United States Government Accountability Office

GAO Testimony 

Before the Subcommittee on Transportation, 

Treasury, the Judiciary, Housing and Urban 

Development, and Related Agencies, 

Committee on Appropriations, U.S. Senate 

AIR TRAFFIC CONTROL

Status of the Current 

Modernization Program and 

Planning for the Next 

Generation System 

Statement for the Record by 

Gerald L. Dillingham, Ph.D., Director 

Physical Infrastructure Issues 

For Release on Delivery

Expected at 9:30 a.m. EDT

Thursday, May 4, 2006

 

GAO-06-738T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

May 4, 2006

AIR TRAFFIC CONTROL 

Status of the Current Modernization 

Program and Planning for the Next 

Generation System 

Highlights of GAO-06-738T, a statement 

for the record for the Subcommittee on 

Transportation, Treasury, the Judiciary, 

Housing and Urban Development, and 

Related Agencies, Committee on

Appropriations, U.S. Senate 

Over a decade ago, GAO listed the

Federal Aviation Administration’s 

(FAA) effort to modernize the

nation’s air traffic control (ATC) 

system as a high-risk program 

because of systemic management 

and acquisition problems. Two 

relatively new offices housed 

within FAA—the Air Traffic 

Organization (ATO) and the Joint 

Planning and Development Office

(JPDO)—are now primarily 

responsible for planning and 

implementing these modernization 

efforts. Congress created ATO to 

be a performance-based

organization that would improve 

both the agency’s culture,

structure, and processes, and the 

ATC modernization program’s 

performance and accountability. 

Congress created JPDO, made up

of seven partner agencies, to 

coordinate the federal and

nonfederal stakeholders necessary

to plan a transition from the 

current air transportation system to

the “next generation air

transportation system” (NGATS). 

This statement is based on GAO’s

recently completed and ongoing 

studies of the ATC modernization 

program. GAO provides

information on (1) the status of 

ATO’s efforts to improve the ATC 

modernization program, (2) the 

status of JPDO’s planning efforts 

for NGATS, and (3) actions to

control costs and leverage

resources for ATC modernization 

and the transformation to NGATS. 

ATO has taken a number of steps as a performance-based organization to 

improve the ATC modernization program, but continued management 

attention will be required to institutionalize these initiatives. ATO has 

adopted core values, streamlined its management, and begun to revise its 

acquisition processes to become more businesslike and accountable. For the 

past 2 years, ATO has met its major acquisition performance goals. ATO still 

faces challenges, including sustaining its transformation to a results-oriented 

culture, hiring and training thousands of air traffic controllers, and ensuring 

stakeholder involvement in major system acquisitions. 

JPDO has made progress in planning for NGATS by facilitating collaboration 

among federal agencies, ensuring the participation of federal and nonfederal 

stakeholders, addressing technical planning, and factoring global 

harmonization into its planning, but JPDO faces challenges in continuing to 

leverage the partner agencies’ resources and in defining the roles and 

responsibilities of the various agencies involved. JPDO could find it difficult 

to sustain the support of stakeholders over the longer term and to generate 

participation from some key stakeholders, such as current air traffic 

controllers. JPDO has taken steps to develop an enterprise architecture (the 

blueprint for NGATS) and will have an early version later this year. The 

robustness and timeliness of this enterprise architecture are critical to many

of JPDO’s future NGATS planning activities. 

ATO has taken a number of actions to control costs and maximize capital 

funds, which will become increasingly important during the transition to 

NGATS. ATO has established cost control as one of its key performance 

metrics, developed a cost accounting system, and is using its performance 

management system to hold its managers accountable for controlling costs. 

ATO has developed a formal cost control program that includes, among 

other things, (1) conducting annual business case reviews for its capital 

programs, (2) decommissioning and consolidating ATC facilities, and (3)

pursuing cost reduction opportunities through outsourcing. These cost 

control initiatives represent an important first step to improved performance 

but will require review and monitoring. 

Air Traffic Control Tower 

www.gao.gov/cgi-bin/getrpt?GAO-06-738T.

To view the full product, click on the link 

above. For more information, contact Dr. 

Gerald L. Dillingham, at (202) 512-2834 or 

dillinghamg@gao.gov. 
Mr. Chairman and Members of the Subcommittee: 

We are pleased to present this statement for the record regarding the 

status of efforts by the Air Traffic Organization (ATO) and the Joint 

Planning and Development Office (JPDO) to modernize and transform the 

nation’s air traffic control (ATC) system. Both offices are within the 

Federal Aviation Administration (FAA) and represent recent efforts by 

Congress to, among others things, ensure a national airspace system that 

is safe, efficient, and capable of meeting a growing demand for air 

transportation—a demand that is expected to triple by 2025. ATO has 

responsibility for operating, maintaining, and modernizing the current ATC 

system. ATO was authorized as a performance-based organization (PBO)1

in 2000 and includes 36,000 of FAA’s roughly 46,000 employees. JPDO, 

authorized in 2003, is responsible for planning and coordinating the 

broader and longer-term transformation (through 2025) to the “next 

generation air transportation system” (NGATS). 

The ATC system is composed of an array of subsystems, including radars; 

automated data-processing, navigation, and communications equipment; 

and ATC facilities. These systems work together to support all phases of 

flight for aircraft operating in U.S. airspace. The ATC system also includes 

the FAA employees who manage, operate, and maintain ATC equipment 

and facilities. Over a decade ago, we designated FAA’s ATC modernization 

program as high risk because of systemic management and acquisition 

problems, which we have reported on and made recommendations to 

address over the years. 

Efforts to modernize and transform the ATC system will be costly, yet FAA 

anticipates lean capital budgets for the immediate future. Thus, to 

maintain the current ATC system while preparing for the next, FAA will 

have to work even harder to make the best and most efficient use of 

increasingly scarce resources. These transformation efforts are getting

under way and will continue as the United States confronts multiple 

challenges and demands for resources. ATC transformation also involves 

the recognition that other nations are upgrading their aviation

technologies, creating a need for global harmonization to support 

international travel. 

 1

PBOs are discrete units, led by a Chief Operating Officer, that commit to clear objectives, 

specific measurable goals, customer service standards, and targets for improved 

performance. 

Page 1 GAO-06-738T 
Our statement focuses on three key questions. (1) What is the status of 

ATO’s efforts to improve its performance as it modernizes our nation’s air 

traffic control system? (2) What is the status of JPDO’s planning efforts for 

NGATS? (3) To what extent are efforts being made to control costs and 

leverage resources to support ATC modernization and the transformation 

to NGATS? My statement is based on our recently completed and ongoing

studies of FAA’s ATC modernization program, together with updated 

information from ATO and JPDO officials and aviation stakeholders.2

 Later 

this year, we expect to issue two detailed reports related to the issues 

discussed in this statement. One report will provide our assessment of the 

status of JPDO’s efforts to develop NGATS. Another report will examine a 

variety of cost-saving and financing options for FAA in the 21st century. 

We are performing our work in accordance with generally accepted

government auditing standards. 

The following is a summary of our findings to date: 

• Created as a performance-based organization, ATO has been working to 

establish a results-oriented organizational culture, a more accountable 

management structure, and more businesslike management and 

acquisition processes, but continued management attention will be 

required to institutionalize these initiatives. To bring about cultural 

change, ATO has adopted core values such as integrity, accountability, and 

fiscal responsibility and is using FAA Employee Attitude Survey data to 

establish a baseline for assessing changes in attitudes over time. ATO has 

begun to hold managers accountable for cost control through its 

performance rating and bonus system. To improve its acquisitions process, 

FAA is, for example, evaluating all investment decisions, including those 

for systems in service beyond 2 years, to ensure that all decisions support 

agency goals. Recently, FAA has reported positive results: For the past 2 

fiscal years, FAA has met its major acquisition performance goal—to have

80 percent of its acquisitions meet scheduled milestones and be within 10

percent of budget. However, FAA still faces challenges, including 

sustaining ATO’s transformation to a results-oriented culture, hiring and 

training thousands of air traffic controllers to replace those expected to 

retire, ensuring stakeholder involvement in major system acquisitions to 

ensure that the acquisitions meet users’ needs, and keeping major 

acquisitions, such as the FAA Telecommunications Infrastructure (FTI) on 

 2

Because ATO includes the majority of FAA employees, this statement will refer to ATO 

initiatives, even though some may apply FAA-wide. 

Page 2 GAO-06-738T 
schedule and within budget. 

• JPDO has made progress in planning for the NGATS that is described in its 

December 2004 Integrated Plan and its March 2006 Progress Report. 

JPDO’s focus has included facilitating collaboration among federal 

agencies, ensuring active participation of stakeholders, addressing 

technical planning, and factoring global harmonization into its planning, 

but several challenges exist. Our work has shown that it is important for 

collaborating agencies to leverage resources and define roles and 

responsibilities.3

 JPDO has facilitated collaboration among its federal 

partner agencies, but faces challenges in continuing to leverage the 

partner agencies’ resources and in defining the roles and responsibilities 

of the various agencies involved. JPDO is structured in a way that involves 

federal and nonfederal stakeholders, but could find it difficult to sustain 

the support of nonfederal stakeholders over the longer term and has had 

difficulty obtaining the participation of current air traffic controllers. 

JPDO is using an iterative process for technical planning, but has not 

completed some key activities. For example, JPDO’s Evaluation and 

Analysis Division is beginning to model anticipated changes in air traffic 

controller workload, but has not completed human factors modeling to 

determine the effects of potential changes in pilot workload. JPDO has 

taken the initial steps to develop an enterprise architecture (a blueprint for 

NGATS) and will have an early version by the end of fiscal year 2006. The 

robustness and timeliness of JPDO’s enterprise architecture is critical to 

many of JPDO’s future NGATS planning activities.

• ATO has taken a number of steps to control costs and leverage resources 

that, in combination with other actions, can provide funds for ATC 

modernization and transformation to NGATS. ATO has established 

performance metrics for cost control, developed a cost accounting system, 

and is using its performance management system to hold its managers 

accountable for controlling costs. ATO has also developed a formal cost 

control program that includes (1) conducting annual business case 

reviews for its capital programs, (2) decommissioning and consolidating 

ATC facilities, (3) improving its project management of its operations 

programs, (4) pursuing cost reduction opportunities through outsourcing, 

(5) assisting Congress in identifying projects for funding priority, and (6) 

reducing or avoiding personnel costs through workforce attrition and 

efficiency gains. However, ATO’s cost control efforts are at an early stage,

and ATO lacks a consistent process to validate savings estimated for 

 3

GAO, Results-Oriented Government: Practices That Can Help Enhance and Sustain

Collaboration among Federal Agencies, GAO-06-15 (Washington, D.C.: Oct. 21, 2005). 

Page 3 GAO-06-738T 
operations cost control initiatives. Cost control will become increasingly 

important during the transition from the current ATC system to NGATS, 

when ATO is expected to remain responsible for the costs of operating 

and maintaining the current ATC system while assuming major 

responsibility for the costs of demonstrating and developing new NGATS

technologies. Opportunities exist for greater savings and cost control. 

Many of these opportunities will require risk-based decision making and 

significant congressional support. ATO and JPDO have collaborated on 

developing rough near-term estimates of the funding requirements for 

defining concepts and developing systems for surveillance, 

communications, and other key NGATS components. However, these 

funding requirements are not currently in ATO’s budget-constrained 

capital spending plan. ATO’s NGATS funding burden could be reduced to

the extent that JPDO is successful in leveraging resources from its partner 

agencies. Further enhancement to NGATS funding could be achieved by 

ATO utilizing its existing funding flexibility. 

In 1981, FAA began a program to replace and upgrade ATC facilities and

equipment. However, systemic management issues, such as frequent 

turnover in agency leadership, an ineffective organizational culture, and 

problems with its acquisition process, contributed to cost growth, 

schedule slippages, and performance shortfalls, leading us to classify 

FAA’s ATC modernization program as high risk in 1995.4

 That same year, 

Congress passed legislation that exempted FAA from most federal 

personnel and acquisition laws and regulations on the premise that FAA 

needed such freedom to better manage ATC modernization.5 In December 

2000, President Clinton signed an executive order and Congress passed 

supporting legislation that, together, provided FAA with the authority to 

create ATO as a performance-based organization (PBO) to control and 

improve FAA’s management of the modernization effort. In February 2004, 

FAA reorganized, transferring 36,000 employees, most of whom worked in 

air traffic services and research and acquisitions, to ATO. 

Even with the creation of ATO, the current approach to managing air 

transportation is becoming increasingly inefficient and operationally 

Background 

 4

ATC Modernization has remained on our high-risk list since 1995. See GAO, High Risk 

Series: An Update, GAO-05-207 (Washington, D.C.: January 2005). 

5

P.L. 104-50, Fiscal Year 1996 Department of Transportation Appropriations Act. 

Page 4 GAO-06-738T 
obsolete. In late 2003, Congress created JPDO6

 to plan NGATS, a system 

intended to accommodate what is expected to be three times more air 

traffic by 2025 than there is today. JPDO’s scope is broader than 

traditional ATC modernization in that it is “airport curb-to-airport curb,” 

encompassing such issues as security screening and environmental 

concerns. Additionally, JPDO’s approach will require unprecedented 

collaboration and consensus among many stakeholders—federal and 

nonfederal—about necessary system capabilities, equipment, procedures, 

and regulations. Key to this collaboration will be the work of JPDO’s seven 

partner agencies: the Departments of Transportation, Commerce, Defense,

and Homeland Security; FAA; the National Aeronautics and Space 

Administration (NASA); and the White House Office of Science and 

Technology Policy. Each of these agencies will play a role in creating 

NGATS. For example, the Department of Defense has deployed “network 

centric” systems, originally developed for the battlefield, that are being

considered as a framework to provide all users of the national airspace 

system—FAA and the Departments of Defense and Homeland Security—

with a common view of that system. JPDO began its initial operations in 

early 2004. A Senior Policy Committee, chaired by the Secretary of 

Transportation and including senior representatives from each of the 

participating departments and agencies, provides oversight to JPDO. 

JPDO is located within FAA and reports to the FAA Administrator and to 

the Chief Operating Officer within ATO.7

 See figure 1. 

 6

P.L. 108-176, Vision 100—Century of Aviation Reauthorization Act, December 12, 2003. 

7

For more information on JPDO, visit www.jpdo.aero. 

Page 5 GAO-06-738T 
Figure 1: Organizational Chart of JPDO 

Concurrent with JPDO’s efforts, the European Commission8

 is conducting

a project to harmonize and modernize the pan-European air traffic 

management system. Known as the Single European Sky Air Traffic 

Management Research Programme (SESAR), the project is overseen by 

the European Organization for the Safety of Air Navigation (Eurocontrol).9

 8

The European Commission is a politically independent institution that prepares and

implements legislative instruments. 

9

Eurocontrol is an autonomous organization established in 1963 with the intention of 

creating a single upper airspace in Europe. 

Page 6 GAO-06-738T 
Eurocontrol has contracted out the work of SESAR to a 30-member 

consortium of airlines, air navigation service providers, airports, 

manufacturers, and others. The consortium is receiving 60 million euros 

($73 million)10 to conduct a 2-year definition phase and produce a master 

plan for SESAR. 

To improve its management of ATC modernization, ATO has taken steps 

toward having a more results-oriented culture; a flatter, more accountable 

management structure; and more businesslike management and 

acquisition processes. In addition, ATO is implementing recommendations 

we have made to address systemic factors that have contributed to cost, 

schedule, and performance problems with major ATC acquisitions. For the 

past 2 fiscal years, FAA has met its acquisition performance goals. 

However, FAA still faces human capital challenges, such as 

institutionalizing a results-oriented culture and hiring thousands of air 

traffic controllers during the next decade. FAA also faces challenges in 

keeping its major system acquisitions on track.

ATO is working to establish the results-oriented organizational culture, 

structures, and processes that are generally associated with a PBO. FAA, 

through ATO, has established a strategic goal to become a results-oriented 

organization. One key element of ATO’s strategy is to identify core values 

and track employees’ attitudes about those values to monitor cultural 

change.

11 To implement this element, ATO has identified multiple core 

values: integrity and honesty, accountability and responsibility, 

commitment to excellence, commitment to people, and fiscal 

responsibility. ATO is using FAA Employee Attitude Survey data to 

determine employee attitudes toward these values and has developed a 

baseline of employee attitudes for use in monitoring changes in attitudes 

over time.12 Another key element of ATO’s strategy is to establish a viable, 

ATO Has Taken Steps 

to Improve ATC 

Modernization, but 

Challenges Remain 

ATO Has Begun Efforts to 

Transform Its Culture, 

Structures, and Processes 

to Operate More 

Efficiently as a PBO 

 10A portion of this funding is in-kind services from Eurocontrol. To convert euros to U.S.

dollars, we used 1.2098, the foreign exchange rate for March 21, 2006, as published in The 

Washington Post. 

11FAA, Employee Attitudes Within the Air Traffic Organization (Washington, D.C.;

December 2004). 

12Because the most recent FAA Employee Attitude Survey was conducted in September

2003, prior to the formation of ATO, FAA combined survey data from the FAA 

organizations that were merged into the ATO. 

Page 7 GAO-06-738T 
stable, and sustainable organization that can transcend changes in 

leadership. 

In our past work, we noted that FAA’s acquisitions workforce did not have 

an organizational culture and structure that supported the acquisition and 

deployment of sophisticated technology on the scale used in the national

airspace system.13 For example, acquisitions were impaired because 

employees and managers acted in ways that did not reflect a strong 

commitment to mission focus, accountability, adaptability, and 

coordination. Specifically, officials performed little or no mission needs 

analysis, made unrealistic cost and schedule estimates, and moved to 

producing systems before completing their development. We also reported 

that accountability was not well defined or enforced for decisions on 

requirements and contract oversight. Additionally, vertical lines of 

authority impaired communication across organizations that needed to

coordinate, particularly the acquisitions and operations areas of FAA. 

Finally, we reported that FAA’s culture of conservatism and conformity 

rewarded employees for simply following the rules rather than considering 

innovation. We recommended that FAA develop a strategy for cultural 

change. Although FAA responded to our recommendation by developing a 

cultural change strategy and some other related initiatives, these initiatives

were neither fully implemented nor sustained. 

ATO has put a new management structure in place and established more 

businesslike management and acquisition processes. ATO is structured as 

a discrete management unit within FAA and is headed by a Chief 

Operating Officer (COO), who is appointed to a 5-year term. It has become 

a flatter organization, with fewer management layers. As a result, 

managers are in closer contact with the services they deliver. ATO is also 

taking some steps to break down the vertical lines of authority, or 

organizational stovepipes, that we found hindered communication and 

coordination across FAA. For example, the COO holds daily meetings with 

the managers of ATO’s departments and holds the managers collectively 

responsible for the success of ATO through the performance management 

system. According to the COO, the daily meetings have been a revelation 

for some managers who were formerly only focused on and responsible 

for their own departments. 

 13GAO, National Airspace System: Transformation Will Require Cultural Change, 

Balanced Funding Priorities, and Use of All Available Management Tools, GAO-06-154 

(Washington, D.C.: Oct. 14, 2005). 

Page 8 GAO-06-738T 
ATO has begun to revise its business processes to increase accountability.

For example, it has recently established a cost accounting system and 

made the units that deliver services within each department responsible 

for managing their own costs. Thus, each unit manager develops an 

operating budget and is held accountable for holding costs within specific 

targets. Managers track the costs of their unit’s operations, facilities and 

equipment, and overhead and use this information to determine the costs 

of the services their unit provides. Managers are evaluated and rewarded 

according to how well they hold their costs within established targets. Our 

work has shown that it is important, when implementing organizational 

transformations, to use a performance management system to assure 

accountability for change.14

Finally, ATO is revising its acquisition processes, as we recommended,15

and taking steps to improve oversight, operational efficiency, and cost 

control. To ensure executive-level oversight of all key decisions, FAA 

plans to revise its Acquisition Management System to incorporate key 

decision points in a knowledge-based product development process by 

June 2006. Moreover, as we have reported, ATO formed an executive

council to review major acquisitions before they are sent to FAA’s Joint 

Resources Council.16 To better manage cost growth, this executive council 

also reviews project breaches of 5 percent or more in cost, schedule, or 

performance. FAA has issued guidance on how to develop and use pricing, 

including guidelines for disclosing the levels of uncertainty and 

imprecision that are inherent in cost estimates for major ATC systems. 

Additionally, ATO has begun to base funding decisions for system 

acquisitions on a system’s expected contribution to controlling operating 

costs. Finally, FAA is creating a training framework for its acquisition 

workforce that mirrors effective human capital practices that we have

identified, and the agency is taking steps to measure the effectiveness of 

its training. 

 14GAO, Results-Oriented Cultures: Implementation Steps to Assist Mergers and

Organizational Transformations, GAO-03-669 (Washington, D.C.: July 2, 2003). 

15GAO, Air Traffic Control: FAA’s Acquisition Management has Improved, but Policies

and Oversight Need Strengthening to Help Ensure Results, GAO-05-23 (Washington, D.C.: 

Nov. 12, 2004). 

16The Joint Resources Council is an FAA body responsible for approving and overseeing 

major system acquisitions. 

Page 9 GAO-06-738T 
ATO Has Begun to Address 

Systemic Causes of Delays 

and Cost Overruns in ATC 

Modernization 

ATO has begun taking actions to address systemic factors that our work 

has shown contribute individually or collectively to schedule delays or 

cost overruns in major system acquisitions. Such factors include funding 

acquisitions at lower levels than called for in agency planning documents, 

not considering all information technology investments as a complete 

portfolio, not adequately defining a system’s requirements or 

understanding software complexity, and not adequately considering 

customer needs in a system’s functional and performance requirements. 

Funding acquisitions at lower levels than called for in agency planning 

documents. When FAA initiates a major system acquisition, it estimates, 

and its top management approves, the funding plan for each year. 

However, when budget constraints do not allow all system acquisitions to 

be fully funded at the previously approved levels, FAA must decide which 

programs to fund and which to cut, according to its priorities. When a 

system acquisition does not receive the annual funding called for in its 

planning documents, the acquisition may fall behind schedule. This may 

also postpone the benefits of the new system and can require FAA to 

continue operating and maintaining the older equipment that the 

acquisition is intended to replace. For example, reduced funding was one 

factor that caused FAA to reduce the initial deployment of its ASR-11 

digital radar system from 111 systems to 66 systems, as well as defer 

decisions on further deployment pending additional study. In the 

meantime, FAA will have to continue maintaining the aging analog radars 

that the new system was intended to replace. To address this issue, we 

recommended that, to help ensure key administration and congressional 

decision makers have more complete information, FAA identify and 

annually report which activities under the ATC modernization program 

have had funding deferred, reduced, or eliminated, and provide detailed 

information on how those decisions have affected FAA’s ability to 

modernize the ATC system and related components in the near, mid, and 

longer term.17 Such information would make clear how constrained 

budgets will affect modernization of the national airspace system and how 

FAA is working to live within its means. According to FAA, the agency 

intends to better inform Congress in the future by providing information in 

its capital investment plan, submitted to Congress annually with the 

President’s Budget, that will identify changes from the preceding year. 

 17GAO, The National Airspace System: FAA Has Made Progress but Continues to Face

Challenges in Acquiring Major Air Traffic Control Systems, GAO-05-331 (Washington,

D.C.: June 10, 2005). 

Page 10 GAO-06-738T 
Not considering all information technology investments as a complete 

portfolio. We pointed out that FAA does not evaluate projects beyond the 

first 2 years of service to ensure that they are aligned with organizational 

goals.18 Consequently, the agency could not ensure that projects with a 

longer service history, totaling about $1.3 billion per year, were still 

aligned with FAA’s strategic plans and business goals and objectives. We

recommended that FAA include these projects in its investment portfolio 

management for review. FAA’s current version of its Acquisition 

Management Policy calls for periodic monitoring of in-service systems to 

collect and analyze performance data to use as the basis for sustained 

deployment. However, we have not yet evaluated FAA’s implementation of 

this policy. 

Not adequately defining a system’s requirements or understanding 

software complexity. Inadequate or poorly defined requirements may 

contribute to the inability of system acquisitions to meet their original 

cost, schedule, or performance targets, since developing or redefining 

requirements as an acquisition progresses takes time and can be costly. In 

addition, unplanned development work may occur when the agency

misjudges the extent to which a commercial-off-the-shelf or 

nondevelopmental item, such as one procured by another agency, will 

meet FAA’s needs. For example, FAA sought to use an Army radio as the

core of a new digital ATC communication system, but found that the radio

did not meet established interference requirements, which contributed to 

schedule delays. When FAA underestimates the complexity of software 

development or misjudges the difficulty of modifying available software to 

fulfill its mission needs, acquisitions may take longer and cost more than 

expected. FAA’s acquisition of the Local Area Augmentation System 

(LAAS)—a system that would allow precision instrument approaches and 

landings in all weather conditions—is a case in point. FAA underestimated 

LAAS’s software complexity because it inadequately assessed the system’s 

technology maturity. In particular, the agency misunderstood the potential 

for radio interference through the atmosphere, which could limit LAAS’s 

operations. The technical difficulties encountered with LAAS, among other 

things, led FAA to suspend this acquisition. To reduce these risks, FAA has 

developed and applied a process improvement model to a number of 

acquisition projects. This model is used to assess the maturity of FAA’s 

 18GAO, Information Technology: FAA Has Many Investment Management Capabilities in 

Place, but More Oversight of Operational Systems Is Needed, GAO-04-822 (Washington,

D.C.: Aug. 20, 2004). 

Page 11 GAO-06-738T 
software and systems capabilities. As we reported, this approach has 

resulted in enhanced productivity, higher quality, greater ability to predict

schedules and resources, better morale, and improved communication and 

teamwork.19 However, FAA did not mandate the use of the model 

throughout the organization. In response to our recommendation that FAA 

institutionalize the model’s use throughout the organization, FAA has 

begun developing a requirement that acquisition projects have process 

improvement activities in place before seeking approval from FAA’s 

investment review board. 

Not adequately considering customer needs in a system’s functional and 

performance requirements. We reported that FAA was not applying best 

practices used in Department of Defense and commercial product 

development. Best practices include balancing customer needs with 

available resources. According to FAA, the agency is now including in its 

acquisition guidance a requirement that top-level functional and 

performance requirements reflect the needs of the customer. 

FAA has now met its acquisitions performance goal 2 years in a row. The

goal for fiscal years 2004 and 2005 was to have 80 percent of its system 

acquisitions on schedule and within 10 percent of budget. The goal 

gradually increases to 90 percent by fiscal year 2008. The increase will 

make FAA’s acquisition performance goal consistent with targets set in the 

Department of Transportation’s strategic plan and will comply with the 

Federal Acquisition Streamlining Act of 1994. 

Having such a goal is consistent with the President’s Management Agenda, 

which calls for a commitment to achieve immediate, concrete, and 

measurable results in the near term, and meeting this goal is a positive 

step toward better acquisition management. However, if the milestones for 

an acquisition have changed over the years to reflect changes in its cost 

and schedule, then using those revised milestones may not provide a 

complete picture of the acquisition’s progress over time. For example, the 

milestones for 3 of the 16 major system acquisitions that we reviewed in 

detail during 2004 and 2005 were being revised to reflect cost or schedule 

changes during 2005. These revised milestones, together with revised 

targets for meeting them, will become the new milestones for fiscal year 

FAA Met Its Acquisition 

Performance Goal for the 

Second Consecutive Year, 

but Use of Revised 

Milestones Does Not 

Provide Consistent 

Benchmarks 

 19GAO, Air Traffic Control: System Management Capabilities Improved, but More Can Be

Done to Institutionalize Improvements, GAO-04-901 (Washington, D.C.: Aug. 20, 2004). 

Page 12 GAO-06-738T 
2006. While revising milestones and targets that are no longer valid is an 

appropriate management action, using revised rather than original targets 

for measuring performance does not provide a consistent benchmark over 

time. The extent to which an acquisition meets its annual performance 

targets is one measure of its performance and should be viewed together 

with other measures, such as its progress against original and revised 

baselines. The variance reports provided to the FAA Administrator and to 

Congress may also be useful in evaluating an acquisition’s performance.20

Since fiscal year 2003, the number of acquisition programs measured by 

FAA has varied from 31 to 42. According to FAA, the number varies from 

year to year, in part, because some programs reach completion and others

are initiated. The programs that are selected each fiscal year represent a 

cross section of ATO programs, including investments in new capabilities 

and others that are ready for use without modification. FAA’s Portfolio of 

Goals, which provides supplementary information on the agency’s 

performance goals, asserts that no bias exists in the selection of 

milestones for performance review, but does not state the basis for this 

conclusion. The portfolio also states that the milestones selected represent 

the program office’s determination of the efforts that are “critical” or 

important enough to warrant inclusion in the acquisition performance goal 

for the year. However, we have not conducted a detailed examination of 

the reliability and validity of FAA’s metrics for its acquisition program 

performance. 

ATO faces a challenge in sustaining and institutionalizing management 

focus on its transformation to an effective PBO and a results-oriented 

culture. Our work has shown that successful transformations and the 

institutionalization of change in large public and private organizations can 

take 5 to 7 years or more to fully implement.21 To ensure that FAA’s focus 

on cultural change does not diminish as it did in the past, we 

recommended that FAA provide sustained oversight of efforts to achieve a 

more results-oriented workforce culture, including periodically monitoring 

the agency’s progress against baseline data.22 As discussed, ATO has 

ATO Faces Human Capital 

Challenges in Creating a 

More Results-Oriented 

Culture and Hiring and 

Training Thousands of Air 

Traffic Controllers 

 20According to FAA, the agency tracks acquisition program performance from its original 

baseline or any subsequently approved baselines approved by the Joint Resource Council, 

and reports variances to the Administrator and to Congress as required. 

21GAO-03-669. 

22GAO-06-154. 

Page 13 GAO-06-738T 
established a baseline of employee attitudes for use in monitoring cultural

change, and similar long-term management attention will be needed to

conduct this monitoring and assess ATO’s progress toward becoming a 

PBO. 

FAA also faces the challenge of hiring and training thousands of air traffic 

controllers during the coming decade. According to its controller staffing 

plan, FAA expects to lose about 11,000 air traffic controllers due to 

voluntary retirements or mandatory retirements at age 56, as well as other 

reasons.23 These retirements stem from the 1981 controller strike, when 

President Ronald Reagan fired over 10,000 air traffic controllers and FAA 

then had to quickly rebuild the controller workforce. From 1982 through 

1991, FAA hired an average of 2,655 controllers per year. These controllers 

will become eligible for retirement during the next decade. To replace 

these controllers, as well as those who will leave for other reasons, and to 

accommodate forecasted increases in air traffic, FAA’s plan calls for hiring 

a total of 12,500 new controllers over the next 10 years.24

Adequately involving stakeholders in a system’s development is important 

to ensure that the system meets users’ needs. In the past, air traffic 

controllers were permanently assigned to FAA’s major system acquisition 

program offices and provided input into air traffic control modernization 

projects. In June 2005, FAA terminated this arrangement because of 

budget constraints. According to FAA, it now plans to obtain the subjectmatter expertise of air traffic controllers or other stakeholders as needed 

in major system acquisitions. It remains to be seen whether this approach 

will be sufficient to avoid problems such as FAA experienced when 

inadequate stakeholder involvement in the development of new air traffic 

controller workstations (known as the Standard Terminal Automation 

Replacement System (STARS)) contributed to unplanned work, which, in 

turn, led to significant cost growth and schedule delays.25

Three systems—all communications-related—missed the fiscal year 2005 

acquisition performance goal for schedule. According to FAA, the $310 

FAA Faces Challenges in 

Ensuring Stakeholder 

Involvement in Major 

System Acquisitions and 

Keeping Acquisitions on 

Schedule and within

Budget 

 23FAA, A Plan for the Future: The Federal Aviation Administration’s 10-Year Strategy for

the Air Traffic Control Workforce (Dec. 21, 2004). 

24Since issuing its controller staffing plan, FAA has achieved productivity gains that have 

reduced the need to hire about 460 air traffic controllers. 

25GAO-05-331. 

Page 14 GAO-06-738T 
million FTI acquisition, which is replacing costly existing networks of 

separately managed systems and services by integrating advanced 

telecommunications services, was behind schedule because initial plans 

did not allow sufficient time for installations. To complete the installations 

in fiscal year 2008, as originally scheduled, FAA initiated a plan to put the

program back on schedule and has met the plan’s milestones since August 

2005. Two other communications acquisition programs also missed the 

acquisition performance goal for schedule—the $325 million Next 

Generation Air-to-Ground Communication system, segment 1A, which 

replaces analog communication systems with digital systems, and the $85 

million Ultra High Frequency Radio Replacement, which replaces aging 

equipment used to communicate with Department of Defense aircraft. 

According to an FAA official, as the agency assessed its priorities for fiscal 

year 2005, a decision was made that these programs would receive fewer 

resources. The resources that were then available were not sufficient to 

allow the programs to meet established milestones. 

To the extent that delays in FTI persist, FAA will lose the cost savings that 

the system was expected to produce. The Department of Transportation’s 

Office of the Inspector General has reported that FAA did not realize $32.6 

million in anticipated operating cost savings in fiscal year 2005 because of 

the limited progress made in disconnecting legacy circuits. The office also 

reported that without a nearly tenfold increase in its rate of transferring 

service to FTI and disconnecting legacy circuits, FAA stands to miss out 

on an additional $102 million in cost savings in fiscal year 2006. As an 

alternative to continuing the current FTI program, some experts have 

suggested that FAA consider outsourcing this activity, as it recently did for

its flight service stations.

26

In summary, ATO has made a number of promising moves toward 

becoming a results-oriented organization, and we view ATO’s efforts to 

improve its culture, management, and acquisitions process as positive 

steps. However, ATO has been established for only slightly more than 2 

years. Work remains to ensure that these processes become 

institutionalized. Although it is still too early to evaluate the effectiveness 

of many of these steps, we are monitoring ATO’s progress. As ATO moves 

forward, it will play a key role in implementing NGATS, as planned by 

JPDO. I will now discuss the status of JPDO’s planning efforts. 

 26In February 2005, FAA awarded a contract for the operation of its flight service stations. 

Page 15 GAO-06-738T 
JPDO has engaged in practices that facilitate collaboration among its 

partner agencies, but faces challenges in continuing to leverage resources

from these agencies and in defining the roles and responsibilities of the 

various entities involved. JPDO has been structured to involve both federal 

and nonfederal stakeholders, but maintaining the support of nonfederal 

stakeholders over the long term and soliciting the participation of some 

stakeholders may prove difficult. JPDO is using a reasonable process for 

technical planning, but several key technical planning activities remain. 

Lastly, JPDO is including efforts toward global harmonization in its 

planning for NGATS, but other opportunities for cooperation have not

been fully explored. 

Our work to date shows that JPDO is facilitating the federal interagency 

collaboration that is central to its mission and legislative mandate. 

According to our research, agencies must have a clear and compelling 

rationale for working together to overcome significant differences in their

missions, cultures, and established ways of doing business. In developing

JPDO’s integrated plan,27 the partner agencies agreed to a vision statement 

and eight strategies that broadly address the goals and objectives for 

NGATS. These strategies formed the basis for JPDO’s eight integrated 

product teams (IPT), and various partner agencies have taken the lead on

specific strategies. Our research has also shown that it is important for 

collaborating agencies to include the human, technological, and physical

resources needed to initiate or sustain their collaborative effort. To 

leverage human resources, JPDO has staffed the various levels of its 

organization with partner-agency employees, many of whom work part 

time for JPDO. To leverage technological resources, JPDO conducted an

interagency program review of its partner agencies’ research and 

development programs to identify work that could support NGATS. 

Through this process, JPDO identified early opportunities that could be

pursued during fiscal year 2007 to produce tangible results for NGATS, 

JPDO Has Made 

Progress in Planning 

for NGATS, but Faces 

Challenges and 

Opportunities in 

Several Areas 

JPDO Has Begun to 

Facilitate Collaboration 

among Federal Agencies, 

but Faces Challenges in 

Continuing to Leverage 

Resources and in Defining 

Roles and Responsibilities 

 27The Vision 100 Act called for JPDO to create and carry out an integrated plan for NGATS. 

This integrated plan was developed by the partner agencies and submitted to Congress on 

December 12, 2004. 

Page 16 GAO-06-738T 
such as the Automatic Dependent Surveillance-Broadcast (ADS-B)28

program at FAA. 

However, while JPDO’s legislation, integrated plan, and governance 

structure29 provide the framework for institutionalizing collaboration 

among multiple federal agencies, JPDO is fundamentally a planning and 

coordinating body that lacks authority over the key human and 

technological resources needed to continue developing plans and system 

requirements for NGATS. Consequently, the ability to continue leveraging 

resources of the partner agencies will be critical to JPDO’s success. 

However, beginning around 2008, JPDO expects a significant increase in 

its IPTs’ workloads. JPDO officials told us that although the partner 

agencies have not yet expressed concerns over the time that their 

employees spend on JPDO work, it remains to be seen whether agencies 

will be willing to allow their staff to devote more of their time to JPDO. In 

addition, JPDO anticipates needing more agency resources to plan and

implement demonstrations of potential technologies to illustrate some of 

the early benefits that could be achieved from the transformation to 

NGATS. 

This challenge of leveraging resources arises, in part, because the partner 

agencies have a variety of missions and priorities other than supporting 

NGATS. NASA, for example, while conducting key aeronautical and safety 

research relevant to NGATS, nonetheless has other competing missions. 

Recently, NASA’s management determined that for the agency to meet its 

other mission needs, it would not develop new aviation technologies to the 

extent that it had in the past. As a result, additional development costs 

related to NGATS will have to be borne by JPDO, industry, or some 

combination. 

 28ADS-B is a surveillance technology that transmits an aircraft’s identity, position, velocity,

and intent to other aircraft and to ATC systems on the ground, thereby enabling pilots and 

controllers to have a common picture of airspace and traffic. By providing pilots with a 

display that shows the location of nearby aircraft, the system enables pilots to collaborate

in decision making with controllers, safely allowing reduced aircraft separation and 

thereby increasing NAS capacity. 

29Some of JPDO’s governance structure was determined by Vision 100, which directed the

Secretary of Transportation to establish a Senior Policy Committee and set forth the 

membership of this committee. In addition, JPDO has established a Board of Directors, a 

Master IPT, and several divisions. 

Page 17 GAO-06-738T 
JPDO also faces the challenge of clearly defining its partner agencies’ roles 

and responsibilities. Our work has shown that collaborating agencies 

should work together to define and agree on their respective roles and 

responsibilities, including how the collaboration will be led. In JPDO’s 

case, there is no formal, long-term agreement on the partner agencies’

roles and responsibilities in creating NGATS. According to JPDO officials, 

a memorandum of understanding that would define the partner agencies’ 

relationships was being developed as of August 2005, but has not yet been

completed. 

Defining roles and responsibilities is particularly important between JPDO 

and ATO, because both organizations have responsibilities related to 

planning the national airspace system’s modernization. ATO has primary 

responsibility for the ATC system’s current and near-term modernization, 

while JPDO has responsibility for planning and coordinating a 

transformation to NGATS over the next 20 years. The roles and 

responsibilities of each office are currently being worked out. ATO now 

plans to expand its Operational Evolution Plan so that it applies FAA-wide

and represents FAA’s piece of JPDO’s overall NGATS plan. 30 As the roles 

and responsibilities of the two offices become more clearly defined, there 

is also a need to better communicate these decisions to stakeholders. 

JPDO has structured itself to involve federal and nonfederal stakeholders

throughout its organization. Our work has shown that involving 

stakeholders can, among other things, increase their support for a 

collaborative effort. Federal stakeholders from the partner agencies serve 

on JPDO’s Senior Policy Committee, board, and IPTs. Nonfederal 

stakeholders may participate through the NGATS Institute (the Institute). 

Through the Institute, JPDO obtained the participation of over 180 

stakeholders from over 70 organizations for the IPTs. The NGATS Institute 

Management Council, composed of top officials and representatives from

the aviation community, oversees the policy and recommendations of the 

Institute and provides a means for advancing consensus positions on 

critical NGATS issues. 

JPDO Is Structured to 

Involve Federal and 

Nonfederal Stakeholders, 

but Faces a Challenge in 

Soliciting and Maintaining 

Support over the Long 

Term

 30Currently, FAA’s Operational Evolution Plan monitors how NAS capacity will change over

a rolling 10-year planning horizon depending on numerous variables, such as the demand 

for air travel, the completion of new runways, and the availability of new ATC systems. 

Page 18 GAO-06-738T 
Although JPDO has developed the mechanisms for involving stakeholders

and brought stakeholders into the process, it faces challenges in sustaining 

nonfederal stakeholders’ participation over the long term. Much as with 

the federal partner agencies, JPDO has no direct authority over the human, 

technical, or financial resources of its nonfederal stakeholders. To date, 

these stakeholders’ investment in NGATS has been through their part-time, 

pro bono participation on the IPTs and the NGATS Institute Management 

Council.31 The challenge for JPDO is to maintain the interest and 

enthusiasm of these nonfederal stakeholders, which will have to juggle 

their own multiple priorities and resource demands, even though some of 

the tangible benefits of NGATS may not be realized for several years. For 

example, stakeholders’ support will be important for programs such as 

System Wide Information Management (SWIM),32 which is a prerequisite to

future benefits, but may not produce tangible benefits in the near term. 

In the wake of past national airspace modernization efforts, JPDO also 

faces the challenge of convincing nonfederal stakeholders that the 

government is financially committed to NGATS. While most of FAA’s 

major ATC acquisition programs are currently on track, earlier attempts at 

modernizing the national airspace system encountered many difficulties. 

In one instance, for example, FAA developed a datalink communications 

system that transmitted scripted e-mail-like messages between controllers

and pilots. One airline equipped its aircraft with this new technology, but

because of funding cuts, FAA ended up canceling the program. In a similar 

vein, we have reported that some aviation stakeholders expressed concern 

that FAA may not follow through with its airspace redesign efforts and are 

hesitant to invest in equipment unless they are sure that FAA’s efforts will 

continue. One expert suggested to us that the government might mitigate 

this issue by making an initial investment in a specific technology before

requesting that airlines or other industry stakeholders purchase 

equipment. 

In addition to maintaining stakeholder involvement, JPDO faces 

challenges in obtaining the participation of all stakeholders. In particular,

 31Nonfederal stakeholders’ participation varies from approximately 10 percent to 25 

percent of their time per week on the IPTs and involves approximately one meeting per 

month for members of the council. 

32SWIM is expected to help transition the NAS to network-centric operations by providing

the infrastructure and associated policies and standards to enable information sharing

among all authorized NAS users, such as the airlines, other government agencies, and the

military. 

Page 19 GAO-06-738T 
JPDO does not involve current air traffic controllers, who will play a key 

role in NGATS. The current air traffic control system is based primarily on 

the premise that air traffic controllers direct pilots to maintain safe 

separation between aircraft. In NGATS, this premise could change and,

accordingly, JPDO has recognized the need to conduct human factors 

research on such issues, including how tasks should be allocated between

humans and automated systems, and how the existing allocation of 

responsibilities between pilots and air traffic controllers might change. 

The input of current air traffic controllers who have recent experience 

controlling aircraft is important in considering human factors and safety 

issues, as our work on STARS has shown. 

However, as mentioned, no current air traffic controllers are involved in

NGATS. In June 2005, FAA terminated its liaison program through which 

air traffic controllers had been assigned as liaisons to its major system 

acquisition program offices. This included the liaison assigned to JPDO. 

Since that time, the National Air Traffic Controllers Association (NATCA), 

the labor union that represents air traffic controllers, has not been a 

participant in planning NGATS. Although the NGATS Institute 

Management Council includes a seat for the union, a NATCA official told 

us that the union’s head had been unable to attend the council’s meetings. 

According to JPDO officials, the council has left a seat open in hopes that

the controllers will participate in NGATS after a new labor-management 

agreement between NATCA and FAA has been settled. 

To conduct the technical planning needed to develop NGATS, JPDO is 

using an iterative process that appears to be reasonable given the 

complexity of NGATS. Two fundamental pieces of this technical planning 

are modeling and developing an enterprise architecture (a tool, or 

blueprint, for understanding and planning complex systems). 

JPDO has formed an Evaluation and Analysis Division (EAD), composed 

of FAA and NASA employees and contractors, to assemble a suite of 

models that will help JPDO refine its plans for NGATS and iteratively 

narrow the range of potential solutions. For example, EAD has used 

modeling to begin studying how possible changes in the duties of key 

individuals, such as air traffic controllers, could affect the workload and 

performance of others, such as airport ground personnel. NGATS could 

shift some tasks now done by air traffic controllers to pilots. However, 

EAD has not yet begun to model the effect of this shift on pilots’ 

performance because, according to an EAD official, a suitable model has

not yet been incorporated into the modeling tool suite. According to EAD, 

JPDO Is Using a 

Reasonable Process for 

Technical Planning, but 

Has Not Yet Completed 

Key Activities 

Page 20 GAO-06-738T 
addressing this issue is difficult because data on pilot behavior are not 

readily available to use in creating such models. Furthermore, EAD has 

not studied the training implications of various NGATS-proposed solutions 

because further definition of the concept of operations for these solutions 

has not been completed. As the concept of operations matures, it will be 

important for air traffic controllers and other affected stakeholders to 

provide their perspectives on these modeling efforts. In addition, as the 

concept of operations and plans for sequencing equipment matures, EAD 

will be able to study the extent to which new air traffic controllers will 

have to be trained to operate both the old and the new equipment. 

To develop an enterprise architecture, JPDO has taken several important 

first steps and is following several effective practices that we have 

identified for enterprise architecture development. However, JPDO’s 

enterprise architecture is currently a work in progress. Development of 

the NGATS enterprise architecture is critical to JPDO’s planning efforts, 

and many of JPDO’s future activities will depend on the robustness and 

timeliness of its architecture development. The enterprise architecture will 

describe ATO’s operation of the current national airspace system, JPDO’s 

plans for the NGATS, and the sequence of steps needed to transition 

between them. The enterprise architecture will provide the means for 

coordinating among the partner agencies and private sector 

manufacturers, aligning relevant research and development activities, 

integrating equipment, and estimating system costs. 

To date, JPDO has formed an Enterprise Architecture Division and plans 

to have an early version of the architecture by the end of fiscal year 2006.

The office has established and filled a chief architect position and 

established an NGATS Architecture Council composed of representatives 

from each partner agency’s chief architect office. This provides the 

organizational structure and oversight needed to develop an enterprise 

architecture. JPDO’s phased “build a little, test a little” approach for 

developing and refining its enterprise architecture is similar to a process 

that we have advocated for FAA’s major system acquisition programs. In 

addition, this phased development process will allow JPDO to incorporate 

evolving market forces and technologies in its architecture and thus better 

manage change. 

Page 21 GAO-06-738T 
Global harmonization is one of the important strategies underlying 

NGATS, and JPDO has started to plan for harmonization. JPDO officials 

said they recognize the need to work toward the global harmonization of 

systems and have met with officials from various parts of the world, 

including China, East Asia, and Europe, to assess the potential for 

cooperative NGATS demonstrations. JPDO has a global harmonization 

IPT, led by managers from ATO’s International Operations Planning 

Services International and FAA’s Office of International Aviation. The 

IPT’s mission is to harmonize equipment and operations globally and

advocate for the adoption of U.S.-preferred transformation concepts, 

technologies, procedures, and standards. The harmonization IPT finalized 

its charter in March 2006 and is working to develop an international 

strategy and outreach plan. In addition to external efforts, the 

harmonization IPT plans to work as a crosscutting IPT that will raise 

awareness of global interoperability and standards issues within the other 

IPTs as they consider product development. 

JPDO officials have noted the need to work toward harmonization with 

the Single European Sky Air Traffic Management Research Programme 

(SESAR), a major initiative to modernize the airspace system of the 

European Union. Eurocontrol has been designated to conduct SESAR to 

both modernize and integrate European air traffic management systems. 

While similar in many respects to the NGATS planning effort, Eurocontrol 

has contracted with an industry consortium to conduct the 2-year planning 

phase of the project. 

According to several European officials with whom we spoke, global 

harmonization (and harmonization with the U.S. system specifically) is 

considered to be a key ingredient for the success of SESAR. Several of 

these officials said that although the European organization invited JPDO 

to participate as a full member in SESAR and the organization has 

indicated its willingness to have reciprocal participation with the United

States, personnel exchanges are just beginning to occur. JPDO officials 

recognize the importance of cooperative efforts and noted that if Europe 

and the United States were to implement different and incompatible 

standards and technologies, there could be a major adverse impact on 

airlines that serve international markets. Nonetheless, these officials point

out that JPDO, as a U.S. government entity, could not participate as a 

member in a private industry effort like the SESAR consortium. FAA is, 

however, a member of the European Commission’s Industry Consultation 

Body, which provides advice to SESAR. The JPDO officials also said 

personnel exchanges and other cooperative activities, such as information 

exchanges and a joint working group on technical standards, are now 

JPDO Is Planning for 

Global Harmonization as 

Part of the NGATS Effort, 

but Additional Cooperative 

Activities Have Not Been 

Fully Explored 

Page 22 GAO-06-738T 
being conducted under a memorandum of cooperation between FAA and 

Eurocontrol. 

While FAA and the harmonization IPT are planning cooperative activities,

our research has identified several other areas where cooperation does 

not appear to be fully developed. For example, the SESAR and NGATS 

initiatives, despite their similarities, do not have coordination activities 

such as peer reviews of relevant research, cooperation on safety analysis 

(such as through the pooling of accident data), or validation of 

technologies. It is possible that greater cooperation and exchange between

NGATS and SESAR might develop once planning has progressed to the 

development and validation stage. 

In the face of rising operating costs, ATO has implemented a number of 

cost control initiatives. Savings realized from ATO efforts to control costs 

could be used for modernization efforts, including the development of 

NGATS. Funding flexibility could also help to address these challenges. In

addition to the cost savings efforts initiated by ATO, JPDO is identifying 

potential ways to leverage available resources to support initial NGATS 

initiatives. 

To address rising operating costs and improve performance, ATO has 

developed a formal cost control program that includes completing the 

development of a cost accounting system and using information from the 

system to conduct activity value analysis—that is, to assess the value of its

products and services to its customers. The cost control program also 

includes conducting annual business case reviews, primarily for its capital

programs, and assisting Congress in identifying funding priorities. To 

control costs, ATO is decommissioning and consolidating ATC facilities, 

improving its contract management, pursuing cost reduction opportunities 

through outsourcing, and avoiding or reducing personnel costs through 

workforce attrition and efficiency gains. 

ATO has made significant progress in developing its cost accounting 

system.33 In doing so, ATO is addressing our long-standing concern that 

ATO and JPDO are 

Working to Address 

Funding Challenges 

ATO Has Begun to Take a 

Number of Steps to 

Address Rising Operating 

Costs 

 33FAA is using its cost accounting system to potentially allocate costs of its services to 

users to better align its costs with revenues through a new funding mechanism. GAO is 

currently examining this effort as part of an ongoing study examining FAA financing 

options. 

Page 23 GAO-06-738T 
FAA lacked the cost information necessary for decision making and could 

not adequately account for its activities and major projects, such as its 

ATC modernization programs. ATO officials have also noted that the 

system will enhance their ability to accurately determine the costs of 

providing specific services or products and to compare those costs with 

the value provided to the organization’s customers. This information will 

be valuable in prioritizing activities and weighing the costs and benefits of

various courses of action when developing and supporting proposed 

budgets. It will also allow FAA to base funding decisions for system 

acquisitions on their contribution to reducing the agency’s operating costs.

These efforts facilitate ATO’s activity value analysis, through which ATO 

determines (1) the costs of the products and services provided, (2) the 

factors that affect the costs, and (3) the value of these products and 

services, as perceived by ATO’s customers. By comparing the costs of 

providing services with their value to customers, ATO officials expect the

process to help them eliminate activities with low customer value and 

determine ways to reduce the costs of activities with high customer value.

ATO expects business case reviews of its capital programs to reduce its 

ATC modernization costs by about $62 million in fiscal year 2007 and by

nearly $400 million by fiscal year 2008. Over the last 2 years, ATO 

conducted business case reviews of 81 programs, including 67 capital 

programs and 14 operations programs. Through these annual reviews, 

ATO examines each program to ensure that its funding is justified, and if

ATO determines that the funding is not justified, it may terminate or 

restructure the program. To date, ATO has terminated or restructured 6 

programs after reviewing the business cases for them, including its 

Medium Intensity Airport Weather System (MIAWS) program. ATO 

canceled this program’s $4 million spending request.34 ATO also reduced 

the funding for a radar replacement program after reviewing its business 

case and identifying opportunities to conduct more effective maintenance 

rather than replace radars. Through these combined efforts, FAA expects 

to reduce costs by $32 million in fiscal year 2007.

ATO is working with Congress to discuss proposed projects and maximize 

capital funds, as we previously recommended.35 ATO reported that 

 34MIAWS was intended to provide real-time displays of storm positions and estimated 

storm tracks for airports and airlines. 

35GAO, National Airspace System: FAA Has Made Progress but Continues to Face 

Challenges in Acquiring Major Air Traffic Control Systems, GAO-05-331 (Washington,

D.C.: June 10, 2005). 

Page 24 GAO-06-738T 
Congress designated approximately $300 million for specific projects in 

fiscal years 2003 and 2004. In fiscal year 2005, according to ATO, 

designated projects totaled almost $430 million. In fiscal year 2006, ATO 

staff met with Senate offices to provide input on projects,36 and the value 

of the congressionally designated projects declined, as indicated in table 1. 

Table 1: Congressionally Designated Projects for ATO, Fiscal Years 2003 through 2006 

Dollars in millions 

Fiscal year 

2003 2004 2005 2006 

 Amount Amount Percentage change 

from prior year

Amount Percentage

change from 

prior year 

Amount Percentage

change from prior 

year 

Total $295,905 $282,280 -4.6% $429,160 52.0% $245,800 -42.7%

Source: GAO analysis of ATO data. 

ATO has saved about $84 million to date through initiatives to control its 

costs. For example, ATO has begun to decommission ground-based 

navigational aids, such as compass locators, outer markers and 

nondirectional radio beacons, and to close related ATC facilities as it 

transitions to a satellite-based navigation system. In fiscal year 2005, ATO 

decommissioned 177 navigational aids for a savings of $2.9 million. 

However, ATO has thousands of navigational aids in use, many of which 

could be decommissioned during the transition to NGATS. Consolidating 

ATC facilities, including terminal radar approach control (TRACON)

facilities and air traffic control centers, can also save costs. According to

one estimate, undertaking all of these actions could save ATO 

approximately $600 million per year. We have also found, in researching 

cost control efforts undertaken by international air navigation service 

providers, that consolidating regional administrative offices offers 

additional potential cost savings. 

While efforts to decommission navigational aids and close ATC facilities 

offer potential savings, we found that ATO lacks a consistent process for 

identifying the costs and benefits associated with these efforts. For 

example, although ATO reported saving $2.9 million in fiscal year 2005 by 

decommissioning 177 navigational aids, its report did not offset these 

 36The House of Representatives did not have any designated projects for FAA for fiscal year 

2006. 

Page 25 GAO-06-738T 
savings with the costs of decommissioning activities, such as real property 

disposition (including buildings or real property leases, standby power 

systems, and fuel storage tanks), site cleanup, and restoration. Experts 

estimate that the costs of decommissioning all possible navigational aids 

and conducting the needed environmental remediation could total about 

$300 million. Opportunities may exist for ATO to reuse these sites to 

reduce or eliminate environmental cleanup costs. For example, sites could 

be used for cell phone towers, generating about $100,000 per year in 

revenue per site. Other sites could be leased as warehouses. Together, 

these efforts could potentially save FAA up to $14 million per year. 

However, without a transparent and verifiable process for determining 

both the costs and benefits, it remains difficult to accurately determine 

financial savings. 

As ATO proceeds with these efforts, stakeholders caution that 

decommissioning navigational aids and closing facilities should entail 

comprehensive risk mitigation to ensure that ATO retains adequate safety

levels. This includes risk prevention, which focuses on elements that the 

agency can prevent, and risk recovery, which recognizes that some events 

cannot be prevented and the system must recover from them. It is 

important that facility closures happen within the context of a logical, 

well-documented, and reasoned process in consultation with 

congressional oversight committees. Any process to determine closures or 

consolidations should use consistent, accurate data collection and a 

common analytical framework to ensure the integrity of the process. 

ATO is also attempting to examine existing service contracts to better 

control costs. For example, it has saved about $2 million by renegotiating 

task orders and modifying contracts for technical assistance provided by 

contractors that manage facilities and equipment projects. According to 

ATO, these renegotiations did not affect the associated programs. In 

addition, ATO has saved about $1 million to date by negotiating cell phone 

contracts with four large service providers. Formerly, ATO employees 

arranged individual plans for their work cell phones. ATO also entered 

into a new contract with natural gas and electricity providers at its 

Technical Center that has saved about $358,000 to date. Lastly, through a

strategic sourcing initiative, it has newly negotiated purchasing deals for 

support services, including printing and mail services, office equipment 

and supplies, and information technology hardware and software. 

As another cost-saving measure, ATO is exploring opportunities for 

outsourcing work that is now performed by the government. Under the 

Office of Management and Budget’s Circular A-76 (Revised), federal 

Page 26 GAO-06-738T 
agencies can compete with and rely on the private sector to enhance 

productivity. Recently, FAA contracted with Lockheed Martin to operate 

its flight service stations. According to FAA, this contract will cost 

approximately $2.2 billion less over 10 years than FAA would have had to 

pay to operate the stations itself. FAA’s estimate includes the savings it 

expects to realize as the contractor assumes the costs of providing the

services and paying their utility and maintenance costs. FAA is currently 

working to identify other opportunities to reduce costs through the A-76 

process. Some experts have suggested that the time may be right for FAA 

to examine opportunities to contract out the ground portion of its FTI 

program, through which FAA is replacing air-ground telecommunications 

networks. According to these experts, this approach could save FAA up to 

$130 million a year beginning in fiscal year 2008. The FTI program is not 

expected to provide financial savings until fiscal year 2010; however, the 

savings might take longer to be realized because the program is falling 

behind schedule. 

ATO is working to control personnel costs through both attrition and 

improved productivity. According to ATO, these efforts have saved about 

$67 million from the beginning of fiscal year 2005 to date. For example, 

ATO has saved about $44 million from the attrition of both nonsafety and 

Flight Service staff. ATO further expects efficiencies and lower training 

costs to allow a 10 percent reduction in the controller workforce over the

next decade. These efficiencies include relying on part-time employees 

and job-sharing arrangements, implementing split shifts, and improving 

the management of overtime through an optimal mix of increased staffing

and overtime hours to meet workload demands. Through gains in air 

traffic controllers’ productivity, ATO has reduced its hiring requirements 

by about 460 controller positions, thereby avoiding salary costs of about 

$23 million, according to ATO. In addition, ATO is considering the 

feasibility of saving air traffic controller training costs by allowing 

graduates of its Air Traffic Collegiate Training Initiative (CTI) to bypass 

the FAA Academy, where FAA provides initial qualification training to new 

hires.37 According to an FAA Academy official, the proposal to allow these 

graduates to bypass the academy is being considered as part of a 

comprehensive review of the Collegiate Training Initiative that will be 

 37Graduates of schools participating in the Collegiate Training Initiative have college 

degrees, a broad knowledge of the aviation industry, a basic level of training in air traffic 

control, and a demonstrated interest in the field. The Department of Transportation 

Inspector General reported that course work in these collegiate programs duplicates a 

portion of the academy-provided training. 

Page 27 GAO-06-738T 
completed this fall. We had previously identified this effort as offering 

potential savings.38 

ATO Faces Challenges in 

Funding NGATS 

As the organization primarily responsible for implementing NGATS, ATO 

will face substantial funding requirements beyond those needed to 

maintain the current system. Funding constraints have required ATO to 

carefully scrutinize capital projects and defer or eliminate funding for 

systems that could support NGATS, such as a precision-landing system 

augmented by satellites (LAAS), a digital e-mail-type communication 

system between controllers and pilots (CPDLC), and the next generation

air/ground communication system (NEXCOM). 

Although the cost of NGATS is not yet known, JPDO and ATO are 

collaborating in developing rough near-term funding requirements for 

NGATS’s concept definition and development for major categories of air 

traffic control functions such as automation, communications, navigation, 

surveillance, and weather. While these funding requirements are not in 

FAA’s current 5-year spending plan, they could be included once JPDO 

presents, and FAA accepts, business cases, according to an FAA official. 

JPDO has identified some key factors that will drive NGATS costs. One of 

the drivers is the technologies expected to be included in NGATS. Some of 

these are more complex and thus more expensive to implement than 

others. A second driver is the sequence in which NGATS technologies will 

replace the technologies now in use. A third driver is the length of time 

required to transition to NGATS, since a longer transition period would 

impose higher costs. JPDO held the first in a series of investment analysis

workshops to determine the basis for developing future NGATS cost 

estimates on April 25 and 26, 2006. This first workshop focused on 

recommendations from commercial and business aviation, equipment 

manufacturers, and systems developers. 

 38GAO, National Airspace System: Transformation Will Require Cultural Change, 

Balanced Funding Priorities, and Use of All Available Management Tools, GAO-06-154

(Washington, D.C.: Oct. 14, 2005). 

Page 28 GAO-06-738T 
Resources available to support NGATS could be enhanced to the extent

that JPDO leverages other partner agency resources. JPDO has already 

moved in this direction by conducting a review of its partner agencies’ 

research and development programs to identify ongoing work that could 

support NGATS and the potential for more effective interagency 

collaboration. Through this process, for example, JPDO successfully 

requested that FAA pursue funding to accelerate development of ADS-B 

and SWIM, which are two key systems identified for NGATS. However, 

JPDO officials told us that, while FAA did receive a funding increase for 

those systems, FAA did not receive the full amount it had requested. As 

noted, our past work on FAA’s national airspace modernization program 

has shown that receiving fewer resources than planned was one factor 

that contributed to delays in implementing technologies and significant 

cost increases. 

Resources Available to 

Support NGATS Could Be 

Enhanced through 

Leveraging and Funding 

Flexibility 

To further leverage resources for NGATS, JPDO has issued guidance to its 

partner agencies identifying areas that JPDO would like to see emphasized 

in the agencies’ fiscal year 2008 budget requests. JPDO is also working 

with the Office of Management and Budget to develop a systematic means 

of reviewing partner agency budget requests so that the NGATS-related 

funding in each request is easily identified. This includes a review of 

budgets submitted by the Department of Homeland Security for efforts by 

the Transportation Security Administration, and the Department of 

Commerce for efforts by the National Oceanic and Atmospheric 

Association. Such a process would help the Office of Management and 

Budget consider NGATS as a unified program rather than as disparate line 

items distributed across several agencies’ budget requests. 

Further enhancement to NGATS funding could be achieved by ATO 

utilizing its existing funding flexibility. Under existing law, ATO has a 3-

year spending authority for Facilities and Equipment funds. It also has 

discretion to shift as much as 10 percent of a given program’s funds over a 

fiscal year. This is important, since annual expenditures for several large 

capital projects will soon be trending downward.39 Concurrently, FAA is 

working to conduct business case reviews of existing capital projects on 

an annual basis. These combined efforts could potentially yield hundreds 

of millions of dollars to pursue initial NGATS projects. 

 39ATO expects that by fiscal year 2008, spending for its En Route Modernization (ERAM), 

Oceanic Services, Standard Terminal Automation Replacement System (STARS), Airport 

Surveillance Radar–Model 11 (ASR-11), and FAA Telecommunications Infrastructure

programs should begin trending downward. 

Page 29 GAO-06-738T 
ATO has put mechanisms in place to change the culture and business 

processes that have plagued the past modernization efforts of FAA. ATO’s 

new cost accounting system and management practices are important 

steps toward improved accountability. Similarly, it has taken steps, in 

response to our recommendations, to improve its acquisition processes. 

However, as I mentioned, ATO faces challenges in sustaining and 

furthering its transformation to a results-oriented culture, and in many 

cases, it is still too early to judge the long-term success of these attempts 

at fundamental organizational change. ATO must continue to measure its 

progress and work to change the culture at all levels of the organization, 

as our work has shown that these types of transformations can sometimes 

take close to a decade to truly become entrenched within the organization.

We believe that, overall, ATO is moving in the right direction, and we will 

continue to monitor its progress. 

Concluding 

Observations 

We also believe that JPDO is moving in the right direction in creating an 

organizational structure that facilitates the federal interagency 

collaboration that must occur for the office to be successful in its mission. 

JPDO is working to leverage the various human, technological, and 

financial resources of its partner agencies. This is key given the 

coordinating role of JPDO and its lack of authority over key resources 

needed to continue developing the NGATS plan. However, because of this

lack of authority, JPDO could be challenged to maintain partner agency 

and stakeholder commitment to the NGATS effort in the long term. Also, 

much of the NGATS planning and implementation depends on the 

development of the NGATS enterprise architecture. Although JPDO has 

said that a version of the enterprise architecture will be completed later 

this year, the architecture will require further refinement and commitment 

from the partner agencies into the future. 

Transforming the national airspace system to accommodate what is 

expected to be three times the current amount of traffic by 2025, providing 

adequate security and environmental safeguards, and doing these things 

seamlessly while the current system continues to operate, will be an 

enormously complex undertaking. Both ATO and JPDO have been given 

difficult tasks in a difficult budgetary environment. Going forward, efforts 

to control costs and leverage resources will become even more critical. 

Success also depends on the ability of ATO and JPDO to define their roles 

and form a collaborative environment for planning and implementing the 

next generation system. 

Mr. Chairman, this concludes my statement for the record. 

Page 30 GAO-06-738T 
For further information on this statement for the record, please contact 

Gerald Dillingham at (202) 512-2834 or dillinghamg@gao.gov. Individuals

making key contributions to this statement include Nabajyoti Barkakati, 

Christine Bonham, Jay Cherlow, Elizabeth Eisenstadt, Colin Fallon, David 

Hooper, Heather Krause, Elizabeth Marchak, Maren McAvoy, Edmond 

Menoche, Faye Morrison, Richard Scott, Sarah Veale, and Matthew 

Zisman. 

Page 31 GAO-06-738T 

Contact and Staff 

Acknowledgments 

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