    Federal Aviation Administration: Key Issues in Ensuring the
    Efficient Development and Safe Operation of the Next Generation
    Air Transportation System (22-MAR-07, GAO-07-636T).

    The Federal Aviation Administration (FAA) operates one of the
    safest air transportation systems in the world. It is, however, a
    system under strain. The skies are becoming more crowded every
    day, with an estimated 1 billion passengers per year expected by
    2015. The current aviation system cannot be expanded to meet this
    growth. The reauthorization of FAA is an opportunity to examine
    how the agency is managing the operation and safety of the air
    transportation system as it leads the transition to the Next
    Generation Air Transportation System (NextGen)--a major redesign
    of the current system. GAO's testimony focuses on key issues
    related to FAA's reauthorization, including (1) FAA's progress in
    implementing initiatives that could provide a solid foundation
    for NextGen, (2) issues that need to be addressed to help ensure
    a successful transition to NextGen, and (3) safety areas that are
    important for the continued safe operation of the current and
    future system. This statement is based on recent GAO reports and
    ongoing work on some management and safety initiatives.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-07-636T
        ACCNO:   A67134
      TITLE:     Federal Aviation Administration: Key Issues in Ensuring
    the Efficient Development and Safe Operation of the Next
    Generation Air Transportation System
         DATE:   03/22/2007
      SUBJECT:   Air traffic control systems
    	     Air transportation
    	     Data collection
    	     Data integrity
    	     Financial management
    	     Internal controls
    	     Legacy systems
    	     Safety regulation
    	     Safety standards
    	     Strategic planning
    	     Transportation safety
    	     Transportation statistics
    	     Program implementation
    	     Next Generation Air Transportation
    	     System

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    GAO-07-636T

         * [1]Improved, Businesslike Operations Should Better Position FAA

              * [2]FAA Has Improved Its Financial Management, although the Soun
              * [3]Progress Has Been Made but Further Work Remains to Instituti
              * [4]FAA's Methodology for Tracking and Reporting Performance on
              * [5]Although FAA Is Now Focusing on NextGen, It Must Continue to
              * [6]Institutionalizing Change Within FAA Will Require Continued

         * [7]Key Issues Remain in the Transition From Planning to Impleme

              * [8]FAA Has Improved Coordination with JPDO, but Some Key Stakeh
              * [9]FAA Has Begun Budgeting for NextGen Programs, although Quest
              * [10]FAA Needs to Explore whether It Has the Technical and Contra

         * [11]Aviation Safety Record Remains High, but Some Areas Need to

              * [12]FAA Faces Challenges in Implementing Advanced Technology and
              * [13]FAA and Congress Should Address Regulatory Approaches to Som
              * [14]FAA Needs Improved Data and Analysis for Current Safety Over
              * [15]FAA Faces Human Capital Challenges

         * [16]GAO's Mission
         * [17]Obtaining Copies of GAO Reports and Testimony

              * [18]Order by Mail or Phone

         * [19]To Report Fraud, Waste, and Abuse in Federal Programs
         * [20]Congressional Relations
         * [21]Public Affairs

    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 10 a.m. EDT
    Thursday, March 22, 2007

    FEDERAL AVIATION ADMINISTRATION

    Key Issues in Ensuring the Efficient Development and Safe Operation of the
    Next Generation Air Transportation System

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

    GAO-07-636T

    Mr. Chairman and Members of the Subcommittee:

    I appreciate the opportunity to testify before you today as you consider
    the reauthorization of the Federal Aviation Administration (FAA). 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. Already, with the increasing demand for air travel, flight
    arrival delays have increased; such delays are nearing the record levels
    of 2000, a year in which one in four flights reached its destination
    behind schedule. The system is also expected to absorb a variety of
    different types of aircraft in the near future, ranging from the jumbo
    Airbus A380--which can hold more than 500 passengers--to very light
    jets--which may greatly increase the number of aircraft in the sky while
    transporting six or fewer passengers on any given flight. The consensus is
    that the current aviation system cannot be expanded to meet this projected
    growth.

    In 2003, recognizing the need for system transformation, Congress
    authorized the creation of the Joint Planning and Development Office
    (JPDO), housed within FAA but involving several federal partner
    agencies,^1 to conceptualize and plan for the Next Generation Air
    Transportation System (NextGen). NextGen is envisioned as a major redesign
    of the air transportation system that will move from largely ground-based
    radars to precision satellite-based navigation and includes digital,
    networked communications; an integrated weather system; layered, adaptive
    security; and more. The reauthorization of FAA and the Airport and Airway
    Trust Fund provides a unique opportunity to examine how the agency is
    managing the operation and safety of the current air traffic control
    system as it prepares to implement NextGen. My testimony today focuses on
    these questions: (1) What progress is FAA making in implementing
    initiatives that could provide a solid foundation for NextGen? (2) What
    are the key issues that need to be addressed to help ensure a successful
    transition to NextGen? and (3) What key safety areas need to be addressed
    for the continued safe operation of the current and future air
    transportation system? My statement is based on our recent reports as well
    as ongoing work for this subcommittee assessing FAA's performance metrics
    for its acquisitions, runway safety, and safety issues concerning the
    operation of unmanned aircraft systems in the national airspace. We
    conducted this work in accordance with generally accepted government
    auditing standards.

    ^1JPDO was authorized by the Vision 100--Century of Aviation
    Reauthorization Act (Pub. L. No. 108-176), which requires the office to
    operate in conjunction with multiple government agencies, including the
    Departments of Transportation, Commerce, Defense, and Homeland Security;
    FAA; the National Aeronautics and Space Administration (NASA); and the
    White House Office of Science and Technology Policy. JPDO also involves
    industry and other stakeholders through the Next Generation Air
    Transportation System Institute.

    In summary

               o Over the past few years, FAA has made significant progress in
               moving to more businesslike and cost effective operations and
               modernizing the air traffic control system, which should better
               position the agency for the complex implementation of NextGen.
               However, further work remains to fully address past problems in
               the modernization program. FAA has improved its financial
               management, including implementing a new cost accounting system
               and developing a cost allocation methodology; however, it is not
               yet clear if the cost allocation methodology is sufficiently valid
               and reliable to derive the administration's proposed new
               cost-based funding for FAA. FAA has also sought to improve its
               financial management with efforts to control and reduce costs. For
               example, FAA plans to produce cost savings through outsourcing
               such as with its planned contracting out of new surveillance
               technology, and through facility consolidations. In addition to
               improvements in financial management, FAA has improved its
               acquisition management, which will be critical to a successful
               transition to NextGen. For example, FAA has begun reviewing its
               major systems acquisitions and has established guidance for using
               a project management technique known as Earned Value Management^2
               in its acquisition management system, although institutionalizing
               these improvements will continue to be a challenge for FAA. FAA
               has also established performance measures and targets for its
               critical acquisitions. While the acquisition and deployment of
               NextGen technology are key issues facing the agency, it will be
               critical that FAA continue to maintain existing systems and phase
               out existing systems using a risk-based approach. And, although
               FAA has initiated numerous financial, management, and acquisition
               process improvements, the agency must work to institutionalize
               these changes while at the same time finding new leadership--due
               to losses of key leaders at FAA and its Air Traffic Organization
               (ATO)--that can continue to enforce an agencywide commitment to
               change and continuous improvement.
               o As FAA begins implementing NextGen, key issues remain that will
               need to be addressed, such as coordinating with JPDO, funding for
               NextGen-related programs, and ensuring that FAA has both the
               technical and contract management expertise that will be required
               to oversee this complex undertaking. FAA has become steadily more
               focused on NextGen over the past few years and is expanding and
               revamping its Operational Evolution Plan--renamed the Operational
               Evolution Partnership--to integrate with JPDO activities and
               become its implementation plan for NextGen, including details of
               required technologies, procedures, and resources. This is a step
               in the right direction. JPDO recently reported that the total cost
               for NextGen infrastructure may range between $15 billion and $22
               billion. The agency also noted that it expects a corresponding
               cost to system users, who will have to equip themselves with the
               advanced avionics necessary to realize the full benefits of some
               NextGen technologies, in the range of $14 billion to $20 billion.
               Another transition challenge for FAA and JPDO is to address
               questions about which entities will fund and conduct some of the
               necessary research, development, and demonstration projects that
               will be key to achieving certain NextGen capabilities and keeping
               the development of new systems on schedule. We have also
               recommended that FAA examine its strengths and weaknesses with
               regard to the technical and contract management expertise that
               will be needed for NextGen implementation. In response to our
               recommendation, FAA is considering convening a blue ribbon panel
               to study the issue and make recommendations to the agency. We
               believe that such a panel could help FAA begin to address this
               challenge.
               o To deal with current and future safety issues, it will be
               important for FAA to also address several issues as it works to
               ensure that its safety programs are aligned to meet future demand.
               First, ground safety is an area of increasing concern because air
               traffic is forecast to grow substantially during the coming
               decades, which will result in more aircraft and increased
               congestion and safety hazards in the complex airport environment.
               FAA needs to keep on schedule to deploy NextGen technology that
               warns controllers of imminent ground collisions and implement
               recommendations by the National Transportation Safety Board (NTSB)
               (which continues to place runway incursions on its Most Wanted
               Transportation Safety Improvements list). Second, FAA needs to
               establish an appropriate regulatory approach for some current
               airspace users, such as air ambulances, and new users such as the
               emerging space tourism industry. For example, we suggested that
               Congress should consider revisiting FAA's dual role for ensuring
               safety and promoting the emerging space tourism industry and
               decide whether the elimination of FAA's promotional role is
               necessary to alleviate a potential conflict of interest. Third, to
               maintain and expand the margin of safety--especially if
               substantial growth in air traffic materializes--FAA cannot rely on
               its current oversight approach, which focuses on labor-intensive
               inspections. Accurate, complete safety data would provide FAA with
               an early warning of hazards that can lead to accidents. We have
               recommended that FAA improve the accuracy and completeness of its
               safety data and its analysis of that data. FAA is in the early
               planning stages of addressing our recommendations, but more work
               remains. Fourth, FAA's ability to ensure safety in NextGen will be
               affected by its ability to manage its human capital, including
               safety inspectors, engineers, technicians, and air traffic
               controllers. FAA faces challenges in improving its staffing
               processes, addressing human factors issues associated with
               significant increases in the automation of air traffic management,
               replacing the large percentage of staff expected to retire, and
               addressing the contentious relations with its employee unions,
               which have the potential to hinder the agency's ability to retain
               and recruit skilled staff.

    			  Improved, Businesslike Operations Should Better Position FAA to
    			  Implement and Manage NextGen, but Further Work Remains

               Although the NextGen effort involves multiple government agencies
               and the private sector, FAA will be the entity largely responsible
               for implementing the policies and systems necessary for NextGen
               while safely operating the current air traffic control system 24
               hours a day, 7 days a week. This means that FAA will be
               responsible for keeping a number of large NextGen systems
               acquisitions on budget and on schedule as it manages and sustains
               the current system. Historically, FAA has had serious weaknesses
               in its financial management as well as chronic cost and schedule
               difficulties with air traffic control system acquisitions. During
               the past few years, FAA has made significant progress in
               implementing businesslike processes and procedures for financial
               management, acquisitions, and organization structures. The
               implementation of these types of initiatives has improved FAA's
               management of the current system and should better position the
               agency to manage the enormously complex transition to NextGen.
               However, further work remains to fully address past problems and
               institutionalize these changes throughout the agency, especially
               given the changing leadership within both FAA and its ATO.

    			  FAA Has Improved Its Financial Management, although the Soundness
    			  of Its Cost Allocation Methodology is Uncertain

               Sound financial management, including sound cost accounting and
               cost allocation systems, is important for the current operation of
               FAA and lays the foundation for the transformation to NextGen and
               proposed changes to the agency's funding system laid out in the
               administration's reauthorization proposal. In 1999, we placed FAA
               on our high-risk list for its financial management practices,
               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
               Congress. In 2005, we removed FAA's financial management from our
               high-risk list because the agency had made significant progress,
               including implementing a new financial management system called
               Delphi^3 and receiving unqualified opinions from auditors on its
               annual financial statements for fiscal years 2001 through 2005.
               Nonetheless, external auditors issued a qualified opinion on FAA's
               fiscal year 2006 financial statement and repeated a material
               internal control weakness that was reported in 2005. The concerns
               that led to the qualified opinion stemmed from FAA's inability to
               support the accuracy and completeness of its
               construction-in-progress account, reported in the financial
               statement as $4.7 billion. FAA is working to address the problem.

               As part of its improved financial management, FAA has developed a
               cost accounting system and a cost allocation methodology, which
               are critical to the successful implementation of the new
               cost-based funding system included in the administration's
               reauthorization proposal.^4 The proposal would change FAA's
               financing system from one based mainly on excise taxes to one that
               provides a better link between revenues and the costs that users
               of the national airspace system impose on the system, according to
               the agency. FAA also says the proposal would improve revenue
               adequacy, equity, and efficiency.^5 While the reauthorization
               proposal may address some of the equity and efficiency concerns
               that FAA has raised with the current funding structure, we have
               reported that it is not yet clear if FAA has developed a sound
               cost allocation methodology from which to derive the new
               cost-based funding.^6 We are reviewing FAA's cost allocation
               methodology and expect to issue a report later this year.

               FAA has also improved its financial management through increased
               efforts to achieve cost savings and cost avoidance throughout the
               agency. For example, FAA is outsourcing flight service stations
               and estimates a $2.2 billion savings over 12 years. Similarly, FAA
               is seeking savings through outsourcing its planned nationwide
               deployment of Automatic Dependent Surveillance-Broadcast (ADS-B),
               a critical element of NextGen. FAA is planning to implement ADS-B
               through a performance-based contract in which FAA will pay
               "subscription" charges for the ADS-B services and the vendor will
               be responsible for building and maintaining the infrastructure.
               (FAA also reports that the ADS-B rollout will allow the agency to
               remove 50 percent of its current secondary radars, saving money in
               the program's baseline. The remaining radars will serve as a
               back-up system to ADS-B.) As for consolidating facilities, FAA is
               currently restructuring ATO's administrative service areas from
               nine offices to three offices, which FAA estimates will save up to
               $460 million over 10 years.

               We previously reported that FAA should pursue further cost control
               options, such as exploring additional opportunities for
               contracting out services and consolidating facilities. However, we
               recognize that FAA faces challenges with consolidating facilities,
               an action that can be politically sensitive. In recognition of
               this sensitivity, the administration's reauthorization proposal
               presents a "BRAC-like" initiative in which the Secretary of
               Transportation would be authorized to establish an independent,
               five-member commission, known as the Realignment and Consolidation
               of Aviation Facilities and Services Commission, to independently
               analyze FAA's recommendations to realign facilities or services.
               The commission would then send its own recommendations to the
               President and Congress. In the past, we noted the importance of
               potential cost savings through facility consolidations; however,
               it must also be noted that any such consolidations must be handled
               through a process that solicits and considers stakeholder input
               throughout and fully considers the safety implications of both
               proposed facility closures and consolidations.

    			  Progress Has Been Made but Further Work Remains to Institutionalize
    			  Recent Improvements in Management and Acquisition Processes

               A successful transition to NextGen will depend, to a great extent,
               on FAA's ability to manage the acquisition and integration of
               multiple NextGen systems. Since 1995, we have designated FAA's air
               traffic control modernization program as high risk because of
               systemic management and acquisition problems. However, in recent
               years, FAA has made significant progress toward improving its
               acquisition management. Realization of NextGen goals could be
               severely compromised if FAA's improved processes are not
               institutionalized and carried over into the implementation of
               NextGen, which is an even more complex and ambitious undertaking
               than past modernization efforts.

               To its credit, FAA has taken a number of actions to improve its
               acquisition management. By creating ATO in 2003 and appointing a
               chief operating officer (COO) to head ATO, FAA established a new
               management structure and adopted more leading practices of private
               sector businesses to address the cost, schedule, and performance
               shortfalls that have plagued air traffic control acquisitions. ATO
               has worked to create a flatter organization, with fewer management
               layers, and has reported reducing executive staffing by 20 percent
               and total management by 16 percent. In addition, FAA uses a
               performance management system to hold managers responsible for the
               success of ATO. More specifically, to better manage its
               acquisitions and address problems we have identified,^7 FAA has

               o undertaken human capital initiatives to improve its acquisition
               workforce culture and build towards a results-oriented,
               high-performing organization;
               o developed and applied a process improvement model to assess the
               maturity of its software and systems acquisitions capabilities
               resulting in, among other things, enhanced productivity and
               greater ability to predict schedules and resources; and
               o reported that it has established a policy and guidance on using
               Earned Value Management (EVM) in its acquisition management system
               and that 19 of its major programs are currently using EVM.^8

               Institutionalizing these improvements throughout the agency will
               continue to be a challenge for FAA. For example, the agency has
               yet to implement its cost-estimating methodology, although,
               according to the agency, it has provided training on the
               methodology to employees. Furthermore, FAA has not established a
               policy to require use of its process improvement model on all
               major acquisitions for the national airspace system. Until the
               agency fully addresses these residual issues, it will continue to
               risk program management problems affecting cost, schedule, and
               performance. With a multibillion dollar acquisition budget,
               addressing these issues is as important as ever.

    			  FAA�s Methodology for Tracking and Reporting Performance on
    			  Critical Acquisitions is Subject of Ongoing Work for this
    			  Subcommittee

               In another effort to improve agency processes, FAA expanded its
               use of performance measures to track its performance. In its
               fiscal year 2007 portfolio of goals, FAA lists 30 performance
               measures. As part of our ongoing work,^9 we are currently
               reviewing how FAA selects and measures two of these goals in
               particular: critical acquisitions on budget and critical
               acquisitions on schedule.^10 FAA has reported exceeding targets
               for both of these measures for the past 3 fiscal years. FAA's
               targets for fiscal year 2006 were to have 85 percent of critical
               acquisition programs within 10 percent of budget, as reflected in
               its capital investment plan, and to have 85 percent of critical
               acquisition programs on schedule. For fiscal year 2006, FAA
               reported that its critical acquisitions were 100 percent on budget
               and over 97 percent on schedule. This represents a major
               turnaround in a program that remains on our high-risk list.

               It will be important, as FAA begins to implement NextGen systems,
               to maintain critical acquisitions on schedule and on budget in
               order to meet the goal of transitioning to NextGen by 2025 and to
               prevent escalation of the costs of NextGen. Our ongoing work is
               examining FAA's performance and reporting on its critical
               acquisitions, including applicable performance measures. We are
               also exploring FAA's use of the most recently approved cost and
               schedule baselines, which may have changed significantly since the
               start of an acquisition, to measure program performance.
               Rebaselining acquisitions is an accepted practice and there are
               valid reasons for doing so, such as when changes in a program's
               requirements fundamentally alter the acquisition and make the
               originally approved schedule unrealistic. Because rebaselining
               resets the cost and schedule variances to zero, we want to verify
               that FAA's practice is not masking acquisition performance
               problems. We expect to issue a report on these issues later this
               year.

    			  Although FAA Is Now Focusing on NextGen, It Must Continue to
    			  Manage and Sustain the Current System

               While the acquisition and deployment of NextGen technology are key
               issues facing the agency, it will be critical for FAA to continue
               to maintain existing systems and phase out existing systems using
               a risk-based approach. The adequacy of FAA's maintenance of
               existing systems was raised following a power outage and equipment
               failures in Southern California that caused hundreds of flight
               delays during the summer of 2006. Investigations by FAA and the
               Department of Transportation Inspector General into these
               incidents identified a number of underlying issues, including the
               age and condition of equipment. Nationwide, the number of
               scheduled^11 and unscheduled outages of air traffic control
               equipment and ancillary support systems has been increasing (see
               fig. 1). Increases in the number of unscheduled outages indicate
               that systems are failing more frequently.

               Figure 1: Number of Scheduled and Unscheduled Equipment Outages,
               Calendar Years 2001-2006

               In addition, the duration of unscheduled equipment outages has
               also been increasing in recent years from an average of about 21
               hours in 2001 to about 40 hours in 2006 (see fig. 2), which may
               indicate, in part, that maintenance and troubleshooting activities
               are requiring more effort and longer periods of time. However,
               according to FAA, it considers user impact and resource efficiency
               when planning and responding to equipment outages. As a result,
               according to the agency, although some outages will have longer
               restoration times, the agency believes they do not adversely
               affect air traffic control operations. It will be critical for FAA
               to monitor and address equipment outages to ensure the safety and
               efficiency of the legacy systems, since they will be the core of
               the national airspace system for a number of years and, in some
               cases, will become part of NextGen.

               Figure 2: Average Duration of Scheduled and Unscheduled Equipment
               Outages, Calendar Years 2001-2006

    			  Institutionalizing Change Within FAA Will Require Continued Strong
    			  Leadership

               While FAA has implemented many positive changes to its management
               and business processes in recent years, it currently faces the
               loss of key leaders. We 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.^12 However, the agency will have lost two of its
               significant agents for change--the FAA administrator and the COO,
               who heads ATO--by the end of September 2007. The administrator's
               term ends in September 2007; the COO left in February 2007, after
               serving 3 years. This situation is exacerbated by the fact that
               the current director of JPDO is new, having assumed that position
               in August 2006. For the financial, management, and acquisition
               improvements to further permeate the agency, and thus provide a
               firm foundation upon which to implement NextGen, FAA's new leaders
               will need to demonstrate the same commitment to improvement as the
               outgoing leaders. This continued commitment to change is critical
               over the next few years, as foundational NextGen systems begin to
               be implemented. Because this is a critical time for FAA, the
               agency needs to move expeditiously to find a new COO for ATO. It
               could be useful to have a COO whose tenure lasted the length of
               the current statutory 5-year term. This would allow for stable
               leadership at ATO during this critical transition from planning to
               early implementation of NextGen.

    			  Key Issues Remain in the Transition From Planning to Implementing
    			  NextGen

               Several key issues will need to be addressed to help ensure a
               successful transition to NextGen as FAA moves from the
               conceptualization and planning of NextGen, handled largely through
               the interagency collaborative efforts of FAA's JPDO, to the
               implementation of NextGen technologies and systems. Those issues
               include (1) continuing to focus on the coordination between ATO
               and JPDO and stakeholder involvement; (2) determining which
               entities will fund the necessary research, development, and
               demonstration projects for NextGen; and (3) determining whether
               FAA has the technical and contract management expertise necessary
               to oversee the complex implementation of NextGen.

    			  FAA Has Improved Coordination with JPDO, but Some Key Stakeholder
    			  Involvement is Absent

               FAA has become steadily more focused on NextGen implementation,
               but some key stakeholders, such as FAA technicians who will
               maintain NextGen systems, are not currently involved. One of the
               most important changes FAA has made with regard to NextGen is the
               expansion and revamping of its Operational Evolution Plan
               (OEP)--renamed the Operational Evolution Partnership--to become
               FAA's implementation plan for NextGen. This is a step in the right
               direction. The OEP is being expanded to apply to all of FAA and is
               intended to become a comprehensive description of how the agency
               will implement NextGen, including the required technologies,
               procedures, and resources.^13 (Figure 3 shows the OEP framework.)
               An ATO official told us that the new OEP is expected to be
               consistent with JPDO's key planning documents and partner agency
               budget guidance.^14 According to FAA, the OEP will allow it to
               demonstrate appropriate budget control and linkage to NextGen
               plans and will force FAA's research and development to be relevant
               to NextGen's requirements. According to FAA documents, the agency
               plans to publish the new OEP in June 2007.

               Figure 3: New OEP Framework

               Source: JPDO.

               Note: The concentric rings indicate the nature of initiative
               development from the outer ring (NextGen strategic initiatives),
               in which new programs and concepts are analyzed and demonstrated;
               to the second ring, where decisions are made regarding safety,
               operating policy, performance standards, and certification
               requirements; to the third ring (technical development), where
               concepts are prototyped and investment analysis decisions are
               made. The progression through the rings is not necessarily linear,
               and a program may be in more than one ring at a time. Data
               communications, for example, is in the technical development ring
               and also in the middle ring as policy and rulemaking is
               considered. The core is divided into three sections, which
               indicate the FAA offices that implement the final NextGen program.

               In an effort to further align FAA's efforts with JPDO's plans for
               NextGen, FAA has created a NextGen Review Board to oversee the
               OEP. This review board will be co-chaired by JPDO's director and
               ATO's vice president of operations planning services. Initiatives,
               such as concept demonstrations or research proposed for inclusion
               in the OEP will now need to go through the review board for
               approval. Initiatives are to be assessed for their relation to
               NextGen requirements, concept maturity, and risk. An ATO official
               told us that the new OEP process should also help identify some
               smaller programs that might be inconsistent with NextGen and could
               be discontinued and will assist in project integration.
               Additionally, as a further step towards integrating ATO and JPDO,
               the administration's reauthorization proposal calls for the JPDO
               director to be a voting member of FAA's Joint Resources Council
               and ATO's Executive Council.

               Some stakeholders, such as current air traffic controllers and
               technicians, will play critical roles in NextGen, and their
               involvement in planning for and deploying the new technology will
               be important to the success of NextGen. In November 2006, we
               reported that air traffic controllers were not involved in the
               NextGen planning effort.^15 Controllers are beginning to become
               involved as they are now represented on a key planning body.
               However, the technicians do not participate in NextGen efforts.
               Input from current air traffic controllers who have recent
               experience controlling aircraft and current technicians who will
               maintain the new equipment is important in considering human
               factors and safety issues. Our work on past air traffic control
               modernization projects has shown that a lack of stakeholder
               involvement early and throughout a project can lead to cost
               increases and delays.

    			  FAA Has Begun Budgeting for NextGen Programs, although Questions
    			  Remain About the Funding of NextGen Research and Development

               JPDO recently reported some estimated costs for NextGen, including
               specifics on some early NextGen programs.^16 JPDO believes the
               total federal cost for NextGen infrastructure through 2025 will
               range between $15 billion and $22 billion. JPDO also reported a
               preliminary estimate of the corresponding cost to system users to
               equip themselves with the advanced avionics that are necessary to
               realize the full benefits of some NextGen technologies may range
               from $14 billion to $20 billion. JPDO, in its recently released
               2006 Progress Report, noted that this range for avionics costs
               reflects uncertainty about equipage costs for individual aircraft,
               the number of very light jets that will operate in
               high-performance airspace, and the amount of out-of-service time
               required for installation.

               In its capital investment plan for fiscal years 2008-2012, FAA
               includes estimated expenditures for 11 line items that are
               considered NextGen capital programs.^17 The total 5-year estimated
               expenditures for these programs is $4.3 billion. In fiscal year
               2008, only 6 of the line items are funded for a total of roughly
               $174 million; funding for the remaining 5 programs would begin
               with the fiscal year 2009 budget. According to FAA, in addition to
               capital spending for NextGen, the agency will spend an estimated
               $300 million on NextGen-related research and development from
               fiscal years 2008 through 2012. The administration's budget for
               fiscal year 2008 for FAA includes a total of $17.8 million to
               support the activities of JPDO.

               The administration's reauthorization proposal would allow for $5
               billion in Treasury debt financing authority for NextGen-related
               capital needs for fiscal years 2013-2017. Projects that might be
               appropriate for such financing include safety-critical and
               mission-essential software and systems that controllers and
               traffic flow managers will use to support certain aircraft
               operations in the NextGen system, according to the proposal.
               However, the proposed borrowing authority seems unlikely to have a
               major impact on FAA's ability to pay for capital investment
               associated with moving to NextGen because the payback period is
               relatively short. With a maximum payback period of 5 years, the
               advantage of matching the time period for paying for a capital
               investment with the time period in which the benefits of that
               investment are realized is unlikely to be achieved. Therefore, the
               advantage of borrowing versus receiving appropriations for a
               period of up to 5 years is unclear.

               While FAA and JPDO have begun to release estimates for FAA's
               NextGen investment portfolio, questions remain over which entities
               will fund and conduct some of the necessary research, development,
               and demonstration projects that will be key to achieving certain
               NextGen capabilities and keeping the development of new systems on
               schedule. In the past, a significant portion of aeronautics
               research and development, including intermediate technology
               development, has been performed by NASA. However, 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 and JPDO face the challenge
               of determining the nature and scope of the research and technology
               development necessary to begin the transition to NextGen. They
               also have to identify the entities that can conduct that research
               and development and the source of funding to support it.

    			  FAA Needs to Explore whether It Has the Technical and Contract
    			  Management Expertise Necessary to Implement NextGen

               In the past, a lack of expertise contributed to weaknesses in
               FAA's management of air traffic control modernization efforts, and
               industry experts with whom we spoke questioned whether FAA will
               have the technical expertise needed to implement NextGen. In
               addition to technical expertise, FAA will need contract management
               expertise to oversee the systems acquisitions and integration
               involved in NextGen. In November 2006, 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.^18 In response to our
               recommendation, FAA is considering convening a blue ribbon panel
               to study the issue and make recommendations to the agency about
               how best to 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.

    			  Aviation Safety Record Remains High, but Some Areas Need to be
    			  Addressed for Current and Future Safety as FAA Transitions to
    			  NextGen

               As FAA works to develop the policies and systems to transition to
               NextGen, it will be important for the agency to also ensure that
               its safety programs are aligned with these changes. While recent
               safety trends are generally positive, improving upon those trends
               will be necessary simply to maintain the same level of safety if
               air traffic doubles or triples during the coming decades.
               Moreover, certain recent trends--such as the commercial air
               carrier fatal accident rate--may warrant immediate attention.
               Although this accident rate has steadily declined in recent years,
               FAA did not meet its performance target in this area for fiscal
               year 2006 due to four accidents, including two accidents on runway
               and ramp areas and one runway overrun. FAA's ability to deal with
               current safety issues and the transition to NextGen would be
               enhanced by (1) acquiring and deploying new safety enhancing
               technologies; (2) establishing appropriate regulatory approaches
               for current airspace users and emerging sectors; (3) improving the
               accuracy and completeness of its safety data; and (4) addressing
               human capital issues associated with hiring, training, and
               deploying its skilled workforce of air traffic controllers, safety
               inspectors, engineers, and technicians.

    			  FAA Faces Challenges in Implementing Advanced Technology and Other
    			  Measures to Improve Safety in the Airport Environment

               Safety in the airport environment is an area of increasing concern
               because air traffic is forecast to grow substantially during the
               coming decades. More aircraft and congestion at the airport will
               make maintaining safety even more critical, as the airport
               environment involves enormously complex interactions between air
               traffic controllers and the people who operate on the airport
               surface, including pilots, mechanics, maintenance technicians, and
               airport employees. FAA's efforts to improve safety in the airport
               environment include deploying NextGen technology, such as the
               Airport Surface Detection Equipment Model X (ASDE-X),^19
               evaluating runway status lights, and testing a low-cost surface
               surveillance system. FAA pursues new technologies to improve
               runway safety because the incursion rate at U.S. airports was
               higher in fiscal year 2006 than it was in fiscal year 2002.^20
               (Incursions are potential collisions on the ground.) However, the
               deployment of new technology has faced schedule delays. FAA
               originally planned to deploy ASDE-X at 35 major airports by 2007,
               but the technology is operational at only 8 airports to date, and
               deployment at the remaining 27 airports is not scheduled to be
               complete until 2011 (see fig. 4). At the same time, FAA is
               evaluating the performance of runway status lights, another
               technology aimed at preventing runway incursions by warning pilots
               when a runway is unsafe for crossing or departure. FAA expects to
               decide this year whether to deploy the system at 35 large airports
               at an estimated cost of $300 million. Although the 35 airports
               that are to receive ASDE-X--and may receive runway status
               lights--handle about 70 percent of enplanements in the United
               States, they represent only about 6 percent of the country's 573
               commercial service airports. Therefore, FAA is also evaluating a
               low-cost surface surveillance system that could meet the needs of
               small- to medium-sized airports. The system is designed to alert
               controllers of potential conflicts and hazards and provide direct
               warnings to pilots entering or approaching active runways.

    ^2Earned Value Management combines measurements of technical, schedule,
    and cost performance with the intent of providing an early warning of
    problems while there is time for corrective action.

    ^3Delphi is a commercial off-the-shelf financial management system that
    was acquired by the Department of Transportation and fully implemented in
    FAA in 2003.

    ^4The reauthorization proposal includes, among other things, introducing
    direct user charges for commercial aircraft based on the cost of the air
    traffic services they receive, eliminating many current taxes,
    substantially increasing the fuel taxes general aviation operators pay,
    charging both commercial and general aviation a fuel tax to pay for
    airport capital improvements, and linking the contribution to FAA's budget
    from the General Fund of the U.S. Treasury to the public benefits FAA
    provides. Under the administration's proposal, these changes would begin
    in fiscal year 2009.

    ^5Revenue adequacy refers to the ability of FAA's funding system to
    produce revenues commensurate with workload changes over time. Equity
    refers to the equitable distribution of costs to aviation users.
    Efficiency refers to incentives that encourage the efficient use of the
    national airspace system.

    ^6GAO, Federal Aviation Administration: Observations on Selected Changes
    to FAA's Funding and Budget Structure in the Administration's
    Reauthorization Proposal, [22]GAO-07-625T (Washington, D.C.: Mar. 21,
    2007).

    ^7GAO, Federal Aviation Administration: Stronger Architecture Program
    Needed to Guide Systems Modernization Efforts, [23]GAO-05-266 (Washington,
    D.C.: Apr. 29, 2005); Air Traffic Control: System Management Capabilities
    Improved, but More can be Done to Institutionalize Improvements,
    [24]GAO-04-901 (Washington, D.C.: Aug. 20, 2004); and Information
    Technology: FAA Has Many Investment Management Capabilities in Place, but
    More Oversight of Operational Systems is Needed, [25]GAO-04-822
    (Washington, D.C.: Aug. 20, 2004).

    ^8EVM is a project management technique that combines measurements of
    technical performance, schedule performance, and cost performance with the
    intent of providing an early warning of problems while there is time for
    corrective action.

    ^9This work is in response to a joint request from this subcommittee and
    the Subcommittee on Aviation of the Senate Commerce, Science, and
    Transportation Committee.

    ^10ATO has the lead responsibility for both of these goals.

    ^11Scheduled outages occur for scheduled maintenance.

    ^12GAO, National Airspace System: Transformation will Require Cultural
    Change, Balanced Funding Priorities, and Use of All Available Management
    Tools, [26]GAO-06-154 (Washington, D.C.: Oct. 14, 2005).

    ^13Prior to expansion of the OEP, the document centered on plans for
    increasing capacity and efficiency at 35 major airports.

    ^14The planning documents include the Concept of Operations, Enterprise
    Architecture, and Integrated Work Plan. The 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. The Enterprise
    Architecture follows from the Concept of Operations and describes the
    system in more detail. It will be used to integrate planning efforts and
    drive partner agency guidance. The Integrated Work Plan lays out a
    timeline for deploying and integrating NextGen systems.

    ^15GAO, Next Generation Air Transportation System: Progress and Challenges
    Associated with the Transformation of the National Airspace System,
    [27]GAO-07-25 (Washington, D.C.: Nov. 13, 2006).

    ^16JPDO, Making the NextGen Vision a Reality: 2006 Progress Report to the
    Next Generation Air Transportation System Integrated Plan (Washington,
    D.C.: March 2007).

    ^17FAA has six capital investment programs that it considers
    transformational NextGen programs slated to receive funding in fiscal year
    2008: ADS-B nationwide implementation, System Wide Information Management
    (SWIM), NextGen Data Communications, NextGen Network Enabled Weather,
    National Airspace System Voice Switch, and NextGen Technology
    Demonstration. In addition, five other programs are slated to begin
    funding in 2009: NextGen System Development, NextGen High Altitude
    Trajectory Based Operations, NextGen High Density Airports, NextGen
    Networked Facilities, and NextGen Cross-Cutting Infrastructure.

    ^18 [28]GAO-07-25 .

    ^19ASDE-X is the upgraded digitally-based technology that enables air
    traffic controllers to detect potential runway conflicts by providing
    detailed coverage of movement on runways and taxiways. ASDE-X warns
    controllers of potential runway incursions.

    ^20The rate was 5.4 incursions per 1 million tower operations in fiscal
    year 2006 and 5.2 incursions per 1 million tower operations in fiscal year
    2002.

    Figure 4: Airport Surface Detection Equipment Model X (ASDE-X) Deployment
    Sites

    The number of serious incursions--incidents where a collision was narrowly
    avoided--rose from 28 in fiscal year 2004 to 31 in fiscal year 2006. As a
    result, NTSB continues to place runway incursions on its Most Wanted
    Transportation Safety Improvements list. FAA has not yet implemented any
    of the six runway incursion prevention recommendations that NTSB made in
    2000. The recommendations include such things as implementing at
    commercial airports ground movement safety systems that provide a direct
    warning to flight crews of possible incursions and changing air traffic
    control procedures.^21 According to NTSB, FAA has not completed its
    evaluation and implementation of technology to address the recommendation
    on safety systems, and the two agencies have not reached agreement on the
    recommendations to change air traffic control procedures.

    FAA is also making efforts to prevent runway overruns, which occur when
    aircraft pass the ends of runways during aborted takeoffs or while
    landing, by the construction of runway safety areas or the installation of
    arresting material at the end of runways. In 2000, FAA established its
    Runway Safety Area program to accelerate the construction of runway safety
    areas--areas surrounding the runways designed to reduce the risk of damage
    to aircraft from overruns. Since 2005, commercial service airports have
    been required^22 to bring their runway safety areas into compliance with
    FAA standards by 2015. According to FAA, as of January 2007, 70 percent of
    the 1,020 runways at 573 commercial airports in the United States
    substantially comply with runway safety area standards, up from 55 percent
    in 2000. In fiscal year 2006, the Airport Improvement Program (AIP)
    awarded more than $240 million in grants for runway safety area
    improvement projects. FAA indicates that about $1.1 billion in AIP funds
    will be needed to complete the remainder. The administration's budget
    request for FAA calls for $2.75 billion in AIP funds in fiscal year 2008,
    a substantial reduction from the $3.5 billion funding levels for fiscal
    years 2006 and 2007. It will be important for FAA to consider these runway
    safety areas as it prioritizes AIP funds. FAA considers the installation
    of an Engineered Materials Arresting System (EMAS), a bed of crushable
    concrete designed to safely decelerate and stop overrunning aircraft, to
    be an acceptable alternative for meeting runway safety area standards. As
    of December 2006, EMAS was installed on 21 runways at 16 U.S. airports and
    had successfully stopped three aircraft from overrunning runways. We are
    conducting ongoing work for this subcommittee on runway and ramp safety
    and expect to issue our final report later this year.

    ^21Recommended changes to air traffic control procedures include
    clarifying authorized runway crossings, increasing the situational
    awareness of the flight crews for arriving aircraft at night or in poor
    visibility conditions without relying on the controllers, and the use of
    international landing clearance procedures and standard phraseology for
    airport surface operations.

    ^22Public Law 109-115.

    FAA and Congress Should Address Regulatory Approaches to Some Current Airspace
    Users and Emerging Sectors

    Future air traffic is expected to include not only increases in the number
    of traditional airspace users, but new users as well. It will be important
    for FAA to establish the appropriate regulatory approach for current users
    and new users such as the emerging space tourism industry and unmanned
    aircraft systems. For example, we recently found that FAA's current
    oversight approach for air ambulances was not geared to the unique
    operating characteristics and risks associated with that sector.^23
    Further, in 2006, NTSB recommended, among other things, that FAA require
    that all air ambulance operators comply with Part 135 of Title 14 of the
    Code of Federal Regulations during all flights with medical personnel on
    board.^24 Under FAA regulation, most air ambulances operate under rules
    specified in Part 135. However, pilots may operate under different
    standards, depending on whether they are carrying patients. Without
    patients or passengers on board, pilots may operate under rules specified
    in Part 91 of Title 14 of the Code of Federal Regulations. With patients
    on board, pilots are required to operate under Part 135 rules. Parts 91
    and 135 flight rules differ significantly in two key areas--(1) weather
    and visibility minimums and (2) rest requirements--with Part 135
    requirements being more stringent.

    In many air ambulance trips, part of the trip may involve Part 135 rules,
    while another part may involve Part 91 rules. For example, scene response
    missions for air ambulance helicopters frequently have three legs--the
    flight en route to the accident scene, the transport of the patient to the
    hospital, and the reposition of the helicopter back to its base (see fig.
    5). Only the leg during which patients or other passengers (medical crew
    members are not considered passengers) are on board must be flown under
    Part 135 flight rules. Of the 89 air ambulance accidents that we examined
    from 1998 through 2005, 64 took place during Part 91 flight and the
    remaining 25 took place during Part 135 flight. However, because air
    ambulance flights without patients or passengers could be flown under Part
    91 requirements, there may be more than twice as many flights taking place
    under Part 91 compared with Part 135. A better understanding of the trends
    in the air ambulance industry, including accident data, will be important
    in deciding if the current regulatory approach is appropriate or if more
    fundamental changes, such as revising FAA regulations, need to be made.

    ^23GAO, Aviation Safety: Improved Data Collection Needed for Effective
    Oversight of Air Ambulance Industry, [29]GAO-07-353 (Washington, D.C.:
    Feb. 21, 2007).

    ^24NTSB, Special Investigative Report on Emergency Medical Services
    Operations (Washington, D.C.: 2006). According to NTSB, as of December 21,
    2006, this recommendation and others made in this report were still open.

    Figure 5: Air Ambulance Scene Flight Response Legs

    As another example, the need for a different regulatory approach for
    all-cargo operations has been raised. According to FAA, from 1998 through
    2005, the accident rate for scheduled air cargo operators declined
    significantly but was still about 2.5 times higher than the accident rate
    for scheduled passenger operators. The Congressional Research Service
    pointed out that the size of aircraft, the range of operations flown by
    all-cargo operators, and the large growth in the all-cargo sector
    introduce unique risks to operators, airports, and the public that may
    call for revisiting the safety standards that apply to all-cargo
    operations.^25

    25Congressional Research Service, Reauthorization of the Federal Aviation
    Administration: Background and Issues for Congress (Washington, D.C.: Jan.
    29, 2007).

    In recent work, we also raised issues concerning FAA's regulation of the
    emerging space tourism industry.^26 Specifically, we suggested that
    Congress should consider revisiting the granting of FAA's dual mandate for
    ensuring safety and promoting space tourism and decide whether the
    elimination of FAA's promotional role is necessary to alleviate a
    potential conflict. FAA licenses the operation of commercial space
    launches and launch sites. Historically, these launches carried commercial
    payloads and were unmanned. The prospect for commercial space tourism
    materialized in 2004, after the successful launches of SpaceShipOne raised
    the possibility of an emerging U.S. commercial space tourism industry that
    would make human space travel available to the public. Several companies
    are planning to start taking paying passengers on suborbital flights
    within the next few years and a number of commercial spaceports are being
    planned. For example, Virgin Galactic intends to provide suborbital space
    flight from a planned spaceport in New Mexico starting in 2009. It plans
    to carry 3,000 passengers over 5 years, with 100 individuals having
    already paid the full fare of $200,000. Figure 6 shows current and planned
    spaceports. In 1984, the Commercial Space Launch Act gave DOT the
    authority to license and monitor the safety of commercial space launches
    and to promote the industry. It is important that FAA's statutory
    responsibility to promote the commercial space launch industry does not
    interfere with its safety oversight of the industry as the space tourism
    sector develops. We have no evidence that FAA's promotional activities,
    such as sponsoring an annual industry conference and publishing economic
    impact studies, have conflicted thus far with its safety regulatory role,
    but conflicts could occur as the industry matures.

    ^26GAO, Commercial Space Launches: FAA Needs Continued Planning and
    Monitoring to Oversee the Safety of the Emerging Space Tourism Industry,
    [30]GAO-07-16 (Washington, D.C.: Oct. 20, 2006).

    Figure 6: Federal Commercial Launch Sites and Existing and Proposed
    Spaceports in the United States, October 2006

    In addition, FAA faces the challenge of determining the circumstances
    under which it would regulate the safety of crew and space flight
    participants. In 2004, the Commercial Space Launch Amendments Act
    prohibited FAA from regulating crew and passenger safety before 2012,
    except in response to high-risk incidents, serious injuries, or
    fatalities. FAA has interpreted this limited authority as allowing it to
    regulate crew safety in certain circumstances and has been proactive in
    proposing regulations concerning emergency training for crews and
    passengers. However, FAA has not developed safety indicators by which it
    would monitor the developing space tourism sector and determine when to
    step in and regulate human space flight. We have recommended that the
    agency be proactive about safety rather than respond only after a fatality
    or serious incident occurs by identifying and monitoring safety indicators
    that might trigger the need for regulation before 2012. Actions have not
    been taken on our recommendations.

    Another emerging sector that poses regulatory issues is unmanned aircraft
    systems (UAS)^27 (see fig. 7), which are expected to be part of the mix of
    aircraft that will operate in NextGen. A small number of UASs are
    currently used by government agencies for a variety of purposes, such as
    border security, search and rescue, firefighting, military training
    exercises, and other law enforcement and homeland security initiatives.
    Recent projections indicate that over 10,000 UASs could be in operation in
    the United States by 2015, but FAA believes that the number may be less.
    We have work ongoing for this subcommittee to assess issues such as the
    technological and regulatory issues that remain in order for UASs to be
    safely integrated in the national airspace system, the timeframes for
    completing such work, and the identification of entities that should take
    the lead in such work. We expect to issue a report later this year.

    Figure 7: U.S. Air Force's Global Hawk UAS

    ^27Unmanned aircraft systems do not carry a human operator; they are
    either programmed for autonomous flight (called a "drone") or are flown
    remotely by a ground operator.

    Our preliminary work, indicates that UASs pose unique safety challenges
    and questions. For example, what standards should UASs meet to ensure that
    they detect, sense, and avoid other aircraft? What standards should be set
    for UAS safety and reliability? How should FAA classify UASs, which can
    range in size from very small, hand launched systems to those similar in
    size to a large passenger aircraft? What pilot qualifications are needed
    for UAS operators? FAA has begun to answer such questions by reviewing its
    existing safety regulations developed for manned aircraft to determine how
    or whether they need to be modified to enable UASs to be safely integrated
    into the national airspace system. FAA expects this to be a 5- to 10-year
    effort. In the meantime, FAA will continue its existing oversight approach
    and review each request to operate on a case-by-case basis. If FAA
    determines that a UAS can operate safely under specified conditions, the
    agency issues a certificate of authorization and the airspace is
    restricted during the period of operation.^28 In fiscal year 2006, FAA
    processed 96 applications for certificates of authorization and issued 62
    certificates. FAA projects that it will receive over 400 applications in
    2010. The agency may have difficulty handling such an increase under its
    existing case-by-case process, which could serve as a de facto limit on
    the number of UASs operating in the next few years.

    FAA Needs Improved Data and Analysis for Current Safety Oversight and for the
    Transition to NextGen

    FAA cannot rely on its current oversight approach, which focuses on
    labor-intensive inspections to maintain and expand the margin of safety,
    especially if substantial growth in air traffic materializes. FAA
    acknowledges this situation and sees the need to establish a safety
    information system that can provide an early warning of hazards that may
    lead to accidents and help the agency manage risk. However, our past work
    has found problems with the accuracy and completeness of FAA's safety
    data. For example, FAA does not collect actual flight activity data for
    general aviation operators, air taxis, or air ambulances. As a result, FAA
    lacks information to monitor the rate of accidents and determine the
    effectiveness of its oversight. We have recommended that FAA improve the
    accuracy and completeness of its safety data and evaluate this information
    to identify nationwide trends. FAA is in the early planning stages of
    addressing our recommendations, but more work remains.

    ^28A certificate of authorization allows an operator to use defined
    airspace for a specified time (up to one year, in some cases) and includes
    special provisions unique to each operation. For instance, a certificate
    may include a requirement to operate only under visual flight rules.

    An important aspect of FAA's safety oversight is the use of over 13,000
    private individuals and organizations, known as designees, to leverage
    inspector resources. Designees act as representatives of the agency to
    conduct many safety certification activities, such as administering flight
    tests to pilots, inspecting repair work by maintenance facilities, and
    approving designs for aircraft parts. In reviewing FAA's designee
    programs, we found that the agency's oversight of designees was hampered,
    in part, by limited data on designees' performance.^29 FAA is in the early
    stages of addressing our recommendation to improve the consistency and
    completeness of designee information. FAA is also changing and expanding
    the designee programs by replacing certain designee programs with an
    organization designation authorization. By expanding the number and types
    of organizational designees, FAA's role is being further transformed to
    monitoring the performance of organizations rather than overseeing the
    individuals who perform the certification activities. It will be important
    for FAA to have the data, evaluative processes, and a well-trained
    inspector staff to effectively monitor the new program to make sure that
    safety is not adversely affected.

    FAA is in the early stages of addressing some of these data issues as it
    begins planning a new system-- Aviation Safety Information Analysis and
    Sharing System--that would provide access to large volumes of industry
    safety data. 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 successful completion of this planning effort will be
    critical to FAA's ability to improve safety. In fiscal year 2008, FAA
    proposes budgeting $32 million for safety databases and computer systems.
    As FAA prioritizes the activities that it undertakes with these funds, it
    will be important to continue addressing these critical data limitations.

    In addition, FAA is shifting to a data-driven, risk-based approach to
    maintaining the agency's approximately 40,000 pieces of air traffic
    control equipment, but it has not yet determined its new data needs. FAA
    is in the very early planning stages of a 10-year or longer effort to
    switch to this new approach, termed reliability centered maintenance
    (RCM), which private industry and other federal agencies, such as the
    Department of Defense (DOD) and NASA, use to maintain equipment. FAA
    expects the new approach to improve equipment performance. However, we
    reported in November 2006 that FAA had not developed a plan to implement
    RCM, has not determined the data needs for RCM, and has not decided what
    training will be provided to staff.^30 As the agency moves forward with
    this approach, it will be important for FAA to address the issues we
    identified as well as work with stakeholders, including FAA maintenance
    technicians, to ensure that decisions are not driven entirely by cost
    savings and that the safety and efficiency of national airspace operations
    are not adversely affected.

    ^29GAO, Aviation Safety: FAA Needs to Strengthen the Management of Its
    Designees Programs, [31]GAO-05-40 (Washington, D.C.: Oct. 8, 2004).

    FAA Faces Human Capital Challenges

    FAA's ability to ensure safety in NextGen will also be affected by its
    ability to manage its human capital, including air traffic controllers,
    safety inspectors, engineers, and technicians. FAA faces a challenge in
    managing human capital due to contentious relations with its labor unions.
    Fourteen unions represent more than 34,000 of FAA's 43,200 full time
    permanent employees. With the exception of two unions--the National Air
    Traffic Controllers Association (NATCA) and the Professional Airway System
    Specialists (PASS), which represent about 23,000 FAA employees--12 unions
    have negotiated a contract or memorandum of agreement with FAA, according
    to agency officials. In April 2006, after reaching an impasse in
    negotiations with NATCA, FAA used its authority^31 to settle the impasse
    by imposing a contract on its air traffic controllers. After 4 years of
    contract negotiations with PASS, FAA reached an agreement in April 2006.
    The PASS membership, however, according to an FAA official, rejected this
    proposed contract. Subsequently, FAA filed a complaint with the Federal
    Labor Relations Authority claiming an unfair labor practice, according to
    the same FAA official. Until this complaint is adjudicated, the previous
    PASS contract remains in effect, according to the FAA official. Improving
    the contentious relationship between FAA and these unions could have
    positive effects on both the safety of FAA operations and the
    implementation of new air traffic management systems under NextGen. For
    example, delays in union approvals that may be needed to implement new
    systems could lead to delays in their implementation if labor management
    relations are acrimonious. In addition, the current contract situations
    have the potential to hinder FAA's ability to retain and recruit skilled
    technical staff.

    ^30GAO, FAA's Proposed Plan for Implementing a Reliability Centered
    Maintenance Process for Air Traffic Control Equipment, [32]GAO-07-81R
    (Washington, D.C.: Nov. 9, 2006).

    ^3149 U.S.C. S40122(a)(2).

    FAA estimates it will lose about 72 percent of its air traffic controller
    workforce over the next 10 years. (See fig. 8.) To replace these
    controllers, FAA plans to hire 15,004 new controllers from fiscal years
    2006 through 2016, according to the agency's March 2007 controller
    workforce plan. This recent hiring target is higher than FAA's June 2006
    hiring target^32 to reflect recent data indicating that controllers are
    retiring at a faster rate than FAA anticipated. To meet these higher
    targets, FAA has expanded its hiring sources, which had focused on
    individuals with prior FAA or 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 DOD's higher
    salaries than FAA's entry-level salary.^33 However, those new hires that
    lack prior air traffic control experience will require more training to
    become certified controllers.^34 Additionally, since it can take up to 3
    to 5 years for a controller to become certified, within a few years, a
    large portion of the controller workforce may be trainees and not fully
    certified. Based on FAA's hiring and retirement projections, by 2010,
    about 40 percent of the air traffic controller workforce will have 5 or
    fewer years of experience. This high percentage of newly hired controllers
    will continue for a number of years, making it important for FAA to
    carefully balance the ratio of trainees to certified controllers at each
    air traffic control facility.

    ^32In June 2006, FAA planned to hire 11,851 new air traffic controllers
    from 2006 through 2015. FAA's revised plan calls for hiring 13,641 new
    controllers for the same time period.

    ^33Under FAA's recently implemented contract with air traffic controllers,
    most current controllers continue to receive their existing base salaries
    and benefits, while new controllers are hired at lower wages.

    ^34Only newly hired controllers without any previous experience or
    specialized education are required to complete 5 weeks of initial
    qualification training.

    Figure 8: Estimated Controller Losses and Planned Hires, Fiscal Years
    2006-2016

    Note: Numbers for fiscal year 2006 represent actual losses and hires.

    In addition to the challenge of hiring and training new air traffic
    controllers, it will be important to deploy them in an optimal manner to
    reflect changing air traffic demands. FAA's recent controller workforce
    plan includes facility-by-facility staffing standards for fiscal year 2007
    expressed as ranges.^35 The staffing standards are intended to take into
    consideration facility-specific information, such as air traffic
    operations, productivity trends, expected retirements, and the number of
    controllers in training. These new standards are an improvement over FAA's
    historical approach, which was to compute the number of controllers needed
    systemwide and negotiate the distribution of these totals to the facility
    level. However, FAA's current staffing does not align with the new
    standards at about one-third of FAA's 314 facilities--93 of which are
    currently overstaffed and 11 understaffed. This situation adds further
    complexity to the controller hiring, training, and staffing issues that
    FAA must carefully manage in the upcoming years. Furthermore, FAA has not
    factored into its staffing standards or its projected hiring targets the
    effect of new NextGen technologies on controller workload. The new
    technologies will result in a more automated system that, over time, is
    expected to change the role of controllers as well as productivity. In
    future updates of the controller workforce plan, it will be important to
    begin to factor in this impact.

    ^35For example, the staffing range at the Seattle-Tacoma International
    Airport is from 23 to 29 controllers.

    Furthermore, having the right skill mix of safety inspectors and
    technicians and deploying them to make best use of their skills is
    especially important as new and developing sectors emerge. By 2010, 44
    percent of FAA's inspector workforce of about 3,865 will be eligible to
    retire. To begin addressing this situation, FAA has requested funding to
    hire an additional 87 inspectors in fiscal year 2008. In addition to
    maintaining a sufficient number of safety inspectors, it will be important
    to deploy them where they are most needed. However, FAA lacks a staffing
    model to accomplish this. The National Academy of Sciences recently
    completed a study that analyzed FAA's staffing processes for safety
    inspectors and identified a number of issues that the agency needed to
    address. For instance, the study indicated 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. In response
    to academy recommendations, FAA expects to develop a staffing model, but
    the agency does not have a specific time frame for initiating this effort.
    In addition, FAA lacks staffing standards for its approximately 6,100
    technicians, who are responsible for maintaining the agency's air traffic
    control equipment. The development of staffing models for safety
    inspectors and technicians is important in the changing aviation
    environment and is critical to FAA's ability to ensure that its safety
    programs and workload are aligned to meet the future demands for which
    NextGen is preparing.

    For further information about this testimony, please contact Dr. Gerald L.
    Dillingham at (202) 512-2834 or dillinghamg@gao.gov. Individuals making
    key contributions to this testimony include Faye Morrison, Teresa Spisak,
    Nancy Boardman, Anne Dilger, Sharon Dyer, Kevin Egan, Colin Fallon, Jim
    Geibel, Bob Homan, Rosa Leung, Ed Menoche, Taylor Reeves, Richard Scott,
    Jeremy Sebest, Larry Thomas, Pam Vines, and Carrie Wilkes.

    Related GAO Products

    Federal Aviation Administration: Observations on Selected Changes to FAA's
    Funding and Budget Structure in the Administration's Reauthorization
    Proposal. [33]GAO-07-625T . Washington, D.C.: March 21, 2007.

    Aviation Safety: Improved Data Collection Needed for Effective Oversight
    of Air Ambulance Industry. [34]GAO-07-353 . Washington, D.C.: February 21,
    2007.

    Federal Aviation Administration: Challenges Facing the Agency in Fiscal
    Year 2008 and Beyond. [35]GAO-07-490T . February 14, 2007.

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

    FAA's Proposed Plan for Implementing a Reliability Centered Maintenance
    Process for Air Traffic Control Equipment. [37]GAO-07-81R . Washington,
    D.C.: November 9, 2006.

    Aviation Safety: FAA's Safety Efforts Generally Strong but Face
    Challenges. [38]GAO-06-1091T . Washington, D.C.: September 20, 2006.

    Commercial Space Launches: FAA Needs Continued Planning and Monitoring to
    Oversee the Safety of the Emerging Space Tourism Industry. [39]GAO-07-16 .
    Washington, D.C.: September 20, 2006.

    Aviation Safety: FAA's Safety Oversight System Is Effective but Could
    Benefit from Better Evaluation of Its Programs' Performance.
    [40]GAO-06-266T . Washington, D.C.: November 17, 2005.

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

    Aviation Safety: System Safety Approach Needs Further Integration into
    FAA's Oversight of Airlines. [42]GAO-05-726 . Washington, D.C.: September
    28, 2005.

    Federal Aviation Administration: Stronger Architecture Program Needed to
    Guide Systems Modernization Efforts. [43]GAO-05-266 . Washington, D.C.:
    April 29, 2005.

    Aviation Safety: FAA Needs to Strengthen the Management of Its Designees
    Programs. [44]GAO-05-40 . Washington, D.C.: October 8, 2004.

    Air Traffic Control: System Management Capabilities Improved, but More can
    be Done to Institutionalize Improvements. [45]GAO-04-901 . Washington,
    D.C.: August 20, 2004.

    Information Technology: FAA Has Many Investment Management Capabilities in
    Place, but More Oversight of Operational Systems is Needed. [46]GAO-04-822
    . Washington, D.C.: August 20, 2004.

    (540146)

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    www.gao.gov/cgi-bin/getrpt?GAO-07-636T .

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    Highlights of [54]GAO-07-636T , a testimony before the Subcommittee on
    Aviation, Committee on Transportation and Infrastructure, House of
    Representatives

    March 22, 2007

    FEDERAL AVIATION ADMINISTRATION

    Key Issues in Ensuring the Efficient Development and Safe Operation of the
    Next Generation Air Transportation System

    The Federal Aviation Administration (FAA) operates one of the safest air
    transportation systems in the world. It is, however, a system under
    strain. The skies are becoming more crowded every day, with an estimated 1
    billion passengers per year expected by 2015. The current aviation system
    cannot be expanded to meet this growth. The reauthorization of FAA is an
    opportunity to examine how the agency is managing the operation and safety
    of the air transportation system as it leads the transition to the Next
    Generation Air Transportation System (NextGen)--a major redesign of the
    current system. GAO's testimony focuses on key issues related to FAA's
    reauthorization, including (1) FAA's progress in implementing initiatives
    that could provide a solid foundation for NextGen, (2) issues that need to
    be addressed to help ensure a successful transition to NextGen, and (3)
    safety areas that are important for the continued safe operation of the
    current and future system. This statement is based on recent GAO reports
    and ongoing work on some management and safety initiatives.

    [55]What GAO Recommends

    This testimony does not contain recommendations. However, GAO reports
    containing relevant recommendations are listed among the Related GAO
    Products, some of which FAA is in the process of responding to.

    FAA has made significant progress in moving to more businesslike and
    cost-effective operations and modernizing the air traffic control system.
    This progress should better position the agency for the complex
    implementation of NextGen. However, further work remains to fully address
    past problems in the modernization effort while at the same time finding
    new leadership--due to losses of key leaders at FAA and its Air Traffic
    Organization--that can continue an agencywide commitment to
    transformation. While FAA has improved its financial management
    capability, including implementing a new cost accounting system and
    developing a cost allocation methodology, it is not yet clear if that
    methodology provides a sound basis from which to derive the
    administration's proposed new cost-based funding structure for FAA. In
    addition, improved acquisition processes, such as establishing guidance on
    using Earned Value Management, are positive steps, but they need to be
    fully implemented across all critical acquisitions. As FAA works toward
    acquiring and deploying NextGen technology, it will also be important to
    phase out existing air traffic control equipment using a risk-based
    approach and continue to maintain existing systems.

    Key issues that FAA needs to address as it begins implementing NextGen
    include continued focus on coordination with the Joint Planning and
    Development Office (JPDO). FAA, in coordination with JPDO, is developing
    an implementation plan for NextGen that is expected to include details of
    the required technologies, procedures, and resources. This is a step in
    the right direction. While FAA estimates that its cost for NextGen
    programs may range between $15 billion and $22 billion, it will be
    important to determine which entities will fund and conduct the necessary
    developmental research. Also, GAO has recommended that FAA assess its
    capacity to handle the technical and contract management expertise to
    determine if it has the capabilities required to oversee the
    implementation of NextGen. FAA is considering action that would respond to
    this recommendation.

    To deal with current safety issues and the transition to NextGen, it will
    be important for FAA to address safety in the airport environment, where
    forecasted traffic growth could lead to increased ground congestion and
    safety hazards. FAA also needs to establish the appropriate regulatory
    approach for certain current airspace users, such as air ambulances, and
    new users, such as the emerging space tourism industry. In addition, to
    maintain and expand the margin of safety, especially if substantial growth
    in air traffic materializes, FAA will need to rely more on data than on
    labor-intensive inspections. GAO has recommended that FAA improve its
    safety data. FAA has taken some action to improve its data, but more work
    remains. FAA's ability to ensure a safe system will also be affected by
    its ability to hire, train, and deploy its workforce of air traffic
    controllers, inspectors, and technicians.

    References

    Visible links
      22. http://www.gao.gov/cgi-bin/getrpt?GAO-07-625T
      23. http://www.gao.gov/cgi-bin/getrpt?GAO-05-266
      24. http://www.gao.gov/cgi-bin/getrpt?GAO-04-901
      25. http://www.gao.gov/cgi-bin/getrpt?GAO-04-822
      26. http://www.gao.gov/cgi-bin/getrpt?GAO-06-154
      27. http://www.gao.gov/cgi-bin/getrpt?GAO-07-25
      28. http://www.gao.gov/cgi-bin/getrpt?GAO-07-25
      29. http://www.gao.gov/cgi-bin/getrpt?GAO-07-353
      30. http://www.gao.gov/cgi-bin/getrpt?GAO-07-16
      31. http://www.gao.gov/cgi-bin/getrpt?GAO-05-40
      32. http://www.gao.gov/cgi-bin/getrpt?GAO-07-81R
      33. http://www.gao.gov/cgi-bin/getrpt?GAO-07-625T
      34. http://www.gao.gov/cgi-bin/getrpt?GAO-07-353
      35. http://www.gao.gov/cgi-bin/getrpt?GAO-07-490T
      36. http://www.gao.gov/cgi-bin/getrpt?GAO-07-25
      37. http://www.gao.gov/cgi-bin/getrpt?GAO-07-81R
      38. http://www.gao.gov/cgi-bin/getrpt?GAO-06-1091T
      39. http://www.gao.gov/cgi-bin/getrpt?GAO-07-16
      40. http://www.gao.gov/cgi-bin/getrpt?GAO-06-266T
      41. http://www.gao.gov/cgi-bin/getrpt?GAO-06-154
      42. http://www.gao.gov/cgi-bin/getrpt?GAO-05-726
      43. http://www.gao.gov/cgi-bin/getrpt?GAO-05-266
      44. http://www.gao.gov/cgi-bin/getrpt?GAO-05-40
      45. http://www.gao.gov/cgi-bin/getrpt?GAO-04-901
      46. http://www.gao.gov/cgi-bin/getrpt?GAO-04-822
      54. http://www.gao.gov/cgi-bin/getrpt?GAO-07-636T
    *** End of document. ***