Major Management Challenges and Program Risks: Department of
Transportation (Letter Report, 01/01/2001, GAO/GAO-01-253).

This report, part of GAO's high risk series, discusses the major
management challenges and program risks facing the Department of
Transportation (DOT). DOT has achieved many successes in accomplishing
its objectives and improving its operations, but it still has to address
problems in safety standards, financial management, railroad assistance,
travel security, and fair competition.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GAO-01-253
     TITLE:  Major Management Challenges and Program Risks: Department
	     of Transportation
      DATE:  01/01/2001
   SUBJECT:  Risk management
	     Accountability
	     Safety standards
	     Financial management
	     Transportation operations
	     Transportation safety
	     Federal aid to railroads
	     Air traffic control systems
IDENTIFIER:  High Risk Series 2001
	     GAO High Risk Program
	     FAA Air Traffic Control System
	     Highway Trust Fund
	     FAA Safer Skies Initiative
	     DOT Safety Action Plan
	     FAA Wide Area Augmentation System
	     Coast Guard Deepwater Capability Replacement Project
	     Central Artery/Tunnel Project (Boston, MA)

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GAO-01-253

Performance and Accountability Series

January 2001 Major Management Challenges and Program Risks

Department of Transportation

GAO- 01- 253

Letter 3 Overview 6 Major

12 Performance and Accountability Challenges

Related GAO 55

Products Performance

61 and Accountability Series

Lett er

January 2001 The President of the Senate The Speaker of the House of
Representatives

This report addresses the major performance and accountability challenges
facing the Department of Transportation (DOT) as it seeks to ensure the safe
and

efficient movement of people and goods and the costeffective investment of
resources in the nation's transportation infrastructure. It includes a
summary of actions that DOT has taken and that are under way to address
these challenges. It also outlines further actions

that GAO believes are needed. This analysis should help the new Congress and
administration carry out their responsibilities and improve government for
the benefit of the American people. This report is part of a special series,
first issued in January 1999, entitled the Performance and Accountability
Series: Major Management Challenges

and Program Risks. In that series, GAO advised the Congress that it planned
to reassess the methodologies and criteria used to determine which federal
government operations and functions should be highlighted and which should
be designated as “high risk.” GAO completed the assessment,
considered comments provided on a publicly available exposure draft, and
published its guidance document, Determining Performance and Accountability
Challenges and High Risks (GAO- 01- 159SP), in

November 2000. This 2001 Performance and Accountability Series contains
separate reports on 21 agencies- covering each cabinet department, most
major independent agencies, and the U. S. Postal Service. The series also

includes a governmentwide perspective on performance and management
challenges across the federal government. As a companion volume to this
series, GAO is issuing an update on those government operations

and programs that its work identified as “high risk” because of
either their greater vulnerabilities to waste, fraud, abuse, and
mismanagement or major challenges associated with their economy, efficiency,
or effectiveness.

David M. Walker Comptroller General of the United States

Overview With $58. 5 billion in funding for fiscal year 2001, the Department
of Transportation (DOT) is responsible for ensuring the safe and efficient
movement of people and goods and the cost- effective investment of resources
in the nation's transportation infrastructure, including its

highways and transit systems, airports, airways, railroads, ports, and
waterways. The Department has achieved many successes in accomplishing its

objectives and improving its operations. For example, DOT successfully
addressed the Year 2000 computer challenge and the Congress has resolved
some of the uncertainties about long- term financing for the Department's
aviation programs and the nation's airports. In addition, DOT has improved
the management of its transit grant programs so that they no longer are at
high risk of fraud, waste, abuse, or mismanagement. However, we, DOT's
Inspector General (IG), and the Department itself have documented

shortcomings that still remain with the performance and management of the
Department and unique challenges facing passenger rail travel and aviation
and freight rail competition. Although some actions have been taken to
address these problems, in many cases, addressing them

will require a sustained effort by DOT, working with other federal, state,
local, and private sector stakeholders and the Congress.

Improve the safety and security of air, highway, and pipeline transportation

? Enhance the management of aviation and Coast Guard acquisitions and
obsolete ship disposal to maximize investment of public funds

? Increase the accountability for financial management activities

? Improve the oversight of highway and transit projects to provide maximum
transportation services for the federal dollars invested

? Strengthen the financial condition of Amtrak ? Enhance competition and
consumer protection

in aviation and freight rail industries to ensure reasonable fares, rates,
and service

Safety and Security Ensuring the safe and secure movement of people and
goods on the nation's transportation infrastructure is a top priority for
DOT. Although the Department has made improvements, there are still
opportunities to reduce

deaths and injuries and enhance the safety and security of the traveling
public. For example, the Federal Aviation Administration (FAA) has announced
a joint government and industry initiative to identify the root causes of
aviation accidents and to design interventions that address them. This
initiative should help improve aviation safety; however, we recommended that
its effectiveness could be enhanced by developing better evaluation
procedures. Further improvements are needed in hiring and training personnel
who operate

checkpoints at airports to screen passengers and carryon baggage for
dangerous objects and in securing FAA's air traffic control (ATC) computer
systems to reduce the possibility of intrusions or attacks. We recommended,
for example, that FAA tighten controls over contract employees by ensuring
that appropriate background

investigations are performed. While DOT appears to be making progress on
some initiatives to reduce truck crashes, we have advocated that it obtain
needed highquality, timely data on the causes of these crashes. Finally, DOT
has not assessed the effectiveness of its revised approach to regulating
pipelines that transport natural gas and hazardous liquids. Accordingly, we
recommended that DOT determine whether its approach of working
constructively with pipeline companies and reducing the use of fines has
improved compliance with pipeline safety regulations.

Management of DOT's management of its major acquisitions and assets
Acquisitions and needs improvement in several areas. FAA and the U. S.

Assets Coast Guard are undertaking costly, long- term programs to modernize
and replace aging equipment. Over the past 19 years, FAA's multibillion-
dollar ATC modernization program has experienced cost overruns,

delays, and performance shortfalls of large proportions. FAA is making
progress in addressing some of the causes of these problems, but its reform
efforts are not complete, and major projects continue to face cost,

schedule, and performance problems. Because of its size, complexity, cost,
and problem- plagued past, we designated FAA's ATC modernization program as
a highrisk information technology initiative in 1995. In addition, the Coast
Guard is planning a 20- year, $10 billion project to replace or modernize
its fleet of deepwater ships and aircraft. Although the agency has addressed
many of our earlier recommendations about the project's justification and
affordability, attention needs to be focused on the adequacy of the
management controls to oversee the project. Finally, the growing

backlog of the Maritime Administration's (MARAD) surplus ships awaiting
disposal poses environmental threats and leads to continuing costs for
storage, maintenance, and security. DOT's IG recommended that the Department
seek congressional action to revise the

contracting process for ship scrapping. Financial Major improvements are
still needed in DOT's financial Management

management systems. The Department received an unqualified opinion on its
fiscal year 1999 financial statements and DOT's IG reported that significant
progress was made in improving its financial reports. However, the IG also
reported that systems deficiencies affected DOT's ability to prepare its
financial statements and account for liabilities and that the Department
lacked a managerial cost accounting system. DOT's financial management
weaknesses have been particularly troublesome at FAA because of their
longstanding

nature and the agency's slow progress in resolving them. In January 1999, we
designated FAA's financial management as a high- risk area because of
serious and long- standing accounting and financial management weaknesses.
Until FAA has financial

management systems and related procedures and controls that provide reliable
information, the agency will continue to be at high risk of waste, fraud,
abuse, and mismanagement. Highway and Transit Over the years, many large-
dollar highway and transit Grants

projects have incurred cost increases and schedule delays. From 1998 through
2003, DOT is expected to provide at least $198 billion for highway and
transit projects through programs financed largely from the Highway Trust
Fund. Although the Federal Transit Administration (FTA) and the Federal
Highway Administration (FHWA) have improved their oversight of large highway
and transit projects, additional opportunities exist to improve the
oversight of these

projects and the approach to funding them. For example, FTA may not have the
resources it needs after fiscal year 2001 to adequately oversee the
significant

number of new transit projects requiring oversight and we recommended that
the Department identify any funding shortfalls and take steps to address
them. We also recommended that DOT prioritize eligible transit projects so
that funds can be directed to the most deserving projects.

Intercity Passenger Despite efforts to improve its overall financial
condition,

Rail the National Railroad Passenger Corporation (Amtrak) has made
relatively little progress in reducing its need for federal operating
subsidies. Since 1971, the federal government has provided Amtrak with over
$23 billion

in operating and capital assistance. In 1994, at the request of the
administration and later at the direction of the Congress, Amtrak pledged to
eliminate the need for federal operating subsidies by the end of 2002. To
reach this goal, Amtrak has reduced its need for operating subsidies by only
$83 million in 6 years (1995- 2000) and must make $282 million in further
reductions in 2001 and 2002. While revenues have increased, it will be
difficult for Amtrak to eliminate the need for federal

operating subsidies by the deadline, given Amtrak's lack of overall progress
in reducing costs. If Amtrak does not meet the goal, plans for restructuring
intercity passenger rail service and liquidating Amtrak are to be submitted
to the Congress. Even if Amtrak does attain operational self- sufficiency,
it could require substantially more federal funds to meet its capital needs.
We estimate that Amtrak will need at least $9 billion (in constant 1999
dollars) to meet its identified capital needs through 2015. Aviation and
Rail Lack of effective competition in certain markets has Competition
contributed to high fares and rates and poor service in commercial aviation
as well as freight rail

transportation. A number of communities have not benefited from increased
aviation competition, largely because barriers inhibit the entry of new
airlines and, as a result, pockets of high fares and poor service exist.
These barriers include limited access to gates at certain airports and
“slot” controls that limit the number of takeoffs and landings
at certain congested airports. The

Congress has begun to address some of these barriers, including requiring
the phasing out of “slot” rules. However, the recently proposed
merger between United Airlines and US Airways- two of the nation's largest
airlines- has raised concerns that it may lead to decreased competition in
certain markets. In addition,

freight shippers are concerned that recent railroad mergers and
consolidations have resulted in poor service and high rates in certain
markets. The Surface Transportation Board, which approves rail mergers and
consolidations, has taken a number of actions to address rail rate, service,
and merger issues. However, the Board's actions may not fully satisfy many
shippers' concerns that increased competition in the rail industry is needed
to improve service. Because of the divergent views of railroads and
shippers, resolving service and competition issues will be difficult and may
require congressional action.

Major Performance and Accountability Challenges

Improve the Safety DOT is responsible for ensuring the safe and secure and
Security of Air, movement of people and goods on the nation's Highway, and

transportation infrastructure- including its highways, Pipeline

transit systems, airports, airways, railways, ports, and Transportation

waterways. Transportation safety and security is of paramount importance and
a top priority for the Department. DOT has made measurable improvements in
many areas, as shown by the performance data it tracks. For example, in
fiscal year 1999, the Department met two of its three goals for highway
safety and three of its four goals for freight railroad safety. However,
there are still opportunities to reduce deaths and enhance the safety and
security of the traveling public.

Our recent work shows the need for improvements in (1) implementing certain
aviation safety programs; (2) screening passengers at airports for dangerous
objects, such as guns and explosives; (3) ensuring the security of ATC
computer systems and the facilities that house them; (4) improving aspects
of DOT's truck safety initiatives, including the quality of safety data; and
(5) identifying and integrating state participation in

pipeline safety programs. Aviation Safety The continued growth that is
forecast for air travel in the

United States in the coming decade will bring a rise in fatal accidents if
the current accident rate is not reduced. Commercial aviation, used by most
Americans when they fly, experienced an average of 6 fatal accidents a year
in the United States from 1997- 99; general aviation experienced an average
of 368 accidents a year during the same period. 1 Since fiscal year 1999,
DOT has set annual performance goals to 1 Commercial aviation includes both
large air carrier operations and

smaller commuter operations. General aviation includes a wide variety of
aircraft, ranging from corporate jets to small piston- engine aircraft as
well as helicopters, gliders, and aircraft used in such operations as
firefighting and agricultural spraying.

improve aviation safety. However, in fiscal year 1999, the Department missed
all four annual performance goals for aviation safety. These goals targeted
(1) the fatal accident rate in commercial aviation, (2) the number of
dangerous incidents on airport runways, (3) the rate of errors in
maintaining safe separation between aircraft, and (4) the frequency at which
aircraft enter airspace without prior coordination. (See table 1.)

Table 1: DOT's Fiscal Year 1999 Performance Measures and Goals for Aviation
Safety Fiscal year 1999

Goal Performance measure Fiscal year 1999 goal performance achieved?

Number of fatal aviation .034 accidents per 100,000 .04 accidents per

No accidents for U. S. commercial air

flight hours 100,000 flight hours carriers per 100,000 flight hours Number
of dangerous incidents 270 incidents 322 incidents No on airport runways
(runway incursions)

Number of errors in maintaining .496 errors per 100,000

.57 errors per 100,000 No

safe separation between aircraft activities activities per 100,000
activities a Number of deviations- i. e. when

.099 deviations per 100,000 .18 deviations per No an aircraft enters
airspace

activities 100,000 activities without prior coordination- per 100,000
activities

a “Activities” are total FAA facility activities, as defined in
Aviation System Indicators 1997 Annual Report. An example of an activity is
an air traffic controller providing guidance to a pilot who needs to make an
instrument landing.

Source: DOT.

FAA's annual performance goals to reduce the rate of fatal aviation
accidents represent interim steps toward reaching the challenging goal set
by the White House and congressional commissions- an 80- percent reduction
in the fatal accident rate by 2007. As part of its effort to achieve this
long- range goal, FAA announced the Safer Skies initiative in April 1998.
Safer Skies is a joint effort by government and the aviation industry to
reduce the fatal accident rate by identifying the root

causes of accidents and designing interventions to address them. In June
2000, we reported that the Safer Skies initiative should help reduce the
accident rate and enhance the safety of air travelers.

We recommended, however, that the initiative's effectiveness could be
enhanced by considering potential new safety threats caused by changes in
the aviation environment, developing effective systems to monitor the
implementation of interventions, and evaluating the effectiveness of these
interventions. Moreover, we found that efforts to evaluate the
interventions' effectiveness will be hampered by a lack of (1) good baseline
data on the extent of the problem

prior to implementing the intervention, (2) explicit goals against which to
measure progress, and (3) performance measures that are clearly linked to
the safety problem being addressed. We recommended that baseline data,

goals, and performance measures be developed for the Safer Skies initiative.
In addition, a key to improving aviation safety is for FAA to have an
effective process for inspecting the nation's airline operations. In the
past, we and others have expressed concerns about the adequacy of FAA's

inspection process to meet this challenge. Concerns about the inspection
process focused on unstructured, nonsystematic inspections that produced few
reports of safety problems and on the adequacy of inspectors'

technical training. These concerns also raised questions about the quality
and consistency of the resulting inspection data and their usefulness for
conducting analyses and targeting FAA's resources to the greatest

safety risks. In response, FAA introduced, in 1998, a redesigned safety
inspection system called the Air Transportation Oversight System (ATOS).
ATOS was

designed to ensure that airlines have operating systems to control risks and
prevent accidents and to provide more useful information to help FAA target
its limited inspection resources more effectively. We reviewed the

initial implementation of ATOS and, in June 1999, reported that it was
responsive in concept to many of our previous concerns and recommendations.
However, we concluded that ATOS suffered from a number of severe problems
caused by an overly ambitious implementation schedule. We recommended
several specific actions to clarify the program's guidance and improve the
usefulness of FAA's database for targeting inspection resources to the areas
of greatest potential safety risk. FAA recognized the need for improvements
and postponed wider implementation of ATOS until the problems are corrected.
FAA is continuing to address our concerns with the program and
recommendations but has not yet fully implemented them.

Airport Security Protecting the air transport system from terrorist attacks
or other dangerous acts remains an important national issue. FAA has a
number of safeguards in place to prevent attacks against commercial
aircraft. Among the most important of these are the checkpoints at airports
where passengers and their carry- on items are

screened for dangerous objects, such as guns and explosives. Historically,
however, screeners who operate checkpoints in the United States have had
difficulty detecting dangerous objects, missing as many as 20 percent during
tests conducted by FAA. In June 2000, we reported that long- standing
problems continue to reduce screeners' effectiveness in detecting dangerous
objects, most notably (1) the rapid turnover of screener personnel- often
above 100 percent a year at large airports and, in at least one airport,
above 400 percent in a year- and (2) the human factors associated with
screening that have for years affected screeners' hiring, training, and
working environment. (See table 2.)

A key factor in the rapid turnover is the low wages screeners receive.
Screeners are often paid the minimum wage or close to it and can frequently
earn

more at airport fast- food restaurants.

Table 2: Turnover Rates for Screeners at 19 Large Airports, May 1998- April
1999 City (airport) Annual turnover rate (percent)

Atlanta (Hartsfield Atlanta International) 375 Baltimore (Baltimore-
Washington International) 155 Boston (Logan International) 207 Chicago
(Chicago- O'Hare International) 200 Dallas- Ft. Worth (Dallas/ Ft. Worth
International) 156 Denver (Denver International) 193 Detroit (Detroit Metro
Wayne County) 79 Honolulu (Honolulu International) 37 Houston (Houston
Intercontinental) 237 Los Angeles (Los Angeles International) 88 Miami
(Miami International) 64 New York (John F. Kennedy International) 53 Orlando
(Orlando International) 100 San Francisco (San Francisco International) 110
San Juan (Luis Munoz Marin International) 70 Seattle (Seattle- Tacoma
International) 140 St. Louis (Lambert St. Louis International) 416
Washington (Washington- Dulles International) 90 Washington (Ronald Reagan
Washington National) 47

Average turnover rate 126

Source: FAA.

FAA is pursuing several initiatives to improve the hiring, training, and
testing of screeners; to increase their alertness and more closely monitor
their performance; and to certify the security companies that airlines
retain to staff screening checkpoints. However, most of these efforts are
behind schedule. For example, FAA is 2 years

behind schedule in issuing its regulation requiring the certification of
screening companies. Furthermore, FAA has established performance
improvement goals for screeners, but it has not (1) developed an integrated
plan to tie its various efforts to improve screeners'

performance to the achievement of its goals or (2) adequately measured its
progress in achieving its goals for improving screeners' performance. In
June 2000, we recommended that FAA complete and implement such a plan and
establish additional performance goals to better ensure the success of FAA's

efforts to improve screeners' performance. Additionally, congressional
concerns over screeners' training have led to recently enacted legislation
that significantly expands their training and testing requirements.

Air Traffic Control Security at our nation's airports alone does not ensure
Computer Security safe air travel. It is also critical to secure FAA's ATC
computer systems, which provide information to air traffic controllers and
aircraft flight crews to help ensure the safe and expeditious movement of
aircraft.

Failure to adequately protect these systems, as well as the facilities that
house them, could cause a nationwide disruption of air traffic or even a
loss of life due to collisions. In May 1998, we reported that (1) physical
security management and controls at facilities that house ATC systems were
ineffective; (2) systems security- for both operational and future systems-
were ineffective, rendering systems vulnerable; and (3) FAA's

management structure for implementing and enforcing computer security policy
was ineffective. More recently, in December 1999, we reported that FAA was
not following its own personnel security practices and, thus, had increased
the risk that inappropriate contractor employees might have gained access to
its facilities, information, or resources. For example, we found instances
in which required background investigations had not been performed-
including on 36 mainland Chinese nationals who reviewed the computer source
code of eight mission- critical systems as part of FAA's

effort to ensure Year 2000 readiness. By not following its

own policies, FAA increased the exposure of its systems to intrusion and
malicious attack.

Between May 1998 and May 2000, we made 22 recommendations to address, among
other things, weaknesses in ? physical security- by inspecting all ATC
facilities

that had not been recently inspected, correcting any identified weaknesses,
and accrediting these facilities; 2 ? operational ATC systems security- by
assessing,

certifying, and accrediting 3 all systems by April 30, 1999, and at least
every 3 years thereafter, as required by federal policy;

? future ATC systems security- by including wellformulated security
requirements in the specifications for all new ATC systems; ? security
management- by developing an effective

Chief Information Officer (CIO) management structure for implementing and
enforcing computer security policy; and ? personnel security- by tightening
controls over contractor employees by ensuring that appropriate background
investigations are performed.

FAA is acting to address our recommendations, but its progress in some areas
has been slow. In our September 2000 testimony, we updated the status of
these issues 2 At the time of our review, FAA's policy required that ATC
facilities be inspected to determine if they met physical security
standards. This inspection then served as the basis for accrediting a
facility-

concluding that it is secure. 3 System certification is the technical
evaluation that is conducted to verify that FAA systems comply with security
requirements. Certification results are one factor management considers in
deciding whether to accredit systems. Accreditation is the formal
declaration

that the appropriate security safeguards have been properly implemented and
that the residual risk is acceptable.

and found that serious and pervasive problems continue to exist: ? In the
area of facilities' physical security, FAA is making progress in assessing
its facilities, but the agency has identified significant weaknesses, and
numerous ATC facilities have yet to be assessed and accredited as secure, in
compliance with FAA's policy. ? FAA does not know how vulnerable most of its

operational ATC systems are and cannot adequately protect them until it
performs the appropriate risk assessments and addresses identified
weaknesses. Furthermore, FAA has not always acted quickly to implement
corrective actions for the systems that have undergone risk assessments and
to test those system access controls designed to prevent unauthorized
access. ? FAA has established an information systems security management
structure under the CIO, but does not yet have a comprehensive security
program in place. ? In the area of personnel security, FAA appears to
perform appropriate background investigations for

federal employees, but many Top Secret reinvestigations of senior personnel
are past due- some by over 5 years. FAA is working to complete background
investigations on thousands of its contractor employees, but much work
remains to be done. ? In addition, we found that FAA's efforts to ensure
that critical operations continue without interruption are limited and FAA
has not yet fully implemented an intrusion detection capability for its
computer systems that will enable it to quickly detect and respond to
malicious intrusions. In December 2000, we made an additional 17
recommendations to address these continuing weaknesses. Senior FAA officials
have acknowledged weaknesses in the agency's computer security program

and have generally agreed to address our recommendations. Until FAA
addresses the pervasive weaknesses in its computer security program,
however,

its critical information systems will remain at increased risk of intrusion
and attack, and its aviation operations will remain at risk.

Truck Safety In 1999, about 5, 400 people died on our nation's roads from
crashes involving large trucks (those with a gross weight of more than 10,
000 pounds), a figure largely unchanged from a decade ago. (See fig. 1.) To
address this problem, the Secretary of Transportation set a goal of reducing
truck- related fatalities to about 2, 700 by 2009.

Figure 1: Number of Fatalities From Large Truck Crashes, 1989- 1999

6,000 Truck- related fatalities

5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000

500 0

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Source: DOT.

DOT has taken several steps to improve truck safety. First, as required by
the Congress, in January 2000, it established a new organization- the
Federal Motor Carrier Safety Administration- that is responsible for truck
safety and places a greater emphasis on enforcement and compliance. Second,
DOT has developed an overall strategy to improve the safety of commercial
motor vehicles (trucks and buses). This strategy, called the Safety Action
Plan, covers 2000

through 2003 and contains 47 initiatives that are intended to be an initial
step in enabling the Department to reduce fatalities to meet its fiscal year
2009 goal. These initiatives fall within several broad categories, including
increasing the enforcement of federal safety regulations; increasing safety
awareness; improving safety information and technology; and improving
performance standards for vehicles, drivers, and motor carriers. The
Department must overcome significant barriers to make measurable progress in
improving truck safety.

First, several key leadership positions in the new Federal Motor Carrier
Safety Administration- including the Administrator and four Associate
Administrators-

have never been filled. The longer the Department takes to fill these
positions, the more difficult it will be to accomplish the challenging goals
to improve truck

safety. Second, while the Department appears to be making progress on some
of the individual initiatives in its Safety Action Plan, it lacks high-
quality, up- to- date information on the causes of large truck crashes. In
1999, we brought to the forefront the problems with DOT's data on truck
crashes and, as a result, DOT has

begun to improve its data on their causes. Without such data, DOT cannot
determine the degree to which its initiatives will reduce truck- related
fatalities. Third, the Department is only beginning to determine whether it
will have the resources to complete the activities in its plan. Finally, the
Federal Motor Carrier Safety Administration's proposed revisions to its
rules that

limit the number of hours that truck drivers may operate their vehicles
before resting (estimated to save 115 lives a year) have been widely
criticized by the trucking industry and safety groups. DOT has received
about 20, 000 comments on these revisions. The future of the revisions to
rules concerning hours of service is

uncertain, in part, because DOT's appropriations act for fiscal year 2001
prohibits the Department from spending funds to promulgate a final rule on
hours of service. However, it allows the agency to carry out all rulemaking
activities short of adopting a final rule.

Pipeline Safety DOT's Office of Pipeline Safety (OPS) is responsible for
ensuring the safe transportation of natural gas and hazardous liquids (such
as crude oil and refined gasoline) by pipeline. Although fatalities from
pipeline accidents are relatively few in number when compared with those
from accidents involving other forms of freight transportation, they have
been increasing. From 1989 through 1998, the number of major pipeline

accidents increased by about 4 percent annually (see fig. 2) and resulted in
an average of about 22 fatalities per year. 4 During this period, 226 people
died and 1, 030 people were injured in 2,241 major pipeline accidents.

More recently, in August 2000, 12 people were killed as the result of a
natural gas pipeline accident in Carlsbad, New Mexico. 4 Major pipeline
accidents are those that result in a fatality, an injury, or property damage
of $50, 000 or more.

Figure 2: Accidents Resulting in Fatalities, Injuries, or $50,000 or More in
Property Damage, 1989- 1998

300 Number of accidents

250 200 150 100

50 0

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Source: GAO's analysis of OPS' data.

OPS has adopted several initiatives to improve pipeline safety, including a
risk management demonstration program. It is implementing a risk- based
approach to regulation based, in part, on preliminary qualitative

results from the demonstration program. It is also moving toward inspecting
entire pipelines rather than segments of pipelines to provide a more
comprehensive assessment of a pipeline's safety risks. Finally, it has

changed its approach to enforcing compliance with its regulations by
reducing its use of fines and, instead, working with pipeline operators to
identify and correct safety problems. Although we agree that a risk- based
approach offers the potential to improve pipeline safety, we have concerns
about OPS' actions. First, the office is implementing this

approach before obtaining quantitative evidence about the results of its
risk management demonstration program. OPS has not developed performance
measures for the demonstration program nor collected needed data on safety
that could help evaluate the program and support the broader implementation
of a risk

management approach to pipeline safety. Second, in inspecting interstate
pipelines, OPS is relying less on states to inspect those portions of the
pipelines within

their borders. OPS made this change primarily because of the logistical
difficulties in scheduling systemwide inspections with the states involved.
States' familiarity with the pipeline segments in their jurisdictions could
aid in identifying the very risks that OPS is hoping to mitigate through its
new approach. In addition, a combined federal and state approach to
overseeing pipeline safety could better leverage federal resources. In May
2000, we recommended that the Secretary of Transportation direct OPS to work
with state pipeline officials to determine which federal pipeline safety
activities would benefit from state participation and, for those states
willing to participate, integrate state participation into those activities.
DOT agreed with this recommendation. Finally, OPS' approach of working
constructively with pipeline companies and reducing the office's reliance on
monetary penalties in enforcing regulations may be reasonable if pipeline
companies are achieving greater rates of compliance. The office has already
significantly reduced its use of fines- the percentage of enforcement
actions that resulted in fines fell from nearly 50 percent in 1990 to about
4 percent in 1998. However, OPS has not assessed whether less punitive
actions are effective in achieving the desired results. In May 2000, we
recommended that DOT determine whether OPS'

reduced use of fines has maintained, improved, or decreased compliance with
pipeline safety regulations. DOT agreed to conduct this evaluation.

Key Contacts John H. Anderson, Jr., Managing Director Physical
Infrastructure (202) 512- 2834 andersonj@ gao. gov Joel C. Willemssen,
Managing Director

Information Technology (202) 512- 6408 willemssenj@ gao. gov Enhance the

Several of DOT's major acquisitions and assets face Management of
significant challenges that require management

Aviation and Coast attention. FAA and the Coast Guard are undertaking

Guard Acquisitions costly, long- term programs to modernize and replace

and Obsolete Ship aging equipment. In addition, a growing backlog of
Disposal to

MARAD's surplus ships poses environmental threats and Maximize leads to
continuing costs as these ships await disposal. Investment of

Our work has shown that these agencies need to improve the management of
these acquisitions and Public Funds assets to ensure that federal funds are
effectively and efficiently used.

Federal Aviation Faced with rapidly growing traffic volume and aging
Administration's Air equipment, FAA initiated an ambitious ATC

Traffic Control modernization effort in 1981. This effort involves

Modernization acquiring new air traffic control facilities, as well as a
vast network of radar, automated data processing,

navigation, and communications equipment, and is expected to cost a total of
$45 billion through fiscal year 2005. To date, the Congress has appropriated
over $32

billion, and FAA estimates that it will need $13 billion more. Over the past
19 years, the modernization effort has experienced cost overruns, schedule
delays, and performance shortfalls of large proportions. Because of its
size, complexity, cost, and problem- plagued past, we

designated this program as a high- risk information technology initiative in
1995. Many of the issues we reported then remain today, and we continue to
believe this program remains at high risk.

Our work over the years has pinpointed the root causes of the modernization
program's problems, including (1) immature software acquisition
capabilities, (2) the lack of a complete and enforced systems architecture,
(3) inadequate cost estimating and cost accounting practices, (4) the lack
of an effective CIO management structure, (5) an ineffective investment
management process, and (6) an organizational culture that impaired the
acquisition process. We also noted that FAA faced

many challenges in implementing its new air traffic management concept known
as “free flight,” which would allow pilots more flexibility in
choosing routes and is intended to improve air traffic safety and

efficiency. Since 1995, we have made over 30 recommendations to address the
root causes of the modernization's problems. For example, we recommended
that FAA improve its software acquisition capabilities by institutionalizing
mature processes, develop and enforce a complete systems architecture, and
implement an effective CIO management structure similar to the department-
level CIOs prescribed by the

Clinger- Cohen Act of 1996. FAA initiated numerous activities in response to
our recommendations in each of these areas. However, in many areas, more
must be done:

? FAA developed an integrated framework for improving its software
acquisition, software development, and systems engineering processes. The
agency is also tracking several projects' efforts to improve these
processes. However, FAA does not yet require all systems to achieve a
minimum level of software process maturity before being funded.

? FAA is working to develop a complete systems architecture, or overall
blueprint, and expects to issue its draft of a technical architecture in
2001.

? To improve cost estimates, FAA developed a standard work breakdown
structure and has established an historical database for tracking

systems' costs and other information. However, it has not yet fully
instituted rigorous cost- estimating practices. FAA is working to develop a
cost accounting capability and expects to have this

capability fully in place by September 2002. ? FAA established a CIO
management structure consistent with the provisions of the Clinger- Cohen

Act, and the CIO is working to manage several complex, agencywide
initiatives- which include improving information systems security,
developing a complete systems architecture, and improving the agency's
software acquisition processes. However, the CIO faces a continuing
challenge in ensuring that these initiatives are implemented and enforced. ?
To improve its investment management processes, FAA is now overseeing
investments' risks and

capturing key information from the investment selection process in a
management information system. However, the agency has not yet issued
guidance for validating investment analysis data or instituted a process for
evaluating projects after

implementation to identify lessons learned and improve the investment
management process.

? FAA issued an organizational culture framework in 1997 and is working to
implement it. However, DOT's IG reported in August 2000 that FAA's culture
remains a barrier to successful acquisition projects and that integrated
teams, a key mechanism to deliver more cost- effective and timely products,
are not working well because FAA's culture continues to operate in vertical
“stovepipes,” which conflict with the horizontal structure of
team operations. 5 In fact, our recent report on FAA's Wide Area
Augmentation System (WAAS) confirmed that the integrated teams

were not working as intended. 6 We found that competing priorities between
two key organizations that are part of the WAAS integrated team negated the
effectiveness of the team's approach for meeting the agency's goals for
WAAS. ? FAA established a program office for its free flight initiative to
help reduce technical and financial risk

by implementing selected technologies on a limited basis and evaluating them
before fully implementing them. However, many challenges remain, including
developing software, integrating free flight technologies with other
modernization projects, and addressing human factor issues affecting
controllers and pilots. Clearly, FAA has initiated numerous improvements,
but its reform efforts are not yet complete. In the meantime, major projects
continue to face challenges that could affect their cost, schedule, and
performance. For example, in June 2000 we reported that FAA's WAAS project
has experienced cost increases of $500 million

5 DOT Office of Inspector General, Survey of the Federal Aviation
Administration's Integrated Product Development System (AV- 2000- 110, Aug.
29, 2000). 6 WAAS, which will be a ground- and satellite- based navigation
system for airspace users, is intended to significantly augment and improve

the current ground- based navigation system, which requires pilots to fly
less efficient routes to arrive at their destinations.

and a 3- year delay. (See table 3.) However, the cost increases are likely
to grow to about $720 million, and the delay is likely to grow to 6 years
because of problems associated with meeting a key performance requirement to
provide timely warnings when the WAAS signal is providing misleading
information and should not be used.

Table 3: Development Costs and Schedules for WAAS, 1994- September 1999

Dollars in millions

As of WAAS' cost and schedule information 1994 Jan. 1998 Jan. 1999 Sept.
1999

Total development $508 $1,007 a $1,007 $2,484 b costs Initial capability
June 1997 July 1999 Sept. 2000 Sept. 2000 c

schedule Full capability Dec. 2000 Dec. 2001 To be determined Dec. 2006
schedule Note: Since 1996, FAA has included life- cycle costs, which include

costs for developing, operating, and maintaining projects. In June 2000, we
reported that the life- cycle cost estimate for WAAS was $3,187.6 million. a
The January 1998 program development costs for WAAS included

costs for the prime contractor, development of standards and procedures,
technical engineering and program support, and the first year of costs for
satellites.

b The September 1999 estimate for WAAS development costs included $1.3
billion in satellite service acquisitions through 2020. In earlier
estimates, satellite service acquisition costs were included in the cost of
operating WAAS. c FAA did not meet this milestone and has not determined
when this capability will be available.

Source: FAA.

FAA has acknowledged that it took a risk by agreeing to a design for the
system and establishing milestones for its deployment before completing the
research and

development needed to demonstrate the system's capabilities. FAA is
implementing a new approach in which it plans to reevaluate the system at
critical points in its development. The agency has established a panel of
internal and external specialists in satellite navigation to identify the
technical changes necessary for WAAS to meet its key performance
requirements.

We recommended that FAA develop a comprehensive plan that would include
established checkpoints at which the agency would determine, among other
things, whether users' needs have changed and whether other technologies
have matured and could better meet users' needs and the agency's
requirements for satellite navigation. Furthermore, we recommended that FAA

should have an external organization evaluate its progress at established
checkpoints and include the results of this evaluation in its request for
future funding of the navigation system. FAA concurred with our
recommendations and has, in fact, appointed an independent board- consisting
of external experts in

satellite navigation, safety certification, and radio spectrum- that reports
directly to the FAA Administrator. The board is tasked with reviewing the
soundness of the panel's recommendations and with revalidating the future
path for WAAS. However, given the past problems in developing this system
and the

long- term effort that is still required, we believe that continued
oversight by an independent group of experts is warranted. It is not clear
whether the current independent board will fulfill this role. We will
continue to evaluate FAA's progress on this and other system acquisition
efforts.

The Coast Guard's The Coast Guard is planning what is potentially the
Deepwater Project

largest acquisition project in its history. This effort, the Deepwater
Capability Replacement Project, involves replacing or modernizing the Coast
Guard's 92 ships and 209 aircraft. The estimated cost could total $10
billion

over 20 years. In October 1998, we recommended that the Coast Guard more
thoroughly address the project's justification and affordability. The Coast
Guard responded by more thoroughly documenting the justification for the
project as the following examples show:

? In December 1999, the Interagency Task Force on the Roles and Missions of
the Coast Guard released a report reaffirming the future roles and
responsibilities of the Coast Guard and endorsing the importance of the
Deepwater Project.

? The Coast Guard contracted with the Center for Naval Analysis and sought
our input in revising its justification for the Deepwater Project. ? The
Coast Guard has provided more complete information on the condition of ships
and aircraft to contractor teams as a basis for determining the Deepwater
Project's needs.

? The agency modified its acquisition schedule, adding more time for
contractors to adequately consider updated data on current fleets of
deepwater ships and aircraft. Although the Coast Guard is addressing many of
our earlier concerns, numerous uncertainties still exist, including the
project's affordability and the adequacy of management controls to oversee
it. These challenges must be addressed both before and after the agency
awards a contract for its Deepwater Project in January 2002. Currently, DOT
plans to request $350 million for the Deepwater Project in February 2001,
but the Coast Guard will not complete planning the project until July 2001.
Asking for funds prior to completing the planning process raises
uncertainties about what the overall

acquisition strategy will be and how the funds will be used.

A key uncertainty surrounding the Deepwater Project involves the contracting
approach the Coast Guard plans to use to procure deepwater ships and
aircraft. This approach, which calls for awarding a contract to one system
integrator for a period of 20 or more years, has never been used on a
procurement of this size or complexity. There are no models in the federal
government to guide the Coast Guard in developing its acquisition strategy
for this approach. Because of the

uniqueness of this approach, the large dollars involved, and the importance
of this approach in shaping the future of the Coast Guard, the agency's
planned contracting strategy requires a carefully thought- out and well-
documented acquisition plan. We are currently reviewing issues related to
the Deepwater Project,

including the Coast Guard's proposed contracting strategy. As part of our
review, we shared our preliminary observations with the Coast Guard's
managers, expressing concerns about the lack of documentation and detailed
analyses of the risks

associated with various contracting alternatives. The Coast Guard's managers
agreed to examine the agency's contracting strategy in more detail and to
document

their plans. We plan to issue a report on our findings in the summer of
2001.

Maritime The growing backlog of MARAD's surplus ships awaiting
Administration

disposal poses environmental threats and leads to continuing costs for
storage, maintenance, and security. In October 1998, we reported that MARAD
had 63 ships awaiting disposal or scrapping. In fiscal year 1999, the number
of surplus ships had grown to 112, according to DOT's IG. 7 Ship scrapping
is a labor- intensive industry with extremely high risks with respect to
environmental and worker safety issues. Ships typically contain 7 DOT Office
of Inspector General, Top 12 Management Issues Department of Transportation
(CE- 2000- 026, Dec. 22, 1999).

environmentally hazardous materials, such as asbestos, polychlorinated
biphenyls (PCBs), lead, mercury, and cadmium. If done improperly, ship
scrapping can pollute the land and water surrounding the scrapping site and
jeopardize the health and safety of the people involved in the scrapping
process. However, storing and maintaining rather than scrapping the ships is
expensive and also poses environmental threats. For fiscal year 1999 alone,
the cost to maintain the vessels awaiting disposal amounted to $4. 2
million. Figure 3 shows a deteriorating vessel awaiting disposal.

Figure 3: Deteriorating Vessel at MARAD's James River Reserve Fleet

Source: Office of Inspector General, DOT.

From 1983 through 1994, MARAD relied primarily on selling its surplus ships
for overseas scrapping. However, in 1994, overseas scrapping was suspended
because of legal constraints on the export of PCBs for disposal. As a
result, MARAD has been relying on the domestic scrapping market, but there
is a shortage of qualified domestic bidders. In the 1970s, when hundreds

of ships were scrapped domestically, the industry comprised about 30 firms.
Since then, many of the firms left the industry. Furthermore, the
difficulties experienced by some domestic scrappers in complying with
environmental, worker safety, and other contract performance provisions have
led MARAD to consider fewer firms to be technically and financially
acceptable. 8 As of December 1999, only four companies had bid on

MARAD's scrapping contracts and passed the agency's technical compliance
review to scrap vessels. 8 To be financially acceptable, firms must offer to
pay MARAD a purchase price greater than $0 for the ships.

MARAD is required by law to dispose of its surplus ships by September 30,
2006, in a manner that provides the best value to the government. DOT's IG
reported that MARAD made very little progress in disposing of its

surplus ships during fiscal year 1999. During that year, MARAD sold 15 of
the 112 ships for domestic scrapping, but as of December 1999, work had
started on only one vessel. The other 14 vessels remained moored in MARAD's
fleets, requiring continued maintenance. The IG reported that the
requirement to maximize financial returns on the disposal of surplus ships
may not work in today's marketplace. To dispose of MARAD's surplus

ships in a timely manner, the IG made several recommendations including that
the agency seek legislative approval to eliminate the requirement to
maximize financial returns and seek authorization and funding for a program
to pay for the disposal of surplus ships. 9 In line with this
recommendation, the Congress provided $10 million to MARAD and the
Department of the Navy for fiscal year 2001 to dispose of and scrap

their surplus ships, which should start to reduce the backlog.

Key Contacts John H. Anderson, Jr., Managing Director Physical
Infrastructure (202) 512- 2834 andersonj@ gao. gov Joel C. Willemssen,
Managing Director

Information Technology (202) 512- 6408 willemssenj@ gao. gov 9 DOT Office of
Inspector General, Report on the Program for Scrapping Obsolete Vessels (MA-
2000- 067, Mar. 10, 2000).

Charles I. Patton, Jr., Director Defense Capabilities and Management (202)
512- 8412 pattonc@ gao. gov Increase the

For years, DOT has struggled to improve its financial Accountability for
management activities, but inadequate accounting Financial systems and
related procedures and controls have Management hampered its progress. DOT's
IG issued an unqualified Activities opinion on DOT's fiscal year 1999
financial statements and reported that significant progress has been made in

improving the Department's financial reports. However, the IG also reported
that systems' deficiencies affected the Department's ability to prepare
financial statements and to account for liabilities and that the Department
lacked a managerial cost accounting system to allocate costs by major
program. 10 In addition, in a separate audit report on FAA's fiscal year
1999 financial statements, which also received an unqualified opinion, the
IG reported that FAA lacked an adequate system to account for its property,
plant, and equipment on an ongoing basis. 11 In January 1999, we designated
FAA's financial management as a high- risk area because of serious and long-
standing accounting and financial management weaknesses.

DOT's Financial While DOT received an unqualified opinion on its fiscal
Management Systems

year 1999 financial statements, this opinion required extraordinary effort
by the Department and IG audit staff and will be difficult to repeat. For
example, 10 DOT Office of Inspector General, Fiscal Year 1999 Consolidated
Financial Statements, Department of Transportation (FE- 2000- 062, Mar. 8,
2000). 11 DOT Office of Inspector General, Fiscal Year 1999 Financial
Statements, Federal Aviation Administration (FE- 2000- 060, Feb. 29, 2000).

because FAA lacks an adequate system to account for its property, plant, and
equipment on an ongoing basis, FAA used alternative procedures and labor-
intensive methods to establish a baseline and costs for property, plant, and
equipment.

The IG's audit report also cited problems with DOT's accounting systems that
prevented the Department from complying with the Federal Financial
Management Improvement Act of 1996. The IG reported that, to comply with the
act, DOT needed to (1) modify its

accounting systems so they would be the primary source of financial
information for the consolidated financial statements, (2) properly accrue
liabilities, and (3) implement a managerial cost accounting system that can
allocate costs by major program.

Because DOT's accounting systems do not provide the data necessary to
prepare annual financial statements, the Department relies heavily on year-
end adjustments “outside” its systems. The IG reported that DOT
required about 800 such outside adjustments totaling $36 billion

to prepare its fiscal year 1999 financial statements. The need for this
large number of adjustments means that DOT lacked reliable data on a day-
to- day basis to make management decisions and maintain accountability to
the taxpayers. The IG also reported that DOT did not have systems in place
to allocate costs by major programs. As a result, DOT's ability to
meaningfully evaluate performance in terms of efficiency and
costeffectiveness

is limited. Because many of DOT's problems stemmed from weaknesses in FAA's
financial statements and systems and because of FAA's cost accounting and
property issues, discussed below, we designated FAA's financial management
as a high- risk area in 1999. Until FAA has financial management systems and
related procedures and controls that provide reliable information to (1)

prepare financial statements and reports, (2) meaningfully accumulate and
report costs for programs and activities, and (3) account for property,
plant, and equipment on an ongoing basis, the agency's financial management
will continue to be at high risk of waste, fraud, abuse, and mismanagement.

DOT is progressing in addressing our and the IG's concerns by improving or
replacing the capabilities of its accounting systems so they can provide the
summary data needed to prepare financial statements and other reports. The
Department plans to replace its current systems with a commercial general
ledger accounting system that will be able to maintain accounting
information at the detailed account level. In addition, DOT is implementing
a new financial reporting module that will summarize detailed account
information from the general ledger for use in preparing financial
statements and other reports. The financial reporting module has been
implemented at two DOT agencies: the Federal Railroad Administration and
FTA. The Department plans to broaden the use of the module to more agencies
during fiscal year 2001, with full implementation expected by September
2001. The replacement system is also being designed to allocate

costs by major programs.

FAA's Managerial FAA lacks a cost accounting system or an alternative

Cost Accounting means to meaningfully accumulate and report its costs.

Information The objective of a cost accounting system is to accurately
assign basic financial costs- such as an

agency's labor, overhead, and other costs- to program activities and
projects. Accurate cost information is essential for managing FAA's programs
in the following areas: (1) budgeting and cost control, (2) determining cost
reimbursements and setting fees and prices, (3)

performance measurement, (4) program evaluations, and (5) choosing among
alternative actions. 12 Deficiencies in these areas limit FAA's and others'
ability to make effective decisions about resource needs and to adequately
control major projects, such as its multibillion- dollar ATC modernization
program.

FAA has made substantial progress in developing its cost accounting
capabilities. It is developing a comprehensive cost accounting system that
it expects to have fully operational by the end of fiscal year 2002. This
system is expected to provide detailed information about the costs of
services that FAA provides to the

public. As of September 30, 2000, FAA had implemented three of the four Air
Traffic Services cost accounting systems applications. 13 In July, these
applications began

producing reports that FAA's managers are using for analysis and training.
The fourth application is scheduled for implementation during the second
quarter of fiscal year 2001. These plans address many of our concerns.
However, the applications being placed in service are not fully integrated
with other systems within DOT and FAA. Integration, which is important to 12
The Statement of Federal Financial Accounting Standards No. 4, Managerial
Cost Accounting Standards, July 31, 1995, describes these

five areas for which cost information is essential in managing government
programs.

13 Air Traffic Services is the FAA organization responsible for operating
and maintaining the national airspace system.

fully realize the efficiency and effectiveness of modern data processing
systems, is dependent on the eventual replacement of those other systems. In
addition, FAA's

cost systems applications, like DOT's system, presently require some costs
to be manually allocated, rather than allocating them automatically. As a
result, the systems

do not provide the reliable up- to- date data needed for making decisions.
FAA's Property

Since 1994, DOT's IG has reported that FAA lacked the Systems

systems and related procedures to accurately and routinely account for its
property, plant, and equipment (PP& E)- which, as of September 30, 1999,
totaled $10. 8 billion. This lack of accurate and current PP& E

information may impede the ability of program officials to properly manage
and safeguard these assets and to make prudent business decisions. It may
also limit their ability to accurately determine the costs of operations

on an ongoing basis. In fiscal year 1999, FAA started an extensive
laborintensive project to reconstruct the detailed records needed to
document its PP& E costs. With a significant effort and commitment of
resources, FAA made real progress and, for the first time, established a PP&
E

baseline. This extraordinary effort resulted in corrections to previously
reported PP& E amounts, including a $3 billion increase in the reported cost
of PP& E and an $806 million increase in accumulated depreciation. While
this special effort established a baseline for PP& E costs, without adequate
systems and

controls, FAA will have difficulty tracking its PP& E activity on a routine
basis. In its report on FAA's financial statement for fiscal year 1999, the
IG concluded that the manual and labor- intensive efforts

could not be sustained in the future and are prone to errors, mistakes, and
inaccuracies. As a result, the IG classified the internal controls over
FAA's PP& E as a material weakness.

During fiscal year 2000, FAA began implementing a new system to maintain
detailed PP& E records that can calculate depreciation. In the past, the
depreciation expense, which is an important component of FAA's

operating costs, required the preparation of separate electronic
spreadsheets. The new system is expected to be fully operational by
September 2001. However, the full benefits of the new detailed record system
for PP& E will not be realized until it is integrated with systems changes
(or replacements) to FAA's existing related property systems that identify
and track PP& E activity, such as property acquisitions and disposals. FAA
does

not expect these related PP& E systems to be fully implemented until fiscal
year 2003. We will continue to monitor FAA's progress in implementing these
new systems to determine if they are responsive to the concerns that we and
the IG raised. Key Contact Linda Calbom, Director

Financial Management and Assurance (202) 512- 9508 calboml@ gao. gov Improve
the

For fiscal years 1998 through 2003, DOT is expected to Oversight of provide
a total of at least $198 billion for a variety of Highway and transit and
highway projects. These funds have and will

Transit Projects to continue to play an important role in building and
Provide Maximum expanding the nation's transit and highway systems.
Transportation DOT has opportunities to improve its oversight of and
Services for the

its approach to funding these projects. For example, Federal Dollars FTA has
agreements to fund a significant number of ongoing projects to construct new
transit systems or

Invested extend existing ones and expects to enter into additional

agreements in fiscal year 2001. As a result, it may not have sufficient
resources in fiscal years 2002 and 2003 to enter into additional agreements
to fund these types of projects. Furthermore, FTA may not have the resources
it needs after 2001 to adequately oversee the transit

projects requiring oversight. FHWA faces the challenges of completing steps
that could help prevent cost overruns and delays on major highway projects
and of improving the reliability of the process it uses to estimate the
portion of tax receipts contributed by each state to the Highway Trust Fund.
Federal Transit We have reported on a number of transit projects
Administration

funded, in part, by the federal government that have experienced cost and
schedule problems and identified areas in which FTA needs to improve its
oversight of large transit projects. FTA has taken steps designed to
mitigate these problems. In particular, FTA has improved its oversight
activities since the early 1990s when FTA's grant management program for
transit projects was on our list of high- risk programs. In 1995, as a
result of various initiatives FTA was undertaking to improve its

grants management oversight, we removed this program from our high- risk
list. For example, we reported in April 1998 that FTA improved its guidance
and training for staff and grantees, standardized oversight

procedures, and effectively used contractor staff in its project management
oversight program. In particular, we noted that the agency's risk assessment
process helped target limited oversight resources and provided a strong
foundation for improved oversight. In September 2000, we reported that FTA's
project management oversight program- which is designed to help ensure that
grantees constructing major capital projects have qualified staff and
procedures to build and operate them- has resulted in benefits for both
grantees and

FTA. Transit agencies commended the program and cited numerous examples of
how FTA's project management contractors have improved quality controls and
provided FTA with early warnings of issues and problems that could lead to
increased costs and schedule delays.

Nevertheless, we also noted in the September 2000 report that FTA believes
that the funds available for the project management oversight program might
not be sufficient to allow the necessary level of oversight activity to
continue. According to FTA, the growing demand for oversight is largely due
to the number of projects in the new starts program, which is used to
construct new systems and extend existing systems identified as eligible for
funding in the Transportation Equity Act for the 21st Century (TEA- 21).
This increased number of transit projects needing monitoring will

strain FTA's oversight resources. For example, the agency anticipates a $5
million shortfall in its project management oversight program in fiscal year
2002. We recommended that the Secretary of Transportation determine the
amount of funds needed, any shortfalls, and the steps needed to cover any
shortfalls. The conference report accompanying the Department's fiscal year
2001 appropriations act directed DOT to develop a plan to address any
expected shortfalls and to include this information in its fiscal year 2002
budget submission.

FTA is also likely to exhaust its commitment authority for transit projects
funded under its new starts program before the end of the funding period for
TEA- 21. As a result, FTA will be able to enter into few, if any additional
agreements to fund new starts projects in fiscal years 2002 and 2003. FTA
rates proposed projects

according to a variety of criteria and, based on these ratings, expects to
enter into agreements to fund 15 additional projects during 2001. These 15
projects, together with 14 ongoing projects already receiving funds under
the new starts program, will likely exhaust almost all of FTA's available
commitment authority

under TEA- 21. We recommended that DOT further prioritize the transit
projects it rates as “highly recommended” and
“recommended” so available funds can be directed to the most
deserving projects. FTA

agreed and said it would seek ways to further prioritize eligible projects.
Federal Highway

Projects to improve or expand highways can cost Administration hundreds of
millions of dollars and pose significant management and logistical
challenges. For example, the

Central Artery/ Tunnel Project in Boston- the most expensive and complex
federally assisted highway project ever undertaken- continues to be troubled
by cost increases and management problems, leading to management changes and
increased oversight measures. 14 In spite of the increased oversight, in
early 2000, the estimated cost of the project increased again by over $1
billion to total about $14 billion (the federal share is about $8. 5
billion). The original cost estimate for the project, made in 1985, was $2.
6 billion. In prior years, we reported on the likelihood of future cost
increases in this project because of several systemic problems affecting it
and FHWA. Furthermore, in February 1997, we identified several options that
could improve the management of all large- dollar highway projects,
including improving the preparation of total

cost estimates and requiring states to track a project's progress against
its initial baseline cost estimates. Another option we identified was the
establishment of a federal approval process for large- dollar projects,
including the approval of a project's finance plan. FHWA has taken some
steps in this direction; for example, as required by TEA- 21, it now
requires the

states to submit finance plans for projects that are expected to cost over
$1 billion. Furthermore, FHWA 14 The Central Artery/ Tunnel Project will
replace a deteriorating elevated section of Interstate 93 through Boston
with an underground expressway and extend the Massachusetts Turnpike under
Boston Harbor to Logan Airport.

has recently issued guidance concerning the content and format of such
plans. Allocation of TEA- 21 continued the use of the Highway Trust Fund-
Highway Trust Fund

which is funded by taxes on highway users- as the Receipts mechanism to
account for federal highway user tax receipts that fund various surface
transportation programs. Furthermore, under TEA- 21, the link between
highway user tax receipts in the Fund's Highway Account and federal highway
program funding levels

was enhanced by (1) guaranteeing specific annual funding levels for most
highway programs on the basis of the projected receipts in the Fund's
Highway Account and (2) providing that the guaranteed spending level for
each fiscal year would be adjusted upward or downward

according to the receipt levels in the Highway Account. FHWA is responsible,
together with the Treasury Department, for estimating the amount of these
receipts and the overall portion of the receipts attributable to each state.
Under TEA- 21, billions of dollars in highway

program funds- about $13 billion in fiscal year 2000 alone- are distributed
to the states on the basis of information developed by the Treasury and
Transportation departments. In June 2000, we reported that the processes
used by Treasury and FHWA to estimate overall receipts and the

portion of those receipts attributable to highway users in individual states
are highly complex and susceptible to error and that the reliability of the
estimates has not been demonstrated. The process for distributing these tax
receipts has two separate components: (1) the

Treasury Department determines the overall amount of receipts to be
distributed to the Highway Account and (2) FHWA estimates the portion of the
overall amount that is attributable to each state by using state data on
motor fuel usage. Some of the complexity of the first component stems from
the fact that business taxpayers make deposits of highway user taxes to the
Treasury

Department in combination with other excise taxes but do not report them by
tax type at the time the deposits are made. Several offices in the Treasury
Department play roles in determining which portion of excise tax collections
to allocate to the Highway Trust Fund according to payment data and
quarterly tax returns.

Regarding the second component, highway user taxes on motor fuels are not
paid directly by consumers at the gas pump. Oil companies generally pay the
tax on motor fuels- which made up 89 percent of the highway user taxes paid
in fiscal year 1999- when the fuel is loaded into a tanker truck or rail
car. As a result, FHWA must estimate receipts attributable to highway users
in each state, on the basis of data provided by each state, in order to
distribute Highway Account funds to all the

states. Our June 2000 report concluded there is little assurance that the
actual amounts distributed to the states are accurate, although there is no
way of knowing the extent of over- or underpayments, if any, to individual
states, given the information currently available from the two agencies.
Although the Treasury Department and FHWA are taking actions to review and
improve their estimating processes, these actions are not sufficient to
correct all the weaknesses. Therefore, our report made recommendations to
the Treasury and DOT that are designed to reduce the risk of errors and
increase the reliability of the information used to distribute federal
highway program funds to the states. FHWA officials agreed with all of our
recommendations

aimed at improving the reliability of FHWA's attribution process, and they
are developing an action plan to implement the recommendations. FHWA has
also agreed to prepare an annual report to the Congress

summarizing its progress in implementing our recommendations, with the first
report to be issued in July 2001.

Key Contact John H. Anderson, Jr., Managing Director Physical Infrastructure
(202) 512- 2834 andersonj@ gao. gov Strengthen the

Since 1971, the federal government has provided over Financial Condition $23
billion in operating and capital assistance to Amtrak,

of Amtrak a private corporation that provides nationwide intercity passenger
rail service. Amtrak operates trains in 45 states, serving more than 20
million riders annually. The Secretary of DOT sits on Amtrak's board of
directors,

and the Department sets annual performance goals to improve Amtrak's
ridership and service. In fiscal year 2000, the railroad lost $943 million.
15 In 1994, at the request of the administration and later at the direction
of the Congress, Amtrak pledged to eliminate the need for federal operating
subsidies by the end of 2002. 16 Amtrak has made relatively little progress
in reducing its

need for federal operating subsidies. In fiscal year 2000, Amtrak's revenues
increased substantially, but expenses increased more. As a result, Amtrak's
cost increases wiped out the impact of the revenue gains. In fiscal year
2000, Amtrak reduced its need for operating subsidies by $5 million-
substantially less than its planned reduction of $114 million. (See fig. 4.)
Moreover, for fiscal years

2001 and 2002 combined, Amtrak will need to achieve about $282 million in
savings to reach operational selfsufficiency.

15 Amtrak's fiscal year 2000 financial results had not been audited as of
November 2000. 16 The Amtrak Reform and Accountability Act of 1997
prohibited Amtrak from using federal funds for operating expenses, except
for an amount equal to excess Railroad Retirement Tax Act payments, after
2002. Amtrak participates in the railroad retirement system, under

which each participating railroad pays a portion of the total retirement and
benefit costs for employees of the industry.

Figure 4: Amtrak's Budget Gap, Fiscal Years 1994- 2000 550

Dollars in millions 600

578 554

550

522 512 500

494 476 471

450 400 350 300 250 200 150 100

50 0

1994 1995 1996 1997 1998 1999 2000

Note: Amtrak must reduce its budget gap to an amount equal to its excess
Railroad Retirement Tax Act payments, estimated at $189 million in fiscal
year 2002, to achieve operational self- sufficiency.

Source: GAO's analysis of Amtrak's data.

Given Amtrak's lack of overall progress in reducing costs and increasing
revenues, it will be difficult for Amtrak to eliminate the need for federal
operating subsidies by the end of 2002. Amtrak's costs are expected to
increase, and its ability to realize substantial

revenue increases and productivity improvements is uncertain. Nearly three
quarters of the $1. 9 billion in net financial benefits that Amtrak expects
to achieve between 2000 and 2004 have either not been identified or are
based on initiatives that have yet to be fully implemented. Key decisions
have to be made about the future of Amtrak and the future of intercity
passenger rail. If Amtrak does not reach operational self- sufficiency, the

Amtrak Reform and Accountability Act of 1997 requires the Amtrak Reform
Council to submit a plan to the Congress for a restructured national
intercity passenger rail system and Amtrak to submit a plan for its

liquidation. Basic decisions will need to be made about the nation's
intercity passenger rail system, including the scope of a national intercity
passenger rail network, if any; how it would be operated; and the level of
federal funding that would be provided to support this network.
Alternatively, if Amtrak does attain operational selfsufficiency, it could
require a substantially higher level of financial support than it receives
now (about $521 million annually) to meet its capital needs and excess

Railroad Retirement Tax Act expenses. In this regard, we estimate that
Amtrak will need at least $9 billion (in constant 1999 dollars) to meet its
identified capital needs through 2015 and substantial sums (about $200
million in 2004, according to Amtrak) to cover excess Railroad Retirement
Tax Act payments. Key Contact John H. Anderson, Jr., Managing Director

Physical Infrastructure (202) 512- 2834 andersonj@ gao. gov Enhance

The lack of effective competition in certain markets has Competition and
contributed to high fares and rates and poor service in Consumer

commercial aviation and freight rail service. A number Protection in of
communities have not benefited from increased

Aviation and aviation competition largely because of barriers that Freight
Rail

inhibit the entry of new airlines, and, as a result, pockets Industries to

of high fares and poor service exist. Freight shippers are Ensure Reasonable
concerned that recent railroad mergers and consolidations have resulted in
poor service and high Fares, Rates, and

rates in certain markets. Increasing competition and Service improving
aviation and freight rail service will entail a range of solutions by DOT,
the Surface Transportation

Board (which approves railroad mergers and consolidations), the Congress,
and the private sector. Aviation Deregulation of the airline industry in
1978 is generally considered to have been a success, having lowered fares
and improved service for most air travelers. These

benefits largely resulted from increased competition from the entry of new
airlines into the industry and more vigorous competition among established
airlines in existing markets. However, airlines' problems with gaining
access to certain airports and the success of marketing strategies employed
by established airlines have limited competition at certain major U. S.
airports. For example, limited access to gates at six major airports in the
East and Upper Midwest has made it difficult for new airlines to begin
service to those

airports. 17 Many gates at those six airports are exclusively leased to just
one airline. In addition, at four major airports- Chicago's O'Hare, Reagan
Washington National, and New York's Kennedy and LaGuardia- the established
airlines control access to most of the takeoff and landing times, known as
“slots,” that FAA created and distributed. In addition,
perimeter rules, which prohibit most flights that exceed certain distances,
at LaGuardia and Reagan Washington National limit the ability of airlines
based in the West to compete at these airports. Moreover, even where new
airlines have managed to enter certain markets, established airline
strategies, such as frequent flyer programs and discounts given to large
corporate customers, have prevented some new entrant airlines from
successfully competing in certain markets. In addition, the recently
proposed merger between two of the nation's largest airlines- United
Airlines and US 17 The six airports are located in Charlotte, Cincinnati,
Detroit,

Minneapolis, Newark, and Pittsburgh.

Airways- has raised concerns that it might lead to decreased competition in
certain markets. The Department of Justice is reviewing the proposed merger
to determine if it complies with U. S. antitrust laws. We reported on the
implications of this proposed merger in December 2000. Furthermore, small
communities have expressed concerns about poor air service and relatively
high fares. As we reported in April 2000, few airlines seek to serve small
communities where demand for air service is limited. When service is
provided, it is usually provided in less popular turboprop aircraft.
However, the introduction of regional jets (small jet aircraft that can
carry between 30 and 70 passengers) by the commuter affiliates of major
airlines may provide opportunities to replace turboprops and expand service
to new markets.

In early 2001, we will report on the potential effect of these jets on the
airline industry, including their effect on service to smaller communities
and on congestion at larger airports. Actions by the Congress and DOT could
increase competition and improve air service. In the Aviation Investment and
Reform Act for the 21st Century, the Congress required FAA to phase out slot
rules at O'Hare airport by 2002 and at Kennedy and LaGuardia airports by
2007. The act also required FAA to immediately grant a limited number of
exemptions to the perimeter and slot rules at Reagan Washington National
Airport. In addition, the act directed that, by fiscal year 2001, larger
airports submit plans to the Secretary of Transportation that show how they
will provide for access to new entrant airlines and expansion by incumbent
airlines.

Furthermore, in 1998, DOT issued draft guidelines describing what the
Department considers to be anticompetitive practices in the airline
industry. DOT

had not issued final guidelines as of December 2000.

Finally, the quality of air service has also emerged as a public issue. In
1999, we examined the “Customer Service Commitment” that the
airlines made to congressional committees and the traveling public and

found that it restated and extended some aspects of the airlines' existing
agreements with passengers, such as notifying passengers of flight
cancellations in a timely manner. By July 2000, the major airlines had begun
implementing these commitments and strengthening efforts at customer
service. The commitments, however, did not address key underlying aspects of
customer dissatisfaction, such as flight delays and long check- in lines,
and, as a result, travelers' discontent with the

quality of service is likely to continue. We have initiated work examining
air traffic congestion and flight delay, along with their effects on
competition at the airports most affected by these problems and plan to
report on these issues in the near future. Freight Rail Continued
consolidation of the railroad industry- a condition that has been occurring
throughout the past century- has led rail shippers and others to express

concerns about the lack of competition in the industry, the extent to which
railroads are using their market power to set unreasonably high rates, and
the quality of service provided, especially for those shippers with fewer
alternatives to rail transportation to move their goods to market. In 1976,
there were 30 independent Class I systems (consisting of 63 Class I
railroads- the nation's largest railroads). By 2000, there were seven

railroad systems (consisting of eight Class I railroads). Concerns have been
raised about whether the Surface Transportation Board is adequately
protecting shippers against unreasonable rates and poor service quality. The
Board approves mergers and consolidations and adjudicates complaints
concerning rail rates and service.

Rail rates are sensitive to competition. For example, in April 1999 we found
that rates in some markets that are considered to have less effective
competition, such as the northern Plains states, were generally higher than
rates where there might be more effective competition options, such as
barges or other railroads. 18 Shippers

have increasingly criticized railroads for providing poor service, such as
inconsistent pickup and delivery of railcars and a lack of railcars when and
where needed. About 60 percent of the 525 coal, grain, and chemical shippers
that responded to a survey question concerning service believed their
service was worse than in preceding years and attributed this poor service,
at least in part, to railroad mergers and consolidations. The Surface
Transportation Board has taken a number of actions to address rate, service,
and merger issues. In response to complaints over unreasonable rates, it has

eliminated certain tests related to market dominance, reducing the burden on
shippers and railroads in rate relief proceedings. Regarding service
quality, the Board adopted new procedures allowing shippers to receive
expedited temporary relief from inadequate rail service through service from
an alternative carrier. Finally, the Board has proposed changes to its
approach to reviewing and approving mergers. However, these

actions are not likely to satisfy many shippers' belief that increased
competition in the rail industry is needed to improve service. Because of
the divergent views of railroads and shippers, resolving service and
competition issues will be difficult and may require congressional action.
18 Our April 1999 report focused on the shipment of coal and grain in
markets in the northern and central Plains states.

Key Contact John H. Anderson, Jr., Managing Director Physical Infrastructure
(202) 512- 2834 andersonj@ gao. gov

Related GAO Products Safety and Security

Federal Aviation FAA Computer Security: Recommendations to Address
Administration Continuing Weaknesses (GAO- 01- 171, Dec. 6, 2000).

FAA Computer Security: Actions Needed to Address Critical Weaknesses That
Jeopardize Aviation Operations (GAO/ T- AIMD- 00- 330, Sept. 27, 2000). FAA
Computer Security: Concerns Remain Due to Personnel and Other Continuing
Weaknesses (GAO/ AIMD- 00- 252, Aug. 16, 2000). Aviation Safety: Safer Skies
Initiative Has Taken Initial Steps to Reduce Accident Rates by 2007 (GAO/
RCED- 00- 111, June 28, 2000). Aviation Security: Long- Standing Problems
Impair Airport Screeners' Performance (GAO/ RCED- 00- 75, June 28, 2000).
Computer Security: FAA Is Addressing Personnel Weaknesses, but Further
Action Is Required (GAO/ AIMD- 00- 169, May 31, 2000).

Aviation Security: Vulnerabilities Still Exist in the Aviation Security
System (GAO/ T- RCED- 00- 142, Apr. 6, 2000). Computer Security: FAA Needs
to Improve Controls Over Use of Foreign Nationals to Remediate and Review
Software (GAO/ AIMD- 00- 55, Dec. 23, 1999).

Aviation Safety: FAA's New Inspection System Offers Promise, but Problems
Need to Be Addressed (GAO/ RCED- 99- 183, June 28, 1999).

Aviation Security: FAA's Actions to Study Responsibilities and Funding for
Airport Security and to Certify Screening Companies (GAO/ RCED- 99- 53, Feb.
25, 1999).

Air Traffic Control: Weak Computer Security Practices Jeopardize Flight
Safety (GAO/ AIMD- 98- 155, May 18, 1998). Federal Motor

Commercial Motor Vehicles: Effectiveness of Actions Carrier Safety Being
Taken to Improve Motor Carrier Safety Is Administration

Unknown (GAO/ RCED- 00- 189, July 17, 2000). Commercial Motor Vehicles:
Significant Actions Remain to Improve Truck Safety (GAO/ T- RCED- 00- 102,
Mar. 2, 2000).

Truck Safety: Motor Carriers Office Hampered by Limited Information on
Causes of Crashes and Other Data Problems (GAO/ RCED- 99- 182, June 29,
1999). Truck Safety: Motor Carriers Office's Activities to Reduce Fatalities
Are Likely to Have Little Short- term Effect (GAO/ T- RCED- 99- 89, Feb. 23,
1999).

Office of Pipeline Pipeline Safety: Office of Pipeline Safety Is Changing
Safety

How It Oversees the Pipeline Industry (GAO/ RCED- 00- 128, May 15, 2000).

Management of Acquisitions and Assets

Federal Aviation National Airspace System: Persistent Problems in FAA's
Administration

New Navigation System Highlight Need for Periodic Reevaluation (GAO/ RCED/
AIMD- 00- 130, June 12, 2000). Federal Aviation Administration: Challenges
in Modernizing the Agency (GAO/ T- RCED/ AIMD- 00- 87, Feb. 3, 2000). Air
Traffic Control: FAA's Modernization Investment Management Approach Could Be
Strengthened (GAO/ RCED/ AIMD- 99- 88, Apr. 30, 1999).

Coast Guard Coast Guard: Budget Challenges for 2001 and Beyond (GAO/ T-
RCED- 00- 103, Mar. 15, 2000). Coast Guard: Strategies for Procuring New
Ships, Aircraft, and Other Assets (GAO/ T- RCED- 99- 116, Mar. 16, 1999).

Coast Guard: Key Budget Issues for Fiscal Years 1999 and 2000 (GAO/ T- RCED-
99- 83, Feb. 11, 1999).

Coast Guard's Acquisition Management: Deepwater Project's Justification and
Affordability Need to Be Addressed More Thoroughly (GAO/ RCED- 99- 6, Oct.
26, 1998). Maritime

Federal Surplus Ships: Government Efforts to Address Administration

the Growing Backlog of Ships Awaiting Disposal (GAO/ NSIAD- 99- 18, Oct. 22,
1998).

Financial Financial Management: Financial Audit Results at GSA, Management

EPA, and DOT (GAO/ T- AIMD- 99- 301, Sept. 30, 1999). FAA Financial
Management: Further Actions Needed to Achieve Asset Accountability (GAO/
AIMD- 99- 212, July 30, 1999).

Federal Aviation Administration: Financial Management Issues (GAO/ T- AIMD-
99- 122, Mar. 18, 1999). Financial Management: Federal Aviation
Administration Lacked Accountability for Major Assets (GAO/ AIMD- 98- 62,
Feb. 18, 1998).

Air Traffic Control: Improved Cost Information Needed to Make Billion Dollar
Modernization Investment Decisions (GAO/ AIMD- 97- 20, Jan. 22, 1997).
Highway and Transit Grants

Federal Highway Surface Infrastructure: Costs, Financing, and Schedules

Administration for Large- Dollar Transportation Projects (GAO/ RCED- 98- 64,
Feb. 12, 1998).

Federal Transit Mass Transit: Project Management Oversight Benefits
Administration

and Future Funding Requirements (GAO/ RCED- 00- 221, Sept. 15, 2000).

Mass Transit: Implementation of FTA's New Starts Evaluation Process and FY
2001 Funding Proposals (GAO/ RCED- 00- 149, Apr. 28, 2000).

Mass Transit: Challenges in Evaluating, Overseeing, and Funding Major
Transit Projects (GAO/ T- RCED- 00- 104, Mar. 8, 2000).

Highway Trust Fund Highway Funding: Problems with Highway Trust Fund
Information Can Affect State Highway Funds (GAO/ RCED/ AIMD- 00- 148, June
29, 2000). Intercity Passenger

Intercity Passenger Rail: Decisions on the Future of Rail

Amtrak and Intercity Passenger Rail Are Approaching (GAO/ T- RCED- 00- 277,
Sept. 26, 2000). Intercity Passenger Rail: Amtrak Will Continue to Have
Difficulty Controlling Its Costs and Meeting Capital Needs (GAO/ RCED- 00-
138, May 31, 2000). Intercity Passenger Rail: Amtrak Needs to Improve Its
Accountability for Taxpayer Relief Act Funds (GAO/ RCED/ AIMD- 00- 78, Feb.
29, 2000).

Intercity Passenger Rail: Amtrak's Progress in Improving Its Financial
Condition Has Been Mixed (GAO/ RCED- 99- 181, July 9, 1999). Aviation and
Rail Competition

Aviation Aviation Competition: Issues Related to the United Airlines- US
Airways Merger (GAO- 01- 212, Dec. 15, 2000). Essential Air Service: Changes
in Subsidy Levels, Air Carrier Costs, and Passenger Traffic (GAO/ RCED- 00-
34, Apr. 14, 2000).

Reagan National Airport: Capacity to Handle Additional Flights and Impact on
Other Area Airports (GAO/ RCED- 99- 234, Sept. 17, 1999).

Aviation Competition: Changes in Airfares, Service Quality, and Barriers to
Entry (GAO/ RCED- 99- 92, Mar. 4, 1999).

Aviation Competition: Effects on Consumers From Domestic Airline Alliances
Vary (GAO/ RCED- 99- 37, Jan. 15, 1999).

Freight Rail Railroad Regulation: Changes in Railroad Rates and Service
Quality Since 1990 (GAO/ RCED- 99- 93, Apr. 16, 1999). Railroad Regulation:
Current Issues Associated With the Rate Relief Process (GAO/ RCED- 99- 46,
Feb. 26, 1999).

Performance and Accountability Series

Major Management Challenges and Program Risks: A Governmentwide Perspective
(GAO- 01- 241)

Major Management Challenges and Program Risks: Department of Agriculture
(GAO- 01- 242)

Major Management Challenges and Program Risks: Department of Commerce (GAO-
01- 243)

Major Management Challenges and Program Risks: Department of Defense (GAO-
01- 244)

Major Management Challenges and Program Risks: Department of Education (GAO-
01- 245)

Major Management Challenges and Program Risks: Department of Energy (GAO-
01- 246)

Major Management Challenges and Program Risks: Department of Health and
Human Services (GAO- 01- 247)

Major Management Challenges and Program Risks: Department of Housing and
Urban Development (GAO- 01- 248)

Major Management Challenges and Program Risks: Department of the Interior
(GAO- 01- 249)

Major Management Challenges and Program Risks: Department of Justice (GAO-
01- 250)

Major Management Challenges and Program Risks: Department of Labor (GAO- 01-
251)

Major Management Challenges and Program Risks: Department of State (GAO- 01-
252)

Major Management Challenges and Program Risks: Department of Transportation
(GAO- 01- 253)

Major Management Challenges and Program Risks: Department of the Treasury
(GAO- 01- 254)

Major Management Challenges and Program Risks: Department of Veterans
Affairs (GAO- 01- 255)

Major Management Challenges and Program Risks: Agency for International
Development (GAO- 01- 256)

Major Management Challenges and Program Risks: Environmental Protection
Agency (GAO- 01- 257)

Major Management Challenges and Program Risks: National Aeronautics and
Space Administration (GAO- 01- 258)

Major Management Challenges and Program Risks: Nuclear Regulatory Commission
(GAO- 01- 259)

Major Management Challenges and Program Risks: Small Business Administration
(GAO- 01- 260)

Major Management Challenges and Program Risks: Social Security
Administration (GAO- 01- 261)

Major Management Challenges and Program Risks: U. S. Postal Service (GAO-
01- 262)

High- Risk Series: An Update (GAO- 01- 263)

GAO United States General Accounting Office

Page 1 GAO- 01- 253 DOT Challenges

Contents

Page 2 GAO- 01- 253 DOT Challenges

Comptroller General of the United States

Page 3 GAO- 01- 253 DOT Challenges United States General Accounting Office

Washington, D. C. 20548

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Overview Page 7 GAO- 01- 253 DOT Challenges

Overview Page 8 GAO- 01- 253 DOT Challenges

Overview Page 9 GAO- 01- 253 DOT Challenges

Overview Page 10 GAO- 01- 253 DOT Challenges

Overview Page 11 GAO- 01- 253 DOT Challenges

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Major Performance and Accountability Challenges Page 13 GAO- 01- 253 DOT
Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Related GAO Products Page 56 GAO- 01- 253 DOT Challenges

Related GAO Products Page 57 GAO- 01- 253 DOT Challenges

Related GAO Products Page 58 GAO- 01- 253 DOT Challenges

Related GAO Products Page 59 GAO- 01- 253 DOT Challenges

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Performance and Accountability Series

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