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United States Government Accountability Office:

GAO:

Testimony:

Before the Subcommittee on Transportation, Treasury, the Judiciary, 
Housing and Urban Development, and Related Agencies, Committee on 
Appropriations, U.S. Senate:

Air Traffic Control:

Status of the Current Modernization Program and Planning for the Next 
Generation System:

Statement for the Record by Gerald L. Dillingham, Ph.D.: 
Director: 
Physical Infrastructure Issues:

GAO-06-738T:

GAO Highlights: 

Highlights of GAO-06-738T, a statement for the record for the 
Subcommittee on Transportation, Treasury, the Judiciary, Housing and 
Urban Development, and Related Agencies, Committee on Appropriations, 
U.S. Senate.

Why GAO Did This Study: 

Over a decade ago, GAO listed the Federal Aviation Administration’s 
(FAA) effort to modernize the nation’s air traffic control (ATC) system 
as a high-risk program because of systemic management and acquisition 
problems. Two relatively new offices housed within FAA—the Air Traffic 
Organization (ATO) and the Joint Planning and Development Office 
(JPDO)—are now primarily responsible for planning and implementing 
these modernization efforts. Congress created ATO to be a performance-
based organization that would improve both the agency’s culture, 
structure, and processes, and the ATC modernization program’s 
performance and accountability.  Congress created JPDO, made up of 
seven partner agencies, to coordinate the federal and nonfederal 
stakeholders necessary to plan a transition from the current air 
transportation system to the “next generation air transportation 
system” (NGATS).  This statement is based on GAO’s recently completed 
and ongoing studies of the ATC modernization program. GAO provides 
information on (1) the status of ATO’s efforts to improve the ATC 
modernization program, (2) the status of JPDO’s planning efforts for 
NGATS, and (3) actions to control costs and leverage resources for ATC 
modernization and the transformation to NGATS.

What GAO Found: 

ATO has taken a number of steps as a performance-based organization to 
improve the ATC modernization program, but continued management 
attention will be required to institutionalize these initiatives. ATO 
has adopted core values, streamlined its management, and begun to 
revise its acquisition processes to become more businesslike and 
accountable. For the past 2 years, ATO has met its major acquisition 
performance goals. ATO still faces challenges, including sustaining its 
transformation to a results-oriented culture, hiring and training 
thousands of air traffic controllers, and ensuring stakeholder 
involvement in major system acquisitions.  

JPDO has made progress in planning for NGATS by facilitating 
collaboration among federal agencies, ensuring the participation of 
federal and nonfederal stakeholders, addressing technical planning, and 
factoring global harmonization into its planning, but JPDO faces 
challenges in continuing to leverage the partner agencies’ resources 
and in defining the roles and responsibilities of the various agencies 
involved. JPDO could find it difficult to sustain the support of 
stakeholders over the longer term and to generate participation from 
some key stakeholders, such as current air traffic controllers. JPDO 
has taken steps to develop an enterprise architecture (the blueprint 
for NGATS) and will have an early version later this year. The 
robustness and timeliness of this enterprise architecture are critical 
to many of JPDO’s future NGATS planning activities.

ATO has taken a number of actions to control costs and maximize capital 
funds, which will become increasingly important during the transition 
to NGATS. ATO has established cost control as one of its key 
performance metrics, developed a cost accounting system, and is using 
its performance management system to hold its managers accountable for 
controlling costs.  ATO has developed a formal cost control program 
that includes, among other things, (1) conducting annual business case 
reviews for its capital programs, (2) decommissioning and consolidating 
ATC facilities, and (3) pursuing cost reduction opportunities through 
outsourcing. These cost control initiatives represent an important 
first step to improved performance but will require review and 
monitoring.

Image: Air Traffic Control Tower: 

[See PDF for Image] 

Source: National Aeronautics and Space Administration. 

[End of image] 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-738T].

To view the full product, click on the link above.  For more 
information, contact Dr. Gerald L. Dillingham, at (202) 512-2834 or 
dillinghamg@gao.gov. 

[End of section]

Mr. Chairman and Members of the Subcommittee:

We are pleased to present this statement for the record regarding the 
status of efforts by the Air Traffic Organization (ATO) and the Joint 
Planning and Development Office (JPDO) to modernize and transform the 
nation's air traffic control (ATC) system. Both offices are within the 
Federal Aviation Administration (FAA) and represent recent efforts by 
Congress to, among others things, ensure a national airspace system 
that is safe, efficient, and capable of meeting a growing demand for 
air transportation--a demand that is expected to triple by 2025. ATO 
has responsibility for operating, maintaining, and modernizing the 
current ATC system. ATO was authorized as a performance-based 
organization (PBO)[Footnote 1] in 2000 and includes 36,000 of FAA's 
roughly 46,000 employees. JPDO, authorized in 2003, is responsible for 
planning and coordinating the broader and longer-term transformation 
(through 2025) to the "next generation air transportation system" 
(NGATS).

The ATC system is composed of an array of subsystems, including radars; 
automated data-processing, navigation, and communications equipment; 
and ATC facilities. These systems work together to support all phases 
of flight for aircraft operating in U.S. airspace. The ATC system also 
includes the FAA employees who manage, operate, and maintain ATC 
equipment and facilities. Over a decade ago, we designated FAA's ATC 
modernization program as high risk because of systemic management and 
acquisition problems, which we have reported on and made 
recommendations to address over the years.

Efforts to modernize and transform the ATC system will be costly, yet 
FAA anticipates lean capital budgets for the immediate future. Thus, to 
maintain the current ATC system while preparing for the next, FAA will 
have to work even harder to make the best and most efficient use of 
increasingly scarce resources. These transformation efforts are getting 
under way and will continue as the United States confronts multiple 
challenges and demands for resources. ATC transformation also involves 
the recognition that other nations are upgrading their aviation 
technologies, creating a need for global harmonization to support 
international travel.

Our statement focuses on three key questions. (1) What is the status of 
ATO's efforts to improve its performance as it modernizes our nation's 
air traffic control system? (2) What is the status of JPDO's planning 
efforts for NGATS? (3) To what extent are efforts being made to control 
costs and leverage resources to support ATC modernization and the 
transformation to NGATS? My statement is based on our recently 
completed and ongoing studies of FAA's ATC modernization program, 
together with updated information from ATO and JPDO officials and 
aviation stakeholder[Footnote 2]s. Later this year, we expect to issue 
two detailed reports related to the issues discussed in this statement. 
One report will provide our assessment of the status of JPDO's efforts 
to develop NGATS. Another report will examine a variety of cost-saving 
and financing options for FAA in the 21st century. We are performing 
our work in accordance with generally accepted government auditing 
standards.

The following is a summary of our findings to date:

* Created as a performance-based organization, ATO has been working to 
establish a results-oriented organizational culture, a more accountable 
management structure, and more businesslike management and acquisition 
processes, but continued management attention will be required to 
institutionalize these initiatives. To bring about cultural change, ATO 
has adopted core values such as integrity, accountability, and fiscal 
responsibility and is using FAA Employee Attitude Survey data to 
establish a baseline for assessing changes in attitudes over time. ATO 
has begun to hold managers accountable for cost control through its 
performance rating and bonus system. To improve its acquisitions 
process, FAA is, for example, evaluating all investment decisions, 
including those for systems in service beyond 2 years, to ensure that 
all decisions support agency goals. Recently, FAA has reported positive 
results: For the past 2 fiscal years, FAA has met its major acquisition 
performance goal--to have 80 percent of its acquisitions meet scheduled 
milestones and be within 10 percent of budget. However, FAA still faces 
challenges, including sustaining ATO's transformation to a results- 
oriented culture, hiring and training thousands of air traffic 
controllers to replace those expected to retire, ensuring stakeholder 
involvement in major system acquisitions to ensure that the 
acquisitions meet users' needs, and keeping major acquisitions, such as 
the FAA Telecommunications Infrastructure (FTI) on schedule and within 
budget.

* JPDO has made progress in planning for the NGATS that is described in 
its December 2004 Integrated Plan and its March 2006 Progress Report. 
JPDO's focus has included facilitating collaboration among federal 
agencies, ensuring active participation of stakeholders, addressing 
technical planning, and factoring global harmonization into its 
planning, but several challenges exist. Our work has shown that it is 
important for collaborating agencies to leverage resources and define 
roles and responsibilities.[Footnote 3] JPDO has facilitated 
collaboration among its federal partner agencies, but faces challenges 
in continuing to leverage the partner agencies' resources and in 
defining the roles and responsibilities of the various agencies 
involved. JPDO is structured in a way that involves federal and 
nonfederal stakeholders, but could find it difficult to sustain the 
support of nonfederal stakeholders over the longer term and has had 
difficulty obtaining the participation of current air traffic 
controllers. JPDO is using an iterative process for technical planning, 
but has not completed some key activities. For example, JPDO's 
Evaluation and Analysis Division is beginning to model anticipated 
changes in air traffic controller workload, but has not completed human 
factors modeling to determine the effects of potential changes in pilot 
workload. JPDO has taken the initial steps to develop an enterprise 
architecture (a blueprint for NGATS) and will have an early version by 
the end of fiscal year 2006. The robustness and timeliness of JPDO's 
enterprise architecture is critical to many of JPDO's future NGATS 
planning activities.

* ATO has taken a number of steps to control costs and leverage 
resources that, in combination with other actions, can provide funds 
for ATC modernization and transformation to NGATS. ATO has established 
performance metrics for cost control, developed a cost accounting 
system, and is using its performance management system to hold its 
managers accountable for controlling costs. ATO has also developed a 
formal cost control program that includes (1) conducting annual 
business case reviews for its capital programs, (2) decommissioning and 
consolidating ATC facilities, (3) improving its project management of 
its operations programs, (4) pursuing cost reduction opportunities 
through outsourcing, (5) assisting Congress in identifying projects for 
funding priority, and (6) reducing or avoiding personnel costs through 
workforce attrition and efficiency gains. However, ATO's cost control 
efforts are at an early stage, and ATO lacks a consistent process to 
validate savings estimated for operations cost control initiatives. 
Cost control will become increasingly important during the transition 
from the current ATC system to NGATS, when ATO is expected to remain 
responsible for the costs of operating and maintaining the current ATC 
system while assuming major responsibility for the costs of 
demonstrating and developing new NGATS technologies. Opportunities 
exist for greater savings and cost control. Many of these opportunities 
will require risk-based decision making and significant congressional 
support. ATO and JPDO have collaborated on developing rough near-term 
estimates of the funding requirements for defining concepts and 
developing systems for surveillance, communications, and other key 
NGATS components. However, these funding requirements are not currently 
in ATO's budget-constrained capital spending plan. ATO's NGATS funding 
burden could be reduced to the extent that JPDO is successful in 
leveraging resources from its partner agencies. Further enhancement to 
NGATS funding could be achieved by ATO utilizing its existing funding 
flexibility.

Background:

In 1981, FAA began a program to replace and upgrade ATC facilities and 
equipment. However, systemic management issues, such as frequent 
turnover in agency leadership, an ineffective organizational culture, 
and problems with its acquisition process, contributed to cost growth, 
schedule slippages, and performance shortfalls, leading us to classify 
FAA's ATC modernization program as high risk in 1995.[Footnote 4] That 
same year, Congress passed legislation that exempted FAA from most 
federal personnel and acquisition laws and regulations on the premise 
that FAA needed such freedom to better manage ATC 
modernization.[Footnote 5] In December 2000, President Clinton signed 
an executive order and Congress passed supporting legislation that, 
together, provided FAA with the authority to create ATO as a 
performance-based organization (PBO) to control and improve FAA's 
management of the modernization effort. In February 2004, FAA 
reorganized, transferring 36,000 employees, most of whom worked in air 
traffic services and research and acquisitions, to ATO.

Even with the creation of ATO, the current approach to managing air 
transportation is becoming increasingly inefficient and operationally 
obsolete. In late 2003, Congress created JPDO[Footnote 6] to plan 
NGATS, a system intended to accommodate what is expected to be three 
times more air traffic by 2025 than there is today. JPDO's scope is 
broader than traditional ATC modernization in that it is "airport curb- 
to-airport curb," encompassing such issues as security screening and 
environmental concerns. Additionally, JPDO's approach will require 
unprecedented collaboration and consensus among many stakeholders-- 
federal and nonfederal--about necessary system capabilities, equipment, 
procedures, and regulations. Key to this collaboration will be the work 
of JPDO's seven partner agencies: the Departments of Transportation, 
Commerce, Defense, and Homeland Security; FAA; the National Aeronautics 
and Space Administration (NASA); and the White House Office of Science 
and Technology Policy. Each of these agencies will play a role in 
creating NGATS. For example, the Department of Defense has deployed 
"network centric" systems, originally developed for the battlefield, 
that are being considered as a framework to provide all users of the 
national airspace system--FAA and the Departments of Defense and 
Homeland Security--with a common view of that system. JPDO began its 
initial operations in early 2004. A Senior Policy Committee, chaired by 
the Secretary of Transportation and including senior representatives 
from each of the participating departments and agencies, provides 
oversight to JPDO. JPDO is located within FAA and reports to the FAA 
Administrator and to the Chief Operating Officer within ATO.[Footnote 
7] See figure 1.

Figure 1: Organizational Chart of JPDO:

[See PDF for image] 

Source: JPDO.

[End of figure]

Concurrent with JPDO's efforts, the European Commission[Footnote 8] is 
conducting a project to harmonize and modernize the pan-European air 
traffic management system. Known as the Single European Sky Air Traffic 
Management Research Programme (SESAR), the project is overseen by the 
European Organization for the Safety of Air Navigation 
(Eurocontrol).[Footnote 9] Eurocontrol has contracted out the work of 
SESAR to a 30-member consortium of airlines, air navigation service 
providers, airports, manufacturers, and others. The consortium is 
receiving 60 million euros ($73 million)[Footnote 10] to conduct a 2- 
year definition phase and produce a master plan for SESAR.

ATO Has Taken Steps to Improve ATC Modernization, but Challenges Remain:

To improve its management of ATC modernization, ATO has taken steps 
toward having a more results-oriented culture; a flatter, more 
accountable management structure; and more businesslike management and 
acquisition processes. In addition, ATO is implementing recommendations 
we have made to address systemic factors that have contributed to cost, 
schedule, and performance problems with major ATC acquisitions. For the 
past 2 fiscal years, FAA has met its acquisition performance goals. 
However, FAA still faces human capital challenges, such as 
institutionalizing a results-oriented culture and hiring thousands of 
air traffic controllers during the next decade. FAA also faces 
challenges in keeping its major system acquisitions on track.

ATO Has Begun Efforts to Transform Its Culture, Structures, and 
Processes to Operate More Efficiently as a PBO:

ATO is working to establish the results-oriented organizational 
culture, structures, and processes that are generally associated with a 
PBO. FAA, through ATO, has established a strategic goal to become a 
results-oriented organization. One key element of ATO's strategy is to 
identify core values and track employees' attitudes about those values 
to monitor cultural change.[Footnote 11] To implement this element, ATO 
has identified multiple core values: integrity and honesty, 
accountability and responsibility, commitment to excellence, commitment 
to people, and fiscal responsibility. ATO is using FAA Employee 
Attitude Survey data to determine employee attitudes toward these 
values and has developed a baseline of employee attitudes for use in 
monitoring changes in attitudes over time.[Footnote 12] Another key 
element of ATO's strategy is to establish a viable, stable, and 
sustainable organization that can transcend changes in leadership.

In our past work, we noted that FAA's acquisitions workforce did not 
have an organizational culture and structure that supported the 
acquisition and deployment of sophisticated technology on the scale 
used in the national airspace system.[Footnote 13] For example, 
acquisitions were impaired because employees and managers acted in ways 
that did not reflect a strong commitment to mission focus, 
accountability, adaptability, and coordination. Specifically, officials 
performed little or no mission needs analysis, made unrealistic cost 
and schedule estimates, and moved to producing systems before 
completing their development. We also reported that accountability was 
not well defined or enforced for decisions on requirements and contract 
oversight. Additionally, vertical lines of authority impaired 
communication across organizations that needed to coordinate, 
particularly the acquisitions and operations areas of FAA. Finally, we 
reported that FAA's culture of conservatism and conformity rewarded 
employees for simply following the rules rather than considering 
innovation. We recommended that FAA develop a strategy for cultural 
change. Although FAA responded to our recommendation by developing a 
cultural change strategy and some other related initiatives, these 
initiatives were neither fully implemented nor sustained.

ATO has put a new management structure in place and established more 
businesslike management and acquisition processes. ATO is structured as 
a discrete management unit within FAA and is headed by a Chief 
Operating Officer (COO), who is appointed to a 5-year term. It has 
become a flatter organization, with fewer management layers. As a 
result, managers are in closer contact with the services they deliver. 
ATO is also taking some steps to break down the vertical lines of 
authority, or organizational stovepipes, that we found hindered 
communication and coordination across FAA. For example, the COO holds 
daily meetings with the managers of ATO's departments and holds the 
managers collectively responsible for the success of ATO through the 
performance management system. According to the COO, the daily meetings 
have been a revelation for some managers who were formerly only focused 
on and responsible for their own departments.

ATO has begun to revise its business processes to increase 
accountability. For example, it has recently established a cost 
accounting system and made the units that deliver services within each 
department responsible for managing their own costs. Thus, each unit 
manager develops an operating budget and is held accountable for 
holding costs within specific targets. Managers track the costs of 
their unit's operations, facilities and equipment, and overhead and use 
this information to determine the costs of the services their unit 
provides. Managers are evaluated and rewarded according to how well 
they hold their costs within established targets. Our work has shown 
that it is important, when implementing organizational transformations, 
to use a performance management system to assure accountability for 
change.[Footnote 14]

Finally, ATO is revising its acquisition processes, as we 
recommended,[Footnote 15] and taking steps to improve oversight, 
operational efficiency, and cost control. To ensure executive-level 
oversight of all key decisions, FAA plans to revise its Acquisition 
Management System to incorporate key decision points in a knowledge- 
based product development process by June 2006. Moreover, as we have 
reported, ATO formed an executive council to review major acquisitions 
before they are sent to FAA's Joint Resources Council.[Footnote 16] To 
better manage cost growth, this executive council also reviews project 
breaches of 5 percent or more in cost, schedule, or performance. FAA 
has issued guidance on how to develop and use pricing, including 
guidelines for disclosing the levels of uncertainty and imprecision 
that are inherent in cost estimates for major ATC systems. 
Additionally, ATO has begun to base funding decisions for system 
acquisitions on a system's expected contribution to controlling 
operating costs. Finally, FAA is creating a training framework for its 
acquisition workforce that mirrors effective human capital practices 
that we have identified, and the agency is taking steps to measure the 
effectiveness of its training.

ATO Has Begun to Address Systemic Causes of Delays and Cost Overruns in 
ATC Modernization:

ATO has begun taking actions to address systemic factors that our work 
has shown contribute individually or collectively to schedule delays or 
cost overruns in major system acquisitions. Such factors include 
funding acquisitions at lower levels than called for in agency planning 
documents, not considering all information technology investments as a 
complete portfolio, not adequately defining a system's requirements or 
understanding software complexity, and not adequately considering 
customer needs in a system's functional and performance requirements.

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 plan 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 and can 
require FAA to continue operating and maintaining the older equipment 
that the acquisition is intended to replace. For example, reduced 
funding was one factor that caused FAA to reduce the initial deployment 
of its ASR-11 digital radar system from 111 systems to 66 systems, as 
well as defer decisions on further deployment pending additional study. 
In the meantime, FAA will have to continue maintaining the aging analog 
radars that the new system was intended to replace. To address this 
issue, we recommended that, to help ensure key administration and 
congressional decision makers have more complete information, FAA 
identify and annually report which activities under the ATC 
modernization program have had funding deferred, reduced, or 
eliminated, and provide detailed information on how those decisions 
have affected FAA's ability to modernize the ATC system and related 
components in the near, mid, and longer term.[Footnote 17] Such 
information would make clear how constrained budgets will affect 
modernization of the national airspace system and how FAA is working to 
live within its means. According to FAA, the agency intends to better 
inform Congress in the future by providing information in its capital 
investment plan, submitted to Congress annually with the President's 
Budget, that will identify changes from the preceding year.

Not considering all information technology investments as a complete 
portfolio. We pointed out that FAA does not evaluate projects beyond 
the first 2 years of service to ensure that they are aligned with 
organizational goals.[Footnote 18] Consequently, the agency could not 
ensure that projects with a longer service history, totaling about $1.3 
billion per year, were still aligned with FAA's strategic plans and 
business goals and objectives. We recommended that FAA include these 
projects in its investment portfolio management for review. FAA's 
current version of its Acquisition Management Policy calls for periodic 
monitoring of in-service systems to collect and analyze performance 
data to use as the basis for sustained deployment. However, we have not 
yet evaluated FAA's implementation of this policy.

Not adequately defining a system's requirements or understanding 
software complexity. Inadequate or poorly defined requirements may 
contribute to the inability of system acquisitions to meet their 
original cost, schedule, 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, such as one procured by another agency, will 
meet FAA's needs. For example, FAA sought to use an Army radio as the 
core of a new digital ATC communication system, but found that the 
radio did not meet established interference requirements, which 
contributed to schedule delays. 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. FAA's acquisition of the Local Area 
Augmentation System (LAAS)--a system that would allow precision 
instrument approaches and landings in all weather conditions--is a case 
in point. FAA underestimated LAAS's software complexity because it 
inadequately assessed the system's technology maturity. In particular, 
the agency misunderstood the potential for radio interference through 
the atmosphere, which could limit LAAS's operations. The technical 
difficulties encountered with LAAS, among other things, led FAA to 
suspend this acquisition. To reduce these risks, 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 19] However, FAA did not mandate the use of the 
model throughout the organization. In response to our recommendation 
that FAA institutionalize the model's use throughout the organization, 
FAA has begun developing a requirement that acquisition projects have 
process improvement activities in place before seeking approval from 
FAA's investment review board.

Not adequately considering customer needs in a system's functional and 
performance requirements. We reported that FAA was not applying best 
practices used in Department of Defense and commercial product 
development. Best practices include balancing customer needs with 
available resources. According to FAA, the agency is now including in 
its acquisition guidance a requirement that top-level functional and 
performance requirements reflect the needs of the customer.

FAA Met Its Acquisition Performance Goal for the Second Consecutive 
Year, but Use of Revised Milestones Does Not Provide Consistent 
Benchmarks:

FAA has now met its acquisitions performance goal 2 years in a row. The 
goal for fiscal years 2004 and 2005 was to have 80 percent of its 
system acquisitions on schedule and within 10 percent of budget. The 
goal gradually increases to 90 percent by fiscal year 2008. The 
increase will make FAA's acquisition performance goal consistent with 
targets set in the Department of Transportation's strategic plan and 
will comply with the Federal Acquisition Streamlining Act of 1994.

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 is a 
positive step toward better acquisition management. However, if the 
milestones for an acquisition have changed over the years to reflect 
changes in its cost and schedule, then using those revised milestones 
may not provide a complete picture of the acquisition's progress over 
time. For example, the milestones for 3 of the 16 major system 
acquisitions that we reviewed in detail during 2004 and 2005 were being 
revised to reflect cost or schedule changes during 2005. These revised 
milestones, together with revised targets for meeting them, will become 
the new milestones for fiscal year 2006. While revising milestones and 
targets that are no longer valid is an appropriate management action, 
using revised rather than original targets for measuring performance 
does not provide a consistent benchmark over time. The extent to which 
an acquisition meets its annual performance targets is one measure of 
its performance and should be viewed together with other measures, such 
as its progress against original and revised baselines. The variance 
reports provided to the FAA Administrator and to Congress may also be 
useful in evaluating an acquisition's performance.[Footnote 20]

Since fiscal year 2003, the number of acquisition programs measured by 
FAA has varied from 31 to 42. According to FAA, the number varies from 
year to year, in part, because some programs reach completion and 
others are initiated. The programs that are selected each fiscal year 
represent a cross section of ATO programs, including investments in new 
capabilities and others that are ready for use without modification. 
FAA's Portfolio of Goals, which provides supplementary information on 
the agency's performance goals, asserts that no bias exists in the 
selection of milestones for performance review, but does not state the 
basis for this conclusion. The portfolio also states that the 
milestones selected represent the program office's determination of the 
efforts that are "critical" or important enough to warrant inclusion in 
the acquisition performance goal for the year. However, we have not 
conducted a detailed examination of the reliability and validity of 
FAA's metrics for its acquisition program performance.

ATO Faces Human Capital Challenges in Creating a More Results-Oriented 
Culture and Hiring and Training Thousands of Air Traffic Controllers:

ATO faces a challenge in sustaining and institutionalizing management 
focus on its transformation to an effective PBO and a results-oriented 
culture. Our work has shown that successful transformations and the 
institutionalization of change in large public and private 
organizations can take 5 to 7 years or more to fully 
implement.[Footnote 21] To ensure that FAA's focus on cultural change 
does not diminish as it did in the past, we recommended that FAA 
provide sustained oversight of efforts to achieve a more results- 
oriented workforce culture, including periodically monitoring the 
agency's progress against baseline data.[Footnote 22] As discussed, ATO 
has established a baseline of employee attitudes for use in monitoring 
cultural change, and similar long-term management attention will be 
needed to conduct this monitoring and assess ATO's progress toward 
becoming a PBO.

FAA also faces the challenge of hiring and training thousands of air 
traffic controllers during the coming decade. According to its 
controller staffing plan, FAA expects to lose about 11,000 air traffic 
controllers due to voluntary retirements or mandatory retirements at 
age 56, as well as other reasons.[Footnote 23] These retirements stem 
from the 1981 controller strike, when President Ronald Reagan fired 
over 10,000 air traffic controllers and FAA then had 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. To replace these controllers, as 
well as those who will leave for other reasons, and to accommodate 
forecasted increases in air traffic, FAA's plan calls for hiring a 
total of 12,500 new controllers over the next 10 years.[Footnote 24]

FAA Faces Challenges in Ensuring Stakeholder Involvement in Major 
System Acquisitions and Keeping Acquisitions on Schedule and within 
Budget:

Adequately involving stakeholders in a system's development is 
important to ensure that the system meets users' needs. In the past, 
air traffic controllers were permanently assigned to FAA's major system 
acquisition program offices and provided input into air traffic control 
modernization projects. In June 2005, FAA terminated this arrangement 
because of budget constraints. According to FAA, it now plans to obtain 
the subject-matter expertise of air traffic controllers or other 
stakeholders as needed in major system acquisitions. It remains to be 
seen whether this approach will be sufficient to avoid problems such as 
FAA experienced when inadequate stakeholder involvement in the 
development of new air traffic controller workstations (known as the 
Standard Terminal Automation Replacement System (STARS)) contributed to 
unplanned work, which, in turn, led to significant cost growth and 
schedule delays.[Footnote 25]

Three systems--all communications-related--missed the fiscal year 2005 
acquisition performance goal for schedule. According to FAA, the $310 
million FTI acquisition, which is replacing costly existing networks of 
separately managed systems and services by integrating advanced 
telecommunications services, was behind schedule because initial plans 
did not allow sufficient time for installations. To complete the 
installations in fiscal year 2008, as originally scheduled, FAA 
initiated a plan to put the program back on schedule and has met the 
plan's milestones since August 2005. Two other communications 
acquisition programs also missed the acquisition performance goal for 
schedule--the $325 million Next Generation Air-to-Ground Communication 
system, segment 1A, which replaces analog communication systems with 
digital systems, and the $85 million Ultra High Frequency Radio 
Replacement, which replaces aging equipment used to communicate with 
Department of Defense aircraft. According to an FAA official, as the 
agency assessed its priorities for fiscal year 2005, a decision was 
made that these programs would receive fewer resources. The resources 
that were then available were not sufficient to allow the programs to 
meet established milestones.

To the extent that delays in FTI persist, FAA will lose the cost 
savings that the system was expected to produce. The Department of 
Transportation's Office of the Inspector General has reported that FAA 
did not realize $32.6 million in anticipated operating cost savings in 
fiscal year 2005 because of the limited progress made in disconnecting 
legacy circuits. The office also reported that without a nearly tenfold 
increase in its rate of transferring service to FTI and disconnecting 
legacy circuits, FAA stands to miss out on an additional $102 million 
in cost savings in fiscal year 2006. As an alternative to continuing 
the current FTI program, some experts have suggested that FAA consider 
outsourcing this activity, as it recently did for its flight service 
stations.[Footnote 26]

In summary, ATO has made a number of promising moves toward becoming a 
results-oriented organization, and we view ATO's efforts to improve its 
culture, management, and acquisitions process as positive steps. 
However, ATO has been established for only slightly more than 2 years. 
Work remains to ensure that these processes become institutionalized. 
Although it is still too early to evaluate the effectiveness of many of 
these steps, we are monitoring ATO's progress. As ATO moves forward, it 
will play a key role in implementing NGATS, as planned by JPDO. I will 
now discuss the status of JPDO's planning efforts.

JPDO Has Made Progress in Planning for NGATS, but Faces Challenges and 
Opportunities in Several Areas:

JPDO has engaged in practices that facilitate collaboration among its 
partner agencies, but faces challenges in continuing to leverage 
resources from these agencies and in defining the roles and 
responsibilities of the various entities involved. JPDO has been 
structured to involve both federal and nonfederal stakeholders, but 
maintaining the support of nonfederal stakeholders over the long term 
and soliciting the participation of some stakeholders may prove 
difficult. JPDO is using a reasonable process for technical planning, 
but several key technical planning activities remain. Lastly, JPDO is 
including efforts toward global harmonization in its planning for 
NGATS, but other opportunities for cooperation have not been fully 
explored.

JPDO Has Begun to Facilitate Collaboration among Federal Agencies, but 
Faces Challenges in Continuing to Leverage Resources and in Defining 
Roles and Responsibilities:

Our work to date shows that JPDO is facilitating the federal 
interagency collaboration that is central to its mission and 
legislative mandate. According to our research, agencies must have a 
clear and compelling rationale for working together to overcome 
significant differences in their missions, cultures, and established 
ways of doing business. In developing JPDO's integrated plan,[Footnote 
27] the partner agencies agreed to a vision statement and eight 
strategies that broadly address the goals and objectives for NGATS. 
These strategies formed the basis for JPDO's eight integrated product 
teams (IPT), and various partner agencies have taken the lead on 
specific strategies. Our research has also shown that it is important 
for collaborating agencies to include the human, technological, and 
physical resources needed to initiate or sustain their collaborative 
effort. To leverage human resources, JPDO has staffed the various 
levels of its organization with partner-agency employees, many of whom 
work part time for JPDO. To leverage technological resources, JPDO 
conducted an interagency program review of its partner agencies' 
research and development programs to identify work that could support 
NGATS. Through this process, JPDO identified early opportunities that 
could be pursued during fiscal year 2007 to produce tangible results 
for NGATS, such as the Automatic Dependent Surveillance-Broadcast (ADS- 
B)[Footnote 28] program at FAA.

However, while JPDO's legislation, integrated plan, and governance 
structure[Footnote 29] provide the framework for institutionalizing 
collaboration among multiple federal agencies, JPDO is fundamentally a 
planning and coordinating body that lacks authority over the key human 
and technological resources needed to continue developing plans and 
system requirements for NGATS. Consequently, the ability to continue 
leveraging resources of the partner agencies will be critical to JPDO's 
success. However, beginning around 2008, JPDO expects a significant 
increase in its IPTs' workloads. JPDO officials told us that although 
the partner agencies have not yet expressed concerns over the time that 
their employees spend on JPDO work, it remains to be seen whether 
agencies will be willing to allow their staff to devote more of their 
time to JPDO. In addition, JPDO anticipates needing more agency 
resources to plan and implement demonstrations of potential 
technologies to illustrate some of the early benefits that could be 
achieved from the transformation to NGATS.

This challenge of leveraging resources arises, in part, because the 
partner agencies have a variety of missions and priorities other than 
supporting NGATS. NASA, for example, while conducting key aeronautical 
and safety research relevant to NGATS, nonetheless has other competing 
missions. Recently, NASA's management determined that for the agency to 
meet its other mission needs, it would not develop new aviation 
technologies to the extent that it had in the past. As a result, 
additional development costs related to NGATS will have to be borne by 
JPDO, industry, or some combination.

JPDO also faces the challenge of clearly defining its partner agencies' 
roles and responsibilities. Our work has shown that collaborating 
agencies should work together to define and agree on their respective 
roles and responsibilities, including how the collaboration will be 
led. In JPDO's case, there is no formal, long-term agreement on the 
partner agencies' roles and responsibilities in creating NGATS. 
According to JPDO officials, a memorandum of understanding that would 
define the partner agencies' relationships was being developed as of 
August 2005, but has not yet been completed.

Defining roles and responsibilities is particularly important between 
JPDO and ATO, because both organizations have responsibilities related 
to planning the national airspace system's modernization. ATO has 
primary responsibility for the ATC system's current and near-term 
modernization, while JPDO has responsibility for planning and 
coordinating a transformation to NGATS over the next 20 years. The 
roles and responsibilities of each office are currently being worked 
out. ATO now plans to expand its Operational Evolution Plan so that it 
applies FAA-wide and represents FAA's piece of JPDO's overall NGATS 
plan. [Footnote 30] As the roles and responsibilities of the two 
offices become more clearly defined, there is also a need to better 
communicate these decisions to stakeholders.

JPDO Is Structured to Involve Federal and Nonfederal Stakeholders, but 
Faces a Challenge in Soliciting and Maintaining Support over the Long 
Term:

JPDO has structured itself to involve federal and nonfederal 
stakeholders throughout its organization. Our work has shown that 
involving stakeholders can, among other things, increase their support 
for a collaborative effort. Federal stakeholders from the partner 
agencies serve on JPDO's Senior Policy Committee, board, and IPTs. 
Nonfederal stakeholders may participate through the NGATS Institute 
(the Institute). Through the Institute, JPDO obtained the participation 
of over 180 stakeholders from over 70 organizations for the IPTs. The 
NGATS Institute Management Council, composed of top officials and 
representatives from the aviation community, oversees the policy and 
recommendations of the Institute and provides a means for advancing 
consensus positions on critical NGATS issues.

Although JPDO has developed the mechanisms for involving stakeholders 
and brought stakeholders into the process, it faces challenges in 
sustaining nonfederal stakeholders' participation over the long term. 
Much as with the federal partner agencies, JPDO has no direct authority 
over the human, technical, or financial resources of its nonfederal 
stakeholders. To date, these stakeholders' investment in NGATS has been 
through their part-time, pro bono participation on the IPTs and the 
NGATS Institute Management Council.[Footnote 31] The challenge for JPDO 
is to maintain the interest and enthusiasm of these nonfederal 
stakeholders, which will have to juggle their own multiple priorities 
and resource demands, even though some of the tangible benefits of 
NGATS may not be realized for several years. For example, stakeholders' 
support will be important for programs such as System Wide Information 
Management (SWIM),[Footnote 32] which is a prerequisite to future 
benefits, but may not produce tangible benefits in the near term.

In the wake of past national airspace modernization efforts, JPDO also 
faces the challenge of convincing nonfederal stakeholders that the 
government is financially committed to NGATS. While most of FAA's major 
ATC acquisition programs are currently on track, earlier attempts at 
modernizing the national airspace system encountered many difficulties. 
In one instance, for example, FAA developed a datalink communications 
system that transmitted scripted e-mail-like messages between 
controllers and pilots. One airline equipped its aircraft with this new 
technology, but because of funding cuts, FAA ended up canceling the 
program. In a similar vein, we have reported that some aviation 
stakeholders expressed concern that FAA may not follow through with its 
airspace redesign efforts and are hesitant to invest in equipment 
unless they are sure that FAA's efforts will continue. One expert 
suggested to us that the government might mitigate this issue by making 
an initial investment in a specific technology before requesting that 
airlines or other industry stakeholders purchase equipment.

In addition to maintaining stakeholder involvement, JPDO faces 
challenges in obtaining the participation of all stakeholders. In 
particular, JPDO does not involve current air traffic controllers, who 
will play a key role in NGATS. The current air traffic control system 
is based primarily on the premise that air traffic controllers direct 
pilots to maintain safe separation between aircraft. In NGATS, this 
premise could change and, accordingly, JPDO has recognized the need to 
conduct human factors research on such issues, including how tasks 
should be allocated between humans and automated systems, and how the 
existing allocation of responsibilities between pilots and air traffic 
controllers might change. The input of current air traffic controllers 
who have recent experience controlling aircraft is important in 
considering human factors and safety issues, as our work on STARS has 
shown.

However, as mentioned, no current air traffic controllers are involved 
in NGATS. In June 2005, FAA terminated its liaison program through 
which air traffic controllers had been assigned as liaisons to its 
major system acquisition program offices. This included the liaison 
assigned to JPDO. Since that time, the National Air Traffic Controllers 
Association (NATCA), the labor union that represents air traffic 
controllers, has not been a participant in planning NGATS. Although the 
NGATS Institute Management Council includes a seat for the union, a 
NATCA official told us that the union's head had been unable to attend 
the council's meetings. According to JPDO officials, the council has 
left a seat open in hopes that the controllers will participate in 
NGATS after a new labor-management agreement between NATCA and FAA has 
been settled.

JPDO Is Using a Reasonable Process for Technical Planning, but Has Not 
Yet Completed Key Activities:

To conduct the technical planning needed to develop NGATS, JPDO is 
using an iterative process that appears to be reasonable given the 
complexity of NGATS. Two fundamental pieces of this technical planning 
are modeling and developing an enterprise architecture (a tool, or 
blueprint, for understanding and planning complex systems).

JPDO has formed an Evaluation and Analysis Division (EAD), composed of 
FAA and NASA employees and contractors, to assemble a suite of models 
that will help JPDO refine its plans for NGATS and iteratively narrow 
the range of potential solutions. For example, EAD has used modeling to 
begin studying how possible changes in the duties of key individuals, 
such as air traffic controllers, could affect the workload and 
performance of others, such as airport ground personnel. NGATS could 
shift some tasks now done by air traffic controllers to pilots. 
However, EAD has not yet begun to model the effect of this shift on 
pilots' performance because, according to an EAD official, a suitable 
model has not yet been incorporated into the modeling tool suite. 
According to EAD, addressing this issue is difficult because data on 
pilot behavior are not readily available to use in creating such 
models. Furthermore, EAD has not studied the training implications of 
various NGATS-proposed solutions because further definition of the 
concept of operations for these solutions has not been completed. As 
the concept of operations matures, it will be important for air traffic 
controllers and other affected stakeholders to provide their 
perspectives on these modeling efforts. In addition, as the concept of 
operations and plans for sequencing equipment matures, EAD will be able 
to study the extent to which new air traffic controllers will have to 
be trained to operate both the old and the new equipment.

To develop an enterprise architecture, JPDO has taken several important 
first steps and is following several effective practices that we have 
identified for enterprise architecture development. However, JPDO's 
enterprise architecture is currently a work in progress. Development of 
the NGATS enterprise architecture is critical to JPDO's planning 
efforts, and many of JPDO's future activities will depend on the 
robustness and timeliness of its architecture development. The 
enterprise architecture will describe ATO's operation of the current 
national airspace system, JPDO's plans for the NGATS, and the sequence 
of steps needed to transition between them. The enterprise architecture 
will provide the means for coordinating among the partner agencies and 
private sector manufacturers, aligning relevant research and 
development activities, integrating equipment, and estimating system 
costs.

To date, JPDO has formed an Enterprise Architecture Division and plans 
to have an early version of the architecture by the end of fiscal year 
2006. The office has established and filled a chief architect position 
and established an NGATS Architecture Council composed of 
representatives from each partner agency's chief architect office. This 
provides the organizational structure and oversight needed to develop 
an enterprise architecture. JPDO's phased "build a little, test a 
little" approach for developing and refining its enterprise 
architecture is similar to a process that we have advocated for FAA's 
major system acquisition programs. In addition, this phased development 
process will allow JPDO to incorporate evolving market forces and 
technologies in its architecture and thus better manage change.

JPDO Is Planning for Global Harmonization as Part of the NGATS Effort, 
but Additional Cooperative Activities Have Not Been Fully Explored:

Global harmonization is one of the important strategies underlying 
NGATS, and JPDO has started to plan for harmonization. JPDO officials 
said they recognize the need to work toward the global harmonization of 
systems and have met with officials from various parts of the world, 
including China, East Asia, and Europe, to assess the potential for 
cooperative NGATS demonstrations. JPDO has a global harmonization IPT, 
led by managers from ATO's International Operations Planning Services 
International and FAA's Office of International Aviation. The IPT's 
mission is to harmonize equipment and operations globally and advocate 
for the adoption of U.S.-preferred transformation concepts, 
technologies, procedures, and standards. The harmonization IPT 
finalized its charter in March 2006 and is working to develop an 
international strategy and outreach plan. In addition to external 
efforts, the harmonization IPT plans to work as a crosscutting IPT that 
will raise awareness of global interoperability and standards issues 
within the other IPTs as they consider product development.

JPDO officials have noted the need to work toward harmonization with 
the Single European Sky Air Traffic Management Research Programme 
(SESAR), a major initiative to modernize the airspace system of the 
European Union. Eurocontrol has been designated to conduct SESAR to 
both modernize and integrate European air traffic management systems. 
While similar in many respects to the NGATS planning effort, 
Eurocontrol has contracted with an industry consortium to conduct the 2-
year planning phase of the project.

According to several European officials with whom we spoke, global 
harmonization (and harmonization with the U.S. system specifically) is 
considered to be a key ingredient for the success of SESAR. Several of 
these officials said that although the European organization invited 
JPDO to participate as a full member in SESAR and the organization has 
indicated its willingness to have reciprocal participation with the 
United States, personnel exchanges are just beginning to occur. JPDO 
officials recognize the importance of cooperative efforts and noted 
that if Europe and the United States were to implement different and 
incompatible standards and technologies, there could be a major adverse 
impact on airlines that serve international markets. Nonetheless, these 
officials point out that JPDO, as a U.S. government entity, could not 
participate as a member in a private industry effort like the SESAR 
consortium. FAA is, however, a member of the European Commission's 
Industry Consultation Body, which provides advice to SESAR. The JPDO 
officials also said personnel exchanges and other cooperative 
activities, such as information exchanges and a joint working group on 
technical standards, are now being conducted under a memorandum of 
cooperation between FAA and Eurocontrol.

While FAA and the harmonization IPT are planning cooperative 
activities, our research has identified several other areas where 
cooperation does not appear to be fully developed. For example, the 
SESAR and NGATS initiatives, despite their similarities, do not have 
coordination activities such as peer reviews of relevant research, 
cooperation on safety analysis (such as through the pooling of accident 
data), or validation of technologies. It is possible that greater 
cooperation and exchange between NGATS and SESAR might develop once 
planning has progressed to the development and validation stage.

ATO and JPDO are Working to Address Funding Challenges:

In the face of rising operating costs, ATO has implemented a number of 
cost control initiatives. Savings realized from ATO efforts to control 
costs could be used for modernization efforts, including the 
development of NGATS. Funding flexibility could also help to address 
these challenges. In addition to the cost savings efforts initiated by 
ATO, JPDO is identifying potential ways to leverage available resources 
to support initial NGATS initiatives.

ATO Has Begun to Take a Number of Steps to Address Rising Operating 
Costs:

To address rising operating costs and improve performance, ATO has 
developed a formal cost control program that includes completing the 
development of a cost accounting system and using information from the 
system to conduct activity value analysis--that is, to assess the value 
of its products and services to its customers. The cost control program 
also includes conducting annual business case reviews, primarily for 
its capital programs, and assisting Congress in identifying funding 
priorities. To control costs, ATO is decommissioning and consolidating 
ATC facilities, improving its contract management, pursuing cost 
reduction opportunities through outsourcing, and avoiding or reducing 
personnel costs through workforce attrition and efficiency gains.

ATO has made significant progress in developing its cost accounting 
system.[Footnote 33] In doing so, ATO is addressing our long-standing 
concern that FAA lacked the cost information necessary for decision 
making and could not adequately account for its activities and major 
projects, such as its ATC modernization programs. ATO officials have 
also noted that 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. It will also allow FAA to 
base funding decisions for system acquisitions on their contribution to 
reducing the agency's operating costs. These efforts facilitate ATO's 
activity value analysis, through which 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 ATO's customers. By comparing the costs of providing services with 
their value to customers, 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.

ATO expects business case reviews of its capital programs to reduce its 
ATC modernization costs by about $62 million in fiscal year 2007 and by 
nearly $400 million by fiscal year 2008. Over the last 2 years, ATO 
conducted business case reviews of 81 programs, including 67 capital 
programs and 14 operations programs. Through these annual reviews, ATO 
examines each program to ensure that its funding is justified, and if 
ATO determines that the funding is not justified, it may terminate or 
restructure the program. To date, ATO has terminated or restructured 6 
programs after reviewing the business cases for them, including its 
Medium Intensity Airport Weather System (MIAWS) program. ATO canceled 
this program's $4 million spending request.[Footnote 34] ATO also 
reduced the funding for a radar replacement program after reviewing its 
business case and identifying opportunities to conduct more effective 
maintenance rather than replace radars. Through these combined efforts, 
FAA expects to reduce costs by $32 million in fiscal year 2007.

ATO is working with Congress to discuss proposed projects and maximize 
capital funds, as we previously recommended.[Footnote 35] ATO reported 
that Congress designated approximately $300 million for specific 
projects in fiscal years 2003 and 2004. In fiscal year 2005, according 
to ATO, designated projects totaled almost $430 million. In fiscal year 
2006, ATO staff met with Senate offices to provide input on 
projects,[Footnote 36] and the value of the congressionally designated 
projects declined, as indicated in table 1.

Table 1: Congressionally Designated Projects for ATO, Fiscal Years 2003 
through 2006:

Dollars in millions.

Fiscal year: 2003: 
Amount total; $295,905.

Fiscal year: 2004: 
Amount total; $282,280; 
Percentage change from prior year; -4.6%.

Fiscal year: 2005: 
Amount total; $429,160;
Percentage change from prior year; 52.0%.

Fiscal year: 2006: 
Amount total; $245,800;
Percentage change from prior year. -42.7%.

Source: GAO analysis of ATO data.

[End of table]

ATO has saved about $84 million to date through initiatives to control 
its costs. For example, ATO has begun to decommission ground-based 
navigational aids, such as compass locators, outer markers and 
nondirectional radio beacons, and to close related ATC facilities as it 
transitions to a satellite-based navigation system. In fiscal year 
2005, ATO decommissioned 177 navigational aids for a savings of $2.9 
million. However, ATO has thousands of navigational aids in use, many 
of which could be decommissioned during the transition to NGATS. 
Consolidating ATC facilities, including terminal radar approach control 
(TRACON) facilities and air traffic control centers, can also save 
costs. According to one estimate, undertaking all of these actions 
could save ATO approximately $600 million per year. We have also found, 
in researching cost control efforts undertaken by international air 
navigation service providers, that consolidating regional 
administrative offices offers additional potential cost savings.

While efforts to decommission navigational aids and close ATC 
facilities offer potential savings, we found that ATO lacks a 
consistent process for identifying the costs and benefits associated 
with these efforts. For example, although ATO reported saving $2.9 
million in fiscal year 2005 by decommissioning 177 navigational aids, 
its report did not offset these savings with the costs of 
decommissioning activities, such as real property disposition 
(including buildings or real property leases, standby power systems, 
and fuel storage tanks), site cleanup, and restoration. Experts 
estimate that the costs of decommissioning all possible navigational 
aids and conducting the needed environmental remediation could total 
about $300 million. Opportunities may exist for ATO to reuse these 
sites to reduce or eliminate environmental cleanup costs. For example, 
sites could be used for cell phone towers, generating about $100,000 
per year in revenue per site. Other sites could be leased as 
warehouses. Together, these efforts could potentially save FAA up to 
$14 million per year. However, without a transparent and verifiable 
process for determining both the costs and benefits, it remains 
difficult to accurately determine financial savings.

As ATO proceeds with these efforts, stakeholders caution that 
decommissioning navigational aids and closing facilities should entail 
comprehensive risk mitigation to ensure that ATO retains adequate 
safety levels. This includes risk prevention, which focuses on elements 
that the agency can prevent, and risk recovery, which recognizes that 
some events cannot be prevented and the system must recover from them. 
It is important that facility closures happen within the context of a 
logical, well-documented, and reasoned process in consultation with 
congressional oversight committees. Any process to determine closures 
or consolidations should use consistent, accurate data collection and a 
common analytical framework to ensure the integrity of the process.

ATO is also attempting to examine existing service contracts to better 
control costs. For example, it has saved about $2 million by 
renegotiating task orders and modifying contracts for technical 
assistance provided by contractors that manage facilities and equipment 
projects. According to ATO, these renegotiations did not affect the 
associated programs. In addition, ATO has saved about $1 million to 
date by negotiating cell phone contracts with four large service 
providers. Formerly, ATO employees arranged individual plans for their 
work cell phones. ATO also entered into a new contract with natural gas 
and electricity providers at its Technical Center that has saved about 
$358,000 to date. Lastly, through a strategic sourcing initiative, it 
has newly negotiated purchasing deals for support services, including 
printing and mail services, office equipment and supplies, and 
information technology hardware and software.

As another cost-saving measure, ATO is exploring opportunities for 
outsourcing work that is now performed by the government. Under the 
Office of Management and Budget's Circular A-76 (Revised), federal 
agencies can compete with and rely on the private sector to enhance 
productivity. Recently, FAA contracted with Lockheed Martin to operate 
its flight service stations. According to FAA, this contract will cost 
approximately $2.2 billion less over 10 years than FAA would have had 
to pay to operate the stations itself. FAA's estimate includes the 
savings it expects to realize as the contractor assumes the costs of 
providing the services and paying their utility and maintenance costs. 
FAA is currently working to identify other opportunities to reduce 
costs through the A-76 process. Some experts have suggested that the 
time may be right for FAA to examine opportunities to contract out the 
ground portion of its FTI program, through which FAA is replacing air- 
ground telecommunications networks. According to these experts, this 
approach could save FAA up to $130 million a year beginning in fiscal 
year 2008. The FTI program is not expected to provide financial savings 
until fiscal year 2010; however, the savings might take longer to be 
realized because the program is falling behind schedule.

ATO is working to control personnel costs through both attrition and 
improved productivity. According to ATO, these efforts have saved about 
$67 million from the beginning of fiscal year 2005 to date. For 
example, ATO has saved about $44 million from the attrition of both 
nonsafety and Flight Service staff. ATO further expects efficiencies 
and lower training costs to allow a 10 percent reduction in the 
controller workforce over the next decade. These efficiencies include 
relying on part-time employees and job-sharing arrangements, 
implementing split shifts, and improving the management of overtime 
through an optimal mix of increased staffing and overtime hours to meet 
workload demands. Through gains in air traffic controllers' 
productivity, ATO has reduced its hiring requirements by about 460 
controller positions, thereby avoiding salary costs of about $23 
million, according to ATO. In addition, ATO is considering the 
feasibility of saving air traffic controller training costs by allowing 
graduates of its Air Traffic Collegiate Training Initiative (CTI) to 
bypass the FAA Academy, where FAA provides initial qualification 
training to new hires.[Footnote 37] According to an FAA Academy 
official, the proposal to allow these graduates to bypass the academy 
is being considered as part of a comprehensive review of the Collegiate 
Training Initiative that will be completed this fall. We had previously 
identified this effort as offering potential savings.[Footnote 38]

ATO Faces Challenges in Funding NGATS:

As the organization primarily responsible for implementing NGATS, ATO 
will face substantial funding requirements beyond those needed to 
maintain the current system. Funding constraints have required ATO to 
carefully scrutinize capital projects and defer or eliminate funding 
for systems that could support NGATS, such as a precision-landing 
system augmented by satellites (LAAS), a digital e-mail-type 
communication system between controllers and pilots (CPDLC), and the 
next generation air/ground communication system (NEXCOM).

Although the cost of NGATS is not yet known, JPDO and ATO are 
collaborating in developing rough near-term funding requirements for 
NGATS's concept definition and development for major categories of air 
traffic control functions such as automation, communications, 
navigation, surveillance, and weather. While these funding requirements 
are not in FAA's current 5-year spending plan, they could be included 
once JPDO presents, and FAA accepts, business cases, according to an 
FAA official.

JPDO has identified some key factors that will drive NGATS costs. One 
of the drivers is the technologies expected to be included in NGATS. 
Some of these are more complex and thus more expensive to implement 
than others. A second driver is the sequence in which NGATS 
technologies will replace the technologies now in use. A third driver 
is the length of time required to transition to NGATS, since a longer 
transition period would impose higher costs. JPDO held the first in a 
series of investment analysis workshops to determine the basis for 
developing future NGATS cost estimates on April 25 and 26, 2006. This 
first workshop focused on recommendations from commercial and business 
aviation, equipment manufacturers, and systems developers.

Resources Available to Support NGATS Could Be Enhanced through 
Leveraging and Funding Flexibility:

Resources available to support NGATS could be enhanced to the extent 
that JPDO leverages other partner agency resources. JPDO has already 
moved in this direction by conducting a review of its partner agencies' 
research and development programs to identify ongoing work that could 
support NGATS and the potential for more effective interagency 
collaboration. Through this process, for example, JPDO successfully 
requested that FAA pursue funding to accelerate development of ADS-B 
and SWIM, which are two key systems identified for NGATS. However, JPDO 
officials told us that, while FAA did receive a funding increase for 
those systems, FAA did not receive the full amount it had requested. As 
noted, our past work on FAA's national airspace modernization program 
has shown that receiving fewer resources than planned was one factor 
that contributed to delays in implementing technologies and significant 
cost increases.

To further leverage resources for NGATS, JPDO has issued guidance to 
its partner agencies identifying areas that JPDO would like to see 
emphasized in the agencies' fiscal year 2008 budget requests. JPDO is 
also working with the Office of Management and Budget to develop a 
systematic means of reviewing partner agency budget requests so that 
the NGATS-related funding in each request is easily identified. This 
includes a review of budgets submitted by the Department of Homeland 
Security for efforts by the Transportation Security Administration, and 
the Department of Commerce for efforts by the National Oceanic and 
Atmospheric Association. Such a process would help the Office of 
Management and Budget consider NGATS as a unified program rather than 
as disparate line items distributed across several agencies' budget 
requests.

Further enhancement to NGATS funding could be achieved by ATO utilizing 
its existing funding flexibility. Under existing law, ATO has a 3-year 
spending authority for Facilities and Equipment funds. It also has 
discretion to shift as much as 10 percent of a given program's funds 
over a fiscal year. This is important, since annual expenditures for 
several large capital projects will soon be trending downward.[Footnote 
39] Concurrently, FAA is working to conduct business case reviews of 
existing capital projects on an annual basis. These combined efforts 
could potentially yield hundreds of millions of dollars to pursue 
initial NGATS projects.

Concluding Observations:

ATO has put mechanisms in place to change the culture and business 
processes that have plagued the past modernization efforts of FAA. 
ATO's new cost accounting system and management practices are important 
steps toward improved accountability. Similarly, it has taken steps, in 
response to our recommendations, to improve its acquisition processes. 
However, as I mentioned, ATO faces challenges in sustaining and 
furthering its transformation to a results-oriented culture, and in 
many cases, it is still too early to judge the long-term success of 
these attempts at fundamental organizational change. ATO must continue 
to measure its progress and work to change the culture at all levels of 
the organization, as our work has shown that these types of 
transformations can sometimes take close to a decade to truly become 
entrenched within the organization. We believe that, overall, ATO is 
moving in the right direction, and we will continue to monitor its 
progress.

We also believe that JPDO is moving in the right direction in creating 
an organizational structure that facilitates the federal interagency 
collaboration that must occur for the office to be successful in its 
mission. JPDO is working to leverage the various human, technological, 
and financial resources of its partner agencies. This is key given the 
coordinating role of JPDO and its lack of authority over key resources 
needed to continue developing the NGATS plan. However, because of this 
lack of authority, JPDO could be challenged to maintain partner agency 
and stakeholder commitment to the NGATS effort in the long term. Also, 
much of the NGATS planning and implementation depends on the 
development of the NGATS enterprise architecture. Although JPDO has 
said that a version of the enterprise architecture will be completed 
later this year, the architecture will require further refinement and 
commitment from the partner agencies into the future.

Transforming the national airspace system to accommodate what is 
expected to be three times the current amount of traffic by 2025, 
providing adequate security and environmental safeguards, and doing 
these things seamlessly while the current system continues to operate, 
will be an enormously complex undertaking. Both ATO and JPDO have been 
given difficult tasks in a difficult budgetary environment. Going 
forward, efforts to control costs and leverage resources will become 
even more critical. Success also depends on the ability of ATO and JPDO 
to define their roles and form a collaborative environment for planning 
and implementing the next generation system.

Mr. Chairman, this concludes my statement for the record.

Contact and Staff Acknowledgments:

For further information on this statement for the record, please 
contact Gerald Dillingham at (202) 512-2834 or dillinghamg@gao.gov. 
Individuals making key contributions to this 
statement include Nabajyoti Barkakati, Christine Bonham, Jay Cherlow, 
Elizabeth Eisenstadt, Colin Fallon, David Hooper, Heather Krause, 
Elizabeth Marchak, Maren McAvoy, Edmond Menoche, Faye Morrison, Richard 
Scott, Sarah Veale, and Matthew Zisman.

(540126): 

[End of section]

FOOTNOTES

[1] PBOs are discrete units, led by a Chief Operating Officer, that 
commit to clear objectives, specific measurable goals, customer service 
standards, and targets for improved performance. 

[2] Because ATO includes the majority of FAA employees, this statement 
will refer to ATO initiatives, even though some may apply FAA-wide.

[3] GAO, Results-Oriented Government: Practices That Can Help Enhance 
and Sustain Collaboration among Federal Agencies, GAO-06-15 
(Washington, D.C.: Oct. 21, 2005).

[4] ATC Modernization has remained on our high-risk list since 1995. 
See GAO, High Risk Series: An Update, GAO-05-207 (Washington, D.C.: 
January 2005).

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

[6] P.L. 108-176, Vision 100--Century of Aviation Reauthorization Act, 
December 12, 2003.

[7] For more information on JPDO, visit www.jpdo.aero. 

[8] The European Commission is a politically independent institution 
that prepares and implements legislative instruments.

[9] Eurocontrol is an autonomous organization established in 1963 with 
the intention of creating a single upper airspace in Europe.

[10] A portion of this funding is in-kind services from Eurocontrol. To 
convert euros to U.S. dollars, we used 1.2098, the foreign exchange 
rate for March 21, 2006, as published in The Washington Post.

[11] FAA, Employee Attitudes Within the Air Traffic Organization 
(Washington, D.C; December 2004). 

[12] Because the most recent FAA Employee Attitude Survey was conducted 
in September 2003, prior to the formation of ATO, FAA combined survey 
data from the FAA organizations that were merged into the ATO.

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

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

[15] 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).

[16] The Joint Resources Council is an FAA body responsible for 
approving and overseeing major system acquisitions. 

[17] 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).

[18] 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). 

[19] 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).

[20] According to FAA, the agency tracks acquisition program 
performance from its original baseline or any subsequently approved 
baselines approved by the Joint Resource Council, and reports variances 
to the Administrator and to Congress as required.

[21] GAO-03-669.

[22] GAO-06-154.

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

[24] Since issuing its controller staffing plan, FAA has achieved 
productivity gains that have reduced the need to hire about 460 air 
traffic controllers.

[25] GAO-05-331.

[26] In February 2005, FAA awarded a contract for the operation of its 
flight service stations.

[27] The Vision 100 Act called for JPDO to create and carry out an 
integrated plan for NGATS. This integrated plan was developed by the 
partner agencies and submitted to Congress on December 12, 2004. 

[28] 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.

[29] Some of JPDO's governance structure was determined by Vision 100, 
which directed the Secretary of Transportation to establish a Senior 
Policy Committee and set forth the membership of this committee. In 
addition, JPDO has established a Board of Directors, a Master IPT, and 
several divisions. 

[30] Currently, FAA's 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.

[31] Nonfederal stakeholders' participation varies from approximately 
10 percent to 25 percent of their time per week on the IPTs and 
involves approximately one meeting per month for members of the council.

[32] SWIM is expected to 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.

[33] FAA is using its cost accounting system to potentially allocate 
costs of its services to users to better align its costs with revenues 
through a new funding mechanism. GAO is currently examining this effort 
as part of an ongoing study examining FAA financing options.

[34] MIAWS was intended to provide real-time displays of storm 
positions and estimated storm tracks for airports and airlines. 

[35] GAO, 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).

[36] The House of Representatives did not have any designated projects 
for FAA for fiscal year 2006.

[37] Graduates of schools participating in the Collegiate Training 
Initiative have college degrees, a broad knowledge of the aviation 
industry, a basic level of training in air traffic control, and a 
demonstrated interest in the field. The Department of Transportation 
Inspector General reported that course work in these collegiate 
programs duplicates a portion of the academy-provided training.

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

[39] ATO expects that by fiscal year 2008, spending for its En Route 
Modernization (ERAM), Oceanic Services, Standard Terminal Automation 
Replacement System (STARS), Airport Surveillance Radar-Model 11 (ASR- 
11), and FAA Telecommunications Infrastructure programs should begin 
trending downward. 

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