a

GAO

United States Government Accountability Office

Report to Congressional Requesters

October 2005 NATIONAL AIRSPACE 

SYSTEM

Transformation will 

Require Cultural 

Change, Balanced 

Funding Priorities, and 

Use of All Available 

Management Tools

GAO-06-154
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-06-154.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Gerald L. 

Dillingham, Ph.D. (202) 512-2834, 

dillinghamg@gao.gov. 

Highlights of GAO-06-154, a report to 

congressional requesters 

October 2005

NATIONAL AIRSPACE SYSTEM

Transformation will Require Cultural 

Change, Balanced Funding Priorities, and 

Use of All Available Management Tools 

GAO’s recent reports indicate that FAA has made progress in managing its 

infrastructure—the systems, facilities, airports, and navigation aids that 

comprise the NAS—but acquisition, security, and capacity challenges 

remain. FAA met its fiscal year 2004 acquisitions performance goal. This 

goal was consistent with the President’s Management Agenda and represents 

a positive step. However, FAA needs to continue addressing four key factors 

that, as GAO has reported, have historically contributed to acquisitions’ 

missing their original cost, schedule, and performance targets: (1) actual 

funding less than planned, (2) increases in projects’ scope, (3) 

underestimates of software complexity, and (4) insufficient stakeholder 

involvement. To address these factors, FAA has begun to prioritize its 

investments by considering their potential to reduce operational costs and 

by developing a blueprint for information technology investment; but FAA 

still needs to secure information technology systems and expand the NAS’s 

capacity for an expected 25 percent increase in air travel by 2015. 

Human capital management challenges include hiring and training thousands 

of air traffic controllers to replace those expected to retire over the next 

decade and creating a results-oriented culture. FAA has developed a 

controller staffing plan, but has not estimated its cost, and therefore, cannot 

determine its impact on future budgets. Efforts to transform FAA’s 

workforce culture address an impediment to ATC modernization that GAO 

has identified, but will require a sustained, multiyear commitment. 

Rising costs and shrinking revenues pose financial management challenges. 

To manage costs, FAA is using a new cost accounting system and 

emphasizing accountability. However, in view of current and anticipated 

funding reductions, FAA has eliminated initial research and development 

funding for new technologies that could support the next-generation air 

transportation system. Some stakeholders and FAA officials are discussing 

potential changes to FAA’s funding mechanism. Some experts, and GAO’s 

work, suggest that FAA pursue near-term options, such as contracting out 

more services. After establishing a sound financial management record, 

FAA could pursue options for greater financial management flexibility. 

Source: Photodisc, Getty Images.

The National Airspace System 

(NAS) is a complex network of 

airports, aircraft, air traffic control 

(ATC) facilities, employees, and 

pilots. The aviation industry, 

which depends on the NAS, 

contributes about 9 percent to the 

gross domestic product. The 

Federal Aviation Administration 

(FAA), funded through a taxfinanced trust fund and General 

Fund appropriations, is pursuing a 

multibillion-dollar modernization 

program. Persistent cost, schedule, 

and/or performance shortfalls have 

kept this program on GAO’s list of 

high-risk programs since 1995. 

GAO was asked to review the 

status of NAS modernization. This 

report addresses NAS status by 

identifying the challenges that FAA 

faces in managing (1) 

infrastructure, (2) human capital, 

and (3) financial resources. 

What GAO Recommends

To facilitate NAS modernization, 

GAO recommends that FAA (1) 

estimate controller hiring and 

training costs, (2) establish a longterm focus on developing a more 

results-oriented culture, (3) 

balance immediate and long-term 

investment needs, and (4) pursue 

options for improved system 

management and development. 

In commenting on a draft of this 

report, agency officials described 

ongoing actions consistent with the 

third and fourth recommendations, 

but did not comment on the others. 

GAO believes that all four 

recommendations are needed. 
Page i GAO-06-154 Status of NAS Modernization

Contents

Letter 1

Executive Summary 3

Purpose 3

Background 5

Results in Brief 6

Principal Findings 9

Recommendations for Executive Action 14

Agency Comments and GAO Evaluation 14

Chapter 1

Introduction

16

FAA Manages the National Airspace System, a Complex

Collection of Systems and Infrastructure 16

FAA Envisions a More Flexible and Efficient NAS 23

Numerous Reviews of FAA’s Modernization Efforts Have Identified 

Problems and Proposed Solutions 26

Objectives, Scope, and Methodology 28

Agency Comments and Our Evaluation 30

Chapter 2

FAA Has Made 

Changes to Improve 

Infrastructure 

Management, but 

Acquisition, Security, 

and Capacity 

Challenges Remain

31

FAA Met Its 2004 Acquisitions Performance Goal 31

FAA Is Addressing Key Factors That Contributed to Legacy Cost, 

Schedule, and/or Performance Problems, but More Work Remains 

32

FAA Faces Challenges in Ensuring Information Security 38

FAA Faces Challenges in Expanding NAS Capacity to Meet Current 

and Future Needs 39

Agency Comments 46
Contents

Page ii GAO-06-154 Status of NAS Modernization

Chapter 3

Human Capital 

Management 

Challenges Include 

Hiring Air Traffic 

Controllers and 

Transforming FAA’s 

Organizational Culture

47

FAA Will Need to Hire and Train Thousands of Controllers in the 

Next Decade 47

FAA Has Made Progress in Implementing Human Capital Reforms, 

but Challenges Remain in Transforming Its Workforce Culture 52

Conclusions 61

Recommendation for Executive Action 62

Agency Comments 62

Chapter 4

Rising Costs and 

Declining Revenues 

Pose Financial 

Management 

Challenges

63

To Address Rising Costs and Declining Revenues, FAA Is Focusing 

on Cost Control 63

To Fund Major System Acquisitions through Fiscal Year 2009, FAA 

Has Cut Funding for Planned Investments in Other Areas 71

FAA Is Reviewing Potential Changes in Its Funding Mechanism 76

Conclusions 80

Recommendations for Executive Action 81

Agency Comments and Our Evaluation 81

Appendixes

Appendix I: Methodology for Workforce Culture Assessment 82

Appendix II: Major ATC System Acquisitions 87

Appendix III: Perceptions of Organizational Culture in FAA’s Acquisition 

Workforce and in Other Organizations 91

Appendix IV: Key Practices and Implementation Steps for Mergers and 

Organizational Transformations 97

Tables Table 1: NAS Overview 16

Table 2: Four Key Interrelated Factors Contributing to Cost 

Growth, Schedule Extensions, and/or Performance 

Shortfalls for 12 ATC System Acquisitions 33

Table 3: Common Themes and Number of Findings from ATO’s 

Headquarters Activity Value Analysis 68

Table 4: FAA Capital Funding Plans for Major ATC Modernization 

Acquisitions 72
Contents

Page iii GAO-06-154 Status of NAS Modernization

Table 5: Age of NAS Facilities 75

Table 6: Number of Surveys That FAA Mailed to the Acquisition 

Workforce and Completed Surveys Received in 1997, 2000, 

and 2003 83

Figures Figure 1: Phases of Flight 17

Figure 2: Trust Fund Revenue Sources, Fiscal Year 2004 20

Figure 3: Trust Fund Expenditures by Category, Fiscal Year 

2004 21

Figure 4: Relationship of FAA’s Plans to Department-Level and 

Executive Branch-Level Plans 22

Figure 5: Wide Area Augmentation System 23

Figure 6: Local Area Augmentation System 24

Figure 7: Prior and Current Structure of Research and Acquisitions, 

Air Traffic Services, and Free Flight Organizations 28

Figure 8: Commissioned and Planned Runways, December 1999 to 

November 2008 42

Figure 9: Projected Controller Retirements, Fiscal Years 2005 - 

2014 48

Figure 10: Cultural Changes and Key Practices Necessary for 

Successful Transformation 54

Figure 11: Changes in Mean Response Scores for Selected Items on 

FAA’s Employee Attitude Surveys, 1997 to 2000, and 2000 

to 2003, for the Acquisition Workforce 58

Figure 12: Actual Capital Appropriations, Fiscal Years 2002 – 2005, 

and Budget Targets, Fiscal Years 2006 – 2009 64

Figure 13: Aviation and Airway Trust Fund Expenditures and 

Revenues, Fiscal Years 2002 - 2004 65

Figure 14: Aviation and Airway Trust Fund Uncommitted Balances, 

Fiscal Years 2002 - 2004 66

Figure 15: Percentage Reductions in Capital Investment Plans as of 

January 2005, Compared with January 2003 73

Figure 16: Acquisition Workforce’s Mean Responses to Selected 

Items from FAA’s 1997, 2000, and 2003 Employee Attitude 

Surveys and Comparison Group’s Mean and Benchmark 

Scores for Similar Items 92
Contents

Page iv GAO-06-154 Status of NAS Modernization

Abbreviations

ADS-B Automatic Dependent Surveillance - Broadcast

ATC air traffic control

ATO Air Traffic Organization 

ATOP Advanced Technologies and Oceanic Procedures

CPDLC Controller-Pilot Data Link Communications

DOD Department of Defense

ECG En Route Communications Gateway

ERAM En Route Automation Modernization System

FAA Federal Aviation Administration 

FTI Federal Telecommunications Infrastructure

GPS Global Positioning System 

JPDO Joint Planning and Development Office

LAAS Local Area Augmentation System

NAS National Airspace System

NEXCOM Next Generation Air/Ground Communications

STARS Standard Terminal Automation Replacement System

SWIM System Wide Information Management System

TAMR Terminal Automation Modernization Replacement

WAAS Wide Area Augmentation System

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

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Page 1 GAO-06-154 Status of NAS Modernization

United States Government Accountability Office

Washington, D.C. 20548

A

October 14, 2005 Letr

The Honorable Tom Davis 

Chairman 

The Honorable Henry A. Waxman 

Ranking Minority Member 

Committee on Government Reform

House of Representatives

The Honorable Don Young

Chairman

The Honorable James L. Oberstar

Ranking Democratic Member

Committee on Transportation and Infrastructure

House of Representatives

The Honorable John L. Mica

Chairman

The Honorable Jerry F. Costello

Ranking Democratic Member

Committee on Transportation and Infrastructure

House of Representatives 

In response to your request, this report discusses the status of national 

airspace modernization and the challenges that the Federal Aviation 

Administration (FAA) faces in managing its infrastructure, human capital, 

and financial resources. The report contains recommendations to the 

Secretary of Transportation to ensure that FAA (1) follows through with its 

efforts to improve workforce culture; (2) balances current and long-term 

investment priorities; and (3) in the near term, fully uses all existing 

flexibilities to reduce costs and manage revenues, and, in the longer term, 

determines whether a business case exists to pursue more extensive 

changes, such as those requiring legislation. 

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution of it until 30 days from 

the date of this letter. At that time, we will send copies of this report to 

interested congressional committees and the Secretary of Transportation. 

We will also make copies available to others upon request. In addition, this 

report will be available at no charge on the GAO Web site at 

http://www.gao.gov. 
Page 2 GAO-06-154 Status of NAS Modernization

If you or your staff have any questions about this report, please call me at 

(202) 512-2834 or dillinghamg@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. Key contributors to this report are Tamara Dorland, Seth 

Dykes, Bess Eisenstadt, Brandon Haller, Maren McAvoy, Edmond Menoche, 

Beverly Norwood, and Mark Ramage.

Gerald L. Dillingham 

Director, Physical Infrastructure Issues
Page 3 GAO-06-154 Status of NAS Modernization

Executive Summary

Purpose Since 1981, the Federal Aviation Administration (FAA) has been conducting 

a program to modernize the National Airspace System (NAS) at a cost of 

$43.5 billion, to date. In 2003, Congress passed legislation to create the 

Next Generation Air Transportation System Joint Planning and 

Development Office (JPDO) to transform the NAS to meet the potential air 

travel demands of 2025. The NAS’s infrastructure includes the air traffic 

control (ATC) system, which relies on an extensive array of information 

technology systems, including radars, automated data processing, 

navigation and communications equipment, and ATC facilities. The NAS’s 

infrastructure also includes over 215,000 commercial and recreational 

aircraft as well as more than 19,000 airports. The aviation industry is 

critical to the nation’s economic health, contributing about 9 percent to the 

gross domestic product. However, the ability of the NAS to accommodate 

increasing volumes of air traffic is limited, in part, to airport capacity, as 

well as the efficiency with which aircraft utilize the finite amount of 

airspace available in the vicinity of airports and at cruising altitudes. The 

JPDO is beginning to plan a multiagency effort to create the Next 

Generation Air Transportation System (NGATS), intended to triple the 

capacity of the current NAS. The NAS’s human capital includes FAA’s 

50,000 employees—the air traffic controllers who guide aircraft as they 

take off, land, and fly between airports—and others who certify the safety 

of aircraft and equipment, manage ATC modernization projects, maintain 

NAS systems, and provide support services. Finally, the NAS’s financial 

resources are vitally important to ensure that it continues to meet the 

nation’s mobility needs. From fiscal years 2000 through 2004, FAA’s annual 

budget increased from $10.9 billion to approximately $14 billion; however, 

in fiscal year 2005, FAA received substantially less in capital funding than in 

prior years. FAA anticipates lean capital budgets for the immediate future, 

which enhances the need for FAA to manage its resources effectively.
Executive Summary

Page 4 GAO-06-154 Status of NAS Modernization

In 1995, GAO designated the ATC modernization program—a major 

component of NAS modernization—as a high-risk information technology 

initiative because of its size, complexity, cost, and problem-plagued past.1

 

FAA also faces challenges in expanding NAS capacity to accommodate 

future increases in demand for air travel as well as in hiring and training 

thousands of air traffic controllers to replace those expected to retire in the 

next decade. Additionally, FAA has attempted to change its workforce 

culture to one that stresses mission focus, coordination, accountability, and 

adaptability, but the agency has not provided the sustained leadership 

needed for lasting cultural change.2

 

Concerned about the challenges facing ATC modernization, the Chairman 

and Ranking Minority Member, House Committee on Government Reform, 

and the Chairmen and Ranking Democratic Members of the House 

Committee on Transportation and Infrastructure and its Subcommittee on 

Aviation asked GAO to provide an overall assessment of the status of NAS 

modernization. This report addresses the status of ATC modernization as 

well as other NAS components, by answering the following research 

question: What challenges does FAA face in managing three distinct areas: 

(1) infrastructure, (2) human capital, and (3) financial resources? This 

report is based on FAA documents and briefings as well as reviews and 

summaries of related GAO work. GAO also convened an international 

panel of experts to discuss the challenges of FAA’s NAS modernization 

efforts and the prospects that the Air Traffic Organization (ATO)—a 

recently created subunit of FAA—holds for improving modernization 

management. In addition, GAO interviewed key stakeholders representing 

labor, commercial airlines, general aviation, and the Department of

1

GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: Jan. 1, 2005). In 

August 2005, FAA submitted a plan to the Office of Management and Budget to remove ATC 

modernization from GAO’s high-risk list. FAA submitted this plan in response to a request 

from the Office of Management and Budget, which had asked agencies with programs on 

GAO's high-risk list to identify their goals for reducing fraud, waste, or mismanagement. 

Although the request specified that the purpose of the plans was not to get agency programs 

off the high-risk list, FAA intends to use the activities described in the plan as means for 

doing so, according to a Department of Transportation official.

2

“Organizational culture” is the underlying assumptions, beliefs, values, attitudes, and 

expectations shared by an organization’s members that affect their behavior and the 

behavior of the organization as a whole.
Executive Summary

Page 5 GAO-06-154 Status of NAS Modernization

Defense (DOD). This report discusses all aspects of the NAS except airline 

employees and FAA’s aircraft and equipment safety assurance operations.3

 

(See ch. 1 for additional information on GAO’s objective, scope, and 

methodology). 

Background GAO has issued numerous reports on FAA’s difficulty in meeting cost, 

schedule, and/or performance targets, as well as on FAA’s management of 

information technology, which is at the heart of many modern ATC 

systems. GAO has also reported on FAA’s efforts to expand NAS capacity 

and reduce delays, and on FAA’s human capital challenges, such as the need 

to hire and train thousands of air traffic controllers in the coming decade to 

replace those becoming eligible to retire. Finally, GAO has pointed out that 

FAA’s acquisitions were impaired because employees acted in ways that did 

not reflect a strong commitment to mission focus, accountability, 

coordination, and adaptability.

4

Congress and others have taken steps to address these issues. For example, 

Congress exempted FAA from federal personnel and acquisition 

regulations in 1995, after the 1993 National Performance Review found, and 

FAA asserted, that these regulations impeded its ability to properly manage 

the ATC modernization program. In 1997, the congressionally appointed 

National Civil Aviation Review Commission recommended that FAA’s 

management become more performance-based and that changes be made 

in how FAA is funded. In December 2000, President Clinton signed an 

executive order, and Congress passed, supporting legislation that, together, 

provided FAA with the authority to create the performance-based ATO to 

control and improve FAA’s management of the modernization effort. In 

February 2004, FAA reorganized, transferring 36,000 employees, most of 

whom worked work in air traffic services and research and acquisitions, to 

the ATO. 

3

For reports on airline employees and aircraft and equipment safety assurance workforce 

and procedures, see, for example, GAO, Aviation Safety: FAA Needs to Update the 

Curriculum and Certification Requirements for Aviation Mechanics, GAO-03-317

(Washington, D.C.: Mar. 6, 2003); Human Factors: FAA's Guidance and Oversight of Pilot 

Crew Resource Management Training Can Be Improved, GAO/RCED-98-7 (Washington, 

D.C.: Nov. 24, 1997); and Aviation Safety: Safer Skies Initiative Has Taken Initial Steps to 

Reduce Accident Rates by 2007, GAO/RCED-00-111 (Washington, D.C.: June 28, 2000).

4

GAO, Aviation Acquisition: A Comprehensive Strategy Is Needed for Cultural Change at 

FAA, GAO/RCED-96-159 (Washington, D.C.: Aug. 22, 1996).
Executive Summary

Page 6 GAO-06-154 Status of NAS Modernization

In 2003, Congress authorized creation of a Joint Planning and Development 

Office (JPDO) to create and carry out an integrated plan to develop the 

next generation air transportation system, capable of meeting potential air 

traffic demand by 2025. While NAS modernization has previously been 

mainly under the purview of FAA, with a 10-year planning horizon, the 

JPDO is charged with coordinating research activities of multiple agencies, 

including FAA, to coordinate a 20-year research and development program. 

Results in Brief As GAO reported, FAA has taken many positive steps to improve the 

management of its infrastructure, but it still faces significant challenges. 

FAA met its acquisition performance goal for 2004, which indicates a good 

start in addressing the factors that contributed to past system acquisition 

problems. However, FAA will need to continue addressing four key factors 

that, as GAO has reported, have historically contributed individually or 

collectively to acquisitions missing their original cost, schedule, and 

performance targets: (1) acquisitions receiving less funding than called for 

in agency planning documents, (2) adding requirements and/or unplanned 

work, (3) underestimating the complexity of software development, and (4) 

not sufficiently involving stakeholders throughout system development.5

 

To address these and other issues that GAO has identified, FAA has taken 

some actions, but in some cases, needs to do more. For example, to 

improve its acquisition of software-intensive ATC systems, FAA developed 

a process improvement model, but did not mandate the model’s use 

throughout the organization. In response to GAO’s recommendation that it 

do so, FAA has begun developing a requirement that projects have process 

improvement activities in place before seeking approval from the FAA 

investment review board. Moreover, GAO has reported that FAA’s 

acquisition management system does not ensure the use of a knowledgebased approach found in the best practices for managing commercial 

product developments. Commercial best practices call for specific 

knowledge to be captured and used by corporate-level decision makers to 

determine whether an acquisition has reached a level of development 

(product maturity) sufficient to move forward in the acquisition process. 

Additionally, while FAA has begun to develop its NAS enterprise 

architecture—a blueprint to guide and constrain its information technology 

investments—the agency needs to do more to achieve the architecture’s 

5

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

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

D.C.: June 10, 2005).
Executive Summary

Page 7 GAO-06-154 Status of NAS Modernization

full benefits. Another challenge is protecting information technology 

systems—an issue that has been on GAO’s high-risk list since 1997. GAO 

recently reported that FAA faces critical needs in protecting its information 

technology-intensive ATC systems from inadvertent or intentional 

disruption.6

 Finally, FAA will be challenged to expand NAS capacity to 

accommodate anticipated increases in air travel. To this end, FAA is 

supporting the development of new runways and airports, and is 

redesigning flight patterns to make more efficient use of airspace as 

aircraft take off, cruise, and land. 

FAA’s major human capital challenges include hiring and training 

thousands of air traffic controllers to replace those expected to retire, and 

transforming the agency’s organizational culture. First, FAA will need to 

hire and train thousands of air traffic controllers in the next decade to 

replace those who were hired after the air traffic controllers’ strike in 1981. 

As GAO recommended in 2002,7

 FAA developed a comprehensive plan for 

this hiring and training effort. The plan describes expected recruitment 

sources, planned revisions to ATC facility staffing standards, a screening 

process to eliminate potentially unsuccessful candidates, and proposed 

upgrades to controller training facilities. To mitigate the costs of the 

controller training and hiring program, FAA’s plan includes a number of 

steps that the agency expects will reduce controller staffing requirements 

by 10 percent. However, FAA has not calculated the savings that each step 

will achieve or the total cost of hiring and training. As a result, FAA cannot 

estimate the impact of the hiring and training effort on future budgets. As 

of June 2005, FAA was studying a proposal that could save costs by 

allowing potential controllers, after graduating from aviation-related 

college programs, to bypass FAA’s controller training academy and 

immediately start their on-the-job training at an ATC facility. Second, FAA’s 

workforce culture remains a concern. Responding to GAO’s 1996 finding 

that FAA’s workforce culture impaired its acquisitions, the agency 

developed a strategy for cultural change, but did not sustain its efforts. FAA 

is now developing baseline data for measuring the progress of its cultural 

transformation. FAA’s recent action is a good first step, but continued 

management focus and commitment will be needed for success in this area, 

6

GAO, Information Security: Progress Made, but Federal Aviation Administration Needs 

to Improve Controls Over Air Traffic Control Systems, GAO-05-712 (Washington, D.C.: 

Aug. 26, 2005).

7

GAO, Air Traffic Control: FAA Needs to Better Prepare for Impending Wave of Controller 

Attrition, GAO-02-591 (Washington, D.C.: June 14, 2002).
Executive Summary

Page 8 GAO-06-154 Status of NAS Modernization

since, as we have reported, at least 5 years is needed to achieve cultural 

change.8

 

In managing its financial resources, FAA faces the dual challenges of rising 

costs and declining revenues that it projects will produce an $8.2 billion 

gap between expected budget targets and expected spending requirements 

through fiscal year 2009.9

 FAA is striving to live within its reduced means by 

focusing on cost control and prioritizing projects. However, these actions 

will not come close to eliminating the gap, and some actions, such as 

cutting funding for new technology, come at the expense of future goals. 

For example, FAA eliminated $1.4 billion planned for early research, which 

included research on two systems that FAA had described as 

“cornerstones” of the NAS of the future. These technologies could have 

supported the JPDO’s vision for the next generation air transportation 

system. As the expiration for the Aviation and Airway Trust Fund (Trust 

Fund) and FAA’s reauthorization—both scheduled for 2007—approach, 

FAA officials, aviation experts, and stakeholders are discussing how to 

better align FAA’s revenue structure with actual costs and changes in the 

aviation industry. Over half of the Trust Fund’s income now comes from a 

ticket tax, which some stakeholders believe is not linked to FAA’s costs. A 

congressionally appointed commission made a similar recommendation in 

1997, that the FAA’s revenue stream become more cost based. Some 

experts suggested that FAA work toward changes that would be possible 

within the existing federal structure, such as improving its process for 

prioritizing programs or exploring further options for contracting out 

services. Others maintained that the ATO’s relationship with Congress must 

change to allow the ATO to manage its own finances. GAO has reported 

that to address the challenges of the 21st Century, the nation needs to 

fundamentally reexamine such governance issues. In GAO’s view, FAA 

could adopt a two-staged approach to address its financial management 

challenges: In the near term, make changes that are possible within the 

federal structure and establish a record of sound financial management. 

Over the longer term, determine whether sufficient evidence exists to 

develop a business case for more fundamental changes that could permit 

greater financial management flexibility. 

8

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

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

9

In this report, the term “budget targets” means the outyear budgets provided by the Office 

of Management and Budget. 
Executive Summary

Page 9 GAO-06-154 Status of NAS Modernization

Principal Findings

FAA Has Made Changes to 

Improve Infrastructure 

Management, but 

Acquisition, Security, and 

Capacity Challenges Remain 

GAO’s recent reports on FAA’s management of its infrastructure indicate 

that FAA has responded to several past recommendations, but needs to do 

more work to address continuing challenges. For example, FAA met its 

acquisition performance goal for fiscal year 2004—to meet 80 percent of 

designated milestones and maintain 80 percent of critical program costs 

within 10 percent of the budget, as published in FAA’s Capital Investment 

Plan. This represents a good start. However, because the goal uses cost or 

schedule milestones that are set for each fiscal year, it needs to be viewed 

in the context of FAA’s long-term acquisition performance. For example, 

during 2005, FAA plans to make changes to three major system 

acquisitions, effectively resetting the program milestones and cost targets 

against which it measures annual performance. Hence, this performance 

goal does not provide a consistent benchmark—such as the cost and 

schedule targets set at an acquisition’s inception—for assessing progress 

over time. These annual performance targets should continue to be viewed 

in the broader context of acquisitions’ original and revised baselines, and 

the variance reports provided to the FAA administrator and to Congress.

FAA still faces challenges in addressing four factors that GAO found to be 

the cause of acquisitions missing their original cost, schedule, and/or 

performance targets. These factors-—funding shortfalls, requirements 

growth and/or unplanned work, insufficient stakeholder involvement, and 

underestimation of software complexity—individually or collectively 

contributed to these problems and often interacted. For example, when 

developing a satellite navigation system, FAA underestimated the 

complexity of the system’s software as it compressed the development 

schedule. This underestimate then contributed to unplanned work, cost 

increases, and schedule delays.
Executive Summary

Page 10 GAO-06-154 Status of NAS Modernization

To address these four factors and improve its general management of 

system acquisitions, FAA has taken several steps, but in a number of cases, 

it needs to do more. For example, FAA has obtained substantial benefits by 

developing and using a process improvement model in a number of 

software-intensive system acquisitions. FAA has begun developing a 

requirement that projects have process improvement activities in place 

before seeking approval from the FAA investment review board, as GAO 

recommended.10 Also in response to a GAO recommendation, FAA officials 

reported that they have improved the agency’s investment portfolio 

management through semiannual reviews of in-service systems.11 FAA also 

changed its format for justifying major technology investments to a format 

prescribed by the Office of Management and Budget. However, FAA’s 

acquisition management system still lacks a knowledge-based approach 

consistent with commercial best practices. Knowledge-based approaches 

ensure that, as acquisitions progress, officials obtain knowledge at specific 

junctures of an acquisition cycle, or knowledge points, thereby decreasing 

the risk of cost growth and schedule delays. Finally, although FAA has 

begun to develop a NAS enterprise architecture, it has not completed the 

architecture that it needs to manage its information technology 

investments.12 GAO’s experience with federal agencies has shown that 

making information technology investments without defining these 

investments in the context of an architecture often results in duplication, 

poor integration, and unnecessary costs.

GAO’s most recent report on FAA’s efforts to provide security for its 

information technology-intensive ATC systems notes that FAA needs to 

take steps to do more to protect these systems from inadvertent or 

intentional disruption.13 While FAA has established an information security 

program, the agency has not fully implemented it. As a result, GAO found 

outdated security plans, a lack of security awareness training, limited 

incident detection capabilities, and shortcomings in service continuity 

10GAO, Air Traffic Control: System Management Capabilities Improved, but More Can Be 

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

11GAO, Information Technology: FAA Has Many Investment Management Capabilities in 

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

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

12GAO, Federal Aviation Administration: Stronger Architecture Program Needed to Guide 

Systems Modernization Efforts, GAO-05-266 (Washington, D.C.: Apr. 29, 2005).

13GAO-05-712. 
Executive Summary

Page 11 GAO-06-154 Status of NAS Modernization

plans. GAO also found weaknesses that threaten the integrity, 

confidentiality, and availability of these systems, including weaknesses in 

controls over who can obtain access. Accordingly, GAO recommended 

several actions intended to improve FAA’s information security program. 

FAA agreed to consider our recommendations, but expressed concern that 

we had overstated the system’s vulnerability to disruption. We 

acknowledged that FAA may have other protections built into its overall 

system architecture. However, because these systems are interconnected, 

the weaknesses we identified in the systems that we reviewed may increase 

the risk to other systems.

To accommodate an expected 25 percent increase in air travel, many 

airports are building new runways. FAA is leveraging the benefits of new 

and existing runways by redesigning flight procedures to allow properly 

equipped aircraft to take off, cruise, and land with reduced separation 

while maintaining safety. 

Human Capital Management 

Challenges Include Hiring 

Air Traffic Controllers and 

Transforming FAA’s 

Organizational Culture

During the next decade, FAA will need to replace thousands of air traffic 

controllers who will become eligible for retirement. During the 1980s and 

early 1990s, FAA hired large numbers of controllers to replace those who 

were fired when they went on strike in 1981. As a result, most of the current 

workforce will become eligible for retirement over the next 10 years. In 

December 2004, responding to GAO’s recommendation,14 FAA issued a 

hiring and training plan. To mitigate the cost of the plan, FAA plans to rely 

on part-time employees and job-sharing arrangements. However, the plan 

does not disclose the cost of hiring and training controllers, and agency 

officials could not provide any analyses to support the plan’s estimates of 

cost savings. Hence, the impact of this hiring and training program on 

future budgets is unclear. If FAA experiences shortages in controller 

staffing, the agency plans to maintain safety by slowing the traffic flow, 

which could result in delays. In June 2005, FAA began considering whether 

prospective controllers who graduate from aviation-related programs in 

certain colleges could bypass the currently required academy training and 

instead proceed directly to an ATC facility to begin on-the-job training. 

Such a change in the training program holds potential for cost savings and 

is endorsed by union officials and by one of the colleges that prepares 

graduates for careers in aviation.

14GAO-02-591.
Executive Summary

Page 12 GAO-06-154 Status of NAS Modernization

FAA has implemented a number of human capital reforms in response to an 

exemption from federal personnel management regulations. FAA replaced 

the traditional civil service pay system with a series of pay bands and 

specific job categories that have minimum and maximum pay rates 

spanning two to five pay bands. FAA also established its own hiring 

program, a flexible system for adjusting the number of executive-level 

positions, and a new performance management system. 

FAA is taking steps to create a results-oriented culture, addressing a factor 

that we identified as an impediment to ATC modernization in 1996. 

Recognizing the importance of organizational culture in achieving results, 

FAA’s human capital plan includes a goal to create a results-based 

performance culture. Furthermore, FAA is using the results of its most 

recent employee attitude survey as a baseline to assess the organization’s 

progress in adopting five core values that the management team selected. 

The core values are (1) integrity and honesty, (2) accountability and 

responsibility, (3) commitment to excellence, (4) commitment to people, 

and (5) fiscal responsibility. FAA’s actions are good first steps, but 

continuous management attention over the next several years will be 

crucial to achieving the cultural change that FAA is seeking. GAO’s work 

has highlighted the importance of recognizing organizational culture as a 

step in implementing mergers and transformations and has found that 

achieving cultural change typically takes 5 to 7 years years or longer.15 In 

the past, FAA’s efforts at cultural change lacked follow-through and 

continuity. While there was some improvement in securing a more resultsoriented culture, as measured by employee responses to surveys in 1997 

and 2000, progress leveled off between the 2000 and the 2003 surveys. 

Rising Costs and Declining 

Revenues Pose Financial 

Management Challenges

FAA projects that rising costs and reduced budgets will create a cumulative 

gap of $8.2 billion between expected budget targets and expected spending 

requirements through fiscal year 2009. FAA’s budget targets for capital for 

each year through fiscal year 2009 will be 17 percent less, on average, than 

the annual appropriations it received in fiscal years 2002 through 2004. 

Additionally, recent trends in the Trust Fund, which provides most of FAA’s 

funding, have raised concerns. Since 2002, FAA has spent more than the 

Trust Fund has taken in, and the Trust Fund’s uncommitted balance has 

declined by nearly 50 percent. Although revenues increased in 2004, FAA’s 

15GAO-03-669.
Executive Summary

Page 13 GAO-06-154 Status of NAS Modernization

expenditures increased more. FAA is striving to live within its reduced 

means by cutting programs and focusing on cost control. For example, for 

fiscal year 2005, after an intensive review of its capital investment portfolio, 

FAA suspended the acquisition of a digital communications data link and a 

precision landing system augmented by satellites, and terminated a major 

component of a new digital communications system. Additionally, FAA has 

begun to implement a new cost accounting system, as GAO has long 

advocated. GAO had previously reported that FAA lacked the cost 

information necessary for decision making and for adequate accounts of its 

activities and major projects, such as the air traffic control modernization 

program. FAA also expects to save about $450 million over 5 years through 

cost-reduction measures such as contracting out its flight service stations. 

However, FAA is not likely to meet its financial challenges through savings, 

given other pressing needs. FAA has had to significantly cut capital funding 

aimed at providing future benefits in order to remain within expected 

appropriations, while providing $4.2 billion for 16 major system 

acquisitions through 2009. For example, in its 2005 through 2009 capital 

investment plan, FAA eliminated the $1.4 billion that it had set aside for 

what it calls the “architecture segment,” which would have supported 

initial research and development of new technologies, prior to initiating 

formal acquisition programs. This reduction comes at an inopportune time, 

as the JPDO begins its efforts to coordinate the research of FAA and other 

federal agencies to transform the NAS to meet potential capacity needs in 

2025. FAA also cut nearly $790 million from its planned investments for 

facilities. While FAA has replaced many ATC facilities in the last 5 years, 

the funding reduction could delay progress on ATC facilities that are 

scheduled for repair or replacement in the future. 

In anticipation of the Trust Fund’s expiration and FAA’s reauthorization, 

both scheduled for 2007, FAA officials, aviation experts, and stakeholders 

are debating the appropriateness of the current revenue structure and are 

reiterating some of the recommendations made in the past, such as those 

that the National Civil Aviation Review Commission made in 1997. Many 

stakeholders and aviation experts, as well as Department of Transportation 

officials, have suggested in various forums that FAA’s funding mechanism 

needs to be changed to one that is more closely aligned with FAA’s costs. 

FAA’s 2004 performance report notes that the current revenue structure is 

heavily reliant on the number of airline passengers in the NAS, while FAA’s 

workload and costs are driven by the number of aircraft operating in the 

NAS. Some experts stated that to effectively manage its acquisitions, FAA 

needs multiyear funding, financed by debt if necessary, as the commission 

recommended. Others suggested that FAA take steps in the near term to 
Executive Summary

Page 14 GAO-06-154 Status of NAS Modernization

reduce costs within the existing structure of congressional oversight and 

financial control, such as exploring additional opportunities to contract out 

night-time ATC services. Others went so far as to state that FAA cannot 

fully address legacy modernization problems without complete managerial 

and budgetary independence. GAO has reported that to address the 

challenges of the 21st Century, the nation needs to fundamentally 

reexamine what the government should do, how it should do business, and 

how it should be financed. GAO believes that in the near term, FAA must 

pursue currently available options, such as exploring additional 

opportunities for contracting out services and pursuing other cost-saving 

measures, and demonstrate improvement in its ability to manage its costs. 

After fully exploiting these options, and establishing a record of improved 

financial management, FAA could consider longer term changes by 

reexamining fundamental issues such as the appropriate government role 

in aviation and the funding mechanism that supports the ATC system. 

Ultimately, Congress and the President will decide these issues.

Recommendations for 

Executive Action

GAO is recommending that FAA take the following four actions: (1) 

estimate the cost of its controller hiring and training plan and provide for 

these costs in future budget requests; (2) provide the long-term 

commitment to transforming the culture to become more results oriented 

so that the change takes root; (3) balance current and long-term investment 

priorities; and (4) use all available management tools and, after establishing 

a record of improved financial management, explore more fundamental 

changes that could provide greater financial management flexibility. 

Agency Comments and 

GAO Evaluation

GAO provided a draft of this report to the Department of Transportation for 

its review and comment. In response, ATO managers; FAA’s Chief 

Information Officer; and the Acting Director, Office of Financial Controls, 

provided oral comments. ATO managers noted that GAO’s 

recommendations on balancing current and long-term investment priorities 

and using all available financial management tools may not be necessary 

because FAA is taking actions consistent with these recommendations. 

According to FAA, the agency’s balancing of current and long-term 

investment priorities will be reflected in its fiscal year 2007 budget request, 

which was being formulated in parallel with GAO’s work. GAO is retaining 

this recommendation because it pertains not only to fiscal year 2007, but to 

future years as well. FAA also commented that it is using all available 

management tools, including examining alternative funding mechanisms. 
Executive Summary

Page 15 GAO-06-154 Status of NAS Modernization

GAO believes that FAA needs to pursue additional cost saving tools, such 

as exploring further opportunities to contract out services; consolidate 

major facilities; and accelerate decommissioning of ground-based 

navigation aids, as GAO has noted in this report. Therefore, GAO is 

retaining the recommendation to this effect. FAA did not comment on the 

other recommendations. FAA provided technical comments and 

clarifications throughout the report, which GAO incorporated as 

appropriate. 
Page 16 GAO-06-154 Status of NAS Modernization

Chapter 1

Introduction Chapte1r

FAA Manages the 

National Airspace 

System, a Complex

Collection of Systems 

and Infrastructure

The Federal Aviation Administration’s (FAA) mission is to provide the 

safest, most efficient aerospace system in the world. This system, known as 

the National Airspace System (NAS), consists of (1) infrastructure 

(systems, procedures, facilities, airports and aircraft, communications 

equipment, satellite navigation aids, and radars); and (2) human capital 

(the people who make the NAS work—commercial, military, and general 

aviation pilots and airline dispatchers, and FAA employees, including 

equipment maintenance technicians and air traffic controllers who work in 

airport towers, and terminal area, en route, and oceanic air traffic control 

(ATC) centers. (See table 1.) 

Table 1: NAS Overview

Source: FAA.

a

Includes approximately 950 nondirectional beacons owned by local governments and other entities.

The NAS covers every aspect of aviation in the United States, beginning 

with the aircraft itself. FAA certifies aircraft as safe to operate in the NAS, 

from the earliest stages of design to 30 years after entry into service. FAA 

also certifies the NAS’s practices, personnel, and spare parts. Additionally, 

FAA sets standards for the construction and operation of the public and 

private airports located throughout the NAS. 

On a larger scale, the NAS is a highly technical system and includes some 

36,000 pieces of equipment operating in hundreds of locations throughout 

the United States. This equipment can range from a single navigation 

beacon in Brooke, Virginia, to an air route traffic control center, such as 

that in Oberlin, Ohio, that handles en route traffic. The mission of this 

Infrastructure Approximate number

Airports 19,500

Aircraft (large, regional, and general aviation) 215,000

En route control centers 21

Oceanic control centers 3

Terminal radar approach facilities 162

Ground-based navigational aids 2,200a

Human capital

FAA’s Air Traffic Controllers 15,000

Other FAA employees 35,000

Pilots 600,000
Chapter 1

Introduction

Page 17 GAO-06-154 Status of NAS Modernization

highly integrated system is to support all phases of flight for aircraft in the 

United States, from initial flight planning to successful takeoff, en route 

operations, and landing. (See fig. 1.) 

Figure 1: Phases of Flight

Definitions of phases of flight:

Preflight: The period before the aircraft starts to move. It includes an 

extended strategic planning period that precedes flights. During this 

period, air traffic controllers compare the amount of traffic in the NAS with 

available capacity and develop initial strategies to mitigate any imbalances. 

Airport surface: The periods from the terminal gate to takeoff and from 

touchdown to the terminal gate at the destination. Air traffic controllers in 

airport towers control aircraft during this phase. 

Terminal departure and terminal arrival: The periods immediately 

following takeoff, when the aircraft initially climbs from the origination 

airport, and toward the end of a flight, when the aircraft descends to the 

destination airport. Air traffic controllers in airport towers control aircraft 

during the initial moments after takeoff and prior to landing, when the 

aircraft is within 5 nautical miles of the airport and up to 3,000 feet above 

the airport. Air traffic controllers at terminal approach control facilities, 

called TRACONS, control aircraft from the point where the airport tower’s 

control ends to approximately 50 miles from the airport. 

En route: The phase that occurs between terminal areas, including the 

climb, cruise, and decent phases of the flight. Air traffic controllers at air 

route traffic control centers control aircraft during the en route phase of 

Preflight Airport

surface

Terminal

departure

En route/

oceanic

Terminal

arrival

Airport

surface

Source: FAA.
Chapter 1

Introduction

Page 18 GAO-06-154 Status of NAS Modernization

flight, and in some areas of the country, also control aircraft during the 

arrival and departure phases.

Oceanic: Analogous to the en route phase, except the aircraft is operating 

in oceanic air space, where there are fewer communication, navigation, 

and surveillance capabilities than are available over land. 

The ATC system, which is a principal component of the NAS, comprises a 

vast network of radars; automated data processing, navigation and 

communication equipment; and air traffic control facilities. About 15,000 

air traffic controllers control aircraft in the system and provide critical data 

throughout every stage. They work in the 162 terminal radar control 

facilities, the 21 air route traffic control centers that manage aircraft in the 

en route environment, and the 3 oceanic control centers. All of these 

control centers are linked and managed through the Air Traffic Control 

System Command Center in Herndon, Virginia. The NAS also includes 

thousands of navigational aids throughout the United States that provide 

critical location information to pilots at all stages of their operations.1

 

The nation’s 19,500 airports are key components of the NAS, as they serve 

as gateways to air travel. Several of the nation’s largest airports, such as 

Chicago’s O’Hare, New York’s LaGuardia, and Atlanta’s Hartsfield, are at 

capacity and need immediate improvements. Because the NAS functions as 

an interdependent network, delays at these airports can quickly create a 

“ripple” effect of delays that affects many airports across the country. For 

example, flights scheduled to take off from these airports may find 

themselves being held at the departing airport due to weather or limited 

airspace. Similarly, an aircraft late in leaving the airport where delays are 

occurring may be late in arriving at its destination, thus delaying the 

departure time for that aircraft’s next flight.

The current NAS continues to reflect its origins as a system in which 

aircraft flew directly between ground-based navigational aids along FAAdefined routes. The existing airspace structure and boundary restrictions 

strongly reflect the constraints that communication and computer systems 

imposed as the NAS developed over the past 80 years. The advanced 

information technology available today, such as satellite navigation 

systems onboard aircraft, digital communication, and computer decision1

A navigation aid is any visual or electronic device, airborne or on the surface, that provides 

point-to-point guidance information or position data to aircraft in flight.
Chapter 1

Introduction

Page 19 GAO-06-154 Status of NAS Modernization

support systems, holds potential for increasing airspace capacity, 

improving aviation safety, and providing efficiencies to aircraft operators 

and service providers.2

 FAA is working to harness this new technology by 

transitioning the NAS from a ground-based system to a hybrid that uses 

both ground-based and airborne systems, thereby allowing pilots to be the 

primary decision makers as they navigate their aircraft, while controllers 

intervene only by exception. Making this transition requires that 

procedures, roles, responsibilities, equipment, and automation functions 

evolve into a structure that gives users greater flexibility in planning and 

conducting flights. 

Such an evolution is a key component of the Joint Planning and 

Development Office’s (JPDO) vision for the Next Generation Air 

Transportation System. In 2003, Congress directed the Secretary of 

Transportation to establish the JPDO to create, among other things, an 

integrated plan to ensure that the future air transportation system meets 

safety, security, mobility, efficiency, and capacity needs of the year 2025.3

 

The JPDO is expected to operate in conjunction with relevant programs in 

the National Aeronautics and Space Administration; the Departments of 

Defense, Commerce, and Homeland Security; and other agencies as 

needed. The JPDO published a report in December 2004 that describes the 

need for change in the NAS over the next 20 years.4

FAA receives most of its funding from the Airport and Airway Trust Fund 

(Trust Fund), which was established by the Airport and Airway Revenue 

Act of 19705

 to help fund the development of a nationwide airport and 

airway system as well as investments in air traffic control facilities. The 

Trust Fund receives most of its income from a number of taxes paid by 

passengers or airlines. (See fig. 2.) It funds the Airport Improvement 

Program, which provides grants that airports use in combination with other 

funding sources to finance construction and safety projects; capital 

2

The term “service provider” refers to anyone who furnishes NAS users with separation 

assurance, traffic management, infrastructure management, aviation information, 

navigation, landing, airspace management, search and rescue, or aviation assistance 

services. 

3

P.L. 108-176, December 12, 2003.

4

Joint Planning and Development Office, Next Generation Air Transportation System: 

Integrated Plan (Washington, D.C.: Dec. 12, 2004).

5

P.L. 91-258.
Chapter 1

Introduction

Page 20 GAO-06-154 Status of NAS Modernization

expenditures; and the Research, Engineering, and Development account. 

(See fig. 3.) The General Fund provided 40 percent of FAA’s operating funds 

and 22 percent of FAA’s total budget in fiscal year 2004.

Figure 2: Trust Fund Revenue Sources, Fiscal Year 2004

Note: Transportation of persons includes domestic passenger ticket taxes, domestic flight segment 

fees, rural airports ticket taxes, and frequent flyer taxes. In the past, FAA had reported estimates of 

each of these taxes based on an internal allocation formula. Under that formula, passenger ticket taxes 

contributed about half of the Trust Fund’s revenues. The Trust Fund also receives tax revenue from the 

sale of noncommercial aviation gasoline. In fiscal year 2004, this tax contributed 0.3 percent of Trust 

Fund revenues.

Transportation of persons 

Use of international air facilities 

Transportation of property 

Interest on investments 

Aviation fuel - commercial 

3%

Aviation fuel

other than gasoline (non-commercial) 

5%

5%

5%

15%

67%

Source: GAO analysis of FAA data.
Chapter 1

Introduction

Page 21 GAO-06-154 Status of NAS Modernization

Figure 3: Trust Fund Expenditures by Category, Fiscal Year 2004

To organize its efforts to manage the NAS, FAA has developed a variety of 

plans, which it links to the President’s Management Agenda.6

 (See fig. 4.) 

FAA’s strategic plan, titled the Flight Plan, provides a 5-year view of the 

agency’s goals and performance measures. Each of the agency’s major 

organizational units, called lines of business, develops a plan that supports 

the Flight Plan. The Operational Evolution Plan monitors how NAS 

capacity will change over a rolling 10-year planning horizon depending on 

numerous variables, such as the demand for air travel, the completion of 

new runways; and the availability of new ATC systems. Ultimately, FAA 

plans to link the Operational Evolution Plan and the 20-year plan of the 

JPDO.

6

The President’s Management Agenda was issued in fiscal year 2002 as a strategy for 

improving the performance and management of the federal government.

43%

29%

27%

Source: GAO analysis of FAA data.

Operations

Airport Improvements

Capital

1%

Research, Engineering, and Development
Chapter 1

Introduction

Page 22 GAO-06-154 Status of NAS Modernization

Figure 4: Relationship of FAA’s Plans to Department-Level and Executive Branch-Level Plans

Source: FAA.

Strategic Planning

Interagency National Plan

Operational Evolution Plan

Strategic Management Process
Chapter 1

Introduction

Page 23 GAO-06-154 Status of NAS Modernization

FAA Envisions a More 

Flexible and Efficient 

NAS

Satellite-based ATC systems and new digital communications systems are 

key elements of FAA’s vision for NAS modernization. Under this vision, 

pilots would use performance-based navigation, which makes optimum use 

of an aircraft’s capabilities, combined with new satellite and ground-based 

navigation systems and digital communications systems to use the NAS 

more efficiently. Properly equipped aircraft would navigate using satellite 

signals from the global positioning system (GPS). Because GPS alone does 

not produce a signal that matches the performance of existing groundbased navigation aids, FAA has deployed a Wide Area Augmentation 

System (WAAS), consisting of many widely spaced wide area reference 

stations, that provide information necessary to transmit the WAAS signal to 

users. (See fig. 5.) GPS and WAAS provide precise navigation and landing 

guidance at all airports, including the thousands that have no ground-based 

landing capacity. Consequently, WAAS significantly enhances navigation 

capabilities at these U.S. airports. 

Figure 5: Wide Area Augmentation System 

Source: Photo courtesy of FAA.
Chapter 1

Introduction

Page 24 GAO-06-154 Status of NAS Modernization

FAA is developing a similar system, called the Local Area Augmentation 

System (LAAS). (See fig. 6.) LAAS would also use GPS signals to provide 

more precise landing guidance at airports, but coverage would be airportspecific rather than nationwide, like WAAS’s coverage. LAAS, as 

envisioned, would exceed the capabilities of current instrument landing 

systems and increase NAS capacity by providing more precise approach 

paths and reducing required separation between incoming aircraft in all 

weather conditions, as well as shorter and more flexible curved 

approaches to airports. WAAS and LAAS could eventually allow FAA to 

eliminate about half of the current ground-based system of navigational 

aids and instrument landing systems. 

Figure 6: Local Area Augmentation System

However, WAAS and LAAS cannot fully replace ground-based navigational 

technologies because GPS signals are susceptible to disruptions from 

atmospheric effects, signal blockage from buildings, and interference from 

communications equipment, as well as from deliberate acts. Without a 

backup system, such as that provided by ground-based navigational aids, 

commercial operations, which are essential to the nation’s economic 

vitality, could be interrupted. Therefore, FAA and the Department of 

Source: Photo courtesy of FAA.
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Introduction

Page 25 GAO-06-154 Status of NAS Modernization

Defense (DOD) plan to maintain a number of ground-based navigational 

aids and instrument landing systems as a backup system. These aids and 

systems would also serve general aviation aircraft that are not equipped 

with satellite navigation systems. The backup system could further aid in 

reestablishing surveillance of an aircraft that loses satellite contact. 

FAA’s vision for NAS modernization also includes digital communications 

systems, such as that envisioned under the Controller-Pilot Data Link 

Communications (CPDLC) program. CPDLC would improve the efficiency 

of routine communications by sending structured sets of phrases between 

controllers and pilots in suitably equipped aircraft to eliminate the need for 

voice communications, thereby reducing air traffic controller workload 

and allowing better use of voice frequencies. The Next Generation Air-toGround Communication System (NEXCOM) would replace existing analog 

controller-pilot communication systems with a new state-of-the-art digital 

system. This would improve ATC communications capabilities and security 

by requiring a digital form of authentication, thus preventing the possibility 

of “phantom controllers” gaining access to the communications system. 

Collecting weather data and forecasting weather conditions are joint 

efforts of the Department of Commerce, FAA, and DOD. Weather 

information is critical for NAS operators—those who control aircraft and 

provide flight service information to pilots, as well as NAS users—the 

pilots, airline dispatchers, and airport operators, among others, who use it 

in every facet of their operations. Weather information systems range from 

the automated weather data systems at airports to sophisticated forecasts 

of en route conditions. For example, the Alaskan Flight Services 

Automation System will integrate real-time weather graphics with weather 

and aeronautical information.7

 The overall network of weather data 

collection sites, computer systems, and communications covers the entire 

United States. 

7

FAA has an ongoing ATC modernization effort in Alaska. This modernization effort includes 

software improvements for pilots’ weather briefings and infrastructure improvements for 

flight service facilities.
Chapter 1

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Page 26 GAO-06-154 Status of NAS Modernization

Numerous Reviews of 

FAA’s Modernization 

Efforts Have Identified 

Problems and 

Proposed Solutions

We have reported on the cost, schedule, and/or performance problems that 

FAA has encountered in NAS modernization and Congress has passed 

legislation to address these problems. We have issued numerous reports 

and made over 30 recommendations to improve FAA’s ATC modernization 

efforts. These reports focused on many aspects of the NAS, including 

• the management of modernization projects, including the use of project 

reviews, milestones, and baselines, and the development of costaccounting information;

• the management of the information technology that is at the heart of 

many modern ATC systems, many of which could directly or indirectly 

increase NAS capacity; 

• the challenges FAA faces in increasing NAS capacity and reducing 

delays;

• human capital challenges, such as the need to hire thousands of air 

traffic controllers in the coming decade to replace those becoming 

eligible to retire; and 

• a workforce culture that lacked the mission focus, accountability, 

coordination, and adaptability needed for FAA to meet its cost, 

schedule, and performance targets for system acquisitions. 

FAA has implemented many of these recommendations to varying degrees.

In September 1993, the National Performance Review concluded that, 

among other things, federal personnel rules prevented FAA from reacting 

quickly to the agency’s needs for attracting and hiring staff. Subsequently, 

Congress directed the Secretary of Transportation to study the 

management, regulatory, and legislative reforms that would enable FAA to 

provide better ATC services. The Secretary of Transportation argued 

strongly that the agency needed flexibility to pay people what the job 

required and to move them where the work was needed, without the 

restrictions of standard government personnel procedures. FAA also 

maintained that it needed flexibility to deviate from the Federal Acquisition 

Regulations to allow it to better manage its ATC modernization program. 
Chapter 1

Introduction

Page 27 GAO-06-154 Status of NAS Modernization

Congress exempted FAA from most personnel and procurement 

regulations in legislation passed in late 1995.8

In 1994, to provide more stability in FAA leadership, Congress established a 

5-year term for the administrator. The first administrator to complete this 5-

year term served from 1997 to 2002. In contrast, during the first 10 years of 

the ATC modernization effort, FAA had seven administrators and acting 

administrators, whose average tenure was less than 2 years. 

In 1996, Congress established the National Civil Aviation Review 

Commission to develop, among other things, specific recommendations on 

how the administration could reduce costs, raise additional revenue for the 

support of agency operations, and accelerate modernization efforts. In 

1997, the commission offered the following recommendations: 

• FAA’s management must become more performance based,

• FAA must control its operating costs and increase capital investments,

• airport capital needs must be met,

• FAA’s revenue stream must become more cost based, and 

• FAA’s budget treatment must change. 

In December 2000, President Clinton issued an executive order and 

Congress passed supporting legislation, which together gave FAA the 

authority to create the performance-based Air Traffic Organization (ATO) 

to control and improve FAA’s management of the modernization effort.9

 

The executive order envisioned that the ATO would be better able to 

exercise the procurement and personnel authorities granted by Congress. 

The order directed the ATO to incorporate FAA’s Research and Acquisitions 

and Air Traffic Services organizations—essentially those that develop and 

acquire systems, and those that operate them, respectively. FAA hired a 

chief operating officer in August 2003 to head the ATO. In February 2004, 

8

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

9

Executive Order 13180, which created the ATO, was amended by Executive Order 13264 in 

June 4, 2002, which removed the caveat that air traffic services are an “inherently 

governmental function.”
Chapter 1

Introduction

Page 28 GAO-06-154 Status of NAS Modernization

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

air traffic services and in research and acquisitions, to the ATO. (See fig. 7.)

Figure 7: Prior and Current Structure of Research and Acquisitions, Air Traffic Services, and Free Flight Organizations

Objectives, Scope, and 

Methodology

We assessed the status of FAA’s efforts to modernize several key 

components of the NAS’s infrastructure: ATC systems—a major 

component of the NAS; information security; and NAS capacity expansion 

through airspace redesign and runway construction. We also addressed 

FAA’s human capital and financial management challenges, including rising 

FAA 

Administrator

FAA Deputy 

Administrator

FAA 

Administrator

FAA Deputy 

Administrator

Research and 

Acquisition

Air Traffic 

Services

Free Flight COO

Safety

Communications

Operations

Planning 

Finance

En Route and 

Oceanic

Terminal 

Service

Flight Services

System 

Operations

Acquisition and 

Business

Technical 

Operations

ATO Transition

temporary

Air Traffic Systems 

Development

Communications Navigation 

and Surveillance

System Architecture and 

Investment Analysis

Business Management

Competitive Sourcing 

Acquisition

William J. Hughes Technical 

Center

Operational Evolution Plan

Air Traffic System 

Requirements

Airway Facilities Service

System Capacity

Independent Operational 

Test 

Runway Safety

Terminal Business Unit

Operational Evolution Plan

Source: FAA.

Before ATO realignment After ATO realignment
Chapter 1

Introduction

Page 29 GAO-06-154 Status of NAS Modernization

costs and uncertain future revenues. We conducted our work from June 

2004 through June 2005, in accordance with generally accepted 

government auditing standards.

Our methodology included summarizing recently completed work on all 

aspects of NAS modernization, and where necessary, updating that work 

and performing new evaluation work. We reviewed FAA reports on its 

plans for the NAS, including its Flight Plan, Operational Evolution Plan, 

Roadmap for Performance-Based Navigation, and Controller Staffing Plan, 

and reports by the Department of Transportation’s Office of the Inspector 

General. We also reviewed relevant legislation and committee reports and 

drew heavily from our completed work on air traffic congestion, runway 

construction, acquisitions management, acquisition of software-intensive 

ATC systems, information technology investment management, controller 

staffing, acquisition workforce culture, and human capital reforms. 

To broaden our perspective on NAS modernization, we assembled an 

international panel of experts for a day-long symposium and asked them to 

address the following questions:

• What factors have affected the schedule, cost, and performance of FAA’s 

ATC modernization program, and what steps could the ATO take in the 

short term to address these factors?

• How have federal budget constraints affected ATC modernization, and 

what steps could the ATO take in the short term to address these 

constraints?

• What steps could FAA take in the longer term to improve the 

modernization program’s chances of success and help the ATO achieve 

its mission?

We also interviewed a number of aviation stakeholders including officials 

at the Radio Technical Commission for Aeronautics (RTCA), DOD, the 

American Association of Airport Executives, the Aircraft Owner and Pilots 

Association, FAA’s Avionics Systems Branch, the Air Transport Association, 

and the National Air Traffic Controllers Association. 

To update previous work and obtain a clearer understanding of FAA’s 

procedures, we met with FAA’s administrator and assistant administrator 

for human resources management and obtained information from officials 

in FAA’s Airports Organization. Within the ATO, we met with the chief 
Chapter 1

Introduction

Page 30 GAO-06-154 Status of NAS Modernization

operating officer, the vice president for acquisitions and business services, 

the vice president for finance, and the JPDO director and deputy director.

As part of our effort to evaluate FAA’s progress in addressing human capital 

management challenges, we analyzed FAA employees’ responses to items 

on workforce culture issues that FAA included in employee attitude 

surveys conducted in 1997, 2000, and 2003. We selected these items with 

expert assistance and compared the responses to those for similar items 

contained in a research database on workforce culture. Appendix I 

contains detailed information on our methodology for analyzing and 

comparing survey data. 

Agency Comments and 

Our Evaluation

We provided a draft of this report to the Department of Transportation for 

its review and comment. In response, ATO managers; FAA’s Chief 

Information Officer; and the Acting Director, Office of Financial Controls, 

provided oral comments. FAA commented that its fiscal year 2007 budget 

request will reflect its balancing of current and future funding priorities, 

and, therefore, our recommendation to this effect may be unnecessary. We 

are retaining this recommendation because it applies not only to fiscal year 

2007, but to future years as well. Likewise, FAA managers commented that 

the agency is already utilizing all available financial management tools, 

including looking at alternative financing mechanisms. Our draft report 

discussed FAA’s consideration of alternative financing mechanisms at 

length. We continue to believe that FAA should explore further 

opportunities to contract out its services; consolidate major facilities; and 

accelerate decommissioning of ground-based navigation aids, as we have 

noted in this report. Therefore, we are also retaining this recommendation. 

FAA did not comment on the remaining recommendations. 

FAA also provided a number of technical comments and clarifications 

throughout the report, which we included as appropriate.
Page 31 GAO-06-154 Status of NAS Modernization

Chapter 2

FAA Has Made Changes to Improve 

Infrastructure Management, but Acquisition, 

Security, and Capacity Challenges Remain Chapte2r

We recently reported on FAA’s system acquisition, security, and capacity 

challenges. We reported that FAA got off to a good start in 2004 by meeting 

its acquisitions performance goal and has recently taken several steps to 

address the factors that contributed to acquisition problems in the past. 

However, it still faces challenges in some areas. Our recent report on 

information security highlights the need for FAA to ensure that key 

information technology systems are protected from willful acts of 

sabotage. Finally, we reported on the challenges that FAA faces in 

expanding the NAS’s capacity to accommodate current and anticipated 

increases in air travel. 

FAA Met Its 2004 

Acquisitions 

Performance Goal

As we recently reported, FAA met its acquisitions performance goal for 

fiscal year 2004: to meet 80 percent of the designated milestones and 

maintain 80 percent of the critical program costs within 10 percent of the 

budget, as published in FAA’s Capital Investment Plan. Having such a goal is 

consistent with the President’s Management Agenda, which calls for a 

commitment to achieve immediate, concrete, and measurable results in the 

near term and meeting this goal indicates a good start for the ATO. While 

meeting this 1-year goal is a positive step toward better acquisition 

management, evaluating it in the context of overall acquisition 

achievements provides a more comprehensive assessment.1

 For example, 3 

of the 16 major system acquisitions that we reviewed in detail were being 

revised to reflect cost and/or schedule changes during 2005. These revised 

cost and schedule changes would become the new milestones for the fiscal 

year 2006 performance goal. While revising targets that are no longer valid 

is an appropriate management action, using revised targets, rather than the 

original targets, as a basis for overall performance measurement, does not 

provide a consistent benchmark for measuring acquisition performance 

over time. Annual performance targets should continue to be viewed in the 

broader context of acquisitions’ original and revised baselines, and in the 

variance reports provided to the FAA administrator and to Congress. 

1

Our statements about cost, schedule, and/or performance in this and past reports are based 

on the original targets that FAA established and approved for each acquisition program. FAA 

noted that it tracks acquisition performance against original baselines and reports variances 

that exceed predefined thresholds to the administrator and Congress as required. 
Chapter 2

FAA Has Made Changes to Improve 

Infrastructure Management, but Acquisition, 

Security, and Capacity Challenges Remain

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FAA Is Addressing Key 

Factors That 

Contributed to Legacy 

Cost, Schedule, and/or 

Performance 

Problems, but More 

Work Remains

We recently reported that, historically, four factors individually or 

collectively contributed to system acquisitions’ missing cost, schedule, 

and/or performance targets.2

 FAA is taking steps to address some of these 

factors, but needs to do more. 

Four Key Factors 

Contributed to Legacy Cost, 

Schedule, and/or 

Performance Problems

One or more of four factors—(1) funding acquisitions at lower levels than 

called for in agency planning documents, (2) adding requirements and/or 

unplanned work, (3) underestimating the complexity of software 

development, and (4) not sufficiently involving stakeholders throughout 

system development—contributed to 12 of 16 major acquisitions’ missing 

targets.3

 (See table 2.) Appendix II provides each system’s full name and 

purpose.

2

GAO-05-331.

3

See GAO-05-331. We reviewed the 16 ATC system acquisitions with the largest life-cycle 

costs that met the following criteria: each system had cost, schedule, and/or performance 

targets; each system was discussed in prior GAO and Department of Transportation 

Inspector General reports, had not been fully implemented or deployed by 2004, and 

received funding in 2004. We reviewed this list with FAA officials to ensure that we did not 

exclude any significant system. In fiscal year 2005, these 16 major ATC system acquisitions 

account for about 36 percent of FAA’s capital budget.
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FAA Has Made Changes to Improve 

Infrastructure Management, but Acquisition, 

Security, and Capacity Challenges Remain

Page 33 GAO-06-154 Status of NAS Modernization

Table 2: Four Key Interrelated Factors Contributing to Cost Growth, Schedule Extensions, and/or Performance Shortfalls for 12

ATC System Acquisitions

Source: GAO analysis of FAA data.

Notes: 

Blank spaces in the chart denote that the specific factor was not a key contributor to a program’s 

inability to meet cost, schedule, or performance targets.

FAA’s Telecommunications Infrastructure, another of the 16 system acquisitions that we reviewed, also 

experienced cost growth, but for a reason not shown above. The original planning document that was 

prepared for this acquisition contained estimated costs for some of the system’s requirements. When 

the planning document was updated, it included actual contract costs, which were greater than 

originally estimated. 

a

Additional factors are listed, beyond those previously reported, based on updated information 

provided by FAA. 

A discussion of each factor follows: 

• Funding acquisitions at lower levels than called for in agency 

planning documents: When FAA initiates a major system acquisition, it 

estimates, and its top management approves, the funding plans for each 

year. However, when budget constraints do not allow all system 

acquisitions to be fully funded at the previously approved levels, FAA 

must decide which programs to fund and which to cut, according to its 

priorities. When a system acquisition does not receive the annual 

funding called for in its planning documents, the acquisition may fall 

behind schedule. This may also postpone the benefits of the new system 

Name of system 

The funding level 

received was less 

than the agency 

planning documents

The system acquisition 

experienced requirements 

growth and/or unplanned 

work

The complexity of 

software development 

was underestimated 

Stakeholders were 

not sufficiently 

involved 

ASDE-Xa XX X

ASR-11 X X

ATCBI-6 X

CPDLC X

FFP2 X

ITWS X X X

LAAS X X X

NEXCOM X X

NIMS-2 X X

OASIS X X X

STARS X X

WAAS X X X
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Infrastructure Management, but Acquisition, 

Security, and Capacity Challenges Remain

Page 34 GAO-06-154 Status of NAS Modernization

for the NAS, and can require FAA to continue operating and maintaining 

the older equipment that the acquisition is intended to replace. 

• Adding requirements and/or unplanned work: Inadequate or poorly 

defined requirements may contribute to the inability of system 

acquisitions to meet their original cost, schedule, and/or performance 

targets, since developing or redefining requirements as an acquisition 

progresses takes time and can be costly. In addition, unplanned 

development work may occur when the agency misjudges the extent to 

which a commercial-off-the-shelf or nondevelopmental item,4

 such as 

one procured by another agency, will meet FAA’s needs. 

• Underestimating the complexity of software development: When FAA 

underestimates the complexity of software development or misjudges 

the difficulty of modifying available software to fulfill its mission needs, 

acquisitions may take longer and cost more than expected.5

 

• Not sufficiently involving stakeholders throughout system 

development: Not involving relevant stakeholders, such as air traffic 

controllers and maintenance technicians, early and throughout a 

system’s development and approval may lead to costly changes in 

requirements and unplanned work late in the development process. 

In some cases, FAA missed cost, schedule, and/or performance targets 

because of two or more of the factors discussed above. For example, FAA 

underestimated the complexity of the software that would be needed to 

support WAAS when the agency reduced, by 3 years, its plans to develop, 

test, and commission the system. FAA then tried to accomplish these tasks 

in 28 months, even though the software development alone was originally 

expected to take from 24 to 28 months. FAA’s efforts to resolve this issue 

resulted in unplanned work, which then contributed to cost increases and 

4

FAA defines a commercial-off-the-shelf item as a product or service that has been 

developed for sale, lease, or license to the general public. The product is currently available 

at a fair market value. FAA defines a nondevelopmental item as an item that was previously 

developed for use by a government (federal, state, local, or foreign) and that requires limited 

further development. For example, an Army radio is the core of FAA’s NEXCOM radio, and 

the software that FAA selected for its new oceanic ATC system was a nondevelopmental 

item from New Zealand’s air system.

5

For purposes of this report, the underestimation of software complexity refers to poor 

estimation of the level of effort that would be required to modify software to meet 

requirements (e.g., commercial-off-the-shelf or nondevelopmental items). 
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Security, and Capacity Challenges Remain

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schedule delays. For STARS, not adequately including stakeholders during 

the development phase contributed to unplanned work, which in turn, 

contributed to cost growth, schedule delays, and eventually a reduction in 

the number of systems to be deployed. 

The remaining three systems that we reviewed—En Route Automation 

Modernization System (ERAM), Advanced Technologies and Oceanic 

Procedures (ATOP), and En Route Communications Gateway (ECG)—are 

meeting cost, schedule, and performance targets, but warrant close 

attention. ERAM, the new computer system to help run FAA’s en route ATC 

operations, is a high-risk effort, in part because it requires over 1 million 

lines of code. While ERAM’s contractor has completed the first three of 

four software deliveries ahead of schedule, “bugs” could be discovered 

through further testing and integration, which could require additional 

software development, according to a senior program official. In the past, 

FAA has had difficulty developing systems with such a high volume of 

code. Also, FAA assumed responsibility after February 2005 for the cost of 

resolving any additional software problems that it identifies with ATOP, its 

new oceanic ATC system. A fixed-price contract previously governed the 

acquisition. FAA also anticipates adding requirements costing about 

$500,000 to ECG, a communications interface. 

FAA Has Taken Steps to 

Improve Acquisition 

Management, but Has Not 

Fully Implemented Some 

Recommendations 

FAA has announced plans to implement recommendations we made to 

improve software-intensive acquisitions and investment management 

practices.6

 However, FAA has not yet adopted a knowledge-based approach 

for system acquisitions or fully implemented our recommendations to 

improve its enterprise architecture development.

To reduce the risk of requirements growth and/or unplanned work, as well 

as the risks associated with acquiring software-intensive systems, FAA has 

developed and applied a process improvement model to a number of 

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

software and systems capabilities. As we reported, this approach has 

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

6

As required by 31 U.S.C. 720, the Department of Transportation submitted a written 

statement of the actions taken on our recommendations to the Senate Committee on 

Homeland Security and Governmental Affairs and to the House Committee on Government 

Reform. We have not yet evaluated whether these actions fully address our 

recommendations.
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Security, and Capacity Challenges Remain

Page 36 GAO-06-154 Status of NAS Modernization

schedules and resources, better morale, and improved communication and 

teamwork.7

 However, because FAA did not mandate the use of the model 

throughout the organization, we recommended that it do so. In response, 

FAA has begun developing a requirement that projects have process 

improvement activities in place before seeking approval from the FAA 

investment review board. 

FAA told us in December 2004 that it is taking actions that respond to our 

recommendations for improvements to its Acquisition Management 

System.8

 For example, FAA reports that when reviewing acquisitions, it 

now focuses on the acquisition’s impact on customer service and 

contribution to achieving the agency’s strategic and performance goals, 

including expanding NAS capacity, rather than on the approval and 

management of individual acquisition programs. FAA has also informed us 

that it has established basic investment management capabilities, including 

many practices for selecting and controlling its mission-critical information 

technology investments. Our previous work showed that FAA was not 

regularly reviewing investments that are more than 2 years into their 

operations. As a result, FAA was limited in its ability to oversee, as a total 

package of competing investment options, more than $1 billion of its 

information technology investments, and to pursue only those that best 

meet its goals.9

 In its response to our recommendation, FAA stated that it 

had changed its acquisition review process to a semiannual “service level 

review” process that encompasses systems that are in service. Additionally, 

FAA has changed its format for justifying major technology investments to 

that prescribed by the Office of Management and Budget. According to 

FAA, this change provides more comprehensive information than the 

previous format and provides efficiencies by avoiding the need to later 

translate the information into the Office of Management and Budget’s 

prescribed format. We have not yet assessed these actions. 

Additionally, further improvements to FAA’s Acquisition Management 

System are warranted. We recently reported that while the system provides 

some discipline for acquiring major ATC systems, it does not apply a 

7

GAO-04-901.

8

GAO, Air Traffic Control: FAA’s Acquisition Management Has Improved, but Policies and 

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

12, 2004).

9

GAO-04-822.
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FAA Has Made Changes to Improve 

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Security, and Capacity Challenges Remain

Page 37 GAO-06-154 Status of NAS Modernization

knowledge-based approach to acquisitions that is characteristic of 

commercial best practices. Such practices call for specific knowledge to be 

captured and used by corporate-level decision-makers to determine 

whether a product has reached a level of development (product maturity) 

sufficient to demonstrate its readiness to move forward in the acquisition 

process. Knowledge is captured at specific junctures, or knowledge points, 

in the acquisition cycle, which developers use to determine whether they 

have attained the knowledge they need to move to the next phase or 

activity in the acquisition process. Such developers also conduct corporate 

executive-level reviews to ensure that they obtain the insights and 

perspectives of stakeholders throughout their organization. If the 

knowledge attained does not meet the criteria for advancement or if the 

executive reviewers determine that further development is inconsistent 

with their priorities, the acquisition does not move forward. 

Experience with these best practices has shown that to the extent that the 

level of knowledge called for at each knowledge point is not attained, 

organizations take on risks in the form of unknowns that will persist into 

the later stages of development, where they will take more time and money 

to resolve if they become problems. Such problems lead to cost increases 

and schedule delays. Accordingly, we recommended that FAA (1) develop 

explicit written criteria for the key decision points called for under best 

practices, including the capture of specific design and manufacturing 

knowledge, and (2) require corporate executive-level decisions at these key 

decision points (before an acquisition moves from integration to 

demonstration and, again, before it moves to production).10

We also reported that FAA has taken some initial steps to develop a NAS 

enterprise architecture, but further steps are needed.11 An enterprise 

architecture serves as a blueprint to guide and constrain investments in a 

consistent, coordinated, and integrated fashion. It should provide a clear 

and comprehensive picture of an organization, including snapshots of the 

current “as is” environment as well as the target “to be” environment, and a 

roadmap for transition. FAA has committed resources to this effort, 

established a project office, designated a chief architect, and issued the 

latest version of its architecture. However, FAA has not taken some key 

steps, such as designating a committee or group representing the 

10GAO-05-23.

11GAO-05-266.
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Security, and Capacity Challenges Remain

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enterprise to direct, oversee, or approve the architecture; establishing a 

policy for developing, maintaining, and implementing the architecture; or 

fully developing architecture products that meet contemporary guidance 

and describe both the “as is” and the “to be” environments and developed a 

sequencing plan for transitioning between the two. Our experience with 

federal agencies has shown that making information technology 

investments without defining these investments in the context of an 

architecture often results in systems that are duplicative, not well 

integrated, and unnecessarily costly to maintain and interface.

FAA Faces Challenges 

in Ensuring 

Information Security

Because ATC systems rely heavily on information technology, protecting 

them from inadvertent or intentional disruption is critically important. The 

risks to information systems include the escalating threat of computer 

security incidents, the ease of obtaining and using hacking tools, the steady 

advance in the sophistication and effectiveness of attack technology, and 

the emergence of new and more destructive attacks. Inadequately 

protected systems are at risk of intrusion by individuals or groups with 

malicious intent, who could use their unauthorized access to obtain 

sensitive information, disrupt operations, or launch attacks against other 

computer systems and networks. A prolonged disruption in ATC systems 

and communications, accidental or intentional, could disrupt air traffic, 

cause significant economic losses, and subject travelers to delays and 

inconvenience. Federal information security has been on GAO’s list of highrisk areas since 1997; in 2003, GAO expanded this high-risk area to include 

the protection of cyber-critical infrastructure.12

Recently, we reported that FAA had established, but not fully implemented, 

an information security program for its ATC information systems.13 For 

example, some of the agency’s security plans were outdated; security 

awareness training requirements were not fully met; system testing and 

evaluation programs were inadequate; security incident detection 

capabilities were limited; and shortcomings existed in providing service 

continuity to protect against disruptions in operations. Furthermore, we 

identified security weaknesses that threaten the integrity, confidentiality, 

and availability of the three critical systems we reviewed, including 

weaknesses in controls designed to manage access to these systems. 

12GAO-05-207.

13GAO-05-712. 
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Weaknesses in physical security increase the risk that unauthorized 

individuals could gain access to sensitive computing resources and data 

and could inadvertently or deliberately misuse or destroy them. In 

response to weaknesses that we had identified, FAA officials told us they 

recognized that more work was needed to continue to improve their 

information security program and that they had already corrected many of 

their electronic access control weaknesses. 

We recommended several actions intended to improve FAA’s information 

security program. FAA agreed to consider our recommendations, but 

emphasized that, because our review focused on only three systems, it does 

not indicate that the entire NAS is vulnerable. Additionally, FAA maintains 

that vulnerabilities are mitigated by redundancies and separate access 

controls. Consequently, FAA concluded that the public may infer from our 

review that security risks are higher than they actually may be. In our 

report, we acknowledged that FAA may have other protections built into its 

overall system architecture. However, as noted in the report, the complex 

air traffic control system relies on several interconnected systems. As a 

result, the weaknesses we identified may increase the risk to other 

systems. For example, FAA did not consistently configure network services 

and devices securely to prevent unauthorized access to and ensure the 

integrity of computer systems operating on its networks.

FAA Faces Challenges 

in Expanding NAS 

Capacity to Meet 

Current and Future 

Needs

The current level of air travel, combined with airlines’ use of smaller 

aircraft, is straining NAS capacity and further increases in air travel are 

forecast. FAA has developed a rolling 10-year plan for capacity 

improvements at the nation’s 35 busiest airports, and airports are building 

new runways. However, many congested airports are not building or 

cannot build new runways, and delays at these airports can have ripple 

effects throughout the NAS. FAA is considering administrative and marketbased options to ease congestion at the most delay-prone airports. The 

agency is also redesigning flight procedures in specific locations to 

improve the efficiency with which aircraft use crowded airspace. 

However, FAA has encountered difficulties in establishing reliable costs 

and schedules for its airspace redesign efforts, and airlines have been 

reluctant to equip their aircraft because of uncertainty about FAA’s future 

plans for airspace redesign. 
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More Travelers and Smaller 

Aircraft Could Strain NAS 

Capacity

In 2004, passengers returned to air travel, following a lull that resulted from 

a series of largely unforeseen events, including global recessions, the 

terrorist attacks of September 11, and the Severe Acute Respiratory 

Syndrome (SARS) scare, the war in Iraq, and associated security concerns. 

Enplanements in 2004 exceeded those in 2000 by 5 percent. The high level 

of traffic in the summer of 2000 produced the worst record of delays up to 

that time; however, nearly as many delays occurred in 2004, but the delays 

were longer, on average, mainly because of bad weather, according to FAA 

officials. FAA forecasts a 25-percent increase in air traffic by 2015, and the 

JPDO is developing plans to transform the NAS to accommodate a tripling 

of capacity by 2025. 

The airlines’ increasing use of smaller aircraft is likely to enhance the need 

for capacity. In 2001, we reported that the growing number of regional jets, 

which generally seat fewer than 100 passengers, was contributing to 

congestion in our national airspace.14 The industry experts we interviewed 

repeatedly expressed concern about the impact of additional aircraft on 

airspace whose capacity was already strained. Because hundreds of new 

aircraft have been added to already congested airspace while 

comparatively few aircraft have been taken out of service, many experts 

believe that increasing congestion and delays are inevitable. Moreover, the 

experts noted that with many more regional jets on order, congestion and 

delays are not likely to diminish in the near future. In 2003, Boeing forecast 

that regional jets would account for 16 percent of the world aircraft fleet by 

2022. In June 2004, the Chairman and Chief Executive Officer of AirTran 

Airways noted that the ATC system could have difficulty absorbing the 

hundreds of regional jets then on order.15 Recent data validate those 

concerns. Although passenger travel between 2000 and 2004 increased by 5 

percent, the number of aircraft operating in the NAS, as indicated by 

domestic aircraft departures, increased by 36 percent during that time 

period. 

Additionally, air taxis, which carry about four passengers each, could begin 

operations within the NAS. FAA officials told us that they have been briefed 

14GAO, Aviation Competition: Regional Jet Service Yet to Reach Many Small 

Communities, GAO-01-344 (Washington, D.C.: Feb. 14, 2001).

15Testimony of Joseph Leonard, Chairman and Chief Executive Officer of AirTran Airways 

before the Subcommittee on Aviation, House Committee on Transportation and 

Infrastructure, June 3, 2004.
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on proposals for using air taxis in selected metropolitan areas to relieve 

heavy traffic congestion on roadways. Air taxis could add to air congestion, 

as well as increase the workload of air traffic controllers in metropolitan 

areas where air traffic is already likely to be heavy. Potential increases in 

general aviation could further increase air congestion and controllers’ 

workload.16 

New Runways Are Under 

Construction and More Are 

Planned to Increase NAS 

Capacity

According to FAA, building new runways is the most direct approach to 

increasing NAS capacity. FAA estimates that a new runway increases an 

airport’s capacity by between 30 and 60 percent. FAA’s plans for capacity 

enhancement at the nation’s 35 busiest airports are laid out in the agency’s 

rolling 10-year Operational Evolution Plan. Since 1999, 8 of the nation’s 35 

busiest airports—Phoenix, Detroit, Denver, Miami, Cleveland, Houston, 

Philadelphia, and Orlando—have each opened a new runway. Collectively, 

these runways have provided these airports with the potential to 

accommodate about 1 million more annual operations (takeoffs and 

landings). Six more runways, one runway extension, and one airfield 

reconfiguration are scheduled to open by the end of 2008 at the nation’s 35 

busiest airports. These runways are expected to provide those airports 

with the potential to accommodate 830,000 more annual operations. (see 

fig. 8). In addition to the runways scheduled for the 35 busiest airports, nine 

more capacity-enhancing projects are in the planning or environmental 

review stages, including one new runway, three runway extensions, three 

new airports and two airfield reconfigurations in major metropolitan areas.

16General aviation includes a wide variety of aircraft, ranging from corporate jets to small 

piston-engine aircraft as well as helicopters, gliders, and aircraft used in operations such as 

firefighting and agricultural spraying.
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Figure 8: Commissioned and Planned Runways, December 1999 to November 2008

Note: Included in the planned runways is one runway extension project at Philadelphia.

Several of the nation’s largest airports are among those most in need of 

capacity improvements. In a recent study, FAA reported that the Atlanta, 

Newark, New York LaGuardia, Chicago O’Hare, and Philadelphia airports 

needed immediate capacity improvements to meet existing demand. The 

study identified 15 airports that would need capacity improvements by 

2013. 

LambertSt. Louis

Philadelphia

Orlando Houston

Miami

Denver

Phoenix

Minneapolis/

St. Paul

SeattleTacoma

Planned runway opening

Runway opened

Source: GAO analysis of FAA data, and Map Art.

December 2003

February 2008

June 2006

November

2006

September 2003

October 2005

April 2006

December 2001

December 2005

October 2000

November 2008

October 2003

December 2002

August 2004

December 1999

December 2007

September 2003

Charlotte-Douglas

Cincinnati/

North Kentucky

Boston

Logan

Detroit

Cleveland

Atlanta

Hartsfield
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However, building new runways is not an option at all airports with 

pressing needs for more capacity. Some airports are not able to build even 

one more runway, either because they lack the space or would face intense 

opposition from adjacent communities. Only 3 of the 9 most delay-prone 

airports will receive new runways, and delays at these airports can have a 

ripple effect throughout the NAS, notwithstanding capacity improvements 

made elsewhere. For example, in 2000, Phoenix Sky Harbor International 

Airport put an additional runway into service, and the airport had sufficient 

capacity to allow flights to take off on time. However, the airport ranked 

among the top 15 in the United States for flight delays. According to airport 

officials, most of the delays in Phoenix were the result of delays and 

cancellations at other airports—circumstances unrelated to the capacity at 

Phoenix. To reduce flight delays at some of the delay-prone airports, such 

as New York LaGuardia and Chicago O’Hare, FAA is exploring 

administrative and market-based options. For example, FAA is considering 

auctioning off landing and takeoff rights at New York LaGuardia and is 

currently limiting the number of scheduled arrivals during peak periods at 

New York LaGuardia and Chicago O’Hare.

FAA Is Redesigning Flight 

Paths to Create More 

Capacity

FAA is redesigning how aircraft utilize airspace during the takeoff, landing, 

and en route phases of flight. Currently, most aircraft must follow 

established routes over designated navigation aids and maintain wide 

separation from other aircraft. Wide separation has been necessary to 

provide a margin of error against inaccuracies in older navigation systems. 

However, many aircraft in use today carry navigation equipment that is not 

dependent on ground-based navigation aids and would enable aircraft to 

safely operate in a less restrictive manner, allowing more efficient use of 

airspace and increased NAS capacity.17 Moreover, this equipment provides 

aircrews with precise information on the location of their aircraft and that 

of nearby aircraft, allowing them to fly more directly to their destinations, 

thereby saving time and fuel, and reducing congestion. Advanced 

17FAA has established “Area Navigation,” commonly known as RNAV, which allows properly 

equipped aircraft to navigate using onboard systems in conjunction with satellites or 

ground-based navigation aids to fly desired flight paths without requiring direct flight over 

ground-based navigation aids. RNAV provides for more direct routing, avoiding suboptimal 

routes prescribed by conventional “highways in the sky” that are defined by point-to-point 

flying over ground-based navigation aids. The RNAV concept and a major new method for 

exploiting it, called required navigation performance (RNP), permit flight in any airspace as 

long as aircraft have been certified to meet the required accuracy level for navigation 

performance.
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navigation capabilities also reduce the adverse impact of bad weather on 

NAS efficiency by allowing pilots to land in weather conditions that they 

otherwise would have to avoid.

 In 2005, FAA increased airspace capacity by reducing the required 

minimum vertical separation from 2,000 feet to 1,000 feet for properly 

equipped aircraft at altitudes between 29,000 and 41,000 feet, essentially 

doubling capacity at those altitudes. FAA anticipates that this change will 

allow aircraft to safely fly the most efficient routes, increase airspace 

capacity, and save airlines about $400 million in fuel costs during the first 

year. 

FAA reports that airspace redesign can provide benefits at a number of 

airports. For example, at Dulles International Airport, suitably equipped 

aircraft could simultaneously depart on parallel routes in bad weather, 

which would not otherwise be possible. Dallas-Fort Worth International 

Airport could increase capacity by 20 percent by allowing aircraft with the 

appropriate capabilities to depart more quickly from multiple points at the 

airport, thereby reducing the taxi time between terminal and departure, as 

well as ground congestion. According to FAA, allowing aircraft with 

appropriate equipment to use parallel runways during periods of marginal 

visibility could increase arrival rates by 10 to 24 percent at airports with 

closely spaced runways, such as those in Boston, Cleveland, Newark, 

Portland, Philadelphia, Seattle, and San Francisco.18 An FAA official told us 

that these procedures could leverage the future benefits of ATC systems 

currently in the acquisitions pipeline if planned and implemented in 

coordination with the systems’ acquisition schedules.

Redesign is a complex process that requires the development of specific 

navigation procedures tailored to each location, taking into account 

numerous factors. According to FAA, the following factors pose challenges 

for redesign efforts: 

• costly environmental reviews required by the National Environmental 

Policy Act, 

• the logistics of coordinating meetings with controllers and operators to 

discuss how to design the procedures, 

18Marginal weather conditions occur between 5 and 20 percent of the time at these airports.
Chapter 2

FAA Has Made Changes to Improve 

Infrastructure Management, but Acquisition, 

Security, and Capacity Challenges Remain

Page 45 GAO-06-154 Status of NAS Modernization

• aircrew training,

• the modeling and testing of procedures, and

• the development of written navigation and air traffic control 

procedures.

Consequently, FAA focuses its efforts on airports that are the best 

candidates to benefit from airspace redesign, such as those that have 

frequent bad weather, parallel runways that cannot be used for parallel 

approaches in bad weather, nearby mountains or tall buildings, or aircraft 

noise that adversely affects nearby communities. Also, having an airline 

that has a significant presence at an airport and is willing to take the lead in 

airspace redesign facilitates its implementation. 

Airspace Redesign Efforts 

Have Encountered Cost and 

Schedule Challenges, and 

Airlines Are Hesitant to 

Invest in Advanced 

Capabilities

The Department of Transportation’s Office of the Inspector General has 

testified that FAA is experiencing significant problems in its airspace 

redesign efforts. The office reported that FAA lacks reliable information on 

costs and schedules for 42 airspace redesign efforts and found that FAA’s 

process for controlling costs, mitigating risks, and coordinating these 

efforts was fragmented and diffuse. 

Expanding efforts to redesign airspace also depends on the willingness of 

NAS users to equip their aircraft with advanced capabilities—a willingness 

that is based, in part, on the belief that FAA will continue with its redesign 

plans. Some stakeholders we interviewed expressed concern that FAA may 

not follow through with its airspace redesign efforts. For example, a DOD 

official said that in response to budget constraints, FAA might curtail its 

airspace redesign efforts after DOD had equipped its aircraft with advanced 

capabilities, resulting in a waste of DOD resources. The official cited FAA’s 

actions to suspend certain acquisition programs such as LAAS, NEXCOM, 

and long-range radar. An official of the Airline Owners and Pilots 

Association, which represents general aviation pilots, cited similar 

concerns with WAAS and another system (Automatic Dependent 

Surveillance – Broadcast) in onboard navigation systems. Consequently, 

general aviation pilots are hesitant to invest in systems for their aircraft 

unless they are sure that FAA will continue to redesign airspace and 

implement procedures that will make use of this equipment. According to 

one expert, some aircraft have been retired without ever having their 

advanced capabilities used. 
Chapter 2

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Security, and Capacity Challenges Remain

Page 46 GAO-06-154 Status of NAS Modernization

Overcoming these challenges is a productive area of focus for FAA. Our 

panel of experts noted that exploiting airspace redesign is a “quick hit” that 

would produce good value for the investment, and airlines are anxious to 

see more airspace redesign efforts. The experts also noted that the private 

sector has the capacity to develop new flight procedures as part of airspace 

redesign, and a precedent exists in another country. However, the experts 

said that in the past, FAA has resisted outside parties’ efforts to design new 

flight procedures for FAA’s approval, and they suggested that FAA could be 

more flexible in this area. 

Agency Comments FAA provided technical comments, which we included as appropriate.
Page 47 GAO-06-154 Status of NAS Modernization

Chapter 3

Human Capital Management Challenges 

Include Hiring Air Traffic Controllers and 

Transforming FAA’s Organizational Culture Chapte3r

During the coming decade, FAA will need to hire and train thousands of air 

traffic controllers to replace those who will retire. FAA has implemented a 

number of human capital reforms but still faces the challenge of 

transforming its workforce to a more results-oriented culture.

FAA Will Need to Hire 

and Train Thousands of 

Controllers in the Next 

Decade 

In 2002 and 2004, we reported that FAA would need to hire and train 

thousands of air traffic controllers during the next decade, and we 

recommended in 2002 that FAA develop a comprehensive workforce plan 

that includes strategies to ensure that FAA would have adequate human 

resources and training facilities to meet its hiring needs while maintaining 

safety.1

 Additionally, we recently reported that succession planning and 

management are critical steps that federal agencies need to take to meet 

the challenges of the 21st Century.2

 In 2004, FAA published a controller 

staffing plan that includes several of the strategies that we recommended. 

Recognizing that the plan would be costly, FAA planned to obtain savings 

from a number of human capital management initiatives, some of which 

will require union negotiation. 

Impending Retirements Will 

Require Extensive Hiring 

and Training 

FAA’s controller staffing plan indicates that the agency expects to lose 

about 11,000 air traffic controllers, or about 73 percent of the controller 

workforce, to retirements and other factors.3

 This high percentage of 

retirements is attributable to the 1981 controller strike, when President 

Ronald Reagan fired over 10,000 air traffic controllers, and the consequent 

need to quickly rebuild the controller workforce. From 1982 through 1991, 

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

become eligible for retirement during the next decade. (See fig. 9.)

1

GAO-02-591; GAO, Federal Aviation Administration: Plan Still Needed to Meet Challenges 

to Effectively Manage Air Traffic Controller Workforce, GAO-04-887T (Washington, D.C.: 

June 15, 2004).

2

GAO, Human Capital: Selected Agencies Have Opportunities to Enhance Existing 

Succession Planning and Management Efforts, GAO-05-585 (Washington, D.C.: June 30, 

2005); and 21st Century Challenges: Reexamining the Base of the Federal Government, 

GAO-05-325SP (Washington, D.C.: February 2005).

3

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

the Air Traffic Control Workforce (Dec. 21, 2004).
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Figure 9: Projected Controller Retirements, Fiscal Years 2005 - 2014

To replace the controllers who will retire, as well as those who will leave 

for other reasons, and to accommodate forecasted increases in air traffic, 

FAA plans to hire a total of 12,500 new controllers over the next 10 years, 

or 1,250 per year, on average. Because of training facility limitations and 

the need to minimize the impact on operational facilities of on-the-job 

training for new controllers, FAA plans to hire relatively equal numbers of 

controllers each year.

FAA’s Controller Staffing 

Plan Reflects Lessons 

Learned Since 1981 

Controller Strike 

To manage the air traffic control workforce over the next decade, the 

controller staffing plan that lays out a 10-year strategy for recruiting, hiring, 

and training new controllers to replace those that retire. This plan, which 

we recommended in a 2002 report and Congress mandated in 2003, reflects 

recruiting and training lessons learned since the 1981 air traffic controllers’ 

strike, endeavors to benefit from the expertise of today’s experienced 

controllers, and addresses staffing and equipment needs at FAA’s training 

academy.

According to the controller staffing plan, FAA has established a facility-byfacility retirement loss model that FAA will use to determine annual hiring 

Source: FAA.

Number of retirees

Fiscal years

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

0

300

600

900

1,200

1,500
Chapter 3

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Page 49 GAO-06-154 Status of NAS Modernization

targets for each facility. The plan also lays out a strategy to develop new 

staffing standards for each ATC facility, starting in fiscal year 2005. 

Additionally, the plan describes a revised hiring policy, which recognizes 

the need to hire replacement controllers well in advance of expected 

retirements, rather than waiting until after each controller leaves. 

FAA’s plan lays out new recruitment sources designed to identify and retain 

viable candidates. Through this approach, FAA expects to achieve greater 

success than it did in the 1980s, when it last hired large numbers of 

controllers but had problems with retention. At that time, FAA officials told 

us, most of the candidates were recruited “off the street,” with no prior 

background in air traffic control. According to the plan, over 40 percent of 

the candidates failed training, resulting in wasted training funds. This time, 

FAA plans to hire new controllers from a variety of sources, including some 

that can provide candidates with training or experience in aviation. A 

primary source will be the Air Traffic Collegiate Training Initiative, which 

FAA established in January 1991 and has since expanded.4

 Under this 

initiative, participating schools produce candidates with college degrees 

and a broad knowledge of the aviation industry. These candidates have at 

least a basic level of training in air traffic control and have demonstrated 

their interest in the field by the investment they have made in their own 

training. Other potential recruits include former and retired military 

personnel, former Professional Air Traffic Controllers Organization 

controllers, and the general public. 

FAA is also evaluating the effectiveness of a tool to screen potential 

controllers. Between 1981 and 1992, FAA screened out unsuccessful 

candidates over a period of 9 weeks as they attended a formal training 

program. Fewer than 60 percent of the candidates passed the screen. 

Recognizing that this was a costly process, FAA dismantled the 9-week 

screening process in 1992 and implemented an 8-hour computer-based Air 

Traffic Selection and Training exam to screen candidates, reducing the 

screening cost from $10,000 per candidate to $800 per candidate. The 

screening exam evaluates many aptitudes, including prioritization and 

problem solving, decisiveness, and composure. The controller staffing plan 

indicates that FAA’s Civil Aerospace Medical Institute is evaluating the 

effectiveness of this new screening tool, as we recommended.

4

Because FAA’s intake of new controllers was very low from 1994 until recently, the agency 

did not need to seek candidates from other sources. 
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FAA believes that allowing some controllers to continue working beyond 

the current age limitation could help alleviate staffing shortages in targeted 

locations. Under legislation enacted in 1971,5

 most controllers are required 

to stop handling live traffic when they reach age 56. FAA has reviewed the 

safety implications of waiving this requirement under certain 

circumstances. Specifically, its Civil Aerospace Medical Institute reviewed 

the scientific basis for the law and concluded that the scientific literature 

did not provide a firm foundation for either retaining the age 56 limit or 

seeking a legislative change. A supplemental study found that the 

likelihood of an en route operational error declined with age as a function 

of experience. According to the controller staffing plan, FAA believes that 

waivers to the age 56 rule may be of value for targeted locations where 

there may be a critical staffing shortage. FAA estimates that 5 to 10 percent 

of current controllers might be granted such waivers.

The controller staffing plan describes FAA’s plans to address staffing and 

equipment needs at the training academy. FAA plans to meet the need for 

more instructors by working with its contractor to ensure that training 

needs are met. FAA has also upgraded equipment at the training academy. 

We reported in 2002 that equipment used at the academy to train en route 

controllers did not match equipment used in the field. We also reported that 

tower simulators were often broken or outdated, and lacked the necessary 

capacity to train large numbers of new hires. FAA has since acquired four 

new tower simulators, and in the spring of 2005, it opened a laboratory for 

en route training at the academy, several months ahead of schedule. 

FAA Plans Cost-Saving 

Initiatives to Mitigate the 

Expense of the Controller 

Staffing Plan

Recognizing the immense cost of recruiting and training enough controllers 

to replace those who are retiring, FAA plans to implement efficiencies that 

would reduce training costs and allow a 10 percent reduction in the 

controller workforce over the next decade. FAA plans to provide more 

intensive training so that controllers can be certified in 2 to 3 years, rather 

than 4 to 5 years as in the past. Some of these initiatives will require union 

consent which FAA will have to negotiate when it renews its contract with 

the controllers. For example, FAA plans to rely on part-time employees and 

job-sharing arrangements, as well as implement split shifts, where all 

controllers work during peak periods, but some leave during slack periods 

and return to complete their shifts later. FAA also plans to improve its 

5

P.L. 92-297.
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management of overtime by using the optimal mix of increased staffing and 

overtime hours to meet workload demands. In addition, FAA plans to 

oversee the use of sick leave more aggressively and to manage workers’ 

compensation cases to bring employees back to duty as quickly as possible. 

Other steps include reducing the number of hours controllers spend on 

union-related duties and in workgroups, conferences, and meetings; and 

employing efficiencies made possible by implementing technological 

advances, consolidating facilities, and expanding the contract tower 

program.

FAA has neither determined the total cost of the controller staffing plan, 

nor developed any basis for the cost savings planned for many of the 

initiatives described in the plan. For example, FAA officials told us that 

they have not determined 

• the costs of hiring and training controllers from different sources; 

• the amount of productivity savings from various sources, including 

implementing new technology and adjusting staffing according to traffic 

levels; or 

• the savings from the improved training success rate.

Therefore, the impact of this plan on future funding needs is unclear. FAA 

officials indicated that they view the plan as fluid, and will make yearly 

updates and changes as they move forward with its implementation. 

However, without supportable estimates of the hiring and training 

program’s cost and potential savings, FAA lacks key information needed to 

plan for future funding needs. The plan states that if FAA does not receive 

sufficient funds to hire adequate numbers of controllers, FAA will maintain 

safety before addressing delays. According to the plan, FAA would slow air 

traffic to a level that the available controllers could handle safely, an action 

that could create significant delays in the NAS. 

FAA has also begun considering whether graduates of its Air Traffic 

Collegiate Training Initiative can bypass the currently required training at 

the FAA Academy—a change that could produce savings. Currently, 

graduates must attend the academy for 37 days if they are training to be 

terminal controllers or 57 days if they are training to be en route 

controllers, before they can report to an ATC facility to begin on-the-job 

training. The National Air Traffic Controllers Association and one of the 

colleges that participates in the Air Traffic Collegiate Training Initiative 
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believe that graduates could bypass the training academy and report 

directly to an ATC facility to begin on-the-job training. In June 2005, FAA 

initiated a review to determine whether graduates could bypass the 

academy training. 

FAA Has Made 

Progress in 

Implementing Human 

Capital Reforms, but 

Challenges Remain in 

Transforming Its 

Workforce Culture

Since receiving an exemption from many federal personnel management 

regulations in 1995, FAA has implemented a number of compensation, 

hiring, and performance management reforms. Additionally, FAA is taking 

steps toward developing a results-oriented culture, but needs to ensure 

continuity and follow-through for these efforts to have a lasting effect.

FAA Has Implemented 

Elements of Personnel 

Management Reform

After being exempted from most federal personnel regulations in 1995, FAA 

initiated a broad set of changes in compensation, performance 

management, and workforce management. FAA replaced the general 

schedule system of 15 pay grades—each with 10 within-grade pay steps—

with a series of pay bands and specific job categories with minimum and 

maximum pay rates spanning two to five pay bands. Since 2003, when we 

last reported on the status of FAA’s human capital reforms, FAA has 

increased the percentage of the workforce covered by the new pay system 

from about 75 percent to 82 percent.6

Additionally, FAA established its own hiring policies and began hiring 

applicants directly, rather than going through the Office of Personnel 

Management. It also established a flexible system for adjusting the number 

of executive positions in response to shifting agency priorities and set up 

flexible policies for determining whether and how much to reimburse 

employees’ relocation expenses. 

Finally, FAA established a new performance management system, which it 

uses for 45 percent of its employees. The new system requires that 

6

GAO, Human Capital Management: FAA’s Reform Effort Requires a More Strategic 

Approach, GAO-03-156 (Washington, D.C.: Feb. 3, 2003). 
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employees have performance plans that identify specific work 

expectations and outcomes and are linked to agency and organizational 

goals. The new system changed performance assessment from a once-ayear process to one that focuses on interim feedback discussions between 

employees and supervisors to address performance issues when they arise, 

and identify opportunities for improving performance and meeting 

developmental needs. The performance management system also 

determines whether an employee is eligible for agencywide performancebased bonuses. FAA has not yet included most of its bargaining unit 

employees under the new performance management system, but plans to 

negotiate this issue during contract negotiations, which began in the spring 

of 2005. 

While we have not evaluated the merits of the new performance 

management system or that used to manage the performance of bargaining 

unit employees, linking work expectations and outcomes to organizational 

goals, as FAA has done in its new performance management system, is a 

positive first step. We have reported that effective performance 

management systems are not merely used for once or twice-yearly 

individual expectation setting and rating processes, but are tools to help 

the organization manage on a day-to-day basis. These systems are used to 

achieve results, accelerate change, and facilitate two-way communication 

throughout the year so that discussions about individual and organizational 

performance are integrated and ongoing.7

 

Developing a ResultsOriented Organizational 

Culture Remains a Key 

Challenge

Recognizing the importance of cultural change in achieving results, FAA is 

moving forward on actions consistent with those that we have identified as 

important for cultural transformation. In 1996, we reported that FAA’s 

acquisition workforce culture lacked a commitment to mission focus, 

accountability, adaptability, and coordination, which impeded its ATC 

modernization efforts. While FAA took a number of actions over the past 

several years to change the culture of its acquisition workforce, these 

actions lacked continued management commitment. Our work shows that 

successfully implementing cultural change requires continued management 

attention over several years.

7

GAO, Results-Oriented Cultures: Creating a Clear Linkage between Individual 

Performance and Organizational Success, GAO-03-488 (Washington, D.C.: Mar. 14, 2003).
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FAA Recognizes the Importance 

of a Results-Oriented Culture

FAA has established a goal to create a results-oriented culture and is 

developing baseline data for tracking progress. FAA’s Human Capital Plan 

includes a goal to create a results-based performance culture and strategies 

for implementing performance management and compensation systems 

that focus on achieving results, providing training and briefings on the 

agency’s new performance management system, and implementing a 

communication plan for performance management responsibilities. 

Additionally, FAA’s performance-based compensation system provides 

most employees with a bonus when the agency meets its performance 

goals. 

FAA’s emphasis on performance management is an important step toward 

creating a results-oriented culture in the acquisition workforce. Our work 

has highlighted the importance of organizational culture in implementing 

mergers and transformations. Using a performance management system to 

define responsibility and ensure accountability for change is a key practice 

that can help agencies transform their cultures so that they can be more 

results oriented, customer focused, and collaborative.8

 (See fig 10.) 

Figure 10: Cultural Changes and Key Practices Necessary for Successful 

Transformation 

8

GAO, 21st Century Challenges: Transforming Government to Meet Current and Emerging 

Challenges, GAO-05-830T (Washington, D.C.: July 13, 2005).

Source: GAO.
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The chief operating officer, who heads the ATO, has also recognized that 

cultural factors can play a critical role in an organization’s success and is 

aiming to make a transformation similar to that shown above. For example, 

he has observed that FAA’s management culture has been “intensely 

hierarchical, risk averse,” and “reactionary,” and aims to develop a viable, 

stable, and sustainable organization that can make fact-based decisions 

that transcend changes in leadership. He said that FAA is giving high 

priority to changing its leadership model by linking top management more 

closely to operations in the field and by replacing command and control 

with communication across organizational levels. 

To further support cultural change, FAA is emphasizing accountability and 

other core values. For example, it is holding managers accountable for 

managing their budgets. Additionally, FAA has chosen five core values and 

plans to use employees’ responses to selected questions in the most recent 

employee attitude survey9

 to set a baseline for cultural improvement. The 

five core values are (1) integrity and honesty, (2) accountability and 

responsibility, (3) commitment to excellence, (4) commitment to people, 

and (5) fiscal responsibility. FAA’s Civil Aerospace Medical Institute 

analyzed the survey results by grouping three to seven survey items under 

each of these areas. For example, FAA placed the survey item “We are 

encouraged to express our concerns openly” along with four other items 

under the integrity and honesty core value. For many items, across all core 

values, fewer than 40 percent of ATO employees indicated agreement or 

strong agreement, indicating that FAA still has work to do to create a 

culture where these core values are readily evident to the majority of its 

employees. FAA is addressing these items by developing its own action 

plan, and documenting best practices for items where positive response 

rates—the total percentage of agree and strongly agree—are above 55 

percent. 

The FAA’s recognition of the importance of creating a results-oriented 

culture is an important step, particularly within the ATO, which is 

composed of formerly separate organizations. We have reported that many 

mergers or transformations fail because the cultures of the originating 

components are not fully understood or considered.10 Thus, identifying 

9

Although this survey was administered in September 2003, before the ATO was formed, 

FAA organized the responses according to the former suborganizations that became part of 

the ATO. 

10GAO-03-669.
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cultural features of the originating components, prior to, or early on, in the 

merger and transformation process, can help leadership gain a better 

understanding of their beliefs and values. Organizationwide surveys, 

employee focus groups, and individual interviews can be used to assess 

culture in order to provide a better understanding of how work gets done 

and what values are important to employees.

Past Cultural Change Efforts Met 

with Limited Success

Since we identified the acquisition workforce culture as an underlying 

cause of FAA’s chronic system acquisition problems in 1996,11 FAA has 

taken a number of steps to change its culture, but long-term management 

attention and focus have been lacking. Our 1996 report showed that FAA’s 

acquisitions were impaired because the employees and managers acted in 

ways that did not reflect a strong commitment to mission focus, 

accountability, adaptability, and coordination—the key factors that we 

identified at that time as being associated with a constructive culture. 

These factors are similar to the characteristics of the results-oriented 

culture that FAA is seeking to develop. A results-oriented culture is also an 

organizational element that we have identified as key in transforming the 

government to meet the management challenges of the 21st Century. 

In 1996 we reported that agency officials performed little or no mission 

needs analysis, made unrealistic cost and schedule estimates, and 

proceeded into the production phase of systems before completing their 

systems’ development. We also reported that accountability was not well 

defined or enforced for decisions on requirements and oversight of 

contracts. Additionally, ineffective coordination that resulted from, among 

other things, stovepipe lines of authority, impaired communications 

between organizations that needed to coordinate, particularly between the 

acquisition and operations sides of FAA. Finally, we reported that FAA’s 

culture of conservatism and conformity discouraged innovation and, 

instead, rewarded employees for simply following the rules. 

FAA responded to our 1996 report in several ways. As we recommended, 

FAA developed a strategy to implement cultural change. While the strategy 

called for, among other things, a report on the primary impediments to 

cultural change and a detailed action plan, the strategy was not 

implemented exactly as FAA anticipated. For example, FAA laid out a 

series of tasks over the course of a year, including developing a 

communications plan, conducting focus groups, and encouraging 

11GAO/RCED-96-159.
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workforce participation. However, according to FAA, the communications 

plan was never implemented because of a shift in senior leadership and 

organizational dynamics. 

Rather than implementing the strategy for cultural change, FAA took a 

number of alternative actions aimed at changing the culture. For example, 

FAA developed an intellectual capital investment plan that outlined 

corporate investment priorities for workforce development. FAA also 

implemented a results-based individual performance management program 

that showed the relationship between individual performance plans and the 

agency’s goals. Finally, FAA hired consultants to assess the acquisition 

workforce culture in 1998 and 2000 and developed action plans to address 

the issues that the assessments identified. According to an FAA official, 

FAA started implementing these action plans, but suspended them when 

the ATO was established. Additionally, although FAA strongly emphasized 

cultural change in the annual performance plans developed in the late 

1990s, the emphasis tapered off from 2000 through 2002. 

Some Recent FAA Survey 

Results Suggest Less 

Improvement in Workforce 

Culture Than in Prior Years

Improvements in some culture-related responses in FAA’s employee 

attitude survey have tapered off, compared with prior years. Since 1984, 

FAA has periodically conducted employee attitude surveys, most recently 

in 1997, 2000, and 2003.12 The survey gathers information on employees’ 

attitudes, perceptions, and opinions about a broad variety of organizational 

issues. Many of the survey items relate to mission focus, accountability, 

coordination, and adaptability—the four characteristics of a constructive 

culture that we identified in 1996. 

According to our analysis of employee responses to survey items, FAA 

made some initial progress between 1997 and 2000, but progress leveled off 

for many items thereafter.13 (See fig. 11.)

12See appendix I for additional information on these surveys.

13The surveys elicited information in a variety of ways. For example, in some cases, 

questions were asked and the response choices ranged from “to a limited extent” to “a great 

extent.” In other cases statements were presented and response choices ranged from 

“strongly disagree” to “strongly agree.” On a five-point scale, the most negative response is 

scored “1” and the most positive response is scored “5.” Mean scores were developed by 

summing the responses to each question and dividing by the number of respondents. For 

example, a mean score of 3 for a particular question would indicate that the average 

response was “neither agree nor disagree,” while a mean score of 4 would indicate the 

average response was “agree.” 
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Figure 11: Changes in Mean Response Scores for Selected Items on FAA’s Employee Attitude Surveys, 1997 to 2000, and 2000 

to 2003, for the Acquisition Workforce

Change in mean response Change in mean response

Mission Focus: pursuing goals that define the best course of action for an 

organization

1. In my organization, there are service goals aimed at meeting customer 

expectations. 

2. Some employees may be hesitant to speak up for fear of retaliation.a

3. I am clear about how "good performance" is defined in my organization. 

4. My organization has clearly communicated the connection between my 

individual performance goals and my organization's performance goals.b

Accountability: empowering employees and holding them responsible for 

their decisions and actions

1. I am able to contribute to decisionmaking that affects my job.

2. I have the authority to make decisions required by my day-to-day work problems.

3. To what extent have you received the training you need to perform effectively in 

your job?

4. To what extent do you have the tools needed to do your job efficiently 

(computers, test equipment, communication devices, etc.)?

-0.50

-0.25

0.00

0.25

0.50

Question 1 Question 2 Question 3 Question 4

-0.50

-0.25

0.00

0.25

0.50

Question 1 Question 2 Question 3 Question 4

b
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Note: FAA score estimates have 95 percent confidence intervals of plus or minus 0.06 or less. Year-toyear differences in scores of 0.08 or more are significant at the 95 percent confidence level.

a

This question is negatively worded, such that “strongly agree,” would be a negative response. For 

consistency, we reversed the scoring for this question, so that a “strongly agree” response would be 

scored 1, and a “strongly disagree” response would be scored 5. The practice of reverse scoring 

negatively worded items is a commonly accepted professional practice in survey research 

methodology.

b

Not asked in the 1997 survey.

Change in mean response Change in mean response

2000 - 2003

1997 - 2000

Coordination: involving other employees in decisions affecting them, resolving 

differences collaboratively, and cooperating across organizational lines

1. Conflicts and differences in my organization are brought out and managed 

rather than avoided or worked around. 

2. Overall, how satisfied are you with your workgroup? 

3. In my organization, we are encouraged to share information to get the job done.b

4. I trust my coworkers.b

Adaptability: accepting new approaches and responding positively to demands 

and opportunities posed from within and outside of the organization

1. To what extent has FAA done a good job creating an environment where all 

employees get the chance to fully contribute to organization's mission?

2. To what extent do you receive sufficient information from FAA to understand how 

major innovations and changes might affect you?

3. My supervisor is effective in providing periodic coaching to improve my performance.

4. To what extent has FAA done a good job creating an environment where all 

employees have the opportunity to participate in developmental activities (e.g., 

details, training, task forces, special assignments)?b

Source: GAO analysis of FAA data. 

-0.50

-0.25

0.00

0.25

0.50

Question 1 Question 2 Question 3 Question 4

-0.50

-0.25

0.00

0.25

0.50

Question 1 Question 2 Question 3 Question 4

b b b
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Transforming FAA’s Organizational Culture

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FAA’s Survey Results Are Lower 

Than Those for Other 

Organizations on Similar Culture 

and Climate Surveys

Surveys of organizational culture in other organizations, conducted over 

the past 20 years (comparison group), show higher mean scores than those 

for FAA’s acquisition workforce. To determine how FAA’s culture compares 

with that of other organizations, we contracted with an expert in 

organizational culture. With this expert’s assistance, we compared FAA’s 

scores for the survey items listed in figure 10 with the comparison group’s 

responses to similar items.14 While an exact match in the wording of survey 

items was not possible, we found that the mean scores for FAA’s acquisition 

workforce were lower than those of the comparison group for 14 out of 16 

items that we compared. The exceptions were for items that addressed the 

adequacy of training provided to perform one’s job and the sufficiency of 

tools and equipment needed to do one’s job efficiently. Appendix III lists 

the 16 items that we compared and the respective mean scores of FAA’s 

acquisition workforce and of the comparison group. Appendix III also 

shows the mean scores for organizations with highly effective cultures, 

which could be used as a target towards which other organizations, such as 

FAA, could work to redirect their cultures and improve their 

performance.15

It is important to note that comparisons of the responses to questions, 

whose wording is similar, but not identical, are difficult because even 

subtle changes in a question’s wording can result in different outcomes. 

Our expert commented that FAA’s survey results are more indicative of an 

organization’s climate, rather than culture. The expert noted, however, that 

research shows that climate is strongly related to culture. Therefore, we 

present the two sets of survey results here because the concepts that they 

are measuring are, in our opinion, similar enough to warrant a general 

comparison. Additionally, we noted in 1996 that the culture of FAA’s 2,000-

employee acquisition workforce needed improvement, and that the rate of 

initial improvement has not been sustained. Additionally, as previously 

stated, FAA has demonstrated its recognition of the need for a results14See appendix II for additional information on our methodology for assessing FAA’s 

workforce culture. 

15In November 2003, GAO hosted a forum to discuss the characteristics of high-performing 

organizations. The forum participants agreed that the key characteristics and capabilities of 

high-performing organizations can be grouped into four themes: (1) a clear, wellarticulated, and compelling mission; (2) focus on needs of clients and customers; (3) 

strategic management of people; and (4) strategic use of partnerships. See GAO, HighPerforming Organizations: Metrics, Means, and Mechanisms for Achieving High 

Performance in the 21st Century Public Management Environment, GAO-04-343SP

(Washington, D.C.: February 2004). 
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oriented culture by creating a goal to create such a culture in its Human 

Capital Plan. The chief operating officer has also observed the need to 

change the culture of the ATO’s 36,000 employees. 

Transforming organizational cultures requires substantial management 

attention. The experiences of successful transformations and change 

management initiatives in large public and private organizations suggest 

that it can take 5 to 7 years or more until such initiatives are fully 

implemented and cultures are transformed in a sustainable manner. Such 

changes require focused, full-time attention from senior leadership and a 

dedicated team. The team must have vested authority and resources from 

top management to set priorities, make timely decisions, and move quickly 

to implement decisions. Such a team provides a visible signal that the 

transition is being undertaken with the utmost seriousness and 

commitment. Having a dedicated transition team is just one of several 

practices that we have identified, such as setting implementation goals and 

a timeline and establishing a communication strategy, that are key to 

successful mergers and organizational transformations. (See app. IV for a 

complete list.) 

Conclusions FAA has addressed a number of the challenges it faces in hiring and 

training thousands of air traffic controllers over the coming decade. 

However, FAA’s lack of information on the cost of this program is of 

particular concern as the agency enters a period of anticipated lean 

budgets, as discussed in the next chapter. A shortage of funds that results 

in hiring fewer controllers than needed could lead to additional delays in 

air travel, beyond those caused by infrastructure constraints. 

Successful organizational transformations and cultural changes require 

several years of focused attention from senior leadership. In the past, FAA 

set, but did not sustain, a fact-based course for creating a constructive 

organizational culture. Promising initiatives, such as detailed action plans, 

were developed but not implemented or sustained, and without continued 

attention to cultural change from the top, improvements leveled off, and 

FAA now appears to lag behind other organizations on cultural measures. 

FAA’s current effort to establish a baseline for measuring cultural change 

represents an important first step, but additional steps and sustained 

management attention will be needed to achieve and maintain progress. 

Unless FAA succeeds in transforming itself into an organization that is 

more mission focused, accountable, cooperative, and adaptable, it could 

have difficulty establishing the results-oriented culture that it seeks. 
Chapter 3

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Recommendation for 

Executive Action

To provide Congress with accurate information on the resources needed to 

hire and train thousands of air traffic controllers over the next decade, we 

recommend that the Secretary of Transportation direct the FAA 

Administrator to estimate the cost of FAA’s controller hiring and training 

plan and incorporate these estimates into future budget requests. 

To ensure that FAA provides the long-term focus needed for an effective 

cultural transformation, we recommend that the Secretary of 

Transportation direct the FAA Administrator to provide sustained oversight 

of efforts to transform FAA’s workforce culture to one that is more resultsoriented, including periodically monitoring the agency’s progress against 

baseline data. 

Agency Comments FAA did not comment these recommendations, but provided technical 

comments which we included as appropriate.
Page 63 GAO-06-154 Status of NAS Modernization

Chapter 4

Rising Costs and Declining Revenues Pose 

Financial Management Challenges Chapte4r

FAA faces the dual challenge of rising costs and declining revenues, 

culminating in a projected multibillion-dollar gap between its expected 

budget targets and expected spending requirements through fiscal year 

2009. To attempt to live within its means, FAA is cutting programs and 

controlling costs, but these steps will not come close to closing the gap. 

FAA officials and some experts and stakeholders believe a key element in 

addressing the agency’s financial management challenges is changing FAA’s 

revenue structure from the present ticket-tax-based structure to one more 

closely tied to FAA’s cost of providing services. Collectively, aviation 

experts and stakeholders suggested that FAA could address its financial 

management challenges through a two-pronged approach: in the near 

term, consider options that are readily available, such as contracting out 

more of its services and pursuing other cost-saving measures; and over the 

longer term, determine whether a business case could be developed to 

support more extensive changes that would require presidential and/or 

congressional action to implement, such as providing the ATO with more 

financial management flexibility.

To Address Rising 

Costs and Declining 

Revenues, FAA Is 

Focusing on Cost 

Control

FAA is concerned about the impact of rising costs and reduced budget 

targets through fiscal year 2009, combined with uncertainty over future 

balances in the Trust Fund.1

 FAA is attempting to live within its reduced 

means by controlling its costs. 

FAA Projects a MultibillionDollar Gap 

FAA projects an $8.2 billion gap between its expected budget targets and 

expected spending requirements through fiscal year 2009. Under existing 

budget targets set through fiscal year 2009, FAA would receive about 17 

percent less each year in capital funding than it received in fiscal years 

2002, 2003, and 2004. For fiscal year 2005, FAA received an appropriation of 

$2.5 billion for capital expenditures, and capital budget targets for fiscal 

1

The Office of Management and Budget reviews each executive branch agency’s input to the 

budget that the President submits to Congress each February. The budget includes the most 

recently completed year, the current year, the budget year, and at least the four following 

years, called outyears. The Office of Management and Budget informs agencies of its 

decisions on the budget through its “passback.” In this report we refer to the outyear 

budgets shown in the passback as budget targets. 
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years 2006 through 2009 are just under $2.5 billion. In contrast, for fiscal 

years 2002 through 2004, FAA received annual capital appropriations of 

nearly $3 billion. (See fig. 12.)

Figure 12: Actual Capital Appropriations, Fiscal Years 2002 – 2005, and Budget 

Targets, Fiscal Years 2006 – 2009

Compounding FAA’s financial concerns is ongoing uncertainty over 

revenue forecasts for the Trust Fund. From fiscal years 2002 through 2004, 

FAA’s expenditures declined at a steeper rate than the Trust Fund revenues, 

but the expenditures nonetheless remained higher. (See fig. 13.) Although 

revenues increased from fiscal years 2003 through 2004, expenditures 

increased more rapidly.

0

1

2

3

2002 2003 2004 2005 2006 2007 2008 2009

Dollars in billions

Fiscal year

Actual appropriations

Expected appropriations

Source: GAO analysis of FAA data.
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Figure 13: Aviation and Airway Trust Fund Expenditures and Revenues, Fiscal Years 

2002 - 2004

The combined effect of the higher expenditures and the lower revenues is a 

reduction in the Trust Fund’s uncommitted balance of nearly 50 percent 

from fiscal years 2002 through 2004. (See fig. 14.) 

Dollars in billions

Expenditures

Revenue

Source: GAO analysis of FAA data.

0

3

6

9

12

2002 2003 2004
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Figure 14: Aviation and Airway Trust Fund Uncommitted Balances, Fiscal Years 

2002 - 2004

We recently testified that in 4 out of the last 5 years, actual trust fund 

revenues fell short of forecasts. Our analysis indicated that if revenues fall 

10 percent short of forecasts for fiscal years 2005 through 2007, the fund 

could be bankrupt by 2006.2

FAA Cut Major Programs 

and the ATO Is Gathering 

and Tracking Data to 

Control Costs

FAA cut funding for three major programs. For fiscal year 2005, the 

appropriation for FAA’s facilities and equipment budget, which funds ATC 

system acquisitions, was $393 million less than the agency had planned to 

spend. FAA conducted an intensive review of its capital investment 

portfolio and absorbed the $393 million reduction largely by suspending the 

funding for CPDLC, an e-mail-like messaging system for communications 

between air traffic controllers and pilots; eliminating a major component of 

NEXCOM, an air-to-ground digital communications system; and returning 

LAAS, a precision landing system augmented by satellites, to research and 

development to resolve a key performance shortfall. 

The ATO plans to manage its services on the basis of costs. Key to this 

effort is FAA’s implementation of a cost accounting system. Until recently, 

2

GAO, Airport and Airway Trust Fund: Preliminary Observations on Past, Present, and 

Future, GAO-05-657T (Washington, D.C.: May 4, 2005).

0

1

2

3

4

5

2002 2003 2004

Fiscal year

Source: GAO analysis of FAA data.

Dollars in billions
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FAA had no cost accounting system and could not accurately determine the 

cost of its activities. When fully implemented in 2006, the cost accounting 

system should address our long-standing concern that FAA lacked the cost 

information necessary for decision making as well as to adequately account 

for its activities and major projects, such as the air traffic control 

modernization program. Additionally, the ATO intends to use the cost 

accounting system to provide more credible and transparent analyses of 

the costs and benefits of alternative plans of action. For example, ATO 

officials said the system will enhance their ability to accurately determine 

the costs of providing specific services or products, and to compare those 

costs with the value provided to the organization’s customers. This 

information will be valuable in prioritizing activities and weighing the costs 

and benefits of various courses of action when developing and supporting 

proposed budgets. 

The ATO also plans to hold its managers accountable for cost control. The 

ATO has decentralized cost accountability to service delivery points—the 

units that actually provide services—such as air traffic control facilities. 

Each manager of a service delivery point will develop an operating budget. 

According to the ATO’s plans, each manager will be held accountable for 

holding costs within specific targets. Managers will track their costs using 

reports that show expenditures for operations, facilities and equipment, 

and overhead, as well as cost per service. For example, managers will 

receive reports indicating the cost per takeoff and landing, or cost per flight 

hour, depending on the organizational unit’s purpose. ATO officials stressed 

that training key executives and managers to understand the general ledger 

and cost accounting system is a key element in controlling costs. The ATO 

plans incorporate cost control into the performance rating and bonus 

system in fiscal year 2006. 

FAA has also begun to base funding decisions for system acquisitions on 

their contribution to reducing the agency’s operating costs, among other 

things. Currently, FAA’s Telecommunications Infrastructure—one of the 16 

major system acquisitions that we reviewed in detail—is the only one of the 

55 system acquisitions in FAA’s ATC modernization program that helps 

reduce the agency’s operating costs. However, FAA does not expect to 

realize most of these benefits until after 2009. 

The ATO is conducting activity value analysis as another method to reduce 

costs. Through activity value analysis, the ATO determines (1) the costs of 

the products and services provided, (2) the factors that affect the costs, and 

(3) the value of these products and services, as perceived by the ATO’s 
Chapter 4

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internal customers. Through activity value analysis, officials are asking the 

internal organizations that use the ATO’s products and services to 

categorize their value as high, medium, or low, while ATO officials 

categorize the cost of performing each activity as high, medium, or low. 

ATO officials expect the process to help them eliminate activities with low 

customer value and determine ways to reduce the costs of activities with 

high customer value. 

The ATO first focused the activity value analysis on headquarters units, and 

plans to do so later at field units. The results of the headquarters analysis 

indicated that internal customers rated only 5 out of 73 reviewed products 

or services as low value, and all of these were also low cost. Officials 

judgmentally selected 11 activities for a more in-depth analysis to 

determine areas for potential improvement. The activity value analysis 

resulted in 39 discrete findings and recommendations with common 

themes. (See table 3.)

Table 3: Common Themes and Number of Findings from ATO’s Headquarters 

Activity Value Analysis

Source: FAA.

Common theme

Number of

findings

Accountability or metrics is needed 19

Tools and systems lack standardization 18

Approach across service units is inconsistent 15

Process is too complex or disparate 9

Function or organization is too spread out 9

Process is sound, but not enforced; may require minor adjustments 3

Product or service is an afterthought 3
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Existing Cost Control 

Initiatives Will Not Close the 

Projected Gap

FAA, through the ATO, has a number of cost control initiatives under way. 

For example, the ATO is evaluating whether some of its services can be 

provided for less cost by contracting out. In February 2005, FAA awarded a 

contract for the operation of its flight service stations. Under this 

arrangement, which FAA termed the largest competitive sourcing activity, 

at that time, in the federal government, the agency expects significant 

savings. According to FAA’s estimate, the agency will save $441 million in 

capital costs because it will not continue to procure modernized equipment 

for the flight service stations. Additionally, FAA expects to save $1.2 billion 

in operating costs. However, the projected operating cost savings would 

not occur until fiscal year 2011 or later; only about $241 million savings in 

operating costs would be realized through fiscal year 2010.3

 For fiscal years 

2005 through 2010, FAA also projects savings of $212 million in operating 

costs from a variety of other actions, including improvements in 

procurement for office supplies, office equipment, mail, printing and 

information technology hardware and software; improving cell phone 

contracting; and cutting night shift operations at selected ATC towers. 

These cost control efforts are not likely to close the projected gap. In total, 

the estimated operating cost savings that the agency could realize from 

current cost-reduction actions is $454 million through fiscal year 2010—far 

short of the projected gap. However, additional options for cost savings 

exist. Some will require FAA to address organizational barriers and receive 

strong political support for implementation. Frequently cited cost control 

strategies are described below.

3

FAA also saved $494 million in operating costs through staff attrition that occurred in 

advance of contracting out. FAA did not fill these vacancies because it was planning to 

contract out the flight service stations.
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• Consolidate major air traffic control facilities. A 1997 Coopers & 

Lybrand report concluded that the number of these centers could be 

reduced without a negative impact on air safety, but that such an 

initiative was considered unfeasible without strong political support for 

cost control.4

 Some stakeholders told us that six or fewer facilities could 

be sufficient. FAA officials said they have no plans to consolidate 

centers because the concept would require strong political support that 

is not yet evident and they have no current financial estimate of 

potential savings. In addition, FAA’s Management Advisory Council5

recently recommended that FAA develop a plan for reducing the number 

of terminal radar approach control facilities from their current level of 

150 aging and inefficient facilities to around 50 to 60 newer, upgraded 

facilities using more capable and efficient automation.

• Consolidate regional offices. According to the Coopers & Lybrand and 

the National Civil Aviation Review Commission reports, FAA could 

achieve savings by consolidating its nine regional offices. Both reports 

said that FAA had studied the issue numerous times but had never acted 

on the results of its own studies. According to the commission’s report, 

consolidating nine FAA regional offices into three could save $400 

million over a 5-year period. Several stakeholders told us this is an 

initiative that FAA should pursue. 

• Expand the Contract Tower Program. Although FAA employees staff 

control towers at most of the nation’s busiest airports, FAA contracts for 

outside staff to work at over 200 airports with lower traffic levels. Both 

the Coopers & Lybrand study and the commission report recommended 

expanding the contract tower program to achieve savings of $20 million 

to $30 million per year. More recently, the Department of 

Transportation’s Office of the Inspector General reported that each 

contract tower costs FAA nearly $900,000 less per year than comparable 

FAA towers, without compromising flight safety.

4

Coopers & Lybrand, L.L.P., Federal Aviation Administration Independent Financial 

Assessment (Feb. 28, 1997).

5

In 1996, Congress authorized the Administrator of the FAA to establish the Management 

Advisory Council. The council reviews, comments, and makes recommendations on FAA 

management, policy, spending, funding, and regulatory matters affecting the aviation 

industry. On May 12, 2005, the council issued a report that included suggestions for reducing 

FAA’s costs.
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• Decommission infrastructure. Aviation stakeholders noted that savings 

could be achieved by decommissioning ground-based navigational aids, 

but FAA has been slow to take action. As of May 2005, approximately 

2,200 ground-based navigation aids were in operation. At the same time, 

FAA is fielding costly satellite navigation systems such as WAAS, but has 

made little progress in decommissioning the ground-based 

infrastructure. Its current plan calls for modest equipment retirements 

over the next 5 years and more substantial decommissioning over the 

next 10 to 15 years. According to one estimate, these actions could save 

$150 million per year. FAA maintains that a long decommissioning 

process is required because general aviation users will continue to rely 

on some of these systems until their aircraft are upgraded to use 

satellite-based navigation. Several stakeholders commented that 

responding to the general aviation community on this issue has long 

been a roadblock to decommissioning obsolete equipment, and the ATO 

cannot afford to maintain these systems indefinitely.

To Fund Major System 

Acquisitions through 

Fiscal Year 2009, FAA 

Has Cut Funding for 

Planned Investments in 

Other Areas

FAA plans to spend $4.2 billion on 16 major system acquisitions in fiscal 

years 2005 through 2009. (See table 4.) 
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Table 4: FAA Capital Funding Plans for Major ATC Modernization Acquisitions

Source: GAO analysis of FAA data.

Note: Amounts shown in the table for NEXCOM, LAAS, and CPDLC reflect cuts previously described 

in this chapter. 

a

Funding includes the remaining STARS acquisitions for fiscal years 2006 and 2007 and $256.5 million 

for the Terminal Automation Modernization Replacement (TAMR) program. In 2004, FAA decided to 

end the STARS acquisition in fiscal year 2007 and began TAMR. FAA plans to continue terminal 

modernization incrementally under TAMR, but has not formally approved its funding. For purposes of 

this table, we are treating STARS and TAMR as a single acquisition.

As table 4 shows, ERAM is a major component of FAA’s system 

acquisitions. This system will replace the software and hardware in the 

current en route host computers at 20 of FAA’s air route traffic control 

centers.6

 This acquisition is still in its early stages, but will consume 35 

percent of FAA’s total estimated funding planned through 2009 for the 16 

systems listed in table 4. 

Dollars in millions

Major system

Funds planned for fiscal years 

2005–2009

ERAM $1,531.8

STARSa 614.9

WAAS 570.8

FFP2 235.3

ASR-11 230.8

NEXCOM 212.8

ATOP 197.7

FTI 163.4

ASDE-X 107.9

NIMS-2 104.2

ITWS 77.7

ECG 74.3

ATCBI 73.7

OASIS 31.7

LAAS 9.9

CPDLC 2.9

Total $4,239.8

6

ERAM will not be installed at the Anchorage, Alaska, air route traffic control center.
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To provide the $4.2 billion for its major system acquisitions in fiscal years 

2005 through 2009 while remaining within its budget targets, FAA has 

reduced funding planned for new technology, facilities, and airport 

improvements, among other things. (See fig. 15.) 

Figure 15: Percentage Reductions in Capital Investment Plans as of January 2005, 

Compared with January 2003

FAA Has Reduced Funding 

for New Technology That 

Could Produce Future 

Benefits

For fiscal years 2005 through 2009, FAA eliminated the $1.4 billion that it 

had set aside for what it calls the “architecture segment.” These funds 

would have been used to perform about 2 years’ worth of early research on 

new programs that have not been officially approved as part of an 

acquisition decision by FAA management. According to FAA officials, these 

new programs will be postponed until they are affordable. 

Architecture segment funds would have funded some technology 

developments intended to serve as cornerstones of FAA’s planned evolution 

Percentage

Category

Personnel

Navigation

Weather

Mission support

Surveillance

Communications

Facilities

Source: GAO presentation of FAA data.

-100

-80

-60

-40

-20

0

Automation

Architecture
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from a controller-based ATC system to one that relies more on 

collaboration between pilots and controllers and on better use of the 

technology on board an aircraft for safe navigation. For example, 

architecture segment funds would have been used to develop, among other 

things, the System Wide Information Management network (SWIM). SWIM 

would help transition the NAS to network-centric operations by providing 

the infrastructure and associated policies and standards to enable 

information sharing among all authorized NAS users, such as the airlines, 

other government agencies, and the military. 

The architecture segment would also have funded the initial development 

of Automatic Dependent Surveillance-Broadcast (ADS-B), which FAA 

describes as another cornerstone of its long-term plans. ADS-B is a 

surveillance technology that transmits an aircraft’s identity, position, 

velocity, and intent to other aircraft and to ATC systems on the ground, 

thereby enabling pilots and controllers to have a common picture of 

airspace and traffic. By providing pilots with a display that shows the 

location of nearby aircraft, the system enables pilots to collaborate in 

decision making with controllers, safely allowing reduced aircraft 

separation and thereby increasing NAS capacity. 

Eliminating the architecture segment comes at an inopportune time, as the 

JPDO begins its congressionally mandated efforts to coordinate the 

research efforts of FAA and other federal agencies to create the Next 

Generation Air Transportation System that would provide capacity to meet 

the air transportation needs of 2025. The JPDO issued a report in 2004 

outlining its plans to triple NAS capacity by 2025 and proclaimed that it can 

reach this goal only by completely transforming the way air traffic is 

managed. Network-centric operations and improved surveillance 

technology, such as SWIM and ADS-B might provide, are key elements of 

this transformation. A senior JPDO official told us that the JPDO’s 

planning is still at an early stage, and therefore, the JPDO is not certain 

whether SWIM or ADS-B, as currently configured, would address NAS 

needs for 2025. However, he said that further development work is needed 

on these and other new technologies, and consequently, the JPDO hopes to 

see some funding for early technology development restored in FAA’s 

capital investment plans as FAA’s fiscal year 2007 budget request moves 

forward. 

According to FAA, the program requirements for new technologies 

included in the JPDO’s plans for the future were not mature enough, and 

business cases were not validated at that time, to justify inclusion within 
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FAA’s constrained capital investment plan. FAA stated that it plans to work 

with the Department of Transportation, the Office of Management and 

Budget, and congressional appropriations committees to introduce new 

technologies associated with the JPDO’s future plans. We believe that FAA 

needs to give continuing priority to developing business cases for new 

technologies such as ASD-B and SWIM. Such actions will help FAA and the 

JPDO transition the current NAS to the next generation air transportation 

system. 

FAA Has Reduced Funding 

for Facilities

FAA cut nearly $790 million from its planned investments for facilities—an 

action that could delay actions on facilities scheduled for repair or 

replacement. Much of FAA’s infrastructure—the buildings and towers that 

house ATC employees and costly systems—is aging. (See table 5.) For 

example, the Casper, Wyoming, air traffic control tower was built in 1937; 

the tower in Binghamton, New York, was built in 1951; and FAA’s newest air 

route traffic center was occupied in 1963. The average age of air traffic 

control towers at airports is 30 years. FAA’s chief operating officer told us 

that the Houston traffic control center floods during heavy rains. Fire 

suppression systems are another concern, he said. While FAA has replaced 

more than 30 air traffic control towers and terminal radar approach control 

facilities in the last 5 years, the funding reduction could delay progress on 

ATC facilities that are scheduled for repair or replacement in the future.

Table 5: Age of NAS Facilities

Source: FAA.

The capital spending reductions that FAA has planned for fiscal years 2005 

through 2009 reflect the end result of difficult decisions about which 

programs to fund and which to cut in order to remain within budget targets. 

However, as we recently reported, FAA does not provide sufficient 

information to senior agency, department, Office of Management and

Facility

Average

age

Air route traffic control facilities (that house en route ATC operations) 43 years

Air traffic control towers (that house airport ATC operations) 29 years

Terminal radar control facilities (that house ATC approach and departure 

operations)

25 years
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Budget, and congressional decision-makers of how it has arrived at its 

spending plans.7

 Specifically, FAA does not identify the impact of these 

decisions on ATC and NAS modernization. Such information would make 

clear how constrained budgets will affect NAS modernization and how FAA 

is working to live within its means. Accordingly, we recommended that 

FAA begin providing such information with its budget submissions to 

Congress. FAA informed us that it intends to better inform Congress in the 

future by adding a section to its annual capital investment plan that will 

summarize major changes from the preceding year.

FAA Is Reviewing 

Potential Changes in 

Its Funding Mechanism 

With the various taxes that accrue to the Trust Fund scheduled to expire in 

2007, and FAA’s reauthorization, also scheduled for 2007, many aviation 

experts, as well as top Department of Transportation and FAA officials, are 

revisiting the way FAA receives its funding and are repeating 

recommendations made in the past, such as those of the National Civil 

Aviation Review Commission in 1997. Aviation experts and stakeholders 

agree that the incomplete implementation of these recommendations and 

additional factors could limit FAA’s ability to fully address long-standing 

NAS modernization problems. 

The ATO, as Created, 

Implemented Only Part of 

the 1997 Commission’s 

Recommendations

The 2000 executive order and related legislation that laid the foundation 

leading to FAA’s creation of the ATO did not implement all of the 

recommendations of the National Civil Aviation Review Commission. The 

report stressed that the recommendations composed an integrated and 

comprehensive funding package and that the commissioners’ agreement on 

the recommendations was contingent on their implementation as a total 

package. The report stated that implementing the recommendations in 

total could put FAA and aviation stakeholders in a position to take 

advantage of industry growth and technological change. The commission 

recommended the following: 

• FAA’s budget treatment must change. The commission recommended 

that FAA’s funding and financing system receive a federal budget 

treatment ensuring that revenues from aviation users and spending on 

aviation services are directly linked and shielded from discretionary 

7

GAO-05-331.
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budget caps. This linkage would ensure that FAA’s expenditures are 

driven by aviation demand.

• FAA’s management must become performance based. The commission 

recommended that services related to the air traffic system be placed in 

a performance-based organization, managed by a chief operating officer, 

and overseen by a board of public interest directors. In addition, FAA 

should institute a cost accounting system and be given authority to 

implement innovative programs involving leasing and borrowing 

authority. The commission further stated that the safety and security 

functions of FAA, which are separate from the performance-based 

organization, should also adopt a performance-based management 

philosophy so that the quality of these programs can be improved.

• FAA’s revenue stream must become more cost based. The commission 

recommended that FAA adopt a cost-based revenue stream to support 

its air traffic system activities including capital investments. At the same 

time, funding for aviation security, safety, and government use of the air 

traffic system should be provided by the federal government’s general 

fund.

• FAA must control its operating costs and increase capital investments. 

The commission reviewed FAA’s forecasted budget needs and assumed 

the agency’s budget projections to be reasonable in a status quo 

environment. However, the commission noted that FAA’s operating 

costs could be better managed and controlled and that investments in 

ATC modernization should be increased.

• Airport capital needs must be met. The report noted that the federal 

requirements of airport capital development exceeded the amount of 

revenue that was available to finance these requirements through the 

Airport Improvement Program. The commissioners believed that the 

Airport Improvement Program is the linchpin of airport financial 

planning and stated that the program should be funded at a minimum of 

$2 billion annually over the next 5 years.
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While we do not necessarily agree with all of the commission’s 

recommendations, we note that they were not implemented as a complete 

package, as the commission intended. Indeed, the ATO has been created as 

a legislatively mandated performance-based organization, headed by a 

chief operating officer, and focused on cost control, as the commission 

recommended. However, creating the ATO did not change its funding 

mechanism—a topic currently under discussion as the Trust Fund and 

FAA’s reauthorizations are about to expire. Additionally, FAA’s spending 

remained subject to congressional appropriations and the ATO was not 

given authority to implement innovative programs involving leasing and 

borrowing. Furthermore, the Trust Fund continues as a partial funding 

source for aviation security and safety.8 

Aviation Experts and 

Stakeholders Repeated 

Several Past 

Recommendations

With the Trust Fund’s scheduled 2007 expiration, and FAA’s reauthorization 

drawing near, stakeholders, aviation experts, and Department of 

Transportation officials are discussing whether or how the Trust Fund 

should be changed to better meet FAA’s needs. Potential changes echo 

those made by the commission in 1997. For example, FAA’s 2004 

performance report notes that the FAA’s funding mechanism does not link 

revenues with FAA’s cost of providing ATC services.9

 The report states that 

Trust Fund revenues are affected primarily by the number of passengers in 

the NAS, while FAA’s workload and costs are based on the number of 

aircraft operating in the NAS, regardless of the number of passengers on 

each aircraft. Given the same number of passengers, the Trust Fund’s 

revenues would remain constant, even though the passengers may be 

traveling on more, smaller aircraft. Under this scenario, FAA’s workload 

and costs would increase but FAA’s income would remain the same. The 

FAA Administrator noted that a tax on airline fares paid by passengers, 

which is the Trust Fund’s primary source of revenue, is not related to FAA’s 

actual cost of providing ATC services, and is not responsive to changes in 

the aviation industry. According to the Administrator, the United States is 

in a select minority of countries—all of them small, third world nations—

that do not charge for the actual cost of air traffic control. She added that 

the current structure provides little incentive for FAA’s customers to look at 

8

Security fees, collected as a fee imposed on airline passengers, also help pay for aviation 

security. 

9

FAA is funded through the Trust Fund and the General Fund. In fiscal year 2004, the 

General Fund provided 22 percent of FAA’s total budget. 
Chapter 4

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Page 79 GAO-06-154 Status of NAS Modernization

what things cost and help FAA to focus its resources where they matter the 

most. Under this system, she observed, “everyone wants everything and in 

a political environment, it becomes difficult ... often impossible ... to do 

things differently and undertake real reform.” 

Some aviation experts also noted that FAA’s funding stream needs to be 

linked to the cost of its services and FAA needs multiyear funding, financed 

by debt if necessary, to effectively manage its acquisitions, as the 

commission recommended.10 FAA’s chief operating officer said that 

multiyear funding would provide needed stability, and a senior Department 

of Transportation official stated that 50 percent of acquisition cost 

overruns resulted from an unstable funding stream. One stakeholder 

concluded that, at the present time, a window of opportunity may exist to 

seriously reexamine past recommendations that have been repeated over 

time, such as those of the commission. However, not all stakeholders agree 

that significant changes are needed. The National Air Traffic Controllers’ 

Association, the labor union representing air traffic controllers, testified 

that the Trust Fund is a stable and strong source of revenue and structural 

changes should not be taken lightly. 

Some aviation experts and our work suggests steps that FAA could take in 

the short term to improve its performance-based characteristics within the 

existing structure of congressional oversight and financial control. For 

example, one expert suggested that FAA has room for improvement in 

prioritizing how it commits to programs that require future investments, 

keeping in mind realistic funding assumptions. Another noted that FAA’s 

anticipated high retirement rate over the next few years provides an 

opportunity to cut costs by redistributing and trimming the workforce. 

Finally, some experts suggested that if contracting for flight service 

stations proved to be effective, FAA could consider contracting for other 

functions, such as oceanic or en route ATC, or nighttime operations. Under 

this option, experts noted that ongoing government oversight could ensure 

the safety of contracted operations, and a “staged outsourcing” of the 

NAS’s functions might build confidence in the private sector’s ability to 

provide air traffic services safely and efficiently. As previously discussed, 

10As part of our research, we sought the perspective of an international group of experts. We 

asked these experts to address, among other things, short-term steps that the ATO could 

take to address funding constraints and longer term steps that FAA could take to help the 

ATO achieve its mission. The options presented were identified by one or more members of 

our expert panel or others that we interviewed and do not necessarily reflect the views of 

GAO or of all aviation experts. 
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Page 80 GAO-06-154 Status of NAS Modernization

our work has also pointed out cost-saving options that FAA could pursue, 

such as consolidating ATC facilities and regional offices, decommissioning 

ground-based navigational aids, and expanding the contract tower 

program.

Other experts went so far as to state that FAA, through the ATO, cannot 

fully address legacy modernization problems unless the ATO receives 

managerial and budgetary independence. To this end, some stated that the 

ATO’s basic relationship with Congress must be changed so that ATO has 

the authority to manage its own finances, as the private sector does. 

Experts noted that, in contrast to the independence, flexibility, and tools 

available to private business executives, the business decisions made by 

the ATO’s executives are subject to review by the FAA Administrator, the 

Secretary of Transportation, the Office of Management and Budget, and 

Congress. Increasing the ATO’s autonomy would entail fundamental 

structural changes to the how the ATO receives and spends funding.

Considering such fundamental changes is consistent with our work on the 

challenges facing this nation in the 21st Century. Addressing these 

challenges requires a fundamental reexamination of government policies, 

programs, and functions to determine what the federal government should 

do and how it should be financed in the future. Concerning transportation, 

federal decision makers need to ask whether existing program constructs 

and financing mechanisms are relevant to the challenges of the 21st

Century. 

Conclusions The current tight budget environment has forced FAA to make some tough 

decisions, the implications of which may not be apparent to executive 

branch and congressional decision makers. Including information in its 

budget submissions on the impact of these decisions, as we previously 

recommended, will enable FAA to provide decision makers with a better 

understanding of the funding trade-offs it is proposing. FAA’s current 

capital investment plan sacrifices funding for the early development of new 

technologies—included in the JPDO’s plans for the NAS of the future—to 

make funding available for ongoing modernization projects. Although many 

of these ongoing projects are supportive of the JPDO’s vision, eliminating 

the funding for research and development for new technologies runs 

counter to the JPDO’s objectives. Balancing the needs of ongoing and 

future projects is essential to provide for transforming the NAS, both in the 

near term and by 2025.
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The costs of hiring and training thousands of controllers annually for the 

next decade, as discussed in chapter 3, add to FAA’s financial challenges. It 

is important that FAA estimate these costs now, so that it can incorporate 

them in future budget requests. These cost estimates will affect the 

amounts of funding FAA will have available for modernization as well as 

operations. 

The observations of aviation experts and stakeholders, as well as our work 

on the nation’s 21st Century challenges, suggest a two-staged approach to 

addressing FAA’s financial management challenges. First, FAA needs to 

pursue those options available under the existing federal oversight and 

appropriations process, such as exploring opportunities for contracting out 

more of its services, and consolidating facilities. Once FAA has fully 

exploited those options, and has established a record of improved financial 

management, it could consider developing a business case to reexamine 

fundamental issues such as the appropriate government role in aviation 

and the funding mechanism that support the ATC system. Ultimately, 

Congress and the President decide these issues. 

Recommendations for 

Executive Action

To position FAA to best meet NAS needs in both the near term, and the 

longer term, we are making the following two recommendations to the 

Secretary of Transportation. The Secretary should direct the FAA 

Administrator to (1) balance current and long-term investment priorities; 

and (2) use all available management tools and, after establishing a record 

of improved financial management, explore more fundamental changes 

that could provide greater financial management flexibility. 

Agency Comments and 

Our Evaluation

FAA commented that its fiscal year 2007 budget request will reflect its 

balancing of current and future funding priorities, and, therefore, our 

recommendation to this effect may be unnecessary. We are retaining this 

recommendation because it pertains not only to fiscal year 2007, but to 

future years as well. Likewise, FAA commented that it is already utilizing all 

available financial management tools, including looking at alternative 

financing mechanisms. We continue to believe that FAA should explore 

further uses of available management tools such as opportunities to 

contract out its services; consolidate major facilities; and accelerate 

decommissioning of ground-based navigation aids, as we have noted in this 

report. Therefore, we are also retaining this recommendation. FAA also 

provided technical comments, which we included as appropriate.
Page 82 GAO-06-154 Status of NAS Modernization

Appendix I

Methodology for Workforce Culture Apendxies

Assessment ApendxiI

Because we identified the acquisition workforce culture as an underlying 

cause of air traffic control (ATC) modernization problems in 1996 and had 

not revisited this area since the Federal Aviation Administration (FAA) 

published its strategy for cultural change in 1997, we reassessed the status 

of FAA’s efforts in this area. We obtained documents that showed evidence 

of the steps that FAA took to improve the acquisition workforce culture 

between 1997 and 2005. To benchmark the acquisition workforce against 

organizations with constructive cultures, we employed the services of a 

consultant with extensive experience in analyzing organizational culture 

and used a research database of responses to the Organizational Culture 

Inventory and Organizational Effectiveness Inventory. These 

instruments have been administered over a period of 20 years to nearly 

1,000 organizations selected to maximize the number and diversity of the 

organizations represented in the database. 

The research database does not contain client data—that is, data obtained 

from organizations that contracted for an organizational assessment. Such 

data would be subject to self-selection biases because the factors 

prompting the use of culture and climate surveys by such organizations 

almost ensure that the results will be skewed and somewhat negative. 

Additionally, the types of organizations (typically large, for-profit 

corporations) that undertake, and can afford, such surveys are not 

necessarily representative of the larger population of organizations. 

Instead, the organizations, whose responses are in the research database, 

were strategically selected and invited to use the surveys on a research 

basis.1

 Additionally, priority was placed on gaining entrée into a number of 

highly effective organizations, including some that initially turned down the 

invitation on the grounds that their cultures represented a competitive 

advantage and were proprietary. Thus, though not collected from a random 

sample of organizations, the research data are less subject to systematic 

biases than are client-based data. 

The research database provides both “historical averages” and 

“constructive benchmarks” against which organizations can compare their 

results. The historical averages, for the purposes of this study, are the mean 

scores for all respondents across the organizational units surveyed. The 

1

The research database includes responses from government agencies, not-for-profit 

organizations, public and private schools, libraries and museums, sports teams and athletic 

organizations, professional groups, and small businesses. Approximately 10 percent of the 

respondents in the research database are from public agencies, a rate that is significantly 

higher than would be the case for a client database.
Appendix I

Methodology for Workforce Culture 

Assessment

Page 83 GAO-06-154 Status of NAS Modernization

constructive benchmark scores are the averages for up to 172 highly 

effective units—defined as those with predominately positive and adaptive 

cultures. These scores provide a target toward which organizations can 

work to redirect their cultures and enhance their performance. 

We compared the results in the research database with those that FAA 

obtained through its periodic employee attitude survey. Specifically, we 

used 1997, 2000, and 2003 survey results for the acquisition workforce, the 

same segment of the organization that we focused on in 1996. In each of 

these years, FAA mailed surveys to the entire acquisition workforce and 

received completed surveys from approximately half of the worforce, as 

summarized in table 6.

Table 6: Number of Surveys That FAA Mailed to the Acquisition Workforce and 

Completed Surveys Received in 1997, 2000, and 2003 

Source: GAO representation of FAA data.

The results derived from these completed surveys could differ if a different 

subset of the workforce responded. Consequently, we treat the completed 

surveys as a random sample of the workforce to acknowledge the sampling 

error that would be expected for a probability sample of this size. This 

treatment assumes that response is random and that the completed surveys 

constitute a simple random sample of the acquisition workforce. If this 

assumption is not correct, for example, if employees with positive attitudes 

were more (or less) likely to respond than employees with negative 

attitudes, then the scores developed from the survey results could 

overstate (or understate) the scores for the workforce overall.

Year Surveys mailed Completed surveys returned

1997 2,051 1,004

2000 1,983 1,057

2003 1,825 928
Appendix I

Methodology for Workforce Culture 

Assessment

Page 84 GAO-06-154 Status of NAS Modernization

Mean scores were developed from the survey data by assigning values of 1 

through 5 to the five-point extent scales for each question, and then using 

these score values to estimate an average score based on all responses for 

that question.2

 We express our confidence in the precision of these score 

estimates at 95 percent confidence intervals. This is the interval that would 

contain the actual population value for 95 percent of the samples we could 

have drawn. As a result, we are 95 percent confident that each of the 

confidence intervals in this report will include the true values in the study 

population. For the estimated acquisition workforce scores in this report, 

the 95 percent confidence intervals are within plus or minus .06 points of 

the score estimate. For example, if the estimated score is 3.21, then the 95 

percent confidence interval would run from 3.15 to 3.27.

With our expert’s assistance, we selected items from FAA’s employee 

attitude survey that addressed cultural issues and matched them with 

similar survey items used to assemble the research database. Each of our 

comparisons addressed a common aspect of organizational culture or 

climate. For example, FAA’s survey asks for agreement or disagreement 

with the following statement: “In my organization, there are service goals 

aimed at meeting customer expectations.” We compared FAA’s responses 

to the following item used in the comparison group survey: “Are you 

encouraged to emphasize the perspective and needs of customers when 

making decisions?” Appendix III shows a complete list of FAA survey items 

and comparison group survey items that we used for comparison, and the 

respective scores. 

It is important to note that comparisons of the responses to questions 

whose wording is similar, but not identical, are difficult because even 

subtle changes in a question’s wording can result in different outcomes. We 

present the two sets of survey results here because they are measuring 

similar enough concepts that we think a general comparison is warranted. 

Additionally, we used the results of our comparisons as part of a body of 

evidence that also includes our past work on FAA’s culture, and FAA’s more 

recent recognition of the importance of a results-oriented culture. 

2

Responses to questions range over a five-point scale. For example, the possible responses 

might be: strongly disagree, disagree, neither agree nor disagree, agree, strongly agree. In 

this case, if “strongly agree” were the most positive response for the question, it would be 

scored a “5,” “neither agree nor disagree” would score a “3,” and “strongly disagree” would 

score a “1.”
Appendix I

Methodology for Workforce Culture 

Assessment

Page 85 GAO-06-154 Status of NAS Modernization

We believe that the research database is sufficiently authoritative, 

appropriate, and reliable for us to use it as a basis for comparing FAA’s 

workforce culture with other organizations’ cultures. The survey that was 

used to create the database has been completed by over 2,500,000 

respondents since its publication in prototype form in 1983. It has been 

administered in thousands of organizations throughout the world, 

including the Department of the Navy, the Coast Guard, the Defense 

Logistics Agency, major retailing organizations, international 

pharmaceutical companies, financial services corporations, newspapers, 

high tech firms, universities and hospitals, not-for-profit organizations, and 

numerous manufacturing firms. These organizations have variously used 

the results to diagnose their cultures and initiate change programs, to 

identify the “ideal” culture for maximizing their effectiveness, and to 

monitor the impact of organizational development efforts. More specialized 

applications have included programs focusing on diversity within 

organizations, mergers and acquisitions, and union-management relations.

Additionally, the survey is referenced in various textbooks and has been 

adopted for instructional purposes by leading universities. It has been used 

in research projects on topics ranging from organizational reliability and 

effectiveness to member socialization and citizenship behavior. These 

projects include a Department of Defense study of the culture of highly 

effective units during the Desert Shield buildup; a comparative study of 150 

supermarkets sponsored by the Coca-Cola Retailers’ Research Council; the 

Readership Institute’s (Northwestern University) national survey of 100 

newspapers; and various projects focusing on organizations carrying out 

critical activities (e.g., nuclear power plants, nuclear aircraft carriers, 

critical care units). The survey has also been used in international crosscultural projects, including one by the International Association of 

Economic and Management Students focusing on management cultures in 

over 40 different countries. The survey has been published in Bulgarian, 

Chinese (traditional and simplified), Dutch, Finnish, French (European and 

Canadian), German, Icelandic, Japanese, Korean, Portuguese, Romanian, 

Russian, Spanish (Castilian and Latin American), and Swedish, and 

preliminary translation keys have been developed in Afrikaans, Hindi, 

Polish and other languages. Results of research supporting the scientific 

reliability and validity of the survey have been published in Psychological 

Reports, Group and Organization Studies, Human Relations, and the 

Handbook of Organizational Climate and Culture.

Similarly, we believe FAA’s employee attitude survey is sufficiently 

authoritative, appropriate, and reliable for us to use it as a basis for 
Appendix I

Methodology for Workforce Culture 

Assessment

Page 86 GAO-06-154 Status of NAS Modernization

comparing FAA’s workforce culture over time. FAA has administered the 

employee attitude survey to its employees nine times since 1984. The 

survey was designed to gather information on employees’ attitudes, 

perceptions, and opinions about a broad variety of organizational issues. 

Although elements of the survey have changed over time, items thought to 

represent core areas of interest have remained relatively unchanged. For 

our analysis, we used FAA’s data showing the acquisition workforce’s 

responses for surveys conducted in 1997, 2000, and 2003. The acquisition 

workforce’s response rate for these years was, respectively, 49 percent, 53 

percent, and 51 percent.
Page 87 GAO-06-154 Status of NAS Modernization

Appendix II

Major ATC System Acquisitions ApendxiI

Air Traffic Control Radar 

Beacon Interrogator— 

Replacement (ATCBI-6)

ATCBI-6 is a replacement radar capable of determining both range and 

direction to and from the aircraft. It can also forward this information to 

the appropriate air route traffic control centers. It will replace radars that 

have exceeded their life expectancy and have proved extremely vulnerable 

to outages and critical-parts shortages.

Advanced Technologies and 

Oceanic Procedures (ATOP)

ATOP is an integrated system of new controller workstations, dataprocessing equipment, and software that will enhance the control and flow 

of oceanic air traffic to and from the United States. ATOP is planned for the 

three sites that control oceanic air traffic: Anchorage, Alaska; New York, 

New York; and Oakland, California.

Airport Surface Detection 

System- Model X (ASDE-X)

ASDE-X is an airport surveillance system that enables air traffic controllers 

to track the surface movement of aircraft and vehicles. The detection 

system automatically predicts potential conflicts and seamlessly covers 

airport runways, taxiways, and other areas.

Airport Surveillance Radar 

Model-11 (ASR-11)

ASR-11 is a digital radar that replaces aging analog radars, such as ASR-7 

and ASR-8, as well as collocated ATCBI-4 and ATCBI-5 secondary radars, 

with a single, integrated digital radar system. ASR-11 reduces operational 

costs, improves safety, and can accommodate future capacity increases. 

Controller-Pilot Data Link 

Communications (CPDLC)

CPDLC is a communication system that will allow pilots and controllers to 

transmit data messages directly between FAA automated ground 

computers and aircraft. 

En Route Automation 

Modernization (ERAM)

ERAM will replace software and hardware in the host computers at FAA’s 

20 en route air traffic control centers, which provide separation, routing, 

and advisory information. It provides a flexible and expandable base to 

facilitate further National Airspace System (NAS) modernization 

initiatives.
Appendix II

Major ATC System Acquisitions

Page 88 GAO-06-154 Status of NAS Modernization

En Route Communications 

Gateway (ECG)

A precursor to ERAM, ECG provides a communications interface between 

radar sites and en route centers. The system has an open and expandable 

platform that allows for new connectivity and functionality as the NAS 

evolves. It replaces the interim Peripheral Adapter Module Replacement 

Item that has been operating for 10 years and has exceeded its life 

expectancy.

FAA Telecommunications 

Infrastructure (FTI)

FTI is FAA’s new telecommunications system. It will replace costly 

networks of separately managed systems and services—both leased and 

owned—by integrating advanced telecommunications services within 

FAA’s NAS and non-NAS infrastructures.

Free Flight Phase 2 (FFP2) FFP2 is a suite of air traffic control tools and subsystems that allows air 

traffic controllers to move gradually from a highly structured system, based 

on elaborate rules and procedures, to a more flexible system wherein 

pilots, within limits, can change their route, speed, and altitude while 

keeping air traffic controllers informed of such changes. It includes the 

Traffic Management Advisor, Collaborative Decision Making, and the User 

Request Evaluation Tool. 

Integrated Terminal Weather 

System (ITWS)

ITWS is a weather information system that furnishes air traffic controllers 

and supervisors with full-color graphic displays of weather conditions that 

need no meteorological interpretation. It provides a comprehensive 

representation of the current weather situation and precise forecasts of 

weather conditions for the next 20 minutes (to be increased to 60 minutes 

in 2006) of convective weather conditions. 

Local Area Augmentation 

System (LAAS)

LAAS is a landing guidance system that would use global positioning 

satellites and would be installed at airports to allow aircraft to execute 

precision instrument approaches and landings in all weather conditions. 

LAAS would eliminate the need for multiple instrument landing systems at 

airports where it is installed.
Appendix II

Major ATC System Acquisitions

Page 89 GAO-06-154 Status of NAS Modernization

NAS Infrastructure 

Management System—

Phase 2 (NIMS-2)

NIMS is a centralized system to help manage and schedule maintenance on 

the NAS infrastructure, including its facilities, systems, and equipment. 

NIMS will decrease the number of en route delays by reducing the time 

required to restore systems to full operation following maintenance. NIMS 

Phase 1, already complete, provides initial Operational Control Center 

capability, along with remote monitoring and control functionality, to 3,700 

NAS facilities and 5,800 deployed maintenance data terminals.1

 Phase 2 will 

fully implement resource management and enterprise management 

software and focus on increasing workers’ productivity in receiving orders 

and managing resources.

Next Generation Air/Ground 

Communications 

(NEXCOM)

NEXCOM is a digital communications system, consisting of multimodal 

digital radios, avionics, and ground stations, that will improve ATC 

communications by replacing old analog communication systems. Segment 

1A will replace 30- to 40-year-old radios, deploying 6,000 new radio sets that 

use both analog and digital communications with aircraft. Segment 1B will 

create ground stations to communicate with aircraft equipped with digital 

capability.

Operational and 

Supportability 

Implementation System 

(OASIS)

OASIS is a system used at flight service stations to assist general aviation 

pilots with flight planning. The system provides up-to-the-minute weather 

graphics by integrating real-time weather and flight planning data with 

overlays of flight routes. It replaces the Flight Services Automation system 

for which FAA has had difficulty obtaining spare parts and hardware 

support. 

Standard Terminal 

Automation Replacement 

System (STARS)

STARS is a workstation to allow civilian and military air traffic controllers 

to direct aircraft near major U.S. airports and will replace aging 

workstations at certain facilities. It has an open and expandable terminal 

automation platform that can accommodate air traffic growth, as well as 

new hardware and software that is designed to promote safety, maximize 

operational efficiency, and improve controllers’ productivity. FAA will 

1

Operational Control Center capability, established in 2001, was a standard set of tools and 

procedures needed to open the control centers. The tools provide the initial enterprise 

management and resource management technical capabilities needed at Operational 

Control Centers. 
Appendix II

Major ATC System Acquisitions

Page 90 GAO-06-154 Status of NAS Modernization

terminate STARS after replacing 47 older systems by the end of fiscal year 

2007. 

Terminal Automation 

Replacement (TAMR)

TAMR is a modernization program to resolve existing safety, capacity, and 

obsolescence concerns in terminal automation systems at approximately 

115 terminal radar approach control facilities and their associated towers. 

FAA initiated TAMR in 2004, concurrent with its decision to end STARS 

acquisitions by the end of fiscal year 2007. According to FAA, TAMR will 

incrementally continue the modernization and replacement actions. 

Wide Area Augmentation 

System (WAAS)

WAAS is a navigation and landing guidance system that uses global 

positioning satellites to provide precise navigation and landing guidance at 

all U.S. airports, including thousands that have no ground-based instrument 

landing capability.
Page 91 GAO-06-154 Status of NAS Modernization

Appendix III

Perceptions of Organizational Culture in FAA’s 

Acquisition Workforce and in Other 

Organizations ApendxiI

This appendix provides the results of surveys conducted at FAA and at a 

variety of other organizations (comparison group). FAA has conducted 

employee attitude surveys periodically since 1984, and most recently in 

1997, 2000, and 2003. At the other organizations, Human Synergistics, 

International, has surveyed employees over a 20-year period to develop a 

database for research on organizational culture and climate, as discussed 

in appendix II, using its Organizational Culture Inventory and its 

Organizational Effectiveness Inventory (see app. II for more detail about 

these inventories). Human Synergistics also identified a subset of these 

organizations as highly effective organizations with constructive cultures. 

To compare the perceptions of FAA’s acquisition workforce with the 

perceptions of employees at other organizations, including those 

organizations with constructive cultures, we compared the mean responses 

of FAA and other employees to similar items in their respective surveys. We 

selected four survey items to compare for each of four key factors 

associated with a constructive organizational culture—mission focus, 

accountability, adaptability, and coordination. In this appendix, we refer to 

the mean responses of the FAA and other employees as the mean scores for 

the survey items. Additionally, we refer to the mean responses of the 

constructive organizations’ employees as the benchmark scores for the 

items.

Figure 16 presents the mean and benchmark scores for the four survey 

items associated with each of the four factors we considered. For FAA’s 

acquisition workforce, we provide the mean scores, as calculated by FAA, 

for each item from the agency’s 1997, 2000, and 2003 surveys. For the 

employees of the other and the highly effective organizations, we provide 

the mean and the benchmark score for each item that we obtained from the 

research database. We display these scores in consecutive charts whose 

juxtaposition shows how the perceptions of FAA acquisition employees 

compare at three points in time with the perceptions of employees at other 

organizations generally and at organizations with constructive cultures.
Appendix III

Perceptions of Organizational Culture in 

FAA’s Acquisition Workforce and in Other 

Organizations 

Page 92 GAO-06-154 Status of NAS Modernization

Figure 16: Acquisition Workforce’s Mean Responses to Selected Items from FAA’s 1997, 2000, and 2003 Employee Attitude 

Surveys and Comparison Group’s Mean and Benchmark Scores for Similar Items 

In my organization, there are service goals aimed at meeting customer expectations. 

Some employees may be hesitant to speak up for fear of retaliation.a

Are you encouraged to emphasize the perspective and needs of customers when making decisions?

Information that employees send upward to people in higher-level positions is...“whatever needs to be said” versus “only what they want to hear.”

012345

2003

2000

1997

2003

2000

1997

Benchmark score

Mean score

Benchmark score

Mean score

Benchmark score

Mean score

Benchmark score

Mean score

Mean response

Mean response

Mean response

Mean response

2003

2000

1997

2003

2000

1997

012345

I am clear about how “good performance” is defined in my organization.

Are the goals that you work toward on your job “unclear and ambiguous” vs. “clear and specific?” 

012345

My organization has clearly communicated the connection between my individual performance goals and my organization's performance goals.

The objectives and priorities of this organization are clear and well understood by all members.

012345

FAA survey

Comparison

group

FAA survey

Comparison

group

FAA survey

Comparison

group

FAA survey

Comparison

group

b

Mission Focus: pursuing goals that define the best course of action for an organization
Appendix III

Perceptions of Organizational Culture in 

FAA’s Acquisition Workforce and in Other 

Organizations 

Page 93 GAO-06-154 Status of NAS Modernization

I am able to contribute to decisionmaking that affects my job.

I have the authority to make decisions required by my day-to-day work problems.

It is basically my responsibility to decide how my job gets done. 

I have the authority and influence needed to carry out my responsibilities.

012345

2003

2000

1997

2003

2000

1997

Benchmark score

Mean score

Benchmark score

Mean score

Benchmark score

Mean score

Benchmark score

Mean score

Mean response

Mean response

Mean response

Mean response

2003

2000

1997

2003

2000

1997

012345

To what extent have you received the training you need to perform effectively in your job.

I am asked to perform only those tasks for which I am properly trained and qualified.

012345

To what extent do you have the tools needed to do your job efficiently (computers, test equipment, communication devices, etc.)?

I am expected to do things without the necessary resources (such as equipment, information and/or assistance).

012345

FAA survey

Comparison

group

FAA survey

Comparison

group

FAA survey

Comparison

group

FAA survey

Comparison

group

Accountability: empowering employees and holding them responsible for their decisions and actions
Appendix III

Perceptions of Organizational Culture in 

FAA’s Acquisition Workforce and in Other 

Organizations 

Page 94 GAO-06-154 Status of NAS Modernization

Conflicts and differences in my organization are brought out and managed rather than avoided or worked around. 

Overall, how satisfied are you with your workgroup? 

To what extent are people expected (or implicitly required) to resolve conflicts constructively?

The people you work with are helpful to you in getting your job done. 

012345

2003

2000

1997

2003

2000

1997

Benchmark score

Mean score

Benchmark score

Mean score

Benchmark score

Mean score

Benchmark score

Mean score

Mean response

Mean response

Mean response

Mean response

2003

2000

1997

2003

2000

1997

012345

In my organization, we are encouraged to share information to get the job done.

To what extent are people expected (or implicitly required) to communicate ideas?

012345

I trust my coworkers.

You can count on your co-workers when teamwork is needed.

012345

FAA survey

Comparison

group

FAA survey

Comparison

group

FAA survey

Comparison

group

FAA survey

Comparison

group

b

b

Coordination: involving other employees in decisions affecting them, resolving differences collaboratively, and cooperating across

organizational lines
Appendix III

Perceptions of Organizational Culture in 

FAA’s Acquisition Workforce and in Other 

Organizations 

Page 95 GAO-06-154 Status of NAS Modernization

Note: FAA score estimates have 95 percent confidence intervals of plus or minus 0.06 or less. 

Differences in scores of 0.08 or more are significant at the 95 percent confidence level.

To what extent has FAA done a good job creating an environment where all employees get the chance to contribute fully to meeting their organization's mission?

To what extent do you receive sufficient information from FAA to understand how major innovations and changes might affect you?

Employees here are actively involved in improving the organization and increasing its productivity.

Information employees receive about the organization (e.g., its policies, new strategies, changes in procedures) is... "in-depth" versus "superficial"

012345

2003

2000

1997

2003

2000

1997

Benchmark score

Mean score

Benchmark score

Mean score

Benchmark score

Mean score

Benchmark score

Mean score

Mean response

Mean response

Mean response

Mean response

2003

2000

1997

2003

2000

1997

012345

My supervisor is effective in providing periodic coaching to improve my performance.

Your supervisor shows you how to improve your work.

012345

To what extent has FAA done a good job creating an environment where all employees have the opportunity to participate in developmental activities (e.g., 

details, training, task forces, special assignments)?

Opportunities for training and advancement are fair and equitable.

012345

FAA survey

Comparison

group

FAA survey

Comparison

group

FAA survey

Comparison

group

FAA survey

Comparison

group

b

Adaptability: accepting new approaches and responding positively to demands and opportunities posed from within and outside of the

organization

Source: GAO analysis of FAA data and research database compiled and used with permission of Human Synergistics, International. 
Appendix III

Perceptions of Organizational Culture in 

FAA’s Acquisition Workforce and in Other 

Organizations 

Page 96 GAO-06-154 Status of NAS Modernization

a

This question is negatively worded, such that “strongly agree,” would be a negative response. For 

consistency, we reversed the scoring for this question, so that a “strongly agree” response would be 

scored 1, and a “strongly disagree” response would be scored 5. The practice of reverse scoring 

negatively worded items is a commonly accepted professional practice in survey research 

methodology.

b

Not asked on the 1997 survey.
Page 97 GAO-06-154 Status of NAS Modernization

Appendix IV

Key Practices and Implementation Steps for 

Mergers and Organizational Transformations ApendxiIV

Source: GAO, Results-Oriented Cultures: Implementation Steps to Assist Mergers and Organizational Transformations, GAO-03-669

(Washington, D.C.: July 2, 2003).

Practice Implementation steps

Ensure top leadership drives the transformation. • Define and articulate a succinct and compelling reason for change.

• Balance continued delivery of services with merger and 

transformation activities.

Establish a coherent mission and integrated strategic goals to 

guide the transformation.

• Adopt leading practices for results-oriented strategic planning and 

reporting.

Focus on a key set of principles and priorities at the outset of the 

transformation.

• Embed core values in every aspect of the organization to reinforce 

the new culture.

Set implementation goals and a time line to build momentum and 

show progress from day one. 

• Make public implementation goals and time line.

• Seek and monitor employee attitudes and take appropriate followup actions.

• Identify cultural features of merging organizations to increase 

understanding of former work environments.

• Attract and retain key talent.

• Establish an organizationwide knowledge and skills inventory to 

allow knowledge exchange among merging organizations.

Dedicate an implementation team to manage the transformation 

process.

• Establish networks to support the implementation team.

• Select high-performing team members.

Use the performance management system to define 

responsibility and ensure accountability for change.

• Adopt leading practices to implement effective performance 

management systems with adequate safeguards.

Establish a communication strategy to create shared expectations 

and report related progress.

• Communicate early and often to build trust.

• Ensure consistency of message.

• Encourage two-way communication.

• Provide information to meet specific needs of employees.

Involve employees to obtain their ideas and gain ownership for 

the transformation.

• Use employee teams.

• Involve employees in planning and sharing performance 

information.

• Incorporate employee feedback into new policies and procedures.

• Delegate authority to appropriate organizational levels.

Build a world-class organization. • Adopt leading practices to build a world-class organization.

(542036)
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