FY 2002 Performance and Accountability Report i

TABLE OF CONTENTS 

FOREWORD iii 

MESSAGE FROM THE SECRETARY v 

MESSAGE FROM THE CHIEF FINANCIAL OFFICER vii 

THE DEPARTMENT OF TRANSPORTATION AT A GLANCE 1

History and Legislation 1 

Mission 1 

Operating Administrations 1 

Departmental Organization Chart 2 

Financial Resources 3 

HIGHLIGHTS 4

Overview of Highlights 4 

Presidential Management Agenda Highlights 4 

President’s Management Agenda Scorecard 6 

Federal Highway Administration 10 

Federal Aviation Administration 10 

Federal Transit Administration 10 

United States Coast Guard 11 

Transportation Security Administration 11 

Federal Railroad Administration 11 

National Highway Traffic Safety Administration 12 

Federal Motor Carrier Safety Administration 12 

Maritime Administration 13 

Office of the Secretary 13 

Research and Special Programs Administration 14 

Office of the Inspector General 14 

Bureau of Transportation Statistics 15 

Surface Transportation Board 15 

Saint Lawrence Seaway Development Corporation 15 

MANAGEMENT DISCUSSION AND ANALYSIS 17

Introduction 17 

How We Select Our Performance Goals and Measures 17 

How DOT Works to Achieve Strategic and Organizational Goals 18 

 

PERFORMANCE REPORT 19 

Safety 21 

Highway Safety 22 

Aviation Safety 25 

Maritime Safety 28 

Rail Safety 29 

Transit Safety 29 

Pipeline Safety 30 

Hazardous Materials Safety 31 

Homeland and National Security 33 

Aviation Security 34 

Coastal and Seaport Security 36 

Strategic Mobility 38 

Drug and Migrant Interdiction 39 
 

FY 2002 Performance and Accountability Report ii

Mobility and Economic Growth 41 

Highway Infrastructure Condition 43 

Highway Congestion 44 

Transit Ridership 45 

Aviation Delay 46 

Maritime Navigation 48 

Transportation Accessibility 49 

International Air Service 50 

Human and Natural Environment 51 

Fishery Protection 52 

Wetland Protection and Recovery 52 

DOT Facility Cleanup 52 

Mobile Source Emissions 54 

Oil and Pipeline Spills 54 

Aircraft Noise Exposure 55 

Organizational Excellence 56

Strategic Management of Human Capital 57 

Competitive Sourcing 58 

Financial and Procurement Performance 58 

Citizen-Centered Government 62 

Budget and Performance Integration 65

PERFORMANCE DATA COMPLETENESS AND RELIABILITY 66 

DOT PROGRAM EVALUATIONS 68 

 

MANAGEMENT CONTROLS 75 

Federal Manager’s Financial Integrity Act 75 

Federal Financial Management Improvement Act 76 

Consolidated Financial Statements 77 

Limitations of the Consolidated Financial Statements 77 

 

FINANCIAL MANAGEMENT AND ANALYSIS 79 

Analysis of Financial Statements 79 

Total Consolidated Statements of Net Cost 79 

Assets 79 

Liabilities and Net Position 79 

Program Costs 80 

Loans 80 

Intra-Departmental Eliminations 80 

Transportation Equity Act for the 21st Century 80 

Stewardship 80 

FUTURE STEPS 83 

INSPECTOR GENERAL AUDIT REPORTS 85 

INSPECTOR GENERAL TOP MANAGEMENT CHALLENGES 105 

 

EXHIBIT 149

 Performance Measure Completeness and Reliability (Detail) 149 

 

ACRONYMS 151 

 

ACKNOWLEDGEMENTS 154 

PRINCIPAL FINANCIAL STATEMENTS 155 

 
 

FY 2002 Performance and Accountability Report iii

 

F O R E W O R D 

In accordance with the Consolidation Act of 2000, this is the United 

States Department of Transportation’s (DOT) fiscal year 2002 

Performance and Accountability Report. As required by law, this 

document integrates DOT’s Performance Report with its consolidated 

Financial Statements and the resulting DOT Inspector General’s opinion 

on DOT’s statements, internal controls, and compliance with laws and 

regulations. It also includes the Inspector General’s 2003 report on the 

Department’s Top Management Challenges and a summary of the 

Department’s actions in response to the Office of the Inspector General’s 

2002 Top Management Challenge. 

All comments regarding this report are welcome. The electronic version 

of the report is available at the Department of Transportation website, 

www.dot.gov. 

Comments may be addressed to: 

U.S. Department of Transportation 

Office of the Chief Financial Officer 

400 7th Street, S.W., Room #10101 

Washington, DC 20590
 

FY 2002 Performance and Accountability Report iv
 

FY 2002 Performance and Accountability Report v

MESSAGE FROM THE SECRETARY 

FY 2002 was a very challenging year for the country and the Department. After the events 

of September 11, 2001, the President signed into law the Aviation and Transportation 

Security Act on November 19, 2001, that required that the Department of Transportation 

(DOT) establish the Transportation Security Administration (TSA). I am proud to say that 

DOT’s and TSA’s efforts in FY 2002 meant that we met the legislative deadlines specified 

by Congress, including completely replacing all the Nation’s airport passenger screeners by 

November 19, 2002, and having all checked passenger bags screened by December 31, 2002. 

I am extremely pleased and proud that during a year with many changes and uncertainties 

(including the creation of TSA), DOT was able to maintain its financial “clean opinion.” I 

believe that a clean opinion demonstrates that we have provided proper stewardship over the 

resources entrusted to us by the American taxpayers. We have more work to finish to eliminate material weaknesses 

in our financial processes. While we have management controls in place, we must continue our progress to install a 

new financial system and cost accounting throughout the Department. These are critical items to enable us to meet the 

requirements of the Federal Managers Financial Integrity Act. This Performance and Accountability Report contains 

performance and financial data that are substantially complete and reliable. The “Management Control” section in the 

report contains a detailed assessment of the inadequacies in DOT’s performance data, and explains how we plan to 

remedy those deficiencies in the future. 

The Department is committed to implementing the President’s Management Agenda. The Office of Management and 

Budget gave DOT its highest rating – “green” – for progress in all five Presidential Management goals. Specifically, 

DOT is moving ahead on competitive sourcing by identifying over 12,000 positions as performing commercial 

functions and committing to conduct reviews on 25 percent of its commercial positions by September 30, 2003. In 

addition, we have developed a Human Capital plan that is now being used as a model for other departments. In the 

area of performance, DOT is preparing to further integrate performance and budget by producing better, more 

quantitative budget requests that will more clearly link results with funding levels. All of us at the Department are 

proud that the Mercatus Center ranked DOT’s Performance Report as one of the best in government for the past three 

years. In E-government, DOT is working closely with partner agencies to develop practices which improve service to 

our customers. Finally, DOT has already transferred nine of its 13 agencies onto a new Oracle-based financial system 

that meets all Federal financial requirements. These accomplishments underscore DOT’s commitment to improving 

its overall management. 

While this past year has been challenging, this year will also be challenging. TSA and the Coast Guard will be 

transferring to the new Department of Homeland Security. In addition, DOT will be proposing significant 

reauthorization proposals for its surface and aviation modes. We are confident that our continually improving 

financial practices and systems will successfully support us in meeting these challenges. 

 

Norman Y. Mineta 
 

FY 2002 Performance and Accountability Report vi
 

FY 2002 Performance and Accountability Report vii

MESSAGE FROM THE CHIEF FINANCIAL OFFICER 

The Department of Transportation (DOT) is continuing its 

initiatives to improve financial management. We are using 

government-wide financial management goals, the legislation 

related to the Government Performance and Results Act (GPRA), 

DOT’s Strategic Plan, and our financial management visions as a 

basis for action. Our focus is on upgrading our accounting system, 

achieving clean audit opinions on our consolidated financial 

statements, and effectively leveraging technology, such as the 

Internet, to add efficiency to our operations. The Department has 

numerous accomplishments that have further strengthened our 

financial management environment. They are: 

• Implementing Delphi, DOT’s new integrated financial management system. 

• Offering web-based travel services, “FedTrip” and “Web T&E,” which provide 

cheaper and easier travel arrangement for our employees and reduce travel 

transaction fees, while eliminating manual data entry of travel data into the 

accounting system. 

• Continuing innovative financing techniques that supplement Federal funds with 

private and non-Federal public sector investment for transportation infrastructure. 

• Promoting the use of electronic business practices. Our “Do-It-Yourself (DIY)” 

website expands the opportunities for citizens to make payments for DOT services 

over the Internet with a credit card and electronic checks. Our use of invoice 

imaging and workflow technology has covered the costs of paying vendors and has 

improved the quality of financial data. 

• Increasing our use of the Government Small Purchase Credit Card has saved over 

$46 million in administrative costs in FY 2001- FY 2002.

• Having over 98 percent of employee salary payments by Electronic Fund Transfer, 

a one percent increase over last year. 

This report illustrates the Department’s recent achievements and future plans in the area of financial and 

performance management. We are completely committed to the Present’s management goals, and I am 

proud of our team for their accomplishments. 

Donna McLean
 

 

FY 2002 Performance and Accountability Report

 

viii
 

 

FY 2002 Performance and Accountability Report

 

1

DEPARTMENT OF TRANSPORTATION AT A GLANCE 

History and Legislation 

The U.S. Department of Transportation (DOT) is a 

steward of the Nation’s transportation system and 

speaks for transportation in the Federal Government. 

The Department of Transportation, created in 1967, 

develops policies and programs that contribute to a 

safe, efficient, and convenient transportation system 

at the lowest cost—essentials to meet national 

objectives of economic growth, stability, and security 

of the United States. Its creation brought under one 

umbrella a myriad of transportation missions and 

programs, some of which date back to the 1700s. 

Mission 

DOT’s mission is to serve the United States by 

ensuring a safe transportation system that furthers our 

vital national interests and enhances the quality of 

life of the American people. 

DOT’s Strategic Objectives 

Safety: Promote the public health and safety by 

working toward the elimination of transportationrelated deaths and injuries. 

Homeland and National Security: Ensure the 

security of the transportation system for the 

movement of people and goods, and support the 

National Security Strategy.

Mobility: Shape an accessible, affordable, and 

reliable transportation system for all people, goods 

and regions. 

Economic Growth and Trade: Support a 

transportation system that sustains America's 

economic growth. 

Human and Natural Environment: Protect and 

enhance communities and the natural environment 

affected by transportation. 

Organizational Excellence Objective: Advance the 

Department’s ability to manage for results and 

innovation. 

The DOT Performance Plan implements DOT’s 

Strategic Plan through a series of performance goals 

and measures to assess the Department’s yearly 

progress in achieving strategic and organizational 

objectives. This FY 2002 Performance and 

Accountability Report describes DOT’s FY 2002 

performance and financial results, linking back to 

DOT’s FY 2002 enacted budget, and to DOT’s FY 

2002 Performance Plan. 

DOT has been challenged in accounting for the 

secondary impacts of its programs. Programs 

typically influence more than one performance 

outcome. For example, building a new highway may 

affect travel time, congestion costs, emissions and 

land use, safety, and security. DOT will continue to 

improve our ability to link resources and results. 

DOT is committed to managerial cost accounting, as 

integral to improving overall departmental 

management. DOT is investing in improved 

financial and data systems to better associate dollars 

with activities, outputs, and outcomes. 

Operating Administrations 

In FY 2002, DOT employed approximately 118,447 

full-time equivalent employees. There are 13 

Operating Administrations (OAs) in DOT that are 

responsible for a mode of transportation or an 

intermodal aspect of the transportation system. In 

addition, the Office of the Secretary coordinates 

overall policy, program planning, budgeting, 

information management, human capital 

management, and administration. The DOT 

Inspector General audits the Department’s programs 

and finances to ensure efficient and economical 

operations and to discover and suppress waste, fraud, 

and abuse. The Surface Transportation Board, while 

formally a part of DOT, is decisionally independent, 

carrying out economic regulatory programs for 

surface transportation carriers. The Transportation 

Security Oversight Board ensures that transportation 

security regulations are soundly based. 
FY 2002 Performance and Accountability Report 2

DOT’s Operating Administrations 

and Service Providers 

FY 2002 

Bureau of Transportation Statistics (BTS) 

Federal Aviation Administration (FAA) 

Federal Highway Administration (FHWA) 

Federal Motor Carrier Safety Administration (FMCSA) 

Federal Railroad Administration (FRA) 

Federal Transit Administration (FTA) 

Maritime Administration (MARAD) 

National Highway Traffic Safety Administration 

(NHTSA) 

Office of the Secretary (OST) 

Research & Special Programs Administration (RSPA) 

Saint Lawrence Seaway Development Corporation 

(SLSDC) 

Surface Transportation Board (STB) 

Transportation Security Administration (TSA) 

United States Coast Guard (USCG)

FY 2002 
 FY 2002 Performance and Accountability Report 3

 

Financial Resources 

DOT’s Budget and Financial Management 

 

Three types of primary revenue sources support DOT’s budget: trust funds, direct receipts, and general funds. Trust 

funds, derived from special fees, such as motor fuel taxes and airline ticket taxes, provide more than two-thirds of 

the Department’s funding. The two largest trust funds, the Highway Trust Fund and the Airport and Airways Trust 

Fund, account for most of DOT’s funding and support the Department’s programs for maintaining and improving 

transportation infrastructure and performance. Direct receipts are resources from non-Federal entities that are 

directly available for DOT programs. General revenue funds are obtained from the general taxes of the United 

States. 

DOT Budget by Operating Administration and 

Office

Federal Aviation Administration Transportation Security Administration

U.S. Coast Guard Federal Highway Administration (less BTS)

National Highway Traffic Safety Administration Federal Motor Carrier Safety Administration

Federal Transit Administration Federal Railroad Administration

Research and Special Programs Administration St. Lawrence Seaway Development Corporation

Surface Transportation Board Maritime Administration

Bureau of Transportation Statistics Office of the Inspector General

Office of the Secretary
 FY 2002 Performance and Accountability Report 4

HIGHLIGHTS 

Overview of Highlights 

FY 2002 was an important year in DOT’s transition to 

managing for results under the Government 

Performance and Results Act (GPRA) of 1993. DOT’s 

Operating Administrations (OAs) identified goals to 

reach planned results, resources needed to accomplish 

the goals, and measures to gauge progress towards 

achieving them. 

DOT’s Performance and Accountability Report links 

programs to strategic performance areas, such that 

major program activities are traceable to a performance 

outcome and goal. 

In addition to providing leadership to improve the 

Nation’s transportation system, a key focus of DOT’s 

time and resources in FY 2002 was the successful 

establishment of the Transportation Security 

Administration (TSA) following the events of 

September 11, 2001. 

The DOT met all legislative requirements of the 

Aviation and Transportation Security Act (P.L. 107-71) 

including deploying Federal personnel by 

November 19, 2002 and having all checked passenger 

bags screened by December 31, 2002. The U.S. Coast 

Guard provided security in the Nation’s ports and 

waterways. DOT continues to provide leadership to 

meet the criteria in the Presidential Management 

Agenda while helping to enhance safety and security 

for the Nation. The five highlighted areas in the 

Presidential Management Agenda are as follows. 

Presidential Management Agenda 

Highlights 

Strategic Management of Human Capital

DOT developed a Human Capital Plan that will 

strategically guide our human capital planning efforts 

through FY 2005. 

The Department is implementing policies to recruit, 

develop, and retain the diverse talent needed now and 

in the future to perform our mission and achieve 

DOT’s strategic goals. 

DOT worked on succession plans to maintain required 

levels of experience, competencies, and institutional 

knowledge in the Department’s civilian, military, and 

contract workforce to prepare for an impending wave 

of retirements. 

Competitive Sourcing 

DOT’s 2001 FAIR Act inventory identified over 

12,000 FTE performing commercial activities available 

for competition. In 2002, DOT planned that 20 percent 

of all service contract dollars be performance-based. 

Improved Financial Performance

For FY 2001 and FY 2002, DOT received an 

unqualified opinion on all of the financial statements 

required by OMB. 

To streamline and modernize financial services, DOT 

is automating electronic transmission of data and 

information for internal processes (i.e., employee 

travel, internet payments, salary payments, 

procurement), and external processes (i.e., payments to 

grantees and vendors, etc.). 

DOT is utilizing more web-enabled technology to 

improve the Department’s financial systems. 

As a part of implementing its new financial 

management system, Delphi, DOT is adopting a 

document imaging system that integrates scanned 

images of financial documents with accounting 

records. 

Expanded Electronic Government

The Docket Management System (DMS) is an example 

of DOT’s e-government initiative. The DMS is an 

electronic, image-based database designed to store and 

display, via the Internet, all DOT docketed information 

(a docket is an official public record) for easy research 

and retrieval. DMS also allows businesses and citizens 

to submit comments to DOT’s dockets electronically. 

DOT provides on-line information about proposed and 

final regulations, information on adjudicatory actions, 

and public comments on proposed rules. The Dockets 

Office reviews all documents to make sure they meet 

filing requirements, registers the document into the 

DMS, scans and electronically saves hard copy 

documents received, and performs quality assurance. It 

saves the government over $1.3 million annually in 

space and personnel costs alone. 
 FY 2002 Performance and Accountability Report 5

Another example of DOT’s e-government initiative is 

the “Do-It-Yourself” (DIY) website. It provides 

customers the option of doing business with DOT 24 

hours a day through the Internet. Virtually every 

function requiring payment from the public will be 

available on the Internet, from paying fees to applying 

for registrations and licenses. In FY 2002, DIY 

processed 38,719 payment transactions, totaling $78.5 

million. This was a significant increase from FY 2001, 

where 18,846 transactions that totaled $ 6.1 million 

were collected using DIY. 

DOT’s Intranet Website is a third example of an egovernment initiative. A Department-wide DOTnet

website provides employees with the ability to post 

documents on the web, add latest information to 

bulletin boards, manage a central calendar for events, 

and provide frequently used links. 

Integrating Performance and Budget 

Managerial cost accounting provides opportunities for 

agencies to make business process improvements by 

linking agency outputs to strategic performance 

objectives. It helps integrate performance and budget, 

justify budget requests and have accountability in its 

financial management system. Managerial cost 

accounting can monitor an agency’s cost patterns, 

identify drivers of those costs, manage indirect costs, 

track labor, as well as forecast critical costs for the 

agency. 

At the Federal Aviation Administration (FAA), 

detailed cost accounting system (CAS) requirements 

were developed and implemented for the Air Traffic 

Services (ATS) line of business to assign the full cost 

of providing en route and oceanic services for FY 1998 

and FY 1999. At the beginning of FY 2000, CAS was 

implemented for Flight Services, and enhancements to 

the capabilities provided for En Route and Oceanic 

Services were implemented. In 2001, FAA also 

enhanced the system to provide costing of Terminal 

Services. 
 FY 2002 Performance and Accountability Report 6

US Department of Transportation 

President’s Management Agenda Scorecard 

KEY TO FY 2002 STATUS:

The “status” column measures where DOT is in satisfying the initiative. Agencies receive a green rating by reaching 

the required score. Agencies must maintain scores between evaluations to maintain a green. 

z Indicates that the agency has met all of OMB’s core criteria for the initiative. 

S Indicates achievement of some but not all of OMB’s core criteria for the initiative and that the agency has no “red” 

conditions. 

 Indicates that at least one of the conditions identified by OMB for that initiative is in need of correction. 

The “progress” column measures the rate at which DOT are moving toward green. Agencies get a green rating 

when implementation is advancing according to plan. 

INITIATIVE

 

 FY 2002 

 STATUS 

PROGRESS HOW DOT IS MEETING PMA CHALLENGES 

Human Capital: Develop a 

DOT-wide human capital 

workforce strategy to 

address future workforce 

gaps, eliminate skill gaps in 

critical occupations, 

develop performancebased incentives for the 

workforce, remove 

unneeded management 

layers, and develop the 

right mix of skills in the 

workforce that reflect the 

new emphasis on 

E-Government and 

Competitive Sourcing. 

 Q

Human Capital Plan: In FY 2002, DOT developed a 

Human Capital Plan that will strategically guide our 

human capital planning efforts through FY 2005. This 

Plan is fully aligned with the President’s Management 

Agenda and the Standards for Success developed by 

the Office of Management and Budget, Office of 

Personnel Management, and the General Accounting 

Office that are strategic alignment, workforce 

planning and deployment, leadership and knowledge 

management, performance culture, talent, and 

accountability. DOT’s Human Capital Plan includes 

specific HR initiatives that will help the Department 

recruit, develop, and retain the diverse talent needed 

now and in the future to perform our mission and 

achieve our strategic goals. It encompasses 

strategies from the Departmental Strategic Plan and 

the Human Resources Strategic Plan. During FY 

2002, DOT continued implementing workforce 

planning throughout the operating administrations 

and will continue into FY 2003, as outlined in DOT’s 

Human Capital Plan. As the OAs work through the 

workforce planning process in FY 2003 for mission 

critical occupations, they will gear their efforts toward 

creating a citizen-centered organization, using egovernment and competitive sourcing, as appropriate 

solutions to our human capital challenges.
 FY 2002 Performance and Accountability Report 7

INITIATIVE

 

 FY 2002 

 STATUS 

PROGRESS HOW DOT IS MEETING PMA CHALLENGES 

Competitive Sourcing: 

Each department must 

submit a Strategic 

Competition Plan and 

compete “commercial 

reimbursable support 

services” on a recurring 

basis. 

 Q

Strategic Competition Plan: 

DOT has submitted a comprehensive Strategic 

Competition Plan. DOT is moving ahead on 

competitive sourcing by identifying over 12,000 

positions as performing commercial functions and 

committing to conduct reviews on 25 percent of its 

commercial positions by September 30, 2003. Most 

of these studies have begun and are all moving 

ahead smartly. 

Improved Financial 

Management: Develop 

financial management 

systems capable of 

producing more timely and 

accurate information, 

maintain a record of 

unqualified opinions on our 

financial statements, 

continue to improve 

accounting control over 

property, and develop full 

cost accounting capability. 

 Q

Delphi: In June 2002, DOT converted FTA and 

NHTSA from our outdated legacy accounting system 

to Delphi, a new Web-enabled financial system based 

on Oracle Financials. Delphi uses the Standard 

General Ledger and has a consistent Accounting 

Classification Structure for all DOT Operating 

Administrations (OA), has extensive standard, 

custom-developed, and ad-hoc reporting capabilities, 

and is significantly improving the quality and 

timeliness of DOT’s financial statements and reports. 

DOT organizations are using Delphi, except for 

FHWA, FAA, MARAD, and FMCSA that will complete 

their conversions to Delphi in 2003. 

Unqualified Audit Opinion: After extensive hard 

work, DOT has received an unqualified audit opinion 

from the Inspector General on our financial 

statements for FY 2002. DOT is continuing to work to 

improve financial management further to ensure that 

we maintain a clean opinion in the future. 

Assets Accounting and Property Management 

System: As part of the overall plans to improve 

property management, DOT has launched a project 

to improve asset accounting practices. To 

accomplish this, TSA has been through an audit to 

work with the issues concerning property 

management. The Coast Guard successfully 

completed implementation of a commercial-off-theshelf (COTS) asset accounting and property 

management system, Oracle Financials – Fixed 

Assets Module. 
 FY 2002 Performance and Accountability Report 8

INITIATIVE

 

 FY 2002 

 STATUS 

PROGRESS HOW DOT IS MEETING PMA CHALLENGES 

E-Government: Better 

justify and track costs and 

performance of information 

technology projects, as well 

as participate in 

government-wide initiatives 

that automate how the 

public deals with the 

government, such as the 

FirstGov.gov initiative, 

electronic grants, 

standardization of data, and 

customer relationship 

management. 

 Q

Electronic Grants: DOT has formalized its grants 

management policy, which provides guidance to 

grant program officials on implementing the various 

OMB grants management circulars and DOT-issued 

common rules for electronic grants. 

Capital Planning: DOT implemented an IT Capital 

Planning policy and is now fully integrating this 

process with the budget cycle. DOT held its initial 

Departmental Investment Review Board, and 

identified areas to consolidate redundant IT projects. 

Additionally, DOT submitted over 80 business cases 

as compared to just over 20 for the FY2003 budget. 

DOT will continue process improvements through a 

year-long project manager and capital planning 

curriculum. 

IT Security: DOT has decreased GISRA 

weaknesses by over 40 percent, and has a plan of 

action to continue this progress in FY 2003. DOT 

increased the number of systems certified/accredited, 

and implemented a program to conduct weekly 

vulnerability scanning of all public facing and 

eGovernment web servers. To date, DOT has 

increased over 100 percent of systems scanned, 

decreased vulnerabilities by over 90 percent, and 

over $1.2M by using an enterprise-wide software 

license. DOT has implemented a Department-wide 

24X7 Transportation Cyber Incident Response 

Center, in conjunction with other Federal Agencies, to 

leverage the economies of scale. 

Enterprise Architecture: DOT has completed the 

"As Is" architecture for crosscutting business 

processes and will define the "To Be" architecture for 

the DOT common IT infrastructure by the end of 

March. DOT Operating Administrations plan to 

complete EAs for their unique business areas by the 

end of FY2003. 

Government-wide Initiatives: DOT is an active 

partner in many of the government wide initiatives, 

including e-payroll, e-travel, e-learning, and 

rulemaking. In addition to the government wide 

initiatives, we have implemented DOT initiatives to 

expand services and information available to the 

public through such initiatives and TranStats and the 

St. Lawrence Seaway binational website partnership 

with the Canadian government. 
 FY 2002 Performance and Accountability Report 9

INITIATIVE

 

 FY 2002 

 STATUS 

PROGRESS HOW DOT IS MEETING PMA CHALLENGES 

Budget/Performance 

Integration: 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. 

S Q

DOT Performance Plan and Reports. DOT’s 

Performance Plans and Reports have consistently 

garnered a high standing from George Mason 

University’s Mercatus Center, and the General 

Accounting Office. The DOT FY 2003 Performance 

Plan/FY 2001 Performance Report gained Mercatus’ 

top rating last year. DOT’s Strategic Plans likewise 

have consistently been rated as the best in 

government. 

Cost Accounting System (CAS): In 2001, FAA 

enhanced the CAS to provide for costing of Terminal 

Services, thus completing the implementation of all 

four Air Traffic Services. The CAS has also been 

used to produce the agency’s Statement of Net Cost 

since 1998. In 2002, FAA added six organizations to 

CAS, now capturing 76 percent of agency costs by 

product or service. To improve the accuracy of labor 

costs in the CAS, a sub-set of agency employees 

began tracking their time by project and activity in the 

Labor and Distribution Reporting (LDR) system. This 

will be expanded in the coming year. Since 1999, 

FAA had used the CAS to produce their annual 

Statement of Net Cost. In 2003, all FAA line of 

business employees will begin tracking their annual 

Statement of Net Cost. In 2003, all FAA line of 

business employees will begin tracking their time in 

LDR and the existing CAS and LDR systems will be 

converted to be compliant with the new Delphi 

system. FAA will complete its CAS implementation in 

the remaining lines of business in FY 2004. 

The Bureau of Transportation Statistics (BTS) 

developed a method to monitor activities by tracking 

non-labor spending to the project level using new 

accounting codes, a first step toward BTS’ cost 

accounting. 

Tracking Operations and Labor Costs: The Volpe 

National Transportation Systems Center, part of 

RSPA, tracks key fiscal trends, such as obligations, 

labor, and acquisitions on a regular basis. Volpe 

prints a pocket size summary brochure that is used in 

management meetings to review the financial status 

of the agency. Volpe’s staff members are able to 

assess their operation costs, and compare their labor 

and overhead costs from the past to the current fiscal 

year. 

The next section of the Report describes the activity or financial highlights for each operating administration that help 

DOT meet its departmental objectives. 
 FY 2002 Performance and Accountability Report 10

Federal Highway Administration 

(FHWA)

FHWA provides grants to States to help plan, build, 

maintain, and manage the Nation’s highway system and 

bridges. It also performs research and development of 

highway and trucking related issues; manages the 

Intelligent Transportation System (ITS) program; and 

operates the direct Federal highway construction 

program for Federal lands. 

Highway Trust Fund 

A majority of FHWA programs and projects are 

authorized by the Transportation Equity Act for the 21st 

Century (TEA-21) and receive funds from the Highway 

Trust Fund (HTF). 

FHWA programs are primarily “user funded” 

programs, supported by the Federal gasoline/diesel tax 

and taxes on other motor vehicle-related products (e.g., 

tires, trucks, trailers), and truck use taxes. The tax 

collections are deposited into the HTF and dedicated to 

financing Highway and Transit programs. About 14 

percent of the HTF revenue was dedicated to Federal 

transit programs in FY 2001 and FY 2002. FHWA 

obligations for the HTF totaled $39.7 billion at the end 

of FY 2002. The cash balance in the HTF at the end of 

FY 2002 was about $22 billion. 

Transportation Infrastructure Finance And Innovation 

Act 

FHWA has innovative financing initiatives such as the 

Transportation Infrastructure Finance and Innovation 

Act (TIFIA) to support financial investments in 

transportation. Since the creation of TIFIA, DOT has 

selected 11 projects to benefit from TIFIA at a 

budgetary cost of $202 million to the Federal 

Government and provided $37 billion in credit 

assistance supporting transportation investments. 

Federal Aid and State Grants 

Federal-aid highway funding accounts for the majority 

of FHWA’s budget authority. It provides for 

construction and preservation of the approximately 

46,700 mile Dwight D. Eisenhower National System of 

Interstate and Defense Highways, generally financed on 

a 90 percent Federal to 10 percent State basis. It also 

provides for improvements on approximately 900,000 

miles of other Federal-aid arterial and collector routes, 

with financing generally on a 80 percent Federal to 20 

percent State basis. 

Federal Aviation Administration 

(FAA) 

The FAA is charged with providing a safe, secure, and 

efficient aviation system that contributes to national 

security. FAA establishes and enforces regulations and 

conducts oversight inspections of the civil aviation 

industry. The Agency operates and maintains the 

complex air traffic control system and the facilities and 

equipment that support it. Air traffic controllers 

supervise more than half of the world’s air traffic each 

day – 5,000 aircraft at any given moment and close to 7 

million commercial, military, and general aviation 

aircraft each year. The 51,000-person, $14 billion 

administration also conducts research to improve safety 

and efficiency, and assists in the development of a 

nationwide system of more than 5,000 public use 

airports in the United States. The FAA also regulates 

and licenses U.S. commercial space transportation 

activities. 

Cost Accounting System (CAS) 

FAA is continuing with the development and 

implementation of a cost accounting system, and is 

developing an Interim Fixed Asset System (IFAS). 

FAA's cost accounting system captures investments, 

operating and overhead costs, revenues, and other 

financial measurement and reporting aspects of 

operations. The CAS is also used to determine the cost 

of Air Traffic Services and supports the calculation of 

overflight user fees. IFAS will receive data 

electronically from various property systems, further 

enhancing the integration of DOT's financial systems. 

IFAS will compute the depreciation for FAA's owned 

assets that meet the Department's capitalization criteria. 

Finally, as the Operating Administrations of the 

Department continue to migrate to Delphi, they will 

have enhanced cost accounting capabilities based on 

the best practices of the private sector. 

Federal Transit Administration 

(FTA) 

Public transit provides access to school, work, and 

community services and activities for millions of 

Americans. Over 95 billion trips were taken on public 
 FY 2002 Performance and Accountability Report 11

transit in FY 2001. FTA provides financial assistance 

to develop new transit systems, and to improve, 

maintain, and operate existing systems. Funds are 

provided through legislative formulas or discretionary 

authority. In 2002, FTA provided funding to over 600 

public transit operators in 417 urbanized areas, 1,300 

transit systems serving rural areas, and 4,000 agencies 

that provide transit service to elderly and disabled 

individuals. These systems operate 154,244 total 

transit vehicles, 10,572 miles of rail track, 2,825 rail 

stations, and 1,269 maintenance facilities nationwide. 

New Starts 

TEA-21 authorized $6.1 billion n guaranteed funding 

for the New Starts program through FY 2003. An 

additional, $3.4 billion in "contingent" or "bridge" 

authority was authorized, increasing the total to $9.5 

billion. 

Projects eligible for FTA New Starts funding include 

an extension of an existing or new fixed guideway 

system which utilizes and occupies a separate right-ofway, or rail line, for the exclusive use of mass 

transportation and other high occupancy vehicles, or 

uses a fixed catenary system and a right of way usable 

by other forms of transportation. This includes, but is 

not limited to, rapid rail, light rail, commuter rail, 

automated guideway transit, people movers, and 

exclusive facilities for buses (such as bus rapid transit) 

and other high occupancy vehicles. 

United States Coast Guard 

(USCG) 

The United States Coast Guard is a military, multimissioned maritime service and one of the Nation’s 

five Armed Services. Its mission is to protect the 

public, the environment, and U.S. economic interests in 

the Nation’s ports and waterways, along the Nation’s 

coastline, on international waters, and in any maritime 

region as required to support national security. The 

Coast Guard established a new level of maritime 

security operations around our Nation and beyond its 

borders while enhancing DOT’s capabilities in 

maritime safety, mobility, and environmental 

protection. 

Assets Accounting and Property Management System 

The Coast Guard successfully completed 

implementation of a commercial off-the-shelf (COTS) 

asset accounting and property management system, 

Oracle Financials – Fixed Assets Module. 

Property custodians now have more detailed 

information available on the location, value, status, and 

condition of the property under their control. 

Procedures have been established for performing 

ongoing physical inventories of capital assets for 

validation with system records. 

By closely working with program managers and 

utilizing application extensions, the Coast Guard was 

able to implement its Oracle Fixed Assets Module in 

less than one year and replace several non-integrated 

asset systems with it. 

Transportation Security 

Administration (TSA) 

Created in FY 2002, TSA protects the Nation’s 

transportation systems to ensure freedom of movement 

for people and commerce. TSA provides aviation 

security and coordinates security policy for the 

Nation’s railway, highway, pipeline, and waterway 

systems. TSA is supported by a combination of 

general funds and user fees. 

Financial Statements Module 

As a part of implementing the Delphi system, TSA is 

adopting a document imaging system that integrates 

scanned images of financial documents with financial 

records in Delphi and makes the document images 

easily and quickly accessible over the Web. The TSA 

Financial Statements Module (FSM) automates the 

preparation of an Adjusted Trial Balance Report with 

an accompanying Audit Transaction Report. The FSM 

provides an efficient means of preparing financial 

statements that ensures the accuracy and integrity of 

data. The FSM currently consolidates data from 

Delphi, and prepares the Consolidated Financial 

Statements. 

Federal Railroad Administration 

(FRA) 

FRA was created in 1966, to promote and enforce safety 

throughout the U.S. railroad system, rehabilitate the 
 FY 2002 Performance and Accountability Report 12

Northeast Corridor rail passenger services, consolidate 

Federal support for rail transportation, and support 

research and development. FRA also educates the public 

on dangers associated with railroading and encourages 

cooperative efforts to advance safety throughout 

America’s rail system. A rail system that in FY 2002 

included over 659 different railroads, ranging from major 

freight railroads and Amtrak’s Northeast Corridor to 

historic railroads of one mile to two miles in length. 

Railroad Rehabilitation and Improvement Financing 

(RRIF) 

RRIF loans help maintain and improve railroads. FRA 

provides direct loans or loan guarantees for the 

acquisition, development, improvement or 

rehabilitation of existing or new intermodal or rail 

equipment facilities. Eligible borrowers include 

railroads, State and local governments and government 

sponsored authorities. A $2.07 million 25-year direct 

loan was awarded to the Mount Hood Railroad, a short 

line railroad based in northwest Oregon. Mount Hood 

Railroad operates a 22-mile line extending from the 

City of Hood River on the Columbia River to Parkdale, 

Oregon. The Mount Hood Railroad provides both 

freight and scenic passenger services. The Oregon 

Department of Transportation supported Mt. Hood’s 

RRIF application by paying the credit rule premium. 

As a result of the loan, a greater partnership now exists 

between DOT, the FRA, and the Oregon Department of 

Transportation that benefits the State’s short line 

industry and the rail customers. 

National Highway Traffic Safety 

Administration (NHTSA) 

NHTSA traffic safety programs encompass a range of 

strategies to reduce the number of crashes and their 

consequences. These programs include highway safety 

research, demonstrations of new technologies and 

techniques, and outreach efforts, particularly focusing 

on multi-cultural education programs and high-risk 

groups. 

Incentive Grants Against Drunk Driving 

At the National Highway Transportation Safety 

Administration (NHTSA), program cost effectiveness 

is a foremost consideration in all of the activities. 

NHTSA’s programs are designed specifically to 

intensify efforts in behavioral and vehicular safety 

initiatives. 

The Transportation Equity Act for the 21st Century 

(TEA-21) authorized $500 million, over a six-year 

period, for incentive grants to encourage States to 

increase safety belt use rates. In 2001, safety belt use 

saved over 12,000 lives. However, about 25 percent of 

Americans still do not use safety belts when driving or 

riding in motor vehicles. For each percentage point 

increase in safety belt use, 2.8 million more people 

buckle up, saving approximately 265 additional lives 

and preventing over 6,400 additional injuries each year. 

Eighteen states, the District of Columbia, and Puerto 

Rico now have primary safety belt laws. In June 2002, 

the average safety belt use rate in States with primary 

enforcement laws was 11 percentage points higher than 

in States without primary enforcement laws. (Safety 

belt use was 80 percent in primary law States versus 69 

percent in States without primary enforcement.) 

TEA-21 also authorized $219.5 million, over a six-year 

period for NHTSA, to continue the Section 410 

alcohol-impaired driving countermeasures incentive 

grant program. To qualify for this grant, States must 

either demonstrate that they have in place certain laws 

or programs, such as administrative license revocation 

laws and graduated licensing programs, or meet certain 

performance criteria based on their alcohol-related 

fatality rates. States use Section 410 grant funds to 

implement and enforce alcohol-impaired driving 

countermeasures. 

Federal Motor Carrier Safety 

Administration (FMCSA) 

The Federal Motor Carrier Safety Administration’s 

(FMCSA) primary mission is to prevent commercial 

motor vehicle-related fatalities and injuries. FMCSA 

activities contribute to ensuring safety in motor carrier 

operations through strong enforcement of safety 

regulations, targeting high-risk carriers and commercial 

motor vehicle drivers; improving safety information 

systems and commercial motor vehicle technologies; 

strengthening commercial motor vehicle equipment 

and operating standards; and increasing safety 

awareness. 

FMCSA and State authorities completed 10,271 

compliance reviews in 2002. In addition, 30,893 motor 

carriers were reached through security sensitivity visits. 

FMCSA initiated 3,791 enforcement actions in 2002 

for claims totaling more than $21 million (an average 

of $5,554 per claim), issued 182 out-of-service orders, 

and 677 orders to cease operations. 
 FY 2002 Performance and Accountability Report 13

Border Program Funds 

FMCSA obligated $62.5 million in grant and 

operations funding to ensure safety and security 

activities in conjunction with opening the U.S.-Mexico 

border to Mexican commercial vehicles. This included 

deploying additional inspectors along the U.S.-Mexico 

border and additional safety investigators to evaluate 

Mexican carriers’ safety. 

HAZMAT Funds 

In response to the events of 9/11, FMCSA obligated 

$19.5 million to complete over 30,890 security 

sensitivity visits aimed at educating carriers on 

appropriate HAZMAT security processes and 

procedures. 

Commercial Drivers License Funds 

In FY 2002, FMCSA obligated $8 million for research, 

training, and implementation of commercial drivers 

license (CDL) fraud detection and prevention 

techniques. 

Maritime Administration 

(MARAD) 

MARAD is the Federal Government’s link to the U.S. 

and international maritime industry. MARAD provides 

education and training of merchant mariner officers at 

the U.S. Merchant Marine Academy and six State 

Maritime Schools; manages the Ready Reserve Force 

within the national Defense Reserve Fleet (NDRF); 

supports the shipbuilding and repair industry; disposes 

of obsolete vessels In the NDRF; undertakes 

emergency planning and coordination; promotes port 

and intermodal development; and administers maritime 

war risk insurance. 

Implementation of Port Security Electronic Grants 

System 

In February 2002, MARAD, in partnership with TSA 

and USCG, implemented the first all electronic grants 

system to award competitive Port Security Grants (P.L. 

107-117) with $92.3 million in emergency funding. A 

total of 850 project applications for Port Security 

Grants were submitted on-line in response to the 

announcement, resulting in a total award of 78 Port 

Security Grants in a record time of 4 months. 

Electronic grant administration is ongoing. 

Fair and Reasonable Guideline Rates

A total of 239 fair and reasonable guideline rate 

determinations were made during the fiscal year, 

covering 3.2 million metric tons of food aid cargoes. 

Office of the Secretary 

(OST) 

The Office of the Secretary (OST) provides policy 

development and central supervisory and coordinated 

functions necessary for overall planning and direction 

of the Department. OST’s budget supports salaries and 

expenses, planning, research and development, and 

supports the Office of Civil Rights and the Minority 

Business Resource Center. 

Electronic Grants 

DOT has formalized the grants management policy, 

which provides guidance to grant program officials on 

implementing the various OMB grants management 

circulars and DOT-issued common rules. Programspecific regulations, guidance, and award conditions 

make reference to the various departmental grantrelated rules. Most grant programs require the standard 

OMB grant application and reporting form, or have 

requirements that are substantially reduced from the 

standards. 

The Department continues to play a major role in the 

development of government-wide standards and 

requirements. Departmental staff members were 

instrumental in establishing the Inter-Agency 

Electronic Grants Committee (IAEGC), leading the 

Government-wide Grants Network, and providing key 

leadership positions in the Federal Grants Streamlining 

Program that implements Public Law 106-107, the 

Federal Financial Assistance Management 

Improvement Act of 1999. The Department was a 

major participant in the development of grant financial 

National Security National Security

Shipbuilding Shipbuilding

Intermodalism Intermodalism

Trade

MARAD’s Strategic Goals MARAD’s Strategic Goals
 FY 2002 Performance and Accountability Report 14

system standards by the Joint Financial Management 

Improvement Program (JFMIP). 

DOT Building Security 

Immediately following the events of September 11, 

2001, OST organized to provide priority services and 

around-the-clock duty personnel in support of 

exceptional departmental requirements, particularly in 

support of the Office of the Secretary, the FAA, and 

later the Transportation Security Administration. This 

effort included the installation of additional emergency 

telecom and local area network capacity for more than 

1,000 users at the GSA and Nassif Buildings. A stateof-the-art Voice Over Internet Protocol network was 

also established to serve more than 1,000 users in five 

different building locations. 

Research and Special Programs 

Administration (RSPA) 

RSPA programs make America’s transportation 

systems more integrated, effective, and secure by 

conducting and fostering crosscutting research and 

special programs to enhance the quality of life, safety, 

the environment, and the well-being of all Americans. 

RSPA’s mission can be broken down into three major 

programs: the pipeline and HAZMAT transportation 

safety, research and technology, and emergency 

preparedness. 

Tracking Operations and Labor Costs 

The Volpe National Transportation Systems Center, 

part of RSPA, is an innovative, fee-for-service 

organization for transportation and logistics expertise, 

providing customers with policy support and strategic 

planning and analysis. Volpe tracks key fiscal trends, 

such as obligations, labor, and acquisitions on a regular 

basis. Volpe prints a pocket size summary brochure 

that is used in management meetings to review the 

financial status of the agency. Volpe’s staff members 

are able to assess their operation costs, and compare 

their labor and overhead costs from the past to the 

current fiscal year. Volpe is also able to track their 

labor and operations costs by the various OAs, and 

other Departments (e.g., DOD, DOE, EPA) to whom 

they provide services. 

 

Office Of Inspector General 

(OIG) 

The Inspector General Act of 1978, as amended 

(Inspector General Act, P.L. 95-452), established the 

OIG as an independent and objective organization 

within DOT with responsibility for (1) conducting and 

supervising objective audits and investigations of 

DOT’s programs and operations, (2) promoting 

economy, effectiveness, and efficiency within DOT, 

and (3) preventing and detecting, fraud, waste, and 

abuse in the Department’s programs. The OIG is 

charged with keeping the Secretary of Transportation 

and the Congress fully informed about problems in 

departmental programs and operations and making 

recommendations for improvements. OIG also has 

significant responsibilities under the Chief Financial 

Officers Act, the Government Management Reform 

Act, and the Government Information Security Reform 

Act (GISRA), as well as the Government Performance 

and Results Act (GPRA). OIG will fulfill these 

responsibilities by overseeing required audits of DOT’s 

financial statements, assessing the adequacy of internal 

control systems, and identifying opportunities to 

achieve financial benefits and improve program 

performance. 
 FY 2002 Performance and Accountability Report 15

OIG Audits 

The Department of Transportation is required to 

prepare audited financial statements. In FY 2001 and 

FY 2002, DOT received an unqualified opinion on its 

financial statements, indicating that DOT’s resources 

are properly accounted for, its financial condition fairly 

reported, and that steps have been taken to ensure that 

DOT can sustain those results in the future. 

The DOT OIG also conducts performance audits of 

DOT programs. These performance audits examine 

performance and management of DOT programs with 

the intent to improve program operations, decisionmaking, and public accountability. 

The OIG plan for selecting grantees for quality control 

reviews assures each grantee for which DOT has audit 

cognizance will receive at least one quality control 

review within a 5-year period. Other grantees selected 

for review were determined based on both risk and the 

dollar value of transportation expenditures and major 

program dollars. 

Bureau of Transportation Statistics 

(BTS) 

BTS’ mission is to lead in developing transportation 

data and information of high quality, and to advance 

their effective use in both public and private 

transportation decision making. 

Government Transportation Financial Statistics Report 

BTS updated and provided quality control to numerous 

DOT publications, particularly to data and information 

in the Government Transportation Financial Statistics 

Report. 

Cost Accounting 

BTS developed a method to monitor activities by 

tracking non-labor spending to the project level using 

new accounting codes, one of the initial steps toward 

cost accounting in this Operating Administration. In 

September 2002, BTS also implemented a Labor 

Distribution Reporting (LDR) system. BTS formed a 

working group within DOT to guide the project and is 

planning to collaborate with the Federal Aviation 

Administration and their LDR system. 

Surface Transportation Board 

(STB) 

The STB was established on January 1, 1996, by the 

Interstate Commerce Commission Termination Act of 

1995 (ICCTA). The ICCTA eliminated the Interstate 

Commerce Commission (ICC) and transferred certain 

functions formerly performed by the ICC to the STB. 

The STB is a three-member, bipartisan body with 

jurisdiction over certain regulatory matters. The 

mission of the STB is to promote substantive and 

procedural regulatory reform in the economic 

regulation of surface transportation, and to provide a 

forum for dispute resolution and facilitation of 

appropriate business transactions. 

The STB’s funding included an appropriation of 

$18.448 million, of which $0.95 million was provided 

from the collection of user fees that are credited to the 

appropriation as offsetting collections on a dollar-fordollar basis. The STB annually updates and revises its 

user fee schedule of 114 different fee-related activities. 

Saint Lawrence Seaway 

Development Corporation (SLSDC) 

The U.S. Saint Lawrence Seaway Development 

Corporation (SLSDC), a wholly owned government 

corporation and an operating administration of the U.S. 

Department of Transportation (DOT), is responsible for 

the operations and maintenance of the U.S. portion of 

the St. Lawrence Seaway between Montreal and Lake 

Erie. This responsibility includes maintaining and 

operating the two U.S. Seaway locks located in 

Massena, N.Y., and vessel traffic control in areas of the 

St. Lawrence River and Lake Ontario. In addition, the 

SLSDC performs trade development functions 

designed to enhance Great Lakes St. Lawrence Seaway 

System utilization. Maritime commerce on the Great 

Lakes Seaway System annually generates 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. The 

SLSDC coordinates its activities with its Canadian 

counterpart, The St. Lawrence Seaway Management 

Corporation (SLSMC), particularly with respect to 

environmental programs, operating dates, and trade 

development programs. The unique binational nature 
 FY 2002 Performance and Accountability Report 16

of the Seaway System requires 24-hour, year-round 

coordination between the two Seaway entities. 

The SLSDC has joined with its Canadian counterpart, 

the St. Lawrence Seaway Management 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. In FY 2002, 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 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 in operating costs 

during FY 2002. 
 

FY 2002 Performance and Accountability Report 17 

MANAGEMENT DISCUSSION AND ANALYSIS 

Introduction 

The Department of Transportation (DOT) is committed to embodying the President’s goals of a citizen-centered, 

results-based, market-oriented government. Transportation is a key element in our national economy - it helps maintain 

our standard of living, and supports our Nation’s defense. Everything we do at DOT is aimed at making measurable 

improvements in our transportation system, the security of our Nation, and the quality of American life. In this first 

combined Performance and Accountability Report and fourth annual Performance 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 management framework is as follows: 

▪ The DOT Strategic Plan provides a comprehensive vision for improving the Nation’s complex and vital 

transportation system. For the next several years, it puts forth broad objectives; targets specific outcomes we want 

to achieve, and identifies key challenges. 

▪ The DOT Performance Plan operationalizes the Strategic Plan, and provides strong linkages to DOT’s budget 

request. The Plan defines performance goals and measures used to manage progress toward our strategic 

objectives. It describes in detail one fiscal year’s resources and programmatic effort within a strategic context. 

▪ The DOT Performance Report provides accountability against our FY 2002 performance goals. 

▪ Accountability Agreements for DOT organizations, executives, and employees embed the philosophy of managing 

for performance into the Department’s culture and daily practices. 

This graphic describes how DOT plans, measures, manages, and reports on performance: 

How We Select Our Performance Goals 

and Measures 

Performance goals articulated in the introductory 

paragraph of a goal page in the DOT Plan are aimed at 

achieving one or more strategic outcomes, and convey 

a sense of how DOT creates value for the American 

public. Performance measures, however, are aimed at 

tangible effects created by DOT program activities. 

DOT Strategic goals

DOT Performance Goals and 

Measures

Supplementary Operating 

Administration performance goals

Organizational Accountability 

Contracts

Executive Performance 

Agreements

Employee Performance 

Plan

Management projects
 

FY 2002 Performance and Accountability Report 18 

We have tailored performance measures to how DOT 

gets our work done (described in the next section) for 

each performance goal. When considered along with 

external factors and information provided in program 

evaluations, these measurements give valuable insight 

into the performance of DOT programs, and are meant 

to broadly illustrate how DOT adds value to the 

Nation. The FY 2002 Performance Plan depicted a 

top-level, integrated system for managing for results 

within DOT, and was not an exhaustive treatment of all 

DOT programs and activities. This report in 

conjunction with DOT’s FY 2002 Performance Plan

must be read with each DOT Operating 

Administrations’ own performance results to gain a 

comprehensive picture of everything DOT 

accomplished in FY 2002. 

Terminology 

We will use the following terminology throughout 

the report: 

Strategic Objective – 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. 

How DOT Works to Achieve Strategic and 

Organizational 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, airline passenger security screening, and 

Coast Guard’s vessel traffic services, maritime 

search and rescue, and military operations. 

• Infrastructure investments and other grants, such 

as investment in highway, rail, transit, airport, and 

Amtrak capital infrastructure improvement, 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. 

• Enforcement to ensure compliance, including 

inspections, investigations, and penalty action. 

• 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. 

• 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. Tax expenditures are also a significant tool by 

which the Federal Government encourages 

transportation investment, but do not represent a key 

tool of intervention by DOT. 

The performance report focuses on DOT’s five 

strategic goal areas and describes the results we saw in 

FY 2002. Some activities are internal ones – like 

financial management, procurement, and personnel -- 

without which the Department could not operate or 

hope to achieve its goals. The Organization Excellence 

chapter 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 marketbased transportation solutions. 
 

FY 2002 Performance and Accountability Report 19 

PERFORMANCE REPORT 

Our 2002 Results: A Reader’s Guide 

For each strategic and organizational goal, we present 

performance goals and measures in the FY 2002 

Performance and Accountability Report, along with 

our performance against them. For each performance 

goal we provide: 

▪ a description of the challenge we face – the reason 

for action;

▪ the measure or measures we are using to judge 

success, and the FY 1999-2002 targets for each; 

▪ a discussion of other agencies who share in our 

efforts, or whose outcome goals we contribute to; 

▪ the external factors that may present special 

challenges in achieving our goal; 

▪ special management challenges (when related to 

the goal); and 

▪ a performance forecast for FY 2003.

To present information meaningfully, we have relied 

on these general rules about data and data 

interpretation in preparing this report: 

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 Coast 

Guard drug and migrant interdiction, are influenced 

both by external forces and prior-year acquisition 

activities. Other results, such as highway congestion or 

transit ridership, are predominately influenced by prioryear funding. 

Fiscal Year versus Calendar Year: Most DOT 

results are reported on a fiscal year basis, but some are 

reported on a calendar year basis. We have been 

careful to note the calendar or fiscal year basis of result 

and trend measurement. Either is a satisfactory basis 

for measuring DOT’s annual performance. 

Summary Performance Report: To help interpret 

single year results and historical trends, we have 

provided a tabular summary of long-term performance 

at the beginning of each strategic goal section. We also 

have provided a table to report final FY 2001 

performance information for performance measures 

that had projected or preliminary performance data in 

last year’s report. 

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.dot.gov. In that website, we also provide 

information to resolve the inadequacies that exist in our 

performance data. 

Preliminary vs. Final Results: Reporting FY 2002 

results by February 2003 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. 

Single Year Results vs. Historical Trends: Federal 

and State programs rarely aim to influence simple 

things. We tackle complex national problems such as 

safety, pollution, and congestion. Sometimes we see 

progress overwhelmed by external factors, such as 

economic growth (or recession), market shifts, or 

extreme weather, and sometimes we get a “helping 

hand” from those same factors. Always there is natural 

fluctuation year to year. 

DOT sets annual performance targets for the outcomes 

it aims to influence. Targets set a mark so we can 

judge our progress. They also force us to think hard 

about what we can – and can’t – do to get results. In 

this report, we focus on single-year results for 

FY 2002. There is no simple formula that ties the 

results in one year to the success or failure of 

programs. DOT’s FY 2002 Performance and 

Accountability Report invites the reader to “look over 
 

FY 2002 Performance and Accountability Report 20 

our shoulder” as we improve transportation and make 

Americans’ quality of life better. 

Integrating FY 2002 Resource Expenditure 

Accounting With Achievement of Our Goals

A fundamental strength of DOT programs is that our 

activities affect multiple goal areas. By design, a dollar 

spent on transportation infrastructure can not only 

advance mobility, but safety, homeland and national 

security, economic growth, and the mitigation of 

harmful environmental impacts. We strive for clearer 

linkages between expenditures and performance. 

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 National Security Strategic goal, we make very 

important contributions in accordance with our 

mandates and appropriations, but we do so alongside 

the Departments as Defense, 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 General 

Accounting 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. Where 

there is a DOT performance goal associated with a 

management challenge, we discuss the challenge as a 

part of our performance against that goal, and made it 

stand out visually by use of a text box. We also 

indicate where a Management Challenge relates to 

more than one performance goal. 
 

FY 2002 Performance and Accountability Report 21 

SAFETY

STRATEGIC OBJECTIVE: Promote the public health and safety by working toward the elimination of 

transportation-related deaths and injuries. 

Strategic Outcomes: 

▪ Reduce the number of transportation-related deaths. 

▪ Reduce transportation-related injuries. 

Safety is our most important strategic objective. We strive to improve the benefits of transportation while constantly 

reducing the risk to their health and well being. In FY 2002, DOT safety programs continued to reduce transportationrelated fatalities and injuries. 

PERFORMANCE SUMMARY: 

1996 1997 1998 1999 2000 2001 2002 2002 

Target

Met Not 

Met 

Highway fatalities/100 million vehiclemiles traveled (VMT) 1.69 1.64 1.58 1.55 1.53 1.51 1.50* 1.4 9

Fatalities involving large trucks 5,142 5,398 5,395 5,380 5,282(r) 5,082(r) 4,984* 4,710 9

Fatalities involving large trucks per 100 

million commercial VMT 

2.8 2.8 2.7 2.7 2.6(r) 2.45 2.4* 2.2 9

U.S. commercial fatal aviation 

accidents/100,000 departures (Last 3 

years’ average) 

0.051 0.057(r) 0.046 0.051 0.037 0.037 0.026* 0.038 9

Fatal general aviation accidents 382 378 396 364 341 359(r) 346* 379 9

Percent of all mariners in imminent 

danger rescued 

84 84 84 87.5 82.7 84.2 84.4 85 9

Train-accidents/million train-miles 3.64 3.54 3.77 3.89 4.13 4.22(r) 3.56 4.00 9

Grade crossing accidents divided by the 

product of million train-miles and trillion 

VMT 

2.57 2.27 1.98 1.83 1.76(r) 1.64(r) 1.54 1.39 9

Transit fatalities/100 million passengermiles traveled 0.520 0.545 0.564 0.530 0.499(r)0.480(r) 0.487* 0.492 9

Number of excavation damages to 

natural gas and hazardous liquid 

pipelines. 

122 99 129 100 119 121 75* 111 9

Serious hazardous materials incidents in 

transportation 

466 486 456 540(r) 565(r) 515(r) 189* 523 9
 

FY 2002 Performance and Accountability Report 22 

FY 2001 FINAL DOT PERFORMANCE REPORT

1995 1996 1997 1998 1999 2000 2001 2001 

Target

Met Not 

Met

Highway injured persons/100 million 

VMT 

143 140 131 121 120 116 109(r) 113 9

Injured persons involving large 

trucks (in thousands) 

117 129 131 127 142 140 131(r) 122 9

Percent highway fatalities alcoholrelated 41 41 39 39 38 40 41 34 9

Operational errors/100,000 activities 0.52 0.51 0.49 0.56 0.57 0.68 0.73 0.5 9

Runway incursions 227 268 301 311 330 405 407 243 9

Recreational boating fatalities 888 770 857 864 778 742 722(r) 749 9

Rail-related fatalities/million trainmiles 1.71 1.55 1.57 1.48 1.31 1.30 1.36 1.23 9

Natural gas transmission pipeline 

failures 

4,767 4,964 4,871 4,160 4,467 2,750 2,831(r) 4,375 9

* Preliminary estimate 

(r) Revised 

HIGHWAY SAFETY: Highway crashes cause 95 

percent of all transportation-related fatalities and 99 

percent of transportation injuries, and are the leading 

cause of death for people ages 4 through 33. About 70 

million people (25 percent) still do not use safety belts 

when driving or riding in motor vehicles. Alcohol is 

the single biggest contributing factor to fatal crashes – 

over 17,000 annually. About 12 percent of all people 

killed in motor vehicle incidents are involved in a crash 

with a large truck, yet trucks represent only 4 percent 

of registered vehicles and about 7 percent of the 

vehicle-miles of travel. Highway crashes place a 

considerable burden on our health care system – 

reaching $230.6 billion a year, or an average of $820 

for every person living in the United States. 

Performance measures: 

Fatalities per 100 million vehicle-miles of travel 

(VMT). 

 1999 2000 2001 2002

Target: 1.6 1.5 1.5 1.4 

Actual: 1.6 1.5 1.5 1.5# 

Number and rate (per 100 million commercial VMT) 

of fatalities in crashes involving large trucks. 

 1999 2000 2001 2002

Target:

Number: N/A 4,934 4,830 4,710 

Rate: N/A N/A N/A 2.2 

Actual: 

Number: 5,380 5,282(r) 5,082(r) 4,984# 

Rate: 2.7 2.6(r) 2.45 2.4# 

(r) Revised; # Preliminary estimate. 

Note on data: Traffic fatalities are based on States’ 

monthly fatality counts for the first half of FY 2002 

and are then annualized through an estimating process. 

Performance targets and results for 1999 through 2001 

are on a calendar year basis, which are not materially 

different from FY 2002 targets and estimated results. 

2002 Results: DOT did not meet the highway fatality 

rate target, and did not meet the truck-related fatality 

and fatality rate targets. Traffic fatalities totaled an 

estimated 42,605 in 2002, up from 42,116 in 2001. 

However, DOT has made substantial progress in 

reducing the traffic fatality rate per 100 million vehicle 

miles from 3.3 in 1980 to 1.5 in 2002. 
 

FY 2002 Performance and Accountability Report 23 

NHTSA: Passenger vehicle occupant fatality rates are 

declining for all types of vehicles, despite a 

significantly rising number of vehicles being driven 

more miles. Fatalities among children ages 0-4 and 5-

15 are decreasing. Although non-occupant injuries 

have been declining, non-occupant fatalities have been 

increasing lately, for the first time since 1995. In 

addition, alcohol-related fatalities and motorcycle 

fatalities increased. 

Safety belts - The safety belt use rate is one of DOT’s 

highest priority safety programs. Belt use in 2002 

reached 75 percent, which is the highest rate yet 

observed and continues a relatively steady pattern of 

increase since use was first measured by a 

comprehensive national survey at 58 percent in 1994. 

States that allow more stringent enforcement of their 

belt use laws (“primary” States) reached a milestone of 

80 percent belt use in 2002, and substantial gains were 

also seen in the Northeast and in vans and sport utility 

vehicles. 

NHTSA focused on at-risk populations whose safety 

belt use rates were below the national level and 

conducted two “Click-It or Ticket” Campaigns 

emphasizing aggressive enforcement. NHTSA worked 

with partners and stakeholders to encourage additional 

States to enact primary belt laws, the strategy that has 

proven to most dramatically raise safety belt use and 

save lives. 

$15 million was enacted in 2002 for Occupant 

Protection Incentive Grants, and grants were awarded 

to 29 States, the District of Columbia, Puerto Rico, and 

2 Territories. For a State to be awarded such a grant 

they had to demonstrate their implementation of 

specific occupant protection laws and programs such as 

a safety belt law providing for primary enforcement or 

a law requiring use by individuals in all seating 

positions within the vehicle. 

Impaired drivers - In combating this important traffic 

safety issue, NHTSA focuses on high risk drinking 

drivers. Its five-State alcohol demonstration program 

(begun in FY 1999) was expanded to include Indiana 

and Michigan, with their high alcohol-related fatalities. 

The on-going national public education campaign “You 

Drink and Drive. You Lose.” in conjunction with 

highly publicized July and December enforcement 

mobilizations, communicated hard-hitting prevention 

messages to the public. NHTSA also focused on repeat 

and high blood-alcohol content offenders. 

TREAD - NHTSA revised child safety seat and tire 

standards, and published new requirements for a child 

safety seat ease-of-use rating system, tire labeling, and 

tire pressure monitoring systems in light vehicles. 

NHTSA also published regulatory notices for roof 

crush protection, school bus safety, occupant protection 

in interior impact and with advanced air bags, heavy 

truck braking and rear impact guards, electric vehicle 

crash safety, bus emergency exits and windows, and 

accelerator controls. NHTSA published a request for 

comments on a vehicle safety rulemaking priorities 

plan. 

Grants - $38 million was available for AlcoholImpaired Driving Countermeasures Incentive Grants, 

and 34 States received these grants to implement and 

enforce alcohol-impaired driving countermeasures. To 

qualify for this grant, States had to either demonstrate 

that they had in place certain laws or programs, such as 

administrative license revocation laws and graduated 

licensing programs, or had to meet certain performance 

criteria based on their alcohol-related fatality rates. 

State highway safety program formula grants totaling 

$160 million was also provided using a performancebased management process. States used this and their 

own funds to: 

▪ reduce speed-related fatalities; 

▪ encourage proper use of occupant protection 

devices; 

▪ reduce alcohol and drug impaired driving; 

▪ reduce crashes between motorcycles and other 

vehicles; 

▪ reduce school bus crashes; 

▪ improve police traffic services; 

▪ improve emergency medical services and trauma 

care systems; 

▪ increase pedestrian and bicyclist safety; 

▪ improve general roadway safety; and 

▪ improve State traffic record systems and highway 

fatality and injury data collection and reporting. 

FMCSA and its State partners have reduced fatalities in 

crashes involving large trucks four consecutive years, 

from 5,395 in 1998 to an estimated 4,984 in 2002, a 7.6 

percent reduction over the four-year period. The 

fatality rate for crashes involving large trucks, which 

takes into account increased risk exposure, has been 

reduced by 11 percent over the same time period. The 

large truck-related injury trend similarly has been 

encouraging, being reduced from 142,000 in 1999 to 

131,000 in 2002. 

Grants - In 2002, $160 million in safety grants to 

States supported motor carrier compliance and 

enforcement activities, including traffic enforcement 

and over 2.7 million commercial motor vehicle 

roadside inspections. 

Licensing - To improve the commercial driver’s license 

(CDL) program, FMCSA published a rule regarding 
 

FY 2002 Performance and Accountability Report 24 

driver disqualification and license requirements and 

penalties as required by the Motor Carrier Safety 

Improvement Act of 1999, completed 17 compliance 

reviews of State CDL programs, and distributed over 

$33 million in grants to States for CDL improvements. 

Enforcement and Compliance - FMCSA conducted 

7,492 compliance reviews of motor carriers in FY 

2002, and State authorities conducted an additional 

2,756. FMCSA also issued an interim final rule for the 

New Entrant Safety Assurance Program, to become 

effective in January 2003. This rulemaking requires all 

new entrants to pass an FMCSA safety audit within the 

first 18 months of operation in order to receive 

permanent DOT registration. 

Border Safety Enforcement - FMCSA completed all 

requirements contained within Section 350 of the FY 

2002 DOT Appropriations Act to open the U.S. - 

Mexico border to Mexican commercial vehicles, and 

issued rules governing safety monitoring, application 

for operating authority, and enforcement actions. 

FMCSA also provided policy guidance for 

enforcement at the border; developed centralized data 

systems; enhanced border inspection facilities; and 

hired, trained, and equipped an additional 214 border 

enforcement inspectors. 

FHWA’s approach to minimizing crash-related 

fatalities and injuries is to reduce the occurrence of the 

most frequent types of fatal crashes. In FY 2002, an 

estimated 38 percent of all fatalities occurred in 

roadway departures, 20 percent occurred at or near 

intersections, and about 11 percent involved 

pedestrians. 

To address roadway departure crashes, FHWA issued a 

Technical Advisory containing improved information 

on shoulder “rumble strip” design and installation for 

rural National Highway System segments. Mississippi 

installed and tested different rumble strip designs 

combined with pavement marking overlays on rural 

roads. Initial evaluations from this test indicated 

improved safety results on rainy nights from the morevisible markings and audible rumble strip warnings. 

To promote pedestrian and bicyclist safety, FHWA 

developed an Internet-based Bicycle Safety Education 

Resource Center to provide safety education 

information for bicyclists, motorists, and those who 

teach children to ride. The website contains a database 

of training materials, a guide to help interested parties 

identify the training needs of their audience, and 

guidance to assist with the development of new safety 

programs. 

NHTSA and FMCSA supplementary performance 

measures: 

Injured persons per 100 million vehicle-miles of travel. 

 1999 2000 2001 2002

Target: 127 116 113 111 

Actual: 120 116 109(r) N/A 

Number (000s) and rate (per 100 million commercial 

VMT) of injured persons in crashes involving large 

trucks. 

 1999 2000 2001 2002

Target: 

Number: N/A 125 122 121 

Rate: N/A N/A N/A 56 

Actual: 

Number: 142 140 131 N/A 

Rate: 70 68 63 N/A 

Alcohol-related fatalities per 100 million VMT 

 1999 2000 2001 2002

Target: N/A N/A N/A 0.55 

Actual: 0.59 0.63(r) 0.63(r) N/A 

Percentage of front occupants using safety belts. 

 1999 2000 2001 2002

Target: 80 85 86 75 

Actual: 67 71 73 75 

(r) Revised; N/A Not available. 

FY 2003 Performance Plan Evaluation: DOT will be 

challenged to meet the highway fatality rate target in 

2003. NHTSA will encourage additional States to 

enact primary safety belt laws and enforce them, and 

will continue efforts to reduce impaired driving. 

FMCSA also will be challenged in achieving the 2003 

fatality rate target. FMCSA will focus on enforcement 

and compliance activities, and extend its compliance 

and enforcement program to include safety audits of 

new motor carrier operations (New Entrants) and at the 

southern border. 

Management Challenge – Motor Vehicle Safety (IG) 

In its 2002 update on DOT’s management challenges, 

the IG made three findings related to motor vehicle 

safety: (1) Despite the combined efforts of Federal, 

State, and local governments, safety belt use rates have 

remained relatively constant, ranging from 66 to 70 

percent since 1993. 2002 safety belt use rates are at 75 

percent nationwide, below the rate needed to attain 78 

percent use by 2003; (2) Early identification of defects 
 

FY 2002 Performance and Accountability Report 25 

by NHTSA’s Office of Defects Investigation (ODI) can 

be improved. Congress questioned the preparedness of 

ODI to handle information that may contain early 

warning signs of product defects; and (3) the TREAD 

Act requires NHTSA to conduct 10 rulemakings in the 

areas of defects, tires, rollover tests, and child 

restraints. Six of the 10 rulemakings must be 

completed in 2001 or 2002. Since the IG found that it 

takes DOT an average of 3.8 years to complete a rule, 

significant management effort will be required to issue 

these rules in the time frame required by the Act. 

These issues are continued in the IG’s 2003 

management challenges report. 

NHTSA Actions: 

Strategies to increase safety belt use and reduce 

alcohol-related fatalities are discussed above. To 

improve defects investigation, NHTSA published the 

TREAD §3(b) Early Warning final rule. NHTSA is 

improving recall initiation criteria. TREAD actions 

included: 

▪ a final rule on Standards Enforcement, Defect 

Investigation and Noncompliance Reports Records 

Retention on July 10, 2002; 

▪ work on final rules to improve tire labeling and to 

revise and update tire safety standards; and 

▪ work on a rulemaking for improved child restraint 

safety, and creating a child restraint safety ratings 

program.

Management Challenge - Large Truck Safety 

(IG/GAO) 

The IG identified major challenges in motor carrier 

safety at the U.S.-Mexico border, improving oversight 

of the commercial driver license (CDL) program, 

managing the security implications of open borders; 

strengthening oversight and reducing fraud in the CDL 

program; and improving U.S. motor carrier safety 

enforcement. As traffic materializes, FMCSA will 

need to assess the adequacy of its inspection resources, 

including those beyond the Border States. These issues 

continue the IG’s 2003 report. GAO’s concerns extend 

to staffing in FMCSA, truck safety data quality and 

causal analysis, adequacy of FMCSA’s resources, and 

safety rulemaking. 

FMCSA 2002 activities and initiatives included: 

▪ compliance reviews for high-risk carriers; 

▪ security sensitivity visits, hazmat compliance 

reviews, and hazmat package and vehicle 

inspections; 

▪ the interim final rule for New Entrant Safety, 

requiring new entrants safety audits in the first 18 

months of their operation; 

▪ in August 2002, FMCSA issued a new rule that 

requires all states to place Mexican commercial 

vehicles out of service if they do not have U.S. 

operating authority; 

▪ completing all requirements of the FY 2002 DOT 

Appropriations Act, §350 to open the southern 

border to Mexican commercial vehicles; 

▪ policy guidance for border safety enforcement, and 

four rules governing safety monitoring and motor 

carrier operating authority; 

▪ centralized data systems, inspection facilities, and 

hiring, training, and equipping 214 more border 

enforcement personnel; 

▪ work on rulemakings for drivers’ hours-of-service 

and CDL improvements; 

▪ review of 17 State CDL programs and significant 

improvement of their operation; 

▪ advanced safety technology development, and 

deployment; 

▪ PRISM and CVISN deployment to more States; 

▪ operational tests of advanced commercial vehicle 

safety and security technology; 

▪ with NHTSA, investigation of almost 500 large 

truck crashes in the Large Truck Crash Causation 

Study; and 

▪ with NHTSA and the States, a commercial motor 

vehicle crash data collection system (CVARS) 

pilot test. 

AVIATION SAFETY: Commercial aviation is one of 

the safest forms of transportation. While 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. 

However, the majority of aviation fatalities have 

occurred in this segment of aviation. Since 1988, there 

has been a gradual trend downward in the number of 

general aviation accidents, but progress has not been 

steady. 
 

FY 2002 Performance and Accountability Report 26 

Performance measures: 

Fatal aviation accidents (U.S. commercial air carriers) 

per 100,000 departures (reported by 3-year average). 

 1999 2000 2001 2002

Target: .048 .045 .043 .038 

Actual: .051 .037 .037 .026# 

Number of fatal general aviation accidents. 

 1999 2000 2001 2002

Target: N/A 379 379 379 

Actual: 364 341 359(r) 346# 

(r) Revised. # Preliminary estimate 

2002 Results: DOT met the general aviation fatal 

accident and the commercial aviation fatal accident rate 

targets. 

Commercial Air Carrier Safety

FAA worked with the aviation community and other 

governmental agencies to identify causal factors of 

accidents and prevent strategies in three areas – aircraft 

technology, pilot safety, and maintenance and fleet 

management practices which prevent small safety 

problems from growing into large ones. In 2002, FAA, 

in concert with the aviation industry continued to: 

▪ implement ‘Safer Skies’ interventions, and 

monitor the progress of strategies to prevent 

uncontained engine failure, controlled flight into 

terrain, approach and landing accidents, and loss 

of control; 

▪ develop and implement the Air Transportation 

Oversight System (ATOS), the Safety 

Performance Analysis System (SPAS), Flight 

Operations Quality Assurance (FOQA), and the 

Aviation Safety Action Program (ASAP) – all of 

which are designed to catch safety problems and 

keep them from becoming causes of aircraft 

crashes; and 

▪ work on aging aircraft systems and fuel tank 

safety, including fuel tank inerting; 

FAA's regulation and certification program established 

aviation safety standards, monitored safety 

performance, conducted aviation safety education and 

research, issued and maintained aviation certificates 

and licenses, and managed rulemaking. 

FAA continued to implement an integrated research 

plan with NASA to effectively leverage combined 

safety research and development resources to reduce 

the aviation fatal accident rate. 

General Aviation Safety

Improving GA safety is a joint effort with the GA 

community to identify problems and implement 

solutions. GA safety in 2002 included: 

▪ publishing a new Advisory Circular, Controlled 

Flight into Terrain (CFIT) Awareness; 

▪ issuing the Aeronautical Information Manual 

(AIM) and guidance for pilots on the use of 

advanced weather products; 

▪ developing a personal minimums checklist 

involving weather scenarios and operations; and 

▪ upgrading safety equipment such as the flight 

service station automation system, automated 

weather observation systems, and communications 

systems that provide weather and altimeter 

settings. 

Together with the GA industry, FAA initiated a new 

program, System Safety Approach for General 

Aviation, to foster aviation safety and awareness. This 

joint effort will encourage use of new technology and 

will provide training and education to enhance safety. 

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. 

To help further reduce the number and rate of runway 

incursions, FAA: 

▪ conducted education, training and awareness for 

pilots, and controllers/vehicle operators and 

distributed more than 250,000 program materials 

(brochures, videotapes, CDs and other visual aids); 

▪ analyzed runway incursion risks by examining 

incursions from 1997 through 2001 and assigning 

those incursions to a severity category; 

▪ published two runway safety reports; 

▪ completed and distributed the Runway Safety 

Blueprint 2002–2004, which presents data 

collection results and analyses and defines 

objectives to be achieved during the next 2 years; 

▪ conducted pilot/controller communications 

phraseology reviews and Air Traffic Teamwork 

Enhancement Training for Tower Controllers; 

▪ developed and distributed training videotapes for 
 

FY 2002 Performance and Accountability Report 27 

airport vehicle operators and aircraft mechanics; 

▪ published and distributed two advisory circulars 

for airport surface operations and, with industry, 

developed an advisory circular for vehicle 

operations; and 

▪ conducted runway incursion “callbacks” – requests 

for information targeted at key factors of the 

runway incursion event -- through the NASA 

Aviation Safety Reporting System Program. 

Several other efforts are helping to reduce runway 

incursions. The Department of Defense has developed 

radar-imaging software to display aircraft and other 

vehicular movement, which has helped reduce runway 

incursions at military airports. NASA and FAA are 

also working cooperatively on aviation safety research 

and technology development for runway safety and 

other areas. The NTSB works to investigate runway 

accidents and determine causal factors useful in 

refining our safety program design. 

Operational Errors

When controllers fail to apply or follow aircraft 

separation standards and aircraft in flight pass too 

close, an operational error occurs. To give controllers 

better ways to determine aircraft location and reduce 

miscommunication between pilots and controllers, 

FAA: 

▪ provided training to provide a common 

understanding of procedures and policies among 

controllers and pilots is a central strategy for 

reducing operational errors; 

▪ identified factors that cause errors and 

implementing improvements in technology, such 

as the deployment of modern displays, new 

decision support tools, and improved 

communication systems; and 

▪ used lessons learned in reducing runway 

incursions as a model for reducing operational 

errors.

In addition, FAA: 

▪ investigated the use of the User Request 

Evaluation Tool (URET), a prototype conflict 

probe that provides controllers with more 

advanced notification of potential in-flight 

conflicts; 

▪ investigated the initial deployment of Controller 

Pilot Data Link Communications to improve pilot 

and controller communications, thereby reducing 

operational errors caused by miscommunication; 

▪ addressed and reduced repeat incidents by 

individuals through meaningful individual skill 

enhancement/remedial training. This was 

accomplished by better identification of causal 

factors, and refresher training on procedures for 

avoiding common types of operational errors; 

▪ continued to conduct QAR's to identify and correct 

controller performance deficiencies prior to an 

occurrence of an operational error or deviation, 

and resolve performance deficiencies through 

corrective training; and 

▪ with the National Air Traffic Controllers 

Association, developed and implemented a system 

to classify every operational error based on risk, 

and took action to train or discipline controllers 

based on an assessment of the cause and severity 

of the incident. 

The FAA proposed changing separation standards to 

reflect the level of risk. Changes to current rules and 

regulations, and NTSB and other interested parties’ 

concurrence is necessary before these new standards 

can be implemented. 

FAA supplementary performance measures: 

Number of operational errors where less than 80 

percent of required separation is maintained. 

 1999 2000 2001 2002

Target: N/A N/A N/A 568 

Actual: 570 610 674 615 

Number and rate (per 100,000 operations) of highest 

risk runway incursions. 

Target: 1999 2000 2001 2002

Number: N/A N/A N/A 53 

Rate: N/A N/A N/A 0.08 

Actual: 

Number: 69 67 53 37 

Rate: .10 .10 .08 .06 

FY 2003 Performance Plan Evaluation: DOT will 

meet the performance targets in FY 2003. 

Management Challenge – Commercial and General 

Aviation Safety (Operational Errors and Runway 

Safety) (IG/GAO) 

The IG and GAO have suggested FAA to take steps to 

reverse the trend in known safety risks such as runway 

incursions and operational errors, strengthen oversight 

and rulemakings, and manage the aviation safety and 

air traffic control workforce strategically over the long 

term. The IG stated that safety must take priority over 

the impact of increased demand, new technologies and 

budget cuts. The IG also listed several safety issues 

that the FAA must address. 
 

FY 2002 Performance and Accountability Report 28 

FAA faces many challenges in promoting aviation 

safety in a dynamic industry. FAA will determine the 

feasibility of expanding the Air Transportation 

Oversight System (ATOS) beyond currently covered 

large air carriers to smaller commercial air carriers and 

complete system safety and risk analysis training for all 

ATOS-assigned field inspectors. The FAA will 

continue implementation of the Continuing Analysis 

and Surveillance System (CASS) improvements to 

address deficiencies in aircraft maintenance programs 

at some major air carriers through development and 

publication of advisory circular guidance to clarify 

14 CFR §121.373, CASS Requirements, and to deliver 

updated FAA policy, procedures, and training courses 

to the inspection work force. 

The IG indicated that the trend in runway incursions 

and operational errors are critical management 

challenges for DOT. Runway incursion are down 

approximately 10 percent from last year, and the 

number of operational errors was down from an alltime high of almost 1,200 in FY 2001 to 1,061 in FY 

2002. However, operational errors still pose a 

significant safety risk, with an average of three 

operational errors per day and one serious error every 3 

days (in which a collision was barely averted). FAA is 

continuing to pursue a number of initiatives to solve 

these problems, and as the IG reports, is identifying 

and evaluating technologies that can be quickly put to 

use in high-risk airports. Though both runway 

incursions and operational errors are down, they 

continue at high levels and remain on the IG’s 2003 list 

of top management challenges. 

MARITIME SAFETY: Recreational boating is a 

popular activity in America, and the popularity of 

personal watercraft continues to be strong. There are 

about 78 million recreational boaters in the U.S. - and 

most operators involved in accidents have had no 

boating safety training. The number of recreational 

and commercial vessel users continues to increase as 

more Americans move to coastal areas and global and 

domestic waterborne trade grows. Large numbers of 

Americans commute to work in ferries and enjoy 

leisure activities at sea such as commercial cruising. 

Performance measure: 

Percent of all mariners in imminent danger who are 

rescued. 

 1999 2000 2001 2002

Target: N/A N/A 85 85 

Actual: 87.5 82.7 84.2 84.4 

2002 Results: DOT did not meet the performance 

target. 

The Coast Guard answered nearly 37,000 calls for 

help, saving 3,653 lives in imminent danger. Overall, 

in 2002, there was a slight decrease in search and 

rescue caseload. For the second year in a row, the 

results show a slight improvement over the previous 

year, but are still insufficient to meet the performance 

target. Given three years’ data, the number of persons 

who remained missing at the termination of search and 

rescue efforts continues to be significant - 233 persons. 

Inclusion of missing persons into the performance 

measure would result in saving just under 80 percent of 

all mariners in distress, highlighting shortcomings in 

USCG search and response efforts. This will be 

remedied as the replacement communications system 

for maritime safety comes on line, and as USCG adds 

additional command center and boat stations staff, 

beginning in 2003. 

Despite a steady increase in the number of recreational 

boats registered with States, recreational boating 

fatalities have been reduced from 1999 through 2001. 

The number of boating fatalities per 100,000 registered 

boats has decreased 34 percent over the last decade, 

while drowning deaths have sharply decreased, 

suggesting that DOT and State boating safety and life 

jacket outreach and awareness campaigns, and 

additional State laws requiring personal watercraft 

riders and youth on boats to wear life jackets, had an 

impact. 

USCG supplementary performance measures: 

Number of recreational boating fatalities (calendar 

year). 

 1999 2000 2001 2002

Target: 763 763 749 742 

Actual: 778 742 722(r) 707# 

Fatalities per million passenger capacity aboard 

passenger vessels. 

 1999 2000 2001 2002

Target: N/A N/A N/A 2.5 

Actual: 4.1 1.9 1.0 0.4 

(r) Revised; # Preliminary estimate. 

FY 2003 Performance Plan Evaluation: DOT cannot 

characterize Coast Guard performance for FY 2003, 

since the Coast Guard will be a part of the new 

Department of Homeland Security. 

Management Challenge – National Distress Response 

System (IG) 

The IG stated that Coast Guard needs to plan for the 

procurement of the National Distress and Response 

System within available capital funding. Deficiencies 
 

FY 2002 Performance and Accountability Report 29 

in the Distress and Response System have existed for at 

least 10 years, and the NTSB criticized Coast Guard’s 

interim fixes as insufficient. The major task for Coast 

Guard is to present a specific system modernization 

plan that details what assets need to be acquired or 

modernized, how it will be done, what it will cost, and 

when funding will be needed. (For a discussion of 

DOT plans, see the Management Challenge box 

regarding the Coast Guard Capital Acquisition Budget 

in the Coastal and Port Security performance 

discussion.) 

RAIL SAFETY: Approximately 50 percent of the railrelated fatalities were trespasser-related, and more than 

45 percent occurred at highway-rail grade crossings in 

2002. To reduce rail fatalities, FRA is forging safety 

partnerships with the rail industry, strengthening 

educational outreach, and rigorously emphasizing 

compliance with safety standards. 

Performance measures: 

Grade crossing accidents divided by the product of: 

million train-miles and trillion vehicle-miles traveled. 

 1999 2000 2001 2002

Target: 2.19 1.57 1.39 1.39 

Actual: 1.83 1.76(r) 1.64(r) 1.54 

Train accidents per million train-miles. 

 1999 2000 2001 2002

Target: 3.44 3.44 3.35 4.00 

Actual: 3.89 4.13 4.22(r) 3.56 

(r) Revised.

2002 Results: Based on eight months of data, DOT 

met the performance targets for train accidents, but did 

not meet the grade crossing accidents performance 

target. Depending on activity for the remainder of the 

year, DOT may meet both goals. 

For 2002, train accidents were down slightly as 

compared with 2001 (2,597 vs. 3,330). Train miles 

decreased by 7.5% during that period, resulting in an 

increase in the train accident indicator. 

Grade crossing accidents were down in 2002 at both 

public and private crossings, decreasing 16.6% (3,072 

vs. 3,685). 

For the eight-month period January-August 2002, railrelated fatalities increased over the same period in 

2001 (668 vs. 655). Again, trespasser deaths are the 

primary cause of the rise, increasing 8.9%, from 348 to 

379. Highway-rail crossing fatalities, on the other 

hand, dropped 13.0%, from 285 to 248. 

FRA supplementary performance measure:

Rail-related fatalities per million train-miles. 

 1999 2000 2001 2002

Target: 1.57 1.30 1.23 1.20 

Actual: 1.31 1.30 1.36(r) 1.40 

(r) Revised. 

FY 2003 Performance Plan Evaluation: DOT will 

combine both performance measures above to better 

align with FRA’s safety program, and DOT will be 

challenged to meet both targets in 2003. 

TRANSIT SAFETY: Public transit provides a 

flexible alternative to automobile and highway travel, 

offering a higher degree of safety as well. Currently 

transit is one of the safest modes of travel per 

passenger mile traveled. According to the National 

Safety Council, riding the bus is 47 times safer than car 

travel. By train, customers are 23 times safer than by 

car. The challenge is to further reduce the rate of 

fatalities and injuries even as the total number of 

people using transit increases. 

Performance measure: 

Transit fatalities per 100 million passenger-miles 

traveled. 

 1999 2000 2001 2002

Target: .507 .502 .497 .492 

Actual: .530 .499(r) .480(r) .487# 

(r) Revised; # Preliminary estimate. 

2002 Results: DOT met the performance target. 

Recent growth in light rail grade crossing fatalities in 

the 1998 – 2000 period has been reversed. Light rail 

grade crossing fatalities were down 92 percent from 12 

in 2000 to 1 in 2001. In the first half of 2002, this 

trend continued as there were only 2 light rail grade 

crossing fatalities. 

Of the 309 total transit-related fatalities in 2001, 43 

were patrons. Of the 180 total transit-related fatalities 

in the first half of 2002, 33 were passengers or revenue 

facility occupants. Many categories and definitions 

have been added or changed in the new National 

Transit Database in 2002 and will allow for improved 

and more timely analysis of trends of contributing 

factors such as trespassing in the future. 

Strategies in 2002: 

▪ through Formula Grants, Capital Investment 

Grants, and the Job Access and Reverse Commute 

Program, FTA invested in public transit 

infrastructure. Most of these funds improve transit 
 

FY 2002 Performance and Accountability Report 30 

safety by replacing older bus and rail systems with 

newer, safer public transit vehicles and improve 

the condition of tracks and transit facilities. For 

new projects, safety is a design consideration from 

the beginning; 

▪ through the Transit Planning and Research 

Program, FTA worked with States, local transit 

authorities, and the transit industry to develop 

technology, provide training, and supply technical 

assistance that advances safety. FTA also 

conducted research and generates valuable data on 

safety and security, standards programs, and transit 

accident causal factors, which is used by FTA, 

States, and local transit agencies to improve safety; 

▪ through FTA oversight of State rail safety 

programs, alcohol and drug testing programs, and 

transit security programs. FTA also provided 

oversight and guidance to transit properties on the 

direct safety features and safety implications of 

becoming compliant with the Americans with 

Disabilities Act; and 

▪ through resolution of NTSB Recommendations. 

Seven outstanding recommendations were closed 

with acceptable actions. The remaining three 

recommendations involve FTA and other modes, 

and FTA is working with others in the Department 

to resolve them. 

FTA supplementary performance measure:

Transit injured persons per 100 million passengermiles traveled. 

 1999 2000 2001 2002

Target: 123.2 121.9 120.7 109.4 

Actual: 114.9 111.7 107.3 N/A 

N/A Not available, since no comparable 2002 data 

exists due to revised definition of “transit injuries”. 

For 2002 the definition of what constitutes a reportable 

transit “injury,” was changed in the new National 

Transit Database (the source of the transit injury data). 

Only an incident involving immediate medical 

treatment away from the scene now qualifies as a 

reportable transit injury. FTA made this change in 

consultation with the transit industry. Based on the 

first half of 2002, injuries using the new definition are 

occurring at approximately one third the rate of those 

occurring based on the previous definition. 

FY 2003 Performance Plan Evaluation: DOT will 

meet the target in FY 2003. 

PIPELINE SAFETY: A network of two million miles 

of pipelines transports natural gas to 60 million 

residential and commercial customers. While pipelines 

are among the safest modes for transporting liquids and 

gases, the nature of the cargo is inherently dangerous. 

Pipeline failures can pose an immediate threat to 

people and communities. Excavation damage causes 39 

percent of pipeline failures for all types of pipelines. 

Corrosion also causes on average another 20 percent of 

all pipeline failures. Incorrect operation, 

construction/material defects, equipment malfunction, 

failed pipe, and other miscellaneous causes account for 

the remaining 41 percent of pipeline failures. 

Performance measure: 

Number of excavation damages to natural gas and 

hazardous liquid pipelines. 

 1999 2000 2001 2002

Target: N/A N/A N/A 111 

Actual: 100 119 121 75# 

# Preliminary estimate. 

2002 Results: DOT met the performance target. 

Preliminary results are considerably lower than the 

2002 target, most likely due to improved pipeline 

accident and incident data collection in 2002. RSPA 

categorizes outside force ruptures in more ways, 

leading to an apparent sharp decrease in excavation 

damage incidents. 

For the past ten years, there were on average about 23 

annual pipeline-related fatalities annually. 79 percent 

of fatalities occurred on natural gas distribution 

pipeline incidents, 12 percent on natural gas 

transmission pipelines, and 9 percent on hazardous 

liquid pipelines, with excavation damage as the leading 

cause of all pipeline failures. 

RSPA improved operations, control, and monitoring 

technologies to enable better corrosion detection; 

validated direct assessment techniques for unpiggable 

pipelines; and researched better pipeline coatings. 

Better corrosion detection technology and direct 

assessment allows pipeline operators to detect pipeline 

defects before a release occurs. RSPA also supported 

efforts of the Common Ground Alliance to offer “Dig 

Safely” training sessions around the country for groups 

interested in implementing this important program. 

RSPA supplementary performance measure:

Number of incidents for natural gas and hazardous 

liquid pipelines. 

 1999 2000 2001 2002

Target: N/A N/A N/A 330 

Actual: 341 381 292 293# 

# Preliminary estimate. 
 

FY 2002 Performance and Accountability Report 31 

FY 2003 Performance Plan Evaluation: DOT will 

meet the target in FY 2003. 

Management Challenge – Pipeline Safety (GAO) 

GAO’s recommendations to RSPA for improving 

pipeline safety included: improving pipeline safety 

standards; strengthening enforcement of pipeline safety 

laws and regulations; enhancing Federal-State 

partnerships; providing the public better information 

and opportunities to participate; and supporting 

research and development of innovative pipeline safety 

technologies. 

RSPA has made significant progress in improving 

pipeline safety and in accomplishing improvements 

suggested by IG, GAO, and NTSB in safety standards 

and technologies, regulatory enforcement, public 

participation in safety efforts, and in improving 

Federal-State-private sector safety partnerships. NTSB 

now rates more than 85 percent of RSPA responses to 

their safety recommendations as “acceptable,” not only 

an improvement from 75 percent in 2001, but one of 

the highest acceptable ratings of any transportation 

mode. In FY 2002, RSPA: 

▪ made progress in finalizing actions required by 

Congressional mandates. RSPA will complete 

rulemakings that address all mandates by the close 

of calendar year 2002. 

▪ completed reporting changes for natural gas 

transmission pipeline operators. 

▪ increased oversight of accident reporting by 

operators and implemented revised procedures to 

examine accident reports submitted by pipeline 

operators. RSPA pursued enforcement action for 

reporting requirement non-compliance. 

▪ completed training for Federal inspectors. In 

FY 2003, this training will be expanded to State 

pipeline inspectors. 

HAZARDOUS MATERIALS SAFETY: Many of 

the materials used in manufacturing and many of the 

retail products people buy include hazardous materials. 

There are over 800,000 hazmat shipments each day in 

the United States. These range from flammable 

materials and explosives to radioactive materials, 

poisons and corrosives. Release of these materials 

during transportation could result in serious injury or 

death, or harm to the environment. 

Performance measure: 

Number of serious hazardous materials incidents in 

transportation. 

 1999 2000 2001 2002

Target: N/A N/A N/A 523 

Actual: 540(r) 565(r) 515(r) 189# 

(r) Revised; # Preliminary estimate 

Note on data: Mail security measures delayed hazmat 

incident reporting last year. Given the year-to-year 

fluctuation observed in this performance measure, it is 

difficult to determine whether a firm downward trend 

has been established. DOT expects that the number of 

hazmat incidents in FY 2002 will increase as all 

incident reports are received and analyzed. 

2002 Results: DOT met the performance target.

Road accidents leading to hazmat releases continue to 

dominate overall serious hazardous materials incident 

statistics, but they decreased from 79 percent of total 

serious incidents to 73 percent. Serious rail incidents 

increased from 17 percent to 23 percent of the total. 

FAA worked to reduce HAZMAT incidents as a 

percentage of cargo revenue ton-miles flown by 

focusing on improved compliance among 

manufacturers, distributors, retailers, and shippers 

before their cargo reached airports. 

There was a marked reduction in serious incidents 

involving commercial motor vehicles in 2002. While 

this improvement is certainly encouraging, it may be 

attributable in part to market factors and/or mitigation 

activities in the months following the September 11, 

2001 terrorist attacks, and may or may not be 

indicative of a new performance trend. FMCSA and 

DOT continue to monitor incidents, but it will be a year 

or so before it can be discerned whether a new 

performance baseline has been established. 

FRA continued its integrated rail safety program, with 

the dual aim of reducing train accidents and HAZMAT 

releases. To the extent that train accidents are 

prevented, HAZMAT releases are also prevented. In 

2001, 54 of 67 serious rail HAZMAT incidents were 

due to derailments, down from 63 of 95 incidents in 

2000. 

The Coast Guard enforced hazmat shipping regulations 

aboard U. S ships and foreign ships in U.S. waters as 

well as at port facilities. The Coast Guard operated the 

24-hour National Response Center and the National 

Vessel Movement Center, for all reporting of 

hazardous materials releases, and for collecting and 

disseminating data on movement of vessels 

transporting dangerous cargoes to ensure adequate 
 

FY 2002 Performance and Accountability Report 32 

safety and security measures are taken to prevent 

intentional discharges of hazardous materials. 

FY 2003 Performance Plan Evaluation: DOT will 

meet the target in FY 2003. 
 

FY 2002 Performance and Accountability Report 33 

HOMELAND and NATIONAL SECURITY

STRATEGIC OBJECTIVE: Ensure the security of the transportation system for the movement of people 

and goods, and support the National Security Strategy. 

Strategic Outcomes: 

▪ Reduce the vulnerability of the transportation system and its users to crime and terrorism. 

▪ Increase the capability of the transportation system to meet national defense needs. 

▪ Reduce the flow of illegal drugs entering the United States. 

▪ Reduce the flow of migrants illegally entering the United States. 

▪ Reduce illegal incursions into our sovereign territory. 

▪ Increase support for United States interests in promoting regional stability. 

▪ Reduce transportation-related dependence on foreign fuel supplies. 

Transportation security is equal in importance to transportation safety. As we have witnessed, the Nation’s 

transportation system has certain vulnerabilities, which need to be guarded against attack, and our borders are subject to 

illegal intrusions by smugglers of contraband or weapons of mass destruction, and by illegal migrants. DOT’s objective 

is to contribute to homeland and national security by minimizing the vulnerability of our transportation system to 

disruption, damage, or exploitation through crime or terrorism. In FY 2002, DOT homeland and national security 

programs continued reducing the transportation system’s vulnerability to crime and terrorism and enforced sovereignty 

over our borders. 

PERFORMANCE SUMMARY: 

1996 1997 1998 1999 2000 2001 2002 2002 

Target

Met Not 

Met

Percent of high interest vessels 

screened. 

N/P N/P N/P N/P N/P N/P N/P N/P 9

Percentage of DOD-required shipping 

capacity complete with crews available 

within mobilization timelines. 

N/A N/A N/A 97 92 97 94 93 9

Percentage of DOD-designated 

commercial ports available for military 

use within DOD established readiness 

timelines 

64 57 93 93 93 92 92 92 9

Amount of drugs seized or destroyed at 

sea (metric tons). 

27 94 52 79 83 79 72 75 9

Interdict and/or deter at least 87 percent 

of undocumented migrants who 

consider attempting to enter the U.S. via 

maritime routes. 

92 94 91 87 89 83 88 87 9
 

FY 2002 Performance and Accountability Report 34 

FY 2001 FINAL PERFORMANCE REPORT

1995 1996 1997 1998 1999 2000 2001 2001 

Target

Met Not 

Met

Percent seizure rate for cocaine 

shipped through the transit zone 

6.1 5.3 16.3 10.1 12.2 10.6 11.1 15 9

Transportation-related petroleum 

consumption (in quadrillion BTUs) 

per trillion dollars of Real GDP in 

1996 constant dollars 

3.075 3.037 2.945 2.90 2.74(r) 2.63(r) 2.55 2.76 9

N/A = Not Available 

NP = Not published (Sensitive information protected under 49 CFR Part 1520.7(r)) 

* Preliminary estimate 

(r) Revised 

AVIATION SECURITY: The United States and its 

citizens remain targets for terrorist groups seeking to 

challenge or influence domestic and international 

affairs. Thus, protecting air travelers against terrorist 

and other criminal acts is a homeland and national 

security priority. After the terrorist attacks of 

September 11, 2001, the President signed the Aviation 

and Transportation Security Act (P.L. 107-71), 

establishing the Transportation Security 

Administration, and charging it with carrying out this 

important responsibility. Public confidence in the 

safety and security of air travel enables its continued 

growth, and tourism and world economies depend on 

effective aviation security measures being efficiently 

applied. Governments, airlines and airports must work 

together cooperatively to achieve our common goal - 

safe and secure air transportation worldwide. 

2002 Results: There were no performance targets 

established for FY 2002. 

TSA’s performance highlights in FY 2002 are: 

▪ took immediate steps to secure the cockpit against 

hijacking by significantly expanding the Federal 

Air Marshal program and reinforcing commercial 

aircraft cockpit doors. Administered a $100 

million Federal grant program to help the U.S. 

airline and cargo industry finance aircraft cockpit 

doors modifications; 

▪ hired 148 Federal Security Directors, who are 

responsible for nearly 400 airports; 

▪ hired more than 36,000 security screeners and 

deployed Federal screeners to 142 airports; 

▪ established a customer service call center, a 

coalition to advice TSA on passengers with 

disabilities, and other initiatives to promote 

communication and responsiveness to the flying 

public; 

▪ purchased over 1,000 explosives detection systems 

and 3,700 explosive trace detectors for screening 

checked and carry-on baggage; and 

▪ continued research and development on 

technologies and procedures to enhance 

transportation security - including CAPPS II, an 

advanced automated profiling system to focus 

screening. 

FY 2003 Performance Plan Evaluation: DOT met 

the passenger screening Federalization deadline, and 

with new authority provided in the Homeland Security 

Act of 2002, met the baggage screening deadline, and 

will ensure that explosive detection technology is in 

full use for baggage screening as soon as possible in 

FY 2003. 

Management Challenge – Aviation and 

Transportation Security (IG/GAO) 

The IG and GAO have previously noted that challenges 

exist in effectively meeting national requirements for 

improving security in aviation and surface 

transportation. After the terrorist attacks of September 

11, Congress passed and the President signed the 

Aviation and Transportation Security Act, which 

created an Under Secretary of Transportation for 

Security, and a new DOT Operating Administration - 

the Transportation Security Administration. 

TSA efforts for 2002 mostly focused on addressing 

aviation security and meeting deadlines established in 

the Aviation and Transportation Security Act. TSA 

met the unprecedented challenge to hire and train a 

federalized workforce to screen all passengers and their 

carry-on baggage by November 19, 2002, and, for the 

most part, to deploy the necessary equipment and 

federalized workforce to meet the December 31, 2002 
 

FY 2002 Performance and Accountability Report 35 

deadline to screen all checked baggage. At the same 

time, TSA significantly expanded the Federal Air 

Marshals program with more flights being guarded 

now than anytime in history. 

However, TSA’s work is not done. Until TSA is 

transferred to the Department of Homeland Security in 

March 2003, DOT must continue to take the lead for 

the Government’s increased aviation security 

responsibilities, including completing deployment of 

explosives detection equipment to the remaining 

airports where alternate screening methods are 

employed, and developing plans for expanding security 

in all modes of transportation. The primary 

responsibility will move with TSA to the new 

Department of Homeland Security. 

DOT’s focus in FY 2003 will be to ensure effective 

aviation security, to ensure an effective transition of 

these two DOT administrations to the new department 

with no loss of effectiveness, and to develop methods 

for working effectively with DHS on the overlapping 

issues of transportation security and safety. This issue 

continues on the IG’s 2003 list of DOT top 

management challenges. 

Public Transportation Security Initiatives

Since September 11, 2001, FTA has helped prepare the 

transit industry to counter terrorist threats. To date, 

FTA has: 

▪ completed 37 threat and vulnerability assessments 

and provided feedback to individual agencies on 

how to improve their security systems and reduce 

vulnerabilities, as well as information on “best 

practices” to all transit agencies; 

▪ deployed emergency response planning and 

technical assistance teams to the top 50-60 transit 

agencies to help them implement systematic 

security programs; 

▪ awarded 83 grants for emergency responder and 

transit agency drills to test and improve security 

and emergency response plans; 

▪ accelerated testing and deployment of the 

PROTECT system for chemical detection in 

subway systems; 

▪ FTA also completed 11 short-term, quick payoff 

research projects identified by the transit industry; 

▪ facilitated training and regional collaboration 

through security awareness courses for front line 

employees and supervisors, and regional forums to 

promote regional collaboration and coordination 

among fire, police, and medical emergency 

responders and transit; and 

▪ developed a list of Security Program Action Items 

that transit agencies should incorporate into their 

System Security Program Plans. 

Strategies for FY 2003

With the knowledge and expertise acquired, FTA is 

enhancing its strategies and moving forward to further 

enhance transit security. FTA will continue to tap the 

expertise of TSA, the intelligence community, the 

transit industry, and others to help strengthen transit 

security, as follows: 

Reducing America’s Vulnerability to Terrorism: FTA 

is working with the transit industry to identify critical, 

high-risk assets and operations, and is developing a 

broad range of strategies to increase security. These 

strategies must become an integral part of daily transit 

operations and will include special emphasis on 

training, as well as technical assistance, guidelines, 

best practices, and testing of available technologies for 

intrusion detection, surveillance, and chemical and 

biological substance detection. FTA will provide onsite technical assistance to the largest 60 transit 

agencies to assist them in updating and enhancing their 

security system programs. This will include 

implementing protocols for handling suspicious 

packages and chemical/biological incidents, as well as 

addressing the twenty priority security program 

initiatives that have been identified by FTA. Chem/bio 

guidelines have been developed and an updated transit 

security guidebook will be published. 

Minimizing Damage and Speeding Recovery: FTA’s 

ongoing security program will work to promote 

regional coordination, communication, and shared 

drills among transit and emergency responders. 

Training and emergency response preparedness are top 

priorities for quickly enhancing transit security. FTA 

will complete the regional forums and collect best 

practices and develop training from the full-scale 

emergency response drills and tabletop exercises. 

Security courses at Transportation Safety Institute and 

National Transit Institute are under review. They will 

be updated and a comprehensive curriculum will be 

defined. 

Management Challenge – Computer Security 

(Department-wide and FAA) (IG/GAO/OMB) 

The IG, GAO, and OMB have identified information 

system security as a critical government-wide 

management challenge, and in particular, have 

identified FAA air traffic control information systems 

as needing special attention to harden them against 

malicious or criminal attack. 

The DOT Chief Information Officer (CIO) will lead 

intermodal efforts to ensure the continued security of 
 

FY 2002 Performance and Accountability Report 36 

our transportation information systems to make IT 

systems less vulnerable to attack and other service 

disruptions, including those caused by natural disasters. 

The Computer Security Challenge presents itself on 

two fronts: 1) protection of all IT assets as required by 

the Computer Security Act of 1987, the Government 

Information Security Reform Act (GISRA), OMB 

Circular A-130, National Institute of Standards and 

Technology guidance, etc.; and, 2) specific protection 

of critical IT assets in accordance with Presidential 

Decision Directive 63 (PDD-63). 

DOT established an IT Security Program requiring: 

▪ that all DOT IT systems be assessed to identify 

vulnerabilities; 

▪ that vulnerabilities be evaluated and mitigated 

where justified; and 

▪ that systems be tested and certified as adequately 

protected. 

In FY 2002 

▪ DOT CIO developed a comprehensive Information 

Technology Security Performance Measurement 

(IT SPM) program to identify and track 

quantifiable results related to key IT security 

metrics. DOT reduced GISRA program related 

weaknesses by over 40 percent and reduced 

vulnerabilities in the primary “demilitarized zone” 

(DMZ) by over 70 percent a month. 

▪ DOT instituted a robust training and awareness 

program, focused on developing and providing 

specialized training to IT security personnel. DOT 

provided awareness training to more than 99 

percent of all employees, provided specialized 

training in certification and accreditation (C&A) 

and network security to more than 90 percent of 

the Agency-level Information Systems Security 

Officers (ISSO). 

▪ DOT developed and began implementing a 

comprehensive policy for integrating IT security 

into the Capital Planning and Investment Control 

(CPIC) process, with Agency ISSOs participating 

as members of the CPIC Review Board. IT 

security policy is embedded in each phase of the 

CPIC and the system development life cycle 

through security costs estimation methodologies. 

▪ DOT developed and executed an Incident 

Reporting Policy Memorandum and began 

reporting incidents on a weekly basis to the 

Federal Computer Incident Response Center 

(FedCIRC), the National Infrastructure Protection 

Center (NIPC) and other law enforcement agencies 

as required. DOT is implement intrusion detection 

systems (IDS) at critical access points throughout 

the DOT backbone and on NHTSA, RSPA and 

FAA local area networks. FAA, in particular, has 

made significant improvements in implementing 

and monitoring network and perimeter security. 

▪ DOT published comprehensive network security 

guidelines and began a Web Server Vulnerability 

Testing Program in the DOT DMZ. Based on this 

program, vulnerabilities decreased from an 

average of more than 200 incidents a month to 

fewer than 30 a month for systems within the 

DMZ. 

For FY 2003, DOT established a contract for an 

enterprise-wide vulnerability-scanning tool. This 

contract was the result of an FAA testing project and 

provides all DOT organizations with an effective, cross 

cutting cost solution for vulnerability testing. 

FAA has developed a concept of operations, approach, 

and major milestones to address information security 

issues and protect information assets. FAA’s approach 

focused on protecting the operational capability of its 

facilities, which requires an integrated approach to 

information systems, personnel, and physical security 

at each facility. Other efforts included authorizing and 

certifying computer security systems, security 

awareness training, vulnerability assessments, and 

improving intrusion detection capability, and to 

develop methods for working effectively with DHS on 

the overlapping issues of transportation security and 

safety. This issue continues on the IG’s 2003 list of 

DOT top management challenges. 

COASTAL AND SEAPORT SECURITY: The 

Department, through the Transportation Security 

Administration and the U.S. Coast Guard, provides an 

essential maritime element of homeland and national 

security. DOT’s maritime homeland and national 

security functions are anchored in coordinated 

interagency law enforcement, coastal sea control, and 

port security. 

Performance measure:

Percent of high interest vessels screened. 

 1999 2000 2001 2002

Target: N/A N/A N/A ## 

Actual: N/A N/A N/A ## 

## Not published due to sensitive security information 

being protected under 49 CFR Part 1520.7(r). 

2002 Results: DOT met the performance target. 

DOT’s FY 2002 actions to ensure seaport and cargo 

security included:
 

FY 2002 Performance and Accountability Report 37 

▪ USCG protection of high consequence targets, 

including critical bridges, port facilities and other 

infrastructure; a permanent regulation requiring 

96-hour advance notices of arrival for ships 

arriving in U.S. ports; tracked inbound highinterest vessels in cooperation with the Office of 

Naval Intelligence; and disseminated intelligence 

on passengers, crew, and cargoes to partner 

agencies; and deployed Sea Marshals and small 

boat escorts to ensure positive control of vessels 

containing critical cargoes and in sensitive areas; 

▪ MARAD’s work with maritime industry to 

examine and address security issues and policy 

and heightened security at its Ready Reserve Force 

fleet sites and outports; 

▪ TSA’s, MARAD’s and an inter-departmental 

Credential Direct Action Group’s examination of 

ways that advanced technologies, including smart 

cards, biometrics and public key infrastructure, 

could be used throughout the maritime and related 

industries to identify employees working in 

security-sensitive areas; and TSA/MARAD/ 

USCG’s distribution of $93 million in grants to 

seaports for security assessments and enhanced 

facility and operational security; and 

▪ SLSDC’s close partnership with its Canadian 

counterpart and USCG to heighten security on the 

St. Lawrence River and ensure the protection of 

ocean access to Great Lakes ports. 

An interagency Container Working Group established 

by the Secretary of Transportation and co-chaired by 

the Department of the Treasury, worked to address 

security issues surrounding the movement of marine 

cargo containers through the international and 

intermodal transportation system. The Container 

Working Group focused on information technology, 

security, business practices, and international affairs, 

and made recommendations to improve international 

container security efforts and increased use of 

advanced technologies to improve container profiling. 

“Operation Safe Commerce,” co-led by DOT, was 

initiated by the private sector as an attempt to make the 

supply chain more secure. This effort seeks to move 

the primary reliance away from control systems at U.S. 

ports of entry and toward improved controls at points 

of origin and along the way. It relies on using new 

technology such as electronic container seals to

strengthen the security of cargo as it moves along the 

international supply chain. Efforts center on the 

following: 

▪ ensuring that containers are loaded in a secure 

environment at the point of product origin, with 

100 percent verification of their contents; 

▪ using pressure, light, or temperature sensors to 

continually monitor containers throughout their 

overseas voyage to the point of distribution in the 

United States; and 

▪ using cargo-tracking technology to track 

containers at all points in the supply chain, 

including delivery of cargo inside containers to 

consignees.

The three largest container port complexes (Los 

Angeles/Long Beach, New York/New Jersey, and 

Seattle/Tacoma) are involved in the Operation Safe 

Commerce pilot project addressing security 

vulnerabilities posed by containers entering the U.S. 

through seaports. These projects will help determine 

which procedures and technologies constitute the best 

practices in supply chain security. 

DOT and other Federal agencies are working with 

international organizations [the International Maritime 

Organization (IMO), the International Organization for 

Standardization (ISO), the International Labor 

Organization (ILO), and the United Nations 

Subcommittee of Experts on the Transportation of 

Dangerous Goods] to accelerate, where possible, the 

deadlines for implementation of important new security 

requirements. 

USCG continues to make progress in providing the 

required number of “combat ready” units to meet 

Combatant Commander operational requirements in 

wartime and peacetime. The Coast Guard contributes 

high endurance cutters, patrol boats, Law Enforcement 

Detachments, and Port Security Units to DOD 

Combatant Commanders’ war plans. High endurance 

cutters met readiness requirements 84 percent of the 

time. Readiness degradations stemmed from 

equipment casualties and unit training deficiencies. 

This is a seven percent drop from last year, but 

deficiencies were manageable and quickly remedied on 

notification of a scheduled deployment. Patrol boats 

met readiness objectives 100 percent of the time. 

Though Port Security Units achieved acceptable 

readiness ratings only 25 percent of the time, recruiting 

incentives, increases in unit budgets and establishment 

of a formal training and standardization program have 

been established to close readiness gaps. 

The challenges associated with operating an aging 

cutter fleet are well recognized and the Coast Guard is 

taking steps to ensure replacement assets are brought 

into action without the transition degrading current 

capability.

USCG supplementary performance measure: 

Percentage of days that the designated number of 

critical defense assets (high endurance cutters, patrol 
 

FY 2002 Performance and Accountability Report 38 

boats, and port security units needed to support DOD 

operational plans) maintain a combat readiness rating 

of 2 or better. 

 1999 2000 2001 2002

Target: N/A 100 100 100 

Actual: 4 51 67# 70 

# Three-quarter year data since fourth quarter data 

did not survive the attack on the Pentagon. 

FY 2003 Performance Plan Evaluation: DOT cannot 

characterize Transportation Security Administration 

and Coast Guard performance for FY 2003, since they 

will be a part of the new Department of Homeland 

Security. 

Management Challenge – Cargo Security (IG) 

The IG has stated that strengthening cargo security is a 

major management challenge facing DOT. Ensuring 

robust port and maritime security is a national priority 

and an intermodal challenge, with impacts in America's 

heartland communities just as directly as the U.S. 

seaport cities where cargo and passenger vessels arrive 

and depart daily. The U.S. has more than 361 ports 

containing more than 3,700 passenger and cargo 

terminals. Current growth predictions indicate that 

container cargo will double in the next 20 years. The 

biggest cargo security challenge facing DOT is how to 

ensure that legitimate cargo is not unnecessarily 

delayed as we introduce enhanced security measures 

against security threats. 

Management Challenge - Coast Guard Capital 

Acquisition Budget (IG/GAO) 

The IG and GAO have stated that DOT needs to: 

▪ stabilize Coast Guard's missions and budget 

requirements in light of post-9/11 priorities; 

▪ make progress on Deepwater, while at the same 

time moving with dispatch on National Distress 

and Response System and Search and Rescue 

procurements; 

▪ meet the enhanced Coast Guard port security 

mission, while continuing to effectively meet 

Coast Guard's other responsibilities; and 

▪ ensuring the planning progress includes a realistic 

level of funding and using a process to assess the 

readiness of proposed technology. 

Deepwater Capability Replacement. The Coast Guard 

is in the midst of the largest acquisition project in its 

history. On June 25, 2002, the Coast Guard awarded 

the Integrated Deepwater System contract to Integrated 

Coast Guard Systems (ICGS), a joint venture of 

Lockheed Martin and Northrop Grumman. In 

executing the contract, ICGS will modernize or replace 

the Coast Guard’s major cutters and aircraft and their 

supporting communications, sensors, and logistics 

systems, transforming the aging current fleet into an 

integrated, interoperable network-centric system. This 

innovative, performance-based approach manages 

acquisition risk by using state-of-the-market 

technologies. The overall goal of this unique 

acquisition project is to develop an integrated system 

that maximizes operational effectiveness while 

minimizing total ownership costs. 

The IG identified the Coast Guard Search and Rescue 

program’s effectiveness as needing additional focus 

due to staffing, training and capital asset readiness 

problems; particularly with regard to budget and 

acquisition schedule estimates for replacing the 

National Distress System (NDS). The Coast Guard is 

currently undertaking the major task of modernizing 

the NDS. Through a six year, $611M contract with 

General Dynamics, the Coast Guard will upgrade the 

existing system to meet the safety requirements of 

growing marine traffic and the International 

Convention for the Safety of Life at Sea treaty. The 

acquisition project, named “Rescue 21”, will expand 

existing capability through greater area coverage, 

eliminate emergency access problems, comply with 

Federal mandates for narrow banding, provide voice 

recorder replay, and add direction finding capability to 

improve Coast Guard emergency response. In 

FY 2003, Rescue 21 deployments will begin in 

southern New Jersey, the Eastern shore of Maryland 

and Virginia, the Strait of Juan de Fuca and Puget 

Sound, Washington; the panhandle and west coast of 

Florida, and south Alabama and Mississippi. Rescue 

21 deployments in the continental U.S. will be 

completed by September 2005 with all regions 

completed by September 2006. Training and staffing 

are discussed above under the Maritime Safety 

performance results. 

The Coast Guard’s acquisition projects remain on the 

IG’s top management challenges list for 2003. 

STRATEGIC MOBILITY: To maximize DOD’s 

logistics capability and minimize its cost, defense 

sealift increasingly relies on the U.S. commercial 

sector. DOD’s ability to respond to military 

contingencies requires adequate U.S.-flag sealift 

resources, skilled U.S. maritime labor, and the 

associated maritime infrastructure. DOT helps provide 

for a seamless, time-phased transition from peacetime 

to wartime operations while balancing the defense and 

commercial elements of our transportation system. 

The Ready Reserve Force (RRF) is a key source of 
 

FY 2002 Performance and Accountability Report 39 

strategic sealift capacity to support the rapid 

deployment of U.S. military forces during the early 

stages of a military crisis. Merchant mariners 

employed on commercial vessels in the U.S. domestic 

and international trades provide the core job skills 

needed to crew the RRF. The Maritime Security 

Program (MSP) and the Voluntary Intermodal Sealift 

Agreement (VISA) program ensure that the active 

U.S.-flag fleet is available for sealift while continuing 

to carry commercial freight. Merchant mariners 

employed on these and other vessels in the U.S. 

domestic and international trades provide the crew to 

simultaneously operate both the RRF and the 

commercial fleet during wartime. DOT is responsible 

for establishing DOD's prioritized use of ports and 

related intermodal facilities during DOD mobilizations, 

when the smooth flow of military cargo through 

commercial ports is critical. 

Performance measures: 

Percentage of DOD-required shipping capacity 

complete with crews available within mobilization 

timelines. 

 1999 2000 2001 2002

Target: N/A N/A N/A 93 

Actual: 97 92 97 94

Percentage of DOD-designated commercial ports 

available for military use within DOD established 

readiness timelines. 

 1999 2000 2001 2002

Target: 90 90 93 92 

Actual: 93 93 92 92 

2002 Results: DOT met both performance targets for 

DOD-required shipping capacity and for DODdesignated port availability. 

MARAD also achieved its target of 99 percent RRF 

ship mission-capability while under Military Sealift 

Command control, but did not achieve its 100 percent 

target for timely ‘no-notice’ RRF ship activations (97 

percent on-time activation rate). Beginning in 

FY 2002, on-time activation includes a requirement 

that activated ships successfully complete a 72-hour 

sea trial upon activation. MARAD is conducting 

additional repairs to ensure successful activations. 

MARAD was slightly below its 165,000 twenty-foot 

equivalent units (TEUs) target for the amount of 

available sealift capacity within the MSP/VISA fleet 

(164,271 TEUs). 

MARAD estimates that sufficient mariners were 

available to crew the available shipping capacity, 

however, the number of mariners declined significantly 

since many mariners did not upgrade their licenses to 

meet new, more stringent standards for maritime 

training and certification implemented in 2002. 

FY 2003 Performance Plan Evaluation: DOT will 

meet both performance targets in FY 2003. In 

November 2002, a larger vessel will replace a vessel in 

the MSP and provide the additional necessary TEUs. 

DRUG AND MIGRANT INTERDICTION: Illegal 

drugs threaten our children, our communities, and the 

social fabric of this country. Illegal immigration also 

poses a serious threat to America’s economic and 

social well being, and challenges the integrity of our 

borders as a sovereign Nation. Approximately 52,000 

deaths occur annually in America from drug abuse and 

drug-related crimes, accidents, and illnesses. An untold 

number of illegal migrants perish each year when 

overloaded and un-seaworthy vessels founder at sea. 

Performance Measures: 

Amount of drugs seized or destroyed at sea (metric 

tons). 

 1999 2000 2001 2002

Target: N/A N/A N/A 75 

Actual: 78.7 83.2 78.6 71.9 

Interdict and/or deter at least 87 percent of 

undocumented migrants who consider attempting to 

enter the U.S. via maritime routes. 

 1999 2000 2001 2002

Target: 87 87 87 87 

Actual: 86.7 89 82.5 88.3 

2002 Results: DOT met the illegal migrant interdiction 

performance target, but did not meet the drug 

interdiction performance target. 

Although the flow of cocaine toward the U.S. remains 

relatively high, USCG cocaine seizures dropped by 

about 15 percent from FY 2001. There are two reasons 

for this drop in performance: 

▪ the apparent increase in the smugglers' willingness 

to destroy their vessels rather than face interdiction 

and prosecution. For example, upon approach for 

boarding, smugglers scuttled two vessel strongly 

suspected of transporting a total of over 20 metric 

tons of cocaine. Had these drugs been seized, the 

Coast Guard would have set a new record for 

fiscal year total seizures. 

▪ the Coast Guard’s FY 2002 focus on coastal and 

seaport security required shifting some effort from 

drug interdiction. 
 

FY 2002 Performance and Accountability Report 40 

USCG stopped 4,104 illegal immigrants from reaching 

the U.S. Most of the illegal migrants successfully 

interdicted and returned were from the Caribbean. 

Cuban migration was steady but slightly less than 

previous years. Haitian migrant flow was higher than 

last year and this is expected to persist. In the Pacific, 

almost 1,500 Ecuadorian migrants were interdicted in 

eight events. People’s Republic of China (PRC) 

migration was slightly higher than last year, but 

remained low overall. Guam and the U.S. Virgin 

Islands will continue to remain attractive targets for 

future PRC migration since they are the closest points 

of entry along traditional migration routes. 

USCG supplementary performance measure: 

Percent of cocaine seized that is shipped through the 

transit zone (high seas between source countries and 

the United States). 

 1999 2000 2001 2002

Target: 12.5 13.0 15.0 18.7 

Actual: 12.2 10.6 11.1 10.3# 

# Preliminary estimate based on 2001 cocaine flow 

quantity. 

FY 2003 Performance Plan Evaluation: DOT cannot 

characterize Coast Guard performance for FY 2003, 

since the Coast Guard will be a part of the new 

Department of Homeland Security. As requested 

resources for port and coastal security come on stream, 

the Coast Guard will be increasingly able to restore 

levels of effort to drug interdiction. 
 

FY 2002 Performance and Accountability Report 41 

MOBILITY AND ECONOMIC GROWTH

STRATEGIC OBJECTIVES: 

1. Shape an accessible, affordable, reliable transportation system for all people, goods, and regions. 

2. Support a transportation system that sustains America’s economic growth. 

Strategic Outcomes: 

▪ Improve the physical condition of the transportation system. 

▪ Reduce transportation time from origin to destination for the individual transportation user. 

▪ Increase the reliability of trip times for the individual transportation user. 

▪ Increase access to transportation systems for the individual user. 

▪ Reduce the cost of transportation for the individual user. 

▪ Ensure the Producer Price Index for transportation services grows less rapidly than the overall PPI through the 

year 2005. 

▪ Reduce barriers to trade that are related to transportation. 

▪ Improve the U.S. international competitive position in transportation goods and services. 

▪ Improve the capacity of the transportation workforce. 

▪ Expand opportunities for all businesses, especially small, women-owned, and disadvantaged businesses 

(discussed in the Organizational Excellence chapter). 

Mobility as much as any other factor defines us as a Nation, and is intertwined with the Nation’s economic growth. It 

connects people with work, school, community services, markets, and other people. The U.S. transportation system 

carries over 4.6 trillion passenger-miles of travel and 3.9 trillion ton-miles of freight every year – generated by more 

than 276 million people and 6 million businesses. 

DOT’s aim is an affordable, reliable and accessible transportation system. To achieve reliability and accessibility, our 

transportation system frequently relies on common public infrastructure that is maintained on limited national resources 

– our land, waterways, and airspace. DOT’s objective is to optimize capital investment in these public systems and 

manage them to maximize the benefit to all Americans. In FY 2002, DOT mobility and economic growth programs 

improved condition, performance, and services provided by the Nation’s transportation system. 
 

FY 2002 Performance and Accountability Report 42 

PERFORMANCE SUMMARY:

1996 1997 1998 1999 2000 2001 2002 2002 

Target

Met Not 

Met

Percentage of travel on the NHS 

meeting pavement performance 

standards for acceptable ride. 

88.9 89.1 89.8 90.5 90.9 90.9(r) 91.6# 92.0 9

Percent of total annual urban-area 

travel occurring in congested 

conditions** 

26.8(r) 27.3(r) 28.3(r) 29(r) 29.3(r) 30.4(r) 31.1* 30.9(r) 9

Cumulative average percent change 

in transit passenger-miles traveled 

per transit market. 

2.3 2.5 4.7 5.0 5.0 4.3 N/A 5.3 

Percent of flights arriving on time N/A N/A 76.8 76.0 74.9 76.2 82.3 77.2 9

Commercial vessel collisions, 

allisions, and groundings 

2,716 2,456 2,445 2,194 2,152 1,677 1,926 2,098 9

Percent of days in shipping season 

that the U.S. sectors of the St. 

Lawrence Seaway are available, 

including the two U.S. locks in 

Massena, N.Y. 

97.0 98.0 98.5 99.2 98.7 98.3 99.1 99.0 9

Percent of key rail stations ADA 

compliant 

19 26 29 49 52 67 77* 68 9

Percent bus fleets ADA compliant 63 68 72 77 80 85 90* 86 9

Employment sites (000s) made 

accessible by Job Access and 

Reverse Commute transportation 

services 

N/A N/A N/A 1.7 17.0 17.8(r) N/A 20.4*** 

Passengers (millions) in international 

markets with open skies aviation 

agreements 

38.4 40.7 43.0 49.4 56.8 56.4(r) 57.0* 59.7 9

FY 2001 FINAL PERFORMANCE REPORT

# Projection; N/A = Not Available; (r) Revised; * Preliminary estimate; ** Methodology change – a more refined and 

accurate congestion model was used to calculate historical and current performance. 2002 target has been changed to 

new methodology; *** The target from the revised FY 2002 DOT Performance Plan was 404, but it was based on 

erroneous trend data. The target calculated from correct trend data is 20,400. 

Percent miles of NHS roads meeting 

pavement performance standards 

89.6 91.1 91.8 92.1 93.0 93.5 93.7 91.9 9

Additional percent of annual urban-area 

peak period travel time attributable to 

congestion** 

N/A 43 45 47 49 51 53(r) 52 9

Average annual hours of extra travel time 

due to delays for the individual traveler in 

urban areas** 

N/A 26.8 28.1 29.1 30.6 31.2 32(r) 31.7 9

Gross tonnage (in thousands) of 

commercial vessels on order or under 

construction in U.S. shipyards 

N/A N/A 579 407 595 1,100 1,162 530 9

Students graduating with transportationrelated advanced degrees from DOTfunded universities N/A N/A N/A N/A 1,086 1,154 1,108 1,203 9
 

FY 2002 Performance and Accountability Report 43 

HIGHWAY INFRASTRUCTURE CONDITION: 

The National Highway System (NHS) carries 1 trillion 

or 43 percent of vehicle-miles traveled (VMT), but 

consists of only 161,117 miles of rural and urban 

roads—just 4 percent of total highway miles—and 

115,000 bridges. The system serves major population 

centers, international border crossings, intermodal 

transportation facilities, and major travel destinations. 

The condition of this system can affect wear-and-tear 

on vehicles, fuel consumption, travel time, congestion, 

and comfort, as well as public safety. Improving 

pavement and bridge condition is also important to the 

long-term structural integrity and cost effectiveness of 

the transportation system. 

Performance measure: 

Percentage of travel on the NHS meeting pavement 

performance standards for acceptable ride. 

 1999 2000 2001 2002

Target: N/A N/A N/A 92.0 

Actual: 90.5 90.9 90.9 91.6# 

# Projection from trends. 

2002 Results: DOT did not meet the performance 

target. 

Pavement condition overall continued to improve, but a 

few States with a significant portion of VMT reported a 

decline in acceptable ride quality. 

To improve pavement condition, FHWA developed 

standards for pavement smoothness during pavement 

construction that were adopted by American 

Association of State Highway and Transportation 

Officials as a provisional standard, and also published 

reports on pavement smoothness for hot-mixed asphalt 

pavements and Portland Concrete Cement pavements 

that highlight best practices for measurement and 

construction practices. FHWA developed the Profile 

Viewer software to analyze pavement profile data 

collected with inertial profilers, and delivered a course 

on measuring pavement smoothness using advanced 

inertial profilers. 

FHWA took several steps to improve the condition of 

our Nation’s bridges. To give States more flexibility in 

using Highway Bridge Replacement and Rehabilitation 

Program funds, FHWA modified its policy to allow 

program funds to also be used for preventative 

maintenance. This policy change should enable States 

to slow bridge deterioration and extend useful service 

lives. FHWA also obtained valuable input on 

improving the National Bridge Inspection Standard, 

and an Advanced Notice of Proposed Rulemaking is 

being drafted. Through the Innovative Bridge 

Research and Construction (IBRC) program, 59 bridge 

replacement and repair projects were delivered using 

innovative structural material. 

A total of 2,571 miles of the Appalachian Development 

Highway System were open to traffic or under 

construction. There were 231 miles in the final design 

or right-of-way acquisition phase and 224 miles in the 

location studies phase. 

FHWA supplementary performance measures: 

Percentage of deficient bridges on the NHS. 

 1999 2000 2001 2002

Target: 22.8 22.5 22.3 21.9 

Actual: 23.0 21.5 21.2 20.7# 

Miles of the Appalachian Development Highway 

System (ADHS) completed. 

 1999 2000 2001 2002

Target: 2,327 2,373 2,520 2,557 

Actual: 2,456 2,483 2,526 2,571 

# Projected from trends. 

FY 2003 Performance Plan Evaluation: DOT will 

meet the target in FY 2003. 

Management Challenge – Highway Trust Fund 

Receipts/Allocation (GAO); and Trust Fund Balances 

and Grant Fraud (IG) 

The IG’s concerns extended to two areas – effective 

use of highway funds to improve mobility and reduce 

congestion; and preventing fraud and abuse in highway 

projects contracts. A June 2000 GAO report stated that 

there is little assurance that Highway Account funds 

distributed to the States are accurate given the 

information currently available. Although the Treasury 

Department and FHWA had taken initial actions to 

review and improve their estimating processes, these 

actions alone were not sufficient to correct the 

weaknesses. Therefore, to reduce the risk of errors and 

increase the reliability of the information used to 

distribute Federal highway program funds to the States, 

GAO made these recommendations to DOT: 

▪ perform detailed, independent verifications of 

motor fuel data used in the process; 

▪ fully document FHWA’s current analysis 

methodology for State motor fuel data; 

▪ conduct an independent, comprehensive review of 

this methodology; and 

▪ evaluate the potential reliability of the Internal 

Revenue Service’s ExFIRS data as a tool to 

validate State motor fuel data. 
 

FY 2002 Performance and Accountability Report 44 

FHWA agreed with recommendations to improve its 

attribution process reliability and incorporated them 

into a motor fuel attribution process improvement 

action plan. In FY 2002, FHWA: 

▪ developed a new data submittal tool for the States 

(90 percent of all States are now submitting their 

motor fuel data electronically using this new tool); 

▪ started detailed review of State motor fuel data 

collecting and reporting processes; 

▪ refined motor fuel attribution, beginning with 

calendar year 2002 data; and 

▪ initiated an independent, comprehensive review of 

its methodology. 

FHWA will work with States to ensure that funds are 

being obligated for valid highway projects and to 

reduce the dollar value of inactive obligations for 

highway infrastructure projects by 10 percent per year. 

This will ensure that unused funds associated with 

completed, cancelled, or unnecessary projects are put 

to good use. 

FHWA will encourage efficient use and management 

of Federal funds, and better project funds management. 

FHWA assists Federal, State, and local agencies in 

identifying projects that are ready for advancement; is 

streamlining the environmental process; and 

encouraging the use of innovative contracting and 

financing such as advance construction, GARVEE 

bonds, State Infrastructure Banks, or tapered match. 

FHWA will improve management of the Federal-aid 

highway program, including cost containment, while 

allowing the States maximum delegated authority and 

flexibility, as appropriate. As larger and more complex 

projects are completed, a balance must be achieved 

between addressing the needs of major projects and the 

vast majority of the program vested in smaller projects. 

HIGHWAY CONGESTION: Delay on the Nation’s 

highway systems is a major cost to motorists - 

amounting to $72 billion in 1997 in lost wages and 

wasted fuel. Congestion adds to the cost of production, 

drives prices up, and reduces funds available for 

investment in product development or firm expansion. 

Slowing the growth of congestion and delay aids urban 

travelers’ mobility and productivity and curbs 

economic inefficiencies induced by congestion. Highly 

integrated Intelligent Transportation Systems (ITS) use 

electronic information and communications technology 

to extend the capacity of our existing infrastructure 

system, improving traffic flow and reducing 

bottlenecks. 

Performance measure: 

Percentage of total annual urban-area travel that occurs 

in congested conditions. 

 1999 2000 2001 2002

Target: (old) N/A N/A 33.4 33.7 

 (revised) N/A N/A 30.0 30.9 

Actual: (old) 32.6 33.1 33.8(r) --

 (revised) 29.0 29.3 30.4 31.1# 

# Preliminary estimate; (r) Revised 

Note on data: A more refined and accurate urban 

highway congestion model was used to calculate 

historical and current performance. The 2002 target 

has been changed to new methodology. 

2002 Results: DOT did not meet the performance 

target. 

Trend data indicates congestion is growing in 

metropolitan areas of all sizes. Preliminary data for 

metropolitan areas with integrated ITS deployments 

indicates that FHWA’s target of 61 cities in the 

medium or high deployment category will not be met. 

FHWA assisted States in completing of 77 of 244 

regional ITS architectures. The number of 

metropolitan areas with a medium or high integrated 

ITS infrastructure increased from 52 to 57. For areas 

with less well-integrated systems or no systems, 

FHWA continued funding and technical assistance to 

support integration efforts. The “511” highway 

information telephone number was launched in 8 

metropolitan areas, and will be available in an 

additional 5 locations in early 2003. FHWA continued 

“511” system deployments through 40 planning grants 

and technical assistance throughout the U.S. 

To improve work zone and highway incident 

management, FHWA: 

▪ completed an Advance Notice of Proposed 

Rulemaking to require project planners and 

designers focus on work zone planning early in 

planning cycles; 

▪ upgraded a traffic impact analysis tool that can be 

used for work zone delay estimation; 

▪ expanded collection of real-time data on travel 

time and travel time reliability from 10 to 22 city 

Transportation Management Centers across the 

country; and 

▪ began operational testing on integration of data 

and common operational practices between public 
 

FY 2002 Performance and Accountability Report 45 

safety dispatch centers and transportation 

management centers. 

FHWA supplementary performance measures:

Of annual urban-area peak period travel time, 

additional percentage of travel time attributable to 

congestion. 

 1999 2000 2001 2002

Target: N/A N/A 52 53 

Actual: 49 51 53(r) 55# 

For the individual traveler in urban areas, average 

annual hours of extra travel time due to delays. 

 1999 2000 2001 2002

Target: N/A N/A 31.7 32.2 

Actual: 30.6 31.2 32.0(r) 31.9# 

Number of metropolitan areas where integrated ITS 

infrastructure is deployed. 

 1999 2000 2001 2002

Target: N/A 51 56 61 

Actual: 49 52 52 57 

(r) Revised; # Projected from trends. 

FY 2003 Performance Plan Evaluation: DOT will 

likely meet the target in FY 2003. 

TRANSIT RIDERSHIP: In 2001, people rode public 

transportation systems 9.5 billion times, traveling to 

and from work, medical appointments, school and 

social events. Public transit offers many benefits. It is 

one of the safest ways of traveling, relieves road 

congestion, and reduces air pollution. To achieve these 

benefits, transit must be convenient and cost-efficient. 

Federal transit investment combined with State and 

private sector funds enable this means of 

transportation.

Performance measures: 

Average percent change in transit passenger-miles 

traveled per transit market. 

 1999 2000 2001 2002

Target: N/A N/A N/A 5.3 

Actual: 5.0 5.0 4.3 N/A 

N/A Not available. 

2002 Results: DOT cannot characterize its 

performance since no data was available. 

In FY 2002, DOT changed the transit ridership 

measure to the average change in passenger miles 

traveled per market. This change was prompted by the 

fact that the previous measure placed excessive 

emphasis on increasing ridership in the Nation’s very 

largest urban areas. The new measure was intended to 

focus more attention on increasing transit ridership in 

every community. 

After a year of experience with this measure, DOT has 

concluded that this measure should be modified to 

better account for the impact of economic conditions 

on transit use. The revised measure will adjust for 

changes in the level of employment in each urbanized 

area. A recent study by the Mineta Institute found that 

change in employment is a key economic factor 

associated with change in transit ridership. This 

finding is consistent with the fact that approximately 

one-half of transit riders are traveling to and from 

work. Further, employment levels also reflect the 

financial capacity of local governments to support 

transit service levels and keep fares stable. 

An increase in the average transit ridership per market, 

adjusted for changes in employment, represents an 

increase in transit’s share of the personal travel market. 

The goal is a 2.0 percent increase per year, adjusted for 

changes in employment. 

At present, this measure is reported based on year-toyear changes in transit ridership from the annual 

reports made to the National Transit Database, based 

on local fiscal years. Thus, the data being reported for 

the year 2001 represents changes between local fiscal 

years ending in 2001 (e.g., July 2000 to June 2001 or 

January 2001 to December 2001) versus local fiscal 

years ending in 2000. In order to improve the 

timeliness of the data reported, and to make the period 

being reported more comparable across areas, in the 

future, the measure will utilize data on transit 

boardings from the new monthly National Transit 

Database that was initiated in 2002. This data is 

available for the largest 150 transit operators, which 

account for about 95 percent of all transit ridership. 

Thus, for 2003, the indicator will compare transit 

ridership for the urbanized areas containing the 150 

largest transit agencies (normalized for employment 

levels) for the year ending in November 2003 with the 

year ending in November 2002. Data on employment 

is based on monthly employment levels for 

metropolitan statistical areas reported by the Bureau of 

Labor Statistics. 

FTA supplementary performance measures:

Passenger-miles traveled (in billions) by transit. 

 1999 2000 2001 2002

Target: --- 40.56 44.8 47.5 

Actual: 43.3 45.1 46.3 47.1 
 

FY 2002 Performance and Accountability Report 46 

Average condition of motor bus fleet (on a scale of 1 

(poor) to 5 (excellent)). * 

 1999 2000 2001 2002

Target: N/A 3.15 3.20 3.25 

Actual: 3.13 3.07(r) 3.11(r) N/A 

Average condition of rail vehicle fleet (on a scale of 1 

(poor) to 5 (excellent)). * 

 1999 2000 2001 2002

Target: N/A 3.19 3.24 3.29 

Actual: 3.14 3.55(r) 3.58(r) N/A 

(r) Revised; # Preliminary estimate; * In 2001 the 

method for calculating condition was revised to better 

reflect actual conditions -- this is reflected in the 

revised actual numbers for 2000 and 2001. 

FY 2003 Performance Plan Evaluation: DOT will 

meet the target in FY 2003. 

Management Challenge – Transit Grant Oversight 

(IG/GAO/OMB) 

Oversight of transit grants is a core management 

responsibility of FTA, and the IG and GAO have 

identified ways to improve oversight. Over the past 

several years, FTA has worked to continuously 

improve its grants management by implementing better 

oversight activities and exercising full use of available 

enforcement tools to correct grantees’ noncompliance 

with Federal regulations. As a result, FTA is reducing 

the risk associated with its grants program. 

FTA will use its project management oversight 

contractors (PMOC) to provide monthly reports on all 

phases of construction of transit projects. Tracking 

project contract changes and costs, and implementing 

measures to control cost will remain part of the PMOC 

responsibilities. 

DOT/FTA grants to States and localities are a key tool 

in achieving the benefits that increased transit use 

provides to individuals, communities and the Nation. 

Oversight of these grants to ensure that funds are spent 

in conformance with Federal laws and regulations is a 

core management responsibility of FTA. In the 1990s, 

the IG, GAO and OMB criticized FTA's grant 

oversight, and placed FTA grant assistance on a list of 

high-risk Federal programs. Subsequently, FTA 

established a systems approach to oversight through an 

annual risk assessment of each of its 600-plus grantees. 

In addition, numerous improvements were made to 

FTA oversight, which resulted in FTA being first 

Federal agency to be dropped from the list of high-risk 

Federal programs. 

Over the last two years, FTA has worked diligently to 

further improve its grants management oversight by 

implementing a fully coordinated approach to 

oversight. Recently, FTA has taken several steps to 

strengthen the Triennial Review Program, FTA's 

statutory oversight program, and to provide additional 

assistance to grantees in meeting FTA's requirements. 

Grantees who will be subject to a Triennial Review in 

FY 2003 were offered 10 one-day regional workshops 

to help them better understand what is required. To 

ensure that grantees have the necessary information to 

assist them in meeting Federal standards, the number of 

Grants Management Seminars was expanded from 

three to five each year and the Grants Management 

Seminar Workbook was placed on the FTA public 

website. This document includes links to all FTA 

Circulars, OMB Circulars, Federal Register Notices 

and other laws and regulations that grantees are 

required to follow. 

To improve grantee compliance with statutory and 

administrative requirements, in FY 1998 FTA 

established a goal to reduce by five percent per year the 

deficiency findings per FTA management review. 

Since that time, as FTA has increased its effort to 

strengthen grantee performance, the number of 

questions asked of grantees has increased by over 20 

percent. Thus, while deficiency findings have not 

decreased, a more rigorous oversight process has 

reduced the risks associated with FTA's grant 

assistance programs. In addition, FTA is providing 

more assistance to grantees in resolving these findings. 

FTA no longer believes that a reduction in the average 

number of deficiency findings is necessarily a good 

indication of improved grantee performance, 

particularly since the grantees reviewed change from 

year to year. In fact, this result theoretically could be 

achieved by conducting less rigorous reviews, which 

would be counterproductive to our ultimate goal. In all 

oversight areas, the proper balance has to be found in 

streamlining reviews and reducing deficiency findings, 

while encouraging grantees to continue to improve 

their management of Federal transit funds. 

AVIATION DELAY: Commercial aviation delays 

cost airlines an estimated $3 billion per year. 

Passengers are directly affected by missed flight 

connections, missed meetings, and loss of personal 

time. There are approximately 20 congested airports, 

each averaging over 20,000 hours of flight delay per 

year. Delays throughout the system are projected to 

increase as passenger travel demand continues to 

recover and rise. 
 

FY 2002 Performance and Accountability Report 47 

Performance measures: 

Percent of on-time flights. 

 1999 2000 2001 2002

Target: N/A N/A N/A 77.2 

Actual: 76 74.9 76.2 82.3 

2002 Results: DOT met the performance target. 

DOT worked with the aviation community to develop 

an action plan for increasing on-time flight arrivals. 

While recognizing the role of airlines and airports, this 

plan focuses on: 

▪ an examination of the success that Canada and 

other nations have experienced with individual air 

traffic control systems owned and operated by 

private companies; 

▪ improved FAA business practices; 

▪ organizational changes, including establishing a 

performance-based air traffic control organization; 

and 

▪ market-oriented techniques to strengthen our 

operations and reduce system delays. 

Over the long term, increased airport capacity, 

all-weather access to runways, and building more 

runways provide the best means of matching capacity 

to demand and reducing the possibility of delayed 

flights. In the near term, delay reduction depends on 

improved FAA service delivery, deployment of 

improved decision making tools such as Free Flight 

software, continued air traffic management system 

modernization to keep system reliability up, and 

improvements to aviation weather information systems. 

Capacity Growth: In addition to grant funding for 

additional runways, taxiways, and aprons at airports, 

FAA continued or completed the following projects to 

increase usable capacity, flexibility, and efficiency: 

▪ Center TRACON Automation System (CTAS), a 

decision support tool for air traffic controllers, 

which enables a more efficient arrival flow into 

terminal airspace and onto runways; 

▪ User Request Evaluation Tool (URET), a conflict 

probe that enables controllers to more quickly 

approve user requests in en route airspace by 

identifying potential aircraft-to aircraft conflicts up 

to 20 minutes in advance; 

▪ Traffic Management Advisor (TMA) at major 

hubs (Dallas–Ft. Worth, Los Angeles, Atlanta, 

Minneapolis, Oakland, Miami, and Denver); 

▪ two major systems to improve weather reporting, 

processing, and dissemination - Integrated 

Terminal Weather System to consolidate 

information from several sources, which is then 

provided to TRACONs and airport towers and 

Weather and Radar Processor to provide integrated 

weather observations and weather radar data to 

FAA traffic control centers; 

▪ improved weather sensors such as Next Generation 

Weather Radar, Terminal Doppler Weather Radar, 

the Low-Level Wind Shear Alert System and a 

wind shear detection channel for the terminal 

radar, the Automated Surface Observation System; 

and 

▪ Collaborative Convective Forecast Product 

(CCFP), an experimental demonstration program 

from the National Weather Service, at the Air 

Traffic Control System Command Center. The 

CCFP provides a single convective forecast for use 

in coordinating a system wide approach to severe 

weather events. 

Efficient Use of Daily Capacity: FAA tracks airport 

acceptance and departure rates, reflecting the arrivals 

and departures that can occur, based on standard air 

traffic management practices. Demand for arrivals or 

departures at an airport divided by its practical 

capacity, gives a utilization rate for that airport. By 

tracking utilization rates, FAA can evaluate the 

effectiveness of its delay reduction programs. 

To further increase efficiency, FAA and NASA 

developed enhanced software tools for air traffic 

control. FAA and National Weather Service aviation 

weather research programs developed improved flight 

planning and collaborative decision making tools for 

more detailed and timely detection and forecasting of 

hazardous weather, icing, turbulence, oceanic 

convection, ceilings and visibility. 

FAA Supplementary performance measures:

Airport Efficiency Rate (percent of actual arrival 

capacity used). 

 1999 2000 2001 2002

Target: N/A N/A N/A 95.25 

Actual: N/A 94.7 94.9 96.20 

Average Daily Level of Airport Arrival Capacity 

(thousands of landings) 

 1999 2000 2001 2002

Target: N/A N/A 46.6 46.6 

Actual: 44.7 44.7 46.6 47.0 

FY 2003 Performance Plan Evaluation: DOT will 

meet the target in FY 2003. 
 

FY 2002 Performance and Accountability Report 48 

Management Challenge – Aviation System Capacity 

and Air Traffic Control Modernization (IG/GAO) 

The FAA is engaged in a comprehensive program to 

modernize the air traffic control system. This includes: 

replacement of the controller workstations and 

automation software; replacement of radar surveillance 

systems; modernization of voice communication 

systems; and the introduction of enhanced automation 

aids, data links, and improved weather systems. 

Modernization is necessary to accommodate air traffic 

growth. Given the complex nature of the equipment 

and the need for the highest level of reliability, there 

are significant management challenges associated with 

maintaining schedule and cost discipline, and in 

ensuring efficient and timely use of airport grant funds. 

FAA’s Operational Evolution Plan (OEP) outlines how 

National Airspace System capacity will be increased 

over time. The OEP builds upon successful Free Flight 

program techniques and integrates well-defined 

operational concepts, early deployment, spiral 

development, and objective, measurable results. 

Through the RTCA Advisory Committee, FAA is 

working to synchronize efforts with the aviation 

industry so that FAA investments yield timely benefits. 

Responsibility for delivery of each new capability is 

assigned to a single senior executive who coordinates 

both acquisition and operational integration 

performance. The FAA is working to map OEP 

metrics directly to organizational measures. This 

linkage ensures that resources are properly aligned with 

the FAA's commitment to increasing capacity. 

It is generally accepted that new runways are the most 

effective way to increase capacity. In the 10 years 

prior to the FAA’s OEP, six new runways had been 

completed, including runways at Dallas and Phoenix. 

When the OEP was first published in June 2001, it 

included provisions to add 15 new runways, but that 

was before 9/11, and before the effects of the economic 

slowdown became more pronounced. 

As of November 2002, FAA's Airport Improvement 

Program (AIP) had 61 grant obligations, totaling about 

$72 million, with no expenditures within 18 months. 

FAA is working with the grantees to ensure that the 

grants will be activated or closed out expeditiously. 

The inactive grants and the unused funds will be 

eliminated during FY 2003. 

MARITIME NAVIGATION: More than 2 billion 

tons of freight worth $1 trillion moves annually 

through U.S. ports and waterways. The 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. As trade increases, ensuring safe and 

unimpeded access to commercial and recreational 

vessel traffic will be increasingly important to the 

national economy. Navigational accidents and icechoked shipping channels impact freight movements 

and increase the risk of environmental damage. 

Extending shipping routes in winter is crucial for many 

industries and for home heating oil shipments to the 

Northeastern U.S. where transportation alternatives do 

not exist. 

Performance measures: 

Total number of commercial vessel collisions, 

allisions, and groundings. 

 1999 2000 2001 2002

Target: N/A N/A 2,204 2,098 

Actual: 2,194 2,152 1,677 1,926 

Percentage of days in the shipping season that the U.S. 

portion of the St. Lawrence Seaway system is 

available. 

 1999 2000 2001 2002

Target: 99 99 99 99 

Actual: 99.2 98.7 98.3 99.1# 

# Preliminary estimate. 

2002 Results: DOT met the collisions, allisions, 

groundings, and the Seaway availability target. 

41 percent of the events leading to diminished 

waterway traffic availability were groundings, 40 

percent were allisions, and 18 percent were collisions. 

65 percent of collisions, allisions and groundings were 

associated with the Nation’s towing industry. 

USCG Aids to Navigation, Icebreaking, and 

International Ice Patrol Operations: No waterways 

were either closed or restricted in FY 2002 due to 

failures of the aids to navigation system or excessive 

ice buildups, and no connections were drawn between 

aid to navigation failures and any groundings, 

collisions, or allisions. Significant ice did not form on 

the Great Lakes until mid-January when more seasonal 

temperatures caused rapid ice formation in the northern 

lakes. In the Northeast, there was little ice formation 

until early January. Most ice operations were centered 

on the upper Penobscot River in Maine and the upper 

Hudson River in New York. 

No ships collided with icebergs. The 2002 season was 

a moderate ice year with several icebergs surviving 

long enough to drift past the southern end, or “Tail” of 

the Grand Banks. Over 4,700 icebergs were sighted in 

the patrol area, 877 of them south of latitude 48°, 

which is the area of greatest concern. 
 

FY 2002 Performance and Accountability Report 49 

St. Lawrence Seaway Operations: The most common 

cause of system non-availability in 2002 was weather. 

Weather delays usually occur at the beginning and end 

of each navigation season, and are caused by poor 

visibility, high winds, ice, blizzards, and dense fog. 

The other major factor that reduced lock availability in 

2002 was vessel incidents, usually caused by human 

error on the part of a vessel’s crew. Vessel incidents 

are also caused by mechanical breakdowns. Of the 

remaining system non-availability causes, the SLSDC 

has the most control over the proper functioning of 

lock equipment. During 2002, only 3.2 hours of the 

63.2 total hours of downtime (5 percent) were due to 

malfunctioning lock equipment. 

To address vessel related non-availability causes, 

SLSDC has joined with its Canadian counterpart, the 

St. Lawrence Seaway Management 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. This vessel inspection 

program was certified as ISO 9002 compliant in 1998. 

In 2002, 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 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 in operating costs during 2002. 

The SLSDC also unveiled an Automatic Identification 

System (AIS)-based Vessel Traffic Management 

System (TMS) in 2002 that is based on Global 

Positioning System (GPS) technology. The application 

of Universal AIS technology enhances the efficiency of 

Seaway operations, and improves the safety of 

navigation on the Seaway. 

USCG supplementary performance measure: 

Days critical waterways are closed due to ice. (2 days 

in an average winter; 8 days in a severe winter.) 

 1999 2000 2001 2002

Target: 2-8 2-8 2-8 2-8 

Actual: 0 0 7# 0 

# The winter of 2000-2001 was classified as a severe 

winter. 

FY 2003 Performance Plan Evaluation: SLSDC will 

meet the target in FY 2003. DOT cannot characterize 

Coast Guard performance for FY 2003, since the Coast 

Guard will be a part of the new Department of 

Homeland Security.

TRANSPORTATION ACCESSIBILITY: 

Transportation is vital in maintaining independence 

and mobility for people with disabilities, linking them 

to employment, health care, and participation in the 

community. The President’s New Freedom initiative 

seeks to create a more accessible public transportation 

system for individuals with disabilities. The Personal 

Responsibility and Work Opportunity Reconciliation 

Act limits the time a person can receive welfare 

benefits, and generally requires recipients to participate 

in job and training activities. For many of these 

people, access to transportation is the key to making a 

transition from welfare to work. 

Performance measures: 

Percentage of bus fleets that are ADA-compliant. 

 1999 2000 2001 2002

Target: 73 80 83 86 

Actual: 77 80 85 90# 

Percentage of key rail stations that are ADA-compliant. 

 1999 2000 2001 2002

Target: 37 47 58 68 

Actual: 49 52 67 77# 

Number of employment sites (000s) that are made 

accessible by Job Access and Reverse Commute 

(JARC) transportation services. 

 1999 2000 2001 2002

Target: N/A 4.1 15.7 40.4 

Actual: 1.7 17.0 17.8(r) N/A 

(r) Revised; # Preliminary estimate; N/A Not 

available; Rail station measure does not reflect 

stations under a time extension as discussed below. 

Note on data: The FY 2002 target for work sites made 

accessible by Job Access and Reverse Commute grants 

was adjusted upward in the FY 2002 Performance Plan 

based on FY 2001 preliminary estimates of actual 

performance. Subsequent revisions to the methodology 

used to calculate the estimates resulted in revised 

actual performance numbers in FY 200l. Future 

performance targets will be adjusted to account for 

improved trend data. 

2002 Results: DOT met both bus and rail station ADA 

compliance targets, and cannot characterize 

performance for the Job Access and Reverse Commute 

work site accessibility target since data has not yet 

received from JARC grantees to verify that FY 2002 

program targets have been achieved. A new easier-touse reporting system is being implemented that should 

improve data gathering performance. 

The bus transit fleet continues to become more 

accessible as older vehicles are replaced with those that 
 

FY 2002 Performance and Accountability Report 50 

are lift-equipped or have low floors. The overall rate 

of increase in bus accessibility has slowed somewhat 

since many of the buses replaced were already liftequipped. 

There are a total of 685 key rail stations nationwide 

designated by the commuter authority or light/rapid rail 

operator in cooperation with the local disability 

community. To date, of the 685 key stations, 547 were 

covered by a Voluntary Compliance Agreement that 

expired December 31, 2001. The other 138 are 

currently operating under time extensions. Since 1995, 

FTA has assessed more than 509 stations, taking onsite measurements, recording specific accessibility 

features at stations, and simultaneously providing 

technical assistance. 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. 

In areas that receive JARC funds, the program 

successfully meets the transportation needs of lowincome individuals seeking reliable transportation to 

employment and related support services. Grantees 

have used JARC funds for a wide variety of services, 

ranging from expansion of fixed route bus systems to 

the provision of customer information. In each 

community that has 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 have also increased access to 

critical employment support sites, particularly 

childcare and job training facilities. 

FY 2003 Performance Plan Evaluation: DOT will 

meet the targets in FY 2003. 

INTERNATIONAL AIR SERVICE: Since the 

1940’s international air transportation has been subject 

to restrictive bilateral agreements that raise prices and 

artificially suppresses 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 agreements have made it possible for 

the airline industry to provide better quality, lower 

priced, more competitive service for millions of 

passengers in thousands of international city-pair 

markets. 

Performance measure: 

Number of passengers (in millions) in international 

markets with open skies aviation agreements. 

 1999 2000 2001 2002

Target: 43.4 44.7 51.6 59.7 

Actual: 49.4 56.8 56.4(r) 57.0# 

# Preliminary estimate 

2002 Results: DOT did not meet the performance 

target. 

Passenger travel diminished in FY 2002 because of 

9/11’s impact on air travel. However, DOT increased 

the number of countries with which the U.S. has "openskies" agreements to 59, adding five new open-skies 

agreements (France, Sri Lanka, Uganda, Cape Verde 

and Jamaica). In addition, the U.S. has multilateral 

open-skies agreements with six other members of the 

Asia-Pacific Economic Cooperation (APEC) forum 

(Brunei, Chile, New Zealand, Peru, Samoa and 

Singapore); and an "open transborder" agreement with 

Canada. 

FY 2003 Performance Plan Evaluation: DOT 

expects to meet the target in FY 2003. Although the 

European Court of Justice (ECJ) found that some 

elements of the U.S.s’ aviation agreements with eight 

EU member states violated EU law, it did not nullify 

our agreements with those eight or the other seven EU 

members. Those agreements, which form the legal 

basis for air service between the United States and EU 

countries, will remain in force, and the ECJ decision 

will not affect our ability to meet the FY 2003 target. 
 

FY 2002 Performance and Accountability Report 51 

HUMAN AND NATURAL ENVIRONMENT

STRATEGIC OBJECTIVE: Protect and enhance communities and the natural environment affected by 

transportation. 

Strategic Outcomes: 

▪ Improve the sustainability and livability of communities. 

▪ Reduce the adverse effects of transportation on ecosystems and the natural environment. 

▪ Improve the viability of ecosystems. 

▪ Reduce the adverse effects of transportation facilities on the natural environment. 

▪ Improve equity for low income and minority communities concerning the benefits and burdens of transportation 

facilities and services. 

▪ Reduce the amount of pollution from transportation sources. 

Transportation makes our communities more livable, enhancing the quality of our lives and our society. However, 

transportation generates undesired consequences too, such as pollution, noise, and the use of valuable land and 

degradation of fishery habitat. No matter how much is done to improve the capacity and efficiency of our transportation 

system, we cannot consider our programs to be successful unless we also manage the effects on our environment, and 

ultimately our quality of life. 

DOT’s objective is to advance the benefits of transportation while minimizing its negative environmental impacts. In 

FY 2002, DOT environmental programs prevented as much harm as possible from being done to the environment by 

transportation projects and operations. 

PERFORMANCE SUMMARY: 

1996 1997 1998 1999 2000 2001 2002 2002 

Target

Met Not 

Met

Number of significant domestic 

fishery violations found 

N/A 308 400 392 273(r) 92(r) 113 133 9

Acres of wetlands replaced for 

every acre affected by Federal-aid 

highway projects 

2.3 2.6 2.2 2.3 3.8 2.1 2.7 1.5 9

Percent DOT facilities categorized 

as No Further Remedial Action 

Planned under Superfund 

Amendments and Reauthorization 

Act 

75 74 78 90 90 91 91 91 9

Monthly average number of area 

transportation emissions 

conformity lapses 

N/A N/A N/A N/A 6 6 6 6 9

Gallons of oil spilled by maritime 

sources per million gallons 

shipped 

7.2 1.6 3.1 2.6(r) 2.8(r) 3.4 0.4 2.6 9

Tons of hazardous liquid materials 

spilled per pipeline million tonmiles shipped 

0.0232 0.0257 0.0119 0.0229 0.0131(r) 0.0201 0.0109* 0.0142 9

Number of people in U.S. (in 

thousands) exposed to significant 

aircraft noise levels 

N/A N/A 722 585 440 411(r) 379* 440 9
 

FY 2002 Performance and Accountability Report 52 

FY 2001 FINAL PERFORMANCE REPORT

1995 1996 1997 1998 1999 2000 2001 2001 

Target

Met Not 

Met

Percent change in number of species 

designated as overfished 

N/A N/A N/A N/A N/A -9 N/A -1 

N/A Not available 

* Preliminary estimate 

FISHERY PROTECTION: The U.S. Exclusive 

Economic Zone covers 3.36 million square miles of 

ocean, providing a livelihood for commercial 

fishermen, a vast supply of food, and recreation. 

Commercial and recreational fisheries contribute about 

$50 billion annually to the U.S. economy. The 

Sustainable Fisheries Act (SFA) of 1996 mandates a 

reduction in the number of over-fished stocks. 

Responsible management and enforcement of ocean 

resource management regimes is of critical importance 

as the demand for fish protein grows. 

Performance measure: 

Number of significant domestic fishery violations 

found. 

 1999 2000 2001 2002

Target: N/A N/A N/A 133 

Actual: 392 273(r) 92(r) 113 

(r) Revised. 

2002 Results: DOT met the performance target. 

However, significant violations arose from FY 2001, 

reversing a significant downtrend. Coast Guard 

enforcement presence on fishing grounds diminished at 

the start of the fiscal year due to the need for coastal 

and seaport security in the aftermath of 9/11. The 

Coast Guard has since restored the fisheries 

enforcement effort and toward the end of FY 2002, saw 

a significant decrease in violations of fisheries 

protection regulations. 

FY 2003 Performance Plan Evaluation: DOT cannot 

characterize Coast Guard performance for FY 2003, 

since the Coast Guard will be a part of the new 

Department of Homeland Security. 

WETLAND PROTECTION AND RECOVERY: 

Wetlands are an important natural resource. They 

provide natural filtration of pollutants, and they store 

and slow down the release of floodwaters, thereby 

reducing damage to downstream farms and 

communities. Wetlands also provide an essential 

habitat for biodiversity. But many of the Nation’s 

wetlands have been lost to development over the years, 

before their value was fully recognized. Highways and 

transportation facilities (location, construction, and 

operation) can be a significant factor affecting these 

ecosystems. 

Performance measure: 

On a program-wide basis, acres of wetlands replaced 

for every acre affected by Federal-aid Highway 

projects (where impacts are unavoidable). 

 1999 2000 2001 2002

Target: 1.5 1.5 1.5 1.5 

Actual: 2.3 3.8 2.1 2.7 

2002 Results: DOT met the performance target. 

Federal-aid projects nationwide impacted 

approximately 1,896 acres of wetland, and provided 

5,118 acres of compensatory mitigation. 

With other agencies, FHWA continued to conduct joint 

research, and develop revised standards for wetlands, 

highway runoff water quality, and wildlife habitat. In 

cooperation with AASHTO, FHWA conducted a 

technology scanning tour of five countries in Europe to 

examine ways to reduce wildlife mortality along 

highways. Results of the scan were developed into an 

implementation plan for the U.S. FHWA also 

developed new training courses on highway runoff 

water quality and stream ecosystem restoration with the 

National Highway Institute. 

FY 2003 Performance Plan Evaluation: DOT will 

meet the targets in FY 2003. 

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. 

MARAD is the U.S. Government’s disposal agent for 

merchant type vessels weighing 1,500 gross tons or 
 

FY 2002 Performance and Accountability Report 53 

more, and is required by law to dispose of obsolete 

ships in the National Defense Reserve Fleet (NDRF) 

by the end of FY 2006. Due to 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, sales for 

overseas disposal were halted in 1995. Additional 

ships will be added to the inventory as other merchant 

type Federal Government vessels become obsolete. 

Leaks from some of the ships in the NDRF have 

already occurred and the risk of environmental damage 

associated with the deteriorating ships continues to 

increase. 

Performance measure: 

Percentage of DOT facilities categorized as No Further 

Remedial Action Planned (NFRAP) under the 

Superfund Amendments and Reauthorization Act 

(SARA). 

 1999 2000 2001 2002

Target: 80 82 91 91 

Actual: 90 90 91 91 

2002 Results: DOT met the performance target. 

Facility cleanup complies with the SARA process and 

with the National Oil and Hazardous Substances 

Pollution Contingency Plan. Working with States, 

local governments, and the EPA, DOT used a “worst 

first” prioritization system to attack the overall problem 

presented by DOT facilities where significant pollution 

problems present themselves. 

The Coast Guard continued cleanup activities at its 

Kodiak, Alaska and Elizabeth City, North Carolina 

industrial facilities. In September 2002, EPA added 

the Coast Guard Yard in Baltimore, Maryland to its 

National Priority List, and the Coast Guard will 

conduct cleanup activities at the Yard for the next 

several years. 

FAA continued cleanup activities in several Alaskan 

locations, at the Mike Monroney Aeronautical Center 

in Oklahoma City, and at the William J. Hughes 

Technical Center in Atlantic City, New Jersey. FAA is 

also continuing to replace outdated underground 

storage tanks with newer, regulatory-compliant tanks, 

as well as cleaning or removing unused tanks at 

decommissioned facilities. 

EPA removed FRA’s formerly-owned and 

contaminated site in Anchorage, Alaska from the 

National Priority List in September 2002, thus 

concluding all FRA’s SARA cleanup efforts. 

FHWA continued work at one facility to meet State 

requirements. 

FY 2003 Performance Plan Evaluation: DOT will 

meet the target in FY 2003. 

Management Challenge – Ship Disposal (IG/GAO) 

Ship disposal is a management challenge separate from 

DOT’s goal to clean up its shore facilities. MARAD is 

the U.S. Government’s disposal agent for merchanttype vessels of 1,500 gross tons or more. As of March 

2002, 133 ships await disposal. 

Since 1994, environmental concerns and hazardous 

material regulatory obstacles have prevented exporting 

ships, which had been a disposal option that maximized 

financial returns to the Government. Legislation in 

2001 allowed MARAD to purchase scrapping services 

as an expedient means to remove the most deteriorated 

ships and provided $10 million for this purpose. 

Eleven obsolete vessels have been removed from the 

fleets for disposal through a combination of payment 

for scrapping services, prior year vessel sales and 

artificial reefing. In addition to scrapping obsolete 

ships, MARAD will dispose of them by any or all of 

the following means: 

▪ artificial reefing (including the establishment of 

national remediation standards through a joint 

effort with the EPA and the Navy); 

▪ soliciting for the sale of recyclable obsolete 

vessels having a material value to recycling 

companies; and 

▪ pursuing legislative changes to expedite ship 

disposal or create new opportunities. 

MARAD is also pursuing the following alternatives: 

▪ export of ships for recycling (teaming with the 

EPA and the State Department to resolve 

environmental and worker health/safety issues); 

▪ soliciting innovative proposals from industry for 

ship disposal solutions; and 

▪ seeking additional funding sources and 

partnerships (domestic and international) for ship 

disposal based upon the environmental, safety and 

training aspects of the program. 

Each of the above alternatives has the potential to 

realize cost savings (compared to paid ship scrapping) 

and increase the number of vessel disposals. However, 

potential results for these alternatives cannot yet be 

accurately quantified. If MARAD is to meet the 

legislative deadline for eliminating the current 

inventory of obsolete ships, approximately 43 ships a 

year must be disposed of during the FY 2004-2006 

timeframe. 
 

FY 2002 Performance and Accountability Report 54 

MOBILE SOURCE EMISSIONS: The National 

Ambient Air Quality Standards 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. About two-thirds of 

transportation-related emissions come from on-road 

motor vehicles. The quality of our air is a public good, 

and the cost of these pollutants is not captured in the 

marketplace. For this reason, the Government works to 

mitigate this negative impact. 

Performance measure: 

Monthly average number of area transportation 

emissions conformity lapses. 

 1999 2000 2001 2002

Target: N/A N/A N/A 6 

Actual: N/A 6 6 6 

2002 Results: DOT met the performance target. 

Of non-attainment and maintenance areas, 98 percent 

met mobile emissions budgets for ozone, 100 percent 

met their budget for carbon monoxide and 96.3 percent 

met their budget for particulate matter (PM-10). 

Although national mobile source emissions estimates 

for FY 2001 and FY 2002 are not available, emissions 

were 61.9 million tons in FY 2000, which was lower 

than the FY 2002 target of 63.1 million. 

A USDOT/EPA public information initiative on 

transportation and air quality was expanded with the 

addition of a new web site, information exchange, and 

community partnership program. FHWA continued to 

support the Alliance for Clean Air and Transportation, 

a national alliance of more than 20 organizations 

supporting public education to reduce traffic 

congestion and improve air quality. Through the 

Congestion Mitigation and Air Quality Improvement 

(CMAQ) program, FHWA funded State and local 

government initiatives to reduce emissions through the 

use of alternative fuel vehicles, inspection and 

maintenance programs, and other transportation control 

measures. 

FHWA eliminated its supplementary performance 

measure of tons of on-road mobile source emissions. 

FHWA used data from an EPA emissions trends 

database, which lags as much as two years behind, 

making the performance measure of little utility in 

managing ongoing performance. 

FY 2003 Performance Plan Evaluation: DOT will 

meet the target in FY 2003. 

OIL AND PIPELINE SPILLS: A large share of the 

U.S. economy is fueled by oil. Over half the oil used 

in the U.S. today is imported, and most of the imported 

oil is carried in tankships. Furthermore, with offshore 

drilling occurring further offshore, and larger cargo and 

tank ships plying the oceans, the task of preventing oil 

spills will become even more challenging. Oil spills 

can devastate ecosystems and can incur enormous 

response costs. More than 617 billion ton-miles of 

petroleum and other hazardous liquids move across the 

country through about 157,000 miles of hazardous 

liquid pipelines. While this is usually the least costly 

way to transport these bulk cargoes, it also entails some 

risk. Because of the volume of liquid hazardous 

materials moved by pipelines, any spill into the 

environment is potentially a significant one. 

Performance measures: 

Gallons spilled per million gallons shipped by maritime 

sources. 

 1999 2000 2001 2002

Target: 4.3 4.1 4.0 2.6 

Actual: 2.6(r) 2.8(r) 3.4 0.4 

Tons of hazardous liquid materials spilled per million 

ton-miles shipped by pipelines. 

 1999 2000 2001 2002

Target: .0171 .0161 .0151 .0142 

Actual: .0229 .0131(r) .0201 .0109# 

(r) Revised; # Preliminary estimate. 

2002 Results: DOT met performance targets for both 

maritime oil spills and pipeline hazmat spills. 

A significant portion of all the oil spilled into U.S. 

waters continues to result from a few large spills. In 

FY 2002, 45 percent of the total volume of oil spilled 

from maritime sources resulted from three spills. Spill 

sources continue to shift toward marine terminal 

facilities. Oil spill regulations combined with 

improved international standards and industry efforts 

have decreased cargo oil spills, but risks of bunker 

spills will increase over time as vessel size and 

waterway traffic increases. Barges continue to be a 

leading source of spills, with most spills resulting from 

equipment malfunction or human error. 

As part of its pipeline safety program, RSPA improved 

operations, control, and monitoring technologies to 

enable better corrosion detection; validated direct 

assessment techniques for unpiggable pipelines; and 

researched better pipeline coatings. Better corrosion 

detection technology and direct assessment allows 

pipeline operators to detect pipeline defects before a 

release occurs. Improved pipeline coatings reduce 
 

FY 2002 Performance and Accountability Report 55 

corrosion damage and lessen the risk of environmental 

damage from pipeline failures. 

RSPA further improved damage prevention and leak 

detection by increasing pipeline operators’ use of inline inspection tools and locating technologies to detect 

pipeline defects especially in unpiggable pipelines; 

improve remote and real-time monitoring for 

encroachment, unauthorized excavation, and pipeline 

damage; and required more use of directional drilling 

to avoid damage. RSPA also made educational 

materials available to operators, one-call centers and 

other interested groups, and supported efforts of the 

Common Ground Alliance to offer “Dig Safely”

training sessions around the country for groups 

interested in implementing this important program. 

FY 2003 Performance Plan Evaluation: RSPA will 

meet its performance target in FY 2003. DOT cannot 

characterize Coast Guard performance for FY 2003, 

since the Coast Guard will be a part of the new 

Department of Homeland Security.

AIRCRAFT NOISE EXPOSURE: Public concern 

and sensitivity to aircraft noise around airports is high. 

In recent years, noise complaints have increased even 

while quieter aircraft technology has been introduced. 

Aircraft noise is an undesired by-product of our 

mobility, and the Government acts to reduce the 

public’s exposure to unreasonable noise levels. 

Performance measure: 

Number of people in the U.S. (in thousands) who are 

exposed to significant aircraft noise levels (65 decibels 

or more). 

 1999 2000 2001 2002

Target: N/A N/A 440 440 

Actual: 585 440 411(r) 379# 

(r) Revised; # Preliminary estimate.

2002 Results: DOT met the performance target. 

DOT pursued a program of aircraft noise control in 

cooperation with the aviation community through noise 

reduction at the source (development and adoption of 

quieter aircraft), soundproofing and buyouts of 

buildings near airports, operational flight control 

measures, and land use planning strategies. In 2002, 

FAA: 

▪ continued to develop noise research and 

assessment technologies; 

▪ implemented flight control measures to help 

reduce neighborhood exposure; 

▪ continued to examine and validate methodologies 

used to assess aircraft noise exposure; 

▪ developed a research plan and program for 

international certification noise standards for 

turbojet airplanes that will be more stringent than 

the current Stage 3 standard; and 

▪ in cooperation with the National Park Service, 

assessed noise exposure and developed Air Tour 

Management Plans for an estimated 45 national 

parks. 

FAA also worked with NASA to identify concepts that 

will reduce the noise impact of future subsonic jet 

airplanes by half (7 to 10 decibels), relative to 1992 

technology. 

FY 2003 Performance Plan Evaluation: DOT will 

meet the target in FY 2003. 
 

FY 2002 Performance and Accountability Report 56 

ORGANIZATIONAL EXCELLENCE

Implementing the President’s Management Agenda 

STRATEGIC OBJECTIVE: Advance the Department’s ability to manage for results and innovation. 

In implementing the President’s Management Agenda in DOT, we aim to achieve the following organizational 

excellence outcomes: 

▪ Improve customer satisfaction 

▪ Improve employee satisfaction and effectiveness 

▪ Improve organizational performance and productivity 

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; organized to be agile, lean, and capable of making timely decisions. As we 

determine our human capital requirements, DOT will thoughtfully restructure our organization. 

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. 

FINANCIAL AND PROCUREMENT PERFORMANCE 

Improved financial performance is a key aspect of improving the government’s performance. Knowing the full cost of 

DOT’s goods and services is a prerequisite to good program management. The General Accounting Office and the 

DOT IG have also identified DOT financial management as requiring focused effort to make needed improvements. 

Good financial stewardship, excellent and efficient procurement and acquisition systems, and improved financial 

performance are cornerstones of excellent DOT management. 

EXPANDED ELECTRONIC GOVERNMENT 

President Bush has called for an expanded electronic government that improves service to individuals, businesses, and 

State and local government through the use of information technologies. DOT is committed to improving 

transportation through market-based policies that foster competition by using electronic government resources, and 

increasing the range of transportation choices available to travelers and shippers. DOT is also committed to making the 

U.S. transportation system as efficient as possible in order to enable maximum economic growth, more efficient use of 

information technology to create faster, easier, and more efficient ways for citizens to transact their business with DOT 

and to provide input on transportation policies and programs. 

BUDGET AND PERFORMANCE INTEGRATION 

Regular, systematic measurement and accountability for program performance compared to pre-established goals will 

be the means to improve DOT management. The President’s Management Agenda stresses a sea change in Federal 

management – that of changing yearly budgetary and resource management decision focus from the “increment” to the 

“base” and through accountability for programmatic results. 
 

FY 2002 Performance and Accountability Report 57 

PERFORMANCE SUMMARY

 1996 1997 1998 1999 2000 2001 2002 2002 

Target

Met Not 

Met

For major DOT acquisitions, 

percentage of cost, schedule, and 

performance goals established in 

acquisition project baselines that are 

met. 

N/A N/A N/A N/A N/A N/A 74 90 9

Percent share of total dollar value of 

DOT direct contracts awarded to 

women-owned businesses. 

2.4 4.0 3.7 4.1 4.5 3.7(r) 3.8* 5.1 9

Percent share of total dollar value of 

DOT direct contracts awarded to 

small disadvantaged businesses. 

19.8 19.6 17.0 17.9 17.7 17.4(r) 16.2* 14.5 9

For major Federally funded 

infrastructure projects, percentage 

that meet schedule milestones 

established in project or contract 

agreements, or miss them by less 

than 10 percent. 

N/A N/A N/A N/A N/A N/A 85 95 9

For major Federally funded 

infrastructure projects, percentage 

that meet cost estimates established 

in project or contract agreements, or 

miss them by less than 10 percent. 

N/A N/A N/A N/A N/A N/A 85 95 9

Percentage of transit grants 

obligated within 60 days after 

submission of a completed 

application. 

N/A N/A N/A N/A 21 51 67 60 9

Environmental justice cases 

unresolved after one year. 

50 20 67 29 56 39 65 40 9

* Preliminary estimate 

Strategic Management Of Human Capital 

In FY 2002, DOT developed a Human Capital Plan to 

provide a strategic guide our efforts through FY 2005. 

This Plan is fully aligned with the President’s 

Management Agenda and the standards developed by 

the Office of Management and Budget, Office of 

Personnel Management, and the General Accounting 

Office: strategic alignment, workforce planning and 

deployment, leadership and knowledge management, 

performance culture, talent, and accountability. DOT’s 

plan contains initiatives to help the Department recruit, 

develop, and retain the diverse talent needed now and 

in the future to perform our mission and achieve our 

strategic objectives. During FY 2002, DOT improved 

workforce planning throughout the Department and 

which will continue into FY 2003, as outlined in 

DOT’s Human Capital Plan. As we utilize the 

workforce planning process in FY 2003 for mission 

critical occupations, we will focus on creating a 

citizen-centered, using e-government and competitive 

sourcing, as appropriate solutions to our human capital 

challenges. 

FAA is redirecting a major portion of its organization - 

37,300 employees - into a results-oriented Air Traffic 

Organization (ATO), freeing most of the FAA to 

manage better and modernize more efficiently. 

Management Challenge – Strategic Human Capital 

Planning (GAO/OMB) 

GAO has stated that the entire Federal Government 

faces an impending wave of retirements of longservice, highly competent Federal employees. From 

this arises a large-scale strategic human resource 

planning issue. While this exodus of talent will not 
 

FY 2002 Performance and Accountability Report 58 

happen overnight, DOT must plan now to maintain 

required levels of experience, competencies, and 

knowledge levels in the Department’s civilian, 

military, and contract workforce. S uccession planning 

as well as managing and maintaining adequate 

institutional knowledge will be crucial for DOT’s 

ability to carry out its functions during this period of 

high workforce turnover. 

Competitive Sourcing 

DOT’s 2001 Fair Act inventory identified over 12,000 

FTE performing commercial functions. In FY 2002, 

DOT developed a plan to compete over 3,400 positions 

in FY 2003 or about 30 percent of the calendar year 

2000 Fair Act inventory, far exceeding the President's 

Management Agenda goal of 15 percent by the end of 

FY 2003. DOT has already initiated studies for over 

2,800 of these positions and FAA's study of flight 

service station is one of few in government that is 

nation-wide in scope. 

Financial and Procurement Performance 

Acquisition Management – 

Performance measures:

For major DOT systems acquisitions, percentage of 

cost, schedule, and performance goals established in 

acquisition project baselines that are met. 

 1999 2000 2001 2002

Target: N/A N/A N/A 90 

Actual: N/A N/A N/A 74* 

* Data is for cost and schedule only; full data on 

major systems that had been fielded and met 

performance expectations were not available. 

2002 Results: DOT did not meet the target.

FY 2003 Performance Plan Evaluation: DOT will 

meet the target in FY 2003. 

Small disadvantaged and women-owned 

business contracts – 

Percent share of the total dollar value of DOT direct 

contracts that are awarded to women-owned 

businesses. 

 1999 2000 2001 2002

Target: 5 5 5 5.1 

Actual: 4.1 4.5 3.7(r) 3.8# 

Percent share of the total dollar value of DOT direct 

contracts that are awarded to small disadvantaged 

businesses. 

 1999 2000 2001 2002

Target: 14.5 14.5 14.5 14.5 

Actual: 17.9 17.7 17.4(r) 16.2# 

(r) Revised; # Preliminary estimate 

2002 Results: DOT met the target for small 

disadvantaged businesses (SDB), and missed targets 

for acquisition performance and for women-owned 

businesses (WOB). SDBs received $372 million and 

WOBs received $88 million of DOT's direct 

procurements, which totaled $2.3 billion, a significant 

increase from the $1.9 billion base estimated for the 

year. Though short of the target, the SDB achievement 

is above the government-wide average of 

approximately 2.4 percent. 

WOBs do not have a special set-aside authority 

allowing them to compete in a restricted market for 

Federal procurements. Therefore, WOBs must 

successfully compete with other small businesses for 

small business set-aside procurements or with all 

businesses for full and open procurements. To assist 

WOBs to successfully compete, DOT offered financial 

assistance, conducted outreach and training to identify 

potential contracting opportunities, and made more 

electronic marketing and contract information available 

to WOBs, assisting them in becoming better informed 

on how to do business with DOT and in accessing 

transportation-related contract opportunities. DOT's 

ongoing Bonding Assistance Program and Short Term 

Lending Program improved WOBs' access to financing 

and bonding. 

FY 2003 Performance Plan Evaluation: DOT will 

meet the targets in FY 2003. 

Financial management – Last year, DOT, FHWA, 

and FAA received unqualified opinions (clean audit) 

on all three financial statements required by statute and 

by OMB, and we have taken steps to ensure that we 

sustain those results in the years to come. In prior 

years, FAA did not receive unqualified opinions 

because of a material internal control weakness in 

accounting and reporting for FAA property, plant, and 

equipment. These assets, valued at almost $13 billion 

in FY 2002, account for 46 percent of FAA’s total 

assets. To fix this problem, FAA created an Interim 

Fixed Asset System (IFAS) to centrally control and 

account for its property. 

Additionally, work continued on implementing Delphi 

– DOT’s JFMIP-compliant Department-wide financial 

accounting system. All Operating Administrations 
 

FY 2002 Performance and Accountability Report 59 

except FAA, FMCSA, MARAD and FHWA were 

using Delphi at the end of FY 2002, with the remaining 

DOT Operating Administrations to convert in FY 

2003. 

Performance-based contracting and 

Expanding on-line procurement – DOT's 

agency-wide Procurement Performance Management 

System policy includes a measure for Performance 

Based Service Contracting consistent with the 20 

percent by FY 2004 goal established in the 

government-wide Acquisition Performance 

Measurement Program. In 2002, DOT intended that 20 

percent of all service contract dollars would be 

performance based. Not including TSA, 22.1 percent 

of DOT’s contracts were performance based; including 

TSA procurements, 16.6 percent were performance 

based. 

DOT and FAA Audited Financial Statements 

(IG/GAO/OMB) 

As indicated by the IG, GAO, and OMB, DOT needs to 

stress implementation of its replacement financial 

system, and implement cost accounting and labor 

distribution functions along with the replacement 

system. DOT’s plans to introduce all activities to the 

Department’s financial accounting has presented a 

significant management challenge, requiring DOT to 

develop more comprehensive cost accounting systems, 

and – most critically – to develop improved record 

keeping and valuation procedures for property, plant, 

and equipment. This last requirement remains a 

significant challenge for FAA, whose direct provision 

of services to the public involves significant capital 

assets. The IG continues to carry this issue in its 2003 

management challenge report. 

DOT is following through on the full implementation 

of the new Delphi accounting system and managerial 

cost accounting standards. The Delphi system, which 

was initiated in 1997, is now operational in seven of 

DOT’s smaller Operating Administrations and staff 

offices. Delphi is being implemented in four of DOT’s 

largest Operating Administrations (Federal Aviation 

Administration, Federal Highway Administration, 

Federal Motor Carrier Safety Administration, and 

Maritime Administration), which account for more 

than 80 percent of DOT’s FY 2003 budget (not 

including TSA and Coast Guard) and represent most of 

the volume of transactions anticipated for Delphi 

operations. 

Financial StewardshipPerformance measures:

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. 

 1999 2000 2001 2002

Target: N/A N/A N/A 95 

Actual: N/A N/A N/A 85 

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. 

 1999 2000 2001 2002

Target: N/A N/A N/A 95 

Actual: N/A N/A N/A 85 

Percentage of transit grants obligated within 60 days 

after submission of a completed application. 

 1999 2000 2001 2002

Target: N/A N/A N/A 60 

Actual: -- 21 51 67 

2002 Results: DOT met its transit grant obligation 

timeliness target, but did not meet infrastructure project 

cost or schedule performance targets. 

FHWA identified six major transportation 

improvement projects with an estimated total cost of 

more than $1 billion - Central Artery/Tunnel (Boston), 

Woodrow Wilson Bridge (MD-VA-DC), San 

Francisco-Oakland Bay Bridge (East Span), Miami 

Intermodal Connector, T-Rex Project (Denver), and the 

Central Texas Turnpike (Austin). The costs for all of 

these projects, except the Central Artery/Tunnel, were 

within 10 percent of estimates in the initial baseline in 

the project financial plan. There were no schedule 

milestones for these projects in FY 2002. 

FAA – Major runway construction projects for 

infrastructure (Seattle, St. Louis, and Atlanta) were all 

within 10 percent of milestone goals for schedule and 

costs. 

FTA’s four major projects (active New Starts projects 

with Full Funding Grant Agreements (FFGA) that 

exceed $1 billion) are: New Jersey Hudson-Bergen 

MOS II, San Juan Tren Urbano, Denver Southeast 

Corridor Project, and Bay Area Rapid Transit (BART) 

Extension to San Francisco Airport. Three of these 

projects (New Jersey Hudson-Bergen, Denver 

Southeast Corridor and the BART-SFO Extension) 
 

FY 2002 Performance and Accountability Report 60 

were within 10 percent of the cost estimate of the 

current FFGA agreements. San Juan Tren Urbano is 

36 percent over the cost estimate in their current 

FFGA, and is currently operating under an FTAapproved recovery plan. Two of these projects (New 

Jersey Hudson-Bergen and Denver Southeast Corridor) 

were within 10 percent of the schedule milestones of 

the current FFGA agreements. The San Juan Tren 

Urbano Revenue Operations Date was recently 

changed from July 2001 to June 2004. BART-SFO 

Extension had a Revenue Operations Date of July 

2001, but is now projected to be completed in April 

2003. 

FTA remains committed to bringing projects in on time 

and on budget, and is improving its rigorous oversight 

program, and has made project cost and budget 

performance, a core accountability of every senior 

manager in the agency. In addition, FTA is using 

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 obligated 67 percent of grants within 60 days, 

including grant applications received in FY 2001 and 

obligated in FY 2002. In January 2002, FTA 

determined that improvements in the timeliness of 

grant processing should be an important component of 

its efforts to be more customer-focused and resultsoriented. In spite of the fact that this ambitious goal 

was established for the first time one-quarter into the 

fiscal year, FTA made dramatic improvements in the 

timeliness of grant processing during FY 2002. Sixtyseven percent of the 1,511 program grants FTA 

obligated during FY 2002 were awarded in 60 days or 

less after submission of a completed application. By 

comparison, a retrospective examination of prior year 

data indicated that FTA processed only 51 percent of 

grants within 60 days in FY 2001 and 21 percent in 

FY 2000. 

In addition, FTA took steps to reduce the delay 

attributable to year-end closing activities. During 

FY 2002, monthly reconciliation of TEAM data was 

instituted. This allows a speedier year-end closing and 

reconciliation that will reduce delays in grant 

processing at the beginning of FY 2003. As a result of 

measures instituted in FY 2002 and management 

attention to the goal, we also anticipate reaching our 

goal for FY 2003. 

FY 2003 Performance Plan Evaluation: DOT will 

meet the targets in FY 2003. 

Management Challenge – Financial Stewardship 

(IG/OMB) 

Contract Closeout (IG/OMB); 

Management of Large Transportation Infrastructure 

Projects (IG/GAO/OMB) 

Monitoring the cost, schedule, and performance of 

“mega projects” is critical to identify problems and 

initiate action to mitigate risks as soon as possible. 

DOT has identified and initiated steps to improve its 

oversight of these projects by developing a 

comprehensive, standard oversight approach. Elements 

of this approach include vigorous enforcement of 

financial reporting requirements, designating 

accountable oversight managers for “mega projects”, 

and taking timely action to protect Federal interests on 

projects designated as “at risk.” FHWA and FTA have 

developed new guidance for financial reporting on 

infrastructure projects greater than $1 billion. Critical 

analysis of these plans will ensure the Department is 

provided complete and consistent reporting of basic 

standardized financial data. Fully developed finance 

plans have been useful in identifying emerging cost 

and funding shortfalls in projects. 

Proper and timely administrative closure of contracts 

and proper management control safeguards against 

waste, fraud, and abuse have been identified by the IG 

and OMB as areas requiring improvement. Properly 

closed contracts ensure that the Government pays only 

what it owes, upon presentation of an invoice by 

departmental contractors, and that any excess obligated 

funds can be de-obligated and deployed elsewhere. 

The IG has also noted that FHWA can obtain better 

value for each dollar invested in highway projects by 

refocusing its oversight efforts to ensure that major 

projects are delivered on time and on budget. FHWA 

needs to move from an engineering culture to a more 

multi-disciplined workforce with the management, 

financial, environmental, program analysis, and 

engineering oversight skills necessary to review 

modern highway projects and programs. 

DOT will continue to improve institutional and 

personal accountability systems to ensure that large 

transportation infrastructure projects are adequately 

managed and periodically reviewed by a high-level 

Departmental Council. 

DOT has taken the following actions: 

Established project oversight by designating competent 

oversight managers who are personally accountable for 

proper Federal oversight; establishing Integrated 

Product Teams to assist the oversight manager. 

Additionally, professional certifications for Federal 

oversight managers will be funded, and grant 
 

FY 2002 Performance and Accountability Report 61 

recipients’ project management staff will be required to 

have professional certifications. 

Established a formal management and reporting 

framework by creating a DOT Executive Council to 

review project oversight; fostering a collaborative 

relationship between Federal project oversight 

managers and grant recipients to facilitate 

communications; and requiring grant recipients to 

submit project management plans with agreed-upon 

oversight provisions and which incorporate “Earned 

Value Management”. Additionally, projects with 

significant deviations from cost and schedule baselines 

will be designated as “at risk”. Grant agreements will 

provide financial incentives for comprehensive project 

management systems, and will insure that a dedicated 

funding source exists for independent oversight 

reviews. 

Insured accountability by incorporating mega-project 

oversight into DOT Performance Plans, inviting 

external audits; providing proper incentives for 

excellent oversight performance by DOT employees. 

To better ensure stewardship and accountability in the 

use of Federal-aid funds, FHWA issued a policy 

memorandum on oversight and management of major 

projects. As part of an FHWA implementation plan 

which addresses the USDOT task force 

recommendations on major projects, the Agency 

obtained an additional 12 full-time equivalent positions 

for stewardship and oversight of major projects, 

initiated a risk assessment review, and provided 

technical assistance on major projects in Washington 

and Florida. The risk assessment review study, 

scheduled for completion in FY 2003, will focus on 

how FHWA interrelates with the project management 

and oversight activities in the States. 

FHWA staff participated in the 2002 National Fraud 

Conference on Highway Construction and Public 

Transportation, and worked closely with IG 

investigative staff to deliver a course on Contract 

Administration. 

The Massachusetts Turnpike Authority completed its 

annual review of the Central Artery/Tunnel Project’s 

cost and schedule. The cost estimate did not increase 

from last year and the total cost of the project is now 

estimated at $14.625 billion. A completion date of 

February 2005 is anticipated. In an independent 

estimate, FHWA determined the project costs at 

$14.408 billion and projected a completion date of 

February 2005. The difference in the two estimates is 

attributed to different methods used in calculating the 

contingency amounts. 

This issue continues on the IG’s 2003 list of DOT top 

management challenges. 

Management Challenge – Amtrak Financial Viability 

(IG/GAO) 

The 1997 Amtrak Reform and Accountability Act 

mandated that Amtrak develop a plan to eliminate its 

need for Federal operating support by FY 2003. The 

IG’s January 2002 report on Amtrak’s Financial 

Performance and Requirements, observed that Amtrak 

is no closer to operational self-sufficiency than it was 

in 1997. In the summer of 2002, Amtrak lost access to 

the short-term credit market and threatened shutdown 

of its entire system. This crisis was averted when the 

Department arranged a loan of $100 million and 

Congress voted to provide an additional $205 million 

in supplemental appropriations. Amtrak’s 

authorization ended in December 2002 and 

reauthorization will be debated in the coming months. 

In the short run, Amtrak is likely to require at least 

$1 billion in Federal grant support in 2003 to preserve 

the current system and keep open all options for the 

Congress and the Administration in defining the future 

of passenger rail. Additional borrowing against 

assets—such as the 2001 mortgaging of Penn Station—

would adversely affect the long-term prospects for the 

railroad. Deferral of routine maintenance is starting to 

catch up with Amtrak. Similarly, GAO has discussed 

Amtrak’s need for greater progress toward the goal of 

operating self-sufficiency. 

This continues to be a challenge, since Amtrak 

experienced significant mechanical problems with 

Acela locomotives, taking them out of service for 

significant periods with some impact on revenues. 

DOT continued to work with the Administration and 

Congress to develop a plan for Amtrak’s future. 

Amtrak remained in financial straits, as evidenced by 

the $100 million RRIF loan they required in July to 

sustain operations through the fiscal year. 

This issue continues on the IG’s 2003 list of DOT top 

management challenges. 

Management Challenge: Reducing DOT Liabilities 

for Title XI Ship Construction Loan Defaults (IG) 

The IG has stated that DOT should act to protect the 

Government’s interests and seek to stop the recent 

increase in Title XI ship construction loan defaults. 

MARAD took two steps to improve Title XI program 

administration. First, the responsibility for performing 

certain financial functions was centralized in order to 

provide for greater efficiency and reliability. Second, 

MARAD amended its regulations regarding the deposit 

of proceeds from Title XI obligations. The new 

regulations eliminate the Construction Fund so that all 

Title XI proceeds not reimbursed to the ship owner are 

now deposited solely in the Escrow Fund held at the 
 

FY 2002 Performance and Accountability Report 62 

U.S. Treasury. This action eliminates the need for 

certain legal opinions from the ship owner's counsel 

and assures MARAD that these funds will always be 

available to them as a security deposit. Together, these 

two actions help to simplify program administration, 

lower administrative costs and enhance the 

enforceability of MARAD's security interest in its 

collateral. 

Citizen Centered Government 

Performance measure: 

Percent of Environmental Justice cases unresolved 

after one year. 

 1999 2000 2001 2002

Target: N/A N/A N/A 40 

Actual: 29 56 39 65 

2002 Results: DOT did not meet the performance 

target. 

Environmental justice (EJ) complaints continue to be 

very complex, and therefore time-consuming, 

compared to other external civil rights complaints. 

DOT’s lack of progress is explained by the following: 

▪ EJ complaints always involve classes and not 

single individuals; 

▪ EJ complaints almost always involve controversies 

relating to unsettled areas of the law; and 

▪ EJ complaints involve time-consuming 

jurisdictional determinations. 

DOT will take actions as explained in the following 

paragraph to address these issues. 

FY 2003 Performance Plan Evaluation: DOT will 

most likely not meet the target in FY 2003. DOT's 

External Complaint Tracking System (XTRAK) is 

being revised to track complaints more closely, in a 

more timely way, and with a higher level of data 

quality. DOT’s General Counsel and Director of Civil 

Rights are developing joint guidance to operating 

administration legal counsels and offices of civil rights 

requiring more intensive legal staff involvement in 

external civil rights complaints, especially EJ cases, 

with greater opportunities for legal sufficiency input 

and concurrence. 

Customer Service Focus and E-Government – During FY 2002, the Department launched a new 

"citizen services" web site which makes it easier for the 

public to find information and services provided by all 

DOT organizations. Information on the web site is 

organized under specific topics such as 'aviation', 

'highways and bridges', 'licenses and permits' and many 

more. As a result, rather than having to know which 

agency may have the information you're looking for 

and searching through the web pages of each operating 

administration, the public can more quickly find 

information of interest to them. This web site support's 

the Administration's efforts to improve empower 

citizens by making information available to the public 

in ways that make sense to them. 

The Department continues to be an active participant in 

many of the Administration's government-wide EGovernment initiatives, such as online rulemaking, 

business compliance one-stop, e-learning, e-travel and 

others. 

For example, BTS created TransStat to make 

transportation statistics more accessible to the public 

(http://transtats.bts.gov), and for the Office of the 

Secretary’s Dockets Management System, the 

managing office created a listserv. This lets the public 

sign up to be notified when documents on certain 

topics are added to the system. 

Additionally, FAA implemented a robust Section 508 

Compliance program to include extensive training for 

508 coordinators and website developers, website 

evaluation and remediation, and adoption of automated 

tools for website reviews. FAA also contributed funds 

and staff to the e-Grants program office to review 

statements of work, review and comment on 

“mandatory data elements”, and review and comment 

on OMB postings in the Federal Register. FAA is also 

participating in the FedBizOps pilot project. 

Information and Technology Management - 

Key 2002 milestones and accomplishments: 

Take actions that contribute to achieving a 5 percent 

reduction in information collection burden hours 

imposed on the public from FY 2001. 

▪ DOT was not able to reduce the information 

collection paperwork burden on the public. 

Realistically, DOT will not be able to reduce 

burden hours on the public as new collection 

mandates increase. 

Provide oversight and monitoring of departmental 

progress in meeting the Government Paperwork 

Elimination Act (GPEA) requirements regarding 

delivering information and transacting business 

electronically by October 2003. 

▪ launched the Department's web-based GPEA 

management system in March 2002 for reporting 

and monitoring progress in meeting the GPEA 

deadline; and 

▪ made significant progress in implementing GPEA 

during the past year, going from less than 18 
 

FY 2002 Performance and Accountability Report 63 

percent of the GPEA items completed last year to 

over 65 percent completed this year. 

Continue development of the Department’s IT 

Enterprise Architecture. 

▪ completed DOT-wide data gathering to identify 

crosscutting business processes and supporting 

applications, data, and technology. This will allow 

us to meet our target date to complete the DOT 

“As Is” Enterprise Architecture (EA) by the end of 

November 2002; 

▪ developed navigation and query tools to 

complement our EA development tool and 

repository. These tools will make the 

Department’s EA accessible to all DOT employees 

and managers in a format that is understandable 

and useful; and 

▪ completed plans for Operating Administrations to 

finish EAs by the end of FY 2003. 

Ensure that DOT organizations make sound IT 

business investments supportive of strategic goals and 

electronic government, and effectively manage and 

control their IT capital investment portfolio through 

implementation of a structured and integrated capital 

planning and investment control (CPIC) process: 

▪ implemented Secretary-approved Departmental IT 

Capital Planning and Investment Control (CPIC) 

Manual. All DOT organizations developed 

internal CPIC processes to implement DOT CPIC 

policies; 

▪ provided training and guidance to all DOT 

organizations on the preparation of Business 

Case/OMB Exhibit 300 submissions for significant 

IT projects and in the use of the IT Investment 

Portfolio System (ITIPS) Database Tool; and 

▪ improved FY 2004 budget submission quality by 

analyzing DOT organizations’ portfolios and IT 

projects for overall adequacy of documentation, 

justifications, affordability, security measures, risk 

levels, and potential for meeting DOT strategic 

goals and objectives. 

Review IT capital investments that are common to 

multiple DOT organizations to achieve operational and 

economic efficiencies, and advise the Secretary 

regarding the appropriate acquisition and use of such 

IT capital assets. 

▪ established a departmental Investment Review 

Board (IRB), chaired by the Deputy Secretary to 

consider the management, technical and cost 

efficiencies that could be accrued by consolidating 

multiple, redundant, human resources, financial 

management and accounting systems within the 

Department; and 

▪ planned for and provided guidance to DOT 

organizations on the consolidation of IT 

infrastructure projects DOT-wide, as a result of the 

Capital Planning Work Group (CPWG) 

deliberations on IT Business Cases/OMB Exhibit 

300s in support of the FY 2004 budget submission. 

Significant operational efficiencies and cost 

savings should result from the IT infrastructure 

consolidation in the planned DOT Headquarters 

Building. 

Fostering Competition – The Air Carrier Access 

Act (ACAA) and the Department's implementing 

regulations prohibit discrimination against disabled air 

travelers. In April 2000, provisions were included in 

AIR-21 requiring that DOT investigate each ACAA 

complaint that it receives and that it implement an 

effective ACAA outreach program. 

DOT made significant progress during FY 2002 in 

improving access to the national air transportation 

system for disabled air travelers. It made significant 

progress in the number of investigations based on 

complaints from disabled air travelers that it completed 

and closed. Beginning in April 2000 through the end 

of that fiscal year, the Office of the Assistant General 

Counsel for Aviation Enforcement and Proceedings (C70) received 409 ACAA complaints. Although it was 

able to investigate and close 180 cases by the end of 

FY 2001, because such complaints are labor-intensive, 

the Department had a significant and growing backlog 

of complaints by disabled air travelers. Congress 

provided additional funding for FY 2002 to address the 

complaint backlog and provide additional assistance to 

disabled air travelers. While the additional staff was 

not available for the entire fiscal year, the Department 

received an additional 373 cases and it investigated and 

closed 489 cases during FY 2002, a significant 

improvement over the prior year’s performance. 

Importantly, the Department also began an effective 

outreach program to provide relevant information and 

technical advice to the disabled community and the 

airline industry about the rights and responsibilities that 

flow from the ACAA. In this regard, during FY 2002 

the Department’s Aviation Enforcement Office 

established a toll-free hotline, staffed seven days per 

week from 7 a.m. until 11 p.m., to answer questions 

from disabled air travelers and assist such persons with 

real-time solutions to any air travel problems. This 

office also makes available on its website information 

to assist air travelers with disabilities, which include its 

fact sheet with tips for disabled air travelers regarding 

the security screening process, its New Horizons

information pamphlet, its Plane Talk fact sheet with 
 

FY 2002 Performance and Accountability Report 64 

general information for airline passengers with 

disabilities, as well as 14 CFR Part 382, the 

Department’s rule implementing the ACAA. They also 

hosted a second forum during FY 2002 to provide 

disability community organizations, representatives of 

the airline industry, airport authorities, airport 

associations, and government officials, including 

officials from the FAA and the National Council on 

Disability, an opportunity to have an exchange of ideas 

and to start a dialogue that will enable all involved to 

work better together to understand the needs of 

travelers with disabilities and explore ways of making 

accessibility to air travel a reality for all. 

Feedback from government and advocacy 

organizations (e.g. National Council on Disability) and 

members of the public suggests that DOT has been 

very effective in reducing discrimination by air 

carriers. Airlines realize that the civil rights of air 

travelers are a high priority at the Department because 

of the constant messages provided to them about 

nondiscrimination and the great number of ongoing 

enforcement investigations and actions, particularly 

those related to disability. Specifically, DOT settled a 

major disability case against Northwest Airlines with a 

$700,000 assessed civil penalty. This is the largest 

civil penalty ever assessed by the DOT for any 

violation, including a civil rights violation. Much of 

the penalty will be offset with expenditures by 

Northwest to improve disabled air traveler 

accommodations. DOT continues to actively pursue 11 

other significant civil rights enforcement investigations 

involving disabled air travelers. 

DOT also investigated and closed several informal 

complaints of unfair competition filed against various 

airlines by competitors. One informal complaint 

remains under active investigation. In addition, DOT 

completed and closed with a dismissal order its 

investigations into two major formal complaints by 

travel agency associations alleging unfair practices and 

unfair methods of competition on the part of more than 

two dozen airlines and a major online Global 

Distribution System. With the hiring of additional staff 

stemming from the increased FY 2002 budget, the 

Department expects to further reduce the number of 

pending formal actions involving unfair competition. 

With regard to airport capacity matters, the Department 

made significant progress in working to ensure fair and 

adequate access to airport facilities. The Department 

reviewed competition plans filed by the 39 medium or 

large hub airports that were dominated by one or two 

carriers. The in-depth review process, which included 

document reviews, telephone conferences, meetings, 

and site visits, resulted in airports modifying their 

business practices to achieve the goal of reducing gate 

hoarding and providing more opportunities for 

accommodation of new entrants. The airports achieved 

this goal by adopting practices such as: monitoring 

gate utilization; providing fair and uniform notification 

of gate availability; adopting fair and transparent 

protocols for gate assignment; and adopting procedures 

to ensure fair and timely dispute resolution about 

access, accommodation, subleasing and ground 

handling. 

Management Challenge – Airline Mergers, and 

Customer Service Commitment (IG/GAO)

As stated by the IG, airlines have committed to 

improving air travel by improving communication with 

passengers, quoting the lowest available fare, timely 

return of lost baggage, and taking care of passengers 

during extended onboard aircraft delays. Extensive 

flight delays, baggage not showing upon arrival, and 

long check-in lines remain as major sources of 

dissatisfaction by air passengers. Efforts to solve these 

problems have been frustrated by record delays, which 

translate into customer discontent. Until the FAA, 

airlines, and airports effectively address these areas, 

there will continue to be discontent with air travel. 

Additionally, as GAO has pointed out, the lack of 

effective competition in certain markets has 

contributed to high fares and poor service. Increased 

competition and better aviation service will entail a 

range of solutions by DOT, the Congress, and the 

private sector. 

Government needs to be the watchdog of competition 

to ensure that competitive conditions continue to exist. 

In response to complaints by new entrant airlines that 

incumbent airlines were engaging in unfair competitive 

practices, DOT informally investigated major airline 

responses to entry by low-fare airlines. If complaints 

were to have a substantial basis in fact, the Justice 

Department would bring actions against the parties. 

The Department of Justice is responsible for 

determining whether mergers should be challenged on 

competitive grounds. DOT also conducts its own 

analysis of merger transactions and provides its views 

on competitive issues to the Justice Department.
 

FY 2002 Performance and Accountability Report 65 

Budget and Performance Integration 

Results-oriented decision-making – By clearly 

focusing on investments in programs that work, and by 

exerting efforts to make well-designed programs 

achieve their intended results, DOT will increase the 

value it creates for the American people. The chief 

means to accomplish our intended results is to hold 

executives and managers accountable for them. 

Accordingly, DOT thoroughly revamped its 

performance plan and refocused its system of 

individual and organizational accountability. 

Departmental leaders, senior executives, and flag 

officers are included in this system, which will increase 

the alignment of resource decision-making and 

programmatic effort with DOT’s strategic purposes. 

Management Challenge – Government Performance 

and Results Act Implementation (IG/OMB) 

The IG has noted that GPRA requires Federal agencies 

to develop five-year strategic plans, annual 

performance plans and annual performance reports. 

The IG further noted that DOT’s strategic and 

performance plans are among the best in the Federal 

Government. To continue this success, DOT needs to 

improve the reliability and timeliness of its 

performance data, and provide better linkages between 

budgets and performance results. 

DOT has acknowledged that increasing the validity, 

reliability, timeliness, and comparability-over-time of 

performance data will be a challenging task. In its 

most recent strategic plan, DOT included a data 

improvement strategy under each strategic goal. BTS 

is leading the development of standards for DOT’s 

data, training people in the collection and interpretation 

of transportation data, and coordinating data series 

among Operating Administrations. BTS continued to 

develop leading indicators for its strategic goals and 

most DOT performance measures to help anticipate 

trends in each of these outcomes and completed an 

assessment of data quality for the major DOT data 

collection systems. 

The FY 2002 performance plan linked budgeted 

amounts more closely with each performance goal. 

Several DOT Operating Administrations will submit 

integrated performance-based FY 2004 budget 

justifications to Congress, making linkages between 

resources and results more clear. 
 

FY 2002 Performance and Accountability Report 66 

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 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 Performance 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 this is 

not possible 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 February 

deadline for submission of the Performance and 

Accountability Report, quite often data have not been 

compiled and finalized for the entire year. When this 

occurs and an actual value is not available for the 

current year, either an estimate or 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, will then be 

applied to estimate the remaining six months of 

performance. The result will be identified as a 

“preliminary estimate” in the Report. If partial year 

data are not available, then past trend information will 

be analyzed and supplemented by program knowledge, 

to develop a projected value for the annual 

performance measure. The result will be identified as a 

“projection” in the Report. As data are finalized, the 

projections and preliminary estimates will be 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. 

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 www.bts.gov/statpol/SAcompendium.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 departmental data 

programs use quality control techniques, such as 

flowcharting the data collection process, 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 nonresponse 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 the Department and, therefore, outside 

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 
 

FY 2002 Performance and Accountability Report 67 

known biases in outside data into account when using 

the data. 

To help the Operating Administrations address these 

issues, the Bureau of Transportation Statistics (BTS) is 

developing a statistical policy framework where the 

Operating Administrations 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. 

In 2002, a DOT intermodal working group addressing 

DOT data quality issues continued to: 

▪ develop departmental statistical standards; 

▪ update Source and Accuracy Statements for all 

DOT data programs to document limitations and 

known errors and biases; 

▪ improve quality assurance procedures; 

▪ evaluate sampling and non-sampling errors; and; 

▪ develop common definitions for data across 

modes. 

See Exhibit I for detailed explanations of completeness 

and reliability for each performance measure. 

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 

located 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. 

External Data Source Limitations – Timeliness is also 

a significant limitation for external or third party data. 

In some cases, DOT has replaced external data, where 

little is known about the quality of the data, with 

internal data. For example, DOT has used estimates of 

person-miles traveled (PMT) from private 

organizations, absent any better estimate. The 1995 

Nationwide Personal Transportation Survey and 

American Travel Survey give DOT data with known 

error properties that allow a better estimate of PMT.
 

FY 2002 Performance and Accountability Report 68 

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 GPRA, the Department’s 2000 - 2005 Strategic Plan included an initial list of new program evaluations 

planned for those fiscal years. This appendix provides a summary of DOT’s plan for managing program evaluations 

within the Department and a report on program evaluations completed in FY 2002. An updated list of program 

evaluations to be conducted in FY 2003 will be included in DOT’s updated Strategic Plan this September. 

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. 

The purpose of this program evaluation plan is to 

improve the analytic content of evaluations 

Department-wide in order to manage DOT programs 

for results. This plan generally focuses on the 

following types of program evaluation: 

▪ 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. 

The aim of this plan is to identify areas of program 

evaluation for: 

▪ programs that represent significant DOT 

activities contributing to our strategic goals; 

▪ programs that are cross-modal in nature, or 

would benefit from evaluation that is reviewed 

outside an Operating Administration; and 

▪ programs where Department-wide expertise can 

assist in evaluation planning and review. 

Program Evaluation Management 

DOT manages program evaluations through a 

Program Evaluation Council (PEC), comprised of 

representatives from each Operating Administration 

and select Secretarial Offices. The PEC reviews 

proposals for program evaluations, shares 

information across modes, and monitors ongoing 

evaluations. 

DOT staff, contractors, or academic institutions may 

do program evaluations. Internal departmental 

reviews are designed to ensure that the finished 

evaluations are useful regardless of how they are 

accomplished. 

The Office of Budget and Programs and the Inspector 

General manage the schedule of program evaluations, 

foster training and development of program 

evaluation skills, and review the quality of the 

program evaluation process. The Office of Budget 

and Programs works to ensure that the results of 

program evaluations are considered in the allocation 

of resources. The Office of the Inspector General 

continues its own program evaluations independent 

of this schedule, as deemed appropriate. 

A summary of DOT program evaluations completed 

in FY 2002 follows. 
 FY 2002 Performance and Accountability Report 69

FY 2002 Program Evaluation Summaries 

Evaluation of the Noise Set-Aside Portion 

of the FAA Airport Improvement 

Program (AIP) 

The importance of reducing noise around airports is 

recognized by Congress, which provided that “noncompatible land uses around airports must be reduced 

and efforts to mitigate noise must be given a high 

priority”(49 USC Section 47101(c)). In section 

47117(e), Congress directed that the Secretary of 

Transportation set aside 34 percent of available 

discretionary funding under the AIP for carrying out 

noise compatibility programs. Over the past 20 

years, considerable effort has been expended to 

provide relief to noise impacted areas through 

funding of noise compatibility projects under the 

AIP. 

In FY 2002, the FAA evaluated how effectively its 

noise set-aside grant program contributes to reducing 

the noise-impacted population around the Nation’s 

airports. Data were obtained for the FY 2000 and FY 

2001 noise set-aside grants from a detailed 

questionnaire completed by each of the regional 

airports division offices. The following findings 

resulted from the evaluation: 

▪ Many airports throughout the country benefit 

from AIP noise set-aside program grants. A total 

of 219 noise compatibility projects, spread 

among 84 airports and in 37 States were 

supported by the approximately $522M in 

FY 2000 and FY 2001 AIP monies committed to 

the noise set-aside program. 

▪ The FY 2000 program benefits a residential 

population of 13,785 and the FY 2001 program 

benefits a residential population of 19,043. 

▪ Funding for the AIP noise compatibility projects 

is variable from year to year, making it 

somewhat difficult to forecast annual population 

benefits. 

▪ Many of the FY 2000 and FY 2001 projects were 

based on noise data representative of aircraft 

activity during the late 1980s and the early to 

mid 1990s, prior to the December 1999 

completion of the phase out of air carrier aircraft 

that use older and louder engines (i.e. Stage 2 

aircraft). Because of the phase-out, it is likely 

that for many air carrier airports, the current (and 

future year) noise contours are smaller than that 

same airport’s noise contours from the earlier 

time period. This most likely resulted in some of 

the reported population benefits occurring in 

areas of moderate noise impact, rather than all of 

them being in areas of significant noise impact, 

as was reported. 

The evaluation concluded that the program is 

effective in benefiting a large number of people 

exposed to aircraft noise. In order to improve the 

accuracy of reporting on how the AIP noise set-aside 

program benefits a population that is impacted by 

significant levels of noise, starting with the FY 2003 

AIP program, guidance will be issued to ensure that 

100 percent of all AIP programming decisions are 

based on current noise contours. 

Evaluation of the FAA General Aviation 

Safety Program Training Methodologies 

In the mid-1960s, FAA launched a program aimed at 

reducing the number of accidents in general aviation 

(GA). It was called the GA Accident Prevention 

Program. The premise of the program was to reduce 

accidents and provide pilots with recurrent training 

after certification in the best safety practices. By 

1995, the program’s name changed to the Aviation 

Safety Program (ASP) and its mission expanded to 

include all aspects of aviation, including air carriers 

and maintenance. Although experience and past 

surveys, such as the Customer Satisfaction Survey in 

1998, affirmed the popularity of the ASP, FAA saw a 

need to adapt the program to extend its benefits to 

more airmen and airwomen in the aviation 

community. 

The evaluation focused on the portion of the program 

devoted to pilots and the current instructional 

methodologies used. The ASP has many 

instructional tools, but the one primarily used is the 

safety seminar, which pilots are encouraged to attend. 

Also, the ASP sponsors an incentive program, the 

Pilot Proficiency Award Program, informally known 

as WINGS. Besides attending seminars, WINGS 

participants are offered 3 hours of training in an 

aircraft for each of the 20 levels presently available. 

As an incentive, they receive lapel pins in the shape 

of wings to signify their accomplishment. 

Participation in either a single seminar or WINGS is 

entirely voluntary and provides the individual pilot 

with the opportunity to establish a recurrent training 

program after certification. 

To gather the data for the evaluation, FAA and the 

Bureau of Transportation Statistics conducted a 

nationwide survey of pilots. Survey questionnaires 

were distributed to 5,400 certificated pilots randomly 

selected from the Civil Airman Registry, and 1,859 

pilots responded to the survey, resulting in a 34 
 FY 2002 Performance and Accountability Report 70

percent rate of return. The rate of return makes this 

sample highly representative of the pilot community 

as a whole. 

The evaluation concluded that the ASP appeals to 

pilots holding all levels of certificates and they agree 

that program participation makes safer pilots. FAA 

intends a stronger outreach effort to the 53 percent of 

the pilot population that has not attended in the past 

two years. Outreach will be based on the following: 

Web-based training, incentive programs that include 

continuing education credits, partnering with 

individual employers, and more pilots participating in 

WINGS. More analysis is necessary to determine 

seminar topics of interest to participants by their 

experience and pilot certificate. 

Evaluation of the FAA Runway Safety 

Program 

The objective of the Runway Safety Program 

evaluation is to assess the effectiveness of FAA’s 

internal mechanisms designed to accomplish its 

runway safety goals. The evaluation took place over a 

five-month period, and provided useful insights into 

the functioning of the program. Data collection, 

accomplished via document review and interviews, 

was limited to June-August 2002. The data analysis 

process consisted of aggregating interview data, 

identifying trends in sub-categories, and then finding 

general trends. 

Data and analysis suggest that the Runway Safety 

Program is striving towards successfully meeting 

runway safety goals. The analysis suggests that the 

program is making significant progress and that there 

is extensive support for runway safety initiatives at 

all levels (headquarters, regions, and field) of the 

organization. 

The evaluation team observed that the current 

Runway Safety Program is in the early stages of 

formalizing policies and procedures. Ongoing efforts 

will prove themselves effective in the long term. 

Evaluation of the FHWA Congestion 

Mitigation and Air Quality Improvement 

(CMAQ) Program 

Following TEA-21 reauthorization hearings, 

Congress requested that the National Academy of 

Sciences’ Transportation Research Board (TRB) 

conduct a cost-effectiveness study of the CMAQ 

program, which is authorized and described by 

section 149 of title 23, United States Code. As a 

result, FHWA elected not to conduct a separate 

evaluation as originally scheduled in the DOT 

FY 2000 Strategic Plan. Accordingly, future 

program evaluation activities will incorporate the 

findings and recommendations of TRB Special 

Report No. 264, The Congestion Mitigation and Air 

Quality Improvement Program: Assessing 10 Years 

of Experience. 

A TRB Committee of experts concluded (based on 

very limited objective data) that while a broad range 

of transportation planners, operating agency staff, air 

quality officials and interest groups believe the 

CMAQ program is valuable and support its 

continuation, projects aimed at reducing emissions 

directly through the use of technology or fuel 

standards have been more successful than CMAQ 

program strategies that rely on changes in travel 

behavior. 

The TRB recommended: 

▪ the CMAQ program be continued with a high 

priority on air quality improvement, rather than 

congestion mitigation; 

▪ the CMAQ program be broadened to address all 

pollutants regulated under the Clean Air Act, not 

just the transportation-related pollutants for 

which the EPA has set National Ambient Air 

Quality Standards; 

▪ Congress consider authorizing the use of CMAQ 

funds for areas in violation of standards for fine 

particulate matter and ozone; and 

▪ addressing additional categories for CMAQ 

funds including vehicle scrappage programs, 

expanded eligibility for operating expenses, and 

land use actions. 

During FY 2003, DOT will work with Congress and 

the States to reauthorize the CMAQ program and 

develop future program evaluation plans. 

Evaluation of the FMCSA Compliance 

Review Process 

The compliance review (CR) is FMCSA’s essential 

compliance and enforcement safety intervention, and 

is an on-site examination of a motor carrier’s 

operations to determine whether the motor carrier 

meets the safety fitness standards and is in 

compliance with the Federal Motor Carrier Safety 

Regulations (FMCSRs) and Federal Hazardous 

Materials Regulations (FHMRs). Phase I of this twophase process evaluation documented the current CR 

process, focusing on recommendations for improving 

the efficiency and effectiveness. The evaluation 

identified process improvements, including: policy 

and procedural changes, training improvements, and 

software and carrier data system upgrades. Phase II, 

which commenced in 2003, will focus on alternative 
 FY 2002 Performance and Accountability Report 71

approaches to ensuring compliance. The Volpe 

National Transportation Systems Center’s 

Compliance Review Impact Assessment Model 

documents the effectiveness of compliance reviews 

in contributing to motor carrier safety – available at 

http://ai.volpe.dot.gov/CarrierResearchResults/Carrie

rResearchResults.asp?file=HTML/FMCSA_RI_02_0

05.htm. 

In Phase I, a FMCSA workgroup, supported by the 

Oak Ridge National Laboratory, documented the 

current CR process and examined aspects of the 

system affecting the efficiency and effectiveness of 

the FMCSA’s identification, evaluation, and 

prosecution of carriers with poor performance. The 

workgroup analyzed data from existing FMCSA 

sources and conducted an extensive field survey. The 

evaluation identified process improvements, 

including: policy and procedural changes, training 

improvements, and software and carrier data system 

upgrades. An Implementation Plan addressing all 18 

recommendations outlined by the review has been 

developed and is underway. Phase II, which 

commenced in 2003, will focus on alternative 

approaches to ensuring compliance. 

Impact Evaluation of the Coast Guard’s 

Maritime Safety Program 

The Coast Guard is improving maritime safety 

programs through a risk-based decision making 

system. To evaluate this more systematic approach 

to maritime safety, risk-based safety program 

decision-making is being tested through a pilot 

project in one Captain of the Port zone (Charleston, 

South Carolina). During FY 2002, the USCG field 

operations organization in Charleston and the USCG 

Research and Development Center created a baseline 

risk profile through a typology of all Coast Guard and 

private sector maritime activities, a determination of 

the safety hazards inherent in those activities, and an 

inventory of prevention and response activities used 

by the Coast Guard to address the hazards and 

manage the risk. 

Results of the risk profiling effort showed that: 

▪ for vessel and facility types, recreational vessels 

and commercial fishing vessels contributed most 

to increased safety risk; 

▪ for mishap types, personnel injuries contributed 

most to increased safety risk, followed by 

fires/explosions and loss of vessel control; and 

▪ vessel transiting operations had higher relative 

risk than loading and unloading, shore facility 

operations, and waterways management 

operations. 

During FY 2003, candidate safety program activities 

will be chosen for analysis. The maritime safety-asa-system evaluation will capitalize on port-specific 

risk profiles by assessing risk sensitivity resulting 

from changes in specific program safety activities. 

Changes in risk and program costs will be used to 

determine risk reduction benefits for each safety 

activity. Activities demonstrating a significant 

potential for reducing risk in comparison to cost will 

be identified. 

Evaluation of the Coast Guard’s 

Domestic Icebreaking Program 

The Coast Guard sponsored a study conducted by the 

Center for Naval Analysis (CNA) to assess its 

capability to perform its domestic icebreaking 

mission and to determine an optimal force mix. 

Because of resource limitations, the capability study 

was limited to East Coast icebreaking. In addition, 

the CNA study examined the benefit/cost ratio of the 

domestic icebreaking program using a number of 

prior studies to assess the program’s worth. 

To determine the Coast Guard’s icebreaking 

capability, a mathematical model was developed to 

calculate how long an icebreaking assignment should 

take given the length of the waterway involved, the 

probable thickness of ice and the vessels used. The 

model was populated with data and was run to 

calculate required icebreaking hours. These figures

were compared to available assets to determine 

whether the Coast Guard can meet requirements or 

whether resource gaps exist. 

CNA concluded that the Coast Guard would continue 

to be able to meet icebreaking demand on the East 

Coast during most winters. However, the study was 

inconclusive on the ability of the Coast Guard to 

meet demands in severe winters, noting that although 

standards of service are lower in severe winters, 

customer expectations may not be lower. 

The economic analysis reviewed five (5) prior studies 

that estimated benefit/cost ratios ranging from 9:1 

(almost $9 of benefit for every $1 spent) down to a 

ratio of almost 2.5 to 1. The study concluded a 

benefit/cost ratio of at least 2:1 stating that this figure 

represents only monetary benefits to industry on the 

Great Lakes and on the East Coast. The study also 

noted that overall benefits might be higher 

considering other missions conducted in ice-laden 

waters, including flood control and search and rescue. 
 FY 2002 Performance and Accountability Report 72

Evaluation of the Coast Guard’s Strategy 

for Interdiction Illegal Immigrants 

The purpose of this study is to develop a strategic 

plan for the Coast Guard migrant interdiction 

mission. The strategic goals, objectives, and 

organizational foundations of Alien Migrant 

Interdiction Operations (AMIO) are being identified 

in the study. The results of the study will form the 

basis of the new 10-year AMIO strategic plan, 

tentatively named SOVEREIGN SHORES. A final 

report will be completed in FY 2003. 

Evaluation of the Coast Guard’s Process 

for Capturing Recreational Boating 

Fatality Data 

This evaluation resulted in a significant correction to 

Boating Fatality Data deficiencies. In FY 1999, the 

Department of Transportation’s Office of Inspector 

General (OIG) conducted an audit of the Coast 

Guard’s Recreational Boating Safety (RBS) program 

to examine how it sets and measures its performance 

goal. As a result of the audit, the OIG found a 

discrepancy between the boating fatality data 

captured by the Boating Accident Report Database 

(BARD) and the Coast Guard’s Search and Rescue 

Management Information System (SARMIS). The 

Coast Guard used the IG’s analysis to improve 

recreational boating fatality data collection. 

This evaluation reviewed and measured the 

effectiveness of transferring data from SARMIS to 

the BARD system. The evaluation examined 

SARMIS case data for the years 1998 through 2001 

to identify SARMIS cases where Coast Guard Search 

and Rescue (SAR) personnel rendered assistance to a 

recreational vessel that involved loss of life. The 

evaluation also reported on the new process 

implemented in January 2001 that was designed to 

notify appropriate State agencies of recreational 

boating fatalities using SARMIS II. This new 

process provides timely casualty information to 

appropriate State officials in the jurisdiction where an 

appropriate SAR case occurred. 

The study confirms that for 1998 through 2000 the 

BARD database underreported approximately 6 

percent of the fatality cases based on SARMIS 

reviews. After the new process of notifying the 

States of potential BARD fatality cases from the 

SARMIS database as they occurred, the percent of 

under reporting of recreational boating fatalities fell 

to approximately 1 percent. 

Evaluation of FHWA’s Transportation 

Infrastructure Finance and Innovation 

(TIFIA) Program 

As part of its 1998 enactment of the Transportation 

Equity Act for the 21st Century (TEA 21), Congress 

established a unique Federal credit program for large 

transportation projects. Sections 1501 to 1504 of 

TEA 21, collectively the Transportation 

Infrastructure Finance and Innovation Act of 1998 

(TIFIA), authorize the DOT to provide three forms of 

credit assistance – secured (direct) loans, loan 

guarantees and standby lines of credit – to surface 

transportation projects of national or regional 

significance. This evaluation fulfills the requirement 

in TEA 21 to summarize the financial performance of 

the projects assisted by TIFIA and to discuss 

alternatives for achieving the program objectives in 

the future. 

In establishing TIFIA, Congress found that a 

“Federal credit program for projects of national 

significance can complement existing funding 

resources by filling market gaps, thereby leveraging 

substantial private co-investment.” Because credit 

assistance requires a small fraction of the contract 

authority needed to provide a similar amount of grant 

assistance, TIFIA promotes a cost-effective use of 

Federal resources to encourage co-investment in 

transportation infrastructure. Federal grant funds that 

otherwise might be required to support these large 

projects can then be redirected toward smaller but 

critical infrastructure investments. 

An explicit goal of the TIFIA program is to induce 

private investment in transportation infrastructure. 

Private co-investment in the TIFIA project selections 

totals about $3.1 billion, comprised of more than $3 

billion in debt (including State and local debt held by 

private investors) and nearly $100 million in equity. 

This co-investment totals approximately 20 percent 

of the nearly $15.4 billion in total costs. 

The broad project eligibilities and flexible financial 

provisions in TIFIA have enabled the DOT to assist 

projects in meaningful ways other than facilitating 

market access. Project sponsors of higher-rated 

credits have found that TIFIA assistance can reduce 

costs, coalesce support and help remove other 

barriers in advancing projects. 

Comparing total capital investment to the total 

budgetary cost of Federal credit and grant assistance, 

the TIFIA portfolio represents nearly five dollars in 

total investment for each dollar of Federal 

investment. This Federal cost leverage ratio of 4.80 

for TIFIA projects compares favorably with the 

leverage ratio of 1.25 for a Federal-aid project 
 FY 2002 Performance and Accountability Report 73

receiving 80 percent of its funding from Federal grant 

sources. 

As current TIFIA projects move into their 

construction, operation and repayment phases, and as 

additional projects obtain TIFIA assistance, DOT will 

acquire better information for determining future 

policy for transportation infrastructure innovative 

financing. 

Evaluation of FTA’s Job Access and 

Reverse Commute Grant Program 

The Transportation Equity Act for the 21st Century 

(TEA-21) established the Job Access and Reverse 

Commute (JARC) program, and DOT became an 

important partner in welfare-to-work initiatives. 

JARC grants to local agencies and authorities, nonprofit organizations, and transit authorities, improve 

mobility for low-income individuals seeking 

employment. Reverse Commute funds are intended 

to increase access to suburban employment 

opportunities for everyone, including welfare 

recipients and low-income individuals. TEA-21 

authorized $150 million annually for the JARC 

program, with no more than $10 million per year of 

the total being allocated for reverse commute 

activities. Congress provided $75 million for this 

program in both FY 1999 and FY 2000, $100 million 

in FY 2001, and $125 million in FY 2002. 

Grantees have used JARC funds for a wide variety of 

services, ranging from expansion of fixed route bus 

systems to the provision of customer information. 

Through FY 2001, 60 percent of JARC funds had 

been obligated for fixed route services, 34 percent for 

demand response services, three percent for 

ridesharing, and three percent for information 

services. 

JARC grant recipients have been highly successful in 

enlisting the financial participation of human services 

agencies. In areas that receive JARC funds, the 

program is successfully meeting the transportation 

needs of low-income individuals seeking reliable 

transportation to employment and related support 

services. 

Evaluation of Phase 1 of NHTSA’s 

“Buckle Up America” Safety Belt 

Program 

Buckle Up America (BUA) was a Presidential 

initiative announced in January 1997, directing DOT 

to prepare a plan to increase seat belt usage 

nationwide. In response, the DOT's National 

Highway Traffic Safety Administration (NHTSA) 

developed a plan with current goals to increase the 

national seat belt use to 78 percent by 2003 and 

reduce child occupant fatalities by 25 percent by 

2005. 

Program evaluation data included multiple sources of 

seat observation results, Fatality analysis Reporting 

System data (FARS), and the collection of law 

enforcement citation data. Seat belt use rates 

increased after the inception of BUA and, in 2002, 

the national use rate was measured at 75 percent. 

Ten States, Puerto Rico and the District of Colombia 

had reached 80 percent belt use in 2001; 11 out of 12 

were jurisdictions with a standard enforcement seat 

belt law. Since the inception of BUA, the number of 

States adopting a standard enforcement seat belt law 

increased by seven plus the District of Columbia. 

Child restraint use improved markedly for children 

under age five, and more children are being 

transported in restraints and fatalities decreased 

dramatically (19 percent). 

Research and evaluation data also have consistently 

shown that intensive well-publicized enforcement 

produces substantial increases in belt use, in both 

standard and secondary law locations. Publicity has 

included substantial paid media to ensure that the 

message reaches the target audience at the time that 

the enforcement is about to take place. The 

immediate direction for Buckle Up America is clearly 

toward larger and more encompassing publicized 

enforcement efforts. During May 2002, 

approximately 30 States conducted intensified 

enforcement with paid media, most using the Click It 

or Ticket theme. 

Although Buckle Up America is still short of its goal 

for nationwide 78 percent belt use by 2003, several 

States have achieved rates above 80 percent and 

several more are expected to achieve 80 percent or 

better as part of the May 2003 mobilization. 

Evaluation of MARAD’s Federally 

Funded Maritime Education and 

Training Program 

The availability of mariners to crew commercial and 

sealift vessels simultaneously is a vital component of 

strategic mobility. MARAD evaluated Federally 

funded merchant marine officer education programs 

at the U.S. Merchant Marine Academy (USMMA) 

and State maritime academies to determine whether 

these programs are aligned with MARAD and DOT 

national security goals. MARAD examined 

Federally funded maritime education programs 

during 1987-2000 and trends in the officer labor pool 

from 1987 through 2002. In addition, the House 

Committee on Appropriations directed MARAD to 
 FY 2002 Performance and Accountability Report 74

evaluate specific areas of these programs in House 

Report 105-636. 

The officer education programs contributed to the 

MARAD & DOT national security goals by 

graduating an average of 605 officers each year from 

1989 to 1999. Of these, an average of 273 per year 

graduated with service obligations and the licenses 

and skills needed to crew commercial and 

Department of Defense (DOD) organic vessels 

during peacetime and mobilizations. USMMA and 

State academy cadets enrolled in MARAD-funded 

education programs are the primary source of new 

entrants to the officer pool. In 1999, the academies 

(USMMA and State) graduated a combined total of 

540 licensed third mates and third engineers (260 

with service obligations) from the MARAD-funded 

programs. During 1999, 275 shipboard jobs needed 

for full mobilization of DOD commercially crewed 

vessels were third mates or third engineers. This is 

equivalent to about 630 officers using normal crew 

rotation practices during a long-term mobilization. 

The licensed graduates from the USMMA and State 

merchant marine academies have the technical 

qualifications and unlimited USCG deck or 

engineering licenses in rough proportion to third 

mate/third engineer requirements in the DOD organic 

fleet. 

MARAD estimates that in 2002, a pool of 10,300 

active and inactive qualified officers with USCG 

licenses appropriate for deep-sea service would be 

available to fill the demand for approximately 9,000 

officers. These offices will be needed to meet sealift 

requirements for DOD’s most likely full mobilization 

scenario with concurrent full operation of the 

commercial fleet. Although the supply exceeds the 

projected demand, the “cushion” may be too small to 

ensure that there are sufficient officers to meet 

crewing requirements. If a significant proportion of 

the inactive mariners do not become qualified under 

the Standards of Training, Certification, and 

Watchkeeping (STCW-95), a potential shortage of 

immediately available mariners might result in delays 

in vessel activations. However, STCW-95 includes a 

clause allowing the USCG to waive crew certification 

in times of national emergency. 

The Federally funded maritime education programs 

have provided a workforce sufficient to meet 

mobilization requirements for deep-sea qualified 

officers. MARAD, in consultation with maritime 

industry and labor partners, will continue to explore 

crewing potential supply/demand shortfalls and 

identify cost-effective initiatives to reduce 

uncertainties.
 FY 2002 Performance and Accountability Report 75

MANAGEMENT CONTROLS 

The Department of Transportation (DOT) is dedicated to incorporating performance and accountability in all 

programs and operations. DOT is pleased that except for the material weaknesses identified in this section of the 

report, the objectives of Section two and four of the Federal Managers Financial Integrity Act are met in FY 2002. 

Strategic planning and management have been developed to ensure that DOT’s programs and operations produce 

their intended results, and that the information is reliable, timely and accurate. The audit recommendations received 

by the Department are essential to its mission of having organizational excellence and accountable financial 

management of DOT’s programs. 

Federal Managers Financial Integrity Act 

(FMFIA) 

The 1950 Budget and Accounting Procedures Act (64 

Stat. 832) requires Federal managers to establish and 

maintain adequate systems of management control, 

but because of numerous instances of fraud, waste, 

abuse, and mismanagement, Congress passed the 

Federal Managers Financial Integrity Act (FMFIA) 

of 1982. This Act requires the Head of each Federal 

Agency to conduct an annual evaluation of its 

management controls (Section 2), financial 

management systems (Section 4) and report the 

results to the President and Congress. OMB 

Circulars A-123 on Management Accountability and 

Control, and A-127 on Financial Management 

Systems, furnish guidance on complying with 

Sections 2 and 4, respectively. 

At DOT, each of the Operating Administrations 

(OAs) submit to OST’s Office of Financial 

Management an annual statement of assurance 

representing the Administrator’s informed judgment 

for the overall adequacy of management controls 

within their OA, and reporting other details. Each 

year, the OST Office of Financial Management 

updates and issues specific guidance for completing 

the end-of-year assurance statement and report on 

material deficiencies. The OAs report any significant 

weaknesses of safeguards (controls) against waste, 

loss, and misappropriation of funds or property. The 

OAs also report activities that violate statutory 

authority, result in a conflict of interest or cause 

adverse effects on the credibility of the agency, or 

significantly impair the fulfillment of the agency’s 

mission. The Office of Financial Management 

consolidates the OA reporting into one overall report 

for the entire Department. 

OMB Circular A-123 contains guidance to Federal 

managers on improving the accountability and 

effectiveness of Federal programs and operations by 

establishing, assessing, correcting, and reporting on 

management controls. In accordance with OMB’s 

Circular A-127 of 1993 on Financial Management 

Systems, DOT is encouraging the OAs to develop, 

evaluate, and report on financial management 

systems. The Department makes sure that financial 

transactions are executed in accordance with 

authorization records; that the reports are reliable; 

that the applicable laws, regulations, and policies are 

observed; and that the resources are efficiently and 

effectively managed. The OAs are moving forward 

to automate and consolidate systems in a costeffective manner based on requirements that meet the 

minimum needed for field implementation and 

certification. 

For FMFIA, DOT had one beginning and three new 

Section 2 (evaluation of management controls) 

material weaknesses, resulting in four ending 

weaknesses. DOT has material weaknesses for: 

information technology (IT) security within the 

Department, contract closeout processes in the 

Federal Aviation Administration (FAA), 

administration of support screener contracts in the 

Transportation Security Administration (TSA), and 

insufficient separation of duties and other controls 

over financial operations at the Federal Transit 

Administration (FTA). 

DOT’s material weakness in its Information Security 

Program is a critical component of the overall 

infrastructure protection of the Department. Program 

policy is managed by OST’s Office of the Chief 

Information Officer (CIO) and is integrated 

throughout the Department through the DOT CIO 

Council and the IT Security Committee of that 

Council. Numerous audit reports, including the 

recently released FI-2002-115 on DOT Information 

Security Program, have highlighted IT security 

vulnerabilities throughout DOT. These 
 FY 2002 Performance and Accountability Report 76

vulnerabilities could adversely affect the 

confidentiality, availability, and integrity of DOT IT 

Systems. DOT will develop and implement a 

coordinated approach to securing the Department’s 

IT systems. This activity will be done by completing 

a Department-wide assessment and associated 

corrective action plan. To help with this effort, in 

FY2002, the CIO implemented a Performance 

Measurement Program that required commitment 

from all OAs. 

TSA has a material weakness in the contract 

administration of the Contract Screener Program. 

There were not adequate procedures in place to 

prevent payments for inappropriate contractor 

charges. TSA is taking steps to negotiate and 

definitize contracts, obtain final cost and pricing data, 

establish processes to prioritize and review cost and 

pricing data, audit overhead rates, expand the 

oversight of contractors to perform site inspections, 

and recoup improper payments based on finalized 

overhead rates or payment for hours not worked. 

The Department's FMFIA Report to the President and 

the Congress discussed the lack of adequate internal 

management controls over financial processes within 

TSA. After the report was issued, however, more 

information was developed to specifically identify 

the shortcomings of the financial management 

environment within TSA as a material weakness, 

reportable under the FMFIA. A material weakness 

in the controls over financial management policies 

and procedures resulting in inaccurate reporting on 

the financial statements will be reported in 2003. 

On November 19, 2001, the President signed the 

Aviation and Transportation Security Act that created 

TSA. From the first day of its existence, DOT and 

TSA were faced with many significant challenges 

and short statutory milestones. TSA's books and 

accounts were created in the general ledger in Delphi. 

The Project Accounting and Fixed Assets modules of 

Delphi were used to immediately provide TSA with 

cost accounting and property management 

capabilities. However, because TSA’s focus was to 

move forward as quickly as possible, internal 

controls over financial and other processes suffered. 

Policies establishing an effective internal control 

environment still need to be developed where 

necessary. Procedures and practices need to be 

implemented and strengthened to ensure that internal 

controls adequately protect against fraud, waste, 

abuse, mismanagement, and misappropriation. 

FAA has a material weakness in the administration of 

close-out and payment of cost-reimbursable 

contracts. Serious deficiencies in the controls over 

the close-out of cost-reimbursable contracts resulted 

in poor oversight and inadequate protection against 

fraud, waste, and abuse. FAA is improving the 

procedures and processes over which costreimbursable contracts are awarded and monitored to 

ensure that all incured cost audits are complete for all 

Performance years of contracts, final invoices are 

submitted timely by contractors, Government 

property is properly accounted for, contract costs are 

reconciled, and contract funds are appropriately and 

timely de-obligated. 

As of the end of FY 2002, DOT had one material 

nonconformance of financial systems requirements 

pending. The material nonconformance relates to 

FAA property systems that did not provide the data 

necessary for preparation of the DOT Consolidated 

Financial Statements. FAA’s material 

nonconformance has been largely due to the manual 

and intensive efforts required to generate 

depreciation and net book values of FAA assets, and 

the existing method resulted in some errors. These 

nonintegrated and manual processes increase the risk 

of misstatements to the Consolidated Financial 

Statements. 

To resolve the material nonconformance, FAA 

installed an Integrated Financial/Fixed Asset System 

(IFAS). IFAS has controls to accurately track 

property data for financial purposes and generates 

depreciation and asset net book values automatically. 

The software being used for both IFAS and Delphi is 

Oracle, thereby minimizing the impact of conversion 

to the new accounting system. The problem will be 

officially resolved when IFAS is converted and 

integrated with Delphi. 

 

DOT is continuing to work with the Office of 

Inspector General (OIG) to ensure that these material 

deficiencies are effectively corrected and effectively 

maintain the integrity of the Department’s financial 

management information. DOT continues to improve 

management and financial accountability of the 

Department. 

Federal Financial Management 

Improvement Act (FFMIA) 

The Department’s FY 2001 and FY 2002 

Consolidation Financial Statements received 

unqualified audit opinions from the OIG. However, 

the OIG determined that the Department was not in 

full compliance with the Federal Financial 

Improvement Act (FFMIA) because: 
 FY 2002 Performance and Accountability Report 77

• DOT’s legacy accounting system, the 

Departmental Accounting and Financial 

Information System (DAFIS), could not 

produce auditable financial statements; 

• interface deficiencies existed between 

DAFIS and the FHWA Financial 

Management Information System, and 

between Delphi and the FTA’s financial 

feeder systems; 

• DAFIS did not use the U.S. Government 

Standard General Ledger; 

• DOT has not implemented managerial cost 

accounting standards, and 

• material weaknesses existed for DOT’s 

financial, accounting, and information 

security programs. 

FFMIA builds on the foundation laid by the 

Chief Financial Officers (CFO) Act of 1990 by 

emphasizing the need for agencies to have 

financial management systems that can generate 

timely, accurate, and useful information with 

which to make informed decisions and to ensure 

accountability on an ongoing basis. Full 

compliance with FFMIA hinges on the continued 

success of implementing Delphi throughout the 

Department. 

As part of central processing, DAFIS revised and 

updated the Financial Statements Module to 

electronically process information into the 

Standard General Ledger and automate the 

preparation of the Adjusted Trial Balance for 

each OA within DOT. The module also contains 

a detailed audit trail so that all adjustments can 

be easily identified and audited. 

In addition, FAA is continuing its 

implementation of a broad ranging cost 

accounting system and implemented IFAS (see 

above), further tightening the integration of 

DOT’s financial systems. IFAS computes the 

depreciation for FAA’s owned assets that meet 

or exceed the Department’s capitalization 

criteria, and provides detailed depreciation 

expense data for cost accounting. 

Finally, as the elements of the Department 

continue to migrate to Delphi, they will have 

enhanced cost accounting capabilities based on 

the best practices of the sector. Although 

programs within the Department that operate in a 

business type environment already use cost 

accounting processes, all Delphi users will have 

the software infrastructure necessary to fulfill 

this objective. The results of these remedial and 

progressive actions address the OIG findings and 

will bring the Departments into substantial 

compliance with the FFMIA, when successfully 

implemented. 

DOT has five violations of laws or regulations 

whose effects should be considered for 

disclosure in financial statements or as a basis 

for recording a loss contingency, with the 

exception of unresolved audit recommendations. 

They are: noncompliance with FFMIA, 

Treasury miscellaneous receipts, 

intragovernmenal balances, performance 

measures tied to cost, and inappropriate 

combination of programs with goals. 

Consolidated Financial Statements 

There are four material weaknesses affecting the 

Consolidated Financial Statements. The four 

material weaknesses include two anti-deficiency act 

violations, both of which occurred prior to the current 

Administration. The first anti-deficiency act 

violations is in FTA and originated 19 years ago but 

was recently revealed while using the new accounting 

system, Delphi. The second violation was 

immediately halted when the IG notified DOT’s CFO 

that some funds may not be legally available to the 

Department. Both violations will be reported to 

OMB and Congress in accordance with OMB 

Circular A-11. Administrative changes have been 

implemented to avoid any recurrence. The remaining 

two material weaknesses include network security, 

FAA’s deficiencies in controls over costreimbursable contracts, and TSA’s obligation, and 

In addition, there are four internal control weaknesses 

for financial statements: grants management system 

and accounting system interface deficiency, 

accounting for FAA property, legal liabilities, 

information technology system security. 

Limitations of the Consolidated Financial 

Statements

The principal financial statements have been 

prepared to report DOT’s financial position and 

results of operations, pursuant to the requirements of 

31 USC 3515(b). The statements have been prepared 

from DOT’s records in accordance with the generally 

accepted accounting principles for Federal entities 

and the formats prescribed by the Office of 

Management and Budget. They are additional to the 
 FY 2002 Performance and Accountability Report 78

financial reports used to monitor and control DOT’s 

budgetary resources, which are prepared from the 

same books and records. The statements should be 

read with the realization that they are a component of 

the United States, a sovereign entity. One 

implication of this is that liabilities cannot be 

liquidated without legislation that provides the 

resources to do so. 
 FY 2002 Performance and Accountability Report 79 

 FINANCIAL MANAGEMENT AND ANALYSIS 

In order to strengthen the integrity for the financial operations and data reliability, DOT produces audited financial 

statements. The principal financial statements include: the Consolidated Balance Sheets; Consolidated Statement of 

Net Cost of Operations; Combined Statement of Budgetary Resources; and the Consolidated Statement of 

Financing. These principal financial statements, in addition to the financial information in the Other Supplemental 

Information section of the report, summarized the financial activities of the Department. 

Analysis of Financial Statements 

An unqualified audit opinion reflects that the 

agency’s information is reliable, and DOT attained an 

unqualified audit in FY 2002 from the Office of 

Inspector General (OIG). DOT had one beginning 

and four new material weaknesses related to the audit 

on the financial statements, resulting in 5 ending 

material weaknesses for FY 2002. The Department 

made efforts to comply with the requirements of the 

Federal Managers Financial Integrity Act (FMFIA) 

and regulations to improve its financial management 

system. DOT’s management takes responsibility for 

the objectivity and integrity of the financial 

information presented in the financial statements 

contained in this report. Ongoing operations of the 

Department are subjected to enactment of 

appropriations. In the previous year, FY 2001, the 

Department obtained an unqualified audit opinion. 

Total Consolidated Statements of Net 

Cost 

The net cost of DOT operations for FY 2002 was $63 

billion, as reflected in the Consolidated Statement of 

Net Cost as of September 30, 2002. This figure was 

an increase of over 5 percent compared to FY 2001 

cost of operations. The increase was due to a rise in 

cost for surface and air transportation. However, the 

cost of maritime transportation decreased by 44 

percent or $5.5 billion in FY 2002 compared to FY 

2001. From the $63 billion for DOT’s net cost of 

operations, 63 percent was from surface 

transportation, 21 percent from air transportation, 11 

percent from maritime transportation, about 0.2 

percent from crosscutting programs, and four percent 

from costs not assigned to any particular program. 

For surface transportation, a large amount of the net 

cost was from the highway trust fund ($32 billion of 

$47 billion). The majority of air transportation cost 

was from FAA ($12 billion). The U.S. Coast 

Guards accounted for about $6.8 billion out of $7.2 

billion in maritime transportation costs. 

Assets 

Total assets for DOT is $84 billion for FY 2002. The 

decrease in FY 2002 is largely attributable to a 

reduction in investments by almost $6 billion. Total 

intragovernmental assets for DOT are $62 billion. A 

large amount of this funding came from investments 

($31 billlion) and fund balance with Treasury (about 

$30 billion). 

Among general properties, plant and equipments 

(PP&E) for DOT, the total acquisition value is $32 

billion, most of this being equipment ($12 billion), 

buildings and structures ($6 billion), ships and 

vessels ($6 billion), construction in progress ($5 

billion), and aircraft ($1 billion). 

Liabilities and Net Position 

Total liabilities for FY 2002 is $42 billion, a slight 

increase over FY 2001 figures. The Federal 

Employees’ Compensation Act liabilities include the 

expected liability for death, disability, medical, and 

miscellaneous costs for approved compensation 

cases, and a component for incurred but not reported 

claims. The Coast Guard Military Retirement 

System is funded through annual appropriations. In 

FY 2002, the value of the projected plans and 

benefits for the Coast Guard’s pension was $18 

billion, and their Military Health Care was $11 

billion. A large portion of DOT’s liabilities was 

accounted by the US Coast Guard’s pension in FY 

2002. The total Federal employee and veteran 

benefits for FY 2002 were $30 billion. Total 

intragovernmental liabilities experienced a decrease 

from $2.4 billion in FY 2001 to $2.2 billion in 

FY 2002. Of the $42 billion for DOT’s net position, 

33 percent was from unexpended appropriations. 
 FY 2002 Performance and Accountability Report 80 

Program Costs 

Program costs generally experienced an increase in 

FY 2002 compared to FY 2001 in all areas with a few 

exceptions. Also from FY 2001 to FY 2002, Surface 

Transportation experienced an increase of about $3 

billion, Air Transportation increased by $3 billion, 

and Maritime Transportation decreased by about $6 

billion. 

Loans 

DOT gives direct loans and loan guarantees to nonFederal entities for the Amtrak Corridor 

Improvement Program, Railroad Rehabilitation 

Improvement Program, Alameda Corridor 

Transportation Authority Loan, TIFIA Loan, 

Maritime Guaranteed Loan, and to the Office of 

Small and Disadvantaged Business Utilization 

Guaranteed Loan Program. 

 

Intra-Departmental Eliminations 

The Department of Treasury is requiring that all 

agencies confirm and reconcile intragovernmental 

transactions with their trading partners, including 

transactions occurring within DOT or outside DOT. 

This includes fiduciary (investment/borrowing with 

Treasury, DOL Federal Employees’ Compensation 

Act liabilities, OPM employee benefits) and nonfiduciary (that is buy/sell goods and services, 

reimbursables, transfers) intragovernmental 

transactions. Fiduciary confirmation/reconciliations 

are done through the web-based confirmation system 

(IFCS). Non-fiduciary confirmations are done 

manually. Treasury strongly recommends the use of 

confirmation forms to confirm/reconcile nonfiduciary intragovernmental balances. DOT is 

requiring the OAs to report intragovernmental 

balances in their Treasury FACTS I reports and 

financial statements, which must be in agreement. 

Treasury is also requiring CFO representations for 

the confirmation/reconciliation of intragovernmental 

activity and balances. These representations will 

provide assurances for the intragovernmental 

balances included in the financial statements. 

Additionally, the OAs will be required to submit 

representations using a standard form. 

Transportation Equity Act for the 21st

Century 

Federal funding for transportation infrastructure—

improving the Nation’s highways, transit rail and bus 

systems, intercity passenger rail service, airports and 

bridges—is the largest component in DOT’s budget. 

Infrastructure funding focuses on ensuring a safe, 

efficient, accessible and convenient transportation 

system that meets vital National interests and 

enhances the quality of life of the American people. 

The Administration is working toward reauthorizing 

TEA-21 by creating a version that would take effect 

for the next 6 years after TEA-21 expires at the end 

of FY 2003. 

Significant financing features existing under TEA-21 

financing include the following: 

Guaranteed Investment Levels. Highway and transit 

discretionary programs are guaranteed a floor (a 

minimum level of spending) by new budget 

categories that effectively establish a budgetary 

"firewall" between each of those programs and all 

other domestic discretionary programs. 

Authorizations and Investment. The minimum level 

of spending amount for highways is keyed to the 

projected receipts to the Highway Account of the 

Highway Trust Fund and will be adjusted as new 

receipt projections and actual receipts become 

available. 

Increases and Decreases. Any increase in receipts to 

the Highway Account is reserved for the Federal-aid 

highway and highway safety construction programs. 

Obligation Limitations. Spending limitations are 

applied to most programs. However, obligation 

limitations set aside each year for certain programs 

(e.g., Woodrow Wilson Memorial Bridge) do not 

expire if not used by the end of the fiscal year, but 

can be carried over to future years. 

Using Innovative Financing to Supplement Federal 

Funds. The Transportation Infrastructure Finance 

and Innovation Act (TIFIA) of TEA-21 continues to 

use innovative financing techniques that move 

construction projects ahead faster, and supplement 

Federal funds with private and non-Federal public 

investment. TIFIA’s purpose is to fill gaps in market 

funding or to leverage additional non-Federal 

resources by direct Federal loans, loan guarantees, 

and standby lines of credit. 

Stewardship 

DOT’s total non-Federal physical property 

investments were $40 billion, $37 being from surface 

transportation non-Federal physical property 

improvements, and about $3 billion from air 

transportation physical property investments. Total 
 FY 2002 Performance and Accountability Report 81 

human capital investments for DOT were $30 million 

for FY 2002, of which $21 million was from surface 

transportation capital investments, and $8.7 million 

was from maritime transportation human capital 

investments. Total research and development 

investments for DOT in FY 2002 was $450 million, 

from which $324 million was from surface 

transportation investments, $107 million was from air 

transportation investments, and $19 million was from 

maritime transportation investments. 
 FY 2002 Performance and Accountability Report 82 
 FY 2002 Performance and Accountability Report 83 

FUTURE STEPS 

The Department of Transportation (DOT) is undertaking a number of initiatives to meet its performance 

and strategic goals. 

During this time period, homeland and national security continues to be one of the top priorities of DOT. 

The events of September 11 underscore the importance of transportation security as part of America’s 

homeland and national security. DOT is working to ensure a seamless transition of both the Coast Guard 

and the Transportation Security Administration (TSA) to the Department of Homeland Security (DHS) on 

March 1, 2003.

For FY 2003, DOT’s proposed budget totals $59.3 billion. When proposed funding for the Coast Guard 

and TSA are removed from this figure, the budget request totals $51.3 billion. 

DOT has several performance and financial 

priorities for the upcoming fiscal year. Below 

are these initiatives with their corresponding 

budget request. (Note: Figures shown do not 

reflect amounts being requested for the Coast 

Guard and TSA in FY 2003). 

Safety. DOT’s top priority continues to be 

safety. A total of $12.7 billion is requested 

for safety activities and initiatives for FY 

2003. 

Homeland and National Security. As 

stated above, DOT is committed to complete 

the transfer of the Coast Guard and the TSA 

to DHS and continue the good working 

relationship between DOT and DHS. In the 

remaining portion of DOT’s FY 2003 

budget request, $758 million is requested for 

homeland and national security. 

 

Mobility. Another major DOT strategic 

priority is the free flow of passengers and 

goods. The FY 2003 budget requests $34.0 

billion to improve mobility. 

Environment. DOT’s objective is to 

advance the benefits of transportation while 

minimizing the negative environmental 

impacts. The 2003 budget requests $3.6 

billion for environmental initiatives.

Financial Systems. Delphi, DOT’s modern 

financial systems initiative, is moving DOT 

away from the legacy system into an 

advanced financial systems environment. 

DOT has implemented Delphi in all of its 

organizations – except for FAA, FHWA, 

MARAD, FMCSA, and Volpe—which will 

implement Delphi in 2003. 

Streamlining Financial Practices. 

Through the electronic transmission of data 

and information for both our internal 

processes (i.e., employee travel, salary 

payments, procurement), and our external 

processes (i.e., payments to grantees and 

vendors, etc.), we are making things easier 

and quicker for all of our customers and 

cutting administrative costs. 

Another challenge for DOT is the reauthorization 

of its surface and aviation programs which expire 

at the end of FY 2003. DOT looks forward to 

working with the Congress and the appropriate 

stakeholders during the reauthorization of these 

critical infrastructure programs. 

Along with DOT’s successes, the Department 

will also address several management challenges 

in the upcoming year. The DOT Inspector 

General (OIG) has identified several challenges 

and these detailed on the following pages.
 FY 2002 Performance and Accountability Report 84 
 FY 2002 Performance and Accountability Report 85 

CONSOLIDATED FINANCIAL STATEMENTS 

FOR FISCAL YEARS 2002 AND 2001

Department of Transportation 

Report Number: FI-2003-018 

Date Issued: January 27, 2003
U.S. Department of 

Memorandum

Transportation 

Office of the Secretary 

of Transportation 

Office of Inspector General 

 FY 2002 Performance and Accountability Report 86 

 

Subject: ACTION: Report on Consolidated Financial Statements 

for Fiscal Years 2002 and 2001, DOT 

FI-2003-018 

Date: January 27, 2003 

 

From: Kenneth M. Mead 

Inspector General 

Reply To 

Attn. of: Meche:x61496 

 

To: The Secretary 

I respectfully submit the Office of Inspector General (OIG) report on the Department of 

Transportation (DOT) Consolidated Financial Statements for Fiscal Years (FY) 2002 

and 2001. For the first time, the DOT Consolidated Financial Statements include the 

Transportation Security Administration (TSA), which was established on 

November 19, 2001. TSA and the U. S. Coast Guard will transfer to the Department of 

Homeland Security in March 2003. This report is required by the Chief Financial 

Officers Act of 1990, as amended by the Government Management Reform Act of 

1994. 

This report presents our unqualified opinion on the DOT Consolidated Balance Sheet, 

Statement of Net Cost, Statement of Changes in Net Position, and Statement of 

Financing, and the Combined Statement of Budgetary Resources as of, and for the 

years ended, September 30, 2002, and September 30, 2001. The DOT Consolidated 

Financial Statements show assets of about $84 billion, liabilities of $42 billion, 

operating costs of $63 billion, and total budgetary resources of $105 billion.

The unqualified, or "clean," opinion did not come without extraordinary effort by DOT 

employees and the auditors. Early in FY 2002, the DOT Chief Financial Officer 

recognized that the creation of TSA could cause significant challenges for preparing 

and auditing the DOT Consolidated Financial Statements. In addition to the extra work 

needed to start up a new agency, DOT also had a major financial management initiative 

underway at the same time to prepare its larger and more complex agencies to 

implement the new DOT accounting system, Delphi. 

This report identifies significant financial issues that demonstrate the need to fully 

implement automated systems and internal controls to avoid the extra manual efforts 

every year to prepare financial statements. However, with the leadership of DOT 

senior management, especially the DOT Chief Financial Officer and Deputy Chief 

Financial Officer, the Federal Transit Administrator, and the TSA Chief Financial 
 FY 2002 Performance and Accountability Report 87 

 

Officer, and the hard work by DOT employees to address these issues timely, the clean 

opinion was attained.

We identified the following material weaknesses affecting the DOT Consolidated 

Financial Statements. 

• Last year, we reported that a headquarters account created by former Federal 

Transit Administration (FTA) employees existed to hold obligations which were 

adjusted using inappropriate accounting procedures. This account had a 

negative $77 million obligation balance as of September 30, 2001. While 

addressing this issue during FY 2002, FTA discovered that this account 

contained the remaining balance of what at one time was a $562 million 

overobligation that had occurred 19 years earlier. After a thorough review of its 

financial records, FTA found that the remaining balance of the FY 1984 

overobligation was about $29 million as of September 30, 2002. 

Rather than report the Antideficiency Act violation in FY 1984, former FTA 

employees engaged in inappropriate actions, such as (1) using funds from other 

appropriations, some of which had expired for obligation purposes; 

(2) maintaining records outside the accounting system; and (3) manipulating 

financial information on reports to Treasury and the Office of Management and 

Budget (OMB) to prevent detection. Other internal control weaknesses also 

resulted in adjustments of about $8 billion to correct the FY 2002 Consolidated 

Financial Statements. Corrective actions have been taken and are in process.

• DOT has 25 major financial systems. OMB Circular A-130 requires agencies to 

secure computer systems commensurate with the risk resulting from the loss, 

misuse, unauthorized access to, or modification of, the systems. Only 10 of the 

25 major financial application systems have been certified as adequately 

secured. Unauthorized access to any DOT information system could jeopardize 

the integrity of financial information systems. DOT also needs to enhance its 

network security and complete background checks on contractor personnel 

working on DOT information systems. In separate reports, we made 

recommendations to improve computer security and controls. 

• Use of cost-reimbursable contracts is more risky for the Government because 

contractors have little incentive to control costs. The Federal Aviation 

Administration (FAA) had serious deficiencies in controls over cost-reimbursable 

contracts. For contracts totaling $2 billion, FAA did not obtain incurred-cost 

audits as required. FAA also had a backlog of about 1,400 contracts totaling 

$6 billion that were not closed timely. We made recommendations in a separate 

report to strengthen FAA processes. 
 FY 2002 Performance and Accountability Report 88 

 

• TSA obligated about $1 billion to contract with 74 private companies already 

providing passenger security screening services for air carriers. Although TSA 

contract rates were to be based on actual costs to air carriers, we found six 

contractors increased billing rates from 58 to 97 percent above those charged to air 

carriers, and TSA initially was performing virtually no monitoring. We made 

recommendations for corrective actions in a July 2002 memorandum and in a 

separate report to be issued in February 2003. TSA has hired independent 

contractors to audit, administer, and monitor these contracts. 

• Under contract with OIG, KPMG LLP (KPMG) found that TSA did not have 

sufficient personnel or established policies and procedures to ensure accurate 

reporting of amounts on its financial statements. For example, expenses and 

liabilities totaling about $1 billion were understated. TSA corrected its accounting 

records and reported appropriate amounts in its financial statements. 

We also identified the following key issues involving internal control weaknesses and 

compliance with laws and regulations. While they are important, they did not affect 

our audit opinion. 

• Last year, we reported significant deficiencies in accounting for FAA property. 

Under contract with OIG, KPMG found that FAA did not adhere to established 

policies and procedures concerning property reporting during FY 2002, and made 

recommendations for improvement in a separate report. FAA needs to integrate 

its property system with DOT's new accounting system, Delphi. FAA plans to 

integrate its property and financial systems by October 2003. 

• FAA overstated its legal liabilities by about $514 million. FAA corrected its 

estimate and adjusted its financial statements. KPMG made recommendations in a 

separate report to improve communication and coordination within FAA. 

• Delphi has been implemented in 10 of DOT's smaller agencies, but the computer 

system lacked basic system controls and contained nine high vulnerabilities in 

system security. DOT also needs better plans to continue operations in case of 

system failure or catastrophic events. DOT is working to resolve these issues. 

• An interface deficiency existed between the Federal Highway Administration 

(FHWA) grants management system and the existing DOT accounting system, 

which underreported valid obligations by about $388 million. FHWA plans to 

resolve this interface deficiency during the Delphi implementation process. 

• DOT was not in compliance with the Federal Financial Management 

Improvement Act of 1996 because the DOT accounting system did not 
 FY 2002 Performance and Accountability Report 89 

 

(1) provide the data necessary for preparing the DOT Consolidated Financial 

Statements, (2) comply with the U.S. Government standard general ledger, and 

(3) comply with requirements for implementing managerial cost accounting 

standards. DOT also needs to enhance computer security. DOT plans to have 

compliant and secure financial systems by September 2004. 

• DOT spent about $37 million obtained from Treasury miscellaneous receipts 

accounts between FYs 1998 and 2001, rather than using appropriated funds. 

DOT had no authority to spend Treasury's money. When the transactions were 

corrected during FY 2002, FHWA and the Office of the Secretary prior year 

appropriations were overobligated by about $5 million. We recommended 

corrective actions in a separate report.

• DOT did not confirm about $1.9 billion of intragovernmental balances with its 

trading partners. The General Accounting Office (GAO) reported this area as 

one impediment to an opinion on the Financial Report of the United States 

Government. The unreconciled difference among Federal entities for FY 2001 

was $21 billion. Although our audit tests did not identify significant differences, 

DOT needs to do its part to resolve this Governmentwide issue. 

• The performance measures presented in the Management Discussion and 

Analysis did not provide information about the cost-effectiveness of programs 

nor relate to the Statement of Net Cost. Of the 64 performance measures, 14

were based on FY 2001 rather than FY 2002 performance data. None of the 

measures was linked to the cost of achieving targeted results. 

• DOT distributed its operating costs into four components on the Consolidated 

Statement of Net Cost: Surface, Air, Maritime, and Cross-Cutting 

Transportation Programs. This presentation inappropriately combined agencies 

and programs with separate and distinct goals. 

This report includes one new recommendation to confirm intragovernmental balances. 

DOT and its agencies have ongoing corrective actions to address these internal control 

and compliance issues. A draft of this report was provided to the DOT Chief Financial 

Officer on January 24, 2003. She agreed with the report. 

We appreciate the cooperation and assistance of DOT and KPMG LLP representatives. 

If we can answer any questions, please call me at (202) 366-1959, or John Meche at 

(202) 366-1496. 

-#- 
 FY 2002 Performance and Accountability Report 90 

 

DEPARTMENT OF TRANSPORTATION

INSPECTOR GENERAL'S INDEPENDENT AUDIT REPORT

ON THE DEPARTMENT OF TRANSPORTATION

CONSOLIDATED FINANCIAL STATEMENTS

FOR FISCAL YEARS 2002 AND 2001

To the Secretary 

The Department of Transportation (DOT), Office of Inspector General (OIG), audited 

the DOT Consolidated Financial Statements and accompanying notes as of, and for the 

years ended, September 30, 2002, and September 30, 2001. In our audit of the DOT 

Consolidated Financial Statements for Fiscal Years (FY) 2002 and 2001, we found: 

• the financial statements are fairly presented, in all material respects, in 

conformity with U.S. generally accepted accounting principles; 

• five material internal control weaknesses concerning DOT's financial, 

accounting, and information security programs; and reportable conditions 

concerning property, liabilities, obligations, and performance measures; 

• noncompliance with the Federal Financial Management Improvement Act of 

1996 (FFMIA) regarding: (1) DOT's accounting system, (2) financial system 

interfaces, (3) computer security over financial information systems, 

(4) managerial cost accounting standards, and (5) overobligation of funds; 

• financial information in the Management Discussion and Analysis was 

materially consistent with the financial statements, except 14 of 64 performance 

measures were based on FY 2001 rather than FY 2002 performance data; and 

• supplementary and stewardship information was consistent with management 

representations and the financial statements. 

We performed our work in accordance with U.S. generally accepted government 

auditing standards and Office of Management and Budget (OMB) Bulletin 01-02, Audit 

Requirements for Federal Financial Statements. The following sections discuss these 

conclusions. Our audit objectives, scope, and methodology are discussed in Exhibit A. 

We believe that our audit provides a reasonable basis for our opinion. 
 FY 2002 Performance and Accountability Report 91 

A. UNQUALIFIED OPINION ON FINANCIAL STATEMENTS 

In our opinion, the DOT Consolidated Balance Sheet, Statement of Net Cost, Statement 

of Changes in Net Position, and Statement of Financing, and the Combined Statement 

of Budgetary Resources, including accompanying notes, present fairly, in all material 

respects, in conformity with U.S. 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, 2002, and September 30, 2001. 

Under contract with OIG, KPMG LLP (KPMG) audited the financial statements of the 

Federal Aviation Administration (FAA) and Transportation Security Administration 

(TSA) as of and for the period ended September 30, 2002. KPMG rendered 

unqualified opinions on the FAA and TSA financial statements. 

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 01-02 audit guidance, not to express an opinion on internal controls. 

For the controls we tested, we found five 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 

internal control work would not necessarily disclose all material weaknesses or 

reportable conditions. 

Our work also identified the need to improve internal controls over financial reporting 

and compliance in four other areas. These reportable weaknesses in internal controls, 

although not considered material weaknesses, represent significant deficiencies in the 

design and operation of internal controls, which could adversely affect the DOT 

Consolidated Financial Statements. 

Material Weaknesses
 FY 2002 Performance and Accountability Report 92 

The following sections describe the material weaknesses that we identified. On 

December 26, 2002, as required by the Federal Managers' Financial Integrity Act of 

1982, the Secretary of Transportation reported four of the five material weaknesses to 

the President and Congress. The other material weakness concerning TSA financial 

management was identified after the 2002 report was issued. 

Federal Transit Administration (FTA) Financial Management 

Last year, we reported that a headquarters account created by former FTA employees 

existed to hold obligations which were adjusted using inappropriate accounting 

procedures. This account had a negative $77 million obligation balance as of 

September 30, 2001. While addressing this issue during FY 2002, FTA discovered that 

this account contained the remaining balance of what at one time was a $562 million 

overobligation that had occurred 19 years earlier. 

Rather than report the Antideficiency Act violation in FY 1984, former FTA employees 

engaged in inappropriate actions, such as (1) using funds from other appropriations, 

some of which had expired for obligation purposes, (2) maintaining records outside the 

accounting system, and (3) manipulating financial information on reports to OMB and 

Treasury to prevent detection. After a thorough review of its financial records, FTA 

found that the remaining balance of the FY 1984 overobligation was about $29 million 

as of September 30, 2002. This labor-intensive effort identified a material internal 

control weakness involving many areas of FTA financial practices as the following 

examples indicate. 

• Adjustments totaling about $8 billion were needed to correct the FY 2002 

Consolidated Financial Statements. 

• Interface deficiencies between the new DOT accounting system (Delphi) and 

FTA's financial feeder systems (TEAM and ECHO) prevented FTA from 

electronically processing transactions. For example, about $350 million in 

ECHO payments had to be manually processed into Delphi. 

• In June 2002, when FTA implemented Delphi, significant obligation and 

expense transactions were not electronically transferred to Delphi. For example, 

when FTA manually processed transactions, about $64 million in valid 

obligations were not entered into Delphi. 

FTA corrected its financial records and provided accurate amounts for the financial 

statements. In a separate report, we recommended that FTA report a violation of the 

Antideficiency Act that occurred in FY 1984 and ensure that new policies and 

procedures are implemented. FTA is in the process of reporting the Antideficiency Act 
 FY 2002 Performance and Accountability Report 93 

violation to OMB and Congress and implementing new internal control policies and 

procedures. 

DOT Information Security Program

In September 2002, we issued our second annual report on DOT's Information Security 

Program as required by the Government Information Security Reform Act. We found 

that DOT's Chief Information Officer lacked authority to enforce DOT security 

guidance and weaknesses existed in management controls, network security, system 

security, infrastructure-critical systems and asset protection, and E-government and 

personnel security. 

Specifically, we found unsecured network connections to contractors and unauthorized 

telephone line (dial-up) computer connections; no system security certification and 

accreditation reviews on 78 percent (438 out of 561) of mission-critical systems, 

including 15 of the 25 major financial systems; 79 high vulnerabilities on DOT's web 

sites; and no background checks on 24 percent of the contractor personnel we 

reviewed. Unauthorized access to any DOT information system could jeopardize the 

integrity of financial information systems. We made recommendations in separate 

reports to improve computer security and controls. 

FAA Oversight of Cost-Reimbursable Contracts 

FAA's oversight of its cost-reimbursable contracts, as required by acquisition 

regulations, was deficient, lacked accountability, and did not adequately protect FAA 

from fraud, waste, and abuse. This vulnerability was significant because FAA awarded 

about 800 cost-reimbursable contracts totaling $3.4 billion in FY 2001. For example, 

we found that cost-reimbursable contracts totaling $2 billion did not have the required 

incurred-cost audits, and about 1,400 contracts totaling $6 billion were not closed 

timely. In a separate report, we recommended that FAA ensure contract audits are 

obtained and establish better policies and procedures to enhance oversight of its 

contract management functions. 

TSA Security Screening Contracts 

In February 2002, TSA assumed responsibility for passenger security screening at the 

Nation's airports. To do this, TSA contracted at an estimated cost of $1 billion with 74 

private companies that already were on site providing passenger security screening 

services for air carriers. Of the 74 contractors, 13 accounted for about 93 percent of the 

total passenger screening costs. Although contract rates for TSA were to be based on 

actual costs incurred providing screening services for air carriers, we found that 6 of 

the 13 contractors increased billing rates from 58 to 97 percent above those charged to 
 FY 2002 Performance and Accountability Report 94 

air carriers and TSA initially was performing virtually no monitoring of these contracts. 

We made recommendations for corrective action in a July 2002 memorandum and in a 

separate report to be issued in February 2003. TSA has hired independent contractors 

to audit, administer, and monitor these contracts. 

TSA Financial Management 

On November 19, 2001, the President signed the Aviation and Transportation Security 

Act that created TSA. From the first day of its existence, DOT and TSA were faced 

with many significant challenges and short statutory milestones. Getting organized and 

building a financial management organization with only a few Federal employees was 

very challenging for TSA. 

Under contract with OIG, KPMG found that TSA did not have sufficient personnel or 

established policies and procedures to ensure accurate reporting of amounts on its 

financial statements concerning (1) expenses and liabilities of about $1 billion; (2) 

purchase orders and other obligations of $322 million; (3) equipment purchases of 

$309 million; and (4) accounts receivable from air carriers and passenger fees of 

$157 million. TSA corrected its accounting records and reported appropriate amounts 

on its financial statements. KPMG made recommendations in a separate report to 

improve TSA financial management. 

Reportable Conditions 

Internal control weaknesses existed because of (1) the lack of an integrated property 

and accounting system in FAA; (2) inadequate coordination concerning reporting 

procedures for FAA legal liabilities; (3) computer security weaknesses in Delphi; and 

(4) an interface deficiency between FHWA's grants management system and DOT's 

existing accounting system, DAFIS. 

FAA Property, Plant, and Equipment 

Last year, we reported significant deficiencies in accounting for FAA property, plant, 

and equipment. Under contract with OIG, KPMG audited the FY 2002 FAA financial 

statements and reported that FAA did not adhere to established policies and procedures 

to ensure its property accounts were properly reported. In a separate report, KPMG 

made recommendations to improve property accounting; reconcile the property system 

and DAFIS throughout the year, record property additions and disposals, and capitalize 

labor and travel costs. FAA still needs to integrate its property accounting system with 

Delphi. FAA plans to integrate the two systems by October 2003. 

FAA Legal Liabilities 
 FY 2002 Performance and Accountability Report 95 

FAA overstated its legal liabilities by about $514 million. This occurred because the 

FAA Chief Counsel, when preparing the estimate, incorrectly included cases deemed to 

be reasonably possible of loss with those deemed to be probable of loss. FAA also 

incorrectly included cases where the likelihood of loss was deemed to be remote. 

KPMG made recommendations in a separate report to improve communication and 

coordination within FAA. 

Delphi Computer System Controls 

Our ongoing review of Delphi1

 identified that the system security functions need to 

ensure access to Delphi only by authorized personnel. We found that Delphi lacked 

basic system controls, such as (1) passwords not properly configured to prevent 

guessing; (2) no systematic way to identify and remove user accounts for terminated 

employees; and (3) programmers given access to production systems. Using a 

commercial scanning tool, we also identified nine high vulnerabilities in Delphi's 

security system. Access to the Delphi computer room also was not adequately secured. 

These deficiencies occurred partially because Delphi operates on a stand-alone server, 

and security responsibilities that are normally provided by a central security function, 

as was provided for DAFIS, must now be performed by Delphi managers. 

DOT also needs a better plan for Delphi to continue operations in case of system failure 

or catastrophic events such as tornadoes. We will make specific recommendations in a 

separate report to be issued later. DOT agreed with our findings and corrective actions 

already are underway. 

FHWA’s Grants Management System

Last year, we identified an electronic interface deficiency between FHWA's Fiscal 

Management Information System (FMIS) and DAFIS, and recommended corrective 

action. FMIS records initial obligations for Federal-aid grants to states. However, 

when FMIS interfaces with DAFIS, all obligations are not electronically transferred 

into DAFIS. This occurs due to problems resulting from upgrades and changes that 

were made to the FMIS system. FHWA also did not reconcile obligated balances 

between FMIS and DAFIS. As of September 30, 2002, valid obligations of about 

$388 million were understated. FHWA plans to resolve this interface deficiency during 

the Delphi implementation process. 

C. COMPLIANCE WITH LAWS AND REGULATIONS

 

1

 For security reasons, specifics concerning the weaknesses and vulnerabilities we identified and our audit procedures are not 

discussed in this report, but were provided to DOT managers during the audit. 
 FY 2002 Performance and Accountability Report 96 

Our objective was not to express, and we do not express, an opinion on compliance 

with laws and regulations. Our work was limited to selected provisions of laws and 

regulations that would be reportable under U.S. generally accepted government 

auditing standards or under OMB guidance. Our work disclosed the following 

instances of noncompliance with FFMIA and other laws and regulations. 

Federal Financial Management Improvement Act of 1996 

Under FFMIA, we are required to report whether or not DOT financial management 

systems substantially comply with: (1) Federal financial management system 

requirements, (2) applicable Federal accounting standards, and (3) the U.S. 

Government standard general ledger at the transaction level. On January 4, 2001, 

OMB issued Revised Implementation Guidance for the Federal Financial Management 

Improvement Act, including factors for determining compliance and auditor reporting 

responsibilities. To meet the FFMIA audit requirement, we performed tests of 

compliance with the three FFMIA section 803(a) requirements and the revised OMB 

guidance, including financial management systems; the standard general ledger; and 

accounting standards. 

DOT did not meet FFMIA requirements for financial management systems because: 

(1) DOT's accounting system, DAFIS, cannot produce auditable financial statements; 

(2) interface deficiencies exist between DAFIS and FMIS and between Delphi and 

FTA's financial feeder systems; (3) DAFIS does not contain all of the U.S. Government 

standard general ledger accounts; (4) DOT has not implemented managerial cost 

accounting standards; and (5) five material weaknesses existed concerning DOT's 

financial, accounting, and information security programs. 

Financial Management System Requirements 

DOT's major agencies use DAFIS, which cannot produce financial statements based on 

the information included within the system. For example, DOT made about 860 

adjustments, totaling $51 billion, outside DAFIS to prepare the financial statements. 

These adjustments were recorded in a financial statement module, a tool used to 

process the adjustments. However, all DOT agencies did not use the financial 

statement module to prepare the financial statements and adjustments were not 

recorded in DAFIS. For example, the Coast Guard and Maritime Administration 

(MARAD) did not use the financial statement module. 

Ten of DOT's agencies use the new accounting system, Delphi. Although Delphi is 

being used, the system is under development and does not yet fully meet all FFMIA 

requirements for financial management systems. For example, none of the 10 DOT 

agencies on Delphi used the full capabilities in Delphi to prepare their FY 2002 

financial statements. Delphi is being evaluated as to compliance with FFMIA as part 
 FY 2002 Performance and Accountability Report 97 

of its implementation. As discussed in Section B, the Delphi computer system contains 

vulnerabilities and security control weaknesses. DOT plans to have all agencies on 

Delphi by October 2003. 

Interface deficiencies exist between DAFIS and FMIS, and between Delphi and FTA's 

financial feeder systems. The Joint Financial Management Improvement Program 

(JFMIP) Core Financial System Requirements and Grant Financial System 

Requirements and OMB guidance require that, to be compliant with FFMIA, integrated 

financial management systems must maintain data accuracy between the core financial 

system and feeder systems. As discussed in Section B, an interface deficiency between 

DAFIS and FMIS resulted in recorded obligations in DAFIS being understated by 

$388 million. Interface deficiencies between Delphi and FTA's financial feeder 

systems prevented FTA from electronically processing transactions. DOT plans to 

resolve these deficiencies during the Delphi implementation process. 

United States Government Standard General Ledger 

DAFIS does not comply with the U.S. Government standard general ledger (SGL) at 

the transaction level because it does not contain all of the SGL accounts. As a result, 

about 860 adjustments, totaling $51 billion, were made outside DAFIS to prepare the 

financial statements. Delphi is compliant with the SGL, and DOT plans to have Delphi 

fully operational in all agencies by October 2003. 

Federal Cost Accounting Standards 

DOT agencies, except FAA and Coast Guard, are just beginning to identify planning 

requirements for implementation of cost accounting systems. The Statement of Federal 

Financial Accounting Standards (SFFAS) Number 4, Managerial Cost Accounting 

Standards, requires that beginning in FY 1998, each reporting entity should provide 

reliable and regular reporting of full costs of their activities and outputs. DAFIS does 

not have the capability to capture full costs, including direct and indirect costs assigned 

to DOT programs. DOT's goal is to be compliant with cost accounting standards by 

September 2004. 

During FY 2002, DOT demonstrated its commitment to implementing cost accounting 

standards by appointing a full-time cost accounting project manager and forming a 

steering group with representatives from each DOT agency to coordinate the 

Departmentwide implementation of cost accounting standards. These are positive 

steps, but extensive efforts will be needed to complete implementation by 

September 2004. 

FAA made progress by implementing its cost accounting system in its Air Traffic 

Services and Commercial Space Transportation lines of business. FAA also is working 
 FY 2002 Performance and Accountability Report 98 

on developing a labor distribution system. However, FAA still needs to improve the 

system and develop the cost accounting system for its other three lines of business. 

FAA plans to complete its cost accounting system implementation by September 2003. 

As discussed in Section B, material weaknesses exist concerning (1) FTA financial 

management; (2) computer security; (3) FAA oversight of cost-reimbursable contracts; 

(4) TSA security screener contracts; and (5) TSA financial management. 

On December 26, 2002, as required by the Federal Managers' Financial Integrity Act of 

1982, the Secretary of Transportation reported four of the five material weaknesses in 

DOT's 2002 report, and also reported that DOT was taking remedial and progressive 

actions in these areas that will bring DOT into substantial compliance with FFMIA 

when its actions are successfully implemented. The other material weakness 

concerning TSA financial management was identified after the 2002 report was issued. 

Antideficiency Act Violations 

Title 31, United States Code, Section 1341(a) 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 appropriation. As discussed in Section B, a 

$562 million overobligation occurred in FY 1984, and FTA still needs about 

$29 million to pay the remaining overobligation balance. 

DOT also spent about $37 million obtained from Treasury miscellaneous receipts 

accounts between FYs 1998 and 2001, rather than using appropriated funds. DOT had 

no authority to spend Treasury's money. When the transactions were corrected during 

FY 2002, FHWA and Office of the Secretary prior year appropriations were 

overobligated by about $5 million. We made recommendations in a separate report. 

DOT is in the process of reporting both Antideficiency Act violations. 

Intragovernmental Balances 

OMB Bulletin 01-09, Form and Content of Agency Financial Statements, requires that 

reporting entities reconcile intragovernmental asset, liability, and revenue amounts by 

confirming balances with their trading partners. Some DOT agencies only partially 

confirmed or reconciled their intragovernmental balances, but most did not. However, 

our testing found no material differences. Notwithstanding, DOT intragovernmental 

asset, liability, and revenue amounts of about $1.9 billion were not confirmed or 

reconciled with trading partners. 

Confirming and reconciling these balances is important to the Financial Report of the 

United States Government. Last year, GAO reported that one impediment to an 

opinion on the Government Consolidated Financial Statements that must be overcome 
 FY 2002 Performance and Accountability Report 99 

is the Government's inability to account for billions of dollars of transactions among 

Federal entities. GAO attributed part of this problem to agencies not reconciling 

balances with their trading partners. The unreconciled difference among Federal 

entities for FY 2001 was about $21 billion. 

Recommendation. We recommend that the DOT Chief Financial Officer establish a 

special reporting procedure to verify that DOT agencies confirm and reconcile 

intragovernmental balances with trading partners. 

Performance Data 

Under OMB Bulletin 01-02, our responsibility is to obtain an understanding of internal 

controls relating to existence and completeness of performance data. DOT agencies are 

responsible for establishing and maintaining adequate internal controls. The FY 2002 

DOT Performance and Accountability Report contains 39 primary and 25 

supplementary performance measures which were in the FY 2002 DOT Consolidated 

Financial Statements. The overall presentation complied with requirements of OMB 

Bulletin 01-09 to report performance measures consistent with goals and objectives 

from agencies' strategic and performance plans. 

Linking to Statement of Net Cost and Measuring Cost-Effectiveness 

According to OMB Bulletin 01-09: 

Entities should strive to develop and report objective measures that . . . 

provide information about the efficiency and cost effectiveness of 

programs. The discussion of performance . . . should be clearly linked to 

cost categories . . . featured in the Statement of Net Cost. . . . To further 

enhance the usefulness of the information, agencies should include an 

explanation of what needs to be done and what is planned . . . to improve 

financial or program performance. 

DOT does not have systems in place to allocate costs by major program and the 

performance measures presented in the financial statements did not provide information 

about cost-effectiveness. Consequently, none of the performance measures was linked 

to the cost of achieving targeted results or to the Statement of Net Cost. 

DAFIS does not have the capability to accurately identify program costs. DOT is in the 

process of replacing DAFIS, and plans to have Delphi in full operation by 

October 2003. FAA also is developing a separate cost accounting system, which FAA 

expects will be fully operational by September 30, 2003.

Assessing Internal Controls 
 FY 2002 Performance and Accountability Report 100 

We performed various procedures to assess internal controls relating to performance 

data. While our work disclosed no material internal control weaknesses, we were not 

required to, and we did not, test the validity or accuracy of performance data as part of 

the DOT Consolidated Financial Statement audit. However, DOT is facing a 

significant challenge to ensure the incoming data are accurate and complete. 

DOT relies on third-party organizations outside the Federal Government, such as states; 

grantees; transit authorities; commercial airlines; and airports, for some of its 

performance data. States, for example, report on a calendar-year basis, and DOT did 

not receive some FY 2002 performance information in time to incorporate it into the 

DOT Consolidated Financial Statements. Of the 64 performance measures, 14 were 

based on FY 2001 rather than FY 2002 performance data. 

Reporting of Planned Actions 

To enhance the usefulness of performance information, OMB Bulletin 01-09 

encourages entities to include an explanation of what is planned to improve financial or 

program performance. The Management Discussion and Analysis overview includes 

general comments on how to improve performance; however, specific plans to improve 

financial performance were not included. 

Statement of Net Cost Presentation 

According to the Cost Accounting Implementation Guide issued by JFMIP, the 

Statement of Net Cost is pertinent to reporting performance results, and provides 

financial information that can be related to outputs and outcomes of an entity's major 

programs and activities. OMB Bulletin 01-09 requires an entity to report performance 

measures that can be clearly linked to cost categories in the Statement of Net Cost. 

In September 2002, DOT issued guidance for preparing the FY 2002 DOT 

Consolidated Financial Statements that established the major program areas on the 

DOT Consolidated Statement of Net Cost would be Surface, Air, Maritime, and 

Cross-Cutting Transportation Programs. This presentation inappropriately combines 

DOT agencies and programs with separate and distinct goals. 

For example, the Maritime Transportation category combined separate and distinct 

programs in Coast Guard and MARAD, such as the cost for maintaining MARAD's 

Ready Reserve Fleet were combined with Coast Guard’s Search and Rescue, Drug 

Interdiction, and Recreational Boating Safety. Under Maritime Transportation Costs, 

DOT reported Coast Guard operating expenses of $3.8 billion as a major program cost. 

However, these costs represented total operating and maintenance costs that should 

have been allocated among Coast Guard programs. 
 FY 2002 Performance and Accountability Report 101 

To improve financial management, DOT has initiated a project to replace DAFIS. 

Delphi is being designed to produce financial statements, as well as cost accounting 

information. Delphi is scheduled to be fully operational by October 2003. 

D. CONSISTENCY OF OTHER INFORMATION 

Management's Discussion and Analysis, required supplementary information 

(including 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. We 

compared this information for consistency with the DOT Consolidated Financial 

Statements and discussed the methods of measurement and presentation with DOT 

officials. Based on this work, except for FY 2002 performance measures that were 

based on FY 2001 performance data (Part C of this report), we found no material 

inconsistencies with the DOT Consolidated Financial Statements nor nonconformance 

with OMB guidance. 

E. PRIOR AUDIT COVERAGE 

Our report on the DOT Consolidated Financial Statements for FYs 2001 and 2000 

expressed an unqualified opinion and made one recommendation that FTA discontinue 

use of the headquarters account and eliminate the negative obligation balance before 

transferring to Delphi. As discussed in Section B, FTA took corrective actions. In 

March 1998, we also recommended that DOT ensure DAFIS, or its replacement, is the 

primary source of information for preparing financial statements. This item remains 

open until Delphi is fully implemented and demonstrates it can provide the information 

needed to prepare the DOT Consolidated Financial Statements. 

Since we issued our report on the DOT Consolidated Financial Statements for 

FYs 2001 and 2000, a total of 10 reports were issued related to the DOT Consolidated 

Financial Statements. The list of reports is in Exhibit B. 

This report is intended for information and use by DOT, OMB, GAO, and Congress. 

This report is a matter of public record, and its distribution is not limited. 

Kenneth M. Mead 

Inspector General 
 FY 2002 Performance and Accountability Report 102 

EXHIBIT A. OBJECTIVES, SCOPE, AND METHODOLOGY 

Our audit objectives for the DOT Consolidated Financial Statements for FYs 2002 

and 2001 were to determine whether: (1) principal DOT Consolidated Financial 

Statements and accompanying notes are presented fairly, in all material respects, in 

conformity with U.S. 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 is materially consistent with the information in the principal DOT 

Consolidated Financial Statements; (5) internal controls ensured the existence and 

completeness of reported data supporting performance measures; and 

(6) supplementary and stewardship information is consistent with management 

representations and the DOT Consolidated Financial Statements. 

DOT is responsible for (1) preparing the DOT Consolidated Financial Statements for 

FYs 2002 and 2001 in conformity with U.S. generally accepted accounting principles; 

(2) establishing, maintaining, and assessing internal controls to provide reasonable 

assurance that broad control objectives of the Federal Managers' Financial Integrity Act 

are met; (3) ensuring that DOT financial management systems substantially comply 

with FFMIA requirements; and (4) complying with applicable laws and regulations. 

OIG is responsible for obtaining reasonable assurance about whether (1) the DOT 

Consolidated Financial Statements for FYs 2002 and 2001 are presented fairly, in all 

material respects, in conformity with U.S. generally accepted accounting principles and 

(2) management maintained effective internal controls. The objectives of these 

controls are:

• Financial reporting: Transactions are properly recorded, processed, and summarized 

to permit the preparation of financial statements and stewardship information in 

conformity with U.S. generally accepted accounting principles, and assets are 

safeguarded against loss from unauthorized acquisition, use, or disposition. 

• 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 Governmentwide policies identified by OMB audit guidance. 

OIG also is responsible for (1) obtaining sufficient understanding of internal controls 

over financial reporting and compliance to plan the audit, (2) testing compliance with 

selected provisions of laws and regulations that have a direct and material effect on the 

financial statements and laws for which OMB audit guidance requires testing, and 
 FY 2002 Performance and Accountability Report 103 

(3) performing limited procedures with respect to certain other information appearing 

in the DOT Consolidated Financial Statements for FYs 2002 and 2001. 

To fulfill these responsibilities, we examined the amounts and disclosures in the 

financial statements; assessed accounting principles and estimates; evaluated internal 

controls; observed physical inventories; and evaluated the presentation of the financial 

statements. We reviewed the work of KPMG on the FAA and TSA financial 

statements to determine whether the work was performed in accordance with 

U.S. generally accepted government auditing standards. We also examined the validity 

of financial transactions and interviewed financial management officials. 

We did not evaluate all internal controls relevant to operating objectives as broadly 

defined by the Federal Managers' Financial Integrity Act, such as those controls 

relevant to preparing statistical reports and ensuring efficient operations. 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. We also caution 

that projecting our evaluation to future periods is subject to the risk that controls may 

become inadequate because of changes in conditions or that the degree of compliance 

with controls may deteriorate. 

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 

FY 2002 ended September 30, 2002, and FY 2001 ended September 30, 2001. We 

caution that noncompliance may occur and not be detected by these tests and that such 

testing may not be sufficient for other purposes. We also caution that our internal 

control testing may not be sufficient for other purposes. 

We performed our work in accordance with U.S. generally accepted government 

auditing standards and OMB Bulletin 01-02, Audit Requirements for Federal Financial 

Statements. 
 

 FY 2002 Performance and Accountability Report 104 

EXHIBIT B. FINANCIAL-RELATED REPORTS 

TITLE REPORT NUMBER DATE 

ISSUED

Quality Control Review of Fiscal Years 2002 

 and 2001 Financial Statements, FAA` QC-2003-017 January 27, 2003 

Quality Control Review of Fiscal Year 2002 

 Financial Statements, TSA QC-2003-016 January 27, 2003 

Financial Statements for Fiscal Years 

 2002 and 2001, Highway Trust Fund FI-2003-015 January 24, 2003 

Actuarial Estimates for Retired 

 Pay and Medical Benefits, USCG FI-2003-014 January 22, 2003 

Terminal Service Cost 

 Accounting Practices, FAA FI-2003-013 January 21, 2003 

Top Management Challenges, DOT PT-2003-012 January 21, 2003 

Information Security Program, DOT FI-2002-115 September 27, 

2002 

Vessel Documentation User Fees, USCG FI-2002-110 September 18, 

2002 

Spending Money from Treasury 

 Miscellaneous Receipts Accounts, DOT FI-2002-108 September 12, 

2002 

Oversight of Cost-Reimbursable 

 Contracts, FAA FI-2002-092 May 8, 2002 

Management Challenges 

The information in the following section of the report has been provided by the Office of Inspector 

General, in accordance with the Reports Consolidation Act of 2000. 
 FY 2002 Performance and Accountability Report 105 

TOP MANAGEMENT CHALLENGES 

Department of Transportation 

Report Number: PT-2003-012 

Date Issued: January 17, 2003 
 FY 2002 Performance and Accountability Report 106 

U.S. Department of 

Memorandum

Transportation 

Office of the Secretary 

of Transportation 

Office of Inspector General 

Subject: ACTION: DOT’s Top Management Challenges 

PT-2003-012 

Date: January 17, 2003 

From: Kenneth M. Mead 

Inspector General 

Reply to 

Attn. of: J-1

To: The Secretary 

Thru: The Deputy Secretary

The past year has been one of significant challenge and change for the Department 

of Transportation (DOT) and indeed the Nation. It is already clear that 2003 will 

continue that trend. DOT faces significant challenges in the missions for which it 

was created and in smoothly transitioning the Coast Guard and the Transportation 

Security Administration to the new Department of Homeland Security. Most 

items on our 2003 list of top management challenges directly relate to DOT’s 

ongoing missions; the last two items are relevant to DOT during the transition and 

will then move to the Department of Homeland Security. 

• Accomplishing DOT’s Core Missions of Safety and Mobility During and 

After an Effective Transition of TSA and Coast Guard (page 111) 

• Reducing Fatalities and Injuries on Our Highways, Emphasizing Seat Belt 

Law Enforcement (page 115) 

• Reducing the Risk of Aviation Accidents Due to Operational Errors and 

Runway Incursions (page 118) 

• Reversing FAA’s Spiraling Operating Costs, Improving Aviation System 

Capacity, and Reauthorizing AIR-21 (page 121) 

• Clamping Down on Fraud, Obtaining Better Value in Highway and 

Bridge Investments, and Reauthorizing TEA-21 (page 127) 

• Determining the Future of Intercity Passenger Rail (page 131) 

• Ensuring Highway Safety as the Southern Border Is Opened to Mexican 

Motor Carriers Under NAFTA (page 135) 

• Strengthening Computer Security and Investment Controls for DOT’s 

Multi-Billion Dollar Information Technology Investment (page 137) 

• Continuing to Improve Transportation Security (page 141) 

• Meeting Coast Guard’s Safety and Security Missions (page 146) 
 FY 2002 Performance and Accountability Report 107 

The Financial Challenges. Reflecting on the coming year, a few things are 

already clear. It is becoming increasingly important for each agency to operate 

effectively and efficiently to ensure we get the most benefit for each taxpayer 

dollar spent. Trust fund revenues are lower than expected, increasing the calls for 

additional financial support from General Fund resources. For example, over the 

next 6 years the estimated tax revenues in the Aviation Trust Fund are expected to 

be about 19 percent lower than was anticipated before September 11, 2001. At the 

same time, however, the economic forces and the demands of national security 

have combined to limit the General Fund’s ability to supplement and sustain 

transportation spending. In the decision making process, the Government must 

take into consideration the financial effects of creating a new agency, continuing 

the war on terrorism, and growing defense outlays necessary to protect the 

Nation’s interests at home and abroad. 

The Performance Challenges. With respect to DOT specifically, forces set in 

motion by the September 11, 2001 terrorist attacks necessarily turned much of the 

Department’s attention to security issues and have now resulted in the 

establishment of the Department of Homeland Security—the largest 

reorganization of the Federal Government in over 50 years. DOT will need to 

effectively transfer the Transportation Security Administration and the Coast 

Guard to that new agency, while finding ways to work effectively with the 

Department of Homeland Security on DOT’s continuing supportive role in 

transportation security and the overlapping responsibilities for transportation 

safety and security. 

As much of the security focus moves to the new Department—and with 

three major reauthorizations pending (the Aviation Investment and Reform Act for 

the 21st Century, the Transportation Equity Act for the 21st Century, and intercity 

passenger rail)—the Department has an important opportunity to renew its focus 

on the management of its safety and mobility missions. The Department’s success 

will be critical to the effective functioning of transportation, which is an important 

economic engine that comprises almost 11 percent of the economy’s gross 

domestic product. In view of the magnitude and importance of this effort, it is the 

first item on our list of DOT’s top management challenges. 

Our list also covers the other major challenges facing DOT in 2003; these include 

implementing the President’s Management Agenda (parts of which are woven into 

several of our management challenges). In addition, DOT’s challenges in 2003 

will include the reauthorization of the Aviation Investment and Reform Act for the 

21st Century, reauthorization of the Transportation Equity Act for the 21st Century, 

and determination of how best to structure and fund an intercity passenger rail 

system. 
 FY 2002 Performance and Accountability Report 108 

Changes From Last Year’s List. With respect to the airline industry, the 

airline economic environment is in great upheaval, with two major carriers in 

bankruptcy reorganization and the other network carriers working to reorganize 

their operations to avoid similar fates. We are not listing this as a top management 

issue because airline competition has been generally left to the discipline of 

market forces since airline price and service deregulation. Nevertheless, the 

Department clearly does need to closely monitor developments so as to be 

prepared to recommend national policy changes should private market efforts fail, 

threatening large segments of the domestic airline industry and air service to small 

communities. We note as well that the Department continues to have ongoing 

responsibilities for international competition and for monitoring the domestic 

competitive environment for evidence of anti-competitive behavior. 

We are also no longer listing the Maritime Administration’s (MARAD) Ship 

Disposal Program because, while further action is needed, sufficient progress has 

been made to warrant removal from the list of the Department’s top management 

issues. MARAD has succeeded in removing 14 vessels from its Fleets since 2000, 

and it obtained additional funding for disposal efforts in fiscal year 2003. The 

State of Virginia and MARAD are working on the common goal to mitigate the 

environmental threat these vessels pose in the James River Reserve Fleet. Also, in 

its Report to Congress on the Progress of the Vessel Disposal Program (June 

2002), MARAD itself cited Program accomplishments, including: (1) posting of 

an acquisition announcement seeking innovative solutions for vessel disposal, 

(2) proposing legislation to promote greater use of these vessels as artificial reefs, 

(3) ongoing negotiations with the Environmental Protection Agency on exporting 

some vessels, and (4) various partnership initiatives. Despite these 

accomplishments, the Department needs to continue to monitor the Program’s 

progress and ensure adequate funding is provided for disposal efforts. 

Our top management challenges for 2003 are detailed below, and the Exhibit 

provides a comparison of this year’s list with the items from our 2002 list. In 

presenting this list, we recognize that the Department will face many other 

significant issues in the coming year. The absence of a particular issue from this 

list is not intended to suggest that it is unimportant to the Department, but rather 

that we do not consider it among the key challenges at this time. 
 FY 2002 Performance and Accountability Report 109 

Accomplishing DOT’s Core Missions of Safety and 

Mobility During and After an Effective Transition of 

TSA and Coast Guard 

In the aftermath of the September 11 attacks and with the creation of the 

Transportation Security Administration (TSA), the last 16 months have presented 

DOT with unprecedented challenges—including hiring nearly 62,000 screeners to 

check passengers and carry-on baggage at all airports and implementing 

explosives detection equipment at the majority of airports nationwide. At the 

same time, TSA significantly expanded the Federal Air Marshals program with 

more flights being guarded now than any time in history. Meeting these 

challenges was, understandably and necessarily, the top priority of the 

Department’s senior managers. 

With the March 2003 transfer of the Coast Guard and TSA to the newly created 

Department of Homeland Security, the coming year presents DOT with the 

opportunity to focus on challenges central to the Department’s core missions of 

improving transportation safety and mobility. Further, as the Department will 

continue to have a supporting role in transportation security, DOT must also use 

the next year to establish an effective relationship with the new Department of 

Homeland Security. The Department should also take full advantage of this 

opportunity for management renewal by following through on major DOT 

management initiatives, including the development of effective financial and cost 

accounting systems that will enable the Department to better track and manage its 

performance and budget. 

In managing its core missions, both during and after the Coast Guard and TSA 

transition to the Department of Homeland Security, DOT managers will need to 

place priority on: 

a. Focusing on Safety and Mobility in All Modes of Transportation. 

This time of transition presents DOT with a broader opportunity to once 

again focus on effective management of its core safety and mobility 

missions. DOT will need to work with Congress on the reauthorizations of 

its major programs, including the Aviation Investment and Reform Act for 

the 21st Century (AIR-21), the Transportation Equity Act for the 

21st Century (TEA-21), and intercity passenger rail. DOT’s programs are a 

substantial and visible part of the services the public receives from the 

Federal Government. The President’s Budget Request for DOT in 

1 
 FY 2002 Performance and Accountability Report 110 

Fiscal Year (FY) 20032

 was $59.3 billion; $47.4 billion of that will remain 

with DOT once TSA and the Coast Guard have been transferred to the 

Department of Homeland Security. DOT’s impact goes beyond that, 

however, as its safety and mobility missions are critical to the 

transportation industry—an important economic engine that comprises 

almost 11 percent of the gross domestic product and impacts the entire 

gross domestic product.

b. Establishing an Effective Framework for Working With the 

Transportation Industry and Homeland Security on Regulatory and 

Programmatic Security Issues. DOT’s continuing responsibilities for 

transportation safety and efficiency will inevitably overlap with the 

Department of Homeland Security’s responsibilities for transportation security, 

requiring close interaction between the two Departments to strike an 

appropriate balance in implementing, regulating, funding, and overseeing 

programs that benefit the traveling public. DOT will play a continuing and 

supportive role in transportation security, including primary responsibility over 

the safe transport of hazardous materials, which will require ongoing 

coordination with the Department of Homeland Security. 

c. Following Through on Major DOT Management Initiatives, 

Including Full Implementation of the New Delphi Accounting 

System and Managerial Cost Accounting Standards. The Delphi 

system, which was initiated in 1997, is now operational in seven of DOT’s 

smaller Operating Administrations and staff offices.3

 Delphi has not yet been 

implemented in four of DOT’s largest Operating Administrations (Federal 

Aviation Administration, Federal Highway Administration, Federal Motor 

Carrier Safety Administration, and Maritime Administration), which account 

for more than 80 percent of DOT’s FY 2003 budget (not including TSA and 

Coast Guard) and represent most of the volume of transactions anticipated for 

Delphi operations. 

Bringing the four larger and more complex Operating Administrations onto 

Delphi has proven to be a challenge, as evidenced by the repeated schedule 

slippages. They were scheduled to begin using Delphi between 

December 2002 and May 2003. However, that effort has again slipped to 

 

2

 At the time this Top Management Challenges report was prepared, DOT’s FY 2003 budget had not been 

finalized. FY 2003 budget figures shown in this report are based on FY 2003 Budget in Brief, Office of 

the Secretary of Transportation publication, dated February 4, 2002, unless otherwise noted. 

3

 The seven Operating Administrations/Offices operating on Delphi are the Federal Transit Administration, 

Federal Railroad Administration, National Highway Traffic Safety Administration, Research and Special 

Programs Administration, Bureau of Transportation Statistics, Surface Transportation Board, and the 

Office of the Secretary (including the Office of Inspector General and the Transportation Administrative 

Service Center). 
 FY 2002 Performance and Accountability Report 111 

the March through October 2003 timeframe, with a total implementation 

cost of about $103 million. 

Delphi should provide DOT with reliable automated financial data for the 

first time. However, to support the President’s Management Agenda goal 

of integrated budget and performance data, DOT also needs to implement 

managerial cost accounting standards and labor distribution systems that 

interface with Delphi. The ultimate goal is to provide reliable cost and 

performance data that will tell decision makers what programs really cost 

and what they are achieving for that cost. DOT plans to implement 

managerial cost accounting standards in all Operating Administrations by 

September 2004. 

The Federal Aviation Administration (FAA), which is DOT’s largest 

Operating Administration, planned to have a fully operational cost 

accounting system including a labor distribution system called Cru-X to 

capture labor hours and costs associated with specific functions and 

services by September 30, 2002. However, Cru-X for FAA’s air traffic 

controllers, with annual labor costs of about $3.1 billion, omitted important 

internal controls related to the controllers signing in and signing out for 

their work shifts and for recording time while not directing air traffic. 

We brought this issue to the attention of the new FAA Administrator, and 

she directed that appropriate internal controls for recording of air traffic 

controllers’ time be incorporated into the Cru-X labor distribution system. 

FAA needs to identify specific action plans to implement the 

Administrator’s direction and provide milestones for starting and 

completing its corrective actions. 

Without a fully functioning labor distribution system, FAA will not have a 

credible cost accounting system, nor will it be able to credibly claim it is a 

performance-based organization. To date, FAA has spent $38 million and 

is 5 years behind its original schedule for having a fully operational cost 

accounting system. The Federal Aviation Reauthorization Act of 1996 

required FAA to develop a cost accounting system. FAA plans to have an 

operational cost accounting and labor distribution system by September 

2003 unless the implementation schedule slips again. 
 FY 2002 Performance and Accountability Report 112 

For further information, the following reports can be seen on the 

management challenges page of the Office of Inspector General (OIG) 

web site, at http://www.oig.dot.gov/challenges: 

• FAA Financial Statements for Fiscal Years 2001 and 2000 

• DOT Consolidated Financial Statements for Fiscal Years 2001 and 2000 

• FAA Cost Accounting System and Practices–2001 Status Assessment 

• FAA Air Traffic Services Planned Labor Distribution Reporting 

• DOT Implementing a New Financial Management System 
 FY 2002 Performance and Accountability Report 113 

Figure 1. Highway Fatalities Per 

100 Million Vehicle Miles Traveled 

1.7

1.6

1.5

1.4

1.0

1.1

1.2

1.3

1

1.2

1.4

1.6

1.8

19951996199719981999200020012002200320042005200620072008

Actual Fatality Rate Target Fatality Rate

Reducing Fatalities and Injuries on Our Highways, 

Emphasizing Seat Belt Law Enforcement 

In 2001, more than 42,000 people were killed and more than 3 million injured in 

traffic crashes on the Nation’s highways. As shown in Figure 1, DOT has 

established a goal of reducing traffic fatalities to 1 per 100 million vehicle miles 

traveled by 2008. To achieve this 

goal, DOT needs to pursue the 

following ongoing efforts to reduce 

deaths and injuries on the Nation’s 

highways, in addition to continuing 

the fight against driving while under 

the influence of alcohol or drugs. 

a. Increase Seat Belt Use. 

The National Highway 

Traffic Safety Administration 

(NHTSA) estimates that 

raising seat belt use to 

85 percent from the present 

rate of 75 percent would save 

4,600 lives annually. The 

most effective means of 

increasing seat belt use is enactment and enforcement of primary seat belt 

laws, which allow police to stop drivers and issue citations solely for not 

using a seat belt.

Currently, 18 States, the District of Columbia, and Puerto Rico have 

primary seat belt laws. We see no credible basis to forecast increases in 

seat belt use in excess of the recent trend of 1 percentage point per year 

unless additional States enact and enforce primary enforcement laws. If the 

trend in seat belt use of the last 9 years continues, as shown in Figure 2, 

NHTSA will fall short of its 2003 goal of 78 percent. 

2
 FY 2002 Performance and Accountability Report 114 

b. Improve the Credibility and Integrity of the Commercial Driver’s 

License (CDL) Program. In our May 2002 report, we stated existing 

Federal standards and State controls were not sufficient to defend against 

the alarming threat posed by individuals who seek to fraudulently obtain 

CDLs. For example, we found that only 4 of 13 States that we visited had 

laws requiring applicants to demonstrate that they are citizens or legally 

present in the United States. Since 1998, we have conducted over 

70 criminal investigations in 12 States involving CDLs. To date, these 

cases have resulted in 81 indictments, 63 convictions, and over $480,000 in 

fines, restitution and other monetary recoveries. In addition, hundreds of 

truckers have had their licenses suspended or revoked, or have had to be 

retested in order to ensure that they were qualified to drive commercial 

vehicles. 

As a consequence of the fraudulent testing and licensing of commercial 

drivers, highway safety has been compromised and States have incurred 

additional expense to retest thousands of commercial drivers as a result of 

State and Federal investigations. DOT needs to counter fraudulent 

licensing by strengthening and clarifying Federal standards for issuing 

CDLs and by requiring the States to make use of covert procedures in the 

monitoring of driver examiners. 

c. Continue Implementation of the Transportation Recall 

Enhancement, Accountability, and Documentation (TREAD) Act. 

Over the past 2 years, NHTSA has made substantial progress in meeting the 

TREAD Act requirements, completing 10 of 15 final rulemakings. Several 

Figure 2. National Seat Belt Use 

1984 to 2002 

14%

21%

37%

42%45%46%49%

59%62%

66%67%68%68%69%70%67%

71%73%75%

0%

20%

40%

60%

80%

100%

1984198519861987198819891990199119921993199419951996199719981999200020012002

National Seat Belt Use Rate
 FY 2002 Performance and Accountability Report 115 

rules were complex and controversial, such as requiring a tire pressure 

warning device in new vehicles, updating existing tire standards, and 

establishing early warning reporting requirements for vehicle and 

equipment manufacturers. Of the five remaining rulemakings, the 

two regarding the safety of child restraints and updating existing tire 

standards appear to be controversial from the comments received on the 

proposed rules. Neither of these rules has met its statutory deadline. 

The success of the TREAD Act also depends on the quality and usefulness 

of a new information system being developed to track vehicle defects and 

help identify trends. This system is currently scheduled for completion in 

March 2003. Manufacturers must begin reporting additional warning data 

for entry into this new system by August 31, 2003. The Office of Inspector 

General recently initiated an audit to evaluate the progress NHTSA has 

made in implementing recommendations from our January 2002 report. 

For further information, the following reports can be seen on the 

management challenges page of the OIG web site, at 

http://www.oig.dot.gov/challenges: 

• Review of NHTSA’s Progress in Implementing Strategies to Increase the 

Use of Seat Belts 

• Improving the Testing and Licensing of Commercial Drivers 

• Progress and Challenges in Implementing the TREAD Act 

• NHTSA Office of Defects Investigation 

• Disqualifying Commercial Drivers 
 FY 2002 Performance and Accountability Report 116 

Figure 3. Operational Errors 

FY 1998—FY 2002 

Goal 812

Goal 829

941

1,061

885

1,145

1,194

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

# FY 2002

FY 2001

FY 2000

FY 1999

FY 1998

Goal 816 

Rate*

5.6

5.7

6.8

7.4

6.7

# FAA missed its FY 2002 goal of no more than 568 operational errors with less

 than 80 percent of required separation by 7 percent, with 607 such errors.

* Rate is per 1 million air traffic operations.

Reducing the Risk of Aviation Accidents Due to 

Operational Errors and Runway Incursions 

Overall, this has been a very safe year for the aviation industry. There has been 

only one fatal commercial aviation accident in the United States during the last 

14 months, and FAA has made further progress in reducing the risk of aviation 

accidents due to operational errors and runway incursions. Operational errors 

(incidents that could result in collisions in the air) and runway incursions 

(incidents that could result in collisions on the ground) decreased by 11 percent 

and 17 percent, respectively, over FY 2001 levels. While reduced air traffic 

operations contributed to a reduction of these incidents, FAA initiatives to reduce 

operational errors and runway incursions at specific facilities were also 

contributing factors. 

Notwithstanding these improvements, operational errors and runway incursions 

remain on our list of top management challenges because (1) at least three serious 

operational errors and one serious runway incursion occurs, on average, every 

10 days (in which collisions were barely averted); and (2) FAA now projects that 

air traffic, measured in terms of operations, will return to its pre-September 11 

growth pattern between 2005 and 2007. FAA needs to continue initiatives to 

further reduce the risk of aviation accidents by: 

a. Reducing the Number 

of Operational Errors. 

The number of operational 

errors was down from an 

all-time high of almost 

1,200 in FY 2001 to 1,061 

in FY 2002, as shown in 

Figure 3. FAA initiatives 

to reduce operational 

errors included issuing 

guidance to improve 

regional operational error 

reduction plans, and 

establishing a system to 

rate the severity of 

operational errors so FAA can focus resources on reducing the most serious 

errors. However, some operational errors still pose a significant safety 

risk, with an average of three operational errors per day and one serious 

3
 FY 2002 Performance and Accountability Report 117 

Figure 4. Runway Incursions 

FY 1998—FY 2002 

405

338

304

407

-100 100 300 500

# FY 2002

FY 2001

FY 2000

FY 1999

FY 1998

329

243

Rate*

4.7

4.8

5.9

6.2

5.2

# FAA met its goal of no more than 53 serious runway incursions 

 by 30 percent, with 37 such incursions.

* Rate is per 1 million tower operations.

error every 3 days (in which a collision was barely averted). To reduce 

operational errors further, FAA needs to ensure that air traffic controllers 

who make operational errors receive training. FAA also needs to 

reexamine its new severity rating system to ensure that it accurately reflects 

the safety risk of operational errors. 

b. Reducing Runway Incursions. Runway incursions declined from 

407 in FY 2001 to 338 in FY 2002 (see Figure 4), due in part to FAA’s 

aggressive actions to reduce these incidents. FAA established a system to 

categorize runway incursions by severity risk and has reduced the number 

of close calls (those runway 

incursions in the two highest 

categories) from 53 in 

FY 2001 to 37 in FY 2002. 

However, there is still an 

average of one runway 

incursion per day and an 

average of one close call 

every 10 days. In view of the 

potential loss of life in a 

runway accident, this is still 

too many. For example, in 

October 2001, a runway 

accident between a 

commercial aircraft and a 

business jet killed 118 people 

in Milan, Italy. While this 

accident occurred outside the 

United States, the potential 

exists for similar accidents to occur here. To reduce runway incursions 

further, FAA needs to follow through on its plans to train pilots to avoid 

runway incursions and use technology to warn pilots and controllers of 

potential incidents. 

For further information, the following reports can be seen on the 

management challenges page of the OIG web site, at 

http://www.oig.dot.gov/challenges: 

• FAA’s FY 2003 Budget Request 

• Despite Significant Management Focus, Further Actions Are Needed to 

Reduce Runway Incursions 
 FY 2002 Performance and Accountability Report 118 

• Further Actions Are Needed to Reduce Runway Incursions 

• Actions to Reduce Operational Errors and Deviations Have Not Been 

Effective 

• FAA’s Actions to Expand the Controller-in-Charge Program
 FY 2002 Performance and Accountability Report 119 

Figure 5. Aviation Trust Fund: Estimated 

Tax Revenues 

($ in billions) 

$15.8

$14.1 $14.9 $13.3

$11.9 $12.6 $12.8

$11.5 $12.2 $10.9 $10.2 $9.4

$0.0

$5.0

$10.0

$15.0

$20.0

FY

2003

FY

2004

FY

2005

FY

2006

FY

2007

FY

2008

Pre-September 11 Post-September 11

Reversing FAA’s Spiraling Operating Costs, 

Improving Aviation System Capacity, and 

Reauthorizing AIR-21 

FAA is facing critical issues this year involving increasing capacity in the National 

Airspace System, carrying out cost-effective and timely acquisitions, and 

improving business operations by controlling costs. In our view, FAA needs to act 

more like a business, in the 

sense that it pays much 

greater attention to 

cost-effectiveness and 

controlling its costs, 

particularly in view of the 

steep declines in projected 

Aviation Trust Fund 

revenues compared to preSeptember 11, 2001 

estimates, as shown in 

Figure 5. 

Within this context, a 

combination of 

management and legislative 

actions are needed. 

Reauthorization of AIR-21 

provides FAA with an opportunity to seek needed legislative changes. The most 

critical actions include: 

a. Containing Inordinate Increases in Operating Costs That Are 

Due to “Personnel Reform,” and Tightening Accountability for 

Performance Agency-Wide. FAA’s budget has increased $5 billion 

over the past 6 years—escalating from $9.0 billion in FY 1998 to 

$14 billion in FY 2003. This growth has largely been driven by inordinate 

increases in the agency’s operating costs. FAA’s Operations budget, which 

is 73 percent payroll costs, has increased from $5.3 billion in FY 1998 to 

$7.5 billion in FY 2003, an increase of over 41 percent (see Figure 6). 

While FAA has taken extensive advantage of the flexibilities provided by 

personnel reform by substantially increasing salaries, there has been little 

corresponding management accountability for costs. Containing the growth 

4
 FY 2002 Performance and Accountability Report 120 

Figure 6. FAA’s Operations Budget 

FY 1998 through FY 2003 

($ in billions) 

$5.3 $5.6 $6.0 $6.6 $6.9 $7.5

$0.0

$2.0

$4.0

$6.0

$8.0

FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003

Note: FY 2002 figures exclude approximately $200 million in supplemental funds that were 

appropriated specifically for security related purposes. FY 2003 figures include approximately 

$400 million in retirement and healthcare costs, which are now included directly in all Federal 

agencies’ budgets per Office of Management and Budget instructions. 

in operating costs continues to be a top management challenge that FAA 

must address. 

A key tool FAA needs to effectively manage its costs is an accurate cost 

accounting system. As part of its cost accounting system, FAA is 

developing a labor distribution system, called Cru-X, which would account 

for and distribute its air traffic controller labor costs of about $3.1 billion 

annually to specific facilities and functions for FAA to better assess its 

workload and performance. However, Cru-X for FAA’s air traffic 

controllers omitted important internal controls related to controllers signing 

in and signing out for their work shifts and for recording time while not 

directing air traffic. As a result, the Cru-X system would provide no 

assurance that the time worked by air traffic controllers would be accurately 

recorded and properly paid. 

We brought the Cru-X deficiency to the attention of the new 

FAA Administrator and she directed that appropriate internal controls for 

recording of air traffic controllers’ time be incorporated into the Cru-X 

labor distribution system. FAA needs to identify specific action plans to 

implement the Administrator’s direction and provide milestones for starting 

and completing the corrective actions. 

Lastly, FAA needs to become proactive in taking actions to offset costs. 

For example, FAA needs to ensure that future agreements with its 
 FY 2002 Performance and Accountability Report 121 

workforces include quantified offsetting gains in productivity, and that 

managers use flexibilities of personnel reform judiciously in terms of 

employee salaries, bonuses, and awards. 

FAA also needs to take actions on existing opportunities that could help 

defray operating costs. For example, in our FY 2002 report on flight 

service stations, we reported that FAA could save at least $500 million over 

7 years by consolidating automated flight service stations in conjunction 

with deployment of new flight service software. In FY 2000, we reported 

that FAA could also save over $57 million annually by contracting out lowactivity visual flight rule towers that are still operated by the agency. 

Actions such as these offer an important opportunity to follow through on 

one of the President’s Management Agenda goals for strategic management 

of human capital. 

b. Reshaping Air Traffic Control (ATC) Into a Performance-Based 

Organization, in part by appointing a Chief Operating Officer and making 

meaningful use of the ATC Subcommittee, both of which were authorized 

by AIR-21 more than 2 years ago. The pending reauthorization of AIR-21 

also affords the Congress and FAA with an opportunity to consider 

additional tools to enable better, more economical acquisitions and 

personnel systems for the ATC system. One very important tool is the 

development and operation of a cost accounting system, as required by the 

1996 Reauthorization of FAA, and an effective labor distribution system. 

Without such financial systems, FAA cannot credibly claim to be, nor 

function as, a performance-based organization.

c. Re-Baselining Costs and/or Milestones for Modernization 

Projects That Will Cost Much More Than Anticipated or That 

Have Had Substantial Schedule Slips. FAA spends almost $3 billion 

annually on modernization projects designed to improve the National 

Airspace System. Progress has been made with some acquisitions, most 

notably Free Flight Phase 1, but several major efforts need senior 

management level attention over the next year. These projects include the 

Standard Terminal Automation Replacement System (STARS), Local Area 

Augmentation System (LAAS), and Integrated Terminal Weather System 

(ITWS). 

• STARS has a long history of cost overruns and schedule delays. The 

original STARS program estimate was $940 million. In March 2002, 

after the full program estimate rose to $1.69 billion, FAA reduced the 

approved program from 182 to 74 sites and reduced the estimated cost 

to $1.33 billion. Moreover, STARS is not FAA’s only terminal 
 FY 2002 Performance and Accountability Report 122 

modernization program. For example, while waiting for STARS, FAA 

also moved forward with a “bridge” program known as Common 

ARTS. Common ARTS provides the functions that STARS will 

eventually have after STARS development is complete. Common 

ARTS has now replaced aging systems at more than 140 facilities. In 

total, since 1996, FAA has spent more than $1 billion on terminal 

modernization programs. 

• LAAS is a new precision approach and landing system that is expected 

to boost airport arrival rates under all weather conditions. FAA 

intended to have LAAS (Category I) operational in 2004. It is now 

clear that this milestone cannot be met because of additional 

development work, evolving requirements, and unresolved issues 

regarding how the new system will be certified as safe for pilots to use. 

Moreover, the more demanding Category II/III service (planned for 

2005) is now a research and development effort with an uncertain end 

date. 

• ITWS provides air traffic managers with enhanced weather information 

that does not require meteorological interpretation. FAA planned to 

complete deployment of the new weather system in 2004 at a cost of 

about $286 million. However, production costs are three times more 

expensive than planned, and FAA cannot execute the program as 

planned. 

FAA needs to develop metrics to assess progress with major acquisitions, 

strengthen contract oversight, make greater use of Defense Contract Audit 

Agency audits, and institute cost control mechanisms for software-intensive 

contracts. With schedule slips and cost overruns in major acquisitions, it 

should be noted that FAA is not getting as much for its $3 billion annual 

investment as it originally expected. 

d. Addressing Future Capacity Issues. While there is still time to avoid 

a repeat of the gridlock conditions prevalent in the summer of 2000. FAA 

needs to be strategically positioned—through a combination of new 

runways, better air traffic management technology, and greater use of nonhub airports—for when the demand for air travel rebounds. FAA needs to 

continue to make major modifications to the Operational Evolution Plan 

(FAA’s blueprint for increasing capacity over the next 10 years) to address 

changes in schedule and funding requirements in key programs and clarify 

anticipated benefits. In addition, FAA needs to address the uncertainty 

regarding the airlines’ ability to purchase and install new technologies 

(estimated at $11 billion) called for in the Plan due to the decline in airline 

revenue since early 2001.
 FY 2002 Performance and Accountability Report 123 

It is generally accepted that new runways are the most effective way to 

increase capacity. In the 10 years prior to the FAA’s Operational Evolution 

Plan, six new runways had been completed, including new runways at 

Dallas and Phoenix. When the Operational Evolution Plan was first 

published in June 2001, it included provisions to add 15 new runways, but 

that was before September 11 and before the effects of the economic 

slowdown became more pronounced. Since then, a new runway has 

opened in Detroit, and a runway in Cleveland has been added to the 

Operational Evolution Plan. However, plans for a new runway in Charlotte 

and a second new runway in Dallas/Fort Worth Airports have been 

deferred. These runways are no longer in the Operational Evolution Plan. 

FAA’s Operational Evolution Plan tracks 12 runways still scheduled for 

completion in the next 10 years. During 2003, Denver, Houston, Miami, 

and Orlando Airports expect to complete runway projects. However, 

construction on several other runway projects has been delayed from 

3 months to 2 years. Given the challenges that airports are facing, it is 

incumbent on FAA to continue closely monitoring new runway projects. 

e. Achieving a Balance in the Use of Airport Improvement 

Program (AIP) Grants and Passenger Facility Charges (PFC) for 

Airport Security and Capacity Projects. In the past, these funds have 

been used in large part for projects that increased airport capacity, such as 

construction of new runways. However, new security requirements present 

the possibility that AIP and PFC funds may be used increasingly for 

security initiatives. To ensure that airport improvement projects continue 

to progress so that airports will be ready to meet increased capacity 

demands when air travel rebounds, Congress and the Department will need 

to strike a balance between security and capacity in the use of these 

two funding sources. 

For further information, the following reports can be seen on the 

management challenges page of the OIG web site, at 

http://www.oig.dot.gov/challenges: 

• FAA’s Fiscal Year 2003 Budget Request 

• Automated Flight Service Stations: Significant Benefits Could Be Realized 

by Consolidating AFSS Sites in Conjunction with Deployment of OASIS 

• FAA Air Traffic Services Planned Labor Distribution Reporting 

• Actions to Enhance Capacity and Reduce Delays and Cancellations 
 FY 2002 Performance and Accountability Report 124 

• Compensation Issues Concerning Air Traffic Managers, Supervisors, and 

Specialists 

• Actions to Improve Performance of the National Aviation System 

• FAA’s Actions to Expand the Controller-in-Charge Program 

• Technical Support Services Contract: Better Management Oversight and 

Sound Business Practices Are Needed 

• Contract Towers: Observations on FAA’s Study of Expanding the Program 

• Staffing: Supervisory Reductions Will Require Enhancements in FAA’s 

Controller-in-Charge Program 

• Personnel Reform: Recent Actions Represent Progress but Further Effort Is 

Needed to Achieve Comprehensive Change
 FY 2002 Performance and Accountability Report 125 

Figure 7. FHWA Historical Funding Levels 

($ in billions by fiscal year) 

$19.9

$23.2

$27.1

$27.0

$32.1

$32.3

$24.1

$0.0 $10.0 $20.0 $30.0 $40.0

1997

1998

1999

2000

2001

2002

2003

Requested

Actual

Clamping Down on Fraud, Obtaining Better Value in 

Highway and Bridge Investments, and 

Reauthorizing TEA-21 

Investments in highway infrastructure have a significant impact on achieving 

transportation goals to increase mobility, improve safety, and promote economic 

growth. TEA-21, the legislation that authorized highway investments, is 

scheduled to be reauthorized 

this year. A great deal of 

attention is also being 

focused on determining an 

appropriate level of highway 

funding this year. Figure 7 

shows historical Federal 

Highway Administration 

(FHWA) highway funding 

levels. Regardless of the 

level of funding authorized, 

our work reviewing 18 large 

highway and transit projects 

has identified a number of 

opportunities to get more 

from each dollar invested. 

Better value can be obtained by: 

a. Refocusing FHWA Oversight to Ensure That Major Projects Are 

Delivered Approximately On-Time and On-Budget. Key actions in 

this regard include: 

• freeing up FHWA oversight resources by delegating more responsibility 

to the States for contract-level actions, such as approving contract 

awards, change orders, and design modifications, and by strengthening 

FHWA’s program-level involvement and stewardship. 

• improving State management practices in areas such as preparing cost 

estimates, designing projects, processing contractor claims, and 

maintaining accountability over funds. 

5
 FY 2002 Performance and Accountability Report 126 

Figure 9. Judicial Results of 

Infrastructure Fraud—Recoveries 

($ in millions) 

$43

$7

$16

$0 $10 $20 $30 $40 $50

FY 1999

FY 2000

FY 2001

Figure 8. Judicial Results of Infrastructure 

Fraud—Convictions and Indictments 

12

12

45

27

39

26

In

0 10 20 30 40 50 dictments

Convictions

FY 2001

FY 2000

FY 1999

• using proven project management tools including project management 

plans, finance plans, reliable cost estimates, and integrated project 

schedules. 

• modernizing FHWA’s staffing structure to better meet oversight needs. 

FHWA needs to move from an engineering culture to a more multidisciplined workforce with the management, financial, environmental, 

program analysis, and engineering oversight skills necessary to review 

modern highway projects and programs. 

b. Promoting Efforts to Prevent, Detect, and Prosecute Fraud in 

the Federal-Aid Highway Programs. In the past 3 years, the OIG has 

seen increases in fraud case work and judicial actions involving highway 

and transit projects, 

with indictments 

tripling, convictions 

doubling, and 

monetary recoveries 

tripling from 

$15.8 million to 

$43.2 million (see 

Figures 8 and 9). 

Although our work 

does not suggest abuse 

on the scale that was 

experienced in the 

1950’s and 1960’s, the 

recent cases have involved some of the largest fraud schemes in the history 

of the Federal-aid highway program. 

These schemes have 

included bid rigging, 

bribery and kickbacks, 

false claims, and 

product substitution. 

We have also seen 

more scandals and 

fraud schemes, such as 

“front companies and 

pass throughs,” 

involving the 

Disadvantaged 

Business Enterprise 

program, which is 
 FY 2002 Performance and Accountability Report 127 

intended to promote minority participation in contracting on DOT-funded 

transportation infrastructure projects. To strengthen DOT’s ability to 

prevent, detect, and prosecute fraud, the Department should work with 

Congress and the States to: 

• strengthen debarment and suspension sanctions by (1) debarring 

contractors and subcontractors convicted of civil or criminal offenses 

involving fraud, (2) suspending contractors and subcontractors indicted 

for civil or criminal offenses involving fraud from bidding on new 

transportation contracts, and (3) explicitly considering contractors’ past 

performance and compliance with laws and regulations pertaining to 

fraud when awarding new contracts. 

• increase scrutiny of cost proposals, change orders, and claims from 

prime contractors and subcontractors to detect and deter fraud. 

• provide specialized training at the State level to enhance fraud 

prevention. 

• allow monetary recoveries from judgments in Federal criminal and civil 

highway/transit fraud cases to be returned to the affected State, and 

require those funds to be used exclusively for fraud prevention 

programs. 

For further information, the following reports can be seen on the 

management challenges page of the OIG web site, at 

http://www.oig.dot.gov/challenges: 

• Springfield Interchange Project 

• Improving the Delivery of Transportation Projects 

• FHWA Actions to Recover Excess Reserves from Central Artery Owner 

Controlled Insurance Program 

• Inspector General’s Remarks Before the 2nd National Conference on 

Highway Construction and Public Transportation Fraud 

• Management of Large Highway and Transit Projects 

• Report on the October 2001 Finance Plan for the Central Artery/Tunnel 

Project 

• Status of Issues Related to the Woodrow Wilson Bridge Corridor 

Reconstruction Project 
 FY 2002 Performance and Accountability Report 128 

• October 2000 Finance Plan for the Central Artery/Tunnel Project Boston, 

Massachusetts 

• Central Artery/Ted Williams Tunnel Project Highlights Need for Effective 

Federal Oversight (June 7, 2000) 

• Central Artery/Ted Williams Tunnel Project Highlights Need for Effective 

Federal Oversight (May 3, 2000) 

• Current Costs and Funding of the Central Artery/Ted Williams Tunnel 

Project 

• Report on the Baseline Reviews of Four Highway/Transit Mega Projects 
 FY 2002 Performance and Accountability Report 129 

Figure 10. Passenger Revenue and Ridership Growth Since 1992 

0

200

400

600

800

1000

1200

1400

1600

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Revenue ($ in millions)

18

18.5

19

19.5

20

20.5

21

21.5

22

22.5

23

23.5

24

Ridership (millions)

Revenue Ridership

Determining the Future of Intercity Passenger Rail 

In the summer of 2002, Amtrak, the country’s provider of intercity passenger rail 

service, lost access to the short-term credit market and threatened shutdown of its 

entire system. This crisis was averted when the Department arranged a loan of 

$100 million and Congress voted to provide an additional $205 million in 

supplemental appropriations. Amtrak’s authorization ended in December 2002 

and reauthorization will be debated in the coming months. 

 

In the short run, Amtrak is likely to require at least $1 billion in Federal grant 

support in 20034

 to preserve the current system and keep open all options for the 

Congress and the Administration in defining the future of passenger rail. 

Otherwise, we are likely to face the same threats of system shutdown and 

cessation of service as last year. To this point, insufficient alternative planning 

has been done for preserving commuter and some intercity services in such a 

scenario. We understand that Amtrak and the Department are working to develop 

such alternatives, and these efforts need to be brought to fruition at the earliest 

possible date. 

In 1997, Congress established a deadline of December 2002 for Amtrak to 

eliminate its need for Federal operating subsidies (Amtrak was assumed to need 

 

4

 Unless otherwise stated, all years are fiscal years based on Amtrak’s fiscal year of October 1 to September 

30, the same as the Federal fiscal year. 

6
 FY 2002 Performance and Accountability Report 130 

Figure 11. Growth in Amtrak’s Operating and Cash Losses 

1992 Through 2002 

712

833

930 916 944

762

1271 1258

763 808

731

506 525

578 554 523 514 525

579 561

770 681

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

($ in millions)

Operating Loss Cash Loss

continuing capital subsidies) and directed the Office of Inspector General to 

reassess Amtrak’s financial performance and needs each year. Although Amtrak 

has shown sustained growth in ridership and revenue over this period (see 

Figure 10), it has been less successful in reducing its losses. Not only has Amtrak 

not met its mandate for operating self-sufficiency, but it is farther from the selfsufficiency goal now than it was in 1997, as shown in Figure 11. 

It is evident that the current intercity passenger rail system cannot be run without 

both capital and operating subsidies. Amtrak projects that, over the next 25 years, 

it will need to invest about $30 billion in capital projects just to sustain the system 

as currently structured. Amtrak also projects that it will need between 

$550 million and $625 million each year to cover losses sustained from operating 

the current system. 

Amtrak continues to operate despite the fact that its current authorization has 

expired. It is now time for Congress, the Administration, Amtrak, and State and 

local stakeholders to decide on a sustainable intercity passenger rail system, 

determine Amtrak’s roles and responsibilities within that system, and develop a 

credible funding plan that invites Federal and State Government participation. 

Although Amtrak has operated the Nation’s intercity passenger rail service as an 

integrated system for the past 31 years, the discussion over its reauthorization will 
 FY 2002 Performance and Accountability Report 131 

undoubtedly consider other options. Recent proposals have included alternatives 

such as breaking the system into separate entities for operating trains and 

supplying infrastructure, or introducing competition by competitively bidding train 

operations. While its future is being determined, Amtrak must take more 

aggressive action to control expense growth (see Figure 12) and pay down longterm debt. 

Figure 12. Growth in Amtrak’s Expenses, 1992 Through 2002 

Amtrak is burdened with a heavy debt load and substantial principal and interest 

payments that must be satisfied in the coming years. Between 1997 and 2002, 

Amtrak’s total debt grew by $3.1 billion, from $1.7 billion to $4.8 billion, 

representing an overall increase of 178 percent (see Figure 13). Amtrak faces 

formidable challenges in meeting its rapidly growing debt service.

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

($ in millions)

Other 

Interest

Depreciation

Facility and

Office Related

Fuel, Power,

and Utilities

Train

Operations

Labor
 FY 2002 Performance and Accountability Report 132 

Figure 13. Amtrak’s Short-Term and Long-Term Debt and 

Capital Lease Obligations 

779

996 1,090

3,743

621 657 521

3,632

2,798

1,792

1,536

1,216

4,628

3,577

2,449

2,157

1,737

4,833

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

$5,500

1997 1998 1999 2000 2001 2002

($ in millions)

Short-Term Debt Long-Term Debt Total

For further information, the following reports can be seen on the 

management challenges page of the OIG web site, at 

http://www.oig.dot.gov/challenges: 

• Amtrak’s Financial Condition 

• Amtrak’s Performance, Budget, and Passenger Rail Service Issues 

• 2001 Assessment of Amtrak’s Financial Performance and Requirements 

• 2000 Assessment of Amtrak’s Financial Performance and Requirements 
 FY 2002 Performance and Accountability Report 133 

Figure 14. Commercial Vehicle 

Out-of-Service Rates 

44 % 41%

40% 37%

34%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1997 1998 1999 2000 2001

Fiscal Year

Ensuring Highway Safety as the Southern Border Is 

Opened to Mexican Motor Carriers Under NAFTA 

As Mexican trucks and buses begin to operate throughout the United States as 

provided in the North American Free Trade Agreement (NAFTA), the key to a 

successful oversight program will be effective use of safety inspection resources 

and implementation of procedures. This will require: 

a. Reevaluating Overall Resource Requirements for the 

U.S.-Mexico Border, including inspection staff and facility requirements, 

based on the amount of long-haul traffic that materializes. As of January 2, 

2003, the Federal Motor Carrier Safety Administration (FMCSA) has 

received 162 applications from Mexican carriers requesting long-haul 

authority. However, no one knows how many Mexican motor carriers will 

ultimately apply for and be granted authority to operate long-haul vehicles. 

As that traffic materializes, FMCSA will need to assess the adequacy of its 

inspection resources, including those beyond the border States.

b. Monitoring the Safety Performance of Mexican Motor Carriers 

and Drivers. FMCSA needs to implement motor carrier and driver 

monitoring systems and ensure that all Federal and State inspectors have 

access to current, 

accurate, and timely 

information on 

drivers, vehicles, and 

motor carriers. Our 

work has found that, 

as the number of 

inspections of 

Mexican commercial 

vehicles seeking to 

enter the U.S. 

commercial zones 

increased, the 

percentage of 

vehicles that had to 

be placed out of 

service for safety 

and other violations declined (from 44 percent in FY 1997 to 34 percent in 

FY 2001 as shown in Figure 14). The out-of-service rate for commercial 

7 
 FY 2002 Performance and Accountability Report 134 

vehicles inspected nationwide in the United States has been about 

24 percent since 2000. 

c. Placing Commercial Vehicles Out of Service in Any State Where 

They Operate Improperly. In August 2002, FMCSA issued a new rule 

that requires the States to place Mexican commercial vehicles out of service 

if they do not have U.S. operating authority. FMCSA needs to ensure that 

all States implement the new rule and have access to timely information to 

determine if Mexican commercial vehicles are operating improperly, such 

as whether they have been authorized to operate beyond the commercial 

zones. (Commercial zones at the U.S.-Mexico border generally extend 

from 3 to 20 miles north of U.S. border cities.)

For further information, the following reports can be seen on the 

management challenges page of the OIG web site, at 

http://www.oig.dot.gov/challenges: 

• Implementation of Commercial Motor Carrier Safety Requirements at the 

U.S.-Mexico Border 

• Implementation of Commercial Vehicle Safety Requirements at the 

U.S.-Mexico Border 

• Motor Carrier Safety at the U.S.-Mexico Border 

• Status of Implementing the North American Free Trade Agreement’s Cross 

Border Trucking Provisions 
 FY 2002 Performance and Accountability Report 135 

Strengthening Computer Security and Investment 

Controls for DOT’s Multi-Billion Dollar Information 

Technology Investment 

In support of the President’s Management Agenda to better and more fully use 

information technology (IT) in providing services to the public, DOT needs to 

strengthen computer security and IT investment controls on a Department-wide 

basis. This must be done with a view toward cost-effective system acquisitions 

and reducing system vulnerabilities to cyber attacks. DOT is responsible for one 

of the largest IT investment portfolios among civilian agencies. Excluding TSA 

and Coast Guard, DOT has an annual IT budget around $2.5 billion and invests 

2 to 3 percent of its IT budget in computer security, as shown in Figure 15. 

Figure 15. DOT Computer Security Funding as a Percentage 

of Total IT Investment (in millions) 

DOT reported its information security program as a material internal control 

weakness under the Federal Managers’ Financial Integrity Act last year, and the 

Congress recently gave DOT’s computer security an “F.” In the past year, there 

have been some noteworthy improvements such as adding intrusion detection 

systems and more sophisticated firewall security. Still, our work shows that 

further actions remain necessary, and DOT systems remain at risk. For example, 

hundreds of vulnerabilities were found on DOT web sites during FY 2002, as 

shown in Figure 16. These vulnerabilities were rated as high, medium, and low. 

They provided opportunities for attackers to gain unauthorized access to DOT 

computers. High vulnerabilities may provide an attacker with immediate access 

8 

02 03 04

2% 2% 3%

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

Fiscal Year

Total IT Funding

Computer Security

Funding

(Source: Exhibit 53--IT Portfolio)
 FY 2002 Performance and Accountability Report 136 

into a computer system by executing remote commands. Medium and low 

vulnerabilities may provide an attacker with useful information, such as password 

files, to compromise DOT computers. DOT immediately took corrective actions 

on the vulnerabilities we found. Also, starting in FY 2003, DOT is using a 

commercial scanning tool to check all web sites for potential vulnerabilities. 

Figure 16. Vulnerabilities Found on DOT Web Sites in FY 2002 

High, 79

Low, 91

Medium, 283

During the coming year, DOT should strengthen this important aspect of its 

infrastructure by: 

a. Appointing and Empowering a Chief Information Officer (CIO). 

This position, which has been vacant for the last 2 years in spite of the 

Department’s recruitment efforts, must be filled to provide strong 

leadership in this vital area. In addition, DOT needs to provide the CIO 

with the authority to carry out the intended mission and to hold the 

Operating Administrations accountable for following the CIO’s guidance. 

In the past, the Operating Administrations have not effectively 

implemented the guidance and have not been held accountable for doing so. 

b. Securing Network Entry Points and Infrastructure-Critical 

Assets. With extensive reliance on computers for critical, high-visibility 

functions such as controlling air traffic, DOT must properly control access 

to its own computer systems, and these systems must be adequately secured 

from intruders. A simple and effective management control is to 

periodically perform reviews to certify that major computer systems are 

adequately secured. However, DOT has made limited progress by having 
 FY 2002 Performance and Accountability Report 137 

Figure 17. Certification and Accreditation of 

Mission-Critical Systems (Excluding TSA & Coast Guard) 

152

132 132

46

66

0

20

40

60

80

100

120

140

160

September

2001

September

2002

September

2003

September

2004

December

2005

Date

Number of Mission Critical Systems

Completed

Planned

completed such reviews on only 112 of 528 mission-critical systems during 

FYs 2001 and 2002. DOT has to double the number of system certification 

reviews in the upcoming years in order to meet the Department’s goal of 

having all mission-critical systems certified for adequate security by 

December 2005, as shown in Figure 17. 

c. Increasing Departmental Oversight of IT Investments Through 

the Capital Planning Process. While DOT is responsible for one of 

the largest IT investments among civilian agencies, the departmental CIO 

has little oversight over these investments. Over 90 percent of 

IT investments are controlled by the Operating Administrations. In 2002, 

DOT issued new IT capital planning guidance that established a DOT 

Investment Review Board chaired by the Deputy Secretary with assistance 

from the CIO and other departmental senior officials to review major 

IT investment decisions. 

Establishing the Investment Review Board is a step in the right direction to 

implement this cultural change in DOT. However, to ensure that the Board 

could influence major IT investment decisions, DOT needs to take other 

initiatives such as obtaining explicit senior management support from the 

Operating Administrations, issuing clear guidance to identify investments 

for review, and developing a system to implement decisions issued by the 

Board. 
 FY 2002 Performance and Accountability Report 138 

For further information, the following reports can be seen on the 

management challenges page of the OIG web site, at 

http://www.oig.dot.gov/challenges: 

• Computer Security Challenges Within the Department of Transportation 

• DOT Web Security 

• DOT Information Security Program 

• Computer Security and Operational Stability of FAA Labor Distribution 

(Cru-X) System 

• DOT Consolidated Financial Statements for Fiscal Years 2001 and 2000 

• Replacement of FAA Telecommunications Systems 

• DOT Web Privacy 
 FY 2002 Performance and Accountability Report 139 

Continuing to Improve Transportation Security 

TSA efforts for 2002 mostly focused on addressing aviation security and meeting 

deadlines established in the Aviation and Transportation Security Act. TSA met 

the unprecedented challenge to hire and train a federalized workforce to screen all 

passengers and their carry-on baggage by November 19, 2002, and, for the most 

part, to deploy the necessary equipment and federalized workforce to meet the 

December 31, 2002 deadline to screen all checked baggage. At the same time, 

TSA significantly expanded the Federal Air Marshals program with more flights 

being guarded now than any time in history. 

However, TSA’s work is not done. Until TSA is transferred to the Department of 

Homeland Security in March 2003, DOT must continue to take the lead for the 

Government’s increased aviation security responsibilities, including completing 

deployment of explosives detection equipment to the remaining airports where 

alternate screening methods are employed, and developing plans for expanding 

security in all modes of transportation. After that, the primary responsibility will 

move with TSA to the new Department of Homeland Security. To solidify 

progress made thus far, TSA needs to: 

a. Train and Effectively Manage Airport Security Personnel. Since 

January 2002, TSA has hired and trained nearly 62,000 screeners 

responsible for screening passengers and their checked and carry-on 

baggage. The next challenge is ensuring that this large and in some cases 

inexperienced workforce retains and expands its skills and quickly becomes 

a world-class security force. However, before it begins expanding the 

screener skill set, TSA must first execute a screener performance 

measurement system in order to know where and how to best concentrate 

its training efforts. 

TSA could face a significant challenge in training the screening workforce, 

as it balances the training needed to expand the skills of the current 

workforce with the training needed for new hires. Also, more than 

45 percent of current TSA screeners were hired as “temporary” employees. 

TSA will either have to transition this staff into more permanent positions 

or replace them with new employees with additional training needs. In 

terms of overall numbers, Figure 18 depicts the composition of the 

TSA workforce. 

9
 FY 2002 Performance and Accountability Report 140 

Figure 18. TSA Workforce Composition

Other Positions* Human Resources

I.T.

Engineering

Program Analyst

Financial 

Administration Upper 

M anagement

Criminal 

Investigators

Training

Legal

Clerical Support

M isc. 

Administration

18 Other Job 

Categories

TSA Total Workforce

65,918**

Screeners 

61,974

Other 

3,944

*Source: TSA payroll 

data as of 12/28/02. 

Screeners

Temporary

28,037 Permanent 

33,937

**Source: TSA Human Resources 

as of 12/31/02. 
 FY 2002 Performance and Accountability Report 141 

b. Effectively Deploy Advanced Security Technologies at Airports 

Nationwide. Although TSA made every effort to meet the December 31 

deadline to screen all checked baggage using explosives detection 

equipment, deployment of the equipment was not completed at all the 

Nation’s commercial airports. At airports not completed, TSA exercises its 

authority to implement alternate screening methods. However, these 

alternate methods are only short-term, temporary solutions for screening 

checked baggage as TSA continues on with its deployment efforts.

To meet the deadline, an estimated 1,100 explosives detection systems 

(EDS) and 6,000 explosives trace detection machines are being deployed at 

airports nationwide. TSA executed a two-phase deployment approach. The 

initial phase is an interim solution for screening all checked baggage where 

some airports will use EDS, with trace machines used only for resolving 

alarms; others will use trace machines exclusively; and some will use a mix 

of EDS and trace machines to screen checked baggage. 

In phase two, at a future date not yet established, TSA will move the 

EDS machines into baggage systems at the largest airports. It is unclear 

how much this will cost and who will have to pay for it. TSA needs to 

ensure that equipment is properly integrated into airport baggage systems, 

and that it can be relied on to perform as expected. 

c. Control Costs for Security Spending. TSA faces significant 

challenges in providing effective security in a way that avoids waste of 

taxpayer dollars. TSA initially focused its resources on hiring and training 

a screening workforce and deploying sufficient EDS. This was an 

enormous undertaking requiring billions of dollars by an organization 

building from the ground up with no management infrastructure in place. 

TSA has made interim adjustments along the way to compensate for this 

lack of infrastructure, such as contracting with the Defense Contract 

Management Agency to administer the airport screener contracts. Now, 

TSA faces the challenge of building the infrastructure to monitor and 

control costs, especially given the large number and dollar volume of 

contracts it is managing, about $8.5 billion at the end of calendar year 2002 

and continuing to grow. There has also been growth on individual 

contracts. An example of a significant cost growth is the contract with 

NCS Pearson for hiring of screeners and human resources support from 

February to December 2002. The initial contract cost of $104 million grew 

to an estimated $700 million.

TSA has requested $5.3 billion for FY 2003, which consists of an original 

budget request of $4.8 billion, plus a budget amendment request of 

$546 million. These requirements are against projected revenues from the 
 FY 2002 Performance and Accountability Report 142 

security fee of $1.7 billion. Clearly, TSA will require a large infusion of 

cash from the General Fund at a time when the General Fund is already 

strained to pay for vastly increased fiscal needs throughout the Federal 

Government. Within this context, the need for TSA to build cost control 

mechanisms into its infrastructure is critical. Since TSA is expected to 

move to the Department of Homeland Security by March 1, 2003, controls 

are important now in terms of defining the scope of its missions, 

establishing employee compensation, controlling salaries, overseeing 

contracts, and utilizing space at airports. Once TSA moves to the 

Department of Homeland Security, it will have the opportunity to build 

upon existing infrastructure from other Operating Administrations within 

the new Department. 

Over the last few months, TSA has recognized the need for better contract 

administration and has implemented increased controls over some key 

contracts. In its 2002 Federal Managers’ Financial Integrity Act report to 

Congress and the President, DOT reported a material weakness in TSA’s 

administration of airport screener contracts. As we recommended, TSA 

hired the Defense Contract Management Agency to administer the airport 

screener contracts and also hired the Defense Contract Audit Agency to 

audit costs of the airport screener contracts, the NCS Pearson contract, and 

other major contracts. 

d. Strengthen Security in Transit, Rail, Motor Carrier, and Ships. 

Although much of the emphasis thus far has been on aviation security, TSA 

is also responsible for security for the Nation’s 3.9 million miles of public 

roads, 2.2 million miles of oil and natural gas pipelines, 120,000 miles of 

major railroads, 5,000 public use airports, 550 transit operators, and 

350 ports on the coasts and inland waterways. To strengthen the security of 

the transportation system, TSA needs to develop meaningful risk 

assessments that recognize known as well as evolving threat scenarios and 

target limited resources to the areas of greatest vulnerability, as well as 

develop an integrated strategic plan to prioritize funding needs. DOT and 

TSA need to finalize Memorandums of Agreement between TSA and DOT 

Operating Administrations outlining their respective security roles and 

responsibilities.

For further information, the following reports can be seen on the 

management challenges page of the OIG web site, at 

http://www.oig.dot.gov/challenges: 

• Progress in Implementing Provisions of the Aviation and Transportation 

Security Act 
 FY 2002 Performance and Accountability Report 143 

• Key Challenges Facing the Transportation Security Administration 

• Key Budget Issues Facing the Transportation Security Administration 

• Key Issues Concerning Implementation of the Aviation and Transportation 

Security Act 
 FY 2002 Performance and Accountability Report 144 

Meeting Coast Guard’s Safety and Security Missions 

In the aftermath of September 11, homeland and national security was elevated to 

be commensurate with Coast Guard’s highest operational priority, its search and 

rescue mission. In the coming year, the Coast Guard must decide how it can best 

meet its continuing missions. At the same time, the Coast Guard is also 

embarking on a capital acquisition—the Deepwater Capability Replacement 

Project—that is monumental in scope and central to accomplishing all of its 

missions. As this acquisition was planned prior to September 11, the Coast Guard 

needs to update the requirements for this project in light of its enhanced security 

responsibilities, and because it could potentially impact other Coast Guard 

missions and other planned capital investments. In the coming year, Coast Guard 

needs to:

a. Find the Correct Balance Between the Newly Elevated Security 

Mission, the Search and Rescue Mission, and Its Other 

Traditional Core Missions. Immediately after the September 11 

terrorist attacks, Coast Guard redeployed 58 percent of its resources to the 

security of the Nation’s ports, waterways, and coastal areas. While the 

immediate redeployment demonstrated Coast Guard’s flexibility and multimission capabilities in meeting urgent national priorities, it diverted 

substantial resources from other traditional core missions such as marine 

environmental protection, fisheries enforcement, aids to navigation, and 

illegal migrant interdiction. Coast Guard has since redistributed its 

resources to provide a better balance among its various missions and has 

indicated that in FY 2003 it will maintain this balance by devoting 

27 percent of its resources to its security mission. The Homeland Security 

Act requires Coast Guard to ensure there are no substantial reductions in its 

missions or capability to perform them. 

b. Stabilize Requirements for the Deepwater System Procurement 

and Develop a Realistic and Affordable Capital Investment Plan. 

The Coast Guard is implementing the largest acquisition project in its 

history—the Integrated Deepwater System Project—to replace or 

modernize its deepwater ships and aircraft used in homeland and national 

security, search and rescue, drug interdiction, the interception of illegal 

immigrants, fisheries regulation, defense operations, and other at-sea 

operations. 

Complicating this procurement is the fact that the $17 billion Deepwater 

system was planned prior to September 11. However, significant changes 

10
 FY 2002 Performance and Accountability Report 145 

in Coast Guard’s mission requirements since that time will require Coast 

Guard to reevaluate certain aspects of the Deepwater project. For example, 

Coast Guard is considering arming more of its helicopters and adding more 

secure information handling capabilities. Despite this, no changes were 

made to project requirements before the contract was awarded in June 

2002. Coast Guard is also exploring an acceleration of the Deepwater 

project in response to the Homeland Security Act that could increase annual 

capital funding requirements. It is unclear the extent to which the Coast 

Guard’s enhanced security role will affect the procurement’s timetable and 

budget requirements. 

The Coast Guard needs to update and stabilize its requirements for the 

Deepwater project. This is especially important because the project’s cost 

growth could consume more funding. Even at the current annual level of 

$500 million, Deepwater consumes the vast majority of the Coast Guard’s 

projected capital budget. Coast Guard must also fund the modernization of 

the National Distress and Response System (NDS—the 911 system for 

mariners in distress); replacement of Coast Guard’s utility boat and buoy 

tender fleet; preservation of Great Lakes and polar ice breaking capability; 

modernization of aids to navigation; and rehabilitation of aged buildings, 

piers, and other shore facilities (see Figure 19). 

To preserve the overall integrity of its capital plan, the Coast Guard needs 

to make some tough decisions now before further proceeding with the 

Deepwater procurement. 

Figure 19. Five Year Capital Investment Plan 

(millions of dollars, budget year dollars) 

Project FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 

Deepwater $500 $550 $562 $574 $606 

NDS $90 $134 $137 $74 $0 

Other* $146 $68 $70 $138 $198 

Total $736 $752 $769 $786 $804 

* Such as rehabilitating shore facilities and replacing small boats used for search and rescue. 
 FY 2002 Performance and Accountability Report 146 

For further information, the following reports can be seen on the 

management challenges page of the OIG web site, at 

http://www.oig.dot.gov/challenges: 

• U.S. Coast Guard Budget and Management Issues (March 19, 2002) 

• U.S. Coast Guard Budget and Management Issues (February 14, 2002) 

• Planning Process for the National Distress and Response System 

Modernization Program 

• Coast Guard Small Boat Station Search and Rescue Program 

• U.S. Coast Guard Fiscal Year 2002 Budget Request for Modernization 

In addition to being published as an OIG report, this year’s report will, by law, be 

incorporated into DOT’s Accountability Report, which will be delivered to 

Congress and the Office of Management and Budget in January 2003 and is 

designed to provide a comprehensive overview of the Department’s performance 

and financial status. 

If you have any questions concerning this report, please call me at (202) 366-1959; 

Todd J. Zinser, my Deputy, at (202) 366-6767; or Alexis M. Stefani, Principal 

Assistant Inspector General for Auditing and Evaluation, at (202) 366-1992. 

# 
 FY 2002 Performance and Accountability Report 147 

Exhibit. Comparison of 2003 and 2002 OIG Top Management Challenges Lists 

Items in 2003 List Related Items in 2002 list 

Accomplishing DOT’s Core Missions of Safety 

and Mobility During and After an Effective 

Transition of TSA and Coast Guard 

None 

Reducing Fatalities and Injuries on Our 

Highways, Emphasizing Seat Belt Law 

Enforcement 

Implementing TREAD Act Provisions to Improve 

Detection of Motor Vehicle Safety Defects and 

Identifying Strategies to Achieve Goals for 

Increasing Seat Belt Use 

Reducing the Risk of Aviation Accidents Due to 

Operational Errors and Runway Incursions 

Reversing FAA’s Spiraling Operating Costs, 

Improving Aviation System Capacity, and 

Reauthorizing AIR-21 

Following Through on Aviation Safety, Capacity, 

and Modernization Efforts in a Post 9/11 World 

None Implementing the Airline Stabilization Act and 

Addressing Changes in the Competitive Structure 

of Air Services, Including Service to Small and 

Medium-Sized Communities 

Clamping Down on Fraud, Obtaining Better 

Value in Highway and Bridge Investments, and 

Reauthorizing TEA-21 

Substantially Strengthening Oversight of Federal 

Highway and Transit Funds to Ensure Funds Are 

Used Effectively and Efficiently and Are 

Protected From Fraud, Waste, and Abuse 

Determining the Future of Intercity Passenger 

Rail 

Deciding the Appropriate Structure and Funding 

of Intercity Passenger Rail Service, Including the 

Future of Amtrak 

Ensuring Highway Safety as the Southern Border 

Is Opened to Mexican Motor Carriers Under 

NAFTA 

Ensuring Motor Carrier Safety at the 

U.S.-Mexico Border and Improving Oversight of 

the Commercial Drivers License Program 

Strengthening Computer Security and Investment 

Controls for DOT’s Multi-Billion Dollar 

Information Technology Investment 

Addressing Department-wide Management 

Practices and Managing Program Performance 

(Presidential Management Initiatives; Computer 

Security; Contract Oversight; New Financial 

Systems; Government Performance and Results 

Act; and the Transportation Administrative 

Service Center) 

Continuing to Improve Transportation Security Strengthening Transportation Security and 

Establishing the Transportation Security Agency 

Meeting Coast Guard’s Safety and Security 

Missions 

Stabilizing Coast Guard’s Missions and Budget 

Requirements in Light of Post 9/11 Priorities 

None Improving Performance in Maritime 

Administration’s Title XI Loan and Ship 

Scrapping Programs 
 FY 2002 Performance and Accountability Report 148 
 FY 2002 Performance and Accountability Report 149 

EXHIBIT 

PERFORMANCE MEASURE COMPLETENESS AND RELIABILITY 

(DETAIL) 

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 Statistical Issues statement has comments, provided by the Bureau of Transportation 

Statistics (BTS) and the agency in charge of the measure, that discuss variability of the measure and other points. The 

Completeness statement indicates steps taken by the proprietary agencies to address data quality issues. 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, please refer to the BTS S&A compendium 

available at www.bts.gov/statpol/SAcompendium.html. 

Tables detailing performance measure scope, statistical issues, data completeness, and performance measure 

reliability can be found on the DOT website, where the DOT FY 2002 Performance and Accountability Report 

will be published: www.dot.gov 
 FY 2002 Performance and Accountability Report 150 
 FY 2002 Performance and Accountability Report 151 

ACRONYMS

AASHTO - American Association of State Highway 

and Transportation Officials 

AC - Advisory Circular 

ADA - Americans with Disabilities Act 

ADHS - Appalachian Development Highway System 

ADS-B - Automated Dependent Surveillance 

Broadcast 

AIM - Activation Information Management 

AIP - Airport Improvement Program 

AIR-21 - Wendell H. Ford Aviation Investment and 

Reform Act for the 

21st Century 

AMASS - Airport Movement Area Safety System 

ANCA - Airport Noise and Capacity Act 

AOPA - Aircraft Owners and Pilots Association 

APF - Afloat Preposition Force 

API - American Petroleum Institute 

APTA - American Public Transportation Association 

ARC - Appalachian Regional Commission 

ARSR-4 - Air Route Surveillance Radar 

ARTCC - Air Route Traffic Control Center 

ASAP - Aviation Safety Action Program 

ASDE-X - Airport Surface Detection Equipment 

ATC - Air Traffic Control 

ATCSCC - Air Traffic Control System Command 

Center 

ATIP – Automated Track Inspection Program 

ATOS – Air Transportation Oversight System 

AVP - Advanced Vehicle Technologies Program 

BAC - Blood Alcohol Concentration 

BARD - Boating Accident Report Database 

BRR - Bridge Replacement and Rehabilitation 

BTS - Bureau of Transportation Statistics 

CAEP - Committee on Aviation Environmental 

Protection 

CAFE - Corporate Average Fuel Economy 

CBT - Computer Based Training 

CCF - Capital Construction Fund Program 

CDM - Collaborative Decision Making 

CDS - Construction-differential Subsidy 

CGA – Common Ground Alliance 

CHRIS – Corporate Human Resources Information 

System 

CMAQ - Congestion Mitigation and Air Quality 

Improvement Act 

CMC – Crisis Management Center 

COOP - Continuity of Operations 

COTS – Commercial-off-the-shelf 

CSI - Customer Satisfaction Index 

CSXT – CSX Transportation 

CUSEC - Central U.S. Earthquake Consortium 

CVISN – Commercial Vehicle Information Systems 

and Networks 

CY - Calendar Year 

DAFIS – Departmental Accounting and Financial 

Information System 

DAMIS - Drug and Alcohol Management 

Information Statistics 

DARPA - Department of Defense's Advanced 

Research Projects Administration 

DGPS - Differential Global Positioning System 

DIY – Do It Yourself 

DME - Dakota, Minnesota and Eastern Railroad 

DMS – Docket Management System 

DOD - Department of Defense 

DOI - Department of Interior 

DOT - Department of Transportation 

DP - Departure Procedures 

DRC - Day Reporting Center 

DSR - Display System Replacements 

DWI - Driving While Intoxicated 

EAS - Essential Air Service 

EDS – Explosive Detection Systems 

EHRIS – Enterprise Human Resources Information 

System 

EPA - Environmental Protection Agency 

ETD – Explosives Trace Detection 

FAA - Federal Aviation Administration 

FACTS - Federal Agencies' Centralized TrialBalance System 

FAH - Federal-Aid Highway Program 

FFP1 - Free Flight Phase 1 

FFP2 - Free Flight Phase 2 

FHMRs - Federal Hazardous Materials Regulations 

FHWA - Federal Highway Administration 

FLHP - Federal Lands Highway Program 

FMCSA - Federal Motor Carrier Safety 

Administration 

FMCSRs - Federal Motor Carrier Safety Regulations 

FMS – Financial Statements Module 

FMVSS - Federal Motor Vehicle Safety Standard 

FOQA – Flight Operational Quality Assurance 

FRA - Federal Railroad Administration 

FTA - Federal Transit Administration 

FY - Fiscal Year 

GA - General Aviation 

GAMA - General Aviation Manufacturers 

Association 

GAO - General Accounting Office 

GPRA - Government Performance and Results Act 

GPS - Global Positioning System 

GT - Gross Tons 
 FY 2002 Performance and Accountability Report 152 

HAZMAT - Hazardous Materials 

HEPA – High Efficiency Particulate Arresting 

HMIS - Hazardous Materials Information System 

HMPE - Hazardous Materials Program Evaluation 

HMR - Hazardous Materials Regulations 

HR - Human Resources 

HTF - Highway Trust Fund 

IC - Interstate Construction 

ICAO - International Civil Aviation Organization 

ICC - Interstate Commerce Commission 

ICCTA - Interstate Commerce Commission 

Termination Act of 1995 

IG - Inspector General 

IHMP – Intermodal Hazardous Materials Program 

ISTEA - Intermodal Surface Transportation 

Efficiency Act of 1991 

ITOP - Information Technology Omnibus 

Procurement 

IT - Information Technology 

ITS - Intelligent Transportation Systems 

IVHS - Intelligent Vehicle/Highway System 

IVI – Intelligent Vehicle Initiative 

JARC - Job Access and Research Commute 

LAHSO – Land and Hold Short Operations 

LDR – Labor Distribution Reporting 

LORAN - Long Range Aid to Navigation 

MARAD - Maritime Administration 

MARITECH - Maritime Technology 

MSC - Military Sealift Command 

MCSAP – Motor Carrier Safety Assistance Program 

MSP - Maritime Security Program 

MTA - Mass Transit Account 

MTMC - Military Traffic Management Command 

MTS - Marine Transportation System 

NAFTA - North America Free Trade Agreement 

NAPT - National Association of Pupil Transportation 

NAS - National Airspace System 

NASS - National Accident Sampling System 

NBI - National Bridge Institute 

NCAP – New Car Assessment Program 

NDR - National Driver Register 

NDRF - National Defense Reserve Fleet 

NDRS - National Distress and Response System 

NEC - Northeast Corridor 

NEMA - National Emergency Management 

Association 

NHS - National Highway System 

NHTSA - National Highway Traffic Safety 

Administration 

NOCC - National Operations Control Center 

NOPUS - National Occupant Protection Use Survey 

NPIAS - National Plan of Integrated Airport Systems 

NPMS – National Pipeline Mapping System 

NPRG - National Partnership for Reinventing 

Government 

NRP - North American Route Program 

NSTC - National Science and Technology Council 

NSVI – Nighttime, Single Vehicle Injury 

OA - Operating Administration 

ODS - Operating Differential Subsidy 

OET - Office of Emergency Transportation 

OFD - Ocean Freight Differential Program 

OHMS - Office of Hazardous Materials Safety 

OIG - Office of Inspector General 

OLI - Operation Lifesaver, Inc. 

OMB - Office of Management and Budget 

OPDS - Offshore Petroleum Discharge System 

OPM - Office of Personnel Management 

OPS - Office of Pipeline Safety 

PFAST - Passive Final Approach Spacing Tool 

PFC - Passenger Facility Charge Program 

PM-10 – Particulate Matter 

PRISM - Performance Registration and Information 

Systems Management 

PTC - Positive Train Control 

PWC – Personal Watercraft 

QAR – Quality Assurance Review 

RBS - Recreational Boating Safety Program 

R&D - Research and Development 

R,E&D - Research, Engineering and Development 

RIAT - Runway Incursion Action Team 

RLV - Reusable Launch Vehicles 

ROS - Reduced Operating Status 

RRIF - Railroad Rehabilitation and Improvement 

Financing Program 

RRF - Ready Reserve Force 

RSAC - Railroad Safety Advisory Committee 

RSPA - Research and Special Programs 

Administration 

SACP - Safety Assurance and Compliance Program 

SADD - Students Against Destructive Decisions 

SAR - Search and Rescue 

SBU - Strategic Business Units 

SLSDC - Saint Lawrence Seaway Development 

Corporation 

SMA - Surface Movement Advisor 

SOFA – Switching Operations Fatality Analysis 

SPAS – Safety Performance Analysis Systems 

STAR - Standard Terminal Arrival Route 

STARS - Standard Terminal Automation 

Replacement System 

STB - Surface Transportation Board 

STP - Surface Transportation Program 

SUP – Suspected Unapproved Parts 

TASC - Transportation Administrative Service 

Center 

TEA-21 - Transportation Equity Act for the 21st

Century 

TEU - Twenty-foot Equivalent Units 

TIFIA - Transportation Infrastructure Finance and 

Innovation Act 

TIP - Threat Image Projection 
 FY 2002 Performance and Accountability Report 153 

TMA - Traffic Management Advisor 

TPR - Transit Planning and Research 

TREAD – Transportation Recall Enhancement, 

Accountability, and Documentation 

TEServ – Travel Expense Service 

TSI - Transportation Safety Institute 

TTI (D) - Thoracic Trauma Index as Measured on an 

Anthropomorphic dummy 

TVU – Transportation Virtual University 

URET - User Request Evaluation Tool 

UTC - University Transportation Centers 

U.S. - United States 

USCG - United States Coast Guard 

USDA – United States Department of Agriculture 

VANTIS - Value Added Niche Information 

Technology Services 

VCA - Voluntary Compliance Agreement 

VISA - Voluntary Intermodal Sealift Agreement 

VMT - Vehicle-Miles-Traveled 

VRE - Virginia Railway Express 

WMATA - Washington Metropolitan Area Transit 

Authority 

WMDs – Weapons of Mass Destruction 

WRIF - War Risk Insurance Fund Program 
 FY 2002 Performance and Accountability Report 154 

ACKNOWLEDGEMENTS 

We would like to recognize the following people among many, for their contribution to the FY 2002 

Performance and Accountability Report. In particular, we acknowledge the efforts of Kristine Leiphart and 

James McEntire as principal writers, and Christine Kent as the principal analyst for the financial 

statements. 

Susan Abrams 

Bonnie Angermann-Stucker 

Lynn Ashe 

Gayle Baker 

Tami Bernhardt 

Brian Bezio 

Judy Blackwell 

Thomas Bruneel 

Jeffrey Bobich 

Mary Capel 

Jerry Clapham 

Kristin Clarke 

Angelia Collier 

Carla Contee 

Thomas Criman 

Mary Dickerson 

Jane Dion 

Sheldon Edner 

Barbara Ferrell 

Robert Fisher 

Daniel Flaherty 

Janet Forsgren 

Mark Glyptis 

Myron Goldstein 

Sue Halladay 

Andrew Halvorson 

Robert Hayden 

Earl Hedges 

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. 

Ellen Heup 

Deborah Hinz 

Nancy Horkan 

Larry Howard 

Laurie Howard 

Lana Hurdle 

Tony Jacobik 

Aesun Johnson 

Andrew Julian 

David Lippold 

Steve Litty 

James Lunetta 

Chuck Kahane 

Shane Karr 

Christine Kent 

Andrew Kleine 

Carene Krepinevich 

James Lampert 

Kristine Leiphart 

Susan Lee 

Terrence Letko 

Sue Lewis 

Diana Loper 

Tyrone Lumpkins 

Ray Lynch 

Kathy Marrs 

James McEntire 

Kenneth Mead 

John Meche 

Suzanne Murrin 

David Napoliello 

Larry Neff 

Kevin O’Brien 

Keven O’Malley 

Tom Park 

Ron Poulsen 

Robert Proferes 

Brian Riley 

Mari Santangelo 

Lisa Schauer 

Phyllis Scheinberg 

Steve W. Smith 

DJ Stadtler 

Woody Stanley 

Eric Stultz 

David Tochen 

Gilbert Tran 

Orelious Walker 

Jerome Wallace 

Janice Weaver 

Elaine Wheeler 

George Whitney 

Eva Williams 

Tom Wise 

John Yonaitis 

Laura Ziff 
 

FY 2002 Performance and Accountability Report 155

U.S. Department of Transportation

Consolidated Balance Sheet

As of September 30, 2002

(Dollars in Thousands)

FY 2001

FY 2002 DOT Total

Assets (Note 2) DOT Total As Restated

Intragovernmental:

Fund Balance with Treasury (Note 3) 29,968,650 $ 26,107,269 $ 

Investments (Note 4) 31,338,570 39,198,357 

Accounts Receivable, Net (Note 5) 612,172 688,221 

Other Assets (Note 6) 91,564 147,419 

Total Intragovernmental Assets: 62,010,956 66,141,266

Cash and Other Monetary Assets (Note 7) 25,208 48,662 

Investments (Note 4) 27 27 

Accounts Receivable, Net (Note 5) 330,441 159,901 

Loans Receivable and Related

Foreclosed Property, Net (Note 8) 1,205,244 918,087 

Inventory and Related Property, Net (Note 9) 1,957,935 2,491,834 

General Property, Plant and Equipment, Net (Note 10) 18,522,444 16,805,849 

Other Assets (Note 6) 411,542 194,773 

Total Assets $ 86,760,399 84,463,797 $ 

Liabilities (Note 11)

Intragovernmental:

Accounts Payable 108,870 $ 179,496 $ 

Debt (Note 12) 1,157,090 901,293 

Other Intragovernmental Liabilities (Note 13) 1,149,953 1,132,826 

Total Intragovernmental Liabilities: 2,415,913 2,213,615 

Accounts Payable 2,361,655 3,528,850 

Loan Guarantees (Note 8) 384,288 400,363 

Federal Employee and Veterans' 

 Benefits Payable (Note 14) 30,138,868 28,790,360 

Environmental and Disposal Liabilities (Note 15) 1,041,322 1,010,053 

Other Liabilities (Notes 13, 16 & 17) 5,885,366 3,907,674 

Total Liabilities $ 39,850,915 42,227,412 $ 

Commitments and Contingencies (Note 17)

Net Position 

Unexpended Appropriations 14,076,956 $ 13,152,581 $ 

Cumulative Results of Operations 28,159,429 33,756,903 

Total Net Position 42,236,385 46,909,484 

Total Liabilities and Net Position $ 86,760,399 84,463,797 $ 
 

FY 2002 Performance and Accountability Report 156

U.S. Department of Transportation

Consolidated Statement of Net Cost

For the Year Ended September 30, 2002

(Dollars in Thousands)

FY 2001

FY 2002 DOT Total

Program Costs (Notes 18 & 19) DOT Total As Restated

Surface Transportation:

Intragovernmental Gross Costs 231,694 $ 

Less: Intragovernmental Earned Revenue 88,972 

Intragovernmental Net Costs 142,722 

Gross Costs with the Public 39,760,081 

Less: Earned Revenues from the Public 320,738 

Net Costs with the Public 39,439,343 

Total Net Cost 39,582,065 $ 36,072,271 $ 

Air Transportation:

Intragovernmental Gross Costs 1,475,002 $ 

Less: Intragovernmental Earned Revenue 99,063 

Intragovernmental Net Costs 1,375,939 

Gross Costs with the Public 13,556,439 

Less: Earned Revenues from the Public 1,671,716 

Net Costs with the Public 11,884,723 

Total Net Cost 13,260,662 $ 10,673,315 $ 

Maritime Transportation:

Intragovernmental Gross Costs 1,654,898 $ 

Less: Intragovernmental Earned Revenue 538,142 

Intragovernmental Net Costs 1,116,756 

Gross Costs with the Public 6,109,969 

Less: Earned Revenues from the Public 29,620 

Net Costs with the Public 6,080,349 

Total Net Cost 7,197,105 $ 12,756,673 $ 

Cross-Cutting Programs:

Intragovernmental Gross Costs 124,619 $ 

Less: Intragovernmental Earned Revenue 361,614 

Intragovernmental Net Costs (236,995) 

Gross Costs with the Public 341,798 

Less: Earned Revenues from the Public 2,386 

Net Costs with the Public 339,412 

Total Net Cost 102,417 $ 3,284 $ 

Costs Not Assigned to Programs $ 2,583,535 2,451,881 $ 

Less Earned Revenues Not

 Attributed to Programs 195,892 6,304 

Net Cost of Operations $ 61,893,186 62,587,826 $ 
 

FY 2002 Performance and Accountability Report 157

U.S. Department of Transportation

Consolidated Statement of Changes in Net Position

For the Year Ended September 30, 2002

(Dollars in Thousands)

FY 2002 FY 2002

Cumulative Results Unexpended

of Operations Appropriations 

Beginning Balances 32,198,417 $ 13,042,782 $ 

Prior Period Adjustments (+/-) 1,389,360 11 

Beginning Balances, As Adjusted 33,587,777 13,042,793 

Budgetary Financing Sources:

 Appropriations Received 16,862,323 

 Appropriations Transferred-In/Out (+/-) 500,688 

 Other Adjustments (Rescissions, etc.) (+/-) 15,472 (1,293,362) 

 Appropriations Used 14,496,269 (15,035,486) 

 Non-Exchange Revenue 41,895,048 

 Donations/Forfeitures of Cash/Cash Equivalents 744 

 Transfers-In/Out Without Reimbursement (+/-) (238,801) 

 Other Budgetary Financing Sources 327,178 

Other Financing Sources:

 Donations and Forfeitures of Property 11,944 

 Transfers-In/Out Without Reimbursement (+/-) 56,148 

 Imputed Financing From Costs Absorbed by Others 582,158 

 Other (+/-) 13,318 

 Total Financing Sources 57,159,478 1,034,163 

Net Cost of Operations (+/-) 62,587,826 

Ending Balances 28,159,429 $ 14,076,956 $ 
 

FY 2002 Performance and Accountability Report 158

U.S. Department of Transportation

Combined Statement of Budgetary Resources

For the Year Ended September 30, 2002

(Dollars in Thousands)

FY 2002 DOT Total 

FY 2002 DOT Total Non-Budgetary

Budgetary Resources (Note 20): Budgetary Financing Accounts

 Budget Authority:

 Appropriations Received 67,123,839 $ - $ 

 Borrowing Authority 217,473 1,328,108 

 Contract Authority 44,374,187 - 

 Net Transfers (1,005,604) - 

 Other - - 

 Unobligated Balance:

 Beginning of Period 75,693,442 7,785 

 Net Transfers, Actual 1,487,584 - 

Spending Authority From Offsetting Collections:

 Earned

 Collected 4,359,356 34,003 

 Receivable from Federal Sources 192,189 25,552 

 Change in Unfilled Customer Orders

 Advance Received (79,577) - 

 Without Advance from Federal Sources 92,585 - 

 Transfers from Trust Funds 6,712,993 106 

 Subtotal 11,277,546 $ 59,661 $ 

Recoveries of Prior Year Obligations 577,097 24,000 

Temporarily Not Available Pursuant to Public Law (55,841,363) - 

Permanently Not Available (39,622,897) (609,188) 

Total Budgetary Resources 104,281,304 $ 810,366 $ 
 

FY 2002 Performance and Accountability Report 159

Combined Statement of Budgetary Resources

For the Year Ended September 30, 2002

(Dollars in Thousands)

FY 2002 DOT Total 

FY 2002 DOT Total Non-Budgetary

Status of Budgetary Resources: Budgetary Financing Accounts

Obligations Incurred 

 Direct 77,806,931 $ 809,850 $ 

 Reimbursable 2,467,059 - 

 Subtotal 80,273,990 $ 809,850 $ 

Unobligated Balance:

 Apportioned 13,232,195 - 

 Exempt from Apportionment 9,799,655 -

 Other Available 32,899 -

Unobligated Balance Not Available 942,565 516 

Total Status of Budgetary Resources 104,281,304 $ 810,366 $ 

Relationship of Obligations to Outlays:

Obligated Balance, Net, Beginning of Period 61,552,427 $ 2,956,058 $ 

Obligated Balance Transferred, Net (+/-) - - 

Obligated Balance, Net, End of Period: 

 Accounts Receivable (687,120) (194,181) 

 Unfilled Customer Orders from Federal Sources (683,124) - 

 Undelivered Orders 62,474,904 3,521,561 

 Accounts Payable 7,187,105 3,450 

Outlays:

 Disbursements 78,462,208 238,678 

 Collections (16,782,216) (27,355) 

 Subtotal 61,679,992 $ 211,323 $ 

Less: Offsetting Receipts 659,765 6,754 

Net Outlays 61,020,227 $ 204,569 $ 
 

FY 2002 Performance and Accountability Report 160

U.S. Department of Transportation

Consolidated Statement of Financing 

For the Year Ended September 30, 2002

(Dollars in Thousands)

FY 2002 

Resources Used to Finance Activities: DOT Total 

Budgetary Resources Obligated:

 Obligations Incurred 81,083,840 $ 

 Less: Spending Authority From Offsetting

 Collections and Recoveries 11,938,304 

 Obligations Net of Offsetting Collections and Recoveries 69,145,536 $ 

 Less: Offsetting Receipts 666,519 

 Net Obligations 68,479,017 $ 

Other Resources:

 Donations and Forfeitures of Property 11,944 $ 

 Transfers In/Out Without Reimbursement 56,148 

 Imputed Financing from Costs Absorbed by Others 582,158 

 Other:

 Other VNTSC Resources 12,694 

 Other Transit Resources 684 

 Other Miscellaneous Resources (60)

Net Other Resources Used to Finance Activities 663,568 $ 

Total Resources Used to Finance Activities $ 69,142,585

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 6,330,766 $ 

Resources that Fund Expenses Recognized in Prior Periods 587,833 

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 (323,017) 

 Other (136,850)

Resources That Finance the Acquisition of Assets 3,134,564 

Other Resources or Adjustments to Net Obligated Resources

 That Do Not Affect Net Cost of Operations 524,700 

Total Resources Used to Finance Items Not Part

 of the Net Cost of Operations 10,117,996 $ 

Total Resources Used to Finance

 the Net Cost of Operations $ 59,024,589
 

FY 2002 Performance and Accountability Report 161

U.S. Department of Transportation

Consolidated Statement of Financing 

For the Year Ended September 30, 2002

(Dollars in Thousands)

FY 2002 

Components of the Net Cost of Operations That Will Not DOT Total 

 Require or Generate Resources in the Current Period:

Components Requiring/Generating Res. in Future Periods:

Increase in Annual Leave Liability 206,294 $ 

Increase in Environmental and Disposal Liability 372,500 

Upward/Downward Reestimates of Credit Subsidy Expense (103,158) 

Increase in Exchange Revenue Receivable from the Public (134,559) 

Other:

 Increase in Coast Guard Liabilities 1,594,002 

 Increase in FAA Liabilities 135,571 

 Other Miscellaneous Increases 41,241 

Total Components of Net Cost of Operations That Will

 Require or Generate Resources in Future Periods 2,111,891 $ 

Components Not Requiring or Generating Resources:

Depreciation and Amortization 1,207,738 $ 

Revaluation of Assets or Liabilities 108,671 

Other:

 Other TASC Components 125,088 

 Other FAA Components 16,883 

 Other Miscellaneous Components (7,034) 

Total Components of Net Cost of Operations That Will

 Not Require or Generate Resources 1,451,346 $ 

Total Components of Net Cost of Operations That Will Not

 Require or Generate Resources in the Current Period: $ 3,563,237

Net Cost of Operations $ 62,587,826
 

FY 2002 Performance and Accountability Report 162
 

FY 2002 Performance and Accountability Report 163

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 (CFO Act), as amended by the Federal Financial Management Act of 1994 (FFMA), Title IV of the 

Government Management Reform Act of 1994 (GMRA). 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 Bulletin 

No. 01-09, “Form and Content of Agency Financial Statements,” has been used to prepare the Balance Sheet, 

Statement of Net Cost, 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. All financial statements, with the exception of the 

Statement of Budgetary Resources, are presented on a consolidated basis (material intra-agency transactions and 

balances have been eliminated). The Statement of Budgetary Resources is presented on a combined basis. 

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 2002. 

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 21 to the financial statements. 

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 

(FASAB), which is recognized by the American Institute of Certified Public Accountants (AICPA) as the entity 

to establish Generally Accepted Accounting Principles (GAAP) for the Federal Government. The Federal 

Financial Management Improvement Act (FFMIA) 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; 
 

FY 2002 Performance and Accountability Report 164

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) 

 Federal Aviation Administration (FAA) 

 United States Coast Guard (USCG) 

 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) 

 Bureau of Transportation Statistics (BTS) 

 Surface Transportation Board (STB) 

 Office of Inspector General (OIG) 

 Research and Special Programs Administration (RSPA) 

 Transportation Security Administration (TSA) 

Effective December 29, 2002, the Secretary of Transportation realigned service functions, formerly performed 

by TASC, by placing these service providers in OST, the organization responsible for service policies. In 

addition, legislation was signed on November 25, 2002, to create a new Department of Homeland Security 

(DHS) as of January 24, 2003. The DHS Reorganization Plan dated November 25, 2002, indicates that both the 

USCG and TSA will be transferred from DOT to DHS on March 1, 2003. 

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 23. 

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 2002. 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 2002, 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. 

E. Revenues and Other Financing Sources
 

FY 2002 Performance and Accountability Report 165

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, Aquatic Resources 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 (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. Operating materials and supplies at Coast Guard small cutters and shore units are accounted for in the 

property system but not inventoried for financial statement purposes, since the amount is not material. 
 

FY 2002 Performance and Accountability Report 166

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 Stewardship 

Reporting section of this statement.

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. Examples of 

unfunded liabilities are actuarial liabilities for future Federal Employees’ Compensation Act payments and 

actuarial estimates of the present value of USCG pension and medical expenses. The Government, acting in its 

sovereign capacity, can abrogate liabilities arising from other than contracts. 

M. Borrowings Payable to Treasury 

FAA borrowing involves loans from the Treasury to fund expenses in the Aircraft Purchase Loan Guarantee 

Program. Treasury renews the debt obligation until FAA receives an appropriation to liquidate the principal 

and interest. 

FRA has direct loans from Treasury and guaranteed loans made by the Federal Financing Bank (FFB) to 

railroads and guaranteed by FRA under provisions of the Railroad Rehabilitation and Improvement Program, 

the Amtrak Corridor Improvement Program and the Alameda Corridor Improvement Program. FRA records 

these loans as though they were direct loans.
 

FY 2002 Performance and Accountability Report 167

OST borrows from the Treasury to finance loans to disadvantaged transportation-related businesses using 

revolving lines of credit. These OST loans are made through the Short Term Lending Program that provides 

assistance to disadvantaged, minority and women-owned businesses and is administered by the Office of Small 

and Disadvantaged Business Utilization. 

N. Interest Payable to Treasury 

FAA owes interest to Treasury based on its debt to Treasury as a result of borrowing for the Aircraft Purchase 

Loan Guarantee Program. Through FRA, the Amtrak Corridor Improvement Program and Railroad 

Rehabilitation Programs are required to make periodic interest payments to Treasury based on their debt to the 

U.S. Government.

O. 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. 

P. 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 

Transportation Administrative Service Center, 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. 

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. 

Q. 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. 
 

FY 2002 Performance and Accountability Report 168

The USCG Military Retirement System is a defined benefit plan which covers all active duty and reserve 

members of the USCG. This plan was established under authority of the United States Code, Titles 10 and 14. 

This system is funded on a “pay-as-you-go” basis. 

R. Comparative Data 

Comparative data for the prior year has been presented for the Balance Sheet, the Statement of Net Cost, and 

their related notes.
 

FY 2002 Performance and Accountability Report 169

Note 2. Non-Entity Assets:

(Dollars in Thousands)

Intragovernmental: FY 2002 FY 2001

 Fund Balance with Treasury 62,181 $ (6,237) $ 

 Accounts Receivable 38,773 535 

 Other 104 - 

Total Intragovernmental 101,058 $ (5,702) $ 

Accounts Receivable 19,288 $ 16,132 $ 

Other Assets - - 

Total Non-Entity Assets 120,346 $ 10,430 $ 

Total Entity Assets 84,343,451 86,749,969

 Total Assets 84,463,797 $ 86,760,399 $ 
 

FY 2002 Performance and Accountability Report 170

Note 3. Fund Balance with Treasury:

Fund Balances: FY 2002 FY 2001

 Trust Funds 4,260,272 $ 4,337,319 $ 

 Revolving Funds 293,664 583,391 

 Appropriated Funds 24,610,996 20,884,284 

 Other Fund Types 803,718 302,275

 Total 29,968,650 $ $ 26,107,269

Status of Fund Balance with Treasury: FY 2002 FY 2001

Unobligated Balance

 Available 7,740,176 $ 4,840,599 $ 

 Unavailable 1,155,138 1,152,720 

Obligated Balance Not Yet Disbursed 21,073,336 20,113,950 

 Total 29,968,650 $ $ 26,107,269

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. 

Fund Balance with Treasury for FY 2001 has been restated to correct a previously reported error

in FAA revolving funds and other fund types. However, the restatement does not change the

total reported Fund Balance with Treasury as of September 30, 2001.
 

FY 2002 Performance and Accountability Report 171

Note 4. Investments:

(Dollars in Thousands)

As of September 30, 2002: Amortized Market

(Premium) Investments Other Value

Intragovernmental Securities: Cost Discount (Net) Adjustments Disclosure

 Marketable 277,715 $ (1,237) $ 276,478 $ (635) $ 275,843 $ 

 Non-Marketable:

 Par Value 12,001,271 2,339 12,003,610 - 12,003,610 

 Market-Based 18,932,314 (454) 18,931,860 - 18,931,860 

 Subtotal 31,211,300 $ 648 $ 31,211,948 $ (635) $ 31,211,313 $ 

 Accrued Interest 127,257 127,257 127,257 

Total Intragovernmental 31,338,557 $ 648 $ 31,339,205 $ (635) $ 31,338,570 $ 

Other Securities:

 Private Stock 27 $ - $ 27 $ 25 $ 52 $ 

 Total Public 27 $ - $ 27 $ 25 $ 52 $ 

As of September 30, 2001:

Intragovernmental Securities: 

 Marketable 85,216 $ 909 $ 86,125 $ - $ 86,125 $ 

 Non-Marketable:

 Par Value 14,789,076 (2,866) 14,786,210 - 14,786,210 

 Market-Based 24,114,775 - 24,114,775 - 24,114,775 

 Subtotal 38,989,067 $ (1,957) $ 38,987,110 $ - $ 38,987,110 $ 

 Accrued Interest 211,247 211,247 211,247 

Total Intragovernmental 39,200,314 $ (1,957) $ 39,198,357 $ - $ 39,198,357 $ 
 

FY 2002 Performance and Accountability Report 172

Amortized Market

(Premium) Investments Other Value

Other Securities: Cost Discount (Net) Adjustments Disclosure

 Private Stock 27 $ - $ 27 $ - $ 27 $ 

 Total Public 27 $ - $ 27 $ - $ 27 $ 

Investments in Federal securities include non-marketable par value Treasury securities,

market-based Treasury securities, marketable Treasury securities, and securities issued by other

Federal entities. Non-Federal securities include those issued by state and local governments, 

Government-sponsored enterprises, and other private corporations. 

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 to Federal accounts and are purchased and 

redeemed at par exclusively through Treasury's Federal Investment Branch. Non-marketable 

market-based Treasury securities are also issued by the Bureau of Public Debt to Federal accounts. 

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. Private corporation stock consists of common stock in Coast Guard's Gift Fund. 
 

FY 2002 Performance and Accountability Report 173

Note 5. Accounts Receivable:

(Dollars in Thousands)

Gross Allowance for

Amount Uncollectible FY 2002 Net FY 2001 Net

Intragovernmental: Due Amounts Amount Due Amount Due

 Accounts Receivable 612,172 $ - $ 612,172 $ 688,211 $ 

 Accrued Interest - - - 10 

 Total Intragovernmental 612,172 $ $ - $ 612,172 $ 688,221

Public:

 Accounts Receivable 448,764 $ 118,509 $ 330,255 $ 159,861 $ 

 Accrued Interest 186 - 186 40 

 Total Public 448,950 $ $ 118,509 $ 330,441 $ 159,901

 Total Receivables 1,061,122 $ $ 118,509 $ 942,613 $ 848,122

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. 
 

FY 2002 Performance and Accountability Report 174

Note 6. Other Assets

(Dollars in Thousands)

Intragovernmental:

FY 2002 FY 2001

 Advances and Prepayments 53,744 $ 52,283 $ 

 Undistributed Assets and Payments 37,820 95,136 

 Total Intragovernmental 91,564 $ 147,419 $ 

Public:

 Advances to the States 97,573 $ 109,780 $ 

 Other Advances and Prepayments 156,056 84,993 

 Undistributed Assets and Payments 157,913 - 

 Total Public 411,542 $ 194,773 $ 

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.
 

FY 2002 Performance and Accountability Report 175

Note 7. Cash, Foreign Currency and Other Monetary Assets:

FY 2002 FY 2001

Cash 24,765 $ 48,217 $ 

Other Monetary Assets 443 445 

Total Cash and Other Monetary Assets 25,208 $ $ 48,662

Cash consists of undeposited collections and imprest fund balances. Other Monetary Assets 

consist of USCG Cadet Savings Accounts. 
 

FY 2002 Performance and Accountability Report 176

Note 8. Direct Loans and Loan Guarantees, Non-Federal Borrowers:

DOT administers the following direct loan and/or loan guarantee programs:

 (1) Amtrak Corridor Improvement Program

 (2) Railroad Rehabilitation Improvement Program

 (3) Alameda Corridor Transportation Authority Loan 

 (4) Transportation Infrastructure Finance Innovation Act (TIFIA) Loan

 (5) Maritime (Title XI) Guaranteed Loan

 (6) Federal Ship Financing Fund (Title XI)

 (7) Office of Small & Disadvantaged Business Utilization (OSDBU) Guaranteed Loan Program 

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 (Present Value Method):

(Dollars in Thousands)

Value of

Assets

 Loans Related to

Receivable, Interest Direct 

Direct Loan Programs Gross Receivable Loans

(1) Amtrak Corridor 2,511 $ - $ 2,511 $ 

(2) Railroad Rehab Improv 39,418 1,102 40,520 

 Total 41,929 $ 1,102 $ 43,031 $ 

Direct Loans Obligated After FY 1991:

Allowance Value of

for Subsidy Assets

 Loans Cost Related to

Receivable, Interest (Present Direct 

Direct Loan Programs Gross Receivable Value) Loans

(2) Railroad Rehab Improv 104,370 $ 8 $ - $ 104,378 $ 

(3) Alameda Corridor 400,000 110,675 112,853 623,528 

(4) TIFIA Loan 350,714 - (5,162) 345,552 

 Total 855,084 $ 110,683 $ 107,691 $ 1,073,458 $ 
 

FY 2002 Performance and Accountability Report 177

Total Amount of Direct Loans Disbursed (Post-1991):

Current Prior

Direct Loan Programs Year Year

(2) Railroad Rehab Improv 101,131 $ - $ 

(3) Alameda Corridor - 400,000 

(4) TIFIA Loan 50,716 300,000 

 Total 151,847 $ $ 700,000

Subsidy Expense for Direct Loans by Program and Component:

 Subsidy Expense for New Direct Loans Disbursed (Current reporting year):

Fees and Other

Direct Loan Programs Collections Other Total

(2) Railroad Rehab Improv (7) $ - $ (7) $ 

(4) TIFIA Loan - (106) (106) 

 Total (7) $ (106) $ (113) $ 

 Subsidy Expense for New Direct Loans Disbursed (Prior reporting year):

(4) TIFIA Loan (7,770) $ (7,770) $ 

 Total (7,770) $ $ (7,770)

Total Direct Loan Subsidy Expense:

Current Prior

Direct Loan Programs Year Year

(4) TIFIA Loan 106 $ 7,770 $ 

 Total 106 $ $ 7,770

Schedule for Reconciling Subsidy Cost Allowance Balances (Post-1991 Direct Loans)

 Beginning Balance, Changes, and Ending Balance FY 2002 FY 2001

Beginning Balance of the Subsidy Cost Allowance 7,770 $ - $ 

Add: Other Subsidy Costs 106 - 

Ending Balance of the Subsidy Cost Allowance 7,876 $ - $ 
 

FY 2002 Performance and Accountability Report 178

Defaulted Guaranteed Loans from Post-1991 Guarantees:

Value of Assets 

Related to 

Defaulted Allowance Defaulted

Guaranteed for Subsidy Guaranteed

 Loans Cost Loans

Receivable, Interest Foreclosed (Present Receivable,

Loan Guarantee Programs Gross Receivable Property Value) Net

(5) MARAD Guar Loan 459,375 $ 2,965 $ 7,000 $ (380,585) $ 88,755 $ 

 Total 459,375 $ 2,965 $ 7,000 $ (380,585) $ 88,755 $ 

Guaranteed Loans Outstanding:

Outstanding

Principal of Amount of

 Guaranteed Outstanding

Loans, Principal

Loan Guarantee Programs Face Value Guaranteed

(5) MARAD Guar Loan 3,303,275 $ 3,303,275 $ 

(6) Fed Ship Fin Fund 108,473 108,473 

(7) OSDBU Guar Loan 4,791 3,593 

 Total 3,416,539 $ 3,415,341 $ 

New Guaranteed Loans Disbursed (Current reporting year):

(5) MARAD Guar Loan 724,734 $ 724,734 $ 

(7) OSDBU Guar Loan 4,791 3,593 

 Total 729,525 $ $ 728,327

New Guaranteed Loans Disbursed (Prior reporting year):

(5) MARAD Guar Loan 492,764 $ 492,764 $ 

(7) OSDBU Guar Loan 6,592 4,952 

 Total 499,356 $ $ 497,716
 

FY 2002 Performance and Accountability Report 179

Liability for Loan Guarantees (Present Value Method for pre-1992 guarantees):

Liabilities

for Loan

Guarantees Total

 for Post-1991 Liabilities

Guarantees, for Loan

Loan Guarantee Programs Present Value Guarantees

(5) MARAD Guar Loan 383,993 $ 383,993 $ 

(7) OSDBU Guar Loan 295 295 

 Total 384,288 $ $ 384,288

Subsidy Expense for Loan Guarantees by Program and Component:

 Subsidy Expense for New Loan Guarantees (Current reporting year):

Fees and Other

Loan Guarantee Programs Defaults Collections Total

(5) MARAD Guar Loan - $ 22,688 $ 22,688 $ 

(7) OSDBU Guar Loan 129 - 129 

 Total 129 $ $ 22,688 $ 22,817

 Subsidy Expense for New Loan Guarantees (Prior reporting year):

(5) MARAD Guar Loan - $ 18,738 $ 18,738 $ 

(7) OSDBU Guar Loan 166 - 166 

 Total 166 $ $ 18,738 $ 18,904

 Modifications and Reestimates (Current reporting year):

Technical

Loan Guarantee Programs Reestimates Total

(5) MARAD Guar Loan 77,883 $ 77,883 $ 

$ 77,883 $ 77,883

 Modifications and Reestimates (Prior reporting year):

(5) MARAD Guar Loan 186,407 $ 186,407 $ 

$ 186,407 186,407 $ 
 

FY 2002 Performance and Accountability Report 180

 Total Loan Guarantee Subsidy Expense

Current Prior

Loan Guarantee Programs Year Year

(5) MARAD Guar Loan 16,365 $ (187,192) $ 

(7) OSDBU Guar Loan 129 166 

 Total 16,494 $ (187,026) $ 

Subsidy Rates for Loan Guarantees by Program and Component:

 Budget Subsidy Rates for Loan Guarantees for the Current Year's Cohorts:

Interest Fees and Other

Loan Guarantee Programs Supplements Defaults Collections Other Total

(5) MARAD Guar Loan 0% 6% 0% 0% 6%

(7) OSDBU Guar Loan 0% 3% 0% 0% 3%

Schedule for Reconciling Loan Guarantee Liability Balances (Post-1991 Loan Guarantees)

 Beginning Balance, Changes, and Ending Balance FY 2002 FY 2001

Beginning Balance of the Loan Guarantee Liability (400,192) $ (213,167) $ 

Add: Subsidy Expense for Guaranteed Loans Disbursed during the 

 Reporting Years by Component: 

 Default Costs (net of recoveries) 285,770 62,691 

 Fees and Other Collections (67,166) (61,275) 

 Total of the Above Subsidy Expense Components 218,604 $ 1,416 $ 

Adjustments:

 Interest Accumulation on the Liability Balance (31,106) (40,116) 

 Other (93,121) 47 

Ending Balance of the Loan Guarantee Liability Before Reestimates (305,815) $ (251,820) $ 

Add or Subtract Subsidy Reestimates by Component:

 Technical/Default Reestimate (77,883) (148,373) 

 Total of the Above Reestimate Components (77,883) $ (148,373) $ 

Ending Balance of the Loan Guarantee Liability (383,698) $ (400,193) $ 
 

FY 2002 Performance and Accountability Report 181

Administrative Expense:

Loan Guarantee Programs

(5) MARAD Guar Loan 3,973 $ 

(7) OSDBU Guar Loan 80 

 Total 4,053 $ 

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 loans 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.
 

FY 2002 Performance and Accountability Report 182

Note 9. Inventory and Related Property:

(Dollars in Thousands)

Allowance FY 2002 FY 2001

Cost for Loss Net Net

Inventory:

 Inventory Held for Current Sale 126,437 $ (6) $ 126,443 $ 143,967 $ 

 Inventory Held in Reserve for Future Sale 3,409 - 3,409 365,737 

 Excess, Obsolete and Unserviceable Inventory 29,991 11,406 18,585 24,657 

 Inventory Held for Repair 419,096 82,963 336,133 - 

 Inventory Work In Process (307) - (307) (214) 

 Other 13,643 - 13,643 14,294 

 Total Inventory 592,269 $ $ 94,363 $ 497,906 $ 548,441

Operating Materials and Supplies:

 Items Held for Use 1,127,543 $ - $ 1,127,543 $ 1,553,680 $ 

 Items Held in Reserve for Future Use 15,546 - 15,546 17,897 

 Excess, Obsolete and Unserviceable Items 71,861 47,044 24,817 21,482 

 Items Held for Repair 400,098 107,975 292,123 350,334 

 Other - - - -

 Total Operating Materials & Supplies 1,615,048 $ $ 155,019 $ 1,460,029 $ 1,943,393

 Total Inventory and Related Property 1,957,935 $ $ 2,491,834

All DOT inventory is in FAA, USCG, and TASC. Valuation methods used include moving weighted

average, standard price/specific identification, and last acquisition price. 

DOT operating materials and supplies are in USCG, FAA, and MARAD. Valuation methods used 

include weighted average, moving weighted average, historical cost, last acquisition price, standard 

price/specific identification, and standard repair cost. The only restrictions on use are that USCG 

consumption must be in accordance with USCG Directives and FAA is not permitted to donate. 

Inventory and related property for FY 2001 has been restated to reflect a reduction of $416.4 million in

the gross value of FAA's operating materials and supplies. This is due to the reclassification of exchange 

and repair spare parts to equipment, where it can be depreciated based on the period benefited.
 

FY 2002 Performance and Accountability Report 179

Note 10. General Property, Plant and Equipment:

(Dollars in Thousands)

Service Acquisition Accumulated FY 2002 Net FY 2001 Net

Major Classes Life * Value Depreciation Book Value Book Value

 Land 133,630 $ - $ 133,630 $ 138,220 $ 

 Buildings and Structures Various 6,061,139 3,096,522 2,964,617 2,837,276 

 Furniture and Fixtures Various 74,737 51,931 22,806 394 

 Equipment Various 11,859,114 5,288,113 6,571,001 6,532,309 

 ADP Software Various 137,627 35,395 102,232 100,353 

 Electronics 6-10 155,277 101,844 53,433 75,650 

 Assets Under Capital Lease Various 127,143 56,392 70,751 71,802 

 Leasehold Improvements Various 37,882 8,682 29,200 18,397 

 Aircraft 11-20 2,088,624 1,265,106 823,518 810,170 

 Ships and Vessels >20 3,648,700 1,516,888 2,131,812 2,178,375 

 Small Boats 11-20 307,346 108,478 198,868 179,179 

 Other Vehicles 1-5 18,599 16,466 2,133 2,539 

 Construction in Progress 5,417,432 - 5,417,432 3,861,185 

 Property Not in Use 2,283 1,272 1,011 - 

 Total 30,069,533 $ 11,547,089 $ 18,522,444 $ 16,805,849 $ 

Depreciation is computed using the straight line method. Property Not in Use consists of 

decommissioned assets awaiting disposition.

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 Supplemental 

Stewardship Information.

 * Key:

 Range of Service Life

 1-5 - 1 to 5 years

 6-10 - 6 to 10 years

 11-20 - 11 to 20 years

 >20 - Over 20 years
 

FY 2002 Performance and Accountability Report 180

Note 11. Liabilities Not Covered by Budgetary Resources:

(Dollars in Thousands)

Intragovernmental: FY 2002 FY 2001

 Debt 774,460 $ 28 $ 

 Other Liabilities 233,867 225,128 

Total Intragovernmental 1,008,327 $ 225,156 $ 

 Accounts Payable 1 $ - $ 

 Federal Employee and Veterans' Benefits Payable 30,138,478 28,789,852 

 Environmental and Disposal Liabilities 1,041,322 1,010,053 

 Other Liabilities 1,531,154 1,267,632 

Total Liabilities Not Covered by Budgetary Resources 33,719,282 $ 31,292,693 $ 

Total Liabilities Covered by Budgetary Resources 8,508,130 8,558,222 

 Total Liabilities 42,227,412 $ 39,850,915 $ 
 

FY 2002 Performance and Accountability Report 181

Note 12. Debt:

(Dollars in Thousands)

FY 2001 Net Change FY 2001 Net Change FY 2002

Beginning During Ending During Ending

Intragovernmental Debt: Balance Fiscal Year Balance Fiscal Year Balance

 Debt to the Treasury 808,584 $ 89,302 $ 897,886 $ 255,957 $ 1,153,843 $ 

 Debt to the Fed Financing Bank 3,549 (142) 3,407 (160) 3,247 

 Total Intragovernmental Debt 812,133 $ 89,160 $ 901,293 $ 255,797 $ 1,157,090 $ 

 

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, FHWA direct loans under the Transportation Infrastructure Finance and Innovation Act 

(TIFIA), MARAD Title XI guaranteed loans, and the FAA Aircraft Purchase Loan Guarantee 

Program. 
 

FY 2002 Performance and Accountability Report 182

Note 13. Other Liabilities:

(Dollars in Thousands)

Intragovernmental: Non-Current Current FY 2002 Total

 Advances and Prepayments - $ 171,488 $ 171,488 $ 

 Accrued Pay and Benefits 1,354 264,106 265,460 

 Undisbursed Loans 194,180 - 194,180 

 FECA Billings 130,586 100,297 230,883 

 Uncleared Disbursements and Collections 15 6,567 6,582 

 Deferred Credits - 4,739 4,739 

 Deposit Funds - (433) (433) 

 Other Accrued Liabilities - 277,054 277,054

 Total Intragovernmental 326,135 $ 823,818 $ 1,149,953 $ 

Public:

 Accrued Unbilled State Payments 19,422 $ 2,178,191 $ 2,197,613 $ 

 Other Accrued Unbilled Payments 6,069 22,715 28,784 

 Accrued Unrecorded Grantee Liabilities - 1,445,488 1,445,488 

 Accrued Pay and Benefits 817,504 693,794 1,511,298 

 Legal Claims 94,498 76,939 171,437 

 Deferred Credits 245,712 71 245,783 

 Capital Leases 64,398 13,698 78,096 

 Advances and Prepayments - 23,824 23,824 

 Uncleared Disbursements and Collections 65,133 12,152 77,285 

 Deposit Funds - (7,339) (7,339) 

 Other Accrued Liabilities 105,425 7,672 113,097

 Total Public 1,418,161 $ 4,467,205 $ 5,885,366 $ 

Intragovernmental: Non-Current Current FY 2001 Total

 Advances and Prepayments - $ 333,362 $ 333,362 $ 

 Accrued Pay and Benefits - 94,163 94,163 

 Undistributed and Unapplied Collections - 3,571 3,571 

 Deferred Credits - 1,082 1,082 

 Deposit Funds - (3,329) (3,329) 

 FECA Billings 125,853 98,019 223,872 

 Undisbursed Loans 175,920 - 175,920 

 Other Accrued Liabilities - 304,185 304,185

 Total Intragovernmental 301,773 $ $ 831,053 $ 1,132,826
 

FY 2002 Performance and Accountability Report 183

Public:

 Accrued Unbilled State Payments - $ 2,177,972 $ 2,177,972 $ 

 Other Accrued Unbilled Payments - 46,119 46,119 

 Accrued Pay and Benefits 747,994 500,586 1,248,580 

 Undistributed and Unapplied Collections (19,528) (23,935) (43,463) 

 Advances and Prepayments from Others - 10,823 10,823 

 Deposit Funds - 2,221 2,221 

 Deferred Credits 59,335 - 59,335 

 Legal Claims 189,809 - 189,809 

 FAA Return Rights 10,100 - 10,100 

 Capital Leases 80,323 58 80,381 

 Other Accrued Liabilities 109,346 16,451 125,797

 Total Public 1,177,379 $ 2,730,295 $ 3,907,674 $ 

Accrued pay and benefits pertain to unpaid pay and benefits, and may be either current or non-current. 

Agency expenses for payments made under the Federal Employees Compensation Act (FECA) are 

forwarded to the Department of Labor (DOL). Funding for FECA is normally appropriated to agencies 

in the fiscal year two years subsequent to the actual FECA billing from DOL. 

Legal claims liabilities for FY 2001 have been restated to reflect a $489.2 million reduction in FAA's

legal claims. The previously stated amount erroneously included certain claims that are not considered 

probable of loss.
 

FY 2002 Performance and Accountability Report 184

Note 14. Federal Employee and Veterans' Benefits:

(Dollars in Thousands)

Value of Projected Plan Benefits

FY 2002 FY 2001

 Pensions:

 USCG Retired Pay 17,663,500 $ 16,130,300 $ 

 Other Retirement Benefits:

 USCG Military Health Care 11,323,000 11,458,900 

 Other Post-Employment Benefits:

 Federal Employees Compensation Act Actuarial Liability 1,152,368 1,201,160 

 Total Federal Employee and Veterans Benefits 30,138,868 $ 28,790,360 $ 

The Coast Guard Military Retirement System (covering both retirement pay and health care benefits) is 

funded through annual appropriations and, as such, is essentially a pay-as-you-go system. 

Consequently, the only assets in the system are unintentional overpayments in the past which are due

to be repaid by participants. The unfunded figures reported above reflect the actuarial accrued

liability for both retired pay and health care benefits. Calculation of these numbers is a multi-step

process. First, an "actuarial present value of accumulated plan benefits" is derived from the future

payments that are attributable under the retirement plan's provisions to a member's credited service as 

of the valuation date (e.g., benefits to retired members or their beneficiaries). The accumulated plan 

benefits are converted to a present value of future benefits by applying assumptions to reflect the time

value of money and the probability of payment between the valuation date and expected date of 

payments. The significant actuarial assumptions used in this conversion include: life expectancy, cost 

of living increases, and investment return. The present value of future benefits is then converted to an 

unfunded accrued liability by subtracting the present value of future employer/employee normal 

contributions as well as any assets in the system. 

Federal Employees' Compensation Act liabilities include the expected liability for death, disability,

medical, and miscellaneous costs for approved compensation cases, plus a component for incurred 

but not reported claims. The liability is determined using a method that utilizes historical benefit 

payment patterns related to a specific incurred period to predict the ultimate payments related to 

that period. Consistent with past practice, these projected annual benefit payments have been 

discounted to present value using the Office of Management and Budget's economic assumptions for 

10-year Treasury notes and bonds. Interest rate assumptions utilized for discounting were as follows: 

 2002

 5.20% in year 1,

 5.20% in year 2,

 and thereafter
 

FY 2002 Performance and Accountability Report 185

To provide more specifically for the effects of inflation on the liability for future workers' 

compensation benefits, wage inflation factors (cost of living adjustments or COLAs) and medical 

inflation factors (consumer price index medical or CPIMs) were applied to the calculation of 

projected future benefits. These factors were also used to adjust the methodology's historical 

payments to current year constant dollars.

The compensation COLAs and CPIMs used in the projections for various charge back years 

(CBY) were as follows:

 CBY COLA CPIM

 2003 1.80% 4.31%

 2004 2.67% 4.01%

 2005 2.40% 4.01%

 2006+ 2.40% 4.01%

The model's resulting projections were analyzed to insure that the estimates were reliable. The 

analysis was based on two tests: (1) a comparison of the percentage change in the liability amount 

by agency to the percentage of change in the actual payments, and (2) a comparison of the ratio of

the estimated liability to the actual payment of the beginning year calculated for the current 

projection to the liability-payment ratio calculated for the prior projection.
 

FY 2002 Performance and Accountability Report 186

Note 15. Environmental and Disposal Liabilities:

(Dollars in Thousands)

Public: FY 2002 FY 2001

 Environmental Cleanup Liabilities:

 FAA Environmental Remediation 311,914 $ 325,019 $ 

 FAA Environmental Cleanup and Decommissioning 262,762 262,762 

 USCG Environmental Remediation and Cleanup 94,146 102,272 

 MARAD Environmental Cleanup (PCB, Lead, Oil) 372,500 - 

 Asset Disposal Liabilities:

 MARAD Scrapping of 115 Non-Retention Vessels - 320,000 

 Total Public 1,041,322 $ 1,010,053 $ 

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.

Environmental and disposal liabilities for FY 2001 have been restated to reflect a reduction of

approximately $1.1 billion in the estimate of FAA's environmental cleanup and decommissioning

liability.
 

FY 2002 Performance and Accountability Report 187

Note 16. Leases:

ENTITY AS LESSEE: 

Capital Leases: (Dollars in Thousands)

 Summary of Assets Under Capital Lease by Category: FY 2002 FY 2001

 (1) Land and Buildings 125,991 $ 110,514 $ 

 (2) Machinery and Equipment 1,152 1,234 

 (3) Other - - 

 Accumulated Depreciation (56,392) (39,946)

 Net Assets Under Capital Lease 70,751 $ $ 71,802

Description of Lease Arrangements: Capital leases cover land and buildings at FAA's Mike Monroney

Aeronautical Center (MMAC) in Oklahoma City, Oklahoma, and at the William J. Hughes Technical 

Center (WJHTC) located in Pomona, New Jersey. FAA's capital lease payments are funded annually. 

FAA and USCG also have capital leases on machinery and equipment. 

Future Payments Due: 

 Asset Category

Fiscal Year (1) (2) (3) Totals

Year 1 (2003) 13,425 $ 273 $ - $ 13,698 $ 

Year 2 (2004) 13,425 273 - 13,698 

Year 3 (2005) 12,768 273 - 13,041 

Year 4 (2006) 10,535 187 - 10,722 

Year 5 (2007) 10,417 108 - 10,525 

After 5 Years (2008+) 43,128 - - 43,128

Total Future Lease Payments 103,698 $ 1,114 $ - $ 104,812 $ 

Less: Imputed Interest 26,507 209 - 26,716 

 Executory Costs - - - -

Net Capital Lease Liability 77,191 $ $ 905 $ - $ 78,096

 Liabilities Covered by Budgetary Resources - $ 

 Liabilities Not Covered by Budgetary Resources 78,096 $ 
 

FY 2002 Performance and Accountability Report 188

Operating Leases:

Description of Lease Arrangements: Operating leases include a RSPA lease for the Transportation

Safety Institute North Campus, FAA leases for property, aircraft, equipment, and 

telecommunications, and TSA leases for property.

Future Payments Due: 

 Asset Category

Fiscal Year (1) (2) (3) Totals

Year 1 (2003) 63,073 $ - $ 1,428 $ 64,501 $ 

Year 2 (2004) 54,614 - 1,193 55,807 

Year 3 (2005) 49,679 - 956 50,635 

Year 4 (2006) 45,027 - 686 45,713 

Year 5 (2007) 39,762 - 683 40,445 

After 5 Years (2008+) 71,796 - 2,820 74,616

Total Future Lease Payments 323,951 $ $ - $ 7,766 $ 331,717

ENTITY AS LESSOR:

Capital Leases:

 N/A 

Operating Leases:

Description of Lease Arrangements FAA leases Ronald Reagan Washington National Airport and 

Washington Dulles International Airport to the Metropolitan Washington Airports Authority, the

airports' sponsor. The lease took effect in March 1987 for $3 million per year for a 50-year term. 

Subsequent annual rental payments are adjusted by applying the Implicit Price Deflator for the Gross 

National Product published by the Department of Commerce. Additionally, the parties may renegotiate

the level of lease payments attributable to inflation costs every ten years. Upon lease expiration, the 

airports and facilities, originally valued at $244 million, together with any improvements thereto, will 

revert to the Federal Government. In addition, FAA leases equipment to foreign governments and 

leases parcels of Government-owned land, generally for agriculture. 
 

FY 2002 Performance and Accountability Report 189

Future Projected Receipts: 

 Asset Category

Fiscal Year (1) (2) (3) Totals

Year 1 (2003) 12,783 $ 90 $ 5 $ 12,878 $ 

Year 2 (2004) 12,733 90 1 12,824 

Year 3 (2005) 12,495 90 - 12,585 

Year 4 (2006) 12,560 90 - 12,650 

Year 5 (2007) 12,452 90 - 12,542 

After 5 Years (2008+) 30,784 448 - 31,232

Total Future Operating

 Lease Receivables 93,807 $ $ 898 $ 6 $ 94,711
 

FY 2002 Performance and Accountability Report 190

Note 17. Contingencies:

Legal Proceedings. As of September 30, 2002 and 2001, FAA recognized contingent liabilities 

of $499.8 million and $445.8 million, respectively, for asserted and pending legal claims reasonably 

possible of loss. Of the yearend contingent liabilities for legal claims of $169.9 million as of 

September 30, 2002, FAA estimated that $1.7 million would be paid from agency appropriations 

with the remaining $168.2 million to be paid from the permanent appropriation for judgments, awards,

and compromise settlements (Judgment Fund) administered by the Department of the Treasury. 

Of the $189.8 million legal claims liabilities as of September 30, 2001, FAA estimated that $2.1 

million would be paid from agency appropriations and $187.7 million would be paid from the

Judgment Fund.

As of September 30, 2002 and 2001, Coast Guard had pending or potential lawsuits, administrative 

actions and claims of 325 and 330, respectively, that could result in liabilities to Coast Guard funds 

or the Judgment Fund. Claims of 236 and 275, respectively, were against the Oil Spill Liability Trust

Fund. This fund exists for the purpose of facilitating rapid oil spill response and administering a 

compensation program in oil spill situations. 

Amount of loss due to litigation and claims for MARAD was estimated at $2.6 million. Of the $2.6

million, $848,000 was probable and could be reasonably estimated and is included in liabilities not 

covered by budgetary resources. 

Grant Programs. The Federal Highway Administration and the Federal Transit Administration have 

Advance Construction and Full Funding Grant Agreements authorizing states and transit 

authorities to establish project budgets and incur costs with their own funds in advance of

appropriations. Of the over $30 billion authorized under these programs, some portion has been 

liquidated by the states and transit authorities.

FAA has legal authority to issue Letters of Intent (LOIs) to enter into Airport Improvement 

Program (AIP) grant obligations; but these LOIs do not create obligations. Through 

September 30, 2002, FAA issued LOIs covering FY 1988 through FY 2014 totaling $4.3 billion. 

As of fiscal yearend, FAA had obligated $2.7 billion of this total amount, leaving $1.6 billion 

unobligated. FAA anticipates obligating $293 million in FY 2003. As of September 30, 2001, 

LOIs covering FY 1998 through FY 2014 totaled $3.9 billion. Of this amount, FAA had obligated 

$2.4 billion, leaving $1.5 billion unobligated as of September 30, 2001.

FY 2002 AIP grant authority totaled $3.5 billion, including $1.7 billion in entitlements to specific 

locations. Of entitlements to specific locations, sponsors have claimed $1.4 billion, and $355 million

remains available from unused or newly enacted contract authority to those sponsors through 

FY 2004, or in the case of non-hub primary airport locations, through FY 2005. In FY 2001, 

AIP grant authority was $3.1 billion, including $1.4 billion in entitlements to specific locations. 

Of entitlements to specific locations, the sponsors had claimed $1.1 billion and $298 million

remained available from unused or newly enacted contract authority to those sponsors through

FY 2003, or in the case of non-hub primary airport locations, through FY 2004.
 

FY 2002 Performance and Accountability Report 191

Contract Options and Negotiations. As of September 30, 2002 and 2001, FAA had $19.9 billion 

and $17.9 billion, respectively, in unobligated contracts. The terms of these contracts 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.

As of September 30, 2002 and 2001, FAA had a total of $42.1 million and $106.4 million, 

respectively, in commitments (funds reserved for possible future obligations) under unexpired 

appropriations. The commitments were for purchases of goods and services for which contract 

negotiations have not been completed (i.e., agency obligations had not been incurred) at the end of 

each respective fiscal year.

Return Rights Program. The FAA Return Rights Program pertains to employees who previously

accepted transfers to overseas or certain domestic locations for a period of 2 to 4 years, and 

entitles the employees to a future return move at Government expense. As of September 30,

2002 and 2001, 154 and 202 employees, respectively, were contractually entitled to these "return 

rights." 

Aviation Insurance Program. FAA is authorized to issue hull and liability insurance under the Aviation 

Insurance Program for air carrier operations where 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. 

FAA maintains standby non-premium war-risk insurance policies for 38 carriers having 

approximately 974 aircraft available for Defense or State Department charter operations. 

On September 22, 2001, the premium insurance program was expanded by the Air Transportation

Safety and System Stabilization Act to include all scheduled domestic air carriers. Under this program, 

the FAA provided temporary war-risk insurance to U.S. carriers whose coverage was cancelled

following the terrorist attacks on September 11, 2001. As of September 30, 2001, $121.68 billion

of war risk insurance was extended to 74 carriers for a period of 30 days, and coverage has been 

subsequently extended, typically for 60-day periods. As of September 30, 2002, $114 billion of

war risk coverage was extended to 72 carriers until October 16, 2002. The most recent period of

coverage is December 16, 2002, to February 13, 2003, in which $112.5 billion of war risk coverage 

is extended to 71 carriers.

The issuance of temporary war-risk coverage to all scheduled domestic carriers provides necessary 

insurance to qualifying carriers while allowing time for the commercial insurance market to stabilize. 

Premiums under this program are established by the FAA and are assessed per departure. During 

FY 2002 and 2001, the FAA recognized insurance premium revenue of $74.6 million and $4.6 million, 

respectively. Premiums are recognized as revenue on a straight-line basis over the period of coverage.
 

FY 2002 Performance and Accountability Report 192

In the past, the FAA has insured a small number of air carrier operations and establishes a maximum

liability for losing one aircraft. Typically, the maximum liability for both hull loss and liability, per 

aircraft, is $1.75 billion.

No claims for losses were pending as of September 30, 2002. Since the inception of the Aviation

Insurance Program (including the predecessor Aviation War Risk 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.

Overflight User Fees. The FAA issued an interim final rule (IFR) on August 1, 2000, that required 

certain aircraft operators to pay fees for air traffic control and related services provided by the 

FAA to aircraft that operate in U.S.-controlled airspace but neither take off or land in the U.S. 

The authority to charge these fees is contained in the Federal Aviation Reauthorization Act of 1996, 

as amended. Several airlines and an air carrier association challenged this IFR in the U.S. Court 

of Appeals. On July 13, 2001, the Court, in its preliminary opinion, ruled in favor of the airlines. 

The FAA ceased all billing and collection activities under the IFR. In August 2001, the FAA issued 

a Final Rule on overflight fees, thereby allowing the agency to resume charging and collecting fees. 

The same group of plaintiffs brought suit against the Final Rule. The FAA filed a motion for 

reconsideration of the Court's ruling on the IFR. The Court granted this motion on 

December 28, 2001, allowing the IFR to remain in place. The FAA continued to collect fees 

throughout FY 2002, while litigation under both the IFR and the Final Rule continued. The financial 

statements include $27.6 million and $29.3 million in Overflight Fee revenue for the years ended 

September 30, 2002 and 2001, respectively. While the FAA believes it will prevail, those 

revenues remain at risk until the litigation has come to a final resolution. 

Environmental. The FAA is a party to two major environmental remediation projects in which the 

extent of liability is unknown. A study is in process to determine the magnitude and scope of the

remediation required at the two sites. Of the total environmental liability reported as of

September 30, 2002, the amount related to these two sites is $67.7 million. This liability includes

the FAA's share of the known remediation cost and the cost to complete the study.
 

FY 2002 Performance and Accountability Report 193

Note 18. Net Cost by Program:

(Dollars in Thousands)

Program Costs FY 2002 FY 2001

 Surface

 Mass Transit 6,912,429 $ 6,784,288 $ 

 Highway Surface Transportation 7,138,989 6,650,186 

 National Highway System 5,874,660 5,256,026 

 Interstate Maintenance 4,583,450 3,980,379 

 Highway Minimum Guarantee 3,050,915 3,038,069 

 Bridge Program 3,000,457 2,845,309 

 Other Highway Programs 1,205,002 2,273,533 

 Congestion Mitigation and Air Quality 919,250 953,114 

 High Priority Projects 1,132,525 802,426 

 Highway Minimum Allocation 94,073 - 

 Highway Emergency Relief 280,890 724,265 

 Federal Railroad Administration Grants 1,066,576 554,664 

 Federal Lands Highways 598,148 442,918 

 Highway Safety Programs 622,294 434,619 

 Appalachian Development Highway 318,159 352,550 

 Highway Planning 504,403 - 

 DOT Allocated Highway Programs 425,350 - 

 Highway Research and Development 345,630 278,011 

 Department of Interior Allocated Highway Programs 280,798 - 

 Federal Motor Carrier Safety 267,129 201,092 

 Woodrow Wilson Bridge 196,320 118,612 

 Other Rail Programs 17,535 11,858 

 Rail Safety and Operations 96,660 102,050 

 Alameda Corridor 58,561 - 

 Bureau of Transportation Statistics 44,538 - 

 Other Highway Trust Fund Programs 303,297 85,658 

 Research and Special Programs Administration 129,454 86,982 

 State Infrastructure Bank 7,840 - 

 Alaska Railroad 36,315 31,560 

 Next Generation High Speed Rail 29,361 26,826 

 Rail Research 20,275 24,574 

 Surface Transportation Board 20,782 12,702 

 Total Surface Program Costs 39,582,065 $ 36,072,271 $ 
 

FY 2002 Performance and Accountability Report 194

 Air

 Air Traffic Services 7,236,665 $ 6,906,967 $ 

 Airports 2,933,542 2,178,576 

 Regulation and Certification 923,493 798,688 

 Aviation Security 1,430,653 160,403 

 Research and Acquisition 514,862 486,295 

 Other Federal Aviation Administration Programs 210,086 132,806 

 Commercial Space 11,361 9,580 

 Total Air Program Costs 13,260,662 $ 10,673,315 $ 

 Maritime

 Coast Guard Operating Expenses 3,830,128 $ 3,205,509 $ 

 Coast Guard Retired Pay 2,247,751 8,527,834 

 Coast Guard Acquisition and Construction 468,661 327,671 

 Maritime Guaranteed Loan 134,304 212,855 

 Maritime Security Program 96,192 98,405 

 Coast Guard Reserve Training 79,515 78,374 

 Maritime Ocean Freight Differential Program 54,331 141,006 

 Maritime Operations and Training 137,848 82,049 

 Coast Guard Boat Safety 62,036 60,088 

 Coast Guard Oil Spill Liability 52,370 66,427 

 Coast Guard Research, Development, Test & Evaluation 19,067 18,421 

 Coast Guard Alteration of Bridges 10,453 9,151 

 Coast Guard Environmental Compliance & Restoration 9,619 11,329 

 Maritime Operating Differential Subsidy 5,088 (27,131) 

 Maritime Vessel Operations Revolving Fund (11,931) (57,060) 

 Other Coast Guard Programs 1,581 2,947 

 Other Maritime Programs 92 (1,202) 

 Total Maritime Program Costs 7,197,105 $ 12,756,673 $ 

 Cross-Cutting

 Transportation Administrative Service Center 97,783 $ - $ 

 Volpe National Transportation Systems Center 4,634 3,285 

 Transportation Statistics - (1) 

 Total Cross-Cutting Program Costs 102,417 $ 3,284 $ 

The Transportation Administrative Systems Center is now being listed under Cross-Cutting Program

Costs. In FY 2001 it had been listed as Costs Not Assigned to Programs.
 

FY 2002 Performance and Accountability Report 195

Note 19. Gross Cost and Earned Revenue by Budget Functional Classification:

Gross Cost and Earned Revenue by Budget Functional Classification:

(Dollars in Thousands)

Gross Earned Net

Budget Functional Classification Cost Revenue Cost

FY 2002:

 054 Defense-Related Activities 486,147 $ 318,668 $ 167,479 $ 

 304 Pollution Control and Abatement 61,989 - 61,989 

 401 Ground Transportation 39,860,830 408,219 39,452,611 

 402 Air Transportation 15,031,441 1,770,779 13,260,662 

 403 Water Transportation 7,216,731 249,094 6,967,637 

 407 Other Transportation 655,800 365,491 290,309 

 808 Other General Government 2,393,443 6,304 2,387,139 

 Total 65,706,381 $ 3,118,555 $ 62,587,826 $ 

 

FY 2001:

 054 Defense-Related Activities 83,647 $ 348,410 $ (264,763) $ 

 304 Pollution Control and Abatement 90,668 12,912 77,756 

 401 Ground Transportation 36,116,269 130,980 35,985,289 

 402 Air Transportation 10,866,644 193,331 10,673,313 

 403 Water Transportation 13,143,625 199,945 12,943,680 

 407 Other Transportation 423,901 287,225 136,676 

 451 Community Development 2 - 2 

 808 Other General Government 2,341,934 701 2,341,233 

 Total 63,066,690 $ 1,173,504 $ 61,893,186 $ 

Intragovernmental Gross Cost and Earned Revenue by Budget Functional Classification:

FY 2002:

 054 Defense-Related Activities 18,849 $ 318,668 $ (299,819) $ 

 304 Pollution Control and Abatement (14,311) - (14,311) 

 401 Ground Transportation 217,225 87,649 129,576 

 402 Air Transportation 1,475,092 99,063 1,376,029 

 403 Water Transportation 1,650,360 219,474 1,430,886 

 407 Other Transportation 139,088 362,937 (223,849) 

 808 Other General Government 132 132 - 

 Total 3,486,435 $ 1,087,923 $ 2,398,512 $ 
 

FY 2002 Performance and Accountability Report 196

Gross Earned Net

Budget Functional Classification Cost Revenue Cost

FY 2001:

 054 Defense-Related Activities 19,511 $ 348,410 $ (328,899) $ 

 304 Pollution Control and Abatement 17,968 - 17,968 

 401 Ground Transportation 219,062 74,476 144,586 

 402 Air Transportation 1,326,709 63,219 1,263,490 

 403 Water Transportation 1,070,325 133,163 937,162 

 407 Other Transportation 380,321 283,804 96,517 

 808 Other General Government 25,403 701 24,702 

 Total 3,059,299 $ 903,773 $ 2,155,526 $ 
 

FY 2002 Performance and Accountability Report 197

Note 20. Statement of Budgetary Resources:

(Dollars in Thousands)

The amount of direct and reimbursable obligations incurred against amounts

 apportioned under Category A, B and Exempt from apportionment 

 as of September 30, 2002: 81,083,840 $ 

Available Contract Authority as of September 30, 2002: 44,374,187 $ 

Available Borrowing Authority as of September 30, 2002: 1,545,581 $ 

 Borrowing Authority pertains to FRA. 

Adjustments during FY 2002 to Beginning Balance of Budgetary Resources:

 Rescissions (121,595) $ 

 Prior Year Recoveries 271,705 

 Temporarily Not Available 55,769,263 

 Cancelled Authority (9,754) 

 Permanently Not Available 5,127,195 

 Offsetting Security Fee Collections 1,128,316 

 Liquidated Contract Authority 28,912,607 

 Other Adjustments 470,096 

 Total Adjustments to Budgetary Resources 91,547,833 $ 

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 years until expiration, upon receipt of an

 apportionment from OMB. Unobligated balances of expired accounts

 are not available.

 There are no material differences between the information required by 

 SFFAS Number 7 and the amounts described as "actual" in the "Budget

 of the United States Government" for FY 2004. The "Budget of the

 United States Government" for FY 2004 is not final at this time.
 

FY 2002 Performance and Accountability Report 198

Note 21. Incidental Custodial Collections:

Revenue Activity: (Dollars in Thousands)

Sources of Cash Collections: FY 2002 FY 2001

 Miscellaneous Receipts 20,792 $ 26,592 $ 

 User Fees 16,146 24,009 

 Fines, Penalties and Forfeitures 8,642 47,609 

 General Fund Proprietary 3,100 1,238 

 Refunds, Recoveries & Cancelled Checks & Accounts 7,346 2,155 

 USCG Registration and Filing Fees 866 1,022 

 Total Cash Collections 56,892 $ 102,625 $ 

 Accrual Adjustment 9,500 5,912 

 Total Custodial Revenue 66,392 $ 108,537 $ 

Disposition of Collections:

 Transferred to Treasury (General Fund) 56,892 $ 102,625 $ 

 (Increase) Decrease in Amounts to be Transferred 9,500 5,912 

 Net Custodial Revenue Activity - $ $ -
 

FY 2002 Performance and Accountability Report 199

Note 22. Dedicated Collections:

(Dollars in Thousands)

Aquatic Resources Trust Fund FY 2002 FY 2001

Other Assets 61,959 $ $ 64,966

TOTAL ASSETS 61,959 $ $ 64,966

Liabilities Payable 3,251 $ 2,553 $ 

Other Liabilities 19,422 25,091

TOTAL LIABILITIES 22,673 $ $ 27,644

TOTAL NET POSITION 39,286 $ $ 37,322

TOTAL LIABILITIES AND NET POSITION 61,959 $ $ 64,966

BEGINNING BALANCES 37,322 $ 33,410 $ 

OTHER FINANCING SOURCES 64,000 64,000 

TOTAL FINANCING SOURCES 101,322 $ 97,410 $ 

NET COST OF OPERATIONS (62,036) (60,088) 

ENDING BALANCES 39,286 $ $ 37,322
 

FY 2002 Performance and Accountability Report 200

Oil Spill Liability Trust Fund FY 2002 FY 2001

Investments 1,007,378 $ 1,129,248 $ 

Other Assets 106,056 60,883

TOTAL ASSETS 1,113,434 $ $ 1,190,131

Liabilities Payable 339 $ 964 $ 

Other Liabilities 2,511 38

TOTAL LIABILITIES 2,850 $ $ 1,002

TOTAL NET POSITION 1,110,584 $ $ 1,189,129

TOTAL LIABILITIES AND NET POSITION 1,113,434 $ $ 1,190,131

BEGINNING BALANCES 1,189,129 $ 1,275,025 $ 

BUDGETARY FINANCING SOURCES - 73,828 

OTHER FINANCING SOURCES (26,175) (93,297) 

TOTAL FINANCING SOURCES 1,162,954 $ 1,255,556 $ 

NET COST OF OPERATIONS (52,370) (66,427) 

ENDING BALANCES 1,110,584 $ $ 1,189,129

Highway Trust Fund and Airport and Airway Trust Fund dedicated collections are described in their

stand-alone financial statements.
 

FY 2002 Performance and Accountability Report 201

Note 23. Saint Lawrence Seaway Development Corporation:

(Dollars in Thousands)

Condensed Information:

FY 2002 FY 2001

Cash and Short-Term Time Deposits 14,156 $ 13,724 $ 

Long-Term Time Deposits 98 294 

Accounts Receivable 93 170 

Inventories 262 259 

Property, Plant and Equipment 81,626 82,855 

Deferred Charges 1,722 1,816 

Other Assets 616 531 

TOTAL ASSETS 98,573 $ $ 99,649

Current Liabilities 1,839 $ 1,830 $ 

Actuarial Liabilities 1,722 1,817 

TOTAL LIABILITIES 3,561 $ $ 3,647

Invested Capital 96,595 $ 97,791 $ 

Cumulative Results of Operations (1,583) (1,789) 

TOTAL NET POSITION 95,012 $ $ 96,002

TOTAL LIABILITIES AND NET POSITION 98,573 $ $ 99,649
 

FY 2002 Performance and Accountability Report 202

Deferred Maintenance:

 DOT Asset Cost to Return to

Entity Major Class of Asset Method of Measurement Condition* Acceptable Condition**

FAA Buildings Condition Assessment 4 & 5 73,741 $ 

 Survey

Other Structures and Condition Assessment 4 & 5 13,843 

 Facilities Survey

MARAD Vessels, Ready Reserve Condition Assessment 3 34,457 

 Force Survey

Real Property, Anchorage Condition Assessment 4 8,124 

 Survey

Real Property, Buildings Condition Assessment 3 33,000 

 Survey

USCG Aircraft Condition Assessment Variable 20,281 

 Survey

Vessels Condition Assessment Variable 18,672 

 Survey

Shore Facilities Condition Assessment Variable 429,411 

 Survey

Electronics Systems Condition Assessment Variable 19,474 

 Survey

Total 651,003 $ 

*Asset Condition Rating Scale:

 1 - Excellent

 2 - Good

 3 - Fair

 4 - Poor

 5 - Very Poor
 

FY 2002 Performance and Accountability Report 203

**Acceptable Condition is:

 FAA Buildings 3 - Fair 

 FAA Other Structures and Facilities 3 - Fair 

 MARAD Vessels, Ready Reserve 1 - Excellent - Ships are seaworthy and ready for 

 Force mission assignments within prescribed time

 limits.

 MARAD Real Property, Anchorage 3 - Fair - Adequate water depth, shore power, and

 mooring capabilities.

 MARAD Real Property, Buildings 3 - Fair - Buildings are safe and inhabitable.

 USCG Aircraft 1 - Excellent 

 USCG Vessels 1 - Excellent 

 USCG Shore Facilities 1 - Excellent 

 USCG Electronic Systems 1 - Excellent 

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.

The Coast Guard continues to use the same methodology which was developed for the FY 2000 report.

This includes: 1) the evaluation of the value of planned vessel, aircraft, or electronic systems overhauls

and depot-level projects, which were held awaiting funding at fiscal year end; 2) the value of inventory 

reorders called for by logistics stocking algorithms, which were held awaiting funding at fiscal year end

and 3) the value of broken (repairable) inventory items needing repair which were held awaiting

funding at fiscal year end. 
 

FY 2002 Performance and Accountability Report 204

Intragovernmental Balances by Trading Partner:

Intragovernmental Assets by Trading Partner: (Dollars in Thousands)

Fund Balance Accounts Other

Trading Partner with Treasury Investments Receivable Assets

Department of the Treasury 29,968,650 $ 31,338,570 $ 257,380 $ 6,691 $ 

Department of Defense - - 237,709 59,499 

U.S. Capitol Police - - 16,908 - 

Department of State - - 5,877 - 

Department of Interior - - 5,653 - 

Department of Veterans Affairs - - 3,295 168 

Department of Justice - - 2,733 - 

General Services Administration - - 2,027 200 

Natl. Aero. and Space Admin. - - 1,621 - 

Environmental Protection Agency - - 1,509 - 

Department of Health & Human Serv. - - 1,455 - 

Securities and Exchange Comm - - 1,347 - 

Department of Commerce - - 704 - 

Department of Agriculture - - 532 - 

Library of Congress - - 485 - 

Department of Energy - - 440 - 

U.S. Agency for International Devel. - - 278 - 

Department of Education - - 172 - 

Dept. of Housing & Urban Devel. - - 125 - 

U.S. House of Representatives - - 120 - 

Fed. Emergency Mgmt. Admin. - - 109 - 

Broadcasting Board of Governors - - 106 - 

Department of Labor - - 101 - 

U.S. Postal Service - - 60 - 

Other Miscellaneous Agencies - - 71,426 25,006 

 Total 29,968,650 $ $ 31,338,570 $ 612,172 $ 91,564

 Total Intragovernmental Assets 62,010,956 $ 
 

FY 2002 Performance and Accountability Report 205

Intragovernmental Liabilities by Trading Partner: (Dollars in Thousands)

Accounts Other

Trading Partner Payable Debt Liabilities

Department of the Treasury 2,684 $ 1,157,090 $ 488,776 $ 

Department of Defense 45,780 - 239,600 

Department of Labor 26 - 228,377 

Office of Personnel Management 1,214 - 65,245 

Social Security Administration 1 - 12,533 

General Services Administration 13,260 - (363) 

U.S. Capitol Police - - 9,876 

Department of Agriculture - - 7,225 

Natl. Aero. and Space Admin. - - 6,855 

Department of Commerce 25 - 1,010 

Department of Interior 1,597 - 825 

Department of Energy 65 - 848 

Department of Justice 317 - 431 

Environmental Protection Agency - - 428 

Tennessee Valley Authority 353 - - 

Department of State - - 296 

Fed. Emerg. Mgmt. Admin. - - 220 

U.S. Postal Service - - 88 

Department of Health & Human Serv. 137 - 17 

National Science Foundation - - 9 

Other Miscellaneous Agencies 43,411 - 87,657 

 Total 108,870 $ $ 1,157,090 $ 1,149,953

 Total Intragovernmental Liabilities 2,415,913 $ 
 

FY 2002 Performance and Accountability Report 206

Intragovernmental Earned Revenues and Related Costs: (Dollars in Thousands)

Intragovernmental

Trading Partner Earned Revenue

Department of Defense 660,850 $ 

Department of the Treasury 66,384 

Environmental Protection Agency 53,918 

Department of Veterans Affairs 27,098 

U.S. Capitol Police 24,052 

Department of Justice 16,106 

Department of Health & Human Serv. 14,846 

Natl. Aero. and Space Admin. 14,130 

General Services Administration 13,361 

Department of Commerce 11,636 

Department of State 10,349 

Department of Energy 9,824 

Department of Agriculture 6,559 

Social Security Administration 5,263 

Fed. Emerg. Mgmt. Admin. 4,348 

Department of Education 4,108 

Dept. of Housing & Urban Devel. 3,813 

Department of Interior 3,805 

Securities and Exchange Comm 2,645 

Department of Labor 2,174 

U.S. Agency for International Devel. 2,151 

Office of Personnel Management 1,838 

Library of Congress 1,814 

U.S. Postal Service 1,753 

Federal Deposit Insurance Corp. 1,489 

Broadcasting Board of Governors 1,233 

Small Business Administration 878 

National Institute for Literacy 870 

US House of Representatives 735 

Federal Trade Commission 653 

Natl. Archives & Records Admin. 593 

Central Intelligency Agency 63 

National Mediation Board 33 

Other Miscellaneous Agencies 118,551 

 Total 1,087,923 $ 
 

FY 2002 Performance and Accountability Report 207

Gross Cost to Generate

Intragovernmental

Budget Functional Classification Earned Revenue

054 Defense-Related Activities 318,668 $ 

401 Ground Transportation 70,181 

402 Air Transportation 1,427,986 

403 Water Transportation 220,115 

407 Other Transportation 474,006 

808 Other General Government 4,890 

 Total 2,515,846 $ 

Intragovernmental Non-Exchange Revenue:

 (Dollars in Thousands)

Trading Partner Transfers-In Transfers-Out

Executive Office of the President 87,500 $ - $ 

Department of the Treasury 113,142 (50,094) 

General Services Administration - (26,970) 

Environmental Protection Agency - (15,000) 

Department of Interior - (6,105) 

Department of Defense 23,168 (9,029) 

Other Miscellaneous Agencies 20,250 (11,361) 

 Total 244,060 $ $ (118,559)
 

FY 2002 Performance and Accountability Report 208
 

FY 2002 Performance and Accountability Report 209

HERITAGE ASSETS SUMMARY 

ANNUAL STEWARDSHIP INFORMATION, SEPTEMBER 30, 2002 

NUMBER OF PHYSICAL UNITS 

 

Units as of Units as of 

 

Heritage Assets: 09/30/01 Additions Withdrawals 09/30/02

Personal Property: 

 Collections 

 Artifacts 17,715 1,293 132 18,876 

 Display Models 473 1 1 473 

 Museum 450 1 0 451 

 Other Collections 98 0 0 98

Total Collections 18,736 1,295 133 19,898

 Other Non-Collection Types 

 Sunken Vessels 59 0 0 59 

 Sunken Aircraft 1 0 0 1

Total Non-Collection Types 60 0 0 60

Total Personal Property 

 Heritage Assets 18,796 1,295 133 19,958

 

Units as of Units as of 

 

Heritage Assets: 09/30/01 Additions Withdrawals 09/30/02

Real Property: 

 Buildings and Structures 420 545 61 904 

 Memorials 2 0 0 2 

 Recreational Areas 2 0 0 2 

 Other Historical Areas 24 0 10 14

Total Real Property 

 Heritage Assets 448 545 71 922

Artifacts are those of the U.S. Coast Guard and Maritime Administration. Maritime Administration artifacts are generally on 

loan to single purpose memorialization and remembrance groups, such as AMVets and preservation societies. Coast Guard 

artifacts can be divided into four general areas: ship’s equipment, lighthouse and other aids-to-navigation items, military 

uniforms, and display models. The addition of artifacts is the result of gifts to the Coast Guard. 

Ship’s equipment is generally acquired when the ship is decommissioned and includes small items such as sextants, ship’s clocks, 

wall plaques, steering wheels, bells, binnacles, engine order telegraphs, and ship’s name boards. Conditions vary, but much is

worn out from decades of use. 

Aids-to-navigation items include fog and buoy bells, lanterns, lamp changing apparatus, and lighthouse lenses. Buoy equipment 

tends to be worn out and is usually acquired only when new technology makes it obsolete. Classical lighthouse lenses vary 
 

FY 2002 Performance and Accountability Report 210

greatly in condition. The condition is normally dependent on how long the item has been out of service and not maintained. 

Most of the good lenses go to local museums or Coast Guard bases as display items. 

Military uniforms are generally donated by retired Coast Guard members, and include clothing as well as insignia and 

accoutrements. Most clothing is in fair to good condition, particularly full dress items which saw little daily wear. 

Display Models are mostly of Coast Guard vessels and aircraft. These are often builders’ models. In addition to being accurate 

and valuable, they are generally in very good condition. Builders’ models are acquired by the Coast Guard as part of the 

contracts with the ship or aircraft builders. The withdrawal of display models was due to wear and tear. 

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. 

Non-Collection Type heritage assets are sunken vessels and aircraft owned by the Coast Guard under the property clause of the 

U.S. Constitution, Articles 95 and 96 of the International Law of the Sea Convention, and the sovereign immunity provisions of 

Admiralty law. Despite the passage of time or the physical condition of these assets, they remain Government-owned until the 

Congress of the United States formally declares them abandoned. The USCG desires to retain custody of these assets to 

safeguard the remains of crew members who were lost at sea, to prevent the unauthorized handling of explosives or ordnance 

which may be aboard, and to preserve culturally valuable relics of the USCG’s long and rich tradition of service to our nation in 

harm’s way.

Buildings and Structures include Union Station in Washington, D.C. Union Station is an elegant and unique turn-of-thecentury 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. 

As a matter of public law and policy, Coast Guard does not acquire or retain heritage buildings and structures without an 

operational use. Most real property, even if designated as historical, is acquired for operational use and is transferred to other 

government agencies or public entities when no longer required for operations. In the majority of cases, therefore, any historical 

property owned by Coast Guard is multi-use heritage. All multi-use heritage assets are reflected on the balance sheet. 

Of the Coast Guard buildings and structures designated as heritage, including memorials, recreational areas and other historical 

areas, over two-thirds are multi-use heritage. The remaining are historical lighthouses, which are no longer in use and awaiting 

disposal; their related assets; and a gravesite. 

During the past year, Coast Guard performed a comprehensive review of buildings and structures to validate historical 

classification. In addition to reviewing assets currently classified as heritage and multi-use heritage, civil engineering facilities 

were also tasked with evaluating other assets, which due to year of construction and/or co-location with a historical lighthouse, 

could also be reclassified as heritage. This validation resulted in an increase of heritage assets but had no effect on the balance 

sheet. 

Financial information for multi-use heritage assets is presented in the principal statements and notes. 
 

FY 2002 Performance and Accountability Report 211

NATIONAL DEFENSE PROPERTY, PLANT, AND EQUIPMENT SUMMARY 

NUMBER OF PHYSICAL UNITS AND ACQUISITION COSTS 

SEPTEMBER 30, 2002 

(Dollars in Thousands) 

 

National Defense Reserve Original Capital Acquisition MARAD Acquisition 

 Fleet Vessels Units Cost __ Improvements Total Cost 

Ready Reserve Fleet Vessels 76 $ 859,163 $ 591,078 $ 1,450,241 $ 1,101,458 

Retention Vessels 65 244,757 43,022 287,779 232,554 

Scrap Ships 133 2,833,730 280,313 3,114,043 571,427

 Total 274 $ 3,937,650 $ 914,413 $ 4,852,063 $ 1,905,439

 

All DOT National Defense Property, Plant, and Equipment (PP&E) is in the Maritime Administration (MARAD). The data 

continue to be refined. Capital improvements reflect all costs on record, some dating to the late 1970’s. 

Original cost is the original cost of the assets to MARAD or the cost to the Federal entity that originally purchased the assets and 

subsequently transferred the assets to MARAD. The MARAD acquisition cost is the value of the assets transferred and/or 

acquired by MARAD as if they were recorded under FASAB No. 6, Accounting for Property, Plant and Equipment (PP&E). 

FASAB No. 6 requires the cost of general PP&E transferred from other Federal entities to be the cost recorded by the transferring 

entity for the PP&E, net of accumulated depreciation or amortization. If the receiving entity cannot ascertain those amounts, the 

cost of the PP&E shall be its fair value at the time transferred. In this case, fair value is equal to the net book value of the assets 

as if depreciation took place since the date of the original acquisition. 
 

FY 2002 Performance and Accountability Report 212

NONFEDERAL PHYSICAL PROPERTY 

ANNUAL STEWARDSHIP INFORMATION, SEPTEMBER 30, 2002 

TRANSPORTATION INVESTMENTS

 (Dollars in Thousands) 

 

Surface Transportation: FY 1998 FY 1999 FY 2000 FY 2001 FY 2002

Federal Highway Administration

Federal Aid Highways (HTF) $19,967,116 $ 22,741,808 $ 24,920,221 $ 25,876,082 $ 29,377,231 

Other Highway Trust Fund Programs 119,276 124,705 42,269 85,807 211,883 

General Fund Programs 173,230 90,587 151,011 44,159 31,616 

Appalachian Development System 187,173 137,265 157,219 23,801 146,306 

Federal Motor Carrier 0 0 91,822 125,261 149,091

 

Federal Transit Administration 

Discretionary Grants $ 1,872,945 $ 1,523,668 $ 1,199,725 $ 721,774 $ 495,322 

Formula Grants 1,729,350 2,174,323 2,791,855 3,978,247 4,283,634 

Capital Investment Grants 0 248,844 1,071,361 1,902,425 2,371,521 

Washington Metro 183,626 161,834 108,518 115,856 89,227 

Interstate Transfer Grants 2,693 10,602 836 2,716 8,155

Surface Transportation Nonfederal 

 Physical Property Investments $24,235,409 $ 27,213,636 $ 30,534,837 $ 32,876,128 $ 37,163,986 

Air Transportation: FY 1998 FY 1999 FY 2000 FY 2001 FY 2002

Federal Aviation Administration

Airport Improvement Program $ 1,436,541 $ 1,612,867 $ 1,375,293 $ 2,178,576 $ 2,933,542 

Air Transportation Nonfederal 

 Physical Property Investments $ 1,436,541 $ 1,612,867 $ 1,375,293 $ 2,178,576 $ 2,933,542

Total Nonfederal Physical Property 

 Investments $25,671,950 $ 28,826,503 $ 31,910,130 $ 35,054,704 $ 40,097,528 

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. 

The Federal Transit Administration provides grants to State and local transit authorities and agencies. 

Discretionary grants provide capital assistance to finance acquisition, construction, reconstruction, and improvement of 

facilities and equipment. Discretionary grants fund the categories of new starts, fixed guideway modernization, and 

bus and bus-related activities. 

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. 
 

FY 2002 Performance and Accountability Report 213

Capital investment grants were created in the Transportation Equity Act for the 21st Century (TEA-21) to replace 

Discretionary grants. They continue to provide capital grants for new fixed guideway systems and extensions to 

existing fixed guideway systems (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 funding 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. 
 

FY 2002 Performance and Accountability Report 214

HUMAN CAPITAL INVESTMENT EXPENSES 

ANNUAL STEWARDSHIP INFORMATION, SEPTEMBER 30, 2002 

 (Dollars in Thousands) 

Surface Transportation: FY 1998 FY 1999 FY 2000 FY 2001 FY 2002

Federal Highway Administration 

National Highway Institute Training $ 2,716 $ 2,540 $ 7,304 $ 3,202 $ 9,146 

Federal Transit Administration 

National Transit Institute Training 3,116 3,6005 3,790 3,5506 3,9462 

Research and Special Programs Administration 

Hazardous Materials (MAZMAT) Training 3,849 5,014 7,778 7,771 7,763

Surface Transportation Human 

 Capital Investments $ 9,681 $ 11,154 $ 18,872 $ 14,523 $ 20,855

Maritime Transportation: FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 

Maritime Administration 

State Maritime Academies Training7 $ 7,900 $ 7,550 $ 7,773 $ 8,257 $ 8,257 

Additional Maritime Training 453 463 463 463 463

Maritime Transportation Human 

 Capital Investments $ 8,353 $ 8,013 $ 8,236 $ 8,720 $ 8,720

Total Human Capital Investments $ 18,034 $ 19,167 $ 27,108 $ 23,243 $ 29,575

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 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 Research and Special Programs 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. 

 

5

 Estimate based on enacted budget authority for FY 1997, FY 1998, and FY 1999. 

6

 Estimates based on enacted budget authority for FY 1998, FY 1999, FY 2000, and FY 2001, outlayed based on 

approved outlay rates for the National Transit Institute (5%, 4%, 50%, and 5%). 7

 Does not include funding for the Student Incentive Payment (SIP) Program which produces graduates who are 

obligated to serve in a reserve component of the United States armed forces. 
 

FY 2002 Performance and Accountability Report 215

RESEARCH AND DEVELOPMENT INVESTMENTS 

ANNUAL STEWARDSHIP INFORMATION, SEPTEMBER 30, 2002 

 (Dollars in Thousands) 

Surface Transportation: FY 1998 FY 1999 FY 2000 FY 2001 FY 2002

Federal Highway Administration

Intelligent Transportation Systems $ 189,612 $ 286,105 $ 144,734 $ 103,980 $ 124,950 

Other Applied Research & Development 123,739 137,588 132,634 118,425 183,142 

Federal Transit Administration

Applied Research and Development 

 Transit Planning and Research 5,966 5,912 5,476 1,931 1,9318

 Transit University Transportation Center 2,556 2,280 8,971 3,492 8,168 

 Research Training and Human Resources 24 0 0 0 0 

 Discretionary/Capital Investment Grants 48 48 24 0 0 

Research and Special Programs Administration 

Applied Research and Development 

 Research and Technology $ 1,738 $ 2,540 $ 1,963 $ 3,318 1,608 

 Pipeline Safety 792 1,780 1,980 1,404 4,000 

 Hazardous Materials 313 758 1,326 1,366 233 

 Emergency Transportation 35 204 198 244 137 

Surface Transportation Research and 

 Development Investments $ 324,82 $ 437,215 $ 297,306 $ 234,160 $ 324,169 

Air Transportation: FY 1998 FY 1999 FY 2000 FY 2001 FY 2002

Federal Aviation Administration

Research and Development Plant $ 11,254 $ 14,290 $ 12,800 $ 46,988 $ 44,480 

Applied Research 103,274 118,834 99,777 120,395 59,150 

Development 48,237 18,358 7,175 3,419 603 

Administration 54,179 36,466 46,219 10,130 3,020

Air Transportation Research and 

 Development Investments $ 216,944 $ 187,948 $ 165,971 $ 180,932 $ 107,253 

 

8

 Estimate is based on the FY 2001 amount. 
 

FY 2002 Performance and Accountability Report 216

Maritime Transportation: 

 

U.S. Coast Guard

Applied Research, Development, Test 

 and Evaluation: 

 Marine Safety $ 9,416 $ 10,069 $ 8,936 $ 8,860 $ 9,171 

 Comprehensive Law Enforcement 4,228 4,521 4,013 3,978 4,117 

 Marine Environmental Protection 3,230 3,454 3,065 3,038 3,144 

 Waterways Management 2,701 2,889 2,563 2,545 2,634 

Maritime Transportation Research and 

 Development Investments $ 19,575 $ 20,933 $ 18,577 $ 18,421 $ 19,066

Total Research and Development 

 Investments $ 561,342 $ 646,096 $ 481,854 $ 433,513 $ 450,488

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 battery-powered 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. 

 

Research and development activities were funded under the Research Training and Human Resources program until FY 

1993. Since FY 1993, these activities have been funded under the Transit Planning and Research Program. 

Discretionary Grants funded the National Research Program in FY 1992. 

The Research and Special Programs 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. 

The Office of Hazardous Materials is involved in research, development, and analysis in regulation compliance, safety, and 

information systems. 

The Office of Emergency Transportation is involved in research and development in mapping software for the Crisis 

Management Center, transportation policy, and outreach efforts. 

The Office of Research and Technology is involved in research and development for the University of Technology and 

Education. 

The Federal Aviation Administration (FAA) 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. 

 
 

FY 2002 Performance and Accountability Report 217

The U.S. Coast Guard funds research, development, testing, and evaluation in the following program areas: 

 

Marine Safety research supports the Coast Guard and Departmental goal of safety by eliminating deaths, injuries, and 

property damage associated with maritime transportation, fishing, and recreational boating. Two major initiatives show great 

potential to help reduce the number of accidents on U.S. waterways: the development of risk management analytical tools for 

marine inspection and regulatory missions, and the development of fatigue countermeasures that minimize human error and 

reduce crew fatigue. The first pinpoints root-cause safety problems from the galaxy of components that can malfunction on 

complex marine engineering systems. The second addresses the 80% of maritime mishaps in which human error was the 

direct cause or was a major contributing factor. Other Marine Safety research and development initiatives are focused on 

more traditional research areas such as: improving the Computer-Assisted Search Planning (CASP) system used in tactical 

search and rescue (SAR) operations by more accurately applying all information available on wind, currents, survivor 

characteristics (i.e., life raft or personal flotation device); reducing the threat of shipboard fires by testing and evaluating ship 

fire safety systems; improving the coordination of Coast Guard operations through the use of new communications systems; 

and encouraging state-of-the-art marine engineering design through membership in the Ship Structure Committee (SSC), an 

interagency consortium that coordinates research to enhance marine safety. 

Comprehensive Law Enforcement research supports the Coast Guard’s performance goal of maritime security and DOT’s 

strategic goal of national security. These research projects evaluate detection capability improvements, including identifying

new technology to counter threats to Coast Guard detection and search devices, resulting in increased probability of detecting 

illegal smuggling and immigration. 

Marine Environmental Protection research supports the Coast Guard’s performance goal of protection of natural resources and 

DOT’s strategic goal of human and natural environment. Marine Environmental Protection R&D projects focus on pollution 

prevention and response improvements, including developing predictive models and automated tools to improve spill 

response, and evaluating in-situ burning as a spill response tool. The Coast Guard R&D program supports pollution response 

strategies by improving the Coast Guard’s ability to mobilize and respond to major oil and hazardous substance discharges, 

mitigating the effects on the environment from these pollutants, and improving cleanup capabilities. The Federal Oil Pollution

Research and Technology Plan maps the coordination of activities among responsible Federal agencies and industry to 

upgrade spill response technology by developing, testing, and evaluating state-of-the-art training and command and control 

systems, equipment, and procedures. 

Waterways management research supports the Coast Guard and Departmental mobility goal and the Departmental goal of economic 

growth and trade. Both of these goals rely on establishing an accessible, seamless, efficient, and flexible maritime transportation 

system. Coast Guard R&D is working to develop computerized tools to more effectively and efficiently manage their Aids to 

Navigation system.