[Senate Hearing 112-]
[From the U.S. Government Publishing Office]



 
TRANSPORTATION AND HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES 
                  APPROPRIATIONS FOR FISCAL YEAR 2012

                              ----------                              


                         THURSDAY, MAY 12, 2011

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 9:34 a.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Patty Murray (chairman) presiding.
    Present: Senators Murray, Lautenberg, Pryor, and Collins.

                      DEPARTMENT OF TRANSPORTATION

                    Federal Aviation Administration

STATEMENT OF HON. J. RANDOLPH BABBITT, ADMINISTRATOR
ACCOMPANIED BY HON. CALVIN L. SCOVEL III, INSPECTOR GENERAL

               OPENING STATEMENT OF SENATOR PATTY MURRAY

    Senator Murray. This subcommittee will come to order.
    This morning we are going to be holding a hearing on the 
President's budget request for the Federal Aviation 
Administration (FAA). We will be hearing testimony from the 
Administrator of the FAA, Mr. Randy Babbitt, and the Inspector 
General for the Department of Transportation, Mr. Calvin 
Scovel.
    I want to thank both of you for being here this morning, 
and I look forward to hearing your testimony.
    The United States is a leader in air transportation, and I 
am very proud of our innovation and our safety record. For 3 
out of the past 4 years, there has been less than 1 fatality 
for every 100 million passengers on board commercial air 
carriers. As the agency in charge of overseeing the safety of 
air transportation, the FAA has built a strong record for more 
than 50 years.
    But while we can be proud of the safety record, we can 
never believe that our work is done or let down our guard, not 
even for a moment. So I am very troubled by recent news reports 
that include stories about air traffic controllers falling 
asleep on duty and a dramatic increase in the number of errors 
committed by air traffic controllers.
    The FAA made a series of announcements as more and more of 
these incidents came to light. Soon after the first news 
reports, the FAA promised air traffic controllers will no 
longer be working alone in the middle of the night, and the FAA 
would no longer use certain kinds of schedules that are known 
to worsen fatigue. More recently, the FAA announced a series of 
initiatives, including a new working group that will make 
recommendations to improve the qualifications, placement, and 
training of air traffic controllers. These initiatives may be 
important work for the FAA, but I am troubled by the fact that 
they came as a result of unflattering news reports, especially 
when the inspector general has been sounding the alarm on these 
issues for years.
    Back in 2004, the inspector general recommended the FAA 
develop a method for placing newly hired controllers at its 
various facilities based on skill and ability. This 
recommendation was repeated in 2010. In both cases, the FAA 
agreed and said the agency was working on a test that would be 
used in the placement of its new hires. Today, however, the FAA 
still does not have an objective-reliable test it can use to 
place newly hired controllers.
    The FAA also knew it needed to evaluate how well graduates 
from the training academy in Oklahoma City were prepared to 
enter the workforce and begin their on-the-job training. In 
2008, the inspector general found the FAA had not yet fulfilled 
this promise. In 2010, the inspector general found academy 
training was focused on short-term memorization, and facility 
managers did not believe new hires were prepared for their on-
the-job training.
    In short, the FAA has known about troubles with how it 
trains and places newly hired controllers for a long time, and 
yet, after a series of news reports, suddenly the FAA announces 
a new working group to address this issue and we are supposed 
to believe that in a few short months, this working group will 
be able to do something the FAA could not accomplish for the 
past 7 years.
    So, we have been down this road before. In fact, it was 
just 3 years ago that this subcommittee held a hearing with the 
FAA and heard about how FAA managers allowed Southwest Airlines 
to violate Federal safety regulations and punished the safety 
inspector who tried to bring these violations to light. The FAA 
acknowledged its safety office had an inappropriate 
relationship with the very airline it was supposed to oversee.
    Again, there was a history of reports and recommendations 
from the inspector general. Importantly, the inspector general 
found safety inspections were being missed and FAA headquarters 
needed to take a more a hands-on approach to make sure 
individual inspection offices were getting the job done.
    I know the FAA is dedicated to its safety mission, but we 
cannot afford to let news stories determine how the FAA does 
its work. We need the FAA to make the right decision before an 
issue gets in the news.
    The Next Generation Air Transportation System (NextGen) is 
another area where we need to see more from the FAA. This 
subcommittee has long understood the importance of NextGen, and 
until this year, we have met all of the administration's budget 
requests for its modernization programs. In fact, this 
subcommittee has provided targeted increases for NextGen, 
giving additional funds to push for more capabilities out of 
the Automatic Dependent Surveillance-Broadcast (ADS-B) program 
and to see more demonstrations of network-enabled operations.
    Still, even when there has been a steady stream of funding, 
we have seen delays and management problems with some of the 
most important capital programs. For example, the En Route 
Automation Modernization (ERAM) program is now years behind the 
FAA's original target, and we still do not know for sure if 
this program is working well enough to control traffic at 
additional sites. Only recently has the FAA started to work 
hand in hand with the air traffic controllers who will be 
working with the ERAM software.
    This year, however, we find ourselves in a completely new 
budget environment. For fiscal year 2011, the Committee enacted 
the largest 1-year cut to discretionary spending in our 
Nation's history, and debates over the fiscal year 2012 budget 
continue to focus on spending cuts. In this kind of 
environment, we cannot afford further delays and mismanagement.
    We need to see a realistic strategy for funding NextGen. To 
date, the FAA has filled its budget request with a laundry list 
of programs and development activities and a vague promise that 
somehow the agency will achieve its goals by 2018, but that 
approach is not enough this year. The FAA must be able to show 
how each of its programs contribute to NextGen goals, and we 
need to hear a clear set of priorities from the FAA so we know 
what the impact of various funding levels will be on 
modernization.
    We are waiting now to get a final spend plan from the FAA 
on how it will distribute the funding levels provided for 2011, 
but the FAA also needs to think about the impact of various 
funding levels in a different way, not a year-by-year basis, 
but with a long-term strategy in mind.

                           PREPARED STATEMENT

    With that, I am going to turn it over to my ranking member, 
Senator Collins, for her opening statement.
    [The statement follows:]
               Prepared Statement of Senator Patty Murray
    The subcommittee will come to order.
    This morning we will be holding a hearing on the President's budget 
request for the Federal Aviation Administration (FAA).
    We will be hearing testimony from the Administrator of FAA, Mr. 
Randy Babbitt, and the Inspector General for the Department of 
Transportation, Mr. Calvin Scovel.
    I would like to thank both of you for being here this morning, and 
I look forward to hearing your testimony.
               professionalism of air traffic controllers
    The United States is a leader in air transportation, and I am proud 
of our innovation and our safety record. For 3 out of the past 4 years, 
there has been less than 1 fatality for every 100 million passengers on 
board commercial air carriers.
    As the agency in charge of overseeing the safety of air 
transportation, the FAA has built a strong record for more than 50 
years.
    But while we can be proud of this safety record, we cannot believe 
that our work is done, or let down our guard--not even for a moment.
    So, I am troubled by recent news reports that include stories 
about:
  --air traffic controllers falling asleep on duty; and
  --a dramatic increase in the number of errors committed by air 
        traffic controllers.
    The FAA made a series of announcements as more and more of these 
incidents came to light. Soon after the first news reports, the FAA 
promised that air traffic controllers will no longer be working alone 
in the middle of the night, and that the FAA would no longer use 
certain kinds of schedules that are known to worsen fatigue.
    More recently, the FAA announced a series of initiatives, including 
a new working group that will make recommendations to improve the 
qualifications, placement, and training of air traffic controllers.
    These initiatives may be important work for the FAA, but I am 
troubled by the fact that they come as the result of unflattering news 
reports.
    Especially when the inspector general has been sounding the alarm 
on these issues for years.
    For example, in 2004, the inspector general recommended that the 
FAA develop a method for placing newly hired controllers at its various 
facilities based on skill and ability. This recommendation was repeated 
in 2010. In both cases, the FAA agreed, and said that the agency was 
working on a test that would be used in the placement of its new hires.
    Today, however, the FAA still does not have an objective, reliable 
test that it can use to place newly hired controllers.
    The FAA also knew that it needed to evaluate how well graduates 
from its training academy in Oklahoma City were prepared to enter the 
workforce and begin their on-the-job training. In 2008, the inspector 
general found that the FAA had not yet fulfilled this promise. And then 
in 2010, the inspector general found that academy training was focused 
on short-term memorization, and that facility managers did not believe 
that new hires were prepared for their on-the-job training.
    In short, the FAA has known about troubles with how it trains and 
places newly hired controllers for a long time.
    And yet, after series of news reports, suddenly the FAA announces a 
new working group to address this issue. And we're supposed to believe 
that in a few short months, this working group will be able to do 
something that the FAA couldn't accomplish for the past 7 years.
    We've been down this road before.
    In fact, it was just 3 years ago that this subcommittee held a 
hearing with the FAA and heard about how FAA managers allowed Southwest 
Airlines to violate Federal safety regulations and punished the safety 
inspector who tried to bring these violations to light. The FAA 
acknowledged that its safety office had an inappropriate relationship 
with the very airline it was supposed to oversee.
    Again, there was a history of reports and recommendations from the 
inspector general. Importantly, the inspector general had found that 
safety inspections were being missed, and that FAA headquarters needed 
to take a more hands-on approach to make sure that individual 
inspection offices were getting the job done.
    I know the FAA is dedicated to its safety mission. But we cannot 
afford to let news stories determine how the FAA does its work. We need 
the FAA to make the right decision before an issue gets in the news.
                     a strategy for funding nextgen
    The Next Generation Air Transportation System (NextGen) is another 
area where we need to see more from the FAA.
    This subcommittee has long understood the importance of NextGen, 
and until this year, we have met all of the administration's budget 
requests for its modernization programs. In fact, this subcommittee has 
provided targeted increases for NextGen, giving additional funds to 
push for more capabilities out of the Automatic Dependent Surveillance-
Broadcast program and to see more demonstrations of network-enabled 
operations.
    Still, even when there has been a steady stream of funding, we have 
seen delays and management problems with some of the most important 
capital programs.
    For example, the En Route Automation Modernization (ERAM) program 
is now years behind the FAA's original target. And we still don't know 
for sure if the program is working well enough to control traffic at 
additional sites. Only recently has the FAA started to working hand-in-
hand with the air traffic controllers who will be working with ERAM 
software.
    This year, however, we find ourselves in a completely new budget 
environment. For 2011, the Committee enacted the largest 1-year cut to 
discretionary spending in our Nation's history. And debates over the 
2012 budget continue to focus on spending cuts.
    In this kind of environment, we cannot afford further delays and 
mismanagement.
    We need to see a realistic strategy for funding NextGen. To date, 
the FAA has filled its budget requests with a laundry list of programs 
and development activities, and a vague promise that somehow the agency 
will achieve its goals by 2018.
    But that approach is not enough this year.
    The FAA must be able to show how each of its programs contribute to 
NextGen goals. And we need to hear a clear set of priorities from the 
FAA, so that we know what the impact of various funding levels will be 
on modernization.
    We are waiting to get final spend plans from the FAA on how it will 
distribute the funding levels provided for 2011. But the FAA also needs 
to think about the impact of various funding levels in a different 
way--not a year-by-year basis, but with a long-term strategy in mind.
    With that, I will turn to my ranking member, Senator Collins, for 
her opening statement.

                   STATEMENT OF SENATOR SUSAN COLLINS

    Senator Collins. Thank you very much, Madam Chairman, for 
holding this hearing on the fiscal year 2012 budget request for 
the FAA.
    I want to welcome our two witnesses this morning, 
Administrator Babbitt and Inspector General Scovel, to our 
hearing.
    Let me begin my remarks by associating myself with the 
comments that the chairman made about safety.
    It is extremely worrisome to learn of the incidents over 
the past couple of months regarding air traffic controllers who 
have behaved unprofessionally. It is unacceptable that Federal 
employees who are responsible for the safe arrival and 
departure of our flying public were asleep on the job or 
inattentive to pilot requests, and of course, in reading these 
incidents, one cannot help but think that it is the tip of the 
iceberg--that this problem, as the inspector general perhaps 
will illuminate today, has been going on for some time, but it 
has only recently come to the public's attention.
    The Administrator of FAA has one of the toughest challenges 
in overseeing the national airspace system, the most complex 
airspace in the world. This includes monitoring more than 
45,000 flights per day from commercial air, cargo, military, 
and nearly 240,000 general aviation aircraft that could enter 
the system at any given moment.
    While there are not nearly as many flights going in and out 
of the State of Maine as I would like to see, it is important 
that we ensure that sufficient options are available to rural 
communities, particularly those that support our smaller 
municipal airports.
    In rural States, such as my home State, aviation helps to 
keep residents connected to the rest of the country and is a 
key element in economic development. A lot of times, when we 
are doing business attraction efforts in Maine, the first 
question that we get is what the air service is like. FAA 
resources help airports, particularly general aviation or 
smaller airports with limited resources, to make the necessary 
infrastructure upgrades to improve air traffic services, 
availability, and safety.
    Recognizing safety as the No. 1 priority, ensuring a safe 
civil aviation system is also critically important to the 
overall economy. According to the FAA, aviation adds $1.3 
trillion to our economy and accounts for more than 11 million 
jobs.
    As the chairman has indicated, as we move forward to the 
fiscal year 2012 budget, we will face even tougher choices than 
those in the recently passed 2011 budget. It is, therefore, 
essential that the FAA identifies and prioritizes programs to 
ensure the least amount of consequences to safety and 
operations, and I am particularly concerned about any cuts that 
would delay the implementation of NextGen. The full 
implementation of NextGen by 2025 will total between $20 and 
$25 billion from FAA resources alone.
    The airline industry also needs to be a team player in the 
decisionmaking process, as it too must make an equal amount of 
investments in retrofitting their aircraft. With NextGen, 
however, and despite the costs, the benefits are enormous. 
Airlines will see a reduction in fuel consumption. Travelers 
will see fewer delays, and the environment will benefit from 
lower carbon emissions.

                           PREPARED STATEMENT

    I look forward to hearing the testimony of our witnesses 
today as we consider this very important budget request.
    Thank you, Madam Chairman.
    [The statement follows:]
              Prepared Statement of Senator Susan Collins
    Good morning, and thank you Chairman Murray for holding this 
hearing on the fiscal year 2012 budget request for the Federal Aviation 
Administration (FAA). I welcome Administrator Babbitt and Inspector 
General Scovel and thank you both for being here today.
    This subcommittee faced many challenges passing the fiscal year 
2011 budget in which important programs had to be reduced or 
eliminated. I appreciate the leadership of Chairman Murray and am glad 
we worked in a bipartisan effort.
    The soaring debt of more than $14 trillion and growing poses a 
grave threat to our Nation's future prosperity. We simply must rein in 
our spending and get our financial house in order.
    It is unacceptable that we came at all close to a government 
shutdown. It is my hope that the Congress and the administration will 
take a much more thoughtful and reasoned approach to the difficult task 
of developing a budget for 2012 and demonstrate to the American people 
that we are willing to work together to put our country back on a 
strong fiscal course.
    Administrator Babbitt has one of the toughest challenges overseeing 
the national airspace system, the most complex airspace in the world. 
This includes monitoring over 45,000 flights per day from commercial, 
air cargo, military, and nearly 240,000 general aviation aircraft that 
could enter the system at any given moment.
    While there are not as many flights going into and out of Maine as 
I would like to see, it is important we ensure that sufficient and 
adequate options are available to rural communities, particularly those 
that support small or municipal airports.
    In rural States, such as my home State of Maine, aviation helps 
keep residents connected with the rest of the country. FAA resources 
help airports, particularly general aviation or small airports with 
limited resources, make the necessary infrastructure upgrades to 
improve air travel services and safety.
    Recognizing safety as the No. 1 priority, ensuring a safe civil 
aviation system is also critically important to the overall economy. 
According to FAA, aviation adds $1.3 trillion to our economy and 
accounts for more than 11 million jobs.
    As this subcommittee moves forward to the fiscal year 2012 budget, 
we will face even tougher choices than those from the recently passed 
fiscal year 2011 budget. It is essential that FAA identify and 
prioritize programs to ensure the least amount of impacts to safety and 
operations, particularly those that could delay the implementation of 
the Next Generation Air Transportation System (NextGen).
    FAA estimates full implementation of NextGen by 2025 will total 
between $20 and $25 billion from FAA resources alone. The airline 
industry also needs to be a team player in the decisionmaking process 
as they too must make an equal amount of investments retrofitting their 
aircraft while struggling with unstable profits and rising operating 
costs. FAA must present the benefits early enough in the process of 
implementing NextGen that outweigh the costs of equipage. With NextGen, 
airlines will see a reduction in fuel consumption, travelers will see 
fewer delays, and the environment will benefit from lower carbon 
emissions.
    I also want to highlight the serious concerns as the chairman noted 
in her statement. It is troubling to hear recent media reports over the 
past couple of months regarding air traffic controllers who behaved 
unprofessionally. It is unacceptable that Federal employees who are 
responsible for the safe arrival and departure of our flying traveling 
public to be asleep on the job or inattentive to pilot requests.
    I appreciate the department for taking action within the Air 
Traffic Organization. Accountability starts at the top with management 
and I am hopeful that FAA will be able to quickly address the issues 
surrounding air traffic controller and pilot fatigue and training to 
avoid further incidents from occurring.
    Chairman Murray, thank you and I look forward to hearing the 
testimony of Administrator Babbitt and Inspector General Scovel as we 
consider the fiscal year 2012 budget request of FAA.

    Senator Murray. Thank you very much.
    Senator Lautenberg, do you have an opening statement for 
us?

                STATEMENT OF SENATOR FRANK R. LAUTENBERG

    Senator Lautenberg. Thank you very much, Madam Chairman.
    I am pleased that we are inspired with some extra funds to 
do our job here, and we welcome the President's budget for the 
next year.
    We are constantly wrestling with whether or not we have 
adequate population, based on the outline of what should be the 
number of fully trained professionals. And we see in the 
airports in the New York area nowhere near the number that 
should be there to manage the traffic flow. It is made up for 
with trainees, but we would not like trainees going into the 
operating room with us and we should not have an excessive 
number of trainees doing the job of fully prepared, fully 
certified controllers.
    Madam Chairman, one of the things that I look at here with 
some degree of--more than annoyance, and that is the extra fees 
that are put on for baggage. If you want the large pretzels, it 
is $1. If you take the small ones, you might have to pay only 
50 cents. But these things--you do not get it when you use 
other means of travel. I consider it an affront to a welcome to 
travel for the average passenger. One of these days I suspect 
that you are going to be charged for going to the lavatory, and 
maybe they will say, okay, you do not have to pay going in, but 
you have to pay getting out, some kind of scheme that will put 
you under the gun, as they say.
    So we have important things to do. NextGen has been NextGen 
for years. We have spent billions of dollars trying to get 
there and have not yet got what we consider an up-to-date plan 
in place, and we have got to wrestle, as all of you know.
    And I thank you both. The system is terrific. It really is 
when you consider how many passengers are handled each day and 
each year, and with the shortages and with the problems that we 
have--despite them, thank goodness, air travel is really safe.
    So I encourage us to move the budget along as we have, 
Madam Chairman. I am glad that you are doing this and that we 
have Senator Collins here also, people who understand what we 
have got to do to improve our aviation system. So thank you 
very much.
    Senator Murray. Thank you very much, Senator Lautenberg.
    With that, we will turn it over to the testimony from our 
witnesses today and begin with Randy Babbitt.

             SUMMARY STATEMENT OF HON. J. RANDOLPH BABBITT

    Mr. Babbitt. Good morning, Madam Chairman, Ranking Member 
Collins, subcommittee members as well. Thank you very much for 
the opportunity to come in and discuss with you the 
administration's budget request for the FAA for the fiscal year 
of 2012.
    As you have mentioned, everyone at the FAA is committed to 
continuing to run the safest and most efficient airspace system 
in the entire world. I want to take a moment, however, to 
address some of the issues in the news recently and update you 
on some of our actions.
    Yesterday, we proposed a comprehensive overhaul of pilot 
and crew training that will require pilots to work together and 
demonstrate their skills in real-world scenarios during 
training that will expose them to situations they might 
actually encounter in the cockpit. This is a major effort to 
strengthen performance and represents the most significant 
changes in crew training in more than 20 years. With this 
proposed training, we want pilots and crews to have more 
training in the kinds of rare--but they do happen--type of 
emergency events that test their skills and give them the 
confidence to appropriately handle the situation.
    In addition to this update on crew training, I want you to 
be aware of the latest steps that we have taken with regard to 
the incidents involving air traffic controllers who have 
behaved unprofessionally.
    Last month, I traveled all around the country with the 
National Air Traffic Controllers Association's (NATCA) Paul 
Rinaldi. We went to air traffic facilities across the Nation in 
a call-to-action on professionalism. The visits reinforced for 
me that we have a workforce that is committed to the safety of 
this system 24 hours a day, 7 days a week, 365 days a year, but 
the incidents of a few employees falling asleep on position 
showed us that we have to make changes, and we have.
    We have added a second controller on the midnight shifts in 
some facilities where we only had one.
    We made significant changes to long-time scheduling 
practices that will reduce further the possibility of fatigue, 
and we will do more.
    We have changed management within the FAA in some critical 
positions to ensure that we have the right people in the right 
places.
    We, unfortunately, found it necessary to terminate three 
controllers who were found sleeping on the job.
    We continue to review the 12 recommendations developed by a 
joint FAA/NATCA task force work group that I believe you 
referenced, which was undertaken more than 1 year ago in an 
effort to reduce controller fatigue and do so in a 
collaborative fashion.
    Controllers have a responsibility to report rested and 
ready to work for their shifts, and as management, we have the 
responsibility to make sure that they have the opportunity for 
adequate rest between those shifts. The American public trusts 
us to perform our jobs and make safety the highest priority 
each day, year in and year out. We are committed to making 
whatever difficult changes are necessary to preserve that 
trust.
    The President's 2012 budget is designed to maintain and 
enhance operational safety, as well as to invest in NextGen 
infrastructure and technology. We are facing a very pivotal 
time in aviation history. We are transforming to NextGen. We 
are moving from ground-based radar to a satellite-based style 
of navigation. Air travel will, in fact, become more precise 
and safer. It will leave a smaller carbon footprint, and 
NextGen will create thousands of good jobs. We need to embrace 
this opportunity and lead the way.
    Our budget contains limited discretionary increases and 
really emphasizes cost efficiency. We are taking a good hard 
look at our organizational structure and we are making changes 
to create a more streamlined, as well as a more efficient, 
agency.
    The infrastructure of the future is going to be a marriage 
of NextGen procedures with our airports, our runways, our 
airlines, and the flight crews. This budget supports the 
airport grant program, which enhances the safety, efficiency, 
and capacity of the aviation system. This is vital, because 
delaying infrastructure investments today means the ultimate 
long-term cost to our Nation, to our passengers, and to our 
environment will far exceed the cost of going forward today.
    This budget also pays for safety inspectors who inspect the 
latest generation of innovative aircraft that Americans are 
building. We do not want to be the chokepoint in the assembly 
line of progress. We want to certify aircraft. We want to 
certify equipment and new procedures that keep the Nation's 
aviation economic engine running and running smoothly. So I 
sincerely ask for your support in helping the men and women of 
this agency to perform the tasks that they so proudly do day in 
and day out.

                           PREPARED STATEMENT

    So, thank you very much for this opportunity, and I would 
be happy to answer any questions, should you have some.
    [The statement follows:]
             Prepared Statement of Hon. J. Randolph Babbitt
    Good morning, Chairman Murray, Ranking Member Collins, and members 
of the subcommittee. Thank you for the opportunity to discuss the 
administration's fiscal year 2012 budget request for the Federal 
Aviation Administration (FAA).
                        fiscal year 2012 budget
    The FAA's mission is to provide the safest, most efficient air 
transportation system in the world. We have proudly delivered on this 
promise for more than 50 years, providing the world's leading aviation 
system and setting an unparalleled standard for safety and efficiency 
that is emulated globally. Since 2001, we have managed more than 600 
million airport operations, including more than 93 million successful 
flights on U.S. commercial aircraft, transporting more than 6.5 billion 
passengers safely to their destinations. Commercial aviation fatality 
rates are at historic lows and the number of commercial air carrier 
accidents has decreased 83 percent since the mid-1990s. In the last 10 
years, 16 new runways have opened at large commercial airports. And 
we've put in place financial systems that have helped us better account 
for and save taxpayers' money. Despite our many successes, there is 
still more to be done.
    The demand for FAA services has never been more complex or 
comprehensive. We are heading into a period of unprecedented challenge 
as we pilot the future of aviation into our skies and into space. We 
must work to stay ahead of changing technological, economic, social, 
environmental, and energy needs of both our Nation and our global 
partners. We are confident that the President's fiscal year 2012 budget 
request will enable us to take aviation to the next level of safety, 
while providing the public, U.S. business, and our international 
partners with secure, convenient, and environmentally sustainable air 
travel.
    Our vehicle for this transformation is the Next Generation Air 
Transportation System (NextGen), which will enable increased safety, 
capacity and efficiency while providing for a cleaner environment and 
bolstering America's continued economic growth. The next 15 years 
promise to be a pivotal time in the history of air transportation, as 
the face of aviation is transformed around the world. Parts of NextGen 
are already on the ground and in cockpits, and are improving air travel 
for passengers and aviation professionals today. From flight decks to 
control towers, our system is already changing, delivering access 
through innovation. As we change, FAA remains deeply committed to 
providing the safest, most advanced and efficient aviation system in 
the world, and to ensuring air transportation is safe and efficient 
wherever U.S. citizens travel.
    We must continue to fulfill our mission for the flying public, 
delivering a safe and efficient system that continues to set the global 
standard. We are working to promote an increased sense of 
professionalism and accountability, while fostering a culture of 
vigilance and safety. We also aim to support aviation's crucial role in 
our Nation's economic recovery, building on today's successes to meet 
tomorrow's growing demands. That means delivering on the promise and 
benefits of NextGen, offering economic and environmental efficiencies 
and technologies that support America's ability to shape international 
aviation standards and development around the world.
Operations
    The fiscal year 2012 request of $9.8 billion funds the development 
of the performance-based navigation routes and procedures necessary to 
support NextGen, increased safety staffing, enhanced Information System 
Security protection, implementation of environmental and energy 
technologies, and appropriate staffing to improve safety and hazardous 
materials compliance. The request also supports annualization costs of 
new hires, adjustments for inflation, and maintenance and operating 
costs of National Airspace System (NAS) systems and equipment.
    The fiscal year 2012 request maintains our critical aviation safety 
(AVS) inspector staff changes from recent years, while further 
increasing overall AVS staffing by 178 positions. The request, 
recognizing increasing flight operations and complexity, adds 100 new 
safety inspectors to implement new flight procedures, operation 
methods, airmen qualifications, and Air Carrier Evaluation Program 
functions. These inspectors will also oversee the conformity of new 
designs and the production of new aircraft and aircraft parts. We must 
be responsive to innovation in our Nation's market place while ensuring 
that safety always remains our top priority. We must certify new 
aircraft and new equipment as expeditiously as possible so as not to 
become a bottleneck in the industry's assembly line. The fiscal year 
2012 request enables FAA to perform additional rulemaking, 
certification, and outreach activities necessary to move NextGen 
forward.
    As the National Aeronautics and Space Administration (NASA) retires 
the space shuttle, it will begin to utilize commercial space 
transportation systems to access the International Space Station (ISS). 
The FAA is solidifying our relationships with the Air Force and with 
NASA to ensure a seamless transition to a commercial space 
transportation model that provides access to ISS as we focus on the 
development of commercial human spaceflight systems.
    This change increases the workload of FAA's Office of Commercial 
Space Transportation. In response, our fiscal year 2012 budget includes 
$5 million for the FAA Commercial Spaceflight Technical Center at the 
Kennedy Space Center in Florida and includes $1.3 million to begin 
development and implementation of safety requirements for commercial 
human space flight. We also request $5 million to establish a Low-Cost 
Access to Space Incentive program.
    We must protect against persistent and organized threats that beset 
FAA systems every day, as hackers launch attacks that may compromise 
service to our users. We must also improve safety standards and 
compliance for hazardous materials transportation, while meeting an 
increased requirement for security investigations of new hires and 
existing staff. The budget request includes the enhancement of FAA's 
Cyber Security Management Center (CSMC) to increase information system 
security protection and increased staffing to more effectively support 
our intelligence activities and oversight of hazardous materials in air 
commerce.
    The fiscal year 2012 Operations request includes $45 million in new 
cost savings. In the Air Traffic Organization (ATO), we expect the 
flight services contract to save FAA $1.9 billion over its 13-year 
lifespan and $8 million in fiscal year 2012. The Aviation Safety 
Organization expects to achieve $2.4 million in administrative 
efficiencies. Finally, our budget request incorporates base transfers 
that better align our resources with organizational functions.
Facilities and Equipment
    Our fiscal year 2012 budget request of $3.1 billion allows FAA to 
meet the challenge of improving the capacity and safety of the current 
NAS while keeping our comprehensive modernization and transformation 
efforts on track.
    To spur job growth and initiate sound multi-year investments, the 
President's budget includes a $50 billion boost more than current law 
spending for roads, railways and runways. As part of this initiative, 
our facilities and equipment (F&E) request includes $250 million in 
mandatory General Fund appropriations that will be used to advance 
NextGen and make near-term improvements in FAA's air traffic control 
infrastructure. Two hundred million dollars will be used to accelerate 
applied research, advance development, and implement engineering 
solutions for NextGen technologies, applications, and procedures while 
$50 million will be used to upgrade existing capital infrastructure 
such as power systems and air traffic control centers and towers.
    The F&E NextGen portfolio of $1.14 billion in fiscal year 2012 will 
continue our ongoing NextGen modernization activities. This includes 
nation-wide Automatic Dependent Surveillance-Broadcast (ADS-B) 
deployment, the data link communications services program, NextGen 
future facilities investment planning, and follow-on En Route 
Automation Modernization (ERAM) data side-position development for 
future NextGen capabilities.
    The remainder of our investment--representing $2 billion--will be 
in legacy areas, including our extensive infrastructure, power systems, 
information technology, navigational aids, and weather systems. In 
fiscal year 2012, FAA plans to award four tower construction contracts. 
Funding is also requested to replace and upgrade aging aerospace 
medical equipment needed to perform research in pilot certification and 
performance, aircrew health, atmospheric and radiation risk data, and 
other medical areas to keep FAA in the forefront of aeromedical 
research.
Research, Engineering, and Development
    The fiscal year 2012 request of $190 million supports FAA's 
continued work in both NextGen and other research areas such as fire 
research and safety, propulsion and fuel systems, advanced materials 
research, aging aircraft, and environment and energy.
    The request supports our research to enable the use of ``drop in'' 
sustainable jet fuels for commercial aviation, reinforcing American 
leadership in clean technologies and enhancing energy supply security. 
It also supports developing alternatives to leaded aviation gasoline to 
lessen general aviation environmental impacts. Other environment and 
energy investments ($35.8 million including NextGen) support a range of 
research activities, from improved science and modeling capabilities 
that characterize and quantify aviation's environmental impacts to 
maturing certifiable clean and quiet aircraft technologies via the 
Continuous Lower Energy, Emission and Noise (CLEEN) program and other 
vehicles.
    FAA must meet our Nation's growing need for unmanned aircraft 
systems (UAS). Our research, engineering, and development (RE&D) 
request continues to support this critical area, providing $3.5 million 
to develop minimum performance requirements for ground control stations 
and to revise standards and guidance that address UAS crew resource 
management and training for both pilots and crewmembers.
Grants in Aid for Airports
    Airports remain the critical foundation of our Nation's aviation 
system infrastructure. Our fiscal year 2012 request provides the 
funding needed to ensure safety, capacity, and efficiency at our 
Nation's airports through a combination of continued grant funding and 
an increase in passenger facility charges (PFCs). Our fiscal year 2012 
request totals $5.5 billion for the Airport Improvement Program (AIP), 
which includes $2.4 billion from the Airport and Airway Trust Fund and 
$3.1 billion in mandatory General Fund resources. The fiscal year 2012 
request will continue our focus on safety-related development projects, 
including runway safety area improvements, runway incursion reduction, 
AVS management, and improving infrastructure conditions.
    The budget proposes to lower funding for ongoing airport grants to 
$2.4 billion by eliminating guaranteed funding for large- and medium-
hub airports. The proposal is consistent with the recommendation of the 
President's National Commission on Fiscal Responsibility and Reform to 
eliminate grants to large- and medium-hub airports. Our budget 
continues to support smaller commercial and general aviation airports 
that do not have access to additional revenue or other sources of 
capital. The reduction in AIP funding for larger airports is premised 
on an increase to PFCs of $4.50 to $7 per enplanement, providing these 
airports greater flexibility to generate their own revenue.
    In addition, FAA requests a one-time appropriation of $3.1 billion 
in mandatory General Fund resources for the Grants-in-Aid program. 
While regular AIP eligibility will be suspended for large- and medium-
hub airports, eligible airports in all size categories will be able to 
compete for the $3.1 billion. Most of this funding will be used for 
runway construction and other airport improvement projects aimed at 
increasing overall system efficiency in the future.
    Our request also includes $101 million for Personnel and Related 
Expenses to support Safety Management Systems (SMS) training in the 
Office of Airports; improved joint use agreements between the 
Department of Defense and airports; data trend analysis; engineering 
support; field operations program/portfolio management/inspectors; and 
information systems security and privacy.
    The budget also provides $29.3 million for Airport Technology 
Research to support enhanced safety and pavement research efforts and 
conduct noise studies. In addition, the budget provides $15 million for 
Airport Cooperative Research.
    The American Recovery and Reinvestment Act of 2009 (ARRA) provided 
resources to preserve and enhance safety, capacity and access while 
maximizing efficiency and operational performance. The FAA obligated 
100 percent of the ARRA funds available for airport grants ahead of 
schedule. Work has been completed on 98 percent of 372 airport grant 
projects at 334 airport locations nationwide. We have improved runways 
and taxiways, modernized terminal buildings, and provided aircraft 
rescue and firefighting improvements at airports that serve millions of 
passengers every year. Our commitment to successfully implementing ARRA 
established FAA's place as a recognized leader in the Department of 
Transportation's (DOT) efforts to bring Americans back to work.
NextGen Implementation
    The fiscal year 2012 budget request reflects FAA's ongoing 
commitment to the implementation and deployment of innovative NextGen 
solutions. The application of these critical 21st century technologies 
represents a pivotal shift that will transform aviation. NextGen is 
already yielding immediate results for a safer America while working to 
maximize efficiencies to meet future demands. The investment in NextGen 
will reduce taxpayer and industry costs while safeguarding our world's 
precious environment and resources. We are working in cooperation with 
industry toward a shared vision, leveraging powerful technologies and 
setting new standards for the future of global aviation.
    NextGen is our evolutionary blueprint for modernizing air 
transportation with revolutionary technologies. NextGen represents a 
wide-ranging transformation of the entire national air transportation 
system to meet future demand and support the economic viability of 
aviation while improving safety and protecting the environment. The 
application of critical 21st century solutions is already transforming 
aviation from a ground-based system of air traffic control to a 
satellite-based system of air traffic management. We continue to work 
in full partnership with industry, other agencies and departments, and 
our labor groups to achieve a shared vision, leveraging powerful 
technologies and setting new standards for the future of global 
aviation.
    Our fiscal year 2012 budget request bolsters FAA's NextGen 
investment to $1,237 million, distributed among F&E programs ($1,135 
million), RE&D ($77 million), and Operations activities ($25 million).
    The FAA continues to support the Radio Technical Commission for 
Aeronautics (RTCA) NextGen mid-term implementation task force 
recommendations. Our fiscal year 2012 budget request further emphasizes 
our commitments in the areas of surface, metroplex, runway access, 
cruise, as well as some cross-cutting recommendations. As FAA moves 
forward on NextGen implementation, we will continue to evaluate and 
adjust our strategies, priorities and deployment timelines in full 
collaboration with aviation stakeholders.
    We have also been working hard at our Nation's airports to reduce 
delays and improve the environment with NextGen initiatives that help 
curb fuel burn and emissions by improving surface efficiencies. We move 
forward with these initiatives knowing we might have to make 
adjustments due to new information, program interdependencies, 
realignment of priorities, and other changes that can't always be 
anticipated as we pursue our mid-term operational vision.
    Fiscal year 2012 promises to be every bit as productive as last 
year. Design and implementation teams will focus on streamlining 
arrival and departure traffic at clustered metroplex airports. Our work 
on data communications is setting the stage for the delivery of a 
NextGen technology that the 2009 RTCA task force identified as a 
priority. And the report of our ADS-B In rulemaking committee, due in 
September, will give us an indication of which cockpit-based ADS-B 
applications may be most important to the aviation community.
    Our fiscal year 2012 budget includes $9 million in the Operations 
account for 30 new AVS staff to support the certification and oversight 
of NextGen systems and procedures. They will play a pivotal role in the 
implementation of several NextGen initiatives including efficient 
aircraft designs, revolutionary cockpits, data link communications, new 
interactive instrumentation, SMS, and aviation safety information 
analysis and sharing (ASIAS). This will enable AVS to review, process, 
and certify new NextGen-related technology applications from aircraft 
manufacturers and operators, as well as evaluate the safety aspects of 
changes in the airspace system proposed by the ATO. We also are 
striving to streamline our own internal processes to ensure that the 
NextGen capabilities emerging from our test beds and research centers 
begin producing operator benefits as quickly and safely as possible. 
The new policies, standards, and guidance produced by these additional 
staff will facilitate the transition of maturing NextGen research and 
development toward implementation.
    ADS-B is a proven centerpiece component of NextGen, evolving from a 
radar-based system to a sophisticated satellite-derived aircraft 
location data system. Future ADS-B applications will provide 
surveillance, like radar, but will offer greater precision and 
additional services, such as weather and traffic information for 
pilots. In 2010, we successfully integrated ADS-B into all four air 
traffic control automation platforms at key sites across the country. 
Our ADS-B technology deployed in the Gulf of Mexico has opened up 
250,000 square miles of new, positively controlled airspace in the 
gulf, in an area where radar cannot reach.
    We cleared the way to begin integrating ADS-B into FAA air traffic 
control facilities nationwide, and to train both our workforce and 
users. We have issued our ADS-B Out rule requiring aircraft operating 
in most controlled airspace to be equipped to broadcast their position 
to the ADS-B network by the start of 2020. This rule allows 
manufacturers to start mass-producing certified ADS-B avionics, which 
we believe will drive prices down, addressing a key concern of the 
operators.
    Our budget request includes $285 million for our continued rollout 
of ADS-B. This will ensure that our deployment of the ground 
infrastructure that will support ADS-B surveillance remains on time and 
on budget. We are installing more than 800 ground transceiver stations 
nationwide, and 330 ground transceiver stations have been installed to 
date. Of these, 260 are operationally providing services in the NAS. 
FAA plans to complete the ADS-B network in 2013.
    The budget designates $200 million from the President's $50 billion 
``up-front boost'' in support of NextGen research, so we can stay on 
the forefront of the technology. We have enjoyed success in our early 
efforts to leverage surface data sharing in support of collaborative 
surface traffic management at select locations. We must continue 
developing innovative programs to manage air traffic and provide better 
weather data to general aviation and commercial carriers alike.
    The FAA has already produced a significant number of performance-
based navigation (PBN) routes and procedures, exceeding our fiscal year 
2010 goal. Our fiscal year 2012 request also includes $26 million to 
improve performance-based GPS-based precision approach and departure 
procedures, better known as area navigation/required navigation 
performance (RNAV-RNP), at airports across the country. Performance-
based navigation offers our airline industry better routes, added 
capacity, improved on-time performance and lower fuel bills. Our 
country benefits from reduced airspace congestion, more efficient air 
travel, reduced emissions, and a reduced dependency on oil.
    There is a strong business case for NextGen that many companies 
have already embraced. They are already seeing fuel savings. Fuel 
represents about 40 percent of an airline's total expenses, on average, 
and the cost of jet fuel has increased significantly in the last 6 
months. Southwest Airlines started using the precision procedures at a 
dozen airports this year and estimates it will save $60 million per 
year in fuel when it uses NextGen arrival procedures at airports across 
the country. Helicopters in the Gulf of Mexico have benefited from ADS-
B technology, saving up to 10 minutes and 96 pounds of fuel each 
flight. Airlines flying over the Pacific Ocean are taking advantage of 
a combination of improved capabilities to save 200 to 300 gallons per 
flight. This represents a significant return on their investment, while 
justifying ours.
    Alaska Airlines has long been a NextGen pioneer and is the only 
U.S. carrier to fully equip its entire fleet for high-performance GPS-
based procedures. This allows aircraft to navigate precisely through 
mountainous terrain in low-visibility conditions. The company estimates 
it would have canceled 729 flights last year into Juneau alone due to 
bad weather if it were not for the GPS-based approaches. Alaska 
Airlines saved $7.5 million last year by making these flights, safely 
transporting passengers to their respective destinations without 
diversions or ground holds.
    The FAA will maintain an ongoing focus on top priorities for the 
development and implementation of NextGen. The detailed planning that 
supports NextGen--including the NAS Enterprise Architecture (EA) and 
the NextGen Segment Implementation Plans (NSIP)--enable cost-effective 
decisions for NextGen projects. Cross program dependencies are captured 
on EA roadmaps, which assist planners in assessing impacts and 
developing alternative plans. The NSIP documents linkages among 
programs and promotes coordination and risk management to support cost-
effective investments in NextGen.
    As we move forward with NextGen, our goal is to reach the next 
level of safety and prepare our workforce for the future. We will 
continue to work closely with industry to implement new technologies 
and procedures that are sustainable. And we want to work with other 
countries to establish uniform standards around the globe.
The Airport and Airway Trust Fund
    The Airport and Airway Trust Fund provides all of the funding for 
FAA's airport improvement, facilities and equipment, and research and 
development activities, as well as a share of FAA's operations. As of 
the end of last fiscal year, the Trust Fund had a cash balance of 
approximately $9.4 billion, of which $770 million remains uncommitted. 
The AIR-21 formula for calculating Trust Fund appropriations safeguards 
the future solvency of the Trust Fund by ensuring that expenditures 
will not exceed projected revenue. If revenue forecasts are accurate, 
the uncommitted balance will remain relatively stable for fiscal year 
2012.
Reauthorization
    We are grateful for the considerable efforts the Congress has made 
to prepare an FAA reauthorization bill. As you already know, the 
current and 18th extension expires on May 31. The budgetary and 
operational uncertainties of repeated extensions make running the FAA 
much more difficult, which makes the passage of a multi-year bill 
vital. Most notably, delaying a multi-year reauthorization has produced 
several hurdles for managing and funding AIP.
    While the administration supports the enactment of a multiyear 
reauthorization bill, the funding levels in the House-passed bill for 
FAA operations and air traffic modernization represent significant 
reductions from levels proposed by the administration. While we will 
never reduce our commitment to safety, if funding were appropriated at 
the levels proposed in the bill, the safe and efficient movement of air 
traffic in the air and on the ground would be degraded--today and in 
the future. In addition, the administrative funding levels for AIP in 
the House bill, if enacted, will seriously undermine the 
administration's ability to execute congressionally mandated airport 
programs.
    The administration looks forward to working with the Congress to 
craft final legislation that will provide adequate funding 
authorization for infrastructure investment, enhance the efficiency and 
safety of the national airspace, accelerate and streamline 
implementation of NextGen, and advance research and sustainable 
technologies to improve efficiencies and reduce environmental impacts.
                                 safety
    Safety is FAA's primary mission and our 2012 budget request 
reflects this most important of strategic objectives. We have 
identified and mitigated many of the major risks in the system and we 
will continue to act on the remaining safety challenges and keep air 
travelers safe. Approximately 49 percent of our fiscal year 2012 budget 
will be required to maintain and improve the agency's safety programs. 
Our day-to-day operations in the four key programs of air traffic, AVS, 
airports, and commercial space transportation contribute toward a 
reduction in air transportation-related injuries and fatalities.
    The FAA continues to address concerns over capacity and safety with 
increased vigilance and professionalism. The flying public must have 
the highest confidence that the airplanes they board are properly 
designed, produced, operated, and maintained. They must know that their 
pilots and air traffic controllers are qualified, trained for their 
mission, and fit for duty. This year we continue to take AVS to a new 
level, making aggressive effort to take advantage of the latest 
research on fatigue to create a rule on pilot flight, duty and rest. 
Our landmark proposal combats fatigue among commercial pilots by 
setting new flight time, duty and rest requirements based on fatigue 
science. Additional rulemaking proposals will be put forward this year, 
such as redefining requirements for pilot certification and 
qualifications, flight crewmember training, leadership and professional 
development.
    The FAA's implementation of an SMS is a critical component of our 
overall approach to safety. SMS is a systematic and continuous 
management process based on proactive identification of hazards and 
analyses of their risk. SMS gives us the wherewithal to gather 
information that takes safety to the next level. Our ASIAS team gathers 
crucial safety information from various data sources and uses 
sophisticated analysis tools to detect trends, identify precursors, and 
assess risks. We are pushing the science of advanced data analysis, 
developing cutting edge tools to find emerging threats, as well as 
identifying previously undiscovered risks that are buried in terabytes 
of safety information.
    AVS inspectors, engineers, and other staff increases are key to 
leveraging standardized SMS processes to implement an integrated, risk-
based method of oversight while supporting FAA's efforts in rulemaking, 
certification, and outreach activities that will move NextGen forward.
    The FAA will continue to work on focus areas for reducing aviation 
related injuries and fatalities, such as the air tour industry and in 
helicopter emergency medical services (HEMS). The HEMS weather tool 
will be enhanced in 2012 to provide additional altitude and location 
specific data to increase safety. The FAA will collaborate with NASA to 
develop measurement technology and forecast capability of the high ice 
water content conditions that represent a critical safety hazard.
    The FAA places a high priority on initiatives to reduce runway 
incursions and excursions. We continue to implement ambitious training 
programs for pilots, controllers, and airport operators. We will 
implement solutions through technologies and advanced programs such as 
runway status lights, airport surface detection equipment, engineered 
materials arresting systems, improved runway safety areas, and others. 
The Runway Incursion Reduction Program remains a catalyst for 
acquisition of promising safety technologies that have reached a level 
of maturity appropriate for transition and implementation into the NAS.
    The FAA's mandate for AVS includes leading the world safely into an 
exciting new era where international spaceports, commercial space 
transportation and orbital tourism are already becoming a reality. Last 
year, there were four licensed launches, bringing the overall total to 
more than 200, without any fatalities, serious injuries or property 
damage to the public. Our fiscal year 2012 budget request allows us to 
maintain a spotless industry record for safety in the rapidly 
developing industry of commercial human space flight. The FAA will 
develop safety requirements, policies, processes and procedures to 
address and safeguard this bourgeoning industry.
    The FAA's 2012 budget supports continued AVS research, focusing on 
critical areas such as UAS, fire and structural safety, human factors, 
and airworthiness. It further supports enhanced safety and pavement 
airport technology research. Weather systems research continues in 
naturally occurring atmospheric hazards including turbulence, severe 
convective activity, aircraft icing, and restricted visibility.
                          state of good repair
    As good stewards of our aviation system, we apply asset management 
principles proactively to maintain and modernize our airport runways. 
We recognize the safety benefits of ensuring that pavement, marking and 
lighting at airports identified in the National Plan of Integrated 
Airport Systems (NPIAS) meet current safety and design standards.
    Airport infrastructures, particularly airfield facilities, are 
exposed to constant heavy use and harsh environmental conditions. 
Runways, taxiways, and aprons are designed to withstand the heavy 
equipment that operates on them, but even so these facilities require 
frequent maintenance and rehabilitation in order to remain in good 
working condition. Runways and taxiways must be kept clear of snow, 
ice, and ponding water that can jeopardize aircraft directional control 
or braking action. Chemicals and plowing, as well as freeze-thaw 
cycles, all take a toll on runways, taxiways, and other paved areas. 
The smallest bit of broken asphalt or concrete can represent a major 
safety hazard to aircraft.
    We have had a target to ensure that 93 percent of runways are in 
good condition for the past several years, and we have exceeded that 
goal, most recently reaching 97.2 percent. AIP grants and PFC funding 
will continue to support this goal by funding airport pavement and 
lighting system rehabilitation projects, treatments to minimize 
hydroplaning in wet conditions, obstruction removal in runway approach 
zones, perimeter fencing to prevent wildlife entry, and aircraft 
firefighting equipment. By continuing to surpass this target, we are 
not only achieving the goal of a state of good repair, but we are also 
contributing to our overall primary goal of safety.
                        economic competitiveness
    NextGen remains our most critical investment to ensure our economic 
competitiveness on the global market. NextGen involves the total 
overhaul of our NAS to make air travel more convenient and dependable 
while ensuring our stakeholders have the safest and most secure flights 
possible. Technological advancement and integration of new systems, new 
procedures, aircraft performance capabilities, engines, airframes, 
renewable fuel technologies, new supporting infrastructure, and new 
ways to do business as the Air Transportation System will keep the 
United States globally competitive. We have partnered with industry in 
our CLEEN technology program to develop new technologies to reduce 
aircraft noise, emissions, and fuel burn, and to advance sustainable 
alternative aviation fuels.
    The NextGen portfolio of investments focuses on the implementation 
and integration of key NextGen transformational technologies. The 
capabilities these technologies provide begin a shift of information 
flow from the ground to the cockpit. These include:
  --Automatic Dependent Surveillance-Broadcast (ADS-B);
  --System-Wide Information Management (SWIM);
  --Data Communications;
  --NextGen Network-Enabled Weather (NNEW);
  --Collaborative Air Traffic Management Technologies (CATMT);
  --Time-Based Flow Management (TBFM); and
  --NAS Voice Switch (NVS).
    Our NextGen efforts further include supporting performance-based 
navigation (RNP/RNAV) between select metropolitan areas. Deployed over 
a 3- to 4-year period, these high-altitude performance-based routes 
will provide increased efficiency and flexibility to the aircraft using 
them, as well as significant savings in fuel costs and usage.
    We have already seen the benefits of implementing ADS-B in the Gulf 
of Mexico. For one major helicopter operator in the gulf, only 14 
percent of their flight hours in 2009 were flown by instrument flight 
rules (IFR). But in 2010, the first full year ADS-B was available, the 
percentage went up to nearly 21 percent. And just in the first 2 months 
of this year, 36 percent of flight hours were IFR This means that this 
very important airspace is more accessible, more of the time thanks to 
NextGen innovation.
    NextGen will also provide numerous benefits for the general 
aviation community by facilitating better access to airports, and 
providing more complete weather and traffic information. In addition, 
even those aircraft that are not fully equipped will benefit from the 
improved traffic flow that NextGen will achieve.
    Implementation of NextGen technologies and capabilities, with the 
resulting benefits to economic growth in large and small communities 
around the Nation, is essential if the United States is to maintain its 
global aviation leadership. Timely and effective progress on NextGen 
helps the U.S. aviation sector sustain this position.
                      environmental sustainability
    Environmental protection and addressing the energy challenge are 
vital elements to sustaining the future of United States air 
transportation viability and global leadership. We are continuing 
efforts to reduce greenhouse gas emissions, improve water use 
efficiency, prevent pollution, and improve building energy consumption.
    Environmental pressures on the national and international aviation 
system will continue to increase as growth in aviation activity 
returns. FAA supports DOT's environmental sustainability outcomes to 
reduce carbon emissions, improve energy efficiency, and reduce 
dependence on oil. We are reducing transportation-related pollution and 
impacts on the ecosystems while increasing the use of environmentally 
sustainable practices in the transportation sector.
    We are committed to managing aviation's growth while reducing the 
negative impacts of aviation noise and air emissions. Through increased 
efforts on the CLEEN initiative, FAA will develop and mature clean and 
quiet technologies and advance alternative fuels. The Commercial 
Aviation Alternative Fuel Initiative is moving forward to qualify and 
approve new aviation alternative fuels for operational use. And by the 
end of this year we should have approval for a renewable biofuel for 
commercial aircraft made from plants, algae or other sustainable 
sources. These alternative jet fuels are ``drop-in fuels.'' There's no 
need to change the engines or equipment. The source would be renewable 
and would reduce greenhouse gases.
    Sustainable alternative jet fuels offer benefits for both our 
environment and our economy. They can help stabilize supply and the 
cost volatility in the jet fuel market. In 2010, U.S. airlines spent 
$36 billion on jet fuel. This represents $21 billion more than in 2000 
even though the airlines consumed 3 billion gallons less.
    The budget request supports identifying and exploring advances in 
communication, navigation and surveillance technology to advance 
aircraft arrival and departure, surface movements, and en route/oceanic 
procedures for reduced noise, fuel burn, and engine emissions. It also 
supports updating and enhancing the Voluntary Airport Low Emissions 
Program so that airports located in nonattainment or maintenance areas 
for National Ambient Air Quality Standards will have continued 
opportunities to reduce air emissions.
    In addition, we are working to mitigate noise impacts for thousands 
of people exposed to a day/night sound level (the energy-averaged sound 
level metric used by the aviation industry to determine the impact of 
noise) equal to or greater than 65 decibels through ongoing noise 
compatibility efforts. These efforts include the purchase and 
relocation of residences and businesses, the soundproofing of 
residences and buildings used for educational or medical purposes, the 
purchase and installation of noise barriers or monitors, recommended 
land use planning, and public outreach.
                       organizational excellence
    The fiscal year 2012 budget request provides for a motivated, well-
trained, and dynamic workforce that possesses the vital resources and 
reliable data necessary to support the continued success of FAA's 
mission for safety and efficiency. It further includes enhanced cost-
control measures to ensure savings that can be effectively managed to 
fund mission-critical initiatives.
    One of the key challenges we face is building the workforce of the 
future to meet the transition to NextGen. Effecting this transition 
will involve a systematic approach to getting the right number of 
people with the right skills, experience, and competencies in the right 
jobs at the right time.
    We will continue to ensure adequate numbers of safety staff. 
Workforce planning for mission-critical and key occupations will 
benefit our managers as they make staffing decisions to achieve program 
goals based on a rigorous analysis of their organization's activities, 
workforce and expected technological advances. The flying public will 
benefit from a better prepared and well trained workforce.
    The FAA is delivering programs that build leadership capabilities, 
support professional development and promote continuous learning at 
executive, manager, and employee levels. The development of our 
executive corps is grounded in creating a culture of accountability and 
professionalism. Building stronger leadership within the agency helps 
us to achieve strategic goals and manage people and resources 
effectively while driving continuous improvement.
    Part of our organizational excellence goal is to protect agency IT 
assets from cyber-attacks, to ensure alignment between IT investment 
and agency business needs, and provide certain enterprise-wide shared 
services. The FAA's CSMC is a core component of our overall Information 
Security Services. CSMC is tasked with protecting our information 
infrastructure using advanced cyber defense strategies. The CSMC works 
to enhance our architecture to include cybersecurity, to harden 
individual systems and networking elements, improve recover rate times, 
and enhance boundary protection by completing remediation of 
vulnerabilities, improved information sharing, and systemic monitoring 
of systems.
    The budget request supports activities to remediate moderate 
vulnerabilities identified for our information systems that support 
human resources, finance, security/safety, and air traffic services. In 
the last few years, we have focused on high-risk vulnerabilities. Now 
the focus is on remediating the moderate vulnerabilities. The request 
will cover contracts that will conduct information system assessments, 
certifications, recertifications, and risk mitigation activities. The 
funding will allow FAA to handle risks to its information systems 
sooner, which will save out-year dollars and prevent higher and more 
costly system vulnerabilities and remediations.
    The fiscal year 2012 budget request supports continued efforts to 
manage our acquisitions responsibly so we deliver programs on time and 
on budget. In addition, we are implementing a Real Property Asset 
Management Plan to ensure timely disposition of assets are measured by 
the number of days to process inactive assets. Since 2000, FAA has 
removed more than $341 million in real property assets from our 
portfolio.
                               conclusion
    Despite a challenging economic environment, 713 million passengers 
flew on U.S. airlines in 2010. We anticipate stronger growth this year, 
with a projected increase of 3.5 percent. Economic indicators project 
that we are rapidly approaching a historic milestone of carrying 1 
billion passengers on U.S. airlines annually within the next decade. To 
offer additional perspective, that increase represents an additional 
300 million passengers per year, roughly equal to the entire population 
of the United States.
    In this age of global competition, we have a clear opportunity to 
invest now in America's future even as we prepare our world class 
aviation system to meet the demands of that future. NextGen 
technologies offer our Nation a worthy opportunity for investment in 
safety and innovation. Delaying infrastructure investment means the 
long-term cost to our system, passengers, and environment will far 
exceed the cost of a timely deployment today. NextGen technologies are 
an investment in aviation's continued viability, and will produce 
economic benefits for decades--far beyond their cost. Our Nation and 
airline industry will yield immediate and measurable financial returns 
that will bolster America's future economic stability and continued 
growth, as we continue to meet the challenge of giving the world new 
ways to fly.
    Our Nation's continued economic recovery demands a cautious and 
well-considered fiscal policy. We have to invest carefully in America's 
future where we can be certain of reliable returns.
    Aviation is a growth industry worthy of that investment, 
representing a key element of our country's economy. The FAA is already 
delivering on the promise of tomorrow, and we are grateful that the 
Congress continues to recognize our ongoing mission of safety and 
modernization as a national priority.

    Senator Murray. Thank you very much.
    Mr. Scovel.

                 STATEMENT OF HON. CALVIN L. SCOVEL III

    Mr. Scovel. Madam Chairman, Ranking Member Collins, members 
of the subcommittee, thank you for inviting me here today to 
testify on FAA's proposed fiscal year 2012 budget.
    Like other Federal agencies, FAA faces the formidable 
challenge of achieving its goals in a constrained fiscal 
environment. For FAA, this means ensuring safe operations while 
implementing NextGen, a multi-billion-dollar investment for 
increasing national airspace capacity.
    Our past and ongoing work has shown that a lack of 
comprehensive analyses and rigorous oversight have created 
significant challenges for FAA in meeting its safety, 
modernization, and financial goals. My testimony will outline 
our ongoing concerns related to FAA's efforts to improve safety 
and accommodate aviation growth.
    Maintaining a safe national air transportation system has 
been an ongoing challenge for FAA. Between fiscal years 2009 
and 2010, operational errors by air traffic controllers 
increased 53 percent. FAA primarily attributes this increase to 
the introduction of voluntary, nonpunitive safety reporting. 
However, other factors may contribute to the increase, such as 
the introduction of an automated tool to detect operational 
errors in terminal radar approach controls (TRACONs) and the 
large influx of new controllers in training. Some critical 
facilities have 40 percent of their workforce in training.
    FAA faces a similar challenge with its inspector workforce. 
The agency is requesting almost an additional $12 million to 
support a potential increase of more than 100 inspectors. 
However, we have concerns about FAA's methodology for assigning 
inspectors to high-risk areas and the training they receive on 
how to assess risk. Oversight of aircraft repair stations also 
remains a concern, despite FAA's implementation of a risk-based 
system in 2007.
    Reducing pilot error and fatigue also remains a key safety 
challenge, especially given industry opposition to proposed 
rules on pilot training and rest requirements. FAA's proposed 
requirements for more realistic flight scenarios and special 
hazard training could significantly enhance pilot training. 
However, FAA still lacks adequate systems for tracking poorly 
performing pilots and overseeing pilot training programs. FAA's 
proposed rule for new pilot rest requirements is an important, 
much needed step but may also lack all the elements needed to 
mitigate pilot fatigue.
    As FAA works to address these safety concerns, it must also 
address key challenges with NextGen's advancement. FAA needs to 
make decisions about NextGen's overall design--decisions that 
will impact the program's long-term benefits and costs and 
overcome problems in NextGen systems.
    In particular, FAA needs to resolve technical issues with 
ERAM, a $2.1 billion system for processing en route flight 
data. System testing revealed more than 200 software-related 
problems, pushing estimated completion dates out several years 
and potentially increasing costs by as much as $500 million. 
Cost escalations of this magnitude will affect FAA's capital 
budget and could crowd out other projects.
    At the same time, FAA must tackle known vulnerabilities in 
key programs for delivering critical NextGen capabilities. FAA 
plans to spend more than $2 billion on these programs over the 
next 5 years, but has yet to establish consistent requirements, 
clear lines of accountability, or an integrated plan that will 
address the complex linkages between programs. Without clearly 
defined requirements and program priorities, problems with cost 
and schedule estimates will continue.
    To realize the full benefits of NextGen, FAA must maximize 
capacity at our Nation's airports. Over the past decade, more 
than 20 runways have been built, reconfigured, or extended. 
However, funding, environmental, and legal concerns could 
impede this progress. As runway projects move forward, FAA must 
maintain vigilant oversight to ensure that they are completed 
on time and within budget.
    Rigorous oversight of DOT's $1.1 billion American Recovery 
and Reinvestment Act of 2009 (ARRA)-funded airport grants is 
critical to ensuring funds are available to meet needed 
improvements. Last September, FAA consultants determined that 
14 of 24 airports did not have adequate support to justify 
their ARRA payment requests, a finding consistent with those we 
reported in December. Specifically, we identified $6 million in 
improper payments made to non-ARRA-funded Airport Improvement 
Program (AIP) grantees due in part to weaknesses in FAA's 
financial oversight strategies.
    Continued schedule delays and program weaknesses in FAA's 
safety, NextGen, and airport infrastructure programs will have 
a significant impact on its current and future budgets. FAA 
needs sound strategies for identifying impediments to meeting 
its goals that will allow the agency to prioritize its 
oversight and maximize its investments.

                           PREPARED STATEMENT

    Madam Chairman, this concludes my statement. I would be 
happy to answer any questions you or members of the 
subcommittee may have.
    [The statement follows:]
            Prepared Statement of Hon. Calvin L. Scovel III
    Madam Chairman and members of the subcommittee: Thank you for 
inviting me to testify today on the Federal Aviation Administration's 
(FAA) fiscal year 2012 budget request. As you know, FAA faces 
significant challenges to control costs in a tight budget environment 
while ensuring a safe and modern National Airspace System (NAS). This 
past year, FAA has taken actions to address many significant safety 
issues, most notably with its recent airworthiness directive to inspect 
aging Boeing 737s in response to a recent in-flight hull breach. 
However, much work remains to meet other key goals, including improving 
pilot and air traffic controller training, effectively managing its 
multibillion-dollar capital investments for the Next Generation Air 
Transportation System (NextGen), and overseeing Federal airport grants.
    My testimony today focuses on three major challenges FAA faces:
  --addressing ongoing safety concerns;
  --managing NextGen advancement while controlling costs; and
  --maximizing airport infrastructure funding to accommodate aviation 
        growth.
    In summary, FAA faces the formidable challenge of safely operating 
and maintaining an increasingly strained NAS system while developing 
the next generation of air traffic control--all within a severe 
budgetary environment. FAA will require resources to address safety 
issues related to pilot, controller, and inspector workforces and to 
make critical, long-delayed decisions about NextGen's overall design--
decisions that will impact the program's long-term costs and benefits. 
At the same time, FAA requires better controls to instill 
accountability and better manage airport infrastructure contracts and 
grants. FAA's fiscal year 2012 budget request reflects the agency's 
plans to improve its NextGen efforts, but it also reveals the 
difficulties FAA has had in controlling its costs and schedules. 
Effectively balancing agency priorities now is essential to deliver a 
future system to travelers and airspace users that provides a return on 
taxpayers' investment, functions safely and efficiently, and adapts to 
growing capacity needs and industry changes for many years to come.
                               background
    FAA's budget funds four accounts:
  --Operations;
    --Operations funds most of FAA's day-to-day activities, including 
            the agency's safety oversight and air traffic control 
            functions.
  --Facilities and equipment (F&E);
    --F&E funds the agency's NextGen initiatives and other 
            modernization activities such as improving aging 
            infrastructure, power systems, navigational aids, and 
            weather systems.
  --The Airport Improvement Program (AIP); and
    --AIP funds grants to airports to pay for runway construction and 
            other related projects.
  --Research, engineering, and development (RE&D).
    --RE&D funds NextGen and other research areas such as fire research 
            and safety, aging aircraft, and other activities.
    FAA's total fiscal year 2012 budget request of $18.7 billion 
represents a 17-percent increase more than this year's appropriated 
amount and includes significant funding increases for infrastructure 
and modernization projects over its fiscal years 2010 and 2011 budgets 
(see table 1).

                         TABLE 1.--FAA BUDGET FISCAL YEAR 2010 THROUGH FISCAL YEAR 2012
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                                   Increase from
                     Account                        2010 Actual    2011 Enacted    2012 Request    2011 to 2012
                                                                                                     (percent)
----------------------------------------------------------------------------------------------------------------
Operations......................................          $9,351          $9,514          $9,823               3
F&E.............................................           2,928           2,731           3,120              14
AIP.............................................           3,121           3,515           5,524              57
RE&D............................................             191             170             190              12
                                                 ---------------------------------------------------------------
      Total.....................................          15,591      \1\ 15,929          18,657              17
----------------------------------------------------------------------------------------------------------------
Source: FAA's Office of Budget.
\1\ Figures may not add up due to rounding.

    FAA proposes to shift the focus of its AIP account--which 
represents the largest requested increase--to smaller commercial and 
general aviation airports and eliminate guaranteed AIP funding for 
large- and medium-hub airports. The proposal would also increase the 
passenger facility charge (PFC) limit from $4.50 to $7 per enplanement 
for all eligible airports, giving large- and medium-hub airports 
greater flexibility to generate their own revenue.
    Almost 37 percent of FAA's F&E account request, which represents 
the second largest increase, is allocated for NextGen activities. Most 
of the increase in FAA's Operations budget is to fund inflation 
adjustments and the National Air Traffic Controllers Association 
(NATCA) contract. Nearly 71 percent of the total requested amount for 
Operations is used to pay for the salaries and benefits of most FAA 
employees, including safety inspectors and air traffic controllers.
    FAA is currently financed by two mechanisms:
  --excise taxes deposited into the Airport and Airway Trust Fund; and
  --a General Fund contribution.
    While the General Fund has paid for about one-third of FAA's total 
budget the past 2 years, in fiscal year 2012 the General Fund is 
expected to contribute $8.2 billion, or 44 percent, toward the total 
budget. In addition, past differences between FAA's budget, Trust Fund 
revenues, and General Fund contribution were bridged by drawing down 
the Trust Fund's uncommitted balance. These draw downs have caused a 
90-percent decline in the uncommitted balance, from $7.3 billion at the 
end of fiscal year 2001 to $770 million at the end of fiscal year 2010 
(see Figure 1).



                   addressing ongoing safety concerns
    The United States has the world's safest air transportation system; 
however, our current audit work and recent events, such as the near 
mid-air collision between an American Airlines flight and two Air Force 
planes near New York City, underscore the need for FAA to take 
additional actions to improve its safety oversight functions. Key 
safety issues that FAA needs to address include a significant increase 
in operational errors, controller staffing and training at air traffic 
control critical facilities, oversight of air carrier and repair 
stations, and pilot training and fatigue.
Causes of Increases in Air Traffic Controllers' Operational Errors Are 
        Not Fully Known
    The number of operational errors by air traffic controllers 
increased by 53 percent between fiscal years 2009 and 2010--from 1,234 
to 1,887. According to FAA, the rise in errors is primarily due to the 
introduction of voluntary, nonpunitive safety reporting programs, such 
as its new Air Traffic Safety Action Program (ATSAP). ATSAP encourages 
controllers to voluntarily report operational errors in an effort to 
better capture the actual number of errors and identify and address 
their root causes. However, other factors may also contribute to the 
recent increases, including the large influx of new controllers in 
training and the implementation of the Traffic Analysis and Review 
Program (TARP), an automated system to identify when operational errors 
(or other losses of separation between aircraft) occur at terminal 
facilities.
    The National Transportation Safety Board (NTSB) has raised concerns 
about the reliability of FAA's process for assessing and reporting 
incidents involving losses of separation and is currently reviewing 
reports of Traffic Collision and Avoidance Systems (TCAS) 
advisories.\1\ Since NTSB issued its final rule requiring aircraft 
operators to report certain TCAS advisories in January 2010, the Board 
has received nearly 950 reports of these collision advisories and has 
initiated investigations into nine of the more severe incidents.\2\ 
These mid-air incidents raise further concerns about controller 
performance and how FAA classifies, reports, and mitigates losses of 
aircraft separation within these new reporting systems. At the request 
of members of the Senate Committee on Commerce, Science, and 
Transportation, as well as the ranking member of the House 
Transportation and Infrastructure Subcommittee on Aviation, we will 
begin two audits to assess FAA's implementation and oversight of ATSAP 
and evaluate FAA's process for tracking and reporting near mid-air 
collisions and mitigating those risks.
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    \1\ An onboard TCAS issues advisories for pilots to take evasive 
actions when the system detects a potential collision with other 
aircraft.
    \2\ After review by NTSB, many of these reports were considered 
``nuisance alerts'' (i.e., situations in which there was no collision 
risk, but TCAS generated a resolution advisory). However, about 260 
reports required additional data in order for NTSB to understand and 
evaluate the circumstances that caused the apparent conflict and to 
determine whether further action was warranted.
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Critical Facilities May Need More Certified Professional Controllers To 
        Effectively Train New Controllers
    FAA is taking action to hire and train nearly 11,000 new 
controllers through fiscal year 2020 to replace large numbers of 
retiring controllers hired after the 1981 strike. However, FAA must 
focus on staffing and controller skill levels at those facilities that 
are most critical to NAS operations. As of March 2011, 25 percent of 
FAA's controller workforce was in training--compared to 15 percent in 
2004--meaning fewer certified controllers in the workforce to control 
air traffic and provide on-the-job training for new controllers. In 
addition, due to the attrition surge, FAA has had to assign newly hired 
controllers to complex air traffic control locations, such as southern 
California, Atlanta, Chicago, and New York. Normally, new hires would 
start their on-the-job training at less complex facilities and 
eventually transfer to a higher-level facility.
    While FAA has ongoing actions or plans to improve controller 
training and placement, some of the most critical facilities now have a 
significant percentage of their workforce in training. For example, 
Denver Terminal Radar Approach Control has 43 percent of its workforce 
in training, and LaGuardia Air Traffic Control Tower has 39 percent. We 
are reviewing FAA's plans to provide its critical facilities with 
appropriate controller staffing, training resources, and other support 
necessary to ensure continuity of facility operations. We expect to 
report on our results later this year.
FAA Has Not Addressed Inspector Training and Staffing Issues That Would 
        Enhance Its Risk-Based Oversight
    Since 2003, FAA has enhanced the Air Transportation Oversight 
System (ATOS), its risk-based oversight system for air carriers, by 
improving inspector guidance and completing key processes for analyzing 
inspection results. However, in December 2010, we identified additional 
improvements FAA needed to make to strengthen ATOS, such as requiring 
that inspectors' risk assessments include analyses of all available 
data sources--such as voluntary self-disclosure data--and changes that 
occurred in the airline industry, such as mergers and acquisitions. We 
also reported that ATOS implementation at smaller air carriers was 
hindered due to inspectors' frustrations with adapting ATOS principles 
to their operations, staffing limitations, and insufficient data to 
support ATOS's data-driven approach. A contributing factor may be that 
inspectors experienced gaps of 3 years or longer between when they 
received systems safety training and when they actually used the 
system. FAA is currently addressing our recommendations to ensure 
inspectors receive timely training and use all available data sources 
for more accurate and relevant air carrier risk assessments.
    Another concern has been FAA's inadequate oversight of aircraft 
repair stations, a weakness we reported on in 2003. While FAA 
strengthened its procedures for monitoring inspections of foreign 
repair stations that are conducted by aviation authorities on its 
behalf and implemented a risk-based system in 2007 to target repair 
stations with increased risk, concerns remain. As a result, the 
Congress directed us to assess FAA's oversight system for foreign and 
domestic repair stations. We began our review in January of this year.
    FAA must also ensure it targets limited resources to areas of 
greatest risk by placing its approximately 4,300 inspectors where they 
are most needed to effectively oversee a dynamic aviation industry. In 
a 2006 study directed by the Congress, the National Research Council 
concluded that FAA's methodology for allocating inspector resources was 
not effective and recommended that FAA develop a new approach. In 
response, FAA completed a new staffing model in October 2009. After 
completing the model, FAA tested it using actual staffing data to 
determine whether it was ready for full deployment. FAA used the model 
to assist in developing its fiscal year 2012 budget request for an 
additional $11.9 million to support an increase of up to 106 
inspectors. However, FAA is still refining the model to make it more 
reliable. As directed by the Congress, we are evaluating FAA inspector 
staffing and the new staffing model.
FAA and Industry Have Not Fully Addressed Pilot Training and Fatigue
    Pilot training and fatigue continue to present challenges to FAA. 
The February 2009 fatal crash of Colgan Air flight 3407 underscores the 
importance of addressing these long-standing safety concerns. In 
January 2009, FAA issued a Notice of Proposed Rulemaking (NPRM) to 
revise crew training requirements by requiring more realistic training 
scenarios with a complete flight crew, using flight simulator devices, 
and working with new special hazard practices for pilots and crew 
members. Because of the extensive industry comments on this proposed 
rule, FAA plans to submit a Supplemental Notice of Proposed Rulemaking 
(SNPRM) to address the concerns. However, as of April 2011, the SNPRM 
had not been issued. While the proposed rule could significantly 
enhance pilot training programs, FAA still faces challenges tracking 
pilots with poor performance and training deficiencies and overseeing 
air carrier programs aimed at improving pilot skills.
    FAA has also taken steps to address pilot fatigue issues, as 
required by the Airline Safety and FAA Extension Act of 2010.\3\ In 
September 2010, FAA published an NPRM to institute new flight, duty, 
and rest requirements for pilots based on factors such as time of day 
flown and sleep consideration rather than type of flight operation. 
Issuing the NPRM was an important step toward changing outdated 
regulations. However, FAA has already received more than 2,500 comments 
from industry, most of which oppose the NPRM. Given industry's 
historical opposition to revamping rest rules, it will be a substantial 
challenge for FAA to finalize the rule by the congressionally mandated 
deadline of August 2011. Further, the NPRM would not require carriers 
to track pilots with lengthy commutes, a factor that can contribute to 
pilot fatigue. FAA officials stated that enforcing this requirement 
would be difficult and not necessarily result in responsible commuting. 
FAA instead issued draft advisory guidance on pilots' and carriers' 
responsibility to ensure proper rest before flying. However, without 
FAA and industry efforts to collect and analyze data on pilot 
commuting, the current proposed actions to mitigate fatigue in aviation 
may not fully address this critical safety issue.
---------------------------------------------------------------------------
    \3\ Airline Safety and Federal Aviation Administration Extension 
Act of 2010 Public Law 111-216, section 212 (August 2010).
---------------------------------------------------------------------------
         managing nextgen's advancement while controlling costs
    FAA is developing NextGen, a satellite-based air traffic control 
system intended to replace the current ground-based system, to better 
manage air traffic and meet future air travel demands. However, FAA 
faces several management challenges in implementing key NextGen 
programs in an efficient and cost-effective manner. These include 
mitigating ongoing cost increases and schedule delays with FAA's ERAM 
program that will impact several NextGen programs and capabilities, 
better managing contracts and its acquisition workforce to protect the 
taxpayers' interest, and keeping its operating costs from crowding out 
capital investments in NextGen.
Uncertain Design Decisions Put NextGen's Cost and Schedule Targets at 
        Risk
    FAA is making progress on near and mid-term NextGen efforts in 
response to recommendations from a government-industry task force but 
must address long-term cost, schedule, and performance issues.\4\ In 
response to one of the task force's most critical recommendations, FAA 
launched its ``metroplex initiative''--a 7-year effort aimed at 
improving airspace efficiency to reduce delays at 21 congested airports 
in major metropolitan areas. While FAA has completed studies at two 
prototype sites and plans to study five more sites this year, many 
unresolved issues could delay the effort and ultimately increase costs. 
For example, FAA has not established detailed milestones to complete 
initiatives at high-activity locations or a mechanism for integrating 
its metroplex initiative with other related task force recommendations, 
such as better managing airport surface operations. Further, FAA needs 
to resolve concerns that airline and air traffic facility officials 
have expressed about FAA's execution thus far, such as the slow pace of 
the effort and a lack of clearly defined benefits to airspace users.
---------------------------------------------------------------------------
    \4\ NextGen Mid-Term Implementation Task Force Report, September 9, 
2009.
---------------------------------------------------------------------------
    Realizing these benefits, however, depends on the timely deployment 
of new flight procedures. As we noted in our December 2010 report,\5\ 
FAA's flight procedures are mostly overlays of existing routes, which 
do not provide shorter flight paths to alleviate congestion. Because 
FAA has mainly focused on developing a targeted number of procedures 
each year--not on measuring user benefits--airlines have not widely 
used the new procedures. At the same time, FAA faces several 
organizational, policy, logistical, and training challenges that could 
impede NextGen implementation in the midterm, including working across 
diverse agency lines of business.
---------------------------------------------------------------------------
    \5\ OIG report number AV-2011-025, ``FAA Needs To Implement More 
Efficient Performance-Based Navigation Procedures and Clarify the Role 
of Third Parties'', December 10, 2010.
---------------------------------------------------------------------------
    FAA's most recent NextGen Implementation Plan provides a framework 
for what NextGen will resemble in the 2015 to 2018 timeframe and 
broadly outlines the linkages between FAA and stakeholder investments. 
While the plan is responsive to the task force, it does not outline 
NextGen capabilities, timing, and costs, which FAA committed to in 
previous plans and budget requests to the Congress. For example, the 
plan does not discuss how delays in critical design decisions will 
affect NextGen performance. Delayed decisions include:
  --division of responsibility delegated to pilots in the cockpit and 
        to controllers and FAA ground systems for tracking aircraft;
  --level of automation needed to support division of responsibility, 
        ranging from today's largely manual flight management to a 
        primarily automated system with little controller involvement; 
        and
  --the number and locations of air traffic facilities needed to 
        support NextGen.
Unresolved Technical Problems With ERAM Have Resulted in Delays and 
        Cost Increases
    Numerous technical problems with ERAM--the primary tool that will 
process en route flight data--have pushed schedules well beyond 
original completion dates and increased cost estimates by hundreds of 
millions of dollars. FAA planned to complete deployment of ERAM to 20 
en route facilities by the end of 2010 at a cost of $2.1 billion. 
However, ERAM testing at initial operating sites revealed more than 200 
software-related problems, such as radar processing failures, errors 
that tag flight data to the wrong aircraft, and hand-off problems 
between controllers. As a result of these problems at the initial 
sites, FAA postponed its plans to continue deployment of ERAM at 
additional sites--originally scheduled for December 2009.
    FAA is requesting $120 million for ERAM in its fiscal year 2012 
budget request and now plans to complete ERAM in 2014--a schedule slip 
of 4 years. However, FAA and its contractor plan to add new 
capabilities while attempting to resolve problems identified in earlier 
software versions, which could cause further schedule delays. New 
software releases have already exhibited problems, including a 
significant software failure that caused one site to revert back to 
using the legacy operating system for several weeks.
    While FAA estimates that delays with ERAM will translate into an 
additional $330 million to complete deployment, our work and a recent 
MITRE analysis suggest the total cost growth could be as much as $500 
million.\6\ Cost escalations of this magnitude will affect FAA's F&E 
budget and crowd other projects. Further, FAA will incur additional 
costs to sustain aging equipment longer than planned and retrain 
controllers on both the legacy and ERAM systems. The MITRE analysis 
cautions that implementing ERAM at more complex sites, like Chicago and 
New York, may require additional time and resources. Continued problems 
with ERAM will also affect both the cost and pace of FAA's other key 
NextGen efforts--some of which have already been allocated more than 
$500 million to integrate and align with ERAM. ERAM delays will also 
affect FAA's ability to develop trajectory-based operations \7\ and 
transition to a common automation platform for terminal and en route 
operations.
---------------------------------------------------------------------------
    \6\ MITRE Corporation and Massachusetts Institute of Technology/
Lincoln Laboratory Report, Independent Assessment of the ERAM Program, 
October 15, 2010.
    \7\ Trajectory-based operations focus on more precisely managing 
aircraft from departure to arrival with the benefits of reduced fuel 
consumption, lower operating costs, and reduced emissions.
---------------------------------------------------------------------------
FAA Lacks an Integrated Master Schedule To Mitigate Risks in NextGen's 
        Transformational Programs
    FAA has not approved total program cost, schedule, or performance 
baselines for any of NextGen's transformational programs \8\ and faces 
significant risks and challenges to successfully implementing them. 
FAA's fiscal year 2012 budget request includes $590 million for the six 
programs, and the agency plans to spend more than $2 billion on them 
between 2012 and 2016. Three transformational programs that are 
critical to achieving streamlined and more efficient data sharing for 
airspace users face uncertainty with respect to what they will 
ultimately cost, when they will be completed, and what they will 
deliver.
---------------------------------------------------------------------------
    \8\ FAA's transformational programs, defined as programs directly 
related to the delivery of NextGen capabilities, will fundamentally 
change NAS by enhancing communications, improving the tracking of 
aircraft, and revamping overall air traffic management.
---------------------------------------------------------------------------
            Automatic Dependent Surveillance-Broadcast (ADS-B)
    ADS-B ($285 million requested for fiscal year 2012) is a satellite-
based surveillance technology that combines the use of aircraft 
avionics and ground-based systems. FAA is planning to implement ADS-B 
in four segments but has only approved $1.7 billion for the initial two 
segments to deploy the system's ground infrastructure. FAA has deployed 
275 of the planned 800 radio ground stations and also published a final 
rule mandating that airspace users equip ADS-B avionics by 2020. As we 
noted in our October report,\9\ realizing the full range of ADS-B 
benefits will depend on:
---------------------------------------------------------------------------
    \9\ OIG report number AV-2011-002, ``FAA Faces Significant Risks in 
Implementing Automatic Dependent Surveillance-Broadcast Program and 
Realizing Benefits'', October 12, 2010.
---------------------------------------------------------------------------
  --finalizing requirements for capabilities to display traffic 
        information in the cockpit;
  --modifying the systems controllers rely on to manage traffic;
  --addressing broadcast frequency congestion concerns;
  --implementing procedures for separating aircraft; and
  --assessing security vulnerabilities.
    These risks, if not successfully mitigated, could lead to cost, 
schedule, and performance shortfalls.
            System-Wide Information Management (SWIM)
    SWIM ($66 million requested for fiscal year 2012) is expected to 
form the basis for a secure network that manages and shares information 
more efficiently among all air traffic systems that will comprise 
NextGen. Key benefits expected from SWIM are streamlined data 
communications and real-time information that will improve air traffic 
management, enhance airspace capacity, reduce flight delays, and 
decrease costs for FAA and aviation users. FAA is planning to implement 
SWIM in three segments but has only approved funding for the first 
segment at an estimated cost of $284 million. FAA has already increased 
costs for the first segment by more than $100 million and delayed its 
completion by at least 2 years. Further, FAA has not established clear 
lines of accountability for overseeing how SWIM is developed and 
managed. Without a consistent vision of SWIM's requirements and clearly 
defined program priorities, the true cost and timeline to deploy SWIM 
and the realization of expected benefits are unknown. We have 
transmitted recommendations to FAA for improving SWIM and expect to 
issue our final report this spring.
            Data Communications (DataComm)
    DataComm ($150 million requested for fiscal year 2012) will provide 
two-way data communication between controllers and pilots that is 
analogous to wireless email. FAA plans to implement DataComm in at 
least two segments, and a final investment decision is not expected 
until fiscal year 2012. Total program costs are uncertain but estimated 
to be almost $3 billion. Developing and implementing DataComm is a 
complex, high-risk effort, and industry officials have expressed 
skepticism about FAA's ability to deliver on such a program because the 
agency abandoned a data link effort in the past due to cost concerns. 
The successful implementation of DataComm faces the challenges of 
integrating with FAA automation systems and overcoming users' 
reluctance to equip.
    FAA's approach of baselining smaller segments of larger programs 
may reduce some risks in the short-term, but as requirements continue 
to evolve, programs are left with no clear end-state and decisionmakers 
lack sufficient information to assess progress. Moreover, delays with 
one program can significantly slow another, since the programs have 
complex interdependencies and integration issues with FAA's existing 
automation and communications systems. While FAA recognizes the need 
for an integrated master schedule to manage the implementation of these 
NextGen capabilities, it has yet to develop one. Without a master 
schedule, FAA will continue to be challenged to fully address 
operational, technical, and programmatic risks and prioritize and make 
informed trade-offs among the programs.
Contract Oversight and Administration Problems Contribute to Cost 
        Overruns With FAA Acquisitions
    Our work on large FAA acquisition programs and high-risk 
procurements has repeatedly identified weaknesses in the agency's 
contract administration. For example, FAA awarded an $859 million 
contract for training air traffic controllers \10\ without correctly 
assessing how many controllers needed training or addressing the risk 
that the contractor's proposed instructor hours were too low. These 
weaknesses contributed to a $46 million cost overrun for the first 2 
years of the contract.
---------------------------------------------------------------------------
    \10\ OIG report number AV-2010-126, ``FAA's Air Traffic Controller 
Optimum Training Solution Contract: Sound Contract Management Practices 
are Needed to Achieve Program Outcomes'', September 30, 2010.
---------------------------------------------------------------------------
    Our ongoing work has similarly found weaknesses in FAA's cost and 
price analysis processes for noncompetitive contracts. In fiscal year 
2009, FAA obligated more than $541 million for more than 16,500 
noncompetitive contract actions. These contracts have a high risk of 
overpayment because the contractor is assured to receive the award. 
However, for 8 of the 25 contracts we reviewed, FAA did not perform 
effective cost and price analyses and was unable to demonstrate that 
prices paid were reasonable. We expect to issue our final report later 
this month.
    Another ongoing audit has identified concerns with FAA's Systems 
Engineering 2020 (SE-2020) contracts to augment FAA staff and support 
NextGen implementation. The contracts have a cumulative maximum value 
greater than $7 billion--the largest award in FAA history. To date, our 
assessment of FAA's contract award processes, oversight mechanisms, and 
performance-based methods found that they may not be adequate to 
achieve intended outcomes. We plan to issue our report later this year.
    At the same time, FAA faces challenges in maintaining an 
acquisition workforce with the skills needed to oversee its NextGen 
contracts. Currently, 20 percent of FAA's experienced acquisition 
workforce is eligible to retire, with a cumulative retirement 
eligibility of 40 percent by fiscal year 2015. FAA's Acquisition 
Workforce Plan outlines the acquisition competencies needed, 
establishes hiring strategies, and describes new certification and 
training programs.\11\ However, the plan excludes Federal and 
contractor acquisition employees working on FAA's support services 
contracts and technical officer representatives responsible for 
overseeing contracts vital to NextGen, such as ERAM. Further, FAA fell 
short of its planned hiring targets and hired less than 40 percent of 
the engineers needed to support acquisition programs. FAA's primary 
staffing needs are for engineers, which are critical to implementing 
NextGen programs. However, FAA could not accurately determine whether 
it hired enough engineers or program managers for NextGen because FAA's 
hiring data were either inaccurate or missing. FAA's tracking systems 
are also ineffective in monitoring the training and certification of 
its acquisition workforce. We expect to issue our final report on FAA's 
acquisition workforce this summer.
---------------------------------------------------------------------------
    \11\ FAA issued its workforce plan in 2009 and updated the plan in 
2010, projecting its acquisition workforce needs through fiscal year 
2014.
---------------------------------------------------------------------------
Increasing Operating Costs Risk Crowding Out NextGen Capital 
        Investments
    FAA estimates that the 2009 collective bargaining agreement with 
NATCA will cost the agency $669 million more than it would have cost to 
extend the work rules established in 2006 for 3 more years. In the 
past, our audit work found that uncontained increases in operating 
costs have crowded capital investments.
    Several factors in the agreement may further increase FAA's costs:
  --Most estimated costs are for increased salaries and benefits for 
        controllers, but these will depend on the rate at which veteran 
        controllers retire and are replaced by new controllers with 
        lower salaries and benefits.
  --Negotiated memorandums of understanding (MOU) may incur additional 
        costs. FAA has had problems with managing its MOUs in the past. 
        For example, in 2003 we identified negotiated MOUs that 
        resulted in millions of dollars in cost overruns.\12\ As a 
        result of our review, FAA established controls that it believes 
        will prevent additional costs with MOUs in the agreement. 
        However, some local air traffic managers and regional managers 
        are not strictly complying with these controls. FAA must 
        consider these issues as well as its budgetary constraints when 
        negotiating its next collective bargaining agreement.
---------------------------------------------------------------------------
    \12\ OIG report number AV-2003-059, ``FAA's Management of and 
Control Over Memorandums of Understanding'', September 12, 2003. OIG 
reports are available on our Web site: www.oig.dot.gov.
---------------------------------------------------------------------------
   maximizing airport infrastructure funding to accommodate aviation 
                                 growth
    FAA projects that passenger traffic will grow by 3.7 percent 
annually each of the next 5 years, and that by 2021 there will be 1 
billion passengers. Ensuring enough capacity at the Nation's airports 
is essential to meeting this demand, reducing delays, and realizing the 
full benefits of NextGen. This includes keeping key runways that are 
planned or under construction on schedule and improving oversight of 
airport grant programs to ensure funds are appropriately spent.
Funding, Legal, and Other Concerns Could Undermine Efforts To Keep 
        Runway Projects on Track
    FAA has made progress in overseeing opening and improving runways 
at our Nation's airports; however, with capacity-enhancing airspace 
changes being developed, FAA must ensure that current runway projects 
remain on schedule. Since the start of fiscal year 2000, 17 new runways 
have been built,\13\ 4 runways were reconfigured, 2 runways were 
extended, and 3 taxiways have opened.
---------------------------------------------------------------------------
    \13\ These projects included new runways at Boston, Chicago O'Hare, 
Atlanta, and Washington Dulles airports.
---------------------------------------------------------------------------
    FAA is pursuing several airspace redesign projects nationwide--
including major efforts to revamp airspace in the Atlanta, New York-New 
Jersey-Philadelphia, and Chicago areas--that require a sufficient 
amount of runways to accommodate additional traffic. Several runway 
projects either under construction or planned at key airports will 
accommodate future air traffic growth and coincide with airspace 
redesign efforts (see table 2). However, FAA and local airport 
authorities face challenges that could impede the progress of these 
projects, including funding issues, extensive environmental reviews, 
coordination among numerous stakeholders, and legal issues. As these 
projects move forward, FAA should continue its efforts to ensure that 
these projects are completed on time and within budget.

                                  TABLE 2.--STATUS OF MAJOR NEW RUNWAY PROJECTS
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                                   Total cost
                Airport                             Phase            Estimated completion date      estimate
----------------------------------------------------------------------------------------------------------------
Atlanta (Runway 9L/27R)................  Site prep.................  2012.....................               $46
Chicago O'Hare (Runway 1 0C/28C).......  Construction..............  December 2013............            $1,265
Chicago O'Hare (Runway 9R/27L) \1\.....  On hold \2\...............  October 2015.............              $357
Chicago O'Hare (Runway 9C/27C).........  On hold \2\...............  October 2015.............            $1,470
Chicago O'Hare (Runway 10R/28L)........  Site prep.................  January 2015.............              $578
Fort Lauderdale (Runway 9R/27L) \1\....  Design....................  June 2014................              $720
Philadelphia (Runway 9R/27L, 8/26,\1\    Record of decision,         To be determined.........            $5,200
 9R/27L) \1\.                             December 2010.
----------------------------------------------------------------------------------------------------------------
Source: OIG analysis of FAA's quarterly report ``Runway Projects at Core Airports Under Construction'' for
  October--December 2010 (published February 1, 2011).
\1\ Extension of existing runway.
\2\ Due to lack of funding, completion dates for these projects could be extended up to 5 years.

FAA's AIP Program Is Vulnerable to Improper Payments
    Our continuing work on FAA's $1.1 billion ARRA-funded airport 
grants indicates that FAA has primarily focused its oversight on the 
construction status of projects, not on ensuring grantees comply with 
FAA and Office of Management and Budget financial oversight 
requirements. While FAA commissioned a review of ARRA payments, its 
consultants determined in September 2010 that 14 of 24 airports did not 
have adequate support to justify their ARRA payment requests. This is 
consistent with findings we reported in December 2010 on FAA's 
oversight of non-ARRA-funded AIP grants.\14\
---------------------------------------------------------------------------
    \14\ OIG report number FI-2011-023, ``Improper Payments Identified 
in FAA's Airport Improvement Program'', December 1, 2010.
---------------------------------------------------------------------------
    In our December report, we identified $13 million in improper 
payments made to AIP grantees; $7 million of that amount was due to 
documentation problems, and $6 million could have been recovered by 
FAA. The $6 million of recoverable funds included grantees receiving 
payments for ineligible services or paying ineligible recipients and 
FAA making incorrect and duplicate payments. For example, during fiscal 
years 2007 and 2008, the county of Sacramento billed FAA and was 
reimbursed a total of $675,000--the full amount of construction 
invoices received--but FAA reimbursed the county before the county had 
actually paid its construction contractor. Subsequently, FAA agreed 
that these AIP payments were improper.
    Both our prior and ongoing AIP and ARRA work have identified 
several potential weaknesses in FAA's financial oversight that make its 
grant funds vulnerable to improper payments. First, FAA relies on 
grantees to self-certify that they adhere to their grant agreements and 
to maintain documentation validating payment requests. Second, FAA does 
not review grantee payment requests beyond summary documentation, which 
does not include actual contractor invoices. Third, grantees approve 
change orders for contract work without required cost or price 
analyses--and without FAA approval. Finally, FAA employees often cited 
staff and resource limitations as impediments to more rigorous 
oversight.
                               conclusion
    FAA's fiscal year 2012 budget proposal comes at a time when FAA 
must prepare for the increasingly complex demands of the air system of 
the future--while continuing to improve safety for the public today. 
Whether the particular issue at hand is operational errors by air 
traffic controllers, technical problems affecting NextGen's 
advancement, or grant oversight of airport infrastructure projects, FAA 
needs sound strategies for identifying trends that may be impeding its 
safety, modernization, and financial goals. Effective data, analyses, 
and oversight will prove critical for FAA to ensure taxpayer dollars 
are used wisely to maintain a safe, modern, and efficient American 
airspace.
    Madam Chairman, this concludes my statement. I would be happy to 
address any questions that you or other members of the subcommittee may 
have.

                 CONTROLLER FATIGUE--OPERATIONAL ERRORS

    Senator Murray. Thank you very much. I appreciate both of 
your testimonies today.
    Let me start with the issue about the air traffic 
controllers falling asleep on duty. I know the FAA has 
announced several new reforms and initiatives.
    Mr. Babbitt, you quickly began to work with NATCA to visit 
some of the FAA facilities and talk about the importance of 
professionalism, and in the most recent announcement, the FAA 
started to look more carefully at its own management team. The 
agency said it would revisit how managers are selected and how 
their performance is evaluated. And I know that the FAA is 
going to send out some review teams to look into the management 
practices of some of the facilities.
    But the agency, as I said earlier, already had questions 
about how well its facility managers follow FAA policies. In 
fact, in 2007, the FAA learned that managers at certain 
facilities had been covering up a number of errors committed by 
their air traffic controllers.
    So I wanted to ask you today why the FAA did not take a 
closer look at the management of its facilities before we saw 
these stories in the press.
    Mr. Babbitt. Madam Chairman, of course, I did not arrive at 
the FAA until 2009, in the summer.
    Senator Murray. Correct. I should state that, but yes.
    Mr. Babbitt. A number of the things that you have mentioned 
to us are absolutely points of focus for us. And we have 
undertaken some very serious attempts to reform. These do not 
happen quickly. There are 49,000 employees. We have facilities 
all over the country. But we have been working for more than 1 
year. For example, the fatigue study was undertaken by a joint 
agreement with NATCA.
    The management changes that we have taken--first, we have 
made some changes in the upper management structure, followed 
by a broader review, as we work our way down, and making 
certain that all of our facilities do, in fact, stay consistent 
with the policies that we want and the procedures that we 
expect them to follow. We made it very clear there is no 
tolerance in the FAA for this type of ``looking the other 
way.''
    We have a very dedicated workforce, and unfortunately, what 
came to light are the sins of a few, not the good deeds of 
many. And so we are working very, very hard to maintain the 
morale--as a matter of fact, to increase it, and at the same 
time, making certain that everyone follows the same guidelines 
and principles. That is a difficult transition for us to make.
    We have streamlined our internal workings. As of 6 months 
ago, internally, we had more than 30 different governing 
committees that were structured inside the FAA. Next month, we 
will have five. We are far more efficient. We have realigned a 
number of our businesses and streamlined the way we do things 
to give ourselves better program oversight. I would invite--it 
is probably unheard of for the administrator to invite the 
inspector general to come over, but I would be delighted to 
have them look at some of the changes that we have done in 
program management and program oversight that we have done in 
the last 6 to 12 months. So, I think we are going to be a much 
more efficient agency going forward, and we have taken to heart 
some of the very constructive criticisms that people have 
brought to us.
    Senator Murray. When you announced your review teams, you 
only identified a couple of facilities that would be visited by 
those review teams. One of them is Cleveland, where the air 
traffic controller was found watching a movie, I believe, on 
duty. Can you tell us why review teams are not going out more 
aggressively to a larger number of facilities?
    Mr. Babbitt. We have a finite number of people that can 
conduct the review teams, and so we took a few right off the 
top of the bat. We took a look at the facilities that we 
thought would most benefit from the immediate review. But the 
plan is to review everyone, all facilities, over time.
    Senator Murray. Over what kind of time period?
    Mr. Babbitt. I would actually be giving you a wag here, but 
I would hope within the next 6 months.

                     CONTROLLER TRAINING--PLACEMENT

    Senator Murray. In following a lot of these news reports, 
the FAA announced it was pulling together this working group 
that will make recommendations about how new air traffic 
controllers are trained and placed into FAA facilities.
    But as I said in my opening statement, the inspector 
general has actually been talking about this for many years. 
Mr. Scovel, both in 2004 and again in 2010, your office 
recommended the FAA develop an objective, reliable method for 
placing new air traffic controllers at FAA facilities based on 
skills, and the FAA actually agreed they needed that. But to 
date we still don't have or see a way that FAA is placing these 
air traffic controllers based on an objective test.
    Can you tell us why an objective, reliable way of placing 
air traffic controllers is so important?
    Mr. Scovel. Thank you, Madam Chairman.
    Yes, it is important. In the course of conducting our 2010 
audit of FAA's practices for assigning new air traffic 
controllers, we found that new air traffic controllers were 
promised duty assignments before they had even started 
training. It appears to us to have been a part of the 
recruitment and hiring process. There was little attention, if 
any, paid at that time to an objective, reasonable method based 
on the new air traffic controllers' capabilities and 
performance at the Air Traffic Control Academy in Oklahoma City 
to determine where these people might best be placed. And in 
fact, we have found that new air traffic controllers in 
increasing numbers are being assigned to the most complex 
facilities: the New York TRACON, for instance; the Cleveland 
facility that you mentioned; areas that govern complex 
airspace, have high traffic volumes, and require intense on-
the-job training by the certified professional controllers 
assigned to those stations.
    We can only urge in the strongest terms that FAA quickly 
adopt a reasonable method, whether it is by test, by interview, 
or whether it is by performance at the training academy in 
determining where new air traffic controllers should be 
assigned.
    Senator Murray. After their training, I assume, not pre-, 
when they are----
    Mr. Scovel. Exactly. We assume that this will be an item of 
intense interest to applicants for air traffic controller 
spots, but it must be made clear to them that while certain 
duty options and stations might be available, final assignment 
will remain with the discretion of the agency.
    Senator Murray. So, Mr. Babbitt, where are we on putting in 
place a reliable test?
    Mr. Babbitt. One of the key changes that has been made 
might not appear to have anything to do with controller 
placement, but it has everything to do with it, and that had to 
do with the collective bargaining agreement. We have a new 
agreement with our controllers. It was reached shortly after I 
took the Administrator position.
    During the last agreement, there was absolutely no 
incentive to bid controllers into higher paying positions. So 
if we had a vacancy in the most complex facility in our system, 
there was absolutely no incentive for a controller to bid over 
there. And so we were forced to assign people out of the 
academy. There was no other way to fill the vacancies. That is 
not a good practice. I will tell you now, it is not a good 
practice, and we have eliminated it.
    So now we have the ability to incentivize seasoned 
controllers who can take that opportunity. And in fact, when 
they go to a more complex facility, they are going to work 
harder. It is a more difficult task, and they are going to be 
compensated accordingly. That gives us the opportunity to put 
new hire controllers into facilities that are more suited to 
their skill set.
    Senator Murray. Is there an objective test developed to 
give to air traffic controllers on assignment yet?
    Mr. Babbitt. We test all the air traffic controllers, and 
while I realize everyone would like to appreciate that we would 
have a range, we like to think that all of the controllers are 
qualified. When they are qualified, they are qualified to do 
anything. We would never want to be in the position of saying, 
well, we sent the good ones here, but the not-so-good ones went 
here.
    Senator Murray. I have additional questions about that, but 
I have gone over my time. So I am going to turn it over to 
Senator Collins.
    Senator Collins. Thank you, Senator Murray.
    I actually am going to pick up exactly on the point that 
Senator Murray was raising with you because I have read the 
March 30 report of the inspector general, which points out that 
the FAA will need to hire and train nearly 11,000 new air 
traffic controllers through fiscal year 2019, because there are 
going to be a large number of retiring controllers.
    And the inspector general's report finds that the FAA's 
reported training failure rate was not accurate and is critical 
of the metrics. In the report, it explains that when there are 
student controllers who are unable to pass the training 
process, they are either transferred within their assigned 
facility to a new area of operation, or transferred to a less 
complex facility, or terminated. It bothers me if individuals 
who could not pass the training are being placed in any 
position. So is that still happening?
    Mr. Babbitt. I believe that the training that you are 
talking about--we have a variety of controllers. We have tower 
controllers. We have en route center controllers, and we also 
have controllers in the very complex areas. If someone has, for 
example, been a very effective tower controller working for a 
number of years fully trained and wished to upgrade to another 
level and simply did not master that training, we would let 
them go back to their previous area where they had exhibited a 
success rate.
    Senator Collins. That makes sense, but that is not what 
this report seems to be saying is going on. Are you familiar 
with this March 30 report from the inspector general?
    Mr. Babbitt. Yes, ma'am.
    Senator Collins. And do you agree with the findings?
    Mr. Babbitt. I believe that we have incorporated--and I 
believe that the inspector general has concurred with the 
suggestions that we made going forward. One of the points of 
that report I think we partially concurred with, and I think 
one area of the report was simply a data measurement point in 
terms of failure rate. I believe the inspector general's team 
was looking at a certain period, and we were looking at a 
longer period of time. I think if you go to the end, the 
failure rates come back into alignment. In other words, we 
would say we had someone who was still in school at the end of 
a year and we failed them at 18 months. We were counting that 
person as having passed at the 1-year point, and I think the 
inspector general said, well, they ultimately failed. You 
should reflect it that way. And we understand the difference in 
the accounting of that.

                           OPERATIONAL ERRORS

    Senator Collins. Let me ask you both a basic question. It 
seems that in the last year, there has been an alarming 
increase in close calls in the air and on the ground, 
collisions that were narrowly averted. In addition, we have 
seen these reports about the air traffic controllers falling 
asleep or being inattentive.
    What are your views on the increase in operational errors, 
and also in these incidents with the air traffic controllers? 
Are we seeing a true increase, or has this problem been going 
on all the time and there has just not been public awareness of 
it? There is just better coverage of it now?
    I am going to start with the inspector general and then 
hear the Administrator.
    Mr. Scovel. Thank you, Senator Collins.
    As I mentioned in my opening statement, operational errors 
by controllers increased between 2009 and 2010 by 53 percent, 
from 1,234 operational errors to 1,887 operational errors. At 
this point, we do not have a good handle on what the true cause 
may be, and I suspect that we will not find a single true 
cause. We have examined National Transportation Safety Board 
(NTSB) investigations as well, where operational errors have 
been discussed, and found that they too have not found any kind 
of silver bullet. But there have been a number of reasons, 
perhaps, advanced to explain it.
    One that the agency points to frequently--in recent weeks, 
in the last month or so, since all of this has arisen in the 
news, is what Mr. Babbitt likes to call the enhanced safety 
culture and safety awareness in the agency. That is due, in 
large part, the agency believes, to the Air Traffic Safety 
Action Program (ATSAP), the voluntary, nonpunitive disclosure 
program that was recently put in place for air traffic 
controllers. The theory is that controllers, now, without 
fearing punishment, will be more willing to report operational 
errors. And that may be a cause.
    Another cause might be the automated tool that was recently 
put in place at TRACON facilities, which up until recent times 
did not have any kind of automated tool to capture operational 
errors committed by controllers in those facilities. This is 
the TARP program, the Traffic Analysis and Review Program. That 
certainly has flushed out more operational errors, I would 
speculate.
    A final cause might be--and some point to the fact that we 
have all been talking about this just this morning--the 
increase in newly hired controllers at air traffic control 
facilities, and the question of if they might not be committing 
more operational errors.
    At this point, we do not know and neither does FAA, neither 
does NTSB.
    I commend Mr. Babbitt for naming an independent team--that 
panel that he has charged with investigating the seeming rise 
in operational errors that is due to report in the early fall.
    This week, too, my office has announced audits to get to 
the root cause of all these operational errors. We are going to 
be looking at ATSAP, the voluntary disclosure program that I 
mentioned. We are also going to be looking at the agency's loss 
index, their loss of standard separation index, which attempts 
to capture all the different types of proximity events. We want 
to look at all of that and see if we can identify the range of 
causes. And I suspect that, like NTSB, we will not find a 
single one or even a couple, but it could be attributed to a 
number of them.
    Senator Collins. Thank you.
    Mr. Babbitt, what are your initial impressions on the cause 
of the increase in operational errors?
    Mr. Babbitt. I believe that the inspector general 
highlighted a number that we concur with. Certainly it is a 
concern whenever the rate goes up, but we have made such 
important strides in so many areas. Runway incursions, for 
example, have been reducing at a rate of 50 percent per year 
for the last 3 years. We had a grand total of six serious 
runway incursions last year, and that is out of 50 million 
operations. Had we maintained the same rate we had in 2005, 
there would have been more than 100. So dramatic reductions 
have been made, and that is attributed to a lot of things: the 
professional controller workforce, the attentiveness, new 
electronic gear, Airport Surface Detection Equipment, Model X 
(ASDE-X) radar on the ground. All of these are leading to that.
    By the same token, we may be somewhat being penalized by 
the fact that we do have better electronic ways of reporting. 
As the inspector general mentioned, this electronic reporting, 
this TARP program, allows us to flag things electronically that 
if no one had seen, we would not have noticed. And so we are 
taking the position that it is not necessarily the amount of 
operational errors that is increasing, but that we are 
capturing them. And that is a good thing. We want to capture 
what is happening. The next question is, then what is causing 
them? What do we need to change? Are we asking controllers to 
put airplanes too close together? Are we not being clear with 
our navigational instructions? We want to get to the bottom so 
that we can train to reduce these.
    But I use the example: I had an office over in Arlington 
for years, and at the intersection, there were two or three 
traffic light violations being given a week. They put in a 
camera and there were suddenly 40 being given a week. There 
were not more people running the light. There were more people 
getting caught running the light. In a sense, that is what we 
have done with this electronic capture, is our ability to find 
them. But again, that is a good thing. It is not a bad thing.
    Senator Collins. And it still begs the question of the 
cause, as you indicated.
    Thank you, Madam Chairman. As you know, I need to leave to 
go to the White House, and I would ask unanimous consent to put 
questions in the record. Thank you.
    Senator Murray. Absolutely. And I appreciate that. Your 
questions will be submitted for the record, and we will get a 
response. Thank you very much.
    Senator Lautenberg.

              FUNDING CONSTRAINTS AND CONTROLLER ATTRITION

    Senator Lautenberg. Thanks again for your being here and 
for the excellent support that you have brought to the system--
being constantly on guard to rid ourselves of those occasional 
slips. Mr. Babbitt, you know that no matter how many flights it 
is compared to, the fact is that we will look simply at the 
number of incursions or other close calls. Those are the ones. 
It could be millions of airplanes flying or in the air, but we 
want to make sure that we catch all of the problems.
    In terms of what we see happening, the House Republicans 
have threatened to cut back FAA funds to fiscal year 2008 
levels. Yet, a large number of trainees are entering the air 
traffic controller system, particularly--with a large wave, not 
unexpected, of controller retirements expected soon. Now, would 
that impair the system's ability to maintain the safety levels 
or that can be improved in the future?
    Mr. Babbitt. Let me answer. I read that as sort of a two-
part question. We have a training program that will accommodate 
what we anticipate for retirements. In the hiring program, we 
did have, from about 2005 through about 2009, an exceedingly 
high number of retirements, far above what was anticipated, 
which put a huge demand on our training. That has abated. We 
now are down to what we believe is a steady state rate of 
replacing our controller workforce as they age, and I am very 
comfortable that the profile that we have now--we are also 
seeing the ratios of fully trained certified professional 
controllers to train these----
    Senator Lautenberg. Can we do better with less?
    Mr. Babbitt. No, sir, I would fear that we could not. We 
have four fundamental areas that we have to address, and if you 
said we are going to do with less, then we would have to 
certainly take priorities into consideration and something 
would have to give.
    Senator Lautenberg. So this would not help protect the 
public more than they are protected now.
    Mr. Babbitt. The priorities--we would certainly share with 
the subcommittee here what our new priorities would be and----
    Senator Lautenberg. You are the boss, Mr. Babbitt. You have 
got the orchestra in front of you and you are the conductor. 
Will the sounds be the same? Will the system be the same if we 
have less to work with? Is it fair to assume that the answer 
would be no?
    Mr. Babbitt. You are correct. The answer would be no.
    Senator Lautenberg. Thank you.

                         PASSENGER BAGGAGE FEES

    The airlines are tacking on fees that account for an 
additional 20 percent of the ticket costs, and we have seen 
what happened when one airline imposes a new fee. Others 
quickly follow suit. These fees are on everything, as I said 
earlier, from checking your bags to pretzels. I would like to 
have the airlines required to publish what fees they are going 
to charge above the basic airline ticket so that a prospective 
passenger can make a comparison. Maybe I can get a bite to eat 
and not have to pay for it. And everybody who flies is not a 
millionaire.
    So, Madam Chairman, I would like to propose that we try to 
put a system like that into play. And I do not know whether 
this is an appropriate moment or hearing to move this along, 
but I would like that to be in the works.

                        JFK AIR FRANCE INCIDENT

    Last month, a large Air France plane struck a much smaller 
Delta plane at JFK. Luckily nobody was seriously injured, but 
it gave everyone pause to think about how something like that 
can happen. What went wrong that permitted that incident to 
take place?
    Mr. Babbitt. Yes, sir. That was an instance where an 
aircraft was on a taxiway that was being controlled by air 
traffic ground control at Kennedy Airport. The aircraft in 
front of it, a smaller airplane, was exited onto a private 
ramp.
    Now, I should mention this is under investigation by the 
NTSB, and we are party to that investigation. There has not 
been a conclusion reached, but I would say that the airplane 
went to a traffic area that is managed by their local ramp no 
longer in our control. Clearance needs to be provided----
    Senator Lautenberg. We would like to hear the conclusion 
there----
    Mr. Babbitt. Yes, sir.
    Senator Lautenberg [continuing]. Because it seems almost 
impossible that that is the situation.
    Mr. Babbitt. We will certainly get back to you when the 
NTSB concludes.
    [The information follows:]

    The National Transportation Safety Board (NTSB) has not yet 
completed its investigation into the April 11, 2011, incident at John 
F. Kennedy International Airport (New York, New York) where the wing of 
an Airbus A380 (Air France Flight 7 bound for Paris, France) clipped 
the tail of a Bombardier CRJ 700 regional jet (Comair Flight 293 in-
bound from Boston) that was waiting to park at an arrival gate.
    The agency will provide the subcommittee with a copy of the NTSB's 
finding once the investigation report is made available.

    Senator Lautenberg. Madam Chairman, if my colleague, 
Senator Pryor, would indulge, just one last thing here.
    Is there anything on the drawing board that either of you, 
or you particularly, Mr. Babbitt, are aware of that might 
suggest that further noise reductions could take place? Because 
that affects our airspace usage and design enormously.
    Mr. Babbitt. Yes, sir. I know a lot of times we are sort of 
charged with, so, where is NextGen and how is it progressing. 
We are actually very well along, and we are operating at a 
number of airports around the country utilizing very complex 
and robust procedures that utilize NextGen technologies. In 
Seattle, for example, we use these continuous descent arrivals 
that save 60 to 80 gallons of fuel and produce much less noise 
in the communities by using required navigational performance 
(RNP), and satellite-based navigation. Aircraft arriving into 
Seattle use curved approaches and avoid flying over populous 
areas and therefore produce much less noise with a much smaller 
carbon footprint. We are doing those procedures in Atlanta, Los 
Angeles, Seattle, and Philadelphia. We have a lot of 
opportunities where this is actually being deployed today. So, 
yes, sir, there is a huge benefit available.
    Senator Lautenberg. Yes. Bring it up to New Jersey, please, 
Mr. Babbitt.
    Thank you.
    Senator Murray. Senator Pryor.

                      AIRPORT IMPROVEMENT PROGRAM

    Senator Pryor. Thank you, Madam Chair. And I want to thank 
our witnesses for being here today. We appreciate your service.
    Mr. Babbitt, let me start with you. I would like to ask 
about AIP, and I would like to focus on one particular case 
that I hope you will look at and see if we can get some help 
with.
    There is a city in Arkansas about 30 miles outside of 
Little Rock called Conway, Arkansas. It is a great community. 
They have great people there, and it is growing. It is a 
robust, very energetic community.
    For the last 17 years, they have been trying to move their 
airport, and they have taxed themselves in order to do so. They 
have done everything they need to do. They have a location. 
They have a plan. They have all this. They want to do it over a 
3-year period. FAA says they need to do it over a 5-year 
period. I am not sure why the FAA wants to go slower.
    But there is a compelling reason why I think we need to 
move the airport as quickly as possible, and that is the 
current airport is very old. On one end of the runway is 
Interstate 40. On the other end is a neighborhood. And I know 
they have had at least two, maybe more incidents, where planes 
are landing or taking off and actually crash into homes and 
kill people. So it really needs to be moved to a safer 
location.
    Again, this community is totally behind this. They have 
taxed themselves. They have a great plan. I wish you would look 
at that. I know that they are in line to get some grant money 
this year too, and I know because of the budget issues we have 
been going through recently, you guys have not done that 
allocation yet. But I hope you will look at that as well. 
Conway, Arkansas. We will get you more information on that.
    Why would the FAA want to go slower than a community? Do 
you know the answer to that?
    Mr. Babbitt. I can give you one of several potential 
answers. Oftentimes we are limited. We might suggest that we 
could do that in 3 years and--I will just make up a number--
that it might cost $20 million. However, between authorizations 
and appropriations, they might say, well, you can have $15 
million and you can get the next $5 million later on. And so we 
are compelled to say to the airport we simply cannot get the 
money that fast for you, and of course, you are in competition 
with a lot of other airports. And it is based on a very 
thoughtful formula of what that airport expansion and change 
will do to improve the overall effectiveness of the national 
airspace system. But usually those are limited simply by the 
amount of funds that we have to flow at the rate of change, and 
it is always slower than both of us would like to be, and 
limited by the amount of money available.
    Senator Pryor. I just hope you will look at the Conway 
issue.
    Mr. Babbitt. Yes, sir. I have jotted that down.
    [The information follows:]

    The Federal Aviation Administration (FAA) supports the city's 
efforts to relocate Conway Municipal Airport (KCWS).
    The agency has invested more than $5.4 million in seven separate 
Airport Improvement Program (AIP) grants to support the airport 
relocation efforts. These grants were used for planning, land 
acquisition, and the first stage of construction.
    The Office of the Secretary of Transportation announced on June 20, 
2011, an AIP grant award in the amount of $2.3 million for the second 
stage of construction at KCWS. The FAA Southwest Regional Office will 
continue to work closely with the city on the administration of this 
grant.
    Additionally, the FAA Southwest Regional Office carefully assessed 
opportunities to speed up the project and accelerate the construction 
schedule, taking into consideration other critical needs across the 
Arkansas system. After examining various options, a strategy was 
developed to complete the project over a 4-year period, enabling KCWS 
to be funded 1 year earlier than previously reported to city officials.

    Senator Pryor. Thank you very much.
    And the other thing is I know that we are all--and I know 
Senator Murray has been a leader in this as well--trying to 
look for ways to be more efficient and to trim our spending. We 
are trying to do it in a way that does not harm the public and 
that would be considered a smart way to trim our spending.
    Last year I added a provision in the FAA bill as it came 
through the legislative process. It would require a study on a 
proposed Air Traffic Control Modernization Board to look at 
whether there should be consolidation of air traffic control 
towers. We had problems a few years ago with some strong 
indicators that they were going to consolidate a tower--in 
fact, it was the Little Rock tower--and take it offline and 
just use the Memphis tower. But we could never get real 
clarification on that from FAA.
    So my question for you is: Are there any plans to 
consolidate any air towers that we need to know about?
    Mr. Babbitt. Yes, sir. We have looked at a number of 
consolidations. I think for clarity, we would be talking about 
consolidating the radar functions and the TRACON functions. For 
example, in the State of California, we have two very large 
northern and southern California TRACONs where the people in 
those facilities control the air traffic at literally dozens of 
airports.
    Senator Pryor. Right.
    Mr. Babbitt. NextGen technology will allow us to really 
capitalize on those kinds of efficiencies. Let me give you an 
example. If we had 10 facilities in an area, every one of those 
facilities would have a radar room, and in that radar room, we 
would have all the necessary hardware, software, backup 
generators and backup IT capability. All of that would be 
duplicated times 10. We, on the other hand, could consolidate 
that, and with the digital technology we have today, the 
controllers do not need to sit underneath the air traffic they 
are controlling. They can do it very efficiently. You have a 
lot easier staffing. You have a lot of efficiencies that come 
from that. So we are weighing those things with our colleagues 
in the House and the Senate, as well as the people we work 
with, the air traffic controllers. We want to look at this 
thoughtfully. Does this make sense? Is this good use of our 
technology? And are we truly more efficient, or is there any 
harm done? So we have working groups that are looking at this, 
and in the interest of being efficient with our tax dollars, it 
is something we have to look at.
    Senator Pryor. I am all for efficiency, but you also need 
some redundancy in the system in case one location goes down. 
In our region, we have had a situation I know a couple of times 
in the last 3 or 4 years where the Memphis airport, for one 
reason or other, storms or whatever, has lost power. And they 
have had to go down, and the Little Rock TRACON takes up the 
slack on the Memphis area. So do you not want some redundancy 
in the system?
    Mr. Babbitt. Absolutely, yes, sir.
    And one of the things when we talk about--it is very 
germane to your question there. When we transition completely 
to ERAM, the ERAM system and aircraft equipped with ADS-B, we 
have the same fidelity as terminal approach radar so that if a 
TRACON, for example, were to have some catastrophic power 
failure, the center controllers would have the same update 
rates that TRACON enjoys today. That is not the case today with 
the host system and, essentially, the analog type radar we use.
    Senator Pryor. Thank you.
    Madam Chair, I have other questions I will just submit for 
the record. Thank you very much.
    Senator Murray. Thank you very much.

                   EN ROUTE AUTOMATION MODERNIZATION

    I did want to ask about the ERAM program. It is a 
fundamental part of the FAA's NextGen effort, and under ERAM, 
the FAA is completely replacing a key part of the agency's air 
traffic control system. Unfortunately, that means that when 
there are problems with ERAM, there are problems in other parts 
of NextGen.
    Now, this subcommittee has provided a steady stream of 
funding for ERAM, but the program fell years behind on its 
schedule, and those delays are now affecting other important 
programs, like the data communications program, that need the 
new features that ERAM is supposed to be offering.
    According to the inspector general, the ERAM program is 
facing additional cost increases between $330 and $500 million, 
and because of those delays and cost overruns, the FAA is going 
to be establishing a new budget and schedule for ERAM this 
summer.
    If more funds are needed for ERAM, will you be identifying 
which programs will be cut in order to make room for the cost 
increases on those?
    Mr. Babbitt. I am going to start with the positive approach 
that I am very optimistic that we will not need sufficient new 
funds. ERAM was a program that was started more than 9 years 
ago. It was a quite ambitious program, and I think, candidly, 
it was more ambitious than people gave it credit for and more 
complex than people appreciated that it might be. We have run 
into some serious complications in integrating this type of 
technology into the national airspace system.
    With that said, it was clear to me within 1 year of my 
arrival that this program was not on track. We literally 
stopped the program and brought it to a halt and said, let us 
analyze it top to bottom. We invited MITRE to come in. We 
invited outside--certainly the inspector general has looked at 
it and the results. We have revamped it. We have revamped some 
of the cost allocations.
    And yes, those numbers were re-baselined, but they were 
done with a lot of transparency, a lot of openness. And the 
cascade of implementation, or waterfall, if you would, that we 
set forth is a very achievable process and program.
    Second, we changed completely our program management 
oversight. We have completely revamped how we do that. I think 
it is more state of the art. I think it is something that we 
probably should have done some time ago. But the bottom line is 
here today. We also are carefully monitoring each of the 
stages.
    I think one of the most important things that we have done 
is we have now incorporated our air traffic controllers. They 
were not really involved in the implementation schedules. They 
have been a great benefit. These are people who have wonderful 
practical experience in how this program should work. They have 
been very helpful in working with us, and we have identified a 
lot of the open items. I just read a report in the last 2 or 3 
days; there was something like 150 open items as of 6 months 
ago with one of the operating systems. Today we are down to 
about seven or eight. Granted, that is seven or eight too many, 
but it is a dramatic improvement over where we were. We now 
have ERAM operating in two different areas, Seattle and Salt 
Lake. Once we have our initial service decision in place, we 
will move on with implementation in other areas, and I believe 
we are on track.
    Senator Murray. Mr. Scovel, you have disagreed with the FAA 
on this cost estimate. They have said that the cost increase 
will not exceed $330 million. You said it could be as high as 
$500 million. Why do you see the cost increase being so high?
    Mr. Scovel. Madam Chairman, the cost increase is a 
difficult figure to pin down. The agency has specified, as you 
pointed out, $330 million, and extended the initial timeline 
for ERAM by about 4 years. The work of our office and that of 
MITRE as well has suggested that $330 million might only be the 
start.
    Mr. Babbitt has spoken to the extreme technical 
difficulties and unpredictable nature of putting ERAM in place 
first at the initial operating sites, much less at other places 
around the country. We can anticipate that those difficulties, 
in fact, will continue. The Salt Lake City and Seattle sites 
were selected as test beds precisely because they are less 
complex than some of the other locations where ERAM will need 
to be installed, like New York, Chicago, and Cleveland. When 
ERAM is put in place in those areas, we can anticipate new 
problems cropping up, especially more software problems. More 
time and more effort will be needed in order to bring those to 
closure, and that, of course, translates into more expense. We 
and MITRE have predicted perhaps an upper range of $500 million 
in order to accomplish all of those fixes.
    Mr. Babbitt is absolutely correct. ERAM is critical to 
NextGen. There is a logjam right now in NextGen, and ERAM is 
the key log. The agency is working night and day to work on 
fixes. They appreciate the seriousness of the situation.
    At times, however, in our opinion, the agency has been 
over-eager, a bit too quick to declare temporary victory in the 
face of some of the limited accomplishments that it has 
achieved. For instance, the in-service decision actually was 
announced at the end of March but then quickly suspended in the 
face of protests from the NATCA representatives that Mr. 
Babbitt has mentioned, and also from an independent operating 
assessment team that the agency had commissioned to review ERAM 
fixes to date.
    That is the kind of over-eagerness that can sometimes lead 
to skepticism on the part of decisionmakers like you, and by 
users in the industry, and by oversight authorities like my 
office. We would strongly encourage the agency to adopt a very 
sober and rational approach in deciding what needs to be 
accomplished with ERAM, and then putting it in place and 
testing it thoroughly before taking the next step.
    Senator Murray. And so, Mr. Babbitt, you answered my 
question on what you would cut in order to make room for the 
cost increase, with the positive attitude that you will not 
have to do that. But having been around here for a while 
watching this, I would come back to you and say that we do need 
to know from you what programs you will cut in order to deal 
with that cost increase because that will be what this 
subcommittee will have to deal with here in the coming months. 
So I would ask you to go back and look at that, and for the 
record, if you could give that answer back to me, I would 
appreciate it.
    Mr. Babbitt. Absolutely. I mean, we clearly would have to 
reevaluate our priorities, but the savings that come from 
implementation of NextGen are so powerful and so far outweigh 
the incremental costs. For example, for every month we delay 
the implementation--we do appreciate staying on schedule, 
because every month that we delay the implementation of a fully 
robust ERAM system, we continue to support an old legacy system 
that costs us $10 million a month.
    Senator Murray. I do not disagree with the long-term 
projections at all. I totally am where you are. I am dealing 
with the immediacy of a budget that does not appear to be 
growing. So we need to make some tough decisions here, and we 
will need your input as we do that.
    Mr. Babbitt. We will do that.
    [The information follows:]

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           Fiscal year                      Fiscal year
 Budget                                                    Fiscal year     Fiscal year     Fiscal year        2012                         2012 revised
  line       Program name          Summary of impact     2011 enacted @  2012 request @  2012 mandatory   discretionary    ERAM funding   $2.87 billion--
  item                                                    $2.73 billion   $3.12 billion  @ $250 million      @ $2.87        adjustment     $28.5 million
                                                                                                             billion
--------------------------------------------------------------------------------------------------------------------------------------------------------
   2B07 ATCT/TRACON Improve  Will delay the execution      $45,508.80      $61,900.00       $5,000.00      $56,900.00      $(6,900.00)      $50,000.00
                              of backlogged and new
                              projects.
   2D03 WAAS                 Funding for the                94,810.00      125,500.00  ..............      125,500.00      (12,200.00)      113,300.00
                              deployment of a 5th GEO
                              Satellite was reduced.
   2B17 ASR-8 SLEP/          ASR-8 Relocation--              2,594.80        2,700.00  ..............        2,700.00       (2,700.00)  ..............
         Relocation           Bismark, North Dakota.
                              This was to complete a
                              congressionally
                              directed item in the
                              fiscal year 2008
                              budget. The airport
                              secured an earmark to
                              relocate the ASR-8 to
                              make room for an
                              industrial park.
   4A08 CAASD                Will reduce the planned        73,755.20       80,800.00  ..............       80,800.00       (6,700.00)       74,100.00
                              level of 263 MITRE
                              technical staff years
                              that will support
                              communications
                              modernization,
                              performance-based NAS,
                              enroute evolution,
                              terminal operations and
                              evolution, airspace
                              design and analysis,
                              NAS System operations,
                              aviation safety, and
                              security--13-percent
                              reduction.
   2A01 ERAM                 Accelerated funding for       181,935.40      120,000.00  ..............      120,000.00       28,500.00       148,500.00
                              ERAM into fiscal year
                              2012 from fiscal year
                              2014 in order to meet
                              the programs fiscal
                              year 2014 schedule
                              goal. Revised fiscal
                              year 2012 funding does
                              not increase the
                              overall program
                              baseline cost which
                              remains at $330 million.
--------------------------------------------------------------------------------------------------------------------------------------------------------
        \1\ The total reduction of ERAM funding adjustment is $0.

                   SYSTEM-WIDE INFORMATION MANAGEMENT

    Senator Murray. I wanted to ask about the System-Wide 
Information Management (SWIM) program. It is an essential part 
of FAA's NextGen effort as well. And under SWIM, the FAA will 
be able to have a network of different computer systems and 
programs. It is about sharing data and working more 
efficiently, a good long-term goal, and we support that.
    But, Mr. Scovel, in your written testimony, you talk about 
the fact that the SWIM program has already seen a cost increase 
of about $100 million. Now, I understand the FAA has been 
setting a very cautious baseline for SWIM, committing to only 2 
years of funding at a time, and the FAA has stayed within the 
budget set by those baselines. But the overall cost of this 
program is increasing, and I wanted to ask you today to explain 
what these 2-year baselines mean for a program and how a 
program can stay within its short-term baselines and still 
experience long-term cost growth.
    Mr. Scovel. Madam Chairman, SWIM is a key transformational 
program for NextGen. It is a program, however, that is now in 
trouble. It started off at $179 million for the first segment 
estimated cost. Now it is $104 million or so above that and 
extended by about another 2 years on this first segment. We do 
not have the cost estimates, in fact, for the next couple of 
segments--not that my office has seen, at any rate.
    If I could drop a footnote at this point, I would say that 
had FAA published a detailed NextGen implementation plan or an 
integrated master schedule that would be of benefit to 
decisionmakers like you, we might know. We might have some 
visibility over the longer term of how SWIM would fit in, along 
with other programs, in terms of cost, benefits, timing, and 
sequence. The agency has not yet given us that.
    In the meantime, we see a program like SWIM that appears to 
be in trouble. When we commissioned our audit, the initial 
report, which we have submitted to the agency for their 
comments back--we think that we have identified a root cause of 
the problem, and that is the diffused and decentralized nature 
of the development and management structure of the program. 
Rather than a strong central program office, SWIM, in fact, has 
devolved or delegated key implementation decisions to the seven 
subordinate programs or peer programs that will draw on SWIM's 
capabilities--programs like ERAM. And we just discussed that 
and how the requirements and fixes for ERAM are very much in 
flux.
    We have suggested to the agency, and we have recently 
learned that they have, in fact, put in place a way to clarify 
accountability and authority over SWIM. It will be the deputy 
administrator who will adjudicate disputes between the SWIM 
program office and other program offices as to what SWIM should 
include, and what requirements should be, and fixes to be put 
in place.

                   LIFE-CYCLE PROGRAM COST MANAGEMENT

    Senator Murray. Mr. Babbitt, can you tell me how the agency 
manages the cost of a program over its entire lifetime, and 
does not just look at the short-term baselines?
    Mr. Babbitt. It is a complicated answer that I have to give 
you. We do, in fact, have a NextGen implementation plan, but 
that is simply the mechanics and the actual layout and rollout 
of the various functions. To attach a budget to that is more 
complex.
    Oftentimes we would ask for--and I think it explains, or I 
hope to explain the question to you with a suitable answer. We 
might say, for example: We would like to be funded. We would 
like to put this program in place that would cost $50 million 
and take us 2 years. What we may get back instead is, well, you 
can only have $30 million. So now it makes it a 3-year program 
which will be, in fact, more expensive. And so then we will re-
baseline and we will reprogram the funding for that. So those 
things change for us subject to how we are allocated funds. It 
does make it difficult.
    Of course, we are on our 18th extension. It does make it 
very difficult to give you a budget forecast with all these 
very short-term extensions. It makes it a little more 
complicated for us. And sometimes it would appear that, well, 
you did not do a very good job of your forecast when, in fact, 
it was necessary to change the timeline.
    Senator Murray. It is my understanding that SWIM has gotten 
all of its funding that they requested.
    Mr. Babbitt. As the inspector general has noted, it is a 
complex program, and we have run into some technical 
difficulties.
    Two things that I think are very important: We have changed 
the reporting structure and the accountability to very much 
more centralize this to overcome the very things that were 
pointed out. We had a very diverse and not very transparent 
process, and we were not leveraging the technology that we had, 
or the skills inside the agency. I think we have made great 
steps toward that.
    Our program management oversight has been changed. A number 
of the changes that I mentioned to you that have been 
undertaken are now being implemented. I truly hope that we will 
produce a far better and more realistic result to your 
subcommittee and others.

                       NEXTGEN FUNDING PRIORITIES

    Senator Murray. As we face these continuing budget cuts, we 
have to know that. This subcommittee is watching it very 
closely. So we will stay in touch with you on that.
    You mentioned the managing of NextGen, and I know FAA has 
come under a lot of criticism for its management. Good 
questions have been asked about whether the FAA can manage a 
wide variety of programs as a single portfolio and whether the 
FAA has set appropriate goals and metrics to measure the 
success of NextGen. But I think recent pressure to make drastic 
cuts to the budget raises new kinds of issues about NextGen.
    When there is only a limited amount of funding available, 
we need to know what FAA's priorities are and what benefits we 
are going to get for the money that we spend. I know that right 
now you are working on a new spend plan for 2011. But I am just 
not convinced that the FAA has a strategy for identifying its 
highest priorities for the long term, and not just on a year-
by-year basis. So I wanted to ask you if you could tell me 
which NextGen capabilities have the highest priority for 
funding if there is not enough money to pay for all of it.
    Mr. Babbitt. That is a very complicated question. Let me 
see if I can tackle it for you. Some of this is going to be 
dependent--remember, there are two components, or actually 
three components internal to the FAA. But there is the fourth 
component of equipage on aircraft outside the FAA.
    Now, we have taken great lengths to determine the 
prioritization of what we would want to do, and we took it to 
an outside group, RTCA. We showed them our draft program for 
the NextGen implementation, and we asked them to review it. 
Now, these were 300 people from around the industry. These were 
manufacturers, pilot groups, mechanics, air traffic 
controllers, all the people directly affected by NextGen. And 
we asked them to look over what we had done.
    And they have given us a new set of priorities, which are 
now the steps we are following. We revised our NextGen 
implementation plan to align ourselves with what the industry 
said would be most effective. In other words, the industry 
said--for example, we were going to build something for data 
communication. They said that does not do us any good until we 
get something else. You should do the something else first. So 
we have realigned our priorities to that extent.
    So if showing you the new NextGen implementation plan and 
then putting dollars with it--that would probably do about as 
good a job of laying out for you the priorities that we have 
accepted, driven by the industry, driven by the consumers, and 
that would be the steps we would follow.
    Now, having said that, I am very concerned that you cannot 
just take one brick out of a building and say, well, this is 
the brick we will save. That may be a very foundational brick 
and we would want to be very cautious in thinking about--even 
though it might not be the highest priority, it might be very 
necessary to support the rest of the program. So we would have 
to go back and look.
    And this has been complicated by an uncertainty of funding. 
Given a finite amount of money, we can tell you what we are 
going to do. Given sort of an unknown quantity, it is 
different.
    One of the things that does concern me--I just recently 
read an independent study that shows the benefits of NextGen if 
it were to be fully implemented by 2025 and if we spent every--
even on the high-side dollars, it would cost, in round numbers, 
$22 billion to fully implement. But the benefit to the global 
economy of the world is $897 billion. This has an enormous 
return on its investment. So we would want to be very careful 
about saying we can save a billion here if it delays the 
program implementation. But this independent report says, if 
you delay the implementation 5 years, it reduces the $148 
billion.
    So we would want to be very thoughtful and we certainly 
would want to have your understanding and concurrence before we 
said, well, we are going to cut back here. We are going to save 
$4 billion over the next 2 years, but it is going to cost us 
$80 billion in the long run. So I think we need to be----
    Senator Murray. Those are issues we are dealing with in 
every program here, and we are trying to be sober about what we 
can realistically do. So we will work with you.
    Mr. Scovel, do you have any ideas on how the FAA can 
prioritize this as we face these continuing challenges here 
with budget cuts?
    Mr. Scovel. We would commend the agency for their efforts 
in the short-term implementation for NextGen to have worked 
with the RTCA so-called Task Force 5. And by the short term, we 
are talking about from the present up to the 2015-2017 
timeframe. FAA, we think, has very wisely chosen to focus its 
short-term efforts on the Metroplex initiative, and working 
with users in the industry to determine those benefits that can 
be most quickly and most tangibly achieved at those key 
locations throughout the country. And FAA has been working on 
airspace and procedural changes in order to accomplish that.
    Looking out over the longer term, we would cite a couple of 
programs. And I am certain the Administrator would likely 
agree. ERAM, as we have talked about, needs to be fixed, and as 
quickly as possible. ADS-B is absolutely critical. One that has 
not been mentioned yet today, apart from our written 
statements, is terminal modernization. In order for the 
benefits of NextGen to be achieved, and specifically for the 
ADS-B benefits to be put in place, not only ERAM at the en 
route centers, but also the modernization platforms at the 
TRACONs need to be in place. The users have been clamoring for 
some certainty and identification as to when, and how, and 
where those initiatives will take place, and we would certainly 
second that.

               AIR FRANCE FLIGHT 447--LOSS OF SEPARATION

    Senator Murray. I appreciate both of your testimony on all 
those complex budget issues.
    Mr. Babbitt, while I have you, I just want to ask you one 
question. It was almost 2 years ago when Air France flight 447 
disappeared into the Atlantic Ocean, and the New York Times 
published a lengthy story on that this week which was very 
interesting. I know that was not under FAA's watch, but I 
wanted to ask you, while you are here, what procedures are 
followed when U.S. aircraft controllers lose contact with the 
aircraft.
    Mr. Babbitt. I guess that changes depending on other 
circumstances. But if an aircraft were to lose contact, we 
would certainly institute a set of procedures to try and regain 
radio communications. If that is not possible after about 10 
minutes, we go into----
    Senator Murray. That soon.
    Mr. Babbitt. Yes. We start notifying other agencies. We 
escalate it. Now, that is just radio communication.
    If we lose radio and radar communication--in other words, 
we lose sight of the target--we immediately assume that some 
catastrophic loss has occurred. If we cannot even get a primary 
target, meaning there is no radar return whatsoever, we would 
assume that the airplane is down and we would go to another 
level. We would notify the NTSB. We would notify other 
agencies. We would begin search and rescue.
    Senator Murray. How soon? Because I think it was a day 
before they began search and rescue. How soon would we be 
looking at search and rescue?
    Mr. Babbitt. We would have notified people within 30 
minutes. So, we would have been reacting very, very quickly. Of 
course, this was an airplane that was not a U.S.-registered 
aircraft and it was not in U.S. control.
    Senator Murray. Yes. My question was more, what do we have 
in place that is dissimilar to that. It seemed like it just 
took them--from reading the article--I do not know if you read 
it, but it just seemed like it took them forever to do 
anything.
    Mr. Babbitt. Right. Yes. No, we would have responded more 
quickly. That one was complicated in consideration of the 
circumstances. That airplane could not have been further from 
anything than it was. It was in a very remote area across the 
ocean, which really complicated the authorities' ability to 
move there. But I do not know the exact timeline of when they 
implemented. But things would be well underway in this country 
in 30 minutes.
    Senator Murray. That is good to know.

                     ADDITIONAL COMMITTEE QUESTIONS

    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
               Question Submitted by Senator Patty Murray
                   performance and retention bonuses
    Question. Please explain what changes the Federal Aviation 
Administration (FAA) has made to its procedures in the past year to 
ensure it is using its retention bonus authority appropriately. Please 
compare how FAA's retention bonus policy differs from that of other 
department modes.
    Answer. To ensure appropriate and responsible use its Retention 
Incentive Program, in October 2010, FAA raised the approval level for 
all retention incentives to the FAA Administrator. In addition, FAA is 
in the process of strengthening its policy that will:
  --require increased analysis and written justification based on 
        specific factors;
  --require a period of employment with FAA of at least 1 year prior to 
        being authorized any retention incentive; and
  --add an annual review to determine continued business need for the 
        retention incentive.
    Other than the approval level, these added requirements mirror the 
Department of Transportation's incentive policy. Pursuant to 49 U.S.C. 
40122, the FAA Administrator holds the final approval authority for pay 
decisions.
                                 ______
                                 
            Questions Submitted by Senator Richard J. Durbin
                faa airport privatization pilot program
    Question. Since the Federal Aviation Administration (FAA) Airport 
Privatization Pilot Program began in 1997, how many airports have 
applied to participate in the program?
    Answer. Since the program's inception in 1997, 10 airports have 
submitted applications for participation in the Pilot Program:
  --Stewart International Airport, Newburgh, New York;
  --San Diego Brown Field, San Diego, California;
  --Rafael Hernandez Airport, Aguidilla, Puerto Rico;
  --Niagara Falls International Airport, Niagara Falls, New York;
  --New Orleans Lakefront Airport, New Orleans, Louisiana;
  --Chicago Midway International Airport, Chicago, Illinois;
  --Louis Armstrong International Airport, New Orleans, Louisiana;
  --Luis Munoz Marin International Airport, San Juan, Puerto Rico;
  --Gwinnett County-Briscoe Field, Lawrenceville, Georgia; and
  --Hendry County Airglades Airport, Clewiston, Florida.
    Question. How many airports have applied to be sold or privatized 
under the pilot program? How many airports have successfully been 
privatized under the program?
    Answer. Ten airports have submitted applications for participation 
in the pilot program. Title 49 U.S.C. 47134 requires that commercial 
service airports can only be leased while general aviation (GA) 
airports can be leased or sold. Nine airports have applied for leases; 
Hendry County Airglades Airport, a GA airport, is the only GA airport 
considering a sale.
    To date, Stewart International Airport (SWF) in Newburgh, New York, 
is the only airport to receive final agency approval. National Express 
Group, a private company from the United Kingdom, operated SWF from 
March 2000 until October 2007, when the Port Authority of New York and 
New Jersey purchased the National Express Group's Airport Lease. SWF is 
no longer privatized.
    Question. How many applications are currently pending in the 
privatization program? What airports are currently participating in the 
program?
    Answer. Of the five slots available in the pilot program, FAA has 
four slots reserved:
  --Chicago Midway International Airport, Chicago, Illinois;
  --Luis Munoz Marin International Airport, San Juan, Puerto Rico;
  --Gwinnett County Briscoe Field, Lawrenceville, Georgia; and
  --Hendry County Airglades Airport, Clewiston, Florida.
    Question. The privatization pilot program allows FAA to exempt the 
public airport sponsor from the obligation to repay Federal grants and 
return property acquired with Federal assistance upon the lease or sale 
of the airport. Is this authority discretionary or is FAA required to 
exempt airport sponsors from repaying Federal grants?
    Answer. Title 49 U.S.C. 47134(b)(2) gives the Secretary 
discretionary authority to grant an exemption to an airport sponsor 
necessary to waive an obligation to repay Federal grants.
    Question. The privatization pilot program allows FAA to exempt the 
public airport sponsor from the obligation to repay Federal grants and 
return property acquired with Federal assistance upon the lease or sale 
of the airport. Has the FAA ever used this discretionary authority?
    Answer. In the case of SWF, FAA granted an exemption to the New 
York State Department of Transportation from its obligations to repay 
Airport Improvement Program grants. Title 49 U.S.C. 47134(b)(1) 
requires that the exemption permitting revenue to be used for 
nonairport purposes must be approved by at least 65 percent of the air 
carriers serving the airport; and by air carriers whose aircraft 
landing at the airport had a total landed weight of at least 65 percent 
of the total landed weight of all aircraft landing at the airport. The 
air carriers declined to approve New York State's request to use 
airport revenue for nonairport purposes.
    Consequently lease proceeds remained airport revenue. The State of 
New York could only receive reimbursement for capital contributions 
incurred within the past 6 years as permitted by existing statute. An 
exemption was issued waiving the obligation to return Federal surplus 
property.
    Question. The privatization pilot program allows FAA to exempt the 
public airport sponsor from the obligation to repay Federal grants and 
return property acquired with Federal assistance upon the lease or sale 
of the airport. If so, when and how much funding were airport sponsors 
exempted from repaying?
    Answer. In 2000, New York State Department of Transportation was 
exempted by FAA from repaying $59,118,796 in AIP funds and repaying an 
Economic Development Administration grant for the construction of an 
air cargo terminal. The Federal obligations were transferred to the 
private operator. Since the air carriers declined to approve New York 
State's request to use the lease proceeds for nonairport purposes, the 
lease proceeds remained airport revenue, and therefore the exemption 
was not used.
    Question. The privatization pilot program allows FAA to exempt the 
public airport sponsor from the obligation to repay Federal grants and 
return property acquired with Federal assistance upon the lease or sale 
of the airport. If FAA did not require repayment at any airport 
involved in the privatization program, how much total Federal funding 
would each airport sponsor in the privatization program be exempted 
from repaying?
    Answer. If FAA did not require repayment by any of the four active 
applicants in the privatization pilot program, the exemptions issued 
would equal approximately $215,931,838 in total Federal funding. The 
amounts due the Federal Government would include:
  --Chicago Midway, $145,340,713;
  --Luis Munoz Marin, $42,736,309;
  --Gwinnett County Briscoe Field, $24,408,257; and
  --Hendry County Airglades Airport, $3,446,559.
    These amounts include the remaining useful life of grant-funded 
pavement, buildings, and equipment. Grant amounts are amortized over 
the 20-year useful life of the physical asset. The FAA would not 
require repayment for federally acquired land as long as the airport 
remained an airport. These amounts do not include improvements older 
than 20 years or intangible investments like studies and planning that 
are not depreciable assets.
    Question. The privatization pilot program allows FAA to exempt the 
public airport sponsor from the obligation to repay Federal grants and 
return property acquired with Federal assistance upon the lease or sale 
of the airport. Have any of the public airport sponsors interested in 
privatization received Federal funding for land acquisition to build 
their airport? How would these types of grants be considered in the 
requirement to repay Federal grants?
    Answer. Yes, some of the public airport sponsors interested in 
privatization have received Federal funding for land acquisition to 
build their airport. Since the useful life of land does not end or 
depreciate, the obligations associated with the Federal purchase of 
land do not expire. Federal surplus property deeds conveying land for 
airport purposes also do not expire. FAA would not require repayment 
associated with land acquisition because sponsors would want those 
obligations released. FAA would not normally seek reimbursement for the 
land, in order to ensure that these airports remain federally 
obligated.
    Question. Midway Airport in Chicago is currently the only large-hub 
airport in the privatization program. How much total Federal funding 
has gone to build and maintain Midway Airport?
    Answer. The FAA has obligated $376,480,477 in AIP grant funds for 
Midway Airport in the last 20 years.
    Question. Midway Airport in Chicago is currently the only large-hub 
airport in the privatization program. How much Federal funding would 
the city of Chicago need to repay if it were successfully privatized 
under the program and FAA did not use their authority to exempt 
repayment of previously received Federal grants?
    Answer. The FAA could require repayment associated with the 
remaining useful life of the Federal investment without repayment for 
the cost of land. The city of Chicago and its private operator would 
have to repay $145,340,713. This would include the depreciated value of 
pavement, buildings, and equipment. This sum would not include 
improvements older than 20 years or intangible investments like studies 
and planning.
    Question. Midway Airport in Chicago is currently the only large-hub 
airport in the privatization program. What other large-hub airports 
have expressed interest in the privatization program?
    Answer. It is unclear what other large-hub airports are interested. 
The FAA has not received applications from other large-hub airports 
because Midway currently holds the only slot for large hubs.
    Question. Under the current privatization pilot program, what 
disclosure requirements does the private entity wishing to buy or lease 
the airport have?
    Answer. The disclosure requirements are identified in the FAA's 
Airport Privatization Pilot Program: Application Procedures, 62 Federal 
Register 48693, September 16, 1997. Such disclosures include the 
following:
  --qualifications of private airport operator, including the identity, 
        experience and responsibility of key personnel;
  --financial resources, including copies of 10K annual reports filed 
        with the Securities and Exchange Commission, if not filed, 
        balance sheet and income statement prepared in accordance with 
        generally accepted accounting principles, with all footnotes 
        applicable to the financial statements;
  --description of the private operator's capability of complying with 
        the public sponsor's existing grant assurances;
  --affiliations with air carriers or other persons engaged in 
        aeronautical business activity at an airport (other than 
        airport management); and
  --description of all charges of unfair or deceptive practices or 
        unfair methods of competition brought against the private 
        operator, private operator's key personnel and in the case of a 
        private operator that is a joint venture, partnership or other 
        consortium, the separate members of the entity in the past 10 
        years.
    The description should include the disposition or current status of 
each such proceeding. If application is approved, the private operator 
is subject to financial reporting requirements provided for in 49 
U.S.C. 47107(a)(15) and (19) and as implemented in Grant Assurance Nos. 
13 and No. 26. Additionally, if the application is approved, the 
private operator would be subject to periodic audits of the financial 
records and operations of an airport receiving an exemption under the 
pilot program and the applicant indicates their express assent to this 
provision. Private operators may file a request for confidentiality of 
documents or information submitted to protect the disclosure of 
confidential business information.
    Question. Do private airport sponsors need to disclose any conflict 
of interests they may have with parties involved in a sale or lease 
agreement?
    Answer. According to the application procedures, private operators 
must disclose affiliations with air carriers or other persons engaged 
in aeronautical activity at an airport (other than airport management). 
Private operators must also disclose all charges of unfair or deceptive 
practices or unfair methods of competition brought against the private 
operator and or key personnel within the past 10 years. The private 
applicant would also be subject to applicable State law conflict of 
interest requirements when submitting a response to a request for 
proposal and/or bid.
    Question. Do private airport sponsors need to disclose an estimated 
amount of tax benefits over the life of a long-term lease or sale of a 
privatized airport?
    Answer. Neither the statute nor the application procedures require 
the private operator to disclose estimated tax benefits over the life 
of a long-term lease or sale of a privatized airport.
    Question. Do private airport sponsors need to disclose savings they 
may receive from changes in workforce, wages, benefits, or rules? Are 
the private entities required to disclose any tax or financing benefits 
they receive from entering into a long-term lease of an asset like an 
airport?
    Answer. Neither the statute nor the application procedures require 
the private operator to disclose savings or estimated tax benefits over 
the life of a long-term lease or sale of a privatized airport. The 
statute does require that any collective bargaining agreement that 
covers airport employees and is in effect on the date of the sale or 
lease of the airport not be abrogated by the sale or lease. 
Additionally, if the application is approved, the private operator 
would be required to comply with all applicable Internal Revenue 
Service (IRS) rules and regulations.
    Question. Under the current privatization pilot program, what 
disclosure requirements does the airport sponsor have before they sell 
or lease their airport?
    Answer. The disclosure requirements are identified in the FAA's 
Airport Privatization Pilot Program: Application Procedures, 62 Federal 
Register 48693, September 16, 1997. Public Sponsors interested in 
applying must file a preliminary application to reserve a slot, 
followed by a final application for the exemption. The application 
procedures require the sponsor to submit a statement of the public 
sponsor's authority to sell or lease the airport, with a citation to 
legal authorities. The sponsor is required to file a distribution ready 
copy of the request for proposals (RFP) for the management and 
operation of the airport which should contain references to the nine 
statutory objectives listed in 49 U.S.C. 47134. In the RFP, the sponsor 
will need to disclose whether it is proposing to sell or lease a GA 
airport, or to lease any other type of airport. The applications are 
filed on www.regulations.gov and available for public review and 
comment. The FAA conducts a public hearing in the local community and 
holds a 60-day public comment period before making a decision. Public 
Sponsors must disclose the amount of airport revenue that will be used 
for non airport purposes and the amount of airport revenue that will be 
paid to the private operator. The FAA encourages airport sponsor to 
augment FAA's efforts with their local means of communicating with the 
general public. The FAA requires a description of any local public 
outreach efforts by the applicant.
    Question. Does the public airport sponsor need to conduct an 
assessment of whether a sale or lease with a private entity would 
represent a better public and financial benefit than keeping the 
airport under public ownership and control?
    Answer. No, not formally through the privatization application 
process. The FAA views the type of management structure an airport 
owner chooses to manage its airport as a local decision. However, as a 
matter of prudence, FAA would expect an airport sponsor to perform 
appropriate due diligence in considering whether to privatize its 
public use airport. Most airport owners have conducted some form of 
assessment and made a decision to seek private investment and operation 
prior to submitting an application for the privatization pilot program.
    As stated in the application procedures, it was the intent of 
Congress in enacting the airport privatization pilot program to 
determine if new investment and capital from the private sector can be 
attracted through innovative financial arrangements. The FAA and the 
public have a reasonable expectation that a private operator will 
provide new capital and create new investment opportunities at the 
airport.
    Furthermore, the airport sponsor is required to describe how the 
private operator, the public sponsor, or both will address operation, 
maintenance, and development of the airport after the proposed 
transfer, and the continued operation of the airport in the event of 
bankruptcy or other financial or legal impairment of the private 
operator. One approach would be through reversion of the airport back 
to the public sponsor.
    Question. Does the public airport sponsor need to disclose how much 
revenue they will lose from selling or leasing an airport?
    Answer. The application procedures require the public airport 
sponsor to disclose the lease or sale proceeds from the transaction 
that will be used for nonairport purposes. As with all Federal 
obligated airports, FAA can require airport owners and operators to 
submit financial information. The FAA did caution the sponsor and the 
private applicant for Niagara Falls International Airport about its 
concern about the level of investment in a proposed privatization 
process. This application was ultimately closed out in January 2002 for 
failure to proceed.
    Question. Does the public sponsor need to disclose their plan for 
spending any up-front payments received in a sale or lease of an 
airport?
    Answer. Yes, typically this occurs when the sponsor responds to the 
preliminary application question related to a summary narrative of the 
objectives of the privatization initiative--what the public sponsor 
wants to accomplish by the solicitation. The application procedures 
require the sponsor to disclose the amounts and timing of payments, and 
the amounts of payments to sponsor to be used, respectively, for 
airport purposes (including recoupment of public sponsor investments 
not previously recovered) and other purposes.
                                 ______
                                 
               Questions Submitted by Senator Mark Pryor
    Question. How do small communities benefit from the Essential Air 
Service (EAS) program?
    Answer. The Department of Transportation's (DOT) EAS program was 
established in the 1978 Airline Deregulation Act (ADA) as a safety net 
for smaller and more isolated communities to have access to the 
national air transportation system. Under the program, small 
communities are assured a basic level of air service, linking them to 
the national air transportation system--generally with two departures 
per day, 6 days per week.
    As of July 1, 2011, EAS-subsidized service was provided at 153 
communities across the country--44 in Alaska and 109 in the rest of the 
country and Puerto Rico. Funding is now provided via an annual $50 
million payment from the Federal Aviation Administration (FAA), which 
derives the funds from air traffic control fees for international 
overflights, and an additional amount through annual appropriations. 
Program budget amounts have increased from $22.6 million in fiscal year 
1992 to $200 million in fiscal year 2010.
    The EAS program has largely retained its basic eligibility criteria 
since the ADA was enacted; it specified that those communities then 
receiving scheduled airline service were ensured of receiving at least 
a basic level of service thereafter, with subsidy if necessary. The 
guarantee was originally scheduled to expire after 10 years, but it has 
been extended indefinitely. The most notable change in eligibility 
dates from 1990, when Federal statute excluded from subsidy eligibility 
those communities in the 48 contiguous States that were located fewer 
than 70 highway miles from the nearest large- or medium-hub airport, or 
that require a rate of subsidy per passenger in excess of $200, unless 
the point is more than 210 miles from the nearest large- or medium-hub 
airport. Public Law 106-69, title III, section 332. DOT is precluded by 
statute from making any determinations that would exclude communities 
from subsidy eligibility on any other basis. 49 U.S.C. 41731(b).
    Question.What effect will the EAS provisions that have been added 
to the Senate version of the FAA bill with regard to the 100-mile rule 
have on small communities? How many airports will be affected by the 
100-mile rule?
    Answer. Senator Coburn's 100-mile amendment was subsequently 
modified, such that what was adopted by the Senate would define an 
eligible place for EAS as a place in the United States (but excluding 
Alaska) that ``is located not less than 90 miles from the nearest 
medium or large hub.'' See S. 223, section 420, as passed the Senate on 
February 17, 2011. A 90-mile limitation, by DOT calculation, would 
affect 10 communities and produce an annual savings potential of 
approximately $12.5 million. (Increasing the limitation to 100 miles 
would affect three additional communities, at a potential additional 
savings of $4.2 million.)
                        federal contract towers
    Question. Contract tower cost share programs are important to my 
State as well as several others. An amendment I introduced to FAA bill 
would set a local cost share cap on the cost-share airports 
participating in the contract tower program and provide relief for 
airports recovering from the recession. What steps are you taking to 
assist cost share contract tower communities currently struggling due 
to the economic downturn?
    Answer. The FAA is keenly aware of the challenges faced by airports 
that are recovering from the economic downturn and has taken steps to 
lessen the financial impact of the cost share program on local 
communities. Historically, FAA updated its benefit cost (B/C) ratios on 
a biennial cycle; however, given the drastic decline in general 
aviation (GA) traffic in the past few years, FAA had delayed its B/C 
update until recently to avoid unnecessarily penalizing communities. 
However, the agency now believes the lower growth rate in GA traffic is 
going to persist for the foreseeable future and is in the process of 
revising its B/C ratios. We are taking steps to make sure the 
methodology and data involved in updating our B/C results as well as 
how that information is communicated and potentially appealed by 
communities is open and transparent.
    While the hourly wages of the air traffic controllers are 
determined by the Department of Labor, FAA continuously evaluates and 
verifies the staffing for each facility. This is done to ensure the 
facilities are adequately staffed to provide safe, efficient operations 
and not overstaffed, to keep the price of each facility as low as 
possible. This successful program provides highly trained, experienced 
controllers at a reduced cost to the taxpayers.
    Capping the local cost share for airports will have budget impacts 
on the FAA and opportunity costs for other programs as it will lead to 
a need to increase the funds made available to the current and future 
Cost Share program. It will also limit FAA's ability to allow new 
towers and communities into the program. There may also be lower-cost 
alternatives over time with the capacity of Next Generation Air 
Transportation System (NextGen) to deploy ``virtual towers'' with 
automatic dependent surveillance-broadcast capability.
                   air traffic control modernization
    Question. The budget request includes an estimated $1.2 billion to 
support the ongoing NextGen program that will modernize the Air Traffic 
Control system. This is about a $350 million increase more than the 
fiscal year 2010 enacted level. What is the rationale for the increase?
    Answer. The fiscal year 2012 President's budget request for NextGen 
totals $1.237 billion, an increase of $369 million, or 43 percent more 
than the fiscal year 2010 enacted level of $868 million. While this is 
a significant funding increase, it:
  --includes a one-time $200 million mandatory spending request in 
        support of the President's $50 billion infrastructure 
        initiative;
  --is consistent with the FAA's Capital Investment Plan and NextGen 
        Implementation Plan; and
  --underscores the declaration by this administration that NextGen is 
        a top national transportation and infrastructure priority.
    The NextGen Implementation Plan lays out FAA's plan for delivering 
significant benefits by the 2018 timeframe. Specifically, our most 
recent estimates show that by 2018, NextGen air traffic management 
improvements will reduce total delays (in flight and on the ground) by 
about 35 percent compared with what would happen if we did nothing. 
This delay reduction will provide $23 billion in cumulative benefits 
from 2010 through 2018 to the traveling public, aircraft operators, and 
the FAA. We will save about 1.4 billion gallons of aviation fuel during 
this period, and cut carbon dioxide emissions by 14 million tons.
    Aviation is critical to our Nation's economy. As recently as 2009, 
civil aviation contributed to $1.3 trillion annually to the national 
economy, and constituted 5.2 percent of the gross domestic product. It 
generated more than 10 million jobs, with earnings of $397 billion.
    Question. One of my goals is to ensure that all taxpayer dollars 
are spent wisely and effectively, particularly given the fiscal 
situation we are in right now. Can you give me some specific examples 
of how taxpayers will benefit from this spending (i.e., what is the 
return on investment for taxpayers)?
    Answer. The advantages of NextGen will benefit almost all 
taxpayers, whether they are frequent flyers or never fly at all. Those 
who do fly will enjoy fewer delays, the highest level of safety, and 
more predictable trips. Those living in neighborhoods near airports 
will experience less aircraft noise and fewer emissions. Communities 
will make better use of their airports and strengthen their local 
economy, as well as our national economy.
    Specifically, our most recent estimates show that by 2018, NextGen 
air traffic management improvements will reduce total delays (in flight 
and on the ground) by about 35 percent compared with what would happen 
if we did nothing. This delay reduction will provide $23 billion in 
cumulative benefits from 2010 through 2018 to the traveling public, 
aircraft operators, and the FAA. We will save about 1.4 billion gallons 
of aviation fuel during this period, and cut carbon dioxide emissions 
by 14 million tons.
    NextGen mid-term improvements made during this time will continue 
to accrue benefits beyond 2018. Total cumulative benefits through 2030 
are estimated to be worth $123 billion, including a total savings of 
6.7 billion gallons of fuel and 64 million tons of carbon dioxide. This 
represents a net present value to the taxpayers of $33 billion.\1\
---------------------------------------------------------------------------
    \1\ Net present value equals discounted benefits, minus discounted 
costs.
---------------------------------------------------------------------------
                                 ______
                                 
               Question Submitted by Senator Daniel Coats
          airport slot allocations at reagan national airport
    Question. I am concerned about the fairness of the criteria used 
for counting slots at Washington, DC's Ronald Reagan Washington 
National Airport (DCA). It appears the current regulation has led the 
agency to double-count the number of ``holds'' an airline possesses for 
purposes of qualifying as a ``limited incumbent'' (See 14 CFR 93.213). 
For example, Republic Airways Holdings, an Indiana-based company, 
maintains control over fewer than 20 slots at DCA. But the company 
cannot qualify as a limited incumbent due to its minority interests in 
and financial transactions with other airlines. Under the current 
method of counting, these investment interests result in Republic 
holding more than 100 slots at DCA. But airlines other than Republic 
retain complete control over the use of those slots--and the slots 
count against the controlling airlines as well as against Republic. 
Thus, numerous slots are being double-counted for purposes of 
qualifying as a limited incumbent. Why has the agency adopted a policy 
that results in such dramatic double-counting of slots? Is there a way 
to end double-counting and promote accuracy and fairness when counting 
slots for purposes of qualifying as a limited incumbent at DCA?
    Answer. Pursuant to 14 CFR 93.213, a ``limited incumbent'' at high-
density airports is defined as a carrier that ``holds or operates'' 
fewer than 20 slots, including slot exemptions. The limit was increased 
from 12 to 20 in the AIR-21 legislation, Public Law 106-181, an action 
we interpret as indicating congressional recognition and support for 
the ``hold or operate'' approach.
    In this case, Republic Airways Holdings, Inc. clearly holds 113 
slots at DCA, Republic Airlines (a subsidiary of Republic Airways 
Holdings), holds 16 slots and Frontier Airlines, another subsidiary of 
Republic Airways Holdings, holds 6 slots. We understand Republic 
Airways Holdings' claims that under their agreement US Airways 
effectively has control over use of the slots, but there appears to be 
no dispute either that Republic Airways Holdings is in fact the holder 
of the 113 slots or that it derives financial benefit as a result of 
such holdings.
    Notwithstanding this point, in the latest ``slot counting'' issue 
at DCA--in which Delta Air Lines is proposing to swap certain slots at 
DCA for slots held by US Airways at LaGuardia Airport--the Department 
has demonstrated some flexibility in its approach by proposing to allow 
Frontier Airlines to be eligible to compete for certain slots to be 
divested, despite the fact that it is wholly owned by Republic Airways 
Holdings. While the issue remains open for comment, the Department of 
Transportation tentatively found that Frontier Airlines maintained a 
discretely different low-cost carrier business plan than its parent and 
that Frontier Airline's presence as an eligible bidder would help to 
stimulate and maintain competition at these airports.

                          SUBCOMMITTEE RECESS

    Senator Murray. I appreciate both of your testimonies today 
and look forward to working with you.
    With that, this hearing is recessed.
    [Whereupon, at 10:52 a.m., Thursday, May 12, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]
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