Federal Aviation Administration: Challenges Facing the Agency in 
Fiscal Year 2008 and Beyond (14-FEB-07, GAO-07-490T).		 
                                                                 
FAA operates one of the safest air transportation systems in the 
world. It is, however, a system under strain. The skies over	 
America are becoming more crowded every day. FAA faces the	 
daunting task of safely integrating a growing influx of 	 
passengers and aircraft into the system and simultaneously	 
leading the transition to the Next Generation Air Transportation 
System (NextGen)--a complicated effort to modernize the system.  
FAA's broad responsibilities to maintain and modernize the	 
nation's air transportation system must be met in an uncertain	 
budgetary and long-term fiscal environment. GAO's concerns about 
financing the nation's transportation system, including aviation,
led GAO to designate this issue as high-risk.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-490T					        
    ACCNO:   A65944						        
  TITLE:     Federal Aviation Administration: Challenges Facing the   
Agency in Fiscal Year 2008 and Beyond				 
     DATE:   02/14/2007 
  SUBJECT:   Accident prevention				 
	     Agency evaluation					 
	     Air traffic control systems			 
	     Air transportation 				 
	     Airline regulation 				 
	     Financial analysis 				 
	     Human capital management				 
	     Safety regulation					 
	     Strategic planning 				 
	     Technology modernization programs			 
	     Transportation industry				 
	     Transportation safety				 
	     Transportation statistics				 
	     Airbus 380 Aircraft				 
	     Aviation Safety Reporting System			 
	     FAA Airport Improvement Program			 
	     FAA Aviation Safety Program			 
	     Next Generation Air Transportation 		 
	     System						 
                                                                 

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GAO-07-490T

   

     * [1]FAA Faces Challenges in Ensuring the Safe and Efficient Oper

          * [2]Data Limitations Affect FAA's Ability to Manage Risk
          * [3]FAA Faces Workload Challenges for its Safety Inspectors
          * [4]Hiring and Training Air Traffic Controllers Remains a Challe

     * [5]FAA Faces Challenges in Furthering and Institutionalizing Ma

          * [6]Progress Has Been Made but Further Work Remains to Instituti
          * [7]Progress Continues to Be Made in Planning for NextGen, but C

               * [8]JPDO Has Made Progress toward Finalizing Key Planning
                 Docume
               * [9]Both JPDO and FAA Face Challenges as NextGen Moves from
                 Plan

     * [10]Funding Issues May Affect Airports' Investment and Other FAA

          * [11]FAA's Recent Estimate of Planned Capital Development Similar
          * [12]FAA Funding Proposals Would Change How Airport Development i
          * [13]FAA and the Congress Will Face a Challenge Funding FAA Progr

     * [14]GAO Contact and Staff Acknowledgments

          * [15]Order by Mail or Phone

Testimony

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

United States Government Accountability Office

GAO

For Release on Delivery Expected at 2:00 p.m. EST

Wednesday, February 14, 2006

FEDERAL AVIATION ADMINISTRATION

Challenges Facing the Agency in Fiscal Year 2008 and Beyond

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

GAO-07-490T

Mr. Chairman and Members of the Subcommittee:

I appreciate the opportunity to testify before you today as you consider
the Administration's budget proposal for the Federal Aviation
Administration (FAA) for fiscal year 2008. FAA operates one of the safest
air transportation systems in the world. It is, however, a system under
strain. The skies over America are becoming more crowded every day. Demand
for air travel has increased in recent years, with over 740 million
passengers flying in fiscal year 2006, climbing toward an estimated 1
billion passengers per year in 2015, according to FAA estimates. These
passengers are expected to find more choices of aircraft in the years
ahead, ranging from the jumbo Airbus A380 that can hold more than 500
passengers, to very light jets that might transport 6 or fewer passengers
on any given flight. Already with increasing demand has come an increase
in flight arrival delays; such delays are nearing the levels of 2000, a
year in which 1 in 4 flights reached its destination behind schedule. And
although the system remains extraordinarily safe, if the current accident
rate continues while air traffic potentially triples in the next 20 years,
this country would see nine fatal commercial accidents each year, on
average. FAA thus faces the daunting task of safely integrating this
expected influx of passengers and aircraft into the system and
simultaneously leading the transition to the Next Generation Air
Transportation System (NextGen)--an enormously complicated endeavor to
transform the air traffic control system.

FAA's broad responsibilities to maintain and modernize the nation's air
transportation system must be met in an uncertain budgetary and long-term
fiscal environment. We recently reported that the federal government's
financial condition and fiscal outlook are worse than many may
understand.1 Additionally, our concerns about financing the nation's
transportation system, including the aviation system, led us to designate
this issue as high-risk.2 These circumstances provide the context for my
testimony today. In particular, I will focus on some of the key challenges
and issues facing FAA and the Congress as the fiscal year 2008 budget for
FAA is considered. These challenges and issues are related to (1) ensuring
the continued safe operation of the nation's airspace system, (2)
continuing to improve FAA's internal management while leading the
transition to NextGen, and (3) funding issues concerning capital
improvements for airports and FAA's reauthorization. My statement is based
on our recent reports and updates that we obtained through interviewing
FAA officials and reviewing their documentation. We conducted this work in
accordance with generally accepted government auditing standards.

1GAO, Fiscal Stewardship: A Critical Challenge Facing Our Nation,
[16]GAO-07-362SP (Washington, D.C.: January 2007).

2GAO, High-Risk Series: An Update, [17]GAO-07-310 (Washington, D.C.:
January 2007).

In summary:

           o To maintain and expand the margin of safety within the national
           airspace system, FAA is using risk-based, data-driven safety
           programs to oversee the industry; however, the agency faces data
           and human resource challenges that affect its ability to fully
           implement these programs. These challenges are especially
           important in light of the agency not meeting its performance
           target for commercial air carrier safety for fiscal year 2006
           because of recent fatal accidents and predictions of greatly
           increased air travel. FAA's approaches to safety require that the
           agency obtain accurate and complete data to monitor safety trends,
           fully implement its safety programs, and assess their
           effectiveness to determine if they are focused on the greatest
           safety risk. We have previously recommended that FAA improve the
           accuracy and completeness of its safety data and its analysis of
           that data. FAA has made progress in this area but more work
           remains. FAA's ability to oversee the aviation industry and ensure
           a safe national air space system will be further affected by its
           ability to hire, train, and deploy its primary workforce of safety
           inspectors, engineers, and air traffic controllers. The expansion
           of its oversight program for air carriers will result in workload
           shifts for its inspector workforce that will make it important for
           FAA to improve its staffing process and address its lack of a
           staffing model. In addition, the agency estimates that it will
           lose more than 10,000, or about 70 percent, of the air traffic
           controller workforce over the next 10 years, primarily due to
           retirements. In recent years, air traffic controllers have been
           retiring at a faster rate than FAA anticipated, exacerbating this
           hiring challenge.
           o FAA has made significant progress in implementing management
           processes and systems that use leading practices of private sector
           businesses; however, further work remains to institutionalize
           these efforts. FAA's progress led us to remove its financial
           management from our high-risk list. Similarly, new and improved
           acquisition processes and oversight have contributed to FAA
           reporting that it has met its acquisition cost and schedule goals
           for the last three years. Nonetheless, making and
           institutionalizing further improvements in acquisition and
           investment management are still needed. For example, while FAA has
           established a cost estimating methodology for investments, it has
           not implemented it. In addition, during the last two fiscal years,
           FAA has reported cost savings and cost avoidance of $99.1 million
           and $81.9 million, respectively. Additional work remains,
           though--FAA received a qualified opinion on its most recent
           financial audit as a result of the agency's inability to support
           the accuracy and completeness of about $4.7 billion for equipment
           reported in the financial statements. Moreover, as we have
           previously recommended, FAA should undertake additional efforts to
           consolidate its facilities and outsource some of its services to
           further cut costs. FAA's focus on maintaining and improving its
           record of internal achievement will be further tested as it joins
           with its partners in the Joint Planning and Development Office in
           transitioning from planning to implementing NextGen. Some key
           challenges for the transition include completing the design and
           cost estimates for NextGen and proposing how that cost will be
           funded, especially in view of reduced funding for applied
           aeronautical research, which is necessary to achieve some critical
           NextGen capabilities. FAA will also need to assess if it has the
           necessary expertise to handle the technical and contract
           management that will be required to oversee the implementation of
           NextGen.
           o Related to the challenge of modernizing the air traffic control
           system, FAA faces the challenge of ensuring that the nation's
           3,400 airports develop the capacity to safely and efficiently
           handle the projected growth in the demand for air travel. FAA
           estimates that the total cost for planned airport development that
           is eligible for funding from the Airport Improvement Program (AIP)
           will be about $42 billion for 2007 through 2011. FAA administers
           the AIP, which provides federal funds for capital development
           projects at the entire range of the nation's airports. In its
           fiscal year 2008 budget proposal, the Administration has proposed
           reducing funding for AIP grants and changing the allocation
           formula. Other changes being considered by FAA could increase
           available funds for airport development. The net effect of all
           these changes on the amount of funding available for planned
           airport development is uncertain. Additionally, the excise taxes
           that fund the Airport and Airway Trust Fund, such as those on
           ticket purchases by airline passengers and aviation fuel, are
           scheduled to expire at the end of fiscal year 2007. Avoiding a
           lapse in revenue to the trust fund in fiscal year 2008 will
           require Congressional action. About 80 percent of the budget
           request for FAA would be funded by the trust fund and the
           remainder by the general fund. Without a continued flow of funds
           to the trust fund, FAA's ability to carry out AIP and other
           programs throughout the agency may be in jeopardy, compounding the
           safety and management challenges facing the agency.
			  
			  FAA Faces Challenges in Ensuring the Safe and Efficient Operation
			  of the Nationï¿½s Airspace System

           Aviation safety is a priority goal for FAA. That priority is
           reflected in the Administration's budget for fiscal year 2008,
           which requests $1.9 billion to promote aviation safety and
           efficiency. To the credit of FAA and the aviation industry, U.S.
           commercial aviation has had an extraordinary safety record in
           recent years. In 1997, FAA established a goal to reduce the
           commercial fatal accident rate by 80 percent in 10 years and for
           many years the agency has made incremental progress toward that
           goal. However, increased air traffic, leading to congestion and
           delays, is straining the efficiency and potentially the safety of
           the nation's airspace system. Moreover, while commercial aviation
           safety trends have been positive over the last several years, FAA
           did not meet its performance target for commercial aviation
           accidents last year and does not expect to meet its target for
           2007. If air traffic triples as expected over the next two decades
           and the accident rate of recent years is unchanged, there would be
           nine fatal commercial aviation accidents each year, on average.

           To maintain a safe and efficient airspace system, especially if
           substantial growth in the industry materializes, it will be
           important for FAA to have well-established, efficient, and
           effective processes in place to provide an early warning of
           hazards that can lead to accidents. It will also need a skilled
           workforce to implement these processes. FAA is moving to a system
           safety approach to oversight and has established risk-based,
           data-driven safety programs to oversee the industry and a
           workforce that includes approximately 4,500 safety inspectors and
           engineers to implement those programs, about 15,420 air traffic
           controllers, and nearly 7,200 technicians responsible for
           maintaining FAA's air traffic control equipment and facilities. In
           addition, FAA leverages its inspector and engineer workforce
           through its "designee" programs, in which about 13,400 private
           individuals and over 200 organizations have been delegated to act
           on the agency's behalf. Our recent work has identified data
           limitations and human resource challenges facing the agency that
           affect its ability to implement these programs and oversee
           aviation safety.
			  
			  Data Limitations Affect FAAï¿½s Ability to Manage Risk

           FAA's ability to identify and respond to trends and early warnings
           of safety problems and to manage risk is limited by incomplete and
           inaccurate data. While FAA has developed risk-based processes for
           monitoring and inspecting the aviation industry, in some cases,
           the implementation of those processes is hampered by the lack of
           reliable and complete data, which are important for identifying
           and mitigating safety risks. In other cases, FAA does not fully
           utilize the data it collects by evaluating or analyzing it for
           nationwide safety trends.

           For example, FAA does not collect actual flight activity data for
           general aviation operators and air taxis. Instead, the agency uses
           an annual survey to query a sample of registered aircraft owners
           about the activity of their aircraft during the previous year. The
           National Transportation Safety Board3 (NTSB) noted a number of
           problems with these data, such as historically low response rates,
           and concluded that FAA's data do not accurately portray changes in
           general aviation activity.4 As a result, FAA lacks information to
           monitor the rate of general aviation accidents, which decreased
           from 1,715 in 2002 to about 1,500 in 2006. (See fig. 1.)
           Therefore, the agency cannot meaningfully evaluate changes in the
           number of general aviation accidents or determine the effect of
           its general aviation safety initiatives. NTSB made a number of
           recommendations to FAA to improve the accuracy of the survey data,
           such as improving the currency of aircraft owner contact
           information.

           Figure 1: Number of General Aviation Accidents and Fatalities,
           2000 through 2006

           As another example, FAA does not collect basic data to measure
           changes in the air ambulance industry, such as flight hours or
           number of trips flown. From 1998 through 2005, the air ambulance
           industry averaged 11 accidents per year, peaking at 18 accidents
           in 2003. (See fig. 2.) Without data about the number of flights or
           flight hours, FAA and the air ambulance industry are unable to
           identify whether the increased number of accidents has resulted in
           an increased accident rate, or whether it is a reflection of
           growth in the industry. Data describing the safety trends of the
           industry are essential to understanding the impact of FAA efforts
           to improve air ambulance safety.

           Figure 2: Total Air Ambulance Accidents, 1998 to 2005

           In addition, while FAA receives important data, including
           self-reporting of safety violations, through its partnership
           programs with industry, the agency does not evaluate this
           information for nationwide trends. According to FAA officials, the
           Aviation Safety Action Program, Aviation Safety Reporting Program,
           and Voluntary Disclosure Reporting Program5 allow the agency to be
           aware of many more safety incidents than are discovered during
           inspections and surveillance. Although FAA tracks the actions
           taken to resolve the individual safety violations that it learns
           about through these programs, it does not evaluate such
           information in the aggregate to identify trends in violations and
           their potential cause in order to improve safety. We recommended
           that FAA develop a continuous evaluative process for its industry
           partnership programs, and use it to create measurable performance
           goals for the programs and track performance towards those goals.6
           FAA has not taken these actions, but has begun to address other
           data issues.

           FAA recognizes the critical nature of the issues associated with
           its data. To address its data limitations, FAA is in the early
           stages of planning the Aviation Safety Information Analysis and
           Sharing system--a comprehensive new data system that is expected
           to provide the agency with access to a vast amount of safety data
           that reside with entities such as NTSB and industry partners
           including airlines and repair stations. Working with the National
           Aeronautics and Space Administration (NASA), FAA began planning
           for the new system in 2006. Because this activity is in the early
           planning stages, our concerns about FAA's data remain relevant.
           The fiscal year 2008 budget for FAA proposes $32 million for
           safety databases and computer systems. As FAA prioritizes the
           activities that it undertakes with such funds, it will be
           important to continue addressing these critical data limitations.
			  
			  FAA Faces Workload Challenges for its Safety Inspectors

           Changes to FAA's oversight programs, such as the planned rapid
           expansion of the Air Transportation Oversight System (ATOS), from
           16 air carriers in 2005 to approximately 115 air carriers by the
           end of 2007, will pose workload challenges for FAA's safety
           inspector workforce of about 3,600. As FAA moves air carriers
           under the ATOS program, it will also move inspectors to the
           program. As of January 2007, the 51 air carriers in ATOS were
           overseen by 829 safety inspectors. Unlike other FAA inspection
           programs, ATOS inspectors are dedicated to an air carrier and
           generally cannot be used to inspect other entities. Inspectors who
           are not part of ATOS, on the other hand, have duties in addition
           to inspecting air carriers--such as overseeing repair stations,
           designees, and aviation schools, and investigating accidents. In
           prior work, we found that about 75 percent of the non-ATOS
           inspectors had responsibility for more than 3 entities and about
           half had responsibility for more than 15. In addition, we found
           that ATOS requires more inspectors per airline than the
           traditional inspection approach.7 As inspectors are transitioned
           to ATOS, the remaining inspectors will have to add those other
           entities to their workload. With the expansion of ATOS that will
           continue into fiscal year 2008, it will be important to monitor
           the magnitude of the shift in resources and the effect it may have
           on FAA's overall capability to oversee the industry.

           Part of the challenge that FAA faces with regard to safety
           inspectors is improving its process for determining staffing
           needs. This is especially important as oversight activities and
           workload shifts with the expansion of ATOS and other program
           changes, yet FAA lacks staffing standards for safety inspectors.
           The National Academy of Sciences, under a congressional mandate,
           recently completed a study for FAA that analyzed FAA's staffing
           processes for safety inspectors.8 The study identified a number of
           issues that FAA must address when developing a staffing model for
           safety inspectors. For instance, the study included concerns that
           the current staffing process does not focus resources in the areas
           of greatest need and the match between individual inspectors'
           technical knowledge and the facilities and operations they oversee
           is not always optimal. The study recommended a process for FAA to
           follow to develop a staffing model and identified key
           factors--such as changes in aircraft and systems, changes in FAA
           oversight practices including a shift to a system safety approach
           through programs like ATOS and increasing the use of designees,
           and new knowledge and skill demands--that should be considered in
           developing the model. In response to the Academy's
           recommendations, FAA expects to develop a staffing model, but the
           agency does not have a specific timeframe for initiating this
           effort. With nearly $1 billion of the fiscal year 2008 budget
           request for FAA covering personnel compensation and benefits for
           aviation safety and operations, these workload and staffing
           challenges are critical to address.
			  
			  Hiring and Training Air Traffic Controllers Remains a Challenge

           During the coming decade, FAA will need to hire and train
           thousands of air traffic controllers to replace those who will
           retire and leave for other reasons. FAA estimated it will lose
           10,291 controllers, or about 70 percent of the controller
           workforce, during fiscal years 2006 through 2015, primarily due to
           retirements.9 To replace these controllers and accommodate
           increases in air traffic while accounting for expected
           productivity increases, FAA plans to hire a total of 11,800 new
           controllers from fiscal year 2006 through 2015. In fiscal year
           2006, FAA hired 1,116 controllers. The Administration's budget for
           fiscal year 2008 proposes about $4.4 billion for salaries and
           benefits for the air traffic organization account, which includes
           FAA's large air traffic controller workforce. The fiscal year 2008
           proposal includes FAA's plans to hire 1,420 air traffic
           controllers, which would bring the total number of air traffic
           controllers to about 15,000. Figure 3 shows the estimated losses
           each year as well as the number of planned hires.

           Figure 3: Estimated Controller Losses and Planned Hires, Fiscal
           Years 2006-2015

           Note: FAA established these hiring targets in its 2006 controller
           workforce plan.

           Recent events may exacerbate the hiring situation. Data indicate
           that controllers are retiring at a faster rate than FAA
           anticipated. FAA projected 341 retirements for fiscal year 2005;
           465 controllers actually retired--36 percent more than FAA's
           estimate. Similarly, in fiscal year 2006, 25 percent more
           controllers retired than FAA projected.10 To meet its hiring
           target of 930 controllers in fiscal year 2006, FAA shifted about
           200 of its planned hires from fiscal year 2007 to fiscal year 2006
           by speeding up the initial screening and training process.
           According to FAA, it is on track to hire between 1,300 and 1,400
           controllers in fiscal year 2007.11 To keep on track, FAA has
           recently expanded its hiring sources, which had focused on
           individuals with prior FAA or Department of Defense (DOD) air
           traffic control experience and graduates from FAA's collegiate
           training initiative program, to include the general public. This
           strategy is needed, according to FAA officials, because DOD has
           recently become less of a hiring source for controllers due to
           military incentives for retaining controllers and higher salaries
           than FAA's entry-level salary.12

           It is also important for FAA to ensure that air traffic control
           facilities have adequate staffing based on their unique traffic
           demands and the accuracy of FAA's retirement forecast.
           Historically, FAA has computed staffing standards, which are the
           number of controllers needed on a systemwide basis, but
           distribution of these totals to the facility level was a
           negotiated process. The staffing standards did not take into
           account the significant differences in complexity and workload
           among FAA's 300 terminal and enroute control facilities, which can
           lead to staffing imbalances. FAA has begun developing and
           implementing new staffing standards that use an algorithm that
           incorporates traffic levels and complexity of traffic at the
           facility level to determine the number of air traffic controllers
           needed, according to an FAA official. As FAA further refines its
           process for determining controller staffing needs, the ultimate
           objective is to assess the traffic level and complexity on a
           sector-by-sector basis to develop more accurate controller
           staffing requirements. This process is in the early stages of
           implementation and it is too early to assess the outcome. Such
           staffing standards for air traffic controllers as well as safety
           inspectors are important to ensure that FAA deploys its resources
           for fiscal year 2008 and later years in a cost-effective and
           risk-based manner.
			  
			  FAA Faces Challenges in Furthering and Institutionalizing
			  Management Improvements While Moving Toward Implementing NextGen

           FAA has made significant progress in implementing management
           processes that use leading practices of private sector businesses,
           but further work remains to fully address past problems.
           Historically, those problems included chronic cost and schedule
           difficulties associated with operating and modernizing the
           nation's air traffic control system as well as weaknesses in FAA's
           financial management. In 1995, we declared FAA's air traffic
           control modernization program a high-risk initiative because of
           its cost, complexity, and systemic management and acquisition
           problems. In 1999, we also placed FAA on the high-risk list for
           financial management, noting weaknesses that rendered the agency
           vulnerable to fraud, waste, and abuse by undermining its ability
           to manage operations and limiting the reliability of financial
           information provided to the Congress. FAA has made significant
           progress in both areas and we removed FAA's financial management
           from our high risk list in 2005. However, additional work is
           needed in managing its acquisitions and finances and is crucial to
           developing a sustainable capability for delivering priority
           systems on budget and on time. In addition, FAA, in partnership
           with other federal agencies, is embarking on the development of
           NextGen--one of the federal government's most complex and
           comprehensive undertakings in recent times. FAA faces challenges
           associated with moving forward from planning to implementing
           NextGen.
			  
			  Progress Has Been Made but Further Work Remains to
			  Institutionalize Recent Management Improvements

           FAA has taken actions to operate in a more business-like manner
           and enable the agency to more economically and efficiently manage
           the $14.1 billion requested for its fiscal year 2008 budget. Since
           we designated FAA financial management as high-risk in 1999, FAA
           has made significant improvements, including implementing a new
           financial management system called Delphi13 and developing a cost
           accounting system. Additionally, FAA received unqualified opinions
           from auditors on its annual financial statements for fiscal years
           2001 through 2005, in spite of material internal control
           weaknesses that the auditors identified. This progress led us to
           remove FAA financial management from our high risk list in 2005.

           Nonetheless, external auditors issued a qualified opinion on FAA's
           fiscal year 2006 financial statements for the first time since
           2000 and repeated a material internal control weakness that was
           reported in 2005. The opinion and internal control report stemmed
           from FAA's inability to support the accuracy and completeness of
           the construction-in-progress account, reported in the financial
           statements as $4.7 billion. Difficulties with this account, which
           includes costs for projects such as radars, runway guidance
           systems, and aviation safety and security systems, have been a
           longstanding concern. FAA has begun work to address this problem.
           However, it will be important for FAA to develop a systematic
           solution to this problem, so that it does not recur.

           FAA's efforts towards improved financial management also include
           establishing a cost control and cost reduction program. According
           to agency officials, each line of business--such as FAA's Air
           Traffic Organization (ATO), which is responsible for managing and
           modernizing the air traffic control system--is annually required
           to propose at least one cost control initiative, and the
           Administrator tracks and reviews progress on these initiatives
           monthly. According to FAA, these initiatives have yielded a total
           of $99.1 million in cost savings and $81.9 million in cost
           avoidance for fiscal years 2005 and 2006. Additional cost control
           efforts include outsourcing flight service stations, which FAA
           estimates will save $2.2 billion over 10 years, and restructuring
           its administrative service areas from 9 separate offices to 3,
           which FAA estimates will save up to $460 million over 10 years. We
           have ongoing work that is assessing FAA's cost control strategy
           and identifying additional cost savings opportunities that may
           exist. For example, we have previously reported the need for FAA
           to pursue further cost control options, such as exploring
           additional opportunities for consolidating facilities and
           contracting out more of its services.14

           FAA has taken steps to improve its software acquisition and
           investment management processes and for the last 3 years has
           reported meeting its cost and schedule targets for the acquisition
           of major systems, including air traffic control systems.15 These
           improvements are particularly important since FAA plans to spend
           about $9.4 billion from fiscal year 2007 through fiscal year 2011
           to upgrade and replace air traffic control systems. To better
           manage its information technology investments, including its
           software intensive air traffic control systems, and address
           problems we have identified,16 FAA has changed its acquisition
           management guidance to require review of all investments--new
           systems as well as systems in service. In addition, FAA has
           established a cost estimating methodology for its investments. FAA
           has also developed and applied a process improvement model to
           assess the maturity of its software and systems capabilities
           resulting in, among other things, enhanced productivity and
           greater ability to predict schedules and resources. Further, FAA
           has made progress in expanding its enterprise architecture--a
           comprehensive guide to its plans for acquiring new systems--to
           include the initial requirements for NextGen.

           However, making further improvements and institutionalizing them
           throughout the agency will continue to be a challenge for FAA. For
           example, FAA's acquisition management guidance does not clearly
           indicate whether the reviews of in-service systems include
           reevaluations of projects' alignment with strategic goals and
           objectives, as we recommended. In addition, the agency has yet to
           implement its cost estimating methodology. Furthermore, FAA has
           not established a policy to require use of its process improvement
           model on all major acquisitions for the national air space system.
           Additionally, as FAA begins to detail the scope and system
           requirements of NextGen, it will be important to adapt and expand
           the enterprise architecture for the national air space system to
           guide these future plans. Until the agency fully addresses these
           residual issues, it will continue to risk program management
           problems affecting cost, schedule, and performance. With a
           multi-billion dollar acquisition budget, addressing these actions
           are as critical as ever.

           Institutionalizing these financial, acquisition, and information
           technology improvements will be a challenge for FAA, especially in
           view of the imminent departure of the Chief Operating Officer
           later this month and the departure of the Administrator, who will
           reach the end of her 5-year term this September. We have reported
           that the experiences of successful transformations and change
           management initiatives in large public and private organizations
           suggest that it can take 5 to 7 years or more until such
           initiatives are fully implemented and cultures are transformed in
           a sustainable manner. Such changes require focused, full-time
           attention from senior leadership and a dedicated team.17
			  
			  Progress Continues to Be Made in Planning for NextGen, but
			  Challenges to Successful Implementation Remain

           Work to determine the capabilities and requirements that will be
           needed for NextGen and to produce a comprehensive vision for that
           system is nearing completion; however, given the staggering
           complexity of this ambitious effort to modernize and transform the
           air traffic control system over the next two decades, it will not
           be easy to move from planning to implementation. To plan NextGen,
           Congress authorized the creation of the Joint Planning and
           Development Office (JPDO) in 2003. JDPO is housed within FAA and
           the Administration's fiscal year 2008 budget includes $14.3
           million to support JPDO. To carry out its planning function, JPDO
           is required to operate in conjunction with multiple government
           agencies.18 JPDO's approach requires unprecedented collaboration
           and consensus among many stakeholders--federal and
           nonfederal--about necessary system capabilities, equipment,
           procedures, and regulations. Recently, JPDO has made progress in
           developing key planning documents, including a cost estimate for
           NextGen. However, as efforts move forward to implement NextGen, it
           will be important to identify the source and funding for
           completion of intermediate technology development and determine
           how FAA can best manage the complex implementation and integration
           of NextGen technologies. Without a timely transition to NextGen
           capabilities, JPDO officials estimate a future gap between the
           demand for air transportation and available capacity that could
           cost the U.S. economy billions of dollars annually.
			  
			  JPDO Has Made Progress toward Finalizing Key Planning Documents
			  and Developing a Cost Estimate

           FAA and the other JPDO partners have been working to refine the
           vision for NextGen and achieve a general consensus on that vision.
           The bulk of JPDO's planning has been to develop three critical
           documents--a concept of operations,19 enterprise architecture,20
           and operational improvement roadmaps.21 Once these key documents
           are completed in the next few months, it will be important to
           synchronize them with partner agency planning documents, including
           FAA's implementation plan for NextGen--the Operational Evolution
           Partnership (OEP)--and to continue to use the documents to drive
           agency budget decisions. The OEP is intended as a comprehensive
           description of how the agency will implement NextGen, including
           the required technologies, procedures, and resources. JPDO is
           continuing to work with the Office of Management and Budget (OMB)
           to develop a unified, cross-agency program for NextGen funding
           requests.

           Given the criticality of NextGen, another important planning
           document--possibly the most important for Congress--is a
           comprehensive estimate of the costs to JPDO partner agencies,
           particularly FAA, for the required research, development, systems
           acquisitions, and systems integration. Such an estimate does not
           yet exist. As we reported in November 2006,22 a limited,
           preliminary cost estimate concluded that FAA's budget under a
           NextGen scenario would average about $15 billion per year through
           2025, or about $1 billion more annually (in today's dollars) than
           FAA's fiscal year 2006 appropriation.23 A JPDO official told us
           they have submitted a limited NextGen cost estimate to OMB with
           the 2008 budget request. As of February 9, 2007, JPDO had not
           publicly released its cost estimate for NextGen. According to the
           Department of Transportation, the Administration's budget for
           fiscal year 2008 includes $175 million to support key FAA
           investments in NextGen.

           According to JPDO officials, their current estimate focuses only
           on the near-term capital needs for FAA's ATO portfolio. To develop
           what they believed would be a more accurate cost estimate, JPDO
           also focused on the funding necessary to achieve only the
           capabilities of the NextGen system around 2016, rather than the
           long-term 2025 capabilities. JPDO then laid out the major systems
           and investments required by ATO to achieve the mid-term vision and
           the related costs for ATO.

           While JPDO's new estimate will be a step toward understanding the
           costs of NextGen, this estimate is still incomplete. Much work
           remains to develop a comprehensive cost estimate for NextGen that
           includes the costs to the rest of FAA (beyond ATO), the other JPDO
           partner agencies, and industry. A JPDO official told us the agency
           is working to develop a comprehensive estimate and plans to have
           one ready to submit with the 2009 budget request. This
           comprehensive estimate is intended to describe the business case
           for NextGen and detail the investments that will be required by
           all the JPDO partner agencies to achieve the NextGen vision by
           2025.
			  
			  Both JPDO and FAA Face Challenges as NextGen Moves from Planning
			  to Implementation

           The successful implementation of NextGen will depend, in part, on
           resolving the uncertainty over which entities will fund and
           conduct the research and development necessary to achieve some key
           NextGen capabilities and to support the operational roadmaps. In
           the past, a significant portion of aeronautics research and
           development, including intermediate technology development, has
           been performed by NASA. However, our analysis of NASA's
           aeronautics research budget and proposed funding shows a 30
           percent decline, in constant 2005 dollars, from fiscal year 2005
           to fiscal year 2011. To its credit, NASA plans to focus its
           research on the needs of NextGen. However, NASA is also moving
           toward a focus on fundamental research and away from developmental
           work and demonstration projects. FAA has determined that research
           gaps now exist as a result of both NASA's cuts to aeronautical
           research funding and the expanded requirements for NextGen coming
           from JPDO. These gaps are in the activities of applied research
           and development--activities that will be required to implement new
           policies, demonstrate new capabilities, set parameters for
           certification of new systems, and develop technologies for
           transfer to industry.

           It will be important for both FAA and JPDO to find ways, in the
           near term, to keep the necessary research and development on track
           to support implementation of NextGen by 2025. In 2006, officials
           from FAA and JPDO initiated an assessment of NextGen research and
           development requirements. Their goal was to identify specific
           research initiatives that were not currently funded, but which
           they said must be initiated no later than fiscal year 2009 to
           comply with the operational roadmaps. The preliminary findings
           from this assessment led to increased budget requests for FAA to
           help lessen the research and development gaps. However, JPDO
           officials noted that a research and development gap remains, with
           items in the research and development pipeline that need funding
           to take them from concept to development. Other options for
           addressing the gap are for JPDO and FAA to further explore ways to
           leverage the research being conducted in other agencies or to
           partner with industry or academia. For example, JPDO and FAA have
           already identified research within DOD on alternative fuels that,
           with a modest investment, could be leveraged to include civil
           aviation. Currently, it is unknown how all of the significant
           research and development activities inherent in the transition to
           NextGen will be conducted or funded.

           Another issue with regard to NextGen implementation will be FAA's
           ability to manage the systems acquisitions and integration needed
           to implement a system as broad and complex as NextGen. In the
           past, a lack of expertise contributed to weaknesses in FAA's
           management of air traffic control modernization efforts. Industry
           experts with whom we have spoken continue to question whether FAA
           will have the technical expertise needed to implement NextGen. In
           November, we recommended that FAA examine its strengths and
           weaknesses with regard to the technical expertise and contract
           management expertise that will be required to define, implement,
           and integrate the numerous complex programs inherent in the
           transition to NextGen.24 In response to our recommendation, FAA is
           considering convening a blue ribbon panel to study this issue and
           make recommendations to the agency about how to best proceed with
           its management and oversight of the implementation of NextGen. We
           believe that such a panel could help FAA begin to address this
           challenge.
			  
			  Funding Issues May Affect Airportsï¿½ Investment and Other FAA
			  Programs

           As it modernizes the national airspace system to meet the nation's
           future air transportation needs, FAA must not only transform the
           air traffic control system, but also work with airport operators
           to provide increased capacity at airports to safely handle the
           projected growth in the demand for air travel. This latter
           responsibility will include overseeing airports' efforts to adapt
           their infrastructure to accommodate the introduction of very light
           jets, and in the case of the largest airports, the new large
           Airbus A380. Airports are an integral part of the nation's
           transportation system and maintaining their safety and efficiency
           is an important FAA responsibility. To this end, FAA administers
           the Airport Improvement Program (AIP), which provides federal
           funds for development projects at the entire range of the nation's
           3,400 airports--from small general aviation airports to the very
           largest that handle several million passengers per year. The
           Administration has proposed cuts in AIP funding and is considering
           possible changes to the AIP allocation formula as well as
           increasing the cap on passenger facility charges25 for airport
           development projects. Any change in the level or allocation of
           these funds could have implications for funding airport capital
           projects. Not only AIP grants but also portions of other FAA
           programs receive funds from the Airport and Airway Trust Fund,
           which is largely financed by excise taxes on ticket purchases by
           airline passengers and aviation fuel. Since these taxes are
           scheduled to expire at the end of September 2007, ensuring that
           there is no lapse in revenue to the trust fund will require
           Congressional action.26 Without a continued flow of funds to the
           trust fund, FAA's ability to carry out AIP and other programs
           during fiscal year 2008 may be in jeopardy.
			  
			  FAAï¿½s Recent Estimate of Planned Capital Development Similar to
			  Past Estimate

           FAA estimates the total cost for planned airport projects that are
           eligible for AIP funding, including runways, taxiways, and noise
           mitigation and reduction efforts, will be about $42 billion for
           fiscal years 2007 through 2011.27 This estimate is little changed
           from the agency's last estimate in 2004 for the period 2005 to
           2009. FAA's current estimate indicates that over half of the
           planned development will occur at large and medium hub airports.28
           The Airports Council International--North America (ACI-NA) also
           provides estimates of planned airport development. ACI-NA includes
           both AIP-eligible projects and ineligible projects and, as a
           result, has higher estimates.

           Historically, airports have received funding for capital
           development from a variety of sources. As we reported in 2003, the
           single largest source of financing for airports is tax-exempt
           bonds, followed by AIP grants and passenger facility charges. Tax
           exempt bonds are currently supported by airport revenue and, in
           some cases, by passenger facility charges. Access to these funding
           sources varies according to airports' size and funding
           capabilities. Large and medium hub airports depend primarily on
           tax-exempt bonds, while the smaller airports rely principally on
           AIP grants.29 Passenger facility charges are a particularly
           important source of capital for large and medium hub airports
           because they have the majority of commercial service passengers.
			  
			  FAA Funding Proposals Would Change How Airport Development is
			  Financed

           The Administration has proposed changing the federal role in
           financing airport development in its fiscal year 2008 budget
           proposal, which also includes a reauthorization proposal for FAA
           that will be submitted later this month. Funding for AIP grants
           would be reduced and the allocation formula changed. The
           Administration's reauthorization proposal is expected to provide
           details on these proposed changes. It is, therefore, currently
           unclear how a number of issues will be addressed.

           The reauthorization proposal may clarify the impact on smaller
           airports,30 which received about two-thirds of AIP grants in
           fiscal year 2004. As noted earlier in my statement, smaller
           airports rely primarily on AIP grants for capital funding. In
           recent years, statutory changes in the distribution of AIP grants
           have increased the share to smaller airports.31 However, under the
           fiscal year 2008 budget proposal, funding changes would especially
           impact smaller airports if the current allocation formulas are
           unchanged in the forthcoming reauthorization proposal. First,
           primary airport entitlements32 under AIP would be cut in half from
           the fiscal year 2006 level. In turn, the small airport fund, which
           is funded from AIP entitlement amounts that large and medium hub
           airports must turn back if they impose passenger facility
           charges,33 would also be reduced by half. Second, state
           entitlements for non-primary34 commercial service and general
           aviation airports would be reduced from 20 percent to 18.5 percent
           of total AIP obligations. Finally, discretionary set aside grants
           for reliever airports would be eliminated under the fiscal year
           2008 budget proposal. Table 1 shows the effect on the amounts
           available for various types of AIP grants at different funding
           levels including the $2.75 billion requested in the
           Administration's budget and the actual funding level for fiscal
           year 2006.

3NTSB, Current Procedures for Collecting and Reporting U.S. General
Aviation Accident and Activity Data (Washington, D.C.: April 2005).

4In fiscal year 2007, FAA made changes to its survey, increasing the
sample size from 30,000 to 75,000 and, according to the agency, responses
increased from 15,000 to 32,000. However, the response rate still remains
low.

5Participants in the Aviation Safety Action Program include employees of
air carriers and repair stations; participants in the Aviation Safety
Reporting Program include all users of the national airspace system,
including air traffic controllers; participants in the Voluntary
Disclosure Reporting Program include air carriers, repair stations, and
aviation manufacturers.

6GAO, Aviation Safety: Better Management Controls are Needed to Improve
FAA's Safety Enforcement and Compliance Efforts, [18]GAO-04-646
(Washington, D.C.: July 6, 2004).

7GAO, Aviation Safety: System Safety Approach Needs Further Integration
into FAA's Oversight of Airlines, [19]GAO-05-726 (Washington, D.C.: Sept.
28, 2005).

8National Research Council, Staffing Standards for Aviation Safety
Inspectors (Washington, D.C.: The National Academies Press, 2006).

9The high percentage of retirements is attributable to the 1981 controller
strike, when President Ronald Reagan fired over 10,000 air traffic
controllers, and the consequent need to quickly rebuild the controller
workforce. From 1982 through 1991, FAA hired an average of 2,655
controllers per year. These controllers will become eligible for
retirement during the next decade.

10FAA estimated 467 retirements in fiscal year 2006 and 583 controllers
actually retired.

11FAA originally planned to hire 1,136 controllers in fiscal year 2007 as
shown in figure 3. In January 2007, FAA revised that hiring target to
1,386.

12Under FAA's recent contract with air traffic controllers, most current
controllers continued to receive their existing base salaries and
benefits, while new controllers are hired at lower wages.

13 [20]Delphi is a commercial off-the-shelf financial management system
that was acquired by the Department of Transportation and fully
implemented in FAA in 2003.

14GAO, National Airspace System: Transformation will Require Cultural
Change, Balanced Funding Priorities, and Use of All Available Management
Tools, [21]GAO-06-154 (Washington, D.C.: Oct. 14, 2005).

15We have on-going work examining FAA's procedures for measuring its
acquisition performance.

16GAO, Federal Aviation Administration: Stronger Architecture Program
Needed to Guide Systems Modernization Efforts, [22]GAO-05-266 (Washington,
D.C.: Apr. 29, 2005); GAO, Air Traffic Control: System Management
Capabilities Improved, but More can be Done to Institutionalize
Improvements, [23]GAO-04-901 , (Washington, D.C.: Aug. 20, 2004); and GAO,
Information Technology: FAA Has Many Investment Management Capabilities in
Place, but More Oversight of Operational Systems is Needed, [24]GAO-04-822
, (Washington, D.C.: Aug. 20, 2004).

17 [25]GAO-06-154 .

18In addition to FAA, these agencies include the Departments of
Transportation, Commerce, Defense, and Homeland Security; the National
Aeronautics and Space Administration (NASA); and the White House Office of
Science and Technology Policy.

19The concept of operations describes how the transformational elements of
NextGen will operate in 2025. It is intended to establish general
stakeholder buy-in to the NextGen end state, transition path, and business
case.

20The enterprise architecture follows from the concept of operations and
describes the system in more detail (using federal enterprise architecture
and DOD enterprise architecture frameworks). It will be used to integrate
planning efforts and drive partner agency guidance.

21The operational improvement roadmaps lay out a timeline for deploying
and integrating NextGen systems.

22GAO, Next Generation Air Transportation System: Progress and Challenges
Associated with the Transformation of the National Airspace System,
[26]GAO-07-25 (Washington, D.C.: Nov. 13, 2006).

23This preliminary estimate--developed by the Research, Engineering and
Development Advisory Committee, an advisory committee to FAA--indicates
that the cost for a status quo scenario (i.e., no NextGen) would also be
about $15 billion per year through 2025. This is due primarily to the
expectation that, under the NextGen scenario, capital expenditures would
be higher than under the status quo scenario in the near term, but
operations costs would be lower because of productivity improvements in
the longer term.

24 [27]GAO-07-25 .

25Passenger facility charges are fees airports can charge passengers to
fund FAA approved projects.

26Congress also would need to renew FAA's authority to spend from the
trust fund.

27FAA's estimate, in nominal dollars, is based on the agency's National
Plan of Integrated Airport Systems, which FAA published in September 2006.

28Commercial service airports are categorized by the number of
enplanements. Large hubs are those airports that account for at least one
percent of total passenger enplanements. Medium hubs account for between
0.25 and 1 percent of total passenger enplanements.

29Any increase in the issuance of bonds exempt from federal taxation has
an impact on federal revenue.

30Smaller airports include small hub, nonhub, other commercial service,
reliever (high capacity general aviation airports in major metropolitan
areas that provide pilots with an alternative to using congested hub
airports) and general aviation airports.

31For example, FAA's 2000 authorization (Pub. L. No. 106-181) boosted
funding for nonprimary airports and small primary airports by increasing
the portion of AIP passenger entitlement funds that must be turned back by
large and medium hub airports. Under AIP, airports that collect passenger
facility charges must forfeit a certain percentage of their AIP
entitlement funds, which are then distributed to smaller airports. In
fiscal year 2004, smaller airports received a total of about $380 million
as a result of these turn backs.

32Entitlements are AIP funds apportioned to airport sponsors and states
for eligible projects based on formulas.

33Small airport fund grants must be spent at small hub primary airports,
general aviation airports (including reliever airports), and nonhub
commercial airports.

34Non-primary airports are commercial service airports that have from
2,500 to 10,000 annual passenger enplanements. These airports are used
mainly by general aviation.

Table 1: Estimated AIP Distribution Under Alternative Funding Levels (in
millions)

                                         Alternative funding levels
                                      $2,750                                  
                                (proposed FY                   $3,550 (actual 
                                       2008)   $3,000   $3,250       FY 2006) 
Primary airports                   $496.0   $496.0   $857.7         $888.0 
entitlements                                                               
Entitlements for                    487.9    534.1    242.0          299.5 
non-primary, general                                                       
aviation and reliever                                                      
airports                                                                   
Other entitlementsa                 103.0    111.8    516.5          526.6 
Carryover entitlementsb             447.8    447.8    447.8          431.7 
Small airport fund                  214.2    214.2    428.4          428.4 
Discretionary set aside               0.0      0.0      4.3            5.6 
grants for reliever airports                                               
All other discretionary and         888.3  1,083.3    640.4          844.6 
set aside grantsc                                                          
TOTAL AIP funds available        $2,637.2 $2,887.2 $3,137.1       $3,424.4 
for grantsd                                                                

Source: FAA.

aIncludes grants for Alaskan airports and cargo service airports.

bFunds that some airports can claim to use in the fiscal year in which the
amount was apportioned and two fiscal years immediately after that year.

cFunds that are available for use on AIP eligible projects at FAA's
discretion. This includes funds set aside for such things as noise
planning and programming, reliever airports and capacity, safety,
security, and noise projects. It also includes discretionary grants that
can be used for any AIP eligible project at any airport.

dThe funding available for grants after the 2006 rescission and deductions
for airport research, other programs, and administrative costs.

To help offset any reductions in AIP grants, FAA is also considering
allowing airports to collect more revenue from passenger facility charges,
which large airports generally prefer. Airlines, however, have been
generally opposed to an increase in these charges because they have little
control in how passenger facility charges are spent and because they
believe these charges reduce passenger demand for air travel. Nonetheless,
if airports were to increase charges, additional airport revenue could be
generated. Increasing the cap on passenger facilities charges would
primarily benefit larger airports because these charges are a function of
passenger traffic. However, as already noted, under AIP, large airports
that collect passenger facility charges must forfeit a certain percentage
of their AIP formula funds. These forfeited funds are subsequently divided
between the small airport fund, which is to receive 87.5 percent, and the
discretionary fund, which is to receive 12.5 percent. Thus, under current
law, smaller airports would benefit indirectly from any increases in
passenger facility charges and help offset reductions in AIP funding.

FAA and the Congress Will Face a Challenge Funding FAA Programs in Fiscal Year
2008 if Reauthorization is Not Timely

With the excise taxes that fund the Airport and Airway Trust Fund
scheduled to expire at the end of fiscal year 2007, Congress will need to
act if there is to be no lapse in revenue to the trust fund to fund FAA.
If the taxes are neither reauthorized by that time nor replaced by other
revenue sources for the trust fund, the only revenues to the trust fund
will be interest earned on the fund's cash balance. FAA estimates that two
previous lapses in 1996-1997 resulted in the trust fund not receiving
about $5 billion in revenue.

As of the end of fiscal year 2006, the trust fund's uncommitted
balance--surplus revenues in the trust fund against which no commitments,
in the form of budget authority, have been made--was less than $2 billion.
The Administration's budget proposal projects that the uncommitted balance
will be about $2 billion at the end of fiscal year 2007. If today's level
of monthly tax revenue continues, a 2- to 3-month lapse in fiscal year
2008 could reduce the revenue to the trust fund enough to cause the
uncommitted balance to fall to zero in fiscal year 2008. Most of FAA's
funding comes from the trust fund--the fiscal year 2008 budget request for
FAA proposes about 80 percent of the agency's funding from the trust fund
with the remainder from the general fund. If the trust fund balance falls
to zero, continuation of FAA's programs--including efforts to address some
of the safety and management challenges that I have discussed--would
depend on providing additional general revenues.

GAO Contact and Staff Acknowledgments

For further information on this testimony, please contact Dr. Gerald L.
Dillingham at (202) 512-2834 or [email protected] . Individuals
making key contributions to this testimony include Paul Aussendorf, Jay
Cherlow, Jessica Evans, Colin Fallon, Carol Henn, Ed Laughlin, Ed Menoche,
Faye Morrison, Colleen Phillips, Taylor Reeves, Richard Scott, Teresa
Spisak, and Larry Thomas.

(540144)

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Highlights of [36]GAO-07-490T , a testimony to Subcommittee on Aviation,
Committee on Transportation and Infrastructure, House of Representatives

February 14, 2007

FEDERAL AVIATION ADMINISTRATION

Challenges Facing the Agency in Fiscal Year 2008 and Beyond

FAA operates one of the safest air transportation systems in the world. It
is, however, a system under strain. The skies over America are becoming
more crowded every day. FAA faces the daunting task of safely integrating
a growing influx of passengers and aircraft into the system and
simultaneously leading the transition to the Next Generation Air
Transportation System (NextGen)--a complicated effort to modernize the
system. FAA's broad responsibilities to maintain and modernize the
nation's air transportation system must be met in an uncertain budgetary
and long-term fiscal environment. GAO's concerns about financing the
nation's transportation system, including aviation, led GAO to designate
this issue as high-risk.

This statement is based on recent reports and interviews with FAA
officials. It focuses on FAA's challenges relating to (1) ensuring the
continued safe operation of the nation's airspace system, (2) continuing
to improve FAA's management while leading the transition to NextGen, and
(3) funding issues concerning capital improvements for airports and FAA's
reauthorization.

[37]What GAO RecommendsIn prior reports, GAO has made recommendations to
address data and management problems. Although FAA has begun to address
them, many have not been fully implemented.

To ensure continued safety within the national airspace system, FAA is
using risk-based, data-driven safety programs to oversee the industry;
however, the agency faces data and human resource challenges that affect
its ability to fully implement these programs. GAO has previously
recommended that FAA improve the accuracy and completeness of the safety
data and analysis of that data needed to monitor safety trends, fully
implement its safety programs, and assess their effectiveness to determine
if they are focused on the greatest safety risk. FAA has made progress in
this area but more remains to be done. FAA's ability to oversee the
aviation industry will be further affected by its ability to hire, train,
and deploy its primary workforce of safety inspectors, engineers, and air
traffic controllers. The expansion of FAA's oversight program for air
carriers will result in workload shifts for its inspectors that will make
it important for FAA to improve its staffing process. In addition, the
agency estimates that it will lose about 70 percent of the air traffic
controller workforce over the next 10 years, primarily due to retirements.

FAA has made significant progress in implementing management processes and
systems that use leading practices of private sector businesses; however,
further work remains to institutionalize these efforts. For example, new
and improved acquisition processes and oversight have contributed to FAA
meeting its acquisition cost and schedule goals for the last three years.
Additional work remains, though--FAA received a qualified opinion on its
most recent financial audit as a result of lack of support for the
accuracy of about $4.7 billion for equipment. Moreover, GAO has previously
recommended that FAA should undertake additional efforts to consolidate
its facilities and outsource some of its services to further cut costs.
Some key challenges for the transition to NextGen include completing the
design and cost estimates for NextGen and proposing how that cost will be
funded. FAA will also need to assess its capacity to handle the technical
and contract management expertise that will be required to oversee the
implementation of NextGen.

FAA estimates that the total cost for planned airport development that is
eligible for funding from the Airport Improvement Program (AIP) will be
about $42 billion for 2007 through 2011. FAA's budget request for fiscal
year 2008 proposes significant cuts in AIP. These cuts, along with changes
to the way AIP is allocated among airports and possible increases in the
cap on passenger ticket charges for airport projects, could have
implications for the amount of funding available for planned airport
development, especially at small airports. Additionally, the taxes that
fund the Airport and Airway Trust Fund are scheduled to expire at the end
of fiscal year 2007. Until Congress reauthorizes those taxes, FAA's
ability to carry out programs related to airport development as well as
some other programs throughout the agency may be in jeopardy, compounding
the safety and management challenges facing FAA.

References

Visible links
  16. http://www.gao.gov/cgi-bin/getrpt?GAO-07-362SP
  17. http://www.gao.gov/cgi-bin/getrpt?GAO-07-310
  18. http://www.gao.gov/cgi-bin/getrpt?GAO-04-646
  19. http://www.gao.gov/cgi-bin/getrpt?GAO-05-726
  20. http://delphi.faa.gov/
  21. http://www.gao.gov/cgi-bin/getrpt?GAO-06-154
  22. http://www.gao.gov/cgi-bin/getrpt?GAO-05-266
  23. http://www.gao.gov/cgi-bin/getrpt?GAO-04-901
  24. http://www.gao.gov/cgi-bin/getrpt?GAO-04-822
  25. http://www.gao.gov/cgi-bin/getrpt?GAO-06-154
  26. http://www.gao.gov/cgi-bin/getrpt?GAO-07-25
  27. http://www.gao.gov/cgi-bin/getrpt?GAO-07-25
  36. http://www.gao.gov/cgi-bin/getrpt?GAO-GAO-07-490T
*** End of document. ***