-   **Executive Overview**

-   **Background.** The Department of Transportation 1996 Appropriations
    Act\
    (PL 104-50) exempts the FAA from many existing Federal procurement
    laws and regulations, and it directs the agency to develop and
    implement a new acquisition management system by April 1, 1996. The
    FAA convened a Blue Ribbon Panel to provide outside expertise in
    reforming its acquisition management system. This report provides
    the panel's independent assessment of the FAA's acquisition reform
    efforts.

**Reform Requirements.** The Blue Ribbon Panel believes that reform is
needed in four major areas to ensure that the FAA's acquisition
management system adequately supports the FAA mission of providing a
safe, effective, and efficient civil aviation system. In order of
importance these four areas are: **(1) creating a culture of excellence
and transforming the Research and Acquisition (ARA) work force into a
high performance organization; (2) reforming the acquisition management
system; (3) reforming the budget process to ensure that the FAA is
adequately funded and has the necessary budget flexibility; and (4)
reforming and streamlining the FAA's procurement process.**

**Assessment of FAA's Acquisition Reform Effort.** The panel believes
that the new acquisition management system proposed by the FAA is an
excellent start toward meeting the reform goals in acquisition
management and procurement. The FAA's acquisition reform working group
has been very successful in accomplishing its task. These reforms must
be continued through an aggressive implementation program that will
propel the FAA toward the continuous changes necessary for creating a
system that fully emulates the best practices of world-class commercial
organizations.

While the FAA has made significant improvements in the acquisition and
procurement policy arenas, the panel has serious reservations concerning
the personnel and budgetary reforms needed to support meaningful change
in the acquisition management system. The Blue Ribbon Panel has
developed specific recommendations for FAA and Congressional actions
necessary for continued success of the acquisition reform effort.

**Personnel Reform and Excellence in the Acquisition Workforce.** While
the personnel reform initiatives developed by the FAA will provide the
ARA line of business with the flexibilities needed to transform its work
force, the timetable for FAA-wide implementation of personnel reforms is
unacceptable. The ARA line of business must be given permission to
immediately pilot innovative personnel practices in hiring, performance
management, compensation, incentive awards, etc., and invest adequate
resources to jump-start transformation of the acquisition work force
into a high performance organization.

**Acquisition Management System Reform.** The Blue Ribbon Panel believes
that the increased flexibility, focus on lifecycle management, emphasis
on external customer and supplier involvement, and empowerment of
integrated product teams (IPTs) contained in the new acquisition
management policy are steps in the right direction. The panel is
concerned, however, that the priority selection process (i.e.,
requirements process) proposed by the FAA will not ensure the
appropriate balance between meeting operational needs and taking
advantage of technological opportunities (for cost reductions and safety
and performance enhancements) within the resource constrained
environment of the future. The panel believes that the FAA must
establish an organization that functions as a high level advocate for
non-traditional solutions and opportunities offered by advanced
technology.

**Budget Reform.** The Blue Ribbon Panel was provided no tangible
evidence of progress on the budgetary reforms needed to ensure
successful implementation of the acquisition reform effort. The panel
believes that budgetary reform is needed in two broad areas. First, the
FAA must have a means to ensure adequate and stable multi-year funding
for major acquisition programs, including the transition training and
other support necessary to bring new systems into the FAA inventory.
Second, the FAA must have the flexibility to manage its funds without
constraints imposed by line item program allocations and barriers
related to different appropriation sources. This funding flexibility
must be matched with increased visibility and accountability in FAA's
capital program to ensure that the FAA responsibly manages public
resources to deliver results. The FAA must make internal changes to its
budget process and aggressively work with Congress to obtain the
necessary legislative reforms in the financial arena.

**Procurement Process Reform.** The FAA's new procurement policy
represents a significant advancement over past practices. The FAA must
now aggressively implement this policy and continue making changes
needed to exceed the interim goal of a 50% reduction in the time
required to award contracts. The FAA must continue to evolve its policy
in the areas of price analysis, cost accounting standards, and
performance-based contracting.

**Implementation.** The Blue Ribbon Panel believes that the FAA must
establish an acquisition reform implementation group reporting directly
to the FAA Administrator to continue the reform momentum and ensure that
the necessary culture changes occur throughout the FAA.

-   **Congressional Support.** Congress must continue to play a critical
    role in supporting the FAA's acquisition reform effort by ensuring
    that the FAA has the flexibility to provide sufficient funding to
    transform the acquisition work force. In addition, Congress should
    pursue budgetary reforms that will provide stable, multi-year
    budgets for major system acquisitions and allow the FAA to more
    flexibly manage its own funds. Finally, Congress must resist
    imposing any new restrictive regulations on the FAA in response to
    mistakes that are likely to occur during transition to the new
    acquisition management system.