it the ATA's position that it would 
be acceptable for the FAA and/or Congress to restrict non-
certificated facilities from doing what I earlier described as 
critical maintenance?
    Mr. Barimo. Sir, I would argue that based on the feedback 
that I have received to date, that is already happening. The 
restriction is there.
    Mr. DeFazio. Well, it is not happening on the part of the 
FAA, clearly. To them it is like, as long as there is an A&P 
mechanic there, it is okay, it doesn't matter. And even when I 
cited an instance where people died, it is still okay, that met 
all the rules. I am just trying to nail you down here. We do 
have testimony here from Mr. Brantley saying that there are 21 
domestic and foreign non-certified facilities that perform 
maintenance critical to the airworthiness of the aircraft. And 
we just worry about the slippery slope down here. So anyway, it 
seems like yes, you would support that.
    Mr. Barimo. Really, from our standpoint, we talk about 
insurance providers. We are talking about FAA oversight. The 
carriers take their safety responsibilities very seriously.
    Mr. DeFazio. I understand that. But there is always a bad 
apple in the barrel, often there is. I remember when Mr. 
Lorenzo kept trying to drag the industry down. We have to worry 
about those sorts of things.
    So Mr. Goglia, I am disturbed about the manuals, which as I 
understand it are called the Instructions for Continued 
Airworthiness. It sounds pretty important to me, sometimes 
called maintenance manuals. You are saying they are neither 
validated, verified nor validated, meaning they contain 
procedures that won't work, don't work or won't ensure the 
continued airworthiness of the aircraft, is that correct?
    Mr. Goglia. That is correct, they are not 100 percent 
verified or validated, unlike the flight manuals.
    Mr. DeFazio. Okay. I guess I can think back to that Chicago 
crash, DC-10, where the engine dropped off. That would have 
been perhaps a problem in the manual?
    Mr. Goglia. It was an attempt to circumvent the manual 
proceedings.
    Mr. DeFazio. So in that case the manual was correct and the 
maintenance was incorrect?
    Mr. Goglia. Right.
    Mr. DeFazio. Okay. But we do require that the flight 
operation manual that the pilots have up there to refer to 
does, is verified and validated?
    Mr. Goglia. Yes. In fact, the pilots cannot use a procedure 
unless has been vetted.
    Mr. DeFazio. So what would be the bar to getting better 
manuals?
    Mr. Goglia. All it is is a process, sir. When you build an 
airplane, you have to fly it for about a year, the 
manufacturer. It is a nice new airplane, nothing much breaks. 
When something does break, when they have occasion to change an 
engine, a wheel, a brake, anything, at that point they will 
verify those procedures.
    But because it is new, they don't get to do a lot of that. 
What happens is after it is in service with an airline, now the 
procedures that have been written by some person within their 
organization get to be done by the average person on the line, 
the average maintenance person. At that point, we find the 
problems.
    Mr. DeFazio. The jack screw on the DC-9 issue, that one?
    Mr. Goglia. I was afraid of that. That was the most painful 
accident I have ever worked. From a maintainer's point of view, 
to kill 88 people because we couldn't grease--excuse me.
    Mr. Filler. Mr. DeFazio?
    Mr. DeFazio. Yes.
    Mr. Filler. If I could just add to what Mr. Goglia said, 
with respect to the certification process and the development 
of ICAs, all focusing on the ICAs at least at the airplane 
level or aircraft level, they are all based on so-called 
approved technical data, which is data that has been shown to 
comply with the airworthiness standards. So if it is a large 
airplane, Part 25.
    In addition to that, when the maintenance manuals are 
created, there is a unit of the FAA called the aircraft 
valuation group that specializes in the review of ICAs. Now, do 
they go out and actually try every repair that is listed in the 
airplane maintenance manual? No, they don't. But they do review 
it, and they are reviewed by people who are knowledgeable about 
maintenance procedures. It is one of those things that we just 
have not achieved perfection yet.
    Mr. DeFazio. Well, but I mean, if you make a plane, you 
think, okay, I am making this plane, it will take a year to 
certify, I will take one of them over here, I will take the 
engines off an align, I will take this part out, I will do 
that, and I will verify what I am telling people they should do 
to remove those parts and maintain them.
    Apparently that is not being regularly done. Mr. Goglia had 
an example of Airbus and Jet Blue and the fact that they were 
having problems with engine changes. They were following the 
manual, it just didn't work. Then apparently, finally, Airbus, 
after many people complained, finally sent a team over, and 
they said, oh, yes, you are right, it doesn't work, we will 
rewrite the manual.
    Mr. Filler. In some cases, you are absolutely right, sir, 
that does exist. These manuals are----
    Mr. DeFazio. I would think that would be part of the 
certification process, you made it, you take it apart, put it 
back together and you verify what you put down here as 
directions. That does not seem unreasonable to me. I was a bike 
mechanic, not a plane mechanic. But the manuals pretty well 
worked for me. Someone had vetted that stuff.
    Mr. Filler. Repair development engineers do engage in that 
practice. But if the question is, does the FAA review all these 
repairs to make sure that they actually work, the answer to 
that is just no. There are just too many of them, sir.
    Mr. DeFazio. Okay.
    Mr. Goglia. But you know, they all have to review them 
beforehand. Maintenance is a process. Don't lose sight of the 
fact that everything we do has order in it. If you have a list 
of, let's say the list is 500 items long, they are in the 
maintenance manual, procedures in the maintenance manual, you 
simply can ask the airlines, as a manufacturer, the first time 
you accomplish any one of the items on this list, to report 
back to us that it worked or didn't work, and improvements.
    Mr. DeFazio. Sort of like we do with doctors and drugs.
    Mr. Brantley, I was just really disturbed, we had 
allegations and Mr. Goglia I think was sort of making fun, but 
is it accurate to say we are really constraining our actual 
physical inspections because there aren't enough people, there 
is huge concern about overtime and there is not an adequate 
travel budget? You talked about people just trying to go from 
one State to another, let alone a foreign country.
    Mr. Brantley. Yes, sir, that is absolutely accurate. It is 
a shame, because it doesn't need to be that way. Again, if the 
agency were truly looking at the work that needed to be done, 
the resources needed to do it, and where people needed to be to 
apply those skills, much of that could be avoided. They would 
be asking for the money they need rather than asking for the 
money they are willing to ask for. Those are two very different 
numbers, as you well know.
    Mr. DeFazio. It has been a frustration, and I am just 
summarizing here, Mr. Chairman. My entire time in Congress I 
keep having regulators come before me and I say, look, I know 
you are being threatened by your political bosses, but just 
tell us what we need, not what they will let you ask for over 
at OMB. I am very sorry to hear that in this critical area of 
inspections and safety, that that prevails. I hope we can pry 
an honest number out of FAA on what they need and we can 
authorize it in the upcoming bill. I would love to have 
contributions from your folks on what they think we need.
    Mr. Brantley. Thank you, sir.
    Mr. DeFazio. Thank you, Mr. Chairman.
    Mr. Costello. The Chair thanks the gentleman from Oregon.
    We thank all of our witnesses today for your testimony. It 
has been very interesting. As we go through the reauthorization 
process, we certainly will take into consideration what we have 
learned here today.
    With that, the Subcommittee stands adjourned.
    [Whereupon, at 1:33 p.m., the Subcommittee was adjourned.]
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