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



 
    THE PRESIDENT'S FISCAL YEAR 2009 FEDERAL AVIATION ADMINISTRATION 
                                 BUDGET

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

                                (110-94)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                                AVIATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                            FEBRUARY 7, 2008

                               __________


                       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
Vice Chair                           DON YOUNG, Alaska
PETER A. DeFAZIO, Oregon             THOMAS E. PETRI, Wisconsin
JERRY F. COSTELLO, Illinois          HOWARD COBLE, North Carolina
ELEANOR HOLMES NORTON, District of   JOHN J. DUNCAN, Jr., Tennessee
Columbia                             WAYNE T. GILCHREST, Maryland
JERROLD NADLER, New York             VERNON J. EHLERS, Michigan
CORRINE BROWN, Florida               STEVEN C. LaTOURETTE, Ohio
BOB FILNER, California               FRANK A. LoBIONDO, New Jersey
EDDIE BERNICE JOHNSON, Texas         JERRY MORAN, Kansas
GENE TAYLOR, Mississippi             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
TIMOTHY H. BISHOP, New York          JOHN BOOZMAN, Arkansas
MICHAEL H. MICHAUD, Maine            SHELLEY MOORE CAPITO, West 
BRIAN HIGGINS, New York              Virginia
RUSS CARNAHAN, Missouri              JIM GERLACH, Pennsylvania
JOHN T. SALAZAR, Colorado            MARIO DIAZ-BALART, Florida
GRACE F. NAPOLITANO, California      CHARLES W. DENT, Pennsylvania
DANIEL LIPINSKI, Illinois            TED POE, Texas
DORIS O. MATSUI, California          DAVID G. REICHERT, Washington
NICK LAMPSON, Texas                  CONNIE MACK, Florida
ZACHARY T. SPACE, Ohio               JOHN R. `RANDY' KUHL, Jr., New 
MAZIE K. HIRONO, Hawaii              York
BRUCE L. BRALEY, Iowa                LYNN A WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania          CHARLES W. BOUSTANY, Jr., 
TIMOTHY J. WALZ, Minnesota           Louisiana
HEATH SHULER, North Carolina         JEAN SCHMIDT, Ohio
MICHAEL A. ACURI, New York           CANDICE S. MILLER, Michigan
HARRY E. MITCHELL, Arizona           THELMA D. DRAKE, Virginia
CHRISTOPHER P. CARNEY, Pennsylvania  MARY FALLIN, Oklahoma
JOHN J. HALL, New York               VERN BUCHANAN, Florida
STEVE KAGEN, Wisconsin               VACANCY
STEVE COHEN, Tennessee
JERRY McNERNEY, California
LAURA A. RICHARDSON, California
VACANCY

                                  (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, Vice Chair   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 
ELLEN O. TAUSCHER, California        York
TIM HOLDEN, Pennsylvania             LYNN A WESTMORELAND, Georgia
MICHAEL E. CAPUANO, Massachusetts    MARY FALLIN, Oklahoma
DORIS O. MATSUI, California          VERN BUCHANAN, Florida
MAZIE K. HIRONO, Hawaii              JOHN L. MICA, Florida
LAURA A. RICHARDSON, California        (Ex Officio)
JAMES L. OBERSTAR, Minnesota
  (Ex Officio)

                                 (iii)

                                CONTENTS

                                                                   Page

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

                               TESTIMONY

Dillingham, Gerald, Director, Physical Infrastructure Issues, 
  U.S. Government Accountability Office..........................     7
Punwani, Ramesh K., Assistant Administrator for Financial 
  Services, Chief Financial Officer, Federal Aviation 
  Administration, accompanied by Gene Juba, Senior Vice President 
  for Finance, Air Traffic Organization, Federal Aviation 
  Administration.................................................     7
Scovel, III, Hon. Calvin L., Inspector General, U.S. Department 
  of Transportation..............................................     7

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Carnahan, Hon. Russ, of Missouri.................................    32
Costello, Hon. Jerry F., of Illinois.............................    33
Mitchell, Hon. Harry E., of Arizona..............................    45
Oberstar, Hon. James L., of Minnesota............................    52
Richardson, Hon. Laura A., of California.........................    58
Salazar, Hon. John T., of Colorado...............................    60

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Dillingham, Gerald L.............................................    62
Punwani, Ramesh K................................................    95
Scovel, III, Hon. Calvin L.......................................   110

                       SUBMISSIONS FOR THE RECORD

Federal Aviation Administration:

  Response to request from Rep. Costello.........................    13
  Response to request from Rep. Costello.........................    16
  Response to request from Rep. Duncan...........................    20
  Response to request from Rep. Hall.............................    27
  Responses to requests from Rep. Richardson.....................    30
  Responses to questions directed toward the Honorable Robert 
    Sturgell, Acting Administrator, from Rep. Mica...............   141
  Consolidated listing of FAA facilities requiring repairs.......   144
  Mold remediation projects......................................   176

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     HEARING ON THE PRESIDENT'S FISCAL YEAR 2009 FEDERAL AVIATION 
                         ADMINISTRATION BUDGET

                              ----------                              


                       Thursday, February 7, 2008

                   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 would ask all Members, staff, and everyone to turn their 
electronic devices off or on vibrate.
    The Subcommittee is meeting today to hear testimony on the 
President's fiscal year 2009 FAA budget. The Chair will give an 
opening statement, recognize the Ranking Member for his opening 
statement or comments, and then we will get to our witnesses.
    The Chair would note that Mr. Petri, the Ranking Member of 
the Subcommittee, was snowed in and, unfortunately, can't be 
here today, but we are fortunate to have, in his place as the 
Ranking Member today, the former Chair of this Subcommittee, 
Mr. Duncan from Tennessee, and after my opening statement I 
will recognize him for his comments.
    I welcome all of our witnesses here today. This 
Subcommittee is, of course, having our first Subcommittee 
hearing of this year on the President's fiscal year 2009 FAA 
budget. I am pleased to welcome the Chief Financial Officer for 
the FAA, Ramesh Punwani, who is accompanied by Gene Juba, the 
Senior Vice President for Finance of the FAA's Air Traffic 
Organization; the Department of Transportation's Inspector 
General, Mr. Scovel; and Dr. Gerald Dillingham of the 
Government Accountability Office.
    The Administration's fiscal year 2009 budget again proposes 
to transform the FAA's current excise tax financing system to a 
user fee system. Under the fiscal year 2009 budget request, as 
detailed in the FAA's reauthorization proposal submitted last 
year, the FAA's financing sources would shift from a mix of 
fuel taxes, other excise taxes, and a general fund contribution 
to user fees, fuel taxes, and a general fund contribution. This 
proposal would take effect in 2010.
    Last year, however, this Subcommittee, the Full Committee, 
and the House soundly rejected the Administration's user fee 
proposal during consideration of H.R. 2881, the FAA 
Reauthorization Act of 2007, which passed the House of 
Representatives on September 20th, 2007. We, of course, are 
still awaiting the Senate to act on the reauthorization 
proposal.
    As everyone knows, this past year we experienced record 
delays. It is very difficult for me to understand why the 
Administration wants to cut the FAA's total funding request by 
1.8 percent at the same time it predicts that by 2014, without 
any change to the current air traffic system, delays will be 62 
percent higher than today. The Administration's fiscal year 
2009 FAA budget request is simply inadequate to meet the 
growing demand in air travel and to keep pace with 
infrastructure needs of our aviation system.
    Let's begin with looking at the F&E account, facilities and 
equipment, capital programs. In 2003, the FAA requested and 
received from the Congress an authorization of approximately $3 
billion per year for its capital program. Yet, through fiscal 
year 2005, 2006, 2007, and 2008, the Administration requested 
roughly $2.5 billion per year for its capital program. For 
fiscal year 2009, the Administration is requesting an 8.4 
percent increase in the F&E account over the fiscal year 2008 
enacted level.
    While I am pleased to see the Administration has asked for 
increased funding, I do not believe that it is enough to 
modernize the current air traffic control system. Moreover, the 
Administration's fiscal year 2009 capital spending request 
appears to be at odds with its own preliminary Next Generation 
transportation system F&E cost estimate of $3.246 billion, 
which is also the funding level authorized in H.R. 2881.
    While it is important that funding is provided to make 
NextGen happen, NextGen is not just about financing. I am 
concerned with reports the FAA has yet to set near-term 
expectations for the NextGen system and establish funding 
priorities. We have learned from the past that the NextGen 
system must evolve incrementally through sound contract 
management by the FAA coupled with aggressive oversight by the 
Congress. To move forward with NextGen, the FAA must provide a 
clear road map detailing both short-and long-term goals and 
investment priorities. Moreover, the Administration must 
develop a plan on long-term NextGen costs.
    Last year, the Department of Transportation Inspector 
General reported that there are still unknowns regarding 
NextGen costs which will depend on, among other things, 
performance requirements for new automation, weather 
initiatives, and the extent to which the FAA intends to 
consolidate facilities.
    I am also concerned about the condition of our air traffic 
control facilities. In our hearing last year regarding ATC 
facility conditions, the Subcommittee found that the facilities 
were poorly maintained and had unsafe working conditions, 
jeopardizing the health of its employees. I have asked the FAA 
for a list of facilities that it will remediate in fiscal year 
2008, as well as under the fiscal year 2009 budget, and FAA has 
not yet given the list to the Subcommittee. I expect the FAA to 
provide this information to the Subcommittee within seven days 
from today. The facilities that will be remediated in fiscal 
year 2008, as well as under the fiscal year 2009 budget, this 
Subcommittee wants a list of those facilities within seven days 
from the agency.
    I have said before that we can't put the cart before the 
horse when it comes to modernization. While the FAA continues 
to lay the groundwork for modernization, it must also make 
certain that the current system can continue to operate in a 
safe, reliable way to properly invest in maintaining and 
upkeeping the existing structure. The FAA must also provide 
safe and healthy working conditions for its employees.
    In the AIP program, the Airport Improvement Program, the 
fiscal year 2009 budget request provides $2.75 billion for the 
Airport Improvement Program, $1.15 billion less than the level 
authorized under H.R. 2881 and $765 million less than the 
fiscal year 2008 enacted level.
    Increasing investment in aviation infrastructure is 
necessary to enhance capacity and reduce delays, and one way of 
achieving that goal is through the new runway and runway 
extensions in this Country. The AIP levels set forth in the 
Administration's fiscal year 2009 proposal will not provide the 
investment needed to reduce congestion and delays. Under the 
current formula for distributing AIP entitlement funding, 
virtually every airport that currently receives AIP entitlement 
funding will have its entitlement reduced.
    Let me repeat that. Under the current formula for 
distributing AIP funding, virtually every airport in the 
Country that currently receives AIP entitlement funding will 
have its entitlement reduced.
    Additionally, small airports may be particularly hard hit 
by the Administration's proposed AIP cut because AIP grants are 
a larger source of funding for smaller airports.
    Staffing. I am concerned about future staffing levels for 
the FAA's controller and safety inspector workforces. In 
particular, the FAA estimates that, by 2016, approximately 60 
percent of the FAA's roughly 15,000 air traffic controllers 
will be eligible for retirement. The FAA plans to hire 
approximately 16,000 controllers over the next 10 years to have 
enough recruits in the pipeline to backfill the positions lost 
and to accommodate the increase in air traffic.
    The Inspector General will testify today that since 2005, 
3,300 controllers have left the agency and that the total rate 
of attrition was 23 percent higher than the FAA had projected. 
I will repeat that again. The rate of attrition is 23 percent 
higher than the FAA projected. If anyone doubts that we have a 
problem in the system, all they have to do is to take a look at 
the current staffing level and the projections that the FAA had 
made in the past.
    The National Air Traffic Controllers Association states 
that three veteran controllers have retired per day since the 
end of fiscal year 2007. The acceleration of retirement is no 
doubt directly attributable to the imposition of the FAA work 
rules on its controller workforce. We are more than a bit 
strained in our system. We are headed toward a crisis if the 
FAA does not acknowledge that it has a serious controller 
staffing problem. Hiring new controllers is a complex process, 
and there is a significant difference between a trainee and a 
certified controller.
    Replacing a controller who retires must begin several years 
in advance, and I am concerned that the FAA does not have an 
effective program to ensure both efficiency and quality of the 
trainee. Moreover, I have concerns about reports that some ATC 
facilities have more controllers in training than they can 
realistically handle. I think we will hear about that today 
from both the IG and the GAO as well.
    The FAA extension. Finally, this Subcommittee is well aware 
that the FAA is potentially facing significant fiscal year 2008 
budget problems due to the lapse in funding for the AIP 
program, and the upcoming expiration of both the aviation 
excise taxes and the authority to make expenditures from the 
aviation trust fund. The House acted on three separate 
occasions to extend the FAA's authorities, including passage of 
H.R. 2881, the four-year FAA reauthorization legislation. We 
are working with the Ways and Means Committee in the House to 
develop legislation that extends not only the aviation taxes 
and expenditure authority, but also AIP contract authority. We 
will work with the Senate to pass this extension as soon as 
possible.
    We must make the investments in our aviation infrastructure 
and workforce now so that they can maintain the highest level 
of safety and efficiency in our aviation system.
    With that, I will recognize, again, the Ranking Member who 
is sitting in for Mr. Petri today, but before I recognize Mr. 
Duncan, 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.
    The Chair now recognizes the Ranking Member from Tennessee, 
Mr. Duncan.
    Mr. Duncan. Well, thank you very much, Mr. Chairman. I 
thought you would make a great Chairman of this Subcommittee 
and you certainly have, and I am privileged to sit in on behalf 
of Mr. Petri and make a few remarks both on his behalf and 
mine.
    The fiscal year 2009 FAA budget request is a stark reminder 
of the need to get the FAA reauthorization bill signed into 
law. I anticipate that the witnesses will share with the 
Subcommittee the ramifications of further delay in passing the 
FAA reauthorization bill and the impact of repeated short-term 
extensions of the FAA's authorities. I would encourage all 
Members to pay particular attention to the concerns raised in 
this regard and keep in mind that the House passed its 
reauthorization bill back on September 20th of last year.
    We will also explore the issues raised by the President's 
budget request for fiscal 2009. Despite the fact that both the 
House of Representatives and most of the aviation community did 
not accept it, the proposal assumes a shift in the FAA's 
revenue sources from the current assortment of excise taxes to 
a combination of general aviation fuel taxes and cost-based 
user fees for commercial users. While it seems to be a foregone 
conclusion that the FAA's proposal will not be adopted at the 
end of the day, I admire the agency's commitment to their 
cause.
    Like last year, I am particularly interested in how the FAA 
budget proposal addresses the much needed modernization of our 
national air space system. As we all know, air traffic control 
modernization will be a critical importance over the next 10 to 
20 years, as demand on the system is projected and certainly 
will grow dramatically. The budget request includes $631 
million for the transformation to NextGen. However, for 
modernization to be successful, development and deployment of 
cutting-edge technologies and performance standards must not be 
delayed. Congress must be assured that NextGen planning and 
investment decisions are being coordinated.
    Additionally, the Federal Government must work closely with 
aviation stakeholders, including industry and labor, to ensure 
that new technologies and operational changes are thoroughly 
vetted and that critical investment decisions are fully 
addressed and supported. This is a difficult thing for this 
Subcommittee, particularly with some of these very expensive, 
high-tech projects, and in that regard, so that we won't be 
embarrassed by huge cost overruns and not do our duty to the 
taxpayers, we need much help in this regard from the witnesses 
who are here today, System Administrator Punwani and especially 
Inspector General Scovel and Director Gerald Dillingham, on 
whom we have relied so much in the past.
    I am interested in hearing what specific modernization 
initiatives the Administration proposes for fiscal years 2009 
through 2015, as well as beyond. To keep pace with the rising 
demand, the FAA must also continue to support airport capacity 
capital projects with the continuation of a robust air 
improvement program. The President's budget requests $2.75 
billion for AIP.
    This request is some $765 million less than was enacted for 
fiscal year 2008 and almost $400 million less than what was 
authorized for fiscal year 2008 in our House-passed 
reauthorization bill. I am concerned about the impact that 
reduced funding would have on our airports' ability to keep up 
with capital project needs, particularly at small and medium 
sized airports, as the Chairman has mentioned, that are unable 
to rely on sizable passenger facility charge receipts to 
complete the needed projects.
    In the aviation industry, safety and efficiency is not only 
achieved by technology and funding, but also by the dedicated 
and highly trained employees of the FAA. As we move forward 
with the budget, we must be sure to provide adequate funding 
for recruiting, hiring, and training FAA's future safety 
professionals and air traffic controllers, and the Chairman, 
once again, went into this. Ensuring the right investment now 
is essential to maintaining the FAA's critical safety mission 
and impressive safety record.
    I want to thank all of the witnesses for joining us here 
today, and I look forward to hearing your testimony, and I 
yield back the balance of my time.
    Mr. Costello. The Chair thanks the Ranking Member and 
recognizes the gentleman from Colorado, Mr. Salazar.
    Mr. Salazar. I want to thank you, Mr. Chairman, for having 
this very, very important hearing. Today, I want to say that I 
associate myself with your remarks and the Ranking Member's 
remarks, and I am very concerned about the dramatic $765 
million cut to the Airport Improvement Program. I find that 
very, very troubling. Despite the increasing delays and 
congestion, you want to take funding out of these current 
infrastructure projects that many of them are underway right 
now, and we all know that for every billion dollars that we 
spend on our transportation and infrastructure projects in this 
Country, it creates 47,000 jobs. At this time, while we are 
having to deal with an economic stimulus package, this is one 
way to make sure that we keep America's workforce in play.
    The regional and smaller rural airports in Colorado 
actually provide the communities with the ability to enhance 
economic development, something that we could use quite a bit 
of these days. The FAA states that the cuts in the AIP program 
will be offset with the funding outlined in the FAA 
reauthorization bill. Well, I know that I have a brother in the 
upper house, but he is also very frustrated in how the Senate 
moves, and there is no telling when they will reach an 
agreement and bring that to the floor.
    We, as a Committee, have determined that the appropriate 
level of AIP funding to meet the needs of this entire airport 
system is $3.8 billion. I think that any proposal short of that 
will be met with opposition from me and hopefully others in 
this Committee. I know that the Colorado Department of 
Transportation does not support this level of funding. The 
communities who own and operate these airports do not support 
this level of funding. I do not support this level of funding. 
So I would like to hear today your justification for these 
cuts.
    And with that, Mr. Chairman, I yield back.
    Mr. Costello. The Chair thanks the gentleman.
    Do any other Members wish to be recognized for an opening 
statement or comments? Mr. Lampson from Texas.
    Mr. Lampson. Thank you, Mr. Chairman. Just a quick 
statement. First, thank you for holding the hearing. I am 
anxious to hear what the witnesses have to bring to us.
    It is troubling indeed to consider having to face the 
problems that we are facing in some of our areas. Houston, 
Texas, as an example, with the congestion that Houston 
Intercontinental Airport and Hobby Airport and that whole 
system faces down there right now, when the area is expected to 
have, within the next 15 to 25 years, an additional 3.5 million 
people, we are going to shut ourselves down. So this is 
extremely shortsighted. I look forward to finding solutions to 
it and working with this Committee to do so.
    Thank you, Mr. Chairman. I yield back.
    Mr. Costello. The Chair thanks the gentleman and at this 
time will recognize our witnesses. First, as I said earlier, I 
am pleased to recognize Mr. Ramesh Punwani, who is the Chief 
Financial Officer for the Federal Aviation Administration. He 
is accompanied by--but I understand will not be presenting 
testimony, but will be here to answer questions--Mr. Gene Juba, 
who is the Senior Vice President for Finance at the FAA's Air 
Traffic Control Organization. Also, we will hear testimony from 
the Honorable Calvin Scovel, III, who is the Inspector General 
for the Department of Transportation, and Dr. Gerald 
Dillingham, who, of course, has testified here many times, with 
the GAO.
    At this time, the Chair, under the five minute rule, would 
recognize Mr. Punwani.

  TESTIMONY OF RAMESH K. PUNWANI, ASSISTANT ADMINISTRATOR FOR 
 FINANCIAL SERVICES, CHIEF FINANCIAL OFFICER, FEDERAL AVIATION 
ADMINISTRATION, ACCOMPANIED BY GENE JUBA, SENIOR VICE PRESIDENT 
    FOR FINANCE, AIR TRAFFIC ORGANIZATION, FEDERAL AVIATION 
ADMINISTRATION; THE HONORABLE CALVIN L. SCOVEL, III, INSPECTOR 
GENERAL, U.S. DEPARTMENT OF TRANSPORTATION; GERALD DILLINGHAM, 
   DIRECTOR, PHYSICAL INFRASTRUCTURE ISSUES, U.S. GOVERNMENT 
                     ACCOUNTABILITY OFFICE

    Mr. Punwani. Good morning, Chairman Costello, Congressman 
Duncan, and Members of this Subcommittee. It is a pleasure to 
appear before you this morning to provide an overview of the 
President's budget request for the FAA for fiscal year 2009. 
With me today is my colleague, Gene Juba, Senior Vice President 
of Finance in our Air Traffic Organization.
    I would like to use my time to first briefly address some 
budget concerns for the current fiscal year and then provide a 
few highlights of our 2009 budget request. We need Congress's 
immediate attention to an upcoming lapse in authorities that 
could significantly disrupt our normal day-to-day operations.
    First, the Consolidated Appropriations Act for this year 
permits us to make expenditures from the Airport and Airways 
Trust Fund only until the end of this month. Second, the 
authority to collect aviation-related excise taxes also expires 
on February the 29th. Third, the contract authority for the 
Airport Grants Program expired on December the 31st of last 
year, and for all practical purposes the Airport Grant Program 
is shut down.
    The consequences for FAA are that no new obligations can be 
made out of any capital account after February the 29th. This 
covers airport grants, F&E, and the RE&D accounts, including 
employees' salaries. Without action, 4,000 employees will be 
sent home and the remaining 43,000 operational staff would 
follow when the General Fund is fully obligated, by about mid-
June.
    Mr. Chairman, it is in the best interest of aviation safety 
and efficiency for these lapses to not take place, and the 
consequent disruption to our programs and personnel need to be 
avoided. We appreciate the efforts of this Committee to correct 
this problem as soon as possible.
    Turning now to the next fiscal year. Our 2009 budget 
request of $14.6 billion provides funding to support all the 
critical priorities of the FAA. As always, safety is our 
primary concern. As you know, we are fortunate to be living in 
the safest period in aviation history, and the FAA remains 
committed to making it safer still. This remarkable record is 
due to the combined efforts of the Administration, the aviation 
community, and, as always, the support of Congress.
    Sixty-seven percent of our budget request is dedicated to 
our safety mission. This includes meeting our NextGen 
transformation milestones, as well as hiring goals for our air 
traffic controller and safety workforces. The budget will allow 
us to hire and train safety personnel to enhance FAA's 
oversight, surveillance, and certification activities.
    With regard to controller staffing, FAA is aggressively 
hiring and training controllers to ensure the right number of 
controllers are in the right place at the right time. Our 
budget includes funding to provide a net increase of 306 new 
controllers, a level consistent with the targets being 
developed in our updated staffing plan. We are staying ahead of 
the attrition curve.
    As we look into the future, we see an aviation system that 
will need to grow to accommodate the demands of our 
stakeholders and the flying public. Our 2009 budget triples the 
investment in NextGen technology, proposing $688 million for 
the transformation from radar-based to satellite-based air 
traffic systems. That is $500 million more in investment than 
in 2008. We will also invest $3.7 billion in operating and 
capital funds to improve system capacity and address congestion 
and delays.
    With regard to AIP, which is a major concern, I realize, 
for the Subcommittee, with our proposed programmatic changes, 
including the proposed increase in the maximum PFC allowed, the 
$2.75 billion proposed in our budget will be sufficient to fund 
capital needs and meet the safety capacity and noise abatement 
objectives we have identified. As CFO, I am particularly proud, 
over the last five years, to say that we have improved our 
financial management performance in ways that enable us to 
better use the funding that Congress provides.
    We are continuing to make every effort to control our 
operating costs. We have improved the discipline with which 
agency programs and contracts are first approved; we have 
improved the tracking and monitoring of our programs; and, most 
important of all, we have reduced our overhead costs so that 
more of the taxpayer dollars are spent on a safe, efficient, 
and accessible aviation system.
    In conclusion, Mr. Chairman, with Congress' help, we can 
avoid disruption to our programs this fiscal year with an 
extension of critical authorities and taxes. Time is of the 
essence. We stand ready to work with this Committee and others 
in Congress to enact a full-fledged reauthorization bill that 
is consistent with the key goals of the Administration and will 
enable us to move to the NextGen transportation system.
    That concludes my testimony, and my colleague and I would 
be happy to answer any questions that you and Members of the 
Subcommittee may have.
    Mr. Costello. Thank you, Mr. Punwani. Let me say, before we 
recognize Mr. Scovel, that the Administration's statement or 
position that the AIP program, as you are proposing, the level 
of funding, coupled with the PFC that you believe will be 
adequate funding, I doubt that there is an airport operator or 
airport executive in the Country that would agree with that. 
But we will get into that in just a few minutes.
    The Chair now recognizes Mr. Scovel.
    Mr. Scovel. Good morning, Mr. Chairman, Ranking Member 
Duncan, Members of the Subcommittee. We appreciate the 
opportunity to testify today regarding FAA's $14.6 billion 
fiscal year 2009 budget request.
    As this Subcommittee is well aware, meeting the current and 
forecasted demand for air travel is an important issue facing 
the Nation. The airlines transported over 700 million 
passengers in 2007, and this number is expected to grow to over 
1 billion by 2015. Escalating numbers of severe flight 
disruptions and delays are all signs of an increasingly 
strained system.
    Mr. Chairman, several key issues demand FAA's attention. 
First, keeping existing modernization projects on track and 
setting realistic expectations for NextGen. FAA's capital 
account is now being shaped by NextGen, an enormously complex 
effort that will cost tens of billions of dollars. We are not 
seeing the massive cost growth and schedule slips of the past.
    It will be important to keep existing efforts on track 
because 30 projects will serve as platforms for NextGen. 
However, several programs do require attention, including a key 
technology to improve runway safety called ASDE-X. Thus far, 11 
of 35 systems have been deployed for operational use. However, 
we are concerned about FAA's ability to complete ASDE-X 
deployment with all planned capabilities at the more complex 
airports with less than half of the planned funds available.
    FAA is exploring ways to accelerate NextGen; however, it 
remains uncertain how much NextGen will cost or what can be 
delivered in terms of capacity and delay reduction. Therefore, 
we think a number of actions are needed. First, FAA must 
conduct a gap analysis of the current NAS and NextGen. FAA's 
NextGen plans for the 2025 timeframe remain at a high level and 
do not detail how FAA will complete the transition to NextGen. 
Until this gap is understood, it will be difficult to set 
requirements and reliable cost estimates.
    Second, FAA must establish NextGen funding priorities. At 
this point, it is difficult for decision makers to determine 
what to invest in first or what can be accelerated. FAA needs 
to identify the highest priority improvements and reflect them 
in budget requests.
    In addition, FAA must develop an interim architecture for 
what can be accomplished in the 2015 time frame. This would 
help FAA determine reasonable goals, establish priorities and 
make adjustments to existing systems.
    Finally, the Agency needs to obtain the expertise required 
to execute and manage NextGen. We believe that strong contract 
management, systems integration, and system engineering skills 
with an understanding of human factors will be needed.
    Another key issue is addressing attrition in FAA's critical 
workforces. The long-expected surge in controller attrition has 
begun. Since 2005, 3,300 controllers have left the agency, 
which was 23 percent higher than FAA had projected. However, 
since 2005, FAA has hired 3,450 new controllers, which was 25 
percent higher than it had projected. New controllers now 
represent 23 percent of the workforce, up from 15 percent in 
2004, and this varies by location, from 2 percent at the Boston 
TRACON to 50 percent at the Las Vegas TRACON.
    FAA is facing a fundamental transformation in the 
composition of its controller workforce. A major challenge will 
be to train new controllers to the certified level at their 
assigned locations. Facility training can take up to three 
years and is the most expensive part of new controller 
training. Training new controllers to the fully certified level 
is important for two reasons: one, only certified controllers 
can control traffic on all positions of their assigned area 
and, two, controllers must be fully certified for at least six 
months before they can train other new controllers on the job, 
a critical component of FAA's plans to hire and train 15,000 
new controllers through 2016.
    We recently completed an audit of FAA's controller facility 
training program. Overall, we found that the program continues 
to be extremely decentralized and the efficiency and quality of 
the training vary from one location to another. We found 
similar problems in 2004. FAA is taking steps at the national 
level, but many efforts are still in the early stages.
    Key actions needed include: first, establishing realistic 
standards for the number of new controllers facilities can 
accommodate; second, clarifying responsibilities for oversight 
and direction at the national level; and, finally, following 
through on key initiatives included in its 2004 workforce plan, 
such as holding managers accountable for achieving timeframes 
for certifying new controllers.
    FAA faces similar issues in its inspector workforce. A key 
issue here will be to develop a reliable staffing model for 
ensuring its limited inspector resources are placed where they 
are most needed.
    Mr. Chairman, that concludes my statement. I would be happy 
to answer any questions you or other Members may have.
    Mr. Costello. The Chair thanks you, Mr. Scovel, and 
recognizes now Dr. Dillingham.
    Mr. Dillingham. Thank you, Mr. Chairman, Mr. Duncan, 
Members of the Subcommittee. My written statement includes our 
preliminary analysis of the President's 2009 budget for FAA and 
identifies some of the key challenges for FAA and the Congress 
associated with maintaining the current ATC system and the 
transformation to NextGen.
    Regarding the budget, although the Administration's budget 
proposes major changes in the way that FAA is funded, we 
believe that the current funding mechanism of the trust fund 
and the general fund can provide sufficient resources to 
support FAA activities, including NextGen. However, the 
proposed changes to FAA's funding mechanism could better align 
its operational costs with revenues, that is, if FAA's cost 
allocation system reliably allocates cost to the users.
    The budget also proposes an overall reduction of $765 
million for AIP and would allow airports to increase PFCs to 
$6. However, for smaller airports, the PFC increase would not 
compensate for the reduction in AIP dollars. In addition, it is 
not entirely clear how such a reduction in AIP funds will 
affect the efforts to increase system capacity through AIP-
funded projects.
    With regard to the challenges associated with the current 
ATC system, FAA has determined that it can best achieve its 
safety mission by using risk-based, data-driven safety 
programs. GAO agrees that this is a rational approach for 
monitoring safety. However, for this approach to be effective, 
FAA must obtain accurate and complete safety related data.
    Another challenge for FAA is its ability to continue to 
hire, train, and deploy a sufficient number of air traffic 
controllers. Although FAA has been able to hire several 
thousand controllers in recent years, controllers have been 
retiring faster than FAA anticipated, thereby making this 
challenge more difficult. In some cases, FAA will have to plan 
for the time and funds that will be needed for dual training 
for the controllers to operate within the current ATC system as 
well as in the NextGen environment.
    Another immediate challenge for FAA is repairing and 
maintaining the safety and physical condition of over 400 
terminal facilities. Some of these facilities will need to be 
operational for years to come, including being a part of the 
NextGen infrastructure. The one-time cost to repair and bring 
existing facilities up to standards is estimated to be about 
$300 million.
    With regard to the challenges associated with the 
transformation to NextGen, transitioning to NextGen will mean 
an increasing number of acquisitions and increasing complexity 
within those acquisitions. The challenge for FAA is to continue 
the organizational cultural changes that were started about 
four years ago with the startup of the ATO and to maintain its 
key acquisitions on schedule and within budget. This challenge 
will be especially difficult because of the need to attract 
managers and other staff with the technical skills to apply a 
systems approach to managing the acquisitions and the 
integration of NextGen systems.
    FAA has already taken steps to identify the required 
workforce competencies and define strategies for obtaining the 
necessary expertise. The challenge that remains is the analysis 
of FAA's existing staff resources, a determination of what gaps 
exist, and filling those gaps in a timely manner. Another 
NextGen challenge for FAA is developing a new configuration of 
facilities and airspace that will support the transformed 
system. Unless a plan for facility consolidation or realignment 
is developed and airspace design projects are implemented, the 
cost of NextGen could increase significantly and the potential 
system efficiency gains will be delayed or not realized.
    Finally, FAA faces the challenge of improving 
communications with stakeholders with the goal of obtaining 
their buy-in and support for NextGen implementation. The 
stakeholders that we have talked to have expressed frustration 
over not being able to obtain satisfactory responses to some of 
their basic questions, such as who is in charge of NextGen, how 
is NextGen going to be implemented, and what kind of capacity 
or efficiency gains can be expected from various components of 
NextGen. Some of the stakeholders are concerned that FAA is not 
adequately focusing on NextGen initiatives that could have a 
more immediate effect on the efficiency and capacity problems 
of the ATC system but, instead, is pursuing a path with 
benefits targeted too far in the future.
    Mr. Chairman and Members of the Subcommittee, as my final 
point, I would like to identify with the remarks of the 
Chairman and the two previous witnesses. It is vitally 
important that the FAA reauthorization legislation be completed 
in a timely fashion. Progress on critical projects such as 
runway safety, the hiring of safety personnel, and capacity 
projects depends on timely action on the reauthorization 
legislation. Thank you.
    Mr. Costello. Thank you, Dr. Dillingham.
    Mr. Punwani, let me begin with you and ask just a few 
questions. One, in the Administration's proposed budget you are 
proposing $688 million for NextGen for fiscal year 2009. That 
is an increase, as you stated in your testimony and we 
acknowledge, of $476 million from fiscal year 2008. However, 
when you look at the capital and research budget only rising 
$234 million for fiscal year 2009, something has to give here, 
and my question is what other capital and research programs 
within the base will have to be cut to pay the $476 million 
increase for NextGen?
    Mr. Punwani. Let me start by saying there are many programs 
within the capital program that are winding down, and I am 
going to ask my associate to give you further detail on those 
programs.
    Mr. Costello. Mr. Juba?
    Mr. Juba. Mr. Chairman, the additional money is coming 
from, as Mr. Punwani said, the wind-down of some of the 
programs that we are putting in place right now, the biggest of 
which is our En Route Automation Program, which would be the 
platform for a number of the NextGen applications. We are also 
winding down the ATOP program. This is a base automation system 
for the oceanic area.
    Our capital portfolio is actively managed. We look at what 
we are investing in, and some of the things for which we have 
reduced investments are being replaced by NextGen technologies. 
For example, the biggest component of our 2009 NextGen budget 
is ADS-B, or our satellite-based surveillance system. With more 
surveillance being provided by satellite, we can reduce our 
investment in some of the ground-based surveillance, some of 
the radar programs.
    Mr. Costello. So that would make up the entire $234 million 
difference?
    Mr. Juba. We can get you a complete detail of exactly the 
programs that it comes out to, but I can tell you the ERAM, for 
one, or the En Route Automation, is $165 million of that 
difference.
    Mr. Costello. We are pleased that you recognize the need to 
increase money for NextGen. My only question is where is it 
coming from to bump the number up.
    Mr. Juba. Right.
    Mr. Costello. And if it comes from areas that do not 
jeopardize other important areas of either NextGen or other 
operations, then that is fine. If you could get us that 
information, I would appreciate it.
    [Information follows:]
    [GRAPHIC] [TIFF OMITTED] 40696.015
    
    Mr. Costello. Mr. Scovel, let me ask you. As you know, for 
the past few years we have been expecting the Enterprise 
Architecture to define NextGen's cost, and now that we have the 
Enterprise Architecture, you state in your testimony that the 
MITRE Corporation says that it is too theoretical. I wonder if 
you might elaborate on what you have seen and what MITRE is 
saying, that it is too theoretical. Elaborate on that and tell 
me when you might think that we might get a more reliable cost 
schedule or estimate for NextGen.
    Mr. Scovel. Thank you, Mr. Chairman. I would like to give 
credit to the FAA because they have made some progress on the 
Enterprise Architecture_the JPDO has. The Enterprise 
Architecture is their technical road map for NextGen, and it is 
aimed at the 2025 timeframe, and that is an important date to 
keep in mind. However, this Enterprise Architecture is very 
much a work in progress, and it is difficult to develop an 
accurate architecture when we are shooting out as far as 2025.
    My office, on its own review, and after we have assessed 
the MITRE review, which was completed last October, found some 
significant shortcomings in the JPDO's first attempt at its 
Enterprise Architecture. The information in the Enterprise 
Architecture doesn't adequately align with NextGen's own 
concept of operations; it ranges from partial alignment to 
examples of no connection at all.
    The difference is this, Mr. Chairman: the concept of 
operations lays out how NextGen will actually operate; the 
Enterprise Architecture lays out the systems that will support 
those operations. Sometimes there is a mismatch. In other 
cases, the information remains at much too high a level to be 
effective. Some activities are insufficiently described, and 
occasionally only a single sentence is dedicated to describe 
those activities.
    We think_and as we have elaborated in our testimony_that 
there is a gap between today's system and the NextGen concept. 
We think that what we are calling a gap analysis would assist 
FAA and this Committee in determining what systems and what 
priorities need attention between now and the out-years. We 
also think that the 2025 target date is difficult for all of us 
to get our arms around, and so we recommended in our testimony 
today that an interim architecture targeted at 2015_perhaps 
2016, 2017, that mid-decade timeframe_would be helpful. In 
other words, we would like to put an island out there midstream 
and find out where we need to go to get there. Once there, we 
can assess, re-adjust, and shoot for the far bank.
    We don't know what timing FAA will need in order to 
accomplish all of this, but our discussions with them have 
informed us that perhaps a year, maybe two, would be required 
for them to refine the Enterprise Architecture. If they were to 
adopt our recommendation for an interim enterprise 
architecture, we would hope that they would be able to 
accomplish that in the same time frame.
    Mr. Costello. Two more quick questions, Mr. Scovel. You 
cite in your testimony there is an industry analysis that you 
recently have seen that suggested that the FAA could face 
possibly as high as a $50 billion software development effort 
with NextGen. In your view, is that estimate within the realm 
of possibility?
    Mr. Scovel. Mr. Chairman, we do think it is certainly 
within the realm of possibility. We think it is credible. 
NextGen presents FAA with the need for a very large and complex 
software development, and this is certainly a major risk to the 
entire NextGen effort, as it is to any particular program. The 
analysis that we refer to in our statement, that you referred 
to just a moment ago, was provided to us by a major industry 
stakeholder. It was done under contract to them.
    We have no reason at this point to doubt it. Their 
methodology was based on a review of both past FAA major 
programs and DOD systems that involved large software 
acquisitions, and it was done with at least a broad acquisition 
of what NextGen is envisioning currently. The study--and you 
referred to it--pegged a figure of $50 billion, and, of course, 
when we add that on top of the $15 billion to $22 billion that 
FAA currently estimates for global costs for NextGen, then we 
are speaking of total costs now on an order of magnitude 
greater than what we have currently seen for NextGen estimates.
    Mr. Costello. I wonder if you would comment, either one of 
you, Mr. Juba. Have you seen this, the estimate that the 
software could cost as high as $50 billion? I would like your 
response.
    Mr. Juba. At this point, we have not changed our long-term 
projection of $15 billion to $22 billion on NextGen.
    Mr. Costello. I understand that, but my question is have 
you seen this industry analysis that says that it could cost up 
to $50 billion, as the IG has?
    Mr. Juba. No, I have not.
    Mr. Costello. Okay. Is it something that you think you 
should take a look at?
    Mr. Juba. Yes, it is.
    Mr. Costello. Well, I would ask that you take a look at it 
immediately, because it is alarming to me that you have an 
industry analysis out there that is saying that it could be as 
high as $50 billion, which, of course, would take the cost of 
the NextGen system as much as four, five, or six times higher 
than the agency is estimating right now. So I would ask that 
you go back and take a look at that and give us your opinion as 
to if you think it is realistic and your response to it.
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    [GRAPHIC] [TIFF OMITTED] 40696.016
    
    Mr. Costello. Final question, and then I will turn it over 
to the Ranking Member for his questions.
    Mr. Scovel, there is no question--you know, there was an 
article in The Wall Street Journal and USA Today and The 
Washington Post about controller staffing issues, and I said 
then, and I will say now, that the FAA does not want to 
acknowledge that there is a staffing problem. We all know there 
is. Everyone involved in the system knows there is. Everyone 
involved in the system knows that fatigue is a factor and an 
issue. Dr. Dillingham has touched on that previously.
    The fact is there is a problem, and my question to you is 
while the FAA has underestimated the number of retirements over 
at the agency, while you correctly noted in your testimony they 
have increased the number of trainees that they have hired and 
put into the program, there is a problem here.
    I mean, when we have one-fourth of the air traffic 
controllers today coming into the workforce and we have three 
controllers retiring, the most senior controllers retiring at a 
rate of three a day, when the agency is now saying that we are 
willing to offer up to a $24,000 bonus to keep the most senior 
controllers, there is a problem.
    So my question to you is, one, I would like you to comment. 
Is there a problem, in your opinion? Number two, the issue of 
the facilities, does the FAA have the facilities to handle the 
number of trainees that they are trying to get into the program 
and get them out to facilities? I can tell you I was at their 
training facility in Oklahoma in November with Mr. Duncan and 
other Members of the Subcommittee, and I can tell you they are 
doing their best to get people in and out of the program as 
quickly as possible.
    But I have major concerns with what is going on. I just 
want you to comment. One, are you concerned? Do we have a 
problem in the system? Two, do they have enough personnel to 
train the people coming in to the academy and into the training 
program in order to get them out into facilities and to 
supervise them properly?
    Mr. Scovel. Mr. Chairman, we are concerned with the overall 
state of controller staffing. However, we think it is important 
to really refine the question. Everybody has known that this 
surge in attrition was coming ever since the mid-1980s, when 
the baby boom, if you will, of controllers was hired in the 
aftermath of the PATCO strike. We knew that the day would come 
when that baby boom would have fully matured, and they have 
served admirably on behalf of the Nation. But now it is time 
for them to take their well-earned rewards and to transition 
into retirement.
    There is much talk given of the overall numbers of 
controllers in the workforce--14,800, 15,300--and we wish to 
give FAA credit for stepping up to the problem in terms of 
making the adjustment and hiring at least rookie controllers to 
fill the vacancies that are coming. As you have noted, they 
haven't been able to anticipate the rate at which the attrition 
would materialize. They have consistently underestimated that. 
However, they have adjusted on-the-fly by hiring many more new 
controllers than even they projected would be needed in the 
first place, and they deserve credit, great credit on the 
hiring side.
    As you have correctly noted, however, the problem then 
shifts. We may have enough controllers overall, but what is the 
composition of that workforce, veteran controllers versus new 
controllers in training? And that is where we have the problem. 
The focus now needs to shift to training of the new 
controllers, and part of that process begins at the FAA 
training academy in Oklahoma City, as you have noted. We have a 
project underway, at your request, to study training attrition 
and try to determine root causes for that.
    It is too early in that effort for me to say at this point 
whether the academy is properly staffed in order to turn out 
the number of new controllers that it needs; however, we will 
certainly have that information for you. Based on what we have 
completed to date, I can say that when new controllers leave 
the academy and go to their first air traffic control facility, 
the efficiency and the quality of that training varies greatly.
    New controllers in 2004 amounted to 15 percent of the total 
controller workforce. Today, it stands at 23 percent. FAA 
itself estimates that within four years 30 percent of the total 
workforce will be new controllers. Assuming the academy can 
push those students out to the field, then it becomes the 
responsibility of each facility to train them according to 
local rules and requirements.
    What we have seen there is really a gap in training. We 
have seen some facilities that are able to handle that quite 
well. They have used their classrooms and simulators, which FAA 
has aggressively pushed out to them_and, again, we will give 
credit to the agency for that because the simulators have been 
a great force multiplier in completing training quicker than 
might otherwise be required.
    What has happened, however, is that the agency has 
neglected to follow through on a couple of its key promises in 
its 2004 controller workforce. One of those had to do with 
emphasizing controller training at the facility level as a true 
priority, second only to critical operational requirements.
    What sometimes happens at facilities, we have noted, is 
that facility managers will use a controller in training who is 
accredited on a particular position over and over again on that 
position to the detriment of training that new controller on 
other positions and pushing that new controller up to the most 
desirable level of certified professional controller, CPC. That 
ultimately is the goal both for the facility_which gives the 
facility greater flexibility in assigning that new controller 
throughout the facility--and also, frankly, for the controller 
himself or herself, who would like to see the larger paycheck 
that comes with being a CPC.
    We have also seen confusion on the part of controllers in 
the field and, honestly, some people at FAA headquarters 
regarding oversight and responsibility for facility training 
within FAA headquarters. As our testimony notes today, four 
different vice presidents within FAA headquarters have 
important roles to play in facility training.
    Confusion exists, however, on the user side as to what some 
of those authorities and responsibilities are. We won't presume 
to tell FAA how to organize itself, but we can certainly offer 
the suggestion that far greater clarification is needed on the 
part of headquarters in informing all of its staff who has what 
responsibilities when it comes to facility level training.
    Mr. Costello. Thank you very much.
    The Chair now recognizes the Ranking Member, Mr. Duncan.
    Mr. Duncan. Thank you, Mr. Chairman.
    Administrator Punwani, you heard me say in my opening 
statement that I think it is very important that we move on the 
FAA reauthorization bill as soon as possible, but I am 
wondering. You know, a couple of years ago we did a series of 
short-term extensions in regard to the highway bill. What 
adverse impacts would there be if we had to do that in regard 
to the FAA, a series of short-term extensions? You mentioned 
the 4,000 you would have to furlough or send home if we don't 
meet the February 29th deadline, but are there other adverse 
impacts or problems that a series of short-term extensions 
would cause?
    Mr. Punwani. There is no doubt that an extension, short-or 
long-term, would alleviate the immediate problem that we are 
faced with on February the 29th. But some of the problems with 
short-term extensions include, in the case of airport grants, 
if you have a short-term extension of contract authority; it 
leads to sub-optimal allocations of airport grants, the 
entitlements are sub-optimal. The formulas that are used to 
come up with airport grant allocations are very complex; they 
have minimums and maximums and entitlement recoveries, and the 
formulas just don't work unless you have a full year 
entitlement. So it is sub-optimal.
    If you extend the expenditure authority for the short-term 
when we already have a full year appropriation and have less 
than a full year's expenditure authority, that limits our 
ability to manage effectively.
    Mr. Duncan. Let me ask you another thing. We have heard a 
lot over the last couple of years about the contract 
negotiations with the controllers and so forth. Have there been 
any benefits or savings to date from the contract that you have 
with the controllers? And what would be the situation if the 
FAA was forced into binding arbitration?
    Mr. Punwani. Let me begin to answer that by telling you our 
fiscal year 2009 budget does recognize some cost reductions 
through various actions we have taken, including cost savings 
related to the controller contract. But I believe Gene Juba 
would be able to give you more information on that detail.
    Mr. Duncan. All right. Mr. Juba?
    Mr. Juba. Mr. Duncan, I can find that number. In the 2009 
budget, we have taken a reduction in the operating account due 
to the new contract that is in place with our controllers.
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    [GRAPHIC] [TIFF OMITTED] 40696.017
    
    Mr. Duncan. All right.
    Well, let me move on to something else, then, and this is 
the thing that is the most important to me, and I think I would 
like to get comments from all three of you. I am really 
concerned about this NextGen problem. I know that we need to do 
this, have this technical progress, but what concerns me is on 
almost all Federal programs we usually hear low-ball estimates 
of the cost on the front end.
    Yet, we have heard estimates everywhere from $14 billion to 
$25 billion on this NextGen project, or probably more so in the 
range of $14 billion to $22 billion, but that is a huge range. 
I mean, we are talking about billions up here like it is some 
small amount, but it is not; that is a huge difference.
    And then my eyes really popped open when the Chairman said 
$50 billion a few minutes ago. I mean, it is getting kind of 
scary, really. If we don't really stay on top of this, these 
costs could just explode, and I am wondering are we sure that 
we are doing everything possible to make sure that we don't 
have huge cost overruns in the years ahead?
    I am wondering, too, Chairman Costello and I, several 
months ago, got a presentation on the--is it SESAR, the 
European--I am not if I pronounced that right--the SESAR system 
in Europe. Are we ahead of them, behind them? Have we learned 
anything from some of their preliminary experiences? I am just 
wondering about where we stand on all that.
    And then I notice that Administrator Scovel complimented 
the FAA on the technical road map, but he also expressed 
several concerns; number one, that 2025 was too far out to 
really have realistic planning. I would like to know what you 
say about that.
    Then, Administrator Scovel, I didn't really understand what 
you meant by the things not aligning with the concept of 
operations. I would like to hear you comment more specifically, 
in a more down-to-earth, less bureaucratic way about what you 
mean by that.
    And then, Dr. Dillingham, you wrap it up with what you are 
saying on this NextGen progress so far.
    Go ahead, Mr. Juba.
    Mr. Juba. Mr. Duncan, I think the NextGen endeavor that we 
are on is a complex program. It is software-intensive; it 
requires careful integration with other programs across not 
only the FAA, but other partner agencies. But one thing that 
gives me confidence that we will manage these programs is--I 
can go through a couple of reasons why I am confident. I am the 
one that is tracking our progress along on our programs.
    First off, we have done a better job of managing capital 
programs. My colleagues at the IG and GAO have even admitted 
that though there is still work to be done, that we are doing a 
better job there. But there are three things there that you 
might not be aware of that we are undertaking right now, 
activities that I think will help us tremendously in executing 
the programs.
    First off, two years ago, we set out a goal to get off the 
GAO's high risk list. This is the list of agencies that have 
programs that are complex and there is risk of cost overruns. 
We actually provided the GAO a written plan of action in April 
of last year, and we are meeting with the GAO every quarter to 
go over status on that.
    Mr. Duncan. That is good.
    Mr. Juba. And this planning includes things like best 
practices in terms of program management and putting those 
inside of all our programs. Talking about software, it includes 
IT development best practices, which is key to managing these 
software-intensive programs. Other things, it is using the 
right metrics, including EVM, or earned value management, which 
is another way of tracking our cost and schedule performance.
    It also includes improvements in our cost estimating and 
cost accounting. So that is one activity that is out there, one 
that is not just an activity led by a small work group, but it 
is an activity that is chaired and overseen by senior people at 
the FAA, including Mr. Punwani, myself, our CIO and our chief 
acquisition executive. So that is one thing.
    The second thing is that--and I think it was brought up--
there is a need for the right human capital, the right Federal 
employees at the agency to manage these programs. We see that. 
We know that. We have actually hired, in the past two years, 40 
contracting officers or specialists. Just in the last year we 
hired over 40 system engineers, computer science people, and 
program management people. We also are working with the 
National Academy of Public Administration. They are helping us 
look at what other needs that we have out there to manage a 
program such as this. So we have that activity that is 
underway.
    Lastly, and probably most important, is we are using the 
OEP, the new OEP, our Operational Evolution Partnership, to 
manage NextGen throughout the agency. And let me tell you just 
a little bit about OEP. OEP is composed of the lines of 
business heads of all the lines of business with the FAA. It 
includes the JPDO. It also includes the heads of two of our 
larger unions that are affected by NextGen, NATCA and PASS. Why 
this is a key activity out there? This is a group that is going 
to oversee the progress and ensure that activities are 
coordinated among the different lines of businesses, and this 
is absolutely key with such a complex endeavor that we are on.
    That is what gives me comfort, anyway.
    Mr. Duncan. That is a good report and I appreciate all 
those things. You know, this is my twentieth year on this 
Subcommittee, and I have just seen so many of these things just 
explode and, boy, when you are talking about these kind of 
figures, you are talking about a really big deal.
    Let me go to Mr. Scovel and Dr. Dillingham. I know, in 
fairness to other Members, I will have to ask you to be fairly 
short. I know I asked a lot of questions at one time, but go 
ahead, Administrator Scovel.
    Mr. Scovel. Thank you, Mr. Duncan. You have expressed 
frustration with the imprecision in the cost estimates and, of 
course, we share your great concern over that. Let me take just 
a couple of examples, and perhaps this will also assist you in 
understanding what I meant when I said there was a mismatch 
between concept of operations and the Enterprise Architecture.
    A big question mark when it comes to the cost estimates is 
what will happen between NextGen, its primary system, ADS-B, 
and what must be accomplished by way of terminal modernization 
at air traffic control facilities. As you know from your years 
on the Subcommittee, what has happened, for instance, with the 
STARS program was tremendous cost growth and a reduction in the 
number of air traffic control facilities that would be 
modernized through that system. There is now a gap of some 100-
plus facilities, the modernization status for which is very 
much up in the air. That contributes, of course, to the 
imprecision in the cost estimate and it also illustrates the 
question of what will happen between how NextGen is actually 
supposed to operate, along with the concept of operations, and 
the Enterprise Architecture, what systems or platforms will be 
needed to pull that off.
    One further example, sir, by way of communications, I know 
too from your years on the Subcommittee you know that the 
controller-pilot data link communication program ended up being 
terminated a few years back, or at least suspended. Data link 
communications will be a very expensive component of NextGen. 
FAA intends to embark, in the next year or two, to restart the 
data link communication effort, scope it out, and resume some 
sort of data link communication program so that NextGen can be 
fully realized. Cost estimates? Uncertain. Again, how will that 
work between other NextGen programs remains to be seen.
    Mr. Duncan. All right. Let Dr. Dillingham explain where he 
thinks we are.
    Mr. Dillingham. Mr. Duncan, I think what Mr. Juba said 
about FAA being on our high-risk list for ATC modernization is 
very important, because we have had them on the list for almost 
15 years. But, most recently, we concluded that the changes 
that FAA has made in managing its acquisitions, the outcome of 
those changes, we have labeled them as making significant 
progress.
    We are guardedly optimistic, but still watching to make 
sure that the culture that was put in place, that put those 
business practices in place and those cost-saving mechanisms, 
will go through with the next administrator as well as the new 
chief operating officer. Progress has been made, but clearly we 
have to watch it.
    Also, with regard to the cost of NextGen, clearly it is 
something that everybody is wondering about and, as you say, we 
had estimates that run the gamut. I think, you know, the way we 
look at it is that, yes, we need to be focused on what the 
total cost is, but I think after you get out beyond a certain 
number of reasonable years it becomes a real guess.
    We look at the capital program over the next five years 
that contains the NextGen technologies and we see they are 
asking for $5.4 billion. We look at that and say that is a more 
reasonable focus, but keep trying to project out so that 
Congress can know where we are going and you can monitor it to 
that extent. But, you know, as the IG has said, let's move back 
a little bit and let's sort of look at what is reasonable to 
make that kind of estimate about it.
    We have seen, from the 15, 20 years we have been looking at 
this, that--you were here, Mr. Duncan, when we had the AAS sort 
of thing, and we told FAA at that point in time to go from the 
big bang theory to the build-a-little/test-a-little theory, and 
that is in fact what we are seeing in many cases, and we think 
that is a positive development.
    With regard to the Concept of Operations and the Enterprise 
Architecture, those are also necessary documents, but it is 
also the case that the more understandable--at least from my 
perspective--document that is in the works right now is the 
Integrated Work Plan, which talks about which systems when, 
what steps along the way; and that is still being vetted by the 
stakeholders.
    So although part of what we are hearing out there is let's 
start to talk about what we can do with NextGen that is going 
to have a more immediate effect on system capability and 
efficiency--and, by example, they talk about instead of trying 
to figure out and deploy ADS-B across the Nation, maybe we 
should look at some existing procedures and technologies and 
deal with where we have problems that are facing us everyday--
New York, Miami, Los Angeles--and use those as both immediate 
kinds of things to address as well as test beds for the larger 
national layout kind of thing.
    With regard to SESAR, the question that comes to us about 
the European effort is the very question that you asked, Mr. 
Duncan. Who is on first_who is ahead? Basically, you know, if I 
had to answer that straight out, we would say the U.S., of 
course. But the deal is that they are probably in the same 
place. The Europeans are just finishing what they call the 
definition stage, which is sort of their overall planning and 
sort of what is it going to be, and they are getting ready to 
move forward into some early implementation.
    The major difference that we need to sort of keep in mind, 
that I think is going to keep the U.S., you know, moving 
ahead--because that is in important in terms of who is going to 
set the standards and how is that going to play into our 
economy--we in the United States have to deal with lots of 
agencies to make all of this work, but over in Europe they have 
to deal with 10 or 11 sovereign nations in their air traffic 
control system.
    So I think that idea, in conjunction with one of the 
things--based on what we were asked to do by this Committee, in 
fact, we talked to FAA about international harmonization, and 
FAA went forward under the last administrator to establish an 
MOU with the Europeans so that there could be some sharing and 
lessons learned kind of thing. This is, no doubt, complicated--
the analogy has been that trying to do NextGen is sort of like 
trying to go to the moon. It is that complicated, it is that 
much of an issue, and it is something that we have to watch.
    But I think, under the circumstances, progress is being 
made. More needs to be done.
    Mr. Costello. The Chair thanks the Ranking Member and now 
recognizes the gentleman from New York, Mr. Hall.
    Mr. Hall. Thank you, Mr. Chairman, and thanks to all of our 
witnesses for being here and giving us your testimony today.
    Mr. Punwani, I wanted to start by asking you if the budget 
contains funds to implement the airspace redesign for the New 
York-New Jersey-Philadelphia area.
    Mr. Punwani. The budget does contain that allowance.
    Mr. Hall. Okay. And as a result of the redesign, a number 
of communities in my district, including Pound Ridge and 
Bedford in Westchester County, and parts of Rockland and Orange 
County, have seen or will seen an increase in air traffic. Is 
there any funding in the budget for noise mitigation or other 
means directed by the damage caused by the increased number of 
airplanes flying over communities that previously had little or 
no aircraft noise?
    Mr. Punwani. We do have a provision of as much as $276 
million in our airport grants program to address issues of 
noise mitigation.
    Mr. Hall. Thank you. And you spoke in your testimony about 
offering controllers a variety of retention incentives. Could 
you explain some of those incentives and how effective they 
have been in attracting or retaining controllers? Mr. Juba?
    Mr. Juba. Mr. Hall, we introduced a number of different 
incentives or tools that we could use both to recruit new 
controllers, as well as retain the seasoned controllers that we 
have. One of those is the retention incentive. In areas where 
we needed--this is not an across-the-board incentive, but it is 
at those airports, those terminals, and those en route 
facilities where we believe there is a need to keep a 
controller on for training or watch-standing.
    We also are actively pursuing reassignment provisions, 
using a reassignment bonus to incentivize controllers to move 
out of places that may be well staffed or overstaffed into 
places like Atlanta. There are other things we have. We 
introduced child care benefits; and also have a recruitment 
bonus available that we have used to attract military 
controllers.
    Mr. Hall. Excuse me, I just wanted to ask since it used to 
be a pattern for military controllers to come into the FAA 
system, why is it necessary now to have a bonus offered to get 
them to do that?
    Mr. Juba. We found that to get people to go to the places 
we want, sometimes a bonus actually works to incentivize 
somebody to do that. There are incentives being offered at DOD 
for these same employees. It is a competitive environment out 
there.
    Mr. Hall. Since we are speaking, Mr. Juba, I wanted to ask 
you about the cost savings you referred to a few minutes ago 
due to the new contract. My understanding of a contract is that 
it is an agreement negotiated between two parties willingly and 
signed by those two parties. Are you referring in fact to the 
work rule that FAA instituted?
    Mr. Juba. We are talking about the contract that was put in 
place I believe a year and a half ago.
    Mr. Hall. Put in place by who?
    Mr. Juba. I can't answer you from the legal perspective, 
but we went by the rules established by Congress in negotiation 
with our controllers and have a contract in place.
    Mr. Hall. So you would call it a contract.
    Mr. Juba. Yes, sir.
    Mr. Hall. Okay. I have yet to see a document that most 
people would regard as a contract. In fact, that is why this 
Subcommittee, and I believe the Full Committee, voted to 
require, as our last FAA reauthorization bill that we passed, 
require binding arbitration, because of the fact that there was 
not in fact a contract agreed upon and that the FAA was, many 
of us think, the intransigent party. I am just curious how much 
the cost savings you are telling us about are offset by the 
retention bonuses and by the other incentives that you have to 
provide, and also by the loss of efficiency and the loss of 
experience from people retiring who might not otherwise retire. 
Any thoughts about that?
    Mr. Juba. Just on retirements, we did project for 
retirements and, as reported by a number of people, we have 
under-projected. But just to give you a perspective on that, in 
2007 we projected 700 retirements. Actual requirements were 
828. We missed by a little over 100. To put that in 
perspective, that is less than 1 percent----
    Mr. Hall. Thank you, Mr. Juba. I have just a few seconds 
left. I wanted to ask Dr. Dillingham for a comment on--well, 
you said in your testimony that the FAA ``faces a challenge in 
establishing credibility with stakeholders that the agency is 
fully committed to NextGen.'' And referring back to a comment, 
if I got it correctly, Mr. Scovel, you said that the cost for 
NextGen is uncertain. It is also difficult to predict how much 
NextGen will enhance capacity and reduce delays. Did I hear you 
more or less correctly?
    Mr. Scovel. Yes, sir.
    Mr. Hall. Okay. So you can answer this too, but I wanted to 
ask Dr. Dillingham if this perhaps has some relationship to the 
difficulty in establishing credibility with stakeholders, that 
the agency is fully committed to NextGen.
    Mr. Dillingham. Yes, sir, that is exactly the issue. What 
the stakeholders are telling us is that they need to know, in 
terms of return on investment, what is it that is going to come 
out of NextGen so they know how to--be it an avionics 
manufacturer or an airline--how to plan their operations. And 
they are saying we, as stakeholders, need to have that kind of 
capacity or efficiency explanation. So, that gives us more of 
an incentive to, in fact, come on board with NextGen 
technologies.
    Mr. Hall. Lastly, I just wanted to ask, if I may, starting 
with Mr. Punwani, which corporation is the biggest corporation 
for NextGen?
    Mr. Punwani. I don't have that information readily 
available. Do you?
    Mr. Juba. In the 2009 budget, we have a line item in there 
for ADS-B, which is our satellite-based surveillance system. 
ITT is the lead contractor on that, and I would have to believe 
that they are the largest. Of course, there are subcontractors 
below them; they are not doing all the work by themselves.
    Mr. Hall. Perhaps if you could reply in writing to the 
question, in order of total dollars, who are the biggest 
contractors, you know, maybe the top half dozen or so. I would 
be curious to know who is receiving how much money for a 
program that is difficult to predict the expense of and is also 
difficult to predict how much it is actually going to enhance 
the capacity or reduce delays.
    [Information follows:]
    [GRAPHIC] [TIFF OMITTED] 40696.018
    
    Mr. Hall. And I yield back. Thank you.
    Mr. Costello. The Chair thanks the gentleman and recognizes 
Mr. Boozman from Arkansas.
    Mr. Boozman. Thank you, Mr. Chairman, very much.
    We have really been blessed. You know, when you look at our 
safety record, it has been tremendous, and that reflects on you 
all and your predecessors. It really reflects on our 
controllers, the tremendous job they are doing and have done in 
the past. I would like for the Committee to claim some credit 
for that, but it is probably in spite of us that you all have 
been able to do all that.
    But I think we have some concerns about, you know, with so 
many new people coming into the system, the quality of the 
people that you are getting. So I would like you to tell us a 
little bit about where those people came from in 2007 and just 
kind of tell us are they former controllers from the military, 
are they coming out of the schools, are they coming off the 
street? If you give us some numbers as to what is going on in 
that regard, I would appreciate it.
    Mr. Juba. Let me talk about where we hired controllers last 
year. The biggest source of new hire controllers has been 
through our college training initiative, or CTI, schools. These 
are two-and four-year programs. They go through a variety of 
aviation subjects. Nearly, 60 percent of the over 1800 people 
we hired last year came from those schools.
    As a side note, we actually have expanded that program--it 
has been very successful; we get very high-quality candidates--
from the 14 current schools out to 23 schools.
    The second biggest source is the military. We have about a 
third of our new hires last year came from the military. A lot 
of those from military controllers.
    And lastly, about 7 percent come from local hires. These 
are people who had applied through our Web site and have been 
screened and have gone to the Academy straight from there. A 
lot of those have aviation experience of some sort and all are 
required to meet the medical, security and cognitive testing 
that we put them through.
    Mr. Boozman. Thank you. On a similar note, in looking at 
the budget, the $2.75 billion for the AIP funding level, which 
is significantly reduced, do you think that you will be able to 
meet the critical safety needs that we have in our airports 
with that level of funding? And I will just throw that out to 
whoever wants to----
    Mr. Punwani. I will answer that. We recognize, first of 
all, that this Committee is a big supporter of a robust airport 
grants program. The $2.75 billion request may seem low, but we 
believe it is affordable when it is coupled with some of the 
formula changes that we proposed in our reauthorization 
proposal, coupled with an increase in the passenger facility 
charge at large airports, where we are proposing that the 
maximum go from $4.50 to $6.00. That increase by itself would 
generate an additional $1.5 billion of funding.
    But it doesn't just end there. More importantly, the 
formula changes that we are proposing will allow us to direct 
airport grants and entitlements to the smaller airports that 
have greater difficulty in raising funding. Taken together, 
this budget will allow us to meet our major capacity, safety, 
noise abatement, and environmental issues.
    Mr. Boozman. So are you saying that the funding that we 
have used for airport improvement in the past, that if we did 
adopt the fees and those things, are you saying, then, that 
that goes up to $4.25 billion for the same--are we talking 
apples and apples or apples and oranges?
    Mr. Punwani. Apples and apples.
    Mr. Boozman. Very good. Thank you all.
    Thank you, Mr. Chairman.
    Mr. Costello. I thank the gentleman from Arkansas, and the 
Chair now recognizes the gentlelady from California, Ms. 
Richardson.
    Ms. Richardson. Thank you, Mr. Chairman.
    Two brief questions that I want to follow up on Mr. 
Boozman's comments. One, of the categories where you are doing 
your hiring, what is the average work experience, though, for 
those different categories? Because I would think that if 
someone is being hired from the military who is currently doing 
the job, maybe they have done it for a couple years or five 
years or ten years; whereas, maybe someone coming out of the 
school may have the academic experience, but that may not 
translate to actual work experience. So do you have some sort 
of averages?
    Mr. Juba. I don't have those numbers right now, but I would 
believe that your assessment is probably right; the people 
coming out of the school probably do not have a lot of work 
experience.
    Ms. Richardson. Okay. Could you supply this to the 
Committee? Because I think that gets to the heart of Mr. 
Boozman's question. Although the school might be great and 
wonderful and, you know, we are getting a lot of good people, 
the limited real-life experience might not be as strong, and 
that is, I think, a concern in some of the issues that we might 
be hearing about.
    [Information follows:]
    Ms. Richardson. My follow-up question to that would be how 
do you determine who goes to what location? So what I mean by 
that is an average person with limited experience, would they 
typically get a Chicago assignment or a Los Angeles assignment, 
or do they have to first do kind of a smaller tier location and 
then work their way up, or is it just people go wherever there 
is an opening?
    [Information follows:]
    [GRAPHIC] [TIFF OMITTED] 40696.019
    
    Mr. Juba. Well, there are two parts to that, where people 
go. One is their desires. I mean, do they bid for a job 
location? We put it out by State sometimes. So it is where they 
want to go. The second part is, from our operational side, 
where do we put people. We put people in every level of the 
facility, from the smaller towers up to the larger towers. This 
is actually consistent with what some of our global partners 
do.
    In the case where we put somebody at a high level facility 
and they can't perform up to that level, but are good employees 
nonetheless, we have actually taken those people and moved them 
down to lower level facilities and sometimes from en route to 
terminal.
    Ms. Richardson. So, Mr. Chairman, that would be a second 
thing I would like to suggest we might like to pull that 
further, because it is my understanding--since I do represent a 
fairly active area, Long Beach Airport; we also have LAX, which 
is my neighboring airport--I have heard that maybe it really 
shouldn't be to the discretion of someone who wants to go to 
LAX. If they don't have an extensive amount of experience, 
maybe there could be some additional requirements that could be 
instituted before they are able to go to some of the more 
higher capacity tower facilities.
    Mr. Juba. One thing I might add, Ms. Richardson, is that in 
some of the larger, more complex facilities, what we have done, 
as I mentioned earlier, is actually reassigned some of our 
veteran controllers from other facilities into those facilities 
to help out with training and standing watch there.
    Ms. Richardson. Right. Because I spoke with an air traffic 
controller in my district, in the Long Beach Airport, who said 
he has only been on board maybe about a year and a half, and he 
is already training other people, and, you know, that is kind 
of a concern of mine. Someone who has only been doing the job a 
year or so is training someone else, I mean, they haven't even 
walked through the breadth of all potential examples that might 
occur.
    So I think building upon what Mr. Boozman said, this really 
is at the heart of what I know a lot of my concerns are.
    Thank you very much, Mr. Chairman.
    Mr. Costello. The Chair thanks the gentlelady. As you might 
have heard, we have been called for a vote. We have a series of 
four votes.
    That concludes our hearing today. I would like to remind 
our friends from the FAA to--we understand the acting 
administrator is on the Senate side today in a confirmation 
hearing, but please remind him that we expect a report seven 
days from today concerning the facilities that we spoke about 
earlier, and we would expect to get that report. We have been 
waiting for some time and our patience is running thin. [Note 
provided by FAA: this information was provided to the Committee 
at a briefing held on February 14, 2008.]
    Again, on behalf of the Members of the Subcommittee, we 
thank you for testifying here today, and that concludes the 
hearing.
    [Whereupon, at 11:33 a.m., the Subcommittee was adjourned.]
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