National Transportation Safety Board:
Observations on the Draft Business Plan for NTSB's Training Center
GAO-07-886R, Jun 14, 2007
- Accessible Text:
The National Transportation Safety Board (NTSB) opened a training center in 2003 to train its investigators and others from the transportation community on accident investigation techniques. As GAO reported last year, NTSB's training center is not cost-effective, as its revenues, when combined with the external training costs NTSB staff avoid by using the center, do not cover its costs. In fact, in fiscal year 2006, costs exceeded revenues by $2.7 million. We concluded that potential strategies to increase revenues or decrease costs could increase the cost-effectiveness of the training center; however, vacating the space may be the strategy that reduces costs the most. On December 21, 2006, Congress passed Public Law 109-443, requiring NTSB to prepare a utilization plan for the training center that would, among other things, consider other revenue-generating measures, such as subleasing the training center to another entity; include a detailed financial statement covering current training center expenses and revenues and an analysis of the projected expenses and revenues; and submit the plan to us for review and comment within 90 days of passage of the act. NTSB prepared a draft business plan for the training center and provided the draft to us on March 28, 2007. We are mandated to review and comment on the draft plan so that NTSB can submit a final plan to Congress within 180 days of the enactment of Public Law 109-443. In reviewing and commenting on the draft business plan, we are addressing the following questions: (1) To what extent are relevant marketing and financial data and assumptions included in the plan? (2) Based on the available information, is the plan likely to achieve its objective of self-sufficient operation of the training center by the end of fiscal year 2010?
The business plan provides little rationale for its relevant marketing and financial data and assumptions. In addition, the business plan presents some historical and projected financial data and calls for a revenue-sharing strategy with a vendor for the length of the contract but lacks explanations of important assumptions, such as a 10 percent growth in revenues. The plan also does not provide significant information about historical or projected revenues and expenses of the training center, such as whether (1) expenses are presented as full cost, (2) salaries and benefits of NTSB staff used for teaching or developing courses are included in expenses, and (3) revenue includes an amount representing fees that NTSB staff attending the training center would pay if they were charged. The business plan lacks sufficient data or analysis to determine whether it is likely to achieve its goal of recovering 100 percent of the training center's operating expenses by the end of fiscal year 2010. In addition, the time frame for receiving proposals from interested vendors has already been extended once, indicating that the ambitious time frames contained in the plan are questionable. Furthermore, even if the business plan achieves its goal of self-sufficient operations by the end of fiscal year 2010, substantial expenses, amounting to over $2 million each year, will have to be covered by annual appropriations because the plan's definition of self-sufficiency excludes lease payments from expenses. We conclude that the overall strategy presented in the business plan--to hire a vendor to operate the training center--is reasonable. However, the plan provided too little rationale for its marketing and financial assumptions for us to assess the viability of this strategy. Since the success of the plan relies on marketing and financial analyses that will be developed by the potential vendor, it will be important for NTSB to have staff in-house who are capable of assessing the reasonableness of that information or to hire outside expertise to do so.