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U.S. Air Traffic Control Modernization Program' which was released on 
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GAO Panel:

April 2005:

National Airspace System:

Experts' Views on Improving the U.S. Air Traffic Control Modernization 


GAO Highlights: 

Highlights of GAO-05-333SP:

Why GAO Convened This Panel: 

In 1981, the Federal Aviation Administration (FAA) began a program to 
modernize the national airspace system and a primary component, the air 
traffic control (ATC) system. The ATC component of this program, which 
is designed to replace aging equipment and accommodate predicted growth 
in air traffic, has had difficulty for more than two decades in meeting 
cost, schedule, and performance targets. The performance-based Air 
Traffic Organization (ATO) was created in February 2004 to improve the 
management of the modernization effort. 

On October 7, 2004, GAO hosted a panel to discuss attempts to address 
the ATC modernization program's persistent problems. Participants 
discussed the factors that they believed have affected FAA's ability to 
acquire new ATC systems. Participants also identified steps that FAA's 
ATO could take in the short term to address these factors, as well as 
longer term steps that could be taken to improve the modernization 
program's chances of success and help the ATO achieve its mission. 

The participants included domestic and foreign aviation experts from 
industry, government, private think tanks, and academia. They are 
recognized for their expertise in aviation safety, economics, and 
engineering; transportation research and policy; and government and 
private-sector management. 

What Participants Said: 

Overall, the participants identified cultural, technical, and budgetary 
factors that, in their view, have affected the progress of ATC 
modernization. To address these factors, they proposed what one 
participant termed a "two-pronged" approach--simultaneously taking care 
of "the here and now" and building a "viable future" for the ATO. 

Cultural and Technical Factors Have Impeded ATC Modernization:

According to participants, the key cultural factor impeding 
modernization has been resistance to change. Such resistance is a 
characteristic of FAA personnel at all levels, participants said, and 
management, in the experience of some, is more resistant than employees 
who may fear that new technologies will threaten their jobs. The key 
technical factor affecting modernization, participants said, has been a 
shortfall in the technical expertise needed to design, develop, or 
manage complex air traffic systems. Without the technical proficiency 
to "scrub" project proposals for potential problems early and to 
oversee the contractors who implement its modernization projects, they 
said, FAA has to rely on the contractors, whose interests differ from 
its own. 

Budgetary Factors Have Constrained ATC Modernization:

The most immediate budgetary constraint, participants said, is the 
multibillion-dollar shortfall that FAA is projecting between available 
revenues and modernization needs over the next 4 years. Participants 
also identified features of the federal budget process as constraints, 
noting, for example, that the federal budget cycle is too long and 
inflexible to meet the needs of a dynamic ATC system that requires much 
more managerial freedom and short-term decision making. They further 
noted that the budget process is influenced by the political process, 
and that the funding for capital projects is sometimes spread out over 
so many years that technologies are out of date by the time they are 
deployed. Annual funding uncertainties discourage strategic and capital 
planning, they said, and the budget fails to show priorities and 
relationships among proposed investments. 

Short-term and Longer Term Changes Could Promote Success:

Participants suggested that the ATO could facilitate cultural 
transformation by creating a vision and strategy that would unite 
stakeholders and by assembling project teams with different skills and 
interests whose members could forge common organizational interests by 
working together to solve common technology development problems. To 
help offset technical inadequacies, the participants suggested that the 
ATO could consult an advisory board, identify and consider purchasing 
needed technologies that other countries have developed, and hire more 
skilled engineers to provide in-house expertise. To address budgetary 
constraints, participants suggested, among other short-term steps, 
reducing spending to match revenues and developing strategies for 
presenting FAA's budget request more clearly to Congress. Longer term 
suggestions included giving the ATO the predictable funding and 
decision-making authority it needs to carry out a "sensible" capital 
investment plan. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Gerald Dillingham at 
(202) 512-2834 or 

[End of section]



National Airspace System: Experts' Views on Improving the U.S. Air 
Traffic Control Modernization Program:

Limitations and Qualifications:

Results in Brief:

Panelists Identified Cultural and Technical Factors That Have Affected 
ATC Modernization and Suggested Short-term Steps to Address Them:

Panelists Said Funding Shortfall and Features of the Federal Budget 
Process Affect ATC Modernization and Suggested Short-term Steps to 
Address Them:

Panelists Suggested Structural Changes to Improve the ATO's Chances of 
Success over Time:

Concluding Observations:


Appendix I: GAO Panel Members:

Appendix II: GAO Contact and Staff Acknowledgments:

GAO Contact:

Staff Acknowledgments:

Related GAO Products:

Cultural and Technical Factors:

Budgetary Factors:

Structural Issues:


AOV: Air Traffic Safety Oversight Service:

ATC: air traffic control:

ATO: Air Traffic Organization:

COO: Chief Operating Officer:

DOT/IG: Department of Transportation's Office of Inspector General:

FAA: Federal Aviation Administration:

JPDO: Joint Planning and Development Office:

NAS: national airspace system:

NEXCOM: Next-Generation Air-to-Ground Communications System:

OEP: Operational Evolution Plan:

OMB: Office of Management and Budget:

RNAV: area navigation:

RNP: required navigation performance:

STARS: Standard Terminal Automation Replacement System:

URET: User Request Evaluation Tool:

WAAS: Wide Area Augmentation System:

[End of section]

National Airspace System: Experts' Views on Improving the U.S. Air 
Traffic Control Modernization Program:

In 1981, the Federal Aviation Administration (FAA) began what it 
initially envisioned as a 10-year modernization program to upgrade and 
replace the national airspace system's (NAS) facilities and equipment 
to meet projected increases in traffic volumes, enhance the system's 
margin of safety, and increase the efficiency of the air traffic 
control (ATC) system--a principal component of the NAS.[Footnote 1] 
Through the ATC component of this modernization program, FAA planned to 
acquire a vast network of radar, navigation, communications, and 
information processing systems that would enhance aviation safety and 
accommodate predicted growth in air traffic in the NAS. However, the 
program has proved to be more challenging than anticipated, in terms of 
both technology and management, and FAA's efforts to achieve desired 
improvements in performance have typically taken longer and cost more 
than anticipated. As a result, planned improvements in safety and 
capacity have been delayed, and the costs, both of maintaining existing 
technologies and of replacing outdated ATC systems and infrastructure, 
have grown.[Footnote 2] FAA no longer sees its modernization program as 
a multiyear initiative with a defined end; rather, it now sees the 
program as an ongoing investment in technological advances designed to 
improve aviation safety and capacity. To date, FAA has spent $43.5 
billion on NAS modernization,[Footnote 3] and it expects to spend an 
additional $9.6 billion through 2009, primarily to upgrade and replace 
ATC facilities and equipment. Of the $43.5 billion spent thus far, 
about $25.1 billion, or 58 percent, has gone to ATC upgrades and 
replacements, according to FAA. 

To improve FAA's management of the modernization program, Congress, in 
1995, gave the agency acquisition and human capital flexibilities, 
which FAA has largely implemented.[Footnote 4] According to our most 
recent work, FAA has made important progress and improvements in its 
acquisition of major systems,[Footnote 5] but the modernization program 
remains challenging and some problems have persisted. In 2000, Congress 
and the administration took further steps to improve the modernization 
program's management. Through legislation and an executive order, they 
laid the foundation for a new, three-component structure, including an 
oversight body, called the Air Traffic Services Subcommittee;[Footnote 
6] a Chief Operating Officer; and the Air Traffic Organization (ATO), a 
performance-based organization to manage FAA's ATC investments and 
operations.[Footnote 7] In February 2004, FAA merged its Office of Air 
Traffic Services, Office of Research and Acquisitions, and Free Flight 
Program Office to create the ATO. The new organizational structure 
sought to break some of the existing "stovepipes" and bring together 
the key organizational units responsible for, among other things, ATC 

The terrorist attacks of September 11, 2001, temporarily reduced 
airport congestion, but a number of factors--including a drop in air 
traffic in the years following the attacks, the economic slowdown, and 
an increase in businesses' use of low-cost carriers--led to a 
significant decline in airline ticket tax receipts and in the Aviation 
Trust Fund, where the receipts are deposited.[Footnote 8] Today, air 
traffic has rebounded to near pre-September 11 levels and congestion is 
increasing, but the Aviation Trust Fund balance appears to be smaller 
than expected. For fiscal year 2005, for example, FAA reduced its 
original estimate of this fund balance by nearly $3.5 billion, and the 
agency is reviewing its estimates for future years. 

The House Committees on Government Reform and Transportation and 
Infrastructure asked us to conduct a comprehensive review of the NAS 
modernization program's ATC modernization effort, the performance-based 
organizational initiatives resulting in the creation of the ATO, and 
the funding challenges that the changed budget situation poses for the 
modernization program. As part of our efforts to respond to the 
committees' request, which we plan to address through two separate 
ongoing studies,[Footnote 9] we convened a panel of international 
aviation experts and asked them 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 

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

This report summarizes the panelists' responses to these and related 
questions that arose during the panel discussions. 

The panel consisted of foreign and domestic aviation experts from 
industry, government, private think tanks, and academia. Their fields 
of expertise included aviation safety, economics, and engineering; 
transportation research and policy; and government and private-sector 
management. Former FAA officials and current executives of the air 
traffic organizations in Canada and the United Kingdom[Footnote 10] 
were among the experts, as was the chairman of EUROCONTROL's 
Performance Review Commission.[Footnote 11] In addition, the Chief 
Operating Officer (COO) of the ATO presented an initial briefing on the 
status of and plans for the ATO. He responded to questions but did not 
remain for the panel discussion. (See app. I for a list of the 

The panelists convened at the National Academies Keck Center in 
Washington, D.C., on October 7, 2004, after reviewing background 
materials and discussion questions that we provided in advance. The 
background materials included reports by GAO, the Department of 
Transportation's Office of Inspector General (DOT/IG), FAA, and other 
government organizations; industry publications; studies supporting and 
opposing the corporatization of air traffic services; and a comparative 
Performance Review Commission report. 

As agreed with the panelists, the purpose of this panel was to engage 
in an open, not-for-attribution dialogue. However, information from the 
briefing by the ATO's COO and the COO's responses to the panelists' 
follow-up questions are attributed to him because his presentation was 
critical to the panelists' discussion. This material appears, together 
with relevant information from some of our issued reports and work in 
progress, in the italicized text at the end of each major section of 
this report. (See Related GAO Products at the end of this report for a 
list, by topic, of reports, testimonies, and other products we have 
issued in recent years on topics related to those discussed by the 
panel.) Otherwise, this report summarizes the collective discussion by 
topic and does not necessarily represent the views of any individual 
panelist, GAO, or the National Academies. We did not verify the 
panelists' statements, although we did ask the panelists, in some 
instances, to clarify certain details. See appendix II for GAO contacts 
and staff acknowledgments. 

Limitations and Qualifications:

The discussion summarized in this report should be interpreted in the 
context of two key limitations and qualifications. 

First, the panel was only an initial step in a possible long-term, 
evolving effort to develop and sustain discussion on ATC modernization. 
As such, it brought together generalists, rather than specialists, to 
address broad themes and consider how to organize a more comprehensive 
approach. Because our scope was limited, we could not include a large 
number of leading experts, institutions, and networks involved in 
specialized efforts. Furthermore, although many points of view were 
represented, the panel was not representative of all potential 

Second, even though we, in cooperation with the National Academies, 
conducted preliminary research and heard from national experts in their 
fields, a day's conversation cannot represent the current practice in 
this vast arena. More thought, discussion, and research are needed to 
develop greater agreement on what we really know, what needs to be 
done, and how to do it. 

These two key limitations and qualifications provide contextual 
boundaries. Nevertheless, the panel provided a rich dialogue on ATC 
modernization, and the panelists developed strong messages in 
responding to each of the three questions. Those messages are 
highlighted below. 

Results in Brief:

Overall, the panelists identified cultural, technical, and budgetary 
factors that they thought had affected the progress of the 
modernization program. To address these factors, the panelists proposed 
what one panelist termed a "two-pronged" approach--simultaneously 
taking care of "the here and now" and building a "viable future" for 
the ATO.[Footnote 12] Envisioning "parallel efforts," the panelists 
identified multiple steps that the ATO could take in the short term 
within its existing legislative and organizational framework, as well 
as structural changes that could be made in the longer term to enhance 
the modernization program's prospects for success. 

According to panelists, the key cultural factor impeding modernization 
has been resistance to change. Such resistance is a characteristic of 
FAA personnel at all levels, panelists said, and management, in the 
experience of some panelists, is more resistant than employees who may 
fear that new technologies will threaten their jobs. Panelists noted 
that resistance to change is at odds with the financially stressed 
aviation industry's need for new air traffic systems and procedures 
that will enhance capacity and efficiency and reduce costly delays. 
Panelists suggested that the ATO could facilitate cultural 
transformation by (1) creating a vision and strategy that would unite 
stakeholders and (2) assembling project teams with different skills and 
interests--engineers, finance officers, information technology experts, 
and controllers--whose members could work together to solve common 
technology development problems and, in so doing, forge common 
organizational interests. The key technical factor affecting 
modernization, panelists said, has been a shortfall in the technical 
expertise needed to design, develop, or manage complex air traffic 
systems. Without the technical proficiency to "scrub" project proposals 
for potential problems early and to oversee the contractors who 
implement its modernization projects, they said, FAA has to rely on the 
contractors, whose interests differ from its own. To help offset its 
technical inadequacies, the panelists suggested that the ATO could take 
steps such as consulting an advisory board, identify and consider 
purchasing needed technologies that other countries have developed, and 
hire more skilled engineers to provide in-house expertise. 

According to the panelists, budget constraints have affected ATC 
modernization in several ways, and the ATO could take a number of steps 
in the short term to address them. The most immediate budgetary 
constraint identified by the panel is the multibillion-dollar shortfall 
that FAA is projecting between available revenues and modernization 
needs over the next 4 years. One panelist predicted that this shortfall 
would have gradual rather than catastrophic effects and would manifest 
itself through a slow but sure increase in air traffic delays. The 
panelists also identified features of the federal budget process that 
they believe constrain modernization. They said, for example, that the 
federal budget cycle is too long and inflexible to meet the needs of a 
dynamic ATC system that requires much more managerial freedom and short-
term decision making. In addition, they noted that the budget process 
is influenced by the political process, and that the funding for 
capital projects is sometimes spread out over so many years that 
technologies are out of date by the time they are deployed. Annual 
funding uncertainties discourage strategic and capital planning, they 
noted, and the budget fails to show priorities and relationships among 
proposed investments. To address these constraints, the panelists 
suggested various actions that the ATO could take in the short term, 
including accepting the budget process as it is and reducing spending 
to match revenues, developing strategies for presenting FAA's budget 
request more clearly to Congress, implementing regulatory and 
procedural changes to allow the use of existing cost-saving 
technologies, contracting with the private sector to provide certain 
air traffic services, and obtaining information on other countries' ATC 
technologies and on international technical standards. 

For the longer term, some panelists suggested structural changes, which 
would generally require legislation. The goal of these longer term 
initiatives would be to give the ATO the predictable funding and 
decision-making authority these panelists said it needs to carry out a 
"sensible" capital investment plan. The suggested initiatives included 
replacing taxes with user fees based on the cost of air traffic 
services, allowing the ATO to manage those fees, and giving the ATO 
borrowing and leasing authority. The panelists advocating these kinds 
of initiatives said the initiatives would help the ATO address the 
predicted funding shortfall and free it from the constraints of the 
federal budget process, as well as enable the ATO to pay for the 
technical expertise and the technologies it needs to deliver efficient, 
cost-effective service. In addition, these panelists said, removing the 
ATO's funding from the appropriations process would establish a direct 
relationship between the ATO and its customers that could promote 
efficiencies and improve service. According to these panelists, 
customers would monitor the ATO's spending to ensure that the ATO 
addressed their priorities, and the ATO would provide better service 
because it would try to please the customers rather than the 
appropriators who now fund its activities. Restructuring the financing 
of the modernization program could streamline and strengthen the ATO's 
management, they said. According to these panelists, this kind of 
financing arrangement would allow program managers to make decisions 
quickly, on the basis of business rather than political considerations, 
and could provide the ATO with the management tools needed to fully 
execute its mission. While not disagreeing with the potential benefits 
of the proposed structural changes, other panelists cautioned against 
investing too much effort in them, since, in the view of these other 
panelists, the changes were, for the most part, politically infeasible. 
Moreover, as one panelist noted, even if the structural changes were 
implemented, it would be important to consider what problems they were 
creating as well as what problems they were addressing. He suggested, 
for example, that a weight-based user fee might incentivize smaller 
planes and more planes, thereby having the unintended effect of 
increasing demands on the ATC system's capacity. Finally, one panelist 
said, restructuring could resolve the conflict of interest inherent in 
FAA's dual responsibility as the regulator and the operator of air 
traffic services. 

Panelists Identified Cultural and Technical Factors That Have Affected 
ATC Modernization and Suggested Short-term Steps to Address Them:

The panelists attributed many of the ATC modernization program's 
chronic problems to cultural and technical factors. In particular, they 
cited resistance to change at all levels within the agency and 
insufficient technical expertise as key factors impeding modernization. 
They identified multiple, currently available options for addressing 
these factors. 

Panelists Cited Resistance to Change as a Key Cultural Factor Impeding 

Although the panelists did not explicitly define "culture," they used 
the term generally to denote an environment in which multiple 
stakeholders with entrenched interests struggle to preserve their 
interests and to retain control or influence. They described FAA's 
culture as resistant to change and identified resistance to change as a 
characteristic of FAA personnel at all levels. One panelist cited FAA's 
ingrained preference for ground-based systems and for sticking with 
what has worked in the past rather than rocking the boat by trying out 
new technologies, especially since "the boss isn't telling you to rock 
the boat." A second panelist described FAA as "very, very resistant" to 
having private organizations, rather than FAA, develop new procedures 
and systems for FAA to approve and institute. 

Several panelists saw resistance to change as a consequence of federal 
employment--of the security that comes from having a regular paycheck, 
cost-of-living pay increases, and protections against layoffs. A 
government organization is insulated from the economic pressures that 
the private sector faces, one of the panelists indicated. In his view, 
federal employees do not have the firsthand experience with layoffs and 
business failures to understand, as private aviation industry employees 
do, why improvements to the ATC system's efficiency are needed to help 
revitalize the struggling aviation industry. 

Other panelists emphasized the reluctance of management to change. 
According to a panelist with experience in restructuring a foreign air 
traffic organization, the senior and middle managers could not or would 
not adjust to the change and had to be let go within the first 2 years. 
The other employees also had difficulty adjusting and were still 
adjusting in some respects, he said, but getting management on the 
right page was the real challenge. Another panelist emphasized that 
cultural change starts at the top and questioned why the ATO's new COO 
had, according to the panelist's count, replaced only two top managers 
in the ATO and simply reassigned other managers. Still another panelist 
suggested that cultural change within the ATO alone would not be 
sufficient to ensure the ATO's success, because so much of the ATO's 
fate depends on other organizations, including FAA, DOT, the Office of 
Management and Budget (OMB), and Congress. 

A number of panelists described the air traffic controllers' union as 
also resistant to change. According to one panelist, for example, the 
union delayed the adoption of technologies such as the User Request 
Evaluation Tool (URET) because some controllers saw them as a threat to 
its membership.[Footnote 13] Another panelist cited the union's long-
term opposition to the implementation of a software program that tracks 
productivity--a key measure for a performance-based 
organization.[Footnote 14] The union is "very political," several 
panelists asserted, and one panelist charged that it was "hindering the 
progress" of a performance-based organization. 

Resistance to change can be an issue outside FAA as well as within it, 
panelists noted. For example, one panelist questioned how much support 
the ATO was getting from DOT, OMB, and congressional committees for 
changing "some extremely entrenched political fiefdoms." Another 
panelist said that he had found the congressional authorizing 
committees amenable to changes, but the appropriators liked things the 
way they were. 

Panelists Suggested Steps That the ATO Could Take in the Short Term to 
Address Cultural Impediments to Modernization:

According to some panelists, creating a common vision, bringing in a 
new management team, and employing strategies that bring disparate 
stakeholders together could immediately help the ATO address the 
cultural factors that have impeded modernization. The following are 
steps that panelists proposed to facilitate the ATO's cultural 

* According to one panelist, the ATO needs to give people a vision and 
a clear plan, or strategy, that they can understand. People have to 
know what is expected of them, how they fit into the strategy, and what 
the vision is for their organization. 

* In addition to having a vision, another panelist said, it is 
important for the ATO to tie that vision to the user constituency, not 
confine it to the agency. FAA cannot do everything alone from the 
inside, because airplanes and airports, for example, need to be 
equipped with the technologies that will help realize the vision. 

* Employing a team concept could help overcome resistance to the 
implementation of new technologies, according to another panelist. 
Putting engineers, finance people, controllers, and electronic 
technologists together, all on the same team, he said, could unite them 
as they moved through the stages of implementation. Therefore, when the 
time comes to field a technology, the focus would be on getting it up 
and running and operating safely--not, the panelist implied, on 
obstructing its implementation because it might threaten jobs. 

* A change in management's approach could go a long way toward 
overcoming controllers' and other employees' resistance to change, one 
panelist noted. One foreign air traffic organization changed its whole 
approach to the unions and the staff, started talking to them as 
people, and began executing "participative working" programs, according 
to the panelist. Union representatives and managers take the same 
courses together and address issues of affordability together, he said, 
and, as a result, controllers' pay has increased, costs have dropped, 
and productivity has risen. The key to these positive results, he said, 
is psychological change--managers have stopped seeing employees as a 
problem and have started to see them as part of the solution. 

* According to other panelists, however, people find it very difficult 
to change, and the only way to bring about a cultural transformation is 
to replace those who resist change, either by allowing them to retire 
or by hiring others to take their places. In the corporate world, one 
panelist observed, a new executive brings in a new management team to 
support a cultural turnaround. The new team is then loyal to the new 
executive. In the view of this panelist, the COO's hiring of only two 
new managers and reassignment of other managers would not be sufficient 
to turn the ATO's culture around. Another panelist further noted that 
an executive in the private sector replaced the top 200 people in his 
organization to achieve the transformation he was seeking. 

Panelists Said FAA Personnel Lack Technical Expertise Needed to Develop 
Complex Systems and Oversee Contractors Effectively:

Technical as well as cultural factors have impeded ATC modernization, 
according to several of the panelists. In the words of one speaker, FAA 
does not have "the engineering technical capability to deal with an 
extremely complex, highly nonlinear adaptive system that's got 
technical safety risk as a key technical parameter." According to 
another panelist, FAA does not apply rigorous systems engineering 
expertise early in nonadvocate technical reviews of project proposals 
to scrub them for potential issues. As a result, a number of FAA's 
programs--including complex ones such as the Wide Area Augmentation 
System (WAAS), as well as more "straightforward" ones such as the 
Standard Terminal Automation Replacement System (STARS) and the Next-
Generation Air-to-Ground Communications System (NEXCOM)[Footnote 15]--
had fundamental system engineering technical issues that were not 
identified early in the program. The risks were not mitigated, and the 
programs experienced significant cost growth and schedule increases. 
"The system engineering organization in FAA is nothing more than a 
process organization," another panelist said. "The power resides with 
the program manager. It doesn't matter what the systems engineering 
people do, their job is to keep doing plans and processes. They think 
that meetings are products."

FAA's lack of systems engineering expertise is problematic not only 
when the agency reviews project proposals but also when it manages 
contracts, panelists observed. Although FAA personnel receive training 
in acquisition management, one panelist noted, they also need technical 
skills. If they simply learn how to carry out the acquisition process 
without really understanding the underlying technical 
interrelationships, they will fail, he said. In the words of another 
panelist, FAA may be able to hire smart contractors, but it needs 
personnel of its own who are smart enough to ask the right questions 
and smart enough to understand the answers. FAA lacks the technical 
expertise needed to design, develop, or manage complex air traffic 
systems, another panelist maintained, because the administration never 
allowed the agency to invest in highly qualified technical personnel. 
As a result, FAA is beholden to its contractors, who may or may not do 
a good job, but who certainly have a different motivation from FAA. As 
this panelist put it, FAA lacks a rudder, in a technical sense, for 

Panelists Suggested Steps That the ATO Could Take in the Short Term to 
Address Insufficient Technical Expertise:

To help address its lack of technical expertise, panelists suggested, 
the ATO could obtain advice from an independent board or information 
from other countries on technologies that they have already adopted. 
The panelists proposed some immediate steps that the ATO could take to 
address this deficiency, including the following:

* A technical advisory board made up of system engineers could review 
proposals for FAA and demand the kinds of data and tests needed to 
scrub the proposals and identify any big roadblocks. 

* Hiring skilled engineers instead of relying on contractors might 
enable the ATO to develop systems more economically and efficiently, 
one panelist suggested. This panelist described how a foreign air 
traffic services organization develops new ATC systems in-house and 
seldom uses contractors. It now utilizes its engineers to build systems 
rather than manage contractors. As a result, he said, it is now 
developing the systems it needs faster and at less cost. 

* Maximizing the use of commercial inputs was the recommendation of 
another panelist, who said that FAA needs to get out of the business of 
designing systems. According to him, most companies no longer develop 
their own large, complex systems; instead, they get other people to do 
that for them in the private sector. Another panelist also emphasized 
the availability of technical expertise in the private sector. However, 
according to a third panelist, commercial systems have a shorter 
economic service life than the systems that FAA designs. 

* The ATO could profitably take advantage of the experiences of other 
countries' air traffic organizations, which are technically as good as 
FAA ever was or ever will be, one panelist said. He maintained that the 
ATO should institute "a fundamental requirement and a cultural 
expectation" that it will review existing technologies before it buys 
or tries to develop its own. With a multibillion-dollar budget for 
software and other information technology, he said, the ATO has ample 
opportunity to save money. 

In his opening remarks and in responding to panelists' questions, the 
ATO's COO made a number of observations on FAA's culture. He also noted 
that FAA plans to train or hire people with needed skills to address 
shortfalls in technical expertise. The following summarizes some of his 
key observations on FAA's culture and provides additional information 
from previous GAO reports and work in progress on how FAA is addressing 
some of the cultural and technical factors panelists identified as 
affecting ATC modernization:

Recognizing that cultural factors can play a critical role in an 
organization's success, the ATO has initiated organizational changes 
that are designed to create a foundation for cultural change and 
deliver benefits to customers efficiently. For example, the ATO:

* established collaborative teams of technical experts and ATC system 

* reorganized air traffic services and the research and acquisition 
organization along functional lines of business to bring stakeholders 
together and integrate goals, as well as reward cooperation by linking 
investments to operations;

* reduced layers of management from 11 to 7 to help address the 
hierarchical nature of the organization; and:

* conducted an organizationwide activity value analysis to determine 
the full range of activities that ATO headquarters is engaged in, the 
value customers place on those activities, and the potential for 
conducting any of those activities more effectively and efficiently. 

Although FAA anticipates that cultural change will take a long time, it 
is giving high priority to changing its leadership model by linking top 
management more closely to operations in the field and replacing 
"command and control" with communication across organizational levels. 
According to an FAA consultant's review of the agency's internal 
communication needs,[Footnote 16]communication within FAA is, in many 
ways, broken, but a good number of employees want to help fix it. 
Employees willingly participated in discussions and focus groups, the 
report said, indicating a desire to improve the flow of information 
within the agency by sending a large number of detailed e-mails in 
response to a call for recommendations to improve internal 

In the past, according to the ATO's COO, FAA's management culture was 
"intensely hierarchical, risk averse," and "reactionary." But now, he 
said, FAA is attempting to foster "results-focused, proactive and 
innovative behavior." Changing the agency's leadership model is also 
designed, he said, to replace a "personality-driven culture" with a 
sustainable, stable, viable organization that can make rational 
decisions that transcend changes in political leadership. 

The ATO is trying to better align FAA's priorities and stakeholders' 
interests by developing a strategy map that captures the outputs 
desired by the ATO's owners and customers, along with the outputs that 
must be achieved. Called the Strategic Management Process, this effort 
borrows heavily from a private-sector model and uses the ATO's 
strategic goals and objectives to drive investment decisions. According 
to FAA, the strategy map will enable owners and customers to clearly 
understand both the services that the ATO is providing and the effects 
of products in development on those services. As a result, FAA says, 
future budgetary conversations will revolve around the desired level of 
service, instead of focusing on a product, as past discussions 
typically did. According to FAA, the Strategic Management Process will 
ensure linkage between FAA's operating and capital budgets. 

To become a "performance-based organization" and identify customer 
groups and their service needs, the ATO created "value-based" 
performance metrics; that is, it defined its performance in terms of 
customers' needs and connected efforts to satisfy those needs with 
cost. Ultimately, the ATO wants to know how much every unit of output 
costs so that it can allocate and compare costs and measure 
productivity. Thus, each organizational unit and facility is developing 
applicable metrics for performance so that the ATO can compare costs, 
identify factors that affect costs, and use this information to improve 
performance. For example, each en route facility is determining its 
hourly cost to control flights. The ATO can then compare and analyze 
these costs to identify positive and negative factors affecting 
performance and productivity. 

FAA is implementing its 10-year strategy for air traffic controllers, 
the Air Traffic Controller Workforce Plan, released in December 2004. 
This plan is a response to a congressional mandate, based on a 
recommendation we made in 2002, that FAA develop a plan for addressing 
an impending wave of controller retirements and deal with productivity 

Panelists Said Funding Shortfall and Features of the Federal Budget 
Process Affect ATC Modernization and Suggested Short-term Steps to 
Address Them:

The panelists identified and discussed the impact of funding 
constraints and the federal budget process on ATC modernization. In 
their view, the most immediate issue is a critical shortage of funds to 
meet the current modernization program's plans and users' demands. 
Additionally, they said, the federal budget process is slow, 
inflexible, and influenced by the political process; annual 
appropriations are uncertain and discourage planning; and the budget 
fails to show investment priorities and relationships between FAA's 
capital and operating budgets. The panelists suggested a number of 
steps that the ATO could currently take to address these challenges. 

With Funding Shortfall, Flight Delays May Gradually Increase, Panelists 

Panelists viewed the ATO's apparent fiscal shortfall--which one 
panelist said would amount to a 20 percent deficit in 4 years--as a 
severe challenge. In terms of operations, the panelist said, this 
deficit was more likely to have a gradual than an immediately 
catastrophic onset. He did not expect to see major system outages but 
predicted, instead, "a slow but sure increase in delays." However, as 
another panelist said, if the ATO did not carefully analyze demand and 
determine how that demand could be served, the ATO would find itself 
facing what a third panelist referred to as a "perfect storm," 
reiterating a term the ATO itself has used. 

Severe reductions in the funding for ATC modernization, if required to 
address the currently projected shortfall, could exacerbate what one 
panelist described as the government's traditional underfunding of the 
ATC system's capital requirements. According to this panelist, the 
government undercapitalizes any complex, rapidly evolving operational 
system, including the ATC system, and overestimates the economic 
service lives of information technology investments. Whereas the 
government typically assumes such investments will last for 15 years, 
he said, a 7-year estimate would be more reasonable. 

Although the ATO has said that its business plan, when completed, will 
provide policy makers with detailed information on the current funding 
shortfall, panelists expressed concerns about the political 
implications of showing large deficits. They suggested, for example, 
that FAA and DOT officials might be unwilling to publicly release data 
that could raise questions about their management. 

Funding Air Traffic Services through the Budget Process Is Slow and 
Inflexible, Some Panelists Said:

Several panelists maintained that the federal budget cycle is too long 
and inflexible to meet the needs of an ATC system. According to one 
panelist, it is "impossible" to run the U.S. ATC system within the 
classic federal structure. Such a "dramatic," "dynamic" system requires 
"more managerial freedom, much more day-to-day, week-to-week, month-to-
month decision-making," he said. The federal budget process freezes 
plans for the system 12 or 18 months in advance, but for an ATC system 
to succeed, "you've got to be 12 or 18 days ahead."

The budget procedure requiring that capital investments be funded out 
of annual appropriations means that major acquisitions generally take 
many years to implement and projects may continue to be implemented 
even after they have outlived their usefulness. Particularly when 
annual appropriations fall short, panelists noted, projects' 
development and deployment may be delayed and their costs may increase 
with time. Furthermore, until the acquisitions are completed, the 
benefits of the new technologies are deferred, aging equipment may pose 
risks to users, and outdated software may require costly upgrades. By 
the time the acquisitions are fully deployed, panelists said, they may 
be out of date. 

Panelists Described the Effects of the Political Process on the Federal 

Several panelists discussed the impact of the political process on the 
federal budget. According to one panelist, Members of Congress may base 
funding decisions on how jobs in their districts will be affected, 
rather than on how reasonable the business cases for actions may be. As 
evidence, he cited a Senate provision that prohibited FAA from closing 
its regional accounting departments and centralizing them to achieve 
cost efficiencies because the regional departments were big employers 
in congressional districts. Another panelist noted that political 
considerations may be more influential than broader issues. In his 
view, competition among appropriators for projects benefiting their 
constituents, regardless of the need for those projects, undermined 
need-based efforts to allocate scarce resources so that the NAS can 
serve as many people as possible. "I've been in too many of these 
meetings where we prioritize things," he said. "And if your 
constituency doesn't get something, I know you're not going to support 
me." Thus, Oklahoma, for example, may get the same ATC technology as 
New York, despite resource constraints and major differences in air 
traffic demand. 

The political process influences budget decisions in the administration 
as well as in Congress, some panelists said. According to one panelist, 
Congress has generally supported FAA's modernization program, but 
funding difficulties have ensued because the budget is consolidated and 
there are always pressures on it. Other panelists added that the ATO 
would have difficulty "deliver[ing] the bad news"--that is, publishing 
a business plan that projects deficit scenarios--unless revenue 
increases are forthcoming. According to this panelist, OMB would deny 
any requests for increased funding and would, instead, tell the ATO to 
find another way of doing business. 

Panelists Said Uncertain Annual Funding Discourages Effective Planning:

Panelists noted that funding from annual appropriations is uncertain, 
and that this uncertainty is incompatible with strategic and capital 
planning. The amount of money available for appropriation each year 
cannot be predetermined, one panelist said, and the size of the 
appropriation may vary from year to year. This uncertainty focuses 
attention on which technology will receive the funding (the inputs) 
rather than on what improvements in safety or capacity the technology 
is supposed to deliver (the outputs), he said. In debating whether this 
investment or that investment should receive funding, planners have 
lost sight of the big picture, he suggested, and the ATO has spent most 
of its capital investment dollars on sustaining and maintaining 
existing systems. Only about 14 percent of its expenditures, he 
recalled, were for flight enhancement. "Who anywhere would have a 
capital investment plan that was predominantly about standing still?" 
he asked. 

Another panelist also considered the federal budget process 
incompatible with strategic planning. In his words, "it is absolutely a 
problem at FAA" that "budget drives strategy and strategy does not 
drive budget." Although FAA is good at forecasting demand, he said, it 
does not evaluate "the anatomy of demand" and determine how that demand 
will be served. Panelists noted, for example, that the number of 
regional jets, low-fare airlines, and unmanned aerial vehicles are 
increasing, but FAA has not developed a business model or plans for 
managing the increased air traffic. 

Other panelists suggested that the federal budget process discourages 
realistic capital planning. FAA's capital investment plan is "mired in 
predictable annual fits and starts subject to micromanagement by 
Congress," one panelist said, rather than integrated, organized, and 
periodically revised. Another panelist observed that FAA asks for more 
than it can get and then carries the difference over from year to year, 
creating "a bow wave" of unfunded requests for capital projects that it 
seldom reduces. Furthermore, as a third panelist pointed out, the 
budget process establishes incentives for unrealistic planning: Project 
managers first overpromise capabilities and underestimate costs to 
increase the chances that new projects will be accepted. Then, after 
projects are accepted, they overestimate costs because they assume 
their requests will be cut. Although managers could include options in 
their budget submissions to indicate what could be accomplished at 
different funding levels, they do not do so because they assume items 
identified as options will be cut. Finally, managers are reluctant to 
revise ongoing projects because they do not want to be seen as fickle. 
By contrast, another panelist said, a private company that operates 
under a board of directors and obtains revenue from customers does not 
have incentives to play budget games to get projects approved. "Your 
money is your own money," he said. 

Some Panelists Believed That the Federal Budget Fails to Show 
Priorities and Relationships:

Some panelists criticized the federal budget for failing to show 
priorities and relationships among proposed investments. In the budget, 
one panelist said, "everything is as important as everything else." 
Another panelist observed that the budget sets no capital investment 
priorities. According to a third panelist, a line item budget tears 
apart a highly layered, interdependent system and does not reveal 
synergies between projects. Then, when the budget request goes to 
Congress, he said, "you have no opportunity to try to explain to 
anybody the interconnections of these programs." As a result, when the 
appropriators decide not to fund a project, they may not understand how 
their decision will affect other projects. 

Several panelists discussed the "firewall" that federal budget 
procedures create between the FAA's capital (Facilities and Equipment) 
and operating (Operations) accounts, noting that separating these two 
types of costs makes it difficult to recognize interactions between 
them.[Footnote 17] "You can't make rational decisions if somebody is 
handing you those two separate pieces with a wall between them," one 
panelist said. He added that the firewall discourages analyses of life-
cycle costs and may lead, in some instances, to investments in 
technologies that end up in a warehouse because the ATO cannot afford 
to operate them. Similarly, another panelist observed that the 
separation of capital and operating costs in FAA's accounting system 
makes it difficult to see the implications of capital investment 
decisions for operating costs, even though "everything we put in the 
field winds up increasing the ops budget." Furthermore, as another 
panelist noted, the firewall makes it difficult to see the relationship 
between software replacement (capital) and maintenance (operating) 
costs. Thus, decisions to postpone purchases of new or upgraded 
software may save capital investment costs, but rising maintenance 
requirements may increase operating costs. Eventually, he said, the 
maintenance costs may "far exceed" the replacement costs. 

Finally, other panelists said, the budget is not integrated to show 
what investments buy in terms of productivity, safety, or environmental 
benefits, and FAA's capital budget fails to show the impact of 
investments on the country. This can lead to mismatches--that is, to 
funding projects that will provide limited benefits for users. 

Panelists Identified Short-term Steps within the Budget Process and 
Other Steps That the ATO Could Take under Its Existing Authorities to 
Address Budget Constraints:

While recognizing the magnitude of the ATO's projected funding 
shortfall over the next few years, the panelists identified a number of 
steps that the ATO could take to address its current financial 
situation. These steps included accepting the budget process as it is 
and reducing spending to match revenues, developing strategies for 
presenting the ATO's budget request more clearly to Congress, 
implementing regulatory and procedural changes to allow the use of 
existing cost-saving technologies, contracting with the private sector 
to provide certain air traffic services, and obtaining information on 
other countries' ATC technologies and on international technical 

Short-term Steps within the Budget Process:

Several panelists emphasized the importance of accepting the budget 
process as it is and of doing what can be done in today's government 

* One panelist thought that the ATO should scope the modernization 
program so that it realistically reflects the resources that can be 
expected within the next 5 years and then put together and communicate 
a strategy and a vision to guide the agency's 36,000 people. He called 
for the ATO to adjust its capital requirements to what can 
realistically be funded and to review and cut its programs in light of 
the current budget constraints. 

* This panelist also recommended looking at longer term alternatives to 
annual appropriations that are available within the government and work 
well for other organizations, such as "working capital accounts and all 
kinds of industrial funding schemes."

* Another panelist encouraged the ATO to focus its capital investment 
on avoiding outages--that is, on replacing equipment that would 
otherwise fail. This panelist also said that FAA needs a customer-
oriented business strategy and a business plan. 

* One panelist, who observed that operating costs account for about 
three-quarters of the ATO's total costs,[Footnote 18] suggested that 
the upcoming wave of air traffic controller retirements[Footnote 19] 
would create "an opportunity to redistribute and even to trim the work 
force in some areas," as well as reduce personnel costs by offering 
incentives for early retirement. 

* Improving controllers' productivity would be another way to save 
money, a fourth panelist said, but he characterized his suggestion as 
"touch[ing] the third rail of aviation politics."

* Another panelist emphasized the importance of starting to plan now to 
accommodate the airplanes that are being bought today to provide 
service for the next generation, which he variously estimated at 20, 
30, or 40 years. 

Some panelists proposed strategies for the ATO to present its budget 
request more clearly to Congress:

* For example, one panelist said that the ATO needed to understand the 
interconnections between ATC systems and break the big picture into 
nuggets so that it could clarify for the appropriators why they should 
not break apart the ATO's capital investment plan and selectively fund 
only some components. 

* Another panelist maintained that the ATO could mitigate the effects 
of the firewall between its capital and operating budgets by modifying 
its budget submissions to show the future cost implications of current 
investment decisions. 

Steps outside the Budget Process under Current Authorities:

Several panelists identified options outside the budget process that 
the ATO could pursue under its current authorities. They said, for 
example, that the ATO could pursue procedural and regulatory changes 
that would take advantage of existing technologies to increase 
capacity, pilot test contracts with the private sector to provide 
certain air traffic services, and obtain information on technologies 
and procedures developed in other countries that could be used in the 
United States. 

Regulatory and Procedural Changes Could Allow the Use of Existing 
Technologies to Enhance Capacity and Efficiency:

Several panelists discussed the potential benefits of a more widespread 
use of a concept called area navigation (RNAV), which allows operators 
of properly equipped aircraft to use onboard navigation capabilities to 
fly desired flight paths without requiring direct flight over ground-
based navigation aids. This 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. RNAV and RNP hold promise for saving 
system users time and money--largely by reducing flight times and fuel 
consumption by allowing users to fly shorter routes or avoid bad 
weather. In addition, RNAV and RNP could potentially increase the 
capacity of the ATC system to handle air traffic by reducing the 
required distance (separation) between aircraft equipped with advanced 
navigation capabilities if the aircraft can safely operate closer to 
one another than FAA's regulations currently allow. 

According to some panelists, many aircraft have had the navigation 
capabilities to implement RNP for many years, but operators have not 
been able to use these capabilities to their full potential in the 
United States because FAA has not approved procedures for its use. 
However, the airlines are "crying for" FAA to approve RNP, one of the 
panelists said, because aircraft equipped with RNP capabilities could 
then fly alternative rolling, moving routes to avoid weather delays. 
Service would improve for travelers, and the airlines would avoid the 
substantial costs of delays, he said. Implementing RNP could also 
eventually lower the ATO's costs, another panelist said, since RNP does 
not require any ground equipment. 

RNP technologies have been installed on larger aircraft for so long 
that some aircraft equipped with the technologies have already been 
retired to the desert, one panelist said. In addition, pilots have been 
trained to use the technologies, and the technologies are already being 
used in some other countries, including Canada, where a private airline 
company (West Jet) developed implementation procedures in collaboration 
with the Canadian ATC regulatory agency and the Canadian air traffic 
management organization. 

As a first step toward obtaining FAA's approval of procedures for using 
RNP, a panelist said, the ATO could make policy announcements to set a 
tone and direction. These announcements would enlist the user 
community's support at little or no cost to the ATO, give the ATO an 
early success, and help tie customers to the ATO's mission. However, he 
also cautioned, it would be important for FAA to implement RNP in a way 
that did not "disenfranchise" general aviation interests and regional 
carriers whose aircraft are not already equipped with RNP technologies. 

Two panelists expressed concerns about the government's approach to 
regulating the use of onboard navigation equipment and the associated 
procedures needed to implement RNP. According to one of these 
panelists, FAA has "the wrong conceptual framework" for developing 
regulations to implement new procedures. Its current approach is 
disproportionate, he said, because it establishes the same safety 
standards for aircraft of all sizes. "We can't keep treating airplanes 
that need 100 cubic miles of airspace the same from a cost and benefit 
point of view as airplanes that need a quarter cubic mile of airspace," 
he said. In his view, FAA needs to revise its approach to assessing and 
balancing risks. He maintained that the role of regulatory management 
on the evolution of the ATC system has been underestimated and called 
for significant investment in understanding risk management. 

The other panelist who expressed concerns about the government's 
regulatory approach argued that navigational technology is evolving and 
shifting from ground-based to cockpit-based systems. He maintained that 
"you've got to get aircraft closer and closer together to be able to 
increase capacity," and said that the government should allow the ATO 
to change its policies on aircraft separation to permit "the technology 
that exists on airplanes today to do the job." He suggested that the 
private sector could assume the cost of capitalizing the equipment, but 
"the government's got to allow that technology to be used, and it 

Although one panelist emphasized the importance of conducting thorough 
technical evaluations of RNP to identify any roadblocks to its use, the 
panelists generally considered it a highly promising, low-cost option 
for the ATO to improve service. One panelist recommended that the ATO 
create incentives, such as the right to fly in preferred airspace, for 
users that equip their aircraft with RNP technologies, to lower the 
ATO's costs. 

Contracting with the Private Sector to Provide Certain Air Traffic 
Services Could Demonstrate Efficiencies and Potential Cost Savings:

Throughout the panel, panelists discussed an initiative that FAA has 
already begun--determining whether a private contractor or the federal 
government can provide automated flight service station services more 
efficiently.[Footnote 20] OMB Circular A-76 directs federal agencies to 
(1) identify all activities performed by government personnel as either 
commercial or inherently governmental, (2) perform inherently 
governmental activities with government personnel, (3) use a 
competition to determine who should perform commercial activities, and 
(4) award a contract to the private sector if the outcome, or 
performance decision, of the competition is determined in its 
favor.[Footnote 21] The panelists, who generally assumed that the 
private sector could provide flight service station services and other 
air traffic services more efficiently than the government, suggested 
that if contracting for flight service station services proved to be 
effective, FAA could contract for other air traffic services, such as 
oceanic, night, en route, or airways facilities services. The A-76 
process would then serve not only as a way of saving money but also as 
"a pilot program for how things could get done," one panelist said. In 
the view of another panelist, ongoing government oversight would ensure 
the safety of contracted operations, and "staged outsourcing" of the 
NAS's functions might build confidence in the private sector's ability 
to provide air traffic services safely and efficiently. 

Obtaining Information on Other Countries' ATC Technologies and on 
International Technical Standards Could Help the ATO Save Costs:

Obtaining information on technologies and procedures that other 
countries have already developed could help the ATO control costs, as 
well as help compensate for its lack of technical expertise, panelists 
noted. "We should be using and sharing" the technologies that have 
already been invented, one panelist said. According to his 
organization, the air navigation service business worldwide spends $3 
billion to $4 billion a year on writing code for air traffic management 
software, and "at least half of that" is writing code for "something 
that's already been invented and…works just fine somewhere else."

Although this panelist's organization formerly maintained, as FAA has 
done, that it could not adapt other countries' systems to its own 
unique needs, it found, when faced with financial pressures, that it 
could buy technologies from other countries or enter into agreements 
with them and that it could do so at less cost than it could develop 
its own technologies. To facilitate information sharing and cost 
saving, the panelist suggested, benchmarks of the existing market would 
be useful, including information on the systems that are already 
running in countries, their performance, and their cost.[Footnote 22]

Sharing information on technical standards with international 
organizations could also help the ATO avoid costly investments in 
technologies whose standards were incompatible with those of other 
countries. A shared vision is crucial for a globally based air traffic 
system, one panelist said. If every country or continent had its own 
technical standards--a North American switch, a European switch, a 
South American switch, and an Australian switch, for example--an 
international system could not function effectively.[Footnote 23]

The following provides additional information from the ATO's COO and 
from previous GAO reports and work in progress on how FAA is addressing 
some of the funding shortfalls and features of the federal budget 
process that panelists identified as affecting ATC modernization:

The ATO's COO believes that good financial management means linking 
FAA's capital and operating budgets. Previously, FAA developed separate 
capital (Facilities and Equipment) and operating (Operations) budgets. 
But the ATO recognizes that capital expenditures directly affect 
operating costs over time, and therefore the two budgets must be 
developed together. Creating this linkage is important for the ATO to 
respond to concerns expressed by its owners and customers as well as to 
address internal issues, such as training, staffing, pay disparities, 
and infrastructure. Using the Strategic Management Process to drive 
budget decisions will help to ensure the establishment and maintenance 
of a linkage between the capital and operating budgets. 

According to the ATO's COO, it will be at least 2 years before the ATO 
has completed the basic management processes needed to use the new 
financial management systems it has been putting in place. As steps 
toward that goal, the ATO expects everyone to learn the difference 
between cost and cash flow and get a better handle on unit costs as 
better cost accounting data become available. To gain a more complete 
understanding of its costs, FAA is revising its cost accounting 
practices and changing from a cash flow to a total cost business model 
for the ATO, and the ATO is developing management training in cost 
accounting and budgeting. Moreover, FAA plans to finish putting a new 
cost accounting system in place by 2006 that will allow it to assign, 
track, and better control costs. 

In the fall of 2004, FAA updated its cost estimates in light of OMB's 
revenue projections for the next 4 years and arrived at a cumulative 
shortfall for the period of $5 billion for the operating budget and 
$3.2 billion for the capital budget. According to FAA, a business plan 
that the ATO was preparing at that time will show, when completed, how 
large a funding gap the ATO faces and how far it will have to go to 
address that gap. Whatever the exact size of the gap may be, FAA says 
that it is prepared to identify and eliminate redundancies in the NAS 
and to review its long-term ATC modernization priorities. 

FAA has already taken some steps to control the costs of ATC 
modernization. For example, it has adopted the phased approach to 
implementing new ATC systems that it used under Free Flight Phase 1, 
called "build a little, test a little." This approach relies on the 
early and ongoing investment of stakeholders, who review the progress 
of new projects regularly and identify critical omissions and "no go" 
items that would prevent a system from operating as intended. Reviews 
of three projects with cost, schedule, and performance issues that our 
reports had identified--the Local Area Augmentation System, Controller-
Pilot Data Link Communications, and Next-Generation Air-to-Ground 
Communications System--led FAA to reduce the funding for them in FAA's 
fiscal year 2005 budget request. The ATO says it plans to continue this 
phased approach to acquiring new systems. 

FAA developed a Roadmap for Performance-Based Navigation, which it 
published in July 2003, but the ATO is having difficulty finding the 
$10 million in its operations budget that it needs to chart RNP 
procedures. Airspace redesign using RNAV is occurring in phases, and 
its implementation will depend on those owners and operators who have 
fully equipped aircraft and are sufficiently trained. To encourage 
progress, FAA is implementing procedures that provide benefits for 
those customers that do equip. Now, during the first phase, FAA is 
implementing the redesign at very high altitudes. In January 2005, FAA 
doubled the airspace routes between 29,000 feet and 41,000 feet by 
spacing aircraft 1,000 feet apart instead of 2,000 feet. The procedure, 
invisible to passengers, is called Reduced Vertical Separation Minimum 
and is expected to save airlines $400 million in fuel costs during the 
first year. As technology allows, FAA says, more flight altitude levels 
will be added. Currently, FAA is implementing a number of improvements 
to airspace and procedures using RNP. In addition, according to FAA, 
five airports are developing RNP-based procedures in partnership with 
airlines that favor RNP. 

Panelists Suggested Structural Changes to Improve the ATO's Chances of 
Success over Time:

While recognizing that the ATO could make some progress in addressing 
its cultural, technical, and budgetary challenges under its current 
authorities, the panelists generally agreed that structural changes 
would increase the ATO's chances of success. These changes, which would 
give the ATO a more predictable source of funding and greater decision-
making authority, would generally require legislative action and take 
time to implement. To give the ATO a more predictable source of 
funding, panelists suggested that it be authorized to establish and 
manage user fees, rather than rely on appropriated tax receipts, and 
that it be allowed to issue revenue bonds backed by these fees. To give 
the ATO greater decision-making authority, panelists proposed 
restructuring it to streamline and strengthen its management and 
provide its managers with the tools needed to address its challenges. 
These changes would allow the ATO to implement a "sensible" capital 
investment program; hire the technical expertise it needs; achieve cost 
efficiencies; and offer better, more responsive service. Additionally, 
panelists said, restructuring could resolve the conflict of interest 
inherent in FAA's dual responsibility as the regulator and the operator 
of air traffic services. 

Some Panelists Considered the Steps Taken to Create a Performance-Based 
Air Traffic Organization Insufficient for Its Success:

When Congress authorized the ATO's creation and generally implemented 
the Mineta Commission's[Footnote 24] organizational recommendations 
without implementing its funding recommendations, it produced an 
anomaly--that is, an organization charged with becoming performance-
based but deprived of the means to transform itself, according to one 
panelist. Other panelists also portrayed the ATO as an organization 
that is charged with operating like a business but is not provided with 
the management tools available to a business. In their view, the ATO's 
chances for success are limited because the COO is being asked to turn 
the organization around without being given the tools to do so. One 
panelist, who said he was skeptical about the ATO's ability to act like 
a business when it is not really one, suggested that it was only at the 
margins that the creators of the ATO had replicated a business. 
According to him, the ATO is still largely a government organization 
and therefore remains subject to most governmental constraints. 

Panelists Said a User Fee System Would Give the ATO a More Predictable 
Source of Funding and Link Air Traffic Services with Demand:

Replacing airline ticket taxes with a user fee and allowing the ATO, 
rather than Congress, to manage the collected fees is a step that many 
panelists considered essential for the ATO's success. While recognizing 
that such a fee would be controversial, since the costs for most users 
would likely increase, the panelists maintained that it would produce a 
more predictable, reliable funding stream than the annual 
appropriations process. 

A user fee system would link air traffic services directly with demand, 
panelists pointed out. Under the annual appropriations process, they 
noted, Congress comes between the ATO and the airlines that use its 
services. The ATO lacks a direct link with the users because Congress 
appropriates the revenue from them--the airline ticket taxes that are 
deposited into the Aviation Trust Fund--and the ATO is required to 
spend the funds as Congress directs. Not having a direct financial link 
between the ATO and the users can create inefficiencies, panelists 
said: The users lack incentives to monitor the ATO's spending and may 
not insist on cost control, while the ATO lacks incentives to consult 
the users and may invest in technologies that the users do not want. A 
user fee makes the ties between the funding source and the users "much 
more transparent," according to one panelist, and helps preclude 
spending for "gold-plated things that don't affect the true performance 
of the system and drive the costs up completely unnecessarily." Without 
a direct connection to the users and their mission, another panelist 
said, "evolution takes very unintended and very undesirable paths over 
long periods of time." As long as the customers are not directly paying 
the bills and providing the resources, still another panelist 
maintained, "it's going to be very hard to bring about real change" and 
make the ATO "a customer-driven, customer-servicing organization. The 
ones who pay the bills are the ones you respond to and serve," he 

While panelists generally favored a user fee system, they cautioned 
care in proposing and implementing one. As one panelist said, the fee 
question, once raised, would be all-consuming and would require the 
expenditure of political capital. In his view, it was critical that the 
ATO wait to achieve some successes before seeking a user fee system. 
Another panelist called for figuring out "not only what problem we're 
solving, but what problems we might be likely to create," and noted 
that the government would have to consider what it was incentivizing 
through user fees. For example, if the fee was based on weight, he 
said, it might "incentivize even smaller planes and more planes," 
thereby increasing demands on the ATC system's capacity. Another issue 
that would have to be worked out, is how the common costs of air 
traffic services (e.g., the costs of activities in the ATC system 
operated by the Department of the Air Force) should be allocated--
whether users should pay only for the incremental costs of the services 
they use, as most users would argue, or whether some cross-subsidies 
should continue. Another panelist pointed out that implementing a user 
fee alone would not guarantee efficiency, because the air traffic 
services provider could simply raise the fee when costs increased and 
the users would have to pay, since the service is a monopoly. Some 
method of controlling costs would have to be built into the system, he 

Most panelists correctly assumed that legislation would be required to 
institute a user fee system. Specifically, a user fee system could be 
implemented in a government or a public-private type of air traffic 
services organization. However, one panelist cautioned, it would be 
"fatal" to implement the fee in any way that did not make the ATO 
financially independent of Congress. Once the airlines and general 
aviation users started to pay a fee to finance the ATO, then the ATO 
should be held accountable to them, he said, and "FAA should not be 
getting approval from government to spend its budget."

Panelists Said Borrowing Authority Would Provide the Funding for 
Efficient Capital Investment:

Revenue bonding based on a new user fee stream would create an 
"alternative to capital starvation," one panelist said. Even if the 
user fee stream initially produced no more revenue than the airlines 
are now paying in aviation-related taxes, he said, the ATO could reap a 
"transition dividend" during the first 5 or 10 years after the bonds 
are issued, limiting its annual outlays to the debt service on the 
bonds. To facilitate the airlines' recovery, he suggested, the ATO 
could cut what the airlines pay and "still have a robust modernization 
program being financed by the revenue bonds." He characterized this 
strategy as "money that's lying on the sidewalk waiting to be picked 
up" and saw it as an opportunity to buy some new equipment in bulk and 
get it installed before it becomes obsolete. Such a "sensible" approach 
would not be possible with annual appropriations, he said. 

Further Organizational Restructuring Could Streamline and Strengthen 
the ATO's Management:

Panelists maintained that the ATO's organizational placement, combined 
with its dependence on Congress for funding, limits the COO's ability 
to make decisions and take actions. The COO is not a Chief Executive 
Officer, as one of the panelists observed. Instead, he reports to his 
"owners"--who include the FAA Administrator and the DOT Secretary, who 
in turn receive direction from the administration (the President and 
OMB Director) and Congress. 

Because the ATO is embedded so deeply in the executive branch, the COO 
has no means of communicating directly with the congressional 
committees that authorize and fund the ATO. Congress originally tried 
to address this issue when, as part of the legislation creating the COO 
position, it created the Air Traffic Services Subcommittee to oversee 
the ATO and report independently to Congress on the ATO's 
performance.[Footnote 25] However, the legislation did not authorize 
funds to support an independent staff for the subcommittee, and when 
the FAA Administrator requested funds, DOT denied the request, one 
panelist said, because the Deputy Secretary saw the subcommittee as 
performing a DOT function. Moreover, as another panelist noted, 
Congress eliminated the subcommittee's oversight authority,[Footnote 
26] making the subcommittee purely advisory. Consequently, he said, 
there is no oversight group that is expected to provide constructive 
criticism of FAA, and FAA does not get "the kind of constructive advice 
that you might hope for." According to a third panelist, Europe's 
Performance Review Commission provides such constructive advice for 
EUROCONTROL, the European air traffic management organization. The 
commission serves as a panel of independent advisers and costs about 
$2.5 million a year, he said, and "it's well worth the investment."

According to several panelists, the ATO's COO lacks the management 
tools that would be available to a private-sector CEO. His ability to 
plan modernization projects, set program priorities, and implement new 
technologies is constrained because the FAA Administrator, DOT 
Secretary, and OMB Director can revise his budget request and Congress 
can make further changes in the ATO's budget. In addition, the 20-year 
vision of the Joint Planning and Development Office (JPDO)[Footnote 27] 
is at odds with the ATO, according to one panelist, because it looks 
forward to the ATC system of 2025, rather than helping the ATO address 
its immediate funding needs. Other panelists observed that the 
controllers' union influences management's decisions. 

The COO lacks key financial data needed to determine, analyze, and 
manage the ATO's costs. When he was "parachuted" into the ATO, as one 
panelist put it, he did not have the numbers he needed to know where 
the ATO stood because FAA did not maintain basic information on the 
costs and value of existing systems, reducing the ATO's potential to be 
data driven. As a result, he spent most of his first year overseeing 
the implementation of a cost accounting system and collecting other key 

Finally, the COO's ability to manage the ATC workforce is limited. 
Civil service rules give the ATO's employees powers and rights that 
they would not have in a private organization, and management's ability 
to influence their performance is constrained because their terms of 
employment and compensation are based largely on negotiated agreements 
rather than on performance. In addition, salary caps limit FAA's 
ability to pay for technical expertise. 

Restructuring Could Resolve the Conflict of Interest Inherent in FAA's 
Dual Role as the Regulator and the Operator of Air Traffic Services:

As one panelist observed at the end of the panel, the ATO's creation 
did not address the structural conflict of interest that exists because 
FAA is both the regulator and the operator of air traffic services. "We 
didn't have arms length regulation of air traffic control in FAA," he 
said, "and the ATO didn't do anything to accomplish that." Another 
panelist noted that when his country restructured its air traffic 
organization, it immediately eliminated the same structural conflict of 
interest, and "overnight" the regulator became more effective and the 
operator's safety performance "significantly improved." According to 
the first panelist, other countries that have reorganized their air 
traffic organizations have also instituted arms' length regulation if 
they did not have it already. "We remain one of the few places that 
somehow thinks that self-regulation is a good idea, in spite of sort of 
overwhelming evidence in lots of arenas that it's not a very good 
idea," he said. 

The following is additional information from the ATO's COO and from 
previous GAO reports and work in progress that indicates how FAA is 
addressing some of the structural changes that panelists proposed to 
improve the ATO's success over time:

In addition to the business plan that the ATO is developing to guide 
and improve its operations and financial management, FAA has worked to 
develop three longer term planning documents. First, it has published 
its Flight Plan for 2005 through 2009, a multiyear strategic effort 
that sets a 5-year course for FAA in the areas of safety, capacity, 
international leadership, and organizational excellence. Second, it has 
developed a rolling 10-year effort, called the Operational Evolution 
Plan (OEP), through which FAA plans to increase the capacity of the NAS 
by one-third. Finally, FAA is participating in a multiagency effort, 
sponsored by the JPDO, to develop a national plan for aviation in 2025 
and beyond. Both the OEP and the JPDO's plan are designed to meet the 
Flight Plan's commitment to help the NAS flow smoothly and meet future 
needs. According to FAA, the Vice President of the Operations Planning 
Service Unit in the ATO is also the Director of the JPDO, helping to 
ensure integration of near-term and long-term planning. 

According to the ATO's COO, the restructuring of U.S. air traffic 
services that has taken place thus far, through the establishment of a 
performance-based air traffic organization, constitutes "the first 
building block" of the longer term effort to transform the aviation 
system envisioned in the JPDO's 20-year plan. According to the COO, 
this vision of the U.S. aviation system will incorporate both 
technologies and processes. However, he acknowledged that the ATO has 
not yet connected this long-term vision with the financial and other 
challenges it currently faces. He said that his goal is to establish an 
organization that can execute the long-term vision and manage not only 
its finances but also its future--an organization that can, in effect, 
ensure the viability of the long-term vision. Over time, he said, he 
plans to expand the OEP to include a strategy and the JPDO's long-term 
vision, thereby "tie[ing] the vision to the viability of the future." 
The OEP will then be "not just a set of projects," but a project plan 
with a vision and a strategy that goes out 20 years. But given the 
current budget constraints, he conceded, the path to that goal is not 

In March 2004, FAA created the Air Traffic Safety Oversight Service 
(AOV), under FAA's Office of Aviation Safety. This step established 
separate reporting relationships for the ATO, which is responsible for 
managing the ATC system, and for the AOV, which is responsible for 
ensuring the safety of changes to air traffic standards and procedures. 
The establishment of the AOV responds directly to a recommendation by 
the 1997 National Civil Aviation Review Commission that safety 
oversight of FAA's traffic function be provided by a separate part of 
the agency. Although both organizations remain within FAA, under the 
FAA Administrator, they are less closely joined than they were 
previously. Hence, this step is a positive move toward providing "arm's 
length" safety oversight, although it does not go as far as placing the 
two organizations in separate federal agencies or removing one of the 
agencies from the federal government altogether. 

Concluding Observations:

At our request, the panelists concluded the panel with their parting 
thoughts on the day's discussion, including any advice they had for FAA 
or for Congress. Overall, the panelists were united in their desire for 
the ATO to succeed, but they generally agreed that its opportunities 
for success were constrained within a government system. For many, the 
steps taken thus far to create a performance-based organization were 
insufficient, in large part because the ATO lacks control over its 
revenues and funding priorities, and the ATO still had a long way to go 
to achieve its goals. 

Some panelists stressed the importance of progressing by small steps 
within the existing system, at least for the time being. Such small 
steps might include obtaining good performance and cost information, 
scoping programs in accordance with current budget projections, 
contracting out some air traffic services, and obtaining outside 
expertise from systems engineers and other technical and management 
experts. It was critical, one panelist said, for the ATO to "have some 
small early practical successes" to enlist the political support of the 
user community and help tie the customers to the ATO's mission. 

Other panelists focused on the obstacles within the system that they 
believed would impede or prevent success. Among the obstacles they 
cited were the counterproductive incentives inherent in the budget 
process, the government's refusal to allow new air traffic technologies 
to be used, and opposition to organizational and technological change. 
It was important, one panelist said, to overcome this opposition by 
describing "the difference between how things are and how they might 
be." Descriptions of accomplishments elsewhere, together with actions 
to implement whatever safeguards and regulatory framework might be 
necessary, could perhaps make the argument for change "compelling," he 

Still other panelists looked to the future, calling for international 
technical benchmarks to promote efficient development, business models 
that take into account operational trends (e.g., the growing market 
share of regional jets and low-fare airlines) and incentives to help 
users overcome cost barriers to acquiring new technologies. As one 
panelist said, "we have to target the future mix of real operations 
that we're really going to see, not build the world's most perfect 
system from 1956."

Despite their reservations about the ATO's potential for success as a 
government organization, the panelists generally agreed that 
stakeholders should not "allow the concept of privatization to be the 
enemy of moving forward with the ATO," as one panelist said, or 
"sacrifice the good for the better" in the words of another. Instead, 
taking a two-pronged approach--telling people "what's to be done now to 
get results" and telling them "that they have an obligation to build 
for the future"--would be the best way, in the view of most panelists, 
for the ATO to meet its immediate and longer term challenges. 

[End of section]


[End of section]

Appendix I: GAO Panel Members:

Clinton V. Oster, Jr. (Panel Moderator), 
Professor of Public and Environmental Affairs, 
School of Public and Environmental Affairs, Indiana University:

Anthony J. Broderick, 
Independent Consultant, 
Former FAA Associate Administrator for Regulation and Certification:

Steven R. Bussolari, 
Assistant Division Head, Tactical Systems Division, 
Manager, Air Traffic Control System Group, Lincoln Laboratory, 
Massachusetts Institute of Technology:

John W. Crichton, 
President and CEO, 
NAV Canada:

George L. Donahue, 
Director, The Center for Air Transportation Systems Research, 
George Mason University, 
Former FAA Associate Administrator for Research and Acquisition:

John J. Fearnsides, 
Professor of Public Policy, 
George Mason University, 
Chief Strategist and Partner of MJF Strategies:

Xavier Fron, 
Performance Review Commission, EUROCONTROL: 

Richard Golaszweski, 
Executive Vice President, 
Gellman Research Associates (GRA), Inc. 

Ian Hall, 
Director of Operations, 
National Air Traffic Services, 
United Kingdom: 

Thomas Imrich, 
Chief Pilot, Research, 
Boeing Commercial Aircraft: 

Satish C. Mohleji, 
Principal Engineer, 
Center for Advanced Aviation System Development, 
The MITRE Corp. 

Robert W. Poole, Jr., 
Director of Transportation Studies, 
Reason Foundation: 

Michael Powderly, 
Airspace Solutions: 

John A. Sorensen, 
Chief Executive Officer, 
Seagull Technology, Inc. 

James A. Wilding, 
Former President and Chief Executive Officer, 
Metropolitan Washington Airports Authority: 

[End of section]

Appendix II: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Gerald Dillingham, Ph.D., (202) 512-2834: 

Staff Acknowledgments: 

In addition to the individual named above, Elizabeth Eisenstadt, 
Brandon Haller, Bert Japikse, Maren McAvoy, Beverly Norwood, and 
Richard Scott made key contributions to this special product. 

[End of section]

Related GAO Products: 

Cultural and Technical Factors: 

Air Traffic Control: FAA Needs to Ensure Better Coordination When 
Approving Air Traffic Control Systems. 
Washington, D.C.: November 17, 2004. 

Air Traffic Control: FAA's Acquisition Management Has Improved, but 
Policies and Oversight Need Strengthening to Help Ensure Results. 
Washington, D.C.: November 12, 2004. 

Air Traffic Control: System Management Capabilities Improved, but More 
Can Be Done to Institutionalize Improvements. 
Washington, D.C.: August 20, 2004. 

Information Technology: FAA Has Many Investment Management Capabilities 
in Place, but More Oversight of Operational Systems Is Needed. 
Washington, D.C.: August 20, 2004. 

Federal Aviation Administration: Plan Still Needed to Meet Challenges 
to Effectively Managing Air Traffic Controller Workforce. 
Washington, D.C.: June 15, 2004. 

Air Traffic Control: FAA's Modernization Efforts--Past, Present, and 
Washington, D.C.: October 30, 2003. 

National Airspace System: Current Efforts and Proposed Changes to 
Improve Performance of FAA's Air Traffic Control System. 
Washington, D.C.: May 30, 2003. 

Human Capital Management: FAA's Reform Effort Requires a More Strategic 
Washington, D.C.: February 3, 2003. 

National Airspace System: Better Cost Data Could Improve FAA's 
Management of the Standard Terminal Automation Replacement System. 
Washington, D.C.: January 31, 2003. 

National Airspace System: Status of FAA's Standard Terminal Automation 
Replacement System. 
Washington, D.C.: September 17, 2002. 

National Airspace System: FAA's Approach to Its New Communications 
System Appears Prudent, but Challenges Remain. 
Washington, D.C.: July 15, 2002. 

Air Traffic Control: FAA Needs to Better Prepare for Impending Wave of 
Controller Attrition. 
Washington, D.C.: June 14, 2002. 

Air Traffic Control: Role of FAA's Modernization Program in Reducing 
Delays and Congestion. 
Washington, D.C.: May 10, 2001. 

National Airspace System: Problems Plaguing the Wide Area Augmentation 
System and FAA's Actions to Address Them. 
Washington, D.C.: June 29, 2000. 

Aviation Acquisition: A Comprehensive Strategy Is Needed for Cultural 
Change at FAA. 

Budgetary Factors: 

FAA Budget Policies and Practices. 
Washington, D.C.: July 2, 2004. 

Air Traffic Control: FAA's Modernization Efforts--Past, Present, and 
Washington, D.C.: October 30, 2003. 

National Airspace System: Current Efforts and Proposed Changes to 
Improve Performance of FAA's Air Traffic Control System. 
Washington, D.C.: May 30, 2003. 

National Airspace System: Reauthorizing FAA Provides Opportunities and 
Options to Address Challenges. 
Washington, D.C.: February 12, 2003. 

National Airspace System: Better Cost Data Could Improve FAA's 
Management of the Standard Terminal Automation Replacement System. 
Washington, D.C.: January 31, 2003. 

National Airspace System: FAA's Approach to Its New Communications 
System Appears Prudent, but Challenges Remain. 
Washington, D.C.: July 15, 2002. 

National Airspace System: Free Flight Tools Show Promise, but 
Implementation Challenges Remain. 
Washington, D.C.: August 31, 2001. 

Structural Issues: 

Federal Aviation Administration: Challenges for Transforming Into a 
High-Performing Organization. 
Washington, D.C.: May 18, 2004. 

National Airspace System: Current Efforts and Proposed Changes to 
Improve Performance of FAA's Air Traffic Control System. 
Washington, D.C.: May 30, 2003. 



[1] The NAS is a complex network of interconnected systems that 
includes over 19,000 airports, 750 ATC facilities, and about 45,000 
pieces of equipment. 

[2] See GAO, Air Traffic Control: FAA's Modernization Efforts--Past, 
Present, and Future, GAO-04-227T (Washington, D.C.: Oct. 30, 2003); 
National Airspace System: Current Efforts and Proposed Changes to 
Improve Performance of FAA's Air Traffic Control System, GAO-03-542 
(Washington, D.C.: May 30, 2003); and High-Risk Series: An Update, GAO-
05-207 (Washington, D.C.: January 2005). 

[3] For purposes of this report, NAS modernization refers to ATC 
facilities, equipment, and related expenses. 

[4] Fiscal Year 1996 Department of Transportation Appropriations Act, 
Public Law 104-50, Section 348. 

[5] See GAO, Air Traffic Control: FAA Needs to Ensure Better 
Coordination When Approving Air Traffic Control Systems, GAO-05-11 
(Washington, D.C.: Nov. 17, 2004); 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); 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); Air Traffic 
Control: System Management Capabilities Improved, but More Can Be Done 
to Institutionalize Improvements, GAO-04-901 (Washington, D.C.: Aug. 
20, 2004); and GAO-05-207. 

[6] This body was created as a subcommittee of a larger, preexisting 
organization, the Management Advisory Council, which Congress had 
established in 2000 to oversee the administration, management, conduct, 
direction, and supervision of the ATC system. When Congress 
reauthorized FAA in December 2003, it eliminated the subcommittee's 
oversight responsibilities, and the subcommittee is now purely 
advisory. According to FAA, the subcommittee can help the ATO achieve 
consensus on difficult issues and contribute business expertise. 

[7] Wendell H. Ford Aviation Investment and Reform Act for the 21st 
Century, Public Law 106-181, Section 303, April 5, 2000; Executive 
Order 13180, December 7, 2000. Under the executive order, part of the 
ATO's purpose is to "develop methods to accelerate air traffic control 
modernization and to improve aviation safety related to air traffic 

[8] Congress appropriates funds for FAA's budget from both the Aviation 
Trust Fund and the General Fund. According to FAA's FY 2006 Budget in 
Brief, the Aviation Trust Fund accounted for $9.7 billion of FAA's 
$14.1 billion budget for fiscal year 2004, and the General Fund 
accounted for the remainder. 

[9] These include a report on the status of individual ATC system 
acquisitions and a comprehensive report on the status of the complete 
NAS modernization program. In addition, in response to a request from 
the Senate Committee on Commerce, Science, and Transportation, we are 
currently obtaining information and plan to report on how other 
countries have commercialized their air traffic services, applying a 
performance-based approach. For this work, we asked the panelists to 
discuss any lessons that can be learned from commercializing air 
traffic services abroad. We plan to incorporate the panelists' comments 
on this topic in the report that we expect to issue for the Senate 

[10] The head of Germany's air navigation services responsible for air 
traffic control, DFS (Deutsche Flugsicherung GmbH), provided written 
responses to our questions. 

[11] EUROCONTROL is the European Organization for the Safety of Air 
Navigation. The Performance Review Commission, one of EUROCONTROL's 
oversight bodies, was established to ensure effective management of 
European Air Traffic Management, through target-setting and the 
establishment of a transparent and independent performance review 

[12] The panelists used the terms "FAA" and "ATO" interchangeably. 
Therefore, references to FAA should be considered references to the ATO 
in this context. 

[13] URET is a computer program that aids controllers in granting 
pilot's requests to change their flight paths for more direct routes or 
for different altitudes and allows controllers to look 20 minutes into 
the future of a flight path. If a pilot wants a different route, the 
controller punches in the request and is immediately advised if the 
request is safe. Previously, the controller relied on paper flight 
strips and mental calculations. According to FAA, as a result of URET, 
pilots now receive more direct routes and the airlines are saving time 
and money. 

[14] The National Air Traffic Controllers Association, the federal-
sector labor union representing air traffic controllers, engineers, and 
other safety-related professionals, testified in June 2004 that 
"controller time on position," a measure of time that tracks when 
controllers are working with the primary responsibility for an 
operational ATC position, tracks only a portion of the controller's job 
functions and, therefore, is not an accurate measure. Testimony of Ruth 
E. Marlin, Executive Vice President, National Air Traffic Controllers 
Association Before the U.S. House of Representatives, Committee on 
Transportation and Infrastructure, Subcommittee on Aviation, Status of 
the Air Traffic Controller Workforce, June 15, 2004. 

[15] WAAS is a navigation and landing system that uses global 
positioning system technology. According to FAA, WAAS is to improve 
safety by providing precision guidance to an aircraft in all phases of 
flight at thousands of airports and landing strips, including runways 
where there is no ground-based landing capability. STARS is a color 
computer display system used at FAA terminal radar control and 
Department of Defense facilities. NEXCOM will replace the existing 
analog ATC communications system with a digital system that has greater 

[16] "Communicating the Future within the Federal Aviation 
Administration," Review of Findings from Summer 2004, Internal 
Research, August 13, 2004. 

[17] The vast majority of funds for FAA's ATC modernization program and 
operations comes from taxes on airline tickets that are deposited into 
the Aviation Trust Fund. Congress then appropriates the trust fund 
revenues for line items in FAA's budget. Under federal budget 
procedures, funds are appropriated separately for capital projects and 
for operations. 

[18] According to DOT/IG, salaries and benefits make up approximately 
73 percent of FAA's operating budget. See DOT/IG, Key Issues for the 
Federal Aviation Administration's FY 2005 Budget, CC-2004-038 
(Washington, D.C.: Apr. 22, 2004). 

[19] In 2002, we reported that almost one-half of FAA's controller 
workforce (about 7,000 controllers) would retire over the next 10 years 
and about 93 percent of controller supervisors would be eligible to 
retire by the end of 2011. See GAO, Federal Aviation Administration: 
Plan Still Needed to Meet Challenges to Effectively Managing Air 
Traffic Controller Workforce, GAO-04-887T (Washington, D.C.: June 15, 
2004) and Air Traffic Control: FAA Needs to Better Prepare for 
Impending Wave of Controller Attrition, GAO-02-591 (Washington, D.C.: 
June 14, 2002). 

[20] FAA formally announced in December 2003 that its flight service 
stations met the criteria for competitive sourcing, and that it would 
conduct a competition under OMB's A-76 guidelines for an improved way 
to provide flight service operations. On February 1, 2005, FAA 
announced the selection of a team headed by Lockheed Martin to provide 
services now offered by the agency's network of 58 automated flight 
service stations across the United States. These services include 
weather briefing and flight planning services, which are used primarily 
by general aviation pilots. The total evaluated cost of the 5-year 
contract, with 5 additional option years, is $1.9 billion and 
represents estimated savings of $2.2 billion over the next 10 years. 

[21] Under President Clinton, air traffic services were defined as 
"inherently governmental," meaning that they could not be provided by 
the private sector. In June 2002, President Bush issued Executive Order 
13264, which revised that definition and opened the way for FAA to 
contract with private companies for services on a test basis, as 
directed by OMB Circular A-76. 

[22] EUROCONTROL has been collecting and reporting performance data 
from its members since 1998, and the International Air Transport 
Association is calling on the Civil Air Navigation Services 
Organization (CANSO) to develop performance benchmarks for its members. 
CANSO represents the interests of air navigation service providers 
(organizations that provide ATC services) and technology suppliers of 
goods and services to the industry worldwide. 

[23] FAA has ceased funding the ground station component of one 
modernization program (NEXCOM), in part because it is reevaluating its 
approach for modernizing the air-to-ground communications. FAA will 
move forward with replacing older radios, which is the least complex 
element of the NEXCOM effort. 

[24] The Mineta Commission, formally authorized as the National Civil 
Aviation Review Commission, recommended in 1997 that FAA's air traffic 
system be restructured as a performance-based organization, subject to 
independent oversight, and be given leasing and borrowing authority. 

[25] As originally implemented, this committee, the Air Traffic 
Services Subcommittee, was similar to the board of public interest 
directors that the Mineta Commission recommended be established to 
oversee a performance-based air traffic services organization. 

[26] Congress eliminated the subcommittee's oversight responsibilities 
when it reauthorized FAA in December 2003. 

[27] This office coordinates an air transportation system planning 
initiative that involves the Departments of Transportation, Commerce, 
Defense, and Homeland Security; the National Aeronautics and Space 
Administration; and the Office of Science and Technology Policy and 
other experts from the public and private sectors. The office reports 
to a Senior Policy Committee chaired by the Secretary of 

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