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Performance and Accountability Series:

January 2003:

Major Management Challenges and Program Risks:

Department of Transportation:

GAO-03-108:

A Glance at the Agency Covered in This Report:

The Department of Transportation implements national transportation 
policy 
and administers federal transportation programs.Its responsibilities 
are 
considerable and reflect the extraordinary scale, use, and impacts of
the 
nations transportation system. The department carries out multiple 
transportation missions, including

* reducing deaths and injuries on our nations roads,in civilaviation, 
in the
railroad industry, and on waterways;

* improving mobility on and the accessibility of our nations roads and 
public 
transportation systems;

* protecting the nations passenger and freight transportation systems;

* promoting the development of the railroad industry and the development 
and 
maintenance of an adequate, well-balanced merchantmarine; and

* providing law enforcement, humanitarian assistance,and emergency 
response on 
our nations waterways.

The Department of Transportation's Budgetary and Staff Resources

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This report is part of a special GAO series, first issued in 1999 and 
updated in 
2001, entitled the Performance and Accountability Series: Major 
Management Challenges 
and Program Risks. The 2003 Performance and Accountability Series 
contains separate 
reports covering each cabinet department, most major independent 
agencies, and the 
U.S. Postal Service. The series also includes a government-wide 
perspective on 
transforming the way the government does business in order to meet 
21st century 
challenges and address long-term fiscal needs. The companion 2003 
High Risk Series: 
An Update identifies areas at high risk due to either their 
greater vulnerabilities 
to waste, fraud, abuse, and mismanagement or major challenges 
associated with their 
economy, efficiency, or effectiveness. A list of all of the 
reports in this series is 
included at the end of this report.

GAo Higlights:

Highlights of GAO-03-108, a report to
Congress included as part of GAOs
Performance and Accountability Series

PERFORMANCE AND ACCOUNTABILITY SERIES
Department of Transportation

Why GAO Did This Report:

In its 2001 performance and accountability report on the 
Department of Transportation 
(the department), GAO identified important safety, security, 
acquisition, financial 
management, and other issues facing the department. The 
information GAO presents in 
this report is intended to help sustain congressional attention 
and a departmental 
focus on continuing to make progress in addressing these 
challengesand others that
have arisen since 2001and ultimately overcoming them. This 
report is part of a special 
series of reports on governmentwide and agency-specific 
issues.

What GAO Found:

The Department of Transportation has implemented a number 
of actions to
improve its mission and management performance. Future 
improvements
will increasingly demand effective partnerships and 
consensus-building with
state, local, and private stakeholders.

 Improving transportation safety. Efforts to further 
reduce 44,000
annual transportation fatalities have reached a plateau. 
Since the
highest pay-off actions have occurred, future 
improvements will be
difficult because they depend on influencing individuals 
behaviors and
state and local governments implementation of safety 
laws.

 Transforming transportation security. Security is a 
crucial and
growing responsibility. The department needed to 
design and implement
effective security approaches that did not unduly 
hinder passenger and
freight mobility. It created the Transportation 
Security Administration
and staffed a federalized aviation screening 
workforce of more than
60,000 people within just a few months. Despite 
an impressive start,
extraordinary challenges remain. It now must 
accomplish a smooth
transfer of security functions to the new Department 
of Homeland
Security and work closely with the new agency on 
transportation
security.

 Improving mobility and economic growth through 
intermodal and
modal approaches. As transportation needs change, 
mobility and
economic growth are affected. More travel crosses 
transportation
modes and increasing congestionparticularly for 
freightaffects
productivity. New strategies and policy decisions-
-especially about
Amtrak's role--are required to meet these challenges.

 Enhancing management of aviation and Coast Guard 
acquisitions.
The Federal Aviation Administration (FAA) and the
Coast Guard face
major acquisition issues. Both agencies have 
improved acquisition
management, but multibillion-dollar modernization 
projects pose risks of
significant delays and cost increases. Specifically, 
FAAs Air Traffic
Control modernization efforts continue to be at 
high risk.

 Building human capital strategies. The department 
faces human
capital problems that are mirrored in the nations 
transportation sector.
A shortfall of people and skills could compromise 
the transportation
workforce and affect the economy, safety, and 
mobility of our nation.

 Fostering improved financial management. The 
department and
FAA have made significant progress in improving 
the underlying causes
of weaknesses in their financial management 
systems. Until new
systems that will soon be deployed are proven in 
full operation, FAAs
financial management systems remain at high risk.

What Remains to Be Done:

GAO believes the department should

 work with Congress and other transportation 
stakeholders to
develop approaches that improve transportation 
safety,
mobility through intermodal and modal planning 
and investment approaches, 
and human capital strategies;

 pursue strategies to address long-term security 
challenges and ensure 
a smooth transition to Department of Homeland 
Security responsibility;

 continue to improve its acquisition and financial 
management by addressing
root causes of problems.

To view the full report, click on the link above.
For more information, contact John H.
Anderson, Jr. at (202) 512-2834 or
andersonj@gao.gov.

Contents:

Transmittal Letter:

Major Performance and Accountability Challenges:

GAO Contacts:

Related GAO Products:

Performance and Accountability and High-Risk Series:

This is a work of the U.S. Government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. It may contain 
copyrighted graphics, images or other materials. Permission from the 
copyright holder may be necessary should you wish to reproduce 
copyrighted materials separately from GAOs product.

Transmittal Letter January 2003:

The President of the Senate
The Speaker of the House of Representatives:

This report addresses the major management challenges facing the U.S. 
Department of Transportation as it carries out its multiple and highly 
diverse missions. The report discusses the actions that the department 
has taken and that are under way to address the challenges GAO 
identified in its Performance and Accountability Series 2 years ago, 
and major events that have occurred that significantly influence the 
environment in which the department carries out its mission. Also, GAO 
summarizes the challenges that remain, new ones that have emerged, and 
further actions that GAO believes are needed.

This analysis should help the new Congress and the administration carry 
out their responsibilities and improve government for the benefit of 
the American people. For additional information about this report, 
please contact John H. Anderson, Jr., Managing Director, Physical 
Infrastructure Issues, at (202) 512-2834 or at andersonj@gao.gov.

David M. Walker
Comptroller General 
of the United States:
Signed by David M. Walker:

[End of section]

Major Performance and Accountability Challenges:

Our 2001 Performance and Accountability Series report described the 
major challenges facing the Department of Transportation (the 
department) as follows:

* Improving the safety and security of air, highway, and pipeline 
transportation;

* Strengthening the financial condition of Amtrak;

* Enhancing competition and consumer protection in the aviation and 
freight rail industries;

* Enhancing the management of aviation and Coast Guard acquisitions and 
obsolete ship disposal;

* Increasing the accountability for financial management activities; 
and:

* Improving the oversight of highway and transit projects.

We have reported that the department has made measurable progress in 
carrying out its diverse missions and improving management of its 
operations since our 2001 report. For example, the department has made 
concentrated efforts to improve financial management of its accounting 
and property management activities. However, we continue to designate 
both the Federal Aviation Administration's (FAA) acquisition and 
financial management as high risk areas. Both our reviews and the 
department's own performance reports indicate that its performance has 
been uneven. The department's fiscal year 2001 performance report (the 
most recent data available), for example, indicates that it met only 
slightly more than half
(59 percent) of the performance goals that it set for itself.

In addition, the intervening 2 years have resulted in dramatic changes 
that have introduced complex new issues with no easy solutions into the 
department's responsibilities. Newly critical concerns--transportation 
security and human capital--are affecting the department's priorities 
and the scope of these concerns is substantial. Security, always a 
crucial issue, became paramount. An impending shortage of skilled 
personnel may compromise transportation missions and services in the 
department and throughout the transportation system. Also of concern is 
the level of congestion, which is an increasingly pervasive problem in 
the transportation system. Furthermore, the department's other missions 
and management goals require continuing attention.

This 2003 Performance and Accountability Series report differs from our 
2001 report in two important ways. First, our 2003 report recognizes 
the need to frame some issues more broadly than we have done before. 
Second, it provides attention to those issues, such as security, that 
have arisen in the intervening 2 years and will challenge the 
department for years to come. This report discusses six mission and 
management challenges that require the department's sustained attention 
and innovation.

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The department's pressing challenges are to:

* Improve transportation safety to reduce transportation-related 
fatalities, a leading cause of death. We have framed this issue more 
broadly than in the past so as to include highway safety. This broader 
statement of the safety challenge facing the department recognizes that 
it has not made substantial inroads into reducing transportation-
related fatalities in the last 2 years. We focused on safety on the 
nation's highways because the overwhelming majority of fatalities occur 
there. We are not focusing on pipeline safety as we did in 2001 because 
the department's Office of Pipeline Safety has responded positively to 
our recommendations aimed at (1) involving state pipeline safety 
offices in the department's safety inspection of pipelines and (2) 
using a fuller range of enforcement actions, such as monetary 
penalties, when it finds safety violations.

* Transform transportation security to reduce the vulnerability of the 
nation's surface and air transportation systems to terrorism and other 
disruptions. While our 2001 report recognized that the department faced 
aviation security concerns, these concerns have been greatly amplified 
as a result of the terrorist attacks on the United States in September 
2001 and subsequent events. This 2003 report, therefore, presents 
transportation security as a separate mission challenge. Under the 
Homeland Security Act of 2002, the department's major homeland security 
functions, now housed in the Transportation Security Administration 
(TSA) and the Coast Guard, are to be moved to the newly created 
Department of Homeland Security by January 2004. Because there will be 
a continued need for cooperation and communication between the 
Department of Transportation and TSA to effectively protect borders and 
ensure security of all modes of transportation and because the 
department will be a key stakeholder in the future regarding 
development and implementation of transportation security policy, we 
continue to consider transportation security functions as challenges 
for the department to address.

* Improve mobility and economic growth using intermodal and modal 
approaches to meet changing passenger and freight travel needs, such as 
ameliorating congestion. Our 2001 report recognized some aspects of 
this challenge--addressing the financial condition of Amtrak, aviation 
industry consolidation and its impacts on small communities, mass 
transit funding, and oversight of federal highway and bridge 
investments. However, this 2003 report presents this issue in a broader 
perspective, recognizing that the challenge to fostering mobility is 
more than just surmounting problems in individual modes of 
transportation. Three issues included in our 2001 report are not 
included in this report. First, the department has responded positively 
to our recommendations regarding transit project oversight. Second, we 
have presented Congress with options for determining the amount of 
highway trust funds for distribution that it may wish to consider 
during the reauthorization of the Transportation Equity Act for the 
21ST Century. Finally, regarding freight rail competition, the Surface 
Transportation Board (the industry regulator) does not expect 
additional applications for mergers of major railroads in the near 
future.

* Build human capital strategies that will ensure that the department 
and the transportation sector achieve missions and deliver services 
effectively, efficiently, and economically. We identified the need to 
revamp federal strategic human capital management as a governmentwide 
challenge[Footnote 1] in 2001 and discussed aspects of this issue in 
our 2001 report on the department. The need to address human capital 
challenges has grown over the past 2 years and we have identified it as 
a discrete challenge for the department in 2003.

* Enhance FAA and Coast Guard acquisition management to maximize 
returns from investment of public funds in large, complex, high-cost 
procurements. This is a continuing challenge in which the department 
has made some progress, but still needs concentrated attention. This is 
particularly true for aviation acquisition management, which we 
designated as high risk in 1995. FAA acquisition remains a high risk 
area in 2003 because critical systems are not yet in place and proven 
in operation and because the agency has not completed efforts to 
address root causes of prior modernization problems. As a result, key 
reforms are not completed and could jeopardize major projects' costs, 
schedule, and performance. Obsolete ship disposal--included in our 2001 
report--is not discussed in this report because the department has made 
progress in this area.

* Continue progress in improving financial management to provide 
accurate, reliable financial information for decisionmakers. FAA's 
financial management has been a high risk area since 1999 and, despite 
significant progress made by the department, continues to be high risk 
this year because critical systems are not yet in place and proven in 
operation.

Selected GAO reports that address many of the department's performance 
and accountability challenges and offer recommendations for improvement 
are listed at the end of this report.

Improving Transportation Safety:

In the past decade, transportation accidents--particularly motor 
vehicle accidents--were among the top 10 leading causes of death in the 
United States and the leading cause of death for people from 6 through 
27 years of age. In 2001, over 44,000 people were killed and over 3 
million people were injured in highway, aviation, rail, and maritime 
accidents. (See fig. 1.) To address this problem, improving 
transportation safety is the department's highest priority.

Figure 1: Fatalities by Transportation Mode, 2001:

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[End of figure] - graphic text:

Notes: GAO analysis of the department's data.

Aviation, rail, and maritime numbers are preliminary. Aviation 
fatalities include the 265 persons killed in the four aircraft hijacked 
on September 11, 2001, but do not include the 2,801 persons killed or 
missing at the World Trade Center or 125 persons killed at the 
Pentagon.

Over the past 4 decades, transportation safety has improved 
considerably. However, in recent years, fatalities have plateaued. Of 
particular concern is the limited progress in recent years in improving 
safety on our nation's roads, where 94 percent of all fatalities occur; 
in general aviation, where
87 percent of all aviation fatalities occur; and in commercial 
aviation, where accidents have the potential for catastrophic loss of 
life.

Improved Highway Safety Requires a Renewed Focus on Seat Belts and 
Truck-related Fatalities:

Between 1960 and 1990, motor vehicle transportation fatality rates were 
reduced by more than half. (See fig. 2.) However, since the mid-1990s, 
the fatality rate and the number of fatalities from transportation-
related accidents on our nation's highways has not declined 
substantially. Two areas for reducing motor vehicle fatalities--seat 
belt use and large truck safety--continue to experience less progress 
than other areas in meeting highway safety goals.

Figure 2: Motor Vehicle Fatality Rate and Number of Fatalities, 1960 
through 2001:

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Seat belts. The department's National Highway Traffic Safety 
Administration (NHTSA), leading highway organizations, and we have 
reported that seat belts offer the most effective way to lower highway 
fatalities.[Footnote 2] In 2000, NHTSA estimated that seat belts saved 
almost 12,000 lives and could have saved an additional 9,200 lives that 
year if all passenger vehicle occupants aged 4 and older had worn seat 
belts. As a result of the passage of state seat belt laws and a 
national effort of highly visible seat belt law enforcement and public 
education, seat belt use increased considerably in the 1980s and early 
1990s from 10 to 15 percent nationwide to 66 to 70 percent nationwide. 
However, since the early 1990s, seat belt use rates have not increased 
substantially. In 2001, front seat belt usage increased slightly to 73 
percent but remained well below the department's target for the year of 
86 percent. In 2002, front seat belt usage increased slightly again to 
75 percent, saving an additional 500 lives. Nevertheless, small annual 
percentage increases in front seat belt use do not put the department 
on track to meet its goal of having 90 percent of front seat occupants 
use seat belts by 2005.

One key factor in increasing seat belt use is the enactment of primary 
enforcement seat belt laws. Primary enforcement allows police officers 
to stop vehicles and write citations whenever they observe violations 
of safety belt laws. (In contrast, secondary enforcement permits police 
officers to write a citation only after a vehicle is stopped for some 
other traffic violation.) As of September 2002, nearly every state has 
enacted laws requiring the use of safety belts, but only about 40 
percent of all states have primary enforcement laws. NHTSA estimates 
that states with secondary enforcement laws could increase seat belt 
use an estimated 14 percentage points from an average of 67 percent if 
they enacted primary enforcement laws. This increase translates to 
preventing around 1,750 fatalities, saving the federal government 
around $300 million, saving states nearly $140 million, and saving $3 
billion in total costs to society annually (1998 dollars).

The department's ability to implement safety-enhancing interventions 
has been limited because it must rely heavily on individuals to modify 
their behavior and state governments to implement laws that enhance 
safety. To increase seat belt use, we have suggested that Congress 
consider encouraging states to enact primary enforcement laws. The 
department's recent campaign to encourage states to increase seat belt 
use, "Click It or Ticket," is designed to resonate with hard-core non-
seat-belt-users in high-risk populations that have traditionally lower 
than average seat belt use rates and higher fatality rates. The 
department has received preliminary evidence that this campaign is 
having some success. For example, some of the strongest gains in seat 
belt use during the Memorial Day holiday in 2002 were in states 
participating in the "Click It or Ticket" enforcement campaign.

Large commercial trucks. The department has made significantly less 
progress in reducing commercial truck-related fatalities than it has in 
improving highway safety overall.[Footnote 3] While commercial trucks 
represent only 4 percent of all registered vehicles, they are involved 
in 12 percent of all crashes resulting in fatalities. As a result, 
around 5,000 people died on our nation's roads in 2001 from crashes 
involving large trucks, a figure largely unchanged from a decade ago. 
In 2001, 200 fewer people were killed in large truck-related accidents 
than in 2000. This reduction was substantially in line with the 
department's goal. (See fig. 3.) However, the department will have to 
make significantly greater gains in the coming years to meet its goal 
for reducing by half the number of large truck-related fatalities, from 
about 5,300 in 1999 to about 2,600 in 2009.

Figure 3: Number of Fatalities from Crashes Involving Large Trucks, 
1991 through 2001:

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As we reported in 1999, efforts to determine how its actions will 
reduce the number of large truck-related fatalities have been limited 
because the department does not have a good understanding of the causes 
of large truck crashes. At the direction of Congress, the department is 
performing a multiyear large-scale study of the causes of large truck 
crashes and expects to report its findings in 2004.

Improved Aviation Safety Will Require Improved Interventions and 
Oversight:

In 2001, more than 1,100 people died in commercial and general aviation 
accidents, almost 50 percent more than the nearly 750 people who died 
in 2000.[Footnote 4] Despite the unusually large increase in aviation 
fatalities in 2001, primarily caused by the September 11, 2001 
terrorist events, commercial and general aviation safety has improved 
considerably over the past 4 decades. In general and commercial 
aviation, the fatality rate decreased considerably between 1960 and 
1975. Between 1975 and 2000 (the most recent data available), the 
fatality rate in general aviation has continued to decline 
substantially (to about 2 fatalities per 100,000 flight hours). The 
fatality rate in commercial aviation has remained relatively low since 
1975, averaging around 2 fatalities per 100,000 aircraft departures. In 
2002, there were no commercial aviation fatalities.

However, aviation experts are concerned that if air travel during the 
next decade were to increase 37 percent over 1999 levels, as was 
forecast before September 11, 2001, the number of fatalities from 
aviation accidents would rise if the department did not make a 
sustained effort to improve aviation safety. To address concerns about 
safety, FAA and the aviation industry developed the Safer Skies 
initiative in 1998. The initiative established the broad safety goal of 
reducing the fatal aviation accident rate for commercial aviation by 80 
percent by 2007. As we reported in 2000, to accomplish this, the 
initiative is designing interventions to respond to key safety problems 
that accounted for over three-quarters of the fatal accidents from 1988 
through 1997, including pilots losing control of their aircraft, pilots 
flying otherwise controllable aircraft into the ground or water, and 
accidents during approach and landing.[Footnote 5]

For general aviation, the Safer Skies initiative did not adopt the 80 
percent goal proposed by two aviation safety commissions. Instead, as 
we reported in 2001, the Safer Skies initiative chose the goal of 
reducing the number of fatal general aviation accidents to 350 by 2007, 
which represents a 20-percent reduction (from 440) in the number of 
fatal accidents that would be expected in 2007 given the expected 
growth in the industry.[Footnote 6] Interim goals for 2000 through 2002 
were actually higher than the fatalities seen in 1999 and did not 
challenge the general aviation industry to continue improvements. 
General aviation safety initiatives will focus on major:

causes of fatal accidents that include weather, loss of control, and 
runway incursions.[Footnote 7]

Compounding our concern about improving aviation safety is the 
impending wave of retirements among aviation professionals--and the 
FAA's limited progress in addressing this problem, as we reported in 
June 2002.[Footnote 8] In a recent survey of air traffic controllers, 
about 5,000 of the approximately 20,000 controllers indicated that they 
might leave in the next 5 years. However, FAA has not yet implemented 
our recommendations to develop a comprehensive human capital strategy 
to meet the impending need to hire and train new controllers. Instead, 
it is hiring new controllers only when current, experienced controllers 
leave--a strategy that might not provide enough well-qualified new 
controllers when they are needed. Further, FAA has not addressed the 
resources that may be needed at its training academy and for on-the-job 
training at its control facilities in order to handle the large influx 
of new controllers and to ensure that FAA's controller workforce will 
continue to have the knowledge, skills, and abilities necessary to 
perform its critical mission.

In addition to developing interventions that respond to significant 
safety problems, a key to improving aviation safety will require that 
FAA be able to effectively inspect the nation's airline operations. In 
1998, FAA introduced a redesigned safety inspection system called the 
Air Transportation Oversight System (ATOS), which shifted oversight of 
airline operations beyond simply ensuring compliance to ensuring that 
airlines have operating systems to control risks and prevent accidents. 
However, in 1999, we reported that FAA's overly ambitious 
implementation schedule has impaired its ability to successfully 
implement several of the system's key elements.[Footnote 9] In 2002, 
the department's Inspector General reported that FAA introduced the 
system's new inspection system without fully developing several key 
elements and without thoroughly testing the feasibility of ATOS as a 
stand-alone surveillance system.[Footnote 10] Critical actions, such as 
analyzing the system's inspection data and implementing actions to 
correct identified weaknesses, are still being developed. Moreover, 
while FAA has made some progress in addressing recommendations we made 
in 1999 to improve inspection guidance, it still has not adequately 
prepared inspectors with adequate training and inspection 
tools.[Footnote 11] Lastly, ATOS has been inconsistently implemented 
nationwide at FAA's field offices because FAA has not established 
strong oversight and accountability procedures.

Transforming Transportation Security:

Since September 11, 2001, securing our nation's transportation system 
from terrorist attacks has assumed great urgency. In response, on 
November 19, 2001, the Aviation and Transportation Security Act was 
enacted. This act created TSA within the department and defined its 
primary responsibility as ensuring security in all modes of 
transportation. Since then, the department has worked to make security 
improvements through its modal administrations while simultaneously 
organizing a new agency to meet the longer-term challenge of 
implementing security improvements that will not excessively inhibit 
commerce and travel or interfere with other critical agency missions. 
With the enactment of the Homeland Security Act on November 25, 2002, 
the new Department of Homeland Security will assume overall 
responsibility for transportation security and incorporate TSA and the 
Coast Guard into its organization. The Department of Transportation 
will need to forge a close working relationship with the new agency to 
effectively protect borders and ensure security of all modes of 
transportation because the department will be a key stakeholder in the 
future regarding development and implementation of transportation 
security policy.

Aviation security received most of the department's attention 
immediately after September 11. More recently, officials have begun to 
turn their attention to surface transportation security as well. 
Balancing surface transportation security needs without unduly 
inhibiting the movement of goods and people is complicated by the 
nature and the vast scope of surface transportation in the United 
States. For example, the volume of imported containers that pass 
through more than 300 public and private U.S. seaports--in 2001, the 
equivalent of six million containers were imported into the United 
States--ensures that no one single shipment can be scrutinized too 
carefully without significantly delaying delivery. (See fig. 4.) About 
6,000 agencies provide transit services such as bus, subway, ferry, and 
light rail to about 14 million Americans each weekday, and the open and 
accessible nature of these services make it difficult to apply the 
kinds of security measures that can be applied at airports. Despite an 
impressive start in which the department simultaneously began to build 
the infrastructure of a large organization as it focused on meeting the 
nation's security needs, formidable short-and long-term challenges 
remain.[Footnote 12]

Figure 4: Inspecting Millions of Containers that Arrive at U.S. Ports 
Remains a Challenge:

[See PDF for image] - graphic text:

[End of figure] - graphic text:

Short-Term Challenges in Aviation Security Remain:

In response to the September 11 terrorist attacks, the department faced 
several urgent aviation security challenges, including meeting 
screening deadlines and addressing security gaps that we and others, 
including the department's Inspector General, had identified. Prior to 
September 11, 2001, airlines were responsible for screening passengers 
and property. In November 2001, the Aviation and Transportation 
Security Act shifted this responsibility to TSA and established a 
series of monumental requirements for the new agency, including 
deadlines for hiring and deploying federal passenger screeners by 
November 19, 2002, and screening all checked baggage using explosive 
detection systems by December 31, 2002.[Footnote 13] In addition to 
these screening deadlines, FAA established an April 2003 deadline for 
designing, approving, and installing reinforced cockpit doors in over 
6,000 passenger and cargo aircraft.

The department has made considerable progress in addressing aviation 
security challenges. According to TSA, it met the November 2002 
deadline by hiring and deploying over 40,000 passenger screeners to 
screen passengers at 429 commercial airports. In addition, TSA reports 
that it met the December 31, 2002, deadline to screen all checked 
baggage. TSA reports that it hired and deployed more than 20,000 of an 
estimated 22,000 baggage screeners as of mid December 2002 to screen 
all checked baggage and that as of December 31, 2002, about 90 percent 
of all checked baggage will be screened using explosive detection 
systems or explosive trace detection equipment.[Footnote 14] The 
remaining checked baggage will be screened using alternative means such 
as canine teams, hand searches, and passenger-bag matching. 
Nevertheless, significant challenges remain. TSA reports that as of mid 
December 2002, it has installed only 239 of the estimated 1,100 
explosive detection machines and 1,951 of the estimated 6,000 trace 
detection machines they say they need to screen baggage to meet baggage 
screening requirements contained in the Aviation and Transportation 
Security Act. Finally, FAA has approved reinforced flightdeck doors for 
5,150 of 6,000 commercial and cargo aircraft requiring newly reinforced 
doors. However, these doors have been installed in only 19 percent of 
these planes.

In addition to securing passenger carry-on luggage and checked luggage, 
TSA faces other immediate challenges in securing cargo aboard 
commercial passenger and all-cargo aircraft. The Aviation and 
Transportation Security Act, enacted in November 2001, requires 
screening all cargo carried aboard commercial passenger aircraft and 
requires TSA to have a system in place as soon as practicable to 
screen, inspect, or otherwise ensure the security of cargo on all cargo 
aircraft. The "known shipper" program-which allows shippers that have 
established business histories with air carriers or freight forwarders 
to ship cargo on planes-is TSA's primary approach to ensuring air cargo 
security and safety and complying with the cargo screening requirement 
of the act.[Footnote 15] However, we and the department's Inspector 
General have identified weaknesses in the known shipper program and 
TSA's procedures for approving freight forwarders. In December 2002, we 
reported that TSA lacks a comprehensive plan with long-term goals and 
performance targets for cargo security, time frames for completing 
security improvements, and risk-based criteria for prioritizing actions 
to achieve those goals.[Footnote 16] We recommended that TSA develop a 
comprehensive plan for air cargo security that incorporates a risk 
management approach, includes a list of security priorities, and sets 
deadlines for completing actions; TSA agreed with this recommendation. 
With regard to dangerous goods shipped by air, in January 2003, we 
reported that undeclared air shipments of dangerous goods can have 
serious consequences, but TSA lacks statistically valid, generalizable 
data to reliably estimate the nature and frequency of such
shipments and assess their risks.[Footnote 17] We recommended that the 
Department of Transportation evaluate the need for additional 
inspection authority to obtain statistically valid data on undeclared 
air shipments of dangerous goods and document its penalty assessments 
so that it can demonstrate that it is handling similar cases 
consistently.

Long-Term Aviation and Surface Transportation Security Challenges:

The department and the Department of Homeland Security face long-term 
transportation security challenges that include: (1) ensuring that 
transportation security funding needs are identified and prioritized 
and costs are controlled, (2) establishing effective coordination among 
the many public and private entities responsible for transportation 
security, (3) ensuring adequate workforce competence and staffing 
levels, (4) ensuring information systems security, and (5) implementing 
national security standards.

Funding. Two key funding and accountability challenges will be (1) 
paying for increased transportation security and (2) ensuring that 
these costs are controlled. The costs associated with acquiring 
equipment and personnel for improving aviation security alone are huge. 
Although TSA estimates that it will need about $4.8 billion for 
aviation security in fiscal year 2003, it estimates that revenues from 
the new passenger security fee will pay for only around one-third ($1.7 
billion) of that amount. As a result, TSA will need a major cash 
infusion at a time when federal budget deficits are growing. Similarly, 
many of the planned security improvements for surface transportation 
facilities, such as seaports and mass transit, require costly outlays 
for infrastructure, technology, and personnel at a time when weakening 
local economies have reduced local transportation agencies' abilities 
to fund security improvements. For example, even before September 11, 
the Interagency Commission on Crime and Security in U.S. Seaports 
estimated that the costs to upgrade the security infrastructure at the 
nation's 361 ports ranged from $10 million to $50 million per port. As 
we reported in August 2002, although the federal government has already 
stepped in with additional funding, demand has far outstripped the:

additional amounts made available.[Footnote 18] While Congress 
appropriated $93 million to fund port security improvements in fiscal 
year 2002, TSA has received applications for as much as $697 million 
for these improvements. This puts pressure on the federal government to 
make the best decisions about how to use the funds that it makes 
available. As we also reported in August 2002, the Coast Guard's 
efforts to develop port security standards that define what safeguards 
a port should have in place will help identify and prioritize needs so 
that limited funds can be better targeted to the highest risks at each 
port.

The Maritime Transportation Security Act, enacted in November 2002, 
requires the Secretary of the department in which the Coast Guard is 
operating to, among other things, promulgate regulations setting forth 
standards for newly required vessel and facility security plans, 
conduct vulnerability assessments for vessels and U.S. port facilities 
and promulgate regulations to prevent individuals from entering secured 
areas of vessels and port facilities through the use of a biometric 
transportation security card. The act does not provide for a dedicated 
source of funding for these new requirements, but does require that the 
Secretary of Transportation report to Congress on proposals to fund 
these new programs within 6 months after passage of the act.

In July 2002, we reported that long-term attention to cost and 
accountability controls for acquisition and related business processes 
will be critical both to ensuring TSA's success and maintaining its 
integrity and accountability.[Footnote 19] According to the 
department's Inspector General, although TSA has made progress in 
addressing certain cost-related issues, it has not established an 
infrastructure that provides effective controls to monitor contractors' 
costs and performance. To ensure control over TSA contracts, the 
department's Inspector General has recommended that Congress set aside 
a specific amount of TSA's contracting budget for overseeing contractor 
performance with respect to cost, schedule, and quality.[Footnote 20]

Furthermore, funding challenges have implications for the department's 
other vital missions, requiring modal administrations to re-prioritize 
functions. For example, as a result of new mission requirements, the 
Coast Guard redirected its fiscal year 2002 resources from traditional, 
nonsecurity missions to security-oriented functions. This doubled 
projected spending for marine safety and security and reduced spending 
in areas such as marine environmental protection. While some resources 
have been redeployed to restore capabilities in key mission areas, 
other resources, including district patrol boats and small boats, are 
still being used primarily for security-related functions.

In considering the federal government's role in meeting long-term 
funding challenges, several issues will need to be addressed beyond 
determining who should pay for the security enhancements and how much 
agency functions should be funded. An important consideration is 
establishing appropriate criteria for distributing federal funds--the 
most common of which have included ridership level, population, 
identified vulnerabilities, and criticality of assets. Another 
important consideration, as we reported in September 2002, is selecting 
the appropriate federal policy instrument such as grants, loan 
guarantees, tax incentives, and partnerships to motivate or mandate 
other levels of government or the private sector to help address 
security concerns.[Footnote 21] Finally, it will be important to 
consider how to allocate funds between competing needs and measure 
whether we are achieving increased security benefits envisioned.

Coordination. Since September 11, 2001, federal, state, and local 
surface transportation agencies and the private sector have begun 
rethinking roles and responsibilities for security. One challenge to 
achieving national preparedness hinges on the federal government's 
ability to form effective partnerships among entities that implement 
security measures at the local level. Effective, well-coordinated 
partnerships require identifying roles and responsibilities; 
developing effective collaborative relationships with local and 
regional transportation, emergency management, and law enforcement 
agencies; agreeing on performance-based standards that describe desired 
outcomes; testing procedures that implement roles and responsibilities; 
and sharing intelligence information. Since its creation in November 
2001, TSA has focused primarily on aviation security challenges and is 
working toward defining the roles and responsibilities for surface 
transportation security. Specifically, TSA is developing memorandums of 
agreement with other modal administrations within the department that 
are expected to delineate the lines of authority between the parties 
and establish their specific responsibilities for transportation 
security. TSA plans to complete the agreements by March 1, 2003.

Coordination challenges will continue for the department after TSA is 
transferred to the new Department of Homeland Security. The department 
and the new Department of Homeland Security will have to work closely 
to ensure the development of sound security policies and procedures and 
effective implementation of those procedures by the many public and 
private transportation system's stakeholders. A key coordination 
challenge for TSA involves ensuring that terrorist and threat 
information gathered and maintained by numerous law enforcement and 
other agencies, including the Federal Bureau of Investigation, the 
Immigration and Naturalization Service, the Central Intelligence 
Agency, and the Department of State, is quickly and efficiently 
communicated among federal agencies and to state and local authorities, 
as needed. In aviation security, timely information sharing among 
agencies has been hampered by organizational cultures that make them 
reluctant to share sensitive information and by outdated computer 
systems that lack interoperability. In surface transportation, timely 
information sharing has been hampered by the lack of standard protocols 
to exchange information among federal, state, and local government 
agencies and private entities. The department should have a critical 
role in ensuring that information on best practices is shared with 
local transportation agencies. Finally, as we reported in September 
2002, intelligence sharing can be hampered if personnel in surface 
transportation agencies have difficulty in obtaining the security 
clearances necessary to obtain the critical intelligence information 
that might be exchanged.[Footnote 22]

Human capital. A key challenge to ensuring the success of the 
Department of Transportation and the Department of Homeland Security in 
protecting the nation's transportation system is recruiting, training, 
and retaining a large workforce (currently TSA has more than 60,000 
people). TSA is currently addressing some critical success factors in 
managing human capital by hiring personnel, using a wide range of tools 
available for hiring, and beginning to link individual performance to 
organizational goals. However, concerns remain in areas of hiring, 
training, and retention; developing an approach to compensation; and 
setting up a performance management system.

TSA has encountered unexpected difficulty in hiring and training a 
federal screener workforce. For example, at Baltimore-Washington 
International Airport--the first of 429 airports to be staffed with 
federal passenger screeners--TSA's hiring of screeners was delayed 
because only about one-third of qualified applicants who were contacted 
to schedule an assessment reported for the assessment. Of those that 
reported, only about one-third passed the skills assessment. In 
addition, while TSA is using a wide range of tools and flexibilities 
available to meet its workforce needs, the department's Inspector 
General has expressed concern about its approach to compensation. TSA 
is basing its compensation system on FAA's pay banding approach, which 
allows the agency to hire employees anywhere within broad pay bands for 
their positions. In a report issued last summer, the department's 
Inspector General has expressed concern about TSA's salary levels for 
law enforcement and general and administrative positions, stating that 
they are higher than for comparable positions in other 
agencies.[Footnote 23] Finally, while TSA has made progress in setting 
up the performance management system, the agency has not approved an 
interim employee performance management system for 2002. Finalizing a 
performance management system linked to organizational goals will be 
critical to motivating and managing staff, ensuring the quality of 
screeners' performance, and ultimately, restoring public confidence in 
air travel.[Footnote 24]

Information systems security. Security at our nation's airports alone 
does not ensure safe air travel. It is also critical to secure FAA's 
air traffic control computer systems, which provide information to air 
traffic controllers and aircraft flight crews to help ensure the safe 
and expeditious movement of aircraft. Failure to adequately protect 
these systems, as well as the facilities that house them, could cause a 
nationwide disruption of air traffic or even a loss of life due to 
collisions. In the area of information systems security, we made 39 
recommendations to FAA between May 1998 and December 2000 to address 
pervasive weaknesses in the agency's facilities' physical and 
information systems security--both for currently operational and future 
air traffic control systems, security management, and personnel 
security. FAA has initiated numerous activities in response to our 
recommendations. However, in several areas, including ensuring that 
operational systems and facilities are secure, more must be done.

FAA has established an information systems security management 
structure under its Chief Information Officer. In recent years, the 
Chief Information Officer's information systems security office has 
developed an information systems security strategy, security 
architecture (i.e., overall blueprint), security policies and 
directives, and a security awareness training campaign; managed FAA's 
incident response center; and implemented a certification and 
accreditation process to ensure that vulnerabilities in current and 
future air traffic control systems are identified and weaknesses 
addressed. Despite these improvements, the office faces continued 
challenges in increasing its intrusion detection capabilities, 
obtaining accreditation for systems that are already operational, and 
managing information systems security throughout the agency. In 
addition, according to senior security officials, FAA has completed 
assessments of the physical security of its staffed facilities, but has 
not yet accredited all of these air traffic control facilities as 
secure in compliance with agency policy. Finally, in the area of 
personnel security, FAA has worked aggressively over the past 2 years 
to complete background investigations on numerous contractor employees. 
However, ensuring that all new contractors are assessed to determine 
which employees require background checks and that those checks are 
completed in a timely manner will be a continuing challenge for the 
agency. While FAA has made progress in each of these areas, more 
remains to be done to better ensure that critical information systems 
are not at risk of intrusion and attack.

National security standards for surface transportation. Standards 
define the level of security that is needed and the safeguards that 
should be in place to meet identified needs. Adequate standards, 
consistently applied, are important to ensure that operators improve 
their security practices in modes where lax security could make surface 
transportation facilities attractive targets for terrorists. New 
security standards are being developed in some modes and are being 
considered in other modes. New port security standards are being 
developed in areas such as preventing unauthorized persons from 
accessing sensitive areas, detecting and intercepting intrusions, 
checking backgrounds of those whose jobs require access to port 
facilities, and screening travelers and other visitors to port 
facilities. The Maritime Transportation Security Act of 2002, enacted 
November 25, 2002, in fact, requires that port security standards for 
access controls, background checks, and vessel and facility security 
plans be developed by the Secretary of the department where the Coast 
Guard is operating. The act also directs the Secretary of the 
department where the Coast Guard is operating to develop performance 
standards for seals and locks on shipping containers. In addition, in 
the last session of Congress, legislation was proposed that would 
require the department to prescribe standards for pipeline security 
programs and approve or disapprove each pipeline operator's program on 
the basis of their adherence to these standards.[Footnote 25] However, 
industry representatives have told us that they prefer a nonregulatory 
approach, citing concerns about the need for flexibility in designing 
security programs suitable for each pipeline facility.

While progress has been made in developing security standards, 
challenges remain in implementing them. There is little precedent for 
how to enforce standards because the size, complexity, and diversity of 
surface transportation facilities do not lend themselves to an 
enforcement approach similar to the one adopted for airports after 
September 11. Perhaps most importantly, implementing standards is 
difficult because it requires consensus and compromises on the part of 
stakeholders. To the degree that some stakeholders believe that 
security actions are unnecessary or conflict with other goals and 
interests, achieving consensus about what to do will be difficult.

Improving Mobility and Economic Growth through Intermodal and Modal 
Approaches:

Ensuring that the nation's transportation system improves mobility and 
supports economic growth are vital departmental goals that influence 
our quality of life.[Footnote 26] Today, changing passenger and freight 
travel needs and expectations are redefining what is needed to meet 
these goals. Pervasive problems, such as congestion and inadequate 
capacity in both the air and surface transportation systems, also are 
making it increasingly difficult to improve mobility and economic 
growth, as we reported in May 1999, October 2001, and August 2002. (See 
table 1.) Moreover, budget constraints at all levels of government are 
expected to reduce the resources that are available for transportation 
solutions.

Table 1:  Changing Transportation Needs:

Key change: Increasing travel demand; Elements of change: All modes 
face surging travel demand by passengers, freight shippers, and the 
military. Time lost to congestion delays is estimated from 
$75 billion to $100 billion annually. Demand will continue to grow. By 
calendar year 2020, the U.S. population is projected to grow by 
50 million to 60 million people and 60 million to 70 million more 
vehicles will be using the nation's transportation network..

Key change: Increasing; expectations; Elements of change: For the $8 
trillion freight industry, efficient connections between modes and 
efficient travel in each mode are essential to the competitive position 
of U.S. products in global markets. For the public, better and more 
reliable transportation services are expected..

Key change: Increasing intermodal travel; Elements of change: 
Passengers and freight have more diverse mobility needs that 
increasingly involve moving across modes--highways to airports, ports 
to railroads, transit to highways--and through connections between 
modes. Trip timeliness, cost, quality, and safety are becoming more 
relevant than which mode is used..

[End of table]

Source: Congressional Research Service, Transportation Board, and 
others.

Note: GAO's analysis of its reports on mobility and growth topics and 
reports from the Congressional Research Service, Transportation 
Research Board, and others.

Congestion has emerged as a prime yardstick of the immense pressure on 
the nation's transportation system, as we reported in August 2002 and 
in December 2001.[Footnote 27] Congestion has led to longer, less 
predictable trips that translate into lost productivity, higher fuel 
costs, and frustration. (See fig. 5.) Moreover, congestion and capacity 
problems are expected to worsen in the future. We recommended that the 
department develop a blueprint for effectively addressing capacity 
issues in its strategic planning for airspace capacity--a 
recommendation that remains open.

* The difficulty in moving freight efficiently and safely between the 
highway system and ports, rail, airports, and truck terminals has long 
been a major freight problem. Over the next 20 years, freight volumes 
are expected to increase by about 70 percent. This suggests that 
freight infrastructure--already straining to accommodate today's 
volumes--will be pushed to the breaking point and generate more 
gridlock. However, funds for connectors have been limited and might not 
be a priority for local governments or for highway capital improvements 
that tend to be passenger-oriented.

* For passengers, travel on roads is expected to increase by about 
25 percent from 2000 through 2010. Furthermore, poor connections also 
are a significant barrier to moving between cars, buses, trains, and 
other means of transit. In many areas, infrastructure that could serve 
as multimodal transfer points--passenger rail terminals, for example--
have been abandoned or demolished.

Figure 5: Congestion on Our Nation's Highways Reduces Mobility and 
Results in Lost Productivity and Growth Opportunities:

[See PDF for image] - graphic text:

[End of figure] - graphic text:

In this increasingly complex environment, it is much less likely that 
mobility and economic growth can be enhanced if major modes--air, 
highway, transit, rail, and water--are not connected, no matter how 
well each mode functions. Yet, intermodal connections, such as 
multimodal passenger terminals and roads that link freight terminals 
and major highways, are among the transportation system's weakest 
links. The department's challenge is to leverage all of its 
transportation resources--both intermodal and modal--to deal with these 
problems and their increasingly ominous impacts on mobility and 
economic growth.

Intermodal Planning and Investments Are Vital to Promoting Mobility and 
Economic Growth:

Whether and how efficiently people and products move between modes has 
become crucial to mobility and economic growth. (See fig. 6.) 
Connections between modes now can mean success or failure for a 
region's transportation network and economy. As we reported in May 1999 
and October 2001, aligning transportation with changing needs is 
vital.[Footnote 28] An intermodal approach can give passengers and 
freight shippers more choices, greater convenience, and reduced costs 
by making it possible for them to use whatever mode is best suited to 
each portion of their trip. To deliver these potential benefits, an 
intermodal planning and investment approach emphasizes coordinating 
transportation policy and decisionmaking, connecting transportation 
modes, and allowing passengers and freight to reach their destinations 
efficiently through the use of multiple modes of transportation, if 
necessary. An intermodal approach connotes a transportation system that 
is more than the sum of its modal parts.

Figure 6: Intermodal Connections Are Crucial for Continued Growth and 
Competitiveness in a Global Economy:

[See PDF for image] - graphic text:

[End of figure] - graphic text:

As early as March 1978, and again in July 1987, November 1988, December 
1989, and August 2002, we reported that an intermodal approach was 
vital to match the nation's modal infrastructure with its diverse 
transportation needs. The Intermodal Surface Transportation Efficiency 
Act of 1991 made developing an intermodal transportation system that 
connects all transportation modes a national policy. This policy goal 
was reaffirmed in 1998 with the enactment of the Transportation Equity 
Act for the 21ST Century.

The department is in a unique position to advocate an intermodal 
approach to meet mobility and economic growth needs by encouraging 
consensus and action by stakeholders inside and outside the department. 
Yet, the reality is that the department's modally based funding and 
organization limits its ability to promote intermodalism. Adopting an 
intermodal approach will require addressing a number of fundamental 
issues. (See table 2.) A key issue is ensuring that federal policies 
support intermodal needs. Other issues include dealing with 
institutional barriers--a critical transportation issue in 2002, 
according to the Transportation Research Board--and matching funding to 
intermodal needs. An intermodal approach also focuses on supporting 
federal research that improves transportation stakeholders' ability to 
plan and make cross-modal investment decisions.

Table 2: Intermodal Issues and Key Considerations:

Issues: Policies; Key considerations: Ensuring that federal policies 
support intermodalism.

Issues: Strategies; Key considerations: Capturing the strengths of each 
mode in a national intermodal system.

Issues: Priorities; Key considerations: Identifying critical actions to 
promote intermodal passenger and freight transportation, relevant 
performance measures, and methods for achieving measurable progress.

Issues: Institutional support; Key considerations: Agreeing on roles 
and responsibilities for public and private stakeholders at all levels; 
identifying institutional barriers to intermodal action--including the 
department's modal structure--and tactics to minimize their impacts; 
supporting entities that can promote intermodal planning and 
investment.

Issues: Funding; Key considerations: Increasing federal and state 
funding/flexibility for intermodal connectors--seen as the weakest 
links in the transportation system--and supporting innovative public 
and private partnerships and financing.

Issues: Research; Key considerations: Supporting research that can be 
applied in making decisions about intermodal passenger and freight 
policies, planning, investing, and technologies. Research also is 
needed to explore interactions between passenger and freight travel.

Issues: Regulations; Key considerations: Streamlining federal 
requirements for state and local planning and decisionmaking.

Issues: Safety standards; Key considerations: Identifying safety 
standards needed for intermodal transportation.

[End of table]

Source: Congressional Research Service, Transportation Board, and 
others.

Note: GAO's analysis of its reports on mobility and growth topics and 
reports from the Congressional Research Service, Transportation 
Research Board, and other sources.

Currently, the department is taking actions to promote intermodalism. 
It expects to support intermodal financing, connectors, systems 
management, and new technologies as Congress reauthorizes surface 
transportation legislation. It also is developing a dialogue with the 
freight industry, since there is considerable need for better public 
sector understanding of freight and its needs. The Intelligent 
Transportation System program is helping to improve intermodal 
operations by using information and communication technology to 
expedite shipments and improve safety and security. In addition, modal 
agencies--such as the Federal Highway Administration (FHWA) and the 
Federal Transit Administration (FTA)--have assumed responsibility for 
advocating intermodal passenger and freight programs with state, 
regional, and local transportation agencies and with other agencies in 
the department.

Intercity Passenger Rail Poses Critical Policy Decisions:

Amtrak's financial condition and ability to provide quality intercity 
passenger rail service has been tenuous since it began operations in 
1971. It was on the brink of having to shut down in 2002. While Amtrak 
meets several of the criteria for designation as one of our high risk 
areas, we have not done so because it is a private corporation, albeit 
with significant federal funding.[Footnote 29] Amtrak's intractable 
financial condition makes a congressional decision on intercity 
passenger rail's future paramount, as we reported in April 
2002.[Footnote 30] This decision poses significant mobility issues--if 
and how intercity passenger rail fits into the nation's transportation 
system and the appropriate balance between needed federal investments 
and other competing national priorities.

As we also reported in April 2002, there is considerable agreement that 
passenger rail's mission, funding, and approach of providing service 
through Amtrak needs to be changed. Intercity passenger rail has the 
potential to produce transportation benefits--more in some markets than 
others--as projected increases in intercity passenger travel occur. 
Currently, over half of Amtrak's 23 million passengers are in the 
Washington, D.C., to Boston corridor. Where intercity passenger rail is 
time and price competitive, it could potentially help reduce highway 
and air travel congestion, pollution, energy dependence, and improve 
safety. Nevertheless, federal development and operating support will be 
needed.

The department has the opportunity to support a congressional decision 
by providing a framework for determining the appropriate role and level 
of investment for intercity passenger rail. This framework would help 
establish clear, nonconflicting goals for federal support, government-
private sector roles, funding approaches that reward results and 
accountability, and strategies that address stakeholders' interests and 
limit unintended consequences. Although the department has developed 
five general reform principles as its vision for the future, a more 
detailed framework will be essential.

Addressing the Effects of Aviation Industry Consolidation and Reduced 
Service to Small Communities:

Airline industry competition and service have mobility and economic 
consequences for consumers, as we reported in October 2002.[Footnote 
31] Airlines' restructuring and consolidation--whether through 
marketing alliances among or mergers between carriers in the wake of 
financial pressures--will significantly affect the industry's 
competitive landscape. Consumers have fewer travel options and 
generally face higher fares when carriers reduce the number of flights, 
reduce aircraft size, or drop markets altogether. As we reported in 
February and March 2001, industry consolidation also raises critical 
public policy issues, such as greater potential barriers to carriers 
that want to enter markets, less competition in key markets, and 
greater risk of travel disruptions as a result of labor 
disputes.[Footnote 32]

Small communities face higher fares and reduced service as airlines 
continue to reduce their market presence. These actions will increase 
pressure on the primary federal program that assists the smallest 
communities, the Essential Air Service program. The number of 
communities that qualify for subsidized service under this program has 
grown over the last year, and there are clear indications that this 
number and the program's costs will continue to grow. Federal awards 
under the program have increased from just over $40 million in 1999 to 
an estimated $97 million in fiscal year 2002. As carriers continue to 
drop service in some markets, more communities will become eligible for 
Essential Air Service funding, an issue that Congress and the 
department will have to confront.

Current and Planned Commitments Could Constrain Future Spending for New 
Mass Transit Projects:

FTA's New Starts program provides a large share of capital investment 
in urban mass transportation systems, and demand for these funds is 
extremely high. However, as we reported in June 2002, FTA is likely to 
end the current authorization period with significantly limited ability 
to fund future transit projects. This situation could occur if the 
program is reauthorized at the currently authorized level of $6.1 
billion because FTA (1) needs over $3 billion after 2003 for projects 
that it has already approved and (2) will likely need $2.8 billion in 
the next 2 years for five projects that it is close to approving for a 
grant agreement.[Footnote 33] Limited funding for this program could 
mean an even more competitive environment for future projects seeking 
approval and funding. Although the administration has proposed to fund 
more future projects by limiting federal funds to less than 80 percent 
of a single project, the effect of such a reduction is unclear. A 
federal funding limit would, in part, reflect a pattern that has 
emerged in the program--few projects are asking for the maximum 80 
percent federal share and many have already significantly increased the 
local share to be competitive under the New Starts program. Local 
transit officials also may modify or even terminate projects, be more 
aggressive in containing project costs, or search for lower cost 
transit options. To facilitate a clearer prioritization of projects 
seeking limited funding, we recommended in March 2000 that the 
department further prioritize the projects as "highly recommended" and 
"recommended" for funding purposes. However, this recommendation has 
not been implemented.

Oversight of Federal Highway and Bridge Investments Could Reduce Cost 
Growth:

Federal grants to states and local governments for transportation 
infrastructure promote mobility and economic growth. FHWA oversees 
major highway and bridge projects to help ensure that federal funds are 
spent appropriately and costs are contained to maximize transportation 
services that are provided by the federal investment. Federal funds 
often are used to pay for 80 percent of a project's costs that can 
range from several million to several billion dollars.

FHWA's performance continues to be a concern, although it has taken 
initiatives to improve its oversight of major projects. FHWA now 
requires that projects costing over $1 billion submit annual financial 
plans and has introduced greater risk-based oversight into its work. 
Despite these initiatives, the department's Inspector General, state 
agencies, and we have reported cost growth on large projects. As we 
reported in May 2002, cost growth on large highway and bridge projects 
intensifies the problem of limited federal and state funds that are 
available for transportation.[Footnote 34] While the question of 
whether more federal or state level oversight is needed to minimize 
project cost growth ultimately is a policy decision, both federal and 
state levels need to identify and share strategies to control costs and 
improve oversight.

Building Human Capital Strategies:

The department and other federal agencies face a growing human capital 
challenge that we have designated as a governmentwide high risk 
concern. In addition, this challenge ripples throughout the state and 
local transportation agencies that build, maintain, and operate the 
vast preponderance of the nation's transportation system. The problem 
is similar--finding enough people with the appropriate skills.

Both the department and transportation stakeholders face an impending 
shortage of skilled people that threatens to have serious short-and 
long-term consequences, according to the department and the 
Transportation Research Board. As we have reported, the department's 
air traffic control modernization and airport and coastal security 
programs face human capital issues that are likely to impair mission 
performance. All 50 state departments of transportation have singled 
out recruiting and retaining staff as their greatest human resource 
issues. The repercussions from these issues are considerable--a 
compromised departmental and transportation sector workforce could 
seriously impair the U.S. economy, public safety, and mobility. The 
Transportation Research Board calls attracting, hiring, and retaining 
personnel a critical transportation issue.

Public and private transportation entities are finding it difficult to 
hire enough people with the right skills, according to the department 
and independent experts. The gap between the skilled workforce and need 
is expected to surge, as about 50 percent of the people who plan, 
develop, and manage the nation's transportation system will become 
eligible to retire in the next 5 years. As these retirements occur, 
they will deplete the collective experience, knowledge, and skills of 
organizations throughout the transportation sector. The growing demand 
for human capital will collide with the reality of fewer people 
entering transportation-related fields. Enrollments in such fields as 
engineering are declining, creating fierce competition for these and 
other technical graduates needed in transportation.

Other factors further complicate the transportation sector's human 
capital challenge. Changes in intergovernmental responsibilities for 
delivering transportation services, new travel patterns, different 
business practices, advances in technology, and changed public 
expectations are redefining the competencies and skills that are 
needed. Increasingly, transportation will require more diverse, 
sophisticated management and technical competencies than ever before. 
(See table 3.):

Table 3: Changing Transportation Workforce Competencies:

Competency: Building and sustaining partnerships; Change: Public 
agencies, private companies, and nonprofit organizations are partnering 
to deliver transportation services.; New skills needed: Managing these 
extensive networks and collaborating with diverse stakeholders.

Competency: Developing intermodal; approaches; Change: Transportation 
agencies at all levels increasingly will be asked to develop intermodal 
connections and solutions to passenger and freight transportation 
problems as envisioned by the Intermodal Surface Transportation 
Efficiency Act of 1991 and the Transportation Equity Act for the 21[ST] 
Century (1998) to connect travel modes to promote transportation system 
integration.; New skills needed: Broad transportation knowledge, 
financing expertise, and technical competence in applying complex 
analytic tools--especially in freight planning.

Competency: Managing contractors; Change: Public agencies are using the 
private sector to meet their growing workloads. For example, state 
agencies' full-time employment has decreased about 5 percent as their 
budgets increased over 50 percent in the past decade.; New skills 
needed: Contract management.

Competency: Incorporating; technologies; Change: Information and 
communications technologies are revolutionizing transportation.; New 
skills needed: Strategic technology investing and incorporating 
technology into operations.

Competency: Responding to public concerns; Change: The public 
increasingly expects transportation decisions to consider concerns 
about land use, air and water quality, and historic preservation.; New 
skills needed: Public participation and communication.

[End of table]

Source: DOT and State transportation agencies.

Note: GAO's analysis of information from the department and state 
transportation agencies.

The Department's Challenge: A Strategic Approach to Human Capital 
Issues:

A consistent strategic approach to marshaling, managing, and 
maintaining human capital is essential to deal with the human capital 
shortfalls that are eroding many federal agencies' ability to perform 
their missions, as we have reported.[Footnote 35] However, the 
department faces persistent human capital problems that put its ability 
to accomplish its own missions and performance at risk throughout the 
department and key agencies such as FAA, TSA, and the Coast Guard. Its 
human capital plan, published in September 2002, acknowledges that 
accomplishing the department's missions depends on a strategic approach 
to human capital and highlights workforce planning to meet its most 
formidable organizational and management challenges. Although a number 
of milestones have been met since workforce planning began in fiscal 
year 1999, the plan provides limited information about how future 
milestones will be accomplished. Other human capital initiatives also 
are under way. For example, FHWA has taken the first steps in creating 
a senior executive performance management system that holds managers 
accountable for contributing to organizational results.

The National Challenge: A Collaborative Approach to Workforce 
Development:

A nationwide shortfall in human capital with the requisite skills to 
meet transportation's changing needs calls for a national response. The 
department's leadership and active involvement are essential to 
coordinate a strategic response by promoting:

* agreement among high-level stakeholders on successful performance by 
transportation agencies and the competencies these agencies will need 
to achieve this performance and:

* information sharing on best practices, lessons learned, human capital 
research, and benchmarking against other industries and countries that 
face issues related to an aging workforce.

To its credit, the department has taken several steps to address this 
challenge confronting the transportation sector. For example, FHWA's:

Office of Professional Development recently organized the first 
National Transportation Workforce Summit in Washington, D.C., for 
representatives of state and local transportation agencies, the 
transportation industry, and academic experts. The department's Deputy 
Secretary and administrators of FTA, FHWA, the Research and Special 
Projects Administration, and the Federal Motor Carrier Safety 
Administration participated. The summit focused on three critical 
concerns: making a sustained commitment to attract people to 
transportation careers, investing in employee skills development, and 
institutionalizing workforce development initiatives. A committee of 
attendees is expected to continue addressing these issues. FHWA also is 
working with major national and state transportation organizations and 
independent experts to identify human capital needs and innovative ways 
to meet them.

Enhancing the Management of FAA and Coast Guard Acquisitions:

Aging and obsolete equipment has limited FAA's and the Coast Guard's 
abilities to achieve their safety and security missions. In response, 
FAA and the Coast Guard are undertaking costly, complex, and long-term 
programs to modernize and replace aging equipment, putting them at 
greater risk for significant schedule delays and cost increases. 
Because of the size, complexity, cost, and problem-plagued past of 
FAA's program designed to acquire systems needed to modernize air 
traffic control, we designated it as high risk in 1995. FAA's air 
traffic control modernization program remains at high risk in 2003. 
Because of the September 11 terrorist attacks and the subsequent need 
for a variety of security improvements that were neither planned nor 
budgeted for, FAA and the Coast Guard have had to re-evaluate their 
acquisition plans. As greater emphasis is placed on security, important 
questions exist about how to move forward with acquisition projects and 
at what pace.

FAA's Air Traffic Control Modernization:

Faced with rapidly growing air traffic and aging equipment, FAA 
initiated an ambitious effort in 1981 to modernize air traffic control. 
This modernization involved the acquisition of new air traffic control 
facilities, as well as a vast network of radar, navigation, automated 
data processing, and communications equipment. However, this 
modernization effort has experienced cost overruns, schedule delays, 
and performance shortfalls. Originally, FAA had planned to complete its 
modernization in 10 years at a cost of $12 billion. Now, two decades 
and $35 billion later, FAA estimates that modernization efforts are 
still far from complete and that it will need nearly $16 billion more 
through fiscal year 2007 to complete key projects, including the 
Standard Terminal Automation Replacement System (STARS), the Wide Area 
Augmentation System (WAAS), and the Next-Generation Air/Ground 
Communications System (NEXCOM). (All amounts are in nominal dollars.) 
These projects continue to face challenges that might affect FAA's 
ability to meet cost, schedule, and/or performance expectations. (See 
table 4.):

Table 4: Selected Air Traffic Control Modernization Acquisition 
Projects:

: : Estimated: [Empty]; : : Estimated: [Empty]; : : Estimated: [Empty].

Project: Standard Terminal Automation Replacement System (STARS), 
designed to replace aging displays and processing systems used by air 
traffic controllers; [Empty]; Estimated: cost: Original: $940 million; 
Estimated: Current: $1.33 billion; [Empty]; Projected deployment 
schedule: Original: Start: 1998;; Finish: 2005; Projected deployment 
schedule: [Empty]; Projected deployment schedule: Current: Start: 
2002;; Finish: 2005; [Empty]; FAA's latest cost and schedule for STARS 
is based on deployment to 74 facilities as opposed to the original 172 
facilities. In September 2002, we found that FAA's schedule for 
deploying STARS to a large facility presents challenges in terms of 
completing efforts to test the system, resolve problems, and train all 
employees on the new system.[A].

Project: Wide Area Augmentation System (WAAS), designed to provide 
satellite-based navigation for airspace users; [Empty]; Estimated: 
cost: Original: $892 million; Estimated: Current: $2.9 billion; 
[Empty]; Projected deployment schedule: Original: Start: 1998; Finish: 
2001; Projected deployment schedule: [Empty]; Projected deployment 
schedule: Current: Start: 2003;; Finish: to be determined; [Empty]; 
Integrity concerns have plagued WAAS' development. While the agency has 
made progress in resolving these concerns, FAA must decide whether to 
stop WAAS development in 2003 or continue to refine the technology to 
provide an approach capability with greater precision..

Project: Next-Generation Air/Ground Communications (NEXCOM), designed 
to replace existing communications systems and provide additional voice 
channels; [Empty]; Estimated: cost: Original: $986 million (1[ST] 
segment only); Estimated: Current: $986 million (1[ST]; segment only); 
[Empty]; Projected deployment schedule: Original: Finish: 2009; 
Projected deployment schedule: [Empty]; Projected deployment schedule: 
Current: Finish: 2013; [Empty]; FAA is only in the early stages of 
making a final decision to select the technology for NEXCOM and still 
needs to address three major issues: (1) whether the preferred 
technology is technically sound and will operate as intended, (2) if 
the preferred technology and equipment it requires can be certified as 
safe for use in the National Airspace System, and (3) whether it is 
cost effective for users and the agency..

[End of table]

Source: FAA.

Notes: Dollars are nominal.

GAO analysis of the department's data.

[A] U.S. General Accounting Office, National Airspace System: Status of 
FAA's Standard Terminal Automation Replacement System, GAO-02-1071 
(Washington, D.C.: Sept. 17, 2002).

Since 1995, we have made over 30 recommendations to address the root 
causes of FAA's modernization problems. Although FAA has made progress 
in addressing these root causes, more remains to be done. For example:

Improve immature software capabilities. FAA developed an integrated 
framework for improving its software acquisition, software development, 
and systems engineering processes. Since our last high-risk update, FAA 
has continued to expand the number of system development projects that 
use this integrated framework. However, FAA still does not require all 
systems to achieve a minimum level of progress within the framework 
before being funded.

Need for a complete and enforced systems architecture. FAA has 
developed a systems architecture, or overall blueprint, which clarifies 
interdependencies and interrelationships among national airspace 
systems and the technical standards to which systems must comply. In 
November 2000, the Office of Management and Budget instructed agencies 
to base investments in information technology on enterprise 
architectures, which define (in both business and technology terms) how 
an entity operates today and how it wants to operate in the future, 
including a roadmap for transitioning to this future operational state. 
In February 2002, we reported that FAA's enterprise architecture is at 
a moderate level of maturity--that is, the agency has begun developing 
architecture products such as policies and concepts, but has not yet 
completed the architecture products or leveraged the architecture for 
managing change.[Footnote 36]

Improve cost estimating and cost accounting practices. To improve cost 
estimates, FAA developed a standard work breakdown structure and 
established an historical database for tracking systems' estimated 
costs and other information. Further, since our last high-risk update, 
FAA has made significant progress in implementing its cost accounting 
system. However, the agency has not yet fully instituted rigorous cost 
estimating practices. That is, FAA is not yet incorporating actual 
costs from related system development efforts in its processes for 
estimating the costs of new projects.

Strengthen investment management processes. To improve its investment 
management processes, FAA is now overseeing investment risks and 
capturing key information from the investment selection process in a 
management information system. Also, since our last high-risk update, 
FAA has developed guidance for validating costs, benefits, and risks 
and expects to finalize this guidance by early 2003. However, FAA has 
not yet implemented processes for evaluating projects after 
implementation in order to identify lessons learned and improve the 
investment management process.

Change organizational culture. FAA issued an organizational culture 
framework in 1997 and is working to implement it. However, in 2000, the 
department's Inspector General reported that FAA's culture remains a 
barrier to successful acquisition projects and that integrated teams, a 
key mechanism to deliver more cost-effective and timely products, are 
not working well because FAA's culture continues to operate in vertical 
"stovepipes," which conflict with the horizontal structure of team 
operations. In fact, our 2000 report on WAAS confirmed that the 
integrated teams were not working as intended.[Footnote 37] We found 
that competing priorities between two key organizations that are part 
of WAAS' integrated team negated the effectiveness of the team's 
approach for meeting the agency's goals for the system.

Clearly, FAA has undertaken numerous improvements to enhance its 
ability to manage the air traffic control modernization, but its reform 
efforts are not yet complete and thus remain at high risk. In the 
meantime, major projects continue to face challenges that could affect 
their cost, schedule, and performance. We will continue to evaluate 
FAA's progress on selected system acquisition efforts.

The Coast Guard's Deepwater Project:

The Deepwater Capability Replacement Project involves replacing or 
modernizing over 90 ships and 200 aircraft that are approaching the end 
of their useful lives and are critical to missions that occur 50 miles 
or more offshore ("deepwater"). These missions include search and 
rescue activities and interdiction of illegal aliens and drugs. The 
Coast Guard is addressing many of the concerns we reported in our 2001 
Performance and Accountability Series report, but uncertainties still 
exist in key areas such as (1) attaining stable, sustained funding; (2) 
controlling costs, especially in the contract's later years; (3) 
ensuring that procedures and personnel are in place for managing and 
overseeing the contractor; and (4) minimizing potential problems using 
unproven technology.

Stable, sustained funding. In 2002, the Coast Guard awarded a 
$17 billion contract to a Lockheed-Northrop Grumman team, using 
projections of sustained funding of $500 million a year (in 1998 
dollars) over the next 2 to 3 decades to develop the Integrated 
Deepwater System. However, the Office of Management and Budget 
estimates a possible cumulative funding shortfall of about half a 
billion dollars for the project's first 5 years. In response to our 
concerns[Footnote 38] about the Coast Guard's ability to obtain 
sustained funding of $500 million a year, the fiscal year 2002 
appropriations act for the department prohibited the obligation and 
expenditure of appropriated funds until the department and the Office 
of Management and Budget jointly (1) certified that the Coast Guard's 
deepwater funding was within the Office of Management and Budget's 
projections and (2) approved a contingency procurement strategy for 
assets and capabilities envisioned in the deepwater system. The 2002 
fiscal year appropriation of $320 million for the deepwater system was 
about $18 million below the planned level. The fiscal year 2003 
transportation appropriations have not yet been signed into law; 
however, the Senate appropriations committee has proposed $480 million 
for Deepwater, about $20 million below the budget request and the House 
appropriations committee proposed full funding for the $500 million 
budget request. The Coast Guard is updating its baseline funding 
projections for the deepwater project according to these lower funding 
levels. Reductions in funding from amounts planned could result in 
reduced operations, increased costs, and/or schedule delays.

Controlling costs. While the Coast Guard's management during the 
planning phase of the deepwater project was among the best of the 
federal agencies we have evaluated and provides a solid foundation for 
the project, the next phase presents considerably tougher management 
challenges. The next phase concentrates the responsibility for the 
project's success with one systems integrator and its subcontractors 
for a period of 20 or more years and starts the Coast Guard on a course 
that is likely to be difficult and potentially expensive to alter once 
funding has been committed and contracts have been executed. Moreover, 
this approach has never been used on a procurement of this size or 
complexity, and, as a result, there are no models in the federal 
government to guide the Coast Guard in developing its acquisition 
strategy. We and others have raised concerns about whether the Coast 
Guard's planned contracting approach of relying on a single contracting 
team will be able to control costs and still meet performance 
requirements in later years in the absence of competition, particularly 
since it was adopted without documentation of risks involved or the 
degree to which this approach provided better value than other ones. In 
response, the Coast Guard developed processes and policies to address 
concerns about costs, including establishing prices for deliverables, 
negotiating change order terms, and developing incentives. We will 
continue to assess the department's actions in this area.

Contractor oversight. While the Coast Guard's overall management and 
day-to-day administration of the deepwater contract during the planning 
phase has generally been excellent, as the project moves into a 
procurement phase that has a smaller scope of work and uses a 
contracting approach that is unique and untried, the challenges in 
managing and overseeing the contractor will become more difficult. To 
address these challenges, the Coast Guard plans to require the systems 
integrator to implement many management processes and procedures 
according to best practices. Since our May 2001 report, the Coast Guard 
has identified management processes and procedures based on best 
practices for governance, peer review inside the federal government, 
advisory boards outside the federal government, program self-
assessment, risk management, and technology readiness. According to the 
Coast Guard, these best practices are assisting it to build out the 
21st century Coast Guard using lessons learned, which it is 
incorporating in its program management to build partnerships with 
industry. While these practices are not yet in place, in May 2002, the 
Coast Guard released its Phase 2 Program Management Plan, which 
establishes processes to successfully manage, administer, monitor, 
evaluate, and report contract performance.

Unproven technology. Our reviews of other acquisitions have shown that 
reliance on unproven technology is a frequent contributor to escalated 
costs, schedule delays, and compromised performance standards. While 
the Coast Guard has successfully identified technologies that are 
sufficiently mature, commercially available, and proven in similar 
applications for use in the first 7 years of the project, it has had no 
structured process to assess and monitor the potential risk of 
technologies proposed for use in later years. Specifically, the Coast 
Guard has lacked uniform and systematic criteria, such as those used by 
the National Aeronautics and Space Administration to judge the level of 
a technology's readiness, maturity, and risk. Such criteria are 
important for monitoring continued development of the technologies that 
will be used later in the project. However, in response to our 2001 
recommendation, the Coast Guard is incorporating the technology 
readiness level assessment in the deepwater program's risk management 
process. Technology readiness level assessments are to be performed for 
technologies identified in the design and proposal preparation and 
procurement stages of the deepwater program.

Continuing Progress in Financial Management:

Since our 2001 Performance and Accountability Series report, the 
department has made significant progress in addressing financial 
accountability weaknesses. In 2001, as in 1999, we designated FAA's 
financial management as high risk because of wide-ranging concerns 
reported by the department's Inspector General and us, about the 
department's ability to prepare accurate, reliable financial 
information that its managers could use to make decisions. While the 
department has begun installing a new departmentwide general accounting 
system and FAA has installed a new interim property system and expects 
to complete implementation of its cost accounting system in 2003, it is 
too early to predict whether the new systems will completely remedy the 
department's and FAA's financial management weaknesses. As a result, we 
continue to designate FAA financial management as high risk in 2003.

Eliminating Financial Management Deficiencies Will Require 
Successfully Implementing a New General Accounting System:

The department has continued to expand implementation of its new 
general accounting system--Delphi--throughout the department.[Footnote 
39] This new system is expected to correct many of the financial 
management deficiencies that have plagued the department.

Problems with the department's current general accounting system have 
been substantial. In its fiscal year 2001 financial statement audit 
report, the Inspector General described the current general accounting 
system as unable to produce auditable financial statements based on the 
information in the system. This meant that the department needed to 
make about 850 adjustments outside of its general accounting system 
totaling about 
$41 billion in order to prepare its financial statements. The need for 
extensive adjustments, along with other general financial management 
weaknesses, also has led to misstatements in the department's financial 
reporting. For example, its fiscal year 2001 financial statements 
included net prior period adjustments totaling approximately $2.1 
billion. Prior period adjustments are required when financial statement 
balances have been materially misstated in previously issued financial 
statements. They confirm the existence of severe financial management 
accountability problems. Prior period adjustments totaling $5.6 billion 
and $330 million, respectively, also were reported in the department's 
1999 and 2000 financial statements. Large numbers of adjustments also 
mean that the department lacked reliable day-to-day data to make 
management decisions and maintain ongoing accountability to the 
taxpayers.

The new Delphi accounting system will allow the department and its 
modal administrations to accumulate information at the detailed account 
level necessary to prepare financial statements and other reports 
without the extensive manual intervention presently required. It also 
will accumulate costs by program. This presently is not possible, which 
prevents the department from linking its costs with performance 
information. The system was implemented in seven of the department's 
smaller modal administrations by the end of fiscal year 2001. Full 
departmentwide and FAA implementation is expected by the end of 2003.

The department also introduced a system module that facilitated the 
preparation of its financial statements and related reports starting 
with fiscal year 2001. This module automated many financial statement 
preparation operations that had been done manually and is designed to 
utilize the information provided by the Delphi general accounting 
component. The department will realize additional efficiencies when 
this component is fully implemented, including the consolidation of 
modal administrations' financial information at the department level. 
The system also is designed to receive and exchange financial data with 
many other systems such as those for FAA's property and cost 
accounting.

However, the reliability of the data produced and maintained by the new 
systems will be unproven until they are operated in a fully integrated 
manner and a subsequent audit of the department's financial statements 
occurs. As such, it is too early to predict whether or not these new 
systems will meet the department's financial management information 
needs.

FAA Property Accountability Requires New Systems to Be Fully 
Implemented and Successfully Operated:

FAA implemented its new property system module as a stand-alone interim 
system in 2001. This module will be a component of the new Delphi 
system when it is implemented by FAA. The property system module is 
designed to account for FAA property from acquisition through disposal. 
Along with related procedural and control changes, it is expected to 
remedy FAA's long-standing inability to properly account for the cost 
of its property.

FAA property accountability has been an issue since the Inspector 
General's first audit of FAA financial statements in 1994. The 
Inspector General and we have reported consistently that FAA lacked the 
systems and related procedures to accurately and routinely account for 
property that totaled $11.7 billion as of September 30, 2001. FAA 
property accountability also has been cited as a material internal 
control weakness for many years.

Although the Inspector General issued an unqualified audit opinion on 
FAA's financial statements for fiscal year 1999, special FAA and 
Inspector General efforts were required to produce this result, since 
FAA's systems did not provide reliable data. For fiscal year 2000, when 
these significant extra efforts were not made, the Inspector General 
qualified its opinion because it was unable to determine the accuracy 
of FAA's reported property amounts. In fiscal year 2001, FAA 
centralized its accounting for property and implemented an interim 
property system. After the Inspector General initially found prior year 
property errors totaling $184 million during its audit, FAA hired an 
independent certified public accounting firm to perform a complete 
property financial audit. The auditors recommended additional 
adjustments totaling $138 million. After those adjustments were made, 
the Inspector General gave the 2001 FAA financial statements an 
unqualified opinion, but continued to cite property accountability as a 
material internal control weakness.

FAA expects to convert to its new Delphi system including the property 
system and general accounting system modules by the end of 2003. These 
systems components, which exchange data, will need to be proven in full 
operation. Subsequently, FAA's financial statement audit will provide a 
comprehensive test of the ability of these systems to function in the 
complex FAA environment. That audit will include an assessment about 
the reliability of reported property amounts and the related internal 
controls.

More Complete FAA Cost Accounting Information Requires Additional 
Systems Implementation:

FAA continues to make substantial progress in developing its cost 
accounting information capabilities. It is completing the 
implementation of its cost accounting system that it expects to have 
fully operational by the end of 2003. This system is intended to 
provide reliable information that has been lacking in the past about 
the full cost of FAA's projects and services.

FAA's progress in this area is important because a cost accounting 
system's objective is to accurately assign basic financial costs--such 
as an agency's labor, overhead, and other costs--to program activities 
and projects. Accurate cost information is essential for managing FAA's 
programs in areas that include budgeting and cost control, determining 
cost reimbursements and setting fees and prices, performance 
measurement, program evaluations, and choosing among alternative 
actions.[Footnote 40] The nature of its activities means that FAA has 
many cost information needs. For example, labor and other costs are 
incurred in the design, acquisition, and installation of air traffic 
control and other systems. Such costs need to be identified and 
accounted for as a part of systems acquired instead of being charged to 
current operating costs. FAA also needs information about the cost of 
services that it provides to the public.

We and others have reported that FAA lacked the systems necessary to 
provide cost accounting information. This deficiency limits FAA's and 
others' ability to make effective decisions about resource needs and to 
adequately control major projects, such as its multibillion-dollar air 
traffic control modernization program.

FAA began to implement portions of its cost accounting system in fiscal 
year 1997. By the end of fiscal year 2001, FAA had completed the 
implementation of its cost accounting system for its Air Traffic 
Services, began to track labor cost by project in two FAA 
organizations, and started to develop cost/performance models for its 
enroute and flight services.[Footnote 41] During 2002, FAA focused on 
implementing cost accounting systems in its remaining organizations 
such as the Aeronautical Center and Civil Aviation Security and began 
to use cost data to support fee and pricing activities. It also made 
progress in developing financial measures that focus on cost trends by 
service area, analyzing cost anomalies, and using cost per flight as a 
financial indicator in relation to operational measures. FAA continues 
to add to and enhance the comprehensiveness of its cost systems. For 
example, it is integrating additional labor cost data into the system 
from various FAA activities. Complete implementation of this system is 
expected by the end of 2003.

As is the case with FAA's property system, the reliability of the data 
produced and maintained by FAA's new cost accounting system will be 
unproven until it is fully implemented and is subsequently subjected to 
a financial statement audit.

[End of section]

GAO Contacts:

Subject covered in this report: Improving transportation safety; ; 
Transforming transportation security; ; Improving mobility and economic 
growth through intermodal and modal approaches; Contact person: John H. 
Anderson, Jr., Managing Director; Physical Infrastructure Issues; (202) 
512-2834; andersonj@gao.gov.

Subject covered in this report: Building human capital strategies; 
Contact person: J.C. Mihm, Director; Strategic Issues; (202) 512-3236; 
mihmj@gao.gov; ; Gerald L. Dillingham, Ph.D., Director; Physical 
Infrastructure Issues; (202) 512-2834; dillinghamg@gao.gov.

Subject covered in this report: Enhancing the management of FAA 
acquisitions; ; ; ; ; ; ; ; ; Enhancing the management of Coast Guard 
acquisitions; Contact person: Gerald L. Dillingham, Ph.D., Director; 
Physical Infrastructure Issues; (202) 512-2834; dillinghamg@gao.gov; ; 
David A. Powner, Acting Director; Information Technology Issues; (202) 
512-9286; pownerd@gao.gov; ; JayEtta Z. Hecker, Director; Physical 
Infrastructure Issues; (202) 512-2834; heckerj@gao.gov.

Subject covered in this report: Continuing progress in financial 
management; Contact person: Linda M. Calbom, Director; Financial 
Management and Assurance Issues; (202) 512-9508; calboml@gao.gov.

[End of section]

Related GAO Products:

Performance, Accountability, and High Risk:

Performance and Accountability: Reported Agency Actions and Plans to 
Address 2001 Management Challenges and Program Risks. GAO-03-225. 
Washington, D.C.: October 31, 2002.

Performance Reporting: Few Agencies Reported on the Correctness and 
Reliability of Performance Data. GAO-02-372. Washington, D.C.: April 
26, 2002.

Department of Transportation: Status of Achieving Key Outcomes and 
Addressing Major Management Challenges. GAO-01-834. Washington, D.C.: 
June 22, 2001.

Major Management Challenges and Program Risks: Department of 
Transportation. GAO-01-253. Washington, D.C.: January 2001.

Major Management Challenges and Program Risks: A Governmentwide 
Perspective. GAO-01-241. Washington, D.C.: January 2001.

High-Risk Series: An Update. GAO-01-263. Washington, D.C.: January 
2001.

Transportation Safety:

Aviation Safety: Undeclared Air Shipments of Dangerous Goods and DOT's 
Enforcement Approach. GAO-03-22. Washington, D.C.: January 10, 2003.

Pipeline Safety and Security: Improved Workforce Planning and 
Communication. GAO-02-785. Washington, D.C.: August 26, 2002.

General Aviation: Status of the Industry, Related Infrastructure, and 
Safety Issues. GAO-01-916. Washington, D.C.: August 31, 2001.

Vehicle Safety: Technologies, Challenges, and Research and Development 
Expenditures for Advanced Air Bags. GAO-01-596. Washington, D.C.: June 
12, 2001.

Motor Vehicle Safety: NHTSA's Ability to Detect and Recall Defective 
Replacement Crash Parts Is Limited. GAO-01-225. Washington, D.C.: 
January 31, 2001.

Commercial Motor Vehicles: Effectiveness of Actions Being Taken to 
Improve Motor Carrier Safety Is Unknown. GAO/RCED-00-189. Washington, 
D.C.: July 17, 2000.

Aviation Safety: Safer Skies Initiative Has Taken Steps to Reduce 
Accident Rates by 2007. GAO/RCED-00-111. Washington, D.C.: June 28, 
2000.

Air Traffic Control: FAA Needs to Better Prepare for Impending Wave of 
Controller Attrition. GAO-02-591. Washington, D.C.: June 14, 2002.

Pipeline Safety: The Office of Pipeline Safety Is Changing How It 
Oversees the Pipeline Industry. GAO/RCED-00-128. Washington, D.C.: 
May 15, 2000.

Commercial Motor Vehicles: Significant Actions Remain to Improve Truck 
Safety. GAO/T-RCED-00-102. Washington, D.C.: March 2, 2000.

Truck Safety: Motor Carrier Office Hampered by Limited Information on 
Causes of Crashes and Other Data Problems. GAO/RCED-99-182. Washington, 
D.C.: June 29, 1999.

Aviation Safety: FAA's New Inspection System Offers Promise, but 
Problems Need to Be Addressed. GAO/RCED-99-183. Washington, D.C.: June 
28, 1999.

Motor Vehicle Safety: Comprehensive State Programs Offer Best 
Opportunity for Increasing Use of Safety Belts. GAO/RCED-96-24. 
Washington, D.C.: January 3, 1996.

Transportation Security:

Transportation Security Administration: Actions and Plans to Build a 
Results-Oriented Culture. GAO-03-190. Washington, D.C.: January 17, 
2003.

Aviation Security: Vulnerabilities and Potential Improvements for the 
Air Cargo System. GAO-03-344. Washington, D.C: December 20, 2002.

Mass Transit: Federal Action Could Help Transit Agencies Address 
Security Challenges. GAO-03-263. Washington, D.C.: December 13, 2002.

Mass Transit: Challenges in Securing Transit Systems. GAO-02-1075T. 
Washington, D.C.: September 18, 2002.

Port Security: Nation Faces Formidable Challenges in Making New 
Initiatives Successful. GAO-02-993T. Washington, D.C.: August 5, 2002.

Aviation Security: Transportation Security Administration Faces 
Immediate and Long-Term Challenges. GAO-02-971T. Washington, D.C.: July 
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Homeland Security: Progress Made, More Direction and Partnership 
Sought. GAO-02-490T. Washington, D.C.: March 12, 2002.

Aviation Security: Terrorist Acts Demonstrate Urgent Need to Improve 
Security at the Nation's Airports. GAO-01-1162T. Washington, D.C.: 
September 20, 2001.

FAA Computer Security: Recommendations to Improve Continuing 
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Aviation Security: Long-Standing Problems Impair Airport Screeners' 
Performance. GAO/RCED-00-74. Washington, D.C.: June 28, 2000.

Mobility and Economic Growth:

Commercial Aviation: Financial Condition and Industry Responses Affect 
Competition. GAO-03-171T. Washington, D.C.: October 2, 2002.

Intercity Passenger Rail: Potential Financial Issues in the Event that 
Amtrak Undergoes Liquidation. GAO-02-871. Washington, D.C.: September 
20, 2002.

Highway Infrastructure: Timely Delivery of Highway Construction 
Projects. GAO-02-1067T. Washington, D.C.: September 19, 2002.

Marine Transportation: Federal Financing and a Framework for 
Infrastructure Investments. GAO-02-1033. Washington, D.C.: September 
9, 2002.

Surface and Maritime Transportation: Developing Strategies for 
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August 30, 2002.

Mass Transit: Status of New Starts Program and Potential for Bus Rapid 
Transit Projects. GAO-02-840T. Washington, D.C.: June 20, 2002.

Railroad Regulation: Changes in Freight Railroad Rates from 1997 
through 2000. GAO-02-721. Washington, D.C.: June 5, 2002.

Highway Infrastructure: Interstate Physical Conditions Have Improved, 
but Congestion and Other Pressures Continue. GAO-02-571. Washington, 
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Mass Transit: FTA's New Starts Commitments for Fiscal Year 2003. GAO-
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Intercity Passenger Rail: Congress Faces Critical Decisions in 
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2002.

Physical Infrastructure: Crosscutting Issues Planning Conference 
Report. GAO-02-139. Washington, D.C.: October, 2001.

Mass Transit: FTA Could Relieve New Starts Funding Program Constraints. 
GAO-01-987. Washington, D.C.: July 31, 2001.

Aviation Competition: Restricting Airline Ticketing Rules Unlikely to 
Help Consumers. GAO-01-831. Washington, D.C.: July 31, 2001.

Freight Railroad Regulation: Surface Transportation Board's Oversight 
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Mass Transit: Many Management Successes at WMATA, but Capital Planning 
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Aviation Competition: Challenges in Enhancing Competition in Dominated 
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Highway Infrastructure: FHWA's Model for Estimating Highway Needs Has 
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February 14, 2001.

Aviation Competition: Issues Raised by Consolidation Proposals. GAO-01-
370T. Washington, D.C.: February 1, 2001.

Mass Transit: Project Management Oversight Benefits and Future Funding 
Requirements. GAO-00-221. Washington, D.C.: September 15, 2000.

Transit Grants: Need for Improved Predictability, Data, and Monitoring 
in Application Processing. GAO/RCED-00-260. Washington, D.C.: August 
30, 2000.

Highway Funding: Problems with Highway Trust Fund Information Can 
Affect State Highway Funds. GAO/RCED/AIMD-00-148. Washington, D.C.: 
June 29, 2000.

Highway Infrastructure: FHWA's Model for Estimating Highway Needs Is 
Generally Reasonable, Despite Limitations. GAO/RCED-00-133. 
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Intercity Passenger Rail: Amtrak Will Continue to Have Difficulty 
Controlling Its Costs and Meeting Capital Needs. GAO/RCED-00-138. 
Washington, D.C.: May 31, 2000.

Mass Transit: Challenges in Evaluating, Overseeing, and Funding Major 
Transit Projects. GAO/T-RCED-00-104. Washington, D.C.: March 8, 2000.

Transportation Infrastructure: Better Data Needed to Rate the Nation's 
Highway Conditions. GAO/RCED-99-263. Washington, D.C.: September 24, 
1999.

Mass Transit: Status of New Starts Transit Projects with Full Funding 
Grant Agreements. GAO/RCED-99-240. Washington, D.C.: August 19, 1999.

Aviation Competition: Information on the Department of Transportation's 
Proposed Policy. GAO/RCED-99-225. Washington, D.C.: July 29, 1999.

Surface Transportation: Moving Into the 21ST Century. GAO/RCED-99-176. 
Washington, D.C.: May 1999.

Human Capital:

A Model of Strategic Human Capital Management. GAO-02-373SP. 
Washington, D.C.: March 2002.

Coast Guard Workforce Mix: Phased-In Conversion of Some Support Officer 
Positions Would Produce Savings. GAO/RCED-00-60. Washington, D.C.: 
March 1, 2000.

Federal Aviation Administration: Challenges in Modernizing the Agency. 
GAO/T-RCED/AIMD-00-87. Washington, D.C.: February 3, 2000.

Acquisition Management:

National Airspace System: Status of FAA's Standard Terminal Automation 
Replacement System. GAO-02-1071. Washington, D.C.: September 17, 2002.

National Airspace System: FAA's Approach to Its New Communications 
System Appears Prudent, but Challenges Remain. GAO-02-710. Washington, 
D.C.: July 15, 2002.

FAA Alaska: Weak Controls Resulted in Improper and Wasteful Purchases. 
GAO-00-606. Washington, D.C.: May 30, 2002.

Coast Guard: Budget and Management Challenges for 2003 and Beyond. GAO-
02-538T. Washington, D.C.: March 19, 2002.

Coast Guard: Progress Being Made on Deepwater Project, but Risks 
Remain. GAO-01-564. Washington, D.C.: May 21, 2001.

National Airspace System: Persistent Problems in FAA's New Navigation 
System Highlight Need for Periodic Re-evaluation. GAO/RCED/AIMD-00-
130. Washington, D.C.: June 12, 2000.

Financial Management:

Transportation Infrastructure: Cost and Oversight Issues on Major 
Highway and Bridge Projects. GAO-02-702T. Washington, D.C.: May 1, 
2002.

Metropolitan Washington Airports Authority: Contracting Practices Do 
Not Always Comply with Airport Lease Requirements. GAO-02-36. 
Washington, D.C.: March 1, 2002.

Airport Infrastructure: Unresolved Issues Make It Difficult to 
Determine the Cost to Serve New Large Aircraft. GAO-02-251. Washington, 
D.C.: February 4, 2002.

Department of Transportation: Status of Achieving Key Outcomes and 
Addressing Major Management Challenges. GAO-01-824. Washington, D.C.: 
June 22, 2001.

Port Infrastructure: Financing of Navigation Projects at Small and 
Medium-Sized Ports. GAO/RCED-00-58. Washington, D.C.: March 2, 2000.

Results Act: Information on Performance Goals and Measures Contained in 
the Department of Transportation's Fiscal Year 2000 Performance Plan. 
GAO/RCED-00-36, Washington, D.C.: November 15, 1999.

Commercial Maritime Industry: Updated Information on Federal 
Assessments. GAO/T-RCED-00-36. Washington, D.C.: November 3, 1999.

[End of section]

Performance and Accountability and High-Risk Series:

Major Management Challenges and Program Risks: A Governmentwide 
Perspective. GAO-03-95.

Major Management Challenges and Program Risks: Department of 
Agriculture. GAO-03-96.

Major Management Challenges and Program Risks: Department of Commerce. 
GAO-03-97.

Major Management Challenges and Program Risks: Department of Defense. 
GAO-03-98.

Major Management Challenges and Program Risks: Department of Education. 
GAO-03-99.

Major Management Challenges and Program Risks: Department of Energy. 
GAO-03-100.

Major Management Challenges and Program Risks: Department of Health and 
Human Services. GAO-03-101.

Major Management Challenges and Program Risks: Department of Homeland 
Security. GAO-03-102.

Major Management Challenges and Program Risks: Department of Housing 
and Urban Development. GAO-03-103.

Major Management Challenges and Program Risks: Department of the 
Interior. GAO-03-104.

Major Management Challenges and Program Risks: Department of Justice. 
GAO-03-105.

Major Management Challenges and Program Risks: Department of Labor. 
GAO-03-106.

Major Management Challenges and Program Risks: Department of State. 
GAO-03-107.

Major Management Challenges and Program Risks: Department of 
Transportation. GAO-03-108.

Major Management Challenges and Program Risks: Department of the 
Treasury. GAO-03-109.

Major Management Challenges and Program Risks: Department of Veterans 
Affairs. GAO-03-110.

Major Management Challenges and Program Risks: U.S. Agency for 
International Development. GAO-03-111.

Major Management Challenges and Program Risks: Environmental Protection 
Agency. GAO-03-112.

Major Management Challenges and Program Risks: Federal Emergency 
Management Agency. GAO-03-113.

Major Management Challenges and Program Risks: National Aeronautics and 
Space Administration. GAO-03-114.

Major Management Challenges and Program Risks: Office of Personnel 
Management. GAO-03-115.

Major Management Challenges and Program Risks: Small Business 
Administration. GAO-03-116.

Major Management Challenges and Program Risks: Social Security 
Administration. GAO-03-117.

Major Management Challenges and Program Risks: U.S. Postal Service. 
GAO-03-118.

High-Risk Series: An Update. GAO-03-119.

High-Risk Series: Strategic Human Capital Management. GAO-03-120.

High-Risk Series: Protecting Information Systems Supporting the Federal 
Government and the Nation's Critical Infrastructures. GAO-03-121.

High-Risk Series: Federal Real Property. GAO-03-122.

FOOTNOTES

[1] U.S. General Accounting Office, Major Management Challenges and 
Program Risks: A Governmentwide Perspective, GAO-01-241 (Washington, 
D.C.: January 2001).

[2] U.S. Department of Transportation, Office of the Inspector General, 
Progress in Implementing Strategies to Increase the Use of Seat Belts, 
MH-2002-109 (Washington, D.C.: Sept. 18, 2002) and U.S. General 
Accounting Office, Motor Vehicle Safety: Comprehensive State Programs 
Offer the Best Opportunity for Increasing Use of Safety Belts, GAO/
RCED-96-24 (Washington, D.C.: Jan. 3, 1996).

[3] Large trucks are those with a gross weight of more than 10,000 
pounds.

[4] Aviation fatalities in 2001 include the 265 persons killed in the 
four aircraft hijacked on September 11, 2001, but do not include the 
2,801 persons killed at the World Trade Center or 125 persons killed at 
the Pentagon.

[5] U.S. General Accounting Office, Aviation Safety: Safer Skies 
Initiative Has Taken Steps to Reduce Accident Rates by 2007, GAO/RCED-
00-111 (Washington, D.C.: June 28, 2000).

[6] U.S. General Accounting Office, General Aviation: Status of the 
Industry, Related Infrastructure, and Safety Issues, GAO-01-916 
(Washington, D.C.: Aug. 31, 2001). 

[7] Runway incursions are incidents on the runway that create a 
collision hazard or result in aircraft being closer than allowed by air 
traffic control requirements.

[8] U.S. General Accounting Office, Air Traffic Control: FAA Needs to 
Better Prepare for Impending Wave of Controller Attrition, GAO-02-591 
(Washington, D.C.: June 14, 2002).

[9] U.S. General Accounting Office, Aviation Safety: FAA's New 
Inspection System Offers Promise, but Problems Need to Be Addressed, 
GAO/RCED-99-183 (Washington, D.C.: 
June 28, 1999).

[10] U.S. Department of Transportation, Office of Inspector General, 
Report on the Air Transportation Oversight System: Federal Aviation 
Administration, AV-2002-088 (Washington, D.C.: Apr. 8, 2002).

[11] GAO/RCED-99-183.

[12] U.S. General Accounting Office, Transportation Security 
Administration: Actions and Plans to Build a Results-Oriented Culture, 
GAO-03-190 (Washington, D.C.: Jan. 17, 2003). 

[13] The Homeland Security Act of 2002 amends this requirement. 
According to the legislation, if, in his discretion or at the request 
of an airport, the Under Secretary of Transportation for Security 
determines that TSA is not able to deploy explosive detection systems 
required in the Aviation and Transportation Security Act by December 
31, 2002, then for each airport for which the Under Secretary makes 
this determination, the Under Secretary shall submit to specific 
congressional committees a detailed plan for the deployment of the 
number of explosive detection systems at that airport necessary to meet 
the requirements as soon as practicable at that airport but no later 
than December 31, 2003; the Under Secretary shall take all necessary 
action to ensure that alternative means of screening all checked 
baggage are implemented until the requirements have been met.

[14] Explosive detection machines are used to screen baggage for 
explosives and work by using CAT scan X-ray to take fundamental 
measurements of materials in bags to recognize characteristic 
signatures of threat explosives. Explosive trace detection systems 
(trace detection machines) are used to screen baggage for explosives 
and work by detecting vapors and residues of explosives.

[15] Freight forwarders consolidate shipments and deliver them to air 
carriers and cargo facilities of passenger and all-cargo air carriers.

[16] U.S. General Accounting Office, Aviation Security: Vulnerabilities 
and Potential Improvements for the Air Cargo System, GAO-03-344 
(Washington, D.C.: Dec. 20, 2002). 

[17] U.S. General Accounting Office, Aviation Safety: Undeclared Air 
Shipments of Dangerous Goods and DOT's Enforcement Approach, GAO-03-22 
(Washington, D.C.: Jan. 10, 2003). 

[18] U.S. General Accounting Office, Port Security: Nation Faces 
Formidable Challenges in Making New Initiatives Successful, GAO-02-993T 
(Washington, D.C.: Aug. 5, 2002). 

[19] U.S. General Accounting Office, Aviation Security: Transportation 
Security Administration Faces Immediate and Long-Term Challenges, GAO-
02-971T (Washington, D.C.: July 25, 2002). 

[20] U.S. Department of Transportation, Office of Inspector General, 
Key Challenges Facing the Transportation Security Administration, CC-
2002-180 (Washington, D.C.: June 20, 2002).

[21] U.S. General Accounting Office, Mass Transit: Challenges in 
Securing Transit Systems, GAO-02-1075T (Washington, D.C.: Sept. 18, 
2002).

[22] GAO-02-1075T. 

[23] U.S. Department of Transportation, Office of Inspector General, 
Progress in Implementing Provisions of the Aviation and Transportation 
Security Act, CC-2002-203 (Washington, D.C.: Aug. 7, 2002). 

[24] To assist agencies in managing their human capital more 
strategically, we have developed a model of strategic human capital 
management that identifies cornerstones and related critical success 
factors that agencies should apply and steps they can take. See U.S. 
General Accounting Office, A Model of Human Capital Management, GAO-02-
373SP (Washington, D.C.: March 2002). 

[25] Pipeline Infrastructure Protection to Enhance Security and Safety 
Act, H.R. 3609, 107th Congress (2001).

[26] The department's performance plan for fiscal year 2003 and 
performance report for fiscal year 2001 defines mobility as shaping an 
accessible, affordable, reliable transportation system for all people, 
goods, and regions and economic growth as supporting a transportation 
system that sustains America's economic growth.

[27] U.S. General Accounting Office, Surface and Maritime 
Transportation: Developing Strategies for Enhancing Mobility--A 
National Challenge, GAO-02-775 (Washington, D.C.: Aug. 30, 2002) and 
National Airspace System: Long-Term Capacity Planning Needed Despite 
Recent Reduction in Flight Delays, GAO-02-185 (Washington, D.C.: Dec. 
14, 2001).

[28] U.S. General Accounting Office, Surface Transportation: Moving 
Into the 21ST Century, GAO/RCED-99-176 (Washington, D.C.: May 1999) and 
Physical Infrastructure: Crosscutting Issues Planning Conference 
Report, GAO-02-139 (Washington, D.C.: October 2001).

[29] From fiscal years 1998 through 2002, the federal government has 
provided $1 billion per year on average to Amtrak to help meet the 
railroad's capital and operating needs. The federal government also has 
an ownership interest of over $17 billion in preferred stock and 
cumulative unpaid dividends. See U.S. General Accounting Office, 
Intercity Passenger Rail: Potential Financial Issues in the Event That 
Amtrak Undergoes Liquidation, GAO-02-871 (Washington, D.C.: Sept. 20, 
2002).

[30] U.S. General Accounting Office, Intercity Passenger Rail: Congress 
Faces Critical Decisions in Developing a National Policy, GAO-02-522T 
(Washington, D.C.: Apr. 11, 2002). 

[31] U.S. General Accounting Office, Commercial Aviation: Financial 
Condition and Industry Responses Affect Competition, GAO-03-171T 
(Washington, D.C.: Oct. 2, 2002).

[32] U.S. General Accounting Office, Aviation Competition: Regional Jet 
Service Yet to Reach Many Small Communities, GAO-01-344 (Washington, 
D.C.: Feb. 14, 2001) and Aviation Competition: Challenges in Enhancing 
Competition in Dominated Markets, GAO-01-518T (Washington, D.C.: Mar. 
13, 2001). 

[33] According to FTA, as of early January 2003, none of these projects 
have been approved.

[34] U.S. General Accounting Office, Transportation Infrastructure: 
Cost and Oversight Issues on Major Highway and Bridge Projects, GAO-02-
702T (Washington, D.C.: May 1, 2002).

[35] U.S. General Accounting Office, A Model of Strategic Human Capital 
Management: Exposure Draft, GAO-02-373SP (Washington, D.C.: March 15, 
2002) and High-Risk Series: An Update, GAO-01-263 (Washington, D.C.: 
January 2001).

[36] U.S. General Accounting Office, Information Technology: Enterprise 
Architecture Use Across the Federal Government Can Be Improved, GAO-02-
6 (Washington, D.C.: Feb. 19, 2002). 

[37] U.S. General Accounting Office, National Airspace System: 
Persistent Problems in FAA's New Navigation System Highlight Need for 
Periodic Reevaluation, GAO/RCED/AIMD-00-130 (Washington, D.C.: June 
12, 2000). 

[38] U.S. General Accounting Office, Coast Guard: Progress Being Made 
on Deepwater Project, but Risks Remain, GAO-01-564 (Washington, D.C.: 
May 21, 2001). 

[39] Delphi consists of a number of integrated components, including 
modules for general accounting and property.

[40] The Statement of Federal Financial Accounting Standards No. 4, 
Managerial Cost Accounting Standards, July 31, 1995, describes these 
five areas for which cost information is essential in managing 
government programs.

[41] Air Traffic Services is the FAA office responsible for operating 
and maintaining the national airspace system.

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