oversight

Transportation: Key Issues and Management Challenges

Published by the Government Accountability Office on 2012-03-29.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                             United States Government Accountability Office

GAO                          Testimony
                             Before the Subcommittee on Transportation,
                             Housing and Urban Development, and
                             Related Agencies, Committee on
                             Appropriations, House of Representatives
                             TRANSPORTATION
For Release on Delivery
Expected at 10:00 a.m. EDT
Thursday, March 29, 2012



                             Key Issues and Management
                             Challenges
                             Statement of Phillip R. Herr, Managing Director,
                             Physical Infrastructure Issues




GAO-12-581T
Mr. Chairman and Members of the Subcommittee:

I appreciate the opportunity to participate in this hearing to discuss key
issues and management challenges facing our nation’s transportation
system, as well as the Department of Transportation (DOT), as Congress
deliberates transportation policy and funding issues. A safe and efficient
transportation system is critical to our economy and affects the daily life of
most Americans. Our nation has built vast systems of roadways, airways,
railways, transit systems, pipelines, and waterways that help move people
and goods. However, these systems are under growing strain, and the
cost to repair and upgrade them to meet current and future demands is
estimated in the hundreds of billions of dollars. Yet, calls for increased
investments in the systems come at a time when traditional funding
sources are eroding. Funding is further complicated by the federal
government’s financial condition and fiscal outlook. GAO’s long-term
simulations show that, absent policy changes, the federal government
faces unsustainable growth in deficits and debt.

The challenges facing DOT and Congress regarding transportation
priorities and funding cannot be addressed by simply spending more
money. Despite large increases in expenditures for transportation in
recent years, system performance has not commensurately improved.
Congestion continues to grow, particularly in urban areas, and looming
problems from the anticipated growth in travel are not being adequately
addressed. As performance degrades and the system grows increasingly
unreliable, the economic and environmental implications are significant,
including wasted fuel and lost time, as cars idle in traffic, airline
passengers confront delays, and businesses incur increased costs. As
always, safety remains a primary concern, and improving information
security is critical to DOT’s mission.

Although our nation’s transportation system is owned and operated by
multiple levels of government and the private sector, DOT is the principal
federal agency responsible for implementing national transportation policy
and administering most of the federal transportation programs. DOT has
multiple missions—primarily focusing on mobility and safety—that are
carried out by its various operating administrations (such as aviation,
highways, transit, railroads, and others). For fiscal year 2013, the
President’s budget has requested $74.5 billion to carry out its activities.

My statement today focuses on five key issues and management
challenges that DOT and Congress face. These areas are



Page 1                                               GAO-12-581T Transportation
                       •   funding the nation’s transportation system,
                       •   refocusing and restructuring surface transportation policies and
                           programs,
                       •   improving transportation safety,
                       •   implementing the Next Generation Air Transportation System
                           (NextGen), and
                       •   improving information security.

                       My statement is based on a body of work that we have completed from
                       March 2008 through March 2012, including recommendations we have
                       made to both DOT and Congress. This body of work was conducted in
                       accordance with generally accepted government auditing standards. A list
                       of related GAO products is included with this statement, along with
                       references to these products throughout the statement.



Funding the Nation’s
Transportation
System
Funding Highways and   The major source of federal surface transportation funding is the Highway
Transit                Trust Fund, 1 but the revenues that make up that fund are eroding. The
                       federal motor fuel tax rate has not increased since 1993, meaning that the
                       18.4 cent per gallon tax on motor fuels enacted in 1993 is worth about
                       11.5 cents today. This trend will continue with the introduction of more
                       fuel-efficient and alternative-fuel vehicles that have the potential through
                       fuel savings to decrease motor fuel purchases and associated tax
                       receipts. The Congressional Budget Office estimates, as of March 2012,
                       that to maintain current spending levels plus inflation between 2013 and
                       2022, the Highway Trust Fund will require over $125 billion more than it is
                       expected to take in over that period. 2 (See fig. 1.) For this and other



                       1
                        The Highway Trust Fund is an account established by law to hold and distribute federal
                       highway user taxes (e.g., federal excise taxes on fuel) that are dedicated for highway and
                       transit related purposes. It is composed of two accounts: the Highway Account and the
                       Mass Transit Account.
                       2
                        Congressional Budget Office—March Fiscal Year 2012 Baseline Projections for the
                       Highway Trust Fund.




                       Page 2                                                        GAO-12-581T Transportation
reasons, funding surface transportation remains on GAO’s High-Risk
List. 3 Long-term reauthorization of surface transportation provides an
opportunity for Congress to fund the program on a sustainable basis.

Figure 1: Projected Highway Trust Fund Balance, Fiscal Years 2011 through 2022




The President’s fiscal year 2013 budget proposes increasing surface
transportation funding levels, including a 34 percent increase over the
next 6 years for highways and bridges—funded in part through general
revenue transfers. These transfers would be in addition to the more than
$30 billion Congress transferred from general revenues to the Highway
Trust Fund since 2008. Augmenting transportation funding through
general revenues would move away from the “user pays” principle and
might not be sustainable in the long term given the federal government’s
growing fiscal challenge.

Congress and the administration are considering various proposals to
expand federal financing tools to help leverage investment in
transportation infrastructure:



3
GAO-11-278.




Page 3                                                 GAO-12-581T Transportation
•   Expanding the Transportation Infrastructure Financing Innovation Act
    (TIFIA) program. The TIFIA program provides federal credit
    assistance in the form of direct loans, loan guarantees, and lines of
    credit to finance surface transportation projects, including highway,
    transit, rail, and intermodal projects. In recent years, TIFIA has been
    in high demand in part because of the tightening of commercial credit
    markets and low federal treasury rates. Reauthorization proposals
    contain various changes to TIFIA, including a significant expansion of
    the program, increasing the eligible federal share of the program, and
    modifying the federal nonsubordination clause. 4 DOT will face
    challenges in balancing a broader portfolio, with the increased
    exposure and risk to the federal government that these changes might
    produce. Additionally, although such changes might help augment
    funding, DOT will face challenges in ensuring that adequate staff and
    expertise exist to efficiently manage an expanded program.

•   Creating a National Infrastructure Bank. As envisioned in legislative
    and administration proposals, a National Infrastructure Bank would
    make direct loans, loan guarantees, and offer credit enhancements to
    eligible applicants for transportation and other projects (including
    those in the water and energy sectors) in an attempt to stretch limited
    federal funds. The creation of such an entity would create numerous
    challenges inherent in the start-up of any new program or government
    entity. One such challenge would be ensuring that any new program
    or entity does not duplicate or overlap any existing financing programs
    and tools, such as TIFIA, state infrastructure banks, and others.
    Another challenge would stem from seeking a balance between
    financing projects that yield the highest public benefit—but that
    potentially concentrate funds in one region—with a desire for an
    equitable distribution of federal investment in infrastructure across the
    country.

•   Continuing and expanding federal bonding mechanisms. These
    mechanisms include Grant Anticipation Revenue Vehicles, which
    allow states to issue bonds backed by expected future federal-aid



4
 The nonsubordination clause or “springing lien” means that the TIFIA lien on project
revenues can be subordinated to those of senior lenders except in the event of
bankruptcy, insolvency, or liquidation of the obligor. In such an instance, the TIFIA lien
would rise to parity with senior creditors. This provision can be effected through a master
trust agreement, an intercreditor agreement, or other agreement entered into at the time of
execution of the credit agreement.




Page 4                                                        GAO-12-581T Transportation
                       highway formula grants, and Private Activity Bonds, which are debt
                       instruments issued by state or local governments whose proceeds are
                       used to construct projects with significant private involvement. Several
                       bills have been introduced in Congress that would increase
                       investment in the nation’s infrastructure through bonding. Although
                       bonds can provide up-front capital for infrastructure projects,
                       accelerate construction, and potentially reduce construction costs,
                       they can be more expensive for the federal government than
                       traditional grants. The higher expense would result, in part, because
                       the government would have to compensate the investors for the risks
                       they assume.

                   While these tools have promise to help meet increasing transportation
                   demands, they are forms of debt that must be repaid, not new revenues.
                   New revenues for transportation infrastructure investments can come only
                   from two sources: new taxes or new fees. Ultimately, raising new
                   revenues or reducing transportation spending or both will be needed.


Funding Aviation   The Federal Aviation Administration’s (FAA) expenditures are budgeted
                   to continue to exceed forecasted revenues from the Airport and Airway
                   Trust Fund in future years. 5 FAA operation expenditures not covered by
                   trust-fund revenues are projected to be paid for by general revenues from
                   the U.S. Treasury. 6 According to the President’s fiscal year 2013 budget,
                   roughly 20 percent of FAA’s total annual expenditures for about the next
                   10 years might have to be paid for by general revenues. As the federal
                   budget continues to be constrained, Congress may face difficult choices
                   regarding reducing FAA’s appropriations, which could increase FAA’s




                   5
                    FAA is primarily funded by appropriations from the Airport and Airway Trust Fund, which
                   is financed by various excise taxes paid by passenger and cargo airlines and general
                   aviation operators.
                   6
                    In comparison, the general revenue contribution to FAA was about 33 percent and 31
                   percent in fiscal years 2010 and 2011, respectively. As the Congressional Research
                   Service (CRS) has reported, there has been general acceptance that there is a public
                   interest component to the operation of the national aviation system, which is appropriated
                   from the Treasury’s general revenues. This compensates for what the military,
                   government, and nonuser beneficiaries (also known as societal users) might have
                   contributed if they had actually paid into the trust fund.




                   Page 5                                                        GAO-12-581T Transportation
                          total costs and delay the benefits associated with investments such as
                          NextGen. 7


Funding High-Speed Rail   The President’s budget for fiscal year 2013 requests $2.5 billion for high-
                          speed and intercity passenger rail—part of a proposed $47 billion for
                          passenger rail projects over the next 6 years. However, Congress has not
                          provided funding for high-speed rail since appropriating over $10 billion
                          through the American Recovery and Reinvestment Act (Recovery Act) of
                          2009 and the fiscal year 2010 DOT Appropriations Act. 8 We recently
                          reported that the Federal Railroad Administration (FRA) essentially
                          followed good grant making practices as it awarded Recovery Act funds, 9
                          but we have also identified several challenges facing these projects as
                          they move forward. 10 For example, project sponsors find it difficult to
                          secure the up-front investment for construction costs and indicated that
                          they have or will need some federal funding to develop their projects.


                          Long-term reauthorization provides an opportunity for Congress to
Refocusing and            fundamentally re-examine surface transportation programs as we have
Restructuring Surface     recommended—another reason why funding surface transportation is on
                          GAO’s High-Risk List—and to expand on recent efforts to reform the
Transportation            highway program. From the standpoint of state and local governments,
Policies and Programs     re-examining surface transportation programs could reduce fragmentation
                          and the administrative expenses states face complying with myriad
                          federal statutory and regulatory requirements. This re-examination could
                          include the following:

                          •     Clearly define the federal role in relation to other levels of government
                                and, thus, create a more targeted federal role focused around evident
                                national interests. For issues in which there is a strong national


                          7
                           We recently reported on the revenue forecast accuracy for the Airport and Airway Trust
                          Fund and the extent to which revenues into the Airport and Airway Trust Fund might cover
                          planned FAA expenditures. See GAO-12-222.
                          8
                           Congress subsequently rescinded $400 million from the 2010 DOT Appropriations Act
                          through the 2011 DOT Appropriations Act. Congress has also provided approximately
                          $1.4 billion annually to fund Amtrak operating and capital costs.
                          9
                          GAO-11-283.
                          10
                              GAO-09-317.




                          Page 6                                                       GAO-12-581T Transportation
      interest, ongoing federal financial support and direct involvement
      could help meet federal goals. Where national interests are less
      evident, other stakeholders could assume more responsibility, and
      some programs and activities may better be devolved to the states or
      other levels of government.

•     Ensure accountability for entities receiving federal funds, for example,
      by moving to a performance-based program. Current programs lack
      links to transportation system performance or of grantees receiving
      federal funds. Most highway, transit, and safety grant funds are
      distributed through formulas that have only an indirect relationship to
      needs, and many have no relationship to performance or outcomes.
      Funds for highways, in particular, are distributed to return revenues to
      their state of origin and states have considerable flexibility to
      reallocate them among highway and transit programs. Legislation
      passed by the Senate—Moving Ahead for Progress in the 21st
      Century (MAP-21)—would direct DOT to develop performance targets
      for pavement on the Interstate Highway System and many of the
      nation’s bridges. If a state were not to meet the minimum condition
      levels for two consecutive reporting periods, it would be required to
      commit a specific percentage of its highway funding to the deficient
      area. 11 For other areas, MAP-21 directs states to develop
      performance targets related to national priorities, as well as link
      investment priorities to these targets.

•     Employ the best approaches and analysis to direct federal funds to
      infrastructure with clear national interests. There is a natural tension
      between providing funding based on merit and performance and
      providing funds on a formula basis to achieve equity among states.
      Consequently, meritorious projects of national or regional significance,
      in particular those connecting multiple transportation modes or those
      that cross geographic boundaries, may not compete well at the state
      level for formula funds. We have recommended to Congress that a
      criteria-based selection approach be used to direct a portion of federal
      funds in programs designed to select transportation projects with
      national and regional significance. 12




11                     th
    S. 1813, § 1106, 112 Cong., as adopted by the Senate March 14, 2012.
12
    GAO-08-400 and GAO-11-234.




Page 7                                                      GAO-12-581T Transportation
Congress developed a merit-based approach in the Transportation
Investment Generating Economic Recovery (TIGER) grant program, now
in its fourth round of competitively awarding grants, based on criteria such
as the potential for a project to improve the state of repair of critical
infrastructure and reduce fatalities and injuries. The first round of the
TIGER grants under the Recovery Act gave preference to projects that
could be completed within about 2 years of the award announcement; 13
that had substantial co-investments from other funding partners and
where TIGER funds would complete that package of funding; and that
would fund an operable project when completed. 14 This approach has the
potential to ensure that federal funds produce useful and functional
projects in a timely fashion. Going forward, evaluating whether completed
TIGER projects have met these goals will be important to assessing this
program’s potential for investing federal funds in projects of regional and
national significance.

Should Congress move toward a more performance-based system for
highways, DOT’s Federal Highway Administration (FHWA) would need to
work with the states to develop performance goals, measure states’
progress, and take corrective action should states not meet performance
targets. We have reported weaknesses in FHWA’s oversight of statewide
and metropolitan area planning processes that prevents FHWA from
effectively measuring and tracking performance outcomes. FHWA’s
oversight focuses on process, rather than outcomes, 15 and, as such,
FHWA cannot assess whether states’ investment decisions are improving
the nation’s transportation system’s condition and performance. We
recommended that FHWA more closely review states’ transportation
improvement programs to assess whether states’ investments are
achieving intended outcomes. 16 In addition, FHWA would need to improve
its ability to collect national level data on highway performance across
many of the programs it oversees. We have made numerous


13
  The American Recovery and Reinvestment Act of 2009 required that, in making the final
award selections, priority be given to projects that were expected to be completed within 3
years of enactment of the act on February 17, 2009. Pub. L. No. 111-5, div. A, title XII,
123 Stat. 115, 204. Awards for the first round of TIGER grants were made on February 17,
2010.
14
 GAO-11-234.
15
 GAO-09-898 and GAO-11-77.
16
 GAO-11-77.




Page 8                                                        GAO-12-581T Transportation
                        recommendations to DOT related to the need for accurate and reliable
                        national-level data.


                        Another continuing challenge facing DOT pertains to improving
Improving               transportation safety. In recent years, we have seen a remarkable decline
Transportation Safety   in transportation-related fatalities and injuries, the vast majority of which
                        occur on our nation’s roads. Traffic fatalities decreased more than 20
                        percent over the last decade, from nearly 42,000 in 2000 to less than
                        33,000 in 2010, the lowest level since 1949. (See fig. 2.) Traffic injuries
                        decreased approximately 30 percent, from about 3.2 million in 2000 to
                        about 2.2 million in 2010. These encouraging trends are likely due in part
                        to federal and state DOT efforts. However, even these reduced numbers
                        of fatalities and injuries are still too many.

                        Figure 2: Traffic Fatality Rates and Total Number of Fatalities, 2000-2010




                        a
                        Fatality rate for 2010 is based on estimated vehicle miles traveled data.


                        Other modes of surface transportation are relatively safe. Still, high-profile
                        accidents have raised concerns, such as the collision of two trains in



                        Page 9                                                                 GAO-12-581T Transportation
Washington, D.C., in 2009 that resulted in 9 fatalities and 52 injuries. A
less visible—but important—mode of freight transportation is the nation’s
more than 2.5 million mile natural gas and hazardous liquid pipeline
network. From 2004 to 2010, an average of about 16 fatalities per year for
all pipeline incidents was reported to DOT. While pipelines are relatively
safe, incidents can have dire consequences. For example, a natural gas
pipeline explosion in San Bruno, California, in September 2010 killed 8
people and damaged or destroyed over 100 homes.

Turning to aviation, the U.S. system is one of the most efficient and safest
in the world. However, from 1999 to 2010, over 450 aviation-related
fatalities occurred annually. The vast majority of these fatalities were in
the general aviation sector, which includes all forms of aviation except
commercial and military operations. Specifically, this sector consists of
over 220,000 aircraft—including airplanes, helicopters, and balloons—
and composes over 90 percent of the U.S. civilian aircraft fleet engaged.
Over the same time period, approximately 70 percent of fatal general
aviation accidents occurred in the personal flying segment. In addition, a
growing proportion of amateur-built aircraft are involved in accidents.

Our recent work on transportation safety has highlighted room for
improvement in three areas: data, performance measurement, and
oversight. High-quality safety data are vital to allocating resources and
targeting programs effectively. High-quality data are also essential to
implement performance measures to identify progress and ensure
accountability. The National Highway Traffic Safety Administration
(NHTSA) has made good progress toward establishing such performance
measures, but within other DOT administrations, there remains room for
improvement. As DOT moves closer to a data-driven, performance-based
structure, a robust oversight approach is critical to ensure that states are
establishing appropriate goals and making sufficient progress toward
those goals.

    For traffic safety data, states maintain six core types of data systems
     that are used to identify priorities for highway and traffic safety
     programs.17 In 2010, we reported that NHTSA’s periodic assessments
     designed to help states identify quality issues with their data systems
     were in some cases incomplete or inconsistent. We recommended


17
  The six core types of systems are vehicle, driver, roadway, crash, citation and
adjudication, and injury surveillance.




Page 10                                                        GAO-12-581T Transportation
      measures for DOT to make those assessments more useful for states,
      and DOT is implementing those measures. 18

•     For years, some commercial motor carriers have registered under a
      new identity to evade detection for previous safety violations.
      Currently, the Federal Motor Carrier Safety Administration (FMCSA)
      examines a small number of the tens of thousands of new motor
      carrier applicants that register annually—including only 2 percent of
      approximately 66,000 applicants in 2010—to identify carriers
      operating illegally under new identities. We recently recommended
      that FMCSA develop a data-driven approach to target new carriers
      attempting to disguise their former identities and expand this new
      oversight approach to examine all motor carriers. 19

•     The Federal Transit Administration (FTA) has created plans and other
      tools to help guide and manage its transit safety efforts but has not
      fully adopted leading practices to set clear performance goals and
      related measures. Performance goals can help prioritize efforts and
      make the best use of available resources, which is essential for FTA,
      given the relatively small number of staff it has devoted to safety and
      state of good repair efforts. To ensure that the agency targets
      resources effectively, we recommended that FTA use leading
      practices to set clear and specific goals and measures to guide and
      track the performance of its rail transit safety efforts. 20 FTA concurred
      in part with our recommendation but reported that it was premature to
      act before the passage of legislation that provides FTA with sufficient
      and appropriate rail transit safety authority. However, it is unclear why
      waiting to fully adopt leading practices is necessary since FTA already
      has efforts underway to assist transit agencies in addressing safety
      challenges.

•     FTA oversees state safety agencies that are responsible for providing
      direct oversight for transit agencies, but safety standards, expertise,
      staffing levels, and enforcement authority vary among these agencies.
      DOT has proposed legislation that would give FTA authority to set
      uniform safety standards for transit agencies and enforce them, in



18
    GAO-10-454.
19
    GAO-12-364.
20
    GAO-11-199.




Page 11                                                GAO-12-581T Transportation
      cooperation with the states, and FTA has requested funds to set up
      such a new rail transit safety oversight program. In 2009, we raised
      some issues for Congress to consider in deciding whether or how to
      act on DOT’s proposal, including determining what level of
      government has the best capacity to oversee transit safety, ensuring
      that FTA and state oversight agencies would have adequate and
      qualified staff to carry out the envisioned program, and understanding
      the potential budgetary implications of the program. 21

•     Regarding pipeline safety, part of the nation’s pipeline network
      consists of more than 200,000 miles (estimated) of onshore
      “gathering” pipelines, many of which are not federally regulated
      because they have generally been located away from populated areas
      and operate at relatively low pressures. We recently recommended
      that the Pipeline and Hazardous Materials Safety Administration
      (PHMSA) collect data on these pipelines to assess safety risks
      because urban development is encroaching on existing pipelines and
      the increased extraction of oil and natural gas from shale deposits is
      resulting in new gathering pipelines that can be larger in diameter and
      operate at higher pressures. 22

•     With regard to aviation, FAA lacks data to accurately assess the
      safety performance of certain industry sectors, such as general
      aviation, and to more fully assess the trends in certain types of
      events, such as for runway excursions and ramp accidents. FAA has
      concurred with, but has not yet implemented, several of our
      recommendations aimed at improving its capability to use data for
      aviation safety oversight. 23 Similarly, we could not determine whether
      FAA completed the required inspections for pilot examiners or the
      reasons that the discretionary inspections of flight instructors were
      conducted. We recently recommended that FAA develop a
      comprehensive system to measure performance for meeting annual
      inspection requirements for pilot schools and better understand the
      nature and scope of discretionary inspections for flight instructors. 24


21
  GAO-10-314T. The Senate has adopted legislation that would expand FTA’s role in
some of these areas. See S. 1813, § 20021.
22
    GAO-12-388.
23
    GAO-10-414 and GAO-12-24.
24
    GAO-12-117.




Page 12                                                    GAO-12-581T Transportation
                      An additional challenge that I would like to address pertains to the
Implementing the      implementation of the Next Generation Air Transportation System
Next Generation Air   (NextGen)—a complex multiagency undertaking intended to transform the
                      current radar-based system into an aircraft-centered, satellite-based
Transportation        system by 2025. 25 FAA has taken some steps to improve NextGen
System                implementation and is continuing to address critical issues that we,
                      stakeholders, and others have identified over the years. 26 For example,
                      FAA has made progress in streamlining its processes and improving its
                      capacity to develop new flight procedures that have led to measurable
                      benefits, such as fuel savings. 27 FAA has also set NextGen performance
                      goals through 2018. 28 However, as our recent and ongoing work has
                      shown, FAA faces several challenges in keeping key NextGen
                      acquisitions within cost estimates and on schedule, delivering NextGen
                      benefits, and addressing changes in management and governance,
                      including vacancies in key leadership positions.

                      •     Timely delivery of key acquisitions. As we recently reported, FAA
                            continues to face challenges in assuring that acquisitions are within
                            cost and on schedule. 29 In our review of 30 major air traffic control
                            acquisition programs, including those critical to the NextGen
                            implementation, we found that costs for 11 of the 30 programs have
                            increased from initial estimates and that 15 programs experienced
                            delays. 30




                      25
                       Along with the Department of Transportation and FAA, the Departments of Defense,
                      Commerce, and Homeland Security, the National Aeronautics and Space Administration,
                      and the White House Office of Science and Technology Policy are involved in NextGen
                      development.
                      26
                          See the end of this statement for a list of related GAO products on NextGen.
                      27
                        For example, FAA reports thousands of gallons of fuel savings from the performance-
                      based navigation routes in operation at Atlanta and the continuous descents being used
                      into Los Angeles and San Francisco.
                      28
                       These goals include improving the throughput of air traffic at key airports by 12 percent
                      over 2009 levels, reducing delays by 27 percent from 2009 levels, and achieving a 5
                      percent reduction in average taxi-time at key airports.
                      29
                          GAO-12-223.
                      30
                       See GAO-12-223 for more information on the specific air traffic control programs that
                      have experienced cost increases or schedule delays.




                      Page 13                                                         GAO-12-581T Transportation
     Cost increases and schedule delays occurred due to (1) additional or
     unanticipated system requirements; (2) insufficient stakeholder
     involvement (such as air traffic controllers’ input) throughout system
     development; (3) underestimating the complexity of software
     development; and (4) unanticipated events, including funding
     shortfalls or work stoppages. These challenges, if they persist, will
     impede the implementation of NextGen, especially given
     interdependencies among many acquisition programs in which cost
     increases or delays in one program can affect the costs and
     schedules of others. We recommended that FAA further incorporate
     best practices into its acquisition processes by requiring cost and
     schedule risk analysis, independent cost estimates, and integrated
     master schedules. 31

•    Delivery of NextGen benefits: To maintain credibility with aircraft
     operators, FAA must deliver systems, procedures, and capabilities on
     time, so that operators can realize benefits from investments they
     have already made in avionic equipment and have incentives to
     continue to invest in the equipment necessary for NextGen to operate
     as planned. For example, a large percentage of the current fleet is
     equipped to fly more precise performance-based navigation
     procedures. Although FAA has begun implementing new flight
     procedures to allow for more precise navigation under NextGen,
     aircraft operators have raised concerns that, to date, FAA has not
     produced procedures that are most effective in delivering such
     benefits as reduced flight time, congestion, and fuel consumption. The
     NextGen Advisory Committee has made recommendations to help
     FAA identify and prioritize improvements that could provide more
     immediate benefits, including recommending that FAA focus NextGen
     capabilities at metroplexes that have the greatest impact on aviation




31
  For our report, we selected and analyzed four programs—the Automatic Dependent
Surveillance-Broadcast (ADS-B) system, the Collaborative Air Traffic Management
Technologies (CATMT) system, the System Wide Information Management (SWIM)
system, and the Wide Area Augmentation System (WAAS)—in depth and found that FAA
is not consistently following the characteristics of high-quality cost estimates and
scheduling best practices that GAO previously identified.




Page 14                                                   GAO-12-581T Transportation
      system performance. 32 To help address industry concerns, FAA has
      initiatives under way or planned in 21 metropolitan areas across the
      country, including completing initial work to identify improvements in 7
      metroplexes, including Washington, D.C.; Charlotte, North Carolina;
      and Atlanta, Georgia—focusing on routes and procedures that will
      produce benefits for operators. 33

      While some operational improvements can be made with existing
      aircraft equipment, realizing more significant NextGen benefits
      requires a critical mass of properly equipped aircraft. Reaching that
      critical mass is a significant challenge because the first aircraft
      operators to purchase and install NextGen-capable technologies will
      not obtain a return on their investment until many other operators do.
      FAA estimates that the avionics needed on aircraft to realize
      significant NextGen capabilities will cost private operators about $5
      billion to $7 billion through 2018. The recently passed FAA
      Modernization and Reform Act of 2012 created a program to facilitate
      public-private financing, such as loan guarantees and other credit
      assistance tools, for equipping general aviation and commercial
      aircraft with NextGen technologies. 34 However, no decisions have
      been made on how to incentivize this transition.

•     Changes in management and governance: FAA is working to abolish
      and merge a number of committees to improve decision making and
      reduce time requirements of senior FAA executives. It also moved the
      NextGen organization under the responsibility of the Deputy
      Administrator (who is currently serving as the Acting Administrator)
      and created a new head of program management for NextGen-related




32
  The NextGen Advisory Committee is comprised of aviation stakeholders from the
government and industry. The committee works to develop a common understanding of
priorities in the context of overall NextGen capabilities and implementation constraints,
with an emphasis on the near term and midterm. The committee primarily focuses on
implementation issues, including prioritization criteria at a national level, joint investment
priorities, and location and timing of capability implementation.
33
 In addition, the FAA Modernization and Reform Act of 2012, Pub. L. No. 112–95, § 213,
126 Stat. 11, 46-50, requires FAA to certify, publish, and implement procedures that
maximize the fuel efficiency and airspace capacity of NextGen commercial operations at
each of the 35 operational evolution partnership (OEP) airports by June 30, 2015.
34
    Pub. L. No. 112–95 § 221, 126 Stat. 11, 54.




Page 15                                                           GAO-12-581T Transportation
                            programs to ensure improved oversight of NextGen implementation. 35
                            Additionally, the recently passed FAA authorization act redesignated
                            the Director of the Joint Planning and Development Office to directly
                            report to the FAA Administrator and created a new leadership
                            position—the Chief NextGen Officer—that will also report to the
                            administrator but has not yet been filled. While elimination of
                            duplicative committees and a focus on accountability for NextGen
                            implementation are positive steps, it remains to be seen whether this
                            latest reorganization will produce the desired results without the
                            necessary leadership positions filled. As we have previously reported,
                            leadership is a critical element of success for large-scale systems
                            integration efforts like NextGen. 36

                       DOT relies on more than 400 computerized information systems to carry
Improving              out its financial and mission-related operations. Effective information
Information Security   security controls are required to ensure that financial and sensitive
                       information is adequately protected from inadvertent or deliberate misuse;
                       fraudulent use; and improper disclosure, modification, or destruction.
                       Ineffective controls can also impair the accuracy, completeness, and
                       timeliness of information used by management. The need for effective
                       information security is further underscored by the evolving and growing
                       cyber threats to federal systems and the dramatic increase in the number
                       of security incidents reported by federal agencies, including DOT. From
                       fiscal years 2007 to 2011, the number of incidents reported to the United
                       States Computer Emergency Readiness Team (US-CERT) 37 by DOT
                       increased by more than 140 percent.

                       DOT has been challenged to effectively protect its computer systems and
                       networks. Our analysis of agency and OIG reports shows that the
                       department has not consistently implemented effective controls, such as


                       35
                         As part of FAA’s restructuring efforts, the Air Traffic Organization will be divided into two
                       branches: operations and NextGen program management. Operations will focus on the
                       day-to-day management of the national air space system and the program management
                       branch will be responsible for developing and implementing NextGen programs while
                       working with operations to ensure proper integration.
                       36
                        GAO-10-824.
                       37
                         US-CERT is a component of the Department of Homeland Security and is responsible
                       for analyzing and addressing cyber threats and vulnerabilities and disseminating cyber-
                       threat warning information. Federal agencies, including DOT, are required to report
                       security incidents to US-CERT.




                       Page 16                                                           GAO-12-581T Transportation
                  those intended to prevent, limit, and detect unauthorized access to its
                  systems or manage the configuration of devices to prevent unauthorized
                  access and ensure system integrity. We have reported on the need for
                  federal agencies, including DOT, to improve implementation of
                  information security controls, such as those for configuring desktop
                  computers and wireless communication devices. 38 For example, we
                  recommended that DOT complete deployment of a National Institute of
                  Standards and Technology (NIST)-validated security tool to monitor
                  compliance with the U.S. Government Configuration Baseline (USGCB)
                  and ensure that language is included in contracts to ensure new
                  acquisitions include USGCB settings and products of information
                  technology providers operate effectively using them. DOT agreed with our
                  recommendations. Until DOT strengthens information security controls, it
                  has limited assurance that financial and sensitive information is
                  adequately protected from inadvertent or deliberate misuse, fraudulent
                  use, and improper disclosure, modification, or destruction.


                  In conclusion, we have ongoing work examining many of the topics
                  discussed in this statement. For example, we are conducting work for this
                  subcommittee on the viability of supplanting or replacing fuel taxes with a
                  system of charging vehicle owners a user fee based on vehicle miles
                  traveled. We also have ongoing work examining California’s high-speed
                  rail program, participation in the TIFIA program, and implementation of
                  the Next Generation Air Transportation System.

                  We look forward to supporting this committee’s oversight activities on
                  these and many other issues. Chairman Latham, Ranking Member Olver,
                  and Members of the Subcommittee, this concludes my prepared
                  statement. I would be pleased to answer any questions you have at this
                  time.


                  For further information on the statement, please contact Phillip R. Herr at
GAO Contact and   (202) 512-2834 or herrp@gao.gov. Contact points for our Congressional
Staff             Relations and Public Affairs offices may be found on the last page of this
                  statement. Individuals making key contributions to this statement were
Acknowledgments   Paul Aussendorf, Matt Cail, Steve Cohen, Matt Cook, Kathryn Crosby,



                  38
                   GAO-11-43 and GAO-10-202.




                  Page 17                                             GAO-12-581T Transportation
Lynn Filla-Clark, Holly Dye, Colin Fallon, Susan Fleming, Judy Guilliams-
Tapia, Brandon Haller, Robert Heilman, David Hooper, Joah Iannotta,
Bert Japikse, Heather Krause, Joanie Lofgren, Ed Laughlin, Heather
MacLeod, Sara Vermillion, Pamela Vines, Andrew Von Ah, and Susan
Zimmerman.




Page 18                                            GAO-12-581T Transportation
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             Motor Carrier Safety: New Applicant Reviews Should Expand to Identify
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             Air Traffic Control Modernization: Management Challenges Associated
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             Enhanced Oversight and Improved Availability of Risk-Based Data Could
             Further Improve Safety. GAO-12-24. Washington, D.C.: October 5, 2011.

             Information Security: Weaknesses Continue Amid New Federal Efforts to
             Implement Requirements. GAO-12-137. Washington, D.C.: October 3,
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             NextGen Air Transportation System: Mechanisms for Collaboration and
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             Page 19                                           GAO-12-581T Transportation
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Surface Transportation: Competitive Grant Programs Could Benefit from
Increased Performance Focus and Better Documentation of Key
Decisions. GAO-11-234. Washington, D.C.: March 30, 2011.

Intercity Passenger Rail: Recording Clearer Reasons for Awards
Decisions Would Improve Otherwise Good Grantmaking Practices. GAO-
11-283. March 10, 2011.

High-Risk Series: An Update. GAO-11-278. Washington, D.C.: February
2011.

Rail Transit: FTA Programs Are Helping Address Transit Agencies’ Safety
Challenges, but Improved Performance Goals and Measures Could
Better Focus Efforts. GAO-11-199. Washington, D.C.: January 31, 2011.

Statewide Transportation Planning: Opportunities Exist to Transition to
Performance-Based Planning and Federal Oversight. GAO-11-77.
Washington, D.C.: December 15, 2010.

Transportation: Integration of Current Implementation Efforts with Long-
term Planning for the Next Generation Air Transportation System. GAO-
11-132R. Washington, D.C.: November 22, 2010.

Recovery Act: Opportunities to Improve Management and Strengthen
Accountability over States’ and Localities’ Uses of Funds. GAO-10-999.
Washington, D.C.: September 20, 2010.

Next Generation Air Transportation System: FAA and NASA Have
Improved Human Factors Research Coordination, but Stronger
Leadership Needed. GAO-10-824. Washington, D.C.: August 6, 2010.

NextGen Air Transportation System: FAA’s Metrics Can Be Used to
Report on Status of Individual Programs, but Not of Overall NextGen
Implementation or Outcomes. GAO-10-629. Washington, D.C.: July 27,
2010.

Recovery Act: States’ and Localities’ Uses of Funds and Actions Needed
to Address Implementation Challenges and Bolster Accountability. GAO-
10-604. Washington, D.C.: May 26, 2010.

Aviation Safety: Improved Data Quality and Analysis Capabilities Are
Needed as FAA Plans a Risk-Based Approach to Safety Oversight. GAO-
10-414. Washington, D.C.: May 6, 2010.


Page 20                                            GAO-12-581T Transportation
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           Surface Transportation: Principles Can Guide Efforts to Restructure and
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(541094)
           Page 21                                          GAO-12-581T Transportation
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