Aviation Acquisition:

Further Changes Needed in FAA's Management and Budgeting Practices

RCED-91-159: Published: Jul 29, 1991. Publicly Released: Jul 29, 1991.

Additional Materials:


Kenneth M. Mead
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Pursuant to a congressional request, GAO reviewed the Federal Aviation Administration's (FAA): (1) progress in incorporating federal acquisition principles into its acquisition process; and (2) budgeting procedures for major acquisitions.

GAO found that: (1) since 1990, FAA has undertaken such acquisition reforms as appointing an executive director for acquisitions and revising its acquisition order to increase compliance with federal guidance; (2) such reforms were instrumental in FAA postponement of two premature production contract awards; (3) even though the new orders should help FAA improve its acquisition process, the orders do not indicate the extent to which certain acquisitions will be exempt from federal acquisition processes; (4) although the new orders require every new major acquisition to have a mission needs statement that identifies project purposes and how the project meets FAA needs, the FAA fiscal year (FY) 1992 budget request includes $116.7 million for 10 new projects that do not include such statements; (5) FAA failed to consistently follow federal acquisition regulations or its own criteria for budgeting acquisition activities; (6) FAA does not effectively link its budgeting with its acquisition process for major systems; (7) although FAA acknowledged in its FY 1992 budget request that it was requesting facilities and equipment (F&E) funding for development activities, it did not state the full extent to which it would use F&E funds for such activities, define development work, or identify the projects' acquisition phases; and (8) FAA was reluctant to budget development activities in its research, engineering and development (RE&D) account, because of reductions to that account over the years.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In accordance with FAA Order 1810.1E, all programs now are reviewed for designation as major acquisitions. The Deputy Secretary, as the Department's Acquisition Officer, designates those FAA programs that will be identified as major programs and determines whether mission needs statements and acquisition plans will be required. FAA officials oversee the progress of these major programs.

    Recommendation: The Secretary of Transportation should direct the Administrator, FAA, to ensure that FAA consistently applies its new acquisition policy and procedures to its major system acquisitions. FAA should continually reconfirm the mission of its projects to help eliminate any uncertainty associated with product development, and it should clearly indicate the progress of its acquisition projects through its acquisition and budget documents.

    Agency Affected: Department of Transportation

  2. Status: Closed - Implemented

    Comments: The House and Senate conferees on the transportation appropriations bill for FY 1992 agreed that a revised budget structure would be submitted as part of the FY 1993 President's budget and that this new structure would address concerns raised by GAO about the existing budget structure. The 1993 budget included the revised budget structure.

    Recommendation: The Secretary of Transportation should direct the Administrator, FAA, to work with the appropriate committees of Congress to develop and implement criteria for budgeting for major acquisition activities. Those criteria should segment funding for major acquisitions according to the phases and milestones set forth in federal acquisition principles.

    Agency Affected: Department of Transportation


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