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GAO discussed the proposed establishment of a government-owned corporation to operate, maintain, and modernize the nation's air traffic control (ATC) system, focusing on: (1) whether exempting the Federal Aviation Administration (FAA) from federal procurement regulations will substantially accelerate modernization; (2) how FAA can better position itself to meet the ATC system's future needs; and (3) how the proposed incorporation will affect FAA financing and safety issues. GAO noted that: (1) FAA would not be able to significantly accelerate the installation of ATC equipment if it was exempt from federal procurement regulations; (2) many factors, including underestimating the technical complexity of ATC system development, contribute to ATC modernization delays; (3) FAA capital and strategic goals are well-organized and defined and in accordance with federal legislation; (4) many FAA financing and safety oversight issues will need to be resolved if an ATC corporation is created; (5) FAA will need to define how it will accelerate investments, ensure that revenues and expenditures assumptions are accurate, determine the government's potential liability for corporation losses and debt, define the new divisions of responsibility between the corporation and the new FAA agency, and limit the risks that could affect the safety margins in the current system; and (6) the proposed FAA corporation will need to require the performance of safety-related activities regardless of its financial condition, establish safety standards for judging compliance, address weaknesses in its proposed oversight model, and complete controller and maintenance workforce staffing standards.

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