FISCAL YEAR 2013 | PERFORMANCE a n d ACCOUNTABILITY REPORT

The FAA. Evolving Technology. Advancing Aviation.
OUR MISSION

To provide the safest, most efficient 

aerospace system in the world.

OUR VISION

Transform the aviation system to reflect 

the highest standards of safety and efficiency 

and be a model for the world. The FAA will 

bring about this transformation by fostering 

innovation in our workforce and in how we serve 

our stakeholders and the American people.
FISCAL YEAR 2013

PERFORMANCE a n d

ACCOUNTABILITY REPORT

The FAA. Evolving Technology. Advancing Aviation.

Our FY 2013 Performance and Accountability Report is dedicated to all the people 

who make aviation safe, efficient, and pleasant: from the mechanics to the air traffic 

controllers, from the aviation inspectors to the baggage and cargo handlers, from the 

scientists to the pilots, and so many more. To all of them we say: Thank you!

OUR VALUES

Safety is our Passion.

We work so that all air and 

space travelers 

arrive safely at their 

destinations.

Excellence is our Promise.

We seek results that 

embody professionalism, 

transparency, and 

accountability.

Integrity is our Touchstone.

We perform our duties 

honestly, with moral 

soundness, and with the 

highest level of ethics.

People are our Strength.

Our success depends 

on the respect, 

diversity, collaboration, 

and commitment of 

our workforce.

Innovation is our Signature.

We foster creativity and 

vision to provide 

solutions beyond 

today’s boundaries.
2 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

THE FAA AT A GLANCE

Established ¢ 1958

Headquarters ¢ 800 Independence Avenue, SW

Washington, DC 20591

www.faa.gov

FY 2013 Budget (sequester) ¢ $15.3 billion

Total Employees ¢ 46,027 employees

Headquarters ¢ 3,706 employees

Regional and Field Offices ¢ 37,362 employees

William J. Hughes Technical Center

Atlantic City, NJ

¢ 1,427 employees

Mike Monroney Aeronautical Center 

Oklahoma City, OK

¢ 3,532 employees

FY 2013 Passengers on U.S. Carriers ¢ More than 736 million (estimate)

FY 2013 Tower Operations and Overflights ¢ 53.1 million arrivals, departures, and 

overflights

FOREWORD

The Federal Aviation Administration (FAA) is part of the U.S. 

Department of Transportation (DOT). By directives, the Office of 

Management and Budget (OMB), which implements the Chief 

Financial Officers Act of 1990 (CFO Act), requires us to prepare 

financial statements separate from those of the DOT. We 

consolidate key FAA data and information and provide this to the 

DOT to incorporate into their corresponding reports. Although we 

are not required to prepare a separate Annual Financial Report 

or Performance and Accountability Report (PAR), we recognize 

that we can better demonstrate our agency’s accountability by 

presenting performance, management, and financial information 

using the same statutory and guidance framework as that used 

by the DOT. For this reason, the FAA has produced its own PAR 

since fiscal year (FY) 2002.

Last year, we were proud to receive our ninth prestigious 

Certificate of Excellence in Accountability Reporting award 

for our PAR from the Association of Government Accountants 

(AGA). This award is indicative of the progress we have made 

in reporting financial and program performance and in candidly 

assessing our results. Last year, the AGA also honored 10 federal 

agencies with “Best in Class” awards for demonstrating specific 

points of excellence within their PAR. Our PAR was recognized 

as the “most representative of editorial excellence” across 

government. 

We strive to continue to raise the bar with our performance and 

financial accountability and do our part to help the DOT and the 

federal government excel in providing high-quality services and 

products to the taxpayers we serve.

This report and reports from prior years are available on the FAA website at

www.faa.gov/about/plans_reports
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CONTENTS

AT A GLANCE / FOREWORD

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

CONTENTS

Mission, Vision, and Values Statements (inside front cover)

2 The FAA at a Glance

2 Foreword

4 A Message from the Administrator

10 MANAGEMENT’S DISCUSSION AND ANALYSIS

11 History of Aviation

12 Our Organization

16 The Year in Highlights

17 Major Accomplishments

17 NextGen

19 Other Major Accomplishments

22 Performance Highlights

29 Alignment of FAA Costs and Goals

30 Financial Highlights

35 Management Control Highlights

38 Management Assurances

39 Financial Management Systems Strategy and Actions

42 PERFORMANCE RESULTS

43 Performance Measures Overview

44 Next Level of Safety

54 Workplace of Choice

57 Delivering Aviation Access Through Innovation

62 Sustaining Our Future

66 Improved Global Performance through Collaboration

69 Quality Assurance

70 FINANCIAL RESULTS

71 A Message from the Chief Financial Officer

73 Office of the Inspector General (OIG) Quality Control Review

75 Independent Auditors’ Report

80 Management’s Response to the FY 2013 Independent Auditors’ Report

83 Financial Statements

87 Notes to the Financial Statements

113 Required Supplementary Stewardship Information

117 Required Supplementary Information

120 OTHER INFORMATION

121 Summary of Inspector General’s Top Management Challenges

133 Summary of Financial Statement Audit and Management Assurances

134 Summary of Improper Payments

138 Administrative Services Franchise Fund

143 Other Information

144 Glossary

We Welcome Your Comments (inside back cover)

SIDEBARS

13 The FAA and Sequestration

14 NextGen Progress Today Ensures 

a Viable Future for Aviation 

Tomorrow

18 Unmanned Aircraft: A New FAA 

Frontier

20 Improving the Safety of General 

Aviation

23 Commercial Space Transportation: 

A Booming Market

28 The FAA Responds to Natural 

Disasters

65 The FAA Intensifies Its Study of 

Alternative Fuels
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Mi c h a e l P. Hu e r t a

Ad m i n i s t r a t o r

a MESSAGE f r o m

t h e ADMINISTRATOR
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a M E S SAG E f r om

t h e AD M I N I STRATOR

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

A

s we celebrate our 55th year, I am pleased to submit the Federal Aviation Administration’s (FAA) Fiscal Year 

2013 Performance and Accountability Report (PAR), the first PAR since I had the honor of being confirmed as 

Administrator last January. Our FY 2013 PAR discusses the challenges, accomplishments, and performance 

results of our agency as we delivered on a promise that we make every day—to provide the safest, most 

efficient aerospace system in the world. This report shows how we went about making good on our promise in 

the past fiscal year. 

The effective operation of FAA programs requires stability and predictability in funding. The agency’s many authorization 

extensions over the past few years inevitably took a toll on the FAA’s work in certain areas until the Federal Aviation 

Reauthorization Modernization and Reform Act of 2012 restored some of the stability essential to our agency’s ability to deliver 

both air traffic management and aviation safety. It is unfortunate that just as the era of protracted uncertainty caused by temporary 

reauthorizations ended, the new reality of budget sequestration caused even more dire uncertainty. Halfway through FY 2013, 

more than $600 million was cut from our budget, which is affecting our operations and our future. The FAA urgently needs a 

longer-term solution to provide the financial certainty essential to our move toward modernization.

Our goal areas of the past year are based on the framework of Destination 2025, which was our strategic plan published in 2011. 

These goals are discussed further in this letter and throughout the PAR. Beginning in 2014, I have established a revised strategic 

framework where we will focus our efforts during my five-year term as Administrator. These priorities are to:

¢ Make aviation safer and smarter

¢ Deliver benefits through technology and infrastructure

¢ Enhance the FAA’s global leadership

¢ Empower and innovate with the FAA’s people

During FY 2014, we will identify specific initiatives for each of these areas.

SAFETY

The FAA’s number one priority is safety. We focus on this priority 24 hours a day, 7 days a week. The Asiana Airlines crash in 

San Francisco in July serves as a somber reminder of how valuable our employees’ efforts are in keeping our skies safe for the 

approximately 70,000 flights that pass through our national airspace each and every day. It is also a sign of the technological 

progress we are making in aircraft safety, including fire retardant materials aboard aircraft, to keep passengers safe. We continue 

to work with the National Transportation Safety Board on the investigation of this accident.

In the past few years, Congress has given us significant guidance on how to advance aviation safety. We accomplished a great 

deal on this front in 2013, including issuing a final rule that increased the qualification requirements for first officers who fly for 

U.S. passenger and cargo airlines.

This rule requires first officers, also known as co-pilots, to hold an Airline Transport Pilot (ATP) certificate, which mandates 1,500 

hours total time of flight experience, including time in a simulator. Previously, first officers were required to have only a commercial 

pilot certificate, which required just 250 hours of flight time as a pilot. The rule further requires first officers to have an aircrafttype rating, which involves additional training and testing specific to the airplanes they fly. The rule gives first officers a stronger 

foundation of aeronautical knowledge and experience before they fly for an air carrier. 
6 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

These new regulations address a congressional mandate in the Airline Safety and Federal Aviation Administration Extension Act of 

2010 requiring that both pilots and co-pilots receive the ATP certification. 

This is one of several rulemakings required by that Act. Others include new flight duty and rest requirements for pilots that were 

finalized in December 2011 and new training requirements. These requirements, which ensure that pilots know how to react 

properly in difficult operating environments, will eventually be included in all air carrier training programs.

We have put new safety data collection programs in place for air traffic controllers and aviation technicians to report a problem 

or even a mistake they may have made, without fear of retribution. This makes the system even safer because we can learn from 

mistakes.

This year we took actions to address safety issues that were prompted by incidents involving lithium ion batteries. Failures of

these batteries resulted in release of flammable electrolytes, heat damage, and smoke on two Boeing 787-8 airplanes. The FAA 

issued an emergency airworthiness directive in January 2013, requiring battery system modifications before further flight. Our 

agency then worked closely with Boeing and the National Transportation Safety Board (NTSB) to understand what prompted the 

failures and how best to mitigate the safety issues. This included an in depth review of the certification activities, manufacturing 

processes and supply chain, and a non-advocate review by internationally recognized battery experts. In April 2013, we added 

requirements to install new battery enclosures and environmental control system ducts; replace the main and auxiliary power 

unit batteries and their respective battery chargers; and revised the maintenance program. This work involved unprecedented 

coordination with Boeing, NTSB and our international partners and enabled successful resumption of 787 operations in May 2013. 

We are taking many other actions to enhance safety across the board, including promoting safety management systems and 

fostering the sharing of more data between our agency and the airline industry. By analyzing this data, we are able to identify 

trends and hazards across the airspace system and mitigate risks before emergencies occur.

Although we operate in one of the safest periods in aviation history, we continually strive to improve. As we undergo the difficult 

process of implementing the deep cuts required by the sequester, we refuse to sacrifice safety, even if this means that operations 

may at times be less efficient.

NEXTGEN 

We continue to make progress with the Next Generation Air Transportation System, known simply as NextGen. We’re moving 

from a primarily ground-based system to satellite-based operations and an air-ground communication system that relies on digital 

data exchange, as well as voice. These changes will make flying more efficient and more environmentally-friendly. We remain 

committed to implementing the technologies that comprise NextGen, even if we may have to shift some of our priorities and alter

some of our deployment timeframes. 

NextGen tools and procedures are changing the way we fly. By 2020, we project that NextGen will provide $38 billion in savings. 

We also project a 41 percent reduction in delays compared to what would happen if we did nothing, a reduction of 16 million 

metric tons in carbon emissions, and a 1.6 billion gallon cumulative reduction of fuel use.

This year we continued with the installation of Automatic Dependent Surveillance Broadcast (ADS-B), which makes use of 

satellite-based technology to determine and share precise aircraft location information. Early next year we expect to complete the 

installation of 642 ADS-B ground radio stations. 
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a M E S SAG E f r om

t h e AD M I N I STRATOR

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

We also began work on Data Communications (Data Comm) trials. Data Comm supplements today’s analog, voice-only, air-toground communications system with a digital message system. The sending and receiving of digital instructions to and from pilots 

will increase overall system efficiency, while reducing the likelihood of hearback and readback errors. We plan to start initial 

operations of Data Comm in equipped control towers beginning in 2016.

We also continue to make progress with implementation of the En Route Automation Modernization (ERAM) system, which 

replaces the 1970s era En Route Host computer and backup system used at 20 FAA Air Route Traffic Control Centers nationwide. 

ERAM is one of the most complex, challenging, and ambitious systems deployed by the FAA in recent times. In effect, the 

transition to ERAM represents a live transplant of the “heart” of today’s air traffic control system while continuing safe and 

efficient flight operations for the flying public. As ERAM evolves, it will provide benefits for users and the flying public by 

increasing air traffic flow and improving automated navigation and conflict detection services, all of which are vital to meeting 

future demand and preventing gridlock and delays. Our goal was to have ERAM in initial operation at all 20 locations by the end of 

2013. However, due to sequestration, this will not occur until 2014.

As part of the financial flexibility that Congress gave us earlier this year to mitigate the worst impacts of the sequester (namely, 

employee furloughs for our entire workforce), we were able to restart the Metroplex work that had been put on hold. Our 

Metroplex initiative involves optimizing aircraft routes in major metropolitan areas that have one or more airports. The airspace 

above these airports is among the most congested nationwide. Our individual Metroplex projects are highly collaborative and must 

include our operational air traffic control personnel. Prior to the congressional action, the planned furloughs under the sequester 

required us to postpone new design and development efforts, and recall air traffic controllers and managers back to their duty 

stations. Air traffic controllers have now returned and are applying their needed airspace expertise to all Metroplex efforts. In 

addition, we have restarted the collaborative process with airlines and the many other stakeholders who are all working together 

to improve congested airspace over busy cities that have multiple major airports. We were able to do this in the following seven 

Metroplex areas where the work will continue, including: Washington, D.C., Northern Texas, Charlotte, Northern and Southern 

California, Houston and Atlanta.

There is much more to NextGen. For more information, go to www.faa.gov/nextgen. Additionally, NextGen accomplishments and 

highlights also appear on pages 14–15 and 17–19 of this document. 

FY 2013 PERFORMANCE HIGHLIGHTS 

NEXT LEVEL OF SAFETY. This year we met our domestic commercial aviation fatal accident safety goal. Although we met our 

goal with our U.S. registered carriers, the Asiana crash in San Francisco in July, which involved a foreign carrier, is a somber 

reminder of the importance of constant vigilance in the area of aviation safety world-wide. Reducing general aviation (GA) 

fatalities continues to be a challenge. More than three-quarters of GA fatal accidents are related to human factors. In addition, 

many GA accidents occur in Alaska, where the state’s topography and extreme weather present unique safety challenges to pilots. 

In the area of commercial space safety, we maintained our outstanding record, with no fatalities, serious injuries, or significant 

property damage from launches.

A summary of these performance results is presented in the Management’s Discussion and Analysis on page 26. Detailed 

information about each of our safety performance metrics begins on page 44 of the Performance Results section.
8 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

Workplace of Choice. Our employees are our biggest asset. The vital work they do each and every day makes it possible for us 

to deliver on our mission of safety. Their talent and ideas are what will move us into the future. In order to reach this future, we 

must create an environment marked by innovation and excellence. We must continue to attract the best-qualified employees and 

to develop, motivate, and retain them. One of our strategic objectives is for the FAA to be widely recognized as a federal employer 

of choice. 

A summary of both performance results is presented on page 26 of the Management’s Discussion and Analysis. Detailed 

information about each of the workplace performance metrics begins on page 54 of the Performance Results section.

Delivering Aviation Access Through Innovation. A complex challenge that we face today is ensuring that airport and airspace 

services are more efficient, predictable, and cost-effective, and that capacity matches demand. These are important factors that

contribute to our goal of meeting the present and future needs of the flying public.

A summary of these performance results is presented on page 27 of the Management’s Discussion and Analysis. Detailed 

information about each of these performance metrics begins on page 57 of the Performance Results section.

Sustaining Our Future. Mitigating noise pollution and improving fuel efficiency are essential to increasing aviation capacity, 

efficiency, and sustainability. This year, we achieved partial success in meeting our performance targets for these measures.

A summary of these performance results is presented on page 27 of the Management’s Discussion and Analysis. Detailed 

information about each of these metrics begins on page 62 of the Performance Results section.

Improved Global Performance Through Collaboration. As the United States rolls out the improvements of NextGen, we seek 

to partner more with the International Civil Aviation Organization and other countries and regions. We continue to make strides 

in global stewardship by working with governments and industries around the world to encourage the alignment with NextGen of 

concepts, systems, and procedures under development internationally. By doing so, we will enhance safety around the world. 

A summary of this performance result is presented on page 27 of the Management’s Discussion and Analysis. Detailed 

information about this metric begins on page 66 of the Performance Results section.

ACCOUNTABILITY

For the sixth consecutive year, independent auditors gave the FAA’s financial statements an unmodified opinion with no material 

weaknesses. We issued an unqualified statement of assurance, shown under “Management Assurances” on page 38, and can 

state that the financial and performance data are reliable and complete. 

We are committed to ensuring transparency and accountability to the public while achieving our mission. Working in a difficult 

budgetary environment means that we must continue to refine and adjust our priorities as we move forward. We will select and 

deliver the technologies and programs that will help us achieve the greatest improvements in safety. We will continue to be 

careful stewards of the tax dollars we receive. This report is a clear indication that we take this responsibility very seriously. 

Our FY 2013 Performance and Accountability Report (www.faa.gov/about/plans_reports) provides a detailed accounting of 

our performance and financial management. A Summary of Performance and Financial Information presents the information in a 

condensed form. A summary is available at www.faa.gov/about/plans_reports. Our strategic plan—Destination 2025—focuses 

our performance on the top agency targets that position us to meet the future successfully. The plan can be found at www.faa.

gov/about/plans_reports/media/Destination2025.pdf.
Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report 9

CONCLUSION

From its beginnings, aviation has expanded beyond all known technological boundaries. For more than five decades, the FAA 

has compiled a proven track record of safely introducing new technology and new aircraft. The new technologies and process 

improvements that we deliver over the next several years will again change the course of aviation history—both here and around 

the world—for decades to come. I and the FAA’s capable and dedicated staff, including our new deputy administrator, Michael 

Whitaker, look forward to working with the President, the Congress, industry partners, and stakeholders to ensure that the United 

States continues to set the world standard for aviation safety and efficiency.

Michael P. Huerta

Administrator 

December 9, 2013

a M E S SAG E f r om

t h e AD M I N I STRATOR
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M A N A G E M E N T ’ S D I S C U S S I O N 

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Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

HISTORY OF AVIATION

Orville Wright made the first sustained, powered flight on 

December 17, 1903, in a plane that he and his brother Wilbur 

built. This 12-second flight led to the development of the first 

practical airplane in 1905. The early twentieth century witnessed 

countless aviation developments as new planes and technologies 

entered service. During World War I, the airplane also proved 

its effectiveness as a military tool and, with the advent of 

early airmail service, showed great promise for commercial 

applications.

The first lighted airway was a 72-mile strip between Dayton 

and Columbus, OH, constructed by the Army in 1921, using 

rotating beacons, field floodlights, and flashing markers. As air 

travel increased, some airport operators, hoping to improve 

safety, began providing an early form of air traffic control. Early 

controllers stood on the field and waved flags to communicate 

with pilots. Development of radio navigation in the 1920s was 

conducted by the Post Office Department, the Navy, the Army, 

and the Bureau of Standards, using radio transmitters on the 

ground and aircraft receivers with directional antennas on board. 

Based on ideas from the Bureau of Standards, the Army, and 

other sources, a radio system was developed during the course 

of the 1920s that would guide an aircraft along a chosen course 

and require only simple airborne equipment. With the placement 

of radio beacons along the airways, air commerce in the United 

States grew, even during the Great Depression of the 1930s.

On June 30, 1956, a Trans World Airlines Super Constellation 

and a United Air Lines DC-7 collided in Arizona, over the Grand 

Canyon, killing all 128 people on board the two airplanes. The 

collision occurred while the aircraft were flying under visual flight 

rules in uncongested airspace. The accident dramatized the fact 

that, even though U.S. air traffic had more than doubled since the 

end of World War II, little had been done to mitigate the risk of 

midair collisions.

Accidents like these spurred passage of the Federal Aviation 

Act of 1958, which transferred Civil Aeronautics Administration 

functions to a new independent body, the Federal Aviation 

Agency. On April 1, 1967, the Federal Aviation Agency became 

one of several organizations within the U.S. Department of 

Transportation (DOT) and was named the Federal Aviation 

Administration (FAA).

Today, the FAA’s air traffic control system is one piece of 

the national airspace system which consists of a complex 

network of systems and aircraft, combined with the people 

who certify, operate, and maintain them. The network includes 

more than 19,455 airports, 568 air traffic control facilities, 

and approximately 65,000 other facilities, including radar, 

communications nodes, ground-based navigation aids, computer 

displays, and radios, that operate unceasingly to provide safe 

and efficient flight services for users. Over 46,000 FAA personnel 

and approximately 608,000 pilots operate more than 228,000

aircraft within the national airspace system. American air traffic 

controllers can be responsible for up to 2,850 flights at any given 

moment, half of the world’s air traffic.

The system operates non-stop, 24 hours a day, every day of the 

year, providing safe air transportation for millions of passengers. 

Under agreement with the International Civil Aviation 

Organization (ICAO), a specialized United Nations agency 

dedicated to air transportation and navigation, the national air 

space system not only spans the country, but extends across 

the Atlantic, Pacific, and Arctic oceans. It also interfaces with 

neighboring countries’ air traffic control systems for international 

flights.

Passengers boarding a plane on a rainy day at the municipal airport in 

Washington, D.C. From the Farm Security Administration—Office of War 

Information Photograph Collection, Library of Congress.

An airlines hostess. Municipal airport, Washington, D.C. From the Farm 

Security Administration—Office of War Information Photograph Collection, 

Library of Congress.
12 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

OUR ORGANIZATION

The FAA fulfills its mission through four lines of business that 

work collaboratively to create, operate, and maintain the national 

airspace system.

¢ Air Traffic Organization (ATO). Moves air traffic safely 

and efficiently. The customers of the world’s largest air 

navigation service provider are commercial, private, and 

military aviation. Approximately 33,000 ATO employees 

provide services to these customers.

¢ Airports (ARP). Provides leadership in planning and 

developing a safe, secure, and efficient airport system; 

manages the Airport Improvement Program (AIP), which 

provides grants to public agencies and, in some cases, 

to private owners and entities, for the planning and 

development of public-use airports that are included in 

the National Plan of Integrated Airport Systems (NPIAS); 

enhances environmental quality related to airport 

development; develops standards for the design and 

construction of airport facilities; establishes regulations 

for the safe operation of commercial service airports; and 

inspects airports for compliance.

¢ Aviation Safety (AVS). Oversees the safety of aircraft and 

the credentials and competencies of pilots and mechanics, 

develops mandatory safety rules, and sets the standards 

that have helped make air travel one of the safest modes of 

transportation in history.

¢ Commercial Space Transportation (AST). Oversees 

the safety of commercial space transportation activities; 

regulates the U.S. commercial space transportation industry, 

including human space flight; and encourages, facilitates, 

and promotes U.S. commercial space transportation.

The FAA has 10 staff offices that support these lines of business 

and accomplishment of the agency’s mission. Key among these 

staff offices are: 

¢ Finance and Management (AFN). Consolidates support 

services and provides a centralized focus for finance, 

acquisition, information services, and region and center 

ADMINISTRATOR

Aviation

Safety

AVS

Finance & Management

AFN

Mike Monroney

Aeronautical Center

MMAC

Airports

ARP

Civil Rights

ACR

Government & Industry Affairs

AGI

Chief Counsel

AGC

NextGen & Operations Planning

ANG

William J. Hughes

Technical Center

WJHTC

Human Resource Management

AHR

Policy, International Affairs, 

& Environment

APL

Communications

AOC

Audit & Evaluation

AAE

Security & Hazardous 

Materials Safety

ASH

Air Traffic 

Organization

ATO

Commercial Space 

Transportation

AST

LINES OF

BUSINESS

STAFF 

OFFICES
operations. The streamlining of agency functions enables us 

to be more responsible stewards of FAA resources. AFN is 

comprised of the following offices: 

Financial Services 

Acquisitions and Business Services 

Information Services 

Regions and Center Operations 

¢ Aeronautical Center. The Mike Monroney 

Aeronautical Center in Oklahoma City, OK, provides 

logistics, enterprise business services, software 

design, training, course design, and acquisition 

services. The Aeronautical Center also trains the 

air traffic control workforce and the technician 

workforce, as well as provides technological training, 

national partnerships, logistics support, simulation, 

and medical research—all to move the NextGen 

transformation forward.

¢ NextGen (ANG). The NextGen Office provides leadership 

in planning and developing the Next Generation Air 

Transportation System. This office coordinates NextGen 

initiatives, programs and policy development across the FAA.

Technical Center. The William J. Hughes Technical 

Center, located in Atlantic City, NJ, supports the NextGen 

office and serves as the national scientific test base 

for the FAA. The Technical Center focuses on research 

and development, including long-range development of 

innovative aviation systems and concepts; development 

of new air traffic control equipment and software; and 

modification of existing systems and procedures. The 

Technical Center also verifies and validates air traffic 

control, communications, navigation, airports, aircraft 

safety, and security systems.

Go to www.faa.gov/about/office_org for more details about 

our organization. 

THE FAA AND SEQUESTRATION 

The Budget Control Act of 2011 established enforcement 

mechanisms to reduce federal budget deficits by at least $2.1 trillion 

over 10 years. The act mandated automatic spending cuts for most 

federal government departments and agencies, if the Congress 

failed to enact balanced deficit reduction legislation. These budget 

reductions, known as sequestration, began on March 1, 2013, and 

are slated to last 10 years. 

While exempting most mandatory programs such as Social Security, 

Medicaid, federal pensions, and veterans benefits from cuts, the 

2013 sequester reduced most discretionary budget accounts by 

approximately five percent, or $85 billion for the government as 

a whole. Sequestration reduced the FAA’s FY 2013 budget by 

$637 million. 

With sequestration looming, the FAA implemented cost-saving 

strategies, including a partial hiring freeze and elimination of 

employee bonus awards, early in the fiscal year. These were in 

addition to ongoing spending restrictions on items such as travel, 

training, IT, conferences, office supplies, and contracts. When the 

sequestration became effective on March 1, the FAA initiated severe 

hiring restrictions. 

Given the large percentage of the operations budget devoted to 

payroll, however, the FAA was also forced to implement acrossthe-board employee furloughs, or unpaid time off. Controllers, 

technicians, and inspectors were included in the furlough. Flight 

delays began occurring almost immediately. 

Congress responded to the crisis by enacting special legislation, 

the Reducing Flight Delays Act of 2013, which granted the FAA the 

flexibility to transfer up to $253 million from the Grants-in-Aid for 

Airports program (which had been exempt from sequestration) to 

the Operations and Facilities & Equipment accounts. This funding 

transfer enabled the FAA to immediately stop employee furloughs 

and a proposal to close low-traffic towers. But other cutbacks have 

remained in place.

The special legislation only addressed the funding shortfall in 

FY 2013. The FY 2014 continuing resolution that funds government 

operations through 

January 15, 2014, includes 

additional funding to 

avoid FAA furloughs 

during this time period. 

The final FY 2014 funding 

level, however, remains 

uncertain. And for as long 

as the sequestration law 

remains in effect, the FAA 

will continue to face the 

prospect of reductions to 

aviation services. 

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Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
14 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

PROGRESS TODAY ENSURES A VIABLE 

FUTURE FOR AVIATION TOMORROW

The Next Generation Air Transportation System, called NextGen—mandated 

by Congress in its 2003 reauthorization of the FAA—is in the midst of 

transforming our nation’s airspace system by increasing safety, saving time, 

and reducing fuel use and environmentally undesirable emissions, all while 

fostering the flow of commerce. Our latest estimates for the benefits to 

aviation efficiency indicate that by 2020, NextGen improvements will reduce 

current delays by 41 percent.

The movement to NextGen is being enabled by a shift to smarter satellitebased and digital technologies and new procedures. NextGen is already 

being deployed and used today. Three main NextGen areas that have seen 

steady advances are infrastructure, controller decision support tools, and 

performance-based navigation.

Infrastructure

Automatic Dependent Surveillance—Broadcast 

(ADS-B)

Although NextGen is fundamentally satellite-based, its ADS-B 

program works with a network of ground-based stations. This fiscal 

year has seen a steady increase in deployment of these stations. 

As of October 2013, the FAA had installed more than 578 ADS-B 

ground stations, of which 550 were operational. Ground stations 

help provide traffic and weather information both directly to aircraft 

equipped with ADS-B technology and to air traffic control separation 

services at 45 Terminal Radar Approach Control (TRACON) facilities 

and 11 en route facilities across the country. 

A great benefit of ADS-B then is that it can provide precise aircraft 

location information not only to controllers, but directly to pilots’ 

instrument panels. In the future, aircraft equipped with the now 

optional ADS-B In reception capability—in addition to the currently 

mandated ADS-B Out transmission capability—will be able to “see” 

the location of nearby ADS-B Out-equipped aircraft via air-to-air 

reception or by relay from the ground. In addition, ADS-B In can 

display the location of aircraft equipped solely with transponders, 

even if they lack ADS-B Out technology, thus providing fully 

equipped pilots with awareness of all nearby aircraft.

ADS-B In is also providing another service to equipped operators 

in the airspace where it is operational: Flight Information 

System-Broadcast (FIS-B). The FIS-B data stream is packed with 

information from the National Weather Service, including NEXRAD 

(Next-Generation Radar), winds aloft, and pilot reports. FIS-B also 

includes information on temporary flight restrictions and airspace 

reserved for special use.

Data Communications (Data Comm)

Data Comm will add a digital data exchange capability to air-toground communications, enhancing safety by reducing potential 

errors in voice transmission. Controllers will still talk to pilots, 

but the need to talk will be reduced by the ability to exchange 

digital messages. With Data Comm, controllers will be able to 

push a button and send routine information—such as clearances, 

instructions, and advisories—to many pilots at the same time. 

Flight crews will be able to transmit requests this way too. With 

this capability, radio frequency congestion will be reduced and 

controllers will safely be able to handle more traffic. Data Comm is 

expected to reduce flight times by improving traffic flow.

Through active collaboration and agreements with multiple air 

carriers, the FAA has already started field testing a major component 

of Data Comm at Memphis International Airport and Newark Liberty 

International Airport.

En Route Automation Modernization (ERAM)

ERAM is the new automation platform for the centers which control 

high-altitude traffic, allowing faster processing of route requests 

and in-flight route changes. ERAM deployment is nearly complete, 
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with 17 of 20 sites having achieved initial operating 

capability this year and the remaining three 

expected to do so in early 2014. Eleven sites are 

fully operational. All ERAM sites should reach this 

status in FY 2015. Further software development 

will make ERAM a foundation for important 

NextGen capabilities, such as Data Comm and 

Time-Based Flow Management (TBFM). TBFM will 

help optimize the flow of aircraft into capacityconstrained areas, decrease delays by enhancing 

the predictability of airspace use, and improve fuel 

efficiency.

Controller Decision Support Tools

Wake Recategorization (RECAT)

Since November 2012, controllers at the Memphis 

International Airport air traffic control tower have 

been using new wake-spacing criteria (called 

RECATs, short for recategorizations) to manage 

separations between aircraft as they approach and 

depart from the airport. Wake turbulence is a trail 

of disrupted air that is left behind an aircraft and 

that can be dangerous to aircraft that follow. The 

strength of this turbulence is primarily determined 

by the weight, wingspan, and speed of the aircraft. 

In order to address this phenomenon, the FAA has 

developed wake categories to safely manage the 

separation between different sizes of aircraft. 

Compared to the traditional wake categories, the 

RECATs being used in Memphis provide for more 

consistency among similar-sized aircraft. As a 

result, separation standards between successive 

aircraft can now be safely reduced for many of 

the same aircraft-pair combinations. Aircraft flight 

sequences at Memphis are now tighter—arrivals 

are about 7.5 percent and departures 5 percent 

closer to each other on average. Consequently, 

aircraft flows are more efficient, resulting in flight 

reduction times of almost a minute for arrivals and 

of 2.8 minutes for departures.

One Memphis air carrier is reporting significant 

capacity increases since the reduced separation 

standards have been in place, adding nine flight 

operations per hour, an increase of 17 percent.

Performance-Based Navigation (PBN)

PBN is a NextGen framework for defining the performance requirements an aircraft 

must meet in order to use applicable air traffic routes, instrument procedures, or 

defined airspace. The two main components of the PBN framework are Area Navigation 

(RNAV) and Required Navigation Performance (RNP). RNP is RNAV with the addition of 

an onboard performance monitoring and alerting capability, meaning that the crew is 

informed if a required performance level is not met during an operation.

Area Navigation Procedures with Authorization Required (RNP ARs) with 

Defined Turn-to-Final

Certain RNP operations require advanced features of the onboard navigation function 

and approved training and crew procedures. These operations must receive approvals 

that are characterized as Authorization Required (AR). As of March 2013, the FAA 

had published 359 RNP AR approaches across the national airspace system. Major 

components of the authorized traffic patterns in the RNP AR include 229 Radius-to-Fix 

(RF) turns, and 172 defined turns-to-final. Such advanced RNP procedures optimize 

terminal arrival operations, resulting in shorter flight times, an improvement that is being 

made today. The FAA is encouraging the use of such procedures whenever possible in 

order to achieve these benefits. 

Optimized Profile Descents (OPDs)

OPDs reduce fuel consumption and noise by maintaining a constant and optimal 

descent angle during landing (instead of the traditional “step-down” and “level off” 

descent pattern). The key benefit of OPDs is flight efficiency, but they can also deconflict 

terminal air traffic and improve safety. The FAA is including OPDs as part of PBN arrival 

procedures whenever possible. 

By August 2013, the FAA had published 69 PBN arrival procedures with OPDs. Benefits 

vary from one location to another, depending on such factors as proximity of other 

airports, terrain, airspace restrictions, and typical weather conditions,

At Reagan National and Dulles International airports, for instance, the new procedures 

provide shorter routes for arrivals from the west and facilitate more efficient vertical 

arrivals. A vertical arrival is one that is continuous from the beginning of the descent to 

touchdown, without any leveling-off segments, and with aircraft engines set to nearly 

idle throttle. Vertical profiles also help keep arriving aircraft at a safe distance from each 

other, resulting in fewer aircraft interactions. 

At Memphis International Airport, OPDs, together with the new RECAT wake- spacing 

criteria, improved terminal flows and yielded more than a 50 percent reduction in 

airborne holding time. 

At Denver International, one airline estimates saving 100-200 pounds of fuel on each 

arrival. With an average of 120 flights per day, that equates to an estimated annual 

reduction of 4.4–8.8 million pounds of fuel and 13.8 –27.6 million pounds of carbon 

dioxide emissions.

The FAA updates the NextGen Implementation Plan annually. The plan provides a 

comprehensive overview of implementation activities and benefits.

For more information on these and other NextGen achievements, see http://www.faa.gov/nextgen. 
16 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

THE YEAR IN HIGHLIGHTS

The FAA Serves the Flying Public 

by Operating a System that: 

Ê Operates 24 hours a day, 7 days a week, 365 days a year. 

Ê Provides more than 65,000 facilities with related equipment. 

Ê Maintains FAA-operated or FAA-contracted towers at more 

than 500 airports. 

Ê Inspects and certifies approximately 228,000 aircraft and 

608,000 pilots. 

Ê Facilitates more than 5,700 takeoffs and landings per hour. 

Ê Transports more than 736 million passengers annually. 

Ê Safely guides approximately 25 million flights every year. 

Ê Generates more than 10 million jobs, with earnings of $394 

billion. 

Ê Contributes $1.3 trillion annually to the national economy 

and constitutes 5.2 percent of the gross domestic product. 

The FAA Provides: 

Ê A workforce of more than 46,000 personnel who operate, 

maintain, oversee, and support the most complex aerospace 

system in the world. 

Ê An array of services and programs within an annual budget 

of approximately $15.3 billion. 

Ê Almost 14,500 controllers who manage and ensure everincreasing levels of safety in the busiest air traffic system in 

the world. 

Ê Almost 6,000 system specialists who maintain the 

equipment in the national airspace system to extremely high 

levels of operability. 

Ê Research to improve aviation safety and efficiency. 

Ê Grants to improve up to 3,330 eligible public-use airports in 

the United States. 

Ê Protection of the public, property, and the national security 

and foreign policy interests of the United States during 

commercial space launch and reentry activities.
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MAJOR ACCOMPLISHMENTS

In FY 2013, as the FAA celebrated its 55th year, the agency 

continued to meet its most important goal—safety—and 

achieved one of the safest years in aviation history. With 

more than 70,000 flights on any given day, the agency ensured 

that more than 736 million passengers safely reached their 

destinations over the course of the year. This year also saw other 

major accomplishments, particularly in the area of NextGen, with 

its wealth of technological improvements.

NEXTGEN

NextGen provides a comprehensive overhaul of the nation’s 

airspace to make air travel more convenient and dependable, 

while ensuring that flight is as safe, efficient, and environmentallyfriendly as possible. Our agency remains committed to 

implementing NextGen’s 21st century aviation system, which 

includes integrating satellite-based and digital technologies 

largely unheard of not long ago.

As demand for our nation’s increasingly congested airspace 

continues to grow, NextGen improvements are enabling the FAA 

to guide and track aircraft more precisely on more direct routes. 

NextGen efficiency reduces delays, saves fuel, and reduces 

aircraft exhaust emissions. NextGen is also vital to preserving 

aviation’s significant contributions to our national economy.

While the agency has had to shift some of its priorities and 

alter some of its NextGen deployment timeframes, we remain 

committed to delivering the NextGen capabilities outlined over 

the past several years.

Just as important as proper funding is effective collaboration. 

Industry, government, and labor, working in concert, will enable 

us to deliver the NextGen transformation of our airspace and 

realize maximum benefits for everyone. 

To see the impact of today’s NextGen improvements, please 

visit the NextGen Performance Snapshots website (www.faa.

gov/nextgen/snapshots), which tracks NextGen performance 

metrics and highlights success stories.

Automatic Dependent SurveillanceBroadcast (ADS-B)

ADS-B is a system for air traffic surveillance that brings the 

added precision and reliability of satellite-based surveillance 

to the nation’s skies. With ADS-B, each aircraft broadcasts its 

identification, position, altitude, velocity, and other information. 

Aircraft that broadcast this information are considered to be 

equipped with “ADS-B Out.” Radio stations on the ground receive 

this information and relay it to automation system displays at 

FAA facilities. The use of this data by controllers will allow 

improved separation services, along with other applications such 

as continuous descent approaches. 

The same radio stations on the ground also process traffic and 

weather information and broadcast it to displays in the cockpit. 

Aircraft that can receive and display this information are “ADS-B 

In”-equipped. The use of ADS-B information in the cockpit will 

allow for better situational awareness and traffic avoidance 

along with future applications. 

Current ADS-B technology significantly improves controllers’ 

situational awareness by allowing them to “see” aircraft data 

with satellite-based precision, a precision that radar-based 

technology cannot provide. The displays update in real time and 

do not degrade with distance or terrain. Pilots will be able to 

fly more direct routes between point A and point B by means of 

new procedures, such as enhanced merging and tighter aircraft 

spacing, and they can fly at more fuel-efficient altitudes. The 

system also gives pilots in equipped aircraft direct access right 

on their flight decks to weather and flight information. 

ADS-B technology is crucial to turning the NextGen vision into 

a reality. After years of research, development, and operational 

use by General Aviation (GA) pilots in Alaska and air transport 

carriers in the Ohio River Valley, the FAA determined in 2005 that 

ADS-B was ready to be implemented throughout the national 

airspace system. The gains in safety, capacity, and efficiency as 

a result of moving from a radar-based system to a satellite-based 

system will enable the FAA to meet the expected growth in air 

traffic predicted for coming decades. Because ADS-B is flexible 

and expandable, it can change and grow with the evolving 

aviation system. 

As of FY 2013, 550 ADS-B ground radios have been deployed 

throughout the United States and the program is on track to 
18 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

complete deployment of 642 ADS-B ground radio stations 

in FY 2014. As more aircraft equip with ADS-B receivers, we will 

be able to realize its benefits more fully throughout the national 

airspace system.

Performance-Based Navigation (PBN)

Another cornerstone of NextGen is PBN. It allows for navigation 

routes and procedures that use the satellite-based global 

positioning system (GPS) to determine and share precise aircraft 

location information. 

PBN routes and instrument procedures enable aircraft to fly 

more direct routes, thereby increasing efficiency and capacity 

gains. PBN helps reduce fuel burn and emissions through more 

continuous climbs and descents that eliminate the need for 

gradually “stepping up” to ascend or gradually “stepping down” 

to descend. The FAA is supporting the use of PBN to provide 

greater flexibility in the management of air traffic. This year, the 

FAA produced 677 PBN routes and procedures.

In May 2013, we launched the PBN Dashboard at www.faa.

gov/nextgen/pbn/dashboard. The website provides PBN 

implementation and usage statistics for all major airports in 

the national airspace system that have had PBN procedures 

published for them. The data is captured on a periodic basis and 

displayed in an easy-to-interpret format for interested parties.

UNMANNED AIRCRAFT: A NEW FAA FRONTIER 

NextGen transformations are not the only major innovation in the 

offing at the FAA. In the FAA Modernization and Reform Act of 

2012 (FMRA), Congress directed the agency to integrate Unmanned 

Aircraft Systems (UAS) into the evolving national airspace safely and 

efficiently by 2015. 

UAS are unmanned vehicles that can be the size of toy aircraft and 

fly at low altitudes, or have the equivalent wingspan of a Boeing 737 

and fly above 60,000 feet. For many UAS operations, an observer 

on the ground or an accompanying manned “chase” aircraft is 

required to maintain visual contact with the UAS vehicle at all times, 

providing the pilot-in-command who is controlling the UAS with 

“sense and avoid” capabilities in relation to other aircraft. 

UAS have been deployed mainly for “public interest” military and 

border patrol purposes since 1990. But in July 2013, for the first time, 

the FAA certified two small UAS for commercial use. 

These initial commercial UAS operations in Arctic locations will be 

cost effective and environmentally friendly, and because of the lack 

of dense air traffic, they will reduce the risk to manned aviation. The 

Scan Eagle, manufactured by Boeing subsidiary Insitu, will survey 

ocean ice floes and migrating whales in Arctic oil exploration areas. 

AeroVironment’s PUMA will support emergency response crews in 

oil-spill monitoring and wildlife surveillance over the Beaufort Sea.

UAS are less expensive to operate than manned aircraft and may 

be used for a wide variety of purposes, including monitoring natural 

disasters, such as forest fires; tracking dangerous weather patterns, 

such as hurricanes; conducting crop monitoring; performing scientific 

research for National Aeronautics and Space Administration (NASA) 

and National Oceanic and Atmospheric Administration (NOAA), as 

well as for universities; supporting law enforcement; and assisting 

in humanitarian search and rescue operations, such as finding 

stranded climbers or a missing child.

In February 2013, in accordance with the requirements of FMRA, the 

FAA kicked off a process to select six test sites to conduct research 

and development to assist in the integration of UAS into the national 

airspace system. To address public concerns about privacy related 

to the UAS test sites, the FAA held a public engagement session in 

April to help determine the required privacy approach for the test 

sites. The final, approved privacy approach will be included in the 

contractual agreement between the FAA and test site operators. In 

addition, the agency is consulting with other government agencies 

about the privacy policies that will shape UAS implementation more 

broadly beyond UAS test sites. 

(Editorial note: On November 7, 2013, the FAA published the UAS 

Roadmap, Comprehensive Plan, and Final Privacy Policy for the UAS 

Test Sites. All three may be found at http://www.faa.gov/about/

initiatives/uas/.)

NASA’s Global Hawk UAS aircraft flies above the equatorial Pacific, collecting 

data that will help researchers identify how changes in humidity in the upper 

atmosphere may affect climate. Photo: NASA, March 2013.
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Optimized Profile Descents (OPDs) 

During the past six years, we have completed 59 Standard 

Terminal Arrival Routes with Optimized Profile Descent (OPD) 

capability. OPD allows pilots to set aircraft engines at near idle 

throttle while they descend. Traditional arrival procedures involve 

multiple segments of flight at different levels during descent, 

and each “step-down” requires a change in power settings, like 

walking down the stairs. It is the aviation equivalent of stopand-go driving along the highway. The OPD procedures enable 

arriving aircraft to descend from cruise altitude to final approach 

with few, if any, level-offs; it is like sliding down the bannister. 

With OPD, aircraft reduce fuel consumption, emissions, and 

noise.

The Benefits of the Wide-Area 

Augmentation System (WAAS) 

GPS signals must be enhanced or augmented before they can 

meet the FAA’s stringent requirements for accuracy, integrity, and 

availability for navigation. The Wide-Area Augmentation System 

(WAAS) corrects for GPS signal errors caused by atmospheric 

disturbances, clock drift, and errors in satellite orbit. It also 

provides vital information about the health of each GPS satellite. 

The system consists of multiple ground reference stations 

positioned across the United States that monitor GPS satellite 

data and three geostationary satellites that broadcast correction 

signals to aircraft. 

In the general aviation (GA) community, tens of thousands of 

aircraft are already equipped with WAAS receivers, which can 

improve GPS signal accuracy to within three feet laterally and 

six feet vertically. Pilots of WAAS-equipped GA aircraft are the 

primary users of Localizer Performance with Vertical Guidance 

(LPV) and Localizer Performance (LP) approach procedures. LPV 

and LP procedures enable pilots to descend to heights as low as 

200 feet in low visibility before having to see the runway to land. 

The FAA must develop new approach procedures for each 

airport to take advantage of WAAS. By September 2013, the 

FAA had published 3,822 WAAS-enabled LPV and LP procedures 

at more than 1,800 airports. The agency plans to provide for as 

many as 5,218 LPV and LP facilitated runways in the national 

airspace system by 2018. The latest information can be found 

on FAA’s Satellite Navigation Program website: www.faa.gov/

about/office_org/headquarters_offices/ato/service_units/

techops/navservices/gnss/approaches/index.cfm. 

Equivalent Lateral Spacing Operations 

(ELSO)

Another NextGen area in which progress is being made is in the 

greater use of equivalent lateral spacing operations, or ELSO. The 

enhanced precision of NextGen navigation means that aircraft 

can safely access runways that are slightly closer together. This 

tighter use of space has been used in Atlanta, resulting in an 

increase of 8 to 12 departures per hour. We estimate that this 

saved customers 700,000 minutes, the equivalent of 1.3 years, 

of waiting in line for take-off in Atlanta last year. ELSO is better 

for the environment too, because aircraft spend less time waiting 

on the ground with their engines running. As a result, less fuel is 

burned and pollution is decreased.

We want other major airports to be able to use ELSO, so we 

are changing our air traffic control handbook, which sets the 

standards that controllers use to ensure safe separation between 

aircraft. Since this change has saved airlines approximately $20 

million per year at Atlanta, it could bring large savings when 

used across the nation.

OTHER MAJOR ACCOMPLISHMENTS

Partnership with Industry, Labor Unions, 

and National Transportation Safety Board 

(NTSB) to Help Prevent Accidents

This year, the FAA, the airlines, and the aviation labor unions 

announced a partnership with the NTSB to share summarized 

safety information in order to help prevent accidents. This would 

include summarized safety data from accidents and incidents, 

including that from the Asiana accident in July.

Data collection and control room at the National Airport Pavement Test 

Facility, located at the FAA’s William J. Hughes Technical Center. Photo: FAA.
The nation’s impressive safety record is in part due to an 

unwavering commitment by government and industry to work 

together to monitor data and identify trends to prevent accidents. 

More than 90 percent of air carriers use voluntary reporting 

programs to report trend data. The data are shared with the FAA 

to help identify trends. This data-sharing has led to significant 

safety improvements in training, operations, and maintenance.

The information, which will now be shared with the NTSB 

through the Aviation Safety Information Analysis and Sharing 

(ASIAS) Executive Board, will help determine if an accident is a 

unique event or an indication of systemic risks. 

ASIAS uses aggregate, protected data from industry and 

government voluntary reporting programs, without identifying 

the source of the data, to proactively find safety issues, 

identify safety enhancements, and measure the effectiveness 

of solutions. Begun in 2007, ASIAS now has 44 members and 

receives voluntary data representing 95 percent of all commercial 

air carrier operations. It connects 131 data and information 

IMPROVING THE SAFETY OF GENERAL AVIATION 

General Aviation (GA) refers to flights not conducted by the regularly 

scheduled airlines or the military. GA aircraft include gliders, 

helicopters, air taxis, and small, privately-owned planes, as well 

as high-performance business jets. GA aircraft also provide aerial 

firefighting, disaster relief, aeromedical rescue, law enforcement, 

rush-hour traffic monitoring, and access to remote communities. 

Most of the world’s air traffic is GA traffic, including in the United 

States, where some 3,700 airports are used primarily by GA aircraft, 

while scheduled commercial flights operate from approximately 

378 primary airports. GA activities and products are vital to the 

U.S. economy. They generate more than one percent of our gross 

domestic product and account for some 1.3 million professional 

services and manufacturing jobs. General aviation is also a principal 

training ground for commercial airline pilots. 

Five-Year Safety Plan for GA 

Because the fatal accident rate has been slow to improve, 

the FAA has undertaken a five-year plan to improve GA 

safety. Recommendations are forthcoming on improving the 

aeronautical training and testing materials used for GA pilot 

and instructor certification. And in July, recommendations came 

out for streamlining the GA aircraft certification process, so that 

manufacturers can incorporate safety improvements in new planes 

more easily and inexpensively. The recommendations will also 

facilitate upgrades to the existing GA fleet and provide greater 

flexibility to incorporate future technological advances. 

GA and NextGen 

NextGen, which transitions the national airspace to satellite-based 

navigation, offers technology and procedures especially conducive 

to GA safety:

•	 Wide-Area Augmentation System (WAAS). WAAS improves 

the accuracy, integrity, and availability of Global Positioning 

System (GPS) signals, enabling aircraft to rely on GPS for all 

phases of flight, including precision approaches to airports. 

GPS signal errors are caused by such things as atmospheric 

disturbances, clock drift, and errors in satellite orbit. Tens of 

thousands of GA aircraft are already equipped with WAAS 

receivers.

•	 Localizer Performance with Vertical Guidance (LPV). LPV 

approach procedures enable pilots of WAAS-equipped aircraft to 

descend to as low as 200 feet in poor weather before having to 

see the runway. The availability of LPVs has improved safety and 

access at more than 1,500 small and medium-sized airports used 

by GA. 

•	 Automatic Dependent Surveillance-Broadcast (ADS-B).

ADS-B enhances safety by making an aircraft’s position visible, 

in real time, to air traffic controllers and to other appropriately 

equipped ADS-B aircraft. The ADS-B Traffic Advisory System 

(ATAS) is being developed for the GA community, to provide traffic 

situational awareness for small aircraft to use while en route and 

when landing at small airports. 

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 Small business aircraft at an airport. Photo: FAA.
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sources across the industry and is integrated into the Commercial 

Aviation Safety Team (CAST) process, which uses a data-driven 

strategy to reduce the commercial aviation fatality risk in the 

United States and promote safety initiatives throughout the 

world. CAST’s work, along with new aircraft, regulations, and 

other activities, reduced the fatality risk for commercial aviation 

in our country by 83 percent from 1998 to 2008.

Seven of CAST’s 76 safety enhancements have been derived 

from forward-looking data analysis in ASIAS. Additionally, 

ASIAS stays connected to CAST’s safety enhancements to track 

the effectiveness of those interventions. The databases used 

to identify trends include Flight Operations Quality Assurance 

(FOQA) programs, the Aviation Safety Action Partnership (ASAP), 

the Air Traffic Safety Action Program (ATSAP), FAA surveillance 

data, and many others.

The agreement outlines the procedures, guidelines, and roles 

and responsibilities to be used by the ASIAS Executive Board to 

address specific written NTSB requests for ASIAS information. 

The agreement does not allow any of the parties to use aggregate 

FOQA, ASAP, ATSAP or other non-publicly available data to 

measure individual performance or safety.

The NTSB will initiate written requests for ASIAS information 

related to aircraft accidents involving U.S. air carriers that occur 

in the U.S. and address safety issues that both the NTSB and 

the ASIAS board determine are significant and non-routine 

or reoccurring. The NTSB will not publicly disclose ASIAS 

information it receives via the process unless the ASIAS 

Executive Board agrees.

The NTSB will share with ASIAS its archived air carrier accident 

and incident flight data recorder information related to a request.

Approval of Additional Oxygen Concentrator 

Models

Early in the fiscal year, the FAA approved seven additional 

portable oxygen concentrator models for use aboard airplanes, 

bringing the total number of approved units to 21. This is good 

news for passengers who may need to use medical oxygen.

Portable oxygen concentrators are small, portable devices that 

separate oxygen from nitrogen and other gases in the air and 

provide oxygen to users at greater than 90 percent concentration. 

They do not use compressed or liquid oxygen, which the 

government classifies as hazardous materials.

The Department of Transportation (DOT) requires that U.S. 

airlines and foreign air carriers flying into the U.S. allow 

passengers to use portable oxygen concentrators approved 

by the FAA during all phases of a flight if the unit displays a 

manufacturer’s label that indicates it meets FAA requirements 

for portable medical electronic devices. Moreover, the DOT 

strongly encourages airlines to voluntarily allow the in-flight 

use of oxygen concentrators even if they are not labeled as 

FAA-approved because they pose no safety danger.

Passengers must ensure that the unit is in good working order 

and must be able to respond to the unit’s warning alarms. They 

must protect extra batteries in carry-on baggage from short 

circuits and physical damage. The unit must be properly stowed 

when not in use. Carriers also must allow passengers to operate 

these FAA-approved concentrators while moving about the cabin 

whenever the captain turns off the “Fasten Seat Belt” sign.

Alternative Aviation Fuels Partnership 

with Spain

While we maintain the largest airspace in the world, we cannot 

be fully successful without working hand-in-hand with our 

foreign counterparts. The growth in international traffic makes 

ongoing collaboration with our foreign partners essential. Our 

agency continues to work closely with other countries and 

regions as we all develop new technologies, share ideas, and 

harmonize programs.

In February of 2013, the FAA and the Spanish Aviation 

Safety and Security Agency (AESA) signed a Declaration 

of Cooperation to promote the development and use of 

sustainable alternative aviation fuels in the U.S. and Spain.

The declaration calls for the United States and Spain to 

exchange ideas, information, skills, and techniques, and to 

collaborate on problems and projects of mutual interest in the 

development and use of sustainable alternative aviation fuels. 

The specific areas of cooperation include exchanging information 

about research results, publications, funded research, and 

development activities. The parties will also share best practices 

in alternative jet fuel conversion research, development, and 

deployment. The declaration also enables the FAA’s Office of 

Environment and Energy and the AESA to conduct research 

leading to reductions in the cost of producing alternative 

aviation fuels.
22 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

PERFORMANCE HIGHLIGHTS

Although we take pride in our accomplishments to date on 

various fronts, we remain vigilant in scrutinizing our performance.

At the FAA, we are charged with promoting the safety and 

efficiency of the nation’s aviation system. We maintain the 

system’s integrity and reliability through our broad authority to 

enforce safety regulations and conduct oversight of the civil 

aviation industry. Our strategic plans, annual business plans, 

human capital plans, program evaluations, annual PARs, and 

constant reevaluation of our efforts create a recurring cycle of 

planning, program execution, measurement, verification, and 

reporting. We have created a strong link between resources and 

performance that focuses us on accomplishing defined priorities 

in the context of their costs.

MANAGING PERFORMANCE 

We manage organizational performance through a four-step 

process that is based on best practices borrowed from several 

private and public-sector organizations:

¢ Set Goals 

¢ Plan, Work, and Budget 

¢ Monitor Work 

¢ Assess Results 

Each year we improve on this strategy through adaptation and 

enhancements of technologies that support the process. 

Set Goals 

The first step in the performance management process includes 

consulting with management, employees, and stakeholders to 

identify areas to target for improvement. These areas include 

near-term priorities and long-standing management challenges. 

Goals, performance measures, targets, and initiatives are laid out 

in our strategic plan.

Plan, Work, and Budget 

The second step in evaluating our performance focuses on 

planning, which begins with reviewing the critical activities and 

resources required to achieve our goals. Budget formulation 

involves a series of steps that the FAA takes to determine 

where a program or activity stands at present, where it is going 

(i.e., reasonable expectations for progress), and what else (i.e., 

alternative approaches) the FAA could implement to achieve 

its stated objectives. One of the basic objectives of the budget 

formulation process is to ensure that decision-makers have 

the information they need to determine how best to allocate 

resources to achieve goals.

Our complete FY 2013 Congressional Justification can be found 

at: http://www.dot.gov/sites/dot.dev/files/docs/faa_%20

fy_%202013_budget_estimate.pdf. The FAA also has a section 

in the DOT- prepared Budget Highlights Fiscal Year 2013. This 

document can be found at: http://www.dot.gov/sites/dot.

dev/files/docs/dot_budget_highlights_fy_2013_5MB.pdf. 

In addition, our strategic plan and FY 2013 business plans for 

all FAA organizations are available at www.faa.gov/about/

plans_reports.

Monitor Work 

Monitoring occurs in the course of the various performance 

management activities in which our executives and employees 

participate each month. 

The agency’s overall governance model was revised this year to 

streamline decision-making at the executive level. The revised 

model includes two new groups—an Executive Council and a 

Business Council. 

The Executive Council, headed by the Administrator and including 

a select number of FAA executives, is charged with making major 

strategic externally-facing decisions. The Business Council, 

headed by the Deputy Administrator and including the leaders 

of all FAA organizations, is charged with making major internal 

decisions. Both councils are chartered and follow a formal 

decision-making process, which includes:

¢ Identifying council decisions

¢ Developing options and alternatives

¢ Debating and making decisions

¢ Communicating and monitoring execution.

The new councils were established to: create a more transparent 

decision-making process, one with clear roles; clarify decisions 

across the FAA; clearly communicate decisions by means of 

decision memos; and retire the previous governance structure, 

which included the former Strategy, Budget and Performance 
(SBP) Committee and the Governance Roundtable. The Joint 

Resources Council and NextGen Management Board will 

continue to operate.

However, the Performance Subcommittee from the former 

SBP continues to meet monthly to review goals and related 

performance targets so as to identify areas in special need 

of management’s attention. These sessions also result in 

decisions about resource allocation to support priorities. The 

subcommittee will continue to meet and provide information and 

recommendations to the Business Council until a new structure is 

established for this purpose.

Assess Results 

This is the final, but critically important step in the performance 

management process. Using performance information, the 

agency looks for ways to learn from past performance and 

improve outcomes.

Performance measures and targets support our mission to provide 

the American public with a safe and efficient global aviation 

system. The table on page 27 summarizes how well we are doing 

year-to-year in achieving our performance goals. As the table 

indicates, we have streamlined our strategic focus over the past 

COMMERCIAL SPACE TRANSPORTATION: A BOOMING MARKET 

Just three licensed or permitted commercial space launches took 

place in all of FY 2012. In FY 2013, that number climbed to 18 

licensed or permitted launches. Some of the ongoing activities 

include:

•	 Transporting Supplies to the International Space Station 

(ISS)

In October 2012, Space Exploration Technologies (SpaceX), using 

its Dragon spacecraft, made history as the first private company 

to bring supplies to the ISS. The mission followed SpaceX’s 

successful ISS resupply “demonstration” in FY 2012. Also in 

FY 2013, again with NASA support, Orbital Sciences became the 

second company to demonstrate an ISS cargo resupply capability. 

Having multiple companies capable of flying these missions will 

help keep pace with commercial space demand and provide 

flexibility in the event of a delay in one company’s program. 

•	 Ferrying Crews to the ISS

NASA is partnering with SpaceX, Boeing, and Sierra Nevada 

Corporation to develop vehicles to take astronauts to and from 

the ISS. Sierra Nevada’s Dream Chaser spacecraft passed 

several key tests in August 2013, including evaluation of its 

flight computer, guidance systems, navigation systems, landing 

gear, and nose skid capabilities. Developing a manned American 

transportation capability is critical because NASA currently pays 

the Russian space program $70 million per person per trip, twice 

a year, to ferry our astronauts to the ISS. 

•	 Reusing Space Vehicles

With the “Grasshopper,” SpaceX is now performing multiple tests 

of its reusable take-off and landing design, bringing rocket stages 

directly back to the launch pad for repeat missions. Currently 

rocket pieces land in the ocean or burn up upon reentry. Reusable 

space vehicles will radically reduce the cost of commercial space 

travel.

•	 Transporting Space Tourists

Virgin Galactic will take space tourists on suborbital flights with 

SpaceShipTwo, which began conducting powered test flights 

in 2013. Departures from Spaceport America in New Mexico 

may occur as soon as 2014, with more than 600 advance tickets 

already sold. During what will probably be about a two-hour flight 

offered by Virgin Galactic and other companies, tourists will fly 

62 miles up, experience weightlessness, and enjoy breathtaking 

views of the earth. 

All commercial space launches are regulated and licensed by 

the FAA’s Office of Commercial Space Transportation (AST). The 

significant increase in demand for such missions occurs at a time 

when sequestration limits AST’s ability to process applications for 

new licenses and permits. 

SpaceX-2 Mission Launch: Space Exploration Technologies’ Falcon 9 rocket 

lifts off on March 1, 2013, carrying a Dragon capsule filled with cargo for 

the International Space Station. Photo: NASA.

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24 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

seven years. As our strategic management processes continue 

to mature and the focus becomes sharper, the number and mix of 

performance targets will shift. This plan is reviewed on a yearly 

basis to ensure that we are on track to meet future challenges.

PERFORMANCE GOALS 

When we began reporting against Destination 2025 goals in 

FY 2012, we streamlined and thereby reduced the number of 

performance measures supporting our strategic goals from 

31 to 14. These are the same measures we report on in the 

FY 2013 PAR. We also continue to track other detailed measures 

internally. As part of our work monitoring, we report on the 

status of all measures in our monthly performance meetings and 

on our monthly performance scorecards.

Strategic Goals 

Our strategic goals are: 

¢ Next Level of Safety 

¢ Workplace of Choice 

¢ Delivering Aviation Access through Innovation 

¢ Sustaining Our Future 

¢ Improved Global Performance through Collaboration. 

Next Level of Safety. Achieving the lowest possible accident 

rate and always striving to improve safety ensure the highest 

possible level of safety for the public.

In FY 2013, we met five of six safety goals, missing our target 

for General Aviation Fatal Accident Rate. For a more complete 

discussion of all safety measures and performance results for 

FY 2013, as well as next steps, see page 44.

Workplace of Choice. FAA employees are our most valuable 

resource. We aim to create a workplace of choice marked 

by integrity, fairness, diversity, accountability, safety, and 

innovation. Our workforce will have the skills, abilities, and 

support systems needed to achieve and sustain NextGen.

We operate the largest and safest aerospace system in the 

world. To do this efficiently, we must continually strive for 

stronger leadership, a better-trained and more safety-conscious 

workforce, and improved decision-making. We will not have the 

FY 2013 results for the two workplace of choice performance 

measures until early FY 2014. For a more detailed discussion of 

all workplace measures and performance results for FY 2012, as 

well as next steps, see page 54.

Delivering Aviation Access through Innovation. Our goal is 

to enhance the experience of the traveling public and other users 

by improving access to and increasing the capacity of the nation’s 

aviation system. We will ensure that airport and airspace 

capacity are matched to public needs and are more efficient, 

predictable, and cost-effective.

In FY 2013, we met one of three aviation access measures. For a 

more complete discussion of these measures and performance 

results for FY 2013, as well as next steps, see page 57.

Sustaining Our Future. Our goal is to develop and operate 

an aviation system that is a model of sustainability: reducing 

aviation’s environmental and energy impacts, yet not constraining 

growth. In FY 2013, we met one of our two environmental goals. 

For a complete discussion of all sustainability measures and 

performance results for FY 2013, as well as next steps, see 

page 62.

Improved Global Performance through Collaboration. Our 

goal is to achieve enhanced safety, efficiency, and sustainability 

of aviation world-wide. We aim to provide leadership in 

collaborative standard-setting and help with the creation of a 

seamless global aviation system. In FY 2013, we met our one 

global performance goal. For a complete discussion of this global 

performance measure and performance result for FY 2013, as 

well as next steps, see page 66.

Aviation meteorologists studying weather patterns to provide 

information for planning safe and efficient flight routes. Photo: FAA.
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PERFORMANCE AT A GLANCE 

The following tables summarize our performance on our FY 2013 performance measures to date. The measures are listed in terms of the 

strategic goals and objectives that appear in our strategic plan. The Performance Results section, beginning on page 42, contains full 

discussions of the FAA’s FY 2013 performance and results for each of these measures.

YEAR TO YEAR PERFORMANCE GOALS ACHIEVED

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Number of Performance Targets Met 24 of 30 26 of 29 28 of 31 28 of 31 27 of 29 13 of 14 8 of 12

Percentage of Performance Targets Met 80% 90% 90% 90% 93% 93% 67%

The results of two of the fourteen FY 2013 targets are 

not yet available as of the date of publication. Therefore, 

only targets with known results are reported. The FY 2013 

percentage is computed based on the twelve FY 2013 targets 

for which results are available. To view the full array of 

performance data, please visit: www.dot.gov/budget/

dot-budget-and-performance. For archived performance 

information, visit: www.dot.gov/mission/budget/

dot-annual-budget-and-performance-archive.

Aircraft Rescue and Fire Fighting vehicle. Photo: FAA.
26 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

STRATEGIC GOAL: NEXT LEVEL OF SAFETY

Performance Measure

FY 2013

Target

FY 2013

Results

FY 2013 

Status

FY 2014 

Target

STRATEGIC OBJECTIVE: No Accident-Related Fatalities on Commercial Service Aircraft in the U.S.

Commercial Air Carrier Fatality Rate*

In FY 2013, the commercial air carrier fatality rate will not exceed 7.4 fatalities per 100 

million people on board. 

7.4 1.11 ✓ 7.2

STRATEGIC OBJECTIVE: Aviation Risk Is Reduced through All Phases of Flight (Gate-to-Gate)

Serious Runway Incursions Rate*

Reduce Category A & B (most serious) runway incursions to a rate of no more than .395 

per million operations.

0.395 0.2002 ✓ 0.395

System Risk Event Rate

Limit the rate of the most serious losses of standard separation to 20 or fewer for every 

thousand (.02) losses of standard separation within the National Airspace System.

20 5.662 ✓ 20

Information Security

Ensure no cyber security event significantly degrades or disables a mission-critical FAA 

system.

0 0 ✓ 0

General Aviation Fatal Accident Rate*

Reduce the general aviation fatal accident rate to no more than 1.057 fatal accidents per 

100,000 flight hours.

1.057 1.0613 ✘ 1.05

STRATEGIC OBJECTIVE: There Are No Fatalities Resulting from Commercial Space Launches

Commercial Space Launch Accidents

No fatalities, serious injuries, or significant property damage to the uninvolved public 

during licensed or permitted space launch and reentry activities.

0 0 ✓ 0

STRATEGIC GOAL: WORKPLACE OF CHOICE

Performance Measure

FY 2013

Target

FY 2013

Results4

FY 2013 

Status

FY 2014 

Target

STRATEGIC OBJECTIVE: The FAA Is Widely Recognized as an Employer of Choice

FAA Ratings

Top 75 percent rating on the Best Places to Work (BPTW) Index for Federal Agencies 

Subcomponents.

75% TBD TBD 61%

Outside Ratings

Achieve a 90 percent success rate in the areas of financial management and human 

resources management.5

90% 

success 

rate

TBD TBD 90% 

success 

rate

*This performance measure supports a DOT Agency Priority Goal. 

1 Preliminary estimate until final result can be confirmed by NTSB in March 2015. We do not expect 

any change in the result to be significant enough to change the year-end status of achieving the 

target.

2 Preliminary estimate until the final result becomes available in January 2014. We do not expect 

any change in the result to be significant enough to change the year-end status of achieving the 

target.

3 Preliminary estimate until the final result becomes available in March 2015. We do not expect 

any change in the result to be significant enough to change the year-end status of achieving the 

target. This target was previously displayed rounded to two decimal places as 1.06. For clarity 

in demonstrating that the target was not achieved, it is now displayed rounded to three decimal 

places.

4 Results are not available at this time.

5 For an explanation of “success rate,” see page 56.

✓ Target met ✘ Target not met
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STRATEGIC GOAL: DELIVERING AVIATION ACCESS THROUGH INNOVATION

Performance Measure

FY 2013

Target

FY 2013

Results

FY 2013 

Status

FY 2014 

Target

STRATEGIC OBJECTIVE: NextGen Capabilities Are Fully Implemented and Utilized Based on U.S. Aviation Community System Needs

Air traffic control systems improve the efficiency of airspace* 

By September 30, 2013, replace a 40-year old computer system serving 20 air traffic 

control centers with a modern, automated system that tracks and displays information on 

high altitude planes.

11 8 ✘ N/A

Major System Investments

In FY 2013, maintain 90 percent of major system investments within 10 percent variance 

of current acquisition program baseline at completion.

90% 90% ✓ 90%

STRATEGIC OBJECTIVE: Safety, Airport Infrastructure and Environmental Issues Are Advanced and Leveraged by Full Utilization of NextGen 

Capabilities

LPV or LP Procedures

Publish 500 LPV or LP procedures in FY 2013 to ensure Localizer Performance (LP) or 

Localizer Performance w/Vertical (LPV) procedures are available at 3,800 runways in the 

national airspace system.

500 469 ✘ 400

STRATEGIC GOAL: SUSTAINING OUR FUTURE

Performance Measure

FY 2013

Target

FY 2013

Results

FY 2013 

Status

FY 2014 

Target

STRATEGIC OBJECTIVE: Community Noise Concerns Are Not a Significant Constraint on Growth

Noise Exposure

Reduce the number of people exposed to significant aircraft noise to less than 371,000 in 

calendar year 2013.

371,000 321,000 ✓ 356,000

STRATEGIC OBJECTIVE: Improve the Energy Efficiency of the National Airspace System

National Airspace System Energy Efficiency

Improve aviation fuel efficiency by 16 percent, as measured by the calendar year 2010 

fuel burned per revenue mile flown, relative to the calendar year 2000 baseline.

-16.00% -15.61 ✘ -18.00%

STRATEGIC GOAL: IMPROVED GLOBAL PERFORMANCE THROUGH COLLABORATION

Performance Measure

FY 2013

Target

FY 2013

Results6

FY 2013 

Status

FY 2014 

Target

STRATEGIC OBJECTIVE: Reduce Aviation Accidents and Fatalities World-wide

World-Wide Fatal Aviation Accidents

In FY 2013, limit world-wide fatal accidents in Part 121-like operations to no more than 

20 fatal accidents per million revenue aircraft departures.

20 12 ✓ 21

*This performance measure supports a DOT Priority Goal. 

6 Preliminary estimate until final result becomes available in July 2014 when the International 

Civil Aviation Organization (ICAO) updates their world-wide departure data. We do not expect 

any change in the result to be significant enough to change the year-end status of achieving 

the target.

✓ Target met ✘ Target not met
THE FAA RESPONDS TO NATURAL DISASTERS

Natural disasters made FY 2013 exceptionally challenging for both 

the FAA and the American public. On October 29, 2012, Hurricane 

Sandy brutalized the Caribbean and the U.S. East Coast, killing some 

159 people in the United States alone. New York and New Jersey 

were among the areas hardest hit. Streets, tunnels, and subway 

lines in and around New York City lay under water. The three airports 

in the New York City metropolitan area were inundated. Then, on 

May 19, 20, and 31, 2013, a mere seven months later, deadly 

tornadoes devastated towns in Oklahoma. The heavy rains and high 

winds accompanying the twisters also significantly damaged the 

Mike Monroney Aeronautical Center (MMAC) in Oklahoma City. FAA 

personnel at the center repaired the damage to their own facility 

and turned out in force to help their neighbors. 

Hurricane Sandy in New York and New Jersey: Teamwork 

Saved the Day

The megastorm that hit the New York area on October 29, 2012, 

resulted in record flooding of runways at LaGuardia, John F. Kennedy, 

and Newark airports. In addition, silt and salt water invasion of 

electrical equipment resulted in unparalleled damage to essential 

flight navigational aids, radio transmitters that make possible 

communications between air traffic controllers and pilots, airport 

lighting, and airport surface pumping stations. 

The hurricane caused passenger delays at airports all over the 

country and around the world. But the grounding of planes not only 

affected passengers; it threatened the recovery. Airplanes were 

needed for delivery of the tons of emergency replacement equipment 

and the numerous emergency workers critical to the recovery effort. 

Although many had suffered damage to their own homes, teams of 

FAA employees immediately transitioned to the task of assessing 

and restoring the destroyed FAA equipment at the airports. The 

mission of serving the flying public was paramount.

When many of the parts needed for repair or replacement were 

unavailable, team members, working 14-hour shifts, used their 

engineering expertise, esprit de corps, and sheer creativity to 

rebuild or reconfigure the destroyed facilities and equipment. Three 

days later, on the morning of November 1, 2012, all three airports 

reopened for business. 

The Disaster Relief Appropriations Act of 2013, passed in January, 

provided the FAA with $28.5 million to complete work on the 

systems destroyed by the megastorm. The funding is being used 

to decontaminate and repair or replace navigation, power, and 

communications systems, as well as manned and unmanned 

structures and facilities. 

The teamwork demonstrated during these efforts garnered two 

awards for FAA personnel. The FAA’s Technical Operations group 

won both the New York City Federal Executive Board Award for 

Teamwork and the FAA Eastern Region Regional Administrator’s 

Award for Team Excellence.

Tornadoes in Oklahoma: People Pulled Together

Over a 12-day period this past May, three monster tornadoes ravaged 

Oklahoma. The last of them, on May 31, also inflicted severe damage 

on the MMAC in Oklahoma City. The FAA facility provides consulting, 

engineering, repair services, technical support, and training for air 

traffic control and aviation safety activities in the United States and 

44 other countries. 

The storm destroyed power at the facility, toppled a 70-foot-wide, 

20-foot-high radar antenna onto one building, flooded an air traffic 

building with nearly 100,000 gallons of water, and tore part of the 

roof off an air traffic training building. Of the 128 campus buildings, 

at least a quarter sustained water damage.

The homes of more than 100 FAA employees were severely damaged 

or destroyed. One FAA employee survived the tornado that struck 

Moore, OK, by sheltering with others in a bank vault. The thick walls 

of the vault just barely kept out the storm, but the bank building was 

demolished around them. Another FAA employee was among the 24 

identified men, women, and children killed in the tornado that laid 

waste to Moore.

The disasters generated immense support from people living in 

other states. An automation system support center manager at the 

Dallas/Fort Worth Terminal Radar Approach Control facility who had 

formerly served as an instructor at the FAA Academy on the MMAC 

campus used a week of her annual leave to join Team Rubicon, a 

disaster recovery organization that traveled to Moore to provide 

assistance. In the words of one tornado survivor, the turnout showed 

that “Americans understand that people matter more than politics, 

economics, and many other things that we tend to argue about.”

Many people working at the MMAC performed double duty, both 

responding to the crisis at their workplace and joining search and 

rescue missions in the surrounding neighborhoods. All in the space 

of a few days, for example, one FAA employee, a supervisory lead for 

the center’s AeroNav Products instrument flight procedures review 

team, joined search and rescue operations for a neighborhood hit 

hard by the first tornado, deployed to Moore as part of the Cleveland 

County Task Force after the second tornado, and managed recovery for 

the MMAC operations center after the third tornado. 

28 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

293 mph winds toppled a long-range radar antenna onto a building at the 

MMAC. Photo: FAA.
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ALIGNMENT OF FAA COSTS AND GOALS

We use our Cost Accounting System to track and summarize our 

costs in a matrix format by organizational unit and project. This 

enables the FAA to monitor that our spending is in alignment 

with our strategic goals. At the beginning of each project, we 

determine the degree to which the project will contribute to one or 

more of our strategic goal areas: Next Level of Safety, Workplace 

of Choice, Delivering Aviation Access through Innovation, 

Sustaining our Future, and Improved Global Performance through 

Collaboration. We allocate actual project costs to the strategic 

goal areas supported by the project. Because we also routinely 

accumulate costs by organizational unit, we are then able to 

assign total net costs among our four lines of business and our 

combined staff offices, by strategic goal area.

The FAA total net cost of $16.2 billion was allocated to our 

strategic goal areas as described below and as shown in Note 11 

of the financial statements on page 102.

Next Level of Safety. More than $9.9 billion, or approximately 

60 percent, of our total net cost was devoted to our primary goal 

of ensuring the safety of the national airspace system.

¢ The Office of Airports (ARP) directed $1.9 billion to establish 

safe airport infrastructure.

¢ The Air Traffic Organization (ATO) spent approximately $6.3 

billion, largely to maintain the safe separation of aircraft in 

the air and on the ground.

¢ The Aviation Safety Organization (AVS) spent just under $1.4 

billion on its programs to regulate and certify aircraft, pilots, 

and airlines, directly supporting the safety of commercial and 

general aviation.

¢ The Office of Commercial Space Transportation (AST), the other 

FAA staff offices, and other programs spent slightly less than 

$14 million to further support the agency’s safety mission.

Workplace of Choice. Approximately $585 million supported 

our workplace of choice goal, to which nearly all the lines of 

business and staff offices contributed.

Delivering Aviation Access Through Innovation.

Approximately $5.7 billion—or about 35 percent of total net 

costs—was assigned to support our goal of expanding the 

capacity of the national airspace system, particularly through the 

pursuit of programs contributing to the NextGen initiative.

¢ The ATO spent approximately $4.1 billion, largely to finance 

its facilities and equipment projects.

¢ The ARP spent over $1.7 billion to enhance the capacity of 

the country’s airports through runway projects and other 

efforts.

¢ The AST contributed nearly $5 million to improve commercial 

space launch capabilities through its spaceport grant 

program.

Sustaining Our Future. As a whole, we committed 

approximately $66.7 million to support environmental 

sustainability. This funding included support for research 

programs in alternative fuels and increases in aircraft energy 

efficiency. AIP grants were also targeted toward reducing 

aviation noise near large airports.

Improved Global Performance Through Collaboration.

As a whole, we committed approximately $3.5 million to 

strengthening our international leadership role. These efforts 

included programs aimed at reducing fatal accidents around 

the world. Funding for training and technical assistance helped 

promote safety standards as well.

Passenger jets at the international terminal of the Miami International Airport. Photo: BigStock.com.

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
30 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

FINANCIAL HIGHLIGHTS

DISCUSSION AND ANALYSIS OF THE 

FINANCIAL STATEMENTS

FAA prepares annual financial statements in conformity with 

accounting principles generally accepted in the United States. 

The financial statements are subject to an independent audit to 

ensure that they are free from material misstatement and that 

they can be used to assess FAA performance.

FY 2013 Financial Statement Audit

The Chief Financial Officers Act of 1990 (Public Law 101–576), 

as amended by the Government Management Reform Act 

of 1994, requires that financial statements be prepared by 

certain agencies and commercial-like activities of the federal 

government and that the statements be audited in accordance 

with government auditing standards. FAA is required to prepare 

its own financial statements under OMB Bulletin No. 14–02, 

Audit Requirements for Federal Financial Statements. DOT’s 

Office of Inspector General (OIG) is statutorily responsible for 

the manner in which the audit of FAA’s financial statements 

is conducted. The OIG selected KPMG LLP, an independent 

certified public accounting firm, to audit FAA’s FY 2013 financial 

statements. 

In 2002, DOT’s OIG and Chief Financial Officer, along with 

FAA’s Chief Financial Officer, established an Audit Coordination 

Committee to promote and encourage open communication 

among the OIG, FAA management, and the independent 

auditors to resolve issues that arise during the audit and to 

monitor the implementation of audit recommendations. The 

committee is chaired by the Director of the Office of Financial 

Management and includes representatives from the OIG; DOT’s 

Office of Financial Management; FAA’s Assistant Administrator 

for Regions and Center Operations; and ATO’s Chief Operating 

Officer. In 2006, committee participation was expanded to include 

representatives from the Chief Counsel’s Office, the Assistant 

Administrator for Human Resources Management, Information 

Services, and Airports. 

KPMG LLP has rendered an unmodified opinion on FAA’s FY 2013 

financial statements.

Understanding the Financial Statements

FAA’s Consolidated Balance Sheets, Statements of Net Cost, 

Changes in Net Position, and Combined Statements of Budgetary 

Resources, have been prepared to report the financial position 

and results of operations of FAA, pursuant to the requirements 

of the Chief Financial Officers Act of 1990 and the Government 

Management Reform Act of 1994. The following section provides 

a brief description of (a) the nature of each financial statement 

and its relevance to FAA, (b) significant fluctuations from FY 2012 

to FY 2013, and (c) certain significant balances, where necessary, 

to help clarify their link to FAA operations.

Balance Sheet

The balance sheet presents the amounts available for use by FAA 

(assets) against the amounts owed (liabilities) and amounts that 

comprise the difference (net position). 

Composition of Assets 

as of September 30, 2013

n Fund Balance with Treasury

n Investments

 

n Other

n Property, plant and equipment

10%

43% 44%

3%

Assets Comparison 

(Dollars in Thousands)

0 3,000,000 6,000,000 9,000,000 12,000,000 15,000,000

 Other 

 Property, plant 

and equipment 

 Investments 

 Fund balance 

with Treasury 

n 2013 n 2012

$ THOUSANDS
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Composition of Liabilities

as of September 30, 2013

n Accounts payable

n Grants payable

n Environmental liabilities

n Employee related and other 

liabilities

n Federal employee benefits

9%

18%

17%

22%

34%

Liabilities Comparison

(Dollars in Thousands)

0 400,000 800,000 1,200,000 1,600,000

 Accounts payable 

 Grants payable 

 Environmental 

liabilities 

 Federal employee 

benefits 

 Employee related 

and other liabilities 

n 2013 n 2012

$ THOUSANDS

Assets

Total assets were $31.4 billion as of September 30, 2013. The 

FAA’s assets are the resources available to pay liabilities or 

satisfy future service needs. The Composition of Assets chart 

depicts major categories of assets as a percentage of total 

assets. 

The Assets Comparison chart presents comparisons of major 

asset balances as of September 30, 2012 and 2013. 

Fund balance with Treasury (FBWT) represents 10 percent of the 

FAA’s current period assets and consists of funding available 

through the Department of Treasury accounts from which the 

FAA is authorized to make expenditures to pay liabilities. It also 

includes passenger ticket and other excise taxes deposited to the 

Airport and Airway Trust Fund (AATF), but not yet invested. Fund 

balance with Treasury increased from $3.1 billion to $3.3 billion. 

At $13.8 billion, Investments represent 44 percent of the FAA’s 

current period assets, and are derived from passenger ticket and 

other excise taxes deposited to the AATF and premiums collected 

from the Aviation Insurance Program. These amounts are used to 

finance the FAA’s operations to the extent authorized by Congress 

and to pay potential insurance claims. Investments increased by 

$1.5 billion due to an increase in excise tax revenues of $317.2 

million, coupled with yearly War Risk premiums of $164.2 million, 

and earned interest of $248.0 million. Additionally, investments 

are not liquidated until needed to fund expenses which accounts 

for the remaining increase on a comparative basis. 

At $13.4 billion, General property, plant, and equipment, net

(PP&E) represents 43 percent of the FAA’s assets as of September 

30, 2013, and primarily comprises construction-in-progress 

related to the development of the national airspace system 

assets, and capitalized real and personal property. There was 

a decrease of $21.8 million in the total composition of PP&E as 

purchases of equipment and additions to construction-in-progress 

through the normal course of business were less than the offsets 

by retirements, disposals, and depreciation.

Liabilities 

As of September 30, 2013, FAA reported liabilities of $4.4 

billion. Liabilities are probable and measurable future outflows 

of resources arising from past transactions or events. The 

Composition of Liabilities chart depicts the FAA’s major 

categories of liabilities as a percentage of total liabilities. 

The Liabilities Comparison chart presents comparisons of major 

liability balances between September 30, 2012 and September 

30, 2013. Below is a discussion of the major categories. 

At $1.5 billion, Employee related and other liabilities represent 

34 percent of FAA’s total liabilities. These liabilities decreased by 

$64.1 million as of September 30, 2013 and are comprised mainly 

of $175.2 million in advances received, $201.3 million in Federal 

Employee’s Compensation Act payable, $452.2 million in accrued 

payroll and benefits, $526.6 million in accrued leave and benefits, 

$2.7 million in legal claims liability and $78.0 million in capital 

lease liability. 

At $973.0 million, Federal employee benefits represent 22 

percent of the FAA’s current year liabilities, and consist of the 

FAA’s expected liability for death, disability, and medical costs 

for approved workers compensation cases, plus a component 

for incurred but not reported claims. The Department of Labor 

(DOL) calculates the liability for the DOT, and the DOT attributes 

a proportionate amount to the FAA based upon actual workers’ 

compensation payments to the FAA employees over the 
32 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

Composition of Net Cost

as of September 30, 2013

n Air Traffic Organization

n Aviation Safety

 

n Airports

n Regions and Center 

Operations & All Other

67%

2%

9%

22%

Net Cost Comparison

(Dollars in Thousands)

0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000

Regions and Center

Operations & All Other

Aviation Safety

Airports

Air Traffic

 Organization

n 2013 n 2012

$ THOUSANDS

preceding four years. This liability is updated on an annual basis 

at year end. 

Environmental liabilities represent 17 percent of FAA’s total 

liabilities and were $751.7 million as of September 30, 2013, 

compared with $810.4 million a year earlier. Environmental 

liabilities include a component for remediation of known 

contaminated sites and the estimated environmental cost to 

decommission assets presently in service. 

The FAA’s Grants payable are estimated amounts incurred but 

not yet claimed by Airport Improvement Program (AIP) grant 

recipients and represent 18 percent of liabilities. Grants payable

increased by $132.2 million. Accounts payable decreased $57.8 

million and are amounts the FAA owes to other entities for 

unpaid goods and services. 

Statement of Net Cost

The Statement of Net Cost presents the cost of operating the 

FAA programs. The gross expense less any earned revenue for 

each FAA program represents the net cost of specific program 

operations. The FAA has used its cost accounting system to 

prepare the annual Statement of Net Cost since FY 1999. 

As of September 30, 2013, and September 30, 2012 FAA’s net 

costs were $16.2 billion and $16.1 billion, respectively. The 

Composition of Net Cost chart illustrates the distribution of costs 

among the FAA’s lines of business.

The Net Cost Comparison chart compares September 30, 2012, 

and September 30, 2013 net costs. 

With a net cost of $10.9 billion, the Air Traffic Organization is 

FAA’s largest line of business, comprising 67 percent of total 

net costs. The Air Traffic Organization’s net costs decreased by 

$292.2 million, on a comparative basis, primarily from decreases 

in contractor services, labor costs, and travel expenses offset by 

increases in property related activities, telecommunications and 

utilities costs. 

The FAA’s second largest line of business is Airports with a net 

cost of $3.6 billion as of September 30, 2013, which is 22 percent 

of the FAA’s total net costs. Net costs increased by $463.3 million 

from the prior year primarily due to an increase in the Airport 

Improvement Program grant disbursements and accruals on a 

comparative basis.

The net cost of Aviation Safety represents 9 percent of the FAA’s 

total net costs, while Regions and Center Operations and All 

Other comprise 2 percent of total net costs. 

Statement of Changes in Net Position

The Statement of Changes in Net Position presents those 

accounting items that caused the net position section of the 

balance sheet to change from the beginning to the end of the 

reporting period. Various financing sources increase net position. 

These financing sources include appropriations received and nonexchange revenue, such as excise taxes and imputed financing 

from costs absorbed on the FAA’s behalf by other federal 

agencies. The agency’s net cost of operations and net transfers 

to other federal agencies serve to reduce net position. 

The FAA’s Cumulative Results of Operations for the period ending 

September 30, 2013, increased by $1.8 billion due primarily 

to a combination of financing sources of $4.4 billion from 

appropriations used, non-exchange revenue of $13.1 billion, 

imputed financing of $571.0 million, and donations of property 
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Statement of Budgetary Resources Comparison

(Dollars in Thousands)

0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000

Gross outlays

Obligations

 incurred

Budget

 authority, gross

n 2013 n 2012

$ THOUSANDS

FAA Enacted Budget – FY 2013

(Dollars in Thousands)

n Operations

n Facilities & Equipment (F&E)

n Research, Engineering & 

Development (R,E&D) 

n Grants-in-Aid for Airports (AIP)

$9,395,665

 $3,343,300

 $2,622,197

 $158,792

of $78.6 million offset by transfers out of $147.7 million and net 

costs of $16.2 billion. Unexpended appropriations decreased 

slightly by $106.6 million. 

Statement of Budgetary Resources

This statement provides information on the budgetary 

resources available to the FAA as of September 30, 2013, 

and September 30, 2012, and the status of those budgetary 

resources. 

Budget authority, gross is the authority provided to the FAA by 

law to enter into obligations that will result in outlays of federal 

funds. Obligations incurred result from an order placed, contract 

awarded, service received, or similar transaction, which will 

require payments during the same or a future period. Obligations 

incurred are sourced from current year budget authority and 

unobligated balances carried forward. Gross outlays reflect the 

actual cash disbursed by the Treasury for the FAA obligations. 

The FAA reported gross budget authority of $21.2 billion as of 

September 30, 2013, compared to $21.9 billion as of September 

30, 2012. Obligations incurred decreased $825.7 million to $21.4 

billion. Gross outlays decreased by $284.9 million to $21.5 billion. 

Stewardship Investments

Stewardship investments are substantial investments made by 

the FAA for the benefit of the nation, but do not result in physical 

ownership of assets by the FAA. When incurred, these amounts 

are treated as expenses in the Consolidated Statements of Net 

Cost. Our Required Supplementary Stewardship Information 

(RSSI) includes disclosure of stewardship investments over the 

last five years. These are disclosures of Airport Improvement 

Program grants by State/territory, and research and development 

investments. The FAA recognizes the grants expense as the 

recipient accomplishes the improvement work.

The FAA’s research and development expenses decreased slightly 

in FY 2013 by $9.4 million. Two areas of focus this year included 

lithium battery testing for cargo aircraft to help ensure the safe 

transport of lithium batteries in quantity and wind study research 

using NextGen operational performance simulations to help 

sync the reporting of accurate wind conditions in the NextGen 

operational environment. 

Limitations of the Financial Statements

The FAA has prepared its financial statements to report its 

financial position and results of operations, pursuant to the 

requirements of the Chief Financial Officers Act of 1990 and the 

Government Management Reform Act of 1994.

While the FAA statements have been prepared from its books 

and records in accordance with the formats prescribed by the 

OMB, the statements are in addition to the financial reports used 

to monitor and control budgetary resources, which are prepared 

from the same books and records.

These statements should be read with the understanding that 

they are for a component of the United States Government, a 

sovereign entity. Liabilities not covered by budgetary resources 

cannot be liquidated without the enactment of an appropriation 

by Congress, and payment of all liabilities, other than for 

contracts, can be abrogated by the federal government.
34 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

Budgetary Integrity: FAA Resources and 

How They Are Used 

In FY 2013, the AATF provided approximately 71 percent of our 

enacted budgetary authority. Created by the Airport and Airway 

Revenue Act of 1970, the AATF derives its funding from excise 

taxes and earned interest. It provides a source of revenue to 

finance investments in the airport and airway system, and covers 

a portion of the FAA operating costs.

Aviation excise taxes, which include taxes on domestic 

passenger tickets, freight waybills, general and commercial 

aviation fuel, and international departures and arrivals, are 

deposited into the AATF. The U.S. Department of the Treasury 

maintains the AATF and invests in government securities.

Interest earned is deposited into the AATF. Funding is withdrawn 

as needed and transferred to each FAA appropriation budget line 

to cover obligations.

We are financed through annual and multiyear appropriations 

authorized by Congress. The FY 2013 enacted budget of $15.3 

billion was a decrease from the FY 2012 enacted level of $15.9 

billion. This included $10.9 billion from the AATF and $4.4 billion 

from the General Fund, as enacted by the Consolidated and 

Further Continuing Appropriations Act, 2013.

The FAA has four appropriations. The largest, Operations, is 

funded by both the Treasury’s General Fund and the AATF. In 

FY 2013, the AATF provided 53.7 percent of the revenue for 

Operations. The AATF is the sole revenue source for our three 

capital investment appropriations: 

¢ Grants-in-Aid for Airports (AIP) 

¢ Facilities and Equipment (F&E) 

¢ Research, Engineering, and Development (R,E,&D).

Operations. The Operations appropriation finances operating 

costs, maintenance, communications, and logistical support 

for the air traffic control and air navigation systems. It also 

funds the salaries and costs associated with carrying out our 

safety inspection and regulatory responsibilities. In addition, 

the account covers administrative and managerial costs for our 

international, medical, engineering, and development programs, 

as well as for policy oversight and overall management functions.

The FY 2013 Operations appropriation was $9.2 billion, which 

was augmented by a $.2 billion transfer from AIP, for a total 

funding level of $9.4 billion, approximately 3 percent less 

than in FY 2012. This decrease is primarily attributable to the 

sequestration resulting from the Budget Control Act of 2011, 

offset by the transfer into Operations enabled by the Reducing 

Flight Delays Act.1

AIP. The Secretary of Transportation is authorized to award 

grants for planning and development to maintain a safe and 

efficient nationwide system of public airports. These grants fund 

approximately one third of all capital development at the nation’s 

public airports. Grants are issued to maintain and enhance airport 

safety, preserve existing infrastructure, and expand capacity and 

efficiency throughout the system. The program also supports 

noise compatibility and planning, the military airport program, 

reliever airports, and airport program administration.

FY 2013 funding for AIP was $3.343 billion. Funding for the Small 

Community Air Service Development program was $5.9 million. 

F&E. The programs funded by the F&E appropriation are our 

principal means of modernizing and improving air traffic control 

and airway facilities, particularly through programs supporting 

NextGen. The account finances major capital investments to 

enhance the safety and capacity of the nation’s airspace. F&E 

was funded at $2.62 billion in FY 2013, a 4 percent decrease from 

FY 2012. This funding included $28.5 million from the Hurricane 

Sandy Supplemental Bill and a transfer of $5.8 million into 

F&E enabled by the Reducing Flight Delays Act. Several major 

systems that contribute to the NextGen effort reached significant 

milestones in FY 2013.These include: Automatic Dependent 

Surveillance-Broadcast (ADS-B), Data Communications for 

Trajectory-Based Operations (Data Comm), and En Route 

Automation Modernization (ERAM).

R,E,&D. The FY 2013 appropriation for R,E,&D of $158.79 million 

was about 5 percent lower than the FY 2012 level. The reduction 

for FY 2013, was again primarily attributable to the sequester. 

1 FY 2013’s Reducing Flight Delays Act (P.L. 113-9) enabled a $253 million 

expenditure transfer from Grants-In-Aid for Airports to Operations and 

Facilities & Equipment.
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MANAGEMENT CONTROL HIGHLIGHTS

IMPROVING FINANCIAL 

MANAGEMENT 

Cost-Effectiveness and Efficiency 

Our strategic plan includes a strategic objective to improve the 

financial management of the agency while delivering quality 

customer service. A cost-control target is tracked each month. 

By adhering to this target, the agency was able to achieve $102 

million in recurring savings in FY 2012 (from efforts put in place 

between FY 2005 to FY 2011). FAA efforts in this area for FY 2013 

are described below. 

Service Area Restructuring. By reevaluating and changing the 

structure of ATO service areas, the FAA sharply reduced staffing 

requirements. This activity achieved savings of $7 million in 

FY 2013.

Worker’s Compensation Consolidation. The FAA has saved 

a total of $119 million in workers’ compensation claims since 

FY 2005. Due to the FAA’s success in this area, the DOT gave 

us centralized, department-wide responsibility for managing 

workers’ compensation claims. In FY 2013, we saved $7 million 

in worker’s compensation costs.

Information Technology (IT). IT investments can be expensive 

while the technology quickly becomes obsolete. To address these 

issues, the FAA is becoming more strategic about IT decisions 

through the implementation of agency-wide IT initiatives that 

consolidate resources and improve efficiency. This yielded a cost 

savings of more than $36 million in FY 2013.

The Strategic Sourcing for the Acquisition of Various 

Equipment and Supplies (SAVES) Program. The SAVES 

program is an ambitious effort that began in FY 2006 to 

implement private-sector best practices in the FAA’s procurement 

of administrative supplies, equipment, IT hardware, commercial 

off-the-shelf (COTS) software, and courier services. The SAVES 

program oversees eleven national contracts in five different 

categories. The SAVES program has enabled us to gain better 

financial oversight in addition to significant cost savings.

Through SAVES contracts, we achieved more than $17 million in 

cost savings for FY 2013 and a total savings of more than $147 

million since program implementation. SAVES contracts produced 

the following savings rates: 

¢ 21 percent for office supplies 

¢ 32 percent for office equipment 

¢ 12 percent for IT hardware 

¢ 11 percent for COTS software 

¢ 4 percent for ground and overnight delivery.

In addition to cost control, each FAA organization develops, 

tracks, and reports quarterly on a comprehensive measure of its 

operating efficiency or financial performance. 

Cost per Controlled Flight. This cost-based metric provides a 

broader historic picture of overall air traffic control cost efficiency 

at various FAA organizational levels. Cost per FAA-controlled 

flight is reviewed regularly to determine the efficacy of periodic 

benchmarking initiatives conducted in the United States and with 

our international counterparts. 

Overhead Rate. We capture overhead rates to provide insight 

into the cost-effectiveness of overhead resources at the FAA. The 

resulting performance indicator informs management decisions 

concerning the allocation of general and administrative services 

and mission support services.

Regulatory Cost per Launch. This metric provides trend data 

for the average regulatory cost per launch of commercial space 

vehicles. This information is used to track how efficiently the AST 

mission is interacting with the commercial space industry. Trend 

data are also reviewed to forecast what human resources will be 

needed to regulate and support launch and reentry operations.
36 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

IMPLEMENTING EXPENSE CONTROLS 

The FAA has improved its oversight of the acquisition process 

to help ensure that the agency is a responsible steward of the 

taxpayers’ money. Enhanced processes and controls help us 

to better manage resources and arrive at sounder business 

decisions in relation to our external contracts.

Procurements. In 2005, the FAA’s Chief Financial Officer (CFO) 

was directed to exercise greater oversight and fiscal control 

over all agency procurements costing $10 million or more. 

Since that time, the Office of Financial Controls has evaluated 

446 procurement packages with an estimated cost of $52.3 

billion. Our ability to better define program requirements, 

more accurately estimate costs, and substantiate those cost 

estimates has greatly improved. With these improvements, we 

have established proper controls and can manage our contract 

resources more effectively.

The Chief Acquisition Officer established an Acquisition 

Executive Board during FY 2009 to oversee procurement policy. 

The Acquisition Executive Board is working to streamline and 

standardize the processes by which acquisitions are approved 

and managed. As part of this effort, a separate board (the 

Support Contracts Review Board) was established to review 

and approve any proposed support contract with a value of 

$10 million or more. This board is composed of executives from 

the CFO’s office, the Office of Acquisitions and Contracting, and 

the Office of the Chief Counsel. It makes recommendations to the 

CFO for approval or disapproval of each large support contract.

Information Technology. To better coordinate IT efforts, any 

IT-related spending in excess of $250,000 must be approved by 

the FAA’s Chief Information Officer. This requirement ensures 

that our IT investments are coordinated and fit into the agencywide IT strategy. The Information Technology Shared Services 

Committee serves as a forum to direct the effective, secure, and 

cost-efficient application of administrative, IT-related personnel 

resources, and oversees funding to meet our IT needs.

FAA personnel validating equipment installation prior to operational testing. Photo: FAA.
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Conferences. In 2009, our CFO and Chief Acquisition Officer 

issued guidance requiring that all conferences costing $100,000 

or more be approved by the CFO before funds were committed. 

As we have continued to strengthen policies in this area, in 

2010, the level of approval was elevated to the Administrator, 

and in 2012, to the Deputy Secretary of DOT. Also beginning in 

2012, the Administrator took on the authority of approving all 

conferences costing $20,000 or more. 

FINANCIAL MANAGEMENT 

INTEGRITY: CONTROLS, 

COMPLIANCE, AND CHALLENGES

In a November 18, 2013, memorandum, the FAA Administrator 

reported to the Secretary of the DOT an unqualified statement 

of assurance under the Federal Managers’ Financial Integrity 

Act (FMFIA). Every year, FAA program managers assess the 

vulnerability of their programs in terms of the strength of 

their activity management controls. On the basis of these 

assessments, reviews are conducted to determine their 

compliance with Sections 2 and 4 of FMFIA. The head of each 

office then reports in writing to the Administrator any potential 

material internal control weakness or system nonconformance. 

Identified weaknesses deemed material are consolidated in 

a memorandum with a Statement of Assurance signed by the 

Administrator and sent to the DOT Secretary. Our response 

becomes a part of the DOT Statement of Assurance sent to 

the President. In addition to reporting our compliance with the 

FMFIA, we report our compliance with the Federal Financial 

Management Improvement Act (FFMIA). The FFMIA requires 

an assessment of adherence to standard government financial 

management system requirements, accounting standards, and 

U.S. Standard General Ledger transaction-level reporting. For 

FY 2013, we are reporting overall substantial compliance.

IMPROPER PAYMENTS ELIMINATION 

AND RECOVERY ACT OF 2010 (IPERA)

The Improper Payments Information Act of 2002 (IPIA), as 

amended by the Improper Payments Elimination and Recovery 

Act (IPERA) of 2010, requires federal agencies to annually report 

to the President and the Congress information on improper 

payments. 

IPERA encompasses a systematic approach that allows the 

federal government to address a difficult and often complex 

problem. The federal government loses billions of dollars a year 

on improper payments. OMB Circular A-123, Appendix C (April 

14, 2011), provides government-wide guidance for IPERA.

The purpose of these regulations and guidance is to improve 

agency efforts to reduce and recover improper payments. 

Specifically, IPERA requires agencies to identify and estimate 

improper payments that they have made, conduct payment 

recovery audits, reuse recovered improper payments, and 

complete lists of compliance actions per the law. 

In simple terms, an improper payment based on IPERA is any 

payment that should not have been made at all, that was made 

in the incorrect amount (overpayments or underpayments), or 

that was made to an ineligible recipient or for an ineligible 

good or service. Additionally, payments made without complete 

supporting documentation and duplicate payments are also 

considered improper payments. This is the level of detail applied 

by the FAA to monitor payments and assess if an improper 

payment has occurred. 

Based on IPERA, agencies are required to review all programs 

and financial activities in order to identify those that are most 

susceptible to improper payments. This risk assessment allows 

agencies to identify areas that have the potential for “significant” 

improper payments. 

The FAA’s FY 2013 IPERA review did not find any programs or 

activities with “significant erroneous payments,” as determined 

in accordance with the criteria of the Office of Management and 

Budget (OMB), which identifies erroneous payments as those 

exceeding both $10 million and 2.5 percent of program payments 

or exceeding $100 million. 
38 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

MANAGEMENT ASSURANCES

Federal Managers’ Financial Integrity Act (FMFIA) 

Assurance Statement— Fiscal Year 2013

The FAA is responsible for establishing and maintaining effective internal control and financial management systems 

that meet the objectives of the FMFIA and OMB Circular A-123, titled Management’s Responsibility for Internal Control.

These objectives are to ensure:

¢ Effective and efficient operations

¢ Compliance with applicable laws and regulations

¢ Reliable financial reporting

Internally, we assess the vulnerability of our programs and systems through the FMFIA. We are pleased to report that, 

taken as whole, the management controls and financial management systems in effect from October 1, 2012, through 

September 30, 2013, provide reasonable assurance that the objectives of both Sections 2 and 4 of the FMFIA are being 

met. Management controls are in place and our financial systems conform to government-wide standards.

In addition, the FAA conducted its assessment of the effectiveness of internal control over financial reporting. This 

includes internal control related to the preparation of our agency’s annual financial statements, as well as safeguarding 

of assets and compliance with applicable laws and regulations governing the use of budgetary authority and other 

laws and regulations that could have a direct and material effect on the financial statements, in accordance with the 

requirements of Appendix A of OMB Circular A-123.

The results of this evaluation provide reasonable assurance that the FAA’s internal control over financial reporting is 

operating effectively as of September 30, 2013. Due to the unlimited scope of processes tested this year and the fact 

that no material weaknesses were reported on our financial statements, the FAA is issuing an unqualified statement of 

assurance.

Michael P. Huerta 

Administrator 

November 18, 2013
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FINANCIAL MANAGEMENT SYSTEMS STRATEGY AND ACTIONS

FINANCIAL SYSTEMS STRATEGY

Our agency’s financial systems strategy is based on a framework 

called the Federal Enterprise Architecture (FEA). FEA is 

recognized across the federal government as the best practice 

for integrating strategic, business, and technology management 

as part of organizational design and performance improvement. 

Our financial management systems strategy can be divided into 

five categories: Business, Applications, Data, Information, and 

Services. A summary of each is provided below:

¢ Business—Initiate federated financial IT management as 

a new business model across the agency, enabling joint 

strategic planning and project implementation between FAA 

organizations.

¢ Applications—Reduce the current financial management 

system portfolio through a financial systems modernization 

program that addresses redundancies in key financial and 

mixed financial business areas. 

¢ Data—Implement a financial data management roadmap 

and stewardship council to govern the use and sharing 

of FAA financial data as a common asset; reduce the 

redundancy of data; and improve the quality of data to 

facilitate decision-making.

¢ Information—Build an FAA-wide financial data 

“warehouse” to increase the consistency of reporting while 

maintaining each organization’s ability to meet individual 

core mission area business reporting requirements.

¢ Services—Define and deliver shared operational and 

infrastructure services for the FAA’s multiple financial 

systems.

SYSTEMS CRITICAL TO FINANCIAL 

MANAGEMENT AND ACTIONS 

The FAA is working with the DOT to consolidate and modernize 

our financial management systems, and streamline our processes 

and reports. Maintaining fewer systems will enable our agency 

to operate more efficiently. We will have fewer points of data 

entry, fewer systems to reconcile with the official sources of the 

data, and fewer systems to train our employees how to use. 

Below is a summary of the systems critical to our financial 

management and the actions or improvements that are recently 

completed, underway, or planned for each. 

Accounting. Delphi is the DOT’s comprehensive financial 

management system. The FAA uses Delphi to record financial 

transactions and account balances. Currently, the DOT is working 

on a major upgrade to Delphi. One benefit of upgrading will be 

a system design that more fundamentally addresses the unique 

accounting requirements of federal government entities, thus 

increasing efficiency and data integrity. Another benefit is that 

we will be better able to keep pace with security “patches,” 

which are changes to the system issued by the manufacturer to 

continually address security vulnerabilities. 

During FY 2013, we also worked on requirements and an 

implementation plan for moving vendor payments from paper 

to electronic invoicing. As of FY 2012, we already implemented 

electronic invoicing for all grants payments. 

Acquisition. PRISM is an internet-based acquisition system 

that is integrated with Delphi’s purchasing functions to provide 

vendor information and communicate accounting information. In 

the near term, we will retrofit PRISM to work with the upgraded 

version of Delphi. In the longer term, we will be migrating toward 

a business process management suite of tools that will automate 
40 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

and integrate all activities related to procurement and contracts 

management. We are continuing to pilot business process 

automation tools in preparation for fully implementing them.

Budget. During FY 2013, we eliminated duplicative “cuff 

record” systems, moving to a single system for all Operations 

account needs. Although cuff record systems are an important 

supplement to Delphi because they have allowed our 

organizational units to manage their planned obligations at a 

much lower level of detail than practical or possible using Delphi 

alone, a single system increases efficiency and accuracy because 

there are fewer systems to maintain and reconcile to Delphi. 

Financial Reporting. The current FAA financial reporting 

systems are the Report Analysis and Distribution System (RADS); 

the Regional Information System; the Financial Management 

System; and the Research, Engineering & Development 

Monitoring, Analysis and Control System. RADS is currently 

being replaced with the Platform for Unified Reporting system, 

which will provide management with more comprehensive 

analytic tools to support better planning and decision-making. 

Looking even further into the future, we are studying options 

for combining these systems’ functionalities into a single data 

warehouse. 

Timekeeping. While timekeeping systems are not technically 

financial management systems, they are integral to proper 

reporting of workforce-related costs. CRU-X is a suite of software 

used by the Air Traffic Organization (ATO) for timekeeping, 

schedule and position management, and labor distribution 

reporting. During FY 2013, we decreased the footprint of CRU-X 

by migrating more than 15,000 ATO employees from CRU-X to 

Castle, which is now the designated agency-wide timekeeping 

system. 

A component of the CRU-X suite is CRU-ART, which has been 

used for schedule and position management of air traffic 

controllers. Now 15 years old, this legacy system is at the end of 

its useful life. Its operation requires more than 350 servers—one 

in each location where air traffic controllers work. We are 

currently evaluating requirements to replace the CRU-ART 

system with a new, modernized version. 
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42

P E R F O R M A N C E R E S U LT S
43

PERFORMANCE

R E S U LT S

PERFORMANCE MEASURES OVERVIEW

In this section, we discuss our progress in achieving our 14 

performance measures. The measures are organized by strategic 

goal and objective. Our agency has five overarching strategic 

goals: 

1. Next Level of Safety (page 44) 

2. Workplace of Choice (page 54)

3. Delivering Aviation Access through Innovation

(page 57)

4. Sustaining our Future (page 62)

5. Improved Global Performance through Collaboration

(page 66) 

We provide the FY 2013 target, a discussion of our FY 2013 

performance, and, when available, five years of historical trend 

data. We have also prepared a graph of performance measures 

with three or more years of data. 

In FY 2013, we achieved 8 of the 12 performance targets for 

which we had end-of-year data. Two performance measures 

(FAA Ratings and Outside Ratings) did not have any data results 

available at the time of this publication. We will report these 

data in the Fiscal Year 2014 Performance and Accountability 

Report (PAR). We have noted the measures for which the data 

provided are preliminary. Finally, in this FY 2013 PAR, we provide 

FY 2012 performance results for the two performance measures 

(FAA Ratings and Outside Ratings) for which end-of-year data 

were unavailable when the FY 2012 PAR was published. 

Although in some cases the FAA achieved a result significantly 

better than the target, the FAA did not set the new fiscal year’s 

target to reflect the prior year’s result. Annual performance 

is subject to greater variability than long-term performance. 

Over time, short-term trends tend to balance out and provide a 

more accurate picture of the agency’s long-term performance. 

Moreover, some annual targets are baselined using data acquired 

over a multi-year period. The target has been set to measure the 

FAA’s performance toward a long-term goal.

Our Performance Section concludes on page 69 with 

discussions of the ways in which our performance data are 

verified; the completeness and reliability of our performance 

data; and a program evaluation completed by the Office of 

Airports in FY 2013.

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

Top: Pilots in cockpit. Photo: BigStock.com.

Bottom: Flight attendant demonstrating use of oxygen mask. 

Photo: BigStock.com.

Cargo compartment smoke-detection testing. Photo: FAA.
44 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

1 NEXT LEVEL OF SAFETY 

By achieving the lowest possible accident rate and always improving safety, all users of our aviation system can 

arrive safely at their destinations. We will advance aviation safety world-wide.

FY 2013 SAFETY PERFORMANCE MEASURES AND RESULTS

Performance Measure

FY 2013

Target

FY 2013

Results

FY 2013

Status

FY 2014

Target

Commercial Air Carrier Fatality Rate*

In FY 2013, the commercial air carrier fatality rate will not exceed 7.4 fatalities per 

100 million persons on board. 

7.4 1.11 ✓ 7.2

Serious Runway Incursions Rate*

Reduce Category A & B (most serious) runway incursions to a rate of no more than .395 

per million operations.

0.395 0.2002 ✓ 0.395

System Risk Event Rate

Limit the rate of the most serious losses of standard separation to 20 or fewer for every 

thousand (.02) losses of standard separation within the national airspace system.

20 5.662 ✓ 20

Information Security

Ensure no cyber security event significantly degrades or disables a mission-critical FAA 

system.

0 0 ✓ 0

General Aviation Fatal Accident Rate*

Reduce the general aviation fatal accident rate to no more than 1.057 fatal accidents per 

100,000 flight hours.

1.057 1.0613 ✘ 1.05

Commercial Space Launch Accidents

No fatalities, serious injuries, or significant property damage to the uninvolved public 

during licensed or permitted space launch and reentry activities.

0 0 ✓ 0

* This performance measure supports a DOT Agency Priority Goal. 

1 Preliminary estimate until final result can be confirmed by the National Transportation Safety 

Board (NTSB) in March 2015. We do not expect any change in the result to be significant enough 

to change the year-end status of achieving the target.

2 Preliminary estimate until the final result becomes available in January 2014. We do not expect 

any change in the result to be significant enough to change the year-end status of achieving the 

target.

3 Preliminary estimate until the final result becomes available in March 2015. We do not expect 

any change in the result to be significant enough to change the year-end status of achieving 

the target. This target was previously displayed rounded to two decimal places as 1.06. For 

clarity in demonstrating that the target was not achieved, it is now displayed rounded to three 

decimal places.

✓ Target met ✘ Target not met
45

PERFORMANCE

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Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

OBJECTIVE: No Accident-Related Fatalities on Commercial Service Aircraft in the U.S.

Commercial Air Carrier Fatality Rate

Reduce the commercial air carrier fatalities per 100 million 

persons on board by 24 percent over 9-year period 

(2010-2018). No more than 6.2 in 2018. 

FY 2013 

Target

In FY 2013, the commercial air carrier fatality rate will not 

exceed 7.4 fatalities per 100 million persons on board.

FY 2013 

Result

1.1

(Preliminary estimate until final result can be confirmed by NTSB 

in March 2015.)

Public 

Benefit

As fatal air carrier accidents have declined in terms of 

average fatalities per accident, this metric will sharpen 

FAA’s focus on helping air travel become even safer.

This performance measure supports a DOT Agency Priority Goal.

This year, with a result of 1.1, we were successful in maintaining 

the commercial air carrier rate below 7.4 fatalities per 100 

million persons on board. The results will not be final until they 

are confirmed by the National Transportation Safety Board 

(NTSB) in March 2015. 

Commercial aviation includes both scheduled and nonscheduled 

flights of U.S. passenger and cargo air carriers. Accidents 

involving passengers, crew, ground personnel, and the public are 

all included in this fatality rate. Commercial aviation fatalities 

of non-U.S. passenger carriers are included in our world-wide 

performance measure, which can be found on page 67.

Our continuing role as stewards of aviation safety is a result 

of our focused, data-driven safety agenda. We use the latest 

technology and training to break the chain of events that leads 

to accidents. Our partnership with the aviation industry has 

allowed us to build a system that has reduced the risks of flying 

to all-time lows. 

The technology used by our pilots, mechanics, flight attendants, 

and air traffic controllers has evolved a great deal in recent years. 

In addition, pilots today must possess not only the navigation, 

stick, and rudder skills that they have always had to learn; they 

must also be “system managers,” who are intimately familiar 

with the complexity of aviation operations. Our training programs 

equip our pilots with the skills that they need to deal with any 

situation.

The FAA continues to be challenged by the number of projects 

directly tasked to it by Congress in the Airline Safety and Federal 

Aviation Administration Extension Act of 2010. We were also 

tasked with additional projects in the FAA Modernization and 

Reform Act of 2012. Although these laws promote many projects 

in areas in which we are already engaged, they add projects 

requiring resources that in some cases were planned for use 

elsewhere.

Our agency has made progress on several prominent rulemaking 

projects designed to reduce the risk of commercial air fatalities, 

including issuing a final rule to meet pilot certification and 

qualification requirements appearing in Title 14, Aeronautics 

and Space, Code of Federal Regulations, Part 121, Air Carrier 

Certification, which establishes the operational rules for air 

carriers. We continue to work on other projects, including 

final rules for crewmember training, helicopter air-ambulance 

Commercial Air Carrier Fatality Rate 

Fatalities per 100 million persons on board

RATE

0.4

8.7



6.7

8.4



0.3

8.1



0.0

7.9



0.01

7.6



1.12

7.4



Actual

Target

Target

Achieved?

1 Preliminary estimate until final result can be confirmed by NTSB in March 2014. We 

do not expect any change in the result to be significant enough to change the 

year-end status of achieving the target.

2 Preliminary estimate until final result can be confirmed by NTSB in March 2015. We 

do not expect any change in the result to be significant enough to change the 

year-end status of achieving the target.

-2

0

2

4

6

8

10

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
46

Cockpit simulator. Photo: FAA

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

operations, and safety management systems as required by Part 

121. In response to the Modernization and Reform Act, we have 

begun new rulemaking projects to prohibit the personal use 

of portable electronic devices on the flight deck, further revise 

flight and duty regulations, and study the use of cell phones 

on passenger aircraft. Additionally, we started a rulemaking 

project to enhance simulator qualification standards for stall 

and upset recovery. We also issued revised guidance on Fatigue 

Risk Management Systems, Airline Transport Pilot certification 

training, and autorotation training.

While our achievements have brought aviation to an 

unprecedented level of safety, identified sources of risk within 

aviation show us the way to move forward to the next level of 

safety. Thus, our work with stakeholders to stimulate cooperation 

in the open reporting of safety concerns is critical to our ability 

to further improve safety. In a system dependent upon voluntary 

reporting, each member of the aviation community plays a vital 

role in ensuring that we continue to have the safest airspace 

system in the world.
47

PERFORMANCE

R E S U LT S

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

OBJECTIVE: Aviation Risk Is Reduced through All Phases of Flight (Gate-to-Gate)

Serious Runway Incursions Rate 

(Category A & B)

Reduce Category A & B (most serious) runway incursions 

to a rate of no more than .395 per million operations, and 

maintain or improve through FY 2013.

FY 2013 

Target

Reduce Category A & B (most serious) runway incursions 

to a rate of no more than .395 per million operations, and 

maintain or improve through FY 2013.

FY 2013 

Result

.200

(Preliminary estimate until the final result becomes available in 

January 2014.)

Public 

Benefit

Reduced probability that the public will be injured or killed 

in an accident resulting from a runway incursion. 

This performance measure supports a DOT Agency Priority Goal.

A runway incursion is any occurrence at an airport involving 

the incorrect presence of an aircraft, vehicle, or person on the 

protected area of a surface designated for the landing and 

takeoff of aircraft. Runway incursions may result from air traffic 

controller, pilot, vehicle driver, or equipment operator, or from 

pedestrian deviation. All events are analyzed to identify hazards 

and develop mitigation procedures to reduce the reported risk 

of such incidents. Such events can lead to serious accidents, 

potentially involving fatalities, injuries, and significant property 

damage.

The FAA tracks two categories of most serious runway 

incursions: 

¢ Category A—a serious incident in which a collision was 

narrowly avoided.

¢ Category B—an incident in which separation decreases 

and there is a significant potential for collision, which may 

result in a time-critical corrective/evasive response to avoid 

a collision.

Since maintaining the safety of the nation’s runways is critical 

to ensuring safe operations in the nation’s airspace, reducing the 

number and severity of runway incursions is one of the FAA’s top 

priorities. In FY 2013, with a rate of .200, we achieved our goal of 

reducing Category A & B runway incursions to no more than .395 

per million operations.

In recent years, the agency has implemented changes in cockpit 

procedures, airport signage and markings, air traffic procedures, 

and technology implementation to improve runway safety at our 

nation’s airports. 

Changes took place in the following areas: 

¢ The Air Traffic Safety Action Program (ATSAP) and the 

Technical Operations Safety Action Program (T-SAP). These 

are voluntary self-reporting systems that enable FAA 

employees to openly report concerns about flight safety. 

ATSAP is a confidential, non-punitive reporting program that 

empowers FAA employees to play a direct role in safety. Use 

of this tool has resulted in an increase in safety reporting, 

which has ironically caused a greater number of such issues 

to be brought to light in recent years. However, the reporting 

has helped the FAA identify potential incursion risks in the 

system and take swift action to address them.

¢ Initial and periodic safety reviews of airports where incorrect 

runway departures and runway incursions are of greatest 

concern.

¢ Implementation of enhanced taxiway centerline markings at 

all certificated airports.

¢ Review of airport vehicular operations and air carrier surface 

procedures, along with revised employee recurrent training.

¢ Accelerated deployment of surveillance, detection, and 

warning systems, such as Airport Surface Detection 

Equipment, including Model X (ASDE-X), and Runway Status 

Lights (RWSL) at designated Core 30 Airports. ASDE is a 

surface-detection technology that integrates data from 

various sources, including radars and aircraft transponders, 

to provide controllers with a more robust view of movement 

on runways and taxiways. RWSL is a situational awareness 

indication system located on the runway that alerts pilots 

and ground vehicle operators not to enter or cross a runway 

when there is conflicting traffic.

¢ Adoption of International Civil Aviation Organization (ICAO) 

standardized air traffic controller/pilot runway clearance 

phraseology (“Line Up and Wait”) and runway crossing 

clearances.
48 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

We are also advancing the development and implementation 

of new technologies to address incursion safety deficiencies. 

For example, smartphones were not widely used just a few 

years ago. Today, we are starting to use such devices to help 

general aviation pilots determine their positions on the airport 

surface and file reports concerning wildlife hazards. Electronic 

tablets are replacing pilots’ paper charts, offering enhanced 

situational awareness. Replacing analog voice and paper 

reports with digital communication and electronic reporting 

systems is revolutionizing our ability to capture and store airport 

surface information. Highly capable multilateration systems are 

augmenting information from radar and satellite infrastructure 

and providing an array of safety choices for airports. These 

multilateration systems measure the differences in distance 

between two or more stations at known locations that broadcast 

signals at known times to provide more accurate depictions of 

where objects may be located, such as aircraft or vehicles on the 

surface of an airport. 

Other examples of technology advances to improve safety 

include:

¢ Accelerating and standardizing air traffic facility electronic 

reporting capabilities through the Comprehensive Electronic 

Data Analysis Reporting system.

¢ Creating the ability to baseline, assess, and manage risk in 

the terminal area, utilizing Traffic Analysis Review Program 

data and centralized quality assurance protocols.

¢ Continuing to strengthen the Aviation Safety Information 

and Analysis Sharing program, which fuses subjective and 

objective information contributed by airlines to the FAA, 

supplemented by other publicly available data, to produce 

comprehensive, graphical depictions of “what happened,” 

and “why it happened.”

¢ Developing innovative tools to identify and assess risk, for 

example, quick response codes for filing real-time wildlife 

reports, which are used to formulate wildlife mitigation plans 

at the nation’s airports.

¢ Installing runway status lights at 17 large airports by 2017. 

¢ Installing Engineering Material Arresting Systems (EMAS) 

at certain certificated airports that do not have standard 

runway safety areas. EMAS materials of closely-controlled 

strength and density placed at the ends of runways can stop 

or greatly slow any aircraft that may overrun the runway.

The agency is committed to mitigating the risks of runway 

incursions and continuing its ongoing outreach, education, 

and awareness programs through mass electronic mail 

communications and training animations. Maintaining the safe 

flow of airport traffic constitutes the major runway safety mission 

of the FAA. 

Serious Runway Incursions Rate 

Per million operations

RATE

0.393

0.530



0.427

0.509



0.227

0.472



0.117

0.450



0.138

0.450



0.356

0.395



0.2001

0.395



Actual

Target

Target

Achieved?

1 Preliminary estimate until final result becomes available in January 2014. We do not 

expect any change in the result to be significant enough to change the year-end 

status of achieving the target.

0.0

0.2

0.4

0.6

0.8

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
49

PERFORMANCE

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Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

System Risk Event Rate (SRER)

Reduce risks in flight by limiting the rate of the most 

serious losses of standard separation to 20 or fewer for 

every thousand (.02) losses of standard separation within 

the national airspace system.

FY 2013 

Target

Limit the rate of the most serious losses of standard 

separation to 20 or fewer for every thousand (.02) losses 

of standard separation within the national airspace 

system.

FY 2013 

Result

5.66

(Preliminary estimate until final result becomes available in 

January 2014.)

Public 

Benefit

Targeting the resources of the ATO to mitigate the most 

serious hazards in the national airspace system results in 

a focused increase in safety. A similar safety enhancement 

approach process in commercial aviation produced a 

dramatic decrease in the accident rate during the first part 

of the 21st century.

One of the fundamental principles of aviation safety is 

separation. A key FAA duty is to ensure that aircraft flying within 

the national airspace system maintain the required distance from 

each other. To control losses of separation, we need an accurate 

picture of system safety performance. The System Risk Event 

Rate (STER) enables us to identify losses of separation. 

Introduced in FY 2011, the SRER represents a move away from 

legacy safety indicators toward a metric that illuminates, with 

far greater precision, the frequency and rate of high-risk events 

across the national airspace. This is possible because the 

SRER is supported by the Risk Analysis Process (RAP) tool. The 

RAP determines causal factors, considers pilot and controller 

performance on loss of separation events, and assesses the 

potential repeatability and severity of those events.

The SRER allows us to: 

¢ Increase the amount of data collected and analyzed to 

achieve better understanding of risk.

¢ Align our approach to safety with that of our international 

partners.

¢ Integrate pilot and air traffic controller performance data on 

all air traffic incidents.

¢ Evaluate separation incidents caused by other factors, 

including pilot deviations.

¢ Avoid underreporting and misclassification of incidents.

In FY 2013, with a preliminary result of 5.66, we achieved our 

target of limiting the rate of the most serious losses of standard 

separation to 20 or fewer for every thousand (.02) losses of 

standard separation within the system. The initial target of 

20 was based on a projection of the SRER based on historical 

operational error and pilot deviation data. The target of 20 set 

for FY 2011 through FY 2014 will establish a baseline while 

deploying improved analysis and loss-detection equipment. It 

will set a minimum level of system performance that should 

be attainable, while we continue to strive for even greater 

improvements.

Finally, the SRER improves our ability to measure the systemwide safety performance of NextGen implementation. With this 

additional data, we will be able to determine the safety impact 

of new NextGen air traffic procedures and technologies and, 

ultimately, make more knowledgeable decisions about reductions 

in separation standards.

System Risk Event Rate (SRER) 

Rate of serious losses of standard separation per thousand losses RATE

24.54

20.00



9.33

20.00



5.661

20.00



Actual

Target

Target

Achieved?

1 Preliminary estimate until final result becomes available in January 2014. We do not 

expect any change in the result to be significant enough to change the year-end 

status of achieving the target.

0

5

10

15

20

25

FY 2011 FY 2012 FY 2013
50 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

Information Security

Ensure no cyber security event significantly degrades or 

disables a mission-critical FAA system.

FY 2013 

Target

Ensure no cyber security event significantly degrades or 

disables a mission-critical FAA system.

FY 2013 

Result

0

Public 

Benefit

The public benefits from an efficient, safe and secure 

national airspace with no disruption of services.

The FAA operates one of the most complex aviation systems 

in the world—consisting of thousands of people, procedures, 

facilities, and equipment—that results in safe and expeditious 

air travel. Successful operation of the national aviation system 

depends upon our ability to continuously track the position, 

routes of flight, and movement of aircraft. Unfortunately, 

attackers seek to exploit the critical infrastructure behind this 

capability. Through cyber events (attacks conducted through 

computers), they persist in attempts to disrupt critical services by 

exploiting software, hardware, and network infrastructure flaws. 

How is the number of events determined? The computation of 

a cyber event is based on the time the system is not available, 

minus the maximum tolerance for downtime in the system’s 

information security contingency plan (ISCP). The time for each 

cyber incident is measured in hours, with each system’s ISCP 

documenting the maximum tolerance for downtime in hours. If 

this calculation results in a positive number, then the incident is 

counted as an event. 

Today’s electronically-networked environment requires that the 

FAA’s more than 300 computer systems be secure. In FY 2013, 

with zero cyber events that significantly degraded or disabled any 

mission-critical FAA systems, we resoundingly met our goal. FAA 

employees were able to continue to provide, and the flying public 

continued to benefit from, the safest, most efficient aviation 

system in the world.

Our compliance program meets federal, departmental, and 

agency policies that require the regular testing and evaluation of 

information security policies, procedures, and practices. During 

FY 2013, we completed a comprehensive assessment of our 

security systems to ensure that policies were being correctly 

implemented and were providing full protection to all parts of the 

agency. 

The future of information security at the FAA calls for continuous 

refinement of agency services, clarification and implementation 

of additional performance measures, and increased use of new 

technologies to protect the agency and the flying public.

Information Security 

Number of cyber security events that significantly degrade or disable a mission-critical FAA system

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Actual 0 0 0 0 0 0 0

Target 0 0 0 0 0 0 0

Target 

Achieved? 

✓ ✓ ✓ ✓ ✓ ✓ ✓
51

PERFORMANCE

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Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

General Aviation (GA) Fatal Accident Rate

Reduce the GA fatal accident rate to no more than 1 fatal 

accident per 100,000 flight hours by 2018.

FY 2013 

Target

Reduce the GA fatal accident rate to no more than 1.057 

fatal accidents per 100,000 flight hours in FY 2013. 

FY 2013 

Result

1.061 

(Preliminary estimate until final result becomes available in March 

2015.)

Public 

Benefit

By tracking the rate of fatal accidents per flight hours, FAA 

can more accurately pinpoint safety concerns or trends 

indicating potential safety risks.

This performance measure supports a DOT Agency Priority Goal.

While commercial aviation makes more headlines, GA is just 

as vital to the success of our nation’s aviation system. GA is 

made up of more than 300,000 aircraft, from amateur-built 

aircraft, rotorcraft, and balloons, to highly sophisticated 

turbojets (executive jets). Although the GA fatal accident rate 

has remained relatively flat over the past five years, it remains 

unacceptably high. This may explain the National Transportation 

Safety Board (NTSB) leaving “General Aviation Safety” on its 

“Most Wanted List” of advocacy priorities for another year. 

Reducing the rate remains one of the FAA’s top priorities. In 

FY 2013, with a result of 1.061 fatal accidents per 100,000 

flight hours, we did not achieve our goal. “Loss of control” 

continues to be the leading cause of GA fatalities, accounting for 

approximately 70 percent of all fatal GA accidents. In addition, 

human factors directly contribute to approximately 80 percent of 

fatal GA accidents.

Many GA accidents occur in Alaska. More than three-quarters 

of Alaska’s communities have no access to highways or roads 

and depend upon GA for access to food, mail, jobs, schools, 

medical services, and travel. The state’s topography and extreme 

weather present unique safety challenges to pilots, resulting in a 

relatively high number of accidents. 

In May of this year, FAA leadership met with leaders from the 

GA community to agree on actions to enhance safety and reduce 

accidents. In the short term, the group agreed to raise awareness 

of the importance of basic airmanship and to promote a positive 

safety culture. For the longer term, the FAA called upon the GA 

community to install life-saving equipment in older airplanes, 

improve general aviation data, and improve airman certification 

testing and training. To meet these goals, the general aviation 

community and the FAA agreed to move forward as quickly as 

possible on three key initiatives:

¢ Participate and invest in the FAA’s General Aviation Joint 

Steering Committee (GAJSC). Industry participation is key 

to obtaining data for analysis, which it is hoped will lead 

to the development of voluntary safety enhancements. 

The FAA group uses a data-driven process modeled on 

that of the highly successful Commercial Aviation Safety 

Photo: FAA
52 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

Team (CAST). Sharing data through the Aviation Safety 

Information Analysis and Sharing (ASIAS) system and other 

voluntary programs will help educate the GA community 

and strengthen its safety culture. The FAA plans to expand 

ASIAS to general aviation in the next few years. In that time, 

the FAA and industry will work together to find incentives to 

increase voluntary reporting of risks and near accidents.

¢ Support the overhaul of airmen testing and training 

standards. An industry and government working group is 

overhauling the standards by incorporating risk management 

and decision-making into flight training and testing. 

¢ Expedite Title 14, Aeronautics and Space, Code of Federal 

Regulations, Part 23, Airworthiness Standards certification 

process for small aircraft to reduce costs and install new 

technology in airplanes. An industry and government 

committee completed work on streamlining certification 

for the installation of certain safety technologies on these 

aircraft. 

In late July, an Aviation Rulemaking Committee (ARC), made up 

of international industry and government experts, recommended 

a broad range of GA policy and regulatory changes. The 

recommendations cover the areas of GA design, production, 

maintenance, and safety. 

Among the ARC recommendations was a suggestion that 

compliance with Part 23 requirements be made performancebased, focusing on the complexity and performance of an aircraft 

instead of on its weight and type of propulsion, as is presently 

the case. Under many of the existing Part 23 requirements, small, 

relatively simple airplanes have to meet the same regulatory 

requirements as more complex aircraft.

The committee also proposed using industry consensus 

standards to create a compliance framework that can be more 

easily amended to keep up with evolving technology. This 

step would encourage innovation while ensuring that the FAA 

retains safety oversight. Our agency will be reviewing the ARC 

recommendations as we continue our efforts to improve general 

aviation safety.

We remain committed to our partnerships with industry to meet 

this metric over time.

See page 20 for more information about GA.

GA Fatal Accident Rate 

Fatalities per 100,000 flight hours

RATE Actual

Target

Target

Achieved?

1 Preliminary estimate until final result becomes available in March 2014. We do not 

expect any change in the result to be significant enough to change the year-end 

status of achieving the target.

2 Preliminary estimate until final result becomes available in March 2015. We do not 

expect any change in the result to be significant enough to change the year-end 

status of achieving the target. This target was previously displayed rounded to two 

decimal places as 1.06. For clarity in demonstrating that the target was not achieved, 

it is now displayed rounded to three decimal places. 

1.00

1.05

1.10

1.15

1.20

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
53

PERFORMANCE

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Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

OBJECTIVE: There Are No Fatalities Resulting from Commercial Space Launches

Commercial Space Launch Accidents

No fatalities, serious injuries, or significant property 

damage to the uninvolved public during licensed or 

permitted space launch and reentry activities.

FY 2013 

Target

No fatalities, serious injuries, or significant property 

damage to the uninvolved public during licensed or 

permitted space launch and reentry activities.

FY 2013 

Result

0

Public 

Benefit

FAA’s Office of Commercial Space Transportation (AST) 

oversight of the commercial space launch industry 

activities resulted in no loss of life or property damage to 

the uninvolved public.

Commercial space launches are an important and growing part of 

our aviation system, one in which the sky is the limit—literally. 

Commercial space transportation carries payloads, such as 

satellites, supplies, remote sensing devices, and, one day, 

perhaps, paying customers, into orbit. The innovation of this 

industry today parallels the challenges, imagination, and courage 

of the early pioneers of flight more than 100 years ago. 

AST regulates all commercial space launch and reentry activities. 

The mission of AST, which was established nearly two decades 

ago, is to ensure protection of the public, property, and the 

national security and foreign policy interests of the United 

States during commercial launch or reentry activities, as well 

as to encourage, facilitate, and promote commercial space 

transportation. 

In 2013, AST once again achieved its target of zero fatalities, 

serious injuries, or significant property damage to the uninvolved 

public during licensed or permitted space launch and reentry 

activities. There has not been a single commercial space launch 

accident since the first DOT-licensed launch took place in 1989. 

This record demonstrates both the industry’s and the agency’s 

commitment to safety. 

Beyond this official record, however, the success of commercial 

space transportation is becoming more and more visible to the 

American public. Just last year, Space X launched and berthed 

a cargo capsule to the International Space Station (ISS). The 

capsule then safely returned to earth, with cargo intact. This 

was the first time that private industry resupplied the space 

station. Since that time, Space X has completed two more cargo 

missions to the ISS.

Given impressive industry progress, the opportunity for the 

general public to take a “day trip” into space may become 

available in the near future. For example, Virgin Galactic and 

XCOR Aerospace have been actively promoting the future 

capability of their spacecraft, now in development, to take 

people and payloads on commercial suborbital flights. In 

addition, Boeing, Sierra Nevada, and Space X continue to work 

on their own designs for commercial crew vehicles capable of 

transporting people to the ISS and other destinations in earth’s 

orbit. 

AST continues to experience a significant increase in the number 

of requests and applications for new licenses or permits. In 

FY 2013, there were 18 licensed and permitted launches—more 

than five times the number of launches in FY 2012. 

As the commercial space transportation industry continues to 

grow, AST faces important challenges. One of them will be the 

continued safe integration of commercial space operations into 

U.S. national airspace. Usable airspace is a limited resource and 

safety considerations require the careful coordination of aviation 

and space activity.

Commercial Space Launch Accidents 

Number of fatalities, serious injuries, or significant property damage during space launch and reentry activities

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Actual 0 0 0 0 0 0 0

Target 0 0 0 0 0 0 0

Target 

Achieved? 

✓ ✓ ✓ ✓ ✓ ✓ ✓
54 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

2 WORKPLACE OF CHOICE

We will create a workplace of choice marked by integrity, diversity, accountability, safety and innovation. Our workforce 

will have the skills, abilities, and support systems required to achieve and sustain NextGen.

FY 2013 WORKPLACE OF CHOICE PERFORMANCE MEASURES AND RESULTS

Performance Measure

FY 2013

Target

FY 2013

Results1

FY 2013

Status

FY 2014

Target

FAA Ratings

75th percentile rank in the Best Places to Work (BPTW) Index for Federal Agencies 

Subcomponents.

75% TBD TBD 61%

Outside Ratings

Achieve a 90 percent success rate in the areas of financial management and human 

resources management.

90% 

success 

rate

TBD TBD 90% 

success 

rate

1 Results are not available at this time.

NextGen Weather Evaluation Capabilities Route Availability Planning Tool (RAPT). Photo: FAA.
55

PERFORMANCE

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Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

OBJECTIVE: The FAA Is Widely Recognized as an Employer of Choice

FAA Ratings

The FAA is rated in the top 25 percent of places to work in 

the federal government by employees by 2018.

FY 2013 

Target

75th percentile rank in the Best Places to Work (BPTW) 

Index for Federal Agencies Subcomponents.

FY 2013 

Result

TBD 

(Results are not available at this time.)

Public 

Benefit

Improvements in Employee Viewpoint Survey results that 

are used to calculate the BPTW rankings would indicate 

that FAA is managing its workforce better. Research 

indicates that improved employee survey results are 

associated with higher organizational performance. 

Each year, the Office of Personnel Management (OPM) 

administers the Federal Employee Viewpoint Survey (FedView). 

The survey is a tool that measures employees’ perceptions 

of the extent to which conditions characterizing successful 

organizations are present in their agencies. The results of this 

survey provide valuable insight into the challenges that agency 

leaders face in ensuring that their agencies are contributing to 

the effectiveness of the federal government’s civilian workforce 

and the degree to which these leaders are responding to the 

challenges. 

The Partnership for Public Service obtains FedView survey data 

from the OPM and calculates the Best Places to Work (BPTW) 

Index. This index is used to rank federal agencies. This ranking 

is generally the most publicized FedView result. The FAA’s 

long-term goal is to be ranked in the top 25 percent by 2018, 

with progress towards that goal being demonstrated in two-year 

increments. The FY 2013 target is to be ranked in the top 75 

percent of participating agencies.

Early in FY 2013, we received the results of the FY 2012 survey. 

Our 2012 ranking was 114th out of 292 organizations rated. 

This means we ranked in the top 39 percent of all participating 

agencies in FY 2012, exceeding our FY 2012 target of being 

ranked in the top 75 percent of participating agencies. 

The FY 2013 BPTW rankings are not available at this time. 

However, earlier this year, the OPM released the final 

government-wide BPTW response rate to the 2013 FedView 

Survey. The 2013 government-wide average response rate was 

48.2 percent, up from the 46.1 percent in 2012. The final FAA 

2013 FedView response rate was 53.3 percent, down from the 59 

percent response rate obtained in the agency in 2012. However 

this was still more than five percentage points higher than the 

2013 government-wide rate. 

In FY 2013, we began addressing our 2012 results from the 

FedView Survey with ongoing actions as well as redesigns of 

critical human capital systems. The FAA’s actions are organized in 

four focus areas: 

¢ Increasing Creativity and Innovation 

¢ Improving Internal Processes

¢ Addressing Poor Performers 

¢ Holding Leaders Accountable for Employee Engagement

In addition to the actions outlined above, a variety of agencywide steps have been taken to foster communication, including 

holding regular executive town hall meetings, enhancing 

employee websites, publishing lines of business newsletters, 

and nurturing employee opportunities for collaboration and 

participation in work groups. These communication innovations 

have facilitated the sharing of information and improved 

workforce engagement.

FAA Ratings 

FAA is rated in the top 25 percent of places to work 

in the federal government by employees

FY 2011 FY 2012 FY 2013

Actual

This was a new 

measure in 

FY 2012

39% TBD1

Target 75% 75%

Target 

Achieved? 

✓ TBD1

1 The results for this performance measure are not available at this time.
56 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

Outside Ratings

Achieve a 90 percent success rate in the areas of financial 

management and human resources management.

FY 2013 

Target

Achieve a 90 percent success rate in the areas of financial 

management and human resources management:

■ Receive annual unmodified audit opinions with no 

material weaknesses.

■ Maintain the competitive status of all FAA employees 

within the federal personnel system.

■ Improve the “effective leadership” index score on the 

OPM Employee Viewpoint Survey by 8 percent.

■ Improve the “talent management” index score on the 

OPM Employee Viewpoint Survey by 8 percent.

FY 2013 

Result

TBD

(Results are not available at this time.)

Public 

Benefit

The public benefits by being reasonably assured the 

agency is being operated in a transparent and fiscally 

responsible manner and that our human resources 

management system is legally compliant with merit 

systems principles, adheres to veterans’ preference rules 

and maintains an internal system of accountability. The 

public also benefits by knowing that our human resource 

practices, programs and policies position us to compete 

for the best and brightest talent to ensure a safe, efficient, 

and responsive air transportation system for the flying 

public.

This performance measure was established to determine 

whether the FAA is successful in the areas of financial 

management and human resource management. Four indicators 

are used to assess our success rate: 

¢ Receive annual unmodified audit opinions with no material 

weaknesses.

¢ Maintain the competitive status of all FAA employees within 

the federal personnel system. Whether the agency has met 

this criterion is determined by an independent, biennial OPM 

assessment and audit of the FAA’s personnel management 

system, policies, and practices.

¢ Improve the FAA’s “effective leadership” index score on the 

OPM Employee Viewpoint Survey by 8 percent.

¢ Improve the FAA’s “talent management” index score on the 

OPM Employee Viewpoint Survey by 8 percent.

The “success” computation is a sum of weighted scores for the 

four components. The unmodified audit opinion with no material 

weaknesses and the competitive status indicators contribute 

40 percent each. The two index scores (effective leadership and 

talent management) contribute up to 10 percent each. Our goal is 

to achieve a 90 percent success rate. 

In FY 2012, FAA received a two-year extension of the interchange 

agreement with OPM. In addition, we received an unmodified 

audit opinion with no material weaknesses. During FY 2012, 

the Workplace of Choice target indices for Leadership and 

Talent Management were also measured. The Leadership index 

target was 55 percent and we received a rating of 58 percent, 

exceeding the target by 3 percent. The Talent Management index 

target was 58 percent, and we received a rating of 58 percent, 

which met our annual target. This yields an overall actual result 

of 91.6 percent [(100 X .4) + (100 X .4) + (58 X .1) + (58 X .1)].

While we have received an unmodified audit opinion with 

no material weaknesses for FY 2013, the results of the other 

components that make up this measure are not available at this 

time. Therefore, we are unable to report on our overall level of 

success in achieving this performance measure. The final FY 2013 

result will be included in our FY 2014 PAR.

Outside Ratings 

90% success rate in the areas of financial management 

and human resources management achieved

FY 2011 FY 2012 FY 2013

Actual

This was a new 

measure in 

FY 2012

91.6% TBD1

Target 90% 90%

Target 

Achieved? 

✓ TBD1

1 The results for this performance measure are not available at this time.
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Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

3 DELIVERING AVIATION ACCESS THROUGH INNOVATION

Enhance the flying experience of the traveling public and other users by improved access to and increased capacity 

of the nation’s aviation system. Ensure airport and airspace capacity are more efficient, predictable, cost-effective and 

matched to public needs.

FY 2013 AVIATION ACCESS PERFORMANCE MEASURES AND RESULTS

Performance Measure

FY 2013

Target

FY 2013

Results

FY 2013

Status

FY 2014

Target

Air Traffic Control Systems Improve the Efficiency of Airspace*

By September 30, 2013, replace a 40-year old computer system serving 20 air traffic 

control centers with a modern, automated system that tracks and displays information on 

high altitude planes.

11 8 ✘ N/A

Major System Investments

In FY 2013, maintain 90 percent of major system investments within 10 percent variance 

of current acquisition program baseline at completion.

90% 90% ✓ 90%

LPV or LP Procedures

Publish 500 LPV or LP procedures in FY 2013 to ensure Localizer Performance (LP) or 

Localizer Performance w/Vertical (LPV) procedures are available at 3,800 runways in the 

national airspace system.

500 469 ✘ 400

* This performance measure supports a DOT Agency Priority Goal. ✓ Target met ✘ Target not met
58 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

OBJECTIVE: NextGen Capabilities Are Fully Implemented and Utilized Based on U.S. Aviation 

Community System Needs

Air Traffic Control Systems Improve the 

Efficiency of Airspace

By September 30, 2013, achieve initial operating capability 

(IOC) on ERAM at all 20 air route traffic control centers 

(ARTCCs).

FY 2013 

Target

By September 30, 2013, achieve IOC on ERAM at 11 

ARTCCs.

FY 2013 

Result

8

Public 

Benefit

With the establishment of this metric, expanding capacity 

and reducing costs will play an important role in improving 

the economic returns from our transportation system. 

In the decade between 1998 and 2008, total airline 

passenger traffic rose 13 percent in U.S. domestic markets 

and 47 percent in the international arena, despite the 

impacts of the September 11, 2001, terrorist attacks and 

the more recent global recession. As domestic and world 

economies recover, U.S. airline passenger demand is 

expected to increase and approach a growth rate of 3-4 

percent annually.

This performance measure supports a DOT Agency Priority Goal.

The En Route Automation Modernization (ERAM) System is 

central to our ability to transform our nation’s airspace from 

radar-based to satellite-based operations. ERAM replaces the 

1970s era “Central Computer Complex HOST” used at ARTCCs 

around the country to guide airplanes flying at high altitudes. 

The new system allows us to maximize the use of airspace, 

substantially increasing the number of flights that can be tracked 

and displayed. The new system also offers enhanced back-up 

capability. 

Further software development will make ERAM a foundation of 

important NextGen capabilities, such as Data Communications 

(Data Comm), a data link system that enables the automated 

exchange of pre-departure and en route clearance information 

between aircraft and controllers; and System Wide Information 

Management (SWIM), an open, flexible, and secure information 

management architecture using commercial off-the-shelf 

hardware and software to share national airspace system advisory 

data and enable increased common situational awareness and 

improved system agility. 

We had originally planned to complete ERAM by December 

2010. Due to software development and testing issues and 

implementation challenges, the program was rebaselined in 

June 2011. Under this new plan, IOC was achieved at 9 of the 

20 ERAM sites prior to 2013. The remaining 11 ERAM sites were 

scheduled for IOC by the end of FY 2013, but the target was not 

achieved for a number of reasons. 

Since the rebaseline, the ERAM Program Office has undertaken a 

series of management initiatives to help get the program back on 

track. These include addressing contractual, strategic, structural, 

process, personnel, and incentive aspects of the program’s 

overall approach. A centerpiece of these improvement initiatives 

has been the collaborative approach taken by the ERAM office in 

working with its union partners, the National Air Traffic Controller 

Association and the Professional Aviation Safety Specialists. 

However, due to sequestration, we were unable to achieve our 

target. Immediately prior to sequestration, the controllers who 

serve as subject matter experts on ERAM implementation teams 

were recalled to their home facilities to ensure their readiness to 

resume their controller duties prior to the initiation of employee 

furloughs. During this time, many of the ongoing implementation 

activities at remaining sites came to a halt as the FAA focused on 

ensuring the safe and efficient operation of the air traffic control 

system at facilities around the country. 

After Congress enacted legislation that allowed the FAA to 

transfer funds from its Airport account to its Operations account, 

the agency was able to quickly end all employee furloughs. A 

high priority after employee furloughs ended was to reengage 

the ERAM implementation teams, which FAA accomplished in 

coordination with the controller’s union. However, due to other 

budget reductions, training was not available and a decision was 

made to defer initial operations at remaining sites until after 

the busy summer months. As such, three of the IOCs were not 

completed in FY 2013 as planned. The program will continue until 

all sites are fully operational. The delay will cause an increase in 

the cost of the program. 

Before 2013, ERAM was operating at the following centers:

¢ Salt Lake City, UT 

¢ Seattle, WA 

¢ Denver, CO 

¢ Albuquerque, NM 
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ERAM (En Route Automation Modernization) system monitor and control consoles. Photo: FAA.

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

¢ Minneapolis, MN 

¢ Chicago, IL 

¢ Oakland, CA 

¢ Los Angeles, CA 

¢ Houston, TX 

In FY 2013, we achieved IOC at the following centers:

¢ Kansas City, MO

¢ Boston, MA

¢ Indianapolis, IN

¢ New York, NY

¢ Cleveland, OH

¢ Washington, DC

¢ Memphis, TN

¢ Ft. Worth, TX

The following centers will achieve IOC in FY 2014:

¢ Atlanta, GA

¢ Jacksonville, FL

¢ Miami, FL

Since December 2011, ERAM has accumulated more than 

123,000 hours of operational run time, which amounts to more 

than 14 years of consecutive operation. 

More information on ERAM can be found at www.faa.gov/

air_traffic/technology/eram.

Air Traffic Control Systems Can Improve 

the Efficiency of Airspace 

Replace a 40-year old computer system 

serving 20 air traffic control centers

FY 2011 FY 2012 FY 2013

Actual 2 7 8

Target1 2 7 11

Target 

Achieved? 

✓ ✓ ✘

1 The number represents annual targets needed to achieve a cumulative 

target of implementing IOC at all 20 ERAM sites by the end of FY 2013. The 

cumulative target in FY 2012 was 9, and the cumulative target in FY 2013 

was 20, which was not achieved. As of September 30, 2013, 17 have been 

achieved. 
60 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

Major System Investments

Maintain 90 percent of major system investments within 10 

percent variance of current acquisition program baseline 

at completion.

FY 2013 

Target

90 percent of major baselined acquisition programs 

must be maintained within 10 percent of their current 

acquisition cost, schedule and technical performance 

baseline as of the end of fiscal year 2013.

FY 2013 

Result

90%

Public 

Benefit

FAA’s ability to keep acquisitions within budget, schedule 

and performance will allow for a timely transition to 

NextGen programs. The transition to NextGen involves 

acquiring numerous systems to support precision satellite 

navigation; digital, networked communications; integrated 

weather information; layered, adaptive security; and more.

This target measures the FAA’s ability to stay within a 10 percent 

variance of its budget, schedule, and technical performance with 

regard to major system investments in support of the ongoing 

transition to NextGen, a comprehensive overhaul of our nation’s 

airspace system to make air travel more convenient, dependable 

and safe. It involves the acquisition of numerous systems, tools, 

and pieces of equipment to support precision-based satellite 

navigation, networked digital communications, integrated 

weather information, and improved security. Our ability to make 

the relevant major system investments in an efficient and costeffective manner is critical to the implementation of NextGen.

The FAA has established acquisition categories (ACATs) within 

the Acquisition Management System that governs major system 

investments. Within these categories, the following criteria 

are applied to determine the ACAT level of each acquisition: 

1) lifecycle costs and annual costs; 2) political sensitivity; 3) risk 

level; 4) complexity; and 5) likelihood of changes in the safety of 

the nation’s airspace. Programs that have lifecycle costs greater 

than $100 million or that are classified with a medium or high 

rating in any of the criteria are assigned an ACAT level of 1, 

2, or 3, and are considered major investments. The FAA tracks 

and reports the status of each program’s acquisition program 

baseline, using an automated database. The data are used to 

convey program status and performance information to senior 

executives for purposes of program reporting and periodic 

reviews. 

Choosing to report on this measure ensures continuity 

and consistency with the Air Traffic Management System 

Performance Improvement Act of 1996. This act requires the 

FAA Administrator to terminate programs that are funded 

from Facilities and Equipment appropriations and that have 

variances of 50 percent or greater for cost, schedule, or 

technical performance, unless the Administrator determines 

that termination would be inconsistent with the development or 

operation of the national airspace system in a safe and efficient 

manner. In addition, the law requires the FAA Administrator to 

consider terminating any substantial acquisition that has cost, 

schedule, or performance variances of 10 percent or greater. 

In FY 2013, we were unable to meet the targets for two 

programs: Runway Status Lights and Logistics Center Support 

System. We did, however, achieve the overall target by 

maintaining 90 percent of the major system investments being 

tracked (18 of 20 programs) within 10 percent variance of their 

approved acquisition program baseline total budget, schedule, 

and technical performance at completion.

Major System Investments 

Maintain 90 percent of major system investments within baseline

FY 2011 FY 2012 FY 2013

Actual

This was a new 

measure in 

FY 2012

100% 90%

Target 90% 90%

Target 

Achieved? 

✓ ✓
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Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

OBJECTIVE: Safety, Airport Infrastructure and Environmental Issues Are Advanced and Leveraged by 

Full Utilization of NextGen Capabilities

LPV or LP Procedures

Ensure Localizer Performance with Vertical Guidance (LPV) 

or Localizer Performance (LP) procedures are available at 

5,218 runways in the national airspace system by 2018.

FY 2013 

Target

Publish 500 LPV or LP procedures in FY 2013 to ensure 

Localizer Performance (LP) or Localizer Performance with 

Vertical (LPV) procedures are available at over 3,800 

runways in the national airspace system.

FY 2013 

Result

469

Public 

Benefit

Vertically guided approach procedures provide a safety 

benefit to all users compared to non-precision approach 

services. In addition because LPV or LP procedures can 

be published at any qualifying runway, users obtain a 

significant access benefit over Instrument Landing System 

(ILS). As of July 2011, there are twice as many LPV/LP 

procedures as ILS procedures. 

The FAA continues to deploy procedures that improve access 

to many GA airports in almost all weather conditions. Localizer 

Performance with Vertical Guidance (LPV) and Localizer 

Performance (LP) procedures are enhanced performance, 

precision-guided Global Positioning System (GPS) approaches, 

made even more accurate by the use of Wide Area Augmentation 

System (WAAS) signals. 

Pilots fly into airports with the guidance of either ground-based 

navigational aids such as ILS or satellite-based navigation, 

i.e., GPS. The FAA must develop new approach procedures for 

an airport before an aircraft can use WAAS. These approach 

procedures are called LPVs. For the past 60 years, the Category-1 

ILS has been used at airports throughout the national airspace 

system to guide aircraft to as low as 200 feet above the runway 

surface. 

Unlike ILS technology, WAAS provides the same capability but 

without the need for infrastructure at each runway end. WAAS 

has enabled a new LP approach which provides the same lateral 

accuracy as LPV, but without the vertical guidance. 

Two of the FAA’s top goals are increased aircraft safety and 

greater air traffic capacity in a defined airspace. WAAS provides 

for both, along with other significant benefits:

¢ More vertically-guided approach procedures, which are safer 

than those without vertical-guidance

¢ More flexible approach and departure routings, which 

will cut arrival times as well as enhance safety and noise 

abatement

¢ More direct, fuel-efficient and timely routings through the air 

traffic control system

¢ Significant government cost savings due to the elimination 

of maintenance costs associated with older, more expensive 

ground-based navigation aids

¢ No additional runway infrastructure required

In FY 2013, with 469 LPV and LP procedures published, we did 

not meet our goal of publishing 500 procedures in 2013. To date, 

we have published 3,822 procedures at more than 1,838 airports. 

Of the procedures published so far, more than half are at GA and 

regional airports that have no ILS, so the new procedures are a 

huge boon to these airports. The agency plans to provide for as 

many as 5,218 LPV-facilitated and LP-facilitated runways in the 

national airspace system by 2018. 

LPV or LP Procedures 

Ensure Localizer Performance (LP) procedures are available at 

runways in the national airspace system

FY 2011 FY 2012 FY 2013

Actual

This was a new 

measure in 

FY 2012

536 469

Target 500 500

Target 

Achieved? 

✓ ✘
62 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

4 SUSTAINING OUR FUTURE

To develop and operate an aviation system that reduces aviation’s environmental and energy impacts to a level that does 

not constrain growth and is a model for sustainability.

FY 2013 SUSTAINING OUR FUTURE PERFORMANCE MEASURES AND RESULTS

Performance Measure

FY 2013

Target

FY 2013

Results

FY 2013

Status

FY 2014

Target

Noise Exposure

Reduce the number of people exposed to significant aircraft noise to less than 371,000 in 

calendar year 2013.

371,000 321,000 ✓ 356,000

National Airspace System Energy Efficiency

Improve aviation fuel efficiency by 16 percent, as measured by the calendar year 2010 

fuel burned per revenue mile flown, relative to the calendar year 2000 baseline.

-16.00% -15.61% ✘ -18.00%

✓ Target met ✘ Target not met

Travelers make their way through the busy airport security check at Denver International Airport, Denver, Colorado. Photo: Bigstock.com.
63

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Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

OBJECTIVE: Community Noise Concerns Are Not a Significant Constraint on Growth

Noise Exposure

The U.S. population exposed to significant aircraft noise 

around airports has been reduced to less than 300,000 

persons.

FY 2013 

Target

Reduce the number of people exposed to significant 

aircraft noise to less than 371,000 in calendar year 2013. 

FY 2013 

Result

321,000

Public 

Benefit

Public benefit is reduced exposure to unwanted aircraft 

noise and increased capacity, reducing airport congestion 

and delays.

Aircraft noise remains one of the most significant environmental 

challenges facing airlines and airports as they seek to grow 

their capacity. By mitigating and reducing exposure to noise, the 

FAA can promote community acceptance of airport expansion 

and enable capacity growth in an environmentally-responsible 

manner. 

The number of people exposed to significant noise levels was 

reduced by approximately 96 percent between 1975 and 2012. 

This was due primarily to the legislatively-mandated transition 

of airplane fleets to newer generation aircraft that produce less 

noise. Most of the gains from quieter aircraft were achieved by 

FY 2000. The remaining problem must be addressed primarily 

through airport-specific noise compatibility programs along with 

reduction of aircraft noise at the source. With the use of these 

strategies, we achieved our FY 2013 noise exposure goal. 

The goal of achieving a reduction in the number of people 

exposed to significant aviation noise requires a robust and 

multi-faceted environmental program that develops and invests 

in new technologies, takes advantage of operational advances, 

and includes effective policies and investments. 

By continuing to develop NextGen technologies that offer a broad 

array of noise mitigation approaches, the FAA can decrease 

aviation noise exposure. 

In cooperation with the aviation community and local 

governments, the FAA pursues such measures as source noise 

reduction, soundproofing, buyouts of homes and other noisesensitive buildings near airports, operational flight control 

measures, and land use planning strategies. While the FAA 

is authorized to provide funds for airport noise compatibility 

projects, each project must be locally sponsored by the airport 

responsible for the noise and then approved by the FAA.

In addition, the FAA’s Continuous Lower Energy, Emissions, and 

Noise (CLEEN) program, along with FAA collaborations with the 

National Aeronautics and Space Administration (NASA) and 

the Department of Defense, can speed the introduction of new, 

quieter aircraft technologies into the aircraft fleet.

Continued success in this performance metric will require 

partnership and the sharing of responsibilities among many 

stakeholders. Air carriers will need to operate quieter aircraft 

that run on cleaner fuel; airports will need to provide good 

planning and local environmental mitigation measures; air traffic 

management will need to facilitate environmentally-friendly 

flight procedures; federal programs and investments will need to 

move in the direction of supporting the necessary environmental 

mitigation technology and operational improvements; and local 

governments will need to ensure compatible land use around 

airports. The FAA is committed to working with all stakeholders 

to find the right balance to manage capacity growth in an 

environmentally sound manner.

Noise Exposure 

Number of people exposed to significant aircraft noise

POPULATION

383,465

455,000



291,768

436,000



317,596

419,000



315,293

402,000



315,000

386,000



321,000

371,000



Actual

Target

Target

Achieved?

1 For FY 2012, targets and res

number of persons exposed. 

recalculated from the origina

were revised to reflect newl

the Airport Improvement Pro

2 Preliminary estimate based o

based on actual 2012 opera

250,000

300,000

350,000

400,000

450,000

500,000

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
64 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

OBJECTIVE: Improve the Energy Efficiency of the National Airspace System

National Airspace System Energy Efficiency

Improve national airspace system energy efficiency (fuel 

burned per miles flown) by at least 2 percent annually.

FY 2013 

Target

Improve aviation fuel efficiency by at least 2 percent per 

year, through FY 2025, as measured by the calendar year 

2012 fuel burned per miles flown, relative to the calendar 

year 2000 baseline.

FY 2013 

Result

-15.61

Public 

Benefit

Today’s aircraft are up to 70 percent more efficient in fuel 

use than early commercial jet aircraft. However, there is 

growing concern over aviation’s impact on the environment 

and public health. Aviation is currently viewed as a 

relatively small contributor to those emissions that have 

the potential to influence air quality and global climate. 

Carbon dioxide emissions are a primary greenhouse gas 

and are directly related to the fuel burned during the 

aircraft’s operation. As air traffic grows, this contribution 

will increase without improvements in technology, more 

efficient air traffic operations, and renewable fuels.

This measure supports the development of these 

improvements to reduce aviation’s impact on the 

environment and thereby improve public health and 

welfare. In addition, more fuel efficient aircraft should 

contribute to improving the financial well-being of 

commercial airlines and a growing economy.

As a result of monitoring improvements in aircraft and 

engine technology, as well as operational procedures and 

enhancements, the FAA is able to track and measure aircraft 

fuel efficiency in the national airspace system. In FY 2013, we 

continued to make progress in maintaining efficient commercial 

aircraft operations, thereby minimizing environmental and public 

health impacts. However, the progress was not enough to meet 

or exceed our FY 2013 energy efficiency target.

National airspace system energy efficiency is heavily dependent 

upon commercial airline operating procedures and day-to-day 

operational conditions. Factors affecting efficiency include 

the condition of airlines’ operating fleets and their route 

assignments, air traffic conditions, weather, airport operating 

status, congestion in the system, and any disruptions that 

introduce delay in scheduled flights. For example, a major 

sustained disruption, a significant shift in commercial airline 

operations, such as changes in fleet composition and missions, or 

even a change in air traffic management could have a profound 

impact upon our ability to achieve this performance target.

With the continued increase in air traffic that outpaced fleet 

technological improvements, the system’s energy efficiency 

started leveling off in 2007. This trend has continued to the 

present. While it is difficult to determine the exact cause of not 

meeting our FY 2013 energy efficiency target, a combination of 

factors in the overall system contributed to our inability to meet 

this annual goal.

The existing metric of fuel burn per distance flown does not take 

into account the revenue payload moved within the system, an 

important factor in calculating energy efficiency. A new metric 

that incorporates this factor is being developed and benchmarked 

on an annual basis relative to the current FY 2001 baseline. 

Analysis of historical trends for this new payload-based metric 

will help determine the continued applicability of the two percent 

per year energy efficiency improvement target. 

In FY 2013, we missed achieving the energy efficiency 

performance target by 0.39 percent. Our annual target called 

for achieving a 16 percent cumulative improvement in system 

energy efficiency over the base FY 2001 period; we only achieved 

a 15.61 percent improvement. However, over the past 20 years, 

improvements in aircraft energy efficiency have enabled aviation 

to outpace other forms of transportation in the United States. 

The development and deployment of NextGen technologies allow 

us to continue to make improvements in the national airspace 

National Airspace System Energy Efficiency

Cumulative percentage reduction from baseline

-13.52

-8.00



-14.03

-9.00



-15.25

-10.00



-14.50

-12.00



-14.76

-14.00



-15.61

-16.00



Actual

Target

Target Achieved? PERCENT

-20

-15

-10

-5

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
system’s energy efficiency. Air traffic modernization is reducing 

delays and enabling more direct routes, thus saving fuel.

In addition, the FAA’s Continuous Lower Energy, Emissions 

and Noise (CLEEN) program is accelerating the development 

of energy-efficient technologies. These will be deployed to 

the commercial fleet sooner than normal market forces would 

allow. The program aims to introduce CLEEN technologies into 

production aircraft in the 2015-2017 timeframe. 

Advances in the development of sustainable alternative fuels 

also offer great promise for emissions reduction. Nearly 100 

percent of the fuel used in aviation operations is petroleumbased, raising issues of energy supply, energy security, and 

the effect of fossil fuel emissions on our air quality and 

climate. In response to these multiple concerns, government 

and the aviation industry have a strong interest in alternative 

aviation fuels that can be blended with or replace petroleum 

jet fuel without changes to existing engines, aircraft, ground 

infrastructure, or supply equipment.

THE FAA INTENSIFIES ITS STUDY OF ALTERNATIVE FUELS 

The FAA intensified its study of less polluting aircraft fuel in 

FY 2013. Once developed, alternative fuels will reduce airplane 

carbon emissions and make aviation more economically and 

environmentally sustainable. 

•	 As part of NextGen’s CLEEN program, the FAA is conducting rig 

and engine tests of promising alternatives to petroleum-based jet 

fuels. The goal is to develop “drop-in” alternative jet fuels that 

can be used in existing aircraft, without requiring installation of 

new engines or creation of new airplane types. 

•	 The General Aviation (GA) community is also searching for an 

environmentally-friendly fuel alternative. Most of the community 

runs on avgas (aviation gasoline), an anti-knock mixture whose 

lead content has raised public health concerns. The FAA’s Fuels 

Program Office, created in 2012, is working with the agency’s 

William J. Hughes Technical Center and industry partners on 

developing a high-quality, lead-free alternative GA fuel.

•	 In February 2013, the FAA and the Spanish Aviation Safety and 

Security Agency (AESA) signed a Declaration of Cooperation to 

promote the development and use of sustainable alternative 

aviation fuels in the United States and Spain. The declaration, 

like others that the United States has signed with Australia, Brazil, 

and Germany, enables the FAA’s Office of Environment and Energy 

to explore cooperation in areas such as research on the life-cycle 

effects of alternative fuel emissions on the atmosphere and best 

practices on alternative jet fuel testing and approvals.

•	 In April 2013, the U.S. Department of Agriculture extended for five 

years its “Farm to Fly” agreement to work with the FAA and other 

partners to develop biofuel from renewable feedstocks. This will 

create jobs and economic opportunity from the farm to the airport 

and lessen America’s reliance on foreign oil. The goal: production 

of one billion gallons of drop-in aviation biofuel by 2018. 

•	 In September 2013, the FAA announced formation of its newest 

center of excellence (COE), devoted to researching the effects of 

alternative jet fuels on the environment, as part of meeting the 

environmental and energy goals of NextGen. Headquartered in 

Richland, WA, the COE will focus on developing drop-in biofuels 

that meet industry standards and are cost-competitive with 

petroleum-based fuels. The FAA’s COE programs are cost-sharing 

research partnerships between academia, industry, and the 

federal government. 

Aviation Fuel and Engine Test Facility for the Lycoming Piston Engine. 

Photo: FAA.

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Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
66 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

5 IMPROVED GLOBAL PERFORMANCE THROUGH COLLABORATION

Achieve enhanced safety, efficiency, and sustainability of aviation around the world. Provide leadership in collaborative 

standard setting and creation of a seamless global aviation system.

FY 2013 GLOBAL PERFORMANCE MEASURES AND RESULTS

Performance Measure

FY 2013

Target

FY 2013

Results

FY 2013

Status

FY 2014

Target

World-wide Fatal Aviation Accidents

In FY 2013, limit world-wide fatal accidents in Part 121-like operations to no more than 20 fatal 

accidents per million revenue aircraft departures.

20 121 ✓ 21

1 Preliminary estimate until the final result becomes available when ICAO updates their world-wide 

departure data in July 2014.

✓ Target met ✘ Target not met

Photo: Bigstock.com.
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Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

OBJECTIVE: Reduce Aviation Accidents and Fatalities World-wide

World-wide Fatal Aviation Accidents

By 2018, the world-wide fatal aviation accident rate 

declines 10 percent compared to 2010. 

FY 2013 

Target

Limit the world-wide fatal accident rates in Part 121-like 

operations to no more than 0.65 fatal accidents per million 

revenue aircraft departures. This equates to 20 fatal 

accidents for FY 2013.

FY 2013 

Result

12 

Preliminary estimate until the final result becomes available in 

July 2014 when the ICAO updates their world-wide departure 

data.

Public 

Benefit

The public will benefit from safer travel on foreign air 

carriers and from the economic contributions of a safe 

international aviation system.

A safe, efficient, and seamless aviation system is the ultimate 

goal of international air transportation. Increased public 

confidence in air transportation world-wide will result in an 

increase in passenger traffic. The FAA’s recognition as a global 

leader in air safety enables it to influence safety goals in the 

international arena. In turn, international air safety is a driver of 

economic growth and expansion, opportunity, and development 

throughout the world.

This performance metric tracks non-U.S. commercial aviation 

fatalities around the globe, including any non-U.S. carrier 

fatalities that occurred on U.S. soil, such as the Asiana Airlines 

crash in San Francisco in July of this year. In FY 2013, with a 

preliminary result of 12 fatal accidents, we achieved our target. 

The final result will not be available until July 2015. 

Achieving an increasingly safe global air transportation 

environment is a challenge. Many countries and regions around 

the world have competing priorities, insufficient resources, 

unstable political and economic environments, or diverging 

approaches to legislative and regulatory requirements. All of 

these—which are beyond the direct influence of the FAA or 

the aviation community—can affect global civil aviation safety 

outcomes. 

Increased implementation of advances in avionics, structures, 

and human factors, as well as continued operational safety 

initiatives, technical assistance, and safety data sharing with 

international partners are all positive outcomes of global aviation 

cooperation. But the current fiscal climate negatively impacting 

our agency’s budget may limit our outreach and interaction with 

key partners. That could hinder further global harmonization 

with FAA policies. A continued negative trend could threaten 

the FAA’s international leadership and result in a global aviation 

environment less aligned with U.S. interests. 

At present, we are proud that we continue close and consistent 

collaboration with other countries. Here are a few examples of 

our many efforts: 

¢ As part of a continued commitment to further streamline 

and grow the exchange of aviation products under the 

European Union Aviation Safety Agreement (EASA), the FAA 

recently approved revision 3 of the Technical Implementation 

Procedure to further promote U.S. and EASA coordination of 

aircraft requirements in the areas of design, production, and 

airworthiness. 

¢ The FAA initiated a pilot program with Mexico’s Directorate 

General of Civil Aviation involving joint aviation supplier 

audit exercises. This will eventually lead to Mexican 

authorities’ support of FAA audits of facilities in Mexico, in 

accordance with our bilateral agreement. 

¢ The FAA is collaborating with the Singapore aviation 

authorities and an affiliated training academy to offer 

regional, targeted, aviation-safety training at a central 

location in the Asia Pacific region.

¢ The FAA continues to work closely with the ICAO to 

promote world-wide aviation and airport safety. The FAA 

participated in ICAO Regional Runway Safety Seminars in 

Morocco, Antigua, and Malaysia. At the seminars, the FAA 

provided information on the use of Runway Safety Action 

Teams (RSATs) to reduce runway incursions, and the need to 

implement effective airport certification programs, improve 

runway safety areas, and implement mitigation measures to 

reduce the risk of bird strikes.
68 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

Oversight authorities, including the Office of the Inspector 

General (OIG) and the Government Accountability Office (GAO), 

request detailed documentation of FAA performance measure 

results from our external sources. We provide internal data 

verification review reports to these authorities to demonstrate 

that the FAA is committed to aviation excellence and enhanced 

safety around the world.

World-Wide Fatal Aviation Accidents 

World-wide fatal aviation accident rate declines 10 percent 

FY 2011 FY 2012 FY 2013

Actual

This was a new 

measure in 

FY 2012

10 122

Target 191 20

Target 

Achieved? 

✓ ✓

1 Target recalculated from original target of 20 due to finalization of projected 

departure data.

2 Preliminary estimate until final result becomes available in July 2014 when 

ICAO updates their world-wide departure data. We do not expect any 

change in the result to be significant enough to change the year-end status 

of achieving the target.

Boeing 777 Asiana Airlines Flight 214 being investigated by the NTSB after crash landing at San Francisco Airport on July 6, 2013. Photo: iStock.com.
69

PERFORMANCE

R E S U LT S

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

QUALITY ASSURANCE

VERIFICATION AND VALIDATION OF 

PERFORMANCE INFORMATION 

We employ strong management controls to ensure the accuracy, 

completeness, and timely reporting of performance data. Thanks 

to rigorous internal and external reviews, the FAA verification 

and validation process produces performance results that enjoy 

the confidence of agency managers and the Administrator.

In addition to internal verification and review by the FAA, 

performance data is independently verified by the Department 

of Transportation. Moreover, data for the incidents that are 

included in several FAA safety performance measures, such as 

the Commercial Air Carrier Fatality Rate and the General Aviation 

Fatal Accident Rate, require independent verification by the 

NTSB and the Bureau of Transportation Statistics. Data for these 

measures are not considered final until the NTSB completes its 

report on each incident.

COMPLETENESS AND RELIABILITY OF 

PERFORMANCE DATA 

The agency’s internal review processes support the integrity 

of performance data. At the beginning of each fiscal year, we 

update the performance measure profiles, a clearinghouse 

for accurate and detailed documentation of our performance 

measures. An exhaustive report includes technical definitions 

for each measure, as well as data source information, statistical 

issues, and completeness and reliability statements. Where the 

criteria for targets have changed, it is noted and the changes 

are explained (see www.faa.gov/about/plans_reports/

performance_profiles to review the FY 2013 Performance 

Measure Profiles).

To supplement the performance measure profiles, the agency 

conducts its own annual internal review of the verification 

processes used by all FAA organizations responsible for 

collecting and reporting performance data. The agency’s full 

understanding of these processes allows it to provide complete 

and definitive documentation of results, as required by auditors 

at the end of the year.

PROGRAM EVALUATIONS 

Program evaluation is a major requirement of the Government 

Performance and Results Modernization Act of 2010. The statute 

calls for agencies to use program evaluations to assess the 

manner and extent to which federal programs achieve intended 

objectives. While performance measures use statistics to show 

whether the FAA has achieved its intended outcomes, program 

evaluations use analytical techniques to assess the extent to 

which programs contributed to their desired outcomes and 

trends. Understanding the results of these program evaluations 

enables us to initiate actions to improve program performance. 

Program evaluations or assessments are conducted by 

contractors, academic institutions, the OIG, and the GAO.

In FY 2013, the FAA’s Office of Airports completed a program 

evaluation of the environmental streamlining process 

implemented by the FAA in response to Title III of the Vision 

100—Century of Aviation Reauthorization Act. Title III calls for 

prioritization of certain airport capacity, airport safety, and airport 

security projects for expedited and coordinated environmental 

review in compliance with the National Environmental Policy 

Act of 1969. Following FAA approval of an evaluation plan, the 

evaluation was conducted independently by a firm with expertise 

in environmental streamlining. 

The evaluation concluded that the FAA’s environmental 

streamlining process has resulted in the successful prioritization 

of key airport projects. These actions have included successful 

stakeholder coordination and an excellent public involvement 

process. The evaluation also highlighted several opportunities 

for improvement. This resulted in 17 recommendations that could 

improve Vision 100 environmental streamlining. Four of these 

are best practices from other modal administrations that could 

be successfully applied to the FAA’s streamlined environmental 

reviews. In FY 2014, the FAA will evaluate the recommendations, 

and identify and implement any actions that could improve the 

process.
70

F I N A N C I A L R E S U LT S
71F I N A N C I A L R E S U LT S

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

A MESSAGE from the

CHIEF FINANCIAL OFFICER

Mark House

Chief Financial Officer

This year, the Federal Aviation Administration continued to fulfill its primary mission of running the safest and most efficient 

airspace in the world, despite an extremely challenging budget environment. The FAA provides a direct service to the public, 

operating a huge, diverse, and complex system of equipment, facilities, and technologies that we call the national airspace 

system. Most of our operating costs go toward staffing, operating, and maintaining the system. Budget cuts therefore have a 

detrimental impact on the efficient operation of that system, while simultaneously hindering our ability to staff for our future

growth, invest in new equipment and technology, and repair our existing equipment and facilities. The cuts also jeopardize the 

$1.3 trillion in economic activity and 10 million jobs that the aviation industry brings to our country.

Sequestration

The sequestration of more than $600 million from our FY 2013 budget, mandated by the Budget Control Act of 2011, 

necessitated a reevaluation of our critical priorities, difficult cost-cutting measures, and a review of our business model for 

providing services to the American public. 

More than 70 percent of our operating costs are used to cover the salaries of our workforce—those serving the flying public, 

including, for example, air traffic controllers and aviation inspectors. Thus, it is particularly challenging to reduce Operations 

spending to the extent required by sequestration without correspondingly impacting the very workforce that serves the flying 

public. To ensure that our top priority—aviation safety—was not compromised in this environment, we invested a tremendous 

amount of time and resources in planning for the budget sequester. This included mining historical financial data; developing 

alternative spending scenarios; and presenting realistic, data-driven options to support difficult decisions about spending. 

As a result of these efforts, we implemented severe hiring restrictions and significantly reduced spending in non-pay areas 

such as contracts, travel, training, and other day-to-day expenses. Considering the decreased purchasing power resulting from 

inflation, we have substantially reduced our non-pay Operations spending by about 10 percent from FY 2010 levels. In response 

to sequestration, we also adjusted the schedules of our highest priority capital projects—including the En Route Automation 

and Modernization (ERAM) platform, foundational for our Next Generation Air Transportation System (NextGen) program—to 

conserve funding.

Still, those reductions were not sufficient to cover the substantial sequestration cuts. As a last resort, we developed plans 

to furlough more than 44,000 FAA employees for up to 11 days during the last five months of the fiscal year. Just one week 

into implementation, however, Congress enacted the Reducing Flight Delays Act of 2013. This legislation enabled the FAA to 

transfer $253 million in funding from our Airport Improvement Program to two other accounts: Operations, and Facilities and 

Equipment, thus eliminating the need for furloughs and tower closures that would have caused widespread air traffic delays 
72 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

across the national airspace system. While the transfer of funding allowed us to discontinue the furloughs, as a consequence 

the airports that would have received those grants are unable to use the funds for infrastructure improvements.

Accomplishments

Despite the substantial funding challenges that we faced, we kept our focus on operating a safe and efficient airspace system. 

We also continued to make progress on our transition to NextGen; more than 90 percent of our major system investments are 

still within 10 percent of their cost and schedule baselines. We exhibited strong fiscal and resource management by managing 

through the sequester. And we also succeeded in keeping our commitment to provide comprehensive fiscal and performance 

information, as we achieved an unmodified audit opinion with no material weaknesses on our FY 2013 financial statements. 

In addition, we were recognized with the distinguished Certificate in Excellence in Accountability Reporting award, given by 

the Association of Government Accountants for our 2012 Performance and Accountability Report. This was the ninth year that 

we have been a recipient of this award. We also received a “Best in Class” award for editorial excellence—presenting our 

financial and performance results in an informative, understandable, and transparent way.

Moving Forward

In the near term, we will build on the progress we’ve made in FY 2013. But a long-term unstable budget environment is 

unsustainable. The inefficiencies that derive from the continued fiscal uncertainty manifest themselves in start-and-stop 

operations that frustrate our customers, our stakeholders, and our employees. Given our critical role of operating the largest 

and most complex airspace in the world, budget uncertainty is not sustainable. Our economy, our customers, and the American 

public deserve a stable and safe aviation system.

Despite the funding situation, our dedicated team responded to this year’s substantial challenges with skill and 

professionalism. It is an honor and a privilege to be working with such a talented and dedicated workforce that does 

everything it can each day to keep the aviation system operating safely and efficiently. We are proud of our accomplishments 

and look forward to continuing to serve the public as cost-effective stewards of their investments. The American people 

deserve no less.

Mark House

Chief Financial Officer

December 9, 2013
73F I N A N C I A L R E S U LT S

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

OFFICE OF THE INSPECTOR GENERAL (OIG) QUALITY CONTROL REVIEW

U.S. Department of

Memorandum

Transportation

Office of the Secretary

of Transportation

Office of Inspector General

Subject: ACTION: Quality Control Review of Audited 

Financial Statements for Fiscal Years 2013 and 

2012, Federal Aviation Administration 

Report Number: QC-2014-014

Date: December 13, 2013

From: Calvin L. Scovel III 

Inspector General 

Reply to 

Attn. of: JA-20

To: Federal Aviation Administrator 

We respectfully submit our report on the quality control review (QCR) of the 

Federal Aviation Administration’s (FAA) audited financial statements for fiscal 

years 2013 and 2012.

The audit of FAA’s financial statements, as of and for the years ended 

September 30, 2013, and September 30, 2012, was completed by KPMG LLP, of 

Washington, DC (see Attachment) under contract to the Office of Inspector 

General (OIG). The contract required the audit to be performed in accordance with

generally accepted Government auditing standards and Office of Management and 

Budget Bulletin 14-02, “Audit Requirements for Federal Financial Statements.”

KPMG LLP concluded the consolidated financial statements present fairly, in all 

material respects, FAA’s financial position as of September 30, 2013, and

September 30, 2012, and its net costs, changes in net position, and budgetary 

resources for the years then ended in accordance with U.S. generally accepted 

accounting principles.

KPMG LLP’s Fiscal Year 2013 Audit Report 

KPMG LLP reported the following significant deficiency in internal control over 

financial reporting:
74

2

Improvements Needed in Management Review Controls – FAA does 

not have adequate controls to ensure that all transactions were properly 

recorded in the general ledger, including sufficient review controls to 

validate the completeness and accuracy of key inputs and assumptions of 

certain estimated amounts. As a result, there is a risk that errors will not be 

detected or corrected in a timely manner.

We performed a QCR of KPMG LLP’s report and related documentation. Our 

QCR, as differentiated from an audit performed in accordance with generally 

accepted Government auditing standards, was not intended for us to express, and 

we do not express, an opinion on FAA’s financial statements or conclusions about 

the effectiveness of internal controls or compliance with laws and regulations.

KPMG LLP is responsible for its report dated December 9, 2013, and the 

conclusions expressed in that report. However, our QCR disclosed no instances in 

which KPMG LLP did not comply, in all material respects, with generally 

accepted Government auditing standards.

KPMG LLP made two recommendations to strengthen FAA’s financial, 

accounting, and system controls. FAA officials concurred with KPMG LLP’s 

findings on the significant deficiency. FAA also committed to submitting to OIG, 

by December 31, 2013, a detailed action plan to address the findings contained in 

the audit report. In accordance with DOT Order 8000.1C, the corrective actions 

taken in response to the findings are subject to follow up. 

We appreciate the cooperation and assistance of FAA’s representatives, the Office 

of Financial Management, and KPMG LLP. If we can answer any questions, 

please contact me at 202-366-1959, or Lou E. Dixon, Principal Assistant Inspector 

General for Auditing and Evaluation, at 202-366-1427.

Attachment

#

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
75F I N A N C I A L R E S U LT S

INDEPENDENT AUDITORS’ REPORT

KPMG LLP is a Delaware limited liability partnership,

the U.S. member firm of KPMG International Cooperative

(“KPMG International”), a Swiss entity.

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

KPMG LLP

Suite 12000

1801 K Street, NW 

Washington, DC 20006

Independent Auditors’ Report

Administrator, Federal Aviation Administration

U.S. Department of Transportation: 

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of the U.S. Department of 

Transportation (DOT), Federal Aviation Administration (FAA), which comprise the consolidated balance 

sheets as of September 30, 2013 and 2012 and the related consolidated statements of net cost, and changes 

in net position, and combined statements of budgetary resources for the years then ended, and the related 

notes to the consolidated financial statements. 

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial 

statements in accordance with U.S. generally accepted accounting principles; this includes the design, 

implementation, and maintenance of internal control relevant to the preparation and fair presentation of 

consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of 

America; the standards applicable to financial audits contained in Government Auditing Standards issued 

by the Comptroller General of the United States; and Office of Management and Budget (OMB) Bulletin 

No. 14-02, Audit Requirements for Federal Financial Statements. Those standards and OMB Bulletin 

No. 14-02 require that we plan and perform the audit to obtain reasonable assurance about whether the 

consolidated financial statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the 

consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the 

assessment of the risks of material misstatement of the consolidated financial statements, whether due to 

fraud or error. In making those risk assessments, the auditor considers internal control relevant to the 

entity’s preparation and fair presentation of the consolidated financial statements in order to design audit 

procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on 

the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also 

includes evaluating the appropriateness of accounting policies used and the reasonableness of significant 

accounting estimates made by management, as well as evaluating the overall presentation of the 

consolidated financial statements. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our 

audit opinion. 
76

Opinion on the Financial Statements

In our opinion, the consolidated financial statements referred to above present fairly, in all material 

respects, the financial position of the Federal Aviation Administration as of September 30, 2013 and 2012,

and its net costs, changes in net position, and budgetary resources for the years then ended in accordance 

with U.S. generally accepted accounting principles. 

Emphasis of Matter

As discussed in Notes 1 and 12, the consolidated financial statements reflect actual excise tax revenues 

deposited in the Airport and Airway Trust Fund through June 30, 2013, and excise tax receipts estimated 

by the Department of Treasury’s Office of Tax Analysis for the quarter ended September 30, 2013. Our 

opinion is not modified with respect to this matter. 

Other Matters

Required Supplementary Information

U.S. generally accepted accounting principles require that the information in the Management’s Discussion 

and Analysis, Required Supplementary Information, and Required Supplementary Stewardship 

Information sections be presented to supplement the basic consolidated financial statements. Such 

information, although not a part of the basic consolidated financial statements, is required by the Federal 

Accounting Standards Advisory Board who considers it to be an essential part of financial reporting for 

placing the basic consolidated financial statements in an appropriate operational, economic, or historical 

context. We have applied certain limited procedures to the required supplementary information in 

accordance with auditing standards generally accepted in the United States of America, which consisted of 

inquiries of management about the methods of preparing the information and comparing the information

for consistency with management’s responses to our inquiries, the basic consolidated financial statements, 

and other knowledge we obtained during our audits of the basic consolidated financial statements. We do 

not express an opinion or provide any assurance on the information because the limited procedures do not 

provide us with sufficient evidence to express an opinion or provide any assurance. 

Other Information

Our audits were conducted for the purpose of forming an opinion on the basic consolidated financial 

statements as a whole. The information in the Other Information, FAA at a Glance, Forward, Messages 

from the Administrator and Chief Financial Officer, and Performance Results sections as listed in the Table 

of Contents of the FAA Performance and Accountability Report is presented for purposes of additional 

analysis and is not a required part of the basic consolidated financial statements. Such information has not 

been subjected to the auditing procedures applied in the audits of the basic consolidated financial 

statements, and accordingly, we do not express an opinion or provide any assurance on it. 

Other Reporting Required by Government Auditing Standards 

Internal Control Over Financial Reporting

In planning and performing our audit of the consolidated financial statements, we considered the FAA’s

internal control over financial reporting (internal control) to determine the audit procedures that are 

appropriate in the circumstances for the purpose of expressing our opinion on the consolidated financial 

statements, but not for the purpose of expressing an opinion on the effectiveness of the FAA’s internal 

control. Accordingly, we do not express an opinion on the effectiveness of the FAA’s internal control. We

did not test all internal controls relevant to operating objectives as broadly defined by the Federal 

Managers’ Financial Integrity Act of 1982. 

2

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
77F I N A N C I A L R E S U LT S

A deficiency in internal control exists when the design or operation of a control does not allow 

management or employees, in the normal course of performing their assigned functions, to prevent, or 

detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination 

of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of 

the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A

significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe 

than a material weakness, yet important enough to merit attention by those charged with governance. 

Our consideration of internal control was for the limited purpose described in the first paragraph of this 

section and was not designed to identify all deficiencies in internal control that might be material 

weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may 

exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies 

in internal control that we consider to be material weaknesses. However, we did identify certain 

deficiencies in internal control, described in the accompanying schedule of findings in Exhibit I, that we 

considerto be significant deficiencies. 

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the FAA’s consolidated financial statements are 

free from material misstatement, we performed tests of its compliance with certain provisions of laws, 

regulations, contracts, and grant agreements, noncompliance with which could have a direct and material 

effect on the determination of financial statement amounts, and certain provisions of other laws and 

regulations specified in OMB Bulletin No. 14-02. However, providing an opinion on compliance with 

those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. 

The results of our tests disclosed no instances of noncompliance or other matters that are required to be 

reported under Government Auditing Standards or OMB Bulletin No. 14-02. 

FAA’s Response to Findings

The FAA’s response to the findings identified in our audit is described in the accompanying schedule of 

findings in Exhibit I. The FAA’s response was not subjected to the auditing procedures applied in the 

audit of the consolidated financial statements and, accordingly, we express no opinion on the response. 

Purpose of the Other Reporting Required by Government Auditing Standards

The purpose of the communication described in the Other Reporting Required by Government Auditing 

Standards section is solely to describe the scope of our testing of internal control and compliance and the 

result of that testing, and not to provide an opinion on the effectiveness of the FAA’s internal control or 

compliance. Accordingly, this communication is not suitable for any other purpose. 

December 9, 2013 

3

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
78

Federal Aviation Administration

Independent Auditors’ Report

Internal Control Over Financial Reporting EXHIBIT I

SIGNIFICANT DEFICIENCIES

______________________________________________________________________________________

Improvements Needed in Management Review Controls

Criteria

The Government Accountability Office’s (GAO) Standard for Internal Control in the Federal Government

(the Standards) states that, “... control activities help to ensure that all transactions are completely and 

accurately recorded.”

The Standards further define internal control as “an integral component of an organization’s management 

that provides reasonable assurance that the following objectives are being achieved: effectiveness and 

efficiency of operations, reliability of financial reporting, and compliance with applicable laws and 

regulations.” Furthermore, the Standards list examples of control activities that include (1) top-level 

reviews of actual performance, (2) reviews by management at the functional or activity level ...

(4) controls over information processing ... (6) Establishment and review of performance measures and 

indicators, (7) segregation of duties, (8) proper execution of transactions and events, (9) accurate and 

timely recording of transactions and events, (10) access restrictions to and accountability for resources and 

records, and (11) appropriate documentation of transactions and internal control.

The Standards also state, “Internal control should generally be designed to assure that ongoing monitoring 

occurs in the course of normal operations. It is performed continually and is ingrained in the agency’s 

operations. It includes regular management and supervisory activities, comparisons, reconciliations, and 

other actions people take in performing their duties.”

Appendix A, Section I, of the Office of Management and Budget (OMB) Circular No. A-123,

Management’s Responsibility for Internal Controls, states that “Internal control over financial reporting is 

a process designed to provide reasonable assurance regarding the reliability of financial reporting. 

Reliability of financial reporting means that management can reasonably make the following assertions:

• All reported transactions actually occurred during the reporting period and all assets and liabilities 

exist as of the reporting date (existence and occurrence); 

• All assets, liabilities, and transactions that should be reported have been included and no 

unauthorized transactions or balances are included (completeness); and,

• All assets and liabilities have been properly valued, and where applicable, all costs have been 

properly allocated (valuation).”

Conditions

During the fiscal year (FY) 2013 audit, we noted several instances whereby the FAA did not have adequate 

controls in place to ensure that all transactions were properly recorded in the general ledger, including 

sufficient review controls to validate the completeness and accuracy of key inputs and assumptions of

certain estimated amounts. For example, we identified errors totaling over $100 million in three of eight 

overflight fee revenue transactions tested for the period July 1, 2013 through September 30, 2013.

One error was identified and corrected by management; however, the correction was not made timely. 

Two errors were identified by us. 

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
79F I N A N C I A L R E S U LT S

Federal Aviation Administration

Independent Auditors’ Report

Internal Control Over Financial Reporting EXHIBIT I

SIGNIFICANT DEFICIENCIES

______________________________________________________________________________________

In addition, our testing of the grant accrual as of September 30, 2013 revealed the following errors in key 

inputs and assumptions used in the calculation of the estimate:

• The grant disbursement data used in the calculation of the grant accrual was incomplete, as two 

months of data was erroneously excluded from the accrual calculation.

• The grant accrual calculation erroneously did not include an accrual for costs associated with one 

grant that was awarded in August 2013.

The errors above were not detected by management in the review of these accruals at year-end.

Cause/Effect

The errors above related to overflight fee revenue first occurred after personnel at the Enterprise Service 

Center implemented a Dataloader tool in June 2013 to post overflight fee revenue transactions to the 

general ledger. The Dataloader did not always properly capture overflight fee revenue and, as a result, 

posted incorrect transactions to the general ledger. A manual review of the transactions posted by the 

Dataloader tool was not consistently performed to ensure the recorded amounts were consistent with the 

related source documentation and general ledger inputs.

The conditions above related to the grant accrual occurred because personnel within the Office of Financial 

Reporting and Accountability did not perform procedures to validate the completeness and accuracy of key 

inputs provided by other organizations within FAA for use in calculating year-end accruals. As a result, 

Grants Payable and Expenses were overstated by $80 million as a result of the error related to incomplete 

disbursements, and understated by $65 million as a result of the exclusion of one grant from the accrual. 

The net impact was an overstatement to Grants Payable and Expenses of $15 million. The draft FY 2013 

Performance and Accountability Report provided to us contained errors caused by the conditions described 

above.

Failure to perform sufficient review controls over key general ledger inputs and outputs increases the risk 

and the likelihood that material differences will not be detected or corrected timely.

Recommendations

We recommend that FAA design and implement policies and procedures 1) to ensure transactions are 

recorded properly in the general ledger and 2) to validate the completeness and accuracy of key inputs and 

assumptions that are the basis for transactions recorded to the general ledger. 

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
80

U.S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

MANAGEMENT’S RESPONSE TO THE FY 2013 

INDEPENDENT AUDITORS’ REPORT

December 9, 2013

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
81F I N A N C I A L R E S U LT S

Office of Financial Services/CFO 800 Independence Ave. S.W.

Washington, DC 20591

Ms. Hannah Padilla 

KPMG LLP

1801 K Street, NW 

Suite 12000 

Washington, DC 20006 

Dear Ms. Padilla: 

We have received your Independent Auditors’ Report related to the Federal Aviation 

Administration’s (FAA’s) fiscal year 2013 consolidated financial statements and offer the 

following comments. 

We concur with the significant deficiency contained in your report. To address the findings, 

the Office of Financial Services will coordinate with other FAA offices as necessary to 

develop a corrective action plan, and will submit it to the Office of Inspector General no 

later than December 31, 2013. I will monitor implementation of the plan throughout the 

corrective action process. 

We reaffirm our commitment to continuously improving our financial management, and to 

serving the public as cost-effective stewards of their investments. We look forward to 

continuing to work with you in support of an efficient and effective audit. 

As always, we welcome the opportunity to improve our processes and procedures. Thank 

you for your candor and the professional manner in which you and your team conducted this 

audit. 

Sincerely, 

Mark House 

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83F I N A N C I A L R E S U LT S

FINANCIAL STATEMENTS

U.S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

CONSOLIDATED BALANCE SHEETS

As of September 30

(Dollars in Thousands)

Assets 2013 2012

Intragovernmental

Fund balance with Treasury (Note 2) $ 3,273,753 $ 3,085,202 

Investments, net (Note 3) 13,821,513 12,331,464 

Accounts receivable, prepayments, and other (Note 4) 205,778 240,254 

Total intragovernmental 17,301,044 15,656,920 

Accounts receivable, prepayments, and other, net (Note 4) 55,293 47,949 

Inventory, operating materials, and supplies, net (Note 5) 656,491 632,320 

Property, plant, and equipment, net (Note 6 and 9) 13,420,806 13,442,573 

Total assets $ 31,433,634 $ 29,779,762 

Liabilities

Intragovernmental liabilities

Accounts payable $ 9,943 $ 15,656 

Employee related and other (Note 8) 362,017 425,300 

Total intragovernmental liabilities 371,960 440,956 

Accounts payable 365,311 417,445 

Grants payable 772,822 640,646 

Environmental (Note 7, 15, and 16) 751,705 810,399 

Employee related and other (Note 8, 9, and 16) 1,120,996 1,121,798 

Federal employee benefits (Note 10) 973,055 946,778 

Total liabilities 4,355,849 4,378,022 

Commitments and contingencies (Note 9 and 16)

Net position

Unexpended appropriations—funds from dedicated collections (Note 12) 932,877 1,037,316 

Unexpended appropriations—all other funds 29,039 31,225 

Subtotal unexpended appropriations 961,916 1,068,541 

Cumulative results of operations—funds from dedicated collections (Note 12) 15,513,924 14,859,763 

Cumulative results of operations—all other funds 10,601,945 9,473,436 

Subtotal cumulative results of operations 26,115,869 24,333,199 

Total net position 27,077,785 25,401,740 

Total liabilities and net position $ 31,433,634 $ 29,779,762

The accompanying notes are an integral part of these financial statements.

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
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U.S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

CONSOLIDATED STATEMENTS OF NET COST

For the Years Ended September 30

(Dollars in Thousands)

2013 2012

Line of Business programs (Note 11)

Air Traffic Organization

Expenses $ 11,142,570 $ 11,439,702 

Less earned revenues (276,406) (281,226)

Net costs 10,866,164 11,158,476 

Aviation Safety

Expenses 1,417,207 1,422,325 

Less earned revenues (10,683) (12,016)

Net costs 1,406,524 1,410,309 

Airports

Expenses 3,602,949 3,139,685 

Less earned revenues — (86)

Net costs 3,602,949 3,139,599 

Commercial Space Transportation

Expenses 19,139 18,400 

Net costs 19,139 18,400 

Non-Line of Business programs

Regions and Center Operations and other programs

Expenses 753,699 783,696 

Less earned revenues (423,137) (379,320)

Net costs 330,562 404,376 

Net cost of operations

Total expenses 16,935,564 16,803,808 

Less earned revenues (710,226) (672,648)

Total net cost $ 16,225,338 $ 16,131,160 

The accompanying notes are an integral part of these financial statements.

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
85F I N A N C I A L R E S U LT S

U.S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

CONSOLIDATED STATEMENTS OF CHANGES IN NET POSITION

For the Years Ended September 30

(Dollars in Thousands)

UNEXPENDED APPROPRIATIONS

2013 2012

Funds from 

dedicated 

collections

All other 

funds Totals

Funds from 

dedicated 

collections

All other 

funds Totals

Beginning balances $ 1,037,316 $ 31,225 $ 1,068,541 $ 1,088,171 $ 65,775 $ 1,153,946 

Budgetary financing sources

Appropriations received (Note 14) 4,592,701 — 4,592,701 4,592,701 — 4,592,701 

Appropriations transferred-in/out — — — 14,082 — 14,082 

Rescissions, cancellations and other (287,566) — (287,566) (58,748) — (58,748)

Appropriations used (4,409,574) (2,186) (4,411,760) (4,598,890) (34,550) (4,633,440)

Total budgetary financing sources (104,439) (2,186) (106,625) (50,855) (34,550) (85,405)

Ending balances $ 932,877 $ 29,039 $ 961,916 $ 1,037,316 $ 31,225 $ 1,068,541 

CUMULATIVE RESULTS OF OPERATIONS

2013 2012

Funds from 

dedicated 

collections

All other 

funds Totals

Funds from 

dedicated 

collections

All other 

funds Totals

Beginning balances $14,859,763 $ 9,473,436 $ 24,333,199 $12,873,270 $ 9,606,578 $ 22,479,848 

Budgetary financing sources

Appropriations used 4,409,574 2,186 4,411,760 4,598,890 34,550 4,633,440 

Non-exchange revenue—excise 

taxes and other (Note 12) 13,101,575 20,015 13,121,590 12,777,130 24,456 12,801,586 

Transfers-in/out without 

reimbursement (236,568) — (236,568) (199,016) (16) (199,032)

Other financing sources

Donations and forfeitures of property — 78,599 78,599 — 156,817 156,817 

Transfers-in/out without 

reimbursement (2,314,873) 2,403,773 88,900 (951,817) 1,021,572 69,755 

Imputed financing from costs 

absorbed by others (Note 13) 509,371 61,656 571,027 489,032 63,112 552,144 

Other (405) (26,895) (27,300) (37) (30,162) (30,199)

Total financing sources 15,468,674 2,539,334 18,008,008 16,714,182 1,270,329 17,984,511 

Net cost of operations 14,814,513 1,410,825 16,225,338 14,727,689 1,403,471 16,131,160 

Net change 654,161 1,128,509 1,782,670 1,986,493 (133,142) 1,853,351 

Ending balances $15,513,924 $ 10,601,945 $ 26,115,869 $ 14,859,763 $ 9,473,436 $ 24,333,199 

The accompanying notes are an integral part of these financial statements.

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
86

U.S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

COMBINED STATEMENTS OF BUDGETARY RESOURCES

For the Years Ended September 30

(Dollars in Thousands)

2013 2012

Budgetary resources (Note 14)

Unobligated balance brought forward, transfers and other $ 3,519,678 $ 3,556,211 

Recoveries of prior year obligations 373,662 413,890 

Other changes in unobligated balance (85,116) (116,841)

Unobligated balance from prior year budget authority 3,808,224 3,853,260 

Appropriations 11,924,500 12,552,370 

Contract authority 3,343,300 3,350,000 

Spending authority from offsetting collections 5,910,887 5,969,879 

Total budgetary resources $ 24,986,911 $ 25,725,509 

Status of budgetary resources

Obligations incurred $ 21,380,109 $ 22,205,831 

Apportioned 1,388,704 1,430,914 

Unapportioned 2,218,098 2,088,764 

Total status of budgetary resources $ 24,986,911 $ 25,725,509 

Change in obligated balance

Obligated balance, net, beginning of period $ 8,938,047 $ $8,955,059 

Obligations incurred 21,380,109 22,205,831 

Gross outlays (21,481,412) (21,766,301)

Recoveries of prior year obligations (373,662) (413,890)

Change in uncollected customer payments from federal sources 54,842 (42,652)

Obligated balance, net, end of period $ 8,517,924 $ $8,938,047 

Budget authority and outlays

Budget authority, gross $ 21,178,687 $ 21,872,249 

Actual offsetting collections (5,969,567) (5,927,227)

Change in uncollected customer payments from federal sources 54,842 (42,652)

Budget authority, net $ 15,263,962 $ 15,902,370 

Outlays

Gross outlays $ 21,481,412 $ 21,766,301 

Collections, net of offsetting receipts (5,969,567) (5,927,227)

Distributed offsetting receipts (2,801) (11,560)

Net outlays $ 15,509,044 $ 15,827,514 

The accompanying notes are an integral part of these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS

NOTE 1. Summary of Significant Accounting Policies 

A. Basis of Presentation

The financial statements have been prepared to report the 

financial position, net cost of operations, changes in net 

position, and status and availability of budgetary resources of 

the Federal Aviation Administration (the FAA). The statements 

are a requirement of the Chief Financial Officers Act of 1990, 

and the Government Management Reform Act of 1994. They 

have been prepared from, and are fully supported by, the books 

and records of the FAA in accordance with (1) the hierarchy of 

accounting principles generally accepted in the United States of 

America and standards approved by the principals of the Federal 

Accounting Standards Advisory Board (FASAB), (2) Office of 

Management and Budget (OMB) Circular No. A-136, Financial 

Reporting Requirements, and (3) Department of Transportation 

(DOT) and the FAA significant accounting policies, the latter of 

which are summarized in this note. These statements, with the 

exception of the Statement of Budgetary Resources, are different 

from financial management reports, which are also prepared 

pursuant to OMB directives that are used to monitor and control 

the FAA’s use of budgetary resources. The statements are 

subjected to audit, as required by OMB Bulletin No. 14-02, Audit 

Requirements for Federal Financial Statements.

Notes 4 and 8 include the necessary information to present 

“other assets” and “other liabilities” as defined by OMB Circular 

No. A-136. This presentation is used to support the preparation 

of the consolidated financial statements of the U.S. Government. 

Unless specified otherwise, all dollar amounts are presented in 

thousands.

B. Appropriations and Reporting Entity 

The FAA, which was created in 1958, is a component of the DOT, 

a cabinet-level agency of the Executive Branch of the United 

States Government. The FAA’s mission is to provide a safe, 

secure, and efficient global aerospace system that contributes to 

national security and the promotion of United States aerospace 

safety. As the leading authority in the international aerospace 

community, the FAA is responsive to the dynamic nature of 

customer needs, economic conditions, and environmental 

concerns. 

Congress annually enacts appropriations to permit the FAA 

to incur obligations for specified purposes. In FY 2013 and 

2012, the FAA was accountable for amounts made available 

in appropriations laws from the Airport and Airway Trust Fund 

(AATF), Revolving Funds, a Special Fund, and General Fund 

appropriations. The FAA recognizes budgetary resources as 

assets when cash (funds held by the U.S. Treasury) is made 

available through Department of Treasury General Fund warrants, 

and transfers from the AATF are apportioned by OMB. 

The FAA has contract authority which allows the agency to enter 

into contracts prior to receiving an appropriation for the payment 

of obligations. A subsequently enacted appropriation provides 

funding to liquidate the obligations. Current contract authority is 

provided for the Airport Improvement Program (AIP) program and 

funded by appropriations from the AATF.

The FAA also has spending authority from offsetting collections 

primarily from a non-expenditure transfer from the AATF for 

Operations funding. The balance of the spending authority from 

offsetting collections comes from other federal agencies to fund 

reimbursable activities performed by the FAA on their behalf.

The FAA reporting entity is comprised of the following major 

funds: 

¢ Airport and Airway Trust Fund (AATF). The AATF, a fund 

from dedicated collections (in prior years referred to as 

an “earmarked fund”), is funded by excise taxes that the 

Internal Revenue Service (IRS) collects from airway system 

users. As presented in Note 3, these receipts are held for 

investment and unavailable until appropriated by the U.S. 

Congress. Once appropriated for use, the FAA transfers AATF 

receipts necessary to meet cash disbursement needs to 

several other funds, from which expenditures are made. The 

AATF fully finances the following additional FAA funds: 

¢ Grants-in-Aid to Airports-AATF. As authorized, grants 

are awarded with Grants-in-Aid to Airports funding 

and used for planning and development to maintain a 

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88

safe and efficient nationwide system of public airports. 

These grants fund approximately one-third of all capital 

development at the nation’s public airports, and are 

administered through the Airport Improvement Program. 

¢ Facilities and Equipment-AATF. The Facilities and 

Equipment funds are the FAA’s principal means of 

modernizing and improving air traffic control and 

airway facilities. These funds also finance major capital 

improvements required by other the FAA programs as 

well as other improvements designed to enhance the 

safety and capacity of the national airspace system. 

¢ Research, Engineering and Development-AATF. Research, 

Engineering, and Development funds finance long-term 

research programs to improve the air traffic control 

system.

¢ Operations General Fund and Operations-AATF. Operations 

finances operating costs, maintenance, communications, 

and logistical support for the air traffic control and air 

navigation systems. It also finances the salaries and costs 

associated with carrying out the FAA’s safety and inspection 

and regulatory responsibilities. Operations-AATF is financed 

through transfers from the AATF. For administrative ease in 

obligating and expending for operational activities, those 

funds are then in turn transferred to the Operations General 

Fund, which is supplemented by appropriations from the U.S. 

Treasury. Expenditures for operational activities, whether 

originally funded by the AATF or the General Fund of the U.S. 

Treasury, are generally made from the Operations General 

Fund.

¢ Aviation Insurance Revolving Fund. Revolving funds are 

accounts established by law to finance a continuing cycle 

of operations with receipts derived from such operations 

usually available in their entirety for use by the fund 

without further action by the U.S. Congress. The Aviation 

Insurance Revolving Fund, a fund from dedicated collections, 

provides products that address the insurance needs of the 

U.S. domestic airline industry not adequately met by the 

commercial insurance market. The FAA is currently providing 

war risk insurance which includes hull loss and passenger, 

crew, and third-party liability coverage as required by the 

Homeland Security Act of 2002 as amended by the Federal 

Aviation Administration Extension Act of 2011 (see Note 16). 

Current insurance coverage expires on December 31, 2013. 

¢ Administrative Services Franchise Fund (Franchise Fund). 

The Franchise Fund is a revolving fund designed to create 

competition within the public sector in the performance of a 

wide variety of support services. 

¢ Other Funds. The consolidated financial statements include 

other funds such as Aviation Overflight User Fees. Aviation 

Overflight User Fees is a “special” fund from dedicated 

collections whose receipts come from charges to operators 

of aircraft that fly in U.S. controlled airspace, but neither take 

off nor land in the United States. Other funds also include 

Facilities, Engineering & Development General Fund and 

General Fund Miscellaneous Receipts accounts established 

for receipts of non-recurring activity, such as fines, penalties, 

fees, and other miscellaneous receipts for services and 

benefits.

The FAA has rights and ownership of all assets reported in these 

financial statements. The FAA does not possess any non-entity 

assets.

C. Basis of Accounting

Transactions are recorded on both an accrual accounting basis 

and a budgetary accounting basis. Under the accrual method, 

revenues are recognized when earned, and expenses are 

recognized when a liability is incurred, without regard to receipt 

or payment of cash. Budgetary accounting facilitates compliance 

with legal requirements on the use of federal funds. All material 

intra-agency transactions and balances have been eliminated for 

presentation on a consolidated basis. However, the Statement 

of Budgetary Resources is presented on a combined basis, in 

accordance with OMB Circular No. A-136. 

Intra-governmental transactions and balances result from 

exchange transactions made between the FAA and another 

federal government reporting entity, while those classified as 

“with the public” result from exchange transactions between 

the FAA and non-federal entities. For example, if the FAA 

purchases goods or services from the public and sells them to 

another federal entity, the costs would be classified as “with the 

public,” but the related revenues would be classified as “intragovernmental.” This could occur, for example, when the FAA 

provides goods or services to another federal government entity 

on a reimbursable basis. The purpose of this classification is to 

enable the federal government to prepare consolidated financial 

statements, and not to match public and intra-governmental 

revenue with costs that are incurred to produce public and intragovernmental revenue. 

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D. Revenues and Other Financing Sources

Congress enacts annual, multi-year, and no-year appropriations 

to be used, within statutory limits, for operating, capital and 

grant expenditures. Additional amounts are obtained from 

service fees (e.g., landing, registry, and overflight fees), Aviation 

Insurance Program premiums (see note 16), and through 

reimbursements for products and services provided to domestic 

and foreign governmental entities.

The AATF is sustained by excise taxes that the IRS collects 

from airway system users. Excise taxes collected are initially 

deposited to the General Fund of the U.S. Treasury. The IRS does 

not receive sufficient information at the time the excise taxes 

are collected to determine how they should be distributed to 

specific funds from dedicated collections. Therefore, the U.S. 

Treasury makes initial semi-monthly distributions to funds from 

dedicated collections based on estimates prepared by its Office 

of Tax Analysis (OTA). These estimates are based on historical 

excise tax data applied to current excise tax receipts. The FAA’s 

September 30, 2013, financial statements reflect excise taxes 

certified (as actual collections) by IRS through June 30, 2013, 

and excise taxes estimated by OTA for the period July 1 through 

September 30, 2013, as specified by Statement of Federal 

Financial Accounting Standards (SFFAS) Number 7, Accounting 

for Revenue and Other Financing Sources. Actual excise tax 

collections data for the quarter ended September 30, 2013, will 

not be available from the IRS until February 2014. When actual 

amounts are certified by the IRS, generally three to four months 

after the end of each quarter, adjustments are made to the AATF 

to account for the difference. Historically, actual excise tax 

collections certified by the IRS for the fourth quarter of the fiscal 

year have not been materially different from the OTA’s estimate. 

Additional information on this subject is disclosed in Note 12. 

The AATF also earns interest from investments in U.S. 

Government securities. Interest income on investments is 

recognized as revenue on the accrual basis.

Appropriations are recognized as a financing source when 

expended. Revenues from services provided by the FAA 

associated with reimbursable agreements are recognized 

concurrently with the recognition of accrued expenditures for 

performing the services. Aviation Insurance Program premiums 

are recognized as revenue on a straight-line basis over the period 

of coverage. Aviation overflight user fees are recognized as 

revenue in the period in which the flights take place. 

The FAA recognizes as an imputed financing source the amount 

of accrued pension and post-retirement benefit expenses for 

current employees paid on the FAA’s behalf by the Office of 

Personnel Management (OPM), as well as amounts paid from 

the U.S. Treasury Judgment Fund in settlement of claims or court 

assessments against the FAA.

E. Taxes

The FAA, as a federal entity, is not subject to federal, state, or 

local income taxes and, accordingly, does not record a provision 

for income taxes in the accompanying financial statements.

F. Fund Balance with the U.S. Treasury

The U.S. Treasury processes cash receipts and disbursements. 

Funds held at the Treasury are available to pay agency liabilities. 

The FAA does not maintain cash in commercial bank accounts 

or foreign currency balances. Foreign currency payments are 

made either by Treasury or the U.S. Department of State and are 

reported by the FAA in the U.S. dollar equivalent.

G. Investment in U.S. Government Securities

Unexpended funds in the AATF and Aviation Insurance Revolving 

Fund (Aviation Insurance Program premiums) are invested in U.S. 

Government securities at cost. A portion of the AATF investments 

is liquidated semi-monthly in amounts needed to provide cash 

for the FAA appropriation accounts, to the extent authorized. 

Aviation Insurance Revolving Fund investments are usually held 

to maturity, but may be liquidated to pay for an insurance claim 

when necessary. Investments, redemptions, and reinvestments 

are held and managed under the direction of the FAA by the U.S. 

Treasury. 

H. Accounts Receivable

Accounts receivable consists of amounts owed to the FAA by 

other federal agencies and the public. Amounts due from federal 

agencies are considered fully collectible. Accounts receivable 

from the public include, for example, overflight fees, fines 

and penalties, reimbursements from employees, and services 

performed for foreign governments. These amounts due from the 

public are presented net of an allowance for loss on uncollectible 

accounts based on historical collection experience or an analysis 

of the individual receivables. 

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I. Inventory

Within the FAA’s Franchise Fund, inventory is held for sale to 

the FAA field locations and other domestic entities and foreign 

governments. Inventory consists of materials and supplies 

the FAA uses to support our nation’s airspace system and is 

predominantly located at the FAA Mike Monroney Aeronautical 

Center in Oklahoma City. Inventory cost includes material, labor, 

and applicable manufacturing overhead, and is determined using 

the weighted moving average cost method.

The FAA field locations frequently exchange non-operational 

repairable components with the Franchise Fund. These 

components are classified as “held for repair.” An allowance 

is established for repairable inventory based on the average 

historical cost of such repairs. 

Inventory may be classified as “excess, obsolete, and 

unserviceable” if, for example, the quantity exceeds projected 

demand for the foreseeable future, or if the item has been 

technologically surpassed. An allowance is established for 

“excess, obsolete, and unserviceable” inventory based on the 

condition of various inventory categories as well as the FAA’s 

historical experience with disposing of such inventory.

J. Operating Materials and Supplies

In contrast to inventory, which is held for sale by the Franchise 

Fund, operating materials and supplies are used in the operations 

of the agency. Operating materials and supplies primarily consist 

of unissued materials and supplies that will be used in the repair 

and maintenance of the FAA owned aircraft. They are valued 

based on the weighted moving average cost method or on the 

basis of actual prices paid. Operating materials and supplies are 

expensed using the consumption method of accounting.

Operating materials and supplies “held for use” are those items 

that are consumed on a regular and ongoing basis. Operating 

materials and supplies “held for repair” are awaiting service to 

restore their condition to “held for use.” 

Operating materials and supplies may be classified as “excess, 

obsolete, and unserviceable” if, for example, the quantity 

exceeds projected demand for the foreseeable future, or if 

the item has been technologically surpassed. An allowance 

is established for “held for repair” and “excess, obsolete, and 

unserviceable” operating materials and supplies based on 

the condition of various asset categories as well as the FAA’s 

historical experience with disposing of such assets. 

K. Property, Plant and Equipment (PP&E)

The FAA capitalizes acquisitions of Property Plant &Equipment 

(PP&E) when the cost equals or exceeds $100 thousand and the 

useful life equals or exceeds two years. The FAA records PP&E 

at original acquisition cost. However, where applicable, the 

FAA allocates an average cost of like assets within a program, 

commonly referred to as “unit costing.” The FAA purchases 

some capital assets in large quantities, which are known as 

“bulk purchases.” If the cost per unit is below the capitalization 

threshold of the FAA, but the aggregate bulk purchase equals 

or exceeds the capitalization threshold, then these items are 

capitalized.

Depreciation expense is calculated using the straight-line 

method. Depreciation commences the first month after the asset 

is placed in service. The FAA does not recognize residual value of 

its PP&E. 

Real property assets, such as buildings, air traffic control towers, 

en route air traffic control centers, mobile buildings, roads, 

sidewalks, parking lots, and other structures, are depreciated 

over a useful life of up to 40 years.

Personal property assets, such as aircraft, decision support 

systems, navigation, surveillance, communications and weatherrelated equipment, office furniture, internal use software, 

vehicles, and office equipment, are depreciated over a useful life 

of up to 20 years.

Buildings and equipment acquired under capital leases are 

amortized over the lease term. If the lease agreement contains 

a bargain purchase option or otherwise provides for transferring 

title of the asset to the FAA, the building is depreciated over a 

40-year service life. 

Construction in Progress (CIP) is valued at actual direct costs plus 

applied overhead and other indirect costs.

The FAA occupies certain real property that is leased by the 

DOT from the General Services Administration. Payments made 

by the FAA are based on the fair market value for similar rental 

properties.

The FAA conducts a significant amount of research and 

development into new technologies to support nation’s airspace 

system. Until such time as the research and development project 

reaches “technological feasibility” the costs associated with the 

project are expensed in the year incurred. 

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L. Prepaid Charges

The FAA generally does not pay for goods and services 

in advance, except for certain reimbursable agreements, 

subscriptions, and payments to contractors and employees. 

Payments made in advance of the receipt of goods and services 

are recorded as prepaid charges at the time of prepayment and 

recognized as expenses when the related goods and services are 

received.

M. Liabilities

Liabilities covered by budgetary or other resources are those 

liabilities for which Congress has appropriated funds or funding 

is otherwise available to pay amounts due. Liabilities not 

covered by budgetary or other resources represent amounts 

owed in excess of available, congressionally appropriated 

funds or other amounts. The liquidation of liabilities not 

covered by budgetary or other resources is dependent on future 

congressional appropriations or other funding, including the 

AATF. Intragovernmental liabilities are claims against the FAA by 

other federal agencies.

N. Accounts Payable 

Accounts payable are amounts that the FAA owes to other 

federal agencies and the public. Accounts payable to federal 

agencies generally consist of amounts due under interagency 

reimbursable agreements. Accounts payable to the public 

primarily consist of unpaid goods and services received by the 

FAA in support of our nation’s airspace system, and estimated 

amounts incurred but not yet claimed by AIP grant recipients.

O. Annual, Sick, and Other Leave

Annual leave is accrued as it is earned, and the accrual is 

reduced as leave is taken. For each bi-weekly pay period, 

the balance in the accrued annual leave account is adjusted 

to reflect the latest pay rates and unused hours of leave. 

Liabilities associated with other types of vested leave, including 

compensatory, credit hours, restored leave, and sick leave in 

certain circumstances, are accrued based on latest pay rates and 

unused hours of leave. Sick leave is generally nonvested, except 

for sick leave balances at retirement under the terms of certain 

union agreements. Funding will be obtained from future financing 

sources to the extent that current or prior year appropriations 

are not available to fund annual and other types of vested leave 

earned but not taken. Nonvested leave is expensed when used. 

P. Accrued Workers’ Compensation

A liability is recorded for actual and estimated future payments 

to be made for workers’ compensation pursuant to the Federal 

Employees’ Compensation Act (FECA). The actual costs incurred 

are reflected as a liability because the FAA will reimburse the 

Department of Labor (DOL) two years after the actual payment 

of expenses by the DOL. Future appropriations will be used 

for the reimbursement to the DOL. The liability consists of (1) 

the net present value of estimated future payments calculated 

by the DOL, and (2) the unreimbursed cost paid by the DOL for 

compensation to recipients under FECA. 

Q. Retirement Plan

The FAA employees participate in either the Civil Service 

Retirement System (CSRS) or the Federal Employees Retirement 

System (FERS). The employees who participate in the CSRS 

are beneficiaries of the FAA’s matching contribution, equal to 7 

percent of pay, distributed to their annuity account in the Civil 

Service Retirement and Disability Fund. 

FERS went into effect on January 1, 1987. FERS and Social 

Security automatically cover most employees hired after 

December 31, 1983. Employees hired prior to January 1, 1984 

could elect either to join FERS and Social Security or to remain in 

CSRS. FERS offers a savings plan to which the FAA automatically 

contributes 1 percent of pay and matches any employee 

contribution up to an additional 4 percent of pay. For FERS 

participants, the FAA also contributes the employer’s matching 

share for Social Security. The FAA’s matching contributions are 

recognized as operating expenses.

The FAA recognizes the full cost of pensions and other retirement 

benefits during an employee’s active years of service through 

a combination of costs financed by the FAA’s appropriations 

and imputed costs. The OPM actuaries determine pension cost 

factors by calculating the value of pension benefits expected to 

be paid in the future and communicate these factors to the FAA. 

The difference between the costs paid by the FAA during the 

year and the full cost of pensions and other retirement benefits 

using the OPM’s costs factors is the imputed cost. The OPM also 

provides information regarding the full cost of health and life 

insurance benefits. The imputed costs are completely offset with 

revenue which is reported as an imputed financing source to the 

extent that these costs will be paid by the OPM.

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R. Grants

The FAA records an obligation at the time a grant is awarded. 

As grant recipients conduct eligible activities under the terms 

of their grant agreement, they request payment by the FAA, 

typically via an electronic payment process. Expenses are 

recorded at the time of payment approval during the year. 

The FAA also recognizes an accrued liability and expense for 

estimated eligible grant payments not yet requested by grant 

recipients. Grant expenses, including associated administrative 

costs, are classified on the Consolidated Statements of Net Cost 

under the line of business program “Airports.”

S. Use of Estimates

Management has made certain estimates and assumptions 

when reporting assets, liabilities, revenues, and expenses, and 

in the note disclosures. Actual results could differ from these 

estimates. Significant estimates underlying the accompanying 

financial statements include (a) the allocation of AATF receipts 

by the OTA, (b) legal, environmental, and contingent liabilities, 

(c) accruals of accounts and grants payable, (d) accrued workers’ 

compensation, (e) allowance for doubtful accounts receivable, (f) 

allowances for repairable and obsolete inventory balances, (g) 

allocations of common costs to Construction in Progress (CIP), (h) 

the allocation of an average cost of like assets within a program, 

commonly referred to as unit costing, (i) allocations of costs to 

programs on the Statement of Net Cost , and (j) accrued benefits 

and benefits payable. 

T. Environmental Liabilities

In compliance with applicable laws and regulations including 

the Comprehensive Environmental Response, Compensation and 

Liability Act of 1980 as amended by the Superfund Amendments 

and Reauthorization Act of 1986 and the Community 

Environmental Response Facilitation Act of 1992, the FAA 

recognizes two types of environmental liabilities: environmental 

remediation, and cleanup and decommissioning. The liability for 

environmental remediation is an estimate of costs necessary to 

bring a known contaminated site into compliance with applicable 

environmental standards. The increase or decrease in the annual 

liability is charged to current year expense.

Environmental cleanup and decommissioning is the estimated 

cost that will be incurred to remove, contain, and/or dispose 

of hazardous materials when an asset presently in service is 

shutdown. The FAA estimates the environmental cleanup and 

decommissioning costs at the time that an FAA-owned asset is 

placed in service. For assets placed in service through FY 1998, 

the increase or decrease in the estimated environmental cleanup 

liability is charged to expense. Assets placed in service in 

FY 1999 and after do not contain any hazardous materials, and 

therefore do not have associated environmental liabilities. 

FAA environmental liabilities are recorded using un-inflated 

estimates. There are no known possible changes to these 

estimates based on inflation, deflation, technology or applicable 

laws and regulations. 

U. Contingencies

Liabilities are deemed contingent when the existence or amount 

of the liability cannot be determined with certainty pending 

the outcome of future events. The FAA recognizes contingent 

liabilities, in the accompanying balance sheet and statement of 

net cost, when they are both probable and can be reasonably 

estimated. The FAA discloses contingent liabilities in the notes 

to the financial statements (see Note 16) when the conditions for 

liability recognition are not met or when a loss from the outcome 

of future events is more than remote. In some cases, once losses 

are certain, payments may be made from the Judgment Fund 

maintained by the U.S. Treasury rather than from the amounts 

appropriated to the FAA for agency operations. Payments from 

the Judgment Fund are recorded as an “Other Financing Source” 

when made.

V. Funds from Dedicated Collections 

The FAA adopted SFFAS Number 27, Identifying and Reporting 

Earmarked Funds, effective October 1, 2005, subsequently 

amended by SFFAS 43, Funds from Dedicated Collections, 

effective October 1, 2012. SFFAS Numbers 27 and 43 define 

“funds from dedicated collections” as those being financed by 

specifically identified revenues, often supplemented by other 

financing sources, which remain available over time. These 

specifically identified revenues and financing sources are 

required by statute to be used for designated activities, benefits 

or purposes, and must be accounted for separately from the 

government’s general revenues. The FAA’s financial statements 

include the following funds, considered to be “funds from 

dedicated collections”:

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¢ Airport and Airway Trust Fund (AATF)

¢ Operations–AATF

¢ Operations General Fund

¢ Grants-in-Aid for Airports–AATF

¢ Facilities and Equipment–AATF

¢ Research, Engineering, and Development–AATF

¢ Aviation Insurance Fund

¢ Aviation User Fees

The AATF is funded by excise taxes that the IRS collects from 

airway system users. These receipts are unavailable until 

appropriated by the U.S. Congress. Once appropriated for 

use, the FAA transfers the AATF receipts necessary to meet 

cash disbursement needs to several other funds, from which 

expenditures are made. Those funds that receive transfers from 

the AATF are the Operations–AATF Trust Fund, Grants-in-Aid for 

Airports, Facilities and Equipment, and Research, Engineering 

and Development, all of which are funded exclusively by the 

AATF. These funds represent the majority of the FAA annual 

expenditures. 

In addition, while the Operations General Fund is primarily 

funded through transfers from Operations–AATF, it is also 

supplemented by funding from the General Fund of the U.S. 

Treasury through annual appropriations. Because the Operations 

General Fund is primarily funded from the AATF, and because 

it is not reasonably possible to differentiate cash balances 

between those originally flowing from the AATF versus General 

Fund appropriations, the Operations General Fund is presented 

as funds from dedicated collections. The funds from dedicated 

collections in the Facilities and Equipment fund are used to 

purchase or construct PP&E. When funds from dedicated 

collections are used to purchase or construct PP&E, they are no 

longer available for future expenditure, have been used for their 

intended purpose, and are therefore classified as other funds on 

the balance sheet and the statement of changes in net position. 

The intended result of this presentation is to differentiate 

between funds from dedicated collections available for future 

expenditure and funds from dedicated collections previously 

expended on PP&E projects and therefore unavailable for future 

expenditure. 

Additional disclosures concerning funds from dedicated 

collections can be found in Note 12.

W. Reclassifications

In FY 2013, Note 2, Fund Balance with Treasury was reclassified 

to conform to the current year presentation requirements of OMB 

Circular No. A-136. 

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NOTE 2. Fund Balance with Treasury

Fund balance with Treasury (FBWT) account balances as of September 30, 2013 and 2012 were:

2013 2012

Trust funds $ 1,357,195 $ 1,140,692 

General funds 1,525,042 1,547,603 

Revolving funds 344,620 291,338 

Other fund types 46,896 105,569 

Total $ 3,273,753 $ 3,085,202 

Status of fund balance with Treasury

Unobligated balance

Available $ 1,388,704 $ 1,430,914 

Not available 2,218,098 2,088,764 

Obligated balance not yet disbursed 8,517,924 8,938,047 

Investments and Contract Authority supporting obligated and unobligated balances (9,840,701) (9,904,858)

Non-budgetary FBWT 989,728 532,335 

Total $ 3,273,753 $ 3,085,202 

Unobligated fund balances are either available or not available. 

Amounts are reported as not available when they are no longer 

legally available to the FAA for obligation. However, balances 

that are not available can change over time, because they can be 

used for upward adjustments of obligations that were incurred 

during the period of availability or for paying claims attributable 

to that time period. 

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NOTE 3. Investments

As of September 30, 2013 and 2012, the FAA’s investment balances were as follows:

2013

Intragovernmental Securities Cost 

Amortized 

(Premium) Discount Investments (Net) 

Market Value 

Disclosure 

Non-marketable par value $ 11,807,771 $ — $ 11,807,771 $ 11,807,771 

Non-marketable market-based 1,936,922 20,697 1,957,619 1,962,650 

Subtotal 13,744,693 20,697 13,765,390 13,770,421 

Accrued interest 56,123 56,123 

Total Intragovernmental Securities $ 13,800,816 $ 20,697 $ 13,821,513 $ $13,770,421 

2012

Intragovernmental Securities Cost 

Amortized 

(Premium) Discount Investments (Net) 

Market Value 

Disclosure 

Non-marketable par value $ 10,424,961 $ — $ 10,424,961 $ 10,424,961 

Non-marketable market-based 1,818,209 28,377 1,846,586 1,860,331 

Subtotal 12,243,170 28,377 12,271,547 12,285,292 

Accrued interest 59,917 59,917 

Total Intragovernmental Securities $ 12,303,087 $ 28,377 $ 12,331,464 $ 12,285,292

The Secretary of the Treasury invests AATF funds on behalf 

of the FAA. The FAA investments are considered investment 

authority and are available to offset the cost of operations to the 

extent authorized by Congress. As of September 30, 2013 and 

2012, $11.8 billion and $10.4 billion were invested respectively 

in U.S. Treasury Certificates of Indebtedness. Nonmarketable 

par value Treasury Certificates of Indebtedness are special 

series debt securities issued by the Bureau of Public Debt to 

federal accounts, and are purchased and redeemed at par 

(face value) exclusively through the Federal Investment Branch 

of the U.S. Treasury’s Bureau of Public Debt. The securities 

are held to maturity and redeemed at face value on demand; 

thus, investing entities recover the full amount invested plus 

interest. Investments as of September 30, 2013, mature on 

various dates through June 30, 2014, and investments as of 

September 30, 2012, matured on various dates through June 30, 

2013. The annual rate of return on Certificates of Indebtedness 

is established in the month of issuance. The average rate of 

return for certificates issued during FY 2013 and FY 2012 was 2.0 

percent and 2.2 percent, respectively.

Nonmarketable, market-based Treasury securities are debt 

securities that the Treasury issues to federal entities without 

statutorily fixed interest rates. Although the securities are 

not marketable, their terms (prices and interest rates) mirror 

the terms of marketable Treasury securities. The FAA invests 

Aviation Insurance Fund collections in nonmarketable marketbased securities and amortizes premiums and discounts over the 

life of the security using the interest method. As of September 

30, 2013, these nonmarketable, market-based securities have 

maturity dates ranging from October 2013 to November 2015 

and have an average rate of return of approximately 1.5 percent. 

As of September 30, 2012, these nonmarketable, market-based 

securities had maturity dates ranging from October 2012 to 

August 2015 and had an average rate of return of approximately 

2.1 percent. 

The U.S. Treasury does not set aside assets to pay the future 

expenditures of the AATF and the Aviation Insurance Fund. 

Instead, the cash collected from the public for the AATF and the 

Aviation Insurance Fund is deposited in the U.S. Treasury, and 

used for general government purposes. Treasury securities are 

issued to the FAA as evidence of the collections by the AATF and 

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Aviation Insurance Fund. Treasury securities are an asset to the 

FAA and a liability to the U.S. Treasury. Because the FAA and the 

U.S. Treasury are both parts of the U.S. Government, these assets 

and liabilities offset each other from the standpoint of the U.S. 

Government as a whole. For this reason, they do not represent 

an asset or a liability in the U.S. Government-wide financial 

statements. 

To the extent authorized by law, the FAA has the ability to 

redeem its Treasury securities to make expenditures. When the 

FAA redeems these securities, the U.S. Government finances 

those expenditures out of accumulated cash balances by raising 

tax or other receipts, borrowing from the public, repaying less 

debt, or curtailing other expenditures. This is the same way that 

the U.S. Government finances all other expenditures. 

NOTE 4. Accounts Receivable, Prepayments, and Other Assets

Accounts receivable, prepayments, and other assets as of September 30, 2013 and 2012 were comprised of the following: 

2013 2012

Intragovernmental

Accounts receivable $ 48,477 $ 68,236 

Prepayments and other 157,301 172,018 

Intragovernmental total 205,778 240,254 

With the public

Accounts receivable, net 53,760 44,739 

Prepayments 1,027 2,709 

Other assets 506 501 

With the public total 55,293 47,949 

Total accounts receivable, prepayments, and other $ 261,071 $ 288,203 

Intragovernmental prepayments represent advance payments to 

other federal government entities for agency expenses not yet 

incurred or for goods or services not yet received. 

Accounts receivable from the public are shown net of allowances 

for uncollectible amounts of $11.2 million and $16.5 million, as of 

September 30, 2013 and 2012, respectively. 

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NOTE 5. Inventory, Operating Materials, and Supplies 

As of September 30, 2013 and 2012, inventory, operating materials, and supplies were: 

2013

Cost Allowance Net

Inventory

Held for sale $ 88,851 $ — $ 88,851 

Held for repair 613,198 (140,456) 472,742 

Raw materials, finished goods and other 49,976 (10,590) 39,386 

Excess, obsolete, and unserviceable 13,945 (13,945) —

Inventory total 765,970 (164,991) 600,979 

Operating materials and supplies

Held for use 42,198 — 42,198 

Held for repair 25,534 (12,767) 12,767 

Excess, obsolete, and unserviceable 1,358 (811) 547 

Operating materials and supplies total 69,090 (13,578) 55,512 

Total inventory, operating materials, and supplies $ 835,060 $ (178,569) $ 656,491 

2012

Cost Allowance Net

Inventory

Held for sale $ 90,540 $ — $ 90,540 

Held for repair 582,567 (135,234) 447,333 

Raw materials, finished goods and other 51,030 (10,591) 40,439 

Excess, obsolete, and unserviceable 8,956 (8,956) —

Inventory total 733,093 (154,781) 578,312 

Operating materials and supplies

Held for use 40,969 — 40,969 

Held for repair 24,387 (12,193) 12,194 

Excess, obsolete, and unserviceable 1,888 (1,043) 845 

Operating materials and supplies total 67,244 (13,236) 54,008 

Total inventory, operating materials, and supplies $ 800,337 $ (168,017) $ 632,320 

Inventory is considered held for repair based on the condition 

of the asset or item, and the allowance for repairable inventory 

is based on the average historical cost of such repairs. The FAA 

transfers excess items for disposal into the government-wide 

automated disposal system. Disposal proceeds, recognized upon 

receipt, may go to the U.S. Treasury’s General Fund or to an 

FAA appropriation, depending on the nature of the item and the 

disposal method. 

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NOTE 6. Property, Plant, and Equipment, Net 

Property, plant, and equipment balances as of September 30, 2013 and 2012 were: 

2013

Class of fixed asset Acquisition value

Accumulated 

depreciation Net book value

Real property, including land $ 6,062,911 $ (3,397,715) $ 2,665,196 

Personal property 20,541,827 (12,314,107) 8,227,720 

Assets under capital lease (Note 9) 114,063 (42,817) 71,246 

Construction in progress (CIP) 2,456,644 — 2,456,644 

Total property, plant and equipment $ 29,175,445 $ (15,754,639) $ 13,420,806 

2012

Class of fixed asset Acquisition value

Accumulated 

depreciation Net book value

Real property, including land $ 5,907,540 $ (3,255,262) $ 2,652,278 

Personal property 18,436,951 (11,460,530) 6,976,421 

Assets under capital lease (Note 9) 126,629 (49,669) 76,960 

Construction in progress 3,736,914 — 3,736,914 

Total property, plant and equipment $ 28,208,034 $ (14,765,461) $ 13,442,573 

The FAA’s CIP relates primarily to national airspace assets, which 

are derived from centrally funded national systems development 

contracts, site preparation and testing, raw materials, and 

internal labor charges. 

The FAA is currently developing and testing the En Route 

Automation Modernization (ERAM) system to upgrade the 

management of air traffic in the en route space and enable the 

implementation of NextGen capabilities. As of September 30, 

2013, construction in progress includes $1,098 million related to 

the ERAM system.

The FAA has fully deployed ERAM at 11 air route traffic control 

centers through September 30, 2013. ERAM is scheduled to be 

deployed at the 9 remaining sites by the end of FY 2015. When 

fully deployed and operational, the ERAM system will replace 

four legacy air traffic systems currently being depreciated over 

service lives ranging from 5–20 years. 

The net acquisition cost of the four air traffic legacy systems 

in use at September 30, 2013, was $1,899 million, down from 

$2,143 million at September 30, 2012, with a net book value 

of $439 million and $634 million, respectively. Depreciation 

on these air traffic legacy systems was $171 million and $111 

million in FY 2013 and 2012, respectively. For the legacy assets 

not already retired or placed in Not in Use status, the FAA 

adjusted the useful life to end one year from ERAM’s site specific 

operational readiness decision date.

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NOTE 7. Environmental Liabilities

The FAA’s environmental liabilities as of September 30, 2013 and 2012 were:

2013 2012

Environmental remediation $ 454,538 $ 517,273 

Environmental cleanup and decommissioning 297,167 293,126 

Total environmental liabilities $ 751,705 $ 810,399 

Additional information on contingencies related to environmental projects is disclosed in Note 16.

NOTE 8. Employee Related and Other Liabilities

As of September 30, 2013 and 2012, the FAA’s employee related and other liabilities were: 

2013

Non-current 

liabilities

Current

 liabilities Total

Intragovernmental

Advances received $ — $ 60,790 $ 60,790 

Accrued payroll & benefits payable to other agencies — 75,453 75,453 

Liabilities covered by budgetary resources — 136,243 136,243 

Federal Employees' Compensation Act payable 114,561 86,761 201,322 

Other — 24,452 24,452 

Liabilities not covered by budgetary resources 114,561 111,213 225,774 

Intragovernmental total 114,561 247,456 362,017 

With the public

Advances received and other — 114,436 114,436 

Accrued payroll & benefits payable to employees — 376,722 376,722 

Liabilities covered by budgetary resources — 491,158 491,158 

Accrued unfunded annual & other leave & assoc. benefits — 407,611 407,611 

Sick leave compensation benefits for eligible employees 73,820 45,161 118,981 

Capital leases (Notes 9 and 15) 69,324 8,681 78,005 

Legal claims — 2,667 2,667 

Other accrued liabilities — 22,574 22,574 

Liabilities not covered by budgetary resources 143,144 486,694 629,838 

Public total 143,144 977,852 1,120,996 

Total employee related and other liabilities $ 257,705 $ 1,225,308 $ 1,483,013 

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2012

Non-current 

liabilities

Current

 liabilities Total

Intragovernmental

Advances received $ — $ 53,654 $ 53,654 

Accrued payroll & benefits payable to other agencies — 90,156 90,156 

Liabilities covered by budgetary resources — 143,810 143,810 

Federal Employees' Compensation Act payable 115,495 90,623 206,118 

Other — 75,372 75,372 

Liabilities not covered by budgetary resources 115,495 165,995 281,490 

Intragovernmental total 115,495 309,805 425,300 

With the public

Advances received and other — 108,444 108,444 

Accrued payroll & benefits payable to employees — 344,809 344,809 

Liabilities covered by budgetary resources — 453,253 453,253 

Accrued unfunded annual & other leave & assoc. benefits — 404,714 404,714 

Sick leave compensation benefits for eligible employees 65,264 61,439 126,703 

Capital leases (Notes 9 and 15) 73,452 8,852 82,304 

Legal claims — 34,300 34,300 

Other accrued liabilities — 20,524 20,524 

Liabilities not covered by budgetary resources 138,716 529,829 668,545 

Public total 138,716 983,082 1,121,798 

Total employee related and other liabilities $ 254,211 $ $1,292,887 $ 1,547,098 

Accrued payroll and benefits payable to other agencies consist of 

FAA contributions payable to other federal agencies for employee 

benefits. These include FAA contributions payable toward 

life, health, retirement benefits, Social Security, and matching 

contributions to the Thrift Savings Plan.

An unfunded liability is recorded for the actual cost of workers’ 

compensation benefits to be reimbursed to the DOL, pursuant to 

the FECA. Because the DOL bills the FAA two years after it pays 

such claims, the FAA’s accrued liability as of September 30, 2013, 

includes workers’ compensation benefits paid by DOL during 

the periods July 1, 2011, through June 30, 2013, and accrued 

liabilities for the quarter July 1, 2013, through September 30, 

2013. The FAA’s liability accrued as of September 30, 2012, 

included workers’ compensation benefits paid by the DOL during 

the period July 1, 2010, through June 30, 2012, and accrued 

liabilities for the quarter July 1, 2012, through September 30, 

2012. 

The estimated liability for accrued unfunded leave and 

associated benefits includes annual and other types of vested 

leave. Additionally, under the terms of various bargaining unit 

agreements, employees who are in FERS, have the option to 

receive a lump sum payment for 40 percent of their accumulated 

sick leave as of their effective retirement date. Based on sick 

leave balances, this estimated liability was $119.0 million and 

$126.7 million as of September 30, 2013 and 2012, respectively.

The FAA estimated that 100 percent of its $2.7 million and 

$34.3 million legal claims liabilities as of September 30, 2013 

and 2012, respectively, would be paid from the permanent 

appropriation for judgments, awards, and compromise 

settlements (Judgment Fund) administered by the Department of 

Treasury.

Other Accrued Liabilities with the Public is composed primarily 

of accruals for utilities, leases, and travel. Total liabilities not 

covered by budgetary resources are presented in Note 15. 

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NOTE 9. Leases 

Capital Leases 

Following is a summary of the FAA’s assets under capital lease as 

of September 30, 2013 and 2012:

2013 2012

Land, Buildings, and Machinery $ 114,063 $ 126,629 

Accumulated Depreciation (42,817) (49,669)

Assets Under Capital Lease, net $ 71,246 $ 76,960 

As of September 30, 2013, the FAA’s future payments due on 

assets under capital lease were:

Future payments due by fiscal year

(Liabilities not covered by budgetary or other resources)

Year 1 (FY 2014) $ 8,681 

Year 2 (FY 2015) 8,648 

Year 3 (FY 2016) 8,639 

Year 4 (FY 2017) 8,639 

Year 5 (FY 2018) 8,640 

After 5 Years 62,013 

Less: Imputed interest (27,255)

Total capital lease liability $ 78,005 

The FAA’s capital lease payments are authorized to be funded 

annually as codified in the United States Code–Title 49–Section 

40110(c)(1) which addresses general procurement authority. The 

remaining principal payments are recorded as unfunded lease 

liabilities. The imputed interest is funded and expensed annually.

Operating Leases

The FAA has operating leases for real property, aircraft, and 

telecommunications equipment. Future operating lease payments 

due as of September 30, 2013, are as follows:

Fiscal year

Year 1 (FY 2014) $ 196,616 

Year 2 (FY 2015) 179,156 

Year 3 (FY 2016) 147,930 

Year 4 (FY 2017) 118,447 

Year 5 (FY 2018) 68,537 

After 5 Years 144,543 

Total future operating lease payments $ 855,229 

Operating lease expense incurred during the years ended 

September 30, 2013 and 2012 was $224.4 million and $231.9 

million, respectively, including General Services Administration 

(GSA) leases that have a short termination privilege. However, 

the FAA intends to remain in the lease. The operating lease 

amounts due after five years do not include estimated payments 

for leases with annual renewal options. Estimates of the lease 

termination dates are subjective, and any projection of future 

lease payments would be arbitrary. 

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NOTE 10. Federal Employee Benefits Payable

As of September 30, 2013 and 2012, FECA actuarial liabilities 

were $973.1 million and $946.8 million, respectively. The 

DOL calculates the FECA liability for the DOT, and the DOT 

allocates the liability amount to the FAA based on actual 

workers’ compensation payments to FAA employees over the 

preceding four years. FECA liabilities include the expected 

liability for death, disability, medical, and miscellaneous costs 

for approved compensation cases, plus a component for incurred 

but not reported claims. The estimated liability is not covered 

by budgetary or other resources and thus will require future 

appropriated funding. 

NOTE 11. Net Cost by Program and Other Statement of Net Cost Disclosures

The FAA’s four lines of business represent the programs reported 

on the Statement of Net Cost. Cost centers assigned to each 

line of business permit the direct accumulation of costs. Other 

costs that are not directly traced to each line of business, such as 

agency overhead, are allocated. 

The following are net costs for the years ended September 30, 2013 and 2012 by strategic goal:

For the Year Ended September 30, 2013

Strategic Goal Areas

Next level 

of Safety

Workplace 

of Choice

Aviation

Access

Sustain our 

Future

Global 

Collaboration Total

Line of Business programs

Air Traffic Organization $ 6,272,408 $ 472,175 $ 4,073,238 $ 44,930 $ 3,413 $ 10,866,164 

Aviation Safety 1,395,511 9,114 526 1,357 16 1,406,524 

Airports 1,884,688 421 1,705,396 12,444 — 3,602,949 

Commercial Space Transportation 13,709 23 4,985 375 47 19,139 

Non-Line of Business programs 

Regions and Center Operations and other 347,098 102,862 (126,982) 7,584 — 330,562 

Net cost $ 9,913,414 $ 584,595 $ 5,657,163 $ 66,690 $ 3,476 $ 16,225,338 

For the Year Ended September 30, 2012

Strategic Goal Areas

Next level 

of Safety

Workplace 

of Choice

Aviation

Access

Sustain our 

Future

Global 

Collaboration Total

Line of Business programs

Air Traffic Organization $ 6,283,426 $ 473,312 $ 4,332,169 $ 63,006 $ 6,563 $ 11,158,476 

Aviation Safety 1,401,860 6,747 456 1,213 33 1,410,309 

Airports 1,641,995 429 1,485,436 11,739 — 3,139,599 

Commercial Space Transportation 11,204 182 6,740 197 77 18,400

Non-Line of Business programs 

Regions and Center Operations and other 346,398 206,232 (163,341) 15,083 4 404,376

Net cost $ 9,684,883 $ 686,902 $ 5,661,460 $ 91,238 $ 6,677 $ 16,131,160

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The following is the FAA’s distribution of FY 2013 and FY 2012 net costs by intra-governmental related activity versus with the public: 

For the Year Ended September 30, 2013 

Intragovernmental With the Public Total 

Line of Business programs

Air Traffic Organization

Expenses $ 2,237,425 $ 8,905,145 $ 11,142,570 

Less earned revenues (236,416) (39,990) (276,406)

Net costs 2,001,009 8,865,155 10,866,164 

Aviation Safety

Expenses 358,890 1,058,317 1,417,207 

Less earned revenues (2,475) (8,208) (10,683)

Net costs 356,415 1,050,109 1,406,524 

Airports

Expenses 61,984 3,540,965 3,602,949 

Net costs 61,984 3,540,965 3,602,949 

Commercial Space Transportation

Expenses 3,647 15,492 19,139 

Net costs 3,687 15,492 19,139 

Non-Line of Business programs

Regions and Center Operations and other programs

Expenses 150,143 603,556 753,699 

Less earned revenues (67,753) (355,384) (423,137)

Net costs 82,390 248,172 330,562 

Net cost of operations

Total expenses 2,812,089 14,123,475 16,935,564 

Less earned revenues (306,644) (403,582) (710,226)

Total net costs $ 2,505,445 $ 13,719,893 $ 16,225,338 

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For the Year Ended September 30, 2012 

Intragovernmental With the Public Total 

Line of Business programs

Air Traffic Organization

Expenses $ 2,252,662 $ 9,187,040 $ 11,439,702 

Less earned revenues (228,401) (52,825) (281,226)

Net costs 2,024,261 9,134,215 11,158,476 

Aviation Safety

Expenses 348,062 1,074,263 1,422,325 

Less earned revenues (2,551) (9,465) (12,016)

Net costs 345,511 1,064,798 1,410,309 

Airports

Expenses 36,451 3,103,234 3,139,685 

Less earned revenues — (86) (86)

Net costs 36,451 3,103,148 3,139,599 

Commercial Space Transportation

Expenses 3,474 14,926 18,400 

Net costs 3,474 14,926 18,400 

Non-Line of Business programs

Regions and Center Operations and other programs

Expenses 136,181 647,515 783,696 

Less earned revenues (72,401) (306,919) (379,320)

Net costs 63,780 340,596 404,376 

Net cost of operations

Total expenses 2,776,830 14,026,978 16,803,808 

Less earned revenues (303,353) (369,295) (672,648)

Total net costs $ 2,473,477 $ 13,657,683 $ 16,131,160 

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NOTE 12. Funds from Dedicated Collections

The FAA’s funds from dedicated collections are presented among 

two classifications. The first classification is comprised of the 

financial statement balances in AATF as of the end of each fiscal 

year. 

The second classification of other funds from dedicated 

collections is comprised of the financial statement balances 

of all the related funds that receive funding from the AATF 

and includes the Operations–AATF, Grants-in-Aid for Airports, 

Facilities and Equipment, and Research Engineering and 

Development, all of which are funded exclusively by the AATF. 

The other funds from dedicated collections classification also 

includes the Operations General Fund, which is primarily funded 

through transfers from Operations–AATF, but is additionally 

supplemented by the General Fund of the U.S. Treasury through 

annual appropriations. However, since the Operations account 

is primarily funded from the AATF, it is properly presented as 

a fund from dedicated collections. The second classification of 

other funds from dedicated collections also includes the Aviation 

Insurance Revolving Fund and Aviation User Fees. 

In addition, this note presents only the funds from dedicated 

collections that retain available financing sources for future 

expenses. As such, the balances in the PP&E fund, though funded 

from Facilities and Equipment, are excluded from this note.

Airport and Airway Trust Fund

The FAA’s consolidated financial statements include the results 

of operations and the financial position of the AATF. Congress 

created the AATF with the passage of the Airport and Airway 

Revenue Act of 1970. 

The Act provides a dedicated source of funding for the nation’s 

aviation system through the collection of several aviation-related 

excise taxes. The IRS collects these taxes on behalf of the 

FAA’s AATF. These taxes can be withdrawn only as appropriated 

by the U.S. Congress. Twice a month, Treasury estimates the 

amount collected and subsequently adjusts the estimates to 

reflect actual collections quarterly. The total taxes recognized in 

FY 2013 included OTA’s estimate of $2.8 billion for the quarter 

ended September 30, 2013 and $2.7 billion for the quarter ended 

September 30, 2012.

As discussed in Note 1 E., FY 2013 excise tax revenue includes 

amounts certified as actual by the IRS for the first three quarters 

and amounts estimated by OTA for the fourth quarter. Excise 

taxes estimated by OTA in the 1st quarter overstated the amount 

subsequently certified as actual by the IRS by $451.7 million, 

overstated the amount certified in the 2nd quarter by $69.5 

million and understated the amount certified in the 3rd quarter by 

$194.5 million. 

The following table summarizes the 4th quarter excise taxes 

accrued in the FAA’s FY 2012 and 2011 financial statements and 

the amounts certified as actual by the IRS several months after 

the issuance of those financial statements:

4th Quarter

 2012 

4th Quarter 

2011

Estimates $ 2,855,461 $ 2,423,294 

Actuals 3,194,131 2,652,178 

Under (Over) Accrual $ 338,670 $ 228,884 

Other Funds from Dedicated Collections

¢ The FAA has authority under the Aviation Insurance Program 

to insure commercial airlines that may be called upon to 

perform various services considered necessary to the foreign 

policy interests of the United States, when insurance is not 

available commercially or is available only on unreasonable 

terms and conditions. The insurance issued, commonly 

referred to as war-risk insurance, covers losses resulting 

from war, terrorism, or other hostile acts. The FAA reported 

premium insurance revenues of $164.2 million and $160.6 

million for the periods ended September 30, 2013 and 2012, 

respectively. The Aviation Insurance Program activity is 

reported below in all other funds from dedicated collections. 

The Aviation Insurance Program is discussed further at Notes 

1.V. and 16. 

¢ Overflight fees are charged to commercial airlines that fly in 

U.S. controlled air space, but neither take off nor land in the 

U.S. The FAA reported overflight fees of $73.5 million and 

$64.9 million for the periods ended September 30, 2013 and 

2012, respectively. Overflight fees activity is reported below 

in all other funds from dedicated collections.

Fiscal data as of, and for the years ended September 30, 2013 

and 2012 are summarized in the following charts. Intra-agency 

transactions have not been eliminated in the amounts presented. 

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
106

2013

AATF

All other funds from 

dedicated collections

Total funds from 

dedicated collections

Balance Sheet 

Assets

Fund balance with Treasury $ 964,255 $ 2,012,978 $ 2,977,233 

Investments, net 11,855,481 1,966,032 13,821,513 

Accounts receivable, net — 4,522,390 4,522,390 

Other assets — 2,915,604 2,915,604 

Total assets $ 12,819,736 $ 11,417,004 $ 24,236,740 

Liabilities and net position

AATF amounts due to the FAA $ 4,444,060 $ — $ 4,444,060 

Other liabilities — 3,345,879 3,345,879 

Unexpended appropriations — 932,877 932,877 

Cumulative results of operations 8,375,676 7,138,248 15,513,924 

Total liabilities and net position $ 12,819,736 $ 11,417,004 $ 24,236,740 

Statement of net cost 

Program costs $ — $ 15,324,734 $ 15,324,734 

Less earned revenue:

Aviation insurance premiums — (164,170) (164,170)

Overflight user fees — (73,507) (73,507)

Other revenue — (272,544) (272,544)

Net cost of operations $ — $ 14,814,513 $ 14,814,513 

Statement of changes in net position

Cumulative results beginning of period $ 6,384,206 $ 8,475,557 $ 14,859,763 

Non-exchange revenue:

Passenger ticket tax 8,769,362 — 8,769,362 

International departure tax 2,911,287 — 2,911,287 

Investment income 233,555 — 233,555 

Fuel taxes 572,289 — 572,289 

Waybill tax 618,896 — 618,896 

Tax refunds and credits (18,274) — (18,274)

Other revenue — 14,460 14,460 

Budgetary financing sources (11,095,645) 15,268,651 4,173,006 

Other financing sources — (1,805,907) (1,805,907)

Net cost of operations — (14,814,513) (14,814,513)

Cumulative results end of period 8,375,676 7,138,248 15,513,924 

Unexpended appropriations — 932,877 932,877 

Net position end of period $ 8,375,676 $ 8,071,125 $ 16,446,801 

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107F I N A N C I A L R E S U LT S

2012

AATF

All other funds from 

dedicated collections

Total funds from 

dedicated collections

Balance Sheet 

Assets

Fund balance with Treasury $ 442,966 $ 2,222,507 $ 2,665,473 

Investments, net 10,473,786 1,857,678 12,331,464 

Accounts receivable, net — 4,622,538 4,622,538 

Other assets — 3,996,271 3,996,271 

Total assets $ 10,916,752 $ 12,698,994 $ 23,615,746 

Liabilities and net position

AATF amounts due to the FAA $ 4,532,546 $ — $ 4,532,546 

Other liabilities — 3,186,121 3,186,121 

Unexpended appropriations — 1,037,316 1,037,316 

Cumulative results of operations 6,384,206 8,475,557 14,859,763 

Total liabilities and net position $ 10,916,752 $ 12,698,994 $ 23,615,746 

Statement of net cost 

Program costs $ — $ 15,181,396 $ 15,181,396 

Less earned revenue:

Aviation insurance premiums — (160,558) (160,558)

Overflight user fees — (64,861) (64,861)

Other revenue — (228,288) (228,288)

Net cost of operations $ — $ 14,727,689 $ 14,727,689 

Statement of changes in net position

Cumulative results beginning of period $ 5,092,201 $ 7,781,069 $ 12,873,270 

Non-exchange revenue:

Passenger ticket tax 8,711,445 — 8,711,445 

International departure tax 2,728,594 — 2,728,594 

Investment income 224,628 — 224,628 

Fuel taxes 622,794 — 622,794 

Waybill tax 491,845 — 491,845 

Tax refunds and credits (22,464) — (22,464)

Other revenue — 20,288 20,288 

Budgetary financing sources (11,464,837) 15,864,711 4,399,874 

Other financing sources — (462,822) (462,822)

Net cost of operations — (14,727,689) (14,727,689)

Cumulative results end of period 6,384,206 8,475,557 14,859,763 

Unexpended appropriations — 1,037,316 1,037,316 

Net position end of period $ 6,384,206 $ 9,512,873 $ 15,897,079 

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
108

NOTE 13. Imputed Financing Sources

The FAA recognizes as imputed financing the amount of accrued pension and post-retirement benefit expenses for current employees. 

The assets and liabilities associated with such benefits are the responsibility of the administering agency, the OPM. Amounts paid 

from the U.S. Treasury’s Judgment Fund in settlement of claims or court assessments against the FAA are also recognized as imputed 

financing. For the fiscal years ended September 30, 2013 and 2012, imputed financing was as follows:

2013 2012

Office of Personnel Management $ 533,686 $ 504,516 

Treasury Judgment Fund 37,341 47,628 

Total imputed financing sources $ 571,027 $ 552,144 

NOTE 14. Statement of Budgetary Resources Disclosures

The Required Supplementary Information section of this report includes a schedule of budgetary resources by each of the FAA’s major 

fund types. Budget authority as reported in the Combined Statements of Budgetary Resources includes amounts made available to 

the FAA from general, revolving and special funds, as well as funds from dedicated collections. In contrast, appropriations received as 

reported in the Consolidated Statements of Changes in Net Position pertain only to amounts made available to the FAA from general 

funds. The following is a reconciliation of these amounts as of September 30:

2013 2012

Combined Statement of Budgetary Resources–budget authority, net $ 15,263,962 $ 15,902,370 

Less amounts made available to the FAA from AATF dedicated collections (10,670,415) (11,308,981)

Less other dedicated resources (846) (688)

Consolidated Statement of Changes in Net Position–appropriations received $ 4,592,701 $ 4,592,701 

The FAA had rescissions of $240 million of budgetary resources 

in FY 2013 due to sequestration; there were no rescissions in 

FY 2012. 

As of September 30, 2013 and 2012, the amount of budgetary 

resources obligated for undelivered orders was $7.2 billion and 

$7.8 billion, respectively. 

There is no difference between Budgetary Authority as reported 

in FAA’s FY 2012 Combined Statement of Budgetary Resources 

and the Budget of the United States Government.

Obligations incurred on the FY 2012 Combined Statement of 

Budgetary Resources includes $62 million of expired funds 

and $758 million of certain reimbursable and revolving fund 

obligations incurred that are not presented in the Budget of 

the United States Government. As a result, the FAA’s FY 2012 

Combined Statement of Budgetary Resources differs from the 

FY 2012 “actuals” reported in the appendix of the FY 2013 

Budget of the United States Government. (The Budget of the 

United States Government is available on the Internet at www.

whitehouse.gov/omb.) As of the date of issuance of the FAA’s 

FY 2013 Combined Statement of Budgetary Resources, the 

Budget of the United States Government for FY 2015, which will 

contain “actual” FY 2013 amounts, was not yet published. The 

OMB is expected to publish this information early in calendar 

year 2014. 

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109F I N A N C I A L R E S U LT S

Statement of Budgetary Resources vs. Budget of the United States Government:

Budgetary 

Authority

Obligations 

Incurred Net Outlays

FAA Combined Statement of Budgetary Resources $ 15,902,000 $ 21,377,000 $ 15,828,000 

Reconciliation to Budget of the United States Government:

Obligation from Trust Funds — (5,051,000) —

Distributed Offsetting Receipts — — 12,000 

Budget of the United States Government $ 15,902,000 $ 16,326,000 $ 15,840,000 

OMB Circular No. A-136 requires the following additional Combined Statement of Budgetary Resources disclosure:

¢ The FAA does not have obligations classified as “exempt from apportionment.” However, during FY 2013 and FY 2012, direct and 

reimbursable obligations incurred against amounts apportioned under categories A and B, as defined in OMB Circular No. A-11, 

Part 4, Instructions on Budget Execution, were as follows:

2013 2012

Direct Reimbursable Direct Reimbursable

Category A $ 5,359,826 $ 447,896 $ 5,636,863 $ 488,819 

Category B 15,321,999 250,388 15,810,304 269,845 

Total $ 20,681,825 $ 698,284 $ 21,447,167 $ 758,664 

Unobligated balances of budgetary resources for unexpired 

accounts are available in subsequent years until expiration, upon 

receipt of an apportionment from the OMB. Unobligated balances 

of expired accounts are not available. At the end of FY 2012, 

$29.4 million of obligated balances were in appropriations 

cancelled at year-end pursuant to 31 U.S.C. 1552 and thus have 

not been brought forward to FY 2013. Additionally, transfers 

in FY 2013 to the DOT for Essential Air Services also reduced 

balances available for obligation.

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
110

NOTE 15. Financing Sources Yet to Be Provided

The following table shows the relationship between liabilities not covered by budgetary or other resources as reported on the balance 

sheets as of September 30, 2013 and 2012, and the change in components of net cost of operations that will require or generate 

resources in future periods. 

2013 2012 Change

FECA actuarial (Note 10) $ 973,055 $ 946,778 $ 26,277 

Unfunded annual & other leave & assoc. benefits (Note 8) 407,611 404,714 2,897 

Increases – components of net cost of operations 

requiring or generating resources in future periods (Note 17) 29,174 

FECA payable (Note 8) 201,322 206,118 (4,796)

Sick leave compensation benefits for eligible employees (Note 8) 118,981 126,703 (7,722)

Legal claims (Note 8 and 16) 2,667 34,300 (31,633)

Environmental liabilities (Note 7 and 16) 751,705 810,399 (58,694)

Capital Leases (Note 8 and 9) 78,005 82,304 (4,299)

Other accrued liabilities (Note 8) 47,026 95,896 (48,870)

Decreases – resources that fund expenses 

recognized in prior periods (Note 17) (156,014)

Total liabilities not covered by budgetary resources 2,580,372 2,707,212 (126,840)

Total liabilities covered by budgetary resources 1,775,477 1,670,810 104,667 

Total liabilities $ 4,355,849 $ 4,378,022 $ (22,173)

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111F I N A N C I A L R E S U LT S

NOTE 16. Commitments, Contingencies, and Other Disclosures 

Subsequent Event. Due to a lapse in annual appropriations 

from October 1, 2013, through October 16, 2013, the FAA ceased 

all non-excepted activities pursuant to the Antideficiency Act, 

U.S.C. Section 1341 et seq, and all non-exempt activities. 

This partial shutdown included issuing stop work orders for 

approximately 1,000 contracts. The financial impact of these stop 

work orders is undetermined at this time. 

Reauthorization. Effective October 17, 2013, the FAA is 

operating under a continuing resolution (CR), Public Law 113-46 

for its FY 2014 appropriation and many of its programmatic 

and financing authorities. The CR will be in effect through 

January 15, 2014, and includes a provision that allows the FAA 

to collect aviation-related excise taxes and to continue spending 

at FY 2013 rates. It also provides sufficient contract authority to 

the Airport Improvement Program.

In addition, the passage of the FAA Modernization and 

Reform Act of 2012, Public Law 112-95, authorizes the FAA’s 

programmatic and financing authorities, the Airport Improvement 

Program contract authority and the authority to collect and 

deposit excise taxes into and make expenditures from the AATF. 

The new authority expires on September 30, 2015. 

Airport Improvement Program. The Airport Improvement 

Program provides grants for the planning and development of 

public-use airports that are included in the National Plan of 

Integrated Airport Systems. Eligible projects generally include 

improvements that address airport safety, capacity, security, 

and environmental concerns. The FAA’s share of eligible costs 

for large and medium primary hub airports is 75 percent with 

the exception of noise program implementation, for which the 

FAA’s share is 80 percent. For remaining airports (small primary, 

reliever, and general aviation), the FAA’s share of eligible costs is 

95 percent.

The FAA has authority under 49 U.S.C. 47110(e) to issue letters 

of intent to enter into a series of annual Airport Improvement 

Program grant agreements. The FAA records an obligation when 

a grant is awarded. As of September 30, 2013, the FAA had 

letters of intent extending through FY 2028 totaling $7.4 billion. 

As of September 30, 2013, the FAA had obligated $6.0 billion of 

this total amount, leaving $1.4 billion unobligated.

As of September 30, 2012, the FAA had letters of intent 

extending through FY 2028 totaling $7.4 billion. As of September 

30, 2012, the FAA had obligated $5.8 billion of this total amount, 

leaving $1.6 billion unobligated.

Aviation Insurance Program. Under the Aviation Insurance 

Program, the FAA is authorized to issue hull and liability 

insurance for air carrier operations for which commercial 

insurance is not available on reasonable terms and when 

continuation of U.S. flag commercial air service is necessary in 

the interest of air commerce, national security, and the foreign 

policy of the United States. The FAA may issue non-premium 

insurance and premium insurance for which a risk-based 

premium is charged to the air carrier, to the extent practical.

During FY 2013, the FAA provided premium war-risk insurance 

to 49 airlines. For these airlines, combined hull and liability per 

occurrence coverage limits range from $100 million to $4 billion. 

The FAA also provided non-premium war-risk insurance to 37 

carriers with 2,068 aircraft for U.S. Department of Defense 

charter operations for Central Command. 

As of September 30, 2013, there are pending aviation insurance 

claims in the amount of $7.0 million. There is approximately $2.0 

billion available in the Aviation Insurance Revolving Fund to pay 

claims to carriers covered by premium insurance. If premium 

insurance claims should exceed that amount, additional funding 

could be appropriated from the General Fund. The Department of 

Defense and the State Department have agreed to pay claims to 

the carriers covered by non-premium insurance. 

Legal Claims. As of September 30, 2013 and 2012, the FAA’s 

contingent liabilities for asserted and pending legal claims 

probable and reasonably possible of loss were estimated at $76

million and $93 million, respectively. There are other claims that 

could result in significant pay-outs; however, it is not possible at 

this time to determine the probability of an unfavorable outcome, 

or to estimate the amount of potential loss in the event of such 

an outcome. 

Environmental Liabilities. As of September 30, 2013, the 

FAA estimated contingent liabilities, categorized as reasonably 

possible at $165.2 million related to environmental remediation. 

Contingency costs are defined for environmental liabilities as 

those costs that may result from incomplete design, unforeseen 

and unpredictable conditions or uncertainties within a defined 

project scope. Note 7 discloses the environmental liability 

accrual.

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
112

NOTE 17. Reconciliation of Net Cost of Operations to Budget

This note reconciles the resources available to the FAA to finance operations and the net cost of operating the FAA’s programs.

2013 2012

Resources used to finance activities

Budgetary resources obligated

Obligations incurred $ 21,380,109 $ 22,205,831 

Less: Spending authority from offsetting collections and receipts and recoveries of prior year 

obligations 6,339,143 6,460,246 

Obligations, net of offsetting collections 15,040,966 15,745,585 

Other resources

Donations and forfeitures of property 78,599 156,817 

Transfers in/(out) without reimbursement 88,900 69,755 

Imputed financing from costs absorbed by others 571,027 552,144 

Other (27,301) (30,199)

Net other resources used to finance activities 711,225 748,517 

Total resources used to finance activities 15,752,191 16,494,102 

Resources used to finance items not part of the net cost of operations

Change in budgetary resources obligated for goods, services and benefits ordered but not yet 

received (598,115) 141,135 

Resources that fund expenses recognized in prior periods (decreases in unfunded liabilities) 

(Note 15) 156,014 58,308 

Resources that finance the acquisition of assets 1,251,875 1,464,254 

Other resources or adjustments to net obligated resources that do not affect net cost of operations 120,275 195,449 

Total resources used to finance items not part of net cost of operations 930,049 1,859,146 

Total resources used to finance net cost of operations 14,822,142 14,634,956 

Components of net cost of operations that will not require or generate resources in the 

current period

Components requiring or generating resources in future periods

Increases in annual leave liability and other unfunded liabilities (Note 15) 29,174 152,877 

Components not requiring or generating resources in future periods

Depreciation and amortization 1,270,958 1,136,914 

Other 103,064 206,413 

Total components of net cost of operations that will not require or generate resources 1,374,022 1,343,327 

Total components of net cost of operations that will not require 

or generate resources in the current period 1,403,196 1,496,204 

Net cost of operations $ 16,225,338 $ 16,131,160 

The accompanying notes are an integral part of these statements.

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
113F I N A N C I A L R E S U LT S

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

U.S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

STEWARDSHIP INVESTMENT

NON FEDERAL PHYSICAL PROPERTY

AIRPORT IMPROVEMENT PROGRAM

For the Fiscal Years Ended September 30

Unaudited

State/Territory 2013 2012 2011 2010 2009

Alabama $ 69,580 $ 54,765 $ 41,267 $ 70,995 $ 88,006 

Alaska 211,385 234,242 185,504 217,745 258,493 

Arizona 59,764 73,272 81,577 74,873 81,016 

Arkansas 54,673 35,746 58,152 44,485 41,746 

California 231,174 212,080 242,701 330,976 257,045 

Colorado 95,027 74,102 115,029 112,610 127,959 

Connecticut 21,374 16,637 20,654 29,152 36,016 

Delaware 15,745 5,352 8,240 11,841 15,112 

District of Columbia 5,354 44,565 7,862 20,336 19,052 

Florida 159,803 160,509 143,266 198,920 209,747 

Georgia 69,999 90,864 84,877 62,908 112,453 

Hawaii 29,153 29,024 29,391 32,954 81,303 

Idaho 23,593 18,813 21,529 19,925 26,444 

Illinois 178,873 161,320 120,826 123,683 126,249 

Indiana 79,478 42,460 68,204 65,839 63,444 

Iowa 58,577 41,221 31,191 40,461 30,776 

Kansas 51,988 31,476 24,293 55,251 43,475 

Kentucky 37,744 24,432 25,941 43,532 47,411 

Louisiana 50,276 55,676 63,079 94,206 66,617 

Maine 35,512 18,257 26,882 29,465 21,130 

Maryland 32,286 15,011 21,000 23,741 26,262 

Massachusetts 53,349 66,044 55,491 77,362 77,193 

Michigan 72,910 76,900 85,698 126,271 95,534 

Minnesota 53,843 48,313 54,819 81,733 62,844 

Mississippi 41,555 35,713 60,065 47,301 43,608 

Missouri 55,522 46,445 38,719 105,807 79,620 

Montana 44,474 48,128 36,530 41,271 44,214 

Nebraska 31,781 34,711 50,130 28,140 46,884 

Nevada 36,441 50,051 45,926 60,035 62,106 

New Hampshire 17,623 21,070 14,752 15,634 21,930 

New Jersey 99,443 47,444 75,939 121,679 81,388 

New Mexico 27,787 26,163 26,387 30,488 25,966 

(continued on next page)

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
114

U.S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

STEWARDSHIP INVESTMENT

NON FEDERAL PHYSICAL PROPERTY

AIRPORT IMPROVEMENT PROGRAM

For the Fiscal Years Ended September 30

Unaudited

State/Territory 2013 2012 2011 2010 2009

New York $ 98,699 $ 94,424 $ 93,252 $ 111,390 $ 111,873 

North Carolina 101,080 51,337 77,725 109,685 105,959 

North Dakota 53,066 28,723 23,127 26,195 21,948 

Ohio 81,205 79,962 97,423 83,681 106,927 

Oklahoma 59,213 37,892 41,488 46,774 49,832 

Oregon 58,929 36,671 56,134 80,910 62,678 

Pennsylvania 53,146 82,029 91,215 106,319 112,739 

Rhode Island 11,939 3,675 8,059 20,554 7,441 

South Carolina 54,621 49,512 56,367 45,763 42,403 

South Dakota 39,320 32,712 29,846 32,330 32,142 

Tennessee 84,893 59,545 75,136 101,234 96,655 

Texas 235,366 195,321 240,380 249,084 289,801 

Utah 59,188 42,705 49,029 34,482 39,329 

Vermont 8,661 9,998 26,103 21,628 8,179 

Virginia 60,272 42,571 32,379 57,930 81,283 

Washington 79,861 89,797 120,976 98,228 133,508 

West Virginia 24,015 26,544 27,167 27,634 28,280 

Wisconsin 75,601 51,167 65,061 78,599 61,043 

Wyoming 30,746 20,108 22,845 34,190 25,486 

American Samoa 2,795 4,952 12,315 6,650 9,273 

Guam 10,324 3,238 11,952 19,574 38,245 

Northern Mariana Islands 17,070 5,714 10,502 14,420 8,678 

Puerto Rico 18,303 11,492 6,569 12,019 20,625 

Virgin Islands 31,012 2,545 16,076 7,602 3,698 

Marshall Islands 4,226 2,669 4,463 24,514 

Administration 143,312 133,576 127,202 124,454 115,902 

Totals $ 3,602,949 $ 3,139,685 $ 3,388,712 $ 4,015,462 $ 4,034,970 

The FAA makes project grants for airport planning and 

development under the Airport Improvement Program to maintain 

a safe and efficient nationwide system of public-use airports that 

meets both the present and future needs of civil aeronautics. 

The FAA works to improve the infrastructure of the nation’s 

airports, in cooperation with airport authorities, local and state 

governments, and metropolitan planning authorities.

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115F I N A N C I A L R E S U LT S

U.S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

STEWARDSHIP INVESTMENT

RESEARCH AND DEVELOPMENT

For the Fiscal Years Ended September 30

Unaudited

Expenses 2013 2012 2011 2010 2009

Applied Research $ 119,952 $ 133,932 $ 129,954 $ 103,042 $ 95,764 

Development 312 1,311 2,238 2,008 1,102 

Administration 35,929 37,482 35,875 36,723 35,055 

R&D Plant 26,086 18,974 5,848 5,590 3,381 

Total $ 182,279 $ 191,699 $ 173,915 $ 147,363 $ 135,302 

The FAA conducts research and provides the essential air traffic 

control infrastructure to meet increasing demands for higher 

levels of safety, efficiency, and environmental protection.

Research priorities include aircraft structures and materials; fire 

and cabin safety; crash injury protection; explosive detection 

systems; ground de-icing operations and decreased in-flight ice 

buildup; better tools to predict and warn of weather hazards, 

turbulence, and wake vortices; aviation medicine; and human 

factors. Human factors refer to research on how people (e.g., air 

traffic controllers and pilots) perform when interacting with, for 

example, technology and equipment, under various conditions. 

Optimizing this interaction contributes to safer air travel. 

Lithium Battery Testing for Cargo Aircraft

In FY 2013, FAA completed full-scale fire tests on bulk shipments 

of large numbers of lithium batteries in a fully operational but 

non-flyable 727 freighter. The bulk shipment consisted of 5000 

lithium batteries, either lithium primary (non-rechargeable) or 

rechargeable lithium ion batteries, commonly employed in lap 

top computers, I pads, and other portable electronic devices. The 

727 was fire hardened and a water spray system was employed 

to protect the test article to allow for repeated tests. Non-lithium 

batteries were also tested for comparison. Tests were conducted 

in the main deck Class E cargo compartment, which requires a 

fire detection system and ventilation controls to minimize air 

flow into the compartment and prevent smoke build-up in the 

flight deck. Tests were also conducted in the lower Class C cargo 

compartment, which had a halon fire suppression system in the 

727. FAA requires that all large passenger carrying airplanes 

have Class C cargo compartments. The test results demonstrated 

the ability of a large transport airplane-under the most realistic 

conditions possible-to withstand a fire involving a large number 

of lithium batteries.

In FY 2014, the 727 freighter will be used to examine the 

effectiveness of fire containment covers (used on cargo pallets) 

and hardened fire containers for protecting against lithium 

battery fires. Moreover, a zoned water spray system will be 

developed and evaluated for lithium battery fire suppression in 

the main deck (Class E) cargo compartment.

In-Flight Icing Product Enhancement

In-flight icing causes more than 25 accidents annually, with more 

than half resulting in fatalities and destroyed aircraft according 

to National Transportation Safety Board data. This equates to 

more than $100 million in injuries, fatalities, and aircraft damage 

annually. To address this problem, the FAA’s Aviation Weather 

Research Program developed the Current and Forecast Icing 

Products (CIP and FIP) which provide more accurate and timely 

diagnoses and forecasts of atmospheric conditions leading to ice 

accretion on aircraft during flight. CIP and FIP were implemented 

operationally on the web-based Aviation Digital Data Service at 

the National Oceanic and Atmospheric Administration’s Aviation 

Weather Center in Kansas City.

In FY 2013, the Weather Program upgraded the CIP and FIP 

algorithms to meet requirements of a High Resolution diagnoses 

and forecast of atmospheric conditions conducive to aircraft 

icing. These upgraded algorithms, also known as CIP/FIP High 

Resolution improve the horizontal and vertical resolution and 

extend the forecast from 12 hours out to 18 hours.

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
116

Wind Information Quality Standards 

Development

Accurate wind information is critical to the development and 

delivery of Next Generation Air Transportation System (NextGen) 

system enhancements. Wind information requirements include 

the need for accurate wind forecasts, consistent winds between 

various ground and airborne systems, and consideration of how 

those winds are being used by ground and airborne system 

algorithms. The FAA Weather Technology in the Cockpit (WTIC) 

program performed research to determine the relationships 

between wind information quality and the performance of the 

NextGen operational improvements they enable. The overall goal 

of this research was to support the development of quantitative 

requirements for wind diagnosis and forecast capabilities that 

enable NextGen operations that are impacted by winds to deliver 

their desired level of benefits.

The wind study research developed a Wind Information 

Analysis Framework that provided a capability to simulate 

NextGen operational performance using selected scenarios (e.g. 

aircraft type, phase of flight, flight scenario) in varying wind 

conditions (i.e. vertical wind shears). Using the Wind Information 

Analysis Framework, simulations were run by modeling various 

levels of wind information quality in the cockpit, the Flight 

Management System (FMS), and on the ground, and various 

aircraft capabilities, to determine the resulting performance 

of the NextGen operation and scenario being evaluated. The 

results of the simulations will be used by stakeholders to identify 

quantitative requirements for a minimum level of wind quality in 

cockpits and FMS to enable the desired level of performance of a 

specific NextGen operation.

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
117F I N A N C I A L R E S U LT S

REQUIRED SUPPLEMENTARY INFORMATION

U.S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

SUPPLEMENTARY INFORMATION

DEFERRED MAINTENANCE

As of September 30, 2013

Unaudited

Category Method Asset condition*

Costs to return to 

acceptable condition

Buildings Condition assessment 4&5 $ 89,183 

Other structures and facilities Condition assessment 4&5 $ 413,297 

* Condition Rating Scale: 4–Poor; 5–Very Poor

Deferred maintenance and repair is maintenance or repair 

that was not performed when it should have been, or was 

scheduled to be performed but was delayed until a future 

period due to a lack of resources or funding. The FAA reports 

deferred maintenance and repair only on assets with condition 

ratings of 4 and 5, in compliance with the SFFAS Number 6, 

“Accounting for Property, Plant, and Equipment,” SFFAS 

Number 8, “Supplemental Stewardship Reporting,“ SFFAS 

Number 14, “Amendments to Deferred Maintenance Reporting”

(amends SFFAS’s 6 and 8), and SFFAS Number 40, “Definitional 

Changes Related to Deferred Maintenance and Repairs” (amends 

SFFAS 6). 

Deferred maintenance and repair is estimated using condition 

assessment surveys and includes the following FAA buildings, 

structures, and facilities: En Route, Terminal, the William J. 

Hughes Technical Center, the Mike Monroney Aeronautical 

Center and unstaffed facilities. The FAA recognizes maintenance 

and repair expense as incurred.

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report
118

U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

SCHEDULE OF BUDGETARY RESOURCES BY MAJOR FUND TYPE

As of September 30, 2013

Unaudited

Trust Fund 

Grants-in-Aid 

to Airports 

Trust Fund 

Facilities & 

Equipment

Trust Fund 

Research, Eng. 

& Development

Aviation 

Insurance 

Revolving

Franchise 

Fund Operations

Other 

Funds

Combined 

Total 

BUDGETARY RESOURCES

Unobligated balance brought forward, transfers and other $ 14,221 $ 1,265,817 $ 80,769 $ 1,834,339 $ 109,077 $ 172,855 $ 42,600 $ 3,519,678 Recoveries of prior year obligations 133,136 100,788 6,363 — 35,127 96,295 1,953 373,662 Other changes in unobligated balance — (43,508) (2,545) 384 — (43,840) 4,393 (85,116)Appropriations — 2,616,397 158,798 — — 4,352,475 4,796,830 11,924,500 Contract authority 3,343,300 — — — — — — 3,343,300 

Spending authority from offsetting collections 771 98,923 1,520 190,656 424,820 5,193,231 966 5,910,887 

Total Budgetary Resources $ 3,491,428 $ 4,038,417 $ 244,905 $ 2,025,379 $ 569,024 $ 9,771,016 $ $,846,742 $ 24,986,911 

STATUS OF BUDGETARY RESOURCES

Obligations incurred $ 3,476,065 $ 2,869,633 $ 154,563 $ 13,632 $ 447,895 $ 9,622,011 $ 4,796,310 $ 21,380,109 

Apportioned 1,446 1,096,339 85,295 43,496 113,785 47,669 674 1,388,704 

Unapportioned 13,917 72,445 5,047 1,968,251 7,344 101,336 49,758 2,218,098 

Total Status of Budgetary Resources $ 3,491,428 $ 4,038,417 $ 244,905 $ 2,025,379 $ 569,024 $ 9,771,016 $ 4,846,742 $ 24,986,911 

CHANGE IN OBLIGATED BALANCES

Obligated balance, net, beginning of period $ 5,427,782 $ 1,861,296 $ 136,424 $ 1,747 $ 162,443 $ 1,343,022 $ 5,333 $ 8,938,047 

Obligations incurred 3,476,065 2,869,633 154,563 13,632 447,895 9,622,011 4,796,310 21,380,109 Gross outlays (3,653,396) (2,848,772) (158,301) (13,779) (423,697) (9,585,108) (4,798,359) (21,481,412)

Recoveries of prior year obligations (133,136) (100,788) (6,363) — (35,127) (96,295) (1,953) (373,662)Change in uncollected customer payments from Federal sources — (6,165) 4,760 — (5,308) 61,555 — 54,842 

Obligated Balance, net, end of period $ 5,117,315 $ 1,775,204 $ 131,083 $ 1,600 $ 146,206 $ 1,345,185 $ 1,331 $ 8,517,924 

BUDGET AUTHORITY AND OUTLAYS 

Budget authority, gross $ 3,344,071 $ 2,715,320 $ 160,318 $ 190,656 $ 424,820 $ 9,545,706 $ 4,797,796 $ 21,178,687 Actual offsetting collections (849) (95,918) (6,280) (190,727) (419,512) (5,255,314) (967) (5,969,567)Change in uncollected customer payments from Federal sources — (6,165) 4,760 — (5,308) 61,555 — 54,842 

Budget Authority, net $ 3,343,222 $ 2,613,237 $ 158,798 $ (71) $ — $ 4,351,947 $ 4,796,829 $ 15,263,962 

NET OUTLAYS

Gross outlays $ 3,653,396 $ 2,848,772 $ 158,301 $ 13,779 $ 423,697 $ 9,585,108 $ 4,798,359 $ 21,481,412 

Collections, net of offsetting receipts (849) (95,918) (6,280) (190,727) (419,512) (5,255,314) (967) (5,969,567)Distributed offsetting receipts — — — — — — (2,801) (2,801)

Net Outlays $ 3,652,547 $ 2,752,854 $ 152,021 $ (176,948) $ 4,185 $ 4,329,794 $ 4,794,591 $ 15,509,044 

Federal Aviation Administration 

| Fiscal Year 2013 | Performance and Accountability Report
119F I N A N C I A L R E S U LT S

U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

SCHEDULE OF BUDGETARY RESOURCES BY MAJOR FUND TYPE

As of September 30, 2012

Unaudited

Trust Fund 

Grants-in-Aid 

to Airports 

Trust Fund 

Facilities & 

Equipment

Trust Fund 

Research, Eng. 

& Development

Aviation 

Insurance 

Revolving

Franchise 

Fund Operations

Other 

Funds

Combined 

Total 

BUDGETARY RESOURCES

Unobligated balance brought forward, transfers and other $ 12,531 $ 1,479,618 $ 82,707 $ 1,671,936 $ 127,592 $ 162,187 $ 19,640 $ 3,556,211 Recoveries of prior year obligations 145,952 122,692 6,676 53 18,850 112,754 6,913 413,890 Other changes in unobligated balance — (70,177) (1,966) — — (60,234) 15,536 (116,841)

Appropriations — 2,730,732 167,572 — — 4,592,701 5,061,365 12,552,370 Contract authority 3,350,000 — — — — — — 3,350,000 

Spending authority from offsetting collections 230 56,548 6,154 161,763 451,454 5,293,517 213 5,969,879 

Total Budgetary Resources $ 3,508,713 $ 4,319,413 $ 261,143 $ 1,833,752 $ 597,896 $ 10,100,925 $ 5,103,667 $ 25,725,509 

STATUS OF BUDGETARY RESOURCES

Obligations incurred $ 3,494,492 $ 3,053,596 $ 180,374 $ (587) $ 488,819 $ 9,928,070 $ 5,061,067 $ 22,205,831 

Apportioned 2,473 1,172,189 49,167 43,634 98,125 65,325 1 1,430,914 

Unapportioned 11,748 93,628 31,602 1,790,705 10,952 107,530 42,599 2,088,764 

Total Status of Budgetary Resources $ 3,508,713 $ 4,319,413 $ 261,143 $ 1,833,752 $ 597,896 $ 10,100,925 $ 5,103,667 $ 25,725,509 

CHANGE IN OBLIGATED BALANCES

Obligated balance, net, beginning of period $ 5,223,111 $ 1,905,142 $ 152,482 $ 5,546 $ 129,561 $ 1,491,128 $ 48,089 $ 8,955,059 

Obligations incurred 3,494,492 3,053,596 180,374 (587) 488,819 9,928,070 5,061,067 22,205,831 Gross outlays (3,143,869) (2,968,584) (187,866) (3,159) (443,427) (9,922,552) (5,096,844) (21,766,301)

Recoveries of prior year obligations (145,952) (122,692) (6,676) (53) (18,850) (112,754) (6,913) (413,890)

Change in uncollected customer payments from Federal sources — (6,166) (1,890) — 6,340 (40,870) (66) (42,652)

Obligated Balance, net, end of period $ 5,427,782 $ 1,861,296 $ 136,424 $ 1,747 $ 162,443 $ 1,343,022 $ 5,333 $ 8,938,047 

BUDGET AUTHORITY AND OUTLAYS 

Budget authority, gross $ 3,350,230 $ 2,787,280 $ 173,726 $ 161,763 $ 451,454 $ 9,886,218 $ 5,061,578 $ 21,872,249 

Actual offsetting collections (230) (50,382) (4,264) (161,763) (457,794) (5,252,647) (147) (5,927,227)Change in uncollected customer payments from Federal sources — (6,166) (1,890) — 6,340 (40,870) (66) (42,652)

Budget Authority, net $ 3,350,000 $ 2,730,732 $ 167,572 $ — $ — $ 4,592,701 $ 5,061,365 $ 15,902,370 

NET OUTLAYS

Gross outlays $ 3,143,869 $ 2,968,584 $ 187,866 $ 3,159 $ 443,427 $ 9,922,552 $ 5,096,844 $ 21,766,301 Collections, net of offsetting receipts (230) (50,382) (4,264) (161,763) (457,794) (5,252,647) (147) (5,927,227)Distributed offsetting receipts — — — — — — (11,560) (11,560)

Net Outlays $ 3,143,639 $ 2,918,202 $ 183,602 $ (158,604) $ (14,367) $ 4,669,905 $ 5,085,137 $ 15,827,514 

Federal Aviation Administration 

| Fiscal Year 2013 | Performance and Accountability Report
120

OTHER INFORMATION
121OTHER INFORMATION

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

SUMMARY OF INSPECTOR GENERAL’S TOP MANAGEMENT CHALLENGES

The Reports Consolidation Act of 2000 requires the Inspector General (IG) to identify and report annually on the most serious 

management and performance challenges that federal agencies face. The Department of Transportation (DOT) IG’s report, which 

is issued soon after the beginning of the fiscal year, highlights urgent issues for the Department as a whole. On November 15, 

2012, the IG issued the following memorandum identifying the Department-wide top management challenges for FY 2013: 

2013 Top Management Challenges, Department of Transportation 

U.S. Department of

Memorandum

Transportation

Office of the Secretary

of Transportation

Office of Inspector General

Subject: INFORMATION: DOT’s Fiscal Year 2013 

Top Management Challenges 

Department of Transportation

Report Number PT-2013-011

Date: November 15, 2012

From: Calvin L. Scovel III 

Inspector General 

Reply to 

Attn. of: J-1

To: The Secretary

Deputy Secretary

As required by law, we have identified the Department of Transportation’s (DOT) top 

management challenges for fiscal year 2013. A safe and well-managed transportation 

system is key for the U.S. economy and the quality of life for the traveling public. To 

maintain and modernize all modes of transportation, the Department spends over

$70 billion annually on a wide range of programs. Consequently, it is critical for the 

Department to carry out its mission within a framework of rigorous stewardship of 

taxpayer funds, and we continue to support the Department’s efforts through our 

audits and investigations. 

Global and domestic travel are projected to significantly increase the demand on our 

transportation system, and the Department faces considerable challenges in improving 

the Nation’s surface infrastructure and airspace. A key issue is the Next Generation 

Air Transportation System—a multibillion-dollar effort to modernize the U.S. air 

traffic control system. The Department is working diligently to address numerous 

challenges we have identified over the years with this highly complex undertaking. 

However, much work remains to move from planning to implementation, tighten cost 

and schedule controls, and better define benefits and an end state for users.

It is also critical that the Department take every opportunity to make efficient use of 

funds through improved acquisition and grant management—an ongoing challenge 

with multi-modal impact. This past year, our work also highlighted the need for the 

Department to better safeguard its investments in key assets to support or expand 

transportation. These challenges include enforcing reforms to business practices, 

closely overseeing financing plans, and protecting critical information systems. 
122 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

2013 Top Management Challenges, Department of Transportation ii

Improving air and surface safety continues to be the Department’s overarching 

priority. This past year, the Department has made important progress toward meeting 

new airline safety regulations to advance voluntary safety programs at air carriers and 

improve pilot rest requirements. To maintain the Nation’s excellent aviation safety 

record, the Department must address a number of challenges. These include 

maximizing existing data to identify trends and root causes of safety issues, enhancing 

risk-based oversight at carriers and repair stations, and mitigating air traffic controller

fatigue. 

In terms of surface safety, fatalities on the Nation’s highways have generally declined 

over the last several years; however, the safety of the Nation’s highways, railroads, 

and pipelines remains an ongoing concern. The Department must implement a number 

of safety requirements enacted in 2012 to identify defective vehicles, better protect 

motor coach passengers, enhance mass transit safety, and develop a national tunnel 

inspection program.

We continue to build a body of work to assist the Department with its critical mission; 

improve the management and execution of programs; and protect the Department’s 

resources from fraud, waste, abuse, and violations of law. We considered several 

criteria in identifying the following nine challenges, including their impact on safety, 

documented vulnerabilities, large dollar implications, and the ability of the 

Department to effect change in these areas:

• Ensuring the Next Generation Air Transportation System Advances Safety and Air 

Travel

• Enhancing FAA’s Oversight and Use of Data To Identify and Mitigate Safety 

Risks

• Overseeing Administration of Key Transportation Assets To Ensure Their Success 

and Sustainability

• Strengthening Existing Surface Safety Programs and Effectively Implementing 

New Safety Requirements

• Maximizing Surface Infrastructure Investments With Effective Program Oversight 

and Execution of New Legislative Requirements

• Adequately Overseeing Administration of High Speed Intercity Passenger Rail 

Grant Funds

• Strengthening Financial Management Over Grants To Better Use Funds, Create 

Jobs, and Improve Infrastructure
123OTHER INFORMATION

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

2013 Top Management Challenges, Department of Transportation iii

• Ensuring Effective Management of DOT’s Acquisitions To Maximize Value and 

Program Performance

• Managing and Securing Information Systems To Efficiently Modernize 

Technology Infrastructure and Protect Sensitive Data From Compromise

We are committed to keeping decision makers informed of issues identified through 

our audits and investigations. We appreciate the Department’s commitment to taking 

prompt corrective action in response to our findings and recommendations. This 

report and the Department’s response will be included in the Department’s Annual 

Financial Report, as required by law. The Department’s response is included in its 

entirety in the appendix to this report. If you have any questions regarding this report, 

please contact me at (202) 366-1959. You may also contact Lou E. Dixon, Principal 

Assistant Inspector General for Audits and Evaluation, at (202) 366-1427.

#

cc: DOT Audit Liaison, M-1
124 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

In FY 2013, the FAA was tasked by DOT with addressing three of 

the nine broad challenges identified by the IG. Those three broad 

categories and eleven key subcomponent challenges within 

them, are summarized below: 

¢ Ensuring the Next Generation Air Transportation 

System Advances Safety and Air Travel

Realizing Benefits from NextGen Capabilities at 

Congested Airports in the Near Term

Mitigating Risks that Delays with the En Route 

Automation Modernization Program Pose to Critical 

NextGen Initiatives

Making Decisions on Facility Consolidation and 

Modernization

Completing an Integrated Master Schedule for NextGen 

Transformational Programs

Achieving Expected Outcomes from Reorganization to 

Improve NextGen Management

Integrating Unmanned Aircraft Systems into the National 

Airspace System

¢ Enhancing FAA’s Oversight and Use of Data to Identify 

and Mitigate Safety Risks

Identifying Trends in Operational Errors and Determining 

Their Root Causes

Advancing Oversight by Implementing the Airline Safety 

Act of 2010

Providing More Rigorous Risk-Based Oversight of Repair 

Stations and Identifying Inspector Staffing Requirements

Identifying the Effects of Air Traffic Controller Scheduling 

on Safety, Cost Efficiency, and Controller Performance

¢ Strengthening Financial Management Over Grants 

to Better Use Funds, Create Jobs and Improve 

Infrastructure

Strengthening DOT’s Acquisition Planning, Oversight, and 

Workforce

Soon after the IG report was issued, the FAA developed an action 

plan for each of the 11 key issues. Included in these action plans 

were detailed steps and timelines for addressing the challenge. 

At the end of FY 2013, the FAA submitted “actions taken” reports 

to DOT. These reports provided our progress made throughout FY 

2013 in addressing each of the key challenges. These year-end 

actions taken reports, our action plans and the comprehensive 

report identifying the IG Top Management Challenges for Fiscal 

Year 2013 are posted on FAA’s website at http://www.faa.gov/

about/plans_reports/ under the DOT IG Top Management 

Challenges section. 

ENSURING THE NEXT GENERATION AIR 

TRANSPORTATION SYSTEM ADVANCES 

SAFETY AND AIR TRAVEL

KEY CHALLENGE:

Realizing Benefits from NextGen Capabilities at Congested 

Airports in the Near Term

ISSUE:

In response to recommendations from the 2009 NextGen 

Mid-Term Implementation Task Force report, the FAA 

undertook an effort to pursue advances at the most congested 

“metroplexes”—large metropolitan areas served by multiple 

airports, sharing the same congested airspace—that could be 

implemented within a few years. The Task Force recommended 

that the FAA implement airspace redesign and Performance 

Based Navigation (PBN) procedures which could be achieved 

quickly, without the need for extensive environmental review 

and without requiring costly new equipage. The FAA thus began 

in 2010 the Optimization of Airspace and Procedures in the 

Metroplex program (OAPM). The idea behind OAPM is that while 

the FAA continues to pursue cutting-edge NextGen solutions, 

these OAPM improvements could be made quickly and with more 

immediate benefits.

The IG states that there is concern among stakeholders that 

OAPM may be late, and may not deliver all desired benefits, 

“since FAA has focused on limited airspace and procedure 

improvements rather than maximizing new technologies and 

advanced procedures.” FAA does not agree with IG’s assessment 

of benefits since the original purpose of the task force 

recommendations was to redesign navigation procedures without 

an extensive process or need for equipage.

ACTIONS TAKEN IN FY 2013:

The enactment of the FY 2013 budget sequester and associated 

furlough in spring 2013 required the return of National Air Traffic 

Controllers Association (NATCA) Article 48 local and national 

subject matter experts to their facilities. Although the actual 

FAA furlough was brief, these controllers had been integrated 

into facility schedules and returning them to OAPM duties took 
125OTHER INFORMATION

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

up to six weeks. Because the success of Metroplex depends on 

collaboration, the OAPM projects were effectively on hold from 

mid-April through May.

This delay was compounded in August/September when 

the implementation schedule for the En Route Automation 

Modernization (ERAM) system was readjusted, and again came 

into conflict with the established OAPM Program Schedule at 

Ft. Worth, Washington, Charlotte, and Atlanta. OAPM originally 

deconflicted its schedule from ERAM’s schedule in 2011. The 

FAA deemed ERAM to be the higher priority program and OAPM 

procedure implementation was delayed so as not to increase 

implementation risk for ERAM. This deconfliction of programs 

resulted in the schedules at the Washington DC, North Texas, 

Charlotte, and Atlanta Metroplexes being delayed for up to 18 

months. 

The Washington and North Texas Metroplexes were well into 

implementation phase activities when the schedules were 

adjusted in September 2013. Washington procedures that 

were to begin implementation in December 2013 were delayed 

until 2015 and implementation will not be complete until 

September 2015. North Texas will not complete implementation 

until October 2014. The Houston Metroplex is also in the 

implementation phase, with procedures to be implemented in 

May 2014. The Phoenix Metroplex completed the study phase. 

The Southern California Metroplex is mid-way through its design 

phase. The Atlanta and Charlotte Metroplexes are concluding 

the evaluation phase, but completion of the implementation 

phase will be delayed until August 2016 due to Atlanta air 

route traffic control center ERAM implementation. Northern 

California Metroplex is mid-way through the evaluation phase. 

In Washington DC, user benefits are increasing through the 

utilization of PBN procedures implemented as part of the 

Metroplex Tri-Flow Project. 

Metroplex initiated the deliberative process to address 

the NextGen Advisory Committee (NAC) June 2013 

Recommendations for Increased Utilization of PBN in the 

National Airspace System report. This process will also address 

issues regarding PBN field implementation that have been identified by interval FAA processes. 

KEY CHALLENGE:

Mitigating Risks that Delays with the En Route Automation 

Modernization Program Pose to Critical NextGen Initiatives

ISSUE:

Increasing airspace capacity and reducing flight delays depend on 

the successful implementation of ERAM—a $2.1 billion system 

to replace hardware and software at FAA’s facilities that manage 

high-altitude traffic. FAA originally planned to complete ERAM 

by the end of 2010. However, software problems have impacted 

the system’s ability to safely manage and separate aircraft and 

raised questions as to what capabilities ERAM will ultimately 

deliver. FAA rebaselined the program in 2011, which pushed 

its expected completion to 2014 and increased cost estimates 

by $330 million. FAA is taking steps to get ERAM on track and 

is using the system on a full-time basis at several sites—a 

significant step forward given the extensive software problems 

during testing at the two initial sites. Recent progress at those 

two sites has allowed FAA to phase out their legacy air traffic 

control systems. However, other facilities continue to identify 

software problems, and FAA will likely encounter these and other 

issues when it implements ERAM at some of the nation’s busiest 

facilities. If software problems persist, the program’s cost growth 

could exceed $500 million, and delays could stretch out to 2016. 

Prolonged delays with ERAM will directly impact the overall cost 

and pace of NextGen. Without ERAM, the benefits of several 

other programs, such as a new satellite-based surveillance 

system and data communications for controllers and pilots, will 

not be possible.

ACTIONS TAKEN IN FY 2013:

The program office has implemented a deep-dive architecture 

review of the system. This work focuses on areas of system 

stability, reliability, and interoperability with other NextGen 

systems. The recommendations and monitoring data from the 

ERAM architecture review demonstrate the system is either 

meeting or exceeding performance levels for availability in its 

system and sub-system components.

The program office continues to apply its processes and 

standards for packaging and deploying builds using a 

collaboratively-managed process between the program office, 

second level engineering, NATCA, and site teams to deploy 

software. This process ensures upstream planning beginning 

more than three months in advance of software test dates to 

ensure that the necessary plans, resources, and sites are aligned 

to ensure robust verification and validation of software in ‘likeoperational’ conditions. 
126 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

The program office initiated recurring pre-operational review 

meetings with the sites that have not yet begun initial operations 

with ERAM. While this process is typical of any site that 

would be planning to transition to ERAM-based operations, 

starting it this far in advance is not typical. This early start is 

aimed at better understanding any potentially new and specific 

downstream needs and proactively addressing them. 

The ERAM program continues to use the standing work group 

within the construct of the contract between the FAA and 

NATCA, as well as Professional Aviation Safety Specialists 

(PASS), to collaborate on program strategy, software content, 

site implementation needs, and a range of other activities. This 

improves transparency and communication for developing buy-in 

to the program, and has enhanced the ability of the program to 

successfully achieve key programmatic milestones. 

The ERAM program has renegotiated the ERAM contract with the 

prime vendor for FY 2012 efforts and beyond. This renegotiation 

included a reexamination of multiple components including 

contractor incentive structure(s), the relationship between 

software milestones and the triggering of those incentive(s), 

and Agency controls to strengthen processes around software 

acceptance.

The initial analysis and recommendations stemming from the 

ERAM independent verification and validation project have 

confirmed the adequacy and stability of the underlying code 

base to support the anticipated needs of NextGen programs. 

In addition, the analysis and recommendations from the ERAM 

software planning and issues analysis process improvement 

project have yielded communication, data flow, and integration 

improvements to better ensure that the program’s software 

planning forums are efficiently and effectively aligned.

Finally, FY 2013 implementation plans were impacted by the 

sequestration, especially at the five sites that achieved initial 

operations immediately prior to sequestration (Cleveland, Boston, 

Memphis, Washington, DC, and New York). At the three sites in 

continuous operational runs in FY 2013, the necessary re-training 

was started to support operational runs later in this fiscal year. 

The Washington and New York Centers, whose re-training 

requirements were more severe, could not begin any level of 

re-training prior to September of 2013 (a seven month delay from 

their prior operational runs in March 2013). The remaining 4 sites 

(Fort Worth, Miami, Atlanta and Jacksonville) will now initiate 

operations later than originally planned. As a result, the program 

must be extended longer than was originally anticipated, with 

a planned last-site operational readiness date in the second 

quarter of FY 2015. This creates a seven month delay in the 

program. This increases the total cost to deliver ERAM because 

of the overhead associated with the program office, Lockheed 

Martin Corporation, and service life extension, to deploy ERAM 

at sites extends 7 months as well, on the order of approximately 

$42 million.

KEY CHALLENGE:

Making Decisions on Facility Consolidation and Modernization

ISSUE:

FAA has not made key decisions on the number and locations of 

air traffic facilities needed to support NextGen or on the level 

of automation that can be realistically and safely achieved to 

manage traffic. In November 2011, FAA formalized an initial plan 

for consolidating en route centers and Terminal Radar Approach 

Control (TRACON) facilities into large, integrated facilities in six 

geographic segments across the country. Since then, the Agency 

has focused on plans in the New York area but has delayed a 

final decision until May 2013 on where to build the integrated 

facility. Ultimately, successfully implementing FAA’s plans will 

require the Agency to address challenges with cost estimates, 

funding sources, and workforce issues. 

Consolidation will likely be a long-term challenge for FAA, as 

its NextGen modernization plans were based on the traditional 

facility set-up of en route centers and TRACONs—not integrated 

facilities. Integrating facilities will also require cost and 

schedule changes to modernization programs that already have 

established baselines. The Terminal Automation Modernization 

and Replacement program alone involves about $1 billion through 

2018 to replace aging displays and processors that controllers 

rely on to manage takeoffs and landings, the most critical phases 

of flight. FAA recently approved plans to begin transitioning to a 

new terminal automation system at 11 large TRACON facilities 

through 2017. However, the Agency has yet to determine 

whether its consolidation efforts will impact these facilities.”

ACTIONS TAKEN IN FY 2013:

FAA’s NY Integrated Control Facility (ICF) Initiative: The FAA 

established the goal to issue a land Request for Information (RFI) 

of properties in NY State for the NY ICF. The FAA issued an RFI 

for sites for the NY ICF in December 2012. The RFI closed Jan 31, 

2013. The FAA is in the process of evaluating the offers received, 

including low-cost and no-cost sites. While the long-term plan 

is to proceed with a full ICF, due to financial constraints, the full 

ICF option is not viable at this time. In the near-term, the FAA 
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Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

is conducting an Options Analysis to inform FAA leadership on 

possible NY facility solutions. 

FAA’s Section 804 Collaborative Workgroup: The FAA’s workgroup 

finalized the process for evaluating facility realignments. 

FAA leadership planned to brief Congress on the workgroup’s 

progress and activities in the spring of 2013. However, due to 

sequestration, FAA leadership has not yet briefed Congress 

on the process for facility realignments. Additionally, the 

workgroup activities are aligned with ATC facilities sustainment, 

replacement, and modernization efforts, as well as the Terminal 

Automation Modernization and Replacement program schedule.

KEY CHALLENGE:

Completing an Integrated Master Schedule for NextGen 

Transformational Programs

ISSUE:

The FAA has not yet developed an Integrated Master Schedule 

for implementing NextGen transformational programs, or 

established total program costs, schedules or performance 

baselines. Decision makers in Congress and the Department 

lack sufficient information to assess progress as requirements 

evolve. Without a master schedule the FAA will continue to be 

challenged to assess progress with NextGen efforts, establish 

priorities, and make necessary trade-offs between programs.

ACTIONS TAKEN IN FY 2013:

The FAA’s NextGen Management Board ratified the final version 

of the National Airspace System Segment Implementation Plan 

(NSIP), Version 5, on December 3, 2012. The updated version of 

NextGen Implementation Plan was published on June 13, 2013. 

During 2013, the NSIP was virtualized and integrated into the 

national airspace system enterprise architecture enabling a 

more efficient three phase update process that includes: Service 

Roadmap revalidation; Infrastructure Roadmap revalidation; and 

Portfolio Revalidation. With the completion of the service and 

infrastructure roadmap reviews, the initial draft of NSIP 2014 

(formerly NSIP 6.0) was completed on September 30, 2013. The 

NSIP Portfolio Revalidation began on August 8, and resolution 

and adjudication of comments started on September 9, 2013.

The FAA continues to align the Integrated Master Schedule with 

the NSIP. High level Segment Bravo schedules are currently being 

incorporated. 

NextGen increments are currently being linked to their respective 

programs/systems. On September 30, 2013, the FAA completed 

linking for the Separation Management Portfolio: Advanced 

Technologies and Oceanic Procedures and Data Comm. 

Quarterly Portfolio Management Reviews (PfMRs) for each NSIP 

Portfolio were conducted starting the first month after the end of 

the fiscal quarter: in January 2013 (1st QTR FY 2013); April 2013 

(2nd QTR FY 2013); and July 2013 (3rd QTR FY 2013). Milestone 

dates, key activities, accomplishments and challenges such as 

sequestration impacts were discussed and statused. Mitigation 

strategies were identified/ implemented. 

KEY CHALLENGE:

Achieving Expected Outcomes from Reorganization to Improve 

NextGen Management

ISSUE:

Many of FAA’s difficulties with implementing NextGen stem 

from underlying management challenges, such as assigning 

responsibility, accountability, and authority. In 2011, FAA 

commissioned an internal study to examine how the Agency’s 

internal structure, processes, and management culture 

could be improved to support NextGen. Based on the study’s 

recommendations, FAA announced a major reorganization in 

2011 to better position NextGen for success. FAA elevated the 

former NextGen office—creating an Assistant Administrator for 

NextGen who reports directly to the FAA Deputy Administrator—

and established a new Program Management Office. This 

new office will also work to bridge the gap between strategic 

requirements and program implementation. FAA is still in the 

early stages of this reorganization, and work remains to establish 

best practices and institutionalize changes.

ACTIONS TAKEN IN FY 2013:

Program Management Office (PMO) Charter and Strategic Plan:

Both a charter and a strategic plan were developed in 2013. The 

charter defines the PMO’s mission, responsibilities, supplemental 

relationships, and lines of succession within the PMO. The 

charter complements the PMO strategic plan which encompasses 

four focus areas: organizational alignment and leadership, 

policies and processes, human capital, and information 

management and stewardship. 

Define Workplan for Future NSIP: NSIP workplans are now 

being integrated into the national airspace system enterprise 

architecture framework. In doing so, the NSIP was virtualized, 
128 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

making it accessible in a web-based environment. This resulted 

in the merger of three independent re-validation processes: 

Infrastructure Roadmap, Service Roadmap, and NSIP.

Institutionalizing Idea to In-service (i2i): The Idea to In-service 

(i2i) process defines the collaboration, structure, and coordination 

required of FAA lines of business and staff offices to ensure the 

successful implementation of NextGen, while simultaneously 

maintaining the current national airspace system. i2i was 

approved by the agency and its key components were integrated 

into the Acquisition Management System (AMS) to ensure that 

Operational Concepts are fully vetted before they are included in 

the national airspace system Concept of Operations. 

PMO Program Reviews: The Air Traffic Organization (ATO) 

conducts bi-weekly program reviews to ensure critical 

information relative to program status and related activities 

are provided to program management executives, NextGen, 

Air Traffic Operations, and shared service stakeholders. The 

review sessions cover topics such as, risks issues and mitigation 

strategies, program status, major accomplishments, key 

assumptions, goals, objectives, and interdependencies.

Portfolio Management Reviews (PfMRs): The PfMRs are a 

process the agency uses to help manage and implement the 

contents of the NSIP. Significant changes in the content and 

execution of the PfMRs over the course of the last year are 

as follows: inclusion of risk management material, assessing 

increment performance based on cost schedule and technical 

assessments. These reviews also include pre-implementation 

work, such as, descriptions, schedules, funding, and linkage 

to portfolio increments resulting in a well-defined line of sight 

between pre-implementation activities and implementation work 

in progress. 

NextGen Management Board Reporting of NSIP Progress:

NextGen Management Board reporting has evolved over the 

past year from being a quarterly report which focused solely on 

the status of targeted milestones to the most current format, 

which is a monthly review of all milestones, planning activities, 

cross-cutting issues and implementation results. 

NextGen Performance Snapshots Website: The NextGen 

performance snapshots website was launched in March 2012. 

It is a reporting tool designed to show performance at locations 

where NextGen programs and initiatives have been implemented. 

It is updated quarterly, with six releases published as of July 

2013. The website provides information on NextGen efforts and 

accomplishments, as well as data on performance at the 30 Core 

airports, the city pairs recommended by the NextGen Advisory 

Committee, and on airspace such as the Gulf of Mexico. 

KEY CHALLENGE:

Integrating Unmanned Aircraft Systems (UAS) in the National 

Airspace System

ISSUE:

The application of UAS in the United States for research, law 

enforcement, private sector, and State government needs 

continues to grow. FAA predicts there will be roughly 10,000 

active commercial UAS in 5 years, with industry investing over 

$89.1 billion in UAS technology over the next 10 years. The FAA 

Modernization and Reform Act of 2012 (FMRA) requires the 

Secretary of Transportation to develop a comprehensive plan 

that will safely and fully integrate UAS into the national airspace 

system no later than September 30, 2015. 

The FMRA also requires FAA to establish a program to integrate 

UAS into our nation’s airspace at six test ranges by late summer 

2012. The selection for these test sites was scheduled to begin 

in July 2012, but there have been delays due to privacy concerns. 

The FAA has charted a path forward and the selection process 

commenced on February 14. It is anticipated that the test site 

selection process will conclude by the end of 2013.

In addition, the FAA and DOT are currently coordinating language 

for the small UAS Notice of Proposed Rulemaking (NPRM) which 

is targeted for release later this year. There are significant 

integration-related questions that must be answered through 

research and development. The FAA’s UAS research program 

is targeted at those specific integration-related issues, such as 

sense and avoid, and is aligned with partner agency (NASA) 

research efforts. 

While the expanded use of UAS presents great opportunities, 

it also presents significant challenges (safety, privacy) as 

unmanned aircraft are inherently different from manned aircraft. 

The impact of integrating UAS is similar to the integration of jet 

powered aircraft that occurred during the 1950’s and 1960’s. The 

FAA will meet the challenge of UAS as we did the challenge of 

jet powered aircraft. It is important to note that the integration 

of UAS is not a destination but a continuous journey. As the 

NextGen systems come on-line in the national airspace system, 

higher and higher levels of UAS integration will be possible. The 

airspace system is constantly evolving and changing and with 
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those changes aircraft will also evolve, allowing even greater 

integration and utilization.

ACTIONS TAKEN IN FY 2013:

Publication of UAS Roadmap: This action has been completed. 

The first edition of the UAS Roadmap was released and 

published on November 7, 2013. The UAS Roadmap will 

provide (initial) necessary stakeholder guidance for the 

path to UAS integration. The Roadmap will be updated and 

published annually, and will include lessons learned, progress 

and accomplishments from the previous year. As part of the 

development of the UAS Roadmap, the FAA received detailed 

recommendations on integration related tasking from the UAS 

Aviation Rulemaking Committee (ARC). The FAA considered 

these UAS ARC recommendations in the development of the UAS 

Roadmap.

Execution of Research Activities as Defined by the UAS 

Integration Office: This action is ongoing. The FAA has been 

executing on planned research requirements and is coordinating 

research activities with other Federal agencies, including 

National Aeronautics and Space Administration and the 

Department of Defense. Research focus areas include Sense and 

Avoid (SAA) and Command and Control (C2). In conjunction with 

RTCA Inc., the FAA launched a new Special Committee (SC-228) 

which will focus on standards development for SAA and C2 

systems. 

Commencement of the six UAS Test Site selection process:

This action has been completed. The solicitation (Screening 

Information Request) for the test site selection process was 

publically released on February 14, 2013.

Actual selection of the six UAS Test Sites: This action is 

in progress. The selection of the six test sites by the FAA 

Administrator is expected by the end of 2013.

Initial flight testing activities in support of the expansion of 

small UAS in the Arctic: This action has been completed. Initial 

flight tests were conducted in the Arctic using small UAS on 

September 12, 2013. 

Release of the small UAS Notice of Public Rulemaking: This 

action is pending. The FAA continued work with the Department 

of Transportation on development of language to be included 

in the small UAS Rule. The release of the Small UAS Notice of 

Proposed Rulemaking (NPRM) for public comment is planned for 

2014. 

ENHANCING FAA’S OVERSIGHT AND USE OF 

DATA TO IDENTIFY AND MITIGATE SAFETY 

RISKS

KEY CHALLENGE:

Identifying Trends in Operational Errors and Determining Their 

Root Causes

ISSUE:

The FAA must make better use of data on operational errors to 

investigate incidents, identify trends and mitigate their risks. 

To identify root causes of safety problems and mitigate their 

risk, the FAA needs to fine tune its approach to how it collects, 

verifies, and uses safety data. 

To realize the full potential of hte Air Traffic Safety Action 

Program (ATSAP), the FAA must close program gaps: such as a 

lack of a formal process to review committee decisions on errors 

and enforce key ATSAP guidelines and requirements.

FAA lacks an accurate baseline on the number of separation 

losses due to its limited use and review of the Traffic Analysis 

and Review program data, gaps in ATSAP reporting, and 

inconsistent classification of separations losses. 

FAA’s new policies transfer the function of investigating 

operational errors from the facilities where they occur to the air 

traffic service areas. Facility managers raised concerns about 

whether the Service Areas have enough staff and knowledge of 

local flight procedures to successfully carry out this responsibility. 

The mitigation strategy for operational errors included in the new 

policies lack a previously identified causal factors, trends, and 

follow-up actions to address the—considered to be key elements 

for mitigating the highest safety risks. 

ACTIONS TAKEN IN FY 2013:

The FAA ATO is conducting its largest and most significant 

safety improvements regarding the way air traffic control risk, 

safety performance, and analysis of safety risks are managed in 

the United States. From implementation of voluntary reporting, 

to new electronic separation loss detection programs, the 

development of standardized risk assessment and validation 

processes and the establishment of a proactive safety 

management system, the FAA has greatly enhanced its ability 

to identify precursors, root causes, and trends of safety risks 

system-wide rather than reacting to single incidents. Following 

our Safety Management System which requires continuous 

improvement of our processes, the ATO is making improvements 
130 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

to our safety programs, such as Quality Assurance (QA) and 

Quality Control (QC), as well as sharing the ATO’s safety data 

with Aviation Safety Information Analysis and Sharing (ASIAS) 

for analysis of air traffic control and aircraft safety data. 

Combining air traffic and aircraft data offers opportunities, never 

available before, to improve aviation safety.

The ATO Quality Assurance Group has developed Standard 

Operations Procedures (SOP) and validation training for QA 

Specialists who review Mandatory Occurrence Report /Electronic 

Occurrence Report at the ATO Safety and Technical Training 

service area offices. The QA SOP became effective in January 

2013 and was revised in May 2013. A QA SOP training course 

was developed to standardized methods for identifying high risk 

hazards, trends, and systemic issues within the national airspace 

system. The initial training course was delivered to the service 

area leads and specialists between February 26 and March 29, 

2013. Individual assessments and certification recommendations 

were completed by each service area manager and approved by 

the group manager during February and March. As a follow up, a 

QA management team led onsite internal reviews to assess SOP 

guidance effectiveness during April and May. An SOP revision 

was completed in May and subsequent training was held in June. 

In order to comply with IG recommendations, the FAA fully 

implemented the Traffic Analysis and Review Program which 

electronically captures quantitative data relating to the vast 

majority of occurrences involving losses of separation. The 

program was fully implemented in terminal radar facilities in 

September 2012 and in en route facilities in May 2013. Full 

program implementation has proven effective by generating 

a greater amount of separation data than previously 

available and consolidating valuable safety information 

into a common database available to all facilities.

Standardized Safety Guidance (ATO–SG-12-05), dated 

January 7, 2013, clarified frequently asked questions 

related to the implementation of new quality assurance, 

quality control, safety occurrence reporting, and Individual 

Performance Management processes. A collaborative Quality 

Assurance Validation Board, which meets quarterly, was 

established to improve application of safety standards, 

risk analyses, and identification of root causes. The ATO 

continues to analyze aggregate data and identify significant 

and common hazards through its Risk Analysis Program (RAP). 

RAP identifies contributing factors where less than 2/3 of 

standard separation was maintained. RAP findings contribute 

to mitigation efforts as part of the ATO Top 5 initiatives 

to improve overall safety in air traffic service delivery. 

Fair and objective principles, efficient processes, and logical/

timely responses to voluntary safety reports are emphasized 

in training for ATO employees. In April 2013, the ATSAP Office 

developed audit guidance and checklists to establish critical 

process checkpoints and evaluation steps. ATSAP will conduct 

internal audits and has realigned its workflows to facilitate 

quality reviews within the program, including the effectiveness 

of the Event Review Committee. This effort promotes continuous 

improvement as part of implementing quality management 

systems.

KEY CHALLENGE:

Advancing Oversight by Implementing the Airline Safety Act of 

2010

ISSUE:

In August 2010, Congress passed the Airline Safety and Federal 

Aviation Administration Extension Act of 2010 (the Act), which 

directed the FAA through legislation to change requirements to 

improve pilot rest requirements, establishing better processes for 

managing safety risks and advancing voluntary safety programs. 

Although the IG acknowledges the progress that the FAA has 

made, it noted missed deadlines and overdue milestones. 

While the Act directed the FAA’s rulemaking activities, it did not 

exempt it from the statutory requirements of rulemaking such as 

regulatory evaluation, economic analysis and approval by other 

federal agencies. The FAA is making steady progress towards 

completion and enhancement of safety through improved 

qualification standards and training for pilots in part 121. 

The Act also directs FAA to establish a “FAA Pilot Records 

Database” that must contain information collected by the 

FAA, air carriers and other employers of pilots, and the 

national driver register records. Air carriers will be required 

to access and evaluate a pilot’s record before allowing 

an individual to begin service as a pilot. This will improve 

upon the timeliness of the existing paper based share data 

instituted by the Pilot Records Improvement Act of 1996. 

ACTIONS TAKEN IN FY 2013:

The FAA has utilized multiple tools to accomplish several 

requirements of the Act, including rulemaking and the publication 

of guidance to inspectors and operators in the form of Notices, 
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Information for Operators, Safety Alerts for Operators, and 

Advisory Circulars (ACs). 

Specifically, the FAA published Advisory Circular 120-109, 

Stall and Stick Pusher Training, which details best practices 

and guidance for training, testing, and checking for pilots to 

ensure correct and consistent responses to unexpected stall 

warnings and stick pusher activations; and a final rule on Pilot 

Certification and Qualification Requirements which created 

new minimum requirements for pilots in air carrier operations;

Additionally the FAA continued to work on the final rule 

for Qualification, Service and Use of Crewmember and 

Aircraft Dispatchers. The final rule entered executive 

review in June 2013. This rule is designed to enhance 

training requirements for all air carrier pilots.

The FAA continues to make progress on the Pilot Records 

Database (PRD) despite the complexity associated with 

this project (as noted in DOT IG Report AV-2013-037 dated 

January 31, 2013). In March 2013, a Rulemaking Action 

Plan was approved, which outlines key issues associated 

with implementation of this rule. The PRD rulemaking 

team is currently drafting the NPRM document.

Current rulemaking projects are in various stages of the process. 

The rulemaking process is complex and lengthy as the FAA 

considers all aspects of impact and the input of stakeholders. 

The FAA was challenged in completing the requirements of the 

Act by short timelines, requirements between sections, and the 

need for coordination with industry and other agencies before 

proposing a final rule.

KEY CHALLENGE:

Providing More Rigorous Risk-Based Oversight of Repair Stations 

and Identifying Inspector Staffing Requirements

ISSUE:

Since 2003, the IG has issued reports critical of FAA’s 

surveillance of aircraft repair stations. The most recent one, 

released in January 2013, states that FAA’s risk based oversight 

system to help inspectors target surveillance to areas of higher 

risk is ineffective. Also, it does not provide inspectors with 

comprehensive data needed for analytical reviews of a repair 

station’s performance.

Also, the DOT’s IG does not think that FAA’s inspector staffing 

model effectively projects staffing needs due to incomplete and 

inaccurate data. The IG has stated that FAA must further refine 

this tool so that it more effectively allocates inspector resources.

ACTIONS TAKEN IN FY 2013: 

The FAA recognizes IG concerns and is taking action to rectify 

performance gaps that contributed to the issues identified in the 

IG report. In the interim of implementing the new certification 

and surveillance system called Safety Assurance System, FAA 

established a team to review and focus on improvements to 

the current FAA risk-based oversight system, and inspector 

guidance and training, based on the IG recommendations. In 

August 2013, FAA personnel conducted a briefing to the Flight 

Standards Regional branch managers on IG concerns and each 

recommendation detailed in their report. FAA’s oversight system 

and its application in FAA’s oversight of part 145 repair stations 

was briefed to re-familiarize the use of FAA oversight system as 

it was intended and to completely convey the expectations that 

all international field offices are required to use the protocols. 

The problems and causes of each issue along with the next 

steps to occur were discussed in the briefing. The regional 

branch managers briefed all the field office managers and 

inspectors in September 2013. The team began drafting revisions 

to FAA Order 8900.1 and repair station course to include the 

changes necessary that will provide more comprehensive and 

standardized procedures for conducting inspections and reporting 

findings. A recurrent training course is under development 

requiring airworthiness inspectors to complete annually, 

titled “Assessment and Planning Tools Transition Training for 

Airworthiness Inspectors”. The course provides instructions on 

the use of the risk-based oversight system tools and processes 

currently in place. It emphasizes the necessity to act upon 

identified risks until mitigation is complete. A standardized 

checklist has been developed for inspectors to use and ensure a 

complete inspection is performed.

KEY CHALLENGE:

Identifying the Effects of Air Traffic Controller Scheduling on 

Safety, Cost Efficiency, and Controller Performance

ISSUE:

A series of high-profile incidents in early 2011 involving 

controllers who were sleeping on duty sparked public concern 

about controller fatigue. In April 2011, FAA instituted a 

series of policy changes including placing an additional air 

traffic controller on the midnight shift at certain facilities and 

mandating a minimum of 9 hours off between evening and day 

shifts.
132 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

ACTIONS TAKEN IN FY 2013:

ATO formally established a Fatigue Risk Management System 

to identify potential controller cognitive performance and 

safety related effects due to human fatigue. The Fatigue Risk 

Management Team provides fatigue research, comparative 

analyses, and other educational material to the Fatigue Safety 

Steering Committee, consisting of senior ATO, NATCA, and PASS 

representatives, on a quarterly basis for their consideration.

In mid-2012, FAA implemented quality controls to ensure 

a minimum of 9 hours between the evening and day shift: 

(1) periodic quality control checks to identify facilities and 

individuals that are not in compliance; (2) facility management 

follow-up to ensure compliance; and, (3) any obstacles to 

compliance are briefed to senior ATO leadership for resolution. 

The quality control checks implemented were effective and 

remained in place through FY 2013. FAA continued to track 

compliance with periodic compliance checks accomplished 

quarterly during FY 2013. ATO reached total compliance by the 

end of FY 2013.

STRENGTHENING FINANCIAL 

MANAGEMENT OVER GRANTS TO BETTER 

USE FUNDS, CREATE JOBS AND IMPROVE 

INFRASTRUCTURE

KEY CHALLENGE:

Strengthening DOT’s Acquisition Planning, Oversight, and 

Workforce

ISSUE:

Modernizing the complex, highly sophisticated national airspace 

system depends on FAA’s acquisition workforce professionals 

and requires that they be of the highest caliber. FAA’s 2012 

acquisition workforce plan provides the blueprint for developing 

a high-performing acquisition workforce capable of successfully 

managing the FAA’s major systems acquisitions, including the 

Systems Engineering 2020 contracts and the ERAM program. 

The 2012 plan emphasizes the need for and the specific steps 

being taken to train and develop the existing workforce, 

reflecting the realities of a federal budget climate that constrains 

the agency’s ability to hire additional resources. Looming 

retirements, competition for acquisition talent inside and outside 

of government, and the growing complexity of technology and 

related system requirements all contribute to the challenge of 

maintaining an adequately staffed, highly capable acquisition 

workforce.

ACTIONS TAKEN IN FY 2013:

The agency published the FY 2013 update to the Acquisition 

Workforce Plan. The plan is the primary tool for identifying, 

implementing and report the initiatives and accomplishments 

FAA has taken and made to address this management challenge. 

FAA collected and tracked information about the professionals 

who comprise the acquisition workforce, including gains and 

losses. FAA uses this information to develop and maintain 

profession-specific competency models and track progress 

toward the achievement of mandatory and voluntary certification 

levels. We collected this information on an ongoing basis. 

FAA initiated two new certification programs—for Test 

& Evaluation professionals and for Systems Engineering 

professionals—in FY 2013. 

FAA met all of its business plan goals for the certification of 

professionals in the workforce, including program managers, 

contracting officer/specialists and contracting officer’s 

representatives.
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SUMMARY OF FINANCIAL STATEMENT AUDIT AND MANAGEMENT ASSURANCES 

Financial Audit Summary

Table 1 is a summary of the results of the independent audit of the FAA’s consolidated financial statements by the agency’s auditors in 

connection with the FY 2013 audit.

TABLE 1: SUMMARY OF FINANCIAL STATEMENT AUDIT

Audit Opinion FY 2013-unmodified*

FY 2012-unqualified

Restatement No

Material Weakness Beginning Balance New Resolved Consolidated Ending Balance

0 0 0 0 0

Total Material Weaknesses 0 0 0 0 0

* Beginning in FY 2013, terminology was changed from “unqualified” to “unmodified.”

Management Assurances Summary 

Table 2 is a summary of management assurances related to the effectiveness of internal control over the FAA’s financial reporting and 

operations, and its conformance with financial management system requirements under Sections 2 and 4, respectively, of the Federal 

Managers’ Financial Integrity Act (FMFIA) of 1982. The last portion of Table 2 summarizes the FAA’s compliance with the Federal 

Financial Management Improvement Act (FFMIA).

TABLE 2: SUMMARY OF MANAGEMENT ASSURANCES

Effectiveness of Internal Control over Financial Reporting (FMFIA § 2)

Statement of Assurance Unqualified statement of assurance

Beginning 

Balance New Resolved Consolidated Reassessed

Ending 

Balance

0 0 0 0 0 0

Total Material Weaknesses 0 0 0 0 0 0

Effectiveness of Internal Control over Operations (FMFIA § 2)

Statement of Assurance Unqualified statement of assurance

Material Weakness

Beginning 

Balance New Resolved Consolidated Reassessed

Ending 

Balance

0 0 0 0 0 0

Total Material Weaknesses 0 0 0 0 0 0

Conformance with financial management system requirements (FMFIA § 4)

Statement of Assurance Systems conformance to financial management system requirements

NonConformances

Beginning 

Balance New Resolved Consolidated Reassessed

Ending 

Balance

Conformance of the FAA’s core financial management system, Delphi, 

is assessed and reported by the Department of Transportation.

0 0 0 0 0 0

Compliance with Federal Financial Management Improvement Act (FFMIA)

Agency Auditor

Overall Substantial Compliance Yes Yes

1. System Requirements Yes

2. Accounting Standards Yes

3. USSGL at Transaction Level Yes
134 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

SUMMARY OF IMPROPER PAYMENTS 

The Improper Payments Information Act (IPIA) of 2002 requires agencies to review their programs and activities to identify those 

susceptible to significant improper payments. IPIA was amended on July 22, 2010, by the Improper Payments Elimination and Recovery 

Act (IPERA) of 2010. IPERA strengthens the requirements for government agencies to carry out cost-effective programs for identifying 

and recovering overpayments, also known as “recapture auditing.” 

The Office of Management and Budget (OMB) Circular A-123, Appendix C, Requirements for Effective Measurement and Remediation 

of Improper Payments provides guidance on the implementation of IPERA. OMB A-123, Appendix C defines an improper payment as any 

payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other 

legally applicable requirements. Incorrect amounts are overpayments or underpayments that are made to eligible recipients (including 

inappropriate denials of payment or service, any payment that does not account for credit for applicable discounts, payments that are 

for the incorrect amount, and duplicate payments). An improper payment also includes any payment that was made to an ineligible

recipient or for an ineligible good or service, or payments for goods or services not received (except for such payments authorized by 

law). In addition, when an agency’s review is unable to discern whether a payment was proper as a result of insufficient or lack of 

documentation, this payment must also be considered an improper payment. 

FEDERAL AVIATION ADMINISTRATION (FAA) PROCESS

The FAA’s process for complying with IPERA and OMB Circular A-123, Appendix C, consists of the following steps:

1) Review program and activities to identify those susceptible to significant improper payments

2) Obtain a statistically valid estimate of the annual amount of improper payments in programs and activities for those programs 

identified as susceptible to significant improper payments

3) Implement a plan to reduce erroneous payments

4) Report estimates of the annual amounts of improper payments in programs and activities and progress in reducing them

For FY 2013 reporting, the FAA conducted the above four-step process for the 12-month period of April 1, 2012 to March 31, 2013. 

For FY 2013, we also developed a Do Not Pay Implementation Plan to be in compliance with the Improper Payments Elimination and 

Recovery Improvement Act (IPERIA) of 2012 and provided a high-dollar quarterly report to the U.S. Department of Transportation (DOT) 

Office of the Inspector General (OIG), OMB, and displayed on DOT website.

I. Risk Assessment 

The FAA’s Programmatic Improper Payment Risk Assessment leverages the Assessable Units (AU) Risk Profiles compiled as part of the 

ongoing compliance with the FMFIA. This assessment identified the Airport Improvement Program (AIP) as high-risk for FY 2013 due

to the volume of payments made annually, approximately $3.5 billion for AIP, coupled with the fact that federal funds within these 

programs are further administrated outside the agency by local governments or airport sponsors. The FAA’s programmatic improper 

payment risk assessment leverages the AU risk profiles compiled as part of ongoing compliance with the FMFIA of 1982. 

Table 1 lists the high-risk program name and the disbursements population selected for FY 2013 testing.

TABLE 1. HIGH-RISK PROGRAM SELECTED FOR TESTING

Operating Administration Program Name FY 2013 Disbursements (Based on Actual Data)

FAA Airport Improvement Program (AIP) $3,517,553,509.73
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Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

The DOT is in the process of completing a revised Department-wide risk assessment for reporting in FY 2014, which will include 

FAA programs and funding activities. Based on the results of this risk assessment, the FAA will determine if AIP is still considered 

a high-risk program or if there are additional programs that should also be included in the reporting. In FY 2014, under OMB Circular 

A-123, Appendix C, the threshold for determining whether a program is at high risk for improper payments is reduced from 2.5 percent 

to 1.5 percent and $10 million or $100 million in improper payments (regardless of the error rate). The susceptibility of programs making 

significant improper payments will be determined by qualitative and quantitative factors. 

II. Statistical Sampling 

The AIP sampling approach has not changed from the prior year. The FAA obtained the data extracts from a single source, the DOT’s 

financial system of record, Delphi. Additionally, to verify both sample integrity and the accuracy of extrapolated programmatic improper 

payment estimates, we collaborated closely with the OIG’s IPERA statistician to develop sampling and extrapolation methodologies 

mutually agreed upon by both parties. 

Sample results provided an overall improper payment point estimate of the percentage of improper payment dollars at the 90 percent 

confidence level within precision requirement of 2.5 percent. 

Table 2 lists the results of the testing. 

TABLE 2. SAMPLE TEST RESULTS

Program

FY 2013 Payment 

Population

FY 2013 Sample Size – 

Stage 1

FY 2013 Sample Size – 

Stage 2

FY 2013 Estimated 

Error Amount 

FY 2013 Estimated 

Error %

AIP $3,517,553,509.73 $118,049,087.84 $17,827,397.54 $2,417,895.87 .07%

III. Corrective Actions

The following table lists corrective actions for the AIP program. These corrective actions are targeted at addressing the root causes 

behind administrative and documentation errors caused by processing the payments incorrectly by the grantees. 

Table 3 lists the corrective actions. 

TABLE 3. CORRECTIVE ACTIONS

Risk Factor Corrective Action Target Completion Date

Application of the Incorrect Federal 

Share: The FAA identified three occurrences 

from one grantee applying the incorrect 

federal share. The grantee agreement for 

the project indicated a reimbursement of 90 

percent. However, the grantee applied a 95 

percent reimbursement rate.

The FAA will provide additional guidance to grantees regarding grant 

drawdowns at the correct federal share. In addition, as part of FY 2014 

grant offers, the FAA will highlight the importance of sponsors’ 

reimbursement requests at the proper federal share over the life of the 

grant. 

The FAA management will continue to conduct invoice reviews under its 

current grant payment policy.

May 31, 2014
136 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

IV. Fund Stewardship 

The FAA stresses the importance of proper fund stewardship with its grant recipients via various grantee review programs and receives 

reports for each grant to assess sponsor performance. On a broader level, the FAA utilizes a risk-based approach that increases the level 

of review of sponsor documentation depending on the calculated risk level and prior performance of the grantee. 

V. Improper Payment Reporting

Table 4A summarizes improper payment amounts for the FAA’s high-risk program, AIP. Improper payment percent (IP%) and improper 

dollar (IP$) results are provided from last year’s and this year’s testing of payments. Data for projected future year improvements are 

based on the timing and significance of completing corrective actions.

TABLE 4A. IMPROPER PAYMENT REDUCTION OUTLOOK

ProgramPY Outlays ($M)PY IP%PY IP$ ($M)CY Outlays ($M)CY IP%CY IP$ ($M)CY+1 Est. Outlays ($M)CY+1 IP%CY+1 IP$ ($M)CY+2 Est. Outlays ($M)CY+2 IP%CY+2 IP$ ($M)CY+3 Est. Outlays ($M)CY+3 IP%CY+3 IP$ ($M)

FAA Airport 

Improvement 

Program

$3,459 0.065% $2.2 $3,520 0.070% $2.4 $3,485 0.50% $17.4 $3,179 0.50% $15.9 $2,988 0.50% $14.9

Key: PY = Prior Year

CY = Current Year

IP = Improper Payment 

Overpayments and Underpayments Details

Table 4B provides overpayment and underpayment breakout for FAA’s high-risk program AIP. 

TABLE 4B. EXTRAPOLATED FAA OVERPAYMENT UNDERPAYMENT PROGRAMMATIC ESTIMATE

Improper Payment Dollar Amount Improper Payment Percent

FAA Overpayment Estimate $2,417,895.87 0.07%

FAA Underpayment Estimate N/A N/A

VI. Recapture of Improper Payments Reporting 

The DOT’s contract recovery auditors worked to recover any FAA overpayments and identify payment process weaknesses. The recovery 

auditors did not, however, identify any systemic payment process weaknesses. The overpayments were of such immaterial amounts that 

it was not considered cost-effective to break them down by agency and therefore they were reported at the departmental level (in the 

DOT’s Performance and Accountability Report). 
137OTHER INFORMATION

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

VII. Ensuring Management Accountability

The FAA’s goals and requirements of IPERA were communicated to personnel at all levels of the organization that are held responsible 

and accountable for reducing and recovering improper payments. 

¢ The FAA has an existing control process with the OMB Circular A-123, Management’s Responsibility for Internal Control, Appendix 

A, which requires the FAA to review internal control over financial reporting and systems. This review includes determining if the 

systems are well documented, sufficiently tested, and properly assessed. The scope of these reviews includes reviewing and testing 

the key internal controls surrounding the payment disbursements for grant and contractual payments. 

¢ The FAA uses a vast network of regional offices to ensure that the FAA maintains regular communication with grantees as well as 

state and local officials. The FAA ensures that grantees understand the purpose of grant reviews during each step of the review 

process. This constant communication, along with the aid of grantee staff, has allowed the FAA to not only maintain a low rate of 

improper payments, but also achieve success in recapturing payments identified as both improper and recoverable. 

VIII. Agency Information Systems and Other Infrastructure

The FAA currently possesses the internal controls, human capital, and information systems necessary to maintain improper payments 

levels at the targeted programmatic rates. 

IX. Statutory or Regulatory Barriers 

None.

X. Overall Agency Efforts

The FAA is implementing lessons learned from the past five years of testing AIP improper payments. For example, we continue to 

communicate and train grantees on areas of improvement to prevent improper payments. These efforts have resulted in a lower 

improper payment percentage rate and dollar amount for the current year. The FAA will continue to put into place preventive measures 

on an ongoing basis. 
138 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

ADMINISTRATIVE SERVICES FRANCHISE FUND

BACKGROUND

Public Law 104-205, “Department of Transportation and Related Agencies Appropriation Act, 1997,” authorized the FAA to establish 

an Administrative Services Franchise Fund (Franchise Fund). The Franchise Fund is designed to create competition within the public 

sector in the performance of a wide variety of support services. It allows for the establishment of an environment to maximize the use 

of internal resources through the consolidation and joint-use of like functions and the recognition of economies of scale and efficiencies 

associated with the competitive offering of services to other government agencies.

The FAA’s Franchise Fund is composed of several programs, within which it offers a wide variety of services. These services include 

accounting, travel, duplicating, multi-media, information technology, logistics and material management, aircraft maintenance, 

international training and management training. The Franchise Fund’s major customers are the FAA lines of business programs. Other 

customers include Department of Transportation (DOT) entities, non-DOT government agencies, and international government entities.

DESCRIPTION OF PROGRAMS AND SERVICES

Several programs within the Franchise Fund are organized around an Enterprise Services Center (ESC) concept, designed to integrate 

the key components necessary to be a full service financial management provider. The efficiencies and economies of scale created by 

this integration offer the opportunity to compete for customers seeking a provider of financial management services. As new customers 

come on board, this further reduces the cost of providing the services by spreading the fixed cost of operations over a larger customer 

base. There are three components of the ESC, all falling within the single Franchise Fund:

¢ Enterprise System-configuration and support of application software and databases

¢ Financial Operations-transaction processing, financial reporting, and analysis services 

¢ Information Technology-hosting, telecommunications, information system security, and end user support services

During FY 2005, the OMB selected ESC as a Financial Management Center of Excellence (COE). As a COE, the ESC has the ability to

compete to provide financial management services for other government agencies. The ESC currently provides financial management 

services to all the DOT agencies, and a number of other non-DOT Executive Branch agencies, including the Securities Exchange 

Commission, the National Endowment for the Arts, the Commodity Futures Trading Commission, the Institute of Museum and Library 

Services, and the United States Government Accountability Office (Legislative Branch). The ESC continues to forward proposals to other 

agencies.

In addition to being selected as a COE, the ESC was chosen by the FAA Administrator to serve as the consolidated provider of all 

financial management services for all the FAA organizations. The ESC committed to providing an improved level of service, meeting all 

Joint Financial Management Improvement Program (JFMIP) requirements.

The Franchise Fund also includes the following program areas:

The FAA Logistics Center is located at the Mike Monroney Aeronautical Center (Aeronautical Center) in Oklahoma City, Oklahoma, 

and provides comprehensive logistics support and a highly sophisticated level of maintenance and repair services to ensure the safety 

of the flying public and to satisfy the critical needs of the national airspace system and related requirements. Services include materiel 

management (e.g., provisioning, cataloging, acquisition, inventory management, inventory supply), reliable and cost-effective depotlevel repair of line replaceable units, life cycle and performance cost analysis, logistics automation, distribution services, disposal of 

items no longer required, and technical support in the repair and maintenance of national airspace and related equipment. The Logistics 

Center also maintains the Department of Homeland Security’s Customs and Border Patrol border surveillance systems, including more 
139OTHER INFORMATION

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

than 80 mobile surveillance systems and fixed towers. It provides supply chain support, depot maintenance support, engineering, and 

other systems support.

The Aircraft Maintenance and Engineering Group in the office of Aviation System Standards is also located at the Aeronautical 

Center. It provides total aircraft support including maintenance, quality assurance, and overall program management for the FAA’s 

uniquely equipped flight inspection aircraft fleet as well as other customer aircraft, including the U.S. Marshals Service and U.S. Army. 

This service includes preventative as well as repair/overhaul and/or modification requirements and reliability and maintainability 

studies. The Aircraft Maintenance and Engineering Group can provide full or partial support depending on customer requirements, 

from short-term preventative maintenance or one time engineering tasks to more involved activities such as a full complement of

maintenance services with quality assurance and engineering support. 

The International Training Division (ITD), an element of the FAA Academy, at the Aeronautical Center in Oklahoma City, OK, 

delivers technical assistance and training to enhance international aviation safety and security while promoting U.S. aviation system 

technologies, products, and services overseas. The products and services of the ITD include training program management, instructional 

services, training design/development/revision, technical training evaluations, and consulting services tailored to meet specifically 

defined needs of the FAA and its international customers.
140 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

FRANCHISE FUND

Condensed Information

ASSETS, LIABILITIES, AND NET POSITION

(Dollars in Thousands)

Unaudited

As of September 30

2013 2012

Assets

Fund balance with Treasury $ 267,335 $ 271,519 

Accounts receivable, net 81 316 

Inventory and related property, net 596,658 568,077 

General property, plant, and equipment, net 22,891 22,950 

Other 1,394 1,477 

Total assets $ 888,359 $ 864,339 

Liabilities

Accounts payable $ 19,597 $ 30,478 

Advances from others 151,459 155,770 

Employee related 21,590 20,785 

Other 1,458 1,294 

Total liabilities 194,104 208,327 

Net position

Cumulative results of operations 694,255 656,012 

Total net position 694,255 656,012 

Total liabilities and net position $ 888,359 $ 864,339 
141OTHER INFORMATION

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

FRANCHISE FUND

Condensed Information

REVENUES AND EXPENSES

(Dollars in Thousands)

Unaudited

For the years ended September 30

2013 2012

Enterprise Services Center

Revenues $ 149,108 $ 147,323 

Expenses 169,059 169,353 

Profit (loss) (19,951) (22,030)

Corp Services

Revenues 1,302 1,634 

Expenses 1,555 1,490 

Profit (loss) (253) 144 

Aircraft Maintenance and Engineering Group

Revenues 52,413 53,288 

Expenses 57,908 57,939 

Profit (loss) (5,495) (4,651)

FAA University

Revenues 4,011 9,227 

Expenses 5,680 11,037 

Profit (loss) (1,669) (1,810)

International

Revenues 4,077 4,087 

Expenses 4,614 4,429 

Profit (loss) (537) (342)

FAA Logistics Center

Revenues 279,695 289,570 

Expenses 257,839 273,458 

Profit (loss) 21,856 16,112 

Acquisitions

Revenues 8,393 8,063 

Expenses 12,205 11,704 

Profit (loss) (3,812) (3,641)

Total Consolidated

Revenues 498,999 513,192 

Expenses 508,860 529,410 

Profit (loss) $ (9,861) $ (16,218)
142 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

U.S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

FRANCHISE FUND

Condensed Information

FINANCING SOURCES AND NET POSITION

(Dollars in Thousands)

Unaudited

Cumulative results of operations

2013 2012

Beginning balance, net position $ 656,012 $ 620,946 

Financing sources

Transfers-in/out without reimbursement (13,552) (11,850)

Imputed financing from costs absorbed by others 61,656 63,134 

Total financing sources 48,104 51,284 

Profit (loss) (9,861) (16,218)

Ending balance, net position $ 694,255 $ 656,012 
143OTHER INFORMATION

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

OTHER INFORMATION

The Schedule of Spending presents an overview of the FAA’s major spending categories during FY 2013. The data used to populate this 

schedule are the same underlying data reported in the Statement of Budgetary Resources. 

U.S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

OTHER INFORMATION

SCHEDULE OF SPENDING

As of September 30, 2013

Unaudited

Total resources available to spend $ 24,986,911

Less amount available but not agreed to be spent 1,388,704 

Less amount not available to be spent 2,218,098 

Total amounts agreed to be spent $ 21,380,109 

Major spending categories

Personnel compensation and benefits $ 7,499,645 

Contractual services and supplies 5,338,487 

Acquisition of assets 350,852 

Grants and fixed charges 3,124,681 

Other 5,066,444 

Total amounts agreed to be spent $ 21,380,109
144 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

GLOSSARY

ACRONYM NAME

AAE Audit and Evaluation (FAA staff office)

AATF Airport and Airway Trust Fund

ACAT Acquisition categories

ACR Civil Rights (FAA staff office)

ADS-B Automatic Dependent Surveillance-Broadcast

AESA Aviation Safety and Security Agency (Spanish)

AFN Finance and Management Staff Office

 (FAA staff office)

AGA Association of Government Accountants

AGC Chief Counsel (FAA staff office)

AGI Government and Industry Affairs (FAA staff office)

AHR Human Resource Management (FAA staff office)

AIP Airport Improvement Program

AMS Acquisition Management System

ANG NextGen Staff Office (FAA staff office)

AOC Communications (FAA staff office)

APL Policy, International Affairs, and Environment 

(FAA staff office)

AR Authorization Required

ARC Aviation Rulemaking Committee

ARP Airports (FAA line of business)

ARTCC Air Route Traffic Control Center

ASAP Aviation Safety Action Partnership

ASH Security and Hazardous Materials Safety 

(FAA staff office)

ASIAS Aviation Safety Information Analysis and Sharing

ASDE Airport Surface Detection Equipment

ASDE-X ASDE including Model X

AST Commercial Space Transportation 

(FAA line of business)

ATO Air Traffic Organization (FAA line of business)

ATP Airline Transport Pilot

ATSAP Air Traffic Safety Action Program

ACRONYM NAME

AU Assessable Unit

AVS Aviation Safety (FAA line of business)

BPTW Best Places to Work

C2 Command and Control

CAST Commercial Aviation Safety Team

CFO Chief Financial Officer

CFO Act Chief Financial Officers Act of 1990

CIP Construction in Progress, Current Icing Products

CLEEN Continuous Lower Energy, Emissions and Noise

COE Center of Excellence

COTS Commercial off-the-shelf

CSRS Civil Service Retirement System

Data Comm Data Communications 

DOL U.S. Department of Labor

DOT U.S. Department of Transportation

EASA European Union Aviation Safety Agreement

ELSO Equivalent Lateral Spacing Operations

EMAS Engineering Material Arresting Systems

ERAM En Route Automation Modernization

ESC Enterprise Services Center

F&E Facilities and Equipment

FAA Federal Aviation Administration

FASAB Federal Accounting Standards Advisory Board

FBWT Fund Balance with Treasury 

FEA Federal Enterprise Architecture

FECA Federal Employees’ Compensation Act

FedView Federal Employee Viewpoint Survey

FERS Federal Employees Retirement System

FFMIA Federal Financial Management Improvement Act

FIP Forecast Icing Products

FISB Flight Information System-Broadcast
145OTHER INFORMATION

Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

ACRONYM NAME

FMFIA Federal Managers’ Financial Integrity Act of 1982

FMRA Flight Modernization and Reform Act

FMS Flight Management System

FOQA Flight Operations Quality Assurance

FY Fiscal Year

GA General Aviation 

GAJSC General Aviation Joint Steering Committee 

GAO Government Accountability Office

GPS Global Positioning System

GSA General Services Administration

i2i Institutionalizing Idea to In-Service

ICAO International Civil Aviation Organization

ICF Integrated Control Facility

IG Inspector General

ILS Instrument Landing System

IOC Initial Operating Capability 

IP$ Improper dollar 

IP% Improper payment percent

IPERA Improper Payments Elimination and Recovery Act

IPERIA Improper Payments Elimination and Recovery 

Improvement Act

IPIA Improper Payments Information Act

IRS Internal Revenue Service

ISCP Information Security Contingency Plan

ISS International Space Station

IT Information Technology

ITD International Training Division

JFMIP Joint Financial Management Improvement Program

LP Localizer Performance

LPV Localizer Performance with Vertical Navigation

MMAC Mike Monroney Aeronautical Center

ACRONYM NAME

NASA National Aeronautics and Space Administration

NATCA National Air Traffic Controllers Association

NextGen Next Generation Air Transportation System

NOAA National Oceanic and Atmospheric Administration

NPRM Notice of Proposed Rulemaking

NSIP National Airspace System Segment Implementation 

Plan

NTSB National Transportation Safety Board

OAPM Optimization of Airspace and Procedures in the 

Metroplex

OIG Office of the Inspector General

OMB Office of Management and Budget

OPD Optimized Profile Descents 

OPM Office of Personnel Management

OTA Office of Tax Analysis

PAR Performance and Accountability Report

PASS Professional Aviation Safety Specialists

PBN Performance-Based Navigation

PfMR Portfolio Management Review

PMO Program Management Office

PP&E Property, Plant, and Equipment

PRD Pilot Records Database

QA Quality Assurance

QC Quality Control

R&D Research and Development

R,E,&D Research, Engineering, and Development

RFI Request for Information

RADS Report Analysis and Distribution System

RAP Risk Analysis Process, Risk Analysis Program

RAPT Route Availability Planning Tool

RECAT Recategorization

RF Radius-to-Fix
146 Federal Aviation Administration | Fiscal Year 2013 | Performance and Accountability Report

ACRONYM NAME

RNAV Area Navigation

RNP Required Navigation Performance

RNP AR Area Navigation Procedures with Authorization 

Required 

RSAT Runway Safety Action Teams

RSSI Required Supplementary Stewardship Information 

RWSL Runway Status Lights

SAA Sense and Avoid

SASO System Approach to Safety Oversight

SBP Strategy, Budget and Performance

SAVES Strategic Sourcing for the Acquisition of Various 

Equipment and Supplies

SFFAS Statement of Federal Financial Accounting Standards

SOP Standard Operations Procedures 

ACRONYM NAME

SpaceX Space Exploration Technologies

SRER System Risk Event Rate 

SWIM System Wide Information Management

TBFM Time-Based Flow Management

T-SAP Technical Operations Safety Action Program

TRACON Terminal Radar Approach Control

TBD To Be Determined

UAS Unmanned Aircraft Systems

WAAS Wide-Area Augmentation System

WJHTC William J. Hughes Technical Center

WTIC Weather Technology in the Cockpit
WE WELCOME YOUR COMMENTS

Thank you for your interest in the FAA’s FY 2013 Performance and Accountability Report. 

We welcome your comments on how we can make this report more informative for our readers.

Please send your comments to

Mail: Office of Financial Reporting and Accountability

Federal Aviation Administration 

800 Independence Avenue, SW, Room 612 

Washington, DC 20591

Phone: 202-267-3018 

Email: Allison.Ritman@faa.gov

Fax: 202-493-4191

This report and reports from prior years are available on the FAA website at 

www.faa.gov/about/plans_reports.
800 Independence Avenue, SW

Washington, DC 20591

WWW.FAA.GOV