Issues Related to FAA's Fiscal Year 1991 Budget Request

Published by the Government Accountability Office on 1990-04-18.

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

I.                      United States General Accounting Office        /     l/L2
4    GAO,

     For Release         Issues   Related   to FAA’s Fiscal   Year   1991
     on Delivery
                         Budget   Request
     Expected at
     10:00 a.m. EDT
     April   18, 1990

                         Statement of
                         Kenneth M. Mead
                         Director,  Transportation Issues
                         Resources,  Community, and Economic
                         Development Division

                         Before the
                         Subcommittee on Transportation
                         Committee on Appropriations
                         House of Representatives

     GAO/T-RCED-90-66                                                          GAO Fom   160 m/87)
Mr. Chairman and Members of the Subcommittee:

         We appreciate    the opportunity    to testify      on the Federal
Aviation     Administration's     (FAA) fiscal     year   1991 budget request.
FAA's budget continues to grow.           Its request of almost $8.3 billion
represents     a 16 percent increase      over the fiscal        year 1990
appropriation.         The two major components of the budget are the
Operations account-- which funds the ongoing operation                and
maintenance of the Air Traffic          Control (ATC) system, and the
Facilities     and Equipment (F&E) account--which            funds modernization
of the ATC system.         Together, Operations and F&E account for $6.6
billion,     or 80 percent of the total        fiscal   year    1991 request.

        Over the past few years, our testimonies            and reports have
alerted this Subcommittee of FAA’s difficulties                in both these
areas.     FAA's ATC modernization       effort,     whereby the agency is
replacing    its existing     radars, computers, and communications
systems, has experienced significant             delays.    At the same time, the
cost of modernization       has more than doubled.          Initiatives   to hire,
retain,    and train critical      safety employees--controllers,
inspectors     and maintenance technicians--while           encouraging,    continue
to fall short of expectations.

           In light of continuing   problems     in both areas,   our testimony
will       make three major points:

           --   First,   developing   and installing new ATC systems continues
                to take longer than FM expected.        Most major systems have
                experienced    another round of delays.     Such delays have
                required the addition     of interim projects   to upgrade
                existing   systems.    Our work to date on the largest    of these
                interim projects     suggests that FAA did not properly    plan
                and assess its needs before seeking funding from Congress.

       v   --   Second, FAA has not yet identified     the additional    human
                resources necessary to implement     ATC modernization    projects
             at field locations.     Insufficient      staff at field  locations
             to install,   test, and be trained       on the new equipment will
             cause further    delays in realizing      modernization  benefits.

       -- Third, FM will not meet this year's staffing                   goals for
          controllers,    inspectors,      and maintenance technicians.            It
          expects shortages of about 1,900 experienced controllers,
          500 inspectors,     and 1,500 maintenance technicians.                In
          addition,    FAA's training      initiatives       are falling    behind
          schedule.     FM may have to curtail            its planned hiring
          because of limited      training      capacity,     further    compounding

       I will    now provide    an assessment     of ATC modernization.


       FM   experienced     additional     delays in key modernization
projects    during the past year.          This was due mainly to a variety         of
technical    problems vendors were having in developing hardware and
software with the capability           they promised.     Delays heighten a need
for additional      short-term     solutions    like the Interim Support Plan
to address projected        system capacity shortfalls       and eguipmszt
reliability     problems.      However, FM must carefully         scrutinize
proposed short-term        solutions     to avoid selecting    projects     that are
not cost beneficial.

Continuinu      Modernization    Delavs

      Past delays of 1 to 4 years in modernizing    the ATC system are
well known. However, as we noted in our recently       issued fact sheet
to this Subcommittee, significant   additional  delays occurred this

year. l In the space of about a year, 8 of 12 major projects
experienced a delay of at least of 200 days.          We believe that
continued delay@ are the result of the acquisition          problems we
have pointed out in the past,      such as inadequate operational
testing    before committing to production.      FM was allowing
contractors     to proceed without substantial    evidence that the
proposed system could meet its requirements.          As a result,   hardware
and software systems could not perform as promised and
modifications     had to be made. Following my statement,        my
colleague,     Ms. Hecker, from the Information    Management and
Technology Division,      will comment in detail   on problems experienced
by FM with two of the major ATC modernization          projects:    the
Advanced Automation System and the Mode S project.

        To its credit,    FAA has recently   taken some encouraging steps
to revamp its acquisition       process, which we believe will help
minimize such problems in the future.           The Administrator     has
created a new Executive Director         for Acquisition   who, among other
duties,    will be tasked with performing'independent          program reviews
and ensuring that independent operational          testing   is conducted.     We
have recommended such independent testing          and view the creation     of
this new organization       as encouraging.2     We plan to evaluate its
effect    on new acquisitions.

Facilities   and Euuioment    Costs Continue    to Rise

        As modernization   of the ATC system moves into the 199Os,
FAA's F&E budget request has reached an all-time       high of $2.5
billion    this year, a 47 percent increase over the fiscal    year 1990
appropriation.      This large increase is due to (1) the movement of

 .r    a fit Contro :                                  to Mode nize     he
System (GAO,/RCED=90=146FS, Apr.      17, 1990).
2Air Traffic  Control:   FAA Needs to Imolement        an Effective   Testinq
Prasrram (GAO/IMTEC-89-62, Sept. 22, 1989).

Original     Nationa& Airspace System (NAS) Plan projects              into full
production      and (2) the addition         of new modernization     projects   due
to NAS Plan project           delays and new requirements.        The addition    of
these new projects          will keep the F&E account at the $2.5 to $3.0
billion    level for at least the next 5 years.               Over that period,     FM
believes     it needs $13.5 billion          to sustain the F&E program.       In
addition,      FM     is currently     analyzing whether its 1983 strategy        to
consolidate       188 terminal       and 20 enroute facilities     into 23 area
control    facilities       is still    operationally   feasible.     FAA has
acknowledged that a revised consolidation               plan could cost an
additional      $1 billion.

Probl ems in Plannlna an d Imolementinq
The Interim  Sunuort Plan

       Delays in the original     NAS Plan projects--combined           with
increasing    demand on the ATC system --have required new projects
such as expansion of the Dallas/Ft.            Worth and the Chicago terminal
radar approach control       (TRACON) facilities.          At the request of this
Subcommittee, we are reviewing one of the largest                of these short-
term projects:      the Interim Support Plan, which FM currently
estimates at a total cost of $430 million.                The Interim Support
Plan is a conglomeration       of projects      directed    primarily   at
resolving    maintenance and capacity problems at TRACONs until
longer term modernization       activities--such         as the Advanced
Automation System--are completed.

       Our work to date suggests that FM did not properly          plan and
assess the Interim Support Plan before it sought funds for the
project.    The program was included in FAA's budget before the
agency's normal review process was completed.            Also, FAA's Systems
Engineering   and Integration      Contractor   found that 7 of the 10
individual   projects    in the program it examined were not coat-
beneficial   and another was cost-beneficial         for only half of the
proposed sites.       The contractor    also recommended that each project
be assessed individually.     We believe   such an assessment would have
verified  that solutions   were needed for specific     equipment
problems.    Instead,   FM generally  dismissed the contractor's
concerns and proceeded with the project.       Therefore,    FM has no
assurance that the equipment being procured will address the most
pressing problems at its TRACONfacilities.

       Furthermore,    despite the urgency initially    ascribed to the
Interim Support Plan, implementation         is behind schedule.   In 1988,
then-Administrator      McArtor indicated   that there were no more
serious operational      requirements   than those covered by the Interim
Support Plan.       However, as of March 1990, most of the Interim
Support Plan projects       are behind schedule and only a small portion
of the equipment has reached the field.

       In addition,     several FM operations   officials       believe
additional    short-term     projects will be necessary before the NAS
Plan is completed.         One example is the need for more controller
work stations     due to the expansion of the Chicago TRACON. The
Interim Support Plan delays and the likelihood            of additional short-
term projects     indicate    that FM should properly       review new
projects   before funding is requested.

Increasina   Reliance   on Sunoort    Contractor@

       FM’s increasing    reliance     on support contractors     is an
emerging issue that requires the agency's attention.             *Following a
review of the NAS Plan in 1982, the White House Science Council
Panel recommended that FM hire a prime contractor             to formulate,
design, and integrate     all NAS Plan systems.         In 1984, FM hired a
support contractor     but did not completely      follow the panel's
recommendation.     Unlike a prime contractor,        Martin Marietta,      as the
Systems Engineering     and Integration     Contractor,    is not responsible
for either the initial     system design or for directly        controlling
individual  system vendors.        Instead,  it serves as FM's technical
adviser for implementing the NAS Plan.    One of Martin Marietta's
primary responsibilities  is to ensure that the thousands of
components being built will be capable of working together,     a
process called systems integration.

      Recently,   FM awarded a $139 million    contract  to TRW
Incorporated    to assist with its automation effort,    including    help
with the Advanced Automation System. Some of the types of tasks
TRW will perform, such as testing    and evaluation,    parallel   the
tasks listed    in Martin Marietta's contract.

       Because of FM’s       growing use of support contractors,         we are
concerned about how additional           players will affect Martin
Marietta's     overall  role    in integrating      all modernization   projects.
FM officials      told us that they are reviewing their use of support
contractors.      As part of this assessment, defining           precise roles
would help to avoid overlapping           responsibilities     and unnecessary
costs.     Furthermore,    as we recently      testified,   developing   in-house
systems engineering       expertise    is an option that deserves serious
consideration     in light of the ongoing nature of modernization.3

FM Has an Oouortunitv       to Reassess and Renort       Prosress
Against Modernization      Goals

       The original  NAS Plan contained generalized,     high-level   goals
such as increased controller     productivity  and a reduced risk of
accidents and collisions     to be achieved when NAS Plan projects      are
completed in the late 1990s. A problem associated with the NAS
Plan is that decision makers have no yardstick       with which to
measure the agency's incremental      progress toward meeting long-term
goals.    Acknowledging that the NAS Plan no longer reflected       its
total ATC modernization    needs, FM recently    announced that it was

31ssues Related to FM's Modernization           of the Air    Traffic   Control
System (GAO/T-RCED-90-32).
developing    a more comprehensive program entitled      the Capital
Investment Plan.     This new effort   will include the original     NAS
Plan projects    as well as new projects    needed for added capacity,
new requirements,    and sustaining  existing   operations.

        We believe the Capital Investment Plan provides FM with the
opportunity      to comply with our previous recommendation that it set
relative     project    priorities      on the basis of benefit          cost ratios,
mission needs, or safety considerations.4                  Prioritization      would
provide visibility         to FAA’s proposed emphasis in the Capital
Investment Plan.         Indeed, since the new Plan will distinguish                  those
projects     required to sustain the existing            ATC system from those
needed to increase capacity,             the Congress would be in a better
position     to weigh trade-offs         between near-term and long-term
activities.       The new Plan also provides FAA with the opportunity                     to
reassess and update its original              goals, to develop a measurement
strategy,      and clearly      show its progress in meeting these goals.
For example, one approach FM can take is to specify                       in
quantitative      terms, how incremental          increases in controller
productivity      contribute       to reducing flight      delays and the risk of


       Once developed, new ATC systems still        need to be installed     and
made operational     in the field.      FM has yet to effectively      address
two key issues relating       to bringing   new systems on line:     namely,
identifying    how much staff is needed to install       and test equipment
in the field    and train controllers     in its operation,    and providing
regions with an accurate information         system for planning
implementation    activities.

4Air   Traffic    Control:  Continued Improvements Needed in FAA's
flanauement      of the NAS Plan (GAO/RCED-89-7, Nov. 10, 1988).
      After    last year's appropriation        hearings,    this Subcommittee
told FM to assess its human resource requirements                  to bring
modernization       equipment on line and report on its plans to meet
such needs.       It has not done so. While FM officials                agree that
they need more staff,          they have not estimated all implementation
requirements.        FM has a draft study that estimates             its needs for
projects    to be installed        at one group of facilities:          Air Route
Traffic    Control Centers.         While this study of implementation           needs
at Centers is still         in draft form and its results        are being
validated,     it does suggest substantial        staffing     shortfalls      of air
traffic    controllers,       engineers,  and technicians--over         700 staff
years in fiscal        year 1991 and steadily     increasing     to over 1,900
staff years in fiscal          year 1995 (see attachment I for more
details).      It also stated that 40 percent of the estimated
implementation       tasks had to be performed by FM controllers,
engineers,     and technicians       and could not be contracted          out.   These
numbers do not include estimates for other facilities,                    such as
TRACONs and airport        towers, where FM has not assessed its staffing

       As we reported in June 1989, continued delays in NAS Plan
projects   have saved FM from having to face the consequences of not
having enough people available     to bring new systems on line.5
However, FM may soon have new systems at its disposal that go
unused unless it quickly determines the number of people it needs
and takes decisive    action to hire and train them.

5Air Traffic    Control:     FM's Implementation  of Modernization
Projects   in the Field     (GAO/RCED-89-92, June 28, 1989).
Not Fullv    OpeMhxml

        We have also reported on the inadequacy of FM’s               information
systems to monitor project milestones         and estimate project
resources.      In particular,    FM regions   had difficulty         scheduling
resources to install        new systems because of accurate         equipment
delivery    dates.   To improve its management of information,              FM
initiated    development of a new reporting      system.      Initially
projected    to be on line by January 1990, the new system is not
scheduled to be complete for another 3 to 6 months.

        In the meantime, FM project           managers continue to use the old
information       systems.      This has led to problems, as evidenced by a
Charlotte      airport    situation   concerning installation          of a new
instrument      landing system.       Regional officials        delayed contracting
for site preparation          for the new equipment because they believed
the information        system inaccurately       portrayed    the actual status of
the contractor's         equipment delivery      plans.    Indeed, although the
contractor      was 17 months behind schedule, the information               system
listed     equipment delivery       as occurring     in January 1990. However,
without telling        the region, FM purchased some equipment through
other means and %t was delivered            to the Charlotte        airport  in
February 1990. Since the site was not prepared to receive the
equipment, it had to be stored on-site.                 FM plans to complete
installation       in late June 1990.

      I will now provide a status report           on FM's     efforts   to rebuild
and train   its safety work forces.

       Although FM has made progress in increasing       its work forces,
staffing    shortages persist,  and the agency is falling    short in
training    its existing  work forces.  We are concerned that FM has
not fully   addressed     the scope and cost of developing      a sufficient
and adequately trained work force.          Maintaining  a high level of air
safety requires       not only a commitment to fund increases      in the air
traffic   controller;     aviation   safety inspector,  and field-
maintenance technician        work forces,  but also a concurrent
commitment to adequately train them.

Staffin:   Needs Not beteu

        Although FM is making progress in increasing            its controller
and safety inspector     work forces,      it continues to experience
shortages in both.     Last January, FM estimated it would fall
1,945 people short of its 1990 congressional            mandate of 12,725
full performance controllers       and that it also would not meet its
mandate to have 17,500 controllers           overall  on board.     The overall
number includes developmental        and full performance controllers.
Although FM has stated it does not need to meet its hiring
mandate because of lower than expected aviation             growth, the
staffing     level FM actually    requires     cannot be determined because,
after 3 years, staffing      standards are still       being updated.

        FM also will have ~7 F;-.fety inspector     shortfall    of over    255
out of over 3,000 needed in 1991. The shortage may actually                 be
greater because FM's inspector       staffing    standards understate        the
number needed for major new inspection        requirements      such as    "hands
on" inspection    of aging aircraft   and sunteillance        of foreign
aircraft   repair stations.    FM plans to develop new inspector
staffing   standards by 1992 and believes that once developed              they
will show a need for more inspectors.

        In addition, there is an emerging issue which could affect the
size and role of the inspector    work force.     FAA is developing a
concept called lfself-audit,n   to better utilize    the airlines'
gualtity assurance programs to ensure that safety regulations
governing      pilots     and maintenance are followed.         This concept is
based on the premise that air carriers              are primarily      responsible
for ensuring        that their   operations    are safe and in compliance          with
FM regulations.            it is too early to say how the self-audit            concept
will    evolve and what the specifics         will entail.        We intend to
closely     follow     the concept's   development.

                 ortaaes Force FM
to Contract    Out Maintenance

        At the beginning of fiscal    year 1990, FM was over 1,500
people short of the 10,000 technicians       it needed.   FM has not
significantly    increased its technician    work force over the last
several years because it thought it would need fewer technicians      as
new NAS Plan equipment came on line.        However, this benefit has
not yet materialized,     and continued NAS Plan delays have resulted
in existing    equipment being maintained longer and more technicians
being needed.

       Now, as we have been predicting        for several years, hiring
enough technicians       to overcome the shortfall     is exacerbated because
38 percent of the maintenance work force is within 5 years of
retirement     age. To cope with this problem, FM's proposes to hire
2,350 technicians      by 1994 and increase the use of contracting.
Even at this hiring        rate, FM is likely    to experience shortages of
fully   trained   technicians    for some time because it takes from 3 to
5 years for a newly hired technician          to reach the full performance

      FM    proposes to spend an estimated $490 million        through 1995
to contract     for maintenance activities,     including   $170 million   for
activities    which FM acknowledges are better undertaken in-house.
FM now has several years' experience in maintenance contracting.
To make informed decisions        on funding these contract    activities,
the'congress     needs information     from FM on how such contracting
meets its needs, the impact of contracting       on its efforts              to
recruit    maintenance technician,   and the relative   cost of
contracting     versus in-house maintenance.

Pay Dem0nstrath.n        Proiect   Has HasI Mixed Resulta

       As  part of its plan to overcome staffing             shortages,      FM began
paying controllers,          inspectors,      and maintenance technicians         an
incentive     allowance of up to 20 percent in June 1989 to attract
people to hard-to-staff           facilities     in the I;os Angeles, Oakland,
Chicago, and New York areas.                FM has paid about $15 million          in
incentive     allowances through March 1990. While the overall                    number
of employees has slightly            increased at participating       facilities,
results    so far are mixed.           For example, for the nine participating
ATC facilities,       only four have shown an increase in the number of
experienced      controllers.

Trainins    Shortfalls     Exacerbate    Staffina    Problems

         Complicating      its staffing     problems, FM is falling         short in
training     controllers,       inspectors,     and maintenance technicians.         For
example, FM has a continuing              backlog of new inspector        training.
In fact, FM may not hire all of the 300 inspectors                    it intends to
bring on board this year because of its inability                   to train them.
Part of the problem is that the Academy, FAA’s primary training
facility,     does not have enough instructors.             To address this
problem, FM recently            announced an initiative       to make instructor
positions     more attractive        by upgrading pay and training.            However,
this initiative        will take time to work, and FM may need to seek
short-term      solutions     to reduce its inspector       training     backlog.

     The demand for training    newly hired maintenance technician
will also outstrip    the Academy's capacity in fiscal  years 1991 and
1992 when hiring   plans call for about 900 new technicians.     The
Acahemy can accommodate only 640 new hires each year.        FM plans to

meet the excess demand by using a type of computer-based
instruction,  which is ineffective, in part,   because it                is   an
inappropriate  training medium for new technicians.

       FM’s training  shortfall is compounded by available      training
seats going unused.    Although 28,000 students attended     Academy
training  in fiscal  year 1989, another 3,500 available     seats were
unfilled.   FM does not have a policy   to minimize     "no shows."

FM Slow in IBnq                  Its   TreL;inins Initiative

         FM has recognized its training         deficiencies,      such as poor
training      system design, outmoded and inadeguate training              delivery
systems, and a fragmented training           organization.       To address these
problems, FM established           an Office of Training       and Higher
Education and developed a comprehensive,              $406 million    training
plan called Flisht                       I
                           Plan for Tralninq which extends through 1994.
However, progress in implementing this plan has been slow--30 of
its 47 projects       are already behind schedule, some as much as a
year.      For example, FM is late beginning           improvements in its
curricula      for training    maintenance technicians        despite its
critical     need to sustain a major effort         in this area.

       In our view, this program is off track because of insufficient
funding and poor planning.           Due to internal        competition     for funds,
FM plans to spend only $48 million              of the $89 million        needed to
keep the plan on track through fiscal              year 1990.        Poor planning has
caused a ripple      effect of delays.         For example, improvements in
maintenance technicians'         curricula     have not begun because FM must
first   complete a study of the technicians'              job tasks,     which will    be
the basis of the training         project.      Yet, the job task study is
itself    a year behind schedule.          This ripple      effect    ends up
cascading    throughout    the system.       Similarly,      delays in increasing
the use of simulation        for controller      training      make it necessary to
cont5nue lengthy and costly on-the-job              training      for controllers.

    In turn, lengthy controller training  affects   FM's             ability   to meet
    it full performance level mandate for controllers.


           There is no doubt that      the extraordinary    needs of both
    maintaining    and modernizing     the ATC system will     require    substantial
    increases   in FM’s   funding.       We believe   it is crucial    that FM
    clearly    show the   Congress,   the aviation     community, and the flying
    public    how these   increases   will result    in measurable benefits.

            In the F&E account, this will require FM to prioritize         its
    many needs, and assure that it has adequate staff to implement new
    systems.      Regarding its current operations,      FM needs to work
    toward meeting Congressionally         mandated goals for its work forces
    and determining        its true work force staffing   needs. Although FM
    has started     initiatives     in some of these areas, they have often
    been delayed and fallen short of the mark. FM needs to promptly
    address these problems if we are to see the safer and more
    efficient    ATC system that the agency envisions.        We intend to
    continue advising Congress on FM's progress in these areas.

          This concludes our prepared statement.            I will    be pleased    to
    address the Subcommittee@s questions at this            time.

ATTACHMENTI                                                                 ATTACHMENTI
                       BY STAFF YEAR FOR FISCAL YEARS 1991-1995
                                   Fiscal        Fiscal   Fiscal       Fiscal        Fiscal
                                    year          year     year         year          year
        orgaw                       1991          A222     1993         195)4         Js22
Air     traffic
  Requirementsa                        297         468      885        1,286         1,533
  Availability                          80         126      194           344          207
  Shortfallb                           217         342      691           942        1,326

Airway       facilities
  Requirementsa                        706         820      862           860          799
  Availability                         214         214      214           214          214
  Shortfallb                           492         606      648           646          585

Total      shortfallb                  709         948    1,339        1,588         1,911

"The study estimated that about 40 percent of these requirements
must be done by FM on-site  Center personnel,  and that the
remaining 60 percent could be accomplished by others such as
contractors or FM personnel from other locations.
bThese shortfalls     represent              only work needed for    NAS Plan
implementation.     They do not               include operational    shortfalls,
estimated at 411 staff years                  in fiscal year 1995,    or projected
attrition,   estimated at 271                staff years in fiscal    year 1995.

Source:       August      1989 Draft   ARTCC    Resource Study

Data   Base:                                     Submitted   by:   j.M   /f-

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