United States Department of Transportation

ACCOUNTABILIT Y 

PERFOR M ANCE 

AND

REPORT

FY 2006 Mary E. Peters 

Secretary of Transportation 

contents 

message from the secretary 3

message from the chief financial officer 7

management’s discussion and analysis 11

performance highlights 19

financial highlights 26

performance report 83

performance framework 85

FY 2006 performance report 88

PERFORMANCE SUMMARY TABLES 91

SAFETY STRATEGIC GOAL 97

MOBILITY STRATEGIC GOAL 117

GLOBAL CONNECTIVITY STRATEGIC GOAL 131

ENVIRONMENTAL STEWARDSHIP STRATEGIC GOAL 141

SECURITY STRATEGIC GOAL 151

ORGANIZATIONAL EXCELLENCE STRATEGIC GOAL 157

performance data completeness and reliability 173

dot program evaluations 176

financial report 191

principal statements 193

notes to principal statements 199

required supplementary information 242

required supplementary stewardship information 245

inspector general’s audit report 253

other accompanying information 281

performance data completeness and reliability details 283

inspector general’s FY 2007 TOP management challenges 332

fy 2006 omb “part” program for dot 396

improper payments information act (ipia) reporting details 400

www.dot.gov 

MESSAGE FROM THE SECRETARY 

As I begin my tenure as the new Secretary of Transportation, I look 

forward to continuing the U.S. Department of Transportation’s record 

of excellence. Safety is and continues to be our top priority. Over the 

past few years, we achieved one of the highest rates of safety belt usage, 

the lowest level of rail-related accidents and the lowest level of aviation 

fatalities. Yet, even with these successes, there is still more work to be 

done. As we move forward, I challenge the employees of the 

Department to focus on improving the safety of our transportation 

systems, improving system performance and reliability, and 

implementing 21st century solutions to 21st century problems. 

Moving forward we must be mindful of our obligation to be responsible stewards of the American 

taxpayers’ dollars, and we must align our resources to the areas that need the greatest attention. 

In the Federal Highway Administration (FHWA), that means using a performance-based 

approach to focus our safety resources within the 16 identified states where the greatest 

opportunity exists to save lives. In the Federal Aviation Administration (FAA), we are ranking 

airspace design projects based on relative benefits. In the Pipeline and Hazardous Materials 

Safety Administration (PHMSA), we are rigorously inspecting pipelines near communities and 

environmentally sensitive areas. This approach ensures our efforts are concentrated on the 

highest priority areas. 

IMPROVE SAFETY 

The Department has made tremendous strides in creating and maintaining the safest and most 

efficient transportation system in our country’s history. However, we are discovering that we have 

reached the limits of traditional solutions. The fatality rate per 100 million vehicle-miles traveled 

(VMT) was 1.47 in 2005, up from 1.45 in 2004. Actual fatalities for this period increased more 

than 1 percent to 43,443, which is the highest level since 1990. The Department is firmly 

committed to meeting the fatality rate goal of 1.0 fatalities per 100 million VMT, but we will need 

the assistance of state and local governments, the entire traffic safety community and all motorists 

if we are to be successful in making our roads even safer. 

To continue making our roads safer, we are exploring new strategies and technologies to reduce 

highway fatalities. We are also exploring new performance targets in key areas to focus the 

Department’s efforts on the critical factors responsible for the overall highway fatality rate 

increase. Being a rider myself, one area of particular concern is motorcycle safety, where the data 

is screaming for something to be done. Motorcycle fatalities have been going up steadily 

3 
over the past few years especially in my own 50-plus age group. Crashes have gone up an 

astonishing 400 percent in 10 years. In my first month as Secretary, I met with motorcyclists and 

manufacturers, and asked all the top state transportation officials to make sure manufacturers, 

dealers, and others are able to offer safety training programs to motorcycle riders. 

We must also address: impaired driving, commercial motor vehicle safety, and safety belt use. 

DOT has launched a new campaign to focus on impaired drivers, “Drunk Driving. Over the 

Limit. Under Arrest.” Sadly, 14,593 fatalities last year involved a driver or motorcycle operator 

with a blood alcohol concentration of .08 or higher, the legal limit throughout the United States. 

Thirty-nine percent of all traffic deaths in 2005 involved alcohol misuse. We have discovered that 

impaired driving disproportionately impacts particular segments of our population. We need to 

do a better job of reaching out to the newly identified communities and addressing the root 

causes. 

The Department also has completed a pilot project dealing with safety strategies and commercial 

motor vehicles. The purpose of the project was to test ways to reduce fatalities resulting from 

other vehicles cutting off, tailgating, and speeding near and around large trucks. We were able to 

demonstrate the effectiveness of using high-visibility enforcement, education, media and 

evaluation to raise public awareness of the need to be vigilant when driving near large trucks. 

In the past five years, safety belt use has increased steadily from 71 percent in 2000 to 81.7 

percent in 2005 (latest data available). To date, 25 states, the District of Columbia, and Puerto 

Rico have enacted primary safety belt use laws. The Safe, Accountable, Flexible, Efficient, 

Transportation Equity Act: A Legacy for Users (SAFETEA-LU), provides real incentives for states 

to enact stronger belt use laws. We already are seeing benefits. Since the beginning of 2006, three 

more states, Alaska, Kentucky, and Mississippi, have enacted primary safety belt use laws in direct 

response to the SAFETEA-LU incentives. 

IMPROVE SYSTEM PERFORMANCE AND RELIABILITY 

Each of our major transportation systems are facing challenges, and our infrastructure is showing 

signs of aging. Increased congestion on our highways, railways, airports, and seaports is choking 

our cities and reducing our nation’s economic productivity and consuming our citizens’ time. 

The Department is working to both increase system capacity and focus on ways to improve the 

efficiency of the existing transportation network. For example, FAA is pursuing a redesign of the 

airspace around LaGuardia airport to reduce delays and improve efficiency. FHWA is focusing on 

delays that create uncertainty in travel times. By promoting the use of 511 traveler information 

systems, and implementing quick clearance policies and roving response teams in the case of 

accidents, a measure of system reliability can be returned to travelers. 

4 
Shippers face serious freight bottlenecks at every turn. Our Corridors of the Future pilot project 

will help us test leading-edge policies and find better and more effective ways to keep goods 

moving. Eliminating the freight chokepoints and bottlenecks along our key corridors and border 

crossing will make American products more competitive on the global market place. 

IMPLEMENTING 21ST CENTURY SOLUTIONS TO 21ST CENTURY PROBLEMS 

The Department recognizes that traditional problem solving approaches may no longer be 

effective. The traveling public needs us to take a fresh look at how we consider the issues of today. 

The decades-old solutions aren’t working anymore. 

The reauthorization of FAA will be our first opportunity to re-think traditional approaches. FAA 

has already started this process by providing a clear line of sight between the work employees 

perform on a daily basis and the overarching goals of the organization with their Organizational 

Flight Plan. 

As traditional funding sources are no longer able to keep up with program demands, we are 

exploring ways to incorporate private sector resources to provide greater flexibility to state and 

local officials. The Department is in the process of compiling best-practices and creating model 

legislation and model contracting language to spur public-private partnerships. We must rethink the traditional approaches to problem solving in order to fully realize the next level of 

system performance. 

SECURITY/PREPAREDNESS 

The aftermath of last year’s hurricanes reinforced the importance of preparedness. It is not 

enough that the Department was able to quickly respond to disasters after the fact. The 

Department has begun a systematic analysis of ways to improve our preparedness so crucial 

contracts and Memoranda of Understanding with other relief organizations are in place prior to a 

disaster. 

For example, DOT, in support of the Department of Homeland Security, has established major 

contracts for bus and passenger rail evacuation support to ensure the capability is in place to 

evacuate large populations in the event of a catastrophic incident. DOT also refined an existing 

contract to improve access to commercial aviation services. These contracts clearly define the 

roles and responsibilities of each organization charged with responding to a catastrophic event. 

PROGRAM AND FINANCIAL PERFORMANCE 

Our 2006 Performance and Accountability Report contains performance and financial data that 

are substantially complete and reliable. The Performance Data and Completeness and Reliability 

section in the report contains a detailed assessment of the inadequacies in the DOT’s 

5 
performance data, and explains how we will remedy those deficiencies. DOT has a qualified 

statement of assurance with exceptions noted under the Federal Managers’ Financial Integrity Act 

(FMFIA) in the Management Discussion and Analysis Section. Two material weaknesses are for 

Section 2 and one material non-conformance is for Section 4. We will continue to make 

improvements throughout FY 2007. 

CONCLUSION 

My top priorities at DOT are to keep the traveling public safe and secure, increase their mobility, 

and have our transportation system contribute to the Nation's economic growth. 

Our achievements from the past year inform, but do not limit, our direction. I believe the 

Department has the talent, creativity and innovative spirit to produce tangible results for the 

American people, making our communities more prosperous and improving quality of life. We 

are on the brink of new and exciting programs that will further our ability to provide a safe, 

effective, and efficient transportation system for all Americans. 

November 15, 2006

6 
MESSAGE FROM THE assistant SECRETARY 

for budget and programs & chief financial officer 

The Department of Transportation (DOT) made great strides in 

enhancing our budget, performance and financial management 

programs during Fiscal Year (FY) 2006. By integrating these programs, 

we can use performance and financial information to make better 

budget and business decisions for DOT programs, as demonstrated in 

this Performance and Accountability Report. For the first time this 

year, we brought representatives of our budget, performance and 

financial management staffs together for a joint training workshop to 

discuss common issues and determine our strategy for moving forward 

together. 

This was our first year operating under the Safe, Accountable, Flexible, Efficient Transportation 

Equity Act: A Legacy for Users (SAFETEA-LU), which was passed in August 2005 to reauthorize 

surface transportation programs for four years. SAFETEA-LU provides for increased 

transportation infrastructure investment, strengthens transportation safety and environmental 

programs, and continues core research activities. 

The Secretary is leading a new commission established by Congress to develop innovative 

funding strategies for future surface transportation programs. Another challenge for the future is 

the reauthorization of DOT’s aviation programs; planning and budget development for this effort 

are underway. 

PRESIDENT’S QUALITY AWARD FOR BUDGET-PERFORMANCE INTEGRATION 

DOT is proud that we received the President’s Quality Award this year for our outstanding 

budget-performance integration program. DOT routinely uses performance information to make 

funding decisions during the budget formulation process. We strive to reflect the results achieved 

by our Operating Administrations by providing links between resources and performance 

attained. 

DOT also received the President’s Quality Award for Competitive Sourcing this year. DOT is 

proud to be the only Department to receive two President’s Quality Awards in FY 2006. 

EXCELLENCE IN FINANCIAL MANAGEMENT 

Over the past three years, DOT has continued to realize significant benefits from our state-of-theart financial system. This year, we further enhanced our Financial Statement Solution, which 

produces statements from our core accounting system overnight at the end of each month, at the 

end of the fiscal year, and anytime on demand. In conjunction with a government-wide 

7 
accounting code initiative led by the Office of Management and Budget (OMB), we are planning 

enhancements to our accounting classification structure to support improved financial operations 

and to make our financial information and reports more useful to DOT program managers. 

In 2003, DOT became the first cabinet-level agency to finish converting all our organizations to 

a new financial management system that runs on a cost-effective single production instance for 

17 Sets of Books. DOT’s financial system uses non-customized commercial off-the-shelf software 

to minimize upgrade costs (we have successfully upgraded our system four times) and currently 

supports 4,000 users. 

In February 2005, the President’s budget named DOT one of four government-wide Centers of 

Excellence for financial management. These Federal Shared Service Providers were designated to 

offer financial systems and accounting services to other Federal agencies. DOT’s Center, called 

the Enterprise Services Center (ESC), is hosted at the Mike Monroney Aeronautical Center in 

Oklahoma City. In 2005, DOT became the only Center to competitively select a private sector 

business partner to help market to new customers and implement them on our financial system. 

This summer DOT signed our fourth customer when the Government Accountability Office 

(GAO) selected DOT’s financial system in a competitive process. GAO will be implemented on 

DOT’s system in October 2007. GAO joins DOT’s first three customers, the National 

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

Museum and Library Services. Three of our customers have also contracted with DOT’s Center 

to provide accounting services including Accounts Receivable, Accounts Payable, Supplier Table 

maintenance, monthly closing and reconciliation, and financial reporting. 

CONSOLIDATING OPERATIONS AND SYSTEMS 

DOT also made great progress in consolidating our accounting operations at the ESC. During 

FY 2006, we completed consolidating nine Federal Aviation Administration (FAA) regional 

accounting offices at the ESC at an estimated savings of $4.9 million. We will migrate the 

accounting services of our last two Operating Administrations to the ESC during FY 2007. 

Consolidating accounting services provides significant economies of scale and supports our 

efforts to further streamline and standardize our processes and implement best practices. 

In addition to consolidating accounting services, DOT has an active program to consolidate and 

sunset redundant financial systems that have grown up over many years. During FY 2006, DOT 

sunset the following systems: our legacy payroll and Human Resources (HR) systems (replaced 

by Interior’s Federal Personnel and Payroll System [FPPS]), our legacy Time and Attendance and 

labor distribution system (replaced by a new server- and Web-based system interfaced with FPPS 

and DOT’s accounting system), our legacy HR analysis and reporting system (replaced by the 

8 
FPPS Data Mart), the Transportation Safety Institute’s legacy procurement system (consolidated 

with the Volpe National Transportation Systems Center’s procurement system), and six travel 

management systems (replaced by our new e-Travel system). 

NEW E-TRAVEL SYSTEM 

During FY 2006, DOT built on our history of innovation in travel management by implementing 

one of the new e-travel systems selected by the General Services Administration under OMB’s 

e-Gov program. DOT has more travel transactions flowing through a new e-travel system than 

any other department, and we have developed and implemented the most sophisticated 

automated interface from the e-travel system to our financial system, including real-time funds 

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

delinquency rate below one percent. 

NEW INTERNAL CONTROL PROGRAM 

During FY 2006, DOT developed and implemented the first year of our in-depth two-year 

Internal Control program to meet the revised requirements of OMB Circular A-123, 

Management’s Responsibility for Internal Control. Each DOT entity conducted internal control 

environment surveys, and we identified 12 key business processes. This year we documented, 

assessed risk and extensively tested the first six of these 12 key processes. Corrective action plans 

have been developed and are being implemented to address the findings, none of which were 

material. Our auditors determined that our Internal Control program was in compliance with 

OMB requirements. 

To ensure effective implementation and oversight of our Internal Control program, in 2005 DOT 

established an Internal Control Senior Advisory Team and an Internal Control Working Group. 

To avoid duplication of effort, we are integrating our Internal Control program with our CFO 

audits, with our Federal Managers Financial Integrity Act program, and with our innovative 

Improper Payments Information Act (IPIA) program, which this year sampled 1,500 highway 

projects across the country and developed a nationwide improper payment rate. This year we also 

developed component improper payment rates for transit and aviation programs. Together, these 

efforts improved our progress score on the President’s Management Agenda goal for IPIA. 

NEW INTERAGENCY AGREEMENT POLICY AND PROCESS 

Culminating an extensive two-year collaborative effort involving all DOT Operating 

Administrations, we recently developed and issued a new policy and business process for interand intra-agency agreements. The new policy and process are being implemented throughout 

DOT during FY 2007. This effort will greatly facilitate eliminations on financial statements; this 

has long been recognized as a significant problem for all government agencies. 

9 
MANAGERIAL COST ACCOUNTING 

Managerial cost accounting enables program managers to analyze and manage program costs 

accurately and timely. DOT Operating Administrations have been working aggressively to 

implement managerial cost accounting for several years. Examples include: 

• During FY 2006, the FAA completed implementing its Cost Accounting System 

(CAS) for its remaining two lines of business, Aviation Safety and Airports. 

FAA has also implemented labor distribution reporting in all lines of business, 

covering over 45,000 employees. 

• The Federal Highway Administration is developing a new capability in our 

accounting system to make program, project, and task information available to 

Federal Lands Highway Program managers, engineers, and financial managers; 

this new capability will be implemented in FY 2007. 

• The Federal Transit Administration has begun using labor distribution reporting 

to assign salary and benefit expenses to programs and is consolidating 

administrative, salary, benefit and grant expenses from various systems to 

provide that information to program managers. 

• DOT’s leadership and progress in cost accounting was recognized in the GAO 

report Managerial Cost Accounting (MCA) in the Departments of Education, 

Transportation, and Treasury. We are continuing to integrate program and 

accounting data and to expand cost accounting within DOT. 

CONCLUSION 

FY 2006 has been another productive year in our efforts to enhance and strengthen our budget, 

performance and financial management programs. Looking back, we see that we are 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 financial and 

program results the American people expect and deserve. 

November 15, 2006

10 
Management’s Discussion & Analysis 

About This Report 

The Department of Transportation’s (DOT) Performance and Accountability Report (PAR) for 

Fiscal Year 2006 (Report) provides performance and financial 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. This Report satisfies the reporting requirements 

of the following major legislation: 

• Chief Financial Officers Act of 1990 

• Government Performance and Results Act of 1993 

• Government Management Reform Act of 1994 

• Reports Consolidation Act of 2000 

Under the Reports Consolidation Act of 2000, agencies are permitted to submit combined reports 

in implementing statutory requirements for financial and performance management reporting to 

improve the efficiency of executive branch performance. 

These reports are combined in the PAR, which consists of the Annual Performance Report 

required by the Government Performance and Results Act of 1993, with annual financial 

statements required under the Chief Financial Officers Act of 1990, as amended by the 

Government Management Reform Act of 1994, and other reports such as management 

assurances on internal controls, and Inspector General assessments of an agency’s management 

challenges. 

You may view this report online at http://www.dot.gov. You may also have additional copies of the 

report mailed to you by writing a request to: 

U.S. Department of Transportation

Office of the Chief Financial Officer (Room 10101)

400 7th Street S.W.

Washington, D.C. 20890

MANAGEMENT’S DISCUSSION AND ANALYSIS 13 
How this report is organized 

Management’s Discussion and Analysis (MD&A) 

The 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 2006; a brief analysis of financial performance; a brief description of 

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

implementing the President's Management Agenda. The MD&A also addresses the management 

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

General’s audit report. 

The Performance Report 

The 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 specified in OMB Circular A-11, 

Preparation, Submission and Execution of the Budget. The results are presented by Strategic Goal. 

The Financial Report 

The Financial Report section contains the Department's financial 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. 

14 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
dot mission and values 

MISSION 

The 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, 

efficient, and convenient transportation at the lowest cost consistent with 

those and other National objectives, including the efficient 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 differences 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. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 15 
organization 

HISTORY 

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

private sector partners to promote a safe, secure, efficient, 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 specific goals. 

HOW WE ARE ORGANIZED

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

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

with its own management and organizational structure. 

The Office of the Secretary of Transportation provides overall leadership and management 

direction, administers aviation economic programs, and provides administrative support. The 

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

part of DOT, are independent by law. 

16 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
OVERVIEW OF LEGISLATIVE AUTHORITIES

The 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. 

Office of the Secretary. The Office 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 fitness 

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. The Federal Aviation Administration's (FAA) mission is to 

promote aviation safety and mobility by building, maintaining, and operating the Nation's air 

traffic 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. The mission of the Federal Highway Administration (FHWA) 

is to enhance mobility through innovation, leadership, and public service. 

Federal Motor Carrier Safety Administration. The Federal Motor Carrier Safety 

Administration's (FMCSA) primary mission is to prevent commercial motor vehicle-related 

fatalities and injuries. 

Federal Railroad Administration. The Federal Railroad Administration's (FRA) mission is to 

ensure that our Nation has safe, secure, and efficient rail transportation that enhances the quality 

of life for all. 

Federal Transit Administration. The Federal Transit Administration (FTA) provides leadership, 

technical assistance, and financial 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 after criminal or terrorist attack. 

Maritime Administration. The Maritime Administration's (MARAD) mission is to promote the 

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

sufficient 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. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 17 
National Highway Traffic Safety Administration. The National Highway Traffic Safety 

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

due to road traffic crashes through education, research, safety standards, and enforcement 

activity. 

Office of Inspector General. The Inspector General Act of 1978, as amended, established the 

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

The OIG’s mission is to promote economy, effectiveness, and efficiency 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. The Pipeline and Hazardous 

Materials Safety Administration (PHMSA) is dedicated to safety and security by working toward 

the elimination of transportation-related deaths and injuries in hazardous materials and pipeline 

transportation, and by promoting transportation solutions that enhance communities and protect 

the natural environment. 

Research and Innovative Technology Administration. The Research and Innovative 

Technology Administration (RITA) is dedicated to the advancement of DOT priorities for 

innovation and research in transportation technologies and concepts. Innovations that will 

improve our mobility, promote economic growth, and ultimately deliver a better integrated 

transportation system. 

Saint Lawrence Seaway Development Corporation. The 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. The Surface Transportation Board (STB) is charged with 

promoting substantive and procedural regulatory reform in the economic regulation of surface 

transportation, and with providing an efficient and effective forum for the resolution of disputes 

and the facilitation of appropriate business transactions. 

18 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
performance highlights 

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

secure, and efficient 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. 

This 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 fiscal year (FY) 2006 results in our five 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. 

For the first time in many years, DOT is reporting that the 

highway fatality rate increased on our Nation’s roads and 

highways. The fatality rate per 100 million vehicle-miles 

traveled (VMT) was 1.47 in 2005, up from 1.45 in 2004. 

Actual fatalities for this period increased 1.4 percent to 

43,443, which is the highest level since 1990. While firmly 

committed to meeting the 1.0 fatality rate goal, the 

Department realizes that we will not achieve this goal by 

FY 2008 as originally planned. The Department will need 

© AP Photo/Manuel Balce Ceneta the assistance of State and local governments, along with 

the entire traffic safety community to achieve this goal. 

Our central strategies for reducing the increasing rate of highway fatalities and injuries are to 

reduce alcohol-impaired driving, increase safety belt use, reduce the rising motorcycle fatality 

rate, and improve the safety of commercial vehicle operations. Some of the approaches to 

increased highway safety the Department is pursuing are: 

MANAGEMENT’S DISCUSSION AND ANALYSIS 19 
• National Highway Traffic Safety Administration (NHTSA) provided funds to the ten 

States with the highest fatality rates to facilitate implementation of effective programs, 

including periodic and sustained high-visibility enforcement efforts and media 

campaigns. 

• NHTSA initiated 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 weekend and the 

December holiday season. 

• FMCSA has begun developing recommended practices for on-board safety technologies 

in large trucks, including collision warning systems, adaptive cruise control, and 

stability systems. 

The increase in 2005 vehicle fatalities comes from the rise in the number of 

motorcycle fatalities and the increase in pedestrian fatalities over the 

previous year, which more than compensate for the slight decrease in motor 

vehicle occupant fatalities (- 0.7 percent). Motorcycles continue to be of 

particular concern, playing a large role in the increase with a 13 percent 

increase in motorcycle fatalities in 2005, to a total of 4,553, an increase of 

more than 115 percent since 1997. The number of pedestrian fatalities 

increased from 4,675 in 2004 to 4,881 in 2005, a 4.4 percent increase. All of 

this underscores the need for a renewed, aggressive and coordinated effort to 

make America’s roads safer. 

Although FAA did not meet its commercial aviation safety measure this year, 

© Kevin Mattingly this remains one of the safest periods in aviation history. Since 2001, there Northern Virginia Community College have been 50 million successful flights. This represents 2.7 billion passengers 

who have flown on commercial jet aircraft in the United States without an onboard fatality—nine 

times the population of our country. Accidents involving passenger fatalities have a rate of about 

one every 18 million departures. 

Rail and transit safety continue to improve. Based on preliminary estimates, DOT expects to 

exceed the FY 2006 target of 16.80 rail-related accidents/incidents per million train miles, 

limiting accidents/incidents to 16.14 per million train miles. This improvement was 

accomplished while the overall number of train-miles nationally rose almost 3 percent. The rail 

industry also saw a 4.3 percent decrease in accidents during that period, from 14,496 to 13,875. 

Transit safety continues to exceed expectations. In FY 2006, transit fatalities decreased from 

0.428 in FY 2005 to 0.344 per 100 million passenger miles traveled. Strong growth in transit 

ridership and the continued expansion of transit service significantly increased the number of 

transit passenger miles in FY 2006 over FY 2005. 

20 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
DOT's safety performance results from targeting unsafe practices for improvement, partnering 

with an ever-widening group of stakeholders to leverage our resources, and fostering the use of 

Web-enabled and other technologies to achieve safer transportation. 

MOBILITY 

Historically, the mobility that transportation provides has helped define 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, efficient, intermodal 

transportation for the movement of people and goods. Highlights of 

our results are presented below. 

Recent forecasts indicate that commercial aviation is rebounding. 

FAA exceeded its target for percentage of flights arriving within 15 

minutes of schedule in FY 2006. To manage the increased air traffic, © AP Photo/Mark J. Terrill 

FAA continued to focus on easing congestion in eight metropolitan areas; improving overall 

capacity at the Nation's top 35 airports; building new runways; enhancing access to reliever 

airports for general aviation operations; and increasing traffic coordination and communication 

by using new technologies. In FY 2006, we opened four new runways, one each in MinneapolisSt. Paul, Cincinnati, St. Louis, and most recently in Atlanta, the world’s busiest airport. The recent 

commissioning of a new runway at Atlanta-Hartsfield Airport, allows for 33 percent more 

operations a year. 

Mobility and accessible transportation go hand-in-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 2006, DOT met both of its performance targets 

measuring compliance with the Americans with Disabilities Act (ADA). An estimated 97 percent 

of bus fleets are now ADA compliant, either being lift-equipped or having low floors to 

accommodate wheelchairs and people with limited mobility. Approximately 92 percent of key rail 

stations are also ADA compliant, increasing transportation access for all of our citizens. 

Work continued to improve the pavement condition on the Nation's highways. The results from 

this year show that 54.2 percent of our roads meet the “good-rated” ride quality standard, not 

quite meeting the target for FY 2006. However, FHWA has found that more improvement is 

needed in key states that have the most influence on the nationwide results in order to meet the 

higher standard. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 21 
The percent of travel nationwide that is under congested conditions is estimated to be 32.1 

percent in calendar year 2006, which meets this year’s target. Although the congestion levels 

continue their upward trend, DOT’s efforts have contributed to slowing the rate of the increase. 

Based on the current state of the highway system, DOT expects that the congestion levels will 

continue to rise if there is no significant change in transportation system capacity or existing 

operating practices. 

FHWA intensified its efforts to manage highway capacity through the implementation of pricing 

strategies. The Agency developed a Tolling and Pricing Primer for states and other public entities 

that provide a comprehensive perspective of federal tolling and pricing initiatives, including 

public-private partnerships and innovative financing programs. 

GLOBAL CONNECTIVITY 

Transportation systems within and among nations are lifelines to economic growth, to 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 efficient domestic and global transportation system that enables 

economic growth and development, concerns the efficiency of transportation, an important part of 

our competitive edge in global trade. 

In an effort 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 agreements are in place. 

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. As a result of newly 

© AP Photo/Charles Rex Arbogast implemented Open Skies agreements, DOT increased the number of 

potential air transportation customers to 3.01 billion, an increase over 

22 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
FY 2005. In FY 2006, the Department reached Open Skies agreements with Canada, Cameroon, 

Kuwait and several other countries. We now have 75 Open Skies agreements with countries all 

over the world. 

In FY 2006, DOT entered into four Bilateral Aviation Safety Agreements (BASA), exceeding its 

performance target. These agreements improve global understanding of U.S. safety regulations, 

processes, and procedures, which leads to better international regulatory oversight. The BASAs 

allow FAA to focus on U.S. safety priorities by relying on the capabilities and technical expertise 

of other civil aviation authorities and minimizing duplication of efforts. 

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

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

East and Africa. The Great Lakes Seaway System offers 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 percent of the season. 

ENVIRONMENTAL STEWARDSHIP 

While transportation ties us together as a Nation, it can also produce unwanted side effects 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 effects 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 first time since we began measuring the activity in FY 2002, conformity lapses for 

transportation systems fell far below the target. On average, the Nation experienced 

approximately six air quality transportation conformity lapses in any given month. In FY 2006, 

the 12-month moving average number of areas in a conformity lapse was 1.3. In FY 2005, EPA 

announced that States and cities would have to meet a new, more stringent requirement for fine 

particulates in the air by April 2006. In anticipation of this deadline, DOT and EPA conducted 

numerous workshops, training sessions, and other outreach activities to raise awareness and to 

prepare State departments of transportation, State air agencies, and Metropolitan planning 

organizations to meet the requirements. As a result of the advanced preparation, many of the 

areas formerly in non-attainment status were able to meet conformity determinations by the April 

2006 deadline. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 23 
Once again, DOT exceeded its target of creating/replacing at least 1.5 acres of wetlands for every 

acre affected by Federal-aid Highway projects, achieving a ratio of 2.6 to 1 in FY 2006. DOT is 

proud of its nine year track record of exceeding the target. In a demonstration of commitment to 

environmental stewardship and ecosystem conservation, DOT has begun using a new measure to 

assess the impact of projects on entire ecosystems rather than limiting the impact to a site-specific 

area. Traditional mitigation for transportation impacts tend to be site-specific, with little 

consideration of how the project fits into the context of the surrounding ecosystem. Under the 

ecosystem approach, the frame of reference and project objectives are broader and are applied 

within a defined geographic framework such as an eco-region, watershed, species range, or 

transportation planning area. 

The Maritime Administration (MARAD) has more than 130 obsolete and deteriorating ships 

awaiting disposal that pose potentially costly 

environmental threats to the waterways near where they 

are stored. Due to legal, financial, and regulatory factors 

that have complicated the disposal effort, MARAD did 

not meet the congressionally mandated disposal 

schedule. However, in FY 2006, MARAD removed 25 

obsolete ships, 23 of which were either high or moderate 

priority vessels. They completed dismantling of 20 

© AP Photo/Daily Press, Adrin Snider additional ships, some of which were removed from the 

MARAD fleet sites in earlier fiscal years. 

SECURITY 

Our transportation system must remain a vital link for mobilizing our armed forces for military 

contingencies and for supporting civilian emergency response. 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. 

DOT provided sealift services to the Department of Defense (DoD) in support of Operation Iraqi 

Freedom during the redeployment phase of the war. In addition to the availability of commercial 

U.S.-flag vessels, MARAD has 48 government-owned Ready Reserve Force vessels available to 

satisfy DoD’s surge sealift requirements, a decrease of 10 vessels from FY 2005. 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. These 

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

notice. While DOT did not meet the shipping capacity performance target of 94 percent 

availability within mobilization timelines, MARAD did meet its target for commercial strategic 

port availability, and in fact achieved 100 percent readiness within established timelines. 

24 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
The Department continues to focus on emergency preparedness through the Office of 

Intelligence, Security, and Emergency Response. In FY 2006, DOT established the Transportation 

Management Unit in Baton Rouge, Louisiana, to manage the Federal response activities for Gulf 

Coast evacuations and emergencies during the hurricane season. The Office was involved in the 

implementation of protective measures for the transportation system in response to several 

international terrorism threats. 

ORGANIZATIONAL EXCELLENCE 

Secretary Peters has challenged the Department to renew its commitment to a culture of foresight 

and continuous improvement, which is essential to achieving our strategic goals. We have put 

this into practice as evidenced by DOT's achieving the Office of Management and Budget’s 

“green” rating for four of the five government-wide President's Management Agenda (PMA) 

initiatives. 

DOT's Inspector General released the annual report on the Department's consolidated financial 

statements, for which we were issued an qualified opinion. Consolidated financial 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 qualified opinions. 

DOT continues its stewardship of taxpayer monies through its management of large 

transportation projects. Project financial plans are approved at the Department level and 

reviewed yearly to track any significant cost and schedule deviations. Areas of program risk are 

identified earlier so that managers can implement the necessary changes in a timely fashion. 

To ensure a secure infrastructure, DOT has certified and accredited 90 percent of its information 

technology (IT) systems. This provides management with an acceptable level of assurance that all 

systems either meet a minimum level of baseline requirements or have plans of action and 

milestones to mitigate any remaining risks. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 25 
financial highlights 

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

to provide accurate and reliable information that is useful for assessing financial performance and 

allocating resources. Departmental management is responsible for the integrity and objectivity of 

the financial information presented in the financial statements. 

The financial statements and financial data presented in this Report have been prepared from the 

accounting records of the DOT in conformity with generally accepted accounting principles 

(GAAP). GAAP for Federal entities are the standards prescribed by the Federal Accounting 

Standards Advisory Board (FASAB). 

OVERVIEW OF FINANCIAL POSITION

Assets

The Consolidated Balance Sheet shows the Department had total assets of $65.1 billion at the end 

of FY 2006. This represents a decrease of $903 million (1.4 percent) over the previous year’s total 

assets of $66.0 billion. The decrease is primarily the result of a decrease of $1.5 billion in Fund 

Balance with Treasury and a $823 million increase in investments. The Department’s assets 

reflected in the Consolidated Balance Sheet are summarized in the following table. 

ASSETS BY TYPE • DOLLARS IN THOUSANDS 2006 % 2005 %

Fund Balance with Treasury $ 27,692,908 42.6 $ 29,140,842 44.2

Investments 19,824,151 30.5 19,000,999 28.8

General Property, Plant & Equipment 15,455,811 23.8 15,325,392 23.2

Inventory and Related Property, Net 897,494 1.4 939,639 1.4

Direct Loans and Guarantees, Net 618,179 1.0 760,448 1.2

Accounts Receivable 315,987 0.5 503,424 0.8

Cash and Other Assets 261,091 0.4 297,802 0.5

Total Assets $ 65,065,621 100.0 $ 65,968,546 100.0

26 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Liabilities

The Department had total liabilities of $13.7 billion at the end of FY 2006. This represents a 

6.3 percent increase over the previous year’s total liabilities of $12.9 billion, which is reported on 

the Consolidated Balance Sheet and summarized in the following table. 

LIABILITIES BY TYPE • DOLLARS IN THOUSANDS 2006 % 2005 %

Other Liabilities $ 4,622,073 33.8 $ 5,019,980 39.0

Grant Accrual 5,546,895 40.5 4,086,728 31.7

Accounts Payable 424,993 3.2 408,755 3.2

Federal Employee and Veterans’ Benefits 

Payable 950,466 6.9 1,007,303 7.8

Environmental and Disposal Liabilities 953,634 7.0 1,003,585 7.8

Debt 839,357 6.1 952,536 7.4

Loan Guarantees 345,864 2.5 393,451 3.1

Total Liabilities $ 13,683,282 100.0 $ 12,872,338 100.0

Of the total liabilities, $3.2 billion were not covered by budgetary resources. The $3.2 billion is 

primarily comprised of $361 million liabilities to other Federal agencies (intragovernmental), 

$951 million liability to Federal Employees’ and Veterans’ Benefits Payable, $954 million of 

environmental and disposal liabilities, and $922 million of other liabilities with the public. 

Net Position 

The Department’s Net Position at the end of FY 2006 on the Consolidated Balance Sheet and the 

Consolidated Statement of Changes in Net Position is $51.4 billion, a $1.7 billion (3.2 percent) 

decrease from the previous fiscal year. Net Position is the sum of the Unexpended Appropriations 

and Cumulative Results of Operations. 

RESULTS OF OPERATIONS 

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

Consolidated Statement of Changes in Net Position. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 27 
Program Costs 

The Department’s total net cost of operations for FY 2006 was $61.8 billion. 

NET PROGRAM COSTS • DOLLARS IN THOUSANDS 2006 % 2005 %

Surface Transportation $ 46,527,176 75.28 $ 42,309,410 74.34

Air Transportation 14,453,211 23.39 14,029,096 24.65

Maritime Transportation 457,525 0.74 278,914 0.49

Costs Not Assigned to Programs 390,463 0.63 261,911 0.46

Less Earned Revenues Not Attributed to 

Programs 30,985 -0.05 25,165 -0.04

Cross-Cutting Programs 7,355 0.01 8,728 0.02

Net Cost of Operations $ 61,804,745 100.0 $ 56,862,894 100.0

Surface and air costs represent 98.67 percent of the Department’s net cost of operations. Surface 

transportation program costs represent the largest investment for the Department at 75.28 

percent of the Department’s net cost of operations; Air transportation is the next largest 

investment for the Department at 23.39 percent of the Department’s net cost of operations. 

RESOURCES

Budgetary Resources 

The Combined Statement of Budgetary Resources provides information on how budgetary 

resources were made available to the Department for the year and their status at fiscal year-end. 

For the 2006 fiscal year, the Department had total budgetary resources of $112.5 billion, 

compared to the FY 2005 levels of $114 billion. 

The Department’s FY 2006 budget authority of $115.8 billion primarily consists of $60.8 billion of 

appropriations received and $51.9 billion of borrowing and contract authority. The Department 

incurred obligations of $65.6 billion for the 2006 fiscal year, a 6.6 percent decrease over the $69.8 

billion of obligations incurred during FY 2005. Outlays reflect the actual cash disbursed against 

the Department’s obligations. 

28 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Financing 

The Consolidated Statement of Financing reconciles the resources available to the Department to 

finance operations with the net costs of operating the Department’s programs. 

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 significance; cultural, educational, or artistic importance; 

or significant 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. 

The Department’s Heritage assets consist of artifacts, museum and other collections, and 

buildings and structures. The 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. 

Financial information for Heritage assets is presented in the Financial Section of this Report 

under the Financial Statements and Required Supplementary Information. 

LIMITATIONS OF THE FINANCIAL STATEMENTS 

The principal financial statements have been prepared to report the financial position and results 

of operations of the Department of Transportation, pursuant to the requirements of 

31 U.S.C. 3515 (b). 

While the 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 the Office of Mangement and Budget (OMB), the 

statements are in addition to the financial reports used to monitor and control budgetary 

resources, which are prepared from the same books and records. 

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

Government, a sovereign entity. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 29 
systems, controls, and legal compliance 

FEDERAL MANAGERS’ FINANCIAL INTEGRITY ACT

The Federal Managers’ Financial Integrity Act (FMFIA) requires agencies to conduct an annual 

evaluation of their management controls and financial systems and report the results to the 

President and Congress. The 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 effectiveness 

of internal control over financial 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. 

The Secretary of Transportation has issued a qualified Statement of Assurance for FY 2006. A 

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

The Department evaluated its management control systems and financial management systems 

for the fiscal year ending September 30, 2006. This 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 2006. 

FMFIA Annual Assurance Process 

The FMFIA review is an agency self-assessment of the adequacy of financial controls in all areas 

of the Department’s operations—program, administrative, and financial management. 

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 efficiently and effectively managed. 

6. Financial systems conform to government-wide standards. 

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 sufficiently protected from fraud, waste, and abuse, and to meet the intent and 

requirements of the FMFIA. 

30 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
The head of each Operating Administration and Departmental office submits an annual statement 

of assurance representing the overall adequacy and effectiveness of management controls within 

the organization to the Assistant Secretary for Budget and Programs/Chief Financial Officer 

(CFO). FMFIA material weaknesses and material nonconformances are also reported along with 

remediation plans to correct the material weakness or nonconformance. Specific guidance for 

completing the end of fiscal year assurance statement and reporting on material deficiencies is 

issued annually by the Department’s Office 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 Office of the President and/or the relevant Congressional oversight 

committees. 

4. I

CRITERIA FOR REPORTING A MATERIAL WEAKNESS 

1. Significant 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 conflict of interest. 

3. Deprives the public of significant services, or seriously affects safety or the environment. 

mpairs significantly the fulfillment of the agency’s mission. 

5. Would result in significant adverse effects 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 Office of the President or the relevant Congressional 

oversight committees. 

CRITERIA FOR REPORTING A MATERIAL NONCONFORMANCE 

1. Prevent the primary accounting system from centrally controlling financial transactions 

and resource balances. 

2. Prevent compliance of the primary accounting system, subsidiary system, or program 

system under the Office of Management and Budget Circular A-127. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 31 
Summary of FY 2006 FMFIA Material Weaknesses 

Status of Internal Controls—FMFIA, Section 2 

DOT has two material weaknesses under Section 2. One of the material weaknesses - Timely 

Processing of Transactions and Accounting for the Construction in Progress (CIP) Account at the 

Federal Aviation Administration (FAA) is a carryover from FY 2005. Financial Management, 

Oversight, and Reporting at the Highway Trust Fund (HTF) is a new material weakness. 

Timely Processing of Transactions and Accounting for the CIP Account. Last year we reported 

that FAA did not have effective processes to capitalize headquarters-based projects in a timely 

manner. During FY 2006, FAA took action to resolve the elements of the FY 2005 prior year 

material weakness associated with property accounting by working with the Air Traffic 

Organization (ATO) on a comprehensive review of projects totaling $1.2 billion. However, 

significant improvements still need to be made including strengthening policies and procedures 

over CIP accounting, establishing controls to ensure that policies and procedures are being 

followed, and continuous monitoring of accounts. In addition, FAA must ensure that supporting 

documentation for capitalization of fixed assets is properly managed and maintained. 

Financial Management, Reporting, and Oversight at the HTF. During FY 2006, several issues 

existed in financial management, reporting and oversight at the HTF. These issues include, 

improper recording of journal entries, lack of controls in place to track and monitor journal 

entries, inadequate controls over grant accruals, and lack of policies and procedures addressing 

abnormal balances. 

The following table shows the Department’s progress with correcting and closing material 

weaknesses. 

32 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
NUMBER STILL PENDING: 

1 0 0

0 0 0

1

I

0 0

2

I 1 0

2

I 1 0

2

HTF Grants 

2

I 0

1

HTF Grants (R) 

2 1

1 2

HTF Grants 

1

10 8 2

2 ; (R) - Repeat 

DEPARTMENT OF TRANSPORTATION 

STATISTICAL SUMMARY OF PERFORMANCE 

SECTION 2, INTERNAL CONTROLS 

NUMBER OF MATERIAL WEAKNESSES 

NUMBER OF REPORTED 

FOR THE FIRST TIME IN: 

FOR THAT YEAR, NUMBER THAT 

HAVE BEEN CORRECTED: 

FOR THAT YEAR, 

1999 Report FAA Property, Plant and Equipment (PP&E) 

2000 Report FAA PP&E (R) 

2001 Report FAA PP&E (R) 

nformation Security Program 

2002 Report nformation Security Program (R) 

FTA Management 

FAA Contracts 

FAA PP&E 

2003 Report 

nformation Security Program (R) 

FAA Contracts (R) 

HTF Financial Mgmt. 

Reconciling Transactions (Eliminations) 

FTA Management 

2004 Report 

HTF Financial Mgmt. (R) 

Reconciling Transactions (Eliminations) (R) 

Financial System Controls 

nformation Security Program 

FAA Contracts 

2005 Report HTF Financial Mgmt. (R) 

FAA Reconciliations 

Reconciling Transactions 

Financial System Controls FAA Reconciliations/CIP 

2006 Report FAA Reconciliations/CIP (R) 

HTF Financial Reporting 

HTF Financial Mgmt. FAA Reconciliations/CIP (R) 

1999–2006 Total 

Of the total number corrected, how many were corrected in 2006 

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. For FY 2006, this noncompliance consists of three issues: Preparation of 

Financial Statements; Use of a Standard General Ledger (credit reform/loans); and Federal 

Accounting Standards (cost accounting). 

The following table shows the Department’s progress with correcting and closing material 

nonconformances. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 33 
NUMBER STILL PENDING: 

0 0 0

1

0

1

1

I 0 0

0

I 0 0

0 1

I 0

1

0 0

0 1 0

0 0 0

3 2 1

0 ; (R) - Repeat 

DEPARTMENT OF TRANSPORTATION 

STATISTICAL SUMMARY OF PERFORMANCE 

SECTION 4, FINANCIAL MANAGEMENT SYSTEMS 

NUMBER OF MATERIAL NONCONFORMANCES 

NUMBER OF REPORTED 

FOR THE FIRST TIME IN: 

FOR THAT YEAR, NUMBER THAT HAVE 

BEEN CORRECTED: 

FOR THAT YEAR, 

1999 Report 

2000 Report 

FFMIA Nonconformance 

1.a. Preparation of Financial Statements 

1.b. Standard General Ledger 

1.c. Managerial Cost Accounting 

FFMIA Nonconformance 

1.a. Preparation of Financial Statements 

1.b. Standard General Ledger 

1.c. Managerial Cost Accounting 

2001 Report nformation Security Program 

FFMIA Nonconformance (R) 

2002 Report nformation Security Program (R) 

FFMIA Nonconformance (R) 

2003 Report FFMIA Nonconformance (R) nformation Security Program 

2004 Report Financial System Controls 

FFMIA Nonconformance (R) 

2005 Report FFMIA Nonconformance (R) Financial System Controls 

2006 Report FFMIA Nonconformance (R) 

2000–2006 Total 

Of the total number corrected, how many were corrected in 2006 

Appendix A, Internal Control Over Financial Reporting 

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

maintaining effective internal control over financial 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 effectiveness of internal control over financial 

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

assessment process. The 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. The assurance statement is located in the following section 

of this report. 

DOT is reporting a limitation of scope for its assurance statement on internal controls over 

financial reporting due to its two year implementation of Appendix A. During FY 2006, DOT 

identified 12 key business processes that are material to financial reporting. Of these 12 

processes, six were documented and tested in FY 2006. The remaining key business processes will 

be documented and tested during FY 2007 as described in our implementation plan. 

34 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Management Assurances—OMB Circular A-123

MANAGEMENT’S DISCUSSION AND ANALYSIS 35 
36 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
FEDERAL FINANCIAL MANGEMENT IMPROVEMENT ACT

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

financial management systems provide reliable financial data in accordance with generally 

accepted accounting principles and standards. Under FFMIA, financial management systems 

must substantially comply with three requirements — Federal financial management system 

MANAGEMENT’S DISCUSSION AND ANALYSIS 37 
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. This determination is to be made no later than 120 days after the earlier 

of (a) the date of receipt of the agency-wide audited financial statement, or (b) the last day of the 

fiscal 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 

financial statement audits, the Department’s annual Federal Information Security Management 

Act (FISMA) Report, and other relevant information. The 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 2006, DOT reported that the Department was not in compliance with FFMIA. For 

FY 2006, this noncompliance consists of: Federal financial management information systems 

requirements and Federal accounting standards. 

Federal Financial Management Information Systems Requirements. FAA, FHWA, and FTA 

were not in compliance with Federal financial management information systems requirements. 

Key financial systems used by FAA, FHWA, and FTA which feed or support the financial data in 

the core accounting system do not comply substantially with the categories of FFMIA compliance 

listed in OMB Circular No. A-127, Section 7—Financial Management System Requirements. 

Specific weaknesses in these systems are in the following areas: 

• Does not adhere to functional and Computer Security Act requirements; 

• Inadequate systems and processing documentation; 

• Lacks adequate internal controls; 

• Lacks adequate training and user support; and, 

• Lacks appropriate maintenance. 

Federal Accounting Standards. FAA management was unable 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. 

38 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
FFMIA of 1996 financial management systems strategy 

During FY 2006, DOT continued its financial management strategy to improve financial systems 

by supporting business modernization and by standardizing and integrating financial and 

program data. By standardizing systems, DOT is poised to achieve the goals of the President's 

Management Agenda. 

The DOT financial system enterprise architecture includes: Delphi (DOT’s core financial system, 

which uses Oracle Financials commerical-off-the-shelf software without customizations) and 

CASTLE (new time and attendance and Labor Distribution system interfaced with Delphi), along 

with OA managerial cost accounting, procurement management, and grants management 

systems. DOT plans to further integrate cost accounting, procurement and grants systems with 

Delphi and to expand Delphi capability by piloting two new modules: Loan Management and 

Enterprise Planning and Budgeting. As a designated Federal Shared Service Provider, DOT will 

continue its mission to market our Delphi financial system and accounting services to new clients 

and to help government agencies further standardize and streamline business processes and 

realize greater economies of scale. 

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

DOT addressed FAA's budgetary and proprietary reconciliation problems and reduced suspense 

balances by consolidating accounting services into our Enterprise Services Center (ESC) in 

Oklahoma City. Second, DOT sunset several redundant systems, including our legacy payroll 

and HR systems following our migration to DOI's Federal Personnel and Payroll system (FPPS). 

Third, DOT replaced six stand-alone travel systems with our implementation of the GovTrip 

e-Travel system. 

FEDERAL INFORMATION SECURITY MANAGEMENT ACT

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

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

from the loss of, misuse of, unauthorized access to, or modification of information collected or 

maintained by or on behalf of the agency. DOT 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 2006, DOT’s IT 

budget totaled about $2.5 billion. 

The Inspector General’s office tested a representative subset of DOT systems, including 

contractor-operated or -maintained systems that had undergone systems security certification 

reviews in order to determine whether DOT had complied with Government standards for (1) 

assessing system risks, (2) identifying security requirements, (3) testing security controls, and 

MANAGEMENT’S DISCUSSION AND ANALYSIS 39 
(4) accrediting systems as able to support business operations. The Inspector General also 

performed a detailed follow-up review of the Department’s process for managing remediation of 

known security deficiencies. 

During FY 2006, the Inspector General reported that the Department made noticeable 

improvement in tracking, prioritizing, and correcting security weaknesses, further noting that 

aggressive action was taken to identify systems containing personally identifiable information for 

proper security protection, including procuring encryption software to secure all laptop 

computers. The full FY 2006 FISMA report can be found at www.oig.dot.gov. 

SAS 70 REVIEW ON DOT’S FINANCIAL MANAGEMENT SYSTEM

The Department’s report summarizes the results of a review of system security controls over the 

DOT Enterprise Service Center’s (ESC) Delphi Financial Management System. The ESC 

performs accounting and financial management functions for DOT and other Federal agencies. 

It is maintained by Federal Aviation Administration employees at the Mike Monroney 

Aeronautical Center in Oklahoma City, Oklahoma, under the strategic direction of the 

Departmental Chief Financial Officer. 

ESC is one of four financial management Centers of Excellence (Federal Shared Service 

Providers) designated by the Office of Management and Budget to provide a financial 

management system and accounting services to other government agencies. In addition to all 

DOT Operating Administrations, the ESC also supports the National Endowment for the Arts, 

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

and in the summer of 2006 signed up the Government Accountability Office as its newest 

customer. The Office of Management and Budget requires Centers of Excellence to provide client 

agencies with an independent audit report in accordance with the American Institute of Certified 

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

This year’s SAS 70 audit was conducted by Clifton Gunderson, LLP, of Calverton, Maryland. The 

DOT Office of Inspector General performed a quality control review of this audit work to ensure 

that it complied with applicable standards. 

The Clifton Gunderson SAS 70 audit report, dated May 31, 2006, 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, 2006. In addition, 

on 9 out of 10 control objectives, the independent auditor concluded that controls are suitably 

designed and were operating effectively during the period from October 1, 2005, through May 31, 

2006. The full OIG report can be found on their Web site at www.oig.dot.gov. ESC Delphi 

management developed a detailed Corrective Action Plan to implement Clifton Gunderson’s 

recommendations to further strengthen Delphi controls. 

40 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Follow-up Review 

Since the issuance of its May 31, 2006 report, Clifton Gunderson completed a follow-up review 

covering the period from June 1, 2006 through September 30, 2006 fiscal year end. The purpose 

of this follow-up review was to determine whether any significant changes had been made to 

Delphi’s operating environment. The follow-up review documented the corrective actions that 

have been implemented to strengthen Delphi controls in accordance with the SAS 70 

recommendations. 

IMPROPER PAYMENTS INFORMATION ACT OF 2002 

In FY 2006, the Department continued implementing efforts to meet requirements of the 

Improper Payments Information Act of 2002 (IPIA), which requires that agencies (1) review 

programs and activities and identify those susceptible to significant improper payments (2) 

estimate the amount of improper payments in identified programs and activities, (3) report to 

Congress on the amount and causes of improper payments, and (4) report to Congress on actions 

to reduce such payments. 

In FY 2005, the Department successfully completed its second review of ten programs 

determined to be susceptible to significant improper payments. While these reviews found no 

significant improper payments, for those programs involving payments to grantees, the reviews 

did not address payments made by grantees. To address payments by grantees, the Department 

developed and tested a model for estimating the amount of improper payments in the Federal 

Highway Administration’s (FHWA) Federal-aid Highway Program and committed to developing 

and testing a model for estimating the amount of improper payments in the Federal Transit 

Administration’s (FTA) Formula Grants Program and the Federal Aviation Administration’s 

(FAA) Airport Improvement Program. Former Section 57 of OMB Circular A-11 designated 

these as programs susceptible to significant improper payments. 

In FY 2006, the Department re-engaged AOC Solutions, Inc., to execute the model developed for 

the Federal-aid Highway Program nationwide and to develop and test the models for the FTA 

Formula Grants Program and the FAA Airport Improvement Program. The samples designed to 

execute the model are of sufficient size to yield an estimate with a 90 percent confidence interval 

within +/- 2.5 percent points around the estimate of the percentage of erroneous payments, as 

prescribed by OMB. The results of these efforts are discussed below. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 41 
Federal-aid Highway Program 

The Department with the aid of a contractor developed and executed a sampling plan to test 

project payments in all 50 States and two territories that received funding under this program. 

The objectives of this effort were to: estimate the amount of improper payments nationwide and 

assist the FHWA in developing test criteria and procedures for monitoring highway project 

payments in the future through its Financial Integrity Review and Evaluation (FIRE) Program. 

The nationwide testing program was executed by personnel from the 52 FHWA division offices 

and covered Federal payments to grantees over the five month period October 1, 2005 through 

February 28, 2006. Time and resource constraints limited the period of coverage. In FY 2007, the 

testing will cover a 12-month period. 

The sampling plan involved a multi-staged statistical approach that included the selection of 513 

State payments and then 928 testable line items from those payments for testing. The 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 specified materials and 

whether material quality tests indicated that materials met contractual requirements. 

Improper payments totaling $125,508.56 were found in the sample of 928 tested items selected 

from a population of 10,116 items. The projection of this result to the population of program 

payments for the five-month period results in an improper payment estimate of $30.15 million 

+/- $35.04 million. This projection does not meet OMB’s definition of significant improper 

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

reported resulted from factors such as data entry errors, missing approvals, incorrect cost 

allocations, and unallowable charges. The FHWA will implement fully its FIRE Program in 

FY 2007 to monitor State and territory payments and provide a mechanism for assisting these 

entities with effectively addressing operational issues that result or could result in improper 

payments. 

FTA Formula Grants Program 

The Department and the FTA developed and tested a model for testing grantee payments under 

this Program. The objectives of the FY 2006 effort were to develop the model and field test it at 

two grantees and to assist the FTA in incorporating the test procedures in its statutorily required 

Triennial Review Program. The FY 2006 model development and testing effort were not designed 

to provide a nationwide or program-wide estimate of improper payments. 

42 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
The review covered federal payments to two grantees during the period October 1, 2005 through 

June 30, 2006 and related payments by these grantees. To execute the review, a two-stage 

statistical approach was used to select the line items for testing. The model’s test procedures 

examined a range of administrative and contractual elements similar to those tested in the 

Federal-aid Highway Program. 

For the first grantee, the review found administrative and contractual compliance as addressed in 

the test model and no improper payments. For the second grantee, improper payments totaling 

$11,664.08 were found in the sample of tested payments. The sample size was 18 payments 

selected from a population of 100 payments. The projection of this result to the population of 

payments under the Program by the grantee is an improper payment estimate of $252,000.00. 

In FY 2007, the Department and the FTA will expand the Triennial Review Program to provide 

an estimate of the amount and rate of improper payments for the grantees subject to the 2007 

Triennial Review. Chapter 49 U.S.C. Section 5307 requires a triennial review of agencies receiving 

Urban Area Formula Grant Funds. The Triennial Review assesses compliance with Federal 

regulations in 23 areas 

FAA Airport Improvement Program (AIP)

The Department and the FAA developed and tested a model for testing grantee payments under 

this Program. The objectives of the FY 2006 effort were to develop the model and field test it at 

one grantee and to assist the FAA in incorporating the test procedures in its grants management 

oversight and AIP review programs. The FY 2006 model development and testing effort was not 

designed to provide a nationwide or program-wide estimate of improper payments. 

The review covered Federal payments to a single grantee during the period October 1, 2005 

through June 30, 2006 and related payments by this grantee. To execute the review, a two-staged 

statistical approach was used to select the line items for testing. As with the FTA Formula Grants 

Program, the model’s test procedures examined a range of administrative and contractual 

elements similar to those tested in the Federal-aid Highway Program. 

The review found administrative and contractual compliance as addressed in the test model and 

no improper payments. 

The pilot effort identified several opportunities for maximizing the effectiveness of future 

improper payment reviews. Notably, the structure of AIP project funding is an important 

consideration in designing an IPIA review. Federal payments that cover only a portion of eligible 

costs incurred can be characterized as reimbursements for a percentage of allowable payments 

made during a period rather than reimbursements for specific payments. The model was 

modified accordingly and should provide for an effective and efficient review. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 43 
In FY 2007, the Department and the FAA will apply the test model nationwide to estimate the 

amount and rate of improper payments for the AIP. 

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 2006 Status:  Green 

FY 2006 Progress:  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 OPM/OMB Standards for Success. 

• Met hiring timelines for General Schedule vacancies—68 percent were 

completed within 45 days; we also set hiring timeline targets for the 

Senior Executive Service. The Department met the requirement to 

notify applicants of hiring decision status—84 percent were notified 

within 45 days; 

• Identified Mission Critical Occupation (MCO) Competency and 

Leadership Gap Analysis targets; provided MCO Resource Chart; 

• Met IT Workforce Report hiring targets; 

• Submitted updates to the Improvement Plan for Human Resource 

Management Competency Gap Analysis; 

• Identified targets for improving the quality and number of applicants in 

the hiring process; 

• Verified leadership bench strength numbers in agency pilot program; 

44 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
• Implemented performance management system improvement strategies 

in the pilot project with FMCSA; identified Federal Railroad 

Administration as the next mode to participate in the expanded pilot 

project; 

• Received OPM approval of the revised Succession Plan; 

• Met accountability system requirements, received OPM approval; 

conducted five on-site accountability reviews; and, 

• Began the Career Patterns initiative. 

Competitive Sourcing Initiative 

Goal: Improve the consistency for defining commercial and inherently governmental inventories 

across the Department. Identified competable 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 2006 Status:  Green 

FY 2006 Progress:  Yellow 

How DOT is Meeting PMA Challenges: In FY 2006, DOT was awarded a Green rating for 

competitive sourcing. To receive this rating, DOT completed the following: 

• Provided updated green competition plan to OMB; 

• Made performance decisions on the National Highway Transportation 

Safety Administration competition; 

• Completed competitive sourcing policy document; and, 

• Shared lessons learned within the Department and with other agencies. 

However, DOT drops to yellow in progress due to limited competitions planned for fiscal years 

2007-2008. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 45 
Improved Financial Management Initiative 

Goal: Develop financial management systems capable of producing more timely and accurate 

information, and maintain a record of unqualified opinions on our financial statements. 

FY 2006 Status:  Red 

FY 2006 Progress:  Green 

How DOT is Meeting PMA Challenges: DOT’s Office of Financial Management provides 

overnight closing and produces statements every month and at year-end. These statements, with 

the exception of the Statement of Financing, are prepared directly from trial balances from Delphi 

utilizing the Financial Statement Solution (FSS). In 2006, the FSS was further enhanced to run 

overnight. Additonal actions include the following: 

• FHWA Financial Management - Put into production Release 2 of Delphi 

Financial Statement Solution to enhance preparation of statements; 

results were produced overnight 75 percent faster; 

• FHWA Grants Management - Field offices conducted Financial Integrity 

Review and Evaluation (FIRE) reviews using revised FHWA 

headquarters order; 

• FAA improved transaction processing: 

o Process for reconciling Subsidiary to General Ledger completed 

monthly; 

o Achieved significant progress reducing Suspense Account 

balances; 

o Completed significant cleanup for Construction In Progress 

balances affecting prior fiscal years’ activity; and, 

o Automated Budgetary to Proprietary reconciliations; reflected in 

improved financial reporting. 

• Reported monthly corrective action plan progress to OMB; and, 

• Provided preliminary Federal Manager’s Financial Integrity Act 

assurance statements with draft FY 2006 A-123 testing results. 

46 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
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 efficiencies across government-wide. 

FY 2006 Status:  Green 

FY 2006 Progress:  Yellow 

How DOT is Meeting PMA Challenges: During FY 2006, the Department’s efforts on the EGovernment initiative had a number of important successes: DOT met established requirements 

and made further improvements in enterprise architecture, privacy, and capital planning. 

• Finalized milestones for quarterly Enterprise Architecture reporting with 

OMB and submitted the first report before the end of FY 2006; 

• Acheived certification and accreditation for more than 99 percent of 

operational Information Technology systems; 

• Provided quarterly Earned Value Management variance and high risk 

reports; 

• Provided a status update on FAA's Earned Value Management System 

Plan of Action & Milestones for applicable systems; 

• Completed all E-Government implementation plan milestones; and, 

• Completed FY 2006 milestones for FAA to the Government

Accountability Office High Risk list plan.

MANAGEMENT’S DISCUSSION AND ANALYSIS 47 
Budget and Performance Integration 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 

effectiveness. 

FY 2006 Status:  Green 

FY 2006 Progress:  Green 

How DOT is Meeting PMA Challenges: In FY 2006, DOT achieved its goals in this area and 

maintained a green score by completing the following: 

• Published the Department’s 2006−2011 Strategic Plan; 

• Submitted the DOT efficiency measures report; 

• Submitted a budget request to OMB that clearly articulated the 

performance impact of implementing a budget at the target level, and 

supported by sound and thorough analysis and performance data; and 

• Provided marginal cost of performance information in each modal 

administration’s FY 2008 OMB budget submission in accordance with 

OST guidance. 

Eliminating Improper Payments Initiative 

Goal: Develop financial management systems capable of producing more timely and accurate 

information, and eliminating improper payments to DOT vendors/customers. 

FY 2006 Status:  Green 

FY 2006 Progress:  Red 

48 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
How DOT is Meeting PMA Challenges: During FY 2006, DOT took significant steps towards 

the implementation of the Improper Payments Information Act (IPIA) of 2002. DOT’s efforts 

focused on program areas in three of our largest Operating Administrations: FHWA Highway 

Planning and Construction Program, FTA Formula Grants, and FAA Airport Improvement 

Program. 

• FHWA Planning and Construction 

o State testing is nearing completion and work is transitioning to 

the data analysis phase; 

o Received completed workbooks from 50 out of 52 States and 

Territories; 50 States, Puerto Rico and the U.S. Virgin Islands; 

and, 

o Identified $82 thousand in improper payments. 

• FTA Formula Grants 

o Completed FTA test model; 

o Received grantee payment data from Minneapolis and Charlotte 

transit organizations and selected test samples; and, 

o Made arrangements for conducting testing. 

• FAA Airport Improvement Program 

o Finalized baseline test model; and, 

o Selected samples from Washington Airports Authority and 

began testing payments. 

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 2006 Status:  Yellow 

FY 2006 Progress:  Green 

MANAGEMENT’S DISCUSSION AND ANALYSIS 49 
How DOT is Meeting PMA Challenges: DOT continues to make progress under this initiative. 

The 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. 

• Completed necessary system enhancements to provide DOT real 

property information to the Federal real property database by the first 

quarter of FY 2007; 

• Submitted prioritized investment list of assets across DOT portfolio of 

assets; 

• Continued to close the inventory and performance data gaps for full 

constructed asset level reporting; 

• Continued identifying draft performance measure targets and goals; and, 

• Revised draft 3-year timeline, including narrative of initiatives supported 

by specific capital actions. 

50 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
other management information, 

initiatives, and issues 

IMPLEMENTING OMB CIRCULAR A-123 

During FY 2006, DOT modified its implementation plan for OMB Circular A-123 and obtained 

approval from OMB to implement A-123, Appendix A over a 2-year cycle. DOT has successfully 

completed the first year of our implementation plan, including: 

• Conducted detailed entity-level assessments of the control environment 

in each of our organizations to determine how well internal controls 

were designed and functioning and to assist managers in evaluating 

current internal controls; 

• Established the DOT Internal Control Senior Assessment Team (ICSAT) 

and the Internal Control Working Group (ICWG); 

• Trained the ICSAT, ICWG, and key business process owners on the 

requirements of A-123; 

• Completed documentation and testing for six of our twelve key business 

processes; and, 

• Developed corrective action plans to address findings identified during 

testing and worked to complete the remaining corrective actions. 

In addition to finishing work on corrective actions, DOT is currently planning the 

documentation and testing efforts for the second group of key business processes, which will be 

tested during FY 2007. 

In the upcoming months, DOT will continue educating its management and staff on effective 

internal controls to prevent fraud, waste, abuse, and mismanagement of resources. Our 

management training focuses on the applicable laws and regulations; on how to implement 

segregation of duties; and on how to properly record and document transactions, conduct risk 

assessments, test controls, implement corrective action plans and monitor progress. We are also 

developing internal controls training to be included in the orientation for all new employees and 

additional web-based training for DOT staff. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 51 
DOT is also continuing its efforts to fully integrate our internal control program with the annual 

financial statement audits, FMFIA, Improper Payments Improvement Act (IPIA) program, and 

other related activities with the goal of realizing significant efficiencies and savings. The 

integration of these potentially overlapping efforts will result in a more comprehensive platform 

for top management to utilize in assessing and managing risk and vulnerability across the 

Department. 

CONSOLIDATED AUTOMATED SYSTEM FOR TIME AND LABOR ENTRY

In September 2006, the Department implemented a DOT-wide system for Automated Leave Requests 

2006 (CASTLE 3.3 release). This new feature allows employees simple online entry of leave requests 

and immediate email notification of leave approval by their supervisor. A handy online Employee 

Leave Calendar showing leave requests and approval status is included with this new request system. 

Approving officials receive immediate notification of leave requests and are able to easily approve 

those leave requests online. There is also a Group Leave Calendar showing requested leave and 

approval status for all employees in the timekeeping group. This feature can be used for 

workforce planning. 

Timekeepers will be able to select a special button to automatically fill the timecard with leave 

information from approved leave requests. There is also a helpful Leave Discrepancy Report to 

identify discrepancies between leave requests and the leave recorded on an employee’s timecard. 

Another valuable feature of this system is the online history of leave requests. 

MANAGERIAL COST ACCOUNTING 

Managerial cost accounting identifies, tracks, and analyzes the total costs attributable to a 

particular task, job, or program. The purpose of managerial cost accounting is to provide 

program managers with cost information required to accurately report program efficiency and to 

develop a program’s future budget. DOT’s Operating Administrations (OAs) are working 

aggressively to implement managerial cost accounting systems in order to provide their managers 

with cost information to make better informed decisions. 

Several OAs made substantial process in implementing full cost accounting during FY 2006. The 

Federal Transit Administration (FTA) has completed the majority of its cost accounting 

implementation. FTA is using a commercial off the shelf software to import administrative, 

salary and benefit, and grant expenses from existing systems. FTA employees also began using 

activity codes to record their time and attendance using the Labor Distribution Reporting (LDR) 

function within CASTLE. By doing so, FTA has been able to assign salary and benefit expenses to 

52 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
activities. FTA has already provided their Executive Management Team (EMT) with preliminary 

reports from the cost accounting system. FTA plans to finalize the reports and begin distributing 

them to the EMT and other managers monthly starting in November 2006. 

During FY 2006, the Federal Aviation Administration (FAA) completed its implementation of the 

cost accounting system by implementing the remaining two lines of business, Aviation Safety and 

Airports. FAA is now providing cost accounting information to all lines of business. Labor 

distribution has been implemented in all of the lines of business and in most of the staff offices, 

covering over 45,000 employees. FAA plans to implement the remaining staff offices consisting of 

approximately 1,500 employees in FY 2007. 

The Federal Lands Highway Program of the Federal Highway Administration is in the process of 

developing a solution within Oracle’s Project Accounting module which will provide reports to 

manage their programs and projects. The goal of the solution is to capture program, project, and 

task information on the budget distribution and execution transactions in order to generate 

reports for financial managers, program managers, and engineers. A data warehouse is being 

developed which will enable Federal Lands to retrieve the data they need to manage their 

programs and projects in various formats. The solution will be completed in January 2007. 

In addition to the progress noted above, FRA and FHWA also implemented LDR and are using 

activity codes to record employee time. The vast majority of DOT’s employees are now using 

LDR to record their time. 

The Government Accountability Office recognized DOT’s leadership and cited progress in 

Managerial Cost Accounting (MCA) in their report titled “Managerial Cost Accounting (MCA) 

in the Departments of Education, Transportation, and Treasury” as follows: 

“Transportation has in recent years shown strong leadership in developing MCA 

systems both Department-wide and at the individual operating administrations 

(OA). According to Transportation officials, the 12 OAs were developing MCA 

systems tailored to their respective needs, which should be able to interface with 

Delphi – an integrated financial management system, a component of which could 

be used by OAs for cost accounting. One of the two largest OAs, the Federal 

Aviation Administration (FAA), was mandated to develop a cost accounting 

system in 1996, and had implemented MCA in two business lines covering over 80 

percent of its budget.” 

DOT will continue to take the steps necessary to integrate program and accounting data. DOT 

will work with the remaining small OAs during FY 2007 to implement their managerial cost 

accounting plans. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 53 
INSPECTOR GENERAL’S TOP MANAGEMENT CHALLENGES

DOT OFFICE OF INSPECTOR GENERAL’s APPROACH

The Office of Inspector General (OIG) issues its annual report on DOT’s top 

management challenges to provide a forward-looking assessment for the 

coming fiscal year. The 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 efficiency. 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. These 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 reflect the most relevant 

issues and provide the most useful and effective oversight to DOT agencies. 

As required by OMB Circular A-136, the OIG’s report briefly assesses DOT’s 

progress in addressing the challenges identified. To track management 

challenges identified 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 fiscal year. In addition, the OIG may refine the scope of 

the management challenge from year to year based on program developments, 

external factors, or other information that becomes available. 

The 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 fiscal year. Since the OIG may refine the scope of the management challenge 

based on information that may become available during the year, it can be difficult 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 defined. The 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. 

54 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
1. Management Challenge: Working With Other Agencies To Respond 

to Disasters and Address Transportation Security 

Responding to Hurricane Katrina and Other National Disasters 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

The attacks of September 11, 2001, along with the destruction of the Gulf Coast by Hurricanes 

Katrina and Rita highlighted the need for a well-defined, well coordinated, interagency approach 

to preparing for and responding to catastrophic events. Under the Federal Government's 

National Response Plan, the DOT is responsible for coordinating and providing Federal and civil 

transportation support, as directed by the Federal Emergency Management Agency (FEMA) 

during times of national emergency. 

To provide a centralized, effective program, the Office of Intelligence, Security, and Emergency 

Response (OET), in the Office of the Secretary (OST), performs coordinated crisis management 

functions for multimodal transportation emergencies, including: 

• natural disasters; 

• technological incidents / accidents; 

• labor strikes; 

• security situations, such as domestic criminal acts or international 

terrorist acts; and, 

• national defense mobilization. 

To facilitate interdepartmental and intermodal coordination during times of crisis, DOT 

established the Crisis Management Center (CMC). During the London transportation bombings, 

for example, the CMC was staffed with many of DOT’s emergency coordinators from each 

operating administration for full-time around-the-clock operations. CMC personnel regularly 

communicate with Federal, State, and local entities to acquire, confirm, and communicate 

MANAGEMENT’S DISCUSSION AND ANALYSIS 55 
information prior to reporting to senior DOT officials. DOT also has a representative in the 

Department of Homeland Security’s Operations Center to further facilitate communications 

during times of emergency. 

The Department played a significant role in responding to the Gulf Coast hurricanes. More than 

$2.7 billion in FHWA Emergency Relief (ER) funds were provided in late 2005 (first quarter of 

FY 2006) to assist States in the repair and recovery of Federal-aid highways damaged by 

hurricanes. These funds were instrumental in assisting the Gulf Coast region with needed 

recovery efforts following the devastating impact from Hurricanes Katrina, Rita, and Wilma. 

Repairs to the I-10 Twin Spans bridge in Louisiana, the replacement of two bridges on U.S. 90 in 

Mississippi that were completely destroyed, and debris removal that opened closed roadways were 

funded using ER resources. In addition, ER funds were used for repairs to traffic signals, 

guardrail replacement, and restoration of washed-out pavements and shoulders caused by 

extensive flooding all over the Gulf Coast region. 

In the rush to restore transportation services as quickly as possible, it was also important that 

DOT’s Operating Administrations provide proper stewardship over the resources devoted to the 

recovery effort. Incorporating lessons learned from the Gulf Coast hurricane relief effort, DOT’s 

Chief Financial Officer issued cost reporting guidance in July 2006, to the Department for future 

emergency responses and related activities. This guidance identified statutory authorities for 

relief efforts; provided instructions to each Operating Administration on how to account for 

direct, indirect, and other costs associated with relief efforts; and mandated specific reporting 

requirements so management could provide the proper oversight. 

To support the Department's responsibilities during national emergencies, the FAA's Southern 

Region awarded a competitive contract in 2002 to provide the bulk of transportation services 

designated to the region by FEMA. To administer the contract, the FAA Southern Region, 

assigned to the newly established Emergency Transportation Center (ETC) in Baton Rouge two 

experienced, full-time senior contracting officers. These contracting officers have implemented 

procedures directly responsive to Inspector General recommendations. Specifically, they have 

implemented procedures to randomly evaluate costs and pricing tendered by the current 

contractor, by comparing relevant market prices for the same or similar assets or services to 

determine fair market value. The contracting officers, in conjunction with other ETC personnel, 

enter transactions into the PRISM/Delphi cost accounting system as soon as possible after terms 

of agreement are reached with the contractor for particular tasks. 

The FAA has also completed mitigating strategies to ensure the timeliness and tracking of credit 

card purchases through the use of the US Bank’s computer system, Access Online. As of July 

2006, all purchase card transactions in all FAA regions, centers, and headquarters offices are 

tracked with Access Online. 

56 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Addressing Transportation Security 

MODERATE

C NO

P

P

S

P

S

P

P METER

OMPLETE

ROGRESS

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

There is a growing interdependency among Federal agencies to work together to secure the U.S. 

transportation system and protect the users of the transportation system from criminal and 

terrorist acts. The imperative for DOT is to effectively integrate new security measures into its 

existing safety regimen and to do so in a way that promotes stronger security without degrading 

transportation safety and efficiency. 

Significant progress was made in providing timely and accurate information to support federal, 

State and local response activities. For example, the FAA collaborated with many of our 

stakeholders to design an Airport Status Report that will be issued daily during periods of 

emergency. This report assists those responsible for the dispatch and operation of responding 

aircraft by providing specific information on the availability and usability of airport 

infrastructure, navigation aids, runways, and support facilities within a declared emergency or 

disaster area. It will also aid pilots operating in crisis environments by alerting them of 

compromised airport conditions, thereby facilitating informed and safer decisions. This type of 

communication flow continues to increase the FAA’s ability to help the first-responders make 

critical decisions that reduce the effects of natural disasters and other crisis events. 

DOT and the Department of Homeland Security (DHS) are implementing a Memorandum of 

Understanding (MOU) to improve cooperation and coordination in promoting the safety, 

security, and efficient movement of people and goods throughout the U.S. transportation system. 

We have established MOU annexes and agreements between DHS and the Federal Railroad 

Administration, Pipeline and Hazardous Materials Safety Administration, Federal Transit 

Administration, Federal Aviation Administration, and the Maritime Administration. These 

annexes clearly define the roles and responsibilities of each organization and provide the 

structure, processes, and oversight of research and development, emergency communications, 

and enforcement activities. Under the National Infrastructure Protection Plan, the modal 

agencies are working with their DHS counterparts to develop modal-specific security regulations 

or directives that ensure security issues are balanced with safety and efficiency. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 57 
With the experiences of Hurricanes Katrina and Rita behind us along with our growing 

collaboration with the Department of Homeland Security and other federal agencies, the 

Department has made great progress in our ability to respond to disasters and address 

transportation security. Although we may conclude that we have met the challenge presented by 

the Office of the Inspector General, the issue of disaster preparedness must be continually 

monitored and adjusted as needs dictate. DOT will take advantage of every opportunity to 

evaluate internal practices and partner with federal, State, and local officials to improve our 

disaster response capabilities as well as our support to the security of the Nation’s transportation 

sector. 

2. MANAGEMENT CHALLENGE: Getting the Most for Every Taxpayer 

Dollar Invested in Highway and Transit Projects 

Actions by FHWA and the States Are Needed To Provide Oversight of Highway Funds to 

Ensure Projects Are Delivered On Time, Within Budget, and Free From Fraud. 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

In a 2003 Report to Congress, FHWA outlined its efforts to develop a more multi-disciplinary 

approach towards project management and oversight activities of highway projects. During the 

past three years, the Agency has addressed key areas including: 1) optimizing the use of internal 

staffing; 2) increasing training for existing and new staff; and 3) implementing specific 

stewardship and oversight initiatives. In addition, FHWA has taken steps to use available funds 

more efficiently across its project portfolio and to minimize improper payments. 

As part of its efforts to optimize internal staffing, FHWA continued a program to move Agency 

employees beyond reviewing and approving project level actions to ensuring the effectiveness of 

local processes in major project drivers such as financing, cost control, schedule performance, 

and transportation planning. 

FHWA continues to develop a multidisciplinary workforce. After a Department-wide assessment 

identified a skill gap in the financial management area, FHWA revised both the existing position 

descriptions and the available training opportunities for financial managers. This was done to 

58 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
clearly identify financial management job duties and responsibilities so training could be aligned 

accordingly. In addition to new training options for financial managers, FHWA provided training 

for project managers including offerings in cost estimating and risk management. The FHWA is 

also addressing skill gaps by changing the mix of new hires to a multidisciplinary focus that 

includes positions other than those in civil engineering, which was traditionally the focus of 

recruitment efforts. 

To increase project oversight for major programs, a project oversight manager position is being 

assigned to the largest projects. The major duties of the project oversight manager include 

ensuring the credibility of cost estimates/schedule milestones as well as overseeing completion of 

required activities at major project milestones. 

FHWA’s stewardship and oversight role was strengthened in SAFETEA-LU legislation passed last 

year. The legislation requires FHWA to conduct an annual review of the State departments of 

transportation financial management systems and project delivery systems, develop minimum 

standards for estimating project costs, and periodically evaluate State practices in these areas. It 

also places requirements for a project management plan and financial plan on all major projects 

of $500 million or more, and requires each State to provide a value engineering analysis on each 

Federal-aid project with a total cost of $25 million or more, a bridge project of $20 million or 

more, and other designated projects. In January of this year, the FHWA issued Interim Major 

Project Guidance based on the philosophy of expanding the FHWA oversight role to optimize its 

positive influence in the management of major projects. 

FHWA revised regulation 23 CFR 630, Subpart A, Project Authorization and Agreements in order 

to better manage available funding and minimize inactive obligations. This regulation change 

assists States and FHWA in monitoring Federal-aid highway projects and provides greater 

assurance that the Federal funds obligated reflect the current estimated cost of the project. 

FHWA will revise the Federal obligation amount and reallocate inactive funding obligation 

balances if a State fails to take action as required by the regulation. 

In April 2006, FHWA issued a new directive titled the Financial Integrity Review and Evaluation 

Program. The new directive requires each Federal-aid Division Office to conduct an improper 

payments review of its programs. In addition, FHWA implemented an improper payments 

testing and assessment methodology into the normal grant testing procedures. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 59 
Enhancing Fraud Prevention Capabilities and Taking Aggressive Action Against Those Who 

Perpetrate Fraud, Including Motor Fuel Tax Evasion. 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

Detecting, preventing and responding to fraud, waste and abuse in the Federal-aid highway 

program is an essential component of FHWA’s stewardship and oversight mission. FHWA 

continues to team with the DOT Office of Inspector General in elevating the awareness of fraud 

prevention. In April, FHWA co-sponsored the 2006 Fraud Prevention Conference, which drew 

over 300 participants from Federal, State and local governments, and the private sector. 

Detecting, preventing and responding to fraud are included in the FHWA Contract 

Administration Core Curriculum Course, which was presented in seven States in FY 2006 and 

has already been requested by 17 States for FY 2007. FHWA continues to stress the use of fraud 

indicators and reporting procedures and is working with the transportation and highway industry 

to report allegations of fraud, waste, and abuse on Federal-aid infrastructure construction 

projects. 

The FHWA and the Internal Revenue Service (IRS) continue to work together to address the issue 

of evasion of motor fuel and other highway use taxes. An enforcement strategy, signed in January 

2006, by the FHWA Administrator and the IRS Commissioner, focuses on enhancing 

enforcement efforts by developing and modernizing systems to improve service and enforcement; 

sharing best practices, lessons learned, and expertise with agencies involved with motor fuel and 

highway use tax enforcement; conducting outreach and education for stakeholders; and 

continuing research into finding solutions to the problem of tax evasion. Additionally, a 

Memorandum of Understanding identifying program-related responsibilities, accountability 

requirements, and funding levels, was also signed in January. FHWA has enlisted the help of a 

number of states by providing grant funds for intergovernmental enforcement efforts designed to 

address motor fuel tax evasion. Awards were given for innovative projects that involved a number 

of agencies working together with identified performance objectives. Project team leaders will 

submit an annual report presenting a summary of the project, accomplishments, as well as other 

comments on the project experience. FY 2006 was the first year intergovernmental grants were 

provided to the states through a competitive process. Grant funding is available through FY 2009. 

60 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Tough Decisions Ahead in Choosing Between Competing Transit Needs 

MODERATE

C NO

P

P

S

P

S

P

P METER

OMPLETE

ROGRESS

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

FTA’s New Starts program encourages the submission of transit proposals that produce significant 

transportation benefits at a reasonable cost. Many worthwhile proposals are received each year. 

Unfortunately, the program is over subscribed – the total cost of proposals received exceeds the 

available funding. Therefore, it is incumbent upon FTA to have a prioritization process that funds 

only those programs that yield the greatest benefits to the public. 

The current New Starts evaluation and rating process evaluates transit proposals using the 

following criteria: project cost estimates, benefits, and performance impacts for various planning 

alternatives. A thorough application of a planning alternatives analysis will result in reliable cost 

estimates, impacts, and benefits of these alternatives sufficient to make an informed decision. 

Through this process, FTA emphasizes the need for reliable ridership forecasts and cost estimates 

by including reliability of forecasting methods as an evaluation criterion. 

While the current New Starts evaluation and rating process provides an evaluation and rating 

framework that enables FTA to make sound decisions on the competing transit needs, the process 

will be improved in the future by replacing the three-level rating scale with a five-level scale. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 61 
3. MANAGEMENT CHALLENGE: Building on Recent Initiatives To Further 

Strengthen Surface Safety Programs 

Addressing Highway Safety Problems Where Serious Injuries and Fatalities Persist 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

To reduce the number and rate of fatalities in traffic related crashes, the FHWA launched a 

performance based approach to safety in FY 2005 that better focuses resources on 16 identified 

States where the greatest opportunity exists to save lives. These States continued to receive 

funding in FY 2006 and FY 2007. In addition to the 16 identified States, a program entitled the 

Accelerating Safety Activities Program (ASAP) was adopted to support grants for all States to 

advance safety at the State, multi-State and local level. Over the last two years, 56 ASAP grants 

were approved. 

In continuing to combat this problem, NHTSA made available more than $118 million to the 

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 will work closely with these ten States to facilitate implementation of effective 

programs, including periodic and sustained high-visibility enforcement efforts and media 

campaigns. NHTSA initiated 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 weekend and the December 

holiday season. Additionally in FY 2006, NHTSA 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 offenders). NHTSA also 

completed its demonstration of effective records system improvement strategies. Improved 

records systems ensure a more comprehensive and consistent approach to the apprehension, 

adjudication, and sanctioning of impaired drivers. 

62 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
NHTSA has been effective in promoting safety belt use—steadily increasing the usage rate to a 

high of 82 percent in 2005. To further increase safety belt use, in FY 2006 NHTSA provided 

$123.3 million in incentive grant funding to 22 States, the District of Columbia and Puerto Rico 

that had implemented primary State safety belt use laws. The Safe, Accountable, Flexible, Efficient 

Transportation Equity Act: A Legacy for Users (SAFETEA-LU) authorizes the Federal surface 

transportation programs for highways, highway safety, and transit for the 5-year period 2005-

2009. SAFETEA-LU established new core safety programs, encouraging safer cars and safer 

roads, and aggressively discouraging impaired driving while providing real incentives for States to 

enact stronger belt use laws. These incentives are already showing results. Since the beginning of 

2006, three more States, Alaska, Kentucky, and Mississippi, have enacted primary safety belt use 

laws in direct response to the SAFETEA-LU incentives. In addition, the agency conducted its 

May 2006 Click It or Ticket campaign and encouraged States to increase participation in periodic 

high-visibility safety belt law enforcement mobilizations with coordinated paid and earned media 

efforts. Currently, a full National Occupant Protection Use Survey is being conducted to help 

quantify the results of the campaign’s efforts. To reach hard-core safety belt non-users, NHTSA 

will continue to identify new communication strategies and messages and conduct research and 

demonstration projects among nighttime drivers, rural populations, pick-up truck drivers, 8-15 

year olds, and teens. 

Motorcycle rider fatalities have increased for the last eight years. To address this alarming trend, 

NHTSA issued a final rule in FY 2006 implementing the Motorcyclist Safety grant program. This 

rule establishes the requirements a State must meet and the procedures it must follow to receive a 

Motorcyclist Safety grant. The grants are to support rider training, motorist awareness, and 

impaired driving programs. In FY 2006, NHTSA awarded $5.9 million Motorcycle Safety grant 

funds to 44 States. Additionally, the agency developed and distributed implementation guidance 

and recommendations to State and local communities in the National Agenda for Motorcycle 

Safety. NHTSA also initiated a demonstration program to implement the “best practices” 

identified from a review of State training and licensing programs. Other NHTSA efforts include 

forming new partnerships with AARP, insurance companies, and health/medical organizations to 

assist with older/returning motorcyclists. The agency also recently released its 2006 Motorcycle 

Safety Program Plan, which provides a comprehensive look at NHTSA motorcycle safety efforts. 

The document can be found on NHTSA’s website at 

http://www.nhtsa.dot.gov/people/injury/pedbimot/motorcycle/MotorcycleSafety.pdf. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 63 
Preventing Fraud in the Commercial Driver’s License Program 

MODERATE

C NO

P

P

S

P

S

P

P METER

OMPLETE

ROGRESS

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

In FY 2006, FMCSA took a proactive approach to prevent fraud in State Commercial Drivers 

License (CDL) programs. FMCSA has just completed enhanced compliance reviews of 16 State 

CDL programs to ensure that: 1) States have the proper statutes and administrative procedures to 

administer their CDL programs in compliance with the Federal requirements, and 2) that State 

computer systems and licensing procedures are actually 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 

issuance and testing procedures in order to reduce their susceptibility to fraud. 

In April 2006, FMCSA initiated rulemaking to require covert monitoring of examiners and social 

security number (SSN) verification of CDL applicants. Currently, FMCSA has encouraged (but 

not required) States to establish covert oversight for both State and third-party testing examiners 

and provided grants funding to set up such programs. FMCSA continues to encourage States to 

perform SSN verification on all drivers, especially CDL holders and encourages the States to apply 

for CDL grant funds for the verification process. At least 45 States are currently performing SSN 

verification on CDL applicants and holders. States are required to perform Immigration and 

Naturalization Service Number verification through the Transportation Security Administration 

for CDLs with a hazardous materials endorsement. The proposed rulemaking that is under 

development would require both covert monitoring of examiners and SSN verification of CDL 

applicants, as well as continuing the current practice of Immigration and Naturalization Service 

Number verification. 

A total of 39 States were awarded $19.6 million in grants to support improvements in State CDL 

programs and address deficiencies identified in compliance reviews and Inspector General audits. 

Nearly $2.4 million of this funding was allocated to improve 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. 

64 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
FMCSA has also taken steps to strengthen and modernize information systems associated with 

the CDL program. Congress recognized the importance of improving data quality by authorizing 

funding for a State safety data improvement program, known as the Safety Data Improvement 

Program (SaDIP). In FY 2006, FMCSA received 15 SaDIP applications from States with total 

funding requests equal to $5.8 million. FMCSA is currently reviewing applications and 

anticipates that it will award all $2 million in FY 2006 authorized funding to States. 

Strengthening Rail Safety Program Oversight and Enforcement 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

The FRA has the responsibility to ensure the safe operation of the Nation’s rail system. The Close 

Call Confidential Reporting System (CCCRS) is a process for proactively collecting and analyzing 

leading indicator data, and for improving the safety reporting culture in the railroad industry. 

Currently, the safety reporting systems in the railroad industry, including FRA’s, are reactive 

systems for reporting accidents that often trigger punitive actions and the withholding of critical 

safety-related information. While reactive systems are valuable in identifying safety issues, the 

typically small number of accidents that are reported in such systems hinders effective trend 

spotting and other analyses. CCCRS reports many more events and thereby allows safety 

problems to be identified and corrected before accidents can occur. Moreover, CCCRS can 

significantly reduce accidents and injuries by creating a trusting environment in which critical 

safety-related information is openly shared for analyses, instead of being actively withheld to 

avoid punishment or liability. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 65 
4. MANAGEMENT CHALLENGE: Reforming Intercity Passenger Rail To 

Improve Performance 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

To address this challenge, FRA together with the Office of Secretary, has been heavily engaged in 

promoting a reauthorization of Amtrak that would address many issues surrounding intercity 

passenger rail. These issues include but are not limited to size, operations and governance of the 

Nation’s passenger rail systems. DOT recognizes that the need for work in these areas is ongoing, 

particularly in addressing Amtrak’s operating accounts and services it provides such as food and 

beverage and first class services. Through the annual grants to Amtrak, in particular the capital 

grant, and the Department’s presence on the Amtrak board of directors, DOT has been able to 

assure that capital investments address the company’s highest priorities and are consistent with 

the funding available. 

5. MANAGEMENT CHALLENGE: Mitigating Flight Delays and Relieving 

Congestion—Actions Needed To Meet Demand 

Taking Appropriate Action Against Growing Aviation Delays 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

In FY 2004, the FAA completed a study analyzing system capacity. The study identified 21 nonOperational Evolution Plan (OEP) airports as potentially needing additional capacity. In 

FY 2005, phase two of the capacity study was undertaken to enhance the level of detail of the 

non-OEP airports identified. This included conducting annual service volume studies, 

66 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
developing capacity benchmarks, and detailing national airspace simulation. In addition, 

potential solution sets were developed to improve airport capacity. In FY 2006, FAA continued 

these efforts and analyzed the benefits of the potential solutions through detailed modeling. 

The Agency is increasing capacity by working with airports and local communities to build new 

runways. Four new runways opened at OEP airports in FY 2006 at Atlanta, St. Louis, Cincinnati, 

and Minneapolis, providing the airports with the potential to accommodate an additional 665,000 

annual operations. Runways are under construction at six other airports—Boston, Philadelphia, 

Los Angeles, Seattle, Washington Dulles, and Chicago O’Hare. Eight projects are in the planning 

or environmental review stage—one airfield reconfiguration, two runway extensions, two new 

runways, and three new airports that are expected to provide significant capacity benefits through 

2015. 

Technological improvements are aggressively being pursued to improve system capacity. In June 

2006, the Airspace Flow Program (AFP) was deployed. AFP is a traffic management initiative 

that identifies constraints in the enroute system, develops a real-time list of flights that are filed 

into a constrained area, and distributes departure clearance times to meter demand through the 

area. It allows controllers to delay only those flights that are expected to pass through airspace 

affected by bad weather and safely meters traffic throughout the constrained area. AFP reduces 

the number of flight delays and brings an estimated $900 million in cost savings to the airlines 

and the flying public over ten years. AFP provides flexible, equitable metering of traffic through a 

constrained area of airspace. 

As a result of this new program, the crippling effects of thunderstorms that impact the Nation's 

airspace system are minimized. Even with limited use of the program to date, the number of 

required reroutes has declined and routes within the constrained airspace appear to remain 

useable for longer periods. In addition, with the deployment of the AFP, the FAA has seen a 

decrease in the number of ground delays for flights destined to the Northeast. AFP initial 

deployment was limited to select geographical areas in the Northeastern Corridor. FAA expects 

to continue the geographical expansion of the AFP as the analysis of the procedure becomes 

mature and familiarization and experience with the process increases. 

In addition to these decision support tools, the Agency is continuing to explore and apply state of 

the art weather forecast information to improve services to our customer, to mitigate the impact 

of weather on air traffic. Two systems are now in place to help—the Collaborative Convective 

Forecast Product and Corridor Integrated Weather System. 

The Collaborative Convective Forecast Product, available during the March to October severe 

weather season, is a graphical forecast of convection (winds, showers, and thunderstorms) 

developed specifically for use in strategic planning and the management of air traffic. With this 

MANAGEMENT’S DISCUSSION AND ANALYSIS 67 
forecast product, collaborative activities occur more rapidly and traffic management decisions 

based on weather data are more accurate. The tool provides advance planning for long haul 

flights and allows for schedule predictability based on 2-4-6 hour forecasts. 

The Corridor Integrated Weather System provides a more accurate convective weather forecast 

out to 120 minutes in the future. The product is deployed on a limited basis at several Air Traffic 

Control centers as a prototype. Preliminary results indicate contollers are making and 

coordinating decisions more quickly, which reduced delays due to severe weather. FAA expects 

that this prototype can be ultimately tested and integrated into the NAS system in the near future. 

Procedural changes have also been implemented to improve performance. In FY 2006, the FAA 

created a new position at the Air Traffic Control Systems Command Center (ATCSCC) called the 

National Enroute Spacing Position (NESP). The goal of the NESP is to distribute enroute volume 

efficiently during severe weather or other events that constrain the NAS. As such, the NESP is the 

focal point when implementing an AFP. The NESP position was implemented as part of a larger 

concept change at the ATCSCC called the National System Strategy Team (NSST). The NSST was 

developed to clearly define areas of specific individual responsibility among personnel. 

Implementing individually assigned and recognized responsibilities in the NSST will improve the 

efficiency and effectiveness of system-wide planning, coordination, and responsiveness including 

reroute generation and exit strategy planning. 

Keeping Planned Infrastructure and Airspace Projects on Schedule to Relieve Congestion and 

Delays 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

An integration team comprised of representatives from all appropriate FAA organizations 

monitors the progress of each new runway construction project and is responsible for ensuring 

that the runway is commissioned on schedule with all necessary equipment and airspace 

procedures in place. The team provides quarterly updates to FAA executives on the status of each 

project and issues relating to the runway project are discussed, assigned to an executive to resolve, 

and tracked by the integration team to ensure resolution. 

68 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Improving the efficiency of existing airport capacity by redesigning airspace is critical for taking 

full advantage of new runways and enhancing the flow of air travel around existing runways and 

airports. To support improved investment decisions, FAA commissioned a study that was 

delivered in March 2006, to estimate the customer benefits of airspace redesign projects and then 

rank projects based on relative benefits. A prioritization index was developed based on each 

project’s ability to meet FAA agency goals, customer and agency benefits, and risk factors. In 

FY 2006, when the Airspace Management Program (AMP) budget experienced significant cuts, 

the airspace prioritization index was used to make difficult funding decisions. Along with this 

index, the AMP program office completed a quantified assessment of the operational benefits of 

all proposed projects. This assessment has been used to create an earned-value metric that 

measures the progress and projected value of a proposed airspace effort. The Airspace Current 

Benefit State metric is defined as a weighted dollar value of the experienced and expected 

customer benefits of charted and funded airspace projects. 

Exploring Alternatives for Managing Capacity Where Infrastructure and Airspace Redesign 

Initiatives Are Not Feasible 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

Over the past several years, the FAA has conducted extensive research efforts to explore the 

feasibility of various market-based and administrative mechanisms to manage congestion at 

capacity constrained airports where expansion is not a viable option. For example, the FAA, in 

concert with the National Center of Excellence for Aviation Operations Research, has initiated 

research on auctions, congestion pricing, and various administrative solutions. 

In FY 2006, the FAA began to promote a more efficient allocation of resources through the use of 

market-based mechanisms. In August 2006, a congestion management Notice of Proposed 

Rulemaking (NPRM) for New York’s LaGuardia Airport was published in the Federal Register. 

The proposed rule establishes an operational limit on the number of aircraft landing and taking 

off at the airport. To offset the effect of this limit, the rule would implement an airport-wide, 

average aircraft size requirement. The intent is to encourage the use of larger aircraft to increase 

the number of passengers who use the airport. To maintain a level of service to small 

communities, FAA proposes to permit a fixed number of operating authorizations for service to 

MANAGEMENT’S DISCUSSION AND ANALYSIS 69 
smaller airports, exempt from the aircraft size requirement. The proposed rule also announces 

the Administration’s intent to use market-based mechanisms beginning in 2010. The FAA is 

directing its efforts toward the publication of the final rule for LaGuardia and developing marketbased language in the FAA Programmatic Reauthorization, which must be enacted by the end of 

FY 2007. 

Similarly, FAA published a Final Congestion and Delay rule for Chicago O’Hare International 

Airport in August 2006. The rule will manage capacity at that airport until the O’Hare 

Modernization Plan (OMP) expansion yields additional capacity. The first OMP runway is 

expected to open in November 2008. Therefore, FAA adopted October 2008 as the sunset date for 

this rule. 

Although the rule is temporary, FAA has included market-based elements for the secondary 

market allowing the purchase, sale, and lease of arrival authorizations by air carriers. The FAAoperated market will be “blind,” keeping the bidders’ identities secret until the sale has closed and 

FAA has forwarded the highest bid to the seller. A blind market will advance the goals of 

promoting the most efficient use of the airspace and maximizing reliance on market forces. This 

will also ensure that new entrants and all other airlines have an equal opportunity to 

purchase/lease arrival authorizations. 

6. MANAGEMENT CHALLENGE: Reauthorizing Aviation Programs— 

Establishing Requirements and Controlling Costs Are

Prerequisites for Examining FAA Financing Options 

Control Major Acquisitions Costs—Delivering New Systems that Work on Time and Within 

Budget and Making Decisions about the Scope of Billion-Dollar Projects that Have Been 

Delayed 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

In an effort to better control major acquisition costs and schedules, FAA has implemented a series 

of executive and management reviews to oversee program progress. Currently, FAA acquisitions 

over $10 million require the approval of the Chief Financial Officer (CFO). The FAA’s Chief 

70 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Information Officer now reviews any information technology acquisition in excess of $250,000. 

The Associate General Counsel also provides a legal review for all procurement actions greater 

than $100,000. 

In addition to the executive-level reviews, the agency has implemented acquisition management 

controls through the Joint Resource Council (JRC), the ATO Executive Council, and the Capital 

Investment Team (CIT). The JRC reviews and approves all major investments and the Facilities 

and Equipment (F&E) budget. It delegates to subordinate boards the authority to approve nonmajor investments in accordance with the FAA Acquisition Management System (AMS). It also 

conducts service-level reviews, which provide a FAA-wide overview of operations and 

investments by service organization. 

The ATO Executive Council meets monthly to approve mission need statements of programs 

beginning the investment process. They review major investments prior to submitting these to 

the JRC for further review and approval. They also provide review and approval of non-major 

investments to begin acquisitions. For the Executive Council to approve a program, the program 

must first complete the ATO-Finance Capital Investment Team review process. 

The CIT reviews both the benefits and costs of each ATO investment program, and validates the 

methodology to determine if benefits are calculated properly, validates the requirements for 

major investments, and ensures recipient benefits are correctly identified. They also validate the 

development costs, whether a proper alternatives analysis was conducted, and whether ATO can 

afford to operate the system once it is developed. As a result of the CIT process, several projects 

have been restructured, had resources reallocated, or have been terminated. Through these 

actions, the F&E budget baseline has been decreased by over $450 million dollars. 

Further, FAA has strengthened its management processes. Recent changes to the Acquisition 

Management System require major acquisition projects to meet OMB Exhibit 300 standards for 

business case justification before receiving program approval and funding. Key changes include 

limiting funding approvals to three – five year segments, training and certifying all project 

managers, and strengthening the investment analysis process. 

In addition, a major earned value management (EVM) effort has been initiated across the agency. 

For all newly approved IT investments that have funding greater than $10 million, project 

personnel are required to track and measure program performance in accordance with EVM 

guidelines. By applying EVM methodologies to its acquisitions, the FAA is able to ensure project 

planning and control by effectively integrating the project scope of work with cost, schedule, and 

performance elements. 

Implementation of executive and management reviews and wide-ranging processes have resulted 

in positive, measurable, and dramatic changes in how FAA controls major acquisition costs. FAA 

is meeting its performance target related to acquisition costs and is meeting 97.4 percent of its 

MANAGEMENT’S DISCUSSION AND ANALYSIS 71 
acquisition schedule milestones. More importantly, the FAA is beginning to efficiently and 

effectively deliver critical technology to the National Airspace System, resulting in increased 

safety and system capacity for airline passengers. 

Get Control of Support Services Contracts 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

FAA support service contracts now undergo the same rigorous executive and management 

oversight as do other FAA acquisitions. In addition to the executive reviews discussed in the 

previous section on controlling major acquisition costs, FAA’s Deputy Administrator also plays an 

important role in reviewing and managing FAA support services costs. For any support service 

contract where fewer than three bidders are competing for a contract over $1 million, the Deputy 

Administrator’s approval is required. This additional step in the review process insures adequate 

competition exists in awarding service contracts. 

As discussed in the Inspector General’s audit report on FAA’s National Contracting Service, the 

agency has also implemented corrective actions to address a practice known as revolving 

employment - where former FAA employees return as contractor employees. In October 2005, 

AMS Clause 3.1.7-6, Disclosure of Certain Employee Relationships was implemented. This clause 

is intended to enforce the Agency’s policy of not conducting business with contractors, 

subcontractors and consultants who have an unacceptable conflict of interest or an unacceptable 

appearance of a conflict of interest. Additional guidance was implemented in the October 2006, 

AMS update. 

The IG also pointed out in the same audit report that there were variations in the mechanisms 

used by different FAA organizations in carrying out procurement oversight responsibilities. In 

response, the FAA is developing a nationwide, uniform procedure for such oversight under the 

FAA’s Acquisition Executive, which will be incorporated into the AMS by January 31, 2007. 

72 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Establish Requirements for the Next Generation Air Traffic Management System (NextGen)

MODERATE

C NO

P

P

S

P

S

P

P METER

OMPLETE

ROGRESS

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

The goal of the Next Generation Air Transportation System (NextGen) is the creation of a more 

flexible and scalable air transportation system through use of new technologies and capabilities. 

It will be a data driven system capable of handling new types of aircraft, new industry business 

models, and the growing demands on capacity expected in the years ahead. Achieving this 

requires a concerted focus and alignment of efforts in both government and the aviation industry. 

The FAA has released an initial draft of the enterprise architecture and its companion concept of 

operations for stakeholder comment. The concept of operations was developed with the 

assistance of the private sector and member Federal agencies. The concept forms a baseline to 

initiate a dialogue with the aviation stakeholder community, to develop the policy agenda, and 

encourage the research needed to achieve NextGen. An iterative process of defining the concept 

of operations (ConOps) and enterprise architecture (EA) will continue into early FY 2008, at 

which time the full breadth and depth of NextGen will have been addressed. However, the 

ConOps and EA will be further refined over time as research results are achieved, policy decisions 

are reached, and the impacts of technology breakthroughs are assessed. 

In order to better understand the costs and benefits of NextGen, the FAA asked the Next 

Generation Air Transportation System Institute to host a series of workshops with industry where 

the critical assumptions and uncertainties underlying future cost estimates can be reviewed, 

scrutinized, and validated for future use. The workshops have been focused on three objectives. 

The first has been to focus on specific cost drivers affecting the first five years of the NextGen 

initiative. The second objective is to develop the assumptions for research and development, 

facilities, and equipment for the five to fifteen year timeframe. And finally, the third objective is 

to gain insight into how aviation service and equipment providers view the future of the global 

marketplace. The workshops have proven highly successful and with this input, the FAA is in a 

much better position to offer an estimate of the future costs of NextGen. A completed cost 

benefit case will be developed in FY 2007. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 73 
Address the Expected Surge in Air Traffic Controller Attrition and Negotiating an Affordable 

and Equitable bargaining Agreement 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

In August 2006, FAA released an updated air traffic controller workforce plan—A Plan for the 

Future: The FAA’s 10-Year Strategy for the Air Traffic Control Workforce. The plan provides a 

comprehensive 10-year strategy to ensure the FAA has an adequate number of controllers 

available, in the right place, to handle the coming decade’s projected air traffic. These resource 

needs are then tightly aligned to the agency’s performance budgets. The plan also outlines how 

we will hire these new controllers using a schedule designed to provide adequate training leadtime and to address changing air traffic demands over the coming decade. 

In FY 2006, the FAA hired and trained new controllers at the level consistent with the updated 

staffing plan. Controller staffing levels will need to increase each year through 2012 to ensure the 

number of certified professional controllers in the system stays ahead of expected retirements. 

Adequate funding requests to hire and train new staff in the future will continue to be consistent 

with targets set in the controller workforce plan. 

Academy training and facility training capacity improvements have been implemented and 

further improvements are continuing in order to decrease the time it takes a new hire to become a 

certified professional controller, from three to five years down to two to three years. Even-flow 

hiring that links Academy training capacity and facility training capacity has avoided training 

bottlenecks at both the Academy and in-the-field facilities. Training classes at the Academy are 

full and two classes have been added to the FAA Academy course schedule for FY 2007 to meet 

hiring and training needs. Academy graduates will fill targeted air traffic facility vacancies that 

have been identified through the third quarter of FY 2007. 

The FAA has also undertaken several key initiatives to achieve significant reductions in operating 

costs by ensuring controller productivity measures are in place. Since the release of the first air 

traffic control workforce plan in December 2004, ATO has introduced methods to save $20,000 

per FAA Academy trainee, achieved one-year cost avoidances of $6.4 million, and reduced direct 

labor costs by almost $1 million. 

74 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
The FAA implemented new work rules for the nation’s air traffic controller workforce which went 

into effect September 3, 2006, with all past practices and Memorandums of Understanding 

rendered null and void. The work rules associated with the new National Air Traffic Controllers 

Association contract ensure that the funding, technology, and people will be in place to provide 

safe and seamless travel for the flying public, while fairly conpensating controllers. 

The new contract restores basic management rights lost in the last agreement. Going forward, the 

agency will be in charge of daily schedules, work assignments, and decisions regarding the 

deployment of technology. Significant costs savings are achieved through a new controller pay 

scale and by eliminating two types of premium pay—Controller Incentive Pay, a second locality 

pay unique to some controllers, and Controller-in-Charge Pay premium, which had not reduced 

required supervision as originally intended. 

Completing the Cost Accounting System to Control Costs and Improve Operations 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

During FY 2006, the FAA completed the implementation of the Cost Accounting System (CAS) 

in the last two lines of business – Airports and Aviation Safety. With the implementation of the 

CAS across all lines of business, FAA management is able to obtain invaluable management 

information to assess operational performance and make critical business decisions. 

The integration of the Air Traffic Organization (ATO) labor distribution system with the CAS was 

also completed in FY 2006. An updated version of CAS was implemented in ATO, which uses 

actual ATO labor distribution data – thereby eliminating the use of the less precise staffing 

standards to assign ATO labor costs. Tracking data indicates that organization-wide, over 90 

percent of labor distribution reporting hours are charged to valid projects and activities and that 

ATO has been achieving a compliance rate near 92 percent. 

Financial information from CAS is also being used to determine past trends and future needs and 

is coupled with operational data to determine unit costs. ATO managers are driving cost 

improvements, and measuring those improvements using key financial performance metrics. For 

example, the ATO has identified economic drivers, such as controlled flights, and manages to a 

MANAGEMENT’S DISCUSSION AND ANALYSIS 75 
“full cost per controlled flight” performance target. The ATO also manages to an overall direct to 

indirect field employee staffing ratio, to assure resources are deployed to support the operational 

workforce in a cost-efficient manner. 

7. MANAGEMENT CHALLENGE: Aviation Safety—Developing Effective

Oversight Programs for Air Carrier Operations, Repair Station 

Maintenance, and Operational Errors 

Implement a Risk-Based Approach to Air Carrier and Repair Station Oversight 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

The FAA has continued implementation and expansion of the Air Transportation Oversight 

System (ATOS), a proven risk-based approach to air carrier oversight. ATOS enables FAA 

inspectors to look at the whole system, from pilots to maintenance facilities to flight dispatch to 

cabin safety. ATOS provides inspectors with the ability to continually adjust the focus of 

surveillance through the identification and prioritization of risks. Of the 116 major air carriers, 

39 are currently under ATOS and the remaining 77 will be under ATOS by December 2007. 

A significant part of air carriers’ maintenance work is performed at night or on weekends. To 

fully address this circumstance, FAA adjusted its surveillance requirements to reflect the amount 

of maintenance performed during these hours. To support this adjustment, the agency issued 

new guidance that requires certificate management teams to identify and document how much 

maintenance is accomplished off-hours and to develop surveillance plans to monitor risks 

associated with work performed during these times. The guidance also requires managers to 

ensure that inspectors assess risk, adjust surveillance plans accordingly, and that surveillance 

reports are annotated to indicate when inspections are accomplished off-hours. 

The FAA issued new guidance and proposed rules for the oversight of both domestic and foreign 

repair stations. For domestic facilities, the guidance establishes a system safety oversight and risk 

assessment program. A notice of proposed rule making (NPRM) that revises standards for the 

FAA to certify repair stations is also currently under review at the Department of Transportation. 

76 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
To provide customers a better understanding of the capabilities of specific repair stations, the 

FAA has prepared and sent to DOT a NPRM that revises the rating system for repair stations to 

better reflect evolving technologies and business practices. The proposed rule also requires repair 

stations to have a self-audit system to assure the repair station only returns to service products 

that meet all airworthiness requirements. 

The FAA continues to conduct a repair station prototype program that uses an air carrier 

certificate management team structure to strengthen oversight. Advantages of this approach 

include standardization and control from a central FAA office. The program is targeting large 

repair stations and companies that operate multiple repair stations or satellite repair facilities. 

Based on the results, FAA will evaluate expanding this approach in FY 2008. 

Ensure Reporting of Operational Errors 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

To ensure operational errors are reported, the FAA issued a general notice to all Air Traffic 

Control facilities to establish an incident audit process. This program was implemented in 

October 2005, and is fully operational. The incident audit review process contains a highly 

structured system of checks and balances to ensure the reporting of operational errors. The 

process requires reviews of Air Traffic Services using existing playback tools to identify 

operational errors. The playback tools recreate air traffic incidents by replaying recorded radar 

and voice data. FAA Headquarters is also conducting similar reviews to capture operational 

errors. Further, the FAA has added a requirement to its Air Traffic Quality Assurance Order that 

directs all facilities to conduct monthly audits of a random sampling of radar or other data. Each 

facility or hub prepares a quarterly report of the findings to their respective Service Area Quality 

Assurance Manager. FAA data indicates the audit program is having the desired effect—facilities 

are more accurately reporting operational errors and deviations. 

To automate this incident audit review process, FAA is currently developing and implementing a 

nationwide automated software prototype to depict separation conformance in both the terminal 

and enroute environments called the Traffic Analysis Review Program. This detection technology 

MANAGEMENT’S DISCUSSION AND ANALYSIS 77 
applies separation logic to targets, identifies where applicable separation standards are not being 

maintained, and highlights incidents for further investigation. The FAA is on schedule for initial 

implementation in the third quarter FY 2007. 

8. MANAGEMENT CHALLENGE: Improving Information Technology 

Investment and Computer Security 

Clarify the Departmental Investment Review Board’s Role in Assisting the Secretary to 

Maximize the Value and Manage the Risk of Major Information Technology Investments 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

With the cooperation of the DOT General Counsel and FAA’s Chief Counsel Offices, the role of 

the DOT Investment Review Board (IRB) in major IT investments has been more clearly defined. 

The IRB will continue its oversight role for the entire Department, with the FAA agreeing to 

voluntarily submit its major investment projects to the IRB for review. The IRB will continue to 

make recommendations to the FAA with respect to major IT programs as a necessary part of 

developing the Department’s IT portfolio in the budget process. If the FAA chooses not to adopt 

the Department’s recommendations with respect to major IT investments, the Department retains 

the authority to exclude the project from the Department’s budget. 

In order to improve management and oversight of IT investments, DOT is revamping its overall 

governance structure, including changes to the IRB to make it more value added in the oversight 

process. The IT budget submission schedule will be changed to better align it with the overall 

budget schedule. Reporting requirements for IT investments will also change to allow managers 

to identify at-risk or potentially at-risk programs earlier in the acquisition process. The 

Department’s Chief Information Officer intends to have these changes implemented in FY 2007. 

78 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Eliminating Redundant IT Infrastructure Outside of DOT Headquarters to Reduce 

Operating Costs. 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

During FY 2006, DOT continued to integrate hardware and software services to its common 

operating environment. The Department also made gains in eliminating IT redundancy as field 

office e-mail and desktop workstations were consolidated in several operating administrations. 

Server migrations were also completed at several field facilities in five different operating 

administrations. 

The Department’s focus in FY 2007 will be to plan for the broader remaining activities related to 

consolidating field office IT infrastructure and eliminating duplication. Consolidating networks 

and implementing a services support model will be included in the planning process. A 

comprehensive project plan will be completed and submitted to the CIO Council and the 

Investment Review Board for review and approval. 

Better Securing Operational Air Traffic Control Systems 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

The Security Certification and Accreditation (C&A) Program is an integral part of FAA’s efforts to 

ensure the security of its information technology systems, including air traffic control systems. 

The FAA adopted National Institute of Standards and Technology (NIST) guidelines and 

standards for certification, accreditation, and monitoring of its IT systems. The C&A process 

MANAGEMENT’S DISCUSSION AND ANALYSIS 79 
provides FAA senior managers the most complete and accurate information possible on the 

security status of the agency’s information systems so they can make timely, credible, risk based 

decisions on whether to authorize operation of those systems. 

The FAA undertook several initiatives to maintain current certification and authorization (C&A) 

of its IT systems, which includes air traffic control systems. The FY 2006 goal was to complete 

C&As on 33 percent of its IT systems, or 95 total C&As. Of the 95 total C&As, 28 were planned 

to be initial certifications and 67 re-certifications. The agency completed initial C&As on 26 

systems (rather than 28 as two developmental systems were not fielded) and recertified 73 systems 

in FY 2006. Remaining systems will undergo self-assessments as the FAA is required to review all 

IT systems on a yearly basis using a C&A or self-assessment. In addition, the agency revised the 

C&A Handbook to reflect NIST guidelines and standards. The agency also established a FY 2006 

goal to remediate 20 percent, or 36, of the 180 high-risk weaknesses identified. To date, the FAA 

has remediated 112 of the targeted 180 vulnerabilities, far exceeding the FY 2006 target. 

The FAA took steps to improve its business continuity plan (BCP) to deal with prolonged service 

disruptions at a major facility that would severely disrupt air traffic, cause significant economic 

losses, and subject travelers to delays and inconvenience. The FAA has completed actions on 

recommendation received in FY 2005 to mitigate a prolonged service disruption at an enroute 

facility. Further, the agency established an engineering team to support continuity plan activities. 

The BCP team completed an engineering analysis and developed proposed near, mid, and longterm solutions. The team briefed FAA Senior Executives who formalized BCP activity as a 

priority. By December 2006, the BCP team will develop a schedule and program management 

plan to support the proposed business continuity plan solutions. 

The FAA also designated a focal point for decision-making in long-term disaster recovery. This 

designation is reflected in an update to the Air Traffic Organization Operational Contingency 

Plan. The update also reflects the transition from short-term contingency to long-term 

continuity, which will enable the FAA to deal more effectively with prolonged service disruptions 

at major facilities. 

80 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Correcting Weaknesses in the Federal Railroad Administration Network and Enhancing 

Business Contingency Plans for Critical DOT Systems 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

In response to the Inspector General’s finding, FRA has eliminated a router vulnerability in its 

administrative network. Using static route statements, all communication from external sources 

passing through the network’s edge routers are now directed to the security firewalls. All firewalls 

have been upgraded with the latest security software updates/patches, and hardened following the 

guidance in existing DOT standards. The overall firewall policy being followed is to block all 

inbound communications traffic unless that traffic is explicitly permitted. This firewall policy was 

adapted from DOT guidance, the Computer Emergency Response Team/Coordination Center 

and the SANS (SysAdmin, Audit, Network, Security) Institute. Users have been given training on 

security awareness and the handling of sensitive data. FRA has also added their headquarters 

systems to the DOT Windows Active Directory domain in order to ensure compliance with DOT 

standards. 

9. MANAGEMENT CHALLENGE: Ensuing That Reforms Are Implemented in 

the Maritime Administration’s Title XI Loan Guarantee Program 

Completing the Development of the Title XI Loan Guarantee Tracking System 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

MANAGEMENT’S DISCUSSION AND ANALYSIS 81 
During FY 2006, MARAD continued development and implementation of the loan guarantee 

tracking system. By the second quarter of FY 2007, the computerized monitoring software should 

be fully capable of meeting the Title XI program’s requirements. The computerized monitoring 

system will be fully developed and operational by the end of FY 2007. The tracking system will 

increase the program’s efficiency in performing the required financial analysis for each Title XI 

loan guarantee and the tracking of insurance and vessel classification certificates for vessels and 

shipyards financed by the Title XI program. The computerized monitoring system will help the 

Title XI program staff minimize defaults since the increased efficiency in performing financial 

analysis will help identify troubled loan guarantees earlier and provide more time for the staff to 

take corrective actions when necessary. 

Enforcing the Requirements Established To Mitigate Risks of Noncompliant Loans and 

Pursuing Remedies to Cure Defaults 

MODERATE

PROGRESS

C NO

P

S

P

S

P

P METER

OMPLETE

ROGRESS

LIGHT

ROGRESS

IGNIFICANT

ROGRESS

ROGRESS

MARAD has completed an accounting of each borrower’s Reserve Fund requirements. MARAD 

has actively worked to cure any defaults of noncompliant loans and will continue to work with 

any borrower that is noncompliant on its Reserve Fund deposit requirements. 

With the implementation of the new loan guarantee tracking system, MARAD considers this 

management challenge resolved. In September 2004, the DOT Inspector General issued a followup audit on the Title XI Program and stated that MARAD developed policies and procedures that 

addressed each of their five recommendations from the March 2003, audit report in a satisfactory 

manner. The Title XI Program has not experienced a loan guarantee pay-off since April 2002. 

82 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Performance Report 

Performance framework 

INTRODUCTION 

The Department of Transportation’s overarching mission is: 

The 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, 

efficient, and convenient transportation at the lowest cost consistent with 

those and other National objectives, including the efficient 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 effectively 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: 

• The DOT Strategic Plan provides a comprehensive vision for improving the 

Nation’s complex and vital transportation system. DOT’s 2003 – 2008 Strategic 

Plan outlines five strategic goals in the areas of safety, mobility, global 

connectivity, security and environmental stewardship that articulate the longer 

term focus of the Department. In addition to the broad objectives, the plan 

targets specific outcomes we want to achieve and identifies key challenges. 

• The DOT Performance Budget operationalizes the Strategic Plan, and provides 

direct linkages between DOT’s budget request and the results the public can 

expect from programs within each of our Operating Administrations. The 

performance budget defines the performance goals and measures used to 

manage progress toward our strategic goals. It describes in detail one fiscal 

year’s resources and programmatic effort within a strategic context. The 

performance budget also aligns each dollar requested to one of our strategic 

goals. 

• This DOT Performance and Accountability Report provides a public

accounting of our FY 2006 performance results.

PERFORMANCE FRAMEWORK 85 
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 

fiscal year, these agreements between the Secretary of Transportation and each 

modal 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 fiscal year to 

assess the organization’s success in the following areas: meeting Departmentwide performance targets; results of Office of Management and Budget Program 

Assessments using the Program Assessment Rating Tool; President’s 

Management Agenda initiative ratings; and efforts associated with addressing 

any management challenges or material weaknesses identified by DOT’s Office 

of Inspector General. The results of these assessments are then factored into the 

personal performance evaluations of our senior executives. 

• Employee Performance Plans—Prepared early in the fiscal year, these plans 

document expected levels of employee performance that clearly link to our 

strategic goals through the performance framework. 

The following graphic describes how DOT plans, measures, manages, and reports on 

performance: 

86 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
How DOT Works to Achieve Its Strategic and Performance Goals 

The Department achieves its goals through its leadership role in U.S. transportation policy, 

operations, investment, and research. To influence results, DOT programs rely on a number of 

common interventions and actions. These include: 

• Direct operations and investment in DOT capital assets that provide capability, 

such as air traffic 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 financial 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-to-peer 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 

influence 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 significant partnering with State and local authorities and with the transportation 

industry. These are the broad areas of action that DOT—and State and local governments— 

commonly use to bring about desired results. 

PERFORMANCE FRAMEWORK 87 
performance Report 

Our FY 2006 Results: A Reader’s Guide 

The performance section of this report is composed of chapters for each strategic goal identified 

in the DOT Strategic Plan. The Organizational Excellence section of the report focuses on overall 

DOT efforts to achieve our part of the President’s Management Agenda, ensuring that we are a 

citizen-centered, 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. 

• The first 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; 

• The second level, the performance goal and annual resources dedicated to the 

performance goal, focuses on a particular aspect of the priority being discussed; 

• The 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, 

• The 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—a performance objective, connecting effects created by Departmental 

activities and programs, and the resulting influence on strategic outcomes. 

Performance Measure—a measurable indicator of progress toward a performance goal, 

with annual targets. 

88 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
This graphic shows the different levels of information and how they are presented.

L

E

V

E

L

1

L

E

V

E

L

2

L

E

V

E

L

3

L

E

V

E

L

4

• • 

• • 

• • 

• • 

2003 2004 2005 2006 

N/A 53.0 (r) 54.0 55.5 

l: 50.0 52.0 51.8 (r) 54.2 * 

I

) ( i ) 

FY 2007 Performance Forecast. DOT expects to meet 

the target in FY 2007 

Annual resources dedicated to the 

performance goal 

STRATEGIC OUTCOMES: PERFORMANCE MEASURES: 

Improved infrastructure in all modes Percentage of travel on the NHS .. 

Reduced congestion in all modes Percent of total annual urban ....... 

Increased reliability throughout the system Average percent change in transit .. 

Increased access for all Americans Percent bus fleets that are ADA .... 

FHWA continued to develop and promote innovative technologies that improve pavement durability, extend the 

service life, reduce costs, and help mitigate congestion and work zone duration. 

Annual resources dedicated to 

the strategic goal 

MOBILITY STRATEGIC GOAL: 

ADVANCE ACCESSIBLE, EFFICIENT, INTERMODAL TRANSPORTATION FOR THE MOVEMENT OF PEOPLE AND 

GOODS. 

FY 2006 ENACTED FUNDS: $37,618.6 MILLION 

Performance Measure: 

Percentage of travel on the NHS meeting pavement performance standards 

for "good" ride. 

Target: 

Actua

(r) Revised; * Preliminary estimate 

OST, $135.9 

FTA, $8,101.1 

FRA, $1,300.9 

FHWA, $24,278.9 FAA, $3,778.8 

Other OAs 

MARAD, $20.9 

FMCSA, $2.1 

Total FY 2006 Funding: $37,618.6 

MOBIL TY STRATEGIC GOAL 

FY 2006 Enacted Funding by Operating Administration (OA Dollars in M llions

Strategic Outcomes: 

Nearer-term objectives 

Performance Measure: 

Progress toward performance goal 

Strategic Goal: 

Desired long-term end state 

Planned performance 

Performance results 

This section describes 

accomplishments and challenges 

Forecast for FY 2007 

Improved Infrastructure FY 2006 Enacted Funds 

$12,102.6 Million 

Performance Goal: 

Connection between departmental activities 

and the strategic goal 

2006 Results. FHWA has redefined the pavement 

condition performance measure from adequate ride 

to a higher standard of good ride...... 

PERFORMANCE REPORT 89 
The relationship between DOT’s activities and observed results—The relationship between 

resources and results can be complex, and a mix of current and prior-year resources and activity 

almost always influences any performance result. For example, direct service program results 

such as FAA air traffic control operations are influenced both by external forces and prior-year 

acquisition activities. Other results, such as highway congestion or transit ridership, are 

predominately influenced by prior-year funding. 

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. final results—Reporting FY 2006 results by November 2006 has been 

challenging where we rely on third party reporting. Often we have only preliminary or estimated 

results based on partial-year data and must wait for final 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 after 

final compilation or verification 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 

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 significant contributions to the Nation’s transportation system. 

Management challenges—The DOT Inspector General and the Government Accountability 

Office 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 efforts 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 2006 achievements. 

90 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
SUMMARY PERFORMANCE TABLES

Overall DOT Performance Summary 

Percentage of Performance Targets Met or Not Met 

FY 2006 FY 2005 

Not Met Not Met 

29% 34%

Met Met 

71% 66% * 

* Revised 

Safety Performance Summary 

Performance Measure 2000

1.53

2.57

2001

1.51

2.45

2002

1.51

2.30

2003

1.48

2.31 (r) 

2004

1.45 (r) 

2.29 (r) 

2005

1.47 (r) * 

2.31 (r) 

2006

Actual 

1.44 # 

2.32 * 

2006

Target 

1.38

1.85

Met / 

Not Met 





Highway fatalities per 100 million 

vehicle-miles traveled (VMT) 

Fatalities involving large trucks per 

100 million truck VMT 

U.S. commercial fatal aviation 

accidents per 100,000 departures 0.037 0.037 0.026 0.024 0.021 0.017 * .020 * .018 

(last 3-years’ average) 

341

22.84

0.499

359

23.44

0.482

348

20.04

0.473

366 (r) 

19.40 (r) 

0.461

340

18.95 (r) 

0.467 (r) 

354 (r) * 

17.62 (r) 

0.428 (r) 

297 * 

16.14 * 

0.344 * 

337

16.80

0.477







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 380 341 330 370 (r) 440 (r) 490 (r) 407 * 365 

pipeline accidents 

564 (r) 588 (r) 465 (r) 472 (r) 490 (r) 482 (r) * 432 * 460 Number of serious hazardous 

materials transportation incidents 

(r) Revised; * Preliminary estimate; # Projection Met;  Not Met 

PERFORMANCE SUMMARY TABLES 91 
Mobility Performance Summary 

Performance Measure 2000

48.0

2001

49.0

2002

49.3 (r) 

2003

50.0 (r) 

2004

52.0 (r) 

2005

51.8 (r) 

2006

Actual 

54.2 * 

2006

Target 

55.5

Met / 

Not Met 



Percent of travel on the National 

Highway System (NHS) meeting 

pavement performance standards for 

“good” rated ride 1

Percent of total annual urban-area 

travel occurring in congested 29.6 30.6 30.7 31.0 31.6 31.8 (r) 32.1 # 33.7 

conditions 

5.0

80

52

17

4.3

85

67

28.4

0.2

90

77

52.1

0.7

93

82

73.7

0.7

95

82

82.8

1.9 (r) 

97

91

95.4 (r)* 

2.1 * 

97 * 

92 * 

71.5 * 

1.0

97

91

50









Average percent change in transit 

boardings per transit market (150 

largest transit agencies), adjusted for 

changes in employment levels 

Percent bus fleets compliant with the 

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 2

Percent of all flights arriving within 

15 minutes of schedule at the 35 

Operational Evolution Plan airports 74.9 76.5 82.2 82.3 79.07 88.4 (r) 88.36 87.40 

due to NAS-related delays 

(r) Revised; * Preliminary estimate; # Projection Met;  Not Met 

ADA — Americans with Disabilities Act; 

1 Starting in FY 2005, measure was redefined to measure “good” rated pavement versus “acceptable” rated pavement. Results for 

FY 2000 through FY 2004 have been adjusted accordingly. 

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. 

92 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Global Connectivity Performance Summary 

Performance Measure 2000

4.5

2001

3.7

2002

3.8

2003

4.2

2004

3.8 (r) 

2005

6.6 (r) 

2006

Actual 

6.7 * 

2006

Target 

5.1

Met / 

Not Met 



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 17.7 17.4 16.2 15.8 15.6 (r) 12.7 (r) 11.8 * 14.5 

businesses

99.2

N/A

98.1

N/A

98.7

N/A

98.9

N/A

99.1

3

99.7

2

99.0

4

99.0

2





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 N/A N/A N/A 1.48 1.72 2.97 3.01 * 2.99 (r) 

Open Skies and open transborder 

aviation agreements (measure 

revised in FY 2005) 

Number of international negotiations 

conducted annually to remove 

market-distorting barriers to trade in N/A N/A N/A N/A N/A 10 (r) 10 10 

air transportation (new measure in FY 

2005)

(r) Revised; * Preliminary estimate; Met;  Not Met 

PERFORMANCE SUMMARY TABLES 93 
Environmental Stewardship Performance Summary 

Performance Measure 2000

3.8

2001

2.1

2002

2.7

2003

2.7

2004

2.1

2005

3.3 (r) 

2006

Actual 

2.6 # 

2006

Target 

1.5

Met / 

Not Met 

Ratio of wetlands replaced for every 

acre affected by Federal-aid highway 

projects 

Percent DOT facilities characterized as 

No Further Remedial Action Planned 

under the Superfund Amendments and 90 91 91 94 93 92 92 93 

Reauthorization Act 

6.0 6.0 6.0 6.0 6.3 (r) 5.8 (r) 1.3 * 6.0 12-month moving average number 

of area transportation emissions 

conformity lapses 

Tons of hazardous liquid materials 

spilled per million ton-miles shipped 0.0083 0.0026 0.0057 0.0071 0.0102 0.0090 (r) 0.0059 * 0.0060 

by pipelines 

Percent reduction in the number of 

people in the U. S. who are exposed N/A N/A N/A -15 -28 (r) -29 (r) -27 # -4 

to significant aircraft noise levels 

(r) Revised; * Preliminary estimate; # Projection from trends; Met;  Not Met 

Security Performance Summary 

Performance Measure 2000

92

93

2001

97

92

2002

94

92

2003

96

86

2004

94

93

2005

95

87

2006

Actual 

93

100

2006

Target 

94

93

Met / 

Not Met 





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 N/A N/A N/A 59 67 65 72 72 

Score (New Measure in FY 2005) 

Met;  Not Met 

94 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
Organizational Excellence Performance Summary 

Performance Measure 2000

N/A

2001

N/A

2002

89.5

2003

88

2004

100

2005

97

2006

Actual 

100

2006

Target 

85

Met / 

Not Met 



For major DOT aviation systems , 

percentage of cost goals 

established in the acquisition 

project baselines that are met 1

For major DOT aviation systems, 

percentage of scheduled 

milestones established in N/A N/A 74 77 (r) 91.5 (r) 92 97.4 85 

acquisition project baselines that 

are met 2

For major Federally funded 

infrastructure projects, percentage 

that meet schedule milestones 

established in project or contract N/A N/A 85 88 95 95 91 95 

agreements, or miss them by less 

than 10 percent 

For major Federally funded 

infrastructure projects, percentage 

that meet cost estimates 

established in project or contract N/A N/A 85 88 74 79 82 95 

agreements, or miss them by less 

than 10 percent 

21 51 67 83 91 91 94 80 

Percentage of transit grants 

obligated within 60 days after 

submission of a completed 

application

(r) Revised; Met;  Not Met 

1 & 2 These measures were combined in FY 2004 to include both cost goals and schedule milestones 

PERFORMANCE SUMMARY TABLES 95 

safety STRATEGIC goal 

promote the public health and safety by working toward the elimination of 

transportation-related deaths and injuries 

FY 2006 Enacted Funds: $19,530 Million 

SAFETY STRATEGIC GOAL

FY 2006 Enacted Funding by Operating Administration (OA)

(Dollars in Millions)

PHMSA, $102.5 

NHTSA, $803.6 

FMCSA, $455.7 

FAA, $9,529.2 

Other OAs 

FTA, $12.3 

OST, $2.4 

RITA, $0.3 

FRA, $198.2 

FHWA, $8,425.7 

Total FY 2006 Funding: $19,530 

STRATEGIC OUTCOMES PERFORMANCE MEASURES 

• Reduction in Transportation-Related Deaths • Highway fatalities per 100 million vehicle-miles traveled 

• Reduction in Transportation-Related Injuries (VMT). 

• Fatalities involving large trucks per 100 million truck 

VMT. 

• U.S. commercial fatal aviation accidents per 100,000 

departures (last 3 year’s 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. 

SAFETY STRATEGIC GOAL 97
HIGHWAY SAFETY FY 2006 ENACTED FUNDS

$9,668.6 MILLION 

Highway crashes account for 95 percent of all transportation-related fatalities and 99 percent of 

transportation injuries. There are a number of facts known about this leading cause of death for 

Americans age 4 through 34: about 60 percent of fatalities occur in roadway departure crashes 

and 59 percent of those happen on rural roads; 22 percent of fatal crashes occur at intersections; 

18 percent of Americans, or about 55 million people, still do not use safety belts all of the time 

when driving motor vehicles; and alcohol is still the single biggest contributing factor in fatal 

crashes. Three Operating Administrations—the National Highway Traffic Safety Administration, 

the Federal Highway 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 After two consecutive years of decline in overall highway fatalities and impaired driving 

fatalities, and having achieved the lowest recorded fatality rate in history, fatality data revealed a 

setback in 2005 (latest data available). Total fatalities increased by 1.4 percent over 2004, to a total 

of 43,443 in 2005. The 2005 figure includes a minimal decrease in total alcohol-related fatalities 

by 0.2 percent to a total of 16,885. The increase in vehicle fatalities comes from the dramatic rise 

in the number of motorcycle fatalities and the increase in pedestrian fatalities over the previous 

year, which more than compensate for the slight decrease in motor vehicle occupant fatalities 

(-0.7 percent). Motorcycles continue to be of particular concern, with a 13 percent increase in 

motorcycle fatalities in 2005, to a total of 4,553. The number of pedestrian fatalities increased 

from 4,675 in 2004 to 4,881 in 2005, a 4.4 percent increase. All of this underscores the need for a 

renewed, aggressive and coordinated effort to make America’s roads safer. 

FHWA Approximately 60 percent of fatalities occur in roadway departure crashes, involving a 

run-off-road in a single vehicle or a head-on or sideswipe collision with another vehicle. The 

FHWA continues to concentrate efforts on reducing the number of fatalities in three types of 

crashes: roadway departures, crashes at or near intersections, and collisions involving 

pedestrians. Roadway departures fatalities in 2005 (latest data available) were 25,388, a slight 

decrease from 2004. Fatalities for intersection-related fatal crashes in 2005 were 9,188 and 4,881 

for pedestrian-related fatalities. Both figures represent slight increases from 2004. The FHWA 

safety-related programs yielded multiple benefits for communities across the United States, 

including a reduction in the number of specific types of crashes and improvements in system 

conditions and operations. Highway construction programs contributed to safety by improving 

unsafe roadway design and operations, improving the condition of bridges, and removing 

roadway hazards. The continued use of Road Safety Audits assisted communities with safety 

improvements during the construction of new roadways and reconstruction of existing roadways. 

FHWA influenced decisions to increase staffing, funding, and coalition partnerships for safety 

initiatives in Maine, Illinois, Minnesota, and States along the I-95 corridor. 

98 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
 

FMCSA Based on preliminary estimates for 2006, the number of deaths in crashes involving 

large trucks has decreased by almost 20 percent from its all-time high in 1979. In addition to the 

low rate for crash-related fatalities, the rate for crash incidence is the lowest in decades. 

Preliminary projections for 2006 suggest that FMCSA will be able to maintain this historic low. 

Currently, about 8 million large trucks are registered to operate across the Nation, traveling over 

230 million truck miles. 

2006 Results. DOT is not expected to 

meet the targeted highway fatality rate. 

The early projection for 2006 is a fatality 

rate of 1.44 per hundred million VMT, 

resulting in 43,463 fatalities. The rate 

continues to decline, but at a slower pace 

than anticipated. In 2003, the fatality rate 

was 1.48 per hundred million vehicle 

miles traveled (VMT) based on 42,884 

killed in traffic-related crashes. With 42,836 fatalities in 2004, the rate declined to 1.45 per 

hundred million VMT. In 2005, there was a slight rise to 43,443 traffic deaths, resulting in a 

fatality rate of 1.47. 

Performance Measure 

Highway fatalities per 100 million vehicle-miles traveled (VMT) 

2003 2004 2005 2006

Target 1.4 1.38 1.38 1.38

Actual 1.48 1.45 (r) 1.47 (r) * 1.44 # 

(r) Revised; * Preliminary estimate; # Projection 

DOT is reviewing trends and identifying the program factors that contribute to reductions in the 

average fatality rate to identify the States that appear to be on track to achieve substantial 

reduction in fatalities over the next few years. With the new Highway Safety Improvement 

Program established in SAFETEA-LU and continued implementation of existing programs, the 

current trends can hopefully be reversed. The FHWA, NHTSA, FMCSA, FTA and FRA, as well as 

external safety advocates and partners including the American Association of State Highway 

Transportation Officials, will continue working together to develop effective approaches and 

countermeasures. 

FY 2007 Performance Forecast. It is unlikely that the target will be met in FY 2007. 

SAFETY STRATEGIC GOAL 99
2006 Results. DOT did not meet the 

target. Preliminary data for 2006 shows 

that the actual large truck fatality rate is 

2.32 fatalities per 100 million truck VMT, 

while the target was no more than 1.85 

fatalities per 100 million truck VMT. 

This constitutes an estimated shortfall of 

.47 fatalities per 100 million truck VMT; 

based on the projected mileage for 2006. 

2003 2004 2005 2006

2.19 2.07 1.96 1.85

2.31 (r) 2.29 (r) 2.31 (r) 2.32 * 

(r) Revised; 

Performance Measure 

Fatalities involving large trucks per 100 million truck VMT 

Target 

Actual 

* Preliminary estimate 

Despite the lowest incidence of truck crashes and fatalities in decades, it has become clear that 

our gains have reached a plateau, and further reductions in the fatality rate are becoming harder 

and harder to attain. In response, beginning in FY 2005, FMCSA launched major initiatives to 

reexamine and reengineer core safety activities. The Comprehensive Safety Analysis (CSA) 2010 

project is examining the foundation of all of FMCSA’s safety programs, exploring new 

enforcement regimes, and revisiting many existing practices and procedures to increase and 

sharpen the agency’s focus on improving safety. In FY 2007, FMCSA will launch important 

research and development cycles for CSA 2010 concepts and in FY 2008 the Agency will begin 

initial testing and evaluation of the CSA 2010 projects through pilot tests in multiple states. In 

FY 2007, FMCSA will renew its focus on the role of drivers in preventing crashes. An increasing 

body of research shows that influencing driver behavior is the biggest factor in crash prevention. 

This is an important area for the Agency to look at for future gains in safety. 

FY 2007 Performance Forecast. The Department will likely fall short of the Secretary’s goal of 

1.75 fatalities per 100 million truck vehicle-miles traveled. 

In-Depth Accomplishments Promoting Highway Safety 

nhtsa

Safety Belts 

In the past five years, safety belt use has increased steadily from 71 percent in 2000 to 82 percent 

in 2005 (latest data available). NHTSA has found safety belt use is statistically lower in States 

with secondary belt enforcement laws than in States with primary laws, and even lower in rural 

areas than in urban or suburban areas. Primary enforcement allows law enforcement officers to 

issue a citation any time they observe an unbelted driver or passenger. Secondary enforcement 

only allows officers to issue a safety belt citation if the officer has stopped the vehicle for some 

other reason. To date, 25 States, the District of Columbia, and Puerto Rico have enacted primary 

safety belt use laws. SAFETEA-LU provides real incentives for States to enact stronger belt use 

100 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
laws. It is already seeing benefits; since the beginning of 2006 three more States—Alaska, 

Kentucky, and Mississippi—have enacted primary safety belt use laws in direct response to the 

SAFETEA-LU incentives. 

In May 2006, NHTSA conducted one national Click It or Ticket (CIOT) campaign, while 

encouraging States to continue to conduct periodic high-visibility safety belt law enforcement 

mobilizations during the summer months. The agency continued demonstration projects to 

increase safety belt use among high-risk populations such as drivers in rural areas, pick-up truck 

occupants, 8-15 year olds and teens. NHTSA continued to work with organizations representing 

these populations to try to raise their lower-than-average safety belt use rates. This year’s CIOT 

campaign was accompanied in 18 States by an additional campaign, Buckle Up in Your Truck, to 

encourage improved safety belt usage in pickups. 

Impaired Drivers 

NHTSA made available more than $118.3 million 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 under SAFETEA-LU. 

NHTSA will work closely with these ten States to facilitate implementation of effective programs, 

including periodic and sustained high-visibility enforcement efforts and media campaigns. 

NHTSA initiated 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 weekend and the December holiday season. 

Safer Vehicles 

Under NHTSA’s New Car Assessment Program (NCAP), the agency tested approximately 

80 percent of new vehicles in order to provide consumers with frontal and side crashworthiness 

information. The agency has published a new regulation, effective November 2006, to require the 

placement of NCAP safety ratings on vehicles at the point of sale by September 1, 2007. 

The agency also rated 99 child safety seats for ease of use from 14 different manufacturers for 

2006. According to the annual ratings, the newest models of child safety seats are easier to use 

than their predecessors. Of the 99 seats rated, 85 received an overall score of “A”. In 2005, 

74 percent of rated seats received an overall score of “A”. Clearer labels and instructions 

accounted for most of the improvements in 2006. 

Rollover ratings for 2006 model year sport utility vehicles (SUVs) show a marked improvement 

over 2005. The rating results also point to an unprecedented number of SUVs with electronic 

stability control (ESC) in 2006. For the 2006 model year, 39 SUVs (42 percent of those rated) 

SAFETY STRATEGIC GOAL 101
earned four stars in NHTSA’s rollover rating program. In 2005, 34 percent received four stars. 

For the 2006 model year, 57 SUVs (69 percent of all SUV models) offer ESC as standard 

equipment, up from 43 percent in 2005. Earlier research by NHTSA documented the potential 

life-saving benefits of ESC, reducing single vehicle crashes by 63 percent for SUVs and 30 percent 

for passenger cars. 

FHWA 

Roadway Departure 

In 2006, FHWA continued to actively pursue improved roadway departure safety through a 

multi-faceted approach. FHWA worked closely with State highway engineers and safety 

specialists, law enforcement personnel, and safety researchers to identify appropriate engineering 

countermeasures for high-risk locations on existing roads and to incorporate state-of-the-practice 

design features on new roads. This effort includes promoting greater use of improvements such 

as upgraded guardrails and other roadside features to current standards, encouraging expanded 

use of pavement grooves as warning devices (i.e., rumble strips), and greater use of retroreflective signs. To minimize the impact of a crash when a vehicle leaves the roadway and strikes 

objects such as trees or guardrails, an educational CD that addresses the need to balance roadside 

aesthetics with safety was widely distributed to State highway departments. 

Intersection Safety 

To improve intersection safety, the FHWA worked with its partners to develop engineering and 

technology improvements, provide training and technical assistance for State and local safety 

officials, develop a sample intersection safety action plan for use by States, and evaluate the 

effectiveness of intersection safety countermeasures. As a result of these efforts, FHWA provided 

information to State and local officials on intersection safety, including novel or non-traditional 

intersections. FHWA continues to develop Intelligent Transportation Systems technology-based 

systems that might significantly reduce intersection crashes in the future, such as a Cooperative 

Intersection Collision Avoidance System, which has the potential to significantly reduce 

intersection crashes by enabling the vehicle to communicate with the highway to help drivers 

avoid potential crashes. 

Pedestrian Safety 

To counter the serious issue of pedestrian fatalities, FHWA continued to partner with State and 

local agencies to target high crash locations in those States with the highest pedestrian fatalities. 

FHWA developed a comprehensive guide to help State and local agencies to develop and 

implement a pedestrian safety action plan. FHWA delivered 37 courses on How to Develop a 

Pedestrian Safety Action Plan and Engineering for Pedestrian Safety in States with pedestrian safety 

102 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
issues. In addition, FHWA developed bilingual educational materials designed to provide native 

Spanish speaking audiences with important information related to pedestrian and bicycle safety 

issues in the United States. 

fmcsa

Compliance and Enforcement 

During FY 2006, FMCSA continued to place a high priority on enforcement and compliance 

operational activities. FMCSA obligated over $250 million to States for motor carrier compliance 

and enforcement activities to complement Federal operations. During FY 2006, FMCSA 

completed over 15,398 federally conducted safety compliance reviews, 2,577 conditional carrier 

reviews, 10,057 federally conducted new entrant safety audits, 186,389 federally conducted 

Southern border vehicle/driver inspections, 737 federally conducted border safety audits, and 

3,032,625 roadside inspections. In addition, the Agency completed 501 motorcoach compliance 

reviews, 15,867 motorcoach inspections and 15,513 border motorcoach inspections. FMCSA also 

worked with State partners to ensure their completion of over 5,161 compliance reviews, 

28,863 new entrant audits, 138 motorcoach compliance reviews, 8,871 motorcoach inspections, 

499 border motorcoach inspections, and 537,124 southern border vehicle/driver inspections. 

Education and Outreach 

FMCSA, in partnership with NHTSA, completed a project known as TACT (Ticketing Aggressive 

Cars and Trucks), the first demonstration pilot project of its kind. The project demonstrated the 

effectiveness 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. The results of the project showed that drivers of passenger vehicles 

understood the message and learned how to drive more responsibly around trucks. 

FMCSA began developing a Non-Entrant Education and Outreach Program to identify interstate 

motor carriers and shippers throughout the country who have not registered with FMCSA and 

educate them about their responsibility to register and receive formal operating authority. The 

program will also educate them on their responsibility to comply with the Federal Motor Carrier 

Safety Regulations and Hazardous Materials Regulations, and the penalties for non-compliance. 

SAFETY STRATEGIC GOAL 103 
Research, Technology and Safety Information 

FMCSA’s Research and Technology programs continue 

to provide advances and innovations to improve 

commercial motor vehicle safety. In FY 2006, FMCSA 

evaluated a lane departure warning system that would 

monitor the position of a vehicle within a roadway lane 

and warn a driver if the vehicle deviates or is about to 

deviate outside the lane. The Agency also began 

developing recommended practices for other on-board 

safety technologies, including collision warning 

systems, adaptive cruise control, and stability systems. © AP Photo/Bradley C. Bower 

FMCSA is also constructing a prototype and testing countermeasures to alert drivers if their 

vehicle is following too closely to a commercial motor vehicle. The Agency initiated the design 

and prototype of an Employer Notification Service system that will allow carriers to register their 

drivers so that they are notified in a timely manner of any convictions or citations that may 

disqualify a driver from holding a commercial driver’s license. 

FMCSA also began the development, testing and evaluation of a prototype Drowsy Driver 

Detection System. This project will develop a prototype drowsy driver and distraction 

monitoring feedback system for commercial motor vehicle drivers using two or more proven 

sensors. The Agency also commenced Phase 3 of the North American Fatigue Management 

Program which will provide training and tools for fleet managers, schedulers, drivers and their 

families. This comprehensive program is currently being tested at one U.S. and one Canadian 

trucking company to provide fatigue management and awareness training for the different 

audiences using classroom instruction and DVDs. 

AVIATION SAFETY FY 2006 ENACTED FUNDS

$9,529.2 MILLION

Commercial aviation is one of the safest forms of transportation. Although rare, aviation 

accidents can have catastrophic consequences, with large loss of life. The public demands a high 

standard of safety and expects continued improvement. General Aviation (GA) is also an 

important element of the U.S. transportation system and the U.S. economy. While the majority of 

aviation fatalities have occurred in this segment of aviation, there has been a gradual trend 

downward in the number of general aviation accidents since 1988. Progress, however, has not 

been steady. 

104 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
 

2006 Results. DOT did not meet the 

commercial aviation fatal accident rate. 

In late August 2006, the commercial 

aviation industry experienced the tragic 

loss of a commuter jet with 49 fatalities in 

Lexington, Kentucky. Earlier in the fiscal 

year, three fatal accidents occurred on the 

ground. Each of these fatalities is a sober 

reminder of the need to continue to work 

on safety. 

Despite these losses, this remains one of the safest periods in aviation history. Since 2001 there 

have been 50 million successful flights. This represents 2.7 billion passengers who have flown on 

commercial jet aircraft in the United States without an onboard fatality – nine times the 

population of our country. The National Airspace System operates 32,000 scheduled commercial 

flights daily. Accidents involving passenger fatalities have a rate of about one every 18 million 

departures. 

2003 2004 2005 2006

.033 .028 .023 .018

.024 .021 .017 * .020 * 

Performance Measure 

U.S. commercial fatal aviation accidents per 100,000 departures 

(last 3-years’ average) 

Target 

Actual 

* Preliminary estimate 

To further strengthen aviation safety, the FAA continued to aid the movement of aircraft 

throughout the system through the use of required navigation performance (RNP). RNP is 

performance-based and not dependent on a specific piece of equipment. RNP is not new 

hardware for the cockpit or new navigation aids. It is a statement of navigation position accuracy 

necessary for operation within a defined airspace. It establishes highly refined parameters for 

aircraft airspace containment and ensures aircraft containment 99.9 percent of the time. The 

accurate, repeatable path, integrity and continuity ensure procedures will be flown in the same 

manner by all aircraft. Controllers can then expect aircraft to be at a specific position with a high 

degree of confidence, thus maximizing safety and the efficient flow of aircraft through airspace. 

While maintaining its regulatory and enforcement role, FAA continues to partner with the 

aviation community in improving safety, which is reflected in three basic long-term strategies: 

(1) prevent accidents by addressing recurrent causes; (2) improve certification and surveillance; 

and (3) share safety data and information with aviation partners. These strategies are at the heart 

of most of FAA’s significant and long-term safety programs. 

FY 2007 Performance Forecast. DOT will not meet its FY 2007 Commercial Air Carrier fatal 

accident target. 

SAFETY STRATEGIC GOAL 105 
2006 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. These aircraft 

include single-seat home-built airplanes, 

rotorcraft, balloons, and highly sophisticated extended-range turbojets. General aviation 

activities include student training, crop dusting, fire fighting, law enforcement, news coverage, 

2003 2004 2005 2006

374 349 343 337

366 (r) 340 354 (r) * 297 * 

(r) Revised; 

Performance Measure 

Number of fatal general aviation accidents 

Target 

Actual 

* Preliminary estimate 

sightseeing, industrial work, on-demand air taxi service, 

corporate transportation, as well as personal use and 

recreational flying. In FY 2006, personal, agricultural, and 

amateur-built operations showed especially sharp 

improvements. 

© AP Photo/The Laramie Boomerang, Rob Densmore 

FAA worked with various members of the GA community 

during FY 2006, including aeromedical evacuation, charter 

services, and other members of the community to promote 

education and training on night landings, weather, and other 

areas of concern. 

FY 2007 Performance Forecast. DOT expects to meet the FY 2007 General Aviation safety 

performance target. 

In-Depth Accomplishments Promoting aviation Safety 

Creating safe flying 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. Therefore, the agency spends considerable time and resources to reduce operational 

errors and runway incursions. 

Runway Safety 

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 significant 

property damage. 

106 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
The number of serious runway incursions has been reduced by more than 50 percent from five 

years ago. In FY 2006, there were 231 (preliminary estimate) of the most serious runway 

incursions. This equated to an estimated rate of .458 per million operations, a significant 

improvement over the FY 2006 target rate of .551. Ongoing activities to reduce the risk of runway 

incursions include improvements to air traffic controller, pilot and vehicle driver awareness, as 

well as to airport infrastructure and technology enhancements. In FY 2006, the FAA completed 

crew resource management training designed to help the controller detect and correct controller 

and pilot mistakes before they result in operational errors or collisions. 

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 traffic controllers 

employ rules and procedures that define separation standards for this environment. An 

operational error (OE) 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. 

The performance limit for FY 2006 was set not to exceed a rate of 4.27 operational errors per 

million activities. The FY 2006 preliminary estimates indicate 4.09 operational errors per million 

activities, tracking slightly below the year-to-date projected performance limit. The FAA 

continues to implement performance management and communications initiatives focused on 

operational awareness. To ensure an accurate severity classification of an operational incident, 

FAA is refining the process used to describe the seriousness of an operational error. 

Alaska Accidents 

FAA has continued to work proactively to meet its goal to reduce accidents in Alaska for general 

aviation and all smaller aircraft. Because of the challenges weather and terrain present in Alaska 

and the broad use of general aviation as a means of transportation, FAA’s Flight Plan focuses 

specifically on reducing general aviation accidents in Alaska. The 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. The FY 2006 target is 115. 

There were 102 accidents in Alaska versus a not-to-exceed ceiling of 115. Based on preliminary 

data, Alaska experienced a total of seven fatal accidents this year. As a percentage of total 

accidents, Alaska continues to have one of the lowest proportions of fatal vs. non-fatal accidents, 

6.8 percent. From 2000 through 2005, the national percentage of fatal accidents to total accidents 

was 19 percent. Alaska is at nine percent for those five years, with 65 fatal accidents out of 699. 

SAFETY STRATEGIC GOAL 107 
The introduction of new technology has significantly improved the General Aviation operating 

environment. Pilots in Alaska can now conduct Global Positioning System approaches using 

sophisticated on-board equipment at runways that are normally not accessible in low visibility 

and bad weather conditions. 

Also, FAA’s continuing development of the Automatic Dependent Surveillance Broadcast 

(ADS-B) technology holds promise for this region. Unlike conventional radar, ADS-B works at 

low altitudes and on the ground so that it can be used to monitor traffic on the taxiways and 

runways of an airport. It is effective in remote areas or in mountainous terrain where there is no 

radar coverage, or where radar coverage is limited. 

RAIL SAFETY FY 2006 ENACTED FUNDS

$159.1 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. Substantial progress has been made 

in FY 2006 to implement the plan’s many components. 

For example, the National Inspection Plan has been adopted for all five FRA safety disciplines 

(track; signal and train control; motive power and equipment; operating practices; and hazardous 

materials). Although data are preliminary for the fiscal year, the plan is having an immediate 

impact as it makes better use of available inspection resources and accident data to identify safety 

“hot spots” before an unsafe condition arises. 

Other highlights completed during the plan’s first year include: the demonstration of vehiclemounted photo-imaging technology to identify hard-to-detect cracks in rail joint bars; the testing 

of wireless communications technology to monitor when track switches are left in the wrong 

position in non-signaled (or dark) territory; a pilot project to ensure emergency responders have 

accurate and timely information about train accidents involving hazardous materials; and 

assistance to States to reduce collisions and fatalities and highway-rail grade crossings. 

2006 Results. Preliminary results 

indicate that FRA met its FY 2006 target. 

In attempting to evaluate the success of 

the National Rail Safety Action Plan, a 

review of nine months of accident data is 

not particularly useful or meaningful. 

The plan is comprehensive and will 

require some time for its various 

components to take hold in the industry; 

2003 2004 2005 2006

N/A 17.49 17.14 16.80

19.4 (r) 18.95 (r) 17.62 (r) 16.14 * 

(r) Revised; 

Performance Measure 

Rail-related accidents and incidents per million train-miles 

Target 

Actual 

* Preliminary estimate 

108 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
however, some results in FY 2006 appear positive. Although preliminary, the 16.14 rate of railrelated accidents/incidents is considerably lower than its goal of 16.80, and the rates of many of its 

components are lower than their safety performance goals. 

For example, the rate of train accidents caused by human factors is 23 percent below its goal for 

the year, while those of accidents caused by track, equipment, and signal defects are below their 

goals by 3 percent, 21 percent, and 5 percent, respectively. These comprise four of the five key 

safety disciplines addressed in the plan, with the benefit to the public of fewer accidents and 

casualties. The plan targets the most frequent, highest-risk causes of accidents, thereby helping to 

protect the public and nurture a safe railroad environment. 

Although FRA did not meet its targeted accidents/incidents rate in FY 2005, it did reduce its rate 

by seven percent over FY 2004, and this improvement was accomplished while the overall 

number of train-miles nationally rose almost three percent. The rail industry also saw a 

4.3 percent decrease in accidents during that period, from 14,496 to 13,875. Unfortunately, 

disasters like Hurricane Katrina late in the fiscal year may have kept us from reaching our goal. 

FY 2007 Performance Forecast. The FY 2007 target will be met. 

In-Depth Accomplishments Promoting rail Safety 

Track-caused accidents comprised almost 35 percent of all train accidents over the last five years. 

Roughly an equal amount is attributable to human factors. The remainder is divided between 

equipment and signal defects. Some of the leading track causes of train accidents are very 

difficult to detect in normal railroad inspections. Broken joint bars, for example, are a leading 

cause, but the kinds of cracks in those bars that foreshadow a derailment-causing break are very 

hard to spot with the naked eye. Similarly, broken rails account for some of the most serious 

accidents, but the internal flaws that lead to many of those breaks can be detected only by 

specialized equipment. 

To reduce rail-related accidents and incidents, FRA is developing 

an automated, high-resolution video, joint bar inspection system 

that can be deployed on a hi-rail maintenance vehicle that will 

detect visual cracks in joint bars without having to stop the vehicle. 

In October 2005, a prototype system that inspects joint bars on 

both sides of each rail was successfully demonstrated. Testing 

showed that the high-resolution video system detected visual 

cracks that were missed by the traditional visual inspections. 

© AP Photo/U.S. Department of Transportation, 

Steven Purcell 

SAFETY STRATEGIC GOAL 109 
In 2006, the system was enhanced with new developments to improve the reliability of the joint 

bar detection system and adding capabilities to include global positioning satellite coordinates for 

each joint for future inspection and identification. Additionally, software is being developed and 

tested to automatically scan the images, detect the cracked joint bar and send a message with the 

image to the operator. 

TRANSIT SAFETY FY 2006 ENACTED FUNDS

$12.3 MILLION 

Public transportation provides a flexible, 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. The challenge is to further reduce the rate of fatalities and injuries even as the 

total number of people using transit increases. 

2006 Results. DOT met the target for FY 

2006. Strong growth in transit ridership 

and the continued expansion of transit 

service significantly increased the 

number of transit passenger miles 

traveled in FY 2006 over FY 2005. At the 

same time, using six months of data from 

FTA’s National Transit Database and four 

months of Commuter Rail (CR) data 

from the FRA Rail Accident Incident 

Reporting System (RAIRS), FY 2006 safety figures show a decline in the number of fatalities and 

injuries. The resulting rates of fatalities and injuries per 100 million passenger miles traveled were 

well below the performance targets. 

2003 2004 2005 2006

.492 .487 .482 .477

.461 .467 (r) .428 (r) .344 * 

(r) Revised; 

Performance Measure 

Transit fatalities per 100 million passenger-miles traveled 

Target 

Actual 

* Preliminary estimate 

To sustain and improve gains made in safety performance, FTA is working 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 significant 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 that will have a direct impact on reducing these statistics; to 

improve and maintain the condition of the transit infrastructure (vehicles, track and facilities), 

which has a impact on overall system safety and performance; and to promote system safety in 

110 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
the planning and design of a transit system from its inception. This approach also includes 

promoting emergency preparedness procedures which enhance the speed and effectiveness of 

responses to accidents and incidents that do occur. 

The 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. Also, 

there is a greater public perception and 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 2007 Performance Forecast. DOT will meet the FY 2007 target. 

In-Depth Accomplishments Promoting transit Safety 

In FY 2006, public transportation did not experience a single accident resulting in double digit 

fatalities such as the New York Staten Island Ferry incident in October 2003, or the Los Angeles 

Metrolink Commuter Rail collision, derailment and fire in January 2005. In FY 2006, FTA’s 

strategy for further reducing the low rate of transit fatalities and injuries included: 

• Continued investment in new, safer bus and rail vehicles, and improvements to 

track and transit facility conditions. Newer vehicles and well-maintained 

facilities are inherently safer than older, less dependable infrastructure. 

• Collaboration with Federal, state, and local agencies to promote comprehensive 

approaches to the management of emergency incidents, including response and 

recovery activities. FTA developed and disseminates guidance documents to 

enhance transit system preparedness for dealing with safety and security related 

incidents and the deployment of critical resources. 

• Technical assistance to help the transit industry understand and implement 

innovative safety and security strategies that reduce risks and mitigate 

consequences from acts of intentional harm against the transit infrastructure or 

its passengers and employees. 

• Continued support for safety and security training. Over 11,000 transit

employees were trained in FY 2006. Training courses included accident

prevention and investigation, emergency management, industrial safety,

alternative fuels, bus operator safety, and fatigue awareness.

SAFETY STRATEGIC GOAL 111 
• Continued auditing of alcohol and drug testing programs. Nine years of audits 

conducted by FTA have shown that the drug and alcohol programs of grantees, 

sub-recipients, and their contractors have increased compliance with testing 

rules. An effective drug and alcohol program assists in the reduction of 

accidents. It is estimated that the drug and alcohol program has led to the direct 

avoidance of 817 accidents, saved six lives and avoided 718 injuries during the 

period 1996-2002. Fatalities resulting from accidents in which employees have 

positive drug test results, dropped from three in 1995 (first year of mandatory 

testing) to one over the period of 1999 through 2004. 

PIPELINE SAFETY FY 2006 ENACTED FUNDS

$54.1 MILLION 

While pipelines are among the safest modes for transporting hazardous liquid and natural gas, 

the nature of their cargo is inherently dangerous. Therefore, the Pipeline and Hazardous 

Materials Safety Administration 

(PHMSA) has designed and 

implemented a strong risk-based 

systems approach to ensure the safety, 

security, and reliability of our Nation’s 

pipeline infrastructure. Accordingly, 

this risk-based systems approach also 

ensures the secure and reliable 

transportation of our Nation’s energy 

resources. To address risks, PHMSA 

develops and enforces standards, 

provides grants to assist states in 

managing pipeline safety programs, 

provides training and education, 

sponsors research and development, 

develops plans for emergency response, and responds to incidents to reduce the risk to the public 

and the environment. 

The pipeline safety record is good and improving. The long-term trend shows a general decline in 

the number of total pipeline incidents. But beginning in 2002, PHMSA saw three successive years 

of increasing incidents. About 25 percent of this increase can be attributed to recent increases in 

the price of natural gas (i.e. which escalate the value of product lost), while the reporting 

threshold has remained fixed at $50,000. The number of serious incidents has declined markedly 

112 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
over the past 20 years, and preliminary estimates for 2006 indicate a continuing decline. We 

believe this indicator provides a better overall measure of program performance than total 

reported incidents. 

2006 Results. Based on preliminary 

data, PHMSA projects 407 pipeline 

incidents in 2006, which misses the 

performance target by about 11 percent. 

However, this projection, based on six 

months of reporting, indicates that the 

number of incidents in 2006 probably 

will be substantially lower than the 

previous two years. Data for 2003 and 

2004 are revised slightly from earlier 

reports because operators have submitted new reports or amended old reports. 

2003 2004 2005 2006

326 310 295 365

370 (r) 440 (r) 490 (r) 407 * 

(r) Revised; 

Performance Measure 

Number of natural gas pipeline incidents and hazardous liquid 

pipeline accidents 

Target 

Actual 

* Preliminary estimate 

Over the past 20 years, PHMSA has cut the risk of serious incidents—those involving death or 

injury—by more than half. The agency’s goal is to continue this trend, reducing serious incidents 

by 10 percent every three years. The risk of serious incidents is down for all three major industry 

sectors: hazardous liquid, gas transmission, and gas distribution pipelines. Integrity management 

has been the core of the agency’s approach over the past several years. PHMSA is finishing 

implementation of integrity management practices in the hazardous liquid and natural gas 

transmission pipeline systems and extending integrity management practices to gas distribution 

systems. 

It is important to note that since 2004 about 14 percent of the total gas transmission and 

distribution incident reports submitted to PHMSA per year were reported on incidents that did 

not meet the reporting criteria in the regulations—death, injuries, or $50,000 property damages 

(e.g., since 2002, reporting increased about 25 percent due solely to rapid escalation of natural gas 

prices and the cost of gas lost in incidents—an important component of property damage). We 

are working to reduce or eliminate non-reportable incidents from the data. As previously noted, 

PHMSA will shift its reporting to emphasize serious incidents. PHMSA is also developing a 

regulatory proposal to adjust the property damage criteria for incidents from a cost basis to a 

volumetric basis. 

FY 2007 Performance Forecast. PHMSA does not anticipate meeting its FY 2007 target. 

SAFETY STRATEGIC GOAL 113 
In-Depth Accomplishments Promoting pipeline Safety 

In FY 2006, the Government Accountability Office (GAO) conducted a study on the effect of 

PHMSA’s integrity management program for gas pipelines on public safety. Early indications 

were that the condition of transmission pipelines is improving as operators complete assessments 

and related repairs of their pipelines. In its final report (GAO-06-946), GAO noted the “gas 

integrity management program is benefiting public safety by supplementing existing safety 

requirements with risk-based management principles that focus on safety risks in highly 

populated or frequented areas, referred to as high consequence areas.” GAO found that the “gas 

pipeline industry, state pipeline agency and safety advocate representatives generally agree that 

the program enhances public safety, citing operators’ improved knowledge of the risks to their 

pipeline systems that stems from systematic assessments as the primary benefit of the program.” 

As part of its continued implementation of the risk-based approach, PHMSA stepped up the 

oversight of the new natural gas transmission operator requirements, completing over 75 percent 

of inspections of the high consequence area mileage covered under the transmission natural gas 

integrity management rule. 

PHMSA issued a new final rule for gas gathering lines in 2006. Through this rule, rural and nonrural gas gathering lines are regulated using a risk-based approach. For the first time, high-risk 

rural lines are protected under DOT standards, while standards are reduced or eliminated for 

previously regulated non-rural lines that pose a low risk to public safety. 

HAZARDOUS MATERIALS SAFETY FY 2006 ENACTED FUNDS

$106.7 MILLION 

The Pipeline and Hazardous Materials Safety Administration (PHMSA) formulates, issues, and 

revises Hazardous Materials Regulations (HMR) under the Federal Hazardous Materials 

Transportation Law. The HMR cover hazardous materials definitions and classifications, hazard 

communications, shipper and carrier operations, training and security requirements, and 

packaging and container specifications. PHMSA uses risk management principles and security 

threat assessments to understand, communicate, and reduce dangers inherent in hazardous 

materials transportation. PHMSA partners with other modes within DOT and the Department 

of Homeland Security in developing new regulations and enforcing the provisions of HMR within 

the hazmat community. 

PHMSA focuses its enforcement and outreach resources on hazmat packaging manufacturers, 

retesters and reconditioners, and commercial shippers of hazardous materials, such as 

petrochemical companies, large retailers and hospitals. Hazmat carriers are regulated by their 

respective modes. 

114 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
460

2006 Results. PHMSA shares authority 

to enforce the HMR with other DOT 

modes—FAA, FMCSA and FRA—as well 

as the US Coast Guard. PHMSA expects 

to achieve its serious incidents target this 

year. PHMSA has implemented practices 

and software to better track incidents as 

it learns about them in the press or other 

sources and aggressively follows up with 

companies that do not submit a report in a timely manner. The agency believes it is now getting 

reports that it would not have gotten without the new, more aggressive tactics. In addition, 

during 2006, PHMSA invested heavily in a prototype information system that will allow modes to 

share company-specific compliance information, to better identify high-risk hazmat carriers and 

shippers and plan interventions to limit those risks. The agency intends to invest heavily in this 

system development during FY 2007 and 2008. 

2003 2004 2005 2006

515 509 503

472 (r) 490 (r) 482 (r) * 432 * 

(r) Revised; 

Performance Measure 

Number of serious hazardous materials transportation incidents 

Target 

Actual 

* Preliminary estimate 

FY 2007 Performance Forecast. PHMSA expects to achieve the re-baselined serious incident 

target in FY 2007. 

In-Depth Accomplishments Promoting hazmat Safety 

PHMSA is leading the development of the Hazardous Materials Intermodal Database, a new 

information system that consolidates all company-specific records across all DOT hazmat 

programs. The system will be used by hazmat inspectors in all modes to produce reports on 

facilities’ compliance records, including their involvement in incidents, penalties imposed by 

DOT inspectors, and special permits held. This system will focus DOT enforcement resources on 

the highest-risk hazmat shippers and carriers, thus enhancing safety efficiently. PHMSA also 

continues to work in tandem with the Department of Homeland Security to implement rules that 

protect the Nation from the intentional release of hazardous materials. 

During FY 2006, PHMSA revised transportation requirements for infectious substances, 

including regulated medical waste, to adopt new classification criteria, new exceptions, and 

packaging and hazard communication requirements consistent with revised international 

standards and to clarify existing requirements to promote compliance. These revisions will 

ensure an acceptable level of safety for the transportation of infectious substances and facilitate 

domestic and international transportation. PHMSA is also working with FRA to enhance rail 

transportation security for hazardous materials shipments. 

SAFETY STRATEGIC GOAL 115 

mobility STRATEGIC goal 

advance accessible, efficient, intermodal transportation for the movement 

of people and goods 

FY 2006 Enacted Funds: $37,618.6 Million 

MOBILITY STRATEGIC GOAL 

FY 2006 Enacted Funding by Operating Administration (OA) 

(Dollars in Millions) 

FAA, $3,778.8

OST, $135.9

FHWA, $24,278.9 

Other OAs 

MARAD, $20.9 FTA, $8,101.1 FMCSA, $2.1 

FRA, $1,300.9 

Total FY 2006 Funding: $37,618.6 

STRATEGIC OUTCOMES 

• Improved infrastructure in all modes 

• Reduced congestion in all modes 

• Increased reliability throughout the system 

• Increased access for all Americans 

1 Starting in FY 2005, measure was redefined to measure “good” 

rated pavement versus “acceptable rated pavement. Results for 

FY 2000 through FY 2004 have been adjusted accordingly. 

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. A feasibility study is being conducted on the 

proposed replacement measures. 

PERFORMANCE MEASURES 

• Percent of travel on the National Highway System (NHS) 

meeting pavement performance standards for good rated 

ride. 1 

• Percent of total annual urban-area travel occurring in 

congested conditions. 

• Average percent change in transit boardings per transit 

market (150 largest transit agencies), adjusted for 

changes in employment levels. 

• Percent bus fleets 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. 2 

• Percent of all flights arriving within 15 minutes of 

schedule at the 35 Operational Evolution Plan airports 

due to National Airspace System (NAS)-related delays. 

MOBILITY STRATEGIC GOAL 117 
IMPROVED INFRASTRUCTURE FY 2006 ENACTED FUNDS

$12,102.6 MILLION 

Improving the condition and performance of pavement and bridges is critical to the structural 

integrity and cost effectiveness of the transportation system. The condition of the national 

highway system (NHS) also impacts traffic congestion, the wear-and-tear on vehicles, the comfort 

of travelers, and fuel consumption. 

2006 Results. Efforts continue to 

improve the pavement condition on the 

Nation’s highways. The goal is to reach a 

target of 58.5 percent of vehicle-miles 

traveled on NHS pavements with good 

ride quality (International Roughness 

Index (IRI) of 95 inches/mile or less) by 

2008. In 2006, 54.2 percent of travel on 

the NHS occurred on facilities with a 

reported IRI of 95 inches per mile or less. 

2003 2004 2005 2006

N/A 53.0 54.0 55.5

50.0 (r) 52.0 (r) 51.8 (r) 54.2 * 

(r) Revised; 

Performance Measure 

Percent of travel on the National Highway System (NHS) meeting 

pavement performance standards for “good” rated ride 

Target 

Actual 

* Preliminary estimate 

FY 2007 Performance Forecast. Based on recent trends, it is unlikely that the target will be met 

in FY 2007. The criteria for the pavement condition measure were revised in FY 2005 to 

encourage States to focus on increasing the good quality pavements, rather than simply 

minimizing the poor pavements. However, more improvement is needed in key states that have 

the most influence on the nationwide results. 

REDUCED CONGESTION FY 2006 ENACTED FUNDS

$13,626.8 MILLION

Traffic congestion on our Nation’s highways now affects more trips, more hours of the day, and 

more of the transportation system than ever before. Congestion varies significantly day to day 

because demand and capacity are constantly changing at any 

given location. However, 67 percent of the peak-period travel 

nationwide is congested, compared to 32 percent in 1982. 

Travelers in 85 urban areas spent 3.76 billion hours stuck in 

traffic in 2002, an increase from 0.72 billion in 1982. Reducing 

congestion and delay will improve urban travelers’ mobility and 

© AP Photo/Jeff Roberson productivity and curb economic inefficiencies induced by 

congestion. 

118 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
2006 Results. DOT and FHWA have 

adopted the percent of daily-congested 

travel nationwide as an indicator of 

overall system performance. The 

measure is an estimate of the percent of 

daily traffic in approximately 400 

urbanized areas moving at less than freeflow speeds. The estimate of percent of 

congested travel was 32.1 percent in 

2006, a figure below the target of 

33.7 percent. The actual result in 2005 was 0.2 percent higher than in 2004. The results for the 

2002-2005 period suggest that the overall rate of growth in traffic congestion nationwide has 

slowed somewhat. In addition, the rate of growth in traffic congestion nationwide appears to be 

slowing based on the analyses of real-time traffic data that the FHWA has collected during 2004-

2006 from travel information Web sites and transportation management centers in selected cities. 

2003 2004 2005 2006

31.6 32.3 33.0 33.7

31.0 31.6 31.8 (r) 32.1 # 

(r) Revised; 

Performance Measure 

Percent of total annual urban-area travel occurring in congested 

conditions 

Target 

Actual 

# Projection 

FY 2007 Performance Forecast. Congestion levels nationwide should remain below the target of 

32.5 percent in FY 2007, so the current target will likely be met. The results for the period 

between 2002 and 2005 indicate that the overall rate of growth in traffic congestion nationwide is 

slowing, and is less than projected increases of 0.7 percent annually. 

In-Depth Accomplishments Promoting mobility 

FHWA continued to promote the use of the Mechanistic Empirical Pavement Design Guide, a 

pavement analysis and modeling system released by the National Cooperative Highway Research 

Program (NCHRP) and submitted to the American Association of State Highway and 

Transportation Officials (AASHTO). Potential users of the design guide increased their 

familiarity with the system by participating in FHWA sponsored workshops, equipment demos, 

and site visits. New test procedures and equipment were developed that will be used in writing 

future performance related specifications, by conducting State visits with the FHWA mobile 

asphalt and concrete laboratory. Also, FHWA completed a study of ways to use pavement 

management system information to calibrate the design guide procedures. 

FHWA continued efforts to optimize the performance of the highway system by providing 

performance data, analysis, and product information that engineers and managers can use to 

design, build, maintain and manage more cost effectively. With the Foundation for Pavement 

Preservation and other association forums on pavement preservation, the Agency initiated a 

national effort to examine State DOT pavement preservation practices and processes in order to 

identify areas of potential improvement in this area. Seventeen on-site reviews of state pavement 

preservation programs were conducted in FY 2005-2006. 

MOBILITY STRATEGIC GOAL 119 
FHWA made significant progress in implementing high 

performance materials for wide- spread applications to ensure 

more durable bridges. Forty-three States are using highperformance steel and all States are using high-performance 

concrete in their bridges. FHWA assisted the States in 

implementing the Load Resistance and Factor Design (LRFD) 

specification, which provides a more reliable and uniform level 

of safety for bridges. Seventeen States are utilizing the LRFD 

specifications for all new designs. 

© AP Photo 

A series of pavement smoothness workshops were delivered in 

five States that can most affect the pavement condition target. A best practices document was 

prepared based on site reviews of pavement production quality assurance systems in four States. 

Research and development on advancing pavement materials testing, performance prediction, 

analysis, and recycling continued through cooperative agreements with the American Concrete 

Institute, the Asphalt Institute, Iowa Sate University, Auburn University, and a consortium of 

universities through the Western Research Institute. 

FHWA continued to deploy custom workshops and training to States and other partners 

implementing asset management, and provided focused resources and technical assistance to 

practitioners utilizing economic analysis and evaluation tools. With AASHTO and the 

Transportation Research Board (TRB), the FHWA supported the Transportation Asset 

Management Web site to provide best practices information to transportation owners. FHWA 

responded to numerous inquiries from the Web site as well as over 50 requests for technical 

assistance to practitioners. 

FHWA continued to promote accelerated construction through a series of workshops and reports, 

including a How To Guide for State Highway Agencies to assist states in developing their own 

programs. As of October 2005, Accelerated Construction Technology Transfer (ACTT) is a key 

step in the project development process and defines Federal-aid funding eligibility. A progress 

report, ACTT III – Transition to Tomorrow, was released in May. In addition, FHWA has 

accelerated construction of Bridges by developing resources such as the Decision Making 

Framework for Prefabricated Bridges, Manual for Bridge Moves using Self-Propelled Mobile 

Transporters, cost studies, connection details, and specifications. 

Federal Lands Highway (FLH) partnered with the National Park Service (NPS) to transform the 

way the NPS manages its constructed assets. For the first time, NPS has comprehensive 

information about their inventory of roadway assets. Also, it is completing the first round of 

comprehensive roadway condition assessments. Understanding the actual and total costs for 

sustaining its assets in an acceptable condition is critical, as it makes future strategic decisions 

concerning the allocation of financial resources. FLH and the NPS conducted a pilot study and 

beta-test of the application of an automated Pavement Management System to assist in the 

120 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
development of a prototype Transportation Improvement Program for the Park Roads and 

Parkways program of the NPS Northeast Region. This procedure incorporates Asset 

Management practices including both Pavement Management Systems and Bridge Management 

Systems into a transportation planning process to influence decision making from both an 

economical and technical point of view. The pilot study also utilized the Right Fix-Right Time 

approach, which uses the Roadway Inventory Program data, specific decision trees for various 

environmental zones, deterioration curves for the Maintenance and Rehabilitation activities in 

the environmental zones, and an optimization analysis to make recommendations for the 

pavement activities. The recommendations were considered during the development of a multiyear program of priority projects that balance pavement preservation with other maintenance and 

rehabilitation activities, as well as bridge and safety needs. In addition to the work that only 

involves the NPS, FLH completed stewardship and oversight agreements with its three major 

partners, the U.S. Forest Service, the NPS, and the U.S. Fish & Wildlife Service. Working with the 

Fish & Wildlife Service, FLH also instituted an assessment and review function to ensure 

compliance with laws, agreements, and regulations. Finally, FLH began implementation of the 

Indian Reservation Roads program’s tribal agreements between FHWA and individual tribal 

governments. 

Encouraging public private partnerships is a key strategy in the Transportation Secretary’s 

National Strategy to Reduce Congestion, which was announced in June. The FHWA compiled a 

manual of all the innovative ways to use public-private partnerships on highway projects under 

current law, including SAFETEA-LU, in order to facilitate private industry entering into 

partnerships with public agencies to build roads. The Agency posted model public-private 

partnership contract and legislative language on its Web site. FHWA continued to gather 

information about enabling legislation and contract documents used at the state-level to share 

with States that are considering enabling legislation or entering into public-private partnerships 

under existing authority. Numerous presentations about innovative financing and public private 

partnerships were made at conferences and meetings. 

FHWA initiated efforts to develop and deploy new SAFETEA-LU programs to fund designated 

projects that will add capacity to the National Highway System. The Agency issued program 

guidance for the Projects of National and Regional Significance Program, which involves 25 

projects and $1.779 billion in funding over five years, and the National Corridor Infrastructure 

Improvement Program, which involves 33 projects and $1.948 billion in funding over five years. 

Initial funding was provided to two projects. FHWA also began an effort to develop a list of 

significant traffic bottlenecks in each state in order to identify the areas where the Agency can 

focus efforts to reduce their effects or eliminate them altogether. 

FHWA sponsored an assessment on traffic signal training to identify knowledge, skills and 

abilities necessary for traffic signal technicians and engineers, as well as categorize and assess 

existing traffic signal timing courses. We completed the Traffic Signal Timing on a Shoestring 

MOBILITY STRATEGIC GOAL 121 
guidance and initiated work on a comprehensive traffic signal operations manual. Adaptive 

Control Software (ACS)-Lite was introduced to help support changes in traffic signal timing in 

response to changes in facility use. 

To ensure that Intelligent Transportation System (ITS) technologies can work together smoothly 

and effectively, FHWA continued to ensure the technical and institutional framework needed for 

deployment of the Nation’s ITS infrastructure. FHWA supported the completion of 270 Regional 

ITS Architectures. Another eight regional architectures are currently under development. 

FHWA provided a robust program of training and technical assistance to partner agencies in 

developing Regional ITS Architecture and in understanding how to properly use and maintain 

them once developed. 

FHWA continued to support the deployment of 511, a national travel information telephone 

service that provides drivers with easier access to local travel conditions information. Through 

the AASHTO-led 511 coalition, FHWA developed guidelines and provided technical assistance 

and information through various means including Web meetings and a national conference. The 

511 telephone service is now accessible to about 38 percent of the Nation’s population. In 

addition, we assisted State and local transportation agencies with providing high-quality traveler 

information through other means such as dynamic message signs and Web sites. 

FHWA intensified its efforts to manage facility capacity through the implementation of pricing 

strategies. In response to new options provided in SAFETEA-LU, a Federal Register Notice was 

issued to assist public authorities in identifying the most appropriate program to meet their 

requirements. A Web-based information clearinghouse was created to describe all of the eligible 

programs, as well as to solicit and collect expressions of interest from states and other candidate 

authorities. Finally, a Tolling and Pricing Primer that provides a comprehensive perspective of 

the Agency’s tolling and pricing initiatives, including Public-Private Partnerships and Innovative 

Financing programs, was developed for States and other public entities. 

Numerous States conducted a self-assessment, with support from FHWA, in order to examine 

their current state-of-the-practice in work zone management and implementation with other 

states. In addition, we produced and promoted a suite of implementation guidance documents, 

regional technical assistance workshops, web-based questions and answers to assist States in 

meeting the October 2007 implementation deadline for the 2004 Work Zone rule. The rule 

requires State work zone mobility and safety policies, consideration of work zone impacts, and 

identification of work zone impact mitigation strategies. In partnership with the Highways for 

Life Program, the Agency launched a major initiative to provide focused technical assistance to 

support State efforts in making work zones work better. 

FHWA continued its efforts to assist States and metropolitan areas in improving their Traffic 

Incident Management (TIM) programs. Select metropolitan areas assessed TIM programs for 

program and institutional issues, on-scene operational issues, and communications and 

122 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
technology. In addition, significant institutional and technical advancements were made with the 

establishment of the National TIM Coalition, supported by FHWA and comprised of 

representatives from a number of transportation, public safety and private sector organizations. 

In addition to establishing a National TIM Unified Goal, the Coalition continued its outreach and 

educational efforts. Also, FHWA encouraged the establishment of new or enhancement of 

existing service patrols as a way to better manage traffic incidents. 

Weather events can cause traffic congestion and contribute to accidents. Efforts continued with 

the National Oceanic Atmospheric Administration to jointly develop several improved weather 

products and services, including an observation system that assimilates road weather conditions 

and feeds them into better road weather information products, and training materials that 

highlight the ways in which state and local Departments of Transportation can make the most use 

of National Weather Service advisories, watches and warnings. 

TRANSIT RIDERSHIP FY 2006 ENACTED FUNDS

$7,711.0 MILLION 

Transit is one of the safest ways of traveling, relieves road congestion, and reduces air pollution. 

The Federal investments in transit, combined with State and private sector funds, make public 

transportation possible for millions of Americans every day. 

© AP Photo/Morry Gash 

Traffic congestion now costs motorists in our Nation’s top 

urban areas about $68 billion a year in wasted time and fuel. 

Without transit, traffic congestion would cost an additional 

$19 billion. 

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 offers the critical link that makes 

employment possible and the American workforce stronger. 

Accessible public transportation is also important to 24 million Americans with physical 

disabilities who can use public transportation, and the increasing elderly population who can no 

longer drive. 

MOBILITY STRATEGIC GOAL 123 
2006 Results. DOT met the 

performance target. Collectively, the top 

150 operators represent about 96 percent 

of transit ridership nationwide. The 

analysis provides the opportunity to 

report data that is consistent across 

transit systems and time periods. FTA’s 

methodology captures the average 

change per market to reflect FTA’s goal 

of increasing ridership in every transit 

market. In addition, based on a number 

2003 2004 2005 2006

2.0 2.0 1.0 1.0

0.7 0.7 1.9 (r) 2.1 * 

Performance Measure 

Average percent change in transit boardings per transit market 

(150 largest transit agencies), adjusted for changes in 

employment levels 

Target 

Actual 

(r) Revised; * Preliminary estimate 

of studies that document the effect of 

employment changes on transit ridership, FTA accounts for changes in employment by market 

utilizing Department of Labor monthly employment reports. FTA issues a quarterly report to 

agency staff regarding ridership boardings (unlinked trips) nationally. 

A combination of factors contributed to the increase in ridership in 2006 including programs 

such as the Commuter Choice/Commuter Check, the guaranteed ride home program, 

partnerships between transit agencies and employers, and universities to provide transit passes, 

simplified fare structures, and greater marketing of transit. The purchase of new vehicles by many 

transit properties increased the amenities and rider comfort which also attracts riders. In 

addition to these system initiated efforts to increase transit ridership, economic factors such as 

the increase in the price of gasoline and higher levels of employment contributed to the growth in 

ridership during 2006. 

FY 2007 Performance Forecast. DOT expects to meet the transit ridership target for FY 2007. 

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, efficient and cost-effective as possible, thus attracting new riders, and 

maintaining existing 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 FY 2006, the United We Ride (UWR) human service coordination initiative moved to improve 

transportation services for transportation disadvantaged populations (older adults, persons with 

disabilities and individuals with low incomes) by improving the coordination of various Federal 

program resources. As a result of UWR, 32 States have developed state coordination action plans 

124 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
and state transportation coordination councils to promote coordinated human transportation 

strategies within their states. FTA developed guidance to implement the coordinated planning 

requirements of SAFETEA-LU to implement coordinated public transit/human service. 

• In FY 2006, FTA established two additional ridership teams to work with transit 

systems in California and Michigan that have had declines in ridership during 

the past two years. During FY 2007, these two transit systems will implement 

the actions recommended by FTA to increase ridership. 

• FTA is working with the Transit Cooperative Research Program on a study 

entitled, “Determining the Elements Needed to Create High Ridership Transit 

Systems,” which is expected to be completed by December 31, 2006. 

• The FTA Ridership Web site, launched in FY 2005, contains best practices on 

approaches used by transit agencies to increase ridership, reports on four 

Ridership Team Reviews completed by FTA, National Transit Institute training 

opportunities, and a link to the American Public Transit Association (APTA) 

Web site for additional information. 

• FTA completed a national study of guaranteed ride home (GRH) programs to 

demonstrate their cost effectiveness and posted it on FTA’s Ridership Web page. 

It is expected to be published in 2 national journals by the end of CY 2006. 

• FTA hosted a ridership forum at the APTA Annual Conference in San Jose in 

October 2006 which examined what transit agencies can do to maintain and 

increase ridership. 

INCREASED ACCESSIBILITY FY 2006 ENACTED FUNDS

$399.3 MILLION 

Accessible public transportation is vital to maintaining the independence and mobility for people 

with disabilities and linking them to employment, health care and the community. Access to 

transportation is essential for people who are making the transition from welfare to work. 

MOBILITY STRATEGIC GOAL 125 
 

2006 Results. DOT met the bus target 

for compliance with the Americans with 

Disabilities Act (ADA). The bus fleet 

continues to become more accessible as 

older vehicles are replaced with those 

that are lift-equipped or have low floors 

to accommodate wheel chairs. The 

overall rate of increase in bus 

accessibility has slowed somewhat since many of the buses replaced were already lift-equipped. 

While all new buses are lift equipped or have low floors, it will be difficult to reach 100 percent 

compliance because many transit operators retain buses that are not lift-equipped for more than 

twenty years. 

2003 2004 2005 2006

89 92 95 97

93 95 97 97 * 

Performance Measure 

Percent of bus fleets compliant with the ADA 

Target 

Actual 

* Preliminary estimate 

FY 2007 Performance Forecast. DOT expects to meet the bus fleet accessibility target for FY 

2007. 

2006 Results. DOT met the key rail 

station target for compliance with the 

Americans with Disabilities Act (ADA). 

There are 687 key rail stations 

nationwide designated as such by the 

commuter authority or light/rapid rail 

operator, in cooperation with the local 

disability community. 549 of these key 

rail stations make up our goal. The remaining 138 stations are under FTA approved time 

extensions for meeting ADA compliance requirements because they require extraordinarily 

expensive structural modifications to bring them into compliance. Transit operators have made 

significant progress in meeting the goal; the remaining stations tend to be those that require a 

significant amount of work and are very expensive. Many of these operators are discovering that 

the scope of work needed to comply with the ADA exceeds their original projections. As a result, 

more time will be required to complete the necessary modifications. The flat level of growth in 

the percentage of key stations made accessible between 2003 and 2004 reflect these realities and 

led FTA to lower its previous projection for achieving full key station accessibility beyond 

FY 2004. 

2003 2004 2005 2006

79 89 84 91

82 82 91 92 * 

Performance Measure 

Percent of key rail stations compliant with the ADA 

Target 

Actual 

* Preliminary estimate 

FY 2007 Performance Forecast. DOT expects to meet the accessibility target for FY 2007. 

126 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
In-Depth Accomplishments to increase transit accessibility 

For FY 2006, preliminary estimates indicate that 92 percent of key rail stations are ADA 

compliant, which is higher than anticipated. A key factor in exceeding the 91 percent target is 

attributed to aggressive monitoring, follow-up, and continuation of the ADA key rail station 

compliance assessment process. Since 1995, FTA has conducted more than 700 assessments or 

follow-up assessments to track progress toward ADA compliance. Quarterly rail station status 

reports and key rail station assessments have helped to significantly increase the number of key 

rail stations that have come into compliance. FTA is providing the necessary technical assistance 

to transit operators as both parties work together to achieve the goals. FTA will continue efforts 

to encourage and support transit agencies to meet the accessibility goal for key rail stations. 

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. Transit agencies have used JARC funds for a wide variety of 

services, ranging from expansion of fixed 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. 

2006 Results. DOT met the JARC 

target for the number of employment 

sites that are made accessible by Job 

Access and Reverse Commute (JARC) 

transportation services. The 

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. This 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 and found 

that the measure could be improved. FTA is in the process of defining a new measure and 

undertaking a feasibility study. Upon the conclusion of the feasibility study, FTA hopes to have 

baseline information available by FY 2007. 

)

2003 2004 2005 2006

23.5 50.0 50.0 50.0

73.7 82.8 95.4 (r) * 71.5 * 

(r) Revised; 

Performance Measure 

Number of employment sites (000s) that are made accessible by 

Job Access and Reverse Commute (JARC transportation services 

Target 

Actual 

* Preliminary estimate 

MOBILITY STRATEGIC GOAL 127 
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. 

FY 2007 Performance Forecast. It is anticipated that DOT will meet the FY 2007 target, once it 

is established. 

INCREASED RELIABILITY FY 2006 ENACTED FUNDS 

$3,778.8 MILLION

Major factors affecting National Air Space (NAS) on time arrivals include seasonal weather 

patterns, airport conditions, airport construction projects, and increases in traffic volume, which 

have surpassed pre-September 11, 2001 levels. 

Our strategic programs and initiatives, such as airspace redesign, revised air traffic control 

procedures, and the introduction of new technology, are expected to further improve on-time 

arrivals. To address these issues, FAA employees at the Air Traffic Control System Command 

Center (ATCSCC) have daily meetings with airline industry representatives to coordinate traffic 

around factors that could potentially cause delays. Careful collaborative planning with our 

industry partners on the previous day ensures that aircraft land on time. 

2006 Results. We exceeded our FY 2006 

target of 87.40 percent, achieving an ontime arrival rate of 88.36 percent. NAS 

On-Time Arrival is the percentage of all 

flights arriving at the 35 Operational 

Evolution Plan (OEP) airports equal to 

or less than 15 minutes late. It excludes 

minutes of delay attributed by air 

carriers to weather, carrier action, 

security delay, and prorated minutes for late arriving flights at the departure airport. 

2003 2004 2005 2006

78.2 82.1 87.4 87.40

82.3 79.07 88.4 (r) 88.36

(r) Revised 

Performance Measure 

Percent of all flights arriving within 15 minutes of schedule at the 

35 Operational Evolution Plan airports due to NAS-related delays 

Target 

Actual 

Further improvements to on-time arrivals are expected as we accomplish programs and initiatives 

such as airspace redesign, revised air traffic control procedures, and the introduction of new 

technology, as outlined in our on-going 10-year OEP. 

FY 2007 Performance Forecast. FAA expects to meet the target for FY 2007. 

128 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
In-Depth Accomplishments reducing aviation delays 

Growth in air travel has generally been accomplished by increasing the number of flights. 

Measuring the growth of airport capacity indicates the limit at which increased service can be 

accommodated without affecting delay. The ability of the system to respond to demand is a 

function of airport runway capacity, airspace capacity, the status of air traffic control equipment, 

and weather conditions. Major factors affecting performance include weather, volume and 

runway construction. Delays occur when the demand for air transport services exceeds the 

capacity of the system. 

In the last nine years, thirteen new runways have opened at the 35 OEP airports, providing the 

airports with the potential to allow almost 1.7 million more operations. In FY 2006, we opened 

four new runways, one each in Minneapolis-St. Paul, Cincinnati, St. Louis, and most recently in 

Atlanta, the world’s busiest airport. The recent commissioning of a new runway at AtlantaHartsfield Airport, allows for 33 percent more operations a year. 

© AP Photo/M. Spencer Green, File 

For years, FAA has targeted efforts at eight major 

metropolitan areas (New York, Philadelphia, South Central 

Florida, Chicago, Baltimore/Washington, Atlanta, Los 

Angeles Basin, and San Francisco Bay area) that most affect 

total system delays. Every year after thorough data 

analysis, FAA updates this list of metropolitan areas. With 

FY 2006 improvements, we have achieved our capacity 

goals for Atlanta. Therefore, our FY 2007 efforts will focus 

on the remaining 7 major metropolitan areas that affect 

system delay. By redefining the metro areas our FY 2007 

target has been refined to 63,650 average daily arrival and 

departure rates. 

Two tools that accommodate air growth and improve efficiency, Area Navigation (RNAV) 

standard instrument departures (SID), and Standard Terminal Arrivals (STARS), are producing 

the most immediate impact towards near-term capacity gains and operator cost savings. RNAV 

uses a computerized flight management system (FMS) to combine navigation sensors and a 

database of procedures for a very accurate navigation capability. RNAV procedures simplify the 

issuance of clearances by allowing air traffic control to specify procedures by name without 

having to describe the route in detail. RNAV SID are published air traffic control departure 

procedures that provide obstacle clearance and a transition from the terminal area to the enroute 

structure. RNAV STAR provide standardized routing from the enroute structure into the 

terminal area. Since FY 2005, FAA has published 128 RNAV – SID and STAR procedures, 

resulting in over $40 million in reduced delay and capacity benefits. 

MOBILITY STRATEGIC GOAL 129 
In FY 2006, FAA RNAV implementations occurred at Washington Reagan National Airport 

(3 STAR), Miami (4 STAR, 7 SID), Fort Lauderdale (3 STAR, 6 SID), Atlanta (4 STAR, 16 SID), 

Seattle-Tacoma Airport (2 SID), Palm Beach (3 STAR), Phoenix (2 STAR) and Boca Raton 

(2 STAR). 

Additionally in FY 2006, FAA: 

• Implemented daily use of a software tool, Traffic Management Advisor, at several 

locations. With the use of this tool in Oakland Oceanic Airspace, FAA reduced 

the separation standard from 100 nautical miles lateral to 30 nautical miles 

lateral. This first application allowed one of the aircraft to ascend 6 minutes 

sooner than with the previous standard. This reduction in spacing will result in 

fuel savings for the airlines and greater capacity for the National Airspace 

System. 

• Announced approval for the initial deployment of the Automatic Dependent 

Surveillance Broadcast (ADS-B), throughout the United States. Switching from 

our reliance on ground-based radar equipment to satellite-based operations 

enhances safety while providing increased capacity and efficiency. ADS-B will 

keep aircraft safely separated, provide better use of available airspace, and enable 

more direct aircraft routing, thus saving fuel. 

House Hold Goods (HHG) Enforcement 

FMCSA’s regulation of the HHG moving industry and enforcement of the commercial 

requirements included in the Federal Motor Carrier Commercial Regulations (FMCCRs) 

contribute to efficient and reliable transportation operations and DOT’s mobility strategic goal. 

An estimated 40 million Americans relocate each year, approximately 1.6 million of which are 

interstate moves. Fortunately, the majority of household moves are completed without incident. 

Following FMCSA’s launch of a consumer education program to raise FMCSA’s public profile 

regarding the Agency’s role in collecting complaints about shippers, HHG complaints are 

continuing to rise. FMCSA receives nearly 3,000 legitimate HHG complaints annually. Calls and 

internet complaints from consumers are rising every year. There are over 4,000 registered motor 

carriers actively transporting HHG across State lines and, as investigations have uncovered, many 

more that operate without proper authority. In FY 2006, FMCSA initiated four strike force 

operations targeting HHG carriers and conducted its first-ever roadside inspections of HHG 

CMVs that resulted in enforcement cases. FMCSA completed 562 commercial investigations 

(124 percent of goal) and continues to focus on, and increase enforcement actions against, 

unscrupulous HHG movers. 

130 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
global connectivity STRATEGIC Goal 

facilitate a more efficient domestic and global transportation system that 

enables economic growth and development 

FY 2006 Enacted Funds: $1,216.8 Million 

GLOBAL CONNECTIVITY STRATEGIC GOAL

FY 2006 Enacted Funding by Operating Administration (OA)

(Dollars in Millions)

OST, $22.6 

Other OAs 

FTA, $0.7 

FHWA, $1,136.4 

SLSDC, $15.3 

MARAD, $9.3 

FAA, $32.6 

Total FY 2006 Funding: $1,216.8 

STRATEGIC OUTCOMES PERFORMANCE MEASURES 

• Reduced barriers to trade in transportation goods and • Percent share of the total dollar value of DOT direct 

services contracts that are awarded to women-owned businesses. 

• More efficient movement of cargo throughout the • Percent share of the total dollar value of DOT direct 

supply chain contracts that are awarded to small disadvantaged 

• Enhanced international competitiveness of the U.S. businesses. 

transport providers and manufacturers • Percent of days in shipping season that the U.S. portion 

• Harmonized and standardized regulatory and of the St. Lawrence Seaway is available. 

facilitation requirements • Number of new or expanded bilateral aviation safety 

• The most competitive, cost effective and efficient agreements implemented. 

environment for passenger travel • Number of potential air transportation consumers (in 

• Expanded opportunities for all businesses, especially billions) in international markets traveling between the 

small, women-owned and disadvantaged businesses U. S. and countries with Open Skies and open 

transborder aviation agreements (measure revised in FY 

2005). 

• Number of international negotiations conducted 

annually to remove market distorting barriers to trade in 

air transportation (new measure in FY 2005). 

GLOBAL CONNECTIVITY STRATEGIC GOAL 131 
EXPANDED OPPORTUNITIES FY 2006 ENACTED FUNDS

$5.1 MILLION 

Expanded opportunities for all businesses, especially small, women-owned and disadvantaged 

businesses, serves the economic interest 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 significant hurdles participating in procurement opportunities with the 

Federal Government. To help these entrepreneurs have a fair opportunity to compete, Congress 

and the Administration have established procurement goals for the Federal Government. In turn, 

each DOT Operating Administration develops targets consistent with legislative mandates and 

anticipated contracting and subcontracting opportunities. 

2006 Results. Preliminary data indicates 

that DOT met the target for womenowned businesses (WOB) but did not 

meet the target for small disadvantaged 

businesses (SDB). Data are not final until 

SBA submits its annual end of fiscal year 

report, normally in December. 

Based on preliminary FY 2006 data, the 

Department of Transportation issued

2003 2004 2005 2006

5.1 5.1 5.1 5.1

4.2 3.8 (r) 6.6 (r) 6.7 * 

(r) Revised; 

2003 2004 2005 2006

14.5 14.5 14.5 14.5

15.8 15.6 (r) 12.7 (r) 11.8 * 

(r) Revised; 

Performance Measure 

Percent share of the total dollar value of DOT direct contracts 

that are awarded to women-owned businesses 

Target 

Actual 

* Preliminary estimate 

Performance Measure 

Percent share of the total dollar value of DOT direct contracts 

that are awarded to small disadvantaged businesses 

Target 

Actual 

* Preliminary estimate 

$1.3 billion in contract awards. Womenowned businesses received 6.7 percent of 

all contracting dollars and more than 

$152 million, or 11.8 percent, of the total 

contracting dollars went to small 

disadvantaged businesses. 

In FY 2006, for the second time since its 

inception, DOT not only met the WOB 

legislative goal, but exceeded it by more 

than 20 percent. This is a significant achievement considering that the government-wide 

participation level is less than 3 percent. While below the target, the SDB participation in DOT 

contracting is still twice as much as the government-wide level of participation. To ensure that 

the SDB goal is met, DOT will continue to emphasize more hands-on involvement with its 

procuring agencies, and an increase in outreach and technical assistance with the SDB 

community. 

FY 2007 Performance Forecast. DOT expects to meet the targets for both measures in FY 2007. 

132 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
MORE EFFICIENT MOVEMENT OF FY 2006 ENACTED FUNDS

CARGO $1,151.7 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. 

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 two billion metric tons of 

cargo estimated at $300 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 traffic travels to and 

from overseas ports, especially in Europe, the Middle East, and Africa. 

2006 Results. For FY 2006, DOT’s Saint 

Lawrence Seaway Development 

Corporation (SLSDC) met the 

performance target with a system 

availability rate of 99.0 percent. During 

the year, commercial navigation was 

suspended for 68 hours, 12 minutes during 

the 6,685-hour year, due mostly to vesselrelated incidents, weather conditions, and 

other non-navigation related delays. 

2003 2004 2005 2006

99.0 99.0 99.0 99.0

98.9 99.1 99.7 99.0

Performance Measure 

Percent of days in the shipping season that the U.S. portion of 

the St. Lawrence Seaway is available 

Target 

Actual 

Vessel incidents in FY 2006 accounted for 29 hours, 41 minutes of delays, or 43 percent of total 

delays. Vessel incidents involve ship operations, most commonly caused by human error on the 

part of a vessel’s crew. Also included as vessel incidents are vessel breakdowns, which are caused 

by mechanical problems with a vessel. The majority of vessel incident delays are related to a nonhazardous commercial vessel grounding in September 2006, which resulted in 16 hours, 

20 minutes (24 percent of entire year’s non-availability) of suspended navigation during its 

inspection and refloating operations. 

Weather-related delays totaled 25 hours, 47 minutes or 38 percent of total delays. These weather 

delays usually occur at the beginning and end of each navigation season, and are mostly caused 

by poor visibility, dense fog, high winds, or ice. 

Other non-navigation delays were caused by pilotage delays and equipment that had fallen into 

the lock chamber, causing 9 hours, 37 minutes, or 14 percent of total delays. 

While none of these delay factors are directly under the control of the SLSDC, the agency is 

taking steps to address these issues and improve vessel transit efficiency. For example, since 1997 

the SLSDC has joined with its Canadian counterpart, the St. Lawrence Seaway Management 

GLOBAL CONNECTIVITY STRATEGIC GOAL 133 
Corporation, as well as the U.S. and Canadian Coast Guards, to institute a joint boarding program 

for the foreign vessels that use the Seaway. Each year, SLSDC marine inspectors examine more 

than 200 foreign vessels to ensure compliance with safety and environmental protection 

regulations in Montreal, Quebec, before they enter U.S. waters. 

In FY 2006, the SLSDC continued this program by inspecting 100 percent of all ocean vessels in 

Montreal. This improved inspection regime has saved vessels, on average, four hours per transit 

and ensured that any safety, security, or environmental issues are addressed prior to entering U.S. 

waters. As a result, delays were reduced and ocean carriers using the Seaway saved more than 

$500,000. 

The U.S. and Canadian Seaway agencies began enforcing 

mandatory Automatic Identification System (AIS) use on 

commercial vessels entering the waterway beginning in 

2003. The Seaway became the first inland waterway in the 

western hemisphere to implement an operational AIS vessel 

traffic services system. AIS technology uses data from shipto-ship, ship-to-shore, and shore-to-ship, thereby enabling a 

constant two-way communication between mariners and 

the three Seaway vessel traffic control centers. Originally 

developed primarily for safety reasons, AIS has become 

increasingly of interest to maritime security officials in the 

post September 11th environment as it offers the ability for them to track with precision any 

vessel carrying the transponder. In April 2006, the SLSDC and USCG signed a Memorandum of 

Agreement that establishes provisions for sharing Seaway AIS data with the USCG as well as 

provisions for sharing USCG AIS data with the Seaway as their stations in the Great Lakes come 

on line. 

© U.S. Department of Transportation 

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 2006, there were 3 hours, 7 minutes of 

delays, or 5 percent, related to lock equipment malfunctioning incidents. Lock equipment delays 

represented five one-hundredths of 1 percent of the total navigation time during FY 2006. 

In order to ensure that the two U.S. Seaway locks are in sound working condition, the SLSDC 

performs an aggressive infrastructure winter maintenance program each year focusing on 

inspections, preventative maintenance, concrete rehabilitation, and repairs to lock equipment and 

parts. This program has been instrumental in the SLSDC’s long-term success in providing a safe, 

efficient, secure, and reliable commercial waterway. 

FY 2007 Performance Forecast. DOT expects to meet the FY 2007 target of 99.0 percent. 

134 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
measure under development—freight travel 

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 traffic congestion. A further increase in freight activity on the 

Nation’s highways is anticipated in this decade due to continued growth in international trade. 

Traffic congestion hinders freight movement and undermines business productivity and 

international trade. 

2006 Results. The FHWA began measuring travel speeds 

along significant freight corridors in 2005. As illustrated 

below, travel speed measurements were used to calculate the 

average travel speed and average buffer index for five 

Interstate corridors in which data were collected. Data 

collection is expanding to 25 freight corridors in 2006. The 

buffer index represents the extra time freight carriers should 

add to their average travel time in order to ensure on-time 

arrival, at least 95 percent of the time, for an end-to-end trip 

© AP Photo/Al Grillo along the corridor. The extra time is added to account for any 

unexpected delay. The buffer index, which is expressed as a 

percentage, decreases as trip reliability improves. The DOT and FHWA have adopted the number 

of freight corridors with an annual decrease in their annual average buffer index rating as a 

measure of improvement in freight travel in significant corridors. As travel speeds become more 

consistent and reliable in these significant corridors being monitored, the number with a 

declining annual buffer index rating should increase. 

For the period from January 1 to March 31, 2006, the change in quarterly average travel speed for 

the five corridors was less than 0.3% from the same quarter last year. At the same time, the 

change in the quarterly average buffer index for all five corridors combined was 18.8%, an 

increase of 2% over the same period last year. While there was a combined increase in the 

average buffer index, three of the five corridors experienced a decrease. Significant increases in 

two corridors, I-70 and I-45, resulted in the overall combined increase in buffer index. 

It is unlikely that the FY 2007 target, which is based on reducing the buffer index in 100 percent 

of the corridors monitored in FY 2006, will be met. However, we expect to see improvement in a 

majority of the corridors under study. 

GLOBAL CONNECTIVITY STRATEGIC GOAL 135 
Average Travel Speed and Buffer Index on Freight Significant Corridors 

FY 2006 

Corridor 

Name 

Description 

(Start and End Locations) 

Average Travel Speed 

(miles per hour) 

Average Buffer Index 

(%) 

I-5 San Diego, CA (Mexican Border) 

to Blaine, WA (Canadian Border) 

49.7 mph 18.9% 

I-10 Santa Monica, CA to 

Jacksonville, FL 

55.9 mph 20.8% 

I-45 Galveston, TX to Dallas, TX 54.1 mph 30.8% 

I-65 Mobile, AL to Gary, IN 57.7 mph 6.8% 

I-70 Cove Fort, UT to Baltimore, MD 54.3 mph 11.1% 

The DOT National Freight Policy (NFP) was announced in January 2006. The NFP provides a 

national framework that enables Federal, State and local governmental organizations, and the 

private sector to coordinate their resources and efforts to advance key objectives to improve 

multimodal freight mobility on the U.S. transportation network. FHWA is contributing to the 

deployment of this policy in a variety of ways. 

• DOT developed courses in freight financing, engaging the private sector in 

transportation planning activities, freight and environment, for the Freight 

Professional Development program. 

• DOT held a national conference with the Transportation Research Board to 

advance forecasting and analysis models used to support decision makers in 

freight transportation. This conference identified numerous research initiatives 

that will improve freight modeling. 

• The Freight Analysis Framework, a database 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 

recalibration, the FHWA updated the highway network with 2002 freight flows, 

generated forecasts of freight movement to 2035, initiated current year estimate 

methodologies, and began comparing prior survey data with current data so an 

accurate trend line can be developed. 

136 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
• Numerous test pilots and workshops were initiated with States and Metropolitan 

Planning Organizations (MPOs) to enable local transportation planners to 

integrate local data with national data to support investment decisions. 

The Border Information Flow Architecture (BIFA) was widely disseminated to stakeholders and 

efforts began to replicate this successful endeavor on the southern border. The goal is to use 

BIFA, which maps systems and information flow between stakeholders, as a tool to develop and 

implement bi-national technology solutions to problems at borders, such as delay, congestion, 

and unpredictable crossing times. Examples include advanced traveler information and border 

wait time systems, expedited cargo clearance and processing systems, and incident management 

systems. 

HARMONIZED AND STANDARDIZED FY 2006 ENACTED FUNDS

REGULATORY & FACILITATION $40.2 MILLION 

REQUIREMENTS

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

enhances cooperation and increases efficiency in civil aviation matters. The agreements are based 

on recognized comparability of U.S. and foreign systems for approval and surveillance of the 

aviation industry. By building a network of competent civil aviation authorities and concluding 

agreements with additional countries and/or regional authorities, FAA increases safety globally. 

Improved global understanding of U.S. safety regulations, processes, and procedures leads to 

better international regulatory oversight. The BASAs allow FAA to focus on domestic safety 

priorities by relying on capabilities and technical expertise of other civil aviation authorities and 

minimizing duplication of efforts. 

2006 Results. FAA met the target. FAA 

is cooperating with partners in Europe 

and Asia to negotiate executive 

agreements and associated 

implementation procedures to support 

the transfer of aviation products and 

services. These agreements lay the 

essential groundwork for cooperation 

2003 2004 2005 2006

N/A 2 2 2

N/A 3 2 4

Performance Measure 

Number of new or expanded bilateral aviation safety 

agreements impemented 

Target 

Actual 

between the United States and the 

respective target country’s aviation authority. In FY 2006, the FAA concluded: 

• An expanded implementation procedure for airworthiness with New Zealand; 

GLOBAL CONNECTIVITY STRATEGIC GOAL 137 
• A revised simulator implementation procedure with Switzerland; and, 

• A maintenance implementation procedure and implementation procedures for 

licensing with Canada. 

These implementation procedures will promote a safer aviation environment for U.S. travelers. 

FY 2007 Performance Forecast. DOT expects to achieve the target in FY 2007. 

ENHANCED COMPETITIVE FY 2006 ENACTED FUNDS

ENVIRONMENT FOR PASSENGER TRAVEL $4.0 MILLION 

Since the 1940’s, international air transportation has been subject to restrictive bilateral 

agreements that limit price and service options and artificially 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. These 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. 

2006 Results. DOT is working with 

foreign civil aviation authorities 

throughout the world to negotiate and 

execute Open Skies agreements. The new 

Open Skies agreements concluded each 

year continually increase the total world 

population brought under the umbrella 

of Open Skies. This year DOT concluded 

a number of new agreements that 

allowed it to exceed its target goal of 2.99 

billion. In FY 2006, the Department 

reached Open Skies agreements with Canada, Cameroon, Kuwait and several other countries. We 

now have 75 Open Skies agreements with countries all over the world. 

2003 2004 2005 2006

N/A 1.51 1.53 2.99 (r) 

1.48 1.72 2.97 3.01 * 

(r) Revised; 

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 

(measure revised in FY 2005) 

Target 

Actual 

* Preliminary estimate 

FY 2007 Performance Forecast. DOT expects to meet the FY 2007 target of 3.05 billion. 

138 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
REDUCED BARRIERS TO TRADE FY 2006 ENACTED FUNDS

$15.8 MILLION 

DOT’s policy is to negotiate liberalized bilateral aviation agreements to open international air 

travel to market forces resulting in increased services, lower fares, and economic growth. These 

negotiations require DOT to arrange, conduct and fully participate in a number of formal 

international meetings with the goal of achieving less restrictive agreements and ultimately “Open 

Skies” agreements with foreign countries or associations of foreign countries, such as the 

European Union. 

2006 Results. DOT continually works 

with foreign civil aviation authorities 

throughout the world to negotiate and 

execute less restrictive aviation 

agreements with the ultimate goal of 

reaching “Open Skies” agreements with 

our international partners. During the 

course of FY 2006 the Department 

achieved its performance measure. In FY 

2006, it had negotiating rounds with the 

European Union, China, Japan, Canada, 

Kuwait and others. The number of rounds it takes in order to reach a new agreement varies from 

partner to partner based on the evolution of the aviation relationship. 

2003 2004 2005 2006

N/A N/A 10 10

N/A N/A 10 (r) 10

(r) Revised 

Performance Measure 

Number of international negotiations conducted annually to 

remove market-distorting barriers to trade in air transportation 

(new measure in FY 2005) 

Target 

Actual 

FY 2007 Performance Forecast. DOT expects to meet the FY 2007 target of 12 rounds. 

GLOBAL CONNECTIVITY STRATEGIC GOAL 139 

eNVIRONMENTAL STEWARDSHIP STRATEGIC goal 

PROMOTE TRANSPORTATION SOLUTIONS THAT ENHANCE COMMUNITIES AND PROTECT 

THE NATURAL AND BUILT ENVIRONMENT 

FY 2006 Enacted Funds: $5,822.3 Million 

STRATEGIC OUTCOMES 

• Reduce pollution and other adverse environmental 

effects of transportation and transportation facilities 

• Streamlined environmental review of transportation 

infrastructure projects 

PERFORMANCE MEASURES 

• Ratio of wetlands replaced for every acre affected by 

Federal-aid highway projects. 

• Percent DOT facilities characterized as No Further 

Remedial Action under the Superfund Amendments and 

Reauthorization Act. 

• 12-month moving average number of area transportation 

emissions conformity lapses. 

• Tons of hazardous liquid materials spilled per million 

ton-miles shipped by pipelines. 

• Percent reduction in the number of people within the 

U.S. who are exposed to significant aircraft noise levels. 

ENVIRONMENTAL STEWARDSHIP STRATEGIC GOAL 141
REDUCE POLLUTION AND OTHER FY 2006 ENACTED FUNDS

ENVIRONMENTAL EFFECTS $5,692 MILLION 

WETLANDS RESTORATION 

Wetlands are important natural ecosystems that filter pollutants and minimize potential 

floodwater damage. Before their value was fully recognized, many of the Nation’s wetlands were 

adversely affected or lost in the development of transportation and other infrastructure facilities. 

In 1996, FHWA established a national policy on wetland protection that called for a net gain of 

wetlands in federally assisted projects. Over the past 10 years, considerable progress has been 

made in States and Federal Lands Highway Divisions. 

2006 Results. Federal-aid projects 

nationwide replaced wetlands at a ratio of 

2.6 acres of compensatory wetland 

mitigation for every acre impacted. 

FY 2007 Performance Forecast. This 

measure will continue to be tracked 

internally, but no longer reported after 

FY 2006. A new measure tracking the 

number of Exemplary Ecosystem 

Initiatives (EEI) will be reported on in FY 2007. An EEI is an action or measure that will help 

sustain or restore natural systems and their functions and values, using an ecosystem or landscape 

context. Examples 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. 

2003 2004 2005 2006

1.5 1.5 1.5 1.5

2.7 2.1 3.3 (r) 2.6 # 

(r) Revised; 

Performance Measure 

Ratio of wetlands replaced for every acre affected by 

Federal-aid Highway projects 

Target 

Actual 

# Projection 

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. 

142 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
2006 Results. DOT did not meet 

the target. FAA continued work 

under State agreements at several 

facilities, including five that the 

Environmental Protection Agency 

(EPA) identified as needing further 

evaluation or remediation. In FY 

2006, FAA received a written 

determination of "No Further 

2003 2004 2005 2006

92 92 93 93

94 93 92 92

Performance Measure 

Percent DOT facilities characterized as No Further Remedial Action 

Planned under the Superfund Admendments and Reauthorization Act 

Target 

Actual 

Remedial Action Planned" from the 

EPA for the Jackson Homer Beacon Annex in Jackson, Nebraska; and, a verbal notification of “No 

Further Remedial Action Planned” from the EPA for the Washington-Reagan National Airport. 

In addition, during this fiscal year, FAA achieved closure at 27 State regulated sites. To reduce the 

likelihood of petroleum contamination from mission critical equipment, FAA meets current EPA 

requirements for fuel storage tanks; continues to replace outdated fuel storage tanks at the end of 

their normal life cycle to prevent leakage; tests in-service tanks; and will investigate, remove or 

clean tanks at decommissioned facilities. 

FY 2007 Performance Forecast. DOT expects to meet the target in FY 2007. 

Ship Disposal 

MARAD conducts its 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. By expediting the disposal of highand moderate-priority ships via full and open competition, 

utilizing all feasible disposal options, MARAD will 

eliminate the risk posed by these ships to the local 

environment. 

MARAD was required by law to dispose of all obsolete 

ships in the National Defense Reserve Fleet by the end of 

FY 2006. MARAD did not meet the deadline due to limited 

© AP Photo/Daily Press, Joe Fudge domestic industrial capacity and regulatory impediments 

to expedited and cost-effective foreign recycling. The 

presence of hazardous substances such as asbestos and solid and liquid polychlorinated biphenyls 

(PCBs), and concerns raised by the EPA about the export of PCBs, removed overseas recycling as 

a viable option for expedited disposal. 

MARAD informed the Congress in 2002 that the deadline was unlikely to be met. However, 

MARAD has removed 72 obsolete ships since 2001 including all 37 ships identified as high 

disposal priorities, in 2001 with the exception of one ship that is on hold pending historic 

ENVIRONMENTAL STEWARDSHIP STRATEGIC GOAL 143 
assessment. It is anticipated that this vessel will be available for disposal by the end of FY 2006. 

While clearance through the historical assessment process at times affects the disposal availability 

of some specific ships, the process is not impeding the rate of vessel removals overall. 

Additional ships are added to the disposal inventory as other merchant-type Federal vessels 

become obsolete. Thus, much of the improvement as seen in the decreased number of obsolete 

vessels awaiting disposal has been offset by additional vessels being declared obsolete. However, 

all high-priority vessels available to the disposal program have been removed from MARAD’s 

reserve fleets so the risk to the environment has been reduced. 

During FY 2006, MARAD removed 25 obsolete ships from three National Defense Reserve Fleet 

sites. This included 23 high and moderate priority vessels. All of the removals were the result of 

dismantling/recycling contracts with domestic ship disposal companies with the exception of one 

ship that was disposed of via deep-sinking. 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. Dismantling was completed on 20 ships during 

2006. These ships were removed from the fleet sites during the current and preceding fiscal years. 

The 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. MARAD also entered into additional disposal contracts that will 

result in the dismantling/recycling of 22 additional ships in subsequent years. 

MOBILE SOURCE EMISSIONS

The 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. Recent studies show 

that 27 to 56 percent of all emissions related to these pollutants originated from on-road vehicles. 

Areas exceeding certain NAAQS, known as air quality non-attainment areas, are required to meet 

transportation conformity requirements in the Clean Air Act. Failure to meet the requirements 

will place an area in a conformity lapse, during which only limited types of projects can proceed. 

The EPA recently revised the national ambient air quality standards for fine particulate matter. 

Under the more stringent standard, more areas will be designated as non-attainment and will be 

subject to conformity requirements. 

144 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
2006 Results. Prior to FY 2006, 

approximately 6 non-attainment and 

maintenance areas were in a conformity 

lapse in any given month. In FY 2006, the 

12-month moving average number of 

areas in a conformity lapse was 1.3. The 

number of conformity lapses was very low 

throughout most of FY 2006. As required 

by the Clean Air Act, non-attainment and 

maintenance areas are required to 

demonstrate that, through the conformity process, emissions estimated from the planned 

transportation system must be consistent with the clean air goal of the State. Many new nonattainment areas were required to demonstrate conformity for the fine particulate air quality 

standards by April, 2006. In anticipation of this deadline, DOT and EPA conducted numerous 

workshops, training sessions, and other outreach activities to raise awareness and to prepare State 

departments of transportation, State air agencies, and Metropolitan Planning Organizations 

(MPOs) to meet the requirements. In addition, guidance documents were issued by the two 

agencies to ensure that the transition to new conformity requirements went smoothly. State and 

local agencies took the initiative to coordinate the process well in advance of the deadline. As a 

result of the advanced preparation, all the non-attainment areas were able to meet conformity 

determinations by the April 2006, deadline. 

2003 2004 2005 2006

6.0 6.0 6.0 6.0

6.0 6.3 (r) 5.8 (r) 1.3 * 

(r) Revised; 

Performance Measure 

12-month moving average number of area transportation 

emissions conformity lapses 

Target 

Actual 

* Preliminary estimate 

FY 2007 Performance Forecast. DOT expects to meet or exceed the performance targets in 

FY 2007 for areas in a conformity lapse. While there are multiple causes for a transportation 

lapse, including new conformity requirements for the new fine particulate matter air quality 

standard, the FHWA should be able to provide adequate guidance and assistance to these areas to 

address these causes and meet the more stringent targets in most instances. 

In-Depth Accomplishments promoting air quality 

FHWA continued to work closely with States, MPOs, the Federal Transit Administration (FTA), 

and EPA to reduce on-road mobile source emissions. 

With the implementation of new SAFETEA-LU 

provisions, the Agency expects State and local 

partnering agencies to fund and implement even more 

cost-effective strategies often focusing on heavy-duty 

diesel emissions. FHWA seeks to increase the 

percentage of non-attainment and maintenance areas 

meeting the mobile source emissions budgets for ozone, 

carbon monoxide, and particulate matter. Following the © AP Photo/Ed Andrieski 

ENVIRONMENTAL STEWARDSHIP STRATEGIC GOAL 145 
release of more stringent standards for ozone and fine particulate matter, the Agency continued to 

address the impact of the regulatory changes and to maintain area transportation conformity 

lapses at current low levels. Through improved integrated transportation and air quality 

planning, the transportation conformity process is designed to ensure that emissions from an 

area’s transportation system are consistent with the Clean Air Act. The EPA is required to revise 

the conformity regulation to reflect all the SAFETEA-LU transportation conformity changes by 

August 2007. 

PIPELINE HAZMAT SPILLS 

One of the major consequences of pipeline incidents—particularly from hazardous liquid 

pipelines—can be adverse impacts to the environment. This is a function of the type, amount and 

location of commodity spilled. 

PHMSA’s first 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 ensure the safety, security, and reliability of the Nation’s 

pipeline infrastructure. 

Over the long term, PHMSA continues to significantly reduce the environmental impact of nonvolatile hazardous liquid spills by achieving a 48 percent reduction in the five year average of 

hazardous liquid spill volume from 1996-2000 compared to 2001-2005, even with major 

hurricane damages in 2005 – an accomplishment due to several new initiatives adopted by 

PHMSA since 2001. 

2006 Results. Based on the preliminary 

data, PHMSA expects to meet the FY 

2006 performance target, despite two 

significant accidents in Kansas 

(Montgomery County and Wyandotte 

County). These two accidents account 

for 62 percent of the net tons lost in the 

first half of this year. This measure is 

very dependent on single large events 

because a single spill can account for 

50 percent or more of the annual total spill amount for all reportable pipeline releases. 

2003 2004 2005 2006

.0073 .0068 .0064 .0060

.0071 .0102 .0090 (r) .0059 * 

(r) Revised; 

Performance Measure 

Tons of hazardous liquid materials spilled per million ton-miles 

shipped by pipelines 

Target 

Actual 

* Preliminary estimate 

In December 2000, PHMSA issued the hazardous liquid integrity management (IM) regulations 

to assess, evaluate, repair and validate the integrity of hazardous liquid pipelines that could affect 

High Consequence Areas (HCAs). At the end of 2005, the total number of pipeline segment 

146 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
miles inspected that could affect HCAs (including environmentally sensitive areas) is 

approximately 80,000 miles, of which 22,500 miles were inspected in 2005 (the 2006 figure will be 

available in 2007). 

The IM strategy is a long-term program investment. The expected environmental benefits 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, over 

3,000 conditions were repaired or mitigated that needed immediate attention, nearly 10,000 other 

conditions were repaired on a scheduled basis, and an additional 21,000 conditions were repaired 

beyond those required by the hazardous liquid IM regulations. 

FY 2007 Performance Forecast. PHMSA expects to meet the FY 2007 target. 

In-Depth Accomplishments 

In 2006, PHMSA proposed an important environmental protection through its new low-stress 

hazardous liquid pipeline Notice of Preliminary Rule Making. The rule would require operators 

to address the most common threats to these lines, corrosion and third-party damage, and 

provide other protections to the surrounding environment. The importance of this step was 

underscored by two spills from BP Corporation pipelines 

on Alaska’s North Slope. DOT and PHMSA took command 

of these accidents, directed extensive testing of and repair to 

these previously unregulated pipelines, and is closely 

overseeing all work. DOT and PHMSA generally received 

high marks from all sides on its efforts including from the 

Congress in three oversight hearings. 

PHMSA has strengthened and improved its oversight 

program to foster improved operator IM Programs and to 

assure compliance with the new IM rules that protect 

environmentally sensitive areas. PHMSA and its state 

partners will soon complete initial comprehensive inspections of all hazardous liquid operator IM 

Programs. Approximately 175 inspections have been completed encompassing more than 98 

percent of the hazardous liquid pipeline mileage. Re-inspections of operators with especially 

poor performance have begun to assure they are making progress toward attaining full 

compliance. 

© AP Photo/Al Grillo 

ENVIRONMENTAL STEWARDSHIP STRATEGIC GOAL 147 
AIRCRAFT NOISE EXPOSURE 

The FAA is working to increase the number of flights at America’s top airports to keep pace with 

forecasted demand. However, public concern and sensitivity to aircraft noise around airports 

continues to grow. Noise complaints increase even while quieter aircraft technology is introduced 

into the fleet. Aircraft noise is an undesired by-product of mobility, and FAA acts to reduce the 

public’s exposure to unreasonable 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, although its efforts 

were complemented by noise compatibility projects funded under the Airport Improvement 

Program (AIP). While the new international aircraft noise standard will encourage the 

introduction of quieter aircraft into operations, AIP-funded noise compatibility projects will be 

the principal means employed by FAA to mitigate significant aircraft noise exposure in the near 

future. 

2006 Results. DOT met the 

performance target. DOT continues to 

pursue a program of aircraft noise 

control in cooperation with the aviation 

community through the development 

and adoption of quieter aircraft, 

soundproofing and buyouts of buildings 

near airports, operational flight control 

measures, and land use planning 

strategies. FAA is authorized to provide 

funds for soundproofing and residential relocation, but each project must be locally sponsored 

and be part of a noise compatibility program prepared by the airport sponsor and approved by 

the FAA. The noise target is based on FAA's historical experience and reflects the relocation of 

people from significant noise areas through grant funding, but is also affected by market forces 

that drive changes in commercial aircraft fleets and operations. 

2003 2004 2005 2006

-1 -2 -3 -4

-15 -28 (r) 

(r) Revised; 

Performance Measure 

Percent reduction in the number of people in the U.S. who are 

exposed to significant aircraft noise levels 

Target 

Actual -29 (r) -27 # 

# Projection from trends 

The significant performance improvement over the targeted goals in noise reduction grew out of a 

confluence of a number of external factors: the economic downturn, the impact of September 

11th on the industry, and the severe acute respiratory syndrome (SARS) outbreak. These factors 

produced a dramatic downturn in operations as well as a large-scale premature retirement of 

older Stage Three aircraft (B727s, DC-9s, and MD-80s). This combination of lower operations 

and the rapid reduction of the average age of the fleets operating produced the dramatic 

improvements in the noise exposure environment. 

148 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Operational levels began to recover in FY 2004 and continue to increase. Taking into account the 

Next Generation Air Transportation System goal of increasing capacity threefold, the dramatic 

level of the improvements witnessed over the last three years is unlikely to persist. 

FY 2007 Performance Forecast. DOT will meet the target in FY 2007. 

MEASURE UNDER DEVELOPMENT— FY 2006 ENACTED FUNDS

ENVIRONMENTAL STREAMLINING $130.3 MILLION 

Project delays impede needed transportation system improvements and increase costs. 

Streamlining environmental reviews and documentation is essential to mitigating time delays and 

completing infrastructure projects on a more timely and cost effective basis. DOT has begun 

implementing new SAFETEA-LU requirements for an Environmental Impact Statement (EIS) 

review that are intended to make the process quicker and more predictable. The new 

requirements focus on better identifying agencies, issues, and methodologies; coordinating 

reviews by participating agencies in accordance with a coordination plan; and engaging members 

of the public at critical points early in the process. 

Three DOT modes are affected by the new requirements: the Federal Highways Administration, 

the Federal Aviation Administration, and the Federal Transit Administration. These agencies 

expended significant funds in FY 2006 developing collection systems, revising procedures, and 

working with stakeholders in order to improve the Department’s performance in processing EISs. 

DOT intends to report on progress against targets in FY 2008. 

ENVIRONMENTAL STEWARDSHIP STRATEGIC GOAL 149 

security STRATEGIC goal 

balance homeland and national security transportation requirements with 

the mobility needs of the nation for personal travel and commerce 

FY 2006 Enacted Funds: $828.5 Million 

SECURITY STRATEGIC GOAL

FY 2006 Enacted Funding by Operating Administration (OA)

(Dollars in Millions)

OST, $8.6 

MARAD, $254.1 FAA, $177.3 

Other OAs 

FRA, $0.7 

SLSDC, $0.3 

FTA, $41.9 

FMCSA, $7.4 FHWA, $338.3 

Total FY 2006 Funding: $828.5 

STRATEGIC OUTCOMES PERFORMANCE MEASURES 

• All modes have implemented steps that would prepare 

them for a rapid recovery of transportation from 

international harm and natural disasters 

• Percent of DoD-required shipping capacity complete 

with crews available within mobilization timelines. 

• Percent of DoD-designated commercial ports available 

• The U.S. transportation system meets National security for military use within DoD established readiness 

requirements timelines. 

• Transportation Capability Assessment for Readiness 

Index Score (New measure in FY 2005). 

SECURITY STRATEGIC GOAL 151 
STRATEGIC MOBILITY FY 2006 ENACTED FUNDS

$254.1 MILLION 

The Department of Defense (DoD) relies heavily on the U.S. commercial sector for surface cargo 

movement and sealift in order to maximize its logistics capabilities and minimize cost. The ability 

of the United States to respond to military contingencies requires adequate commercial and 

government-owned U.S.-flag sealift, the use of associated maritime infrastructure and skilled U.S. 

maritime labor. DOT manages four programs that help make these resources available to DoD. 

DOT, through the Maritime Administration (MARAD), operates the Voluntary Intermodal 

Sealift Agreements (VISA) program as the means used by the Department of Defense (DoD) to 

pre-plan the availability of militarily useful commercial vessels for DoD use in times of 

emergency. VISA constitutes DoD’s official emergency preparedness program for sealift. 

Approximately 77 percent, of the ship capacity enrolled in VISA is from the 60 U.S.-flag 

commercial vessels receiving Maritime Security Program (MSP) payments, managed by DOT. 

The remaining component of vessels enrolled in VISA is made up of ship operators transporting 

Federal Government preference cargoes and domestic cargoes. These operators are required to 

provide varying levels of ship capacity to VISA. All ships enrolled in VISA must commit certain 

percentages of their vessel capacity and use of their related intermodal transportation resources to 

DoD. In 2006, MARAD implemented the newly reauthorized MSP. The reauthorization 

expanded the program from 47 to 60 ships and increased the payment levels to MSP ship 

operators. 

The Ready Reserve Force (RRF) is a fleet of 48 government-owned, militarily useful cargo ships 

that are owned and maintained by DOT and made available to DoD to support the rapid, massive 

movement of military unit equipment and supplies in times of emergency or war. These ships are 

also available for emergency response after domestic natural disasters. During 2006, the number 

of vessels assigned to the RRF fleet decreased by 10 ships. The Department of Defense 

determined that the RRF should reduce to 48 ships due to changing sealift requirements and 

shifting funding priorities. This resulted in the shift of two Lighter Aboard Ship (LASH) vessels, 

four crane ships (TACS) and four small Roll-On/Roll-Off (RO/RO) vessels out the RRF. 

MARAD also supports mariner education programs to help produce new merchant marine 

officers. In 2006, approximately 40 percent of these new mariners had an obligation to serve in 

the U.S. Navy Reserve/Merchant Marine Reserve for a period of six years. All of these graduates 

help to replenish the “pool” of mariners available to crew the RRF in times of need and to crew 

U.S.-flag commercial ships. 

152 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
The ability of the United States to respond to military contingencies also requires the availability 

of adequate U.S. commercial port facilities. DOT, through MARAD, is responsible for 

establishing DoD's prioritized use of port facilities and related intermodal services and facilities 

during DoD mobilizations to ensure the safe, secure, and smooth flow of military cargo through 

the commercial U.S. transportation system while minimizing commercial cargo disruptions. 

DoD, in conjunction with MARAD, negotiates a Port Planning Order with each designated 

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

port is expected to be able to make these facilities available to the military within 48 hours of 

written notification. If a port forecasts that it will be unable to provide the specific facilities, or 

provide acceptable alternative facilities within 48 hours, it 

will report that it is not available. MARAD conducts strategic 

commercial port planning and readiness activities to help 

ensure the availability of these ports for DoD use in times of 

emergency. These port planning and readiness activities 

include chairing the National Port Readiness Network 

(NPRN), monitoring port facility availability, maintaining 

security clearances at the strategic ports, maintaining security 

communication equipment at the strategic ports, 

© AP Photo/Elaine Thompson participating in port readiness committee meetings and port 

readiness exercises, completing semi-annual enhanced port 

readiness assessment reports, participating in area maritime security committee meetings, 

participating in American Port Authority Association (AAPA), Transportation Research Board 

(TRB), and National Defense Transportation Association (NDTA) activities, and leading the 

NPRN strategic port study. The port planning and readiness activities continue to train 

commercial port employees and help coordinate military deployment and redeployment moves 

through the strategic ports. DoD did not experience any strategic port delays in 2006. 

2006 Results. DOT did not meet the 

performance target. In April 2006, 

MARAD was directed by the 

Commander of the United States 

Transportation Command 

(USTRANSCOM) to remove ten vessels 

from the RRF to the NDRF by July 27, 

2006. Prior to this direction, the vessels 

had been maintained and kept in good 

repair to successfully activate in accordance with their prescribed time frames. With the 

concurrence of USTRANSCOM, MARAD immediately ceased all maintenance and repair in 

April on these vessels and commenced preparation for long term storage at the National Defense 

Reserve Fleet site. 

2003 2004 2005 2006

94 94 94 94

96 94 95 93

Performance Measure 

Percent of DoD-required shipping capacity complete with crews 

available within mobilization timelines 

Target 

Actual 

SECURITY STRATEGIC GOAL 153 
 

By immediately discontinuing the preventative maintenance programs and ongoing repairs on 

these vessels, MARAD was able to avoid approximately $6.0 million in planned costs for the 

management and repair of these ten vessels. These savings were applied to the necessary actions 

for long term lay-up of the vessels at the NDRF sites and to pay for cancellation of the Ship 

Manager Contracts on these vessels. Additional savings were applied to deferred maintenance 

and service life extension projects on the balance of current RRF vessels. 

FY 2007 Performance Forecast. DOT expects to meet the FY 2007 target. 

2006 Results. DOT met the 

performance target. From 2003-2006, 

DoD has not experienced any port 

related delays in its execution of the 

deployment and redeployment of 

Operation Enduring Freedom/Operation 

Iraqi Freedom troops and equipment. 

However, current congestion and the 

impact of anticipated trade growth on the 

exhausted and limited physical capacity of strategic ports may make it difficult for DOT to meet 

this performance measure in the future. A draft NPRN report nearing completion reviewed the 

strategic port system, military requirements, and readiness timelines. The report is expected to 

conclude that all the strategic ports are necessary to meet the national military objectives and 

provide operational flexibility and redundancy and that, based upon industry views and 

independent data, congestion and lack of port infrastructure will continue to challenge the 

strategic ports’ ability to meet both commercial and military surge requirements without 

commercial disruption. The NPRN draft report provided data to a DoD report that was 

requested by Congress after strategic ports expressed concerns about congestion and their future 

ability to meet military deployment requirements in a more congested transportation system. 

The expected completion date for the DoD report is October 2006. DOT will incorporate study 

findings into future planning and continue working with DoD to identify other possible solutions 

that better match requirements with availability at the individual port facilities. 

2003 2004 2005 2006

92 92 93

86 93 87 100

Performance Measure 

Percent of DoD-designated commercial ports available for 

military use within DoD established readiness timelines 

Target 

Actual 

FY 2007 Performance Forecast. DOT expects to meet the FY 2007 target. During FY 2007, 

MARAD will work with DoD and the industry to insure that every effort is made for clarifying 

and anticipating requirements to minimize the impact on commercial cargo flow while providing 

timely and sufficient port facilities for military deployments. 

154 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT

93
TRANSPORTATION READINESS FY 2006 ENACTED FUNDS

$574.4 MILLION 

The past year marked the busiest on record for the Office of Intelligence, Security, and Emergency 

Response. The response to Hurricanes Katrina, Rita and Wilma began late in FY 2005 and 

continued through FY 2006. These storms illustrated the importance of preparedness on a scale 

not previously experienced in domestic incident response. DOT, under Emergency Support 

Function (ESF) No. 1 of the National Response Plan, led the response for transportation and 

played a significant role in the response to these storms. Although the Department met the 

challenges these storms presented, their severity and the duration of the response stretched our 

resources to their limits. FY 2006 marked an incident-free year in domestic transportation 

security. However, several international terrorism threats and incidents prompted the 

implementation of targeted protective measures to ensure the security of the domestic 

transportation system. DOT’s role in identifying and helping to implement the most effective and 

efficient measures was reinforced and helped quickly close potential gaps as the threat 

environment changed. 

2006 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. These areas include 

monitoring operations, emergency 

response, training and exercises, continuity of operations, continuity of government, and 

international civil emergency planning. Although DOT met the target with a score of 72, 

expectations of all Federal departments and agencies involved in these activities have risen in the 

wake of the 2005 Hurricanes and are reflected in numerous White House and Congressional 

reports. The on-going challenges for Deparmental preparedness have risen significantly, with a 

few examples provided below: 

2003 2004 2005 2006

N/A N/A 71 72

59 67 65 72

Performance Measure 

Transportation Capability Assesment for Readiness Index Score 

Target 

Actual 

• Operational Response (National Response Plan ESF-1): There has been an 

increase in demand for DOT to provide transportation services during 

emergencies. For example, in three successive years, emergency transportation 

support needs have risen from 700 truckloads of commodities moved in 2004 to 

over 23,000 truckloads during last year’s hurricane season. This increase was in 

addition to the major evacuation support described below. Although it is 

impossible to predict the severity of future natural or man-made disasters, it is 

clear that we must be prepared to respond effectively and efficiently to 

catastrophic events at any time. 

SECURITY STRATEGIC GOAL 155 
• Evacuations: During Hurricane Katrina, DOT, through ESF-1, provided over 

1,100 evacuation buses, arranged for an Amtrak evacuation train, and 

coordinated the air evacuation of over 24,000 residents from New Orleans. For 

the 2006 hurricane season, DOT, in support of the Department of Homeland 

Security has established major contracts for bus and passenger rail evacuation 

support to ensure the capability is in place to evacuate larger populations in the 

event of a catastrophic incident. DOT also refined an existing contract to 

improve access to commercial aviation services. DOT leads and staffs the 

Transportation Management Unit in Baton Rouge, Louisiana, which was 

established to conduct planning and response activities for Gulf Coast 

evacuations and emergencies this hurricane season. Although additional 

planning will be needed to evolve plans to assist other States with evacuations, 

these measures represent levels of evacuation planning and increased capacity in 

the Federal Government. Sustaining these capabilities and providing additional 

evacuation planning support will be critical to future preparedness. 

• Continuing Role of the Office of Intelligence, Security, and Emergency 

Response: In addition to the increase in preparedness and operations 

responsibilities described above, the Department has ongoing obligations, which 

are summarized below; 

o Provide intelligence information and timely analysis of threats; and 

security, diplomatic, and economic issues that impact the Department’s 

ability to effectively perform its mission; 

o Monitor the status of the national transportation system from the Crisis 

Management Center (CMC), 24 hours a day, seven-days a week; 

o Develop and review preparedness and security policy; 

o Represent and prepare the Department for national and Senior Official 

level exercises and training required under the National Exercise 

Program and other directives; 

o Ensure the Department meets the requirements of Continuity of 

Operations and Continuity of Government established by Executive 

Order. This includes development and maintenance of continuity plans, 

conducting training and maintaining an alternate site from which to 

conduct DOT operations; and, 

o Participate in international civil emergency planning for response to 

natural disasters and crises, including national security. 

FY 2007 Performance Forecast. In 2007, the Department is planning to expand intelligence 

support to Operating Administrations, security policy development and preparedness and 

response operations. We anticipate meeting the performance target of 75 in FY 2007. 

156 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Organizational excellence STRATEGIC goal 

advance the department’s ability to manage for results and achieve the 

goals of the president’s management agenda 

FY 2006 Enacted Funds: $1,165.8 Million 

STRATEGIC OUTCOMES 

• Strategic management of human capital 

• Competitive sourcing 

• Improved financial management 

• Expanded E-Government 

• Budget and performance integration 

PERFORMANCE MEASURES 

• For major DOT aviation systems, percentage of cost goals 

established in the acquisition project baselines that are 

met.

• For major DOT aviation systems, percentage of 

scheduled milestones established in acquisition project 

baselines that are met. 

• 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. 

• 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. 

• Percentage of transit grants obligated within 60 days after 

submission of a completed application. 

ORGANIZATIONAL EXCELLENCE STRATEGIC GOAL 157
PRESIDENT’S MANAGEMENT AGENDA FY 2006 ENACTED FUNDS

$1,190.3 MILLION 

Secretary Peters’ central management strategy for achieving organizational improvement is full 

implementation of the PMA. The PMA contains five core, 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 financial performance goals; 

• Achieved E-government goals; and, 

• Achieved budget and performance integration 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 2006 ACCOMPLISHMENTS 

Balanced Scorecard. Since 1998, DOT has used a Balanced Scorecard instrument to evaluate 

each Administration’s delivery of HR services and information and identify opportunities for 

improvement. The scorecard gathers perspectives of customers, employees, and HR managers in 

the following performance areas: 

• *Timeliness • Excellence in HR Programs 

• *Quality • Effective Use of Information Technology 

• *Service Partnership • Quality Workforce 

• Quality Work Environment • Mission Goals 

• Executive Leadership • Financial Perspective 

(*) These dimensions are rated by customers. 

158 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
While organizations that participated regularly in the survey areas shown above experienced a 

general trend of improvement, average scores in the critical area of “Service Partnership” hit a 

plateau between the 2000 and 2002 surveys, holding steady at 69.5 percent. DOT set a goal in 

2002 to reach an 80 percent satisfaction score. The most recent survey, administered in the fall of 

2005, showed an average score for service partnership of 79.7 percent. Through the balance of 

FY 2006, Operating Administrations (OAs) implemented improvement plans to build on this new 

base, and further improve scores in other service dimensions. 

Career Resident Pilot. In 2005, DOT piloted a Career Resident program to expand entry level 

hiring in mission-critical occupations. Highly targeted recruitment identified a pool of diverse 

candidates with competencies matching specific needs. The pool of candidates identified in the 

initial 2005 recruitment met all of the criteria for program success, and OAs who hired from that 

pool were extremely happy with the performance of the employees. As a result, both the 

candidate pool and hiring commitments doubled in 2006, despite severe budget constraints that 

dampened overall hiring. 

Workforce planning and talent management. One-DOT initiatives have identified and closed 

or narrowed competency gaps in leaders, using automated assessments and targeted training; 

narrowed gaps for IT workers; identified competency gaps and strategies for human resource 

specialists, identified specific functions performed in four cross-cutting engineering disciplines, 

and mapped out more disciplined succession strategies. DOT also saw a number of successful 

initiatives in individual OAs: 

PHMSA strengthened its “People Pipeline”. PHMSA’s workforce analysis showed that too 

much of its workforce was clustered at high grades, with similar age and length of service 

demographics. The Agency needed to take steps to build a pipeline for critical technical and 

professional positions. In FY 2006, PHMSA, an agency of fewer than 400 positions, had 9 

employees under student appointing authorities and 2 student volunteers, and filled a third of its 

positions at the entry level. 

FRA used multiple strategies to close skills gaps. FRA's workforce planning study of its 

financial management functions highlighted the need for greater analytical and automation skills, 

in agreement with recommendations from the Department. As a result, FRA combined its 

financial services, budget, and support systems operations into one office; established a Deputy 

Chief Financial Officer position dedicated to financial management responsibilities only; and 

used a buyout to create vacancies for the organization that have been used to hire employees with 

the desired skills/competencies. FRA also met targets for closing gaps among Rail Safety 

Inspectors through technical training, on-the-job coaching and mentoring, and targeted 

improvements in recruitment and hiring strategies. 

ORGANIZATIONAL EXCELLENCE STRATEGIC GOAL 159 
FTA placed people with disabilities. By working closely with the Virginia Department of 

Rehabilitative Services (VDRS), FTA provided internships for disabled candidates, many of 

whom were subsequently appointed to permanent full-time or longer-term temporary positions. 

Additionally, FTA earned recent special recognition from the Northern Virginia Department of 

Rehabilitative Services as “Employer of the Year” for its “disability-friendly” spirit toward 

employment, accessibility and service to individuals with disabilities. 

FAA supported employees affected by competitive sourcing. The FAA Automated Flight 

Service Station (AFSS) Competitive Sourcing competition included 58 facilities in the continental 

United States, Puerto Rico, and Hawaii operated by the FAA. In February 2005, the FAA awarded 

a 10-year contract (5-year base, with 5 option years) to Lockheed Martin, the winning bidder, 

which assumed operations on October 4, 2005. FAA Human Resources had a number of huge, 

critical tasks to support the transition of service and the employees affected by it, and the majority 

of these tasks extended through 2006. 

COMPETITIVE SOURCING

DOT uses competitive sourcing as a key tool for efficiently getting commercial-type work done. 

By doing so, we can ensure that we are providing the highest quality and the most economical 

service to Americans. 

FY 2006 ACCOMPLISHMENTS 

Workforce Analysis Pilot Project. In 2006, as required by both human capital and competitive 

sourcing President’s Management Agenda initiative Standards for Success, DOT created a model 

process that better integrates workforce planning and competitive sourcing. The ongoing pilot 

project allows DOT’s human capital staff to evaluate Mission Critical Occupations for achieving 

staffing and skill gap closure. DOT uses a process that relates current personnel, organizational, 

and functional requirements with future staffing and skill requirements. Included in this process 

is relating FAIR Act Inventory data with the above process. 

Post-competition Accountability and Independent Validation of Savings. In an ongoing effort, 

the Office of Competitive Sourcing staff and support consultants develop post-competition 

accountability (PCA) policy and guidance and trained individual agency managers on correct 

application of procedures to validate savings and performance improvements resulting from 

competition. As of 2006, DOT has anticipated savings of $2.22 billion and operating 

administrations are implementing PCA procedures to validate savings and performance 

improvements. Additionally, the Office of Competitive Sourcing staff conducts independent 

validations of completed competition to verify savings which further demonstrates the 

Department’s successful implementation of the President’s Management Agenda for competitive 

sourcing. 

160 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
IMPROVED FINANCIAL PERFORMANCE 

Improved financial 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 financial stewardship, excellent financial and acquisition systems, 

and improved performance on DOT’s financial metrics guides DOT financial performance. In 

recent years, the Government Accountability Office and the DOT Office of Inspector General 

have aggressively recommended that DOT financial management focus on needed improvements. 

DOT has responded with several efforts that have improved financial performance throughout 

the Operating Administrations (OAs) and the Department. 

FY 2006 ACCOMPLISHMENTS

Managerial Cost Accounting 

Managerial cost accounting (MCA) identifies, tracks, and analyzes the total costs attributable to a 

particular task, job, or program. The purpose of managerial cost accounting is to provide 

program managers with cost information required to accurately report program efficiency and to 

develop a program’s future budget. DOT OAs are working aggressively to implement managerial 

cost accounting systems in order to provide their managers with cost information to make betterinformed decisions. 

During FY 2006, the Federal Aviation Administration (FAA) completed their implementation of 

the Cost Accounting System (CAS) by implementing the remaining two lines of business, 

Aviation Safety and Airports. FAA is now providing cost accounting information to all lines of 

business. Labor distribution has been implemented in all of the lines of business and in most of 

the staff offices, covering over 45,000 employees. FAA plans to implement the remaining staff 

offices consisting of approximately 1,500 employees in FY 2007. 

The Federal Lands Highway Program of the Federal Highway Administration is in the process of 

developing a solution within Oracle’s Project Accounting module which will provide reports to 

manage their programs and projects. The goal is to capture program, project, and task 

information on the budget distribution and execution transactions in order to generate reports 

for financial managers, program managers, and engineers. A data warehouse is being developed 

that will enable Federal Lands to retrieve the data they need to manage their programs and 

projects in various formats. The solution will be completed in early 2007. 

Several OAs made substantial progress in implementing full cost accounting during FY 2006. The 

Federal Transit Administration (FTA) has completed the majority of its cost accounting 

implementation. FTA is using commercial-off-the-shelf software to import administrative, salary 

and benefit, and grant expenses from existing systems. FTA employees also began using activity 

codes to record their time and attendance using the Labor Distribution Reporting (LDR) function 

ORGANIZATIONAL EXCELLENCE STRATEGIC GOAL 161 
within CASTLE. By doing so, FTA has been able to assign salary and benefit expenses to 

activities. FTA has already provided its Executive Management Team (EMT) with preliminary 

reports from the cost accounting system. FTA plans to finalize the reports and begin distributing 

them to its EMT and other managers monthly starting in November 2006. 

In addition to the progress noted above, the FRA and FHWA have also implemented LDR and are 

using activity codes to record employee time. The vast majority of DOT’s employees are now 

using LDR to record their time. 

DOT will continue to take the steps necessary to integrate program and accounting data. DOT 

will work with the remaining small OAs during FY 2007 to implement their managerial cost 

accounting plans. 

Improved Financial Processes 

DOT’s Office of Financial Management provides overnight closing and produces statements every 

month and at year-end. Each month the OAs prepare and submit monthly non-audited financial 

statements comprised of: the Balance Sheet, Statement of Net Cost, Statement of Net Position, 

and Statement of Budgetary Resources. These statements, with the exception of the Statement of 

Financing, are prepared directly from trial balances from Delphi utilizing the Financial Statement 

Solution (FSS). In 2006, the FSS was further enhanced to run overnight. 

In addition, DOT: 

• Developed an incremental year-end close process that can be run throughout 

the year and make the carry forward balances available on the first day of the 

new fiscal year; 

• Developed a new accounting classification structure to standardize financial 

management and was actively involved in the effort to develop a common 

government-wide accounting classification structure (CGAC); and, 

• Continued consolidating accounting services at the Enterprise Services Center 

in Oklahoma City. 

Reimbursable Policy 

In 2006, DOT made a substantial progress in finalizing the reimbursable policy and business 

process. This is a critical part of DOT’s efforts to streamline and standardize business practices 

and to strengthen Internal Controls across DOT. The Policy also addresses the FY 2005 financial 

statement audit finding on reconciling transactions within DOT by requiring all agreements 

must: 

162 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
• designate a common agreement number; 

• have one Treasury Fund Symbol; and, 

• not exceed 5 years. 

Implementation of the new policy will begin during FY 2007, with implementation mandatory as 

of October 1, 2007. 

Federal Shared Service Provider Activities 

In February 2005, OMB designated DOT one of the four Financial Management Line of Business 

Federal Shared Service Providers (FSSP), giving DOT the opportunity to offer its suite of 

integrated tools and services to other government agencies. In FY 2006, the DOT Enterprise 

Service Center (ESC) established a Project Management Office to coordinate and track FSSP 

activities and work with our private sector teaming partner, Systems Research and Applications 

Corporation (SRA). 

In addition to the 15 original customers (14 DOT agencies and TSA) during FY 2006, DOT 

increased the number of Federal Agencies it cross-services to four: 

• The National Endowment for the Arts. 

• The Institute of Museum and Library Sciences (IMLS). IMLS has also 

contracted the DOT’s Enterprise Service Center (ESC) to provide a full range of 

accounting services including Accounts Receivable, Accounts Payable, Supplier 

Table Maintenance, Monthly Closing and Reconciliation, Financial Reports. 

• The Commodity Futures Trading Commission (CFTC). CFTC also contracted 

with the ESC to provide a full range of accounting services. 

• The Government Accountability Office (GAO). GAO will also rely on ESC to 

provide selected accounting services. DOT and its private sector business 

partner, SRA recently began the GAO conversion to Delphi, scheduled for 

completion by October 2007. 

In June 2005, DOT selected SRA as its private sector business partner to help market ESC to, and 

implement new customers. Working together, SRA and the DOT ESC: 

• Successfully implemented CFTC on Delphi; 

ORGANIZATIONAL EXCELLENCE STRATEGIC GOAL 163 
• Developed a cost estimate and detailed project plan /implementation schedule 

for GAO; and, 

• Marketed and submitted joint proposals to several Federal agencies. 

Delphi Security 

Delphi is the Department’s financial mangement system. The FY 2006 Delphi certification and 

accreditation (C&A) effort provides the Authorizing Official with important information 

necessary to make an informed, risk-based decision regarding the operation of Delphi. This C&A 

was performed against the new 2006 standards for C&A IT Security audits, NIST Special 

Publication 800-53/53A. The risk assessment for 2006 identified no “high risk” vulnerabilities in 

any of the Delphi controls. This is the first full recertification of Delphi that included all of 

Delphi’s subsystems. 

In addition, in 2006, a new educational program to ensure that the appropriate security training 

for all Delphi personnel from the head of the ESC to Delphi end users was conducted per NIST 

regulations. We maintain the confidentiality, integrity and accessibility for our Delphi systems by 

being NIST and OMB compliant with all security best practices, procedures, policies and laws in 

the most cost effective delivery of financial systems. 

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) significantly improves it’s ability to serve citizens, and that IT systems are secure, 

and delivered on time and on budget. Effective implementation of E-Government is important in 

making DOT more responsive and cost-effective. 

FY 2006 ACCOMPLISHMENTS 

The Department continues to participate actively in many of the Administration's governmentwide E-Government initiatives, such as grants management and E-Authentication, and others. 

The results allow the general public customers easy and secure access to their government. For 

example, DOT: 

• Increased public access to, awareness of, and the ability to apply through a 

central portal DOT grant opportunities; 

• Implemented a secure, standard E-Authentication mechanism for two major 

DOT business programs; and, 

164 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
• Made a large number of OMB forms available to citizens through the Business 

Gateway PMA E-Government Web site. 

During FY 2006, the Department’s efforts in the E-Government portion of the President’s 

Management Agenda had a number of important successes: DOT met established requirements 

and made further improvements in enterprise architecture, privacy, and capital planning. In 

FY 2006, over 99 percent of operational Information Technology (IT) systems have current 

certification and accreditation. DOT continued to update and refine enterprise architecture 

artifacts and plans that focus IT investment business functions. DOT also reduced cost, schedule 

and performance overruns and shortfalls for major projects to less than 10 percent. 

In the spring of 2006, DOT saw the successful completion of its headquarters IT infrastructure 

consolidation project. The project aimed to create a more mission-effective, secure, and costefficient Common Operating Environment (COE) to meet DOT IT infrastructure requirements. 

The scope of the IT consolidation program included the following specific IT services: 

Consolidated Information Security; Consolidated Help Desk; Network Management; Wide Area 

Network (WAN); Metropolitan Area Network (MAN); Local Area Network (LAN); 

Telecommunications; Remote Access; Electronic Mail (Email); Domain Name Service (DNS); 

End-User Devices; File Services; Print Services; Backup (Information); IT Support & 

Maintenance; File Storage; and Server Hosting. Participants in the project included all Operating 

Administrations (except FAA), and selected field activities nationwide. DOT successfully 

migrated all Operating Administrations (except FAA) to the DOT Common Operating 

Environment within established schedule and cost goals. In addition, DOT implemented a 2-tier 

Information Technology Infrastructure Library-compliant service management structure, 

reduced desktop support costs by 30 percent, and increased customer satisfaction from 82 percent 

to 93 percent. 

DOT also made great strides to address previously Inspector General identified information 

assurance weaknesses. DOT expanded its oversight and quarterly compliance review process to 

go beyond the C&A process to improve staff and executive level awareness and action on critical 

Plans of Action and Milestones, contingency planning and testing, annual security control testing, 

and awareness training. By implementing Department-wide improvements, DOT complies with 

the law and provides DOT management the assurance that IT assets are able to provide greater 

system security for services delivered to the public. 

BUDGET AND PERFORMANCE INTEGRATION 

Regular, systematic measurement and accountability for program performance compared to predetermined targets will be the means to improve DOT management. The 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. 

ORGANIZATIONAL EXCELLENCE STRATEGIC GOAL 165 
FY 2006 ACCOMPLISHMENTS 

Linking Performance to Resource Decision-Making. DOT continues to be recognized as a 

leader in Budget and Performance Integration and continues to build on previous efforts to 

improve the link between performance results to resource decisions and to hold executives and 

managers accountable for those results. In order to make financial and performance information 

available to executives and managers, the Department created a Web portal on the DOT Intranet 

providing links to performance, budget, and financial management information available 

throughout the Department. The Web portal approach was pursued after the Department, due to 

cost and funding constraints, terminated its implementation of a real-time Automated Dashboard 

Desktop User Interface (DASHboard) linked to the Department’s Delphi financial management 

system. 

DOT continues to incorporate results from the Program Assessment Rating Tool (PART) into the 

resource decision making process. Since the Office of Management and Budget (OMB) began 

assessing the Department’s programs using PART, it has resulted in DOT program offices 

justifying their budget requests based on actual performance results and focused program 

managers to fully address improvement recommendations received from OMB program 

examiners. DOT’s PART results, which are consistently above the Government-wide average, are 

presented to the Secretary of Transportation and her staff during the budget preparation process 

in order to better link resource allocation decisions to program results. PART results and 

performance measures are also documented in the final budget documents that are submitted to 

OMB and to Capitol Hill. 

During the FY 2006 budget cycle, DOT took performance budgeting to the next level by 

estimating the marginal cost of performance (what results can be achieved at different levels of 

funding) for selected programs. This approach was expanded to all modal administrations and 

for the FY 2007 budget cycle, all DOT modes will provide marginal cost information for at least 

one of their performance goals. For the FY 2008 budget cycle, each modal administration will 

provide marginal cost of performance information in their FY 2008 OMB budget submission for 

performance goals that have discretionary budget changes from the previous year in accordance 

with Departmental guidance. 

Recognized as a government leader in marginal cost methodologies, the Department continues to 

share lessons learned with other Federal agencies in order to provide all Government executives 

and managers the best information possible to make resource decisions. 

ELIMINATING IMPROPER PAYMENTS

The President’s Management Agenda (PMA) strives to instill first class financial management 

practices in departments and agencies throughout the Executive Branch. Such efforts ensure that 

taxpayer dollars are spent wisely and efficiently, appropriately accounted for, and protected from 

166 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
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 2006 ACCOMPLISHMENTS 

During FY 2006, DOT took significant steps toward the implementation of the Improper 

Payments Information (IPIA) Act of 2002. DOT’s efforts focused on program areas in three of 

our largest operating administrations: FHWA Highway Planning and Construction Program, 

FTA Formula Grants, and FAA Airport Improvement Program. 

Highway Planning and Construction Program. Leveraging innovative work that was 

accomplished in previous fiscal years, FHWA applied a standardized methodology to establish a 

nationwide improper payment rate in FY 2006. This comprehensive project involved an 

unprecedented level of cooperation and participation between State, Federal, and contractor 

personnel from all 50 States and two territories with a goal of obtaining a data-driven snapshot of 

improper payments in the Highway Planning and Construction Program. In the course of doing 

this work, fundamental root causes for improper payments were also documented so that policies 

and procedures can be instituted to prevent the reoccurrence of such transactions in the future. 

Because our methodology focuses on detailed transactions between the grantees (States and 

territories) and the sub-grantees (actual contractors performing the work), we have found 

opportunities for improvement at the base level of payments. We have participated in 

discussions, which may lead to the application of our methodologies to other Federal grant 

programs across the government. 

FTA Formula Grants and FAA Airport Improvement Program. During FY 2006, DOT also 

took significant steps forward in classifying and scoping improper payments in FTA’s Formula 

Grants and the FAA’s Airport Improvement Program. In conjunction with OMB, our objective 

was to arrive at rates of improper payments for both programs. Activity this fiscal year focused 

on the development of a methodology that would facilitate valid statistical sampling and analysis. 

As a result, DOT was able to achieve its objective of deriving a component improper payment rate 

for both programs. This methodology and related lessons learned will be expanded to obtain a 

nationwide perspective in FY 2007. 

FEDERAL REAL PROPERTY ASSET MANAGEMENT 

It is the policy of the United States to promote the efficient 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 

ORGANIZATIONAL EXCELLENCE STRATEGIC GOAL 167 
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 2006 ACCOMPLISHMENTS 

On behalf of the Department, the FAA provided inventory information and performance 

measures to the Federal Real Property Council (FRPC), that included metrics for the 

approximately 69,500 DOT real property assets. The data and performance measures are 

maintained in the Real Estate Management System (REMS) which serves as the single-point 

inventory database for DOT real property assets. The full inventory of real property assets will be 

transmitted to the Federal Real Property Profile (FRPP) in FY 2007 for inclusion in the full 

Federal real property inventory database. 

In accordance with the DOT Asset Management Plan (AMP) and during the preparation of the 

Department’s Three-Year Timeline for Real Property, each of the OAs was offered the opportunity 

to review the data and identify properties for disposition based on the mode’s asset inventory and 

the Department’s decision-making process. 

In addition, the investment list was prioritized across the DOT portfolio of assets. The 

investment priorities were sorted by fiscal year, rather than by Operating Administration and 

functional area as previously reported. Prioritization was established using the following 

parameters: 

• Mission criticality; 

• Facility condition index; 

• Utilization Rate; and, 

• Annual Operating Costs. 

The prioritized list it will aid the Department in managing its wide-range of real property assets at 

the constructed asset level. 

RESEARCH, DEVELOPMENT, AND TECHNOLOGY (RD&T)

Through RITA’s management of the RD&T coordination function, leadership has identified the 

emerging research priorities that the Department intends to pursue over the next several years. 

The plan incorporates the RD&T programs of all DOT operating administrations and considers 

how research by other Federal agencies, State departments of transportation, the private sector, 

and others contributes to DOT goals and how unnecessary duplication is avoided. 

168 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Over the next several years, a number of external factors will affect the Department’s ability to 

achieve transportation goals, some of which will create particular challenges for RD&T. These 

include globalization, the economy, demographic and lifestyle changes, transportation fuel, 

obstacles to intermodalism, declining revenue in transportation trust funds, constraints on 

expanding capacity, and advances in technology. 

The Department’s emerging research priorities were selected by DOT leadership to help focus the 

Departmental R&D resources. Research priorities include human–automation interaction, 

application of enhanced transportation safety data and knowledge, congestion reduction policy 

research and technologies, system resilience and global logistics, next generation air 

transportation system, and energy efficiency and alternative fuels. 

organizational excellence performance goals 

In addition to the President’s Management Agenda, DOT also manages for results by tracking our 

progress in acquisition management and financial stewardship. Through these measures, DOT 

endeavors to improve organiztional performance and productivity. 

ACQUISITION MANAGEMENT FY 2006 ENACTED FUNDS

$0.6 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 efficiently, and manage services and assets over 

their lifecycle. The overarching goal is continuous improvement in the delivery of safe, secure, 

and efficient services over time. DOT ensures that taxpayer dollars spent through DOT’s 

acquisition programs achieve performance outcomes required by tracking, cost and schedule 

milestones. 

2006 Results. FAA exceeded the 

FY 2006 performance targets for major 

acquisitions cost and schedule. FAA 

tracked 39 milestones against 29 

acquisition programs for this 

performance measure and has met the 

variances for cost and schedule. 

2003 2004 2005 2006

80 80 80 85

88 100 97 100

Performance Measure 

For major DOT aviation systems, percentage of cost goals 

established in the acquisition project baselines that are met 

Target 

Actual 

ORGANIZATIONAL EXCELLENCE STRATEGIC GOAL 169 
The FAA’s success in meeting these yearly 

acquisition goals is attributable to our 

continued efforts to incorporate and 

apply effective management control 

processes. We are segmenting large, 

complex investment programs into 

development, demonstration, or 

production phases, with the Joint 

Resources Council (JRC) approving each 

phase incrementally. Segmentation 

clarifies schedules and allows the JRC to assess how well work is progressing before approving 

subsequent phases. This gives the FAA better control of costs and schedules. 

2003 2004 2005 2006

80 80 80 85

77 (r) 91.5 (r) 92 97.4

(r) Revised 

Performance Measure 

For major DOT aviation systems, percentage of scheduled 

milestones established in acquisition project baselines that are met 

Target 

Actual 

We are using Earned Value Management (EVM) techniques for contracts where there is 

significant risk to the Government. With the use of EVM as a project management tool, we are 

able to optimize project planning and control through integration of the project scope of work 

with cost, schedule, and performance elements. Major programs were assessed against the 

industry standard for EVM compliance and action plans put in place to achieve full compliance. 

Continued surveillance reviews will ensure continuity of program planning and the reliability of 

performance data. 

FY 2007 Performance Forecast. DOT anticipates meeting the performance targets in FY 2007. 

FINANCIAL STEWARDSHIP FY 2006 ENACTED FUNDS

$1.1 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 projects are critical to identify problems and initiate action to mitigate risks. Three 

Operating Administrations have projects included in the following infrastructure project 

performance measures: FTA, FAA, and FHWA. 

2006 Results. Although FTA and FAA 

projects are all within ten percent of cost 

and schedule milestones, excessive cost 

and schedule variances on certain 

FHWA projects prevented the 

Department from meeting its overall 

targets for keeping major infrastructure 

projects on schedule and within budget. 

2003 2004 2005 2006

95 95 95 95

88 95 95 91

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 

Target 

Actual 

170 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
FTA has four mega projects (active New 

Starts projects with Full Funding Grant 

Agreements (FFGA) that exceed 

$1 billion). The four projects included in 

the measure are: New Jersey HudsonBergen-Minimum Operable Segment 

(MOS) II Light Rail; San Juan Tren 

Urbano Heavy Rail; Denver Southeast 

Corridor Project; and, Seattle Central 

Link Light Rail. All of the FTA projects 

are within 10 percent of the cost estimates and schedule milestones associated with their current 

FFGA. 

2003 2004 2005 2006

95 95 95 95

88 74 79 82

Performance Measure 

For major Federally funded infrastructure projects, percentage 

that meet cost estimates established in project or contract 

agreements, or misss them by less than 10 percent 

Target 

Actual 

The following activities contributed to FTA’s success in meeting the performance targets for the 

infrastructure projects. FTA initiated a risk management program for its major capital projects. 

FTA’s risk management is a continuous process that includes a formal planning activity, 

assessment activities, a mitigation strategy for selected risks, and monitoring the progress in 

reducing the selected risks to the desired level. The risk assessment for project cost and schedule 

is performed by FTA’s Project Management Oversight (PMO) contractors and identifies and ranks 

the highest areas of risk. The report is then used as a guide to establish a risk mitigation plan with 

which to monitor risk through the completion of the project. This risk management program 

creates a confidence level for the project budget and schedule, and enables FTA and the grantee to 

proactively manage the project. 

FAA has major runway projects at St. Louis, Seattle-Tacoma, and Atlanta. In FY 2006, both 

Lambert St. Louis International and Atlanta Hartsfield-Jackson International opened one new 

runway. FAA also added one new project, Phase 1 of the Chicago O’Hare Modernization 

Program (OMP), consisting of one new runway construction, an existing runway relocation, and 

one runway extension. Both major runway projects and OMP Phase 1 are on schedule and within 

cost. The Seattle-Tacoma runway is on schedule to open in 2008 and OMP Phase 1 is on schedule 

for completion in 2009. 

FHWA has approved financial plans or their annual updates for 14 major projects. Of the 

14 major projects that have reached the financial plan stage, 11 of 14, or 79 percent, are currently 

on or within allowable budget variances. In addition, 12 of 14 projects, or 86 percent, are within 

the forecasted schedule completion variance. The targets of 95 percent were not met because 

some projects exceeded their baseline estimates for cost and schedule by at least 10 percent. 

There are numerous project specific reasons for this situation including overly optimistic initial 

cost estimates. Once a project exceeds the threshold for cost, it is difficult to meet the threshold 

in future years. 

ORGANIZATIONAL EXCELLENCE STRATEGIC GOAL 171 
 

FY 2007 Performance Forecast. DOT will have difficulty meeting both the cost and schedule 

targets for infrastructure projects in FY 2007. 

2006 Results. FTA met the target for 

FY 2006. The amount of time to process 

grants was reduced from an average of 67 

days in 2001 to an estimated 28 days in 

2006. 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. The improvements in the timeliness of grant processing have 

resulted in improved customer service. FTA has continued to build on and refine initiatives 

implemented in FY 2004 and FY 2005 to improve grant processing time, including: 

2003 2004 2005 2006

80 80 80 80

83 91 91 94

Performance Measure 

Percentage of transit grants obligated within 60 days after 

submission of a completed application 

Target 

Actual 

• Implementing an electronic Grants Notification 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 processing earlier in FY 2006 as a result of monthly 

reconciliation of TEAM data during FY 2005; 

• Continuing to work with the Department of Labor (DOL) to streamline

procedures for certifying grants; 

• Continuing the expedited notification of certification by the DOL; and, 

• Resolving mid-year problems with electronic notification to DOL resulting from 

new computer security firewall protections. 

FY 2007 Performance Forecast. FTA anticipates meeting the FY 2007 target. 

ENVIRONMENTAL JUSTICE 

The Environmental Justice measure was part of the DOT 2000-2005 Strategic Plan. Last year was 

the first year of reporting under the DOT 2003-2008 Strategic Plan and this measure was retained 

in error. Consistent with the DOT 2003-2008 Strategic Plan, we have discontinued reporting this 

information. 

172 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
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 sufficient accuracy 

and timeliness but at a reasonable cost. This 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 fiscal year basis. However, there are instances where fiscal year data are not available 

so calendar year data are used instead. This often occurs when data are collected and reported to 

DOT by external sources and a calendar year reporting requirement is specified 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 finalized 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. The result is identified 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. The result is identified as a projection in the report. As 

data are finalized, 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 

identified in the data verification process, as updated information is provided by the reporting 

sources, or because of legal or other action that changes a previously-reported value. 

PERFORMANCE DATA COMPLETENESS AND RELIABILITY 173 
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 

influenced 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. 

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_compendiu 

m/index.html. The 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 Deparmental 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 

effects of unanticipated errors. These include verification of data collection and coding, as well as 

coverage, response and non-response error studies to measure the extent of human error affecting 

the data. As sources of error are identified, data collection is improved. 

The 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. The data often 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. This 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. 

174 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
DATA LIMITATIONS

DOT Data Source Limitations. Timeliness is the most significant 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 five 

years. Data that are collected each year (or more frequently) require time to analyze, confirm and 

report results. For example, Highway Performance Monitoring System vehicle-miles traveled 

(VMT) data require several months of post-collection processing, making final results unavailable 

for this performance report. 

Other performance measurement data limitations are identified in the previously mentioned 

Source and Accuracy Statements for DOT data programs. These 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, most of the 

FY 2006 measures must be projected from either partial-year data or historical trends. The 

projections based on partial-year data from FY 2006 are more likely to reflect changes effected by 

current DOT policies and programs. The measures projected from FY 2005 and prior historical 

data reflect continuing trends from ongoing programs, but do not reflect the effects of changes 

implemented in FY 2006. 

External Data Source Limitations. Data that originates from external or third-party sources are 

not directly controlled by DOT. These data often come from administrative records or from 

sample surveys. Timeliness is also a significant 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. 

PERFORMANCE DATA COMPLETENESS AND RELIABILITY 175 
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 fiscal years. This appendix provides a summary of DOT's program 

evaluation efforts and a report on program evaluations scheduled for completion in FY 2006. In 

addition, updates of FY 2005 evaluations that were not completed when last year’s PAR went to 

press are also included to maintain continuity across fiscal years. 

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. These 

represent the highest standard of program evaluations and are often the most 

difficult and expensive to construct and interpret. 

• Outcome Evaluations assess the extent to which programs achieve their 

outcome-oriented objectives. Outcome evaluations will use quantitative 

methods to assess program effectiveness, 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-Benefit and Cost-Effectiveness Analyses compare a program's outputs or 

outcomes with the costs to produce them. This type of analysis conforms with 

program evaluation when applied systematically to existing programs and when 

measurable outputs and outcomes are monetized. 

176 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
PROGRAM EVALUATION MANAGEMENT 

DOT staff, contractors, academic institutions, the Office of the Inspector General (OIG), or the 

Government Accountability Office (GAO) may conduct program evaluations. Program 

evaluation efforts are designed to ensure that the finished evaluations are useful regardless of who 

conducts the evaluation or the methodology used. 

The programs selected for evaluations are vetted through the Department’s strategic planning 

process. Each modal administration nominates programs that are then reviewed by a strategic 

planning executive committee to ensure two things: 1) adequate breadth of program evaluations 

across modal administrations; and 2) alignment to the strategic goals developed through the 

planning process. The OIG and the GAO continue their own program evaluations independent 

of this schedule, as deemed appropriate. 

fy 2006 program evaluation summaries 

A summary of DOT program evaluations scheduled for completion in FY 2006 follows. 

EVALUATION OF NATIONAL TRAFFIC SAFETY ENFORCEMENT MOBILIZATIONS

Safety belt use is the most effective countermeasure available to passenger vehicle occupants to 

prevent fatalities and injuries in highway motor vehicle traffic crashes. This being the case, 

NHTSA has encouraged States to aggressively enforce laws mandating the use of safety belts in 

motor vehicles. Data indicates that safety belt use has increased over the preceding six year 

period as shown below: 

DOT PROGRAM EVALUATIONS 177 
As part of the enforcement effort, the Click It Or Ticket (CIOT) campaign was established to 

promote safety belt use. The CIOT program includes: the use of high visibility enforcement 

mobilizations by local law enforcement officials, paid advertisements focusing on safety belt 

enforcement, measurement of motorists’ awareness of safety belt campaigns, and measurement of 

the change in the rate of seat belt use. 

Related Strategic Goal: Safety 

The purpose of this outcome evaluation is to determine the effectiveness of various CIOT 

program components in increasing the overall safety belt usage rate. Data collection is ongoing to 

determine the amount of funds spent for enforcement actions and advertising. In addition, the 

results of State reported surveys of safety belt use, motorist knowledge/attitude surveys 

administered at Driver Licensing offices, and a national telephone survey conducted pre/post 

yearly mobilization efforts are being analyzed to track progress. 

Both the FY 2004 and FY 2005 evaluation results will be published by the end of 2006 and the 

FY 2006 results will be published by December 2007. 

EVALUATION OF FRA’s RESEARCH, DEVELOPMENT, AND DEMONSTRATION 

PROGRAM 

The Federal Railroad Administration (FRA) Research, Development and Demonstration (RD&D) 

Program conducts work that directly supports the agency's regulatory safety mission. The 

purpose of the program is to support FRA's efforts to sustain the safety and efficiency of the rail 

system. 

Related Strategic Goal: Safety 

Based on the recommendations of a 2004 program 

assessment, FRA is in the process of completing a strategic 

framework for managing the program and its component 

research projects. This will involve developing multi-year 

RD&D program plans that contain detailed schedule and 

budget information as well as clear explanations of how 

projects support Department-wide goals. After the 

completion of the framework and program plans in 

FY 2007, annual reviews of the program will commence. 

© AP Photo/Reed Saxon 

178 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
RAILROAD SAFETY BOARD EVALUATION 

The Railroad Safety Board reviews and approves, or denies, waiver petitions, block-signal 

applications, and requests for special approval submitted by railroads and other parties subject to 

the applicable regulations. A third party review of the Railroad Safety Board was initiated in 

order to improve the effectiveness and efficiency of the Board. The evaluation was performed by 

private contractor, Zeta-Tech Associates, Inc. 

Related Strategic Goal: Safety, Organizational Excellence 

The evaluation objectives included the following: 

• Review the overall operations of the Railroad Safety Board; 

• Assess the completeness of documentation relating to the review process; 

• Check the availability of standard forms and instructions to applicants; 

• Analyze the processes and performance of the Board as compared to similar 

DOT agencies and other regulatory bodies; and, 

• Develop recommendations to improve the efficiency and effectiveness of the 

Railroad Safety Board. 

In performing the process evaluation, Zeta-Tech interviewed FRA staff, Safety Board Members, 

and railroad representatives. They also reviewed documentation outlining the waiver process and 

attended multiple Railroad Safety Board meetings. Based on the recommendations provided by 

Zeta-Tech, FRA has taken the actions indicated in the list below. 

• The Safety Board will retain the current membership structure but underlying 

support has been enhanced with greater administrative staff participation. As 

part of the overall modifications to correspondence handling procedures, 

documentation of the entire waiver process was reviewed and rewritten. This 

documentation is now available to internal participants in both electronic and 

hard-copy format. This has clarified the steps involved in the waiver process and 

delineated individual responsibilities. 

• A Web page has been posted to the FRA website explaining the requirements for 

a waiver petition or block signal application. This ensures that standards are 

followed for each submission. The requestors also benefit as they are able to 

read about the overall process and see what information is expected from them, 

arranged by type of request, along with projected time frames for completion. 

DOT PROGRAM EVALUATIONS 179 
• Many waivers have conditions and restrictions added by the Safety Board to 

clarify when and how the waiver is in effect. Copies of every decision letter are 

currently sent to each regional office in hard-copy format, and are electronically 

posted to the DOT Document Management System and are also attached to the 

waiver tracking system available to Office of Safety personnel. The 

Correspondence Control Manager is used by headquarters and regional offices 

for tracking of waivers. The Office of Safety is working toward making this an 

online process, allowing all field personnel to check for conditions and 

restrictions, even when not connected to the FRA network. In addition, many 

of the field users use e-mail to send copies of the decision letters to co-workers. 

• On the day(s) that the Safety Board convenes, staff members that worked on 

waivers being considered are now available in person or by telephone to answer 

any questions or supply technical expertise for the Safety Board. If the staff 

member is not available, a designate will be available who has been fully briefed 

and can provide information in support of the position taken by the original 

staffer. This is a departure from past practice, since many staff members 

regularly scheduled travel on the day the Safety Board met. 

FMCSA PERFORMANCE MEASUREMENT AND LINKAGES PROGRAM EVALUATION 

The Performance Measurement and Linkages Program evaluation focused on an assessment of 

the underlying mission, goals, objectives and strategies of Federal Motor Carrier Safety 

Administration (FMCSA), and development of strategic plans, integrated performance budgets 

and operational plans based on sound performance measurement. 

Related Strategic Goal: Organizational Excellence 

This process evaluation focused on the current quantitative measures being used by the Agency in 

defining accomplishments, and recommended ways to more closely align the planning and 

budgeting processes. It also provided analysis into the validity of Agency performance measures 

and related measurement tools. 

The findings identified the following recommendations: 

• FMCSA should more clearly integrate performance measurement, strategic 

planning and the performance budget; 

• FMCSA should redefine the fatality rate performance measure; 

• FMCSA could measure the number of commercial investigations launched and 

the number of household goods (HHG) complaint calls received to measure 

achievement of the HHG strategic objective; and, 

180 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
• FMCSA should develop research, development and technology performance 

measures. 

FMCSA has already begun implementing the evaluation recommendations. Upcoming actions 

include the following: 

• FMCSA will release a refreshed 2006-2011 modal strategic plan in the fall of 

2006 that more clearly ties strategic goals, performance measures and the 

integrated performance budget together; 

• FMCSA has begun reviewing the fatality rate performance measure to

determine if it is accurate and the best indicator of performance of safety

programs;

• FMCSA has developed several new performance measures for the FY 2008 

budget request that track responsiveness to complaints and targeted 

investigations; 

• FMCSA will develop new research, development and technology performance 

measures for the FY 2008 budget; and, 

• FMCSA has developed a new process for documenting performance measures, 

tracking them within the Agency budget, and validating their measurement 

processes. 

In addition to the findings related to current strategies and measures, the evaluation also provided 

recommendations for improvement of the Agency’s internet-based Accomplishments Tracking 

System and identified issues to be considered in long-term authorization planning. 

EVALUATION OF THE COMPLIANCE REVIEW IMPACT ASSESSMENT MODEL 

A Compliance Review (CR) is an onsite examination of a motor carrier’s operations to determine 

the carrier’s safety fitness. FMCSA, in cooperation with the Volpe National Transportation 

Systems Center, has developed an analytic model to measure the effectiveness of the Compliance 

Review in terms of crashes avoided, injuries avoided, and lives saved. This 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 

effectiveness 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 field 

safety resources. This analytic tool is known as the CR Effectiveness Model. 

DOT PROGRAM EVALUATIONS 181 
Related Strategic Goal: Safety 

The CR Effectiveness Model shows the direct impact of compliance reviews on motor carrier 

safety, but not the "deterrent" effects (i.e., the effect on a carrier's behavior due to the potential of 

having a CR). The model is based entirely on "before and after" changes in the safety performance 

of motor carriers that received CRs. The model compares a motor carrier's crash rate in the 

12-month period after 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. 

This impact evaluation focused on CRs conducted in 2002 and 2003 to identify the extent to 

which the model could be used and to identify the associated benefits. In 2002, 12,139 

compliance reviews were conducted. The analytical model was able to assess the impact of 9,172 

of these reviews (some compliance reviews are removed from the model because the motor 

carrier receiving the compliance review was not active 12 months after 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 2002 to 

2003, 1,426 crashes were avoided, 1,087 injuries were avoided, and 62 lives were saved as result of 

performing compliance reviews in 2002. 

In 2003, 11,086 compliance reviews were conducted. The analytical model was able to assess the 

impact of 8,587 of these reviews. Based on this assessment, it is estimated that during the period 

from 2003 to 2004, 2,276 crashes were avoided, 1,651 injuries were avoided, and 90 lives were 

saved as result of performing compliance reviews in 2003. 

EVALUATION OF THE ROADSIDE INSPECTION/ TRAFFIC ENFORCEMENT 

ANALYTICAL MODEL 

FMCSA, in cooperation with the Volpe National Transportation Systems Center, has developed 

an analytic model to measure the effectiveness of roadside inspections and traffic enforcements in 

terms of crashes avoided, injuries avoided, and lives saved. This model provides FMCSA 

management with information to address the requirements of the Government Performance and 

Results Act of 1993 (GPRA), which obligates Federal agencies to measure the effectiveness 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 safety resources in 

the field. This analytic model is known as the Intervention Model. 

182 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Related Strategic Goal: Safety 

The Intervention Model is based on the premise that the two programs— 

Roadside Inspection and Traffic Enforcement—directly and indirectly 

contribute to a reduction in crashes. The model includes two components 

that are used for measuring these different effects, the direct effects model 

component and indirect effects model component. Direct effects 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 to measure the direct 

effects of the intervention, the model assigns crash risk probabilities to 

each of the violations found at the roadside. The model then calculates 

direct-effect-prevented crashes according to the number and type of 

violations detected and corrected during the intervention. 

© AP Photo/Ric Francis 

Indirect effects 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 effects, 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 effectiveness during the 2004 

activity year using March 25, 2005, data extracted from the Motor Carrier Management 

Information System (MCMIS). The number of inspections as well as the model results are shown 

below for 2004 and the previous two years. 

Number of Inspections 

Calendar Year 2002 2003 2004 

Roadside Inspections 2,255,921 2,215,762 2,211,875 

Traffic Enforcements 762,561 791,157 803,032 

Total Interventions 3,018,482 3,006,919 3,014,907 

DOT PROGRAM EVALUATIONS 183 
Program Effectiveness 

Calendar Year 2002 2003 2004 

Roadside Inspections 16,387 17,151 18,673 

Traffic Enforcements 12,716 13,062 13,615 

Total Interventions 781 722 722 

COMMERCIAL DRIVERS LICENSE PROGRAM EVALUATION 

The objective of the Commercial Drivers License (CDL) program evaluation is to assess how well 

the CDL program is meeting its implicit goal of improving highway safety, which includes 

preventing unqualified drivers from obtaining a CDL and ensuring that commercial drivers are 

disqualified from driving when appropriate. Phase I of the evaluation used existing data to assess 

the program’s effectiveness and was completed in July 2005. Phase II of the evaluation is 

gathering additional data and is scheduled for completion in 2007. 

Related Strategic Goal: Safety 

Findings from the Phase I impact evaluation include: 

• FMCSA issued 464 citations to States for non-compliance with Federal 

Regulations for preventing unqualified drivers from obtaining CDLs. For those 

regulations specific to this issue, States are having the greatest difficulties 

meeting requirements related to testing and background checks on drivers (49 

CFR Part 384, Sections 201-205). 

• FMCSA issued 1,260 citations to States for non-compliance with Federal 

Regulations to remove bad drivers from the road. For those regulations specific 

to this issue, States are having the greatest difficulties meeting requirements 

related to State disqualification of drivers and recordkeeping (49 Code of Federal 

Regulations (CFR) Part 384, Sections 231 and Sections 215-219). 

• Issues involving the potential for obtaining fraudulent CDLs are addressed 

during the State Compliance Reviews. All States are meeting some requirements 

to prevent fraud; however, the potential for unqualified drivers to obtain 

fraudulent CDLs still exists. 

184 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
As a result of these findings, FMCSA has taken significant steps to improve oversight of the CDL 

program, including implementation of more thorough and more frequent reviews of State CDL 

programs. The final portion of the review (Phase II) is accumulating diverse stakeholder 

feedback through surveys and focus groups to help determine why the States are not fully 

successful, with the goal of recommending additional improvements to the CDL program. 

EVALUATION OF DOT’S RESEARCH AND DEVELOPEMENT STRATEGIC PLANNING

PROCESS

Congress directed the Government Accountability Office (GAO) to assess Research and 

Innovative Technology Administration’s (RITA’s) coordination of DOT’s research and 

development activities and to evaluate how RITA is resolving concerns about the process raised 

by its predecessor organization—the Research and Special Programs Administration (RSPA). 

Related Strategic Goal: Organizational Excellence 

The purpose of the GAO evaluation was to: (1) determine how RITA’s responsibilities for 

overseeing DOT’s Research, Development, and Technology (RD&T) activities differ from RSPA’s; 

(2) identify RITA’s practices for coordinating, facilitating, and reviewing RD&T activities; and 

(3) evaluate the progress RITA has made in implementing previous GAO recommendations made 

to RSPA in 2003. 

GAO collected information through legislative histories, document reviews, and interviews to 

compare RITA with RSPA with respect to mission, organizational structure, oversight of RD&T 

activities, budgetary resources, and strategic goals. 

The findings from the GAO evaluation were as follows: 

• RITA differs from RSPA in proposed budgetary levels, authority for evaluation, 

and extent of multi-modal focus; 

• RITA has established several coordination, facilitation, and review groups and 

practices, but lacks performance goals and a plan for evaluating its own efforts; 

• RITA has made some progress in implementing the GAO’s recommendations 

from 2003, partially implementing four of the five recommendations previously 

identified. 

GAO made several recommendations to the Secretary of Transportation to enhance RITA’s ability 

to manage and ensure the effectiveness of RD&T activities. GAO urged RITA to develop and 

incorporate into its annual budget process and upcoming RD&T strategic plan: 

DOT PROGRAM EVALUATIONS 185 
• Performance goals and an overall implementing strategy to ensure the

effectiveness of the Department’s RD&T investment; 

• Common performance measures for DOT RD&T programs; 

• A strategy for identifying and reviewing all DOT RD&T projects to determine 

duplication, overlap and opportunities for joint efforts; 

• A strategy to ensure that the results of all DOT RD&T activities are evaluated 

according to established best practices; 

• A summary of all RD&T program evaluations conducted in the last three years 

and a schedule for future evaluations; and, 

• A description of RITA’s process for systematically evaluating the results of its 

own multi-modal research programs. 

EVALUATION OF THE NATION’S HIGHWAYS, BRIDGES AND TRANSIT

(CONDITION AND PERFORMANCE REPORT)

The Conditions and Performance (C&P) Report provides Congress and other decision makers an 

appraisal of highway, bridge and transit physical conditions, operational performance, financing 

mechanisms, and future investment requirements. The C&P Report consolidates conditions, 

performance, and finance data provided by States, local governments, and transit operators to 

provide a national summary. 

Related Strategic Goals: Safety, Mobility, Environmental Stewardship, Global Connectivity, 

Security, and Organizational Excellence 

Executive Order 12893, Principles for Federal Infrastructure Investments (January 1994), directs 

each Executive Department and Agency with infrastructure responsibilities to base investments 

on systematic analysis of expected benefits and costs, including both quantitative and qualitative 

measures. The highway investment requirements in the C&P Report are developed in part from 

the Highway Economic Requirements System, which quantifies user, agency and societal costs for 

various types and combinations of improvements including travel time, vehicle operating, safety, 

capital, maintenance, and emissions costs. The National Bridge Investment Analysis System uses 

engineering and benefit-cost analysis to evaluate bridge investment requirements. Transit 

investment analysis is based on the Transit Economic Requirements Model (TERM), which 

consolidates engineering and cost/benefit analysis. TERM identifies the investments needed to 

replace and rehabilitate existing assets, improve operating performance, and expand transit 

systems to address the growth in travel demand and evaluate these needs to select future 

investments. The 2006 version of the C&P Report was completed in May 2006 and will be 

released upon review and approval by the Office of Management and Budget. 

186 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
MANAGING THE PHYSICAL SECURITY OF FAA FACILITIES EVALUATION 

The FAA operates systems and facilities, including Air Traffic Control Centers, Terminal Radar 

Approach Control facilities, air traffic control towers, and supporting facilities that collectively 

make up the National Airspace System (NAS). The President, through the publication of 

Homeland Security Presidential Directive-7, dated December 17, 2003, designated the NAS as 

part of the Nation’s critical infrastructure because of commercial aviation’s role in fostering and 

sustaining the national economy and ensuring the safety and mobility of air travelers. 

Related Strategic Goal: Security 

The FAA has established physical security requirements to ensure the safety and security of the 

NAS, FAA personnel, and assets. These security requirements are implemented through the 

FAA’s Facility Security Management Program. All staffed NAS facilities are periodically assessed 

and inspected for program compliance. Security shortfalls or “findings” are aggressively tracked 

until corrected. Once all required security measures are implemented at a facility, the facility 

receives security “accreditation.” The FAA has completed assessments at all of its staffed facilities 

and continues to work toward completing accreditation. 

The DOT OIG conducted an independent evaluation to assess the adequacy of physical security 

at FAA facilities. The OIG concluded that the FAA has continued to improve its security 

measures since the September 11th attacks and has taken steps to strengthen its physical security 

environment. Nevertheless, physical security weaknesses at FAA facilities were identified and the 

OIG made recommendations for improvement that the FAA is actively pursuing. 

The OIG's report is protected as sensitive security information and is not released to the public. 

FY 2005 program evaluation updates 

For those evaluations that were scheduled for completion in FY 2005 and did not have results 

available for publication in the FY 2005 Performance and Accountability Report, an update is 

provided below. 

EVALUATION OF AUTOMOBILE SIDE IMPACT PROTECTION 

Side impacts rank second only to frontal impacts as a cause of occupant fatalities in cars, light 

trucks and vans. Federal Motor Vehicle Safety Standard 214 sets minimum performance 

requirements in side impacts. The requirements were phased into passenger cars during model 

years 1994 to 1997 and extended to light trucks and vans in model year 1999. 

DOT PROGRAM EVALUATIONS 187 
Related Strategic Goal: Safety 

The results of this outcome evaluation will not be published by the end of FY 2006 as planned. 

This evaluation is subject to new Office of Management and Budget (OMB) peer review 

requirements. Although the review is nearing completion, the added level of review will delay 

publication until sometime in FY 2007. 

LARGE TRUCK CRASH CAUSATION STUDY 

The Government Accountability Office and the Department of Transportation’s Inspector General 

stated in separate reports in 1999 that the lack of large truck crash causation data hampers 

FMCSA program effectiveness. In addition, the Motor Carrier Safety Improvement Act of 1999 

authorized funding for a study of the causes of commercial vehicle crashes. In response, in 

cooperation with the National Highway Traffic Safety Administration (NHTSA), FMCSA 

initiated the Large Truck Crash Causation Study (LTCCS); the first-ever National study of the 

causes of crashes involving large trucks. 

Related Strategic Goal: Safety 

Nationally representative data on the primary and 

secondary causes of serious large truck crashes were 

collected by teams of trained investigators from NHTSA’s 

National Automotive Sampling System and FMCSAfunded State truck inspectors. The goal of the LTCCS was 

to determine the reasons for, and factors contributing to, 

serious large truck crashes, so FMCSA can take the results 

of this process evaluation and implement the most effective 

countermeasures to reduce crash occurrence and severity. 

© AP Photo/Lisa Poole 

The LTCCS collected data on crashes in 24 sites in 17 States 

from 2000 through 2003. All the crash data were collected and encoded into a database. In 

March 2006, FMCSA completed a report to Congress on the LTCCS results. Information and 

findings from the evaluation included: 

• Most of the crashes involved collisions with another motor vehicle, usually a

passenger vehicle;

• About two-thirds of the trucks involved in the crashes were truck tractors

pulling a single semi-trailer;

188 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
• The immediate reason for large truck crashes in an overwhelming majority of 

the cases was an action or inaction by the driver of the truck or the passenger 

vehicle involved; 

• Driver recognition and decision errors were recorded most often for drivers of 

both trucks and passenger vehicles; 

• Truck drivers were in better condition to drive and made fewer driving

performance errors than passenger vehicle drivers; 

• Fatigue was a significant issue for truck drivers, but was recorded even more 

often for passenger vehicle drivers; 

• Alcohol and illegal drug use was rare among truck drivers, but more common 

among passenger vehicle drivers; and, 

• Trucks were recorded with much higher rates of mechanical problems than 

passenger vehicle drivers, usually brake problems. 

FMCSA is analyzing the results of this evaluation and will use the findings to improve the 

Agency’s safety programs. 

BUS CRASH CAUSATION STUDY 

In 2004, FMCSA initiated the Bus Crash Causation Study (BCCS) as a complementary and 

follow-on effort to the Large Truck Crash Causation Study (LTCCS). The goal of the BCCS is to 

determine the reasons for, and factors contributing to, serious bus crashes, so FMCSA can take 

the results of this process evaluation and implement the most effective countermeasures to reduce 

crash occurrence and severity. 

Related Strategic Goal: Safety 

The BCCS uses the same data collection methodology as followed in the LTCCS. Data collection 

was initiated in 2004 and will continue through 2006, with a release of initial data and findings to 

Congress and the public scheduled for FY 2007. By August 2006, investigations of 32 bus crashes 

had been conducted. 

DOT PROGRAM EVALUATIONS 189 

Financial Report 

DEPARTMENT OF TRANSPORTATION 

CONSOLIDATED BALANCE SHEET 

As of September 30, 2006 2005 

Dollars in Thousands 

ASSETS (Note 2) 

Intragovernmental

Fund Balance with Treasury (Note 3)

Investments (Note 4)

Accounts Receivable, Net (Note 5)

Other Assets (Note 6)

Total Intragovernmental Assets 

Cash and Other Monetary Assets

Accounts Receivable, Net (Note 5)

Loans Receivable and Related Foreclosed Property, Net (Note 7)

Inventory and Related Property, Net (Note 8)

General Property, Plant & Equipment, Net (Note 9)

Other Assets (Note 6)

Total Assets 

Stewardship Property, Plant & Equipment (Note 10) 

LIABILITIES (Note 11) 

Intragovernmental

Accounts Payable

Debt (Note 12)

Other Intragovernmental Liabilities (Note 13)

Total Intragovernmental Liabilities 

Accounts Payable

Loan Guarantees (Note 7)

Federal Employee and Veterans’ Benefits Payable

Environmental and Disposal Liabilities (Note 15)

Grant Accrual (Note 14)

Other Liabilities (Notes 13 & 17)

Total Liabilities 

Contingencies and Commitments (Note 17) 

NET POSITION 

Unexpended Appropriations - Earmarked Funds

Unexpended Appropriations - Other Funds

Cumulative Results of Operations - Earmarked Funds

Cumulative Results of Operations - Other Funds

Total Net Position 

Total Liabilities and Net Position 

The accompanying notes are an integral part of these financial statements. 

$ 27,692,908 $ 29,140,842

19,824,151 19,000,999

212,616 358,857

37,946 96,346

47,767,621 48,597,044

27,639 40,573

103,371 144,567

618,179 760,448

897,494 939,639

15,455,811 15,325,392

195,506 160,883

$ 65,065,621 $ 65,968,546 

$ 21,271 $ 182,710

839,357 952,536

3,212,891 3,378,564

4,073,519 4,513,810

403,722 226,045

345,864 393,451

950,466 1,007,303

953,634 1,003,585

5,546,895 4,086,728

1,409,182 1,641,416

$ 13,683,282 $ 12,872,338 

$ 682,501

7,799,530 5,448,954

30,053,924

12,846,384 47,647,254

$ 51,382,339 $ 53,096,208 

$ 65,065,621 $ 65,968,546 

FINANCIAL REPORT 193 
DEPARTMENT OF TRANSPORTATION 

CONSOLIDATED STATEMENT OF NET COST 

For the Years Ended September 30, 

Dollars in Thousands 

2006 2005 

PROGRAM COSTS (Notes 19 & 20) 

SURFACE TRANSPORTATION 

Gross Costs $ 46,922,501 $ 42,519,917

Less: Earned Revenue 395,325 210,507

Net Costs 46,527,176 42,309,410

AIR TRANSPORTATION 

Gross Costs $ 15,112,554 $ 14,618,959

Less: Earned Revenue 659,343 589,863

Net Costs 14,453,211 14,029,096

MARITIME TRANSPORTATION 

Gross Costs $ 739,789 $ 735,215

Less: Earned Revenue 282,264 456,301

Net Costs 457,525 278,914

CROSS-CUTTING PROGRAMS 

Gross Costs $ 442,044 $ 536,912

Less: Earned Revenue 434,689 528,184

Net Costs 7,355 8,728

Costs Not Assigned To Programs 390,463 261,911

Less: Earned Revenues Not Attributed to Programs 30,985 25,165

NET COST OF OPERATIONS $ 61,804,745 $ 56,862,894 

The accompanying notes are an integral part of these financial statements. 

194 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
DEPARTMENT OF TRANSPORTATION 

CONSOLIDATED STATEMENT OF CHANGES IN NET POSITION 

For the Years Ended September 30, 2006 2005 

Dollars in Thousands Consolidated Consolidated Consolidated Consolidated 

Earmarked Funds All Other Funds Total Total 

Cumulative Results of Operations 

Beginning Balances $ 31,316,081 $ 16,329,106 $ 47,645,187 $ 49,592,505

Budgetary Financing Sources 

Other Adjustments (Rescissions, etc.) (48,206) — (48,206) (165,954)

Appropriations Used 3,582,258 3,493,303 7,075,561 5,965,970

Non-Exchange Revenue (Note 21) 49,482,068 11,967 49,494,035 48,602,831

Donations & Forfeitures of Cash & Cash 

Equivalents 2,151 — 2,151 2,504

Transfers-In / Out Without Reimbursement 54,185 67,477 121,662 17,812

Other Budgetary Financing Sources — (263) (263) (9,351)

Other Financing Sources (Non-Exchange) 

Transfers-In / Out Without Reimbursement (1,032,131) 892,660 (139,471) (58,866)

Imputed Financing 460,143 102,134 562,277 554,579

Other — (7,880) (7,880) 8,118

Total Financing Sources 52,500,468 4,559,398 57,059,866 54,917,643

Net Cost of Operations 53,762,625 8,042,120 61,804,745 56,862,894

Net Change (1,262,157) (3,482,722) (4,744,879) (1,945,251)

Cumulative Results of Operations $ 30,053,924 $ 12,846,384 $ 42,900,308 $ 47,647,254 

Unexpended Appropriations 

Beginning Balances 1,520,236 3,923,924 5,444,160 5,284,364

Budgetary Financing Sources 

Appropriations Received 2,778,855 7,422,451 10,201,306 6,591,723

Appropriations Transferred-In/Out 25,365 4,117 29,482 13,497

Other Adjustments (Rescission, etc.) (59,684) (59,738) (119,422) (449,796)

Appropriations Used (3,582,271) (3,491,224) (7,073,495) (5,990,834)

Total Budgetary Financing Sources (837,735) 3,875,606 3,037,871 164,590

Total Unexpended Appropriations $ 682,501 $ 7,799,530 $ 8,482,031 $ 5,448,954 

NET POSITION $ 30,736,425 $ 20,645,914 $ 51,382,339 $ 53,096,208 

The accompanying notes are an integral part of these financial statements. 

FINANCIAL REPORT 195 
DEPARTMENT OF TRANSPORTATION 

COMBINED STATEMENT OF BUDGETARY RESOURCES 

For the Years Ended September 30, 2006 2005 

Dollars in Thousands 

Budgetary 

Non-Budgetary 

Financing 

Accounts Budgetary 

Non-Budgetary 

Financing 

Accounts 

BUDGETARY RESOURCES (Note 22) 

Unobligated Balance, Brought Forward, October 1 $ 43,793,009 $ 434,789 $ 38,244,246 $ 1,595,313

Recoveries of Prior Year Unpaid Obligations 709,780 728,153 634,513 240,569

Budget Authority 

Appropriations Received 60,768,943 — 61,516,780 —

Borrowing Authority 269,300 225,051 282,260 $ 456,800

Contract Authority 51,421,012 — 50,427,292 —

Spending Authority From Offsetting Collections 

Earned

Collected 2,344,798 395,477 2,011,267 148,995

Change in Receivables from Federal Sources (152,036) 3,803 199,911 (5,713)

Change in Unfilled Customer Orders 

Advance Received 32,546 — 55,825 —

Without Advance from Federal Sources 397,898 (40,360) 684 32,780

Expenditure Transfers from Trust Funds 142,346 — 7,711,917 —

Subtotal 115,224,807 583,971 122,205,936 632,862 

Nonexpenditure Transfers, Net 

Temporarily Not Available Pursuant to Public Law 

Permanently Not Available 

23,093 — 29,169 —

(80,837) — (61,067) —

(47,871,478) (1,007,732) (47,818,493) (1,679,091) 

Total Budgetary Resources $ 111,798,374 $ 739,181 $ 113,234,304 $ 789,653 

STATUS OF BUDGETARY RESOURCES 

Obligations Incurred 

Direct $ 62,959,622 $ 380,354 $ 67,052,096 $ 330,863

Reimbursable 2,272,080 — 2,382,937 —

Subtotal 65,231,702 380,354 69,435,033 330,863

Unobligated Balance 

Apportioned 23,324,733 — 17,784,534 59,442

Exempt from Apportionment 269,421 — 190,273 —

Subtotal 23,594,154 — 17,974,807 59,442

Unobligated Balance Not Available 23,972,518 358,827 25,824,464 399,348

Total Status of Budgetary Resources $ 111,798,374 $ 739,181 $ 113,234,304 $ 789,653 

The accompanying notes are an integral part of these financial statements. 

196 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
DEPARTMENT OF TRANSPORTATION 

COMBINED STATEMENT OF BUDGETARY RESOURCES (CONT.)

For the Years Ended September 30, 2006 2005

Dollars in Thousands Non-Budgetary Non-Budgetary 

Financing Financing 

Budgetary Accounts Budgetary Accounts 

CHANGE IN OBLIGATED BALANCES 

Obligated Balance, Net 

Unpaid Obligations, Brought Forward, October 1 $ 70,820,273 $ 2,361,768 $ 67,849,718 $ 2,398,507 

Uncollected Customer Payments from Federal Sources, 

Brought Forward, October 1 (1,338,353) (196,147) — —

Total Unpaid Obligated Balance, Net 69,481,920 2,165,621 67,849,718 2,398,507 

Obligations Incurred 

Gross Outlays 

Recoveries of Prior Year Unpaid Obligations, Actual 

Change in Uncollected Customer Payments from Federal Sources 

Obligated Balance, Net, End of Period 

Unpaid Obligations 

Uncollected Customer Payments from Federal Sources 

65,231,702

(63,011,808)

(709,780)

(251,840)

72,330,387

(1,590,193)

380,354

(307,018)

(728,153)

36,557

1,706,951

(159,590)

69,435,033

(71,847,262)

(634,513)

200,595

70,820,313

(1,365,277)

330,863

(320,115)

(240,569)

27,067

2,339,218

(196,147)

Total Unpaid Obligated Balance, Net, End of Period 70,740,194 1,547,361 69,455,036 2,143,071 

NET OUTLAYS 

Gross Outlays 63,011,808 307,018 71,847,262 320,115

Offsetting Collections (2,513,482) (395,475) (14,658,640) (148,996)

Less: Distributed Offsetting Receipts (236,451) — (61,990) (36,395)

Net Outlays $ 60,261,875 $ (88,457) $ 57,126,632 $ 134,724 

The accompanying notes are an integral part of these financial statements. 

FINANCIAL REPORT 197 
DEPARTMENT OF TRANSPORTATION 

CONSOLIDATED STATEMENT OF FINANCING 

For the Years Ended September 30, 2006 2005 

Dollars in Thousands 

Resources Used To Finance Activities 

Budgetary Resources Obligated 

Obligations Incurred $ 65,612,056 $ 69,765,896

Less: Spending Authority From Offsetting Collections and Recoveries 4,562,405 11,030,748

Obligations Net Of Offsetting Collections and Recoveries 61,049,651 58,735,148

Less: Offsetting Receipts 236,451 98,385

Net Obligations 60,813,200 58,636,763

Other Resources 

Transfers In / Out Without Reimbursement (139,471) (58,866)

Imputed Financing From Costs Absorbed by Others 562,277 554,579

Other Miscellaneous Resources (7,880) 8,118

Net Other Resources Used To Finance Activities 414,926 503,831

Total Resources Used To Finance Activities $ 61,228,126 $ 59,140,594

Resources Used To Finance Items Not Part Of The Net Cost Of Operations 

Change In Budgetary Resources Obligated For Goods, Services, and Benefits Ordered But Not Yet Provided (1,448,198) 2,137,768

Resources That Fund Expenses Recognized In Prior Periods 528,360 290,178

Budgetary Offsetting Collections And Receipts That Do Not Affect Net Cost of Operations 

Credit Program Collections Which Increase Liabilities For Loan Guarantees or Allowances for Subsidy 205,918 (19,281)

Other 73,075 12,510

Resources That Finance the Acquisition of Assets or Liquidation of Liabilities 1,261,904 1,570,399

Other Resources or Adjustments To Net Obligated Resources That Do Not Affect Net Cost of Operations 200,692 (46,320)

Total Resources Used To Finance Items Not Part Of The Net Cost of Operations 821,751 3,945,254

Total Resources Used To Finance the Net Cost of Operations $ 60,406,375 $ 55,195,340

Components of the Net Cost of Operations That Will Not Require or Generate Resources in the Current Period 

Components Requiring / Generating Resources In Future Periods 

Increase in Annual Leave Liability 30,105 31,157

Upward / Downward Reestimates of Credit Subsidy Expense 98,058 3,832

Increase in Exchange Revenue Receivable From The Public 1,291 (23,891)

Other 

Increase in MARAD Liabilities (22,694) 27,438

Increase in FAA Liabilities 2,314 196,698

Other Miscellaneous Increases 101,142 48,385

Total Components of Net Cost of Operations That Will Require or Generate Resources in Future Periods $ 210,216 $ 283,619

Components Not Requiring or Generating Resources 

Depreciation and Amortization 1,165,371 1,278,650

Revaluation of Assets or Liabilities 3,997 2,233

Other 

Other WCF Components (31) —

Other FAA Components 57,164 68,418

Other Miscellaneous Components (38,347) 34,634

Total Components of Net Cost of Operations That Will Not Require or Generate Resources 1,188,154 1,383,935

Total Components of Net Cost of Operations ThatWill Not Require or Generate Resources In The Current Period 1,398,370 1,667,554

NET COST OF OPERATIONS $ 61,804,745 $ 56,862,894 

The accompanying notes are an integral part of these financial statements. 

198 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES 

A. Basis of Presentation 

The Departmental consolidated financial statement has been prepared to report the financial 

position and results from operations of the Department of Transportation (DOT), as required by 

the Chief Financial Officers Act of 1990, Title IV of the Government Management Reform Act of 

1994. The statement has been prepared from the books and records of DOT in accordance with 

Office of Management and Budget (OMB) requirements for form and content for entity financial 

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 Changes in 

Net Position, Statement of Budgetary Resources, and Statement of Financing. They are different 

from the financial reports prepared pursuant to OMB directives that are used to monitor and 

control the use of budgetary resources. 

The Balance Sheet presents agency assets and liabilities, and the difference 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). 

The 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. 

The Statement of Changes in Net Position reports beginning balances, budgetary and other 

financing sources, and net cost of operations, to arrive at ending balances. 

The 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, definitions, 

and guidance in OMB Circular No. A-11, Preparation, Submission, and Execution of the Budget, 

dated June 2006. 

The Statement of Financing is intended to be a bridge between an entity’s budgetary and financial 

(i.e., proprietary) accounting. The Statement of Financing illustrates the relationship between net 

obligations derived from an entity’s budgetary accounts and net cost of operations derived from 

an entity’s proprietary accounts by identifying and explaining key differences between the two 

numbers. 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 financial statements. 

FINANCIAL REPORT 199 
The 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, which is recognized by the American Institute of Certified Public 

Accountants as the entity to establish Generally Accepted Accounting Principles (GAAP) for the 

Federal Government. The Federal Financial Management Improvement Act of 1996 requires the 

Department to comply substantially with (1) Federal financial 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 financial and technical assistance. 

The Department is comprised of the Office 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. 

The Departmental consolidated financial statement represents the financial data, including 

various trust funds, revolving funds, appropriations and special funds of the following 

organizations: 

• Office of The 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 Traffic Safety Administration (NHTSA) 

• Maritime Administration (MARAD) 

• Federal Transit Administration (FTA) 

• Surface Transportation Board (STB) 

• Office of Inspector General (OIG) 

• Pipeline and Hazardous Materials Safety Administration (PHMSA) 

• Research and Innovative Technology Administration (RITA—includes Volpe 

National Transportation System Center) 

200 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
In November 2004, President Bush signed into law the Norman Y. Mineta Research and Special 

Program Improvement Act to be enacted in February 2005. This new law split Research and 

Special Programs Administration (RSPA) who ceases to exist into two different entities, Research 

and Innovative Technology Administration (RITA) and Pipeline and Hazardous Materials Safety 

Administration (PHMSA). 

The 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 financial data 

have not been consolidated in the DOT financial statements. However, condensed information 

about SLSDC’s financial position is included in Note 24. 

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 June 2006. 

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 2006, 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 financing sources for earmarked funds separately from 

other funds. This 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 effective October 1, 

2005. This 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 fiduciary activity; and (3) 

defining and providing accounting and reporting guidance for earmarked funds. 

In accordance with SFFAS No. 27, DOT did not restate the prior period columns of the 

consolidated financial statements and related notes. See Note 18 for specific required disclosures 

related to the DOT’s earmarked funds. 

FINANCIAL REPORT 201 
E. Revenues and Other Financing Sources 

DOT receives the majority of the funding needed to support all of its programs through 

appropriations. The 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 expenditures. 

Additional amounts are obtained from offsetting 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 gifts from donors, sales of 

goods and services to other agencies and the public, the collection of fees and fines, 

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. The funds with the U.S. Treasury are 

appropriated, revolving, and trust funds that are available to pay current liabilities and finance 

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. This reduces the 

amount of interest that must be paid to borrow funds. Lockboxes have been established with 

financial 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 fines 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 after 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. The allowance is estimated based on past experience, 

present market conditions, and an analysis of outstanding balances. Loans obligated after 

September 30, 1991, are reduced by an allowance equal to the present value of the subsidy costs 

202 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
(due to the interest rate differential between the loans and Treasury borrowing, the estimated 

delinquencies and defaults net of recoveries, the offset from fees, and other estimated cash flows) 

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/specific identification, 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. The Department’s intent is to 

hold investments to maturity, unless they are needed to cover losses on loan guarantees, finance 

programs, or otherwise sustain the operation of the organization. Investments, redemptions, and 

reinvestments are controlled and processed by the Department of the Treasury. 

J. Property and Equipment 

DOT agencies have varying methods of determining the value of property and equipment and 

how it is depreciated. DOT currently has a capitalization threshold of $200,000 for structures and 

facilities and for internal use software, 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. The system accumulates costs by project number assigned to the equipment or 

facility being constructed. The 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 specific required disclosures related to 

Stewardship Heritage Assets. 

FINANCIAL REPORT 203 
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 data. Available budgetary 

resources include new budget authority, spending authority from offsetting 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 indefinite 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. The Government, acting in its sovereign capacity, can abrogate liabilities arising from 

other than contracts. 

M. Contingencies 

The 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 outflow or other sacrifice of resources is 

probable; and (3) the future outflow or sacrifice 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 affect the financial 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 financial 

statement. 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 financing sources. Sick leave 

and other types of non-vested leave are expended as taken. 

204 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Air Traffic 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 effective 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 effect pursuant to Public Law (P.L.) 99-335. Most employees hired after 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 offers 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 benefits during 

the employees’ active years of service. Reporting the assets and liabilities associated with such 

benefits is the responsibility of the administering agency, the Office of Personnel Management. 

Therefore, DOT does not report CSRS or FERS assets, accumulated plan benefits, or unfunded 

liabilities, if any, applicable to employees. 

P. Comparative Data 

Comparative data for the prior year have been presented for the principal financial 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 differ from these estimates. 

Significant estimates underlying the accompanying financial statements include (a) the allocation 

of trust fund receipts by the Office of Treasury’s Assessment (OTA), (b) yearend accruals of 

accounts and grants payable, (c) accrued workers’ compensation, and (d) allowance for doubtful 

accounts receivable. Actual results may differ from these estimates. 

R. Reclassifications 

Certain reclassifications were made to the FY 2005 financial statement presentation to conform 

with that used in FY 2006. 

FINANCIAL REPORT 205 
S. Parent/Child Allocations 

According to OMB Circular No. A-136, effective FY 2007 the parent must report all budgetary 

and proprietary activity of the child account in its financial statements, whether material to the 

parent or not. For FY 2006, DOT implemented this requirement early as agreed upon by its child 

agencies and reported all budgetary and proprietary activity in its financial statements, except for 

the proprietary activity related to the funds allocated to the U.S. Army Corps of Engineers and 

U.S. Forest Service. 

206 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
NOTE 2. NON-ENTITY ASSETS 

Dollars in Thousands 

As of September 30, 2006 2005 

Intragovernmental 

Fund Balance with Treasury 

Accounts Receivable 

$ 186

—

$ 7,066

2,931

Total Intragovernmental 186 9,997

Accounts Receivable 39 1,637

Total Non-Entity Assets 

Total Entity Assets 

225

65,065,396

11,634

65,956,912

Total Assets $ 65,065,621 $ 65,968,546

FINANCIAL REPORT 207 
NOTE 3. FUND BALANCE WITH TREASURY 

Dollars in Thousands 

As of September 30, 2006 2005 

Fund Balances 

Trust Funds $ 7,883,395 $ 4,992,309 

Revolving Funds 591,806 609,041

Appropriated Funds 18,930,510 22,713,473

Other Fund Types 287,197 826,019

Total Fund Balances $ 27,692,908 $ 29,140,842 

Status of Fund Balance With Treasury 

Unobligated 

Available $ 4,248,737 $ 8,171,205 

Unavailable 1,403,548 1,461,669

Obligated Balance Not Yet Disbursed 21,715,828 19,145,967

Non-Budgetary Fund Balance With Treasury 324,795 362,001

Total Status of Fund Balance With Treasury $ 27,692,908 $ 29,140,842 

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. 

208 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
NOTE 4. INVESTMENTS 

Dollars in Thousands 

As of September 30, 2006 Amortized Market 

(Premium) Investments Other Value 

Cost Discount (Net) Adjustments Disclosure 

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 

As of September 30, 2005 

Intragovernmental Securities 

Marketable $ 65,850 $ (799) $ 65,051 $ (635) $ 64,416 

Non-Marketable 

Par Value 18,318,001 — 18,318,001 — 18,318,001 

Market-Based 528,116 (663) 527,453 — 527,453 

Subtotal 18,911,967 (1,462) 18,910,505 (635) 18,909,870 

Accrued Interest 91,129 — 91,129 — 91,129

Total Intragovernmental $ 19,003,096 $ (1,462) $ 19,001,634 $ (635) $ 19,000,999 

Investments in Federal securities include non-marketable par value Treasury securities, marketbased 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. 

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. Nonmarketable market-based Treasury securities are also issued by the Bureau of Public Debt to 

Federal accounts. They 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. 

The Federal Government does not set aside assets to pay future benefits or other expenditures 

associated with earmarked funds. The 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 

FINANCIAL REPORT 209 
NOTE 4. INVESTMENTS (CONT.) 

Dollars in Thousands 

of the Government, these assets and liabilities offset 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 financial statements. 

Treasury securities provide the DOT with authority to draw upon the U.S. Treasury to make 

future benefit payments or other expenditures. When the DOT requires redemption of these 

securities to make expenditures, the Government finances 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. This is the same way that the Government finances all 

other expenditures. 

210 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
NOTE 5. ACCOUNTS RECEIVABLE 

Dollars in Thousands 

Gross Allowance for 

Amount Uncollectable 

Due Amounts 

FY 2006 FY 2005 

Net Amount Net Amount 

Due Due 

Intragovernmental 

Accounts Receivable $ 212,616 $ — $ 212,616 $ 358,857

Total Intragovernmental 212,616 — 212,616 358,857

Public 

Accounts Receivable $ 172,686 $ 69,315 $ 103,371 $ 144,454

Accrued Interest — — — 113

Total Public 172,686 69,315 103,371 144,567

Total Receivables $ 385,302 $ 69,315 $ 315,987 $ 503,424

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. 

FINANCIAL REPORT 211 
NOTE 6. OTHER ASSETS 

Dollars in Thousands

FY 2006 FY 2005

Intragovernmental 

Advances and Prepayments $ 37,946 $ 95,627

Other — 719

Total Intragovernmental $ 37,946 $ 96,346

Public 

Advances to the States $ 98,401 $ 95,861

Other Advances and Prepayments 96,550 62,486

Other 555 2,536

Total Public $ 195,506 $ 160,883

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. 

212 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
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 Act (TIFIA) Loan 

4. Federal Ship Financing Fund (Title XI) 

5. OST Minority Business Resource Center Guaranteed Loan Program 

6. Federal Ship (Title XI) Liquidating Fund 

An analysis of loans receivable, allowance for subsidy costs, liability for loan guarantees, foreclosed 

property, modifications, 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 2006 

Loans Value of Assets 

Receivable, Interest Foreclosed Allowance Related to 

Gross Receivable Property for Subsidy Direct Loans, Net 

Direct Loan Programs 

Prior to FY 1992 Allowance for Loss method 

(1) Railroad Rehab. Improvement $ 21,900 $ 82 $ — $ — $ 21,982 

Direct Loan Programs (After FY 1991) 

(1) Railroad Rehab. Improvement $ 449,320 $ — $ — $ 9,471 $ 458,791 

(3) TIFIA Loan 117,950 — — (8,901) 109,049

Subtotal $ 567,270 $ — $ — $ 570 $ 567,840 

FY 2005 

Loans Value of Assets 

Receivable, Interest Foreclosed Allowance Related to 

Gross Receivable Property for Subsidy Direct Loans, Net 

Direct Loan Programs 

Prior to FY 1992 Allowance for Loss method 

(1) Railroad Rehab. Improvement $ 26,078 $ — $ — $ — $ 26,078 

Direct Loan Programs (After FY 1991) 

(1) Railroad Rehab. Improvement $ 398,197 $ 6,453 $ — $ (10,242) $ 394,408 

(3) TIFIA Loan 289,876 8,031 — (22,835) 274,072

Subtotal 688,073 14,484 — (34,077) 668,480

TOTAL AMOUNT OF DIRECT LOANS DISBURSED (POST-1991) 

Direct Loan Programs FY 2006 FY 2005 

(1) Railroad Rehab. Improvement $ 79,249 $ 85,808 

(3) TIFIA Loan 43,683 102,087

Subtotal $ 122,932 $ 187,895 

FINANCIAL REPORT 213 
Note 7. direct loans and loan guarantees, non-federal borrowers (cont.) 

Dollars in Thousands 

SUBSIDY EXPENSE FOR DIRECT LOANS BY PROGRAM AND COMPONENT 

FY 2006 

Subsidy Expense for New Direct Loans Disbursed 

Interest Fees & Other Modifications / 

Differential Defaults Collections Re-Estimates Total 

Direct Loan Programs 

(3) TIFIA Loans — 3,101 218 (11,821) (8,502)

Subtotal $ — $ 3,101 $ 218 $ (11,821) $ (8,502) 

FY 2005 

Direct Loan Programs 

(1) Railroad Rehab. Improvement $ — $ — $ — $ 14,585 $ 14,585 

(3) TIFIA Loans — 6,926 — 2,884 9,810

Subtotal $ — $ 6,926 $ — $ 17,469 $ 24,395

BUDGET SUBSIDY RATES FOR DIRECT LOANS FOR THE CURRENT YEAR COHORT 

FY 2006 Interest Fees & Other 

Differential Defaults Collections Other Total 

Direct Loan Programs 

(1) Railroad Rehab. Improvement 0.00% 0.00% 0.00% 0.00% 0.00%

(3) TIFIA Loans 0.00% 0.00% 0.00% 0.00% 0.00%

Subtotal 0.00% 0.00% 0.00% 0.00% 0.00%

SCHEDULE FOR RECONCILING SUBSIDY COST ALLOWANCE BALANCES (POST-1991 DIRECT LOANS) 

Beginning Balance, Changes, and Ending Balance FY 2006 FY 2005 

Beginning Balance of the Subsidy Cost Allowance $ 34,077 $ 33,496

Add: Subsidy Expense for Direct Loans Disbursed during the Reporting Years by Component 

Fees and Other Collections 157 (1,238)

Other Subsidy Costs (4,078) —

Total of the Above Subsidy Expense Components $ (3,921) $ (1,238)

Adjustments 

Subsidy Allowance Amortization (6,432) (15,650)

Ending Balance of the Subsidy Cost Allowance Before Reestimates $ 23,724 $ 16,608

Add or Subtract Subsidy Reestimates by Component 

Interest Rate Reestimate (510) 140

Technical/Default Reestimate (23,784) 17,329

Total of the Above Reestimate Components $ (24,294) $ 17,469

Ending Balance of the Subsidy Cost Allowance $ (570) $ 34,077 

214 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Note 7. Direct Loans and Loan Guarantees, Non-Federal Borrowers (cont.) 

Dollars in Thousands 

DEFAULTED GUARANTEED LOANS FROM POST-1991 GUARANTEES 

Value of 

Loans 

Receivable, 

FY 2006 Gross 

Assets Related 

Interest Foreclosed Allowance to Loans 

Receivable Property for Subsidy Receivable 

(4) Federal Ship (Title XI) Financing Fund $ 7,713 $ 144 $ 19,000 $ 1,500 $ 28,357 

FY 2005 

(4) Federal Ship (Title XI) Financing Fund $ 87,357 $ 2,617 $ 19,004 $ (43,088) $ 65,890 

GUARANTEED LOANS OUTSTANDING 

Outstanding Amount of 

Principal of Outstanding 

Guaranteed Loans, Principal 

Face Value Guaranteed 

(4) Federal Ship (Title XI) Financing Fund 2,936,187 2,936,187 

(5) OST Minority Business Resource Center 5,011 4,015

(6) Federal Ship (Title XI) Liquidating Fund 6,781 6,781

Subtotal $ 2,947,979 $ 2,946,983 

NEW GUARANTEED LOANS DISBURSED 

FY 2006 

(4) Federal Ship (Title XI) Financing Fund 139,731 139,731 

(5) OST Minority Business Resource Center 2,515 1,886

Subtotal $ 142,246 $ 141,617 

FY 2005 

(4) Federal Ship (Title XI) Financing Fund 11,969 11,969

(5) OST Minority Business Resource Center 6,200 4,650

Subtotal $ 18,169 $ 16,619 

LIABILITY FOR LOAN GUARANTEES (PRESENT VALUE METHOD POST-1991 GUARANTEES) 

FY 2006 FY 2005 

Total Liabilities for Total Liabilities for 

Loan Guarantee Programs Loan Guarantees Loan Guarantees 

(4) Federal Ship (Title XI) Financing Fund $ 345,341 $ 392,870

(5) OST Minority Business Resource Center 523 581

Total $ 345,864 $ 393,451

FINANCIAL REPORT 215 
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 

Defaults Fees & Other Other Modifications / 

FY 2006 Net Collections Subsidy Costs Re-Estimates Total 

(4) Federal Ship (Title XI) Financing Fund (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)

FY 2005 

(4) Federal Ship (Title XI) Financing Fund (876) 5,793 9,582 — 14,499

(5) OST Minority Business Resource 131 — — (136) (5)

Subtotal $ (745) $ 5,793 $ 9,582 $ (136) $ 14,494

BUDGET SUBSIDY RATES FOR LOAN GUARANTEES FOR THE CURRENT YEAR COHORT 

FY 2006 

Interest Fees & Other 

Differential Defaults Collections Other Total 

Loan Guarantee Programs 

(3) TIFIA Loans 0.00% 0.00% 0.00% 0.00% 0.00%

(4) Federal Ship (Title XI) Financing Fund 0.00% 12.52% (4.88)% 0.00% 7.64%

(5) OST Minority Business Resource 0.00% 1.85% 0.00% 0.00% 1.85%

Subtotal 0.00% 14.37% (4.88)% 0.00% 9.49%

216 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Note 7. Direct Loans and Loan Guarantees, Non-Federal Borrowers (cont.) 

Dollars in Thousands 

SCHEDULE FOR RECONCILING LOAN GUARANTEE LIABILITY BALANCES (POST-1991 LOAN GUARANTEES) 

Beginning Balance, Changes, and Ending Balance FY 2006 FY 2005 

Beginning Balance of the Loan Guarantee Liability 

Add: Subsidy Expense for Guaranteed Loans Disbursed during the Reporting Years by Component 

Default Costs (net of recoveries) 

Fees and Other Collections 

Other Subsidy Costs 

Total of the Above Subsidy Expense Components 

$ 393,451 $ 378,612

(3,455) (745)

(12,707) 5,793

75,210 9,582

$ 59,048 $ 14,630

Adjustments 

Fees Received

Interest Supplements Paid

Interest Accumulation on the Liability Balance

Ending Balance of the Loan Guarantee Liability Before Reestimates 

Add or Subtract Subsidy Reestimates by Component 

Technical/Default Reestimate 

Total of the Above Reestimate Components 

— (6,068)

— (12,000)

19 18,413

$ 452,518 $ 393,587

(106,654) (136)

$ (106,654) $ (136)

Ending Balance of the Loan Guarantee Liability $ 345,864 $ 393,451

The 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 loan obligations or loan guarantees, and (2) Post-1991 means the 

direct loan obligations or loan guarantee commitments made after FY 1991 and the resulting 

direct loans or loan guarantees. 

The Act provides that, for direct loan obligations or loan guarantee commitments made after 

FY 1991, the present value of the subsidy costs (which arises from interest rate differentials, 

interest subsidies, delinquencies and defaults, fee offsets, and other cash flows) 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 Department-wide. 

FINANCIAL REPORT 217 
NOTE 8. INVENTORY AND RELATED PROPERTY 

Allowance FY 2006 FY 2005 

Dollars in Thousands Cost for Loss Net Net 

Inventory 

Inventory Held for Current Sale $ 69,960 $ 6,031 $ 63,929 $ 87,928

Excess, Obsolete and Unserviceable Inventory 47,607 5,814 41,793 11,962

Inventory Held for Repair 376,366 87,615 288,751 328,661

Other 224,652 35,774 188,878 13,632

Total Inventory $ 718,585 $ 135,234 $ 583,351 $ 442,183

Operating Materials and Supplies 

Items Held for Use $ 229,098 $ 3,061 $ 226,037 $ 430,039

Items Held for Reserve for Future Use 69,414 — 69,414 66,472

Excess, Obsolete and Unserviceable Items 758 758 — —

Items Held for Repair 33,558 14,866 18,692 945

Total Operating Materials & Supplies $ 332,828 $ 18,685 $ 314,143 $ 497,456

Total Inventory and Related Property $ 897,494 $ 939,639 

All DOT inventory is in FAA and the OST Working Capital Fund. Valuation methods used 

include moving weighted average, standard price/specific identification, 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/specific identification, standard repair cost, 

weighted average, and moving weighted average. The only restriction on use is that FAA is not 

permitted to donate. 

218 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
NOTE 9. GENERAL PROPERTY, PLANT AND EQUIPMENT 

Dollars in Thousands 

Service 

Major Classes Life 

FY 2006 FY 2005 

Acquisition Accumulated Net Book Net Book 

Value Depreciation Value Value 

Land and Improvements 

Buildings and Structures Various 

Furniture and Fixtures Various 

Equipment Various 

ADP Software Various 

Electronics 6-10 years 

Assets Under Capital Lease Various 

Leasehold Improvements Various 

Aircraft 11-20 years 

Ships and Vessels Over 20 years 

Small Boats Various 

Construction in Progress 

Property Not in Use 

Other Miscellaneous Property 

$ 113,482 $ 393 $ 113,089 $ 102,882 

4,388,151 2,307,250 2,080,901 2,084,107 

55,112 25,827 29,285 40,738

15,752,755 8,055,763 7,696,992 7,655,284 

163,967 143,688 20,279 27,459

2,720 2,626 94 8

127,024 89,181 37,843 45,191

59,933 29,491 30,442 31,573

401,614 280,758 120,856 138,471 

1,653,368 1,110,010 543,358 621,917 

15,648 14,240 1,408 649

4,741,761 — 4,741,761 4,565,239 

117,050 86,598 30,452 4,700

73,097 64,046 9,051 7,174

Total $ 27,665,682 $ 12,209,871 $ 15,455,811 $ 15,325,392 

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 Required Supplementary Information. 

FINANCIAL REPORT 219 
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. These 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 

The 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 shoreside 

storage facilities. This resulting inventory of artifacts is made available for long-term loan to 

qualified organizations for public display purposes. Qualified organizations have access to the 

artifact inventory via Web-based system. The artifact loan process is also managed on-line via 

this system. The 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. 

The 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. The condition of the stewardship assets is included in the Deferred 

Maintenance section of the Required Supplementary Information. 

220 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
NOTE 11. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES 

Dollars in Thousands

FY 2006 FY 2005

Intragovernmental 

Debt $ 4,841 $ —

Other Liabilities 356,460 477,063

Total Intragovernmental $ 361,301 $ 477,063

Accounts Payable 

Federal Employee and Veterans’ Benefits Payable 

Environmental and Disposal Liabilities 

Other Liabilities 

Total Liabilities Not Covered by Budgetary Resources 

Total Liabilities Covered by Budgetary Resources 

Total Liabilities 

$ — $ 44

950,466 1,007,303

953,634 1,003,585

922,089 1,011,512

$ 3,187,490 $ 3,499,507

10,495,792 9,372,831

$ 13,693,282 $ 12,872,338

FINANCIAL REPORT 221 
NOTE 12. DEBT 

Dollars in Thousands 

Net Change 

FY 2005 During FY 2006 

Ending Balance Fiscal Year Ending Balance 

Intragovernmental Debt 

Debt to the Treasury $

Debt to the Federal Financing Bank 

Total Intragovernmental $

949,653 $ (112,973) $ 836,680 

2,883 (206) 2,677

952,536 $ (113,179) $ 839,357 

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. 

222 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
NOTE 13. OTHER LIABILITIES 

Dollars in Thousands 

FY 2006 

Non-Current Current FY 2006 Total 

Intragovernmental 

Advances and Prepayments $

Accrued Pay and Benefits

FECA Billings

Uncleared Disbursements and Collections

Deferred Credits

Deposit Funds

Other Accrued Liabilities

Total Intragovernmental $

— $ 2,797,414 $ 2,797,414 

993 52,546 53,539

121,877 91,572 213,449

— (26,967) (26,967)

— 2,199 2,199

— (2,437) (2,437)

164,702 10,992 175,694

287,572 $ 2,925,319 $ 3,212,891 

Public 

Other Accrued Unbilled Payments $

Accrued Pay and Benefits

Legal Claims

Deferred Credits

Capital Leases

Advances and Prepayments

Uncleared Disbursements and Collections

Deposit Funds

Other Custodial Liability

Other Accrued Liabilities

Total Public $

— $ 11,772 $ 11,772 

182,330 686,968 869,298

3,281 8,001 11,282

115,175 74,675 189,850

34,199 8,607 42,806

— 105,554 105,554

— 6,548 6,548

(3,950) 3,139 (811)

— 57,902 57,902

88,991 25,990 114,981

420,026 $ 989,156 $ 1,409,182 

FY 2005 

Non-Current Current FY 2005 Total 

Intragovernmental 

Advances and Prepayments $

Accrued Pay and Benefits

Undisbursed Loans

FECA Billings

Uncleared Disbursements and Collections

Deposit Funds

Other Accrued Liabilities

Total Intragovernmental $

— $ 2,689,272 $ 2,689,272 

— 45,902 45,902

152,634 — 152,634

118,311 92,178 210,489

— (35,698) (35,698)

— 9,094 9,094

2,125 304,746 306,871

273,070 $ 3,105,494 $ 3,378,564 

Public 

Other Accrued Unbilled Payments $

Accrued Pay and Benefits

Legal Claims

Deferred Credits

Capital Leases

Advances and Prepayments

Uncleared Disbursements and Collections

Deposit Funds

Other Custodial Liability

Other Accrued Liabilities

Total Public $

— $ 81,143 $ 81,143 

134,055 721,692 855,747

470 6,588 7,058

27,903 1,766 29,669

42,597 8,193 50,790

— 258,418 258,418

— (7,495) (7,495)

(2) 2,145 2,143

231 8,457 8,688

331,577 23,678 355,255

536,831 $ 1,104,585 $ 1,641,416 

Accrued pay and benefits pertain to unpaid pay and benefits, and may be either current or noncurrent. 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 fiscal year two years subsequent to the actual FECA billing from 

DOL. 

FINANCIAL REPORT 223 
NOTE 14. GRANT ACCRUAL 

Dollars in Thousands 

Grant liabilities are accrued in two categories. The first category is grant related requests for 

payments that had been billed to an agency as of September 30, but had not yet been paid. The 

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 Administration, at September 30, 2006 and 2005, are summarized as 

follows: 

FY 2006 FY 2005 

Highway Trust Fund 

Federal Transit Administration 

Federal Aviation Administration 

Federal Highway Administration (non-trust fund) 

Federal Railroad Administration 

$ 3,556,098 $ 2,274,780 

1,437,190 1,281,550

549,758 507,590

34 17,908

3,815 4,900

Total Grant Accrual $ 5,546,895 $ 4,086,728 

224 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
NOTE 15. ENVIRONMENTAL AND DISPOSAL LIABILITIES 

Dollars in Thousands 

FY 2006 FY 2005 

Public 

Environmental Cleanup Liabilities 

FAA Environmental Remediation $ 573,263 $ 596,536 

MARAD Environmental Cleanup (PCB, Lead, Oil) 380,371 407,049

Total Public $ 953,634 $ 1,003,585 

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 inflation and are 

subject to revision as a result of changes in technology and environmental laws and regulations. 

The current law requires all non-retention ships to be disposed of by the end of FY 2006. If an 

extension of this requirement is not granted and/or foreign scrapping is not available, then 

MARAD could realize a substantial increase in this unfunded environmental liabilities. 

FINANCIAL REPORT 225 
NOTE 16. LEASES—ENTITY AS LESSEE 

Dollars in Thousands 

Capital Leases 

Summary of Assets Under Capital Lease by Category 

Land and Buildings $ 127,024

Accumulated Amortization (89,181)

Net Assets Under Capital Lease $ 37,843

Capital Leases—Future Payments Due Land Machinery 

and and 

Buildings Equipment Total 

Fiscal Year 

Year 1(2007) $

Year 2 (2008)

Year 3 (2009)

Year 4 (2010)

Year 5 (2011)

After 5 Years (2012+)

Total Future Lease Payments $

Less

Imputed Interest

11,541 $ — $ 11,541 

9,948 — 9,948

9,656 — 9,656

8,978 — 8,978

7,951 — 7,951

16,945 — 16,945

65,019 $ — $ 65,019 

22,213 — 22,213

Net Capital Lease Liability $ 42,806 $ — $ 42,806 

Liabilities Not Covered by Budgetary Resources $ 42,806

Operating Leases—Future Payments Due 

Fiscal Year 

Land 

and 

Buildings 

Machinery 

and 

Equipment Total 

Year 1(2007) $ 112,589 $ 20,250 $ 132,839

Year 2 (2008) 89,328 20,250 109,578

Year 3 (2009) 75,843 20,250 96,093

Year 4 (2010) 61,915 16,750 78,665

Year 5 (2011) 

After 5 Years (2012+) 

50,166

244,871

16,750

33,500

66,916

278,371

Total Future Lease Payments $ 634,712 $ 127,750 $ 762,462

226 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
NOTE 17. CONTINGENCIES, COMMITMENTS, AND OTHER DISCLOSURES 

Contingencies 

Hurricane Disaster Relief. In September 2005, Hurricanes Katrina, Rita, and Wilma 

significantly affected certain sections with the states of Louisiana, Florida, Mississippi, Texas and 

Alabama. 

Currently DOT in conjunction with other Federal entities is assessing the estimated financial 

impact of the affected areas. As of September 30, 2006, DOT obligated $1.83 billion of which 

$389 million will reimbursed to the DOT from FEMA. 

During FY 2006 Congress, through Public Law 109-148, appropriated an additional $2.75 billion 

for bridge and road repair. These funds cover certain transit and travel costs used in evacuating 

and relocating displaced persons; a Ready Reserve Fleet of ships used for temporary housing, 

relief and recovery; airfield and terminal repairs; restoration of FAA facilities; pipeline 

inspection; emergency work to restore essential traffic and minimize damage, and protect 

remaining facilities and; repair and rebuild railroad infrastructure in a safe manner. 

Legal Claims. As of September 30, 2006 and 2005, DOT's contingent liabilities for asserted and 

pending legal claims reasonably possible of loss were estimated at $27.9 million and $65.1 million, 

respectively. DOT does not have material amounts of known unasserted claims. 

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 fiscal year ended September, 2006 and 2005, 

FHWA has pre-authorized $45 billion and $40 billion, respectively, under these arrangements; 

however, no liability is reflected in the Highway Trust Fund financial statements at September, 

2006 and 2005. 

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, 2006 and 2005, 

approximately $1.4 billion and $2.2 billion respectively in Section 5309 New Starts funds has been 

committed under FFGAs, but not yet appropriated by Congress. However, no liability is reflected 

in the DOT financial statements at September 30, 2006, for these agreements. 

FINANCIAL REPORT 227 
Contract Options and Negotiations. As of September 30, 2006 and 2005, FAA had contract 

options of $3.35 billion and $10 billion, respectively. These 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. flag 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 37 air carriers having 

approximately 1,634 aircraft available for Defense or 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 (and subsequent amendments) required FAA to extend policies in effect on 

July 19, 2002, until August 31, 2006. The Secretary of Transportation has extended coverage 

through December 31, 2006 as allowed by Public Law 108-11. It also mandated provision of hull 

loss and passenger and third party war risk liability insurance for those policies. During this year 

there were 75 FAA premium war-risk policies. Insured air carrier 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 the 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 2006 and FY 2005, FAA recognized insurance premium revenue of $168.4 

million and $157.5 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.” 

The maximum liability for both hull loss and liability, per occurrence, is $4 billion. No claims for 

losses were pending as of September 30, 2006, or 2005. 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 dating back to 1951, only four claims, all 

involving minor dollar amounts, have been paid. 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. 

228 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
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 percent with the exception of noise program implementation, 

which is 80 percent. For remaining airports (small primary, relievers, and general aviation 

airports), FAA's share of eligible costs is 95 percent. 

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. 

Through 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. 

Through September 30, 2005, FAA issued letters of intent covering FY 1988 through FY 2017 

totaling $4.7 billion. As of September 30, 2005, FAA had obligated $3.6 billion of this total 

amount, leaving $1.1 billion unobligated. 

FINANCIAL REPORT 229 
NOTE 18. EARMARKED FUNDS 

Dollars in Thousands 

Highway Trust Funds 

The 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 Traffic Safety 

Administration. The 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. The use of the fund has also been expanded to brace highway safety. The 

HTF prepares financial statements in accordance with generally accepted accounting principles 

and the form and content requirements specified by the Office of Management and Budget's 

Financial reporting Requirements No. A-136. Financial reports are also used to monitor and 

control budgetary resources, which are prepared from the same books and records. Overall, there 

are 64 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. The AIRF is a separate fund within FAA's accounting structure and included as 

part of FAA's consolidated financial 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 traffic 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. The AUF is a separate fund within FAA's accounting structure and 

included as part of FAA's consolidated financial 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. The activity within each 

area is reported by fund group within FAA's accounting structure and included as part of FAA's 

consolidated financial statements. The 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. The unavailable or unappropriated funds in AATF, referred to as Corpus, are 

also included as part of FAA's consolidated financial statements. 

230 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Federal Highway Administration Non-Trust Funds 

Trust funds are accounts established by law to hold receipts collected by the Federal Government 

earmarked for financing special purposes and programs. Examples of receipts are specific taxes 

and revenue. Earmarked funds are tracked separately to ensure expenditures do not exceed 

available revenues. The use of earmaked fund receipts are authorized by Congress. 

Federal Transit Administration (Mass Transit) 

Fiscal Year 2005 and prior, FTA programs were funded 80 percent through the Mass Transit 

account and 20 percent through Treasury General Receipt (Fund) account. During these prior 

years, FTA’s formula programs were paid out of general fund accounts combined with financing 

sources transferred in without reimbursement from expenditure transfers from an FTA conduit 

Trust Fund account (69X8350). The Mass Transit account is considered earmarked funds as 

described in FASAB SFFAS 27, Identifying and Reporting Earmarked Funds. 

SAFETEA-LU legislation (Public Law 109-59) changed the way FTA programs are funded. 

Beginning in FY 2006, FTA formula and bus appropriation (69X8350) is funded 100 percent by 

the Mass Transit account and is reported in the HTF financial statements as earmarked funds. 

The administrative, capital investment and research accounts are funded 100 percent by the 

Treasury General Receipt account and is reported as non-HTF activity in the financial statements. 

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. This 

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. 

Gifts and Bequests Fund. The Secretary is authorized to accept, hold, administer and gifts and 

bequests of property, both real and personal for the purpose of aiding or facilitating the work of 

Department of Transportation. 

Office 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. 

FINANCIAL REPORT 231 
Pipeline and Hazardous Material Safety Administration 

The pipeline 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. The authority is established 

by Public Law 109-115. 

Trust Fund provides funding for pipeline to provide regulations, proposed and final rulemakings, 

pipeline statistics, report accidents/incidents and corrective action orders. PHMSA reports this 

fund as a Special Fund. The authority is established by Public Law 109-115. 

Emergency Preparedness Grants funds are used to establish a national registration program for 

shippers and carriers of hazardous materials. These fees finance emergency preparedness 

planning and training grants, development of a training curriculum for emergency responders, 

and technical assistance to States, political subdivisions, and Indian tribes. This fund is reported 

as a Special Fund. The authority is established by Public Law 109-115. 

Sources of Earmarked Funds 

Highway Trust Funds. The funding needed to support the HTF programs and activities are 

financed from excise taxes collected on specific motor fuels, truck taxes, and fines and penalties. 

Annual appropriations are the authority to collect these tax revenues to support programs as 

authorized by law. A small portion of the financing revenues are provided by offsetting 

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. 

Aviation Insurance Revolving Fund. FAA collects insurance premiums from participating 

carriers that finance a continuing cycle of operations. These revenues are inflows of resources to 

the government. 

Aviation User Fees. FAA collects overflight user fees for providing air traffic control services. 

These revenues are inflows of resources to the government. 

Airport and Airway Trust Fund. Funding currently comes from several aviation related excise tax 

collections from passenger tickets, passenger flight segments, international arrivals/departures, 

cargo waybills and aviation fuels. These revenues are inflows of resources to the government. 

232 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Federal Highway Administration Non Trust Funds. Source of funding is from receipts that come 

in from various public sources. The level of funding is not known. These receipts are the sole 

source of funding for miscellaneous trust funds. 

Federal Transit Administration (Mass Transit). FTA had a significant amount (greater than 50 

percent) of its earmarked funds in the FTA general fund accounts. To properly comply with 

FASAB 27, FTA management decided to report the majority of the funds in their general fund 

appropriation accounts as earmarked funds. 

Maritime Administration. War Risk Insurance Fund—Insurance premium; Special Study, 

Services & Project Fund—Fee for performing work or service; Gift and Bequests Fund— 

Donation. 

Office of the Secretary. X-5423—Funding comes from FAA as a transfer of funds, 100 percent 

intragovernmental flow; X-8304—Funding comes from the Bureau of Public Debt as a transfer of 

funds, 100 percent intragovernmental flow; X-8548—Investment at Treasury from a gift that 

earns interest twice a year, 100 percnet 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. 

There were not changes in legislation as of September 30, 2006, that significantly changed the 

purpose of the earmarked funds or redirected a material portion of the accumulated balance. 

FINANCIAL REPORT 233 
NOTE 18. EARMARKED FUNDS (CONT.) 

Dollars in Thousands 

Airport and Fy 2006 

Highway FAA Airway Mass All Other Consolidated 

Balance Sheet Trust Fund Programs Trust Fund Transit Funds Total 

Assets 

Fund Balance with Treasury $ 4,431,555 $ 2,597,692 $ 645,458 $ 5,858,113 $ 445,251 $ 13,978,069 

Investments, Net 10,997,655 707,190 7,967,539 — 37,413 19,709,797 

Accounts Receivable, Net 38,564 2,470,079 — 15,064 11,824 2,535,531 

Property, Plant & Equipment 101,070 — — — 4,275 105,345 

Other 191,346 3,455,833 — 8,445 12,034 3,667,658 

Total Assets $ 15,760,190 $ 9,230,794 $ 8,612,997 $ 5,881,622 $ 510,797 $ 39,996,400 

Liabilities and Net Position 

AATF Due to FAA $ — $ 

Liabilities 3,888,600

Unexpected Appropriation —

Cumulative Results of Operations 11,871,590

— $ 2,214,186 $ — $ — $ 2,214,186 

2,427,234 — 581,236 148,719 7,045,789 

426,474 — 171,578 84,449 682,501 

6,377,086 6,398,811 5,128,808 277,629 30,053,924 

Total Liabilities and Net Position $ 15,760,190 $ 9,230,794 $ 8,612,997 $ 5,881,622 $ 510,797 $ 39,996,400

Statement of Net Cost 

Program Costs $ 37,203,191 $ 2,066,167 $ 11,604,263 $ 3,694,562 $ 169,062 $ 54,737,245

Less: Earned Revenue 61,846 640,181 — 59,163 213,430 974,620

Net Program Costs 37,141,345 1,425,986 11,604,263 3,635,399 (44,368) 53,762,625

Net Cost of Operations $ 37,141,345 $ 1,425,986 $ 11,604,263 $ 3,635,399 $ (44,368) $ 53,762,625

Statement of Changes in Net Position 

Beginning Net Position $ 10,231,428 $ 6,314,719 $ 7,317,573 $ 8,844,979 $ 127,618 $ 32,836,317

Budgetary Financing Sources 38,752,831 2,515,678 10,685,501 90,666 190,045 52,234,721

Other Financing Sources 28,676 (600,851) — 140 47 (571,988)

Net Cost of Operations 37,141,345 1,425,986 11,604,263 3,635,399 (44,368) 53,762,625

Net Position End of Period $ 11,871,590 $ 6,803,560 $ 6,398,811 $ 5,300,386 $ 362,078 $ 30,736,425

234 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
NOTE 19. NET COST BY PROGRAM 

Dollars in Thousands 

FY 2006 FY 2005 

PROGRAM COSTS 

SURFACE 

Federal Aid Highway Program $ 33,552,312 $ 31,163,144

Mass Transit Program 9,428,642 8,078,973

Other Surface Transportation Program 3,546,222 3,067,293

Total Surface Program Costs $ 45,527,176 $ 42,309,410

AIR 

Air Traffic Services $ 9,615,233 $ 8,931,418

Airports 3,851,902 3,711,927

Aviation Safety 943,242 1,075,118

Other Federal Aviation Administration Programs 27,585 296,560

Commercial Space 15,249 14,073

Total Air Program Costs $ 14,453,211 $ 14,029,096

MARITIME 

Maritime Operations and Training $ 149,242 $ 54,872

Maritime Guaranteed Loan (58,940) (14,403)

Maritime Security Program 154,700 98,484

Maritime Ocean Freight Differential Program 161,088 105,503

Maritime Vessel Operations Revolving Fund 31,144 26,788

Maritime Operating Differential Subsidy 220 517

Maritime Operating Ship Disposal 21,201 14,332

Other Maritime Programs (1,130) (7,179)

Total Maritime Program Costs $ 457,525 $ 278,914

CROSS-CUTTING 

Office of the Secretary Working Capital Fund $ 5,127 $ 3,999

Volpe National Transportation Systems Center 2,228 4,729

Total Cross-Cutting Program Costs $ 7,355 $ 8,728

FINANCIAL REPORT 235 
NOTE 20. INTRAGOVERNMENTAL COSTS AND EXCHANGE REVENUES 

Dollars in Thousands 

FY 2006 FY 2005 

Surface Transportation 

Federal-Aid Highway Program 

Intragovernmental Gross Costs $ 251,703 $ 240,562 

8,263 17,502

I 243,440 223,060

33,329,236 30,978,622

20,364 38,538

33,308,872 30,940,084

$ 33,552,312 $ 31,163,144 

I $ 3,344 $ 91,817 

54,301 37,977

I (50,957) 53,840

9,469,186 8,026,289

(10,413) 1,156

9,479,599 8,025,133

$ 9,428,642 $ 8,078,973 

I $ 223,100 $ 284,932 

70,354 (4,185)

I 152,746 289,117

3,641,373 2,897,695

247,897 119,519

3,393,476 2,778,176

$ 3,546,222 $ 3,067,293 

$ 46,527,176 $ 42,309,410 

I $ 2,227,253 $ 1,999,237 

331,294 133,073

I 1,895,959 1,866,164

12,873,935 12,619,722

316,683 456,790

12,557,252 12,162,932

$ 14,453,211 $ 14,029,096 

Less: Intragovernmental Earned Revenue 

ntragovernmental Net Costs 

Gross Costs with the Public 

Less: Earned Revenues from the Public 

Net Costs with the Public 

Total Net Cost 

Mass Transit Program 

ntragovernmental Gross Costs 

Less: Intragovernmental Earned Revenue 

ntragovernmental Net Costs 

Gross Costs with the Public 

Less: Earned Revenues from the Public 

Net Costs with the Public 

Total Net Cost 

Other Surface Transportation Programs 

ntragovernmental Gross Costs 

Less: Intragovernmental Earned Revenue 

ntragovernmental Net Costs 

Gross Costs with the Public 

Less: Earned Revenues from the Public 

Net Costs with the Public 

Total Net Cost 

Total Net Cost—Surface Transportation 

Air Transportation 

ntragovernmental Gross Costs 

Less: Intragovernmental Earned Revenue 

ntragovernmental Net Costs 

Gross Costs with the Public 

Less: Earned Revenues from the Public 

Net Costs with the Public 

Total Net Cost 

236 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
NOTE 20. INTRAGOVERNMENTAL COSTS AND EXCHANGE REVENUES (CONT.) 

Dollars in Thousands 

Maritime Transportation 

Intragovernmental Gross Costs $ 104,578 $ 150,505 

Less: Intragovernmental Earned Revenue 272,108 448,796

Intragovernmental Net Costs (167,530) (298,291)

Gross Costs with the Public 625,876 584,710

Less: Earned Revenues from the Public 821 7,505

Net Costs with the Public 625,055 577,205

Total Net Cost $ 457,525 $ 278,914 

Cross-Cutting Programs 

Intragovernmental Gross Costs $ 9,812 $ 37,492 

Less: Intragovernmental Earned Revenue 454,722 521,327

Intragovernmental Net Costs (444,910) (483,835)

Gross Costs with the Public 457,491 499,420

Less: Earned Revenues from the Public 5,226 6,857

Net Costs with the Public 452,265 492,563

Total Net Cost $ 7,355 $ 8,728 

Costs Not Assigned to Programs 390,464 261,911

Less: Earned Revenues Not Attributed to Programs 30,985 25,165

Net Cost of Operations $ 61,804,745 $ 56,862,894 

FINANCIAL REPORT 237 
NOTE 21. STATEMENT OF CHANGES IN NET POSITION 

Dollars in Thousands 

NON-EXCHANGE REVENUE FY 2006 FY 2005 

Highway Trust Fund 

Excise Taxes and Other Non-Exchange Revenue (transferred from the Treasury general fund) 

Gasoline $ 24,667,951 $ 23,420,989 

Diesel and Special Motor Fuels 9,906,181 9,551,359

Trucks 5,510,705 4,549,657

Gasohol — 1,797,493

Fines and Penalties 10,961 14,070

Total Taxes $ 40,095,798 $ 39,333,568 

Less: Transfers (448,313) (435,121)

Gross Taxes $ 39,647,485 $ 38,898,447 

Less: Refunds of Taxes (reimbursed to Treasury general fund) (883,155) (1,006,854)

Total Excise Taxes $ 38,764,330 $ 37,891,593 

Other Non-Exchange Revenue 16,028 10,035

Net Non-Exchange Revenue $ 38,780,358 $ 37,901,628 

Federal Aviation Administration 

Taxes and Other Non-Exchange Revenue 

Passenger Ticket $ 7,423,271 $ 7,007,134 

International Departure 1,993,697 1,922,368

Fuel (Air) 402,436 926,860

Waybill 478,614 460,563

Investment Income 483,363 439,793

Gasoline 17,003 43,934

Tax Refunds and Credits (112,909) (100,628)

Other 16,234 —

Net Non-Exchange Revenue $ 10,701,709 $ 10,700,024 

Other Miscellaneous Net Non-Exchange Revenue 11,968 1,179

Total Non-Exchange Revenue $ 49,494,035 $ 48,602,831 

The financial statements of DOT for the Highway Trust Fund and the Airport and Airway Trust 

Fund reflect actual tax collections for the six months ended March 31, 2006, plus an estimate of 

tax collections expected for quarters ended June 30, 2006, and September 30, 2006. Actual tax 

collection data for the two quarters ended June 30, 2006, and September 30, 2006 will not be 

available from the IRS until December 2006 and March 2007 respectively. 

238 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
NOTE 22. STATEMENT OF BUDGETARY RESOURCES 

Dollars in Thousands 

FY 2006 FY 2005 

The amount of direct and reimbursable obligations incurred against amounts apportioned 

under Category A, B, and exempt from apportionment as of end of fiscal year: $ 65,612,056 $ 69,765,896 

Available Contract Authority as of end of fiscal year $ 21,935,692 $ 38,783,649 

Available Borrowing Authority as of end of fiscal year $ 30,383 $ 20,607 

Undelivered Orders as of end of fiscal year $ 67,588,782 $ 68,081,990 

Adjustments during fiscal year to Beginning Balance of Budgetary Resources 

Rescissions — (9,068)

Prior Year Recoveries — 519,964

Temporarily Not Available — (60,947)

Cancelled Authority — (5,190)

Permanently Not Available — (762,764)

Other Adjustments — 43,401

Total Adjustments to Budgetary Resources $ — $ (274,604)

The 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 Indefinite Appropriations 

FAA has permanent indefinite appropriations for the Facilities and Equipment, Grants-in-Aid, 

and Research, Development and Engineering appropriations in order 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 

year until expiration, upon receipt of an apportionment from OMB. Unobligated balances of 

expired accounts are not available. 

For FY 2007, the enacted budget of the United States has not been finalized. The President’s 

Budget of the United States for FY 2008 will not be published until February 2007, therefore, 

DOT is unable to confirm if differences exist between the information required by SFFAS 

No. 7 and the amounts described as “actual” for FY 2006 in the FY 2008 Budget of the United 

States. The information will be published on OMB’s Web site located at 

www.whitehouse.gov/omb. 

Budget authority on the FY 2005 Combined Statement of Budgetary Resources includes expired 

funds of $2.8 million that are not presented in the Budget of the United States Government for 

the FAA. Also, obligations incurred on the FY 2005 Combined Statement of Budgetary Resources 

includes $77 million of expired funds and $762 million of certain reimbursable and revolving 

fund obligations incurred that are not presented in the Budget of the United States Government. 

As a result, DOT’s FY 2005 Combined Statement of Budgetary Resources differs from FY 2005 

“actuals” reported in the appendix of the FY 2007 Budget of the United States Government. 

FINANCIAL REPORT 239 
NOTE 23. INCIDENTAL CUSTODIAL COLLECTIONS 

DOLLARS IN THOUSANDS 

Dollars in Thousands FY 2006 FY 2005 

Revenue Activity 

Sources of Cash Collections 

Miscellaneous Receipts $ 19,096 $ 20,758 

Fines, Penalties, and Forfeitures 5,903 —

Total Cash Collections $ 24,999 $ 20,758 

Total Custodial Revenue $ 24,999 $ 20,758 

Disposition of Collections 

Transferred to Treasury (General Fund) $ 24,999 $ 20,758 

Net Custodial Revenue Activity $ — $ —

240 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
NOTE 24. SAINT LAWRENCE SEAWAY DEVELOPMENT CORPORATION 

Dollars in Thousands

FY 2006 FY 2005

Condensed Information: 

Cash and Short-Term Time Deposits $ 15,967 $ 15,594 

Long-Term Time Deposits 392 882

Accounts Receivable 82 79

Inventories 256 249

Other Current Assets 2 —

Property, Plant and Equipment 76,074 76,835

Deferred Charges 3,086 2,716

Other Assets 516 602

TOTAL ASSETS $ 96,375 $ 96,957 

Current Liabilities $ 3,034 $ 2,820 

Actuarial Liabilities 3,086 2,716

TOTAL LIABILITIES $ 6,120 $ 5,536 

Invested Capital $ 91,065 $ 91,818 

Cumulative Results of Operations (810) (397)

TOTAL NET POSITION $ 90,255 $ 91,421 

TOTAL LIABILITIES AND NET POSITION $ 96,375 $ 96,957 

FINANCIAL REPORT 241 
Required Supplementary 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 $ 74,751

Other Structures 

and Facilities Condition Assessment Survey 4&5 23,605

MARAD Vessels, Ready Reserve Force 

(Various Locations) Condition Assessment Survey 3 32,401

Real Property, Buildings: 

U.S. Merchant Marine Academy, NY Condition Assessment Survey 3 41,250

Real Property, Buildings: 

Warehouse and Wharf Repairs, Condition Assessment Survey 3 3,455

Poland Avenue, New Orleans, LA 

Real Property, Buildings: 

Parking Lot, Reserve Fleet, CA Condition Assessment Survey 3 4,125

Real Property, Structure: 

Beaumont Reserve Fleet, Condition Assessment Survey 3 4,000

Reserve Fleet, TX 

Fleet Facilities, Beaumont, TX Condition Assessment Survey 3 4,075

Real Property, Structure: 

Suisun Bay Reserve Fleet, CA Condition Assessment Survey 3 3,555

Fleet Facilities, James River Condition Assessment Survey 3 1,820

Stewardship Heritage Assets Condition Assessment Survey 2,3,4 200

Stewardship Heritage Assets Total $ 193,237 

† 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 fixed 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. 

FINANCIAL REPORT 243 
HERITAGE ASSETS SUMMARY

ANNUAL STEWARDSHIP INFORMATION, SEPTEMBER 30, 2006

NUMBER OF PHYSICAL UNITS

Units as of Withdrawals Units as of 

September 30, 2005 Additions September 30, 2006 

Personal Property 

Collections

Artifacts 38 — — 38

Museum 456 2 — 458

Other Collections 100 1 — 101

Total Collections 594 3 — 597

Total Personal Property Heritage Assets 594 3 — 597

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. They are merchant 

marine artifacts, composed of ships’ operating equipment, obtained from obsolete ships. They 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 affairs, 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-of-the-century rail station in which one finds a wide variety of elaborate, artistic 

workmanship characteristic of the period. Union Station is listed on the National Register of 

Historic Places. The station consists of the renovated original building and a parking garage 

which was added by the U.S. Park Service. The 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-profit 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. The condition of the stewardship heritage assets is presented in the Deferred Maintenance 

section of the Required Supplementary Information. 

244 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Required Supplementary stewardship information
NON-FEDERAL PHYSICAL PROPERTY

ANNUAL STEWARDSHIP INFORMATION, SEPTEMBER 30, 2006

TRANSPORTATION INVESTMENTS

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 Dollars in Thousands 

Surface Transportation 

Federal Highway Administration 

Federal Aid Highways (HTF) $ 29,377,231 

Other Highway Trust Fund Programs 211,883

General Fund Programs 31,616

Appalachian Development System 146,306

Federal Motor Carrier 149,091

$ 29,258,796 $ 29,207,012 $ 29,750,120 $ 32,190,231 

243,874 300,493 445,083 452,022 

73,046 962,370 330,790 14,240 

128,480 263,430 425,810 366,816 

159,628 299,450 195,740 117,004 

Federal Transit Administration 

Discretionary Grants $ 495,322 $ 

Formula Grants 4,283,634

Capital Investment Grants † 2,371,521

Washington Metro 89,227

Interstate Transfer Grants 8,155

Formula and Bus Grants N/A

291,889 $ 160,655 $ 119,277 $ 91,961 

4,390,965 4,723,674 4,521,288 3,376,068 

2,632,841 2,788,920 3,375,206 3,073,294 

11,252 12,409 1,719 4,255

9,459 1,479 1,411

N/A N/A N/A 1,862,772 

Surface Transportation Non-Federal $ 37,163,986 $ 37,200,230 $ 38,719,892 $ 39,166,444 $ 39,686,097 Physical Property Investments 

Air Transportation 

Federal Aviation Administration 

Airport Improvement Program $ 2,933,542 $ 2,786,717 $ 2,977,300 $ 3,712,423 $ 3,852,141 

Air Transportation Non-Federal Physical $ 2,933,542 $ 2,786,717 $ 2,977,300 $ 3,712,423 $ 3,852,141 Property Investments 

Total Non-Federal Physical $ 40,097,528 $ 39,986,947 $ 41,697,192 $ 42,878,867 $ 43,538,238 Property Investments 

† Fiscal Year 2003 outlays are not net of Federal Emergency Management Administration 

(FEMA) collection of $2.75 billion. 

The Federal Highway Administration reimburses States for construction costs on projects 

related to the Federal Highway System of roads. The main programs in which the States 

participate are the National Highway System, Interstate Systems, Surface Transportation Program, 

and Congestion Mitigation/Air Quality Improvement. The States’ contribution is ten percent for 

the Interstate System and twenty percent for most other programs. 

246 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT

206
The 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 finance acquisition, construction, reconstruction, and improvement of facilities and 

equipment. Capital investment grants fund the categories of new starts, fixed 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 financing 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. 

The Federal Aviation Administration (FAA) makes project grants for airport planning and 

development under the Airport Improvement Program (AIP) to maintain a safe and efficient 

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. 

FINANCIAL REPORT 247 
HUMAN CAPITAL INVESTMENT EXPENSES

ANNUAL STEWARDSHIP INFORMATION, SEPTEMBER 30, 2006

Dollars in Thousands FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 

Surface Transportation 

Federal Highway Administration 

National Highway Institute Training $ 9,146 $ 8,539 $ 4,069 $ 11,844 $ 14,123

Federal Motor Carrier Safety Administration 

California Highway Patrol 926 192 41 —

Idaho Video 199 593 344 208 —

Kentucky IT Conference 175

Massachusetts Training Academy 25 175 9 53 —

Minnesota Crash Investigation 18 57 21 — 1

Federal Transit Administration † ‡ 

National Transit Institute Training 3,946 4,292 4,667 3,318 3,961

National Highway Safety Administration 

Section 403 Highway Safety Programs 83,389 49,013 53,964 110,981 221,523

Highway Traffic Safety Grants 229,145 210,469 205,509 216,702 279,244

Pipeline and Hazardous Materials Safety 

Administration 

Hazardous Materials (Hazmat) Training 7,763 7,782 7,780 8,065 7,800

Surface Transportation 

Human Capital Investments $ 333,631 $ 281,846 $ 276,555 $ 351,212 $ 526,827 

Maritime Transportation 

Maritime Administration 

State Maritime Academies Training ‡ $ 8,257 $ 8,363 $ 9,208 $ 9,215 $ 7,528

Additional Maritime Training 463 463 388 328 134

Maritime Transportation 

Human Capital Investments $ 8,720 $ 8,826 $ 9,596 $ 9,543 $ 7,662 

Total Human Capital Investments $ 342,351 $ 290,672 $ 286,151 $ 360,755 $ 534,489 

† FY 2002 outlay amounts are based on the enacted budget authority for FYs 1999, 2000, and 2001, and on the 

approved outlay rates for the National Transit Institute (5 %, 50%, 40%, and 5%). 

‡ Does not include funding for the Student Incentive Payment Program, which produces graduates who are 

obligated to serve in a reserve component of the U.S. armed forces. 

248 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
The 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. 

The California Highway Patrol educates the trucking industry for the Federal Motor Carrier 

Safety Administration about Federal and State commercial motor vehicle/carrier inspection 

procedures, and increased commercial motor vehicle driver awareness. The Idaho Video Program 

develops video training material utilized by FMCSA National Training Center for the purpose of 

training State and local law enforcement personnel. The Massachusetts Training Academy 

provides training to State law enforcement personnel located in the northeast region of 

Massachusetts. The Minnesota Crash Investigation program provides training and develops 

processes and protocols for commercial motor vehicle crash investigations. 

The National Transit Institute of the Federal Transit Administration develops and offers 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. 

The National Highway Traffic Safety Administration’s programs authorized under the Highway 

Trust Fund provide resources to State and local governments, private partners, and the public to 

effect 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. 

The Pipeline and Hazardous Materials Safety Administration administers Hazardous Material 

Training (Hazmat). The 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. 

FINANCIAL REPORT 249 
RESEARCH AND DEVELOPMENT INVESTMENTS

ANNUAL STEWARDSHIP INFORMATION, SEPTEMBER 30, 2006

Dollars in Thousands FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 

Surface Transportation 

Federal Highway Administration 

Intelligent Transportation Systems $ 124,950 $ 126,256 $ 146,852 $ 183,634 $ 129,219

Other Applied Research & Development 183,142 115,368 142,557 114,315 105,336

Federal Railroad Administration 

Railroad Research & Development Program 9,600 2,402 9,342 6,032 11,681 

Federal Transit Administration 

Applied Research and Development 

Transit Planning and Research † 1,931 3,895 3,483 2,546 6,543 

Transit University Transportation Centers ‡ 8,168————

Office of the Secretary 

Applied Research and Development 

Emergency Transportation 137 650 8 — —

Pipeline and Hazardous Materials Safety 

Administration 

Applied Research and Development 

Pipeline Safety 

Hazardous Materials 

4,000

233

5,523

1,755

6,375

1,489

10,810

1,638

11,705

2,204

Research and Innovative Technology 

Administration 

Applied Research and Development 

Research and Technology 1,608 1,454 1,134 1,564 1,110

Surface Transportation Research and 

Development Investments $ 333,769 $ 257,303 $ 311,240 $ 320,539 $ 267,798 

Air Transportation 

Federal Aviation Administration 

Research and Development Plant $ 3,020 $ 2,903 $ 4,230 $ 5,287 $ 3,821

Applied Research 59,150 29,406 91,743 103,659 106,390

Development 603 251 478 547 587

Administration 44,480 31,669 28,643 29,163 30,566

Air Transportation Research and $ 107,253 $ 64,229 $ 125,094 $ 138,656 $ 141,364 Development Investments 

Total Research and Development Investments $ 441,022 $ 321,532 $ 436,334 $ 459,195 $ 409,162 

† FY 2002 updated with Transit Cooperative Research Program estimate based on actual outlays. 

‡ FY 2002 updated based on actual research and development related outlays. 

250 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
The Federal Highway Administration’s research and development programs are earmarks in the 

appropriations bills for the fiscal 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. The output is in 

accordance with the specifications within the appropriations act. 

The 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. The National Research Program funds the research and 

development of innovative transit technologies such as safety-enhancing 

commuter rail control systems, hybrid electric buses, and fuel cell and batterypowered propulsion systems. The Transit Cooperative Research Program 

focuses on issues significant 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 finance acquisition, construction, reconstruction, 

and improvement of facilities and equipment. Capital investment grants fund 

the categories of new starts, fixed guideway modernization, and bus and busrelated activities. 

The Office of the Secretary’s Office of Emergency Transportation is involved in research and 

development in mapping software for the Crisis Management Center, transportation policy, and 

outreach efforts. 

The Pipeline and Hazardous Materials Safety Administration funds research and development 

activities for the following organizations and activities: 

• The Office of Pipeline Safety is involved in research and development in 

information systems, risk assessment, mapping, and non-destructive evaluation; 

and, 

• The Office of Hazardous Materials is involved in research, development, and 

analysis in regulation compliance, safety, and information systems. 

FINANCIAL REPORT 251 
The Research and Innovative Technology Administration’s Office of Research and Technology 

is involved in research and development for the University of Technology and Education. 

The Federal Aviation Administration conducts research and provides the essential air traffic 

control infrastructure to meet increasing demands for higher levels of system safety, security, 

capacity, and efficiency. Research priorities include aircraft structures and materials; fire and 

cabin safety; crash injury-protection; explosive detection systems; improved in-flight icing and 

ground de-icing operations; better tools to predict and warn of weather hazards, turbulence and 

wake vortices; aviation medicine, and human factors. 

252 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
U.S. Department of 

Memorandum

Transportation 

Office of the Secretary 

of Transportation 

Office of Inspector General 

Subject: ACTION: Report on Consolidated Financial Date: November 15, 2006 

Statements for Fiscal Years 2006 and 2005, DOT 

Report Number: FI-2007-010 

From: Calvin L. Scovel III Reply to 

Attn. of: JA–20 Inspector General 

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) 

2006 and 2005 (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, with one exception. 

That exception concerns the FY 2006 Construction in Progress (CIP) balance, 

which is a subcomponent of the Property, Plant, and Equipment line item on the 

Department’s balance sheet. 

KPMG LLP, under contract to us and under our supervision, audited the Federal 

Aviation Administration’s (FAA) financial statements and rendered a qualified 

opinion because deficiencies in FAA’s accounting for CIP prevented FAA from 

providing adequate support to verify that reported CIP balances were reliable.1 

Because 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 must be 

similarly qualified. 

We recognize that you, the Department’s Chief Financial Officer, and other 

Department leaders are concerned that deficiencies in FAA’s CIP accounting 

process resulted in this qualification to the Department’s consolidated financial 

statement. The Department’s leaders have demonstrated a longstanding 

1

 FAA uses a complicated process to track and account for billions of dollars in capital investments. The majority of 

these investments are needed to modernize the air traffic control system—a critical national infrastructure. This 

multiyear development effort involves the extensive use of advanced technologies. While under development, all 

spending must be carefully tracked and recorded in the CIP account. When commissioned into use, these investments 

must be reclassified as in-service assets, which are then subject to depreciation. 

FINANCIAL REPORT 253 
2 

commitment to improving financial management in the Department and in each 

Operating Administration. As reflected in our prior financial statement audit 

reports, that commitment has substantially improved the Department’s ability to 

track and properly report financial results. We also recognize your history of 

strong support for improved financial management processes, as reflected by the 

critical and effective leadership that you demonstrated in correcting longstanding 

financial issues in the Federal Highway Administration (FHWA) during your 

tenure as the Administrator. 

FAA’s process for accounting for CIP is a longstanding concern. Auditors 

reported material weaknesses concerning FAA’s Property, Plant, and Equipment 

account balances, including inaccurate and untimely CIP transaction processing, 

annually from FY 1992 through FY 2002. Although FAA substantially corrected 

the deficiencies by FY 2003, the problems recurred during FY 2004 and 

subsequent years. At that time, FAA replaced key CIP manual processes with an 

automated project accounting module but did not implement adequate controls and 

oversight to ensure that the new process worked effectively. 

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, 

including its ability to ensure that CIP transactions were timely and accurately 

recorded when assets were placed in service. Although FAA management agreed 

to correct those deficiencies during FY 2006, the corrective actions were not 

implemented effectively. As a result, the CIP balance presented to KPMG in 

August 2006 contained material errors, and FAA was not able to complete its 

review of CIP or to properly state the CIP balance as of September 30, 2006. 

Consequently, FAA management was unable to represent to KPMG that the CIP 

balance, reported to be $4.7 billion, was fairly stated. Accordingly, KPMG could 

not complete its audit of CIP balances. KPMG also identified CIP process 

deficiencies as a material weakness. 

The lack of controls over CIP-related transactions was one of several concerns 

included in last year’s material weakness reporting. This year, KPMG reported 

that, except for CIP-related processing, FAA has taken adequate corrective actions 

to ensure timely recording of obligations, supporting advances and prepayments, 

clearing suspense accounts, reconciling budgetary to proprietary accounts, and 

reconciling subsidiary to general ledger account balances. If FAA stays focused 

on fixing CIP-related operations, it should be able to produce the same results in 

FY 2007. However, we are concerned that this correction effort may become 

diverted. 

Responding to this year’s report, FAA hired a contractor and committed to taking 

aggressive action to ensure that capitalized assets are properly valued and 

transactions are recorded in a timely manner by improving policies and 

254 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
3 

procedures, enhancing communications between program officials and accounting 

personnel, and conducting a comprehensive evaluation of CIP balances to make 

appropriate accounting adjustments. However, FAA has first directed the 

contractor to analyze a sample of CIP assets in order to generate a more reliable 

estimate of the CIP balance as of September 30, 2006. FAA then intends to 

provide this additional information to KPMG, requesting that KPMG continue 

auditing the FY 2006 balance and issue a new report, sometime during FY 2007, 

that provides a restatement on FAA’s FY 2006 financial statements. In our view, 

diverting resources to generate a new estimate of the FY 2006 CIP balance and to 

reissue the FY 2006 financial statement audit report will further delay efforts to fix 

the CIP process deficiencies and will increase the risk that FAA will again not be 

able to correct its underlying material weakness during FY 2007. 

Successfully implementing these corrective actions in FY 2007 is critical for two 

reasons. First, FAA has stated that its goal is to implement sound financial 

management processes. This must include establishing stronger processes to 

account for its property. In doing so, FAA will be in a substantially stronger 

position to correct the material weakness and obtain a clean opinion on its 

financial statements in FY 2007. 

Second, the FAA deficiencies may adversely affect DOT’s ability to meet the 

Office of Management and Budget’s FY 2007 internal control requirements under 

Circular A-123—the Federal version of the Sarbanes/Oxley Act. Circular A-123 

requires the Department’s leaders to implement adequate management and 

financial controls to deliver the best value with the resources entrusted to the 

agency. At the end of FY 2007, the Department will be required, for the first time, 

to provide specific assurance that it has adequate controls to provide reasonable 

assurance that property is accounted for properly. The adequacy of FAA’s 

controls will be key to whether the Secretary will be able to provide that 

assurance. 

The Department’s Chief Financial Officer also recognizes the importance of 

correcting the underlying process deficiencies. She told us that her office will now 

closely monitor FAA’s efforts to correct CIP process deficiencies to ensure that 

FAA implements timely and effective corrective actions. Given the importance of 

correcting these deficiencies, we agree that this is appropriate. 

Turning now to the audit of the Highway Trust Fund (HTF) financial statements, 

KPMG rendered an unqualified (clean) opinion this year—the eighth consecutive 

clean opinion since FY 1999. However, FHWA continued to experience problems 

preparing reliable draft HTF financial statements in a timely manner, primarily 

due to difficulties analyzing and consolidating underlying data. To illustrate, the 

HTF finances operations in multiple DOT Operating Administrations: FHWA, the 

Federal Transit Administration, the National Highway Traffic Safety 

FINANCIAL REPORT 255 
4 

Administration, the Federal Motor Carrier Safety Administration, the Federal 

Railroad Administration, and the Research and Innovative Technology 

Administration. In addition, 17 other agencies outside of DOT receive HTF 

appropriations through FHWA. Together, these agencies disbursed about 

$37 billion in Federal funds during FY 2006. To compile the HTF statements, 

FHWA had to monitor fund transfers, collect reliable information about how funds 

were used from all of these Operating Administrations and outside agencies, and 

reconcile related account balances. KPMG’s audit report also identified 

deficiencies in other accounting operations and financial oversight that make it 

more difficult for FHWA to generate timely and reliable HTF financial statements. 

Our report identifies two financial management matters that KPMG and we 

consider material and several other reportable conditions that are significant but 

not material. The material matters are that: 

x FAA must take immediate action to correct the underlying process deficiencies 

that limit its ability to properly account for CIP-related transactions; and 

x FHWA and other HTF Operating Administrations must enhance their financial 

accounting operations and oversight in several areas, such as better control 

over journal entries to process accounting adjustments, more timely correction 

of abnormal account balances, improved coordination with non-DOT agencies 

that receive HTF appropriations through FHWA, and validation of the accrual 

methodology used to estimate unpaid grant expenses. 

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 2006 financial statements 

show total assets of $65 billion, liabilities of almost $14 billion, program costs of 

nearly $62 billion, and available financial resources of more than $112 billion. In 

FY 2006, DOT received appropriations (revenue) of $61 billion. More than 

$49.5 billion (about 81 percent) of DOT’s revenue sources came from two trust 

funds, the HTF and the Airport and Airway Trust Fund. 

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 its recommendations. We appreciate the cooperation and assistance of 

DOT and KPMG representatives. If we can answer any questions, please call me 

at (202) 366-1959; Ted Alves, Principal Assistant Inspector General for Auditing 

and Evaluation, at (202) 366-1992; or Rebecca Leng, Assistant Inspector General 

for Financial and Information Technology Audits, at (202) 366-1496. 

Attachment 

256 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
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Page 1 of 24 

DEPARTMENT OF TRANSPORTATION 

INSPECTOR GENERAL’S INDEPENDENT AUDIT REPORT 

ON THE DEPARTMENT OF TRANSPORTATION 

CONSOLIDATED FINANCIAL STATEMENTS 

FOR FISCAL YEARS 2006 AND 2005 

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, 2006, and September 30, 2005. In our audit, “DOT Consolidated 

Financial Statements for Fiscal Years 2006 and 2005,” we found: 

x Except for the accuracy and completeness of the Construction in Progress 

(CIP) account, financial statements are fairly presented, in all material respects, 

in conformity with generally accepted accounting principles. 

x Two material internal control weaknesses: timely processing of transactions 

and accounting for the Federal Aviation Administration (FAA) CIP account; 

and financial management, reporting, and oversight for the Highway Trust 

Fund (HTF) agencies.2 

x Seven reportable conditions: reporting of earmarked funds for the Federal 

Transit Administration, financial system controls, DOT’s information security 

program, reconciling intragovernmental transactions, deobligating unneeded 

funds in the HTF agencies, FAA grants management, and FAA contract 

management. 

x Three instances of noncompliance with laws and regulations: the Federal 

Financial Management Improvement Act of 1996 (FFMIA), the AntiDeficiency Act, and the Improper Payments Information Act of 2002. 

x Financial information in the Management Discussion and Analysis was 

materially consistent with the financial statements. 

x Supplementary and stewardship information, and other accompanying 

information, was materially consistent with management representations and 

the financial statements. 

2 Federal Highway Administration, National Highway Traffic Safety Administration, Federal Transit Administration, 

Federal Railroad Administration, Federal Motor Carrier Safety Administration, and the Research and Innovative 

Technology Administration. 

FINANCIAL REPORT 257 
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Page 2 of 24 

We performed our work in accordance with Generally Accepted Government 

Auditing Standards and Office of Management and Budget (OMB) Bulletin 06-03, 

“Audit Requirements for Federal Financial Statements.” The following sections 

discuss these conclusions. Our audit objectives, scope, and methodology can be 

found in Exhibit A. We believe that our audit provides a reasonable basis for our 

opinion. 

A. QUALIFIED OPINION ON FINANCIAL STATEMENTS 

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, 

including its ability to ensure that CIP transactions were promptly and accurately 

recorded when assets were placed in service. Although FAA management agreed 

to correct those deficiencies during FY 2006, the corrective actions were not 

implemented effectively. As a result, the 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 DOT’s FY 2006 Performance 

and Accountability Report. Accordingly, KPMG could not complete its audit of 

CIP balances. FAA’s CIP balance, which is included as a component of the 

Property, Plant, and Equipment line item in footnote number 9 on the balance 

sheet, was reported to be $4.7 billion as of September 30, 2006. Because FAA’s 

Property, Plant, and Equipment balance represents 95 percent of the Department’s 

property as of September 30, 2006, potential errors in FAA’s CIP balance could 

have a material impact on the Department’s financial statement. 

In our opinion, except for the FY 2006 CIP account balance (a component of 

Property, Plant, and Equipment on DOT’s consolidated financial statements), 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; budgetary resources; and reconciliation of net costs to budgetary 

obligations as of September 30, 2006, and September 30, 2005, and for the years 

then ended. This qualification occurred because, as discussed in the paragraph 

above, material adjustments to the CIP balance would be likely had FAA 

management completed its review of CIP transactions and had we been able to 

apply sufficient procedures to complete our audit. 

Under contract with OIG and under our supervision, KPMG audited the financial 

statements of FAA as of and for the years ended September 30, 2006, and 

September 30, 2005. KPMG qualified its opinion on the FY 2006 FAA financial 

statements because of concerns over the accuracy of the CIP account and rendered 

an unqualified opinion on the FY 2005 FAA financial statements. KPMG also 

audited the financial statements of the HTF as of and for the year ended 

258 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
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September 30, 2006, and rendered an unqualified opinion on the HTF financial 

statements. Clifton Gunderson, LLP, previously audited and rendered an 

unqualified opinion on the financial statements of the HTF as of and for the year 

ended September 30, 2005. We performed quality control reviews of the work 

performed by KPMG and Clifton Gunderson and relied on their results in 

performing our work on the FY 2006 and FY 2005 DOT consolidated financial 

statements. 

Also, as discussed in financial statement footnote numbers 1 and 18, DOT adopted 

the provisions of Statement of Federal Financial Accounting Standards 27, 

“Identifying and Reporting Earmarked Funds,” effective October 1, 2005. As 

discussed in financial statement footnote numbers 1 and 21, the accompanying 

financial statements reflect actual excise tax revenues deposited in the HTF and 

the Airport and Airway Trust Fund through March 31, 2006, and excise tax 

receipts estimated by the Department of the Treasury Office of Tax Analysis for 

the two quarters ended June 30, 2006, and September 30, 2006. 

B. CONSIDERATION OF INTERNAL CONTROLS 

In planning and performing our audit, we considered DOT’s internal controls over 

financial reporting and compliance with laws and regulations. We do not express 

an opinion on internal controls and compliance because the purpose of our work 

was to determine our procedures for auditing the financial statements and to 

comply with OMB Bulletin 06-03 audit guidance, not to express an opinion on 

internal controls. 

For the controls we tested, we found two material weaknesses. A material 

weakness is a condition in which the design or operation of one or more of the 

internal control components does not reduce, to a relatively low level, the risk that 

errors, fraud, or noncompliance that would be material to the financial statements 

may occur and not be detected promptly by employees in the normal course of 

performing their duties. 

Our work identified seven reportable conditions in internal controls. Reportable 

conditions in internal controls, although not considered material weaknesses, 

represent significant deficiencies in the design and operation of internal controls 

that could adversely affect the ability of DOT to meet its internal control 

objectives. Our internal control work would not necessarily disclose all material 

weaknesses or reportable conditions. 

FINANCIAL REPORT 259 
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MATERIAL WEAKNESSES 

The following sections describe the material weaknesses that we identified. 

Timely Processing of and Accounting for the FAA Construction in 

Progress Transactions 

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. To illustrate, in order to prepare reliable financial 

statements, FAA had to commit substantial resources to properly categorize 

$1.1 billion of CIP transactions during the last month of the fiscal year and 

$180 million during the first 2 weeks after the fiscal year ended. 

KPMG’s FY 2005 audit report recommended that FAA improve its processes and 

controls to ensure that PP&E is consistently and accurately capitalized. That 

report also noted that, without substantial changes to FAA’s processes and 

controls over recording transactions and reconciling accounts throughout the year, 

FAA might not be able to meet future financial statement reporting deadlines. 

Although FAA management agreed to correct those deficiencies during FY 2006, 

the corrective actions were not implemented effectively. As a result, FAA again 

had to devote substantial resources at the end of the year. This year, however, the 

CIP balance presented to KPMG in August 2006 contained material errors, and 

FAA was not able to complete its review of CIP or to properly state the CIP 

balance as of September 30, 2006, before the issuance of the Department’s 

Performance and Accountability Report. FAA management was also unable to 

represent to KPMG that the CIP balance, reported to be $4.7 billion, was fairly 

stated. Accordingly, KPMG could not complete its audit of CIP balances. 

In its FY 2006 audit report, KPMG again identified CIP process deficiencies as a 

material weakness. Specifically, KPMG noted that FAA lacks adequate policies, 

procedures, and controls to monitor its CIP activity and balances in a routine and 

timely fashion. KPMG reported that FAA: (1) needs to strengthen accounting 

policies and procedures, (2) lacks controls to ensure that CIP transactions are 

properly accounted for in a timely manner, (3) does not have a process to ensure 

that documentation adequately supports the basis for CIP transactions, and 

(4) does not adequately monitor the process to ensure that CIP balances are 

routinely reconciled to subsidiary listings and supporting detail. 

x Strengthening accounting policies and procedures. KPMG noted that 

FAA’s policies and procedures did not describe how to determine when 

Research and Development costs should be capitalized; treat bulk purchases; 

allocate costs when equipment is deployed to multiple locations; capitalize 

260 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
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costs of long-term projects when deployments occur over several years; 

account for agency prototypes; address recognition of operational feasibility; 

and expense costs of delayed or postponed projects. 

x Ensuring that CIP transactions are properly accounted for in a timely 

manner. KPMG reported that FAA does not have front-end and in-process 

controls to ensure that all CIP projects are accurately and completely 

accounted for in a timely manner. For example, FAA has not established 

adequate processes or controls to ensure that CIP is capitalized to PP&E within 

30 days of being placed in service, as required by FAA policy. KPMG found 

that 96 percent of the items it tested were not capitalized within the 30-day 

period. 

FAA does not have adequate policies and procedures to identify errors and 

make timely corrections to the underlying accounting records. KPMG found 

that even when errors were identified on project activity reports, they were not 

investigated and resolved or reported to senior management. FAA also lacks a 

routine and effective process to identify and correct projects that are 

improperly set up, either as expense or capital activities. In one case, KPMG 

identified a project with a CIP balance of $101 million that should have been 

expensed. 

x Ensuring that documentation is maintained that adequately supports the 

basis for CIP transactions. KPMG found that FAA does not have a process 

to ensure that adequate documentation is maintained to support management’s 

decisions and accounting transactions. For example, FAA could not provide 

documentation without spending several days locating supporting evidence. 

When provided, documentation showed clear inconsistencies with the 

classification of assets in the accounting system. KPMG noted a 50 percent 

error rate between documentation provided and data in the accounting system. 

Also, key documentation was not always available. In particular, two 

documents are key to determining when assets have been placed into service; 

however, in numerous instances, those documents were not available. 

Decisions regarding asset classifications were made without adequate 

supporting documentation. For example, KPMG identified over $200 million 

in 8 CIP projects that had been expensed from CIP in FY 2006 but 

subsequently had to be reversed after FAA provided documentation that 

contradicted the initial entry recorded by FAA. 

x Monitoring and reconciling CIP balances. KPMG reported that FAA does 

not provide adequate monitoring and supervision of CIP processes and that the 

accounting system lacks controls to ensure that CIP balances are reconciled to 

FINANCIAL REPORT 261 
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subsidiary listings and supporting details. KPMG also reported that a lack of 

clear lines of authority and communication among accounting organizations in 

the Office of Financial Management, the Air Traffic Organization, and the 

Office of Regions, Centers, and Operations has led directly to inaccurate or 

untimely accounting for CIP activity. 

KPMG made 10 recommendations to correct these deficiencies, and FAA 

committed to implement the recommendations, including improving policies and 

procedures to ensure that capitalized assets are properly valued and transactions 

are recorded in a timely manner; enhancing communications between program 

officials and accounting personnel; and conducting a comprehensive evaluation of 

CIP balances to make appropriate accounting adjustments. 

The lack of controls over CIP-related transactions was one of several concerns 

included in last year’s material weakness reporting. This year, KPMG reported 

that, except for CIP-related processing, FAA has taken adequate corrective actions 

to ensure timely recording of obligations, supporting advances and prepayments, 

clearing suspense accounts, reconciling budgetary to proprietary accounts, and 

reconciling subsidiary to general ledger account balances. If FAA stays focused 

on fixing CIP-related operations, it should be able to produce the same results in 

FY 2007. However, we are concerned that this correction effort may become 

diverted. 

FAA hired a contractor to assist the review of CIP transaction processing. 

However, FAA has first directed the contractor to analyze a sample of CIP assets 

in order to generate a more reliable estimate of the CIP balance as of 

September 30, 2006. FAA then intends to provide this additional information to 

KPMG, requesting that KPMG continue auditing the FY 2006 balance and issue a 

new report, sometime during FY 2007, providing a restatement on FAA’s 

FY 2006 financial statements. 

In our view, diverting resources to generate a new estimate of the FY 2006 CIP 

balance and to reissue the FY 2006 financial statement audit report will further 

delay efforts to fix the CIP process deficiencies and will increase the risk that FAA 

will again not be able to correct its underlying material weakness during FY 2007. 

Successfully implementing these corrective actions in FY 2007 is critical for two 

reasons. First, FAA has stated that its goal is to implement sound financial 

management processes. This must include establishing stronger processes to 

account for its property. In doing so, FAA will be in a substantially stronger 

position to correct the material weakness and obtain a clean opinion on its 

financial statements in FY 2007. 

262 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
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Page 7 of 24 

Second, the FAA deficiencies may adversely affect DOT’s ability to meet OMB’s 

FY 2007 internal control requirements under Circular A-123—the Federal version 

of the Sarbanes/Oxley Act. Circular A-123 requires the Department’s leaders to 

implement adequate management and financial controls to deliver the best value 

with the resources entrusted to the agency. At the end of FY 2007, the 

Department will be required, for the first time, to provide a specific assurance that 

it has adequate controls to provide reasonable assurance that property is accounted 

for properly. The adequacy of FAA’s controls will be key to whether the 

Secretary will be able to provide that assurance. 

The Department’s Chief Financial Officer also recognizes the importance of 

correcting the underlying process deficiencies. She told us that her office will now 

closely monitor FAA’s efforts to correct CIP process deficiencies to ensure that 

FAA implements timely and effective corrective actions. Given the importance of 

correcting these deficiencies, we agree that this is appropriate. 

HTF Agencies’ Financial Management, Reporting, and Oversight 

Activities

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. During FY 2006, the HTF agencies implemented 

significant improvements over several previously reported deficiencies. As a 

result, some issues—cleaning up suspense accounts and reconciling the Fund 

Balance with Treasury—have been downgraded to reportable conditions for HTF 

financial statement reporting. Other issues—implementation of managerial cost 

accounting and tracking intragovernmental transactions—were closed. 

However, KPMG continued to identify deficiencies in the area of financial 

management, reporting, and oversight. These deficiencies include: (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. 

x Preparation, Approval, and Processing of Journal Entries. A significant 

number of accounting transactions are recorded into Delphi (the departmental 

accounting system for financial statement compilation) through the use of 

journal entries during FY 2006. The HTF agencies used manual journal entries 

to process routine transactions, such as recording and distributing budget 

authority, recording and reversing accruals, and recording cash draw-downs. 

Use of journal entries to process routine transactions increases the risk of error 

and misstatement as users can enter transactions that do not comply with 

FINANCIAL REPORT 263 
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Treasury standard general ledger posting logic. HTF agencies should use 

journal entries to process non-routine transactions, such as recording one-time 

adjustments. 

To ensure a controlled journal-entry process, when appropriate, the HTF 

agencies developed standardized forms to include the name of the preparer, 

reason for the entry, type of supporting documentation provided, and signature 

by the approver. However, key information required on the form was 

frequently missing. KPMG reviewed 183 journal entries and identified 

12 instances where the name of the preparer was not provided, 16 instances 

where the journal entries were not approved before they were recorded in 

Delphi, and 33 instances where either no supporting documentation was 

provided or the documentation provided was insufficient. In addition, 

documentation to support eight journal entries could not be located and three 

journal entries could not be traced to the general ledger. 

x Preparation and Analysis of the HTF Financial Statements. KPMG 

identified several concerns associated with compilation of HTF financial 

statements. Specifically, agencies are required to report net cost of operations 

by major programs on the Statement of Net Cost. In addition, OMB asked 

agencies to allocate net cost of operations by the agency’s strategic goals in 

financial statement note disclosures for information purposes. During 

FY 2006, the HTF agencies revised the methodology used to allocate the 

$37 billion net cost of operations by DOT’s strategic goals. However, KPMG 

determined that the new methodology and the allocation results were not 

properly supported. As a result, HTF agencies reported cost allocations by 

three major programs—Federal Aid Highways, Mass Transit, and Other 

programs—in the Statement of Net Cost note disclosure. The information 

about the cost associated with DOT’s strategic goals was instead presented as 

Other Accompanying Information to the financial statements. KPMG also 

found deficiencies in the Management Discussion and Analysis section in the 

financial statements. For example, HTF agencies initially presented 

information not relevant to the HTF, which had to be eliminated. Also, the 

performance measures had to be revised to conform to OMB requirements. 

x Analysis of Abnormal Account Balances. The HTF agencies did not have 

effective processes to identify and resolve abnormal balances at the Treasury 

appropriation fund symbol level. Abnormal balances, such as a credit balance 

in asset accounts or a debit balance in liability accounts, normally result from 

incorrect transaction processing. Each HTF agency has the ability to produce a 

standard report from the Delphi accounting system, entitled “Account Balance 

Exception Report,” but did not routinely produce or review the report, 

document the review, or resolve exceptions identified. According to 

264 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
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departmental officials, the existing Delphi report was inappropriately designed 

to identify discrepancies within each Treasury symbol. During FY 2006, the 

Department developed an alterative solution to report discrepancies at the 

Treasury symbol level. However, HTF agencies only began using the 

alternative report during the fourth quarter of FY 2006. 

x Analysis of Proprietary and Budgetary Account Relationships. Federal 

agencies are required to perform dual-postings to proprietary (e.g., operating 

expenses) and budgetary (e.g., obligations incurred) accounts to record certain 

business transactions. Balances in these two sets of accounts need to be 

reconciled to ensure consistency. Account relationship tests between 

proprietary and budgetary accounts are an effective tool to ensure that general 

ledger accounts have integrity and that incorrect transactions are detected and 

corrected. To be fully effective, account relationship tests should be performed 

at the Treasury symbol level. 

During FY 2006, HTF agencies developed various account relationship tests— 

both automated and manual. While these tests did not identify material 

discrepancies between proprietary and budgetary accounts, KPMG found that 

HTF agencies did not have effective processes for analyzing and assessing the 

impact of discrepancies on financial statement reporting. For example, 

3⁄4 FHWA had 21 separate account relationship tests, including one performed 

automatically by Delphi and one still under development at June 30, 2006. 

However, it did not assess the impact of account relationship discrepancies 

at yearend. 

3⁄4 FTA had 16, and the remaining 4 HTF agencies had 6, separate account 

relationship tests. However, these tests were performed only at the 

appropriations summary level. As a result, discrepancies at the Treasury 

symbol level could have occurred without being detected. 

x Coordination with Non-DOT Agencies that Receive HTF Appropriations 

through FHWA. During FY 2006, FHWA took action to resolve accounting 

discrepancies related to the reporting of allocation transfers of budgetary 

authority to 17 other Federal agencies outside DOT. These non-DOT agencies 

receive HTF appropriations through FHWA, such as the Forest Service and the 

Army Corps of Engineers. However, FHWA must further strengthen 

procedures to obtain information from these non-DOT agencies to support 

HTF financial statement assertions related to transactions processed by the 

other agencies that are included in the HTF Consolidated financial statements. 

FINANCIAL REPORT 265 
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x Estimating and Reporting Grant Accruals. For yearend reporting, the HTF 

agencies calculate and record an estimate ($3.6 billion at September 30, 2006) 

for the amount of work performed by grantee contractors but not yet billed to 

and reimbursed by the Federal agency. During FY 2006, FHWA did not 

ensure the grant accrual estimate included the total time between when work 

was accepted by grantees and when it was reimbursed by FHWA. As a result, 

in October 2006, FHWA had to initiate a special effort to confirm the accrual 

amounts with grantees in all states, which resulted in about a $200 million 

adjustment to the original estimate. Also, FTA made a material mathematical 

error in the calculation of its grant accrual estimate, which resulted in about a 

$600 million adjustment in the HTF financial statements. 

KPMG made a series of recommendations to improve financial management, 

reporting, and oversight activities in its financial statement audit report, dated 

November 6, 2006. FHWA and DOT agreed to implement the recommendations. 

Therefore, we are not making additional recommendations in this report. 

REPORTABLE CONDITIONS 

The following sections describe the reportable conditions that we identified. 

Reporting of Earmarked Funds for Federal Transit Administration 

Statement of Federal Financial Accounting Standard 27, entitled “Identifying and 

Reporting Earmarked Funds,” became effective for FY 2006 reporting. OMB 

Circular A-136, “Financial Reporting Requirements,” issued July 24, 2006, 

requires both Net Position amounts (Unexpended Appropriations and Cumulative 

Results of Operations) attributable to earmarked funds, if material, to be reported 

separately on the Balance Sheet and Statement of Changes in Net Position. 

Through consultation with OMB, DOT agreed that commingled Treasury accounts 

(with a mixture of earmarked and non-earmarked funds) would be reported based 

on the preponderance of the funds. 

At September 30, 2006, the Federal Transit Administration (FTA) had seven 

Treasury accounts that included a mixture of earmarked and non-earmarked funds. 

Since they were financed predominantly by non-earmarked funds, they should not 

have been reported as earmarked funds. However, these seven accounts were 

initially reported as earmarked in the draft DOT Consolidated Balance Sheet and 

Statement of Changes in Net Position. This material error occurred because FTA 

incorrectly applied the DOT guidance at the summary level instead of at the 

Treasury symbol level. Consequently, adjustments totaling $5.2 billion were 

required to the net position amounts ($3.5 billion to Unexpended Appropriations 

and $1.7 billion to Cumulative Results of Operations) before the FY 2006 DOT 

Performance and Accountability Report was issued. 

266 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
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Financial System Controls 

Last year, we reported DOT’s financial system controls as a reportable condition. 

This included weaknesses in Delphi computer controls and computer security 

deficiencies in several FAA, FHWA, and FTA systems that provide financial data 

to Delphi. In FY 2006, DOT made significant progress in improving controls over 

Delphi. The enhanced operational environment enabled auditors to rely on Delphi 

financial management system controls when conducting this year’s financial 

statement audits. However, continued improvement is needed, and there are still 

deficiencies in FAA, FHWA, and FTA subsidiary financial systems that provide 

information to Delphi. Therefore, financial system controls continue to be a 

reportable condition. 

According to KPMG, four FAA financial systems had access control 

vulnerabilities that could diminish the reliability of computerized data and increase 

the risk of data destruction or inappropriate disclosure. In addition, KPMG found 

that two FTA mission-critical systems, which track grants and feed information to 

the Department-wide Delphi financial management system, had access controls 

weaknesses that could have a material effect on HTF’s financial statements. 

KPMG also found opportunities to improve the FAA, FHWA, and FTA financial 

systems security planning, segregation of duties, and service continuity. 

KPMG’s audit reports, dated November 3, 2006 (FAA) and November 6, 2006 

(HTF), included recommendations to improve financial system controls. The 

DOT Chief Financial Officer agreed with the recommendations; therefore, we are 

not making any additional recommendations. 

DOT Information Security Program 

In October 2006, we issued our sixth annual report on DOT’s Information Security 

Program and reported a noticeable improvement in tracking, prioritizing, and 

correcting security weaknesses—a major concern last year. The Department also 

took actions to identify systems containing personally identifiable information for 

security protection and provide oversight to major IT investments. However, like 

last year, the Department continues to face a challenge in recertifying systems 

security. 

FY 2007 will be especially challenging for DOT because it must recertify about 

230 systems—half of the Department’s total inventory, including many major 

financial subsidiary systems. Meanwhile, DOT must upgrade systems security to 

meet new Government standards, relocate its Headquarters and more than 

75 information systems, and implement a consolidated IT infrastructure in the new 

Headquarters building. The consolidated IT operations will require a higher level 

of security protection because of the potential impact of disruptions on multiple 

FINANCIAL REPORT 267 
Attachment 

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Operating Administrations, not just one. However, the plan and schedule to 

implement and test this new infrastructure are still evolving, due to a variety of 

move-related problems. 

We made a series of recommendations to help the Department strengthen its 

information security program. The departmental Chief Information Officer agreed 

with them. Therefore, we are not making additional recommendations in this 

report. 

Intragovernmental Transactions

During the audits of the FY 2003 and FY 2004 DOT Consolidated Financial 

Statements, we reported a material weakness in the DOT processes and procedures 

to reconcile transactions among its Operating Administrations and its transactions 

with other Federal agencies. During FY 2005, we found intra-DOT activity of 

$402 million ($293 million in assets and $109 million in non-exchange revenue) 

that was not eliminated in the DOT Consolidated Financial Statements. Since the 

amount was significantly lower than the year before, the issue was downgraded 

from a material weakness to a reportable condition. 

While DOT continued to make progress during FY 2006, DOT again did not fully 

eliminate its intragovernmental activity within DOT in the draft FY 2006 DOT 

Consolidated Financial Statements. We found intra-DOT activity of $169 million 

($84 million in assets and liabilities and $85 million in non-exchange revenue) that 

was not eliminated in the draft DOT Consolidated Financial Statements. 

The DOT Chief Financial Officer has advised that the Office of Financial 

Management will continue working with the Operating Administrations to 

implement new processes and procedures to identify and eliminate 

intragovernmental activity during FY 2007. Therefore, we are not making 

additional recommendations in this report. 

Deobligating Unneeded Funds in the HTF Agencies 

Title 31, United States Code, Section 1501, requires amounts to be recorded as an 

obligation of the United States only when supported by documentary evidence of a 

binding agreement in writing between a Federal agency and another entity 

(including an agency) for a purpose authorized by law and executed before the end 

of the period of availability. Undelivered orders reflect obligations for goods or 

services that have not been delivered or received. DOT financial policy requires 

the agencies to monitor their open obligations on a quarterly basis to ensure timely 

deobligation of unneeded obligations prior to year end, so that funds could become 

available for other use. 

268 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
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KPMG sampled 107 Undelivered Orders, totaling $994.2 million, that had no 

activity for a period of 1 year or more as of June 30, 2006. KPMG found 

14 obligations, totaling $118.6 million, that were invalid and no longer needed 

(see details in Table 1). 

Operating

Administration*

# of 

Obligations

Tested

Amount of

Obligations

Tested

(in millions) 

# of 

Obligations

Unneeded

Amount of

Obligations

Unneeded

(in millions) 

FHWA 27 463.1 8 $71.7 

FTA 27 475.2 2 37.4 

FMCSA 3 7.4 3 7.4 

FRA 20 34.2 1 2.1 

NHTSA 20 7.8 0 0 

RITA 10 6.5 0 0 

Total 107 $994.2 14 $118.6

Table 1. Unneeded Obligations Detected 

* FMCSA: Federal Motor Carrier Safety Administration, FRA: Federal Railroad Administration, NHTSA: National 

Highway Traffic Safety Administration, RITA: Research and Innovative Technology Administration 

The HTF agencies agreed to deobligate these obligations for the sample items for 

FY 2006 year-end reporting. 

FAA Grants Management 

In our report on the FY 2005 DOT Consolidated Financial Statements, we 

reported FAA Grants Management as a Reportable Condition. FAA is responsible 

for establishing and maintaining accounting and internal controls over 

expenditures related to the Airport Improvement Program (AIP). The program’s 

growth (from $2.8 billion to $3.9 billion between FY 2004 and FY 2006), 

availability of resources, and reliance on sponsors, among other risks, led to the 

potential for waste, fraud, and abuse of Federal funds, especially within the 

oversight and monitoring phases of the grants management process. 

According to KPMG, FAA’s specific internal control weaknesses in grants 

management include: (1) lack of an effective, risk-based approach to oversight 

and monitoring of AIP grant sponsorship activities; (2) inadequate policies and 

procedures describing the roles and responsibilities of regional managers; and 

(3) disproportionate reliance on OMB Circular A–133, “Single Audit Act,” for 

assurances that grant recipients are administering Federal funds properly and have 

sufficient internal controls. More reliable grants administration and monitoring 

processes feature preventive front-end and early-detection controls. 

FINANCIAL REPORT 269 
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Last year FAA agreed with the KPMG recommendations to implement a 

risk-based approach to monitor AIP grants. However, FAA decided to defer the 

implementation to FY 2007. According to KPMG, the new grants monitoring 

approach was implemented on October 1, 2006, so we are not making any 

additional recommendations. 

FAA Contract Management 

In our report on the FY 2005 DOT Consolidated Financial Statements, we 

reported FAA Contract Management as a Reportable Condition because of 

weaknesses in the management and oversight of cost-reimbursable and support 

service contracts—two significant vehicles used to support modernization of the 

air traffic control system. During FY 2006, FAA made progress in both fronts. 

For example, FAA reduced the backlog of completed cost-reimbursable contracts 

awaiting closeout process, and dissolved one of the multiple-award “umbrella” 

programs used to procure support services. The OIG found that the support 

service procurement program was not properly structured and FAA would incur 

$24 million to $44 million in higher costs if all option years were exercised under 

that program. 

While FAA has taken steps to enhance controls over support services 

procurement, more follow-through actions are needed. In August 2005, the FAA 

Administrator issued a directive requiring FAA-wide procurement enhancements. 

However, the OIG found that FAA had not implemented Agency-wide oversight 

to ensure consistent fulfillment of FAA’s Acquisition Management System 

requirements by its diverse procurement workforce. FAA has agreed to 

implement an oversight program. Therefore, we are not making any additional 

recommendations. 

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 impact 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. 

270 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Attachment 

Page 15 of 24 

FEDERAL FINANCIAL MANAGEMENT IMPROVEMENT ACT 

OF 1996 

Under FFMIA, we must report whether DOT’s financial management system 

substantially complies with Federal requirements and standards. FFMIA requires 

agencies to produce timely, auditable financial statements based on data from the 

agency’s financial system. KPMG concluded that four FAA and seven HTF 

systems were not in compliance for the year ended September 30, 2006. These 

key financial systems—which support data entered into Delphi—do not 

substantially comply with FFMIA compliance categories listed in OMB Circular 

A-127 (section 7), such as implementation of adequate internal controls and 

adherence to Computer Security Act requirements. KPMG recommended that 

FAA, FHWA, and FTA resolve the weaknesses noted in the key financial systems 

used to compile financial statements. 

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 2005 DOT Financial Statements, we reported that FHWA still needed to 

resolve a $5 million violation first identified in FY 2003, and FAA needed to 

report a $1.9 million violation associated with the Small Community Air Service 

program to the President and Congress. 

According to KPMG, FHWA resolved the $5 million violation with Treasury in 

September 2006. However, FAA still has not reported the $1.9 million violation 

to the President and Congress. FAA is working with the Office of the Secretary of 

Transportation to report the violation during FY 2007. 

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 bulletin 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, and payments for the incorrect amount. 

The bulletin 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 

FINANCIAL REPORT 271 
Attachment 

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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. 

During FY 2005, DOT reported the results of its review of the 10 programs 

susceptible to significant improper payments. The review found no significant 

improper payments and did not address payments made by DOT grantees. 

During FY 2006, DOT concentrated on testing improper payments made by DOT 

grantees under FHWA’s Federal-aid Program, FTA’s formula grants program, and 

FAA’s AIP. Among these three Operating Administrations, FHWA was the only 

one that was able to statistically estimate the amount of improper payments. 

However, due to the constraints of the methodology used, FHWA could not 

estimate the annual amount of improper payments made under the Federal-aid 

Program. Instead, the estimation was limited to a period of 5 months—about $30 

million. 

FTA and FAA are still in the early stage of implementing the improper payment 

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. 

DOT (i.e., FHWA, FTA, and FAA) must continue to implement IPIA so that 

annual (12-month) estimates are reported, plans are identified and implemented to 

reduce erroneous payments, and progress in reducing improper payments can be 

reported. 

D. CONSISTENCY OF OTHER INFORMATION 

The Management Discussion and Analysis, Required Supplementary Information, 

Required Supplementary Stewardship Information, and Other Accompanying 

Information 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 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 2005 and 

FY 2004 expressed an unqualified opinion and made no new recommendations. 

272 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Attachment 

Page 17 of 24 

Our report on the DOT Consolidated Financial Statements for FY 2002 and 

FY 2001 made one recommendation: that DOT confirm and reconcile intragovernmental balances with trading partners. DOT must continue to work to 

improve the accounting for intra-governmental balances with trading partners, 

timely de-obligation of unneeded transactions, and testing of improper payments. 

Exhibit B displays the status of the prior year’s and new issues. 

Since we issued our report on the DOT Consolidated Financial Statements for 

FY 2005 and FY 2004, we issued 19 reports related to the DOT Consolidated 

Financial Statements. The reports are listed in Exhibit C. 

The Assistant Secretary for Budgets and Programs/Chief Financial Officer 

provided comments on a draft of the report (see Appendix). The response agreed 

with the material weaknesses and reportable conditions 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 29, 2006. 

This report is intended for the information of and use by DOT, OMB, the 

Government Accountability Office, and Congress. This report is a matter of 

public record, and its distribution is not limited. 

Calvin L. Scovel III 

Inspector General 

FINANCIAL REPORT 273 
Attachment 

Page 18 of 24 

EXHIBIT A. OBJECTIVES, SCOPE, AND METHODOLOGY 

Our audit objectives for the DOT Consolidated Financial Statements for FY 2006 

and FY 2005 were to determine whether (1) principal DOT Consolidated 

Financial Statements and accompanying notes are presented fairly, in all material 

respects, in conformity with generally accepted accounting principles; (2) DOT 

has adequate internal controls over financial reporting, including safeguarding 

assets; (3) DOT has complied with laws and regulations that could have a direct 

and material effect on the DOT Consolidated Financial Statements or that have 

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 is materially consistent with the information in the principal DOT 

Consolidated Financial Statements; and (5) internal controls ensured the existence 

and completeness of reported data supporting performance measures. 

DOT is responsible for (1) preparing the DOT Consolidated Financial Statements 

for FY 2006 and FY 2005 in conformity 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 and 

stewardship information in conformity 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 Government-wide 

policies identified by OMB audit guidance. 

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 A. Objectives, Scope, and Methodology 

274 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
Attachment 

Page 19 of 24 

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 2006. The Treasury Office of Inspector 

General reported on the effectiveness of controls placed in operation over the 

Bureau of Public Debt Trust Fund Management Branch and Federal Investments 

Branch for the period October 1, 2005, to July 31, 2006, and attained 

management’s assurance on the effectiveness of the controls through 

September 30, 2006. 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. 

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, 2006, and September 30, 2005. 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 weaknesses 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 06-03, “Audit Requirements for Federal 

Financial Statements.” 

Exhibit A. Objectives, Scope, and Methodology 

FINANCIAL REPORT 275 
---- 

---- 

Attachment 

Page 20 of 24 

EXHIBIT B. STATUS OF PRIOR YEAR’S AND NEW ISSUES 

Issue

Timely Processing of and 

Accounting for the FAA 

Construction-in-Progress 

Transaction 

HTF Agencies’ Financial 

Management, Reporting, and 

Oversight Activities 

Financial Oversight of 

Highway Grants 

Reporting of Earmarked 

Funds for FTA 

Financial System Controls 

DOT Information Security 

Program 

Intragovernmental 

Transactions 

FAA Grants Management 

FAA Contract Management 

MARAD Oversight of Title XI 

Loan Guarantees 

Federal Financial 

Management Improvement 

Act of 1996 

Antideficiency Act 

Improper Payments 

Information Act of 2002 

Federal Managers’ Financial 

Integrity Act 

Government Performance 

and Results Act 

FAA Franchise Fund Enabling 

Legislation 

As Reported 

9/30/2005

Material Weakness 

Material Weakness 

Material Weakness 

Reportable Condition 

Reportable Condition 

Reportable Condition 

Reportable Condition 

Reportable Condition 

Reportable Condition 

Noncompliance 

Noncompliance 

Noncompliance 

Noncompliance 

Noncompliance 

As Reported 

9/30/2006

Material Weakness 

Material Weakness 

Reportable Condition 

(Deobligating

Unneeded Funds) 

Reportable Condition 

Reportable Condition 

Reportable Condition 

Reportable Condition 

Reportable Condition 

Reportable Condition 

Resolved

Noncompliance

Noncompliance

Noncompliance

Management Letter 

Management Letter 

Resolved

Exhibit B. Statu s o f Prior Year’s and New Issues 

276 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
Attachment 

Page 21 of 24 

EXHIBIT C. FINANCIAL-RELATED REPORTS 

Report Title Report Number Date Issued 

Audit of Special-Purpose 

Financial Statements for 

Fiscal Year 2005, Fiscal 

Year 2004 

FI-2006-015 November 18, 2005 

Independent Accountant's 

Agreed-Upon Procedures 

for Intragovernmental 

Activity and Balances 

FI-2006-017 December 2, 2005 

FAA Has Opportunities To 

Reduce Academy Training 

Time and Costs by 

Increasing Educational 

Requirements for Newly 

Hired Air Traffic Controllers 

AV-2006-021 December 7, 2005 

Internal Controls Over the 

Emergency Disaster Relief 

Transportation Services 

Contract 

AV-2006-032 January 20, 2006 

Inspector General Review 

of Fiscal Year 2005 Drug 

Control Funds 

FI-2006-033 February 1, 2006 

FAA Telecommunications 

Infrastructure Program: 

FAA Needs To Take Steps 

To Improve Management 

Controls and Reduce 

Schedule Risks 

AV-2006-047 April 27, 2006 

Report on the Air Traffic 

Organization's 

Management Controls Over 

Credit Hours 

AV-2006-050 June 21, 2006 

Internal Controls Over 

Payments for Emergency 

Disaster Relief 

Transportation Services 

AV-2006-051 June 30, 2006 

Use of Airport Revenues by 

the Greater Orlando 

Aviation Authority 

AV-2006-056 August 3, 2006 

Mississippi Department of 

Transportation's Award of 

Selected Hurricane Katrina 

Emergency Repair 

Contracts 

MH-2006-065 September 6, 2006 

Exhibit C. Financial-Related Reports 

FINANCIAL REPORT 277 
Attachment 

Page 22 o f 2 4 

Report Title Report Number Date Issued 

Federal Aviation 

Administration's RESULTS 

National Contracting 

Service 

FI-2006-072 September 21, 2006 

Follow-Up Audit Report on 

FAA's Management Of and 

Controls Over 

Memorandums of 

Understanding 

AV-2006-074 September 28, 2006 

Quality Control Review of 

the Report on Controls 

Over the Enterprise Service 

Center's Delphi Financial 

Management System 

QC-2006-076 September 29, 2006 

DOT's Information Security 

Program 

FI-2007-002 October 23, 2006 

Quality Control Review of 

Audited Financial 

Statements for Fiscal Year 

2006 and Fiscal Year 2005: 

Saint Lawrence Seaway 

Development Corporation 

QC-2007-005 November 9, 2006 

Quality Control Review of 

the Audited Financial 

Statements for Fiscal Year 

2006: FAA Franchise Fund 

QC-2007-006 November 13, 2006 

Quality Control Review of 

Audited Financial 

Statements for Fiscal Year 

2006 and Fiscal Year 2005: 

Federal Aviation 

Administration 

QC-2007-009 November 14, 2006 

Quality Control Review of 

Audited Financial 

Statements for Fiscal Year 

2006: Highway Trust Fund 

QC-2007-008 November 14, 2006 

Top Management 

Challenges 

PT-2007-004 November 15, 2006 

Exhibit C. Financial-Related Reports 

278 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
Attachment 

Page 23 of 24 

APPENDIX. ASSISTANT SECRETARY FOR BUDGET AND 

PROGRAMS/CHIEF FINANCIAL OFFICER RESPONSE TO 

AUDIT REPORT 

Appendix. Assistant Secretary for Budget and Programs/Chief 

Financial Officer Response to Audit Report 

FINANCIAL REPORT 279 
Attachment 

Page 24 of 24 

Appendix. Assistant Secretary for Budget and Programs/Chief 

Financial Officer Response to Audit Report 

280 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Other Accompanying Information 

Performance Measure 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. The Scope statement gives an overview of the 

data collection strategy for the underlying data behind the performance measure. The 

Source statement identifies the data system(s) from which the data for each measure was 

taken. The 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. The Completeness statement indicates 

limitations due to missing data or availability of current measures, methods used to 

develop projections are also provided, as appropriate. The 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_com 

pendium/index.html. 

Details on DOT Safety Measures 

Highway Fatality Rate 

Measure: Highway fatalities per 100 million vehicle-miles traveled (VMT). 

Calendar Year (CY) 

Scope: The number of fatalities is a count of occupant and non-motorist deaths 

which occur within 30 days of a crash involving motor vehicle traffic 

traveling on a trafficway customarily open to the public within the 50 

States and the District of Columbia. 

VMT represent the total number of vehicle miles traveled by motor 

vehicles on public roadways within the 50 States and the District of 

Columbia. 

Sources: Motor vehicle traffic fatality data are obtained from the National 

Highway Traffic Safety Administration’s Fatality Analysis Reporting 

OTHER ACCOMPANYING INFORMATION 283
System (FARS). The FARS database is based on police crash reports and 

other State data. 

VMT data for 2006 are estimated based on preliminary 2005 VMT data 

from FHWA’s Traffic Volume Trends (TVT); a monthly report based on 

hourly traffic count data in the Highway Performance Monitoring 

System (HPMS). VMT data for 2005 and prior years are from the 

HPMS system based on State samples of road segments. 

Statistical 

Issues: 

The primary source of uncertainty in the fatality rate measure is the 

denominator, VMT. While the number of total fatalities used in the 

numerator is derived from census data and is relatively accurate, the 

VMT estimate in the denominator has far more variability. 

The TVT data used for the 2006 VMT are an early estimate from the 

2005 VMT. These data, collected at approximately 4,000 continuous 

traffic counting locations nationwide, are used to determine the 

percentage change in traffic for the current month from the same month 

of the previous year. The percentage change is applied to the nationwide 

travel for the same month of the previous year to obtain an estimate of 

nationwide travel for the current month. 

The 2005 and earlier VMT are compiled from data provided to FHWA 

from each State. They are estimates based on a sample of road segments, 

so the numbers have associated sampling errors. The methodology used 

by each of the States to estimate VMT varies and may introduce 

additional non-sampling errors. Although States provide VMT 

estimates on an annual basis, they are only required to update their 

traffic counts at all sampling sites once every three years. Thus, an 

annual VMT estimate from a particular State may be based, in part, on 

data collected during a previous year. 

Completeness: FARS has been in use for many years and is generally accepted as a 

complete measure for describing safety on the Nation’s highways. Total 

annual fatalities are available through CY 2005. The fatality estimates 

used to calculate the 2006 rates shown in this report were forecasted 

using the most recent fatality counts from FARS. NHTSA’s first official 

estimates for 2006, the Early Projections, will be completed in spring 

2007. Differences between the official Early Projection estimates and 

those in this report are to be expected. 

284 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
VMT data for 2005 are preliminary estimates provided by the FHWA. 

VMT data used to calculate the 2006 rates shown in this report are 

projected assuming an increase rate of 1.5 percent (based on previous 

increases in VMT) from the 2005 VMT estimate. The final measure of 

VMT for CY 2006 from the HPMS system will not be available until 

October 2007. 

The measure informs and guides 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 highway crashes. 

Reliability: 

Large Truck-Related Fatalities 

Measure: Fatalities involving large trucks per 100 million truck VMT. (CY) 

Scope: The measure includes all fatalities (e.g., drivers and occupants of 

passenger cars, motorcycles, large trucks, or pedestrians) 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: The number of fatalities comes from NHTSA’s Fatality Analysis 

Reporting System (FARS) data, a census of fatal traffic crashes within the 

50 States and the District of Columbia. 

The TVMT data are derived from the FHWA’s Highway Performance 

Monitoring System (HPMS) 

Statistical 

Issues: 

The fatality counts in FARS are generally quite accurate. The major 

sources of error are underreporting by some precincts and inconsistent 

use of the definition 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. The methodology used by each of the States 

OTHER ACCOMPANYING INFORMATION 285
to estimate TVMT varies and may introduce additional non-sampling 

error. Although States provide TVMT estimates on an annual basis, 

they are only required to update their traffic counts at all sampling sites 

once every three years. Thus, a portion of each States’ sample sites will 

report estimated traffic rather then actual traffic counts. 

Completeness: The FARS has been in use for many years and is generally accepted as a 

complete measure for describing safety on the Nation’s highways. 

Truck-related fatality data is complete through 2005. For 2006, the 

FARS data for crashes involving large trucks are not available. The value 

used for the 2004 rate is projected recent trend data. The actual fatality 

count for 2006 will be available in October 2007. 

The TVMT is complete through 2004. For 2005 and 2006, it is projected 

using the historical trend with adjustments for observed change in the 

total VMT in 2004. The final TVMT estimate for 2005 will be available 

in December 2006, and the final TVMT estimate for 2006 will be 

available in December 2007. 

Reliability: The measure informs and guides FMCSA 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 truck and bus crashes. 

Commercial Air Carrier Fatal Accident Rate 

Measure: U.S. commercial fatal aviation accidents per 100,000 departures (Last 

three years’ average). (FY) 

Scope: This measure includes both scheduled and nonscheduled flights of large 

U.S. air carriers (14 CFR Part 121) and scheduled flights 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: The data on commercial and general aviation 

fatalities come from the National Transportation Safety Board's (NTSB) 

Aviation Accident Database. Aviation accident investigators under the 

286 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
auspices of the National Transportation Safety Board develop the data. 

Departures Performed: The Office of Airline Information (OAI) within 

the Bureau of Transportation Statistics (BTS) collects the data on Form 

41, Schedule T-100—U.S. Air Carrier Traffic and Capacity Data By 

Nonstop Segment and On-flight Market and Form 41, Schedule T-100 

(f)—Foreign Air Carrier Traffic and Capacity Data by Nonstop Segment 

and On-flight Market. 

Statistical 

Issues: 

The 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 Office 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. The fatal accident rate is small and could 

significantly fluctuate from year to year due to a single accident. Use of 

an average over three years smoothes the fluctuation that may occur in 

any given year. 

Completeness: The 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). Actual departure data 

for any given period of time is considered preliminary for up to 12 

months after the close of the reporting period. This is due to amended 

reports subsequently filed by the air carriers. However, the changes to 

departure data rarely have an effect on the annual fatal accident rate. 

NTSB and FAA's Office 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 Official Airline Guide 

(OAG) scheduling information to project at least part of the fiscal year 

activity data. FAA uses OAG data until official BTS data is available. 

The 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 fiscal year departure data will be 

OTHER ACCOMPANYING INFORMATION 287
markedly improved. Lacking complete historical data on a monthly 

basis and independent sources of verification increases the risk of error 

in the activity data. 

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. 

Reliability: 

General Aviation Fatal Accidents 

Measure: Number of fatal general aviation accidents. (FY) 

Scope: The measure includes on-demand (non-scheduled FAR Part 135) and 

general aviation flights. General aviation includes a diverse range of 

aviation activities. The range of general aviation aircraft includes singleseat homebuilt aircraft, helicopters, balloons, single and multiple engine 

land and seaplanes including highly sophisticated extended range 

turbojets. 

Sources: The 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 There is no major error in the accident counts. Random variation in air 

Issues: crashes results in a significant variation in the number of fatal accidents 

over time. 

Completeness: NTSB and FAA’s Office of Accident Investigation meet regularly to 

validate information on the number of accidents. Results are considered 

preliminary. NTSB continues to review accident results from FY 2005. 

288 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
Numbers are final when the NTSB releases its report each March. So for 

March 2006, FY 2004 accident numbers will be finalized. However, the 

number is not likely to significantly change from the end of each fiscal 

year to when the rate is finalized. 

FAA uses performance data extensively for program management and 

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. 

Reliability: 

Train Accidents Rate 

Rail-related accidents and incidents per million train-miles (FY). 

(Measure revised in FY 2004) 

Measure: 

The 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. The 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. 

Scope: 

A train accident is any collision, derailment, fire, 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. The 

reporting threshold for 2006 is $7,700. 

A train incident is any event involving the movement of on-track 

equipment that results in a reportable casualty but does not cause 

OTHER ACCOMPANYING INFORMATION 289
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 225) to file monthly 

reports to the FRA of all train accidents that meet a dollar threshold 

(currently $7,700). They are also required to file monthly operations 

reports of train-miles, employee-hours, and passenger train-miles. 

Reports must be filed within 30 days after 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 fines. 

Transit Fatality Rate 

Measure: (CY) 

Scope: 

Transit fatalities per 100 million passenger-miles traveled. 

Transit fatality data includes passengers, revenue facility occupants, 

290 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
trespassers, employees, other transit workers (contractors), and others. 

A transit fatality is a death within 30 days after the incident, which 

occurs under the categories of collision, derailment, personal casualty 

(not otherwise classified), fire, or bus going off the road in the National 

Transit Database (NTD) reporting. Previous to 2002, transit involved 

parties that were defined as patrons, employees, and others (the safety 

data was collected on a fiscal 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. Those include suicides and fatalities occurring in parking 

facilities and stations, as well as fires 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. 

The 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. 

These 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]). 

The 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 beneficiaries of FTA Urbanized Area Formula funds. 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. 

Sources: 

OTHER ACCOMPANYING INFORMATION 291
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: 

The fatality counts in FTA’s Transit Safety and Security Statistics and 

Analysis are a census. The 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 often 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. The validation is performed by 

statistical analysts at the NTD contractor (Veridian/General Dynamics 

Corporation). 

Completeness: The 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 definitions were added or changed in the new NTD 

in 2002, and have allowed for improvements and more timely analysis of 

trends and contributing factors. 

292 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
The 2006 measure is an extrapolation of partial-year data, particularly of 

passenger-miles traveled. 

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, identifies 

questionable trends, and seeks explanation from operators. 

Reliability: 

Natural Gas and Hazardous Liquid Pipeline Incidents 

Number of natural gas pipeline incidents and hazardous liquid pipeline 

accidents. (CY) 

Measure: 

Gas pipeline incidents are reportable under 49 CFR 191.15 if they Scope: involve: 

• a release of gas from a pipeline or of liquefied 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 

• an event that is significant 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 fire 

• release of 5 gallons or more (except certain maintenance activities) 

• death or injury requiring hospitalization 

• 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. 

OTHER ACCOMPANYING INFORMATION 293
Data are adjusted/normalized for time series comparisons to account for 

changes in reporting criteria over time. This includes screening out 

hazardous liquid spills of less than 50 barrels (or five barrels for highlyvolatile liquids) unless the accident meets one of the other reporting 

criteria. 

Source: 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. 

The reported estimates are based upon incident data reported in January 

through June 2006. There 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. The CY 2006 estimate is a 

projection using both a seasonal adjustment (using a 10-year baseline) 

and a separate adjustment to account for the historical filing of late 

reports (92.5 percent of reports for January - June were filed by this time 

last year). 

Reliability: PHMSA routinely cross-checks incident/accident reports against other 

sources of data, such as the telephonic reporting system for incidents 

requiring immediate notification 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 inflation. A fixed reporting 

threshold ($50,000) for property damage results in an increasing level of 

294 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
reporting over time. 

operator in filing reports for incidents that do no meet any of the 

quantitative reporting criteria. This may result in variations over time 

due to changes in industry reporting practices. 

external factors like changes in pipeline mileage that could affect the 

number of incidents without affecting the risk per mile of pipeline. 

and for more long-term strategic management of its pipeline safety 

program. 

This 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 

The performance measure is not normalized for changes in exposure— 

PHMSA uses these data in prioritizing its inspections and safety reviews, 

Serious Hazardous Materials Incidents 

Measure: Number of serious hazardous materials transportation incidents. (CY)

Hazardous materials transportation incidents are reportable under 49 Scope: 

CFR 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 flight plan or operation caused by the release of a hazardous 

material; 

• the exposure of hazardous material to fire; 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. 

OTHER ACCOMPANYING INFORMATION 295
This 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. 

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 following incidents occurs during transportation 

(including loading, unloading, and temporary storage) 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 verified. The data are then made available in the HMIS 

database during the next monthly update. 

PHMSA continues to receive reports from calendar year 2006. By the 

end of September 2006 actual incident data was received through August 

31, 2006. PHMSA is projecting the remainder of the calendar year using 

the actual number of incidents that occurred during September, 

October, November, and December of 2005—the previous calendar year. 

This methodology for projecting the CY 2006 estimate is expected to be 

within 2-4 percent of the final 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 significant hazmat incidents that might not be reported. 

The performance measure is not normalized for changes in exposure— 

296 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
affect the number of incidents without affecting the risk per ton shipped. 

for research and analysis. The data is also used on a daily basis to target 

entities for enforcement efforts, and review of applications for 

exemption renewals. 

external factors like changes in the amount of hazmat shipped that could 

Annual hazmat incident data are used to track program performance, 

plan regulatory and outreach initiatives, and provide a statistical basis 

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. VehicleMiles 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. 

Source: 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. The VMT data are derived from the 

HPMS. 

Statistical 

Issues: 

The major source of error in the percentages is the differences in data 

collection methodologies between the States and the differences 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. The magnitude of error depends on how 

OTHER ACCOMPANYING INFORMATION 297
well the sites of the continuous counting stations represent nationwide 

traffic rates. HPMS is also subject to estimation differences between the 

States, even though FHWA works to minimize such differences and 

differing projections on growth, population, and economic conditions 

that impact driving behavior. 

Completeness: The 2006 actual results for this measure are reported based on 2005 data, 

which may be incomplete as late as October 2006. 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: The 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 traffic volume, change yearly. Typically, the States 

maintain data inventories that are the repositories of a wide variety of 

data. The HPMS data items are simply extracted from these inventories, 

although some data are collected just to meet Agency requirements. The 

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 Offices 

in each State. The 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 identified. 

Highway Congestion 

Measure: Percent of total annual urban-area travel occurring in congested 

conditions. (CY) 

Scope: Data are derived from approximately 400 urban areas. The data reflects 

travel conditions on freeway and principal arterial street networks. 

298 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Definitions: 

1. Urban area: Developed area with a density of greater than 1,000 

persons per square mile. 

2. Congested Travel: Traveling below the free flow speed—60 mph 

on freeways and 35 mph on principal arterials. 

Source: 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. The 

Texas Transportation Institute utilizes HPMS data to derive the above 

measures. 

Statistical 

Issues: 

The 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_appB.pdf 

Completeness: The 2004 and prior measures are final. The 2005 measure is preliminary, 

as partial 2005 HPMS data were used to construct the estimates. HPMS 

data is compiled from the States and verified approximately 10 months 

from the base year, e.g., 2006 actual numbers will not be available from 

HPMS until October 2007. The 2006 measure is a projection based on 

recent year trends. 

Reliability: The 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 traffic volume, change yearly. Typically, the States 

maintain data inventories that are the repositories of a wide variety of 

data. The HPMS data items are simply extracted from these inventories, 

although some data are collected just to meet Agency requirements. The 

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. 

OTHER ACCOMPANYING INFORMATION 299
An annual review of reported data is conducted by the FHWA, both at 

the headquarters level and in the Division Offices in each State. The 

reported data are subjected to intense editing and comparison with 

A written annual 

to encourage corrective actions. 

where major problems are identified. 

previously-reported data and reasonability checks. 

evaluation is provided to each State to document potential problems and 

Data re-submittal is requested in cases 

Transit Ridership 

Measure: Average percent change in transit boardings per transit market (150 

largest transit agencies), adjusted for changes in employment levels. 

(CY) 

Scope: The metric is the average percent change in transit boardings adjusted 

for employment levels. The components are transit passenger boardings 

and employment levels within a transit market. 

The modes covered are: Motor Bus (MB), Heavy Rail (HR), Light Rail 

(LR), Commuter Rail (CR), Demand Response (DR), Vanpool (VP), and 

Automated Guideway (AG). 

Employment data are collected and reported by the Bureau of Labor 

Statistics. 

Sources: Transit Passengers: Data derived from counts made on bus and rail 

routes by transit agencies that are beneficiaries 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. 

Employment: Bureau of Labor Statistics Current Employment Statistics 

(CES) Survey. 

Statistical 

Issues: 

The sources of uncertainty include coverage errors and auditing issues. 

These data are validated by the FTA Office of Oversight’s NTD 

contractor staff. 

By statute, every FTA formula grant recipient in an urbanized area 

(defined by the Census as having a population of 50,000 or more) must 

300 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
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. 

purchased transportation. 

fares. 

As a 

check, trips are routinely reconciled against fare revenues. The sources 

of uncertainty include coverage errors and auditing issues. Until 2002, 

reports were required only on an annual basis. 

Beginning in 2002, monthly NTD reports were required of the largest 

In 2003 and part of 2004, due to lack of NTD 

With contract support, by the end of 2005, 

However, 

the 150 are dynamic, not static. 

out of business. 

In 2006, reporting by the top 

These 150 

operators represent 96 percent of nationwide transit utilization. 

Employment data are reported by Bureau of Labor Statistics. The 

most major metropolitan areas. The CES survey is a Federal-State 

prepare the data using concepts, definitions, and technical procedures 

prescribed by the Bureau of Labor Statistics. All estimates from a sample 

into the data collection and processing operations. Estimates not 

report to the National Transit Database (NTD). In cities of this size, 

Publicly-funded transit service can be directly-operated or 

Transit authorities have accurate counts of unlinked passenger trips and 

An unlinked trip is recorded each time a passenger boards a 

transit vehicle, even though the rider may be on the same journey. 

150 transit operators on certain safety, service level, and service 

utilization statistics. 

funding, there were many months without contract support to perform 

monthly data collection. 

almost all transit agencies were reporting on a monthly basis. 

Because much of transit is contracted 

out or purchased transportation in the first few years, there are often 

reporting gaps in the top 150, when contracts are lost or contractors go 

For example, in New York City, the top six private bus 

contractors went out of business in 2005. 

150 is much more stable, all of the agencies are reporting. 

Current Employment Statistics (CES) Survey is a monthly survey of 

business establishments that provides estimates of employment, hours, 

and earnings data by industry for the Nation as a whole, all States, and 

cooperative endeavor in which State employment security agencies 

survey are subject to sampling and other types of errors. Survey data are 

also subject to non-sampling errors, such as those that can be introduced 

directly derived from sample surveys are subject to additional errors 

resulting from the special estimation processes used. 

OTHER ACCOMPANYING INFORMATION 301
DOT has revised this measure to better account for the impact of 

economic conditions on transit use by adjusting for changes in the level 

of employment in each urbanized area and to improve timeliness. An 

increase in average transit ridership per market, adjusted for changes in 

employment, represents an increase in transit’s share of the personal 

travel market. 

Completeness: 

For 2006, the indicator compares transit ridership for the urbanized 

areas containing the 150 largest transit agencies, aggregated by mode, 

and normalized for employment levels for the year ending June 30, 2006, 

with the year ending June 30, 2005. Data on employment are based on 

monthly employment levels for metropolitan statistical areas reported by 

the Bureau of Labor Statistics. 

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. 

Reliability: 

FTA has undertaken a major initiative to increase ridership nationwide. 

This measure has been built into all FTA senior executive performance 

accountabilities. 

Transportation Accessibility 

Measure: 1. Percent of bus fleets compliant with the Americans with Disabilities 

Act (ADA). (CY) 

2. Percent of key rail stations compliant with the Americans with 

Disabilities Act (ADA). (CY) 

Scope: Accessibility for bus fleet means that vehicles are equipped with 

wheelchair lifts 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. 

302 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
The percentage of bus fleets that are equipped with lifts 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 fleet that can 

accommodate wheelchairs through the use of mechanical lifts or ramps. 

Accessibility for transit vehicles under the ADA includes other 

equipment and operational practices that are not reflected 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 fleets: National Transit Database (NTD). 

Compliant rail stations: Rail Station status reports to the FTA. 

Statistical Data are obtained from a census of publicly-funded transit buses in 

Issues: urbanized areas. Information on the ADA key rail stations is reported to 

FTA by transit authorities. These data are not based on a sample. 

Completeness: At a transit authority, vehicle purchases are significant 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 lifts and ramps. For the last 20 years, 

transit agencies have reported on the equipment in their bus fleets to the 

FTA in their annual NTD submissions. There is a census of publiclyfunded transit buses in urbanized areas. It is not a sample. Urbanized 

areas have more than 50,000 persons, and are defined by the Census 

Department. By statute, every FTA formula grant recipient in an 

OTHER ACCOMPANYING INFORMATION 303
urbanized area must report to the NTD. In cities of this size, virtually 

every transit authority receives FTA funding. There 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. 

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). There are a total of 138 such stations for 

which time extensions of various lengths were granted, some of them 

through 2020, the maximum permitted. These deadlines are now 

beginning to pass, and these stations can no longer be excluded from the 

total key station accessibility figures; the total number of time extensions 

from 2006 through 2020 stands at 26. The 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 figures will report the total number of 

key stations, the total number that are accessible, and the number with 

outstanding time extensions. 

All data in the NTD are self-reported by the transit industry. The transit 

agency’s Chief Executive Officer and an independent auditor for the 

transit agency certify the accuracy of this self-reported data. The data 

are also compared with fleet data reported in previous years and crosschecked with other related operating and financial 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. 

Reliability: 

Information on ADA key rail stations is reported to FTA by transit 

authorities. The FTA’s Office 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 

significantly increased the number of key rail stations that have come 

into compliance over the last several years. 

FTA will primarily influence 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. 

304 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Access to Jobs 

Number of employment sites (in thousands) that are made accessible by 

Measure: Job Access and Reverse Commute (JARC) transportation services. (FY) 

Scope: This measure assesses one part of the JARC program—the numbers of 

employment sites made accessible that were not previously accessible. 

The 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 fixed 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. This measure 

does not account for those JARC activities that encourage riders to use 

already existing sources of public transit. 

Source: FTA Grantees 

Statistical In previous years, FTA has had difficulty in getting complete 

Issues: information from its grantees. Changes resulting from a FTA analysis of 

this issue have improved grantee reporting compliance to 80 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 80 percent of the JARC grantees have reported this data 

for FY 2005 and similar or better results are expected for FY 2006. FTA 

projects these results to estimate the total new employment sites reached 

by all grantees. 

The calculation methodology is based on the expenditures of selected 

grantees when compared to the total expenditures of all grantees during 

the same two-fiscal-year period. In subsequent years, FTA further 

proposes to supplement this approach by simplifying the data-reporting 

process, developing profiles of all grantees, and conducting on-site 

surveys to collect qualitative information about program performance 

from selected grantees. 

OTHER ACCOMPANYING INFORMATION 305
The preliminary methodology for projecting the number of employment 

sites reached in FY 2006 has two elements. Phase I will use existing data 

collected for FY 2005 to project employment sites reached, based on 

expenditure level for FY 2006. Phase 2 will involve projections based on 

actual FY 2005 and FY 2006 cumulative data that will be available in 

early 2007. 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 2005 / FY 2006. 

Oversight contractors review the data and contact grantees to ascertain 

methodologies on a sample basis, or when the information warrants 

Reliability: review.

Aviation Delay 

Percent of all flights arriving within 15 minutes of schedule at the 35 

Operational Evolution Plan (OEP) airports due to National Airspace 

System (NAS) related delays. (FY) 

Measure: 

NAS On-Time Arrival is the percentage of all flights arriving at the 35 

OEP airports equal to or less than 15 minutes late, based on the carrier 

flight plan filed with the FAA, and excluding minutes of delay attributed 

by air carriers to weather, carrier action, security delay, and prorated 

minutes for late arriving flights at the departure airport. 

Scope: 

The number of flights arriving on or before 15 minutes of flight plan 

arrival time is divided by the total number of completed flights. 

A flight is considered on-time if it arrives no later than 15 minutes after 

it’s published, scheduled arrival time. This definition is used in both the 

DOT Airline Service Quality Performance (ASQP), and Aviation System 

Performance Metrics (ASPM) reporting systems. Air carriers, however, 

also file up-to-date flight plans for their services with the FAA that may 

differ from their published flight schedules. This metric measures ontime performance against the carriers filed flight plan, rather than what 

may be a dated published schedule. 

The time of arrival of completed passenger flights to and from the 35 

OEP airports is compared to their flight plan scheduled time of arrival. 

306 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
For delayed flights, delay minutes attributable to extreme weather, 

carrier caused delay, security delay, and a prorated share of delay 

minutes due to a late arriving flight at the departure airport are 

subtracted from the total minutes of delay. If the flight is still delayed, 

that delay is attributed to the NAS and the FAA, and counted as a 

delayed flight. 

Sources: The ASPM database, maintained by the FAA’s Office of Aviation Policy 

and Plans, supplemented by DOT’s ASQP causation data, provides the 

data for this measure. By agreement with the FAA, ASPM flight data is 

filed by certain major air carriers for all flights to and from most large 

and medium hubs, and is supplemented by flight records contained in 

the Enhanced Traffic Management System (ETMS) and flight movement 

times provided by Aeronautical Radio, Inc. (AIRINC). Data are 

sufficient to complete ASPM data files for 75 airports. The 35 OEP 

airports are a sub-set of these 75 airports. 

Statistical ASQP data is not reported for all carriers, only 21 carriers report 

Issues: monthly into the ASQP reporting system. 

Completeness: The FY 2006 data will not be finalized until about 90 days after the close 

of the fiscal year; essentially the start of the next calendar year. 

Reliability: The reliability of ASPM is verified 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 filed monthly with DOT under 14CFR234, Airline Service Quality 

Performance Reports, which separately requires reporting by major air 

carriers on flights to and from all large hubs. 

Details on DOT Global Connectivity Measures 

Disadvantaged and Women-Owned Small Businesses 

Measure: 1. Percent share of the total dollar value of DOT direct contracts that are 

awarded to women-owned businesses. (FY) 

OTHER ACCOMPANYING INFORMATION 307
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. 

Sources: Prior to October 1, 2003, these data are derived from the USDOT 

Contract Information System (CIS, which fed the old Federal 

Procurement Data System (FPDS). The 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 Office 

(GAO). The 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. 

After re-verifying these data against internal sources, there are no known 

major errors present in the data. Business types are as identified 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. 

308 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
The Federal Procurement Data System (FPDS) is prescribed by 

regulations as the official data collection mechanism for DOT 

acquisitions. 

Completeness: 

There is extensive regulatory coverage to ensure data reliability. The 

system is used to prepare many reports to Congress, the Small Business 

Administration, and others. Performance goals actual data, as finalized 

by the Small Business Administration is the only reliable basis for 

program evaluations as mandated by the Small Business Act, Section 

644(g). 

Reliability: 

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) 

Scope: The 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, affecting 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 flow 

regulation; and lock equipment malfunction. 

Sources: Saint Lawrence Seaway Development Corporation (SLSDC) Office of 

Lock Operations and Marine Services 

Statistical None. 

Issues: 

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 

OTHER ACCOMPANYING INFORMATION 309
operations are suspended. This 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. 

SLSDC verifies and validates the accuracy of the data through review of 

24-hour vessel traffic control computer records, radio communication 

between the two Seaway entities and vessel operators, and video and 

audiotapes of vessel incidents. 

Reliability: 

Bilateral Agreements 

Number of new or expanded bilateral aviation safety agreements 

implemented. (FY) 

Measure: 

The 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 Affairs, and (2) one or more implementation 

procedures signed by the FAA and the other civil aviation authority. 

The measure is the number of agreements signed with foreign 

governments. 

Bilateral Agreements related to aviation safety have two components: 

executive agreements and implementation procedures. The Executive 

Agreement is signed by the Department of State and the target country’s 

Ministry of Foreign Affairs. 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 certification 

arrangements between the FAA and the target country’s civil aviation 

authority. The implementation procedure is the operational portion of 

Scope: 

310 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
the bilateral agreement that allows for the reciprocal acceptance of 

aviation goods and services between the two countries. The 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: The executive agreements are negotiated and maintained by the 

Department of State. The implementation procedures are negotiated 

and concluded by FAA. The official signed document is maintained at 

the FAA. 

Statistical None. 

Issues: 

Completeness: There are no completeness data issues associated with this measure since 

it is a simple count of the final signed new executive agreement or 

implementation procedures. 

This 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. 

The final 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. The FAA and U.S. Government cannot 

control the timing of legislatures in other countries. Therefore, the FAA 

will count executive agreements only when signed. The negotiation of 

implementation procedures is more within FAA’s control. 

The signed document of the executive agreement constitutes evidence of 

completion. For implementation procedures, evidence of the conclusion 

of the agreement will be a signed document. Interim targets related to 

negotiations may also be proposed and documented through some 

agreement between both authorities that material negotiations are 

concluded. This can take the form of a signed agreement stating that 

fact, e-mail, meeting minutes, or other mutual documentation. 

Reliability: No issues. 

OTHER ACCOMPANYING INFORMATION 311
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). 

Scope: The 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 2006, there were 75 open 

skies agreements. This 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. The estimate for the additional population is based on the 

median population size of the countries without open skies agreements. 

The measurement thus reflects 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. 

Source: 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 The International Data Base of the U.S. Bureau of the Census is a reliable 

Issues: source of population estimates. The Bureau’s website and publications 

provide qualifying data notes that more fully describe technical and 

other issues. These qualifying notes do not significantly affect our 

analyses. 

Completeness: The International Data Base of the U.S. Bureau of the Census is a reliable 

source of population estimates. The Bureau’s website and publications 

provide qualifying data notes that more fully describe technical and 

other issues. These qualifying notes do not significantly affect our 

analyses. 

Reliability: The International Data Base of the U.S. Bureau of the Census is a reliable 

source of population estimates. The Bureau’s website and publications 

provide qualifying data notes that more fully describe technical and 

312 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
other issues. These qualifying notes do not significantly affect our 

analyses. 

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: The 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 effort to 

reach open skies agreements, other liberalized aviation agreements, or to 

resolve problems. By the end of FY 2006, there were 75 open skies 

agreements, an open transborder agreement with Canada and 19 

liberalized (but not open skies) agreements. These numbers, however, 

do not represent, but understate, the number of negotiating sessions that 

have historically been held to complete these agreements. The 

measurement thus reflects 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 benefits. 

Source: 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 Office of the Assistant Secretary for Aviation 

and international Affairs based on a number of analytical, economic and 

geopolitical factors. 

Statistical Due to geopolitical factors, the nature of international aviation 

Issues: 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. 

OTHER ACCOMPANYING INFORMATION 313
Reliability: 

negotiations can follow an unpredictable course. It is impossible to 

gauge or comment upon the data limitations, statistical issues, data 

completeness and data reliability. 

Due to geopolitical factors, the nature of international aviation 

Details on DOT Environmental Stewardship Measures 

Wetland Protection and Recovery 

Measure: Ratio of wetlands replaced for every acre affected by Federal-aid 

Highway projects. (FY) 

Scope: Measure includes acreage of wetlands associated with all Federal-aid 

highway projects funded during the fiscal year. To be included, wetland 

replacement (or investment in a wetland bank) must have begun. 

Source: State DOTs input Federal-aid related wetland degradation and 

replacement data into either locally-developed wetland mitigation 

databases or the FHWA Wetlands Management Database. FHWA 

compiles and reports the final data. 

Statistical 

Issues: 

The uniformity of the data is not guaranteed, since it is subject to 

interpretation by the State Departments of Transportation. In 

particular, there is no uniform definition of what should be reported as 

acres mitigated. FHWA has provided guidance to the States as to which 

mitigation activities are to be reported. 

Completeness: Data are compiled by State Departments of Transportation using local 

sources. 

Reliability: All Federal agencies including FHWA and other DOT modes must 

comply with National Environmental Policy Act (NEPA) and the Clean 

Water Act (specifically section 404(b) (1)) regarding disruption of 

wetlands. These laws require agencies to identify project alternatives 

that would avoid or minimize impacts to wetlands as a first 

consideration. These alternatives are subjected to analysis under both 

NEPA and the Clean Water Act. Under the law, these alternatives must 

314 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
If, in 

then works to achieve the goal of wetland replacement. 

be chosen unless the project sponsors clearly demonstrate that they are 

not viable because they do not meet the project purpose and need, or 

will lead to other more significant environmental impacts. 

compliance with the law, wetland disruption is unavoidable, FHWA 

DOT Facility Cleanup 

Measure: Percent of DOT facilities categorized as No Further Remedial Action 

(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 offices 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 None. 

Issues: 

Completeness: The primary criterion for NFRAP is a determination that the facility 

does not pose a significant 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. The OAs’ activities are 

controlled, to a degree, by interaction and decisions made by EPA 

Regional personnel. This measure is current and has no missing data. 

Reliability: DOT uses this data to prioritize cleanup activities and attendant 

resource levels. However, there is insufficient time to complete 

remediation prior to the close of the FY for any sites added in the July 

report. 

OTHER ACCOMPANYING INFORMATION 315
Mobile Source Emissions 

Measure: 12-month moving average number of area transportation emissions 

conformity lapses. (FY) 

Scope: The 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: The 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 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 None. 

Issues: 

Completeness: If conformity cannot be determined within certain time frames after 

amending the SIP, or if three years have passed since the last conformity 

determination, a conformity lapse is deemed to exist and no new nonexempt projects may advance until a new determination for the plan and 

Transportation Improvement Program (TIP) can be made. This affects 

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. This 

measure is current and has no missing data. 

316 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Reliability: There are no reliability issues. FHWA and FTA jointly make conformity 

areas to ensure that Federal actions conform to the purpose of the SIP. 

determinations within air quality non-attainment and maintenance 

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: 

• unintentional explosion or fire; 

• release of five 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. 

Data are adjusted/normalized for time series comparisons to account for 

changes in reporting criteria over time. This includes screening out 

hazardous liquid spills of less than 50 barrels (or five barrels for highlyvolatile 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 figure 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. 

OTHER ACCOMPANYING INFORMATION 317
Statistical A response percentage cannot be calculated as the actual population of 

Issues: 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. 

The 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 effect 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 

fluctuates, the net volume lost may increase. The denominator may 

fluctuate with the overall economy, i.e., the volume shipped increases 

with economic boom and decreases when the economy slows down. 

The environmental metric tracks a highly variable trend and PHMSA 

has noted in the past that the variability of this metric warrants close 

study. 

The 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). This measure also has 

continued a general downward trend even though it bounces above and 

below the trend line over time. 

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. 

Completeness: 

The reported estimates are based upon incident data reported in January 

through June 2006. There 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. The CY 2006 estimate is a 

projection using both a seasonal adjustment (using a 10-year baseline) 

and a separate adjustment to account for the historical filing of late 

318 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
reports (92.5 percent of reports for January - June were filed by this time 

last year). 

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. These large spills 

cannot be factored into a projection model due to their magnitude and 

infrequent and unpredictable occurrences. Thus, 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. 

Reliability: 

PHMSA routinely cross-checks accident reports against other sources of 

data, such as the telephonic reporting system for incidents requiring 

immediate notification 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 inflation. A fixed reporting 

threshold ($50,000) for property damage results in an increasing level of 

reporting over time. This threshold was set for hazardous liquid 

accidents in 1994. 

Data are not normalized to account for the subjective judgment of the 

operator in filing reports for accidents that do no meet any of the 

quantitative reporting criteria. This may result in variations over time 

due to changes in industry reporting practices. 

Lack of additional information for ton-mile data raises definitional and 

methodological uncertainties about the data’s reliability. Moreover, the 

three different 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 and in strategic 

management of the pipeline safety program. 

OTHER ACCOMPANYING INFORMATION 319
Aircraft Noise Exposure 

Measure: Percent reduction in the number of people within the U.S. who are 

exposed to significant 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. 

Sources: A statistical modeling technique (Model for Assessing the Global 

Exposure of Noise because of Transport Airplanes (the MAGENTA 

model)) is applied using U.S. population data from the Department of 

Commerce, locally-developed traffic distribution (route and runway 

utilization), and aircraft distributions developed using the Enhanced 

Traffic Management System (ETMS) and current aircraft registration 

databases. The local traffic utilization data is available for the busiest 

U.S. airports in the form of studies developed for the FAA’s Integrated 

Noise Model (INM). For smaller airports, a generic statistical procedure 

was employed. 

Statistical 

Issues: 

This measure is derived from model estimates that are subject to errors 

in model specification. FAA has replaced the actual number of people 

exposed to significant 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 fluctuate from year to year and are affected by unusual events 

such as the 9/11 attacks and the subsequent economic downturn. The 

2000–2002 base time periods includes these events and is the same 

three-year period used for the emissions goal. 

The move from actual numbers to percent helps avoid confusion over 

U.S. noise exposure trends caused by annual improvements to the noise 

exposure model. A major change to MAGENTA (Model for Assessing 

the Global Exposure of Noise because of Transport Airplanes) resulted 

in a significant improvement in the estimate of the number of people 

exposed to significant noise levels around US airports. Until now, the 

scope of the measure included scheduled commercial jet transport 

airplane traffic at major U.S. airports. With access to better operational 

data sources, the scope of the MAGENTA calculation has expanded to 

320 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
include unscheduled freight, general aviation, and military traffic. The 

expanded scope of operations results in an increase in the estimate of the 

number of people exposed to significant noise. 

The growth in the number of people exposed 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. The 

change will also make the Government Performance Results Act 

(GPRA) goal consistent with the FAA 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 reflected. 

The FAA continues to update these databases as they become available. 

The benefits of Federally-funded mitigation, such as buyout, are 

accounted for. 

Reliability: The 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. The MAGENTA population 

exposure methodology has been thoroughly reviewed by an ICAO task 

group and was most recently validated for a sample of airport-specific 

cases. 

Details on DOT Security Measures 

Strategic Mobility 

Measure: 

(FY) 

Percent of DoD-required shipping capacity, complete with crews, 

available within mobilization timelines. 

OTHER ACCOMPANYING INFORMATION 321
Scope: This measure is based on the material availability of 48 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). 

The 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 qualified mariners than jobs, even in the most under 

represented categories. However, due to the voluntary nature of this 

system, there is no guarantee that sufficient mariners will be available on 

time and as needed especially during a large, rapid activation. 

Sources: Material availability of ships: MARAD records (and information 

exchanged with DoD) on the readiness/availability status of each ship by 

MARAD’s Office of Sealift Support (MSP/VISA ships) and the Office of 

Ship Operations (RRF ships). Typical reasons why a ship is not 

materially available include: the ship is in dry-dock, the ship is 

undergoing a scheduled major overhaul, or the ship is undergoing an 

unscheduled repair. MARAD and DoD also maintain records of the 

sealift ships enrolled in the MSP and VISA and their crew requirements. 

Availability of mariners: MARAD, through their Mariner Outreach 

System, extracts the number of qualified mariners from the data 

recorded in the U.S. Coast Guard’s Merchant Mariner Licensing and 

Documentation (MMLD) system. The 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 None. 

Issues: 

Completeness: Data are complete. 

Reliability: MARAD’s data is reasonably reliable and useful in managing its reserve 

fleet readiness program. 

322 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
DoD-Designated Port Facilities 

Measure: Percent of DoD-designated commercial strategic ports available for 

military use within DoD established readiness timelines. 

Scope: The 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 MARAD, 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 MARAD in cooperation with other National 

Port Readiness Network partners. 

The MARAD/DoD 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 offloading 

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: MARAD data are derived from monthly reports submitted by the 

commercial strategic ports and from MARAD/DoD semi-annual port 

assessments. 

Statistical None. 

Issues: 

Completeness: Data are complete. 

Reliability: MARAD’s data is reasonably reliable according to the Bureau of 

Transportation Statistics and useful in managing its port readiness 

program. 

OTHER ACCOMPANYING INFORMATION 323
Transportation Capability Assessment for Readiness 

Measure: Transportation Capability Assessment for Readiness Index Score. (FY) 

Scope: The Office of Emergency Transportation (OET) was transferred to the 

Office 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 Office of Intelligence, Security, and Emergency Response. 

Sources: This measure is based on a self-assessment score determined by OET. 

Each functional area is rated based on between 1 and 5 specific criteria. 

The criteria are: 

Function 1—Crisis Management Center (20 points) 

1. Does the Secretary’s Crisis Management Center (CMC) have adequate 

resources, such as communications, technology, and fully ready 

technical staff? (10 points) 

2. 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) 

1. 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) 

2. Is there adequate secure communications with state and local 

government and the transportation community when dealing with 

WMD or national security crises? (5 points) 

3. Has the National Response Plan (NRP) Transportation Annex been 

updated in the past 2 years? (3 points) 

324 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
(3 points) 

functions? (3 points) 

disasters and national security crises? (20 points) 

(10 points) 

(3 

points) 

3. Have the Operating Administrations COOP Plans been updated in the 

last 2 years? (4 points) 

(3 points) 

(NEMT)? (5 points) 

session during the year? (5 points) 

Function 6—International Response (10 points) 

key NATO meetings and 2 exercises annually? (8 points) 

the DoD? (2 points) 

4. Within the past 2 years, have all ten regions updated their NRP 

Transportation Annexes? 

5. Have DOT and DoD sufficiently coordinated their transportation 

Function 3—Training and Exercises (20 points) 

1. 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 

Function 4—Continuity of Operations (COOP) (20 points) 

1. Is DOT’s primary COOP site fully functional? 

2. Is the OST COOP plan updated at least once every two years? 

4. Has there been at least one COOP exercise or activation for both OST 

as well as all DOT modes in the last 12 months? 

Function 5—Continuity of Government (COG) (10 points) 

1. Does DOT have a complete National Emergency Management Team 

2. Have the NEMT team members received at least 1 training/exercise 

1. Has DOT, as a U.S. representative to NATO, participated in at least 4 

2. Has DOT sufficiently coordinated its international disaster role with 

the U.S. State Department and its Civil Reserve Air Fleet activities with 

OTHER ACCOMPANYING INFORMATION 325
Statistical None. 

Issues: 

Completeness: The measure is complete and reflects the combined score of all 

evaluation criteria. 

Scores are reliable to the extent that specific quantitative evaluation 

Reliability: criteria are available for each of the questions used to rate the functions. 

Details on DOT Organizational Excellence Measures 

DOT Major System Acquisition Performance 

Measure: For major DOT aviation systems, the percent of cost and schedule 

performance goals established in acquisition project baselines that are 

met. (FY) 

Scope: This performance measure encompasses acquisition management data 

for all of DOT’s major systems acquisition contracts, primarily in the 

FAA, but also from any office procuring a major system as defined in 

OMB Circular A-11, and DOT’s Capital Programming and Investment 

Control order. 

Source: The 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 confidence 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. The 

performance status is reported monthly to the FAA Administrator 

through FAA Flight Plan meetings. 

326 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Statistical 

Issues: 

FAA: Performance is measured separately for schedule and cost goals. 

Schedule performance is measured by calculating the number of 

schedule milestones met divided by the total schedule milestones 

planned. Cost performance is measured by comparing the total F&E 

budget-at-completion amount established in the January FAA Capital 

Investment Plan (CIP) against the projected budget-at-completion 

amount published in the August CIP. Any program with a total variance 

of more than a 10 percent threshold would be considered not meeting 

the established fiscal year performance goal. 

Completeness: This 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, A109, 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. 

Major DOT Infrastructure Project Cost and Schedule Performance 

Measure: 1. For major Federally funded infrastructure projects, percent that meet 

schedule milestones established in project or contract agreements, or 

miss them by less than10 percent. (FY) 

2. 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. (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. 

OTHER ACCOMPANYING INFORMATION 327
FTA: FTA uses independent reviews and third-party assessments 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. 

Sources: 

FHWA: The 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. 

The update contains the latest information about the cost and schedule 

for each of the Major Projects. Division Office 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 specified in the National Airspace System 

Operational Evolution Plan. 

FTA: Scheduled milestone achievement is measured by the difference Statistical 

between the actual Revenue Operations Date and the date of the Issues: 

execution of the Full Funding Grant Agreement divided by the 

difference 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 defined 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. 

328 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
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 fiscal 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. 

FTA: This measure is current with no missing data. The 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. The measures are calculated monthly by an 

FTA Headquarters Engineer, checked by the Team Leader and reviewed 

by the Office Director. 

Completeness: 

FHWA: The 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. The data is available and reported on a semiannual basis. 

FAA: Federal financial commitments to airport sponsors are tracked by 

two automated systems, the System of Airports Reporting (SOAR) and 

the Delphi financial system. These systems are updated immediately 

when a grant payment is made or a grant is amended or closed-out. The 

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. The RTAP is 

comprised of tasks that must be considered when commissioning the 

runway and assigns accountability to the airport, airline, and FAA 

allowing early identification and resolution of issues that might impact 

the runway schedule. 

OTHER ACCOMPANYING INFORMATION 329
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 reflect amendments to the 

Full Funding Grant Agreements. FTA uses independent reviews and 

third-party assessments 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. 

Reliability: 

FHWA: Both the IFP and the Annual Update undergo a rigorous review 

by the Division Office and the Major Projects Team prior to approval 

and acceptance. 

FAA: Reporting of Federal financial 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. The FAA’s AIP Branch monitors FAA regional 

offices 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 verified by an annual 

single audit required b OMB. Such audits cover the entire financial 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. 

Transit Grant Process Efficiency 

Measure: Percent of transit grants obligated within 60 days after submission of a 

completed application. (FY) 

Scope: FTA grants obligated during a fiscal year period for major programs: 

Urbanized area, non-Urbanized area, and Elderly and Persons with 

Disabilities formula grants; Capital grants; Job Access and Reverse 

Commute grants; Over-The-Road Bus grants; and Planning grants. 

330 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
Sources: FTA internal databases including the Transportation Electronic Award 

Management (TEAM) system. 

Statistical Processing time is calculated from submission date to obligation date. 

Issues: Zero-dollar, non-funding grant amendments are excluded from analysis. 

Completeness: Data are current with no missing data, since FTA uses internal databases, 

including the Transportation Electronic Award Management (TEAM) 

system. All grants obligated during the fiscal year for the selected 

programs (see scope) 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. The zero-dollar amendments are excluded because they are 

not representative of the grant processing action being tested. 

Reliability: The files that contain raw data from TEAM have been tested to ensure 

that all fiscal-year-to-date obligated grants are included and that data is 

current. Report programs screen various date fields 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. 

OTHER ACCOMPANYING INFORMATION 331
TOP MANAGEMENT CHALLENGES 

Department of Transportation 

Report Number: PT-2007-004 

Date Issued: November 15, 2006 

332 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
U.S. Department of 

Memorandum

Transportation 

Office of the Secretary 

of Transportation 

Office of Inspector General 

Subject: INFORMATION: DOT’s FY 2007 Date: November 15, 2006 

Top Management Challenges 

Report Number PT-2007-004 

From: Calvin L. Scovel III Reply to 

Attn. of: J-1 Inspector General 

To: The Secretary 

Deputy Secretary 

The Office of Inspector General (OIG) has identified 10 top management 

challenges for the Department of Transportation (DOT) for fiscal year (FY) 2007. 

In considering the items for this year’s list, we continue to focus on the 

Department’s key strategic goals to improve transportation safety, capacity, and 

efficiency. 

The OIG’s list for FY 2007 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 list of management challenges with the list published 

in FY 2006. 

• Defining, Developing, and Implementing Strategies To Improve Congested 

Conditions on the Nation’s Highways, Ports, Airways, and Borders 

- Leading Stakeholders 

- Overcoming Organizational Structures That Inhibit Intermodal Tradeoffs 

- Funding Future Infrastructure Needs Will Be a Challenge 

- Proposals for Market-Based Solutions To Better Utilize Existing Capacity 

Raise Important Policy Issues 

- Keeping Planned Short- and Long-Term Aviation Capacity Enhancing 

Initiatives on Schedule To Relieve Congestion and Delays 

OTHER ACCOMPANYING INFORMATION 333
2 

• FAA Reauthorization—Reaching Consensus on a Financing Mechanism 

To Fund FAA and Establishing Funding Requirements 

- Deciding on a Financing Mechanism That Promotes a More Efficient Use 

of the Air Traffic Control System and Is Considered Equitable by All 

Users 

- Determining the Next Generation Air Transportation System’s Funding 

Requirements, Quantifying Expected Benefits, and Developing a 

Roadmap for Industry To Follow 

- Continuing Efforts To Address the Expected Surge in Air Traffic 

Controller Attrition 

- Using the Cost Accounting System To Control Costs and Improve 

Operations 

• Responding to National Disasters and Emergencies—Assisting Citizens 

and Facilitating Transportation Infrastructure Reconstruction 

- Clarifying Roles and Responsibilities Given Expanded Mission 

Requirements 

- Ensuring Continued Vigilance in Protecting Taxpayer Funds Spent for 

Relief and Recovery Efforts 

• Strengthening Efforts To Save Lives by Improving Surface Safety 

Programs 

- Promoting Improved Performance Measures and Enhanced State 

Accountability To Maximize Efforts To Reduce Fatalities Caused by 

Impaired Driving 

- Building on Successful Efforts To Better Enforce Motor Carrier Safety 

Regulations 

- Ensuring the Integrity and Future Modernization of the Commercial 

Driver’s License Program 

- Enhancing Railroad Safety Through Improved Oversight of GradeCrossing Reporting and Better Identification of Trends 

• Aviation Safety—Performing Oversight That Effectively Utilizes 

Inspection Resources and Maintaining Aviation System Safety 

- Advancing Risk-Based Oversight Systems 

- Maintaining a Sufficient Inspector Workforce 

- Reducing the Risk of Accidents on the Ground and in the Air 

334 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
3 

• Making the Most of the Federal Resources That Sustain Surface 

Transportation Infrastructure Improvements by Continuing To 

Emphasize Project Oversight 

- Initiatives To Improve the Oversight of Highway Funds Need To Be 

Implemented Effectively To Ensure That Projects Are Completed On 

Time, Within Budget, and Free From Fraud 

- FHWA’s Oversight Must Include Actions To Ensure That Highway 

Tunnels Are Safe for the Driving Public 

- FTA Must Continue To Exercise Vigilant Oversight To Ensure Large and 

Complex Transit Infrastructure Projects Are Completed on Time and 

Within Budget 

• Achieving Reform of Intercity Passenger Rail 

- Amtrak Must Do More To Improve Cost-Effectiveness, Operate 

Efficiently, and Improve Performance 

- Amtrak Needs a New Model for Providing Passenger Rail Transportation 

• Improving Acquisition and Contract Management To Reduce Costs and 

Eliminate Improper Payments 

- Institutionalizing the Use of Defense Contract Audit Agency Contract 

Audit Services 

- Strengthening Financial Management Oversight of Institutions 

Performing Research Under DOT Cooperative Agreements and Grants 

- Promoting More Vigilance and Enhanced Oversight of FAA’s Acquisition 

and Contract Management Practices 

- Ensuring That Department Employees Maintain High Ethical Standards 

- Enforcing Suspensions and Debarments More Rigorously 

• Protecting, Monitoring, and Streamlining Information Technology 

Resources 

- Enhancing Air Traffic Control Systems Security Through Resource 

Commitment and Progress Measurement 

- Meeting New Security Standards While Recertifying Systems Security 

- Securing the Consolidated IT Infrastructure and Eliminating Operating 

Administrations’ Fragmented Systems Backup/Recovery Sites 

- Working With Operating Administrations To Strengthen Oversight of IT 

Investment and To Streamline Duplicative IT Systems 

• Strengthening DOT’s Coordination of Research, Development, and 

Technology Activities and Funding 

- Ensuring Effective Coordination of DOT’s Research, Development, and 

Technology Activities 

OTHER ACCOMPANYING INFORMATION 335
4 

If you have any questions concerning this report, please call me at (202) 366-1959 

or Todd J. Zinser, Deputy Inspector General, at (202) 366-6767. You may also 

contact Theodore P. Alves, Principal Assistant Inspector General for Auditing and 

Evaluation, at (202) 366-1992. 

# 

336 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Table of Contents 

Defining, Developing, and Implementing Strategies To Improve Congested 

Conditions on the Nation’s Highways, Ports, Airways, and Borders ..................... 6 

FAA Reauthorization—Reaching Consensus on a Financing Mechanism To 

Fund FAA and Establishing Funding Requirements ............................................. 13 

Responding to National Disasters and Emergencies—Assisting Citizens 

and Facilitating Transportation Infrastructure Reconstruction ............................. 20 

Strengthening Efforts To Save Lives by Improving Surface Safety 

Programs ................................................................................................................ 25 

Aviation Safety—Performing Oversight That Effectively Utilizes 

Inspection Resources and Maintaining Aviation System Safety .......................... 31 

Making the Most of the Federal Resources That Sustain Surface 

Transportation Infrastructure Improvements by Continuing To Emphasize 

Project Oversight ................................................................................................... 38 

Achieving Reform of Intercity Passenger Rail ...................................................... 44 

Improving Acquisition and Contract Management To Reduce Costs and 

Eliminate Improper Payments ............................................................................... 48 

Protecting, Monitoring, and Streamlining Information Technology 

Resources ............................................................................................................... 54 

Strengthening DOT’s Coordination of Research, Development, and 

Technology Activities and Funding ...................................................................... 61 

Exhibit. Comparison of FY 2007 and FY 2006 Top Management 

Challenges ............................................................................................................. 65 

Appendix. OST Comments ................................................................................... 59 

OTHER ACCOMPANYING INFORMATION 337
6 

1. Defining, Developing, and Implementing Strategies To 

Improve Congested Conditions on the Nation’s 

Highways, Ports, Airways, and Borders 

The Department is implementing new initiatives to reduce transportation 

congestion nationwide, and this is the first year that the Office of Inspector 

General has reported it as an emerging issue. The Department has taken initial 

steps to pursue cross-modal approaches with various stakeholders; yet, there are 

difficult challenges the Department must overcome to achieve solutions that will 

provide short- and long-term benefits to the traveling public. 

Transportation congestion reduces Americans’ quality of life and limits economic 

growth. Time spent sitting in traffic or on a runway is time taken away from our 

families and communities, wastes billions of gallons of fuel, and costs billions of 

dollars in lost productivity.1

 The benefits businesses and consumers realized from 

reductions in the cost of moving freight in recent years2

 could be erased if 

projected increases in freight transportation are not properly addressed.3

 In 

addition, the more than doubling of international trade in recent years has led to 

congestion at border gateways, which is expected to worsen as trade and security 

requirements increase.4 Congestion can be tackled by improving the efficiency 

and productivity of existing facilities and investing in new capacity through 

projects that will have the highest rate of return. 

The Secretary’s May 2006 plan, the National Strategy to Reduce Congestion on 

America’s Transportation Network, provides a blueprint for Federal, state, and 

local authorities to reduce congestion. The plan’s six elements are: relieve urban 

congestion by establishing Urban Partnership Agreements with selected 

communities, allow the private sector to assume a broader role in investing in 

transportation, promote operational and technological improvements that increase 

information dissemination and incident-response capabilities, establish a new 

“corridors of the future” competition, address freight bottlenecks and expand 

1 The Texas Transportation Institute estimated that in 2003, congestion in the top 85 urban areas caused 3.7 billion 

hours of travel delay and 2.3 billion gallons of wasted fuel, for a total cost of $63 billion. 2 The cost of moving freight dropped from 16.1 percent of U.S. Gross Domestic Product in 1980 to approximately 

10.0 percent in 2000. The Freight Story: A National Perspective on Enhancing Freight Transportation. U.S. 

Department of Transportation. November 2002. 3 In terms of tons transported, domestic freight transportation by truck, rail, air, water, and air grew by about 

20 percent from 1993 to 2002 and is expected to increase by another 65 to 70 percent by 2020. Freight Facts and 

Figures 2005. U.S. Department of Transportation. 4 Between 1990 and 2000, U.S. international trade more than doubled in inflation-adjusted terms, rising from about 

$900 billion to $2.2 trillion. According to the Federal Highway Administration, “Many gateways now suffer from 

congestion, which is expected to intensify as a result of increased demand and enhanced security measures.” The 

Freight Story: A National Perspective on Enhancing Freight Transportation. U.S. Department of Transportation. 

November 2002. 

338 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
7 

freight policy outreach, and accelerate major aviation capacity projects and 

provide a future funding framework. 

To date, the Department has begun a public outreach campaign to state legislators, 

transportation officials, and chief executive officers of major companies to 

encourage multi-state approaches to congestion, public-private partnerships, and 

multi-modal strategies. The Department has instituted working groups that meet 

weekly and comprise representatives from different disciplines to encourage 

consideration of multi-modal solutions. The Department has established target 

outcomes and developed performance measures and milestones to gauge progress 

towards these targets. 

The challenges facing the Department in implementing this initiative and reducing 

congestion are: 

• Leading stakeholders who are not used to following when the Department 

neither controls the purse strings nor has the final decision making power, 

• Overcoming stovepipe programs and organizational structures that inhibit 

intermodal tradeoffs among transportation solutions, 

• Meeting demands for additional resources in circumstances of constrained 

Federal resources, 

• Achieving acceptance of market-based solutions to better utilize existing 

capacity, and 

• Keeping aviation capacity improvements on schedule. 

Leading Stakeholders 

Solutions to congestion problems cut across transportation modes; however, the 

Department’s role in funding and/or approving projects varies greatly among the 

modes. The Department funds and operates the air traffic control system, but 

states and localities set highway and transit priorities for most projects in these 

areas, and ports and freight railroads largely decide on investments in capacity 

enhancements with no Federal funding and little Federal involvement. For some 

modes, particularly highways and transit, Congress is actively engaged in deciding 

which projects to fund. 

The Department faces a difficult challenge in convincing other stakeholders to 

follow its lead and make congestion a unifying priority in their investment 

decisions. To be successful, the Department needs to gain maximum leverage 

from those tools it has to influence decisions on transportation infrastructure 

investments (i.e., its “bully pulpit”), prioritization of regulatory reviews and 

approvals, and alignment of the Department’s data and research agenda to 

spotlight the impact of congestion and the benefits from its relief. 

OTHER ACCOMPANYING INFORMATION 339
8 

Overcoming Organizational Structures That Inhibit Intermodal Tradeoffs 

The different transportation modes have rarely worked together to determine the 

best solution to congestion in any particular bottleneck. To relieve highway 

congestion, for example, the solution may be to develop alternatives to building 

new highways, such as freight rail, transit, intercity passenger rail, or barge. 

However, the Department is organized by transportation mode and the different 

pots of transportation funding typically can only be used to support a single modal 

solution. The Alameda Corridor project is an example of effective cooperation 

among departmental modal administrations. In that project, the Federal Highway 

Administration and the Federal Railroad Administration worked cooperatively to 

create a 20-mile long rail cargo expressway linking the ports of Los Angeles and 

Long Beach to the intercontinental rail network near downtown Los Angeles. 

Separating rail and highway traffic resulted in more efficient freight rail 

movements and reduced traffic congestion on surface streets. 

The Department needs to convince stakeholders, including its own employees, that 

congestion, and the intermodal tradeoffs required to solve congestion, will be a 

long-term priority that will endure beyond any changes in departmental leadership. 

Funding Future Infrastructure Needs Will Be a Challenge 

Over the long term, the Department will need to find new funding solutions for 

surface, maritime, and aviation infrastructure, either seeking new sources of 

funding or using existing funds in better ways. The National Surface 

Transportation Policy and Revenue Study Commission created in The Safe, 

Accountable, Flexible, and Efficient Transportation Equity Act: A Legacy for 

Users (SAFETEA-LU) and chaired by the Secretary has the potential to provide 

important insights for the Department and Congress to consider regarding funding 

surface transportation needs in the future. The Department should carefully weigh 

all alternatives for funding the Nation’s surface transportation needs to set the 

groundwork for the next surface transportation reauthorization. In particular, there 

is a growing interest of private sector capital investors in surface transportation 

and with it, concerns in some sectors regarding the appropriateness of these 

investments. While the Department is working to remove or reduce barriers to 

private sector investment in the construction and operation of transportation 

infrastructure, it also needs to articulate the case that these investments are in the 

public’s long-term interest. The Department’s challenge regarding funding the 

Nation’s aviation needs will be to achieve consensus on a financing mechanism 

that meets the Federal Aviation Administration’s (FAA) future resource needs, 

promotes a more efficient use of the air traffic control system, and addresses users’ 

equity concerns. 

340 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
9 

Proposals for Market-Based Solutions To Better Utilize Existing Capacity 

Raise Important Policy Issues 

Building new roads and runways is one way to address congestion, but equally 

important is improving the efficiency and productivity of existing infrastructure. 

Value pricing, also referred to as peak-period or congestion pricing, is a 

mechanism that allocates the costs of congestion more equitably to its 

contributors. For highways, this can take the form of tolls that vary by the level of 

demand, tolls that vary by level of occupancy, and priced express lanes. For 

aviation congestion, the Department has a long-term goal of using a market-based 

strategy to reduce congestion at LaGuardia Airport and has the opportunity to 

consider congestion pricing as part of FAA’s reauthorization proposal. 

The Department’s challenge will be to educate the public on pricing strategies and 

their benefits. This includes overcoming the perception of double taxation 

(i.e., the belief that the roads have already been paid for) and income-equity 

issues. The Department will also need to be vigilant in monitoring collateral 

effects of market-based pricing strategies on its constituents, such as the impact of 

these strategies on air service in small communities. 

Keeping Planned Short- and Long-Term Aviation Capacity Enhancing 

Initiatives on Schedule To Relieve Congestion and Delays 

In the short term, the Department needs to keep planned infrastructure projects on 

track. While new technologies can enhance airport arrival rates, new runways 

provide the most increases in capacity. FAA reports that since 2000, 12 new 

runway projects have been built at some of the Nation’s busiest airports. A major 

airport project at Chicago O’Hare is underway, and additional runways are 

expected to be completed, including ones at airports in Boston, Philadelphia, and 

Seattle, between now and the end of 2008. Table 1-1 provides information on the 

runway projects that are tracked in FAA’s Operational Evolution Plan (OEP), the 

Agency’s overall blueprint for enhancing capacity and reducing delays. 

OTHER ACCOMPANYING INFORMATION 341
10 

Table 1-1. Status of Major New Runway Projects, September 2006 

Airport Initial OEP 

(June 2001) 

Estimated 

Completion Date 

Current 

Estimated 

Completion 

Date 

Phase Current Cost 

Estimate* 

(in Millions) 

Boston Logan Dec 2005 Nov 2006 Construction $87 

Philadelphia Not in initial OEP Dec 2007 Construction $65 

Seattle-Tacoma Nov 2006 Nov 2008 Construction $1,129 

Los Angeles Not in initial OEP Jun 2008 Construction $333 

Washington-Dulles Not in initial OEP Nov 2008 Construction $243 

Chicago O’Hare 

(Phase I) 

Not in initial OEP Nov 2008 Construction $619 

* Estimated cost data for Boston Logan, Philadelphia, Seattle-Tacoma, Los Angeles, and Washington-Dulles were 

obtained from airport sponsors. Estimated cost data for Chicago O’Hare were obtained from an FAA update to 

its quarterly report. 

These six runway projects are expected to significantly increase airport operations 

or contribute to delay reduction. The Department’s challenge is to make sure the 

navigation equipment, new procedures, and airspace modifications are in place 

when these projects are commissioned to get the expected capacity benefits. 

As we have noted in the past, airspace changes—even without a new runway—can 

enhance the flow of air traffic. In May 2005, we made recommendations aimed at 

improving the overall management and execution of FAA’s airspace redesign 

efforts, including coordination among FAA organizations. FAA has taken some 

steps to address our concerns and now is pursuing 20 airspace projects. The 

challenges facing FAA’s airspace redesign efforts focus on completing complex 

environmental reviews and matching projects with available funds. 

In the longer term, the Department and FAA need to continue to develop concepts, 

milestones, and transition strategies for the next generation air traffic management 

system being developed by FAA’s Joint Planning and Development Office. The 

next generation system is expected to accommodate three times more aircraft 

through, among other things, increasing automation for controllers and shifting 

greater responsibility to the cockpit. The importance of FAA’s efforts to develop 

the next generation system and corresponding funding requirements are included 

in our views on the challenges facing FAA in the upcoming reauthorization 

process. 

342 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
11 

For further information, the following reports and testimonies can be seen on 

the OIG web site at http://www.oig.dot.gov: 

• Perspectives on the Progress and Actions Needed To Address the Next 

Generation Air Transportation System

• Chicago’s O’Hare Modernization Program 

• Airspace Redesign Efforts Are Critical To Enhance Capacity but Need Major 

Improvements 

• Aviation Industry Performance: Trends in Demand and Capacity, Aviation 

System Performance, Airline Finances, and Service to Small Airports (June 

2005 and August 2006)

• Review of December 2004 Holiday Air Travel Disruptions 

• Audit of Small Community Aviation Delays and Cancellations 

• Observations on Current and Future Efforts To Modernize the National 

Airspace System 

• Observations on the Progress and Actions Needed To Address the Next 

Generation Air Transportation System 

OTHER ACCOMPANYING INFORMATION 343
12 

2. FAA Reauthorization—Reaching Consensus on a 

Financing Mechanism To Fund FAA and 

 Establishing Funding Requirements 

The aviation excise taxes that support Federal Aviation Administration (FAA) 

programs and the authorization underlying most of those programs (VISION 100) 

expire at the end of fiscal year (FY) 2007. Over the next year, the congressional 

aviation agenda will be dominated by two separate but related issues: how to 

finance FAA programs and the level of funding those programs require. Moving 

forward with reauthorization will require the Department, FAA, and Congress to 

reconcile very divergent stakeholder positions regarding potential financing 

mechanisms, obtain more precise funding requirements, and ensure tighter 

controls over Agency costs. 

To its credit, FAA has hosted forums and held discussions with aviation 

stakeholders and is developing a proposal regarding the best way to finance FAA. 

The challenges facing FAA in this regard include: 

• Deciding on a financing mechanism that promotes a more efficient use of the 

air traffic control system and is considered equitable by all users; 

• Determining the Next Generation Air Transportation System’s (NGATS) 

funding requirements, quantifying expected benefits, and developing a 

roadmap for industry to follow; 

• Continuing efforts to address the expected surge in air traffic controller 

attrition; and 

• Using its cost accounting system to control costs and improve operations. 

Deciding on a Financing Mechanism That Promotes a More Efficient Use 

of the Air Traffic Control System and Is Considered Equitable by All 

Users 

There has been considerable debate over whether the current excise tax system is 

fair, is equitable, and will generate sufficient revenues to meet future FAA needs, 

particularly regarding NGATS. Stakeholders have very divergent, and at times 

opposing, views on the answer to this question. 

Proponents of the current system note that excise tax revenues, which are 

deposited into the Aviation Trust Fund, have increased over the past 2 years, and 

the estimates show revenues continuing to increase over the next decade. 

However, others note that revenues are less than what was estimated previously, 

when events such as the September 11th attacks impacted the industry as a whole. 

344 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
13 

While Trust Fund revenues are an important aspect of the debate, they are only 

one part of the equation. Determining whether projected revenues will be 

sufficient to cover FAA’s costs depends on assumptions regarding future 

appropriations for FAA programs, such as airport grants and capital programs, as 

well as contributions from the General Fund. It is extremely difficult, if not 

impossible, to determine the “right” assumptions regarding these factors, making it 

equally difficult to answer whether the current financing system will be adequate 

in the future. 

A more fundamental question regarding FAA’s future is whether the air 

transportation system will be sufficient to meet the anticipated future demand for 

air travel. FAA projects that the current system (or business as usual) will not be 

sufficient to meet future demands. Over 700 million passengers used the system 

last year, and this number is forecast to grow to over 1 billion by 2015. As part of 

its overall solution to this problem, FAA should examine whether a financing 

system can promote a more efficient use of the air traffic control system. The 

Agency can use the expiration of the current aviation excise taxes as an 

opportunity to seek consensus on implementing such a system. There are a 

number of options for FAA to consider. 

Excise Taxes. FAA has long been supported by a system of excise taxes, the 

revenues from which are deposited into the Aviation Trust Fund. Almost 

70 percent of those revenues come from the 7.5 percent ticket tax and 

$3.30 segment tax. Excise taxes are easy to collect, familiar to air travelers and 

industry, and difficult to evade. While the current taxes are not directly related to 

the FAA’s costs in providing the specific services used, the General Aviation 

community argues that they fairly allocate costs among users. However, airlines 

argue that they pay disproportionately more for the services they receive. In 

addition, as FAA points out, excise taxes are not linked to usage or cost of 

providing services. As such, excise taxes provide little incentive for the efficient 

use of FAA services or for the more cost effective provision of services by the 

Agency. Furthermore, if excise tax revenues did increase, this would not 

automatically translate into an increase in spending on FAA programs under 

current budget rules. 

User Charges. User charges attempt to correlate the cost of a providing a service 

to the fees collected for using that service. In practice, the strength of this 

correlation can vary significantly. For example, over 100 countries base their user 

charges on a combination of aircraft weight and distance flown. These charges are 

more closely related to costs than are excise taxes but less closely related than a 

true cost-based fee-for-service user charge. 

User charges can provide incentives for users to be more efficient in their use of 

FAA services and for FAA to control costs. These incentives become stronger the 

OTHER ACCOMPANYING INFORMATION 345
14 

closer the charges approximate cost-based fee-for-service charges and the degree 

to which there is appropriate user oversight of the charges and their expenditure. 

Also, cost-based fee-for-service user charges are more likely than excise taxes to 

fall on the mandatory side of the budget, allowing them to be spent without 

congressional action. 

However, there is intense controversy regarding what type of fees should be 

charged, who should pay what, and how—if at all—the current oversight of FAA 

spending should be altered. There is also disagreement on the cost of 

administering the fees and the burden on the aviation community of paying them. 

We believe that any proposal to give FAA more flexibility and additional funds 

needs to be accompanied by strong oversight mechanisms to ensure funds are 

spent efficiently. 

Should FAA determine that a user charge can be developed that promotes the 

efficient use of FAA services, it faces a formidable challenge in making the case 

for change and obtaining consensus on what that change should entail. To meet 

this challenge, FAA would need to demonstrate clearly and convincingly why the 

current excise tax financing mechanism is not adequate and how its proposed 

solution would fix this problem. 

Borrowing/Bonding. This alternative would either permit the FAA to borrow 

directly from the Treasury or permit it, or another entity on its behalf, to sell bonds 

in the private markets. This solution is typically considered in conjunction with 

user charges, although such charges are not a prerequisite. The borrowing or 

bonds would be repaid or backed by FAA-generated revenues, such as excise 

taxes or user charges. 

Borrowing or bonding authority would provide FAA with a large infusion of 

funds, presumably for capital projects, without requiring similarly large upfront 

increases in excise taxes or user fees. However, granting this authority would 

require significant legislative changes to implement and waivers of current budget 

rules to be effective. As we have previously noted, borrowing or bonding 

authority by itself provides little incentive for either users or FAA to operate 

efficiently and would require a powerful oversight mechanism to ensure that FAA 

invests wisely and controls costs. 

Determining the Next Generation Air Transportation System’s Funding 

Requirements, Quantifying Expected Benefits, and Developing a Roadmap 

for Industry To Follow 

Closely related to the question of how to finance FAA is what level of funding to 

provide to it. As we previously stated, the answer to this question determines the 

level at which excise taxes, user fees, or borrowing/bonding needs to be set to 

support the program authorizations. FAA’s future funding requirements will be 

346 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
15 

driven, in large part, by the need to change the current air transportation system to 

meet the anticipated demand for air travel and reduce FAA operating costs. 

FAA’s Joint Planning and Development Office (JPDO) was mandated by 

Congress to develop a vision for the next generation air transportation system in 

the 2025 timeframe and coordinate diverse agency research efforts. Currently, 

participating agencies include the National Aeronautics and Space Administration, 

the Department of Commerce, the Department of Defense, and the Department of 

Homeland Security. 

Key challenges for the Department, FAA, and the JPDO focus on what the new 

office can deliver and when and how much its proposals will cost. These are 

central questions in the debate about how to finance FAA programs and will shape 

the size, requirements, and direction of the capital program for the next decade. 

Moving to the next generation system is a high-risk effort and will require 

significant investments from FAA (new ground systems) and airspace users (new 

avionics). The JPDO is conducting workshops with industry to gather input on the 

potential costs of the future system. FAA’s Air Traffic Organization (ATO) and a 

working group of the Agency’s Research, Engineering, and Development 

Advisory Committee have developed some estimates, but they have not been 

finalized or approved by senior FAA management. There are considerable 

unknowns, and costs depend on, among other things, performance requirements 

for new automation and weather initiatives and to what extent FAA intends to 

consolidate facilities. 

Preliminary estimates from the ATO suggest that next generation air traffic 

management initiatives would cost a total of $4.4 billion for the next 6 years above 

the current investment levels in FAA’s Capital Investment Plan. These 

preliminary numbers do not distinguish between development efforts, adjustments 

to existing programs, or implementation of new initiatives. 

FAA will have to analyze information from the JPDO/industry workshops and 

other sources and provide Congress with expected funding requirements and when 

the funding will be needed. When transmitting this information to Congress, FAA 

should provide cost data on three vectors—research and development needed 

(including demonstration projects), adjustments to existing projects, and estimates 

for implementing NGATS initiatives. 

Also, another challenge that was raised at the JPDO workshops concerns the need 

for FAA to clearly define the expected benefits from NGATS initiatives, 

particularly for projects that require airspace users to equip with new avionics. At 

an April 2006 workshop, industry participants asked FAA for a “service roadmap” 

that (1) specifies required equipage in specific time increments, (2) bundles 

OTHER ACCOMPANYING INFORMATION 347
16 

capabilities with clearly defined benefits and needed investments, and (3) uses a 

4- to 5-year equipage cycle that links with aircraft maintenance schedules. It will 

be important for FAA to provide industry with this information. 

Continuing Efforts To Address the Expected Surge in Air Traffic 

Controller Attrition 

Another challenge facing FAA is the hiring and training of over 11,000 new 

controllers through FY 2015 as controllers hired after the 1981 strike begin 

retiring. In December 2004, FAA developed a comprehensive workforce plan for 

addressing that challenge. FAA issued the second in a planned series of reports in 

June 2006. The workforce plan lays out the magnitude of the issue and establishes 

broad measures for meeting the challenge. However, as we reported in May 2005, 

the plan lacks essential details concerning two key areas. 

First, the plan does not address staffing needs by location. Planning by location is 

critical because FAA has over 300 terminal and en route air traffic control 

facilities with significant differences in the types of users they serve, the 

complexity of airspace they manage, and the levels of air traffic they handle. 

Without accurate facility-level planning, FAA runs the risk of placing too many or 

too few controllers at key locations. FAA recognizes this need and is in the 

process of evaluating its facility staffing standards down to the sector and position 

level for each location. FAA expects to complete this assessment for its 

21 en route centers (its largest facilities) by the beginning of the next calendar 

year. However, the estimated completion date for the entire project is not until 

2008. Given the significant expenditures that will be required to hire and train 

controllers over the next 10 years, FAA needs to ensure this project remains on 

track. 

Second, FAA’s plan does not identify how much it will cost. The cost of hiring 

and training 11,000 new controllers will be substantial, particularly since it 

currently takes new controllers 2 to 5 years to become fully certified. During that 

time, FAA incurs the cost of trainees’ salaries and benefits as well as the cost of 

the salaries and benefits of the certified controllers who instruct them one-on-one. 

FAA needs to develop detailed cost estimates before the next submission of its 

staffing plan, particularly now that questions concerning new controllers’ salaries 

have been settled under a new contract with the National Air Traffic Controllers 

Association. 

Using the Cost Accounting System To Control Costs and Improve 

Operations 

Irrespective of the financing system ultimately decided upon, it is important that 

FAA has an effective cost accounting system. This becomes more important for 

those options that approach true cost-based user fees. 

348 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
17 

FAA has substantially completed a cost accounting system for all its lines of 

business and labor distribution systems for all its personnel. With a number of 

further refinements, FAA should have a sufficiently accurate system to support 

cost-based user fees. These refinements include making further progress in 

assigning labor hours to projects, documenting an easily understandable and 

readily available set of rules, and establishing new and specific labor codes to 

track costs as duties change. Also important to this discussion is allocating FAA’s 

costs to airspace users. FAA needs to finalize and publish its ongoing cost 

allocation study. 

In addition to its role in financing options, FAA’s cost accounting system can help 

FAA more effectively manage its operations. However, FAA makes only limited 

use of its cost accounting system for this purpose. To use the system effectively, 

FAA must improve the accuracy and timeliness of the financial data, link the 

system with its performance measures, and assign about $1 billion in 

miscellaneous service-level costs (including depreciation) to facilities. 

For further information, the following reports and testimonies can be seen on 

the OIG web site at http://www.oig.dot.gov: 

• Observations on FAA’s Oversight of Aviation Safety 

• Perspectives on the Progress and Actions Needed To Address the Next 

Generation Air Transportation System 

• Perspectives on FAA’s FY 2007 Budget Request and the Aviation Trust Fund 

• FAA Has Opportunities To Reduce Academy Training Time and Costs by 

Increasing Educational Requirements for Newly Hired Air Traffic Controllers 

• Next Steps for the Air Traffic Organization 

• Report on Controller Staffing: Observations on FAA’s 10-Year Strategy for the 

Air Traffic Controller Workforce 

• Addressing Controller Attrition: Opportunities and Challenges Facing the 

Federal Aviation Administration 

• Opportunities To Improve FAA’s Process for Placing and Training Air Traffic 

Controllers in Light of Pending Retirements 

• FAA’s Management of and Control Over Memorandums of Understanding 

OTHER ACCOMPANYING INFORMATION 349
18 

3. Responding to National Disasters and Emergencies— 

Assisting Citizens and Facilitating Transportation 

 Infrastructure Reconstruction 

The Department of Transportation (DOT) has a significant role in assisting 

citizens and helping states and localities to rebuild infrastructure damaged or 

destroyed during natural and manmade disasters, such as earthquakes and acts of 

terrorism. Under the National Response Plan, DOT is the lead agency for 

coordinating transportation support (Emergency Support Function-1) during these 

types of emergencies and serves as a support agency for 11 other critical functions. 

For example, DOT works with state and local transportation departments and 

industry partners after 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. 

Since the 2005 Gulf Coast hurricanes, DOT has undertaken a number of initiatives 

to enhance preparations for future disasters, such as examining regulations that 

may impede the transportation industry’s ability to quickly respond to disasters 

and developing procedures to overcome such hurdles. DOT has also been 

responsive to our audit recommendations. For example, better procedures are now 

in place for evaluating contractor price quotes and ensuring documentation of the 

actual amount of services received before authorizing payments under the 

Department’s emergency disaster relief transportation services contract. 

The Department needs to ensure that it remains responsive to the changing 

emergency operations environment and that relief and recovery aid is spent 

appropriately. We see two key issues that DOT needs to focus on to better 

mitigate the effects of future disasters: 

• Clarifying roles and responsibilities given expanded mission requirements and 

• Ensuring continued vigilance in protecting taxpayer funds spent for relief and 

recovery efforts. 

Clarifying Roles and Responsibilities Given Expanded Mission 

Requirements 

As a result of the presidentially directed “lessons learned” review of the Federal 

Government’s response to last year’s hurricanes, DOT has been given new 

responsibilities for mass evacuations when disasters overwhelm state and local 

government capabilities. The Department is now primarily responsible for 

350 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
19 

developing the capability to conduct and coordinate the potential movement of 

millions of people within the general population during response efforts, while 

also moving commodities, such as water, ice, and food, which composed the bulk 

of DOT emergency disaster relief transportation services efforts in the past. DOT 

has already taken many short-term actions, such as coordinating with the 

American Red Cross to improve evacuation capabilities based on lessons learned 

in 2005 and is examining a range of potential longer-term options, including ways 

to maximize internal resources and processes to better respond to catastrophic 

incidents requiring mass evacuations. 

The number of disasters involving DOT relief and recovery assistance, including 

those requiring Federal Emergency Management Agency (FEMA) mission 

assignments for services under the Robert T. Stafford Disaster Relief and 

Emergency Assistance Act, has increased during the past 3 years (see Figure 3-1). 

In addition, the magnitude and duration of relief and recovery efforts in response 

to the 2005 hurricanes has far surpassed those of any previous disasters in which 

DOT has been involved. For example, many of the FEMA-requested emergency 

transportation services required as a result of these hurricanes lasted for more than 

6 months, which is much longer than the historically typical duration of several 

weeks or a month or 2. We note that the Nation is also facing an avian bird flu 

pandemic threat that, if it materializes, could last 18 months. 

Figure 3-1: Departmental Disaster Involvement 

2001 2002 2003 2004 2005 

To fulfill future emergency response responsibilities, DOT Office of the Secretary 

and Operating Administration personnel must work together effectively with staff 

at FEMA and other Federal agencies and with state and local government entities 

across the Nation. This requires clearly defined missions, chains of command, 

lines of communication, and adequate resources for effective intra- and interagency coordination. DOT has reported that while the systems, plans, and training 

it had in place for fulfilling its National Response Plan responsibilities during the 

2005 Gulf Coast hurricanes generally worked well, they were not always sufficient 

for the devastation wrought by Hurricanes Katrina, Rita, and Wilma in Louisiana, 

Mississippi, Alabama, Texas, and Florida. 

Source: Office of the Secretary 

OTHER ACCOMPANYING INFORMATION 351

0 

10 

20 

30 

40 

50 

60 

Incidents 

Mission Assignments 
20 

According to DOT, telecommunications systems, such as satellite phones, failed; 

communications and coordination with FEMA staff were difficult; and lines of 

authority were not always clear. DOT is taking steps to address these issues and 

remain responsive to the changing emergency operations environment. For 

example, the Department has been coordinating with FEMA and the U.S. Army 

Corps of Engineers to improve communications capabilities and is emphasizing 

disaster planning as part of its Security, Preparedness and Response Strategic Goal 

in its “Strategic Plan for Fiscal Years 2006-2011.” 

Ensuring Continued Vigilance in Protecting Taxpayer Funds Spent for 

Relief and Recovery Efforts 

History has shown that substantial infusions of funding for disaster relief and 

recovery efforts increase the risk of fraud by those who exploit weaknesses in 

Government oversight. Senior departmental leaders, including the Secretary, have 

emphasized that DOT should provide effective stewardship and oversight of 

disaster-related expenditures to prevent fraud, waste, and abuse. The general 

consensus within and outside the Department has been that the scope of the 

2005 Gulf Coast hurricane disasters presents special challenges for DOT and its 

Operating Administrations to ensure that taxpayer interests are fully protected. 

Public and congressional expectations for future disasters are likely to be no 

different, given the stewardship and oversight standards set for the 2005 hurricane 

disasters. 

DOT expects to spend nearly $4.5 billion5

 responding to the 2005 Gulf Coast 

hurricanes, primarily for emergency and permanent repairs to damaged roadways 

and bridges on Federal-aid highways. Included in this amount is about 

$500 million in Stafford Act disaster assistance for which FEMA will only 

reimburse DOT after FEMA determines it can rely on DOT reports that the 

expenditures were valid and appropriate. If FEMA determines that it cannot rely 

on DOT reporting, it will disapprove the reimbursement requests until it is 

satisfied that the expenditures were legitimate. The Office of Inspector General is 

working with the Department’s Office of Intelligence, Security, and Emergency 

Response to ensure sufficient Defense Contract Audit Agency coverage of DOT’s 

emergency transportation services contract, which has a value not to exceed 

$800 million. This contract is managed by the Federal Aviation Administration 

and supports DOT-wide responsibilities during national emergencies, primarily in 

response to FEMA mission assignments. We believe the cost of Defense Contract 

Audit Agency audit coverage should be identified as a FEMA reimbursable item 

for mission assignments involving the use of this contract and that DOT should 

ensure these types of audits are accomplished, as appropriate. 

5 The majority of these funds are from two emergency supplemental appropriation bills signed into law in response to 

the 2005 Gulf Coast hurricanes, specifically Public Law 109-148, December 30, 2005 (119 Stat. 2680), and Public 

Law 109-234, June 15, 2006 (120 Stat 418). 

352 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
21 

DOT has also taken other actions to ensure more intense oversight of its 

obligations and expenditures related to disaster relief and recovery activities. For 

example, the Department’s Assistant Secretary for Budget and Programs/Chief 

Financial Officer (1) created a special financial integrity team to ensure that 

spending resulting from Hurricane Katrina is thoroughly documented and funds 

are properly accounted for and (2) has already issued guidance on tracking and 

reporting costs related to the 69 tasks assigned to the Department as part of the 

National Strategy for Pandemic Influenza for planning, detecting, and responding 

to this emerging threat. 

Continued vigilance and follow-through at all levels of the Department is needed 

to ensure that relief and recovery aid is spent appropriately. This is an especially 

critical issue because the risks of disaster-related fraud, waste, and abuse increases 

when 100 percent of the funding is provided by the Federal Government, as was 

the case for most of last year’s hurricane-related relief and recovery projects. 

Simply put, because grantees no longer are required to share in the cost of these 

projects, they have less incentive to control costs. 

In addition, post-hurricane staffing for at least one grantee left fewer staff 

available to perform oversight. For example, we found that after experiencing 

financial difficulties due to the substantial loss of passenger revenue following the 

hurricanes, management at New Orleans International Airport cut operations 

staffing levels by almost half, from a pre-Katrina level of 222 employees to just 

123 employees after the hurricane. Similarly, the airport accounting staff was cut 

from 10 to 7, leaving fewer staff to manage FAA Airport Improvement Program 

hurricane grant expenditures. 

For further information, the following reports can be seen on the OIG web site 

at http://www.oig.dot.gov: 

• Federal Aviation Administration Oversight of Airport Improvement Program 

Hurricane Grants 

• Mississippi Department of Transportation’s Award of Selected Hurricane 

Katrina Emergency Repair Contracts 

• Internal Controls Over the Emergency Disaster Relief Transportation Services 

Contract 

• Internal Controls Over Payments for Emergency Disaster Relief 

Transportation Services 

• Management Advisory: Accounting and Financial Reporting of Related 

Hurricane Costs 

OTHER ACCOMPANYING INFORMATION 353
22 

4. Strengthening Efforts To Save Lives by Improving 

Surface Safety Programs 

A 

transportation safety programs. As the Department implements these programs, it 

surface transportation and more lives saved. 

While the highway fatality rate per 100 million vehicle miles traveled has been 

rate for 2005 increased to 1.47 from 1.45 in 2004. 

) ambitious target, set forth in the 

September 2003 Strategic Plan, was to reduce the fatality rate to 1.0 by 2008. 

Meeting the 1.0 

target rate, even with this extended timeframe, will require a significant 

acceleration in past improvements. 

Figure 4-1: 

2001 2002 2003 2004 2005 2006 2007 2008

j

Source: 

The Safe, Accountable, Flexible, and Efficient Transportation Equity Act: 

Legacy for Users (SAFETEA-LU) provided significant enhancements for surface 

must use the increased resources across all modes in ways that result in safer 

reduced by approximately 40 percent in the last 20 years, 2005 marked the first 

increase in the highway fatality rate since 1986. The most recent crash data from 

the National Highway Traffic Safety Administration (NHTSA) shows that 

43,443 people were killed in motor vehicle crashes in 2005 and the crash fatality 

The Department of Transportation’s (DOT

However, as shown in Figure 4-1, the actual rates have lagged behind the yearly 

targets, and our projection of past trends estimates a 2008 fatality rate of 1.41. 

DOT’s latest Strategic Plan for 2006 through 2011, issued in September 2006, sets 

transportation safety as the Department’s number one goal and retains the target 

rate of 1.0 but extends the time for reaching this goal out to 2011. 

Actual Highway Fatality Rates Lag Targeted Rates* 

1.51 1.51 1.48 1.45

1.00

1.40 1.40 1.38 1.38 1.38 1.38 1.50

1.47 1.44 1.42 1.41

0.00

0.50

1.00

1.50

2.00

Year 

Actual Fatality Rate Target Rate Pro ected Rate 

Fatality Rate 

 NHTSA budget information for actual fatality rates and target rates. Projected rates for 2006, 2007, 

and 2008 were calculated using NHTSA’s forecasting methodology. 

* Fatality rates are shown as the number of fatalities per 100 million vehicle-miles traveled. 

354 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
23 

Despite the overall increase in highway fatalities and the fatality rate in 2005, the 

latest data show improvements in a number of areas, including these examples. 

• Alcohol-related traffic fatalities accounted for 16,885 of the 43,443 fatalities in 

2005 (39 percent), the lowest level since 1999. Number of Train Accidents 

• Fatalities in large truck crashes decreased in 2005 to 5,212, after increasing in 

the 2 previous years. 

• The number of young drivers (age 16 to 20) killed declined from 3,538 to 

3,374. 

• Observed seat belt use increased to 82 percent in 2005, compared to 80 percent 

in 2004. 

The highway crash data also show specific areas where challenges remain. For 

example, motorcycle fatalities increased by 13 percent in 2005, from 4,028 to 

4,553. In addition, non-occupant fatalities (including pedestrians) rose by almost 

6 percent, from 5,532 to 5,849. The rise in fatalities in these two areas more than 

offset an overall decrease in passenger vehicle fatalities. 

For rail safety, data from the last decade also show challenges, although the 

2005 data registered an improvement. In 2005, train accidents decreased by 

6 percent and the rate of train accidents per million train-miles traveled decreased 

by 8 percent. However, the overall data for 1995 through 2005 show that train 

accidents increased by 29 percent and the rate of train accidents grew by 9 percent Rate of Train Accidents Per Million Train-Miles Traveled 

(see Figure 4-2). 

Figure 4-2: Trends in the Number and Rate of Train Accidents 

5,000 5

4,750 4.75 

4,500 4.5

4,250 4.25 

4,000 4

3,750 3.75 

3,500 3.5

3,250 3.25 

3,000 3

2,750 2.75 

2,500 2.5

2,250 2.25 

2,000 2 

96

19

9

00

2

95

1

0

03

2

05

8

19

1

20

04

19

20

9

97

19

99

20

0

02

20

0

Year 

Source: Federal Railroad Administration 

OTHER ACCOMPANYING INFORMATION 355
24 

The importance of rail safety is illustrated by the tragic consequences that can 

occur from just one accident. For example, a 2005 train accident in Graniteville, 

South Carolina, which was attributed to human error, caused the train to derail and 

a tank car to release a hazardous material. As a result, 9 people were killed and 

292 people were injured. 

To their credit, NHTSA, the Federal Motor Carrier Safety Administration 

(FMCSA), and the Federal Railroad Administration (FRA) have taken action to 

address the surface safety challenges discussed in our previous reports. To further 

enhance DOT’s surface safety programs for highway and rail travel, we have 

identified the following key actions in this year’s report: 

• Promoting improved performance measures and enhanced state accountability 

to maximize efforts to reduce fatalities caused by impaired driving, 

• Building on successful efforts to better enforce motor carrier safety 

regulations, 

• Ensuring the integrity and future modernization of the Commercial Driver’s 

License (CDL) Program, and 

• Enhancing railroad safety through improved oversight of grade-crossing 

reporting and better identification of trends. 

Promoting Improved Performance Measures and Enhanced State 

Accountability To Maximize Efforts To Reduce Fatalities Caused by 

Impaired Driving 

NHTSA is the lead Federal agency responsible for reducing alcohol-impaired 

driving. In our ongoing audit of alcohol-impaired driving programs, the 10 states 

reviewed reported benefits derived from Federal funding. However, NHTSA’s 

ability to fully gauge the effectiveness of state programs would be improved if 

states had established performance measures designed to assess key strategies, 

such as sustained enforcement of alcohol-impaired laws. We are discussing with 

management ways to help NHTSA target Federal resources to the program areas 

most likely to lead to future reductions in alcohol-impaired traffic fatalities. 

Enhanced state accountability will also be promoted if NHTSA continues the 

timely implementation of the triennial reviews of highway safety grant programs 

that are required by SAFETEA-LU and follows up on recommendations made to 

the states in these reviews. 

Building on Successful Efforts To Better Enforce Motor Carrier Safety 

Regulations 

Our 2006 audit found that FMCSA’s implementation of the Motor Carrier Safety 

Improvement Act of 1999 had significantly improved oversight of motor carrier 

safety. However, the audit found that FMCSA could further strengthen its 

356 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
25 

oversight by imposing maximum fines on truck or bus companies that chronically 

violate serious safety regulations. FMCSA did not consistently implement the 

law’s sanctions against such repeat violators—only 33 of the 533 repeat violators 

we identified received the maximum penalty. In response to the report, FMCSA 

committed to strengthening its policy by May 2007 to ensure all violations falling 

within the two most serious categories set up by the Agency are appropriately 

counted when identifying chronic or repeat violators subject to maximum 

penalties. 

Our 2006 audit also found that FMCSA and the states have taken and are 

continuing to take positive steps to improve the quality of safety-related 

performance data, but challenges remain. For example, after FMCSA took action, 

the percentage of motor carriers not reporting census data on drivers and trucks 

was reduced from 42 percent as of January 2003 to approximately 27 percent as of 

January 2005. Data also show improvement in the overall completeness of crash 

reporting from the states, although studies done at selected states indicate that 

more improvements are needed. 

Quality data are needed to properly rank motor carriers’ safety performance, 

identify high-risk motor carriers, and target those carriers for compliance reviews 

and inspections. Reasonable and workable quality standards must also be 

maintained if the data are to be made public. The challenge to obtain higher 

quality data will require continued effort from FMCSA and the states to carry out 

the initiatives that are underway. 

Ensuring the Integrity and Future Modernization of the Commercial 

Driver’s License Program 

Over the past 5 years and with the support of FMCSA, we have carried out 

investigations with other law enforcement agencies that involved CDL fraud 

schemes in 24 states. These investigations have led to the prosecution of CDL 

fraud schemes in 15 states and have revealed that thousands of CDLs were issued 

to drivers who obtained them through corrupt state or state-approved (third-party 

examiners) testing processes. Curbing CDL fraud is important to highway safety 

and ensures that only drivers with requisite skills, including applicable training for 

hazardous material transportation, obtain CDLs. 

Our 2006 audit on CDL oversight recognized several positive steps that FMCSA 

took to counter CDL fraud. For example, FMCSA instituted a fraud component 

within its CDL compliance review program. It also worked with the states and 

other organizations to identify fraud vulnerabilities and to develop model law 

enforcement programs. In 2007, FMCSA needs to follow through on its 

commitment in response to our report, to request that states track the status of 

OTHER ACCOMPANYING INFORMATION 357
26 

drivers suspected of fraud, and to continue to demonstrate the high priority it 

places on this issue. 

FMCSA is also faced with the challenge of modernizing the Commercial Driver’s 

License Information System (CDLIS). The CDLIS Modernization Program 

should improve the system’s security and effectiveness and prevent further system 

degradation as system usage and requirements grow. The modernization efforts 

should also address future financing of the system. 

Enhancing Railroad Safety Through Improved Oversight of GradeCrossing Reporting and Better Identification of Trends 

FRA has taken significant steps to reduce collisions and fatalities at highway-rail 

grade-crossings, including the establishment of a reconciliation process to ensure 

that fatal grade-crossing collisions are promptly reported to the National Response 

Center. However, our ongoing audit work shows that railroads are not providing 

timely written reports to FRA for all grade-crossing collisions (both fatal and 

non-fatal). In some cases, collisions have gone unreported. Without data on all 

grade-crossing collisions, FRA’s ability to identify emerging trends and new areas 

for further safety improvements is limited. 

The identification of trends for the targeting of resources to high-risk areas is 

particularly critical, because FRA inspections decreased by 6 percent, from 

67,517 in 2003 to 63,264 in 2005. To facilitate the targeting of resources, in 

October 2005, FRA began to phase in the implementation of its National 

Inspection Plan. The Plan is intended to make better use of data and direct safety 

inspectors to high-risk areas. This action will complement the aggressive and 

ambitious National Rail Safety Action Plan launched in May 2005. The Action 

Plan includes initiatives to reduce train accidents caused by human factors and to 

enhance hazardous materials safety and emergency preparedness. Better targeting 

of resources may enable FRA to carry out its safety mission more efficiently, but 

FRA needs to ensure that its inspection activity remains at the level needed to 

adequately oversee the safety of the Nation’s railroads. 

For additional information, the following reports and testimonies are available 

on the OIG web site at http://www.oig.dot.gov: 

• Reauthorization of TEA-21 Safety Programs 

• Processing Petitions To Import Non-Canadian Gray Market Vehicles 

• Follow-Up Audit on NHTSA’s Office of Defects Investigation 

• Significant Improvement in Motor Carrier Safety Since 1999 Act but Loopholes 

for Repeat Violators Need Closing 

• Federal Motor Carrier Safety Administration Oversight of Commercial 

Driver’s License Program 

358 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
27 

• Background Checks for Holders of Commercial Driver’s Licenses With 

Hazardous Materials Endorsements 

• Follow-Up Audit of the Implementation of the North American Free Trade 

Agreement’s Cross-Border Trucking Provisions 

• Highway-Railroad Grade Crossing Safety Issues 

• FRA Safety-Related Findings and Recommendations 

• Report on the Audit of the Highway-Rail Grade Crossing Safety Program 

• Audit of Oversight of Highway-Rail Grade Crossing Accident Reporting, 

Investigations, and Safety Regulations 

OTHER ACCOMPANYING INFORMATION 359
28 

5. Aviation Safety—Performing Oversight That Effectively 

Utilizes Inspection Resources and Maintaining Aviation 

 System Safety 

Safety is the Federal Aviation Administration’s (FAA) highest priority. For more 

than 4 years, FAA and the U.S. aviation industry has experienced one of the safest 

periods in history, even though 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 even safer. 

While the Comair accident is the most recent U.S. air carrier accident, other fatal 

accidents occurred in the past year as well. In December 2005, a 58-year old 

Chalks Ocean Airways seaplane crashed off the coast of Florida when the right 

wing separated from the aircraft during flight. During the same month, a 

Southwest Airlines aircraft skidded off the runway at Chicago Midway and 

collided with an automobile off the airport grounds. Each of these accidents is the 

subject of an ongoing National Transportation Safety Board investigation. 

Notwithstanding these tragic accidents, the United States has maintained one of 

the safest aviation systems in the world. This is a remarkable accomplishment 

given the many changes occurring within the industry. For example, network air 

carriers continue to work aggressively to move away from high-cost structures by 

reducing in-house staff, renegotiating labor agreements, and increasing the use of 

external repair facilities. To address these changes, FAA is working to implement 

and refine risk-based safety oversight systems. 

At the same time, FAA must also remain attentive to other issues that could affect 

the safety of the aviation system, such as runway incursions (potential collisions 

on the ground) and operational errors (potential collisions in the air). In recent 

years, FAA has made progress in reducing the overall number of runway 

incursions, but serious incidents (where a collision was barely avoided) continue 

to occur. For example, on March 21, 2006, a controller at Chicago O’Hare 

mistakenly cleared two commercial aircraft (an Airbus 319 and an Embraer E145) 

for takeoff on intersecting runways. Before stopping, the two aircraft came within 

100 feet of one another at the runway intersection. 

Key challenges for FAA are: 

• Advancing risk-based oversight systems for air carriers and external repair 

facilities, 

360 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
29 

• Maintaining a sufficient inspector workforce to effectively respond to changes 

in the industry, and 

• Continuing to emphasize and address the risks of runway incursions and 

operational errors. 

Advancing Risk-Based Oversight Systems 

In the past 8 years, FAA has made important progress in developing risk-based 

approaches to safety oversight. As of October 13, 2006, there are 39 air carriers 

under FAA’s Air Transportation Oversight System—a system that permits 

inspectors to use maintenance and operations data to focus their oversight on areas 

of higher risk. In addition, FAA has developed a risk-based oversight system for 

aircraft repair facilities. However, FAA continues to face challenges in advancing 

both these efforts. Also, FAA needs to gather more information about the type of 

work repair facilities not certificated by FAA perform and determine what range 

of actions are required to improve oversight of these facilities. 

Risk-Based Oversight System for Air Carriers. FAA has made significant progress 

in implementing its risk-based oversight approach for air carriers; however, FAA 

is still refining the system and working to implement it at the remaining 85 air 

carriers. In 2005, we reported that the system was not mature enough to permit 

inspectors to effectively respond to the rapid changes occurring in the industry. 

Further, when the 2005 mechanics’ strike occurred at Northwest Airlines, FAA 

abandoned the system in favor of a more simplified approach to oversight that was 

much like the process used under the old inspection system. 

In response to our 2005 report, FAA developed guidance to help inspectors more 

thoroughly address industry changes, such as financial distress and growth, when 

assessing safety risks. FAA also revised guidance to ensure inspectors are 

continually monitoring the effects of air carrier changes, rather than waiting for a 

major event such as an air carrier declaring bankruptcy. In addition, FAA has now 

developed a schedule and plans to complete transition of all air carriers to its riskbased oversight system by the end of calendar year 2007. For this effort to be 

successful, FAA must ensure its inspectors are well trained and located in areas of 

greater need. 

Oversight Systems for External Repair Facilities. As air carriers worked to reduce 

costs, use of external maintenance facilities dramatically increased. Air carriers 

that had traditionally performed all their maintenance in-house began to use 

domestic and foreign repair facilities to do this work. For example, in 

March 2005, Delta Air Lines announced that it would substantially reduce its 

in-house mechanics’ staff and use external facilities to perform most of its heavy 

airframe maintenance. From 1996 to 2005, air carriers’ use of external repair 

OTHER ACCOMPANYING INFORMATION 361
30 

facilities has grown from 37 percent of air carriers’ maintenance costs to 

62 percent. 

Recognizing that its inspector workforce cannot provide continuous oversight of 

every maintenance facility and in response to recommendations in our July 2003 

report, FAA has now developed a risk-based oversight approach to FAAcertificated repair stations. However, at the time of our review, the system has not 

been fully implemented; rather, inspectors had the option of using a manual 

system for assessing potential safety risks at repair stations. According to FAA, 

the more effective automated system was implemented on October 1, 2006. As 

with its air carrier oversight system, FAA must ensure its inspectors are well 

trained on the new system for this effort to be successful. 

FAA also needs to develop a more effective oversight process for work performed 

at non-FAA-certificated repair facilities. In December 2005, we reported that air 

carriers are now using these facilities to perform critical and scheduled 

maintenance work. We identified 6 domestic and foreign facilities that performed 

scheduled maintenance and 21 that performed maintenance that is key to the 

airworthiness of the aircraft. FAA oversight of the work performed at these 

facilities is important because there are significant differences in regulatory 

requirements for operation of the facilities and the amount of training the 

mechanics at non-certificated repair facilities receive. For example, noncertificated repair facilities are not required to have a quality control system, 

designated supervisors and inspectors, or a training program. 

We recommended that FAA inventory air carrier maintenance providers and 

identify which non-certificated facilities perform critical maintenance functions 

and scheduled maintenance and, based on the results of this inventory, make a 

determination as to whether it should limit the type of work non-certificated 

facilities can perform. Also, we recommended that FAA evaluate air carrier 

training and oversight programs for work performed at non-certificated facilities. 

FAA committed to implement all our report recommendations and needs to follow 

through on its commitment. 

Maintaining a Sufficient Inspector Workforce 

Much attention has been paid to controller staffing—FAA plans to hire over 

11,000 controllers in the next 10 years. While replacing retiring controllers is a 

critical issue for FAA, it is also important to maintain a safety inspector workforce 

sufficient to achieve the Agency’s mission of safety oversight. 

FAA’s fiscal year (FY) 2007 budget request calls for an increase of 116 safety 

inspectors. However, it is unlikely that staffing gains over the next few years will 

be enough to offset the number of safety inspectors eligible to retire during the 

same time period. For example, this year, 28 percent of the current inspector 

362 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
31 

workforce (1,008 of 3,628) will be eligible to retire. By 2010, half of the current 

safety inspector workforce (1,820 of 3,628) will be eligible to retire. Just as FAA 

generation of safety inspectors. 

attrition within that workforce. 

Reducing the Risk of Accidents on the Ground and in the Air 

Two primary indicators of system safety are runway incursions and operational 

errors. Reducing these incidents are key performance goals for FAA that require 

heightened attention at all levels of the Agency. 

alarming rates. To its credit, FAA took decisive action—it established regional 

initiated aggressive educational programs for pilots, and implemented 

As shown in Figures 5-1 and 5-2, the total number of runway incursions decreased 

serious runway incursions (those in which a collision was barely avoided) 

continue to occur. 

safety risks associated with runway incursions. 

through August 2006, Boston Logan, Chicago O’Hare, and Philadelphia 

Fi ions 

327 

326 

323 

407 

405 

329 

305 

0 200 300 400 

Fi i ions 

27 

29 

28 

32 

37 

53 

67 

69 

0 

f

has recognized the need to address an expected surge in controller attrition, it must 

also ensure it closely monitors retirements and takes steps to hire and train the next 

FAA will need to carefully evaluate its inspector 

staffing levels to ensure it can sustain sufficient oversight in light of the potential 

From 1998 to 2001, we reported that runway incursions were increasing at 

runway safety offices, conducted numerous safety evaluations at problem airports, 

technologies at major airports that alert controllers of potential runway accidents. 

from a high of 407 in FY 2001 to 327 in FY 2005, and the most serious incidents 

have decreased from a high of 69 in FY 1999 to 29 in FY 2005. 

However, since 2003, the number of runway incursions has leveled off, and very 

Recent incidents at several large airports highlight the potential 

During the period FY 2005 

International all experienced increases in runway incursions. Boston Logan had 

gure 5-1. Runway Incurs

FY 1999 to FY 2005 

339 

100 500 

* FY 2006 

FY 2005 

FY 2004 

FY 2003 

FY 2002 

FY 2001 

FY 2000 

F Y 1999 

* P reliminary data fo r 11 mo nths So urce: FA A 

gure 5-2. Ser ous Runway Incurs

FY 1999 to FY 2005 

25 50 75 

* FY 2006 

FY 2005 

FY 2004 

FY 2003 

FY 2002 

FY 2001 

FY 2000 

F Y 1999 

* P reliminary data o r 11 mo nths So urce: FA A 

OTHER ACCOMPANYING INFORMATION 363
32 

22 incidents (1 severe), Chicago O’Hare had 15 incidents (5 severe), and 

Philadelphia had 15 incidents (1 severe involving a collision). Those were the 

highest number of runway incursions among the Nation’s large commercial 

airports. FAA needs to remain committed to its efforts addressing these 

significant safety risks. 

While FAA has seen a reduction in the number of runway incursions nationwide, 

it has not had the same success with operational errors—where aircraft come too 

close together in the air. Not only are these incidents continuing to increase, but 

shortcomings in FAA’s reporting system for operational errors have indicated that 

the true number of these incidents is not yet known. 

For example, in FY 2005, there were 1,489 operational errors (up from 1,149 in 

FY 2004), which is the highest number of errors reported in the past 6 years. 

Seventy-three of those errors were classified as serious incidents (those rated as 

“high” severity), compared to 40 serious incidents reported in FY 2004. 

While the increases in operational errors are significant, it is important to 

recognize that the number of errors reported in prior years may not be an accurate 

benchmark. This is because at the majority of FAA facilities, FAA relies on an 

inaccurate system of self-reporting operational errors. In September 2004, we 

reported that only 20 of FAA’s 524 air traffic control facilities have an automated 

system that identifies when operational errors occur. At its towers and terminal 

radar approach control (TRACON) facilities, FAA depends on an unreliable 

system of self-reporting operational errors. 

This past year, FAA has taken steps to improve operational error reporting. For 

example, FAA implemented procedures that require towers and TRACONs to 

conduct random audits of radar data to identify potential unreported operational 

errors. FAA Headquarters is also conducting random audits at selected facilities 

and is evaluating its severity rating system in an effort to more accurately capture 

the collision risk that operational errors pose. More importantly, FAA is 

developing an automated system to identify when operational errors occur at 

TRACON facilities. FAA plans to start fielding this system in FY 2008 with an 

estimated completion date in FY 2009. 

Clearly, these actions are steps in the right direction. FAA will need to remain 

committed to following through on those efforts and identify an accurate baseline 

of the number of operational errors that are actually occurring. 

364 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
33 

For further information, the following reports and testimonies can be seen on 

the OIG web site at http://www.oig.dot.gov: 

• Safety Oversight of an Air Carrier Industry in Transition 

• Letter to Representative Oberstar Regarding FAA Actions on Air Carriers’ 

Use of Aircraft Repair Stations 

• Controls Over the Reporting of Operational Errors 

• Alleged Cover-Up of Operational Errors at DFW TRACON 

• Review of Air Carriers’ Use of Non-Certificated Repair Facilities 

• Letter to Representative Oberstar Regarding FAA’s Aging Airplane Safety 

Rule 

OTHER ACCOMPANYING INFORMATION 365
34 

6. Making the Most of the Federal Resources That 

Sustain Surface Transportation Infrastructure 

Improvements by Continuing To Emphasize Project 

Oversight 

At a time when transportation infrastructure needs are increasing faster than the 

financial resources available to fund them, stewardship of taxpayer dollars 

continues to be a priority for the Department of Transportation. During fiscal year 

2006, both the Federal Highway Administration (FHWA) and Federal Transit 

Administration (FTA) took positive actions to increase their oversight of grant 

funds. For example, FHWA continued to strengthen its oversight of inactive 

obligations by deobligating $738 million in unneeded funds for highway projects. 

Joint work by FHWA and the Office of Inspector General resulted in one firm 

agreeing to a $3 million civil settlement involving the inappropriate use of 

Disadvantaged Business Enterprises on 38 different federally funded highway 

projects. In addition, FTA continues to use its special office in New York City to 

oversee $4.4 billion in high-priority transit projects being built in Lower 

Manhattan in response to the September 11, 2001, terrorist attacks. 

FHWA’s and FTA’s actions are steps in the right direction, but more needs to be 

done to sustain and build on these oversight improvements. This is a significant 

challenge, given the annual budgets of both Operating Administrations: FHWA’s 

of about $40 billion and FTA’s of about $9 billion. 

We see three key issues that need continued management emphasis. 

• FHWA must ensure that initiatives to strengthen its oversight of Federal 

highway funds are implemented effectively so that major projects are delivered 

on time, within budget, and free from fraud. 

• FHWA’s oversight must include actions to ensure that highway tunnels are 

safe for the driving public. 

• FTA must continue to exercise vigilant oversight to ensure that large and 

complex transit infrastructure projects are completed on time and within 

budget. 

Initiatives To Improve the Oversight of Highway Funds Need To Be 

Implemented Effectively To Ensure That Projects Are Completed on Time, 

Within Budget, and Free From Fraud 

In 2006, FHWA implemented several initiatives to strengthen its oversight— 

testing whether Federal highway payments to states were eligible for 

366 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
35 

reimbursements, issuing new regulations to help states monitor obligated Federal 

highway funds, and dedicating staff in its Division Offices to oversee active major 

projects. Although we foresee positive outcomes to these initiatives, FHWA must 

take additional steps to ensure that large, complex construction projects are 

delivered on time, within budget, and free from fraud. 

Specifically, FHWA needs to: 

• Strengthen financial and cost controls for Federal highway funds to better 

detect improper payments to states. FHWA’s implementation of its 

Financial Integrity Review and Evaluation (FIRE) Program will help to 

improve controls and safeguard highway funds. The FIRE Program is the 

cornerstone of FHWA’s plan to improve oversight by supporting the annual 

certification of internal and financial controls over the Highway Trust Fund 

financial statements. The program also includes a risk assessment of the grant 

financial management process and statistical reviews of Federal-aid billing 

transactions to determine whether costs submitted to FHWA by state 

transportation departments are eligible for reimbursements. Establishment of 

the FIRE Program is a significant step. FHWA must ensure that the program 

is implemented effectively in each of its 52 Division Offices. 

In addition, FHWA Divisions need to do more to ensure that states have better 

financial management practices for identifying and recovering improper 

payments, particularly on state contracts awarded with Federal-Aid Highway 

funds. FHWA also needs to refine its testing techniques for identifying 

improper payments. For example, in August 2006, FHWA recovered 

$20 million from the Tennessee Department of Transportation for the Memphis 

Intermodal Transportation Project because Federal highway funds approved for 

this project were inappropriately used to build a parking garage adjacent to a 

national sports arena. While FHWA’s actions in recovering these funds were 

effective, stronger oversight by FHWA is needed to help avoid such improper 

payments in the first place. 

• Ensure that cost estimates and schedule milestones for major projects are 

realistic, reasonable, and credible and that potential risks are thoroughly 

considered. FHWA can build on its existing practices by increasing its 

oversight and providing greater financial and technical expertise to help states 

address funding shortages, cost increases, schedule delays, and construction 

quality issues. FHWA oversees 117 major highway projects6

 estimated to cost 

$192 billion ($63 billion for 37 active projects and $129 billion for 80 projects 

currently in the pipeline). 

The Safe, Accountable, Flexible, and Efficient Transportation Equity Act: A Legacy for Users defines major 

highway construction projects as those that are estimated to cost $500 million or more. 

OTHER ACCOMPANYING INFORMATION

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367
36 

Of the 12 major highway projects we are monitoring, two-thirds have 

experienced moderate to significant increases in their cost estimates. We 

found that states’ cost estimates have frequently excluded or understated 

known elements of cost growth that were needed to complete projects. 

Further, some major highway projects have fallen months or years behind 

schedule, which has led to rising project costs. To ensure that states prepare 

reliable estimates of the cost to complete major projects, FHWA needs to 

routinely validate the reliability of estimated costs. 

As a result of Hurricane Katrina destroying three major bridges, the value of 

Federal-aid highway programs in both Louisiana and Mississippi more than 

doubled. FHWA mobilized very quickly to respond to the catastrophic 

conditions and took the initiative to evaluate costs and to question 

unreasonable emergency repair contract charges. However, FHWA’s 

continued oversight will be important to ensure that, in addition to other 

highway projects, those three critical bridge replacement projects are 

completed on time, within budget, and able to withstand future hurricanes. 

• Ensure that special oversight managers are properly trained to identify 

risks. Several provisions under the Safe, Accountable, Flexible, and Efficient 

Transportation Equity Act: A Legacy for Users (SAFETEA-LU) promote 

stronger oversight of Federal-aid funds by: (1) lowering the major project 

threshold from $1 billion to $500 million and (2) requiring states to submit 

project management plans and annual financial plans to FHWA for each major 

project. According to FHWA, the lower monetary threshold is expected to 

more than double the number of active and future major projects that will 

require FHWA’s oversight. To meet the challenge of providing primary 

Federal oversight of active major highway construction projects, FHWA 

assigned project oversight managers to its Division Offices. These managers 

are responsible for identifying cost growth, schedule delays, funding shortages, 

and other critical risks on active major highway projects. FHWA needs to 

ensure that they are trained in identifying critical risks and taking appropriate 

corrective actions. 

FHWA’s Oversight Must Include Actions To Ensure That Highway 

Tunnels Are Safe for the Driving Public 

During the past 2 years, serious failures in construction quality on the Central 

Artery/Tunnel Project have highlighted the need for FHWA to take additional 

steps to ensure the safety of the Nation’s highway infrastructure. Effective quality 

control and vigilant oversight are key components throughout the construction 

process to ensure the safety of the driving public. The Project’s complex network 

of tunnels and bridges has a history of schedule delays and construction problems, 

including water leaks and the July 10, 2006, ceiling collapse that killed an 

368 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
37 

automobile passenger and led to widespread tunnel closures. To address these 

problems, FHWA is providing technical assistance to the National Transportation 

Safety Board in its investigation and to Massachusetts to support the reopening of 

closed tunnels, conducting an independent review of the ceiling failure, and 

advising the Governor’s office on a “Stem-to-Stern Safety Review.”7 The 

magnitude of this oversight effort, as well as the intense public concern for the 

safety of this massive project, presents a significant challenge to FHWA and the 

Department beyond their normal oversight roles. FHWA’s actions will be critical 

in 2007 to restore confidence that the Project is safe. 

The safety problems that surfaced in the Central/Artery Tunnel Project also call 

into question the oversight and quality control processes for constructing and 

maintaining highway tunnels. In light of the known problems of the Central 

Artery tunnels, FHWA should develop and implement a system to ensure that 

states inspect and periodically report on the condition of the Nation’s tunnels. 

FHWA should begin by promptly determining whether a rulemaking or additional 

legislative authority is necessary for this action. 

FTA Must Continue To Exercise Vigilant Oversight To Ensure Large and 

Complex Transit Infrastructure Projects Are Completed On Time and 

Within Budget 

FTA has an established program for oversight of its transit infrastructure projects, 

including the hiring of outside project and financial management oversight 

consultants. FTA uses a risk-based approach for the oversight of its Federal 

projects—a best practice. In addition, it has recently taken the initiative to finetune its risk-based assessments of transit projects and has hired an external 

consulting firm to evaluate this approach. FTA’s initiatives have generally 

improved oversight for its projects; however, numerous large and complex transit 

projects; especially those in New York City and the Washington, DC, 

metropolitan area; will present new oversight challenges. 

On July 13, 2006, we testified to Congress that effective day-to-day oversight of 

these large and complex transportation projects is critical and that FTA should use 

all of its oversight tools effectively. For example, FTA’s project management 

oversight contractors are charged with regularly monitoring each project and 

providing feedback to Federal officials should any problems arise. The oversight 

contractors hired for each project are charged with conducting risk assessments, 

reviewing costs and schedules regularly, and assessing each grantee’s plans for the 

project. The key points are that FTA must ensure that it fully analyzes the results 

The goal of the Stem-to-Stern Safety Review, performed by a major forensic engineering firm under a contract with 

the Commonwealth of Massachusetts, is to conduct an independent review of the infrastructure within the 

Metropolitan Highway System tunnels and facilities and to provide a complete assessment of the near- and long-term 

safety of the system. 

OTHER ACCOMPANYING INFORMATION

7 

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of the contractors’ reports; takes actions, where appropriate; and exercises its own 

oversight role in addition to the contractors’ work. 

Vigilant oversight will be particularly important because FTA must continue to 

oversee a number of transit infrastructure projects throughout the Nation, while at 

the same time overseeing several large and complex initiatives collectively costing 

about $19 billion. The 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), the Long Island Rail Road East Side Access 

(estimated to cost $7.3 billion), and the Dulles Corridor Metrorail Project 

(estimated to cost $2 billion). 

The projects in New York City and the concurrent construction activity there can 

be expected to create significant competition for materials and labor. As 

demonstrated in our September 2006 report on selected Hurricane Katrina 

contracts that were awarded in Mississippi, increased competition for materials 

and labor, among other things, resulted in much higher prices for emergency 

repairs of highways and bridges. FTA will need the right mix of oversight 

resources to effectively manage costs, schedules, and quality issues during the 

construction of each of these large infrastructure projects. 

For further information, the following reports and testimonies can be seen on 

the OIG web site at http://www.oig.dot.gov: 

• Testimony on Impact of Water Leaks on the Central Artery/Tunnel Project and 

Remaining Risks 

• Audit of Federal Highway Administration’s Inactive Obligations 

• Audit of Oversight of Load Ratings and Postings on Structurally Deficient 

Bridges on the National Highway System 

• Testimony on Lower Manhattan Reconstruction: Lessons Learned From Large 

Transportation Projects 

• Audit of the Mississippi Department of Transportation’s Award of Selected 

Hurricane Katrina Emergency Repair Contracts 

370 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
39 

7. Achieving Reform of Intercity Passenger Rail 

Intercity passenger rail service is an important component of a balanced 

transportation system. However, as we stated last year, the current model for 

providing this service remains broken. Amtrak continues to incur unsustainably 

large operating losses, provide poor on-time performance, and require increasing 

levels of infrastructure and fleet investment. Amtrak projects a $1.2 billion 

operating loss in fiscal year (FY) 2006, the fifth consecutive year of operating 

losses in excess of $1 billion. Adding to its fiscal troubles, Amtrak’s flagship 

service, Acela, is underperforming financially. Meanwhile, Amtrak’s overall ontime performance worsened this past year. In July, overall on-time performance 

fell to 67.7 percent—2.4 percent below July FY 2005 year-to-date levels. 

A year ago, we indicated that the Department must work with Congress and other 

stakeholders to break the cycle of appropriations without authorization for Amtrak 

and to realign the size, operations, and governance of the intercity passenger rail 

system to match the levels and sources of funding available. In the past year, 

modest progress was made on our recommendation regarding reducing Amtrak’s 

costs. Still outstanding is our recommendation regarding mechanisms giving 

states a larger voice in determining service requirements and establishing adequate 

and stable Federal funding. 

Critical questions remain regarding where intercity passenger rail makes sense, 

what types of service should be provided, how much it should cost, and who 

should pay for it. Reform should focus on reducing costs while improving 

mobility in corridors (routes of less than 500 miles) around the country—not just 

in the Northeast Corridor—and in restructuring long-distance service (routes of 

greater than 500 miles) to complement corridor services. In the meantime, the 

Department should use its broad authority, through the grant approval process, to 

secure improvements in Amtrak’s operating efficiency. 

Additional effort is needed in the following areas to create a new model for 

passenger rail transportation. 

Amtrak Must Do More To Improve Cost-Effectiveness, Operate 

Efficiently, and Improve Performance 

Amtrak has an obligation to be a prudent steward of the taxpayer support it 

receives and operate cost effectively; yet it has few, if any, internal incentives to 

do so. Its operations are neither disciplined by competition since it is the sole 

provider of intercity passenger rail service nor by the marketplace since it has 

access to the Federal treasury. As a result, until recently, there has been little 

OTHER ACCOMPANYING INFORMATION 371
40 

implementation of reforms to improve the cost-effectiveness of Amtrak’s 

operations. 

This past year, Congress directed Amtrak to operate more cost effectively by 

achieving savings from operational reforms. Our office was required to report on 

and certify Amtrak’s achievement of operational reform savings. This 

requirement—in conjunction with constrained appropriations, the Department’s 

grant application review process, and the Amtrak Reform Board’s strategic reform 

initiatives—has resulted in modest savings from the first stages of a limited 

number of operational reform initiatives. Much more needs to be done. In 

addition, the Department must work to institutionalize incentives for Amtrak to 

control costs that will ensure taxpayers receive the maximum level of intercity 

passenger rail service in exchange for their subsidies. 

We have reported quarterly on the 15 areas targeted to operational reform that 

Amtrak identified to reduce long-term operating costs. We found that only a few, 

primarily those targeting food and beverage and overhead functions, have resulted 

in any savings so far (Amtrak saved $46.3 million through May of this fiscal year, 

of which only $3.8 million was from FY 2006 reform initiatives). Amtrak expects 

to implement an expanded list of reforms in FY 2007. 

As we indicated in our quarterly reports, to operate efficiently and achieve 

significant reductions in its Federal operating subsidies, Amtrak must address the 

cost of state-supported services, route restructuring, and its labor costs. We have 

also reported that Amtrak’s losses on its food and beverage and sleeper service 

remain unacceptably high. Although it has begun to reform its food service, we 

have yet to see a plan that would result in Amtrak breaking even in this area. 

Additionally, while some sleeper service reform has begun, Amtrak needs to do 

more to achieve its goal of breaking even in this area as quickly as possible. 

Many of Amtrak’s reform efforts will take several years of sustained commitment 

to implement fully. Also, for many reforms, the difficult work has not yet begun. 

In light of the considerable time and effort required for Amtrak to achieve 

meaningful operational reforms, the Department will be challenged to ensure that 

the proper external incentives are brought to bear on Amtrak to see this effort 

though to fruition. 

Amtrak Needs a New Model for Providing Passenger Rail Transportation 

The Department and Amtrak need to give states more say in selecting the best mix 

of service for their constituents and provide the infrastructure funding needed for 

passenger rail to operate as an effective alternative mode of transportation. 

States should decide which cities are served, schedules, frequency of service, and 

what amenities should be provided. Those decisions are made by Amtrak, unlike 

372 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
41 

other transportation programs (including highways, transit, and airports) in which 

similar key decisions are made by state or local governments. As a result, these 

service decisions do not always reflect the states’ preferences and priorities. 

Intercity passenger rail would be better served with state-led initiatives as to where 

and how intercity passenger rail service is developed. State sponsorship will 

become increasingly important because the states should also be asked to provide 

increased operating and investment support. Capital funding decisions, as with 

mass transit, should ultimately reside with the Department, based on congressional 

direction and in partnership with the states. 

No corridor around the country, including the Northeast Corridor, can provide the 

type of mobility needed without significant up-front investment. In the Northeast 

Corridor, this means bringing the existing facilities to a state of good repair. In 

other corridors around the country, it means creating the infrastructure for 

high-frequency services in partnership with freight railroads and commuter 

authorities. 

A robust Federal program of capital matching grants will be essential if these 

corridors are to be developed. In addition, long-distance services that provide 

connections between corridors require recapitalization if they are to be run 

efficiently and are to provide the high-quality services their passengers deserve. 

None of this, however, implies giving more money directly to Amtrak, especially 

under the current model. 

Introducing competition into the intercity passenger rail system by authorizing 

multiple passenger rail service providers is one way to encourage efficiency and 

innovation. But competition is not likely to occur unless and until the rail system 

is restored to a state of good repair. The first steps that must be achieved are to 

ensure adequate Federal and state funds are available for infrastructure repair; 

make significant reductions to operating costs; and give states more power to 

select routes, schedules, frequencies, and amenities. 

For further information, the following reports and testimonies can be seen on 

the OIG web site at http://www.oig.dot.gov: 

• FY 2006 First, Second, and Third Quarterly Reports on Amtrak’s Financial 

Status 

• 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 

OTHER ACCOMPANYING INFORMATION 373
42 

8. Improving Acquisition and Contract Management 

To Reduce Costs and Eliminate Improper Payments 

Over the past several years, the Department has shown its ability to strengthen its 

oversight practices in the area of grant oversight and financial management when 

it focuses its attention on the issue. For example, the Department made significant 

progress strengthening its oversight of Federal-aid highway grants since we 

highlighted the issue as a management challenge in 2004. As we report in a 

separate section of this document, Federal Highway Administration (FHWA) 

division officials worked aggressively with states this year to review the need for 

inactive funds on transportation projects. As a result, $738 million of idle Federalaid funds were made available for use on active transportation projects. The 

Department, which requested about $8.7 billion for acquiring goods and services 

in its fiscal year (FY) 2007 budget, should now apply the same degree of 

dedication and initiative toward strengthening its procurement and acquisition 

processes. 

Providing increased attention to ensure 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. Congress enacted 

the Services Acquisition Reform Act of 2003, which established Chief Acquisition 

Officers at Federal agencies with the intention of strengthening oversight of the 

acquisition life-cycle. More recently, in October 2006, the Deputy Attorney 

General formed a nationwide procurement fraud task force to focus law 

enforcement resources, including our office and other Inspectors General on this 

issue. For our part, we have also focused significantly more audit and 

investigative resources on procurement and acquisition issues, including the 

establishment of a new senior executive position and the hiring of additional staff 

to carry out a robust audit program for contracting and procurement activities in 

the Department. 

In recent years, we identified incidents of fraud, waste, and abuse on Department 

of Transportation (DOT) contracts and research agreements. When these incidents 

were brought to management’s attention, DOT and its agencies took swift action 

to correct the problem or limit its impact. For example, upon notifying the Federal 

Aviation Administration (FAA) of wasteful contract management practices 

affecting a $500 million multiple-award program to acquire support services, the 

FAA Administrator immediately acted on our recommendations and issued a 

directive requiring actions to enhance competitive practices, strengthen reviews 

over payments, and add integrity training. 

374 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
43 

While DOT agencies are cooperating on eliminating problems as they arise and 

implementing actions to improve its stewardship and oversight processes, as 

illustrated by FAA’s actions, DOT must be more proactive to further enhance its 

vigilance and oversight in this area. 

We have identified several contracting issues that require the Department’s 

focused attention: 

• Institutionalizing the use of Defense Contract Audit Agency contract audit 

services, 

• Strengthening financial management oversight of institutions performing 

research under DOT cooperative agreements and grants, 

• Promoting more vigilance and enhanced oversight of FAA’s acquisition and 

contract management practices, 

• Ensuring that Department employees maintain high ethical standards, and 

• Enforcing suspensions and debarments more rigorously. 

Institutionalizing the Use of Defense Contract Audit Agency Contract 

Audit Services 

Contract audit services provided by Defense Contract Audit Agency (DCAA) are 

a valuable tool for assisting contracting officers in combating excessive prices and 

unallowable charges. Additionally, monetary benefits from DCAA audits not only 

cover audit costs but can also reduce program costs. For example, from FY 2001 

through FY 2005, DOT agencies saved $8 for every $1 spent on a DCAA contract 

audit. 

The Department is doing more to obtain these needed audits. For example, DOT’s 

Office of the Senior Procurement Executive has been working with DCAA, 

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 post-award audits of allowable costs incurred. Also, FAA’s acquisition 

baselines for major programs are now required to set aside funding for audits, 

including pre-award audits of prices for new contracts. At other DOT agencies, 

incurred-cost audits are now required, unless sufficient justification is documented 

for not obtaining them. 

However, these policy enhancements need to be implemented more effectively 

throughout the Department. Recent Office of Inspector General audits covering 

OTHER ACCOMPANYING INFORMATION 375
44 

all DOT agencies identified that many program offices are not setting aside 

funding for audits and some procurement officials are unaware of or lack details 

on implementing the audit policies. For example, a recent audit of the use of 

contract audit services at DOT agencies other than FAA—covering 

30 cost-reimbursable contracts valued at $618 million—disclosed that DOT 

contracting officers did not obtain any annual incurred-cost audits for 18 of the 

30 contracts (60 percent). 

Strengthening Financial Management Oversight of Institutions 

Performing Research Under DOT Cooperative Agreements and Grants 

The Department uses cooperative agreements and grants to partner with 

universities to acquire transportation-related research services. According to DOT 

senior acquisition officials, DOT agencies in FY 2005 awarded agreements valued 

at over $200 million to colleges, research centers, and other similar recipients. In 

contrast with contract and grants awards, cooperative agreements require more 

collaboration between Federal agencies and awardees. 

In recent audits and investigations, we found recipients and DOT agencies lacked 

sufficient guidance and procedures to administer and oversee the agreements. 

Examples include: 

• An audit of cooperative agreements awarded to a major university, which 

performs research on crash simulations, concluded that the university billed 

FHWA for “inflated or fictitious” charges. We found a serious lack of 

oversight and internal controls, and the university agreed to reimburse the 

Government more than $1.8 million for the full amount of overcharges plus 

penalties. The responsible professor has been imprisoned for embezzlement. 

• The Research and Innovative Technology Administration’s management and 

oversight of an assistance award to a major university was inadequate, and, as 

a result, about $3.5 million in ineligible costs were allowed as matching funds. 

The university claimed a building as its matching funds, but our investigation 

determined that no transportation education, research, or technology transfer 

occurred at the building. 

• A non-profit research entity billed a Federal Transit Administration 

cooperative agreement for over $400,000 in unallowable charges and failed to 

apply its share of matching funds to liquidate expenditures under the grant. 

This matter is currently under investigation by the Office of Inspector General. 

In response to recent audits and investigations, FHWA established a new division 

responsible for administering cooperative agreements. The new division is 

developing detailed guidance for administration and oversight of grants and 

cooperative agreements. FHWA needs to follow through to ensure that it provides 

376 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
45 

adequate oversight of cooperative agreements, and other Operating 

Administrations need to similarly strengthen their oversight of cooperative 

agreements. 

Promoting More Vigilance and Enhanced Oversight of FAA’s Acquisition 

and Contract Management Practices 

FAA faces challenges for each phase of the acquisition cycle, including planning, 

awarding, and administering contracts. Our audit of a multiple-award 

procurement program valued at over $500 million found particular problems with 

the program structure. Unlike other support services programs, such as those 

offered by the General Services Administration, FAA did not establish common 

labor categories and qualifications or leverage the Government’s buying power by 

pre-competing labor rates. Instead, FAA defined and negotiated labor rates 

separately for each contract and overpaid for services under the program. 

Likewise, competitive practices were not used for most individual contract awards. 

We identified weaknesses in FAA’s methods of pricing and awarding new 

contracts for support services. FAA contracting officers did not adequately 

conduct or document price analyses. Although over 76 percent of 114 support 

services awarded under the program lacked sufficient competition, price analyses 

were not adequately supported. We estimated that FAA would be paying 

$24 million to $44 million more if all option years under existing support services 

contracts were exercised. Also, problems in contract administration, the last phase 

of an acquisition, were identified in our review of 11 support services contracts. 

In one case, performance problems were not addressed, and the contractor was 

being reimbursed for work performed beyond the statement of work. FAA 

followed our recommendations throughout the audit; most significantly, FAA 

dissolved the program and is obtaining these services using competitive 

procurements. Further, FAA’s Administrator issued a directive to require that any 

new award over $1 million with fewer than three competitive bids not be awarded 

without the review and approval of the FAA Deputy Administrator. 

Our work on DOT’s emergency transportation contact administered by FAA also 

identified problems with price analyses. In the aftermath of Hurricane Katrina, the 

immediate transportation of people and vital supplies to and from hurricaneaffected areas was critical. FAA contracting officials immediately modified the 

contract to ensure the availability of emergency services. Due to rushed 

conditions, however, sufficient steps were not taken to ensure that the services 

were reasonably priced. For example, one contracting officer awarded a 

modification that doubled the maximum contract value for additional services for 

Hurricane Katrina without obtaining a price proposal or negotiating reductions to 

fixed indirect rates. Although an emergency existed, the contracting officer is still 

responsible for ensuring that pricing factors are reasonable. Due to the 

OTHER ACCOMPANYING INFORMATION 377
46 

emergency, the modification could have been awarded subject to a later review of 

pricing factors. FAA needs to continue strengthening its oversight of acquisitions 

to ensure that procurement and contracting officials implement the Agency’s 

Acquisition Management System regulations and guidance. 

Ensuring That Department Employees Maintain High Ethical Standards 

DOT, like other Federal agencies, is vulnerable to contract and grant fraud 

stemming from ethical lapses on the part of employees involved in awarding or 

administering procurements. Employees involved in the acquisition of support 

services are particularly susceptible. For example: 

• At one Operating Administration, a program manager (who is no longer with 

the Department) received a $120,000 kickback from a contractor who was 

awarded about $3.5 million in purchase orders for information technology 

services. 

• At another Operating Administration, a senior executive attended social 

functions paid for by a contractor (the executive’s previous employer) and 

exerted perceived pressure on subordinates to award over $1.1 million in 

contract task orders to this contractor for a strategic plan and marketing-related 

services. 

• At a third Operating Administration, a program manager steered a 

$465,000 subcontract for financial analysis-related services to a firm owned 

and controlled by a household member. 

• In a departmental office, a senior manager (who is no longer with the 

Department) awarded multiple sole-source contracts and cooperative 

agreements for support services, including advertising and logistics, to an 

individual with whom the director socialized. 

In many cases, officials failed to maintain an appropriate “arms-length” 

relationship with contractors and cooperative agreement recipients, resulting in 

significant administrative and, sometimes, criminal consequences for both 

employees and contractors. In some instances, employees simply did not 

recognize in advance that their actions could violate ethical standards or create, at 

a minimum, the appearance of ethical impropriety. 

DOT needs to continually promote and reinforce ethical standards—in particular, 

the critical importance of avoiding conflicts of interest in contracting—through 

rigorous ethics awareness and training programs. Moreover, while DOT has taken 

some steps to strengthen controls, such as those governing cooperative agreements 

for the Office of the Secretary, it needs to remain vigilant to strengthen internal 

378 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
47 

controls to prevent and detect inappropriate conduct involving procurements and 

take action when violations occur. 

Enforcing Suspensions and Debarments More Rigorously 

The Department has also strengthened its procedures to ban companies and 

individuals that defraud the Government. Most notably, DOT has taken firm 

action to enhance its suspension and debarment actions when fraud is identified. 

DOT promulgated a new, more rigorous Suspension and Debarment Order in June 

2005, which increased accountability and has resulted in an increase in the number 

of indicted or convicted parties referred to Operating Administrations for 

suspension and debarment actions. However, more work is needed to implement 

the policy, specifically in ensuring timelier processing and reporting of suspension 

and debarment actions. A centralized database is also needed, and agencies need 

to share best practices to identify effective procedures for implementing the 

policy. 

For further information, the following reports and testimonies can be seen on 

the OIG web site at http://www.oig.dot.gov: 

• Financial Policies and Procedures at the George Washington University 

National Crash Analysis Center 

• Audit of the Federal Aviation Administration’s RESULTS National Contracting 

Service 

OTHER ACCOMPANYING INFORMATION 379
48 

9. Protecting, Monitoring, and Streamlining 

Information Technology Resources 

The Department of Transportation’s (DOT) information technology (IT) 

investment portfolio, with more than 400 computer systems supporting key 

mission areas at a cost of about $2.5 billion annually, is one of the largest among 

civilian agencies. Over 80 percent of these investments are in air traffic control 

modernization. During fiscal year (FY) 2006, the Department made noticeable 

improvements in tracking, prioritizing, and correcting security weaknesses—a 

major concern identified last year. The departmental Investment Review Board 

also provided close oversight to a multibillion-dollar IT investment project 

managed by the Federal Aviation Administration (FAA). However, the 

Department did not make adequate progress in strengthening air traffic control 

systems security and needs to continue enhancing oversight of IT investments. 

FY 2007 will be a particularly challenging year for the Department. First, it has to 

implement a consolidated IT infrastructure to support all Operating 

Administrations (except FAA and the Surface Transportation Board) in the new 

Headquarters building. This consolidated IT infrastructure presents opportunities 

to eliminate fragmented IT operations; however, it will require a higher level of 

security protection—one that has not yet been tested. In addition, about 

230 systems—more than half of the Department’s total inventory—are due for 

security recertification and have to meet new security standards. The major 

challenges facing DOT in the IT security and investment areas include the 

following: 

• Enhancing air traffic control systems security through resource commitment 

and progress measurement, 

• Meeting new security standards while recertifying systems security, 

• Securing the consolidated IT infrastructure and eliminating Operating 

Administrations’ fragmented systems backup/recovery sites, and 

• Working with Operating Administrations to strengthen oversight of IT 

investment and to streamline duplicative IT systems. 

380 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
49 

Enhancing Air Traffic Control Systems Security Through Resource 

Commitment and Progress Measurement 

The President has designated air traffic control systems a critical national 

infrastructure due to the important role commercial aviation plays in fostering and 

sustaining the national economy and ensuring citizens’ safety and mobility. In 

FY 2004, based on audit findings, FAA made a strong commitment to enhancing 

the security protection of air traffic control systems. One of its promises was to 

complete security reviews of all operational air traffic control systems—at 

en route, approach control, and airport terminal facilities—between FY 2005 and 

FY 2007. This is critical to protecting air traffic control systems because security 

vulnerabilities could inadvertently be created when changes are made to the 

“baseline” systems to meet local operational needs. 

FAA made little progress in reviewing operational air traffic control systems 

security until after April 2005, when the Inspector General sent a letter to the FAA 

Administrator expressing concern over the slow pace of the corrective action. By 

the end of FY 2005, FAA had conducted initial reviews at all en route facilities, 

representing a clear step in the right direction. However, FAA did not follow 

through with this effort during FY 2006 because of, according to FAA officials, a 

funding shortage. 

In October of this year, the FAA Chief Information Officer (CIO) and the head of 

the Air Traffic Organization committed to developing a plan by the end of 

December 2006 detailing the approach FAA will take during FY 2007 to evaluate 

security differences between systems used to direct air traffic at terminal and 

tower facilities and the “baseline” systems previously tested in its computer 

laboratory. If this process is implemented effectively, it will significantly 

strengthen security protection of air traffic control systems. 

Another FAA promise was to develop a contingency plan to restore more than 

essential air services in case of prolonged service disruptions at en route centers. 

FAA’s existing business continuity plan has worked well in the past to ensure 

flight safety when dealing with temporary, less severe disruptions. 

In FY 2005, we reported that FAA had identified a contingency strategy to deal 

with prolonged service disruptions but was years away from its implementation. 

In October of this year, the FAA Deputy Administrator informed us that FAA had 

identified an interim solution based on the results of an engineering study. The 

Deputy Administrator also made a strong commitment to fund this interim 

solution with existing FAA resources. 

We recognize that FAA faces critical decisions in balancing its priorities and using 

its funds at a time of increasingly tight budgets. Yet, issues concerning the 

OTHER ACCOMPANYING INFORMATION 381
50 

security of a critical national infrastructure should receive attention and support 

from the Office of Management and Budget and Congress. 

We plan to initiate an audit of FAA’s progress in reviewing operational systems 

security and implementing the interim solution for contingency planning in Fiscal Year

accordance with the approved plans. 

Meeting New Security Standards While Recertifying Systems Security 

In FY 2004, the Department made significant strides in reviewing and testing 

information systems security and successfully increased the system certification 

and accreditation (C&A) rate from 33 percent to over 90 percent. The C&A 

process is a statutory requirement to ensure that information systems are 

adequately secured to support agency missions and must be conducted every 

3 years or upon major system change. The 2004 reviews are due for 

recertification in 2007, as will be the systems moving to the new Headquarters 

building (a major change). Consequently, DOT will be faced with the need to 

recertify some 230 systems during FY 2007 (see Figure 9-1). 

Figure 9-1: DOT Information Systems Estimated To Require 

Certification and Accreditation Reviews, 

Fiscal Years 2005-2009 

2009* 109 

2008* 87 

2007* 230 

2006 142 

2005 104 

0 50 100 150 200 250

 Numbers of Systems Review ed 

* DOT estimates as of September 28, 2006 

What further complicates the issue is that these recertifications have to meet new 

Government standards. The Federal Information Security Management Act of 

2002 (FISMA) required the National Institute of Standards and Technology to 

develop minimum Government security standards for Federal agencies. These 

new standards become effective in March 2007 and may require security upgrades 

in agency systems, such as greater encryption sophistication. In performing a 

preliminary assessment on a safety-critical system, we found that it meets only 

382 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
51 

about two-thirds of the minimum security standards in one critical area. To meet 

all of these challenges, the Operating Administrations will need to submit system 

recertification work schedules for approval, identify security upgrade needs and 

funding sources, and report progress against approved schedules throughout the 

year. 

Securing the Consolidated IT Infrastructure and Eliminating Operating 

Administrations’ Fragmented Systems Backup/Recovery Sites 

Traditionally, each Operating Administration has managed its own IT 

infrastructure (e. g., desktop computers, local area networks, and e-mail) in the 

departmental Headquarters. These duplicative IT operations were expensive to 

maintain and had inconsistent security protections—both physical and logical.8 

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 into one. 

While the consolidated IT infrastructure can help strengthen Departmentwide 

security protection and make IT operations more efficient, it needs to be 

thoroughly tested before being accredited for operation. However, the plan and 

schedule to implement and test this new infrastructure are still evolving, due to a 

variety of move-related problems. If not properly secured, this consolidated 

infrastructure could result in much greater harm to the integrity of departmental 

system operations than would be the case if only one Operating Administration 

were affected. The Department needs to allow sufficient time to thoroughly test 

this new IT infrastructure before installing Operating Administration missioncritical systems on the new infrastructure. 

As part of this IT consolidation effort, the Department needs to identify a 

consolidated backup/recovery site at a sufficient geographic distance from the new 

Headquarters and conduct contingency testing for all Operating Administration 

systems operating on the consolidated IT infrastructure after completing the 

Headquarters move. Further, the CIO needs to 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. Operating Administrations have been responsible for 

establishing their individual backup/recovery sites because they had separate IT 

infrastructures. In FY 2003, we reported inadequate contingency planning and 

testing at Operating Administration recovery sites. In addition, we reported that, 

Logical security consists of software safeguards for an organization’s systems, including user identification and 

password access, authentication, access rights, and authority levels. These measures are to ensure that only 

authorized users are able to perform actions or access information on a network or a workstation. 

OTHER ACCOMPANYING INFORMATION

8 

383
52 

to reduce the probability of losing both primary and backup sites to the same 

disaster, the Department needed to develop guidance on the minimum geographic 

distance between a system’s primary and recovery processing sites. We found 

cases in which Operating Administrations’ recovery sites were within 10, 15, or 

25 miles of primary sites. In case of an emergency, those Operating 

Administrations would likely lose both the primary and backup computers for 

their mission-critical systems, such as safety inspection and grants management 

systems, since natural disasters often cover areas larger than 25 miles. 

Working With Operating Administrations To Strengthen Oversight of IT 

Investment and To Streamline Duplicative IT Systems 

Last year, we expressed concern over the departmental Investment Review 

Board’s ability to provide value-added services when reviewing FAA’s major IT 

investment projects. As a result, we recommended that the Department clarify the 

Board’s authority and increase the Board’s capability to research potential project 

cost, schedule, and performance shortfalls on complicated IT investments. 

Subsequently, the Department confirmed that the Board, through advising the 

Secretary, can influence budget decisions on all IT investments. During FY 2006, 

the Board used this authority to enhance project management of a multibilliondollar investment project called FAA Telecommunications Infrastructure. 

In terms of identifying problems associated with major IT investments, the 

Department plans to delegate this responsibility to individual Operating 

Administration review boards to oversee their specific IT investments. While we 

support the idea of holding Operating Administrations more accountable for their 

own projects, this will not be possible until the departmental Board establishes 

clear performance measures for IT investments, such as Earned Value 

Management (EVM) measures. However, we found that 70 percent of DOT’s 

major IT investment projects met fewer than half of the Office of Management 

and Budget’s criteria for EVM implementation. Currently, 13 departmental IT 

investment projects are included in the Office of Management and Budget’s highrisk list, 12 of which are related to air traffic control modernization—the 

management of which remains on the Government Accountability Office’s highrisk list, where it has been for more than 10 years. The departmental Board needs 

to work with Operating Administration review boards to continue exercising 

knowledgeable oversight of these major IT investments. 

Another area requiring senior management attention is continuing to streamline 

duplicative common systems for cost savings. In FY 2003, the Department 

identified opportunities to consolidate duplicative systems used in 11 common 

business areas across Operating Administrations, such as office IT infrastructure, 

financial management, grants management, and training. During FY 2006, the 

Department completed its consolidation of recruitment systems and will complete 

384 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
53 

consolidation of IT infrastructures at the new Headquarters in FY 2007. Progress 

has also been made in eliminating duplicative financial systems and teaming with 

the Department of Housing and Urban Development to streamline grants 

management systems. The Department needs to continue to actively pursue 

streamlining these duplicative systems to realize the cost savings that 

consolidation can offer. 

For further information, the following reports and testimonies can be seen on 

the OIG web site at http://www.oig.dot.gov: 

• DOT Information Security Program (October 2004, 2005, and 2006) 

• Security and Controls Over the Remote Maintenance and Management System, 

FAA 

• Security and Controls Over Technical Center Computer Systems, FAA 

• Security and Controls Over En Route Center Computer Systems, FAA 

• Office of the Chief Information Officer’s Budget, DOT 

OTHER ACCOMPANYING INFORMATION 385
54 

10. Strengthening DOT’s Coordination of Research, 

Development, and Technology Activities and Funding 

The Department of Transportation’s (DOT) management strategy for research, 

development, and technology (RD&T) activities is a relatively new initiative, and 

this is the first year that the Office of Inspector General has reported it as an 

emerging issue. DOT has taken significant steps in improving coordination of its 

RD&T activities, but there are a few areas that bear watching to ensure long-term 

benefits to the Department. 

For 2007, DOT has requested over $1 billion for RD&T. (See Table 10-1 for a 

listing of RD&T funding by Operating 

Administration.)9 These funds are used to Table 10-1: RD&T Budget 

support a wide assortment of RD&T projects Request by Operating 

and activities, including the Federal Aviation Administration 

Administration’s continued work on aviation FY 2007 Actual ($000) 

safety ($88 million), the Federal Highway 

Administration’s Innovative Bridge Research 

and Development program ($11.2 million), the 

Pipeline and Hazardous Materials Safety 

Administration’s pipeline safety research 

($9.7 million), and the Federal Railroad 

Administration’s Train Occupant Protection 

Program ($4.95 million). While many of these 

RD&T programs are highly specialized, others 

cut across various modes of transportation— 

such as human factors research.10 

In 2005, DOT took two significant steps designed to improve the coordination of 

the various research efforts and to maximize the Department’s RD&T 

investments. The first involved the establishment of the Research and Innovative 

Technology Administration (RITA) in accordance with the Norman Y. Mineta 

Research and Special Programs Improvement Act of 2004. RITA was established 

in part to coordinate, facilitate, and review the Operating Administrations’ RD&T 

programs and activities and to help identify and eliminate cross-modal project 

FHWA $586,079 

FAA $263,148 

NHTSA $84,502 

FTA $61,685 

FRA $38,646 

PHMSA $12,236 

FMCSA $12,458 

RITA $4,362 

Other $8,910 

Total $1,072,026 

9 The dollar amounts listed in Table 10-1 are based on the amount of funds received by each Operating 

Administration. In some cases, however, funds are used to support programs administered by another DOT or state 

organization. For example, FHWA officials note that a large portion of their RD&T budget is used to fund programs 

administered by RITA, including $110 million for Intelligent Transportation Centers and $69.7 million for 

University Transportation Centers. Another $165.7 million is dedicated Federal-Aid Highway funds apportioned to 

the states for research. 10 Human factors research is an area in which cross-modal coordination has occurred for many years through the 

Human Factors Coordinating Committee. 

386 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
55 

redundancies.11 A second step involved the creation of the RD&T Planning 

Council. Comprising senior DOT officials and chaired by the RITA 

Administrator, the Planning Council (and subordinate Planning Team) was tasked 

with ensuring “...cross-modal collaboration and coordination in the RD&T 

initiatives within DOT and with external entities.”12 

RITA’s and the RD&T Planning Council’s ability to effectively coordinate the 

Department’s RD&T program is affected by a number of factors. First, in an 

August 2006 report, the Government Accountability Office (GAO) noted that 

RITA lacked a strategic approach sufficient to ensure the Department is 

effectively managing its RD&T investment.13 Second, the Transportation 

Research Board (TRB) in an August 2006 letter to the Acting Secretary of 

Transportation cited the growth in congressional RD&T earmarks and the 

resulting impact on DOT’s ability to manage its RD&T programs in support of 

strategic objectives. Third, RITA and the RD&T Planning Council have limited 

oversight authority and must rely on a consensus-based decision making process 

to prevent unnecessary duplication of RD&T efforts and resolve cross-modal 

differences. Finally, while the RD&T Planning Council has received significant 

support from DOT’s senior leadership over the last year, it will be critical that 

such support be maintained over the long term. As a result of these factors, we see 

the Department’s efforts to ensure the effective coordination of RD&T activities 

as an emerging issue. 

Ensuring Effective Coordination of DOT’s RD&T Activities 

Whereas RITA’s and the RD&T Planning Council’s overall challenge will be to 

effectively coordinate the Department’s RD&T program, their success is largely 

dependent on how well a number of key factors are addressed. First, GAO 

recently reported that RITA’s ability to fulfill its mission is hampered by the lack 

of a clear implementing strategy, established performance goals, and an evaluation 

plan that indicates how the Agency’s coordination role will further DOT’s mission 

or ensure the effectiveness of the Department’s RD&T investment. In particular, 

GAO recommends that RITA develop a strategy to identify and review all RD&T 

projects for duplication and to identify areas for joint efforts. Other issues 

affecting RITA include the lack of a DOT-wide database for monitoring RD&T 

programs and activities and vacancies in several key management positions (e.g., 

RITA Administrator and the Associate Administrator for the Office of Research, 

Development and Technology). 

11 RITA also helps fulfill one of the initiatives in the President’s Management Agenda. That initiative calls for the 

implementation of investment criteria for research and development. 12 DOT Order 1120.39A, “Research, Development and Technology Planning Council, Team, and Process,” 

May 2, 2005. 13 U.S. Government Accountability Office, “Transportation Research: Opportunities for Improving the Oversight of 

DOT’s Research Programs and User Satisfaction with Transportation Statistics,” GAO-06-917, August 2006. 

OTHER ACCOMPANYING INFORMATION 387
56 

A second factor deals with the growth in congressional RD&T earmarks and their 

impact on RITA’s and the Planning Council’s ability to ensure the effective use 

and allocation of DOT’s RD&T resources. Between 1995 and 2003, 

congressional earmarks of DOT’s research budget increased from 1 percent to 

14 percent according to a 2005 study done by the University of California, 

Berkeley. This study also noted that earmarks were especially high for surface 

transportation programs. For example, between fiscal year (FY) 1997 and 

FY 2003, congressional earmarks of the Federal Highway Administration’s 

research budget increased from 12 percent to 29 percent. Likewise, earmarks were 

over 40 percent of FY 2006 funding for the Federal Highway Administration 

Surface Transportation Research, Development, and Deployment Program 

(STRDD).14 Moreover, in its August 2006 letter, TRB cited the dramatic growth 

in earmarking and the resulting constraints on the Department’s ability to allocate 

resources in a coherent and strategic manner. As a result, TRB called on DOT 

“...to put forward a thoughtful and persuasive plan for RD&T investment.” 

TRB’s hope is that such a plan will help foster executive branch and congressional 

agreement on Federal RD&T funding for the Nation’s most pressing transportation 

needs. 

A third factor affecting RITA and the RD&T Planning Council involves their 

ability to effectively resolve cross-modal differences. To date, the Council has 

been instrumental in helping define RITA’s RD&T coordination role, drafting the 

Department’s 5-year RD&T Strategic Plan,15 and providing a Departmentwide 

forum for reviewing, coordinating, and strengthening RD&T budget submissions. 

Whether RITA and the Council will have similar success in achieving consensus 

on cross-modal differences—such as eliminating areas of unnecessary 

duplication—remains to be seen. For instance, DOT Order 1120.39A, “Research, 

Development and Technology Planning Council, Team, and Process” simply 

indicates that the “Planning Team shall adopt participative consensus-based 

decision making procedures. In the absence of consensus, options for resolution 

shall be referred to the RD&T Planning Council.” Since the Planning Council and 

RITA do not have direct authority to adjudicate cross-modal RD&T 

disagreements, both may face challenges in trying to prevent unnecessary 

duplication without the assistance of DOT’s senior leadership. 

Thus, the Department faces a number of challenges in the RD&T arena. RITA 

needs to establish a clear implementing strategy for improving DOT-wide RD&T 

coordination, DOT needs to develop an RD&T investment plan for gaining 

executive branch and congressional agreement on funding DOT’s research 

priorities, and the Planning Council needs to have the long-term support of senior 

14 Making up roughly half of FHWA’s authorized RD&T funding, STRDD includes a range of projects dealing with 

pavement, structures, environment, technology, highway safety, planning, and policy. 15 This plan will serve as a guide for the Department’s RD&T investments over the next 5 years. 

388 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
57 

DOT leaders to prevent unnecessary duplication and resolve cross-modal 

disagreements. These factors will all play a critical role in improving coordination 

among the Operating Administrations and ensuring the best use of the 

Department’s substantial RD&T investment. 

For further information, the following reports and testimonies can be seen on 

the OIG web site at http://www.oig.dot.gov: 

• Volpe’s Project Management Oversight 

• The Role and Functions of the Volpe National Transportation Systems Center 

• Improving Aviation Safety, Efficiency, and Security: FAA’s FY 2001 Budget 

Request for Research, Engineering, and Development 

• DOT’s Management and Oversight of University-Based Research 

OTHER ACCOMPANYING INFORMATION 389
58 

EXHIBIT. COMPARISON OF FY 2007 AND FY 2006 TOP 

MANAGEMENT CHALLENGES 

Items in FY 2007 Report Items in FY 2006 Report 

• Defining, Developing, and Implementing 

Strategies To Improve Congested Conditions — on the Nation’s Highways, Ports, Airways, 

and Borders 

• FAA Reauthorization—Reaching Consensus • Reauthorizing Aviation Programs— 

on a Financing Mechanism To Fund FAA 

and Establishing Funding Requirements 

Establishing Requirements and Controlling 

Costs Are Prerequisites for Examining FAA 

Financing Options 

• Responding to National Disasters and 

Emergencies—Assisting Citizens and 

Facilitating Transportation Infrastructure 

Reconstruction 

• Working With Other Agencies To Respond 

to Disasters and Address Transportation 

Security 

• Strengthening Efforts To Save Lives by • Building on Recent Initiatives To Further 

Improving Surface Safety Programs Strengthen Surface Safety Programs 

• Aviation Safety—Performing Oversight That 

Effectively Utilizes Inspection Resources and 

Maintaining Aviation System Safety 

• Aviation Safety—Developing Effective 

Oversight Programs for Air Carrier 

Operations, Repair Station Maintenance, and 

Operational Errors 

• Making the Most of the Federal Resources 

That Sustain Surface Transportation 

Infrastructure Improvements by Continuing 

To Emphasize Project Oversight 

• Getting the Most for Every Taxpayer Dollar 

Invested in Highway and Transit Projects 

• Achieving Reform of Intercity Passenger • Reforming Intercity Passenger Rail To 

Rail Improve Performance 

• Improving Acquisition and Contract 

Management To Reduce Costs and Eliminate — 

Improper Payments 

• Protecting, Monitoring, and Streamlining • Improving Information Technology 

Information Technology Resources Investment and Computer Security 

• Strengthening DOT’s Coordination of 

Research, Development, and Technology 

Activities and Funding 

— 

• Ensuring That Reforms Are Implemented in 

— the Maritime Administration’s Title XI Loan 

Guarantee Program 

• Mitigating Flight Delays and Relieving 

— Congestion—Actions Needed To Meet 

Demand 

Exhibit. Comparison of FY 2007 and FY 2006 Top Management Challenges 

390 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
59 

APPENDIX. OST COMMENTS 

Memorandum U.S. Department of 

Transportation 

Office of the Secretary 

of Transportation 

ACTION: Departmental Comments on the OIG Draft 

Report – Top Management Challenges, Department of Subject: Date: October 31, 2006 Transportation 

Phyllis F. Scheinberg 

Assistant Secretary for Budget and Reply to From: 

Attn. of: Programs/Chief Financial Officer 

To: Calvin L. Scovel III 

Inspector General 

We appreciate the opportunity to review and comment on the Office of Inspector 

General’s (OIG) Top Management Challenges Report for the Department of 

Transportation (DOT). We value the perspective offered by the OIG and your efforts to 

help the Department’s management ensure DOT’s programs are on track and its 

operations are effective, efficient and financially sound. We are pleased that the issues 

identified in this report largely coincide with Secretary Peter’s goals of continued 

improvement in transportation safety with particular effort directed at groups 

experiencing disproportionate crashes and fatalities, improving transportation system 

performance and reducing congestion. The Secretary has made clear that we need to seek 

21st century solutions to the 21st century issues we face. We are also pleased to note that 

DOT is taking meaningful actions relating to each of the management challenges 

identified in this report. 

We provide the following discussion, which offers some highlights of those actions, to be 

included in the final OIG Top Management Challenges report. Separately we provided 

OIG with detailed comments related to specific and technical issues in the draft report. 

Seeking New Solutions to Relieve Congested Transportation Systems 

Recognizing the burden that congestion places on our economy, environment, and public 

welfare, DOT launched a National Strategy to Reduce Congestion on America’s 

Transportation Network during the past year. Congestion in the Nation’s ports, rail 

systems and highways pose an increasingly significant threat to our economic vitality. 

Appendix. OST Comments 

OTHER ACCOMPANYING INFORMATION 391
60 

The Nation’s transportation systems must adjust to changing trade flows to enable the 

efficient flow of goods throughout the economy. Congestion is also affecting the quality 

of Americans lives by robbing them of time that could be spent with families and friends. 

Under the Congestion Initiative, the Department is conducting intermodal efforts to 

relieve urban congestion, unleash private sector investment resources, promote 

operational and technological improvements, establish a “Corridors of the Future” 

competition, target major freight bottlenecks and expand freight policy outreach, and 

accelerate major aviation capacity projects. The Department recognizes the challenges 

ahead and has issued its strategic plan for Fiscal Year (FY) 2007 and beyond that weaves 

together a cooperative intermodal approach to improve transportation system efficiency 

and enable the efficient flow of both passengers and freight. 

Working to Identify Equitable Funding Mechanisms for FAA Reauthorization 

The Department is working aggressively to explore possible alternative funding 

mechanisms for the Federal Aviation Administration (FAA) in an effort to help to keep 

this Nation’s aviation system second to none. FAA is conducting extensive outreach to 

its stakeholders in order to understand the implications of alternative funding options. 

FAA is refining its Cost Accounting System to clearly identify the cost of providing its 

wide range of services to the various users of the National Airspace System (NAS). We 

seek a funding mechanism that provides a more rational, equitable and stable system 

along with appropriate incentives for system users and FAA to operate efficiently. The 

increasing demands being placed on the NAS and evolving technologies with potential 

application to air traffic control have brought about the need to focus on new approaches 

to NAS management in the future. Through the Joint Planning and Development Office, 

the Department, together with stakeholders, is working to bring future demands and 

capabilities into focus in a Next Generation Air Transportation System. 

Expeditious, Effective Transportation Services for Natural Disasters and 

Emergencies 

The Department’s role in responding to natural disasters and other emergencies is to 

maintain readiness and provide the capability to quickly move the people and goods 

necessary for emergency response and recovery, and over time to assist with 

reconstruction. In addition, this year the President expanded the Department’s role 

during times of emergency to include movement of the general population away from 

danger. In response to an emergency, speed and efficiency of movement are the first and 

most critical concerns. Nonetheless we recognize that effective stewardship also requires 

that the Department provide transportation services in a manner that is economic and 

derives the maximum benefit from each dollar expended. The Gulf Coast hurricanes of 

2005 provided the largest test of the Department’s capabilities to date. The results of 

these efforts were extensively reviewed and changes were implemented to improve future 

performance. Additional work is continuing to ensure that prices charged during the 

emergency conditions, were reasonable. 

Appendix. OST Comments 

392 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
61 

Departmental Programs Continue to Focus on Improving Surface Transportation 

Safety 

Transportation safety is the primary focus of the Secretary and the Department. Thanks 

to the efforts of organizations including the National Highway Traffic Safety 

Administration (NHTSA), the Federal Motor Carrier Safety Administration (FMCSA), 

and the Federal Railroad Administration (FRA) and others throughout the Department 

continued progress has been achieved in reducing traffic fatalities related to alcohol 

consumption and large truck crashes. Safety belt usage in private vehicles has risen to 

record levels, and NHTSA continues to evaluate the efficacy of new active safety devices 

such as vehicle stability control systems which offer significant potential for saving 

additional lives. The Department continues to set aggressive targets for reducing 

fatalities associated with surface transportation. Our detailed data analyses provide 

information on both success and failure in meeting those goals, but also pinpoints new 

trends, opportunities, and challenges. For example, analysis of motorcycle-related 

fatalities pinpointed the need to address the trend of increased motorcycle use by older 

populations. DOT is using such data and analyses to identify initiatives that will better 

focus scarce Federal resources on emerging trends and identify opportunities for 

significant safety improvement. Finally, the Department recognizes the need to establish 

tunnel management systems addressing the various features of highway and rail 

transportation tunnels. The Federal Highway Administration (FHWA) and the Federal 

Transit Administration (FTA) jointly developed the "Highway and Rail Transit Tunnel 

Inspection Manual," to provide highway and rail transit tunnel owners guidance in 

developing a comprehensive inspection and maintenance program. 

FAA Efforts Continue to Improve Aviation Safety Oversight 

FAA continued to oversee one of the safest aviation systems in the world during the past 

year. While FAA continues to make progress on its system safety indicators, some 

accidents did occur. As part of its efforts to ensure that the Nation maintains the 

exceptionally high level of safety we have grown to expect in the face of new and 

expanding system challenges, FAA continues to implement and refine its data-driven, 

analytically based system to focus inspector resources on those areas of greatest risk. In 

the operational environment, the latest available data show an improvement in FY 2006 

compared to FY 2005. For example, the data show a 20 percent decrease in accidents for 

the first 9 months of the FY for commercial air carriers and similar improvement for 

general aviation. While these findings are encouraging, they represent a snapshot in time 

and continued diligence will be required to achieve further improvement. 

Efforts in Place to Maintain and Enhance Federal Funds Stewardship 

The Department continues to expect and demand nothing less than full accountability 

over the use of Federal funds and works hard to ensure that its expenditures are effective 

and efficient. The Department recognizes that it must function effectively in a world 

where there is increasing competition for scarce Federal resources. As recognized in the 

management challenges report, the FHWA continued to strengthen its oversight of 

Appendix. OST Comments 

OTHER ACCOMPANYING INFORMATION 393
62 

inactive obligations. As a result, it was able to utilize nearly three-quarters of a billion 

dollars in funds for current transportation priorities. FTA also continues its strong 

oversight of Federal funds for the construction of major new transit projects under its 

New Starts Program and the replacement of transit infrastructure destroyed in the attacks 

of September 2001. 

DOT is a Proponent of Amtrak Reform and Effective Oversight 

DOT, by working with the Congress and through its membership on the Amtrak Board of 

Directors, has been a vocal proponent of effective Amtrak reform to increase 

management accountability and encourage response to market forces. During the past 

year, FRA enhanced the grant agreements it completes each year with Amtrak, to 

improve oversight and provide meaningful requirements intended to improve 

management of the railroad. We also note that Amtrak has implemented important 

reforms in key areas, such as procurement, that offer the potential for continuing 

improvement in the future. Overall, Amtrak must focus on those services and markets 

with the greatest return on investment to achieve long-term success. The type and extent 

of future Federal support should be commensurate with a 21st century national passenger 

rail system. We are continuing to work with Amtrak and the Congress to bring about 

effective intercity passenger rail reform. 

DOT Maintains Effective Acquisition and Contracting Policies 

The Department appreciates the OIG report’s recognition of FHWA’s improved oversight 

of inactive highway funds and agrees that heightened oversight would benefit the overall 

effectiveness of acquisition and procurement programs. DOT management has taken 

initiative to implement improved systems. For example, the Office of the Senior 

Procurement Executive has implemented new purchase card systems and processes to 

enable the Department to continue to enjoy the purchase card program’s benefits while 

improving internal controls. Also, the Office of Senior Procurement Executive is 

working to strengthen controls over cooperative agreements, to improve planning for 

contract audits, and to improve internal DOT suspension and debarment processes. 

Further improvement must be set against a continuing outlook for constrained resources 

available to implement additional or expanded controls. As a result, we must rely on 

creative solutions, and the continued effective efforts by the both the audit and 

investigative teams within the OIG. 

Actions Continue to Address Information Technology Security, Investment and 

Enterprise Architecture 

DOT continues to strengthen its information technology (IT) infrastructure by addressing 

computer security issues, improving IT acquisition oversight, and updating its enterprise 

architecture. DOT has certified and accredited over 99 percent of its IT systems and 

improved its Plan of Action and Milestone Process. Taken together, these steps assure 

management that agency systems meet a minimum level of baseline requirements, and 

where there are risks, a plan of action and milestones process is in place to mitigate those 

Appendix. OST Comments 

394 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT 
63 

risks. In support of improving management controls, DOT exercised increased oversight 

of at-risk major IT programs. Building on plans developed over the past year, and with 

the support of the Office of Management and Budget, the Department continues to reduce 

the risks associated with FAA Air Traffic Control Modernization. Finally, the coming 

year brings a particularly challenging IT environment in which the Department must 

continue to fulfill the high standards established for Federal IT systems while 

consolidating its IT environment and moving to a new headquarters building. 

New Departmental Focal Point for Coordinating Research, Development and 

Technology 

The Research and Innovative Technology Administration (RITA) offers the Department a 

single, focused entity to coordinate, facilitate and evaluate its research, development and 

technology (RD&T) activities. RITA’s efforts include advancing innovative technologies 

and providing comprehensive transportation statistics research, analysis, and reporting. 

RITA is striving to excel in its RD&T coordination role while facing the administrative 

challenges of standing up a new organization amid pervasive resource challenges. In the 

face of these issues it is gratifying to see that a recent Government Accountability Office 

(GAO) report noted the significant progress RITA has achieved since GAO last reviewed 

the Department’s RD&T coordination activities. While much has been achieved, we 

recognize that RITA has just embarked on a journey that will require much work and 

sufficient resources to meet the Mineta Act mandates. 

In conclusion, we appreciate and benefit from perspective offered by the OIG and seek to 

make the best use of information from its reports in improving the Department’s 

programs. The issues identified in this report align well with the Department’s efforts to 

enable the Nation to benefit from a safe, efficient, and effective transportation system. 

Finally, we look forward to a constructive exchange of ideas and information with you in 

each of these areas. 

Appendix. OST Comments 

OTHER ACCOMPANYING INFORMATION 395
DOT FY 2006 OMB Program Assessment Rating Tool (PART) PROGRAM 

Summaries from the FY 2006 PART evaluation cycle are shown below: 

Program Name FAA – Facilities and Equipment 

Strategic Goal(s) Organizational Excellence 

Effected 

Score 55% – Adequate 

Major Findings/ 

Recommendations 

o Continue efforts to develop better internal financial management standards and controls 

to validate the basis for estimating capital program costs and benefits. 

o Improve contract management discipline by increasing the use of performance-based 

contracts and employing an incremental lifecycle approach. 

o Revise the Acquisition Management System to ensure it aligns with the government 

standards for justifying capital investments in FY 2005. 

Actions 

Planned/Taken 

The capital investment team (CIT) is an established group and will continue to function in 

the review and oversight of major capital project acquisitions to ensure better financial 

management standards. The CIT’s reviews have led to the restructuring or termination of 

several programs. By FY 2007, FAA will adopt standard cost estimation guidelines to 

improve accuracy of cost estimates. 

Improved procurement oversight has enabled us to meet our acquisition goals for cost and 

schedule for FY 2004 -05. We are on track to meet our goals for FY 2006. 

FAA has adopted the capital asset plan and business case process recommended by OMB as 

its own internal process for major IT acquisitions. The Joint Resource Committee (JRC) for 

major acquisition approved the OMB business case, now the Acquisition Program Baseline 

(APB). 

Program Name FAA – Aviation Safety 

Strategic Goal(s) Safety: Commercial Air Carrier Fatal Accident Rate, General Aviation Fatal Accidents 

Effected 

Score 84% – Moderately Effective 

Major Findings/ 

Recommendations 

o Develop efficiency metric to measure cost to develop a rulemaking in FY 2005. 

o Conduct look-back study in FY 2005 to determine if rule maximized net benefits. 

Actions 

Planned/Taken 

FAA has developed a metric to provide cost per rule. A broader scope efficiency measure 

would be more representative of the FAA's efforts. The search for such ongoing. After 

attempting to baseline and determine a suitable target, FAA has contracted with 

PriceWaterhouseCoopers to analyze labor and cost data to help develop more broad-based 

efficiency metrics that will allow us to analyze and make decisions based on the data. The 

timeframe for this to occur is in the September – October 2006. 

Over the past two years, FAA completed three reviews and has one currently underway. 

The completed reviews are: (1) Revised Standards for Cargo or Baggage Compartments in 

Transport Category Airplanes (Class D to Class C Compartments) (FY2004); (2) Fatigue 

Evaluation of Structure (FY2004); and (3) Revisions of Digital Flight Data Recorder 

(DFDR) Rules (FY2006). FAA is performing a review of the Terrain Awareness Warning 

System rule. 

396 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Major Findings/ 

Recommendations 

Program Name 

Strategic Goal(s) 

Effected 

Score 

Actions 

Planned/Taken 

o Require the recipients of earmarked funds to demonstrate how projects and intended 

results support FHWA and DOT goals. 

o Include in FHWA ́s RD&T annual performance reports a numeric chart showing 

progress made towards achieving performance goals at the R&D project level. 

o Discuss how FHWA is implementing the President's R&D investment criteria 

(relevance, quality, and performance) in the FY 2006 DOT budget and performance 

documents. 

FHWA – Research and Development Program, Intelligent Transportation Systems 

Mobility 

83% – Moderately Effective 

All recommendations were completed. Program office is developing new recommendations 

for Office of Management and Budget (OMB) review. 

Major Findings/ 

Recommendations 

Program Name MARAD Maritime Security Program 

Strategic Goal(s) 

Effected 

Security 

Score 91% – Effective 

All recommendations are completed. 

o MARAD has developed and will include in the Budget a new measure to track MSP ́s 

contribution to the total commercial sealift capacity requirement. This will also help 

DOT evaluate whether the current mix of vessels in the MSP fleet are appropriate. 

o The Budget will also propose to give the MSP more flexibility in entering into contract 

with the commercial carriers so that the program can better meet the changing 

requirements of the Department of Defense. 

Research and Special Programs Administration (now PHMSA) Pipeline Safety 

Major Findings/ 

Recommendations 

Actions 

Planned/Taken 

Program Name 

Strategic Goal(s) 

Effected 

Safety 

Score 81% – Moderately Effective 

o Enhance program resources for States to address the performance of gas transmission 

pipelines. The Administration also will allocate resources to provide improved 

technical oversight and evaluation of program partners. 

o Include language in pipeline safety grant agreements and other transactions to ensure 

State program partners commit to and report on the program’s long-term and annual 

goals. 

o Finalize a program-wide strategic plan, including research and development activities. 

o Develop and collect baseline data for two efficiency measures related to enforcement 

actions and costs of implementing the Integrity Management Program in HCAs. 

Actions 

Planned/Taken 

PHMSA will request authorization authority and resources to provide better technical 

oversight and recurring systematic evaluation of program partners. 

Program has developed the language to incorporate the recommendations in pipeline safety 

agreements. 

PHMSA is developing a methodology and analyzing the data to develop reasonable 

baselines for at least two efficiency measures. When will these efforts be complete? 

OTHER ACCOMPANYING INFORMATION 397
Major Findings/ 

Recommendations 

Program Name FRA Research and Development 

Strategic Goal(s) 

Effected 

Safety and Organizational Excellence 

Score 77% – Moderately Effective 

o Develop a strategic framework for managing the program and its component research 

projects. This would involve developing multi-year R&D program plans that contain 

detailed schedule and budget information; clear explanations of how research projects 

support FRA performance goals; standard procedures for soliciting stakeholder input on 

setting research agendas; and standard procedures for obtaining merit reviews of work 

performed and funded by FRA. 

o Request $150,000 in the FY 2006 budget for staff and resources to coordinate this 

effort. 

o Include in FRA ́s annual performance reports a numeric chart showing progress made 

towards achieving performance goals at the R&D project level. 

o Develop process for tracking  ́on-budget ́ and  ́on-schedule ́ efficiency measures. 

Actions 

Planned/Taken 

Program Name 

Strategic Goal(s) 

FRA has developed and is continuing to refine efficiency measures for this program. 

Additionally, FRA requested and received funding for a new employee to develop multiyear R&D program plans that contain detailed schedule and budget information and clear 

explanations of how research projects support strategic goals. 

FTA – Formula Programs – Section 5307 and 5309 

Mobility and Organizational Excellence 

Major Findings/ 

Recommendations 

Effected 

Score 92% – Effective 

Administration will work with FTA to evaluate ways to improve national ridership rates and 

to ensure that FTA continues to administer the grants efficiently. 

Actions 

Planned/Taken 

Program Name FMCSA –Safety and Operations 

Highway Safety 

73% – Moderately Effective 

FTA has worked with the 150 largest transit agencies to adopt best practices that will lead to 

increased ridership. FTA has also initiated a three-pronged effort to ensure that the average 

number of days to award and process a grant, as well as grantee performance, is monitored 

and controlled. For FY 2006, FTA committed to: ensuring that the average number of days 

to process a grant is 36 days or fewer, after receipt of a completed application by the 

appropriate regional offices; closing-out 95% of fully disbursed grants by September 30, 

2006; and reducing the backlog of inactive, open grants by 90%. 

Major Findings/ 

Recommendations 

Strategic Goal(s) 

Effected 

Score 

Actions 

Planned/Taken 

o Develop and implement a comprehensive and recurring Regulatory Evaluation 

program. This program will provide a comprehensive review of Agency 

regulations to evaluate their timeliness and effectiveness in improving Agency 

performance. 

o Develop and implement a comprehensive Quality Assurance Program to ensure 

Agency programs and practices are consistent, standardized and applied in a 

timely manner. 

All recommendations have been completed. 

398 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Program Name NHTSA – Operations and Research 

Strategic Goal(s) Highway Safety 

Effected 

Score 75% – Moderately Effective 

Major Findings/ 

Recommendations 

o Increase funding for fatality data analysis to ensure that DOT has timely and accurate 

fatalities statistics. 

o Conduct a review of completed safety evaluations to determine the effectiveness of 

programs in contributing to safety goals. 

o Implement its Motorcycle Safety Program Plan to identify methods and strategies for 

improving motorcycle safety. 

Actions 

Planned/Taken 

Following the passage of SAFETEA-LU, FastFARS (Early Fatality Notification System) 

was initiated, with a goal of providing more timely fatality counts so States can use the 

information to improve their highway safety programs within weeks, rather than over a year 

later. 

A review was conducted of the effectiveness of enacted rulemakings and NHTSA vehicle 

and behavioral safety programs, which enables the Agency to prioritize future rule making 

actions. For example, Electronic Stability Control (ESC), initially installed in SUVs and a 

few expensive passenger vehicles, was evaluated and found to be highly effective. NHTSA 

is initiating a rulemaking for ESC to be a required feature in all private vehicles. 

The 2006 Motorcycle Safety Plan, which incorporates SAFETEA-LU mandates and new 

initiatives, has been completed and can be viewed at: 

http://www.nhtsa.dot.gov/people/injury/pedbimot/motorcycle/MotorcycleSafety.pdf. 

OTHER ACCOMPANYING INFORMATION 399
IPIA REPORTING DETAILS 

1. Improper Payment Program Risk Assessment Description 

In prior years, the Department identified the following ten programs as being susceptible 

to significant improper payments. At that time, the ten programs in the table below were 

identified as having the highest potential for improper payments. 

Operating Administration Program 

• Federal-aid Highway Program – 

Federal Highway Administration State Project* 

• Federal Lands Highway Program – 

Contracts* 

• Operations 

Federal Aviation Administration • Facilities and Equipment 

• Airport Improvement Program* 

Federal Transit Administration • Capital Investment Grants* 

• Formula Grants* 

Office of the Secretary of Transportation • Working Capital Fund 

• DOT Payroll** 

Federal Railroad Administration • Grants 

*Identified 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 2006 IPIA review 

In accordance with IPIA requirements and OMB guidelines, during FY 2004 and 2005 

the Programs reflected in the Table above were subject to a risk assessment and an indepth 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. The ten identified 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. The 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 these reviews, which spanned two fiscal years, the Department concluded that 

all but four programs were not susceptible to significant improper payments as defined by 

the OMB. For these four programs, because of the significance of grantee payments and 

the fact that such payments were not tested under previous efforts due to a lack of data at 

the Federal level required for testing, additional testing was required. The four programs 

are the Federal Highway Administration Federal-aid Highway Program, Federal Aviation 

Administration Airport Improvement Program, and Federal Transit Administration 

Formula Grants Program and Capital Investment Grant Program. Because of program 

400 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
and funding changes, the Department is assessing the extent of testing required for the 

FTA Capital Investment Grant Program. 

In Fiscal Year 2006, to address payments by grantees, the Department developed and 

tested a model for estimating the amount of improper payments in the Federal Highway 

Administration’s (FHWA) Federal-aid Highway Program and committed to developing 

and testing a model for estimating the amount of improper payments in the Federal 

Transit Administration’s (FTA) Formula Grants Program and the Federal Aviation 

Administration’s (FAA) Airport Improvement Program. These Programs were 

designated in former Section 57 of OMB Circular A-11 as programs susceptible to 

significant improper payment. 

In FY 2006, the Department re-engaged AOC Solutions, Inc. to execute the model 

developed for the Federal-aid Highway Program nationwide and to develop and test the 

models for FTA Formula Grant Program and FAA Airport Improvement Program. The 

results of the testing process for each of these programs are described below. 

• FHWA, Federal-aid Highway Program – Improper payments totaling $125,508.56 

were found in the sample of 928 tested items. The projection of this result to the 

population of Program payments for the five month period results in an improper 

payment estimate of $30.15 million +/- $35.04 million. This projection does not meet 

OMB’s definition of significant improper payments ($10 million and 2.5 percent of 

total program payments). 

• FTA, Formula Grants Program – This review, which was designed solely to test 

the sufficiency of the model, covered Federal payments to grantees during the period 

October 1, 2005 through June 30, 2006 and related payments by these grantees. For 

the first grantee, the review found administrative and contractual compliance as 

addressed in the test model and no improper payments. For the second grantee, 

improper payments totaling $11,664.08 were found in the sample of tested payments. 

The projection of this result to the population of payments under the Program by the 

grantee is an improper payment estimate of $252,000.00. 

• FAA, Airport Improvement Program – This review, which also was designed 

solely to test the sufficiency of the model, covered federal payments to a single 

grantee during the period October 1, 2005 through June 30, 2006 and related 

payments by this grantee. The review found administrative and contractual 

compliance as addressed in the test model and no improper payments. 

The Department will execute the test models nationwide covering a 12 month period for 

these programs in FY 2007, and at the conclusion of the testing process is able to provide 

a full assessment of their risk to substantial improper payments. 

2. Statistical Sampling Process Used for Estimating the Improper Payment Rate 

Federal-aid Highway Program 

For the FHWA Federal-aid Highway Program, the statistical sampling process used a 

three-stage approach designed with a 90 percent confidence level, which indicates a 90 

OTHER ACCOMPANYING INFORMATION 401
percent likelihood that the true population is within the results of the sample value, with a 

2.5 percent margin of error. Stage One involved selecting federal payments to states. In 

order to obtain a sample that included invoices from each of the 52 states, the population 

of federal payments from October 1, 2005 through February 28, 2006 was segregated by 

state and territory and then further divided into high or low strata. For each state and 

territory, two payments were randomly selected from the high stratum and one payment 

was randomly selected from the low stratum. In this manner, each state except Puerto 

Rico contributed three payments to the Stage One sample. Puerto Rico contributed two 

payments to the Stage One sample. (Puerto Rico contained just one payment in the high 

stratum, so it was included in the sample along with a randomly selected payment from 

the low stratum–for a total of two.) A Stage One sample of 155 federal payments was 

selected using this stratification scheme. 

Stage Two involved selecting state payments associated with a selected Federal payment. 

For each of the federal payments selected in the Stage One sample, the state grantee 

provided lists showing the supporting state level payments to contractors or lists showing 

internal state documents capturing internal charges. A stratified random sample from 

each list of state payments was selected by first stratifying the list into two groups, those 

state payments that met or exceeded the 90th percentile of the dollar distribution in the 

panel (i.e. the high strata), and those state payments below the 90th percentile (i.e. the low 

strata). After the lists were stratified, three state payments from each stratum were 

randomly selected. Using this method, at most six state payments (three from the high 

strata and three from the low strata) were selected for each federal payment under review. 

Stage Three involved selecting line items from contractor invoices and internal state 

documents for testing. The ultimate test unit was the line item on the contractor invoice 

or state internal document. For each of the state payments selected in the Stage Two 

sample, the state grantee provided the actual contractor invoices and/or internal 

documents showing various materials and services delivered on an approved project. 

Detailed line item expenditure pools were created from the state’s backup. These 

expenditure pools represented the universe of test units associated with the state payment. 

After the line items expenditure pools were identified, simple random sampling was used 

to identify the testable units. For each state payment, three line items were selected. 

During testing, a payment line item was categorized as proper if all applicable test model 

questions were answered in the affirmative. 

FTA Formula Grants Program and FAA Airport Improvement Grant Program 

For the FTA Formula Grants Program and the FAA Airport Improvement Program, a 

multi-staged statistical sampling approach designed with a 90 percent confidence level 

was also used. The Formula Grants Program review sampling frame started with the 

universe of federal payments to two grantees from October 1, 2005 through June 30, 

2006. All grantee payments to contractors supporting these federal payments were 

identified and the first stage sample was drawn from this list. For the first grantee, the 

largest 12 payments and for the second grantee, the largest 14 payments were identified 

as the “certainty stratum.” All of these payments were selected. Probability proportional 

to size was used to select the remaining payments. When nested invoices were found, 

402 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
sub-sampling with probability proportional to size continued. Within the selected 

invoices, the second stage sample was drawn using probability proportional to size. In 

this manner, 100 line items for the first grantee and 18 line items for the second grantee 

were selected for testing. During testing, a line item was categorized as proper if all 

applicable test model questions were answered in the affirmative. For the first grantee, 

the review found administrative and contractual compliance as addressed in the test 

model and no improper payments. For the second grantee, improper payments totaling 

$11,664.08 were found in the sample of tested payments. The sample size was 18 

payments selected from a population of 100 payments. The projection of this result to the 

population of payments under the Program by the grantee is an improper payment 

estimate of $252,000.00. 

The Airports Improvement Program review sampling frame started with a universe of 

federal payments to one sponsor from October 1, 2005 through June 30, 2006. All 

sponsor payments to contractors supporting these federal payments were identified and 

the first stage sample was drawn from this list. All invoices with total amounts above the 

certainty cut-off amount of $600,000 were automatically included in the sample. Smaller 

invoices were sampled with their probability of selection proportional to their size. 

Within the selected invoices, the second stage sample was drawn. All line items above 

the certainty cut-off amount of $50,000 were automatically included. Smaller invoices 

were sampled with their probability of selection proportional to their size. In this 

manner, 234 line items were selected for testing. For federal payments categorized as 

reimbursements for a percentage of allowable costs, a payment was considered proper if 

the sponsor had, at the time of drawdown, incurred allowable costs meeting or exceeding 

the federal grant. 

3. Corrective Action Plans for Reducing the Estimated Rate of Improper Payments. 

FHWA Federal-aid Highway Program 

FHWA Division Offices listed the following reasons for the improper payments 

identified as a result of the IPIA review: Data entry errors, missing approvals, incorrect 

cost allocations, payments for missing field office equipment, unallowable charges, 

materials received not in accordance with contract terms, and source documentation not 

supporting payment amounts. 

The Department and the FHWA will implement fully the Financial Integrity Review and 

Evaluation Program in FY 2007 to monitor State and Territory payments and provide a 

mechanism for assisting these entities with addressing effectively operational issues that 

result or could result in improper payments. The Department believes that this proactive 

approach will establish internal control mechanisms for both preventing and detecting 

improper payments through effective oversight and outreach, the latter being intended to 

assist grantees in improving program management. 

FTA Formula Grants Program and FAA Airport Improvement Program 

Since the effort to date has been on IPIA model development and testing, the Department, 

FTA, and the FAA have no statistics on the amount and rate of improper payments for 

OTHER ACCOMPANYING INFORMATION 403
these programs. The Department, FTA, and the FAA developed and tested a model for 

testing grantee payments under these Programs. The objectives of the FY 2006 effort 

were to develop the model and field test it to assist the FTA and FAA in incorporating the 

test procedures into their respective grants management oversight policies and 

procedures. The FY 2006 model development and testing effort was not designed to 

provide a nationwide or program-wide estimate of improper payments. However, in FY 

2007, this test model will be executed nationwide for these programs. 

4. Department Accomplishments in Grant Programs 

The Department completed the development and testing of models for determining the 

amount and rate of improper payments in its major grant programs. The FHWA review 

of the Federal-aid Highway Program represented nationwide application of an innovative 

research and develop strategy implemented in FY 2005 and updated in FY 2006. This 

methodology successfully resolved a limitation of prior year efforts examining federal 

outlays to primary recipients. As discussed above, methodology models that reached 

grantee level data in the FTA and FAA programs were developed and field tested in FY 

2006. These models will be rolled out nationwide in 2007. 

404 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
5. Improper Payment Estimated Error Rates, Dollar Estimates, and Outlook 

Program PY CY 1 CY +1 CY +2 CY +3 IP % IP $ IP % IP $ IP % IP $ IP % IP $ IP % IP $ 

FHWA:Federal-aidHighwayProgram

 NA NA .247% $30.15

million

 NA NA NA NA NA NA 

FTA:Formula GrantsProgram

 NA NA NA NA NA NA NA NA NA NA 

FAA:AirportImprovement Program

 NA NA NA NA NA NA NA NA NA NA 

1 CY percentages are for only a 5 month period. FY 2007 will be the first year in which an entire 12 month period will be tested for improper payments. 

OTHER ACCOMPANYING INFORMATION 405
6. Recovery Audit Results 

Starting in FY 2002, the Department engaged PRG-Shultz to provide recovery audit 

services. In FY 2005, this contract was re-competed and awarded to Horn and 

Associates. Since award of this new contract, staff from Horn has been working to 

identify overpayments and other areas of weakness. The recovery auditor has been 

granted access to our financial system to review payment records and has 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. They are currently in the process of reviewing 

contracts, vendor statements, and real estate leases. The chart below depicts their 

findings to date: 

Agency 

Component 

Amount Subject to 

Review for CY 

Reporting 

Amounts 

Identified for 

Recovery 

Amounts 

Identified/ 

Amounts 

Reviewed 

Amounts 

Recovered 

CY 

Amounts 

Recovered 

PY 

OST $ 2,846,512,015 $ 65,751,781 $ 68,961 $ 0 $ 0 

FAA 9,528,068,552 150,219,554 4,739,975 45,109 0 

FHWA 2,343,398,062 218,995,827 340,622 0 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 0 0 0 

OIG 42,465,487 415,809 0 0 0 

PHMSA 28,261,569 4,021 0 0 0 

RITA 19,823,586 13,337 0 0 0 

STB 1,259,489 10,832 0 0 0 

TOTAL $25,007,231,396 $1,428,544,765 $6,450,993 $45,109 $0 

7. Department Plans for Ensuring Managers are Held Accountable for Reducing 

and Recovering Improper Payments 

Department management continues to take a strong role in ensuring that agency managers 

are held accountable for reducing and recovering improper payments. The Deputy CFO 

has taken the lead in 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. During the year our CFO spoke at an American Association of State Highway 

Transportation Officials meeting on the initiative. 

406 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT
Monthly, the Department’s chief financial officers and agency financial managers are 

briefed at the CFO Council and Financial Management Committee meetings 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 significant improper payments identified that are necessary to 

reduce and recover. If improper payments are found, the Office of the Secretary/Office 

of Financial Management will work with the organization to ensure that reduction targets 

and recovery rates are established. 

8. Information Systems and Infrastructure Requirements to Reduce Improper 

Payments 

The Department is completing full implementation of the IPIA and at this point has not 

identified 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. 

The Department has not identified any statutory or regulatory barriers that limit its 

corrective action efforts. 

OTHER ACCOMPANYING INFORMATION 407
ACKNOWLEDGMENTS

We would like to recognize the following people among many, for their contribution to 

the FY 2006 Performance and Accountability Report. In particular, we acknowledge the 

efforts of Sarah Hosemann, Gretchen DePasquale, Jeffrey Newsome, William Miller, and 

Michael Soto, as principal writers, and Teresa Lampkin as the principal analyst for the 

financial statements. 

Ted Alves Keith Galtz Arvid Knutsen Meredith Powell 

Darren Ash Frank Grasso Teresa Lampkin Scott Poyer 

Joe Austin Yvonne Griffin Tim Lawler Tom Sachs 

Bethany Blakey Conswella Hackney David Litman Phyllis Scheinberg 

Thomas Bruneel Benita Harris Kristine Leiphart Jerry Schoenauer 

John Block Earl Hedges Thuy Lynch Gayle Sienicki 

Wendy Calvin Ellen Heup Tyrone Lumpkins Steve W. Smith 

Jim Chen Chuck Hiep Rosalie Manley Jeff Shane 

Kristin Clarke Michelle Hill Rita Mantero Michael Soto 

Robert Clausen Deborah Hinz Carla Mazyck DJ Stadtler 

Gwen Daniel Sarah Hosemann Jeffrey Miller Woody Stanley 

Sylvia Davis Laurie Howard Willie Miller Alexis Stefani 

Gretchen Lana Hurdle Linda Moody James Taylor 

DePasquale Alan Jeeves Maribeth Monti David Tochen 

Tyler Duvall Andrew Julian Ray Morris Robert Tuccillo 

Sheldon Edner Catherine Johnson Kevin O'Malley Michael Tyler 

Kellie Feeney Barbara Kahles Warren Owens Victoria Wassmer 

Ron Filbert Shane Karr Larry Neff Jacqueline Weber 

Jerry Franco Zahid Khawaja Jeffrey Newsome Pat Wlaschin 

This report could not have been produced without the participation of the DOT Operating 

Administrations, General Counsel, Office of the Inspector General, Office of Governmental 

Affairs, and the organizations that helped in the preparation and editing of this Performance and 

Accountability Report. 

408 FY 2006 PERFORMANCE AND ACCOUNTABILITY REPORT

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