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Report to Congressional Requesters: 

October 2005: 

National Airspace System: 

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

GAO-06-154: 

GAO Highlights: 

Highlights of GAO-06-154, a report to congressional requesters. 

Why GAO Did This Study: 

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. 

What GAO Found: 

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. 

What GAO Recommends: 

To facilitate NAS modernization, GAO recommends that FAA (1) estimate 
controller hiring and training costs, (2) establish a long-term focus 
on developing a more results-oriented culture, (3) balance immediate 
and long-term investment needs, and (4) pursue options for improved 
system management and development. 

In commenting on a draft of this report, agency officials described 
ongoing actions consistent with the third and fourth recommendations, 
but did not comment on the others. GAO believes that all four 
recommendations are needed. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Gerald L. Dillingham, 
Ph.D. (202) 512-2834, dillinghamg@gao.gov. 

[End of section] 

Contents: 

Letter: 

Executive Summary: 

Purpose: 

Background: 

Results in Brief: 

Principal Findings: 

Recommendations for Executive Action: 

Agency Comments and GAO Evaluation: 

Chapter 1: Introduction: 

FAA Manages the National Airspace System, a Complex Collection of 
Systems and Infrastructure: 

FAA Envisions a More Flexible and Efficient NAS: 

Numerous Reviews of FAA's Modernization Efforts Have Identified 
Problems and Proposed Solutions: 

Objectives, Scope, and Methodology: 

Agency Comments and Our Evaluation: 

Chapter 2: FAA Has Made Changes to Improve Infrastructure Management, 
but Acquisition, Security, and Capacity Challenges Remain: 

FAA Met Its 2004 Acquisitions Performance Goal: 

FAA Is Addressing Key Factors That Contributed to Legacy Cost, 
Schedule, and/or Performance Problems, but More Work Remains: 

FAA Faces Challenges in Ensuring Information Security: 

FAA Faces Challenges in Expanding NAS Capacity to Meet Current and 
Future Needs: 

Agency Comments: 

Chapter 3: Human Capital Management Challenges Include Hiring Air 
Traffic Controllers and Transforming FAA’s Organizational Culture:

FAA Will Need to Hire and Train Thousands of Controllers in the Next 
Decade: 

FAA Has Made Progress in Implementing Human Capital Reforms, but 
Challenges Remain in Transforming Its Workforce Culture: 

Conclusions: 

Recommendation for Executive Action: 

Agency Comments: 

Chapter 4: Rising Costs and Declining Revenues Pose Financial 
Management Challenges:

To Address Rising Costs and Declining Revenues, FAA Is Focusing on Cost 
Control: 

To Fund Major System Acquisitions through Fiscal Year 2009, FAA Has Cut 
Funding for Planned Investments in Other Areas: 

FAA Is Reviewing Potential Changes in Its Funding Mechanism: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendixes: 

Appendix I: Methodology for Workforce Culture Assessment: 

Appendix II: Major ATC System Acquisitions: 

Appendix III: Perceptions of Organizational Culture in FAA's 
Acquisition Workforce and in Other Organizations: 

Appendix IV: Key Practices and Implementation Steps for Mergers and 
Organizational Transformations: 

Tables: 

Table 1: NAS Overview: 

Table 2: Four Key Interrelated Factors Contributing to Cost Growth, 
Schedule Extensions, and/or Performance Shortfalls for 12 ATC System 
Acquisitions: 

Table 3: Common Themes and Number of Findings from ATO's Headquarters 
Activity Value Analysis: 

Table 4: FAA Capital Funding Plans for Major ATC Modernization 
Acquisitions: 

Table 5: Age of NAS Facilities: 

Table 6: Number of Surveys That FAA Mailed to the Acquisition Workforce 
and Completed Surveys Received in 1997, 2000, and 2003: 

Figures: 

Figure 1: Phases of Flight: 

Figure 2: Trust Fund Revenue Sources, Fiscal Year 2004: 

Figure 3: Trust Fund Expenditures by Category, Fiscal Year 2004: 

Figure 4: Relationship of FAA's Plans to Department-Level and Executive 
Branch-Level Plans: 

Figure 5: Wide Area Augmentation System: 

Figure 6: Local Area Augmentation System: 

Figure 7: Prior and Current Structure of Research and Acquisitions, Air 
Traffic Services, and Free Flight Organizations: 

Figure 8: Commissioned and Planned Runways, December 1999 to November 
2008: 

Figure 9: Projected Controller Retirements, Fiscal Years 2005-2014: 

Figure 10: Cultural Changes and Key Practices Necessary for Successful 
Transformation: 

Figure 11: Changes in Mean Response Scores for Selected Items on FAA's 
Employee Attitude Surveys, 1997 to 2000, and 2000 to 2003, for the 
Acquisition Workforce 58: 

Figure 12: Actual Capital Appropriations, Fiscal Years 2002-2005, and 
Budget Targets, Fiscal Years 2006-2009: 

Figure 13: Aviation and Airway Trust Fund Expenditures and Revenues, 
Fiscal Years 2002-2004: 

Figure 14: Aviation and Airway Trust Fund Uncommitted Balances, Fiscal 
Years 2002-2004: 

Figure 15: Percentage Reductions in Capital Investment Plans as of 
January 2005, Compared with January 2003: 

Figure 16: Acquisition Workforce's Mean Responses to Selected Items 
from FAA's 1997, 2000, and 2003 Employee Attitude Surveys and 
Comparison Group's Mean and Benchmark Scores for Similar Items: 

Abbreviations: 

ADS-B: Automatic Dependent Surveillance-Broadcast: 

ATC: air traffic control: 

ATO: Air Traffic Organization: 

ATOP: Advanced Technologies and Oceanic Procedures: 

CPDLC: Controller-Pilot Data Link Communications: 

DOD: Department of Defense: 

ECG: En Route Communications Gateway: 

ERAM: En Route Automation Modernization System: 

FAA: Federal Aviation Administration: 

FTI: Federal Telecommunications Infrastructure: 

GPS: Global Positioning System: 

JPDO: Joint Planning and Development Office: 

LAAS: Local Area Augmentation System: 

NAS: National Airspace System: 

NEXCOM: Next Generation Air/Ground Communications: 

STARS: Standard Terminal Automation Replacement System: 

SWIM: System Wide Information Management System: 

TAMR: Terminal Automation Modernization Replacement: 

WAAS: Wide Area Augmentation System:

Letter: 

October 14, 2005: 

The Honorable Tom Davis: 
Chairman: 
The Honorable Henry A. Waxman: 
Ranking Minority Member: 
Committee on Government Reform: 
House of Representatives: 

The Honorable Don Young: 
Chairman: 
The Honorable James L. Oberstar: 
Ranking Democratic Member:
Committee on Transportation and Infrastructure: 
House of Representatives: 

The Honorable John L. Mica: 
Chairman: 
The Honorable Jerry F. Costello" 
Ranking Democratic Member: 
Committee on Transportation and Infrastructure: 
House of Representatives: 

In response to your request, this report discusses the status of 
national airspace modernization and the challenges that the Federal 
Aviation Administration (FAA) faces in managing its infrastructure, 
human capital, and financial resources. The report contains 
recommendations to the Secretary of Transportation to ensure that FAA 
(1) follows through with its efforts to improve workforce culture; (2) 
balances current and long-term investment priorities; and (3) in the 
near term, fully uses all existing flexibilities to reduce costs and 
manage revenues, and, in the longer term, determines whether a business 
case exists to pursue more extensive changes, such as those requiring 
legislation. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution of it until 30 
days from the date of this letter. At that time, we will send copies of 
this report to interested congressional committees and the Secretary of 
Transportation. We will also make copies available to others upon 
request. In addition, this report will be available at no charge on the 
GAO Web site at [Hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please call 
me at (202) 512-2834 or [Hyperlink, dillinghamg@gao.gov]. Contact 
points for our Offices of Congressional Relations and Public Affairs 
may be found on the last page of this report. Key contributors to this 
report are Tamara Dorland, Seth Dykes, Bess Eisenstadt, Brandon Haller, 
Maren McAvoy, Edmond Menoche, Beverly Norwood, and Mark Ramage. 

Signed by: 

Gerald L. Dillingham: 
Director, Physical Infrastructure Issues: 

[End of section] 

Executive Summary: 

Purpose: 

Since 1981, the Federal Aviation Administration (FAA) has been 
conducting a program to modernize the National Airspace System (NAS) at 
a cost of $43.5 billion, to date. In 2003, Congress passed legislation 
to create the Next Generation Air Transportation System Joint Planning 
and Development Office (JPDO) to transform the NAS to meet the 
potential air travel demands of 2025. The NAS's infrastructure includes 
the air traffic control (ATC) system, which relies on an extensive 
array of information technology systems, including radars, automated 
data processing, navigation and communications equipment, and ATC 
facilities. The NAS's infrastructure also includes over 215,000 
commercial and recreational aircraft as well as more than 19,000 
airports. The aviation industry is critical to the nation's economic 
health, contributing about 9 percent to the gross domestic product. 
However, the ability of the NAS to accommodate increasing volumes of 
air traffic is limited, in part, to airport capacity, as well as the 
efficiency with which aircraft utilize the finite amount of airspace 
available in the vicinity of airports and at cruising altitudes. The 
JPDO is beginning to plan a multiagency effort to create the Next 
Generation Air Transportation System (NGATS), intended to triple the 
capacity of the current NAS. The NAS's human capital includes FAA's 
50,000 employees--the air traffic controllers who guide aircraft as 
they take off, land, and fly between airports--and others who certify 
the safety of aircraft and equipment, manage ATC modernization 
projects, maintain NAS systems, and provide support services. Finally, 
the NAS's financial resources are vitally important to ensure that it 
continues to meet the nation's mobility needs. From fiscal years 2000 
through 2004, FAA's annual budget increased from $10.9 billion to 
approximately $14 billion; however, in fiscal year 2005, FAA received 
substantially less in capital funding than in prior years. FAA 
anticipates lean capital budgets for the immediate future, which 
enhances the need for FAA to manage its resources effectively. 

In 1995, GAO designated the ATC modernization program--a major 
component of NAS modernization--as a high-risk information technology 
initiative because of its size, complexity, cost, and problem-plagued 
past.[Footnote 1] FAA also faces challenges in expanding NAS capacity 
to accommodate future increases in demand for air travel as well as in 
hiring and training thousands of air traffic controllers to replace 
those expected to retire in the next decade. Additionally, FAA has 
attempted to change its workforce culture to one that stresses mission 
focus, coordination, accountability, and adaptability, but the agency 
has not provided the sustained leadership needed for lasting cultural 
change.[Footnote 2] 

Concerned about the challenges facing ATC modernization, the Chairman 
and Ranking Minority Member, House Committee on Government Reform, and 
the Chairmen and Ranking Democratic Members of the House Committee on 
Transportation and Infrastructure and its Subcommittee on Aviation 
asked GAO to provide an overall assessment of the status of NAS 
modernization. This report addresses the status of ATC modernization as 
well as other NAS components, by answering the following research 
question: What challenges does FAA face in managing three distinct 
areas: (1) infrastructure, (2) human capital, and (3) financial 
resources? This report is based on FAA documents and briefings as well 
as reviews and summaries of related GAO work. GAO also convened an 
international panel of experts to discuss the challenges of FAA's NAS 
modernization efforts and the prospects that the Air Traffic 
Organization (ATO)--a recently created subunit of FAA--holds for 
improving modernization management. In addition, GAO interviewed key 
stakeholders representing labor, commercial airlines, general aviation, 
and the Department of: 

Defense (DOD). This report discusses all aspects of the NAS except 
airline employees and FAA's aircraft and equipment safety assurance 
operations.[Footnote 3] (See ch. 1 for additional information on GAO's 
objective, scope, and methodology). 

Background: 

GAO has issued numerous reports on FAA's difficulty in meeting cost, 
schedule, and/or performance targets, as well as on FAA's management of 
information technology, which is at the heart of many modern ATC 
systems. GAO has also reported on FAA's efforts to expand NAS capacity 
and reduce delays, and on FAA's human capital challenges, such as the 
need to hire and train thousands of air traffic controllers in the 
coming decade to replace those becoming eligible to retire. Finally, 
GAO has pointed out that FAA's acquisitions were impaired because 
employees acted in ways that did not reflect a strong commitment to 
mission focus, accountability, coordination, and adaptability.[Footnote 
4] 

Congress and others have taken steps to address these issues. For 
example, Congress exempted FAA from federal personnel and acquisition 
regulations in 1995, after the 1993 National Performance Review found, 
and FAA asserted, that these regulations impeded its ability to 
properly manage the ATC modernization program. In 1997, the 
congressionally appointed National Civil Aviation Review Commission 
recommended that FAA's management become more performance-based and 
that changes be made in how FAA is funded. In December 2000, President 
Clinton signed an executive order, and Congress passed, supporting 
legislation that, together, provided FAA with the authority to create 
the performance-based ATO to control and improve FAA's management of 
the modernization effort. In February 2004, FAA reorganized, 
transferring 36,000 employees, most of whom worked work in air traffic 
services and research and acquisitions, to the ATO. 

In 2003, Congress authorized creation of a Joint Planning and 
Development Office (JPDO) to create and carry out an integrated plan to 
develop the next generation air transportation system, capable of 
meeting potential air traffic demand by 2025. While NAS modernization 
has previously been mainly under the purview of FAA, with a 10-year 
planning horizon, the JPDO is charged with coordinating research 
activities of multiple agencies, including FAA, to coordinate a 20-year 
research and development program. 

Results in Brief: 

As GAO reported, FAA has taken many positive steps to improve the 
management of its infrastructure, but it still faces significant 
challenges. FAA met its acquisition performance goal for 2004, which 
indicates a good start in addressing the factors that contributed to 
past system acquisition problems. However, FAA will need to continue 
addressing four key factors that, as GAO has reported, have 
historically contributed individually or collectively to acquisitions 
missing their original cost, schedule, and performance targets: (1) 
acquisitions receiving less funding than called for in agency planning 
documents, (2) adding requirements and/or unplanned work, (3) 
underestimating the complexity of software development, and (4) not 
sufficiently involving stakeholders throughout system 
development.[Footnote 5] To address these and other issues that GAO has 
identified, FAA has taken some actions, but in some cases, needs to do 
more. For example, to improve its acquisition of software-intensive ATC 
systems, FAA developed a process improvement model, but did not mandate 
the model's use throughout the organization. In response to GAO's 
recommendation that it do so, FAA has begun developing a requirement 
that projects have process improvement activities in place before 
seeking approval from the FAA investment review board. Moreover, GAO 
has reported that FAA's acquisition management system does not ensure 
the use of a knowledge-based approach found in the best practices for 
managing commercial product developments. Commercial best practices 
call for specific knowledge to be captured and used by corporate-level 
decision makers to determine whether an acquisition has reached a level 
of development (product maturity) sufficient to move forward in the 
acquisition process. Additionally, while FAA has begun to develop its 
NAS enterprise architecture--a blueprint to guide and constrain its 
information technology investments--the agency needs to do more to 
achieve the architecture's full benefits. Another challenge is 
protecting information technology systems--an issue that has been on 
GAO's high-risk list since 1997. GAO recently reported that FAA faces 
critical needs in protecting its information technology-intensive ATC 
systems from inadvertent or intentional disruption.[Footnote 6] 
Finally, FAA will be challenged to expand NAS capacity to accommodate 
anticipated increases in air travel. To this end, FAA is supporting the 
development of new runways and airports, and is redesigning flight 
patterns to make more efficient use of airspace as aircraft take off, 
cruise, and land. 

FAA's major human capital challenges include hiring and training 
thousands of air traffic controllers to replace those expected to 
retire, and transforming the agency's organizational culture. First, 
FAA will need to hire and train thousands of air traffic controllers in 
the next decade to replace those who were hired after the air traffic 
controllers' strike in 1981. As GAO recommended in 2002,[Footnote 7] 
FAA developed a comprehensive plan for this hiring and training effort. 
The plan describes expected recruitment sources, planned revisions to 
ATC facility staffing standards, a screening process to eliminate 
potentially unsuccessful candidates, and proposed upgrades to 
controller training facilities. To mitigate the costs of the controller 
training and hiring program, FAA's plan includes a number of steps that 
the agency expects will reduce controller staffing requirements by 10 
percent. However, FAA has not calculated the savings that each step 
will achieve or the total cost of hiring and training. As a result, FAA 
cannot estimate the impact of the hiring and training effort on future 
budgets. As of June 2005, FAA was studying a proposal that could save 
costs by allowing potential controllers, after graduating from aviation-
related college programs, to bypass FAA's controller training academy 
and immediately start their on-the-job training at an ATC facility. 
Second, FAA's workforce culture remains a concern. Responding to GAO's 
1996 finding that FAA's workforce culture impaired its acquisitions, 
the agency developed a strategy for cultural change, but did not 
sustain its efforts. FAA is now developing baseline data for measuring 
the progress of its cultural transformation. FAA's recent action is a 
good first step, but continued management focus and commitment will be 
needed for success in this area, since, as we have reported, at least 5 
years is needed to achieve cultural change.[Footnote 8] 

In managing its financial resources, FAA faces the dual challenges of 
rising costs and declining revenues that it projects will produce an 
$8.2 billion gap between expected budget targets and expected spending 
requirements through fiscal year 2009.[Footnote 9] FAA is striving to 
live within its reduced means by focusing on cost control and 
prioritizing projects. However, these actions will not come close to 
eliminating the gap, and some actions, such as cutting funding for new 
technology, come at the expense of future goals. For example, FAA 
eliminated $1.4 billion planned for early research, which included 
research on two systems that FAA had described as "cornerstones" of the 
NAS of the future. These technologies could have supported the JPDO's 
vision for the next generation air transportation system. As the 
expiration for the Aviation and Airway Trust Fund (Trust Fund) and 
FAA's reauthorization--both scheduled for 2007--approach, FAA 
officials, aviation experts, and stakeholders are discussing how to 
better align FAA's revenue structure with actual costs and changes in 
the aviation industry. Over half of the Trust Fund's income now comes 
from a ticket tax, which some stakeholders believe is not linked to 
FAA's costs. A congressionally appointed commission made a similar 
recommendation in 1997, that the FAA's revenue stream become more cost 
based. Some experts suggested that FAA work toward changes that would 
be possible within the existing federal structure, such as improving 
its process for prioritizing programs or exploring further options for 
contracting out services. Others maintained that the ATO's relationship 
with Congress must change to allow the ATO to manage its own finances. 
GAO has reported that to address the challenges of the 21ST Century, 
the nation needs to fundamentally reexamine such governance issues. In 
GAO's view, FAA could adopt a two-staged approach to address its 
financial management challenges: In the near term, make changes that 
are possible within the federal structure and establish a record of 
sound financial management. Over the longer term, determine whether 
sufficient evidence exists to develop a business case for more 
fundamental changes that could permit greater financial management 
flexibility. 

Principal Findings: 

FAA Has Made Changes to Improve Infrastructure Management, but 
Acquisition, Security, and Capacity Challenges Remain: 

GAO's recent reports on FAA's management of its infrastructure indicate 
that FAA has responded to several past recommendations, but needs to do 
more work to address continuing challenges. For example, FAA met its 
acquisition performance goal for fiscal year 2004--to meet 80 percent 
of designated milestones and maintain 80 percent of critical program 
costs within 10 percent of the budget, as published in FAA's Capital 
Investment Plan. This represents a good start. However, because the 
goal uses cost or schedule milestones that are set for each fiscal 
year, it needs to be viewed in the context of FAA's long-term 
acquisition performance. For example, during 2005, FAA plans to make 
changes to three major system acquisitions, effectively resetting the 
program milestones and cost targets against which it measures annual 
performance. Hence, this performance goal does not provide a consistent 
benchmark--such as the cost and schedule targets set at an 
acquisition's inception--for assessing progress over time. These annual 
performance targets should continue to be viewed in the broader context 
of acquisitions' original and revised baselines, and the variance 
reports provided to the FAA administrator and to Congress. 

FAA still faces challenges in addressing four factors that GAO found to 
be the cause of acquisitions missing their original cost, schedule, 
and/or performance targets. These factors---funding shortfalls, 
requirements growth and/or unplanned work, insufficient stakeholder 
involvement, and underestimation of software complexity--individually 
or collectively contributed to these problems and often interacted. For 
example, when developing a satellite navigation system, FAA 
underestimated the complexity of the system's software as it compressed 
the development schedule. This underestimate then contributed to 
unplanned work, cost increases, and schedule delays. 

To address these four factors and improve its general management of 
system acquisitions, FAA has taken several steps, but in a number of 
cases, it needs to do more. For example, FAA has obtained substantial 
benefits by developing and using a process improvement model in a 
number of software-intensive system acquisitions. FAA has begun 
developing a requirement that projects have process improvement 
activities in place before seeking approval from the FAA investment 
review board, as GAO recommended.[Footnote 10] Also in response to a 
GAO recommendation, FAA officials reported that they have improved the 
agency's investment portfolio management through semiannual reviews of 
in-service systems.[Footnote 11] FAA also changed its format for 
justifying major technology investments to a format prescribed by the 
Office of Management and Budget. However, FAA's acquisition management 
system still lacks a knowledge-based approach consistent with 
commercial best practices. Knowledge-based approaches ensure that, as 
acquisitions progress, officials obtain knowledge at specific junctures 
of an acquisition cycle, or knowledge points, thereby decreasing the 
risk of cost growth and schedule delays. Finally, although FAA has 
begun to develop a NAS enterprise architecture, it has not completed 
the architecture that it needs to manage its information technology 
investments.[Footnote 12] GAO's experience with federal agencies has 
shown that making information technology investments without defining 
these investments in the context of an architecture often results in 
duplication, poor integration, and unnecessary costs. 

GAO's most recent report on FAA's efforts to provide security for its 
information technology-intensive ATC systems notes that FAA needs to 
take steps to do more to protect these systems from inadvertent or 
intentional disruption.[Footnote 13] While FAA has established an 
information security program, the agency has not fully implemented it. 
As a result, GAO found outdated security plans, a lack of security 
awareness training, limited incident detection capabilities, and 
shortcomings in service continuity plans. GAO also found weaknesses 
that threaten the integrity, confidentiality, and availability of these 
systems, including weaknesses in controls over who can obtain access. 
Accordingly, GAO recommended several actions intended to improve FAA's 
information security program. FAA agreed to consider our 
recommendations, but expressed concern that we had overstated the 
system's vulnerability to disruption. We acknowledged that FAA may have 
other protections built into its overall system architecture. However, 
because these systems are interconnected, the weaknesses we identified 
in the systems that we reviewed may increase the risk to other systems. 

To accommodate an expected 25 percent increase in air travel, many 
airports are building new runways. FAA is leveraging the benefits of 
new and existing runways by redesigning flight procedures to allow 
properly equipped aircraft to take off, cruise, and land with reduced 
separation while maintaining safety. 

Human Capital Management Challenges Include Hiring Air Traffic 
Controllers and Transforming FAA's Organizational Culture: 

During the next decade, FAA will need to replace thousands of air 
traffic controllers who will become eligible for retirement. During the 
1980s and early 1990s, FAA hired large numbers of controllers to 
replace those who were fired when they went on strike in 1981. As a 
result, most of the current workforce will become eligible for 
retirement over the next 10 years. In December 2004, responding to 
GAO's recommendation,[Footnote 14] FAA issued a hiring and training 
plan. To mitigate the cost of the plan, FAA plans to rely on part-time 
employees and job-sharing arrangements. However, the plan does not 
disclose the cost of hiring and training controllers, and agency 
officials could not provide any analyses to support the plan's 
estimates of cost savings. Hence, the impact of this hiring and 
training program on future budgets is unclear. If FAA experiences 
shortages in controller staffing, the agency plans to maintain safety 
by slowing the traffic flow, which could result in delays. In June 
2005, FAA began considering whether prospective controllers who 
graduate from aviation-related programs in certain colleges could 
bypass the currently required academy training and instead proceed 
directly to an ATC facility to begin on-the-job training. Such a change 
in the training program holds potential for cost savings and is 
endorsed by union officials and by one of the colleges that prepares 
graduates for careers in aviation. 

FAA has implemented a number of human capital reforms in response to an 
exemption from federal personnel management regulations. FAA replaced 
the traditional civil service pay system with a series of pay bands and 
specific job categories that have minimum and maximum pay rates 
spanning two to five pay bands. FAA also established its own hiring 
program, a flexible system for adjusting the number of executive-level 
positions, and a new performance management system. 

FAA is taking steps to create a results-oriented culture, addressing a 
factor that we identified as an impediment to ATC modernization in 
1996. Recognizing the importance of organizational culture in achieving 
results, FAA's human capital plan includes a goal to create a results- 
based performance culture. Furthermore, FAA is using the results of its 
most recent employee attitude survey as a baseline to assess the 
organization's progress in adopting five core values that the 
management team selected. The core values are (1) integrity and 
honesty, (2) accountability and responsibility, (3) commitment to 
excellence, (4) commitment to people, and (5) fiscal responsibility. 
FAA's actions are good first steps, but continuous management attention 
over the next several years will be crucial to achieving the cultural 
change that FAA is seeking. GAO's work has highlighted the importance 
of recognizing organizational culture as a step in implementing mergers 
and transformations and has found that achieving cultural change 
typically takes 5 to 7 years years or longer.[Footnote 15] In the past, 
FAA's efforts at cultural change lacked follow-through and continuity. 
While there was some improvement in securing a more results-oriented 
culture, as measured by employee responses to surveys in 1997 and 2000, 
progress leveled off between the 2000 and the 2003 surveys. 

Rising Costs and Declining Revenues Pose Financial Management 
Challenges: 

FAA projects that rising costs and reduced budgets will create a 
cumulative gap of $8.2 billion between expected budget targets and 
expected spending requirements through fiscal year 2009. FAA's budget 
targets for capital for each year through fiscal year 2009 will be 17 
percent less, on average, than the annual appropriations it received in 
fiscal years 2002 through 2004. Additionally, recent trends in the 
Trust Fund, which provides most of FAA's funding, have raised concerns. 
Since 2002, FAA has spent more than the Trust Fund has taken in, and 
the Trust Fund's uncommitted balance has declined by nearly 50 percent. 
Although revenues increased in 2004, FAA's expenditures increased more. 
FAA is striving to live within its reduced means by cutting programs 
and focusing on cost control. For example, for fiscal year 2005, after 
an intensive review of its capital investment portfolio, FAA suspended 
the acquisition of a digital communications data link and a precision 
landing system augmented by satellites, and terminated a major 
component of a new digital communications system. Additionally, FAA has 
begun to implement a new cost accounting system, as GAO has long 
advocated. GAO had previously reported that FAA lacked the cost 
information necessary for decision making and for adequate accounts of 
its activities and major projects, such as the air traffic control 
modernization program. FAA also expects to save about $450 million over 
5 years through cost-reduction measures such as contracting out its 
flight service stations. However, FAA is not likely to meet its 
financial challenges through savings, given other pressing needs. FAA 
has had to significantly cut capital funding aimed at providing future 
benefits in order to remain within expected appropriations, while 
providing $4.2 billion for 16 major system acquisitions through 2009. 
For example, in its 2005 through 2009 capital investment plan, FAA 
eliminated the $1.4 billion that it had set aside for what it calls the 
"architecture segment," which would have supported initial research and 
development of new technologies, prior to initiating formal acquisition 
programs. This reduction comes at an inopportune time, as the JPDO 
begins its efforts to coordinate the research of FAA and other federal 
agencies to transform the NAS to meet potential capacity needs in 2025. 
FAA also cut nearly $790 million from its planned investments for 
facilities. While FAA has replaced many ATC facilities in the last 5 
years, the funding reduction could delay progress on ATC facilities 
that are scheduled for repair or replacement in the future. 

In anticipation of the Trust Fund's expiration and FAA's 
reauthorization, both scheduled for 2007, FAA officials, aviation 
experts, and stakeholders are debating the appropriateness of the 
current revenue structure and are reiterating some of the 
recommendations made in the past, such as those that the National Civil 
Aviation Review Commission made in 1997. Many stakeholders and aviation 
experts, as well as Department of Transportation officials, have 
suggested in various forums that FAA's funding mechanism needs to be 
changed to one that is more closely aligned with FAA's costs. FAA's 
2004 performance report notes that the current revenue structure is 
heavily reliant on the number of airline passengers in the NAS, while 
FAA's workload and costs are driven by the number of aircraft operating 
in the NAS. Some experts stated that to effectively manage its 
acquisitions, FAA needs multiyear funding, financed by debt if 
necessary, as the commission recommended. Others suggested that FAA 
take steps in the near term to reduce costs within the existing 
structure of congressional oversight and financial control, such as 
exploring additional opportunities to contract out night-time ATC 
services. Others went so far as to state that FAA cannot fully address 
legacy modernization problems without complete managerial and budgetary 
independence. GAO has reported that to address the challenges of the 
21ST Century, the nation needs to fundamentally reexamine what the 
government should do, how it should do business, and how it should be 
financed. GAO believes that in the near term, FAA must pursue currently 
available options, such as exploring additional opportunities for 
contracting out services and pursuing other cost-saving measures, and 
demonstrate improvement in its ability to manage its costs. After fully 
exploiting these options, and establishing a record of improved 
financial management, FAA could consider longer term changes by 
reexamining fundamental issues such as the appropriate government role 
in aviation and the funding mechanism that supports the ATC system. 
Ultimately, Congress and the President will decide these issues. 

Recommendations for Executive Action: 

GAO is recommending that FAA take the following four actions: (1) 
estimate the cost of its controller hiring and training plan and 
provide for these costs in future budget requests; (2) provide the long-
term commitment to transforming the culture to become more results 
oriented so that the change takes root; (3) balance current and long- 
term investment priorities; and (4) 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 Comments and GAO Evaluation: 

GAO provided a draft of this report to the Department of Transportation 
for its review and comment. In response, ATO managers; FAA's Chief 
Information Officer; and the Acting Director, Office of Financial 
Controls, provided oral comments. ATO managers noted that GAO's 
recommendations on balancing current and long-term investment 
priorities and using all available financial management tools may not 
be necessary because FAA is taking actions consistent with these 
recommendations. According to FAA, the agency's balancing of current 
and long-term investment priorities will be reflected in its fiscal 
year 2007 budget request, which was being formulated in parallel with 
GAO's work. GAO is retaining this recommendation because it pertains 
not only to fiscal year 2007, but to future years as well. FAA also 
commented that it is using all available management tools, including 
examining alternative funding mechanisms. GAO believes that FAA needs 
to pursue additional cost saving tools, such as exploring further 
opportunities to contract out services; consolidate major facilities; 
and accelerate decommissioning of ground-based navigation aids, as GAO 
has noted in this report. Therefore, GAO is retaining the 
recommendation to this effect. FAA did not comment on the other 
recommendations. FAA provided technical comments and clarifications 
throughout the report, which GAO incorporated as appropriate. 

[End of section] 

Chapter 1 Introduction: 

FAA Manages the National Airspace System, a Complex Collection of 
Systems and Infrastructure: 

The Federal Aviation Administration's (FAA) mission is to provide the 
safest, most efficient aerospace system in the world. This system, 
known as the National Airspace System (NAS), consists of (1) 
infrastructure (systems, procedures, facilities, airports and aircraft, 
communications equipment, satellite navigation aids, and radars); and 
(2) human capital (the people who make the NAS work-- commercial, 
military, and general aviation pilots and airline dispatchers, and FAA 
employees, including equipment maintenance technicians and air traffic 
controllers who work in airport towers, and terminal area, en route, 
and oceanic air traffic control (ATC) centers. (See table 1.) 

Table 1: NAS Overview: 

Infrastructure: Airports; 
Approximate number: 19,500. 

Infrastructure: Aircraft (large, regional, and general aviation); 
Approximate number: 215,000. 

Infrastructure: En route control centers; 
Approximate number: 21. 

Infrastructure: Oceanic control centers; 
Approximate number: 3. 

Infrastructure: Terminal radar approach facilities; 
Approximate number: 162. 

Infrastructure: Ground-based navigational aids; 
Approximate number: 2,200[A]. 

Infrastructure: Human capital. 

Infrastructure: FAA's Air Traffic Controllers; 
Approximate number: 15,000. 

Infrastructure: Other FAA employees; 
Approximate number: 35,000. 

Infrastructure: Pilots; 
Approximate number: 600,000. 

Source: FAA. 

[A] Includes approximately 950 nondirectional beacons owned by local 
governments and other entities. 

[End of table] 

The NAS covers every aspect of aviation in the United States, beginning 
with the aircraft itself. FAA certifies aircraft as safe to operate in 
the NAS, from the earliest stages of design to 30 years after entry 
into service. FAA also certifies the NAS's practices, personnel, and 
spare parts. Additionally, FAA sets standards for the construction and 
operation of the public and private airports located throughout the 
NAS. 

On a larger scale, the NAS is a highly technical system and includes 
some 36,000 pieces of equipment operating in hundreds of locations 
throughout the United States. This equipment can range from a single 
navigation beacon in Brooke, Virginia, to an air route traffic control 
center, such as that in Oberlin, Ohio, that handles en route traffic. 
The mission of this highly integrated system is to support all phases 
of flight for aircraft in the United States, from initial flight 
planning to successful takeoff, en route operations, and landing. (See 
fig. 1.) 

Figure 1: Phases of Flight: 

[See PDF for image] 

[End of figure] 

Definitions of phases of flight: 

Preflight: The period before the aircraft starts to move. It includes 
an extended strategic planning period that precedes flights. During 
this period, air traffic controllers compare the amount of traffic in 
the NAS with available capacity and develop initial strategies to 
mitigate any imbalances. 

Airport surface: The periods from the terminal gate to takeoff and from 
touchdown to the terminal gate at the destination. Air traffic 
controllers in airport towers control aircraft during this phase. 

Terminal departure and terminal arrival: The periods immediately 
following takeoff, when the aircraft initially climbs from the 
origination airport, and toward the end of a flight, when the aircraft 
descends to the destination airport. Air traffic controllers in airport 
towers control aircraft during the initial moments after takeoff and 
prior to landing, when the aircraft is within 5 nautical miles of the 
airport and up to 3,000 feet above the airport. Air traffic controllers 
at terminal approach control facilities, called TRACONS, control 
aircraft from the point where the airport tower's control ends to 
approximately 50 miles from the airport. 

En route: The phase that occurs between terminal areas, including the 
climb, cruise, and decent phases of the flight. Air traffic controllers 
at air route traffic control centers control aircraft during the en 
route phase of flight, and in some areas of the country, also control 
aircraft during the arrival and departure phases. 

Oceanic: Analogous to the en route phase, except the aircraft is 
operating in oceanic air space, where there are fewer communication, 
navigation, and surveillance capabilities than are available over land. 

The ATC system, which is a principal component of the NAS, comprises a 
vast network of radars; automated data processing, navigation and 
communication equipment; and air traffic control facilities. About 
15,000 air traffic controllers control aircraft in the system and 
provide critical data throughout every stage. They work in the 162 
terminal radar control facilities, the 21 air route traffic control 
centers that manage aircraft in the en route environment, and the 3 
oceanic control centers. All of these control centers are linked and 
managed through the Air Traffic Control System Command Center in 
Herndon, Virginia. The NAS also includes thousands of navigational aids 
throughout the United States that provide critical location information 
to pilots at all stages of their operations.[Footnote 16] 

The nation's 19,500 airports are key components of the NAS, as they 
serve as gateways to air travel. Several of the nation's largest 
airports, such as Chicago's O'Hare, New York's La Guardia, and 
Atlanta's Hartsfield, are at capacity and need immediate improvements. 
Because the NAS functions as an interdependent network, delays at these 
airports can quickly create a "ripple" effect of delays that affects 
many airports across the country. For example, flights scheduled to 
take off from these airports may find themselves being held at the 
departing airport due to weather or limited airspace. Similarly, an 
aircraft late in leaving the airport where delays are occurring may be 
late in arriving at its destination, thus delaying the departure time 
for that aircraft's next flight. 

The current NAS continues to reflect its origins as a system in which 
aircraft flew directly between ground-based navigational aids along FAA-
defined routes. The existing airspace structure and boundary 
restrictions strongly reflect the constraints that communication and 
computer systems imposed as the NAS developed over the past 80 years. 
The advanced information technology available today, such as satellite 
navigation systems onboard aircraft, digital communication, and 
computer decision-support systems, holds potential for increasing 
airspace capacity, improving aviation safety, and providing 
efficiencies to aircraft operators and service providers.[Footnote 17] 
FAA is working to harness this new technology by transitioning the NAS 
from a ground-based system to a hybrid that uses both ground-based and 
airborne systems, thereby allowing pilots to be the primary decision 
makers as they navigate their aircraft, while controllers intervene 
only by exception. Making this transition requires that procedures, 
roles, responsibilities, equipment, and automation functions evolve 
into a structure that gives users greater flexibility in planning and 
conducting flights. 

Such an evolution is a key component of the Joint Planning and 
Development Office's (JPDO) vision for the Next Generation Air 
Transportation System. In 2003, Congress directed the Secretary of 
Transportation to establish the JPDO to create, among other things, an 
integrated plan to ensure that the future air transportation system 
meets safety, security, mobility, efficiency, and capacity needs of the 
year 2025.[Footnote 18] The JPDO is expected to operate in conjunction 
with relevant programs in the National Aeronautics and Space 
Administration; the Departments of Defense, Commerce, and Homeland 
Security; and other agencies as needed. The JPDO published a report in 
December 2004 that describes the need for change in the NAS over the 
next 20 years.[Footnote 19] 

FAA receives most of its funding from the Airport and Airway Trust Fund 
(Trust Fund), which was established by the Airport and Airway Revenue 
Act of 1970[Footnote 20] to help fund the development of a nationwide 
airport and airway system as well as investments in air traffic control 
facilities. The Trust Fund receives most of its income from a number of 
taxes paid by passengers or airlines. (See fig. 2.) It funds the 
Airport Improvement Program, which provides grants that airports use in 
combination with other funding sources to finance construction and 
safety projects; capital expenditures; and the Research, Engineering, 
and Development account. (See fig. 3.) The General Fund provided 40 
percent of FAA's operating funds and 22 percent of FAA's total budget 
in fiscal year 2004. 

Figure 2: Trust Fund Revenue Sources, Fiscal Year 2004: 

[See PDF for image] 

Note: Transportation of persons includes domestic passenger ticket 
taxes, domestic flight segment fees, rural airports ticket taxes, and 
frequent flyer taxes. In the past, FAA had reported estimates of each 
of these taxes based on an internal allocation formula. Under that 
formula, passenger ticket taxes contributed about half of the Trust 
Fund's revenues. The Trust Fund also receives tax revenue from the sale 
of noncommercial aviation gasoline. In fiscal year 2004, this tax 
contributed 0.3 percent of Trust Fund revenues. 

[End of figure] 

Figure 3: Trust Fund Expenditures by Category, Fiscal Year 2004: 

[See PDF for image] 

[End of figure] 

To organize its efforts to manage the NAS, FAA has developed a variety 
of plans, which it links to the President's Management Agenda.[Footnote 
21] (See fig. 4.) FAA's strategic plan, titled the Flight Plan, 
provides a 5-year view of the agency's goals and performance measures. 
Each of the agency's major organizational units, called lines of 
business, develops a plan that supports the Flight Plan. The 
Operational Evolution Plan monitors how NAS capacity will change over a 
rolling 10-year planning horizon depending on numerous variables, such 
as the demand for air travel, the completion of new runways; and the 
availability of new ATC systems. Ultimately, FAA plans to link the 
Operational Evolution Plan and the 20-year plan of the JPDO. 

Figure 4: Relationship of FAA's Plans to Department-Level and Executive 
Branch-Level Plans: 

[See PDF for image] 

[End of figure] 

FAA Envisions a More Flexible and Efficient NAS: 

Satellite-based ATC systems and new digital communications systems are 
key elements of FAA's vision for NAS modernization. Under this vision, 
pilots would use performance-based navigation, which makes optimum use 
of an aircraft's capabilities, combined with new satellite and ground- 
based navigation systems and digital communications systems to use the 
NAS more efficiently. Properly equipped aircraft would navigate using 
satellite signals from the global positioning system (GPS). Because GPS 
alone does not produce a signal that matches the performance of 
existing ground-based navigation aids, FAA has deployed a Wide Area 
Augmentation System (WAAS), consisting of many widely spaced wide area 
reference stations, that provide information necessary to transmit the 
WAAS signal to users. (See fig. 5.) GPS and WAAS provide precise 
navigation and landing guidance at all airports, including the 
thousands that have no ground-based landing capacity. Consequently, 
WAAS significantly enhances navigation capabilities at these U.S. 
airports. 

Figure 5: Wide Area Augmentation System: 

[See PDF for image] 

[End of figure] 

FAA is developing a similar system, called the Local Area Augmentation 
System (LAAS). (See fig. 6.) LAAS would also use GPS signals to provide 
more precise landing guidance at airports, but coverage would be 
airport-specific rather than nationwide, like WAAS's coverage. LAAS, as 
envisioned, would exceed the capabilities of current instrument landing 
systems and increase NAS capacity by providing more precise approach 
paths and reducing required separation between incoming aircraft in all 
weather conditions, as well as shorter and more flexible curved 
approaches to airports. WAAS and LAAS could eventually allow FAA to 
eliminate about half of the current ground-based system of navigational 
aids and instrument landing systems. 

Figure 6: Local Area Augmentation System: 

[See PDF for image] 

[End of figure] 

However, WAAS and LAAS cannot fully replace ground-based navigational 
technologies because GPS signals are susceptible to disruptions from 
atmospheric effects, signal blockage from buildings, and interference 
from communications equipment, as well as from deliberate acts. Without 
a backup system, such as that provided by ground-based navigational 
aids, commercial operations, which are essential to the nation's 
economic vitality, could be interrupted. Therefore, FAA and the 
Department of Defense (DOD) plan to maintain a number of ground-based 
navigational aids and instrument landing systems as a backup system. 
These aids and systems would also serve general aviation aircraft that 
are not equipped with satellite navigation systems. The backup system 
could further aid in reestablishing surveillance of an aircraft that 
loses satellite contact. 

FAA's vision for NAS modernization also includes digital communications 
systems, such as that envisioned under the Controller-Pilot Data Link 
Communications (CPDLC) program. CPDLC would improve the efficiency of 
routine communications by sending structured sets of phrases between 
controllers and pilots in suitably equipped aircraft to eliminate the 
need for voice communications, thereby reducing air traffic controller 
workload and allowing better use of voice frequencies. The Next 
Generation Air-to-Ground Communication System (NEXCOM) would replace 
existing analog controller-pilot communication systems with a new state-
of-the-art digital system. This would improve ATC communications 
capabilities and security by requiring a digital form of 
authentication, thus preventing the possibility of "phantom 
controllers" gaining access to the communications system. 

Collecting weather data and forecasting weather conditions are joint 
efforts of the Department of Commerce, FAA, and DOD. Weather 
information is critical for NAS operators--those who control aircraft 
and provide flight service information to pilots, as well as NAS users-
-the pilots, airline dispatchers, and airport operators, among others, 
who use it in every facet of their operations. Weather information 
systems range from the automated weather data systems at airports to 
sophisticated forecasts of en route conditions. For example, the 
Alaskan Flight Services Automation System will integrate real-time 
weather graphics with weather and aeronautical information.[Footnote 
22] The overall network of weather data collection sites, computer 
systems, and communications covers the entire United States. 

Numerous Reviews of FAA's Modernization Efforts Have Identified 
Problems and Proposed Solutions: 

We have reported on the cost, schedule, and/or performance problems 
that FAA has encountered in NAS modernization and Congress has passed 
legislation to address these problems. We have issued numerous reports 
and made over 30 recommendations to improve FAA's ATC modernization 
efforts. These reports focused on many aspects of the NAS, including: 

* the management of modernization projects, including the use of 
project reviews, milestones, and baselines, and the development of cost-
accounting information; 

* the management of the information technology that is at the heart of 
many modern ATC systems, many of which could directly or indirectly 
increase NAS capacity; 

* the challenges FAA faces in increasing NAS capacity and reducing 
delays; 

* human capital challenges, such as the need to hire thousands of air 
traffic controllers in the coming decade to replace those becoming 
eligible to retire; and: 

* a workforce culture that lacked the mission focus, accountability, 
coordination, and adaptability needed for FAA to meet its cost, 
schedule, and performance targets for system acquisitions. 

FAA has implemented many of these recommendations to varying degrees. 

In September 1993, the National Performance Review concluded that, 
among other things, federal personnel rules prevented FAA from reacting 
quickly to the agency's needs for attracting and hiring staff. 
Subsequently, Congress directed the Secretary of Transportation to 
study the management, regulatory, and legislative reforms that would 
enable FAA to provide better ATC services. The Secretary of 
Transportation argued strongly that the agency needed flexibility to 
pay people what the job required and to move them where the work was 
needed, without the restrictions of standard government personnel 
procedures. FAA also maintained that it needed flexibility to deviate 
from the Federal Acquisition Regulations to allow it to better manage 
its ATC modernization program. Congress exempted FAA from most 
personnel and procurement regulations in legislation passed in late 
1995.[Footnote 23] 

In 1994, to provide more stability in FAA leadership, Congress 
established a 5-year term for the administrator. The first 
administrator to complete this 5-year term served from 1997 to 2002. In 
contrast, during the first 10 years of the ATC modernization effort, 
FAA had seven administrators and acting administrators, whose average 
tenure was less than 2 years. 

In 1996, Congress established the National Civil Aviation Review 
Commission to develop, among other things, specific recommendations on 
how the administration could reduce costs, raise additional revenue for 
the support of agency operations, and accelerate modernization efforts. 
In 1997, the commission offered the following recommendations: 

* FAA's management must become more performance based, 

* FAA must control its operating costs and increase capital 
investments, 

* airport capital needs must be met, 

* FAA's revenue stream must become more cost based, and: 

* FAA's budget treatment must change. 

In December 2000, President Clinton issued an executive order and 
Congress passed supporting legislation, which together gave FAA the 
authority to create the performance-based Air Traffic Organization 
(ATO) to control and improve FAA's management of the modernization 
effort.[Footnote 24] The executive order envisioned that the ATO would 
be better able to exercise the procurement and personnel authorities 
granted by Congress. The order directed the ATO to incorporate FAA's 
Research and Acquisitions and Air Traffic Services organizations-- 
essentially those that develop and acquire systems, and those that 
operate them, respectively. FAA hired a chief operating officer in 
August 2003 to head the ATO. In February 2004, FAA reorganized, 
transferring 36,000 employees, most of whom worked in air traffic 
services and in research and acquisitions, to the ATO. (See fig. 7.) 

Figure 7: Prior and Current Structure of Research and Acquisitions, Air 
Traffic Services, and Free Flight Organizations: 

[See PDF for image] 

[End of figure] 

Objectives, Scope, and Methodology: 

We assessed the status of FAA's efforts to modernize several key 
components of the NAS's infrastructure: ATC systems--a major component 
of the NAS; information security; and NAS capacity expansion through 
airspace redesign and runway construction. We also addressed FAA's 
human capital and financial management challenges, including rising 
costs and uncertain future revenues. We conducted our work from June 
2004 through June 2005, in accordance with generally accepted 
government auditing standards. 

Our methodology included summarizing recently completed work on all 
aspects of NAS modernization, and where necessary, updating that work 
and performing new evaluation work. We reviewed FAA reports on its 
plans for the NAS, including its Flight Plan, Operational Evolution 
Plan, Roadmap for Performance-Based Navigation, and Controller Staffing 
Plan, and reports by the Department of Transportation's Office of the 
Inspector General. We also reviewed relevant legislation and committee 
reports and drew heavily from our completed work on air traffic 
congestion, runway construction, acquisitions management, acquisition 
of software-intensive ATC systems, information technology investment 
management, controller staffing, acquisition workforce culture, and 
human capital reforms. 

To broaden our perspective on NAS modernization, we assembled an 
international panel of experts for a day-long symposium and asked them 
to address the following questions: 

* What factors have affected the schedule, cost, and performance of 
FAA's ATC modernization program, and what steps could the ATO take in 
the short term to address these factors? 

* How have federal budget constraints affected ATC modernization, and 
what steps could the ATO take in the short term to address these 
constraints? 

* What steps could FAA take in the longer term to improve the 
modernization program's chances of success and help the ATO achieve its 
mission? 

We also interviewed a number of aviation stakeholders including 
officials at the Radio Technical Commission for Aeronautics (RTCA), 
DOD, the American Association of Airport Executives, the Aircraft Owner 
and Pilots Association, FAA's Avionics Systems Branch, the Air 
Transport Association, and the National Air Traffic Controllers 
Association. 

To update previous work and obtain a clearer understanding of FAA's 
procedures, we met with FAA's administrator and assistant administrator 
for human resources management and obtained information from officials 
in FAA's Airports Organization. Within the ATO, we met with the chief 
operating officer, the vice president for acquisitions and business 
services, the vice president for finance, and the JPDO director and 
deputy director. 

As part of our effort to evaluate FAA's progress in addressing human 
capital management challenges, we analyzed FAA employees' responses to 
items on workforce culture issues that FAA included in employee 
attitude surveys conducted in 1997, 2000, and 2003. We selected these 
items with expert assistance and compared the responses to those for 
similar items contained in a research database on workforce culture. 
Appendix I contains detailed information on our methodology for 
analyzing and comparing survey data. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to the Department of Transportation 
for its review and comment. In response, ATO managers; FAA's Chief 
Information Officer; and the Acting Director, Office of Financial 
Controls, provided oral comments. FAA commented that its fiscal year 
2007 budget request will reflect its balancing of current and future 
funding priorities, and, therefore, our recommendation to this effect 
may be unnecessary. We are retaining this recommendation because it 
applies not only to fiscal year 2007, but to future years as well. 
Likewise, FAA managers commented that the agency is already utilizing 
all available financial management tools, including looking at 
alternative financing mechanisms. Our draft report discussed FAA's 
consideration of alternative financing mechanisms at length. We 
continue to believe that FAA should explore further opportunities to 
contract out its services; consolidate major facilities; and accelerate 
decommissioning of ground-based navigation aids, as we have noted in 
this report. Therefore, we are also retaining this recommendation. FAA 
did not comment on the remaining recommendations. 

FAA also provided a number of technical comments and clarifications 
throughout the report, which we included as appropriate. 

[End of section] 

Chapter 2: FAA Has Made Changes to Improve Infrastructure Management, 
but Acquisition, Security, and Capacity Challenges Remain: 

We recently reported on FAA's system acquisition, security, and 
capacity challenges. We reported that FAA got off to a good start in 
2004 by meeting its acquisitions performance goal and has recently 
taken several steps to address the factors that contributed to 
acquisition problems in the past. However, it still faces challenges in 
some areas. Our recent report on information security highlights the 
need for FAA to ensure that key information technology systems are 
protected from willful acts of sabotage. Finally, we reported on the 
challenges that FAA faces in expanding the NAS's capacity to 
accommodate current and anticipated increases in air travel. 

FAA Met Its 2004 Acquisitions Performance Goal: 

As we recently reported, FAA met its acquisitions performance goal for 
fiscal year 2004: to meet 80 percent of the designated milestones and 
maintain 80 percent of the critical program costs within 10 percent of 
the budget, as published in FAA's Capital Investment Plan. Having such 
a goal is consistent with the President's Management Agenda, which 
calls for a commitment to achieve immediate, concrete, and measurable 
results in the near term and meeting this goal indicates a good start 
for the ATO. While meeting this 1-year goal is a positive step toward 
better acquisition management, evaluating it in the context of overall 
acquisition achievements provides a more comprehensive 
assessment.[Footnote 25] For example, 3 of the 16 major system 
acquisitions that we reviewed in detail were being revised to reflect 
cost and/or schedule changes during 2005. These revised cost and 
schedule changes would become the new milestones for the fiscal year 
2006 performance goal. While revising targets that are no longer valid 
is an appropriate management action, using revised targets, rather than 
the original targets, as a basis for overall performance measurement, 
does not provide a consistent benchmark for measuring acquisition 
performance over time. Annual performance targets should continue to be 
viewed in the broader context of acquisitions' original and revised 
baselines, and in the variance reports provided to the FAA 
administrator and to Congress. 

FAA Is Addressing Key Factors That Contributed to Legacy Cost, 
Schedule, and/or Performance Problems, but More Work Remains: 

We recently reported that, historically, four factors individually or 
collectively contributed to system acquisitions' missing cost, 
schedule, and/or performance targets.[Footnote 26] FAA is taking steps 
to address some of these factors, but needs to do more. 

Four Key Factors Contributed to Legacy Cost, Schedule, and/or 
Performance Problems: 

One or more of four factors--(1) funding acquisitions at lower levels 
than called for in agency planning documents, (2) adding requirements 
and/or unplanned work, (3) underestimating the complexity of software 
development, and (4) not sufficiently involving stakeholders throughout 
system development--contributed to 12 of 16 major acquisitions' missing 
targets.[Footnote 27] (See table 2.) Appendix II provides each system's 
full name and purpose. 

Table 2: Four Key Interrelated Factors Contributing to Cost Growth, 
Schedule Extensions, and/or Performance Shortfalls for 12ATC System 
Acquisitions: 

Name of system: ASDE-X[A];
The funding level received was less than the agency planning documents: 
X;
The system acquisition experienced requirements growth and/or unplanned 
work: X;
The complexity of software development was underestimated: X;
Stakeholders were not sufficiently involved: [Empty]. 

Name of system: ASR-11;
The funding level received was less than the agency planning documents: 
X;
The system acquisition experienced requirements growth and/or unplanned 
work: X;
The complexity of software development was underestimated: [Empty];
Stakeholders were not sufficiently involved: . 

Name of system: ATCBI-6;
The funding level received was less than the agency planning documents: 
X;
The system acquisition experienced requirements growth and/or unplanned 
work: [Empty];
The complexity of software development was underestimated: [Empty];
Stakeholders were not sufficiently involved: . 

Name of system: CPDLC;
The funding level received was less than the agency planning documents: 
[Empty];
The system acquisition experienced requirements growth and/or unplanned 
work: X;
The complexity of software development was underestimated: [Empty];
Stakeholders were not sufficiently involved: . 

Name of system: FFP2;
The funding level received was less than the agency planning documents: 
X;
The system acquisition experienced requirements growth and/or unplanned 
work: [Empty];
The complexity of software development was underestimated: [Empty];
Stakeholders were not sufficiently involved: . 

Name of system: ITWS;
The funding level received was less than the agency planning documents: 
X;
The system acquisition experienced requirements growth and/or unplanned 
work: X;
The complexity of software development was underestimated: X;
Stakeholders were not sufficiently involved: . 

Name of system: LAAS;
The funding level received was less than the agency planning documents: 
[Empty];
The system acquisition experienced requirements growth and/or unplanned 
work: X;
The complexity of software development was underestimated: X;
Stakeholders were not sufficiently involved: X. 

Name of system: NEXCOM;
The funding level received was less than the agency planning documents: 
X;
The system acquisition experienced requirements growth and/or unplanned 
work: X;
The complexity of software development was underestimated: [Empty];
Stakeholders were not sufficiently involved: . 

Name of system: NIMS-2;
The funding level received was less than the agency planning documents: 
X;
The system acquisition experienced requirements growth and/or unplanned 
work: X;
The complexity of software development was underestimated: [Empty];
Stakeholders were not sufficiently involved: . 

Name of system: OASIS;
The funding level received was less than the agency planning documents: 
X;
The system acquisition experienced requirements growth and/or unplanned 
work: X;
The complexity of software development was underestimated: [Empty];
Stakeholders were not sufficiently involved: X. 

Name of system: STARS;
The funding level received was less than the agency planning documents: 
[Empty];
The system acquisition experienced requirements growth and/or unplanned 
work: X;
The complexity of software development was underestimated: [Empty];
Stakeholders were not sufficiently involved: X. 

Name of system: WAAS;
The funding level received was less than the agency planning documents: 
[Empty];
The system acquisition experienced requirements growth and/or unplanned 
work: X;
The complexity of software development was underestimated: X;
Stakeholders were not sufficiently involved: X. 

Source: GAO analysis of FAA data. 

Notes: 

Blank spaces in the chart denote that the specific factor was not a key 
contributor to a program's inability to meet cost, schedule, or 
performance targets. 

FAA's Telecommunications Infrastructure, another of the 16 system 
acquisitions that we reviewed, also experienced cost growth, but for a 
reason not shown above. The original planning document that was 
prepared for this acquisition contained estimated costs for some of the 
system's requirements. When the planning document was updated, it 
included actual contract costs, which were greater than originally 
estimated. 

[A] Additional factors are listed, beyond those previously reported, 
based on updated information provided by FAA. 

[End of table] 

A discussion of each factor follows: 

* Funding acquisitions at lower levels than called for in agency 
planning documents: When FAA initiates a major system acquisition, it 
estimates, and its top management approves, the funding plans for each 
year. However, when budget constraints do not allow all system 
acquisitions to be fully funded at the previously approved levels, FAA 
must decide which programs to fund and which to cut, according to its 
priorities. When a system acquisition does not receive the annual 
funding called for in its planning documents, the acquisition may fall 
behind schedule. This may also postpone the benefits of the new system 
for the NAS, and can require FAA to continue operating and maintaining 
the older equipment that the acquisition is intended to replace. 

* Adding requirements and/or unplanned work: Inadequate or poorly 
defined requirements may contribute to the inability of system 
acquisitions to meet their original cost, schedule, and/or performance 
targets, since developing or redefining requirements as an acquisition 
progresses takes time and can be costly. In addition, unplanned 
development work may occur when the agency misjudges the extent to 
which a commercial-off-the-shelf or nondevelopmental item,[Footnote 28] 
such as one procured by another agency, will meet FAA's needs. 

* Underestimating the complexity of software development: When FAA 
underestimates the complexity of software development or misjudges the 
difficulty of modifying available software to fulfill its mission 
needs, acquisitions may take longer and cost more than 
expected.[Footnote 29] 

* Not sufficiently involving stakeholders throughout system 
development: Not involving relevant stakeholders, such as air traffic 
controllers and maintenance technicians, early and throughout a 
system's development and approval may lead to costly changes in 
requirements and unplanned work late in the development process. 

In some cases, FAA missed cost, schedule, and/or performance targets 
because of two or more of the factors discussed above. For example, FAA 
underestimated the complexity of the software that would be needed to 
support WAAS when the agency reduced, by 3 years, its plans to develop, 
test, and commission the system. FAA then tried to accomplish these 
tasks in 28 months, even though the software development alone was 
originally expected to take from 24 to 28 months. FAA's efforts to 
resolve this issue resulted in unplanned work, which then contributed 
to cost increases and schedule delays. For STARS, not adequately 
including stakeholders during the development phase contributed to 
unplanned work, which in turn, contributed to cost growth, schedule 
delays, and eventually a reduction in the number of systems to be 
deployed. 

The remaining three systems that we reviewed--En Route Automation 
Modernization System (ERAM), Advanced Technologies and Oceanic 
Procedures (ATOP), and En Route Communications Gateway (ECG)--are 
meeting cost, schedule, and performance targets, but warrant close 
attention. ERAM, the new computer system to help run FAA's en route ATC 
operations, is a high-risk effort, in part because it requires over 1 
million lines of code. While ERAM's contractor has completed the first 
three of four software deliveries ahead of schedule, "bugs" could be 
discovered through further testing and integration, which could require 
additional software development, according to a senior program 
official. In the past, FAA has had difficulty developing systems with 
such a high volume of code. Also, FAA assumed responsibility after 
February 2005 for the cost of resolving any additional software 
problems that it identifies with ATOP, its new oceanic ATC system. A 
fixed-price contract previously governed the acquisition. FAA also 
anticipates adding requirements costing about $500,000 to ECG, a 
communications interface. 

FAA Has Taken Steps to Improve Acquisition Management, but Has Not 
Fully Implemented Some Recommendations: 

FAA has announced plans to implement recommendations we made to improve 
software-intensive acquisitions and investment management 
practices.[Footnote 30] However, FAA has not yet adopted a knowledge- 
based approach for system acquisitions or fully implemented our 
recommendations to improve its enterprise architecture development. 

To reduce the risk of requirements growth and/or unplanned work, as 
well as the risks associated with acquiring software-intensive systems, 
FAA has developed and applied a process improvement model to a number 
of acquisition projects. This model is used to assess the maturity of 
FAA's software and systems capabilities. As we reported, this approach 
has resulted in enhanced productivity, higher quality, greater ability 
to predict schedules and resources, better morale, and improved 
communication and teamwork.[Footnote 31] However, because FAA did not 
mandate the use of the model throughout the organization, we 
recommended that it do so. In response, FAA has begun developing a 
requirement that projects have process improvement activities in place 
before seeking approval from the FAA investment review board. 

FAA told us in December 2004 that it is taking actions that respond to 
our recommendations for improvements to its Acquisition Management 
System.[Footnote 32] For example, FAA reports that when reviewing 
acquisitions, it now focuses on the acquisition's impact on customer 
service and contribution to achieving the agency's strategic and 
performance goals, including expanding NAS capacity, rather than on the 
approval and management of individual acquisition programs. FAA has 
also informed us that it has established basic investment management 
capabilities, including many practices for selecting and controlling 
its mission-critical information technology investments. Our previous 
work showed that FAA was not regularly reviewing investments that are 
more than 2 years into their operations. As a result, FAA was limited 
in its ability to oversee, as a total package of competing investment 
options, more than $1 billion of its information technology 
investments, and to pursue only those that best meet its 
goals.[Footnote 33] In its response to our recommendation, FAA stated 
that it had changed its acquisition review process to a semiannual 
"service level review" process that encompasses systems that are in 
service. Additionally, FAA has changed its format for justifying major 
technology investments to that prescribed by the Office of Management 
and Budget. According to FAA, this change provides more comprehensive 
information than the previous format and provides efficiencies by 
avoiding the need to later translate the information into the Office of 
Management and Budget's prescribed format. We have not yet assessed 
these actions. 

Additionally, further improvements to FAA's Acquisition Management 
System are warranted. We recently reported that while the system 
provides some discipline for acquiring major ATC systems, it does not 
apply a knowledge-based approach to acquisitions that is characteristic 
of commercial best practices. Such practices call for specific 
knowledge to be captured and used by corporate-level decision-makers to 
determine whether a product has reached a level of development (product 
maturity) sufficient to demonstrate its readiness to move forward in 
the acquisition process. Knowledge is captured at specific junctures, 
or knowledge points, in the acquisition cycle, which developers use to 
determine whether they have attained the knowledge they need to move to 
the next phase or activity in the acquisition process. Such developers 
also conduct corporate executive-level reviews to ensure that they 
obtain the insights and perspectives of stakeholders throughout their 
organization. If the knowledge attained does not meet the criteria for 
advancement or if the executive reviewers determine that further 
development is inconsistent with their priorities, the acquisition does 
not move forward. 

Experience with these best practices has shown that to the extent that 
the level of knowledge called for at each knowledge point is not 
attained, organizations take on risks in the form of unknowns that will 
persist into the later stages of development, where they will take more 
time and money to resolve if they become problems. Such problems lead 
to cost increases and schedule delays. Accordingly, we recommended that 
FAA (1) develop explicit written criteria for the key decision points 
called for under best practices, including the capture of specific 
design and manufacturing knowledge, and (2) require corporate executive-
level decisions at these key decision points (before an acquisition 
moves from integration to demonstration and, again, before it moves to 
production).[Footnote 34] 

We also reported that FAA has taken some initial steps to develop a NAS 
enterprise architecture, but further steps are needed.[Footnote 35] An 
enterprise architecture serves as a blueprint to guide and constrain 
investments in a consistent, coordinated, and integrated fashion. It 
should provide a clear and comprehensive picture of an organization, 
including snapshots of the current "as is" environment as well as the 
target "to be" environment, and a roadmap for transition. FAA has 
committed resources to this effort, established a project office, 
designated a chief architect, and issued the latest version of its 
architecture. However, FAA has not taken some key steps, such as 
designating a committee or group representing the enterprise to direct, 
oversee, or approve the architecture; establishing a policy for 
developing, maintaining, and implementing the architecture; or fully 
developing architecture products that meet contemporary guidance and 
describe both the "as is" and the "to be" environments and developed a 
sequencing plan for transitioning between the two. Our experience with 
federal agencies has shown that making information technology 
investments without defining these investments in the context of an 
architecture often results in systems that are duplicative, not well 
integrated, and unnecessarily costly to maintain and interface. 

FAA Faces Challenges in Ensuring Information Security: 

Because ATC systems rely heavily on information technology, protecting 
them from inadvertent or intentional disruption is critically 
important. The risks to information systems include the escalating 
threat of computer security incidents, the ease of obtaining and using 
hacking tools, the steady advance in the sophistication and 
effectiveness of attack technology, and the emergence of new and more 
destructive attacks. Inadequately protected systems are at risk of 
intrusion by individuals or groups with malicious intent, who could use 
their unauthorized access to obtain sensitive information, disrupt 
operations, or launch attacks against other computer systems and 
networks. A prolonged disruption in ATC systems and communications, 
accidental or intentional, could disrupt air traffic, cause significant 
economic losses, and subject travelers to delays and inconvenience. 
Federal information security has been on GAO's list of high-risk areas 
since 1997; in 2003, GAO expanded this high-risk area to include the 
protection of cyber-critical infrastructure.[Footnote 36] 

Recently, we reported that FAA had established, but not fully 
implemented, an information security program for its ATC information 
systems.[Footnote 37]For example, some of the agency's security plans 
were outdated; security awareness training requirements were not fully 
met; system testing and evaluation programs were inadequate; security 
incident detection capabilities were limited; and shortcomings existed 
in providing service continuity to protect against disruptions in 
operations. Furthermore, we identified security weaknesses that 
threaten the integrity, confidentiality, and availability of the three 
critical systems we reviewed, including weaknesses in controls designed 
to manage access to these systems. Weaknesses in physical security 
increase the risk that unauthorized individuals could gain access to 
sensitive computing resources and data and could inadvertently or 
deliberately misuse or destroy them. In response to weaknesses that we 
had identified, FAA officials told us they recognized that more work 
was needed to continue to improve their information security program 
and that they had already corrected many of their electronic access 
control weaknesses. 

We recommended several actions intended to improve FAA's information 
security program. FAA agreed to consider our recommendations, but 
emphasized that, because our review focused on only three systems, it 
does not indicate that the entire NAS is vulnerable. Additionally, FAA 
maintains that vulnerabilities are mitigated by redundancies and 
separate access controls. Consequently, FAA concluded that the public 
may infer from our review that security risks are higher than they 
actually may be. In our report, we acknowledged that FAA may have other 
protections built into its overall system architecture. However, as 
noted in the report, the complex air traffic control system relies on 
several interconnected systems. As a result, the weaknesses we 
identified may increase the risk to other systems. For example, FAA did 
not consistently configure network services and devices securely to 
prevent unauthorized access to and ensure the integrity of computer 
systems operating on its networks. 

FAA Faces Challenges in Expanding NAS Capacity to Meet Current and 
Future Needs: 

The current level of air travel, combined with airlines' use of smaller 
aircraft, is straining NAS capacity and further increases in air travel 
are forecast. FAA has developed a rolling 10-year plan for capacity 
improvements at the nation's 35 busiest airports, and airports are 
building new runways. However, many congested airports are not building 
or cannot build new runways, and delays at these airports can have 
ripple effects throughout the NAS. FAA is considering administrative 
and market-based options to ease congestion at the most delay-prone 
airports. The agency is also redesigning flight procedures in specific 
locations to improve the efficiency with which aircraft use crowded 
airspace. However, FAA has encountered difficulties in establishing 
reliable costs and schedules for its airspace redesign efforts, and 
airlines have been reluctant to equip their aircraft because of 
uncertainty about FAA's future plans for airspace redesign. 

More Travelers and Smaller Aircraft Could Strain NAS Capacity: 

In 2004, passengers returned to air travel, following a lull that 
resulted from a series of largely unforeseen events, including global 
recessions, the terrorist attacks of September 11, and the Severe Acute 
Respiratory Syndrome (SARS) scare, the war in Iraq, and associated 
security concerns. Enplanements in 2004 exceeded those in 2000 by 5 
percent. The high level of traffic in the summer of 2000 produced the 
worst record of delays up to that time; however, nearly as many delays 
occurred in 2004, but the delays were longer, on average, mainly 
because of bad weather, according to FAA officials. FAA forecasts a 25- 
percent increase in air traffic by 2015, and the JPDO is developing 
plans to transform the NAS to accommodate a tripling of capacity by 
2025. 

The airlines' increasing use of smaller aircraft is likely to enhance 
the need for capacity. In 2001, we reported that the growing number of 
regional jets, which generally seat fewer than 100 passengers, was 
contributing to congestion in our national airspace.[Footnote 38] The 
industry experts we interviewed repeatedly expressed concern about the 
impact of additional aircraft on airspace whose capacity was already 
strained. Because hundreds of new aircraft have been added to already 
congested airspace while comparatively few aircraft have been taken out 
of service, many experts believe that increasing congestion and delays 
are inevitable. Moreover, the experts noted that with many more 
regional jets on order, congestion and delays are not likely to 
diminish in the near future. In 2003, Boeing forecast that regional 
jets would account for 16 percent of the world aircraft fleet by 2022. 
In June 2004, the Chairman and Chief Executive Officer of AirTran 
Airways noted that the ATC system could have difficulty absorbing the 
hundreds of regional jets then on order.[Footnote 39] Recent data 
validate those concerns. Although passenger travel between 2000 and 
2004 increased by 5 percent, the number of aircraft operating in the 
NAS, as indicated by domestic aircraft departures, increased by 36 
percent during that time period. 

Additionally, air taxis, which carry about four passengers each, could 
begin operations within the NAS. FAA officials told us that they have 
been briefed on proposals for using air taxis in selected metropolitan 
areas to relieve heavy traffic congestion on roadways. Air taxis could 
add to air congestion, as well as increase the workload of air traffic 
controllers in metropolitan areas where air traffic is already likely 
to be heavy. Potential increases in general aviation could further 
increase air congestion and controllers' workload.[Footnote 40] 

New Runways Are Under Construction and More Are Planned to Increase NAS 
Capacity: 

According to FAA, building new runways is the most direct approach to 
increasing NAS capacity. FAA estimates that a new runway increases an 
airport's capacity by between 30 and 60 percent. FAA's plans for 
capacity enhancement at the nation's 35 busiest airports are laid out 
in the agency's rolling 10-year Operational Evolution Plan. Since 1999, 
8 of the nation's 35 busiest airports--Phoenix, Detroit, Denver, Miami, 
Cleveland, Houston, Philadelphia, and Orlando--have each opened a new 
runway. Collectively, these runways have provided these airports with 
the potential to accommodate about 1 million more annual operations 
(takeoffs and landings). Six more runways, one runway extension, and 
one airfield reconfiguration are scheduled to open by the end of 2008 
at the nation's 35 busiest airports. These runways are expected to 
provide those airports with the potential to accommodate 830,000 more 
annual operations (see fig. 8). In addition to the runways scheduled 
for the 35 busiest airports, nine more capacity-enhancing projects are 
in the planning or environmental review stages, including one new 
runway, three runway extensions, three new airports and two airfield 
reconfigurations in major metropolitan areas. 

Figure 8: Commissioned and Planned Runways, December 1999 to November 
2008: 

[See PDF for image] 

Note: Included in the planned runways is one runway extension project 
at Philadelphia. 

[End of figure] 

Several of the nation's largest airports are among those most in need 
of capacity improvements. In a recent study, FAA reported that the 
Atlanta, Newark, New York LaGuardia, Chicago O'Hare, and Philadelphia 
airports needed immediate capacity improvements to meet existing 
demand. The study identified 15 airports that would need capacity 
improvements by 2013. 

However, building new runways is not an option at all airports with 
pressing needs for more capacity. Some airports are not able to build 
even one more runway, either because they lack the space or would face 
intense opposition from adjacent communities. Only 3 of the 9 most 
delay-prone airports will receive new runways, and delays at these 
airports can have a ripple effect throughout the NAS, notwithstanding 
capacity improvements made elsewhere. For example, in 2000, Phoenix Sky 
Harbor International Airport put an additional runway into service, and 
the airport had sufficient capacity to allow flights to take off on 
time. However, the airport ranked among the top 15 in the United States 
for flight delays. According to airport officials, most of the delays 
in Phoenix were the result of delays and cancellations at other 
airports--circumstances unrelated to the capacity at Phoenix. To reduce 
flight delays at some of the delay-prone airports, such as New York 
LaGuardia and Chicago O'Hare, FAA is exploring administrative and 
market-based options. For example, FAA is considering auctioning off 
landing and takeoff rights at New York LaGuardia and is currently 
limiting the number of scheduled arrivals during peak periods at New 
York LaGuardia and Chicago O'Hare. 

FAA Is Redesigning Flight Paths to Create More Capacity: 

FAA is redesigning how aircraft utilize airspace during the takeoff, 
landing, and en route phases of flight. Currently, most aircraft must 
follow established routes over designated navigation aids and maintain 
wide separation from other aircraft. Wide separation has been necessary 
to provide a margin of error against inaccuracies in older navigation 
systems. However, many aircraft in use today carry navigation equipment 
that is not dependent on ground-based navigation aids and would enable 
aircraft to safely operate in a less restrictive manner, allowing more 
efficient use of airspace and increased NAS capacity.[Footnote 41] 
Moreover, this equipment provides aircrews with precise information on 
the location of their aircraft and that of nearby aircraft, allowing 
them to fly more directly to their destinations, thereby saving time 
and fuel, and reducing congestion. Advanced navigation capabilities 
also reduce the adverse impact of bad weather on NAS efficiency by 
allowing pilots to land in weather conditions that they otherwise would 
have to avoid. 

In 2005, FAA increased airspace capacity by reducing the required 
minimum vertical separation from 2,000 feet to 1,000 feet for properly 
equipped aircraft at altitudes between 29,000 and 41,000 feet, 
essentially doubling capacity at those altitudes. FAA anticipates that 
this change will allow aircraft to safely fly the most efficient 
routes, increase airspace capacity, and save airlines about $400 
million in fuel costs during the first year. 

FAA reports that airspace redesign can provide benefits at a number of 
airports. For example, at Dulles International Airport, suitably 
equipped aircraft could simultaneously depart on parallel routes in bad 
weather, which would not otherwise be possible. Dallas-Fort Worth 
International Airport could increase capacity by 20 percent by allowing 
aircraft with the appropriate capabilities to depart more quickly from 
multiple points at the airport, thereby reducing the taxi time between 
terminal and departure, as well as ground congestion. According to FAA, 
allowing aircraft with appropriate equipment to use parallel runways 
during periods of marginal visibility could increase arrival rates by 
10 to 24 percent at airports with closely spaced runways, such as those 
in Boston, Cleveland, Newark, Portland, Philadelphia, Seattle, and San 
Francisco.[Footnote 42] An FAA official told us that these procedures 
could leverage the future benefits of ATC systems currently in the 
acquisitions pipeline if planned and implemented in coordination with 
the systems' acquisition schedules. 

Redesign is a complex process that requires the development of specific 
navigation procedures tailored to each location, taking into account 
numerous factors. According to FAA, the following factors pose 
challenges for redesign efforts: 

* costly environmental reviews required by the National Environmental 
Policy Act, 

* the logistics of coordinating meetings with controllers and operators 
to discuss how to design the procedures, 

* aircrew training, 

* the modeling and testing of procedures, and: 

* the development of written navigation and air traffic control 
procedures. 

Consequently, FAA focuses its efforts on airports that are the best 
candidates to benefit from airspace redesign, such as those that have 
frequent bad weather, parallel runways that cannot be used for parallel 
approaches in bad weather, nearby mountains or tall buildings, or 
aircraft noise that adversely affects nearby communities. Also, having 
an airline that has a significant presence at an airport and is willing 
to take the lead in airspace redesign facilitates its implementation. 

Airspace Redesign Efforts Have Encountered Cost and Schedule 
Challenges, and Airlines Are Hesitant to Invest in Advanced 
Capabilities: 

The Department of Transportation's Office of the Inspector General has 
testified that FAA is experiencing significant problems in its airspace 
redesign efforts. The office reported that FAA lacks reliable 
information on costs and schedules for 42 airspace redesign efforts and 
found that FAA's process for controlling costs, mitigating risks, and 
coordinating these efforts was fragmented and diffuse. 

Expanding efforts to redesign airspace also depends on the willingness 
of NAS users to equip their aircraft with advanced capabilities--a 
willingness that is based, in part, on the belief that FAA will 
continue with its redesign plans. Some stakeholders we interviewed 
expressed concern that FAA may not follow through with its airspace 
redesign efforts. For example, a DOD official said that in response to 
budget constraints, FAA might curtail its airspace redesign efforts 
after DOD had equipped its aircraft with advanced capabilities, 
resulting in a waste of DOD resources. The official cited FAA's actions 
to suspend certain acquisition programs such as LAAS, NEXCOM, and long- 
range radar. An official of the Airline Owners and Pilots Association, 
which represents general aviation pilots, cited similar concerns with 
WAAS and another system (Automatic Dependent Surveillance - Broadcast) 
in onboard navigation systems. Consequently, general aviation pilots 
are hesitant to invest in systems for their aircraft unless they are 
sure that FAA will continue to redesign airspace and implement 
procedures that will make use of this equipment. According to one 
expert, some aircraft have been retired without ever having their 
advanced capabilities used. 

Overcoming these challenges is a productive area of focus for FAA. Our 
panel of experts noted that exploiting airspace redesign is a "quick 
hit" that would produce good value for the investment, and airlines are 
anxious to see more airspace redesign efforts. The experts also noted 
that the private sector has the capacity to develop new flight 
procedures as part of airspace redesign, and a precedent exists in 
another country. However, the experts said that in the past, FAA has 
resisted outside parties' efforts to design new flight procedures for 
FAA's approval, and they suggested that FAA could be more flexible in 
this area. 

Agency Comments: 

FAA provided technical comments, which we included as appropriate. 

[End of section] 

Chapter 3: Human Capital Management Challenges Include Hiring Air 
Traffic Controllers and Transforming FAA's Organizational Culture: 

During the coming decade, FAA will need to hire and train thousands of 
air traffic controllers to replace those who will retire. FAA has 
implemented a number of human capital reforms but still faces the 
challenge of transforming its workforce to a more results-oriented 
culture. 

FAA Will Need to Hire and Train Thousands of Controllers in the Next 
Decade: 

In 2002 and 2004, we reported that FAA would need to hire and train 
thousands of air traffic controllers during the next decade, and we 
recommended in 2002 that FAA develop a comprehensive workforce plan 
that includes strategies to ensure that FAA would have adequate human 
resources and training facilities to meet its hiring needs while 
maintaining safety.[Footnote 43] Additionally, we recently reported 
that succession planning and management are critical steps that federal 
agencies need to take to meet the challenges of the 21ST 
Century.[Footnote 44] In 2004, FAA published a controller staffing plan 
that includes several of the strategies that we recommended. 
Recognizing that the plan would be costly, FAA planned to obtain 
savings from a number of human capital management initiatives, some of 
which will require union negotiation. 

Impending Retirements Will Require Extensive Hiring and Training: 

FAA's controller staffing plan indicates that the agency expects to 
lose about 11,000 air traffic controllers, or about 73 percent of the 
controller workforce, to retirements and other factors.[Footnote 45] 
This high percentage of retirements is attributable to the 1981 
controller strike, when President Ronald Reagan fired over 10,000 air 
traffic controllers, and the consequent need to quickly rebuild the 
controller workforce. From 1982 through 1991, FAA hired an average of 
2,655 controllers per year. These controllers will become eligible for 
retirement during the next decade. (See fig. 9.) 

Figure 9: Projected Controller Retirements, Fiscal Years 2005 - 2014: 

[See PDF for image] 

[End of figure] 

To replace the controllers who will retire, as well as those who will 
leave for other reasons, and to accommodate forecasted increases in air 
traffic, FAA plans to hire a total of 12,500 new controllers over the 
next 10 years, or 1,250 per year, on average. Because of training 
facility limitations and the need to minimize the impact on operational 
facilities of on-the-job training for new controllers, FAA plans to 
hire relatively equal numbers of controllers each year. 

FAA's Controller Staffing Plan Reflects Lessons Learned Since 1981 
Controller Strike: 

To manage the air traffic control workforce over the next decade, the 
controller staffing plan that lays out a 10-year strategy for 
recruiting, hiring, and training new controllers to replace those that 
retire. This plan, which we recommended in a 2002 report and Congress 
mandated in 2003, reflects recruiting and training lessons learned 
since the 1981 air traffic controllers' strike, endeavors to benefit 
from the expertise of today's experienced controllers, and addresses 
staffing and equipment needs at FAA's training academy. 

According to the controller staffing plan, FAA has established a 
facility-by-facility retirement loss model that FAA will use to 
determine annual hiring targets for each facility. The plan also lays 
out a strategy to develop new staffing standards for each ATC facility, 
starting in fiscal year 2005. Additionally, the plan describes a 
revised hiring policy, which recognizes the need to hire replacement 
controllers well in advance of expected retirements, rather than 
waiting until after each controller leaves. 

FAA's plan lays out new recruitment sources designed to identify and 
retain viable candidates. Through this approach, FAA expects to achieve 
greater success than it did in the 1980s, when it last hired large 
numbers of controllers but had problems with retention. At that time, 
FAA officials told us, most of the candidates were recruited "off the 
street," with no prior background in air traffic control. According to 
the plan, over 40 percent of the candidates failed training, resulting 
in wasted training funds. This time, FAA plans to hire new controllers 
from a variety of sources, including some that can provide candidates 
with training or experience in aviation. A primary source will be the 
Air Traffic Collegiate Training Initiative, which FAA established in 
January 1991 and has since expanded.[Footnote 46] Under this 
initiative, participating schools produce candidates with college 
degrees and a broad knowledge of the aviation industry. These 
candidates have at least a basic level of training in air traffic 
control and have demonstrated their interest in the field by the 
investment they have made in their own training. Other potential 
recruits include former and retired military personnel, former 
Professional Air Traffic Controllers Organization controllers, and the 
general public. 

FAA is also evaluating the effectiveness of a tool to screen potential 
controllers. Between 1981 and 1992, FAA screened out unsuccessful 
candidates over a period of 9 weeks as they attended a formal training 
program. Fewer than 60 percent of the candidates passed the screen. 
Recognizing that this was a costly process, FAA dismantled the 9-week 
screening process in 1992 and implemented an 8-hour computer-based Air 
Traffic Selection and Training exam to screen candidates, reducing the 
screening cost from $10,000 per candidate to $800 per candidate. The 
screening exam evaluates many aptitudes, including prioritization and 
problem solving, decisiveness, and composure. The controller staffing 
plan indicates that FAA's Civil Aerospace Medical Institute is 
evaluating the effectiveness of this new screening tool, as we 
recommended. 

FAA believes that allowing some controllers to continue working beyond 
the current age limitation could help alleviate staffing shortages in 
targeted locations. Under legislation enacted in 1971,[Footnote 47] 
most controllers are required to stop handling live traffic when they 
reach age 56. FAA has reviewed the safety implications of waiving this 
requirement under certain circumstances. Specifically, its Civil 
Aerospace Medical Institute reviewed the scientific basis for the law 
and concluded that the scientific literature did not provide a firm 
foundation for either retaining the age 56 limit or seeking a 
legislative change. A supplemental study found that the likelihood of 
an en route operational error declined with age as a function of 
experience. According to the controller staffing plan, FAA believes 
that waivers to the age 56 rule may be of value for targeted locations 
where there may be a critical staffing shortage. FAA estimates that 5 
to 10 percent of current controllers might be granted such waivers. 

The controller staffing plan describes FAA's plans to address staffing 
and equipment needs at the training academy. FAA plans to meet the need 
for more instructors by working with its contractor to ensure that 
training needs are met. FAA has also upgraded equipment at the training 
academy. We reported in 2002 that equipment used at the academy to 
train en route controllers did not match equipment used in the field. 
We also reported that tower simulators were often broken or outdated, 
and lacked the necessary capacity to train large numbers of new hires. 
FAA has since acquired four new tower simulators, and in the spring of 
2005, it opened a laboratory for en route training at the academy, 
several months ahead of schedule. 

FAA Plans Cost-Saving Initiatives to Mitigate the Expense of the 
Controller Staffing Plan: 

Recognizing the immense cost of recruiting and training enough 
controllers to replace those who are retiring, FAA plans to implement 
efficiencies that would reduce training costs and allow a 10 percent 
reduction in the controller workforce over the next decade. FAA plans 
to provide more intensive training so that controllers can be certified 
in 2 to 3 years, rather than 4 to 5 years as in the past. Some of these 
initiatives will require union consent which FAA will have to negotiate 
when it renews its contract with the controllers. For example, FAA 
plans to rely on part-time employees and job-sharing arrangements, as 
well as implement split shifts, where all controllers work during peak 
periods, but some leave during slack periods and return to complete 
their shifts later. FAA also plans to improve its management of 
overtime by using the optimal mix of increased staffing and overtime 
hours to meet workload demands. In addition, FAA plans to oversee the 
use of sick leave more aggressively and to manage workers' compensation 
cases to bring employees back to duty as quickly as possible. Other 
steps include reducing the number of hours controllers spend on union- 
related duties and in workgroups, conferences, and meetings; and 
employing efficiencies made possible by implementing technological 
advances, consolidating facilities, and expanding the contract tower 
program. 

FAA has neither determined the total cost of the controller staffing 
plan, nor developed any basis for the cost savings planned for many of 
the initiatives described in the plan. For example, FAA officials told 
us that they have not determined: 

* the costs of hiring and training controllers from different sources; 

* the amount of productivity savings from various sources, including 
implementing new technology and adjusting staffing according to traffic 
levels; or: 

* the savings from the improved training success rate. 

Therefore, the impact of this plan on future funding needs is unclear. 
FAA officials indicated that they view the plan as fluid, and will make 
yearly updates and changes as they move forward with its 
implementation. However, without supportable estimates of the hiring 
and training program's cost and potential savings, FAA lacks key 
information needed to plan for future funding needs. The plan states 
that if FAA does not receive sufficient funds to hire adequate numbers 
of controllers, FAA will maintain safety before addressing delays. 
According to the plan, FAA would slow air traffic to a level that the 
available controllers could handle safely, an action that could create 
significant delays in the NAS. 

FAA has also begun considering whether graduates of its Air Traffic 
Collegiate Training Initiative can bypass the currently required 
training at the FAA Academy--a change that could produce savings. 
Currently, graduates must attend the academy for 37 days if they are 
training to be terminal controllers or 57 days if they are training to 
be en route controllers, before they can report to an ATC facility to 
begin on-the-job training. The National Air Traffic Controllers 
Association and one of the colleges that participates in the Air 
Traffic Collegiate Training Initiative believe that graduates could 
bypass the training academy and report directly to an ATC facility to 
begin on-the-job training. In June 2005, FAA initiated a review to 
determine whether graduates could bypass the academy training. 

FAA Has Made Progress in Implementing Human Capital Reforms, but 
Challenges Remain in Transforming Its Workforce Culture: 

Since receiving an exemption from many federal personnel management 
regulations in 1995, FAA has implemented a number of compensation, 
hiring, and performance management reforms. Additionally, FAA is taking 
steps toward developing a results-oriented culture, but needs to ensure 
continuity and follow-through for these efforts to have a lasting 
effect. 

FAA Has Implemented Elements of Personnel Management Reform: 

After being exempted from most federal personnel regulations in 1995, 
FAA initiated a broad set of changes in compensation, performance 
management, and workforce management. FAA replaced the general schedule 
system of 15 pay grades--each with 10 within-grade pay steps--with a 
series of pay bands and specific job categories with minimum and 
maximum pay rates spanning two to five pay bands. Since 2003, when we 
last reported on the status of FAA's human capital reforms, FAA has 
increased the percentage of the workforce covered by the new pay system 
from about 75 percent to 82 percent.[Footnote 48] 

Additionally, FAA established its own hiring policies and began hiring 
applicants directly, rather than going through the Office of Personnel 
Management. It also established a flexible system for adjusting the 
number of executive positions in response to shifting agency priorities 
and set up flexible policies for determining whether and how much to 
reimburse employees' relocation expenses. 

Finally, FAA established a new performance management system, which it 
uses for 45 percent of its employees. The new system requires that 
employees have performance plans that identify specific work 
expectations and outcomes and are linked to agency and organizational 
goals. The new system changed performance assessment from a once-a-year 
process to one that focuses on interim feedback discussions between 
employees and supervisors to address performance issues when they 
arise, and identify opportunities for improving performance and meeting 
developmental needs. The performance management system also determines 
whether an employee is eligible for agencywide performance-based 
bonuses. FAA has not yet included most of its bargaining unit employees 
under the new performance management system, but plans to negotiate 
this issue during contract negotiations, which began in the spring of 
2005. 

While we have not evaluated the merits of the new performance 
management system or that used to manage the performance of bargaining 
unit employees, linking work expectations and outcomes to 
organizational goals, as FAA has done in its new performance management 
system, is a positive first step. We have reported that effective 
performance management systems are not merely used for once or twice- 
yearly individual expectation setting and rating processes, but are 
tools to help the organization manage on a day-to-day basis. These 
systems are used to achieve results, accelerate change, and facilitate 
two-way communication throughout the year so that discussions about 
individual and organizational performance are integrated and 
ongoing.[Footnote 49] 

Developing a Results-Oriented Organizational Culture Remains a Key 
Challenge: 

Recognizing the importance of cultural change in achieving results, FAA 
is moving forward on actions consistent with those that we have 
identified as important for cultural transformation. In 1996, we 
reported that FAA's acquisition workforce culture lacked a commitment 
to mission focus, accountability, adaptability, and coordination, which 
impeded its ATC modernization efforts. While FAA took a number of 
actions over the past several years to change the culture of its 
acquisition workforce, these actions lacked continued management 
commitment. Our work shows that successfully implementing cultural 
change requires continued management attention over several years. 

FAA Recognizes the Importance of a Results-Oriented Culture: 

FAA has established a goal to create a results-oriented culture and is 
developing baseline data for tracking progress. FAA's Human Capital 
Plan includes a goal to create a results-based performance culture and 
strategies for implementing performance management and compensation 
systems that focus on achieving results, providing training and 
briefings on the agency's new performance management system, and 
implementing a communication plan for performance management 
responsibilities. Additionally, FAA's performance-based compensation 
system provides most employees with a bonus when the agency meets its 
performance goals. 

FAA's emphasis on performance management is an important step toward 
creating a results-oriented culture in the acquisition workforce. Our 
work has highlighted the importance of organizational culture in 
implementing mergers and transformations. Using a performance 
management system to define responsibility and ensure accountability 
for change is a key practice that can help agencies transform their 
cultures so that they can be more results oriented, customer focused, 
and collaborative.[Footnote 50] (See fig 10.) 

Figure 10: Cultural Changes and Key Practices Necessary for Successful 
Transformation: 

[See PDF for image] 

[End of figure] 

The chief operating officer, who heads the ATO, has also recognized 
that cultural factors can play a critical role in an organization's 
success and is aiming to make a transformation similar to that shown 
above. For example, he has observed that FAA's management culture has 
been "intensely hierarchical, risk averse," and "reactionary," and aims 
to develop a viable, stable, and sustainable organization that can make 
fact-based decisions that transcend changes in leadership. He said that 
FAA is giving high priority to changing its leadership model by linking 
top management more closely to operations in the field and by replacing 
command and control with communication across organizational levels. 

To further support cultural change, FAA is emphasizing accountability 
and other core values. For example, it is holding managers accountable 
for managing their budgets. Additionally, FAA has chosen five core 
values and plans to use employees' responses to selected questions in 
the most recent employee attitude survey[Footnote 51] to set a baseline 
for cultural improvement. The five core values are (1) integrity and 
honesty, (2) accountability and responsibility, (3) commitment to 
excellence, (4) commitment to people, and (5) fiscal responsibility. 
FAA's Civil Aerospace Medical Institute analyzed the survey results by 
grouping three to seven survey items under each of these areas. For 
example, FAA placed the survey item "We are encouraged to express our 
concerns openly" along with four other items under the integrity and 
honesty core value. For many items, across all core values, fewer than 
40 percent of ATO employees indicated agreement or strong agreement, 
indicating that FAA still has work to do to create a culture where 
these core values are readily evident to the majority of its employees. 
FAA is addressing these items by developing its own action plan, and 
documenting best practices for items where positive response rates--the 
total percentage of agree and strongly agree--are above 55 percent. 

The FAA's recognition of the importance of creating a results-oriented 
culture is an important step, particularly within the ATO, which is 
composed of formerly separate organizations. We have reported that many 
mergers or transformations fail because the cultures of the originating 
components are not fully understood or considered.[Footnote 52] Thus, 
identifying cultural features of the originating components, prior to, 
or early on, in the merger and transformation process, can help 
leadership gain a better understanding of their beliefs and values. 
Organizationwide surveys, employee focus groups, and individual 
interviews can be used to assess culture in order to provide a better 
understanding of how work gets done and what values are important to 
employees. 

Past Cultural Change Efforts Met with Limited Success: 

Since we identified the acquisition workforce culture as an underlying 
cause of FAA's chronic system acquisition problems in 1996,[Footnote 
53] FAA has taken a number of steps to change its culture, but long- 
term management attention and focus have been lacking. Our 1996 report 
showed that FAA's acquisitions were impaired because the employees and 
managers acted in ways that did not reflect a strong commitment to 
mission focus, accountability, adaptability, and coordination--the key 
factors that we identified at that time as being associated with a 
constructive culture. These factors are similar to the characteristics 
of the results-oriented culture that FAA is seeking to develop. A 
results-oriented culture is also an organizational element that we have 
identified as key in transforming the government to meet the management 
challenges of the 21ST Century. 

In 1996 we reported that agency officials performed little or no 
mission needs analysis, made unrealistic cost and schedule estimates, 
and proceeded into the production phase of systems before completing 
their systems' development. We also reported that accountability was 
not well defined or enforced for decisions on requirements and 
oversight of contracts. Additionally, ineffective coordination that 
resulted from, among other things, stovepipe lines of authority, 
impaired communications between organizations that needed to 
coordinate, particularly between the acquisition and operations sides 
of FAA. Finally, we reported that FAA's culture of conservatism and 
conformity discouraged innovation and, instead, rewarded employees for 
simply following the rules. 

FAA responded to our 1996 report in several ways. As we recommended, 
FAA developed a strategy to implement cultural change. While the 
strategy called for, among other things, a report on the primary 
impediments to cultural change and a detailed action plan, the strategy 
was not implemented exactly as FAA anticipated. For example, FAA laid 
out a series of tasks over the course of a year, including developing a 
communications plan, conducting focus groups, and encouraging workforce 
participation. However, according to FAA, the communications plan was 
never implemented because of a shift in senior leadership and 
organizational dynamics. 

Rather than implementing the strategy for cultural change, FAA took a 
number of alternative actions aimed at changing the culture. For 
example, FAA developed an intellectual capital investment plan that 
outlined corporate investment priorities for workforce development. FAA 
also implemented a results-based individual performance management 
program that showed the relationship between individual performance 
plans and the agency's goals. Finally, FAA hired consultants to assess 
the acquisition workforce culture in 1998 and 2000 and developed action 
plans to address the issues that the assessments identified. According 
to an FAA official, FAA started implementing these action plans, but 
suspended them when the ATO was established. Additionally, although FAA 
strongly emphasized cultural change in the annual performance plans 
developed in the late 1990s, the emphasis tapered off from 2000 through 
2002. 

Some Recent FAA Survey Results Suggest Less Improvement in Workforce 
Culture Than in Prior Years: 

Improvements in some culture-related responses in FAA's employee 
attitude survey have tapered off, compared with prior years. Since 
1984, FAA has periodically conducted employee attitude surveys, most 
recently in 1997, 2000, and 2003.[Footnote 54] The survey gathers 
information on employees' attitudes, perceptions, and opinions about a 
broad variety of organizational issues. Many of the survey items relate 
to mission focus, accountability, coordination, and adaptability--the 
four characteristics of a constructive culture that we identified in 
1996. 

According to our analysis of employee responses to survey items, FAA 
made some initial progress between 1997 and 2000, but progress leveled 
off for many items thereafter.[Footnote 55] (See fig. 11.) 

Figure 11: Changes in Mean Response Scores for Selected Items on FAA's 
Employee Attitude Surveys, 1997 to 2000, and 2000 to 2003, for the 
Acquisition Workforce: 

[See PDF for image] 

Note: FAA score estimates have 95 percent confidence intervals of plus 
or minus 0.06 or less. Year-to-year differences in scores of 0.08 or 
more are significant at the 95 percent confidence level. 

[A] This question is negatively worded, such that "strongly agree," 
would be a negative response. For consistency, we reversed the scoring 
for this question, so that a "strongly agree" response would be scored 
1, and a "strongly disagree" response would be scored 5. The practice 
of reverse scoring negatively worded items is a commonly accepted 
professional practice in survey research methodology. 

[B] Not asked in the 1997 survey. 

[End of figure] 

FAA's Survey Results Are Lower Than Those for Other Organizations on 
Similar Culture and Climate Surveys: 

Surveys of organizational culture in other organizations, conducted 
over the past 20 years (comparison group), show higher mean scores than 
those for FAA's acquisition workforce. To determine how FAA's culture 
compares with that of other organizations, we contracted with an expert 
in organizational culture. With this expert's assistance, we compared 
FAA's scores for the survey items listed in figure 10 with the 
comparison group's responses to similar items.[Footnote 56] While an 
exact match in the wording of survey items was not possible, we found 
that the mean scores for FAA's acquisition workforce were lower than 
those of the comparison group for 14 out of 16 items that we compared. 
The exceptions were for items that addressed the adequacy of training 
provided to perform one's job and the sufficiency of tools and 
equipment needed to do one's job efficiently. Appendix III lists the 16 
items that we compared and the respective mean scores of FAA's 
acquisition workforce and of the comparison group. Appendix III also 
shows the mean scores for organizations with highly effective cultures, 
which could be used as a target towards which other organizations, such 
as FAA, could work to redirect their cultures and improve their 
performance.[Footnote 57] 

It is important to note that comparisons of the responses to questions, 
whose wording is similar, but not identical, are difficult because even 
subtle changes in a question's wording can result in different 
outcomes. Our expert commented that FAA's survey results are more 
indicative of an organization's climate, rather than culture. The 
expert noted, however, that research shows that climate is strongly 
related to culture. Therefore, we present the two sets of survey 
results here because the concepts that they are measuring are, in our 
opinion, similar enough to warrant a general comparison. Additionally, 
we noted in 1996 that the culture of FAA's 2,000-employee acquisition 
workforce needed improvement, and that the rate of initial improvement 
has not been sustained. Additionally, as previously stated, FAA has 
demonstrated its recognition of the need for a results-oriented culture 
by creating a goal to create such a culture in its Human Capital Plan. 
The chief operating officer has also observed the need to change the 
culture of the ATO's 36,000 employees. 

Transforming organizational cultures requires substantial management 
attention. 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. The team must have vested authority 
and resources from top management to set priorities, make timely 
decisions, and move quickly to implement decisions. Such a team 
provides a visible signal that the transition is being undertaken with 
the utmost seriousness and commitment. Having a dedicated transition 
team is just one of several practices that we have identified, such as 
setting implementation goals and a timeline and establishing a 
communication strategy, that are key to successful mergers and 
organizational transformations. (See app. IV for a complete list.) 

Conclusions: 

FAA has addressed a number of the challenges it faces in hiring and 
training thousands of air traffic controllers over the coming decade. 
However, FAA's lack of information on the cost of this program is of 
particular concern as the agency enters a period of anticipated lean 
budgets, as discussed in the next chapter. A shortage of funds that 
results in hiring fewer controllers than needed could lead to 
additional delays in air travel, beyond those caused by infrastructure 
constraints. 

Successful organizational transformations and cultural changes require 
several years of focused attention from senior leadership. In the past, 
FAA set, but did not sustain, a fact-based course for creating a 
constructive organizational culture. Promising initiatives, such as 
detailed action plans, were developed but not implemented or sustained, 
and without continued attention to cultural change from the top, 
improvements leveled off, and FAA now appears to lag behind other 
organizations on cultural measures. FAA's current effort to establish a 
baseline for measuring cultural change represents an important first 
step, but additional steps and sustained management attention will be 
needed to achieve and maintain progress. Unless FAA succeeds in 
transforming itself into an organization that is more mission focused, 
accountable, cooperative, and adaptable, it could have difficulty 
establishing the results-oriented culture that it seeks. 

Recommendation for Executive Action: 

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

To ensure that FAA provides the long-term focus needed for an effective 
cultural transformation, we recommend that the Secretary of 
Transportation 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 Comments: 

FAA did not comment these recommendations, but provided technical 
comments which we included as appropriate. 

[End of section] 

Chapter 4: Rising Costs and Declining Revenues Pose Financial 
Management Challenges: 

FAA faces the dual challenge of rising costs and declining revenues, 
culminating in a projected multibillion-dollar gap between its expected 
budget targets and expected spending requirements through fiscal year 
2009. To attempt to live within its means, FAA is cutting programs and 
controlling costs, but these steps will not come close to closing the 
gap. FAA officials and some experts and stakeholders believe a key 
element in addressing the agency's financial management challenges is 
changing FAA's revenue structure from the present ticket-tax-based 
structure to one more closely tied to FAA's cost of providing services. 
Collectively, aviation experts and stakeholders suggested that FAA 
could address its financial management challenges through a two-pronged 
approach: in the near term, consider options that are readily 
available, such as contracting out more of its services and pursuing 
other cost-saving measures; and over the longer term, determine whether 
a business case could be developed to support more extensive changes 
that would require presidential and/or congressional action to 
implement, such as providing the ATO with more financial management 
flexibility. 

To Address Rising Costs and Declining Revenues, FAA Is Focusing on Cost 
Control: 

FAA is concerned about the impact of rising costs and reduced budget 
targets through fiscal year 2009, combined with uncertainty over future 
balances in the Trust Fund.[Footnote 58] FAA is attempting to live 
within its reduced means by controlling its costs. 

FAA Projects a Multibillion-Dollar Gap: 

FAA projects an $8.2 billion gap between its expected budget targets 
and expected spending requirements through fiscal year 2009. Under 
existing budget targets set through fiscal year 2009, FAA would receive 
about 17 percent less each year in capital funding than it received in 
fiscal years 2002, 2003, and 2004. For fiscal year 2005, FAA received 
an appropriation of $2.5 billion for capital expenditures, and capital 
budget targets for fiscal years 2006 through 2009 are just under $2.5 
billion. In contrast, for fiscal years 2002 through 2004, FAA received 
annual capital appropriations of nearly $3 billion. (See fig. 12.) 

Figure 12: Actual Capital Appropriations, Fiscal Years 2002 - 2005, and 
Budget Targets, Fiscal Years 2006 - 2009: 

[See PDF for image] 

[End of figure] 

Compounding FAA's financial concerns is ongoing uncertainty over 
revenue forecasts for the Trust Fund. From fiscal years 2002 through 
2004, FAA's expenditures declined at a steeper rate than the Trust Fund 
revenues, but the expenditures nonetheless remained higher. (See fig. 
13.) Although revenues increased from fiscal years 2003 through 2004, 
expenditures increased more rapidly. 

Figure 13: Aviation and Airway Trust Fund Expenditures and Revenues, 
Fiscal Years 2002 - 2004: 

[See PDF for image] 

[End of figure] 

The combined effect of the higher expenditures and the lower revenues 
is a reduction in the Trust Fund's uncommitted balance of nearly 50 
percent from fiscal years 2002 through 2004. (See fig. 14.) 

Figure 14: Aviation and Airway Trust Fund Uncommitted Balances, Fiscal 
Years 2002 - 2004: 

[See PDF for image] 

[End of figure] 

We recently testified that in 4 out of the last 5 years, actual trust 
fund revenues fell short of forecasts. Our analysis indicated that if 
revenues fall 10 percent short of forecasts for fiscal years 2005 
through 2007, the fund could be bankrupt by 2006.[Footnote 59] 

FAA Cut Major Programs and the ATO Is Gathering and Tracking Data to 
Control Costs: 

FAA cut funding for three major programs. For fiscal year 2005, the 
appropriation for FAA's facilities and equipment budget, which funds 
ATC system acquisitions, was $393 million less than the agency had 
planned to spend. FAA conducted an intensive review of its capital 
investment portfolio and absorbed the $393 million reduction largely by 
suspending the funding for CPDLC, an e-mail-like messaging system for 
communications between air traffic controllers and pilots; eliminating 
a major component of NEXCOM, an air-to-ground digital communications 
system; and returning LAAS, a precision landing system augmented by 
satellites, to research and development to resolve a key performance 
shortfall. 

The ATO plans to manage its services on the basis of costs. Key to this 
effort is FAA's implementation of a cost accounting system. Until 
recently, FAA had no cost accounting system and could not accurately 
determine the cost of its activities. When fully implemented in 2006, 
the cost accounting system should address our long-standing concern 
that FAA lacked the cost information necessary for decision making as 
well as to adequately account for its activities and major projects, 
such as the air traffic control modernization program. Additionally, 
the ATO intends to use the cost accounting system to provide more 
credible and transparent analyses of the costs and benefits of 
alternative plans of action. For example, ATO officials said the system 
will enhance their ability to accurately determine the costs of 
providing specific services or products, and to compare those costs 
with the value provided to the organization's customers. This 
information will be valuable in prioritizing activities and weighing 
the costs and benefits of various courses of action when developing and 
supporting proposed budgets. 

The ATO also plans to hold its managers accountable for cost control. 
The ATO has decentralized cost accountability to service delivery 
points--the units that actually provide services--such as air traffic 
control facilities. Each manager of a service delivery point will 
develop an operating budget. According to the ATO's plans, each manager 
will be held accountable for holding costs within specific targets. 
Managers will track their costs using reports that show expenditures 
for operations, facilities and equipment, and overhead, as well as cost 
per service. For example, managers will receive reports indicating the 
cost per takeoff and landing, or cost per flight hour, depending on the 
organizational unit's purpose. ATO officials stressed that training key 
executives and managers to understand the general ledger and cost 
accounting system is a key element in controlling costs. The ATO plans 
incorporate cost control into the performance rating and bonus system 
in fiscal year 2006. 

FAA has also begun to base funding decisions for system acquisitions on 
their contribution to reducing the agency's operating costs, among 
other things. Currently, FAA's Telecommunications Infrastructure--one 
of the 16 major system acquisitions that we reviewed in detail--is the 
only one of the 55 system acquisitions in FAA's ATC modernization 
program that helps reduce the agency's operating costs. However, FAA 
does not expect to realize most of these benefits until after 2009. 

The ATO is conducting activity value analysis as another method to 
reduce costs. Through activity value analysis, the ATO determines (1) 
the costs of the products and services provided, (2) the factors that 
affect the costs, and (3) the value of these products and services, as 
perceived by the ATO's internal customers. Through activity value 
analysis, officials are asking the internal organizations that use the 
ATO's products and services to categorize their value as high, medium, 
or low, while ATO officials categorize the cost of performing each 
activity as high, medium, or low. ATO officials expect the process to 
help them eliminate activities with low customer value and determine 
ways to reduce the costs of activities with high customer value. 

The ATO first focused the activity value analysis on headquarters 
units, and plans to do so later at field units. The results of the 
headquarters analysis indicated that internal customers rated only 5 
out of 73 reviewed products or services as low value, and all of these 
were also low cost. Officials judgmentally selected 11 activities for a 
more in-depth analysis to determine areas for potential improvement. 
The activity value analysis resulted in 39 discrete findings and 
recommendations with common themes. (See table 3). 

Table 3: Common Themes and Number of Findings from ATO's Headquarters 
Activity Value Analysis: 

Common theme: Accountability or metrics is needed;
Number of findings: 19. 

Common theme: Tools and systems lack standardization;
Number of findings: 18. 

Common theme: Approach across service units is inconsistent;
Number of findings: 15. 

Common theme: Process is too complex or disparate;
Number of findings: 9. 

Common theme: Function or organization is too spread out;
Number of findings: 9. 

Common theme: Process is sound, but not enforced;
may require minor adjustments;
Number of findings: 3. 

Common theme: Product or service is an afterthought;
Number of findings: 3. 

Source: FAA. 

[End of table] 

Existing Cost Control Initiatives Will Not Close the Projected Gap: 

FAA, through the ATO, has a number of cost control initiatives under 
way. For example, the ATO is evaluating whether some of its services 
can be provided for less cost by contracting out. In February 2005, FAA 
awarded a contract for the operation of its flight service stations. 
Under this arrangement, which FAA termed the largest competitive 
sourcing activity, at that time, in the federal government, the agency 
expects significant savings. According to FAA's estimate, the agency 
will save $441 million in capital costs because it will not continue to 
procure modernized equipment for the flight service stations. 
Additionally, FAA expects to save $1.2 billion in operating costs. 
However, the projected operating cost savings would not occur until 
fiscal year 2011 or later; only about $241 million savings in operating 
costs would be realized through fiscal year 2010.[Footnote 60] For 
fiscal years 2005 through 2010, FAA also projects savings of $212 
million in operating costs from a variety of other actions, including 
improvements in procurement for office supplies, office equipment, 
mail, printing and information technology hardware and software; 
improving cell phone contracting; and cutting night shift operations at 
selected ATC towers. 

These cost control efforts are not likely to close the projected gap. 
In total, the estimated operating cost savings that the agency could 
realize from current cost-reduction actions is $454 million through 
fiscal year 2010--far short of the projected gap. However, additional 
options for cost savings exist. Some will require FAA to address 
organizational barriers and receive strong political support for 
implementation. Frequently cited cost control strategies are described 
below. 

* Consolidate major air traffic control facilities. A 1997 Coopers & 
Lybrand report concluded that the number of these centers could be 
reduced without a negative impact on air safety, but that such an 
initiative was considered unfeasible without strong political support 
for cost control.[Footnote 61] Some stakeholders told us that six or 
fewer facilities could be sufficient. FAA officials said they have no 
plans to consolidate centers because the concept would require strong 
political support that is not yet evident and they have no current 
financial estimate of potential savings. In addition, FAA's Management 
Advisory Council[Footnote 62] recently recommended that FAA develop a 
plan for reducing the number of terminal radar approach control 
facilities from their current level of 150 aging and inefficient 
facilities to around 50 to 60 newer, upgraded facilities using more 
capable and efficient automation. 

* Consolidate regional offices. According to the Coopers & Lybrand and 
the National Civil Aviation Review Commission reports, FAA could 
achieve savings by consolidating its nine regional offices. Both 
reports said that FAA had studied the issue numerous times but had 
never acted on the results of its own studies. According to the 
commission's report, consolidating nine FAA regional offices into three 
could save $400 million over a 5-year period. Several stakeholders told 
us this is an initiative that FAA should pursue. 

* Expand the Contract Tower Program. Although FAA employees staff 
control towers at most of the nation's busiest airports, FAA contracts 
for outside staff to work at over 200 airports with lower traffic 
levels. Both the Coopers & Lybrand study and the commission report 
recommended expanding the contract tower program to achieve savings of 
$20 million to $30 million per year. More recently, the Department of 
Transportation's Office of the Inspector General reported that each 
contract tower costs FAA nearly $900,000 less per year than comparable 
FAA towers, without compromising flight safety. 

* Decommission infrastructure. Aviation stakeholders noted that savings 
could be achieved by decommissioning ground-based navigational aids, 
but FAA has been slow to take action. As of May 2005, approximately 
2,200 ground-based navigation aids were in operation. At the same time, 
FAA is fielding costly satellite navigation systems such as WAAS, but 
has made little progress in decommissioning the ground-based 
infrastructure. Its current plan calls for modest equipment retirements 
over the next 5 years and more substantial decommissioning over the 
next 10 to 15 years. According to one estimate, these actions could 
save $150 million per year. FAA maintains that a long decommissioning 
process is required because general aviation users will continue to 
rely on some of these systems until their aircraft are upgraded to use 
satellite-based navigation. Several stakeholders commented that 
responding to the general aviation community on this issue has long 
been a roadblock to decommissioning obsolete equipment, and the ATO 
cannot afford to maintain these systems indefinitely. 

To Fund Major System Acquisitions through Fiscal Year 2009, FAA Has Cut 
Funding for Planned Investments in Other Areas: 

FAA plans to spend $4.2 billion on 16 major system acquisitions in 
fiscal years 2005 through 2009. (See table 4). 

Table 4: FAA Capital Funding Plans for Major ATC Modernization 
Acquisitions: 

Dollars in millions. 

Major System: ERAM;
Funds planned for fiscal years: 2005-2009: $1,531.8. 

Major System: STARS[A];
Funds planned for fiscal years: 2005-2009: $614.9. 

Major System: WAAS;
Funds planned for fiscal years: 2005-2009: $570.8. 

Major System: FFP2;
Funds planned for fiscal years: 2005-2009: $235.3. 

Major System: ASR-11;
Funds planned for fiscal years: 2005-2009: $230.8. 

Major System: NEXCOM;
Funds planned for fiscal years: 2005-2009: $212.8. 

Major System: ATOP;
Funds planned for fiscal years: 2005-2009: $197.7. 

Major System: FTI;
Funds planned for fiscal years: 2005-2009: $163.4. 

Major System: ASDE-X;
Funds planned for fiscal years: 2005-2009: $107.9. 

Major System: NIMS-2;
Funds planned for fiscal years: 2005-2009: $104.2. 

Major System: ITWS;
Funds planned for fiscal years: 2005-2009: $77.7. 

Major System: ECG;
Funds planned for fiscal years: 2005-2009: $74.3. 

Major System: ATCBI;
Funds planned for fiscal years: 2005-2009: $73.7. 

Major System: OASIS;
Funds planned for fiscal years: 2005-2009: $31.7. 

Major System: LAAS;
Funds planned for fiscal years: 2005-2009: $9.9. 

Major System: CPDLC;
Funds planned for fiscal years: 2005-2009: $2.9. 

Total;
Funds planned for fiscal years: 2005-2009: $4,239.8. 

Source: GAO analysis of FAA data. 

Note: Amounts shown in the table for NEXCOM, LAAS, and CPDLC reflect 
cuts previously described in this chapter. 

[A] Funding includes the remaining STARS acquisitions for fiscal years 
2006 and 2007 and $256.5 million for the Terminal Automation 
Modernization Replacement (TAMR) program. In 2004, FAA decided to end 
the STARS acquisition in fiscal year 2007 and began TAMR. FAA plans to 
continue terminal modernization incrementally under TAMR, but has not 
formally approved its funding. For purposes of this table, we are 
treating STARS and TAMR as a single acquisition. 

[End of table] 

As table 4 shows, ERAM is a major component of FAA's system 
acquisitions. This system will replace the software and hardware in the 
current en route host computers at 20 of FAA's air route traffic 
control centers.[Footnote 63] This acquisition is still in its early 
stages, but will consume 35 percent of FAA's total estimated funding 
planned through 2009 for the 16 systems listed in table 4. 

To provide the $4.2 billion for its major system acquisitions in fiscal 
years 2005 through 2009 while remaining within its budget targets, FAA 
has reduced funding planned for new technology, facilities, and airport 
improvements, among other things. (See fig. 15). 

Figure 15: Percentage Reductions in Capital Investment Plans as of 
January 2005, Compared with January 2003: 

[See PDF for image] 

[End of figure] 

FAA Has Reduced Funding for New Technology That Could Produce Future 
Benefits: 

For fiscal years 2005 through 2009, FAA eliminated the $1.4 billion 
that it had set aside for what it calls the "architecture segment." 
These funds would have been used to perform about 2 years' worth of 
early research on new programs that have not been officially approved 
as part of an acquisition decision by FAA management. According to FAA 
officials, these new programs will be postponed until they are 
affordable. 

Architecture segment funds would have funded some technology 
developments intended to serve as cornerstones of FAA's planned 
evolution from a controller-based ATC system to one that relies more on 
collaboration between pilots and controllers and on better use of the 
technology on board an aircraft for safe navigation. For example, 
architecture segment funds would have been used to develop, among other 
things, the System Wide Information Management network (SWIM). SWIM 
would help transition the NAS to network-centric operations by 
providing the infrastructure and associated policies and standards to 
enable information sharing among all authorized NAS users, such as the 
airlines, other government agencies, and the military. 

The architecture segment would also have funded the initial development 
of Automatic Dependent Surveillance-Broadcast (ADS-B), which FAA 
describes as another cornerstone of its long-term plans. ADS-B is a 
surveillance technology that transmits an aircraft's identity, 
position, velocity, and intent to other aircraft and to ATC systems on 
the ground, thereby enabling pilots and controllers to have a common 
picture of airspace and traffic. By providing pilots with a display 
that shows the location of nearby aircraft, the system enables pilots 
to collaborate in decision making with controllers, safely allowing 
reduced aircraft separation and thereby increasing NAS capacity. 

Eliminating the architecture segment comes at an inopportune time, as 
the JPDO begins its congressionally mandated efforts to coordinate the 
research efforts of FAA and other federal agencies to create the Next 
Generation Air Transportation System that would provide capacity to 
meet the air transportation needs of 2025. The JPDO issued a report in 
2004 outlining its plans to triple NAS capacity by 2025 and proclaimed 
that it can reach this goal only by completely transforming the way air 
traffic is managed. Network-centric operations and improved 
surveillance technology, such as SWIM and ADS-B might provide, are key 
elements of this transformation. A senior JPDO official told us that 
the JPDO's planning is still at an early stage, and therefore, the JPDO 
is not certain whether SWIM or ADS-B, as currently configured, would 
address NAS needs for 2025. However, he said that further development 
work is needed on these and other new technologies, and consequently, 
the JPDO hopes to see some funding for early technology development 
restored in FAA's capital investment plans as FAA's fiscal year 2007 
budget request moves forward. 

According to FAA, the program requirements for new technologies 
included in the JPDO's plans for the future were not mature enough, and 
business cases were not validated at that time, to justify inclusion 
within FAA's constrained capital investment plan. FAA stated that it 
plans to work with the Department of Transportation, the Office of 
Management and Budget, and congressional appropriations committees to 
introduce new technologies associated with the JPDO's future plans. We 
believe that FAA needs to give continuing priority to developing 
business cases for new technologies such as ASD-B and SWIM. Such 
actions will help FAA and the JPDO transition the current NAS to the 
next generation air transportation system. 

FAA Has Reduced Funding for Facilities: 

FAA cut nearly $790 million from its planned investments for 
facilities--an action that could delay actions on facilities scheduled 
for repair or replacement. Much of FAA's infrastructure--the buildings 
and towers that house ATC employees and costly systems--is aging. (See 
table 5). For example, the Casper, Wyoming, air traffic control tower 
was built in 1937; the tower in Binghamton, New York, was built in 
1951; and FAA's newest air route traffic center was occupied in 1963. 
The average age of air traffic control towers at airports is 30 years. 
FAA's chief operating officer told us that the Houston traffic control 
center floods during heavy rains. Fire suppression systems are another 
concern, he said. While FAA has replaced more than 30 air traffic 
control towers and terminal radar approach control facilities in the 
last 5 years, the funding reduction could delay progress on ATC 
facilities that are scheduled for repair or replacement in the future. 

Table 5: Age of NAS Facilities: 

Facility: Air route traffic control facilities (that house en route ATC 
operations);
Average age: 43 years. 

Facility: Air traffic control towers (that house airport ATC 
operations);
Average age: 29 years. 

Facility: Terminal radar control facilities (that house ATC approach 
and departure operations);
Average age: 25 years. 

Source: FAA. 

[End of table] 

The capital spending reductions that FAA has planned for fiscal years 
2005 through 2009 reflect the end result of difficult decisions about 
which programs to fund and which to cut in order to remain within 
budget targets. However, as we recently reported, FAA does not provide 
sufficient information to senior agency, department, Office of 
Management and: 

Budget, and congressional decision-makers of how it has arrived at its 
spending plans.[Footnote 64] Specifically, FAA does not identify the 
impact of these decisions on ATC and NAS modernization. Such 
information would make clear how constrained budgets will affect NAS 
modernization and how FAA is working to live within its means. 
Accordingly, we recommended that FAA begin providing such information 
with its budget submissions to Congress. FAA informed us that it 
intends to better inform Congress in the future by adding a section to 
its annual capital investment plan that will summarize major changes 
from the preceding year. 

FAA Is Reviewing Potential Changes in Its Funding Mechanism: 

With the various taxes that accrue to the Trust Fund scheduled to 
expire in 2007, and FAA's reauthorization, also scheduled for 2007, 
many aviation experts, as well as top Department of Transportation and 
FAA officials, are revisiting the way FAA receives its funding and are 
repeating recommendations made in the past, such as those of the 
National Civil Aviation Review Commission in 1997. Aviation experts and 
stakeholders agree that the incomplete implementation of these 
recommendations and additional factors could limit FAA's ability to 
fully address long-standing NAS modernization problems. 

The ATO, as Created, Implemented Only Part of the 1997 Commission's 
Recommendations: 

The 2000 executive order and related legislation that laid the 
foundation leading to FAA's creation of the ATO did not implement all 
of the recommendations of the National Civil Aviation Review 
Commission. The report stressed that the recommendations composed an 
integrated and comprehensive funding package and that the 
commissioners' agreement on the recommendations was contingent on their 
implementation as a total package. The report stated that implementing 
the recommendations in total could put FAA and aviation stakeholders in 
a position to take advantage of industry growth and technological 
change. The commission recommended the following: 

* FAA's budget treatment must change. The commission recommended that 
FAA's funding and financing system receive a federal budget treatment 
ensuring that revenues from aviation users and spending on aviation 
services are directly linked and shielded from discretionary budget 
caps. This linkage would ensure that FAA's expenditures are driven by 
aviation demand. 

* FAA's management must become performance based. The commission 
recommended that services related to the air traffic system be placed 
in a performance-based organization, managed by a chief operating 
officer, and overseen by a board of public interest directors. In 
addition, FAA should institute a cost accounting system and be given 
authority to implement innovative programs involving leasing and 
borrowing authority. The commission further stated that the safety and 
security functions of FAA, which are separate from the performance- 
based organization, should also adopt a performance-based management 
philosophy so that the quality of these programs can be improved. 

* FAA's revenue stream must become more cost based. The commission 
recommended that FAA adopt a cost-based revenue stream to support its 
air traffic system activities including capital investments. At the 
same time, funding for aviation security, safety, and government use of 
the air traffic system should be provided by the federal government's 
general fund. 

* FAA must control its operating costs and increase capital 
investments. The commission reviewed FAA's forecasted budget needs and 
assumed the agency's budget projections to be reasonable in a status 
quo environment. However, the commission noted that FAA's operating 
costs could be better managed and controlled and that investments in 
ATC modernization should be increased. 

* Airport capital needs must be met. The report noted that the federal 
requirements of airport capital development exceeded the amount of 
revenue that was available to finance these requirements through the 
Airport Improvement Program. The commissioners believed that the 
Airport Improvement Program is the linchpin of airport financial 
planning and stated that the program should be funded at a minimum of 
$2 billion annually over the next 5 years. 

While we do not necessarily agree with all of the commission's 
recommendations, we note that they were not implemented as a complete 
package, as the commission intended. Indeed, the ATO has been created 
as a legislatively mandated performance-based organization, headed by a 
chief operating officer, and focused on cost control, as the commission 
recommended. However, creating the ATO did not change its funding 
mechanism--a topic currently under discussion as the Trust Fund and 
FAA's reauthorizations are about to expire. Additionally, FAA's 
spending remained subject to congressional appropriations and the ATO 
was not given authority to implement innovative programs involving 
leasing and borrowing. Furthermore, the Trust Fund continues as a 
partial funding source for aviation security and safety.[Footnote 65] 

Aviation Experts and Stakeholders Repeated Several Past 
Recommendations: 

With the Trust Fund's scheduled 2007 expiration, and FAA's 
reauthorization drawing near, stakeholders, aviation experts, and 
Department of Transportation officials are discussing whether or how 
the Trust Fund should be changed to better meet FAA's needs. Potential 
changes echo those made by the commission in 1997. For example, FAA's 
2004 performance report notes that the FAA's funding mechanism does not 
link revenues with FAA's cost of providing ATC services.[Footnote 66] 
The report states that Trust Fund revenues are affected primarily by 
the number of passengers in the NAS, while FAA's workload and costs are 
based on the number of aircraft operating in the NAS, regardless of the 
number of passengers on each aircraft. Given the same number of 
passengers, the Trust Fund's revenues would remain constant, even 
though the passengers may be traveling on more, smaller aircraft. Under 
this scenario, FAA's workload and costs would increase but FAA's income 
would remain the same. The FAA Administrator noted that a tax on 
airline fares paid by passengers, which is the Trust Fund's primary 
source of revenue, is not related to FAA's actual cost of providing ATC 
services, and is not responsive to changes in the aviation industry. 
According to the Administrator, the United States is in a select 
minority of countries--all of them small, third world nations--that do 
not charge for the actual cost of air traffic control. She added that 
the current structure provides little incentive for FAA's customers to 
look at what things cost and help FAA to focus its resources where they 
matter the most. Under this system, she observed, "everyone wants 
everything and in a political environment, it becomes difficult … often 
impossible … to do things differently and undertake real reform." 

Some aviation experts also noted that FAA's funding stream needs to be 
linked to the cost of its services and FAA needs multiyear funding, 
financed by debt if necessary, to effectively manage its acquisitions, 
as the commission recommended.[Footnote 67] FAA's chief operating 
officer said that multiyear funding would provide needed stability, and 
a senior Department of Transportation official stated that 50 percent 
of acquisition cost overruns resulted from an unstable funding stream. 
One stakeholder concluded that, at the present time, a window of 
opportunity may exist to seriously reexamine past recommendations that 
have been repeated over time, such as those of the commission. However, 
not all stakeholders agree that significant changes are needed. The 
National Air Traffic Controllers' Association, the labor union 
representing air traffic controllers, testified that the Trust Fund is 
a stable and strong source of revenue and structural changes should not 
be taken lightly. 

Some aviation experts and our work suggests steps that FAA could take 
in the short term to improve its performance-based characteristics 
within the existing structure of congressional oversight and financial 
control. For example, one expert suggested that FAA has room for 
improvement in prioritizing how it commits to programs that require 
future investments, keeping in mind realistic funding assumptions. 
Another noted that FAA's anticipated high retirement rate over the next 
few years provides an opportunity to cut costs by redistributing and 
trimming the workforce. Finally, some experts suggested that if 
contracting for flight service stations proved to be effective, FAA 
could consider contracting for other functions, such as oceanic or en 
route ATC, or nighttime operations. Under this option, experts noted 
that ongoing government oversight could ensure the safety of contracted 
operations, and a "staged outsourcing" of the NAS's functions might 
build confidence in the private sector's ability to provide air traffic 
services safely and efficiently. As previously discussed, our work has 
also pointed out cost-saving options that FAA could pursue, such as 
consolidating ATC facilities and regional offices, decommissioning 
ground-based navigational aids, and expanding the contract tower 
program. 

Other experts went so far as to state that FAA, through the ATO, cannot 
fully address legacy modernization problems unless the ATO receives 
managerial and budgetary independence. To this end, some stated that 
the ATO's basic relationship with Congress must be changed so that ATO 
has the authority to manage its own finances, as the private sector 
does. Experts noted that, in contrast to the independence, flexibility, 
and tools available to private business executives, the business 
decisions made by the ATO's executives are subject to review by the FAA 
Administrator, the Secretary of Transportation, the Office of 
Management and Budget, and Congress. Increasing the ATO's autonomy 
would entail fundamental structural changes to the how the ATO receives 
and spends funding. 

Considering such fundamental changes is consistent with our work on the 
challenges facing this nation in the 21ST Century. Addressing these 
challenges requires a fundamental reexamination of government policies, 
programs, and functions to determine what the federal government should 
do and how it should be financed in the future. Concerning 
transportation, federal decision makers need to ask whether existing 
program constructs and financing mechanisms are relevant to the 
challenges of the 21ST Century. 

Conclusions: 

The current tight budget environment has forced FAA to make some tough 
decisions, the implications of which may not be apparent to executive 
branch and congressional decision makers. Including information in its 
budget submissions on the impact of these decisions, as we previously 
recommended, will enable FAA to provide decision makers with a better 
understanding of the funding trade-offs it is proposing. FAA's current 
capital investment plan sacrifices funding for the early development of 
new technologies--included in the JPDO's plans for the NAS of the 
future--to make funding available for ongoing modernization projects. 
Although many of these ongoing projects are supportive of the JPDO's 
vision, eliminating the funding for research and development for new 
technologies runs counter to the JPDO's objectives. Balancing the needs 
of ongoing and future projects is essential to provide for transforming 
the NAS, both in the near term and by 2025. 

The costs of hiring and training thousands of controllers annually for 
the next decade, as discussed in chapter 3, add to FAA's financial 
challenges. It is important that FAA estimate these costs now, so that 
it can incorporate them in future budget requests. These cost estimates 
will affect the amounts of funding FAA will have available for 
modernization as well as operations. 

The observations of aviation experts and stakeholders, as well as our 
work on the nation's 21ST Century challenges, suggest a two-staged 
approach to addressing FAA's financial management challenges. First, 
FAA needs to pursue those options available under the existing federal 
oversight and appropriations process, such as exploring opportunities 
for contracting out more of its services, and consolidating facilities. 
Once FAA has fully exploited those options, and has established a 
record of improved financial management, it could consider developing a 
business case to reexamine fundamental issues such as the appropriate 
government role in aviation and the funding mechanism that support the 
ATC system. Ultimately, Congress and the President decide these issues. 

Recommendations for Executive Action: 

To position FAA to best meet NAS needs in both the near term, and the 
longer term, we are making the following two recommendations to the 
Secretary of Transportation. The Secretary should direct the FAA 
Administrator to (1) balance current and long-term investment 
priorities; and (2) 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 Comments and Our Evaluation: 

FAA commented that its fiscal year 2007 budget request will reflect its 
balancing of current and future funding priorities, and, therefore, our 
recommendation to this effect may be unnecessary. We are retaining this 
recommendation because it pertains not only to fiscal year 2007, but to 
future years as well. Likewise, FAA commented that it is already 
utilizing all available financial management tools, including looking 
at alternative financing mechanisms. Our draft report discussed FAA's 
consideration of alternative financing mechanisms at length. We 
continue to believe that FAA should explore further uses of available 
management tools such as opportunities to contract out its services; 
consolidate major facilities; and accelerate decommissioning of ground- 
based navigation aids, as we have noted in this report. Therefore, we 
are also retaining this recommendation. FAA also provided technical 
comments, which we included as appropriate. 

[End of section] 

Appendixes: 

Appendix I: Methodology for Workforce Culture Assessment: 

Because we identified the acquisition workforce culture as an 
underlying cause of air traffic control (ATC) modernization problems in 
1996 and had not revisited this area since the Federal Aviation 
Administration (FAA) published its strategy for cultural change in 
1997, we reassessed the status of FAA's efforts in this area. We 
obtained documents that showed evidence of the steps that FAA took to 
improve the acquisition workforce culture between 1997 and 2005. To 
benchmark the acquisition workforce against organizations with 
constructive cultures, we employed the services of a consultant with 
extensive experience in analyzing organizational culture and used a 
research database of responses to the Organizational Culture Inventory" 
and Organizational Effectiveness Inventory'. These instruments have 
been administered over a period of 20 years to nearly 1,000 
organizations selected to maximize the number and diversity of the 
organizations represented in the database. 

The research database does not contain client data--that is, data 
obtained from organizations that contracted for an organizational 
assessment. Such data would be subject to self-selection biases because 
the factors prompting the use of culture and climate surveys by such 
organizations almost ensure that the results will be skewed and 
somewhat negative. Additionally, the types of organizations (typically 
large, for-profit corporations) that undertake, and can afford, such 
surveys are not necessarily representative of the larger population of 
organizations. Instead, the organizations, whose responses are in the 
research database, were strategically selected and invited to use the 
surveys on a research basis.[Footnote 68] Additionally, priority was 
placed on gaining entrée into a number of highly effective 
organizations, including some that initially turned down the invitation 
on the grounds that their cultures represented a competitive advantage 
and were proprietary. Thus, though not collected from a random sample 
of organizations, the research data are less subject to systematic 
biases than are client-based data. 

The research database provides both "historical averages" and 
"constructive benchmarks" against which organizations can compare their 
results. The historical averages, for the purposes of this study, are 
the mean scores for all respondents across the organizational units 
surveyed. The constructive benchmark scores are the averages for up to 
172 highly effective units--defined as those with predominately 
positive and adaptive cultures. These scores provide a target toward 
which organizations can work to redirect their cultures and enhance 
their performance. 

We compared the results in the research database with those that FAA 
obtained through its periodic employee attitude survey. Specifically, 
we used 1997, 2000, and 2003 survey results for the acquisition 
workforce, the same segment of the organization that we focused on in 
1996. In each of these years, FAA mailed surveys to the entire 
acquisition workforce and received completed surveys from approximately 
half of the workforce, as summarized in table 6. 

Table 6: Number of Surveys That FAA Mailed to the Acquisition Workforce 
and Completed Surveys Received in 1997, 2000, and 2003: 

Year: 1997;
Surveys mailed: 2,051;
Completed surveys returned: 1,004. 

Year: 2000;
Surveys mailed: 1,983;
Completed surveys returned: 1,057. 

Year: 2003;
Surveys mailed: 1,825;
Completed surveys returned: 928. 

Source: GAO representation of FAA data. 

[End of table] 

The results derived from these completed surveys could differ if a 
different subset of the workforce responded. Consequently, we treat the 
completed surveys as a random sample of the workforce to acknowledge 
the sampling error that would be expected for a probability sample of 
this size. This treatment assumes that response is random and that the 
completed surveys constitute a simple random sample of the acquisition 
workforce. If this assumption is not correct, for example, if employees 
with positive attitudes were more (or less) likely to respond than 
employees with negative attitudes, then the scores developed from the 
survey results could overstate (or understate) the scores for the 
workforce overall. 

Mean scores were developed from the survey data by assigning values of 
1 through 5 to the five-point extent scales for each question, and then 
using these score values to estimate an average score based on all 
responses for that question.[Footnote 69] We express our confidence in 
the precision of these score estimates at 95 percent confidence 
intervals. This is the interval that would contain the actual 
population value for 95 percent of the samples we could have drawn. As 
a result, we are 95 percent confident that each of the confidence 
intervals in this report will include the true values in the study 
population. For the estimated acquisition workforce scores in this 
report, the 95 percent confidence intervals are within plus or minus 
.06 points of the score estimate. For example, if the estimated score 
is 3.21, then the 95 percent confidence interval would run from 3.15 to 
3.27. 

With our expert's assistance, we selected items from FAA's employee 
attitude survey that addressed cultural issues and matched them with 
similar survey items used to assemble the research database. Each of 
our comparisons addressed a common aspect of organizational culture or 
climate. For example, FAA's survey asks for agreement or disagreement 
with the following statement: "In my organization, there are service 
goals aimed at meeting customer expectations." We compared FAA's 
responses to the following item used in the comparison group survey: 
"Are you encouraged to emphasize the perspective and needs of customers 
when making decisions?" Appendix III shows a complete list of FAA 
survey items and comparison group survey items that we used for 
comparison, and the respective scores. 

It is important to note that comparisons of the responses to questions 
whose wording is similar, but not identical, are difficult because even 
subtle changes in a question's wording can result in different 
outcomes. We present the two sets of survey results here because they 
are measuring similar enough concepts that we think a general 
comparison is warranted. Additionally, we used the results of our 
comparisons as part of a body of evidence that also includes our past 
work on FAA's culture, and FAA's more recent recognition of the 
importance of a results-oriented culture. 

We believe that the research database is sufficiently authoritative, 
appropriate, and reliable for us to use it as a basis for comparing 
FAA's workforce culture with other organizations' cultures. The survey 
that was used to create the database has been completed by over 
2,500,000 respondents since its publication in prototype form in 1983. 
It has been administered in thousands of organizations throughout the 
world, including the Department of the Navy, the Coast Guard, the 
Defense Logistics Agency, major retailing organizations, international 
pharmaceutical companies, financial services corporations, newspapers, 
high tech firms, universities and hospitals, not-for-profit 
organizations, and numerous manufacturing firms. These organizations 
have variously used the results to diagnose their cultures and initiate 
change programs, to identify the "ideal" culture for maximizing their 
effectiveness, and to monitor the impact of organizational development 
efforts. More specialized applications have included programs focusing 
on diversity within organizations, mergers and acquisitions, and union- 
management relations. 

Additionally, the survey is referenced in various textbooks and has 
been adopted for instructional purposes by leading universities. It has 
been used in research projects on topics ranging from organizational 
reliability and effectiveness to member socialization and citizenship 
behavior. These projects include a Department of Defense study of the 
culture of highly effective units during the Desert Shield buildup; a 
comparative study of 150 supermarkets sponsored by the Coca-Cola 
Retailers' Research Council; the Readership Institute's (Northwestern 
University) national survey of 100 newspapers; and various projects 
focusing on organizations carrying out critical activities (e.g., 
nuclear power plants, nuclear aircraft carriers, critical care units). 
The survey has also been used in international cross-cultural projects, 
including one by the International Association of Economic and 
Management Students focusing on management cultures in over 40 
different countries. The survey has been published in Bulgarian, 
Chinese (traditional and simplified), Dutch, Finnish, French (European 
and Canadian), German, Icelandic, Japanese, Korean, Portuguese, 
Romanian, Russian, Spanish (Castilian and Latin American), and Swedish, 
and preliminary translation keys have been developed in Afrikaans, 
Hindi, Polish and other languages. Results of research supporting the 
scientific reliability and validity of the survey have been published 
in Psychological Reports, Group and Organization Studies, Human 
Relations, and the Handbook of Organizational Climate and Culture. 

Similarly, we believe FAA's employee attitude survey is sufficiently 
authoritative, appropriate, and reliable for us to use it as a basis 
for comparing FAA's workforce culture over time. FAA has administered 
the employee attitude survey to its employees nine times since 1984. 
The survey was designed to gather information on employees' attitudes, 
perceptions, and opinions about a broad variety of organizational 
issues. Although elements of the survey have changed over time, items 
thought to represent core areas of interest have remained relatively 
unchanged. For our analysis, we used FAA's data showing the acquisition 
workforce's responses for surveys conducted in 1997, 2000, and 2003. 
The acquisition workforce's response rate for these years was, 
respectively, 49 percent, 53 percent, and 51 percent. 

[End of section] 

Appendix II: Major ATC System Acquisitions: 

Air Traffic Control Radar Beacon Interrogator--Replacement (ATCBI-6): 

ATCBI-6 is a replacement radar capable of determining both range and 
direction to and from the aircraft. It can also forward this 
information to the appropriate air route traffic control centers. It 
will replace radars that have exceeded their life expectancy and have 
proved extremely vulnerable to outages and critical-parts shortages. 

Advanced Technologies and Oceanic Procedures (ATOP): 

ATOP is an integrated system of new controller workstations, data- 
processing equipment, and software that will enhance the control and 
flow of oceanic air traffic to and from the United States. ATOP is 
planned for the three sites that control oceanic air traffic: 
Anchorage, Alaska; New York, New York; and Oakland, California. 

Airport Surface Detection System-Model X (ASDE-X): 

ASDE-X is an airport surveillance system that enables air traffic 
controllers to track the surface movement of aircraft and vehicles. The 
detection system automatically predicts potential conflicts and 
seamlessly covers airport runways, taxiways, and other areas. 

Airport Surveillance Radar Model-11 (ASR-11): 

ASR-11 is a digital radar that replaces aging analog radars, such as 
ASR-7 and ASR-8, as well as collocated ATCBI-4 and ATCBI-5 secondary 
radars, with a single, integrated digital radar system. ASR-11 reduces 
operational costs, improves safety, and can accommodate future capacity 
increases. 

Controller-Pilot Data Link Communications (CPDLC): 

CPDLC is a communication system that will allow pilots and controllers 
to transmit data messages directly between FAA automated ground 
computers and aircraft. 

En Route Automation Modernization (ERAM): 

ERAM will replace software and hardware in the host computers at FAA's 
20 en route air traffic control centers, which provide separation, 
routing, and advisory information. It provides a flexible and 
expandable base to facilitate further National Airspace System (NAS) 
modernization initiatives. 

En Route Communications Gateway (ECG): 

A precursor to ERAM, ECG provides a communications interface between 
radar sites and en route centers. The system has an open and expandable 
platform that allows for new connectivity and functionality as the NAS 
evolves. It replaces the interim Peripheral Adapter Module Replacement 
Item that has been operating for 10 years and has exceeded its life 
expectancy. 

FAA Telecommunications Infrastructure (FTI): 

FTI is FAA's new telecommunications system. It will replace costly 
networks of separately managed systems and services--both leased and 
owned--by integrating advanced telecommunications services within FAA's 
NAS and non-NAS infrastructures. 

Free Flight Phase 2 (FFP2): 

FFP2 is a suite of air traffic control tools and subsystems that allows 
air traffic controllers to move gradually from a highly structured 
system, based on elaborate rules and procedures, to a more flexible 
system wherein pilots, within limits, can change their route, speed, 
and altitude while keeping air traffic controllers informed of such 
changes. It includes the Traffic Management Advisor, Collaborative 
Decision Making, and the User Request Evaluation Tool. 

Integrated Terminal Weather System (ITWS): 

ITWS is a weather information system that furnishes air traffic 
controllers and supervisors with full-color graphic displays of weather 
conditions that need no meteorological interpretation. It provides a 
comprehensive representation of the current weather situation and 
precise forecasts of weather conditions for the next 20 minutes (to be 
increased to 60 minutes in 2006) of convective weather conditions. 

Local Area Augmentation System (LAAS): 

LAAS is a landing guidance system that would use global positioning 
satellites and would be installed at airports to allow aircraft to 
execute precision instrument approaches and landings in all weather 
conditions. LAAS would eliminate the need for multiple instrument 
landing systems at airports where it is installed. 

NAS Infrastructure Management System--Phase 2 (NIMS-2): 

NIMS is a centralized system to help manage and schedule maintenance on 
the NAS infrastructure, including its facilities, systems, and 
equipment. NIMS will decrease the number of en route delays by reducing 
the time required to restore systems to full operation following 
maintenance. NIMS Phase 1, already complete, provides initial 
Operational Control Center capability, along with remote monitoring and 
control functionality, to 3,700 NAS facilities and 5,800 deployed 
maintenance data terminals.[Footnote 70] Phase 2 will fully implement 
resource management and enterprise management software and focus on 
increasing workers' productivity in receiving orders and managing 
resources. 

Next Generation Air/Ground Communications (NEXCOM): 

NEXCOM is a digital communications system, consisting of multimodal 
digital radios, avionics, and ground stations, that will improve ATC 
communications by replacing old analog communication systems. Segment 
1A will replace 30-to 40-year-old radios, deploying 6,000 new radio 
sets that use both analog and digital communications with aircraft. 
Segment 1B will create ground stations to communicate with aircraft 
equipped with digital capability. 

Operational and Supportability Implementation System (OASIS): 

OASIS is a system used at flight service stations to assist general 
aviation pilots with flight planning. The system provides up-to-the- 
minute weather graphics by integrating real-time weather and flight 
planning data with overlays of flight routes. It replaces the Flight 
Services Automation system for which FAA has had difficulty obtaining 
spare parts and hardware support. 

Standard Terminal Automation Replacement System (STARS): 

STARS is a workstation to allow civilian and military air traffic 
controllers to direct aircraft near major U.S. airports and will 
replace aging workstations at certain facilities. It has an open and 
expandable terminal automation platform that can accommodate air 
traffic growth, as well as new hardware and software that is designed 
to promote safety, maximize operational efficiency, and improve 
controllers' productivity. FAA will terminate STARS after replacing 47 
older systems by the end of fiscal year 2007. 

Terminal Automation Replacement (TAMR): 

TAMR is a modernization program to resolve existing safety, capacity, 
and obsolescence concerns in terminal automation systems at 
approximately 115 terminal radar approach control facilities and their 
associated towers. FAA initiated TAMR in 2004, concurrent with its 
decision to end STARS acquisitions by the end of fiscal year 2007. 
According to FAA, TAMR will incrementally continue the modernization 
and replacement actions. 

Wide Area Augmentation System (WAAS): 

WAAS is a navigation and landing guidance system that uses global 
positioning satellites to provide precise navigation and landing 
guidance at all U.S. airports, including thousands that have no ground- 
based instrument landing capability. 

[End of section] 

Appendix III: Perceptions of Organizational Culture in FAA's 
Acquisition Workforce and in Other Organizations: 

This appendix provides the results of surveys conducted at FAA and at a 
variety of other organizations (comparison group). FAA has conducted 
employee attitude surveys periodically since 1984, and most recently in 
1997, 2000, and 2003. At the other organizations, Human Synergistics, 
International, has surveyed employees over a 20-year period to develop 
a database for research on organizational culture and climate, as 
discussed in appendix II, using its Organizational Culture Inventory" 
and its Organizational Effectiveness Inventory' (see app. II for more 
detail about these inventories). Human Synergistics also identified a 
subset of these organizations as highly effective organizations with 
constructive cultures. 

To compare the perceptions of FAA's acquisition workforce with the 
perceptions of employees at other organizations, including those 
organizations with constructive cultures, we compared the mean 
responses of FAA and other employees to similar items in their 
respective surveys. We selected four survey items to compare for each 
of four key factors associated with a constructive organizational 
culture--mission focus, accountability, adaptability, and coordination. 
In this appendix, we refer to the mean responses of the FAA and other 
employees as the mean scores for the survey items. Additionally, we 
refer to the mean responses of the constructive organizations' 
employees as the benchmark scores for the items. 

Figure 16 presents the mean and benchmark scores for the four survey 
items associated with each of the four factors we considered. For FAA's 
acquisition workforce, we provide the mean scores, as calculated by 
FAA, for each item from the agency's 1997, 2000, and 2003 surveys. For 
the employees of the other and the highly effective organizations, we 
provide the mean and the benchmark score for each item that we obtained 
from the research database. We display these scores in consecutive 
charts whose juxtaposition shows how the perceptions of FAA acquisition 
employees compare at three points in time with the perceptions of 
employees at other organizations generally and at organizations with 
constructive cultures. 

[This page left blank intentionally] 

Figure 16: Acquisition Workforce's Mean Responses to Selected Items 
from FAA's 1997, 2000, and 2003 Employee Attitude Surveys and 
Comparison Group's Mean and Benchmark Scores for Similar Items: 

[See PDF for image] 

Note: FAA score estimates have 95 percent confidence intervals of plus 
or minus 0.06 or less. Differences in scores of 0.08 or more are 
significant at the 95 percent confidence level. 

[A] This question is negatively worded, such that "strongly agree," 
would be a negative response. For consistency, we reversed the scoring 
for this question, so that a "strongly agree" response would be scored 
1, and a "strongly disagree" response would be scored 5. The practice 
of reverse scoring negatively worded items is a commonly accepted 
professional practice in survey research methodology. 

[B] Not asked on the 1997 survey. 

[End of Figure] 

[End of section] 

Appendix IV: Key Practices and Implementation Steps for Mergers and 
Organizational Transformations: 

Practice: Ensure top leadership drives the transformation; 
Implementation steps: 
* Define and articulate a succinct and compelling reason for change; 
* Balance continued delivery of services with merger and transformation 
activities. 

Practice: Establish a coherent mission and integrated strategic goals 
to guide the transformation; Implementation steps: 
* Adopt leading practices for results-oriented strategic planning and 
reporting. 

Practice: Focus on a key set of principles and priorities at the outset 
of the transformation; Implementation steps: 
* Embed core values in every aspect of the organization to reinforce 
the new culture. 

Practice: Set implementation goals and a time line to build momentum 
and show progress from day one; Implementation steps: 
* Make public implementation goals and time line; 
* Seek and monitor employee attitudes and take appropriate follow-up 
actions; 
* Identify cultural features of merging organizations to increase 
understanding of former work environments; 
* Attract and retain key talent; 
* Establish an organizationwide knowledge and skills inventory to allow 
knowledge exchange among merging organizations. 

Practice: Dedicate an implementation team to manage the transformation 
process; Implementation steps: 
* Establish networks to support the implementation team; 
* Select high-performing team members. 

Practice: Use the performance management system to define 
responsibility and ensure accountability for change; Implementation 
steps: 
* Adopt leading practices to implement effective performance management 
systems with adequate safeguards. 

Practice: Establish a communication strategy to create shared 
expectations and report related progress; Implementation steps: 
* Communicate early and often to build trust; 
* Ensure consistency of message; 
* Encourage two-way communication; 
* Provide information to meet specific needs of employees. 

Practice: Involve employees to obtain their ideas and gain ownership 
for the transformation; Implementation steps: 
* Use employee teams; 
* Involve employees in planning and sharing performance information; 
* Incorporate employee feedback into new policies and procedures; 
* Delegate authority to appropriate organizational levels. 

Practice: Build a world-class organization; Implementation steps: 
* Adopt leading practices to build a world-class organization. 

Source: GAO, Results-Oriented Cultures: Implementation Steps to Assist 
Mergers and Organizational Transformations, [Hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-03-669](Washington, D.C.: July 2, 
2003). 

(542036): 

FOOTNOTES 

[1] GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: 
Jan. 1, 2005). In August 2005, FAA submitted a plan to the Office of 
Management and Budget to remove ATC modernization from GAO's high-risk 
list. FAA submitted this plan in response to a request from the Office 
of Management and Budget, which had asked agencies with programs on 
GAO's high-risk list to identify their goals for reducing fraud, waste, 
or mismanagement. Although the request specified that the purpose of 
the plans was not to get agency programs off the high-risk list, FAA 
intends to use the activities described in the plan as means for doing 
so, according to a Department of Transportation official. 

[2] "Organizational culture" is the underlying assumptions, beliefs, 
values, attitudes, and expectations shared by an organization's members 
that affect their behavior and the behavior of the organization as a 
whole. 

[3] For reports on airline employees and aircraft and equipment safety 
assurance workforce and procedures, see, for example, GAO, Aviation 
Safety: FAA Needs to Update the Curriculum and Certification 
Requirements for Aviation Mechanics, GAO-03-317 (Washington, D.C.: Mar. 
6, 2003); Human Factors: FAA's Guidance and Oversight of Pilot Crew 
Resource Management Training Can Be Improved, GAO/RCED-98-7 
(Washington, D.C.: Nov. 24, 1997); and Aviation Safety: Safer Skies 
Initiative Has Taken Initial Steps to Reduce Accident Rates by 2007, 
GAO/RCED-00-111 (Washington, D.C.: June 28, 2000). 

[4] GAO, Aviation Acquisition: A Comprehensive Strategy Is Needed for 
Cultural Change at FAA, GAO/RCED-96-159 (Washington, D.C.: Aug. 22, 
1996). 

[5] GAO, The National Airspace System: FAA Has Made Progress but 
Continues to Face Challenges in Acquiring Major Air Traffic Control 
Systems, GAO-05-331 (Washington, D.C.: June 10, 2005). 

[6] GAO, Information Security: Progress Made, but Federal Aviation 
Administration Needs to Improve Controls Over Air Traffic Control 
Systems, GAO-05-712 (Washington, D.C.: Aug. 26, 2005). 

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

[8] GAO, Results-Oriented Cultures: Implementation Steps to Assist 
Mergers and Organizational Transformations, GAO-03-669 (Washington, 
D.C.: July 2, 2003). 

[9] In this report, the term "budget targets" means the outyear budgets 
provided by the Office of Management and Budget. 

[10] GAO, Air Traffic Control: System Management Capabilities Improved, 
but More Can Be Done to Institutionalize Improvements, GAO-04-901 
(Washington, D.C.: Aug. 20, 2004). 

[11] GAO, Information Technology: FAA Has Many Investment Management 
Capabilities in Place, but More Oversight of Operational Systems Is 
Needed, GAO-04-822 (Washington, D.C.: Aug. 20, 2004). 

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

[13] GAO-05-712. 

[14] GAO-02-591. 

[15] GAO-03-669. 

[16] A navigation aid is any visual or electronic device, airborne or 
on the surface, that provides point-to-point guidance information or 
position data to aircraft in flight. 

[17] The term "service provider" refers to anyone who furnishes NAS 
users with separation assurance, traffic management, infrastructure 
management, aviation information, navigation, landing, airspace 
management, search and rescue, or aviation assistance services. 

[18] P.L. 108-176, December 12, 2003. 

[19] Joint Planning and Development Office, Next Generation Air 
Transportation System: Integrated Plan (Washington, D.C.: Dec. 12, 
2004). 

[20] P.L. 91-258. 

[21] The President's Management Agenda was issued in fiscal year 2002 
as a strategy for improving the performance and management of the 
federal government. 

[22] FAA has an ongoing ATC modernization effort in Alaska. This 
modernization effort includes software improvements for pilots' weather 
briefings and infrastructure improvements for flight service 
facilities. 

[23] P.L. 104-50, Fiscal Year 1996 Department of Transportation 
Appropriations Act. 

[24] Executive Order 13180, which created the ATO, was amended by 
Executive Order 13264 in June 4, 2002, which removed the caveat that 
air traffic services are an "inherently governmental function." 

[25] Our statements about cost, schedule, and/or performance in this 
and past reports are based on the original targets that FAA established 
and approved for each acquisition program. FAA noted that it tracks 
acquisition performance against original baselines and reports 
variances that exceed predefined thresholds to the administrator and 
Congress as required. 

[26] GAO-05-331. 

[27] See GAO-05-331. We reviewed the 16 ATC system acquisitions with 
the largest life-cycle costs that met the following criteria: each 
system had cost, schedule, and/or performance targets; each system was 
discussed in prior GAO and Department of Transportation Inspector 
General reports, had not been fully implemented or deployed by 2004, 
and received funding in 2004. We reviewed this list with FAA officials 
to ensure that we did not exclude any significant system. In fiscal 
year 2005, these 16 major ATC system acquisitions account for about 36 
percent of FAA's capital budget. 

[28] FAA defines a item as a product or service that has been developed 
for sale, lease, or license to the general public. The product is 
currently available at a fair market value. FAA defines a 
nondevelopmental item as an item that was previously developed for use 
by a government (federal, state, local, or foreign) and that requires 
limited further development. For example, an Army radio is the core of 
FAA's NEXCOM radio, and the software that FAA selected for its new 
oceanic ATC system was a nondevelopmental item from New Zealand's air 
system. 

[29] For purposes of this report, the underestimation of software 
complexity refers to poor estimation of the level of effort that would 
be required to modify software to meet requirements (e.g., commercial- 
off-the-shelf or nondevelopmental items). 

[30] As required by 31 U.S.C. 720, the Department of Transportation 
submitted a written statement of the actions taken on our 
recommendations to the Senate Committee on Homeland Security and 
Governmental Affairs and to the House Committee on Government Reform. 
We have not yet evaluated whether these actions fully address our 
recommendations. 

[31] GAO-04-901. 

[32] GAO, Air Traffic Control: FAA's Acquisition Management Has 
Improved, but Policies and Oversight Need Strengthening to Help Ensure 
Results, GAO-05-23 (Washington, D.C.: Nov. 12, 2004). 

[33] GAO-04-822. 

[34] GAO-05-23. 

[35] GAO-05-266. 

[36] GAO-05-207. 

[37] GAO-05-712. 

[38] GAO, Aviation Competition: Regional Jet Service Yet to Reach Many 
Small Communities, GAO-01-344 (Washington, D.C.: Feb. 14, 2001). 

[39] Testimony of Joseph Leonard, Chairman and Chief Executive Officer 
of AirTran Airways before the Subcommittee on Aviation, House Committee 
on Transportation and Infrastructure, June 3, 2004. 

[40] General aviation includes a wide variety of aircraft, ranging from 
corporate jets to small piston-engine aircraft as well as helicopters, 
gliders, and aircraft used in operations such as firefighting and 
agricultural spraying. 

[41] FAA has established "Area Navigation," commonly known as RNAV, 
which allows properly equipped aircraft to navigate using onboard 
systems in conjunction with satellites or ground-based navigation aids 
to fly desired flight paths without requiring direct flight over ground-
based navigation aids. RNAV provides for more direct routing, avoiding 
suboptimal routes prescribed by conventional "highways in the sky" that 
are defined by point-to-point flying over ground-based navigation aids. 
The RNAV concept and a major new method for exploiting it, called 
required navigation performance (RNP), permit flight in any airspace as 
long as aircraft have been certified to meet the required accuracy 
level for navigation performance. 

[42] Marginal weather conditions occur between 5 and 20 percent of the 
time at these airports. 

[43] GAO-02-591; GAO, Federal Aviation Administration: Plan Still 
Needed to Meet Challenges to Effectively Manage Air Traffic Controller 
Workforce, GAO-04-887T (Washington, D.C.: June 15, 2004). 

[44] GAO, Human Capital: Selected Agencies Have Opportunities to 
Enhance Existing Succession Planning and Management Efforts, GAO-05-585 
(Washington, D.C.: June 30, 2005); and 21ST Century Challenges: 
Reexamining the Base of the Federal Government, GAO-05-325SP 
(Washington, D.C.: February 2005). 

[45] FAA, A Plan for the Future: The Federal Aviation Administration's 
10-Year Strategy for the Air Traffic Control Workforce (Dec. 21, 2004). 

[46] Because FAA's intake of new controllers was very low from 1994 
until recently, the agency did not need to seek candidates from other 
sources. 

[47] P.L. 92-297. 

[48] GAO, Human Capital Management: FAA's Reform Effort Requires a More 
Strategic Approach, GAO-03-156 (Washington, D.C.: Feb. 3, 2003). 

[49] GAO, Results-Oriented Cultures: Creating a Clear Linkage between 
Individual Performance and Organizational Success, GAO-03-488 
(Washington, D.C.: Mar. 14, 2003). 

[50] GAO, 21ST Century Challenges: Transforming Government to Meet 
Current and Emerging Challenges, GAO-05-830T (Washington, D.C.: July 
13, 2005). 

[51] Although this survey was administered in September 2003, before 
the ATO was formed, FAA organized the responses according to the former 
suborganizations that became part of the ATO. 

[52] GAO-03-669. 

[53] GAO/RCED-96-159. 

[54] See appendix I for additional information on these surveys. 

[55] The surveys elicited information in a variety of ways. For 
example, in some cases, questions were asked and the response choices 
ranged from "to a limited extent" to "a great extent." In other cases 
statements were presented and response choices ranged from "strongly 
disagree" to "strongly agree." On a five-point scale, the most negative 
response is scored "1" and the most positive response is scored "5." 
Mean scores were developed by summing the responses to each question 
and dividing by the number of respondents. For example, a mean score of 
3 for a particular question would indicate that the average response 
was "neither agree nor disagree," while a mean score of 4 would 
indicate the average response was "agree." 

[56] See appendix II for additional information on our methodology for 
assessing FAA's workforce culture. 

[57] In November 2003, GAO hosted a forum to discuss the 
characteristics of high-performing organizations. The forum 
participants agreed that the key characteristics and capabilities of 
high-performing organizations can be grouped into four themes: (1) a 
clear, well-articulated, and compelling mission; (2) focus on needs of 
clients and customers; (3) strategic management of people; and (4) 
strategic use of partnerships. See GAO, High-Performing Organizations: 
Metrics, Means, and Mechanisms for Achieving High Performance in the 
21ST Century Public Management Environment, GAO-04-343SP (Washington, 
D.C.: February 2004). 

[58] The Office of Management and Budget reviews each executive branch 
agency's input to the budget that the President submits to Congress 
each February. The budget includes the most recently completed year, 
the current year, the budget year, and at least the four following 
years, called outyears. The Office of Management and Budget informs 
agencies of its decisions on the budget through its "passback." In this 
report we refer to the outyear budgets shown in the passback as budget 
targets. 

[59] GAO, Airport and Airway Trust Fund: Preliminary Observations on 
Past, Present, and Future, GAO-05-657T (Washington, D.C.: May 4, 2005). 

[60] FAA also saved $494 million in operating costs through staff 
attrition that occurred in advance of contracting out. FAA did not fill 
these vacancies because it was planning to contract out the flight 
service stations. 

[61] Coopers & Lybrand, L.L.P., Federal Aviation Administration 
Independent Financial Assessment (Feb. 28, 1997). 

[62] In 1996, Congress authorized the Administrator of the FAA to 
establish the Management Advisory Council. The council reviews, 
comments, and makes recommendations on FAA management, policy, 
spending, funding, and regulatory matters affecting the aviation 
industry. On May 12, 2005, the council issued a report that included 
suggestions for reducing FAA's costs. 

[63] ERAM will not be installed at the Anchorage, Alaska, air route 
traffic control center. 

[64] GAO-05-331. 

[65] Security fees, collected as a fee imposed on airline passengers, 
also help pay for aviation security. 

[66] FAA is funded through the Trust Fund and the General Fund. In 
fiscal year 2004, the General Fund provided 22 percent of FAA's total 
budget. 

[67] As part of our research, we sought the perspective of an 
international group of experts. We asked these experts to address, 
among other things, short-term steps that the ATO could take to address 
funding constraints and longer term steps that FAA could take to help 
the ATO achieve its mission. The options presented were identified by 
one or more members of our expert panel or others that we interviewed 
and do not necessarily reflect the views of GAO or of all aviation 
experts. 

[68] The research database includes responses from government agencies, 
not-for-profit organizations, public and private schools, libraries and 
museums, sports teams and athletic organizations, professional groups, 
and small businesses. Approximately 10 percent of the respondents in 
the research database are from public agencies, a rate that is 
significantly higher than would be the case for a client database. 

[69] Responses to questions range over a five-point scale. For example, 
the possible responses might be: strongly disagree, disagree, neither 
agree nor disagree, agree, strongly agree. In this case, if "strongly 
agree" were the most positive response for the question, it would be 
scored a "5," "neither agree nor disagree" would score a "3," and 
"strongly disagree" would score a "1." 

[70] Operational Control Center capability, established in 2001, was a 
standard set of tools and procedures needed to open the control 
centers. The tools provide the initial enterprise management and 
resource management technical capabilities needed at Operational 
Control Centers. 

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