United States 

Department of Transportation

Performance and

Accountability Report

for Fiscal Year 2007

 Mary E. Peters, Secretary of Transportation

PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

1

CONTENTS

Message from the Secretary 3

Message from the Chief Financial Offi cer 7

Management’s Discussion and Analysis 11

 Performance Highlights 18

 Financial Highlights 26

 Scorecard on the President’s Management Agenda 44

 Other Management Information, Initiatives, and Issues 50

 Inspector General’s FY 2007 Top Management Challenges 52

Performance Report 89

 Performance Framework 90

 FY 2007 Performance Report 93

 Performance Summary Tables 97

 Safety Strategic Goal 103

 Mobility Strategic Goal 129

 Global Connectivity Strategic Goal 143

 Environmental Stewardship Strategic Goal 151

 Security Strategic Goal 161

 Organizational Excellence Strategic Goal 167

Performance Data Completeness and Reliability 181

DOT Program Evaluations 184

Financial Report 201

 Inspector General’s Audit Report 202

 Principal Statements 231

 Notes to Principal Statements 236

 Required Supplementary Information 281

 Required Supplementary Stewardship Information 285

Other Accompanying Information 293

 Performance Data Completeness and Reliability Details 295

 Summary of Financial Statement Audit and Management Assurances 332

 Improper Payments Information Act (IPIA) Reporting Details 336

 Inspector General’s FY 2008 Top Management Challenges 344

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PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

3

MESSAGE FROM THE SECRETARY

When I was sworn in as Secretary of Transportation 

in October 2006, I convened the Department’s senior 

management team to review the challenges we had to 

face together over the coming year. I advised them that 

we were not going to shy away from the tough issues, but 

instead face challenges head-on. I also encouraged them 

to take a fresh look at our transportation policies in order 

to fi nd creative ways to make it safer, easier, and more 

effi cient to move people and products across our vast 

networks.

Th e agenda I laid out was simple and straightforward 

we must work to fi nd the best way to tackle today’s most 

pressing transportation challenges, including improving 

safety, improving system performance and reliability, and 

fi nding 21st century solutions to 21st century problems.

Finally, I asked them to join me in committing to achieve real results. Th ese are the outcomes that 

the American people will judge us by — results that they can see improving their quality of life and 

making their communities more productive and prosperous.

IMPROVE SAFETY

Th e United States has attained an unparalleled safety record in our airspace in recent years, and the 

number of fatalities on our Nation’s roads fell last year to the lowest rate ever recorded. We are proud 

that our transportation systems are safer than they have ever been before, but much work remains 

if we are to continue to lower the number of highway fatalities and reduce accidents that occur in 

commercial and general aviation.

To enhance our eff orts to improve highway safety, the Department has begun to focus on the key 

areas that contribute to the highway fatality rate. We have developed new measures to track fatalities 

among occupants of passenger vehicles, non-occupants such as pedestrians and cyclists, victims of 

large truck and bus crashes and motorcycle riders. A stronger focus on the subsets of crash victims 

will provide greater insight on where we ought to be directing our safety resources. We intend to 

report on these new measures in the Fiscal Year 2008 Performance and Accountability Report.
UNITED STATES DEPARTMENT OF TRANSPORTATION

4

We are also putting technology to work to improve highway safety. By September 1, 2011, all new 

passenger vehicles will be equipped with Electronic Stability Control, a new safety standard that 

has the potential to save up to 9,600 lives annually. Additionally, the Federal Motor Carrier Safety 

Administration (FMCSA) is testing a technology suite in tractor trailers that will monitor truckers’ 

driving behavior in order to deter unsafe driving practices.

Both the Federal Highway Administration (FHWA) and FMCSA are pursuing broad, large-scale 

improvements in safety; one is directed outward at the States and other is directed inward, toward the 

agency. FHWA worked with all 50 States and the District of Columbia to develop Strategic Highway 

Safety Plans. With these plans, States have a roadmap for the improvements they need to make to 

address their specifi c safety challenges. Th rough the Comprehensive Safety Analysis 2010, FMCSA 

is examining its internal activities and developing an effi cient new operational model to use its 

resources more eff ectively to address motor carrier safety.

Th e Federal Aviation Administration (FAA) is likewise taking a multi-faceted approach to safety. Th e 

Aviation Safety organization within the FAA is committed to a systems-based approach to safety; in 

2006 it received ISO 9000 certifi cation, meeting quality management standards that are recognized 

and respected worldwide. Th e FAA is also looking anew at how human error creeps into both air 

traffi c controller and pilot performance, and is addressing this issue in its Safety unit and the Air 

Traffi c Control organization, as well as through its research programs. FAA continues to invest in 

technology and equipment, such as Airport Surface Detection Equipment, Model X (ASDE-X), to 

improve safety on the ground and in the air.

IMPROVE SYSTEM PERFORMANCE AND RELIABILITY

To ensure the mobility that is critical to our Nation’s continued economic prosperity, we must 

address mounting congestion in the sky and on our highways. Last year the Department rolled out 

its National Strategy to Reduce Congestion on America’s Transportation Network in 2006, and this 

year we have taken innovative and concrete steps to provide Americans with immediate congestion 

relief in surface transportation through Urban Partnerships with fi ve metropolitan areas: Miami, 

Minneapolis, New York City, San Francisco and Seattle.

Th e Department and its Urban Partners have agreed to pursue four strategies with a combined track 

record of eff ectiveness in reducing traffi c congestion, collectively referred to as the ‘‘Four Ts’’: tolling, 

transit, telecommuting, and technology and operations. And through the Corridors of the Future 

Program, DOT provided support for six multi-modal investment proposals that adopt innovative 

fi nancing models as a means to add capacity and reduce congestion on some of our most critical 

trade corridors.

We are also pursuing ground-breaking approaches to improving aviation mobility. Four years 

ago, Congress authorized the creation of the Joint Planning and Development Offi ce (JPDO) to 

manage a public/private partnership to bring the Next Generation Air Transportation System 

(NextGen) on line by 2025. Six Federal agencies support the eff orts of the JPDO: the Departments 

of Transportation (including the FAA), Defense, Homeland Security and Commerce, NASA, and 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

5

the White House Offi ce of Science and Technology Policy. When implemented, the satellite-based 

NextGen system will fundamentally transform the way the United States controls aviation traffi c. In 

the interim the FAA is also making signifi cant operational improvements by redesigning the airspace 

for particularly congested areas like New York, funding new runways, and developing area navigation 

routes that will allow aircraft to fl y point-to-point operations that are not restricted by the location of 

radar.

INCREASE GLOBAL CONNECTIVITY

Th e globalization of the American economy requires more effi cient and cost eff ective movement of 

passengers and cargo throughout international transportation systems, and the Department has been 

in the forefront of reducing barriers to worldwide mobility. In the past, transatlantic travel between 

the United States and the European Union (EU) — which constitutes 60 percent of all international 

travel — has been restricted by bilateral agreements. In April, the United States and the EU signed 

an historic Open Skies agreement that lift s restrictions on the number of fl ights, aircraft , and routes 

between the two, making more fl ights available and lowering costs.

And in July, the United States and China signed an agreement to open up airways and double the 

number of daily fl ights allowed between the two countries over the next fi ve years. Th e agreement 

also allows for new cargo fl ights operating to and from the United States and China. By increasing 

competition, allowing more fl ight options, and reducing costly stops and layovers, these new direct 

routes are expected to lower fares and increase convenience for both business and leisure passengers 

to travel to China. Estimates predict that this accord will generate as much as $5 billion in passenger 

and cargo revenues for the airline industry alone over the next six years and will produce as much as 

$8 billion in new economic activity in the United States.

MINNEAPOLIS BRIDGE COLLAPSE

In the midst of all the year’s successes, we must not forget the tragedy in Minneapolis this summer 

when the I-35W Bridge collapsed during rush hour. Offi cials from FHWA were on the bridge site 

within 30 minutes of the report that it collapsed and worked closely with the National Transportation 

Safety Board (NTSB) as they conducted a thorough investigation. In response to the tragedy, 

FHWA issued two technical advisories: one strongly encouraging States to re-inspect all steel-deck 

truss bridges and follow up on any critical fi nds, and another advising States to ensure that the 

construction equipment loads and stockpiled raw materials placed on a structure do not exceed its 

load limit. We await the NTSB fi ndings along with a program audit by the DOT Offi ce of Inspector 

General, which may result in additional recommended improvements to the Bridge program to 

deliver the highest levels of bridge safety.
UNITED STATES DEPARTMENT OF TRANSPORTATION

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PROGRAM AND FINANCIAL PERFORMANCE

Our FY 2007 Performance and Accountability Report contains performance and fi nancial data that 

are substantially complete and reliable. Th e Performance Data Completeness and Reliability section 

in the report contains a detailed assessment of the inadequacies in DOT’s performance data, and 

explains how we will remedy those defi ciencies. DOT has a clean audit. We will continue to make 

improvements throughout FY 2008.

CONCLUSION

Our achievements from the past year inform, but do not limit, our direction. Th e employees at the 

Department of Transportation have the talent, creativity and innovative spirit to continue to produce 

tangible results for the American people, making our communities more prosperous and improving 

our quality of life. By focusing on real results, we fi nd ourselves on the brink of new and exciting 

programs that will further our ability to provide a safe, eff ective, and effi cient transportation system 

for all Americans.

November 15, 2007
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

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MESSAGE FROM THE ASSISTANT SECRETARY

FOR BUDGET AND PROGRAMS & CHIEF FINANCIAL OFFICER

Th e Department of Transportation (DOT) made great 

strides in enhancing our budget, performance and fi nancial 

management programs during Fiscal Year (FY) 2007. At 

DOT, the Offi ce of the Assistant Secretary for Budget and 

Programs/CFO is a full partner in setting the mission 

and strategies for the Department and plays a key role in 

ensuring eff ective and effi cient use of DOT resources to 

further the Nation’s transportation goals. We supported a 

variety of DOT strategic initiatives and programs through 

innovative fi nancing arrangements, including selecting 

fi ve new Urban Partnership Agreements using previously 

earmarked discretionary funds, providing strong support 

for the Congestion Management and Corridors for the 

Future programs, developing innovative approaches 

for incorporating private sector investment into the 

public transportation infrastructure, and making major advances towards the Federal Aviation 

Administration’s Next Generation program for a new Air Traffi c Control system.

From an organizational perspective, we continued to elevate CFO positions in the Operating 

Administrations (OAs) and initiated a major long-term strategic planning eff ort for our systems and 

services. We also conducted another successful annual CFO Workshop for our budget, performance 

and fi nance staff . In addition, during 2007 DOT moved 5,500 employees on schedule and under 

budget into our new “green” headquarters building, which is helping revitalize the Anacostia River 

waterfront area of Southeast Washington, D.C.

DOT’S PAR RATED #1 IN ALL THREE CATEGORIES

DOT is very proud that our FY 2006 Performance and Accountability Report (PAR) was rated #1 by 

the prestigious Mercatus Center of George Mason University in all three major categories: Overall 

Excellence, Leadership and Transparency. We were especially pleased that Mercatus described our 

PAR as “easy to read” – no small accomplishment for this kind of a report.

PERFORMANCE IMPROVEMENT INITIATIVE

DOT continues to be recognized for our leadership in OMB’s performance improvement initiative 

(formerly called Budget-Performance Integration). We’ve been rated “green” for the last 14 

quarters and received the 2006 President’s Quality Award for our outstanding Budget-Performance 

Integration program.
UNITED STATES DEPARTMENT OF TRANSPORTATION

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EXCELLENCE IN FINANCIAL MANAGEMENT

DOT is proud to receive a clean audit opinion this year. We have received clean fi nancial audit 

opinions for six of the last seven years. Each year, we develop, implement and track detailed 

correction action plans to ensure we resolve all audit fi ndings as we continue to improve our fi nancial 

management business processes, internal controls and fi nancial systems.

DOT is the only cabinet level agency to fi nish converting all of its component agencies to a state-ofthe-art fi nancial system that uses non-customized commercial-off -the-shelf soft ware running on a 

cost-eff ective single production instance. Our fi nancial system, which we call Delphi, currently has 

4,000 users.

DOT continued to upgrade and enhance our fi nancial systems this year. In May, we successfully 

upgraded the soft ware for our Delphi core accounting system, which produces fi nancial statements 

overnight at month- and year-end and anytime on demand. Th is year we also upgraded the server 

hardware and technology for our CASTLE Time and Attendance / Labor Distribution system, which 

improved system performance by 65 percent. In addition, we developed a new solution that uses 

Service Oriented Architecture technology to integrate our procurement management system with our 

Delphi fi nancial system; implementation begins in FY 2008.

To enhance data quality, we established 14 reconciliations that are conducted monthly by our OAs. 

We also developed a website to share their results and our continued progress on the Offi ce of 

Management and Budget’s fi nancial performance measures with all DOT organizations. To facilitate 

the effi cient management of interagency agreements, this year we developed and implemented 

a Common Reimbursable Agreement Number that automates the elimination of reimbursable 

agreements from our consolidated fi nancial statements.

FEDERAL SHARED SERVICE PROVIDER

DOT continues to operate as one of four government-wide Centers of Excellence for fi nancial 

management. As a Federal Shared Service Provider, we off er fi nancial systems and accounting 

services to other agencies and give them the benefi ts of best industry practices and signifi cant 

economies of scale. Customers get the advantages of DOT’s experience and capital investment at low 

cost and low risk. DOT’s Center, called the Enterprise Services Center (ESC), is located at the Mike 

Monroney Aeronautical Center in Oklahoma City.

In a 2006 competitive process, the Government Accountability Offi ce (GAO) selected DOT’s Delphi 

fi nancial system for their own use. We see GAO’s selection of DOT’s Delphi system as a real feather 

in our cap. Aft er a year of planning, set-up and confi guration, data conversion, and a unique parallel 

testing process, in October 2007 GAO went live on DOT’s Delphi fi nancial system with the PRISM 

procurement system integrated with Delphi. DOT’s other external customers include the National 

Endowment for the Arts, the Commodity Futures Trading Commission, and the Institute for 

Museum and Library Services.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

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Th ree of our external customers have also contracted with DOT’s ESC to provide them with our 

high quality accounting services, including accounts receivable, accounts payable, supplier table 

maintenance, monthly closing and reconciliation, and fi nancial reporting. DOT continues to market 

our outstanding fi nancial system and accounting services to other Federal agencies in support of the 

Financial Management Line of Business of the President’s Management Agenda.

CONSOLIDATING ACCOUNTING OPERATIONS

DOT has consolidated accounting operations at the ESC for all OAs. During FY 2007, we moved 

accounting operations for the last two OAs (the Federal Transit Administration and the Maritime 

Administration) to the ESC. Consolidating accounting services provides signifi cant economies of 

scale and supports further streamlining and standardizing of our processes and implementing best 

practices throughout DOT.

INTERNAL CONTROL PROGRAM

During FY 2007, DOT implemented the second year of our 2-year Internal Control program to meet 

the updated requirements of OMB Circular A-123, Management’s Responsibility for Internal Control. 

Th is year we reviewed, documented, assessed risk and extensively tested the second group of our key 

business processes (the fi rst group was tested last year). As with all fi ndings from our fi nancial audits, 

we have developed and are implementing corrective action plans to resolve all Internal Control 

fi ndings, too. Our auditors have determined that our Internal Control program was in compliance 

with OMB requirements.

DOT has established an Internal Control Senior Assessment Team to guide this program. To 

avoid duplication of eff ort, we have integrated our Internal Control program with our CFO audits, 

our Federal Managers Financial Integrity Act program, and our innovative Improper Payments 

Information Act (IPIA) program. Th is year our IPIA program sampled 1,500 highway projects across 

the country to develop a nationwide improper payment rate. We also developed improper payment 

rates for key transit and aviation programs. Together these eff orts upgraded our progress score on the 

President’s Management Agenda goal for Improper Payments.

DOT is currently planning our follow-on A-123 program to review, test and enhance our Internal 

Controls over the next 3 years.

E-TRAVEL PROGRAM

DOT continues to be #1 in the Federal government in e-Travel, with more transactions fl owing 

through a new e-travel system than any other cabinet department. All DOT organizations have 

implemented our new e-travel system. We have developed and implemented a sophisticated 

automated interface from the e-travel system to our Delphi fi nancial system that includes real-time 

funds checking. At the same time, DOT remained vigilant and successfully kept our travel card 

delinquency rate well below one percent.
UNITED STATES DEPARTMENT OF TRANSPORTATION

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MANAGERIAL COST ACCOUNTING

DOT was recognized this year by the GAO as a government leader in cost accounting, which 

helps program managers analyze and manage their program’s costs accurately and timely. Th e 

FAA has completed implementing its Cost Accounting System (CAS) for all its sub-organizations 

and has implemented labor distribution reporting for all 45,000 employees. Th e Federal Highway 

Administration has developed a new cost accounting capability for its Federal Lands Highway 

Program, and the Federal Transit Administration is using Labor Distribution Reporting to assign 

salary and benefi t costs to its programs. Th e Volpe National Transportation Systems Center and the 

DOT Working Capital Fund also use robust cost accounting systems. DOT’s web-based CASTLE 

Time and Attendance/Labor Distribution System automatically interfaces labor costs to our Delphi 

fi nancial system to support cost accounting. Our fi nancial management strategic planning / business 

transformation initiative will guide our continuing eff orts to integrate program and accounting data 

and to expand cost accounting throughout DOT.

CONCLUSION

FY 2007 has been another productive year in our eff orts to enhance and integrate our budget, 

performance and fi nancial management programs. Looking back, we see that DOT is far ahead of 

where we were only a few short years ago. Building on our accomplishments, we will continue to 

develop and implement CFO initiatives so that we can better demonstrate the fi nancial and program 

results the American people expect and deserve and fully support the Department’s strategic goals to 

create a safer and more effi cient transportation system for the Nation.

Phyllis F. Scheinberg

Assistant Secretary for Budget and Programs/Chief Financial Offi cer
11

MANAGEMENT ’S DISCUSSION AND ANALYSIS
UNITED STATES DEPARTMENT OF TRANSPORTATION

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ABOUT THIS REPORT

Th e Department of Transportation’s (DOT) Performance and Accountability Report (PAR) for Fiscal 

Year 2007 provides performance and fi nancial information that enables Congress, the President, and 

the public to assess the performance of the Department relative to its mission and stewardship of 

the resources entrusted to it. Th is Report satisfi es the reporting requirements of the following major 

legislation.

 Reports Consolidation Act of 2000

 Government Management Reform Act of 1994

 Government Performance and Results Act of 1993

 Chief Financial Offi cers Act of 1990

Th ese requirements are combined in the PAR, which consists of the Annual Performance 

Report—required by the Government Performance and Results Act of 1993—with annual fi nancial 

statements—required under the CFO Act, as amended by the Government Management Reform Act 

of 1994—and other reports, such as assurances on internal controls, accountability reports by agency 

heads, and Inspector General assessments of an agency’s management challenges.

Additional copies of the Department of Transportation’s Fiscal Year 2007 Performance and 

Accountability Report are available by writing to:

U.S. Department of Transportation

Offi ce of the Assistant Secretary for Budget and Programs/Chief Financial Offi cer

Room W95-330

1200 New Jersey Avenue, SE

Washington, D.C. 20590

You may also view this Report online at http://www.dot.gov
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

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HOW THIS REPORT IS ORGANIZED

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)

Th e Management’s Discussion and Analysis (MD&A) section provides a summary of the entire 

Report. It includes an organizational overview; a summary of the most important performance 

results and challenges for FY 2007; a brief analysis of fi nancial performance; a brief description 

of systems, controls, and legal compliance; and information on the Department’s progress in 

implementing the President’s Management Agenda. Th e MD&A also addresses the management 

challenges identifi ed by the Department’s Inspector General and a summary of the Inspector 

General’s audit report.

THE PERFORMANCE REPORT

Th e Performance Report section contains the annual program performance information required 

by the Government Performance and Results Act of 1993 (GPRA) and includes all of the required 

elements of an annual program performance report as specifi ed in OMB Circular A-11, Preparation, 

Submission and Execution of the Budget. Th e results are presented by Strategic Goal.

THE FINANCIAL REPORT

Th e Financial Report section contains the Department’s fi nancial statements, notes, required 

supplementary information, supplementary information pertaining to the Department’s stewardship 

of Federal assets, related Inspector General’s Audit Report, and other accompanying information.
UNITED STATES DEPARTMENT OF TRANSPORTATION

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DOT MISSION AND VALUES

MISSION

Th e National objectives of general welfare, economic growth and stability, and the security of the 

United States require the development of transportation policies and programs that contribute to 

providing fast, effi cient, and convenient transportation at the lowest cost consistent with those and 

other National objectives, including the effi cient use and conservation of the resources of the United 

States.

VALUES

PROFESSIONALISM

As accountable public servants, we exemplify the highest standards of excellence, integrity, and 

respect in the work environment.

TEAMWORK

We support each other, respect diff erences in people and ideas, and work together in ONE DOT 

fashion.

CUSTOMER FOCUS

We strive to understand and meet the needs of our customers through service, innovation, and 

creativity. We are dedicated to delivering results that matter to the American people.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

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ORGANIZATION

HISTORY

Established in 1967, DOT sets Federal transportation policy and works with State, local, and private 

sector partners to promote a safe, secure, effi cient, and interconnected National transportation 

system of roads, railways, pipelines, airways, and seaways. DOT’s overall objective of creating a safer, 

simpler, and smarter transportation program is the guiding principle as we move forward to achieve 

specifi c goals.

HOW WE ARE ORGANIZED

DOT employs almost 60,000 people across the country, in the Offi ce of the Secretary of 

Transportation (OST) and through twelve Operating Administrations (OAs) and bureaus, each with 

its own management and organizational structure.

Th e Offi ce of the Secretary of Transportation provides overall leadership and management direction, 

administers aviation economic programs, and provides administrative support. Th e Offi ce of 

Inspector General (OIG) and the Surface Transportation Board (STB), while formally part of DOT, 

are independent by law.

SECRETARY/

DEPUTY SECRETARY

ASSISTANT

SECRETARY FOR

TRANSPORTATION

POLICY

ASSISTANT SECRETARY 

FOR AVIATION AND

INTERNATIONAL

AFFAIRS

UNDERSECRETARY

FOR POLICY

ASSISTANT

SECRETARY FOR

ADMINISTRATION

BOARD OF

CONTRACT

APPEALS

ASSISTANT SECRETARY

FOR BUDGET AND

PROGRAMS & 

CHIEF FINANCIAL

OFFICER

OFFICE OF

THE CHIEF

INFORMATION

OFFICER

OFFICE OF

CIVIL RIGHTS

OFFICE OF

DRUG & ALCOHOL

POLICY & COMPLIANCE

EXECUTIVE

SECRETARIAT

GENERAL

COUNSEL

ASSISTANT

SECRETARY FOR

GOVERNMENTAL

AFFAIRS

OFFICE OF

INTELLIGENCE

AND SECURITY

OFFICE OF

PUBLIC

AFFAIRS

OFFICE OF SMALL &

DISADVANTAGED

BUSINESS

UTILIZATION

FEDERAL

AVIATION

ADMINISTRATION

FEDERAL

HIGHWAY

ADMINISTRATION

FEDERAL MOTOR

CARRIER SAFETY

ADMINISTRATION

FEDERAL

RAILROAD

ADMINISTRATION

FEDERAL

TRANSIT

ADMINISTRATION

MARITIME

ADMINISTRATION

NATIONAL

HIGHWAY TRAFFIC

SAFETY

ADMINISTRATION

OFFICE OF

INSPECTOR

GENERAL

PIPELINE AND

HAZARDOUS

MATERIALS SAFETY

ADMINISTRATION

RESEARCH AND

INNOVATIVE

TECHNOLOGY

ADMINISTRATION

SAINT LAWRENCE

SEAWAY

DEVELOPMENT

CORPORATION

SURFACE

TRANSPORTATION

BOARD
UNITED STATES DEPARTMENT OF TRANSPORTATION

16

OVERVIEW OF LEGISLATIVE AUTHORITIES

Th e DOT strategic plan summarizes the legislative authorities of each Operating Administration. 

To provide a context for the reader, the highlights of the responsibilities of each Operating 

Administration are listed below.

Offi ce of the Secretary. Th e Offi ce of the Secretary (OST) oversees the formulation of national 

transportation policy and promotes intermodal transportation. Other responsibilities range from 

negotiation and implementation of international transportation agreements, assuring the fi tness of 

U.S. airlines, enforcing airline consumer protection regulations, issuance of regulations to prevent 

alcohol and illegal drug misuse in transportation systems and preparing transportation legislation.

Federal Aviation Administration. Th e Federal Aviation Administration’s (FAA) mission is to 

promote aviation safety and mobility by building, maintaining, and operating the Nation’s air traffi c 

control system; overseeing commercial and general aviation safety through regulation and inspection; 

and providing assistance to improve the capacity and safety of our airports.

Federal Highway Administration. Th e mission of the Federal Highway Administration (FHWA) is 

to improve mobility on our Nation’s highways through national leadership, innovation, and program 

delivery.

Federal Motor Carrier Safety Administration. Th e Federal Motor Carrier Safety Administration’s 

(FMCSA) primary mission is to prevent commercial motor vehicle-related fatalities and injuries 

by promoting safe and secure commercial motor vehicle operation through education, regulation, 

enforcement, and innovative research and technology.

Federal Railroad Administration. Th e Federal Railroad Administration’s (FRA) mission is to 

ensure that our Nation has safe, secure, and effi cient rail transportation that enhances the quality of 

life for all.

Federal Transit Administration. Th e Federal Transit Administration (FTA) provides leadership, 

technical assistance, and fi nancial resources for safe, technologically advanced public transportation 

that enhances mobility and accessibility, improves America’s communities, preserves the natural 

environment, advances economic growth, and ensures that transit systems are prepared to function 

during and aft er criminal or terrorist attack.

Maritime Administration. Th e Maritime Administration’s (MARAD) mission is to promote the 

development and maintenance of an adequate, well-balanced U.S. merchant marine that is suffi cient 

to carry the Nation’s domestic waterborne commerce and a substantial portion of its waterborne 

foreign commerce, and to serve as a naval and military auxiliary in time of war or national 

emergency.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

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National Highway Traffi c Safety Administration. Th e National Highway Traffi c Safety 

Administration’s (NHTSA) mission is to save lives, prevent injuries and reduce economic costs due to 

road traffi c crashes through education, research, safety standards, and enforcement activity. 

Offi ce of Inspector General. Th e Inspector General Act of 1978, as amended, established the Offi ce 

of Inspector General (OIG) as an independent and objective organization within the DOT. Th e 

OIG’s mission is to promote economy, eff ectiveness, and effi ciency and to prevent and detect fraud, 

waste, and abuse in DOT operations and programs by conducting and supervising independent and 

objective audits and investigations.

Pipeline and Hazardous Materials Safety Administration. Th e mission of the Pipeline and 

Hazardous Materials Safety Administration (PHMSA) is to protect people and the environment 

from the risks inherent in transportation of hazardous materials—by pipeline and other modes of 

transportation. In doing so, PHMSA also protects the public’s interest in reliable delivery of energy 

resources and other critical materials.

Research and Innovative Technology Administration. Th e Research and Innovative Technology 

Administration (RITA) is dedicated to ensuring the eff ectiveness of the Department of 

Transportation’s investment in research and technology. Innovations that will improve our mobility, 

promote economic growth, and ultimately deliver a better integrated transportation system.

Saint Lawrence Seaway Development Corporation. Th e U.S. Saint Lawrence Seaway Development 

Corporation (SLSDC), a wholly owned government corporation and an OA of DOT, is responsible 

for the operations and maintenance of the U.S. portion of the St. Lawrence Seaway between Montreal 

and Lake Erie.

Surface Transportation Board. Th e Surface Transportation Board (STB) is charged with promoting 

substantive and procedural regulatory reform in the economic regulation of surface transportation, 

and with providing an effi cient and eff ective forum for the resolution of disputes and the facilitation 

of appropriate business transactions.
UNITED STATES DEPARTMENT OF TRANSPORTATION

18

PERFORMANCE HIGHLIGHTS

Secretary Mary E. Peters is committed to ensuring that our transportation system remains safe, 

secure, and effi cient and that it serves as the engine that drives our Nation’s economy. Because 

economic activity and global trade are increasing, our roads, railways, pipelines, public transit 

systems, airways, and waterways are experiencing increasing growth in demand.

Th is Administration is working to ensure that our transportation system has the capacity to 

accommodate the needs of a growing and prosperous America. Below, we present the highlights 

of our fi scal year (FY) 2007 results in our fi ve strategic areas: safety, mobility, global connectivity, 

environmental stewardship and security. We also present our internal organizational achievements 

that enhance DOT’s performance as a results-driven Federal agency.

SAFETY

Transportation makes possible the movement of people and goods fueling our economy and 

improving our quality of life. Development of transportation systems has become a major 

determinant of a nation’s economic success. At the same time, transportation exposes us to the risk 

of harm. While we have made progress in making all modes of transportation safer, the Department’s 

top priority and central focus remains improving safety. All modes of transportation have a share in 

achieving our strategic safety goal: Enhance public health and safety by working toward the elimination 

of transportation-related deaths and injuries.

Th e number of people who died on the Nation’s roads fell last year, leading to the lowest highway 

fatality rate ever recorded and the largest drop in total deaths in 15 years. In 2006, 42,642 people died 

in traffi c crashes, a drop of 868 deaths compared to 2005. Th is two percent decline in traffi c deaths 

contributed to the historic low fatality rate of 1.42 fatalities per 100 million vehicle miles traveled 

(VMT). Th is decline is the largest in terms of both number and percentage since 1992. Preliminary 

2007 data indicates that the fatality rate will decrease to 1.40 fatalities per 100 million VMT. DOT 

is fi rmly committed to meeting the Department’s longstanding overall highway fatality rate goal of 

1.0 fatalities per 100 million VMT by 2011. New performance targets have been established in key 

areas that encompass all areas of motor vehicle crashes. Th is will enable the Department’s eff orts to 

focus on the critical areas responsible for the slow rate of decline in the overall highway fatality rate, 

stagnant impaired driving fatalities, and ever increasing motorcycle rider fatalities. Th ese key focus 

areas include passenger vehicle occupants, non-occupants (pedestrians, cyclists, etc.), motorcycle 

riders, and large trucks and buses. Th ey were chosen in part to cover the breadth of all road users. 

Th e Department will begin to report on these focus areas in the FY 2008 PAR.

In response to the tragic collapse of the I-35W Bridge in Minneapolis, MN, FHWA issued two 

technical advisories. Th e fi rst strongly encouraged States to re-inspect all steel deck truss bridges and 

to follow-up on any critical fi ndings, and the second advised States to ensure that the construction 

equipment loads and stockpiled raw materials placed on a structure do not overload its members. 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

19

Th e Department understands that future National Transportation Safety Board fi ndings along with 

a program audit by the DOT Offi ce of Inspector General may result in additional recommended 

improvements to the FHWA Bridge program.

Although FAA did not meet its commercial aviation safety measure, this remains one of the safest 

periods in aviation history for both commercial and general aviation. Over the last fi ve years, nearly 

three billion airline passengers reached their destination safely. As the stewards of aviation safety 

in the U.S., FAA and its industry partners have built a system that operates nearly 32,000 scheduled 

commercial fl ights daily and has reduced the risks of fl ying to all-time lows. FAA’s eff orts during the 

past ten years have also resulted in reduced general aviation fatal accidents and Alaska fatal accidents. 

Both measures are at their lowest recorded levels in history.

Wisconsin Department of Transportation bridge inspectors Jim Kast, right, and Matt Murphy inspect the support 

structure of the Highway 51 bridge over the Rock River, just south of Edgerton, Wis., Wednesday, Aug. 8, 2007. Th e 

structure, one of about 16 deck truss bridges in the state, is generally similar to the Interstate 35W bridge that collapsed 

in Minnesota on August 1, 2007. Th is bridge was scheduled for a regular inspection next month but the special 

inspection is considered a precautionary measure. (AP Photo/Th e Gazette, Bill Olmsted)
UNITED STATES DEPARTMENT OF TRANSPORTATION

20

Rail and transit safety continue to meet their safety targets. Based on preliminary estimates, DOT 

expects to better the FY 2007 target of 16.70 rail-related accidents/incidents per million train miles, 

limiting accidents/incidents to 15.03 per million train miles. Much of FRA’s success can be attributed 

to its use of data and sophisticated 

technologies to more eff ectively 

and effi ciently alert and direct FRA 

safety inspectors and other resources 

to potential track safety anomalies. 

Th is advanced notice enables FRA 

resources to proactively manage 

safety concerns. Additionally, FRA 

has built substantial partnerships 

with State and local agencies to 

address accidents and casualties at 

highway-rail grade crossings and 

from trespassing. Although the 

transit fatality rate increased slightly 

in FY 2007, safety performance 

continues to meet expectations. 

Th e transit fatality rate increased 

from 0.344 fatalities per 100 million 

passenger miles traveled in FY 2006 

to 0.378 in FY 2007. Strong growth in transit ridership and the continued expansion of transit service 

signifi cantly increased the number of transit passenger miles in FY 2007 over FY 2006.

Th e Department continues its eff ort to lower the number of serious incidents—those presenting 

the greatest risk to people—from the transportation of hazardous materials across all modes of 

transportation. Overall, we have cut the risk by about one third over the past twenty years.

MOBILITY

Historically, the mobility that transportation provides has helped defi ne us as a people and as a 

Nation. Our ability to travel from place to place allows us to connect with other people, work, school, 

and marketplaces throughout the United States and around the world. In partnerships with the States 

and private transportation providers, we have made continuous improvements in mobility as stated 

in our strategic goal: Advance accessible, effi cient, intermodal transportation for the movement of people 

and goods. Highlights of our results are presented below.

Over two million people a day travel on our Nation’s airlines and more than one-third of the value 

of all goods is moved by air. Air travel exceeded pre-9/11 levels in FY 2006, and is on track to reach 

more than one billion passengers by 2015. Th is increased passenger traffi c along with adverse 

weather conditions resulted in the fl ying public experiencing increased delays in their travel plans 

during FY 2007. Not surprising, the FAA fell short of the FY 2007 on-time target of 87.40 percent, 

A Union Pacifi c freight train crosses an intersection in Pine Bluff s, 

Wyoming, Tuesday, April 10 2007. A freight train traveling at top 

speed oft en needs a mile or more to stop aft er applying its brakes. 

Th e train was carrying about 150 passengers who had signed up for a 

presentation on train safety that was given during the ride. (AP Photo/

Th e Wyoming Tribune Eagle, Gregory Hoenig)
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

21

achieving a rate of only 86.50 percent. To manage the increased air traffi c, FAA continued to focus 

on easing congestion in seven metropolitan areas; improving overall capacity at the Nation’s top 35 

airports; building new runways; and increasing traffi c coordination and communication by using new 

technologies. Airspace redesign is one of the key components in optimizing the U.S. airspace and 

allowing for increased capacity. To help reduce delays and create more effi cient routings, signifi cant 

changes were made to crowded en-route and terminal airspace in Atlanta, Southern California, and 

the Cincinnati/Northern Kentucky International Airport. In addition, a new runway at BostonLogan International Airport 

and a relocated runway at Los 

Angeles International Airport 

opened during FY 2007.

Mobility and accessible 

transportation go handin-hand. For our aging 

population and for persons 

with disabilities, we must 

be proactive to ensure their 

mobility and access to 

transportation, now and in the 

future. For FY 2007, DOT met 

one of its two performance 

targets measuring compliance 

with the Americans with 

Disabilities Act (ADA). An 

estimated 97 percent of bus 

fl eets continue to be ADA 

compliant either being lift -

equipped or having low fl oors 

to accommodate wheelchairs 

and people with limited 

mobility. However, it is estimated that only 92.3 percent of key rail stations are ADA compliant, 

slightly missing the FY 2007 target of 93 percent. FTA is developing an action plan and working with 

station operators to address this issue.

Th e pavement condition on the Nation’s highways improved in FY 2007, but not enough to meet 

the Department’s performance target. Th e estimated percentage of travel on the National Highway 

System exhibiting “good”-rated ride quality was 55 percent, missing the target by 1.0 percent. FHWA 

has found that more improvement is needed in key States that have the most infl uence on the 

nationwide results in order to meet the ride quality standard.

An airline passenger watches for fl ight delays on monitors at LaGuardia 

Airport in New York, Friday, June 8, 2007. U.S. airline delays are at their 

highest level in at least 13 years, and analysts say fl iers can expect continued 

delays. Th e Department of Transportation on Monday, Aug. 6, 2007 said the 

industry’s on-time performance in the fi rst six months of the year was its worst 

since 1995, the earliest period for which the agency has comparable data. In 

June, nearly a third of domestic fl ights on major U.S. airlines were late.

(AP Photo/Frank Franklin II, File)
UNITED STATES DEPARTMENT OF TRANSPORTATION

22

Congested travel was below the target level with a projection of 31.8 percent for urban-area travel 

occurring in congested conditions. Th e results from 2004 to 2006 suggest that the overall rate of 

growth nationwide in traffi c congestion appears to be slowing. However, traffi c congestion is still a 

signifi cant problem, particularly in urban areas. Th e FHWA continued to promote operational and 

technological solutions to provide 

traveler information, improve 

traffi c incident management, 

enhance mobility in the vicinity 

of work zones, improve traffi c 

signal timing, and relieve traffi c 

congestion at bottlenecks.

DOT selected fi ve metropolitan 

areas across the country as the 

fi rst communities to participate 

in a new federal initiative to 

fi ght traffi c gridlock. Th e 

Department’s Urban Partnership 

program aims to reduce traffi c 

congestion using approaches 

like congestion pricing, transit, 

tolling, and teleworking. Funding 

has been provided to the cities 

of Miami, Minneapolis, New 

York City, San Francisco, and 

the Seattle area (King County) 

to implement transportation 

solutions that take advantage of new technologies to keep traffi c moving, and promote fl exible work 

schedules and telecommuting to ease traditional rush hours.

GLOBAL CONNECTIVITY

Transportation systems within and among nations are lifelines to economic growth, less restricted 

trade, and greater cultural exchange. A domestic and international intermodal approach is central to 

DOT’s role in promoting global connectivity. Our strategies to address transportation in the global 

economy have two prongs. One is directed toward opening international transportation markets and 

the other is directed toward the improvement of essential, intermodal transportation linkages.

Supporting economic growth is a fundamental purpose of our transportation network. 

Transportation facilitates distribution of goods and creates economic value for the producer. Our 

strategic goal: Facilitate a more effi cient domestic and global transportation system that enables 

economic growth and development, concerns the effi ciency of transportation, an important part of our 

competitive edge in global trade.

Congested traffi c fi lls New York’s Park Avenue, Th ursday June 7, 2007. New 

York Mayor Michael Bloomberg’s plan to ease Manhattan traffi c through 

congestion pricing got a boost from U.S. Secretary of Transportation Mary 

Peters, who announced that New York was one of fi ve metropolitan areas 

across the country selected to participate in the Urban Partnerships Program 

- a new Federal initiative that provides funding to fi ght traffi c gridlock. (AP 

Photo/Richard Drew)
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

23

In an eff ort to provide greater access to international transportation markets and assure a minimum 

standard of safety within those markets, the Department conducts negotiations for open skies 

agreements, enters into open skies agreements, and enters into Bilateral Aviation Safety Agreements 

once the open skies agreement is in place.

On April 30, 2007, aft er more than four years of negotiations, the United States and the European 

Union (EU) achieved a historic pact on Open Skies. Beginning on March 30, 2008, the agreement 

will deregulate air traffi c on both sides of the Atlantic, a market that represents about 60 percent of 

international travel. Th e Agreement would replace existing bilateral agreements between the United 

States and EU member states and establish an Open Skies Plus framework between the United 

States and all 27 EU member states. As a result of newly implemented open skies agreements, DOT 

increased the number of potential air transportation customers to 3.83 billion, a 27 percent increase 

over FY 2006. Open skies agreements have made it possible for the airline industry to provide 

the opportunity for better quality, lower priced, and more competitive air service in thousands of 

international city-pairs to an increasing portion of the world’s population.

Bilateral Aviation Safety Agreements (BASA) promotes aviation safety and environmental quality, 

enhances cooperation, and increases effi ciency in civil aviation safety matters. Th ese agreements 

improve global understanding of U.S. safety regulations, processes, and procedures, which leads 

to better international regulatory oversight. In FY 2007, FAA achieved its performance target, 

negotiating agreements with Singapore, Japan, and Mexico.

Th e Saint Lawrence Seaway is the international shipping gateway to the Great Lakes, with almost 

50 percent of Seaway traffi c traveling to and from overseas ports, especially in Europe, the Middle 

East and Africa. Th e Great Lakes Seaway System off ers access and competitive costs with other 

routes and modes to the interior of the country, so it is critical that the locks maintained by the Saint 

Lawrence Seaway Development Corporation (SLSDC) be open and navigable continuously during 

the navigation season. Once again SLSDC met its target, making the Seaway available for shipping 

99.4 percent of the season.

ENVIRONMENT

While transportation ties us together as a Nation, it can also produce unwanted side eff ects such 

as air and water pollution, the loss of ecosystems and disruption of communities. Americans want 

solutions to transportation problems that are consistent with sound environmental planning. DOT 

is committed to avoiding or mitigating the adverse environmental eff ects that can accompany 

transportation as stated in our strategic goal: Promote transportation solutions that enhance 

communities and protect the natural and built environment. Highlights of our results follow.

For the second year in a row, the number of areas in a transportation emissions conformity lapse 

was well below the target. During 2002 when this measure was adopted, approximately six areas 

were in conformity lapse in any given month. A number of changes to the conformity provisions 

were implemented in 2005 to streamline and provide more fl exibility to the conformity process. Th e 
UNITED STATES DEPARTMENT OF TRANSPORTATION

24

number of areas in a lapse was zero at the end of FY 2006, lowering the 12-month moving average 

number of areas in a conformity lapse to 1.3. In FY 2007, we sustained this eff ort and lowered the 

number of areas in a lapse to zero.

Th e Maritime Administration (MARAD) has more than 115 obsolete and deteriorating ships awaiting 

disposal that pose potentially costly environmental threats to the waterways near where they are 

stored. In FY 2007, MARAD removed 25 obsolete ships from the three fl eet sites, twelve more than 

the 2007 target. All of the removals were the result of dismantling/recycling contracts with domestic 

ship disposal companies. Depending on the characteristics of each vessel and the capability of each 

contractor, it may take from several months to over a year to dismantle a ship once it has arrived at a 

disposal facility, In 2007, dismantling was completed on 18 ships, exceeding the target by three ships. 

Th ese ships were removed from the fl eet sites during the current and preceding fi scal years.

We continue to drive down the potentially harmful releases of hazardous liquids from pipelines. 

We are projecting that we will beat the target for FY 2007 by up to 50 percent. We believe that the 

improved performance over the past two years refl ects the success of our integrity management 

program—pipeline operators are fi nding and fi xing defects before they become failures.

SECURITY

Our transportation system must remain a vital link for maintaining the country’s economy, 

supporting civilian emergency response and mobilizing our armed forces for military contingencies. 

Examples of our achievements under our strategic goal: Balance homeland and national security 

transportation requirements with the mobility needs of the Nation for personal travel and commerce, are 

described below.

Th e Department of Defense (DOD) relies on the U.S. commercial transportation industry as well 

as government-owned ships to deliver equipment and supplies throughout the world in order 

to maximize defense logistics capabilities and minimize cost. In addition to the availability of 

commercial U.S.-fl ag vessels, MARAD has 44 government-owned Ready Reserve Force vessels 

available to satisfy DOD’s surge sealift requirements, a decrease of four vessels from FY 2006. 

MARAD, in conjunction with DOD, also negotiates an agreement with each DOD-designated 

commercial strategic port specifying which facilities will be needed to conduct a military deployment. 

Th ese ports are expected to make their facilities available to the military within 48 hours of written 

notice. DOT met both the shipping capacity performance target of 94 percent availability within 

mobilization timelines, and achieved 100 percent readiness within established timelines for its target 

for commercial strategic port availability.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

25

ORGANIZATIONAL EXCELLENCE

DOT’s Inspector General Calvin L. Scovell III released the annual report on the Department’s 

consolidated fi nancial statements, for which we were issued an unqualifi ed audit opinion. 

Consolidated fi nancial statements show how the Department is accountable for budgetary resources, 

provided by American taxpayers for Federal transportation activities. Individual audits were also 

conducted for the Aviation and Highway Trust Funds, which both received unqualifi ed opinions.

Secretary Peters’ management strategy for achieving organizational improvement includes full 

implementation of the President’s Management Agenda (PMA). Th e PMA contains fi ve core, 

mutually reinforcing initiatives that the DOT team is integrating into its corporate culture in 

striving for continuous management improvement. Th e fi ve core PMA initiatives are in the areas of 

strategic management of human capital, competitive sourcing, fi nancial performance, performance 

improvement, and e-government. Our latest ratings from the Offi ce of Management and Budget 

concerning the status of each core initiative resulted in the Department receiving two “green” ratings;

two “yellow” ratings; and one “red” rating.
UNITED STATES DEPARTMENT OF TRANSPORTATION

26

FINANCIAL HIGHLIGHTS

Preparing these statements is part of the Department’s goal to improve fi nancial management and 

to provide accurate and reliable information that is useful for assessing fi nancial performance. 

Departmental management is responsible for the integrity and objectivity of the fi nancial information 

presented in the fi nancial statements.

Th e fi nancial statements and fi nancial data presented in this Report have been prepared from the 

accounting records of the DOT in conformity with generally accepted accounting principles (GAAP). 

For Federal entities, these GAAP standards are prescribed by the Federal Accounting Standards 

Advisory Board (FASAB).

OVERVIEW OF FINANCIAL POSITION

ASSETS

Th e Consolidated Balance Sheet shows the Department had total assets of $61.8 billion at the end of 

FY 2007. Th is represents a 3.6 percent decrease over the previous year’s total assets of $64.1 billion 

(restated). Th e Department’s assets refl ected in the Consolidated Balance Sheet are summarized in 

the following table.

Assets by Type (Dollars in Thousands) 2007 %

2006 

Restated %

Fund Balance with Treasury $ 23,392,470 37.8 $ 27,692,908 42.2

Investments 21,218,168 34.3 19,824,151 30.9

General Property, Plant & Equipment 14,683,890 23.7 14,501,762 22.6

Inventory and Related Property, Net 785,760 1.3 897,494 1.4

Direct Loans and Guarantees, Net 889,885 1.4 618,179 1.0

Accounts Receivable 623,810 1.0 315,987 0.5

Cash and Other Assets 237,855 0.4 261,091 0.4

Total Assets $ 61,831,838 100.0 $ 64,111,572 100.0

LIABILITIES

Th e Department had total liabilities of $14.1 billion at the end of FY 2007. Th is represents a 

7.4 percent increase from the previous year’s total liabilities of $13.1 billion (restated), which is 

reported on the Consolidated Balance Sheet and summarized in the following table.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

27

Liabilities by Type (Dollars in Thousands) 2007 %

Restated

2006 %

Grant Accrual $ 5,526,288 39.3 $ 4,975,556 37.9

Other Liabilities 4,727,489 33.6 4,622,073 35.3

Accounts Payable 1,591,693 11.3 1,375,459 10.5

Environmental and Disposal Liabilities 852,366 6.1 953,635 7.3

Debt 1,040,761 7.4 839,357 6.4

Loan Guarantees 336,626 2.3 345,864 2.6

Total Liabilities $ 14,075,223 100.0 $ 13,111,944 100.0

NET POSITION

Th e Department’s Net Position at the end of FY 2007 on the Consolidated Balance Sheet and the 

Consolidated Statement of Changes in Net Position is $47.8 billion, a 6.4 percent decrease from the 

previous fi scal year. Net Position is the sum of the Unexpended Appropriations and Cumulative 

Results of Operations.

RESULTS OF OPERATIONS

Th e results of operations are reported in the Consolidated Statement of Net Cost and the 

Consolidated Statement of Changes in Net Position.

NET COSTS

Th e Department’s total net cost of operations for FY 2007 was $63.1 billion.

Net Costs (Dollars in Thousands) 2007 %

2006

Restated %

Surface Transportation $ 47,385,306 75.05 $ 45,955,838 75.59

Air Transportation 14,814,454 23.46 14,135,417 22.97

Maritime Transportation 570,727 0.90 457,525 0.74

Costs Not Assigned to Programs 388,392 0.62 390,463 0.63

Less Earned Revenues Not Attributed to Programs 30,295 0.05 30,985 0.05

Cross-Cutting Programs 11,448 0.02 7,355 0.01

Net Cost of Operations $ 63,140,032 100.0 $ 60,915,613 100.00

Surface and air costs represent 98.5 percent of the Department’s net cost of operations. Surface 

transportation program costs represent the largest investment for the Department at 75.1 percent 

of the Department’s net cost of operations. Air transportation is the next largest investment for the 

Department at 23.5 percent of the Department’s net cost of operations.
UNITED STATES DEPARTMENT OF TRANSPORTATION

28

RESOURCES

BUDGETARY RESOURCES

Th e Combined Statement of Budgetary Resources provides information on how budgetary resources 

were made available to the Department for the year and their status at fi scal year-end. For the 2007 

fi scal year, the Department had total budgetary resources of $122.7 billion, compared to the FY 2006 

levels of $112.5 billion.

Budget Authority of $118.7 billion – which primarily consists of $62.6 billion of appropriations 

received and $56.1 billion of borrowing and contract authority – comprise 96.7 percent of the total 

budgetary resources. Th e Department incurred obligations of $75.8 billion for the 2007 fi scal year, a 

15.5 percent increase over the $65.6 billion of obligations incurred during 2006. Outlays refl ect the 

actual cash disbursed against the Department’s obligations.

HERITAGE ASSETS AND STEWARDSHIP LAND 

INFORMATION

Heritage assets are property, plant and equipment that are unique for one or more of the following 

reasons: historical or natural signifi cance; cultural, educational, or artistic importance; or signifi cant 

architectural characteristics.

Stewardship Land is land and land rights owned by the Federal Government but not acquired for or 

in connection with items of general property, plant and equipment.

Th e Department’s Heritage assets consist of artifacts, museum and other collections, and buildings 

and structures. Th e artifacts and museum and other collections are those of the Maritime 

Administration. Buildings and structures include Union Station (rail station) in Washington, D.C., 

which is titled to the Federal Railroad Administration.

Th e Department holds transportation investments (Stewardship Land) through grant programs such 

as the Federal Aid Highways, mass transit capital investment assistance, and project grants for airport 

planning and development.

Financial information for Heritage assets and Stewardship Land is presented in the Financial Section 

of this Report under the Financial Statements and Required Supplementary Information.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

29

LIMITATIONS OF THE FINANCIAL STATEMENTS

Th e principal fi nancial statements have been prepared to report the fi nancial position and results of 

operations of the Department of Transportation, pursuant to the requirements of 31 U.S.C. 3515 (b).

Th ese statements have been prepared from the books and records of the Department of 

Transportation in accordance with generally accepted accounting principles (GAAP) for Federal 

entities and the formats prescribed by OMB. Th e statements are in addition to the fi nancial reports 

used to monitor and control budgetary resources, which are prepared from the same books and 

records.

Th e statements should be read with the realization that they are for a component of the U.S. 

Government.
UNITED STATES DEPARTMENT OF TRANSPORTATION

30

SYSTEMS, CONTROLS, AND LEGAL COMPLIANCE

FEDERAL MANAGERS’ FINANCIAL INTEGRITY ACT (FMFIA)

Th e FMFIA requires agencies to conduct an annual evaluation of their management controls 

and fi nancial systems and report the results to the President and Congress. Th e Secretary of 

Transportation then prepares an annual Statement of Assurance based on these internal evaluations.

As a subset of the FMFIA Statement of Assurance, DOT is required to report on the eff ectiveness of 

internal control over fi nancial reporting, which includes safeguarding of assets and compliance with 

applicable laws and regulations, in accordance with the requirements of Appendix A of OMB Circular 

A-123. A separate discussion on Appendix A is located at the end of this section.

Th e Secretary of Transportation has issued a qualifi ed Statement of Assurance for FY 2007. A 

copy of the Statement of Assurance is included in this section under Management Assurances. Th e 

Department evaluated its management control systems and fi nancial management systems for the 

fi scal year ending September 30, 2007. Th is evaluation provided reasonable assurance and formed 

the basis of the Secretary’s Statement of Assurance that the objectives of the FMFIA were achieved in 

FY 2007.

FMFIA ANNUAL ASSURANCE PROCESS

Th e FMFIA review is an agency self-assessment of the adequacy of fi nancial controls in all areas of 

the Department’s operations – program, administrative, and fi nancial management.

Managers within the Department, being in the best position to know and understand the nature of 

the problems they face, establish appropriate control mechanisms to ensure Departmental resources 

are suffi ciently protected from fraud, waste, and abuse, and to meet the intent and requirements of 

the FMFIA.

Objectives of Control Mechanisms

1. Financial and other resources are safeguarded from unauthorized use or disposition.

2. Transactions are executed in accordance with authorizations.

3. Records and reports are reliable.

4. Applicable laws, regulations, and policies are observed.

5. Resources are effi ciently and eff ectively managed.

6. Financial systems conform to government-wide standards.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

31

Th e head of each Operating Administration and Departmental offi ce submits an annual statement 

of assurance representing the overall adequacy and eff ectiveness of management controls within 

the organization to the Assistant Secretary for Budget and Programs/Chief Financial Offi cer (CFO). 

FMFIA material weaknesses and material nonconformances are also reported along with remediation 

plans to correct the material weakness or nonconformance. Specifi c guidance for completing the end 

of fi scal year assurance statement and reporting on material defi ciencies is issued annually by the 

Department’s Offi ce of Financial Management.

CRITERIA FOR REPORTING MATERIAL WEAKNESSES AND NONCONFORMANCES

A material weakness under FMFIA must fall into one or more of the categories below plus merit 

the attention of the Executive Offi ce of the President and/or the relevant Congressional oversight 

committees.

Criteria for Reporting a Material Weakness

1. Signifi cant weakness of the safeguards (controls) against waste, loss, unauthorized use or misappropriation of funds, property, or 

other assets.

2. Violates statutory authority, or results in a confl ict of interest.

3. Deprives the public of signifi cant services, or seriously aff ects safety or the environment.

4. Impairs signifi cantly the fulfi llment of the agency’s mission.

5. Would result in signifi cant adverse eff ects on the credibility of the agency.

A material nonconformance under FMFIA must fall into one or more of the categories below plus 

merit the attention of the Executive Offi ce of the President or the relevant Congressional oversight 

committees.

Criteria for Reporting a Material Nonconformance

1. Prevent the primary accounting system from centrally controlling fi nancial transactions and resource balances.

2. Prevent compliance of the primary accounting system, subsidiary system, or program system under the Offi ce of Management and 

Budget Circular A-127.

SUMMARY OF FY 2007 FMFIA MATERIAL WEAKNESSES

STATUS OF INTERNAL CONTROLS (FMFIA SECTION 2)

DOT has two material weaknesses under Section 2 – Timely Processing of Transactions and 

Accounting for Property, Plant and Equipment (PP&E), including the Construction in Progress 

(CIP) Account at the Federal Aviation Administration (FAA) and Weaknesses in the Stewardship 

and Oversight of Federal-Aid Projects Administered by Local Program Agencies (LPA). Th e Timely 

Processing of Transactions and Accounting for PP&E, including the CIP Account material weakness 

is a repeat material weakness from last year and has been updated to include issues surrounding 
UNITED STATES DEPARTMENT OF TRANSPORTATION

32

PP&E. Th e Weaknesses in Stewardship and Oversight of Federal-aid Projects Administered by LPAs 

is a new material weakness identifi ed by the Federal Highway Administration (FHWA). During 

FY 2007, the Department resolved the Financial Management, Reporting, and Oversight at the 

Highway Trust Fund (HTF) which was reported last year.

Timely Processing of Transactions and Accounting for PP&E, including the CIP Account. Last 

year we reported that the FAA did not have eff ective policies and procedures in place over CIP 

accounting, including maintaining supporting documentation for the capitalization of fi xed assets. 

During FY 2007, the FAA executed an extensive corrective action plan, involving a complete review 

of the CIP balance reported by the FAA at September 30, 2006.

For FY 2007, we are updating the material weakness to include issues surrounding PP&E. FAA 

has not fully complied with standardized policies and procedures, including policies on unit costs, 

overhead burden calculations and allocation, and procedures for entry of transactions in the fi xed 

asset subsidiary ledger, to ensure that CIP and related PP&E balances are accurate, complete, and 

recorded timely throughout the year. In addition, the FAA has not completed the design and full 

implementation of internal controls around the standardized policies and procedures that will 

allow management to provide reasonable assurance that internal controls over the CIP and related 

processes are properly designed and operating eff ectively.

Weaknesses in Stewardship and Oversight of Federal-Aid Projects Administered by LPAs. During 

FY 2006 and FY 2007, FHWA assembled an LPA Review Team to review 39 projects administered 

by 35 diff erent local agencies. Th e fi ndings revealed that current oversight activities, as a whole, may 

be inconsistent from State to State and ineff ective for ensuring that Federal-aid requirements are met 

on LPA-administered projects. Th ere were no indications of fraud, waste, or abuse; however, the 

review identifi ed program weaknesses that allow shortcomings in the eligibility determinations in 

compliance with established Federal laws and regulations.

STATUS OF FINANCIAL MANAGEMENT SYSTEMS (FMFIA SECTION 4)

DOT reported again this year that the Department was not in substantial compliance with OMB 

Circular A-127. During FY 2006, we reported that the FAA was not in compliance with Federal 

accounting standards due to their inability to provide representation that the CIP balance and activity 

was fairly stated and in accordance with applicable accounting standards, as of and for the year 

ended, September 30, 2006. Th e non-compliance with Federal accounting standards still exists for 

FY 2007 due to the FAA’s inability to account for transactions and present balances in its periodic 

fi nancial statements in accordance with applicable accounting standards, as of and for the year ended, 

September 30, 2007.

Corrective Action Plans addressing material weaknesses and nonconformances are located in the 

Other Accompanying Information section.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

33

APPENDIX A, INTERNAL CONTROLS OVER FINANCIAL REPORTING

Appendix A of OMB Circular A-123 emphasizes management’s responsibility for establishing and 

maintaining eff ective internal control over fi nancial reporting. Appendix A requires agencies to 

maintain documentation of the controls in place and of the assessment process and methodology 

management used to support its assertion as to the eff ectiveness of internal control over fi nancial 

reporting. Agencies are also required to test the controls in place as part of the overall FMFIA 

assessment process. Th e assurance statement related to the assessment performed under Appendix 

A acts as a subset of the overall Statement of Assurance reported pursuant to Section 2 of the FMFIA 

legislation. Management’s assurance statement as it relates to Appendix A is based on the controls in 

place as of June 30. Th e assurance statement is located in the following section of this Report.

During FY 2006, DOT began an OMB-approved two-year implementation of Appendix A and 

identifi ed 12 key business processes that are material to fi nancial reporting. Of these 12 processes, 

six were documented and tested in FY 2006. During FY 2007, the Department added an additional 

business process to document and test. Th e remaining seven key business processes were 

documented and tested during FY 2007. DOT is reporting a limitation of scope for its assurance 

statement on internal controls over fi nancial reporting due to its two-year implementation of 

Appendix A. 

Based on the results of this evaluation, DOT is reporting one material weakness in its internal control 

over fi nancial reporting as of June 30, 2007. Th e material weakness is the Timely Processing of 

Transactions and Accounting for PP&E, including the CIP Account.
UNITED STATES DEPARTMENT OF TRANSPORTATION

34

MANAGEMENT ASSURANCES – OMB CIRCULAR A-123
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

35
UNITED STATES DEPARTMENT OF TRANSPORTATION

36
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

37

FEDERAL FINANCIAL MANAGEMENT IMPROVEMENT ACT

Th e Federal Financial Management Improvement Act of 1996 (FFMIA) requires that agencies’ 

fi nancial management systems provide reliable fi nancial data in accordance with generally 

accepted accounting principles and standards. Under FFMIA, fi nancial management systems must 

substantially comply with three requirements — Federal fi nancial management system requirements, 

applicable Federal accounting standards, and the U.S. Government Standard General Ledger (SGL). 

In addition, agencies must determine annually whether their systems meet these requirements. 

Th is determination is to be made no later than 120 days aft er the earlier of (a) the date of receipt of 

the agency-wide audited fi nancial statement, or (b) the last day of the fi scal year following the year 

covered by such statement.

To assess conformance with FFMIA, the Department uses OMB Circular A-127 survey results, 

FFMIA implementation guidance issued by OMB, results of OIG and GAO audit reports, annual 

fi nancial statement audits, the Department’s annual Federal Information Security Management Act 

(FISMA) Report, and other relevant information. Th e Department’s assessment also relies a great 

deal upon evaluations and assurances under the FMFIA, with particular importance attached to any 

reported material weaknesses and material nonconformances.

FFMIA OF 1996 NONCOMPLIANCE ISSUES

In FY 2007, DOT reported that the Department was not in compliance with FFMIA due to the FAA 

not complying with Federal accounting standards because their Construction in Progress balance 

was not fairly stated in accordance with applicable accounting standards. FAA management was 

unable to provide representation that the balances in the fi nancial statements were in accordance with 

applicable accounting standards.

FFMIA OF 1996 FINANCIAL MANAGEMENT SYSTEMS STRATEGY

DOT uses Oracle Federal Financials soft ware as its agency-wide fi nancial management and 

accounting system of record (called Delphi). DOT was the fi rst – and remains the only – cabinet 

agency to migrate all of its Operating Administrations (OAs) to a Financial Systems Integration 

Offi ce-certifi ed, commercial-off -the-shelf based fi nancial system running on a cost-eff ective single 

production instance of the soft ware. Using the DOT developed Financial Statement Solution 

enhancement, the Department is able to produce regulatory Financial Statements overnight from the 

core accounting system. Th is improves accuracy, eff ectiveness, effi ciency and enables DOT to meet 

OMB, Treasury and other Federal reporting requirements on schedule.

In FY 2007, DOT moved to a more standardized quarterly release schedule for installing Delphi 

patches, enhancements and upgrades. Th e Offi ce of Financial Management (OFM) Financial Systems 

Team and the Enterprise Services Center (ESC) Delphi Team worked with customers to identify, 

develop, test and coordinate fi ve separate release deliverables. Th is standard release schedule assured 

more complete testing of patches and enhancements and greatly improved communication and 

understanding of changes made to the system. Communication was facilitated with timely and 

eff ective “Go To” on-line web-based meetings between the OAs, ESC and OFM.
UNITED STATES DEPARTMENT OF TRANSPORTATION

38

In December 2006, DOT upgraded the Delphi database to Oracle Release 9.2.0.7. In May 2007, 

DOT successfully upgraded its Oracle Applications soft ware to version 11.5.10. Th is upgrade was 

quite signifi cant: 197 patches were applied, approximately 170,000 jobs were executed and nearly 200 

resources at the Enterprise Services Center were involved. Although the complexity of the Delphi 

11.5.10 upgrade required extra eff ort on the part of the many, including the Delphi Security team, 

this was the most effi cient and eff ective upgrade to Delphi in the system’s seven year history. System 

down time and impact to customers was signifi cantly reduced from previous upgrades.

Th ese upgrades off er assurance that the Delphi Financial Application Soft ware Modules are 

maintained at a level that ensures supportability by Oracle. Th e upgrade also adds some increased 

functionality for the Delphi support staff , reduces risks associated with technical enhancements, 

resolves some outstanding customer requests, provides customers with additional secure processing 

tools and allows Delphi to move toward future enhancements. 

DOT has implemented our FFMIA corrective action plan through several initiatives. First, DOT 

has taken great strides in consolidating and eliminating redundant fi nancial systems including 

FedWire, the Federal Reserve payment system used for FHWA grants. Th e Department now 

processes payments on daily basis through our Delphi system directly to the Treasury. Second, DOT 

is sunsetting the Volpe Center’s labor distribution system and replacing it with web-enabled CASTLE 

Time & Attendance and labor distribution system. Th ird, DOT prepared and implemented a written 

policy to address monthly journal voucher processing, budgetary and proprietary reconciliation 

problems and inadequate analysis of abnormal account balances. 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

39

FEDERAL INFORMATION SECURITY MANAGEMENT ACT

Th e Federal Information Security Management Act (FISMA) requires Federal agencies to identify 

and provide security protection commensurate with the risk and magnitude of harm resulting 

from the loss of, misuse of, unauthorized access to, disclosure of, disruption to, or modifi cation of 

information collected or maintained by or on behalf of an agency. Th e Department maintains one 

of the largest portfolios of information technology (IT) systems among Federal civilian agencies; it 

is therefore essential that the Department protect these systems, along with their sensitive data. In 

FY 2007, the departmental IT budget totaled approximately $2.6 billion. 

During FY 2007, all Operating Administrations except the Federal Aviation Administration (FAA), 

the Federal Railroad Administration (FRA), and the Surface Transportation Board were relocated to 

a new Headquarters. As part of the Headquarters relocation, the Department consolidated individual 

Operating Administrations’ network infrastructures (e-mail, desktop computing, and local area 

networks) into a common IT infrastructure—one of the IT consolidation target projects identifi ed by 

the Department in FY 2003.

For FY 2007, the Department is reporting a total of 429 computer systems—3 more than last 

year, of which 60 percent are FAA systems. Among the systems the Department maintains and 

operates is the air traffi c control system, which the President has designated part of the critical 

national infrastructure. Other systems owned by the Department include safety-sensitive surface 

transportation systems and fi nancial systems that are used to manage and disburse over $50 billion in 

Federal funds each year. 

FY 2007 was a particularly challenging year for the Department in managing its IT resources. 

In addition to establishing a common IT infrastructure for the new Headquarters building, we 

had to review, test, and certify security protection in more than half of its information systems 

to meet the recertifi cation requirements. Th e Department completed most of the scheduled 

security recertifi cation reviews. However, the overall eff ectiveness of its information security 

program declined this year because management had to divert resources and attention to resolving 

Headquarters move-related issues. Specifi cally, management did not meet Government security 

standards to protect information systems and did not take suffi cient action to correct identifi ed 

security defi ciencies. In addition, commercial soft ware products used in departmental systems were 

not confi gured in accordance with security standards and security incidents were incompletely and/

or inaccurately reported. 

In the FY 2006 FISMA report, the OIG stated that the Department faced several challenges in 

implementing and monitoring security controls to meet Government standards. Th is year, we found 

continued defi ciencies in risk categorization of sensitive systems and implementation of security 

upgrades required to meet Government standards. In addition, security recertifi cation review 

of the expanded IT infrastructure at the new Headquarters has not been completed. As a result, 

management has no assurance that application systems are operating securely on this infrastructure. 

Th e full FY 2007 FISMA report can be found at www.oig.dot.gov.
UNITED STATES DEPARTMENT OF TRANSPORTATION

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SAS-70 REPORT ON DOT’S FINANCIAL MANAGEMENT SYSTEM

Th e SAS-70 report summarizes the results of a review of system security controls over the DOT 

Enterprise Services Center’s (ESC) Delphi Financial Management System. Th is is the third year 

that a SAS-70 audit has been conducted on DOT’s Delphi fi nancial system. Th e ESC provides 

accounting and fi nancial management systems and services for DOT and other Federal agencies. 

Delphi is hosted, operated and maintained by Federal Aviation Administration employees at the Mike 

Monroney Aeronautical Center in Oklahoma City, Oklahoma, under the overall direction of the 

Departmental Chief Financial Offi cer.

ESC is one of four Federal Shared Service Providers designated by the Offi ce of Management and 

Budget to provide fi nancial management systems and services to other government agencies. ESC 

supports other Federal entities, including the National Endowment for the Arts, the Commodity 

Futures Trading Commission, the Institute of Museum and Library Services, and the Government 

Accountability Offi ce. Th e Offi ce of Management and Budget requires Shared Service Providers to 

provide client agencies with an independent audit report in accordance with the American Institute 

of Certifi ed Public Accountants’ (AICPA) Statement of Auditing Standards (SAS) 70.

Th is year’s SAS-70 audit of Delphi was conducted by Clift on Gunderson, LLP, of Calverton, 

Maryland. Th e DOT Offi ce of Inspector General performed a Quality Control Review of the SAS-70 

audit work to ensure that it complied with applicable standards.

Th e Clift on Gunderson SAS-70 audit report dated June 28, 2007 concluded that management’s 

description of controls for the Delphi Financial Management System presents fairly, in all material 

respects, the controls that had been placed in operation as of May 31, 2007. Clift on Gunderson 

recommended several enhancements to strengthen Delphi controls further; DOT has already 

implemented many of these recommendations and is implementing the remaining corrective actions. 

Th e operational environment enabled auditors to rely on Delphi system controls in conducting this 

year’s fi nancial statement audits.

FOLLOW UP REVIEW

Since the issuance of its June 28, 2007 report, Clift on Gunderson completed a follow-up review 

covering the period from June 1, 2007 through September 30, 2007 fi scal year end. Th e purpose of 

this follow-up review was to determine whether any signifi cant changes had been made to Delphi’s 

operating environment. Th e follow-up review documented the corrective actions that have been 

implemented to strengthen Delphi controls in accordance with the SAS-70 recommendations. Th e 

full OIG report can be found on their web site at www.oig.dot.gov.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

41

IMPROPER PAYMENTS INFORMATION ACT OF 2002

In FY 2007, the Department continued implementing the Improper Payments Information Act of 2002 

(IPIA), which requires that agencies: (1) review programs and identify those susceptible to signifi cant 

improper payments; (2) report to Congress on the amount and causes of improper payments; and, (3) 

develop approaches for reducing such payments. 

In FY 2007, the Department successfully completed its review of the Federal Highway Administration 

(FHWA) Federal-aid Highway Program, Federal Aviation Administration (FAA) Airport Improvement 

Program, and the Federal Transit Administration (FTA) Formula Grants Program. In addition, the 

Department developed and tested a model for determining the amount of improper payments in the FTA, 

Capital Investment Grant Program.

In FY 2007, the Department re-engaged AOC Solutions, Inc. to develop the nationwide sampling plan, collect 

the results from the application of test procedures, and provide a nationwide estimate of improper payments 

for Federal-aid Highway Program, Airport Improvement Program, and Formula Grants Program. With 

respect to the Formula Grants Program, the sampling plan, test procedures, and test results only apply to 

approximately one-third of Formula Grantee grantees covered by the FTA’s Formula Grant Triennial Review 

Program. Statute 49 U.S.C. 5307 prescribes a triennial review of all Formula Grant grantees. OMB Circular 

A-123, Attachment C, paragraph F provides for alternative approaches, including determining the amount of 

improper payments for components, such as those addressed in the foregoing statute.

In addition, AOC developed and tested a model for determining the amount of improper payments in the 

FTA Capital Investment Grant Program. Th e Department will apply the model on a nationwide basis to the 

Capital Investment Program in FY 2008.

Th e samples designed to execute the model are of suffi cient size to yield an estimate with a 90 percent 

confi dence interval within +/- 2.5 percent points around the estimate of the percentage of erroneous 

payments, as prescribed by OMB. Th e results of these eff orts are discussed below.

FHWA FEDERAL-AID HIGHWAY PROGRAM

Th e Department developed and executed a sampling plan to test project payments and estimate the amount 

of improper payments nationwide. Th e FHWA executed the nationwide testing program using personnel 

from the FHWA division offi ces and covered Federal payments to grantees over the twelve-month period 

March 1, 2006 through February 28, 2007.

Th e sampling plan involved a multi-staged statistical approach that included the selection of 53 Federal 

payments, 40 state payments, and then 230 testable line items from those payments for testing. Th e 2007 

sample size is signifi cantly less than the 2006 sample size because of a change in objectives. In 2006, the 

Department wanted to ensure all 50 states and two territories received sample items for testing. Th is required 

a substantially larger sample that would have been required had the Department not required that all states 

and territories receive sample items. In 2007, the sample was designed to support a nationwide estimate of 
UNITED STATES DEPARTMENT OF TRANSPORTATION

42

improper payments and was not designed to provide sample items to all States and territories. Th e States 

that did not appear in the IPIA sample received sample items for Financial Integrity Review and Evaluation 

(FIRE) program testing.

Th e test procedures applied to the line items were designed to test a range of administrative and contractual 

elements. Tests of administrative elements included determining whether payments were properly approved, 

billed at the correct Federal participation rate, and whether billings and payments were mathematically 

accurate. Tests of contractual elements included determining whether payments were in accordance with 

contract rates/prices for specifi ed materials and whether material quality tests indicated that materials met 

contractual requirements. 

Improper payments totaling $45,568 were found in the sample of 230 tested items. Th e projection of this 

result to the population of program payments for the twelve-month period results in an improper payment 

estimate of $55.2 million +/- $0.5 million. Th is projection does not meet OMB’s defi nition of signifi cant 

improper payments ($10 million and 2.5 percent of total program payments).

Th e improper payments reported resulted from factors such as unallowable charges, insuffi cient supporting 

documentation, incorrect calculations, and duplicate payments. Th e FHWA has implemented its FIRE 

Program to monitor State and territory payments and provide a mechanism for assisting these entities with 

eff ectively addressing operational issues that result or could result in improper payments.

FTA FORMULA GRANTS PROGRAM

FY 2007 was the fi rst year of nationwide coverage of the FTA Formula Grants Program. In FY 2006, the 

FTA developed and tested a model used for use in IPIA testing in 2007. Th e FTA developed and executed 

a sampling plan to determine the amount and cause of improper payments in the Formula Grants Program 

and to assist FTA in incorporating the IPIA test procedures in its statutorily required Triennial Review 

Program.

FTA executed the nationwide testing program for grantees covered by the 2007 Triennial Review Program 

using contractor personnel. Th e review covered the twelve-month period March 1, 2006 through February 

28, 2007.

Th e sampling plan involved a multi-staged statistical approach that included the selection of 60 Federal 

payments, 30 transportation authorities’ payments, and then 169 testable line items from those payments 

for testing. Th e test procedures applied to the line items were designed to test a range of administrative 

and contractual elements. Tests of administrative elements included determining whether payments were 

properly approved, billed at the correct federal participation rate, and whether billings and payments were 

mathematically accurate. Tests of contractual elements included determining whether payments were in 

accordance with contract rates/prices for specifi ed materials and whether material quality tests indicated that 

materials met contractual requirements. 

Improper payments totaling $2,326.16 were found in the sample of 169 tested items. Th e projection of this 

result to the population of program payments for the twelve-month period results in an improper payment 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

43

estimate of $4.32 million +/- $0.09 million. Th is projection does not meet OMB’s defi nition of signifi cant 

improper payments ($10 million and 2.5 percent of total program payments). 

Th e improper payments reported resulted from factors such as miscalculated federal participation share and 

lack of supporting documentation.

FTA CAPITAL INVESTMENT GRANTS PROGRAM

In FY 2007, FTA developed and tested an improper payment test model at one recipient of Capital 

Investment Grants Program funding. Th e FTA patterned the model on the model developed for the FTA 

Formula Grants Program in 2006.

Th e test model involved developing test workbooks with test criteria and procedures. Th e sampling plan 

involved a multi-staged statistical approach that included the selection of 17 Federal payments, 49 grantee 

payments, and then 83 testable line items from those payments for testing. Th e test procedures applied to 

the line items were designed to test a range of administrative elements and contractual elements. Tests of 

administrative elements included determining whether payments were properly approved, billed at the 

correct federal participation rate, and whether billings and payments were mathematically accurate. Tests 

of contractual elements included determining whether payments were in accordance with contract rates/

prices for specifi ed materials and whether material quality tests indicated that materials met contractual 

requirements. 

Improper payments totaling $361,691.73 were found in the sample of 83 tested items. Th e projection of this 

result to the population of program payments for the twelve-month period results in an improper payment 

estimate of $0.55 million +/- $0.39 million. Th is projection applies only to the single grantee and does 

not apply nationwide. Th e improper payments reported resulted from draw-downs in excess of Federal 

participation share.

Th e FTA will apply the model on a nationwide basis in FY 2008 in order to meet the requirements of the IPIA

FAA AIRPORT IMPROVEMENT PROGRAM (AIP)

Th e FAA developed and executed a sampling plan to determine the amount and cause of improper payments 

in the Airport Improvement Program. Th e FAA review covered the twelve-month period March 1, 2006 

through February 28, 2007. 

Th e sampling plan involved a multi-staged statistical approach that included the selection of 50 Federal 

payments, 30 sponsor payments, and then 95 testable line items from those payments for testing. Th e test 

procedures applied to the line items were designed to test a range of administrative and contractual elements. 

Tests of administrative elements included determining whether payments were properly approved, billed at 

the correct federal participation rate, and whether billings and payments were mathematically accurate. Tests 

of contractual elements included determining whether payments were in accordance with contract rates/

prices for specifi ed materials and whether material quality tests indicated that materials met contractual 

requirements. Th e review found administrative and contractual compliance as addressed in the test model 

and no improper payments.
UNITED STATES DEPARTMENT OF TRANSPORTATION

44

SCORECARD ON THE PRESIDENT’S MANAGEMENT AGENDA

HUMAN CAPITAL INITIATIVE

GOAL: Develop a Department-wide human capital workforce strategy to address future workforce 

gaps, eliminate skill gaps in critical occupations, develop performance-based incentives for the 

workforce, ensure citizen-centered, delayered, and mission-focused organizations; strengthen 

leadership skills, and ensure a robust leadership pipeline; improve the measurement and evaluation of 

human capital strategies; and integrate e-Government and Competitive Sourcing strategies.

FY 2007 STATUS: z GREEN

FY 2007 PROGRESS: z GREEN

HOW DOT IS MEETING PMA CHALLENGES: DOT’s Human Capital Plan focuses on long-term 

management of the DOT workforce and is aligned with the Offi ce of Personnel Management (OPM)/

Offi ce of Management and Budget (OMB) Standards for Success. DOT accomplishments in FY 2007 

included the following:

 Issued Human Capital Strategic Plan with Operational Plan;

 Issued the Human Resources Accountability Report;

 Issued workforce plan update;

 Received full certifi cation status for Senior Executive Service personnel for calendar 

years 2007 and 2008 by OPM and OMB;

 Completed backfi le conversion for Electronic Offi cial Personnel Folder (eOPF) 

application and established procedures for employee access;

 Issued additional strategies to support increased participation in telework with senior 

level input;

 Submitted hiring timeline report using new 70 percent target for hiring and 

notifi cation timeliness;

 Closed targeted competency gaps in leadership and human resources;

 Submitted Competency gap targets and staffi ng projections for DOT-specifi c Mission 

Critical Occupations with resource tables and competency profi le tables;

 Reported hiring process improvement strategy; 

 Submitted strategy for accomplishing the required annual employee survey; and,

 Provided update on Federal Human Capital Survey Action Plans.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

45

COMPETITIVE SOURCING INITIATIVE

GOAL: Improve the consistency for defi ning commercial and inherently governmental inventories 

across the Department. Identifi ed compatible activities, provided strategic direction for competitive 

sourcing and human capital initiatives, and developed and shared high-quality intellectual capital 

within the Department and other agencies.

FY 2007 STATUS: z YELLOW

FY 2007 PROGRESS: z YELLOW

HOW DOT IS MEETING PMA CHALLENGES: In FY 2007, DOT was rated “yellow” for 

competitive sourcing. DOT accomplishments in FY 2007 included the following:

 Completed 23 competitions involving about 2,700 full time equivalents;

 Estimated savings of about $95,000 per competed full-time equivalent;

 Garnered anticipated savings of over $2.2 billion (over a ten year period);

 Completed the largest single competition to date (FAA Flight Service Stations);

 Achieved improved operational performance through innovative work processes and 

establishment of quality standards;

 Implemented post-competition accountability and Most Effi cient Organization 

independent validation for fi ve completed competitions to verify actual savings and 

performance improvements;

 Initiated the Workforce Analysis Pilot Project to deliberately link competitive sourcing 

and human capital planning (as required by the President’s Management Agenda); 

and, 

 Shared lessons learned within the Department and with other Federal agencies.

DOT’s drop to yellow in status and progress was mainly due to limited competitions planned for 

fi scal years 2008-2009.

IMPROVED FINANCIAL MANAGEMENT INITIATIVE

GOAL: Develop fi nancial management systems capable of producing more timely and accurate 

information, and maintain a record of unqualifi ed opinions on our fi nancial statements.

FY 2007 STATUS: z RED

FY 2007 PROGRESS: z GREEN

HOW DOT IS MEETING PMA CHALLENGES: During FY 2007, DOT accomplished the following 

work, which has enhanced the timeliness, quality, effi ciency and eff ectiveness of our fi nancial 

reporting and accounting and fi nancial operations.
UNITED STATES DEPARTMENT OF TRANSPORTATION

46

 In December 2006, DOT rolled out a new department-wide initiative designed to 

help the Operating Administrations (OAs) recognize and reconcile longstanding data 

issues in their fi nancial systems. Th is initiative addresses fourteen areas of concern 

and defi nes corrective actions. Th e “Fab 14” raises OA awareness and accountability 

to correct inaccurate and incomplete data.

 In August 2007, the Enterprise Services Center rolled out a web-based site to enable 

DOT users to review and monitor our new “Fab 14” metrics on line. Th e site will also 

include all OMB Financial Performance Metrics.

 DOT successfully upgraded our Delphi fi nancial management system to Oracle 

Financials release 11.5.10 in May 2007. Delphi’s Financial Statement Solution 

continues to produce fi nancial statements overnight from the core accounting system.

 DOT is continuing short-term planning for further Delphi upgrades to Oracle 

database and technology and to servers later in 2007 and 2008. We have also 

initiated a major long-term strategic fi nancial management planning eff ort that will 

include future Delphi upgrades, including Oracle release 12.FSIO and the Common 

Government-wide Accounting Code (CGAC).

 We are re-engineering interfaces for additional feeder systems using the new Service 

Oriented Architecture (SOA). Th e benefi ts are more cost eff ective operation and 

maintenance of interfaces with better data quality and reduced reconciliation.

 More OAs are implementing Labor Distribution Reporting (LDR) in CASTLE, our 

web-based Time & Attendance and Labor Distribution Reporting system. Currently 

serving the FAA, FRA, FTA and FHWA, CASTLE is key to supporting DOT’s 

managerial cost accounting program. Additional OAs will implement LDR in 

CASTLE by early 2008.

 DOT has also made signifi cant progress in consolidating operational accounting 

services at the DOT’s Enterprise Services Center in Oklahoma City. Accounting 

services have already been migrated for all but two Operating Administrations plus

FAA’s Headquarters and nine regional accounting offi ces. Th is consolidation supports 

standardizing and streamlining business processes across the Department. Th e 

remaining phases will be completed in early FY 2008. 

E-GOVERNMENT INITIATIVE

GOAL: To better justify and track costs and performance of information technology projects, as well 

as participate in government-wide initiatives that automate and simplify how the public deals with 

the government and reduce redundancies and increase effi ciencies across the Federal government.

FY 2007 STATUS: z YELLOW

FY 2007 PROGRESS: z YELLOW
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

47

HOW DOT IS MEETING PMA CHALLENGES: During FY 2007, the Department’s eff orts in 

the E-Government initiative resulted in several important successes in that DOT met established 

requirements and milestones and made further improvements in enterprise architecture (EA), 

privacy, capital planning and security as follows: 

 Completed all OMB E-Government Implementation Plan milestones; 

 Achieved an EA Assessment Rating of Green from the Offi ce of Management and 

Budget’s Federal Enterprise Architecture Program Management Offi ce; 

 Established a Departmental segment architecture strategy and developed a Grants 

Segment Architecture; 

 Completed all OMB Enterprise Architecture (EA) milestones and continues to 

improve the eff ectiveness of the DOT EA program; 

 Remediated 37 of the 38 business cases that were on the OMB Management Watch 

List; 

 Completed system of record notices for 90 percent of applicable systems with 

personally identifi able information;

 Made signifi cant strides in the incorporation of encryption technology to further 

provide for the safeguarding of Personally Identifi able Information and other forms of 

sensitive information and data on removable storage and processing devices; and 

 Negotiated an enterprise licensing agreement with Microsoft that reduced the average 

costs for their desktop products by over 25 percent.

PERFORMANCE IMPROVEMENT INITIATIVE

GOAL: To better integrate budget and performance functions by integrating respective staff work; 

developing plans and budget with outcome goals, output targets, and resources requested in the 

context of past results; charging full budgetary costs of programs; and documenting program 

eff ectiveness. 

FY 2007 STATUS: z GREEN 

FY 2007 PROGRESS: z GREEN 

HOW DOT IS MEETING PMA CHALLENGES: In FY 2007, DOT achieved its goals in this area and 

maintained a green score by completing the following:

 Received the President’s Award for Management Excellence in Budget Performance 

Integration;

 Submitted a budget request to OMB that clearly articulated the performance impact 

of implementing a budget at the target level and that was supported by sound and 

thorough analysis and performance data; and,
UNITED STATES DEPARTMENT OF TRANSPORTATION

48

 Each modal administration provided marginal cost of performance information in 

their FY 2009 OMB budget submission in accordance with OST guidance.

ELIMINATING IMPROPER PAYMENTS INITIATIVE

GOAL: Develop fi nancial management systems capable of producing more timely and accurate 

information, and eliminating improper payments to DOT vendors/customers.

FY 2007 STATUS: z YELLOW

FY 2007 PROGRESS: z GREEN

HOW DOT IS MEETING PMA CHALLENGES: During FY 2007, DOT took signifi cant additional 

steps towards implementing the Improper Payments Information Act of 2002. DOT’s eff orts this year 

focused on four program areas in three of our largest Operating Administrations: FHWA Highway 

Planning and Construction Program, FTA Formula Grants, FTA Capital Investment Grants Program 

and FAA Airport Improvement Program. Eff orts included:

FHWA Planning and Construction Program:

 Completed nationwide testing of grantee payments; and, 

 Projected improper payments of $55 million out of total program payments of $33.3 

billion — an improper payment rate of 0.2%.

FTA Formula Grants: 

 Completed nationwide testing of grantee payments for grantees subject to statutorily 

prescribed Triennial Review program; and, 

 Projected improper payments of $4.3 million for grantees subject to the 2007 Triennial 

Review out of total program payments of $1.2 billion to these grantees — an improper 

payment rate of 0.3%.

FTA Capital Investment Grants Program:

 Developed and tested an improper payment testing model at a single grantee for use in 

nationwide testing; and, 

 Projected an improper payment rate and amount for this grantee.

FAA Airport Improvement Program:

 Completed nationwide testing of grantee payments; and, 

 Found no improper payments out of total program payments of $3.9 billion.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

49

REAL PROPERTY INITIATIVE

GOAL: Use sound real property management of real property resources for diverse transportation 

missions, maintaining the quality of real property assets managed, and disposing of assets that are no 

longer required. 

FY 2007 STATUS: z YELLOW

FY 2007 PROGRESS: z GREEN

HOW DOT IS MEETING PMA CHALLENGES: DOT continues to make strong progress under this 

initiative. Th e Real Estate Management System used by DOT is a single-point inventory, contains the 

required performance metrics, and is compatible with the government-wide real property database. 

To date, we have:

 Established Department-wide draft performance measure targets and goals;

 Established a three-year timeline for real property management to support capital 

improvements, acquisitions, and disposition actions; 

 Disposed of 1,602 real property assets, ranking the Department 4th among all Federal 

agencies; 

 Completed the Department’s fi rst-ever inventory of real property assets at the 

constructed asset level; and, 

 Developed a system framework for real property management to establish operating 

standards and guidelines for all Operating Administrations.
UNITED STATES DEPARTMENT OF TRANSPORTATION

50

OTHER MANAGEMENT INFORMATION,

INITIATIVES, AND ISSUES

MANAGERIAL COST ACCOUNTING (MCA)

Managerial cost accounting (MCA) identifi es, tracks, and analyzes the total costs attributable to a 

particular task, job, or program. Th e purpose of managerial cost accounting is to provide program 

managers with cost information required to accurately report program effi ciency and to develop 

a program’s future budget. DOT OAs are working aggressively to implement or enhance existing 

managerial cost accounting systems in order to provide their managers with cost information to 

make better-informed decisions.

DOT initiated MCA with the Federal Aviation Administration (FAA), which was directed to develop 

a cost system in order to establish both unit costs of services and as a means of sustaining defensible 

charges for reimbursable services. FAA has four lines of business and has implemented MCA across 

all four. Th rough an executive dashboard, it links costs to performance goals. Costs are tracked 

through three systems that interact: Delphi (DOT’s fi nancial and accounting system of record) FAA’s 

Cost Accounting System (a People Soft System implemented largely to track projects and tasks) and 

DOT’s Consolidated Automated System for Time and Labor Entry (CASTLE which is both a time 

and attendance and labor distribution reporting system). 

Th e Federal Highway Administration (FHWA), Federal Transit Administration (FTA) and Federal 

Railroad Administration (FRA) have each developed an internal system for taking labor distribution 

fi les from CASTLE and costs from Delphi for rolling up cost information. FTA and FHWA have 

utilized a third party, activity based costing system. FRA has utilized Budget Program Activity Codes 

to track costs related to projects and draws reports from Delphi.

Th e Maritime Administration (MARAD) and Pipeline and Hazardous Materials Safety 

Administration (PHMSA) have begun developing systems utilizing the Delphi Projects Module. 

One unique issue faced by MARAD is a substantial reimbursable eff ort with its Reserve Fleet. Being 

able to track reimbursable activities and connect them with the correct interagency agreement has 

not been possible to date except through bookkeeping adjustments. DOT has begun developing a 

strategy to rewrite its payroll interface for posting salary and benefi t costs to its accounting system, 

which will enhance both payroll posting and tracking interagency costs and payments.

As we gear up for a major system upgrade to Delphi and as we implement the OMB-mandated 

Common Government-wide Accounting Code structure, we expect to re-engineer many DOT 

business processes including standardized use of the accounting string. Th ese eff orts as well as 

the work we will be doing as part of the Financial Management Business Transformation Initiative 

will facilitate a standardized approach to MCA across DOT and enhanced integration with our 

performance measurement program.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

51

DOT’S FINANCIAL MANAGEMENT BUSINESS 

TRANSFORMATION INITIATIVE

Th e DOT fi nancial management community faces considerable challenges in the next fi ve to seven 

years. External mandates from the Offi ce of Management and Budget and the Department of 

Treasury, coupled with a signifi cant upgrade planned for the Department’s accounting system, are 

factors driving DOT to alter signifi cantly the way we conduct fi nancial management practices. We 

look at these external drivers as an opportunity to improve our way of conducting business. For 

example, diff erent Operating Administrations (OAs) use diff erent processes to conduct similar 

business. OAs use various reporting tools to communicate similar fi nancial information, and use 

the Department’s standard Accounting Code Structure (ACS) slightly diff erently to meet their 

program management needs. As a result, we are unable to take full advantage of the economies of 

scale available through the consolidated accounting operations at the Enterprise Services Center. 

Additionally, it is not always easy to roll up fi nancial program information Department-wide.

In order to meet the external challenges of the future while further improving our internal fi nancial 

management operations, the Offi ce of Financial Management is sponsoring a Department-wide 

Financial Management Business Transformation (FMBT) eff ort. Th e purpose of the FMBT is to 

improve information sharing, standardize and streamline business processes, and implement OMB’s 

Common Government Accounting Code structure upon receiving guidance from OMB. We are 

committed to managing our internal improvement eff orts in an organized and structured manner, 

allowing adequate time for planning and resource allocation and focusing on communication with 

our stakeholder community. Th e FMBT will be managed by a governance structure comprised of 

representatives from all stakeholder communities, and the work required to achieve this vision will be 

executed using standard project management principles. Our vision is to be the government leader 

in Financial Management utilizing quality people, processes and technology in delivering a single 

integrated solution to support DOT’s mission by incorporating streamlined business processes while 

ensuring fi nancial integrity.
UNITED STATES DEPARTMENT OF TRANSPORTATION

52

INSPECTOR GENERAL’S FY 2007

TOP MANAGEMENT CHALLENGES

Th e Department recognizes that Management Challenges are not issues that are easily solved. In 

many cases they require investments or upgrades to technology or substantial changes in longstanding procedures or program activities. To completely address a Management Challenge may take 

more than one fi scal year. Since the OIG may refi ne the scope of the management challenge based 

on information that may become available during the year; it can be diffi cult to provide a context 

showing how far along the Department is in resolving a particular challenge. To provide perspective 

on the Department’s progress, we have provided a self assessment showing the achievements toward 

resolving the challenge as currently defi ned. Th e result is displayed via the Progress Meter icon. 

DOT hopes that this approach will provide perspective toward gauging the Department’s progress in 

resolving a management challenge.

DEPARTMENT OF TRANSPORTATION

OFFICE OF INSPECTOR GENERAL APPROACH

Th e Offi ce of Inspector General (OIG) issues its annual report on DOT’s top management 

challenges to provide a forward-looking assessment for the coming fi scal year. Th e purpose of the 

report is to aid DOT’s agencies in focusing attention on and mapping work strategies for the most 

serious management and performance issues facing the Department. 

In selecting the challenges for each year’s list, the OIG continually focuses on the Department’s key 

strategic goals to improve transportation safety, capacity, and effi ciency. In addition to the OIG’s 

vigilant oversight of DOT programs, budgetary issues, and progress milestones, it also draws from 

several dynamic factors to identify key challenges. Th ese include new departmental initiatives, 

cooperative goals with other Federal departments, recent changes in the Nation’s transportation 

environment and industry, as well as global issues that could have implications for the United 

States’ traveling public. As such, the challenges included on the OIG’s list vary each year to refl ect 

the most relevant issues and provide the most useful and eff ective oversight to DOT agencies. 

As required by OMB Circular A-136, the OIG’s report briefl y assesses DOT’s progress in 

addressing the challenges identifi ed. To track management challenges identifi ed from year to year, 

the OIG provides an exhibit to the report that compares the current list of management challenges 

with the list published the previous fi scal year. In addition, the OIG may refi ne the scope of the 

management challenge from year to year based on program developments, external factors, or 

other information that becomes available. 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

53

1. Management Challenge: Defi ning, Developing, And Implementing Strategies 

To Improve Congested Conditions On The Nation’s Highways, Ports, Airways, 

And Borders.

- Leading Stakeholders

Th e current surface transportation policy 

and funding model has proven incapable of 

adequately reducing highway congestion. While 

highway spending at all levels of government has 

increased 100 percent since 1980, the hours of 

delay during peak travel periods has increased 

almost 200 percent over the same time period.

Th e Department currently has little inherent 

ability to counteract our nation’s mushrooming urban congestion problem. Th e massive explosion of 

earmarks and special interest programs (over forty separate highway programs in SAFETEA-LU, the 

governing surface transportation legislation) and stovepiped highway and transit programs greatly 

limits the Department’s discretion to invest in performance-based congestion reduction strategies.

 In an eff ort to change the existing paradigm, the Secretary of Transportation introduced a new 

Congestion Initiative designed to illustrate to stakeholders that there are viable alternatives to the 

current model that focus less on process and more on results. As a result, under the 2007 Urban 

Partnership competition, 29 metropolitan areas submitted comprehensive congestion reduction plans 

that included transit, tolling, technology and telework elements. Five of these cities—New York, San 

Francisco, Seattle, Miami and Minneapolis—were awarded in excess of $800 million in highway, 

transit and ITS grants to expeditiously implement their plans. New York City’s submission includes 

the nation’s fi rst substantive city-wide congestion pricing proposal.

Th e greatest lesson learned to date is that properly focused discretionary Federal resources can 

provide extremely powerful incentives for State and local leaders to confront congestion challenges in 

a diff erent way. In the aft ermath of the 2007 Urban Partnership announcements, other major cities 

such as Los Angeles and Washington have demonstrated a greater interest in implementing pricing 

strategies. To the extent it receives future additional discretionary resources; the Department intends 

to maintain its focus on a small number of large-scale congestion reducing demonstration projects. 

Th e Department’s senior leadership continues to meet regularly with opinion leaders and State 

and local elected offi cials to explain our policies. Th e Department has sponsored two major 

outreach sessions with State legislators that focused on innovative fi nancing for new operational 

and technology opportunities. At the staff level, the Department has hosted a series of technical 

workshops around the country for State and local offi cials interested in congestion pricing and the 

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proper utilization of cost-benefi t analysis in the project selection process. As a result, a national 

consensus is incrementally building towards innovative fi nancing and better prioritization of 

spending and moving away from the status quo approach to surface transportation funding.

- Overcoming Organizational Structures that Inhibit Intermodal Tradeoff s

Th e close collaboration of the various modes 

under the Urban Partnership Program is a 

very positive early signal of how Operating 

Administrations can break down stovepipes 

in the administration of diverse discretionary 

programs. Th at collaboration also spilled over 

to the State and local level where highway 

authorities and transit authorities were forced to 

coordinate — at an unprecedented level in some 

cases — in their applications for Federal funding. Th e model developed to facilitate the Department’s 

Congestion Initiative should be used to inform programmatic changes in the next reauthorization 

legislation. 

- Funding Future Infrastructure Needs Will be a Challenge

With respect to funding future infrastructure 

needs, the country is at a clear crossroads. At 

the same time that the constraints on Federal 

resources have increased, opportunities to 

access alternative fi nancing have never been 

greater. A signifi cant volume of private capital 

is now available specifi cally to fund American 

infrastructure, and technology has advanced 

to the point that charging systems that do not 

rely on indirect taxes are administratively feasible and available for deployment. Th e Department 

will continue to promote the concept of private investment in infrastructure and endorse the direct 

pricing of roads in order to maximize available transportation funds. 

Th e aviation system’s fi nancial structure is similarly challenged, and the Administration submitted a 

comprehensive reform proposal to Congress in Spring 2007. Th e proposal would shift dependence 

away from ticket taxes and move toward a true user fee system in which the charges levied on users 

approximate the true costs of providing various air traffi c control services. Th is proposal would 

supply greater incentives to improve the effi cient utilization of the existing system and provide a 

sustainable funding mechanism to transition to the next generation air traffi c control system. It 

is clear that without major fi nancial reforms, the US aviation system will not perform as well as 

international counterparts that have embraced such reforms. 

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- Proposals for Market-Based Solutions to Better Utilize Existing Capacity Raise Important 

Policy Issues

Th e Department’s two highest policy priorities 

for 2007—the FAA Reauthorization proposal and 

the Congestion Initiative’s Urban Partnership 

program—are both based on the concept of value 

pricing. Promotion of these policy priorities 

through public and stakeholder outreach has 

focused on the inherent benefi ts of direct user 

fees and the intrinsic liabilities associated with 

the current, indirect funding mechanisms.

In February 2007, the Administration submitted to Congress the Next Generation Air Transportation 

System Financing Reform Act of 2007 and the Administration is currently working with Congress to 

ensure timely passage of legislation to reauthorize FAA programs and revenue sources. An important 

part of FAA’s reauthorization proposal includes a new fi nancing system. FAA’s reauthorization 

legislation contains proposals designed to reduce congestion, accelerate the transition to the Next 

Generation Air Transportation System (NextGen), and otherwise improve the effi ciency and 

oversight of the system. Under the proposal, equity and effi ciency will be enhanced.

Th is new system will tie payments that National Air Space (NAS) users make for air traffi c control 

services more closely to the costs they impose on the NAS. By tying costs to the benefi ts and services, 

there will be incentives for more effi cient use of the air traffi c control system. Th e Administration’s 

proposal also includes language to permit the use of market-based mechanisms at New York’s 

LaGuardia Airport, as well as other congested airports when certain conditions are met. 

One illustration of FAA using market-based solutions to better use capacity is at LaGuardia 

Airport. In August 2006, FAA issued a Notice of Proposed Rulemaking (NPRM), subject to 

Congressional approval, that anticipates the use of market-based mechanisms at LaGuardia in the 

future. Additionally, under the reauthorization proposal, if the Secretary of Transportation and FAA 

Administrator determine that market-based mechanisms, such as auctions or congestion pricing, 

are appropriate to promote the effi cient movement of traffi c at LaGuardia, then the Port Authority 

of New York and New Jersey may implement market measures at the airport. If the Port Authority 

does not implement such actions within one year of the Secretary’s determination, the Secretary may 

implement market measures at LaGuardia. 

To address traffi c congestion in cities willing to pursue comprehensive, bold, and innovative 

congestion pricing strategies, the FHWA assisted in formulating Urban Partnerships. Th e Agency 

embarked on implementing a comprehensive agenda to capture lessons learned from the Urban 

Partners and facilitate peer exchange in order to ensure the eventual widespread deployment 

of congestion pricing applications. For example, the FHWA initiated an eff ort to identify High 

Occupancy Vehicle (HOV) facilities that are appropriate for conversion to High Occupancy Toll 

(HOT) lanes, of which there are currently fi ve in operation nationwide. HOT lanes combine HOV 

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and pricing strategies by allowing single occupancy vehicles to gain access to HOV lanes by paying 

a toll. Th e lanes are “managed” through pricing to maintain free fl ow conditions even during the 

height of rush hours. 

As these new pricing strategies are implemented, the Department recognizes the need to educate 

the public on the rationale and benefi ts of such strategies. FAA will continue to lead a public 

outreach campaign to educate stakeholders on pricing strategies, such as congestion pricing and 

auctions. In support of FAA’s eff orts, the National Center for Excellence for Aviations Operations 

Research organized a public workshop in June 2007 to discuss the next steps in the consideration 

of the use of market-based mechanisms at LaGuardia airport. FHWA developed a program for 

educating transportation professionals, elected offi cials, and the public on the broad array of issues 

associated with road pricing. Th e program includes pricing workshops that were given at locations 

around the country; webinars on select topics; published materials ranging from articles to a Primer 

on Congestion Pricing; assistance to jurisdictions in obtaining tolling authority; research activities 

that address the costs and benefi ts, as well as opportunities for mitigating the costs of congestion 

pricing; and making available a cadre of in-house experts on subjects ranging from the economics of 

congestion pricing to the technology required for congestion pricing.

Th e Department is also committed to monitoring the eff ects of new regulations, as well as their 

potential impact on market-based pricing strategies on constituents. For example, the NPRM for 

LaGuardia encourages the continuation of air service to small communities and proposes a fi xed 

number of operating authorizations for service to smaller airports. FAA envisions these small 

community allocations would remain in place, even if FAA were granted authority to conduct a 

market-based mechanism at LaGuardia.

- Keeping Short- and Long-Term Aviation Capacity Enhancing Initiatives On Schedule to 

Relieve Congestion and Delays

Th e Next Generation Air Transportation System 

(NextGen) is a wide ranging, multi-agency 

initiative to transform the National Airspace 

System (NAS) to meet future demands and 

avoid gridlock in the sky and in the airports. 

Th e Operational Evolution Partnership (OEP), 

OEP Version 1.0, is FAA’s plan for implementing 

NextGen.

Th e FAA published the new OEP Version 1.0 in June 2007. It is an expansion of the original OEP 

established in 2001. Th e forecasted and actual benefi ts of the plan’s activities are measured annually, 

and a team chaired by FAA’s Deputy Administrator, ensure each program is implemented on 

schedule. Th rough the OEP, FAA along with its aviation partners, committed to increasing the 

capacity of the NAS by 30 percent. Analysis shows that the OEP will achieve its original goal by 2013. 

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As FAA’s NextGen implementation plan, the OEP will also focus on producing more than 60 new 

operational capabilities between today and 2025. Th ese new capabilities will transform our current 

air transportation system from ground-based surveillance and navigation to new and more dynamic 

satellite-based systems. Technologies and activities that support this transformation are currently 

part of the FAA’s investment portfolio and represent a step beyond our legacy modernization 

programs. Th ese new capabilities and the highly interdependent technologies that support them will 

change the way the system operates, reduce congestion, and improve the passenger experience.

Th e 35 airports included in the OEP account for about 75 percent of all passenger enplanements. 

Much of the current delay to air traffi c can be traced to inadequate throughput—measured as arrival 

and departure rates—at these airports. Th e construction of new airfi eld infrastructure such as new 

runways and taxiways and major runway extensions are currently the most eff ective method of 

increasing throughput. Since FY 2000, 13 new runways have opened at the 35 OEP airports. Th is 

translates into a capacity to accommodate 1.6 million more operations every year. 

Currently, eight OEP airports have ten airfi eld projects under construction—three new runways, 

two airfi eld reconfi gurations, one runway extension, one end-around taxiways, and one center fi eld 

taxiway. Th ese 10 projects are core OEP airports projects that will be commissioned through 2010. 

Th e two new taxiways will provide a means to improve safety and decrease delays at busy airports. 

When commissioned, these ten projects will have the potential to accommodate about 400,000 more 

annual operations and will improve the safety and effi ciency of eight airports.

2. Management Challenge: FAA Reauthorization – Reaching Consensus On A 

Financing Mechanism To Fund FAA And Establishing Funding Requirements 

- Deciding on a Financing Mechanism that Promotes a More Effi cient Use of the Air Traffi c 

Control System and is Considered Equitable by All Users

In February 2007, the Administration 

submitted to Congress the Next Generation Air 

Transportation System Financing Reform Act 

of 2007. Th e Administration is working with 

Congress to ensure timely passage of legislation 

to reauthorize FAA programs and revenue 

sources. 

In developing the proposal, the Administration 

conducted extensive reviews of FAA costs and activities, including analyses of cost drivers in order 

to allocate costs to user groups appropriately. Th is enabled the Administration to propose a set of 

user fees for commercial operators and fuel taxes for general aviation that more accurately refl ect 

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their respective use of the aviation system. Th e Administration’s proposal refl ects expected spending 

requirements in the outyears and ties the rates of taxes and fees to those forecasts, based on cost 

allocation. 

Th e combination of funding sources in the Administration’s reauthorization proposal will help 

improve the stability, fairness, and rationality of FAA funding without imposing a “one size fi ts all” 

solution. Both the user fees that commercial users would pay and the fuel taxes for general aviation 

are based on each user group’s share of the air traffi c control costs. 

Th e proposal provides incentives to use resources effi ciently, reduces cross-subsidization among user 

groups, and can adjust to account for the investment costs of the Next Generation Air Transportation 

System (NextGen) in the near-term and the effi ciencies that NextGen will generate in the long-term. 

Th e reauthorization proposal achieves these benefi ts through a hybrid fi nancing structure that is costbased, yet allows each user group to pay through its preferred funding mechanism.

- Determining the Next Generation Air Transportation System’s (NextGen) Funding 

Requirements, Quantifying Expected Benefi ts, and Developing a Roadmap for Industry to 

Follow

Th e current national airspace system (NAS) is 

reaching its limits and is increasingly unable to 

eff ectively respond to the ever-growing demand 

for increased capacity. NextGen is our Nation’s 

response to the challenges faced by the aviation 

community. An undertaking as substantial 

and long-term as NextGen requires a highly 

deliberate and integrated planning process that, 

in the near-term, results in products that inform 

the architectural design, policy, and investment decision-making required to launch and implement 

NextGen.

Th e Joint Planning and Development Offi ce (JPDO) made progress in 2007 to develop and mature 

foundational products with cooperation and collaboration across government. Th e JPDO delivered 

the NextGen Concept of Operations (ConOps), Version 2.0 and the NextGen Enterprise Architecture 

Version 1.0, in June 2007. Together, both products detail the operational and technical performance 

requirements critical to the planning and implementation of NextGen. A third complementary 

product, the NextGen Integrated Work Plan (IWP) was released in July 2007. Th e IWP lays out 

the initial plan for transitioning from the current state to NextGen, considering policy, research 

and development, and investment needs and illustrates when NextGen operational improvements 

will need to be achieved to deliver critical NextGen capabilities. Th e IWP’s comprehensive nature 

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contains implications for both government and industry. Accordingly, stakeholders have been 

involved in its review and have engaged with the JPDO from both planning and implementation 

perspectives.

One of the JPDO’s primary responsibilities is to inform policy makers on the resources necessary to 

realize NextGen. Th ese resources include research and development (R&D) and capital investments, 

as well as the funding to support and sustain NextGen. To that eff ect, the NextGen R&D Plan

(FY 2009-13) was released at the end of FY 2007. It highlights the NextGen R&D requirements and 

associated partner agency and stakeholder responsibilities for executing the R&D activities specifi ed 

in the Plan. Research and development activities are important for mid- and long-term NextGen 

operational capabilities.

Th e JPDO also developed a NextGen Exhibit 300 that focuses on the portfolio of investments that are 

critical to initiating NextGen in the near-term so that cross-cutting capabilities and benefi ts can be 

realized in the mid-term. Th e NextGen ConOps and Enterprise Architecture set the context for the 

NextGen requirements and inform investment analysis and decision-making. 

Th e JPDO has started to understand and project the costs and benefi ts of NextGen. An estimated 

$4.6 billion will be required to fund NextGen research, development, and implementation activities 

through 2012. Current NextGen spending estimates for the mid- and long-term range from $8 - $10 

billion through 2017, and $15 – $22 billion through 2025. Cost estimates for equipping aircraft with 

NextGen technologies range between $14 – $20 billion through 2025. Estimates vary depending on 

the bundling of the technologies and the pace at which the current aircraft fl eet is replaced. Next 

year, the JPDO plans on developing life-cycle costs for the required infrastructure beyond the initial 

fi ve year period.

- Continuing Eff orts to Address the Expected Surge in Air Traffi c Controller Attrition

Th e FAA developed the 2006 Controller 

Workforce Plan to guide its activities as the 

agency hires an estimated 15,000 Air Traffi c 

Controllers through the year 2016. Aft er 

reviewing the 2006 plan, the OIG expressed 

concern that the plan did not account for staffi ng 

needs by location or the costs associated with 

training new controllers. 

To address this challenge, FAA updated its comprehensive workforce plan in March 2007. Th e 2007 

Controller Workforce Plan now provides staffi ng ranges for each of FAA’s 314 facilities. Th e ranges 

take into account not just the staffi ng standards generated from industrial engineering techniques, 

but also historical productivity, peer performance, and service and fi eld unit input. Current staffi ng 

levels are dynamic and can be impacted by airport construction, controller training, and other 

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issues. Future staffi ng levels are a function of traffi c forecasts, hours of operation, attrition forecasts, 

and other variables. Th e FAA continues to pay close attention to staffi ng at each facility and adjusts 

staffi ng levels accordingly.

Th e OIG also expressed concern that the 2006 Controller Workforce Plan did not identify the annual 

developmental training costs associated with the hiring of new controllers. Th e 2007 Controller 

Workforce Plan includes an estimate for total salary, premium pay, and benefi t costs annually for all 

developmental controllers. Since developmental controllers in training perform actual controller 

work as they become certifi ed, these salaries are included in the personnel costs of FAA’s budget 

request.

- Using the Cost Accounting System to Control Costs and Improve Operations

Th e FAA’s Cost Accounting System (CAS) is an 

accounting system designed to report the total 

cost of delivering FAA products and services. 

CAS calculates all FAA costs by projects and 

tasks. In 2007 FAA made a concerted eff ort and 

signifi cant progress in improving the reliability 

of its cost data and in allocating those costs to 

NAS users. 

FAA requires employees, managers, and supervisors ensure accurate, consistent and complete entry 

of labor distribution reporting data in accordance with the Labor Distribution Reporting (LDR) 

Policy, FAA Order 2700.37. Per this order, FAA managers and supervisors are primarily responsible 

for ensuring the compliance and integrity of LDR data entry. In addition, LDR quality assurance 

resources and timekeepers help by providing added focus, guidance and support for ensuring data 

integrity. Th e Order states, in part, “Th e FAA will collect paid hours worked by each employee, 

manager, and executive against identifi ed projects and activities. No manager may excuse employees 

from compliance with this LDR policy.” 

In FY 2007, FAA targeted 92.5 percent of labor hours to be charged to valid projects and activities. 

Corporately, FAA achieved a fi nal rate of 95 percent. Further, FAA’s Air Traffi c Organization made 

a signifi cant eff ort to record its labor and achieved a rate of 97 percent. Th is labor distribution 

compliance rate is routinely reported on a monthly basis in an executive scorecard to the 

Administrator. Also, as part of the monthly executive scorecard, FAA introduced a new reporting 

requirement where each line of business must report back to the Chief Financial Offi cer within 90 

days on how cost accounting data are being used to manage costs. In FY 2008, the corporate goal will 

be 95 percent and FAA is well-positioned to meet this goal. 

To ensure cost data are current, FAA now establishes new project codes when there is a management 

need to track the cost of a project or activity. Th is is an ongoing activity to better understand the cost 

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of FAA operations. Customers are routinely consulted to incorporate system change requests into 

future CAS releases and improve its managerial cost reporting. 

Improving the accuracy and timeliness of capitalization costs was a major eff ort in 2007. Th is has 

a direct impact on the reliability and timely recording of operating cost data because all agency 

expenditures are either classifi ed as operating or capital. Th e FAA conducted an intensive review of 

its Construction in Progress (CIP) balance and introduced policy/procedural changes, along with 

training, to ensure the agency keeps capitalization eff orts current. In addition, FAA instituted several 

metrics to keep management informed on the status of its capitalization workload. Th e agency 

continues to implement fi nancial metrics to ensure improved overall fi nancial performance. 

3. Management Challenge: Responding To Natural Disasters And

Emergencies – Assisting Citizens And Facilitating Transportation 

Infrastructure Reconstruction 

 - Clarifying Roles and Responsibilities Given Expanded Mission Requirements

Under the National Response Plan, DOT is the 

lead agency for coordinating transportation 

support (Emergency Support Function-1) 

following a disaster. DOT also serves as a 

support agency for 11 other critical functions. 

For example, DOT works with state and local 

transportation departments and industry 

partners aft er disasters to assess transportation 

infrastructure damage and analyze associated 

impacts on transportation operations, nationally and regionally, and to report changes as they occur. 

DOT also has statutory roles related to preparedness for, response to, and recovery from emergencies, 

such as through the Federal Highway Administration’s Emergency Relief program. 

DOT has worked very closely with Department of Homeland Security (DHS) to clarify respective 

roles and responsibilities. Th e clarifi cations will be included in revisions to the National Response 

Plan, the Federal Emergency Management Agency (FEMA) Hurricane Contingency Plan, and other 

operating practices and procedures.

Some of the clarifi cation has been the result of the reassignment of responsibilities related to 

disasters and other emergencies. DOT has taken a more active role working with State and local 

transportation offi cials in planning for disasters. We are collaboratively assessing transportation 

infrastructures and systems for vulnerabilities and identifying critical elements. DOT is also working 

with State and local offi cials in identifying response options to local transportation failures. Th is 

includes developing alternatives in response to situations such as the bridge collapses in Oakland, 

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California and Minneapolis, Minnesota, and in planning for alternatives in response to other 

potential disruptions to the transportation system such as hurricanes, earthquakes, and terrorist 

attacks.

While we have taken on a more signifi cant pre-disaster and post-disaster planning role, the 

role of procuring and managing transport services is being transferred from DOT to FEMA 

via a Memorandum of Understanding (MOU). DHS views the acquisition and management of 

transport services as key to FEMA’s Logistics Management capability and is integrating it into its 

overall Logistics function. Th e transition between the two Departments is taking place in two 

phases: transportation services for evacuation of the general population transitioned June 1, 2007; 

transportation services for responders, equipment, and goods transfer eff ective January 1, 2008. 

DOT is assisting FEMA in creating this new functionality through providing materials, training, and 

advice. Th e MOU contains language that requires DOT and DHS to work to actively and rapidly 

communicate the role transition to their own fi eld offi ces and to stakeholders nationwide. DOT has 

already assisted DHS by briefi ng DOT fi eld personnel in detail, and by briefi ng key leaders and staff 

of FEMA’s fi eld offi ces. While the role transition will reduce the number of locations that DOT is 

likely to be tasked to provide staffi ng, DOT has continued to develop, through training, exercises, 

and practical experience a cadre of response personnel suffi cient to carry out the Department’s 

requirements following any disaster. Th e changed role should also result in more clearly defi ned 

missions and chains of command, and lines of communication for eff ective intra- and inter-agency 

coordination.

- Ensuring Continued Vigilance in Protecting Taxpayer Funds spent for Relief and Recovery 

Eff orts

Since the 2005 Gulf Coast hurricanes, the 

Department continues to be proactive in 

ensuring that funding for future recovery eff orts 

are spent wisely and in accordance with the 

law. Two years aft er the hurricanes struck the 

Gulf Coast, the Department continues to have 

bi-monthly meetings with the Chief Financial 

Offi cers of each Operating Administration to 

discuss procurement and fi nancial management

procedures related to emergency response. 

DOT has also worked to comply with every recommendation made by the OIG and by the GAO that 

relates to disaster response/recovery fi scal and procurement matters managed by DOT. One of the 

most visible of these has been acquisition of funding from FEMA for a closeout audit by the Defense 

Contract Audit Agency of the $800 million Landstar Express America emergency transportation 

services contract administered by Federal Aviation Administration.

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4. Management Challenge: Strengthening Eff orts To Save Lives By Improving 

Surface Safety Programs

- Promoting Improved Performance Measures and Enhanced State Accountability to Maximize 

Eff orts to Reduce Fatalities Caused by Impaired Driving

Analysis of NHTSA’s eff orts to counter alcoholimpaired driving found that NHTSA must 

ensure that States establish and report better 

performance measures to assess implementation 

of key strategies for eff ectively using funding to 

counter impaired driving. State performance 

plans generally contain measures on activities, 

such as the number of sobriety checkpoints 

conducted, or the overall performance goal of 

reducing the alcohol-impaired fatality rate. However, the plans usually do not address performance 

of key strategies, such as sustained enforcement of laws, eff ective prosecution, and full application 

of available sanctions. Better information is needed on the degree to which States are implementing 

these key strategies. For example, NHTSA communicated to the States one possible way to quantify 

sustained enforcement, but none of the States included this measure in their annual plans or 

performance reports to NHTSA.

In continuing to combat impaired driving, NHTSA made $125 million available in FY 2007 to the 

50 States, the District of Columbia and Puerto Rico for alcohol-impaired driving countermeasure 

laws or programs, such as administrative license revocation laws and graduated licensing programs, 

or to meet certain performance criteria based on their alcohol-related fatality rates. Within this 

program, the ten States with the highest impaired driving fatality rates received extra funding. 

NHTSA worked closely with these ten States to facilitate implementation of eff ective programs, 

including periodic and sustained high-visibility enforcement eff orts and media campaigns. NHTSA 

implemented the new national advertising campaign delivering the message “Drunk Driving: Over 

the Limit: Under Arrest.” As part of this campaign, States conduct impaired driving enforcement 

crackdowns during the Labor Day and December holiday seasons. In FY 2007, NHTSA also further 

enhanced its impaired driving program, with continued emphasis on assisting high-risk populations 

(e.g., underage drinkers, 21 to 34 year-olds, individuals with high blood alcohol levels and repeat 

off enders).

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- Building on Successful Eff orts to Better Enforce Motor Carrier Safety Regulations

FMCSA recognizes that improvement needs 

to be made concerning imposing maximum 

fi nes on motor carriers that chronically violate 

serious safety regulations. FMCSA has worked 

with OIG and the Government Accountability 

Offi ce concerning recommendations made 

during FY 2007 emphasizing the requirements 

of Section 222 of the Motor Carrier Safety 

Improvement Act of 1999. FMCSA will publish 

a proposed rulemaking and internal policies in FY 2008 updating these procedures for handling 

repeated and patterned violators.

Fundamental ground work is being laid to correct problems associated with the data quality of 

FMCSA’s Motor Carrier Management Information System census fi le and the Agency is considering 

a number of initiatives to encourage the motor carriers to update their registration data. Each census 

record contains the following information:

 Census Information: Entity Identifying Data - name, address, etc; 

 Business/ Operation Data: Operation Classifi cation and type of business; 

 Cargo Classifi cation: Types of cargo and hazardous materials carried; 

 Equipment and Driver Data: Number of trucks owned, term-leased or trip-leased, 

number of drivers; 

 Carrier Review Data: Latest review date, accident rate, safety rating.

Specifi cally, an inventory of data quality issues related to the census fi le has been identifi ed. A 

working group of business and technical experts has been assembled to address data quality problems 

and will provide recommendations to improve the census fi le and its quality. Some preliminary 

fi ndings suggest that recommendations may include: changes to the existing registration processes, 

the development of improved instructions and training materials to carriers, an outreach program 

to carriers on the importance of updating and ramifi cations of not updating their census data, the 

redesign of the technical data collection and management systems, and modifi cation to Federal 

regulations and enforcement policies.

Th ere has been a signifi cant level of eff ort in the form of training and technical assistance provided 

to States to improve the quality of crash data reported by the State to FMCSA. Specifi cally, State 

police crash reports in 32 States have been re-evaluated and recommendations have been made to the 

States to improve these forms with respect to data required by FMCSA. Training for the collection of 

commercial motor vehicle crash data has been conducted in 10 States. Th is training has been tailored 

to accommodate State specifi c needs such as the inclusion of instructions on how to collect the 

data in the States electronic data collection system. Training materials developed for the electronic 

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data collection disclosed weaknesses in the electronic capture systems and FMCSA has made 

recommendations on how to improve the electronic system to allow for more complete and accurate 

data collection as well. Specialized train-the-trainer materials have been developed and incorporated 

into State training academies. In California alone over 600 offi cers have been trained through the 

FMCSA-developed train-the-trainer program.

- Ensuring the Integrity and Future Modernization of the Commercial Driver’s License 

Program

FMCSA pursued several approaches to prevent 

fraud in State Commercial Driver’s License 

(CDL) programs. During FY 2007, the Agency 

completed comprehensive compliance reviews 

of 15 State CDL programs. Th ese reviews 

are conducted to ensure that States have the 

proper statutes and administrative procedures 

to manage their CDL programs and that State 

computer systems and licensing procedures are 

being implemented in compliance with the Federal requirements. Findings and recommendations 

from the compliance reviews have been provided to the States so they can make the necessary 

improvements to driver licensing testing and issuance procedures in order to reduce their 

susceptibility to fraud.

FMCSA has completed a demonstration test of a soft ware application intended for detecting and 

deterring fraud perpetrated by third-party and State motor vehicle administration examiners. 

Th e testing of prototype soft ware, called the Commercial Drivers CDL Skills Test Information 

Management System, was completed in partnership with the American Association of Motor Vehicle 

Administrators (AAMVA), and the States of Alaska, Arizona, New Mexico, and South Dakota.

FMCSA awarded $22.7 million in grants to States in FY 2007 to support improvements in State 

CDL programs and address defi ciencies identifi ed in compliance reviews and Inspector General and 

Government Accountability Offi ce audits. Th ese grants also went to improving the accuracy, speed 

and completeness of driver history information exchanged among the various components of the 

system – including law enforcement, prosecutors, the courts, employers and State driver licensing 

agencies – both within the States and between States.

FMCSA has also awarded a Commercial Drivers License Information System (CDLIS) 

Modernization Grant to the AAMVA for $7 million to facilitate the modernization of CDLIS to 

ensure that it: 1) complies with Federal information technology security standards; 2) provides for 

electronic exchange of all data including posting convictions; 3) contains self-auditing features to 

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ensure data quality; and 4) integrates the CDL and medical certifi cate. Th e CDLIS modernization 

grant supports improvements to the CDLIS central facility and assists the States in upgrading their 

CDL computer systems to be compatible with the new central site.

FMCSA is in the process of completing eff orts related to the SAFETEA-LU mandated CDL task force 

consisting of State motor vehicle administrators, and representatives from the motor carrier industry, 

labor organizations, judicial system and safety advocacy organizations. Th e task force met four times 

in FY 2007 and discussed issues and problems aff ecting their respective constituencies. Th e task force 

members agreed that the existing CDL program is a highly eff ective highway safety program that 

needs incremental improvements rather than major modifi cations or restructuring. Th e task force 

will issue a report to Congress in early FY 2008.

- Enhancing Railroad Safety Th rough Improved Oversight of Grade-Crossing Reporting and 

Better Identifi cation of Trends.

As reported previously to the Offi ce of Inspector 

General (OIG), FRA has routinely validated the 

completeness and accuracy of its grade crossing 

collision database against the National Response 

Center (NRC) data since the late 1990s. Between 

2004 and 2006, our monthly NRC audit process 

identifi ed a single instance where a crossing 

collision was reported to the NRC but not to the 

FRA. Th is audit process compares the NRC rail 

data against approximately 3,000 FRA crossing collision reports. Th e off ending railroad attributed 

the oversight to an administrative error and submitted a late report aft er they were notifi ed by FRA. 

Th e matter was also referred to the appropriate FRA region for enforcement. 

FRA established a reconciliation process to ensure that fatal grade crossing collisions are promptly 

reported to the NRC. Th is “reverse” audit process was instituted in 2004, and since that time, the 

number of initial discrepancies (potential failures to provide telephonic notifi cation to the NRC) 

has reduced drastically from 61 cases in 2004 to 16 in 2006. Th is is a clear indication that the 

reconciliation process has had a positive impact on railroads’ compliance with applicable regulations.

FRA has completed the comparison of information on grade crossing collisions provided by the 

railroads to the information provided by local law enforcement and State regulatory agencies. Th e 

report is in the fi nal stages of review within FRA and it is expected that the report will be released 

before the end of 2007.

Although FRA is still completing the report of that pilot study, the following tentative conclusions 

have been reached:

 For the great majority of police reports, matching forms 6180.57 were fi led;

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 Th ere appears to be no pattern of discrepancies evident from the reports (e.g., no 

indication that railroads have misrepresented the events in question); and,

 In general, the 6180.57 forms provided more useful detail, although in some cases, 

police report narratives provide additional insight on motorist behavior.

To facilitate the targeting of resources, in October 2005, FRA began to phase in the implementation 

of its National Inspection Plan (NIP). Th e Plan is intended to make better use of data and direct 

safety inspectors to high-risk areas. FRA implemented the NIP for three inspection disciplines 

(Operating Practices, Track, and Motive Power and Equipment) at the beginning of FY 2006. Full 

implementation was achieved in March 2006, when two more disciplines (Hazmat and Signal and 

Train Control) were added to the plan.

Th e NIP complements the aggressive and ambitious National Rail Safety Action Plan (NRSAP), 

originally introduced in 2005. Th e NRSAP involves fi ve strategic initiatives, including the 

improvement of hazmat safety and emergency response capability, and the reduction of human factor 

accidents—which are still the leading cause of train accidents, accounting for 36 percent of the total 

in 2006. 

5. Management Challenge: Aviation Safety – Performing Oversight That 

Eff ectively Utilizes Inspection Resources And Maintaining Aviation System 

Safety 

- Advancing Risk Based Oversight Systems

Th e FAA continues to improve its risk-based 

oversight system. A fully usable manual risk 

assessment/risk-based oversight system for 

repair stations was implemented in September 

2005. Th is oversight system, which was 

automated in FY 2006, provides for continuous 

assessment and prioritization of each repair 

station and non-certifi cated repair facility. 

In October 2006, the bulletin “Air Carriers 

Outsource Maintenance Provider Oversight Responsibilities” was issued providing guidance to 

principal inspectors assigned to 14 CFR Parts 121 and 135 air carriers who outsource some or all of 

their maintenance to other persons including non-certifi cated repair facilities. Th ese instructions 

were for additional oversight of each air carrier’s outsourced maintenance arrangements and were 

issued in conjunction with a new guidance Order 8300.10, Airworthiness Inspector’s Handbook.

Th e FAA is on schedule to have all of the current 120 air carriers, regulated by 14 CFR Part 121, 

transitioned to the Air Transportation Oversight System (ATOS) by the end of 2007. ATOS improves 

the Certifi cation and Surveillance processes for air carriers and it assesses the safety of air carrier 

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operating systems using system safety principles, safety attributes, risk management, and structured 

system engineering practices.

ATOS has been redesigned to provide the fl exibility necessary to manage the multitude of tasks 

necessary to evaluate the operations of small and large air carriers and their diverse operating 

environments. Th e redesign allows inspectors to identify risks in each air carrier’s operation and, 

on that basis, target resources to stay abreast of the rapid changes occurring in the industry. Th e 

new process and soft ware has been tested at three key sites – United Airlines, Colgan Air, and 

Aerodynamics – and is now being adopted throughout the system. Th e FAA offi ces are also being 

staff ed and reconfi gured to effi ciently use inspector resources in conjunction with these conversions. 

All ATOS users will receive training on the new process and soft ware.

In April 2007, Notice 8000.362 became eff ective, requiring principal inspectors to evaluate the air 

carrier’s outsourced maintenance programs to ensure work performed by certifi cated and noncertifi cated repair facilities is accomplished within the scope of the contract and in compliance 

with the air carrier’s maintenance instruction for continued airworthiness. Th e notice also requires 

evaluation of the air carrier’s oversight, authorization and training procedures for non-certifi cate 

repair facilities. 

Th e FAA is currently revising Operations Specifi cation D-91, requiring air carriers to list all 

certifi cated and non-certifi cated repair facilities performing outsourced maintenance and will publish 

the fi nal rule by the mandated date of August 16, 2008. Redesigning ATOS, implementing a riskbased oversight system, and publishing additional guidance in 2006 and 2007 allow for eff ective 

oversight without limiting the work done at non-certifi cated repair facilities.

- Maintaining a Suffi cient Inspector Workforce

Th e FAA is developing short and long-term 

strategies to address safety workforce staffi ng. In 

May 2007, FAA’s Aviation Safety Organization 

(AVS) provided to Congress a 10-year Aviation 

Safety Workforce Plan. Th is plan ensures an 

adequate safety staff is maintained to address 

oversight needs and addresses inspector 

attrition and anticipated changes in the aviation 

industry. Th e workforce plans also address the 

competencies and skills required for staying abreast of new technologies and to successfully perform 

in a Safety Management System (SMS) work environment.

Th e FAA closely monitors retirements and takes steps to hire the next generation of safety inspectors. 

We also evaluate inspector staffi ng levels to ensure the Flight Standards Service and Aircraft 

Certifi cation Service can sustain suffi cient oversight as a result of potential attrition within the 

workforce. 

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In January 2007 FAA received a copy of the Aviation Safety Inspector Staffi ng Standards Study

prepared by the National Research Council of the National Academies of Science. In response to the 

recommendations in this study, FAA tasked an independent contractor to conduct a phased approach 

to the design, development, and implementation of a new automated, demand-driven, staffi ng model. 

Th e contractor will conduct a baseline analysis of the aviation safety inspector workforce and identify 

productivity measures. Specifi cally, the contractor will develop a staffi ng model that will have the 

capability to perform “what if ” scenarios that build on customer demands and changing employee 

skill sets and can support an evolving safety management system culture of the future. Th e project 

design, development and training are estimated to be completed in the next 24 months. 

By the end of 2007, increased inspector resources will allow the FAA to transition all Part 121 air 

carriers to the Air Transportation Oversight System. Th is risk-based, commercial aviation safety 

oversight system is increasing the eff ectiveness of the FAA safety oversight eff orts by developing 

safety surveillance plans for air carriers based on data analysis. Th e FY 2008 President’s Budget 

would provide an additional 241 new safety positions in AVS, including 90 new inspectors for 

increased oversight and surveillance activities.

Currently, the most signifi cant impact on the workforce is the evolution of the risk-based system 

and increased oversight of designees. While these challenges do not demand signifi cantly more or 

fewer inspectors, they do demand a diff erent skill set. Th e overall management strategy to meet 

future oversight requirements focuses on three areas – train current AVS inspectors to help manage 

the transition to a SMS; change the AVS culture to accept the transition to an SMS; and hire the right 

people with the right skills to work in the future aviation environment.

Th e FAA has also established recruitment plans to fi ll our most critical occupations. Th e agency is 

working with technical schools to fi ll entry-level positions. It has ongoing eff orts with minority- and 

women-focused technical publications and associations to ensure positive publicity for FAA and AVS, 

as well as to enhance recruiting opportunities. By the end of 2007, increased inspector resources will 

allow FAA to transition all Part 121 air carriers to the ATOS. Th is risk-based, commercial aviation 

safety oversight system is increasing the eff ectiveness of the FAA safety oversight eff orts by developing 

safety surveillance plans for air carriers based on data analysis. We currently have a large pool of 

qualifi ed aviation safety inspectors available for recruiting. We anticipate that even with the new skill 

set requirements there will be enough candidates to select the needed inspectors in the future.
UNITED STATES DEPARTMENT OF TRANSPORTATION

70

- Reducing the Risk of Accidents on the Ground and in the Air

Runway incursions occur in the airport runway 

environment when an aircraft , vehicle, or 

person on the ground creates a loss of required 

separation with an aircraft . Runway incursions 

present a serious risk to aviation and have 

resulted in collisions and fatalities. Reducing the 

risks of runway collisions and incursions is a top 

priority of the Federal Aviation Administration 

(FAA). In order to reduce the severity, number, 

and rate of runway incursions, the FAA continues to mitigate the errors that contribute to collision 

risks. Th e agency has been aggressively addressing the issue and has made progress reducing the 

most serious incidents, particularly those involving commercial aircraft . In FY 2007, the estimated 

rate of runway incursions was 0.302 per million operations. Th e number of serious runway 

incursions has been reduced by more than 50 percent within the last fi ve years.

Th e FAA continues to conduct Runway Safety Action Team (RSAT) meetings, pilot seminars, 

fl ight instructor refresher courses, commercial fl ight instructor and designated pilot examiner 

refresher courses and airport safety meetings. Th e purpose of an RSAT meeting is to emphasize the 

importance of runway safety and communication among users. Preventative measures to reduce 

runway incursions include: training on airport infrastructure for new controllers, runway training on 

airport signage and markings, adherence to proper phraseology, read-back/ hear-back requirements 

for controllers and pilots to ensure understanding of directions, review of hot spots, quality assurance 

reviews and the review and audit of tapes.

In FY 2007, FAA installed ASDE-X at Louisville International Airport and Charlotte Douglas 

Airport. Ongoing activities to reduce the risk of runway incursions included improvements to 

air traffi c controller, pilot and vehicle driver awareness, as well as to airport infrastructure and 

technology enhancements. 

In August 2007, in response to a recent rise in runway incidents, the agency sponsored a high-level 

meeting with 40 aviation industry leaders to brainstorm remedies for reducing runway incursions. 

Th e meeting focused on identifying short-term steps that could be implemented within 30-60 days. 

Th e recommendations center on improved procedures, increased training for airline personnel, and 

more rapid deployment of technology that could reduce runway incursions. 

In the longer term, the agency will be looking towards technological solutions, including the 

deployment of runway status lights in conjunction with ASDE-X. Th e agency will also be taking a 

close look at the performance of two lower-cost ground surveillance systems currently being tested 

and evaluated in Spokane. Both systems provide cost eff ective alternatives to ASDE-X and can 

be installed in less than a week. While not as sophisticated as ASDE-X, they provide incremental 

situational awareness for controllers.

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Separation in the air, whether it is from other aircraft , terrain, obstructions, or restricted airspace, is a 

critical aspect of air safety. Air traffi c controllers employ rules and procedures that defi ne separation 

standards for this environment. An operational error (OE) occurs when there is a loss of separation 

between aircraft or aircraft and other objects. Reducing the risk of operational errors is one of FAA’s 

top priorities as traffi c continues to increase.

Th e FAA’s Air Traffi c Organization (ATO) is developing and implementing an automated soft ware 

application that will depict Air Traffi c Control (ATC) separation conformance in both the terminal 

and en-route environments nationwide. Th e Traffi c Analysis and Review Program (TARP) will apply 

separation logic to targets; identify where applicable separation standards are not being maintained; 

and highlight incidents for further investigation. Th is will be accomplished by utilizing TARP replay 

features to review radar and voice data to analyze potential operational errors. 

In June 2007, ATO completed its Automated Safety Initial Performance Implementation Plan for all 

applicable en-route and terminal facilities. Th e development of a next generation safety performance 

measurement tool for the en-route environment was completed in 2007. Th is course of action 

will ensure FAA has a meaningful baseline of operational errors and allow consistent reporting of 

operational errors.

Th e FAA has historically tried to understand and mitigate the incidence of OEs, focusing on the 

critical component of the system—the closest person to the air traffi c situation and the last point of 

prevention—the air traffi c controller. We focused attention on implementing a coordinated system 

of investigations to identify causal factors, fi elding automation to identify and re-create events, 

developing metrics to categorize OE severity, and sponsoring unique performance enhancement 

programs.

Specifi cally, during FY 2007, FAA improved how the severity of operational errors is calculated. 

We began implementation of a new system to classify OEs and instituted a 10 percent performance 

tolerance on separation minima to better understand and measure our safety performance. Th ese 

changes allow us to take full advantage of advances in technology that now permit for separation 

measurements to a hundredth of a mile (60 feet) and allow us to capture more events that approach 

the edges of the separation standards.

Th e new measurement process, referred to as the Separation Conformance (SC), measures 

the severity of the outcome of the OE as a result of the percent of required separation that was 

maintained. When the SC is measured in combination with the number of operations, it creates a 

reliable rate-based measure of safety. 

Further, the new measurement system minimizes the number of criteria used to determine OE 

severity, minimizes subjectivity, and allows for better analysis of same category events—all of which 

enhance safety conclusions. With these changes, we now measure the proximity between two aircraft 

which better characterizes the actual risk of collision. Th e FAA is currently testing the new severity 

tool which will be implemented in FY 2008.
UNITED STATES DEPARTMENT OF TRANSPORTATION

72

Also in 2007, FAA modifi ed the evaluation process by which it audits and performs assessments of 

ATC facilities in order to reduce operational errors and focus on system risks. Th e FAA reviews radar 

and voice data tools as part of its Air Traffi c Safety Quality Assurance Order, as well as disseminates 

initial evaluations and audit data derived from the Facility Safety Assessment System to ATO 

Terminal and ATO en-route facilities. 

To enhance air traffi c supervisor and controller discussion of serious events during team 

briefi ngs, safety clips are developed using actual air traffi c control incidents. Th ese clips use video 

reenactments, replays of radar/voice, references, and narration of safety enhancement messages. 

Targeted subject matter is derived from areas such as daily reviews of operational errors and 

operational deviations, collisions, facility evaluations, and customer feedback. Th ese safety awareness 

tools promote and support a safety culture by: 1) helping controllers visualize an event that actually 

happened; 2) aiding the development of strategies based on intuitive and experiential expertise for 

use in similar situations; 3) creating an objective examination of air traffi c events and the service 

that FAA provides to its customers; and 4) continuously assessing individual, team, facility, and 

organization performance. 

Th e ATO’s Safety Services Unit continues to off er its one-day training course, Crew Resource 

Management (CRM), designed to help the air traffi c controller detect and correct controller and 

pilot mistakes before they result in operational errors or pilot deviations. CRM is an operationallyrelevant, one-day workshop that focuses on teamwork and individual performance such as 

situational awareness and safety vigilance. Th e course also focuses on threat and error management, 

vulnerabilities and countermeasures. Based on initial feedback, FAA continues to refi ne the current 

CRM training and Cadre courses. 

6. Management Challenge: Making The Most Of Federal Resources That 

Sustain Surface Transportation Infrastructure Improvements By Continuing 

To Emphasize Project Oversight.

- Initiatives to Improve the Oversight of Highway Trust Funds Need to be Implemented 

Eff ectively to Insure Th at Projects are Completed On Time, Within Budget, and Free From

Fraud

Th e FHWA continued to implement the 

Financial Integrity Review and Evaluation 

(FIRE) program to improve its compliance with 

the Federal Managers’ Financial Integrity Act 

(FMFIA) and improve grant oversight. Also, 

FHWA re-implemented an improved version 

of Delphi’s Projects Module that resolved an 

area of nonconformance involving Federal 

Lands Highway Program transaction processing 

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and reconciliations. Th e FHWA is currently in the process of conducting agency-wide testing of its 

fi nancial and cost controls for a twelve month period. Th e results of this testing will be provided by 

the end of 2007. In addition, the Agency established a grants management council to help oversee 

and ensure alignment of FHWA’s grant-related programs and supporting fi nancial processes. 

FHWA took aggressive steps to validate State cost estimates and thoroughly address potential risks. 

FHWA issued Major Project Guidance in January 2007 that stresses the importance of developing 

reliable cost estimates. FHWA conducted risk-based cost estimate validations for seven major 

projects and will continue the cost estimate validations during FY 2008. A pilot test was completed 

for a new training course designed to address Major Project cost estimating needs and requirements. 

Th e course focuses on raising awareness of the signifi cance of cost estimates throughout the project 

continuum and the need to accurately and thoroughly identify risks involved. 

FHWA delivered a specifi c training program focused on critical risk identifi cation. In response to 

this suggestion from the OIG, FHWA established a core competency framework for Major Project 

Oversight Managers. In addition, 34 participants including 13 current Managers completed a project 

management certifi cate training program that FHWA developed for employees who are currently 

responsible for supporting or managing stewardship and oversight for existing Major Projects. 

Members of the FHWA Major Projects Team involved in oversight activities or individuals preparing 

to be Major Project Oversight Managers in the near future also attended the training program. 

- FHWA’s Oversight Must Include Actions to Ensure Th at Highway Tunnels are Safe for the 

Driving Public.

FHWA has begun developing an Advance Notice 

of Proposed Rule Making in which the Agency 

will outline its requirements to be included 

in National Tunnel Inspection Standards. 

If implemented, this program will require 

States to inventory and inspect tunnels on an 

established frequency. Th e most pressing safety 

challenge for tunnel facilities is dealing with 

fi res, either accidental or intentional. FHWA’s 

approach to bridge and tunnel security is to look for cost eff ective solutions that can be integrated 

into an infrastructure owners’ planning, design, operation and maintenance, recognizing that owners 

and operators have many competing agendas. FHWA also completed an international scan on tunnel 

safety and security and issued a report outlining several measures that could be incorporated into 

new and existing tunnels to improve their safety and operation. 

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- FTA Must Continue to Exercise Vigilant Oversight to Ensure Large and Complex Transit 

Infrastructure Projects are Completed On Time and Within Budget

FTA continues to aggressively implement a 

program of project management oversight for 

its transit infrastructure projects, including the 

use of outside project and fi nancial management 

oversight consultants. FTA uses a risk-based 

approach for the oversight of its Federal 

projects—a best practice. FTA fi ne-tuned its 

risk-informed assessments of transit projects and 

hired an independent management consulting 

fi rm to evaluate this approach to project management oversight. FTA’s project management oversight 

contractors are charged with regularly monitoring each project and providing feedback to Federal 

offi cials should any problems arise. Th e oversight contractors hired for each project are charged with 

conducting risk assessments, reviewing scope, cost, schedule, project contingency, and assessing each 

grantee’s plans for the project. FTA fully analyzes the results of the project management oversight 

contractors’ reports; takes action, where appropriate; and exercises its own oversight role in addition 

to the contractors’ work.

FTA’s initiatives have improved oversight for its grantees’ projects. On July 13, 2006, we testifi ed 

to Congress that eff ective day-to-day oversight of these large and complex transportation projects 

is critical, and that FTA should use all of its oversight tools eff ectively. Vigilant oversight will 

be particularly important because FTA must continue to oversee the federally funded transit 

infrastructure projects throughout the Nation, while at the same time overseeing several large and 

complex initiatives collectively costing about $16 billion. Examples of these initiatives are the Lower 

Manhattan Recovery Projects (four FTA projects and one FHWA project with a Federal commitment 

of $4.4 billion), the New York/Second Avenue Subway Minimum Operable Segment (estimated to 

cost $4.7 billion), and the Long Island Rail Road East Side Access (estimated to cost $7.3 billion). Th e 

projects in New York City and the concurrent construction activity there can be expected to create 

signifi cant competition for materials and labor. FTA will need the right mix of oversight resources to 

eff ectively manage costs, schedules, and quality issues during the construction of each of these large 

infrastructure projects.

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7. Management Challenge: Achieving Reform Of Intercity Passenger Rail

- Amtrak Must Do More to Improve Cost-Eff ectiveness, Operate Effi ciently, and Improve 

Performance

At the urging of FRA, Amtrak has taken many 

steps to address these areas over the past 

year. Amtrak’s Management and Board of 

Directors have a roadmap of the corporation’s 

Strategic Reform Initiatives. Amtrak tracks 

progress toward implementing these changes by 

estimating the savings and/or revenue generated. 

An update is presented to the Board of Directors 

at every regular meeting. Th e “bottom line” 

result is that revenues are up, expense growth has been limited, Amtrak’s debt has been reduced, and 

the company is signifi cantly more fi nancially stable than it was fi ve years ago.

Additionally, FRA expanded the capabilities of its Intercity Passenger Rail Analysis Division with 

fi nancial, accounting, transportation planning, and engineering expertise. FRA’s enhanced on-site 

staff capacity has facilitated FRA’s review of Amtrak Management’s proposals and approaches through 

multiple prisms. Furthermore, the Division has undertaken multiple initiatives to improve FRA 

management’s understanding of the nuances of Amtrak’s operational and corporate performance. 

For example, these initiatives include (1) specifi cation and analysis of the most detailed on-time 

performance data ever provided by Amtrak to the FRA, and (2) new concepts for the presentation 

and interpretation of traffi c, revenue, expense, and corporate result data.

FRA has undertaken an intensive review of Amtrak’s capital-related acquisitions. Specifi cally, FRA 

conducts quarterly reviews of Amtrak’s entire capital program, with civil and mechanical engineers 

scrutinizing infrastructure and equipment programs; as well as reviews of reprogramming proposals, 

with a goal of improving effi ciency and cost-eff ectiveness.

DOT is working with Amtrak on several aspects of improving fi nancial reporting and fi nancial 

management practices. DOT continues to collaborate with Amtrak on the development of a 

managerial cost accounting plan. Amtrak’s plan, which is still being negotiated, contains the 

following major elements:

 Integrated fi nancial systems project;

 Activity analysis pilot project; 

 Strategic framework; and,

 Route accounting system upgrade and related FRA cost accounting methodology 

development project.

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Additionally, through the Department’s Volpe National Transportation Systems Center (Volpe 

Center), FRA is developing a new avoidable cost methodology. Th is new methodology will be 

refl ected in a new cost allocation model Amtrak plans to implement in FY 2008. Th e new model will 

signifi cantly improve the transparency and accuracy of Amtrak’s fi nancial reporting by route and 

business line.

- Amtrak Needs a New Model for Providing Passenger Rail Transportation

Th e FY 2008 budget included a request for the 

creation of a Federal/State Capital program to 

support the needs of intercity passenger rail 

service. Th is new grant program considers the 

fact that most publicly supported transportation 

in the U.S. is undertaken through a partnership 

between the Federal government and the 

States. Th is model, which has worked well for 

generations for highways, transit and airports, 

places the States at the forefront of planning and decision-making. States are uniquely qualifi ed to 

understand their mobility needs and connectivity requirements through statewide and metropolitan 

area intermodal and multimodal transportation planning funded, in part, by the U.S. Department of 

Transportation.

DOT believes that this model will also work for intercity passenger rail. Several States have chosen 

to invest in intercity passenger rail service provided by Amtrak as part of strategies to meet their 

passenger mobility needs. Over the past 10 years, ridership on intercity passenger rail routes that 

benefi t from State support has grown by 88 percent. Over that same time period, ridership on all 

Amtrak routes not supported by States has increased by only 22 percent.

State involvement in planning and decision-making for intercity passenger rail service identifi es 

where mobility requirements justify public investment. An excellent example can be found in 

Washington State, which has invested in intercity passenger rail from Portland, OR, through Seattle, 

to Vancouver, B.C. in order to relieve highway travel on the congested I-5 corridor. Similarly, the 

state of Illinois has made fi nancial commitments that have eff ectively doubled the number of Statesupported trains operated by Amtrak on three routes. 

Past experience shows active State engagement in planning and decision-making helps assure that 

infrastructure components, such as stations, provide connectivity to other forms of transportation, 

which support intermodalism within the State. For example, in North Carolina, the State has 

undertaken the redevelopment of its intercity passenger rail stations and transformed them into 

multi-modal transportation centers serving the mobility needs of the surrounding communities.

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State participation in fi nancing intercity passenger rail service provides added incentives for Amtrak 

to seek ways to enhance quality of service, partnership, and goodwill. In Vermont, where the State 

off ered higher State operating subsidies for current service, Amtrak was willing to restructure services 

to drive down operating costs, while increasing train frequencies for Vermont citizens.

Th is grant proposal aligns with Amtrak’s strategic reform initiative, as Amtrak seeks to build on its 

recent experience with the States as it is proactively seeking to create a stronger role for the States 

in designing and supporting State priorities. Th e Administration supports this aspect of Amtrak’s 

internal reform. In discussions with interested States, the DOT has found that the greatest single 

impediment to implementing this initiative is the lack of a Federal/State partnership, similar to that 

which exists for highways and transit, for investing in the capital needs of intercity passenger rail. 

Th is partnership will play a critical role in the evolution of intercity passenger rail.

8. Management Challenge: Improving Acquisition And Contract Management 

To Reduce Costs And Eliminate Improper Payments.

- Institutionalizing the Use of Defense Contract Audit Agency Contract Audit Services

Th e Offi ce of the Senior Procurement Executive 

(OSPE) has been working closely with the Offi ce 

of the Inspector General (OIG) and the Chiefs of 

the Contracting Offi ce (COCO) of the Operating 

Administrations to improve and institutionalize 

the use of Defense Contract Audit Agency 

(DCAA) services.

As noted in a recently issued OIG report on 

the subject, the Senior Procurement Executive has issued policy which establishes appropriate 

requirements for use of audits. Th erefore, the focus has recently been on improving implementation 

of that policy.

Most recently OSPE developed a methodology whereby DCAA and the Operating Administrations 

work together to identify cost-type contracts most suitable for audits and better estimate the 

necessary audit hours in an annual audit plan. Th is plan was fi rst developed during this current fi scal 

year. Based on the lessons learned, OSPE has worked with the Operating Administrations to improve 

that plan for FY 2008. Discussions with the OA COCO’s revealed that not all cost contracts identifi ed 

by DCAA were of suffi cient complexity to warrant auditor assistance. Th erefore, rather than using 

the DCAA-provided list, in many cases, the COCO’s opted to identify for themselves the contracts 

to be included in their FY 2008 audit plan. Once those audit plans are submitted, the OAs will begin 

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submitting quarterly status reports against their audit plans. Th e status reports will address audit 

hours used, resolved and unresolved questioned costs, and whether justifi cations have been placed in 

the contract fi le where audits were not required.

- Strengthening Financial Management Oversight of Institutions Performing Research Under 

DOT Cooperative Agreements and Grants

Th e Inspector General identifi ed three examples 

where additional oversight of cooperative 

agreements was needed; one each in RITA, FTA 

and FHWA. Departmental actions taken to 

address these examples are summarized below.

RITA — In response to an Inspector General 

report regarding a University Transportation 

Center grantee using ineligible sources of grant 

match, RITA took a number of steps to correct this issue. Th e university identifi ed an alternative 

eligible source of matching funding. RITA also brought this issue to the attention of the Department 

of Health and Human Services, which has audit responsibilities for federal grants at this university. 

Th e university has also established internal management processes to ensure that problems like this 

do not happen in the future.

RITA staff also periodically remind the grant recipients about the necessity of adhering to OMB 

guidelines on matching fund requirements. In addition, the University Transportation Research 

Center Program Offi ce has developed a site visit plan that will ensure that most of the grantee 

universities — and all the Centers with large grants — will have periodic site visits.

FTA — FTA has undertaken a three part strategy to address improved research program oversight, 

most of which is awarded as cooperative agreements.

Immediate Action

Sixteen projects were evaluated to determine the level of risk; nine of the projects were recommended 

for more in-depth review. Th ese reviews are still underway and should be completed by November 

16, 2007. In addition, FTA is working to include appropriate questions on its oversight assessment 

questionnaire to capture issues related to research/cooperative agreements. For the fi rst time, all 

research recipients will be evaluated during the oversight assessment in preparation for the FY 2008 

reviews. Lastly, a contractor was hired to provide two training sessions on oversight of grants/

cooperative agreements for FTA headquarters personnel.

FTA is also expanding the capabilities of its OTrak system (FTA’s database for tracking fi ndings and 

corrective actions) to include quarterly assessments of its research projects. Using OTrak will permit 

these reviews to be conducted for all research projects and allow more systematic follow-up on 

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fi ndings from quarterly reviews. Th e project plan to update OTrak was approved on May 30, 2007 

with an expected readiness date of July 2008. Also FTA’s FY 2008 Budget to Congress included a 

proposed statutory takedown from the National Research Program and other programs for oversight.

Intermediate Action

In February, 2007, FTA established a team to review its Research Order and Circulars. Th e team is 

waiting on recommendations from a Booz-Allen review of FTA’s research/cooperative agreement 

oversight procedures before taking further action. In addition, a research recipient workshop 

was held on April 17, 2007, with approximately 60 recipients. Th e workshop focused on project 

management and fi nancial requirements. FTA intends to hold this event annually.

Long-term Action

FTA will form a team of oversight contractors working from recommendations made by Booz-Allen 

and working with its offi ces to develop an oversight tool appropriate for FTA’s research program/

cooperative agreements. Booz-Allen has met with FTA staff to examine procedures used for project 

management and oversight of research projects. Specifi c recommendations for improvement are 

presently in development. 

FHWA — FHWA made signifi cant progress in its stewardship of its grants and cooperative 

agreements. Following through on actions outlined in FHWA’s Assistance Agreement Process Review – 

Final Report and Recommendations, the FHWA completed the following actions during FY 2007:

 Development and delivery of a series of Agreement Offi cer Technical Representative 

(AOTR) Training Modules. A total of 123 AOTRs received this training during the 

year and many others received copies of the materials.

 Publication and dissemination of a comprehensive Assistance Agreement Procedures 

Manual that provides specifi c guidance for all steps in the assistance agreement 

process from acquisition vehicle selection through award, monitoring, and close-out. 

A separate section devoted to concerns of AOTRs is included in the manual, which 

was written under contract by a recognized leader in the assistance agreement fi eld 

with signifi cant input from FHWA staff . 

 Development of revised fi le organization and guidelines for acquisition staff. FHWA 

commissioned an internal team to review and recommend updated fi le tabs and 

guidelines for fi le organization to be followed by acquisition staff . Grant and 

cooperative agreement fi les were included in this review. Th e team has submitted its 

fi nal report with a new organization recommended for implementation in FY 2008. 

Other actions are also underway to further improve staff ’s knowledge and capabilities to provide 

oversight. Th ese include an update to FHWA policy guidance for grant and cooperative awards 

through revision of FHWA Order 4410.1, and the development of an AOTR Quick Reference Guide 

that augments the Assistance Agreement Procedures Manual by providing an AOTR with concise 
UNITED STATES DEPARTMENT OF TRANSPORTATION

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instructions and frequently asked questions related to agreement monitoring from a technical 

perspective. FHWA will continue to look for ways to improve the eff ectiveness and effi ciency of its 

grant and cooperative agreement activities, as well as other acquisition areas as opportunities emerge 

and needs evolve.

- Promoting More Vigilance and Enhanced Oversight of FAA’s Acquisition and Contract 

Management Practices

FAA’s Contract Oversight function was 

established within the Contract Oversight Group 

in the Fall of 2006. Th e new function provides 

oversight and evaluation of contract operations 

within the FAA. In February 2007 FAA’s 

Acquisition Executive established the National 

Acquisition Evaluation Program (NAEP), 

formerly known as the National Program 

Evaluation. Th e mission of NAEP is to improve 

acquisition and contract management; enhance the quality of fi nancial documentation, reduce 

acquisition cost; eliminate improper payments; and curtail waste, fraud and abuse of funds. 

An Acquisition Management System (AMS) policy change establishing NAEP was developed, 

approved by the Administrator, and incorporated into the AMS in July 2007. Th e AMS change states, 

“Th e National Acquisition Evaluation Program provides oversight of FAA acquisition management 

through the evaluation of contracts, programs, and acquisition management practices. Th e goal 

is to ensure consistent implementation of AMS policy and guidance by FAA offi ces and to identify 

innovative processes or opportunities for improvements. Recommendations based on fi ndings are 

tracked to closure to promote continuous process improvement and procurement integrity.”

In March 2007 the NAEP Team, composed of representatives from all contracting organizations 

within FAA, was formed. Th e NAEP team developed Standard Operating Procedures (SOPs) 

for evaluation teams to use in conducting contract evaluations. Th e SOP provides more detailed 

guidance on how contract and program evaluations are to be performed. Also, the SOPs specify the 

required contents of an evaluation report, including the development of specifi c recommendations for 

contract and acquisition management improvements, and a requirement that the recommendations 

are addressed, mitigation strategies are developed, and planned improvement activities are tracked 

to closure. Th e team also developed an Evaluation Work Plan which proposed contract evaluations 

that are to be conducted over the next three years. Th e list of proposed evaluations was developed 

using the recommendations provided by the Department’s Inspector General in the audit of FAA’s 

RESULTS National Contracting Service Report issued in September 2006, as well as recommendations 

from senior level managers.

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In May 2007, a comprehensive evaluation of the Alaska Region’s contracting activities was conducted, 

in conjunction with the ARC Procurement Evaluation Program, to uncover problems in contract 

management and to obtain commitments from contract management to address the problems. Th e 

results of the evaluation are documented and fi led for follow-up activities. Th e follow-up activities 

will be monitored and tracked to ensure completion. In June 2007 the NAEP Team began to develop 

its fi rst evaluation report on the results of a yearly assessment of the consistency between the hiring 

of contractor personnel as compared to the labor categories and rates contained in support services 

contracts. Th e annual report will be issued in November 2007. 

- Ensuring that Department Employees Maintain High Ethical Standards

Integrity/ethics is considered a core general 

business competency for acquisition personnel. 

In order to achieve the government-wide Federal 

Acquisition Certifi cation, acquisition workforce 

members must complete the mandatory training 

courses. Th ese training courses address all 

the general business competencies including 

integrity and ethics. Also, the Department 

conducts an annual ethics training program 

for employees, including acquisition workforce members, as required by the Offi ce of Government 

Ethics. 

Starting in FY 2008, DOT will provide supplemental training, in addition to required annual 

ethics training, for members of the acquisition workforce and other employees involved in the 

acquisition process. Supplemental training will cover key ethics issues of direct importance to 

acquisition workforce members, e.g., seeking future employment with a contractor, post employment 

restrictions, gift s from contractors, relationships with former private employers, other impartiality 

concerns relating to interaction with contractor personnel, as well as various miscellaneous matters, 

e.g., “moonlighting” for an agency contractor. Trainers will include both ethics and acquisition 

offi cials from departmental as well as modal organizations. DOT is in the process of identifying the 

acquisition workforce, including contracting offi cials, Contracting Offi cers Technical Representatives 

(COTR’s) and program/project managers. Once this process is complete in early calendar year 2008, 

DOT will be able to target the supplemental training to the appropriate staff and make it mandatory 

for certifi cation or recertifi cation.

In addition to training, it is important that DOT have in place the appropriate internal controls 

to prevent and/or detect inappropriate conduct involving procurements and contracts. To that 

end, DOT is in the process of developing a risk management program which will defi ne a set of 

processes across the Department to enhance internal controls for acquisition. Th is risk management 

program is based on the acquisition framework developed by the Government Accountability 

Offi ce (GAO) and is consistent with internal control principles and practices. Th e GAO framework 

covers such areas as organizational leadership and alignment, policies and processes, human capital, 

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and knowledge and information management. DOT’s program implementing the framework will 

feature a series of reviews including self assessments, operational status reviews of procurement 

operations, and periodic on-site reviews. Th e risk management program also incorporates other key 

elements for strengthening acquisition business practices such as an enhanced competition advocate 

function, use of Earned Value Management, and performance based acquisition. DOT plans to begin 

implementation of this program during FY 2008.

Because FAA has statutory acquisition independence, the risk management program does not, as 

a legal matter, apply to FAA’s acquisition function. FAA acquisition personnel will not be included 

in the supplemental training program. We plan to share both programs with the FAA, and to 

recommend that they undertake similar initiatives.

- Enforcing Suspensions and Debarments More Rigorously

Th e Department continues to strengthen its 

processes and procedures to exclude companies 

and individuals from award of Federal fi nancial 

assistance and contracts when they have 

defrauded the government. In an eff ort to ensure 

timelier processing and reporting of suspension 

and debarment (S&D) actions, a centralized 

database for reporting S&D actions is being 

created. All users will be able to electronically 

list and track their S&D actions as they are received from the OIG. Th e OIG has the capability of 

electronically viewing the status of actions within each OA and has the ability to create reports for 

the Department’s S&D actions. We expect the system to be available for the annual report due in 

February 2008.

Additionally, an internal suspension and debarment community on DOT’s intranet has been 

established within the agency. Th is community which is accessible from the agency home page, lists 

and shares best practices on managing suspension and debarment activities.

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9. Management Challenge: Protecting, Monitoring, And Streamlining 

Information Technology Resources 

- Enhancing Air Traffi c Control Systems Security Th rough Resource Commitment and 

Progress Measurement

In FY 2007, FAA met the statutory requirement 

to recertify its information technology (IT) 

systems on their three-year anniversaries or 

upon major system change. Specifi cally, FAA 

recertifi ed 100 percent of its 84 IT systems, 

including the air traffi c control systems. FAA’s 

remaining systems will undergo annual selfassessments as prescribed by the National 

Institute of Standards and Technology (NIST). 

Th e FAA also revised the Certifi cation and Accreditation Handbook to refl ect NIST guidelines and 

standards, and remediated 25 of the 60 high-risk vulnerabilities to date. Th e FAA also continues to 

strengthen security protections of air traffi c control (ATC) systems by conducting ATC fi eld facility 

reviews. In FY 2007, ten facility reviews were completed. 

In FY 2007, FAA’s transitioned the Business Continuity Plan (BCP) from planning to implementation. 

Th e purpose of the BCP is to contemplate and address potential prolonged service disruptions at 

en-route centers. BCP implementation is being executed by a multi-service, multi-disciplinary 

engineering team.

Additionally, FAA established the Business Continuity Program Offi ce to address long-term outages. 

Th e Business Continuity Board of Directors was established and consists of Executive Directors from 

every FAA stakeholder service unit. Th e Board meets monthly to ensure adequate resources, resolve 

disputes, and maintain the BCP program scope and schedule. Th ere are nine working groups to 

address BCP technical capabilities, procedures, documentation, and staffi ng concerns. 

Primary infrastructure is already in place to provide BCP services. Enroute BCP operational 

requirements are being validated with fi eld Air Route Traffi c Control Centers. Th e FAA will provide 

all mission essential services for any aff ected facility with a goal to reconstitute operations at 80 

percent of previous capacity within a 3 week period. To address contingency operations at all 

operational facilities, in the event of short-term outages, FAA has published Order 1900.47B. Th is 

order calls for tabletop exercises to involve FAA’s Command Center as well as all major terminal and 

en-route facilities.

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Th e operations community has direct involvement in solution implementation. Initial capability 

demonstrations for data communications including both radar and fl ight data are also underway. 

Voice communications infrastructure including the Voice Switching and Control System (VSCS), 

VSCS Training and Backup Switch, and Radio Control Equipment are being confi gured and installed 

to support both air-to-ground and ground-to-ground voice communications. 

As the OIG notes, in October 2006, FAA’s Chief Information Offi cer (CIO) and the Air Traffi c 

Organization were planning to evaluate security diff erences between ATC systems in the terminal 

and tower environments. Specifi cally, FAA had planned to visit a signifi cant number of facilities 

to audit security diff erences between systems in the fi eld relative to laboratory conditions. Aft er 

thorough study, FAA has concluded that the return-on-investment would not support the expected 

cost, which would have exceeded $2.5 million. Th is decision was also supported by results of similar 

eff orts at en-route facilities. At en-route centers, there was less than a 10-percent variance.

- Meeting New Security Standards While Recertifying Systems Security

Th e Department made signifi cant progress 

recertifying its IT systems; to date, 210 of 

the 230 systems identifi ed, approximately 91 

percent, have either completed, or expect to 

complete recertifi cation in FY 2007. Th e DOT 

CIO developed several policy documents 

to specifi cally address system certifi cations 

during FY 2007 and the move to the new 

DOT Headquarters building. In response 

to the Inspector General’s FY 2006 FISMA audit report, the CIO required that each Operating 

Administration (OA) and OST offi ce develop detailed and funded implementation plans and 

schedules to address the recertifi cation workload expected during FY 2007.

Th e Department also agreed with the Inspector General’s concern regarding the application of 

new security standards at the time these recertifi cations are performed. By the end of FY 2007, the 

Department will issue policy and guidance for determining risk levels of information systems. Based 

on the determination of system risk level, the application of security controls is then determined. Th e 

OAs and OST offi ces have been instructed that they must apply the direction and guidance outlined 

in NIST Special Publication 800-53 Rev. 1, Recommended Security Controls for Federal Information 

Systems in selecting system security controls that apply to their systems. Th e OAs would then apply 

the new security controls when they perform their recertifi cations and address the risk level for their 

systems.

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- Securing the Consolidated IT Infrastructure and Eliminating Operating Administrations’ 

Fragmented Systems Backup/Recovery Sites

In the past, each Operating Administration 

managed its own IT infrastructure (e.g., 

desktop computers, local area networks, and 

e-mail). Th ese duplicative IT operations were 

expensive to maintain and had inconsistent 

security protections—both physical and logical. 

Since they were interconnected, security 

weaknesses in one Operating Administration’s 

infrastructure could endanger others: in other 

words, the agencies’ IT security was only as strong as the weakest link. As part of the move to the 

new Headquarters, the Department seized the opportunity to consolidate these IT infrastructure 

operations and completed that activity in FY 2006. 

In FY 2007, DOT strengthened the security of the consolidated IT infrastructure by bringing 

the Campus Area Network on line. In addition, Operating Administrations’ mission-specifi c 

server infrastructure was relocated to a contractor-operated hosting facility that was certifi ed and 

accredited. Th e Common Operating Environment as well as the Campus Area Network is currently 

undergoing re-certifi cations to ensure that all necessary security controls and system interconnection 

agreements are in place to ensure continued strengthening of the security infrastructure.

As one of the components of the next phase of consolidation, the Department still needs to identify 

a consolidated backup/recovery site at a suffi cient geographic distance from the new Headquarters 

building and conduct contingency testing for all Operating Administration systems operating on the 

consolidated IT infrastructure. Further, the CIO will direct that the Operating Administrations not 

make additional investments to equip their individual backup/recovery sites until decisions have been 

made for the consolidated backup/recovery site.

- Working With Operating Administrations to Strengthen Oversight of IT Investment and to 

Streamline Duplicative IT Systems. 

While the Department has made the decision to 

delegate the oversight on specifi c IT investments 

to the operating administration review boards, 

each review board is required to annually 

review each major IT investment, looking at 

cost, schedule and performance goals. Th e 

Department has and will continue to monitor 

high risk programs monthly. In general, the 

variances that we have seen for cost and schedule 

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are within the 10 percent tolerance level. Over the next year, the Department plans to benchmark 

technical performance metrics with other agencies to determine the best approach to monitor 

technical performance to improve overall program management.

Th e Department is making progress in improving its EVM oversight. DOT has become an active 

member of a joint Civilian Agency/Industry Working Group addressing signifi cant open issues facing 

the entire federal civilian sector regarding EVM implementation. Th e CIO has recently completed 

the initial draft of EVM policy, which attempts to ensure that all Operating Administrations are 

performing EVM consistently across the Department. We expect to have the policy fi nalized by early 

2008.

During 2007, DOT strengthened its ability to identify duplicative common systems by defi ning all 

agency programs and activities according to common business areas and services, or segments. In 

addition, the Department mapped all DOT IT investments (major and non major) to a DOT segment 

to facilitate the alignment of targeted resources based on business strategies and needs. 

During 2008, the Department plans to collaborate with DOT business stakeholders to validate 

current business activities; identify milestones for streamlining over the next 3 – 5 years; and refl ect 

results in the DOT Transition Strategy for certain prioritized segments. Th ese activities will provide 

valuable information to agency executives and program managers as they make decisions on IT 

projects. 

10. Management Challenge: Strengthening DOT’s Coordination Of Research, 

Development, And Technology (RD&T) Activities And Funding

- Ensuring Eff ective Coordination of DOT’s Research, Development and Technology 

Activities

RITA has secured an enhanced leadership role 

in RD&T coordination for the Department in 

specifi c cross-modal opportunities. In 2007, 

RITA assumed responsibility for the Position, 

Navigation, & Timing (PNT) program with the 

fi rst priority of determining the transportation 

needs of PNT on behalf of the Department. A 

Federal Register notice for public comment on 

the future of NDGPS was issued August 1, 2007, 

and plans were set in motion to collect information from Operating Administrations for analysis and 

preparation of a decision package for the National Space-Based PNT Executive Committee in the fi rst 

half of FY 2008.

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RITA also assumed leadership for the Climate Change & Environmental Forecasting Center on behalf 

of the Department. During 2007, RITA worked with an expert from the Environmental Protection 

Agency (EPA) to assist with redefi ning the direction of the Climate Change & Environmental 

Forecasting Center. Recommendations to improve overall DOT coordination and to reduce RD&T 

overlap of climate change and related initiatives being pursued through the Climate Change Center 

will be off ered and an action plan established. 

In 2007, RITA’s oversight and coordination program completed its fi rst Program Assessment 

Rating Tool (PART) evaluation. Although RITA received a Results Not Demonstrated rating, 

signifi cant progress was made in refi ning and articulating the intent of the program. A Result 

Not Demonstrated rating is given when a program doesn’t have established short- and long-term 

performance measures. As a result of this evaluation, several annual program measures were 

developed for consideration by RITA’s Planning Council for future implementation which will lead to 

the fi rst DOT-wide RD&T coordination measures. 

RITA also continued to coordinate all RD&T budget information through the annual budget process. 

Each operating administration provides budgetary information according to RITA’s guidance 

on all RD&T activities proposed through the Department’s budget process. Th at information is 

identifi ed in a single budget tab in order to compile and view the Department’s RD&T portfolio 

comprehensively and according to Departmental goals.

RITA has concluded that the best way to counter the limiting eff ects of earmarks on management 

of the entire DOT RD&T portfolio is development of an objective data source that can help inform 

stakeholders of the state of projects in relation to others. In 2007, RITA developed a statement of 

work to guide development of a DOT-wide RD&T database. RITA plans to work with the Operating 

Administrations to collect basic information about the RD&T projects that make up the DOT 

portfolio of RD&T investment. Th e process by which information will be collected and reviewed will 

be completed in the fi rst quarter of FY 2008.

PERFORMANCE REPORT

89
UNITED STATES DEPARTMENT OF TRANSPORTATION

90

PERFORMANCE FRAMEWORK

INTRODUCTION

Th e Department of Transportation’s overarching mission is:

To develop and administer policies and programs that contribute to 

providing fast, safe, effi cient, and convenient transportation at the 

lowest cost consistent with the national objectives of general welfare, 

economic growth and stability, the national security, and the effi cient 

use and conservation of the resources of the United States.

Everything we do at DOT is aimed toward meeting this mission statement and making measurable 

improvements in our transportation system, the security of our nation, and the quality of American 

life. In the Performance and Accountability Report we hold ourselves accountable to the public 

for eff ectively bringing to bear the Department’s energy and resources in improving the nation’s 

transportation system. We use these results to improve our strategies and resource decisions.

DOT’s performance framework is as follows:

 Th e DOT Strategic Plan provides a comprehensive vision for improving the nation’s 

complex and vital transportation system. DOT’s 2003 – 2008 Strategic Plan outlines 

fi ve strategic goals in the areas of safety, mobility, global connectivity, security and the 

environment that articulate the longer term focus of the Department. In addition to 

the broad goals; the plan targets specifi c outcomes we want to achieve, and identifi es 

key challenges.

 Th e DOT Performance Budget operationalizes the Strategic Plan, and provides direct 

linkages between DOT’s budget request and the results the public can expect for 

programs within each of our Operating Administrations. Th e performance budget 

defi nes the performance goals and measures used to manage progress toward our 

strategic goals. It describes in detail one fi scal year’s resources and programmatic 

eff ort within a strategic context. Th e performance budget also aligns each dollar 

requested to one of our strategic objectives.

 Th is DOT Performance and Accountability Report provides a public accounting of 

our FY 2007 performance results.

Performance accountability for DOT organizations, executives, and employees embed the philosophy 

of managing for performance into the Department’s culture and daily practices. Performance 

accountability within the Department is accomplished through the following mechanisms:

 Organizational Accountability Contracts – Prepared at the beginning of each fi scal 

year, these agreements between the Secretary of Transportation and each modal 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

91

Administrator document expected levels of organizational performance for the 

upcoming year.

 DOT Organizational Assessments of Performance – A review of each Operating 

Administration’s performance is done at the end of the fi scal year to assess the 

organization’s success in the following areas: meeting Department-wide performance 

targets; results of Offi ce of Management and Budget Program Assessments using 

the Program Assessment Rating Tool; President’s Management Agenda initiative 

ratings; and eff orts associated with addressing any management challenges or material 

weaknesses identifi ed by DOT’s Offi ce of Inspector General. Th e results of these 

assessments are then factored into the personal performance evaluations of our senior 

executives.

 Employee Performance Plans – Prepared early in the fi scal year, these plans document 

expected levels of employee performance that clearly link to our strategic goals 

through the performance framework.

Th e following graphic (fi gure 1) describes how DOT plans, measures, manages, and reports on 

performance:

DOT Strategic Goals

 DOT Department-wide Performance

 Goals & Measures

 Supplementary Operating Administration

 Goals & Measures

 Organizational Accountability Contracts

 Organizational Performance Assessments

 Employee Performance Plans

 Figure 1
UNITED STATES DEPARTMENT OF TRANSPORTATION

92

HOW DOT WORKS TO ACHIEVE ITS STRATEGIC AND PERFORMANCE GOALS

Th e Department achieves its goals through its leadership role in U.S. transportation policy, 

operations, investment, and research. To infl uence results, DOT programs rely on a number of 

common interventions and actions. Th ese include:

 Direct operations and investment in DOT capital assets that provide capability, such as 

air traffi c control and the Saint Lawrence Seaway operations;

 Infrastructure investments and other grants, such as investment in highway, rail, transit, 

airport, and Amtrak capital infrastructure, and grants for safety, job access, or other 

important transportation programs;

 Innovative fi nancial tools and credit programs, such as those provided for by the 

Transportation Infrastructure Finance and Innovation Act, and the Railroad 

Rehabilitation and Improvement Financing Program;

 Rulemaking, in areas such as equipment, vehicle, or operator standards; for improving 

safety; and for fostering competition in the transportation sector of the U.S. economy;

 State/local organizational capacity building, through training, best practices, peer-topeer exchanges and other activities that strengthen the capability of State Departments 

of Transportation, Metropolitan Planning Organizations, and local governments to 

play their essential front-line role in planning, investing in, and operating highway 

and transit systems;

 Enforcement to ensure compliance, including inspections, investigations, and penalty 

action;

 Research and technology development and application, such as fostering new materials 

and technologies in transportation, and transportation related research;

 Education and outreach, such as consumer awareness, and campaigns to infl uence 

personal behavior; and,

 Public Information, such as that provided by the Bureau of Transportation Statistics, 

and each DOT Operating Administration, so that States, localities, regions, and 

private sector entities can better plan their activities.

Some of these interventions and actions reside entirely within the Federal Government, but most 

involve signifi cant partnering with State and local authorities and with the transportation industry. 

Th ese are the broad areas of action that DOT – and State and local governments – commonly use to 

bring about desired results.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

93

FY 2007 PERFORMANCE REPORT

Our FY 2007 Results: A Reader’s Guide

Th e performance section of this report is composed of chapters for each strategic goal identifi ed in 

the DOT Strategic Plan. Th e Organizational Excellence section of the report focuses on overall DOT 

eff orts to achieve our part of the President’s Management Agenda, ensuring that we are a citizencentered, results-oriented Cabinet agency, depending on market-based transportation solutions.

For each strategic goal, we present four increasingly detailed levels of information, which together 

help the reader understand the breadth of the Department’s activities.

 Th e fi rst level, which consists of the strategic goal, strategic outcome, and annual 

resources, provides a summary-level view of how the Department is engaged in a 

national priority like transportation mobility;

 Th e second level, the performance goal area, focuses on a particular aspect of the 

priority being discussed;

 Th e performance measure, at the third level, shows the reader how we measure our 

progress toward the performance goal, the target we set for ourselves, and our success 

in reaching it; and,

 Th e narrative in the fourth level provides the reader details about our 

accomplishments or the challenges we faced, along with a forecast of our ability to 

meet the next year’s target.

TERMINOLOGY

We use the following terminology throughout the report:

Strategic Goal – statement from the DOT Strategic Plan, 

outlining the desired long-term end-state.

Strategic Outcome – statement from the DOT Strategic Plan, 

outlining nearer-term objectives.

Performance Goal Area – a performance objective, 

connecting eff ects created by departmental activities and 

programs, and the resulting infl uence on strategic outcomes.

Performance Measure – a measurable indicator of progress 

toward a performance goal, with annual targets.
UNITED STATES DEPARTMENT OF TRANSPORTATION

94

GLOBAL CONNECTIVITY STRATEGIC GOAL

FACILITATE A MORE EFFICIENT DOMESTIC AND GLOBAL TRANSPORTATION SYSTEM THAT ENABLES ECONOMIC 

GROWTH AND DEVELOPMENT

STRATEGIC OUTCOMES

 Reduced barriers to trade in transportation 

goods and services.

 More efficient movement of cargo throughout 

the supply chain.

PERFORMANCE MEASURES

 Percent share of the total dollar value of DOT 

direct contracts that are awarded to womenowned businesses.

 Percent share of the total dollar value of DOT 

direct contracts that are awarded to small 

disadvantaged businesses.

More Efficient Movement Of Cargo

FY 2007 Enacted Funds: $1.27 Billion

Performance Measure 

Percent of days in the shipping season that the U.S. portion of the 

St. Lawrence Seaway is available.

2004 2005 2006 2007

Target 99.0 99.0 99.0 99.0

Actual 99.1 99.7 99.0 99.4

Associated FY 2007 Funding – $ 17 million

The bi-national St. Lawrence Seaway is the international shipping gateway to the Great Lakes, offering 

access and competitive costs with other routes and modes to the interior of the country.... 

FY 2008 Performance Forecast — DOT expects to meet the 

FY 2008 target of 99.0 percent.

FY 2007 Results — For FY 2007, DOT’s Saint Lawrence Seaway 

Development Corporation (SLSDC) met the performance target 

with a system availability rate of 99.4 percent....

Strategic Goal: 

Desired long term end state. 

Strategic Outcomes: 

Nearer term objectives. 

Annual resources dedicated 

to the Strategic Goal. 

L 

E 

V 

E 

L 

1

Performance Goal Area: 

Connection between Departmental 

activities and the Strategic Goal. Annual Resources dedicated to the 

Performance Goal Area. 

L 

E 

V 

E 

L 

2

Performance Measure: 

Progress toward the 

Performance Goal Area. 

Performance Results. Annual resources dedicated 

to achieving the 

Performance Measure. 

L 

E 

V 

E 

L 

3

This section describes 

accomplishments and challenges. 

Forecast for FY 2008. 

L 

E 

V 

E 

L 

4

Planned Performance. 

Figure 2 shows the diff erent levels of information and how they are presented. 

Figure 2
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

95

Th e relationship between DOT’s activities and observed results — Th e relationship between 

resources and results can be complex, and a mix of current and prior-year resources and activity 

almost always infl uences any performance result. For example, direct service program results such 

as FAA air traffi c control operations are infl uenced both by external forces and prior-year acquisition 

activities. Other results, such as highway congestion or transit ridership, are predominately 

infl uenced by prior-year funding.

Enhanced Transparency — Over the past few years, the Department has tracked and presented the 

funding levels associated with each of its Strategic Goals (Level 1 in fi gure 2) to allow the reader to 

gain a sense of how resources are being allocated across the Department. In the FY 2006 PAR, DOT 

presented funding levels for each performance goal area (Level 2 in fi gure 2), providing an additional 

layer of detail on the Department’s funding allocations.

Th is year, the Department will further increase its transparency by presenting funding information 

at the performance measure level (Level 3 in fi gure 2). We are not yet able to provide data from our 

cost accounting system on actual funds expended by performance measure, so the associated FY 2007 

funds identifi ed for each measure refl ect the Department’s planned spending on a particular activity. 

Th e dollar amounts associated with performance measures at Level 3 may not add up to the funds 

associated with a performance goal area at Level 2, because only a portion of all DOT activities are 

refl ected and tracked in this report. While the fi nancial information provided is not an accounting 

report of funds expended, it does give the reader an overall picture of how the Department uses 

its appropriations. We look forward to implementing future improvements to our cost accounting 

system allowing us to provide even more detail in the years to come.

Data completeness — An exhaustive assessment of the completeness and reliability of our 

performance data and detailed information on the source, scope, and limitations for the performance 

data in this report are provided at: http://www.bts.gov/programs/statistical_policy_and_research/

source_and_accuracy_compendium/index.html. In that Web site, we also provide information to 

resolve the inadequacies that exist in our performance data.

Preliminary vs. fi nal results — Reporting FY 2007 results by November 2007 has been challenging 

where we rely on third party reporting. Oft en we have only preliminary or estimated results based 

on partial-year data and must wait for fi nal data to properly verify and validate our results. In 

some cases where data is provided solely as an annual value and is not available in time for this 

report, we rely on historical trend information and program expertise to generate a projected result. 

We have been careful to point out where we have assessed our performance on a preliminary or 

projected basis. Preliminary estimates or projected results will be adjusted aft er fi nal compilation or 

verifi cation and validation. In all cases where results have changed from last year’s report, we indicate 

that by placing an “(r)” with the number, indicating a revision.

DOT contributions to common governmental outcomes — DOT’s performance is aligned with 

its legislative mandates, but in some cases there are no “bright lines” separating DOT from other 

agencies. For instance, in DOT’s Security Strategic Goal, we make very important contributions 
UNITED STATES DEPARTMENT OF TRANSPORTATION

96

in accordance with our mandates and appropriations, but we do so alongside the Departments of 

Defense, Homeland Security, State, Justice, Commerce, and Energy. Similarly, other agencies make 

signifi cant contributions to the nation’s transportation system.

Management challenges — Th e DOT Inspector General and the Government Accountability Offi ce 

publish reports describing a number of problems and challenges facing the Department. We take 

these issues seriously, and have folded our approach to meeting these challenges into our general 

eff orts to achieve good performance outcomes. We have placed a description of each management 

challenge and the Department’s response in Management’s Discussion and Analysis near the front of 

this report.

Summary performance table — One of the ways that DOT interprets its progress towards achieving 

its strategic goals is to compare single year results to historical trends. We have provided a tabular 

summary of long-term performance for each of the Strategic Goals to provide context for the FY 2007 

achievements.

Looking forward — In September 2006, DOT published its new Strategic Plan for FY 2006–2011. 

Next year, the FY 2008 DOT Performance and Accountability Report will refl ect the new strategic 

plan with its modifi ed set of strategic goals and a new mix of performance measures. Where possible, 

we have noted upcoming changes to performance measures in this year’s report.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

97

SUMMARY PERFORMANCE TABLES

OVERALL DOT PERFORMANCE SUMMARY

SAFETY PERFORMANCE SUMMARY

Performance Measure 2001 2002 2003 2004 2005 2006

2007

Actual

2007 

Target

Met/

Not Met

Highway fatalities per 100 million 

vehicle-miles traveled (VMT) 1.51 1.51 1.48 1.44 (r) 1.46 (r) 1.42 (r) 1.40 # 1/ 1.38 2

Fatalities involving large trucks per 

100 million truck VMT 2.45 2.30 2.31 2.29 2.35 (r) 2.24 (r) 2.24 # 1.75 2

U.S. commercial fatal aviation 

accidents per 100,000 departures 

(Last 3-years’ average) 0.037 0.026 0.024 0.021 0.017 0.020 * 0.022 * 0.010 2

Number of fatal general aviation 

accidents 359 348 366 340 354 299 (r) * 314 * 331 3

Rail-related accidents and incidents 

per million-train miles 23.44 20.04 19.40 19.02 (r) 17.90 (r) 16.94 (r) 15.02 * 16.70 3

Transit fatalities per 100 million 

passenger-miles traveled 0.482 0.473 0.461 0.467 0.428 0.344 0.286 * 0.473 3

Number of incidents for natural gas 

and hazardous liquid pipelines 341 330 370 443 (r) 490 386 (r) 388 * 362 2

Number of serious hazardous 

materials transportation incidents 588 466 (r) 472 492 (r) 530 (r) 494 (r) 455 * 466 3

1/ While based on historical data, the 2007 fatality rate projection is dependent on the continuation of both individual and market 

behavior regarding vehicle-miles traveled, seat belt use and motorcycle rider and alcohol related fatalities. Th e assumptions inherent 

in these projections, together with the normal levels of uncertainty inherent in statistical evaluations, may infl uence the accuracy of the 

projection.

(r) Revised; * Preliminary estimate; # Projection from trends; 3 Met; 2 Not Met

Percentage of Performance Targets Met or Not Met

Met

Not Met

29%

FY 2007

71%

* Revised

Met

Not Met

32%

68% *

FY 2006
UNITED STATES DEPARTMENT OF TRANSPORTATION

98

MOBILITY PERFORMANCE SUMMARY

Performance Measure 2001 2002 2003 2004 2005 2006

2007

Actual

2007

Target

Met/

Not Met

Percentage of travel on the National 

Highway System (NHS) meeting 

pavement performance standards for 

“good” rated ride 49.0 49.3 50.0 52.0 52.0 (r) 54.0 (r) 55 * 56.0 2

Percent of total annual urbanarea travel occurring in congested 

conditions 30.6 30.7 31.0 31.6 31.8 31.6 (r) 31.6 * 32.5 3

Average percent change in transit 

boardings per transit market (150 

largest transit agencies) 1/ 4.3 0.2 0.7 0.7 1.9 2.1 2.0 * 1.5 3

Percent bus fl eets compliant with 

the ADA 85 90 93 96 (r) 96 (r) 98 (r) 98 * 97 3

Percent of key rail stations compliant 

with the ADA 67 77 82 82 91 92 92.3 * 93 2

Number of employment sites (in 

thousands) that are made accessible 

by Job Access and Reverse Commute 

transportation services 2/ 28.4 52.1 73.7 82.8 95.4 91.2 (r) * 95.4 * 50 3

Percent of all fl ights arriving within 

15 minutes of schedule at the 35 

Operational Evolution Plan airports 

due to NAS-related delays 76.5 82.2 82.3 79.07 88.1 (r) 88.36 86.32 * 87.40 2

1/ Beginning in FY 2007, the average percent change in transit boardings will no longer be adjusted for changes in employment.

2/ Starting in FY 2006, the administration of FTA’s JARC program changed from a separate nationally-administered competitive 

program into a state-administered formula program as enacted in SAFETEA-LU. Data is being collected on new measure to determine 

a baseline for identifying future performance targets. 

(r) Revised; * Preliminary estimate; # Projection from trends; 3 Met; 2 Not Met 

ADA – Americans with Disabilities Act
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

99

GLOBAL CONNECTIVITY PERFORMANCE SUMMARY

Performance Measure 2001 2002 2003 2004 2005 2006

2007 

Actual

2007

Target

Met/

Not Met

Percent share of the total dollar 

value of DOT direct contracts that 

are awarded to women-owned 

businesses 3.7 3.8 4.2 3.8 6.6 6.7 6.0 * 5.1 3

Percent share of the total dollar 

value of DOT direct contracts that 

are awarded to small disadvantaged 

businesses 17.4 16.2 15.8 15.6 12.7 15.0 (r) 14.5 * 14.5 3

Percent of days in shipping season 

that the U.S. portion of the St. 

Lawrence Seaway is available 98.1 98.7 98.9 99.1 99.7 99.0 99.4 99.0 3

Number of new or expanded 

bilateral aviation safety agreements 

implemented N/A N/A N/A 32433 3

Number of international negotiations 

conducted annually to remove 

barriers to trade in air transportation 

(new measure in FY 2005) N/A N/A N/A N/A 10 10 23 * 12 3

Number of potential air 

transportation consumers (in 

billions) in international markets 

traveling between the U.S. and 

countries with open skies and open 

transborder aviation agreements N/A N/A 1.48 1.72 2.97 3.01 3.02 * 3.83 3

(r) Revised; * Preliminary estimate; 3 Met; 2 Not Met
UNITED STATES DEPARTMENT OF TRANSPORTATION

100

ENVIRONMENTAL STEWARDSHIP PERFORMANCE SUMMARY

Performance Measure 2001 2002 2003 2004 2005 2006

2007

Actual

2007 

Target

Met/

Not Met

Number of exemplary ecosystem 

initiatives undertaken (target/results 

are cumulative from year to year) N/A 5 8 15 23 43 50 50 3

Percent DOT facilities characterized as 

No Further Remedial Action Planned 

under the Superfund Amendments 

and Reauthorization Act 91 91 94 93 92 92 93 93 3

12-month moving average of the 

number of areas in a transportation 

emissions conformity lapse 6.0 6.0 6.0 6.3 5.8 1.3 0.0 * 6.0 3

Tons of hazardous liquid materials 

spilled per million ton-miles shipped 

by pipeline 0.0026 0.0047 (r) 0.0073 (r) 0.0081 (r) 0.0085 (r) 0.0034 (r) 0.0028 * 0.0057 3

Percent reduction in the number of 

people in the U.S. who are exposed 

to signifi cant aircraft noise levels N/A N/A -15 -28 -29 -28 (r) -27 # -8 3

(r) Revised; * Preliminary estimate; # Projection from trends; 3 Met; 2 Not Met

SECURITY PERFORMANCE SUMMARY

Performance Measure 2001 2002 2003 2004 2005 2006

2007

Actual

2007 

Target

Met/

Not Met

Percentage of DOD-required 

shipping capacity complete with 

crews available within mobilization 

timelines 97 94 96 94 95 93 97 94 3

Percentage of DOD-designated 

commercial ports available for 

military use within DOD established 

readiness timelines 92 92 86 93 87 100 100 93 3

Transportation Capability 

Assessment for Readiness Index 

Score N/A N/A 59 67 65 72 70 75 2

N/A Not Applicable; 3 Met; 2 Not Met
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

101

ORGANIZATIONAL EXCELLENCE PERFORMANCE SUMMARY 

Performance Measure 2001 2002 2003 2004 2005 2006

2007

Actual

2007 

Target

Met/

Not Met

For major DOT aviation systems, 

percentage of cost goals established 

in the acquisition project baselines 

that are met N/A 89.5 88 100 97 100 100 87.5 3

For major DOT aviation systems, 

percentage of scheduled milestones 

established in acquisition project 

baselines that are met N/A 74 77 91.5 92 97.4 97 87.5 3

For major Federally funded 

infrastructure projects, percentage 

that meet schedule milestones 

established in project or contract 

agreements, or miss them by less 

than 10 percent N/A 85 88 95 95 91 88 95 2

For major Federally funded 

infrastructure projects, percentage 

that meet cost estimates established 

in project or contract agreements, or 

miss them by less than 10 percent N/A 85 88 74 79 82 84 95 2

Percentage of transit grants 

obligated within 60 days after 

submission of a completed 

application 51 67 83 91 91 94 94 * 80 3

* Preliminary Estimate; N/A Not Applicable; 3 Met; 2 Not Met
UNITED STATES DEPARTMENT OF TRANSPORTATION

102

B

B B

BBBB

1.5

1.4 1.4

1.38 1.38 1.38 1.38

J J

J

J

J

J

J

1.51 1.51

1.48

1.44 1.46

1.42

1.4

2001 2002 2003 2004 2005 2006 2007

1.25

1.3

1.35

1.4

1.45

1.5

1.55

Year

Highway Fatalities

Fatalities per 100 million

vehicle−miles traveled

Over the last several years, DOT has been able to 

reduce the number of highway fatalities, but we have 

been unable to meet our performance target. We set 

an ambitious goal for ourselves several years ago: to 

reduce the highway fatality rate to no more than 1.0 

per 100 million vehicle miles traveled by 2008. We 

have made progress, dropping the rate from 1.7 in 

1996 to 1.4 in 2007, but it is clear that we have reached 

a plateau. We need to approach the issue diff erently. 

Beginning in FY 2008, we will report on the subelements of the highway fatality statistics in an eff ort 

to understand more clearly where we should apply 

our resources.

HIGHLIGHTS OF MAJOR TRENDS

While all of our performance measures track important activities, we are particularly concerned about 

trends in four areas: highway fatalities, accidents in commercial aviation, urban area congestion, and 

aviation congestion. Th e general public sees our eff ect on those four issues more clearly than on any of the 

others, where our activities may only be evident to members of specifi c industries.

B

B

B

B

B

B

B

0.043

0.038

0.033

0.028

0.023

0.018 0.01

J

J J

J

J

J J

0.037

0.026 0.024

0.021

0.017

0.02

0.022

2001 2002 2003 2004 2005 2006 2007

0

0.005

0.01

0.015

0.02

0.025

0.03

0.035

0.04

0.045

0.05

Year

Commercial Fatal Aviation Accidents

Accidents per 100,000 departures (3 year average) Percentage

B

B

B

B

B

B

B

30

30.9

31.6

32.3

33 33.7

32.5

J J

J

J J J J

30.4

30.5 30.8

31.6 31.8

31.6

31.8

2001 2002 2003 2004 2005 2006 2007

29

29.5

30

30.5

31

31.5

32

32.5

33

33.5

34

Year

Percentage of Total Annual Urban−Area Travel That Occurs in Congested Conditions

B

BBB

82.1

87.4 87.4

87.4

J

J J

J

79.07

88.1 88.36

86.32

2004 2005 2006 2007

78

80

82

84

86

88

90

Year

Aviation On−Time Arrivals

Percentage of flights arriving within

15 minutes of schedule

In 1997, FAA committed to reducing fatal accidents 

in commercial aviation by 80 percent within 10 

years. From 1994 to 1996, there were on average six 

commercial fatal accidents a year, with an average of 

266 deaths. In the last three years, the U.S. averaged 

two fatal accidents per year, with an average loss of 

life of 28 per year. Air travel is now the safest that 

it has ever been, but we were only able to achieve a 

63 percent drop in accidents. FAA is taking a system 

wide, risk management approach to safety that will 

help the agency maintain this gain and drive the 

accident and fatality rate down even further.

Urban area congestion is increasing. Th e current 

population of the United States now exceeds 300 

million people and with over 220 million vehicles on 

the roads and the population projected to pass the 

400 million before 2050, congestion can be expected 

to remain a major challenge if cars and trucks remain 

the dominant mode of travel. In May 2006, DOT 

announced a major initiative to reduce transportation 

congestion, outlining its approach in Th e National 

Strategy to Address Congestion. Th e lessons learned 

from the Congestion Initiative will be a critical 

component in identifying future strategies for fi ghting 

traffi c congestion.

As it is in surface transportation, congestion is a 

growing issue in aviation. Currently, the U.S. air 

transportation system handles roughly 50,000 fl ights 

over a 24-hour period. By 2025, air traffi c is projected 

to increase two-to-three fold, equating to 100,000-

150,000 fl ights every 24 hours. We acknowledge that 

the current U.S. air transportation system will not be 

able to meet these air traffi c demands. FAA is working 

with other Federal agencies to develop the Next 

Generation Air Transportation System (NextGen). 

NextGen will leverage new technologies, such as 

satellite-based navigation, surveillance and networking 

to transform the air traffi c control system.

B Target J Actual
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

103

SAFETY STRATEGIC GOAL

ENHANCE THE PUBLIC HEALTH AND SAFETY BY WORKING TOWARD THE ELIMINATION OF 

TRANSPORTATION-RELATED DEATHS AND INJURIES

STRATEGIC OUTCOMES

 Reduction in transportation-related 

deaths.

 Reduction in transportation-related 

injuries.

PERFORMANCE MEASURES

 Highway fatalities per 100 million vehiclemiles traveled (VMT).

 Fatalities involving large trucks per 100 

million truck VMT.

 U.S. commercial fatal aviation accidents 

per 100,000 departures (Last 3-years’ 

average).

 Number of fatal general aviation 

accidents.

 Rail-related accidents and incidents per 

million train miles.

 Transit fatalities per 100 million 

passenger-miles traveled.

 Number of natural gas pipeline incidents 

and hazardous liquid pipeline accidents.

 Number of serious hazardous materials 

transportation incidents.

FAA, $9,417.2

FHWA, $9,249

FMCSA, $476.6

NHTSA, $811.2

FY 2007 Enacted Funding by Operating Administration (OA)

(Dollars in Millions)

Total FY 2007 Funding: $20,247.9 Million

Other OAs

FRA $181.2

PHMSA $100.6

FTA $11.0

OST $1.3
UNITED STATES DEPARTMENT OF TRANSPORTATION

104

Highway crashes account for 99 percent of all transportation-related fatalities and injuries, and 

are the leading cause of death for Americans age 2 through 34. Alcohol is still the single biggest 

contributing factor in fatal crashes. Fatalities in alcohol-related crashes in 2006 (latest data available) 

remained essentially the same as in 2005. Eighteen percent of Americans (about 55 million people) 

still do not use seat belts all of the time when driving motor vehicles. Motor vehicle crashes have 

placed a considerable burden on the nation’s health care system and have had signifi cant economic 

eff ects. Th e cost to the economy of all motor vehicle crashes is approximately $230.6 billion (in 2000 

dollars), or 2.3 percent of the U.S. gross domestic product. Th ree Operating Administrations - the 

Federal Highway Administration, the National Highway Traffi c Safety Administration, and the 

Federal Motor Carrier Safety Administration - contribute to the accomplishment of the Department’s 

highway safety goal by focusing on safer roads, safer vehicles, and safer driver behavior.

NHTSA — Th e 2006 annual assessment of motor vehicle traffi c crash fatalities and injuries shows 

that the number of people killed in the United States in motor vehicle traffi c crashes declined from 

43,510 in 2005 to 42,642, the lowest level in fi ve years. Th is decline is the largest in terms of both 

number and percentage since 1992. Alcohol-related fatalities in crashes where the highest blood 

alcohol concentration (BAC) was .08 grams per deciliter (g/dL) or greater (.08+) increased by only 0.1 

percent, while the .08+ fatality rate decreased by .01 from the 2005 rate to .50 fatalities per 100 million 

vehicle-miles traveled (VMT) due to the increase in exposure. Fatalities declined for passenger car 

occupants, light-truck occupants, and non-occupants (pedestrians, cyclists, etc.). Passenger car 

occupant fatalities dropped for the fourth year in a row, while light-truck occupant fatalities dropped 

for the fi rst time in 15 years. Motorcycle rider fatalities, however, continued their nine-year increase, 

reaching 4,810 in 2006. Motorcycle rider fatalities now account for 11 percent of total fatalities, 

exceeding the number of pedestrian fatalities for the fi rst time since NHTSA began collecting fatal 

motor vehicle crash data in 1975. In addition to fatalities, NHTSA tracks injuries. Th e 2006 data 

show that the number of people injured in motor vehicle traffi c crashes declined for the seventh year 

in a row. In 2006, fewer than 2.6 million people were injured compared to nearly 2.7 million in 2005, 

with the number of people injured declining in all categories except among motorcycle riders. Th e 

largest percentage decline was found among large-truck and pickup truck occupants.

FHWA — Th e FHWA safety-related programs yielded multiple benefi ts for communities in the 

U.S., including a reduction in the number of crashes and improvements in system conditions and 

operations. FHWA continued to concentrate eff orts on reducing the number of fatalities in three 

types of crashes: roadway departures; crashes at or near intersections; and collisions involving 

pedestrians. According to preliminary Fatality Analysis Reporting System (FARS) estimates, roadway 

departure fatalities declined in 2006 to 24,806 from 25,388 in 2005. Fatalities from intersectionHighway Safety

FY 2007 Enacted Funds: $10.52 Billion
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

105

related and pedestrian-related crashes in 2006 were 8,797 and 4,784, respectively. Both fi gures 

represent a slight decrease from 2005 when there were 9,188 intersection-related and 4,892 for 

pedestrian-related fatalities. 

FMCSA — Between 1997 and 2006, fatalities from large truck and bus crashes have declined 

seven percent from 5,709 in 1997 to 5,309 in 2006 (latest data available). Th e majority of fatal 

commercial motor vehicle crashes involve other vehicles. In 2006, 75 percent of fatalities 

involving large truck and bus crashes were occupants of other vehicles, primarily passenger 

vehicle occupants and motorcycle riders. Of the remaining fatalities, 16 percent were occupants of 

commercial motor vehicles and 10 percent were pedestrians and bicyclists.

Results from FMCSA’s Large Truck Crash Causation Study have shown that the driver plays the 

greatest role in large truck crashes. In crashes between large trucks and passenger vehicles, the 

critical reason for the crash was assigned to the driver of the large truck 44 percent of the time. 

Th e most common reasons for crashes cited in the study are recognition errors (driver distraction 

or inadequate road surveillance) and poor driving decisions (driving too fast for conditions, 

following other vehicles too closely, etc).

Th e study found several other factors that contribute to accidents, including brake problems, 

roadway conditions (weather or road design), drivers’ use of over-the-counter medications, driver 

illness, and shift ing cargo.

2007 Results — Although the fatality 

rate is at historic lows, preliminary 

data indicates that DOT will not 

meet the FY 2007 target. In recent 

years, the Department has focused on 

highway safety as a top Departmental 

priority. Working with key partners and 

stakeholders, this approach has been 

successful. However, highway fatalities 

and injuries for 2006 show that much more needs to be done to improve safety on our roads.

To continue making our roads safer, a working group was established to identify new strategies and 

technologies that will reduce highway fatalities. New performance targets have been established 

in key areas to focus the Department’s eff orts on the critical factors responsible for the overall 

highway fatality rate. Th ese key focus areas include passenger vehicle occupants, non-occupants 

(pedestrians, cyclists, etc.), motorcycle riders, and large trucks and buses. Th ey were chosen in 

part to cover the breadth of all road users. Th ese measures will be reported on in the FY 2008 

PAR.

Performance Measure 

Highway fatalities per 100 million vehicle-miles traveled (VMT).

2004 2005 2006 2007

Target 1.38 1.38 1.38 1.38

Actual 1.44 (r) 1.46 (r) 1.42 (r) 1.40 #

(r) Revised; # Projection

Associated FY 2007 Funding – $ 10.06 billion
UNITED STATES DEPARTMENT OF TRANSPORTATION

106

FY 2008 Performance Forecast — It is unlikely that the target will be met in FY 2008. DOT has set 

an ambitious goal of reducing the rate of highway fatalities to no more than 1.37 per 100 million VMT 

by FY 2008.

2007 Results — DOT did not meet the 

target. Preliminary data for 2007 shows 

that the projected large truck fatality rate 

is 2.24 fatalities per 100 million truckVMT, while the target was no more than 

1.75 fatalities per 100 million-truck VMT. 

Th is constitutes an estimated shortfall 

of 0.49 fatalities per 100 million truck 

VMT, based on the projected mileage and 

fatalities for 2007.

While reaching the lowest incidence of truck crashes and fatalities in decades, FMCSA is 

committed towards achieving its established goals and further improving highway safety. FMCSA 

launched a major initiative in FY 2005 to reexamine and reengineer core safety activities called the 

Comprehensive Safety Analysis 2010 (CSA 2010). In FY 2007, FMCSA launched important research 

and development cycles for the CSA 2010 concepts, and in FY 2008 the Agency will begin initial 

testing and evaluation of the CSA 2010 projects through implementation tests of the operational 

model in multiple States. In FY 2007, FMCSA renewed its focus on the role of drivers in preventing 

crashes by increasing the number of driver inspections and focusing on programs such as PEDAL 

(Plain English Driver Assistance Literature), which communicates Federal motor carrier regulations 

to drivers in an easy-to-understand format. Research shows that infl uencing driver behavior is the 

biggest factor in crash prevention. For future gains in safety, this is an important area for the Agency 

to watch.

FY 2008 Performance Forecast — It is unlikely that the target will be met in FY 2008.

In-Depth Accomplishments Promoting Highway Safety

NHTSA IN-DEPTH

SEAT BELTS

In 2007, according to NHTSA’s National Occupant Protection Use Survey, the national seat belt 

use rate was 82 percent, up from the 81 percent achieved in 2006, the highest nationwide rate ever 

recorded. Seat belt use is statistically lower in States with secondary belt enforcement laws than 

in States with primary laws, and lower in rural areas than in urban or suburban areas. States that 

have secondary enforcement laws require a law enforcement offi cer to pull someone over for a 

Performance Measure 

Fatalities involving large trucks per 100 million truck VMT.

2004 2005 2006 2007

Target 2.07 1.96 1.85 1.75

Actual 2.29 2.35 (r) 2.24 (r) 2.24 #

(r) Revised; # Projection

Associated FY 2007 Funding – $ 459 million
Bergen County police offi cer Jeff Roberts, center, tells an unidentifi ed taxi driver to pull over because he is not wearing 

a seat belt during a “Click It or Ticket” checkpoint stop near the entrance to the George Washington Bridge in Fort Lee, 

N.J., Monday, May 21, 2007. Th e checkpoint was one of three set up in New Jersey Monday to handout seat belt safety 

pamphlets and give out $46 tickets to those motorists not wearing seat belts. (AP Photo/Mike Derer)

PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

107

diff erent violation and only then are they able to write an additional citation for a seat belt violation. 

States that have primary seat belt laws don’t have this restriction. In 2007, States that allowed more 

stringent enforcement of their belt use laws (“primary” States) reached 87 percent belt use, a two 

percent increase over 2006. On average, States that have primary seat belt laws experience usage rates 

that are 14 percentage points higher than States that do not have primary laws. States that implement 

primary laws together with statewide high-visibility law enforcement programs that combine 

enforcement activities with paid media and news coverage may achieve increases of 20 points or 

more.

In May 2007, NHTSA conducted the national “Click It or Ticket” (CIOT) campaign, releasing 

national advertisements focusing on the enforcement of seat belt laws and encouraging States to 

conduct high-visibility seat belt law enforcement operations along with State-level advertising. To 

extend the benefi t of CIOT, the agency conducted demonstration projects to evaluate the eff ect of 

conducting multiple law enforcement mobilizations during the year. In addition, NHTSA conducted 

demonstrations of strategies for increasing seat belt use among high-risk populations such as night-
Administrator Nicole Nason with the National Highway Traffi c Safety 

Administration speaks during a news conference, Wednesday, Aug. 22, 2007, 

in Washington. Administrator Nason discussed the agency’s eff orts to combat 

impaired driving, providing statistics on fatality rates where drivers exceeded the 

legal blood alcohol content (BAC) limit. (AP Photo/Haraz N. Ghanbari)

UNITED STATES DEPARTMENT OF TRANSPORTATION

108

time drivers, drivers in rural areas, pick-up truck occupants, 8-15 year olds and teens. Likewise, 

NHTSA teamed up with new partners which have access to these populations, such as NASCAR 

Disney-Pixar, and rural media outlets to try to raise their lower-than-average seat belt use rates. Th is 

year’s CIOT campaign was accompanied in nine States by an additional campaign, “Buckle Up in 

Your Truck,” to encourage improved seat belt usage in pickup trucks.

Th e results from the National Survey of the Use of Booster Seats found that 41 percent of four 

through seven year olds were restrained in booster seats in 2006. NHTSA continued support for the 

national training and certifi cation program that has prepared more than 30,000 local child passenger 

safety technicians to provide guidance to parents on the correct selection and use of child restraint 

systems.

In July 2007, to assess the feasibility, necessity and economic impact of seat belts on school buses, 

NHTSA conducted a day-long public meeting with State and local governments, education 

offi cials, school bus manufacturers, safety advocates and consumer organizations. School buses 

remain the safest means of transporting students to school and school-related activities by means 

of compartmentalization, a combination of fl exible, energy-absorbent, high seat backs and narrow 

spacing between each row. Th e Department and NHTSA held the meeting to determine whether 

there are sensible and attainable ways to provide even greater protection for children in school buses.

IMPAIRED DRIVERS

In 2006, the number of alcohol-related fatalities remained essentially the same as in 2005, claiming 

17,602 lives. Males comprised 81 percent of fatally injured drivers with blood alcohol content above 

the legal limit; 43 percent of 

fatally injured drivers (both 

men and women) were between 

the ages of 21 and 34. Based 

on the Traffi c Volume Trends

estimated increase in VMT for 

2006, the .08+ BAC alcohol 

fatality rate decreased from 0.51 

fatalities per 100 million VMT 

in 2005, to 0.50 per 100 million 

VMT in 2006, achieving the 

2006 target for this supporting 

performance measure.

In continuing to combat this 

problem, in FY 2007, NHTSA 

further enhanced its impaired 

driving program by placing 

greater emphasis on assisting 

high-risk populations, such as 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

109

underage drinkers, 21 to 34 year olds, individuals with high BAC levels and repeat off enders. Under 

the Impaired Driving Countermeasures Incentive Program, in FY 2007, NHTSA made available $125 

million to the 50 States, the District of Columbia and Puerto Rico if they have prescribed alcoholimpaired driving countermeasure laws or programs, such as administrative license revocation 

laws and underage drinking programs, or if they met certain performance criteria based on their 

alcohol-related fatality rates. Th e ten States with the highest impaired driving fatality rates received 

extra funding under this new SAFETEA-LU Section 410 funding program. NHTSA worked closely 

with these ten States to facilitate implementation of eff ective programs, such as periodic sustained 

high-visibility enforcement eff orts, combined with media campaigns, DWI Courts, and judicial 

and prosecutorial education programs. NHTSA continued the new national advertising campaign 

delivering the message “Drunk Driving: Over the Limit; Under Arrest.” As part of this campaign, 

States conduct impaired driving enforcement crackdowns during the Labor Day and December 

holiday seasons.

In August 2007, NHTSA held a public meeting with judges, court personnel, treatment professionals 

and others to examine the benefi ts of the expanded use of ignition interlocks as a means to further 

reduce deaths and injuries from impaired driving. Meeting participants recommended increased 

education concerning interlock programs directed at judges and court professionals, especially those 

from smaller courts that collectively handle large numbers of DWI cases across the Nation. Other 

recommendations addressed the need for guidance concerning key interlock program elements, 

and demonstrations of strategies for overcoming program challenges such as fi nancial viability, 

coordination among aff ected State agencies, and linkages between the court and alcohol addiction 

treatment functions.

SAFER VEHICLES

On April 6, 2007, NHTSA issued a fi nal rule to establish a new Federal Motor Vehicle Safety 

Standard 126 that will require Electronic Stability Control (ESC) systems by September 1, 2011, 

on passenger cars, multipurpose vehicles, trucks, and buses with a gross vehicle weight rating of 

10,000 pounds or less. ESC is a technology that has the potential to save many lives by assisting the 

driver in maintaining control in critical driving situations. On July 30, 2007, the agency published 

a statistical analysis of the eff ectiveness of ESC systems in vehicles currently on the road (NHTSA 

Report Number DOT HS 810 794). Th ese ESC systems have reduced fatal single vehicle crashes by 63 

percent for light trucks and vans (LTVs) and 36 percent for passenger cars. Rollover involvements in 

fatal crashes were decreased by 70 percent in passenger cars and 88 percent in LTVs. Th is report may 

be accessed at: http://dmses.dot.gov/docimages/p102/479883.pdf.

In FY 2007, the agency began initial research to understand the performance capabilities and 

potential safety benefi ts of heavy vehicle ESC systems and completed brake research needed to 

support the Federal Motor Vehicle Safety Standard (FMVSS) 121 (Air Brake Systems) rulemaking. 

Additionally, NHTSA initiated the development of requirements, assessment metrics and test 

procedures for heavy vehicle (tractor semi-trailer) ESC systems in support of future rulemaking 

proposals.
Mary Peters, Secretary of Transportation, sits in a 2007 Saturn Aura equipped with electronic stability control, at the 

New York International Auto Show on Th ursday, April 5, 2007. During a news conference, Secretary Peters announced 

all new passenger cars sold in the United States will be required to have electronic stability control by 2012.

(AP Photo/Mark Lennihan)

UNITED STATES DEPARTMENT OF TRANSPORTATION

110

In accordance with Section 10307 of SAFETEA-LU, the agency implemented a new regulation, 

eff ective November 13, 2006, that requires the placement of New Car Assessment Program (NCAP) 

safety ratings on vehicles (Stars on Cars) manufactured on or aft er September 1, 2007, at the point of 

sale. Th e agency conducted crash testing on approximately 70 diff erent vehicles to provide front, side 

and/or rollover safety ratings. Th ese tests on new model year 2007 vehicles account for approximately 

36 percent of the new model vehicles in the fl eet.

In 2001, the agency introduced rollover resistance ratings to the NCAP program. Th at year, over half 

of the vehicles rated received one, two or three star ratings for rollover resistance. Seven years later, 

79 percent of the vehicles received a four or fi ve star rating and none of the vehicles rated received 

a one or two star rating. Including rollover resistance ratings for vehicles has greatly improved the 

safety of vehicles available today.

 Information on NHTSA’s NCAP ratings, defect investigations and safety recalls can be found on 

www.safercar.gov, the NHTSA Web-based portal dedicated to the promotion of NCAP safety ratings 

and other vehicle safety-related topics.
Gov. Mitch Daniels prepares to get on his motorcycle before leaving 

the Statehouse in Indianapolis, Friday, Aug. 17, 2007. Daniels was 

joined by leaders of motorcycling organizations from across the state 

for a ride to promote motorcycle safety and awareness.

(AP Photo/Darron Cummings)

PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

111

MOTORCYCLES

Motorcycle rider fatalities have increased each year since reaching a historic low of 2,116 fatalities in 

1997. In 2006, motorcycle rider fatalities increased for the ninth year in a row to 4,810, up from 4,576 

in 2005. Th is is a 5.1 percent increase in just one year. Motorcycle fatalities account for 11 percent of 

the 42,642 total fatalities in motor vehicle crashes in 2006.

Data from 2006 (latest data available) shows that motorcycle rider fatalities increased for most age 

groups, particularly among the 20-29 and 50-59 age groups. However, motorcycle fatalities for 

riders in the under-20 age group declined by 13 percent. Speed continued to be a major contributing 

factor in motorcycle crashes, especially among the younger riders. Th e number of motorcycle riders 

killed in alcohol-related crashes increased by 10 percent. Th is situation is further compounded by 

the continued climb in new unit motorcycle sales in 2005 (latest data available from Motorcycle 

Industry Council), rising above the 

one million mark and reaching levels 

not seen since the 1970s. On a positive 

note, in June 2007, 58 percent of 

motorcyclists used DOT-compliant 

helmets, a seven percentage point 

increase from the 2006 rate. During 

FY 2007, NHTSA and the States began 

implementing the 2006 Motorcycle 

Safety Plan which incorporates 

the 2005 SAFETEA-LU mandates 

and new initiatives, implementing 

additional safety programs to try 

to reduce the escalating motorcycle 

fatality and injury rates. Th e 2006 

Motorcycle Safety Plan can be 

found at: http://www.nhtsa.dot.gov/

people/injury/pedbimot/motorcycle/

MotorcycleSafety.pdf.

With motorcycle safety a signifi cant concern, in FY 2007 NHTSA took several steps to address the 

issue. Th e agency distributed the Implementation Guide for the National Agenda for Motorcycle Safety

to assist States and communities in creating programs to improve motorcycle safety; incorporated 

motorcycle operators in High Visibility Enforcement (HVE) impaired-driving crackdowns; 

completed the Study to Determine Motorcyclist Impairment at Diff erent BAC Levels, and completed 

the Riders Helping Riders instructional program to encourage motorcyclists to intervene to prevent 

drinking and riding by their peers.

During FY 2008, NHTSA will transmit a report to Congress on the fi ndings of a study of educational 

and other activities targeted at reducing impaired riding as mandated by Section 2003 (g) of 

SAFETEA-LU. NHTSA will develop and distribute communication campaigns to increase the 
A red light fl ashes on each corner of this 

stop sign at the intersections of Ohio 49 and 

Ohio 707 in rural Mercer County, Ohio, on 

Sept. 26, 2006. Th e fl ashing lights on the 

stop sign allow it to be seen from greater 

distances, even in daylight. Th e intersection 

had been the scene of numerous accidents. 

To improve traffi c safety without busting 

their budgets, states are installing the cable 

barriers, painting distance dots on roads 

to discourage tailgating and placing stop 

signs that light up like Christmas trees at 

dangerous intersections. (AP Photo/Al 

Behrman)

UNITED STATES DEPARTMENT OF TRANSPORTATION

112

awareness of motorcyclists and to reach older motorcyclists, begin the development of national 

standards for motorcycle rider training, and continue to incorporate motorcycle operators in HVE 

impaired-driving crackdowns, as well as complete and distribute updated motorcycle licensing 

guidance to State Motor Vehicle Administrators to reduce the number of improperly licensed drivers 

involved in fatal crashes. Additionally, NHTSA will initiate the development of national standards 

for novice motorcycle rider training, and evaluate general deterrence demonstrations for impaired 

motorcycle operation. During FY 2008, the Agency will develop a Notice of Proposed Rulemaking 

(NPRM) to improve motorcycle helmet requirements, as well as vehicle safety approaches to reduce 

the number of fatalities associated with motorcycle crashes.

FHWA IN-DEPTH

FHWA continued to promote highway safety through the 

implementation of comprehensive, integrated and datadriven safety programs at the Federal, State and local levels, 

including State and non-State owned roadway systems. 

FHWA worked with States to improve data coverage 

and data quality, develop and apply a Strategic Highway 

Safety Plan (SHSP), and implement eff ective projects and 

programs to save lives and reduce injuries. As a result of 

FHWA eff orts, all 50 States plus the District of Columbia 

developed an approved Plan during FY 2007. Th e 

development of an SHSP provides States the fl exibility to use 

funds for newly eligible activities and enables them to use 

up to 10 percent of Highway Safety Improvement Program 

(HSIP) funds for non-infrastructure safety eff orts. Four 

states took advantage of the fl exible HSIP funding. With 

the new HSIP and continued implementation of existing 

programs, the current downward trend in the fatality rate is 

expected to continue.

FHWA provides training to state and local governments 

that can be instrumental in meeting the local jurisdictions’ 

highway safety needs. For example, Douglas County, 

Georgia, offi cials developed a Safety Action Plan to identify 

areas of concern and set priorities for using available 

funding to make safety improvements. Th e Plan has 

been particularly helpful as the County pursued funding 

opportunities through the Georgia DOT program for off -

system safety projects. Douglas County offi cials credit the 

training they received from FHWA workshops on Low Cost 

Safety Improvements, Intersection Safety, and Road Safety 

Audits as providing them the information they needed to 
Th e U.S. Secretary of Transportation Mary E. Peters, center, accompanied by Mexican Secretary of 

Communications and Transportation Luis Tellez, second from left , watches a truck inspection in the city 

of Apodaca, northern Mexico, Th ursday, Feb. 22, 2007. U.S. safety inspectors will be allowed to examine 

trucks on Mexican soil before they cross the border into the United States under a program announced by 

Secretary Peters that could end a seven-year trade dispute in order to remove the last barrier to the longdelayed opening of U.S. highways to Mexican truckers. (AP Photo/Monica Rueda)

PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

113

advance safety by better identifying high crash locations and improving safety at those locations with 

low cost improvements. Among the improvements are enhanced signing and pavement markings 

such as dual Stop signs and Intersection Ahead warning signs, improved shoulders, roadside 

vegetation and tree removal, rumble strips, illuminated street name signs, and LED traffi c signal 

displays for better visibility. Douglas County developed crash reduction factors based on techniques 

taught at FHWA workshops for specifi c treatments to help determine the potential benefi ts of 

countermeasures and establish priorities for their implementation. County offi cials stated that having 

crash reduction factors has made it easier to get funding resources for safety by enabling them to 

eff ectively communicate the benefi ts of the proposed treatments.

FMCSA IN-DEPTH

COMPLIANCE AND ENFORCEMENT

FMCSA continues to place a high priority on enforcement and operational compliance activities. 

FMCSA’s fi eld staff completed over 10,000 safety compliance reviews, over 2,300 conditional 

carrier reviews, over 4,600 new entrant safety audits, nearly 100,000 southern border vehicle/driver 
UNITED STATES DEPARTMENT OF TRANSPORTATION

114

inspections (53,000 driver and 46,000 vehicle), and nearly 1,000 border safety audits. In addition, 

the Agency completed about 1,000 motorcoach compliance reviews, over 13,000 motorcoach-only 

inspections, and nearly 15,000 border motorcoach inspections (including both Federal and State). 

FMCSA also worked with State partners to ensure their completion of nearly 6,000 compliance 

reviews, over 24,000 new entrant audits, over 100 motorcoach compliance reviews, over 9,000 

motorcoach inspections, 500 border motorcoach inspections, over half a million southern border 

vehicle/driver inspections, and over 3 million roadside inspections of large trucks and buses.

EDUCATION AND OUTREACH

FMCSA, in partnership with NHTSA, extended a demonstration project known as TACT (Ticketing 

Aggressive Cars and Trucks) to four additional states for testing and evaluation. Th e project 

demonstrates the eff ectiveness of using high visibility enforcement, education, media and evaluation 

to raise public awareness to reduce fatalities resulting from other vehicles cutting off , tailgating and 

speeding near and around large trucks. Th e results of the initial project, completed in FY 2006, 

showed that drivers of passenger vehicles understood the message and learned how to drive more 

responsibly around trucks.

RESEARCH, TECHNOLOGY AND SAFETY INFORMATION

FMCSA’s Research and Technology programs continue to provide advances and innovations to 

improve commercial motor vehicle safety. Th e Agency completed the fi rst phase of a study on 

Onboard Monitoring Systems (OBMS) for commercial motor vehicle safety in May 2007. FMCSA 

worked on this study with the California Department of Transportation and the University 

of California Partners for Advanced Transit and Highways program. Th is study developed a 

prototype technology suite for installation in a truck tractor, which monitors a set of safe driver 

behaviors. Th e driver behaviors measured include hard breaking events, speed, hard steering events, 

following distance, lane keeping performance, roll over warning, safety belt use, and the use of turn 

signals. Th e suite provides feedback directly to the driver or in a “rolled-up” report for the carrier’s 

management. Th e purpose is to provide feedback to improve driving performance. Th is project was 

nominated for the 2007 “Best of Intelligent Transportation System Awards.” Th e next phase of the 

study is a fi eld operational test which is scheduled to start before the end of 2007.

Aviation Safety

FY 2007 Enacted Funds: $9.42 Billion

Th is remains one of the safest periods in aviation history for both commercial and general aviation. 

Over the last fi ve years, nearly three billion airline passengers reached their destination safely. As the 

stewards of aviation safety in the U.S., FAA and its industry partners have built a system that operates 

nearly 32,000 scheduled commercial fl ights daily and has reduced the risks of fl ying to all-time lows. 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

115

FAA’s eff orts during the past ten years have resulted in reduced general aviation (GA) fatal accidents 

and Alaska fatal accidents. Both measures are at their lowest recorded levels in history. When 

looking at the GA fatal accidents trend line of the last ten years, we have continued to trend in the 

right direction. However, since GA accidents tend to fl uctuate from year to year, the downward trend 

is not smooth.

2007 Results — DOT did not meet the 

target for the commercial aviation fatal 

accident rate. By the end of FY 2007, we 

had achieved a rate of 0.022 fatal accidents 

per 100,000 departures – a 57 percent drop 

in fatal accidents from 1997.

While FAA continues to aggressively 

pursue increased aviation safety, our 

ability to take corrective action to achieve 

our target both this year and next is severely limited. Even if, for the fi rst time, no commercial air 

carrier fatal accidents occurred during this fi scal year and the next, we would not achieve the target. 

Th is is because the current fatal accident measure is expressed in terms of fatal accidents per 100,000 

departures. With this measure all fatal accidents, as defi ned by the National Transportation Safety 

Board (NTSB) criteria, are weighted equally. Th e result is that an accident with a single fatality is 

viewed in the same way as an accident involving hundreds of passengers.

For this reason, FAA is introducing a new performance metric for commercial air carrier safety — 

fatalities per 100 million persons on-board. Th is new metric is more relevant to the fl ying public, 

as it better measures the individual risk, as low as it is, to fl y. All fatalities, including passengers, 

crewmembers, ramp workers, and ground fatalities, will be considered equally. And the proposed 

long-term target is no less challenging than the previous goal – the agency aims to cut this risk in half 

by 2025. To make this vision a reality, FAA will continue to work in partnership with industry.

FY 2008 Performance Forecast — DOT will not meet the FY 2008 commercial fatal accident 

performance target.

2007 Results — FAA met the target 

this year for reducing general aviation 

(GA) fatal accidents. Although most 

people are familiar with FAA’s role in 

commercial aviation, they may not be 

aware that it also oversees the safety of 

almost 300,000 general aviation aircraft in 

the United States. Th ese aircraft include 

single-seat home-built airplanes, rotorcraft 

(helicopters), balloons, and highly 

Performance Measure 

U.S. commercial fatal aviation accidents per 100,000 departures

(last 3-years’ average).

2004 2005 2006 2007

Target .028 .023 .018 .010

Actual .021 .017 .020 * .022 *

* Preliminary estimate

Associated FY 2007 Funding – $ 7.84 billion

Performance Measure 

Number of fatal general aviation accidents.

2004 2005 2006 2007

Target 349 343 337 331

Actual 340 354 299 (r)* 314 *

(r) Revised; * Preliminary estimate

Associated FY 2007 Funding – $ 1.57 billion
Upland Police Department’s Sgt. John Poole and the city’s building inspector, 

Luis Teixeira, investigate the wreckage of a small plane that crashed atop a 

garage trying to land at Cable Airport, Monday, June 4, 2007, in Upland, 

California. Th e crash slightly injured the pilot and two passengers, authorities 

said. (AP Photo/Inland Valley Daily Bulletin, Mediha Fejzagic DiMartino) 

(LA Times, Ventura County Star & Riverside Press-Enterprise)

UNITED STATES DEPARTMENT OF TRANSPORTATION

116

sophisticated extended-range turbojets. General aviation activities include student training, crop 

dusting, fi re fi ghting, law enforcement, news coverage, sightseeing, industrial work, on-demand air 

taxi service, corporate transportation, as well as personal use and recreational fl ying.

Since FAA began using GA 

fatal accidents as a performance 

target six years ago, the target 

has been exceeded just once. 

In FY 2007, GA fatal accidents 

once again decreased from 

the previous year. Rotorcraft , 

including Emergency Medical 

Service (EMS) fl ights, showed a 

sharp decrease from 2006.

FAA worked with various 

members of the GA community 

during FY 2007, including 

aeromedical evacuation, charter 

services, and others to promote 

education and training on 

instrument check guidance, 

and eff ective pilot/instructor 

mentoring programs. Th e 

sustained improvement in GA 

safety refl ects the cooperative 

eff orts undertaken with the GA 

and nonscheduled Part 135 community through the Joint Steering Committee, with several projects 

on training, information systems, and metrics.

Elsewhere, the FAA has undertaken targeted eff orts to reduce accidents among air tour operators, 

EMS helicopter operators, and energy operators in the Gulf of Mexico. In addition, FAA has 

certifi cated new avionics packages, continued to implement the Wide Area Augmentation System 

to improve safety while landing during limited-visibility operations, and has implemented the FAA/

Industry Training Standards program, which is a partnership with academia and the broader GA 

community to ensure pilots’ ability to manage risk in technologically advanced aircraft .

FY 2008 Performance Forecast — DOT expects to meet the FY 2008 general aviation safety 

performance target.
An American Airlines jet, top, lands Monday, April 2, 2007 on a rebuilt runway at Los Angeles International Airport. 

Th is southernmost runway, one of a parallel pair of runways on the airport’s south side, was closed in July and rebuilt 

55 feet away to create room for a new center aisle between the two. It was part of a $333 million airport renovation 

project designed to reduce close calls involving planes landing, taking off and taxiing. Th e airport historically has had 

among the nation’s highest rates of runway incursions, when a plane or vehicle on the ground gets too close to a plane 

that is landing or taking off . (AP Photo/Nick Ut)

PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

117

In-Depth Accomplishments Promoting Aviation Safety

Creating safe fl ying conditions is a complex interplay of many activities but FAA has learned that 

by addressing the precursors to accidents – operational errors and runway incursions – safety is 

enhanced. Th erefore, the agency spends considerable time and resources to reduce operational errors 

and runway incursions.

In addition, in recent years, FAA has focused on reducing aviation risks in Alaska, particularly those 

associated with GA. Aviation plays a vital role in Alaska, but the state’s topography and weather 

present unique safety challenges to pilots.

RUNWAY ACCIDENTS

Reducing the risk of runway incursions is one of FAA’s top priorities. A runway incursion is any 

occurrence at an airport involving an aircraft , vehicle, person, or object on the ground that creates 

a collision hazard or results in a loss of separation with an aircraft taking off , intending to take off , 

landing, or intending to land. Reducing runway incursions lessens the probability of accidents that 

potentially involve fatalities, injuries, and signifi cant property damage.
UNITED STATES DEPARTMENT OF TRANSPORTATION

118

Th e agency has been aggressively addressing the issue and has made progress reducing the most 

serious incidents, particularly those involving commercial aircraft . In FY 2007, FAA met the 

performance target of 0.530 per million operations by achieving an estimated rate of runway 

incursions of 0.429 per million operations. Runway incursions have dropped to one incursion for 

every 2.7 million operations, a 24 percent decrease from last year. Further, the number of serious 

runway incursions has been reduced by more than 50 percent from fi ve years ago. 

Further, in FY 2007, we continued the Runway Status Lights program which reduces the likelihood of 

runway incidents. Runway status lights act as stoplights on runways and taxiways, assigning priority 

to aircraft with the right of way. Th e lights are located along the centerline of a runway or taxiway 

and light up red when a runway is in use, notifying the pilot of a taxiing aircraft to either stop prior to 

crossing the runway, or yield to the aircraft landing or taking off . 

Th e Airport Surface Detection Equipment Model X (ASDE-X), a new runway safety tool that 

combats the risk of runway incidents on runways and taxiways, was installed at Louisville 

International Airport and Charlotte Douglas Airport. ASDE-X enables air traffi c controllers to detect 

potential runway confl icts by providing detailed coverage of movement on runways and taxiways. By 

collecting data from a variety of sources, ASDE-X is able to track vehicles and aircraft on the airport 

movement area and obtain identifi cation information from aircraft transponders. Controllers in 

the tower see this information presented as a color display of aircraft and vehicle positions overlaid 

on a map of the airport’s runways/taxiways and approach corridors. Th e system essentially creates a 

continuously updated map of the airport movement area that controllers can use to monitor surface 

traffi c. It is especially helpful to controllers at night or in bad weather when visibility is poor.

In addition, while pilots have traditionally acquired information about what runway or taxiway 

they are on by looking out their windshield, FAA is making it easier for pilots to have an invaluable 

electronic tool in the cockpit. It provides a moving map display with “own ship position” — changing 

and improving runway safety the way GPS has changed the way we safely navigate our cars. Aft er 

thoroughly reviewing safety data, including human factors research on the safety benefi ts of “own 

ship position” versus the potential safety risks, we are changing our certifi cation process to enable this 

technology to be available later this year while maintaining all appropriate safety standards.

OPERATIONAL ERRORS

One of the fundamental principles of aviation safety is separation—the need to maintain a safe 

distance from other aircraft , terrain, obstructions, and restricted airspace. Air traffi c controllers 

employ rules and procedures that defi ne separation standards for this environment. An operational 

error occurs when controllers fail to apply or follow these procedures that enforce separation and 

allow aircraft to end up too close to each other or to an obstruction.

Th e performance limit for FY 2007 was set not to exceed a rate of 4.27 operational errors per million 

activities. Th e FY 2007 preliminary estimates indicate 4.11 operational errors per million activities, 

tracking slightly below the year-to-date projected performance limit. 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

119

During FY 2007, FAA improved how the severity of operational errors is calculated. Th e agency 

began implementation of a new system to classify operational errors and instituted a 10 percent 

performance tolerance on separation minima to better understand and measure its safety 

performance. Th ese changes allow FAA to take full advantage of advances in technology that now 

permit for separation measurements to a hundredth of a mile (60 feet) and allow the agency to 

capture more events that approach the edges of the separation standards.

Th e new measurement process, referred to as the separation conformance, measures the severity 

of the outcome of the operational error as a result of the percent of required separation that was 

maintained. When the separation conformance is measured in combination with the number of 

operations, it creates a reliable rate-based measure of safety. 

Further, the new measurement system minimizes the number of criteria used to determine 

operational error severity, minimizes subjectivity, and allows for better analysis of same category 

events—all of which enhance safety conclusions. With these changes FAA now measures the 

proximity between two aircraft which best characterizes the actual risk of collision.

ALASKA ACCIDENTS

Th ere were 94 accidents in Alaska in FY 2007. Alaska experienced a total of 11 fatal accidents this 

year – four in Part 135 (unscheduled air carrier) and seven in general aviation.

Alaska’s skyways are equivalent to the highway and road infrastructure found throughout the 

continental U.S., making the use of general aviation aircraft essential to everyday life. Th is includes 

but is not limited to enabling children to attend school, traveling to medical appointments, and 

supplying communities with groceries, fuel, and mail. 

Th erefore, there is urgency to modernize fl ight service in Alaska and FAA’s Flight Plan focuses 

specifi cally on reducing GA accidents in Alaska. Th e agency’s goal is to reduce Alaska accidents from 

the 2000 – 2002 average of 130 accidents per year to no more than 99 accidents per year by FY 2009. 

Th e FY 2007 target is 110.

Flight Service facilities in Alaska provide fundamental fl ight safety and operational support to 

Alaskan aviators. Th e Alaska Flight Service Modernization (AFSM) program is working to ensure 

Alaska’s unique aviation needs are met with a level of service that is on par or superior to the level of 

service available in the continental U.S., Hawaii, and Puerto Rico. Th e goal of AFSM is to provide 

improved level of service and reduce operating costs by at least 25 percent over projected costs 

associated with current infrastructure. FAA’s eff orts include expanded and enhanced fl ight services 

throughout Alaska through innovative use of remote airport advisory cameras, and the delivery of 

information via Internet Web site hosted on kiosks located at rural airports. Continued emphasis 

on training through Medallion and Circle of Safety programs, as well as the introduction of new 

technology, has signifi cantly improved the GA operating environment in Alaska. Pilots in Alaska 

can conduct required navigation performance approaches using sophisticated on-board equipment at 

runways that are normally not accessible in low visibility and bad weather conditions.
UNITED STATES DEPARTMENT OF TRANSPORTATION

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Th e Alaska Capstone Program evaluated technologies and procedures that are now incorporated 

into the Automatic Dependent Surveillance Broadcast (ADS-B) program. Th e primary benefi t of 

ADS-B in Alaska is the delivery of GA air traffi c control service at lower altitudes in areas where 

radar is not currently available or would be too costly to deploy. ADS-B provides the specialist with 

a situational awareness tool for providing pilots with real time information on aircraft , snow removal 

equipment and airport vehicles operating on runways, taxiways, and ramps and for aircraft operating 

in the vicinity of traffi c patterns at selected airports. ADS-B technology can also be used to improve 

accuracy and timeliness of search and rescue activity when pilots encounter problems or experience 

an accident in remote parts of Alaska.

Rail Safety

FY 2007 Enacted Funds: $145 Million

In May 2005, the Secretary announced the Department’s National Rail Safety Action Plan to improve 

the safety of the Nation’s freight railroad operations by:

 Targeting the most frequent, highest risk causes of train accidents;

 Focusing FRA oversight and inspection resources more precisely; and,

 Accelerating research eff orts that have the potential to mitigate the largest risks.

Th e action plan refl ects a partnership between FRA, the railroads, and communities focused on 

improving rail safety.

2007 Results — FRA estimates that it 

will meet the FY 2007 performance target. 

Much of its success is attributable to better 

utilization of data to direct FRA safety 

inspectors and other resources where 

problems are likely to arise. Additionally, 

FRA has built substantial partnerships 

with State and local agencies through 

the State Rail Participation Program to 

address accidents and casualties at highway-rail grade crossings and from trespassing. Th e public 

benefi ts in several ways. First, fewer accidents mean fewer deaths and injuries. Th ese statistics also 

translate into fewer health-care expenses and loss of personal property.

FY 2008 Performance Forecast — Th e FY 2008 target will be met.

Performance Measure 

Rail-related accidents and incidents per million train-miles.

2004 2005 2006 2007

Target 17.49 17.14 16.80 16.70

Actual 19.02 (r) 17.90 (r) 16.94 (r) 15.02 *

(r) Revised; * Preliminary estimate

Associated FY 2007 Funding – $ 145 million
Federal Railroad Administrator (FRA), Joseph H. Boardman, second from left , and Chief of the Track Research 

Division, Gary A. Carr, left , show a bank of monitors inside a state of the art rail inspection vehicle in Rensselaer, 

N.Y., Monday, March 19, 2007. Th e FRA on Monday started a two-day inspection of the tracks by a special computer 

equipped rail car one week aft er an 80-car freight train partly derailed in Oneida. (AP Photo/Stewart Cairns)

PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

121

In-Depth Accomplishments Promoting Rail Safety

In late April 2007, FRA began operating its two newest automated track inspection vehicles equipped 

with state-of-the-art technology to prevent train derailments by detecting subtle track fl aws that are 

diffi cult to identify by regular means. Th e addition of the new equipment increases the FRA fl eet 

of automated inspection vehicles to fi ve, which when fully integrated into the federal inspection 

program will allow this agency to inspect nearly 100,000 track-miles each year, tripling the current 

capacity. In particular, the addition of these vehicles to FRA’s fl eet gives the Agency a greater ability 

to inspect a larger percentage of the Nation’s rail lines, which are used to transport dangerous, 

hazardous materials as well as those used by passenger trains. Th is enhanced capability gives FRA 

the fl exibility to conduct follow-up inspections on a timelier basis and also provides the Agency the 

capacity to conduct unscheduled inspections of rail lines that have been identifi ed as presenting 

safety concerns.

Th e new vehicles, known as the T19 and T20, use a variety of technologies to measure track geometry 

fl aws such as whether two rails are level, if the width between the rails is acceptable, and if the shape 

of each rail meets federal standards so as to avoid derailments. Th e measurements are recorded in 

real time and at operating speed. Problem areas are identifi ed by global positioning system location 

and shared immediately with the railroad so appropriate corrective actions can be taken in a timely 

manner. Th ese vehicles will contribute signifi cantly to increasing rail safety, specifi cally in reducing 

track caused accidents and incidents.
UNITED STATES DEPARTMENT OF TRANSPORTATION

122

Transit Safety

FY 2007 Enacted Funds: $11 Million

Public transportation provides a fl exible safer alternative to traveling by automobile. Currently, 

transit is one of the safest modes of travel per passenger-mile traveled. According to the National 

Safety Council, passengers on the Nation’s bus, rail, or commuter rail systems are 40 times less likely 

to be involved in a fatal accident, and 10 times less likely to be involved in an accident resulting in 

injury. Th e challenge is to further reduce the rate of fatalities and injuries even as the total number of 

people using transit increases.

2007 Results — DOT met the target 

for FY 2007. Strong growth in transit 

ridership and the continued expansion 

of transit service signifi cantly increased 

the number of transit passenger miles 

traveled in FY 2007 over FY 2006. At 

the same time, using nine months of data 

from FTA’s National Transit Database and 

six months of Commuter Rail (CR) data 

from the FRA Rail Accident Incident Reporting System (RAIRS), FY 2007 safety fi gures come in well 

under the target rates for fatalities and injuries.

To sustain and improve gains made in safety performance, FTA continues to work collaboratively 

with the public, the transportation industry, State departments of transportation, and the research 

and engineering communities to develop new programs to target and address safety and security 

concerns. FTA’s strategy to keep fatality and injury rates low, in spite of signifi cant increases 

in passenger miles traveled, is to implement policies and activities (such as research, training, 

technical assistance, information dissemination, and oversight) that encourage transit decisions, 

practices, programs, and operations to reduce these statistics. FTA’s policies address improving and 

maintaining the condition of the transit infrastructure (vehicles, track and facilities), which has an 

impact on overall system safety and performance, and to promote system safety in the planning and 

design of a transit system from its inception. Th is approach also includes promoting emergency 

preparedness procedures that enhance the speed and eff ectiveness of responses to accidents and 

incidents. 

Th e impact on the riding public is a reduction in transit related fatalities, injuries and incidents, 

and a reduction in the cost and damage to the transit infrastructure due to transit accidents. Th ere 

is greater public awareness of the safety of traveling by transit, which is one of the factors that may 

increase the attractiveness of transit as a mode of choice compared to other modes of transportation 

with higher accident and fatality rates.

FY 2008 Performance Forecast — DOT will meet the FY 2008 target.

Performance Measure 

Transit fatalities per 100 million passenger-miles traveled.

2004 2005 2006 2007

Target .487 .482 .477 .473

Actual .467 .428 .344 .286 *

* Preliminary estimate

Associated FY 2007 Funding – $ 5 million
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

123

In-Depth Accomplishments Promoting Transit Safety

AUDITING OF ALCOHOL AND DRUG TESTING PROGRAMS

FTA audits the drug and alcohol programs of its grantees and their contractors in order to detect and 

deter illicit drug use and alcohol misuse. Over 60 urban and non-urban transit agencies’ drug and 

alcohol testing programs were extensively reviewed with on-site audits in 2007. It is estimated that 

the drug and alcohol testing program audits have led to the avoidance of 817 accidents, saved six lives 

and avoided 718 injuries during the period 1992 through 2002. Fatalities resulting from accidents 

in which transit employees have positive drug test results, dropped from three in 1995 (fi rst year of 

mandatory testing) to one over the period of 1999 through 2004.

Pipeline Safety

FY 2007 Enacted Funds: $51 Million

While pipelines are by many measures the safest mode for transporting hazardous liquid and natural 

gas, their cargo is inherently dangerous. To address these hazards, the Pipeline and Hazardous 

Materials Safety Administration (PHMSA) has designed and implemented a strong, risk-based, 

program for oversight of our Nation’s pipeline infrastructure. Th is risk-based systems approach also 

helps provide secure and reliable transportation of our Nation’s energy resources.

To reduce the risk to the public, PHMSA identifi es and evaluates risks, develops and enforces 

standards, provides grants to assist States in support of their pipeline safety programs, educates 

operators and the public, sponsors research on promising technologies, and responds to accidents/

incidents. States play a critical role in the national pipeline safety program, overseeing most intrastate 

pipeline infrastructure, including most of the Nation’s natural gas distribution pipeline mileage. 

States face increasing resource and technical challenges as we expand the State role in assisting 

with new Integrity Management (IM) and other evolving requirements. Th e Pipeline, Inspection, 

Protection, Enforcement and Safety Act of 2006 (PIPES Act) recognized the challenge and calls for 

increased funding to help states meet new mandatory initiatives. We recognize the importance of a 

strong continued focus on targeting excavation or construction-related damage—the leading cause 

of pipeline incidents involving death or injury, especially in natural gas distribution systems where 

people work and live in closest proximity to pipelines.

Th e pipeline safety record is good and improving. Th e long-term trend shows a general decline in 

the number of total pipeline incidents. But beginning in 2003, PHMSA saw three successive years 

of increasing incidents. Ten percent of the incidents in 2005 were attributable to hurricanes Rita 

and Katrina. Th e number of serious incidents has declined by half over the past 20 years, with a 

record low of 34 in 2006. We believe this indicator provides a better overall measure of program 

performance and public impacts than total reported incidents.
UNITED STATES DEPARTMENT OF TRANSPORTATION

124

2007 Results — Based on preliminary 

data, PHMSA projects 388 total pipeline 

incidents in 2007, which would miss 

the performance target for our goal by 

about seven percent. However, this 

estimate is still 20 percent below the 

high in 2005 (which was aff ected heavily 

by hurricanes) and within the range of 

normal annual variation in the measure. 

Data for 2004, 2005, and 2006 are revised 

slightly from earlier reports because operators have submitted new reports or amended old reports.

FY 2008 Performance Forecast — PHMSA has revised its performance measure beginning in 

FY 2008 to track the number of serious incidents for natural gas and hazardous liquid pipelines. 

Serious incidents are defi ned as those incidents involving death or injury. We expect to meet our 

targets for serious incidents in 2007 and 2008.

In-Depth Accomplishments Promoting Pipeline Safety

With enactment of the PIPES Act, the Administration and Congress agreed on an ambitious agenda 

for PHMSA’s Pipeline Safety Program, emphasizing improved safety and reliability, sharpening 

our focus and mitigating the risk to people. Th e PIPES Act refl ects a strong endorsement of the 

agency’s risk–based integrity management approach. Integrity management has been the core of the 

agency’s approach over the past several years. PHMSA is near the end of the fi rst cycle of integrity 

management implementation in the hazardous liquid and natural gas transmission pipeline systems. 

We attribute signifi cant reductions we see in serious incidents to the early identifi cation and repair of 

55,000 defects that, without early detection, could have grown to failure and harmed the public. 

Th e PIPES Act directed PHMSA to extend similar protections to people living in urban and suburban 

areas along the Nation’s 1.7 million miles of distribution pipelines, where up to 80 percent of the 

human consequences from all pipeline failures occur. PHMSA is issuing a notice of proposed 

rulemaking that will require operators of natural gas distribution systems to implement integrity 

management programs. In addition to safety benefi ts, improving the performance of distribution 

pipelines will also reduce the likelihood of failures that oft en result in congestion-causing road 

closures and evacuations. 

PHMSA works to target excavation-related damage and other pipeline risks through eff ective, nonregulatory approaches. In FY 2007, we partnered with stakeholders to launch “811” as the national 

number to call before digging. Th is program will help reduce excavation damage to pipelines, 

increase regional partnerships, and support enforcement of call-before-you-dig requirements. We 

also are targeting high-risk or poor-performing operators, working closely with senior management 

to assist these companies in addressing safety concerns. 

Performance Measure 

Number of incidents for natural gas and hazardous liquid pipelines.

2004 2005 2006 2007

Target 310 295 365 362

Actual 443 (r) 490 386 (r) 388 *

(r) Revised; * Preliminary estimate

Associated FY 2007 Funding – $ 51 million
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

125

Hazardous Materials Safety

FY 2007 Enacted Funds: $103 Million

Th e Pipeline and Hazardous Materials Safety Administration (PHMSA) leads the national program 

to identify and evaluate safety risks, develop and enforce standards for transporting hazardous 

materials, educate shippers and carriers, investigate hazardous materials incidents, conduct research, 

and provide grants to improve emergency response to incidents. To accomplish its safety goals, 

PHMSA works with other DOT Operating Administrations to help them administer their hazmat 

safety programs eff ectively.

PHMSA employs an enterprise approach to leverage its limited resources with others in the hazmat 

community, including industry, fi rst responders, other modal hazmat enforcement programs, and 

state and local emergency preparedness agencies. We build on existing local and state programs by 

providing funding for emergency preparedness planning and training in order to identify threats 

specifi c to a locality and to train fi rst responders to handle incidents resulting from those threats. 

In addition to enhancing safety, eff ective response also reduces congestion by enabling highways, 

railroads and airports to resume normal operation in a minimum amount of time. 

PHMSA focuses its safety program on those materials that present the most signifi cant risks to 

public safety. Our eff orts are geared toward preventing high consequence events from occurring, and 

mitigating those consequences when they do occur. 

2007 Results — Th e Department 

expects to achieve its serious incident 

target this year. During 2007, PHMSA 

invested heavily in information systems 

that will allow modes to share company 

specifi c compliance information, to 

better identify high-risk hazmat carriers 

and shippers and plan interventions 

to limit those risks. PHMSA shares 

authority to enforce the hazardous 

materials regulations with other DOT modes—the Federal Aviation Administration, the Federal 

Motor Carrier Safety Administration and the Federal Railroad Administration—as well as the US 

Coast Guard. 

FY 2008 Performance Forecast — Based on previous years’ performance, DOT expects to achieve 

its target for serious hazardous materials incidents in 2008. During FY 2008, PHMSA will fi ne-tune 

its risk-based decision support model. We will also accelerate our collaboration with Federal, State 

and local government entities, as well as non-profi t emergency response organizations, to enhance 

safety and reduce non-recurrent congestion.

Performance Measure 

Number of serious hazardous materials transportation incidents.

2004 2005 2006 2007

Target 509 503 460 466

Actual 492 (r) 530 (r) 494 (r) 455 *

(r) Revised; * Preliminary estimate

Associated FY 2007 Funding – $ 103 million
Hazmat personnel and Union Pacifi c Railroad workers inspect several 

tanker cars that derailed and overturned Sunday, Oct. 22, 2006 in 

downtown Gurdon, Arkansas. Th e derailment caused the evacuation of at 

least 50 residents. No injuries have been reported. (AP Photo/Steve Fellers)

UNITED STATES DEPARTMENT OF TRANSPORTATION

126

In-Depth Accomplishments Promoting Hazmat Safety

In response to a series of incidents involving over-heated batteries carried by airline passengers, we 

have pursued a comprehensive, multi-layered strategy to address the transportation risks presented 

by lithium batteries, working with representatives of the NTSB, the Consumer Product Safety 

Commission, manufacturers of lithium batteries and battery-powered products, airlines, airline 

employee organizations, testing laboratories, and the emergency response and law enforcement 

communities to share and disseminate information about battery-related risks and developments and 

to promote improvements in industry standards and best practices. We developed an aggressive 

campaign to educate the public about ways to safely travel with batteries and battery-powered 

equipment. We are leading the development of international transportation standards for lithium 

batteries. 

To enhance the security of rail 

shipments of Toxic by Inhalation 

(TIH) materials, PHMSA and the 

Federal Railroad Administration 

(FRA) are working closely with 

the Transportation Security 

Administration (TSA) through 

cooperative eff orts with rail 

shippers and carriers. DOT 

participates on TSA-led teams 

conducting rail corridor studies, 

which address vulnerabilities and 

mitigation strategies at specifi c 

locations. Based on data and 

information surfaced during the 

corridor studies, TSA, FRA, and 

PHMSA developed a series of 

voluntary security action items for 

implementation by rail carriers 

transporting TIH materials. As a part of these voluntary measures, the industry has agreed to: (1) 

reduce the number of hours TIH cars and trains are held in high threat urban areas; (2) enhance 

chain-of-custody requirements for TIH rail cars; (3) identify secure storage areas for TIH cars; and 

(4) limit the movement of TIH cars near public venues.

On December 21, 2006, in collaboration with FRA and TSA, PHMSA published a rulemaking 

proposal to enhance the safety and security of rail shipments of certain high-risk hazardous materials. 

Th e proposal incorporates a risk-based, data-driven approach, requiring rail carriers to conduct and 

base routing decisions on individualized, route-specifi c assessments. 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

127

To mitigate the consequence of hazmat incidents, PHMSA developed and has maintained the 

Emergency Response Guidebook (ERG) for use by “fi rst responders” – those public safety personnel 

fi rst dispatched to the scene of a hazardous materials transportation incident, such as fi re fi ghters, 

police, and emergency services personnel. Th e ERG provides fi rst responders with a guide for initial 

actions to be taken in those critical fi rst minutes aft er an incident to protect the public and to mitigate 

potential consequences. Th is year, PHMSA partnered with the National Library of Medicine to 

produce a pocket PC soft ware version of the ERG that is available for download at no cost and which 

should greatly improve access to important safety information by those who need it most.
UNITED STATES DEPARTMENT OF TRANSPORTATION

128
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

129

MOBILITY STRATEGIC GOAL

ADVANCE ACCESSIBLE, EFFICIENT, INTERMODAL TRANSPORTATION FOR THE MOVEMENT OF 

PEOPLE AND GOODS

FHWA, $23,678

FAA, $4,004.7

FTA, $8,536.9

FY 2007 Enacted Funding by Operating Administration (OA)

(Dollars in Millions)

Total FY 2007 Funding: $37,670.2 Million

STRATEGIC OUTCOMES

 Improved infrastructure in all modes.

 Reduced congestion in all modes.

 Increased reliability throughout the 

system.

 Increased access for all Americans.

PERFORMANCE MEASURES

 Percentage of travel on the National 

Highway System (NHS) meeting 

pavement performance standards for 

“good” rated ride.

 Percent of total annual urban-area travel 

occurring in congested conditions.

 Average percent change in transit 

boardings per transit market (150 largest 

transit agencies).

 Percent bus fl eets compliant with the 

Americans with Disabilities Act (ADA).

 Percent of key rail stations compliant with 

the ADA.

 Number of employment sites (in 

thousands) that are made accessible 

by Job Access and Reverse Commute 

transportation services.

 Percent of all fl ights arriving within 15 

minutes of schedule at the 35 Operational 

Evolution Plan airports due to National 

Airspace System (NAS)-related delays.

Other OAs

FRA $1,293.7

OST $115.7

STB $26.3

MARAD $12.8

FMCSA $2.1
UNITED STATES DEPARTMENT OF TRANSPORTATION

130

Improved Infrastructure

FY 2007 Enacted Funds: $11.78 Billion

Improving the condition and performance of pavement and bridges is critical to the structural 

integrity and cost eff ectiveness of the transportation system. Th e condition of the National Highway 

System (NHS) also impacts traffi c congestion, the wear-and-tear on vehicles, the comfort of travelers, 

and fuel consumption.

2007 Results — Th e target was not 

met. Th e estimated percentage of 

travel on the NHS exhibiting good 

ride conditions was 55 percent, a one 

percent improvement over 2006. Th e 

two percent improvement — from 52 

percent in 2005 to 54 percent in 2006 

— could not be sustained in 2007, as the 

prior year increase was due primarily to 

substantial improvements in a few states 

while remaining states were only able to maintain existing conditions. Th e targets for 2008 to 2013 

were lowered this year to better refl ect expected future conditions given existing funding levels and 

the risings costs of materials nationwide which limit the number of projects underway.

FY 2008 Performance Forecast — Th e target of 56 percent of travel on the NHS network in good 

ride condition will be met in FY 2008 if construction material costs stabilize.

Additional Highway Infrastructure Activities

MINNEAPOLIS BRIDGE COLLAPSE

As the States work to maintain an aging infrastructure, FHWA stands ready to assist them as 

necessary. FHWA plays a vital role, especially when tragedy occurs. In response to the tragic 

collapse of the I-35W Bridge in Minneapolis, MN, FHWA Division offi ce staff was on the site within 

30 minutes of the report that the bridge collapsed. Th e next day, FHWA headquarters staff was at 

the site to assist State DOT personnel. FHWA is assisting the National Transportation Safety Board 

(NTSB) as they conduct a thorough investigation, which includes a structural analysis of the bridge. 

FHWA released $50 million of Emergency Relief (ER) program funds for clean-up and recovery work 

including clearing debris and rerouting traffi c, and for design work on a new bridge. Th at amount 

is in addition to the $5 million in ER program funds released to Minnesota to initiate recovery 

operations.

Performance Measure 

Percentage of travel on the National Highway System (NHS) meeting pavement 

performance standards for “good” rated ride.

2004 2005 2006 2007

Target 53.0 54.0 55.5 56

Actual 52.0 52.0 (r) 54.0 (r) 55 *

(r) Revised; * Preliminary estimate

Associated FY 2007 Funding – $ 11.78 billion
Vehicles are scattered along the broken remains of the Interstate 35W 

bridge, which stretches between Minneapolis and St. Paul, aft er it collapsed 

into the Mississippi River during evening rush hour Wednesday, Aug. 1, 

2007, sending vehicles, tons of concrete and twisted metal crashing into the 

water. (AP Photo/Th e Minnesota Daily, Stacy Bengs)

PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

131

In response to the tragedy, FHWA 

issued two technical advisories: 

One strongly encouraging 

States to re-inspect all steel deck 

truss bridges and follow-up on 

any critical fi nds, and another 

advising States to ensure that the 

construction equipment loads and 

stockpiled raw materials placed 

on a structure do not overload its 

members. 

FHWA understands that the NTSB 

fi ndings along with a program audit 

by the DOT Offi ce of Inspector 

General may result in additional 

recommended improvements 

to the Bridge program, and as a 

result, FHWA will stand ready to 

implement changes to funding or 

program direction as necessary.

INNOVATIONS AND NEW TECHNOLOGIES

FHWA has developed several initiatives to address highway congestion. One of the newest is 

Highways for LIFE (HfL). Th e purpose of the HfL program is “to advance longer lasting highway 

infrastructure using innovations to accomplish the fast construction of effi cient and safe highways 

and bridges” (thus spelling out “LIFE”). Th e purpose of the Highways for LIFE pilot program 

is to accelerate the adoption of innovations and new technologies, thereby improving safety and 

highway quality, while reducing congestion caused by construction. Th e HfL program is intended 

to bring about this cultural change in a few years rather than decades. Th e program is focused on 

using incentives for construction projects to demonstrate what is possible; fostering technology 

partnerships to help the highway construction industry realize the benefi ts of proven but underutilized technologies; encouraging technology transfer, communication, and stakeholder involvement 

to build and equip the workforce and educate the public. As of June 2007, FHWA had approved 

funding or waivers for matching funds for innovative HfL proposals from nine states. 

Since innovations can take more than a decade to deploy widely, FHWA is attempting to accelerate 

the deployment process for three innovations—Road Safety Audits (RSA), Prefabricated Bridge 

Elements and Systems (PBES), and Making Work Zones Work Better—that are collectively referred to 

as vanguard technologies.
UNITED STATES DEPARTMENT OF TRANSPORTATION

132

Twenty States now have some form of involvement in implementing an RSA, either by conducting 

a pilot RSA or participating in FHWA-sponsored training. RSAs are a comprehensive and eff ective 

tool for improving the safety performance of a road while it is still in the planning or design stage, or 

for identifying and mitigating safety concerns on existing roads and intersections. Th ere are many 

benefi ts to RSAs, among them: designs that reduce the number and severity of crashes and the 

possibility of reducing costs by identifying safety issues and correcting them before projects are built.

Prefabricated bridge elements can be manufactured either onsite or off site under controlled 

conditions and brought to the construction location, ready for installation. Using prefabricated 

elements and systems minimizes construction-related traffi c disruptions, increases work zone 

safety by reducing the number and exposure time of workers operating near moving traffi c, reduces 

environmental impacts by minimizing the site access footprint, and improves the constructability 

of bridge designs by controlling manufacturing environments. Innovative concepts including use 

of high performance materials can mitigate the frequent need for maintenance and resulting traffi c 

impacts.

Data from selected State department of transportation Web sites shows that 20 percent of the 

National Highway System is under construction in the summer and about seven percent during the 

winter months. It is estimated that over 6,400 work zones are in eff ect during the summer months, 

with a corresponding drop in capacity of over 6,100 lane-miles of freeway. Making Work Zones Work 

Better is a collection of more than one hundred innovations that are to be used as appropriate for 

the particular application. To advance practice, the FHWA developed a Work Zone Traffi c Analysis 

Primer and Guidance, set up a work zone peer to peer program to exchange information, and created 

focused workshops based on the particular needs of a State.

Reduced Congestion

FY 2007 Enacted Funds: $6.78 Billion

Traffi c congestion on our Nation’s highways now aff ects more trips, involves more hours of the day, 

and includes more of the transportation system than ever before. Congestion varies signifi cantly 

day to day because demand and capacity are constantly changing at any given location. Overall, 67 

percent of the peak-period travel nationwide is congested, compared to 32 percent in 1982. Travelers 

in 85 urban areas spent 3.7 billion hours stuck in traffi c in 2003, more than a fi ve-fold increase when 

compared to 1982.
Traffi c backs up on I-395 and Seminary Road in Alexandria, 

Virginia on Th ursday Dec. 14, 2006 during the aft ernoon rush 

hour. Drivers waste nearly an entire work week each year 

sitting in traffi c on the way to and from their jobs, according to 

a national study released Tuesday, Sept. 18, 2007. (AP Photo/ 

Jacquelyn Martin)

PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

133

2007 Results — Congested travel in 

urban areas was below the target level with 

a projection of 31.8 percent for urban-area 

travel occurring in congested conditions. 

Th e results from 2004 to 2006 suggest that 

the overall rate of growth nationwide in 

traffi c congestion appears to be slowing. 

However, traffi c congestion is still a 

signifi cant problem, particularly in urban 

areas.

FY 2008 Performance Forecast — DOT anticipates congestion levels nationwide should remain 

below the performance limit of 32.3 percent in FY 2008.

In-Depth Accomplishments Promoting Reduced Congestion

A major component of the National Strategy to Reduce Congestion is the Urban Partnership 

Agreement (UPA), through which the Department works with certain metropolitan areas or ‘‘Urban 

Partners’’ in order to demonstrate strategies with proven eff ectiveness in reducing traffi c congestion. 

Under a UPA, the Department and its Urban Partners agree to pursue four strategies with a 

combined track record of eff ectiveness in reducing traffi c congestion, collectively referred to as the 

‘‘Four Ts:’’

 Tolling: Implementing a broad 

congestion pricing or variable toll 

demonstration; 

 Transit: Creating or expanding 

express bus services or bus rapid 

transit (BRT), which will benefi t 

from the free fl ow traffi c conditions 

generated by congestion pricing or 

variable tolling; 

 Telecommuting: Securing 

agreements from major area 

employers to establish or expand 

telecommuting and fl ex scheduling 

programs; and,

 Technology & operations: Utilizing 

cutting edge technological and 

operational approaches to improve 

system performance.

Performance Measure 

Percentage of total annual urban-area travel occurring in congested conditions.

2004 2005 2006 2007

Target 32.3 33.0 33.7 32.5

Actual 31.6 31.8 31.6 (r) 31.6 *

(r) Revised; * Preliminary estimate

Associated FY 2007 Funding – $ 6.78 billion
UNITED STATES DEPARTMENT OF TRANSPORTATION

134

Five metropolitan areas were selected as the fi rst Urban Partners: Miami, Minneapolis, New York 

City, San Francisco, and Seattle. FHWA embarked on a comprehensive agenda to capture lessons 

learned from this group and facilitate peer exchange in order to ensure the eventual widespread 

deployment of congestion pricing applications.

With FHWA support, a traffi c signal operations self-assessment was undertaken to encourage 

agencies to look at how traffi c signal systems are being managed within their jurisdictions. Th e 

results of the self-assessments provided input to inform the 2007 National Traffi c Signal Report 

Card, part of a nationwide eff ort to bring more attention to the need for additional investment in 

traffi c signal operations. In collaboration with the private sector, FHWA delivered Adaptive Control 

Soft ware (ACS)-Lite, which is designed to monitor and evaluate traffi c operations and refi ne signal 

timing consistent with current traffi c conditions in real time. ACS-Lite passed its real-world tests and 

was aggressively promoted.

To promote better system operation and management practices, FHWA established a Localized 

Bottleneck Reduction program to encourage the use of operational and low-cost construction 

strategies that will improve mobility at bottleneck locations. FHWA undertook a major eff ort to 

identify international and domestic examples of innovative strategies. In particular, all FHWA 

Division Offi ces worked with their State counterparts to identify good practice quick fi xes to alleviate 

bottleneck congestion. Th ese strategies were published in Traffi c Bottlenecks: a Primer – Focus on 

Low-Cost Operational Improvements, which is intended to serve as a forum for peer exchange and will 

be regularly updated as additional information becomes available.

Transit Ridership

FY 2007 Enacted Funds: $8.12 Billion

Transit is one of the safest ways of traveling, relieves road congestion, and reduces air pollution. 

Federal investments in transit, combined with State and private sector funds, make public 

transportation possible for millions of Americans every day. Transit saves time, provides mobility, 

and reduces congestion.

According to a recent analysis, Americans wasted 4.2 billion hours and 2.9 billion gallons of fuel 

sitting in traffi c jams. Traffi c congestion now costs motorists in our Nation’s top urban areas about 

$78 billion a year in wasted time and fuel. Transit saved $10.2 billion in congestion costs attributable 

to wasted fuel and time.

Many of the 37 million Americans who live below the poverty line rely on transit as their only means 

of transportation for work and non-work trips. As former welfare recipients move from welfare to 

jobs, transit off ers the critical link that makes employment possible and the American workforce 

stronger.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

135

Accessible public transportation is also important to the 24 million Americans with disabilities who 

can use public transportation, and the growing number of senior citizens who can no longer drive.

2007 Results — DOT met the 

performance target. A combination of 

factors contributed to the increase in 

ridership in 2007 including programs 

such as Commuter Choice, guaranteed 

ride home, partnerships between the 

transit agencies and employers and 

universities to provide transit passes, 

simplifi ed fare structures, improved and 

expanded service, and more eff ective 

marketing of transit. Th e purchase of new transit vehicles by many transit properties has increased 

the amenities and rider comfort which also attracts riders. In addition to these active eff orts to 

increase transit ridership, external factors such as the increase in the cost of gasoline and higher 

levels of employment have had a positive impact. Th e public benefi ts in many ways from improved 

transit service; through energy conservation, reduced congestion, environmental improvements, and 

economic stimulus.

FY 2008 Performance Forecast — DOT expects to meet the transit ridership target for FY 2008.

In-Depth Accomplishments Promoting Transit Ridership

To support this goal, FTA continued to invest in the Nation’s transit infrastructure to ensure transit 

is as safe, effi cient and cost-eff ective as possible, thus attracting new riders. FTA also implemented 

several new initiatives to promote ridership and recognized transit agencies that developed innovative 

and successful programs to increase ridership. Some of the FTA ridership accomplishments include 

the following:

 In March 2007, FTA formally recognized 12 transit agencies that experienced 

the highest growth in ridership as a result of implementing changes in their fare 

structures, operations, marketing, partnerships, or service coverage. Th e award 

winners are as follows: 

Performance Measure 

Average percent change in transit boarding per transit market

(150 largest transit agencies).

2004 2005 2006 2007

Target 2.0 1.0 1.0 1.5

Actual 0.7 1.9 2.1 2.0 *

* Preliminary estimate

Associated FY 2007 Funding – $ 8.12 billion
UNITED STATES DEPARTMENT OF TRANSPORTATION

136

Population

Under 50,000

Population

50,000 to 200,000

Population

200,000 to 1 million

Population

Over 1 million

River Cities Public Transit,

Pierre, South Dakota

Transit Services of

Frederick County,

Frederick, Maryland

Community Transit,

Everett, Washington

Sound Transit,

Seattle, Washington

Black Hawk Transportation 

Authority,

Black Hawk, Colorado

Hill Country Transit District,

San Saba, Texas

Lehigh and Northampton 

Transportation Authority,

Allentown, Pennsylvania

Peninsula Corridor

Joint Powers Board,

San Carlos, California

City of Durango Transit,

Durango, Colorado

Portage Area

Regional Transportation,

Kent, Ohio

Fort Worth

Transportation Authority,

Fort Worth, Texas

Greater Cleveland Regional 

Transit Authority,

Cleveland, Ohio

 In FY 2007, United We Ride human service transportation initiative made strides to 

improve transportation delivery systems for older adults, persons with disabilities, 

families with low-incomes, disadvantaged youth, and other populations most 

dependent upon public and human service transportation systems to meet their 

mobility needs. United We Ride and the DOT Intelligent Transportation System 

technologies program launched a national demonstration program to untangle the 

confusing web of transportation services for customers by using technology to create 

a single point of customer access to transportation services no matter what the trip, 

who provides the ride or who funds the services. Nine sites were selected to develop 

operational plans to implement simplifi ed customer access systems.

Increased Accessibility

FY 2007 Enacted Funds: $529 Million

Accessible public transportation is vital to maintaining independence and mobility for people with 

disabilities and linking them to employment, health care and their community. Access to public 

transportation is essential for people who are making the transition from welfare to work, or are lowincome and must rely on transit to get to work.

2007 Results — DOT met the bus 

target for compliance with the Americans 

with Disabilities Act (ADA).

Th e bus fl eet continues to become more 

accessible as older vehicles are replaced 

with those that are lift -equipped or 

have low fl oors to accommodate wheel 

chairs. Th e overall rate of increase in bus 

accessibility has slowed somewhat since 

Performance Measure 

Percent of bus fl eets compliant with the ADA.

2004 2005 2006 2007

Target 92 95 97 97

Actual 96 (r) 96 (r) 98 (r) 98 *

(r) Revised; * Preliminary estimate

Associated FY 2007 Funding – $ 51 million
Billy Alton, director of the Delta 

Resource Center Independent Living, 

left , speaks with Arkansas Gov. Mike 

Beebe before Beebe spoke at “Th e 

Road to Freedom” rally to promote 

the Americans with Disabilities 

Act, Monday, Feb. 12, 2007, in Little 

Rock, Arkansas. (AP Photo/Mike 

Wintroath)

PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

137

many of the buses replaced were already lift -equipped. While all new buses are lift equipped or have 

low fl oors, it will be diffi cult to reach 100 percent compliance because many transit operators retain 

buses for more than twenty years.

FY 2008 Performance Forecast — DOT expects to meet the bus fl eet accessibility target for 

FY 2008.

2007 Results — Th e preliminary 

estimate indicates DOT will just miss 

meeting the 2007 target.

Th ere are 687 key rail stations 

nationwide; only 53 of them remain 

inaccessible to people with disabilities. 

Over half of these are under FTAapproved time extensions up to 2020, 

as allowed by regulation, where 

extraordinarily expensive structural changes or replacement of existing facilities is needed. Many of 

these operators are discovering that the scope of work that is needed to comply with the ADA exceeds 

their original projections. As a result, more time will be required 

to complete the necessary modifi cations.

FTA is developing an action plan for moving forward on this goal. 

As a next step, FTA intends to pursue a status report with each of 

the eight remaining operators. Th is will provide a better picture 

of realistic goals for future years. It will be an opportunity for 

grantees to address hurdles in achieving these objectives. Over 

half of the remaining stations are in Cleveland or New York City. 

By focusing on these two cities, we will make substantial progress.

FY 2008 Performance Forecast — DOT will not meet its 

current 2008 target, which is 94 percent. DOT plans to adjust its 

targets for achieving full key station accessibility in FY 2008 and 

beyond to refl ect the realities outlined above.

JOB ACCESS AND REVERSE COMMUTE SERVICES (JARC)

In areas of the country that receive JARC funds, the program 

successfully meets the transportation needs of low-income 

individuals seeking reliable transportation to employment and 

related support services.

Performance Measure 

Percent of key rail stations compliant with the ADA.

2004 2005 2006 2007

Target 89 84 91 93

Actual 82 91 92 92.3 *

* Preliminary estimate

Associated FY 2007 Funding – $ 140 thousand
UNITED STATES DEPARTMENT OF TRANSPORTATION

138

Transit agencies have used JARC funds for a wide variety of services, ranging from expansion of fi xed 

route bus systems, and demand responsive services, to providing customer information. In each 

community that received a grant, JARC transportation services have reached new employment sites, 

making thousands of entry-level jobs and employers accessible for the program’s target populations. 

New stops supported by JARC funds have also increased access to critical employment support sites, 

particularly childcare and job training facilities.

2007 Results — DOT met the Job 

Access and Reverse Commute (JARC) 

target for the number of employment 

sites that are made accessible by JARC 

transportation services. 

Th e administration of FTA’s JARC 

program was changed from a separate 

nationally-administered competitive 

program into a State-administered 

formula program as enacted in 

SAFETEA-LU. Th is change provided each State with the opportunity to consider and prioritize their 

mobility needs when planning transit. In response to this change, FTA evaluated the performance 

measure “Number of employment sites (000s) that are made accessible by Job Access and Reverse 

Commute transportation services”. As a result of this exercise, FTA identifi ed a more precise 

performance measure “Jobs made accessible by JARC services.” Baseline information on the new 

measure is currently being collected and tested and will be reported in the FY 2008 PAR. 

Th e JARC program has consistently exceeded its annual goal to reach 50,000 job sites. Th e new 

JARC performance measure will provide a more precise and eff ective measure of the number of 

employers and jobs made accessible by the JARC program. JARC program performance continues 

to demonstrate the eff ectiveness of the program in meeting the transportation needs of low-income 

individuals seeking reliable transportation to employment and related support services. In the 

most recent analyses of grantee data, it is estimated that JARC funded services provided access 

to approximately 95,400 employment sites and provided 14.1 million one-way trips. Riders have 

reported that JARC services played an important role in their lives by making jobs accessible. An 

overwhelming majority (93 percent) of passengers surveyed in 2002 indicated that JARC services 

were either “very important” (81 percent) or “important” (12 percent) to them. Two-thirds (66 

percent) of the respondents indicated that they would not have been able to access their destination 

without the JARC service. JARC services are used most frequently to travel to and from a work 

site (approximately 62.5 percent of all trips.) Nearly one out of every three JARC respondents 

did not work prior to making use of the services. Th e program has also met its goal of improving 

collaboration between grantees and stakeholders.

FY 2008 Performance Forecast — It is anticipated that DOT will meet the FY 2008 target.

Performance Measure 

Number of employment sites (in thousands) that are made accessible by Job Access

and Reverse Commute (JARC) transportation services.

2004 2005 2006 2007

Target 50.0 50.0 50.0 50.0

Actual 82.8 95.4 91.2 (r) * 95.4 *

(r) Revised; * Preliminary estimate

Associated FY 2007 Funding – $ 144 million
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

139

Increased Reliability

FY 2007 Enacted Funds: $4.0 Billion

Th e demand on our National Airspace System (NAS) has never been greater. Th e number of aircraft 

has grown, as has the diversity in the performance and type of aircraft operating, such as regional 

jets. With the increasing growth of low-cost carriers, the challenge to increase capacity in the NAS 

intensifi es. Along with increased traffi c, adverse weather conditions were a major contributing factor 

to the increase in airport delays this year.

Th e complexity of the future operating environment – with evolving fl eet mixes, new aircraft , 

technology, and environmental constraints – must be approached in partnership with our customers. 

Th e preparation for these changes is already well under way. Th e Federal government’s vision for 

meeting this challenge is called the Next Generation Air Transportation System (NextGen). Th e 

concept of NextGen is a wide ranging transformation of the entire national air transportation system 

to meet future demands and avoid gridlock in the sky and at our airports.

2007 Results — DOT did not achieve 

its FY 2007 NAS On-Time Arrival 

performance target.

FAA fell short of the FY 2007 target of 

87.40 percent, achieving an on-time rate 

of only 86.32 percent. Adverse weather 

conditions played a signifi cant part in 

airport delays; in fact, weather-related 

delays caused by wind, low ceilings, 

and low visibility increased from 2006 to 2007. Over 30 percent of operations at Boston, Newark 

and Chicago were conducted during moderate to severe weather conditions. Traffi c management 

initiatives, such as ground delay programs and airspace fl ow programs were used to combat 

thunderstorms.

To help achieve this target in the future, FAA continues to evaluate new tools and technologies to 

improve arrival times. Th ese include greater collaboration with stakeholders, evaluation of separation 

standards, implementation of improved weather information tools, and airspace redesign where 

benefi cial. Airspace redesign is one of the key components in optimizing U.S. airspace and allowing 

for increased capacity. Effi cient airspace operations will require redesigning routes and changing the 

size and shape of the airspace. Th is increased fl exibility will help address volume, congestion, and 

weather in en-route airspace.

FY 2008 Performance Forecast — Th e FAA anticipates meeting the FY 2008 On-Time Target of 

88.0 percent.

Performance Measure 

Percent of all fl ights arriving within 15 minutes of schedule at the 35 Operational 

Evolution Plan airports due to NAS-related delays.

2004 2005 2006 2007

Target 82.1 87.4 87.40 87.40

Actual 79.07 88.1 (r) 88.36 86.32 *

(r) Revised; * Preliminary estimate

Associated FY 2007 Funding – $ 4.0 billion
UNITED STATES DEPARTMENT OF TRANSPORTATION

140

In-Depth Accomplishments Reducing Aviation Delays

While our aviation system is safer than ever, there is little question that its capacity is rapidly 

reaching critical mass. Eighteen of our Nation’s biggest airports have regained their highest pre9/11 commercial passenger traffi c levels. Th e capacity of our airports, our runways, and our skies 

are stretched thin. By 2015, the system is expected to carry one billion passengers per year and 

international passenger traffi c is expected to grow by 70 percent. We project that by 2014, without 

any changes to the system, we will see delays 62 percent higher than they are today. Th e FAA is 

taking steps right now to prevent these future delays and is making signifi cant strides.

AVERAGE DAILY CAPACITY

Growth in air travel has generally been accomplished by increasing the number of fl ights. Measuring 

the growth of airport capacity indicates the limit at which increased service can be accommodated 

without aff ecting delay.

FAA works with local governments and airspace users to provide increased capacity in the U.S. 

airspace system that will reduce congestion and meet projected demand. Th e agency met and passed 

the FY 2007 target to achieve an average daily airport capacity for the 35 Operational Evolution Plan 

(OEP) airports of 101,562 arrivals and departures per day. 

Activities and accomplishments towards achieving these goals include:

 Airspace Redesign — To help reduce delays and create more effi cient routings, 

signifi cant changes were made to crowded en-route and terminal airspace. Redesign 

eff orts continued in the New York/New Jersey/Philadelphia, Chicago, and Houston 

airspace; all three of these projects are multi-phased eff orts. Th e fi rst phase of 

the Chicago airspace project was implemented in March 2007, and major interim 

milestones for the other two eff orts were completed in 2007. Additionally, airspace 

reviews for Alaska and southern Nevada began in 2007. Th ese eff orts promise to 

improve safety and effi ciency, reduce delays, and accommodate the changing fl eet of 

aircraft and their usage patterns and capabilities.

 Area Navigation (RNAV) Routes, Standard Instrument Departures (SIDs) and 

Standard Terminal Arrivals (STARs) — Area navigation (RNAV) consists of 

routes and procedures that allow aircraft to fl y point-to-point operations that are not 

restricted by the location of radar. Th is permits the aircraft to fl y optimum routes with 

little controller intervention. Two tools that accommodate air growth and improve 

effi ciency are RNAV standard instrument departures (SID) and Standard Terminal 

Arrivals (STARS). RNAV SID and STARS provide instrument fl ight procedures for 

departing and arriving aircraft transitioning to and from the terminal to the en-route 

structure, using advanced navigation technology. Using RNAV reduces pilot and 

controller workload and enhances the effi cient and safe use of navigable airspace 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

141

within the terminal airspace environment. In the en-route structure we are developing 

high and low altitude RNAV routes. In FY 2007, we published 60 RNAV SID and 

STARS and 12 RNAV routes. RNAV is saving operators millions of dollars per year in 

fuel costs due to more effi cient routes. We are beginning to realize capacity benefi ts 

as well. At Dallas/Fort Worth Airport RNAV allows up to 20 additional departures 

per hour. At Atlanta Hartsfi eld Airport, RNAV allows an additional 10 departures per 

hour.

 Integrated Terminal Weather System (ITWS) — ITWS is technology that helps 

make air traffi c fl ow more effi cient in periods of adverse weather. As an air traffi c 

management tool, ITWS provides air traffi c managers, controllers, and airlines highly 

accurate, easily understood and immediately usable graphical weather information 

and hazard alerts on a single, integrated color display. By providing traffi c managers 

with this accurate, immediately usable weather information, ITWS helps increase 

safety and capacity, improve effi ciency, and reduce weather delays for airlines and the 

traveling public. In FY 2007, ITWS was commissioned at New York City airports 

and at Memphis with a terminal convective weather forecast (TCWF) capability 

enhancement. TCWF increases weather forecast information from 20 to 60 minutes.

 New Runways — We opened runway 14/32 at Boston-Logan International Airport 

in November 2006, which has shown delay reduction benefi ts in its fi rst several 

months of operation. A runway at Los Angeles International Airport was closed for 

relocation last year and re-opened in April 2007. With the opening of the end around 

taxiway at Atlanta in April 2007, about 612 runway crossings per day were eliminated 

at the busiest airport in the U.S.—signifi cantly improving safety and effi ciency.

Future Airport Capacity Task (FACT) Report Update — FACT is an assessment of the future 

capacity of the Nation’s airports and metropolitan areas. Th is study shows that by 2025, 14 airports 

and eight metropolitan areas will require additional capacity, even if currently planned improvements 

are built at airports throughout the system. Th e FACT 2 study recommends capacity in the form of 

supplemental airports. Specifi cally Atlanta, Chicago, Las Vegas, and San Diego were identifi ed as 

cities needing additional capacity in the form of supplemental airports.
UNITED STATES DEPARTMENT OF TRANSPORTATION

142
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

143

GLOBAL CONNECTIVITY STRATEGIC GOAL

FACILITATE A MORE EFFICIENT DOMESTIC AND GLOBAL TRANSPORTATION SYSTEM THAT ENABLES 

ECONOMIC GROWTH AND DEVELOPMENT

STRATEGIC OUTCOMES

 Reduced barriers to trade in 

transportation goods and services.

 More effi cient movement of cargo 

throughout the supply chain.

 Enhanced international competitiveness 

of the U.S. transport providers and 

manufacturers.

 Harmonized and standardized regulatory 

and facilitation requirements.

 Th e most competitive, cost eff ective and 

effi cient environment for passenger travel.

 Expanded opportunities for all businesses, 

especially small, women-owned and 

disadvantaged businesses.

PERFORMANCE MEASURES

 Percent share of the total dollar value of 

DOT direct contracts that are awarded to 

women-owned businesses.

 Percent share of the total dollar value of 

DOT direct contracts that are awarded to 

small disadvantaged businesses.

 Percent of days in shipping season that 

the U.S. portion of the St. Lawrence 

Seaway is available.

 Number of new or expanded bilateral 

aviation safety agreements implemented.

 Number of potential air transportation 

consumers (in billions) in international 

markets traveling between the U.S. and 

countries with Open Skies and open 

transborder aviation agreements.

 Number of international negotiations 

conducted annually to remove market 

distorting barriers to trade in air 

transportation (new measure in FY 2005).

FAA, $34.8

FHWA, $1,247

MARAD, $15.3

SLSDC, $16.8

OST, $17.2

FY 2007 Enacted Funding by Operating Administration (OA)

(Dollars in Millions)

Total FY 2007 Funding: $1,333.8 Million

Other OAs

RITA $2.0

FTA $0.9

FMCSA $0.1
UNITED STATES DEPARTMENT OF TRANSPORTATION

144

Expanded Opportunities

FY 2007 Enacted Funds: $5.4 Million

Expanded opportunities for all businesses, especially small, women-owned and disadvantaged 

businesses, serve the economic interests of the United States, both nationally and globally. Small 

businesses routinely develop, manufacture and distribute quality products to the private sector, but 

continue to face signifi cant hurdles participating in procurement opportunities with the Federal 

Government. To give these entrepreneurs a fair opportunity to compete, Congress and the 

Administration have established procurement goals for the Federal Government. In turn, each DOT 

Operating Administration (OA) develops targets consistent with legislative mandates and anticipated 

contracting and subcontracting opportunities.

2007 Results — Based on preliminary 

estimates, DOT met both of the small 

business related targets. 

All of the OAs continue to seek new 

opportunities to engage the small 

disadvantaged business community 

and have done superbly in light of the 

fact that the Federal government has 

not fi nalized regulations to allow for 

set-asides to women owned businesses. 

DOT is one of the few Federal agencies 

surpassing the government-wide fi ve 

percent statutory goal. Th e Offi ce of Small 

and Disadvantaged Business Utilization 

(OSDBU) continues to work closely with 

all OAs to ensure that small businesses 

are aff orded maximum practicable 

opportunities to participate in DOT direct 

procurement actions. OSDBU provided 

assistance to the OAs with their acquisition strategies, professional development and access to 

qualifi ed small businesses. OSDBU also increased technical assistance and participation in outreach 

events.

FY 2008 Performance Forecast — DOT expects to meet the targets for both measures.

Performance Measure 

Percent share of the total dollar value of DOT direct contracts that are awarded

to woman-owned businesses.

2004 2005 2006 2007

Target 5.1 5.1 5.1 5.1

Actual 3.8 6.6 6.7 6.0 *

* Preliminary estimate

Associated FY 2007 Funding – $ 2.7 million

Performance Measure 

Percent share of the total dollar value of DOT direct contracts that are awarded

to small disadvantaged businesses.

2004 2005 2006 2007

Target 14.5 14.5 14.5 14.5

Actual 15.6 12.7 15.0 (r) 14.5 *

(r) Revised; * Preliminary estimate

Associated FY 2007 Funding – $ 2.7 million
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

145

More Effi cient Movement Of Cargo

FY 2007 Enacted Funds: $1.27 Billion

Th e bi-national St. Lawrence Seaway is the international shipping gateway to the Great Lakes, off ering 

access and competitive costs with other routes and modes to the interior of the country. Commercial 

trade on the Great Lakes Seaway System annually sustains more than 150,000 U.S. jobs, $4.3 billion in 

personal income, $3.4 billion in transportation-related business revenue, and $1.3 billion in federal, 

state, and local taxes. Since 1959, more than 2.4 billion metric tons of cargo estimated at more than 

$350 billion has moved through the St. Lawrence Seaway to and from Canada, the United States, 

and nearly 50 other nations. Almost 50 percent of Seaway traffi c travels to and from overseas ports, 

especially in Europe, the Middle East, and Africa. A recent analysis concluded that the economic 

impact of a shutdown of either of the two U.S. locks would range from $1.3–$2.2 million per day, 

depending on the length of the delay.

2007 Results — For FY 2007, DOT’s 

Saint Lawrence Seaway Development 

Corporation (SLSDC) met the 

performance target with a system 

availability rate of 99.4 percent. An 

analysis of system non-availability during 

FY 2007 indicates that the most common 

causes were weather and vessel-related 

incidents.

Weather-related delays totaled 20 hours, 6 minutes of the total 40 hours, 28 minutes of delays or 50 

percent. Th ese weather delays are caused by poor visibility, high winds, fog, and other winter weather 

conditions.

Vessel incidents in FY 2007 accounted for 19 hours, 23 minutes of delays, or 48 percent. Vessel 

incidents involve ship operations, and are usually caused by human error on the part of a vessel’s 

crew. Incidents also include vessel breakdowns, which are caused by mechanical problems with a 

vessel.

Of the remaining factors that cause system non-availability, the SLSDC has the most control over the 

proper functioning of its lock equipment. During FY 2007, there were only 44 minutes of delays, or 2 

percent, related to one lock equipment malfunctioning incident. Lock equipment delays represented 

one one-hundredth of 1 percent of the total navigation time during FY 2007.

Performance Measure 

Percent of days in the shipping season that the U.S. portion of the

St. Lawrence Seaway is available.

2004 2005 2006 2007

Target 99.0 99.0 99.0 99.0

Actual 99.1 99.7 99.0 99.4

Associated FY 2007 Funding – $ 17 million
UNITED STATES DEPARTMENT OF TRANSPORTATION

146

In order to ensure that the two U.S. Seaway locks are in sound working condition, the SLSDC 

performs inspections, preventative maintenance, concrete rehabilitation, and repairs to lock 

equipment and parts. Th is program has been instrumental in the SLSDC’s long-term success in 

providing a safe, effi cient, secure, and reliable commercial waterway.

FY 2008 Performance Forecast — DOT expects to meet the FY 2008 target of 99.0 percent.

Freight Travel (Measure Under Development)

FY 2007 Enacted Funds: $1.25 Billion

Freight transportation is a critical enabler of international economic activity and highways are a 

critical component of the freight transportation system. A doubling of international trade over the 

last decade placed a strain on many of the Nation’s intermodal ports and gateways and contributed 

to an increase in traffi c congestion. A further increase in freight activity on the Nation’s highways is 

anticipated in this decade due to continued growth in international trade. Traffi c congestion hinders 

freight movement and undermines business productivity and international trade. Development of 

this measure will be completed in early FY 2008 and the Department will begin reporting on this 

measure in the FY 2008 PAR.

2007 Results — Th e FY 2007 target, which was based on reducing the buff er index rating in 100 

percent of the corridors under study, was not met. Th e annual average buff er index rating decreased 

in only two of fi ve Interstate corridors under study; while the rating increased in three corridors. 

Th e largest increase was 16 percent along I-45. At the same time, the annual average travel speed for 

the fi ve Interstate corridors remained constant when compared to the previous year. No corridor 

had a decline in average annual speed greater than 1 mph. FHWA will continue to work with 

partner agencies to encourage implementation of operational strategies and to execute infrastructure 

provisions of SAFETEA-LU related to freight projects. In 2008, comparative data will be available for 

25 of the most freight signifi cant interstate corridors.

FY 2008 Performance Forecast — It is unlikely that the FY 2008 target will be met since the 

current target is to reduce the buff er index rating in 100 percent of corridors under study. Using the 

data, we will establish a national average and revise the FY 2009 target to 50 percent or more of the 25 

corridors perform better than the national average.

In-Depth Accomplishments Promoting Freight Travel

Th e DOT National Freight Policy provides a national framework that enables Federal, State, and local 

governmental organizations, along with the private sector, to coordinate their resources and eff orts 

to improve multimodal freight mobility on the U.S. transportation network. FHWA contributed to 

the deployment of this policy in a variety of ways. A broad range of professional capacity building 

courses, seminars and workshops covering topics such as freight fi nancing, engaging the private 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

147

sector in transportation planning activities, and freight and the environment, were delivered. 

Numerous workshops designed to enable local transportation planners to integrate local data with 

national data to support freight investment decisions were completed with States and Metropolitan 

Planning Organizations (MPO). Th e results of these eff orts, which will be catalogued as best 

practices, will be widely disseminated in the coming year. Th e Agency updated the Quick Response 

Freight Manual, a tool used extensively by transportation professionals to plan for predicted freight 

volumes on the transportation network.

Th e Freight Analysis Framework, an analytic tool used extensively in both the public and private 

sector, was recalibrated using data from the 2002 Commodity Flow Survey and integrated with key 

international gateway data. In addition to the recalibration, the FHWA updated the highway network 

with 2002 freight fl ows, generated forecasts of freight movement to 2035, completed current year 

estimate methodologies, and began comparing prior survey data with current data so an accurate 

trend line can be developed.

Th e Border Information Flow Architecture (BIFA), which maps systems and information fl ow 

between stakeholders, was widely disseminated to stakeholders. On the northern U.S. border, 

the Ontario Ministry of Transportation and the Michigan Department of Transportation signed 

a memorandum of understanding to exchange information using ITS technology. As part of the 

agreement, information will be shared to improve border operations in the Detroit-Windsor region 

and give passengers and commercial vehicle operators the timely information they need when 

planning their trip. Th e agreement was driven by Ontario’s Action Plan for the Intelligent Border 

Crossings: the U.S.-Canada BIFA was a foundational element used to develop this action plan.

Harmonized & Standardized Regulatory

and Facilitation Requirements

FY 2007 Enacted Funds: $36.9 Million

With the increasing globalization of aircraft manufacturing and air carrier operations, the 

interdependency between the U.S. and the foreign aviation sector is outpacing FAA’s ability to 

conduct oversight throughout the globe. Since Bilateral Aviation Safety Agreements (BASA) 

are based on the recognition of comparability between U.S. and foreign oversight systems, they 

allow FAA to rely on the safety oversight capabilities and technical expertise of other civil aviation 

authorities, thereby minimizing duplication of eff orts as well as freeing resources to support U.S. 

safety priorities. BASAs promote aviation safety and environmental quality, enhance cooperation, 

and increase effi ciency in civil aviation matters. By building a network of competent civil aviation 

authorities and concluding agreements with additional countries and/or regional authorities, FAA 

increases safety globally.
Minister of the Civil Aviation Authority of China (CAAC) Yang Yuanyuan, right, meets with U.S. Secretary of 

Transportation Mary E. Peters on Friday April 13, 2007 in Beijing, China. Peters, on her visiting from April 12 to 14 in 

Beijing, said the United States is discussing a deal with China to liberalize air travel and hopes for a framework “open 

skies” agreement. (AP Photo/Guang Niu/POOL)

UNITED STATES DEPARTMENT OF TRANSPORTATION

148

2007 Results — In FY 2007, FAA 

achieved its performance target and 

concluded three new or expanded 

Bilateral Aviation Safety Agreements 

(BASAs). Th ese agreements lay the 

essential groundwork for cooperation 

between the United States and the 

respective target country’s aviation 

authority and facilitate an increase in 

the ability to exchange aviation products and services. Th is year, the U.S. negotiated agreements with 

Singapore, Japan, and Mexico.

Performance Measure 

Number of new or expanded bilateral aviation safety agreements implemented.

2004 2005 2006 2007

Target 2223

Actual 3243

Associated FY 2007 Funding – $ 35 million
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FAA is collaborating with partners in Europe, Asia, and the Americas to negotiate executive 

agreements and associated implementation procedures that will improve the safety of the 

international aviation environment for U.S. travelers.

FY 2008 Performance Forecast — In FY 2008 FAA expects to meet its target of two bilateral safety 

agreements concluded.

Reduced Barriers To Trade

FY 2007 Enacted Funds: $5.0 Million

Th e Offi ce of the Assistant Secretary for Aviation and International Aff airs carries a broad portfolio of 

responsibilities covering domestic and international aviation, international trade, and a range of other 

international cooperation and facilitation issues. Th e Offi ce contributes directly to DOT’s global 

connectivity strategic goal by: 1) increasing economic growth and trade; 2) advancing America’s 

economic growth and competitiveness domestically and internationally by negotiating liberalized 

aviation agreements worldwide and ensuring the benefi ts of a deregulated, competitive domestic 

airline industry; and 3) working with international organizations to foster the development of 

transportation infrastructure globally.

2007 Results — DOT met the target for 

2007. On April 30, 2007, aft er more than 

four years of negotiations, the United 

States and the European Community 

and its member states have achieved a 

historic pact on Open Skies. Beginning 

on March 30, 2008, the agreement will 

open up transatlantic air transportation, 

a market that represents about 60 percent 

of international travel. Th e agreement 

would replace existing bilateral agreements between the United States and the member states. Th e 

benefi ts to this agreement are numerous and include allowing every U.S. and European Union (EU) 

airline to:

 Fly between every city in the EU and every city in the United States;

 Operate without restriction on the number of fl ights, aircraft , and routes; and,

 Set fares according to market demand.

Th e agreement is welcomed news for the more than 25 million passengers who will enjoy new 

transatlantic fl ights at lower prices, according to EU estimates.

FY 2008 Performance Forecast DOT expects to meet the target for FY 2008.

Performance Measure 

Number of international negotiations conducted annually to remove market-distorting 

barriers to trade in air transportation.

2004 2005 2006 2007

Target N/A 10 10 12

Actual N/A 10 10 23 *

* Preliminary estimate

Associated FY 2007 Funding – $ 4.1 million
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Enhanced Competitive Environment For Passenger Travel

FY 2007 Enacted Funds: $21.3 Million

Since the 1940s, international air transportation has been subject to restrictive bilateral agreements 

that limit price and service options and artifi cially suppress aviation growth. DOT’s policy is to 

negotiate bilateral agreements to open international air travel to market forces, thereby removing 

limitations on the freedom of U.S. and foreign airlines to increase service, lower fares, and promote 

economic growth. Th ese “Open Skies” agreements have made it possible for the airline industry to 

provide the opportunity for better quality, lower priced, more competitive air service in thousands of 

international city-pairs to an increasing portion of the world’s population.

2007 Results — DOT met the target 

for FY 2007. DOT has successfully 

negotiated over 80 Open-Skies 

agreements, including several important 

new agreements in FY 2007. Having 

3.8 billion people under the Open Skies 

umbrella will provide more economical 

and abundant options for the traveling 

and shipping public world-wide.

FY 2008 Performance Forecast — DOT expects to meet the FY 2008 target.

Performance Measure 

Number of potential air transportation consumers (in billions) in international

markets traveling between the U.S. and countries with open skies and

open transborder aviation agreements.

2004 2005 2006 2007

Target 1.51 1.53 2.99 3.05

Actual 1.72 2.97 3.01 3.83 *

* Preliminary estimate

Associated FY 2007 Funding – $ 2.0 million
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ENVIRONMENTAL STEWARDSHIP STRATEGIC GOAL

PROMOTE TRANSPORTATION SOLUTIONS THAT ENHANCE COMMUNITIES AND PROTECT THE 

NATURAL AND BUILT ENVIRONMENT

STRATEGIC OUTCOMES

 Reduce pollution and other adverse 

environmental eff ects of transportation 

and transportation facilities.

 Streamlined environmental review of 

transportation infrastructure projects.

PERFORMANCE MEASURES

 Number of exemplary ecosystem 

initiatives undertaken

 Percent DOT facilities characterized 

as No Further Remedial Action under 

the Superfund Amendments and 

Reauthorization Act.

 12-month moving average of the number 

of areas in a transportation emissions 

conformity lapse.

 Tons of hazardous liquid materials spilled 

per million ton-miles shipped by pipeline.

 Percent reduction in the number of 

people within the U.S. who are exposed to 

signifi cant aircraft noise levels.

FAA, $445.1

FHWA, $5,621.6

FTA, $360

FY 2007 Enacted Funding by Operating Administration (OA)

(Dollars in Millions)

Total FY 2007 Funding: $6,484.5 Million

Other OAs

PHMSA $29.4

MARAD $22.3

NHTSA $4.5

RITA $0.9

FRA $0.7
UNITED STATES DEPARTMENT OF TRANSPORTATION

152

Reduce Pollution And Other Environmental Eff ects

FY 2007 Enacted Funds: $6.39 Billion

EXEMPLARY ECOSYSTEM INITIATIVES (EEI)

FHWA promotes environmental stewardship practices by recognizing Exemplary Ecosystem 

Initiatives (EEI), which are actions or measures that will help sustain or restore natural systems and 

their functions and values using an ecosystem or landscape context. Examples of an EEI include 

mitigation projects that support wildlife movement and habitat connectivity, the development of 

watershed-based environmental assessment and mitigation approaches, the use of wetland banking, 

and the use of special measures to prevent invasive species along highway rights-of-way. Th e benefi ts 

of adopting Context Sensitive Solution (CSS) concepts throughout all aspects of planning and project 

development are being promoted to advance solutions that enhance and protect ecosystems as 

well as enhance communities, historic preservation, active living, beautifi cation, and acquisition or 

relocation.

2007 Results — Th e target was met. 

FHWA designated seven additional EEIs 

during 2007, bringing the cumulative 

total to 50 initiatives in 32 states. Th e 

target was increased last year aft er the 

Agency designated 20 EEIs in one year, 

exceeding the previously established 

target by a wide margin. An EEI 

not only provides recognition for 

innovative conservation and mitigation eff orts, but also serves as best practices for states to follow. 

Th ese initiatives provide public and non-governmental organizations with actual examples of the 

environmental accomplishments related to the highway program.

FY 2008 Performance Forecast — Because the original 2007 target was exceeded earlier than 

anticipated, in 2006, the FHWA has replaced the EEI with a new measure for Exemplary Human 

Environment Initiatives (EHEI). Th e FHWA expects to meet the target of 10 EHEIs in FY 2008.

In-Depth Accomplishments Promoting Environmental Stewardship

FHWA continued outreach eff orts for Eco-Logical: an Ecosystem Approach to Developing 

Infrastructure Projects. In addition to developing training, the Agency is funding grants for pilot 

projects that advance Eco-Logical and integrated planning concepts. Th e response from the 

public, other federal agencies, and states and non-governmental organizations to a solicitation for 

proposals was robust and FHWA expects to make grant awards in the coming year. In addition, the 

Performance Measure 

Number of exemplary ecosystem initiatives undertaken

(target/results are cumulative from year to year).

2004 2005 2006 2007

Target 10 17 24 50

Actual 15 23 43 50

Associated FY 2007 Funding – $ 2.76 billion
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

153

FHWA delivered a new training course entitled, Managing Road Impacts on Stream Ecosystems: an 

Interdisciplinary Approach. Th is course promotes a more environmentally sensitive approach to 

design by emphasizing a landscape approach to stream restoration and highway project development.

In partnership with the American Association of State Highway and Transportation Offi cials 

(AASHTO), FHWA sponsored the development of a national multi-year action plan to advance 

the implementation of context sensitive solutions. In addition, the agency conducted an in-depth 

assessment of implementation in every state, which led to targeted strategies and action plans to 

assist in overcoming obstacles to the eff ective institutionalization of these practices. Th e assessment 

provides a basis for developing expanded criteria, assessment tools, and other resources to validate 

progress implementing CSS during the coming year.

FHWA awarded funding to the AASHTO for a Center for Environmental Excellence. Th e Center 

hosts a comprehensive Web site, captures best practices through concise practitioner guides, conducts 

targeted problem solving workshops, and manages a program of technical assistance on a variety of 

environmental topics.

DOT FACILITY CLEANUP

DOT has a special responsibility to ensure that its own facilities are compliant with environmental 

laws and regulations. Restoration activities involve identifying, investigating, and cleaning up 

contaminated sites. Compliance activities include the operation of facilities, equipment, and vessels 

in accordance with environmental requirements. Pollution prevention activities involve preventing 

future cleanup activities by avoiding the generation of pollutants in our operations or facilities.

2007 Results — DOT met the FY 2007 

target. Th ere are 72 DOT sites on the 

EPA Hazardous Waste Compliance 

Docket and all but fi ve of them have 

attained No Further Remedial Action 

Planned (NFRAP) status. Th e latest 

site to reach that status is FAA’s Jackson 

Homer Beacon Site. FAA is the 

custodian of the fi ve remaining sites, 

which are: 

1. Ronald Reagan National Airport (DCA);

2. Kirksville Air Route Surveillance Radar (ARSR), AFS F-64 (Kirksville AFS);

3. Mike Monroney Aeronautical Center (MMAC);

4. William J. Hughes Technical Center (ACT), and

5. Omaha Ex AF Station Z-71 (Omaha).

Performance Measure 

Percent DOT facilities characterized as No Further Remedial Action Planned

under the Superfund Amendments and Reauthorization Act.

2004 2005 2006 2007

Target 92 93 93 93

Actual 93 92 92 93

Associated FY 2007 Funding – $ 675 thousand
A launch takes a crew of workers out to do checks and maintenance on ships 

anchored at the Suisun Bay Reserve Fleet in Suisun Bay, California, Friday, 

June 29, 2007. From a busy bridge in the suburbs east of San Francisco, 

commuters catch a daily glimpse of one of the country’s stranger graveyards. 

Moored in ghostly ranks in the brackish water below, the Suisun Bay Reserve 

Fleet looks from a distance like a fi erce phalanx ready for battle - a proud 

reminder of the San Francisco Bay area’s naval heritage.

(AP Photo/Eric Risberg)

UNITED STATES DEPARTMENT OF TRANSPORTATION

154

To ensure that site contamination will be properly removed and that NFRAP status will be achieved, 

FAA’s Environmental and Occupational Safety and Health Services Group provides funding and 

oversight support, and has initiated Environmental Cleanup Program tasks focused on these sites. It 

has short-term actions (1-5 years) to achieve NFRAP status for the Kirksville AFS, and the Omaha Ex 

AF Station, while longer-term actions (5-20 years) will be necessary to achieve NFRAP status for the 

MMAC, DCA and ACT.

FY 2008 Performance Forecast — DOT anticipates meeting the FY 2008 target.

SHIP DISPOSAL

Th e Maritime Administration conducts a Ship Disposal Program to help achieve DOT’s 

Environmental Stewardship strategic goal to promote transportation solutions that enhance 

communities and protect the natural and built environment. Successful pursuit of this program 

also helps lead to achievement of the Department’s desired outcome for reduced pollution and other 

adverse environmental eff ects from transportation and transportation facilities.

Th e Maritime Administration is 

the U.S. government’s disposal 

agent for merchant-type vessels 

1,500 gross tons or more and 

has custody of a fl eet of over 

115 obsolete ships owned by the 

Federal government that are 

available for disposal. Th ese 

obsolete ships are located at 

the James River Reserve Fleet 

site in Virginia, the Suisun Bay 

Reserve Fleet site in California 

and the Beaumont Reserve Fleet 

site in Texas. Steady progress 

in the disposal of the obsolete 

ships must be maintained 

to minimize the risk to the 

surrounding environment due 

to the presence of hazardous 

materials on board the ships.

Early in 2007, confl icting 

Federal and state environmental 

laws and regulations caused 

the Maritime Administrator to temporarily suspend ship disposals. Th e U.S. Coast Guard was 

requiring hull cleaning to reduce the risk of transferring potential invasive aquatic species prior to the 

movement of non-retention ships from one geographic area to another. However, the in-water hull 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

155

cleaning process led to concerns that metals contained in ship hull coatings might be released during 

the cleaning process. Th e Department shares public concern about the potential impact on the 

environment of hull cleaning and is committed to protecting the environment around the fl eet sites.

Th e Maritime Administration and the Commonwealth of Virginia and the State of Texas recently 

agreed on a hull cleaning method and the ship disposal program has resumed in those states. Th e 

agency is still engaged in discussions with the State of California regarding their concerns with the 

hull cleaning process and potential solutions. Various enhanced hull cleaning options are being 

studied on how to better protect the environment during hull cleaning operations. If tests of the 

enhanced methods are successful, the agency will ask the State of California to endorse the method 

and allow the resumption of ship disposal activities in that state.

Despite these challenges, the Maritime Administration removed 20 obsolete ships from the three 

fl eet sites, seven more than the 2007 target. All of the removals were the result of dismantling/

recycling contracts with domestic ship disposal companies. Depending on the characteristics of 

each vessel and the capability of each contractor, it may take from several months to over a year to 

dismantle a ship once it has arrived at a disposal facility. In 2007, dismantling was completed on 20 

ships, exceeding the target by fi ve ships. Th ese ships were removed from the fl eet sites during the 

current and preceding fi scal years. Th e rate of dismantling is dependent on a number of external 

factors, including weather, contractor resource availability and the contractor’s ability to quickly and 

properly arrange for disposal of hazardous materials. Th e Maritime Administration also entered into 

additional disposal contracts that will result in the dismantling/recycling of 23 additional ships in 

subsequent years, exceeding the target by 10 ships.

MOBILE SOURCE EMISSIONS

Th e National Ambient Air Quality Standards (NAAQS) target six major pollutants as among the 

most serious airborne threats to human health. Transportation is a major contributor to some of the 

pollutants - particularly ozone, carbon monoxide and particulate matter. Motor vehicle emissions 

were reduced by 55 percent over the past two decades, in spite of a 48 percent increase in the 

number of registered vehicles and 82 percent increase in the volume of travel miles on our Nation’s 

highways between 1980 and 2001. Areas that exceed, or have previously exceeded, certain NAAQS — 

designated as air quality non-attainment or maintenance areas - are required to meet transportation 

conformity requirements in the Clean Air Act. Failure to meet the conformity requirements will 

place an area in a conformity lapse, which creates a situation in which only limited types of Federallyfunded infrastructure projects can proceed.
UNITED STATES DEPARTMENT OF TRANSPORTATION

156

2007 Results — Th e number of 

areas in a conformity lapse in FY 2007 

was zero, thus lowering the 12 month 

moving average to 0.0. Th is result 

exceeded the performance target. A 

number of changes to the conformity 

provisions were implemented in 

2005 to streamline and provide more 

fl exibility to the conformity process. 

In the implementation of the changes, 

the FHWA and the U.S. Environmental Protection Agency (EPA) conducted numerous workshops, 

training sessions, and other outreach activities to raise awareness of and to prepare State DOTs, air 

agencies, and Metropolitan Planning Organizations to meet the requirements. In addition, FHWA 

and EPA both issued guidance documents to ensure that the States transitioned smoothly to the new 

conformity requirements. State and local agencies took the initiative to coordinate the process well 

in advance of conformity determinations. Because of the advanced preparations, most of the locales 

that had been non-attainment and maintenance areas were able to meet the Clean Air Act goals, thus 

enabling projects to proceed.

FY 2008 Performance Forecast — Th e FHWA expects that the FY 2008 target of six or less areas in 

conformity lapse will be met.

PIPELINE SPILLS OF HAZARDOUS LIQUIDS

One of the major consequences of pipeline incidents — particularly from hazardous liquid pipelines 

— can be adverse impacts to the environment. Th is is a function of the type, amount and location of 

commodity spilled.

Th e Pipeline and Hazardous Materials Safety Administration’s (PHMSA) fi rst priority is the 

continued safe operation and reliability of all pipelines. PHMSA has taken a proactive approach to 

protecting the environment by designing and implementing a strong risk-based systems approach to 

protect the safety, security, and reliability of the Nation’s pipeline infrastructure.

PHMSA continues to signifi cantly reduce the environmental impact of non-volatile hazardous liquid 

spills, reaching a six-year low in 2007.

Performance Measure 

12-month moving average of the number of areas in a transportation

emissions conformity lapse.

2004 2005 2006 2007

Target 6666

Actual 6.3 5.8 1.3 0.0 *

* Preliminary estimate

Associated FY 2007 Funding – $ 2.76 billion
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

157

2007 Results — PHMSA is projecting 

that it will better the 2007 performance 

target by as much as 50 percent.

In December 2000, PHMSA issued the 

hazardous liquid integrity management 

(IM) regulations, which will require 

operators to assess, evaluate, repair 

and validate the integrity of hazardous 

liquid pipelines that could aff ect High 

Consequence Areas (HCAs). Th e agency 

began collecting detailed IM related repair information in 2005 and now has two years of data. At 

the end of 2006, the total number of pipeline segment miles that could aff ect HCAs (including 

environmentally sensitive areas) was approximately 71,000 miles, of which about 35,000 miles were 

inspected in 2005 and 2006.

Th e IM strategy is a long-term program investment. Th e expected environmental benefi ts of the 

IM approach in terms of reduction in number and consequences of hazardous liquid accidents in 

HCAs should be even more apparent over time. Since the inception of the IM regulations, almost 

4,000 conditions that needed immediate attention have been repaired or mitigated. In 2005 and 

2006 alone, over 10,000 other conditions were repaired on a scheduled basis and 32,000 additional 

conditions were repaired beyond those required by the hazardous liquid IM regulations.

FY 2008 Performance Forecast — In 2008, PHMSA will begin reporting on a new environmental 

measure – hazardous liquid pipeline spills in high consequence areas. PHMSA expects to meet its 

targets for this measure.

In-Depth Accomplishments to Prevent Hazardous Materials Spills

PHMSA recognizes the strategic importance of Alaska’s oil and gas production and transportation 

systems to the Nation’s energy supply; in FY 2007 the agency expanded Alaska operations to help 

address serious technical challenges associated with declining oil fi eld production. Th e agency is 

working with other federal and state agencies to take a “system of systems” approach to integrate, 

strengthen and prioritize oversight activities of the Alaska oil and gas production and transportation 

system. Activities include: planning for the new Alaska Gas Pipeline project, signing a letter of 

intent with the Alaska Department of Natural Resources to coordinate risk assessment and oversight 

activities, working with Alaska’s new Petroleum System Integrity Offi ce to develop a detailed work 

plan to assess and review operators’ quality assurance programs, and increasing our personnel in 

Alaska working with the Joint Pipeline Offi ce on development of a unifi ed plan for oversight of the 

Trans-Alaska Pipeline System infrastructure and operations.

Performance Measure 

Tons of hazardous liquid materials spilled per million ton-miles

shipped by pipelines.

2004 2005 2006 2007

Target .0068 .0064 .0060 .0057

Actual .0081 (r) .0085 (r) .0034 (r) .0028 *

(r) Revised; * Preliminary estimate

Associated FY 2007 Funding – $ 29 million
A new oil transit pipeline runs across the tundra to a fl ow station at the Prudhoe Bay oil fi eld on Alaska’s North 

Slope Saturday, June 16, 2007. Th e line will replace the corroded pipeline that leaked and caused the nation’s largest 

producing oil fi eld to shutdown in 2006. Nearly one year aft er BP PLC shut down most of its operations because of 

leaks to a transit line, the company says new accountability and maintenance practices are in place and a $250 million 

upgrade is on schedule for completion next year. (AP Photo/Al Grillo)

UNITED STATES DEPARTMENT OF TRANSPORTATION

158

As a next step in the extension of IM requirements throughout pipeline systems, PHMSA issued a 

supplemental notice of proposed rulemaking for applying pipeline safety requirements, including 

integrity management, to rural low-stress lines. Th is action is consistent with past Congressional 

requirements and new requirements in the PIPES Act. Th e proposed rule is phase one of a two phase 

approach that will extend pipeline safety requirements to previously unregulated rural low-stress 

pipelines. Th e fi rst phase applies to higher risk, larger diameter hazardous liquid lines in rural areas. 

Th e second phase will focus on all remaining unregulated rural low-stress pipelines.

PHMSA leverages its resources to focus on new research technologies to support energy reliability 

and independence. PHMSA will accelerate research to better understand and manage technical 

issues associated with transporting new alternative fuels. In August 2007, PHMSA issued a 

notice outlining its jurisdiction over the transportation of ethanol and other biofuels by pipeline 

and explaining that the agency is stepping up eff orts to support the President’s energy agenda by 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

159

eliminating barriers to the safe and reliable transportation of these materials. We are building the 

capability of fi rst responders to address pipeline incidents involving alternative energy and other new 

emerging technologies.

AIRCRAFT NOISE EXPOSURE

Th e FAA is working to increase the capacity of the national air transportation system to keep pace 

with demand for air travel. Public concern and sensitivity to aircraft noise around airports continues 

to grow even as more Americans value and depend on air transportation. Aircraft noise is an 

undesired by-product of mobility, and FAA acts to reduce the public’s exposure to signifi cant noise 

levels.

In the past decade, the phase-out of noisier commercial aircraft was principally responsible for 

the reduction in the number of people exposed to high levels of aircraft noise. Noise and land use 

compatibility projects, funded under the Airport Improvement Program (AIP), complemented 

aircraft source noise reduction. While the new international aircraft noise standard will continue 

the introduction of quieter aircraft into operations, this will be a gradual process. AIP-funded noise 

compatibility projects and noise abatement fl ight procedures will be the principal means employed by 

FAA to mitigate signifi cant aircraft noise exposure in the near future.

2007 Results — DOT met the 

performance target. Th e target is 

calculated using a three year moving 

average from the base average year from 

2000 to 2002. Th e FAA increased the 

noise exposure target aft er reviewing 

historical reductions and taking into 

account recent trends that remain well 

below the previous noise target. Th e 

signifi cant reduction in noise exposure 

since the base year average 2000 to 2002 has been driven by air carrier fl eet and operational changes 

that took place in the aft ermath of September 11, 2001. It was expected that a return to more typical 

fl eet compositions and a return to air traffi c growth would narrow the “positive gap.” However, the 

return of fl eet composition and air traffi c to pre 9/11 levels has not occurred at the pace expected. In 

addition to noise trends, the new noise target refl ects the relocation of people away from areas of 

signifi cant noise exposure through grant funding. Th e target is also infl uenced by market forces that 

drive changes in commercial aircraft fl eets and operations.

FY 2008 Performance Forecast — DOT will meet the target in FY 2008.

Performance Measure 

Percent reduction in the number of people in the U.S. who are

exposed to signifi cant aircraft noise levels.

2004 2005 2006 2007

Target -2 -3 -4 -8

Actual -28 -29 -28 (r) -27 #

(r) Revised; # Projection from trends

Associated FY 2007 Funding – $ 455 million
UNITED STATES DEPARTMENT OF TRANSPORTATION

160
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

161

SECURITY STRATEGIC GOAL

BALANCE HOMELAND AND NATIONAL SECURITY TRANSPORTATION REQUIREMENTS WITH THE 

MOBILITY NEEDS OF THE NATION FOR PERSONAL TRAVEL AND COMMERCE

STRATEGIC OUTCOMES

 All modes have implemented steps that 

would prepare them for a rapid recovery 

of transportation from international harm 

and natural disasters.

 Th e U.S. transportation system meets 

National security requirements.

PERFORMANCE MEASURES

 Percent of DOD-required shipping 

capacity complete with crews available 

within mobilization timelines.

 Percent of DOD-designated commercial 

ports available for military use within 

DOD established readiness timelines.

 Transportation Capability Assessment for 

Readiness Index Score.

FAA, 198.8

FHWA, $371

MARAD, $239.2

FY 2007 Enacted Funding by Operating Administration (OA)

(Dollars in Millions)

Total FY 2007 Funding: $869.5 Million

Other OAs

FTA $42.4

OST $9.0

FMCSA $8.1

FRA $0.8

SLSDC $0.3
U.S. Secretary of Transportation Mary E. Peters addresses the 

Merchant Marine Academy graduation ceremony, Monday, June 

18, 2007 in Kings Point, New York. (AP Photo/Mary Altaff er)

UNITED STATES DEPARTMENT OF TRANSPORTATION

162

Strategic Mobility

FY 2007 Enacted Funds: $239 Million

Th e Department of Defense (DOD) relies on the U.S. commercial transportation industry as well as 

government-owned ships to deliver equipment and supplies throughout the world in order to 

maximize defense logistics capabilities and minimize cost. Th e availability of shipping capacity is 

determined by a number of diff erent factors: availability of commercial vessels, availability of 

government-owned sealift vessels, availability of qualifi ed mariners to crew these vessels, and the 

availability of war risk insurance coverage for vessels entering a war zone. All of these factors must be 

managed properly in order to support DOD’s mobilization requirements.

Th e Department’s Maritime Security Program (MSP) ensures that the United States will have U.S.-fl ag 

commercial vessels along with their intermodal assets to support DOD operations. DOD also uses 

Voluntary Intermodal Sealift Agreements 

(VISA) with commercial carriers to preplan the availability of militarily useful 

U.S.-fl ag merchant vessels for emergency 

sealift support. All ships enrolled in 

VISAs commit certain percentages of their 

vessel capacity and use of their related 

intermodal transportation resources to 

DOD.

Th e DOT-owned Ready Reserve 

Force (RRF) is also a very important 

component of the Department’s ability 

to provide sealift capacity in times of 

emergency to DOD. Th ese ships also 

serve as an important asset supporting the 

Department’s emergency preparedness 

and disaster response activities. Th e RRF is composed of 44 ships with special capabilities that can 

carry or offl oad heavy and oversized military cargoes which regular U.S.-fl ag commercial cargo ships 

cannot carry. RRF ships meet approximately half of the U.S. Transportation Command’s surge (or 

initial) sealift requirement during a mobilization.

Ship capacity, both commercial and government-owned, is only one part of the mobilization equation. 

Th ese ships must be operated by skilled crews. Th e Maritime Administration supports the training 

of new merchant marine offi cers by operating the U.S. Merchant Marine Academy (USMMA) and 

by providing funding and training vessels to support the six State Maritime Schools (SMS). Th e 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

163

USMMA and SMSs are the principal source of new unlimited license merchant marine offi cers. 

Licensed mariners are needed by DOD during national emergencies not only for crewing purposes, 

but also to provide shore- side support for sealift operations.

In order to enter war zones, commercial vessels require specifi c war risk insurance binders. Th e 

Maritime Administration issues these binders because regular commercial marine insurance will not 

cover losses resulting from war or warlike actions. Without this program, the DOD could not rely on 

commercial ships for sealift during an emergency.

DOT, through the Maritime Administration, is also responsible for establishing DOD’s prioritized 

use of facilities at 15 U.S. commercial strategic ports during DOD mobilizations to ensure the safe, 

secure, and smooth fl ow of military cargo through the commercial U.S. transportation system while 

minimizing commercial cargo disruptions.

2007 Results — DOT exceeded the 

2007 performance target. Th e Maritime 

Administration achieved these results 

through the successful pursuit of a 

number of activities. Most signifi cantly, 

to assure suffi cient availability of U.S. 

ships, the Maritime Administration 

maintained full enrollment in the 

Maritime Security Program, stable 

enrollment in the Voluntary Intermodal Sealift Agreement program and Ready Reserve Force 

readiness levels. Th e Maritime Administration successfully operated the War Risk Insurance 

program, which ensured U.S. commercial ships could enter the Middle East war zones to sustain U.S. 

activities in Iraq and Afghanistan.

In the interest of ensuring that suffi cient numbers of highly qualifi ed new mariners enter the U.S. 

workforce, Maritime Administration supported training activities resulted in the graduation of 187 

U.S. citizen, unlimited license ship offi cers from the USMMA in June 2007 and 479 from the six State 

Maritime Schools.

Taken together, the above activities as well as those undertaken to assure the availability of strategic 

ports (discussed below), ensure the smooth and secure movement of deploying DOD personnel and 

material from origin to destination and support the Department’s ability to rapidly support response 

and recovery eff orts for domestic and international emergencies.

FY 2008 Performance Forecast — Th e Maritime Administration expects to meet the FY 2008 

target.

Performance Measure 

Percentage of DOD-required shipping capacity complete with crews

available within mobilization timelines.

2004 2005 2006 2007

Target 94 94 94 94

Actual 94 95 93 97

Associated FY 2007 Funding – $ 238 million
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2007 Results — DOT exceeded the 

2007 performance target. A number 

of activities during 2007 led to this 

result. Th e Maritime Administration 

participated in joint military 

mobilization and security exercises as 

well as strengthened the cooperative 

partnerships that ensure eff ective 

emergency planning and coordination 

with a variety of organizations. Th e Agency also administered an Intelligent Transportation System 

Deployment Integration program with PAR Government Systems Corporation that demonstrated 

container and chassis satellite tracking technology using the PAR Cargo Watch System. PAR 

technology has evolved from cellular to satellite technology and into the cold food supply chain 

market. PAR successfully tracked 51 USTRANSCOM containers of ammunition and explosives from 

Korea to U.S. ammunition depots.

FY 2008 Performance Forecast — Th e Maritime Administration expects to meet the FY 2008 

target.

Transportation Readiness

FY 2007 Enacted Funds: $9.0 Million

Th e past year marked an increase in the workload of intelligence operations and clarifi cations in 

the role for disaster preparedness and response for the DOT Offi ce of Intelligence, Security, and 

Emergency Response. One new intelligence initiative has been information sharing and DOT has 

made signifi cant progress in this initiative at the Federal Bureau of Investigations (FBI) National 

Joint Terrorism Task Force. Th e DOT representative to the National Joint Terrorism Task Force 

provides information to the other task force members and obtains information that impacts DOT, 

transportation infrastructure, transportation systems and their operations.

Along with its work in intelligence, DOT continued to ensure readiness to undertake its role as 

defi ned in the National Response Plan. DOT is the lead agency for coordinating transportation 

response and support following a disaster and has taken a more active role working with State and 

local transportation offi cials in planning for disasters. We are collaboratively assessing transportation 

infrastructure and systems for vulnerabilities and identifying critical elements. DOT is also working 

with State and local offi cials in identifying response options to local transportation failures.

Performance Measure 

Percentage of DOD-designated commercial parts available for military use

within DOD established readiness timelines.

2004 2005 2006 2007

Target 92 93 93 93

Actual 93 87 100 100

Associated FY 2007 Funding – $ 874 thousand
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165

2007 Results — In addition to 

responses to threats and emergencies, 

the Department measures internal 

preparedness using the Transportation 

Capability Assessment for Readiness 

(TCAR) score. It assesses six functional 

areas to obtain the overall TCAR 

score. Th ese areas include monitoring 

operations, emergency response, training 

and exercises, continuity of operations, continuity of government, and international civil emergency 

planning. DOT was unable to meet its target of 75.

FY 2008 Performance Forecast — In 2008, the Department is planning to expand intelligence 

support to Operating Administrations, expand our policy development role and work with state and 

local governments to ensure preparedness and better planning for emergency response operations. 

We are developing new performance measures for the new Security, Preparedness and Response 

Strategic Goal—“Balance Transportation security requirements with the safety, mobility, and 

economic needs of the Nation and be prepared to respond to emergencies that aff ect the viability of 

the transportation sector.” During Fiscal Year 2008, we will conduct a trial performance period to 

fi eld test and calibrate the performance measures.

In-Depth Accomplishments Promoting Transportation Readiness

Over the past year the responsibilities and workload of the Intelligence Division have increased 

dramatically. Th e division focused on expanding interagency analytic contacts within the Intelligence 

Community and by working with intelligence partners, particularly the National Counterterrorism 

Center and the FBI, in providing information and analysis, which has been used in various products 

produced by the Interagency Intelligence Committee on Terrorism as well as National Terrorism 

Bulletins and briefi ngs.

Operational response activities by DOT were at a more normal level than had been experienced in 

either 2005 or 2006. For a second year, DOT staff ed the Joint Field Offi ce in Baton Rouge through 

the summer to facilitate evacuation planning for south Louisiana.

Th e Secretaries of DOT and the Department of Homeland Security agreed to transition the 

transportation contracting function to FEMA by the end of 2007. DOT assisted FEMA by 

negotiating and transferring the evacuation bus contract, and assisted FEMA in establishing its own 

contract with Amtrak and its own contracting function.

Performance Measure 

Transportation Capability Assessment for Readiness Index Score.

2004 2005 2006 2007

Target N/A 71 72 75

Actual 67 65 72 70

Associated FY 2007 Funding – $ 9 million
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DOT participated in several major national exercises, including the Ardent Sentry, Rubicon and 

Pinnacle Exercises. Th ese exercises engaged both senior and operational staff . For example, more 

than 150 DOT personnel, including the Secretary, Deputy Secretary, and nine other Assistant 

Secretaries or heads of Operating Administrations, participated in the Pinnacle exercise.
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167

ORGANIZATIONAL EXCELLENCE STRATEGIC GOAL

ADVANCE THE DEPARTMENT’S ABILITY TO MANAGE FOR RESULTS AND ACHIEVE THE GOALS OF 

THE PRESIDENT’S MANAGEMENT AGENDA

STRATEGIC OUTCOMES

 Strategic management of human capital.

 Competitive sourcing.

 Improved fi nancial management.

 Expanded e-government.

 Budget and performance integration.

PERFORMANCE MEASURES

 For major DOT aviation systems, percent 

of cost goals established in the acquisition 

project baselines that are met.

 For major DOT aviation systems, percent 

of scheduled milestones established in 

acquisition project baselines that are met.

 For major Federally funded infrastructure 

projects, percent that meet schedule 

milestones established in project or 

contract agreements, or miss them by less 

than 10 percent. 

 For major Federally funded infrastructure 

projects, percent that meet cost estimates 

established in project or contract 

agreements, or miss them by less than 10 

percent.

 Percent of transit grants obligated within 

60 days aft er submission of a completed 

application.

IG, $64

FY 2007 Enacted Funding by Operating Administration (OA)

(Dollars in Millions)

Total FY 2007 Funding: $1,252.6 Million

OST, $129.4

FAA, $436.3

FHWA, $551.9

Other OAs

FMCSA $30.1

FTA $23.7

NHTSA $5.0

RITA $4.9

PHMSA $4.0

FRA $2.1

MARAD $1.1

SLSDC $0.1
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President’s Management Agenda

FY 2007 Enacted Funds: $878 Million

Secretary Peters’ central management strategy for achieving organizational improvement is full 

implementation of the President’s Management Agenda (PMA). Th e PMA contains fi ve mutually 

reinforcing goals that the DOT Team is integrating into its corporate culture in striving for 

continuous management improvement. In implementing the President’s Management Agenda in 

DOT, our objective is to achieve the following organizational excellence outcomes:

 Achieved strategic management of human capital;

 Achieved competitive sourcing goals;

 Achieved fi nancial performance goals;

 Achieved performance improvement goals; and,

 Achieved e-government goals.

STRATEGIC MANAGEMENT OF HUMAN CAPITAL

President Bush’s management agenda focuses on long-term management of the Federal workforce 

and fostering a citizen-centered, results-based government that is organized to be agile, lean, and 

capable of making timely decisions. As we determine our human capital requirements, DOT 

continually assesses and improves critical competencies, thoughtfully restructuring organizations as 

needed to foster performance.

FY 2007 ACCOMPLISHMENTS

Th e DOT Offi ce of Human Resources pursued a number of human capital initiatives throughout the 

year. Th e following are some of the highlights in FY 2007.

WORKFORCE PLANNING

DOT acquired access to the Workforce Analysis Support System (WASS) and Civilian Forecasting 

System (CIVFORS) and trained Operating Administrations (OA) on their use to answer sophisticated 

questions about the workforce or specifi c demographics within it and to forecast future trends 

and needs that improved the linkage between the corporate recruitment program and workforce 

planning. Th e workforce planning process at DOT relies on empirically-based and systematic 

identifi cation and assessment of trends and projections regarding losses, gains, and risk areas, as well 

as a menu of options for addressing employee turnover at each OA. Th is data helps drive decisions 

and policies in areas such as quality of work life programs, retention incentives, training/development 

plans, recruiting strategies, and outsourcing.

During the last year, DOT has signifi cantly refi ned its approaches to competency mapping, 

assessment, and improvement. DOT acquired a Competency Assessment and Management Tool 

(CAMT) to perform web-based assessments. We performed/facilitated competency assessments 

for DOT leaders, Information Technology, HR, Acquisition, Engineers, and several OA specifi c 
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169

occupations, including Financial Management Specialists in the Federal Highway Administration and 

Rail Safety Inspectors in the Federal Railroad Administration. We conducted training for OA staff in 

competency measurement and management.

LEADERSHIP AND SUCCESSION MANAGEMENT

DOT developed a competency model for DOT leaders at three defi ned levels and conducted three 

rounds of competency assessments. Th e competency that showed the greatest need for improvement 

in most OAs was confl ict management, and the HR community worked with DOT’s Offi ce of Civil 

Rights (DOCR) and DOT’s Center for Alternative Dispute Resolution (CADR) as well as external 

partners to increase both the amount of training given and the emphasis on skills improvement in 

this area. Scores in most OAs showed signifi cant improvement upon retesting.

DOT hosted training on succession management for all OAs and subsequent training from the 

Corporate Leadership Council. Th e Department also updated its succession planning model and 

implementation plan to incorporate OPM guidance; led OAs through a process to identify at-risk 

high leverage positions and design bench strength strategies; strengthened the Senior Executive 

System (SES) pay for performance system and received full certifi cation status; issued new policy 

on supervisory and management probation with input from leader focus groups; and instituted 

mandatory training for leaders in performance management.

PERFORMANCE CULTURE

As part of the SES performance management system, Heads of Operating Administrations work with 

the Offi ce of the Assistant Secretary for Budget and Programs to complete an annual organizational 

assessment. Organizational assessments, which aff ect senior executives’ pay increases and bonuses, 

evaluate the organization’s measurable results against established criteria, such as the President’s 

Management Agenda, DOT’s Strategic Plan, and agency goals. Th e assessments encompass 

organizational performance data that is reported annually to OMB in the Performance Accountability 

Report, the Program Assessment Rating Tool, and the Government Performance and Results Act 

report.

COMPETITIVE SOURCING

DOT uses competitive sourcing as a key tool for effi ciently completing commercial-type work. 

By doing so, we ensure that we provide the highest quality and the most economical service to 

Americans.

FY 2007 ACCOMPLISHMENTS

In FY 2007, DOT received the President’s Quality Award for Competitive Sourcing for its eff orts since 

2002. To receive this award, Th e DOT Team has:

 completed 23 competitions involving about 2,700 full time equivalents;

 estimated savings of about $95,000 per competed full-time equivalent;

 garnered anticipated savings of over $2.2 billion (over a ten year period);
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 completed the largest single competition in the Federal government to date (FAA 

Flight Service Stations);

 achieved improved operational performance through innovative work processes and 

establishment of quality standards;

 implemented post-competition accountability and Most Effi cient Organization 

independent validation for fi ve completed competitions to verify actual savings and 

performance improvements;

 initiated the Workforce Analysis Pilot Project to deliberately link competitive sourcing 

and human capital planning (as required by the President’s Management Agenda); 

and, 

 shared lessons learned within the Department and with other Federal agencies.

However, DOT drops to yellow in status and progress on the OMB red-yellow-green scorecard 

system due to limited competitions planned for fi scal years 2008-2009.

IMPROVED FINANCIAL PERFORMANCE

Improved fi nancial performance is a key aspect of improving the Government’s overall performance. 

Knowing the full cost of DOT’s programs and services is a critical element of program management. 

Good fi nancial stewardship, excellent fi nancial and acquisition systems and improved performance 

on DOT’s fi nancial metrics guides DOT fi nancial performance. In recent years, the Government 

Accountability Offi ce and the DOT Offi ce of Inspector General have aggressively recommended that 

DOT fi nancial management focus on needed improvements. DOT has responded with several eff orts 

that have improved fi nancial performance throughout the Operating Administrations (OAs) and the 

Department.

FY 2007 ACCOMPLISHMENTS

MANAGERIAL COST ACCOUNTING

Managerial cost accounting (MCA) identifi es, tracks, and analyzes the total costs attributable to 

a particular task, job, or program. DOT OAs are working aggressively to implement managerial 

cost accounting systems in order to provide their managers with cost information to make betterinformed decisions. DOT initiated MCA with the Federal Aviation Administration (FAA), which 

was directed to develop a cost system in order to establish: 1) unit costs of services, and 2) as a 

means of sustaining defensible charges for reimbursable services. Th rough an executive dashboard, 

FAA’s MCA system links costs to performance goals. Costs are tracked through three systems that 

interact: Delphi (DOT’s fi nancial and accounting system of record) FAA’s Cost Accounting System 

(a People Soft System implemented largely to track projects and tasks) and DOT’s Consolidated 

Automated System for Time and Labor Entry (CASTLE which is both a time and attendance and 

labor distribution reporting system).
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171

Th e Federal Highway Administration (FHWA), Federal Transit Administration (FTA) and Federal 

Railroad Administration (FRA) have each developed an internal system for taking labor distribution 

fi les from CASTLE and costs from Delphi for rolling up cost information. FTA and FHWA have 

utilized a third party, activity based costing system. FRA has utilized Budget Program Activity Codes 

to track costs related to projects and draws reports from Delphi.

Th e Maritime Administration (MARAD) and Pipeline and Hazardous Materials Safety 

Administration have begun developing systems utilizing the Delphi Projects Module. One unique 

issue faced by MARAD is a substantial reimbursable eff ort with its Reserve Fleet. Being able to 

track reimbursable activities and connect them with the correct interagency agreement has not been 

possible to date except through bookkeeping adjustments. However, DOT has begun developing a 

strategy to rewrite its payroll interface for posting salary and benefi t costs to its accounting system, 

which will enhance both payroll posting and tracking interagency costs and payments.

IMPROVING FINANCIAL AND ACCOUNTING PROCESSES AND OPERATIONS

Consolidating Accounting Operations — During FY 2007, DOT continued transitioning 

all accounting operations to the Enterprise Services Center (ESC) in Oklahoma City. Th e full 

consolidation of activities at the ESC reduces redundant processes, eliminates stovepipes and gains 

effi ciencies. With all accounting operations staff centrally located, communication will improve 

and accounting standards and fi nancial policies can be applied consistently. Additionally, having 

all accounting operations performed at the ESC allows better management of resources during 

times of increased accounting activity and simplifi es training on fi nancial system updates and other 

accounting changes. Further, as a consolidated unit, the ESC can showcase its ability to eff ectively 

serve internal customers and potential external customers, positioning it to better compete for 

accounting services among all government agencies.

Enhancing DOT’s Reimbursable Policy — In 2007, DOT made substantial progress in fi ne-tuning 

the Department-wide reimbursable policy and business process. Th is is a critical part of DOT’s 

eff orts to streamline and standardize business practices and to strengthen internal controls across 

DOT. Th e inability to link provider and receiver agreements has hampered DOT’s attempts to 

reconcile its reimbursable transactions with other government agencies. Beginning on October 1, 

2007, all DOT OAs will use a Common Reimbursable Agreement Number (CRAN) on all 

reimbursable documents. Using a standard number and process greatly improves the OAs’ ability 

to match up provider and receive information and eliminates the need for DOT’s reimbursable 

agreement portal. Th e portal was a DOT-developed, labor-intensive workaround, which allowed the 

provider and receiver of services to reconcile revenues.

MEASURING IMPROVEMENTS IN FINANCIAL PROCESSES

Th e Fab 14 — Beginning in FY 2007, the DOT Offi ce of Financial Management (OFM) rolled out 

a new department-wide initiative designed to help the Operating Administrations (OAs) recognize 

and reconcile longstanding data issues in their fi nancial systems. OFM identifi ed fourteen areas 
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of concern and defi ned corrective actions. Th is initiative, called the “Fab 14” raises OA awareness 

and accountability to correct inaccurate and incomplete data. In order to report progress, DOT 

developed an in-house, web-based tool that reports data on a monthly basis.

Chief Financial Offi cer (CFO) Council’s Financial Management Indicators — Th e CFO Council’s 

Financial Management Indicators Metric Tracking System (MTS) is a performance measurement 

system that captures key fi nancial management indicators across the Federal Government. MTS 

uses a red/yellow/green scale to indicate how well an agency is doing. Th e tool’s intent is to provide 

government managers, Congress and other stakeholders, information to assess the fi nancial 

management health of the Federal government as a whole and for each individual agency. Tracking 

performance indicators helps to guide fi nancial management reforms and targets resources to areas 

where DOT needs better stewardship. DOT began FY 2007 as “green” on all but two of the CFO 

Council metrics and plans to reach “green” on all CFO metrics by March 2008.

DELPHI SYSTEM UPGRADE

DOT uses Oracle Federal Financials soft ware (named Delphi) as its agency-wide fi nancial 

management and accounting system of record. In May 2007, DOT successfully upgraded its Oracle 

soft ware to a version 11.5.10. Th e upgrade off ers assurance that the Delphi Financial Application 

Soft ware Modules are maintained at a level that ensures supportability by Oracle. Th e upgrade also 

adds some increased functionality for the Delphi support staff , reduces risks associated with technical 

enhancements, resolves some outstanding customer requests, provides customers with additional 

secure processing tools and allows Delphi to move toward future enhancements.

CASTLE (CONSOLIDATED AUTOMATED SYSTEM FOR TIME AND LABOR)

CASTLE is DOT’s web-enabled, server-based consolidated automated system for time and attendance 

and labor distribution entry. With several major enhancements completed in FY 2007, CASTLE has 

experienced both functional and customer-related benefi ts. Th ese benefi ts include:

 customers experiencing signifi cantly faster timecard processing speed;

 full disaster recovery capability allowing minimal downtime in the event of a system 

outage; and,

 faster processing of the Time & Attendance fi le to our payroll servicing agency, 

allowing employee’s records to be updated quicker, and reducing helpdesk calls and 

issues relating to lag between the two processes.

Future upgrades and enhancements will address integration of labor distribution and time and 

attendance data entry, further protection of Sensitive Personally Identifi able Information and 

revisions coming from DOT implementing the Common Government-wide Accounting Code 

structure.
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EXPANDED ELECTRONIC GOVERNMENT

President Bush has called for an expanded electronic government that improves service to 

individuals, businesses, and State and local governments through the use of information technologies. 

DOT is committed to ensuring that the Department’s investment in information technology (IT) 

signifi cantly improves its ability to serve citizens, and that IT systems are secure, and delivered 

on time and on budget. Implementation of E-Government is important in making DOT more 

responsive, cost-eff ective and effi cient.

FY 2007 ACCOMPLISHMENTS

Th e Department continues to actively participate in many of the Administration’s governmentwide E-Government initiatives, such as, Enterprise Human Resource Integration (EHRI), 

E-Authentication, E-Travel and others. Th e results allow DOT employees access to enterprise or 

government-wide systems and the general public with one stop access to government information. 

For example, DOT:

 Implemented the EHRI electronic Offi cial Personnel File initiative Department-wide 

which will eventually eliminate the need to maintain hardcopy records once back fi le 

conversion is completed in FY 2008;

 Implemented a secure, standard E-Authentication mechanism for ten systems in DOT; 

and, 

 Implemented a standard travel management system Department-wide that allows 

employees to do on-line travel reservations, authorizations and vouchers.

During FY 2007, the Department’s eff orts in E-Government included several important successes 

in that DOT met established requirements and milestones and made further improvements in 

enterprise architecture, privacy, capital planning and security. DOT continued to integrate its 

enterprise architecture into existing business processes by defi ning a Departmental segment 

architecture strategy, developing the fi rst of many segment architectures, implementing a DOT 

federated enterprise architecture repository to enable information sharing and establishing a Data 

Architecture Group to address cross-Departmental data issues. In addition, DOT conducted 

independent reviews of its FY 2009 business cases and provided signifi cant comments to the OAs to 

help strengthen their business cases.

During the spring of 2007, DOT saw the successful completion of the move of the IT infrastructure 

and the Common Operating Environment (COE) to the new headquarters building and to an off -site 

hosting facility. Th is eff ort also reduced application server hosting facilities from eleven (excluding 

FAA) to three.
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PERFORMANCE IMPROVEMENT INITIATIVE

Regular, systematic measurement and accountability for program performance compared to predetermined targets will be the means to improve DOT management. Th e President’s Management 

Agenda stresses a change of direction in Federal management – that of changing yearly budgetary 

and resource decisions from the “increment” to the “base”, and through the focus of accountability for 

programmatic results.

FY 2007 ACCOMPLISHMENTS

In December 2006, OPM awarded DOT the President’s Quality Award for Management Excellence 

in Budget and Performance Integration. Th e Department has advanced its practice of performance 

management in many ways since the President’s Management Agenda was introduced in 2002. Th e 

Operating Administrations (OA) now submit integrated performance management budgets to 

OMB and Congress, which link policy initiatives with the funding requested. Each budget contains 

marginal cost analyses for requested increases in program funding, demonstrating to reviewers how 

performance will be aff ected by funding changes. All DOT programs, covering approximately $65 

billion in funding, have been assessed using the Program Assessment Rating Tool devised by OMB 

and a minimal number have received the lowest rating, Results Not Demonstrated. SES performance 

awards now rest, in part, on how well the executive’s agency has done in achieving its performance 

goals. Performance management has become a part of DOT’s corporate culture at many diff erent 

levels.

ELIMINATING IMPROPER PAYMENTS

Th e President’s Management Agenda (PMA) strives to instill fi rst class fi nancial management 

practices in departments and agencies throughout the Executive Branch. Such eff orts ensure 

that taxpayer dollars are spent wisely and effi ciently, appropriately accounted for, and protected 

from fraud or misuse. To advance these important objectives, the Administration has made the 

elimination of improper payments a major focus of the PMA. An improper payment occurs when 

Federal funds go to the wrong recipient, the recipient receives the incorrect amount of funds, or the 

recipient uses the funds in an improper manner.

FY 2007 ACCOMPLISHMENTS

In FY 2007, the Department continued implementing the Improper Payments Information Act 

of 2002 (IPIA), which requires that agencies (1) review programs and identify those susceptible 

to signifi cant improper payments (2) report to Congress on the amount and causes of improper 

payments and (3) develop approaches for reducing such payments. 

In FY 2007, the Department successfully completed its review of the Federal Highway Administration 

(FHWA) Federal-aid Highway Program, Federal Aviation Administration (FAA) Airport 

Improvement Program, and the Federal Transit Administration (FTA) Formula Grants Program. In 

addition, the Department developed and tested a model for determining the amount of improper 

payments in the FTA Capital Investment Grant Program. Th e Department will apply the model on a 

nationwide basis in FY 2008.
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175

In FY 2007, the Department re-engaged AOC Solutions, Inc. to develop the nationwide sampling 

plan, collect the results from the application of test procedures, and provide a nationwide estimate of 

improper payments for Federal-aid Highway Program, Airport Improvement Program, and Formula 

Grants Program. Th e Department developed and executed a sampling plan to test project payments 

and estimate the amount of improper payments nationwide. 

All three Operating Administrations covered Federal payments to grantees over the twelve-month 

period March 1, 2006, through February 28, 2007. 

Th e test procedures applied to the line items were designed to test a range of administrative elements 

and contractual elements. Tests of administrative elements included determining whether payments 

were properly approved, billed at the correct federal participation rate, and whether billings and 

payments were mathematically accurate. Tests of contractual elements included determining whether 

payments were in accordance with contract rates/prices for specifi ed materials and whether material 

quality tests indicated that materials met contractual requirements. 

FHWA FEDERAL-AID HIGHWAY PROGRAM

In FHWA, the sampling plan involved a multi-staged statistical approach that included the selection 

of 53 Federal payments, 40 state payments, and then 230 testable line items from those payments for 

testing. Th e 2007 sample size is signifi cantly less than the 2006 sample size because of a change in 

objectives. In 2007, the sample was designed to support a nationwide estimate of improper payments 

and was not designed to provide sample items to all states and territories. Th e states that did not 

appear in the IPIA sample received sample items for FIRE testing.

Improper payments totaling $45,568 were found in the sample of 230 tested items. Th e projection of 

this result to the population of program payments for the twelve-month period results in an improper 

payment estimate of $55.2 million +/- $0.5 million. Th is projection does not meet OMB’s defi nition 

of signifi cant improper payments ($10 million and 2.5 percent of total program payments). 

Th e improper payments reported resulted from factors such as unallowable charges, insuffi cient 

supporting documentation, incorrect calculations, and duplicate payments. Th e FHWA has 

implemented its FIRE Program to monitor State and Territory payments and provide a mechanism 

for assisting these entities with eff ectively addressing operational issues that result or could result in 

improper payments.

FTA FORMULA GRANTS PROGRAM

Th e sampling plan involved a multi-staged statistical approach that included the selection of 60 

Federal payments, 30 transportation authorities’ payments, and then 169 testable line items from 

those payments for testing. 
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Improper payments totaling $2,326.16 were found in the sample of 169 tested items. Th e projection of 

this result to the population of program payments for the twelve-month period results in an improper 

payment estimate of $2.77 million +/- $0.03 million. Th is projection does not meet OMB’s defi nition 

of signifi cant improper payments ($10 million and 2.5 percent of total program payments). 

Th e improper payments reported resulted from factors such as miscalculated federal participation 

share and lack of supporting documentation.

FAA AIRPORT IMPROVEMENT PROGRAM (AIP)

Th e sampling plan involved a multi-staged statistical approach that included the selection of 50 

Federal payments, 30 sponsor payments, and then 95 testable line items from those payments for 

testing. 

Th e review found administrative and contractual compliance as addressed in the test model and no 

improper payments.

FEDERAL REAL PROPERTY ASSET MANAGEMENT

It is the policy of the United States to promote the effi cient and economical use of America’s real 

property assets and to ensure management accountability for implementing Federal real property 

management reforms. Based on this policy, executive branch departments and agencies shall 

recognize the importance of real property resources through increased management attention, the 

establishment of clear goals and objectives, improved policies and levels of accountability, and other 

appropriate action.

FY 2007 ACCOMPLISHMENTS

Th e FAA, on behalf of the Department, continued to provide inventory information and performance 

measures to the Federal Real Property Council. Th e data included metrics for the approximately 

69,500 DOT real property assets and reported performance information on the following elements 

for each real property asset:

 Mission criticality;

 Facility condition index;

 Utilization Rate; and,

 Annual Operating Costs.

Th e data and performance measures are maintained in the Real Estate Management System 

application that serves as the single-point inventory database for DOT real property assets. During 

the fi rst quarter of FY 2007, the Department established its fi rst-ever full inventory of real property 

assets and transmitted the data to the Federal Real Property Profi le for inclusion in the full federal 

real property inventory database.
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177

In accordance with the Department’s Asset Management Plan and the Th ree-Year Timeline for Real 

Property, each of the Operating Administrations has participated in periodic reviews of the real 

property asset data. Th e Senior Real Property Offi cers throughout the Department have identifi ed 

properties for disposition based on the mode’s asset inventory and the Department’s decision-making 

process and have also participated in reviews of both GSA and non-GSA leases. In addition to 

disposal activities, each Operating Administration has developed a priority investment list for their 

asset portfolios.

RESEARCH, DEVELOPMENT, AND TECHNOLOGY (RD&T)

Th rough the Research and Innovative Technology Administration’s (RITA) management of the 

RD&T coordination function, leadership has identifi ed the emerging research priorities that 

the Department intends to pursue over the next several years. Th e plan incorporates the RD&T 

programs of all DOT Operating Administrations and considers how research by other Federal 

agencies, State DOTs, the private sector, and others contributes to DOT goals and how unnecessary 

duplication is avoided.

FY 2007 ACCOMPLISHMENTS

Th e inter-modal RD&T Program Review Working Group, chaired by RITA, conducts annual reviews 

of the research programs of the modal administrations. At these reviews, modal administrations 

demonstrate how they are implementing the Department’s RD&T Strategic Plan, applying the 

Administration’s research and development investment criteria, and employing best practices in the 

management of their RD&T activities. Th e reviews also encourage collaboration and help prevent 

unnecessary duplication of eff ort across modes.

Th e Department continued its outreach to stakeholders by involving them in the entire Research 

and Technology (R&T) process from agenda setting and planning, through the conduct of research, 

technology and innovation deployment, implementation, and customer feedback. Specifi c 

mechanisms for stakeholder engagement include the Transportation Research Board (TRB) Research 

& Technology Coordinating Committee (RTCC), and other groups formed to provide advice 

on specifi c designated programs. For example, the TRB Pavement Technology Committee was 

established to provide advice on R&T in the areas of concrete pavements, asphalt pavements, and 

pavement materials.
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Acquisition Management

FY 2007 Enacted Funds: $279 Million

Lifecycle acquisition management is built around a logical sequence of phases and decision points. 

DOT uses these phases and decision points to determine and prioritize its needs, make sound 

investment decisions, implement solutions effi ciently, and manage services and assets over their 

lifecycle. Th e overarching goal is continuous improvement in the delivery of safe, secure, and effi cient 

services over time. DOT ensures that taxpayer dollars spent through DOT’s acquisition programs 

achieve performance outcomes required by tracking, cost and schedule milestones.

2007 Results — DOT met these 

measures, which consists entirely of FAA 

projects. FAA tracked 67 milestones 

against 37 acquisition programs for 

this performance measure and met all 

variances for cost and schedule.

One of the most important steps in 

controlling costs is to ensure that capital 

programs are eff ectively managed. 

Th e FAA major capital programs 

are on track to meet established 

targets. Th ese programs provide 

navigation, surveillance, computer 

processing capabilities, tools for air 

traffi c controllers, telecommunications 

infrastructure and weather information 

to make the National Airspace System 

run smoother.

FY 2008 Performance Forecast — DOT anticipates meeting the performance targets in FY 2008.

Financial Stewardship

FY 2007 Enacted Funds: $98.3 Million

DOT needs to ensure that infrastructure improvements are delivered on time and within budget. 

Infrastructure projects are not static, at any point conditions may change, which impact either the 

cost of the project or the delivery date. Monitoring cost, schedule, and performance of infrastructure 

Performance Measure 

For major DOT aviation systems, percentage of cost goals established

in the acquisition project baselines that are met.

2004 2005 2006 2007

Target 80 80 85 87.5

Actual 100 97 100 100

Associated FY 2007 Funding – $ 56 million

Performance Measure 

For major DOT aviation systems, percentage of scheduled milestones established

in acquisition project baselines that are met.

2004 2005 2006 2007

Target 80 80 85 87.5

Actual 91.5 92 97.4 97

Associated FY 2007 Funding – $ 223 million
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

179

projects is critical to identify problems and initiate action to mitigate risks. Th ree Operating 

Administrations have projects included in the following infrastructure project performance 

measures: FTA, FAA, and FHWA.

2007 Results — DOT missed the target 

for both performance measures. Twentytwo of the Department’s 25 major 

infrastructure projects were on schedule 

and twenty-one were on budget. 

FHWA met the target for both the 

schedule milestones and cost estimates 

for 15 of its 18 major projects. Th e 

three projects that exceeded schedule 

milestones were approved prior to 

FY 2002. Th e three projects that 

exceeded their initial cost estimates 

were approved prior to FY 2004. 

FHWA took aggressive steps to validate 

State cost estimates and thoroughly 

address potential risks. FHWA issued 

major project guidance that stresses 

the importance of developing reliable 

cost estimates. Th e agency conducted 

risk-based cost estimate validations for seven major projects and will continue the cost estimate 

validations during the coming year. A pilot test was completed for a new training course designed 

to address major project cost estimating needs and requirements. Th e course focuses on raising 

awareness of the signifi cance of cost estimates throughout the project continuum and the need to 

accurately and thoroughly identify risks involved.

FTA met the target for schedule milestones and cost estimates for all fi ve of its mega projects, which 

are defi ned as active New Starts projects with Full Funding Grant Agreements (FFGA) that exceed $1 

billion. Th e fi ve projects are: New York East Side Access; Dallas Northwest/Southeast; Phoenix Light 

Rail; Denver Southeast Corridor Project; and, the Seattle Central Link Light Rail.

FAA has major runway projects at Seattle-Tacoma and Chicago O’Hare. Th e Seattle-Tacoma runway 

is on schedule to open in 2008. Phase 1 of the Chicago O’Hare Modernization Program (OMP), 

consisting of one new runway construction, relocation of an existing runway, and one runway 

extension, is on schedule for completion in 2009. For the two current major projects, Chicago OMP 

Phase 1 and the ongoing Seattle projects, the baseline of scheduled costs is $3.2 billion. In FY 2007, 

the Seattle Runway project remains at its cost target as it moves into the fi nal phases of construction. 

Performance Measure 

For major Federally funded infrastructure projects, percentage that

meet schedule milestones established in project or contract

agreements or miss them by less than 10 percent.

2004 2005 2006 2007

Target 95 95 95 95

Actual 95 95 91 88

Associated FY 2007 Funding – $ 47.9 million

Performance Measure 

For major Federally funded infrastructure projects, percentage that

meet cost estimates established in project or contract

agreements, or miss them by less than 10 percent.

2004 2005 2006 2007

Target 95 95 95 95

Actual 74 79 82 84

Associated FY 2007 Funding – $ 47.9 million
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It is estimated that the OMP is $400 million over its original estimate, which is a 15 percent increase. 

FAA had anticipated a 15 percent cost increase in its evaluation of the OMP Phase 1, because of the 

rise in the cost of materials and land.

FY 2008 Performance Forecast — DOT has adopted new measures for monitoring cost estimates 

and schedule milestones on major projects that are based on a comparison of status in the current 

year to the prior year. Th e new target is 2 percent or less growth in schedules and costs in 90 percent 

or more of all major projects with a Financial Plan. DOT anticipates that it will meet the new targets.

2007 Results — FTA met the target for 

FY 2007. Th e amount of time to process 

grants was reduced from an average of 67 

days in 2001 to 29 days in 2007. Higher 

FTA program funding and the number 

of new programs have increased the 

workload and number of awards being 

processed through FTA’s Transportation 

Electronic Award and Management 

(TEAM) system. In FY 2007, total 

FTA grant projects were estimated at 2,500 with associated obligations of over $10 billion. Th e 

improvements in the timeliness of grant processing have resulted in improved customer service. 

FTA has continued to build on and refi ne initiatives implemented in previous years to improve grant 

processing time, including: 

 Implementing an electronic Grants Notifi cation System for grants that are over 

$1 million and processed for release by Congress;

 Opening the Transportation Electronic Award and Management (TEAM) system 

for grant obligation earlier in fi scal year 2007 as a result of monthly reconciliation of 

TEAM data during FY 2006;

 Developing a new functionality in TEAM to improve Earmark processing and 

tracking;

 Continuing to work with the Department of Labor (DOL) to streamline procedure for 

certifying grants;

 Continuing the expedited notifi cation of certifi cation by the DOL; and,

 Resolving mid-year problems with electronic notifi cation to DOL resulting from new 

computer security fi rewall protections.

FY 2008 Performance Forecast — FTA anticipates meeting the FY 2008 target.

Performance Measure 

Percentage of transit grants obligated within 60 days after submission

of a completed application.

2004 2005 2006 2007

Target 80 80 80 80

Actual 91 91 94 94 *

* Preliminary estimate

Associated FY 2007 Funding – $ 2.54 million
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

181

PERFORMANCE DATA COMPLETENESS

AND RELIABILITY

Performance measurement is dependent on the availability of useful data that will indicate level 

of performance and helps progress toward achieving organizational goals. Because all data are 

imperfect in some fashion, pursuing perfect data may consume public resources without creating 

appreciable value. For this reason, there must be an approach that provides suffi cient accuracy and 

timeliness but at a reasonable cost. Th is section of the report provides information on how DOT uses 

performance data, assesses limitations of the data, and plans to improve DOT’s data.

IN GENERAL

In an attempt to bring consistency and quality to its performance reporting, DOT has implemented 

some general rules regarding the data it uses and how it is evaluated.

Annual Data — Whenever available, the data in this document are reported on a Federal 

Government fi scal year basis. However, there are instances where fi scal year data are not available 

so calendar year data are used instead. Th is oft en occurs when data are collected and reported to 

DOT by external sources and a calendar year reporting requirement is specifi ed in the implementing 

regulation.

Completeness of Data for Annual Results — If available, the results for the most recent year in 

the report are listed as Actual in the shaded box for each performance measure. However, given 

the November 15 deadline for submission of the Performance and Accountability Report, not all 

data have been compiled and fi nalized for the entire year. When an actual value is not available 

for the current year, either an estimate or a projection is provided instead. In general, estimates 

are based on partial-year data that are extrapolated to cover a full 12-month period. Historical 

trend information, supplemented by program expertise, is then applied to estimate the remaining 

months of performance for which actual data is unavailable. Th e result is identifi ed as a preliminary 

estimate in the report. If partial-year data are not available, then past trend information is analyzed 

and supplemented by program knowledge to develop a projected value for the annual performance 

measure. Th e result is identifi ed as a projection in the report. As data are fi nalized, the projections 

and preliminary estimates are replaced by actual results, with resulting changes denoted by an (r). 

Results are also amended as errors and omissions are identifi ed in the data verifi cation process, as 

updated information is provided by the reporting sources, or because of legal or other action that 

changes a previously-reported value.

Reliability of Measurement Data — DOT performance data are generally reliable (useful to 

program managers and policy makers). But because performance results in a given year are 

infl uenced by multiple factors, some of which are beyond DOT’s control, and some of which are 

due to random chance, there may be considerable variation from year to year. A better “picture” of 

performance may be gained by looking at results over time to determine if there is a trend.
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Virtually all data have errors. We have compiled Source and Accuracy Statements for each of the 

DOT data programs used in this report, which can be found at http://www.bts.gov/programs/

statistical_policy_and_research/source_and_accuracy_compendium/index.html. Th e Source and 

Accuracy Statements give more detail on the methods used to collect the data, sources of variation 

and bias in the data, and methods used to verify and validate the data.

Assessing and, where possible, eliminating sources of error in DOT data collection programs has 

always been an important task for data program managers. As part of their ongoing work, managers 

of Departmental data programs use quality control techniques to identify where errors can be 

introduced into the data collection system. Program managers also use computerized edit checks and 

range checks to minimize errors that may be introduced into the data of their respective programs. 

In addition, quality measurement techniques are employed to measure the eff ects of unanticipated 

errors. Th ese include verifi cation of data collection and coding, as well as coverage, response and 

non-response error studies to measure the extent of human error aff ecting the data. As sources of 

error are identifi ed, data collection is improved. Quality control is an ongoing and continuous eff ort 

to improve data accuracy and availability.

Th e data used in measuring performance come from a wide variety of sources. Much of it 

originates from sources outside of the Department and, therefore, outside of the direct control of 

the Department. Th e data oft en come from administrative records or from sample surveys. While 

DOT may not have a strong voice in improving the quality of outside data, the Department takes all 

available information about the limitations and known biases in outside data into account when using 

the data.

To help the OAs address these issues, the Bureau of Transportation Statistics (BTS) is developing a 

statistical policy framework where the OAs will work together to identify and implement the current 

statistical best practices in all aspects of their data collection programs. Th is project is consistent with 

the data capacity discussions found in the DOT Strategic Plan.

See Other Accompanying Information in the Financial Report for detailed explanations of 

completeness and reliability for each performance measure.

DATA LIMITATIONS

DOT Data Source Limitations — Timeliness is the most signifi cant limitation for DOT 

performance measurement data. Some DOT data are not collected annually. For example, the 

National Household Travel Survey and the Commodity Flow Survey each collect data every fi ve 

years. Data that are collected each year (or more frequently) require time to analyze, confi rm and 

report results. For example, Highway Performance Monitoring System vehicle-miles traveled (VMT) 

data require several months of post-collection processing, making fi nal results unavailable for this 

performance report.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

183

Other performance measurement data limitations are identifi ed in the previously mentioned 

Source and Accuracy Statements for DOT data programs. Th ese statements contain descriptions 

of data collection program design, estimates of sampling errors (if applicable), and discussions of 

non-sampling errors. Non-sampling errors include under-coverage, item and unit non-response, 

interviewer and respondent response errors, processing errors, and errors made in data analysis.

Estimating and Projection Techniques Used — As discussed under completeness, many of 

the FY 2007 measures must be projected from either partial-year data or historical trends. Th e 

projections based on partial-year data from FY 2007 are more likely to refl ect changes eff ected by 

current DOT policies and programs. Th e measures projected from FY 2006 and prior historical 

data refl ect continuing trends from ongoing programs, but do not refl ect the eff ects of changes 

implemented in FY 2007. 

External Data Source Limitations — Data that originate from external or third-party sources 

are not directly controlled by DOT. Th ese data oft en come from administrative records or from 

sample surveys. Timeliness is also a signifi cant limitation. For example, many DOT internal data 

programs rely on data provided by State DOTs. DOT partners closely with the States, but does not 

have direct control over these programs.
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DOT PROGRAM EVALUATIONS

Performance measures show if intended outcomes are occurring and assess any trends. Program 

evaluation uses analytic techniques to assess the extent to which our programs are contributing to 

those outcomes and trends. As required by the Government Performance and Results Act of 1993, 

the Department’s FY 2006 - 2011 Strategic Plan includes an updated list of new program evaluations 

planned for those fi scal years. Th is appendix provides a summary of DOT’s program evaluation 

eff orts and a report on program evaluations scheduled for completion in FY 2007.

TYPES OF PROGRAM EVALUATIONS

Program evaluation is an assessment, through objective measurement and systematic analysis, 

of the manner and extent to which programs achieve intended outcomes. Evaluations are of the 

following types:

 Impact Evaluations use empirical data to compare measurable program outcomes 

with what would have happened in the absence of the program. Th ese represent 

the highest standard of program evaluations and are oft en the most diffi cult and 

expensive to construct and interpret. 

 Outcome Evaluations assess the extent to which programs achieve their outcomeoriented objectives. Outcome evaluations will use quantitative methods to assess 

program eff ectiveness, but fall short of the rigorous causal analysis of impact 

evaluations.

 Process Evaluations assess the extent to which a program is operating as intended. 

While a true process evaluation will use objective measurement and analysis, it falls 

short of assessing the causal links between intervention and outcome.

 Cost-Benefi t and Cost-Eff ectiveness Analyses compare a program’s outputs or 

outcomes with the costs to produce them. Th is type of analysis conforms with 

program evaluation when applied systematically to existing programs and when 

measurable outputs and outcomes are monetized.

PROGRAM EVALUATION MANAGEMENT

DOT staff , contractors, academic institutions, the Offi ce of the Inspector General (OIG), or the 

Government Accountability Offi ce (GAO) may conduct program evaluations. Program evaluation 

eff orts are designed to ensure that the fi nished evaluations are useful regardless of who conducts 

the evaluation or the methodology used.

Th e programs selected for evaluations are vetted through the Department’s strategic planning 

process. Each Operating Administration nominates programs that are then reviewed by a strategic 

planning executive committee to ensure two things: 1) adequate breadth of program evaluations 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

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across modal administrations; and 2) alignment to the strategic objectives developed through the 

planning process. Th e OIG and the GAO continue their own program evaluations independent of 

this schedule, as deemed appropriate.

FY 2007 PROGRAM EVALUATION SUMMARIES

A summary of DOT program evaluations scheduled for completion in FY 2007 follows.

Retrospective Assessment Of Benefi ts And Impacts Of The Pipeline Safety 

Operator Qualifi cation Regulations

Operator error has long been a signifi cant factor in pipeline incidents and accidents. Aft er three 

major incidents in the 1980s, the National Transportation Safety Board recommended development 

of qualifi cation requirements for pipeline personnel carrying out safety duties. Congress directed 

regulatory action in subsequent legislation, and PHMSA fi nalized a rule in 1999.

Related Strategic Goals: Safety, Environmental Stewardship

Th e purpose of this outcome evaluation was to determine the benefi ts and impacts of the personnel 

qualifi cation regulations issued in 1999. Information was collected through program operations 

and incident reports and two public meetings to explore progress in implementing the program. 

Th e evaluation found several defi ciencies in operator programs during the initial phase of 

implementation, but also a number of solutions emerging from: the pipeline industry itself, 

professional standards organizations, and State/federal inspectors and program managers. PHMSA 

and State pipeline safety agencies completed the initial inspection of Operator Qualifi cation 

(OQ) programs for all federally-regulated operators and most State-regulated operators. Th e 

results of this initial inspection led to development of a national consensus standard to improve 

operators’ programs and to the development of a model plan to assist small operators in complying 

with the 1999 rule. Aft er the new standard for OQ programs was fi nalized and implemented, 

operators reported improved operational ability and safety, improved operating and maintenance 

procedures, and increased awareness of requirements. While evaluators observed some reduction 

in the number of incidents and accidents attributed to operator error, it is too early to attribute 

performance trends solely to the new operator qualifi cation program standard.

Th is evaluation was completed in December 2006, and a report was provided to Congress in 

January 2007. Th e report recommended continuing inspections of OQ programs, monitoring the 

safety performance of operators and trends in accidents/incidents, clarifying the OQ regulations, 

and consideration of regulatory changes. As a result, PHMSA has expanded the Frequently 

Asked Questions published on the agency’s Web site, participated with State partners in the fi rst 

American Society of Mechanical Engineers’ committee meeting to review the new standard and 

begun eff orts toward developing new standards focused on new construction.
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Assess The Current PHMSA Information Technology (IT) Program To Identify 

Overlapping And Redundant IT Investments, Systems And Services.

Th is evaluation will identify current and future business and technology performance gaps that 

inhibit PHMSA’s ability to effi ciently, eff ectively, and reliably execute mission activities.

Related Strategic Goals: Safety, Environmental Stewardship, Organizational Excellence

Th e primary goal of this process evaluation is to better align the Information Technology 

(IT) portfolio with PHMSA’s business model in order to provide the greatest value while 

reducing redundancies and costs and creating a more effi cient IT services delivery program. 

We have conducted a signifi cant amount of pre-program review activities in preparation for 

the IT evaluation. Th ese activities include the development of a draft PHMSA Strategic Plan, 

identifi cation of the PHMSA IT portfolio, mapping of IT systems to PHMSA lines of business, and 

the identifi cation of related costs. Th ese pre-program activities have already led to the discovery 

of redundant IT systems and reinforced our assumption that the current solutions are not meeting 

business expectations and/or not providing maximum business value.

On September 12, 2007, PHMSA awarded a contract to a third party vendor to assist in completing 

the evaluation eff ort. Th e evaluation will use the following approach:

1. Discovery - Review of business (i.e., strategic plan, performance plans, business 

plans) and IT documentation to better understand the “As Is” (current state) 

environment and a framework for the “To Be” (future state) model based on the 

strengthened PHMSA vision, strategies, and goals. 

2. - With the information gathered Build the Conceptual “To Be” Business Model

from the discovery phase, a conceptual “To Be” Business Model will be developed. 

Th e model will be organized by lines of business and provide information on 

business processes, data requirements and dependencies, application and database 

relationships, and technology platforms. PHMSA will leverage best practice data 

from other organizations of similar size, scope, and complexity to assist in building 

the model, identifying benefi ts, and projected costs savings.

3. - Upon Senior Leadership Approval of the “To Be” Business Model, Gap Analysis

a gap analysis will be executed. Th e gap analysis aims to identify misalignments 

in the business, data, application, and technology layers between the “As Is” and 

preferred “To Be” business models. It is highly anticipated that business process 

reengineering recommendations will be an output, in addition to changes in the 

current IT portfolio. Upon completion of the gap analysis, PHMSA will better 

understand what investments are aligned and those that are misaligned with the 

business model, as well as other recommendations that will improve effi ciency 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

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and reduce redundancies. Recommendations will be made to the leadership team 

(Investment Review Board) on which investments should be continued, modifi ed, 

or terminated.

4. - Develop the blueprint and sequencing objectives to get from the Transition Plan

“As Is” to the “To Be” State.

Th e expected completion date for this evaluation is in early 2008. Results from the evaluation will 

be reported in next year’s PAR.

Safer Skies Program

In 1997, the White House Commission on Aviation Safety and Security issued a challenge to the 

FAA and the aviation industry – to reduce the air carrier fatal accident rate by 80 percent in ten 

years. Th is challenge became known as the Safer Skies program.

Th e purpose of this program evaluation is to determine how successful the Safer Skies program, 

which FAA began in 1998, was in increasing aviation safety. Th is outcome evaluation looked at the 

three main areas of emphasis for Safer Skies – Commercial Aviation, General Aviation and Cabin 

Safety. Th ese areas focused on improved data and analysis, as well as improved human factors in 

operations and maintenance.

Related Strategic Goal: Safety

Th e results of this outcome evaluation, for each of the evaluation’s focus areas, were as follows:

Commercial Aviation – In reviewing Commercial Air Carrier Fatal Accidents, the ten-year target 

called for an 80 percent reduction in the commercial air carrier fatal accident rate. Although we 

did not achieve the target set ten years ago, by the end of FY 2007, FAA has achieved a rate of 0.022 

fatal accidents per 100,000 departures – a 57 percent drop. While we did not make this ambitious 

target, this is a signifi cant reduction.

General Aviation Fatal Accidents – A review of the data from the three years prior to the 

development of Safer Skies (1994-1996) shows an average of 418 fatal general aviation accidents per 

year. From 2004 to 2006, the data indicate an average of 353 fatal general aviation accidents per 

year – approximately a 16 percent decrease.

Cabin Safety Commercial Fatalities – Th e three years prior to the development of Safer Skies (1994-

1996) saw an average of 269 deaths per year, with 45 average deaths per fatal accident. A review of 

the FYs 2005 – 2007 fatality data indicates an average of 29 deaths per year, with 11 average deaths 

per fatal accident. Th is is a reduction of 89 percent and 76 percent, respectively.
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Th e transformation of the aviation industry in both complexity and size has dramatically changed. 

Th is should also be refl ected in how FAA conducts surveillance and measures progress. To date, 

“diagnostic surveillance,” looking at the causes of accidents aft er the fact, has been eff ective. 

However, this method of surveillance will result in an unacceptable level of fatal accidents as 

traffi c doubles or triples by 2025. Th e results of the evaluation yielded two recommendations for 

FAA — modify the commercial fatal accident rate to address fatalities and develop a system safety 

approach.

Th e Aviation Safety organization developed a new commercial air carrier fatal accident rate 

performance measure (Fatalities per 100 million enplanements) and is in the process of developing 

a Safety Management System policy for FAA in FY 2008.

Maritime Security Program

Th e Maritime Administration planned to have an independent auditor conduct an impact 

assessment of the Maritime Security Program in FY 2007. However, funding was not available 

for this project, and as a result, a decision was made to defer the evaluation. Th e Maritime 

Administration plans to complete this evaluation in FY 2008. Results from this evaluation will be 

reported in the FY 2008 DOT Performance and Accountability Report.

Evaluation Of National Mobilizations

NHTSA has encouraged States to aggressively enforce laws aff ecting the safety of motorists on 

the Nation’s highways. Th ese laws include mandating the use of seat belts in motor vehicles and 

discouraging drivers from operating a motor vehicle while impaired. As part of this enforcement 

eff ort, the “Click It Or Ticket” (CIOT) campaign was established to promote seat belt use and the 

“Drunk Driving: Over the Limit; Under Arrest” campaign was established to discourage impaired 

driving.

Related Strategic Goal: Safety

Th e purpose of this outcome evaluation is to evaluate high visibility national enforcement 

eff orts and the resulting impact on driver’s behaviors. Th e evaluation considered the use of paid 

advertisements focusing on seat belt enforcement, measured motorists’ awareness of seat belt 

campaigns, and ultimately measured the change in seat belt use rate and the reduction in alcohol 

related fatalities.

 May 2005 National Seat Belt Mobilization: Th e May 2005 National CIOT 

Mobilization was the largest publicity and enforcement program to date to 

increase seat belt use. Approximately $10 million was spent for a national media 

campaign. Forty-one percent of law enforcement agencies across 48 States, the 
Bergen County police offi cer Jeff Roberts, right, hands a seat belt safety pamphlet to a driver during a “Click It or 

Ticket” checkpoint stop near the entrance to the George Washington Bridge in Fort Lee, N.J., Monday, May 21, 2007. 

Th e checkpoint was one of three set up in New Jersey Monday to raise awareness of seat belt safety and give out $46 

tickets to those motorists not wearing seat belts. (AP Photo/Mike Derer)

PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

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District of Columbia, and Puerto Rico reported their participation. Seat belt 

use increased in 35 of 47 States and territories and reached a record high of 82.4 

percent nationally, up from 80 percent in 2004. Additional information can be 

found on the NHTSA Web site at: http://www.nhtsa.dot.gov/staticfi les/DOT/

NHTSA/Communication%20&%20Consumer%20Information/Traffi c%20Tech%20

Publications/Associated%20Files/tt330.pdf.

 2005 Regional Seat Belt Demonstration Programs Focus on Rural Areas and Pickup 

Trucks: NHTSA conducted three regional demonstration programs in 18 States 

just before and during the 2005 May mobilization. Two focused on increasing seat 

belt use in pickup trucks and one focused on increasing seat belt use in rural areas. 

States in the Great Lake Region (region 5) that used the full model of enforcement 

and enforcement-centered media had more success in the rural areas than the States 

that did not. Th e South Central States (region 6) posted a three-point gain in seat 

belt use in pickup trucks from 2004 to 2005, better than the national average, and 

reduced the car/pickup truck disparity in belt usage. Th is had no consequence on 
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the overall belt use rate in all vehicles in this region. A copy of the report can be 

found at: http://www.nhtsa.dot.gov/buckleup/CIOT2005_eff ectiveness/index.html.

 2003-2005 National High Visibility Impaired Driving Campaign: Th e National 

Impaired Driving Crackdown program used high-visibility enforcement coupled 

with enforcement-oriented media to create general deterrence with eff orts focused 

on a number of States with especially high numbers or rates of alcohol-related 

traffi c fatalities. During the three-year study period, the trend in alcohol-related 

fatalities declined, and the declines were more pronounced for the campaign’s 

target audience of male drivers, ages 18 to 34. Th ough the observed declines were 

not signifi cant, they could be considered promising, since they are headed in 

the right direction and immediately follow a period of increased alcohol-related 

fatalities. It appears that more substantial benefi ts will require a much higher level 

of law enforcement intensity than was present during the campaign, as well as a 

frequency of more than once a year. Awareness about both enforcement activities 

and media messages increased following each crackdown, but did not carry over 

from campaign to campaign. Conducting more frequent waves of enforcement 

and publicity may be more successful in building a cumulative eff ect. A copy of 

the report (DOT HS 810 789: Evaluation of the National Impaired Driving HighVisibility Enforcement Campaign: 2003 - 2005) can be found on the NHTSA Web 

site at: www.nhtsa.dot.gov/portal/nhtsa_static_fi le_downloader.jsp?fi le=/staticfi les/

DOT/NHTSA/Traffi c%20Injury%20Control/Articles/Associated%20Files/

YDYDYL_2001-05.pdf.

NHTSA is in the process of conducting an evaluation of the 2006 national mobilization eff ort and 

is preparing a separate report on the May national seat belt mobilization and the Fall impaired 

driving crackdown. Th ey will be completed and published in the Fall of 2008.

Evaluation Of The Compliance Review (CR) Impact Assessment Model

A Compliance Review (CR) is an onsite examination of a motor carrier’s operations to determine 

the carrier’s safety fi tness. FMCSA, in cooperation with the Volpe National Transportation Systems 

Center, has developed an analytic model to measure the eff ectiveness of the CR in terms of crashes 

avoided, injuries avoided and lives saved. Th is tool provides FMCSA management with the 

information it needs to address the requirements of the Government Performance and Results Act 

(GPRA) of 1993, which obligates Federal agencies to measure the eff ectiveness of their programs 

as part of the budget cycle process. It also provides FMCSA and State safety program managers 

with a quantitative basis for optimizing the allocation of fi eld safety resources. Th is analytic tool is 

known as the CR Eff ectiveness Model.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

191

Related Strategic Goal: Safety

Th e CR Eff ectiveness Model shows the direct impact of compliance reviews on motor carrier 

safety, but not the “deterrent” eff ects (i.e., the eff ect on a carrier’s behavior due to the potential of 

having a CR). Th e model is based entirely on “before and aft er” changes in the safety performance 

of motor carriers that received CRs. Th e model compares a motor carrier’s crash rate in the 12-

month period aft er a CR, to its crash rate in the 12-month period prior to that review. To make 

this comparison, the model uses: (1) crash data reported by the States, and (2) power unit data 

reported by carriers or obtained during CRs.

Th is impact evaluation focused on CRs conducted in 2004 to identify the extent to which the 

model could be used to identify the associated benefi ts. In 2004, 10,671 CRs were conducted. 

Th e analytical model was able to assess the impact of 8,042 of these reviews (some compliance 

reviews were removed from the model because the motor carrier receiving the CR was not active 

12 months aft er the CR, had zero power units, or had crash and power unit data that did not pass 

edit checks designed to screen out erroneous data). Based on this assessment, it is estimated that 

during the period from 2004 to 2005, 2,720 crashes were avoided, 1,889 injuries were avoided and 

107 lives were saved as result of performing compliance reviews in 2004. 

Evaluation Of The Roadside Inspection/Traffi c Enforcement Analytical Model 

FMCSA and its State partners conduct roadside inspections and traffi c enforcements of large 

trucks and buses to ensure that the vehicles and drivers are operating safely within the Federal 

Motor Carrier Safety Regulations. FMCSA, in cooperation with the Volpe National Transportation 

Systems Center, has developed an analytic model to measure the eff ectiveness of roadside 

inspections and traffi c enforcements in terms of crashes avoided, injuries avoided and lives saved. 

Th is tool provides FMCSA management with the information it needs to address the requirements 

of the Government Performance and Results Act (GPRA) of 1993, which obligates Federal agencies 

to measure the eff ectiveness of their programs as part of the budget cycle process. It also provides 

FMCSA and State safety program managers with a quantitative basis for optimizing the allocation 

of fi eld safety resources. Th is analytic tool is known as the Intervention Model.

Related Strategic Goal: Safety

Th e Intervention Model is based on the premise that the two programs—Roadside Inspection 

and Traffi c Enforcement—directly and indirectly contribute to a reduction in crashes. Th e 

model includes two components that are used for measuring these diff erent eff ects, the direct 

eff ect model component and the indirect eff ect model component. Direct eff ects are based on 

the assumption that vehicle and/or driver defects discovered and then corrected at the roadside 

reduce the probability that these vehicles/drivers will be involved in subsequent crashes. In order 
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to measure the direct eff ects of the intervention, the model assigns crash risk probabilities to each 

of the violations found at the roadside. Th e model then calculates direct-eff ect-prevented crashes 

according to the number and type of violations detected and corrected during the intervention.

Indirect eff ects are the by-products of the carriers’ increased awareness of FMCSA programs 

and the consequences that the programs could impose if steps are not taken to ensure and/or 

maintain higher levels of safety. In order to measure indirect eff ects, which are essentially changes 

in behavior involving driver preparation, practices and vehicle maintenance, the model calculates 

motor carrier responses to exposure to the programs, and the resulting reduction in potentially 

crash-causing violations.

Most recently, the model was implemented to measure program eff ectiveness during the 

2005 activity year using March 31, 2006, data extracted from the Motor Carrier Management 

Information System (MCMIS). Th e number of inspections and the model results are shown below 

for 2005.

Number of Inspections

Calendar Year 2004 2005

Roadside Inspections 2,211,875 2,194,567

Traffi c Enforcements 803,032 827,719

Total Interventions 3,014,907 3,022,286

2005 Traffi c Enforcement Activity Level Results

Crashes Avoided Injuries Avoided Lives Saved

Traffi c Enforcement Activity 3,416 2,369 127

Roadside Inspection Activity 3,216 2,230 120

Combined Activity 2,583 1,791 96

Total 9,215 6,390 343

Review Of FRA’s Research, Development And Demonstration Programs

Th e FRA Research, Development and Demonstration (RD&D) Program directly supports DOT’s 

regulatory safety mission. Th e purpose of the program is to facilitate FRA’s eff orts to enhance the 

safety and effi ciency of the Nation’s rail system. In FY 1998, Congress directed FRA to expand its 

collaborative eff orts with the Transportation Research Board (TRB) and to review its Research and 

Development (R&D) program. Th e purpose of the TRB review was to validate how FRA’s R&D 
Federal Railroad Administrator Joseph Boardman speaks 

during a news conference at the CSX rail yard in Atlanta, 

Th ursday, March 2, 2006. Boardman said, human factors 

are the leading cause of train accidents and the agency is 

researching railroad worker fatigue and is working to analyze 

close calls, incidents that nearly cause train accidents. (AP 

Photo/John Bazemore)

PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

193

program activities supported the agency’s safety mission and to identify opportunities to improve 

overall program performance. TRB continues to provide FRA with an annual review of its R&D 

program, which helps inform agency leadership on the progress of its R&D activities.

Related Strategic Goal: Safety, Organizational Excellence

Th e TRB conducted peer reviews of FRA’s research, development, and demonstration programs, 

and in doing so, focused on three major issues: safety, capacity, and effi ciency. Th e review 

encompassed both freight and passenger rail activities and was conducted during a three-day 

workshop, which included interviews of FRA staff , presentations from FRA program managers, 

discussions and debate by industry and subject matter experts, and various other data gathering 

methods.

TRB’s overall fi ndings were positive. Th e 

Board concluded that ongoing research 

being pursued by FRA should continue and 

not be given a lower priority solely because 

of proposed new research. Th e committee 

did conclude that there are a number of 

additional research areas that should be 

explored, including:

 development of interoperability 

standards for positive train control;

 research towards performance based 

standards; 

 research related to rail capacity 

issues; and,

 consolidating fi ndings and research 

results related to energy and 

environmental research projects.

TRB also made four recommendations designed to improve FRA’s management of the R&D 

program. FRA is in the process of developing a response to these recommendations, which would 

include an action plan to address the recommendations where appropriate.

Railroad Safety Enforcement

Th e Safety Assurance and Compliance Program (SACP) was initiated in the mid-1990s to identify 

and resolve systemic safety issues on large multi-regional railroad systems through a “macro” 

approach (i.e., examining the railroad system, all at one time). SACP is credited with resolving 
UNITED STATES DEPARTMENT OF TRANSPORTATION

194

hundreds of safety issues, many of which were very complex. Over time, however, SACP grew in 

several diff erent directions and was criticized, internally and externally, for a variety of perceived 

shortcomings.

On July 29, 2005, the Associate Administrator for Safety issued a directive implementing a new 

element of the FRA safety program, Railroad System Oversight (RSO), to replace SACP. Th e SACP 

had served as a critical part of Railroad Safety Enforcement, so this directive refl ected a signifi cant 

modifi cation of FRA’s safety program.

Fundamental changes in the safety oversight process for large railroad systems were implemented 

as a result of this initiative. In all, these changes were designed to improve communication, 

effi ciency, use of FRA resources, and to focus better on those issues and concerns of greatest 

importance to the FRA safety program. 

Related Strategic Goal: Safety

Th is outcome evaluation of RSO, one year aft er its implementation, will assess the eff ectiveness of 

the program and determine if the anticipated operational improvements (e.g., improved resource 

utilization, better organizational communication) were achieved. 

Th e evaluation will include the following activities:

 Review RSO activities since implementation in September 2005 to identify safety 

activities; e.g., issues resolved, safety initiatives;

 Perform a comparative analysis between current RSO operation and the 

implementation directive signed by the Associate Administrator for Safety;

 Interview RSO supervisor and managers, FRA headquarters and regional 

managers, and railroad and labor organization representatives to determine levels 

of communication, integration with safety functions, and overall “customer” 

satisfaction;

 Analyze RSO activities and evaluate eff ectiveness of RSO managers in identifying, 

resolving, and/or communicating safety issues for resolution;

 Review, compare, and evaluate RSO record keeping and reporting activities; and,

 Analyze internal FRA performance data RSO provides to headquarters and regions 

to evaluate consistency, timeliness, and usefulness to headquarters and the regions.

We are currently conducting an evaluation of the Rail Safety Oversight group. Th e evaluation 

will be completed in November 2007 and evaluation results will be reported in the DOT FY 2008 

Performance and Accountability Report.
Th is undated photo provided by the Insurance Institute for 

Highway Safety shows a side impact test on a 2006 Ford Five 

Hundred vehicle with optional side airbags. (AP Photo/

Insurance Institute for Highway Safety)

PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

195

Side Impact Protection And Side Air Bags

Side impacts rank second only to frontal impacts as a cause of occupant fatalities in cars, light 

trucks, and vans. In 2003, over 9,000 fatalities, approximately 29 percent of all occupant fatalities 

in cars and light trucks occurred in crashes initiated by a side impact. Since the 1970’s, NHTSA, 

the manufacturers, and others in the safety community have worked hard to reduce the fatality risk 

in side impacts, especially of the most vulnerable occupant, the “nearside” occupant: the driver in 

a left -side impact and the right-front passenger in a right-side impact.

Related Strategic Goal: Safety

In recent years, four tangible improvements in side impact protection have been implemented and 

were evaluated in this outcome evaluation:

 Upgrading the side structure in passenger cars

 Installation of energy absorbing padding within the door structure

 Torso air bags that provide a cushion between the occupant’s torso and the vehicle 

side structure

 Head-protection air bags that cushion head impacts with the vehicle’s side structure

Eff ect of side air bags for nearside occupants:

Torso air bags plus head-protection air bags reduce the fatality risk of nearside front seat occupants 

in single- and multi-vehicle crashes by 24 percent. Torso bags alone reduce the fatality risk by 

an estimated 12 percent. Th rough 2005, there were few vehicles equipped with head-protection 

air bags only (no torso bags), not enough for a separate statistical analysis. However, the results 

suggest that torso and head-protection air bags are both eff ective in nearside impacts and make 

approximately equal contributions to 

fatality reduction. Overall torso and headprotection air bags could have saved an 

estimated 1791 lives in calendar year 2003 

if every passenger car, light truck, and van 

had been so equipped. In September 2007, 

NHTSA announced new upgraded side 

impact safety requirements for all passenger 

vehicles, which is expected to save over 300 

lives and prevent nearly 400 serious injuries 

every year. Th e new standard requires auto 

manufacturers – for the fi rst time ever – to 

provide head protection in side-impact 

crashes, as well as enhance other protections 

for passengers involved in such crashes.
UNITED STATES DEPARTMENT OF TRANSPORTATION

196

Combined eff ect of improved structure, padding and side airbags:

Side impact protection could have saved an estimated 2,934 lives (nearside and far side occupants) 

in calendar year 2003 if every car on the road had been equipped with side air bags (head and 

torso), improved side structure and padding, and every light truck and van had been equipped 

with side air bags. Th e associated reduction in fatality risk for the combined eff ect is 42 percent in 

two-door passenger cars, 30 percent in four-door cars, and 15 percent in light trucks and vans. Th e 

complete NHTSA report can be found at http://dmses.dot.gov/docimages/p89/460665.pdf.

SafeStat Program

Safety Status Measurement System (SafeStat) is an automated analysis system developed for 

the Federal Motor Carrier Safety Administration (FMCSA). Th e system combines current and 

historical safety performance data to measure the relative safety fi tness of interstate commercial 

motor carriers. SafeStat enables FMCSA to quantify and monitor the safety status of motor carriers 

and guides the deployment of resources to focus on carriers posing the greatest safety risk. 

Related Strategic Goal: Safety

GAO and the DOT Offi ce of Inspector General (OIG) conducted process evaluations of SafeStat 

and made several recommendations to FMCSA to improve the system. Th e reports issued by GAO 

and OIG were largely positive and indicate that FMCSA does a good job in identifying carriers that 

pose high crash risks thereby ensuring the thoroughness and consistency of compliance reviews 

(CRs). 

GAO’s assessments found that FMCSA could more eff ectively address fatalities due to crashes 

involving a commercial motor vehicle if it better targeted CRs to those carriers that pose the 

greatest crash risks. OIG’s assessment found that although improvements have been made to the 

data relied upon in SafeStat; problems still exist with the reporting of crash data.

In June 2007, GAO published an audit report titled, “Motor Carrier Safety: A Statistical Approach 

Will Better Identify Commercial Carriers Th at Pose High Crash Risks Th an Does the Current 

Federal Approach” (Report No. GAO-07-585), and recommended that FMCSA apply a negative 

binomial regression model to enhance the current SafeStat methodology. FMCSA believes that the 

approach looks promising but is concerned that using the binomial regression model may result in 

less emphasis on safety regulatory areas. FMCSA agreed to consider amending current policies to 

place increased CR priority on certain motor carriers that are identifi ed by SafeStat as defi cient in 

the area of prior crashes. 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

197

In August 2007, GAO published audit fi ndings in a report titled, “Motor Carrier Safety: Federal 

Safety Agency Identifi es Many High-Risk Carriers but Does Not Assess Maximum Fines as Oft en 

as Required by Law” (Report No. GAO-07-584), and recommended that FMCSA improve its 

targeting of carriers that posed high crash risks by prioritizing CRs for carriers with very poor 

scores (such as the worst fi ve percent) in the accident safety evaluation area, so that these carriers 

will be selected for CRs regardless of their scores in the other areas. GAO recommended this 

approach should FMCSA decide not to implement the negative binomial regression model, 

as recommended in the report issued in June 2007. FMCSA agreed to implement GAO’s 

recommended approach. In the longer term, FMCSA, under the CSA 2010 initiative, is moving 

towards new methods for better targeting its safety compliance resources which promises further 

improvement in identifying high-risk motor carriers.

In June 2007, OIG issued correspondence to Representative Th omas Petri regarding the quality 

of the underlying data used by SafeStat. Th e review, conducted at Representative Petri’s request, 

found that, although improvements have been made, problems still exist with the reporting of 

crash data to FMCSA. While States are reporting more commercial motor vehicle crashes to 

FMCSA, OIG found anomalies that caused OIG to question the completeness of the non-fatal 

crash reporting. OIG recommended that FMCSA implement a new, more reliable estimate that 

would allow evaluation of non-fatal crash reporting, both nationally and state-by-state, before the 

Department makes all SafeStat scores available to the public. FMCSA acknowledged the need to 

develop a new, more reliable estimate and has begun work to implement the estimate.

Alternative Inspection Regimes

Th e primary goal of the FMCSA is to ensure the safe operation of interstate motor carriers 

and hazardous materials shippers. A program evaluation was conducted to assess the safety 

eff ectiveness, program and process effi ciency, and cost eff ectiveness of alternative inspection 

regimes for FMCSA’s Motor Carrier Compliance Review (CR) Program. Th e alternative inspection 

regimes study evaluated four intervention tactics: educational initiatives, warning letters, off -site 

investigations, and focused on-site investigations. Th ese four interventions are among the broad 

array of progressive interventions being considered by the Comprehensive Safety Analysis (CSA) 

2010 program.

Related Strategic Goal: Safety

Currently the Agency’s CR program can only inspect a small percentage of the motor carrier 

industry. One of CSA 2010’s goals is to increase the Agency’s infl uence over the safety behavior 

of motor carriers (measured in terms of education, visits, an array of disciplinary treatments, and 

warnings). Each of the four interventions were analyzed using quantitative data (when available) 

and qualitative data. Th e warning letter intervention showed the greatest promise of safety 

improvement. Th e educational initiative, which used the new entrant program as a proxy, helped 
UNITED STATES DEPARTMENT OF TRANSPORTATION

198

support the belief that education has a positive impact on safety improvement. FMCSA obtained 

data from other agencies to evaluate the impact of educational initiatives and discovered that 

those that employed this tactic were convinced that education improved safety, though they lacked 

clear performance data to support their claims. Other agencies were also assessed to support the 

eff ectiveness of employing off -site investigations (evaluating data gathered using sophisticated 

information systems which record/monitor safety behavior without visiting the motor carrier 

site); the qualitative data also supported using this tactic. Finally, qualitative data indicated that 

focused reviews provided safety improvements and cost savings. As a result of our investigation of 

alternative inspection regimes, the study recommended that the CSA 2010 team proceed with the 

current model which includes educational initiatives, warning letters, off -site investigations, and 

focused reviews.

Costs, Benefi ts, And Effi ciencies Of Public-Private Partnerships For Fixed 

Guideway Capital Projects

Th is evaluation was conducted by the Federal Transit Administration to comply with the 

requirements of public law 49 U.S.C. 5309(c)(6), to assess the costs, benefi ts, and effi ciencies of 

public-private partnerships (PPP) for fi xed guideway transit capital projects.

Related Strategic Goal: Mobility; Organizational Excellence

Th e scope of the evaluation includes the results of a comprehensive review of available literature on 

PPPs and the results of large-scale transit projects developed as PPPs within the continental U.S. 

since the year 2000. Th e evaluation considered performance factors that determine a sponsor’s 

satisfaction with a PPP, including facets such as total project costs, project delivery timeframe, 

overall cost-eff ectiveness and service delivery.

Th e methodology used included a literature review of PPPs in surface transportation, specifi c 

transit experience with PPPs both in the United States and other developed countries, as well as 

profi les and interviews with transit project sponsors using PPPs in the United States since 2000. 

Th e results of the evaluation were that many transit agencies are considering PPPs to leverage 

public resources, lower costs, improve services, and transfer risks associated with fi xed guideway 

development, fi nancing, operations, and maintenance. Th ey are also considering PPPs for capital 

replacement, expansion and program management. Transit PPPs are likely to attract growing 

private sector interest including transit-oriented development, joint development, and multimodal 

development. Th ese additional PPP approaches can help transit agencies increase revenues, reduce 

project costs, or both by tapping into the resources of economic development on a proactive basis. 

Multimodal PPPs enable transit agencies to combine their resources with resources from other 

modes that have joint needs for related infrastructure improvements, such as highways, railroads, 

or airports. 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

199

Th e evaluation found that in certain instances, the increased involvement of the private sector may 

not prevent a project from experiencing cost or schedule overruns or quality problems. While the 

involvement of the private sector in a transit capital project can help improve the cost-eff ectiveness 

and timeliness of project delivery and provide other benefi ts in terms of risk transfer and access to 

fi nancial markets, it is not a guarantee of successful delivery. Greater involvement by the private 

sector does not make a transit project of dubious feasibility automatically become feasible. 

Recommendations resulting from this evaluation include:

 State and local transit agencies contemplating the use of PPPs should pursue 

additional procurement and contracting authority for project delivery, fi nance, and 

operations;

 States should pursue statutes that grant transit agencies the necessary fl exibility to 

contract out for operation and maintenance services; 

 Transit sponsors of new fi xed guideway or multimodal projects should seek joint 

development agreements during the early conceptual planning stages to capture 

maximum value from the increased accessibility provided to private developer 

property near planned transit stations;

 Transit agency sponsors of PPP projects should develop an appropriate sharing of 

responsibilities, risks, and rewards with the private sector through a transparent 

contractual arrangement that assigns functions and risks to the partner best able to 

manage them;

 Transit agency project sponsors should seek private sector partners with mutually 

complementary project interests and a willingness to accommodate changing 

conditions and opportunities consistent with the desired project outcomes and 

performance; and,

 Transit agency project sponsors should hold private project partners accountable 

for project performance in their areas of responsibility, consistent with the terms of 

the PPP contract agreement, through continuous contract administration involving 

performance monitoring and reporting.

FINANCIAL REPORT

201
UNITED STATES DEPARTMENT OF TRANSPORTATION

202

REPORT ON CONSOLIDATED FINANCIAL 

STATEMENTS FOR FY 2007 AND FY 2006 

Department of Transportation 

Report Number: FI-2008-011 

Date Issued: November 13, 2007 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

203

U.S. Department of 

Memorandum

Transportation 

Office of the Secretary 

of Transportation 

Office of Inspector General 

Subject: ACTION: Report on Consolidated Financial

Statements for Fiscal Years 2007 and 2006, DOT 

Report Number: FI-2008-011 

Date: November 13, 2007 

From: Calvin L. Scovel III

Inspector General

Reply to 

Attn. of: JA–20

To: The Secretary 

I respectfully submit the Office of Inspector General report on the Department of 

Transportation (DOT) Consolidated Financial Statements for Fiscal Years 

(FY) 2007 and 2006 (see Attachment). This year, our audit concluded that DOT’s 

consolidated financial statements are fairly presented, in all material respects, in 

conformity with generally accepted accounting principles. The clean (unqualified) 

opinion signals to the public that the Department has successfully overcome last 

year’s qualified opinion on the Construction in Progress (CIP) balance, which is a 

subcomponent of the Property, Plant, and Equipment line item on the 

Department’s balance sheet. 

Last year, KPMG LLP, under contract to us and under our supervision, rendered a 

qualified opinion on the Federal Aviation Administration’s (FAA) FY 2006 

financial statements because deficiencies in FAA’s accounting for CIP prevented 

FAA from providing adequate support to verify that reported CIP balances were 

reliable. Since FAA’s property, including CIP, represents about 95 percent of the 

Property, Plant, and Equipment line item on the Department’s consolidated 

balance sheet, the Department’s consolidated financial statements were similarly 

qualified. During FY 2007, FAA made a concerted effort to revise the CIP 

account balance, resulting in a clean opinion this year.

The Department’s ability to regain a clean opinion on its consolidated financial 

statements would not have occurred without your emphasis and personal 

commitment to improving financial management practices, along with that of your 

senior leadership team, including the Acting FAA Administrator and the 

departmental Chief Financial Officer. During the year, you made several inquiries 

about FAA’s CIP and financial statement audit progress. Your consistent attention 
UNITED STATES DEPARTMENT OF TRANSPORTATION

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2

to this subject helped departmental officials stay focused on their correction 

efforts.

The Department has undergone annual financial statement audits since FY 1992 

and received the best outcome yet in FY 2007–a clean audit opinion and only one 

material weakness (FAA’s continued challenge in managing the property account). 

While the Department should be commended for this accomplishment, it must 

remain vigilant in sustaining good financial management operations because 

auditors continue to find significant deficiencies associated with financial 

transaction processing. These deficiencies, if not properly addressed, could turn 

into material weaknesses in the future. The following summarizes key challenges 

the Department continues to face. 

Institutionalizing New CIP Processes

FAA must institutionalize the new policies and procedures it developed to process 

CIP transactions. FAA’s process for accounting for CIP has been a longstanding 

concern. Auditors reported material weaknesses concerning FAA’s Property, 

Plant, and Equipment account balances, including inaccurate and untimely CIP 

transaction processing, 13 times since FY 1992. Congress provides more than 

$2 billion to FAA to invest in modernizing air traffic control systems each year. 

Most modernization projects involve sophisticated technology that may take years 

to develop/construct from concept to deployment. CIP projects are often deployed 

to multiple locations at different times and require FAA to use complicated 

formulas to calculate incurred and projected costs. In addition, the rapid 

advancement of technology and changes in FAA programs sometimes cause FAA 

to abandon projects before deployment. 

For years, FAA has relied on a labor-intensive process to adjust the CIP account 

balance for the annual financial statement reporting. For FY 2006, however, FAA 

was unable to support the $4.7 billion CIP account balance as of 

September 30, 2006. As a result, both FAA and the Department received a 

qualified audit opinion on the FY 2006 financial statements. 

During FY 2007, FAA made an unprecedented effort and devoted extensive 

resources to cleaning up the CIP account by conducting a comprehensive projectby-project evaluation. As part of these correction efforts, FAA also revised the 

associated CIP business processes. These included standardizing the methodology 

to calculate unit costs and overhead (burdening) allocation and enhancing 

procedures to record transactions in the property subsidiary ledger to ensure 

accurate, complete, and timely recording throughout the year. However, 

implementing these new procedures is very challenging. As a result, these new 

policies and procedures were not fully used to process FY 2007 transactions. 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

205

3

Institutionalizing the new (To-Be) procedures throughout the Agency will help 

ensure that FAA properly accounts for capital investment projects and avoids 

devoting extensive resources to this process again in future years. This year, 

KPMG reported FAA’s CIP-related process a continued material weakness and 

recommended that FAA implement proper internal controls around the new 

policies and procedures; continue training and strengthening communications 

among field, regional, and accounting offices; enhance automated system 

processes to reduce manual interventions; and assess its human capital needs to 

reduce reliance on contract staff for future implementation.

Regarding the Highway Trust Fund (HTF) financial statements, KPMG rendered 

an unqualified (clean) opinion this year, the ninth consecutive HTF clean opinion 

since FY 1999. More importantly, auditors did not identify any material weakness 

associated with HTF financial accounting operations and oversight, which had 

been a repeated material weakness since FY 2003. This signals to the public that 

the Department has finally developed a mature and reliable financial environment 

to account for HTF resources. This is especially important because, beginning in 

FY 2008, this stand-alone financial statement will cease to exist. HTF-related 

financial activities will be audited as part of the Department’s consolidated 

financial statements.

The Department was required to prepare a stand-alone financial statement to 

increase the visibility of HTF financial management. The HTF finances 

operations in multiple DOT Operating Administrations: the Federal Highway 

Administration (FHWA), the Federal Transit Administration, the National 

Highway Traffic Safety Administration, the Federal Motor Carrier Safety 

Administration, the Federal Railroad Administration, and the Research and 

Innovative Technology Administration. In addition, 15 other agencies outside of 

DOT receive HTF appropriations through FHWA. Together, these agencies 

disbursed about $40 billion in Federal funds during FY 2007. 

To account properly for resources of this magnitude and complexity, the 

Department implemented new policies and procedures for internal governance and 

coordination with outside entities. In consideration of the progress made, the 

Office of Management and Budget approved the Department’s request and waived 

the requirement for stand-alone HTF financial statements in June 2007.

Facing the Highway Trust Fund Funding Crisis 

While the Department made good strides in strengthening financial management 

oversight of HTF resource usage, it is now facing a new challenge. The HTF is 

the primary source for financing highway construction projects and has 

experienced declining revenue collection. This year, the Department of the 
UNITED STATES DEPARTMENT OF TRANSPORTATION

206

4

Treasury’s mid-year evaluation increased its projection of the FY 2009 cash 

shortfall from $230 million to $3.8 billion for the trust fund’s highway account—a 

16-fold escalation. Unless addressed, this shortfall could lead to reductions in 

obligation limitations for Federal highway programs below the levels anticipated 

in the current authorization to prevent HTF insolvency.

Highway funding levels are largely determined by the amount of revenue collected 

from the Federal motor fuel excise tax. The Internal Revenue Service (IRS) 

collects between $30 billion and $40 billion annually in motor fuel tax revenues, 

which account for almost 90 percent of HTF receipts. To combat motor fuel 

excise tax evasion, Congress has appropriated tens of millions of dollars from the 

HTF to help IRS develop more sophisticated information systems and enhance tax 

examination and motor fuel excise tax evasion investigations. This tax evasion is 

estimated to cost the trust fund $1 billion per year.1

In October 2005, the Treasury Inspector General for Tax Administration reported 

that the IRS did not effectively implement congressional direction.2

 In response to 

our request, the Treasury Inspector General has agreed to perform a follow-up 

review of IRS’ corrective actions in FY 2008 (see Exhibit A). Reducing tax 

evasion is critical, given the erosion of trust fund revenues and the rising need for 

investments in the Nation’s highway infrastructure.3

 FHWA management needs 

to work closely with IRS to implement congressional direction and increase tax 

revenue collections for the HTF.

Ensuring Continued Financial Management Improvement 

Generating timely, reliable, and useful financial information is no small task and 

requires continued senior management attention. DOT is a complex organization 

that is accountable for substantial resources. DOT’s FY 2007 financial statements 

show total assets of $62 billion, liabilities of $14 billion, program costs of 

$63 billion, and available financial resources of more than $122 billion. In 

FY 2007, DOT received appropriations of $63 billion. More than $51 billion 

(about 82 percent) of DOT’s revenue sources came from two trust funds, the HTF 

and the Airport and Airway Trust Fund. 

Based on the amount of resources received (appropriations), the Department 

would rank among the top 20 corporations in America. To measure up to what is 

 

1

 According to the IRS estimate, the Highway Trust Fund loses about $1 billion annually because fuel owners mix 

motor fuel with other products—a practice aimed at increasing the fuel volume to reduce the effective tax rate. 2

 “The Excise Files Information Retrieval System Has Not Been Effectively Implemented,” Treasury Inspector 

General for Tax Administration, 2006-20-001. 3

 In January 2007, the Government Accountability Office identified financing the Nation’s transportation system as a 

high-risk area. GAO High-Risk Series: An Update, January 2007 (GAO-07-310). 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

207

5

expected from large publicly-held corporations, the Department needs to sustain 

clean audit opinions with no material weaknesses, continue enhancing its financial 

management oversight, and improve the quality of its financial information 

throughout the year. During this audit, we identified incidents in which 

management postponed researching/resolving account variances by posting 

adjusting entries at the end of each quarter, which were reversed at the beginning 

of the next quarter. This practice not only results in lower quality financial 

information throughout the year, but also inappropriately increases the yearend 

workload. It must be corrected.

We provided a draft of this report to the DOT Assistant Secretary for Programs 

and Budget/Chief Financial Officer, who concurred with its findings and agreed to 

implement corrective actions. We appreciate the cooperation and assistance of 

DOT and KPMG representatives. If we can answer any questions, please call me 

at (202) 366-1959; David Dobbs, Principal Assistant Inspector General for 

Auditing and Evaluation, at (202) 366-1427; or Rebecca Leng, Assistant Inspector 

General for Financial and Information Technology Audits, at (202) 366-1488. 

Attachment
UNITED STATES DEPARTMENT OF TRANSPORTATION

208

Attachment 

Page 1 of 23 

 

DEPARTMENT OF TRANSPORTATION 

INSPECTOR GENERAL’S INDEPENDENT AUDIT REPORT 

ON THE DEPARTMENT OF TRANSPORTATION 

CONSOLIDATED FINANCIAL STATEMENTS 

FOR FISCAL YEARS (FY) 2007 AND 2006 

To the Secretary: 

The Department of Transportation (DOT) Office of Inspector General (OIG) 

audited the DOT Consolidated Financial Statements for the years ended 

September 30, 2007, and September 30, 2006. We found:

x Financial statements that are fairly presented, in all material respects, in 

conformity with generally accepted accounting principles.

x One material internal control weakness: timely processing of transactions and 

accounting for Federal Aviation Administration (FAA) property, plant, and 

equipment, including the Construction in Progress (CIP) account. 

x Four significant deficiencies: (1) journal entries and analysis of account 

relationships for the Highway Trust Fund (HTF) agencies,1

 (2) controls over 

financial management systems, (3) DOT’s information security program, and 

(4) reporting the FTA grant accrual.

x Four instances of noncompliance with laws and regulations: (1) the Federal 

Financial Management Improvement Act of 1996 (FFMIA); (2) the Antideficiency Act; (3) the Improper Payments Information Act of 2002; and 

(4) SFFAS#4, Managerial Cost Accounting Concepts and Standards.

x Financial information in the Management Discussion and Analysis materially 

consistent with the financial statements.

x Supplementary and stewardship information, and other accompanying 

information, materially consistent with management representations and the 

financial statements.

We performed our work in accordance with Generally Accepted Government 

Auditing Standards and Office of Management and Budget (OMB) Bulletin 07-04, 

1

 Federal Highway Administration, National Highway Traffic Safety Administration, Federal Transit 

Administration, Federal Railroad Administration, Federal Motor Carrier Safety Administration, and 

Research and Innovative Technology Administration. 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

209

Attachment 

Page 2 of 23 

“Audit Requirements for Federal Financial Statements.” The following sections 

discuss these conclusions. Our audit objectives, scope, and methodology are 

described in Exhibit B. We believe that our audit provides a reasonable basis for 

our opinion. 

A. UNQUALIFIED OPINION ON FINANCIAL STATEMENTS 

In our report dated November 15, 2006, we expressed a qualified opinion on the 

FY 2006 DOT consolidated financial statements because the FAA CIP balance 

presented to KPMG in August 2006 contained material errors, and FAA was not 

able to develop a reliable and supportable CIP balance prior to the issuance of the 

DOT FY 2006 Performance and Accountability Report (PAR). As discussed in 

footnotes 9 and 25, FAA has completed its review of the CIP balance and related 

transactions (reduced the September 30, 2006, CIP balance from $4.7 billion to 

$2.1 billion) and, as a result, DOT restated the FY 2006 consolidated financial 

statements to correct the error in accounting for FAA CIP. The restatement relates 

to the material weakness in the processing of transactions and accounting for FAA 

property, plant, and equipment, including the CIP account. Accordingly, our 

opinion on the DOT consolidated financial statements, including the FY 2006 

restated financial statements, is different from that expressed in our previous 

report.

In our opinion, the DOT consolidated financial statements, including the 

accompanying notes, present fairly, in all material respects, in conformity with 

generally accepted accounting principles, the DOT assets, liabilities, and net 

position; net costs; changes in net position; and budgetary resources; as of 

September 30, 2007, and September 30, 2006, and for the years then ended.

Under contract with OIG and under its supervision, KPMG audited the financial 

statements of FAA as of and for the years ended September 30, 2007, and 

September 30, 2006, and rendered an unqualified opinion on the FAA financial 

statements. KPMG also audited the financial statements of the HTF as of and for 

the years ended September 30, 2007, and September 30, 2006, and rendered an 

unqualified opinion on the HTF financial statements. We performed quality 

control reviews of the work performed by KPMG and relied on their results in 

performing our work on the FY 2007 and FY 2006 DOT consolidated financial 

statements.

As discussed in financial statement footnotes 1 and 21, the accompanying 

financial statements reflect actual excise tax revenues deposited in the HTF and 

the Airport and Airway Trust Fund for the 9 months ended June 30, 2007, and 

excise tax receipts estimated by the Department of the Treasury Office of Tax 

Analysis for the quarter ended September 30, 2007. As discussed in footnote 1, 
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DOT changed its method of accounting for parent/child allocation transfers in 

FY 2007, in accordance with OMB Circular A-136. 

Also, as discussed in footnotes 1 and 24, DOT changed its method of reporting 

footnotes 1 and 24, DOT changed its method of reporting the reconciliation of 

budgetary resources obligated to the net cost of operations in FY 2007, in 

accordance with OMB Circular A-136.

As discussed in footnote 25, DOT has restated certain balances previously 

reported to correct errors in accounting for FAA CIP, estimating the FTA grant 

accrual, and reporting FTA earmarked funds.

B. CONSIDERATION OF INTERNAL CONTROLS 

In planning and performing our audit, we considered DOT’s internal controls over 

financial reporting, compliance with laws and regulations, and reliability of 

performance reporting. We do not express an opinion on internal controls because 

the purpose of our work was to determine our procedures for auditing the financial 

statements and to comply with OMB Bulletin 07-04 audit guidance, not to express 

an opinion on internal controls. 

For the controls we tested, we found one material weakness. A material weakness 

is a significant deficiency, or combination of significant deficiencies, that result in 

a more than remote likelihood that a material misstatement of the financial 

statements will not be prevented or detected.

Our work identified four significant deficiencies in internal controls. A significant 

deficiency is a deficiency in internal control, or a combination of deficiencies, that 

adversely affects the entity’s ability to initiate, authorize, record, process, or report 

financial data reliably in accordance with generally accepted accounting principles 

such that there is a more than remote likelihood that a misstatement of the entity’s 

financial statements that is more than inconsequential will not be prevented or 

detected. Our internal control work would not necessarily disclose all material 

weaknesses or significant deficiencies.
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MATERIAL WEAKNESS 

Timely Processing of Transactions and Accounting for FAA Property, Plant, and 

Equipment, including the CIP Account 

In FY 2005, KPMG reported a material weakness related to deficiencies in FAA’s 

ability to process transactions and reconcile account balances in a timely manner. 

The account most affected was the CIP component of the Property, Plant, and 

Equipment (PP&E) line item. In FY 2006, KPMG reported that the CIP balance 

presented by FAA in August 2006 contained unknown and potentially material 

errors, and FAA management was unable to represent to KPMG, before the 

issuance of the Department’s Performance and Accountability Report, that the CIP 

balance, reported to be $4.7 billion as of September 30, 2006, was fairly stated. 

Accordingly, KPMG could not complete its audit of CIP balances and again 

identified CIP process deficiencies as a material weakness. KPMG noted that 

FAA lacked adequate policies, procedures, and controls to monitor its CIP activity 

and balances in a routine and timely fashion. 

During FY 2007 FAA executed an extensive corrective action plan, including a 

complete review of the CIP balance reported as of September 30, 2006. FAA’s 

review of CIP resulted in a significant restatement of the DOT FY 2006 financial 

statements, including a reclassification of $1.7 billion from CIP to in-use fixed 

assets and more than $900 million from CIP to expense. The restated CIP balance 

at September 30, 2006, was $2.1 billion.

In its FY 2007 audit report, KPMG again identified the processing of transactions 

and accounting for PP&E, including the CIP account, as a material weakness. 

KPMG noted that FAA had not fully complied with standardized policies and 

procedures on unit costs, overhead allocations, and entry of transactions in the 

fixed asset subsidiary ledger, to ensure CIP and related PP&E balances were 

accurate, complete, and recorded in a timely manner throughout the year. 

Substantial manual processes were necessary for FAA to account for and report 

CIP transactions occurring during FY 2007 and to determine the appropriate 

balances reported at year end. Specifically, KPMG noted: 

x FAA was focused on the cleanup of FY 2006 and prior-year activity in the first 

two quarters of FY 2007; therefore, about 80 percent of FY 2007 capitalization 

activity (additions and adjustments from CIP to in-use fixed assets) were not 

recorded at the detailed transaction level until after March 31, 2007;

x Documentation (joint acceptance inspections, contractor acceptance 

inspections, delivery schedules, etc.) was not readily available from program 
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offices and did not consistently support management’s conclusions on CIP 

project status; in some cases, management needed to reevaluate its initial 

disposition of CIP projects and adjust the general ledger and draft financial 

statement amounts; 

x A lack of formal communications and training for program managers, 

engineers, and operational accountants needed to accurately account for and 

present capitalized balances and related expenses; 

x A lack of adherence to policies and procedures to ensure the timely removal of 

fixed assets from the accounting system upon retirement;

x FAA processes and controls allowed errors to occur in the CIP capitalization 

and valuation process, such as unit costing and overhead allocation; the 

methodology adopted by FAA requires a high level of manual involvement to 

accurately account for CIP; and

x FAA has weaknesses in entity-level controls pertaining to human resources to 

properly account for PP&E and CIP, and relied heavily on outside contractors 

to compute the restatement of the FY 2006 financial statements and record 

FY 2007 CIP and PP&E transactions. 

Accounting for FAA CIP and PP&E is very complex with many variables and 

inputs that affect capitalized asset values including estimates, indirect costs, 

projection of future spending rates, and the timing and number of asset 

deployments. The conditions leading to the restatement of the FY 2006 financial 

statements and the material weakness have built up over several years. For 

example, FAA converted to the Delphi accounting system in FY 2004, and during 

the conversion, some CIP balances were transferred at the summary level, making 

the identification of individual assets in CIP more difficult, causing assets to 

remain in CIP long after they had been placed in service. Also, FAA experienced 

turnover in key PP&E accounting positions, especially at the HQ level, resulting in 

loss of continuity and institutional knowledge. Finally, until recently, 

programmatic and operational personnel did not always adhere to policies and 

procedures to enable the timely recording of assets placed in service.

As a result, FAA had not fully implemented internal controls required by the 

Federal Managers’ Financial Integrity Act (FMFIA) and OMB Circular A-123, 

that will allow FAA management to provide reasonable assurance that controls 

over CIP and PP&E are properly designed and operating effectively. In addition, 

if FAA is unable to correct these conditions early in FY 2008, the CIP, PP&E, and 
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related financial statement balances may not be fairly stated at the end of FY 2008 

and beyond.

KPMG made seven recommendations to correct these deficiencies. FAA agreed 

with the KPMG recommendations and indicated it would continue to implement 

corrective actions in early FY 2008.

SIGNIFICANT DEFICIENCIES 

The following sections describe the significant deficiencies that we identified.

Journal Entries and Account Relationships for the HTF Agencies

Since the audit of the FY 2003 HTF financial statements, we reported that material 

weaknesses existed in internal controls over financial management and reporting 

activities in the HTF agencies. In FY 2006, KPMG reported that the HTF 

agencies continued to have a material weakness in financial management, 

reporting, and oversight. The deficiencies reported by KPMG included (1) the 

preparation, approval, and processing of journal entries; (2) the preparation and 

analysis of the HTF financial statements; (3) the analysis of abnormal account 

balances; (4) the analysis of proprietary and budgetary account relationships; 

(5) the coordination with non-DOT agencies that receive HTF appropriations 

through FHWA; and (6) the estimation and reporting of grant accruals.

During FY 2007, the HTF agencies implemented significant improvements in 

internal controls over financial management and reporting activities. The 

deficiencies related to the preparation and analysis of the HTF financial 

statements, the analysis of abnormal account balances, and accounting for parentchild allocation transfers (with non-DOT agencies) have been corrected. In its 

FY 2007 audit report, KPMG identified controls over journal entries and analysis 

of proprietary and budgetary account relationships as a significant deficiency. In 

addition, KPMG reported the FTA grant accrual as a separate significant 

deficiency.

Controls Over Journal Entries

For the 114 journal entries reviewed by KPMG at September 30, 2007, KPMG 

noted 34 instances related to the FHWA, the Federal Motor Carrier Safety 

Administration (FMCSA), and the National Highway Traffic Safety 

Administration (NHTSA) in which either supporting documentation was not 

provided or the documentation provided was insufficient to support the entry. 

KPMG also noted the approvers for six journal entries related to FHWA and 
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NHTSA were unable to explain the purpose of the entry. While all journal entries 

reviewed had evidence of approval by other than the preparer, KPMG noted 

12 entries related to FHWA, FMCSA, and NHTSA in which they could not 

determine if the entry was approved before it was posted to the general ledger. 

Failure to follow existing policies and procedures over journal entries increases 

the risk that financial statements may be misstated or not properly supported. 

Analysis of Proprietary and Budgetary Account Relationships

During FY 2007 the DOT Office of Financial Management developed a consistent 

and comprehensive set of proprietary and budgetary account relationship tests for 

all DOT agencies to use for the period ended June 30, 2007. During its review of 

account relationship tests at September 30, 2007, KPMG noted the following 

exceptions related to analyzing, resolving, or explaining the variances identified 

by the account relationship tests:

x FHWA did not analyze or resolve any of the 62 variances identified;

x FMCSA identified 26 variances, identified the cause of 18 variances, but 

provided no indication of the cause of the other 8 variances or when they 

would be resolved;

x NHTSA identified 28 variances, identified the cause of 11 variances, but 

provided no indication of the cause of the other 17 variances or when they 

would be resolved; and

x The Research and Innovative Technology Administration (RITA) identified 

10 variances, identified the cause of 3 variances, but provided no indication of 

the cause of the other 7 variances or when they would be resolved. 

KPMG reported that at the end of each quarter, journal entries were posted to 

balance certain proprietary and budgetary accounts without completely 

researching the related variance. These journal entries are reversed at the 

beginning of the next quarter in order to continue researching the variances.

The HTF agencies had not adequately implemented existing policies and 

procedures over the analysis and resolution of variances identified between 

proprietary and budgetary accounts. In addition, Office of the Secretary of 

Transportation (OST) policies and procedures did not establish a firm due date for 

the resolution of any variances identified. Failure to research and resolve 

proprietary and budgetary account variances increases the risk that financial 

statements may be misstated or not properly supported.
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KPMG made six recommendations to improve controls over journal entries and 

proprietary and budgetary account relationship tests for the HTF agencies. 

Departmental management agreed to implement corrective actions.

Financial System Controls 

Last year, we reported DOT’s financial system controls as a reportable condition 

(significant deficiency). This included system control weaknesses in Delphi and 

computer security deficiencies in FAA and HTF systems that provide financial 

data to Delphi.

In FY 2007, DOT made significant progress in strengthening the design and 

implementation of controls over Delphi. Enhanced computer security and other 

protective measures enabled auditors to rely on Delphi financial management 

system controls except for logical access controls. In addition, FAA and HTF 

systems were enhanced in areas such as security awareness training, user access, 

contingency planning, physical security, segregation of duties, and others. 

However, DOT’s move to a new Headquarters building in Washington, D.C., 

resulted in other security concerns. Consequently, despite progress in some areas, 

continued improvements are needed to remediate various control deficiencies in 

the Delphi, FAA, and HTF financial systems. 

Computer security controls can be improved in all 12 systems reviewed during the 

DOT financial statement audits.

x Departmental system: Delphi Financial Management System 

x FAA systems: procurement system (PRISM), cost accounting system, 

timekeeping system (CASTLE), grant management system (System of 

Accounting and Reporting) 

x FHWA systems: User Profile and Access Control System, Rapid Approval and 

State Payment System, Fiscal Management Information System, Delphi 

Interface Management System 

x FTA Systems: Transportation Electronic Award Management System,

Electronic Clearing House Operation, and Delphi Online Transaction System. 

KPMG’s audit reports dated November 5, 2007, included recommendations to 

improve the information technology environment applicable to FAA and HTF 

financial systems.
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The Clifton Gunderson LLP review of the controls over the Enterprise Service 

Center’s Delphi Financial Management System, again reported weaknesses in the 

design and implementation of access controls related to the Delphi financial 

management system. Departmental management agreed to implement corrective 

actions needed in the Delphi, FAA, and HTF financial systems. 

DOT Information Security Program 

In October 2007, we issued our seventh annual report on DOT’s Information 

Security Program. FY 2007 was a challenging year for the Department because of 

the Headquarters move and the need to review, test, and certify security protection 

for more than half of the departmental information systems. Because of this, the 

overall effectiveness of the Department’s information security program declined. 

Specifically, management did not meet Government security standards to protect 

information systems and did not take sufficient action to correct identified security 

deficiencies. We also found that commercial software products used in 

departmental systems were not configured in accordance with security standards, 

and that security incidents were incompletely and/or inaccurately reported. 

We made a series of recommendations to help the Department strengthen its 

information security program. The Department Chief Information Officer agreed 

that these are needed to resolve the current deficiencies.

FTA Grant Accrual

For year-end reporting, the Federal Transit Administration (FTA) calculated and 

recorded an estimate (liability) for the amount of work performed by its grantees 

(including their contractors) but not yet billed to or reimbursed by FTA. During 

FY 2007 FTA hired a consultant to assist in the development of grant accrual 

using a nonstatistical sample of surveys to 49 grantees (29 large and 20 small) that 

accounted for about 70 percent of active obligations. The survey requested 

information that would assist FTA in calculating the FY 2007 grant accrual, such 

as billing cycle days and grantees’ audited year-end accrual amounts. 

While FTA received all the completed surveys, the responses varied in terms of 

reliability. FTA determined that only 18 of the 49 surveys (13 large and 5 small) 

were reasonably accurate and suitable for use in calculating FY 2007 grant 

accrual. KPMG determined that the 18 surveys constituted an inadequate basis on 

which to calculate the accrual. FTA agreed to follow up on the remaining surveys, 

and was ultimately able to use 45 of the 49 surveys. KPMG also noted that 

documentation supporting the work performed by FTA and its consultant was 

initially incomplete and there was no evidence that FTA properly reviewed the 

work performed by its consultant. 
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Controls are not in place in FTA to ensure that grant accrual is based on sufficient 

information provided by its grantees. KPMG made two recommendations to FTA 

to improve controls over the development of the grant accrual and oversight of 

work performed by its consultant. Departmental management agreed to 

implement corrective actions.

C. COMPLIANCE WITH LAWS AND REGULATIONS 

In planning and conducting our audit, we performed limited tests of DOT’s 

compliance with laws and regulations, as required by OMB guidance. It was not 

our objective to express, and we do not express, an opinion on compliance with 

laws and regulations. Our work was limited to testing selected provisions of laws 

and regulations that would have a direct and material effect on the financial 

statements and be reportable under Generally Accepted Government Auditing 

Standards or under OMB guidance. Our work disclosed the following instances of 

noncompliance with laws and regulations. 

FEDERAL FINANCIAL MANAGEMENT IMPROVEMENT ACT 

OF 1996 (FFMIA) 

Under FFMIA, we must report whether DOT’s financial management systems 

substantially comply with Federal financial system requirements, generally 

accepted accounting principles, and the U.S. Government Standard General 

Ledger at the transaction level. DOT was not in compliance with FFMIA because 

FAA was unable to account for property, plant, and equipment transactions 

including the CIP account, and present balances in its periodic financial statements 

in accordance with generally accepted accounting principles as of and for the year 

ended September 30, 2007. 

ANTIDEFICIENCY ACT 

Title 31, United States Code, Section 1517, provides that an officer or employee of 

the U.S Government may not make or authorize an expenditure or obligation 

exceeding an amount available in an allotment. In our report on the 

FY 2006 DOT financial statements, we reported that FAA still needed to report to 

the President and Congress, a $1.9 million violation associated with the Small 

Community Air Service Development Program first detected by FAA in FY 2005. 

On September 7, 2007, DOT reported the FAA Small Community Air Service 

Development Program violation to the President and Congress.

On June 1, 2006, DOT also reported to the President and Congress a $3.6 million 

violation in RITA’s Research and Development Account. While departmental 
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management was aware of this violation during FY 2006, it did not disclose the 

incident in the management representation letter prior to issuance of our audit 

report on the FY 2006 DOT Consolidated Financial Statements.

Also during FY 2007, the Maritime Administration (MARAD) CFO identified a 

potential violation at the U.S. Merchant Marine Academy that needs to be 

reviewed by MARAD and OST General Counsel and, if determined to be a 

violation, reported to the President and Congress. 

IMPROPER PAYMENTS INFORMATION ACT OF 2002 (IPIA) 

OMB Circular A-123, Appendix C, issued on August 10, 2006, entitled 

“Requirements for Effective Measurement and Remediation of Improper 

Payments,” implements the requirements of IPIA and is effective for 

FY 2006 reporting. The circular 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 include overpayments and underpayments, payments made to 

an ineligible recipient or for an ineligible service, duplicate payments, payments 

for services not received.

The circular prescribes a four-step approach for use by agencies in evaluating 

improper payments: (1) review all programs and identify those susceptible to 

significant erroneous payments; (2) statistically estimate the annual amount of 

improper payments; (3) implement a plan to reduce erroneous payments; and 

(4) report estimates of the annual amount of improper payments and progress in 

reducing them. 

In our FY 2006 report we stated that FHWA could not estimate the annual amount 

of improper payments made under the Federal-aid program, and that the estimate 

was limited to a period of 5 months—about $30 million. We also reported that 

FTA and FAA were still in the early stages of implementing the improper 

payments testing requirements. During FY 2006, FAA performed testing of grant 

payments made by one airport authority, and FTA tested payments made by two 

transit grantees.

During FY 2007 DOT reported it successfully completed its review of improper 

payments in 3 of the 4 DOT major grant programs; the FHWA Federal-aid 

Program, the FAA Airport Improvement Program, and the FTA Formula Grant 

Program. In addition, DOT reported it had developed and tested a model to test 

for improper payments in the FTA Capital Investment Program in FY 2008. 

However, we were not provided sufficient information by DOT and its consultant, 
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before the issuance of the DOT FY 2007 PAR, to determine if the sampling plan 

used by DOT and its consultant was statistically valid. For example, we could not 

determine if the sample sizes or the projection of the sample results to the program 

totals were based on generally accepted conventional formulas. The Department 

planned to initiate another round of improper payments testing in all four grant 

programs next year. We will continue to work with DOT and its consultant to 

ensure the improper payment testing performed in FY 2008 is based on valid 

statistical sampling techniques. 

SFFAS 4, MANAGERIAL COST ACCOUNTING CONCEPTS AND 

STANDARDS 

Statement of Federal Financial Accounting Standards (SFFAS) Number 4, 

Managerial Cost Accounting Concepts and Standards for the Federal Government, 

requires Federal entities to establish managerial cost accounting capabilities in 

order to provide reliable and timely information on the full cost of Federal 

programs, activities, and outputs. The managerial cost accounting capabilities 

must include (1) accumulating and reporting costs on a regular basis for 

management information purposes, (2) establishing responsibility segments to 

match costs with outputs, (3) determining full costs of goods and services, 

(4) recognizing the costs of goods and services provided among Federal entities, 

and (5) using appropriate costing methodologies to accumulate and assign costs to 

outputs. 

Nine Operating Administrations (OA) (FHWA, MARAD, FMCSA, FRA, 

NHTSA, PHMSA, RITA, OST, and STB) have not fully implemented cost 

accounting processes in accordance with SFFAS Number 4. Using the FY 2007 

OMB Circular A-123 (Appendix A) results, the DOT CFO has recommended that 

each of these nine OAs continue implementing their managerial cost accounting 

processes.

D. CONSISTENCY OF OTHER INFORMATION 

The Management Discussion and Analysis, Required Supplementary Information, 

Required Supplementary Stewardship Information, and Other Accompanying 

Information sections of the PAR contain a wide range of data, some of which are 

not directly related to the financial statements. We are not required to, and we do 

not, express an opinion on this information. As required by OMB guidance, we 

inquired of management about the methods of preparing this information, and we 

compared this information for consistency with the DOT consolidated financial 

statements and other knowledge obtained during the audit of the financial 
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statements. Based on this work, we found no material inconsistencies with the 

DOT consolidated financial statements or nonconformance with OMB guidance.

E. PRIOR AUDIT COVERAGE 

Our report on the DOT Consolidated Financial Statements for FY 2006 and 

FY 2005 expressed a qualified opinion and made no new recommendations. 

Exhibit C displays the status of the prior year’s findings.

Since our report on the DOT Consolidated Financial Statements for FY 2006 and 

FY 2005 was released, we have issued 19 additional reports related to the DOT 

Consolidated Financial Statements. The reports are listed in Exhibit D.

The Assistant Secretary for Budgets and Programs/Chief Financial Officer 

provided comments on a draft of this report (see Appendix). The response agreed 

with the material weakness and significant deficiencies cited in this report and 

stated that corrective actions have already been initiated. Management agreed to 

provide a detailed action plan addressing each finding by December 28, 2007.

This report is intended for the information of and use by DOT, OMB, the 

Government Accountability Office, and Congress. The report is a matter of public 

record, and its distribution is not limited. 

Calvin L. Scovel III 

Inspector General 

November 9, 2007 
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EXHIBIT A. LETTER TO TREASURY INSPECTOR GENERAL FOR 

TAX ADMINISTRATION

U.S. Department of The Inspector General Office of Inspector General

Transportation Washington, DC 20590

Office of the Secretary

of Transportation 

October 25, 2007 

The Honorable J. Russell George 

Treasury Inspector General for Tax Administration 

U.S. Department of Treasury 

1125 15th Street, NW 

Washington, DC 20005 

Dear Mr. George: 

I would like to express my appreciation for your office’s decision to perform a 

follow-up review of the Internal Revenue Service’s (IRS) implementation of the 

Excise Files Information Retrieval System (ExFIRS). The IRS developed this 

system to combat motor fuel excise tax evasion. In October 2005, your office 

reported that the IRS had not effectively implemented ExFIRS and recommended 

corrective actions to help increase tax revenue collection for the Highway Trust 

Fund.1

The IRS collects between $30 billion and $40 billion annually in motor fuel tax 

revenues, which account for almost 90 percent of Highway Trust Fund receipts. 

This trust fund is the primary financial source for highway construction projects. 

Since fiscal year 1999, Congress has appropriated tens of millions of dollars from 

the Highway Trust Fund to help IRS develop ExFIRS and enhance tax 

examination and motor fuel excise tax evasion investigations. This tax evasion is 

estimated to cost the trust fund $1 billion per year.2

 

1 “The Excise Files Information Retrieval System Has Not Been Effectively Implemented,” Treasury Inspector General 

for Tax Administration, 2006-20-001. 2 According to the IRS estimate, the Highway Trust Fund loses $1 billion annually because fuel owners mix motor 

fuel with other products—a practice aimed at increasing the fuel volume to reduce the effective tax rate.

Exhibit A. Letter to Treasury Inspector General for Tax Administration 
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In August 2007, my staff requested that your office do a follow-up review after we 

received the Department of the Treasury’s mid-year evaluation of the Highway 

Trust Fund. Treasury increased its projection of fiscal year 2009 cash shortfalls 

from $230 million to $3.8 billion for the trust fund’s highway account—a major 

escalation.

Reducing tax evasion is critical in view of the erosion of trust fund revenues and 

rising need for investments in the Nation’s highway infrastructure.3

 Your review 

will provide critical insight into IRS efforts to collect more tax revenues for the 

Highway Trust Fund through ExFIRS. 

We are particularly interested in the status of the following corrective actions to 

reduce motor fuel excise tax evasion. 

1. Enforcing electronic filing of motor fuel tax information. The October 2005 

report stated that the planned use of the automated matching process in 

ExFIRS to detect tax evasion was limited because only 70 percent of the fuel 

transactions were reported electronically.

2. Revising the computer matching process to indentify potential noncompliant 

taxpayers. The October 2005 report stated that the IRS deemed the matching 

results unreliable and that it planned to revise the matching process. 

3. Referring potential noncompliance cases for examination and actual 

recovery. The October 2005 report stated that the IRS elected not to refer 

potential exception cases identified by computer matching for examination 

until electronic filing became mandated in 2006. 

4. Assessing penalties on companies that failed to file complete and accurate 

information documents. The October 2005 report stated that data perfection 

issues would continue to pose a significant problem to ExFIRS operations. 

IRS, however, elected not to assess penalties on companies until after 

January 1, 2006. 

5. Mitigating “reporting gaps” in the movement of motor fuel. The October 

2005 report stated that while ExFIRS was designed to track all motor fuel 

movements into and out of approved terminals, reporting gaps hinder the 

effectiveness of ExFIRS to monitor fuel production and sales. For example,

3

 In January 2007, the Government Accountability Office identified financing the Nation’s transportation system as a 

high-risk area. GAO High-Risk Series: An Update, January 2007 (GAO-07-310). 
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certain carriers were exempted from reporting fuel deliveries to the terminal. 

Also, ExFIRS would not include fuel distribution reporting at refineries, 

unregulated terminals, and bulk storage facilities. 

6. Enhancing coordination with the Federal Highway Administration. The 

October 2005 report stated that the IRS and the Federal Highway 

Administration need to work more closely on ExFIRS development. 

We look forward to the results of your review in these key areas. My office will 

be glad to assist you in coordinating with the Federal Highway Administration. 

If you have any questions or would like to discuss this matter further, please 

contact me at (202) 366-1959 or Todd Zinser, Deputy Inspector General, at 

(202) 366-6767. 

Sincerely,

Calvin L. Scovel III 

Inspector General 

cc: Administrator, Federal Highway Administration 

 Assistant Secretary for Budget and Programs/Chief Financial Officer 

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EXHIBIT B. OBJECTIVES, SCOPE, AND METHODOLOGY 

Our audit objectives for the DOT Consolidated Financial Statements for FY 2007 

and FY 2006 were to determine whether (1) the basic DOT Consolidated Financial 

Statements and accompanying notes were presented fairly, in all material respects, 

in conformity with generally accepted accounting principles; (2) DOT had 

adequate internal controls over financial reporting, including safeguarding assets; 

(3) DOT complied with laws and regulations that could have a direct and material 

effect on the basic DOT Consolidated Financial Statements or that had been 

specified by OMB, including FFMIA; (4) financial information in the 

Management Discussion and Analysis, Required Supplementary Information, 

Required Supplementary Stewardship Information, and Other Accompanying 

Information was materially consistent with the information in the basic DOT 

Consolidated Financial Statements; and (5) internal controls were in place relating 

to the existence and completeness of performance measures. 

DOT is responsible for (1) preparing the DOT Consolidated Financial Statements 

for FY 2007 and FY 2006 in conformance with generally accepted accounting 

principles; (2) establishing, maintaining, and assessing internal controls to provide 

reasonable assurance that broad control objectives of FMFIA are met; (3) ensuring 

that DOT financial management systems substantially comply with FFMIA 

requirements; and (4) complying with other applicable laws and regulations. DOT 

is responsible for maintaining an effective system of internal controls. The 

objectives of these controls are explained below. 

x Financial reporting. Transactions are properly recorded, processed, and 

summarized to permit the preparation of financial statements in accordance 

with generally accepted accounting principles; and assets are safeguarded 

against loss from unauthorized acquisition, use, or disposition. 

x Compliance with laws and regulations. Transactions are executed in 

accordance with laws governing the use of budget authority and with other 

laws and regulations that could have a direct and material effect on the 

financial statements; and any other laws, regulations, and policies identified by 

OMB.

x Reliability of performance reporting. Transactions and other data that 

support reported performance measures are properly recorded, processed, and 

summarized to permit the preparation of required performance information.

To fulfill these responsibilities, we (1) examined, on a test basis, evidence 

supporting the amounts and disclosures in the financial statements; (2) assessed 

Exhibit B. Objectives, Scope, and Methodology 
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the accounting principles used and significant estimates made by management; 

(3) evaluated the overall presentation of the financial statements; (4) obtained an 

understanding and performed limited tests of internal controls related to financial 

reporting, compliance with laws and regulations, and performance measures; and 

(5) tested compliance with selected provisions of certain laws, including FFMIA. 

We did not evaluate all internal controls relevant to operating objectives as 

broadly defined by FMFIA, such as those controls relevant to ensuring that 

programs achieve their intended results and that resources are used consistent with 

agency missions. We limited our internal control testing to controls over financial 

reporting and compliance. Because of inherent limitations in internal controls, 

misstatements due to error or fraud, losses, or noncompliance may nevertheless 

occur and not be detected.

The Government Accountability Office performed agreed-upon procedures at the 

Internal Revenue Service on the excise taxes distributed to the HTF and the 

Airport and Airway Trust Fund during FY 2007. The Treasury Office of Inspector 

General reported on the effectiveness of controls placed in operation over the 

Bureau of Public Debt Trust Fund Management and Federal Investments branches 

for the period August 1, 2006, to July 31, 2007, and attained management’s 

assurance on the effectiveness of controls through September 30, 2007. The 

Treasury Office of Inspector General also reported on selected schedules of assets 

and liabilities of the HTF and the Airport and Airway Trust Fund prepared by the 

Bureau of Public Debt Trust Fund Management Branch, as of and for the year 

ended September 30, 2007. 

We did not test compliance with all laws and regulations applicable to DOT. We 

limited our tests of compliance to those laws and regulations required by OMB 

audit guidance that we deemed applicable to the DOT Consolidated Financial 

Statements for the years ended September 30, 2007, and September 30, 2006. We 

caution that noncompliance may occur and not be detected by these tests and that 

such testing may not be sufficient for other purposes. 

The Chief Financial Officers of DOT and each Operating Administration have 

been assigned the responsibility to address the deficiencies identified in this report. 

Management’s response to the findings and recommendations in this report is 

contained in the Appendix. 

We performed our work in accordance with Generally Accepted Government 

Auditing Standards and OMB Bulletin 07-04, “Audit Requirements for Federal 

Financial Statements.”

Exhibit B. Objectives, Scope, And Methodology 
UNITED STATES DEPARTMENT OF TRANSPORTATION

226

Attachment 

Page 19 of 23

EXHIBIT C. STATUS OF PRIOR YEAR FINDINGS

Issue

As Reported 

September 30, 2006 

As Reported 

September 30, 2007 

Timely Processing of and 

Accounting for the FAA 

Construction-in-Progress 

Transaction 

Material Weakness Material Weakness 

HTF Agencies’ Financial 

Management, Reporting, 

and Oversight Activities 

Material Weakness Several deficiencies 

corrected; Journal 

Entries and Analysis 

of Account 

Relationships

continue as Significant 

Deficiency; FTA Grant 

Accrual is reported as 

a separate Significant 

Deficiency 

Reporting of Earmarked 

Funds for FTA 

 Reportable Condition Corrected

Financial System Controls Reportable Condition Significant Deficiency 

DOT Information Security 

Program

Reportable Condition Significant Deficiency 

Intragovernmental

Transactions 

Reportable Condition Management Letter 

Deobligating Unneeded 

Funds in the HTF Agencies 

Reportable Condition Management Letter 

FAA Grants Management Reportable Condition Corrected

Federal Financial 

Management Improvement 

Act of 1996 

Noncompliance Noncompliance

Antideficiency Act Noncompliance Noncompliance

Improper Payments 

Information Act of 2002 

 Noncompliance Noncompliance

Exhibit C. Status of Prior Year Findings 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

227

Attachment 

Page 20 of 23

EXHIBIT D. FINANCIAL-RELATED REPORTS 

Report Title Report Number Date Issued 

Audit of Special-Purpose 

Financial Statements for 

Fiscal Years 2006 and 2005 

FI-2007-011 November 17, 2006 

Oversight of Airport 

Improvement Program 

Hurricane Grants 

AV-2007-014 December 13, 2006 

Inspector General Review of 

Fiscal Year 2006 Drug 

Control Funds 

FI-2007-029 February 1, 2007 

Emergency Transportation 

Services Contract: Lessons 

Learned from the 2005 Gulf 

Coast Hurricanes 

FI-2007-030 February 5, 2007 

Opportunities to Free Up 

Unneeded FHWA Funds for 

Use in Hurricane Recovery 

Efforts

MH-2007-037 March 6, 2007 

Value Engineering in FHWA’s 

Federal-Aid Highway Program

MH-2007-040 March 28, 2007 

FTA Procedures to Prevent 

Antideficiency Act Violations 

FI-2007-047 May 15, 2007 

More Incurred-Cost Audits of 

DOT Procurement Contracts 

Should Be Obtained 

FI-2007-064 August 29, 2007 

Review of Congressional 

Earmarks Within Department 

of Transportation Programs 

AV-2007-066 September 7, 2007 

Quality Control Review of the 

Report on Controls Over the 

Enterprise Service Center’s 

Delphi Financial Management 

System

QC-2007-072 September 13, 2007

FAA’s Oversight of Inactive 

Airport Improvement Program 

Grant Obligations 

AV-2007-073 September 13, 2007

Growth in Highway 

Construction and 

Maintenance Costs 

CR-2007-079 September 26, 2007

Exhibit D. Financial-Related Reports
UNITED STATES DEPARTMENT OF TRANSPORTATION

228

Attachment 

Page 21 of 23

Report Title Report Number Date Issued 

Information Security 

Program at the Department 

of Transportation 

FI-2008-001 October 10, 2007 

Prioritization of Airport 

Improvement Program 

Funding

AV-2008-002 October 26, 2007 

Quality Control Review of 

Audited Financial 

Statements for Fiscal Year 

2007 and Fiscal Year 2006: 

Federal Aviation 

Administration

QC-2008-005 November 9, 2007 

Quality Control Review of 

Audited Financial 

Statements for Fiscal Year 

2007 and Fiscal Year 2006 

Highway Trust Fund 

QC-2008-006 November 9, 2007 

Quality Control Review of 

Audited Financial 

Statements for Fiscal Year 

2007 and Fiscal Year 2006: 

Saint Lawrence Seaway 

Development Corporation 

QC-2008-007 November 9, 2007 

Quality Control Review of 

the Audited Financial 

Statements for Fiscal Year 

2007 and Fiscal Year 2006 

FAA Franchise Fund 

QC-2008-010 November 13, 2007 

Top Management 

Challenges

PT-2008-008 November 15, 2007 

Exhibit D. Financial-Related Reports
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

229

Attachment 

Page 22 of 23

APPENDIX. ASSISTANT SECRETARY FOR BUDGET AND 

PROGRAMS/CHIEF FINANCIAL OFFICER RESPONSE TO 

AUDIT REPORT 

November 13, 2007 

MEMORANDUM TO: Calvin L. Scovell, III 

 Inspector General 

FROM: Phyllis F. Scheinberg 

SUBJECT: Management Response to the Audit Report 

on Consolidated Financial Statements for 

Fiscal Years (FY) 2007 and 2006 

The Department is pleased to respond to your audit report on the Consolidated 

Financial Statements for FYs 2007 and 2006. We are very proud of the 

exceptional advancements that our Operating Administrations have made over the 

last year. 

This year’s audit concluded that DOT’s consolidated financial statements are 

fairly presented in all material respects in conformity with generally accepted 

accounting principles. 

We concur with the one material weaknesses and four significant deficiencies 

described in your report. Corrective action plans are being developed to address 

the findings in your report and will be forwarded to you by December 28. Our 

consolidated action plans will also address the findings in the audits of the Federal 

Aviation Administration (FAA) and the Highway Trust Fund (HTF) agencies. 

This year the Department made significant progress in resolving long-standing 

financial management internal control issues, including the following highlights: 

 The qualification on the FAA’s FY 2006 audit opinion due to their 

Construction In Progress (CIP) account was lifted as a result of a 

comprehensive program of project-by-project reviews conducted by the FAA. 

Appendix. Assistant Secretary for Budget and Programs/Chief 

Financial Officer Response to Audit Report 
UNITED STATES DEPARTMENT OF TRANSPORTATION

230

Attachment 

Page 23 of 23

During FY 2008, the FAA will complete the remaining corrective actions in 

this area. 

 The HTF agencies have eliminated the FY 2006 material weakness in financial 

reporting and oversight. During FY 2007 they significantly strengthened 

financial management processes and controls. This is the first audit year that 

no material weaknesses have been reported in the HTF audit. The Office of 

Management and Budget (OMB) has eliminated the requirement for the standalone HTF audit in the future; therefore, this is the last year that it will be 

conducted.

 Significant progress was also made on DOT’s implementation of the Improper 

Payments Information Act (IPIA). In FY 2007, the Department developed 

improper payment rates for the Federal-Aid Highway Program, the Airport 

Improvement Program, and the Transit Formula Grants Program. The 

Department also developed and tested a model for determining the amount of 

improper payments in the Transit Capital Investment Grants Program. Per our 

agreement with OMB, DOT will be continuing a comprehensive IPIA program 

in FY 2008. 

 This year the Department completed its comprehensive two-year 

implementation

of OMB Circular A-123, Management’s Responsibility for Internal Control.

During 

FY 2007 DOT assessed our control environments and documented and tested 

the

final seven key business processes. We are planning our A-123 program for 

FY 2008 while we continue to resolve the findings identified by our testing. 

We agree with your recommendations and will use them to develop and 

implement corrective actions. We will continue to work closely with the Operating 

Administrations and the audit workgroups to ensure that the Department further 

improves financial management in FY 2008. 

I would like to express my sincere appreciation for the cooperation and 

professionalism displayed by your staff and your contractors during the course of 

the audit. Please refer any questions to Laurie Howard, Director of Financial 

Management, at (202) 366-2135. 

Appendix. Assistant Secretary for Budget and Programs/Chief 

Financial Officer Response to Audit Report 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

231

DEPARTMENT OF TRANSPORTATION

CONSOLIDATED BALANCE SHEET

As of September 30, 2007

Restated

2006

Dollars in Thousands

ASSETS (Note 2)

Intragovernmental

Fund Balance with Treasury (Note 3) $ 23,392,470 $ 27,692,908 

Investments (Note 4) 21,144,083 19,824,151 

Accounts Receivable, Net (Note 5) 509,692 212,616 

Other Assets (Note 6) 2,453 37,946 

Total Intragovernmental Assets 45,048,698 47,767,621 

Cash and Other Monetary Assets 24,358 27,639 

Investments (Note 4) 74,085 - 

Accounts Receivable, Net (Note 5) 114,118 103,371 

Direct Loan and Loan Guarantees, Net (Note 7) 889,885 618,179 

Inventory and Related Property, Net (Note 8) 785,760 897,494 

General Property, Plant & Equipment, Net (Note 9) 14,683,890 14,501,762 

Other Assets (Note 6) 211,044 195,506 

Total Assets $ 61,831,838 $ 64,111,572 

Stewardship Property, Plant & Equipment (Note 10)

LIABILITIES (Note 11)

Intragovernmental

Accounts Payable $ 30,424 $ 21,271 

Debt (Note 12) 1,040,761 839,357 

Other Intragovernmental Liabilities (Note 15) 3,418,078 3,212,891 

Total Intragovernmental Liabilities 4,489,263 4,073,519 

Accounts Payable 614,861 403,722 

Loan Guarantees (Note 7) 336,626 345,864 

Federal Employee and Veterans’ Benefi ts Payable 946,408 950,466 

Environmental and Disposal Liabilities (Note 13) 852,366 953,635 

Grant Accrual (Note 14) 5,526,288 4,975,556 

Other Liabilities (Note 15) 1,309,411 1,409,182 

Total Liabilities $ 14,075,223 $ 13,111,944 

Contingencies and Commitments (Note 17) 

NET POSITION (Note 18)

Unexpended Appropriations - Earmarked Funds $ 1,213,189 $ 612,378 

Unexpended Appropriations - Other Funds 8,563,101 7,806,902 

Cumulative Results of Operations - Earmarked Funds 26,552,761 30,114,600 

Cumulative Results of Operations - Other Funds 11,427,564 12,465,748 

Total Net Position $ 47,756,615 $ 50,999,628 

Total Liabilities and Net Position $ 61,831,838 $ 64,111,572 

The accompanying notes are an integral part of the fi nancial statements.
UNITED STATES DEPARTMENT OF TRANSPORTATION

232

DEPARTMENT OF TRANSPORTATION

CONSOLIDATED STATEMENT OF NET COST

For the Years Ended September 30, 2007

Restated

2006

Dollars in Thousands

PROGRAM COSTS (Notes 19 & 20)

SURFACE TRANSPORTATION

Gross Costs $ 47,649,334 $ 46,351,162 

Less: Earned Revenue 264,028 395,324 

Net Program Costs 47,385,306 45,955,838 

AIR TRANSPORTATION

Gross Costs $ 15,263,468 $ 14,794,760 

Less: Earned Revenue 449,014 659,343 

Net Program Costs 14,814,454 14,135,417 

MARITIME TRANSPORTATION

Gross Costs $ 759,803 $ 739,789 

Less: Earned Revenue 189,076 282,264 

Net Program Costs 570,727 457,525 

CROSS-CUTTING PROGRAMS

Gross Costs $ 511,524 $ 442,044 

Less: Earned Revenue 500,076 434,689 

Net Program Costs 11,448 7,355 

Costs Not Assigned to Programs 388,392 390,463 

Less: Earned Revenues Not Attributed to Programs 30,295 30,985 

NET COST OF OPERATIONS $ 63,140,032 $ 60,915,613 

The accompanying notes are an integral part of the fi nancial statements.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

233

DEPARTMENT OF TRANSPORTATION

CONSOLIDATED STATEMENT OF CHANGES IN NET POSITION

For the Years Ended September 30, 2007

Restated

2006

Dollars in Thousands

Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated

Earmarked Funds All Other Funds Total Earmarked Funds All Other Funds Total

Cumulative Results of Operations

Beginning Balances $ 30,114,600 $ 12,465,748 $ 42,580,348 $ 31,317,494 $ 16,327,693 $ 47,645,187 

Adjustments (Note 21)

Changes in Accounting Principles 60,461 - 60,461 - - - 

Corrections of Errors - - - (347,773) (1,267,448) (1,615,221)

Beginning Balance, As Adjusted 30,175,061 12,465,748 42,640,809 30,969,721 15,060,245 46,029,966 

Budgetary Financing Sources

Other Adjustments (Rescissions, etc.) (166,601) 166,625 24 (48,206) - (48,206)

Appropriations Used 2,095,506 4,156,871 6,252,377 3,982,705 3,4998,986 7,481,691 

Non-Exchange Revenue (Note 21) 51,531,076 2,197 51,533,273 49,482,068 11,967 49,494,035 

Donations/Forfeitures of Cash/Cash Equivalents 2,422 - 2,422 2,151 0 2,151 

Transfers-In/Out Without Reimbursement 6,883 76,568 83,451 54,184 67,477 121,661 

Other Budgetary Financing Sources ---- (263) (263)

Other Financing Sources (Non-Exchange)

Transfers-In/Out Without Reimbursement (2,443,652) 2,446,463 2,811 (1,032,131) 892,660 (139,471)

Imputed Financing 506,686 98,504 605,190 460,003 102,274 562,277 

Other ---- (7,880) (7,880)

Total Financing Sources 51,532,320 6,947,228 58,479,548 52,900,774 4,565,221 57,465,995 

Net Cost of Operations 55,154,620 7,985,412 63,140,032 53,755,895 7,159,718 60,915,613 

Net Change (3,622,300) (1,038,184) (4,660,484) (855,121) (2,594,497) (3,449,618)

Cumulative Results of Operations $ 26,552,761 $ 11,427,564 $ 37,980,325 $ 30,114,600 $ 12,465,748 $ 42,580,348 

Unexpended Appropriations

Beginning Balance 612,378 7,806,902 8,419,280 1,502,773 3,941,386 5,444,159 

Adjustments

Corrections of Errors - - - 347,773 (4,395) 343,378 

Beginning Balance, As Adjusted 612,378 7,806,902 8,419,280 1,850,546 3,936,991 5,787,537 

Budgetary Financing Sources

Appropriations Received 2,841,381 4,974,437 7,815,818 2,778,855 7,422,451 10,201,306 

Appropriations Transferred-In/Out 621 (606) 15 25,365 4,117 29,482 

Other Adjustments (Rescissions, etc.) (145,134) (60,761) (205,895) (59,682) (59,738) (119,420)

Appropriations Used (2,096,057) (4,156,871) (6,252,928) (3,982,706) (3,496,919) (7,479,625)

Total Budgetary Financing Sources 600,811 756,199 1,357,010 (1,238,168) 3,869,911 2,631,743 

Total Unexpended Appropriations $ 1,213,189 $ 8,563,101 $ 9,776,290 $ 612,378 $ 7,806,902 $ 8,419,280 

NET POSITION $ 27,765,950 $ 19,990,665 $ 47,756,615 $ 30,726,978 $ 20,272,650 $ 50,999,628

The accompanying notes are an integral part of the fi nancial statements.
UNITED STATES DEPARTMENT OF TRANSPORTATION

234

DEPARTMENT OF TRANSPORTATION

COMBINED STATEMENT OF BUDGETARY RESOURCES

For the Years Ended September 30, 2007 2006

Dollars in Thousands

Non-Budgetary Non-Budgetary

Credit Reform Credit Reform

Budgetary Financing Accounts Budgetary Financing Accounts

BUDGETARY RESOURCES (Note 22)

Unobligated Balance, Brought Forward, October 1 $ 46,566,672 $ 358,827 $ 43,793,009 $ 434,789 

Recoveries of Prior Year Unpaid Obligations 658,023 207,000 709,780 728,153 

Budget Authority

Appropriations Received 62,551,786 - 60,768,943 - 

Borrowing Authority 225,000 865,759 269,300 225,051 

Contract Authority 55,040,320 - 51,421,012 - 

Spending Authority from Off setting Collections

Earned

Collected 2,212,610 167,921 2,344,798 395,477 

Change in Receivables from Federal Sources (69,617) (3,616) (152,036) 3,803 

Change in Unfi lled Customer Orders

Advance Received 89,251 - 32,546 - 

Without Advance from Federal Sources 184,966 (20,491) 397,898 (40,360)

Expenditure Transfers from Trust Funds 5,673,226 - 142,346 - 

Subtotal 125,907,542 1,009,573 115,224,807 583,971 

Nonexpenditure Transfers, Net 2,220 - 23,093 - 

Temporarily not Available Pursuant to Public Law (5,489) - (80,837) - 

Permanently Not Available (51,763,052) (287,959) (47,871,478) (1,007,732)

Total Budgetary Resources $ 121,365,916 $ 1,287,441 $ 111,798,374 $ 739,181 

STATUS OF BUDGETARY RESOURCES

Obligations Incurred 

Direct $ 72,701,475 $ 955,036 $ 62,959,622 $ 380,354 

Reimbursable 2,152,731 - 2,272,080 - 

Subtotal $ 74,854,206 $ 955,036 $ 65,231,702 $ 380,354 

Unobligated Balance

Apportioned 22,742,862 4,394 23,324,733 - 

Exempt from Apportionment 307,808 - 269,421 - 

Subtotal 23,050,670 4,394 23,594,154 - 

Unobligated Balance Not Available 23,461,040 328,011 22,972,518 358,827 

Total Status of Budgetary Resources $ 121,365,916 $ 1,287,441 $ 111,798,374 $ 739,181 

The accompanying notes are an integral part of the fi nancial statements.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

235

DEPARTMENT OF TRANSPORTATION

COMBINED STATEMENT OF BUDGETARY RESOURCES (CONT.)

For the Years Ended September 30, 2007 2006

Dollars in Thousands

Non-Budgetary Non-Budgetary

Budgetary Financing Accounts Budgetary Financing Accounts

CHANGE IN OBLIGATED BALANCE

Obligated Balance, Net

Unpaid Obligations, Brought Forward, October 1 $ 72,330,387 $ 1,706,951 $ 70,820,273 $ 2,361,768 

Uncollected Customer Payments from Federal Sources, Brought Forward, October 1 (1,590,193) (159,590) (1,338,353) (196,147)

Total Unpaid Obligated Balance, Net 70,740,194 1,547,361 69,481,920 2,165,621 

Obligations Incurred 74,854,206 955,036 65,231,702 380,354 

Gross Outlays (69,820,935) (437,279) (63,011,808) (307,018)

Obligated Balance, Transferred, Net

Actual Transfers, Unpaid Obligations 2,250 - - - 

Total Unpaid Obligated Balance Transferred, Net 2,250 - - - 

Recoveries of Prior Year Unpaid Obligations, Actual (658,023) (207,000) (709,780) (728,153)

Change In Uncollected Customer Payments from Federal Sources (117,363) 24,106 (251,840) 36,557 

Obligated Balance, Net, End of Period

Unpaid Obligations 76,707,884 2,017,708 72,330,387 1,706,951 

Uncollected Customer Payments From Federal Sources (1,707,556) (135,484) (1,590,193) (159,590)

Total Unpaid Obligated Balance, Net, End Of Period 75,000,328 1,882,224 70,740,194 1,547,361 

NET OUTLAYS

Net Outlays

Gross Outlays 69,820,935 437,279 63,011,808 307,018 

Off setting Collections (7,973,071) (167,921) (2,513,482) (395,475)

Less: Distributed Off setting Receipts (46,779) - (236,451) - 

Net Outlays $ 61,801,085 $ 269,358 $ 60,261,875 $ (88,457)

The accompanying notes are an integral part of the fi nancial statements.
UNITED STATES DEPARTMENT OF TRANSPORTATION

236

Note 1. Signifi cant Accounting Policies

A. Basis of Presentation

Th e Departmental consolidated fi nancial statement has been prepared to report the fi nancial position and results from 

operations of the Department of Transportation (DOT), as required by the Chief Financial Offi cers Act of 1990 (CFO 

Act), Title IV of the Government Management Reform Act of 1994 (GMRA). Th e statement has been prepared from 

the books and records of DOT in accordance with Offi ce of Management and Budget (OMB) requirements for form 

and content for entity fi nancial statements and DOT’s accounting policies and procedures. OMB Circular No. A-136, 

“Financial Reporting Requirements,” has been used to prepare the Balance Sheet, Statement of Net Cost, Statement of 

Changes in Net Position, and Statement of Budgetary Resources. Eff ective FY 2007, the Statement of Financing was 

changed from a basic statement to a footnote disclosure and is refl ected in Note 24 – Reconciliation of Net Cost of 

Operations to Budget. Th ey are diff erent from the fi nancial reports prepared pursuant to OMB directives that are used to 

monitor and control the use of budgetary resources. 

Th e Balance Sheet presents agency assets and liabilities, and the diff erence between the two, which is the agency net 

position. Agency assets include both entity assets (those which are available for use by the agency) and non-entity assets 

(those which are managed by the agency but not available for use in its operations). Agency liabilities include both those 

covered by budgetary resources (funded) and those not covered by budgetary resources (unfunded).

Th e Statement of Net Cost presents the gross costs of programs less earned revenue to arrive at the net cost of operations 

for both programs and for the agency as a whole.

Th e Statement of Changes in Net Position reports beginning balances, budgetary and other fi nancing sources, and net 

cost of operations, to arrive at ending balances.

Th e Statement of Budgetary Resources provides information about how budgetary resources were made available as 

well as their status at the end of the period. Recognition and measurement of budgetary information reported on this 

statement is based on budget terminology, defi nitions, and guidance in OMB Circular No. A-11, “Preparation, Submission, 

and Execution of the Budget,” dated July 2007.

Since DOT custodial activity is incidental to Departmental operations and not material, a Statement of Custodial Activity 

was not prepared. However, sources and dispositions of collections have been disclosed in Note 23 to the fi nancial 

statements.

Th e Department is required to be in substantial compliance with all applicable accounting principles and standards 

established, issued, and implemented by the Federal Accounting Standards Advisory Board (FASAB), which is recognized 

by the American Institute of Certifi ed Public Accountants (AICPA) as the entity to establish Generally Accepted 

Accounting Principles (GAAP) for the Federal Government. Th e Federal Financial Management Improvement Act 

(FFMIA) of 1996 requires the Department to comply substantially with (1) Federal fi nancial management systems 

requirements, (2) applicable Federal accounting standards, and (3) the U.S. Government Standard General Ledger at the 

transaction level.

B. Reporting Entity

DOT serves as the focal point in the Federal Government for the Coordinated National Transportation Policy. It is 

responsible for ensuring the safety of all forms of transportation; protecting the interests of consumers; international 

transportation agreements; conducting planning and research for the future; and helping cities and States meet their local 

transportation needs through fi nancial and technical assistance.

Th e Department is comprised of the Offi ce of the Secretary and the DOT Operating Administrations, each having its 

own management and organizational structure and collectively providing the necessary services and oversight to ensure 

the best transportation system possible. Th e Departmental consolidated fi nancial statement represents the fi nancial data, 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

237

including various trust funds, revolving funds, appropriations and special funds of the following organizations: 

 Offi ce of Th e Secretary (OST - includes OST Working Capital Fund)

 Federal Aviation Administration (FAA)

 Federal Highway Administration (FHWA)

 Federal Motor Carrier Safety Administration (FMCSA)

 Federal Railroad Administration (FRA)

 National Highway Traffi c Safety Administration (NHTSA)

 Maritime Administration (MARAD)

 Federal Transit Administration (FTA) 

 Surface Transportation Board (STB)

 Offi ce of Inspector General (OIG)

 Pipeline and Hazardous Materials Safety Administration (PHMSA)

 Research and Innovative Technology Administration (RITA - includes Volpe National Transportation System 

Center)

Th e Saint Lawrence Seaway Development Corporation (SLSDC) is also an entity of DOT. However, since it is subject to 

separate reporting under the Government Corporation Control Act and the dollar value of its activities is not material 

to Departmental totals, SLSDC’s fi nancial data have not been consolidated in the DOT fi nancial statements. However, 

condensed information about SLSDC’s fi nancial position is included in Note 26.

C. Budgets and Budgetary Accounting

DOT follows standard Federal budgetary accounting policies and practices in accordance with OMB Circular No. A-11, 

“Preparation, Submission, and Execution of the Budget,” dated July 2007. Budgetary accounting facilitates compliance 

with legal constraints and controls over the use of Federal funds. Each year, Congress provides each Operating 

Administration within DOT appropriations to incur obligations in support of agency programs. For FY 2007, the 

Department was accountable for trust fund appropriations, general fund appropriations, revolving funds and borrowing 

authority. DOT recognizes budgetary resources as assets when cash (funds held by Treasury) is made available through 

warrants and trust fund transfers.

D. Basis of Accounting

Transactions are generally recorded on an accrual accounting basis and a budgetary 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 constraints and controls over the use of 

Federal funds. 

DOT accounted for revenues and other fi nancing sources for earmarked funds separately from other funds. Th is new 

method was adopted in accordance with the provisions of the Federal Accounting Standards Advisory Board’s Statement 

of Federal Financial Accounting Standards (SFFAS) No. 27, Identifying and Reporting Earmarked Funds, which became 

eff ective October 1, 2005. Th is new standard amended SFFAS No. 7, Revenue and Other Financing Sources, by: (1) 

elaborating the special accountability needs associated with dedicated collections; (2) separating dedicated collections 

into two categories – earmarked funds and fi duciary activity; and (3) defi ning and providing accounting and reporting 

guidance for earmarked funds.

E. Revenues and Other Financing Sources

DOT receives the majority of the funding needed to support all of its programs through appropriations. Th e Highway 

Trust Fund, Airport and Airway Trust Fund, and the Treasury General Fund fund some of these appropriations. DOT 

receives annual, multi-year and no-year appropriations that may be used, within statutory limits, for operating and capital 
UNITED STATES DEPARTMENT OF TRANSPORTATION

238

expenditures. Additional amounts are obtained from off setting collections and user fees (e.g., landing and registry fees) 

and through reimbursable agreements for services performed for domestic and foreign governmental entities. Additional 

revenue is earned from gift s from donors, sales of goods and services to other agencies and the public, the collection of 

fees and fi nes, interest/dividends on invested funds, loans and cash disbursements to banks. Interest income received 

is recognized as revenue on the accrual basis. Appropriations are recognized as revenues as the related program or 

administrative expenses are incurred.

F. Funds with the U.S. Treasury and Cash

DOT does not generally maintain cash in commercial bank accounts. Cash receipts and disbursements are processed 

by the U.S. Treasury. Th e funds with the U.S. Treasury are appropriated, revolving, and trust funds that are available 

to pay current liabilities and fi nance authorized purchases. DOT has substantially reduced the number of petty cash 

(imprest) funds outside the U.S. Treasury to reduce the amount of cash paid outside of Treasury. Th is reduces the amount 

of interest that must be paid to borrow funds. Lockboxes have been established with fi nancial institutions to collect 

payments, and these funds are transferred directly to Treasury on a daily (business day) basis. DOT does not maintain 

any balances of foreign currencies. 

G. Receivables

Accounts receivable consist of amounts owed to the Department by other Federal agencies and the public. Federal 

accounts receivable are generally the result of the provision of goods and services to other Federal agencies and, with the 

exception of occasional billing disputes, are considered to be fully collectible. Public accounts receivable are generally the

result of the provision of goods and services or the levy of fi nes and penalties from the Department’s regulatory activities. 

Amounts due from the public are presented net of an allowance for loss on uncollectible accounts, which is based on 

historical collection experience and/or an analysis of the individual receivables.

Loans are accounted for as receivables aft er funds have been disbursed. For loans obligated prior to October 1, 1991, 

loan principal, interest, and penalties receivable are reduced by an allowance for estimated uncollectible amounts. Th e 

allowance is estimated based on past experience, present market conditions, and an analysis of outstanding balances. 

Loans obligated aft er September 30, 1991, are reduced by an allowance equal to the present value of the subsidy costs (due 

to the interest rate diff erential between the loans and Treasury borrowing, the estimated delinquencies and defaults net of 

recoveries, the off set from fees, and other estimated cash fl ows) associated with these loans.

H. Inventory and Operating Materials and Supplies

Inventory primarily consists of supplies that are for sale or used in the production of goods for sale. Operating materials 

and supplies primarily consist of unissued supplies that will be consumed in future operations. Valuation methods for 

supplies on hand at yearend include historical cost, last acquisition price, standard price/specifi c identifi cation, standard 

repair cost, weighted average, and moving weighted average. Expenditures or expenses are recorded when the materials 

and supplies are consumed or sold. Adjustments for the proper valuation of reparable, excess, obsolete, and unserviceable 

items are made to appropriate allowance accounts.

I. Investments in U.S. Government Securities

Investments that consist of U.S. Government Securities are reported at cost or amortized cost net of premiums or 

discounts. Premiums or discounts are amortized into interest income over the term of the investment using the interest 

or straight-line method. Th e Department’s intent is to hold investments to maturity, unless they are needed to cover 

losses on loan guarantees, fi nance programs, or otherwise sustain the operation of the organization. Investments, 

redemptions, and reinvestments are controlled and processed by the Department of the Treasury. Securities with the 

Public include marketable Treasury securities that were purchased using deposit fund monies and are required to be 

classifi ed as securities with the public and are not considered intragovernmental investments.

J. Property and Equipment

DOT agencies have varying methods of determining the value of property and equipment and how it is depreciated. 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

239

DOT currently has a capitalization threshold of $200,000 for structures and facilities and for internal use soft ware, 

and $25,000 for other property, plant and equipment. Capitalization at lesser amounts is permitted. Construction in 

progress is valued at direct (actual) costs plus applied overhead and other indirect costs as accumulated by the regional 

project material system. Th e system accumulates costs by project number assigned to the equipment or facility being 

constructed. Th e straight line method is generally used to depreciate capitalized assets.

FASAB standards require DOT stewardship assets to be omitted from the Balance Sheet. Information on DOT 

stewardship assets, as well as stewardship investments, is presented in the Required Supplementary Information section 

and the Required Supplementary Stewardship Reporting section of this statement. See Note 10 for specifi c required 

disclosures related to Stewardship Heritage Assets.

K. Prepaid and Deferred Charges

Payments 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.

L. Liabilities

Liabilities represent amounts expected to be paid as the result of a transaction or event that has already occurred. 

Liabilities covered by budgetary resources are liabilities incurred which are covered by realized budgetary resources 

as of the balance sheet date. Available budgetary resources include new budget authority, spending authority from 

off setting collections, recoveries of unexpired budget authority through downward adjustments of prior year obligations, 

unobligated balances of budgetary resources at the beginning of the year or net transfers of prior year balances during 

the year, and permanent indefi nite appropriations or borrowing authority. Unfunded liabilities are not considered to 

be covered by such budgetary resources. An example of an unfunded liability is actuarial liabilities for future Federal 

Employees’ Compensation Act payments. Th e Government, acting in its sovereign capacity, can abrogate liabilities 

arising from other than contracts.

M. Contingencies

Th e criteria for recognizing contingencies for claims are (1) a past event or exchange transaction has occurred as of 

the date of the statements; (2) a future outfl ow or other sacrifi ce of resources is probable; and (3) the future outfl ow or 

sacrifi ce of resources is measurable (reasonably estimated). DOT recognizes material contingent liabilities in the form of 

claims, legal action, administrative proceedings and environmental suits that have been brought to the attention of legal 

counsel, some of which will be paid by the Treasury Judgment Fund. It is the opinion of management and legal counsel 

that the ultimate resolution of these proceedings, actions and claims, will not materially aff ect the fi nancial position or 

results of operations.

N. Annual, Sick, and Other Leave

Annual leave is accrued as it is earned, and the accrual is reduced as leave is taken. Accruals for other leave (e.g., credit 

hours and compensatory leave) are also recorded in the fi nancial statements. Under the OST Working Capital Fund, the 

liability for accrued annual leave is a funded item. To the extent current or prior year appropriations are not available 

to fund annual leave earned but not taken, funding will be obtained from future fi nancing sources. Sick leave and other 

types of non-vested leave are expended as taken.

Air Traffi c Controllers covered under the Federal Employees Retirement System (FERS) are eligible, upon retirement, 

for a sick leave buy back option. Under this option, an employee who attains the required number of years of service for 

retirement shall receive a lump sum payment for forty percent of the value of his or her accumulated sick leave as of the 

eff ective date of retirement.

O. Retirement Plan

For DOT employees who participate in the Civil Service Retirement System (CSRS), DOT contributes a matching 

contribution equal to 7 percent of pay. On January 1, 1987, FERS went into eff ect pursuant to Public Law (P.L.) 99-335. 
UNITED STATES DEPARTMENT OF TRANSPORTATION

240

Most employees hired aft er December 31, 1983, are automatically covered by FERS and Social Security. Employees hired 

prior to January 1, 1984, could elect to either join FERS and Social Security or remain in CSRS. A primary feature of 

FERS is that it off ers a savings plan to which DOT automatically contributes 1 percent of pay and matches any employee 

contribution up to an additional 4 percent of pay. For most employees hired since December 31, 1983, DOT also 

contributes the employer’s matching share for Social Security.

Employing agencies are required to recognize pensions and other post retirement benefi ts during the employees’ active 

years of service. Reporting the assets and liabilities associated with such benefi ts is the responsibility of the administering 

agency, the Offi ce of Personnel Management. Th erefore, DOT does not report CSRS or FERS assets, accumulated plan 

benefi ts, or unfunded liabilities, if any, applicable to employees.

P. Comparative Data

Comparative data for the prior year have been presented for the principal fi nancial statements and their related notes.

Q. Use of Estimates

Management has made certain estimates and assumptions when reporting assets, liabilities, revenue, expenses, and in the 

note disclosures. Actual results could diff er from these estimates. Signifi cant estimates underlying the accompanying 

fi nancial statements include (a) the allocation of trust fund receipts by the Offi ce of Treasury’s Assessment (OTA), (b) 

yearend accruals of accounts and grants payable, (c) accrued workers’ compensation, and (d) allowance for doubtful 

accounts receivable.

R. Reclassifi cations

Certain reclassifi cations were made to the FY 2006 fi nancial statement presentation to conform to that used in FY 2007. 

Th e FY 2006 Reconciliation of Net Cost of Operations to Budget (formerly the Statement of Financing) was reclassifi ed to 

conform to the FY 2007 presentation.

S. Parent/Child Allocations

FHWA adjusted the beginning balances of cumulative results of operations by $60.5 million due to a change in accounting 

principle. According to OMB Circular No. A-136, eff ective FY 2007 the parent must report all budgetary and proprietary 

activity of the child account in its fi nancial statements, whether material to the parent or not. As a result, U.S. Army 

Corps of Engineers and U.S. Forest Service beginning balances are refl ected in “Changes to Accounting Principles” on the 

Statement of Changes to Net Position. For FY 2006, two recipient agencies, U.S. Army Corps of Engineers and U.S. Forest 

Service, were excluded from all fi nancial statements (except the Statement of Budgetary Resources) and related footnotes; 

as an exception allowed them to include the allocation activity on their fi nancial statements if it was deemed material to 

the child agency.

T. Prior Period Adjustments and Restatements

Federal Aviation Administration Construction in Process (CIP)

DOT has restated certain balances within Property, Plant and Equipment (PP&E, net) as of September 30, 2006, to correct 

the eff ects of untimely recognition of expenses related to Construction in Progress (CIP) activity that did not meet FAA’s 

capitalization requirements and the untimely capitalization of completed assets. Th e restatement reduces the balance of 

PP&E, net by $954 million and also reclassifi es $1,696 million within PP&E from CIP to other PP&E categories. Th e eff ect 

of this correction is also refl ected as a $974 million reduction to the beginning balance of cumulative results of operations 

on the FY 2006 Statement of Changes in Net Position and a $317.8 million decrease to Air Transportation total net costs 

as shown on the FY 2006 Statement of Net Cost. Th e restatement is also refl ected in Note 24, Reconciliation of Net Cost 

of Operations to Budget (formally the Statement of Financing). Th e eff ect of the restatement in Note 24 agrees to the 

decrease in total net costs in the amount of $317.8 million.

Federal Transit Administration Grant Accrual

DOT has restated the FY2006 DOT Consolidated Financial Statements as of September 30, 2006, to correct the eff ects 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

241

of the grant accrual in the Mass Transit Account within FTA’s programs. A review of the application of the methodology 

used to calculate the grant accrual revealed that, due to funding changes enacted in the Surface Transportation Act 

SAFTEA-LU, the grant accrual for FTA was overstated by $571 million. As a result, the balances of other funds were 

increased by $571 million. Th e restatement is refl ected on the Consolidated Balance Sheet, the Consolidated Statement of 

Net Cost and the Consolidated Statement of Changes in Net Position and is summarized in a table refl ected in Note 25. 

Federal Transit Administration Earmarked Funds

DOT has restated balances on the Statement of Changes in Net Position as of September 30, 2006, to correct the eff ects 

of the misclassifi cations of earmarked funds in the Mass Transit Account within FTA’s programs. A review of the 

presentation of earmarked and other funds in the Statement of Changes in Net Position in accordance with FASAB 

27, revealed that the amounts presented were not properly classifi ed in accordance with the standard and the amounts 

reported included corrections of reporting errors from FY2005 and prior that were presented as FY2006 activity. 

As a result, beginning cumulative results of operations was decreased by $343.3 million and beginning unexpended 

appropriations was increased by $343.3 million; the ending balances of earmarked and other funds were reduced by $9.4 

million and increased by $9.4 million, respectively. Th e restatement is refl ected on the Consolidated Balance Sheet, the 

Consolidated Statement of Net Cost and the Consolidated Statement of Changes in Net Position and is summarized in a 

table refl ected in Note 25.
UNITED STATES DEPARTMENT OF TRANSPORTATION

242

NOTE 2. NON-ENTITY ASSETS

Dollars in Thousands

As of September 30, FY 2007

Restated

FY 2006

Intragovernmental

Fund Balance with Treasury $ (268) $ 186

Accounts Receivable 75 - 

Total Intragovernmental (193) 186

Accounts Receivable 121 39

Total Non-Entity Assets (72) 225

Total Entity Assets 61,831,910 64,111,347

Total Assets $ 61,831,838 $ 64,111,572

DOT has restated and reduced PP&E, net as of September 30, 2006 by $954 million to refl ect the correction of 

untimely processing of transactions related to FAA capital projects. Th e eff ects of this correction include a reduction to 

Construction in Progress, net in the amount of $2,593.7 million, comprised of $897.4 million non-capital transactions 

charged to expense and $1,696.3 million of completed assets reclassifi ed from Construction in Progress to other general 

property, plant and equipment categories. Accumulated depreciation was increased by $56.6 million for the eff ects of this 

correction.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

243

NOTE 3. FUND BALANCE WITH TREASURY

Dollars in Thousands

As of September 30, FY 2007

TOTAL

FY 2006

TOTAL

Fund Balances

Trust Funds $ 5,593,882 $ 7,883,395 

Revolving Funds 643,114 591,806 

General Funds 16,871,467 18,930,510 

Other Fund Types 284,007 287,197 

Total $ 23,392,470 $ 27,692,908 

Status of Fund Balance with Treasury

Unobligated Balance

Available $ 5,055,441 $ 4,248,737 

Unavailable 1,537,890 1,403,548 

Obligated Balance Not Yet Disbursed 16,465,645 21,715,828 

Non-Budgetary FBWT 333,494 324,795 

Total $ 23,392,470 $ 27,692,908 

Fund Balances with Treasury are the aggregate amounts of the entity’s accounts with Treasury for which the entity is 

authorized to make expenditures and pay liabilities. Other Fund Types include uncleared Suspense Accounts, which 

temporarily hold collections pending clearance to the applicable account, and Deposit Funds, which are established to 

record amounts held temporarily until ownership is determined.
UNITED STATES DEPARTMENT OF TRANSPORTATION

244

NOTE 4. INVESTMENTS

Dollars in Thousands

As of September 30, 2007 Cost

Amortized 

(Premium) 

Discount

Investments

(Net)

Other

Adjustments

Market Value

Disclosure

Intragovernmental Securities

Marketable $ 35,300 $ 244 $ 35,544 $ (615) $ 34,929 

Non-Marketable

Par Value 20,135,487 - 20,135,487 - 20,135,487 

Market-Based 886,403 - 886,403 - 886,403 

Subtotal $ 21,057,190 $ 244 $ 21,057,434 $ (615) $ 21,056,819 

Accrued Interest 87,264 - 87,264 - 87,264 

Total Intragovernmental Securities $ 21,144,454 $ 244 $ 21,144,698 $ (615) $ 21,144,083 

Securities with the Public

Marketable $ 75,252 $ 483 $ 75,735 $ (1,650) $ 74,085 

Total Securites with the Public $ 75,252 $ 483 $ 75,735 $ (1,650) $ 74,085 

As of September 30, 2006

Intragovernmental Securities

Marketable $ 152,616 $ 2,037 $ 154,653 $ (3,233) $ 151,420 

Non-Marketable

Par Value 18,890,967 - 18,890,967 - 18,890,967 

Market-Based 698,055 (1,388) 696,667 - 696,667 

Subtotal $ 19,741,638 $ 649 $ 19,742,287 $ (3,233) $ 19,739,054 

Accrued Interest 85,097 85,097 85,097 

Total Intragovernmental $ 19,826,735 $ 649 $ 19,827,384 $ (3,233) $ 19,824,151 

Investments in Federal securities include non-marketable par value Treasury securities, market-based Treasury securities, 

marketable Treasury securities, and securities issued by other Federal entities. Non-Federal securities include those issued by 

state and local governments, Government-sponsored enterprises, and other private corporations. Securities with the Public 

include marketable Treasury securities that were purchased using deposit fund monies and are required to be classifi ed as 

securites with the public and are not considered intragovernmental investments.

Marketable Federal securities can be bought and sold on the open market. Non-marketable par value Treasury securities 

are issued by the Bureau of Public Debt to Federal accounts and are purchased and redeemed at par exclusively through 

Treasury’s Federal Investment Branch. Non-marketable market-based Treasury securities are also issued by the Bureau of 

Public Debt to Federal accounts. Th ey are not traded on any securities exchange but mirror the prices of particular Treasury 

securities trading in the Government securities market. Amortization is done using the interest or straight-line method.

Th e Federal Government does not set aside assets to pay future benefi ts or other expenditures associated with earmarked 

funds. Th e cash receipts collected from the public for an earmarked fund are deposited in the U.S. Treasury, which uses the 

cash for Government purposes. Treasury securities are issued to the DOT as evidence of its receipts. Treasury securities 

are an asset to the DOT and a liability to the U.S. Treasury. Because the DOT and the U.S. Treasury are both parts of the 

Government, these assets and liabilities off set each other from the standpoint of the Government as a whole. For this reason, 

they do not represent an asset or liability in the U.S. Government-wide fi nancial statements.

Treasury securities provide the DOT with authority to draw upon the U.S. Treasury to make future benefi t payments or other 

expenditures. When the DOT requires redemption of these securities to make expenditures, the Government fi nances those 

expenditures out of accumulated cash balances, by raising taxes or other receipts, by borrowing from the public or repaying 

less debt, or by curtailing other expenditures. Th is is the same way that the Government fi nances all other expenditures.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

245

NOTE 5. ACCOUNTS RECEIVABLE

Dollars in Thousands

Gross Amount Due

Allowance for 

Uncollectible 

Amounts Net Amount Due

As of September 30, 2007

Intragovernmental

Accounts Receivable $ 509,692 $ - $ 509,692 

Total Intragovernmental $ 509,692 $ - $ 509,692

Public

Accounts Receivable $ 123,422 $ (9,345) $ 114,077 

Accrued Interest 41 - 41 

Total Public $ 123,463 $ (9,345) $ 114,118 

Total Receivables $ 633,155 $ (9,345) $ 623,810 

As of September 30, 2006

Intragovernmental

Accounts Receivable $ 212,616 $ - $ 212,616 

Total Intragovernmental $ 212,616 $ - $ 212,616 

Public

Accounts Receivable $ 172,686 $ (69,315) $ 103,371 

Total Public $ 172,686 $ (69,315) $ 103,371 

Total Receivables $ 385,302 $ (69,315) $ 315,987 

Allowance for Uncollectible Amounts is based on historical data or actual amounts that are determined to be 

uncollectible based upon review of individual receivables. Accrued interest includes interest, penalties, and other 

administrative charges pertaining to accounts receivable. 
UNITED STATES DEPARTMENT OF TRANSPORTATION

246

NOTE 6. OTHER ASSETS

Dollars in Thousands

FY 2007 FY 2006

Intragovernmental

Advances and Prepayments $ 1,739 $ 37,946 

Other 714 - 

Total Intragovernmental $ 2,453 $ 37,946 

Public

Advances to the States $ 98,861 $ 98,401 

Other Advances and Prepayments 112,029 96,550 

Other 154 555 

Total Public $ 211,044 $ 195,506 

Intragovernmental Other Assets are comprised of advance payments to other Federal Government entities for agency 

expenses not yet incurred and for goods or services not yet received and undistributed assets and payments for which 

DOT is awaiting documentation. Public Other Assets are comprised of advances to the States and advances to employees 

and contractors.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

247

NOTE 7. DIRECT LOANS AND LOAN GUARANTEES, NON-FEDERAL BORROWERS

Dollars in Thousands

DOT administers the following direct loan and/or loan guarantee programs:

1. Railroad Rehabilitation Improvement Program

2. Amtrak Loans

3. Transportation Infrastructure Finance Innovation (TIFIA) Loan Program

4. Federal Ship Financing Fund (Title XI)

5. OST Minority Business Resource Center Guaranteed Loan Program

6. Federal Ship Liquidating Fund (Title XI)

An analysis of loans receivable, allowance for subsidy costs, liability for loan guarantees, foreclosed property, 

modifi cations, reestimates, and administrative costs associated with the direct loans and loan guarantees is provided in 

the following sections.

Direct Loans Obligated Prior to FY 1992, Net

FY 2007 Loans 

Receivable, Gross

Interest 

Receivable

Foreclosed 

Property

Allowance for 

Subsidy

Value of Assets 

Related to Direct 

Loans, Net

Direct Loan Programs

Prior to FY 1992 Allowance for Loss Method

1. Railroad Rehab. Improvement Program $ 17,479 $ 90 $ - $ - $ 17,569 

Subtotal $ 17,479 $ 90 $ - $ - $ 17,569 

After FY 1991

1. Railroad Rehab. Improvement Program $ 497,166 $ - $ - $ 9,889 $ 507,055 

3. TIFIA Loan 377,058 - - (39,998) 337,060 

Subtotal $ 874,224 $ - $ - $ (30,109) $ 844,115 

Direct Loans Obligated Prior to FY 1992, Net

FY 2006 Loans 

Receivable, Gross

Interest 

Receivable

Foreclosed 

Property

Allowance for 

Subsidy

Value of Assets 

Related to Direct 

Loans, Net

Direct Loan Programs

Prior to FY 1992 Allowance for Loss Method

1. Railroad Rehab. Improvement Program $ 21,900 $ 82 $ - $ - $ 21,982 

Subtotal $ 21,900 $ 82 $ - $ - $ 21,982 

After FY 1991

1. Railroad Rehab. Improvement Program $ 449,320 $ - $ - $ 9,471 $ 458,791 

3. TIFIA Loan 117,950 - - (8,901) 109,049

Subtotal $ 567,270 $ - $ - $ 570 $ 567,840
UNITED STATES DEPARTMENT OF TRANSPORTATION

248

NOTE 7. DIRECT LOANS AND LOAN GUARANTEES, NON-FEDERAL BORROWERS (CONT.)

Dollars in Thousands

Total Amount of Direct Loans Disbursed (Post-1991)

FY 2007 FY 2006

Direct Loan Programs

1. Railroad Rehab. Improvement Program $ 99,832 $ 79,249 

2. Amtrak Loans - - 

3. TIFIA Loan 246,033 43,683 

Subtotal $ 345,865 $ 122,932 

Subsidy Expense for Direct Loans by Program and Component

FY 2007

Interest Fees and Other Modifi cations/

Diff erential Defaults Collections Re-Estimates Total

Subsidy Expense for New Direct Loans Disbursed

Direct Loan Programs

1. Railroad Rehab Improv $ - $ - $ 1,786 $ (1,745) $ 41 

3. TIFIA Loans - 27,576 - - 27,576 

Subtotal $ - $ 27,576 $ 1,786 $ (1,745) $ 27,617 

FY 2006

Interest Fees and Other Modifi cations/

Diff erential Defaults Collections Re-Estimates Total

Subsidy Expense for New Direct Loans Disbursed

Direct Loan Programs

3. TIFIA Loans $ - $ 3,101 $ 218 $ (11,821) $ (8,502)

Subtotal $ - $ 3,101 $ 218 $ (11,821) $ (8,502)

Modifi cations and Re-estimates

FY 2007

Total Interest Rate Technical Total

Modifi cations Re-estimates Re-estimates Re-estimates

Direct Loan Programs

1. Railroad Rehab Improv $ - $ - $ 1,567 $ 1,567 

3. TIFIA Loans 2,959 1,328 7,099 11,386 

Subtotal $ 2,959 $ 1,328 $ 8,666 $ 12,953 

FY 2006

Total Interest Rate Technical Total

Modifi cations Re-estimates Re-estimates Re-estimates

Direct Loan Programs

1. Railroad Rehab Improv $ - $ - $ 12,473 $ 12,473 

3. TIFIA Loans - (510) (11,311) (11,821) 

Subtotal $ - $ (510) $ 1,162 $ 652 

Total Direct Loan Subsidy Expense

FY 2007 FY 2006

Direct Loan Programs

1. Railroad Rehab Improv $ 1,608 $ 12,473

3. TIFIA Loans 2,959 (20,323)

Subtotal $ 4,567 $ (7,850) 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

249

NOTE 7. DIRECT LOANS AND LOAN GUARANTEES, NON-FEDERAL BORROWERS (CONT.)

Dollars in Thousands

Budget Subsidy Rates for Direct Loans for the Current Year Cohort

FY 2007

Interest Fees and Other

Diff erential Defaults Collections Other Total

Direct Loan Programs

1. Railroad Rehab Improv 0.00% 3.46% -3.46% 0.00% 0.00%

2. Amtrak Loans 0.00% 0.00% 0.00% 0.00% 0.00%

3. TIFIA Loans 0.17% 1.09% 0.00% 0.00% 1.26%

Subtotal 0.17% 4.55% -3.46% 0.00% 1.26%

Schedule for Reconciling Subsidy Cost Allowance Balances (Post-1991 Direct Loans)

Beginning Balance, Changes, and Ending Balance FY 2007 FY 2006

Beginning Balance of the Subsidy Cost Allowance $ (570) $ 34,077 

Add: Subsidy Expense for Direct Loans Disbursed during the Reporting

Years by Component 

Fees and Other Collections - 157 

Other Subsidy Costs 29,362 (4,078)

Total of the Above Subsidy Expense Components $ 29,362 $ (3,921)

Adjustments

Loan Modifi cations 3,207 - 

Fees Received (55) - 

Subsidy Allowance Amortization (8,518) (6,432)

Ending Balance of the Subsidy Cost Allowance Before Reestimates $ 23,426 $ 23,724 

Add or Subtract Subsidy Reestimates by Component:

Technical/Default Reestimate 6,683 (24,294)

Total of the Above Reestimate Components $ 6,683 $ (24,294)

Ending Balance of the Subsidy Cost Allowance $ 30,109 $ (570)

Defaulted Guaranteed Loans from Post-1991 Guarantees

Value of

FY 2007 Loans Interest Foreclosed Allowance Assets Related to

Receivable, Gross Receivable Property for Subsidy Loans Receivable

4. Fed Ship Financing Fund (Title XI) $ 7,501 $ 200 $ 19,000 $ 1,500 $ 28,201 

Total $ 7,501 $ 200 $ 19,000 $ 1,500 $ 28,201 

Defaulted Guaranteed Loans from Post-1991 Guarantees

Value of

FY 2006 Loans Interest Foreclosed Allowance Assets Related to

Receivable, Gross Receivable Property for Subsidy Loans Receivable

4. Fed Ship Financing Fund (Title XI) $ 7,713 $ 144 $ 19,000 $ 1,500 $ 28,357 

Total $ 7,713 $ 144 $ 19,000 $ 1,500 $ 28,357 
UNITED STATES DEPARTMENT OF TRANSPORTATION

250

NOTE 7. DIRECT LOANS AND LOAN GUARANTEES, NON-FEDERAL BORROWERS (CONT.)

Dollars in Thousands

Guaranteed Loans Outstanding

Outstanding 

Principal of 

Guaranteed 

Loans, Face Value

Amount of 

Outstanding 

Principal 

Guaranteed

4. Fed Ship Financing Fund (Title XI) $ 2,687,186 $ 2,936,187 

5. OST Minority Business Res 3,915 2,936 

6. Fed Ship Liquidating Fund (Title XI) 2,204 6,781 

Subtotal $ 2,693,305 $ 2,945,904 

New Guaranteed Loans Disbursed

FY 2007

5. OST Minority Business Resource Center $ 3,415 $ 2,651 

Subtotal $ 3,415 $ 2,651 

FY 2006

4. Fed Ship Financing Fund (Title XI) $ 139,731 $ 139,731

5. OST Minority Business Resource Center 2,515 1,886

Subtotal $ 142,246 $ 141,617

Liability for Loan Guarantees (Present Value Method Post-1991 Guarantees):

FY 2007

Liabilities for Post-1991 

Guarantees, Present Value

FY 2006

Liabilities for Post-1991

Guarantees, Present Value

Loan Guarantee Programs

4. Fed Ship Financing Fund (Title XI) $ 336,410 $ 345,341 

5. OST Minority Business Res 216 523 

Total $ 336,626 $ 345,864 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

251

NOTE 7. DIRECT LOANS AND LOAN GUARANTEES, NON-FEDERAL BORROWERS (CONT.)

Dollars in Thousands

Subsidy Expense for Loan Guarantees by Program and Component

Subsidy Expense for New Loan Guarantees Disbursed

FY 2007 Loan Guarantee Programs Interest Defaults Fees and Other Other Modifi cations/

Supplements Net Collections Subsidy Costs Re-Estimates Total

4. Fed Ship Financing Fund (Title XI) $ - $ 891 $ 774 $ 20,499 $ (31,096) $ (8,932)

5. OST Minority Business Resource 62 - - - - 62 

Subtotal $ 62 $ 891 $ 774 $ 20,499 $ (31,096) $ (8,870)

FY 2006 Loan Guarantee Programs

4. Fed Ship Financing Fund (Title XI) $ - $ (3,378) $ (12,707) $ 75,210 $ (106,654) $ (47,529)

5. OST Minority Business Resource - (77) --- (77)

Subtotal $ - $ (3,455) $ (12,707) $ 75,210 $ (106,654) $ (47,606)

Modifi cations and Re-estimates

Loan Guarantee Programs FY 2007

Total Interest Rate Technical Total

Modifi cations Re-estimates Re-estimates Re-estimates

Direct Loan Programs

4. Fed Ship Financing Fund (Title XI) $ - $ - $ 31,096 $ 31,096 

5. OST Minority Business Resource - 12,992 (15,208) (2,216) 

Subtotal $ - $ 12,992 $ 15,888 $ 28,880 

FY 2006

Total Interest Rate Technical Total

Modifi cations Re-estimates Re-estimates Re-estimates

Direct Loan Programs

4. Fed Ship Financing Fund (Title XI) $ - $ - $ (106,654) $ (106,654)

Subtotal $ - $ - $ (106,654) $ (106,654) 

Total Loan Guarantee Subsidy Expense

Loan Guarantee Programs FY 2007 FY 2006

4. Fed Ship Financing Fund (Title XI) $ 22,164 $ (154,183)

5. OST Minority Business Resource (2,154) (77)

Subtotal $ 20,010 $ (154,260) 

Budget Subsidy Rates for Loan Guarantees for the Current Year Cohort

FY 2007

Interest

Diff erential Defaults

Fees and Other

Collections Other Total

Loan Guarantee Programs

4. Fed Ship Financing Fund (Title XI) 0.00% 12.05% -4.88% 0.00% 7.17%

5. OST Minority Business Res 0.00% 0.00% 0.00% 0.00% 0.00%

Subtotal 0.00% 12.05% -4.88% 0.00% 7.17%
UNITED STATES DEPARTMENT OF TRANSPORTATION

252

NOTE 7. DIRECT LOANS AND LOAN GUARANTEES, NON-FEDERAL BORROWERS (CONT.)

Schedule for Reconciling Loan Guarantee Liability Balances (Post-1991 Loan Guarantees)

Beginning Balance, Changes, and Ending Balance FY 2007 FY 2006

Beginning Balance of the Loan Guarantee Liability $ 345,864 $ 393,451 

Add: Subsidy Expense for Guaranteed Loans Disbursed during the 

Reporting Years by Component: 

Default Costs (net of recoveries) 571 (3,455)

Fees and Other Collections 774 (12,707)

Other Subsidy Costs 3,299 75,210 

Total of the Above Subsidy Expense Components $ 4,643 $ 59,048 

Adjustments:

Interest Accumulation on the Liability Balance 17,216 19 

Ending Balance of the Loan Guarantee Liability Before Reestimates $ 367,724 $ 452,518 

Add or Subtract Subsidy Reestimates by Component:

Technical/Default Reestimate (31,098) (106,654)

Total of the Above Reestimate Components $ (31,098) $ (106,654)

Ending Balance of the Loan Guarantee Liability $ 336,626 $ 345,864 

Th e Federal Credit Reform Act of 1990 divides direct loans and loan guarantees into two groups: (1) Pre-1992 means the 

direct loan obligations or loan guarantee commitments made prior to FY 1992 and the resulting direct loans obligations 

or loan guarantees, and (2) Post-1991 means the direct loan obligations or loan guarantee commitments made aft er 

FY 1991 and the resulting direct loans or loan guarantees.

Th e Act provides that, for direct loan obligations or loan guarantee commitments made aft er FY 1991, the present value 

of the subsidy costs (which arises from interest rate diff erentials, interest subsidies, delinquencies and defaults, fee off sets, 

and other cash fl ows) associated with direct loans and loan guarantees be recognized as a cost in the year the direct or 

guaranteed loan is disbursed.

Direct loans are reported net of an allowance for subsidy at present value, and loan guarantee liabilities are reported at 

present value. Foreclosed property is valued at the net realizable value. Loans receivable, net, or their value of assets 

related to direct loans, is not the same as the proceeds that they would expect to receive from selling their loans. DOT 

calculated the allowance for pre-1992 using the allowance for loss method.

Administrative costs could not be determined and disclosed because DOT has not fully implemented cost accounting 

Departmentwide. 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

253

NOTE 8. INVENTORY AND RELATED PROPERTY

Dollars in Thousands

Allowance

Cost for Loss Net

As of September 30, 2007

Inventory:

 Inventory Held for Current Sale $ 82,975 $ (6,631) $ 76,344 

 Inventory Held for Repair 466,346 (95,600) 370,746 

 Other 35,992 (17,996) 17,996 

Total Inventory $ 585,313 $ (120,227) $ 465,086 

Operating Materials and Supplies:

 Items Held for Use $ 233,470 $ (3,923) $ 229,547 

 Items Held in Reserve for Future Use 69,998 - 69,998 

 Excess, Obsolete and Unserviceable Items 480 (480) - 

 Items Held for Repair 38,385 (17,256) 21,129 

 Total Operating Materials & Supplies $ 342,333 $ (21,659) $ 320,674 

 Total Inventory and Related Property $ 785,760 

As of September 30, 2006

Inventory:

 Inventory Held for Current Sale $ 69,960 $ (6,031) $ 63,929 

 Excess, Obsolete and Unserviceable Inventory 47,607 (5,814) 41,793 

 Inventory Held for Repair 376,366 (87,615) 288,751 

 Other 224,652 (35,774) 188,878 

 Total Inventory $ 718,585 $ (135,234) $ 583,351 

Operating Materials and Supplies:

 Items Held for Use $ 229,098 $ (3,061) $ 226,037 

 Items Held in Reserve for Future Use 69,414 - 69,414 

 Excess, Obsolete and Unserviceable Items 758 (758) - 

 Items Held for Repair 33,558 (14,866) 18,692 

 Total Operating Materials & Supplies $ 332,828 $ (18,685) $ 314,143 

 Total Inventory and Related Property $ 897,494 

All DOT inventory is in FAA and the OST Working Capital Fund. Valuation methods used include moving weighted 

average, standard price/specifi c identifi cation, and last acquisition price.

DOT operating materials and supplies are in FAA and MARAD. Valuation methods used include historical cost, last 

acquisition price, standard price/specifi c identifi cation, standard repair cost, weighted average, and moving weighted 

average. Th e only restriction on use is that FAA is not permitted to donate.
UNITED STATES DEPARTMENT OF TRANSPORTATION

254

NOTE 9. GENERAL PROPERTY, PLANT AND EQUIPMENT

Dollars in Thousands

Service Acquisition Accumulated

Major Classes Life * Value Depreciation Book Value

As of September 30, 2007

 Land and Improvements $ 208,742 $ (89,679) $ 119,063 

 Buildings and Structures Various 4,823,882 (2,485,100) 2,338,782 

 Furniture and Fixtures Various - - - 

 Equipment Various 17,664,815 (9,052,689) 8,612,126 

 ADP Software Various 208,130 (180,104) 28,026 

 Electronics 6-10 738 (738) - 

 Assets Under Capital Lease Various 166,387 (111,373) 55,014 

 Leasehold Improvements Various 67,494 (35,541) 31,953 

 Aircraft 11-20 401,614 (297,508) 104,106 

 Ships and Vessels >20 1,656,764 (1,176,540) 480,224 

 Small Boats Various 17,564 (14,712) 2,852 

 Construction in Progress 2,892,154 - 2,892,154 

 Property Not in Use 93,593 (74,003) 19,590 

 Other Misc. Property 1,390 (1,390) - 

 Total $ 28,203,267 $ (13,519,377) $ 14,683,890 

As of September 30, 2006 (Restated)

 Land and Improvements $ 113,482 $ (393) $ 113,089 

 Buildings and Structures Various 4,592,936 (2,332,213) 2,260,723 

 Furniture and Fixtures Various 55,112 (25,827) 29,285 

 Equipment Various 17,243,773 (8,087,372) 9,156,401 

 ADP Software Various 163,967 (143,688) 20,279 

 Electronics 6-10 2,720 (2,626) 94 

 Assets Under Capital Lease Various 127,439 (89,181) 38,258 

 Leasehold Improvements Various 59,933 (29,491) 30,442 

 Aircraft 11-20 401,614 (280,758) 120,856 

 Ships and Vessels >20 1,653,368 (1,110,010) 543,358 

 Small Boats Various 15,648 (14,240) 1,408 

 Construction in Progress 2,148,066 - 2,148,066 

 Property Not in Use 117,050 (86,598) 30,452 

 Other Misc. Property 73,097 (64,046) 9,051 

 Total $ 26,768,205 $ (12,266,443) $ 14,501,762 

Depreciation is computed using the straight line method. Net book value of multi-use heritage assets is now included in 

general property, plant and equipment, while “physical quantity” information is included in the Heritage Assets section of 

the Required Supplementary Information.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

255

DOT has restated and reduced PP&E, net as of September 30, 2006 by $954.0 million to refl ect the correction of 

untimely processing of transactions related to FAA capital projects. Th e eff ects of this correction include a reduction to 

Construction in Progress, net in the amount of $2,593.7 million, comprised of $897.7 million non-capital transactions 

charged to expense and $1,696.3 million of completed assets reclassifi ed from Construction in Progress to other general 

property, plant and equipment categories. Accumulated depreciation was increased by $56.6 million for the eff ects of this 

correction.
UNITED STATES DEPARTMENT OF TRANSPORTATION

256

NOTE 10. STEWARDSHIP PROPERTY, PLANT AND EQUIPMENT

Stewardship Mission

Implied within the Maritime Administration’s mission is the promotion of the nation’s rich maritime heritage. One aspect 

of this entails the collection, maintenance and distribution of maritime artifacts removed from MARAD ships prior to 

their disposal. Th ese artifacts are sought for public display in museums, aboard memorial ships, and in facilities used by 

government organizations and issued on a long-term loan basis for this purpose.

Washington’s Union Station support’s DOT’s mobility mission, facilitating the movement of intercity and commuter rail 

passengers through the Washington DC metropolitan area.

Stewardship Policy

Th e Maritime Administration has established a list of artifact-type items that are typically found aboard agency-owned 

ships. As ships are assigned to a non-retention status in preparation for disposal, artifact items are collected, inventoried,

photographed and relocated to secure shore-side storage facilities. Th is resulting inventory of artifacts is made available 

for long-term loan to qualifi ed organizations for public display purposes. Qualifi ed organizations have access to 

the artifact inventory via web-based system. Th e artifact loan process is also managed on-line via this system. Th e 

program also supports required National Historical Preservation Act processing prior to vessel disposal. Funding for 

the maintenance of heritage items is typically the responsibility of the organization requesting the loan. As all items are 

durable and restorable, disposal is not a consideration.

Th e Federal Railroad Administration has an oversight role in the management of Washington Union Station. FRA 

received title through legislation, and sublets the property to Union Station Venture Limited which manages the property. 

Net book value of multi-use heritage assets is included in general property, plant and equipment, while “physical quantity” 

information is included in the Heritage Assets section of Required Supplementary Information. Th e condition of the 

stewardship assets is included in the Deferred Maintenance section of the Required Supplementary Information.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

257

NOTE 11. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

Dollars in Thousands

Intragovernmental Restated

FY 2007 FY 2006

 Debt $ 1,726 $ 4,841 

 Other Liabilities 440,686 356,460 

Total Intragovernmental $ 442,412 $ 361,301 

 Federal Employee and Veterans’ Benefi ts Payable $ 946,408 $ 950,466 

 Environmental and Disposal Liabilities 852,366 953,635 

 Other Liabilities 782,120 922,089 

Total Liabilities Not Covered by Budgetary Resources $ 3,023,306 $ 3,187,491 

Total Liabilities Covered by Budgetary Resources 11,051,917 9,924,453 

 Total Liabilities $ 14,075,223 $ 13,111,944 

As discussed in Notes 1.T, 14, 19, and 20, the FY 2006 grant accrual liabilities were restated. Due to funding changes 

enacted in the Surface Transportation Act SAFTEA-LU, the grant accrual for FTA was overstated by $571 million in the 

DOT consolidated fi nancial statements. FTA’s grants primarily aff ect local governments and transit authorities.
UNITED STATES DEPARTMENT OF TRANSPORTATION

258

NOTE 12. DEBT

Dollars in Thousands

FY 2006 FY 2006 FY 2006 FY 2007 FY 2007

Beginning Net Borrowing Ending Net Borrowing Ending

Balance Activity Balance Activity Balance

Intragovernmental Debt

 Debt to the Treasury $ 949,653 $ (112,973) $ 836,680 $ 201,623 $ 1,038,303 

 Debt to the Fed Financing Bank 2,883 (206) 2,677 (219) 2,458 

 Total Intragovernmental Debt $ 952,536 $ (113,179) $ 839,357 $ 201,404 $ 1,040,761 

Net Change During Fiscal Year includes new borrowing, repayments and net change in accrued payables. Debt to 

the Treasury and to the Federal Financing Bank is for FRA direct loans to railroads, for FHWA direct loans under the 

Transportation Infrastructure Finance and Innovation Act (TIFIA), and for MARAD Title XI guaranteed loans. 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

259

NOTE 13. ENVIRONMENTAL AND DISPOSAL LIABILITIES

Dollars in Thousands

FY 2007 FY 2006

Public

 Environmental Cleanup Liabilities

 FAA Environmental Remediation $ 316,748 $ 573,263 

 FAA Environmental Cleanup and Decommissioning 250,138 - 

 MARAD Environmental Cleanup (PCB, Lead, Oil) 285,480 380,372 

 Total Public $ 852,366 $ 953,635 

Environmental cleanup generally occurs under the Resource Conservation and Recovery Act of 1976 (RCRA), the 

Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA or Superfund), or the Toxic 

Substances Control Act (TSCA). Environmental remediation includes the fuel storage tank program, fuels, solvents, 

industrial, and chemicals, and other environmental cleanup associated with normal operations or as a result of an 

accident. Cost estimates for environmental and disposal liabilities are not adjusted for infl ation and are subject to revision 

as a result of changes in technology and environmental laws and regulations.
UNITED STATES DEPARTMENT OF TRANSPORTATION

260

NOTE 14. GRANT ACCRUAL

Dollars in Thousands

Grant liabilities are accrued in two categories. Th e fi rst category is grant related requests for payments that had been 

billed to an agency entity as of September 30, but had not yet been paid. Th e second category is for the grant related costs 

incurred, but not yet reported (IBNR). IBNR represents an estimate of amounts due to grantees for their expenditures 

made through September 30, for which payment requests have not been received from grantees as of September 30.

Grant accruals by Operating Administrations at September 30, 2007 and September 30, 2006 are summarized as follows:

RESTATED

FY 2007 FY 2006

Highway Trust Fund $ 4,144,949 $ 3,556,098 

Federal Transit Administration 707,996 865,851 

Federal Aviation Administration 653,790 549,758 

Federal Highway Administration (non-trust fund) - 34 

Federal Railroad Administration 11,896 3,815 

Pipeline Hazardous Materials Safety Administration 7,657 - 

Total Grant Accrual $ 5,526,288 $ 4,975,556 

DOT has restated and reduced the grant accrual as of September 30, 2006 by $571.3 million to refl ect the correction of 

grant accrual methodology for the Federal Transit Administration. FTA’s grants primarily aff ect local governments and 

transit authorities.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

261

NOTE 15. OTHER LIABILITIES

Dollars in Thousands

Non-Current Current FY 2007 Total

As of September 30, 2007

Intragovernmental

 Advances and Prepayments $ (79,321) $ 2,911,830 $ 2,832,509 

 Accrued Pay and Benefi ts 2,533 83,810 86,343 

 FECA Billings 126,127 88,660 214,787 

 Uncleared Disbursements and Collections (544) (8,441) (8,985)

 Deferred Credits 34,972 - 34,972 

 Deposit Funds (294) (427) (721)

 Other Accrued Liabilities 228,243 30,930 259,173 

 Total Intragovernmental $ 311,716 $ 3,106,362 $ 3,418,078 

Public:

 Other Accrued Unbilled Payments $ 11 $ 1,752 $ 1,763 

 Accrued Pay and Benefi ts 160,135 568,817 728,952 

 Legal Claims 2,431 14,205 16,636 

 Deferred Credits 129,891 - 129,891 

 Capital Leases 57,612 14,499 72,111 

 Advances and Prepayments 31,420 142,852 174,272 

 Uncleared Disbursements and Collections 3,588 128 3,716 

 Deposit Funds - 844 844 

 Other Custodial Liability (2) 26,796 26,794 

 Other Accrued Liabilities 89,833 64,599 154,432 

 Total Public $ 474,919 $ 834,492 $ 1,309,411 
UNITED STATES DEPARTMENT OF TRANSPORTATION

262

Non-Current Current FY 2006 Total

As of September 30, 2006

Intragovernmental

 Advances and Prepayments $ - $ 2,797,414 $ 2,797,414 

 Accrued Pay and Benefi ts 993 52,546 53,539 

 FECA Billings 121,877 91,572 213,449 

 Uncleared Disbursements and Collections - (26,967) (26,967)

 Deferred Credits - 2,199 2,199 

 Deposit Funds - (2,437) (2,437)

 Other Accrued Liabilities 164,702 10,992 175,694 

 Total Intragovernmental $ 287,572 $ 2,925,319 $ 3,212,891 

Public

 Other Accrued Unbilled Payments $ - $ 11,772 $ 11,772 

 Accrued Pay and Benefi ts 182,330 686,968 869,298 

 Legal Claims 3,281 8,001 11,282 

 Deferred Credits 115,175 74,675 189,850 

 Capital Leases 34,199 8,607 42,806 

 Advances and Prepayments - 105,554 105,554 

 Uncleared Disbursements and Collections - 6,548 6,548 

 Deposit Funds (3,950) 3,139 (811)

 Other Custodial Liability - 57,902 57,902 

 Other Accrued Liabilities 88,991 25,990 114,981 

 Total Public $ 420,026 $ 989,156 $ 1,409,182

Accrued pay and benefi ts pertain to unpaid pay and benefi ts, and may be either current or non-current. Agency expenses for payments 

made under the Federal Employees Compensation Act (FECA) are forwarded to the Department of Labor (DOL). Funding for FECA is normally 

appropriated to agencies in the fi scal year two years subsequent to the actual FECA billing from DOL.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

263

NOTE 16. CAPITAL LEASES

Dollars in Thousands

ENTITY AS LESSEE

Capital Leases

FY 2007

Restated

FY 2006

 Summary of Assets Under Capital Lease by Category

 Land, Buildings & Machinery $ 166,387 $ 127,439 

 Accumulated Amortization (111,373) (89,181)

 Net Assets Under Capital Lease $ 55,014 $ 38,258 

Future Payments Due

Land &

Fiscal Year Buildings

Year 1 (2008) $ 14,230 

Year 2 (2009) 13,945 

Year 3 (2010) 13,280 

Year 4 (2011) 12,267 

Year 5 (2012) 8,270 

After 5 Years (2013+) 59,577 

Total Future Lease Payments $ 121,569 

Less: Imputed Interest 49,458 

Net Capital Lease Liability $ 72,111 

Operating Leases

Future Payments Due

Land, Buildings,

 Fiscal Year Machinery & Other

Year 1 (2008) $ 105,170 

Year 2 (2009) 98,527 

Year 3 (2010) 91,968 

Year 4 (2011) 78,783 

Year 5 (2012) 65,963 

After 5 Years (2013+) 130,098 

Total Future Lease Payments $ 570,509 
UNITED STATES DEPARTMENT OF TRANSPORTATION

264

NOTE 17. CONTINGENCIES, COMMITMENTS, AND OTHER DISCLOSURES

Contingencies

Legal Claims

As of September 30, 2007 and 2006, DOT’s contingent liabilities for asserted and pending legal claims reasonably possible 

of loss were estimated at $33.1 million and $27.9 million, respectively. DOT does not have material amounts of known 

unasserted claims.

Th ere are legal actions pending against the HTF Agencies in Federal courts in which claims have been asserted that may 

be based on action taken by the Agencies. Management intends to vigorously contest such claims. Management believes, 

based on information provided by legal counsel, that losses, if any, for these cases would not have a material impact on the 

fi nancial statements and no loss accrual has been made for these cases outstanding as of September 30, 2007 and 2006 due 

to this fact.

Grant Programs

FHWA pre-authorizes states to establish construction budgets without having received appropriations from Congress for 

such projects. FHWA does not guarantee the ultimate funding to the states for these “Advance Construction” projects 

and, accordingly, does not obligate any funds for these projects. When funding becomes available to FHWA, the states 

can then apply for reimbursement of costs that they have incurred on such project, at which time FHWA can accept or 

reject such request. For the fi scal year ended September 30, 2007 and 2006, FHWA has pre-authorized $46.2 billion and 

$44.8 billion, respectively under these arrangements; however no liability is refl ected in the Highway Trust Fund fi nancial 

statements at September 30, 2007 and 2006.

FTA executes Full Funding Grant Agreements (FFGAs) under its Capital Investment program (New Starts) authorizing 

transit authorities to establish project budgets and incur costs with their own funds in advance of annual appropriations 

by Congress. As of September 30, 2007 and September 30, 2006 approximately $3.9 billion and $2.7 billion respectively 

in Section 5309 New Starts funds has been committed under FFGAs, but not yet appropriated by Congress. However, no 

liability is refl ected in the DOT fi nancial statements at September 30, 2007 and September 30, 2006 for these agreements.

Contract Options and Negotiations

As of September 30, 2007 and 2006, FAA had contract options of $3.51 billion and $3.35 billion, respectively. Th ese 

contract options give FAA the unilateral right to purchase additional equipment or services or to extend the contract 

terms. Exercising this right would require the obligation of funds in future years.

Aviation Insurance Program

FAA is authorized to issue hull and liability insurance under the Aviation Insurance Program for air carrier operations 

for which commercial insurance is not available on reasonable terms and when continuation of U.S. fl ag commercial 

air service is necessary in the interest of air commerce, national security, and the U.S. foreign policy. FAA may issue (1) 

non-premium insurance, and (2) premium insurance for which a risk-based premium is charged to the air carrier, to the 

extent practical.

FAA maintains standby non-premium war-risk insurance policies for 40 air carriers having approximately 1,643 aircraft 

available for Department of Defense and for 9 carriers available for State Department charter operations.

On September 22, 2001, the Air Transportation Safety and System Stabilization Act (Public Law 107-42) expanded 

premium insurance program authority to permit insurance of domestic operations. Under this program, FAA initially 

provided third party liability war-risk insurance to U.S. carriers whose coverage was cancelled following the terrorist 

attacks of September 11, 2001.Public Law 108-11 required FAA to extend policies in eff ect on July 19, 2002 and to add hull 

loss and passenger and third party war risk liability insurance for those policies.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

265

Subsequent acts ending with the Revised Continuing Appropriations Resolution, 2007, P.L. 110-5, ultimately extended 

the mandatory provision of insurance through September 30, 2007, expanded the authority of the DOT to include war 

and terrorism insurance for aircraft and aircraft engine manufacturers, extended the potential $100 million third party 

liability limitation for air carriers through September 30, 2007, and expanded it to include aircraft and aircraft engine 

manufacturers. On September 1, 2007, the Secretary of Transportation extended coverage through December 31, 2007. 

During this year there were 77 FAA premium war-risk policies. Insured air carriers per occurrence limits for combined 

hull and liability coverage range from $100 million to $4 billion.

Current war risk coverage is intended as a temporary measure to provide insurance to qualifying carriers while allowing 

time for commercial insurance market to stabilize. Premiums under this program are established by FAA and are based 

on the value of policy coverage limits and aircraft activity. However, airlines’ total charge for coverage is subject to a cap 

mandated by Congress. During FY 2007 and FY 2006, FAA recognized insurance premium revenue of $171 million and 

$168.4 million, respectively. Premiums are recognized as revenue on a straight-line basis over the period of coverage. 

Premium revenue is reported on the FAA’s Consolidated Statement of Net Cost, under “Regional and Center Operations 

and Other Programs.”

FAA airline war risk insurance policies normally establish a maximum liability for claims associated with a single war 

risk event. Th e maximum liability for both hull loss and liability, per occurrence, is $4 billion. No claims for losses were 

pending as of September 30, 2007, or 2006. In the past, FAA has insured a small number of air carrier operations and 

established a maximum liability for losing one aircraft . Since the inception of the Aviation Insurance Program in 1951, the 

FAA has intermittently insured air carrier operations on both a premium and non-premium basis. During its history, 

the Aviation Insurance Program has only paid four claims, all involving only minor dollar amounts. Because of the 

unpredictable nature of war risk and the absence of historical claims experience on which to base an estimate, no reserve 

for insurance losses has been recorded.

Commitments

Grant Programs

FAA’s 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 related 

to enhancing airport safety, capacity, security and environmental concerns. FAA’s share of eligible costs for large and 

medium primary hub airports is 75% with the exception of noise program implementation, which is 80%. For remaining 

airports (small primary, relievers, and general aviation airports), FAA’s share of eligible costs is 95%.

FAA has authority under 49 U.S.C. 47110(e) to issue letters of intent to enter into Airport Improvement Program grant 

agreements. FAA records an obligation when a grant is awarded. Th rough September 30, 2007, FAA issued letters of 

intent covering FY 1988 through FY 2020 totaling $5.6 billion. As of September 30, 2007, FAA had obligated $4.3 billion 

of this total amount leaving $1.3 billion unobligated. Th rough September 30, 2006, FAA issued letters of intent covering 

FY 1988 through FY 2020 totaling $5.3 billion. As of September 30, 2006, FAA had obligated $3.8 billion of this total 

amount, leaving $1.5 billion unobligated.

Other Disclosures

Environmental Liabilities

MARAD faces liability primarily by virtue of the actions of its predecessor, the War Shipping Administration, for its share 

of liability for remediation under the Comprehensive Environmental Response Compensation Liabilities Act (CERCLA) 

at various sites. MARAD is currently unable to quantify its liability in this area.
UNITED STATES DEPARTMENT OF TRANSPORTATION

266

NOTE 18. EARMARKED FUNDS

Highway Trust Funds

Th e Highway Trust Fund is comprised of the Highway Corpus Trust Fund and certain accounts of the Federal Highway 

Administration, Federal Motor Carrier Safety Administration, Federal Transit Administration, Federal Railroad 

Administration and the National Highway Traffi c Safety Administration. Th e HTF was created in 1956 with the Highway 

Revenue Act of 1956 with the main objective of funding the construction of the Dwight D. Eisenhower System of 

Interstate and Defense Highways. Th e use of the fund has also been expanded to embrace highway safety. Overall, there 

are 73 earmarked funds in the HTF.

Federal Aviation Administration Trust Funds

Aviation Insurance Revolving Fund (AIRF) - was authorized under public law Title 49 of the U.S. Code to provide 

insurance coverage for aircraft operations that are deemed essential to the foreign policy interests of the United States 

when commercial insurance is unavailable on reasonable terms. Th e AIRF is a separate fund within FAA’s accounting 

structure and included as part of FAA’s consolidated fi nancial statements.

Aviation User Fees (AUF) - was authorized by the Federal Aviation Reauthorization Act of 1996 and Title 49 U.S. 

Code 45301, as amended by public law 104-264, to establish a fee schedule and collection process for air traffi c control 

and related services provided to aircraft , other than military and civilian aircraft of the U.S. government or a foreign 

government, that neither take off nor land in the United States. Th e AUF is a separate fund within FAA’s accounting 

structure and included as part of FAA’s consolidated fi nancial statements.

Airport and Airway Trust Fund (AATF) - was authorized by the Airport and Airway Revenue Act of 1970 to provide 

funding for the Federal commitment to the nations aviation system and typically includes annual funding for four distinct 

areas; Operations, Grant in Aid for Airports, Facilities and Equipment and Research, Engineering and Development. 

Th e activity within each area is reported by fund group within FAA’s accounting structure and included as part of FAA’s 

consolidated fi nancial statements. Th e AATF is managed by the Bureau of Public Debt (BPD) for FAA and receipts are 

unavailable until appropriated by the U. S. Congress. AATF funds are invested in government securities by BPD which 

are liquidated and transferred to authorized funds as needed. Th e unavailable or unappropriated funds in AATF, referred 

to as Corpus, are also included as part of FAA’s consolidated fi nancial statements.

Earmarked funds from the Facilities and Equipment fund are used to purchase or construct property, plant and 

equipment (PP&E). When earmarked funds are used to purchase or construct PP&E, they are no longer available 

for future expenditure, have been used for their intended purpose, and therefore are classifi ed as other funds on the 

balance sheet and the statement of changes in net position. Th e intended result of this presentation is to diff erentiate 

between earmarked funds available for future expenditure and earmarked funds previously expended on PP&E projects 

and therefore unavailable for future expenditure. In addition, this note presents only the earmarked funds that retain 

available fi nancing sources. As such, the balances in the PP&E fund, though funded from the Facilities and Equipment 

earmarked fund are reported as other funds and therefore are excluded.

Federal Highway Administration Non Trust Funds

Several small miscellaneous programs comprise this portion of earmarked funds in the Federal Highway Administration.

Federal Transit Administration (Mass Transit)

In FY-2005 and prior, FTA programs were funded 80% through the Mass Transit account and 20% through Treasury 

General Receipt (Fund) account. During these prior years, FTA’s formula programs were paid out of general fund 

accounts combined with fi nancing sources transferred in without reimbursement from expenditure transfers from an 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

267

FTA conduit Trust Fund account (69X8350). Th e Mass Transit account for these years is considered earmarked but not 

reported as part of the HTF.

SAFETEA-LU legislation (P.L. 109-59) changed the way FTA programs are funded. Beginning in FY-2006, FTA formula 

and bus appropriation (69X8350) is funded 100% by the Mass Transit account and is reported as part of the HTF.

Maritime Administration

War Risk Insurance Fund - MARAD is authorize to insure against loss or damage from marine war risks until commercial 

insurance can be obtained on reasonable terms and conditions. Th is insurance includes war risk hull and disbursement 

interim insurance, war risk protection and indemnity interim insurance, second seaman’s war risk interim insurance and 

war risk cargo insurance standby program.

Special Study, Services & Project Fund - All payments for work or services performed or to be performed under the Act 

shall be deposited in this separate accounts which may be used to pay directly the costs of such work or services.

Gift s and Bequests Fund - Th e Secretary is authorized to accept, hold, administer gift s and bequests of property, both real 

and personal for the purpose of aiding or facilitating the work of Department of Transportation. 

Offi ce of the Secretary

X-5423 - Emergency Air Service post 911 travel

X-8304 - Emergency Air Service post 911 travel

X-8548 -Investment at Treasury from a gift that earns interest twice a year

Pipeline and Hazardous Material Safety Administration

Th e funds are used to oversee, the safety, security, and environmental protection of pipeline through analysis of data, 

damage prevention, education and training, enforcement of regulations and standards, research and development, grants 

for State pipeline safety programs, and emergency planning and response to accidents. PHMSA reports this as a Special 

Fund. Collections are deposited to an Unappropriated Receipt Account and funds are drawn down as needed during the 

year up to the limitation established by Congress. Th e authority is established by P.L. 109-115.

Trust Fund provides funding for pipeline to provide regulations, proposed and fi nal rulemakings, pipeline statistics, 

report accidents/incidents and corrective action orders. PHMSA reports this fund as a Special Fund. Th e authority is 

established by P.L. 109-115.

Emergency Preparedness Grants funds are used to establish a national registration program for shippers and carriers of 

hazardous materials. Th ese fees fi nance emergency preparedness planning and training grants, development of a training 

curriculum for emergency responders, and technical assistance to States, political subdivisions, and Indian tribes. Th is 

fund is reported as a Special Fund. Th e authority is established by P.L. 109-115.

SOURCES OF EARMARKED FUNDS

Highway Trust Funds

Th e funding needed to support the HTF programs and activities are fi nanced from excise taxes collected on specifi c 

motor fuels, truck taxes, and fi nes and penalties. Annual appropriations are the authority to collect these tax revenues to 

support programs as authorized by law. A small portion of the fi nancing revenues are provided by off setting collections 

for work performed under a reimbursable agreement. Taxes are recognized as revenues at the time they are deposited in 

the Highway Trust Fund Corpus account.
UNITED STATES DEPARTMENT OF TRANSPORTATION

268

Aviation Insurance Revolving Fund:

FAA collects insurance premiums from participating carriers that fi nance a continuing cycle of operations. Th ese 

revenues are infl ows of resources to the government.

Aviation User Fees

FAA collects over fl ight user fees for providing air traffi c control services. Th ese revenues are infl ows of resources to the 

government.

Airport and Airway Trust Fund

Funding currently comes from several aviation related excise tax collections from passenger tickets, passenger fl ight 

segments, international arrivals/departures, cargo waybills and aviation fuels. Th ese revenues are infl ows of resources to 

the government.

Federal Highway Administration Non Trust Funds

Source of funding is from receipts that come in from various public sources. Th e level of funding is not known. Th ese 

receipts are the sole source of funding for Miscellaneous trust funds.

Federal Transit Administration (Mass Transit)

As FTA had a signifi cant amount (greater than 50%) of earmarked funds in its general appropriation fund accounts, the 

majority of these are reported as earmarked. 

Maritime Administration

War Risk Insurance Fund - Insurance premium

Special Study, Services & Project Funs - Fee for performing work or service

Gift and Bequests Fund - Donation

Offi ce of the Secretary

X-5423 - Funding comes from FAA as a transfer of funds, 100% intergovernmental fl ow

X-8304 - Funding comes from the Bureau of Public Debt as a transfer of funds, 100% intragovernmental fl ow

X-8548 - Investment at Treasury from a gift that earns interest twice a year, 100% resources to the Government

Pipeline and Hazardous Material Safety Administration

Pipeline- Financing is a result of user fees

Trust Fund - Funds are appropriated and received from the BPD Trust fund

EP Grants - Financing is obtained from registration fees.

Th ere were no changes in legislation as of September 30, 2007 that signifi cantly changed the purpose of the earmarked 

funds or redirected a material portion of the accumulated balance.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

269

Airport & Airway 

Highway Trust Fund & Mass All Other FY 2007 Total

Trust Fund Other FAA Programs Transit Funds Earmarked

Balance Sheet as of September 30, 2007

Fund Balance with Treasury $ 3,209,239 $ 3,526,513 $ 3,542,996 $ 420,401 $ 10,699,149 

Investments, Net 12,204,544 8,904,357 - 35,818 21,144,719 

Accounts Receivable, Net 46,987 3,228,518 15,646 8,213 3,299,364 

Property, Plant & Equipment 95,744 2,850,676 - 40,668 2,987,088 

Other 192,639 - 1,322 23,130 217,091 

Total Assets $ 15,749,153 $ 18,510,064 $ 3,559,964 $ 528,230 $ 38,347,411 

Liabilities $ 310,363 $ 5,765,678 $ 4,564 $ 150,090 $ 6,230,695 

Grants Accrual 4,144,949 - 198,160 7,657 4,350,766 

Unexpended Appropriations - 1,097,039 49,232 66,918 1,213,189 

Cumulative Results of Operations 11,293,841 11,647,347 3,308,008 303,565 26,552,761 

Total Liabilities and Net Position $ 15,749,153 $ 18,510,064 $ 3,559,964 $ 528,230 $ 38,347,411 

Statement of Net Cost For the Period Ended September 30, 2007

Program Costs $ 39,942,210 $ 13,865,542 $ 1,779,049 $ 139,148 $ 55,725,949 

Less Earned Revenue 108,695 459,574 56,279 49,060 673,608 

Net Program Costs 39,833,515 13,405,968 1,722,770 90,088 55,052,341 

Costs Not Attibutable to Programs - - - 102,279 102,279 

Net Cost of Operations $ 39,833,515 $ 13,405,968 $ 1,722,770 $ 192,367 $ 55,154,620 

Statement of Changes in Net Position For the Period Ended September 30, 2007

Beginning Net Position $ 11,871,590 $ 13,202,371 $ 5,290,939 $ 362,078 $ 30,726,978 

Adjustments: Signifi cant Accounting 

Changes

 60,461 - - - 60,461 

Budgetary Financing Sources 39,160,532 14,921,115 (210,929) 199,379 54,070,097 

Other Financing Sources 34,773 (1,973,132) - 1,393 (1,936,966)

Net Cost of Operations 39,833,515 13,405,968 1,722,770 192,367 55,154,620 

Change in Net Position (638,210) (457,985) (1,933,699) 8,405 (2,961,028)

Net Position End of Period $ 11,293,841 $ 12,744,386 $ 3,357,240 $ 370,483 $ 27,765,950 
UNITED STATES DEPARTMENT OF TRANSPORTATION

270

Airport & Airway RESTATED

Highway Trust Fund & Mass All Other FY 2006 Total

Trust Fund Other FAA Programs Transit Funds Earmarked

Balance Sheet as September 30, 2006

Fund Balance with Treasury $ 4,431,555 $ 3,243,150 $ 5,835,254 $ 445,251 $ 13,955,210 

Investments, Net 10,997,655 8,674,729 - 37,413 19,709,797 

Accounts Receivable, Net 38,564 2,470,079 14,889 11,824 2,535,356 

Property, Plant & Equipment 101,070 - - 4,275 105,345 

Other 191,346 3,455,833 4,843 12,034 3,664,056 

Total Assets $ 15,760,190 $ 17,843,791 $ 5,854,986 $ 510,797 $ 39,969,764 

Liabilities $ 332,502 $ 4,641,420 $ 560,451 $ 148,719 $ 5,683,092 

Grants Accrual 3,556,098 - 3,596 - 3,559,694 

Unexpended Appropriation - 426,474 101,455 84,449 612,378 

Cumulative Results of Operations 11,871,590 12,775,897 5,189,484 277,629 30,114,600 

Total Liabilities and Net Position $ 15,760,190 $ 17,843,791 $ 5,854,986 $ 510,797 $ 39,969,764 

Statement of Net Cost For the Period Ended September 30, 2006

Program Costs $ 37,203,191 $ 13,670,431 $ 3,687,832 $ 61,261 $ 54,622,715 

Less Earned Revenue 61,846 640,182 $59,163 213,430 974,621 

Net Program Costs 37,141,345 13,030,249 3,628,669 (152,169) 53,648,094 

Costs Not Attibutable to Programs - - - 107,801 107,801 

Net Cost of Operations $ 37,141,345 $ 13,030,249 $ 3,628,669 $ (44,368) $ 53,755,895 

Statement of Changes in Net Position For the Period Ended September 30, 2006

Beginning Net Position $ 10,231,428 $ 13,632,292 $ 8,828,929 $ 127,618 $ 32,820,267 

Budgetary Financing Sources 38,752,831 13,201,179 90,679 190,045 52,234,734 

Other Financing Sources 28,676 (600,851) - 47 (572,128)

Net Cost of Operations 37,141,345 13,030,249 3,628,669 (44,368) 53,755,895 

Change in Net Position 1,640,162 (429,921) (3,537,990) 234,460 (2,093,289)

Net Position End of Period $ 11,871,590 $ 13,202,371 $ 5,290,939 $ 362,078 $ 30,726,978 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

271

NOTE 19. NET COST BY PROGRAM

Dollars in Thousands

Restated

FY 2007 FY 2006

Program Costs

 Surface

 Federal Aid Highway Program $ 34,489,150 $ 33,552,312 

 Mass Transit Program 8,853,727 8,857,304 

 Other Surface Transportation Program 4,042,429 3,546,222 

 Total Surface Program Costs $ 47,385,306 $ 45,955,838 

 Air

 Air Traffi c Organization $ 9,680,476 $ 9,297,439 

 Airports 3,923,605 3,851,902 

 Aviation Safety 1,012,749 943,242 

 Other Federal Aviation Administration Programs 186,856 27,585 

 Commercial Space 10,768 15,249 

 Total Air Program Costs $ 14,814,454 $ 14,135,417 

 Maritime

 Maritime Operations and Training $ 104,865 $ 149,242 

 Maritime Guaranteed Loan - (58,940)

 Maritime Security Program - 154,700 

 Maritime Ocean Freight Diff erential Program 272,766 161,088 

 Maritime Vessel Operations Revolving Fund 6,344 31,144 

 Maritime Operating Diff erential Subsidy 2,595 220 

 Maritime Operating Ship Disposal 18,339 21,201 

 Other Maritime Programs 165,818 (1,130)

 Total Maritime Program Costs $ 570,727 $ 457,525 

 Cross-Cutting

 Offi ce of the Secretary Working Capital Fund $ 223 $ 5,127 

 Volpe National Transportation Systems Center 11,225 2,228 

 Total Cross-Cutting Program Costs $ 11,448 $ 7,355 

FAA has restated its FY 2006 fi nancial statements to correct the eff ect of untimely processing of transactions associated 

with capital projects. As a result, net cost as reported on the FY 2006 Consolidated Statement of Net Cost was decreased 

by $317.8 million, within the Air Transportation Program.

FTA has restated and reduced their grant accrual as of September 30, 2006 by $571.3 million to refl ect the correction of 

grant accrual methodology, thereby reducing the FY 2006 Consolidated Statement of Net Cost.
UNITED STATES DEPARTMENT OF TRANSPORTATION

272

NOTE 20. INTRAGOVERNMENTAL COSTS AND EXCHANGE REVENUES

Dollars in Thousands

Restated

FY 2007 FY 2006

Surface Transportation

Federal-Aid Highway Program

 Intragovernmental Costs $ 243,314 $ 251,703 

 Public Costs 34,329,482 33,329,236 

 Total Program Costs 34,572,796 33,580,939 

 Intragovernmental Earned Revenue 26,824 8,263 

 Public Earned Revenues 56,822 20,364 

 Total Program Earned Revenue 83,646 28,627 

 Net Program Cost $ 34,489,150 $ 33,552,312 

Mass Transit Program

 Intragovernmental Costs $ 12,037 $ 3,344 

 Public Costs 8,892,451 8,897,847 

 Total Program Costs 8,904,488 8,901,191 

 Intragovernmental Earned Revenue 49,783 54,301 

 Public Earned Revenues 978 (10,413)

 Total Program Earned Revenue 50,761 43,888 

 Net Program Cost $ 8,853,727 $ 8,857,303 

Other Surface Transportation Programs

 Intragovernmental Costs $ 293,537 $ 223,100 

 Public Costs 3,878,513 3,641,373 

 Total Program Costs 4,172,050 3,864,473 

 Intragovernmental Earned Revenue 44,554 70,354 

 Public Earned Revenues 85,067 247,896 

 Total Program Earned Revenue 129,621 318,250 

 Net Program Cost $ 4,042,429 $ 3,546,223 

Total Net Cost - Surface Transportation $ 47,385,306 $ 45,955,838 

Air Transportation

 Intragovernmental Costs $ 2,274,991 $ 2,158,889 

 Public Costs 12,988,477 12,624,505 

 Total Program Costs 15,263,468 14,783,394 

 Intragovernmental Earned Revenue 127,256 331,294 

 Public Earned Revenues 321,758 316,683 

 Total Program Earned Revenue 449,014 647,977 

 Net Program Cost $ 14,814,454 $ 14,135,417 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

273

Restated

FY 2007 FY 2006

Maritime Transportation

 Intragovernmental Costs $ 173,064 $ 104,578 

 Public Costs 586,739 625,876 

 Total Program Costs 759,803 730,454 

 Intragovernmental Earned Revenue 183,089 272,108 

 Public Earned Revenues 5,987 821 

 Total Program Earned Revenue 189,076 272,929 

 Net Program Cost $ 570,727 $ 457,525 

Cross-Cutting Programs

 Intragovernmental Costs $ 25,177 $ 9,812 

 Public Costs 486,347 457,491 

 Total Program Costs 511,524 467,303 

 Intragovernmental Earned Revenue 492,603 454,722 

 Public Earned Revenues 7,473 5,226 

 Total Program Earned Revenue 500,076 459,948 

 Net Program Cost $11,448 $ 7,355 

Costs Not Assigned to Programs $ 388,392 $ 390,464 

Less Earned Revenues Not Attributed to Programs 30,295 30,986 

Net Cost of Operations $ 63,140,032 $ 60,915,613 

As discussed in notes 1.T, 9, 18, 19 and 24, FAA has restated its FY 2006 fi nancial statements to correct the eff ect of 

untimely processing of transactions associated with capital projects. As a result, net cost as reported on the FY 2006 

Consolidated Statement of Net Cost was decreased by $317.8 million, within the Air Transportation Program.

FTA has restated and reduced their grant accrual as of September 30, 2006 by $571.3 million to refl ect the correction of 

grant accrual methodology thereby reducing the FY 2006 Consolidated Statement of Net Cost. 
UNITED STATES DEPARTMENT OF TRANSPORTATION

274

NOTE 21. STATEMENT OF CHANGES IN NET POSITION

Dollars in Thousands

Non-Exchange Revenue

Highway Trust Fund

Excise Taxes and Other NonExchange Revenue

(transferred from the general fund) FY 2007 FY 2006

Gasoline $ 25,418,957 $ 24,667,951 

Diesel and Special Motor Fuels 9,916,020 9,906,181 

Trucks 5,302,320 5,510,705 

Fines and Penalties 16,869 10,961 

Total Taxes $ 40,654,166 $ 40,095,798 

Less: Transfers (468,003) (448,313)

Gross Taxes $ 40,186,163 $ 39,647,485 

Less: Refunds of Taxes (reimbursed to general fund) (1,047,659) (883,155)

Total Excise Taxes $ 39,138,504 $ 38,764,330 

Other Non-Exchange Revenue 19,980 16,028 

Net Non-Exchange Revenue $ 39,158,484 $ 38,780,358 

Federal Aviation Administration

Taxes and Other Non-Exchange Revenue

Passenger Ticket $ 8,376,680 $ 7,423,271 

International Departure 2,136,257 1,993,697 

Fuel (Air) 850,454 419,439 

Waybill 574,404 478,614 

Investment Income 502,937 483,363 

Tax Refunds and Credits (67,229) (112,909)

Other 64 16,234 

Net Non-Exchange Revenue $ 12,373,567 $ 10,701,709 

Other Miscellaneous Net Non Exchange Revenue 1,222 11,968 

Total Non-Exchange Revenue $ 51,533,273 $ 49,494,035 

Th e fi nancial statements of the DOT for the Highway Trust Fund and the Airport and Airway Trust Fund refl ect actual 

tax collections for the nine months ended June 30, 2007, plus an estimate of tax collections expected for the quarter ended 

September 30, 2007. Actual tax collection data for the quarter ended September 30, 2007 will not be available from the 

IRS until December 2007.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

275

NOTE 22. STATEMENT OF BUDGETARY RESOURCES

Dollars in Thousands

FY 2007 FY 2006

The amount of direct and reimbursable obligations incurred against amounts apportioned 

under Category A, B and Exempt from apportionment as of September 30, 2007: $ 75,809,242 $ 65,612,056 

Available Contract Authority as September 30,2007 $ 17,995,498 $ 21,935,692 

Available Borrowing Authority as of September 30, 2007 $232,807 $30,383 

Undelivered Orders as of September 30, 2007 $ 72,184,302 $ 67,588,782 

Th e amounts reported for undelivered orders only includes balances obligated for goods and services not delivered and 

does not include prepayments.

Existence, Purpose, and Availability of Permanent Indefi nite Appropriations

FAA has permanent indefi nite appropriations for the Facilities and Equipment, Grants in Aid and Research, Development 

and Engineering appropriations to fully fund special projects that were on-going and spanned several years.

Additional Disclosures

Unobligated balances of budgetary resources for unexpired accounts are available in subsequent years until expiration, 

upon receipt of an apportionment from OMB. Unobligated balances of expired accounts are not available.

With the exception of the following, there are no material diff erences between the amounts reported in the Combined 

Statement of Budgetary Resources (SBR) for FY 2006 and the actual amounts reported in the President’s Budget of the 

United States for FY 2008. Budget authority on the SBR contains $3.4 billion of expired funds that is not presented in 

the President’s budget. Also obligations incurred on the SBR includes $78 million of expired funds and $93.3 million of 

reimbursable and revolving funds that are not presented in the President’s budget. Th e SBR obligated beginning balance 

of the year is $117 million less than the related amount reported in the President’s budget while obligations incurred 

during the year are more by $117 million. Th is is the result of prior year obligations being recorded as current year 

business in the President’s budget. Th e unobligated balance brought forward at the beginning of the year on the SBR 

is $134 million greater than the President’s budget due to recording errors on the transfers between some of the HTF 

childrens’ accounts. Th e budget authority for FY 2006 in the SBR is less than that in the President’s budget by $16 million 

which is attributed to the recalculation of the FY 2004 minimum grantee program.

Th e FY 2009 President’s Budget with actual numbers for FY 2007 will be published in February 2008.
UNITED STATES DEPARTMENT OF TRANSPORTATION

276

NOTE 23. INCIDENTAL CUSTODIAL COLLECTIONS

Dollars in Thousands

FY 2007 FY 2006

Revenue Activity

Sources of Cash Collections:

 Miscellaneous Receipts $ 28,332 $ 19,096 

 Fines, Penalties and Forfeitures 4,498 5,903 

 Total Cash Collections $ 32,830 $ 24,999 

 Total Custodial Revenue $ 32,830 $ 24,999 

Disposition of Collections

 Transferred to Treasury (General Fund) $ 32,830 $ 24,999 

 Net Custodial Revenue Activity $ - $ - 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

277

NOTE 24. RECONCILIATION OF NET COST OF OPERATIONS TO BUDGET

Dollars in Thousands

Restated

FY 2007 FY 2006

Resources Used to Finance Activities

 Budgetary Resources Obligated

 Obligations Incurred $ 75,809,242 $ 65,612,056 

Less: Spending Authority from Off setting Collections and Recoveries 9,099,273 4,562,405 

 Obligations Net of Off setting Collections and Recoveries 66,709,969 61,049,651 

 Less: Distributed Off setting Receipts (46,779) (236,451)

 Net Obligations $ 66,663,190 $ 60,813,200 

 Other Resources

 Transfers In/Out Without Reimbursement (+/-) $ 2,812 $ (139,471)

 Imputed Financing From Costs Absorbed by Others 605,189 562,277 

 Other Resources (+/-) - (7,880)

 Net Other Resources Used to Finance Activities 608,001 414,926 

Total Resources Used to Finance Activities $ 67,271,191 $ 61,228,126 

Resources Used to Finance Items Not Part of the Net Cost of Operations

Change in Budgetary Resources Obligated for Goods, Services and Benefi ts Ordered but not yet Provided $ 4,018,636 $ (160,786)

 Resources That Fund Expenses Recognized in Prior Periods 283,949 329,220 

Budgetary Off setting Collections and Receipts That Do Not Aff ect Net Cost of Operations

Credit Program Collections That Increase Liabilities for Loan Guarantees or Allowances for Subsidy (115,714) (401,841)

Other/Change in Unfi lled Customer Orders (461,855) (318,451)

Anticipated Resources not yet realized 256,787 

Resources That Finance the Acquisition of Assets 1,395,553 1,842,344 

Other Resources or Adjustments to Net Obligated Resources That Do Not Aff ect Net Cost of Operations (40,672) 146,662 

Total Resources Used to Finance Items Not Part of the Net Cost Of Operations $ 5,336,684 $ 1,437,148 

Total Resources Used to Finance the Net Cost of Operations $ 61,934,507 $ 59,790,978 
UNITED STATES DEPARTMENT OF TRANSPORTATION

278

Restated

FY 2007 FY 2006

Components of the Net Cost of Operations that will not Require or Generate Resources in the Current Period:

Components Requiring or Generating Resources in Future Periods:

 Increase in Annual Leave Liability $ 10,696 $ 22,237 

Upward/Downward Reestimates of Credit Subsidy Expense (+/-) (1,818) (118,923)

 Increase in exchange revenue receivable from the public (43,314) (14,679)

 Change in Other Liabilities (+/-) 25,584 10,758 

Total Components of Net Cost of Operations That Will Require or Generate Resources in Future Periods $ (8,852) $ (100,607)

Components Not Requiring or Generating Resources:

 Depreciation and Amortization 1,279,474 967,604 

 Revaluation of Assets or Liabilities (+/-) (17,179) (1,959)

Other Expenses and Adjustments not Otherwise Classifi ed Above (+/-) (47,918) 259,597 

Total Components of Net Cost of Operations That Will Not Require or Generate Resources $ 1,214,377 $ 1,225,242 

Total Components of Net Cost of Operations That Will Not Require or Generate Resources in the Current Period $ 1,205,525 $ 1,124,635 

Net Cost of Operations $ 63,140,032 $ 60,915,613 

Th e reconciliation of Net Cost of Operations to Budget is intended to be a bridge between the entity’s budgetary and 

fi nancial (proprietary) accounting. Th is reconciliation fi rst identifi es total resources used by an entity during the period 

(budgetary and other) and then makes adjustments to the resources based upon how they were used to fi nance net 

obligations or cost. Th e budgetary information used to calculate net obligations (the fi rst four lines) must be presented 

on a combined basis to enable a direct tie to the Statement of Budgetary Resources. Th e Reconciliation of Net Cost 

of Operations to Budget explains the diff erence between the budgetary net obligations and the proprietary net cost of 

operations by setting forth the items that reconcile the two amounts. Th e budgetary net obligations and the proprietary 

net cost of operations are diff erent in that (1) the net cost of operations may be fi nanced by non-budgetary resources; (2) 

the budgetary and non-budgetary resources used by an agency may fi nance activities which are not components of the net 

cost of operations; and (3) the net cost of operations may contain components which do not use or generate resources in 

the period.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

279

NOTE 25. RESTATEMENTS

Dollars in Thousands

DOT has restated and reduced PP&E, net on the Balance Sheet as of September 30, 2006 by $954 million to refl ect the 

correction of untimely processing of transactions related to FAA capital projects. Th e correction results from $2,594 

million in downward reclassifi cations of Construction in Progress, net. Non-capital transactions of $898 million were 

reclassifi ed from Construction in Progress to expense and completed assets of $1,696 million were reclassifi ed from 

Construction in Progress to other general property, plant and equipment categories. Associated with the increase in 

completed assets, accumulated depreciation increased by $56 million.

Th e Federal Transit Administration has restated certain balances within the statement of changes in Net Positon, as 

also discussed in notes 1.T, 2, 11, 14, 18, 19, 20 and 21. A review of the presentation of earmarked and other funds in the 

Statement of Changes in Net Position in accordance with FASAB 27, revealed that prior year amounts presented were not 

properly classifi ed in accordance with the standard and the amounts reported included corrections of reporting errors 

from FY2005 and prior that were presented as FY2006 activity. In addition, due to funding changes enacted in the Surface 

Transportation Act SAFTEA-LU, the grant accrual for FTA was overstated by $571 million in the DOT consolidated 

fi nancial statements. As a result, the balances of earmarked and other funds were reduced by $9.4 million and increased 

by $373 million, respectively. Th e restatement is refl ected on the Consolidated Balance Sheet, the Consolidated Statement 

of Net Cost and the Consolidated Statement of Changes in Net Position and summarized in the chart below.

2006

Eff ect of 

Restatement 2006 as Restated

Balance Sheet:

General Property, Plant & Equipment, net 15,455,811 (954,049) 14,501,762 

Total Assets $ 65,065,621 $ (954,049) $ 64,111,572 

Grant Accrual 5,546,895 (571,339) 4,975,556 

Total Liabilities $ 13,683,282 $ (571,338) $ 13,111,944 

Net Position 51,382,339 (382,711) 50,999,628 

Total Liabilities and Net Position $ 65,065,621 $ (954,049) $ 64,111,572 

Statement of Net Cost:

Net Cost of Operations $ 61,804,745 $ (889,132) $ 60,915,613 

Statement of Changes in Net Position

Cumulative Results of Operations

Ending Cumulative Results of Operations - Earmarked $ 30,053,924 $ 60,676 $ 30,114,600 

Ending Cumulative Results of Operations - All Other Funds $ 12,846,384 $ (380,636) $ 12,465,748 

Unexpended Appropriations

Total Unexpended Appropriations - Earmarked $682,501 $ (70,123) $ 612,378 

Total Unexpended Appropriations - All Other Funds $ 7,799,530 $ 7,372 $ 7,806,902 

Net Position

Net Position - Earmarked $ 30,736,425 $ (9,447) $ 30,726,978 

Net Position - All Other Funds $ 20,645,914 $ (373,264) $ 20,272,650 
UNITED STATES DEPARTMENT OF TRANSPORTATION

280

NOTE 26. SAINT LAWRENCE SEAWAY DEVELOPMENT CORPORATION

Dollars in Thousands

Condensed Information

FY 2007 FY 2006

Cash and Short-Term Time Deposits $ 15,430 $ 15,967 

Long-Term Time Deposits 980 392 

Accounts Receivable 115 82 

Inventories 253 256 

Other Current Assets 6 2 

Property, Plant and Equipment 74,578 76,074 

Deferred Charges 3,478 3,086 

Other Assets 599 516 

TOTAL ASSETS $ 95,439 $ 96,375 

Current Liabilities $ 2,577 $ 3,034 

Actuarial Liabilities 3,478 3,086 

TOTAL LIABILITIES $ 6,055 $ 6,120 

Invested Capital $ 89,617 $ 91,065 

Cumulative Results of Operations (233) (810)

TOTAL NET POSITION $ 89,384 $ 90,255 

TOTAL LIABILITIES AND NET POSITION $ 95,439 $ 96,375 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

281

REQUIRED SUPPLEMENTARY INFORMATION

PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

283

Information.

DEFERRED MAINTENANCE

DOT

Entity

Major Class

of Asset

Method of

Measurement

Asset 

Condition*

Cost to Return 

to Acceptable 

Condition**

FAA Buildings Condition Assessment Survey 4 & 5 $ 79,970 

Other Structures and Facilities Condition Assessment Survey 4 & 5 25,254 

MARAD Vessels, Ready Reserve Force (Various Locations) Condition Assessment Survey 2 22,600 

Real Property, Buildings Anchorage Condition Assessment Survey 3 14,695 

Other (Fleet Craft) Condition Assessment Survey 3 2,520 

Other (Pier and Berthing Surveys and Studies) Estimate 3 235 

Other (Heritage Assets) Condition Assessment 3&4 200 

Total $ 145,474

*Asset Condition Rating Scale:

 1 - Excellent

 2 - Good

 3 - Fair

 4 - Poor

 5 - Very Poor

Asset **Acceptable Condition is Comments

FAA Buildings 3 - Fair 

FAA Other Structures and Facilities 3 - Fair 

MARAD Vessels, Ready Reserve Force 1 - Excellent Ships are seaworthy and ready for mission 

assignments within prescribed time limits.

MARAD Real Property, Buildings 3 - Fair Buildings are safe and inhabitable.

MARAD Real Property, Structures 3 - Fair Adequate water depth, shore power, and 

mooring capabilities.

MARAD Stewardship Heritage Assets 3 - Fair 

Deferred Maintenance is maintenance that was not performed when it should have been or was scheduled to be 

performed and delayed until a future period. Maintenance is keeping fi xed assets in acceptable condition, and includes 

preventative maintenance, normal repairs, replacement of parts and structural components, and other activities needed to 

preserve assets in a condition to provide acceptable service and to achieve expected useful lives.
UNITED STATES DEPARTMENT OF TRANSPORTATION

284

HERITAGE ASSETS SUMMARY

REQUIRED SUPPLEMENTAL INFORMATION, SEPTEMBER 30, 2007

NUMBER OF PHYSICAL UNITS

Heritage Assets

Units as of Units as of 

 09/30/2006 Additions Withdrawals 09/30/2007

Personal Property 

Collections

 Artifacts 38 2 - 40 

 Museum 458 - 1 457 

Other Collections 101 - - 101 

Total Collections 597 2 1 598 

Total Personal Property Heritage Assets 597 2 1 598 

Units as of Units as of 

 09/30/2006 Additions Withdrawals 06/30/2007

Real Property

Buildings and Structures 1 - 1 

Total Real Property Heritage Assets 1 - - 1 

Artifacts are those of the Maritime Administration. Maritime Administration artifacts are generally on loan to single 

purpose memorialization and remembrance groups, such as AMVets and preservation societies.

Museum and Other Collections are owned by the Maritime Administration. Th ey are merchant marine artifacts, 

composed of ships’ operating equipment, obtained from obsolete ships. Th ey are inoperative and in need of preservation 

and restoration. Museum items are on loan to organizations whose purpose is historic preservation, education, and 

remembrance, open to the public during regularly scheduled hours. Other collections are on loan to public and private 

entities, the display of which is incidental to maritime aff airs, such as county and state buildings, port authorities, pilots 

associations, public and college libraries, and other organizations.

Buildings and Structures include Union Station in Washington, D.C. Union Station is an elegant and unique turn-ofthe-century rail station in which one fi nds a wide variety of elaborate, artistic workmanship characteristic of the period. 

Union Station is listed on the National Register of Historic Places. Th e station consists of the renovated original building 

and a parking garage which was added by the U.S. Park Service. Th e Federal Railroad Administration received title 

to Union Station through appropriated funds and assumption of a mortgage. Mortgage payments are made by Union 

Station Venture Limited which manages the property. Union Station Redevelopment Corporation, a non-profi t group 

instrumental in the renovation of the station, sublets the operation of the station to Union Station Venture Limited.

Financial information for multi-use heritage assets is presented in the principal statements and notes. Th e condition 

of the stewardship heritage assets is presented in the Deferred Maintenance section of the Required Supplementary 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

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REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

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NON FEDERAL PHYSICAL PROPERTY

ANNUAL STEWARDSHIP INFORMATION, SEPTEMBER 30, 2007

TRANSPORTATION INVESTMENTS

Dollars in Thousands

Surface Transportation: FY 2003 FY 2004 FY 2005 FY 2006 FY 2007

Federal Highway Administration 

 Federal Aid Highways (HTF) $ 29,258,796 $ 29,207,012 $ 29,750,120 $ 32,190,231 $ 32,800,748 

 Other Highway Trust Fund Programs 243,874 300,493 445,083 452,022 366,672 

 General Fund Programs 73,046 962,370 330,790 14,240 51,119 

 Appalachian Development System 128,480 263,430 425,810 366,816 329,161 

 Federal Motor Carrier 159,628 299,450 195,740 117,004 196,967 

Federal Transit Administration

Discretionary Grants $ 291,889 $ 160,655 $ 119,277 $ 91,961 $ 11,719 

Formula Grants 4,390,965 4,723,674 4,521,288 3,376,068 2,086,876 

Capital Investment Grants 1 2,632,841 2,788,920 3,375,206 3,073,294 2,662,845 

Washington Metro 11,252 12,409 1,719 4,255 28,430 

Interstate Transfer Grants 9,459 1,479 1,411 206 1,774 

Formula and Bus Grants N/A N/A N/A 1,862,772 4,193,989 

Surface Transportation Nonfederal Physical Property Investments $ 37,200,230 $ 38,719,892 $ 39,166,444 $ 41,548,869 $ 42,730,300 

(1) Outlays are not net of Federal Emergency Management Agency (FEMA) collection of $2.75 billion. 

Air Transportation

Federal Aviation Administration

Airport Improvement Program $ 2,786,717 $ 2,977,300 $ 3,712,423 $ 3,852,141 $ 3,923,719 

Air Transportation Nonfederal Physical Property Investments $ 2,786,717 $ 2,977,300 $ 3,712,423 $ 3,852,141 $ 3,923,719 

Total Nonfederal Physical Property Investments $ 39,986,947 $ 41,697,192 $ 42,878,867 $ 45,401,010 $ 46,654,019 

Th e Federal Highway Administration reimburses States for construction costs on projects related to the Federal Highway 

System of roads. Th e main programs in which the States participate are the National Highway System, Interstate Systems, Surface 

Transportation Program, and Congestion Mitigation/Air Quality Improvement. Th e States’ contribution is ten percent for the 

Interstate System and twenty percent for most other programs.

Th e Federal Transit Administration provides grants to State and local transit authorities and agencies.

Formula grants provide capital assistance to urban and nonurban areas and may be used for a wide variety of mass transit purposes, 

including planning, construction of facilities, and purchases of buses and railcars. Funding also includes providing transportation 

to meet the special needs of elderly individuals and individuals with disabilities.

Capital investment grants, which replaced discretionary grants in 1999, provide capital assistance to fi nance acquisition, 

construction, reconstruction, and improvement of facilities and equipment. Capital investment grants fund the categories of new 

starts, fi xed guideway modernization, and bus and bus-related facilities.

Washington Metro provides funding to support the construction of the Washington Metrorail System. Interstate Transfer Grants 

provided Federal fi nancing from FY 1976 through FY 1995 to allow States and localities to fund transit capital projects substituted 

for previously withdrawn segments of the Interstate Highway System.

Th e Federal Aviation Administration (FAA) makes project grants for airport planning and development under the Airport 

Improvement Program (AIP) to maintain a safe and effi cient nationwide system of public-use airports that meet both present and 

future needs of civil aeronautics. FAA works to improve the infrastructure of the nation’s airports, in cooperation with airport 

authorities, local and State governments, and metropolitan planning authorities.
UNITED STATES DEPARTMENT OF TRANSPORTATION

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HUMAN CAPITAL INVESTMENT EXPENSES

ANNUAL STEWARDSHIP INFORMATION, SEPTEMBER 30, 2007

Dollars in Thousands

Surface Transportation FY 2003 FY 2004 FY 2005 FY 2006 FY 2007

Federal Highway Administration 

 National Highway Institute Training $ 8,539 $ 4,069 $ 11,844 $ 14,123 $ 4,083 

Federal Motor Carrier Safety Administration 

 California Highway Patrol 926 192 41 - 127 

 Commercial Motor Vehicle Operator

 Safety Grants 748 

 Idaho Video 593 344 208 - - 

 Kentucky IT Conference 175 - 

 Massachusetts Training Academy 175 9 53 - 172 

 Minnesota Crash Investigation 57 21 - 1 - 

 New York Crash Reconstruction 36 

 Tennessee Crash Investigation 165 

Federal Transit Administration (2)

 National Transit Institute Training $ 4,292 $ 4,667 $ 3,318 $ 3,961 $ 3,879 

National Highway Safety Administration 

 Section 403 Highway Safety Programs $ 49,013 $ 53,964 $ 110,981 $ 221,523 $ 235,382 

 Highway Traffi c Safety Grants 210,469 205,509 216,702 279,244 416,241 

Pipeline and Hazardous Materials Safety Administration

 Hazardous Materials (Hazmat) Training $ 7,782 $ 7,780 $ 8,065 $ 7,800 $ 7,798 

Surface Transportation Human

 Capital Investments $ 281,846 $ 276,555 $ 351,212 $ 526,827 $ 668,631 

Maritime Transportation

Maritime Administration

 State Maritime Academies Training (3) $ 8,363 $ 9,208 $ 9,215 $ 7,528 $ 8,978 

 Additional Maritime Training 463 388 328 134 555 

Maritime Transportation Human Capital Investments $ 8,826 $ 9,596 $ 9,543 $ 7,662 $ 9,533 

Total Human Capital Investments $ 290,672 $ 286,151 $ 360,755 $ 534,489 $ 678,164 

Th e National Highway Institute develops and conducts various training courses for all aspects of Federal Highway 

Administration. Students are typically from the State and local police, State highway departments, public safety and 

motor vehicle employees, and U.S. citizens and foreign nationals engaged in highway work of interest to the U.S. Types 

of courses given and developed are modern developments, technique, management, planning, environmental factors, 

engineering, safety, construction, and maintenance.

Th e California Highway Patrol educates the trucking industry for the Federal Motor Carrier Safety Administration

about Federal an State commercial motor vehicle/carrier inspection procedures, and increase CMV driver awareness. 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

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Th e Idaho Video Program develops video training material utilized by FMCSA National Training Center for the purpose 

of training State and Local law enforcement personnel. Th e Massachusetts Training Academy provides training to 

State law enforcement personnel located in the northeast region of Massachusetts. Th e Minnesota Crash Investigation 

program provides training and develops processes and protocols for commercial motor vehicle crash investigations.

Th e National Transit Institute of the Federal Transit Administration develops and off ers training courses to improve 

transit planning and operations. Technology courses cover such topics as alternative fuels, turnkey project delivery 

systems, communications-based train controls, and integration of advanced technologies.

Th e National Highway Traffi c Safety Administration’s programs authorized under the Highway Trust Fund provide 

resources to State and Local governments, private partners, and the public, to eff ect changes in driving behavior on the 

nation’s highways to increase safety belt usage and reduce impaired driving. NHTSA provides technical assistance to all 

states on the full range of components of the impaired driving system as well as conducting demonstrations, training and 

public information/education on safety belt usage.

Th e Pipeline and Hazardous Materials Safety Administration administers Hazardous Material Training (Hazmat). Th e 

purpose of Hazmat Training is to train State and local emergency personnel on the handling of hazardous materials in the 

event of a hazardous material spill or storage problem.

(2) FY 2001 and FY 2002 outlay amounts are based on the enacted budget authority for FY 1999, FY 2000, and FY 2001 

and on the approved outlay rates for the National Transit Institute (5%, 50%, 40%, and 5%).

(3) Does not include funding for the Student Incentive Payment (SIP) Program which produces graduates who are 

obligated to serve in a reserve component of the United States armed forces. Does not include funding for maintenance 

and repair (M&R).
UNITED STATES DEPARTMENT OF TRANSPORTATION

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RESEARCH AND DEVELOPMENT INVESTMENTS

ANNUAL STEWARDSHIP INFORMATION, SEPTEMBER 30, 2007

Dollars in Thousands

Surface Transportation: FY 2003 FY 2004 FY 2005 FY 2006 FY 2007

Federal Highway Administration 

 Intelligent Transportation Systems $ 126,256 $ 146,852 $ 183,634 $ 129,219 $ 152,799 

 Other Applied Research and Development 115,368 142,557 114,315 105,336 74,942 

Federal Railroad Administration 

 Railroad Research and Development Program $ 2,402 $ 9,342 $ 6,032 $ 11,681 $ 5,551 

Federal Transit Administration

 Applied Research and Development - Transit Planning and Research (4) 3,895 3,483 2,546 6,543 3,144 

Offi ce of the Secretary

 Applied Research and Development - Emergency Transportation 650 8 - - - 

Pipeline and Hazardous Materials Safety Administration

Applied Research and Development

 Pipeline Safety $ 5,523 $ 6,375 $ 10,810 $ 12,953 $ 5,494 

 Hazardous Materials 1,755 1,489 1,638 2,225 1,072 

Research and Innovative Technology Administration

Applied Research and Development

 Research and Technology $ 1,454 $ 1,134 $ 1,564 $ 1,110 $ 1,036 

Surface Transportation Research and Development Investments $ 257,303 $ 311,240 $ 320,539 $ 269,067 $ 244,038 

(4) FY 2002 updated with Transit Cooperative Research Program estimate based on actual outlays. 

Air Transportation

Federal Aviation Administration

 Research and Development Plant $ 2,903 $ 4,230 $ 5,287 $ 3,821 $ 4,217 

 Applied Research 29,406 91,743 103,659 106,390 104,782 

 Development 251 478 547 587 844 

 Administration 31,669 28,643 29,163 30,566 32,050 

 Air Transportation Research and Development Investments $ 64,229 $ 125,094 $ 138,656 $ 141,364 $ 141,893 

 Total Research and Development Investments $ 321,532 $ 436,334 $ 459,195 $ 410,431 $ 385,931 

Th e Federal Highway Administration’s research and development programs are earmarks in the appropriations bills 

for the fi scal year. Typically these programs are related to safety, pavements, structures, and environment. Intelligent 

Transportation Systems were created to promote automated highways and vehicles to enhance the national highway 

system. Th e output is in accordance with the specifi cations within the appropriations act.

Th e Federal Transit Administration supports research and development in the following program areas:

Research and development in Transit Planning and Research supports two major areas: the National Research Program 

and the Transit Cooperative Research Program. Th e National Research Program funds the research and development of 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

291

innovative transit technologies such as safety-enhancing commuter rail control systems, hybrid electric buses, and fuel 

cell and battery-powered propulsion systems. Th e Transit Cooperative Research Program focuses on issues signifi cant to 

the transit industry with emphasis on local problem-solving research.

Transit University Transportation Centers, combined with funds from the Highway Trust Fund, provide continued 

support for research, education, and technology transfer.

Capital investment grants, which replaced discretionary grants in FY 1999, provide capital assistance to fi nance 

acquisition, construction, reconstruction, and improvement of facilities and equipment. Capital investment grants fund 

the categories of new starts, fi xed guideway modernization, and bus and bus-related activities.

Th e Offi ce of the Secretary’s Offi ce of Emergency Transportation is involved in research and development in mapping 

soft ware for the Crisis Management Center, transportation policy, and outreach eff orts.

Th e Pipeline and Hazardous Materials Safety Administration funds research and development activities for the 

following organizations and activities:

Th e Offi ce of Pipeline Safety is involved in research and development in information systems, risk assessment, mapping, 

and non-destructive evaluation.

Th e Offi ce of Hazardous Materials is involved in research, development, and analysis in regulation compliance, safety, and 

information systems.

Th e Research and Innovative Technology Administration’s Offi ce of Research and Technology is involved in research 

and development for the University of Technology and Education.

Th e Federal Aviation Administration (FAA) conducts research and provides the essential air traffi c control 

infrastructure to meet increasing demands for higher levels of system safety, security, capacity, and effi ciency. Research 

priorities include aircraft structures and materials; fi re and cabin safety; crash injury-protection; explosive detection 

systems; improved ground and in-fl ight de-icing operations; better tools to predict and warn of weather hazards, 

turbulence and wake vortices; aviation medicine, and human factors.

OTHER ACCOMPANYING INFORMATION

293

PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

295

PERFORMANCE DATA COMPLETENESS AND RELIABILITY 

DETAILS

Each table includes a description of a performance measure and associated data provided by the agencies 

in charge of the measure. Th e Scope statement gives an overview of the data collection strategy for the 

underlying data behind the performance measure. Th e Source statement identifi es the data system(s) from 

which the data for each measure was taken. Th e Statistical Issues statement has comments, provided by the 

Bureau of Transportation Statistics (BTS) and the agency in charge of the measure, which discuss variability 

of the measure and other points. Th e Completeness statement indicates limitations due to missing data or 

availability of current measures, methods used to develop projections are also provided, as appropriate. Th e 

Reliability statement gives the reader a feel for how the performance data are used in program management 

decision making inside DOT.

For further information about the source and accuracy (S&A) of these data, and DOT’s data quality guidelines 

in accordance with Section 515 of the Treasury and General Government Appropriations Act for Fiscal Year 

2001 (P.L. 106-554), please refer to the BTS S&A compendium available at http://www.bts.gov/programs/

statistical_policy_and_research/source_and_accuracy_compendium/index.html.

Details on DOT Safety Measures

Highway Fatality Rate

Measure Highway fatalities per 100 million vehicle-miles traveled (VMT). Calendar Year (CY) 2007

Scope Th e number of fatalities is a count of occupant and non-motorist deaths which occur within 

30 days of a crash involving motor vehicle traffi c traveling on a traffi cway customarily open 

to the public within the 50 States and Washington, D.C.

VMT represent the total number of vehicle miles traveled by motor vehicles on public 

roadways within the 50 States and Washington, D.C.

Sources Motor vehicle traffi c fatality data are obtained from the National Highway Traffi c Safety 

Administration’s Fatality Analysis Reporting System (FARS). Th e FARS database is based on 

police crash reports and other State data.

VMT data for 2007 are estimated based on preliminary 2007 VMT data from FHWA’s Traffi c 

Volume Trends (TVT); a monthly report based on hourly traffi c count data in the Highway 

Performance Monitoring System (HPMS).

Statistical

Issues

While based on historical data, the 2007 fatality rate projection is dependent on the 

continuation of both individual and market behavior regarding vehicle miles traveled, 

seat belt use and motorcycle rider and alcohol related fatalities. Th e assumptions inherent 

in these projections, together with the normal levels of uncertainty inherent in statistical 

evaluations, may infl uence the accuracy of the projection.
UNITED STATES DEPARTMENT OF TRANSPORTATION

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Completeness FARS has been in use since 1975 and is generally accepted as a complete measure for 

describing safety on the Nation’s highways. Total annual fatalities are available through 

CY 2006. Th e fatality projection used to calculate the 2007 rate shown in this report was 

estimated by modifying the 2006 fatality total for the subsequent phase-in of safety features 

in the on-road fl eet, the scrapping of vehicles with existing safety features, a projected 

change in safety belt usage, a projected trend in motorcycle fatalities, and other safetyrelated considerations.

Reliability Th e measure informs and guides NHTSA, FHWA, and FMCSA regarding highway 

safety policy, safety program planning, regulatory development, resource allocation, and 

operational mission performance, and tracks progress toward the goal of saving lives by 

preventing highway crashes.

Details on DOT Safety Measures

Large Truck-Related Fatalities

Measure Fatalities involving large trucks per 100 million truck VMT. (CY)

Scope Th e measure includes all fatalities associated with crashes involving trucks with a gross 

vehicle weight rating of 10,000 pounds or more. Truck Vehicle Miles of Travel (TVMT) 

represents the total number of vehicle miles traveled by large trucks on public roadways 

within the 50 States and the District of Columbia.

Sources Th e number of fatalities comes from NHTSA’s Fatality Analysis Reporting System (FARS) 

data, a census of fatal traffi c crashes within the 50 States and the District of Columbia. 

Th e TVMT data are derived from the FHWA’s Highway Performance Monitoring System 

(HPMS).

Statistical

Issues

Th e fatality counts in FARS are generally quite accurate. Th e major sources of error are 

under reporting by some precincts and inconsistent use of the defi nition of a truck. 

Because the TVMT data provided to FHWA from each State are estimates based on a 

sample of road segments, the numbers have associated sampling errors. Th e methodology 

used by each of the States to estimate TVMT varies and may introduce additional nonsampling error. Although States provide TVMT estimates on an annual basis, they are only 

required to update their traffi c counts at all sampling sites once every three years. Th us, 

a portion of each States’ sample sites will report estimated traffi c rather then actual traffi c 

counts.

Completeness Th e FARS has been in use since 1975 and is generally accepted as a complete measure for 

describing safety on the Nation’s highways. Large truck-related fatality data are complete 

through 2006. For 2007, the FARS data for crashes involving large trucks are not available 

until October 2008. Th e value used for the 2007 rate is projected from recent trend data. 

Th e TVMT is complete through 2005. For 2006 and 2007, it is projected as a percentage 

of the total VMT projections. Th e fi nal TVMT estimate for 2006 will be available in 

December 2007, and the fi nal TVMT estimate for 2007 will be available in December 2008.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

297

Reliability Th e measure informs and guides FMCSA, NHTSA, and FHWA highway safety policy, 

safety program planning, regulatory development, resource allocation, and operational 

mission performance, and tracks progress toward the goal of saving lives by preventing 

large truck crashes.

Details on DOT Safety Measures

Commercial Air Carrier Fatal Accident Rate

Measure U.S. commercial fatal aviation accidents per 100,000 departures (last three years’ average). 

(FY)

Scope Th is measure includes both scheduled and nonscheduled fl ights of large U.S. air carriers (14 

CFR Part 121) and scheduled fl ights of regional operators (14 CFR Part 135). It excludes on 

–demand (i.e., air taxi) service and general aviation. Accidents involving passengers, crew, 

ground personnel, and the uninvolved public are all included.

Sources Fatal aviation accidents: Th e data on commercial and general aviation fatalities come from 

the National Transportation Safety Board’s (NTSB) Aviation Accident Database. Aviation 

accident investigators under the auspices of the NTSB develop the data.

Departures Performed: Th e Offi ce of Airline Information (OAI) within the Bureau of 

Transportation Statistics (BTS) collects the data on Form 41, Schedule T-100—U.S. Air 

Carrier Traffi c and Capacity Data By Nonstop Segment and On-fl ight Market and Form 41, 

Schedule T-100 (f)—Foreign Air Carrier Traffi c and Capacity Data by Nonstop Segment 

and On-fl ight Market.

Statistical

Issues

Th e joint government/industry group working on improving the level of safety for U.S. 

commercial aviation has determined that the number of departures is a better denominator 

measure to use for determining accident rates and the Government Accountability Offi ce 

recommended that FAA use departures.

Both accidents and departures are censuses, having no sampling error. However, missing 

data, particularly in the departure counts, will result in bias to some degree. Th e fatal 

accident rate is small and could signifi cantly fl uctuate from year to year due to a single 

accident. Use of an average over three years smooths the fl uctuation that may occur in any 

given year.

Completeness Th e FAA does comparison checking of the departure data collected by BTS. However, FAA 

has no independent data sources against which to validate the numbers submitted to BTS. 

FAA compares its list of carriers to the DOT list to validate completeness and places the 

carriers in the appropriate category (i.e., Part 121 or Part 135).
UNITED STATES DEPARTMENT OF TRANSPORTATION

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Actual departure data for any given period of time is considered preliminary for up to 12 

months aft er the close of the reporting period. Th is is due to amended reports subsequently 

fi led by the air carriers. However, the changes to departure data rarely have an eff ect on the 

annual fatal accident rate. NTSB and FAA’s Offi ce of Accident Investigation meet regularly 

to validate the accident count. 

To overcome reporting delays of 60 to 90 days, FAA must rely on historical data, partial 

internal data sources, and Offi cial Airline Guide (OAG) scheduling information to project 

at least part of the fi scal year activity data. FAA uses OAG data until offi cial BTS data is 

available. Th e air carrier fatal accident rate is not considered reliable until BTS provides 

preliminary numbers. Due to reporting procedures in place, it is unlikely that calculation 

of future fi scal year departure data will be markedly improved. Lacking complete historical 

data on a monthly basis and independent sources of verifi cation increases the risk of error 

in the activity data.

Reliability Results are considered preliminary based on projected activity data. FAA uses performance 

data extensively for program management, personnel evaluation, and accountability. Most 

accident investigations are a joint undertaking. NTSB has the statutory responsibility, 

but, in fact, most of the accident investigations related to general aviation are conducted 

by FAA Aviation Safety Inspectors without NTSB direct involvement. FAA’s own accident 

investigators and other FAA employees participate in all accident investigations led by 

NTSB investigators.

Details on DOT Safety Measures

General Aviation Fatal Accidents

Measure Number of fatal general aviation accidents. (FY)

Scope Th e measure includes on-demand (non-scheduled FAR Part 135) and general aviation 

fl ights. General aviation includes a diverse range of aviation activities. Th e range of general 

aviation aircraft includes single-seat homebuilt aircraft , helicopters, balloons, single and 

multiple engine land and seaplanes including highly sophisticated extended range turbojets.

Sources Th e data on general aviation fatalities come from the National Transportation Safety Board’s 

Aviation Accident Database (NTSB). Aviation accident investigators under the auspices of 

the NTSB develop the data.

Statistical

Issues

Th ere is no major error in the accident counts. Random variation in air crashes results in a 

signifi cant variation in the number of fatal accidents over time.

Completeness NTSB and FAA’s Offi ce of Accident Investigations meet regularly to validate information on 

the number of accidents. Results are considered preliminary. NTSB continues to review 

accident results from FY 2006. 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

299

Numbers are fi nal when the NTSB releases its report each March. NTSB continues to 

review accident results from FY 2006. So in March 2008, FY 2006 accident numbers will be 

fi nalized. However, the number is not likely to signifi cantly change from the end of each 

fi scal year to when the rate is fi nalized.

Reliability FAA uses performance data extensively for program management and personnel evaluation 

and accountability. Most accident investigations are a joint undertaking between FAA 

and NTSB. NTSB has the statutory responsibility, but, in fact, most of the accident 

investigations related to general aviation are conducted by FAA Aviation Safety Inspectors 

without NTSB direct involvement. FAA’s own accident investigators and other FAA 

employees participate in all accident investigations led by NTSB investigators.

Details on DOT Safety Measures

Train Accidents Rate

Measure Rail-related accidents and incidents per million train-miles (FY).

Scope Th e Railroad Safety Information System (RSIS) is the principal monitoring strategy used 

by the FRA for the management, processing, and reporting on railroad-reported accidents/

incidents; railroad inspections; highway-rail grade crossing data; and related railroad safety 

activities. Th e Railroad Accident/Incident Reporting Subsystem (RAIRS) is the repository 

of all FRA-mandated reports of railroad accidents, incidents, casualties, highway-rail grade 

crossing collisions, and operating information. 

A train accident is any collision, derailment, fi re, explosion, act of God, or other event 

involving the operation of railroad on-track equipment (standing and moving), which 

results in damages greater than the current reporting threshold to railroad on-track 

equipment, signals, track, track structures, and roadbed. Train accidents are reported on 

form FRA F6180.54, Rail Equipment Accident/Incident Report. Th e reporting threshold 

for 2007 is $8,200.

A train incident is any event involving the movement of on-track equipment that results 

in a reportable casualty but does not cause reportable damage above the current threshold 

established for train accidents. Operational data, including train-miles, are reported on the 

form FRA F6180.55, Railroad Injury and Illness Summary.

Sources FRA’s Railroad Accident/Incident Reporting Subsystem.

Statistical

Issues

None.

Completeness Railroads are required by regulation (49 CFR Part 225) to fi le monthly reports to the FRA of 

all train accidents that meet a dollar threshold (currently $8,200). Th ey are also required to 

fi le monthly operations reports of train-miles, employee-hours, and passenger train-miles.
UNITED STATES DEPARTMENT OF TRANSPORTATION

300

Reports must be fi led within 30 days aft er the close of the month. Data must be updated 

when the costs associated with an accident vary by more than 10 percent (higher or lower) 

from that initially reported.

Railroad systems that do not connect with the general rail system are excluded from 

reporting to FRA. Examples include subway systems (e.g., Washington, D.C. Metro, New 

York City subway, San Francisco Bay Area Rapid Transit District), track existing inside an 

industrial compound, and insular rail (e.g., rail that is not connected to the general system 

and does not have a public highway rail crossing or go over a navigable waterway).

Reliability FRA uses the data in prioritizing its inspections and safety reviews, and for more long-term 

strategic management of its rail safety program. 

FRA has inspectors who review the railroads’ reporting records, and who have the authority 

to write violations if railroads are not reporting accurately. Violations may result in 

monetary fi nes.

Details on DOT Safety Measures

Transit Fatality Rate

Measure Transit fatalities per 100 million passenger-miles traveled. (CY)

Scope Transit fatality data includes passengers, revenue facility occupants, trespassers, employees, 

other transit workers (contractors), and others. A transit fatality is a death within 30 days 

aft er the incident, which occurs under the categories of collision, derailment, personal 

casualty (not otherwise classifi ed), fi re, or bus going off the road in the National Transit 

Database (NTD) reporting systems. Previous to 2002, transit involved parties that were 

defi ned as patrons, employees, and others (the safety data was collected on a fi scal year, 

as opposed calendar year basis). Fatalities for the performance measurement only use 

transit agency Directly Operated (DO) mode data. Purchased Transportation (PT) data 

are not part of this measure. Certain fatalities are excluded, as they are not considered to 

be directly related to the operation of transit vehicles. Th ose include suicides and fatalities 

occurring in parking facilities and stations, as well as fi res in right-of-ways and stations. 

Also, the measure includes only the major transit modes (motor/trolleybus, light rail, heavy 

rail, commuter rail with vanpool, automated guideway, and demand response) and excludes 

ferryboat, monorail, inclined plane, cable car, and jitney.

Th e passenger-miles traveled on public transit vehicles (e.g., buses, heavy and light railcars, 

commuter railcars, ferries, paratransit vans, and vanpools) only refer to miles while in 

actual revenue service to the general public.

Th ese data are reported annually by operators to the FTA National Transit Database (NTD) 

and to the Federal Railroad Administration’s (FRA) Rail Accident and Incident Reporting 

System (RAIRS). FRA RAIRS data are used exclusively for commuter rail (CR) safety 

data. NTD and RAIRS data are an input to FTA’s Transit Safety and Security Statistics and 

Analysis program (formerly known as Safety Management Information Statistics [SAMIS]).
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

301

Sources Th e Transit Safety and Security Statistics and Analysis Annual Report, formerly SAMIS, is 

a compilation and analysis of transit accident, casualty, and crime statistics reported under 

the Federal Transit Administration’s (FTA’s) NTD Reporting System by transit systems 

that are benefi ciaries of FTA Urbanized Area Formula funds. (Section 5307 grantees). 

Starting in 2002, commuter rail safety data are being collected from the FRA Rail Accident 

Reporting System (RAIRS) in order to avoid redundant reporting to NTD. Transit fatalities: 

Transit Safety and Security Statistics and Analysis Annual Report. Transit passenger miles: 

Transit Safety and Security Statistics and Analysis Annual Report.

Statistical

Issues

Th e fatality counts in FTA’s Transit Safety and Security Statistics and Analysis are a census. 

Th e major source of uncertainty in the measure relates to passenger-miles traveled. 

Passenger-miles are an estimate derived from reported passenger trips and average trip 

length. Passenger-miles are the cumulative sum of the distances ridden on passenger trips.

Transit authorities have accurate counts of unlinked passenger trips and fares. An unlinked 

trip is recorded each time a passenger boards a transit vehicle, even though the rider may 

be on the same journey. Transit authorities do not routinely record trip length. To calculate 

passenger-miles, total unlinked trips are multiplied by average trip length. To obtain 

an average trip length for their bus routes, transit authorities use Automatic Passenger 

Counters (APC’s) with GPS Technology or a FTA-approved sampling technique. To 

obtain passenger mile data on rail systems, ferry boats, and paratransit, transit authorities 

oft en use Smart Card or other computerized tracking systems. Passenger-miles are the 

only data element that is sampled in the NTD. Validation based on annual trend analysis 

is performed on the passenger mile inputs from the transit industry. Th e validation is 

performed by statistical analysts at the NTD contractor (Technology Solution Providers/

General Dynamics Corporation).

Completeness Th e information for this measure comes from the FTA’s Transit Safety and Security Statistics 

and Analysis program, formerly FTA’s Safety Management Information System (SAMIS), 

which uses data reported by transit operators to the NTD. Many categories and defi nitions 

were added or changed in the new NTD in 2002, and have allowed for improvements 

and more timely analysis of trends and contributing factors. Th e 2007 measure is an 

extrapolation of partial-year data, particularly of passenger-miles traveled.

Reliability An independent auditor and the transit agency’s CEO certify that data reported to the NTD 

are accurate. Using data from the NTD to compile the Transit Safety & Security Statistics 

& Analysis program (formerly SAMIS) data, the USDOT Volpe National Transportation 

Systems Center compares current safety statistics with previous years, identifi es any 

questionable trends, and seeks explanation from operators. 

Details on DOT Safety Measures

Natural Gas and Hazardous Liquid Pipeline Incidents

Measure Number of natural gas pipeline incidents and hazardous liquid pipeline accidents. (CY)
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Scope Gas pipeline incidents are reportable under 49 CFR 191.15 if they involve:

• a release of gas from a pipeline or of liquefi ed natural gas or gas from an LNG 

facility; and a death or personal injury requiring in-patient hospitalization, or

estimated property damage, including cost of gas lost, of $50,000 or more;

• an event that results in an emergency shutdown of an LNG facility; and,

• an event that is signifi cant in the judgment of the operator, even if it does not meet 

any other reporting criteria.

Liquid pipeline accidents are reportable under 49 CFR 195.50 if there is a release of 

hazardous liquid or carbon dioxide and any one of the following:

• unintentional explosion or fi re;

• release of fi ve gallons or more (except certain maintenance activities);

• death or injury requiring hospitalization; and,

• estimated property damage, including cots of cleanup and recovery, value of lost 

product, and other property damage exceeding $50,000.

Gas incidents include both gas transmission and gas distribution pipeline systems. 

Data are adjusted/normalized for time series comparisons to account for changes in 

reporting criteria over time. Th is includes screening out hazardous liquid spills of less than 

50 barrels (or fi ve barrels for highly-volatile liquids) unless the accident meets one of the 

other reporting criteria.

Sources DOT/Pipeline and Hazardous Materials Safety Administration (PHMSA) Incident Data – 

derived from Pipeline Operator reports submitted on PHMSA Form F-7100.1 and F-7000.1. 

Statistical

Issues

A response percentage cannot be calculated as the actual population of reportable incidents 

cannot be precisely determined. Results in any single year need to be interpreted with 

some caution. Targets could be missed or met as a result of normal annual variation in the 

number of reported incidents.

Completeness Compliance in reporting is very high and most incidents that meet reporting requirements 

are submitted. Operators must submit reports within 30 days of an incident or face 

penalties for non-compliance. Th e reported estimates are based upon incident data 

reported in January through June 2007. Th ere may be a 60-day lag in reporting and 

compiling information in the database for analysis. Traditionally, there are more incidents 

in the summer than the winter. Preliminary estimates are based on data available as of 

middle of August, with six months of data through the end of June. Th e CY 2007 estimate 

is a projection using both a seasonal adjustment (using a 10-year baseline) and a separate 

adjustment to account for the historical fi ling of late reports (92.5 percent of reports for 

January - June were fi led by this time last year).
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

303

Reliability PHMSA routinely cross-checks incident/accident reports against other sources of data, such 

as the telephonic reporting system for incidents requiring immediate notifi cation provided 

to the National Response Center (NRC). PHMSA is developing a Best Management 

Practice to ensure quality of the incident data. Data are not normalized to account 

for infl ation. A fi xed reporting threshold ($50,000) for property damage results in an 

increasing level of reporting over time. Th is threshold was set for gas pipeline incidents in 

1985 and for hazardous liquid accidents in 1994.

Data are not normalized to account for the subjective judgment of the operator in fi ling 

reports for incidents that do no meet any of the quantitative reporting criteria. Th is 

may result in variations over time due to changes in industry reporting practices. Th e 

performance measure is not normalized for changes in exposure—external factors like 

changes in pipeline mileage that could aff ect the number of incidents without aff ecting the 

risk per mile of pipeline.

PHMSA uses these data in prioritizing its inspections and safety reviews, and for more 

long-term strategic management of its pipeline safety program.

Details on DOT Safety Measures

Serious Hazardous Materials Incidents

Measure Number of serious hazardous materials transportation incidents. (CY)

Scope Hazardous materials transportation incidents are reportable under 49 CFR Parts 100-185. 

Serious hazardous materials incidents include those incidents resulting in:

• a fatality or major injury;

• the evacuation of 25 or more employees or responders or any number of the 

general public; 

• the closure of a major transportation artery, the alteration of an aircraft fl ight plan 

or operation caused by the release of a hazardous material; 

• the exposure of hazardous material to fi re; or, 

• any release of radioactive materials from Type B packaging, Risk Group 3 or 4 

infectious substances, over 11.9 gallons or 88.2 pounds of a severe marine pollutant, 

or a bulk quantity (over 119 gallons or 882 pounds) of a hazardous material.

Th is measure tracks only transportation-related releases of hazardous materials that are in 

commerce. It includes incidents in all modes of transportation (air, truck, rail, and water) 

except pipelines.

Sources Hazardous Material Information System (HMIS) maintained by DOT/Pipeline and 

Hazardous Materials Safety Administration—derived from reports submitted on Form 

DOT F 5800.1.
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Statistical

Issues

A response percentage cannot be calculated as the actual population of reportable incidents 

cannot be precisely determined. Results in any single year need to be interpreted with some 

caution. Targets could be missed or met as a result of normal variation in the number of 

reported incidents.

Completeness Each person in physical possession of a hazardous material at the time that any of the 

incidents occurs (loading, unloading, and temporary storage) during transportation must 

submit a Hazardous Materials Incident Report on DOT Form F 5800.1 (01-2004) within 30 

days of discovery of the incident. Incident reports are received continuously by PHMSA.

Carriers are required to submit incident reports to PHMSA within 30 days of an incident. 

Once received by PHMSA, it takes approximately one month for incident reports to be 

processed and verifi ed. Th e data are then made available in the HMIS database during the 

next monthly update. 

PHMSA continues to receive reports from calendar year 2007. By the end of September 

2007 actual incident data was received through August 31, 2007. PHMSA is projecting the 

remainder of the calendar year using the actual number of incidents that occurred during 

September, October, November, and December of 2006—the previous calendar year. Th is 

methodology for projecting the CY 2007 estimate is expected to be within 2-4 percent of 

the fi nal estimate, which becomes available during the second quarter of CY 2007.

Reliability PHMSA routinely cross-checks incident data against other sources of data, including the 

use of a news clipping service to provide information on signifi cant hazmat incidents 

that might not be reported. Th e performance measure is not normalized for changes in 

exposure — external factors like changes in the amount of hazmat shipped that could aff ect 

the number of incidents without aff ecting the risk per ton shipped.

Annual hazmat incident data are used to track program performance, plan regulatory and 

outreach initiatives, and provide a statistical basis for research and analysis. Th e data is also 

used on a daily basis to target entities for enforcement eff orts, and review of applications for 

exemption renewals.

Details on DOT Mobility Measures

Highway Infrastructure Condition

Measure Percent of travel on the National Highway System (NHS) meeting pavement performance 

standards for good rated ride. (CY)

Scope Data include vehicle-miles traveled on the Highway Performance Monitoring System 

(HPMS) reported NHS sections and pavement ride quality data reported using the 

International Roughness Index (IRI). IRI is a quantitative measure of the accumulated 

response of a quarter-car vehicle suspension experienced while traveling over a pavement. 

An IRI of 95 inches per mile or less is necessary for a good rated ride. Vehicle-Miles of 

Travel (VMT) represents the total number of vehicle-miles traveled by motor vehicles on 

public roadways within the 50 States, Washington, D.C., and Puerto Rico.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

305

Sources Data for this measure are collected by the State Highway Agencies using calibrated 

measurement devices that meet industry set standards and reported to FHWA. 

Measurement procedures are included in the FHWA HPMS Field Manual. Th e VMT data 

are derived from the HPMS.

Statistical

Issues

Th e major source of error in the percentages is the diff erences in data collection 

methodologies between the States and the diff erences in data collection intervals. FHWA 

is working on revisions to the HPMS data collection guidelines to minimize these potential 

errors. VMT data are also subject to sampling errors. Th e magnitude of error depends on 

how well the sites of the continuous counting stations represent nationwide traffi c rates. 

HPMS is also subject to estimation diff erences between the States, even though FHWA 

works to minimize such diff erences and diff ering projections on growth, population, and 

economic conditions that impact driving behavior.

Completeness Th e 2007 actual results for this measure are reported based on 2006 data, which may be 

incomplete as late as October 2007. Prior to 2006, actual results were reported in the prior 

year and a projection for the current year was made based on the prior year data.

Reliability Th e HPMS data are collected by the 50 States, the District of Columbia, and Puerto Rico 

in cooperation with local governments. While many of the geometric data items, such as 

type of median, rarely change; other items, such as traffi c volume, change yearly. Typically, 

the States maintain data inventories that are the repositories of a wide variety of data. Th e 

HPMS data items are simply extracted from these inventories, although some data are 

collected just to meet Agency requirements.

Th e FHWA provides guidelines for data collection in the HPMS Field Manual. Adherence 

to these guidelines varies by State, depending on issues such as staff , resources, internal 

policies, and uses of the data at the data provider level. An annual review of reported data 

is conducted by the FHWA, both at the headquarters level and in the Division Offi ces 

in each State. Th e reported data are subjected to intense editing and comparison with 

previously reported data and reasonability checks. A written annual evaluation is provided 

to each State to document potential problems and to encourage corrective actions. Data resubmittal is requested in cases where major problems are identifi ed.

Details on DOT Mobility Measures

Highway Congestion

Measure Percent of total annual urban-area travel occurring in congested conditions. (CY)

Scope Data are derived from approximately 400 urban areas. Th e data refl ects travel conditions on 

freeway and principal arterial street networks.

Defi nitions:

Urban area — Developed area with a density of greater than 1,000 persons per square mile.

Congested travel — Traveling below the posted speed limit(s).
UNITED STATES DEPARTMENT OF TRANSPORTATION

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Sources Data collected and provided by the State Departments of Transportation from existing State 

or local government databases, including those of Metropolitan Planning Organizations. 

FHWA’s Highway Performance Monitoring System (HPMS) serves as the repository of the 

data. Th e Texas Transportation Institute utilizes HPMS data to derive the above measures.

Statistical

Issues

Th e methodology used to calculate performance measures has been developed by the Texas 

Transportation Institute (TTI) and reported in their annual Mobility Study. A detailed 

description the of TTI’s methodology is available at: http://mobility.tamu.edu/ums/report/

methodology.stm.

With sponsorship from the National Cooperative Highway Research Program of the 

Transportation Research Board, the methodology was signifi cantly revised in 2006 and 2007 

to take advantage of new studies and detailed data sources that have not been available in 

previous studies. 

Completeness Th e 2005 and prior measures are fi nal. Th e 2006 measure is preliminary, as partial 2006 

HPMS data were used to construct the estimates. HPMS data is compiled from the States 

and verifi ed approximately 10 months from the base year, e.g., 2007 actual numbers will not 

be available from HPMS until October 2008. Th e 2007 measure is a projection based on 

recent year trends.

Reliability Th e HPMS data are collected by the 50 States, the District of Columbia, and Puerto 

Rico in cooperation with local governments. While many of the geometric data items, 

such as type of median, rarely change; other items, such as traffi c volume, change yearly. 

Typically, the States maintain data inventories that are the repositories of a wide variety of 

data. Th e HPMS data items are simply extracted from these inventories, although some 

data are collected just to meet Agency requirements. Th e FHWA provides guidelines for 

data collection in the HPMS Field Manual. Adherence to these guidelines varies by State, 

depending on issues such as staff , resources, internal policies, and uses of the data at the 

data provider level.

An annual review of reported data is conducted by the FHWA, both at the headquarters 

level and in the Division Offi ces in each State. Th e reported data are subjected to intense 

editing and comparison with previously-reported data and reasonability checks. A 

written annual evaluation is provided to each State to document potential problems and to 

encourage corrective actions. Data re-submittal is requested in cases where major problems 

are identifi ed.

Details on DOT Mobility Measures

Transit Ridership

Measure Average percent change in transit boardings per transit market (150 largest transit 

agencies). (CY)
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

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Scope Th e metric is the average percent change in transit boardings. Th e component is transit 

passenger boardings within a transit market. Th e modes covered are: Motor Bus (MB), 

Heavy Rail (HR), Light Rail (LR), Commuter Rail (CR), Demand Response (DR), Vanpool 

(VP), and Automated Guideway (AG).

Sources Transit Passengers: Data derived from counts made on bus and rail routes by transit 

agencies that are benefi ciaries of FTA Urbanized Area Formula funds, as part of their 

monthly National Transit Database (NTD) Reporting System submissions. Data are 

collected from the 150 largest transit systems.

Statistical

Issues

Th e sources of uncertainty include coverage errors and auditing issues. Th ese data are 

validated by the FTA Offi ce of Budget and Policy, contractor staff . 

By statute, every FTA formula grant recipient in an urbanized area (defi ned by the Census 

as having a population of 50,000 or more) must report to the National Transit Database 

(NTD). In cities of this size, virtually every transit authority receives FTA funding, 

and there are only a few cities with over 50,000 persons that do not provide public 

transit service. Publicly-funded transit service can be directly-operated or purchased 

transportation. 

Transit authorities have accurate counts of unlinked passenger trips and fares. An unlinked 

trip is recorded each time a passenger boards a transit vehicle, even though the rider may be 

on the same journey. As a check, trips are routinely reconciled against fare revenues. Th e 

sources of uncertainty include coverage errors and auditing issues. Until 2002, reports were 

required only on an annual basis.

Completeness DOT has revised this measure to better account for the impact of ridership by counting 

actual monthly boardings. 

Reliability For 2007, the indicator compares transit ridership for the urbanized areas containing the 

150 largest transit agencies, aggregated by mode, with the year ending June 30, 2007. An 

independent auditor and the transit agency’s CEO certify that annual data reported to the 

NTD are accurate. FTA also compares data to key indicators such as vehicle revenue-miles, 

number of buses in service during peak periods, etc.

FTA has undertaken a major initiative to increase ridership nationwide with the planned 

results being a reduction in congestion. Th is measure is built into all FTA senior executive 

performance standards.

Details on DOT Mobility Measures

Transportation Accessibility

Measures 1. Percentage of bus fl eets compliant with the Americans with Disabilities Act (ADA). (CY)

2. Percent of key rail stations compliant with the Americans with Disabilities Act (ADA). (CY)
UNITED STATES DEPARTMENT OF TRANSPORTATION

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Scope Accessibility for bus fl eet means that vehicles are equipped with wheelchair lift s or ramps. 

Transit buses are buses used in urbanized areas to provide public transit service to the 

general public. Transit buses do not include private intercity buses (e.g., Greyhound), 

private shuttle buses, charter buses, or school buses.

Th e percentage of bus fl eets that are equipped with lift s or ramps is only a partial measure 

of overall accessibility under the ADA as it measures only the availability of transit buses in 

our National fl eet that can accommodate wheelchairs through the use of mechanical lift s 

or ramps. Accessibility for transit vehicles under the ADA includes other equipment and 

operational practices that are not refl ected in this indicator. 

Accessibility for key rail facilities is determined by standards for ADA compliance. Transit 

systems were required to identify key stations. A key station is one designated as such by 

public entities that operate existing commuter, light, or rapid rail systems. Each public 

entity has determined which stations on its system have been designated as key stations 

through its planning and public participation process using criteria established by DOT 

regulations. 

All new rail stations are required to be ADA compliant upon completion and must meet 

standards for new rail stations, not key stations. All altered stations are required to be ADA 

compliant upon completion and must meet standards for alterations of transportation 

facilities by public entities.

Sources Compliant bus fl eets: National Transit Database (NTD).

Compliant rail stations: Rail Station status reports to the FTA. 

Statistical

Issues

Data are obtained from a census of publicly-funded transit buses in urbanized areas. 

Information on the ADA key rail stations is reported to FTA by transit authorities. Th ese 

data are not based on a sample.

Completeness At a transit authority, vehicle purchases are signifi cant capital expenditures. Vehicles 

purchased with FTA funds must have a useful life of 12 years. Whether a bus is purchased 

or leased, the equipment on the bus is recorded, including lift s and ramps. For the last 20 

years, transit agencies have reported on the equipment in their bus fl eets to the FTA in their 

annual NTD submissions. Th ere is a census of publicly-funded transit buses in urbanized 

areas. It is not a sample. Urbanized areas have more than 50,000 persons, and are defi ned 

by the Census Department. By statute, every FTA formula grant recipient in an urbanized 

area must report to the NTD. In cities of this size, virtually every transit authority receives 

FTA funding. Th ere are only a few cities of over 50,000 persons that do not provide public 

transit service. Publicly funded transit service can be directly operated or purchased 

transportation.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

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Data reported for key station accessibility have historically excluded those stations for 

which time extensions had been granted under 49 CFR 37.47(c) (2) or 37.51(c) (2). Th ere 

are a total of 138 such stations for which time extensions of various lengths were granted, 

some of them through 2020, the maximum permitted. Th ese deadlines are now beginning 

to pass, and these stations can no longer be excluded from the total key station accessibility 

fi gures; the total number of time extensions from 2007 through 2020 stands at 19. Th e total 

number of key stations will therefore increase, and the percentage of compliant stations 

may decrease as they are added to the total key station count. Beginning in 2007, the 

key station accessibility fi gures began reporting the total number of key stations, the total 

number that are accessible, and the number with outstanding time extensions.

Reliability All data in the NTD are self-reported by the transit industry. Th e transit agency’s Chief 

Executive Offi cer and an independent auditor for the transit agency certify the accuracy 

of this self-reported data. Th e data are also compared with fl eet data reported in previous 

years and crosschecked with other related operating and fi nancial data in the report. Fleet 

inventory is also reviewed as part of FTA’s Triennial Review, and a visual inspection is made 

at that time.

Information on ADA key rail stations is reported to FTA by transit authorities. Th e FTA’s 

Offi ce of Civil Rights conducts oversight assessments to verify the information on key rail 

station accessibility. Quarterly rail station status reports and key rail station assessments 

have signifi cantly increased the number of key rail stations that have come into compliance 

over the last several years.

FTA will primarily infl uence the goal through Federal transit infrastructure investment, 

which speeds the rate at which transit operators can transition to ADA-compliant facilities 

and equipment, oversight, and technical assistance.

Details on DOT Mobility Measures

Access to Jobs

Measure Number of employment sites (in thousands) that are made accessible by Job Access and 

Reverse Commute (JARC) transportation services. (FY)

Scope Th is measure assesses one part of the JARC program—the numbers of employment sites 

made accessible that were not previously accessible. Th e new employment sites represented 

new sites connected geographically by the new service or new employment sites reached 

during time periods not previously covered (late night and weekend service). 

An employment site is a new stop reaching employers not previously reached either directly 

by demand responsive services or that are within 1⁄4 mile of the new service stop for fi xed 

route service. Services that make an employment site accessible may include, but are not 

limited to, carpools, vanpools, and other demand-responsive services as well as traditional 

bus and rail public transit. Th is measure does not account for those JARC activities that 

encourage riders to use already existing sources of public transit.
UNITED STATES DEPARTMENT OF TRANSPORTATION

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Sources FTA Grantees.

Statistical

Issues

In previous years, FTA has had diffi culty in getting complete information from its grantees. 

Changes resulting from a FTA analysis of this issue have improved grantee reporting 

compliance to 90 percent of those JARC grantees expected to report.

Completeness JARC grantees are requested to report the new employment sites reached by the 

transportation services initiated under their grant. Approximately 90 percent of the JARC 

grantees have reported this data for FY 2006 and similar or better results are expected for 

FY 2007. FTA projects these results to estimate the total new employment sites reached by 

all grantees.

Th e calculation methodology is based on the expenditures of selected grantees when 

compared to the total expenditures of all grantees during the same two-fi scal-year period. 

In subsequent years, FTA further proposes to supplement this approach by simplifying the 

data-reporting process, developing profi les of all grantees, and conducting on-site surveys 

to collect qualitative information about program performance from selected grantees.

Th e preliminary methodology for projecting the number of employment sites reached in 

FY 2007 has two elements. Phase I will use existing data collected for FY 2006 to project 

employment sites reached, based on expenditure level for FY 2007. Phase 2 will involve 

projections based on actual FY 2006 and FY 2007 cumulative data that will be available in 

early 2008. Phase 2 involves the collection of 2006 data collected from grantees. If data 

collected is incomplete, then projections will be made for grantees not reporting, based on 

data collected in FY 2006 / FY 2007.

Reliability Oversight contractors review the data and contact grantees to ascertain methodologies on a 

sample basis, or when the information warrants review.

Details on DOT Mobility Measures

Aviation Delay

Measure Percent of all fl ights arriving within 15 minutes of schedule at the 35 Operational Evolution 

Plan (OEP) airports due to National Airspace System (NAS) related delays. (FY)

Scope NAS On-Time Arrival is the percentage of all fl ights arriving at the 35 OEP airports equal 

to or less than 15 minutes late, based on the carrier fl ight plan fi led with the FAA, and 

excluding minutes of delay attributed by air carriers to extreme weather (events such as 

hurricane and earthquake), carrier action, security delay, and prorated minutes for late 

arriving fl ights at the departure airport. Th e number of fl ights arriving on or before 15 

minutes of fl ight plan arrival time is divided by the total number of completed fl ights.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

311

A fl ight is considered on-time if it arrives no later than 15 minutes aft er its published, 

scheduled arrival time. Th is defi nition is used in both the DOT Airline Service Quality 

Performance (ASQP), and Aviation System Performance Metrics (ASPM) reporting 

systems. Air carriers, however, also fi le up-to-date fl ight plans for their services with the 

FAA that may diff er from their published fl ight schedules. Th is metric measures on-time 

performance against the carriers fi led fl ight plan, rather than what may be a dated published 

schedule.

Th e time of arrival of completed passenger fl ights to and from the 35 OEP airports is 

compared to their fl ight plan scheduled time of arrival. For delayed fl ights, delay minutes 

attributable to extreme weather, carrier caused delay, security delay, and a prorated share of 

delay minutes due to a late arriving fl ight at the departure airport are subtracted from the 

total minutes of delay. If the fl ight is still delayed, that delay is attributed to the NAS and 

the FAA, and counted as a delayed fl ight.

Sources Th e ASPM database, maintained by the FAA’s Offi ce of Aviation Policy and Plans, 

supplemented by DOT’s ASQP causation database, provides the data for this measure. By 

agreement with the FAA, ASPM fl ight data are fi led by certain major air carriers for all 

fl ights to and from most large and medium hubs, and is supplemented by fl ight records 

contained in the Enhanced Traffi c Management System (ETMS) and fl ight movement times 

provided by Aeronautical Radio, Inc. (AIRINC). Data are suffi cient to complete ASPM 

data fi les for 75 airports. Th e 35 OEP airports are a sub-set of these 75 airports.

Statistical

Issues

ASQP data is not reported for all carriers, only 19 carriers report monthly into the ASQP 

reporting system.

Completeness Fiscal year data are fi nalized approximately 90 days aft er the close of the fi scal year.

Reliability Th e reliability of ASPM is verifi ed on a daily basis by the execution of a number of audit 

checks, comparison to other published data metrics, and through the use of ASPM by over 

1500 registered users. ASQP data is fi led monthly with DOT under 14 CFR 234, Airline 

Service Quality Performance Reports, which separately requires reporting by major air 

carriers on fl ights to and from all large hubs.

Details on DOT Global Connectivity Measures

Disadvantaged and Women-Owned Small Businesses

Measures 1. Percent share of the total dollar value of DOT direct contracts that are awarded to 

women-owned businesses. (FY)

2. Percent share of the total dollar value of DOT direct contracts that are awarded to small 

disadvantaged businesses. (FY)

Scope Includes contracts awarded by DOT Operating Administrations through direct 

procurement. It does not include FAA contracts exempt from the Small Business Act.
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Sources Prior to October 1, 2003, these data were derived from the USDOT Contract Information 

System (CIS, which fed the old Federal Procurement Data System (FPDS). Th e CIS 

included all USDOT contracting activities that reported to the Federal Procurement Data 

Center (FPDC). Migration to the new Federal Procurement Data System on October 1, 

2003 enabled the removal of agency FPDS feeder systems government-wide (including 

CIS). 

New data reports will come directly from FPDS. Data are compiled by USDOT 

Contracting staff from Department contract documents. Selected information is either 

transmitted from the operating administration contract writing systems, or manually datakeyed via the FPDS web site, into the FPDS database, which can be queried to compute 

needed statistics. All USDOT contracts are enumerated. 

Statistical

Issues

Until recently the reliability of the Federal Procurement Data System/Next Generation 

(FPDS/NG) was an issue with DOT and other federal agencies including the Government 

Accountability Offi ce (GAO). Th e FPDS is designed to be an accurate and reliable system, 

as required by the Small Business Act, Section 644(g). However, it is recognized that at 

least through the transitional periods of FY 2003 through FY 2006, there may be issues of 

synchronization and data reliability between federal agencies and the FPDS/NG. 

DOT currently is required to scrub FPDS/NG data and resubmit it for validation. Aft er 

re-verifying these data against internal sources, there are no known major errors present 

in the data. Business types are as identifi ed in the Central Contractor Registration (CCR) 

database. However, random variation in the number of DOT contracts as well as the 

number of women-owned and small disadvantaged businesses each year results in some 

random variation in these measures from year to year.

Completeness Th e Federal Procurement Data System (FPDS) is prescribed by regulations as the offi cial 

data collection mechanism for DOT acquisitions.

Reliability Th ere is extensive regulatory coverage to ensure data reliability. Th e system is used 

to prepare many reports to Congress, the Small Business Administration, and others. 

Performance goals actual data, as fi nalized by the Small Business Administration is the 

only reliable basis for program evaluations as mandated by the Small Business Act, Section 

644(g). 

Details on DOT Global Connectivity Measures

St. Lawrence Seaway System Availability

Measure Percent of days in the shipping season that the U.S. portion of the St. Lawrence Seaway is 

available. (FY)
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Scope Th e availability and reliability of the U.S. sectors of the St. Lawrence Seaway, including the 

two U.S. Seaway locks in Massena, N.Y., are critical to continuous commercial shipping 

during the navigation season (late March to late December). System downtime due to any 

condition (weather, vessel incidents, malfunctioning equipment) causes delays to shipping, 

aff ecting international trade to and from the Great Lakes region of North America. 

Downtime is measured in hours/minutes of delay for weather (visibility, fog, snow, ice); 

vessel incidents (human error, electrical and/or mechanical failure); water level and rate of 

fl ow regulation; and lock equipment malfunction.

Sources Saint Lawrence Seaway Development Corporation (SLSDC) Offi ce of Lock Operations and 

Marine Services.

Statistical

Issues

None.

Completeness As the agency responsible for the operation and maintenance of the U.S. portion of the 

St. Lawrence Seaway, SLSDC’s lock operations unit gathers primary data for all vessel 

transits through the U.S. Seaway sectors and locks, including any downtime in operations. 

Data is collected on site, at the U.S. locks, as vessels are transiting or as operations are 

suspended. Th is information measuring the System’s reliability is compiled and delivered 

to SLSDC senior staff and stakeholders each month. In addition, SLSDC compiles 

annual System availability data for comparison purposes. Since SLSDC gathers data 

directly from observation, there are no limitations. Historically, the SLSDC has reported 

this performance metric for its entire navigation season (late March/early April to late 

December). Unfortunately due to reporting timelines, system availability data is only 

reported through September in this report.

Reliability SLSDC verifi es and validates the accuracy of the data through review of 24-hour vessel 

traffi c control computer records, radio communication between the two Seaway entities and 

vessel operators, and video and audiotapes of vessel incidents.

Details on DOT Global Connectivity Measures

Bilateral Agreements

Measure Number of new or expanded bilateral aviation safety agreements implemented. (FY)

Th e Bilateral Aviation Safety Agreement (BASA) is made up of two parts: (1) an executive 

agreement signed by the Department of State and Ministry of Foreign Aff airs, and (2) 

one or more implementation procedures signed by the FAA and the other civil aviation 

authority. Th e measure is the number of agreements signed with foreign governments.
UNITED STATES DEPARTMENT OF TRANSPORTATION

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Scope Bilateral Agreements related to aviation safety have two components: executive agreements 

and implementation procedures. Th e Executive Agreement is signed by the Department of 

State and the target country’s Ministry of Foreign Aff airs. It lays the essential groundwork 

for cooperation between the two governments and their respective aviation authorities. 

Once executed, the negotiations for the second component, the implementation procedures 

can proceed. Implementation procedures provide detailed operational safety and 

certifi cation arrangements between the FAA and the target country’s civil aviation authority. 

Th e implementation procedure is the operational portion of the bilateral agreement 

that allows for the reciprocal acceptance of aviation goods and services between the two 

countries. Th e target is achieved when either a new Executive Agreement is signed or a new 

or expanded implementation procedure is concluded with the target country or aviation 

authority.

Sources Th e executive agreements are negotiated and maintained by the Department of State. Th e 

implementation procedures are negotiated and concluded by FAA. Th e offi cial signed 

document is maintained at the FAA. 

Statistical

Issues

None.

Completeness Th ere are no completeness data issues associated with this measure since it is a simple 

count of the fi nal signed new executive agreement or implementation procedures. Th is 

performance target is monitored monthly by tracking interim negotiation steps leading to 

completion of a BASA and tracking FAA internal coordination of the negotiated draft text. 

Th e fi nal signing of executive agreements is generally out of the control of the FAA. Many 

sovereign nations view these agreements as treaties that require legislative approval. Th e 

FAA and U.S. Government cannot control the timing of legislatures in other countries. 

Th erefore, the FAA will count executive agreements only when signed. Th e negotiation of 

implementation procedures is more within FAA’s control.

Th e signed document of the executive agreement constitutes evidence of completion. For 

implementation procedures, evidence will be either a signed procedure or some form of 

agreement between both parties that material negotiations are concluded, but a formal 

signing ceremony is pending. Th is can take the form of a signed agreement stating that 

fact, e-mail, meeting minutes, or other mutual documentation.

Reliability No issues.

Details on DOT Global Connectivity Measures

Reduced Barriers to Trade in Transportation

Measure Number of potential air transportation consumers (in billions) in international markets 

traveling between the U.S. and countries with open skies and open transborder aviation 

agreements (measure revised in FY 2005).
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

315

Scope Th e number of potential air transportation consumers is the total population of the U.S. 

and countries with open skies aviation agreements with the U.S. By the end of FY 2007, 

there were more than 80 open skies agreements. Th is measurement includes the annual 

increase in population for the countries where open skies have been achieved, as well as the 

additional populations for newly negotiated open skies agreements. Th e estimate for the 

additional population is based on the median population size of the countries without open 

skies agreements. Th e measurement thus refl ects the extent to which the liberalization 

resulting from open skies agreements, negotiated by DOT, increases travel opportunities 

between the U.S. and countries with previously restricted aviation agreements.

Sources Estimate of the population of the U.S. and countries with open skies agreements with the 

U.S., Midyear Population, International Data Base, and U.S. Bureau of the Census (per 

website).

Statistical

Issues

Th e International Data Base of the U.S. Bureau of the Census is a reliable source of 

population estimates. Th e Bureau’s website and publications provide qualifying data 

notes that more fully describe technical and other issues. Th ese qualifying notes do not 

signifi cantly aff ect our analyses.

Completeness Th e International Data Base of the U.S. Bureau of the Census is a reliable source of 

population estimates. Th e Bureau’s website and publications provide qualifying data 

notes that more fully describe technical and other issues. Th ese qualifying notes do not 

signifi cantly aff ect our analyses.

Reliability Th e International Data Base of the U.S. Bureau of the Census is a reliable source of 

population estimates. Th e Bureau’s website and publications provide qualifying data 

notes that more fully describe technical and other issues. Th ese qualifying notes do not 

signifi cantly aff ect our analyses.

Details on DOT Global Connectivity Measures

Enhanced International Competitiveness of U.S. Transportation Providers

Measure Number of international negotiations conducted annually to remove market-distorting 

barriers to trade in air transportation.

Scope Th e number of international negotiations conducted annually to remove market-distorting 

barriers to trade in transportation is the number (or rounds) of meetings and negotiations 

that are conducted in an eff ort to reach open skies agreements, other liberalized aviation 

agreements, or to resolve problems. By the end of FY 2007, there were more than 80 open 

skies agreements, and 19 liberalized (but not open skies) agreements. Th ese numbers, 

however, do not represent, but understate, the number of negotiating sessions that have 

historically been held to complete these agreements. Th e measurement thus refl ects an 

estimate of the extent of and manner by which the DOT might best apply the necessary 

resources to open the competitive environment and provide increased travel opportunities 

and economic benefi ts.
UNITED STATES DEPARTMENT OF TRANSPORTATION

316

Sources Estimate of the number of annual negotiating sessions that are required to achieve further 

international aviation liberalization. It is an internal estimate generated by the Offi ce of the 

Assistant Secretary for Aviation and International Aff airs based on a number of analytical, 

economic and geopolitical factors.

Statistical

Issues

Due to geopolitical factors, the nature of international aviation negotiations can follow 

an unpredictable course. It is impossible to gauge or comment upon the data limitations, 

statistical issues, data completeness and data reliability.

Completeness Due to geopolitical factors, the nature of international aviation negotiations can follow 

an unpredictable course. It is impossible to gauge or comment upon the data limitations, 

statistical issues, data completeness and data reliability.

Reliability Due to geopolitical factors, the nature of international aviation negotiations can follow 

an unpredictable course. It is impossible to gauge or comment upon the data limitations, 

statistical issues, data completeness and data reliability.

Details on DOT Global Connectivity Measures

Travel in Freight Signifi cant Corridors

Measure Number of freight corridors with an annual decrease in the average buff er index rating. 

(CY)

Scope Travel time reliability is a key indicator of transportation system performance. Th e FHWA 

uses measured speed data to calculate a Buff er Index (BI) for each freight signifi cant 

corridor. Th e BI is a measure of travel time reliability and variability that represents the 

extra time (or time cushion) that would have to be added to the average travel time to 

ensure on-time arrival 95 percent of the time.

Sources Travel time data for freight signifi cant corridors is derived using time and location data 

from satellite communications equipment on-board mobile commercial vehicles. A Global 

Positioning Satellite (GPS) device in the vehicle transmits a continuous or periodic signal to 

an earth orbit satellite. Th is technology allows commercial vehicles to serve as probes and 

enables direct measurement of commercial vehicle average operating speeds and travel rates 

and travel times. Selection of freight signifi cant corridors and highway segments is largely 

based on the volume of freight moved on the segment.

Statistical

Issues

Th e key issues are long term viability of data source, sampling size of the commercial 

vehicle probes, and frequency of the time and position sampling.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

317

Completeness FHWA is partnering with a vendor that collects automatic vehicle location probe 

information from a customer base, primarily interstate long-haul carriers. Th e data 

provides nationwide coverage from approximately 250,000 vehicles in the United States plus 

additional vehicles in Canada. Long haul carrier fl eet managers arrange with the vendor to 

equip their vehicles with GPS probes. Carriers arrange with the vendor to have signal sent 

to vehicles and readings taken as oft en as every 15 minutes. Th e interval between probe 

readings is dependent upon the subscription and services contracted for by each individual 

carrier. Th ese intervals may range from every 15 minutes to every two hours. Th e data 

transmitted are: truck ID, latitude, longitude, date and time, and interstate route. FHWA 

processes and manages the data provided by the vendor to derive the information for this 

measure.

Reliability Probe vehicle performance systems are designed to provide travel time, speed and delay 

information without traditional fi xed-location traffi c monitoring and data collection 

systems. Probe–based systems enable coverage of much larger geographic areas (i.e., 

entire roadway networks) without the cost of building fi xed-location traffi c data collection 

systems throughout those networks. Th is technique takes advantage of the signifi cant 

reductions in the cost of GPS devices that report current location and time information 

with a high degree of accuracy. When placed in vehicles and combined with electronic 

map information, GPS devices are the primary component of excellent vehicle location 

systems. Storage and analysis of the GPS location data allow for very accurate roadway 

performance measurement. To provide reliable roadway performance estimates, a large 

enough number of vehicles must be equipped with GPS to provide an unbiased measure 

of roadway performance, and to provide the temporal and geographic diversity desired 

by the performance measurement system. A signifi cant drawback to probe vehicle-based 

performance monitoring is that it does not provide information about the level of roadway 

use (vehicle volume), but only provides information about the speeds and travel times being 

experienced.

Details on DOT Environmental Stewardship Measures

Exemplary Ecosystems (Environment)

Measure Number of exemplary ecosystem initiatives. (FY)

Scope An exemplary ecosystem initiative is an action or measure that will help sustain or restore 

natural systems and their functions and values, using an ecosystem or landscape context. 

Th e measure is a cumulative count of the number of exemplary ecosystem initiatives 

initiated. Ecosystem/habitat projects are identifi ed as exemplary if they are unique or 

highly unusual in geographic scope; use cutting edge science or technology; attain a high 

level of environmental standards; achieve high quality of results; and/or recognized by 

environmental interests as being particularly valuable or noteworthy. 

Sources A State DOT and FHWA fi eld offi ce submits a list of ecosystem and habitat conservation 

initiatives for consideration to the FHWA. 
UNITED STATES DEPARTMENT OF TRANSPORTATION

318

Statistical

Issues

Th e data may not represent all ecosystem and habitat conservation initiatives underway. 

Submittals are made at the discretion of the States and FHWA fi eld offi ces.

Completeness All identifi ed exemplary ecosystem initiatives are included. However, there may be other 

potential qualifying initiatives that have not been identifi ed.

Reliability Th e identifi cation of exemplary ecosystem initiatives may not be consistent across all States 

and FHWA fi eld offi ces. While the criteria are carefully defi ned and complete, they are still 

subject to interpretation.

Details on DOT Environmental Stewardship Measures

DOT Facility Cleanup

Measure Percent of DOT facilities categorized as No Further Remedial Action Planned (NFRAP) 

under the Superfund Amendments and Reauthorization Act (SARA). (FY)

Scope EPA maintains a Federal Facility Hazardous Waste docket which contains information 

regarding Federal facilities that manage hazardous wastes or from which hazardous 

substances have been or may be released. DOT facilities listed on the docket are discussed 

in the Annual SARA report sent to Congress each year. EPA regional offi ces make the 

determination to change facility status to NFRAPs on the docket.

Sources EPA Federal Facility Hazardous Waste docket which is issued twice a year.

Statistical

Issues

None.

Completeness Th e primary criterion for NFRAP is a determination that the facility does not pose a 

signifi cant threat to the public health or environment. Responsibility for these facilities 

may be with FAA, FHWA, or FRA. NFRAP decisions may be reversed if future information 

reveals that additional remedial actions are warranted. Th e OAs’ activities are controlled, 

to a degree, by interaction and decisions made by EPA Regional personnel. Th is measure is 

current and has no missing data.

Reliability DOT uses this data to prioritize cleanup activities and attendant resource levels. However, 

there is insuffi cient time to complete remediation prior to the close of the FY for any sites 

added in the July report. 

Details on DOT Environmental Stewardship Measures

Mobile Source Emissions

Measure Twelve-month moving average number of area transportation emissions conformity lapses. (FY)
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

319

Scope Th e transportation conformity process is intended to ensure that transportation plans, 

programs, and projects will not create new violations of the National Ambient Air Quality 

Standards (NAAQS), increase the frequency or severity of existing NAAQS violations, or 

delay the attainment of the NAAQS in designated non-attainment (or maintenance) areas.

Sources Th e FHWA and FTA jointly make conformity determinations within air quality nonattainment and maintenance areas to ensure that Federal actions conform to the purpose of 

State Implementation Plans (SIP). With DOT concurrence, the EPA has issued regulations 

pertaining to the criteria and procedures for transportation conformity, which were revised 

based on stakeholder comment.

Statistical

Issues

None.

Completeness If conformity cannot be determined within certain time frames aft er amending the SIP, or 

if three years have passed since the last conformity determination, a conformity lapse is 

deemed to exist and no new non-exempt projects may advance until a new determination 

for the plan and Transportation Improvement Program (TIP) can be made. Th is aff ects 

transit as well as highway projects.

During a conformity lapse, FHWA and FTA can only make approvals or grants for projects 

that are exempt from the conformity process (pursuant to Sections 93.126 and 93.127 

of the conformity rule) such as a safety project and transportation control measures 

(TCM) that are included in an approved SIP. Only those project phases that have received 

approval of the project agreement, and transit projects that have received a full funding 

grant agreement, or equivalent approvals, prior to the conformity lapse may proceed. Th is 

measure is current and has no missing data.

Reliability Th ere are no reliability issues. FHWA and FTA jointly make conformity determinations 

within air quality non-attainment and maintenance areas to ensure that Federal actions 

conform to the purpose of the SIP.

Details on DOT Environmental Stewardship Measures

Hazardous Liquid Materials Spilled from Pipelines

Measure Tons of hazardous liquid materials spilled per million ton-miles shipped by pipelines. (CY)

Scope Liquid pipeline accidents (spills) are reportable under 49 CFR 195.50 if there is a release of 

hazardous liquid or carbon dioxide and any one of the following:

1. unintentional explosion or fi re;

2. release of fi ve gallons or more (except certain maintenance activities);

3. death or injury requiring hospitalization; or,

4. estimated property damage, including costs of cleanup and recovery, value of lost 

product, and other property damage exceeding $50,000.
UNITED STATES DEPARTMENT OF TRANSPORTATION

320

Data are adjusted/normalized for time series comparisons to account for changes in 

reporting criteria over time. Th is includes screening out hazardous liquid spills of less 

than 50 barrels (or fi ve barrels for highly-volatile liquids) unless the accident meets one 

of the other reporting criteria. Highly-volatile liquid (HVL) spills are not included in this 

performance measure. HVLs evaporate on release and don’t impact the environment in the 

usual way that other liquid petroleum products do. 

Sources DOT/Pipeline and Hazardous Materials Safety Administration (PHMSA) Incident Data—

derived from Pipeline Operator reports submitted on PHMSA Form F-7000.1. Ton-mile 

data are calculated using a base fi gure reported in a 1982 USDOT study entitled Liquid 

Pipeline Director and then combined with data from the Association of Oil Pipe Lines and 

the Oil Pipeline Research Institute. 

Statistical

Issues

A response percentage cannot be calculated as the actual population of reportable incidents 

cannot be precisely determined. Results in any single year need to be interpreted with 

some caution. Targets could be missed or met as a result of normal annual variation in the 

number of reported incidents. 

Th e performance measure is a ratio of “Tons Net Loss” and “Ton-Miles Shipped.” 

Uncertainty in either the numerator or the denominator can have a large eff ect on the 

overall uncertainty. Some factors of possible variance in the numerator include: 1) a few 

large spills can make PHMSA miss this goal, and 2) even when the total number of spills 

fl uctuates, the net volume lost may increase. Th e denominator may fl uctuate with the 

overall economy, i.e., the volume shipped increases with economic boom and decreases 

when the economy slows down. Th e environmental metric tracks a highly variable trend 

and PHMSA has noted in the past that the variability of this metric warrants close study.

Th e past long term pattern for the trend was to generally meet or miss the goal every other 

year as the actual performance bounced above and below the trend line regularly. PHMSA 

continues to lessen the overall standard deviation of the metric over time (the performance 

of the trend is getting statistically more sound over time). Th is measure also has continued 

a general downward trend even though it bounces above and below the trend line over 

time.

Completeness Compliance in reporting is very high and most incidents that meet reporting requirements 

are submitted. Operators must submit reports within 30 days of an incident or face 

penalties for non-compliance.

Th e reported estimates are based upon incident data reported in January through June 

2007. Th ere may be a 60-day lag in reporting and compiling information in the database 

for analysis. Traditionally, there are more incidents in the summer than the winter. 

Preliminary estimates are based on data available as of middle of August, with six months 

of data through the end of June. Th e CY 2007 estimate is a projection using both a 

seasonal adjustment (using a 10-year baseline) and a separate adjustment to account for the 

historical fi ling of late reports (92.5 percent of reports for January—June were fi led by this 

time last year).
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

321

Reliability Projection of the environmental measure is less precise due to the nature of pipeline 

spills. A single large spill (10,000 barrels or more) can easily dwarf the total for all other 

CY spills combined. Th ese large spills cannot be factored into a projection model due 

to their magnitude and infrequent and unpredictable occurrences. Th us, projections for 

the remaining six months of this CY assume that the average spill volume in the past six 

months will remain the same in the next six months. However, any large spill of non-highly 

volatile hazardous liquid in the next six months can move the projection upwards.

PHMSA routinely cross-checks accident reports against other sources of data, such as the 

telephonic reporting system for incidents requiring immediate notifi cation provided to the 

National Response Center (NRC). PHMSA is developing a Best Management Practice to 

ensure quality of the incident data.

Data are not normalized to account for infl ation. A fi xed reporting threshold ($50,000) for 

property damage results in an increasing level of reporting over time. Th is threshold was 

set for hazardous liquid accidents in 1994.

Data are not normalized to account for the subjective judgment of the operator in fi ling 

reports for accidents that do no meet any of the quantitative reporting criteria. Th is may 

result in variations over time due to changes in industry reporting practices.

Lack of additional information for ton-mile data raises defi nitional and methodological 

uncertainties about the data’s reliability. Moreover, the three diff erent information 

sources introduce data discontinuities, making time comparisons unreliable. (National 

Transportation System (NTS) 2002).

PHMSA uses this data in conjunction with pipeline safety data in prioritizing compliance 

and enforcement plans. However, beginning in FY 2008, PHMSA will begin reporting on 

the number of spills in high consequence areas as a new performance measure to replace 

the current one. Th is will address many of the reliability issues with the current measure.

Details on DOT Environmental Stewardship Measures

Aircraft Noise Exposure

Measure Percent reduction in the number of people within the U.S. who are exposed to signifi cant 

aircraft noise levels (Day/Night Average Sound Level (DNL) 65 decibels or more) from the 

three-year average for 2000 to 2002. (FY)

Scope Residential population exposed to aircraft noise above Day-Night Sound Level of 65 

decibels around U.S. airports.
UNITED STATES DEPARTMENT OF TRANSPORTATION

322

Sources In 1997, the FAA initiated a project to collect airport noise analysis databases for a large 

number of the world’s airports. Th is sample database of airports would be the basis for 

assessing worldwide trends that would occur as the result of stringency, diff erent land-use 

planning initiatives and operational procedures. Th e objective was to develop a tool that 

could be used by the Committee on Aviation Environmental Protection (CAEP) under the 

International Civil Aviation Organization (ICAO). Previous attempts by CAEP to globally 

assess aircraft noise exposure had limited success. Th e proposed FAA methodology had 

much more promise, as the number of sample databases was large and has since grown to 

around 200. Furthermore, a generalized methodology was included to account for airports 

for which noise databases did not exist. Based on the initial success of the FAA activity, the 

fourth meeting of CAEP (CAEP4) recommended that a task group be formed to complete 

the development of this tool for CAEP analysis.

Th is group and subsequently the model became known as MAGENTA (Model for 

Assessing Global Exposure form Noise of Transport Airplanes). Th e MAGENTA 

population exposure methodology has been thoroughly reviewed by this ICAO task group 

and was validated for several airport specifi c cases. MAGENTA played an important role 

in the setting of new international aircraft noise standards by CAEP in 2001. CAEP used 

MAGENTA to assess the benefi ts (reduction in number of people exposed to aircraft noise) 

of several noise stringency proposals. FY 2000 was the fi rst year MAGENTA was used to 

track the aircraft noise exposure goal in the DOT Performance Plan.

A U.S. version of the global MAGENTA model, which used input data to determine the 

noise exposure in the U.S. on aircraft and operations specifi c to U.S. airports, was developed 

in 2002. Th e general, regional FESG forecast used in the CAEP version of MAGENTA was 

replaced by the FAA Terminal Area Forecast (TAF), which provides current and accurate 

information on how operations will increase on an airport specifi c basis.

Th e new U.S. version of MAGENTA also uses updated population data from the 2000 

Census. Th e U.S. version of MAGENTA has evolved over time as more comprehensive 

databases were incorporated to improve the accuracy of the model. Th e data source for 

airport traffi c changed from the Offi cial Airline Guide (OAG) to the FAA Enhanced Traffi c 

Management System (ETMS).

Unlike OAG, the ETMS database includes unscheduled air traffi c, which allows for more 

accurate modeling of freight, general aviation, and military operations. Th e ETMS also 

provides more details on aircraft type for a more accurate distribution of aircraft fl eet mix. 

Under the old model, unscheduled traffi c was estimated and adjustments in the number of 

people exposed were made at the national level. 

Data on the number of people relocated through the Airport Improvement Program 

are collected from FAA regional offi ces. Local traffi c utilization data are collected from 

individual airports and updated periodically.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

323

Statistical

Issues

Th is measure is derived from model estimates that are subject to errors in model 

specifi cation. FAA has replaced the actual number of people exposed to signifi cant noise 

with the percent decrease in the number of people exposed, measured from the three-year 

average for calendar year 2000-2002. Moving to the three-year average stabilizes noise 

trends, which can fl uctuate from year to year and are aff ected by unusual events such as the 

9/11 attacks and the subsequent economic downturn. Th e 2000–2002 base time periods 

includes these events and is the same three-year period used for the emissions goal.

Th e move from actual numbers to percentages helps avoid confusion over U.S. noise 

exposure trends caused by annual improvements to the noise exposure model. A major 

change to MAGENTA resulted in a signifi cant improvement in the estimate of the number 

of people exposed to signifi cant noise levels around US airports. Until now, the scope of the 

measure included scheduled commercial jet transport airplane traffi c at major U.S. airports. 

With access to better operational data sources, the scope of the MAGENTA calculation 

has expanded to include unscheduled freight, general aviation, and military traffi c. Th e 

expanded scope of operations results in an increase in the estimate of the number of people 

exposed to signifi cant noise.

Th e growth in the number of people exposed to signifi cant noise results from 

improvements in measurement, not a worsening in aviation noise trends. Planned 

improvements to MAGENTA will continue to increase the estimate of the number of 

people exposed to aircraft noise, giving the false impression that aircraft noise exposure is 

increasing. Changing the noise performance goal to an annual percent change in aircraft 

noise exposure will better show the trend in aircraft noise exposure. Th e change will also 

make the Government Performance Review Act (GPRA) goal consistent with FAA’s Flight 

Plan goal.

Completeness No actual count is made of the number of people exposed to aircraft noise. Aircraft type 

and event level are current. However, some of the databases used to establish route and 

runway utilization were developed from 1990 to 1997, with many of them now over seven 

years old. Changes in airport layout including expansions may not be refl ected. Th e FAA 

continues to update these databases as they become available. Th e benefi ts of Federallyfunded mitigation, such as buyout, are accounted for. 

Th e noise studies obtained from U.S. airports have gone through a thorough public review 

process; either under the National Environmental Policy Act (NEPA) requirements or as 

part of a land use compatibility program.

Reliability Th e Integrated Noise Model (the core of the MAGENTA model) has been validated with 

actual acoustic measurements at both airports and other environments such as areas under 

aircraft at altitude. External forecast data are from primary sources. Th e MAGENTA 

population exposure methodology has been thoroughly reviewed by an ICAO task group 

and was most recently validated for a sample of airport-specifi c cases. 
UNITED STATES DEPARTMENT OF TRANSPORTATION

324

Details on DOT Security Measures

Shipping Capacity

Measure Percent of DOD-required shipping capacity, complete with crews, available within 

mobilization timelines. (FY)

Scope Th is measure is based on the material availability of 44 ships in the Maritime 

Administration’s Ready Reserve Force (RRF) and approximately 120 ships enrolled in the 

Voluntary Intermodal Sealift Agreement (VISA) program, which includes 60 ships enrolled 

in the Maritime Security Program (MSP). 

Th e performance measure represents the number of available ships (compared to the total 

number of ships in the RRF and VISA) that can be fully crewed within the established 

readiness timelines. Crewing of the RRF vessels is accomplished by commercial mariners 

employed by private sector companies under contract to the government. Currently there 

are more qualifi ed mariners than jobs, even in the most under represented categories. 

However, due to the voluntary nature of this system, there is no guarantee that suffi cient 

mariners will be available on time and as needed especially during a large, rapid activation.

Sources Material availability of ships. Maritime Administration records (and information 

exchanged with DOD) on the readiness/availability status of each ship by the Offi ce of 

Sealift Support (MSP/VISA ships) and the Offi ce of Ship Operations (RRF ships). Typical 

reasons why a ship is not materially available include: the ship is in drydock, the ship is 

undergoing a scheduled major overhaul, or the ship is undergoing an unscheduled repair. 

Th e Maritime Administration and DOD also maintain records of the sealift ships enrolled 

in the MSP and VISA and their crew requirements.

Availability of mariners. Th e Maritime Administration, through their Mariner Outreach 

System, extracts the number of qualifi ed mariners from the data recorded in the U.S. 

Coast Guard’s Merchant Mariner Licensing and Documentation (MMLD) system. Th e 

willingness and availability of these mariners to sail is then estimated using all available 

information including total U.S. requirements for deep sea mariners, recent sea service, and 

mariner surveys.

Statistical

Issues

None.

Completeness Data are complete.

Reliability Th e data is reasonably reliable and useful in managing the reserve fl eet readiness program.

Details on DOT Security Measures

DoD-Designated Port Facilities

Measure Percent of DoD-designated commercial strategic ports for military use that are available for 

military use within DoD established readiness timelines.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

325

Scope Th e measure consists of the total number of DOD-designated commercial strategic ports 

for military use that forecast their ability to able to meet DOD-readiness requirements 

within 48-hours of written notice from the Maritime Administration, expressed as a 

percentage of the total number of DOD-designated commercial strategic ports. Presently, 

there are 15 DOD-designated commercial strategic ports. Port readiness is based on 

monthly forecasts submitted by the ports and semi-annual port readiness assessments by 

the Maritime Administration in cooperation with other National Port Readiness Network 

partners.

Th e semi-annual port assessments provide data or other information on a variety of factors, 

including the following: the capabilities of channels, anchorages, berths, and pilots/

tugboats to handle larger ships; rail access, rail restrictions, rail ramp offl oading areas, 

and rail storage capacities; the availability of trained labor gangs and bosses; number and 

capabilities of available cranes; long-term leases and contracts for the port facility; distances 

from ports to key military installations; intermodal capabilities for handling containers; 

highway and rail access; number of port entry gates; available lighting for night operations; 

and number and capacity of covered storage areas and marshalling areas off the port.

Sources Th e Maritime Administration’s data are derived from monthly reports submitted by the 

commercial strategic ports and from MARAD/DOD semi-annual port assessments.

Statistical

Issues

None. 

Completeness Data are complete.

Reliability Th e data is reasonably reliable according to the Bureau of Transportation Statistics and 

useful in managing its port readiness program.

Details on DOT Security Measures

Transportation Capability Assessment for Readiness

Measure Transportation Capability Assessment for Readiness Index Score. (FY)

Scope Th e Offi ce of Emergency Transportation (OET) was transferred to the Offi ce of Intelligence, 

Security, and Emergency Response in Fiscal Year 2005. OET measures its performance in 

meeting the Homeland and National Security Performance goal to “prepare the Nation’s 

transportation system for a rapid recovery from intentional harm and natural disasters” by 

assessing progress in six functional areas: (1) Crisis Management Center, (2) U.S. Disaster 

Response, (3) Training and Exercises, (4) Continuity of Operations (COOP), (5) Continuity 

of Government (COG), and (6) International Response. A new performance measure is 

under development to capture the performance of all of the Offi ce of Intelligence, Security, 

and Emergency Response.
UNITED STATES DEPARTMENT OF TRANSPORTATION

326

Sources Th is measure is based on a self-assessment score determined by OET. Each functional area 

is rated based on between 1 and 5 specifi c criteria. Th e criteria are:

Function 1— Crisis Management Center (20 points)

Does the Secretary’s Crisis Management Center (CMC) have adequate resources, such as 

communications, technology, and fully ready technical staff ? (10 points)

Have the CMC workers been trained and participated in at least two exercises per year?

(10 points)

Function 2—U.S. Disaster Response (20 points)

Do the Regional Emergency Transportation Coordinators (RETCO) and Regional 

Emergency Response Teams have the necessary time, skills and equipment to successfully 

carry out their natural disaster and WMD functions? (6 points)

Is there adequate secure communications with state and local government and the 

transportation community when dealing with WMD or national security crises? (5 points)

Has the National Response Plan (NRP) Transportation Annex been updated in the past 2 

years? (3 points)

Within the past 2 years, have all ten regions updated their NRP Transportation Annexes?

(3 points)

Have DOT and DoD suffi ciently coordinated their transportation functions? (3 points)

Function 3—Training and Exercises (20 points)

Have Regional Response Teams and key personnel from state and local government and 

industry participated in DOT sponsored training and exercises, and did the training and 

exercises include both natural disasters and national security crises? (20 points)

Function 4—Continuity of Operations (COOP) (20 points)

Is DOT’s primary COOP site fully functional? (10 points)

Is the OST COOP plan updated at least once every two years? (3 points)

Have the Operating Administrations’ COOP Plans been updated in the last 2 years?

(4 points)

Has there been at least one COOP exercise or activation for both OST as well as all DOT 

modes in the last 12 months? (3 points)

Function 5—Continuity of Government (COG) (10 points)

Does DOT have a complete National Emergency Management Team (NEMT)? (5 points)

Have the NEMT team members received at least 1 training/exercise session during the 

year? (5 points)
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

327

Function 6—International Response (10 points)

Has DOT, as a U.S. representative to NATO, participated in at least 4 key NATO meetings 

and 2 exercises annually? (8 points)

Has DOT suffi ciently coordinated its international disaster role with the U.S. State 

Department and its Civil Reserve Air Fleet activities with the DoD? (2 points)

Statistical

Issues

None.

Completeness Th e measure is complete and refl ects the combined score of all evaluation criteria.

Reliability Scores are reliable to the extent that specifi c quantitative evaluation criteria are available for 

each of the questions used to rate the functions.

Details on DOT Organizational Excellence Measures

DOT Major System Acquisition Performance

Measures 1. For major DOT aviation systems, percentage of cost goals established in the acquisition 

project baselines that are met.

2. For major DOT aviation systems, percentage of scheduled milestones established in 

acquisition project baselines that are met.

Scope Th is performance measure encompasses acquisition management data for all of 

DOT’s major systems acquisition contracts, primarily in the FAA, but also from any 

offi ce procuring a major system as defi ned in OMB Circular A-11, and DOT’s Capital 

Programming and Investment Control order.

Sources Th e data for acquisition programs comes from each DOT organization procuring major 

systems.

FAA tracks and reports status of all schedule and cost performance targets using an 

automated database, providing a monthly Red, Yellow, or Green assessment that indicates 

their confi dence level in meeting their established milestones. Comments are provided 

monthly that detail problems, issues, and corrective actions, ensure milestones and cost are 

maintained within the established performance target. Th e performance status is reported 

monthly to the FAA Administrator through FAA Flight Plan meetings.

Statistical

Issues

Th e programs that are selected each fi scal year represent a cross section of programs within 

the Air Traffi c Organization. Th ey include programs that have an Exhibit 300 as well as 

what is referred to as “buy-by-the-pound” programs. Th e latter are typically not required 

to undergo a standard acquisition life cycle process. Th ere is no bias with the selection of 

milestones. Th e milestones selected represent the program offi ce’s determination as to what 

eff ort they deem “critical” or important enough to warrant inclusion in the Acquisition 

Performance goal for the year. Typically there are anywhere from two to four milestones. 

Interim milestones are also tracked but not included in the fi nal performance calculation.
UNITED STATES DEPARTMENT OF TRANSPORTATION

328

Completeness Th is measure is current with no missing data. Each DOT organization maintains its own 

quality control checks for cost, schedule, and technical performance data of each major 

systems acquisition in accordance with OMB Circulars A-11, A-109, and A-130, Federal 

Acquisition Regulations, and Departmental orders implementing those directives and 

regulations.

Reliability Each DOT organization having major system acquisitions uses the data during periodic 

acquisition program reviews, for determining resource requests. It is also used during the 

annual budget preparation process, for reporting progress made in the President’s Budget 

and for making key program management decisions.

Details on DOT Organizational Excellence Measures

Major DOT Infrastructure Project Cost and Schedule Performance

Measure 1. For major Federally funded infrastructure projects, percentage that meet schedule 

milestones established in project or contract agreements, or miss them by less than 

10 percent. (FY)

2. For major Federally funded infrastructure projects, percentage that meet cost 

estimates established in project or contract agreements, or miss them by less than

10 percent. (FY)

Scope Active FTA New Starts projects with Full Funding Grant Agreements larger than $1 billion; 

FHWA projects with a total cost of $1 billion or more, or projects approaching $1 billion 

with a high level of interest by the public, Congress, or the Administration; and FAA runway 

projects with a total cost of $1 billion or more.

Sources FTA — FTA uses independent reviews and third-party assessment providers such as the 

Corps of Engineers and other oversight contractors to validate the accuracy of project 

budgets and schedules before grantees are awarded Full Funding Grant Agreements. 

Project/Financial Management Oversight contractors review project budgets on a monthly 

basis and FTA assesses projected total project costs against baseline cost estimates and 

schedules.

FHWA — Th e percent cost estimates and scheduled milestones for a FHWA Major Project 

are measured from when the Initial Financial Plan (IFP) is prepared and approved to the 

required Annual Project Update. Th e update contains the latest information about the cost 

and schedule for each of the Major Projects. Division Offi ce Project Oversight Managers 

provide monthly status reports as a supplement to the Annual Update.

FAA — Project cost performance for each major project is measured from cost estimates 

submitted by the airport sponsor to support its letter of intent (LOI) and actual expenditure 

data from FAA data sources (for grants) and airport sponsor submissions (for overall project 

cost). Project schedule performance is measured from the Runway Template Action Plan 

(RTAP), as specifi ed in the National Airspace System Operational Evolution Partnership.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

329

Statistical

Issues

FTA — Scheduled milestone achievement is measured by the diff erence between the 

actual Revenue Operations Date and the date of the execution of the Full Funding Grant 

Agreement divided by the diff erence between the Revenue Operations Date in the Full 

Funding Grant Agreement and the date of execution of the Full Funding Grant Agreement. 

Cost estimate achievement is measured by the actual Total Project Cost divided by the Total 

Project Cost in the Full Funding Grant Agreement.

FHWA — A scheduled milestone is defi ned as being achieved upon completion of the 

project. Major Projects generally require 6-10 years from an IFP to completion. Cost 

estimates are prepared by comparing the costs in the most recent Annual Update to the IFP 

estimate. Because of the small number of Major Projects, FHWA may not meet its target if 

only a few projects show cost increases.

FAA — Schedule completion performance is measured for two milestones—the project 

design and the project construction. A project milestone is considered to meet the 

performance target if actual cumulative rate of completion is not more than 10 percent 

behind scheduled cumulative rate of completion, using the RTAP schedule as a base. For 

example, a 36-month schedule would allow a 3.6 month delay at any point in the schedule.

Cost performance is measured by comparing cumulative actual costs incurred at the end 

of each fi scal year with cumulative costs shown in the scheduled of costs submitted with 

the LOI application. A project will be considered to meet the cost performance target 

if cumulative costs are no more than 10 percent higher than projected costs in the cost 

schedule.

Completeness FTA — Th is measure is current with no missing data. Th e information is currently tracked 

with an in-house MS Excel database. A Web-based database, FASTTrak, is being developed 

to track this type of project information in the future. Th e measures are calculated monthly 

by an FTA Headquarters Engineer, checked by the Team Leader and reviewed by the Offi ce 

Director.

FHWA — Th e FHWA Major Projects Team maintains the project schedules and cost 

estimate information in a spreadsheet, which is updated when a Project IFP is approved 

and/or the Annual Update is received and accepted. Th e data is available and reported on a 

semi-annual basis.

FAA — Federal fi nancial commitments to airport sponsors are tracked by two automated 

systems, the System of Airports Reporting (SOAR) and the Delphi fi nancial system. Th ese 

systems are updated immediately when a grant payment is made or a grant is amended 

or closed-out. Th e FAA relies on the airport sponsor to report actual project costs on a 

quarterly basis. Project design and construction milestones (scheduled and actual) are 

contained in the RTAP and developed by all involved FAA lines of business, the airport 

sponsor and airlines. Th e RTAP is comprised of tasks that must be considered when 

commissioning the runway and assigns accountability to the airport, airline, and FAA 

allowing early identifi cation and resolution of issues that might impact the runway schedule.
UNITED STATES DEPARTMENT OF TRANSPORTATION

330

Reliability FTA — Calculations of schedule achievement are based on month of this report, and not 

on projected Revenue Operations Date. Re-calculations of schedule and cost baselines are 

made to refl ect amendments to the Full Funding Grant Agreements. FTA uses independent 

reviews and third-party assessment providers such as the Corps of Engineers and other 

oversight contractors to validate the accuracy of project budgets and schedules before 

grantees’ are awarded Full Funding Grant Agreements. FTA continues to work to improve 

its rigorous oversight program and has made project cost and budget performance a core 

accountability of every senior manager in the agency.

FHWA — Both the IFP and the Annual Update undergo a rigorous review by the Division 

Offi ce and the Major Projects Team prior to approval and acceptance.

FAA — Reporting of Federal fi nancial commitments to airport sponsors is done in 

accordance with FAA policy and guidance related to administering the Airport Improvement 

Program (AIP) and the authorizing statute. Th e FAA’s AIP Branch monitors FAA regional 

offi ces for compliance with policy and guidance, including input into SOAR and Delphi, and 

conducts periodic regional evaluations. Actual project costs reported by the airport sponsor 

are verifi ed by an annual single audit required by OMB. Such audits cover the entire fi nancial 

and compliance operation of the airport sponsor’s governing body. Status of the project 

design and construction schedule contained in the RTAP is updated quarterly, based on 

meetings held with the airport sponsor and airlines.

Details on DOT Organizational Excellence Measures

Transit Grant Process Effi ciency

Measure Percent of transit grants obligated within 60 days aft er submission of a completed 

application. (FY)

Scope FTA grants obligated during a fi scal year period for major programs: Urbanized area, nonUrbanized area, and Elderly and Persons with Disabilities formula grants; Capital grants; Job 

Access and Reverse Commute grants; Over-Th e-Road Bus grants; and Planning grants.

Sources FTA internal databases including the Transportation Electronic Award Management 

(TEAM) system.

Statistical

Issues

Processing time is calculated from submission date to obligation date. Zero-dollar, nonfunding grant amendments are excluded from analysis.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

331

Completeness Data are current with no missing data, since FTA uses internal databases, including the 

TEAM system. All grants obligated during the fi scal year for the selected programs (see 

Scope section) are included in the original data set. In rare cases where the submission date 

is omitted (which prevents processing time calculation), missing dates are researched and 

added to the database prior to reporting. Th e zero-dollar amendments are excluded because 

they are not representative of the grant processing action being tested.

Reliability Th e fi les that contain raw data from TEAM have been tested to ensure that all fi scal-year-todate obligated grants are included and that data is current. Report programs screen various 

date fi elds to identify any missing or out-of-sequence dates that would skew averages; 

dates are corrected prior to reporting. Reconciliation reports of TEAM data are produced 

monthly and anomalies are explored and resolved. Detailed monthly grant processing 

progress reports provide management tools to the Regional Administrators, who continue to 

make this goal a top priority. 
UNITED STATES DEPARTMENT OF TRANSPORTATION

332

SUMMARY OF FINANCIAL STATEMENT AUDIT

AND MANAGEMENT ASSURANCES

TABLE 1. SUMMARY OF FINANCIAL STATEMENT AUDIT

Audit Opinion: Unqualifi ed

Restatement: Yes

Material

Weaknesses

Beginning 

Balance

New Resolved Consolidated Ending

Balance

Timely Processing of Transactions 

and Accounting for Property, Plant & 

Equipment, including the Construction 

in Progress Account at the FAA 

3 1

Financial Management, Reporting & 

Oversight at the HTF

3 3 0

Total Material Weaknesses 2 1 1
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

333

TABLE 2. SUMMARY OF MANAGEMENT ASSURANCES

Eff ectiveness of Internal Control over Financial Reporting (FMFIA, Section 2)

Statement of Assurance: Qualifi ed

Material Weaknesses

Beginning 

Balance New Resolved Consolidated Reassessed

Ending 

Balance

Timely Processing of Transactions 

and Accounting for Property, Plant & 

Equipment, including the Construction in 

Progress Account at the FAA 

3 1

Financial Management, Reporting & 

Oversight at the HTF

3 3 0

Total Material Weaknesses 2 1 1

Eff ectiveness of Internal Control over Operations (FMFIA, Section 2)

Statement of Assurance: Qualifi ed

Material Weaknesses

Beginning 

Balance New Resolved Consolidated Reassessed

Ending 

Balance

Weaknesses in the Stewardship and 

Oversight of Federal-Aid Projects 

Administered by Local Program Agencies

3 1

Total Material Weaknesses 1 1

Conformance with Financial Management System Requirements (FMFIA, Section 4)

Statement of Assurance: Qualifi ed

Non-Conformances

Beginning 

Balance New Resolved Consolidated Reassessed

Ending 

Balance

Integrated Financial Management 

Systems

3 3 0

Federal Accounting Standards 3 1

Total Non-Conformances 2 1 1

Conformance with Federal Financial Management Improvement Act (FFMIA)

Agency Auditor

Overall Substantial Compliance Yes or No Yes or No

1. System Requirements Yes Yes

2. Accounting Standards No No

3. USSGL at Transaction Level Yes Yes
UNITED STATES DEPARTMENT OF TRANSPORTATION

334

DEPARTMENT OF TRANSPORTATION

FEDERAL AVIATION ADMINISTRATION

PENDING MATERIAL WEAKNESS

HIGH RISK AREA: Timely Processing of Transactions and Accounting for Property, Plant, and 

Equipment, including the Construction in Progress Account & FFMIA Non-Compliance.

EXECUTIVE SUMMARY MILESTONES

PLANNED DATES

O=Original

L=Last Year

C=Current

How shall we fi x it? FAA will 

revised and implement policies, 

procedures and controls to improve 

the capitalization and retirement of 

Property, Plant & Equipment (PP&E).

How will we know it’s fi xed?

1. Policies and procedures 

support auditable PP&E 

balance.

2. Increased oversight of the 

capitalization process.

3. Monitoring controls indicate 

policies and procedures are 

being followed.

4. Quality review of accounts 

indicates project activity is 

conducted property.

Planned (Near-Term)

1. Develop and implement 

business process improvement 

for the timely capitalization 

and retirement of PP&E.

C - 12/2007

2. Formalize organizational 

responsibility and oversight of 

property capitalization eff orts.

C - 12/2007

3. Identify additional 

preventative and detective 

controls and initiate changes, 

when necessary, to ensure 

proper capitalization and 

retirement of FAA assets.

C - 12/2007

4. Continue to conduct training 

on the capitalization process. C - 03/2008

5. Improve quality control review 

procedures at headquarters 

and in the regions to ensure 

capitalized assets are 

complete, accurate, and 

properly valued during the 

construction and close-out 

of construction in progress 

projects.

C - 03/2008

6. Continue to improve the 

process to ensure that assets 

placed into service are properly 

supporting by appropriate 

documentation per FAA policy.

C - 06/2008

Completion Date: (Overall 

completion dates for correcting 

entire material weakness or 

material nonconformance).

C - 06/2008
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

335

DEPARTMENT OF TRANSPORTATION

FEDERAL HIGHWAY ADMINISTRATION

PENDING MATERIAL WEAKNESS

HIGH RISK AREA: Weaknesses in the Stewardship and Oversight of Federal-Aid Projects 

Administered by Local Program Agencies (LPA).

EXECUTIVE SUMMARY MILESTONES

PLANNED DATES

O=Original

L=Last Year

C=Current

How shall we fi x it? FHWA will 

work with State DOTs to identify 

proper stewardship and oversight 

functions to ensure Federal-aid 

requirements on met on LPAadministered projects.

How will we know it’s fi xed?

1. Policies and procedures 

support auditable results.

2. Increased oversight of the 

projects administered by LPAs.

3. Monitoring controls indicate 

policies and procedures are 

being followed.

4. Quality reviews of LPAadministered projects indicate 

that Federal-aid requirements 

are being met.

Planned (Near-Term)

1. Initiate evaluation of State DOT’s 

existing processes and procedures.

C - 09/2007

2. Evaluate the need for additional process 

reviews and begin those reviews. C - 09/2007

3. Initiate discussions with the State DOT 

on the development or enhancement of 

their LPA project oversight program.

C - 09/2007

4. Begin analyses and development of 

regulations that may be necessary to 

more formally establish a structured 

LPA project oversight program.

C - 09/2007

5. C - 09/2007 Continue process reviews as needed.

6. Submit detailed corrective action plans 

as appropriate to address development 

needs and/or corrective measures to 

assure the State DOT has or will have a 

comprehensive LPA project oversight 

program.

C - 01/2008

7. Update report to the LPOC on whether 

the State DOT has, or is working to 

develop, a comprehensive LPA project 

oversight program.

C - 04/2008

8. Report to the LPOC on whether the 

State DOT has a comprehensive LPA 

project oversight program.

C - 10/2008

9. As appropriate, complete the 

rulemaking process to implement any 

needed regulations that more formally 

establish a structured LPA project 

oversight program.

C - 10/2009

Completion Date: (Overall completion dates 

for correcting entire material weakness or 

material nonconformance).

C - 10/2009
UNITED STATES DEPARTMENT OF TRANSPORTATION

336

IPIA REPORTING DETAILS

1. IMPROPER PAYMENT PROGRAM RISK ASSESSMENT DESCRIPTION

In prior years, the Department identifi ed the following ten programs as being susceptible to 

signifi cant improper payments. At that time, the Department identifi ed the ten programs in the table 

below as having the highest potential for improper payments.

Operating Administration Program

Federal Highway Administration Federal-aid Highway Program – State Project*

Federal Lands Highway Program – Contracts

Federal Aviation Administration Operations

Facilities and Equipment

Airport Improvement Program*

Federal Transit Administration Capital Investment Grants*

Formula Grants*

Offi ce of the Secretary of Transportation Working Capital Fund

DOT Payroll**

Federal Railroad Administration Grants

*Identifi ed in the former Section 57 of OMB Circular A-11

**For administrative purposes, payroll was reviewed as a single program for all of DOT

Bolded programs were included in the FY 2007 nationwide IPIA review

In accordance with Improper Payments Information Act (IPIA) requirements and OMB guidelines, 

during FY 2004 and 2005 six of the Programs refl ected in the Table above were subject to a risk 

assessment and an in-depth improper payment review, including a review of payments by the 

Department to grantees. No improper payments exceeding both 2.5 percent of program payments 

and $10 million were found. Th e six programs were subject to a risk assessment based on the 

following criteria: Gross Expended Amount, Complexity of Payments, Established Internal Controls 

and Oversight, Type of Program Recipient, Number of Program Recipients, Volume of Payments, 

Probability of Growth, and Changes in the Program from the previous year. Th e risk criterion was 

used to determine the sampling size for each program. From that, each program underwent an in 

depth statistically based improper payment review.

Based on the FY 2004 and 2005 reviews, the Department concluded that the six programs subject 

to the risk assessment and improper payment test procedures were not susceptible to signifi cant 

improper payments as defi ned by the OMB. For the remaining four programs, because of the 

signifi cance of grantee payments and the fact that such payments were not tested under previous 

eff orts due to a lack of data required for testing at the Federal level, additional testing was required. 

Th e four programs are the Federal Highway Administration (FHWA) Federal-aid Highway 

Program, Federal Aviation Administration (FAA) Airport Improvement Program, Federal Transit 

Administration (FTA) Formula Grants Program, and the FTA Capital Investment Grants Program. 

Because of program and funding changes, the Department was uncertain at the beginning of FY 2007 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

337

as to whether the FTA Capital Investment Grants Program was subject to improper payment testing. 

Subsequently, OMB advised the Department to proceed with model development for nationwide 

testing in FY 2008. 

2. SAMPLING PROCESS AND RESULTS

In FY 2007, the Department continued implementing the IPIA, which requires that agencies: (1) 

review programs and identify those susceptible to signifi cant improper payments (2) report to 

Congress on the amount and causes of improper payments and (3) develop approaches for reducing 

such payments. 

In FY 2007, the Department successfully completed its review of the FHWA Federal-aid Highway 

Program, FAA Airport Improvement Program, and the FTA Formula Grants Program. With respect 

to the Formula Grants Program, as described below, successful completion pertains to approximately 

one-third of the grantees. In addition, the Department developed and tested a model for determining 

the amount of improper payments in the FTA Capital Investment Grants Program.

In FY 2007, the Department re-engaged AOC Solutions, Inc. to develop the nationwide sampling 

plan, collect the results from the application of test procedures, and provide a nationwide estimate of 

improper payments for Federal-aid Highway Program, Airport Improvement Program, and Formula 

Grants Program. With respect to the Formula Grants Program, the sampling plan, test procedures, 

and test results only apply to approximately one-third of the grantees covered by the FTA’s Formula 

Grant Triennial Review Program. 49 U.S.C. 5307 prescribes a Triennial Review of all Formula Grant 

grantees. OMB Circular A-123, Attachment C, paragraph F, provides for alternative approaches, 

including determining the amount of improper payments for components, such as those addressed in 

the foregoing statute. 

In addition, AOC developed and tested a model for determining the amount of improper payments 

in the FTA Capital Investment Grants Program. Th e Department will apply the model on a 

nationwide basis to the Capital Investment Grants Program in FY 2008.

Th e samples designed to execute the model are of suffi cient size to yield an estimate with a 90 percent 

confi dence interval within +/- 2.5 percent points around the estimate of the percentage of erroneous 

payments, as prescribed by OMB. Th e results of these eff orts are discussed below.

FEDERAL-AID HIGHWAY PROGRAM

Th e Department developed and executed a sampling plan to test project payments and estimate the 

amount of improper payments nationwide.

Th e FHWA executed the nationwide testing program using personnel from the FHWA division 

offi ces and covered Federal payments to grantees over the twelve-month period March 1, 2006 

through February 28, 2007. 
UNITED STATES DEPARTMENT OF TRANSPORTATION

338

Th e sampling plan involved a multi-staged statistical approach that included the selection of 53 

Federal payments, 40 state payments, and then 230 testable line items from those payments for 

testing. Th e 2007 sample size is signifi cantly less than the 2006 sample size because of a change 

in objectives. In 2006, the Department wanted to ensure all 50 states and two territories received 

sample items for testing. Th is required a substantially larger sample that would have been required 

had the Department not required that all states and territories receive sample items. In 2007, the 

sample was designed to support a nationwide estimate of improper payments and was not designed 

to provide sample items to all states and territories. Th e states that did not appear in the IPIA sample 

received sample items for FIRE testing.

Th e test procedures applied to the line items were designed to test a range of administrative elements 

and contractual elements. Tests of administrative elements included determining whether payments 

were properly approved, billed at the correct federal participation rate, and whether billings and 

payments were mathematically accurate. Tests of contractual elements included determining whether 

payments were in accordance with contract rates/prices for specifi ed materials and whether material 

quality tests indicated that materials met contractual requirements. 

Improper payments totaling $45,568 were found in the sample of 230 tested items. Th e projection of 

this result to the population of program payments for the twelve-month period results in an improper 

payment estimate of $55.2 million +/- $0.5 million. Th is projection does not meet OMB’s defi nition of 

signifi cant improper payments ($10 million and 2.5 percent of total program payments). 

Th e improper payments reported resulted from factors such as unallowable charges, insuffi cient 

supporting documentation, incorrect calculations, and duplicate payments. Th e FHWA has 

implemented its Financial Integrity Review and Evaluation (FIRE) program to monitor State and 

Territory payments and provide a mechanism for assisting these entities with eff ectively addressing 

operational issues that result or could result in improper payments.

FTA FORMULA GRANTS PROGRAM

FY 2007 was the fi rst year of nationwide coverage of the FTA Formula Grants Program. In FY 2006, 

the FTA developed and tested a model used for use in IPIA testing in 2007. Th e FTA developed and 

executed a sampling plan to determine the amount and cause of improper payments in the Formula 

Grants Program and to assist the FTA in incorporating the IPIA test procedures in its statutorily 

required Triennial Review Program. 

Th e FTA executed the nationwide testing program for grantees covered by the 2007 Triennial Review 

Program using contractor personnel. Th e review covered the twelve-month period March 1, 2006 

through February 28, 2007. 

Th e sampling plan involved a multi-staged statistical approach that included the selection of 60 

Federal payments, 30 transportation authorities’ payments, and then 169 testable line items from 

those payments for testing. Th e test procedures applied to the line items were designed to test a range 

of administrative elements and contractual elements. Tests of administrative elements included 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

339

determining whether payments were properly approved, billed at the correct federal participation 

rate, and whether billings and payments were mathematically accurate. Tests of contractual elements 

included determining whether payments were in accordance with contract rates/prices for specifi ed 

materials and whether material quality tests indicated that materials met contractual requirements. 

Improper payments totaling $2,326.16 were found in the sample of 169 tested items. Th e projection of 

this result to the population of program payments for the twelve-month period results in an improper 

payment estimate of $2.77 million +/- $0.03 million. Th is projection does not meet OMB’s defi nition 

of signifi cant improper payments ($10 million and 2.5 percent of total program payments). 

Th e improper payments reported resulted from factors such as miscalculated federal participation 

share and lack of supporting documentation.

FTA CAPITAL INVESTMENT GRANTS PROGRAM

In FY 2007 the FTA developed and tested an improper payment test model at one recipient of Capital 

Investment Grants Program funding. Th e FTA patterned the model on the model developed for the 

FTA Formula Grants Program in 2006.

Th e test model involved developing test workbooks with test criteria and procedures. Th e sampling 

plan involved a multi-staged statistical approach that included the selection of 17 Federal payments, 

49 grantee payments, and then 83 testable line items from those payments for testing. Th e test 

procedures applied to the line items were designed to test a range of administrative elements and 

contractual elements. Tests of administrative elements included determining whether payments were 

properly approved, billed at the correct federal participation rate, and whether billings and payments 

were mathematically accurate. Tests of contractual elements included determining whether payments 

were in accordance with contract rates/prices for specifi ed materials and whether material quality 

tests indicated that materials met contractual requirements. 

Improper payments totaling $361,691.73 were found in the sample of 83 tested items. Th e projection 

of this result to the population of program payments for the twelve-month period results in an 

improper payment estimate of $0.55 million +/- $0.39 million. Th is projection applies only to the 

single grantee and does not apply nationwide. 

Th e improper payments reported resulted from draw-downs in excess of federal participation share.

Th e FTA will apply the model on a nationwide basis in FY 2008 in order to meet the requirements of 

the IPIA.

FAA AIRPORT IMPROVEMENT PROGRAM 

Th e FAA developed and executed a sampling plan to determine the amount and cause of improper 

payments in the Airport Improvement Program. Th e FAA review covered the twelve-month period 

March 1, 2006 through February 28, 2007. 
UNITED STATES DEPARTMENT OF TRANSPORTATION

340

Th e sampling plan involved a multi-staged statistical approach that included the selection of 50 

Federal payments, 30 sponsor payments, and then 95 testable line items from those payments for 

testing. Th e test procedures applied to the line items were designed to test a range of administrative 

elements and contractual elements. Tests of administrative elements included determining whether 

payments were properly approved, billed at the correct federal participation rate, and whether billings 

and payments were mathematically accurate. Tests of contractual elements included determining 

whether payments were in accordance with contract rates/prices for specifi ed materials and whether 

material quality tests indicated that materials met contractual requirements. 

Th e review found administrative and contractual compliance as addressed in the test model and no 

improper payments. 

3. CORRECTIVE ACTION PLANS FOR REDUCING THE ESTIMATED RATE OF IMPROPER 

PAYMENTS. 

FHWA FEDERAL-AID HIGHWAY PROGRAM

FHWA Division Offi ces listed the following reasons for the improper payments identifi ed as a result 

of the IPIA review: Data entry errors, missing approvals, incorrect cost allocations, payments for 

missing fi eld offi ce equipment, unallowable charges, materials received not in accordance with 

contract terms, and source documentation not supporting payment amounts. 

Th e Department and the FHWA will implement fully the FHWA’s FIRE program in FY 2007 to 

monitor State and Territory payments and provide a mechanism for assisting these entities with 

addressing eff ectively operational issues that result or could result in improper payments. Th e 

Department believes that this proactive approach will establish internal control mechanisms for both 

preventing and detecting improper payments through eff ective oversight and outreach, the latter 

being intended to assist grantees in improving program management.

FTA FORMULA GRANTS PROGRAM 

Th e FTA plans on adapting its statutorily required Triennial Review Program to include procedures 

to test for improper payments. Th is program will focus not only on determining the amount and 

causes of improper payments in the future. 

In addition, the FTA will advise grantees of actions needed to ensure reimbursement requests are in 

accordance with grant cost sharing or matching requirements and that all transactions are supported 

properly prior to submission of reimbursement requests. Finally, the FTA will assess the feasibility 

of follow-up actions to assess the extent to which grantees covered by the 2007 review are addressing 

defi ciencies that resulted in improper payment determinations. 

FTA CAPITAL INVESTMENT GRANTS PROGRAM

Since the eff ort to date has been on IPIA model development and testing, the Department and the 

FTA have no nationwide statistics on the amount and rate of improper payments for this program. 

Th e objectives of the FY 2007 eff ort were to develop the model and fi eld test it to assist the FTA 

in fully implementing the IPIA requirements for this program in FY 2008. Th e FY 2007 model 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

341

development and testing eff ort was not designed to provide a nationwide or program-wide estimate 

of improper payments. However, in FY 2008, this test model will be executed nationwide for this 

program.

While the FTA’s eff orts on the Capital Investment Grants Program were limited, the FTA will 

advise grantees of actions needed to ensure reimbursement requests are in accordance with grant 

cost sharing or matching requirements and that all transactions are supported properly prior to 

submission of reimbursement requests. Once the FTA completes nationwide testing in FY 2008, it 

will assess the feasibility of follow-up actions to assess the extent to which grantees are addressing 

defi ciencies, if any, that result in improper payment determinations. 

4. DEPARTMENT ACCOMPLISHMENTS IN GRANT PROGRAMS

Th e Department completed the development and testing of models for determining the amount 

and rate of improper payments in its major grant programs. Th e FHWA review of the Federalaid Highway Program, FTA Formula Grants Program, and FAA Airport Improvement Program 

represented nationwide application of an innovative research and develop strategy implemented in 

FY 2005 and updated in FY 2006. Th is methodology successfully resolved a limitation of prior year 

eff orts examining federal outlays to primary recipients. As discussed above, a methodology model 

that reached grantee level data in the FTA Capital Investment Grants Program was developed and 

fi eld tested in FY 2007. Th is model will be rolled-out nationwide in 2008.

5. IMPROPER PAYMENT ESTIMATED ERROR RATES, DOLLAR ESTIMATES, AND OUTLOOK

Program

PY CY1 CY +1 CY +2 CY +3

 Outlays IP % IP $ Outlays IP % IP $ Est. Outlays IP % IP $ Est. Outlays IP % IP $ Est. Outlays IP % IP $

FHWA: 

Federal-aid 

Highway 

Program

32,883 .247 30.15 33,347 0.2 55.2 37,140 NA NA 39,300 NA NA NA NA

FTA: Formula 

Grants 

Program2

NA NA NA 6,2813 0.3 4.32 5,700 NA NA 5,700 NA NA NA NA

FTA: Capital 

Investment 

Grants 

Program4

NA NA NA 2,663 1.1 .6 2,800 2,800

FAA: Airport 

Improvement 

Program

NA NA NA 3,874 NA 0 3,967 NA NA 4,075 NA NA NA NA

1. Dollars are in millions

2. Results for the FTA Formula Grants Program applies only to approximately one-third of the grantees as described in Section 2 above.

3. Outlays for grantees covered by 2007 IPIA testing and upon which the FTA Formula Grants program IP% is based, approximates $1.2 billion.

4. CY statistics for the Capital Investment Grants program pertain only to a single grantee and, accordingly, are not projectible nationwide.
UNITED STATES DEPARTMENT OF TRANSPORTATION

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6. RECOVERY AUDIT RESULTS

Th e recovery auditor, Horn and Associates, has continued working to identify overpayments and other 

areas of weakness. Th ey have been granted access to our fi nancial system to review payment records 

and have been tightly integrated into our existing business processes with minimal disruption or cost to 

the government.

To date, the recovery auditor has not uncovered any chronic problems with DOT’s business processes 

and procedures. Th ey are currently in the process of reviewing duplicate payments, prompt payment 

interest paid in error, sales tax on utility billings and open credits on statement. Th e chart below depicts 

their fi ndings to date:

Agency

Component

Amount Subject

to Review for

CY Reporting

Amounts

Identifi ed

for Recovery

Amounts Identifi ed/ 

Amounts Reviewed

Amounts

Recovered

CY

Amounts

Recovered

PY

OST 2,846512,015 65,751,781 68,961 0 0

FAA 9,528,068,552 150,219,554 4,739,975 1,111,618 45,109

FHWA 2,343,398,062 218,995,827 340,622 10,000 0

FMCSA 182,705,574 5,740,338 97,273 0 0

FRA 5,815,740,923 922,035,393 72,384 0 0

FTA 327,017,797 10,908,847 563,769 0 0

MARAD 2,014,025,448 48,528,867 568,010 0 0

NHTSA 1,857,952,895 5,920,159 68,796 68,796 0

OIG 42,465,487 415,809000

PHMSA 28,261,569 4,021000

RITA 19,823,586 13,337000

STB 1,259,489 10,832 27,112 27,112 0

TOTAL $25,007,231,396 $1,428,544,765 $6,546,901 $1,217,525 $45,109

7. DEPARTMENT PLANS FOR ENSURING MANAGERS ARE HELD ACCOUNTABLE FOR 

REDUCING AND RECOVERING IMPROPER PAYMENTS

Departmental management continues to take an active role in ensuring that agency managers are 

held accountable for reducing and recovering improper payments. Th e Deputy CFO has taken the 

lead in this initiative and is heavily involved in the daily decisions of the program. Additionally, the 

Department’s CFO has taken a role in advocating the program.

On a monthly basis, the Department’s top fi nancial offi cers are briefed on the status of improper 

payment initiatives. Additionally, monthly reports are distributed to all levels of the Department 

outlining the work of the recovery audits.

To date, there have been no signifi cant improper payments identifi ed. If improper payments are 

found, the Offi ce of the Secretary/Offi ce of Financial Management will work with the organization to 

ensure that reduction targets and recovery rates are established.
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

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8. INFORMATION SYSTEMS AND INFRASTRUCTURE REQUIREMENTS TO REDUCE 

IMPROPER PAYMENTS

Th e Department is completing full implementation of the IPIA and at this point has not identifi ed a 

need for any additional systems and infrastructure requirements.

9. DESCRIBE THE STATUTORY OR REGULATORY BARRIERS WHICH MAY LIMIT THE 

AGENCIES’ CORRECTIVE ACTIONS IN REDUCING IMPROPER PAYMENTS AND ACTIONS 

TAKEN BY THE AGENCY TO MITIGATE THE BARRIERS’ EFFECTS.

Th e Department has not identifi ed any statutory or regulatory barriers that limit its corrective action 

eff orts.
UNITED STATES DEPARTMENT OF TRANSPORTATION

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TOP MANAGEMENT CHALLENGES 

Department of Transportation 

Report Number: PT-2008-008

Date Issued: November 15, 2007
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

345

U.S. Department of 

Memorandum

Transportation 

Office of the Secretary 

of Transportation 

Office of Inspector General 

Subject: INFORMATION: DOT’s FY 2008 

Top Management Challenges 

Report Number PT-2008-008 

Date: November 15, 2007 

From: Calvin L. Scovel III

Inspector General

Reply to 

Attn. of: J-1

To: The Secretary 

Deputy Secretary

The Office of Inspector General (OIG) has identified nine top management 

challenges for the Department of Transportation (DOT) for fiscal year (FY) 2008. 

The traveling public’s growing concerns about aging transportation infrastructure 

and increasing air travel delays will demand special attention from DOT in 

FY 2008. Key actions will include balancing funding needs to repair or replace 

aging systems while expanding capacity and determining requirements to advance 

new technologies and viable oversight structures. 

The OIG’s list for FY 2008 is summarized below. This report and the 

Department’s response (see Appendix) will be incorporated into the DOT 

Performance and Accountability Report, as required by law. The exhibit to this 

report compares this year’s management challenges with those published in 

FY 2007.

x Continuing To Enhance Oversight To Ensure the Safety of an Aging 

Surface Transportation Infrastructure and Maximize the Return on 

Investments in Highway and Transit Infrastructure Projects 

- Targeting Oversight Actions To Ensure the Safety of Tunnels and Bridges 

- Ensuring That Major Projects Are Completed in an Efficient and CostEffective Manner To Maximize the Return on Federal Infrastructure 

Investments

i
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x Addressing Long- and Short-Term Challenges for Operating, 

Maintaining, and Modernizing the National Airspace System 

- Hiring and Training Nearly 15,000 Controllers Over the Next 10 Years 

- Keeping Existing Modernization Projects on Track

- Reducing Cost, Schedule, and Technical Risk With NextGen 

- Maintaining FAA’s Aging Air Traffic Control Facilities

- Properly Accounting for Capital Investment Projects 

x Developing a Plan To Address the Highway and Transit Funding Issues in 

the Next Reauthorization 

- Facing a Near-Term Funding Crisis in the Highway Trust Fund 

- Developing a Comprehensive Highway Funding Framework Quickly 

x Reducing Congestion in America’s Transportation System 

- Reducing Delays, Improving Airline Customer Service, and Meeting the 

Anticipated Demand for Air Travel in the Near Term

- Keeping Planned Infrastructure and Airspace Projects on Schedule To 

Relieve Congestion and Delays 

- Leading Stakeholders 

- Developing Innovative Funding Solutions for Infrastructure Needs

x Improving Oversight and Strengthening Enforcement of Surface Safety 

Programs 

- Improving Motor Carrier Safety With More Complete Information on 

Vehicle Crashes and Stronger Enforcement Against Repeat Violators 

- Closely Monitoring Mexican Motor Carriers Operating Throughout the 

United States Under the Department’s Demonstration Project 

- Countering Fraud in the Commercial Driver’s License Program

- Resolving Hours of Service Rules for Commercial Drivers 

- Improving State Accountability in Programs for Reducing AlcoholImpaired Driving

- Further Reducing Railroad Collisions and Fatalities Through More Safety 

Oversight

x Continuing To Make a Safe Aviation System Safer 

- Taking Proactive Steps To Improve Runway Safety in Light of Recent 

Serious Incidents 

- Ensuring Consistency and Accuracy in Reporting and Addressing 

Controller Operational Errors 

- Strengthening Risk-Based Oversight Systems for Air Carriers, External 

Repair Facilities, and Aircraft Manufacturers 

- Maintaining a Sufficient Number of Inspectors

- Strengthening Oversight of the Airman Medical Certification Program 

ii
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

347

x Strengthening the Protection of Information Technology Resources, 

Including the Critical Air Traffic Control System 

- Enhancing Air Traffic Control System Security and Continuity Planning

- Testing and Strengthening the Information System Security Program at 

DOT Headquarters 

- Ensuring the Timeliness of Data Recording and Protection of Personally 

Identifiable Information When Interfacing With Non-Federal Systems 

- Continuing To Enhance Oversight of Information Technology Investments 

x Managing Acquisition and Contract Operations More Effectively To 

Obtain Quality Goods and Services at Reasonable Prices 

- Increasing Incurred-Cost Audits of Procurement Contracts To Reduce 

Unallowable Charges 

- Developing Strategies for the Future Acquisition Workforce 

- Fostering High Ethical Standards Throughout the Department and Its 

Contracting Programs To Maintain the Public Trust 

- Enhancing Oversight on Federal-Aid Highway Construction Projects To 

Prevent Abuse in Contractor Quality Control Programs 

x Reforming Intercity Passenger Rail 

- Improving Amtrak’s Cost-Effectiveness To Sustain Its Financial Progress 

- Overcoming Challenges to Improving Amtrak’s On-Time Performance 

- Reauthorizing Amtrak To Facilitate Reform

If you have any questions concerning this report, please contact me at (202) 

366-1959. You may also contact David A. Dobbs, Principal Assistant Inspector 

General for Auditing and Evaluation, at (202) 366-1427. 

#

iii
UNITED STATES DEPARTMENT OF TRANSPORTATION

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Table of Contents 

Continuing To Enhance Oversight To Ensure the Safety of an Aging Surface 

Transportation Infrastructure and Maximize the Return on Investments in 

Highway and Transit Infrastructure Projects ..................................................... 1

Addressing Long- and Short-Term Challenges for Operating, Maintaining, 

and Modernizing the National Airspace System ............................................... 6

Developing a Plan To Address the Highway and Transit Funding Issues in 

the Next Reauthorization ................................................................................. 11

Reducing Congestion in America’s Transportation System ........................... 13

Improving Oversight and Strengthening Enforcement of Surface Safety 

Programs .......................................................................................................... 18

Continuing To Make a Safe Aviation System Safer........................................ 23

Strengthening the Protection of Information Technology Resources, 

Including the Critical Air Traffic Control System........................................... 31

Managing Acquisition and Contract Operations More Effectively To Obtain 

Quality Goods and Services at Reasonable Prices .......................................... 36

Reforming Intercity Passenger Rail................................................................. 41

Exhibit. Comparison of FY 2008 and FY 2007 Top Management 

Challenges........................................................................................................ 43

Appendix. Department Comments ................................................................. 44
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

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1

1. Continuing To Enhance Oversight To Ensure the Safety of 

an Aging Surface Transportation Infrastructure and 

Maximize the Return on Investments in Highway and 

Transit Infrastructure Projects 

Recent fatal highway incidents highlight the need for the Department to focus on 

the safety of the Nation’s surface transportation infrastructure, particularly for 

aging tunnels and bridges needing costly rehabilitation, repair, or replacement. 

The Department also needs to maximize the Federal transportation investment by 

ensuring that highway and transit projects are completed in a timely and costeffective manner. This is critical at a time when infrastructure needs are 

increasing and the Nation’s fiscal resources are struggling to meet growing 

demands. Going forward, the Department will be challenged to balance the need 

to provide funding for projects to repair or replace aging infrastructure with 

funding for projects to reduce congestion with new capacity. 

We see two key challenges that need continued management emphasis: 

x The Federal Highway Administration (FHWA) must target its oversight 

actions to ensure the safety of highway tunnels and bridges. 

x FHWA and the Federal Transit Administration (FTA) must ensure efficient use 

of Federal funds for highway and transit projects. FHWA must also promote 

cost-saving practices such as value engineering (VE), and FTA must provide 

vigilant oversight to control costs and schedules on several massive transit 

infrastructure projects. 

Targeting Oversight Actions To Ensure the Safety of Tunnels and Bridges 

Recent tragic highway incidents underscore the need for FHWA to ensure that its 

oversight actions target tunnels and bridges that represent high-priority safety risks 

so that problems are identified, evaluated, and remediated in a timely and thorough 

manner. In the past 18 months, two major incidents shook the traveling public’s 

confidence in the safety of the Nation’s tunnels and bridges. Specifically, in 

July 2006, a motorist was killed by falling ceiling panels in a tunnel of the Central 

Artery/Tunnel Project in Boston. In August 2007, 13 people were killed when the 

Interstate 35W Bridge in Minneapolis, which spanned the Mississippi River, 

collapsed during the evening rush hour. 
UNITED STATES DEPARTMENT OF TRANSPORTATION

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2

Accordingly, FHWA needs to take the following actions. 

Enhance the safety of the Nation’s highway tunnels. On August 16, 2007, we 

reported1

 that FHWA will need to exercise greater oversight to ensure that the 

Commonwealth of Massachusetts completes the remaining phases of its Stem to 

Stern Safety Review—a comprehensive, project-wide review of the Central 

Artery/Tunnel Project—and conducts remedial work to address safety risks in a 

timely, thorough, and independent manner. The timely completion of this review 

is critical to restoring public confidence in the safety of the project’s structures, 

particularly in light of its troubled history of schedule delays, cost increases, and 

construction quality problems. The magnitude of the review and the intense 

public concern for safety will challenge FHWA and the Department beyond their 

normal oversight roles. Since the Stem to Stern Safety Review is planned to last 

well into 2008, FHWA’s oversight actions must ensure that the review remains a 

top priority for the Commonwealth to restore the public’s confidence. 

In addition, the safety problems that surfaced in the Central Artery/Tunnel Project 

call into question the oversight and quality control processes for constructing and 

maintaining the Nation’s highway tunnels. Considering the known problems of 

the Central Artery tunnels, FHWA should develop and implement a system to 

ensure that states inspect and periodically report on tunnel conditions. To begin 

addressing these problems, FHWA officials informed us that they will issue an 

advance notice of proposed rulemaking by December 2007 to seek input regarding 

the development of national tunnel inspection standards. FHWA should 

aggressively move forward on this rulemaking and establish rigorous inspection 

standards as soon as possible. 

Improve oversight of the Nation’s structurally deficient bridges. The collapse 

of the Interstate 35W Bridge in Minneapolis underscores the importance of 

vigilant oversight for structurally deficient bridges (those that have major 

deterioration, cracks, or other deficiencies in their structural components). In 

September 2007, we testified2

 that nearly 72,500 bridges across the Nation were 

designated as “structurally deficient.” According to FHWA’s estimates, about 

$65 billion could be invested immediately to address current bridge deficiencies. 

However, only $21.6 billion was authorized for the Highway Bridge Program 

through FY 2009. 

1

 OIG Report Number MH-2007-063, “Initial Assessment of the Central Artery/Tunnel Project Stem to 

Stern Safety Review,” August 16, 2007. OIG reports and testimonies are available on our website: 

www.oig.dot.gov. 2

 OIG Testimony Number CC-2007-095, “Federal Highway Administration’s Oversight of Structurally 

Deficient Bridges,” September 5, 2007. OIG Testimony Number CC-2007-101, “FHWA Can Do More 

in the Short Term To Improve Oversight of Structurally Deficient Bridges,” September 20, 2007. 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

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3

Our September 2007 testimonies stated that Federal oversight of bridge 

inspections and funding for bridge rehabilitation and replacement constitute 

significant challenges. To enhance oversight, FHWA should take the following 

actions:

x Develop a data-driven, risk-based approach to bridge oversight to better 

identify and target those structurally deficient bridges most in need of 

recalculation of load ratings and postings. 

x Finalize and distribute the revised Bridge Program Manual to its 52 Division 

Offices as quickly as possible and ensure that FHWA engineers make greater 

use of existing bridge data as part of the annual compliance review process. 

x Ensure that all 52 Division Offices conduct rigorous and thorough assessments 

of any potential risks associated with structurally deficient bridges, as directed 

in February 2007. FHWA must also define how it will respond to any specific, 

high-priority risks that the Division Offices identify. 

x Identify and implement a process to determine the amount of Federal funds 

expended on structurally deficient bridges. 

Ensuring That Major Projects Are Completed in an Efficient and CostEffective Manner To Maximize the Return on Federal Infrastructure 

Investments 

With the increasing demand for limited Federal resources, completing highway 

and transit projects in a timely and cost-effective manner is more critical than ever.

To maximize the return on Federal infrastructure investments, both FHWA and 

FTA must provide vigilant oversight of their grantees to ensure that projects are 

completed on time and within budget.

FHWA must reduce highway project costs by promoting the use of value 

engineering. One way to more effectively use Federal highway funds is to lower 

project costs by increasing VE usage. VE is the systematic process of review and 

analysis of a project during the concept and design phases. A multi-disciplined 

team of persons independent of the project conducts the review. VE provides an 

opportunity for states to obtain the most value from Federal highway funds by 

saving on planned construction projects. It also serves as a key tool in FHWA’s 

stewardship of Federal funds.

Our March 2007 report on FHWA’s VE program3

 identified ways for FHWA to 

improve states’ VE programs. We found that states have missed opportunities to 

3

 OIG Report Number MH-2007-040, “Value Engineering in the Federal-Aid Highway Program,” 

March 28, 2007.
UNITED STATES DEPARTMENT OF TRANSPORTATION

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4

realize additional savings. For example, from FY 2001 through FY 2004, states 

collectively reported $4.2 billion in VE-recommended savings. However, we 

estimated that during the same 4-year period, states could have saved an additional 

$906 million ($725 million in Federal funds) by conducting all required VE 

studies ($117 million) and by achieving the national average of completing 

44.4 percent of VE recommendations ($789 million). These savings could have 

been reprogrammed to other transportation projects. To increase cost savings for 

federally supported highway projects in the future, FHWA should improve its VE 

program by revising policies, strengthening oversight activities, and disseminating 

best practices to states. 

FTA must provide vigilant oversight of transit projects to control costs and 

schedules. FTA has several massive infrastructure projects in various stages of 

design or construction. The agency must ensure that project sponsors keep these 

projects on schedule and within budget, particularly those projects in the 

Washington, D.C., Metropolitan Area and New York City. Vigilant oversight of 

these projects will be particularly important as FTA simultaneously oversees a 

large portfolio of other nationwide transit infrastructure projects. In its “Annual 

Report on Funding Recommendations—Proposed Allocation of Funds for Fiscal 

Year 2008,” FTA reported 10 existing fully funded infrastructure projects (not 

including the Washington, D.C., and New York City projects) with total Federal 

funding of about $4.6 billion. FTA reported that an additional 12 projects are 

currently competing for full funding. 

The Dulles Corridor Metrorail Project in the Washington, D.C., Metropolitan Area 

will challenge FTA in several respects. In July 2007, we reported4

 on key risk 

indicators in this project that merit the Department’s close monitoring in light of a 

potential Federal investment of $1.475 billion (including a $900 million New 

Starts grant and a separate loan and line of credit). Among the risks we identified 

were increases in cost estimates of over $1 billion and schedule delays of about 

4 years. We observed that the reported cost increases could prevent the project 

from meeting FTA’s cost-effectiveness standards, which would make it ineligible 

for a New Starts grant.

After we issued our report, FTA examined the project cost estimate and identified 

that certain elements of the project were underestimated. FTA also found that the 

project did not meet cost-effectiveness standards. The project sponsors have since 

revised the project scope and submitted a new, lower estimate. FTA is examining 

the new estimate, but it could find that the project still does not meet costeffectiveness standards. If the project goes forward, however, FTA will be 

challenged by the unusually complex organizational structure of the project. This 

4

 OIG Report Number MH-2007-060, “Baseline Report on Major Project Monitoring of the Dulles 

Corridor Metrorail Project,” July 27, 2007. 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

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5

includes a large network of key Federal, state, local, and private sector players 

with a stake in the project as well as the possibility of further cost increases and 

schedule delays. 

Further, the magnitude of ongoing major surface transportation projects in New 

York City with estimated costs of over $16 billion (these include about 

$8.5 billion in Federal funds) warrants close FTA oversight. These projects 

include the following: 

x Lower Manhattan reconstruction and enhancement transportation projects 

resulting from the September 11, 2001, terrorist attacks. Federal funds of 

$4.55 billion are allocated for this effort. 

x The East Side Access project. Proposed New Starts funding for this project is 

$2.63 billion. 

x Phase I of the Second Avenue Subway. Proposed New Starts funding for this 

project is about $1.3 billion. 

Controlling costs and schedules will be especially critical in the case of the Lower 

Manhattan recovery projects because of the Federal funding cap of $4.55 billion. 

Further, any costs that exceed Federal limits increase the pressure on a project 

sponsor to identify local funds to cover any cost overruns. Although the East Side 

Access and Second Avenue projects are not subject to the Federal cap, they still 

involve a large Federal funding commitment warranting close FTA oversight to 

ensure that project sponsors are exercising sound project and financial 

management. 

For further information, the following reports and testimonies can be found on 

the OIG web site at http://www.oig.dot.gov:

x Final Report on the Independence of Central Artery/Tunnel Project Inspection 

Contractors 

x Initial Assessment of the Central Artery/Tunnel Project Stem To Stern Safety 

Review

x Audit of Oversight of Load Ratings and Postings on Structurally Deficient 

Bridges on the National Highway System 

x Federal Highway Administration’s Oversight of Structurally Deficient Bridges 

x Value Engineering in the Federal-Aid Highway Program

x Baseline Report on Major Project Monitoring of the Dulles Corridor Metrorail 

Project
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6

2. Addressing Long- and Short-Term Challenges for 

Operating, Maintaining, and Modernizing the National 

Airspace System 

Over the last year, Congress, the Federal Aviation Administration (FAA), and 

aviation stakeholders have debated important questions about how best to finance 

FAA, reauthorize a wide range of aviation programs, and advance the Next 

Generation Air Traffic Management System (NextGen). Several alternatives have 

been proposed; these include imposing user fees, adjusting the existing excise tax 

structure, and allowing the agency to borrow for long-term capital investments. 

While there is disagreement over how to finance FAA, there is general agreement 

that the agency must fundamentally change how air traffic is managed to meet 

forecasted air travel demands. 

Congress has established a short-term FAA financing measure that reflects the 

status quo, but a long-term reauthorization is needed. How FAA should be 

financed is clearly a policy decision for the Congress. Regardless of the funding 

mechanism that is ultimately selected, the Department and FAA will face 

challenges in operating and maintaining the current system while concurrently 

advancing NextGen. These include (1) hiring and training enough air traffic 

controllers to address the surge in retirements; (2) keeping existing modernization 

projects on track; (3) reducing cost, schedule, and technical risks with NextGen; 

(4) maintaining FAA’s aging air traffic control facilities; and (5) properly 

accounting for capital investment projects. 

Hiring and Training Nearly 15,000 Controllers Over the Next 10 Years 

FAA anticipates a significant surge in controller attrition as the controllers who 

were hired after the 1981 strike begin retiring. To address this issue, FAA must 

hire and train over 15,000 new controllers through the year 2016. In December 

2004, FAA developed a comprehensive workforce plan and issued the first in a 

series of annual reports to Congress. FAA issued the first update to the plan in 

June 2006 and the second in March 2007. 

In February, we issued the results of our review of FAA’s progress in 

implementing its controller workforce plan.5

 Overall, we found that FAA 

continues to make progress in implementing a comprehensive staffing plan to 

address the surge in retirements. For example, we found that FAA has 

significantly improved its hiring process and has reduced the time and costs to 

train new controllers. However, further progress is still needed in the following 

key areas:

5

 OIG Report Number AV-2007-032, “FAA Continues To Make Progress in Implementing Its Controller 

 Workforce Plan, but Further Efforts Are Needed in Several Key Areas,” February 9, 2007. 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

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7

x Completing validation of accurate facility-level staffing standards. This is a 

critical component because FAA has over 300 air traffic facilities with 

significant differences in air traffic levels and complexity.

x Establishing baseline metrics to measure the effectiveness of controller 

productivity initiatives. FAA must ensure that reductions in staffing are a 

result of increased productivity and not simply fewer controllers controlling 

more traffic.

x Continuing efforts to reduce the time and costs associated with on-the-job 

training. This is the longest and most expensive portion of new controllers’ 

training.

We will continue to monitor FAA’s progress and report on its actions to address 

this significant challenge. We are currently reviewing FAA’s management of the 

controller on-the-job training process and plan to issue a report early next year. 

Keeping Existing Modernization Projects on Track 

FAA’s major acquisitions have a long history of cost growth and schedule delays. 

For example, two acquisitions, the Wide Area Augmentation System (a satellitebased navigation system) and the Standard Terminal Automation Replacement 

System (new software and hardware for controllers who manage traffic in the 

vicinity of airports), have experienced cost growth in excess of $4.2 billion since 

their inception. Problems with FAA acquisitions are the result of overly ambitious 

plans, changing requirements, complex software development, and poor contract 

oversight.

It will be important to keep existing modernization projects on track because 

about 30 of these are intended to serve as platforms for NextGen. These include 

the $2.1 billion En Route Automation Modernization project to replace hardware 

and software for facilities that manage high-altitude traffic. We note that the 

project is within budget and is on schedule to be deployed at Salt Lake Center in 

2008.

While FAA has done a better job of managing acquisitions over the last several 

years, some programs are still at risk for further cost growth, schedule slips, or 

diminishing benefits. For example, the benefits (expected cost savings) of the 

FAA Telecommunications Infrastructure program (an effort to replace and 

consolidate all telecommunications into a single system) have eroded as costs have 

increased and completion schedules have slipped. FAA needs to prevent cost 

growth, schedule slips, and performance shortfalls with ongoing projects that 

could delay the NextGen capabilities needed to enhance capacity.
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8

Reducing Cost, Schedule, and Technical Risk With NextGen

Although the costs for developing and implementing NextGen remain uncertain, 

FAA expects to spend $4.6 billion on various NextGen initiatives between 2008 

and 2012. The bulk of these funds will be spent on developmental efforts. A key 

project includes the Automatic Dependent Surveillance-Broadcast program—a 

satellite-based system that allows aircraft to broadcast their position to controllers 

and other properly equipped aircraft. The development and execution of NextGen 

is the most complex, high-risk undertaking FAA has ever attempted and will 

require multibillion-dollar investments from the Federal government (for new 

ground automation systems) and airspace users (for new avionics).

In our February 2007 report, we examined progress with FAA’s Joint Planning 

and Development Office,6

 which is responsible for developing a vision for 

NextGen. We identified the range of actions needed to reduce risk with this 

complex, costly effort. We recommended, among other things, that FAA develop 

a strategy for obtaining the necessary expertise to execute NextGen initiatives and 

review existing modernization projects to determine required adjustments. FAA 

has begun addressing our concerns. FAA must also continue to address complex 

engineering and integration issues and develop an effective human factors 

program (for controllers and pilots) to ensure that anticipated changes can be 

safely introduced. 

Maintaining FAA’s Aging Air Traffic Control Facilities

FAA will be challenged to focus on NextGen initiatives while concurrently 

attending to its aging air traffic control facilities and related equipment (e.g., 

electrical power systems). FAA has 21 En Route facilities, 214 terminal facilities, 

and over 22,000 unstaffed facilities. According to FAA, many of these facilities 

are over 25 years old; some may have exceeded their useful life expectancy and 

may not meet current operational requirements. For example, FAA’s En Route 

Centers are now over 40 years old. In 2007, FAA budgeted approximately 

$400 million, or 16 percent, of its $2.5 billion capital account for facilities. A 

longer term but controversial challenge for the Department and FAA is 

determining to what extent FAA can realign or consolidate its air traffic facilities 

based on new technology. FAA must develop a cost-effective strategy for 

maintaining its existing facilities commensurate with NextGen technologies that 

could potentially reduce operating costs. 

6

 OIG Report Number AV-2007-031, “Joint Planning and Development Office: Actions Needed To 

Reduce Risks with the Next Generation Air Transportation System,” February 12, 2007. 
PERFORMANCE AND ACCOUNTABILITY REPORT - FY 2007

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9

Properly Accounting for Capital Investment Projects 

Congress provides more than $2 billion annually to FAA to invest in modernizing 

air traffic control systems. It takes many years to develop and test capital 

investment projects (such as the En Route Automation Modernization program) 

before they can be deployed for operational use. All of these investments are 

recorded in the Construction in Progress (CIP) account. Properly accounting for 

billions of dollars in capital investment has been a longstanding challenge for 

FAA. For years, FAA has relied on a labor-intensive process to adjust the CIP 

account balance for the annual financial statements reporting. For FY 2006, 

however, FAA was unable to support the CIP account balance which totaled 

$4.7 billion as of September 30, 2006. As a result, both FAA and the Department 

received a qualified audit opinion on the FY 2006 financial statements.

During FY 2007, FAA devoted extensive resources and management attention to 

cleaning up the CIP account balance to overcome the qualified opinion. As part of 

these correction efforts, FAA also implemented CIP business process 

enhancements. These included standardizing the methodology used to calculate 

unit costs, including overhead allocation, for asset deployment. The results were 

successful in overcoming the 2006 qualified opinion. However, weaknesses still 

remain in its implementation of the enhanced CIP business process and need to be 

addressed during FY 2008. To ensure the agency properly accounts for capital 

investment projects and avoids going back to prior period practices, FAA needs to 

institutionalize the enhanced CIP procedures throughout the organization.

For further information, the following reports and testimonies can be found on 

the OIG web site at http://www.oig.dot.gov:

x Perspectives on FAA’s FY 2007 Budget Request and the Aviation Trust Fund 

x FAA Has Opportunities To Reduce Academy Training Time and Costs by 

Increasing Educational Requirements for Newly Hired Air Traffic Controllers 

x Next Steps for the Air Traffic Organization 

x Report on Controller Staffing: Observations on FAA’s 10-Year Strategy for the 

Air Traffic Controller Workforce 

x Addressing Controller Attrition: Opportunities and Challenges Facing the 

Federal Aviation Administration 

x Opportunities To Improve FAA’s Process for Placing and Training Air Traffic 

Controllers in Light of Pending Retirements 

x Review of Staffing at FAA’s Combined Radar Approach Control and Tower 

with Radar Facilities

x Joint Planning and Development Office: Actions Needed To Reduce Risks with 

the Next Generation Air Transportation System
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x FAA Continues To Make Progress in Implementing its Controller Workforce 

Plan, But Further Efforts are Needed in Several Key Areas 

x FAA’s FY 2008 Budget Request: Key Issues Facing the Agency 

x Actions Needed To Reduce Risk With the Next Generation Air Transportation 

System

x Inspector General Testifies Before the House Aviation Subcommittee 

Regarding FAA Financing Proposals 

x Quality Control Review of Audited Financial Statements for FYs 2006 and 

2005, Federal Aviation Administration 
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3. Developing a Plan To Address the Highway and Transit 

Funding Issues in the Next Reauthorization 

The Department faces two significant challenges regarding Federal highway 

program funding. First, it must decide how to address Highway Trust Fund (HTF) 

revenue shortfalls that may require near-term reductions in Federal highway 

spending. Second, the Department must decide at what level it will propose that 

highway and transit programs be funded in the upcoming surface transportation 

reauthorization bill, and how that funding level will be financed. 

Facing a Near-Term Funding Crisis in the Highway Trust Fund

Highway funding levels are largely determined by the amount of revenue from the 

Federal motor fuel excise tax and other sources that are deposited into the HTF. 

HTF revenues for 2009 are now expected to fall far short of the levels previously 

anticipated. Unless addressed, this shortfall could lead to reductions in obligation 

limitations for Federal highway programs below the levels anticipated in the 

current authorization to prevent HTF insolvency. For instance, the American 

Association of State Highway and Transportation Officials (AASHTO) has 

projected a $4.3 billion Highway Account revenue shortfall in 2009 that could 

require an obligation reduction in the highway program of about $16 billion. The 

Department must help develop a consensus among the States, the highway 

community, and Congress as to if, and how, this shortfall in HTF revenues will be 

made up. 

Demand for More Investment and Rapid Cost Escalation Will Increase the 

Pressure To Expand Highway Funding. The Department’s most recent 

estimate7

 is that a 12-percent annual funding increase, in constant dollars, is 

required to maintain the Nation’s highways and bridges.8

 This would require an 

average annual investment of about $79 billion by all levels of government and the 

private sector (in constant 2004 dollars), compared with the $70 billion of capital 

spent in 2004. Additional increases in investment would also be required above 

these amounts to offset the effects of inflation. 

The amount needed to offset the effects of inflation in highway construction and 

maintenance costs has soared dramatically in recent years. As we reported in 

September 2007, highway construction and maintenance costs nationwide grew 

about three times faster from 2003 through 2006 than their fastest growth rate 

during any 3-year period between 1990 and 2003. These increases have 

7

 2006 Status of the Nation’s Highways, Bridges and Transit: Conditions and Performance. Report to 

Congress. U.S. Department of Transportation. 8

 This includes both structural maintenance and the maintenance of current congestion levels in light of 

increased usage. It also assumes no change in costs to users. 
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substantially reduced the purchasing power of highway construction funds and 

have led some state planners to cancel or delay projects. 

These increases were largely the result of escalation in the cost of commodities 

used in highway projects, such as steel and asphalt, and reflect structural, not 

transitory, economic changes. Consequently, commodity costs can be expected to 

remain elevated and could possibly continue to expand in the near future. If 

highway construction costs continue to increase at the 2006 rate, they will have 

increased by 37 to 60 percent during the term of the current highway bill. The 

next highway bill may need to provide a significant increase in funding just to 

maintain the current level of highway construction nationwide. 

The needed Federal investment in highways could be reduced by increased 

implementation of congestion pricing, accelerated deployment of operational 

technologies (such as Intelligent Transportation System technologies), and 

innovation in construction methods or materials. Further, innovative financing 

tools can reduce the requirement for near-term Federal highway program 

appropriations by permitting current revenues to be leveraged and highway 

construction to proceed more rapidly than would otherwise be possible. However, 

these tools are not all without controversy, particularly public/private partnerships 

and high occupancy toll (HOT) lanes. Wider support for these financing 

techniques needs to be developed if the Department proposes to expand their use. 

Developing a Comprehensive Highway Funding Framework Quickly

The current highway authorization expires at the end of FY 2009. The 

Department will need to determine what level of highway funding it will propose 

in the reauthorization in light of the growing demand for these investments and the 

escalating costs of meeting this demand. It will also need to determine how this 

level of investment should be funded. To make these determinations, the 

Department will need to consider changes to the existing highway funding 

structure as well as alternative, innovative financing mechanisms; it will also need 

to develop support for new financing methods. 

For further information, the following report can be found on the OIG web site 

at http://www.oig.dot.gov:

x Growth in Highway Construction and Maintenance Costs 

x Quality Control Review of Audited Financial Statements for FYs 2006 and 

2005, Highway Trust Fund 
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4. Reducing Congestion in America’s Transportation System 

The Department is pursuing a national strategy to reduce congestion across all 

modes of transportation. Congestion limits economic growth, wastes billions of 

gallons of fuel, and costs billions of dollars in lost productivity each year. This 

will likely remain a prominent challenge for the Department for some time, 

particularly with regard to air travel. We are seeing record-breaking flight delays 

and cancellations, and forecasted air travel demands will continue to strain the 

capacity of the system. This year’s airline customer service issues drew national 

attention and underscored the need for the Department’s continued focus in this 

area. The Department must make it a top priority to reduce aviation delays and 

alleviate customer dissatisfaction. 

While the Department has made progress on implementing several congestionrelated initiatives this past year, the strategy was developed before this year’s 

overwhelming air travel problems. The Department’s accomplishments this past 

year in implementing its national strategy included selecting Miami, Minneapolis, 

New York, San Francisco, and Seattle to participate in the Urban Partnership 

Agreement program after an 8-month nationwide competition. These 

communities will demonstrate strategies with proven effectiveness in mitigating 

traffic congestion. The Department also selected the first six interstate highway 

corridors as participants in the Corridors of the Future Program: (1) I-95 from 

Washington, D.C., to Florida; (2) I-70 from Missouri to Ohio; (3) I-15 from 

California to Utah; (4) I-5 from California to Washington; (5) I-10 from California 

to Florida; and (6) I-69 from Texas to Michigan.

The Department’s specific challenges for reducing congestion include: 

x reducing aviation delays, improving customer service, and meeting near-term 

demand for air travel; 

x keeping planned infrastructure and airspace projects on schedule to relieve 

congestion and delays; 

x leading stakeholders that have divergent views on resolving transportation 

congestion; and 

x meeting demands for additional resources in a tight budgetary environment. 
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Reducing Delays, Improving Airline Customer Service, and Meeting the 

Anticipated Demand for Air Travel in the Near Term 

During the first 7 months of 2007, airlines’ on-time performance was at the lowest 

percentage (72 percent) recorded in the last 10 years with nearly 28 percent of 

flights delayed, cancelled, or diverted. These rising flight delays are leading to 

more on-board tarmac delays. During the same period, over 54,000 scheduled 

flights—affecting nearly 3.7 million passengers—experienced taxi-in and taxi-out 

times of 1 to 5 hours or more. This is an increase of nearly 42 percent (from 

38,076 to 54,029) as compared to the same period in 2006 (see table 4-1). 

Table 4-1. Number of Flights With Long, On-Board Tarmac Delays of 1 to 5+ Hours 

January Through July of 2006 and 2007 

Time Period 2006 2007 % Change 

1-2 Hrs. 33,438 47,558 42.23

2-3 Hrs. 3,781 5,213 37.87

3-4 Hrs. 710 1,025 44.37

4-5 Hrs. 120 189 57.50

5 or > Hrs. 27 44 62.96

Total: 38,076 54,029 41.90

Source: Bureau of Transportation Statistics data 

Consumer complaints are also on the rise. DOT’s Air Travel Consumer Reports 

disclosed that for the first 7 months of 2007, complaints relating to flight problems 

(delays, cancellations, and missed connections) involving U.S. airlines more than 

doubled (1,096 to 2,468) for the same period in 2006. One-third of the Nation’s air 

traffic passes through New York, and three-fourths of the chronic delays around 

the country can be traced to delays at the New York airports. 

Airlines, airports, FAA, and DOT must work together to reduce delays and 

minimize the impact on passengers when these delays occur. Secretary Peters is 

committed to taking action, but the Department faces several challenges in 

addressing this issue. Although there is no “silver bullet,” a cumulative mix of 

solutions could help. These include scheduling procedures, air traffic control 

modernization, and ground infrastructure (new runways). Complex policy 

questions, such as peak-hour pricing, will also complicate potential solutions. 

Short- and long-term solutions to these delay problems must be pursued. It is also 

important to remember that the traveling public will likely face similar air travel 

problems in the spring and summer of 2008 and 2009 before they experience any 

real relief from capacity problems. The airlines and airports must do their part in 

the short term to effectively implement their customer service plans—including 

contingency plans—especially when extraordinary flight disruptions cause 

significant delays, cancellations, and diversions. The Department should also take 
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a more active role in overseeing customer service issues to ensure that airlines 

comply with their policies on flight problems. 

Keeping Planned Infrastructure and Airspace Projects on Schedule To 

Relieve Congestion and Delays 

While new technologies can help enhance arrival rates, FAA reports that new 

runways provide the most increases in capacity. Since 2000, new runways have 

been built at Detroit, Phoenix, Miami, and other airports. Without these new 

runways, congestion undoubtedly would have been much worse. 

Seven key runway projects are currently underway, including projects at 

Washington Dulles and Chicago O’Hare International Airports. Table 4-2 

provides information on major runway projects and expected completion dates 

from FAA’s Operational Evolution Plan,9

 the agency’s blueprint for enhancing 

capacity.

Table 4-2. Status of Major New Runway Projects, September 2007 

Airport Initial OEP 

(June 2001) 

Estimated

Completion Date

Current

Estimated

Completion

Date

Phase Current Cost 

Estimate

(in millions) 

Philadelphia*

(Runway 17/35) Not in initial OEP Jan 2009 Construction $65

Seattle-Tacoma 

(Runway 16R/34L) Nov 2006 Nov 2008 Construction $1,129**

Washington-Dulles

(Runway 1L/19R) Not in initial OEP Nov 2008 Construction $356

Chicago O’Hare 

(Runway 9L/27R) Not in initial OEP Nov 2008 Construction $455**

Chicago O’Hare* 

(Runway 10L/28R) Not in initial OEP Nov 2008 Construction $240**

Chicago O’Hare 

(Runway 10C/28C) Not in initial OEP 2012** Construction $1,265**

Charlotte

(Runway 17/35) June 2004 Feb 2010 Construction $300

Sources: FAA with Airport Sponsor Updates 

*Extension of existing runway. 

**Update of FAA data obtained from airport sponsor. 

These runway projects are expected to significantly enhance airport operations and 

decrease delays. The Department’s challenge is to make sure the navigation 

9

 FAA’s Operational Evolution Partnership has been the agency’s overall blueprint for enhancing capacity 

and includes runways, airspace changes, and new procedures. In June 2007, FAA expanded the scope of 

the plan beyond capacity to include commitments for the Next Generation Air Transportation System. 
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equipment, new procedures, and airspace modifications are in place when these 

projects are commissioned so that the expected benefits will be achieved. 

As we have noted in the past, airspace redesign efforts are often overlooked but 

are important short-term initiatives. History shows that airspace changes are 

critical to realizing the full potential of new runways and can enhance capacity 

even without new infrastructure. Currently, FAA is pursuing seven airspace 

redesign projects throughout the Nation, including a major effort to revamp 

airspace in the New York/New Jersey/Philadelphia area. FAA expects this project 

to make better use of existing runways in the area and provide more flexibility to 

manage delays in severe weather. Once implemented, FAA believes the redesign 

effort could reduce delays by as much as 200,000 hours annually. 

Leading Stakeholders 

Targeted infrastructure investments can help to alleviate transportation congestion, 

but the Department faces a difficult challenge in convincing various stakeholders 

to make this a priority. The Department’s role in funding or approving 

transportation projects varies greatly across the various modes. For example, 

while the Department funds and operates the air traffic control system, local and 

state agencies manage highway and transit priorities in their respective locales. 

Congress is also very active in deciding which highway and transit projects to 

fund. To successfully meet this challenge, the Department will need to leverage 

its available tools to influence stakeholder decisions on infrastructure 

improvement. 

Developing Innovative Funding Solutions for Infrastructure Needs

The Department will need to decide on the level of Federal investment in 

infrastructure it can support given the current constraints of the Federal budget. 

The Department also needs to continue to develop innovative funding solutions for 

the transportation infrastructure by either identifying new sources of revenue or 

using existing sources more effectively. While the Department is working to 

reduce barriers to private sector investment, it needs to articulate its case that any 

divestitures of public transportation infrastructure assets are in the best interest of 

the taxpayers in the long term. 

For further information, the following reports and testimonies can be found on 

the OIG web site at http://www.oig.dot.gov:

x Airspace Redesign Efforts Are Critical To Enhance Capacity but Need Major 

Improvements 
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x Aviation Industry Performance: Trends in Demand and Capacity, Aviation 

System Performance, Airline Finances, and Service to Small Airports (June 

2005 and August 2006) 

x Audit of Small Community Aviation Delays and Cancellations 

x Observations on Current and Future Efforts To Modernize the National 

Airspace System 

x Observations on the Progress and Actions Needed To Address the Next 

Generation Air Transportation System

x Follow-Up Review: Performance of U.S. Airlines in Implementing Selected 

Provision of the Airline Customer Service Commitment. 

x Refocusing Efforts To Improve Airline Customer Service 

x Actions Needed To Improve Airline Customer Service

x Actions Needed To Minimize Long, On-Board Delays

x Actions Needed To Improve Airline Customer Service and Minimize Long, OnBoard Delays
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5. Improving Oversight and Strengthening Enforcement of 

Surface Safety Programs

Safety is central to the mission of the Department, and three of its Operating 

Administrations have extensive regulatory authority and safety programs—the 

Federal Motor Carrier Safety Administration (FMCSA), the National Highway 

Traffic Safety Administration (NHTSA), and the Federal Railroad Administration 

(FRA). In 2006, over 42,500 highway traffic deaths and 368 highway-rail

crossing deaths occurred in the United States.

The number of fatalities declined in 2006, as did the rate of fatalities per 

100 million vehicle-miles traveled (1.42). The Department’s goal is to reduce the 

fatality rate to 1.0 by 2011; meeting this goal will clearly be a challenge. As 

shown in figure 5-1, we estimate a 2011 fatality rate of 1.34 based on past trends.

Figure 5-1. In the Coming Years, the Highway Fatality Rate Will Need To Fall

Below Projected Rates To Meet the Target Rate by 2011*

1.46 1.51 1.51 1.48 1.44 1.41 1.39 1.38 1.36 1.34 1.42

1.00

1.08 1.17

1.25 1.34

0.00

0.50

1.00

1.50

2.00

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Year

Actual Fatality Rate Projected Rate Path to Target

Fatality Rate

Source: Actual fatality rates are from NHTSA’s 2005 Transportation Safety Facts and 2006 Annual 

Assessment Report. Projected rates for 2007 through 2011 were calculated using NHTSA’s forecasting 

methodology. The Path to Target line drops from 1.42 in 2006 to 1.00 in 2011 and assumes an equal annual 

decrease. 

*Fatality rates are shown as the number of fatalities per 100 million vehicle-miles traveled. 

Our recent audit work points to areas in which the Department can better meet the 

challenge of reducing transportation fatalities through enhanced oversight of 

safety programs and stronger enforcement. 
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Improving Motor Carrier Safety With More Complete Information on 

Vehicle Crashes and Stronger Enforcement Against Repeat Violators 

While quality crash data are vital to ensuring that high-risk motor carriers are 

targeted for additional oversight, states are not reporting significant numbers of 

nonfatal crashes to FMCSA; thus, these important data are not included in the 

calculations that identify high-risk motor carriers. No single solution will resolve 

this problem, but FMCSA could help by providing additional training for those 

who prepare crash reports and complete independent state assessments to identify 

reporting issues. Although 15 independent state assessments have been 

completed, FMCSA should ensure that the remaining states complete assessments 

by the end of FY 2008, as it has promised. 

FMCSA has also committed to closing a loophole in its enforcement policy that 

allows hundreds of motor carriers to repeatedly violate significant safety 

regulations without exposure to maximum penalties. As we reported in April 

2006, motor carriers with limited ability to pay fines can repeatedly violate the 

same regulation without being penalized as a “repeat offender.” FMCSA should 

close this enforcement loophole in FY 2008. 

Closely Monitoring Mexican Motor Carriers Operating Throughout the 

United States Under the Department’s Demonstration Project 

On September 6, 2007, the Department initiated a 1-year demonstration project to 

permit up to 100 Mexican motor carriers to operate beyond the commercial zones 

along the United States–Mexico border. Our report called on FMCSA to address 

the need for coordinated, site-specific plans for checking trucks and drivers 

participating in the demonstration project each time they cross the border into the 

United States.

Assuming future funding for this project is approved, FMCSA will need to 

coordinate with the states and U.S. Customs and Border Protection to carry out the 

plans for these checks. These checks must ensure that all Mexican drivers 

participating in the project are properly licensed and that all trucks display decals 

denoting recent safety inspections. 

Countering Fraud in the Commercial Driver’s License Program

FMCSA should likewise continue to carry out its congressionally mandated 

enhancements to the commercial driver’s license (CDL) program to ensure that 

only drivers with requisite skills obtain CDLs. These mandates include FMCSA’s 

addressing our prior recommendations for countering fraud in the program. Over 

the past 6 years, with the support of FMCSA, we have carried out investigations 

with other law enforcement agencies that involved CDL fraud schemes in 

26 states. These investigations have led to prosecutions in 20 states and the 
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identification of CDLs that were issued by corrupt state or state-approved thirdparty examiners. 

To its credit, FMCSA has instituted a fraud component within its CDL compliance 

review program and is working with the states to identify vulnerabilities. FMCSA 

also followed through on its commitment, made in response to our 2006 audit 

report, to request that states track the status of drivers suspected of fraud. 

Nonetheless, FMCSA must take further action to implement regulatory changes 

being planned to tighten controls over CDL learner’s permits, strengthen 

requirements for proving that CDL applicants are in the United States legally, and 

improve the ability of the states to detect and prevent fraudulent testing and 

licensing.

Resolving Hours of Service Rules for Commercial Drivers 

In July 2007, the U.S. Court of Appeals for the D.C. Circuit vacated two 

provisions of the rules governing the hours of service of commercial drivers, 

which FMCSA issued in 2005. This was the second time in 3 years that the Court 

has vacated all or part of an hours-of-service rule. In 2004, the Court vacated a 

rule because the agency had failed to discuss driver health issues. Although the 

agency’s treatment of that matter in the 2005 rule was challenged in the 

subsequent lawsuit, the Court declined to address the issue. Instead, it held that 

the 2005 rule had violated the Administrative Procedure Act by not providing an 

opportunity for comment on the methodology of a fatigue model that FMCSA 

used and that the agency failed to explain certain elements of that methodology. 

The Court, therefore, vacated the two provisions derived from the methodology in 

question. FMCSA asked the Court to delay its mandate for 1 year and has noted 

the scientific, economic, operational, and procedural complexity of hours-ofservice rulemaking and the critical importance of the issue both to the trucking 

industry and highway safety groups. In September 2007, the court granted a 90-

day stay. The agency should give high priority to resolution of this issue. 

Improving State Accountability in Programs for Reducing AlcoholImpaired Driving

In 2006, the number of alcohol-related highway traffic deaths (over 17,500) 

accounted for about 41 percent of all reported traffic deaths. Accordingly, no 

appreciable improvement in the number of highway fatalities can be achieved until 

alcohol-related fatalities drop dramatically. States are the linchpin in achieving 

this drop and ensuring that the $555 million in Federal funding authorized for state 

alcohol-impaired driving incentive grants are targeted toward strategies that have 

the most impact. 

NHTSA—the lead Federal agency responsible for reducing alcohol-impaired 

driving—could assist in this effort by ensuring that the states include more 
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meaningful measures linked to key program strategies in their performance plans. 

NHTSA has agreed to develop intermediate performance indicators that states can 

use to measure performance in priority program areas. NHTSA should complete 

development of such indicators by FY 2009 and, afterwards, periodically assess 

the extent to which states have adopted them.

Further Reducing Railroad Collisions and Fatalities Through More Safety 

Oversight

Over the past 10 years, significant progress has been made in reducing collisions 

and fatalities at highway-rail grade crossings. The number of such collisions fell 

by 31 percent from the end of 1996 to its end-of-2006 total of just over 2,900. 

FRA’s grade crossing safety oversight activities have contributed to this progress. 

However, these grade crossing collisions continue to claim over 300 lives each 

year.

As we testified in May 2007, FRA can do more to reduce collisions and fatalities 

at the Nation’s grade crossings. Specifically, its challenges are to focus its 

oversight activities on (1) ensuring compliance with mandatory reporting 

requirements, (2) increasing its involvement in investigations, (3) addressing sight 

obstructions at crossings without automated warning devices, (4) establishing 

reporting requirements for its national grade-crossing inventory system, and 

(5) requiring states with the most dangerous crossings to develop action plans that 

identify specific solutions for improved safety. 

Further, FRA must continue to focus its inspection and enforcement resources on 

the issues and locations most in need of attention. In March 2006, it implemented 

a new National Inspection Plan, in response to our 2005 recommendations, that 

called for greater use of data analysis to help target FRA’s regulations and 

oversight activities on problem areas. The plan uses trend analysis of rail safety 

data to identify and track predictive indicators to assist FRA in allocating 

inspection and enforcement activities within a given region, by railroad and by 

state. It is too soon to determine how effective these measures will be in the long 

term, but it is a very positive step.

For additional information, the following reports and testimonies can be found 

on the OIG web site at http://www.oig.dot.gov:

x Motor Carrier Safety: Oversight of High-Risk Trucking Companies 

x Letter to Representative Petri regarding the Motor Carrier Safety Status 

Measurement System (SafeStat) 

x Significant Improvement in Motor Carrier Safety Since 1999 Act but 

Loopholes for Repeat Violators Need Closing 
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x Issues Pertaining to the Proposed NAFTA Cross-Border Trucking 

Demonstration Project 

x Follow-Up Audit on NAFTA Cross-Border Trucking Provisions 

x Federal Motor Carrier Safety Administration Oversight of Commercial 

Driver’s License Program 

x Audit of NHTSA's Alcohol-Impaired Driving Traffic Safety Program 

x FRA Can Improve Highway-Rail Grade Crossing Safety by Ensuring 

Compliance With Accident Reporting Requirements and Addressing Sight 

Obstructions

x Reauthorization of the Federal Railroad Safety Program 

x Actions Needed To Further Improve Railroad Safety 

x Opportunities To Further Improve Railroad Safety 
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6. Continuing To Make a Safe Aviation System Safer 

Safety is the FAA’s highest priority. For more than 5 years, FAA and the U.S. 

aviation industry have experienced one of the safest periods in history—even as 

the industry was undergoing dramatic changes. However, the August 27, 2006, 

crash of Comair Flight 5191 served as a reminder that we must continue to do 

more to make a safe system safer. 

Key challenges for FAA are: 

x Taking proactive steps to improve runway safety in light of recent serious 

incidents;

x Ensuring consistency and accuracy in reporting and addressing controller 

operational errors;

x Strengthening risk-based systems for external repair facilities, air carriers, and 

aircraft manufacturers;

x Maintaining a sufficient number of inspectors with the right skills and in the 

right locations to oversee a dynamically changing aviation industry; and 

x Strengthening oversight of the Airman Medical Certification Program. 

Taking Proactive Steps To Improve Runway Safety in Light of Recent 

Serious Incidents 

Reducing the risk of runway incursions 

(potential collisions on airport surfaces) is a 

critical safety issue that requires proactive 

and ongoing effort on the part of FAA, 

airlines, and airport operators. In fact, the 

last fatal commercial aircraft accident in the 

United States (Comair flight 5191) was the 

result of a runway incident in which the 

pilots attempted to take off from the wrong 

runway.

As shown in figure 6-1, the total number of 

runway incursions decreased from a high of 

407 in FY 2001 to a low of 323 in FY 2003. 

Since 2003, the number of runway incursions had leveled off until last year, when 

they increased to 371. Although the most serious runway incursions (category A 

and B events) decreased to 24 in 2007, very serious runway incursions continue to 

occur. For example: 

Figure 6-1. Runway Incursions

FY 1999 to FY 2007

405

FY 1999 329

330

327

326

323

339

407

371

0 100 200 300 400 500

*FY 2007 

FY 2005

FY 2003

FY 2001

Source: FAA

*Preliminary Data
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x On July 19, 2007, at Chicago O’Hare International Airport, a collision was 

barely avoided when a United Airlines aircraft exited the wrong taxiway and 

taxied directly underneath the path of an arriving US Airways aircraft. 

Although the controller instructed the US Airways plane to go around, it 

overflew the nose of the United Airlines aircraft by an estimated 50 to 70 

feet.

x On May 26, 2007, at San Francisco Airport, a controller mistakenly cleared a 

Republic regional aircraft to depart while a Skywest regional aircraft was 

landing on an intersecting runway. The Skywest aircraft was unable to stop 

short of the runway intersection and the Republic aircraft overflew it by an 

estimated 50 feet. 

The seriousness of these incidents underscores the need for continual proactive 

and concerted efforts, including actions to address technological as well as 

programmatic solutions for improving runway safety.

A key technology for reducing runway incursions is the Airport Surface Detection 

Equipment–Model X (ASDE-X) program. FAA is developing ASDE-X to aid air 

traffic controllers in preventing ground collisions at airports and reducing runway 

incursions. In October, we issued a report10 on FAA’s progress in implementing 

this system.

We found that ASDE-X is at risk of not meeting its cost and schedule goals to 

commission all 35 systems for about $550 million by 2011 and may not achieve 

all planned safety benefits. When we testified before the Senate in May 2007, 

FAA had already expended about $288 million and obligated about $350 million 

but had only deployed 8 of 35 systems for operational use. As of August 30, 

2007, FAA deployed 11 of 35 systems for operational use. Of the 11 systems, 

eight are located at airports with intersecting runways. However, FAA has yet to 

implement the planned capability to alert controllers of potential collisions on 

intersecting runways and taxiways at four of the eight airports requiring these key 

safety capabilities. 

To achieve the program’s goals and more effectively manage the program, FAA 

needs to (1) improve ASDE-X management controls to reduce the risks of further 

cost growth and schedule delays; (2) resolve operational performance risks with 

key ASDE-X safety capabilities associated with detecting potential collisions on 

intersecting runways and taxiways, including during inclement weather; and (3) 

work with the airlines and airports to provide safety enhancements that were not 

10 OIG Report Number AV-2008-004, “FAA Needs To Improve ASDE-X Management Controls To 

Address Cost Growth, Schedule Delays, and Safety Risks,” October 31, 2007. 
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included in the ASDE-X program’s rebaseline but are vital to reducing the risks of 

ground collisions caused by pilot and vehicle operator errors.

In May, we issued a report11 on FAA’s actions to address runway incursions at 

four major airports. Overall, we found that several national initiatives for 

promoting runway safety (undertaken by FAA as early as 2000) have subsequently 

waned as the number of incidents declined and FAA met its yearly goals for 

reducing runway incursions. 

We identified several programmatic actions that FAA needs to take to help prevent 

runway incursions systemwide. They include: 

x improving information sharing among users to identify root causes of pilot 

deviations and communicate best practices to reduce runway incursions; 

x placing additional focus on controller human factors issues and training to 

improve individual, team, and facility performance; and

x assigning greater authority and accountability at the national level to ensure 

that runway safety remains a priority for all FAA lines of business. 

FAA is in the process of addressing these concerns. For example, it appointed a 

permanent executive-level director for its Runway Safety Office in August 2007—

a position that had been vacant for almost 3 years. FAA also plans to reinstate its 

National Plan for Runway Safety, which has not been prepared since 2002. 

In August 2007, FAA also convened a meeting with airline and airport officials, 

and agreed to a five-point, short-term plan for improving runway safety. The 

plan’s major focus includes: 

x conducting safety reviews at airports where wrong runway departures and 

runway incursions are the greatest concern,

x accelerating the deployment of improved airport signage and markings at 

the top 75 airports ahead of the June 2008 mandated deadline, and 

x reviewing cockpit procedures and air traffic clearance procedures. 

The success of these positive actions will depend on ensuring that the current 

momentum continues and that runway safety remains a high priority for all users 

of the National Airspace System. 

11 OIG Report Number AV-2007-050, “Progress Has Been Made In Reducing Runway Incursions, But 

Recent Incidents Underscore the Need for Further Proactive Efforts,” May 24, 2007. 
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Ensuring Consistency and Accuracy in Reporting and Addressing 

Controller Operational Errors 

Another serious safety issue that FAA must continue to address is operational 

errors—when controllers fail to maintain adequate separation between aircraft. In 

FY 2007, there were 1,393 operational errors,12 up slightly from 1,338 in FY 

2006. In addition, the most serious operational errors increased from 41 to 43 in 

the last year—about 1 serious operational error every 8 days. 

FAA needs to ensure that all operational errors are being consistently and 

accurately reported; this is a significant concern. FAA currently relies on an 

inaccurate system of self-reporting of operational errors; only 20 of FAA’s 524 air 

traffic control facilities have an automated system that identifies when operational 

errors occur.

FAA is taking steps to correct this weakness. It is in the process of developing the 

Traffic Analysis and Review Program to identify operational errors when they 

occur at its Terminal Radar Approach Control (TRACON) facilities (those 

facilities that currently have no automated reporting system). FAA plans to start 

fielding this system in FY 2008 and estimates its completion by FY 2011.

Keeping this technology on track must remain a priority for FAA. We continue to 

receive allegations that operational errors are going unreported or, in some cases, 

intentionally misclassified. For example, as a result of a whistleblower complaint, 

we are currently conducting an investigation at the Dallas/Fort Worth TRACON to 

determine if operational errors are being inappropriately classified as pilot 

deviations to deflate the number of errors attributed to the facility. This 

investigation is ongoing, and we expect to report our results later this year.

FAA has also modified its severity rating system for operational errors to make the 

ratings more reflective of potential collisions. The new rating system is based 

solely on the proximity of the two aircraft. FAA believes this will provide a better 

means for measuring the risk of a collision from an operational error so it can 

better focus on the most serious incidents. However, FAA must remain committed 

to finding the cause, applying remedies or mitigations, and taking action in 

response to all operational errors to identify trends and prevent future such errors 

from occurring. 

12 FY 2007 numbers are preliminary. 
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Strengthening Risk-Based Oversight Systems for Air Carriers, External 

Repair Facilities, and Aircraft Manufacturers 

In the past 9 years, FAA has made important progress in developing risk-based 

approaches to safety oversight of air carriers, aircraft manufacturers, and—most 

recently—aircraft repair stations. These systems are designed to permit inspectors 

to use safety data to focus their oversight on areas of higher risk. However, to 

meet the demands of an ever-evolving aviation industry, FAA must ensure that 

inspectors for air carriers transitioned to the Air Transportation Oversight System 

(ATOS) are properly trained in using the risk-based oversight approach; gather 

more complete data on the facilities air carriers use to complete critical 

maintenance; and modify its risk-based system for manufacturers to ensure that 

inspectors can effectively respond to the growth in use of both domestic and 

foreign suppliers. 

Risk-Based Oversight System for Air Carriers: According to recent data 

provided by FAA, it has now implemented ATOS at 110 air carriers; however, 

there are 8 air carriers that still need to be converted to the new oversight system. 

FAA plans to complete this transition by the end of this calendar year.

In addition, ATOS requires the use of a team of inspectors with specialized 

expertise, not only in technical areas such as maintenance and electronics, but also 

in conducting risk assessments. Based on information provided to us, FAA has 

not developed a plan that details how this transition can be accomplished with its 

limited inspector resources. FAA has indicated that it is reconfiguring field 

offices to more efficiently use existing and newly hired inspectors in conjunction 

with the transition, but it has not fully addressed how it plans to ensure that these 

inspectors have the needed skills. FAA has reported that it is providing training 

for inspectors transitioned to ATOS. However, conducting risk assessments is a 

new skill set for FAA inspectors that may not come readily even with new hires. 

For the transition to be successful, FAA must ensure it has an adequate number of 

properly trained inspectors. 

Oversight Systems for External Repair Facilities: During the past 2 years, 

FAA has worked to move its safety oversight for aircraft repair stations to a riskbased system; however, for this new system to be effective, FAA will have to 

establish a sound process for determining where critical aircraft maintenance is 

performed.

FAA developed new inspection guidance and air carrier processes to address this 

problem, but these efforts still fall short of providing FAA with the information it 

needs. For example, FAA developed a process for air carriers to report the top 

10 critical maintenance providers used each quarter. The process is voluntary, 

however, and FAA inspectors are not required to validate the data air carriers 
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submit. Therefore, FAA cannot be assured that it is getting the accurate and 

timely information needed to determine where it should focus its inspections. 

FAA plans to issue a proposed rulemaking requiring this information; but, this 

process is not yet complete. 

Further, FAA’s new risk-based system does not include a process for oversight of 

critical repairs performed by non-certificated repair facilities. In 2005, we 

reported that over 1,400 non-certificated repair facilities were performing 

maintenance for U.S. air carriers and that more than 100 of these facilities were 

located in foreign countries. FAA’s efforts to improve its oversight of noncertificated repair facilities are still underway. FAA needs to clarify its guidance 

so inspectors will be better equipped to identify non-certificated repair facilities 

that are performing critical maintenance. 

Risk-Based Oversight of Aircraft Manufacturers and Their Suppliers: In FY

2003, FAA revised its oversight system for aircraft manufacturers and their 

suppliers to a more risk-based approach. However, FAA will need to modify this 

system so that inspectors can more effectively oversee manufacturing operations 

in the current aviation environment. The system was not designed to address the 

increasingly prominent role that aircraft parts and component suppliers now play 

in aviation. Rather than building the majority of their aircraft within their own 

manufacturing facilities using their own staff, manufacturers now have large 

sections of their aircraft built by domestic and foreign parts suppliers. For 

example, 1 major U.S. manufacturer uses major parts and components from close 

to 1,200 domestic and foreign suppliers to manufacture its aircraft. FAA needs to 

ensure that its risk-based system includes an assessment of the number of suppliers 

manufacturers now use. 

Maintaining a Sufficient Number of Inspectors

The rapidly changing aviation environment makes it imperative for FAA to 

maintain a sufficient number of inspectors in the right locations. FAA has about 

4,000 inspectors located in offices throughout the United States and in other 

countries. These inspectors must oversee both domestic and foreign aspects of 

American air carriers’ maintenance and operations. 

FAA expects to hire 297 aviation safety inspectors in FY 2008. During the same 

period, FAA expects to lose about 210 aviation safety inspectors, resulting in a net 

increase of 87 inspectors in FY 2008. FAA requested funding for these 

87 inspectors in FY 2008, which would be an increase over FY 2007 staffing 

levels. However, FAA faces challenges in maintaining a sufficient staff because 

approximately 48 percent of the inspector workforce will be eligible to retire by 

2012.
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In addition, FAA must ensure adequate training for its inspectors. Using riskbased oversight systems is a foundational part of FAA's plan to meet future 

oversight challenges, but it requires that inspectors be skilled in risk analyses. 

Therefore, FAA must step up its hiring and training if it is to maintain a sufficient 

number of inspectors with the right skill set to provide oversight of a dynamic 

aviation industry. 

Strengthening Oversight of the Airman Medical Certification Program 

The Airman Medical Certification Program represents a key safeguard in making 

sure that the more than 600,000 licensed pilots in the United States are medically 

fit to fly. The OIG, the National Transportation Safety Board, and FAA, however, 

have documented hundreds of instances in which pilots failed to disclose 

potentially disqualifying medical conditions. These are conditions—ranging from 

heart problems to neurological and psychiatric disorders—that the Federal Air 

Surgeon has identified as able to compromise a pilot’s ability to safely operate an 

aircraft.

Because of concerns about FAA’s handling of falsified pilots’ medical certificates, 

Congress held an oversight hearing on July 17, 2007, to better understand this 

fraud among pilots who hide serious medical conditions from examining 

physicians in order to retain medical certification for their pilots’ licenses. At the 

hearing, FAA reiterated its commitment to ensuring the highest level of safety for 

the traveling public. In following through on its commitment, FAA needs to make 

certain it has an effective oversight and regulatory enforcement regimen with 

which to enforce this critical safety requirement in its licensing of pilots. This is 

an especially important issue, given possible regulatory changes to extend medical 

certificate expiration dates, which would result in fewer opportunities for 

physicians to evaluate pilots’ medical fitness.

For further information, the following reports and testimonies can be found on 

the OIG web site at http://www.oig.dot.gov:

x FAA Needs to Improve ASDE-X Management Controls To Address Cost 

Growth, Schedule Delays, and Safety Risks 

x Staffing at FAA’s Combined Radar Approach Control and Tower With Radar 

Facilities

x Progress Has Been Made in Reducing Runway Incursions, but Recent 

Incidents Underscore the Need for Further Proactive Efforts 

x Safety Oversight of an Air Carrier Industry in Transition 

x Letter to Representative Oberstar Regarding FAA Actions on Air Carriers’ 

Use of Aircraft Repair Stations 

x Controls Over the Reporting of Operational Errors 
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x Alleged Cover-Up of Operational Errors at DFW TRACON 

x Review of Air Carriers’ Use of Non-Certificated Repair Facilities 

x Letter to Representative Oberstar Regarding FAA’s Aging Airplane Safety 

Rule

x Falsification of FAA Airman Medical Certificate Applications by Disability 

Recipients
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7. Strengthening the Protection of Information Technology 

Resources, Including the Critical Air Traffic Control 

System

Fiscal year 2007 was a particularly challenging year for the Department in 

managing its information technology (IT) resources. While the Department has 

completed most of its scheduled security recertification reviews, the overall 

effectiveness of its information security program declined because management 

had to divert resources and attention to resolving Headquarters move-related 

issues. In addition to establishing a common IT infrastructure for the new 

Headquarters, it had to review, test, and certify security protection in more than 

half of its information systems to meet the recertification requirement, as well as 

correct security weaknesses previously identified in the critical air traffic control 

system. FY 2008 will require continued management attention in several areas in 

order to strengthen the protection of the Department’s IT resources: 

x Enhancing Air Traffic Control System Security and Continuity Planning 

x Testing and Strengthening the Information System Security Program at 

DOT Headquarters 

x Ensuring the Timeliness of Data Recording and Protection of Personally 

Identifiable Information When Interfacing With Non-Federal Systems 

x Continuing To Enhance Oversight of Information Technology Investments 

Enhancing Air Traffic Control System Security and Continuity Planning 

The President has designated the air traffic control system as part of the Nation’s 

critical infrastructure due to the important role that commercial aviation plays in 

fostering and sustaining the economy and ensuring citizens’ safety and mobility. 

In FY 2007, under the Deputy Administrator’s (now the Acting Administrator) 

direction, FAA undertook renewed initiatives to develop a business continuity 

plan (BCP) to recover the catastrophic loss of any En Route Center and to improve 

the quality of security reviews for air traffic control systems outside of the 

computer laboratory. FAA has made modest progress in both areas by developing 

a detailed concept of operations that thoroughly details the expected operations of 

the BCP and creating a methodology for selecting high-risk operational air traffic 

control systems for security review. However, these are multi-year efforts, for 

which FAA faces the following challenges:

x Measuring the loss of each En Route Center’s impact on the National 

Airspace System (NAS): FAA’s plan estimates restoration of 80 percent of an 
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affected En Route Center’s capabilities within 3 weeks; however, the impact 

that a disabled center will have on the NAS as a whole has not been assessed. 

Since each center relies on adjacent centers to efficiently manage air traffic, the 

loss of one center could cause a ripple effect throughout the NAS. In order for 

FAA to better understand the overall impact, it will need to conduct an impact 

analysis of the effect that the loss of 20 percent of operational capability at 

each En Route Center would have on the entire system. This analysis will help 

FAA not only determine whether the current plan provides adequate coverage 

for the entire NAS, but also prioritize BCP development efforts—the most 

critical En Route Centers receiving more attention. Also, because the plan 

would shift functionality of the disabled center to the FAA recovery site 

located at its Technical Center in Atlantic City, NJ, the analysis should 

determine the impact that an activated recovery plan would have on the 

Technical Center’s core mission—developing and testing systems used to 

support air traffic control operations and aircraft safety.

x Resolving technical and resource concerns: The success of the BCP hinges 

on FAA’s ability to overcome logistical challenges. These challenges include 

rerouting voice communications and surveillance signals from the affected En 

Route Center(s) to the recovery center, ensuring that the “spare” En Route 

Center at the Technical Center is properly staffed in the event that it is 

activated, and prior coordination with the appropriate labor unions for human 

resource management needs. Another resource concern involves funding. 

FAA has budgeted $12 million for developing and implementing the continuity 

plan. However, this funding level was not based on sufficient analysis or cost 

estimates; rather, it was obtained by reallocating excess funds from current and 

ongoing FAA projects. FAA should complete a cost and schedule analysis to 

better determine estimated costs and use these figures to secure additional 

funding commitments, if needed.

Regarding reviews of operational air traffic control systems security, FAA 

developed a methodology to select high-risk systems located in the field for 

testing. In fact, FAA went beyond our recommendation and applied this 

methodology to systems other than those used for air traffic control. However, 

FAA did not meet its commitment to us to complete its reviews of all TRACON 

and tower systems by the end of FY 2007. Further, despite the improved 

site-selection method, FAA did not enhance its methodology to help identify 

software differences between the baseline systems at the Technical Center and the 

operational air traffic control systems in the field. This deficiency could weaken 

overall security protection because vulnerabilities could inadvertently be created 

when software changes are made to meet local (field site) operational needs, as 

evidenced in our previous audit reports. FAA needs to focus on identifying and 

testing for unauthorized software changes in field air traffic control systems. 
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Testing and Strengthening the Information System Security Program at 

DOT Headquarters 

The Department will continue to face important challenges in FY 2008 as it seeks 

to enhance its information system security program, specifically in meeting 

tougher Federal government security standards, correcting identified security 

deficiencies, and securing its IT infrastructure—all at a time of heightened 

vulnerability.

Risk categorization is the key to determining the level of security protection 

needed for individual systems. Systems categorized as having a high-risk impact 

on the Department’s mission must meet a more stringent security standard than 

moderate- or low-risk-impact systems. We have continued to find deficiencies in 

risk categorization and insufficient implementation of minimum security 

protection. For example, of about 100 systems used to direct air traffic control 

operations, none were reported as having high-risk impact. Systems identified by 

FAA as high-risk impact are primarily for administrative functions, such as the 

procurement system. After this was brought to management’s attention, the 

departmental Chief Information Officer, the FAA Acting Deputy Administrator, 

and the FAA Chief Information Officer all agreed to collaborate with the Air 

Traffic Organization to ensure that air traffic control systems are individually 

reviewed and categorized in accordance with National Institute of Standards and 

Technology standards and DOT policy, as a key priority for FY 2008. 

Also of concern is a reversal of the improvement we saw last year in which 

security deficiencies identified during certification reviews were well tracked and 

prioritized for correction. Management did not give the same amount of attention 

to correcting identified security deficiencies in FY 2007 as it did in FY 2006. The 

Department needs to better address the new Federal government security standards 

and correct its security deficiencies. 

In addition, the Department has made little progress in configuring the commercial 

off-the-shelf software installed on DOT computers to comply with government or 

departmental security standards to reduce known vulnerabilities. As a result of 

improper configuration, DOT network computers remain vulnerable to attack. 

Also, with the new common IT infrastructure, the Department has significantly 

expanded its ability to utilize secure connections on the Internet by using virtual 

private network (VPN) access. However, when employees connect their home 

computers to Departmental networks, it creates security exposure because the 

home computers may not be properly secured. The Department needs to take 

stronger action to ensure secure configuration of commercial software and secure 

connections on its new IT infrastructure, particularly as it seeks to dramatically 

expand employees’ use of telecommuting. 
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Ensuring the Timeliness of Data Recording and Protection of Personally 

Identifiable Information When Interfacing With Non-Federal Systems

The Department is responsible for maintaining the National Driver Register 

(NDR) information system, which contains tens of millions of profiles on drivers 

convicted of such offenses as driving under the influence of alcohol. State 

officials are required to report to the NDR drivers who receive traffic convictions, 

along with their personally identifiable information, such as name, date of birth, 

gender, height, weight, eye color, and social security number. Keeping problem 

drivers off the road is critical to reducing highway fatalities and injuries.13

Timely recording of drivers with traffic convictions in the NDR is critical to 

preventing problem drivers from “license shopping”—going to a different state to 

get a new driver’s license when their current licenses are suspended or revoked.

The law requires states to submit problem drivers’ profiles to the NDR within 31 

days of receipt of conviction information. However, only slightly more than onethird of our sample records met this requirement. Further, according to our 

estimate, state officials did not record 6 million problem drivers in the NDR until 

at least 1 year after conviction. This delayed reporting significantly impaired 

other states’ ability to keep problem drivers from getting licenses. The 

Department needs to work with the states to improve the timeliness of problem 

drivers’ profiles being sent to the NDR. 

While drivers’ personally identifiable information was properly secured in the 

NDR mainframe database, it was exposed to unauthorized access or unapproved 

use when outside of the mainframe computer. For example, while Federal security 

standards require that sensitive information be encrypted when transmitted on 

networks, NDR records were not. Instead, they were transmitted in clear text and 

thus subject to unauthorized access during transmission. This security deficiency 

existed partly because a non-Federal entity is responsible for managing the 

transmission network. This network also supports transmission of other critical 

transportation-related data.14 To protect the public’s personally identifiable 

information, the Department needs to ensure that security requirements and the 

associated authorities or responsibilities are properly specified and documented 

with its interfacing partners.

13 There are more than 200 million licensed drivers in the United States, of whom 42 million have records 

in NDR. In 2006, more than 70 million people applied for driver’s licenses, 9 million of whom were 

found to have a conviction recorded in NDR. 14 The same network is also used to support Commercial Driver’s License Information System (CDLIS) 

operations, for which the Department has oversight responsibility. 
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Continuing To Enhance Oversight of Information Technology 

Investments 

A challenge that still confronts the Department is completing the implementation 

of an earned value management (EVM) system. During FY 2007, the Department 

revised its Investment Review Board’s charter by delegating more responsibilities 

to individual Operating Administration review boards to oversee their specific IT 

investments. Regardless of the change in governance responsibility, establishing 

clear measurement benchmarks against which to evaluate major investment 

projects such as EVM is key to effective management of cost, schedule, and 

performance of large (multi-year) development projects. In FY 2006, only 

23 percent of major Departmental IT investment projects met at least half of the 

Office of Management and Budget’s criteria for EVM implementation. During 

FY 2007, the figure was 35 percent—a modest improvement. The Department 

needs to continue to enhance EVM implementation to ensure fiscal discipline with 

major investment projects, which is especially critical in today’s tight economic 

environment. 

For further information, the following reports and testimonies can be found on 

the OIG web site at http://www.oig.dot.gov:

x DOT Information Security Program 

x Volpe Center’s IT Security and Resource Management Activities

x DOT Delphi Financial System Controls 

x Security and Controls Over the Remote Maintenance and Management System, 

FAA

x Security and Controls Over Technical Center Computer Systems, FAA 

x Security and Controls Over En Route Center Computer Systems, FAA

x Office of the Chief Information Officer’s Budget, DOT 
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8. Managing Acquisition and Contract Operations More 

Effectively To Obtain Quality Goods and Services at 

Reasonable Prices

With an annual procurement budget of about $5.6 billion for goods and services, 

the Department needs to ensure that more attention is placed on acquisition and 

contract operations. We continue to find weaknesses throughout DOT. Our 

investigations also continued to identify fraud and abuse and other ethical issues 

involving DOT officials and contractors. 

Providing increased attention to ensuring that procurement and acquisition 

activities are conducted in an efficient and effective manner and that taxpayer 

dollars are protected from fraud and abuse is a Government-wide priority. The 

Department is improving its administration of contracts and grants. For example, 

it has begun working more closely with the Defense Contract Audit Agency 

(DCAA) to help identify high-risk contracts for audit. In addition, the FHWA 

recently issued a manual containing best practices on overseeing grants and 

cooperative agreements.

Last year, we completed a major initiative to help improve contract and 

acquisition practices throughout DOT by establishing a contract and acquisitions 

audit group. The team will continue to meet with senior Department contracting 

officials to discuss procurement issues and will increase its efforts to review 

procurements, contracts, and acquisition programs to enhance controls. 

While DOT agencies are cooperating on eliminating problems as they arise and 

implementing actions to improve oversight processes, DOT must be more 

proactive and enhance its vigilance and oversight. We have identified several 

areas in which the Department must focus its attention in order to enhance its 

acquisition and contract management oversight: 

x Increasing Incurred-Cost Audits of Procurement Contracts To Reduce 

Unallowable Charges 

x Developing Strategies for the Future Acquisition Workforce 

x Fostering High Ethical Standards Throughout the Department and Its 

Contracting Programs To Maintain Public Trust 

x Enhancing Oversight on Federal-Aid Construction Projects To Prevent 

Abuse in Contractor Quality Control Programs 
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Increasing Incurred-Cost Audits of Procurement Contracts To Reduce 

Unallowable Charges 

Contract audit services provided by DCAA are a valuable tool for assisting 

contracting officers in combating excessive prices and unallowable charges. 

Monetary benefits from DCAA audits not only cover audit costs but can also 

reduce program costs. From FY 2001 through FY 2005, DOT Operating 

Administrations saved over $4 for every $1 spent on these audits.

The Department is doing more to obtain these needed audits. DOT’s Office of the 

Senior Procurement Executive has been working with DCAA, the Operating 

Administrations, and the Office of Inspector General to find better methods for 

obtaining needed audits. Additionally, responding to our recommendation, FAA 

revised its guidance to require that all cost-reimbursable contracts over 

$100 million and 15 percent of those contracts under $100 million obtain postaward audits of allowable costs incurred. At other DOT agencies, incurred-cost 

audits are preferred, unless sufficient justification is documented for not obtaining 

them. Resolution of audit recommendations must be made within a maximum of 

6 months after issuance of a final report. 

However, these policies need to be implemented more effectively throughout the 

Department. Our recent report15, covering all DOT agencies other than FAA, 

discussed how many Operating Administrations did not consistently follow 

Departmental and Federal Acquisition Regulation guidance for obtaining incurredcost audits. We also reported that they did not consistently take adequate action to 

resolve audit findings for the audits DCAA conducted. Contracting officers also 

need to take more consistent action in a timely manner to recover overpayments 

made to contractors. To illustrate, between FY 2001 and FY 2005, DCAA 

identified $48 million in questioned costs, of which contracting officers resolved 

about $36 million. However, contracting officers missed opportunities to recover 

the remaining $12 million in questioned contract costs. The Department agreed 

with the findings and recommendations contained in the report. The Department 

needs to follow through on its commitment, in response to our report, to obtain 

more incurred-cost audits and resolve questioned contract costs in a timely 

manner. 

Developing Strategies for the Future Acquisition Workforce 

Having the right people with the right skills is critical to ensuring that DOT 

receives the best value for the $5.6 billion it spends each year for goods and 

services. Like all executive agencies, DOT is required to collect, maintain, and 

utilize information on education, training, career development, and accession to 

ensure effective management of the acquisition workforce. 

15 OIG Report Number FI-2007-064, “More Incurred-Cost Audits of DOT Procurement Contracts Should 

Be Obtained,” August 29, 2007. 
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As required by the Office of Management and Budget, DOT is in the process of 

developing a human capital strategic plan for its acquisition workforce. However, 

DOT is facing a considerable challenge in developing such a plan. According to a 

senior Department official, they are having difficulty determining which positions 

comprise the acquisition workforce. Additionally, DOT lacks complete data on 

the acquisition workforce, such as information on workforce size, knowledge and 

skills, attrition rates, and retirement rates. Without such critical data, the 

Department cannot properly identify the current condition of the workforce and 

decide what needs to be done to ensure that it has the right composition, mix of 

skills, and talent for the future.

Fostering High Ethical Standards Throughout the Department and Its 

Contracting Programs To Maintain the Public Trust 

DOT employees in contracting-related positions represent the first—and best—

line of defense in ensuring program integrity, and a challenge for the Department 

(as with any government agency) is to develop and maintain robust ethics 

programs. Contracting officers and their technical representatives, cooperative 

agreement and grants administrators, and managers are relied upon for the timely 

recognition and reporting of fraud indicators. Along with effective internal 

controls and oversight mechanisms, their vigilance is essential to combating fraud. 

An example of effective vigilance is a recent FAA case involving an almost 

$2-billion multiple awards procurement program. FAA had conducted an internal 

review, finding evidence of a fraud scheme being perpetrated by multiple 

contractors. The ensuing investigation conducted by FAA and our office found 

that 13 of the 30 contractors had significantly overcharged FAA. Specifically, 

over a 3-year period, these 13 firms had billed FAA for employees at labor rates 

that were often considerably higher than their actual education and experience 

warranted, as specified by terms of the contract. As a result, FAA has recovered 

over $8 million in overcharges and further tightened its internal controls to guard 

against recurrence. 

Ethical lapses by DOT employees involved in contracting also sometimes occur. 

For example, at one Operating Administration, a former program manager pled 

guilty to felony charges for accepting $160,000 in exchange for steering contracts 

worth about $8 million to an IT services firm headed by a former employee. In 

another case, an Operating Administration contracting officer and a supervisor 

provided confidential bid information to a foreign-owned entity to help it underbid 

its competitor, a U.S.-owned firm, and win a $4.3-million contract for construction 

of lighting system infrastructure. The two employees pled guilty to felony 

procurement fraud charges and are no longer employed by DOT. 
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In many of the cases we have investigated, DOT employees did not maintain an 

appropriate “arms-length” relationship with contractors and cooperative agreement 

recipients, presenting criminal implications for both employees and contractors 

alike.

The Department must continually promote and reinforce ethical standards to help 

guard against such breaches of integrity in its extensive contract, cooperative 

agreement, and grants programs. Prevention and deterrence of ethical lapses in 

any organization depends upon both the effectiveness of internal controls and 

oversight processes, and a robust ethics awareness and training program.

Agency ethics programs need to have particular emphasis placed on employees 

involved in awarding and administering contracts, cooperative agreements, and 

grants. Enhanced ethics training should include discussions of actual ethics 

violations and “what if” scenarios of situations to avoid. While computer-based 

training is beneficial, there is no substitute for personal contact between ethics 

officials and employees. Moreover, DOT ethics officials should periodically 

review the ethics programs of agency contractors to help prevent ethical 

breakdowns.

Enhancing Oversight on Federal-Aid Highway Construction Projects To 

Prevent Abuse in Contractor Quality Control Programs

A challenge facing FHWA is ensuring that taxpayers are provided the quality of 

products and services they pay for and expect from contractors on Federal-aid 

highway construction projects. To leverage scarce State oversight resources, State 

DOTs partner with industry and directly perform quality assurance materials 

testing only on a sample basis in order to validate the results of more extensive 

quality control testing by contractors. We, however, are seeing more cases 

involving fraudulent quality control testing by contractors. FHWA’s stewardship 

reviews of State DOTs conducted between 2003 and 2006 have also identified 

deficiencies in many State DOT quality assurance programs.

For example, during the last year, we investigated several cases in which company 

employees manipulated quality control test results to falsely earn contract 

incentives. In one such case, a contractor had delivered about 5,700 trucks’ worth 

of substandard concrete to the Central Artery/Tunnel Project in Boston. The 

contractor ultimately pled guilty to conspiracy to defraud the government and 

agreed to pay $50 million in restitution and fines and to establish a corporate 

integrity program, among other penalties. FHWA needs to exercise continued 

vigilance of State DOT quality assurance oversight programs to better mitigate 

fraud.
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For additional information, the following reports can be found on the OIG web 

site at http://www.oig.dot.gov:

x Oversight of Cost-Reimbursable Contracts 

x Audit of the Actions to Prevent Fraud on Cooperative Agreements With 

Universities

x More Incurred-Cost Audits of DOT Procurement Contracts Should Be 

Obtained
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9. Reforming Intercity Passenger Rail 

Intercity passenger rail is an integral part of our Nation’s transportation system, 

particularly in light of growing highway and aviation congestion. However, 

Amtrak’s16 contribution to the transportation system may be limited by its capital 

funding needs, which may be difficult to meet given constrained Federal 

resources. Therefore, the Department must use all tools at its disposal, including 

seeking consensus on a reauthorization, to ensure that Amtrak reduces its 

operating costs and improves its operating performance, thereby freeing funds for 

Amtrak’s capital needs and increasing Amtrak’s viability as a transportation 

alternative.

Improving Amtrak’s Cost-Effectiveness To Sustain Its Financial Progress 

Amtrak projects a $1 billion operating loss in FY 2007. While Amtrak continues 

to implement strategic reforms to improve its cost-effectiveness, the pace of these 

reforms has slowed. Amtrak implemented $61 million in reforms in FY 2006, and 

planned to implement only $46 million in reforms in FY 2007 and $40 million in 

FY 2008. Since February 2007, the company reduced its projected FY 2008 

savings from reforms by half.

While reforms have slowed, Amtrak faces significant and increasing financial 

challenges. Amtrak’s recent improvements in revenues are due, in part, to factors 

beyond its control, such as the high cost of gasoline that contributed to increases in 

ridership. It is unclear whether Amtrak can sustain these revenue improvements. 

A labor agreement, when it is reached, will increase Amtrak’s operating costs. A 

significant investment will be required to return Amtrak’s physical infrastructure 

to a state of good repair, meet the Americans With Disabilities Act requirements, 

and replace Amtrak’s aging passenger cars and locomotives. 

The uncertainty and precarious nature of Amtrak’s revenue structure, its inability 

to shed costs quickly to match revenues, and its near-term financial demands all 

require Amtrak to emphasize cost control and cost improvement. The Department 

needs to use its position as a member of the Amtrak Board of Directors and its role 

in approving funding for Amtrak’s routes and capital projects to help maintain 

Amtrak’s focus on improving the cost-effectiveness of its operations. 

Overcoming Challenges to Improving Amtrak’s On-Time Performance 

On-time performance continues to plague Amtrak service, threatening its ability to 

sustain increased revenues and reduce operational costs. Amtrak service outside 

the Northeast Corridor operates on freight railways, and these railways have 

experienced tremendous growth in tonnage shipped over the past 5 years. This has 

16 Amtrak is the federally supported company established in 1971 to provide intercity passenger rail. 
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resulted in increased congestion and delays for both Amtrak and freight trains. In 

addition, the widespread loss of experienced dispatchers within the industry due to 

retirements has increased freight and passenger rail conflicts. The Department has 

worked with Amtrak and freight railroads in the Southeast to improve Amtrak’s 

on-time performance. The Department will need to expand these efforts to 

improve Amtrak service reliability throughout its system.

Reauthorizing Amtrak To Facilitate Reform

Amtrak’s efforts at reform are not a substitute for reauthorization. Its ability to 

achieve its stated goal of “continuous improvement” is limited within the current 

framework. To go beyond marginal cost and service improvements will require an 

authorization bill that realigns the size, operations, and governance of the intercity 

passenger rail system to match the levels and sources of funding available and 

provides Amtrak with the tools and incentives to provide cost-effective, highquality service. The Department needs to work with Congress and other 

stakeholders to finally break the cycle of appropriations without authorization for 

Amtrak, and provide Amtrak with these needed tools and incentives. 

For further information, the following reports and testimonies can be found on 

the OIG web site at http://www.oig.dot.gov:

• Amtrak’s Board of Directors Provides Leadership to the Corporation but Can 

Improve how it Carries Out Its Oversight Responsibilities 

• First, Second, and Third Quarterly Reports on Amtrak’s FY 2007 Operational 

Reform Savings and Financial Performance 

• First, Second, Third, and Fourth Quarterly Reports on Amtrak’s FY 2006 

Operational Reform Savings and Financial Performance

• Intercity Passenger Rail and Amtrak 

• Reauthorization of Intercity Passenger Rail and Amtrak 

• Analysis of Cost Savings on Amtrak’s Long-Distance Services 

•Assessment of Amtrak’s 2003 and 2004 Financial Performance and 

Requirements
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EXHIBIT. COMPARISON OF FY 2008 AND FY 2007 TOP 

MANAGEMENT CHALLENGES 

Items in FY 2008 Report Items in FY 2007 Report 

x Continuing To Enhance Oversight To Ensure 

the Safety of an Aging Surface 

Transportation Infrastructure and Maximize 

the Return on Investments in Highway and 

Transit Infrastructure Projects 

x Making the Most of the Federal Resources 

That Sustain Surface Transportation 

Infrastructure Improvements by Continuing 

To Emphasize Project Oversight 

x Addressing Long- and Short-Term 

Challenges for Operating, Maintaining, and 

Modernizing the National Airspace System

x FAA Reauthorization – Reaching Consensus 

on a Financing Mechanism To Fund FAA 

and Establishing Funding Requirements 

x Developing a Plan To Address the Highway 

and Transit Funding Issues in the Next 

Reauthorization 

___

x Reducing Congestion in America’s 

Transportation System 

x Defining, Developing, and Implementing 

Strategies To Improve Congested 

Conditions on the Nation’s Highways, Ports, 

Airways, and Borders 

x Improving Oversight and Strengthening 

Enforcement of Surface Safety Programs

x Strengthening Efforts To Save Lives by 

Improving Surface Safety Programs 

x Continuing to Make a Safe Aviation System 

Safer

x Aviation Safety–Performing Oversight That 

Effectively Utilizes Inspection Resources 

and Maintaining Aviation System Safety 

x Strengthening the Protection of Information 

Technology Resources, Including the Critical 

Air Traffic Control System 

x Protecting, Monitoring, and Streamlining 

Information Technology Resources 

x Managing Acquisition and Contract 

Operations More Effectively to Obtain 

Quality Goods and Services at Reasonable 

Prices

x Improving Acquisition and Contract 

Management To Reduce Costs and 

Eliminate Improper Payments 

x Reforming Intercity Passenger Rail x Achieving Reform of Intercity Passenger 

Rail

___

x Responding to National Disasters and 

Emergencies – Assisting Citizens and 

Facilitating Transportation Infrastructure 

Reconstruction

___

x Strengthening DOT’s Coordination of 

Research, Development, and Technology 

Activities and Funding 

Exhibit. Comparison of FY 2008 and FY 2007 Top Management Challenges
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APPENDIX. DEPARTMENT COMMENTS 

U.S. Department of 

Memorandum

Transportation 

Office of the Secretary 

of Transportation 

Subject:

ACTION: Departmental Comments on the OIG Draft 

Report – Top Management Challenges, Department of 

Transportation

Date: October 30, 2007 

From: 

Phyllis F. Scheinberg 

Assistant Secretary for Budget and

 Programs/Chief Financial Officer 

Reply to 

Attn. of:

To: Calvin L. Scovel III 

Inspector General 

The U.S. continues to enjoy the world’s foremost transportation system, which offers 

unprecedented connectivity and safety that is a bedrock of this Nation’s economic 

prosperity. Throughout the last century, the U.S. built the most extensive highway 

system in the world and developed a far-reaching National Airspace System. However, 

today our transportation system faces significant challenges. We value the perspectives 

offered in the Office of Inspector General’s (OIG) report on the Top Management 

Challenges and will make good use of the information it contains. However, several 

items cited reflect larger national policy issues, not simply departmental management and 

performance concerns. Therefore, we are taking this opportunity to offer some additional 

perspective on the top issues facing the Department. 

Congestion and delays on the Nation’s highways and airspace are now widespread and 

acute, affecting both passenger travel and freight movement, and ultimately the nation’s 

economic well being. In the past 20 years, hours of delay and wasted fuel have each 

increased by more than 400 percent. In 2005, highway and transit congestion wasted 4.2 

billion hours of time and 2.9 billion gallons of fuel. The cost for this wasted time, fuel 

and the lost productivity associated with it, exceeds $170 billion per year, and continues 

to worsen. In aviation, while we continue to enjoy the safest period in aviation history, 

congestion and delays continue to grow, stretching the capacity of our aviation system to 

the limit. This past summer saw record delays in flights across the country, up nearly 20 

percent compared to just one year ago. The sum total of aircraft delays during this period 

was more than 15 years, with nearly half of that in the New York/New 

Jersey/Philadelphia region alone. 

The Department will continue to address these issues to the fullest extent of its authority. 

We are seeking to turn these challenges from the last century into the opportunities of this 

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century. Addressing these longstanding policy issues will require sustained and 

cooperative efforts not just by the Department but also by the Congress, transportation 

providers and users. While your Top Management Challenges Report examines these 

issues through the lens of the Department, it will only be through the combined action of 

all parties that we can move forward with innovative solutions to reduce congestion and 

increase efficiency, while continuing to improve transportation safety. We view the 

challenges facing the transportation community as falling into three groupings: (1) 

reshaping transportation financing to promote efficient use of existing infrastructure and 

to provide cost effective new infrastructure, (2) implementing congestion management 

initiatives to break the gridlock growing on our Nation’s highway and airspace, and (3) 

continuing to improve the safety of our Nation’s transportation system. 

Reshaping Transportation Financing is Critical to Successful Transportation 

Investments 

The Department is at a funding crossroads, where several measures pending before the 

Congress have the potential to fundamentally reshape and improve our transportation 

future. With bold and courageous decisions, we can enjoy a future with less congestion, 

modernized transportation systems, and more efficient and productive use of increasingly 

limited taxpayer dollars. The alternative is the status quo, with increasing congestion, 

investment decisions made without cost benefit analysis or performance expectations, 

and a future of increasing costs and uncertain benefits. Three pieces of legislation are 

vital to shaping this future; aviation reauthorization, Amtrak reauthorization, and surface 

transportation reauthorization. The laws that ultimately result from these efforts have the 

potential to change our transportation system. 

The Federal Aviation Administration (FAA) has been preparing to implement a costbased user-funded structure that will base revenues on a specific, transparent assessment 

of what it costs to maintain the National Airspace System. Based on years of extensive 

analysis, FAA now has a viable cost allocation system. Using this capability, it is able to 

assess the cost users impose on the National Airspace System. While significantly more 

complex, this is the same basic approach that consumers experience in their use of 

electricity, water and natural gas. It is a model that promotes efficient use of these 

utilities. In contrast, our current method for funding the National Airspace System is 

analogous to charging households for electricity based on the size of their house, or the 

number of household occupants, rather than their actual utilization. Numerous bipartisan 

commissions have recommended cost-based funding for FAA over the last two decades, 

and we firmly believe that a cost-based funding structure offers the best means to 

efficiently make the major capital investments required for a transition to the Next 

Generation Air Transportation System (NextGen). 

Amtrak has been operating without legislative reauthorization for over 6 years, 

preventing the types of fundamental reforms called for by multiple bodies of experts and 

this Department. The Nation currently has a flawed model for providing intercity 

passenger rail service that does not encourage innovation or emphasize accountability.

The Administration's goal is to create sustainable, demand-driven service by, 

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empowering states and localities to direct rail investment and fostering opportunities for 

participation by alternative rail service providers. Key aspects were first spelled out by 

then-Secretary of Transportation Mineta in 2002, and remain valid today. The 

Department awaits Congressional action to (1) create a system driven by sound 

economics, (2) require that Amtrak transition to a pure operating company, (3) introduce 

carefully managed competition to provide higher quality service at reasonable prices, (4) 

establish a long-term partnership between states and the federal government to support 

intercity passenger rail service, and (5) create an effective partnership, after a reasonable 

transition, to manage the capital assets of the Northeast corridor. Amtrak continues to 

operate without making fundamental changes, resulting in excessive expenditures that 

fail to meet any reasonable cost benefit. Without the statutory framework necessary to 

achieve increased efficiencies and improve cost benefit, the Department can act only at 

the margins to affect positive change on Amtrak operations. 

We are now more than halfway through the existing surface transportation authorization. 

The Department has already begun a dialogue with the Congress and transportation 

stakeholders to focus future surface transportation investments using data-driven, 

performance-oriented techniques that offer the greatest potential transportation benefit 

from each dollar of investment. In contrast, today’s Federal investment strategy 

discourages the proper pricing of transportation infrastructure, fails to sufficiently reward 

innovation and technology development and does not prioritize investments based on 

performance and benefit. We are currently spending billions of dollars more than we 

collect in tax revenues each year. As a result, the Highway Account of the Highway 

Trust Fund is projected to experience a substantial cash shortfall for the first time in 

2009. The Mass Transit Account is also expected to experience a shortfall in 2011. The 

Nation’s transportation community must work together to increase the efficiency of our 

transportation investments, improve benefits to the taxpayers, and reduce congestion. 

Action Needed to Address the Gridlock in the Air and on our Nation’s Highways 

The FAA is working to expand and further improve management of available airspace 

capacity. Since 2000, thirteen new runways have opened at major airports providing the 

capacity to accommodate 1.6 million more annual operations. Even the three more 

runways now under construction will not be enough to accommodate the projected 

growth in air travel. The Department faces a significant challenge of putting necessary 

airport capacity in place while simultaneously addressing environmental concerns. 

Nowhere is this more evident than in the New York/New Jersey/Philadelphia area. FAA 

has worked long and hard to improve the efficiency of this key area in the National 

Airspace System while accommodating the environmental concerns of those living in the 

vicinity. This airspace redesign project offers the potential to eliminate 200,000 hours of 

aircraft delays per year, and reduce airline operating costs by up to $285 million per year, 

while reducing exhaust emissions. 

We have also been taking other near-term actions to reduce air travel delays and better 

use existing capacity. For example, the Secretary and FAA are working with key airports 

and the airlines that use them to achieve a more realistic scheduling of flights and reduce 

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delays. In addition, FAA is constantly working to have an adequately staffed and 

expertly trained air traffic controller workforce. That is why FAA developed and has 

been implementing a comprehensive Controller Workforce Plan to address the wave of 

retirement-eligible controllers over the next ten years. FAA has taken proactive steps to 

ensure it has the right people in the right place and time. These steps include expanding 

the Collegiate Training Initiative, increasing recruiting through forums such as job fairs 

and streamlining clearance processes. FAA hired over 1,100 controllers last year, is on 

track to hire another 1,700 controllers this year, and will carefully monitor actual trends 

and the workforce plan to continue hiring the appropriate number of controllers in the 

future. 

In the longer term, anticipated growth in the use of the National Airspace System will 

require a new approach to air traffic control, which FAA has embodied in the NextGen 

initiative. NextGen is a steady, deliberate and highly collaborative undertaking which 

focuses on leveraging the latest technologies, such as satellite-based navigation, 

surveillance, and network-centric systems. It is intended to be flexible enough to take 

advantage of even newer and better technologies as they emerge. 

The Department is also pursuing innovative means to reduce surface transportation 

congestion. For example, the urban partnership program will provide over $800 million 

to support tolling and other congestion-relief demonstration projects in Seattle, San 

Francisco, Minneapolis, Miami, and New York City. New York’s congestion pricing 

plan, if fully authorized by the state, will provide incentives for off-peak travel in 

Manhattan and finance substantial upgrades to the Nation’s largest transit system. The 

other cities also plan to experiment with tolling and transit improvements that we believe 

can have tremendous impact. In addition, the Corridors of the Future program has 

identified six critical multistate corridors that together carry nearly 23% of the Nation’s 

traffic and has begun to work with applicants on making improvements to these facilities. 

Elements of the program include building new capacity, adding lanes to existing roads, 

building truck-only lanes and bypasses, and integrating real-time traffic technology such 

as lane management that can match available capacity on roads to changing traffic 

demands. These advances offer the hope of reduced congestion, reduced emissions, and 

greater value to the users. 

DOT Maintains a Sharp Focus on Continuously Improving Aviation and Surface 

Transportation Safety

While the U.S continues to enjoy the safest aviation system in the world, FAA is 

persistent in its drive to achieve further improvements. Fiscal year 2007 passed without a 

single major air carrier accident. By the end of calendar year 2007, FAA is on track to 

have all of the current 120 major air carriers regulated under 14 CFR part 121 

transitioned to the data-driven, risk-based, Air Transportation Oversight System (ATOS). 

This is a significant achievement the organization has been working towards for years. In 

April 2007, FAA also took steps to enhance its oversight of maintenance programs to 

ensure that work performed by certificated and non-certificated repair facilities is 

accomplished within the scope of the contract and in compliance with the air carriers’ 

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maintenance instructions for continued airworthiness. In addition, in May 2007, FAA 

completed a 10-year, Aviation Safety Workforce Plan, to address safety staffing, 

inspector attrition, and anticipated changes in the aviation industry. Finally, FAA has 

established recruiting plans to fill its most critical safety occupations. Each of these 

actions is a noteworthy accomplishment that will assist the agency in its relentless drive 

to further improve safety. 

Highway crashes account for 99 percent of all transportation related fatalities and injuries 

and are the leading cause of death for Americans between the ages of 2 and 34. Alcohol 

is still the single largest contributing factor in fatal crashes and about 55 million people 

still do not use safety belts all of the time when driving. However, some progress is 

being achieved. In 2006, the number of people killed in motor vehicle crashes fell 2 

percent to 42,642. Fatalities resulting from large truck and bus crashes account for about 

12 percent of these of these fatalities while motorcycle fatalities continue to increase, 

now accounting for 11 percent of the total highway fatalities. Despite progress in some 

areas, the number of people losing their lives on the Nations’ highways remains far too 

high.

Numerous initiatives are underway to further improve highway safety, better target 

inspection and compliance resources, increase safety belt use, reduce impaired driving, 

and improve the safety of the vehicles we drive. The Federal Motor Carrier Safety 

Administration has launched a major initiative called the Comprehensive Safety Analysis 

2010 to better target its inspection and compliance resources. The National Highway 

Safety Administration (NHTSA) continues to work with the states to increase the 

percentage of drivers using safety belts from the current national average of 82.4 percent.

In the area of impaired driving, NHTSA further enhanced its program to focus on high 

risk populations. Extra funding has been provided to the ten states with the highest 

impaired driving fatality rates, and NHTSA is evaluating technology such as ignition 

interlocks, as a potential means to further reduce deaths and injuries from impaired 

driving. NHTSA also continues its critical work to make vehicles safer. In April of this 

year, NHTSA issued a final rule to require Electronic Stability Control in vehicles. Data 

has shown that these systems can reduce fatal single vehicle crashes by 63 percent for 

sport utility vehicles and 36 percent for passenger cars. Finally, NHTSA is working to 

identify the most effective means to address motorcycle safety problems. It recently 

distributed a guide to assist states and communities in creating programs to improve 

motorcycle safety. It incorporated motorcycle operators in high visibility enforcement 

programs and completed a study to determine impairment levels for motorcycle riders. In 

the coming year, NHTSA plans additional actions to improve motorcycle training, 

improve helmets, and explore vehicle safety approaches to improving safety. 

Thank you for the opportunity to offer management’s perspectives on the Department’s 

Top Management Challenges. We look forward to a continued constructive exchange of 

ideas and information with you in each of these areas. 

Appendix. Department Comments 

United States Department of Transportation

1200 New Jersey Avenue, SE

Washington, D.C. 20590