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Report to the Chairman, House Committee on Transportation and 
Infrastructure: 

March 2006: 

Congressional Oversight: 

FAA Case Study Shows How Agency Performance, Budgeting, and Financial 
Information Could Enhance Oversight: 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-378]: 

GAO Highlights: 

Highlights of GAO-06-378, a report to the Chairman, House Committee on 
Transportation and Infrastructure: 

Why GAO Did This Study: 

Pursuant to various statutes, federal agencies develop an abundance of 
performance, budget, and financial information that could be useful for 
Congress’ review and monitoring of agencies. However, agencies’ 
understanding of Congress’ information needs is often limited and 
agencies may not be providing timely information in a format that aids 
congressional understanding of trends and issues. Thus, Members and 
their staff may not be aware of or avail themselves to certain 
information. To describe the information available and how it might be 
used to support congressional oversight, the Federal Aviation 
Administration was selected as a case study in part due to the large 
quantity of information already available. GAO was asked to identify: 
(1) information FAA produces that could enhance congressional 
oversight, (2) other technology and information resources that could 
enhance congressional oversight, and (3) how committee access to FAA’s 
information could be improved to enhance its timeliness and usefulness. 

What GAO Found: 

The Federal Aviation Administration (FAA) has made available much of 
the information and analytic resources that Congress needs to carry out 
its oversight function. For example, FAA has a strategic plan with long-
term, outcome-oriented goals and objectives. Its annual Performance and 
Accountability Report includes the agency’s progress in achieving its 
goals, and allows Congress to monitor performance trends. This report 
also provides financial information useful for analyzing its operating 
results and financial position. FAA’s budget documents combined with 
performance data could provide Congress information to use in 
determining whether resources are achieving the planned performance 
improvements. Used together, this information could assist Members of 
Congress and congressional staff in their oversight responsibilities. 

Through its legislative support agencies—GAO, Congressional Research 
Service and the Congressional Budget Office—and the Department of 
Transportation’s (DOT) Inspector General (IG), congressional committee 
staff also have access to considerable resources for oversight. For 
example, GAO’s 2005 High Risk Series Update includes FAA’s Air Traffic 
Control Modernization program and discusses progress the agency has 
made in addressing its problems. DOT’s IG annually reports on the top 
management challenges facing FAA, such as safety and capacity 
challenges. 

Effective communication is needed to ensure that information agencies 
provide meets congressional needs. While considerable information 
resources are available, they may not be available in a manner that is 
useful to committees. We have reported that although agencies collect 
and produce a great deal of information, much of it did not reach the 
interested committees, and the information that did reach them was 
difficult to digest, highly aggregated, or was received too late to be 
useful. In the case of FAA, House Transportation and Infrastructure 
Committee staff said FAA has a large quantity of information available 
and effective communication between the staff and agency, but is 
interested in using technology to gain additional agency data. While 
FAA provides a great deal of information on its Web site, it could take 
additional advantage of technology to improve the timeliness and 
usefulness of information to the Congress. For example, a Frequently 
Asked Questions section could provide quick access to information often 
requested by committees. As a result of our discussions with committee 
and agency staff, FAA has initiated two suggested technology 
enhancements, a For Congress page on its Web site, providing a single 
point of access for information relevant for oversight, and a Web site 
subscription service notifying committee staff when relevant 
information has been updated on its Web site. Further, regular meetings 
between congressional committees and agency officials could identify 
the committee’s oversight objectives, provide a forum to discuss the 
issues, and develop approaches to meet them. Importantly, these 
findings constitute lessons learned that may be transferable to other 
agencies. 

What GAO Recommends: 

While FAA makes much of its information available on its Web site, GAO 
recommends that FAA further use technology to enhance congressional 
access to information, and offer regular meetings with Members of the 
committee and key staff to discuss areas of mutual concern. The agency 
generally concurred. 

www.gao.gov/cgi-bin/getrpt?GAO-06-378. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Bernice Steinhardt at 
(202) 512-6543 or steinhardtb@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Agency Performance, Budget, and Financial Management Documents Can 
Enhance Oversight Efforts: 

Analytical Agencies and Organizations Can Provide Information and 
Analysis to Enhance Oversight Efforts: 

Regular Communication and Timely Access to Useful Information Can 
Enhance Oversight: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments: 

Appendixes: 

Appendix I: Objectives, Scope and Methodology: 

Appendix II: Analytical Agencies and Organizations Can Provide 
Information and Analysis to Enhance Oversight Efforts: 

Appendix III: Financial Statements Provide Insights into Agency 
Financial Management and Resources: 

Appendix IV: GAO Contact and Staff Acknowledgements: 

Tables: 

Table 1: FAA's Four Strategic Goals: 

Table 2: Example of ATO's Business Plan Efforts to Support a Flight 
Plan Goal: 

Table 3: Estimated Funding to Support FAA's Safety Strategic Goal by 
Performance Goal: 

Table 4: Example of a Strategy and Research Area in the Next Generation 
Air Transportation System Integrated Plan: 

Table 5: Analytical Resource for Congressional Oversight, as 
Illustrated by FAA Information: 

Figures: 

Figure 1: Status and Trends: Number of Operational Errors: 

Figure 2: FAA Scorecard for General Aviation Fatalities: 

Figure 3: Using Budget Information for Operations Obligations, Trust 
Fund and General Fund: 

Figure 4: Using Budget Information: Trust Fund Outlays Outpacing 
Receipts Since FY 2002: 

Figure 5: FAA's For Congress Web site Page: 

Figure 6: FAA's Consolidated Balance Sheets for Fiscal Years 2003 and 
2004: 

Figure 7: Composition of FAA's Assets and Liabilities, as of September 
30, 2004: 

Figure 8: FAA's Consolidated Statements of Net Cost for Fiscal Years 
2003 and 2004: 

Figure 9: Net Costs for FAA's Airport Program for Fiscal Years 2000 
through 2004: 

Figure 10: Composition of FAA's Net Costs, for Fiscal Year 2004, by 
Business Line and Strategic Goal: 

Figure 11: FAA's Consolidated Statements of Changes in Net Position for 
Fiscal Years 2003 and 2004: 

Figure 12: FAA's Consolidated Statements of Budgetary Resources for 
Fiscal Years 2003 and 2004: 

Figure 13: Composition of Budgetary Resources, by Major Fund Type: 

Figure 14: FAA's Consolidated Statements of Financing for Fiscal Years 
2003 and 2004: 

Abbreviations: 

ARTCC: Air Route Traffic Control Centers: 

ATO: Air Traffic Organization: 

CAS: Cost Accounting System: 

CBO: Congressional Budget Office: 

CFO: Chief Financial Officer: 

CIP: Capital Improvement Plan: 

CRS: Congressional Research Service: 

DOT: Department of Transportation: 

FAA: Federal Aviation Administration: 

FAQ: Frequently Asked Questions: 

FFMIA: Federal Financial Management Improvement Act of 1996: 

FSAS: Flight Services Automation System: 

GA: General Aviation: 

GMRA: Government Management and Reform Act of 1994: 

GPRA: Government Performance and Results Act: 

NAS: National Airspace System: 

OASIS: Operational and Supportability Implementation System: 

OIG: Office of Inspector General: 

OMB: Office of Management and Budget: 

PAR: Performance and Accountability Report: 

PART: Program Assessment Rating Tool: 

PMA: The President's Management Agenda: 

QFR: Questions for the Record: 

Letter March 8, 2006: 

The Honorable Don Young: 
Chairman, Committee on Transportation and Infrastructure: 
House of Representatives: 

Dear Mr. Chairman: 

In your letter dated September 13, 2004, you noted that federal 
agencies develop an abundance of performance, budget, and financial 
information for internal use as well as to report to Congress for 
oversight purposes. However, Congress may not be fully aware of or 
availing itself of this information. Further, communication between 
agencies and Congress to clarify Congress' information needs is 
limited. For example, you stated that agencies often do not provide 
information in a timely manner or in a format that facilitates 
understanding of trends and issues, making it difficult to synthesize 
and use the information to identify areas of greatest concern and 
conduct effective oversight. As a result, you stated that too often 
oversight occurs in an ad hoc manner as problems arise, and with 
inadequate information to determine and address root causes. Further, 
as government grows more complex, and agencies produce more 
information, it becomes harder for Congress to access, analyze, and 
summarize this information to develop its policy positions and 
legislative enactments. New ways must be continually found to use 
emerging technology and approaches to make agency information 
transparent and readily available. 

You requested that we help to address these issues by working with 
committee staff to develop a framework for establishing timely and 
constructive oversight of programs under the committee's jurisdiction. 
To establish a working precedent, the Federal Aviation Administration 
(FAA) was selected as a case study as a result of its large quantity of 
information already available, the forward-looking management systems 
being developed, and the effective communications between the staff and 
agency. Our objectives were to identify: (1) information FAA produces 
that could enhance congressional oversight, (2) other available 
information resources that could enhance congressional oversight and, 
(3) how committee access to FAA's information could be improved to 
enhance its timeliness and usefulness. 

To achieve our objectives, we worked with members of your committee's 
oversight staff, as well as Aviation Subcommittee staff to better 
understand their information needs and delivery mechanisms. In 
addition, we identified relevant FAA performance, budget, and financial 
documents and met with senior officials from across FAA, including 
several lines of business--Airports, Air Traffic Organization, Aviation 
Safety--and staff offices--Aviation Policy, Planning and Environment, 
Financial Services, Government and Industry Affairs, Human Resources 
and Management. We also met with officials from the Department of 
Transportation's (DOT) Office of Inspector General (OIG), the DOT's 
Chief Information Officer, the Congressional Research Service, the 
General Service Administration's FirstGov initiative, and the Office of 
Management and Budget, as well as representatives from several think 
tanks. Our review was conducted from September 2004 through December 
2005 in accordance with generally accepted government auditing 
standards. 

Results in Brief: 

FAA has made available much of the information and analytic resources 
that Congress needs to conduct its oversight role. For example, FAA 
developed a strategic plan with long-term, outcome-oriented goals and 
objectives. Its annual Performance and Accountability Report includes 
the agency's progress in achieving its goals, and allows Congress to 
monitor performance trends. This report also provides financial 
information useful for analyzing its operating results and financial 
position. FAA's budget documents combined with performance data could 
provide Congress information to use in determining whether resources 
are achieving the planned performance improvements. Used together, this 
information provides a valuable tool to assist Members of Congress and 
congressional staff in their oversight responsibilities. 

Through its legislative support agencies--GAO, Congressional Research 
Service and the Congressional Budget Office--as well as the Department 
of Transportation's Inspector General, congressional committees also 
have access to considerable resources for oversight. For example, GAO's 
High Risk Series Update includes FAA's Air Traffic Control 
Modernization program and discusses progress it has made in addressing 
its problems. The DOT IG annually reports on the top management 
challenges facing FAA, such as safety and capacity challenges. 

Effective communication among agency officials, Members of Congress and 
congressional staff is needed to ensure that information agencies 
provide meets committee needs. While considerable information resources 
are available, they may not be available in a manner that is useful to 
committees. We have previously reported, in a review of interactions 
between the Congress and other executive branch agencies, that although 
agencies collect and produce a great deal of useful information, much 
of it did not reach the interested congressional committees, and the 
information that did reach the committees was difficult to digest, too 
highly aggregated, or was received too late to be useful.[Footnote 1] 
In the case of FAA, House Transportation and Infrastructure Committee 
staff noted that the agency has a large quantity of information 
available and effective communication between the staff and the agency, 
but it is also interested in using technology to gain additional, 
timely access to agency data when conducting oversight. While FAA 
provides a great deal of information on its Web site, enhancing access 
to agency information using technology can improve the timeliness and 
usefulness of agency information to the Congress. For example, 
information alerts and summaries from the agency could be effective 
information sharing tools. Further, regular meetings between 
committees, staff and agency officials could identify the committee's 
principal oversight objectives, provide a forum to discuss the issues, 
and develop the best approaches to meet them. 

To further enhance committee access to information about FAA, we 
recommend the Secretary of the Department of Transportation direct the 
Administrator of the FAA to implement a number of technology solutions 
to improve access to information, such as: 

* Continue to work with committee staff to further refine the For 
Congress Web site by improving the flow of information and taking 
advantage of emerging technologies; 

* Include a Frequently Asked Questions page on the For Congress site, 
allowing oversight committees to quickly find answers to commonly 
requested items relevant to Congress; 

* Add moderated access on the For Congress Web site to allow access to 
information that should be made available to congressional committees, 
yet may not be appropriate for the general public; and: 

* Consider offering regular meetings between the Members of the 
committee and key staff with senior FAA executives to address matters 
of mutual concern. 

We provided a draft of this report to the Secretary of the Department 
of Transportation for review and comment. We received comments from FAA 
officials, including the Deputy Assistant Administrator for Financial 
Services, on behalf of the Secretary who indicated that they were 
pleased to have FAA serve as our case study and they would consider the 
report's recommendations as they continue to strive for excellence in 
fulfilling the Congress' information needs. They highlighted a number 
of ways in which they are using technology solutions, including a 
dedicated Web page for Congress and a subscription e-mail service for 
Congress to receive notices of new information. We note that both 
improvements resulted from our discussions with committee and FAA 
staff, the latter in response to a recommendation contained in the 
draft of this report. 

Agency Performance, Budget, and Financial Management Documents Can 
Enhance Oversight Efforts: 

Congressional oversight is the review, monitoring, and supervision of 
federal agencies, programs and policy implementation. This oversight 
provides the legislative branch with an opportunity to inspect, 
examine, review and check the executive branch and its agencies. 
Congressional oversight includes two different features--that which is 
ongoing throughout the course of a year and that which is done at a 
specific time in the year in response to the issuance of the 
President's budget. For the latter, House and Senate committees with 
jurisdiction over federal programs are required to submit a views and 
estimates report--a report containing the committee's comments or 
recommendations on budgetary matters within its jurisdiction--to its 
respective budget committees each year within 6 weeks of the submission 
of the President's budget. For example, the House Transportation and 
Infrastructure Committee's fiscal year 2006 views and estimates report 
identified a number of aviation-related issues and recommended 
increased funding over the President's proposed budget for facilities 
and equipment to pay for capital improvements designed to increase 
capacity and reduce aviation gridlock and for airport safety upgrades, 
including explosive detection systems for airport baggage systems. 
Ongoing oversight and the specific views and estimates oversight 
reports can draw information from documents and reports issued by 
federal departments over the course of the year. 

Pursuant to the Government Performance and Results Act of 1993 (GPRA) 
and other statutes, federal agencies produce performance, budget, and 
financial information for internal management purposes and for 
reporting to Congress which can also be useful to congressional 
committees to enhance their oversight efforts. GPRA required federal 
agencies to develop strategic plans with long-term, outcome-oriented 
goals and objectives, annual goals linked to achieving the long-term 
goals, and annual reports on the results achieved. The Chief Financial 
Officers Act of 1990 (CFO) as expanded by the Government Management and 
Reform Act of 1994 (GMRA) requires annual audited agencywide statements 
for 24 major federal departments. In the case of FAA, the agency has 
made available much of the information and analytic resources that 
Congress needs to conduct its oversight role. 

As part of DOT, FAA addresses some of the requirements of GPRA through 
its inclusion in DOT's Performance and Accountability Report. However, 
FAA also produces its own strategic plan, unit-specific business plans 
and performance reports that identify agency priorities, goals, 
strategies and progress toward these goals and the success of the 
strategies employed. Collectively, these documents help Congress 
determine whether FAA's goals are aligned with congressional goals and 
whether FAA is achieving them. Linking performance information to FAA's 
budgetary resources, such as FAA is beginning to do in its performance- 
based budget, can also provide Congress the opportunity to oversee the 
results planned or achieved with budgeted resources and indicate FAA's 
priorities for funding. Used together, these agency documents could 
assist committees in identifying and tracking progress on the issues 
related to reauthorization and oversight. 

FAA's Strategic and Performance Reporting Documents Outline Agency 
Goals and Priorities: 

FAA manages performance through a series of integrated performance 
documents. FAA's principal performance reports are: the strategic plan, 
called the Flight Plan; unit specific business plans; the annual 
Performance Accountability Report; and quarterly performance reports. 
The Flight Plan includes the agency's mission, goals and strategies. In 
addition, each of FAA's lines of business has a unit-specific business 
plan that outlines how its actions will support the goals and measures 
identified in the Flight Plan. FAA monitors and reports on the Flight 
Plan's key performance targets through quarterly and annual performance 
reports. 

FAA's Strategic Plan: 

FAA's current 5-year strategic plan, or Flight Plan, is designed to 
outline the agency's mission, goals and strategies to achieve these 
goals through 2009, with the overall aim of seeking "to provide the 
safest, most efficient aerospace system in the world." Among other 
things, GPRA requires agencies to consult with Congress and solicit the 
input of others as they develop these plans--a good opportunity for 
congressional committees and staff to influence FAA's future. According 
to FAA senior executives, the Flight Plan is the primary document that 
identifies the agency's priorities and performance expectations and is 
the driver of decision making at all levels. As such, the Flight Plan 
is key for internal agency and congressional oversight purposes. 
Committees can refer to the plan to determine whether national 
priorities are appropriately recognized and to raise questions about 
whether the strategies laid out are likely to lead to success. The 
Flight Plan identifies four strategic goals (see table 1), each of 
which are supported by objectives, strategies, initiatives, and 
performance targets the agency is responsible for achieving. FAA's 
Flight Plan can be accessed via its Web site at [Hyperlink, 
http://www.faa.gov/about/plans_reports/]. 

Table 1: FAA's Four Strategic Goals: 

Increased safety; Achieve the lowest possible accident rate and 
constantly improve safety. 

Greater capacity; Work with local governments and airspace users to 
provide capacity in the U.S. airspace system that meets projected 
demand in an environmentally sound manner. 

International leadership; Increase the safety and capacity of the 
global civil aerospace system in an environmentally sound manner. 

Organizational excellence; Ensure the success of FAA's mission through 
stronger leadership, a better trained and safer workforce, enhanced 
cost-control measures, and improved decision making based on reliable 
data. 

Source: FAA. 

[End of table] 

Committees could use the strategic plan to identify oversight 
questions.[Footnote 2] For example: 

* Do these goals take into account legislative priorities? 

* Are the strategies that support each goal consistent with legislative 
decisions? 

* How effective are the strategies in achieving these goals? 

* How were the specific initiatives and performance targets for each 
objective strategy developed? 

* What key factors--external to FAA and beyond its control--exist and 
how will FAA mitigate or leverage them as appropriate, if they affect 
the achievement of the strategic plan goals? 

* Does the plan include strategies for working with stakeholders (e.g., 
airlines, local governments or airport authorities)? 

Unit-Specific Business Plans: 

The agency's Flight Plan is supported by unit-specific performance 
plans, called business plans. Each line of business and staff office 
produces annual business plans that demonstrate strategic alignment 
with the agency Flight Plan and define core business activities. The 
business plans are important tools for oversight because they provide a 
detailed description of the activities and responsibilities of each 
business line in supporting the Flight Plan. Specifically, the business 
plans define the Flight Plan's performance targets, the specific 
initiatives that support the performance targets--and type of support 
required of each line of business (e.g., lead responsibility or support 
responsibility)--outline the key strategic activities in support of 
those initiatives; and define strategic activity targets to help gauge 
progress towards achieving the strategic initiative. The business plans 
can be found on FAA's external Web site, at [Hyperlink, 
http://www.faa.gov/about/plans_reports/business_plan2005/]. 

For example, the Air Traffic Organization's[Footnote 3] (ATO) fiscal 
year 2005 business plan details six strategic initiatives it is 
employing to help the agency meet its goal to reduce General Aviation 
(GA) fatal accidents.[Footnote 4] Each of the strategic initiatives, 
which indicates whether ATO is the lead business line or is supporting 
other business lines, includes related strategic activities and 
activity targets that enable the ATO to further define and measure the 
degree its performance is contributing to overall agency performance. 
Table 2 shows an example of one of ATO's strategic initiatives, 
activities and activity targets for supporting a Flight Plan goal. 

Table 2: Example of ATO's Business Plan Efforts to Support a Flight 
Plan Goal: 

FAA's Flight Plan performance target; Reduce GA fatal accidents. 

Strategic initiative in ATO's business plan supporting Flight Plan's 
performance target; Human factors: identify human factors that may 
cause accidents and develop strategies, methods, and technologies that 
will reduce those accidents (ATO has lead responsibility.) 

Strategic activity in ATO's business plan; Develop pilot proficiency 
recommendations for technically advanced aircraft. 

Activity target in ATO's business plan; Complete reports on: (1) 
proficiency standards for technically advanced aircraft, (2) the impact 
of technology on pilot performance metrics, and (3) the impact of 
technology on pilot aeronautical decision making. 

Source: FAA: 

[End of table] 

Committees can use the business plans to identify oversight questions 
and additional reports that could be made available to them. For 
example: 

* How will the information from these reports affect the strategies for 
reducing accidents? 

* Do the activities being implemented match congressional priorities? 

Annual Performance Reports: 

FAA annually publishes a detailed account of agency performance, 
including its audited annual financial statements, in its Annual 
Performance and Accountability Report (PAR). While this report is not 
required, FAA believes it is essential to clearly and fairly present 
and discuss FAA's finances and performance. GPRA requires agencies to 
measure performance toward the achievement of their goals and report 
annually on their progress in program performance reports. If a goal 
was not met, the report must provide an explanation and present the 
actions needed to meet any unmet goals in the future. These reports 
provide important information to agency managers, policy makers, and 
the public on what each agency accomplished with the resources it was 
given. FAA's PAR provides Congress with annual and historical trend 
information for its key performance goals. For example, under the 
strategic goal Increased Safety, FAA has a performance target tied to 
its goal to reduce the number of operational errors.[Footnote 5] Figure 
1 shows the trend in the actual number of operational errors between 
fiscal year 2002 and fiscal year 2005. FAA exceeded its target number 
of operational errors in fiscal year 2003 by 38 and again in fiscal 
year 2004 by 8. 

Figure 1: Status and Trends: Number of Operational Errors: 

[See PDF for image] 

[End of figure] 

Based on this, potential questions for oversight could be: 

* What are the primary causes of operational errors? 

* What changes were put into place between fiscal year 2003 and 2004 to 
decrease operational errors? 

* How was the target for 2005 set and what efforts will be put into 
place to meet this target? 

The financial statements, supplementary information, and notes to the 
financial statements included in the PAR present historical 
information, showing the financial activity of the agency for the last 
2 fiscal years and the financial position as of the end of each of 
those years. The five principal financial statements include: 
consolidated balance sheets, consolidated statements of net cost, 
consolidated statements of changes in net position, consolidated 
statements of budgetary resources, and consolidated statements of 
financing. The notes to the financial statements present more detailed 
information about transactions or conditions reflected in these 
statements. Often the Management's Discussion and Analysis section of 
the PAR will address the kinds of operating conditions or changes that 
financial statement analysis discloses. 

The statement of budgetary resources, which interrelates with the other 
financial statements, includes key information that is also included in 
the agency's budget. This information is subjected to audit scrutiny, 
providing some assurance of the reliability of related budgetary 
information. The individual statements and examples of how they can be 
used for congressional oversight are discussed in appendix III. 

The independent auditor's report included in the PAR tells readers 
whether or not, or to what extent, the information provided in FAA's 
financial statements and related notes is, in the opinion of the 
auditor, fairly stated. This report also includes the auditor's 
statements on whether FAA had effective internal control over financial 
reporting and over compliance with laws and regulations, which would 
indicate whether financial management issues need more attention. They 
also report on any identified significant matters of noncompliance with 
selected provisions of applicable laws and regulations. In effect, the 
audit report is a report card on how well the agency is managed from a 
financial perspective. 

The auditor's unqualified opinions on FAA's financial statements for 
fiscal years 2002 through 2005 suggest that those statements are 
sufficiently reliable to be used as a tool for public and congressional 
oversight. However, the auditor's reports for each of those years 
disclosed that FAA's financial management systems did not substantially 
comply with federal financial management systems requirements under the 
Federal Financial Management Improvement Act of 1996 (FFMIA)[Footnote 
6], an issue that may warrant additional oversight. For fiscal years 
2004 and 2005, the auditor noted, among other things, that in 
connection with FAA's conversion to Delphi as its core financial 
system, several key financial systems that feed or support Delphi 
exhibited weaknesses regarding function, reporting or internal control. 
In addition, the auditor reported that in 2005 FAA, also in conjunction 
with the implementation of Delphi, had not timely processed all of its 
transactions and reconciled all of its key accounts. Similar problems 
had been reported for fiscal year 2004 by the auditor. While 
adjustments to the recorded balances were made during the preparation 
of the year end audited financial statements, these weaknesses could 
indicate that the agency's financial information during the year may 
not be fully reliable. 

Committee staff could use information from FAA's independent auditor to 
facilitate an understanding of financial management and compliance 
issues, addressing questions such as: 

* Can users rely on the information provided in FAA's financial 
statements? 

* Did FAA have effective internal control over financial reporting and 
compliance with laws and regulations? 

* Did FAA's independent auditor report on any identified significant 
matter of noncompliance with applicable laws and regulations? 

* Did FAA's financial management improve or deteriorate over the fiscal 
year? 

The answers to the above questions are also key to assessing the 
reliability of cost accounting information, which is discussed later. 
Cost accounting information generated from FAA's financial reporting 
systems is essential to managing on-going agency operations and 
provides useful information to Congress about the cost of specific 
programs, activities, or outputs. 

FAA's annual Performance and Accountability Report can be accessed via 
FAA's Web site at [Hyperlink, http://www.faa.gov/about/plans_reports/]. 

Quarterly Performance Reporting: 

In addition to annual performance reporting, FAA monitors and reports 
quarterly on performance towards the strategic goals through the 
tracking of 31 key performance measures. FAA management conducts 
monthly, day-long meetings with executives from each line of business. 
At these meetings, the designated leaders for each of the four 
strategic goals present information related to the performance targets 
for their goal. Each of the 31 performance targets is displayed using 
the traffic light graphics colors of red, yellow, and green. When a 
target is either yellow or red, the goal leader will discuss the steps 
needed to get to green--which indicates that the performance measure is 
met. 

Committees could use these reports to raise similar questions about 
ways to improve performance to achieve the performance target. FAA 
reports performance for these 31 measures on its external Web site 
quarterly, at [Hyperlink, 
http://www.faa.gov/about/plans_reports/Performance/]. For example, 
under the strategic goal Increased Safety, FAA has a performance target 
tied to its goal to reduce the number of GA fatal accidents. FAA's 
target for fiscal year 2005 is not to exceed 343 GA fatal accidents. 
However, according to its final quarterly performance report for fiscal 
year 2005 published on the FAA Web site, the agency failed to meet its 
target, with a total of 350 GA fatal accidents, 7 fatal accidents above 
the target. Figure 2 shows the quarterly report for FAA's measure on GA 
fatal accidents. 

Figure 2: FAA Scorecard for General Aviation Fatalities: 

[See PDF for image] 

[End of figure] 

Committees could use this performance information to identify oversight 
questions. For example: 

* Why was FAA unable to meet its target for fiscal year 2005? 

* What has the agency been doing to improve on its performance for this 
target? 

* Does FAA measure the number of nonfatal GA accidents? If so, how does 
it use those data? 

In addition, questions could be raised about the measure itself. For 
example, why does the measure track the number of GA fatal accidents 
rather then the rate of GA fatal accidents? 

FAA's Budget and Long-Term Planning Documents Can Be Used to Generate 
Questions About FAA's Planned Resource Use: 

The annual federal budget is developed using a year-round 
administrative process of budget preparation and review. By the first 
Monday in February, the President submits a budget request to Congress 
for the fiscal year starting on the following October 1. However, 
preparation of that particular budget request began about 10 months 
before it was submitted to Congress. For example, for the fiscal year 
2006 budget request, transmitted to Congress in February 2005, the 
budget process began in the spring of 2004. Thus federal agencies deal 
concurrently with three fiscal years: (1) the current year, that is, 
the fiscal year in progress; (2) the coming fiscal year beginning 
October 1, for which they are seeking funds; and (3) the following 
fiscal year, for which they are preparing information and requests. In 
the spring and summer, agencies work with the Office of Management and 
Budget (OMB) to identify major issues for the upcoming budget request, 
develop and analyze options for the upcoming reviews of agency spending 
and program requests, and plan for the analysis of issues that will 
need decisions in the future. In September and October agencies submit 
their budget requests and other initial materials to OMB, typically on 
the first Monday after Labor Day of the year prior to the start of the 
year that the budget request covers. From October to December OMB 
reviews and briefs the President and senior advisors on the proposed 
budget policies and recommends a set of proposals after reviewing all 
agency requests. Budget decisions are passed back to agencies in late 
November and may be appealed. Final budget decisions are transmitted to 
Congress in the President's budget request. 

At the same time an agency is working to formulate a new budget, it is 
executing its approved budget by spending the money Congress has 
appropriated to carry out the objectives of its program legislation. 
During the budget execution phase, agencies sometimes find they need 
more funding than appropriated because of unanticipated circumstances. 
Under such circumstances, agencies may request and Congress may enact a 
supplemental appropriation. 

FAA manages and reports budget decisions in several documents that 
could be used to enhance oversight. The three principal budget 
documents include the annual budget, the budget-in-brief and the 
performance-based budget justification. FAA's annual budget presents 
actual receipts and spending levels for the fiscal year just completed, 
current year estimated receipts and spending, and estimated receipts 
and spending for the upcoming year as proposed by the President. The 
budget-in-brief summarizes the justification for FAA's estimated budget 
by strategic goal. Finally, FAA's performance-based budget 
justification provides a more detailed outline of its planned budget 
according to the Flight Plan's strategic goals and describes the 
expected performance improvements. 

FAA's Budget: 

The fiscal year 2006 budget reports the total funding for all FAA 
programs and provides program and financing information by budget 
account. FAA's budget has four components: operations; facilities and 
equipment; grants-in-aid for airports; and research, engineering, and 
development. There are two sources of FAA funding: the airport and 
airway trust fund, which contains ticket tax and other earmarked 
receipts, and general fund appropriations. In fiscal year 2006, the 
trust fund provides all funding for facilities and equipment; the 
airport improvement grants; and research, engineering and development, 
as well as partial funding for operations. The general fund is also 
used for operations and other, smaller accounts. 

Many different analyses can be done with budget data to identify 
oversight questions. For example, as shown in figure 3, fiscal year 
2000 general fund financing of operations and maintenance increased 
from its pre-2000 level. 

Figure 3: Using Budget Information for Operations Obligations, Trust 
Fund and General Fund: 

[See PDF for image] 

[End of figure] 

Further, figure 4 shows that trust fund outlays have outpaced receipts 
since fiscal year 2002, resulting in a decline in the trust fund 
balance. 

Figure 4: Using Budget Information: Trust Fund Outlays Outpacing 
Receipts Since FY 2002: 

[See PDF for image] 

[End of figure] 

Based on these analyses, some oversight questions could be: 

* What steps are being taken to understand the cost drivers of the 
operations and maintenance portion of budget? 

* What is the desired balance between trust fund and general fund 
financing for FAA operations? 

FAA's Budget-In-Brief: 

FAA's budget-in-brief is a publicly available summary of FAA's budget 
justification. The budget-in-brief summarizes the FAA's annual budget 
request by appropriation and by goal area. It provides committees with 
a quick comparison of resource allocation by goal and program activity 
for the prior year, current year and the budget year. For example, the 
budget-in-brief states that safety is FAA's primary goal and proposes 
spending 71 percent of the fiscal year 2006 request for the safety- 
related goals shown in table 3. For the goal of reducing GA fatal 
accidents, FAA is proposing a decrease from fiscal year 2005 in 
resources for facilities and equipment, and grants-in-aid for airports, 
and in the number of full time equivalent employees devoted to this 
goal. 

Table 3: Estimated Funding to Support FAA's Safety Strategic Goal by 
Performance Goal: 

Dollars in millions. 

Reduce commercial fatal accident rate; 
FY 2004 actual: $7,276,192; 
FY 2005 enacted: $7,669,769; 
FY 2006 request: $7,885,275. 

Reduce general aviation fatal accidents; 
FY 2004 actual: $1,411,095; 
FY 2005 enacted: $2,000,514; 
FY 2006 request: $1,851,296. 

Zero commercial space accidents; 
FY 2004 actual: $13,019; 
FY 2005 enacted: $12,955; 
FY 2006 request: $13,209. 

Total Estimated Funding for Safety; 
FY 2004 actual: $8,700,306; 
FY 2005 enacted: $9,713,239; 
FY 2006 request: $9,749,780. 

Source: FAA's Budget-in-Brief, Fiscal Year 2006. 

[End of table] 

Based on this, potential questions for oversight could be: 

* What changes were made in these areas to permit a reduction in 
funding while still making progress toward the goal of reducing GA 
fatalities? 

* How is the decrease going to affect more ambitious targets for GA 
fatal accident reductions in performance plans? 

* Was funding shifted from reducing GA fatal accidents to a different 
safety-related activity? If so, which activity and why? 

As table 3 shows, at the same time FAA is proposing decreases in 
certain types of spending for reducing GA fatal accidents, FAA is 
proposing budget increases for reducing commercial fatal accident rates 
and achieving zero commercial space accidents. Another potential 
oversight question could therefore be: is FAA proposing increases in 
these other areas--where FAA is meeting its performance targets--while 
proposing decreases in reducing GA fatal accidents, a goal for which 
FAA is not meeting its performance target? FAA's budget-in-brief can be 
accessed on its external Web site at [Hyperlink, 
http://www.faa.gov/about/budget/]. 

FAA's Performance-Based Budget: 

FAA's performance-based budget, first done in fiscal year 2005 and 
submitted to the appropriations committees, is a prominent source of 
both performance and budgetary information on FAA and could also be 
useful for oversight. It highlights FAA's identified resource needs and 
what the agency deems to be the most important performance goals for 
that particular year. One goal of agency performance budgets is to show 
the relationship between resources and incremental improvements in 
performance. Congressional oversight could focus on whether planned 
performance improvements were achieved with the resources provided or, 
if not, raise questions about why they were not achieved. 

For example, FAA's fiscal year 2005 performance-based budget shows a 
request for $10.2 million to reduce GA fatalities through the 
implementation of the Flight Services Automation System (FSAS) and 
Operational and Supportability Implementation System (OASIS). According 
to the budget, FSAS and OASIS will enable flight specialists to more 
efficiently provide weather and flight information, thereby aiding in 
the reduction of accidents through increased pilot awareness of weather 
conditions along the flight route. Committees could use information 
from the performance-based budget to oversee spending on and 
installation of the systems. For example: 

* Was the installation completed within the originally estimated 
funding level? 

* What percentage of GA fatal accidents results from the pilots' 
insufficient knowledge of weather conditions? 

* Are the GA fatality rates decreasing in areas where the installation 
has occurred? 

FAA's Other Long-Term Planning and Budget Documents: 

FAA also produces some long-term planning and budget documents that 
could be helpful for oversight. Intended to integrate and coordinate 
longer-term perspectives and needs of organizations affecting airspace 
usage, these documents are: 

* National Plan of Integrated Airport Systems, 

* Operational Evolution Plan, 

* The Next Generation Air Transportation System Integrated Plan, and: 

* Capital Investment Plan. 

The first three plans were cited by FAA officials as key documents 
presenting FAA's long-term direction. The National Plan of Integrated 
Airport Systems for 2005 to 2009 identifies 3,344 airports that are 
significant to national air transportation and, therefore, eligible to 
receive grants under the FAA's Airport Improvement Program. The plan 
and grant program support the Flight Plan's goals of increased safety 
and greater capacity. The plan describes the condition and performance 
of the airport system according to six performance areas: safety, 
capacity, pavement condition, financial performance, surface 
accessibility, and noise. In addition, the plan provides cost estimates 
for needed improvements to airports by airport type--large, medium or 
small hub primary; no hub primary; non-primary commercial service; 
relievers;[Footnote 7] or general aviation--and by purpose of 
development--safety, security, reconstruction, standards, environment, 
airfield capacity, terminal buildings, ground access, and new airports. 
The projects are not prioritized, but inform the grant decisions for 
the Airport Improvement Program. The National Plan of Integrated 
Airport Systems for 2005 to 2009 can be accessed on FAA's Web site at 
[Hyperlink, http://www.faa.gov/arp/planning/npias/index.cfm?nav=]. 

Based on this plan, some oversight questions could be: 

* How are the projects in the National Plan of Integrated Airport 
Systems selected for airport improvement grants? 

* To what extent have the grant-funded improvements to airports 
achieved performance improvements for the Flight Plan goals of 
increased safety and greater capacity? 

The Operational Evolution Plan, created in collaboration with the 
aviation community, the Department of Defense, the National Weather 
Service and the National Aeronautics and Space Administration, is a 
rolling 10-year tactical implementation plan designed to increase the 
capacity and efficiency of the national airspace system[Footnote 8] by 
approximately 30 percent within its initial 10-year horizon. The plan 
identifies four specific areas for improvement: terminal area, en 
route, and airport congestion; and air traffic management flow 
efficiency. It also identifies milestones for expected improvements at 
each of the airports included in the plan. The Operational Evolution 
Plan can be accessed on FAA's Web site at [Hyperlink, 
http://www.faa.gov/programs/oep/]. 

Based on this plan, some oversight questions could be: 

* Are the milestones for expected improvements realistic and are they 
being met? 

* As airport improvements are completed what has been the impact on 
congestion? Are the changes as great as anticipated? 

The Next Generation Air Transportation System Integrated Plan is a 
multiorganization plan designed to transform the nation's air 
transportation system to meet expected needs in 2025. This plan 
outlines eight transformation strategies that will be researched, 
developed, implemented and maintained by teams composed of federal, 
state, and local governments; quasi-government research institutions; 
universities; and the private sector. For each strategy there is a 
description of the research area and milestones for completion. 

Table 4: Example of a Strategy and Research Area in the Next Generation 
Air Transportation System Integrated Plan: 

Strategy; Develop airport infrastructure to meet future demand; Provide 
a system that meets or exceeds user demand by integrating airport, 
airspace and air traffic management design, development, and 
deployment. Airport infrastructure must address the need to expand in a 
way that meets future capacity while satisfying the other objectives. 
This strategy is intended to provide customers a wide-range of options 
for air transportation in an efficient cost-conscious manner. 

Research areas; Develop requirements and concepts for servicing a 
variety of future demands, from maximizing overall metropolitan area 
capacity to servicing smaller communities. Groundside questions address 
airport access alternatives and associated transportation, security, 
and information systems requirements, such as regional airports and 
city check-in by specific location. 

Source: Next Generation Air Transportation System Integrated Plan. 

[End of table] 

Based on this plan, some oversight questions could be: 

* How do the strategic goals and performance targets in the Flight Plan 
and unit-specific business plans relate to these transformation 
strategies? 

* How were these transformation strategies identified? 

FAA also reports on long-term capital financing options in the Capital 
Investment Plan (CIP), which is a rolling 5-year financial plan that 
allocates planned funding to NAS projects. The Secretary of 
Transportation transmits the CIP to Congress each year at the time of 
the President's annual budget submission. It includes estimated 
expenditures for each line item in the facilities and equipment budget 
for the current fiscal year and for the following 4 years. However, the 
CIP includes only projects that are likely to receive funding rather 
than all initiatives originally considered. 

According to the CIP, a project's planned funding is based on its 
support for the agency's strategic goals and performance targets. As 
such, the CIP is an important oversight tool because it not only 
details estimated expenditures, but also provides the agency's 
rationale for spending federal dollars on specific projects--or a group 
of related projects--and explains how such spending will enhance the 
agency's ability to meet its strategic goals, and ultimately its 
mission. 

Based on this plan, potential questions for oversight could include: 

* Are the projects clearly linked to agency goals and priorities? 

* What other projects could meet these goals and priorities? Why were 
they rejected? 

Cost Accounting Provides Detailed Operating Cost Analysis: 

Financial accountability goes beyond an agency's obtaining an 
unqualified opinion on its annual financial statements. The key to 
financial accountability is obtaining accurate and useful information 
on a timely and ongoing basis to support day-to-day managerial 
decisions and oversight. As a critical part of its new Delphi financial 
management system installation, FAA's cost accounting system (CAS) 
draws upon accounting information in Delphi to provide financial 
information that can be used to monitor ongoing operations as well to 
plan for the future. CAS has been principally implemented in the ATO 
and Commercial Space Transportation, which together comprise over 80 
percent of FAA's budget. FAA's other two lines of business, Aviation 
Safety and Airports are expected to implement CAS in fiscal year 2006. 

CAS takes direct cost data from DOT's financial management system and 
allocates those costs from the organization that incurred the costs to 
the organization, product, or service that benefited from the costs. 
The system allows analysis of costs aggregated within a program, 
activity, location or strategic goal. Allocated costs can also be used 
in an analysis of comparative operating efficiency for different 
operating periods or different locations. An example is a ratio of 
costs to a nonfinancial activity measure, such as cost per day, per 
employee, or per flight. Apparent abnormalities in trends or at 
particular locations may then be investigated. For example, at FAA the 
direct cost of an air traffic controller at a terminal would be 
allocated to airport operations, in proportion to takeoffs and 
landings, which are a major "driver" of those costs. Similarly, the 
indirect cost of a maintenance technician would be allocated to the 
lines of business that benefited from those costs using an appropriate 
allocation base. 

A financial scoreboard in use at FAA regularly tracks trends in these 
unit costs, overhead rates, and other performance measures. Tracking 
these trends is key to identifying operating inefficiencies and, when 
projected to anticipated operating volumes, can help determine future 
financing needs. 

According to FAA, CAS provided labor and overhead cost data which were 
used in the preparation of a competitive sourcing study for ATO flight 
service stations. The cost data were used as a basis to estimate the 
future cost of those existing in-house flight services. Comparison of 
those projected in-house costs to the costs of procuring the services 
from bidders in the private sector resulted in contracting out ATO 
Flight Service Stations in fiscal year 2005 at a projected contract 
savings of about $2.2 billion through fiscal year 2015. FAA has also 
reported that CAS data led to cancellation of a $27 million airport 
weather program and to savings of $7 million from modification of an 
airport radar surveillance program. 

CAS can break down the full costs for the individual activities 
undertaken to provide each of ATO's services[Footnote 9]--En Route, 
Oceanic, Flight Services, and Terminal Services--by location, program 
and function. Using this kind of information, a separate fiscal year 
2004 performance report prepared by ATO displayed unit costs of certain 
activities and services as well as some overall ATO revenue and cost 
trend analyses and other performance measures. The report cited a 
reduction of ATO's total unit cost per flight by $17, or 4.21 percent. 
This type of report is a tool for ongoing congressional oversight, 
addressing key operating issues identified by ATO management. 

Committees could use information from FAA's cost accounting system to 
better understand costs and performance of individual programs, 
activities, or outputs, addressing questions such as: 

* What is the total cost of ATO services per flight? 

* How do this year's costs per flight compare to last year's? 

* How does the per flight cost of traffic controllers compare among 
airports? 

CAS can be used to link costs to strategic performance areas and to 
combine air traffic safety data with financial information. FAA has 
also used cost finding techniques for selected programs during the 
fiscal year 2006 budget cycle to estimate the marginal cost of 
performance, i.e., the incremental results that might be achieved at 
different levels of funding. 

Analytical Agencies and Organizations Can Provide Information and 
Analysis to Enhance Oversight Efforts: 

Through its legislative support agencies--GAO, Congressional Research 
Service and the Congressional Budget Office--and the Department of 
Transportation's Inspector General, congressional committees also have 
access to considerable resources for oversight. See appendix II for a 
summary of additional information resources. 

GAO, as the investigative arm of Congress, examines the use of public 
funds; evaluates federal programs and activities; and provides 
analyses, options, and other assistance to help Congress make effective 
oversight, policy, and funding decisions. Several documents that GAO 
produces on an ongoing basis or as part of a body of work may prove 
useful to congressional committees when setting an oversight agenda. 

* GAO Strategic Plan (2004-2009)[Footnote 10] GAO's strategic plan, 
which has been updated every 2 years since 2000, describes the trends 
and issues that are likely to affect congressional decision makers over 
the 6-year period of the plan. It also provides GAO's plans for 
analyses and other activities to help support Congress's information 
needs. One of GAO's strategic objectives is to support congressional 
and federal efforts to obtain and maintain a safe, secure, and 
effective national physical infrastructure. Several performance goals 
under this objective involve transportation-related issues, including 
assessing efforts to improve safety and security in the nation's 
transportation system and assess the impact of transportation policies 
and practices. As such, oversight committees can look to GAO for 
information on these issues and more. 

* High-Risk Series: An Update[Footnote 11] Since 1990, GAO has 
periodically reported--generally at the start of each new Congress--on 
government operations it identifies as having a high risk of fraud, 
waste, abuse, and mismanagement. Increasingly, the list has grown to 
include programs or agencies that need urgent attention or 
transformation, such as the Department of Homeland Security. In the 
January 2005 update, GAO presented the status of areas previously 
identified as high-risk. These included two involving FAA--FAA 
Financial Management and FAA Air Traffic Control modernization. We 
determined that FAA's progress in improving financial management 
overall, a high-risk area since 1999, has been sufficient to remove it 
from the list. However, while FAA had made progress in addressing root 
causes of problems with its Air Traffic Control modernization, 
originally designated as high-risk in 1995, we maintained the high-risk 
designation. Therefore, the status of FAA's Air Traffic Control 
modernization may be an area for oversight by the Transportation and 
Infrastructure Committee. 

* 21st Century Challenges: Reexamining the Base of the Federal 
Government[Footnote 12] In February 2005, GAO issued a report on 21st 
century challenges facing the nation--including the federal 
government's long-term fiscal imbalance and changing demographics-- 
that suggests the need to reexamine the base of the federal government. 
The report is intended to help Congress address these challenges by 
providing a series of illustrative questions, both generic and for 12 
examination areas that could help support a fundamental and broad-based 
reexamination initiative. One of the 12 examination areas we identified 
is transportation, in which the report describes FAA's challenge in 
addressing the declining revenues in the Aviation Trust Fund and how 
that could affect funding for the agency. Committees could ask the 
related illustrative question: Should the federal government continue 
to provide public financing to stimulate private financing in areas 
such as aviation, where a mix of private and public beneficiaries 
exists? 

In addition, through our review of federal programs and activities, we 
have a large body of work on aviation issues, FAA management, programs, 
and performance. Further, committees can also request additional 
evaluations to address issues of further interest. Recent examples of 
these reports include the following: 

* National Airspace System: Initiatives to Reduce Flight Delays and 
Enhance Capacity Are Ongoing but Challenges Remain;[Footnote 13] 

* Airport and Airway Trust Fund: Preliminary Observations on Past, 
Present, and Future;[Footnote 14] 

* Air Traffic Control: FAA Needs to Ensure Better Coordination When 
Approving Air Traffic Control Systems;[Footnote 15] 

* Air Traffic Control: FAA's Acquisition Management Has Improved, but 
Policies and Oversight Need Strengthening to Help Ensure 
Results;[Footnote 16] 

* Aviation Safety: FAA Needs to Strengthen the Management of Its 
Designee Programs;[Footnote 17] 

* National Airspace System: FAA Has Made Progress but Continues to Face 
Challenges in Acquiring Major Traffic Control Systems;[Footnote 18] 

DOT's OIG works within DOT to promote effectiveness and head off, or 
stop, waste, fraud and abuse in departmental programs through audits 
and investigations. The OIG also consults with Congress about programs 
in progress and proposed laws and regulations. The OIG also publishes 
semiannual reports, which summarize its recent audits and 
investigations. In addition, the OIG annually reports on the top 
management challenges facing DOT. DOT's Top Management Challenges 
report can be found at: [Hyperlink, 
http://www.oig.dot.gov/item.jsp?id=1701]. Three challenges identified 
in the most recent management challenges report by the OIG,[Footnote 
19] relate wholly to FAA. 

* Mitigating flight delays and relieving congestion--actions needed to 
meet demand. The OIG report states that the growth in aviation 
operations has brought an increase in the number of aviation delays, 
with the incidence, rate, and length of delays in the summer of 2005 
approaching 2000 levels, generally regarded as the worst summer of 
aviation delays. The report states that DOT will need to develop a 
toolbox of relief measures to use including new construction, 
technological improvements, procedural changes, administrative 
controls, and market-based solutions. The report also states that new 
runways provide the most increases in capacity, and that DOT and FAA 
will need to ensure the navigation equipment and airspace modifications 
are in place before the eight new runway projects, planned to be 
completed by 2008, are constructed. Finally, FAA will need to continue 
to consider the use of market-based solutions to mitigate congestion, 
such as schedule caps and congestion pricing. 

* Reauthorizing aviation programs--establishing requirements and 
controlling costs are prerequisites for examining FAA financing 
options. The OIG report states that a major focus of the FAA over the 
next year will be preparing to reauthorize a wide range of aviation 
programs and exploring alternative financing mechanisms. Challenges 
facing FAA include (1) controlling costs with major acquisitions by 
delivering new systems that work, are on time, and are within budget, 
and by making decisions on the scope of billion-dollar projects that 
have been delayed for years; (2) getting control of support service 
contracts, reducing associated costs, and following through on the 
implementation of new procedures; (3) establishing requirements for the 
next generation air traffic management system; (4) addressing the 
expected surge in controller attrition and negotiating an affordable 
and equitable bargaining agreement; and (5) completing a cost- 
accounting system to reduce costs and improve operations. 

* Aviation safety--developing effective oversight programs for air 
carrier operations, repair station maintenance, and operational errors. 
The OIG report states that the FAA maintains an impressive safety 
record, but still faces challenges with air carrier and repair station 
oversight as a result of financial uncertainty, competition from low- 
cost carriers, and rebounding air traffic. Further, the report states 
that the FAA experienced an increase in the number of reported 
operational errors--when planes come too close together in the air-- 
over the past year, and at additional locations where operational 
errors were not reported. 

Regular Communication and Timely Access to Useful Information Can 
Enhance Oversight: 

Effective communication among agency officials, Members of Congress and 
congressional staff is needed to ensure that information agencies 
provide meets committee needs. While considerable information resources 
are available, they may not be available in a manner that is useful to 
committees. We have previously reported, in a review of interactions 
between the Congress and other executive branch agencies, that although 
agencies collect and produce a great deal of useful information, much 
of it did not reach the interested congressional committees, and the 
information that did reach the committees was difficult to digest, too 
highly aggregated, or was received too late to be useful.[Footnote 20] 
While FAA provides a great deal of information on its Web site, 
enhancing access to agency information using technology can improve the 
timeliness and usefulness of agency information to the Congress. For 
example, information alerts and summaries from the agency could be 
effective information sharing tools. Further, regular meetings between 
committees, staff and agency officials could identify the committee's 
principal oversight objectives, provide a forum to discuss the issues, 
and develop the best approaches to meet them. 

Access to Timely and Useful Agency Information Could Improve Committee 
Oversight: 

Providing relevant agency information using technology solutions can 
improve committee access and minimize the effort required of agency 
staff. House Transportation and Infrastructure Committee staff 
indicated that FAA has a large quantity of information available and 
effective communication between the staff and the agency, but it is 
also interested in using technology to gain additional, timely access 
to agency data when conducting oversight. From our discussions with 
committee and agency staff, improving access through technology 
solutions could meet the needs of both groups. Access to information 
could be improved by: 

* A For Congress page on FAA's Web site, 

* A Frequently Asked Questions section on the For Congress Web site, 

* A Web site subscription service notifying committee staff when 
relevant information has been updated, and: 

* Moderated access rights to selected FAA documents. 

Several applications allowing Web-based access to information could 
benefit both the committee seeking information as well as the agency 
that provides information. For example, as a result of our discussions 
with committee and agency staff, FAA has initiated a For Congress page 
on its Web site. The page provides a single point of access for 
information committee staff identified in our discussions as relevant 
for oversight, as shown in figure 5. In addition, following a 
recommendation contained in our draft report, FAA added a subscription 
e-mail service to notify congressional users about new information 
available, such as new press releases and speeches by agency officials. 
We had pointed out that a subscription service could enhance the 
timeliness in which Congress receives information for oversight. For 
example, a subscription service notifying committees when notices of 
proposed rulemakings and other regulatory or policy guidance documents 
are published would give committees relevant information in a timely 
manner. 

Figure 5: FAA's For Congress Web site Page: 

[See PDF for image] 

[End of figure] 

The For Congress Web site could be further improved by including a 
Frequently Asked Questions (FAQ) section to provide information often 
requested by committees. According to a manager within FAA, the agency 
provides a great deal of budget information to Congress in response to 
questions for the record (QFRs) that are submitted by the 
appropriations committees of both chambers. However, the agency 
response is shared only with the requesting committee, even though it 
could be useful to all committees involved in oversight. In addition, 
many of these QFRs, as well as other requests for information, are 
handled in an ad hoc manner by individual FAA officials. When similar 
requests for information arrive, FAA officials often have to create an 
entirely new response. An FAA official said they had a general FAQ 
section, available on the bottom of all FAA Web pages, but it does not 
include the QFRs, or other questions regarding FAA planning, budgeting 
or performance. A FAQ section on the For Congress Web page could 
minimize agency efforts by allowing it to post requested information 
once, rather than tying up valuable time and resources by repeatedly 
responding to similar questions. In addition, sharing agency responses 
to congressional information requests could enable quick access to 
information likely to assist in other congressional efforts. 

Other uses of technology, such as granting moderated access rights to 
selected FAA documents, could also enhance committee access to 
information. Moderated access would allow increased access of FAA 
information to committee staff, beyond what is available on the 
agency's public Web site. To provide moderated access, individual 
committee staff would be issued accounts or use passwords to obtain 
access to information restricted to congressional users. The content 
allowed through the moderated access would be negotiated between the 
agency and committee. One way for committees to identify documents that 
are available would be to provide increased search capabilities on the 
FAA Web site. Increasing the Web site search capability would allow 
committees to identify what information exists, even if the entire 
document content was not immediately available. Using this knowledge of 
what information exists, committees could better identify exactly which 
of the information they would like to have made available through 
moderated access. 

Regular Meetings Between Committees and Agency Officials Could Provide 
a Forum to Discuss Oversight Issues: 

We have previously reported in a review of interactions between 
Congress and other executive branch agencies, that communication 
between committees and agency staff is often one-way, with little 
opportunity for direct discussion. According to Transportation and 
Infrastructure Committee staff, they generally contact the agency when 
they have a specific question, on an ad hoc basis. Transportation and 
Infrastructure Committee staff and experts we interviewed said constant 
communication with agencies within the committee's jurisdiction, both 
formal and informal, could contribute to successful oversight. 
Developing a routine schedule of meetings could create a degree of 
certainty for both parties that issues important to each will be 
discussed. The timing, frequency, attendees, and agenda items could be 
negotiated in advance by both parties. Meetings could serve several 
purposes--they could be used to identify the committee's principal 
oversight objectives, provide a forum to discuss the issues, and 
develop the best approaches to meet them. 

Agency officials that we spoke with also supported regular meetings 
with committees. An FAA official said establishing an effective way to 
regularly communicate with Transportation and Infrastructure Committee 
staff would better enable FAA to directly inform the committee about 
emerging issues, whereas now the committee often relies on third party 
analysis and information. They understood that such meetings were not 
only opportunities for the committee to improve its oversight capacity, 
but also were opportunities for the agency to identify issues that may 
have received less attention and to help put the large amount of 
performance, budget, and financial information in a broader context so 
that committees can better understand the agency's operations. The 
potential benefits of regular committee and agency staff meetings were 
evident during the constructive discussions coordinated by GAO for this 
report. 

Conclusions: 

In order to conduct effective oversight of federal agencies and 
programs, congressional committees need access to timely and useful 
information. The types of information we identified as available for 
FAA management could also be used for oversight. Moreover, these types 
of information are produced routinely by all federal agencies and could 
be used by committees of jurisdictions to regularly monitor agency 
performance. 

However, as government grows more complex and agencies produce more 
information, it becomes harder for Congress to access, analyze, and 
summarize this information to develop its policy positions and 
legislative enactments. New ways must be continually found to use 
emerging technology and approaches to make agency information 
transparent and readily available. But despite the availability of 
information, and in FAA's case, its public accessibility, more can be 
done to make this information readily accessible to congressional 
committees. In particular, improving access to information via 
technology solutions like those described in this report could allow 
congressional committees to access information as needed and minimize 
the number of duplicative information requests agencies are asked to 
respond to. In addition, establishing a schedule of routine meetings 
will provide congressional committees and agency officials with the 
opportunity to discuss in-depth the issues and challenges facing all 
federal agencies, including FAA. Establishing a collaborative approach 
to oversight will allow more consistent, rather than ad hoc, committee 
oversight. Importantly, these findings constitute lessons learned that 
may be transferable to other agencies. 

Recommendations for Executive Action: 

We recommend the Secretary of the Department of Transportation, direct 
the Administrator of FAA, to take the following actions to further 
enhance committee access to FAA information: 

* Continue to work with committee staff to further refine the For 
Congress Web site by improving the flow of information and taking 
advantage of emerging technologies; 

* Include a Frequently Asked Questions page on the For Congress site, 
allowing oversight committees to quickly find answers to commonly 
requested items relevant to Congress; 

* Add moderated access on the For Congress Web site to allow access to 
information that should be made available to congressional committees, 
yet may not be appropriate for the general public; 

* Consider offering regular meetings between the Members of the 
committee and key staff with senior FAA executives to address matters 
of mutual concern. 

Agency Comments: 

We provided a draft of this report to the Secretary of the Department 
of Transportation for review and comment. We received comments from FAA 
officials, including the Deputy Assistant Administrator for Financial 
Services, who indicated that they were pleased to serve as our case 
study and they would consider the report's recommendations as they 
continue to strive for excellence in fulfilling the Congress' 
information needs. The officials said that they endeavor to ensure 
Congress is fully informed of FAA's planned and ongoing programs and 
activities, relying on a staff of dedicated professionals who know and 
understand the needs of Congress to maintain a steady flow of useful 
information to Congress. The officials also said that they make 
extensive use of technology to enhance the information available to 
Congress. They noted that a considerable amount of information is 
available to Members of Congress and their staff in a section of FAA's 
Web site dedicated to serving the information needs of Congress--as our 
report notes, an improvement developed as a result of discussions 
between agency and congressional staff during our review. In addition, 
they indicated they had created a subscription e-mail service to enable 
committee staff to be notified when information is updated on their Web 
site, such as with new press releases and speeches by agency officials. 
As noted earlier, this action was recommended in our draft report; 
consequently, since FAA has taken these steps, we have eliminated the 
recommendation from the final report. 

As agreed with your office, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
after its issuance date. At that time, we will send copies of this 
report to the Secretary of Transportation and will make copies 
available to others upon request. In addition, the report will be 
available at no charge on GAO's Web site at [Hyperlink, 
http://www.gao.gov]. 

Please contact me on (202) 512-6543 if you or your staff have any 
questions about this report. Contact points for our Office of 
Congressional Relations and Public Affairs may be found on the last 
page of this report. Other contacts and staff acknowledgments are 
listed in appendix IV. 

Sincerely yours, 

Signed by: 

Bernice Steinhardt: 
Director, Strategic Issues: 

[End of section] 

Appendixes: 

Appendix I: Objectives, Scope and Methodology: 

The objectives of this report were to identify (1) information FAA 
produces that could enhance congressional oversight; (2) other 
available information resources that could enhance congressional 
oversight; and, (3) how committee access to FAA's information could be 
improved to enhance timeliness and usefulness. 

To identify the information and delivery mechanisms that would enhance 
the committee's ability to oversee FAA programs and management, we met 
with staff from the U.S. House of Representatives Committee on 
Transportation and Infrastructure and its subcommittee on Aviation. 

To identify information produced by FAA that could enhance oversight, 
we met with FAA senior officials from numerous offices, including 
several lines of business--Airports; Air Traffic Organization; and 
Aviation Safety--and staff offices--Aviation Policy, Planning and 
Environment; Financial Services; Government and Industry Affairs; Human 
Resources and Management. In addition, we met with officials from the 
Chief Information Office/Office of Information Services and the Office 
of Inspector General for the Department of Transportation. 

To identify information resources external to FAA that could enhance 
congressional oversight, we met with officials from other government 
entities such as the Congressional Research Service, the General 
Service Administration's FirstGov initiative, and the Office of 
Management and Budget. In addition, we met with technology 
representatives from Lexis-Nexis. Finally, we attended meetings with 
representatives from the Mercatus Center, CATO Institute, and the 
Heritage Foundation, hosted by the House Committee on Transportation 
and Infrastructure. 

In addition, we reviewed FAA performance, budget and financial 
documents and FAA's Web site. We also reviewed reports and evaluations 
produced by analytical agencies and organizations and prior GAO work in 
this area. 

Written comments from FAA are included in appendix II. We conducted our 
work from September 2004 through November 2005 in accordance with 
generally accepted government auditing standards. 

[End of section] 

Appendix II: Analytical Agencies and Organizations Can Provide 
Information and Analysis to Enhance Oversight Efforts: 

Table 5: Analytical Resource for Congressional Oversight, as 
Illustrated by FAA Information: 

GAO; www.gao.gov; 
* GAO Strategic Plan (2004-2009) (GAO-04-534SP). GAO's strategic plan, 
which has been updated every 2 years since 2000, describes the trends 
and issues that are likely to affect congressional decision makers over 
the 6-year period of the plan. It also provides GAO's plans for 
analyses and other activities to help support Congress's information 
needs. One of GAO's strategic objectives is to support congressional 
and federal efforts on a safe, secure, and effective national physical 
infrastructure. Several performance goals under this objective involve 
transportation-related issues, including assessing efforts to improve 
safety and security in the nation's transportation system and the 
impact of transportation policies and practices. As such, committee 
oversight staff can look to GAO for support on these issues and more. 
GAO's strategic plan can be found at: http://www.gao.gov/sp.html; 
* High-Risk Series: An Update (GAO-05- 207). Since 1990, GAO has 
periodically reported--generally at the start of each new Congress--on 
government operations it identifies as having a high risk of fraud, 
waste, abuse, and mismanagement. Increasingly, the list has grown to 
include programs or agencies that need urgent attention or 
transformation, such as the Department of Homeland Security. In the 
January 2005 update, GAO presented the status of areas previously 
identified as high-risk. These included two involving FAA-- FAA 
Financial Management and FAA Air Traffic Control modernization. We 
determined that FAA's progress in improving financial management 
overall, a high-risk area since 1999, has been sufficient to remove it 
from the list. However, while FAA had made progress in addressing root 
causes of problems with its Air Traffic Control modernization, 
originally designated as high-risk in 1995, we maintained the high-risk 
designation. Therefore, the status of FAA's Air Traffic Control 
modernization may be an area for oversight by the Transportation and 
Infrastructure Committee staff. GAO's High Risk Series: An Update can 
be found at: http://www.gao.gov/docsearch/featured/highrisk.html; 
* 21st Century Challenges: Reexamining the Base of the Federal 
Government (GAO-05-325SP). In February 2005, GAO issued a report on 
21st century challenges facing the nation--including the federal 
government's long- term fiscal imbalance and changing demographics--
that suggests the need to reexamine the base of the federal government. 
The report is intended to help Congress address these challenges by 
providing a series of illustrative questions, both generic and for 12 
examination areas, that could help support a fundamental and broad-
based reexamination initiative. One of the 12 examination areas we 
identified is transportation, in which the report describes FAA's 
challenge in addressing the declining revenues in the Aviation Trust 
Fund and how that could affect funding for the agency. Committee staff 
could use the related illustrative question--should the federal 
government continue to provide public financing to stimulate private 
financing in areas such as aviation where a mix of private and public 
beneficiaries exists? GAO's 21st Century Challenges Report can be found 
at http://www.gao.gov/index.html; In addition, through our review of 
federal programs and activities, we have a large body of work on 
aviation issues, FAA management, programs, and performance. Further, 
committee staff can also request additional evaluations to address 
issues of further interest. Recent examples of these reports include: 

* National Airspace System: Initiatives to Reduce Flight Delays and 
Enhance Capacity Are Ongoing but Challenges Remain (GAO-05-755T); 
* Airport and Airway Trust Fund: Preliminary Observations on Past, 
Present, and Future (GAO-05-657T); 
* Air Traffic Control: FAA Needs to Ensure Better Coordination When 
Approving Air Traffic Control Systems (GAO-05-11); 
* Air Traffic Control: FAA's Acquisition Management Has Improved, but 
Policies and Oversight Need Strengthening to Help Ensure Results (GAO-
05-23); 
* Aviation Safety: FAA Needs to Strengthen the Management of Its 
Designee Programs (GAO-05-40). 

DOT's Inspector General; www.oig.dot.gov; DOT's OIG works within DOT to 
promote effectiveness and head off, or stop, waste, fraud and abuse in 
departmental programs through audits and investigations. The OIG also 
consults with Congress about programs in progress and proposed laws and 
regulations. Twice a year, the OIG also publishes semiannual reports, 
which summarize its recent audits and investigations. In addition, the 
OIG annually reports on the top management challenges facing DOT. DOT's 
Top Management Challenges report can be found at: 
http://www.oig.dot.gov/item.jsp?id=1701. Three challenges identified in 
the most recent management challenges report by the OIG[A] relate 
wholly to FAA; 
* Mitigating flight delays and relieving congestion-- actions needed to 
meet demand. The OIG report states that the growth in aviation 
operations has brought an increase in the number of aviation delays. 
The incidence, rate, and length of delays this past summer is 
approaching 2000 levels, which was generally regarded as the worst 
summer of aviation delays. The report states that DOT will need to 
develop a toolbox of relief measures, including construction, 
technological improvements, procedural changes, administrative 
controls, and market-based solutions, that can be used as appropriate. 
The report also states that new runways provide the most increases in 
capacity, and that DOT and FAA will need to ensure the navigation 
equipment and airspace modifications are in place before the eight 
runway projects, planned to be completed by 2008, are constructed. 
Finally, FAA will need to continue to consider use of market-based 
solutions to mitigate congestion, such as schedule caps and congestion 
pricing; 
* Reauthorizing aviation programs--establishing requirements and 
controlling costs are prerequisites for examining FAA financing 
options. The OIG report states that a major focus of the FAA over the 
next year will be preparing to reauthorize a wide range of aviation 
programs and explore alternative financing mechanisms. Challenges 
facing FAA include: (1) controlling costs with major acquisitions by 
delivering new systems that work, are on time, and are within budget, 
and making decisions on the scope of billion-dollar projects that have 
been delayed for years; (2) getting control of support service 
contracts, reducing associated costs, and following through on the 
implementation of new procedures; (3) establishing requirements for the 
next generation air traffic management system; (4) addressing the 
expected surge in controller attrition and negotiating an affordable 
and equitable bargaining agreement; and (5) completing a cost-
accounting system to reduce costs and improve operations; 
* Aviation safety--developing effective oversight programs for air 
carrier operations, repair station maintenance, and operational errors. 
The OIG report states that the FAA maintains an impressive safety 
record, but still faces challenges with air carrier and repair station 
oversight as a result of financial uncertainty, competition from low- 
cost carriers, and rebounding air traffic. Further, the report states 
that the FAA experienced an increase in the number of reported 
operational errors--when planes come too close together in the air-- 
over the past year, and additional locations where operational errors 
were not reported. 

Program Assessment Rating Tool (PART); www.whitehouse.gov/omb/; PART is 
a diagnostic tool created as a central component to the President's 
Management Agenda, and is intended to assess and improve program 
performance and results by providing a consistent approach to 
evaluating the management and performance of federal programs. It is 
used by the Office of Management and Budget to conduct oversight. PART 
evaluates a program's (1) purpose and design, (2) strategic planning, 
(3) program management, and (4) program results (e.g., whether a 
program is meeting its long-term and annual goals).[B] PART has been 
used to assess five FAA programs from the fiscal year 2006 budget; 
* Air traffic services; 
* Grants-in-aid for airports; 
* Facilities and equipment; 
* Regulation and certification; 
* Research, engineering and development. 

The President's Management Agenda (PMA); www.results.gov; The 
President's Management Agenda identifies five governmentwide goals to 
improve federal management and deliver results. The goals are strategic 
management of human capital, competitive sourcing, improved financial 
performance, expanded electronic government, and budget and performance 
integration. The Executive Branch Management Scorecard tracks how well 
the departments and major agencies are executing the five 
governmentwide initiatives. The scorecard employs a stoplight grading 
system: green for success, yellow for mixed results, and red for 
unsatisfactory. The Department of Transportation, of which FAA is a 
part, received a rating of green for the strategic management of human 
capital, competitive sourcing, expanded electronic government and 
budget and performance integration, and a rating of red for improved 
financial performance in the September 2005 ratings. 

Congressional Research Service (CRS); www.crs.gov; CRS, a department of 
the Library of Congress, is a nonpartisan analytical, research, and 
reference arm for Congress with the mission to support an informed 
national legislature. CRS serves Congress throughout the legislative 
process by providing comprehensive and reliable legislative research, 
analysis, and information services that are timely, objective, 
nonpartisan, and confidential. CRS is organized into five 
interdisciplinary research divisions: American Law; Domestic Social 
Policy; Foreign Affairs, Defense and Trade; Government and Finance; and 
Resources, Science and Industry. 

Recent CRS reports related to the FAA include: 

* Aviation Taxes and Fees: Major Issues (Order Code RS21321); 
* Avoiding Gridlock in the Skies: Issues and Options for Addressing 
Growth in Air Traffic (Order Code RL32707); 
* Federal Transportation Funding: Selected Programs Fiscal Years 1994-
2004 (Order Code RL32472); 
* Fiscal Year 2006 Appropriations for the Department of Transportation 
(Order Code RL32945); 
* Vision 100: An Overview of the Century of Aviation Reauthorization 
Act (Pub. L. No. 108-176) (Order Code RL32498). 

Congressional Budget Office (CBO); www.cbo.gov; CBO is a nonpartisan 
legislative branch agency that produces material to inform 
congressional decisions on spending and taxes. Specifically, CBO 
publishes cost estimates and mandate statements for congressional 
bills, reports needed for the budget process, budgetary and economic 
analytical studies, policy briefs, background papers, and a monthly 
budget review of the fiscal activity of the government. CBO is 
organized into six divisions: budget analysis, heath and human 
resources, macroeconomic analysis, microeconomic studies, national 
security, and tax analysis; CBO publications containing information on 
FAA include: 

* Budget Options (February 2005); 
* Financing Small Commercial-Service Airports: Federal Policies and 
Options (April 1999); Examples of relevant CBO cost estimates include: 

* H.R. 1496, Return of General Aviation to Ronald Reagan Washington 
National Airport Act of 2005 (May 4, 2005); 
* H.R. 2115, Vision 100-Century of Aviation Reauthorization Act (Dec. 
9, 2003). 

Think Tanks; Think tanks engage in a range of policy-related 
activities, and comprise a diverse set of institutions that have varied 
organizational forms. They could provide information and research to 
enhance congressional oversight. 

Industry, Interest and User Groups; Industry, interest and user groups 
are public and private organizations involved in the aviation industry 
that could provide research and information to inform committee staff 
on oversight issues. 

Source: GAO. 

[A] Top Management Challenges: Department of Transportation, Nov. 15, 
2005, PT-2006-007. 

[B] For GAO's assessment of OMB's PART, see GAO, Performance Budgeting: 
PART Focuses on Program Performance, but More Can Be Done to Engage 
Congress, [Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-28] 
(Washington, D.C.: Oct. 28, 2005) and GAO, Performance Budgeting: 
Observations on the Use of OMB's Program Assessment Rating Tool for the 
Fiscal Year 2004 Budget, [Hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-04-174] (Washington, D.C.: Jan. 30, 2004). 

[End of table] 

[End of section] 

Appendix III: Financial Statements Provide Insights into Agency 
Financial Management and Resources: 

FAA's annual financial statements can be used to analyze the agency's 
operating results and its financial position. Most of this analysis 
involves looking at how various individual reported amounts interrelate 
or represent the agency as a whole, and how those amounts or 
relationships change from period to period. The historical information 
presented can establish a baseline for estimates of future operations 
and funding needs. 

Agency financial information can be valuable for: 

* facilitating an understanding of an agency's operations; 

* providing a common database for the development, analysis, and debate 
of alternative policies; 

* supporting an historical perspective from which to evaluate future 
plans, budgets, and spending proposals; 

* assessing agency accountability for actual results when compared to 
budgets; and: 

* evaluating program costs. 

Further information regarding federal financial statements can be found 
in a guide to the annual financial report of the U.S. Government, 
published recently by GAO. This guide can be helpful to Congress and 
taxpayers in evaluating both governmentwide financial reports and those 
of individual agencies.[Footnote 21] 

FAA's Balance Sheet: 

FAA's balance sheet shows an end-of-the-year view of its overall 
financial position, its assets (what it owns), its liabilities (what it 
owes), and the difference between the two (its net position). A wide 
variety of analyses can be applied to information presented in FAA's 
consolidated balance sheets for fiscal years 2003 and 2004, which are 
presented in Figure 6. 

Figure 6: FAA's Consolidated Balance Sheets for Fiscal Years 2003 and 
2004: 

[See PDF for image] 

[End of figure] 

Committee staff could use information from FAA's balance sheet to 
facilitate a better understanding of the agency's financial position, 
addressing questions such as: 

* What are FAA's largest asset and liability categories? 

* What is the makeup of FAA's assets and liabilities? 

* What future funding may be required to replace deteriorating 
operating assets and to satisfy long-term liabilities? 

For example, as shown in Figure 7, FAA's two largest asset categories 
are property, plant, and equipment valued at about $14.5 billion and 
investments valued at about $10.3 billion. For additional information 
about the makeup of these assets, the balance sheet refers readers to 
the related notes. Referring to the related note 6, one can learn that 
the acquisition value (cost) of personal property (e.g. equipment) 
increased by $1.3 billion, or 10 percent, from fiscal year 2003 to 
fiscal year 2004, and that the sizeable increase in the reported cost 
of property, plant, and equipment includes new acquisitions of National 
Airspace System equipment. The balance sheet and notes also show that 
FAA has significant amounts invested in the Airport and Airway Trust 
Fund but that the balance of these investments fell during fiscal year 
2004. A possible inquiry to the FAA might address a relationship 
between the investment balance and additions to property, plant and 
equipment. Also disclosed in note 6, the accumulated depreciation of 
each asset class is one potential indicator of the relative 
deterioration of those assets. Accumulated depreciation is ultimately 
limited to the original acquisition value of an asset, and 
substantially depreciated assets may possibly soon require funding for 
their replacement. 

Figure 7: Composition of FAA's Assets and Liabilities, as of September 
30, 2004: 

[See PDF for image] 

[End of figure] 

The balance sheet also indicates a significant percentage increase in 
accounts receivable that are not intragovernmental transactions among 
federal entities. Though less significant than some of the other 
amounts shown in the balance sheet, such an increase might warrant a 
follow-up discussion with FAA regarding its cause and whether this 
indicates a new trend that will require funding from additional 
appropriations in the future. 

Statement of Net Cost: 

FAA's statement of net cost is intended to show how much it costs 
taxpayers to operate FAA. Net cost is calculated by subtracting any 
earned revenues from gross cost, which include program costs as well as 
administrative costs, resulting in FAA's costs to taxpayers. As shown 
in Figure 8, FAA's statement of net costs presents cost information for 
each of its four major lines of business - air traffic organization, 
regulation and certification[Footnote 22], airports, and commercial 
space transportation --and two categories that are not lines of 
business, including agency overhead. 

Figure 8: FAA's Consolidated Statements of Net Cost for Fiscal Years 
2003 and 2004: 

[See PDF for image] 

[End of figure] 

Committee staff could use information from FAA's statement of net cost 
to enhance their understanding of possible future cost trends, 
addressing questions such as: 

* How much did FAA's net cost increase or decrease from the prior 
fiscal year? 

* Which of FAA's programs experienced the largest increase and which 
experienced the largest decrease in net cost from the prior fiscal 
year? 

* Which of FAA's programs accounted for most of its net cost? 

For example, FAA's statements of net cost for fiscal years 2003 and 
2004 show that other than a nearly $200 million (6.8 percent) increase 
in net costs related to the airport program, operating results were 
substantially consistent for those two years, indicating that future 
operating costs of FAA's other business lines may be stable. Based on 
the airports' program increase, a reader may decide to perform further 
analysis using FAA's statements of net cost from prior fiscal years. As 
shown in Figure 9, further analysis of the airport program over time 
indicates that net costs for the program have doubled over the last 
four fiscal years. This may prompt questions to determine the causes 
for the increase, whether this growth was expected and, going forward, 
how much the airport program should continue to grow. 

Figure 9: Net Costs for FAA's Airport Program for Fiscal Years 2000 
through 2004: 

[See PDF for image] 

[End of figure] 

FAA provides additional information about the distribution of net costs 
in note 12 of its financial statements, which is summarized in Figure 
10. This information shows that FAA's most costly line of business was 
air traffic organization, which accounted for about two-thirds of its 
net costs. The net cost information provided in note 12 also shows that 
72 percent of FAA's net costs were used to support its strategic goal 
of safety. Using the information about net costs disclosed by FAA, a 
reader can consider whether FAA's current cost distribution 
appropriately reflects its strategic goals and congressional 
priorities, or whether resources should be redirected. 

Figure 10: Composition of FAA's Net Costs, for Fiscal Year 2004, by 
Business Line and Strategic Goal: 

[See PDF for image] 

[End of figure] 

Statement of Changes in Net Position: 

FAA's statement of changes in net position shows how it financed its 
operations for the fiscal year. It shows the agency's net position at 
the beginning of the fiscal year, the major inflows and outflows of 
funds that caused the net position to change during the year, and the 
ending net position. FAA's statements of changes in net position for 
fiscal years 2003 and 2004 are displayed in figure 11. 

Figure 11: FAA's Consolidated Statements of Changes in Net Position for 
Fiscal Years 2003 and 2004: 

[See PDF for image] 

[End of figure] 

Committee staff could use information from the statement of changes in 
net position to facilitate a better understanding of FAA's financial 
position and direction, addressing questions such as: 

* What were FAA's primary financing sources and how much did they 
increase or decrease? 

* To what extent did FAA's excise tax revenue cover its net costs? 

* Did FAA's net position improve or deteriorate? 

For example, FAA's statement of changes in net position shows that FAA 
is primarily financed through excise tax revenue and appropriations. 
However, fiscal year 2004 appropriations used decreased by about 20 
percent from the previous year, while excise taxes and associated 
revenue rose by about three percent, conditions that if analyzed in 
greater detail, might reveal important information about the agency's 
future aggregate spending or income trends. For example, the decrease 
from fiscal year 2003 to 2004 in appropriations used approximated the 
amount associated with FAA's 2003 transferred operations, leading a 
reader to infer that the two are related. However, analyzing the trend 
of this information going forward may tell a different story about the 
agency's direction. If the trend indicated by FAA's statement of 
changes in net position for fiscal year 2004 continues, FAA may be able 
to meet more of its costs through service fees and excise taxes rather 
than appropriated funds. Also, the percentage composition of financing 
sources can be compared to that of other agencies or programs. 

Statement of Budgetary Resources: 

The statement of budgetary resources presents the amount of budgetary 
resources available during the fiscal year and the status of those 
resources at the end of the year. This statement provides basic 
information about budget authority made available from appropriations, 
fee collection, and, when applicable, borrowing authority. The 
relationship of obligations to outlays is also presented for the fiscal 
year. FAA's statements of budgetary resources for fiscal years 2003 and 
2004 are displayed in figure 12. 

Figure 12: FAA's Consolidated Statements of Budgetary Resources for 
Fiscal Years 2003 and 2004: 

[See PDF for image] 

[End of figure] 

Committee staff could use information from FAA's statement of budgetary 
resources to obtain an overview of the agency's financial position and 
direction, addressing questions such as: 

* Were there increases or decreases in budget authority, unobligated 
budgetary resources, total budgetary resources, obligations incurred, 
and/or disbursements? 

* To what extent were current fiscal year budgetary resources used? 

For example, FAA's statements of budgetary resources for fiscal years 
2003 and 2004 show that budgetary authority, budgetary resources, 
obligations incurred, and disbursements all increased in fiscal year 
2004, indicating a possible expansion in FAA's overall activities for 
the year. However, FAA's budgetary resources increased at a faster pace 
than outlays and obligations, which might indicate a change in FAA's 
budgetary needs that should be analyzed further. 

FAA provides additional information about the use of its budgetary 
resources in the required supplementary information section of its PAR, 
which includes a schedule of budgetary resources by major fund type. As 
shown in figure 13, an analysis of this schedule shows that the 
operations fund uses the most budgetary resources followed by the 
grants-in-aid to airports fund and the facilities and equipment fund. 
In addition, readers may compare the fiscal year 2004 schedule of 
budgetary resources by major fund type to schedules for prior years. A 
comparison of the fiscal year 2003 and 2004 schedules included in the 
2004 PAR shows that budgetary resources for facilities and equipment 
grew by 3.8 percent, compared to 8.1 percent growth for grants and 5.0 
percent growth for operations. This type of analysis allows for 
consideration as to whether FAA's current use of budgetary resources is 
efficient and reflects congressional priorities. 

Figure 13: Composition of Budgetary Resources, by Major Fund Type: 

[See PDF for image] 

[End of figure] 

Statement of Financing: 

The statement of financing reconciles the resources used to finance an 
agency's operations for each fiscal year using budgetary accounting 
with the net cost of operations determined using the accrual basis of 
accounting. It explains the differences between an agency's obligations 
of budget authority as reported in budget documents and the statement 
of budgetary resources, and the net cost of its operations as shown in 
the statement of net cost, indicating the various categories of 
transactions that are considered when preparing one of those statements 
but not the other. The statement illustrates the link between budgetary 
accounting (primarily cash basis), which records obligations when goods 
and services are ordered, and financial (accrual basis) accounting, 
which records expenses when goods are consumed and services are 
received in fulfillment of the agency's objectives. FAA's fiscal year 
2003 and 2004 statements of financing are shown in figure 14. 

Figure 14: FAA's Consolidated Statements of Financing for Fiscal Years 
2003 and 2004: 

[See PDF for image] 

[End of figure] 

Committee staff could use information from the statement of financing 
to facilitate an understanding of FAA's financial position and 
direction, addressing questions such as: 

* How much of FAA's net costs were due to the depreciation of its 
assets? 

* How much did FAA spend on capitalized fixed assets? 

For example, FAA's statements of financing for fiscal years 2003 and 
2004 show an increase of 29 percent in resources used to acquire 
assets, transactions which affect budgetary resources but are not shown 
on the statement of net costs until they are used up or depreciated, in 
the case of property, plant, and equipment. As a result, additional 
oversight may be warranted for the increase in resources being used to 
finance the acquisition of assets. 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgements: 

GAO Contact: 

Bernice Steinhardt on (202) 512-6543 or [Hyperlink, 
steinhardtb@gao.gov]. 

Acknowledgments: 

In addition to the contact names above, Linda Calbom, Director; 
Christine Bonham, Assistant Director; Elizabeth Curda, Assistant 
Director; Jack Warner, Assistant Director; Kevin J. Conway, Fred Evans, 
Benjamin Licht, and Chelsa Gurkin made significant contributions to 
this report. 

(450362): 

FOOTNOTES 

[1] GAO, Program Evaluation: Improving the Flow of Program Information 
to the Congress, GAO/PEMD-95-1 (Washington, D.C.: Jan. 30, 1995) and 
GAO, Managing For Results: Views on Ensuring the Usefulness of Agency 
Performance Information to Congress, GAO/GGD-00-35 (Washington, D.C.: 
January 2000). 

[2] GAO previously issued a guide to assist in congressional review of 
federal departments' strategic plans that includes a number of 
questions congressional staff may use to initiate discussion with the 
department and to identify ways to improve the department's strategic 
plans. GAO, Agencies' Strategic Plans Under GPRA: Key Questions to 
Facilitate Congressional Review, GAO/GGD-10.1.16 (Washington, D.C.: May 
1997). 

[3] The primary mission of the ATO, one of FAA's four business lines, 
is to move air traffic safely and efficiently. ATO's customers are 
commercial and private aviation and the military. 

[4] General aviation comprises a diverse range of aviation activities, 
from single-seat homebuilt aircraft, helicopters, balloons, single and 
multiple engine land and seaplanes, to extended range turbojets. 

[5] According to FAA's Fiscal Year 2004 Performance and Accountability 
Report, an operational error occurs when controllers fail to apply or 
follow the procedures that enforce separation and allow aircraft to end 
up too close to each other or to an obstruction. FAA differentiates 
between technical violations and more severe operational errors, and 
includes only the severe operational errors for the performance measure 
to reduce operational errors. 

[6] FFMIA requires that an agency shall implement and maintain 
financial management systems that comply substantially with Federal 
financial management systems requirements, applicable Federal 
accounting standards, and the U.S. Government Standard General Ledger 
at the transaction level. 

[7] According to the National Plan of Integrated Airport Systems, 
relievers are high capacity general aviation airports located in 
metropolitan areas. 

[8] The national airspace system consists of a network of navigational 
aids and a number of air traffic control facilities designed to operate 
in conjunction with the various defined classes of airspace. These 
classes are subdivided into controlled, uncontrolled, special use, and 
other airspace categories. 

[9] ATO's services include: (1) En Route, the monitoring of aircraft 
during flight provided by 21 Air Route Traffic Control Centers; (2) 
Oceanic, procedural air traffic control provided from three locations 
in the United States; (3) Flight Services, telephone and radio 
communication provided by 61 automated stations that have been 
substantially contracted out; and (4) Terminal Services, including air 
traffic control, provided by a network of over 400 combined control 
facilities, terminal radar facilities, and towers. 

[10] GAO, GAO Strategic Plan (2004-2009), GAO-04-534SP (Washington, 
D.C.: March 2004). 

[11] GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: 
January 2005). 

[12] GAO, 21st Century Challenges: Reexamining the Base of the Federal 
Government, GAO-05-325SP (Washington, D.C.: February 2005). 

[13] GAO, National Airspace System: Initiatives to Reduce Flight Delays 
and Enhance Capacity Are Ongoing but Challenges Remain, GAO-05-755T 
(Washington, D.C.: May 26, 2005). 

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

[15] 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). 

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

[17] GAO, Aviation Safety: FAA Needs to Strengthen the Management of 
Its Designee Programs, GAO-05-40 (Washington, D.C.: Oct. 8, 2004). 

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

[19] Top Management Challenges: Department of Transportation, November 
15, 2005, PT-2006-007. 

[20] GAO, Program Evaluation: Improving the Flow of Program Information 
to the Congress, GAO/PEMD-95-1 (Washington, D.C.: Jan. 30, 1995) and 
GAO, Managing For Results: Views on Ensuring the Usefulness of Agency 
Performance Information to Congress, GAO/GGD-00-35 (Washington, D.C.: 
January 2000). 

[21] GAO, Understanding the Primary Components of the Annual Financial 
Report of the United States Government, GAO-05-958SP (Washington, D.C.: 
September 2005). 

[22] The FAA PAR for fiscal year 2005 presents a line of business 
called aviation safety in place of regulation and certification. 

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