Air Traffic Control: FAA's Modernization Efforts--Past, Present, 
and Future (30-OCT-03, GAO-04-227T).				 
                                                                 
The Federal Aviation Administration's (FAA) air traffic control  
modernization (ATC) efforts are designed to enhance the safety,  
capacity, and efficiency of the national airspace system through 
the acquisition of a vast network of radar, navigation, 	 
communications, and information processing systems, as well as	 
new air traffic control facilities. Since 1981, when these	 
efforts began, FAA's ATC modernization projects have consistently
experienced cost, schedule, and performance problems that GAO and
others have attributed to systemic management issues. As a	 
result, FAA's cost estimates have grown and planned improvements 
have been delayed. Initially FAA estimated that its ATC 	 
modernization efforts would cost $12 billion and could be	 
completed over 10 years. Now, two decades and $35 billion later, 
FAA expects to need another $16 billion through 2007 to complete 
key projects, for a total cost of $51 billion. This testimony (1)
provides an overview of the systemic management issues that GAO  
and others have identified in FAA's ATC modernization efforts	 
over time, (2) discusses key actions that FAA and others have	 
taken to address these issues, and (3) identifies the challenges 
that lie ahead for FAA. 					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-227T					        
    ACCNO:   A08806						        
  TITLE:     Air Traffic Control: FAA's Modernization Efforts--Past,  
Present, and Future						 
     DATE:   10/30/2003 
  SUBJECT:   Air traffic control systems			 
	     Cost overruns					 
	     Financial management systems			 
	     General management reviews 			 
	     Information technology				 
	     Internal controls					 
	     Schedule slippages 				 
	     Human capital					 
	     FAA Standard Terminal Automation			 
	     Replacement System 				 
                                                                 
	     FAA Wide Area Augmentation System			 

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GAO-04-227T

United States General Accounting Office

GAO Testimony

Before the Subcommittee on Aviation, Committee on Transportation and
Infrastructure, House of Representatives

For Release on Delivery Expected at 10:00 a.m. EST

Thursday, October 30, 2003

AIR TRAFFIC CONTROL

             FAA's Modernization Efforts-Past, Present, and Future

Statement of Gerald L. Dillingham, Director, Physical Infrastructure Issues

GAO-04-227T

Highlights of GAO-04-227T, a testimony before the Subcommittee on
Aviation, Committee on Transportation and Infrastructure, House of
Representatives

The Federal Aviation Administration's (FAA) air traffic control
modernization (ATC) efforts are designed to enhance the safety, capacity,
and efficiency of the national airspace system through the acquisition of
a vast network of radar, navigation, communications, and information
processing systems, as well as new air traffic control facilities. Since
1981, when these efforts began, FAA's ATC modernization projects have
consistently experienced cost, schedule, and performance problems that GAO
and others have attributed to systemic management issues. As a result,
FAA's cost estimates have grown and planned improvements have been
delayed. Initially FAA estimated that its ATC modernization efforts would
cost $12 billion and could be completed over 10 years. Now, two decades
and $35 billion later, FAA expects to need another $16 billion through
2007 to complete key projects, for a total cost of $51 billion.

This testimony (1) provides an overview of the systemic management issues
that GAO and others have identified in FAA's ATC modernization efforts
over time, (2) discusses key actions that FAA and others have taken to
address these issues, and (3) identifies the challenges that lie ahead for
FAA.

www.gao.gov/cgi-bin/getrpt?GAO-04-227T.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact Gerald L. Dillingham at
(202) 512-2834 or [email protected].

October 30, 2003

AIR TRAFFIC CONTROL

FAA's Modernization Efforts-Past, Present, and Future

Over the years, systemic management issues, including inadequate
management controls and human capital issues, have contributed to the cost
overruns, schedule delays, and performance shortfalls that FAA's major ATC
projects have consistently experienced. These problems occurred, in large
part, because FAA lacked the information technology and financial
management systems that would have helped it reliably determine the
projects' technical requirements and estimate and control their costs and
schedules. In addition, organizational culture issues discouraged
collaboration among technical experts and users, and frequent changes in
FAA's leadership-seven different Administrators and Acting Administrators
in the first 10 years-hampered the modernization efforts.

FAA has taken steps to improve the management of its ATC modernization
efforts and has made progress. For example, it implemented a
cost-effective, incremental development approach that avoided costly
late-stage changes. In addition, it has fully or partially implemented
over 30 GAO recommendations designed to improve its management controls
and address human capital issues. The Congress also extended the term of
the FAA Administrator to 5 years, providing for greater continuity and
stability, and enacted legislation designed to bring the benefits of
performance management to ATC modernization.

FAA faces a number of challenges in fully implementing recommendations
that GAO and others have made to improve its management controls and
address human capital issues. FAA also faces the challenge of becoming a
more efficient and accountable performance-based air traffic organization.
Finally, FAA has an opportunity to review its current 10-year plan for
modernizing the National Airspace System and to assess the relative
importance and feasibility of the plan's priorities in light of current
federal and private sector economic constraints, new aviation security
requirements, and other issues.

Air Traffic Controller at Work

Source: National Air Traffic Controllers Association.

Mr. Chairman and Members of the Subcommittee:

We appreciate the opportunity to participate in today's hearing to discuss
our work on FAA's air traffic control modernization (ATC) efforts, which
are designed to enhance the safety, capacity, and efficiency of the
national airspace system, primarily through software-intensive technology
improvements. As you know, these efforts involve acquiring a vast network
of radar, navigation, communications, and information processing systems,
as well as new air traffic control facilities. Since 1981, when these
efforts began, FAA's ATC modernization projects have consistently
experienced cost, schedule, and performance problems that we and others
have attributed to systemic management issues. As a result, FAA's cost
estimates have grown and planned improvements have been delayed. Initially
FAA estimated that its ATC modernization efforts would cost $12 billion
and could be completed over 10 years. Now, two decades and $35 billion
later, FAA expects to need another $16 billion through 2007 to complete
key projects, for a total cost of $51 billion.

By the summer of 2000, the ATC system no longer had the capacity to manage
demand efficiently, and flight delays produced near-gridlock conditions at
many U.S. airports. The events of September 11 and the subsequent economic
downturn severely reduced the demand for air travel for a time, but the
aviation industry is gradually recovering, and FAA forecasts a return to
pre-9/11 demand levels in about 2005 or 2006. This current period of
reduced but growing demand for air travel has created a narrow window of
opportunity to address the management issues underlying FAA's ATC
modernization problems and to prepare the ATC system for managing a
growing volume of air traffic more safely and efficiently than in the
past.

My statement today (1) provides an overview of the systemic management
issues that we and others have identified in FAA's ATC modernization
efforts over time, (2) discusses key actions that FAA and others have
taken to address these issues, and (3) identifies the challenges that lie
ahead for FAA. The statement is based on our past reports on ATC
modernization (see Related GAO Products)-updated to reflect important
milestones-and recent interviews with key stakeholders in the aviation
community, including the Air Transport Association, National Air Traffic
Controllers Association, and Professional Airways Systems Specialists. We
performed our work in accordance with generally accepted government
auditing standards.

In summary:

o  	Over the years, systemic management issues, including inadequate
management controls and human capital issues, have contributed to the cost
overruns, schedule delays, and performance shortfalls that FAA's major ATC
projects have consistently experienced. These systemic management issues
have kept FAA's ATC modernization efforts on our watch list of high-risk
federal programs since 1995. Both the Wide Area Augmentation System
(WAAS)-designed to provide satellite-based navigation for airspace
users-and the Standard Terminal Automation Replacement System
(STARS)-designed to replace aging displays and processing systems used by
air traffic controllers-have missed cost, schedule, and performance
targets because of such issues. For both projects, FAA initially
underestimated the costs and time needed to meet complex technical
requirements and for STARS, it failed to involve stakeholders sufficiently
in determining the project's requirements. Consequently, when the projects
failed to meet requirements, FAA had to contract for costly,
time-consuming modifications and revise its cost and schedule estimates.
These problems occurred, in large part, because FAA lacked the information
technology and financial management controls that would have helped it
reliably determine the projects' technical requirements and estimate and
control their costs and schedules. In addition, organizational culture
issues discouraged collaboration among technical experts and users, and
frequent changes in FAA's leadership- seven different Administrators and
Acting Administrators in the first 10 years-hampered the modernization
effort. In numerous reports and testimonies, we, the Department of
Transportation's Inspector General, and others have made recommendations
to address these issues.

o  	FAA has taken steps to improve the management of its ATC modernization
efforts and has made progress in a number of areas. For example, it
implemented an incremental, "build a little, test a little" approach that
improved its management by providing for mid-course corrections and thus
helping FAA to avoid costly late-stage changes. Furthermore, since 1995,
FAA has fully or partially implemented over 30 of our recommendations,
including recommendations to improve its management controls and address
human capital issues. In the area of management controls, it has (1)
developed a blueprint for modernization (systems architecture) to manage
the development of ATC systems; (2) established processes for selecting
and controlling information technology investments, (3) introduced an
integrated framework for improving software and system acquisition
processes, and (4) improved its cost-estimating and cost-accounting
practices. In addition, it has taken steps to identify and address its
information systems security needs. In the human

capital area, FAA has attempted to improve collaboration among technical
experts and system users by establishing integrated teams to serve as
vehicles for identifying needs, pooling expertise, and reconciling
priorities. Additionally, in 1994, the Congress extended the term of the
FAA Administrator to 5 years, providing for greater continuity and
stability; in 1995, the Congress exempted FAA, at its request, from
certain federal human capital requirements; and in 2000, the Congress and
the administration together provided for a new oversight and management
structure and a new air traffic organization to bring the benefits of
performance management to ATC modernization. To date, one FAA
Administrator has completed a 5-year term; FAA has fully or partially
implemented the personnel reforms that the Congress authorized; and the
Air Traffic Services Subcommittee, which provides oversight, has recently
appointed a chief operating officer to manage the new air traffic
organization, which has yet to be formed. It is still too early to assess
the results of some of these initiatives, and some challenges remain.

o  	While FAA has taken steps to improve its management controls and
resolve human capital issues, it still faces challenges in fully
implementing recommendations that we and others have made. For example, it
still needs to (1) complete and make better use of its information
technology blueprint to manage change; (2) put processes in place for
evaluating projects after implementation to strengthen the investment
management process, (3) ensure that systems achieve a minimum level of
software capability before being funded; and (4) incorporate actual costs
from related system development efforts in its processes for estimating
the costs of new projects. Efforts to secure FAA's air traffic control
systems from cyber threats also remain a critical challenge. In the human
capital area, FAA needs to do more to foster collaboration among technical
experts and users, as well as fully implement the personnel reforms that
the Congress authorized. FAA also faces the challenge of becoming a more
efficient and accountable performance-based air traffic organization under
the leadership of the Air Traffic Services Subcommittee and the recently
hired chief operating officer. Finally, during the remaining lull in the
demand for air travel, FAA has an opportunity to review its 10-year plan
for modernizing the National Airspace System and to assess the relative
importance and feasibility of the plan's priorities in light of current
federal and private sector economic constraints, new security
requirements, and other issues.

Background 	Commercial aviation is a critical component of our nation's
transportation infrastructure and a significant contributor to our
nation's economy. For

example, in 2000, there were over half a billion passenger boardings of

commercial airline flights and the airline industry contributed $800
billion to Gross Domestic Product (8 percent) and employed nearly 10
million people (7 percent).1

Automated information processing and display, communication, navigation,
surveillance, and weather resources permit air traffic controllers to view
key information, such as aircraft location, aircraft flight plans, and
prevailing weather conditions and to communicate with pilots. These
resources reside at, or are associated with, several ATC facilities-
flight service stations, air traffic control towers, terminal radar
approach control (TRACON) facilities, and air route traffic control
centers (en route centers). These facilities are depicted in figure 1.

1These 10 million people include those with jobs both directly and
indirectly related to aviation activities.

             Figure 1: Overview of U.S. Air Traffic Control System

Source: GAO

Notes:

aThe Standard Terminal Automation Replacement System (STARS) is designed
to allow controllers at TRACONs to separate and sequence aircraft.

bThe Wide Area Augmentation System (WAAS), when fully developed, will
comprise a network of up to 76 ground stations (not depicted in graphic)
and three to four geostationary communications satellites.

cThe Next-Generation Air/Ground Communications System (NEXCOM), is an
integrated voice and data system that will be in aircraft avionics, with
the ground network infrastructure to support data link services to be
deployed, as appropriate, for operation in en route centers.

Over the years, systemic management issues, including inadequate
management controls and human capital issues, have contributed to the cost
overruns, schedule delays, and performance shortfalls that FAA's major ATC
projects have consistently experienced.

These problems were of such magnitude that we designated ATC modernization
as high risk in 1995. Table 1 summarizes the types of problems experienced
by five major air traffic control projects.

  Systemic Issues Have Contributed to ATC Modernization Projects' Cost,
  Schedule, and Performance Problems

Table 1: Cost, Schedule, and Performance Information for Selected ATC
Modernization Efforts

Cost Schedule Performance overruns slips issues

              Standard Terminal       To replace aging  Yes Yes           Yes 
                     Automation           displays and           
             Replacement System     processing systems           
                        (STARS)    used by air traffic           
                                           controllers           
                Next-Generation    To replace existing   No Yes  Test pending 
                     Air/Ground         communications           
                 Communications systems and provide              
                       (NEXCOM)       additional voice           
                                              channels           
                      Wide Area  To provide satellite-  Yes Yesa          Yes 
                   Augmentation based navigation for             
                  System (WAAS)         airspace users           

                    Integrated Terminal  To provide air traffic Yes Yes   Yes 
                         Weather System               managers with      
                                (ITWSb)            enhanced weather      
                                              information that does      
                                                        not require      
                                                     meteorological      
                                                     interpretation      

                     Weather and Radar              To provide  Yes Yes   Yes 
                     Processor (WARPb)    controllers, traffic           
                                                 managers, and           
                                       meteorologists with               
                                         accurate and reliable           
                                       weather information               

Sources: GAO and Department of Transportation, Office of Inspector
General.
aWhile WAAS was deployed in July 2003, historically, the project has had
schedule slips.
bInformation for WARP reported by the Department of Transportation, Office
of Inspector General.

Two Projects Illustrate the Effects of Systemic Management Issues on
Costs, Schedules, and Performance

Two projects, WAAS and STARS, illustrate the effects of inadequate
management controls and human capital issues on the costs, schedules, and
performance of major ATC modernization projects. More specifically, FAA
lacked adequate information technology and financial management controls
to comprehensively identify these projects' requirements, reliably
estimate their costs and schedules, and hold contractors accountable for
meeting cost, schedule, and performance targets. In addition, FAA lacked
effective processes for fostering collaboration among technical experts
and users, as well as sustained leadership to provide direction and
follow-through. As a result, these projects cost more, took longer, and
met fewer requirements than planned.

WAAS is designed to provide satellite-based navigation for airspace users.
As we reported in June 2000,2 FAA underestimated the complexity of
developing WAAS. FAA originally planned to start deploying WAAS in 1998
and finish in 2001; however, the agency could not deliver on this promise
because an aggressive schedule contributed to software development
problems, and the project was unable to meet a key integrity
requirement-that WAAS would virtually never fail to warn pilots of
potential navigation hazards. In January 2003, we reported in our
high-risk series that the cost for WAAS had grown from an original
estimate of $892 million to $2.9 billion.3, 4 In July 2003, FAA
commissioned WAAS for instrument flight use.

STARS is designed to replace the outdated computer equipment that air
traffic controllers currently use at some facilities to control air
traffic within 5 to 50 nautical miles of an airport. In 1996, FAA
anticipated very little software development, planned to install STARS in
172 facilities at a cost of $940 million, and expected implementation to
begin in 1998 and end in 2005. In 1999, FAA modified its acquisition
approach (from off-the-shelf software to a combination of customized and
off-the-shelf software) and then concluded that it did not have adequate
funding to deploy STARS as widely as planned. In March 2002, FAA estimated
that the project's development costs would total $1.33 billion, and it
received approval to deploy STARS at 74 facilities. FAA does not yet know
to what extent its development cost estimate is reliable because, as we
reported in January 2003,5 it lacks accurate, valid, current data on the
STARS project's remaining costs and progress. FAA commissioned STARS at
Philadelphia International Airport in June 2003. Figure 2 shows a STARS
display.

2U.S. General Accounting Office, National Airspace System: Problems
Plaguing the Wide Area Augmentation System and FAA's Actions to Address
Them, GAO/T-RCED-00-229 (Washington, D.C.: June 29, 2000).

3These dollars are nominal.

4U.S. General Accounting Office, High-Risk Series: An Update, GAO-03-119
(Washington, D.C.: January 2003).

5U.S. General Accounting Office, National Airspace System: Better Cost
Data Could Improve FAA's Management of the Standard Terminal Automation
Replacement System, GAO-03-343 (Washington, D.C.: Jan. 31, 2003).

Figure 2: STARS Display with Air Traffic

Source: FAA.

Inadequate Management Controls Have Hampered ATC Modernization Efforts

Our work has shown that several types of information technology and
financial management controls are important to manage large ATC projects
efficiently and effectively. These include a blueprint for planning, a
system for managing information technology investments, and an integrated
framework for improving system and software processes, as well as systems
for estimating and accounting for costs. Efforts to ensure the security of
ATC systems are also critical. As we have reported over the years,
inadequate information technology and financial management

controls made it difficult for FAA to ensure, among other things, the
integrity, efficiency, and security of ATC modernization projects.

o  	Incomplete blueprint for modernization (system architecture): This
blueprint would define and constrain the development and maintenance of
the many interrelated systems comprising the ATC infrastructure. In 1997,
we reported that FAA lacked a complete blueprint. The agency's lack of a
complete and enforced systems architecture had permitted incompatibilities
among existing ATC systems.6

o  	Ineffective information technology investment management: FAA lacked a
complete framework for selecting, controlling, and evaluating a portfolio
of investments. Investments in information technology can have a dramatic
impact on an organization's performance. If managed effectively, these
investments can vastly improve government performance and accountability.7
If not, however, they can result in wasteful spending and lost
opportunities for improving delivery of services to the public.

o  	Immature software acquisition processes: FAA lacked a structured
process for improving its capabilities in acquiring and developing
software-intensive systems. As a result, we found that its processes for
acquiring software were ad hoc.

o  	Inadequate cost estimating and cost accounting systems: In our 1997
high risk series,8 we reported that FAA's cost estimating processes and
cost accounting practices were not adequate to effectively manage its
billion dollar information technology investments for ATC modernization.9
Among other things, we recommended that FAA institutionalize defined
processes for estimating projects' costs.

o  	Poor information security: Since September 1996, we have reported that
poor information security is a high-risk area across the federal
government

6U.S. General Accounting Office, Complete and Enforced Architecture Needed
for FAA Systems Modernization GAO/AIMD-97-30 (Washington, D.C.: Feb. 3,
1997).

7U.S. General Accounting Office, Information Technology Investment
Management: A Framework for Assessing and Improving Process Maturity,
Exposure Draft, GAO/AIMD-10.1.23 (Washington, D.C.: May 2000).

8U.S. General Accounting Office, High Risk Program: Information on
Selected High-Risk Areas, GAO/HR-97-30 (Washington, D.C.: May 16, 1997).

9U.S. General Accounting Office, Information Needed to Make Billion-Dollar
Modernization Investment Decisions, GAO/AIMD-97-20 (Washington, D.C.: Jan.
22, 1997).

with potentially devastating consequences.10 One serious issue is
protecting the information systems that support the nation's critical
infrastructure, including segments of the air traffic control system.
Security at our nation's airports alone does not ensure safe air travel.
It is also critical to secure FAA's air traffic control 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. Between May 1998 and December 2000,
we made 39 recommendations to FAA to address pervasive weaknesses in the
agency's facilities' physical and information systems security-both for
currently operational and future air traffic control systems, security
management, and personnel security.

Human Capital Issues Also Our work has also shown that, to avoid costly
changes to ATC system Impeded ATC contracts, it is important to bring
technical experts and users together to Modernization design and test the
systems to ensure that they will meet users' needs and

work as intended. We found that FAA's organizational culture discouraged
such collaboration. In addition, a lack of sustained leadership slowed the
progress of ATC modernization.

o  	FAA's "stovepiped" organizational culture, as we reported in 1996,11
created barriers to collaboration and encouraged a focus on the goals of

individual program offices, rather than on the goals of projects as a
whole. As a result, employees sometimes acted in ways that did not reflect
a strong enough commitment to mission focus, accountability, coordination,

and adaptability, and the conflicting priorities led to project delays.

o  	The lack of sustained leadership at FAA was problematic throughout the
first decade of ATC modernization and beyond. During the first 10 years,
the agency had seven different Administrators and Acting Administrators,
whose average tenure was less than 2 years. In addition, five people held
the position of senior acquisition executive between 1990 and 1995. As we

10U.S. General Accounting Office, Information Security: Opportunities for
Improved OMB Oversight of Agency Practices, GAO/AIMD-96-110 (Washington,
D.C.: Sept. 24,1996).

11U.S. General Accounting Office, Aviation Acquisition: A Comprehensive
Strategy Is Needed for Cultural Change at FAA (Washington, D.C.: Aug. 22,
1996).

  FAA Has Taken Steps to Address Systemic Management Issues

reported in 1995,12 such frequent turnover at the top contributed to an
agency culture that focused on short-term initiatives, avoided
accountability, and resisted fundamental improvements in the acquisition

process.

In addition, according to FAA, burdensome governmentwide human capital
rules impeded its ability to hire, train, and deploy personnel, thereby
hampering its ability to manage ATC modernization projects efficiently.

FAA has taken a number of steps to improve the management of its ATC
modernization efforts and has made progress. First, it has implemented an
incremental approach to project development, under which it "builds a
little, tests a little" to better estimate the time and costs needed to
complete modernization projects. In addition, it has fully or partially
implemented over 30 recommendations that we have made, as well as
recommendations made by the Department of Transportation's Inspector
General and others. Our recommendations focused on two key areas-(1)
strengthening management controls for major ATC modernization systems
(e.g., improving estimates of the time and cost to develop and implement
projects) and (2) better managing FAA's human capital resources (e.g.,
improving FAA's organizational culture to better leverage its human
capital resources to effectively support ATC modernization). The Congress
has also taken actions designed to address some of FAA's human capital
issues.

A New Development Approach and Better Management Controls Have Given FAA
Stronger Tools for Managing ATC Projects

o  	"Build a little, test a little" approach to system development: During
its implementation of Free Flight Phase 1, FAA adopted a more incremental
approach to acquiring its ATC modernization systems than it had for
previous systems. FAA refers to this as the "build a little, test a
little" or spiral development approach. Some aviation stakeholders applaud
this approach because, although they have found that its use can increase
costs initially, money can be saved in the long run by avoiding mistakes
that are very costly to fix once a system has been developed. This
approach helps to ensure that the necessary building blocks of a system
are tested along the way through the early and ongoing involvement of key
stakeholders, such as those who will use and maintain the system. These

12U.S. General Accounting Office, Exempting FAA From Procurement and
Personnel Rules, GAO/RCED-96-27R (Washington, D.C.: Oct. 27, 1995).

stakeholders are key to identifying critical omissions and "no go" items
that could prevent a system from operating as intended.

o  	Blueprint for modernization (system architecture): FAA has developed a
systems architecture, or overall blueprint, that clarifies
interdependencies and interrelationships among national airspace systems
and the technical standards to which systems must comply for information
technology. In November 2002, the Office of Management and Budget
instructed agencies to base investments in information technology on
enterprise architectures, which define (in both business and technology
terms) how an entity operates today and how it wants to operate in the
future, including a roadmap for transitioning to this future operational
state. In April 2003, GAO issued guidance on developing enterprise
architectures.13

o  	Improved information technology investments management: In response to
our recommendations, FAA has improved its process for managing information
technology investments (e.g., the software-intensive systems under ATC
modernization) by overseeing investment risks and capturing key
information from the investment selection process in a management
information system. Also, FAA has developed and implemented guidance for
validating costs, benefits, and risks.

o  	Improved software acquisition processes: In response to shortcomings
that we identified in FAA's process for acquiring software, FAA developed
an integrated framework for improving its software acquisition, software
development, and systems engineering processes. FAA has also continued to
expand the number of system development projects that use this integrated
framework.

o  	Cost-estimating and cost-accounting systems: To improve cost
estimates, FAA developed a standard work breakdown structure and
established an historical database for tracking ATC systems' estimated
costs and other information. As we reported in January 2003,14 FAA has
made significant progress in implementing its cost accounting system since
our last high-risk series.

13U.S. General Accounting Office, Information Technology: A Framework for
Assessing and Improving Enterprise Architecture Management (Version 1.1),
GAO-03-584G (Washington, D.C.: April 2003).

14U.S. General Accounting Office, High-Risk Series: An Update, GAO-03-119
(Washington, D.C.: January 2003).

o  	Information security: FAA has initiated numerous activities in
response to our recommendations about pervasive weakness in its
facilities' physical and information security system. For example, in
recent years, the Chief Information Officer's information systems security
office has developed an information systems security strategy, security
architecture (i.e, overall blueprint), security policies and directives,
and a security awareness training campaign. The security office also
implemented a certification and accreditation process to ensure that
vulnerabilities in current and future ATC systems are identified and
weaknesses are addressed.

FAA Is Implementing Human Capital Initiatives

o  	Organizational culture framework: In response to recommendations we
made about the need for FAA to address the organizational barriers that
had impaired its ATC acquisition process, the agency issued an
organizational culture framework in 1997 and is working to implement it.
For example, it has used integrated project teams to improve collaboration
among technical experts and users.

o  	Personnel reform: In response to FAA's request, the Congress exempted
FAA from many federal laws governing human capital, and the agency began
implementing sweeping human capital reforms in 1996. These reforms
addressed (1) compensation and performance management, (2) workforce
management, and (3) labor and employee relations. In our February 2003
report on FAA's implementation of personnel reform,15 we found that the
agency had fully or partially implemented initiatives in each of these
areas.

o  	Actions to sustain leadership: To provide FAA's ATC modernization
efforts with needed direction and stability, the Congress established a
5-year term for the FAA Administrator in 1994. Former Administrator Garvey
was the first to complete a term of this length in 2002. In addition, the
three individuals who served as FAA's senior acquisition executive- the
Associate Administrator for Research and Acquisitions-between 1996 and
2003 held this position longer than their predecessors.

o  	Chief operating officer and Air Traffic Organization: To accelerate
ATC modernization and improve the performance of the air traffic control
system, the Congress enacted legislation in 2000 that established a
five-member board (the Air Traffic Services Subcommittee) to oversee, and
a

15U.S. General Accounting Office, Human Capital Management: FAA's Reform
Effort Requires a More Strategic Approach, GAO-03-156 (Washington, D.C.:
February 3, 2003).

chief operating officer to manage, a new performance-based organization,
the Air Traffic Organization, which was created through an executive order
to operate the ATC system. Under the act, the Subcommittee provides
oversight by, among other things, reviewing and approving strategic plans,
large contracts, and budget requests for the air traffic control system.
The Subcommittee has been meeting since January 2001, and a chief
operating officer was appointed in June 2003. While awaiting the
appointment of a chief operating officer, the Subcommittee focused on
bringing performance management, accountability, and a more businesslike
structure to the ATC system, and it took some specific actions, including
reviewing and approving performance metrics, a budget, and three large
procurements that FAA initiated.

Key Challenges Lie 	FAA faces a number of challenges in fully implementing
management controls for major ATC projects and marshalling the human
capital

Ahead 	resources to deliver on these controls. Additionally, during this
lull in the demand for air travel, it has an opportunity to review its
long-term ATC modernization priorities to assess their relative importance
and feasibility in light of current economic constraints, security
requirements, and other issues.

Continuing to Improve Management Controls and Use Human Capital Resources
More Effectively Poses Ongoing Challenges

Despite the progress FAA has made in improving its management controls and
human capital management for ATC modernization, systemic management issues
persist and warrant sustained attention. In our 2003 review of federal
high-risk areas,16 we considered these issues of sufficient magnitude to
continue placing ATC modernization on our high-risk list.

o  	Need for complete and enforced enterprise architecture: FAA has
developed a systems architecture, or overall blueprint, which clarifies
interdependencies and interrelationships among national airspace systems
and the technical standards to which systems must comply. However, in
February 2002, we reported that while FAA's enterprise architecture is at
a moderate level of maturity-that is, the agency has begun developing
architecture products such as policies and concepts- it has not yet
completed the architecture products or leveraged the architecture for

16U.S. General Accounting Office, High-Risk Series: An Update, GAO-03-119
(Washington, D.C.: January 2003).

managing change.17

o  	Need to strengthen information technology investment management
processes: Although FAA has developed guidance for validating costs,
benefits, and risks, the agency has not yet implemented processes for
evaluating projects after implementation in order to identify lessons
learned and improve the investment management process. Our work has also
identified the need for sustained attention to managing ATC systems over
their entire lifecycles-from the cradle to the grave.

o  	Need to improve software acquisition processes: Since our last
high-risk update, FAA has continued to expand the number of system
development projects that use an integrated framework. However, FAA still
does not require all systems to achieve a minimum level of progress within
the framework before being funded.

o  	Need to improve cost-estimating practices: FAA has not yet fully
instituted rigorous cost-estimating practices. That is, it is not yet
incorporating actual costs from related system development efforts in its
processes for estimating the costs of new projects. Cost estimation was
problematic for both STARS and WAAS. As we reported in January 2003,18 FAA
lacks accurate, valid, and current data on the remaining costs and
progress of STARS. Without such data, FAA is limited in its ability to
effectively oversee the contractor's performance and reliably estimate
future costs. Given FAA's chronic difficulty in meeting cost, schedule,
and performance targets, some members of the aviation community have
suggested that more rigor needs to be built into these estimates when
projects are started and that this could best be done by having an
independent group of experts review FAA's initial estimates for ATC
projects. The accuracy of these estimates is particularly important as FAA
embarks on two relatively new and costly ATC modernization projects-
NEXCOM, which is expected to cost nearly $1 billion, and the En Route
Automation Replacement Modernization (ERAM), which will provide new
hardware and software to facilities responsible for directing
high-altitude air traffic and is expected to cost over $2 billion.

17U.S. General Accounting Office, Information Technology: Enterprise
Architecture Use Across the Federal Government Can Be Improved, GAO-02-6
(Washington, D.C.: Feb. 19, 2002).

18U.S. General Accounting Office, High-Risk Series: An Update, GAO-03-119
(Washington, D.C.: January 2003).

o  	Need to improve cost-accounting system: In January 2003, we reported
that FAA had made significant progress in implementing its cost-accounting
system since we issued our last high-risk report. However, in June 2003,
the Department of Transportation's Inspector General issued an assessment
of FAA's cost-accounting system and found that the system was still not
effective.19 According to the Inspector General, FAA could not credibly
claim to be a performance-based organization, or function as one, without
a cost-accounting system that is compliant with federal cost-accounting
standards.

o  	Need to improve information security: Despite improvements by FAA, the
agency faces continued challenges in improving its intrusion detection
capabilities, obtaining accreditation for systems that are already
operational, and managing information systems security throughout the
agency.

o  	Need to change organizational culture: Although FAA issued an
organizational culture framework in 1997 and established integrated teams
to implement it, the Department of Transportation's Inspector General
reported in 2000 that FAA's culture remains a barrier to successful
acquisition projects and that integrated teams are not working well
because FAA's culture continues to operate in vertical "stovepipes" that
conflict with the horizontal structure of team operations. Our 2000 report
on WAAS confirmed that the integrated teams were not working as
intended.20 We found that competing priorities between two key
organizations that are part of WAAS' integrated team negated the
effectiveness of the team's approach for meeting the agency's goals for
the system.

o  	Need to fully implement personnel reforms: In our February 2003 report
on FAA's implementation of personnel reforms, we found that the agency had
not fully incorporated elements that are important to effective human
capital management into its overall reform effort, including data
collection and analysis, performance goals and measures, and links between
reform goals and program goals. In turn, we recommended that FAA develop a
more strategic approach to its reform effort, to better position itself to

19U.S. Department of Transportation, Inspector General, 2002 Status
Assessment of Cost Accounting System and Practices, Federal Aviation
Administration, Report Number FI-2003-043 (Washington, D.C., June 3,
2003).

20U.S. General Accounting Office, National Airspace System: Persistent
Problems in FAA's New Navigation System Highlight Need for Periodic
Reevaluation,

GAO/RCED/AIMD-00-130 (Washington, D.C.: June 12, 2000).

evaluate the effects of its reform initiatives, use the evaluations as a
basis for any strategic improvements to its human capital management
approach, and hold its leaders accountable for the results of its human
capital management efforts. FAA generally agreed with our recommendations.

o  	Implement the new Air Traffic Organization: The new Air Traffic
Organization remains to be formed by joining FAA's Air Traffic Services
and Research and Acquisition offices. In addition, some issues that we
identified in our May 2003 report pose potential challenges to this
restructuring effort. For example, certain lines of authority between the
Subcommittee and the FAA Administrator remain to be clarified.

Other Challenges Lie Ahead

FAA faces a variety of other challenges as it attempts to balance its
modernization investments. These include working effectively in the
post-9/11 environment to determine how best to move forward with ATC
modernization. In addition, FAA must contend with a number of economic
constraints, including the current economic downturn, poor financial
condition of the airline industry, competing demands for agency resources
(e.g. safety, security, infrastructure, and operations), and the need for
airlines to voluntarily equip their fleets with technologies needed to
participate in a modernized National Airspace System. As we, the
Department of Transportation's Inspector General, and others have noted,
to work effectively within these constraints, it is important for FAA to
determine how it can best maximize the ATC system's current capabilities
by (1) identifying the initiatives that hold the most promise for
increasing capacity and efficiency in the near-term and (2) determining
the extent to which the airline industry will be financially able to equip
with new technologies in the near and mid-term. A review of FAA's 10-year
plan to increase the capacity and efficiency of the National Airspace
System called the called the Operational Evolution Plan, could ultimately
result in a reordering of some ATC modernization priorities because the
plan, though issued in 2002, is based on analyses that precede the
important changes in aviation security and the nation's economy that have
taken place during the past 2 years. A fresh view of this plan could put
FAA in a better position to target its resources toward projects that will
maximize the system's capacity and efficiency and identify those ATC
projects that should be kept in the pipeline to meet critical future
needs.

In summary, we are at a critical juncture for reassessing FAA's ATC
modernization efforts. Given over two decades of experience with ATC
modernization, it is time to take advantage of the lessons learned to date

and the relative lull in air traffic demand resulting from the events of
9/11 to make inroads in improving the capacity and efficiency of the
National Airspace System. The systemic issues that have plagued FAA's ATC
modernization efforts for over two decades also provide us with critical
lessons learned as we navigate our way around past mistakes and into this
new century of aviation.

  Contact Information

This concludes my statement. I would be pleased to respond to any
questions that you or other Members of the Subcommittee may have at this
time.

For further information on this testimony, please contact Gerald
Dillingham at (202) 512-2834 or by e-mail at [email protected], or David
Powner at (202) 512-9286 or by e-mail at [email protected]. Individuals
making key contributions to this testimony include Elizabeth Eisenstadt,
Samantha Goodman, Maren McAvoy, Beverly Norwood, Colleen Phillips, and
Richard Scott.

Related GAO Products

Aviation Safety: Information on FAA's Data on Operational Errors at Air
Traffic Control Towers. GAO-03-1175R. Washington, D.C.: September 23,
2003.

National Airspace System: Current Efforts and Proposed Changes to Improve
Performance of FAA's Air Traffic Control System. GAO-03-542. Washington,
D.C.: May 30, 2003.

National Airspace System: Reauthorizing FAA Provides Opportunities and
Options to Address Challenges. GAO-03-473T. Washington, D.C.: February 12,
2003.

Human Capital Management: FAA's Reform Effort Requires a More Strategic
Approach. GAO-03-156. Washington, D.C.: February 3, 2003.

National Airspace System: Better Cost Data Could Improve FAA's Management
of the Standard Terminal Automation Replacement System. GAO-03-343.
Washington, D.C.: January 31, 2003.

High-Risk Series: An Update. GAO-03-119. Washington, D.C.: January 2003.

Air Traffic Control: Impact of Revised Personnel Relocation Policies Is
Uncertain. GAO-03-141. Washington, D.C.: October 31, 2002.

National Airspace System: Status of FAA's Standard Terminal Automation
Replacement System. GAO-02-1071. Washington, D.C.: September 17, 2002.

Air Traffic Control: FAA Needs to Better Prepare for Impending Wave of
Controller Attrition. GAO-02-591. Washington, D.C.: June 14, 2002.

National Airspace System: Long-Term Capacity Planning Needed Despite
Recent Reduction in Flight Delays. GAO-02-185. Washington, D.C.: December
14, 2001.

National Airspace System: Free Flight Tools Show Promise, but
Implementation Challenges Remain. GAO-01-932. Washington, D.C.: August 31,
2001.

Air Traffic Control: Role of FAA's Modernization Program in Reducing
Delays and Congestion. GAO-01-725T. Washington, D.C.: May 10, 2001.

National Airspace System: Problems Plaguing the Wide Area Augmentation
System and FAA's Actions to Address Them. GAO/T-RCED-00-229. Washington,
D.C.: June 29, 2000.

National Airspace System: Persistent Problems in FAA's New Navigation
System Highlight Need for Periodic Reevaluation. GAO/RCED/AIMD-00-130.
Washington, D.C.: June 12, 2000.

Air Traffic Control: Status of FAA's Implementation of the Display System
Replacement Project. GAO/T-RCED-00-19. Washington, D.C.: October 11, 1999.

Air Traffic Control: FAA's Modernization Investment Management Approach
Could Be Strengthened. GAO/RCED/AIMD-99-88. Washington, D.C.: April 30,
1999.

Air Traffic Control: Observations on FAA's Air Traffic Control
Modernization Program. GAO/T-RCED/AIMD-99-137. Washington, D.C.: March 25,
1999.

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