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[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]

 
                    DOMESTIC AVIATION MANUFACTURING: 
                      CHALLENGES AND OPPORTUNITIES

=======================================================================

                                (113-77)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                                AVIATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 23, 2014

                               __________

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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                  BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska                    NICK J. RAHALL, II, West Virginia
THOMAS E. PETRI, Wisconsin           PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         ELEANOR HOLMES NORTON, District of 
JOHN J. DUNCAN, Jr., Tennessee,          Columbia
  Vice Chair                         JERROLD NADLER, New York
JOHN L. MICA, Florida                CORRINE BROWN, Florida
FRANK A. LoBIONDO, New Jersey        EDDIE BERNICE JOHNSON, Texas
GARY G. MILLER, California           ELIJAH E. CUMMINGS, Maryland
SAM GRAVES, Missouri                 RICK LARSEN, Washington
SHELLEY MOORE CAPITO, West Virginia  MICHAEL E. CAPUANO, Massachusetts
CANDICE S. MILLER, Michigan          TIMOTHY H. BISHOP, New York
DUNCAN HUNTER, California            MICHAEL H. MICHAUD, Maine
ERIC A. ``RICK'' CRAWFORD, Arkansas  GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania           DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas              TIMOTHY J. WALZ, Minnesota
LARRY BUCSHON, Indiana               STEVE COHEN, Tennessee
BOB GIBBS, Ohio                      ALBIO SIRES, New Jersey
PATRICK MEEHAN, Pennsylvania         DONNA F. EDWARDS, Maryland
RICHARD L. HANNA, New York           JOHN GARAMENDI, California
DANIEL WEBSTER, Florida              ANDRE CARSON, Indiana
STEVE SOUTHERLAND, II, Florida       JANICE HAHN, California
JEFF DENHAM, California              RICHARD M. NOLAN, Minnesota
REID J. RIBBLE, Wisconsin            ANN KIRKPATRICK, Arizona
THOMAS MASSIE, Kentucky              DINA TITUS, Nevada
STEVE DAINES, Montana                SEAN PATRICK MALONEY, New York
TOM RICE, South Carolina             ELIZABETH H. ESTY, Connecticut
MARKWAYNE MULLIN, Oklahoma           LOIS FRANKEL, Florida
ROGER WILLIAMS, Texas                CHERI BUSTOS, Illinois
MARK MEADOWS, North Carolina
SCOTT PERRY, Pennsylvania
RODNEY DAVIS, Illinois
MARK SANFORD, South Carolina
DAVID W. JOLLY, Florida
                                ------                                7

                        Subcommittee on Aviation

                FRANK A. LoBIONDO, New Jersey, Chairman
THOMAS E. PETRI, Wisconsin           RICK LARSEN, Washington
HOWARD COBLE, North Carolina         PETER A. DeFAZIO, Oregon
JOHN J. DUNCAN, Jr., Tennessee       EDDIE BERNICE JOHNSON, Texas
SAM GRAVES, Missouri                 MICHAEL E. CAPUANO, Massachusetts
BLAKE FARENTHOLD, Texas              DANIEL LIPINSKI, Illinois
LARRY BUCSHON, Indiana               STEVE COHEN, Tennessee
PATRICK MEEHAN, Pennsylvania         ANDRE CARSON, Indiana
RICHARD L. HANNA, New York           RICHARD M. NOLAN, Minnesota
DANIEL WEBSTER, Florida              DINA TITUS, Nevada
JEFF DENHAM, California              SEAN PATRICK MALONEY, New York
REID J. RIBBLE, Wisconsin            CHERI BUSTOS, Illinois
THOMAS MASSIE, Kentucky              CORRINE BROWN, Florida
STEVE DAINES, Montana                ELIZABETH H. ESTY, Connecticut
ROGER WILLIAMS, Texas                NICK J. RAHALL, II, West Virginia
MARK MEADOWS, North Carolina           (Ex Officio)
RODNEY DAVIS, Illinois, Vice Chair
BILL SHUSTER, Pennsylvania (Ex 
    Officio)
                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    iv

                               TESTIMONY
                                Panel 1

Margaret M. Gilligan, Associate Administrator for Aviation 
  Safety, Federal Aviation Administration........................     5
Gerald L. Dillingham, Ph.D., Director, Physical Infrastructure 
  Issues, U.S. Government Accountability Office..................     5

                                Panel 2

Marion C. Blakey, president and chief executive officer, 
  Aerospace Industries Association of America....................    28
Peter J. Bunce, president and chief executive officer, General 
  Aviation Manufacturers Association.............................    28
Joseph W. Brown, president, Hartzell Propeller Inc., and chief 
  operating officer, Tailwind Technologies.......................    28
Dave Cox, lead administrator, Air Washington project, and dean of 
  instruction, Technical Education Division, Spokane Community 
  College........................................................    28

           PREPARED STATEMENT SUBMITTED BY MEMBER OF CONGRESS

Hon. Elizabeth H. Esty, of Connecticut...........................    46

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Margaret M. Gilligan.............................................    47
Gerald L. Dillingham, Ph.D.......................................    59
Marion C. Blakey.................................................    87
Peter J. Bunce...................................................    99
Joseph W. Brown..................................................   112
Dave Cox.........................................................   120

                       SUBMISSIONS FOR THE RECORD

Margaret M. Gilligan, Associate Administrator for Aviation 
  Safety, Federal Aviation Administration, responses to questions 
  for the record issued by Hon. Frank A. LoBiondo, a 
  Representative in Congress from the State of New Jersey........    54
Peter J. Bunce, president and chief executive officer, General 
  Aviation Manufacturers Association, responses to questions for 
  the record issued by Hon. Elizabeth H. Esty, a Representative 
  in Congress from the State of Connecticut......................   109

                         ADDITION TO THE RECORD

Ed Bolen, president and CEO, National Business Aviation 
  Association, written statement.................................   123
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 

     DOMESTIC AVIATION MANUFACTURING: CHALLENGES AND OPPORTUNITIES

                              ----------                              

                        WEDNESDAY, JULY 23, 2014

                  House of Representatives,
                          Subcommittee on Aviation,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:01 a.m. in 
Room 2167, Rayburn House Office Building, Hon. Frank A. 
LoBiondo (Chairman of the subcommittee) presiding.
    Mr. LoBiondo. Good morning. The subcommittee will come to 
order. I would like to thank you all for being here.
    Before my statement, I would like--Ms. Gilligan, I would 
like you to think about possibly making some comments to us. We 
are all very concerned about the--some of the situations around 
the world, and the decisions that the FAA made, especially in 
respect to suspending for 24 hours the flights into Israel, and 
if you could give us a little bit of an update after my 
statement and Mr. Larsen's statement, about how the FAA is 
looking at this, and what we may see in the future, and how you 
come to make a decision like that.
    So, again, I thank everyone for being here.
    The American aviation manufacturing is a critical sector of 
our Nation's economy, contributing billions of dollars and 
supporting millions of jobs annually. We are the world leader 
in aviation safety, standards, and manufacturing, delivering 
thousands of aircraft, aircraft components, and systems 
worldwide every year.
    Today this subcommittee will look at the state of domestic 
aviation manufacturing and some of the challenges that it 
faces. Since recently encountering a hit during the economic 
downturn, our aviation manufacturing sector has seen positive 
growth, and key economic indicators support this. We in 
Congress want this vital component of the aviation sector to 
succeed and surpass where it was prior to 2008. However, 
despite the industry's success, manufacturers continue to face 
some challenges as they work to bring products to the market.
    All aircraft, aircraft components, and aviation systems 
which operate and are manufactured in the United States must 
meet specific design and operational certification standards 
set by the Federal Aviation Administration. The role of the--
that the FAA plays is absolutely critical and necessary to 
ensure our standards continue to be the gold standard, and 
provide for the safest air system in the world.
    As manufacturers design and build to meet these standards 
they can experience delays in approval, both internationally 
and domestically. These delays can result in the loss of real 
dollars and jobs for our aviation manufacturing sector. And we 
have had some very specific instances that have pointed to 
that, which concern us a great deal.
    The previous FAA reauthorization bill required the FAA to 
develop and implement plans to address inefficiencies and 
inconsistencies in the certification process. Currently the 
FAA, along with industry, is working to implement these plans 
in a cooperative fashion. We look forward to hearing what 
progress is being made on this front.
    In regard to aviation certification, the FAA is truly the 
gold standard across the world. As the aviation industry 
continues to push technological boundaries, it is important 
that the FAA certification processes also adapt to accommodate 
for this innovation. Furthermore, as American manufacturers 
compete in a global market, it is vital that the FAA's 
leadership is recognized and maintained globally, and we in 
Congress do all that we can to help ensure that it stays that 
way, and true.
    In addition to an effective and efficient certification 
process, the manufacturing industry relies upon a dedicated and 
well-trained aerospace workforce. Today we will hear from a 
witness who can speak directly to some of the important work 
that is being done to respond to the need for innovation and 
skilled aerospace workforce.
    In my own district, Atlantic Cape Community College has 
recognized the need for a well-trained workforce in the growing 
industry of unmanned aerial systems. Under the leadership of 
college president Peter Mora, they are currently working to 
develop a curriculum that will bring the next generation of an 
already technologically savvy youth into this growing industry.
    In addition, I have the privilege of representing the FAA's 
Tech Center, which is the premier FAA facility in the Nation 
for research and development, and for safety and security. 
Through their important research, experts at the Tech Center 
assist manufacturers as they work to bring innovative products 
to the market. For instance, CSC and dozens of other companies 
utilize the expertise of Tech Center employees and laboratories 
as they develop their innovative technologies.
    I am interested in hearing what role the Government can 
play to promote the aviation manufacturing industry's success. 
It is key we listen to the input of those in the real world, 
and what they have to offer to us. Today we are fortunate to 
have a company who has been part of America's aviation 
manufacturing industry since the Wright Brothers first took 
flight, and who can speak to the day in and day out 
complexities of the industry and the challenges they face.
    I look forward to hearing from our witnesses on these 
topics, and thank them for joining us.
    Mr. LoBiondo. Before I recognize Mr. Larsen, I would like 
to ask unanimous consent that all Members have 5 legislative 
days to revise and extend their remarks, and include extraneous 
material for the record.
    [No response.]
    Mr. LoBiondo. Without objection, so ordered. Now I would 
like to recognize Mr. Larsen.
    Mr. Larsen. Thank you, Mr. Chairman, for calling today's 
hearing to discuss domestic aviation manufacturing.
    U.S. aviation is vital to our economy. Domestic aviation 
manufacturing, the reason we are here today, is one of the 
major reasons why the aviation industry in this country is such 
a powerful economic engine. In 2012, U.S. aviation 
manufacturing generated a total output of over $150 billion.
    This topic, obviously, is close to home for me. In my home 
State of Washington, about 650 aerospace companies support as 
many as 209,000 jobs. These companies range from Boeing to the 
many small businesses that are a critical part of the aviation 
supply chain. Aerospace is the State's largest exporting 
sector, accounting for over 40 percent of the State's exports 
in 2011.
    The issues we are exploring today are the ones we have 
explored before, and I want to thank Chairman LoBiondo for 
remaining focused on them. Last October we had a subcommittee 
hearing about FAA's certification process, where we discussed 
opportunities to make these processes more efficient, and to 
bring more consistency to FAA's interpretations of regulations. 
I look forward to an update today about the FAA's progress from 
that hearing.
    The predictable and timely certification of aircraft and 
aircraft components is critical for domestic manufacturers to 
get their products to market. We must also ensure FAA does not 
cut corners so it continues its critical mission of ensuring 
the highest level of safety. The FAA reauthorization, enacted 
in 2012, included two provisions directing the agency to 
conduct an assessment of the aircraft certification and 
approval process, section 312, and addressing FAA's personnel's 
inconsistent regulatory interpretation, section 313.
    As we continue to conduct our oversight of FAA's 
implementation, I hope to learn more today about the progress 
FAA has made in these areas, and where the agency's efforts 
have stalled. Specifically, I hope to hear about how the labor 
unions and affected FAA inspectors and engineers have played a 
part in FAA's efforts, and if they have signed on to the 
agency's certification reform efforts.
    Labor involvement is critical. FAA leadership can say one 
thing, but the people doing the day-to-day work need to be--
need to buy in before moving forward with major changes. We 
also have to work to be sure that FAA has adequate staffing 
resources to do the job, and to keep pace with new technology. 
For example, I understand the workload of FAA's 204 
manufacturing inspectors continues to increase, while the size 
of its inspector workforce does not.
    And there is no question that FAA must streamline the 
process under its Organization Designation Authorization, or 
ODA program, because of growing workload and limited resources. 
But we must continue at all times to ensure that certification 
efforts are subject to thorough and proper oversight, so that 
the high level of safety the FAA maintains is not compromised.
    Another common theme I continue to hear from manufacturers 
is that our neighbors abroad are unnecessarily delaying their 
validations of FAA-certified products. We must make sure that 
other countries do not question FAA's gold standard, so that 
our manufacturers remain competitive in an increasingly crowded 
global market.
    More broadly, we must do all we can to avoid disadvantaging 
U.S. manufacturers, as they compete vigorously with foreign 
manufacturers. To this end, last year Chairman LoBiondo and I 
asked GAO to explore the FAA certification process in the U.S., 
as it compares with those of its counterparts around the world. 
And I look forward to reviewing that report when it is issued 
later this year.
    Global competitive demands depends on having a high--sorry, 
a robust pipeline of well-trained and highly skilled workers. A 
Government industry panel convened in 2010 by then-Secretary of 
Transportation LaHood recommended several measures to improve 
the training and development of the Nation's aerospace 
workforce.
    To speak to this issue, I want to extend a special welcome 
to Dave Cox of the Air Washington project. Dave is on a later 
panel. The Air Washington project is a unique consortium of 
community colleges that are working together for the sole 
purpose of training and educating workers in a wide variety of 
aviation jobs, such as aircraft maintenance, manufacturing, and 
assembly. In Washington State we have made investments in the 
people that will keep our manufacturing base strong. And I look 
forward to Mr. Cox sharing those lessons with the panel.
    So, Mr. Chairman, I want to thank you for holding this 
hearing. I look forward to hearing from our witnesses.
    And, if I may, Mr. Chairman, just ask--perhaps ask 
unanimous consent--it is a little bit of a surprise--that Ms. 
Gilligan's comments on the FAA's decision with regards to air 
travel not be included in her 5 minutes, so she can brief us on 
that. Yes.
    Mr. LoBiondo. Yes, that was not intended for you to be in 
your 5 minutes. Good point, Mr. Larsen.
    Mr. Larsen. Thank you.
    Mr. LoBiondo. And we have Ms. Peggy Gilligan, Associate 
Administrator for Aviation Safety at the Federal Aviation 
Administration. And if you could, give us some comments on this 
crisis we are seeing around the world, and then get into your 
statement after that, please.
    Ms. Gilligan. Certainly, Mr. Chairman. First, let me just 
make a small comment on the Ukraine. As you know----
    Mr. LoBiondo. Can you pull your mic a little closer, 
please?
    Ms. Gilligan. Sure. As you know, there is an international 
effort underway to secure the site of the crash of the 
Malaysian Flight 17. FAA does not have technical experts in 
Kiev at this time. The National Transportation Safety Board has 
sent an expert, and we remain ready to support any 
investigation, once--if necessary, once the site is secured. 
That airspace over eastern Ukraine continues to be closed to 
all operators, because the Ukrainians have actually closed that 
airspace.
    As to yesterday's initiative, as you might imagine, this is 
a very fluid situation. We are in close contact, the FAA is in 
close contact with the civil aviation authority in Israel. We 
initiated the action after it was confirmed that there had been 
a rocket attack that occurred within just beyond a mile from 
the airport.
    Obviously, our mission is to ensure the protection of our 
operators and the passengers on those operations. And it was 
determined that it was--and the appropriate action was to close 
access to Ben Gurion Airport for U.S. operators for a 24-hour 
period. And we continue to monitor the situation.
    The Administrator has been, again, in close contact with 
his own counterparts, with the State Department, with the U.S. 
Embassy in Israel. And we will monitor the situation and make a 
determination before 12:15 this afternoon, which is the 24-hour 
period, for the original Notice to Airmen concerning the 
airport.
    We have also been in close contact with our operators, the 
airlines, U.S. airlines that operate into Ben Gurion. There was 
a United aircraft on the ground after the NOTAM took effect. We 
did authorize that aircraft to be moved from there. As you 
know, most of the other aircraft that were in flight diverted 
and did not continue their flights into Israel. That continues 
to be the situation at this point.
    Mr. LoBiondo. OK, thank you. Now, if you would, proceed to 
your statement.

TESTIMONY OF MARGARET M. GILLIGAN, ASSOCIATE ADMINISTRATOR FOR 
AVIATION SAFETY, FEDERAL AVIATION ADMINISTRATION; AND GERALD L. 
 DILLINGHAM, PH.D., DIRECTOR, PHYSICAL INFRASTRUCTURE ISSUES, 
             U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Ms. Gilligan. Thank you again, Mr. Chairman, Congressman 
Larsen, and members of the subcommittee. Thank you for the 
opportunity to appear before the subcommittee to discuss the 
FAA's role in supporting domestic aviation manufacturing. 
Through our high safety standards, rigorous certification 
processes, and strong collaboration with industry stakeholders, 
the FAA operates the most complex and the safest airspace 
system in the world.
    Civil aviation manufacturing is vital to the U.S. economy. 
Last year, civil aviation supported 11.8 million jobs, 
accounted for $1.5 trillion in total economic activity, and 
contributed 5.4 percent to the U.S. GDP. Civil aircraft 
manufacturing represents a top U.S. net export. Between 2009 
and 2012, the growth in new civilian commercial aircraft sales 
in both domestic and overseas markets averaged 9.2 percent per 
year, outpacing the overall U.S. economic growth. That 
underlies the fact that people around the world buy and rely on 
U.S. aviation products because the FAA sets the gold standard 
for aircraft design and manufacture.
    For more than 50 years, FAA has certified all civil 
aviation aircraft, aircraft engines, propellers, and parts that 
operate in the U.S. airspace. FAA has played a key role in the 
safe operation and growth of the aviation industry. The FAA 
oversees the life cycle of an aircraft, from design and 
manufacture to the operation and maintenance of the aircraft, 
once it enters service. As the aviation industry continues to 
grow, it is incumbent upon us to improve our processes and make 
them as efficient and effective as possible, while maintaining 
the highest safety standards.
    The FAA Modernization and Reform Act of 2012 contained a 
provision, section 312, that required the FAA to work with 
industry and representatives--with industry representatives, 
and to develop recommendations to reform the aircraft 
certification process. The FAA and industry agreed on six 
recommendations that we believe will streamline and re-engineer 
the certification processes. FAA developed an implementation 
plan that mapped the recommendations to 14 agency initiatives.
    Since the original release of the Implementation Plan in 
January of 2013, we have made progress on all of the 
initiatives. And to assure transparency on our progress, we 
post an update on the FAA Web site every 6 months. The next 
update will be published by the end of this month.
    FAA encourages and facilitates the growth of U.S. aviation 
manufacturers, both domestically and internationally. We 
continue to authorize expansion of production facilities in the 
U.S., and ensure that we have sufficient resources to oversee 
domestic manufacturing.
    We have bilateral aviation safety agreements with over 47 
countries, including an agreement with the European Union that 
covers 28 nations in Europe. These agreements allow U.S. 
manufacturers to export their products and expand their 
business all around the globe.
    The agreements also allow aircraft and components produced 
in other countries to be imported for use in U.S. products. But 
products manufactured in other countries must still meet FAA 
safety standards to operate in the U.S. We ensure the safety of 
all civil aviation components and aircraft that operate in our 
airspace, wherever they are produced.
    Bilateral agreements also allow foreign manufacturers to 
establish production facilities in the U.S., which creates 
additional jobs and stimulates local economies. FAA recently 
issued a U.S. production certificate to Embraer to establish a 
manufacturing facility in Florida. Airbus also recently opened 
a manufacturing facility in Mobile, Alabama, through an 
extension of its European production approval.
    In this era of growing technological sophistication and 
globalization, we collaborate with our industry partners to 
more efficiently oversee the certification and production 
process. We use a risk-based approach to improve aviation 
safety by focusing our resources on the areas of highest risk.
    And to leverage our workforce, we use the designee system, 
which was established by Congress in 1938, and is critical to 
the success and effectiveness of the certification process. The 
designee program plays a critical role in our ability to 
efficiently certify the wide range of aviation products 
designed and manufactured in the U.S.
    There are currently over 600 engineers in the aircraft 
certification service, and over 200 inspectors. But we have 
over 5,000 individual designees, and over 80 organizational 
designations. Without the designee program, we could not 
complete the volume of work we have today or in the future. 
Assuring that we have a robust and successful delegation system 
is imperative to the continued growth of domestic aviation.
    Aviation is a constantly evolving industry, and our 
certification process must evolve with that industry. We know 
that we cannot remain static. We continue to work with our 
industry partners to foster innovation and economic development 
so the United States will remain the global leader in 
aerospace.
    Mr. Chairman, that concludes my testimony for today. I look 
forward to answering any questions.
    Mr. LoBiondo. We thank you very much. Next we are pleased 
to welcome back Dr. Gerald Dillingham, Director of Physical 
Infrastructure Issues for the U.S. Government Accountability 
Office.
    Dr. Dillingham, you are recognized.
    Dr. Dillingham. Thank you, Mr. Chairman, Ranking Member 
Larsen, Chairman Shuster, members of the subcommittee.
    We have conducted several reviews examining the efficiency 
of FAA's aircraft certification and approval processes, and 
industry's concerns about inconsistent regulatory 
interpretation. FAA has implemented several initiatives to 
address these longstanding issues, but they do persist.
    As the ranking member noted, Congress established 
requirements in sections 312 and 313 of the 2012 FAA 
Reauthorization Act to spur additional actions on these items. 
In response to those requirements, FAA chartered two rulemaking 
committees: one on the aircraft certification process, and 
another on the consistency of regulatory interpretation. Both 
committees produced a series of recommendations to assist FAA 
in addressing these issues.
    My statement today focuses on, one, FAA's progress in 
implementing the certification process and regulatory 
consistency recommendations; and, two, the challenges affecting 
successful implementation, and how they might be addressed.
    Regarding the certification process recommendations, FAA 
has established 14 initiatives to address these 
recommendations. These initiatives include developing a 
comprehensive roadmap for major change initiatives; improving 
the project sequencing process; and updating the aircraft 
certification regulations. Most of these initiatives are 
scheduled to be completed within the next 3 years.
    However, FAA has established performance metrics for only 5 
of the 14 initiatives, and has not developed metrics to measure 
the overall effectiveness of the collective efforts. These 
metrics are essential in helping FAA and the industry determine 
whether these initiatives are leading to improvements.
    Moreover, although several initiatives are said to be on 
track, we are concerned that FAA expects to miss interim 
milestones for two of the most critical initiatives, due to 
concerns raised by the unions representing inspectors and 
engineers. Missing these milestones increases the risk of 
delays in scheduled implementation of the initiatives.
    Turning to the regulatory consistency recommendations, FAA 
has begun implementing these recommendations. In its July 2013 
Report to Congress, FAA included a preliminary plan for 
implementing these recommendations. FAA has indicated that its 
final plan would include an implementation strategy, assign 
responsibilities to individuals and offices, and establish 
milestones and measures of effectiveness. The plan is now 
projected to be completed next month, which is about 8 months 
beyond the initial target date.
    Looking ahead to potential implementation challenges, FAA 
will likely be under increased pressure to establish more 
efficient processes as new aircraft materials, aircraft types, 
and NextGen avionics are introduced into the National Airspace 
System. FAA could significantly increase its chances of 
improving its processes and successfully adapting to changes in 
the industry by working to address some key challenges.
    Specifically, FAA should focus on, one, identifying the 
necessary resources to sustain these efforts when faced with 
fiscal pressures. Two, making the cultural shift required to 
implement a risk-based approach in making certification and 
approval decisions. This shift necessitates buy-in, support, 
and accountability throughout the agency, from the highest FAA 
management levels, to the designees and safety inspectors in 
the field. Additionally, FAA must ensure early and continuous 
involvement of industry stakeholders, and establish and use 
performance metrics that measure outcomes, rather than outputs, 
to help show what is actually being achieved through these 
initiatives, and to hold those responsible for implementation 
accountable for the results.
    Thank you, Mr. Chairman. This concludes my statement.
    Mr. LoBiondo. Thank you very much. Dr. Dillingham, what--
you covered a lot of territory there, I am trying to sort of 
digest some of that. Pretty concerning.
    But what--can you sum up what you would say are the biggest 
challenges the FAA faces in implementation and recommendations 
related to sections 312 and 313 of the Modernization and Reform 
Act?
    Dr. Dillingham. Yes, sir, Mr. Chairman. I think the 
recommendations that the two ARCs produced are basically a 
roadmap to making significant improvements in both the 
regulatory interpretation issues, as well as the approval 
issues.
    I think--leave aside--assuming that the resources are 
available--because it will take some resources to implement all 
of the things that FAA has on its plate--but a major issue is 
the cultural change that is involved in this. FAA is moving 
from the way it used to do business, where you had a more 
hands-on approach, to where they are using risk-based safety 
management system kinds of principles that--it is different for 
the inspectors, different for the designees. And that culture 
change takes time, and it is very, very--it is a tough thing to 
do.
    But I think, you know, implementation of the 
recommendations is the first step and to be consistent with 
implementing those recommendations over time.
    Mr. LoBiondo. So when you talked about the FAA possibly 
missing these key milestones, what effect would these delays 
have? What is the downside to this?
    Dr. Dillingham. I want to be clear that the issues that 
were raised by NATCA and PASS either have been resolved or are 
being resolved with collaborative discussions between FAA and 
the unions. But when FAA set their initial milestones, they set 
them without knowledge that they were going to need as much 
discussion as has been necessary with those two unions.
    So, the idea is that if, in fact, FAA does miss the 
milestones, or those interim milestones, the final completion 
date may be expanded, as well. But again, those issues have 
been worked, and are continuing to be worked with the two 
unions.
    Mr. LoBiondo. OK, thank you. Ms. Gilligan, the aviation 
manufacturing industry is constantly innovating and growing. 
What steps has the FAA taken to ensure that the certification 
process is able to respond to such innovation and growth, while 
maintaining safety?
    And I am asking this question because Mr. Larsen and I have 
heard from some stakeholders, where they are very concerned 
that the FAA is not keeping pace with what the real-world 
industry needs, and it is potentially costing us jobs and a 
downturn in economic activity.
    Ms. Gilligan. Yes, Mr. Chairman, we have certainly heard 
those same concerns, that the industry, as I noted in my 
testimony, and we are all well aware, the aviation industry in 
the U.S. is a very innovative industry. They are always looking 
for ways that they can improve their products. And we work with 
them hand in hand, in being able to support that.
    So, there are a couple ways that we approach staying up 
with that. First, on the technical side, obviously, our 
standards aren't prepared to address every new innovation that 
comes along. And so, we have a process in place that allows our 
manufacturers to innovate and to document a way--working with 
FAA, to document a way that their new whatever it is will be 
able to be safely introduced into the system.
    So, we have always been mindful that we don't want our 
regulations to be a hindrance to innovation, because innovation 
tends to improve safety. New concepts tend to enhance safety. 
So we do have a technical way of being able to do that. So, as 
we move toward composites, as they bring in new avionics 
systems, or whatever it might be, we have a process to document 
with the applicant what is the safety standard that will need 
to be met, and how they will go about demonstrating that they 
can actually meet it. So, technically, I think we are ready to 
do that.
    I think your--the bigger concern is, as has been 
highlighted in some of these recommendations, and as Dr. 
Dillingham highlighted, we need to look differently at the work 
we do. We need to think differently about what it is--FAA's 
role, and what is the role of the manufacturer. And I think 
these recommendations and the plan that we have to implement 
the changes under section 312 recognize that.
    So, as you have highlighted, we do have a new plan for how 
we will sequence new applications. We are working with our 
unions to finalize that. But it is a tool that will allow our 
workforce to evaluate what is the safety value of this new 
product. How widely does it affect the system? Because those 
are important things. We want to get safety products in, we 
want to get in changes that affect the larger part of the 
system.
    So, it will give our employees a way to prioritize the work 
with nominal timeframes for when they, then, should take 
certain actions. In addition, we always enter agreements with 
our applicants, with the manufacturer. When they bring us a new 
product, we and they agree to a schedule. They tell us when 
they are going to present information or tests or data, and we 
tell them when we will be able to review that and return it. 
And we hold each other accountable to those schedules.
    So, we have learned that the better planning we can do 
upfront, along with the manufacturer, the more successful we 
and they can be at managing those projects. So we are 
approaching it, I think, from a number of ways to just try to 
continually be more efficient.
    Mr. LoBiondo. Mr. Larsen?
    Mr. Larsen. Thank you, Mr. Chairman. Can you discuss a 
little bit about the inspectors' workload increasing beyond 
their headcount, especially as it relates to managing the 
demand for that oversight, while accelerating the use of ODAs? 
Can you put it in that context? And then, maybe outside of that 
context, as well?
    Ms. Gilligan. No, I think that is exactly the context. So, 
again, as I said, this industry is very innovative. And the 
Federal workforce and the resources that we have will always be 
limited. I appreciate Dr. Dillingham putting aside the question 
of resources. But, unfortunately, we really can't.
    So, given what we know to be the resources we have 
available, that is why the FAA is turning toward this risk-
based approach. We want our employees working on and overseeing 
those elements of design and manufacture that have the highest 
safety risk, and we want to use our designees, the thousands of 
people who have been designated to work on behalf of the 
Administrator, to take care of those more--the more well 
understood, the more mundane activities that are a regular part 
of certifying products. We think that that is the right 
balance.
    So, the approach that we are taking is for our employees to 
focus on those high-risk elements, things like new applications 
of composites, for example. That is something that we, at the 
FAA, want to work with our manufacturers on closely. But the 
fundamental of physics for flight are very well understood. And 
approvals of systems and designs that meet those fundamentals 
can certainly be handled by designees on our behalf.
    Mr. Larsen. You mentioned that--to Mr. LoBiondo, Chairman 
LoBiondo, a few examples. But can you just be just even more 
crystal clear about the specific actions that FAA has taken to 
provide more clarity on what activities would be delegated, 
specific activities would be delegated?
    Ms. Gilligan. Yes. The approach that we are putting in 
place is for our engineers, actually, to assume that the 
project can be delegated, and that then they must really look 
at what are the high-risk elements, and they must document why 
it is they--we, FAA--need to retain certain elements for our 
own approval. And I think it is--as Dr. Dillingham indicated, 
it is a different way to think about the process. There are 
many, many very highly skilled designees throughout the system. 
They have very much the same training as our engineers, and 
they are competent to make findings on our behalf.
    So, it is really up to the FAA to determine what are those 
unique characteristics, those particularly high-risk elements, 
the new and novel applications where the FAA needs to retain 
that determination. And, other than that, we should allow for 
designees to make findings on our behalf.
    Mr. Larsen. Dr. Dillingham, in your testimony last October 
you explained FAA had not developed performance measures to 
track the success of improvements that the agency makes in its 
certification process. Today you described that continued lack 
of performance measure as a missed opportunity. Why would you 
call this a missed opportunity?
    Dr. Dillingham. Mr. Larsen, the reason we called it a 
missed opportunity, it relates to the adage of, you know, 
success builds upon success. And a couple of things are 
associated with that.
    As FAA moves forward and implements the various 
recommendations that are associated with approval and 
certification, and it has some success in improving those 
processes, that, to the extent that the industry is made aware 
of that, to the extent that FAA can point to, with metrics, 
that success is being achieved, that increases the likelihood, 
as FAA moves forward with what could be some more difficult 
changes along the change management chain, there is the idea 
that this can happen, this can make a difference, and you are 
more likely to get industry buy-in with--when you move towards 
that risk management, change management that would be necessary 
to overhaul the whole process.
    Mr. Larsen. Yes, good. That is fine. Thank you very much, 
and I yield back.
    Mr. LoBiondo. Chairman Shuster, thank you for joining us.
    Mr. Shuster. Thank you very much, Mr. LoBiondo. I am 
confused. The FAA comes before us and says they are moving in a 
certain direction. Mr. Dillingham tells us that this risk-based 
approach, for instance, that they are not moving fast enough, 
or you are not moving in that way. Industry tells me that they 
don't sense--there is no sense of urgency they see moving 
towards this, and that is where they want to move to.
    So, Mr. Dillingham, are they moving to a risk-based 
approach, or is it just so slow that it is going to take years 
and years to get there?
    Dr. Dillingham. They are absolutely moving towards a risk-
based approach, not only in this area, but in many other areas 
that FAA has oversight over. Data-based risk management, safety 
management systems, all those things are the new FAA.
    I think what you hear, and what we hear, is that it may not 
be happening fast enough, or, in some cases, what we just 
talked about a moment ago is that communications can be 
improved so that industry and others can see that this is going 
on. And I think it is important to recognize that--and we have 
said this a number of times, and others have said it--that 
cultural change is not an overnight thing. It is going to take 
some time. We know it has been some time----
    Mr. Shuster. How long, 20 years?
    Dr. Dillingham. Well, I can't put a date on it, Mr. 
Chairman. But change is taking place. But, as we just said, 
sometimes it is----
    Mr. Shuster. Well, that is my concern, that we are going to 
lose our lead in the industry if we don't make these changes.
    The other thing that I have heard over and over again is an 
inconsistency throughout the country of the FAA. So people shop 
the different regions to find somebody that is going to be 
easier to deal with, not sacrifice safety, but just be able to 
move through the process.
    The other thing that I heard just recently, a small rebuild 
firm, they take small aircraft and they rebuild them, they get 
it done quicker and cheaper, or less expensive, in other 
countries. Now, I can get my head around why Brazil may be 
faster, because they are an emerging economy. Or Canada has to 
deal with a giant right next door to them, so they are nimble 
and fast. But when they tell me they are taking their planes to 
Germany because it is easier to deal with, less expensive, more 
efficient, I can't understand that. Germany is a country that 
is loaded with regulations. But they are able to do it.
    So can you talk to me about--you said the FAA is working 
with their partners. But why would an American firm go to 
Germany to do a rebuild on a plane, when it should be doing it 
right here, in America?
    Ms. Gilligan. Mr. Chairman, I am not familiar with that 
example. And, if you would, I would ask that we talk to your 
staff, because I would like to look at that one, in particular, 
because we and the Germans have exactly the same standards. We 
have a bilateral agreement. And through that agreement, they 
accept when FAA has certified a product, and we accept when the 
Europeans have certified a product.
    So, it is an example I am not particularly familiar with, 
and will definitely be glad to look into it, and get back to 
you with what those specifics might be.
    Mr. Shuster. Right, and I am pretty confident we can get a 
number of those. But, again, if we have the same standards, it 
has to come down to the process and the people, as they apply 
the standards, it seems to me. You know, and that is something 
I talked about. Throughout the United States I hear that they 
shop around to the different regions, where they know that it 
is a more efficient process. Can you talk about standardization 
across the FAA regions?
    Ms. Gilligan. Yes, sir. We also, as you know, from the 
reauthorization bill, we did have a direction to look at how to 
improve standardization. The recommendations that came from 
that committee are really quite all-encompassing, and they are 
much more robust, much broader, than the recommendations that 
came, as it related to aircraft certification process.
    Standardization is an important initiative, and we have 
focused on that. And, actually, I think we have made good 
improvements over time. We have put in place opportunities and 
tools to elevate issues or questions if at a particular field 
office there is a disagreement between the applicant and our 
inspector. We have a process in place to elevate that to get an 
accurate and consistent answer. That can take time, and so we 
are looking at how we can refine that.
    The recommendations on improving consistency, the 
fundamental one is to start with a much broader database that 
will allow us to integrate all of the information about a 
particular regulation, for example, so that our inspector or 
engineer, and the industry, can go to a single source and find 
out what is all the information to help them understand how to 
implement or how to apply that regulation.
    We have a prototype program under--that will be underway in 
the fall, which I find very exciting, that is a--you know, new 
technology has allowed us to find ways that we can search the 
many databases that we already have to start to address that 
particular concern. And I think you are going to see us 
starting to make real headway on some of those initiatives.
    But it is an issue that is well known to us at the FAA, and 
that we are constantly working with industry to bring those to 
our attention. If there is inconsistency, we will--we want to 
work with them, and we want to get to a single solution.
    Mr. Shuster. Well, and then I will just finish up by 
saying, you know, we really got to move fast on these things. 
Because I have a great concern that we are going to lose our 
lead in the industry across the board, and all the aviation 
industry. And we need to do things differently. And on my 
watch, and on Mr. LoBiondo and Mr. Larsen's watch, I don't want 
to sit here and watch our aviation industry go the way of the 
textiles and the auto industries, and every other industry that 
we put these hurdles and these burdens on that they are not 
able to move forward and be innovative.
    So, again, we need to consider things differently. And, you 
know, one of the things I sit here today and think about is, it 
has been customary for as long as I have been in Congress, we 
always let the administration come up and testify first, and 
industry goes second. I think we need to take into 
consideration letting industry go first to help the Members 
here understand the problems, so we can have example after 
example, so that the administration comes before us and then 
defends itself, and hears these problems firsthand.
    So, that is something we need to take and consider. We need 
to do a different approach across the board on everything we do 
when it comes to aviation. And again, we are going to be doing 
that here in the next months and years. Thank you.
    Mr. LoBiondo. Well, Mr. Chairman, with your permission, 
this is going to be a big focus of what we do with the 
reauthorization bill, to try to understand how all this is 
coming together, and then with very specific language make sure 
that we can keep ourselves on the cutting edge of things. So 
thank you.
    Ms. Johnson?
    Ms. Eddie Bernice Johnson of Texas. Thank you very much, 
Mr. Chairman, and thanks to both of our witnesses for being 
here.
    As I have listened to the dialogue, it appears to me that 
you could easily say that staffing resources and funding 
necessary to both maintain safety and make these ambitious 
improvements could be a problem. Has the agency grasped the 
fact that you might have to do more with less?
    Ms. Gilligan. Congresswoman, absolutely. We believe--and 
Congress has always been very supportive of the aviation safety 
program, and we appreciate that. But we are also realistic, and 
we read the newspaper, and we know there are pressures on the 
Federal budget. And that is exactly why we are pursuing some of 
the initiatives that we have been talking about. We want to 
make sure that our technical experts are focused on those areas 
of highest risk, and that we at the FAA are overseeing the 
safety of those programs.
    And it is important to keep in mind it really is the 
manufacturer's responsibility to assure that they are designing 
and building a safe product. It is the airline operator's 
responsibility to provide safe transportation. The role for FAA 
is to set the standards that allow them to do that, and then 
make sure that they are meeting those standards. And we believe 
that we can manage our resources to effectively continue to 
build on our safety mission. I think our record is clear. We 
are very good at what we do now, and we intend to maintain 
that.
    Ms. Eddie Bernice Johnson of Texas. Are you current with 
the reports that you are supposed to send to Congress on your 
progress?
    Ms. Gilligan. Yes, ma'am. I believe at this point we are. 
The followup reports are not required to be submitted to 
Congress. That is why we are posting them on our Web site, so 
that we and the industry can track our progress.
    But as--the reports related to certification, I believe, 
have been properly submitted.
    Ms. Eddie Bernice Johnson of Texas. What would you consider 
your major handicap right now in trying to get up to par?
    Ms. Gilligan. Well, I think the challenges are as we have 
been discussing. Bringing all of our workforce along on this 
change is something that, as leaders, we are required to do. 
But, as Dr. Dillingham has suggested, it is a challenge.
    Employees are comfortable doing work as they have done it 
in the past, and as they understand it. And it is up to us to 
make sure they are properly trained and have the tools ready to 
be able to make these changes. We believe we are putting those 
kinds of tools and training in place, and that, in fact, the 
employees, our engineers and inspectors, will be able to focus 
on those higher risk areas, and allow designees to perform 
other activities on our behalf.
    Ms. Eddie Bernice Johnson of Texas. Thank you very much.
    Dr. Dillingham, prior GAO studies dating back to 2004 
raised some concerns about the strength of FAA's oversight of 
designers, including FAA's staff workload. Can you provide us 
some of the specifics of those concerns, and how you see the 
progress being made?
    Dr. Dillingham. Yes, ma'am. When we first looked at the 
designees and the organizational delegation issues, our 
concerns were that FAA may not have enough resources to 
adequately oversee the actual designees, and that, in fact, 
some of the designees were not actually trained as they should 
have been to do the job that they were being asked to do. And 
it was a question of whether--how difficult it was for FAA to 
remove those designees when it was determined that they were 
not meeting the standards.
    Since that time, those issues have been addressed by FAA, 
and they are continuing to be addressed by FAA and industry as 
well. So those issues are on the wane.
    Ms. Eddie Bernice Johnson of Texas. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. LoBiondo. Mr. Meadows is not back yet. Mr. Ribble?
    Mr. Ribble. Thank you, Mr. Chairman. Thank you both for 
being here this morning. I just really have one question I 
wanted to address to Ms. Gilligan.
    Thank you for being here. The FAA air certification 
service--I am quoting out of page 3 on your written testimony--
the FAA aircraft certification service has both a high volume 
and wide range of certification applications under review at 
any given time. In fiscal year 2013 alone, the FAA approved 189 
revisions to aircraft type certificates, 440 new supplemental 
type certificates, STCs, for aircraft components, and an 
additional 397 amended STCs, and over 2,200 parts manufacturer 
approvals for replacement parts on aircraft.
    I am curious. Do you know how many of these approvals were 
done with the ODA certification process?
    Ms. Gilligan. I don't offhand, sir, but I am sure we can 
get you that data.
    Mr. Ribble. Could you give me your take on how the ODA is 
working?
    Ms. Gilligan. Yes. We are very encouraged by how it is 
working. We think that there are some that have been very 
successful. Certainly the larger manufacturers that we see are 
able to implement them more effectively so far.
    I think one of the concerns you may have heard is that it 
needs to be a scalable process, and we agree with that. So we 
are looking at how we can continue to improve the use of the 
organizational delegation, because we do see it as a tool in 
the future that allows us to delegate even more of the 
decision--of the findings of compliance.
    So, I think we are learning as we go. I think we have seen 
some, again, that have been very successful, and there are 
still improvements that can be made.
    Mr. Ribble. In your opinion, is the ODA pretty much fully 
implemented now?
    Ms. Gilligan. I think----
    Mr. Ribble. And why wouldn't you use it, if it is not?
    Ms. Gilligan. Well, again, I think it is fully implemented 
at some of the larger manufacturers, when they have applied for 
it, and they have put in place the process that is necessary 
for it.
    I know we have heard concerns raised by some of our smaller 
manufacturers, that it is overwhelming for them to put in 
place, and so they are not pursuing it. And that, I think, is 
something we need to continue to work with, those 
manufacturers, to scale it so that it is appropriate for their 
needs, so that we and they can take better advantage of it.
    Mr. Ribble. OK. Thank you very much.
    And, Mr. Chairman, I yield back.
    Mr. LoBiondo. Mr. Nolan?
    Mr. Nolan. Thank you, Mr. Chairman. I just got a short 
statement and a couple of things.
    One is I want to add my concern to the concern expressed by 
other members of this committee, with regard to the need to 
expedite the certification process, the need to find--I am not 
sure it was addressed, but, you know, better training and 
education programs for the workforce that is necessary for this 
industry, and express my concern about the FAA workforce and 
the workload that is required to meet this incredibly rising 
demand.
    My question is this committee and the Congress here this 
past year passed a new regulatory regime for the manufacturers 
of small aircrafts. And, Ms. Gilligan, I would appreciate if 
you would kind of update us on how that is progressing. That is 
very important to many of us, including those up in Duluth, 
Minnesota, where Cirrus Manufacturing exists, and it is doing a 
remarkably good job in creating a new aircraft, both for the 
domestic and the international market. Thank you, please.
    Ms. Gilligan. Yes, sir. Part 23, the rewrite of part 23, is 
an extremely important initiative for the Administrator and our 
Deputy Administrator. It is also a first of its kind project, 
to take an entire part of our regulations and rewrite all of 
it.
    As you might imagine, there is a lot of interaction among 
all the parts. And as we do this, we want to be certain that we 
are improving the certification process, and not losing any of 
the safety requirements that we have in place. We have a very 
dedicated team led by one of our executives in Kansas City, who 
is responsible for small aircraft certification. He brings a 
personal dedication to this project.
    The schedule is somewhat slower than the legislation had 
envisioned. But going through notice and comment rulemaking, 
and then through final rulemaking, it does take a period of 
time. But we monitor this project on a monthly basis at our 
executive level. I keep the Administrator informed, as well.
    We are meeting our internal schedule. We are identifying 
and solving issues that come along, so the team can continue to 
make progress. And we will be glad to keep you and your staff 
informed of the progress as we proceed.
    Mr. Nolan. Thank you. Can you give us a date as to when you 
project----
    Ms. Gilligan. Yes, sir. The final rule is right now planned 
for--I believe it is December of 2017. That is later than the 
statute, which called for a final rule by the end of 2015. But 
again, first, the complexities of writing the rule, and then 
getting it published for notice and comment, and considering 
those comments, and finalizing the project, will take a 
considerably longer period of time than was anticipated in the 
statute.
    We are--we have a detailed schedule. We are meeting that 
schedule at this point. And, again, we will be glad to keep you 
informed about that schedule.
    Mr. Nolan. Well, thank you for that. And, please, I know it 
means a lot to all the members of this committee to have that 
whole process be a focus of important attention for your agency 
to get that done as soon as possible. Thank you.
    Mr. LoBiondo. Thank you, Mr. Nolan.
    Mr. Rodney Davis?
    Mr. Davis. Thank you, Mr. Chairman. Ms. Gilligan, thank you 
again for being here. It is great to follow the chairman and 
Mr. Nolan, because they took my two questions for you.
    Ms. Gilligan. I appreciate their efforts on my behalf.
    Mr. Davis. But I do want to also let you know I too am 
concerned with the section 313 implementation, or lack thereof 
in many cases. And I am also concerned, as Mr. Nolan was, with 
getting the Small Airplane Revitalization Act, you know, 
implementation moving along much more quickly.
    So, I will move to Dr. Dillingham. Welcome again, sir. It 
is good to speak with you again. Your testimony reinforces that 
change is tough, and the FAA's workforce seems to be a little 
reluctant to implement some significant changes to the way 
business is currently being done there. The GAO usually 
provides good recommendations. But what can you recommend to 
change the culture of an agency?
    Dr. Dillingham. Thank you, sir. What we have found from our 
work is that it--although change takes time, if in fact there 
is commitment and accountability for that change from the top 
all the way through to the field locations that have to 
implement it, that is helpful. If that change is incentivized, 
that is also helpful.
    It is, in fact, a tough thing to do. But what we said 
earlier this morning is that when FAA has some successes, those 
successes need to be communicated broadly and widely. And FAA 
is also currently working with major industry partners to 
implement that cultural change, which is also very critical.
    So, we are guardedly optimistic that, although it may take 
some time, it will, in fact, happen.
    Mr. Davis. OK. My next question. Industry is concerned 
about the FAA's lack of performance measures. Nine out of 
fourteen of those measures have yet to be developed. What is 
the overarching factor holding the FAA back from establishing 
these performance measures?
    Ms. Gilligan. I would be glad to answer that one. I think, 
as Dr. Dillingham has identified, first of all, performance 
metrics are very difficult. And so, we are working with 
industry to try to develop what are the right ways to measure 
this.
    I understand there was a discussion within the last 2 weeks 
between our aircraft certification leadership and industry 
leaders. And, again, what we tend to come down to are counting 
things. How many of these did we do, or how many of that did we 
do? And I think, as Dr. Dillingham's testimony makes clear, 
that is not a measure of your performance, or the effectiveness 
of your changes. It is simply a number. And what we are trying 
to do is understand how do you really measure that if we make 
this change, it has effectively made the process more 
efficient.
    So, we will continue to work with industry so that we and 
they can reach an agreement on these are the right measures. 
You know, if you implement this thing, and you get to this 
outcome, we will know we were successful. And that is what we 
are struggling with.
    Mr. Davis. Well, and that is what we are struggling with, 
too, as policymakers. We want to see the performance measures 
put in place, but I don't want to create a new bureaucracy that 
discusses performance measures and how to measure performance 
measures, and et cetera, et cetera. So that is our concern, 
too.
    And, Dr. Dillingham, issues with the FAA certification 
approval process has obviously resulted in delays and higher 
costs for the aviation industry. And as a policymaker, I want 
to push the FAA to become more efficient more quickly. What are 
some recommendations you have for future FAA reauthorizations 
that would get us this result?
    Dr. Dillingham. I think the--probably the most important 
thing, and probably the most efficient thing that could be 
done, is to make sure that those recommendations that have been 
made, those initiatives that have been identified to address 
those recommendations, that there is actual implementation of 
those, that there is accountability associated with them.
    The recommendations that are on the table from the 2012 
reauthorization are pretty robust, and cover most, if--cover 
most of all the issues that have been brought to the Congress 
over the last few years, and have been identified by our study. 
So that is the first thing, is do what is already on the table. 
Accountability and oversight, as this hearing is doing.
    Mr. Davis. Well, thank you both for being here, and thank 
you for your testimony.
    I yield back, Mr. Chairman.
    Mr. LoBiondo. Thank you. Ms. Titus?
    Ms. Titus. Thank you, Mr. Chairman. When you go last you 
get to hear all the questions, so you can kind of look for 
themes. And it seems to me that every question kind of has the 
same theme: FAA is understaffed, it is too slow, it is too old 
fashioned, it can't keep up with the industry, and it just 
needs more time.
    Well, the industry doesn't have a lot of time. They are 
moving rapidly. And one of the areas where you see this that 
impacts domestic aviation is in the unmanned aircraft 
development. Nevada--I represent Las Vegas--was one of the six 
States, as you know, chosen as a test site for the integration 
of these UAVs, and we are no stranger to that. We have Creech 
Air Force Base, we have the Predator, we have the Reaper, we 
are ready to go. But it doesn't seem like a lot of people are 
starting to test, because of the uncertainty. They don't know 
what the rules are, or what is going to happen.
    So, Ms. Gilligan, could you kind of update us on how the 
test site program is progressing, and the--what is happening 
with the development of the UAV small vehicle rule that you all 
were going to develop? Tell us where we are with that, so we 
can kind of go back and give folks some reassurance that we are 
moving forward in this area.
    Ms. Gilligan. I would be glad to, Congresswoman. As you 
know, four of the test sites are already up and operational, 
and we are working closely with them to understand what 
research and development initiatives they are undertaking, and 
how we can learn from and take advantage of that data.
    As you know, we will be sharing the data that they collect. 
We will be using the Technical Center up in New Jersey to help 
us do the analysis of all of that data. And all of that will 
help inform what standards, both for operation and as well as 
for design and manufacture, that we need to put in place.
    On the manufacturing side, or the design side, we actually 
have approved two aircraft systems already. They are operating 
up in Alaska. They started last summer. They are operating this 
summer. Obviously, that is a low-risk environment. But they 
are--we are learning a lot about the design requirements that 
we had for those systems that can help us better understand how 
to set the design standards for sort of a more robust 
operation.
    And the small UAS rule is making--I will tell you--making 
great headway. We have completed our review at the FAA. It is 
in the executive review process now. It is a top initiative for 
our Administrator. And so, I think we will see some--we are 
hoping to see strong support in getting it through the process 
and published, so we can begin to get comments. And I think 
that will begin to answer a lot of the questions that I know 
some of the applicants at the test sites are concerned about.
    Ms. Titus. And will that be this year? Next year? By 
Christmas? What----
    Ms. Gilligan. Our schedule calls for it to be--for the 
notice to be published by the end of this year. And, as I said, 
the Administrator is pushing hard to see if we can beat that 
schedule.
    Ms. Titus. I appreciate that. And my second part of the 
question is this is going to open up a whole new industry, new 
myriad of products and procedures that will fall under your 
domain. How do you see this affecting the other work that you 
do that we have been talking about this morning? Have you got 
the personnel and the resources to take this part of the 
industry on, and still keep up with these other things that 
have been asked about?
    Ms. Gilligan. Well, certainly, in future budget years we 
will need to look at whether this is driving a new need for 
resources, both in numbers and in skill sets. We may need a 
different kind of skilled employee, as well. And so that will 
be addressed in the budget process.
    But in the meantime, yes, I think we are confident, as you 
know, I believe, at the test centers we are arranging four 
designations there, for us to be able to designate 
representatives to be able to make safety findings at the test 
sites, so that those operations can be determined to meet the 
appropriate safety standard without additional FAA oversight. 
So we are looking at how we can take advantage of the designee 
system to begin the support for UAS systems right now, from the 
ground up.
    Ms. Titus. I hope that will be some kind of 
standardization, and we won't see a problem of shopping the 
test sites, like we heard earlier about shopping the different 
areas because different regional offices do different quality 
of work.
    Doctor, were you going to say something?
    Dr. Dillingham. Yes, I wanted to just note that this 
subcommittee has asked us to conduct a pretty comprehensive 
review of UAS integration into the NAS. And, as a part of that 
review, a lot of focus is on research and development. So we 
are going to be looking at the issues and concerns of the test 
sites, and how that process is going. We are going to be 
looking at what are going to be the resource needs and 
timelines involved in integrating UAS into the NAS.
    So, hopefully, by the end of the year or early next year, 
we will have that comprehensive report for this subcommittee.
    Ms. Titus. Thank you. Would you keep our office updated as 
you move forward with that study?
    Dr. Dillingham. Absolutely.
    Ms. Titus. Thank you. Thank you, Mr. Chairman.
    Mr. LoBiondo. Mr. Hanna?
    Mr. Hanna. Thank you. Thank you, Ms. Titus. I have Griffiss 
Air Force Base, which is one of the 6, and the 174th, and of 
course, Watertown.
    But I have a different question. Correct me if I'm wrong, 
Ms. Gilligan, but you stated that you have adequate resources. 
And Mr.--Dr. Dillingham has said that there are cultural 
issues. We have heard from the FAA director of flight standards 
that there is a backlog of over 1,000 certifications and 
authorizations for the national airspace. And then we go on to 
find--to hear from the manufacturers the FAA has made some 
progress towards addressing--this is Mr. Dillingham's 
statement, but we are hearing--but this committee is hearing 
the absolute opposite from interested parties and stakeholders. 
So, if you have adequate resources, maybe I misheard you.
    The other problem--the other thing I want to ask you, just 
fundamentally, is there a difference between a risk-based 
approach that you talk about, and the outcome-based approach 
that Dr. Dillingham talks about? You both use a different 
language, but it isn't clear to me that you mean the same 
thing. So I am kind of curious.
    Ms. Gilligan. I think actually, Congressman, there are two 
parts of the process.
    When we talk about a risk-based approach, we mean that we 
want to make sure that we are focused--we a the FAA, the 
limited resources that we have are identifying where a 
manufacturer may be adding a new element to their process, or a 
new product that might introduce risk into the system that we 
haven't fully understood and analyzed. And that is the project 
that our inspectors or our engineers should be focused on. That 
is how we determine what work we should take on and determine 
what work can be left to the designees who work on our behalf 
to make certain findings. That is kind of at the front end of 
the process.
    Mr. Hanna. Dr. Dillingham, would you like to comment about 
that? Am I reading something into this that doesn't exist? You 
talk about the cultural issues. And, of course, Ms. Gilligan 
admitted that there were cultural changes going on that present 
some issues, which are, I guess, understandable. But how big a 
barrier to getting this whole thing moving forward is there 
between those two elements?
    Dr. Dillingham. It is hard to put an exact percentage on 
it. But let me talk a little bit, and see if I can add some 
clarity to what we said before.
    The resource issue for FAA is--it is there. There is a 
resource issue. And that--I think that is why the designee 
program, which has been going on for, you know, many years now, 
and now being expanded to organizational designees, is there to 
supplement those resources and to address that resource 
constraint.
    When we talk about culture change, we are talking about the 
difference between what FAA has traditionally done, where they 
had the inspectors who could go out and touch each wheel, touch 
each cert that it needed to, that was a part of its portfolio, 
as well as do its other surveillance activities. That day has 
long since passed. And the idea now is to move towards, you 
know, delegating more of those kinds of things to the industry 
with FAA oversight.
    The outcome versus output that we were talking about 
referred more to--or at least in part to the metrics, that when 
FAA talks about, you know, ``We are implementing various and 
sundry recommendations,'' and--or, ``We are installing certain 
amounts of equipment,'' we are saying that that is not the 
measure. The measure is what difference does it make in the 
certification process. How much more efficient--what are the 
gains for industry?
    And so, all of those concepts are sort of----
    Mr. Hanna. So you are kind of saying to me that--correct me 
if I am wrong--that they have lost their ability to be 
practical in their work process, that they have become 
excessively bureaucratic. Is that close, or----
    Dr. Dillingham. I wouldn't say that. I think they are being 
practical by recognizing that they can't do everything that is 
required of them, and moving towards this ODA process in 
concert with industry. I think I would say it that way.
    Mr. Hanna. Thank you. My time has expired.
    Mr. LoBiondo. Thank you. Mr. Meadows?
    Mr. Meadows. Thank you, Mr. Chairman.
    Dr. Dillingham, I want to come to you with regards to the 
certification process. And if you could help me understand a 
little bit better, I guess, sequencing and why that has worked 
or has not worked.
    Dr. Dillingham. I think the--one of the major concerns with 
the project sequencing was that it was----
    Mr. Meadows. Now you are saying ``was.'' It probably should 
be ``is.''
    Dr. Dillingham. Yes, is.
    Mr. Meadows. OK.
    Dr. Dillingham. Is.
    Mr. Meadows. All right.
    Dr. Dillingham. That--or at least the concern has been 
expressed is that it took a--it came from headquarters, or was 
centrally located, whereas another--an alternative would be to 
be more locally based, where the decisions could be made 
quicker and more efficiently.
    Mr. Meadows. So, do you see the prioritization program as 
being an improvement?
    Dr. Dillingham. I would say it is an improvement. And 
although it is early on in the process, I think the efforts 
that FAA has made to work with the unions and work with 
industry will make it get better in the future, as we go on.
    Mr. Meadows. So right now, though, in terms of if I were a 
civil aerospace company, would I know with certainty whether I 
was going to get a certification or not, based on either first 
come first served--how do I plan? I mean can I properly plan? 
Because it doesn't appear that I could.
    Ms. Gilligan. If I may, Congressman, I think you have 
identified exactly what we have seen, as well.
    The issue is not--it is a little less about timing, and 
much more about predictability. So the process that we had in 
place notified the applicant every 30 or 60 days--I forget what 
the interval was--whether we could or could not begin their 
project until we could. And so, the dilemma for the 
manufacturer was they didn't know if it was going to be in 60 
days or 6 months.
    The new process----
    Mr. Meadows. So you are telling me there is no certainty 
whatsoever, and we are investing millions and millions of 
dollars, and they have to hope that one day they get a letter 
and say, ``Oh, by the way, we are going to certify you,'' or 
start the process?
    Ms. Gilligan. So that was the way we were doing it. And we 
were also trying--we had a metric to approve projects within, I 
believe, a 90-day timeline. And for most of the projects, we 
actually made that. But the applicant may not know that that 
was what the measure was.
    What the new process will do is allow for that 
predictability. When we receive the application, the engineer 
involved will analyze how--what the value of the project is, 
from a safety perspective, and some of the other criteria that 
we have in place, and determine when that project can be turned 
on. The applicant will be given a project number, which means 
that the project is underway. And they can use their designees 
in the interim. We can enter the agreement for what the 
schedule will be.
    What we are trying to address is that concern about 
predictability, so that the applicant, the manufacturers, can 
know when they can expect that the project will move forward. 
We believe that that will go a long way to improving--or to 
addressing the concerns.
    Mr. Meadows. OK. You identified this--am I correct, Ms. 
Dillingham? You identified this back in--Gilligan, I 
apologize--in 2011. Is that correct? The FAA recognized that 
this was a problem, and then again in 2012.
    Ms. Gilligan. Well, we had the sequencing program in place 
for a number of years. And throughout all that time we were 
always trying to find ways to improve it and enhance it. So we 
moved it away from where the local office would say, ``No, we 
don't have the technical skills so we have to delay your 
project,'' to a national approach, where we could see does 
the--do we have the appropriate skills somewhere around the 
country, so that we can get the project started more quickly?
    So, over time we have made improvements. And this will be 
the next----
    Mr. Meadows. OK. Tell me why you are not going to meet your 
milestone. I think that is--according to testimony, it looks 
like--that you are not going to meet the milestone for 
implementation this year. Is that correct?
    Ms. Gilligan. No, sir. We actually disagree with Dr. 
Dillingham. It is true we had interim milestones in order to 
get this in place by the end of the year. One of the interim 
milestones has been delayed because of additional consultation 
with our unions. But we are still focused on implementing this 
by the end of this calendar year.
    Mr. Meadows. Yes, but the milestone was July. So we have 
got 8 more days. So that milestone, you are going to meet that 
milestone, as well?
    Ms. Gilligan. No, the final milestone for implementation 
has been the end of the----
    Mr. Meadows. The milestones are exactly that, they go----
    Ms. Gilligan. Yes----
    Mr. Meadows [continuing]. One step at a time----
    Ms. Gilligan. Yes.
    Mr. Meadows [continuing]. So you don't have to wait until 
the end.
    Ms. Gilligan. I agree.
    Mr. Meadows. So you are not meeting your milestones. So he 
would be correct.
    Ms. Gilligan. There is the interim milestone that has been 
delayed. We acknowledge that, and we agree. We are now working, 
though, to assure that we have it--the program in place by the 
end of the year.
    Mr. Meadows. We will be waiting for those results. I 
appreciate the patience of the Chair.
    Mr. LoBiondo. Mr. Williams?
    Mr. Williams. Thank you, Mr. Chairman. I want to thank both 
of you for being here today, as always.
    I am from Texas. And Texas is home to two major rotorcraft 
manufacturers, Bell Helicopter and Airbus Helicopters. My 
question today concern the challenges in the certification. We 
have talked about that, installation of equipment and safety-
enhancing technology to rotorcraft, compared to large transport 
airplanes and small airplanes.
    So, Dr. Dillingham, my question would be to you. In the 
course of your review of the certification process, have you 
found any particular concerns or frustrations expressed by 
rotorcraft manufacturers? And if so, can you discuss the 
concerns and why they are happening?
    Dr. Dillingham. I think, to the extent that we have looked 
at certification and had a chance to do some interviews, the 
rotorcraft manufacturers had similar concerns as did the 
regular aircraft manufacturers, in terms of delays or different 
regulatory interpretations.
    I think the thing--the example that I remember was more on 
the international front, in which an approval was granted by 
FAA here, but when that rotorcraft was taken overseas, the time 
that it took, and the cost, was similar to what the original 
cost and time was for the FAA certification. And the concern 
was expressed that this was sort of duplicating and having a 
very negative effect on that manufacturer.
    We propose to look at that issue for rotorcraft 
manufacturers and others, as we pursue the committee's request 
to look at international issues and how international 
certification is going.
    Mr. Williams. I know they would appreciate that. And just 
one additional question. Are there any initiatives that could 
help address some of these things we are talking about, like 
making progress on reducing regulatory inconsistency, which we 
talked about? Are there any best practices that could be 
learned from directorates like transport or small airplane?
    Dr. Dillingham. I think the key initiative that we have 
heard from, you know, almost unanimously, is the idea of 
setting up this automated database that brings all of the 
regulations and all of the guidance under one umbrella, where 
it can be searched by both industry and FAA inspectors, so that 
that inconsistency will start to go away.
    When an inspector can punch up, you know, the various and 
sundry ways that certifications and approvals have been made in 
the past, and they don't have to start anew, or impose their 
own particular interpretation on something, and the next move 
up is if there is a disagreement, then there is a procedure 
being developed that will address that. We think that that is 
the most critical element necessary to move forward on 
regulatory interpretation.
    Mr. Williams. New concept. Make it easier, right?
    Dr. Dillingham. Yes, sir.
    Mr. Williams. I appreciate you being here, and I yield 
back, Mr. Chairman.
    Mr. LoBiondo. Mr. Lipinski?
    Mr. Lipinski. Thank you, Mr. Chairman. I want to thank you 
for holding this hearing on domestic aviation manufacturing. 
And very pleased that our subcommittee continues to remain 
active in monitoring of the work to improve FAA's regulatory 
process, and also the domestic manufacturing sector.
    I am a big promoter of American manufacturing. Aircraft 
manufacturing is also especially important to me, and maybe it 
goes back to 35, 40 years ago, when I played little league 
baseball at Aircraft Gear Field in Bedford Park. I know how 
important--especially aviation aircraft manufacturing is to the 
American economy.
    Now, we are all mindful that the FAA reauthorization is 
coming up. We need to get that done next year, and welcome this 
opportunity to learn more about what has been done and what is 
being done.
    And one of the biggest issues that I focused on during my 
time on this subcommittee is streamlining the FAA's 
certification process to make sure that manufacturers can move 
innovative, safety-enhancing ideas from the design table to 
assembly line into the cockpit without months of delays and 
unnecessary costs. I was the lead Democrat cosponsor of the 
Small Airplane Revitalization Act, which requires the FAA to 
streamline its certification process of small aircraft by 
December 2015, and I hope to learn how Congress can continue to 
support other parts of the aviation manufacturing sector.
    Whether it is implementing this bill, developing regulatory 
certainty under section 312, or finalizing the competition to 
develop a new aviation gas, progress in this area is absolutely 
necessary to improve aviation efficiency, enhance safety, and 
help support America's status as a global leader in aviation, 
which leads me into a question for Ms. Gilligan.
    As you know, the American aviation industry, the FAA 
included, has set the standard for innovation, quality, and 
safety. But there are always challenges to our leadership on 
this. You noted that the FAA facilitates the import and export 
of aircraft components in a global economy, and cited the 
establishment of bilateral agreements with 47 countries. I am 
interested to learn what efforts the FAA has made to advance 
the reputation and standing of its standards in American 
aviation products generally, and how our bilateral partners 
view the FAA's type certifications.
    So, how do the FAA's efforts measure up in comparison to 
those of its bilateral agreement partners? Are there ways this 
can be improved? And also, you know, what constraints in 
improving this does the FAA face? I think this is all vitally 
important that we make sure that America remains the gold 
standard here. So just interested in what the FAA is doing 
right now in this area.
    Ms. Gilligan. Thank you, Congressman. First, I think it is 
quite widely accepted that the actual standards for design and 
manufacture of aircraft originated in the United States, and in 
only a few other countries around the world. And they--we--
continue to lead the world in setting what is the safety 
standard against which one designs and builds an aircraft. So I 
don't think there is really a question about whether the U.S. 
standards for design are the gold standards.
    I do think what we are seeing is a phenomena around the 
world, where other countries are expanding, trying to build 
their own technical expertise in aviation safety. And we have 
seen countries where they are taking a more active part in the 
review of product certification before they allow that product 
into their country. Those authorities have the same 
responsibility we in the FAA have of determining that a product 
that is coming into their country is safe.
    Now, we believe that that will change with time, and that 
those emerging economies will understand that it can be much 
more efficient for them to take advantage of the expertise of 
the U.S., or if it is a European product, of the Europeans. 
Now, just as we and the Europeans have already made that--come 
to that realization. So, when the U.S. certifies a--a product, 
rather, it is not at all uncommon for the Europeans to issue 
their approval the very same day, or the next day, because we 
and they have worked together with the manufacturer throughout 
that project to determine compliance with the appropriate 
safety standards.
    Now, we continue to work with the bilateral partners, who 
are at times, we believe, interposing or asking for more than 
is necessary for them to accept a U.S. approval. And we are 
making headway.
    Mr. Lipinski. Not to interrupt you, I am just running out 
of time. I just want to ask one other question. Why is there 
going to be a 2-year delay? What is the cause of the 2-year 
delay in the implementation of the Small Airplane 
Revitalization Act?
    Ms. Gilligan. Yes, sir. The deadline that was given in the 
statute, in our opinion, was not--was just too difficult to 
meet. The part 23 is a very big, complex part of our rules. And 
a complete rewrite is--this is really the first time we have 
ever taken on a project like this.
    So, what we want to make sure is that we are, in fact, 
streamlining the process, but that we are not reducing the 
level of safety in those standards. We have a dedicated team 
that is working hard to keep this project moving forward. But 
we do need to do the rewrite, we need to put it out for 
comment. We do expect that the industry will want a fair amount 
of time, because it is such a complex project. And then we need 
to consider those comments, and make whatever changes are 
necessary to the final rule. And that, we believe, will take an 
additional 2 years.
    Mr. Lipinski. And I want to--I am over time. I thank the 
chairman for letting me go here. But I just want to say I would 
like to follow up later on, you know, what we can do here, so 
that we can move this process forward more quickly. Thank you.
    Ms. Gilligan. We will be glad to follow up with you, sir.
    Mr. LoBiondo. OK. Mr. Bucshon?
    Dr. Bucshon. First of all, thank you both for being here. 
It is very much appreciated. I have--you know, most of my 
questions have been answered, except for the--what I am hearing 
a lot of is that part of the delay process is a ``cultural 
change'' that is required at the FAA, at a Federal agency. And 
almost every Federal agency I have ever had testify in front of 
Congress, they have said the same thing.
    And so, at some point, you know, my question basically is, 
you know, the leadership at the FAA knows what needs to be 
done, Congress has mandated it, put it into law. And so, what 
are the cultural impediments to change? I mean if you were at a 
private company--and I know I am not naive enough to think that 
it is not a totally fair comparison--and a new CEO came in, and 
there was going to be a cultural shift, it doesn't happen 
overnight, first of all. But people that are working at the 
company that don't feel comfortable with that working 
environment leave or--and, at the end of the day, ones that are 
impediments to that cultural shift are fired.
    So, what is the real--I mean what is the impediment? You 
mentioned, you know, you are in discussions with your unions 
about, you know--discussions with the unions about what? I mean 
there needs to be a cultural change at the FAA. It is mandated 
by Congress. It is put into law. What is the discussion?
    So, yes or no, is that the main impediment to a cultural 
change at the FAA?
    Ms. Gilligan. No, sir. I think that the reality is change 
is always difficult. But I can assure you that the 
Administrator has, as one of his significant initiatives, that 
FAA will move to a risk-based decisionmaking process. The 
leadership at FAA understands that, and the workforce is 
actually coming to understand what that means for them.
    So, we have, I think, taken--we have made good steps in 
bringing this change. And we just need--I think Dr. 
Dillingham's point is we need to manage it actively. We need to 
not assume this will just work its way out. And that is why the 
action plans that we have, for example, with the milestones are 
a way that we can continue to measure that we are making 
progress at bringing about this change.
    Some of the recommendations are that we need to change the 
training we provide to our inspectors, or to our engineers, so 
they can better understand what it means to identify risk, and 
how to mitigate it, and those kinds of things. We agree. That 
training is under development. And that will be provided. That 
will begin--excuse me. That will support this continued move 
forward toward this kind of approach.
    I can tell you, broadly, the workforce wants to make this 
move. They believe that there are risks that they can 
understand and mitigate, and they want to focus on that. They 
are a conservative workforce, in that when you are a safety 
professional, change introduces risk. And you want to make 
sure, before you make the change, that you are doing the right 
thing. So that is what we have to--we have to bring them along 
to be confident that they have the skills to make this--to take 
this kind of an----
    Dr. Bucshon. And I am not criticizing the workforce at all. 
I am just saying that, you know, that--themselves, but maybe 
the leadership of the workforce maybe I am slightly 
criticizing. But, you know, how long is this type of thing--
because we--I do hear almost every Federal agency say the same 
thing. When Congress has put something in the law, set a 
deadline, and the deadline is not met, they say it is because 
there is this big, difficult cultural shift that has to happen, 
and we have to make all these changes.
    And then, frequently, hide behind safety issues. Well, it 
is a safety issue because if we quickly change this process, 
you know, it might impair safety, and there might be 
something--I mean this is a common narrative. And frankly, I 
think, you know, Congress gets frustrated by that, both 
political parties, sometimes, when, you know, when you have an 
issue like this.
    And, clearly, when industry is frustrated--and, honestly, 
when American competitiveness is at risk, not only in aviation, 
but across our manufacturing sector, when--you know, when we 
can't quickly change--I mean just use FDA as an example. I was 
a medical doctor before. Businesses in Indiana, in my district, 
are introducing their new products in foreign markets before 
they are in the United States. Why? Because they can't get 
approval fast enough to introduce them here. It is a travesty 
when you have American manufacturers can't produce their own 
products and release them in their own country because a 
Federal agency, you know, has cultural changes that have to be 
made, and that are--I think somebody mentioned might be 20 
years ago.
    For example, Cessna is building planes in China. You know? 
And so I would just implore the FAA to do everything they can 
to comply with what Congress has asked FAA to do. Let's help 
American manufacturing and continue to make America the best 
place in the world to manufacture. I yield back.
    Mr. LoBiondo. Thank you. Ms. Gilligan, you touched on this 
with, I think, Ms. Titus, but I would like you to try to expand 
a little bit. Given the many different types of small, unmanned 
aircraft, will each need to be certified, each platform need to 
be certified? Or how are you going to--I know you started this 
in Alaska, but this is an area where technology is moving very 
quickly. Can you shed any light on this for us?
    Ms. Gilligan. Yes, sir. I think, as you know in the 
reauthorization bill, you provided us some guidance on how to 
address small UAS, up to 55 pounds. Those will be covered in 
the small UAS rule that we expect to publish by the end of the 
year. And I think you will see there that we have hit a good 
balance in terms of what the safety standards or determinations 
need to be for the operation of those small systems.
    For larger systems--and, as you know, these systems can be 
as large as any of our standard aircraft--we believe that there 
will be safety design requirements and manufacturing 
requirements that will be appropriate. The two certifications 
that we issued for the aircraft systems up in Alaska gave us an 
opportunity to look at our standards and to identify those that 
would seem appropriate to apply to this kind of system.
    So, for example, we have a number of design standards that 
apply to making the aircraft safe for people or crew who are in 
the aircraft. Obviously, those standards don't need to apply in 
this setting. So that is what we are really working on.
    We have three other applicants for certification right now 
in our L.A. office. We believe that there may be another one or 
two that will come along. And we will work through that process 
to identify what are the applicable standards, and what are 
standards that they don't need to meet in order to demonstrate 
that the system is safe, both in design and for manufacture.
    Mr. LoBiondo. OK. I would like to thank you, Ms. Gilligan, 
Dr. Dillingham. We will recess briefly while the first panel 
moves out, and welcome the second panel.
    [Recess.]
    Mr. LoBiondo. I would like to welcome our second panel 
today. And our second panel includes Ms. Marion Blakey, 
president and CEO of Aerospace Industries Association of 
America; Mr. Pete Bunce, president and CEO of General Aviation 
Manufacturers Association; Mr. Joe Brown, president of Hartzell 
Propellers; and Mr. Dave Cox, lead administrator of Air 
Washington project.
    Ms. Blakey, you are now recognized.

 TESTIMONY OF MARION C. BLAKEY, PRESIDENT AND CHIEF EXECUTIVE 
OFFICER, AEROSPACE INDUSTRIES ASSOCIATION OF AMERICA; PETER J. 
BUNCE, PRESIDENT AND CHIEF EXECUTIVE OFFICER, GENERAL AVIATION 
MANUFACTURERS ASSOCIATION; JOSEPH W. BROWN, PRESIDENT, HARTZELL 
     PROPELLER INC., AND CHIEF OPERATING OFFICER, TAILWIND 
TECHNOLOGIES; AND DAVE COX, LEAD ADMINISTRATOR, AIR WASHINGTON 
PROJECT, AND DEAN OF INSTRUCTION, TECHNICAL EDUCATION DIVISION, 
                   SPOKANE COMMUNITY COLLEGE

    Ms. Blakey. Thank you, Mr. Chairman. And I do want to thank 
not only our chairman, but Ranking Member Larsen. I am 
delighted to see Congressman Lipinski here, and others that I 
know we have worked very closely with, in terms of aviation 
safety and manufacturing issues.
    I am also very pleased to be able to discuss our views, 
from the standpoint of the Aerospace Industries Association on 
the state of domestic aircraft manufacturing and, frankly, the 
challenges that we face in an increasingly competitive global 
market.
    We are proud that commercial aviation manufacturing remains 
the leading contributing sector to U.S. net exports, and that 
domestic aircraft sales continue to climb. Last year, we had a 
positive trade balance of $72 billion, our best in history. 
This healthy export record underscores our industry's deserved 
reputation for both safety and quality.
    But it is also a testament to an industry that invests 
billions of dollars in R&D in order to keep our competitive 
edge. The use of higher strength, lighter weight materials, 
nano technologies, 3D printing, and cleaner biofuels all help 
to make our aircraft more durable and efficient, and illustrate 
our commitment to being second to none.
    But as much as the United States leads the pack, we face 
stiff competition in a global market, often by foreign firms 
that are highly subsidized by their governments. However, if we 
have the support of strong U.S. Government policies to 
streamline the regulatory environment, provide equitable 
financing terms, and invest in the modernization of our air 
transportation infrastructure, our industry can then continue 
to do what it does best: innovate, compete, and create jobs for 
literally hundreds of thousands of high-skilled workers.
    Let me discuss some of the challenges our industry faces. 
First, we appreciate this committee's strong support for 
streamlining FAA's aircraft certification processes. Now it is 
imperative that the FAA follow through and ensure, at the 
working level, that their organization designation 
authorization, ODA, is used as intended. This will allow the 
FAA to take advantage of industry expertise, and increase the 
collaboration and partnership that leads to improved aviation 
safety.
    Secondly, we are concerned by the millions of dollars it 
costs our manufacturers to get other nations to certify 
equipment that the FAA has already certified. We are eager to 
work with the FAA to improve the acceptance of FAA-approved 
beyond our own borders.
    Let's turn to the big issue before Congress right now, and 
that is the reauthorization of the Export-Import Bank of the 
United States. I can't stress enough that our industry counts 
on Ex-Im guarantees and credit assistance to compete with 
international sales on a level playing field. Thousands of U.S. 
workers who build our wide-body and general aviation aircraft 
and helicopters at companies up and down the supply chain owe 
their very jobs to that support. If Congress fails to 
reauthorize Ex-Im by September 30th, there will be fewer 
workers at plants across our country, and more at the plants of 
foreign countries. It is just that simple.
    The future of our aviation infrastructure is another major 
concern. As this committee well knows, because you all have 
worked on this a great deal, our Nation's air transportation 
system is experiencing serious capacity challenges. Ongoing 
NextGen modernization efforts are making a huge difference in 
helping to reduce congestion, delays, and improve safety. But 
to be fully effective, NextGen must be fully funded.
    Unfortunately, FAA's NextGen budget request for the coming 
year is $200 million below the administration's request of only 
2 years ago. If sequestration returns in fiscal year 2016, we 
urge the Congress to take a hard look at needed investments for 
the future, and ensure that NextGen doesn't fall behind.
    We also hope to see additional progress toward the 
integration of the beneficial use of unmanned aircraft systems 
in the domestic airspace. The FAA has taken initial steps on 
UAS integration, but more needs to be done. For example, the 
agency needs to ensure that the proposed rule for the 
development of equipment and operating standards for small UAS 
remains on track for later this year, and isn't further 
delayed.
    Finally, for our industry to meet future market demand, we 
need to address an aging workforce with a major commitment to 
STEM education and customized workforce training.
    In conclusion, we believe that U.S. aviation manufacturers 
are in a strong competitive position today. With appropriate 
policies to spur innovation, improve air transportation 
infrastructure, and replenish the workforce, our industry can 
continue to lead the world in aviation progress. Thank you.
    Mr. LoBiondo. Thank you.
    Mr. Bunce, you are recognized.
    Mr. Bunce. Thank you, Chairman LoBiondo, Mr. Lipinski. I 
just want to again commend this committee for the deep dive 
that you continue to do into certification, and our ability to 
be able to get product to market. It is vitally important to 
us, as manufacturers, and for the jobs that we provide in the 
Nation.
    It is a lot of jobs, 1.2 million jobs. And the world has 
really changed since the economic downturn. We now export 50 
percent in virtually every segment of general aviation. So even 
piston aircraft, 50 percent of those aircraft are going 
overseas, because it is an expanding market. It is a growing 
pie. The rest of the world is waking up to general aviation, as 
well as commercial aviation. And that is why I would like to 
start with just voicing my extreme frustration in what we heard 
in the first panel today.
    The United States Congress unanimously last year passed the 
Small Airplane Revitalization Act. Both chambers, unanimously. 
The President signed into law the Small Airplane Revitalization 
Act Thanksgiving last year. It requires that the FAA have this 
rule done by December of next year, 2015. And yet, we have the 
Associate Administrator come up here this morning and say, 
``No, we are going to be 2 years late.''
    Now, we have worked on this whole initiative since back in 
2007. So it is nothing new. And the FAA coined the term, 
``Twice the safety at half the cost.'' So think about that. We 
are talking about doubling the amount of safety in the light 
end of general aviation and reducing the cost by half to both 
the Government and industry, and yet the bureaucracy is saying, 
``We don't care what you, Congress, say. We don't care what the 
President says. We are going to get it done when we want to get 
it done, and it is going to be 2 years late.'' And that is 
exactly what we have to put up with with industry.
    One of the questions earlier today was predictability. We 
have no predictability. And when you are in a development 
program that you are trying to certify aircraft, and your burn 
rate in a large aircraft program is $10 million a month, and 
yet you don't have any predictability of when it is going to 
get done, how are you going to be profitable in this industry? 
How are you going to continue to employ folks in this industry? 
We have got to make this change.
    And to Chairman Shuster's comment about 20 years for 
cultural change, we don't have that amount of time. And we 
heard about this continually in the last panel, cultural 
change. We have got to be able to give tools to managers to 
drive this change. This is the new world. We are not going to 
get more resources for the FAA. We have got to let managers 
manage.
    We have got to measure the workforce. There is resistance 
within the workforce to be individually measured. We have got 
to incentivize these different offices, so that those that 
underperform and are not allowing industry to use their 
delegation authorities don't get the same bonuses that those 
that are at the other end of the scale, that are allowing us to 
use those.
    And we have to be able to force the FAA to do things that 
they tell industry that they are going to do, such as 
sequencing, as you heard this morning. Again, they are well 
behind, after talking about it for 2 years.
    Now, on the consistency of regulatory interpretation, the 
313 portion that you all wrote into the law in the last 
reauthorization. Our frustration is very high there, too. A 
thousand authorizations and certifications are awaiting through 
the flight standards portion of the FAA right now. Think about 
that. A thousand road blocks are in place. Now, this is for new 
charter operators, it is for new flight schools to be able to 
go and train more pilots. And it is for repair stations. Each 
one of those is directly translatable to jobs.
    And now you put that in the context of the fact that you 
have an FAA that duplicates expertise in many offices around 
the country. And if you have one inspector that says, ``OK, it 
is all right to do it,'' another inspector in another office 
can say, ``No, I don't accept what that FAA inspector said, 
that is not good enough for me, this is the way I look at it,'' 
how are we in industry supposed to do business in an 
environment like that?
    So it is vitally important to us of the work that this 
committee is doing, the great questions that you all ask in the 
previous panel, and we ask you to continue the pressure, 
because it is only through pressure from the United States 
Congress that is going to drive the change that we need for 
industry to be able to keep moving in aviation. Thank you, Mr. 
Chairman.
    Mr. LoBiondo. Thanks. I wish next time you could be a 
little more clear about how you feel on this whole thing.
    [Laughter.]
    Mr. LoBiondo. Very well done, sharing a lot of our 
frustrations, capsulizing it. That is part of what we are 
continuing to attempt to do here.
    Mr. Brown, you are recognized.
    Mr. Brown. Thank you, Mr. Chairman. Thank you, Mr. 
Lipinski. I am delighted to be here today. It is an honor. 
Frankly, let me start----
    Mr. LoBiondo. Could you pull your mic just a little closer, 
please?
    Mr. Brown. I will.
    Mr. LoBiondo. Thank you.
    Mr. Brown. So I said some thank-yous, and that it was an 
honor. And I would like to start by saying I really think we 
are talking about the right things. I am a small manufacturer 
in Ohio, and this subject matter resonates with me perfectly, 
and I find that very encouraging.
    So, the company that I am representing here primarily today 
is called Hartzell Propeller. It has a storied history. It was 
founded to furnish propellers to the Wright Brothers. Our first 
recorded sale is 1917. We are approaching 100 years of 
manufacturing in Piqua, Ohio. We have high-tech jobs, engineers 
and machinists, machinists who bring home $75,000 a year in 
income, own Harleys, have fishing camps, live pretty well.
    We are a global leader, and our business in the last 5 
years has really, really had to reposition, as a global 
exporter. Sales retracted tremendously during the recession, 
North American sales. And we have filled that in with sales to 
foreign countries. We have about the same revenues today that 
we had at the peak, but our export sales have gone from 30 
percent to 50 percent of total revenue. And that means that we 
are competing in a much more complex environment than what we 
have been accustomed to over almost a century of business.
    Why is it complex? Because we have to go make markets for 
ourselves in over 30 different countries. We have to engage 
with customers there. We have to engage with civil authorities 
there. We have to develop product support, systems, and 
propeller shops there. Much more complicated. In a little 
company in Ohio with 300 people, we have two native Chinese 
speakers on our payroll to help us make a market, and to help 
us engage with the civil aviation authorities.
    We travel to about 30 countries a year, and export to all 
of them. And significantly, in order to make those exports, we 
need foreign validations. Since 2007, we have gotten 
approximately 300 foreign validations, 150 in the last 2 years. 
So we are fully invested and growing our sales internationally. 
We are all in.
    I would like to just say I am a big proponent of Ex-Im 
financing for our customers. We don't engage it directly, but I 
have these validations because I am following my customers to 
market, and my customers appreciate Ex-Im. It levels the 
playing field, and it creates great jobs in the States.
    I would like to turn quickly to the fact that, in order to 
get to market, whether it be in the United States or in a 
foreign country, we must get some form of certification. In the 
United States we get a type certificate, just like an air frame 
or an engine manufacturer. And then, to sell internationally, 
that type certificate needs to be validated. So we are engaged 
regularly with the FAA and civil authorities across the world, 
and we have an ODA to do that.
    I think the ODA subject was very interesting today, 
particularly from the first panel. I think ours is about 7 
years old. We were asked to adopt the ODA system, and we traded 
one delegation system for another. And after 7 years, I think 
the main point for me is that we have about the same level of 
service, which was good to begin with, but it costs us more to 
get the job done. ODAs are more expensive. So, if you don't get 
better efficiency, it is a net loss to the business. And I 
think that we can make ODAs more efficient. And in Q&A I hope I 
will have a chance to opine on that some more.
    Let me talk also about foreign validations. It takes an 
enormous amount of time to have a foreign country tell us that 
the FAA did a good job. We have put 300 validation requests in, 
we have gotten 300 affirmatives. FAA's bat 1,000 with their 
type certificates. But it takes us, on average, 21 weeks to 
receive that validation letter. Now, our design cycles are 
often 8 to 9 months. So think about a 5-month additional delay 
to follow a customer into a foreign market. It is very, very 
significant. And some of the longest validation processes come 
from bilateral countries. So I think this is a wonderful 
opportunity; I would appreciate your help.
    Let me just finish with the AVGAS initiative. I make 
propellers. We put a lot of them on piston aircraft. This 
Congress, this committee, and the FAA have been super in 
driving a transition process for a fuel that does not use lead. 
We have lots to do, but we are making great progress. And in 
Q&A it is my hope that I could encourage us to stay on point. 
It is critical to the light end of general aviation. Thank you.
    Mr. LoBiondo. Thank you, Mr. Brown.
    Mr. Dave Cox, you are on.
    Mr. Cox. Thank you, Mr. Chairman. Thank you, Congressman 
Larsen, for inviting me here today. Very anxious to talk to----
    Mr. LoBiondo. Could you pull the microphone up a little 
bit, please? Thanks.
    Mr. Cox. Very anxious to talk to the committee today about 
a very exciting project that we have been a part of for the 
last 3 years, going on our fourth year now, the Air Washington 
project. And if you look at the screen, I will use three short 
slides--will not create death by PowerPoint here today--to 
illustrate what the project is, and hopefully answer some 
interesting questions that the committee might have for me.
    [Slide]
    First of all, in--next slide--in early 2011, the college 
system in the State of Washington recognized a need to look for 
a method to train our workforce, specifically in aerospace. The 
slide on the screen right now illustrates the scope of the Air 
Washington project. It is a project awarded through the U.S. 
Department of Labor. For us it is a $20 million, 3-year initial 
project, focused on the aerospace industry and aerospace 
workforce in the State of Washington. What is not on this 
slide--and I won't read it to the committee, but what is not on 
this slide is Washington State actually produces 25 percent of 
all aerospace exports for this country. So it is a pretty big 
deal for us in the State of Washington. Next slide, please.
    [Slide]
    In preparation for my testimony, I understood that--and I 
am happy to talk about why we have had such a successful 
project with this grant. And I am going to zero in on five 
different points that myself and my staff and managers have 
identified universally as the reasons why this project has been 
so well received by both business industry and our workforce.
    First of all, the fingerprint business. We matched, in this 
case, a significant grant opportunity to the fingerprint of the 
State of Washington. Again, I mentioned that 25 percent of all 
U.S. exports come from--in aerospace--come from the State of 
Washington. This was a form-fit, square peg-square hole of a 
project to a need.
    Second was industry connection. We did not move forward 
with this project, we didn't even start thinking about this 
project, without being closely connected with all of our 
industries in our area, in our State. And that is from large, 
from the Boeings, all the way down to the small Unitechs, even 
stretching over the border to Idaho.
    Number three, State government connection. This is one of 
the--what I will claim is one of the advantages of working in 
the State of Washington. In the community college system we 
have an organized community college system for the State. It 
was a relatively easy process for us to get a consensus of the 
colleges that needed to--wanted to and needed to be a part of 
the consortium for this project, and work within that 
construct. So State government and the organization of the 
State community college system really facilitated us getting 
off to a good start.
    Fourth, project management. This is something we have 
learned over time, how to manage a project of this size and 
this scope. A consortia of colleges is somewhat like cat 
herding, depends on the day, sometimes there is more cats, 
sometimes there is fewer. But we learned how to do this pretty 
effectively, and we are pretty happy to share those lessons 
learned and best practices with anybody who is willing to 
listen to us.
    And finally, navigation services. This is really a 
connection with the WIBs, our workforce development centers in 
the State. They are critical functions for the project that 
have, quite frankly, validated to business and industry what we 
are doing, how we are doing it, and the successes we are 
having, so that the buy-in, if you will, or the trust level of 
business and industry is extremely high with this project and 
what we are doing.
    So, those are the five points that I would be happy to 
expand on in Q&A, when we get a chance. And at this point I 
would like to finish my spoken testimony.
    Mr. Davis [presiding]. Thank you to each of you for your 
testimony. I will start with my questions.
    And I enjoyed your lively testimony, Mr. Bunce. I do share 
some concern, as you saw with the last panel, with Chairman 
LoBiondo, and I think the rest of my colleagues here, on what 
you have to go through as an industry.
    Ms. Blakey, I enjoyed reading in your testimony about an 
example of a 50-year-old regulation that your folks have to 
make changes to a configuration, just to pass the test, and 
then have the configuration put back in its normal state. I am 
interested, Ms. Blakey. What recommendation do you have, 
besides the fact that we have--I have cosponsored legislation 
to--called the Bipartisan Regulatory Improvement Act. Is 
anything short of a new law to go through these outdated 
regulations--can you give us a recommendation that can fix this 
now?
    Ms. Blakey. Well, certainly, the work that is being done on 
the small aircraft regulations is something that we all have 
great energy behind, and we think this kind of comprehensive 
overhaul is a great thing.
    You also heard how much time it is taking, and how 
complicated it is.
    Mr. Davis. Yes.
    Ms. Blakey. So I think we, as industry, need to also call 
to your attention specific areas, specific regulations and 
problems that we think need to be addressed, where FAA does not 
seem to be able to do this on their own.
    I will say, though, that the FAA, through the CAST program 
and others, does collaborate. And the ARCs that they set up 
with industry can be highly effective. So I would call 
attention to that, because I think there is a great deal of 
incentive on both sides to try to set aside regulations that 
are simply no longer valid in this day and age.
    Mr. Davis. So quicker implementation of 313 is obvious.
    Ms. Blakey. Absolutely.
    Mr. Davis. All right. Mr. Bunce?
    Mr. Bunce. Mr. Davis, just to reiterate Ms. Blakey's point, 
so what the Small Airplane Revitalization Act did was, in this 
instance that you spoke of, where we had to modify an engine 
and make it do something it physically is not able to do, to be 
able to meet a test point that is for engines that were built 
20 years ago that don't have sophisticated electronic controls 
and software, it is just crazy.
    So what this new method of doing business allows for is it 
lets international regulators sit down with industry and keep 
regulations fresh. So if there is new technology, or new 
engines, or new composites that come online, all the regulators 
get together with industry and say, ``This is the method of 
compliance that you can use here.''
    So that is why this is so important to get it right and get 
it out on the small airplane side, because the next step is to 
expand it to rotorcraft. And, as Ms. Blakey just said, we want 
to extend it to the commercial side, because it is the right 
way to do it, and we can keep regulations fresh, and we don't 
have to rule-make continually, which we all know takes way too 
long. We can keep them fresh this way, and it will be 
tremendously helpful for regulator and for the industry.
    Mr. Davis. Thank you. And, Mr. Brown, you said in your 
testimony you would like to expand on your frustrations with 
the ODA process. Feel free to do so.
    Mr. Brown. Well, I would say that our relationship with the 
FAA is pretty healthy. We have a great relationship with the 
folks in our ACO. They understand what we are trying to do.
    But we put in an ODA because we were asked to. And I think 
my issue is that approximately 7 years later we should not be 
talking about the hard-to-gain efficiencies because of culture 
change. Had somebody said to me, ``If you put this system in 
and spend more annually to manage it, but 7 years from now we 
will be talking about whether we can make an efficiency 3 years 
forward,'' I would have said, ``No, thanks. I will stick with 
my current program.''
    So, you know, I consider them allies, but I also consider 
them with a narrative that doesn't quite work, and that is that 
there is no culture change problem. It is a will to apply the 
delegation authorization, as written. And I will just give you 
some quick examples.
    I think Ms. Gilligan hit it on the head when she said the 
assumption is a project is delegated. That should be the 
governing theme.
    I would also suggest that if a company has an ODA project 
whose testing qualification methods are the typical way to take 
a product to market for that company, then by nature the 
project cannot be new and novel. We have had occasions where we 
are going to use exactly the same test and qual methods that we 
normally use to get a product to market, but we have been told 
that our product is new and novel. And that makes no sense to 
me. And we could be very specific in that regard.
    And then, last and finally, I guess I would say that there 
has to be a passionate advocate, or more than one, in the FAA 
who is likely to say something like, ``ODAs are a competitive 
advantage for our leading manufacturers. They are winning in 
the world, and ODAs are part of that strategy. They will be 
efficient, offices will deploy them effectively, and the 
measurements will say so.'' But I don't hear that language. The 
language I hear is, ``We are working on culture change.'' And 
that leaves me feeling uncertain whether or not the payoff is 
to be found.
    Mr. Davis. The gentleman from Illinois is recognized for 5 
minutes.
    Mr. Lipinski. Thank you, Mr. Chairman. Since everyone 
enjoyed Mr. Bunce's comments earlier, I think I will give you 
an opportunity to expand on that, and see if anyone, any of the 
other witnesses want to speak to this. The frustration is 
obvious amongst all of you and all of us here, up on the dais, 
with some of the issues with the FAA.
    So I want to just ask, as I said, Mr. Bunce first, and see 
if anyone else has a comment. What is the issue that--what is 
going on at the FAA, from your perspective? What can we do as a 
legislative body here, besides, you know, maintaining our 
oversight? Is there anything else that can be done? We have the 
FAA reauthorization coming up, as I mentioned. You see anything 
else that we can do to help the FAA--I will put it nicely--help 
the FAA work better on some of these issues? And certainly the 
2-year delay is really unacceptable. But what do you think can 
be done? What do you recommend?
    Mr. Bunce. Thank you, Mr. Lipinski. Industry has delivered 
everything that is required for the FAA to issue a notice of 
proposed rulemaking by the end of this year, beginning of next 
year, for part 23. This would mean that the rule actually could 
be out by December of next year.
    What we are hearing is delaying this process are the 
lawyers with--inside the FAA. It is not--this has nothing to do 
with the other issue, the cultural change and the 
certification. This has to do with the legal entities within 
the FAA that think this is major sweeping change.
    And, in fact, because the process had stalled so much was 
one of the reasons why we were so encouraged that Congress took 
up the issue of passing the law, versus allowing just the 
rulemaking process to trudge along, or go through this long 
slog.
    So, I think it would be particularly helpful for us to--in 
response back to the answers that the Associate Administrator 
gave in the first panel, was to ask the questions why. What is 
the delay? Because industry has delivered our first portion 
enough to be able to give the notice of proposed rulemaking. 
And I actually think that we, industry, will be able to provide 
very valuable feedback if they got the NPRM out, to be able to 
meet the intent of the law and get it out by the end of next 
year.
    As far as the larger cultural change issue with 
certification is concerned, again, trying to drive the 
workforce and the managers to be managers. We had--one of our 
aircraft manufacturers from Olney, Texas, that builds crop 
dusters was in here yesterday. And it was great to see. We had 
over 100 staffers show up for a briefing on Ex-Im Bank, and how 
important--6 of the 7 aircraft on his line are all Ex-Im-
financed. So, right now, with seven airplanes being built, six 
of them are Ex-Im-financed. And the point he was making is he 
will go and submit a program to his aircraft certification 
office, and the manager, instead of managing it and saying, 
``This is the risk-based approach we want to take,'' just 
throws it over to the engineers and says, ``What do you 
think?''
    So, basically, there isn't this process of trying to drive 
change, and trying to give them an overall direction and goal 
of how can we get this program through quickly, and how can we 
improve safety as we go through it. It is just, OK, what do you 
guys think?
    And then, what that encourages is it encourages the 
engineers to go down with the sharp pencil and do what they 
have always done, which is be down there in every little minute 
detail, instead of using resources productively and saying, ``I 
am going to be a safety manager of systems,'' and when a 
company has demonstrated its capability, as Mr. Brown's company 
has, with their ODA, to say they know how to do it, let's 
overall manage their safety processes to make sure that they 
can consistently do that, but not be down in that level of 
detail. And I think that will really help us.
    Mr. Lipinski. Ms. Blakey?
    Ms. Blakey. May I add to this just a moment? Because the 
ODA was put in place in 2005 on my watch, when I was FAA 
Administrator. I believe in it tremendously, and our 
manufacturers believe it can be highly effective, if fully 
implemented. So please understand that. We also experience a 
tremendous amount of frustration at the fact that it is not 
being fully implemented.
    I give as an example we met just the other day with the 
Secretary of Transportation, with several of our manufacturers. 
One of them has experienced 200 days of delay on a rotorcraft 
project, and said that if the decision were before him again, 
he would have contacted the manufacturer, taking the jobs and 
the certification outside the country, because this is the 
failure of ODA in actual fact. So this is real.
    I do want, though, to point out, having been in that 
position, and understanding some of the dynamics, that when we 
talk about culture change we have to remember that the FAA is a 
highly unionized workforce, with highly effective unions. And 
leadership there matters, as well as leadership within the 
FAA's own management team. Trying to put in place incentives 
and accountability is something that has to be worked on both 
sides. And at this point I do think that we, as an industry, 
are advocating metrics, we are advocating specific measurements 
as to whether things are moving forward, and we are also 
advocating a gated approach so that everyone says that there 
are gates to be passed through, and both management and the 
team that is working on it recognizes that those are 
incentives, to hit those gates.
    So, there are mechanisms, and I do think there are things 
that you all can do in the reauthorization to help address 
this.
    Mr. Lipinski. Thank you. I will yield back.
    Mr. Ribble. Thank you, Mr. Chairman. Thanks for being here.
    Mr. Brown, I am going to go ahead and start with you. Give 
you a word of caution. Ten years ago I owned a commercial 
roofing company just outside of Appleton, Wisconsin, and I was 
invited to come and testify before a House subcommittee, and 
now here I am.
    [Laughter.]
    Mr. Ribble. Just a word to the wise here. You never know 
where frustration can lead you.
    I want to read something out of your testimony, because you 
didn't do it, and I appreciate that, but I think it deserves to 
be heard. On page 1, ``In addition to Hartzell Propeller, we 
own three other aviation manufacturing businesses and employ 
about 1,000 people in total. Joining Hartzell Propeller and our 
family of companies, Hartzell Aerospace is based in Valencia, 
California, and manufactures cabin environmental control 
products and subsystems for business, military and commercial 
aircraft. Mayday Manufacturing is located in Denton, Texas, and 
produces specialty bushings for the entire aviation industry. 
Hartzell Engine Technologies is located in Montgomery, Alabama, 
and manufactures aircraft starters, alternators, turbochargers 
and fuel pumps for general aviation aircraft. In all of our 
companies, we sell globally but manufacture all of our products 
in the U.S. and buy all of our materials from U.S. producers.'' 
Thank you for doing that.
    I don't think--in many cases, I don't think American 
business people hear it often enough from Members of Congress 
and from their Government, the appreciation that they deserve 
for what they do.
    I am concerned when I sense your frustration, Mr. Bunce. 
You and I have spoken a number of times, and your frustration 
was so eloquently presented here this morning, without even 
notes. You came well prepared. We get frustrated because 
Congress meets and laws are passed, and Presidents even sign 
them, and then sometimes they just get ignored.
    But you mentioned something, and Ms. Blakey mentioned 
something regarding the Export-Import Bank. Could you tell me, 
if you know, approximately what percent of your business, your 
customers--what percent of your customers who are purchasing 
from your companies here in the U.S. are using some form of 
Export-Import financing? Is it a large percent? Is it a small 
percent?
    Mr. Brown. The answer is I don't know with the specificity 
that would be helpful to this conversation, in part because, 
until a few months ago, I would have never imagined this would 
have been an issue in my business. Ex-Im is very, very old. It 
is an established way to incent exports. And the idea that it 
may not be reauthorized is new to me.
    What I can tell you is that when the reauthorization came 
under question, 3 or 4 of my top 10 customers told me that this 
was a big deal, and that a lot of my sales in my export growth 
was, in fact, flowing through their products, which were 
getting Ex-Im financing, particularly in the agricultural 
aircraft market, where two of my customers are the leaders.
    And they called to tell me that, in part, so I was aware, 
but in part to tell me that the forecast after 2013, the month-
by-month unit forecast for their build rate is in question. And 
they wanted me to understand that my assumptions for 2014--I am 
sorry, for 2015--may not be founded. We heard from Air Tractor 
that six of their seven aircraft on the line right now are 
bound for foreign market with Ex-Im financing attached.
    So, going into 2015 we have taken a totally defensive 
position on hiring, and we have cut our capital budget plan in 
half, project by project. And not to be alarmist, but to be 
prudent. And so, I guess my best answer for you is it is 
significant enough that my customers called me and said, 
``Watch your forecast. Let's be a little bit more cautious 
here, because I don't want you investing in things I can't 
deliver on as your aircraft manufacturing partner.''
    Mr. Ribble. Thank you. Ms. Blakey, do you have any idea, 
industrywide, what role the Export-Import Bank plays?
    Ms. Blakey. It has an enormous role to play, because 
essentially it is what fills the gap, if you will, between what 
the commercial banks are able to do and what, in fact, is 
needed. When you are exporting, as we all are, more and more, 
to a wide variety of countries, some of which there simply is 
not available good commercial financing--in the developing 
world sometime the risk factors are considered to be too high. 
In some cases, those customers need to diversify their 
financing. And so, across the board, we find, whether it is 
parts manufacturers or it is full aircraft, rotorcraft, et 
cetera, that it is very critical.
    And remember that also, when Export-Import Bank financing 
helps make a sale possible, there is the whole aftermarket, 
which really isn't even calculated into the figures that are 
now being used. But that keeps us selling U.S. products out 
there.
    So, it is enormously important, and something that I could 
not agree with Mr. Brown more. None of us imagined that we 
would find ideological rhetoric somehow coloring what should be 
a very straightforward support for America's competitiveness 
and our business community. And it is taking a while, frankly, 
for the business community to even realize that this is in 
jeopardy.
    So, we are very worried about this, because September 30th 
is coming very quickly.
    Mr. Ribble. Thank you for your testimony, thank you for 
being here. I yield back.
    Mr. Hanna [presiding]. Ms. Blakey, we have--referring to 
the Export-Import Bank for a moment longer, it has been 
referred to here widely as somehow corporate cronyism. I would 
like you and Mr. Brown and Mr. Bunce to--if you quickly could--
respond to that. It is not something I necessarily agree with, 
and even understand, frankly. The phrase doesn't exactly strike 
me as meaningful.
    But the idea, I guess, behind it is that it helps larger 
companies more than smaller companies, and that--maybe you 
would like to talk about that. Because my personal opinion is--
and I am a pilot, owned a small airport, I have waited years 
for certifications on planes that I have ordered. So--and I am 
watching the industry that I care about die on the vine in this 
country, but yet we know that it is growing in other countries. 
And we have the most open airspace in the world. We are lucky 
for that.
    But maybe you would like to speak to any part of that.
    Ms. Blakey. It is a phrase that isn't at all apropos or 
relevant, and obviously works on talk radio. It seems to pick 
up a little popularity here and there. But when you think about 
the fact that Ex-Im's support is going 90 percent to small 
businesses--70 percent of Boeing aircraft, to use our largest 
manufacturer, in fact, comes from suppliers. It is not as 
though there is some giant entity out there that doesn't have 
enormous dependence upon a lot of small companies all over this 
country.
    And when you look at the fact that they are trying to sell 
abroad to other countries who are providing massive amounts of 
not just loans, but real subsidy out there, the amount of money 
that Ex-Im is providing is very meager, relative to the 
competitive landscape that we face worldwide.
    And it is about small businesses. The idea that we are 
talking about some sort of cronyism of enormous corporations--
--
    Mr. Hanna. What you are really saying is there are 
thousands of people like Mr. Brown's company, Hartzell, who 
contribute to these massive and hundreds of millions of dollars 
airplanes that trickle all the way down the food chain, so that 
the basic notion is wrongheaded. Is that fair?
    Ms. Blakey. That is fair. The 787 stands on the shoulders 
of thousands of small businesses.
    Mr. Hanna. Mr. Brown?
    Mr. Brown. I wear the hat of Hartzell Propeller in one 
respect, and there is no question in my mind Ex-Im generates 
pull-through sales for my company.
    But I also serve as COO of Tailwind Technologies, which has 
these other aviation concerns, and we are deep in the supply 
chain for companies like Bell Helicopter and Boeing. And when 
they win, we win, period. And that is about 700 employees who 
did not understand how much the Ex-Im Bank was facilitating our 
local jobs until it came into question. And those companies are 
not walking around with their hand out.
    For example, to be ready to sell to the 787 in our small 
businesses, we had about a million-and-a-half dollars' worth of 
nonrecurring R&D. We paid for it. We grew our workforce and our 
capacity and our machining business ahead of the curve, so we 
were in for about 7 multihundred-thousand-dollar machine tools, 
and we hired about 15 people. We did that so that when the 787 
went to market, we could meet their schedule. That is 
investment. That is market risk. That is not walking around 
with your hand out.
    Mr. Hanna. Can I ask you, Mr. Bunce, and Mr. Cox, too? It 
is implicit that the extra cost associated with this approval 
process, which you have indicated is--the cost has grown, even 
though the process is somewhat satisfactory--how does that--
kind of self-answered a question here--but how does--how do you 
see that impacting our ability to grow our aviation industry 
abroad?
    And, Mr. Cox, in Washington State how many of the people 
that you are training are working for companies--not Boeing, 
but all other smaller companies?
    Go ahead, Mr. Bunce.
    Mr. Bunce. Well, Mr. Hanna, when we go and invest in the 
ODA, and get it stood up, as Mr. Brown mentioned, it cost the 
companies money. But the reason they did it was on the promise 
that they would be able to be more efficient to get product to 
market, to have that predictability that they could control 
their destiny, but when they have new and novel technology that 
they bring on board, they can still go in to the FAA, have the 
expertise come over, in some cases train that expertise on the 
project that they are working on, and then collectively the FAA 
and industry go and work this together.
    And it is absolutely essential for us to be able to meet 
the demands of time in the market to be able to make the ODA 
work, because there are no more resources available to add 
engineers, like we had----
    Mr. Hanna. So you are paying more and getting nothing more.
    Mr. Bunce. We are paying more and, as Mr. Brown said, it is 
static, at best. But in some cases, actually less.
    And then, imperative in that calculation is also that 
training for the workforce. The workforce at the FAA, they are 
good people. They want to do the right thing. But, by nature of 
the fact that they are in a bureaucracy, they are risk-averse. 
So they are going to take the path that is the most 
conservative.
    So, if we give them training to be able to say, ``This is 
what it means in a risk-based approach,'' we think they can 
produce for us. But that training is the key, and to let them 
know that they have the backing to make the change, and that 
the risk doesn't fall on each and every one of their careers, 
that they have the backing of FAA management and, of course, 
the Congress.
    Mr. Hanna. Mr. Cox? Thank you.
    Mr. Cox. Thank you. So, as I remember the question, it is 
kind of the ratio of----
    Mr. Hanna. Yes, that is right.
    Mr. Cox [continuing]. Big employer to small employer. We 
have trained through this project a little over 3,500 folks at 
this point in time. At--breaking that down, probably 500 or 
less are employed by the Boeing Company in our service areas. 
And the vast majority are employed by tier 1, tier 2 suppliers 
like Mr. Brown's company, the vast majority. That is where we 
find our real traction in our State. It is not to minimize the 
impact of the big manufacturer, of Boeing----
    Mr. Hanna. I understand.
    Mr. Cox. But it is--really is a driven-by-the-small-company 
kind of an industry.
    Mr. Hanna. OK, good. Thank you. Thank you. Thank you for 
your indulgence, Ranking Member Larsen. I think that might have 
even been one of your questions.
    Mr. Larsen. But I have a few more. First off, I want to 
commend the panel for its--their comments on the Export-Import 
Bank. Obviously, it is important in Washington State, but--and 
it is very important beyond aviation manufacturing, as well. 
And I can go through a myriad of examples in Washington State 
with companies with no relation to aviation that need Export-
Import Bank because their local bank that, you know, lives on 
deposits, has no idea how to do export financing. But they have 
these small businesses who increasingly have their--a lot of 
their business model dependent upon export.
    Mr. Cox, I have a few questions for you. So, you know, we 
have talked Export-Import, and we have talked certification, 
all these very important roles that they play in supporting 
domestic aviation. But the workforce and workforce training is 
important, which is why we have asked you here. And I wanted to 
ask you kind of specifically over these last 3 years, how has 
the demand signal for specific kinds of aviation work changed? 
Or are you still doing mainly maintenance, or mainly assembly, 
or mainly this, or mainly that over the last 3 years?
    Mr. Cox. Probably the most significant change that I think 
I have observed is in the area of composites technology. We 
have seen that, we started out knowing that it was going to be 
important, and it has kind of proven itself--that is, 
increasing in importance for what we train inside the project, 
and for our workforce. So, that would be the big change.
    We are probably seeing pretty stable, as compared to before 
need for our aircraft, air frame, and power plant mechanic side 
of things--general aviation, specifically. however, there has 
been an increase in demand for assembly, for instance, with the 
major manufacturer, Boeing as a great example.
    And then, probably a smaller but growing piece that we 
identified early in the development process of our proposal to 
the DOL that has been a little bit surprising to me is the 
avionics and fiber optics piece. Now, we kind of--back in the 
day, when myself and my three colleagues put this proposal 
together, we kind of looked at that and said, ``Yes, I think we 
can see something, a glimmer of something coming on the 
future,'' or on the horizon. It turns out that there is a 
pretty significant demand for those two pieces of what we have 
been doing.
    Mr. Larsen. Yes, right. I don't have the exact numbers with 
me, but we have looked at this in Washington State, in terms of 
the supplier network, and the percentage of work they provide 
to the major manufacturers of Boeing, Airbus, Embraer, and 
Bombardier, and when you add up the percentage of work, it adds 
up to over 100 percent. The point being that suppliers are not 
just supplying to one manufacturer in the State. They are 
supplying, many of them, to all four--a few of them to all 
four, certainly many of them to at least two of the major 
manufacturers. So there is a real ecosystem of aviation 
manufacturing in the State.
    Do you run into any issues with training for a--one company 
over the next? Or is it generalized and you let them, the 
employer, do what they need to do with that employee that you 
provide?
    Mr. Cox. Less so one company over another. I mean we get 
fairly specific in assembly, because that really is centric to 
the one company. However, in the other areas that are a focus 
of the project, we really are pretty diverse, I think, in the 
population of businesses that we serve.
    And something that you mentioned, I would also illustrate 
or highlight one of the things we have seen as an indirect 
outcome of this project has been an increase in the number of 
companies in the State of Washington to have AS 9100 
certification, and now can get into the market of being 
suppliers to--you know, tier 1 suppliers, or sub-tier 1 
suppliers.
    All of that kind of gets us more into staying tuned in to 
the general market, and identifying where we might need 
specific or point issues addressed, whether it is a specific 
composites company, or specific avionics company. We can kind 
of dive into that on a local level. But that is the beauty of 
the project, the project is statewide and it gives real 
flexibility to the 11 colleges that do this, to kind of jump in 
and do point issue addressing, rather than a one-size-fits-all 
kind of an approach.
    Mr. Larsen. Yes. I see my time is up. But if you will 
indulge me, Mr. Chair, I have one more question for Mr. Cox.
    The subtitle of the hearing is ``Challenges and 
Opportunities.'' What is your number one challenge, going 
forward, other than the grant runs out at the end of the year 
and you need to re-up it?
    Mr. Cox. And even that is less of a challenge, because, 
again, part of our winning strategy is the fact that the State 
of Washington internal government has picked up the mantle on 
this thing, and is moving it forward with independent State 
funding to keep it going into the future. And that was never a 
requirement of the DOL, as a continuation or sustainment piece.
    Our biggest challenge, I honestly think, is going to be in 
the navigator role. We have found that to be so, so important 
to building trust, building confidence in the businesses and 
industries that are going to work with us as higher education. 
And that is not built in to our sustainability piece that the 
State is looking at. They are looking at sustaining our--
basically, our capacity expansion that we have created.
    So, if I can figure a way out to get my navigators at my 11 
colleges--and actually, quite frankly, it is larger than that 
in our State--I would say that is our biggest challenge.
    Our win, going forward, is we have set a great example. We 
have, I think, in the case of this project, shown not only our 
State, but nationally, how to do one of these projects 
correctly. And I say that pretty humbly, actually. But I think 
it is very true. Our results are proof of that. And I think, if 
anything, it will give confidence to law-makers like yourselves 
to positive consider those types of projects----
    Mr. Larsen. Sure.
    Mr. Cox [continuing]. In the future, and balance that 
against maybe some that aren't working so well.
    Mr. Larsen. All right. Great, good. Thank you. Thank you, 
Mr. Chairman.
    Mr. Hanna. Dr. Bucshon?
    Dr. Bucshon. Thank you. We have talked about the regulatory 
climate, but I want to just take this opportunity for your 
industry to discuss other impediments to American 
competitiveness in manufacturing.
    So, Mr. Bunce, I mean, do you have any comments about maybe 
what your members think in the area of taxation, and how maybe 
that is having some impact on your ability to be competitive? 
Or other issues, you know, other than we have talked--I think 
we have talked about the regulatory impediments, but there are 
other big issues, right, out there that are making American 
manufacturers not as competitive as they could be?
    Mr. Bunce. Absolutely, Mr. Bucshon. Something that we have 
been paying attention very closely is the accelerated 
depreciation, or bonus depreciation issue that Congress just 
dealt with, so we were very gratified to see that. The R&D tax 
credit, huge for us.
    I think when you look at other nations out there, and the 
amount of money that they provide or incentivize their industry 
to do research and development for aviation absolutely is so 
essential to us. And anything that we can do to make that 
permanent, to be able to go and get folks to invest in R&D, 
that directly translates to new technology and new jobs out 
there.
    And then, I think also, from the nontaxation area, just 
also keeping pressure on the FAA to make sure that validation 
programs, as Mr. Brown mentioned, are very important. You know, 
obviously, in Indiana you have got a producer of engines that 
is a global producer. It is very important that nations that we 
have a bilateral relationship with, where we have recognized 
their competencies to be able to regulate, they have recognized 
ours, that that is very efficient across the ocean, so that if 
they have a product coming in, that we don't waste a whole 
bunch of FAA resources looking at it, and vice versa, that if 
Mr. Brown's company were to go over there, that he very quickly 
can get his validation, because that delay in time in the 
market has significant impact.
    Dr. Bucshon. Ms. Blakey, do you have any comments, anything 
to add on other impediments to American manufacturers?
    Ms. Blakey. Well, I would certainly foot-stomp the R&D tax 
credit, which, of course, the House has supported and passed. 
But we desperately need that to be in place. Corporate tax 
reform is certainly a big part of what we would like to see.
    But let me turn also to the need for this body and the 
Congress as a whole to be supportive of areas where America's 
industry really does exceed. And I do have in mind the unmanned 
aircraft systems. You know, we sometime get distracted by 
issues that surround these things when you are introducing new 
and disruptive technology. But this is an area right now where 
this country has an enormous lead. And we should look at it as 
something that is going to bring tremendous public benefit. And 
I am talking about in all sorts of areas that really matter, 
you know, search and rescue, firefighting, public law 
enforcement. There is a lot to this.
    But when we realize that this technology, right now, we 
actually could export as well as--we could see it grow 
dramatically in this country. And we have got some pretty 
artificial clamps on introducing it into the NAS at this point, 
and also in being able to export. And we need your help and 
support. I will be very straight up.
    Dr. Bucshon. Thank you. Mr. Brown, you want to comment? I 
mean you have obviously tried to--you have an export market. 
What do you see as some of the impediments out there? There are 
some obvious ones, too, American manufacturing.
    And I will make these comments before I have you answer, 
because I am very concerned about this. When you have companies 
in Indiana like Cook Medical Group, that need to expand, and 
unfortunately are--have so many impediments that they decide 
not to expand in Indiana or neighboring States, that is a big 
problem. And, you know, we hear this all the time, that 
companies right now, as you know, are buying smaller foreign 
companies and then, you know, the merged company will be based 
not in the United States. This is a growing trend. It is 
accelerating quickly because of our tax code. Your comments?
    Mr. Brown. I think they have largely been made. I like your 
phrase, ``foot-stomp.'' I will foot-stomp the validation issue. 
It is very, very significant to us. And I think putting it on 
the radar today sets the stage for more discussion during 
reauthorization. And I think the FAA would be very inclined to 
focus on the speed with which their TCs are validated. Because, 
eventually, there is a quid pro quo. And so, I think that they 
can be more demanding of foreign partners.
    I am a big fan of the R&D tax credit. I look at my income 
statement, and I make investment decisions in part because I 
know the Government is incenting me to do that. Very important.
    I would add, at a higher level, not just with export sales, 
but with all of my sales, it would help a lot if there was 
greater clarity in Washington rhetoric. In the past couple of 
years there have been a number of times where what is going on 
here ends up in my conference room on Mondays with staff. Are 
we going to have an FAA during the sequester, or are they going 
to be shut down? Can we get type certificates out and 
validation support letters out, or not?
    Can my customers sell those six airplanes out of seven with 
Ex-Im financing or not? Are we going to do accelerated rate of 
depreciation, or are we going to talk about jets as fat cat 
transport equipment? And I guess I would say, somehow or 
another, we have lost sight of the fundamental thing, which is 
that the U.S. aviation industry is winning. We are the world 
leaders. We generate a surplus in trade. We are the good guys.
    Dr. Bucshon. I would agree with that. I just would say I 
personally support Ex-Im, and I realize the importance to jobs 
in Indiana and in our country. And with that I yield back.
    Mr. Hanna. Thank you. So we have a situation where we have 
the largest exporter in our country, the biggest net 
beneficiary to our balance of trade, and we are hamstringing 
it. If there are no further questions, I thank the witnesses 
for being here today, and for your participation. This 
committee stands adjourned.
    [Whereupon, at 12:30 p.m., the subcommittee was adjourned.]
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