National Airspace System:

Transformation will Require Cultural Change, Balanced Funding Priorities, and Use of All Available Management Tools

GAO-06-154: Published: Oct 14, 2005. Publicly Released: Nov 14, 2005.

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The National Airspace System (NAS) is a complex network of airports, aircraft, air traffic control (ATC) facilities, employees, and pilots. The aviation industry, which depends on the NAS, contributes about 9 percent to the gross domestic product. The Federal Aviation Administration (FAA), funded through a tax-financed trust fund and General Fund appropriations, is pursuing a multibillion-dollar modernization program. Persistent cost, schedule, and/or performance shortfalls have kept this program on GAO's list of high-risk programs since 1995. GAO was asked to review the status of NAS modernization. This report addresses NAS status by identifying the challenges that FAA faces in managing (1) infrastructure, (2) human capital, and (3) financial resources.

GAO's recent reports indicate that FAA has made progress in managing its infrastructure--the systems, facilities, airports, and navigation aids that comprise the NAS--but acquisition, security, and capacity challenges remain. FAA met its fiscal year 2004 acquisitions performance goal. This goal was consistent with the President's Management Agenda and represents a positive step. However, FAA needs to continue addressing four key factors that, as GAO has reported, have historically contributed to acquisitions' missing their original cost, schedule, and performance targets: (1) actual funding less than planned, (2) increases in projects' scope, (3) underestimates of software complexity, and (4) insufficient stakeholder involvement. To address these factors, FAA has begun to prioritize its investments by considering their potential to reduce operational costs and by developing a blueprint for information technology investment; but FAA still needs to secure information technology systems and expand the NAS's capacity for an expected 25 percent increase in air travel by 2015. Human capital management challenges include hiring and training thousands of air traffic controllers to replace those expected to retire over the next decade and creating a results-oriented culture. FAA has developed a controller staffing plan, but has not estimated its cost, and therefore, cannot determine its impact on future budgets. Efforts to transform FAA's workforce culture address an impediment to ATC modernization that GAO has identified, but will require a sustained, multiyear commitment. Rising costs and shrinking revenues pose financial management challenges. To manage costs, FAA is using a new cost accounting system and emphasizing accountability. However, in view of current and anticipated funding reductions, FAA has eliminated initial research and development funding for new technologies that could support the next-generation air transportation system. Some stakeholders and FAA officials are discussing potential changes to FAA's funding mechanism. Some experts, and GAO's work, suggest that FAA pursue near-term options, such as contracting out more services. After establishing a sound financial management record, FAA could pursue options for greater financial management flexibility.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: At the time we made this recommendation, the Joint Planning and Development Office (JPDO) was just being established and the concept of the Next Generation Air Transportation System (NextGen) was not widely accepted. JPDO officials pointed to two systems that were to be the conrnerstones of NextGen--Automatic Dependent Surveillance - Broadcast (ADS-B) and System Wide Information Management (SWIM). However, FAA's 2005 - 2009 capital investment plan eliminated funding for these new programs. Since that time, these programs have become fully funded and FAA has embraced NextGen as its modernization program.

    Recommendation: To position FAA to best meet NAS needs in both the near term, and the longer term, the Secretary should direct the FAA Administrator to balance current and long-term investment priorities.

    Agency Affected: Department of Transportation

  2. Status: Closed - Implemented

    Comments: In 2006, we reported that FAA faced an $8.2 billion gap between its expected budget targets and expected spending requirements through fiscal year 2009. Under its existing budget targets set through fiscal year 2009, we reported that FAA would receive about 17 percent less each year in capital funding than it received in fiscal years 2002, 2003, and 2004. At that time, aviation stakeholders, experts, and Department of Transportation officials were discussing whether and how FAA's funding mechanism should be changed to better meet the agency's needs. Some aviation experts stated that FAA's basic relationship with Congress must change so that the agency can manage its own finances more like a business. We recommended that, after establishing a record of improved financial management, FAA explore fundamental changes that could provide greater financial management flexibility. In 2005, GAO removed FAA from its high risk list for financial management. In 2007, the administration proposed the Next Generation Air Transportation System Financing Reform Act of 2007, which would fundamentally change FAA's funding mechanism by introducing cost-based charges for commercial users of air traffic control services, eliminating many current taxes, substantially raising fuel taxes for general aviation users to pay for their use of air traffic control services, and charging commercial and general aviation users a fuel tax to pay primarily for airport capital improvements. FAA continued to push for this legislative change in 2008 as a way to better align its costs and revenues.

    Recommendation: To ensure that FAA provides the long-term focus needed for an effective cultural transformation, the Secretary of Transportation should direct the FAA Administrator to provide sustained oversight of efforts to transform FAA's workforce culture to one that is more results-oriented, including periodically monitoring the agency's progress against baseline data.

    Agency Affected: Department of Transportation

  3. Status: Closed - Implemented

    Comments: Since 2007 the FAA has provided an estimate of the expected compensation costs for newly hired controllers by year over a ten year period in each version of the Controller Workforce Plan. Additionally, beginning with its fiscal year 2010 budget justification, FAA is detailing the cost of controller training.

    Recommendation: To provide Congress with accurate information on the resources needed to hire and train thousands of air traffic controllers over the next decade, the Secretary of Transportation should direct the FAA Administrator to estimate the cost of FAA's controller hiring and training plan and incorporate these estimates into future budget requests.

    Agency Affected: Department of Transportation

  4. Status: Closed - Implemented

    Comments: GAO has removed FAA from its high risk list for financial management. FAA has submitted a reauthorization proposal that is based on a user fee approach in an attempt to better align the agency's costs and revenues, as well as an attempt to secure debt financing for some modernization investments. FAA has made a number of management changes to manage its finances and acquisitions in a more business-like manner and has institutionalized these changes.

    Recommendation: To position FAA to best meet NAS needs in both the near term, and the longer term, the Secretary should direct the FAA Administrator to use all available management tools and, after establishing a record of improved financial management, explore more fundamental changes that could provide greater financial management flexibility.

    Agency Affected: Department of Transportation

 

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