The Honorable Robert S. Walker—Commission Chairman

Chairman, Wexler & Walker Public

Public Policy Associates

The Honorable F. Whitten Peters—Commission Vice-Chairman

Partner, Williams & Connolly LLP

Dr. Buzz Aldrin

President

Starcraft Enterprises

Sharespace

Starbooster & Starcycler

Mr. Edward M. Bolen

President & Chief Executive Officer

General Aviation Manufacturers Association

Mr. R. Thomas Buffenbarger

International President

International Association of Machinists & Aerospace Workers

The Honorable John W. Douglass

President, Chief Executive Officer and General Manager

Aerospace Industries Association

The Honorable Tillie K. Fowler

Partner, Holland & Knight LLP

The Honorable John J. Hamre

President & Chief Executive Officer

Center for Strategic & International Studies

The Honorable William Schneider, Jr.

Chairman, Defense Science Board 

President, International Planning Services, Inc.

Mr. Robert J. Stevens

President and Chief Operating Officer

Lockheed Martin Corporation

Dr. Neil deGrasse Tyson

Astrophysicist & Frederick P. Rose Director

American Museum of Natural History

Ms. Heidi R. Wood

Executive Director, Senior Aerospace/Defense Analyst

Morgan Stanley

Commission on the Future

of the United States

Aerospace Industry

Commissioners
FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
i i

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Table of Contents

Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxi

The Future

Chapter 1 Vision: 

Anyone, Anything, Anywhere, Anytime . . . . . . . . . . . . . . . . . . 1-1

Limitless Opportunities

Chapter 2 Air Transportation: 

Exploit Aviation’s Mobility Advantage . . . . . . . . . . . . . . . . . . . 2-1

Chapter 3 Space: 

Its Special Significance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1

Chapter 4 National Security: 

Defend America and Project Power . . . . . . . . . . . . . . . . . . . . . 4-1

Pillars for Achieving the Vision

Chapter 5 Government:

Prioritize and Promote Aerospace.. . . . . . . . . . . . . . . . . . . . . . 5-1

Chapter 6 Global Markets: 

Open and Fair. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1

Chapter 7 Business: 

A New Model for the Aerospace Sector . . . . . . . . . . . . . . . . . . 7-1

Chapter 8 Workforce: 

Launch the Future. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1

Chapter 9 Research: 

Enable Breakthrough Aerospace Capabilities . . . . . . . . . . . . . . 9-1

Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N-1

Additional Commissioner Views . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
iii

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Table of Contents

Appendices

Appendix A Commission Charter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

Appendix B Commission Interim Reports . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

Appendix C Aerospace Sector Budget Breakout (Office of Management 

and Budget) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1

Appendix D Scoping Aerospace (RAND) . . . . . . . . . . . . . . . . . . . . . . . . . . D-1

Appendix E U.S. Aerospace and Aviation Industry: A State-by-State Analysis

(Content First) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1

Appendix F Federal Departments and Agencies with Aerospace 

Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

Appendix G Congressional Committees with Aerospace Responsibilities . . . . . G-1

Appendix H Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-1

Appendix I Summary of Commission Activities and Contacts . . . . . . . . . . . I-1

Appendix J Aerospace-related Websites—Partial List . . . . . . . . . . . . . . . . . J-1

Appendix K Acknowledgements and Commission Staff. . . . . . . . . . . . . . . . . K-1
Source: Mark Garfinkel/Boston Herald
v

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Executive Summary

Executive Summary

Aerospace will be at the core of America’s leadership

and strength in the 21st century. The role of aerospace in establishing America’s global leadership was

incontrovertibly proved in the last century. This

industry opened up new frontiers to the world, such

as freedom of flight and access to space. It provided

products that defended our nation, sustained our

economic prosperity and safeguarded the very freedoms we commonly enjoy as

Americans. It has helped forge

new inroads in medicine and

science, and fathered the development of commercial products

that have improved our quality

of life. 

Given a continued commitment

to pushing the edge of man’s

engineering, scientific and manufacturing expertise, there is the

promise of still more innovations and new frontiers yet to be

discovered. It is imperative that the U.S. aerospace

industry remains healthy to preserve the balance of

our leadership today and to ensure our continued

leadership tomorrow. 

Our Urgent Purpose

The contributions of aerospace to our global leadership have been so successful that it is assumed U.S.

preeminence in aerospace remains assured. Yet the

evidence would indicate this to be far from the case.

The U.S. aerospace industry has consolidated to a

handful of players—from what was once over 70

suppliers in 1980 down to 5 prime contractors today.

Only one U.S. commercial prime aircraft manufacturer remains. Not all of these surviving companies

are in strong business health. The U.S. airlines that

rely upon aerospace products find their very existence is threatened. They absorbed historical losses of

over $7 billion in 2001 and potentially more this

year.

The industry is confronted with

a graying workforce in science,

engineering and manufacturing,

with an estimated 26 percent

available for retirement within

the next five years. New entrants

to the industry have dropped

precipitously to historical lows as

the number of layoffs in the

industry mount. Compounding

the workforce crisis is the failure

of the U.S. K-12 education system to properly equip U.S. students with the math, science, and technological skills

needed to advance the U.S. aerospace industry. 

The Commission’s urgent purpose is to call attention to how the critical underpinnings of this nation’s

aerospace industry are showing signs of faltering—

and to raise the alarm.

This nation has generously reaped the benefits of

prior innovations in aerospace, but we have not been

attentive to its health or its future. During this year

of individual and collective research, the

Commission has visited and spoken with aerospace

The Commission’s urgent

purpose is to call attention

to how the critical

underpinnings of this nation’s

aerospace industry are

showing signs of faltering—

and to raise the alarm.
v i

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

leaders in the United States, Europe, and Asia. We

noted with interest how other countries that aspire

for a great global role are directing intense attention

and resources to foster an indigenous aerospace

industry. This is in contrast to the

attitude present here in the United

States. We stand dangerously close

to squandering the advantage

bequeathed to us by prior generations of aerospace leaders. We

must reverse this trend and march

steadily towards rebuilding the

industry. 

The time for action is now. This report contains recommendations intended to catalyze action from

leaders in government, industry, labor and academia

and assure this industry’s continued prominence. A

healthy aerospace industry is a national imperative.

The Administration and the Congress must heed our

warning call and act promptly to implement the recommendations in this report. 

An Aerospace Vision

This nation needs a national vision to keep alive the

flames of imagination and innovation that have

always been a hallmark of aerospace. For inspiration,

we looked to what aerospace can do for our nation

and world. The vision the Commission used to guide

its efforts is “Anyone, Anything, Anywhere,

Anytime.” We offer this to the nation as its vision for

aerospace.

Conclusions and Recommendations

The Congress gave our Commission a broad mandate to study the health of the aerospace industry

and to identify actions that the United States needs

to take to ensure its health in the future. The challenge of looking across military, civil and commercial

aspects of aviation and space was an opportunity to

take an integrated view of the aerospace sector – government, industry, labor and academia. 

The Commissioners represent a broad cross section

of the stakeholders responsible for the health of the

industry and whose expertise represents the breadth

and depth of aerospace issues. Drawing on their

extensive experience, and on the hundreds of 

briefings and public testimony, the Commission has

made nine recommendations—one per chapter—

that provide our guidance to the nation’s leaders on

the future of the U.S. aerospace

industry. The size and scope of

this report reflects an industry that

is complex and interdependent.

The following are the conclusions

and recommendations in the final

report by chapter. 

Chapter 1—Vision: Anyone, Anything,

Anywhere, Anytime

Conclusions

To achieve our vision for aerospace, the Commission

concludes that:

• The nation needs a national aerospace policy;

• There needs to be a government-wide framework

that implements this policy;

• The Administration and Congress need to remove

prohibitive legal and regulatory barriers that

impede this sector’s growth and continually seek to

level the international playing field; and

• Global U.S. aerospace leadership can only be

achieved through investments in our future,

including our industrial base, workforce, longterm research and national infrastructure.

Recommendation #1

The integral role aerospace plays in our economy,

our security, our mobility, and our values makes

global leadership in aviation and space a national

imperative. Given the real and evolving challenges

that confront our nation, government must commit

to increased and sustained investment and must

facilitate private investment in our national aerospace sector. The Commission, therefore, recommends that the United States boldly pioneer new

frontiers in aerospace technology, commerce and

exploration. 

VISION: “Anyone,

Anything, Anywhere,

Anytime.”
vii

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Executive Summary

Chapter 2—Air Transportation: Exploit

Aviation’s Mobility Advantage

Conclusions

The Commission concludes that superior mobility

afforded by air transportation is a huge national asset

and competitive advantage for the United States.

Because of the tremendous benefits derived from a

highly mobile citizenry and rapid cargo transport,

the United States must make consistent and significant improvements to our nation’s air transportation

system a top national priority. 

Transform the U.S. Air Transportation System as

a National Priority. We need national leadership

to develop an air transportation system that simultaneously meets our civil aviation, national defense

and homeland security needs. Today, leadership and

responsibility are dispersed among many federal,

state and local organizations that impact the aviation

community. In the federal government, this includes

the Department of Transportation’s Federal Aviation

Administration (FAA), National Aeronautics and

Space Administration (NASA), Environmental

Protection Agency, and the Departments of Defense

(DoD), Commerce, and State. 

Often these departments and agencies deal with aviation-related issues independently, without adequate

coordination, and sometimes at cross-purposes. All

have separate authorizing and appropriating Congressional committees. State and local governments

also play important aviation development roles and

private industry has numerous near-term competing

forces that often delay longer-term solutions. Only

strong federal leadership, aimed at a national objective, can sustain a transformational effort.

Deploy a New, Highly Automated Air Traffic

Management System. The core of an integrated 

21st century transportation system will be a common advanced communications, navigation and surveillance infrastructure and modern operational procedures. The system needs to allow all classes of

aircraft, from airlines to unpiloted vehicles, to operate safely, securely, and efficiently from thousands of

communities based on market size and demand. It

also needs to be able to operate within a national air

defense system and enable military and commercial

aircraft to operate around the world in peacetime

and in war. 

As a first step, the Commission recommended in its

Interim Report #2 “the Administration should

immediately create a multi-agency task force with

the leadership to develop an integrated plan to transform our air transportation system.” This task force

should be immediately assigned the leadership role

to establish a Next Generation Air Transportation

System Joint Program Office that brings together

needed participation from the FAA, NASA, DoD,

Office of Homeland Security, National Oceanographic and Atmospheric Administration, and other

government organizations. Within a year, the Joint

Program Office should present a plan to the

Administration and the Congress outlining the overall strategy, schedule, and resources needed to

develop and deploy the nation’s next generation air

transportation system.

As this transformational plan is developed, the FAA

must continue to implement the Operational

Evolution Plan. FAA and NASA must also continue

to perform critical long-term research. The

Commission also recommended in Interim Report

#2 “the Administration and Congress should fully

fund air traffic control modernization efforts in fiscal

year 2003 and beyond, and prioritize FAA and

NASA research and development efforts that are the

critical building blocks for the future.”

Provide Certification Process and Airborne

Equipage Innovation. The Commission calls for a

new approach to the regulation and certification of

aircraft technology, processes and procedures. The

government also needs new mechanisms to accelerate

the equipage of aircraft in order for the nation to

realize broader system benefits. Airborne equipment

needed for safe, secure, and efficient system-wide

operations should be deemed to be part of the

national aviation infrastructure.

• Shift from product to process certification. Instead of

a focus on rules and regulations that dictate the
viii

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

design and approval of each particular piece of

hardware or software, the FAA should focus on

certifying that design organizations have safety

built into their processes for designing, testing,

and assuring the performance of an overall system. 

• Solve the airborne equipage problem. The government, in partnership with industry, must be more

responsible for airborne equipment development

and continuous modernization. In addition to current regulatory and operational incentives, the

government should consider additional options to

motivate a critical mass of early equippers, including full federal funding for system-critical airborne

equipment, tax incentives or vouchers for partial

funding support, and competitively auctioned

credit vouchers.

Streamline the Airport and Runway Development Process. The FAA and other agencies should

expedite new runway and airport development as a

national priority. Further, because aircraft noise and

emissions constrain capacity growth, additional government investment in long-term research in this

area is imperative.

Act Now. The Commission sees compelling reasons

for the Administration and Congress to take immediate action. First, new homeland security and

defense requirements call for system capabilities not

previously anticipated. Second, an entirely new level

of transportation efficiency and national mobility

can be enabled by more flexible, scalable, higher precision aviation operations. Third, inherently long

lead times required for major aviation changes

demand preparation far ahead of anticipated

demand. And fourth, there could be no better

American response after 9/11 than to rebuild the

U.S. air transportation system dramatically better

than it was before.

As we approach the 100th anniversary of powered

flight, the Commission urges the President and

Congress to recognize a pressing national need, and

powerful opportunity, and act now to create a 21st

century air transportation system. 

Recommendation #2

The Commission recommends transformation of the

U.S. air transportation system as a national priority.

This transformation requires: 

• Rapid deployment of a new, highly automated air

traffic management system, beyond the Federal

Aviation Administration’s Operational Evolution

Plan, so robust that it will efficiently, safely, and

securely accommodate an evolving variety and

growing number of aerospace vehicles and civil

and military operations; 

• Accelerated introduction of new aerospace systems

by shifting from product to process certification

and providing implementation support; and

• Streamlined new airport and runway development.

Chapter 3—Space: Its Special

Significance

Conclusions

The Commission concludes that the nation will have

to be a space-faring nation in order to be the global

leader in the 21st century—our freedom, mobility,

and quality of life will depend on it. America must

exploit and explore space to assure national and planetary security, economic benefit and scientific discovery. At the same time, the United States must

overcome the obstacles that jeopardize its ability to

sustain leadership in space.

Achieve Breakthroughs in Propulsion and Space

Power. The ability to access space and travel through

the solar system in weeks or months instead of years

would help create the imperative to do so.

Propulsion and power are the key technologies to

enable this capability. Future progress in these areas

will result in new opportunities on Earth and open

the solar system to robotic and human exploration

and eventual colonization. The nation would benefit

from a joint effort by NASA and DoD to reduce significantly the cost and time required to access and

travel through space.
i x

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Executive Summary

Develop a Next Generation Communication,

Navigation, Surveillance and Reconnaissance

Capability. The nation needs real-time, global

space-based communications, navigation, surveillance and reconnaissance systems for a wide range of

applications. These capabilities will provide the military with the ability to move its forces around the

world, conduct global precision strike operations,

defend the homeland, and provide for planetary

defense. The civil and commercial sectors will also

benefit from these capabilities for air transportation

management, monitoring global climate change,

weather forecasting and other applications. The federal government needs a joint civil and military initiative to develop this core infrastructure.

Revitalize the U.S. Space Launch Infrastructure. NASA and DoD must maintain and

modernize their space launch and support infrastructure to bring them up to industry standards. They

should implement our recommendations contained

in Interim Report #3 concerning federal spaceports,

enhanced leasing authority, and utility privatization

and “municipalization.” We recommended that

DoD and NASA should:

• Investigate the feasibility of establishing a national

spaceport structure at Kennedy Space Center

(KSC) and Cape Canaveral Air Force Station

(CCAFS) under a single management system; and

• Seek Congressional approval for

– Enhanced leasing authority that allows them to

lease real property at fair market value and retain

lease proceeds to cover the total costs incurred at

KSC and CCAFS; and

– Privatization of NASA utilities at KSC and

CCAFS to overcome the budget burdens associated with capital improvements to outdated

infrastructure.

In addition, NASA and DoD need to make the

investments necessary for developing and supporting

future launch capabilities. NASA should also consider turning over day-to-day management responsibilities for its field centers to the respective state governments, universities, or companies.

Provide Incentives to Commercial Space.

Government and the investment community must

become more sensitive to commercial opportunities

and problems in space. Public space travel may constitute a viable marketplace in the future. It holds the

potential for increasing launch demand and

improvements in space launch reliability and

reusability. Moreover, it could lead to a market that

would ultimately support a robust space transportation industry with “airline-like operations.” The

government could help encourage this by allowing

NASA to fly private citizens on the Space Shuttle. 

Sustain Commitment to Science and Space. The

U.S. government should continue its long-standing

commitment to science missions in space and focus

on internationally cooperative efforts in the future.

Recommendation #3

The Commission recommends that the United

States create a space imperative. The DoD, NASA,

and industry must partner in innovative aerospace

technologies, especially in the areas of propulsion

and power. These innovations will enhance our

national security, provide major spin-offs to our

economy, accelerate the exploration of the near and

distant universe with both human and robotic missions, and open up new opportunities for public

space travel and commercial space endeavors in the

21st century. 

Chapter 4—National Security: Defend

America and Project Power

Conclusions

The Commission concludes that aerospace capabilities and the supporting defense industrial base are

fundamental to U.S. economic and national security.

While the nation’s defense industrial base is strong

today, the nation is at risk in the future if the United

States continues to proceed without a policy that

supports essential aerospace capabilities. 

Develop a U.S. Military Industrial Base Policy.

The Department of Defense should task the Defense

Science Board to develop a national policy that 
x

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

will invigorate and sustain the U.S. aerospace industrial base. The policy should address issues, such as

mergers and acquisitions, procurement and budgeting policies, research and development investments,

technology transition, international sales and workforce development.

Sustain the Defense Industrial Base. Today’s

national defense industrial base is indeed robust, but

without constant vigilance and investment, vital

capabilities will be lost.

• DoD’s annual science and technology (6.1-6.3)

funding must be sufficient and stable to create and

demonstrate the innovative technologies needed to

address future national security threats. An

amount no less than three percent of Total

Obligational Authority, “fenced” from budget

cuts, would be sufficient. The use of more joint

technology development and acquisition programs

would spread the funding burden and promote

interoperability. 

• The federal government must remove unnecessary

barriers to international sales of defense products,

and implement other initiatives that strengthen

transnational partnerships to enhance national

security. To help reduce the high development and

production costs of advanced military systems, the

United States must also increase the number of

international joint programs (like the Joint Strike

Fighter), and continue to foster international

interoperability of defense and commercial aerospace system-of-systems.

• DoD acquisition policies should be revised to

encourage greater use of commercial standards.

DoD should impose government requirements by

exception only, allow commercial entities to protect intellectual property, and remove other burdensome regulations that deter providers of commercial products from doing business with the

government. 

• There are numerous government missions that

would benefit from defense technology. For example, the U.S. military has developed capabilities 

in the areas of communications, navigation, 

surveillance, and reconnaissance. These technologies could be adapted and transitioned into other 

government applications that would significantly

enhance the capacity of our air traffic management

system and, hence, our national defense and

homeland security.

• The federal government and the aerospace industry must partner to enhance the operational readiness and capability of new and legacy military

aerospace systems. The government should fund

research and technology development programs

to: reduce total ownership costs and environmental impacts; implement performance-based logistics support; create a structured, timely and adequately funded technology insertion process; and

reform its procurement practices accordingly.

Increase Opportunities to Gain Experience in

the Workforce. The U.S. must continuously

develop new experimental systems, with or without a

requirement for production, in order to sustain the

critical skills to conceive, develop, manufacture and

maintain advanced systems and potentially provide

expanded capability to the warfighter. Furthermore,

the federal government and industry must develop

approaches to retain and transfer intellectual capital

as the workforce retires in greater numbers in the

next few years. 

Maintain and Enhance Critical National

Infrastructure. The federal government must

assume responsibility for sustaining, modernizing,

and providing critical, often high-risk, defenserelated technologies and infrastructure when it is in

the nation’s interest. This includes critical design

capabilities, solid rocket boosters, radiation hardening, space launch facilities, critical research, development, test and evaluation (RDT&E) infrastructure,

Global Positioning System (GPS), and frequency

spectrum.

Recommendation #4

The Commission recommends that the nation 

adopt a policy that invigorates and sustains the 
x i

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Executive Summary

aerospace industrial base. This policy must 

include:

• Procurement policies which include prototyping,

spiral development, and other techniques which

allow the continuous exercise of design and production skills;

• Removing barriers to defense procurement of commercial products and services;

• Propagating defense technology into the commercial sector, particularly in communications, navigation and surveillance;

• Removing barriers to international sales of defense

products;

• Sustaining critical technologies that are not likely

to be sustained by the commercial sector, e.g. space

launch, solid boosters, etc.; and

• Stable funding for core capabilities, without which

the best and brightest will not enter the defense

industry. 

Chapter 5—Government: Prioritize and

Promote Aerospace

Conclusions

The Commission concludes that the government

must ensure that the nation has a healthy aerospace

industry today and in the future, an industry that

can not only meet the security and economic needs

of the country but also can compete successfully in

the international market place. The government

needs to exert leadership and prioritize and promote

aerospace by managing its activities efficiently, effectively and as a sector to accomplish national objectives. It needs to create an environment that fosters

innovation in the U.S. aerospace industry, ensuring

its competitiveness into the 21st century. 

Create a National Aerospace Consensus.The federal government does not have a national aerospace

consensus that supports broader national security

and economic policies, goals and objectives. This 

will require Presidential and Congressional leadership to develop a consensus of federal, state and local

government, industry, labor, academia and nongovernmental organizations to sustain a healthy U.S.

aerospace sector. 

Reorient Government Organizational Structures. The federal government is dysfunctional

when addressing 21st century issues from a longterm, national and global perspective. Government is

organized vertically while national problems are

becoming more horizontal in nature requiring system-of-systems solutions. Key government processes,

such as planning and budgeting, are currently spread

across multiple departments and agencies, with oversight by numerous Congressional committees. As a

result, none of these government groups has an integrated view of our national aerospace efforts.

The executive and legislative branches need to be

reoriented to provide a focus on national aerospace

needs and priorities, government aerospace plans and

budgets, and government management of national

aerospace initiatives. 

• Federal Departments and Agencies. Every federal

department and most federal agencies should 

create an Office of Aerospace Development to 

prioritize and promote aerospace activities within

their organizations and with the public that they

serve;

• Office of Management and Budget (OMB). OMB

should establish a Bureau of Aerospace

Management to develop and implement an aerospace strategic plan, establish an acceptable categorical definition of the aerospace sector, prepare

an annual aerospace sector budget as an addendum

to the President’s Budget Request, and manage

major national aerospace initiatives; and,

• White House. The White House should establish

an aerospace policy coordinating council to

develop and implement national aerospace policy

consistent with national security and economic

goals and objectives.

• Congress. In response to these executive branch

changes, the Commission encourages the legislative branch to create a Joint Committee on
xii

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Aerospace to coordinate legislatively the multifaceted jurisdictional issues.

Streamline and Integrate Key Government

Processes. Government processes for policy, planning, and budgeting, and for developing and acquiring aerospace products and services are vestiges of the

Cold War. As a result, they tend to be ad hoc, complex, lengthy and inefficient. The Administration

and the Congress need to make a concerted effort to

streamline these key government processes to reflect

the new realities of a highly dynamic, competitive

and global marketplace. Specifically, they should

work together to create: an integrated federal planning, budgeting and program management process;

an integrated government science, technology and

acquisition process; and an environment that fosters

rather than impedes innovation in the aerospace 

sector. 

Promote Private-public Partnerships. Partnerships and interconnectedness are keys to competitiveness in the future. Government, industry, labor

and academia play different, but important, roles 

in developing and deploying new aerospace products

and services. They cannot perform these roles 

separately and in isolation. But today, cultural and

institutional biases hinder their ability to partner and

achieve national goals. We need to create an environment and the incentives that will foster privatepublic partnerships. 

Recommendation #5

The Commission recommends that the federal government establish a national aerospace policy and

promote aerospace by creating a government-wide

management structure. This would include a White

House policy coordinating council, an aerospace

management office in the OMB, and a joint committee in Congress. The Commission further recommends the use of an annual aerospace sectoral 

budget to establish presidential aerospace initiatives,

assure coordinated funding for such initiatives, and

replace vertical decision-making with horizontally

determined decisions in both authorizations and

appropriations. 

Chapter 6—Global Markets: Open and

Fair

Conclusions

Open global markets are critical to the continued

economic health of U.S. aerospace companies and to

U.S. national security. In order to remain global

leaders, U.S. companies must remain at the forefront

of technology development. They must also have

access to global customers, suppliers and partners in

order to achieve economies of scale in production

needed to integrate that technology into their products and services.

Government intervention continues to distort global

markets, from subsidies to anti-competitive restrictions on partnerships and collaboration to biased

standards and regulations. U.S. companies frequently find themselves competing against foreign

competitors supported directly or indirectly by their

governments. We need to move to a different model

of business characterized by competition between

companies instead of between countries.

Reform Export Controls and Defense Procurement Policies. U.S. national security and procurement policies represent some of the most burdensome restrictions affecting U.S. industry

competitiveness. 

We call for a fundamental shift away from the 

existing transaction-based export-licensing regime to

process-based licensing. Under this new system, the

government would rely on companies to safeguard

against the sale of controlled technologies to unacceptable parties through internal company controls

certified by the government. The government then

would monitor and audit those company operations

for compliance. Such a process-based licensing

regime would improve security, reduce licensing

costs and enable our companies to collaborate with

international partners and sell to global customers.

Additional reforms, including those outlined in

Interim Report #2, are necessary to make this new

system effective. As quickly as possible, the 

government should revise the U.S. Munitions List,
xiii

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Executive Summary

remove barriers to global project licenses, expand

waivers for trading with friendly nations, and 

update country risk surveys to facilitate better policy

decisions.

U.S. procurement regulations currently are too

restrictive and must be modified to be supportive of

a global industrial base to meet military requirements, while maintaining U.S. industrial capacity in

critical technologies and capabilities. We need to

reform DoD procurement regulations to permit

integration of commercial components into military

products even if they are provided by non-U.S. companies or worked on by foreign nationals. 

Establish a Level International “Playing Field”.

U.S. companies have lost market share to foreign

companies supported by protectionist and market

distorting policies. The U.S. government must take

immediate action to neutralize these distortions and

enable fair and open competition. 

We must continue to meet our responsibilities of setting national goals and priorities for basic research,

reverse declines in basic research and experimentation funding and expand efforts to fund technology

diffusion through U.S. industry. 

We also must work bilaterally and multilaterally to

get foreign governments out of the business of commercial “product launch.” In spite of inadequacies of

the current World Trade Organizations (WTO) system, the U.S. government should work in the WTO

Doha round of negotiations to strengthen the existing WTO provisions restricting the use of subsidies

to distort the market. The U.S. government also

should work with other WTO members to adopt

more effective trade remedies that are usable and

effective in a market characterized by increased globalization. When countries do violate existing provisions, we should not shy away from taking action.

We must ensure that U.S. companies are not disadvantaged by differences between U.S. and foreign tax

policies as exemplified in the current WTO dispute

over U.S. Foreign Sales Corporation/Extra

Terrritorial Income regulations. In the near term we

must seek to delay European trade sanctions while

both parties negotiate a solution to this dispute. We

urge the Administration and Congress to authorize

changes to U.S. tax law that are WTO compliant but

that continue to offset the advantage enjoyed by

European companies. In the longer term, the

Administration should initiate changes in the WTO

rules to remove the current inequity in the treatment

of direct and indirect taxes that caused the dispute in

the first place.

Official export credit support for commercial and

military products is an essential tool to facilitate U.S.

aerospace exports. In addition to continued funding

for U.S. Export-Import Bank programs, we should

seek to reduce international reliance on official

export credits for export financing assistance, such as

through ratification of the “Cape Town convention.”

For military exports, the Defense Export Loan

Guarantee should be modernized to permit the DoD

to create an effective unsubsidized export credit

organization to facilitate the financing of defense

exports to U.S. allies and friendly nations abroad. 

The U.S. government should remove policy and regulatory obstacles to increased commercial mergers

and teaming within the U.S. and with international

partners. The U.S. government should assist in

developing and policing international anti-trust

treaties relating to mergers and teaming between

commercial entities to minimize divergence of

requirements and the methods of assessment in antitrust reviews, presumably making reviews more

objective. The U.S. government also must continue

to work bilaterally with key countries to remove barriers to foreign investment.

Global standards and regulations are critical to the

efficient operation of the global aviation system and

international markets. The U.S. government needs

to step up its commitment to the development of

global standards in International Civil Aviation

Organization (ICAO) and via other forums. This

will help to mitigate the efforts of other countries

seeking to provide a competitive advantage for 

their companies through biased domestic standards

or regulations. 
xiv

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Commit to Global Partnerships. International

partnerships are essential to the creation of systemof-systems solutions to global challenges. 

In order to meet our goal of transforming the way we

use airspace through the use of advanced technology

and improved procedures, we must act in concert

with other countries around the world. We must

commit to developing common standards and recommended practices for satellite navigation in

ICAO, and ensure that global cooperative efforts are

not thwarted by disputes over radio spectrum allocation. We strongly urge U.S. officials to work bilaterally and multilaterally to ensure that U.S. GPS and

European Galileo systems are compatible and complementary in the event that Galileo becomes a 

reality. 

U.S. policy makers should work toward global standards for safety certification as a way to prevent the

use of safety certification by some governments to 

enhance their domestic competitiveness. We also 

call for increased liberalization of air transport 

services through negotiation of open skies agreements in order to expand the demand for all countries’ air transport services and alleviate undue congestion at the largest airports. 

The success or failure of our future activities in space

is fundamentally linked to our ability to work effectively with international partners. It is in our country’s best interest to work cooperatively with partner

nations in space exploration and protection of our

planet from the threat of near-earth objects. 

Recommendation #6

The Commission recommends that U.S. and multilateral regulations and policies be reformed to enable

the movement of products and capital across international borders on a fully-competitive basis, and

establish a level playing field for U.S. industry in the

global market place. U.S. export control regulations

must be substantially overhauled, evolving from 

current restrictions on technologies through the

review of transactions to controls on key capabilities enforced through process controls. The U.S.

government should neutralize foreign government market intervention in areas such as subsidies, tax policy, export financing and standards,

either through strengthening multilateral disciplines

or providing similar support for U.S. industry as 

necessary. 

Chapter 7—Business: A New Model for

the Aerospace Sector

Conclusions

The Commission concludes that for our aerospace

industry to be globally preeminent, now and in the

future, it must be able to attract vitally needed capital at a reasonable cost. We further conclude that the

defense and aerospace sector is viewed as a low

growth industry with low margins, unstable revenue

and a capricious major customer, the government.

Without a significant change in the business model,

the future of the aerospace industry, so critical to our

national economic and homeland security, is uncertain and at risk.

Provide Investment Opportunities. Predictability,

stability and performance are critical to the health

and growth of a robust aerospace industry. The government must stabilize program requirements and

protect adequate long-term investment funding,

enact reforms that increase the financial flexibility of

industry and the government, and improve program

management stability. 

Enable Industry to Attract and Retain HighTech Partners and Suppliers. The future of the

aerospace industry is intrinsically tied to the ability

of the sector to attract and retain high-tech partners

and suppliers throughout the supply chain. The government should pursue near-term reforms to realign

purchasing processes to lower costs and gain access to

new technology by eliminating, or at least lowering,

barriers that make government business inefficient

and unattractive to commercial firms. DoD should

implement changes to permit greater profitability

and financial flexibility of industry working on 

government efforts. A government-wide review 

of functions and services should be conducted to
x v

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Executive Summary

identify those functions that are not “core” to the 

effective operation of government and those functions that could best be performed by the private 

sector. 

Create a favorable Domestic and International

Business Climate. Certain U.S. tax and trade laws

and regulations that affect a wide variety of industries weigh particularly heavily on defense and aerospace, both in competition with domestic commercial entities as well as in the international markets.

The government should act promptly to replace burdensome tax laws and outdated trade laws with laws

and regulations that remove unnecessary administrative burdens from industry and recognize the unique

contribution of defense and aerospace companies to

our nation’s defense and economic security. In addition, the Administration and Congress should review

and consider reducing user fees on the airlines and

their customers.

Ensure Long-Term Growth and Financial

Health. Government and industry must recognize

that a healthy, competitive, and innovative industry

meeting security and aerospace needs must be closely

integrated with the global commercial marketplace.

Major challenges to this desired climate include the

need for dramatic personnel and training reform and

recognition of the dynamic interrelated global environment. Government and industry should work

together to develop and implement training and

exchange programs that would educate and expose

their workforces to those challenges and responsibilities. All government officials with budget and program acquisition, management, or review responsibilities, both appointed and elected, should be

required to have a business or financial background

or training. Finally, government must develop and

implement a policy regarding international cooperation in defense and aerospace that recognizes the

global industrial base. The Administration is urged

to undertake a review of the current policy regarding

both domestic and international business combinations, based on an analysis of the U.S. defense industrial base, including the supplier industrial base.

Recommendation #7

The Commission recommends a new business

model, designed to promote a healthy and growing

U.S. aerospace industry. This model is driven by

increased and sustained government investment and

the adoption of innovative government and industry

policies that stimulate the flow of capital into new

and established public and private companies. 

Chapter 8—Workforce: Launch the

Future

Conclusions

Clearly, there is a major workforce crisis in the aerospace industry. Our nation has lost over 600,000 scientific and technical aerospace jobs in the past 

13 years. These layoffs initially began as a result of

reduced defense spending following the conclusion

of the Cold War. This led to an industry shift from

reliance on defense sales to one dependent upon

commercial markets. Increasing foreign competition

in the commercial aerospace market has led to contractions in the industry, resulting in mergers and

acquisitions. Job losses from this consolidation have

been compounded by the cyclical nature of the

industry. 

Due to these uncertainties, most of the workers 

who have lost their jobs are unlikely to return to the

industry. These losses, coupled with pending retirements, represent a devastating loss of skill, experience, and intellectual capital to the industry. 

Reverse the Decline and Promote the Growth

of Today’s Aerospace Workforce. The Commission was unable to agree to any immediate solutions

to help stem the loss of jobs within the industry. It

hopes that its recommendations for a high-level federal management structure focused on establishing a

national aerospace consensus (Chapter 5) and other

actions to promote the industry will have a positive

effect in the future. What is clear is that industry,

government, and labor must begin to work now to

restore an aerospace industry that will be healthy, stable, and vibrant. 
xvi

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

U.S. policy towards domestic aerospace employment

must reaffirm the goal of stabilizing and increasing

the number of good and decent jobs in the industry.

The Administration and the Congress should consider the impact of domestic and international policies on U.S. aerospace employment.

Address the Failure of the Math, Science, and

Technology Education. The aerospace industry

must have access to a scientifically and technologically trained workforce. In the long term, the

Commission stresses that action must be taken to

improve mathematics and science instruction across

the entire education range—K-12 through graduate

school. These actions and investments should

include scholarships and internship programs to

encourage more U.S. students to study and work in

mathematics, science, and engineering fields. In

addition, investments should be made in vocational

education to develop a highly skilled workforce,

including registered apprenticeship programs for

skilled and technical occupations. Further, as 

recommended in Commission Interim Report #3,

targeted tax credits should be made available to

employers who invest in the skills and training programs needed by the industry. 

In addition, the Commission concludes that emphasis must be placed on the concepts of “lifelong learning” and “individualized instruction” as key elements

of education reform. It is likely that individuals now

entering the workforce will hold five or more jobs in 

their lifetime and the education system must be 

prepared to deliver training and education to meet

these changing skill requirements and meet labor

market needs. U.S. community colleges are adept at 

designing and delivering workforce training and

individualized instruction.

Our policymakers need to acknowledge that the

nation’s apathy toward developing a scientifically

and technologically trained workforce is the equivalent of intellectual and industrial disarmament and is

a direct threat to our nation’s capability to continue

as a world leader. 

Recommendation #8

The Commission recommends the nation immediately reverse the decline in, and promote the growth

of, a scientifically and technologically trained U.S.

aerospace workforce. In addition, the nation must

address the failure of the math, science and technology education of Americans. The breakdown of

America’s intellectual and industrial capacity is a

threat to national security and our capability to continue as a world leader. The Administration and

Congress must therefore:

• Create an interagency task force that develops a

national strategy on the aerospace workforce to

attract public attention to the importance and

opportunities within the aerospace industry;

• Establish lifelong learning and individualized

instruction as key elements of educational reform;

and

• Make long-term investments in education and

training with major emphasis in math and science

so that the aerospace industry has access to a scientifically and technologically trained workforce. 

Chapter 9—Research: Enable

Breakthrough Aerospace Capabilities

Conclusions

The United States must maintain its preeminence in

aerospace research and innovation to be the global

aerospace leader in the 21st century. This can only 

be achieved through proactive government policies

and sustained public investments in long-term

research and RDT&E infrastructure that will result

in new breakthrough aerospace capabilities. 

Over the last several decades, the U.S. aerospace sector has been living off the research investments made

primarily for defense during the Cold War—intercontinental ballistic missiles, the Saturn V, spacebased reconnaissance, the global positioning system,

stealth and unmanned aerial vehicles. The challenges

posed by our rapidly changing world—asymmetric

threats, international competition, environmental
xvii

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Executive Summary

awareness, advances in technology—demand that

we, like the Wright brothers 100 years ago, look at

the challenges as opportunities for aerospace and

turn them into reality.

Government policies and investments in long-term

research have not kept pace with the changing world.

Our nation does not have bold national aerospace

technology goals to focus and sustain federal research

and related infrastructure investments. It lacks a

streamlined innovation process to transform those

investments rapidly into new aerospace products,

processes and services. 

The United States has unlimited opportunities to

revolutionize aerospace in the 21st century, opening

up new markets and launching a new era of U.S.

global aerospace leadership. The nation needs to capitalize on these opportunities, and the federal government needs to lead the effort. Specifically, it needs

to invest in long-term enabling research and related

RDT&E infrastructure, establish national aerospace

technology demonstration goals, and create an environment that fosters innovation and provide the

incentives necessary to encourage risk taking and

rapid introduction of new products and services. 

Increase Public Funding for Long-Term

Research and RDT&E Infrastructure. The

Administration and Congress should sustain significant and stable funding in order to achieve national

technology demonstration goals, especially in the

area of long-term research and related RDT&E

infrastructure. Research areas that provide the potential for breakthroughs in aerospace capabilities

include: 

• Information Technology;

• Propulsion and Power;

• Noise and Emissions;

• Breakthrough Energy Sources;

• Human Factors; and

• Nanotechnology.

Establish National Technology Demonstration

Goals. The Administration and Congress should

adopt the following aerospace technology 

demonstration goals for 2010 as a national priority.

These goals, if achieved, could revolutionize aerospace in the next half century much like the development of the jet, radar, space launch, and satellites

did over the last half-century.

Air Transportation

• Demonstrate an automated and integrated air

transportation capability that would triple capacity

by 2025;

• Reduce aviation noise and emissions by 90 

percent;

• Reduce aviation fatal accident rate by 90 percent;

and 

• Reduce transit time between any two points on

earth by 50 percent.

Space

• Reduce cost and time to access space by 50 

percent; 

• Reduce transit time between two points in space

by 50 percent; and 

• Demonstrate the capability to continuously monitor and surveil the earth, its atmosphere and space

for a wide range of military, intelligence, civil and

commercial applications.

Time to Market and Product Cycle Time

• Reduce the transition time from technology

demonstration to operational capability from years

and decades to weeks and months.

Accelerate the Transition of Government

Research to the Aerospace Sector. The U.S. aerospace industry must take the leadership role in transitioning research into products and services for the 

nation and the world. Government must assist by

providing them with insight into its long-term

research programs. The industry must aggressively

develop business strategies that can incorporate this

research into new products and services. Industry
xviii

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

also needs to provide input to government on its

research priorities. Together industry and government need to create an environment that will accelerate the transition of research into application. The

Departments of Defense, Transportation, Commerce

and Energy, NASA, and others need to work with

industry and academia to create new partnerships

and transform the way they do business. 

Recommendation #9

The Commission recommends that the federal government significantly increase its investment in basic

aerospace research, which enhances U.S. national

security, enables breakthrough capabilities, and fosters an efficient, secure and safe aerospace transportation system. The U.S. aerospace industry

should take a leading role in applying research to

product development. 

Promise for the Future

The aerospace industry has always been a reflection

of the spirit of America. It has been, and continues

to be, a sector of pioneers drawn to the challenge of

new frontiers in science, air, space, and engineering.

For this nation to maintain its present proud heritage

and leadership in the global arena, we must remain

dedicated to a strong and prosperous aerospace

industry. A healthy and vigorous aerospace industry

also holds a promise for the future, by kindling a passion within our youth that beckons them to reach for

the stars and thereby assure our nation’s destiny.
xix

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Executive Summary

xxi

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Preface

Preface

Congress established the Commission on the Future

of the United States Aerospace Industry in Section

1092 of the fiscal year (FY) 2001 National Defense

Authorization Act (P.L.106-398). The Commission

was established as a Federal Advisory Committee

under the Executive Office of the President, National

Science and Technology Council. The purpose of the

Commission is to “study the issues associated with

the future of the U.S. aerospace industry in the

global economy, and the industry’s future importance to the economic and national security of the

United States.” The twelve commissioners,

appointed by the President and the Congress, are

experts representing the breadth of aerospace issues

and stakeholders. The President designated the

Honorable Robert S. Walker as Chairman. 

The Commission defines the U.S. aerospace sector as

the sum of those activities needed to develop, operate, and/or use aerospace capabilities, including the

activities of commercial enterprises and government—from general aviation to space exploration,

and from civil transport to national security. The

human capital, national infrastructure and research

needed to support these activities were also considered to be key elements of the sector.

From November 27, 2001, through November 18,

2002, the Commission held six public meetings,

received public testimony from over 60 witnesses,

and issued three interim reports outlining its preliminary findings and recommendations. The

Commission visited Europe and Asia to meet with

leaders from their aerospace sectors and learn about

their issues and future plans. 

The Commission staff gathered information about

the aerospace sector from over one hundred government, industry, labor, university and non-governmental organizations. The Commission also created

a website to share information about the Commission with the public. It received over 150,000

inquiries during the life of the Commission. 

Opposite page top:

Commissioners Walker, Tyson and Stevens in

Soyuz Simulator, Star City, Russia.

Opposite page bottom:

Commission meeting May 14, 2002

Department of Commerce Auditorium

1-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 1 – Anyone, Anything, Anywhere, Anytime

Chapter 1

Vision: Anyone, Anything,

Anywhere, Anytime

The 20th century was America’s century. Our nation

thrived on previously unimagined advances in

ground, air and space transportation, rapidly becoming the world’s leader in nearly every economic sector driven by the progress of science and technology.

What future does the 21st century hold for us and

for the world?

The Congress gave our Commission a broad mandate to study the health of the aerospace industry

and to identify actions that the United States needs

to take to ensure its health in the future. The challenge of looking across military, civil and commercial

aspects of aviation and space was an opportunity to

take an integrated view of the aerospace sector – government, industry, labor and academia. 

The Commissioners represent a broad cross section

of the stakeholders responsible for the health of the

industry and whose expertise represents the breadth

and depth of aerospace issues. Drawing on their

extensive experience, and on the hundreds of 

briefings and public testimony, the Commission has

made nine recommendations—one per chapter—

that provide our guidance to the nation’s leaders on

the future of the U.S. aerospace industry. The size

and scope of this report reflects an industry that is

complex and interdependent.

From the big picture we describe, the Commission

encourages the reader to recognize the importance of

the aerospace industry to America, and to build the

consensus we need for action.

RECOMMENDATION #1: The integral role aerospace plays

in our economy, our security, our mobility, and our values

makes global leadership in aviation and space a national

imperative. Given the real and evolving challenges that confront our nation, government must commit to increased and

sustained investment and must facilitate private investment in

our national aerospace sector. The Commission therefore recommends that the United States boldly pioneer new frontiers

in aerospace technology, commerce, and exploration.

“It is scarcely possible that the twentieth century will witness improvements in transportation that will be as great

as were those in the nineteenth century.”

Brooklyn Daily Eagle,

December 30, 1900
1-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Aerospace is Vital to the United States 

One hundred years ago, the slogan “Anyone,

Anything, Anywhere, Anytime” would have meant

leaving home when transportation permitted and

then allowing nearly a week to travel between widely

separated American cities. 

Today, New York to London is a day trip. A package

of any size mailed tonight arrives tomorrow morning

anywhere in the country. We fly across the world on

a moment’s notice, at an altitude of 41,000 feet, on

an airplane that holds 400 people, getting fed in our

seats, while watching feature-length movies, calling

home or checking our e-mail. When we arrive at 

our destination, our biggest complaint may be the

delays encountered getting to, from and through the

airports.

As America prepares to celebrate the 100th anniversary of the Wright brothers’ historic achievement in

aviation, our Commission was struck with how the

U.S. aerospace industry has shaped the 20th century

not only for America but also for the world. Indeed,

U.S. leadership has been responsible for superior

achievement in many important industries, but aerospace has been our crown jewel. 

Our national security, economic growth, quality of

life, and scientific achievements now depend on a

myriad of aerospace products and services. These

benefits we enjoy as a nation are the direct result of

U.S. leadership in aerospace. Unfortunately, most

Americans take the benefits of aerospace leadership

for granted. Meanwhile, foreign nations clearly recognize the potential benefits from aerospace and are

attempting to wrest global leadership away from us. 

Nevertheless, where we have the national will, such

as in defense, we continue to be the world leader.

Where we do not have the national will, such as in

civil aviation and commercial space, our leadership

position is at risk.

National Security. Aerospace technologies form the

strategic and tactical backbone of U.S. military capabilities, providing global mobility, space-based 

communications and intelligence, defense against

airborne threats, sea and aerospace control, longrange precision strike, and protection and tactical

mobility for ground forces. Aerospace capabilities

provide unique contributions to U.S. national security as well as underwrite the capabilities of allied

coalitions with whom we are involved in the 

vital work of maintaining international peace and

security. 

Economic Growth. The aerospace industry is a powerful force within the U.S. economy and one of the

nation’s most competitive sectors in the global marketplace. It contributes over 15 percent to our Gross

Domestic Product and supports over 15 million high

quality American jobs. Aerospace products provide

the largest trade surplus of any manufacturing sector.

Last year, more than 600 million passengers relied on

U.S. commercial air transportation and over 150

million people were transported on general aviation

aircraft. Over 40 percent of the value of U.S. freight

is transported by air. Aerospace capabilities have

enabled e-commerce to flourish with overnight mail

and parcel delivery, and just-in-time manufacturing. 

Quality of Life. Aerospace products and services are

important contributors to both the business sector

and the quality of life of the American public. Air

travel is the fastest and safest form of personal and

business mobility. Personal travel now accounts for

more than 50 percent of air transportation and is

increasingly accessible to all segments of American

society. The public continues to benefit immeasurably from aerospace applications, including

improved weather forecasting, cellular telephones,

THE AEROSPACE SECTOR MISSION

• Develop, manufacture and/or operate systems used in the

earth’s atmosphere and/or in space;

• Provide services in and from the earth’s atmosphere

and/or space; and

• Provide the workforce and infrastructure and perform the

research needed to develop and support the systems and

services.
1-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 1 – Anyone, Anything, Anywhere, Anytime

precision farming, new medical devices, and hundreds of other benefits.

Scientific Achievement. Ongoing scientific discoveries

have not only enabled the preceding benefits but

have also provided fundamental knowledge of our

planet, the universe, and the origins of life itself.

Space-based observatories, such as the Hubble telescope, enable us to look back in time to the creation

of the universe. The International Space Station is

the first step toward permanent international colonization of outer space. Interpretation of climate

change, and new discoveries about the formation and

evolution of our solar system now have practical relevance and are essential elements of the nation’s

political, cultural, and scientific agenda. 

Government, Industry, Labor and

Academia Each Play an Important Role

There are four major stakeholder groups that play

important roles in the aerospace sector—government

(at all levels), industry, labor, and academia. In performing these roles, they contribute to the three

major segments of aerospace—national security

(defense and intelligence), civil (other government)

and commercial. Each segment has air, ground and

space components. All of the stakeholders need to

work together in partnership to deliver quality aerospace products and services to the American people.

For example, in the area of air transportation, the

Federal Aviation Administration (FAA) in the U.S.

Department of Transportation

(DOT) develops and operates the

nation’s civil air traffic control system for military, civil and commercial aircraft operating in domestic

and oceanic airspace. That system

depends on the military’s Global

Positioning System for navigation

information and air- and spacebased sensors for surveillance

information. It uses military, civil and commercial

communications for ground-to-air and air-toground communications. Local airport authorities

build and operate the airports; while aircraft and 

airport security is provided by DOT’s Transportation

Security Administration.

The FAA also regulates and certifies

civil and commercial aircraft safety

and works with the Department of

Defense to provide the air traffic

controllers that manage the nation’s

air traffic control system. The

Environmental Protection Agency

regulates the environmental permitting of new runway construction. 

The Departments of State, Commerce and

Transportation negotiate international aviation

agreements, standards and regulations. The National

Aeronautics and Space Administration develops

SEGMENTS OF THE AEROSPACE SECTOR

• National Security

– Defense

• Air (e.g., combat aircraft, airlift, unmanned aerial

vehicles, guided missiles)

• Space (e.g., space launch, communications, navigation

and reconnaissance satellites)

– Intelligence (e.g., air and space-based communications,

reconnaissance)

• Civil (other government)

– Air (e.g., air traffic management system, safety regulation, accident investigation, environmental permitting,

noise and emission standards)

– Space (e.g., weather satellites, air- and space-based

earth monitoring, International Space Station, Space

Shuttle, Hubble Space Telescope, robotic missions to the

planets)

• Commercial

– Air (e.g., aircraft manufacturing, air carriers, general

aviation, airport operations)

– Space (e.g., space launch, launch vehicles and satellite

manufacturing, telecommunications, remote sensing)

Unfortunately, most

Americans take the

benefits of aerospace

leadership for granted. 
1-4

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

technology to improve aviation safety and reduce

environmental impacts as well as develop tools for

improving the air traffic control system. It also

invests in long-term aerospace research and development for the commercial aerospace industry. 

The commercial sector develops and manufactures

the equipment used in the aircraft as well as the

ground, air and space systems used in the air transportation management system. The commercial sector also manufactures the aircraft and operates the

airlines that transport the public, business passengers

and goods—both domestically and abroad.

As this example illustrates, a vast array of organizations make up the aerospace sector, including: federal, state and local government organizations;

multi-national corporations, suppliers and small

businesses; labor unions and trade schools; colleges

and universities; professional associations and societies; and non-governmental organizations. The government (military and civil) and the commercial sector need to work together to provide the nation with

safe and secure air transportation anywhere in the

world. 

In addition, the aerospace sector generates a wide

range of jobs across the fabric of the American economy. This includes jobs in: runway and airport construction; ground transportation; retail stores and

restaurants at airports; and agricultural, urban planning and weather services. 

The World is Changing Rapidly

The Commission has identified a number of forces

that are changing the world and the aerospace sector.

Among these changes are significant shifts in the

global threat, mobility and environmental awareness,

economic growth, governance, and technology.

Understanding these changes is critical if the United

States is to move forward in the second hundred

years of human flight and sustain its global aerospace

leadership position. 

Looking ahead, U.S. dependence on new aerospace

capabilities and technologies will only continue to

grow. Military priorities include defense against ballistic missiles, more rapid global power projection,

and more emphasis on aerospace-based communications, intelligence, surveillance, and reconnaissance,

among others. Civil priorities include more effective

and efficient air traffic management, advanced navigation aids, and other infrastructure needs. Space

will open up new opportunities for expanding

human presence in the solar system and enriching

life on earth through its exploitation in such areas as

energy and materials.

How the United States addresses these military, civil

and commercial priorities will significantly impact

the American economy as well as our national security posture.

FORCES OF CHANGE ON AEROSPACE

HISTORIC EMERGING

Super Power Threat Terrorism Threat

Explosives Cyber, Chemical, Bio

Vehicle Centric Network Centric

Foreign Adversaries International Partners & 

Competitors

Hub and Spoke Point-to-Point

Airlines Range of Air Vehicles

Human Control Human Oversight

System-by-System System-of-Systems

Prescriptive Performance-based

Specifications Solutions and Regulations

Local & Regional National & Global Markets

U.S. Companies Multi-national Corporations

Predominantly White Diverse Workforce

Male Workforce

Large Physical Virtual & Flexible

Infrastructure

Mass Production Custom Built Atom-by-Atom
1-5

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 1 – Anyone, Anything, Anywhere, Anytime

U.S. Aerospace Global Leadership is in

Jeopardy

Our Commission has met with many organizations—both foreign and domestic—over the past

year. We have gathered information on the health

and future of the aerospace industry,

at home and abroad. Based on this,

we believe that U.S. aerospace leadership is in jeopardy. Here is what

we see: 

At Home. The U.S. aerospace sector,

most notably the commercial air

sector, is seen increasingly as a

mature industry lacking in capital investment, innovation, and capacity for growth. Aerospace sector

market capitalization, research and development

investments and return on investments/assets are

down and consolidations are up. The U.S. is losing

global market share and its positive balance of trade

in aerospace manufacturing is eroding. Jobs are

going overseas. 

The U.S. economic downturn, coupled with the

additional security costs resulting from the

September 11 terrorist attacks, is crippling the 

airlines and causing massive layoffs. Meanwhile,

today’s air transportation system—based on 1960s

technology and operational concepts—is reaching

capacity, resulting in increasing delays and costs for

both passengers and shippers.

At the same time, government investments in longterm civil aerospace research are static, if not declining in real terms. The lack of sustained, long-term

investment is stifling innovation and preventing the

establishment of new economic growth curves for air

transportation and space. While the military has

recently received significant increases, both in

research and development and in procurement

accounts, those increases focus on near-term

counter-terrorism and homeland security problems

and may be short-lived. The aerospace workforce

and infrastructure are aging, and there is a lack of

compelling vision or robust financial outlook to

draw our youth into this important business sector. 

Abroad. Around the world, foreign competitors are

aggressively implementing policies to take global

aerospace leadership away from the United States.

The European Union has a stated policy objective of

being the world’s leader in aerospace by 2020. Asian

nations are aggressively trying to capture the U.S.

systems engineering and integration

expertise needed to develop stateof-the-art aerospace systems. The

international competition continues to gain global market share in

commercial aviation. Often desirable, but ever-tightening environmental requirements on noise and

emissions are limiting worldwide flight operations

and creating international conflict. And, in spite of

excess capacity and low demand for space launch

capabilities, foreign governments continue to subsidize their commercial space launch industry. 

The Commission finds this situation unacceptable.

A Vision for America

What could “Anyone, Anything, Anywhere,

Anytime” mean a century from now? A one-hour

sub-orbital trip from the United States to Japan? A

lunar vacation? A Martian hiking expedition?

Whatever our future holds, the aerospace sector will

be at its foundation, providing our nation and the

world with the ability to move people, goods, services and ideas whenever they are needed and wherever they are wanted.

Unfortunately, the nation has not articulated a compelling aerospace vision for over forty years—not

since 1961, when President Kennedy challenged the

nation to put humans on the Moon and to bring

them back safely before the end of the decade.

Although spurred by the Cold War and early successes by the Soviet Union in space, the Apollo program transformed America into a space-faring

nation, while establishing us as the global aerospace

leader. The human space flight program, with each

mission more ambitious than the last, further motivated an entire generation of the nation’s best and

brightest students to pursue careers in science and

engineering.

We believe that U.S.

aerospace leadership

is in jeopardy.
1-6

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

As we now coast on investments made by the generations that came before us, the technological and

economic preeminence we have taken for granted is

in jeopardy. Based largely on perspectives and expectations borne of the Apollo era, Americans commonly view aerospace as the highest of high-tech

industries. Aerospace was the unique purview of the

advanced society that is America. Today, however,

aerospace and other high-tech industries flourish

globally, offering strong and unprecedented international competition in these sectors.

The time is now to shape a bold new aerospace vision

for this century that does not leave us wondering

whether the 20th century saw the ultimate advances

in mobility. In particular, the nation faces a new

imperative for which the aerospace industry is

uniquely positioned to shine: America and its allies

must win the war against terrorism while taking

aggressive measures to strengthen our economy and

improve the quality of life for all Americans.

The nation needs to build on the vision that

President Eisenhower had in 1956 of an interstate

highway system, which transformed America into a

mobile society. Now is the time to provide that same

mobility to all Americans in the air and in space.

We need a bold vision for air transportation that creates a new, highly automated “Interstate Skyway

System.” The system needs to be safe, secure and

efficient and be able to accommodate the large volume and variety of civil and military aerospace vehicles the nation will require in the coming decades. 

We also need an audacious vision of space exploration that recognizes the solar system as our backyard, the Milky Way galaxy as our neighborhood,

and the universe as our hometown. We should do

this not simply because it is fun, or thrilling, or challenging, or enlightening... but because it, too, represents an efficient investment in our economic

strength and, ultimately, in our capacity to defend

ourselves against enemies known and unforeseen.

It’s America’s choice.

The vision that aerospace offers America and the

world is: 

Anyone, Anything, Anywhere, Anytime

Just as the Wright brothers’ historic flight in

December 1903 set the course for U.S. global aerospace leadership in the 20th century, the

Commission believes that its national vision for aerospace—Anyone, Anything, Anywhere, Anytime—

will help sustain our leadership in the 21st century.

If we value technologically-driven prosperity, and if

we value security in times of need, and if we do not

want the 20th century to fade as a distant memory of

America’s greatness, then this vision will:

• Provide a new era of fast, efficient, global air

mobility;

• Enhance our homeland and international security;

• Enable a new era of scientific discovery and space

exploration;

• Open new markets and high-paying jobs for

Americans; and 

• Enable technology applications that spread across

the entire economy.

Sustaining Our Global Leadership

Sustaining U.S. aerospace sector leadership needs to

be a national priority. Today, the nation is responding to a national imperative similar to winning the

Cold War—winning the war against terrorism while

strengthening our global economic leadership.

Aerospace will play a pivotal role in our ability to

respond to this imperative, but the nation needs to

unleash its full potential.

Now is the time for the aerospace sector—government, industry, labor and academia—to come

together to address these critical issues, remove the

bureaucratic and other impediments to progress that

have long since outlived their usefulness, and

embrace our vision for aerospace in the 21st century.

This vision will help set and prioritize national
1-7

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 1 – Anyone, Anything, Anywhere, Anytime

goals—goals that would help to focus both public

and private sector investments and rekindle the

flame of innovation and determination that once

drove the U.S. to develop the interstate highway system and to leave American footprints on the surface

of the moon.

Conclusions

To achieve our vision for aerospace, the Commission

concludes that:

• The nation needs a national aerospace policy;

• There needs to be a government-wide framework

that implements this policy;

• The Administration and Congress need to remove

prohibitive legal and regulatory barriers that

impede this sector’s growth and continually seek to

level the international playing field; and

• Global U.S. aerospace leadership can only be

achieved through investments in our future,

including our industrial base, workforce, longterm research and national infrastructure.

RECOMMENDATION #1

The integral role aerospace plays in our economy,

our security, our mobility, and our values makes

global leadership in aviation and space a national

imperative. Given the real and evolving challenges that confront our nation, government must

commit to increased and sustained investment

and must facilitate private investment in our

national aerospace sector. The Commission therefore recommends that the United States boldly

pioneer new frontiers in aerospace technology,

commerce, and exploration.

2-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 2 – Air Transportation: Exploit Aviation’s Mobility Advantage

Whether aviation’s mobility advantage is used for

economic productivity, military strength, or greater

personal quality of life, it is clearly in the U.S.

national interest to increase both the efficiency and

the use of air transportation.

Efficient air transportation is a tremendous national

asset. U.S. airlines carry more than 600 million passengers per year.1 General aviation aircraft carry an

additional 150 million passengers per year.2 Cargo

airlines have made overnight shipping a consumer

and business utility. Airports are regional economic

powerhouses, and more than 11 million American

jobs and $900 billion in U.S. economic activity

derive from aviation’s pervasive reach.3 Productivity

growth and our Gross Domestic Product are directly

related to an efficient and growing air transportation

system (Figure 2-1).

Even before the events of September 11th, the U.S.

faced serious aviation challenges.

• Commercial air transport had become unpredictable, with frustrating and expensive delays.

Our air traffic system—based on 1960s technology and operating concepts—was approaching

gridlock. 

• Economic problems of major U.S. airlines were

becoming evident.

Chapter 2

Air Transportation: Exploit

Aviation’s Mobility Advantage

RECOMMENDATION #2: The Commission recommends transformation of

the U.S. air transportation system as a national priority. The transformation

requires: 

• Rapid deployment of a new, highly automated Air Traffic Management system, beyond the Federal Aviation Administration’s Operational Evolution

Plan, so robust that it will efficiently, safely, and securely accommodate an

evolving variety and growing number of aerospace vehicles and civil and

military operations; 

• Accelerated introduction of new aerospace systems by shifting from product

to process certification and providing implementation support; and

• Streamlined new airport and runway development.

“The Wright Brothers created the single greatest cultural force since the invention of writing. The airplane

became the first World Wide Web, bringing people,

language, ideas, and values together.”

— Bill Gates,

Founder, Microsoft Corporation
2-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

• Environmental limits on noise and emissions were

impacting worldwide flight

operations and creating international disputes. 

• Our aerospace market leadership was being challenged as 

an explicit goal of foreign 

competitors. 

• And, our country’s investments

in long-term aeronautics research and development were insufficient.

The repercussions of September 11 have compounded most of these problems. Decreases in the

demand for commercial air travel, caused in part by

security concerns, additional security costs, and passenger inconvenience are crippling many airlines and

causing massive layoffs. U.S. airline losses in 2001

totaled over $7 billion and are expected to grow to

$9 billion in 2002.4 Several airlines have filed for

bankruptcy and more may follow, with ripple effects

on the health of the entire aerospace manufacturing

sector. 

As this report is written, the economic health of

America’s airlines continues to decline. The

Commission’s concern over these ongoing events is

deepened by the lack of consensus among the stakeholders in the industry, the Administration, and

Congress regarding the near-term solutions that

could or should be employed to return the industry

to a profitable status. There is consensus, however,

that the solutions to this situation are complex and

must involve cooperation among government,

industry, and labor. The airline industry is currently

subject to a myriad of charges and fees that add up

to a significant percentage of a ticket’s total cost. In

fact, the airlines are subject to more federal taxes and

fees than even the alcohol or tobacco industries,

which have been specifically targeted for “sin taxes.”5

A healthy airline industry is a national resource that

should be enabled and allowed to prosper. 

Any one of these challenges would be cause for serious concern. Taken together—and we do not have

the choice to ignore any of

them—they call for immediate

and bold action.

The nation’s aviation system must

be the best in the world—and we

must ensure that the disruption

of transportation and services

that followed the events of

September 11 never occurs again. 

The United States needs a 21st century global air

transportation system that provides safe, secure, efficient and affordable transportation of people and

The United States needs

a 21st century global air

transportation system.

1978 1998

400

325

225

125

Index (1978 = 100) 275

175

RPMs (Revenue Passenger Miles Flown)

GDP - $1996 (Real Gross Domestic Product)

FTMs (Freight & Express Ton Miles Flown)

375

300

200

100

250

150

350

1983 1988 1993 2003

FTM

RPM

GDP

Source: ATA Annual Reports and U.S. Department of Commerce

(Bureau of Economic Analysis) via www.bea.gov/bea/dn/gdplev.xls

Note: FedEx incorporated into DOT data in 1986

Figure 2-1 Demand for Air Transportation

Outpaces Economic Growth

The U.S. economic downturn coupled with additional 

security costs resulting from the September 11 terrorist attack

are crippling many airlines and causing massive layoffs.
2-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 2 – Air Transportation: Exploit Aviation’s Mobility Advantage

goods in peacetime and wartime. We need a system

that: 

• Enhances national security, strengthens homeland

defense, and enables civil and U.S. military aircraft

to operate without undue restrictions; 

• Increases U.S. economic competitiveness with a

more efficient, higher capacity air transportation

system; and 

• Improves the quality of life of all Americans by

enabling them to go where they want, when they

want.

It is now clear that for too long, we have delayed

the development of policies, systems and technologies needed to solve our air transportation problems.

For too long, we have lacked the national will necessary to make the required investments and guide

them through to application and implementation.

We should wait no longer.

Objective: Delivering People and Goods

Quickly and Affordably—When and

Where Needed

We envision a future in which anywhere, anytime

mobility will enable dramatic improvements in the

productivity of U.S. companies, military capabilities,

and the lives of our citizens. 

We believe that air mobility can provide the fastest,

safest, most secure, most reliable, and most affordable doorstep-to-destination travel. Business travelers

should be able to plan an important 8:45 a.m. airport meeting in any community and be sure that the

flight scheduled to arrive at 8:25 a.m. will be on

time, regardless of weather, visibility, or air traffic

conditions. No longer should extra hours, or even a

day-before arrival, be required. Fast, safe, and secure

point-to-point transportation should be available not

just between major hub airports, but also between

convenient local airports via low-cost, jet air-taxis. 

A whole new generation of unpiloted vehicles should

support our homeland security and enable revolutionary commercial applications. Supersonic business jets could rapidly connect growing transoceanic

partnerships. Rotorcraft should be used to efficiently

shuttle an increasing amount of passengers and

goods to locations beyond traditional airports.

Lighter-than-air vehicles should provide heavy lift,

security patrols, and high-altitude platforms for sensors and communications. Orders placed on the

Internet in the morning could arrive at your home or

business that afternoon. Our military should be

capable of operating more freely in domestic airspace. Aircraft should be so quiet and produce so few

emissions that airports will become welcomed assets

in all communities. 

Both point-to-point and hub-and-spoke

operations will continue to grow.

A new generation of small jets may enable

low-cost, high-speed air taxi service. 
2-4

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Issues

The nation’s aviation sector is staggering under the

combined load of many challenges. Some of the

challenges are discussed in other chapters of this

report. The lack of coordinated government policies

and integrated actions will be discussed in Chapter 5.

International issues, government support for foreign

manufacturers, and the diminishing U.S. influence

in the definition of global aviation standards will be

discussed in Chapter 6. The immediate financial crisis of the airlines and its effects on U.S. manufacturers will be discussed in Chapter 7. The dramatic

decline in the U.S. workforce and long-term aeronautics research will be discussed in Chapters 8 and

9 respectively. Beyond these very serious issues, however, lies a fundamental roadblock—the need to

transform the U.S. air transportation system.

The U.S. Air Transportation System: Does Not Meet

Future Demand 

Our current air transportation system is severely limited in its ability to accommodate America’s growing

need for mobility. The basic system architecture,

operational rules and certification processes developed several decades ago do not allow today’s technologies to be fully utilized and do not allow needed

innovations to be rapidly implemented. 

In response to air traffic delays that reached a peak in

the year 2000, the Federal Aviation Administration

(FAA) developed an Operational Evolution Plan

(OEP) to expand the capacity of our air transportation system by 30 percent by the year 2012.6 The

Commission supports this plan and, in Interim

Report #2, recommended that it be fully funded.

However, the current OEP does not give the nation

sufficient capacity to meet long-term demand.

The nation must commit to developing and implementing a new air transportation system. This system needs to be robust, efficient, safe, secure, and

accommodate an evolving variety and growing number of aerospace vehicles (e.g., unpiloted, tilt-rotor,

lighter-than-air) and civil and military operations.

Without such a system, the delays that plagued air 

travel in the summer of 2000 will be more than a

painful memory—they will be a constant reality.

Getting new technologies, policies and procedures

approved or “certified” for use in our national air

transportation system will require changes in our

current certification process. An RTCA, Inc. study7

of the FAA’s certification process found that:

• Technology development and associated product

cycle times have outpaced the applicable FAA 

regulations, policy, guidance and oversight 

capacity; 

• The time and cost to market for new technology

communication, navigation, surveillance and air

traffic management (CNS/ATM) products is prohibitive to the FAA’s National Airspace System

modernization plans and priorities; 

• The lack of international agreements concerning

the interoperability of CNS/ATM products and

the harmonization of applicable regulations is a

barrier to defining International Airspace System

ISSUES

• U.S. Air Transportation System

– Air Traffic Management Infrastructure

– Certification Process and Airborne Equipage

– New Runway and Airport Development
2-5

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 2 – Air Transportation: Exploit Aviation’s Mobility Advantage

(INAS) operations and to any significant development or certification cost efficiencies for the associated products and systems; and 

• Current methods, policies and practices do not

support the types of operations necessary for efficient use of the INAS by the aviation community. 

To transform our air transportation system, government and industry must work in partnership to

enable certification regulations and processes that

keep pace with advancing technical innovations. We

must be able to efficiently certify the airborne information technologies, integrated systems, and communications links that will comprise our future 

system. 

The FAA is already starting to move in this direction

for certification of operators in its Air Transportation

Oversight System (ATOS). European regulators have

adopted a similar approach to bring advanced new

aviation technologies to the marketplace rapidly. We

should learn from the European experience and

apply such concepts to FAA certification of aircraft

and equipment.

Even when certified for use, airborne equipment that

would enhance the overall capacity and safety of the

aviation system faces a major implementation hurdle. Because significant system benefits do not result

until a large number of aircraft become similarly

equipped, operators have strong disincentives to be

among the first to upgrade their aircraft. This problem must be resolved before the nation’s air transportation system can be effectively modernized.

We also recognize that simply moving aircraft

through the airspace more efficiently will not be

enough to accommodate America’s need for mobility. We need to be able to land at destinations where

people want and need to go. New runways at a handful of key locations around the country could

increase the capacity of our air transportation system

significantly. Unfortunately, the current regulatory

approval process for runway construction is so

Byzantine and unpredictable that it currently takes

10 to 15 years to lay just two miles of concrete at one

of our nation’s airports.8

Runways need to be developed in a timely manner

without lowering our environmental standards or

running roughshod over local community concerns.

Environmental studies need to be performed 

concurrently rather than sequentially. They also must

follow a timely review process to adjudicate disputes.

These three key barriers—the air traffic management

infrastructure, certification and equipage processes,

and new runway and airport development—are discussed in more detail below.

U.S. Air Traffic Management Infrastructure:

Not Scalable and Vulnerable. Air transportation’s

inherent speed advantage is being limited by air 

traffic infrastructure and operating concepts not

designed for high-volume hub and spoke operations.

Steadily increasing delays in the 1990’s are evidence

of a system operating very near its capacity 

limits. On-time flights fell from 81.5 percent 

in 1994 to 72.6 percent in 2000, despite increases 

in scheduled flight times.9 Aviation’s speed advantage is now nearly lost over shorter distances. For

trips less than 500 miles, doorstep to destination

travel time is between 35 and 80 miles per hour.10

Estimates of the cost of aviation delays to the 

U.S. economy range from $9 billion in 2000 to over

$30 billion annually by 2015.11 Without improvement, the combined economic cost of delays over 

Without improvement, the combined economic

cost of delays over the period 2000 to 2012 will

be an estimated $170 billion.
2-6

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

the period 2000 to 2012 will total an estimated 

$170 billion.12

Business globalization, economic growth, population

growth, and the inherent value of more efficient

mobility will continually increase air travel demand

and exacerbate capacity shortfalls. The decline in air

travel and system delays following the terrorist attack

of September 11, 2001 is providing temporary

capacity margins that should not be misinterpreted

as permanent. Growing demand will return and

expose a huge underlying problem. 

In addition, new air transportation services are

emerging that will add even greater capacity challenges. Point-to-point, low cost airlines (Southwest,

Jet Blue, and others) are growing rapidly even in the

midst of currently depressed demand. The Internet

and the pace of global business will continue to

accelerate airborne cargo delivery demand. Demand

for fractional ownership of small private aircraft will

continue to increase business aviation growth. Pointto-point air taxi services are in development by entrepreneurs seeking to capitalize on new, low cost, small

jet aircraft designs. And an extraordinary variety of

unpiloted air vehicles, rotorcraft and lighter-thanair platforms are emerging to meet a growing 

number of military—and perhaps eventually civil—

applications.

Just as important, the nation has new security

requirements for the air transportation system.

Surveillance systems monitoring aircraft flightpaths

need full continental coverage at all altitudes—a

severe challenge for ground-based radar, even with

additional sites. New communications requirements

for voice, data, and ultimately video connections to

in-flight aircraft need to be made secure and continuously available. Commercial and private pilots need

information about restricted airspace and protected

ground sites displayed in their cockpits to avoid accidental intrusions and potentially dangerous security

responses. None of these capabilities are currently

operational.

The FAA’s OEP is the only current national development effort targeted to address the projected capacity shortfall. It should be fully funded. While the

OEP is an evolving plan, it falls short of meeting the

nation’s long-term needs. Even if all of the projects in

the OEP were completed on schedule, flight delays

in 2012 would be at least as great as they were in

2000.13 In addition, the OEP strategy and resources

do not accommodate the surveillance and communications requirements that have emerged since 9/11.

The nation’s civil aviation infrastructure is at a similar juncture as the nation’s highway infrastructure

was in the 1950s. At that time, the nation sought

dramatically improved ground mobility for both

civil and military needs. More country roads, 

Figure 2-3 The decline in air travel and system delays

following 9/11 is providing temporary capacity margins that should not be misinterpreted as permanent.

A typical air traffic controller can maintain

awareness of 4 to 7 aircraft at a time.

1,200

1,100

1,000

900

800

700

600

500

400 1990 1993 1996 1999 2005 2007 2010 2013 2002

*Scheduled Revenue Passenger Enplanements (Millions), Certificated U.S. Carriers

Source: FAA Aerospace Forecasts, Based on DOT Forms 41 and 298-C Revenue Passenger Enplanements (Millions)*

FAA Forecast FYO2

FAA Forecast FYO1 1,010
2-7

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 2 – Air Transportation: Exploit Aviation’s Mobility Advantage

more intersections and more stoplights were not

acceptable solutions. The answer was to build an

entirely new concept designed

for the future. The introduction of the interstate highway

system was a bold change and

investment that has helped

spur the country’s growth and

economic success for the last

50 years. 

Today’s air traffic management system for civil aviation

is not much different from

that used in the 1960’s. It is

still fundamentally based on

radar tracking, reliance on

analog voice radios and the

guidance of air traffic controllers. Although the system is safe, reliable, and still largely capable of handling today’s traffic flow, greater use must be made of 

satellite and other new technologies for the system 

to keep pace with the projected demands of aviation. The Capstone program in Alaska, the datalink demonstration in Miami, and the early introduction of Required Navigation Performance (RNP)

are already demonstrating the potential benefits of

satellites and other new technologies. In addition,

new automation and display technologies, such as

the Standard Terminal Automation Replacement

System (STARS) and the

Display System Replacement

(DSR), provide technology

platforms for integrating nearterm safety and capacity features. However, the aviation

community must also look

past the near horizon and

develop a future concept of

operations and a detailed transition plan to an air traffic

management system that will

require far greater flexibility

and capacity. 

The nation needs a new, highly automated

“Interstate Skyway System” that is safe, secure and

efficient and accommodates the volume and variety

of civil and military air transportation that will be

demanded by the nation in the coming decades. 

The Commission sees a powerful opportunity to

develop a common advanced technology infrastructure that forms the foundation of this new system

Voice

Data Link

• Position

• Intent

• Weather

Future air traffic management operations will likely exploit a network of ground,

airborne, and space-based systems to safely seperate a growing number of aircraft.

The nation needs a new, highly

automated “Interstate Skyway

System” that is safe, secure and

efficient and accommodates the

volume and variety of civil and

military air transportation that

will be demanded by the nation

in the coming decades. 
2-8

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

and simultaneously enhance civil aviation, homeland

security and national defense. Key technologies

being developed by the Department of Defense

(DoD), National Aeronautics and Space Administration (NASA), FAA, National Oceanic and

Atmospheric Administration (NOAA) and private

industry should be brought together to establish that

infrastructure, including:

• Secure, high bandwidth digital communication

systems replacing today’s analog voice radios. 

• Precision navigation reducing position errors for

all aircraft to within a few meters. 

• Precision surveillance systems accurately locating

all aircraft, and automatically detecting any deviations from an approved path within seconds. 

• High-resolution weather forecasts creating 

4-dimensional (space and time) profiles, accurate

for up to 6 hours for all atmospheric conditions

affecting aviation, including wake vortices. 

• Highly accurate digital data bases depicting terrain, obstacle, and airport information no matter

what visibility conditions exist. 

All of this information should be readily accessible

and shared among all intended users through a common information system. In short, the nation needs

an air traffic system of “networked precision.” 

With the notable exception of accurate short-term

weather prediction and wake vortex forecasting,

many of the basic technologies for these capabilities

exist. The DoD, in particular, has developed and

used such systems for many years. This investment

and experience should be aggressively exploited by

the civil sector and supported by the DoD.

Each of the above capabilities would improve aviation. It is their integrated application, however, that

would enable a revolution in air mobility. Conflictfree pathways for the most efficient and weather-safe

routes could be automatically defined and approved.

Closer—and safer—traffic spacing would use available airspace and parallel runways much more 

efficiently. Slot departure and arrival schedule 

accuracy could be reduced to less than 

30 seconds. Small unpiloted vehicles could safely

mix with piloted traffic. Poor visibility could be

eliminated as a capacity or safety restriction at any

public airport. Air traffic controllers would manage

WHAT WILL THE “NEW” AIRLINE OPERATIONS LOOK LIKE IN

10 YEARS?

The answer is... no one knows. Hub and spoke airlines may

become more cost efficient. Low cost carriers may dominate. New

small aircraft markets may open up. Or maybe not.

We need a system so robust and adaptable that we don’t need to

guess at what the future will look like.

Future air traffic control concepts can be explored

through computer simulation.

BUT ISN’T OUR ATTENTION FOCUSED ON FIGHTING A WAR ON

TERRORISM?

It is—and aerospace will help win that war.

But, the Commission also notes—even in the midst of tremendous

national crises—strong U.S. leaders have always been able to see

the long-term picture and invest in the future.

In 1863, at the height of the Civil War, Abraham Lincoln chartered

the construction of the first transcontinental railroad. 
2-9

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 2 – Air Transportation: Exploit Aviation’s Mobility Advantage

overall traffic flows in a highly automated system

rather than direct the movement of every flight.

The design, development, and implementation of

this next-generation ATM system will be an exceedingly complex challenge. While the basic system

components can be readily identified, their integration with new air traffic operating concepts and procedures will require extremely careful development,

test, and evaluation. Major long-term investments

and commitment will be required from the

Administration and Congress. Government and

industry, civil and military leadership, need to work

together to overcome not only technology issues but

also disagreements among aviation’s many interest

groups. 

A federal inter-departmental group, working collaboratively with industry, labor, and other stakeholders

should be formed to plan this new, highly automated

air traffic management system. The new system

operational concept should provide operational benefits, harmonize with the international community,

and exploit aircraft performance capabilities. The

new system should not merely be an extension of the

traditional concepts based on ground navigation systems. The plan should take an integrated systems

approach to achieving improved operational performance and should address needed changes in

everything from policies, procedures, and airspace

design to the procurement of hardware and software.

Initial implementation efforts should focus 

on changing those federal policies and procedures

that will provide early and significant operational

benefits with little or no added out-of-pocket investments. The FAA should clearly define requirements

and timelines for Required Navigation Performance

and standardize precision instrument approach 

procedures. Additionally, it should focus on operationally exploiting available technologies like

Automatic Dependent Surveillance-Broadcast (ADSB)—a data link that provides situation and intent

information to all pilots and controllers in a geographic area—as well as capitalize on DoD research

and development investments that have already produced applicable system capabilities.

Certification Process and Airborne Equipage:

Innovation Needed 

Certification Process. FAA certification is the gate

through which all new aircraft technologies must

pass before entering the national airspace system.

The bulk of certification regulations and processes

were written and developed in an era whose time has

passed and have not kept pace with new technologies. The reality of today is that systems are more

integrated and rely more heavily on software than

current regulations and certification processes can

adequately handle. FAA regulations and standards

are mostly designed for components, boxes, and subsystems, not for integrated aviation systems. 

As a result, an applicant for a new design that incorporates new technologies may have to design and

build a system and propose its certification basis

prior to an FAA determination as to whether such an

approach is viable. Certification for new technologies has, therefore, become highly uncertain in time,

cost, regulatory baseline, and varying FAA regional

office interpretations. Innovations are slowed further

if, because of the uncertainties, manufacturers and
2-10

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

airlines hesitate to proceed with innovative technology or operational developments that are not already

covered by existing certification rules. The regulatory

process needs to be streamlined to enable timely

development of regulations needed to address new

technologies.

Just as certification regulations and processes have

failed to keep pace with the state of technology, so too have procedural regulations. For

example, over sixty years ago, a margin of safety 

for landing distances was applied to commercial 

airplanes. The procedural regulation required an 

aircraft to be able to land on sixty percent of the

available runway. Sixty percent was picked because,

at the time the regulation was developed, little was

known about runways, or rubber, or braking system

performance. No standardized braking tests or manufacturing processes existed. For all these reasons, the

safety cushion was made very large. Today, despite

the fact that much more is known about system and

landing performance, the 60

percent rule has not changed.14

As a result, aviation’s operational procedures are not taking

full advantage of progress in the

known performance of aviation

systems. 

The Commission therefore

believes that a new approach to

certification is needed to foster

innovations that will take

advantage of a constantly improving knowledge base

and new technologies that make aviation safer, more

secure, and more efficient. 

Current certification processes ensure bit by bit that

a design complies with specific regulations covering

each piece of hardware or software. Instead, the FAA

should focus on certifying that manufacturing

organizations have internal design, simulation, testing, and quality assurance processes for assuring their

products comply with all applicable regulations and

are delivered in a condition for safe operation. Such

an approach would allow FAA personnel to more

effectively focus on the most critical safety aspects of

an overall system and safety oversight. Regulations

could also better keep up with technological progress

by becoming less design-specific and more safetyprocess focused. The FAA’s ATOS, mentioned earlier

as a model for flight standards inspections, is a good

example of such an approach. These principles

should be examined for extension and application to hardware and software certification. 

The Equipage Problem. As

noted previously, many of the

technical capabilities to create a

next generation air traffic control system already exist, such

as digital data links, Global

Positioning System (GPS),

ADS-B, advanced flight deck

displays and digital surface mapping. In fact, these

capabilities have existed for many years, some even

decades. But, the civil aviation system has not been

able to incorporate such information-age innovations into its system infrastructure. 

One reason for the extremely slow evolution is the

certification process and the inherent cautiousness in

government and industry over introducing unforeseen risks into a system where safety is a prime concern. Another reason is a challenging labor environment within the FAA air traffic organization, where

system modifications can become entangled with

union negotiations. While these issues are quite real,

A fundamental barrier to

progress is the cost and lack

of operator incentives

for implementing system

innovations.
2-11

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 2 – Air Transportation: Exploit Aviation’s Mobility Advantage

the move to a new air traffic management infrastructure is widely seen as a national necessity by nearly all

parties. Yet, system progress comes at a glacial pace.

Another, more fundamental barrier to progress is the

lack of operator incentives for implementing system

innovations.

Traditionally, the federal government purchases,

operates, and maintains ground and space-based

communication, navigation, and surveillance 

systems. Municipalities, with support from federal

and state governments, develop and operate airports.

Airlines and general aviation operators, however,

must purchase and maintain all their aircraft equipment with no federal support. 

Thus, the FAA can design, purchase, and install only

the non-airborne portion of a system-wide modernization. Airports can do the same only for the ground

portion of local improvements. However, the future

air traffic architecture must be an interconnected system of information exchanges and distributed decision making among all parts of the network, including every aircraft. Aircraft operators must equip with

compatible hardware and systems in order for a

modernized air traffic network to succeed. 

Unfortunately, individual airlines and general aviation operators who are expected to pay for aircraft

equipage have neither the incentives nor the money

to do so. Voluntary airline equipage for air traffic

control modernization has always been a problem.

From an operator’s view, the reason is simple: economics and risk. “Early equippers” of upgraded air

traffic systems technologies take on a number of

additional risks because: 

• The system may not work as needed; 

• Early devices and installations are more expensive; 

• Proposed standards or requirements may change;

and

• Better technology may overtake early systems. 

Most important, “early equippers” generally receive

few operating efficiency benefits until a critical mass

of similarly equipped aircraft make air traffic operational changes and system efficiencies practical.

Unilaterally equipping a few aircraft with digital data

links, GPS position reporting, and/or reduced wake

vortex designs provides no significant individual

operator benefits even though they would provide

major capacity and safety benefits if installed systemwide.

“Late equippers,” on the other hand, face few of the

early system development, design standard, cost, or

installation risks. And, if the critical mass has already

formed to create air traffic efficiency changes, late

equippers accrue immediate operational benefits. 

The results of this situation are disastrous for modernization. Individual airlines and operators clearly

find it in their best interests to delay equipage, especially given their current weak financial situation. As

a result, system developments are continuously

deferred. Just as damaging, avionics suppliers do not

aggressively develop innovative products for network

improvements when there are no reliable customers.

The circle is vicious and quite real.

The FAA currently has two regulatory levers it can

use to address the equipage problem: 

• Establish a rule mandating equipage. While rulemaking can be very effective, it has not been

aggressively employed for operational as opposed

to safety improvements. Rulemaking is typically

used only when a broad new capability is clearly

ready and development risks are low. It is subject

to a legal process that can take significant time,

and is subject to “least common denominator”
2-12

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

pressure to accommodate weaker or more reluctant

participants. Rulemaking is also generally not “targetable,” and seeks to cover a broad range of users

in a single action. As a result, if a significant number of users strenuously object, the rule may not be

issued or its deadline for implementation is

delayed.

• Offer equippers various levels of operational benefits.

These incentives could include preferred airspace,

routings, runway access, or others. Operational

benefits are limited to those aircraft or operators

that can clearly exploit the advantage. Importantly,

the payback for a given operational advantage is

typically best seen from a total system perspective,

not an individual operator perspective.

Operational benefits do not typically save enough

fuel or time for an individual operator that they

quickly pay for themselves. Equipage proposals

with such multi-year paybacks are generally

rejected by a typical airline. It is also not reasonable

to expect that a small aircraft operator would equip

with avionics that exceed the cost of his or her aircraft.

These two levers are insufficient to motivate the

aggressive operator investments in airborne equipment needed for system-wide infrastructure

improvements. The Commission sees the need for

more direct government action and support to overcome the equipage problem.

The Commission believes that airborne equipment

needed for safe, secure, and efficient system-wide

operations should be deemed part of the national

aviation infrastructure. The FAA should be encouraged to also utilize a third incentive lever to support

and motivate operator equipage. The form of that

support could be any of the following:

• Full federal funding for system-critical airborne

equipment. Even if the government fully financed

the communication, navigation, and other 

airborne equipment required for a next-generation

ATM network, the total cost would be well below

the costs of system delays and inefficiencies to the

national economy. In addition, it might cost less 

and provide additional security to equip the civil

fleet with modified military technology than 

it would to retrofit military aircraft with civil 

systems.

• Partial equipage funding. At less cost to the government than full funding, a defined credit in the

form of a voucher or tax incentives could partially

offset the initial cost of equipage. The government

would need to estimate the voucher value necessary to motivate early adaptation by a critical mass

of aircraft operators. 

• Auctioned investment credits. The government

could motivate a limited number of installations

with a credit voucher whose value is determined by

an auction process. Airlines or operators could

competitively bid on the offered support level until

a pre-determined number of users committed to

early equipage. Thus market forces would determine the minimum level of federal funding support needed to overcome the “early equipage”

problem. 

The Commission believes that the equipage problem

is real, critical to future increases in the nation’s air

traffic capacity and must not be ignored. It makes no

sense for federal and local governments to invest billions of dollars in modernizing the air traffic system

infrastructure if a required piece of that infrastructure is left for voluntary funding by private entities

that have little or no incentive to invest. 

THE “EARLY IMPLEMENTER” CHALLENGE IS NOT UNIQUE TO

AVIATION 

Cities and towns that desire real estate development in an area not

served by existing roads, sewers, electrical, and water utilities recognize that the first builder in an area will not pay for common infrastructure if subsequent builders do not also share the cost.

Otherwise, all developers would wait for someone else to build first. 

Municipalities often overcome this problem by overseeing the reimbursement of the developer who first installs the required infrastructure with fees collected from subsequent builders.
2-13

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 2 – Air Transportation: Exploit Aviation’s Mobility Advantage

New Runway and Airport Development: Takes

Too Long. Meeting the nation’s demand for air

transportation, and fully exploiting its benefits will

also require a ground infrastructure that accommodates significant traffic increases. The airport infrastructure is a national asset that needs system-level

attention. Many of the nation’s major airports are

currently operating near or at their capacity limits

during large portions of the day (Figure 2-4). More

significantly, airport delays begin to grow rapidly

when the demand/capacity ratio reaches just 60 percent.15 Although U.S. air passenger traffic has

increased 40 percent since 1991, only 7 new major

airport runways (an approximately 5 percent increase

in the number of runways at the top 50 airports) and

a single new major airport were constructed during

that time. The Air Transport Association has noted

that during that same time, 47 sports stadiums were

constructed in those cities with the top 30 most

delay-prone airports. 

The environmental approval process, and in particular, objections to aircraft noise and emissions are the

primary barriers to building new airports or adding

new runways at existing airports.

The Approval Process. While many airports around

the country have realized the need to add capacity,

construction projects had been held up due to a lack

of financial investment by the federal government

and an inefficient approval process. With the passage

of the Aviation Investment and Reform Act for the

21st century (AIR-21) in 2000, airports now have an

increased and dependable funding stream. But

lengthy and duplicative environmental reviews of

proposed projects remain. As stated earlier, even

without opposition, a review for a proposed airport

construction project can take 10 years. In many

cases, the reviews take 15 to 20 years, and some cases

go on for over 20 years. 

Given the importance of air mobility to the national

interest and the integral role that major airports 

play in providing that mobility, this review timeframe is simply unacceptable. It can and should be

significantly shortened through federal legislation

that includes the following considerations:

• The federal government should recognize that

major airports are an instrumental part of the

national air transportation infrastructure. A balance of national need with valid local priorities

must be maintained. 

LAX

LGA

SFO

PHL

EWR

IAD

DTW

DFW

CLT

PIT

JFK

BWI

DEN

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2

MSP

SEA

ORD

STL

ATL

Airport

Demand/Capacity Ratio

Airport

Delays Become

Disruptive

92 94 96 98 00

3

New Runways at Large Hubs 2

1

0

91 93 95 97 99 01

Source: FAA / Air Transport Association

LAS DTW SLC DFW MEM* PHL PHX

*MEM is a medium hub, but has a substantial cargo operation

92 94 96 98 00

3

New Airports Opened 2

1

0

91 93 95 97 99 01

Source: FAA / Air Transport Association

Denver (DEN)*

Note: Replaced Stapleton Airport; features five runways

Figure 2-4 An Increasing Number of Major

Airports Are Nearing Capacity Limits.

Figure 2-5 Large Hub Airports Opened Since 1990 Figure 2-6 Major New Runways Built Since 1990

Source: FAA/George L. Donohue, Aviation Systems Engineering
2-14

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

• The FAA should assume a lead agency role for

developing and implementing a coordinated airport capacity project review process across the government. Working with aviation stakeholders, an

inter-agency group should be established to

develop a national plan for airport improvements

that would identify critical airport capacity projects. The FAA and other federal agencies should

expedite their environmental reviews as a national

priority for these critical airport capacity projects.

Analyses, permits, licenses, and approvals should

be conducted concurrently to the maximum extent

possible.

• Under current law, the FAA and other agencies

must study whether a reasonable alternative exists

to a proposed capacity project. At major airports

where delays are significant and affect the functioning of the entire national airspace system, it

should be clear that no alternative other than

another capacity project at that same airport is a

reasonable solution. The FAA Administrator

should be able to declare an “alternatives analysis”

unnecessary for projects at designated critical 

airports.

• Existing environmental laws and regulations

should not be weakened or changed. Arguments

for or against a particular project should be considered carefully and publicly, but unending delays

through court challenges should be minimized.

Reasonable judicial review should be conducted in

the U.S. Court of Appeals or higher courts. 

The Commission believes the President has taken a

significant step toward implementing these actions

with an Executive Order signed on September 18,

2002. The Commission believes Congressional

action to support streamlined airport and runway

development should now follow.

Aircraft Noise and Emissions. Aircraft noise remains

the single most significant local objection to airport

construction. Although airplanes are much quieter

today than they were in the past, objectionable noise

levels still depress local real estate values and impact

the quality of life in localities receiving the economic

benefits of air transport.

Aviation is a truly global enterprise. Recognizing

this, the United Nations established the International Civil Aviation Organization (ICAO) to

develop international aviation standards and recommended practices. 

ICAO standards, a vital element of a balanced

approach to environmental management, are set on

the basis of “best available” aircraft noise and emissions technology. The steady progress in setting more

stringent environmental standards reflects the

tremendous community benefits achieved by the aviation industry through reduced aircraft noise and

emissions. But, these accomplishments have only

been possible because of historically well-funded

public-private NASA/industry research and development partnerships responsible for the development

of advanced technologies. Today, these vital programs are threatened by critical under-funding.

The substantial reduction in local noise resulting

from the phase-out and conversion of noisier Stage 2

aircraft is a significant accomplishment for the

nation. Of the 7.5 million people affected by unacceptable (greater than 65 dB Day-Night Level

(DNL)) noise levels in 1975, less than 400,000 are

affected today.16 Airlines spent over $4 billion to

achieve this end.17 But, more remains to be done. 

Source: NASA

Baseline

(55 dB DNL)

-10db

-20db

Airport Boundary

Figure 2-7 Computer Model Contours of Noise

Boundaries Around Chicago’s O’Hare Airport Show

Projected Impact of Reducing Aircraft Noise
2-15

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 2 – Air Transportation: Exploit Aviation’s Mobility Advantage

With adequate research, major noise reduction

breakthroughs may be possible. NASA’s recently

released Aeronautics Blueprint highlights a combination of engine, aerodynamics, materials, flight systems, and other technologies that offer the hope of

reducing noise by 90 percent (10 dB).18

Yet, despite continued existence of noise problems

and the possibility of significant improvements, the

federal government invests only $20 million per year

in basic, pre-competitive research to reduce engine

and airframe noise.19 Current funding levels are inadequate to achieve the long-term FAA goal of reducing community noise exposure to the confines of the

airport, a goal dependent on NASA research and

development, the seed corn of a viable U.S. commercial aviation industry.

Emissions problems are similar to the noise problem,

and the two are very interrelated. The local community effect from oxides of nitrogen (NOx) and high

altitude effect from carbon dioxide are becoming

limiting factors to aviation’s growth. Solutions to

reduce noise and carbon dioxide often cause the production of nitrogen oxides to increase, creating a significant challenge to reducing noise and emissions

simultaneously. In addition, carbon monoxide,

unburned hydrocarbons and particulate matter,

water vapor, sulfur oxides, and aromatics must also

be reduced, but face similar trade-off challenges.

NASA research and development programs aim to

overcome these severe challenges.

Power, propulsion, and fuel design breakthroughs are

achievable. However, the national research and

development effort is exceedingly small compared to

the magnitude of the problem and the payoff for its

mitigation. The Commission believes that additional

government investment in long-term research is

imperative to solve the serious challenges of aircraft

noise and emissions. Chapter 9 of this report further

describes these needs.

Conclusions

The Commission concludes that superior mobility

afforded by air transportation is a huge national asset

and competitive advantage for the United States.

Because of the tremendous benefits derived from a

highly mobile citizenry and rapid cargo transport,

the United States must make consistent and significant improvements to our nation’s air transportation

system a top national priority. 

Transform the U.S. Air Transportation System as

a National Priority. We need national leadership

to develop an air transportation system that simultaneously meets our civil aviation, national defense

and homeland security needs. Today, leadership and

responsibility are dispersed among many federal,

state and local organizations that impact the aviation

community. In the federal government, this includes

the Department of Transportation’s Federal Aviation

Administration, NASA, Environmental Protection

Agency, and the Departments of Defense, Commerce, and State. 

Often these departments and agencies deal with aviation-related issues independently, without adequate

coordination, and sometimes at cross-purposes. All

have separate authorizing and appropriating Congressional committees. State and local governments

also play important aviation development roles and

private industry has numerous near-term competing

forces that often delay longer-term solutions. Only

strong federal leadership, aimed at a national objective, can sustain a transformational effort.
2-16

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Deploy a New, Highly Automated Air Traffic

Management System. The core of an integrated 

21st century transportation system will be a common advanced communications, navigation and surveillance (CNS) infrastructure and modern operational procedures. The system needs to allow all

classes of aircraft, from airlines to unpiloted vehicles,

to operate safely, securely, and efficiently from thousands of communities based on market size and

demand. It also needs to be able to operate within a

national air defense system and enable military and

commercial aircraft to operate around the world in

peacetime and in war. 

As a first step, the Commission recommended in its

second Interim Report “the Administration should

immediately create a multi-agency task force with

the leadership to develop an integrated plan to transform our air transportation system.” This task force

should be immediately assigned the leadership role

to establish a Next Generation Air Transportation

System Joint Program Office that brings together

needed participation from the FAA, NASA, DoD,

Office of Homeland Security, National

Oceanographic and Atmospheric Administration,

and other government organizations. Within a year,

the Joint Program Office should present a plan to the

Administration and the Congress outlining the overall strategy, schedule, and resources needed to

develop and deploy the nation’s next generation air

transportation system.

As this transformational plan is developed, the FAA

must continue to implement the Operational

Evolution Plan. FAA and NASA must also continue

to perform critical long-term research. The

Commission also recommended in Interim Report

#2 “the Administration and Congress should fully

fund air traffic control modernization efforts in fiscal

year 2003 and beyond, and prioritize FAA and

NASA research and development efforts that are the

critical building blocks for the future.”

Provide Certification Process and Airborne

Equipage Innovation. The Commission calls for a

new approach to the regulation and certification of

aircraft technology, processes and procedures. The

government also needs new mechanisms to accelerate

the equipage of aircraft in order for the nation to

realize broader system benefits. Airborne equipment

needed for safe, secure, and efficient system-wide

operations should be deemed to be part of the

national aviation infrastructure.

• Shift from product to process certification. Instead of

a focus on rules and regulations that dictate the

design and approval of each particular piece of

hardware or software, the FAA should focus on

certifying that design organizations have safety

built into their processes for designing, testing,

and assuring the performance of an overall system. 

• Solve the airborne equipage problem. The government, in partnership with industry, must be more

responsible for airborne equipment development

and continuous modernization. In addition to current regulatory and operational incentives, the

government should consider options to motivate a

critical mass of early equippers, including full federal funding for system-critical airborne equipment, tax incentives or vouchers for partial funding support, and competitively auctioned credit

vouchers.

Streamline Airport and Runway Development.

The FAA and other agencies should expedite new

runway and airport development as a national priority. Further, because aircraft noise and emissions constrain capacity growth, additional government

investment in long-term research in this area is

imperative.
2-17

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 2 – Air Transportation: Exploit Aviation’s Mobility Advantage

Act Now. The Commission sees compelling reasons

for the Administration and Congress to take immediate action. First, new homeland security and

defense requirements call for system capabilities not

previously anticipated. Second, an entirely new level

of transportation efficiency and national mobility

can be enabled by more flexible, scalable, higher precision aviation operations. Third, inherently long

lead times required for major aviation changes

demand preparation far ahead of anticipated

demand. And fourth, there could be no better

American response after 9/11 than to rebuild the

U.S. air transportation system dramatically better

than it was before.

As we approach the 100th anniversary of powered

flight, the Commission urges the President and

Congress to recognize a pressing national need, and

powerful opportunity, and act now to create a 21st

century air transportation system. 

RECOMMENDATION #2: The Commission recommends transformation of the U.S. air transportation system as a national priority. The transformation requires: 

• Rapid deployment of a new, highly automated

Air Traffic Management system, beyond the

Federal Aviation Administration’s Operational

Evolution Plan, so robust that it will efficiently,

safely, and securely accommodate an evolving

variety and growing number of aerospace vehicles and civil and military operations; 

• Accelerated introduction of new aerospace systems, by shifting from product to process certification and providing implementation support;

and

• Streamlined new airport and runway development.

3-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 3 – Space: Its Special Significance

Nations aspiring to global leadership in the 21st century must be space-faring. Freedom, mobility, quality of life and the ability to do the difficult things

that define leadership will be enhanced and discovered on the space frontier. For the vision and the

commitment that leadership requires, space is an

imperative.

The United States should recognize the space imperative from its own history. The global legacy we

achieved in the latter half of the 20th century was in

large part tied to space successes. Humans on the

moon, orbiting in space laboratories, space science

discoveries and profound new military capabilities 

all played a role in showing the world our technological prowess and helped us succeed in Cold War

competition.

Today, however, a sense of lethargy has infected the

space industry and community. Instead of the excitement and exuberance that dominated our early 

ventures into space, we at times seem almost apologetic about our continued investments in the space

program. Yet Japan, China, Russia, India and 

France, to name a few, see space as a strategic 

and economic frontier that should be aggressively

pursued. 

So should we.

Objective: The Ability to Do Great Things

The challenge we face on the space frontier is to

build from dreams and concepts, to new technologies and destinations, to the political will to move

forward. For nearly two decades, we have been satisfied to limit our dreams, rely upon proven technologies and invest little in building public or political

support for space initiatives. But the potential to do

great new things has never been clearer.

The truth is that the limitations to space progress are

real: significant expense to get to orbit, a hostile and

highly limited environment once on-orbit and a lack

of strong public advocacy for moving ahead. We

must overcome these limitations and move forward.

Chapter 3

Space: Its Special

Significance

RECOMMENDATION #3: The Commission recommends that the

United States create a space imperative. The Department of Defense,

the National Aeronautics and Space Administration and industry must

partner in innovative aerospace technologies, especially in the areas

of propulsion and power. These innovations will enhance our national

security, provide major spin-offs to our economy, accelerate the

exploration of the near and distant universe with both human and

robotic missions, and open up new opportunities for public space

travel and commercial space endeavors in the 21st century.
3-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Issues

Access to Space: Cost to Orbit is High

Clear consensus exists in the space community that

reducing the cost to orbit is an essential ingredient

for progress. The expense per pound of lifting

humans, cargo and satellites into orbit has effectively

limited us to utilizing space for only the most critical

national missions. The result has been a narrowing,

rather than a broadening, of our space ambitions.

Decreasing launch costs has been a fundamental goal

for the space launch industry. However, little

progress has been made to date. A heavy lift

Expendable Launch Vehicle (ELV) costs approximately $10,000 per pound to orbit. The Space

Shuttle, although originally designed to reduce costs

per pound to orbit from $10,000 to $1,000, never

achieved its promised cost savings.1

Survey data indicate that launch demand has significantly decreased. We would expect that significantly

lowering the cost to orbit might reverse this trend. A

second or third generation launch vehicle based on

new, advanced technology could phase out today’s

expensive ELV and Space Shuttle operations and

open new commercial markets. Associated technology could also: improve control center operations

and operational security; reduce environmental concerns; and mitigate launch, flight and recovery operational and environmental constraints. The operational model for a next generation space launch

vehicle needs to move incrementally closer to the

turnaround capabilities of today’s passenger airline

operations.

ISSUES

• Access to Space

• Propulsion for the Solar System and Beyond

• Power for Space Operations

• National Security

• Space Launch Infrastructure

• Commercial Space

• Science

Vehicle LEO (lb) GTO (lb) Cost Median ($M) Avg. LEO Cost/lb Avg. GTO Cost/lb

Pegasus XL

Minotaur

Athena I

SSLV Taurus

Taurus 2X10

Titan II

Athena II

Delta II 73XX

Delta II 74XX

Delta II 79XX

Delta II 79XX Heavy

Atlas IIA

Delta III

Delta IV M

Atlas IIAS

Atlas IIIA

Atlas IIIB

Atlas V 400

Delta IV M+

Atlas V 500

Titan IVB

Delta IV H

Average Cost/lb

Median Cost/lb

975

1,406

1,804

2,904

3,036

4,180

4,543

6,151

7,042

11,224

13,517

16,095

18,238

18,920

18,960

19,008

23,580

27,500

29,920

44,110

47,696

56,760

N/A

N/A

N/A

880

986

N/A

1,298

1,960

2,508

3,483

4,807

6,745

8,382

8,580

8,182

8,881

9,849

11,000

13,464

18,040

19,000

27,280

$25

$13

$17

$19

$34

$35

$24

$56

$56

$63

$70

$80

$85

$97

$98

$95

$95

$99

$97

$114

$400

$155

$25,652

$8,892

$9,146

$6,543

$11,199

$8,373

$5,283

$9,023

$7,881

$5,613

$5,142

$4,970

$4,661

$5,127

$5,143

$4,972

$4,008

$3,582

$3,242

$2,584

$8,386

$2,731

$6,916

$5,213

N/A

N/A

N/A

$21,591

$34,497

N/A

$18,490

$28,313

$22,129

$18,090

$14,458

$11,860

$10,141

$11,305

$11,917

$10,640

$9,594

$8,955

$7,204

$6,319

$21,053

$5,682

$15,124

$11,888

AVERAGE / MEDIAN US LAUNCH COSTS PER POUND

LEO: Low Earth Orbit GTO: Geostationary Transfer Orbit

Figure 3-1 NASA Derived Cost Estimate per Pound to Orbit
3-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 3 – Space: Its Special Significance

Reducing the cost to orbit could change the economic calculus of space. The use of revolutionary

reusable launch vehicles (RLV) is well within our

grasp in this decade. Developing the next generation

of RLVs (in low, medium and heavy lift configurations) could dramatically improve both the affordability and reliability of access to space. The National

Aeronautics and Space Administration (NASA) and

Department of Defense (DoD) have begun discussions to achieve this goal.

NASA’s Space Launch Initiative (SLI) is a funded

development effort intended to look at more reliable,

cheaper and more frequent access to space through

the development of a second generation reusable

launch system. However, to date, NASA’s SLI program does not include funding for demonstration

flights. 

Whereas the National Aerospace Initiative (NAI), a

joint DoD and NASA program, is focused on

exploiting and developing new and innovative technological capabilities in the areas of highspeed/hypersonics, access-to-space and space technology. The NAI will develop and demonstrate a

portfolio of critical technologies that will enable the

achievement of many common DoD and NASA

goals such as: supersonic/hypersonic capabilities;

safe, affordable, launch on demand space access; and

Prototype of a NASA X-38 Crew Return Vehicle.

Space Shuttle

Launch from the

Kennedy Space

Center, Florida.

responsive payloads for quick deployment and

employment of space capabilities.

Integrating the SLI and NAI initiatives could 

provide the nation with RLV technologies needed to

enable the development of revolutionary air and

space systems. The DoD could contribute significantly to air-breathing propulsion technologies, serving air mission needs and simultaneously providing a

first stage platform for an RLV. NASA is working

toward a next generation spacecraft that could provide a powered crew vehicle as a second stage of a

two-stage RLV.

“Attempts at developing breakthrough space 

transportation systems have proved illusory.”

Commissioner Buzz Aldrin
3-4

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

The Commission believes that the nation would

benefit from a joint effort by NASA and DoD to significantly reduce the cost and time required to access

space by integrating NAI and SLI. Such an effort

would not only build on the capabilities of both

organizations but also provide the “critical mass” of

funding needed to create the necessary breakthroughs in propulsion.

Propulsion for the Solar System and Beyond: In

Need of Breakthrough

To date, all spacecraft that have left Earth have simply coasted to their destination on ballistic trajectories. After they leave low-Earth orbit, their engines

generally do not turn on again until it is time to slow

down at the destination. In some cases the spacecraft

gain additional energy along trajectories that “sling

shot” them past other planets. Transit times will be

significantly reduced if fuel were burned along the

way, vastly increasing the craft’s speed. 

Over the longer term, investment in the development of more advanced propulsion systems (e.g.,

nuclear—by splitting or fusing atoms—to produce

hot plasmas, matter/anti-matter annihilation reactions) will lead to faster transit times, improve operational flexibility and reduce the radiation impacts

for long duration human exploration missions.

Nuclear energy could produce a high-temperature

plasma that would potentially reduce the transit time

for a manned mission to Mars from seven or eight

months to about twelve weeks. Since powered flight

would be much less dependent on orbital mechanics,

the crew would also benefit from having the flexibility to return to Earth on their own schedule. A successful plasma design would reduce transit times and

also result in a tremendous advantage for spacecraft

payloads since less weight would have to be allotted

for fuel. NASA and the Department of Energy

(DOE) currently conducts antimatter research.

Although matter/antimatter reactions as a source of

propulsion are far from being reality, the initial

research results are encouraging. See Chapter 9 for

additional information on propulsion.

The Commission believes that, once the time to

explore many parts of the solar system has been

reduced to reasonable durations—months instead of

years—the political imperative to do so will follow. 

Power for Space Operations: A Limiting Factor

What limits the performance of most spacecraft,

including the International Space Station (ISS), is

the amount of power that can be generated from

solar energy. Increasing available power, both on

orbit and beyond orbit, could expand opportunities

in military, civil, and commercial space applications.

The Commission believes that

the nation would benefit from a

joint effort by NASA and DoD to

significantly reduce the cost and

time required to access space. 

Plasma propulsion will help

reduce transit

times through

the solar system.

Destination

Mars

Mars

Mars

Chemical / Gravity Assist

Nuclear / Plasma

Antimatter

28 - 32 weeks

12 weeks

6 weeks

Propulsion Transit Time - One Way

Figure 3-2 Example Transit Times to 

Mars for Different Propulsion Types

Source: NASA
3-5

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 3 – Space: Its Special Significance

The concept of using solar power satellites to beam

power to Earth has been a distant dream. But, the

use of such satellites as a “refueling station,” to collect solar energy and beam it to on-orbit assets is

worth exploring.

Solar or nuclear power stations capable of supplying

on-orbit power could also have commercial potential. Selling power as a space utility is the kind of

business arrangement that the space community has

long needed. The enhanced power would prove to be

a huge benefit to ISS. It could provide sufficient energy to conduct commercial activities not 

now possible within the station’s limited power 

capabilities.

In addition, others looking to commercial use of

space could design their own free-flyer modules

equipped with an antenna to receive power, thus

needing little more than an emergency backup capability on board. See Chapter 9 for additional information on power.

The Commission believes that once there is affordable, abundant power in orbit, public and private

investments in space systems and exploration will

follow. 

National Security: Not Capitalizing on Space-Based

Opportunities

The U.S. military continues to benefit from a generation of satellites that were built during the Cold

War. Advanced technologies, however, will open up

opportunities for a new generation of space capabilities, such as laser communications, space-based

radar and on-demand access to space. These would

transform military operations while simultaneously

addressing other national needs, such as homeland

defense and air transportation.

Military Use of Space. The military will increasingly rely on space-based communications, navigation, surveillance and reconnaissance systems for:

moving its forces around the world; conducting

global, precision power projection operations; and

defending the homeland. The military and intelligence community will also use global reconnaissance

and surveillance systems to continuously monitor

the intentions and actions of terrorists, rogue nations

and emerging world powers. The civil aviation system should use these same capabilities to improve

dramatically the safety, security and capacity of the

nation’s air transportation system. 

International Space Station, October 16, 2002.

The Titan IVB is

the largest

unmanned space

booster used by the

Air Force. 
3-6

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Planetary Defense. Near-Earth Objects (NEOs)

pose a potentially serious threat for humankind.

Scientists are now certain that a major asteroid or

comet was responsible for the mass extinction of the

dinosaurs. 

The U.S. Air Force (USAF) is currently conducting

concept exploration studies for a constellation of

satellites designed to detect and track man-made

satellites in Earth’s orbit.2 The Commission believes

that these studies should be broadened to include

detection of asteroids. U.S. Strategic Command officials are also reviewing a concept for a clearinghouse

that gathers and analyzes data on potential Earth

impacts from asteroids. In addition, the National

Security Space Architect is currently, as part of the

Space Situational Awareness Architecture, integrating the use of space and ground-based surveillance

systems. Given these actions, planetary defense

should be assigned to DoD in cooperation with

NASA. 

The Commission believes that the nation needs a

joint civil and military initiative to develop a core

space infrastructure that will address emerging

national needs for military use and planetary defense.

Space Launch Infrastructure: Aging 

The current replacement value (CRV) of infrastructure at NASA’s Kennedy Space Center (KSC) is estimated to be $3.9 billion; and $3.0 billion at DoD’s

Cape Canaveral Air Force Station (CCAFS). Current

maintenance funding at KSC is below the National

Research Council’s recommended minimum of 2 to

4 percent of CRV. NASA’s investment has been

about 1.5 percent of CRV. 

As a result, at NASA’s KSC:3

• The cable plant has 275 miles of tar-paper ducts

that are collapsing; the air pressurized cable jackets

are failing to keep water out thus producing shorts;

and cable insulation in the plant is deteriorating

leaving bare wire exposed.

• The Vehicle Assembly Building has sustained siding and bolt failures due to hurricanes and seasonal

high winds. Its 35 year-old roof requires frequent

external patching, and platforms and nets have

been installed below the roof deck to catch falling

debris. Overall, the structure is badly deteriorated

and severely corroded.

• Ten miles of 4-inch high-pressure gaseous nitrogen

and helium pipelines to the Space Shuttle launch

The Crawler/Transporters, used to move the

assembled Space Shuttle system to the

launch pad, are over 30 years old.

Artist’s concept of a catastrophic asteroid impact with the Earth. Life

near the impact would be instantly wiped out from the effects of high

temperatures and pressures.
3-7

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 3 – Space: Its Special Significance

complexes are also 35 years old and severely 

corroded.

• The Crawler/Transporters, used to move the

assembled Space Shuttle system to the launch pad,

are over 30 years old, reaching the end of their useful life, and many subsystems are unsupportable

due to age.

• The checkout, control and monitoring subsystem

developed in the 1970s for shuttle testing and

launch is so old that there aren’t enough spare parts

for 10 percent of its components. NASA began to

upgrade this subsystem in 1996, but it will not be

completed until 2007. 

DoD support infrastructure at CCAFS has similar

problems:4

• Many systems have numerous components that

have exceeded their life expectancy. This includes

electrical distribution; water distribution; waste

water system; heating, ventilation and air conditioning; and fire protection systems; as well as the

airfield.

• Some supporting infrastructure systems are 45 to

55 years old.

• Multiple components have no replacement 

parts due to either obsolete technology or no 

manufacturer.

• A corrosive environment leads to unplanned 

failures.

The Commission believes that clearly a new structure for operation and management structure for

these space facilities would be desirable. Such a structure would have to take into account the different

missions of the USAF and NASA while at the same

time assuring timely and consistent upgrades of vital

infrastructure. Therefore, the USAF and NASA

should explore privatization and “municipalization”

options to deal with their space infrastructure problems. NASA should also consider encouraging additional public and private investment in its field centers by turning over day-to-day management

responsibilities to state government, universities

and/or companies. This could also help deal with the

problem of operational costs.

Commercial Space: A Capacity and Demand

Mismatch

In the future, the civil and commercial sectors will

look to space for new products and services that will

create new markets, much as they did for telecommunications and commercial remote sensing. The

scientific community will have the opportunity to

explore the universe and gain access to information

about our planet, its atmosphere and the solar system. The public will benefit by having the opportunity some day to live, work, and vacation in space.

But the reality is that today we are not even close to

achieving those opportunities and dreams. Domestic

launch vehicle capacity and satellite manufacturing

capabilities far exceed both domestic and international launch market demand. The U.S. commercial

space industry continues to lose access to markets as

demand decreases and international competition

increases. This industry segment will not overcome

these obstacles without government support. New

regulations and incentives will be necessary to bolster

this important market until there is a turnaround in

demand, not unlike what was done in the early rail

and airline industries. Additionally, if government

expects industry to be a partner in developing the

Kennedy Space Center’s

Vehicle Assembly Building.
3-8

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

tremendous expensive supporting infrastructure,

then there must be an expectation that these investments will result in a strong business case. Data from

the Federal Aviation Administration (FAA) shows 

a decline in launch activity since 1967. See Figure

3–3.

The launch activity forecast shows that most organizations expect launch service demand to continue to

decrease. While the ability to forecast launch

demand is not an exact science, the agencies and

organizations providing this information all agree on

the declining trend. 

Both launch activity and their

associated revenues are declining. Overall, the FAA recorded

16 worldwide commercial

orbital launches in calendar

year 2001. (See Figure 3-3.)

This number is significantly

less than in prior years. There were 39 in 1999 and

35 in 2000. Arianespace captured 50 percent of the

world market during 2001. In that year, the United

States and Russia each had 19 percent, while the Sea

Launch Company had 12 percent. Revenues from

the 16 commercial launch events in 2001 were an

estimated $1.5 billion, a 44 percent decrease from

the 2000 total of approximately $2.7 billion.

European revenues were estimated at about 

$948 million, while Russian revenues were about

$178 million, Sea Launch earned approximately

$170 million, and U.S. commercial launch revenues

were about $167 million. Launch revenues are

attributed to the country in which the primary vehicle manufacturer is based, with the exception of Sea

Launch, which is a multinational company.5

The FAA continues to scale back its forecast of commercial launch activity over the next decade. It

expects that 268 commercial launches will take place

during the next decade—a figure that is 16.5 percent

lower than the agency’s forecast in 2001.6

The Teal Group, a national research organization,

publishes an annual forecast of

“proposed payloads” for launch.

While this is a slightly different

approach to the FAA model,

the data show a corresponding

decrease for the next decade of

about 18.4 percent for these

four worldwide categories of

payloads: commercial, military, civil, and university/other. The Teal Group outlook for just the commercial sector shows a “23 percent decline compared

to last year , and a 47 percent drop compared to our

2000 model.”7

Space Tourism and Launch Markets. To understand future dynamics for launch markets, NASA

commissioned the ASCENT Study as part of the

1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989

Commercial Government

1991 1993 1995 1997 1999 2001

160

140

120

80

60

40

20

0

100

Number of Launches

Source: FAA

Launch demand trends hold

little promise for resurgence in

the U.S. space launch industry.

Figure 3-3 Historical Commercial and Government Launches (1957-2001)
3-9

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 3 – Space: Its Special Significance

SLI. This study concluded that the only space launch

sector with growth potential over the next two

decades is passenger space travel. All other sectors—

both commercial and governmental—have flat-line

outlooks.

Throughout the period 2002 through 2020, the

forecast for launches is, in essence, constant at

between 60 to 80 launches per year. The figure below

provides a forecast for public space travel over that

period. The forecast assumed a cost of $20 million

per seat for an orbital flight and was based on a

highly credible survey of public space travel, where a

statistically valid sample of high net worth individuals was interviewed. Seven percent of the sample

indicated that they would be willing to pay 

$20 million for an orbital flight, if available. 

Respondents to the ASCENT Study survey were

aware that it would be necessary to go to Russia for

a six-month training period and would be a risky

venture. To arrive at projected launch forecasts, the

survey responses were discounted for a number of

considerations, such as health, and in order to allow

a build-up curve for this new industry to become

established. Even with these caveats, there is a potential demand for 50 passengers a year at current

prices. Most of the respondents, however, indicated a

preference for training and flying from the United

States. The survey results also showed that demand

for a 15-minute sub-orbital flight costing $100,000

could produce a market for up to 500 passengers per

day by 2020.8

While today there is an extremely limited number of

people in the world who can afford a $20 million

vacation, we should marvel not at the price but at the

fact that the demand exists at all. Given what people

do spend on vacations and amusement park rides

and adventure travel, we have no reason to doubt

that the demand will rise without limit as the price

drops.

The Commission believes that there are opportunities to help alleviate the capacity and demand mismatch in the commercial launch market. Space

tourism markets may be key to help fund the launch

industry through the current market slump by providing increased launch demand and thus helping to

drive launch costs down.

Science: Untapped Opportunities

The quest for knowledge, which has universal

appeal, brings with it the need for attendant technological and engineering feats that make discovery

possible. 

These feats will afford the scientific community the

opportunity to explore the universe and gain access

to information about the planet, its atmosphere and

the solar system. Basic science can produce more and

2002 2005 2008 2011 2014 2017 2020

60

50

30

10

0

Global Launches40

20

Passengers Dedicated Launches Soyuz ISS Flights

Figure 3-4 Public Space Travel Forecasts (Orbital)

Source: NASA
3-10

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

more insights about our relationship to the universe

through increasingly sophisticated astronomical missions. Science can help us find laboratory solutions

to high-end technologies, such as anti-matter and

anti-gravity propulsion concepts. Science can use onorbit assets to develop consumer products in pharmaceuticals and materials. The frontiers of science

are extended significantly by expanding our reach

into new environments and shrinking the boundaries of the unknown. What follows is a short list of

what could be done.

Access to space allows us to answer some of the basic

questions about our universe and ourselves. With the

discovery of sub-surface water on Mars and billionyear-old oceans beneath frozen ice sheets on Jupiter’s

moon Europa, the prospect of finding life in places

other than Earth are higher than ever. If life once

thrived on Mars but is now extinct, planetary geologists will need the services of paleontologists.

Why did the running water once on the surface of

Mars disappear? What atmospheric instability

destroyed its ecosystem, leading to this catastrophe?

Why does the planet Venus, often called Earth’s twin

for its similarity in size and mass, have a runaway

greenhouse effect? What went wrong there? How

will the answers to these questions help us protect

the stability of our own atmosphere?

Asteroids are remarkable resources of minerals and

heavy metals. While not all of their material is economically feasible to mine and return to Earth, it

may be possible to extract materials for delivery to

other planets, where expeditions are underway. In

any case, we will want to learn how to land on asteroids and analyze their makeup. The day will arrive

when an asteroid is discovered on a collision course

with Earth. The more we know about their orbit and

structure, the more effective we can be in attempting

to deflect it from harm’s way.

Space also provides science with the opportunity to

look at the origins and future of the universe. Earth’s

surface is one of the worst places to build a telescope.

Our atmosphere is largely opaque to gamma rays, xrays, and ultraviolet light, and wreaks havoc with the

infrared spectrum. Furthermore, our turbulent

atmosphere, and the radio and light emanations of

civilization are incompatible with high-quality observational data. Earth orbit, such as where we operate

the Hubble Space Telescope, provides a much better

environment for such research. But other orbits are

also possible, such as the stable Lagrangian points of

either the Earth-Moon or the Sun-Earth systems.

Another location for telescopes is the far side of the

Moon, which is completely shielded from Earth’s

cacophony of radio signals. This radio-quiet zone

would enable astrophysicists to observe all windows

to the universe, pollution-free, and continue a 

century of cosmic discovery unmatched in recorded

history.

The Commission believes that this search for cosmic

knowledge will not only answer fundamental questions, but also inspire our children and provide a

source of future products and services. This will

require that the U.S. government sustain its longstanding commitment to science and space technology and continue to focus on internationally cooperative efforts in the future.

Space tourism could create a demand for a commercial

spaceliner, like this artist concept.
3-11

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 3 – Space: Its Special Significance

Conclusions

The Commission concludes that the nation will have

to be a space-faring nation to be the global leader in

the 21st century—our freedom, mobility, and quality of life will depend on it. America must explore

and exploit space to assure national and planetary

security, economic benefit and scientific discovery.

At the same time, the United States must overcome

the obstacles that jeopardize its ability to sustain

leadership in space.

Achieve Breakthroughs in Propulsion and Space

Power. The ability to access space and travel through

the solar system in weeks or months instead of years

would help create the imperative to do so.

Propulsion and power are the key technologies to

enable this capability. Future progress in these areas

will result in new opportunities on Earth and open

the solar system to robotic and human exploration—

and eventual colonization. The nation would benefit

from a joint effort by NASA and DoD to reduce significantly the cost and time required to access and

travel through space.

Develop a Next Generation Communication,

Navigation, Surveillance and Reconnaissance

Capability. The nation needs real-time, global

space-based communications, navigation, surveillance and reconnaissance systems for a wide range of

applications. These capabilities will provide the military with the ability to move its forces around the

world, conduct global precision strike operations,

defend the homeland, and provide for planetary

defense. The civil and commercial sectors will also

benefit from these capabilities for air transportation

management, monitoring global climate change,

weather forecasting and other applications. The federal government needs a joint civil and military initiative to develop this core infrastructure.

Revitalize the U.S. Space Launch Infrastructure. NASA and DoD must maintain and

modernize their space launch and support infrastructure to bring them up to industry standards. They

should implement our recommendations contained

in Interim Report #3 concerning federal spaceports,

enhanced leasing authority, and utility privatization

and “municipalization.” We recommended that

DoD and NASA should:

• Investigate the feasibility of establishing a national

spaceport structure at KSC and CCAFS under a

single management system; and

Mining the moon for ores and isotopes might make sound

commerical business opportunities in the future.

A logistics depot in space for human exploration of the

solar system.
3-12

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

• Seek Congressional approval for

– Enhanced leasing authority that allows them to

lease real property at fair market value and retain

lease proceeds to cover the total costs incurred at

KSC and CCAFS; and

– Privatization of NASA utilities at KSC and

CCAFS to overcome the budget burdens associated with capital improvements to outdated

infrastructure.

In addition, NASA and DoD need to make the

investments necessary for developing and supporting

future launch capabilities. To deal with the problem

of operating costs, NASA should also consider turning over day-to-day management responsibilities for

its field centers to state governments, universities, or

companies.

Provide Incentives to Commercial Space.

Government and the investment community must

become more sensitive to commercial opportunities

and problems in space. Public space travel may constitute a viable marketplace in the future. It holds the

potential for increasing launch demand and

improvements in space launch reliability and

reusability. Moreover, it could lead to a market that

would ultimately support a robust space transportation industry with “airline-like operations.” The

government could help encourage this by allowing

NASA to fly private citizens on the Space Shuttle. 

Sustain Commitment to Science and Space. The

U.S. government should continue its long-standing

commitment to science missions in space and focus

on internationally cooperative efforts in the future.

RECOMMENDATION #3

The Commission recommends that the United

States create a space imperative. The Department

of Defense, the National Aeronautics and Space

Administration and industry must partner in innovative aerospace technologies, especially in the

areas of propulsion and power. These innovations

will enhance our national security, provide major

spin-offs to our economy, accelerate the exploration of the near and distant universe with both

human and robotic missions, and open up new

opportunities for public space travel and commercial space endeavors in the 21st century. 
3-13

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 3 – Space: Its Special Significance

4-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 4 – National Security: Defend America and Project Power

For at least the next quarter century or more, the

effectiveness of the American defense posture will be

a crucial determinant of world peace, prosperity, and

stability. The relationship between advanced technology and national security is a metaphor for the

manner in which our society will grow and prosper

in the 21st century.1 It is essential that the public

policy environment in the 21st century reflect an

appreciation of these circumstances.

During the 20th century, the development of

advanced technology for national security applications stimulated the introduction and diffusion of

such technology to the world. The policy and institutional setting of the 20th century will not work for

the 21st. In the 21st century, the sources of the

enabling technologies for vital military capabilities

will be in both the commercial and the defense sectors. The co-dependence of the commercial and military sectors for advanced technology development

and applications requires new approaches to the policy environment that sustains the defense component of the aerospace sector.

The core competencies of the U.S. defense industrial

sector—systems engineering and system(s) integration—are the decisive enabling skills that must transform widely accessible technologies into superior

military capabilities. The transformation of the U.S.

defense posture, from one dependent on industrial

Chapter 4

National Security: Defend

America and Project Power

RECOMMENDATION #4: The Commission recommends that the nation adopt a

policy that invigorates and sustains the U.S. aerospace industrial base. This policy

must include:

• Procurement policies which include prototyping, spiral development, and other

techniques which allow the continuous exercise of design and production skills;

• Stable funding for core capabilities, without which the best and brightest will not

enter the defense industry;

• Removing barriers to international sales of defense products;

• Removing barriers to defense procurement of commercial products and services;

• Propagating defense technology into the civil sector, particularly in communication, navigation and surveillance; and

• Sustaining critical technologies that are not likely to be sustained by the commercial sector, e.g., space launch, solid rocket boosters, etc.

Before the war in Afghanistan, that area was low on the list of major

planning contingencies. Yet, in a very short time, we had to operate

across the length and breadth of that remote nation, using every

branch of the armed forces. We must prepare for more such deployments by developing assets such as advanced remote sensing, longrange precision strike capabilities, and transformed maneuver and

expeditionary forces. This broad portfolio of military capabilities must

also include the ability to defend the homeland, conduct information

operations, ensure U.S. access to distant theaters, and protect critical

U.S. infrastructure and assets in outer space.

National Security Strategy, September 20, 2002
4-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

age technology to one led by the technologies of

information and decision superiority, will require the

modernization of existing policies, institutions, and

public resource allocation.

The Contribution of Aerospace to

National Security

Defending our nation against its enemies is the first

and fundamental commitment of the federal government.2 This translates into two broad missions—

Defend America and Project Power—when and

where needed. 

In order to defend America and project power, the

nation needs the ability to move manpower,

materiel, intelligence information and precision

weaponry swiftly to any point around the globe,

when needed. This has been, and will continue to be,

a mainstay of our national security strategy. 

The events of September 11, 2001 dramatically

demonstrated the extent of our national reliance on

aerospace capabilities and related military contributions to homeland security. Combat air patrols swept

the skies; satellites supported real-time communications for emergency responders, imagery for recovery, and intelligence on terrorist activities; and the

security and protection of key government officials

was enabled by timely air transport.

As recent events in Afghanistan and Kosovo show,

the power generated by our nation’s aerospace capabilities is an—and perhaps the—essential ingredient

in force projection and expeditionary operations. In

both places, at the outset of the crisis, satellites and

reconnaissance aircraft, some unmanned, provided

critical strategic and tactical intelligence to our

national leadership. Space-borne intelligence, command, control and communications assets permitted

the rapid targeting of key enemy positions and facilities. Airlifters and tankers brought personnel,

materiel, and aircraft to critical locations. And aerial

bombardment, with precision weapons and cruise

missiles, often aided by the Global Positioning

System (GPS) and the Predator unmanned vehicle,

destroyed enemy forces. Aircraft carriers and their

aircraft also played key roles in both conflicts.

Today’s military aerospace capabilities are indeed

robust, but at significant risk. They rely on platforms

and an industrial base—measured in both human

capital and physical facilities—that are aging and

increasingly inadequate. Consider just a few of the

issues:

• Much of our capability to defend America and

project power depends on satellites. Assured reliable access to space is a critical enabler of this capability. As recently as 1998, the key to near- and

mid-term space access was the Evolved Expendable

Launch Vehicle (EELV), a development project of

Boeing, Lockheed Martin and the U. S. Air Force.

EELV drew primarily on commercial demand to

close the business case for two new launchers, with

the U.S. government essentially buying launches at

the margin. In this model, each company partner

made significant investments of corporate funds in

vehicle development and infrastructure, reducing

the overall need for government investment.

Today, however, worldwide demand for commercial satellite launch has dropped essentially to

nothing—and is not expected to rise for a decade

or more—while the number of available launch

platforms worldwide has proliferated. Today,

therefore, the business case for EELV simply does

not close, and reliance on the economics of a commercially-driven market is unsustainable. A new

strategy for assured access to space must be found.

Today, the 

business case for

EELV simply does

not close and

reliance on the

economics of a

commerciallydriven market is

unsustainable.
4-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 4 – National Security: Defend America and Project Power

• The U.S. needs unrestricted access to space for

civil, commercial, and military applications. Our

satellite systems will become increasingly important to military operations as today’s information

revolution, the so-called “revolution in military

affairs,” continues, while at the same time satellites

will become increasingly vulnerable to attack as the

century proceeds. To preserve critical satellite networks, the nation will almost certainly need the

capability to launch replacement satellites quickly

after an attack. One of the key enablers for “launch

on demand” is reusable space launch, and yet

within the last year all work has been stopped on

the X-33 and X-34 reusable launch programs

• The challenge for the defense industrial base is to

have the capability to build the base force structure, support contingency-related surges, provide

production capacity that can increase faster than

any new emerging global threat can build up its

capacity, and provide an “appropriate” return to

shareholders. But the motivation of government

and industry are different. This is a prime detraction for wanting to form government-industry

partnerships. Industry prioritizes investments

toward near-term, high-return, and high-dollar

programs that make for a sound business case for

them. Government, on the other hand, wants to

prioritize investment to ensure a continuing capability to meet any new threat to the nation. This

need is cyclical and difficult for businesses to sustain during periods of government inactivity. Based on the cyclic nature of demand, the

increasing cost/complexity of new systems, and the

slow pace of defense modernization, aerospace

companies are losing market advantages and the

sector is contracting. Twenty-two years ago, today’s

“Big 5” in aerospace were 75 separate companies,

as depicted by the historical chart of industry consolidation shown in Chapter 7.

• Tactical combat aircraft have been a key component of America’s air forces. Today, three tactical

aircraft programs continue: the F/A-18E/F (in

production), the F/A-22 (in a late stage of test and

evaluation), and the F-35 Joint Strike Fighter (just

moving into system design and development).

Because of the recentness of these programs, there

are robust design teams in existence. But all of the

initial design work on all three programs will be

completed by 2008. If the nation were to conclude, as it very well may, that a new manned tactical aircraft needs to be fielded in the middle of

this century, where will we find the experienced

design teams required to design and build it, if the

design process is in fact gapped for 20 years or

more?

• More than half of the aerospace workforce is over

the age of 404

, and the average age of aerospace

defense workers is over 50.5 Inside the Department

of Defense (DoD), a large percent of all scientists

and engineers will be retirement eligible by 2005.

Given these demographics, there will be an exodus

of “corporate knowledge” in the next decade that

will be difficult and costly to rebuild once it is lost.

There will be a critical need for new engineers, but

little new work to mature their practical skill over

the next several decades. Further, enrollment in

aerospace engineering programs has dropped by 47

percent in the past nine years6

, and the interest and

national skills in mathematics and science are

down. Defense spending on cutting-edge work is

at best stable, and commercial aircraft programs

One of the key enablers for “launch on demand” is reusable

space launch, and yet within the last year all work has been

stopped on the X-33 and X-34 reusable launch programs.

“Our goal is not to bring war into space, but rather to defend

against those who would. Protecting U.S. military and commercial assets in space from attack from foreign aggressors must

be a priority in the 21st century.”

Defense Secretary Donald Rumsfeld3
4-4

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

are struggling and laying workers off. As the DoD’s

recent Space Research and Development (R&D)

Industrial Base Study7 concluded, “[s]ustaining a

talented workforce of sufficient size and experience

remains a long-term issue and is likely to get

worse.” In short, the nation needs a plan to attract,

train and maintain a skilled, world-class aerospace

workforce, but none currently exists.

• The current U.S. research, development, test and

evaluation (RDT&E) infrastructure has a legacy

dating back to either World War II or the expansion during the Space Age in the 1960s. It is now

suffering significantly from a lack of resources

required for modernization. In some cases, our

nation’s capabilities have atrophied and we have

lost the lead, as with our outdated wind tunnels,

where European facilities are now more modern

and efficient. In the current climate, there is inadequate funding to modernize aging government

infrastructure or build facilities that would support

the development of new transformational capabilities, such as wind tunnels needed to design and

test new hypersonic vehicles. The aerospace industry must have access to appropriate, modern facilities to develop, test and evaluate new systems.

Throughout this dynamic and challenging environment, one message remains clear: a healthy U.S.

aerospace industry is more than a hedge against an

uncertain future. It is one of the primary national

instruments through which DoD will develop and

obtain the superior technologies and capabilities

essential to the on-going transformation of the

armed forces, thus maintaining our position as the

world’s preeminent military power.

Objective: A Safe and Secure World

The U.S. aerospace industry’s future contribution to

national security is captured in the Commission’s

overall vision of “Anyone, Anything, Anywhere,

Anytime”. For national security, this provides the

ability to: 

• Rapidly, safely, and securely send and receive

information;

• Move troops, equipment, and supplies to anywhere on the globe or into space, at anytime; and

• Prosecute effects-based warfare. 

National security organizations must be able to monitor, detect, neutralize and/or defeat future conventional and asymmetric threats anywhere in the world

by applying new technologies and operational capabilities to implement our national security strategy

and address our national security needs. 

Included in these capabilities are a better understanding of space situational awareness and more

serious attention to the threat to global security

posed by space debris and by Near-Earth Objects,

such as asteroids. Space- and ground-based surveillance systems can provide time-critical detection of

these threats, making a valuable contribution to this

emerging and very demanding national security

requirement. The issue of planetary defense is also

discussed in Chapters 3 and 6.

To deliver the required capabilities and to address

any national security needs quickly and affordably,

the U.S. must possess an aerospace industry that is

‘right-sized’, healthy, highly flexible, and responsive

to its customers. The government can help by

removing unnecessary paperwork and oversight on

government programs and eliminating restrictions

on contractor-developed intellectual property. It can

also help by continuing to increase investment in

DoD TRANSFORMATION GOALS8

• Defend the U.S. homeland and other bases of operation, and

defeat nuclear, biological and chemical weapons and their means

of delivery

• Deny enemies sanctuary—anytime, anywhere

• Project and sustain forces in distant theaters in the face of access

denial threats

• Conduct effective operations in space

• Assure information security and conduct effective information

operations

• Provide a common operational picture for joint forces
4-5

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 4 – National Security: Defend America and Project Power

next-generation aerospace capabilities. Increased

investment will have the dual effect of improving

defense capabilities and attracting the “best and

brightest” workforce to the aerospace sector. 

Issues

Enhancement and, indeed, the preservation of our

current military capabilities in air and space require

a comprehensive, cross-cutting national industrial

base policy. Many elements of such a policy are discussed in this report. 

The Commission believes that the key to any policy

is maintaining the manufacturing capacity and

human capital required to build, integrate and maintain aerospace systems. There are three key elements

of such a policy: (1) sustaining the defense industrial

base; (2) building experience in the workforce; and

(3) maintaining our critical national infrastructure.

The Defense Industrial Base: Consolidations and

Unstable Demand

In the past, the DoD had the luxury of drawing on a

large workforce employed in a large number of U.S.

aerospace companies that, as a whole, dominated

world markets. That is not the case today. The number of U.S. aerospace companies has significantly

reduced over the past 22 years. The total U.S. aerospace workforce has shrunk by approximately

700,000 in the last decade.9 There is significant

over-capacity and limited international demand in

both satellite production and space launch, which is

likely to lead to further consolidations and additional

lay-offs in the near-term. 

The Commission, in its Interim Report #3,

requested the Secretary of Defense to task the

Defense Science Board (DSB) to review and recommend overall DoD policy toward future military

industrial base consolidation, including its policies

toward mergers and acquisitions. In particular, as

part of this review, the DSB should:

• Address the aerospace industry consolidation and

workforce challenges resulting from today’s diminishing number of system design programs;

• Assess approaches for aligning consolidation policies with procurement and budgeting policies;

• Consider specific measures (metrics) on the health

of defense contractors, such as magnitude and

longevity of a contractor’s production base and

product development work; and

• Assess the long-term sustainability of the nation’s

high-performance aircraft and solid rocket booster

design and development capabilities, including the

potential of increasing/initiating high payoff technology development programs and/or continuing

low-rate production of strategic systems to bridge

industry capabilities to a succeeding generation.

Unstable demand for air and space systems has been

a major contributor to an age imbalance in both

industry and government aerospace workforces.

Younger workers have been laid off first and have

more readily taken voluntary separations. At the

same time, students do not see a bright future in the

aerospace industry and seek other professions. To get

out of this trap, government policy must focus on

both the demand and supply sides of the aerospace

ISSUES

• The Defense Industrial Base

– Funding

– Transnational Partnerships and International Sales

– Defense Procurement of Commercial Products and Services

– Transition of Defense Technologies to Civil Applications 

– Technology Insertion and Operational Support for Defense

Systems

• Experience in the Workforce

– Opportunities to Learn

– Skills Transfer to the Next Generation

– Intellectual Capital

• Critical National Infrastructure

– Facilities

– Capabilities
4-6

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

labor market, particularly since defense spending

could be one of the few sources of stable demand in

the U.S. aerospace sector.

On the demand side, government must increase and

then stabilize funding for research and development

and for the prototyping, spiral development, and

production of new systems. In addition, government

should reduce barriers that inhibit demand for the

aerospace products and services needed for national

security. 

The barriers that inhibit demand could be reduced

by the following actions. First, as discussed in

Chapter 6, government must remove unneeded government-imposed barriers on the export of defense

products. Second, since the

civil and military aerospace

workforces are highly integrated, DoD can improve its

access to trained workers by

removing the remaining barriers to its use of commercial

products and services and,

more importantly, by buying

commercial products and

services on a priority basis

when appropriate. Third,

government should move military aerospace products into the commercial sector in areas such as airto-air and satellite-to-air communications, where

DoD has significant technology that could meet

civilian needs, and integration could capitalize on

international demand for modernized aerospace 

systems. 

If stabilization of demand through increased funding

for cutting edge research and development/prototyping programs is insufficient to develop a sufficient

supply of talented engineering and factory workers, a

program of targeted grants,

loans or tax credits for

apprenticeship and graduate

education programs might

also be considered.

Funding. Our overall

national security depends on

the efforts of multiple government departments and

agencies, working as partners, with stable and sufficient budget lines. However, all departments and

agencies suffer from conflicting priorities and annual

congressional authorization and appropriation processes, which may lead to unstable funding over

time. 

The inability to fund all the competing demands

within the defense budget often leads to unrealistic

initial cost estimates, a mismatch of program

requirements and budget, service-imposed “taxes”,

and insufficient management reserves to address

major unforeseen events. In addition, the large operations and support costs associated with legacy systems, and the need to support ongoing military

operations, drain funding away from R&D, infrastructure modernization, and force transformation.

The Secretary of Defense has expressed concern

about the impact of unstable funding in the defense

“The Wright Brothers Institute in Dayton, Ohio is building collaborative partnerships ... of government, industry, and academia...

to expand the base of science, technology, engineering, and design

integration available for air and space applications.” 

General Lester L. Lyles, testimony submitted to the Aerospace

Commission, August 22, 2002

Prototype unmanned combat air vehicle.

Our overall national security

depends on the efforts of 

multiple government departments

and agencies, working as

partners, with stable and

sufficient budget lines.
4-7

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 4 – National Security: Defend America and Project Power

sector. See Figure 4-1. He has specifically recommended that defense in the 21st century be seen as

one where the military forces cannot be optimized

against a specific threat. Instead, he suggests that

defense spending be understood to be closer to an

investment that is subject to a stable fraction of

national income, suggesting 3-3.5 percent per

annum—about one third of the Cold War peak in

1962.10 This could be considered a constructive alternative concept to address the subject of how “stable

funding” might be achieved.

The Commission’s recommendations to enhance

DoD budget stability and flexibility in Interim

Report #3 addressed these issues, in part. Further,

the Commission supports DoD’s Fiscal Year (FY) 04

Legislative Priority #9, “Streamline DoD Processes,”

to shorten the Planning, Programming, and

Budgeting System and the acquisition cycle time.11

Refer to Chapter 5 for actions the Congress can take

to improve their authorization and appropriation

process for aerospace.

Further, the Commission believes that DoD’s annual

science and technology (6.1-6.3) funding must be

sufficient and stable to create and demonstrate the

innovative technologies needed to address future

national security threats. An amount no less than

three percent of DoD Total Obligational Authority,

“fenced” from budget cuts, would be sufficient. The

use of more joint technology development and

acquisition programs would also help to spread the

funding burden and promote interoperability. 

130

120

110

100

90

80

70

60

50

40

30

20

10

0

Source: National Defense Budget Estimate for FY03, Office of the USD (Comptroller)

1987 1988 1986 1989 1990 1991 1992 1993 1994 1997 2002 2004 1995 1999 1996 2001 1998 2001 2003 2005 2007 2006

Billions $

Procurement RDT&E

Actual Years Projected Years

Figure 4-1 FY 1987 – FY 2007 DoD Budget Authority
4-8

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Transnational Partnerships and International

Sales. DoD and the U.S.

aerospace industry share a

long history of forming

global partnerships and conducting joint operations with

our allies. However, the current regulatory environment,

especially in the area of export

controls, provides too little

security, restricts American

companies from marketing

their products, and prevents

effective international technology collaboration. In addition to increasing international commercial trade

tensions, today’s regulatory environment hinders the

development of national security partnerships and

sales of U.S. defense equipment to our friends and

allies. 

The Commission believes that the federal government must remove unnecessary barriers to international sales of defense products, and implement

other initiatives that strengthen global partnerships

to enhance national security. To help reduce the high

development and production costs of advanced military systems, the U.S. must also increase the number of international joint programs, such as the Joint

Strike Fighter, and continue to foster international

interoperability of defense and commercial aerospace

systems-of-systems. At the same time, we must also

ensure that our truly militarily critical technologies

are protected in the international marketplace, and

compliance must be strictly enforced. These issues

are discussed in more detail in Chapter 6. 

Defense Procurement of Commercial Products

and Services. DoD procurement policies must be

modernized in a manner that will allow the DoD to

access the full range of modern technology. Accessing

this technology—most of which will originate as

“commercial” technology—will allow the specialized

defense industrial base to transform them into products and services that create superior military capabilities. The manner in which DoD procurement is

currently structured prevents

the DoD and its industrial

base from doing so. As a consequence, defense technology

is falling behind the pace of

development in the civil sector rather than leading it.

Unfortunately, many commercial companies are electing

to avoid government work

due to onerous paperwork

and the risk of losing intellectual property. This hinders the

The Commission believes that

the federal government must

remove unnecessary barriers to

international sales of defense

products, and implement other

initiatives that strengthen

global partnerships to enhance

national security.

To help reduce the high development and production

costs of advanced military systems, the U.S. must also

increase the number of international joint programs,

such as the Joint Strike Fighter.
4-9

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 4 – National Security: Defend America and Project Power

application of the latest technology to military products. The government must revise policies and

processes to encourage commercial vendors to provide their products and services for national defense

applications. Use of commercial technology is critical to

integrated national security

systems of the future. 

The Commission believes

DoD acquisition policies

should encourage greater use

of commercial standards,

impose government requirements by exception only,

allow commercial entities to

protect intellectual property,

and remove other burdensome regulations that deter providers of commercial

pro-ducts from doing business with the government.

Transition of Defense Technologies into Civil

Applications. There are numerous other government missions that would benefit from defense technology and capabilities, such as in the areas of communications, navigation, surveillance, and reconnaissance. The Commission believes that these technologies could be adapted and transitioned into

other government applications, such as those that

would significantly enhance the capacity of our air

traffic management system and simultaneously

enhance our national defense and homeland security.

These topics are also discussed in Chapters 2 and 3.

Technology Insertion and Operational Support

for Defense Systems. Aging aerospace systems 

and infrastructure create a large and growing operations and support cost burden that adversely 

impacts warfighter readiness,

morale and retention. Many

aerospace systems, like the B52, are on the path to an operational life of 50-75 years,

though their original design

life was only 20-30 years. See

Figure 4-2. These aging systems face inadequate spares

support, increased inspections

and maintenance costs. In

some cases, these aging systems pose flight safety risks. 

The high cost to develop and procure new systems is

one cause for legacy systems to be retained in service.

New operational concepts are also causing legacy systems to be used much differently than originally

intended. The high cost to retrofit legacy platforms

with improvements to enhance their operational

readiness and capability is equally problematic. 

As the military transforms with new aerospace systems to meet future threats, the operational readiness

and capabilities of defense platforms will need to be

sustained and upgraded:

• Extending aircraft mission range would reduce the

need to forward stage fuel and supplies, resulting

30

25

20

15

10

5

0

Source: Joint Aeronautical Commanders Group

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Average Age (Years)

Air Force Navy Army

Figure 4-2 Military Aircraft Age Trend

As the military transforms with

new aerospace systems to meet

future threats, the operational

readiness and capabilities of

defense platforms will need to

be sustained and upgraded.
4-10

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

in potentially enormous cost and operational 

benefits.

• Investments to improve reliability, maintainability

and safety in legacy systems would increase

materiel readiness, reduce maintenance and

inspections, reduce maintainer workload, and raise

morale and retention. 

• Reducing the noise and emissions of legacy and

new high-performance military aircraft would alleviate current basing issues, community lawsuits,

the need to pay for soundproofing homes, as well

as potential U.S. and foreign flight-path issues in

the future. 

• Use of advanced information technologies, such as

modeling and simulation, would reduce development, acquisition and support costs of new and

legacy systems. 

• Adopting commercial build standards, contractor

or shared government-industry logistics support,

and performance-based logistics incentives would

accelerate technology insertion into new and

legacy systems, reducing the cost and improving

the logistics support.

Technology insertion in the defense establishment is

expensive, in part, because of the procurement and

budgeting systems. These systems cause the unnecessarily expensive practice of upgrading ancient computers (e.g., 80286-based microprocessors) rather

than throwing them away, as is done in commercial

practice. Technology insertion is highly desirable

and, in principle, should emerge from evolutionary

“spiral” development practices. A well-structured

“spiral” development program, that is adequately

funded to create and field new military capabilities,

can facilitate technology insertion into legacy 

platforms as the threat and the availability of appropriate technology requires and/or justifies.

In sum, the Commission believes that the federal

government and the aerospace industry must partner

to sustain and enhance the operational readiness and

capability of our military aerospace systems. The

government should fund research and technology

development programs to reduce total ownership

costs and environmental impacts; implement performance-based logistics support; create a structured,

timely and adequately funded technology insertion

process; and reform its procurement practices as recommended in Chapter 7.

Experience in the Workforce: Few Opportunities

and Limited Skills Transfer

At the end of World War II, a typical manager of a

military aircraft development program had worked

on the development of 15 programs. By the end of

the 1990’s, that number had fallen to one. See Figure

4-3. What this statistic reflects is the loss of “corporate knowledge” in our design teams, a loss with parallels in the skilled workforce that builds our aerospace systems. There is already evidence that loss 

of “corporate knowledge” has been costly. A 1999

study of rocket launch failures found that inadequate

Many aerospace systems, like the B-52, are on the path to an operational

life of 50-75 years though their original design life was only 20-30 years. 

The current success of the Predator program shows the military value of moving leap-ahead demonstrators into the

hands of warfighters at a very early stage of development.
4-11

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 4 – National Security: Defend America and Project Power

engineering experience was a major contributing

cause. More recently, the Secretary of the Air Force

has pointed to the decline in systems engineering

skills as a major contributor to cost overruns in military space programs.

Opportunities to Learn. To rebuild the U.S.

knowledge base and to keep it “up-to-date,” a core of

design and production teams must be continuously

exercised, even in periods when the country does not

want to fund extensive production programs. This

requires DoD to continuously fund prototyping programs and, where possible, move to spiral development of major systems. Such a policy would strongly

support current DoD efforts on experimentation

and transformation by providing a small supply of

“leap-ahead” systems for use in the field. The current

success of the Predator program—itself a technology

demonstrator—shows the military value of moving

leap-ahead demonstrators into the hands of warfighters at a very early stage of development. At the same

time, programs providing opportunities for cutting

edge work should create additional incentives for the

“best and brightest” to come to aerospace.

The Commission believes that the United States

must continuously develop new experimental 

systems, with or without a requirement for production, in order to sustain the critical skills to conceive,

develop, manufacture and maintain advanced systems and potentially provide expanded capability to

the warfighter. 

Skills Transfer to the Next Generation. The

ultimate goal of government policy must be to create

an extremely high quality workforce in the aerospace

sector, a workforce that continuously transfers

knowledge and experience from one generation to

the next in all areas that may be needed by future

military systems. A continuous transfer of skills is a

byproduct of stabilized funding.

XP-5Y

A-2D

XC-120

F-4D

F-3H

B-52

A-3D

X-3

S-2F

X-2

F-10F

F-2Y

F-100

B-57

F-102

R-3Y1

F-104

A4D

B-66

F-11F

C-130

F-101

T-37

XF-Y

F-8U

F-6M1

U-2

SY-3

F-105

X-13

C-133

F-107

B-58

F-106

F-5D

X-14

C-140

T-2

F-4

A-5

T-39

T-38

AQ-1

X-15

F-5A

X-1B

A-6

B-52

SR-71

SC-4A

X-21

X-19

C-141

B-70

XC-142

F-111

A-7

OV-10

X-22

X-26B

X-5A

X-24

F-14

S-8

YA-9

A-10

F-15

F-18

YF-17

B-1

YC-15

YC-14

AV-8B

F/A-18

F-117

F-20

X-29

T-46

T-45

B-2

V-22

F-22 EMD

YF-22

YF-23

JSF X-36

JSF X-37

C-17

JSF EMD

UCAV B-X

Source: RAND Study (Chart by Northrop Grumman, Aerospace Industries Association

1950s 1960s 1970s 1980s 1990s 2000s 2010s 2020s 2030s

Year

40 Year Career Span Retired

Experience: 6+ Programs Retiring

Experience: 1-2 Programs Mid Career

Experience: 1 Program Very Few

Retired

“We believe that a declining 

experience level has been a 

contributing factor to the problems we observe in many 

recent aircraft programs.”

RAND

Figure 4-3 Declining Experience Levels in Military Aircraft Programs 

(Vertical Bars: Military Aircraft Program Starts, Horizontal Bars: Typical 40 Year Career Span)
4-12

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

There is a need for a joint government and industry

planning function to ensure that attention is paid 

to areas where skill sets would disappear if government/DoD did not support a segment of the aerospace industry. Areas like radiation-hardened 

computer chips and solid rocket booster motors are

likely to become extinct, if DoD does not maintain

them. While obsolete technologies should be allowed

to disappear if no longer needed, government/DoD

should have a planning process in place to ensure

that skills do not disappear before the need is truly

gone.

Intellectual Capital. An aerospace worker’s intellectual capital includes technical knowledge, process

knowledge and network knowledge—what to do,

how to do it, and who can help. All of these are necessary to get the job done. With an aging workforce

about to leave, the intellectual capital must be passed

on to the continuing workforce to avoid losing the

“corporate knowledge.” A concerted effort by both

industry and government must be initiated to understand the impact of this loss of knowledge and how

to transfer it to the workforce of the future. 

Critical National Infrastructure: In Jeopardy

Maintaining the nation’s critical infrastructure is a

joint responsibility between industry and government. The critical national infrastructure includes

both facilities and capabilities.

Facilities. The aerospace industry lacks an adequate

business case in several areas critical to national security. This includes solid rocket boosters and radiation

hardening capabilities. In addition, there is inadequate funding to support and modernize aging government RDT&E infrastructure, such as existing

space launch facilities and new facilities that would

support the development of transformational capabilities, such as wind tunnels for new hypersonic

vehicles. The aerospace industry needs these facilities

to test and evaluate new systems. Compounding the

funding shortfalls, political pressures also make it

difficult to consolidate or realign infrastructure in

ways that could eliminate inefficiencies and/or

unnecessary duplication. The result is that higher

operating costs are being passed to the user. 

European sources in many cases offer better alternatives for testing new capabilities. For example, U.S.

companies are using foreign wind tunnels for testing

because they are less costly and more capable. The

U.S. must retain world-class infrastructure for test

and evaluation of future technologies. 

The Commission believes the federal government

must assume responsibility for sustaining, modernizing, and providing critical, often high-risk, defenserelated technologies and infrastructure when it is in

the national interest. Chapter 3 contains specific recommendations addressing our space launch infrastructure. As political circumstances permit, the government must also address the broader issue of

RDT&E infrastructure as part of future facility consolidations and realignments. 

Capabilities. The government uses the term “ubiquitous” to describe capabilities that are critical to the

national security and economic prosperity of the

United States and the world. GPS and frequency

spectrum are two of these ubiquitous capabilities

and, as such, must be protected as critical national

infrastructure.

Global Positioning System. GPS provides global positioning, navigation and timing information for a

wide range of military, commercial, and civil applications. It enables the military to place precision

munitions on target. Its timing enables the financial

markets, power grids, and the Internet to synchronize their operations around the world. The 

nation’s air transportation system is becoming more

dependent upon GPS for global navigation and 

precision landings. GPS is becoming more embedded throughout national and international 

infrastructures and operations. 

Though it is managed by the U.S. government

through an interagency process, GPS is fundamentally paid for and operated by the DoD. Its critical contributions to national security and to the

global economy require that senior leadership in
4-13

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 4 – National Security: Defend America and Project Power

both the executive and legislative branches of the

government be conscious of its role, take the necessary steps to ensure its continuous robust availability, and expedite its improvement. In addition, 

our global leadership in space-based positioning,

navigation, and timing will be lost if we do not continue to focus resources and attention on this asset.

As part of the national imperative for protection of

critical national infrastructure, the Commission

believes the federal government should identify and

protect funding that enables the DoD to accelerate

the launch of the next generation of GPS satellites

for the enhancement of anti-jam capabilities and creation of worldwide dedicated civil signals.

Frequency Spectrum. Rapidly changing and emerging

information and communications technologies are

placing significant strains on the finite radio frequency spectrum and on the management processes

that control how it is allocated and used. Globally,

the radio frequency spectrum is an extremely valuable resource essential to national and international

security and commerce.

The Commission believes that the U.S. should create

a national spectrum strategy to preserve and protect

access to radio frequency bands that are dedicated to

public safety and scientific applications, while

enabling the U.S. to remain in the forefront of global

electronic commerce.

Conclusions

The Commission concludes that aerospace capabilities and the supporting defense industrial base are

fundamental to U.S. economic and national security.

While the nation’s defense industrial base is strong

today, the nation is at risk in the future if the United

States continues to proceed without a policy that

supports essential aerospace capabilities. 

Develop a U.S. Military Industrial Base Policy.

The Department of Defense should task the Defense

Science Board to develop a national policy that 

will invigorate and sustain the U.S. aerospace industrial base. The policy should address issues, such as

mergers and acquisitions, procurement and budgeting policies, research and development investments,

technology transition, international sales and workforce development.

Sustain the Defense Industrial Base. Today’s

national defense industrial base is robust, but without constant vigilance and investment, vital capabilities will be lost.

• DoD’s annual science and technology (6.1-6.3)

funding must be sufficient and stable to create and

demonstrate the innovative technologies needed to

address future national security threats. An

amount no less than three percent of Total

Obligational Authority, “fenced” from budget

cuts, would be sufficient. The use of more joint

technology development and acquisition programs

would spread the funding burden and promote

interoperability. 

• The federal government must remove unnecessary

barriers to international sales of defense products,

and implement other initiatives that strengthen

transnational partnerships to enhance national

security. To help reduce the high development and

production costs of advanced military systems, the

United States must also increase the number of

international joint programs (like the Joint Strike

Fighter), and continue to foster international

interoperability of defense and commercial aerospace system-of-systems.

• DoD acquisition policies should be revised to

encourage greater use of commercial standards.

DoD should impose government requirements by

exception only, allow commercial entities to protect intellectual property, and remove other burdensome regulations that deter providers of commercial products from doing business with the

government. 

• There are numerous government missions that

would benefit from defense technology. For example, the U.S. military has developed capabilities in

the areas of communications, navigation, surveillance, and reconnaissance. These technologies

could be adapted and transitioned into other 
4-14

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

government applications that would significantly

enhance the capacity of our air traffic management

system and, hence, our national defense and

homeland security.

• The federal government and the aerospace industry must partner to enhance the operational readiness and capability of new and legacy military

aerospace systems. The government should: fund

research and technology development programs

to, reduce total ownership costs and environmental impacts; implement performance-based logistics support; create a structured, timely and adequately funded technology insertion process; and

reform its procurement practices accordingly.

Increase Opportunities to Gain Experience in

the Workforce. The U.S. must continuously

develop new experimental systems, with or without a

requirement for production, in order to sustain the

critical skills to conceive, develop, manufacture and

maintain advanced systems and potentially provide

expanded capability to the warfighter. Furthermore,

the federal government and industry must develop

approaches to retain and transfer intellectual capital

as the workforce retires in greater numbers in the

next few years. 

Maintain and Enhance Critical National

Infrastructure. The federal government must

assume responsibility for sustaining, modernizing,

and providing critical, often high-risk, defenserelated technologies and infrastructure when it is in

the nation’s interest. This includes critical design

capabilities, solid rocket boosters, radiation hardening, space launch facilities, critical RDT&E infrastructure, GPS, and frequency spectrum.

RECOMMENDATION #4 

The Commission recommends that the nation

adopt a policy that invigorates and sustains the

U.S. aerospace industrial base. This policy must

include:

• Procurement policies which include prototyping,

spiral development, and other techniques which

allow the continuous exercise of design and

production skills;

• Stable funding for core capabilities, without

which the best and brightest will not enter the

defense industry;

• Removing barriers to international sales of

defense products;

• Removing barriers to defense procurement of

commercial products and services;

• Propagating defense technology into the civil

sector, particularly in communication, navigation and surveillance; and

• Sustaining critical technologies that are not

likely to be sustained by the commercial sector,

e.g., space launch, solid rocket boosters, etc.
4-15

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 4 – National Security: Defend America and Project Power

5-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 5 – Government: Prioritize and Promote Aerospace

The federal government plays a key role in promoting the health of the U.S. aerospace industry.

Maintaining global aerospace leadership to ensure

America’s military preeminence, guarantee homeland

security, and assure economic growth and a superior

quality of life for our citizens in the 21st century

requires government activism. Aerospace provides

the fastest, safest, most flexible and often the only

means of travel and security. A coherent and integrated national aerospace consensus is critical to

move the country forward, drive government action,

and preserve U.S. global aerospace leadership.

The federal government has

called on the aerospace industry in time of crisis in the past.

The aerospace industry has

always responded when called.

Today, the U.S. aerospace

industry is in jeopardy and is

looking to the federal government to respond. The

Commission is not asking for

the federal government to create industrial policy, to

pick winners and losers, or to subsidize the development of commercial aerospace products and services.

But, the federal government must recognize that its

interactions with industry are key to its strength and

long-term survival and, ultimately, to the security

and economic prosperity of America.

Objective: Government—Flexible,

Responsive and Oriented Towards

Decision Making

The health of the aerospace

industry, today and in the

future, is inextricably linked to

the leadership of the federal

government. Its interaction

with the U.S. aerospace industry is vast, complex, and

multi-dimensional. In the 

rapidly changing global economy, government leadership

must be increasingly flexible,

Chapter 5

Government: Prioritize

and Promote Aerospace

RECOMMENDATION #5

The Commission recommends that the federal government establish a

national aerospace policy and promote aerospace by creating a government-wide management structure. This would include a White

House policy coordinating council, an aerospace management office in

the Office of Management and Budget, and a joint committee in

Congress. The Commission further recommends the use of an annual

aerospace sectoral budget to establish presidential aerospace initiatives, assure coordinated funding for such initiatives, and replace vertical decision-making with horizontally determined decisions in both

authorizations and appropriations. 

The health of the aerospace

industry, today and in the

future, is inextricably linked to

the leadership of the federal

government.
5-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

responsive and oriented toward decisionmaking at

macro-levels. It must prioritize and promote aerospace both within the government and in its interaction’s with the industry in order to realize the fullest

potential of aerospace to the nation.

• As a leader, the government must provide the

national policies and investments needed for the

industry to be competitive, to be innovative and to

serve the public good both in the short and long

term. 

• As a customer and operator, the government must

buy, use and provide the finest aerospace products

and services for the public good, such as for

national defense, homeland security, air transportation and science.

• As a facilitator, the government must create a level

international playing field so that the U.S. aerospace industry can compete

openly and fairly around the

world. 

• As an enabler, the government must look to and enable

the future by investing in

workforce development, public infrastructure, and longterm research critical to the

nation’s future.

In sum, the health and future of

the aerospace industry depends

on the federal government performing these functions efficiently and effectively in order to preserve

our national security, economic prosperity and the

quality of life of all Americans.

Issues

National Aerospace Consensus: Needed 

The development and implementation of federal

aerospace policy is currently spread across multiple

government departments and agencies, with oversight by numerous and different Congressional committees. (See Appendices F and G.) Therefore, no

organization in either the executive branch or the

legislative branch has an integrated view of the health

and future of the aerospace sector. 

Air transportation policy is but one example of an

aerospace issue that crosses many federal departments and agencies. 

• The Department of Transportation (DOT) develops domestic and international aviation policy.

• The Federal Aviation Administration (FAA) regulates and certifies aircraft safety; develops, acquires

and maintains the air traffic control facilities and

equipment at commercial airports; and provides

the air traffic controllers and operates the air traffic management system.

• The Department of Defense (DoD) acquires and

maintains the air traffic systems for its airfields;

trains military air controllers; and develops and

operates air and space surveillance systems, secure communications and the Global Positioning System (GPS) that

support its national security

mission. It also conducts

research and fields technologies

that are used to manage its

forces globally in combat, such

as JTIDS/Link 16, high-bandwidth digital communications,

battle management systems,

and digital terrain and elevation

data. Many of these technologies could be used by

the civil aviation system but are not.

• The proposed Department of Homeland Security

will be responsible for the security of commercial

and general aviation and airports, among other

ISSUES

• National Aerospace Consensus

• Government Organizational Structure

• Key Government Processes

• Private-public Partnerships

The development and

implementation of federal

aerospace policy is currently

spread across multiple

government departments

and agencies.
5-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 5 – Government: Prioritize and Promote Aerospace

things. Currently, some 22 departments and agencies share responsibility for homeland security.

• The Department of State, working with the other

federal departments and agencies, deals with international treaties, agreements and standards development dealing with aviation.

• The Department of Commerce and, in particular,

its National Oceanic and Atmospheric

Administration (NOAA), develops and maintains

the National Weather System, including the airand space-based systems, that provides meteorological and weather forecasting data used by the

nation’s air transportation system.

• The Environmental Protection Agency (EPA) 

provides regulations for vehicle noise and emissions and environmental permits for airport and runway

construction.

• The National Aeronautics

and Space Administration

(NASA) develops prototype

algorithms for the current

civil air traffic control system,

new models and simulations

to improve air traffic management and technology to improve safety.

The federal government does not have a process to

bring the appropriate departments and agencies

together to reach a consensus on national aerospace

policy. Complicating matters further, there is no

process that brings all of the stakeholders together to

address the factors that influence the health and the

future of the aerospace sector. (See Figure 5-1.) 

The Commission believes that sustaining U.S. global

aerospace leadership will require Presidential and

Congressional leadership and a unified national

team—state and local government, industry, labor,

academia and non-governmental organizations—

committed to sustaining a healthy U.S. aerospace

sector. 

Government Organizational Structure: Not

Integrated and Responsive

The government is not organized to define national

aerospace priorities, develop federal aerospace sector

plans and budgets, manage programs that cross multiple departments and agencies, or foster a healthy

aerospace sector in a global economy. As described

earlier, no single federal organization is responsible

for identifying the appropriate

role of aerospace in the context

of the nation’s transportation

system and other national needs,

including homeland and international security, air transportation, and space exploitation and

exploration. No organization is

responsible for defining national

aerospace priorities or addressing all of the factors that will

influence national aerospace policy across all stakeholders and all dimensions—international, national

and governmental. 

The federal government is organized vertically while

national aerospace challenges are becoming more

horizontal in nature. Legacy structures and processes,

which were effective in the past, are fundamentally

incapable of addressing the system-of-systems level

challenges facing the nation today. These structures

and processes simply must be modified and/or

replaced by integrated, crosscutting structures to

achieve our goals.

The ability of the United States to compete both

militarily and economically requires a government

that speaks coherently, can focus its collective capabilities on national issues, such as terrorism and air

transportation, and can respond quickly and flexibly

to rapidly changing global trends. It requires a 

Political

Markets

Social,

Cultural

and

Institutional

Environmental

Technology Operational Legal &

Regulatory

Figure 5-1 Factors Influencing the Health and

Future of the Aerospace Sector

U.S. global aerospace

leadership will require

Presidential and

Congressional leadership

and a unified national team.
5-4

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

government that is structured and has the appropriate incentives to provide system-of-systems solutions

to problems that transcend all levels of government,

industry, labor and academia and national and international boundaries. 

National challenges now will increasingly require system-of-systems solutions that involve government,

industry, labor, academia and non-governmental

organizations and, in most cases,

international involvement. The

nation’s air transportation system,

for example, requires all stakeholders be involved in the solution to ensure that:

• The nation’s air transportation

system can move people and

cargo safely and securely when

and where they need to go domestically or abroad

in peacetime and in wartime;

• Aerospace manufacturers build safe, clean and

quiet aircraft that meet international standards and

are appropriately equipped;

• Airplanes operate safely and have well trained

pilots and crews; and,

• Airports have runways and terminals that can handle aircraft of all sizes and capabilities and 

have facilities that can move people and goods quickly to and from

connecting modes of transportation without sacrificing safety and

security.

Without integration, national

aerospace policy occurs either by

default or piecemeal. Government

aerospace sector resources often

are not efficiently focused on national problems,

such as air transportation, or new breakthrough

opportunities, such as in propulsion and power. 

The federal government is

organized vertically

while national aerospace

challenges are becoming

more horizontal in nature.

Figure 5-2 A National Global System-of-Systems Architecture
5-5

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 5 – Government: Prioritize and Promote Aerospace

The Commission believes that the U.S. government

can only ensure U.S. aerospace global leadership by

leading itself. To do this, both the executive and legislative branches need to be reoriented to better

address national aerospace issues. Both branches

need to provide a focus on national aerospace needs

and priorities, government aerospace sector plans

and budgets, and government management of

national aerospace initiatives. The Commission

believes that the following executive and legislative

branch organizational changes are necessary.

Executive Branch

Federal Departments and Agencies—Offices of

Aerospace Development. Most federal departments

and agencies spend public

funds to develop, operate

and use aerospace-related

products and services to

advance public policy and to

perform their missions. This

includes departments and

agencies typically not identified with aerospace, for

example:

• The Department of Agriculture promotes the use

of remote sensing for monitoring the nations agricultural, rangeland and forestry resources, and the

Global Positioning System for improving farming

techniques, such as precision farming. 

• The Department of Health and Human Services

promotes the use of space-based communications

for distance medicine and for space-based research

on new medicines and drugs. 

• The Department of Interior uses aerospace derived

geodetic information for fish and wildlife preservation, mining reclamation and enforcement, and

national park surveys. 

• The DOT promotes the use of space-based communications and navigation for air, highway, transit, rail and maritime applications, including law

enforcement. It also licenses commercial space

launches.

Appendix F provides a more comprehensive list of

departments and agencies that spend public funds on

aerospace-related products and/or services. The list

highlights the fact that almost every federal department and agency contributes to or benefits from the

aerospace industry in performing its mission. 

Most federal departments and agencies, however, do

not have an organization that helps them to: promote and implement national aerospace policies;

define aerospace requirements in support of their

mission; coordinate aerospace policies, plans and

programs within their department or agency; prioritize aerospace budgets and spending; and leverage

broader aerospace capabilities in the government and

the private sector to achieve

their mission more efficiently and effectively.

The Commission believes

that each federal department and many agencies

should have an Office of

Aerospace Development to

perform these functions better. The Office should report directly to the Office of

the Secretary or Agency Head and be led by a fulltime senior executive. 

Office of Management and Budget—Bureau of

Aerospace Management. The federal government is

not organized to deal with issues that are more horizontal than vertical in nature (i.e., system-of-systems

issues), whether it is developing national aerospace

policy, defining national priorities, or planning and

budgeting aerospace resources. It does not have an

organization and process that looks at governmentwide plans and budgets with the health and future of

the aerospace sector in mind. Further, it does not

have an organization that manages initiatives that are

a national priority, span multiple departments and

agencies and require system-of-systems solutions.

Development of a next generation air transportation

system is a good example.

To manage its aerospace investments efficiently,

effectively and as a sector, the federal government

The Commission believes that

each federal department and

many agencies should have an

Office of Aerospace Development.
5-6

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

and the aerospace sector need a standardized set of

terms and definitions in order to get a clear and accurate picture of government aerospace budgets. A

standard set of terms and definitions will also help to

improve communications, standardize procedures

and processes, and simplify government business and

administrative practices. 

As the DoD has found over the last several decades,

a system-of-systems level solution requires a single

organization to plan, budget and manage it efficiently and effectively. As a result, DoD has created

joint programs that report either directly to the

Office of the Secretary, such as the Missile Defense

Agency and Defense Advanced Research Projects

Agency (DARPA), or to a

lead service, such as the U.S.

Air Force for the Joint Strike

Fighter. The success of these

joint programs can, in part,

be attributed to the DoD’s

decision for a single program

management structure.

The formation of the

Department of Homeland

Security is one of the first

attempts to create an organization at the interagency level

to provide focused and integrated management of

programs across the federal government from a systems perspective. The Commission is not proposing

the creation of a new Department of Aerospace. The

executive branch, however, needs an organization

that performs this function for major national aerospace initiatives that, through necessity, cross multiple federal departments and agencies.

The Commission believes the White House Office of

Management and Budget (OMB) should perform

this function. It should assume a new and proactive

role as horizontal integrator for the government’s

aerospace sector plans, programs and budgets.

Within its organization, OMB should create a

Bureau of Aerospace Management that would translate the national aerospace policy into annual planning and budget guidance to the appropriate federal

departments and agencies. It would also produce an

annual assessment, plan and budget for government

aerospace activities. 

The Bureau should take responsibility for those

major aerospace initiatives that cross multiple

departments and/or agencies and are deemed in the

national interest. They should assign a lead organization to manage the interdepartmental effort. The

Commission’s approach of developing aerospace

competency and prioritizing aerospace throughout

the government will make this role even more

important.

Critical national aerospace initiatives, especially

those that require a system-of-systems approach

(e.g., modernizing the nation’s air transportation system), require focused and

streamlined management, a

national plan that provides a

well-defined system architecture and performance measures, and program budget

authority with clear lines of

responsibility among participating departments and agencies. OMB seems particularly

well positioned to carry out

this vital management role.

White House—Aerospace Policy Coordinating Council.

All federal departments and agencies need to be

involved in developing and implementing national

aerospace policy. Today, there is no organization or

process in the executive branch that does this.

Because of the importance of aerospace to national

security, homeland defense and the economy, this

policy function should be assigned jointly to the

National Security Council and the National

Economic Council. They should establish an

Aerospace Policy Coordinating Council (PCC) to

develop and implement an integrated means of 

formulating national aerospace policy. This builds on

Commission deliberations that have identified 

a wide range of aerospace policy issues that cut 

across the federal government, such as spectrum

availability, GPS civil frequencies, air transportation,

space launch infrastructure, workforce and research

priorities.

The Office of Management and

Budget should assume a new

and proactive role as horizontal

integrator for the government’s

aerospace sector plans,

programs and budgets.
5-7

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 5 – Government: Prioritize and Promote Aerospace

The Aerospace PCC should include the direct participation of the Office of Vice President, Domestic

Policy Council, OMB, Office of Science and

Technology Policy and Office of Homeland Security.

A senior executive should be

assigned full time to perform

this function.

The Aerospace PCC should

provide an annual report to

the President with an assessment of the health of the

aerospace sector, including the impact of government fiscal and monetary policy, U.S. statutes and

regulations (e.g., export controls), international

treaties and agreements, and public funding in the

aerospace sector. 

Legislative Branch

Joint Committee on Aerospace. The legislative impact

of our recommendation to create Offices of

Aerospace Development throughout the federal government will be to extend aerospace jurisdiction to

most, if not all, committees on Capitol Hill.

Therefore, a prudent response from Congress should

be to organize a Joint Committee on Aerospace that

would have the obligation to coordinate legislatively

the multi-faceted jurisdiction issues.

Like the former Joint

Committee on Atomic

Energy, the Joint Committee

on Aerospace would be

empowered to hold hearings,

initiate legislation and provide overarching and integrated guidance and direction to the appropriate

Congressional authorization and appropriations

committees. 

Key Government Processes: Neither Streamlined

Nor Integrated

Government processes tend to be complex, lengthy

and inefficient. As a result, aerospace products and

services developed and used by the government, such

as military weapon systems and civil space missions,

are more costly for the taxpayer and take longer to

Aerospace

Policy

Coordinating

Council

White

House

Input

Bureau of

Aerospace

Management

Office of

Management

and Budget

OmB

Lead

(Designate

Lead)

Offices of

Aerospace

Deployment

Lead Participate Participate

Federal

Departments

and Agencies

Lead

(As Assigned)

Joint

Committee

On Aerospace

Oversight

Authority

House and

Senate

Oversight

Authority

Oversight

Authority

Congressional

Budget Office

Input Lead Participate Analysis

Analysis

Policy

National Vision, Goals and Priorities

Financial Policy

Performance-Based, Flexible laws and Regs

International Treaties and Agreements

Maintenance of Nation's Industrial Base

Management and Budget

Common Definitions/Currency/Policy

Major Aerospace Sector Budget

Program Acquisition and Procurement

Multi-Year Funding, Life-Cycle Cost/ Management

Civil and Military Needs

Simpler, Shorter, More Efficient

Best Practices From Private Sector

Incentives For Risk Taking

Executive Branch Legislative Branch

Figure 5-3 Notional Federal Responsibilities for Coordination and Oversight of Aerospace Matters

A prudent response from

Congress would be to organize a

Joint Committee on Aerospace.
5-8

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

acquire. Also, aerospace products and services developed by industry for sale in the commercial marketplace take longer and cost more because of extensive

government legal and regulatory barriers, resulting in

lost market share and diminished profitability.

Integrated Government Aerospace Sector

Planning, Budgeting and Program Management.

The Government Performance and Results Act of

1993 has mandated strategic planning and program

management within individual federal departments

and agencies. The DoD, for example, has a very well

defined strategic management process including:

• National strategy and policy development (e.g.,

National Security Strategy, Quadrennial Defense

Review);

• Requirements definition in the Joint Chiefs of

Staff (e.g., Joint Vision 2020);

• Planning and budgeting across the Services and

Defense organizations (e.g., DoD Strategic Plan,

Defense Guidance); and 

• Management of joint and individual service programs (e.g., Missile Defense Agency, Joint Strike

Fighter, GPS, DARPA). 

The Government Performance and Results Act,

however, does not adequately address strategic planning, budgeting and program management across

federal departments and agencies, especially when

the issues cross military, civilian and commercial

lines. 

Aerospace Sector Budget. The federal government

spends public funds for aerospace products and services in performing its missions. This includes: the

development, procurement and operation of military

weapon systems and the nation’s civil air traffic 

control system; the conduct of long-term civil aeronautics research; and the procurement and use of aircraft for monitoring our borders and for fighting forest fires. It also invests in maintaining the nation’s

critical manufacturing capacity, workforce development, national aerospace infrastructure, such as

space launch, and long-term research that directly

and positively impact the nation’s security, economy

and job creation. 

As the Commission noted in Interim Report #1, the

federal government aerospace sector spending, however, is currently spread across multiple government

agency budgets, with oversight by numerous and different Congressional committees. As a result, none 

of these government groups has an integrated view 

of our national aerospace efforts. As was stated 

AEROSPACE SECTOR CATEGORIZATION

• Systems*

– Air (e.g., aircraft (fixed, rotary wing), airships,

unmanned vehicles)

– Missiles (e.g., cruise, guided, ballistic, rockets)

– Space (e.g., spacecraft, space transportation)

• Services

– Air transportation

– Telecommunications

– Navigation

– Earth Monitoring

– Others

• Infrastructure (e.g., facilities and equipment)

– Airports/airfields

– Spaceports

– Air traffic control

– Research, development, test and evaluation facilities

– Manufacturing and maintenance facilities

– Other launch and support facilities and equipment (e.g.,

telemetry, tracking and control)

• Research 

– Government

– Industry

– Academia

• Workforce (e.g., personnel)

* Note: Subcategories include: system research, development, test and

evaluation; flight systems (production); and operations (including maintenance and decommissioning). 
5-9

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 5 – Government: Prioritize and Promote Aerospace

previously, the government’s organizational structure

and planning and budgeting process lack the necessary overall insight and accountability to develop and

implement a coherent national strategy and program. This makes it difficult, if not impossible, to

provide overall national aerospace leadership and

oversight. 

As a result, the Commission asked the OMB to work

with the Commission staff to develop an acceptable

categorical definition of the aerospace sector and to

prepare an aerospace sector budget breakout to be

submitted with the President’s annual budget

request, by category. Appendix C provides the first

attempt by OMB to provide an aerospace sector

budget using the categorization depicted in the

accompanying insert. 

Ultimately, OMB and the Congressional Budget

Office should agree to a categorization and provide

aerospace sector budget data and analysis on an

annual basis. The Commission believes that these

two steps are important, if the executive and legislative branches are to have insight into the government’s aerospace investments. 

Since this categorization is new and much more

comprehensive than what has been used by the government in the past, the Commission was not able to

assess completely the adequacy, balance and trends in

the government aerospace sector budgets. However,

based on existing historical data, the Commission

has the following observations.

• Aeronautics Research and Development. Based on

the data contained in the annual publication of

“Aeronautics and Space Report of the President”

for the fiscal years 1980 to 2000, the federal aeronautics budget more than tripled between 1980

and 1993, reaching a peak of $11,359 million in

1993. From 1993 to 1999, the budgets declined

by approximately 20 percent to a low of $8,997

million before heading upward again with levels

now approaching those in the early 1990’s. See

Figure 5-4. Most of this budgetary increase has

been in the DoD and DOT. Of concern, however,

is the continued decrease in NASA’s civil aeronautics budget. This is unacceptable given the huge

opportunities to improve the nation’s air transportation system as discussed in Chapter 2.

1993

1994

1995

1996

1997 

1998

1999

2000

2001

2002

2003

1

1

1

1

1

1

1

1,2

Research, Development, Testing, and Evaluation of Aircraft and Related Equipment.

Research, Development, Construction of Facilities, Research and Program Management.

Federal Aviation Administration: Research, Engineering, and Development; Facilities, Engineering, and Development.

DOT's R,E&D Presidential budget for 2003 is $126 million. This does not reflect aviation security R&D that has been moved 

from FAA to the Transportation Security Administration (TSA). 

Department of Energy (DOE) has an annual budget of approximately $70 million for aircraft and systems research and 

development.

Budget numbers are from the "Aeronautics and Space Report of the President" for years 1993-2000.

The budget figures for the year 2000 are estimates.

Budget numbers from Office of Management and Budget.

Presidential Budget for FY 2003

Notes:

a

b

c

d

e

1

2

3

4

7,582

6,848

7,196

6,792

6,323

6,256

5,532

6,460

6,587

6,149

6,808

1,245

1,546

1,310

1,315

1,252

1,327

1,194

1,060

985

997

985

2,532

2,309

2,212

2,052

2,146

2,099

2,271

2,201

2,838

3,203

3,107

11,359

10,703

10,718

10,159

9,721

9,682

8,997

9,721

10,410

10,349

10,900

DoD NASA DOT TOTAL a b c,d FY

3

3

3

3

3

4 3

Figure 5-4 Federal Aeronautics Budget (in millions of dollars)
5-10

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

• Space. The “Aeronautics and Space Report of 

the President, Fiscal Year (FY) 2000 Activities”

shows that annual government budgets for civil 

and military space (in equivalent FY 1999 

dollars) have essentially been flat at approximately

$26 billion per year since 1995 after reaching a

peak of $37 billion in 1989. During the period

from 1989 to 1995, the DoD saw a decrease of

over 50 percent from $23.8 billion in FY 1988 to

$11.6 billion in FY 1995. This downward trend

has now been reversed and investments are

approaching the levels of the early 1990s. Over the

last decade, NOAA saw its

budgets increase from approximately $300 million in FY

1990 to $571 million in FY

2000.

On the other hand, from FY

1991 to FY 2000, NASA’s

space budget authority

declined by almost 20 percent

from $15.8 billion to $12.5 billion. Given the

extreme importance of civil space to the nation,

the Commission finds this alarming. 

The federal budget, however, only provides a partial

picture of government investments in the aerospace

sector. The federal budget is a policy document and

does not explain in detail how the budget authority

is spent. To understand more about specific spending, the Commission contracted with the RAND

Corporation to determine federal procurement

spending in the aerospace sector. Figure 5-5 provides

a summary of this data from 1993 through 2001.

Additional information can be found in Appendix

D. The data show the following:

• Procurement. The direct link between the U.S. government and the nation’s aerospace industry is the

federal procurement system through which federal

agencies purchase air, missiles and space systems

and their related infrastructure

from the private sector companies that comprise the aerospace

industry. The past decade has

witnessed a steady decline in federal procurement spending in all

of these areas. Specifically, it

shows that between FY 1993 and

FY 2001, federal procurement

spending dropped 35 percent on

air systems, 50 percent on missile systems, and 46

percent on space systems in absolute dollars. At 

the same time that the U.S. government was buying fewer and fewer aerospace systems, federal

departments and agencies were also investing

fewer dollars in R&D efforts of private industry to

advance and improve existing aerospace systems.

The combined spending of all federal departments

60

50

40

30

20

10

0

1993 1994 1995 1996 1997 1998 1999 2000 2001

Obligations ($ Billions)

Fiscal Year

Air Systems

Space Systems

Research and Development

(Conduct Only)

Missile Systems

(Including Ballistic Missiles)

Figure 5-5 Federal Aerospace Procurement and

R&D Expenditures FY 1993 – FY 2001

The federal budget only

provides a partial picture

of government investments

in the aerospace sector.
5-11

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 5 – Government: Prioritize and Promote Aerospace

and agencies on extramural aerospace-related

R&D dropped by 46 percent in absolute dollars.

In the past decade, federal support for major segments of the aerospace industry has declined significantly as evidenced by direct purchases. 

• Personnel. The U.S. Air Force, NASA and FAA are

the three lead agencies for aerospace. Figure 5-6

shows that during the same years in which federal

support to the aerospace industry was declining,

U.S. Air Force, NASA and FAA spending on their

own internal workforces (i.e., personnel) increased

by 25 percent in absolute dollars even though

overall federal support to the industry was declining. This suggests, that in the past decade, the

operating costs of those three organizations began

to “encroach upon” activities in other areas (i.e.,

procurement and R&D). 

• Government Users of Aerospace Systems. DoD,

DOT/FAA and NASA are the major federal

departments and agencies involved in aerospace,

accounting for over 99 percent of federal procurement spending. There are others departments and

agencies that are major users of aerospace products

and services and have spent more than $100 million in at least one fiscal year between 1996 and

2000. These include the General Services

Administration and the Departments of Energy,

State and Justice. 

Even though the Commission was not able to assess

completely the adequacy, balance and trends in the

government aerospace sector budgets using the new

aerospace sector categorization used by OMB, it was

able to get some insight into important trends in

government aerospace sector procurement and personnel costs. This information has not been available

to decision makers in the past but needs to be in the

future.

The Commission believes, therefore, that both the

executive and legislative branches of government

need better insight into aerospace sector budgets and

procurement and personnel costs over time. To

achieve this, both branches should adopt the aerospace sector categorization definition developed by

the Commission with OMB. Further, OMB should

prepare a budget and spending breakout, by category, as an addendum to the President’s Annual

Budget Request. The Department of Commerce

should compile and present baseline statistics on the

economic performance and investment expenditures

of the aerospace sector for the purpose of comparing

federal outlays. And, the Congressional Budget

Office should provide an annual sectoral budget

breakdown that parallels the President’s Annual

Budget Request, using the same aerospace sector categorization.

Figure 5-6 Air Force, NASA, and FAA Personnel Expenditures

FY 1993 – FY 2001

35

30

25

20

15

10

5

0

1993 1994 1995 1996 1997 1998 1999 2000 2001

Expenditures ($ Billions)

Fiscal Year
5-12

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Integrated Government Science, Technology

and Acquisition Process. In the future, government must think and act on the same time scales 

as industry—weeks and months as opposed to 

years and decades. This will require a much simpler,

better-integrated and more streamlined government

science and technology (S&T) and acquisition

process. 

The government’s current S&T and acquisition

process is rooted in the nation’s science policy that

was articulated by President Roosevelt’s Director of

the Office of Scientific Research and Development,

Vannevar Bush, in 1945. The science policy suggested that basic research

leads to applied research,

then to technology development and, ultimately to

product development and

sales. This linear model has

resulted in segmentation as

opposed to integration of

S&T and acquisition not

only within and among government organizations but

also across government, industry and academia.

Today, the government’s S&T and acquisition

process: 

• Is complex, fragmented, and lengthy;

• Has a one-year planning, budgeting and execution

time horizon;

• Varies from department to department and agency

to agency and, hence, is a maze of different

processes, practices and procedures for government

customers and stakeholders to figure out and use;

• Does not use best business practices and performance-based contracting, standards and certification

processes; and 

• Provides few incentives for risk taking, private

investment, cost sharing and cost and timesavings. 

Global competition dictates that the U.S. aerospace

sector must transition from the fragmented, linear

and functional-oriented S&T and acquisition

process to a dramatically simpler, integrated, and

streamlined product-development process—a

national innovation process. The sector needs a

process that enables it to transform the best domestic and international ideas available into new and

better products and services faster than our competitors. It needs a process that has dramatically shorter

cycle times and provides a much higher rate of return

on the nation’s investments and natural resources. 

To meet this challenges, the aerospace industry has

started to: reengineer its major business and manufacturing processes; integrate its research and development with its manufacturing processes; create

partnerships with government and industry to leverage

national research investments; automate these

processes using tools such as

computer-aided design,

development and manufacturing; and adopte international quality standards. 

The federal government is

under similar pressures from

the public and its internal customers to deliver better

products and services faster and cheaper for the taxpayer. As with industry, it also needs to integrate,

streamline and speed up its product-development

process. 

In summary, the Commission believes that both 

the executive and legislative branches should work

together to:

• Create a common set of terms and definitions

(e.g., aerospace sector, aerospace sectoral budget

categorization), currency (e.g., not different “colors” and kinds of funds) and administrative and

business policies, practices and procedures across

the government;

• Reengineer its strategic planning and budget

process to look at government aerospace polices

and investments as a sector and from a long-term

perspective (e.g., multi-year funding, life-cycle

costing and management);

Global competition dictates

that the United States aerospace

sector’s product-development

process be dramatically simpler,

integrated, and streamlined. 
5-13

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 5 – Government: Prioritize and Promote Aerospace

• Create a single S&T and acquisition process—a

product-development or innovation process—that

is simpler, shorter and more efficient, uses privatepublic partnerships and addresses both civil and

military needs;

• Emulate best private sector business practices,

including the use of performance-based contracting and process (not product) certification; and

• Provide incentives for risk taking, capital formation, cost and risk sharing, and time and cost 

savings.

Public-Private Partnerships: Difficult to Build

Government, industry, labor and academia must

work together—as partners—to transform the way

they do business, allowing the nation to capitalize on

the best ideas available and apply them rapidly to

new aerospace products, processes and services. Each

play different, but important, roles. They cannot

perform these roles separately or in isolation. Each

must understand its role and work together to create

an environment that fosters innovation in aerospace

sector. Collectively, they need shared goals, objectives

and incentives to share the risks, costs and benefits of

doing business. 

• Government, at all levels, should:

– Provide leadership and policy that prepares the

nation for the future while sustaining public

trust and confidence today; 

– Create a supportive legal and regulatory framework that enables rapid introduction of new

products and services;

– Encourage open and fair global competition and

markets; and

– Invest in the future—workforce development,

special-purpose national infrastructure and longterm research.

• Industry should:

– Understand customer and market needs;

– Produce quality aerospace products and services;

– Invest in technologies and concepts that will

provide a competitive advantage;

– Leverage government investments in long-term

research; and

– Ensure that it has the manufacturing capacity

and human resources needed to produce and sell

new products and services quickly and affordably. 

• Labor should:

– Represent workers and ensure that they are

treated fairly by employers,

– Engage in collective bargaining on behalf of the

workforce,

– Hold industry accountable to the workforce and

the communities where work is performed,

– Develop and enhance existing training and

apprenticeship programs, and

– Provide a voice for workers. 

• Academia should:

– Play a leadership role in developing the welleducated, scientifically literate workforce that

government and industry will need in the future,

and 

– Perform cutting-edge research for the nation.

To date the success of private-public partnerships are

mixed, but they are improving. One potential measure of the outcome of these partnerships is the number of jobs, wages, establishments and payroll data

for the U.S. aerospace and aviation industry.

Appendix E provides a summary of national,

regional, state and metropolitan data collected by the

Commission. 

The Commission believes that all of the stakeholders

must work together to ensure that the government

can do its mission and the commercial sector to

prosper and compete successfully. They all have a

stake in the outcome; and all need to work together

to ensure that the outcome is in the best interest of

the nation and the American people.
5-14

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Conclusions

The Commission concludes that the government

must ensure that the nation has a healthy aerospace

industry today and in the future, an industry that

can not only meet the security and economic needs

of the country but also can compete successfully in

the international market place. The government

needs to exert leadership and prioritize and promote

aerospace by managing its activities efficiently, effectively and as a sector to accomplish national objectives. It needs to create an environment that fosters

innovation in the U.S. aerospace industry, ensuring

its competitiveness into the 21st century. 

Create a National Aerospace Consensus.The federal government does not have a national aerospace

consensus that supports broader national security

and economic policies, goals and objectives. This will

require Presidential and Congressional leadership to

develop a consensus of federal, state and local government, industry, labor, academia and non-governmental organizations to sustain a healthy U.S. aerospace sector. 

Reorient Government Organizational Structures. The federal government is dysfunctional

when addressing 21st century issues from a longterm, national and global perspective. Government is

organized vertically while national problems are

becoming more horizontal in nature requiring system-of-systems solutions. Key government processes,

such as planning and budgeting, are currently spread

across multiple departments and agencies, with oversight by numerous Congressional committees. As a

result, none of these government groups has an integrated view of our national aerospace efforts.

The executive and legislative branches need to be

reoriented to provide a focus on national aerospace

needs and priorities, government aerospace plans and

budgets, and government management of national

aerospace initiatives. 

• Federal Departments and Agencies. Every federal

department and most federal agencies should 

create an Office of Aerospace Development to 

prioritize and promote aerospace activities within

their organizations and with the public that they

serve;

• Office of Management and Budget. OMB should

establish a Bureau of Aerospace Management to

develop and implement an aerospace strategic

plan, establish an acceptable categorical definition

of the aerospace sector, prepare an annual aerospace sector budget as an addendum to the

President’s Budget Request, and manage major

national aerospace initiatives; and,

• White House. The White House should establish

an aerospace policy coordinating council to

develop and implement national aerospace policy

consistent with national security and economic

goals and objectives.

• Congress. In response to these executive branch

changes, the Commissions encourages the legislative branch to create a Joint Committee on

Aerospace to coordinate legislatively the multifaceted jurisdictional issues.

Streamline and Integrate Key Government

Processes. Government processes for policy, planning, and budgeting, and for developing and acquiring aerospace products and services are vestiges of the

Cold War. As a result, they tend to be ad hoc, complex, lengthy and inefficient. The Administration

and the Congress need to make a concerted effort to

streamline these key government processes to reflect

the new realities of a highly dynamic, competitive

and global marketplace. Specifically, they should

work together to create: an integrated federal planning, budgeting and program management process;

an integrated government science, technology and

acquisition process; and an environment that fosters

rather than impedes innovation in the aerospace 

sector. 

Promote Private-public Partnerships. Partnerships and interconnectedness are keys to competitiveness in the future. Government, industry, labor

and academia play different, but important, roles 

in developing and deploying new aerospace products

and services. They cannot perform these roles 

separately and in isolation. But today, cultural and
5-15

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 5 – Government: Prioritize and Promote Aerospace

institutional biases hinder their ability to partner and

achieve national goals. We need to create an environment and the incentives that will foster privatepublic partnerships. 

RECOMMENDATION #5

The Commission recommends that the federal

government establish a national aerospace policy

and promote aerospace by creating a government-wide management structure. This would

include a White House policy coordinating council,

an aerospace management office in the Office of

Management and Budget, and a joint committee

in Congress. The Commission further recommends

the use of an annual aerospace sectoral budget to

establish presidential aerospace initiatives, assure

coordinated funding for such initiatives, and

replace vertical decision-making with horizontally

determined decisions in both authorizations and

appropriations. 

6-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 6 – Global Markets: Open and Fair

U.S. aerospace companies currently enjoy a dominant position in the global market for civil and

defense products. Seven of the world’s top ten aerospace companies measured by annual aerospacerelated sales are based in the United States. The success of U.S. aerospace companies has been a result of

two factors: (1) government investments in longterm research and cutting-edge national infrastructure; and, (2) industry’s ability to develop and integrate new technology into their products and services

and achieve economies of scale in production

through access to a broad global customer base.

Since the end of the Cold War, the U.S. aerospace

industry has changed from an industry primarily

dependent upon the defense market to one in which

a significant portion of its sales are commercial. The

result of this change is that for the first time in U.S.

history aerospace companies must succeed commercially to remain viable. If they do not, the nation will

lose its 

defense industrial base. As a result, the United States

must maintain its global commercial leadership.

However, U.S. industry dominance of the commercial market is eroding. Some of this loss in market

share is inevitable as other companies mature and

improve their ability to compete. Government regulations, protectionist policies and our government’s

failure to invest adequately in technology innovation

also are to blame. We must take action to reverse this

erosion. 

Chapter 6

Global Markets: Open

and Fair

RECOMMENDATION #6: The Commission recommends that U.S. and

multilateral regulations and policies be reformed to enable the movement

of products and capital across international borders on a fully competitive

basis, and establish a level playing field for U.S. industry in the global

marketplace. The U.S. export control regulations must be substantially

overhauled, evolving from current restrictions on technologies through the

review of transactions to controls on key capabilities enforced through

process controls. The U.S. government should neutralize foreign government market intervention in areas such as subsidies, tax policy, export

financing, and standards, either through strengthening multilateral disciplines or providing similar support for U.S. industry as necessary.

Boeing/USA

EADS/EU

Lockheed Martin/USA

BAE Systems plc/EU

Raytheon/USA

GE/USA

UTC/USA

Honeywell/USA

Northrop Grumman/USA

Bombardier/Canada

Source: company annual reports

 $58.2

 $27.0

 $24.0

 $19.0

 $16.4

 $13.0

 $13.0

 $9.7

 $8.2

 $7.6

Figure 6-1 2001 Annual Aerospace-related Revenue

(in billions) of Top Global Aerospace Companies
6-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

The Commission wants to make it clear that we are

not calling for industrial policy. Rather, we call for a

policy of cooperation between the U.S. government

and the U.S. aerospace industry to establish a fair

and open competitive global market. Government

policies and investments have a major impact on the

health and future of the U.S. aerospace industry.

Therefore, it is important that government and

industry work together to achieve national policy

objectives. For example, U.S. government investments in aerospace are viewed by some as commercial subsidies. They are not. 

U.S. investments in defense provide security for

America as well as for its friends and allies abroad.

Likewise, U.S. government investments in long-term

research and critical aerospace infrastructure benefit

U.S. companies as well as companies around the

world. National Aeronautics and Space Administration (NASA) investments in fly-by-wire technology,

for example, were first applied to commercial aircraft

designed in Europe. What concerns the Commission

is that other governments are practicing industrial

policy by funding the transfer of our research and

theirs into commercial products and services, giving

their industries a competitive advantage.

Objective: A Globally-Competitive

Industry

To lead an increasingly global industry, U.S. companies must remain at the forefront of technology

innovation and continue to have access to global

markets. This requires collaboration at the global system-of-systems level, such as in air transportation

management, to establish common rules and procedures, and competition at the system level, such as

aircraft, parts, components, to drive innovation,

quality and efficiency.

The United States government must: (a) enable U.S.

companies to retain their position at the forefront of

technology innovation, (b) reduce government intervention in the market whenever possible, and (c)

counteract government-generated market distortions

when no alternative exists. Where other countries or

coalitions of countries distort the market through

policy, regulation or subsidy, the U.S. government

must act to level the playing field. If successful, U.S.

companies will compete in an environment characterized by:

• An export control system and military procurement policies that allow U.S. companies to 

$80

$60

$40

$20

$0

-$20

-$40 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Source: Aerospace Industries Association

Exports

$ Billions

Imports Surplus

Figure 6-2 U.S. Aerospace Trade Balance*

*Includes aircraft, missiles, space vehicles and parts.
6-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 6 – Global Markets: Open and Fair

compete and partner globally without compromising national security;

• Robust U.S. government funding for long-term

research and development; and

• A global aerospace market free from distortions

caused by protectionist and market distorting foreign government policies. 

Issues

Open global markets are critical to the continued

economic health of U.S. aerospace companies and to

U.S. national security. International markets help

U.S. companies to grow by providing a broad customer base. The 2001 U.S.

aerospace trade surplus was

nearly $32 billion, the largest

surplus of any U.S. manufacturing sector. Over half of all

U.S.-manufactured large civil

aircraft are sold to non-U.S.

customers, and foreign airlines represent the largest

market growth prospects for the next 20 years.1

Twenty-five percent of general aviation airplanes

produced in the United States are sold to overseas

customers.2 Overall, exports consistently account for

around one third of total U.S. aerospace production. 

Global demand for aerospace products and services

increased dramatically over the last twenty years.

Global airline fleets tripled as aircraft connected 

the world’s economies with readily available and 

relatively affordable transportation. Governments

around the world reduced tariffs and other trade barriers through multilateral and bilateral agreements,

opening up new markets for airlines and for producers and reducing the cost of trade.

Revenues generated through export sales helped

companies to fund development of new technology,

and a broad customer base enabled U.S. companies

to achieve economies of scale necessary to incorporate innovative technology into new generations of

products. Open international markets enabled U.S.

aerospace companies to retain

production and jobs in the

United States instead of forcing investment overseas to get

around trade barriers.

International partners also

have contributed to the economic success of U.S. companies and to our national

security. These partners have contributed technology

and funding to development of new civilian and military products and services. They have opened up

new markets and strengthened our ties with allies.

They are contributing to our national security by

facilitating the increased cooperation and interoperability with allies required in emerging models of

coalition and network-centric warfare. 

180

160

140

120

100

80

60

40

20

0

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Billion $

Shipments in $ Exports in $ Export % of Shipments

Source: Aerospace Industries Association

Figure 6-3 U.S. Aerospace Export Share of Production

The Commission wants to make 

it clear that we are not calling

for industrial policy.
6-4

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

The U.S. industry share of the global market, however, has declined in key sectors over the last twenty

years. We are on the brink of ceding our position as

the top producer of large commercial aircraft, and

are losing market share in civil helicopters and aircraft engines. We have made small gains in the commercial turboprop aircraft market, although regional

jets are replacing larger turboprops in many markets.

The situation is somewhat better in space-related

industries. The United States remains one of only

two nations with human-rated space launch capability, and the only operator of a versatile space shuttle.

Until 1999 U.S. companies led the world space

launch market in terms of number of commercial

and military launches, and have established a number of joint programs with Russian companies, their

closest competitors.3 U.S. companies dominate 

the world satellite manufacturing industry in large

satellites and are very competitive in the manufacture

of new smaller satellites. U.S. manufacturers continue to lead worldwide in sales and development of

missile systems.4

We remain strongest in military aircraft markets.

U.S.-origin aircraft dominate existing international

fleets of military transports, tankers and helicopters.5

Existing world fleets of Russian origin combat aircraft and non-piston engine trainers exceed those of

U.S. origin, but U.S. market share is set to grow with

the introduction of the Joint Strike Fighter and procurements of F-22 fighters, while sales and replacements of Russian fighter aircraft are weak at best. 

Nonetheless, we have determined that continued

dominance of each of these sectors is by no means

assured. U.S. industry is slowly losing market share

to foreign competitors.

1980 2000

U.S. 85%

Total Jet Aircraft = 5,756 Total Jet Aircraft = 16,405

U.S. 65%

EU 11%

EU 21%

Russia 4%

Russia 9%

Other 5%

U.S. EU Russia Other

1980 2000

U.S. 25% U.S. 31%

Total Turboprop = 2,059 

Aircraft 

Total Turboprop = 7,330 

Aircraft 

EU 38% EU 37%

Russia 10%

Russia 11%

Other 27% Other 21%

U.S. EU Russia Other

1980 2000

EU 15%

Total Helicopters = 195 Total Helicopters = 1,438

U.S. 83% U.S. 60%

EU 28%

Russia 2% Russia 11% Other 1%

U.S. EU Russia Other

1980 2000

IAE 1% IAE 3%

CFM 6% CFM 20%

RollsRoyce 9%RollsRoyce 10%

Total Engines = 30,016 Total Engines = 41,681

GE 10% GE 14%

Other 22% Other

17%

P&W 52% P&W 36%

P&W GE Rolls-Royce CFM IAE Other

Figure 6-4 Turbojet Aircraft in the World

Airline Fleet by Country of Origin

Figure 6-5 Turboprop Aircraft in the World

Airline Fleet by Country of Origin

Figure 6-6 Turbine Helicopters in the World

Airline Fleet by Country of Origin

Figure 6-7 Installed Jet Engines in the World

Airline Fleet by Manufacturer

Figure 6-4 through 6-7 Source: Aerospace Industries Association
6-5

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 6 – Global Markets: Open and Fair

European companies present the most formidable

competition to U.S. companies in global markets as

the only other current producers of large civil aircraft

and complete engines, and leading producers of helicopters and many elements of military hardware.

Europe leads the world commercial space launch

market, and European advances in satellite manufacturing capability as well as consolidation of the

European missile industry may result in declining

U.S. share of these markets.6

European companies also are our most important

partners. U.S. companies collaborate more with

companies from Europe than from any other country or region in the world, through partnerships on

projects and systems, joint ventures and direct

investment. Not surprisingly, Europe is the biggest

customer of U.S. aerospace exports, as well as the

largest supplier of U.S. aerospace imports.

The Russian aerospace industry also is highly developed in all sectors, although most Russian aerospace

manufacturing has ground to a halt under the weight

of economic and political problems following the

dissolution of the Soviet Union. This is turning

around, in part because of the evolving relationships

between U.S. companies and their Russian counterparts. However, it is unclear when and if Russian

aerospace manufacturing will regain a competitive

position in many sectors. Russia is an important

partner in space flight and exploration, and a 

growing partner and competitor in commercial and

military aerospace production. 

Other countries with long-established aerospace

industries historically have focused on producing a

limited range of complete products and supplying

parts and subsystems to other large manufacturers.

They are now expanding their market presence with

first-tier prime manufacturers. 

For example, U.S. and Canadian aerospace industries have had close ties for decades with significant

cross-border trade and investment. Successful sales of

regional and business jet aircraft have propelled

Bombardier into one of the top ten global aerospace

industry companies with plans to break into the 100

seat commercial aircraft market. Japan has long been

an integral supplier of small and large subsystems for

a wide variety of U.S. aircraft and engine programs.

Japan also produces a limited selection of indigenous

civil and military aircraft and trainers. After nearly

twenty years of development, Japan has just completed development of its first space launch vehicle

to be offered on the global commercial market.

New partners and competitors in Asia and Latin

America are further changing global market dynamics. For example, the Chinese aerospace industry has

a number of civil and military aircraft programs

under development. More importantly, the Chinese

government has identified aerospace as one of

U.S. companies dominate the world

satellite manufacturing industry.

European companies present the most formidable competition

to U.S. companies in global markets as the only other current

producers of large commercial aircraft.
6-6

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

China’s leading high-technology industries for the

21st century centered around a core government 

policy goal of self-reliance in the aerospace and

defense sectors. Chinese companies seek to become

world-class producers by 2012, in part via close

cooperation with major international aerospace firms

and enhanced supplier relationships with nonChinese primes. Other Asian countries such as Korea

and India also are establishing sophisticated aerospace industries. In South

America, Brazil has emerged as

a significant player in a number

of areas, led by sales of regional

aircraft to airlines around the

world.

Competition is healthy. It

drives innovation, quality and

efficiency. 

We are greatly concerned, however, where the rise in

foreign competition has been aided by persistent

government intervention. We see concerted strategies by other governments to unseat U.S. companies

from their position of world leadership.

Interventionist policies are being used as tools to

establish and support “national champions” protecting them from market forces at the expense of U.S.

industry. These policies are described in the

“International Playing Field” section later in this

chapter.

Many governments have well-established aerospace

industrial policies because of the unique market

dynamics of the industry and the blurring line

between civil and military products. Aerospace is a

complex, expensive and highly cyclical industry characterized by long lead times for new product development and purchase decisions. The aerospace

industry also is highly susceptible to external factors

such as terrorism or general economic downturn.

And in spite of growing overall size of the commercial aviation market, it can support only a limited

number of major aerospace manufacturers. As a

result, governments often provide financial support

to help their companies get into the market and to

stay there.

Production choices are not made entirely according

to immediate market demand and price. Manufacturers in essence “buy market share” by offering discounts to entice downstream sales of additional

products, replacements, spares and repairs. Airlines

tend toward equipment commonality to increase

flexibility of their labor and route structure, as well as

to reduce operation and maintenance costs. Military

procurements often are focused

on procurement of a single

product to satisfy each particular requirement. In this environment, governments sometimes

are able to sway procurement

decisions with political pressure.

It also is difficult to separate commercial considerations

from national security. Military

users increasingly look to civilian aerospace products

for military applications, and hence may intervene in

civilian markets to protect military capability. For

this reason, recent years have witnessed dramatic

consolidation of the aerospace industry on a national 

level, but insufficient rationalization on a global

level.

We are greatly concerned

where the rise in foreign

competition has been aided

by persistent government

intervention.

The Chinese government has identified aerospace as one

of China’s leading high-technology industries for the 21st

century centered around a core government policy goal of

self-reliance in the aerospace and defense sectors.
6-7

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 6 – Global Markets: Open and Fair

We have identified key areas of intervention that

warrant a policy response from the U.S. government.

These include: 

• Restrictions on sales or transfer of technology to foreign

customers through export

controls;

• Restrictions on collaboration

through partnerships, acquisitions, foreign investment

and military procurement of

foreign-sourced products;

• Significant government

funding for commercial

aerospace research and development, and in some cases

assistance with the “launch”

of new products;

• Tax law;

• Export financing for civil and military products; 

• Obstacles to collaboration on commercial projects;

• Regulations and standards used by national governments to distort markets and provide their

domestic firms a competitive advantage; and

• Insufficient commitment to global partnerships in

air transportation systems and space activities.

Export Controls and Defense Procurement Policies:

Impede Competitiveness

The preeminence of U.S. military aerospace 

capability is a direct result of our concerted policies

to withstand and ultimately defeat international

communism. In the early years of the Cold War,

America and our allies were confronted by a 

numerically-superior opponent that threatened 

our European allies from secure interior lines 

of communication compared to our need to 

mobilize and project forces from the United States.

To deter our opponent, we crafted a three-part strategy. First, we assembled a standing military alliance

composed of democratic states committed to standing together against the threat. Second, we stationed

substantial American forces in Europe and Asia on

an indefinite basis and extended America’s nuclear

guarantee to our allies. Third,

we committed ourselves to

building a qualitatively superior military force to counter

the numerical superiority of

the Warsaw Pact.

The qualitatively superior military force depended on two

subordinate strategies. First,

we committed to a program of

substantial peacetime research

and development to insure we

invented more advanced ideas

and brought those ideas into

production with qualitatively

superior weapons. Second, we instituted a systematic

program to keep that advanced technology out of the

hands of our opponents through effective export

controls.

ISSUES

• Export Controls and Defense Procurement Policies 

– Restrictive Export Controls

– Collaboration in Defense Procurement

• International “Playing Field” 

– Commercial Research and Development Funding

– Domestic Tax Policy 

– Export Financing

– Commercial Mergers and Teaming

– Offsets

– Regulations and Standards 

• Global Partnerships 

– Air Traffic Management

– Open Global Air Transportation

– Cooperative Space Activities 

Our qualitatively superior

military force depended on

substantial peacetime research

and development to produce

qualitatively superior weapons,

and a systematic program to

keep that advanced technology

out of our opponents’ hands.
6-8

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

The strategy worked. The commitment to military

superiority depended on those two equally important policies—strong continuing research and 

development and systematic export control. It

should be noted that these policies never prevented

the Soviet Union from stealing America’s industrial

secrets, or the secrets of our allies. Indeed, we were

continually confronted by effective Soviet espionage

that stole our military secrets. But in the main, the

strategy worked because it insured that we stayed

qualitatively ahead of our

opponent. We won the race

because we never stopped

running. 

The end of the Cold War

brought about a shift in U.S.

military research and procurement priorities, with

negative consequences for

the U.S. military aerospace

establishment. U.S. Department of Defense (DoD)

spending for aircraft research, development, testing

and evaluation (RDT&E) declined dramatically in

the 1990s. U.S. DoD aircraft procurements dropped

by half during that period as well. 

The RDT&E trend appears to be reversing as the

U.S. fights the war on terrorism and takes a new look

at U.S. military capabilities and priorities. Hopefully

this increase in spending is evidence of a long-term

reorientation instead of a temporary aberration. Our

defense investment is critical to provide for the security of the U.S. and the world. This increase is

needed due to the lack of defense investment elsewhere in the world.

The outlook for military aircraft procurement is less

clear. Although we now are committing more

resources to keeping our military aircraft fleet flying,

future aircraft procurement projects face an uncertain future. U.S. military planners are investigating

options to fund transformational changes in our military capability to meet emerging needs. This has

resulted in scaling back or canceling key upcoming

aircraft programs, including the F-22 fighter, the 

V-22 tilt-rotor and the RAH-66 Comanche helicopter. However, air and space assets likely will continue

to play a central role in any new concepts of military

operations and warfare.

Restrictive Export Controls. One of the primary

obstacles to the health and competitiveness of the

U.S. aerospace industry is

our own export control

regime. Export controls have

been and should be an

important component of

America’s national security.

We believe, however, current

export controls are increasingly counterproductive to

our national security interests in their current form and

under current practices of

implementation. In our

judgment, export control reform is crucial to provide

better security in the future and to insure the health

and vitality of our aerospace industry.

The end of the Cold War brought

about a shift in U.S. military

research and procurement

priorities, with negative

consequences for the U.S.

military aerospace establishment.

The RAH-66 Comanche helicopter is one of the key

upcoming aircraft programs that has been scaled back.
6-9

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 6 – Global Markets: Open and Fair

As a central element of our concerted military policy,

export controls took two forms. We tried to control

the export of weapon systems directly through a system of export controls managed by the Department

of State. We also tried to limit the export of commercial products and technology that could be

applied to military purposes, the so-called “dual use”

items. Dual use export controls were managed by the

Department of Commerce.

Export controls largely worked because we created a

consensus with our European allies to control the

same things globally. All of the countries agreed to

limit the export of military items. And the dual-use

items were controlled through the Coordinating

Committee of the North Atlantic Treaty

Organization (COCOM) process.

At the end of the Cold War, several trends dramatically affected the course of export controls. First, the

United States broadened the use of export controls

beyond our Cold War strategy. Export controls and

embargoes became a favored way to signal our disapproval of other countries and to express foreign 

policy objectives. Second, the consensus with our

allies broke down after the end of the Warsaw Pact

and the Soviet Union. The COCOM system was dissolved and replaced by a weak

Waasenar process. European

allies often saw our export

restrictions as protectionism

intended to enhance U.S.

commercial competitiveness

rather than national security

measures. Third, the nature of

advanced manufacturing and

design evolved sharply as companies and consortia of companies established trans-national design teams. Justin-time business practices evolved with international

shipments of components being installed within

hours of receipt at the loading dock. 

Export controls, which were set up in an era of local

manufacturing and slow paper-based processing,

strained (unsuccessfully, we believe) to cope with the

explosion of new technologies and business practices.

In the process, export controls became increasingly

complex, elaborate and burdensome.

Our complaint about export controls is twofold.

First, we believe export controls now provide too 

little security and impose enormous inefficiency.

Some 40,000-export licenses are reviewed every year

by the Department of State, and 99.8 percent of the

licenses are approved, too often after many long

months of review. The bulk of the licenses are

required for prosaic items of equipment, often to our

strongest allies. Ninety percent

of the military export licenses

are granted to companies

exporting equipment and

components to North Atlantic

Treaty Organization (NATO)

allies, for example. The current

system fails to distinguish adequately between friend and

foe, between cutting-edge and

pedestrian technology.

Administrative hurdles and out-of-date information

further exacerbate the inefficiencies of the system.

Country risk surveys used to evaluate the willingness

and ability of recipient nations to comply with

restrictions on the unauthorized use or retransfer of

U.S.-origin defense exports are woefully out of date.

The absence of up-to-date information causes

export-licensing authorities to depend on data that

Export controls largely worked

in the past because we created

a consensus with our European

allies to control the same

things globally.

Over 180 individual export control licenses have been needed for

export sales of C-130J military transport aircraft to the United Kingdom

(UK) Royal Air Force, to support companies in the UK that are involved

in the production of the aircraft. The U.S. prime manufacturer must

apply for a new Technology Assistance Agreement every time the U.S.

company needs to discuss technical issues for parts being manufactured

by the UK partner. The UK company was selected for it's manufacturing

expertise and capabilities and therefore it is difficult to see how this

process is effective in protecting national security.
6-10

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

may no longer reflect current conditions in many

United States defense export markets when evaluating licenses. It also puts U.S. negotiators at a disadvantage when consulting with other governments on

how to strengthen compliance among the community of nations with whom the U.S. shares modern

defense hardware and technology. Bad information

makes for bad decisions.

More importantly, U.S. export controls are undermining one of the central goals of military planning

during the past 30 years—alliance interoperability.

We actively try to get allies to buy American military

equipment to improve our ability to fight as an

alliance, yet we bog down that process through nettlesome export controls. For example, during the

Kosovo air war, allies were petitioning the DoD to

intercede with the State Department to expedite

license approval of weapon systems needed to arm

combat aircraft flying side-by-side

with American pilots.

Export controls are undermining the collaboration between

companies in alliance countries 

on new system developments.

Foreign companies have actually

instructed design engineers to

avoid American components because of the difficulty

of acquiring license approval from the United States

government.

The current approach to export

controls is increasingly isolating

the American aerospace industry

from the commercial sector in an

unproductive cocoon of regulation. The defense industrial base

is falling farther and farther

behind the commercial market

place because it has to cope with

excessive regulation.

The Commission is fully prepared to defend such

regulation where it purchases indispensable security.

But we are convinced that today’s export controls do

not. We do think it is important to regulate the sale

of stealth technology, for example, but see little reason to block the sale of five-ton trucks. We see th

need to formally decide whether to sell a combat aircraft to an ally, but we see little need to require hundreds of subsequent licenses for necessary support

gear, training manuals, replacement spare parts, etc.

We see the clear need to block the sale of military

equipment and dual use items to irresponsible

nations like Iran and Libya, but we see little justification to impose the same standards on our strongest

allies.

During the Kosovo air war, allies were forced to petition the

Defense Department to expedite license approval of weapon

systems needed to arm combat aircraft, such as the Royal Air

Force Harrier GR7, flying side-by-side with American pilots.

We do think it is important to block the sale of stealth technology,

for example, but see little reason to block the sale of five-ton trucks.

We believe U.S. export

controls now provide too

little security and impose

enormous inefficiency.
6-11

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 6 – Global Markets: Open and Fair

In sum, the current export control regime provides

too little security and is choking American companies and preventing effective technology collaboration with others.

The United States export control system needs a

thorough overhaul. We recommended a number of immediate

reforms in Interim Report #2.

However, if we are to improve

the long-term competitiveness

of our industry, minor tinkering

on the margin is unacceptable

and even counterproductive. 

Shift From Transaction to Process

Licensing. We call for a fundamental shift away from

the existing transaction-based licensing system to

process licensing. Currently, we require an export

license for every sale and every shipment. Instead, we

should establish a process that approves a company

for basic operations under predefined conditions. A

useful analogy here is the way aircraft are produced.

Before Boeing can sell a new design aircraft it must

submit to extensive, detailed licensing approval by

the Federal Aviation Administration (FAA) for that

new design. It cannot be sold or delivered to a customer without that basic production approval. Once

it is approved, however, Boeing does not need to subsequently test and safety-certify every subsequent aircraft that comes off the production line. The FAA

certifies the design and the production methodology

once for safety, and then monitors ongoing production on the basis of departures from the baseline

design.

The export control system would be much more efficient if it were similarly reconfigured. Companies

that wish to export would undergo a rigorous certification process to ensure they possess the internal

controls that safeguard against the sale of weapons or

dual use items to unacceptable parties. Once

approved, the company would be free to sell and ship

goods consistent with U.S. government policy. 

The government would monitor and audit those

operations for compliance. In some instances, the

government approval would require case-by-case

approval of sales. For example, we believe the government would want to approve any and all individual sales of advanced technology like stealth technology, even to our strongest allies. Also, we believe the

government would want case-by-case approval of any

sale to countries that we judge to

be serious security risks. 

Additional Reforms Are Needed.

This shift to a process approval

licensing system will not be effective unless other elements of the

U.S. export control policy are

changed as well.

• Expand International Traffic in Arms Regulations

(ITAR) Waiver Process to Allies With Appropriate

Security Controls. Currently, the United States

requires approval of exports of components even to

a subsidiary of the same company that is located in

a different country. Because of the integration of

U.S. and Canadian production capacities, the

United States entered into an agreement with

Canada for license-free transactions of non-classified components between the two countries.

Licenses are required if the item leaves either the

United States or Canada for another country. We

believe this streamlined ITAR waiver process

should be expanded to other key allies. We believe

that countries should be granted this waiver only

after agreeing to appropriate security procedures

with the United States.

• Fix the Munitions List. The current so-called

“munitions list” is far too inclusive and out of date.

It has not been reviewed since 1992. The list

should be shortened substantially and refocused on

items that meet the multilateral standards of significance, such as precursor chemicals for chemical

weapons. It should no longer control commercial

products and technologies that have been “modified or designed for” a military product, unless

they substantially improve military performance.

In particular, commercial communication satellites

and related components should be removed from

We call for a fundamental

shift away from the existing

transaction-based licensing

system to process licensing.
6-12

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

the “munitions list” and again be controlled as a

dual-use product. The government should establish an annual review process to continually clean

up the munitions list. 

Just fixing the U.S. list is not enough. We must

work with our allies to identify critical technology

and come up with solutions on how to protect it.

By and large, the United States and its allies agree

on the items that should be controlled for nonproliferation reasons. However, we lack sufficient

buy-in from the international community on actually getting the job done. The six major European

countries that account for most European defense

production have signed a Letter of Intent (LOI) to

harmonize export controls for countries outside

the group while facilitating defense trade and competition among the group. The United States

should begin discussions with the “LOI six” to

exchange ideas and to examine the possibility of a

framework between the U.S., the “LOI six” and

later with other industrial democracies. 

• Establish an Objective Appeals Process. Currently,

if the government rejects a license application, the

applicant has no effective method to appeal the

decision except to return to the same people who

rejected it in the first place. The only other course

is for companies to take up the matter at the highest levels of the government, a step that can be

used rarely and with great peril. A more objective

appeals process should be established. Ultimately

only the secretary of a department has the authority to approve or reject a license. But the secretary

should have an appeals board that can offer an

alternative recommendation to the secretary if the

panel decides the original decision was unwarranted. This way the secretary will have an independent perspective to consider before making a

final decision. It also permits a more normal way 

for appeals to be made, other than through

extraordinary intervention to senior officials that is

largely unavailable except to the largest defense

contractors.

• Extraterritorial Retransfers. One of the current

great controversies in the export control system is

the American insistence that no component part

or technology from the United States that is used

by a foreign producer can be sold to a third party

without gaining permission each and every time

from the United States. No matter how small the

component is as a part of the entire system, the

United States has asserted that it has exclusive control rights over the entire sale. This retransfer obligation should be retained for significant military

equipment, such as complete end items. But for

other items, the 25 percent de minimus content

threshold originally developed by the Reagan

Administration should be reinstated as the threshold governing extraterritorial retransfers.

• Compliance Risk Management. Decision makers

must have an up-to-date and detailed understanding of the willingness and ability of recipient

nations to comply with restrictions on the unauthorized use or retransfer of U.S.-origin defense

exports. Updated country risk surveys are one key

way of developing and maintaining this information. Moreover, up-to-date country risk surveys

would provide a basis for government-to-government consultations to strengthen compliance

among the community of nations with whom 

the U.S. shares modern defense hardware and

technology. 

Since the Commission’s February 2002 public hearing, U.S. federal

agencies have reviewed nearly half of the chapters of the U.S.

Munitions List, including the chapter on aircraft. Agencies are considering removing a number of aircraft from the USML, as well as

expanding the use of waivers for spare part export licenses to certain parties. As the first review of the USML in a decade, this is a

step in the right direction. Nonetheless, this review will be insufficient unless it culminates in a comprehensive revision of the list. 
6-13

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 6 – Global Markets: Open and Fair

• Administrative Streamlining. Finally, the federal

government should make a major investment in

streamlining the licensing administrative process.

The Department of State should establish timelines and interagency dispute resolution procedures. The process outlined in the national disclosure process is appropriate. The federal

government also should modernize the information technology backbone for the license approval

process, and establish a totally interoperable system with all executive branch departments that

have a role in the license review/approval process.

Such a system ought to allow industry to file

licenses and all supporting data electronically.

Adequate staffing and training are fundamental to

the success of any reform initiative.

Collaboration in Defense Procurement. Export

controls are not the only problem—other U.S. military procurement policies also undermine our goals

of alliance interoperability and U.S. competitiveness.

In order to protect our position of military leadership and capability, we must re-evaluate military procurement policies that hamper

collaboration with our allies. 

The United States has a number

of restrictions affecting military

acquisitions of foreign-manufactured products, systems and

parts. U.S. legislation requires

many military products to be

manufactured in the United

States. Even in instances where

foreign procurement could be

authorized, some DoD program managers have a bias against considering nonU.S. equipment. 

These restrictions do not reflect the realities of a new

global economy. Instead, they hamper U.S. industries’ access to technology and impede their competitiveness. In some cases these restrictions limit U.S.

industry and government access to superior capabilities and technology developed in other countries. In

other cases it means that U.S. companies have to

establish two separate production facilities for the

same product to ensure that no foreign nationals are

involved in producing the copy of the product going

to the DoD. As commercial companies become more

global, they will be less and less willing to go through

the financial and administrative expense of selling to

the DoD.

Existing solutions to this problem are cumbersome.

Most foreign companies interested in selling to the

DoD end up investing in U.S. companies or working through U.S. prime contractors. In fact, a number of leading European aerospace companies have

an extensive presence in the U.S. market through

“special security agreements” (SSAs) designed to prevent technology flows out of the U.S. from U.S. subsidiaries to their foreign parent companies. There

certainly are benefits to this system. For example, the

1995 acquisition of the U.S. Allison Engine

Company by Rolls-Royce plc of the UK has resulted

in a stable, ongoing partnership that has brought

benefits to companies on both sides of the Atlantic.

As a result of this investment, the U.S. DoD is RollsRoyce’s largest single military engine customer.

However, not only do SSAs

prevent U.S. technology from

leaving the country, so do they

prevent U.S. subsidiaries from

taking advantage of foreign

technology advances.

If we do not change our procurement policies, it will

become increasingly difficult to

find competitive suppliers of

military products as U.S.

industry consolidates. We will

be stuck with sole-source contracts for critical technologies, and may be forced to subsidize U.S. suppliers just to keep them operating. 

Support International Collaboration and Procurement.

U.S. government procurement rules should be

revamped to support increased collaboration with,

and in some cases procurement from, non-U.S.

based companies. The resulting competition will

drive innovation and efficiency, and allow the government to choose items at the best cost and 

Export controls are not the

only problem—other U.S.

military procurement policies

also undermine our goals of

alliance interoperability and

U.S. competitiveness.
6-14

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

performance, regardless of where it is produced. It

will promote interoperability with key allies, a critical element to the success of the emerging model of

coalition and network-centric warfare. It will enable

U.S. industry to take advantage of the best technology available anywhere in the world, integrating it

into products for the U.S. warfighter. 

We are doing this in the Joint Strike Fighter program, bringing in technology from key allies, securing access to additional markets, stabilizing funding

and ensuring the long-term sustainability of both

U.S. and partner defense industries. This close partnership also

establishes a channel of influence when dealing with these

countries on defense and

national security issues. We recognize that this partnership is a

two-way street, providing foreign governments and suppliers

some level of influence over

production and maintenance of

U.S. military equipment. However, if projects are correctly

managed this is a manageable

concern, since further integration will bring a dual dependency resulting in convergence of views. 

The Bush Administration is taking positive steps in

promoting international collaboration on other key

defense programs as well. For example, the DoD is

investigating the possibility of including international partners in development of its new ballistic

missile defense system. In July 2002 at the

Farnborough Air Show, Boeing and the European

Aeronautic Defense and Space company (EADS)

announced plans to work together on missile defense

in response to the DoD’s policy. EADS already is a

major subcontractor to Integrated Coast Guard

Systems (ICGS) recently selected by the U.S. Coast

Guard to work on the Deepwater Capability

Replacement Program (“Deepwater”). As a major

subcontractor to ICGS, EADS will refurbish and

supply helicopters and surveillance aircraft.

We need to reform DoD procurement regulations to

permit integration of commercial components into

military products even if they are provided by nonU.S. companies or worked on by foreign nationals.

For example, if a commercial aircraft is to be

upgraded with military hardware, the company

should not have to set up a separate assembly facility

to ensure that particular aircraft are not worked on

by foreign nationals. 

We are not calling for unilateral opening of our

defense market. Key allies must offer reciprocal

access to U.S. companies bidding in foreign procurement

competitions. Increased U.S.

procurement of foreign products can only work if our

companies have access to

their markets as well.

Countries seeking access to

our defense market also must

reconsider their investment

priorities. These allies should

invest their limited development budgets in creation of

new capabilities instead of

seeking to displace sales of

existing U.S. products. Such targeted investment will

bring bigger returns and advance the overall capabilities of all parties. This partnership has established a

strong foundation for cooperation with our allies in

NATO and elsewhere in the past that must not be

weakened in an effort by some parties to simply

broaden the product range of domestic champions. 

We need to reform DoD

procurement regulations

to permit integration of

commercial components into

military products even if they

are provided by non-U.S.

companies or worked on by

foreign nationals.

International partners have contributed technology and

funding to the multinational Joint Strike Fighter program.
6-15

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 6 – Global Markets: Open and Fair

The U.S. government should protect the strength

and viability of the U.S. industrial base in certain

areas of critical technology and capability. This

includes continuing to procure the most critical

equipment from U.S. prime contractors, and careful

consideration of partnership/teaming requests. The

United States government should remain committed

to continued foreign investment in the United States

with the appropriate safeguards for U.S. technology.

The U.S. government also should continue to monitor closely the transfer and use of sensitive technology to ensure that it stays in the control of our partners. Most importantly, policies on procurement and

teaming must be clear and consistent, enabling companies to make judicious decisions on new projects

and acquisitions.

International “Playing Field”: Out of Balance

Commercial Research and Development

Funding. Although we are ahead of other countries

in investment in military technology and capability,

we are on the edge of dropping out of the race in the

civil sector. Instead of continuing to invest, our government has increasingly pulled back from the civil

aerospace market and left it up to U.S. companies to

compete against competitors subsidized by governments that have “not stopped running.” 

The U.S. government historically has limited civil

aerospace technology-related funding to basic

research, creating enabling technologies and sharing

the results with U.S. and

non-U.S. companies. We

have left it up to the companies to integrate these technologies into commercial

products.

NASA spending for aerospace

research has declined in

recent years, resulting in

fewer and less robust programs. NASA rotorcraft

research was eliminated entirely in Fiscal Year 2002.

In those projects that remain, the U.S. government is

cutting off funding at earlier stages of technology

development as a cost-saving measure. FAA R&D

funding has remained flat in recent years in the midst

of plans to completely overhaul our air traffic control

system. These budgets are likely to decline in the

near future as FAA diverts funding from all areas to

aviation security.

Starved of funds, the U.S. government research and

development infrastructure is deteriorating as well.

Some NASA research facilities have closed, while

others are saddled with an aging infrastructure and

declining number of programs. In fact, the percentage

of the budget NASA must

spend on maintaining aging

infrastructure has increased

over the last ten years, displacing money intended to be

spent on other aspects of the

research programs.

Instead of increasing private funding for basic R&D,

U.S. industry spending has fallen off too. Because

companies contribute money and resources when

they participate in government-funded R&D 

NASA spending for aerospace

research has declined in recent

years, resulting in fewer and

less robust programs.

NASA rotorcraft

research was 

eliminated entirely

in Fiscal Year

2002, bringing an

end to rotorcraft

wind tunnel testing

at the Ames

Research Center.
6-16

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

projects, a reduction in federal funding is matched

by a corresponding decrease in industry funding.

Companies have little incentive to fund basic

research on their own because capital markets and

stockholders shy away from risky investments with

indeterminate returns. 

Chapters 5 and 9 addresses in more detail the need

to reverse this decline in federal civil aeronautic

R&D funding. Although there are many reasons to

take action in this area, declining international competitiveness is near, if not at, the top of the list. 

Other countries do not share the United States’ philosophy regarding civil aerospace research and development funding. Many take their funding beyond

basic technology development, choosing to fund

product development and even bringing the product

to the market (also known as product launch). These

governments seek to establish and support aerospace

producers, even if their products are not fully commercially viable. In their view, the benefits of

employment in a high-value and high-tech industry,

establishment of a national aerospace industrial base

and even national pride outweigh the costs of market

distortions. This has become one of the most politically charged forms of government intervention

requiring U.S. government attention.

Foreign government subsidies directly affect the

competitiveness of our companies. Subsidized prime

manufacturers as well as suppliers are able to undercut prices offered by their U.S. competitors, and are

better able to weather market downturns. Subsidized

companies are able to secure cheaper commercial

financing since their governments share the risk associated with bringing new products to market.

Subsidized production skews the market itself by

flooding it with products that are not commercially

viable. Governments providing the subsidies also

apply political pressure on customers in an effort to

facilitate a positive return on the governments’

“investments”. In many cases, these government subsidies stifle competition and often slow the introduction of new technology into the market. 

European funding has had the most dramatic impact

on U.S. competitiveness because European products

directly compete with U.S. products in most sectors.

This problem will be compounded as other governments fund new competitors that will seek to enter

an already saturated market. If we maintain the status quo, U.S. industry will be left to compete against

companies that don’t play by the same rules.

European and U.S. companies benefit from similar

types of government funding in many respects.

European governments fund military R&D and buy

aerospace products, albeit at lower levels than the

United States. Accordingly, European Union (EU)

aerospace companies benefit from enhanced technology capability and a strengthened aerospace industrial base in the same manner as U.S. firms benefit

from U.S. military spending. However, some EU

officials have indicated that in the absence of sufficient defense contracts, they seek to establish and

sustain their aerospace industrial base through commercial aerospace subsidies. European industry and

some NATO officials have called for increasing

European military procurement and improving capabilities, although such changes are likely to come

about slowly. More importantly, there has been no

corresponding call for reducing funding for commercial aerospace products in light of increased military investment. 

Like the U.S., individual European governments

provide funding for basic civil aerospace research in

Langley Research Center’s 16-foot Transonic Tunnel, which has

been making major contributions to the aerospace community for

nearly 50 years, will be mothballed in 2003 due to budget cuts.
6-17

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 6 – Global Markets: Open and Fair

many areas such as materials, aerodynamics, safety,

propulsion, systems and manufacturing processes.

This has led to a number of basic technology

advances ranging from composites to greater fuel

efficiency. Participation in these programs, and

access to the research results, is limited to European

firms.

The EU supplements its member state basic R&D

funds via European Commission (EC) “framework

programs” (FPs). In contrast to declining NASA and

FAA funding, FP funding has increased dramatically

since 1987. The first EU four-year FP (1987 – 1991)

consisted of $35 million in R&D assistance to the

aerospace industry. This figure jumped to nearly 

$1 billion in the sixth EU FP (2002 – 2006).7

According to the EC, Sixth Framework funding

goals are to enhance the competitiveness of

European commercial aerospace manufacturers,

improve EU air traffic management and other safety

issues, reduce emissions and aircraft noise and

enhance the space industry. An advisory committee

was established in 2001 to create EU-wide aerospace

research goals and coordinate EU member state

activities in an effort to improve the effectiveness of

European basic research.

European and U.S. government approaches diverge

on the issue of project “launch aid” (financially 

supporting the introduction of commercial aerospace products in the market). The U.S. has never

supplied “launch aid” for commercial products. 

In contrast, “launch aid” funded development of

almost every large commercial aircraft and aircraft

engine model produced by European companies. 

As one example, over 75 percent of total development costs for Airbus commercial aircraft, totaling

over $30 billion at current market value, were paid

by European governments to help Airbus establish 

a competitive product line. Thus far, Airbus has

repaid an estimated 25 percent of these total development costs according to the U.S. Commerce

Department. 

As another example, UK engine company RollsRoyce plc has received nearly $2.2 billion since 1975

in government “launch aid” for the RB-211 and successor Trent engine programs that constitute the bulk

of their engine offerings for Airbus and Boeing large

commercial aircraft. According to government and

private sector sources, an estimated $300 million of

that launch aid has been repaid, with the majority of

this debt erased from the slate at privatization in

1987 and during subsequent royalty repayment loan

forgiveness by the UK government. Beyond this support, multiple European aerospace companies have

received equity infusions (sometimes concurrent

with privatization) to cover losses.

700

600

500

400

300

200

100

0

Source: U.S. Department of Commerce

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

(est)

Number of Aircraft Delivered

Boeing Airbus

Figure 6-8 Boeing vs. Airbus Deliveries*

*Number of large civil jet transport aircraft produced; Boeing figures before

1997 include aircraft models manufactured by McDonnell Douglas
6-18

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Often European subsidies are targeted specifically to

replace U.S. suppliers with European companies.

The EC subsidy to Sextant to develop the avionics

suite for the A340 provides a clear example. In its

approval of this subsidy, the French government

cited the goal of displacing the U.S. supplier of

avionics for earlier models of that aircraft.8

European funding for the “launch” of new commercial products is continuing. Nearly $4 billion in government public funds have been allocated 

for development of the Airbus A380,9 and nearly

$385 million have been allocated by the UK 

government for new Rolls Royce engine derivative

projects.10 In both cases, funding is being provided

in the form of royalty-based loans that don’t have to

be fully paid back unless the projects are a complete

commercial success. 

To the Europeans’ credit, their funding strategy has

been very successful. EU companies have developed

robust commercial product lines that are slowly displacing U.S.-produced commercial aircraft and helicopters, aircraft engines and components.

Government subsidies have aided in this rise of

European industry competitiveness. 

1200

1000

800

600

400

200

0

Source: U.S. Department of Commerce

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Number of Announced Aircraft Orders

Boeing Airbus

Figure 6-9 Boeing vs. Airbus Announced Orders*

*number of new large civil jet transport aircraft orders announced by each manufacturer, not adjusted for unannounced order cancellations; Boeing figures before

1997 include aircraft models manufactured by McDonnell Douglas.

2000

1600

1200

800

400

0

Source: Aerospace Industries Association

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Number of Aircraft in Backlog

Boeing Airbus

Figure 6-10 Boeing vs. Airbus Backlog*

*Backlog of large civil jet transport aircraft to be manufactured; Boeing figures before

1997 include aircraft models manufactured by McDonnell Douglas.
6-19

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 6 – Global Markets: Open and Fair

European subsidies to Airbus had a direct impact on

the exit of McDonnell-Douglas from the market as

an independent large civil aircraft (LCA) manufacturer and its subsequent merger with Boeing.

European government and industry officials repeatedly have cited the goal of Airbus achieving a fifty

percent share of the global LCA market. With Airbus

surpassing Boeing in terms of orders and backlog in

2001 and possibly poised to exceed Boeing in deliveries in 2003, it appears that the Europeans are

achieving their goal. 

Unfortunately, it appears that European officials

intend to continue directly subsidizing EU companies. The recently unveiled EU aerospace policy

strategy calls for an increase in subsidies to continue

building market share, largely at the expense of U.S.

companies. If trends continue, European companies

may soon gain market leadership in other products

and technologies as well. This fundamental mismatch of declining U.S. government R&D funding

for basic research and increasing European government funding for both basic research and product

development is reaching crisis proportions for U.S.

industry. This challenge cannot go unanswered.

Disputes over subsidies are likely to be exacerbated in

the coming years as other governments look to

Europe as a role model and support their indigenous

manufacturers in an attempt to establish or gain

market share. Countries such as China have wellestablished plans to foster their domestic aerospace

manufacturing capability for military and civil aircraft. Production by Russian aerospace manufacturers has fallen off greatly since the dissolution of the

Soviet Union, and the Russian government has

implemented a number of protectionist policies in

an attempt to rebuild their industry. 

Stop Direct Commercial Product Subsidies. In order

for the playing field to be level, foreign companies

need to be subject to the same market forces as their

U.S. competitors when seeking funding for the

introduction of new products to the market. We

should support the further privatization and

increased transparency of European companies so

they become more responsive to company shareholders than to government planners. Establishment of EADS as a private company is an important

step in this direction. Another positive trend is

European companies reportedly seeking other risksharing partners to cover nearly a third of the development costs for the two newest commercial aircraftrelated programs, namely the Airbus A380 and the

Rolls-Royce Trent 900 program to power the A380.

Increasing availability of commercial financing may

reduce European industry dependence on government subsidies.

In reality, European companies are unlikely to stop

taking government money if European governments

keep offering it. Therefore we should make every

effort to work bilaterally with EU governments to

get them out of the business of “product launch”.

This will be very difficult. European officials offer

grossly exaggerated claims of U.S. subsidies to commercial aircraft programs through funding of military research and procurement as justification for

their continuing subsidies. U.S. efforts to clear up

these misconceptions thus far have fallen on deaf

The recently unveiled EU

aerospace policy strategy calls for

an increase in subsidies to continue

building market share, largely at

the expense of U.S. companies. 

Former Apollo astronaut and Commissioner Buzz Aldrin signs

Yuri Gagarin’s Tribute Book at Star City Russia.
6-20

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

ears, but we should continue to press our case. We

are skeptical that bilateral efforts with European 

governments or other market newcomers will be 

sufficient. 

Any truly workable solution must therefore be multilateral in nature. International trade agreements

have significantly liberalized trade of civil aerospace

products and reduced government intervention in

the civil aerospace market, starting in 1979 with the

negotiation of the General Agreement on Tariffs and

Trade (GATT) Agreement on Trade in Civil Aircraft.

This agreement has successfully eliminated import

tariffs on aircraft, engines and parts by signatories,

and had some impact on reducing government intervention in procurement decisions. 

Under the pressure of a possible U.S. challenge of

European subsidies to Airbus in the GATT, U.S. and

European negotiators went to the table to draft the

1992 Agreement U.S.–EU Agreement Concerning

the Application of the GATT Agreement on Trade in

Civil Aircraft on Trade in

Large Civil Aircraft (the

“1992 Aircraft Agreement”).

This agreement further clarified the type and extent of

financial and political support

U.S. and European governments could provide to large

aircraft manufacturers. 

The 1994 Marrakech Agreement establishing the

World Trade Organization (WTO) contained further disciplines on market-distorting subsidies

through the Agreement on Subsidies and

Countervailing Measures (ASCM). Together, these

three trade agreements provide relatively robust disciplines that theoretically establish a level playing

field for global aerospace producers.

Although WTO provisions are established to ensure

there is fair and open trading between signatory

nations, the system breaks down when one party

chooses to violate the agreement. Application of

remedies becomes difficult when addressing actions

by nations in support of global companies with

global customers and partners. Governments may be

reluctant to pursue trade cases in the WTO for fear

of starting a devastating trade war. Globally-focused

companies may be reluctant to press for action

against their subsidized competitors for fear of losing

access to foreign suppliers or customers because of

counter-retaliation or political pressure. 

Failure to enforce WTO provisions, however, results

in distorted competition where the subsidized company gains market share at the expense of unsubsidized companies. The only option left is to subsidize

in kind. Once one country steps out of line, the rest

follow. We find ourselves in a “race to the bottom”,

where both parties would find it in their best interests to withhold subsidies but instead find themselves

pressured to take the exact opposite course. 

The ongoing dispute between Brazil and Canada

over violations of the ASCM by both parties in support of regional aircraft sales shows both the strength

and the weakness of WTO

provisions in addressing aerospace subsidies. A WTO

Dispute Panel conducted an

objective study of both countries’ subsidy programs and

found them to be in violation

of the ASCM. A successful

resolution to this dispute has been far more elusive,

as neither party has been willing thus far to eliminate

the market distorting effects identified by the panel. 

Our response must be to fix the system instead of

abandoning it. The U.S. government should work to

strengthen the existing WTO provisions restricting

the use of subsidies to distort the market. This could

be a combination of new and/or more stringent subsidy disciplines applicable to aerospace companies to

be negotiated in the WTO Doha round of negotiations. This will be a difficult challenge as previous

attempts have been only partially successful, perhaps

due to a failure of all parties to commit to finding a

workable solution. In any event, existing provisions

must not be weakened. 

Our response must be to fix the

World Trade Organization

instead of abandoning it.
6-21

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 6 – Global Markets: Open and Fair

The U.S. government also should work with other

WTO members to adopt more effective trade remedies to address distortions that do occur. These

remedies must be usable and effective in a market

characterized by increased globalization. We cannot

let the WTO become a forum where member governments seek to divide up markets and production

work shares. Instead, WTO members must commit

to work together to eliminate market distortions to

enable competition between companies, not between

countries.

Despite the deficiencies of the existing system, the

U.S. government should not shy away from challenging illegal subsidies under applicable WTO provisions. All parties have negotiated these provisions

in good faith and willingly agreed to them.

Accordingly, the U.S. government should require

that European and other governments live up to

their obligations. This includes obligations in the

1992 U.S.–EU Aircraft Agreement as well as the

WTO.

We also believe there is a compelling case to help our

companies get back in the technology race by revising our policies on investment in basic research and

development. The U.S. government should not provide “product launch” funding for new programs.

However, we should increase funding for investigation of revolutionary enabling technologies and

processes such as propulsion, materials, communications, air traffic management and security. In areas

where we conduct basic research, the government

should bring technology to a more advanced level of

technology readiness than is current practice to assist

with technology diffusion among the industry.

Without such investments, our companies will only

fall farther behind. 

Domestic Tax Policy. Like subsidies, tax policies

impact the prices companies are able to offer in international sales. Accordingly, tax policy is the source of

another long-standing dispute between the U.S. and

the EU. EU countries rely heavily on a value-added

tax (VAT) for revenue. The VAT tax is imposed on

imports and rebated at the border for exports. EU

countries also tend to tax their companies more

leniently on overseas earnings than on domestic profits. Similar benefits are not traditionally available to

U.S. companies under domestic U.S. tax law.

To create a more level playing field, over thirty years

ago the United States government established a provision in U.S. tax law that permitted U.S. companies

to reduce domestic taxes on a share of profits derived

from exports. This regime, called the DISC

(Domestic International Sales Corporations), was

intended to offset the competitive advantage offered

to European companies via the VAT system. Europe

challenged the DISC program under multilateral

rules (the GATT) as an unfair advantage to U.S.

companies, and the U.S. challenged the VAT system

in response. Following negotiations with the

Europeans, in 1984 the U.S. government established

the U.S. Foreign Sales Corporation (FSC) tax

regime, replacing the DISC with a more restrictive

regime that still leveled the playing field.

Fifteen years later, Europe once again challenged

U.S. tax law under multilateral rules, even though

WTO negotiators had refrained from establishing

explicit WTO rules on domestic taxation. Although

the FSC system directly offset tax benefits available

to European competitors, the WTO determined that

the FSC regime was an illegal export subsidy inconsistent with WTO rules. In an effort to become

WTO compliant, the United States repealed FSC

and enacted the “FSC Repeal and Extra-territorial

Income Exclusion Act of 2000” (ETI) regime in

November 2000. The WTO subsequently ruled that

ETI also was not in compliance.

We highlighted in Interim Report #2 the need for

the United States to work closely with the EU to find

a mutually agreeable solution to this dispute in order

to avoid the up to $4 billion in trade sanctions

against the United States threatened by the EU.

Retaliation of this magnitude would be devastating

to U.S.–EU trade relations. However, U.S. companies will face a significant competitive disadvantage if

a replacement U.S. tax regime is adopted that does

not counter the export-related benefits to European

companies of their VAT system. Loss of the ETI 

tax incentive would result in declining sales as U.S.
6-22

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

manufacturers have to raise prices to compensate for

the increased tax burden, and may result in the loss

of U.S. employment as companies move jobs to offshore facilities that enjoy favorable tax treatment by

foreign governments.

The U.S.–EU dispute over FSC/ETI will have a particular impact on U.S. aerospace companies. Because

they generate a significant portion of their revenue

from export sales and their primary competitors are

European companies who receive VAT benefits,

many U.S. aerospace companies are active users of

the FSC program.

Negotiate Permanent Solution to Tax Disputes. In the

near term we must seek to delay European sanctions

while both parties negotiate a solution. We urge the

President and Congress to authorize changes to U.S.

tax law that are WTO compliant but that continue

to offset the advantage enjoyed by European companies. The Commission highlights some favorable

proposals for such changes in Chapter 7, namely an

enhanced national security R&D credit and proposals offered by the National Foreign Trade Council

related to wage credits and changes in accordance

with WTO rules (including “Footnote 59” of the

WTO ASCM). The Commission urges the

Administration to work with industry and Congress

to develop an equitable resolution to this dispute.

In the longer term, the Administration should initiate changes in the WTO rules to remove the current

inequity in the treatment of direct and indirect taxes

that caused the dispute in the first place. We are not

advocating the global harmonization of tax law,

rather we wish to ensure that WTO rules create a

level playing field. 

Export Financing. The U.S. government also has

sought to eliminate unfair pricing practices and to

level the playing field in the area of government-supported export financing. 

Financing plays a critical role in the ability of customers to procure military and commercial aircraft.

International agreements, such as the Organization

for Economic Cooperation and Development

(OECD) Arrangement on Officially Supported

Export Credits, establish ground rules for governments seeking to support commercial export financing by absorbing some of the risk of loan default by

customers. These financing arrangements, known as

export credit agency (ECA) programs, facilitate the

purchase of aircraft by customers who would not

otherwise have sufficient access to commercial

financing. 

The U.S. Export Import Bank (Ex-Im Bank) supports financing for sales of commercial aircraft as the

U.S. ECA. Ex-Im Bank loan guarantee applications

are rigorously reviewed for commercial viability and

risk before they are approved, resulting in an excellent history of repayment. Nonetheless, Ex-Im Bank

has congressionally appropriated funds to cover

losses from high-risk projects that exceed program

fees. 

Ex-Im Bank funding programs for exports of commercial aircraft are an essential tool to counter discounted or otherwise preferential financing terms

offered by foreign manufacturers with the assistance

of their governments. Continued support from ExIm Bank is particularly important in light of a recent

agreement among European ECAs to expand their

export credit support for European aircraft and

engines. 

Ex-Im Bank financing also enables airlines from

poorer countries or with credit problems to access

financing they need to keep operating and to integrate safer and more environmentally friendly aircraft into their fleets. Airlines struggling to survive

the current downturn in global traffic will become

more reliant upon these programs in the near future. 

Continue Commercial Aircraft Official Export

Financing. Continued funding for Ex-Im Bank is

important to the U.S. aerospace industry. The U.S.

government also should support efforts to reduce

international reliance on ECAs for export financing

assistance, such as through ratification of the “Cape

Town convention” (The International Institute for

the Unification of Private Law Mobile Equipment

Convention and Aircraft Protocol). This convention
6-23

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 6 – Global Markets: Open and Fair

and protocol sets rules that determine the order in

which creditors will get paid if an airline defaults on

mortgage payments. The certainty provided by these

rules helps airlines to access cheaper financing and

helps creditors to make wise loan decisions.

The U.S. government falls short in providing necessary financing for military aircraft exports. The

Defense Export Loan Guarantee (DELG) program

established by Congress in 1996 provides a framework for such financing, but the shortfalls in 

the program are evidenced by its limited use. The

DELG program shares most of the characteristics of

the Ex-Im Bank loan guarantee program for civil sector exports with an important exception—the

defense loan guarantees are not subsidized with

funds appropriated to the DoD. Because of statutory

constraints and regulatory and administrative practices, this program has proven to be unattractive to

potential foreign customers—only one small transaction has been executed in more than five years of

operation. As a result, the United States is the only

significant exporter of defense-related equipment

without an effective military-related exports credit

mechanism.

Modernize the DELG. The DELG program needs to

be modernized to permit the DoD to create an effective export credit organization that will facilitate the

financing of defense exports to U.S. allies and

friendly nations abroad. Modernization of the

DELG should remove dysfunctional statutory and

regulatory constraints that frustrate implementation

of the DELG statute. A number of legislative 

and policy changes would make this program more

effective. For example, customers should be permitted to finance their exposure fees, the lists of countries eligible for DELG financing should be

expanded, and administrative costs should be

reduced. These reforms are highlighted in more

detail in the Commission’s Interim Report #2.

In addition to DELG reforms, Export Import Bank

funding could be extended to military equipment

purchases and the Foreign Military Sales (FMS) program could be updated. 

Commercial Mergers and Teaming. International

collaboration between companies and much needed

rationalization of the global aerospace industry are

impeded by a number of foreign government policies

on foreign investment and mergers and acquisitions

in the commercial sector. Oftentimes countries

impose restrictions in these areas to protect their

“national champions” from national or international

competition.

Because of the increasing global nature of production

and customers, foreign governments have increasing

jurisdiction over mergers or teaming plans of U.S.

companies. This becomes a competitiveness issue

when foreign governments make decisions based on

different criteria than the U.S., or based on concerns about the market share of their own “national

champion”. 

This issue has been most prominent in Europe.

United States and European officials appear to have

different philosophies on consolidation and partnerships. U.S. regulators tend to investigate the impact

of a merger on the consumer and the ultimate

monopoly power of the company in the overall market. EU policy makers seek to preserve stability of the

internal European market and to protect market

share of European companies competing with U.S.

companies. 

The EU imposed a number of conditions upon the

1997 merger between the Boeing Company and

McDonnell Douglas in an attempt to prevent any

competitive advantage of the new company over

their own Airbus Industrie. More recently, concerns

The House Armed Services Committee has proposed expanding the list of countries eligible for DELG assistance in an

effort to make the program more usable. We supported

inclusion of this provision in the FY 2003 Defense

Authorization legislation, and encourage further revisions to

the program.
6-24

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

about the competitive impact on EU based manufacturers apparently contributed to the EU rejection

of the General Electric-Honeywell merger in spite of

U.S. anti-trust approval. 

All countries, including the United States, have some

level of restriction on foreign investment in sensitive

industries to preserve national security. However, we

are concerned about instances where countries such

as Russia restrict foreign investment in their commercial aerospace industries to foster their national

champions. In fact, these restrictions can be counterproductive when they isolate companies from international markets and much-needed sources of capital investment.

For example, U.S. aerospace

companies have invested

extensively in Russia over

the last ten years, providing

much needed financial support and access to global

markets for Russian products and capability. Multiple

partnerships between U.S.

and Russian companies in

the space launch industry have had a significant

impact on the global launch market. U.S. and

Russian civil aerospace manufacturers also have

worked extensively together to develop Russian aircraft with U.S. parts, systems and even engines and

to secure FAA safety certification. However, domestic political pressure on the Russian government has

led to restrictions on foreign investment in Russian

aerospace companies, potentially resulting in divestment by U.S. companies in their Russian partners

and depriving them of the myriad benefits of international collaboration.

Remove Obstacles to Commercial Mergers and

Teaming. The U.S. government should remove policy and regulatory obstacles to increased commercial

mergers and teaming within the U.S. and with international partners. Examples of the benefits of 

this business model abound. Most commercial aircraft engine programs today are characterized by

extensive international collaboration, where U.S.

and foreign partners combine their technology and

investment capital to bring new engines to the market. U.S. prime producers of large civil aircraft and

helicopters also rely heavily on foreign suppliers and

partners to provide critical elements, components

and expertise.

U.S. suppliers benefit from this business model as

well, as evidenced by the regional jet industry. The

global market for regional jets is only big enough for

a limited number of manufacturers, but until

recently was plagued by oversupply. The manufacturing base has undergone some consolidation/

rationalization in recent years with the exit of Fokker

and BAE from regional

aircraft production.

Following the impending

departure of FairchildDornier from this market

segment, Embraer (Brazil)

and Bombardier (Canada)

will be the remaining

regional jet manufacturers

in business today. 

U.S. prime manufacturers

have not directly pursued the regional jet market.

However, U.S. suppliers have significant content on

both the Embraer and the Bombardier aircraft models. In fact, U.S. companies provide nearly 70 percent of the hardware to Embraer for assembly, from

engines to electronics to structural components.11 In

turn, Embraer is a key supplier of structural components to Boeing for other aircraft. U.S. suppliers

benefit from an increased market for their products,

and U.S. customers win as some of the largest customers of these Brazilian and Canadian regional jets.

The U.S. government should assist in developing

and policing international anti-trust treaties relating

to mergers/teaming between commercial entities.

Such multilateral agreements could minimize divergence of requirements and the methods of assessment, presumably making reviews more objective.

The U.S. government also must continue to work

bilaterally with key countries to remove barriers to

foreign investment.

EU policy makers seek to preserve

stability of the internal European

market and to protect market share

of European companies competing

with U.S. companies.
6-25

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 6 – Global Markets: Open and Fair

Offsets. “Offsets” are a form of market distortion in

global aerospace trade that can take on the form of

forced collaboration. Offsets are conditions that a

foreign government negotiates with a company seeking to export a major defense or commercial system

to its country. Under an offset agreement, the

exporting company agrees to either shift some production of the system and/or parts to the procuring

country, or to offer some other technological or economic benefit. Procuring governments usually seek

to negotiate the best offset package possible from all

competing bidders, e.g., U.S. and foreign aerospace

companies. 

Offsets are most prevalent in defense procurements

because governments negotiate the terms of the sales.

According to figures gathered by the U.S.

Department of Commerce and the Office of

Management and Budget, the dollar value of defense

offset agreements negotiated with U.S. companies as

a percentage of the export sales with which they are

associated has ranged from 34 percent to 98 percent

over 1980 – 1998. U.S. exporters of defense systems

complete approximately $3 billion per year in

defense offset transactions with other nations. The

dollar value of defense offset agreements relative to

defense exports has remained stable over time; however, ancedotal evidence provided to the Offsets

Commission suggests that offset demands may have

grown qualitatively as the receiving countries increasingly require specific results rather than best efforts

from the U.S. exporters and seek greater technology

transfer.12 These figures in most cases exceed the

actual dollar value of offsets provided, since procuring governments usually will associate higher values

to offsets that are more important to them and hence

use a “multiplier” to equate the actual offset and the

negotiated percentage.

Offsets also can be involved in exports of commercial

aerospace products and systems where governments

own or have influence over the buyer, such as stateowned or controlled airlines. There is little data on

the prevalence of commercial aerospace offset

requirements since the government does not have

any effective or comprehensive reporting requirements for offsets in the commercial industry.

Industry surveys indicate that countries require offsets on a relatively small percentage of commercial

export sales. 

The full impact of offsets is difficult to determine.

Such agreements can reduce the U.S. content in the

product or system being exported, and can shift

some production or technological capability to the

procuring country. This may result in a shift of U.S.

jobs to foreign suppliers. However, if an offset agreement enables a U.S. company to make an export sale

that would not have occurred without the offset, the

effect is to create additional work and jobs in the

United States. Offsets also can provide U.S. industry

access to new markets and technology. We highlight

concerns about the impact of offsets on the U.S.

workforce in Chapter 8.

Reactivate Offsets Commission. To minimize any negative impact of government-mandated offsets on the

U.S. aerospace industry and employment, the

United States should maintain its policy of discouraging such offset requirements by foreign governments. Unilateral restrictions that prevent U.S. producers from participating in offset agreements likely

would shift demand to other countries, reducing

business for a wide range of U.S. prime contractors

and subcontractors. Therefore the U.S. government

should pursue a multilateral solution to curtail offset

demands. 

The National Commission on Offsets in

International Trade established in 2000 to examine

the use of offsets has not undertaken further study

following the publication of an interim report in

January 2001. Reactivating that Commission may be

the best alternative for developing policy recommendations on this issue. 

Regulations and Standards. Global standards and

regulations are critical to the efficient operation 

of the global aviation system and international markets. They provide predictability and stability that
6-26

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

companies and customers alike need to make wise

investment choices. They are the avenue through

which governments ensure the safety and security of

air travel. They also facilitate the free movement of

goods and people by creating transparency of policies

and compatibility of products and systems.

Governments use standards and regulations to pursue other goals in the public

interest as well, such as

reducing the environmental

impact of aviation. 

The decline of traditional

trade barriers has led to an

increasing impact of standards and regulations on the

competitive position of U.S.

companies. To gain competitive advantage, some countries have established domestic standards or regulations

that do not fully reflect or,

in some cases, ignore global

aerospace standards and

practices. 

Since the signing of the Chicago Convention in

1944, the International Civil Aviation Organization

(ICAO)—a specialized agency of the United Nations

(UN)—has served as the forum for establishment of

international civil aviation standards and recommended practices that have enabled development of

the aerospace industry as we know it today. As a consensus organization made up of representatives from

almost every nation of the world, ICAO has been

and remains the right place for aviation standards

and practices to be developed and policed.

In view of the increasing international competition,

the U.S. has not kept pace by devoting adequate

resources to the development of global standards. As

of the end of 2001, U.S. citizens occupied only 11 of

the 27 staff positions the United States is entitled to

hold in ICAO. Our involvement in ICAO often 

is further hampered by general U.S. government policy regarding the UN, such as the zero nominal

growth policy for UN budgets. Even though we want

and need ICAO to do more to support global aviation, we are prevented from providing the resources

necessary to do so. Lack of resources and reduced

involvement in ICAO and other international cooperative efforts erode the image of the U.S. FAA as a

global leader. The U.S. is losing its position as the de

facto standard setter.

In contrast, European governments actively are seeking

global leadership in this area,

often at odds with U.S. and

other country interests. They

have devoted increasing

resources to international

standards-setting bodies

such as ICAO in an effort to

shape global standards and

regulations. The EU also is

active in providing technical

assistance to third-country

regulators in an effort to

influence their regulatory

decisions. When they are not satisfied with the

process or outcome of international deliberations,

the EU has chosen to establish unilateral regulations

to force their position. 

The unilateral European “hushkit” regulation

(European Council Regulation-EC No. 925/1999)

established in 1999 by the EU clearly illustrates the

need for internationally agreed-upon standards. The

stated goal of the hushkit regulation was to provide

European citizens relief from aircraft noise, but the

regulation was constructed in a way that it had a disproportionate impact on U.S. products and airlines.

U.S. industry-estimated economic damage caused by

the European hushkit regulation approached $2 billion in lost sales of aircraft engines and hushkits and

reduced asset value of U.S. airline fleets.13

This dispute has been partially resolved by ICAO

adoption in October 2001 of a new aircraft noise 

standard and related policy guidelines. U.S. political

leadership and technical expertise was instrumental

To minimize any negative impact

of government-mandated offsets

on the U.S. aerospace industry

and employment, the United

States should maintain its policy

of discouraging such offset

requirements by foreign

governments.
6-27

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 6 – Global Markets: Open and Fair

in developing this global consensus on aircraft noise.

It is exactly this sort of effort from the U.S. government that must be sustained, as well as expanded in

other areas. Future unilateral regulations, especially

environmental regulations related to aircraft noise

and emissions, constitute a serious threat to fair and

open trade.

Another example of regulation being used to further

EU competitiveness goals relates to aircraft safety

certification. European authorities appear to have

used delays or denial of certification of U.S. aircraft

to be operated in Europe for competitiveness reasons

instead of safety or objective technical reasons. There

are numerous examples where additional certification testing or procedures were required or where the

certification process was unjustifiably prolonged for

particular U.S. manufactured aircraft models. The

resulting delays caused by European regulators

worked to the benefit of European manufacturers.

Reinforce Commitment to Leadership in Global

Standards. In most cases, a multilateral solution is the

best remedy for regulatory trade barriers. Global

standards would reduce the burden on manufacturers, provide clarity and constancy of requirements

and ensure the playing field is level.

The U.S. government needs to devote adequate leadership and resources to the development of global

standards in ICAO and via other forums. The

United States has been a leading voice and influence

in ICAO since its inception, although that influence

is waning. We are not critical of increasing European

involvement in ICAO—in fact, we welcome an

increasing reliance on international standards. The

U.S. government must follow suit and commit 

sufficient funding and staff resources to ensure U.S.

views are integral to ICAO discussions and decisions.

Particular attention should be paid to the development of global environmental standards and recommended practices through ICAO, based on objective

analysis and common metrics. 

An increased commitment to ICAO includes 

an expanded U.S. presence at ICAO. We must

proactively support the placement of U.S. citizens in

leadership and staff positions in the ICAO organization. This means devoting more attention to recruitment for ICAO positions and actively supporting

FAA employees who make working for ICAO a

career objective. There is no better way of ensuring

U.S. views are well represented than having U.S. citizens working at ICAO.

U.S. officials must have sufficient funding to participate in ICAO meetings and to cover operational

expenses too. Industry has spent significant money

and resources to facilitate the development of ICAO

standards and procedures. This partnership with

industry is critical to the successful establishment of

standards, but the burden should not fall solely on

their shoulders. The United States cannot afford to

be left behind as a result of not devoting adequate

resources to protect our interests. 

The U.S. government also needs to do a better job of

coordinating U.S. policy positions before bringing

them to international forums. In spite of best efforts,

the existing interagency coordination process is not

always effective in giving equitable weight to the

views of each agency or in avoiding unclear or conflicting U.S. positions in international negotiations.

The government structure reforms outlined in

Chapter 3 would facilitate this coordination. 

Although ICAO is in essence a consensus organization, numbers still matter. Therefore, we take issue

with one element of increasing European involvement in ICAO—the European voting block. The

U.S. is disadvantaged in ICAO discussions by the

European voting block of fifteen European votes to

one U.S. vote when there is a disagreement. The

United States government should oppose adding a

voice in ICAO for the EC unless it will replace individual EU member state votes instead of complementing them. 

Our cooperation should not be limited to activities in ICAO—some issues such as requirements for

safety certification may be best addressed bilaterally.

The United States should continue to devote
6-28

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

resources to harmonizing U.S. and foreign safety certification requirements to ensure the highest level of

safety while reducing the burden of meeting multiple

requirements in different countries. Harmonizing

aircraft safety certification also would reduce the

ability of foreign authorities to unfairly restrict U.S.

industry access to their markets. This will require a

commitment to international exchanges of technical

experts and policy makers as well as a concerted

effort to develop support of all the necessary constituents affected by such a harmonization. 

Global Partnerships: Lack of Commitment

The importance of global standards and cooperation

extends beyond avoidance of regulatory barriers to

trade. International partnerships are essential to the

creation of system-of-systems solutions to global

challenges.

Air Traffic Management System. In order to move

people and goods anywhere around the world, anytime, we need a global air traffic management system. In Chapter 2 we discuss the need to transform

our management of U.S. airspace through the use of

advanced technologies and improved procedures. We

also need to ensure that there continues to be a seamless transition for aircraft entering or leaving U.S.

airspace. Therefore, the transformation will be successful only if the United States acts in concert with

other governments around the world in a number of

areas. 

Fundamentally, the overall architecture of the new

system we envision must be compatible with that 

of neighboring airspace, requiring cooperation on

near-term upgrades as well as long-term development plans. We are encouraged that long-term development plans issued by Eurocontrol and other foreign authorities appear similar to the new system we

are proposing. The FAA must continue to consult

with their foreign counterparts to ensure that these

development plans are coordinated.

Common operational procedures and standard protocols are critical elements of compatibility. Through

ICAO, aviation experts have established recommended practices to guide the operations of pilots

and air traffic controllers. Pilots and controllers will

rely on each other and share information in new

ways in the proposed new system. As a result, the

United States should lead development of new operational guidelines through ICAO, as well as promote

opportunities for training of pilots and controllers in

the new procedures.

Interoperable technology is another critical element

of compatibility. ICAO now is developing standards

and recommended practices for global navigation

satellite services, one element of the new system we

propose. The United States should lead ICAO efforts

to accelerate work in this area, bringing together

existing technology and expertise gained from

American GPS and Russian GLONASS systems and

new systems of the future. We also must start work

now in ICAO to identify additional areas where

introduction of new ATM technology will require

common standards and procedures, and commit

technical and policy resources to assist in their development. A failure of the United States to commit

sufficient resources and attention to ICAO work in

these areas could have disastrous implications for our

efforts to field a new system. 

We also must ensure that deployment of a satellitebased navigation and ATM system is not thwarted
6-29

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 6 – Global Markets: Open and Fair

by disputes over radio spectrum allocation. The

United States must work cooperatively with other

countries via the World Radio Conference and other

multilateral forums to ensure that the necessary frequencies are available around the world. For us to be

effective, U.S. government

officials must coordinate policies among our own government agencies as well as commit the resources needed for

active participation in international negotiations.

European plans to establish

the “Galileo” satellite constellation system could either

help or harm efforts to establish a new global ATM system. Galileo is intended to provide the same type of

service as the existing Global Positioning System

(GPS) constellation owned and operated by the

United States government and available to all users

for free. GPS and other satellite services would serve

as the foundation of our proposed new ATM system,

providing better navigation and positioning information to pilots and to controllers around the world.

The impact of Galileo on the global air traffic system

and on U.S. industry depends largely on how

European policy makers choose to develop and operate their system. In the best-case scenario, Galileo

would offer enhanced capability as well as redundancy to users of the satellite navigation system,

although we are skeptical that establishment of a

completely redundant system is necessary or even a

wise investment of limited budgets. To be compatible, Galileo and GPS must use common protocols

and not interfere with each others’ signals. 

In the worst-case scenario, Galileo signals would be

incompatible or even interfere with GPS signals. We

are concerned that current European government

proposals for funding development, deployment 

and operation of Galileo could lead to just such a

conflict. 

European governments do not intend to fully fund

Galileo as the U.S. government funds and operates

the GPS constellation. Instead, the EU intends to

rely on commercial revenues from the sale of access

to Galileo signals. We are unclear how the EU

intends to generate demand

for a fee-based system that

offers the same service as a

free system, unless EU regulators mandate the use of

Galileo transponders and

services by European companies or within the borders of

the EU. We strongly oppose

any such mandate. It would

be very harmful to U.S. and

all other non-European

industry and create artificial barriers to the integration of European and neighboring airspace. Such a

scenario surely would be grossly detrimental to the

global aviation community.

U.S. government officials must work bilaterally and

multilaterally to ensure GPS and Galileo are compatible and complementary in the event that Galileo

becomes a reality. There have been some positive

steps taken by U.S. and EU officials over the last 

year toward this goal, and we urge those officials to

continue their discussions. We also must collaborate with others in the global aviation community

to develop common standards and procedures in

support of a truly seamless system of worldwide

capability. 

Open Global Air Transportation. A safe, efficient

global transportation infrastructure provides little

benefit if airlines are not able to use it. We therefore call for increased liberalization of air transport

services. Growing demand for air traffic will translate

into the need for more planes and equipment, benefiting passengers, airlines and manufacturers around

the world. Therefore, continued liberalization of the

air transport market is another critical prerequisite to

the continued growth and competitiveness of the

U.S. aerospace industry. 

U.S. government officials must

coordinate policies among our

own government agencies as

well as commit the resources

needed for active participation

in international negotiations.
6-30

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Restricted access to airports is a problem. The United

States government should continue to negotiate

“open skies” agreements that allow domestic and foreign airlines to use airports and airspace more productively by reducing overcapacity and enabling

more point-to-point travel. This will avoid reliance

upon congested hubs and reduce the cost and time of

travel for the passenger, an issue of particular importance given the increased prevalence of securityrelated delays. 

Cooperative Space Activities. Our cooperation

should not be limited to terrestrial-based systems.

We discuss in detail recommendations related to

space in Chapter 3, but would be remiss if we failed

to mention some key points related to the global

nature of space exploration and planetary defense. 

Space Exploration. The success or failure of our future

efforts in space exploration is linked to our ability to

work effectively with international partners. The

magnitude of establishing a permanent presence in

space and exploring new systems is too great to

undertake alone—nor would we want to. Beginning

with the first Apollo-Soyuz mission in 1975, we have

learned that collaboration in space exploration benefits all parties as we set aside differences and pool our

resources to achieve common goals. 

Although we are responsible for managing and operating the International Space Station (ISS), U.S. government decision makers must remember that U.S.

funding and policy decisions directly affect the ability and willingness of international partners to participate in the ISS program. We want and need the

ISS to be an international endeavor. ISS partners

contribute expertise and resources fundamental to

the operation of the station.

NASA must consider carefully the impact on international partners of decisions to restructure or reorient U.S. space exploration priorities. This includes

decisions on a crew return vehicle needed to boost

ISS staffing to a level beyond basic operation of the

station. ISS partners have invested significant

resources and expertise in developing and producing

research modules and other ISS components that

simply won’t be used unless there is sufficient staffing

on board.

Planetary Defense. Cooperative space efforts also

should include planetary defense against Near Earth

Objects (NEOs) ranging from asteroids to comets

that come near (or impact) the earth. NEOs pose a

potentially serious threat for the planet and for

human kind. Scientists point to evidence of NEOs

striking the earth millions of years ago, dramatically

altering the climate and life on earth. The 1908

“Tunguska event” in Siberia, estimated to have had

an impact equivalent to a 40 megaton bomb, was a

more contemporary warning that this threat is real.

Recent press reports have highlighted a series of nearmisses on a planetary scale

where NEOs the size of

small cities came dangerously close to striking the

earth.

NEOs represent a truly

global problem in need 

of a truly global solution.

The U.S. government

must work with other

countries through the UN

and other organizations

on efforts to integrate a

planetary surveillance,

identification and defense

system. 

The success or

failure of our

future efforts in

space exploration

is linked to our

ability to work

effectively with

partners on 

projects such as

the International

Space Station. 

Radar image of Asteroid 1950 DA,

which may have a close encounter

with Earth in 800 years.
6-31

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 6 – Global Markets: Open and Fair

Conclusions

Open global markets are critical to the continued

economic health of U.S. aerospace companies and to

U.S. national security. In order to remain global

leaders, U.S. companies must remain at the forefront

of technology development. They must also have

access to global customers, suppliers and partners in

order to achieve economies of scale in production

needed to integrate that technology into their products and services.

Government intervention continues to distort global markets,

from subsidies to anti-competitive restrictions on partnerships

and collaboration to biased

standards and regulations. U.S.

companies frequently find

themselves competing against

foreign competitors supported

directly or indirectly by their governments. We need

to move to a different model of business characterized by competition between companies instead of

between countries.

Reform Export Controls and Defense

Procurement Policies. U.S. national security and

procurement policies represent some of the most

burdensome restrictions affecting U.S. industry

competitiveness. 

We call for a fundamental shift away from the 

existing transaction-based export-licensing regime to

process-based licensing. Under this new system, the

government would rely on companies to safeguard

against the sale of controlled technologies to unacceptable parties through internal company controls

certified by the government. The government then

would monitor and audit those company operations

for compliance. Such a process-based licensing

regime would improve security, reduce licensing

costs and enable our companies to collaborate with

international partners and sell to global customers.

Additional reforms, including those outlined in

Interim Report #2, are necessary to make this new

system effective. As quickly as possible, the 

government should revise the U.S. Munitions List,

remove barriers to global project licenses, expand

waivers for trading with friendly nations, and 

update country risk surveys to facilitate better policy

decisions.

U.S. procurement regulations currently are too

restrictive and must be modified to be supportive of

a global industrial base to meet military requirements, while maintaining U.S.

industrial capacity in critical

technologies and capabilities.

We need to reform DoD procurement regulations to permit

integration of commercial components into military products

even if they are provided by nonU.S. companies or worked on by

foreign nationals. 

Establish a Level International “Playing Field”.

U.S. companies have lost market share to foreign

companies supported by protectionist and market

distorting policies. The U.S. government must take

immediate action to neutralize these distortions and

enable fair and open competition. 

We must continue to meet our responsibilities of setting national goals and priorities for basic research,

reverse declines in basic R&D funding and expand

efforts to fund technology diffusion through U.S.

industry. 

We also must work bilaterally and multilaterally to

get foreign governments out of the business of commercial “product launch.” In spite of inadequacies of

the current WTO system, the U.S. government

should work in the WTO Doha round of negotiations to strengthen the existing WTO provisions

restricting the use of subsidies to distort the market.

The U.S. government also should work with other

WTO members to adopt more effective trade remedies that are usable and effective in a market characterized by increased globalization. When countries

do violate existing provisions, we should not shy

away from taking action.

Open global markets are

critical to the continued

economic health of U.S.

aerospace companies and

to U.S. national security.
6-32

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

We must ensure that U.S. companies are not disadvantaged by differences between U.S. and foreign tax

policies as exemplified in the current WTO dispute

over U.S. FSC/ETI regulations. In the near term we

must seek to delay European trade sanctions while

both parties negotiate a solution to this dispute. We

urge the Administration and Congress to authorize

changes to U.S. tax law that are WTO compliant but

that continue to offset the advantage enjoyed by

European companies. In the longer term, the

Administration should initiate changes in the WTO

rules to remove the current inequity in the treatment

of direct and indirect taxes that caused the dispute in

the first place.

Official export credit support for commercial and

military products is an essential tool to facilitate U.S.

aerospace exports. In addition to continued funding

for U.S. Ex-Im Bank programs, we should seek to

reduce international reliance on official export credits for export financing assistance, such as through

ratification of the “Cape Town convention.” For military exports, the DELG should be modernized to

permit the DoD to create an effective unsubsidized

export credit organization to facilitate the financing

of defense exports to U.S. allies and friendly nations

abroad. 

The U.S. government should remove policy and regulatory obstacles to increased commercial mergers

and teaming within the U.S. and with international

partners. The U.S. government should assist in

developing and policing international anti-trust

treaties relating to mergers and teaming between

commercial entities to minimize divergence of

requirements and the methods of assessment in antitrust reviews, presumably making reviews more

objective. The U.S. government also must continue

to work bilaterally with key countries to remove barriers to foreign investment.

Global standards and regulations are critical to the

efficient operation of the global aviation system and

international markets. The U.S. government needs

to step up its commitment to the development of

global standards in ICAO and via other forums. This

will help to mitigate the efforts of other countries

seeking to provide a competitive advantage for their

companies through biased domestic standards or regulations. 

Commit to Global Partnerships. International

partnerships are essential to the creation of systemof-systems solutions to global challenges. 

In order to meet our goal of transforming the way we

use airspace through the use of advanced technology

and improved procedures, we must act in concert

with other countries around the world. We must

commit to developing common standards and recommended practices for satellite navigation in

ICAO, and ensure that global cooperative efforts are

not thwarted by disputes over radio spectrum allocation. We strongly urge U.S. officials to work bilaterally and multilaterally to ensure that U.S. GPS and

European Galileo systems are compatible and complementary in the event that Galileo becomes a 

reality. 

U.S. policy makers should work toward global standards for safety certification as a way to prevent the

use of safety certification by some governments to 

enhance their domestic competitiveness. We also 

call for increased liberalization of air transport 

services through negotiation of open skies agreements in order to expand the demand for all countries’ air transport services and alleviate undue congestion at the largest airports. 

The success or failure of our future activities in space

is fundamentally linked to our ability to work effectively with international partners. It is in our country’s best interest to work cooperatively with partner

nations in space exploration and protection of our

planet from the threat of NEOs. 
6-33

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 6 – Global Markets: Open and Fair

RECOMMENDATION #6: The Commission recommends that U.S. and multilateral regulations

and policies be reformed to enable the movement

of products and capital across international borders on a fully competitive basis, and establish a

level playing field for U.S. industry in the global

marketplace. The U.S. export control regulations

must be substantially overhauled, evolving from

current restrictions on technologies through the

review of transactions to controls on key capabilities enforced through process controls. The U.S.

government should neutralize foreign government market intervention in areas such as subsidies, tax policy, export financing, and standards,

either through strengthening multilateral disciplines or providing similar support for U.S. industry as necessary.

7-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 7 – Business: A New Model for the Aerospace Sector

To retain its vitality, the aerospace industry must be

able to attract private investment in the highly competitive global capital markets. The investment community values companies with predictable revenue

flows, sustainable growth in sales and earnings,

strong positive cash flows, healthy profitability, innovative capabilities, and a vibrant workforce. 

For the past half-century, the U.S. aerospace and

defense industry has been inextricably linked to a

defense budget characterized by a “10 years up, 10

years down” cycle. A vibrant, productive, enduring

enterprise is not consistent with this “boom-andbust” cycle, and aerospace companies must be

vibrant, productive, and enduring. Our armed forces

rely on advanced technology for awareness, protection, and instruments of action. Our government

must provide for the many needs of our society, so

value for money efficiently spent on security must be

demonstrated. Our aerospace systems are designed to

perform for decades, with some extending through a

Chapter 7

Business: A New Model

for the Aerospace Sector

RECOMMENDATION #7: The Commission recommends a new business model designed to promote a

healthy and growing U.S. aerospace industry. This model

is driven by increased and sustained government investment and the adoption of innovative government and

industry policies that stimulate the flow of capital into

new and established public and private companies.

375

350

325

300

275

250

225

200

Source: FY03 Budget of the U.S. Government, Historical Tables

52’ 57’ 62’ 67’ 72’ 77’ 82’ 87’ 92’ 97’ 02’ 07’

Billions $

Year

Projected

Figure 7-1 Defense Outlays from 1952-2007 in

constant FY 1996 dollars
7-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

half century of service, and companies must be in a

position to support customers through their evolving

and demanding missions. 

Historically, investors have characterized the aerospace industry, including the commercial business, as

a low-growth sector, chronically hampered by high

cyclicality, low margins, revenue instability, and

inadequate returns on investment, amplified by the

uncertainty in the government budgeting and acquisition process.

As a result, the relative importance of the aerospace

sector in the global marketplace for capital has significantly diminished over the last two decades as

evidenced by the decline in sector market capitalization. In 1980, the aerospace sector had a market capitalization of $13 billion, equivalent to 2.4 percent of

the total Standard and Poors (S&P) 500. In 1990,

the sector dropped to 1.8 percent of the market, and

declined further to 0.9 percent in 2000. Today, even

with the largest proposed defense budget in history

and the longest bear market since World War II,

aerospace comprises 1.4 percent of the S&P 500—

well below the sector's comparative value just prior

to the Reagan defense buildup. See Figure 7-2.

The most compelling determinant in an investors’

decision-making process is their expected riskadjusted return on investment. By this standard, the 

aerospace sector is unattractive. From 1997-2002,

the returns on investors’ capital from aerospace

investment lagged behind even the risk-free rate of

return on Treasury securities. See Figure 7-3.

During the last “bust” cycle that impacted the industry during the 1990s, more than 50 companies were

compelled to consolidate into today’s “Big 5”:

Boeing, General Dynamics, Lockheed Martin,

Northrop Grumman, and Raytheon. See Figure 7-4.

While successful efforts to consolidate capacity

within the framework of current government regulations are clearly evident, significant over-capacity

remains. To fuel the consolidation process, the use of

debt was significantly expanded across the sector,

reducing financial flexibility, increasing leverage,

straining coverage and liquidity, lowering credit

quality, and increasing capital costs. Furthermore,

the industry lost more than 600,000 scientific and

technical jobs in the past 13 years significantly

depleting intellectual capital and experience and

increasing the average age of today’s workforce (see

Chapter 8). In important and enduring aspects, the

industry has been weakened.

Some observers of the current equity markets note

that selected aerospace firms with little commercial

market exposure appear to be doing comparatively

well with regard to other stocks given the renewed

interest in defense spending. The Commission notes

that this perceived strength in the sector is transient,

as the industry is for the moment enjoying the

improved funds flow of the “boom” portion of the

defense cycle while the rest of the economy is in

4.0%

3.0%

2.0%

1.0%

0.0%

4.2%

1960 1970 1980 1990 2000 2001 2002

3.8%

2.4%

1.8%

0.9% 1.0%

1.4%

Source: Morgan Stanley

LT Gov’t

Bonds

Technology

$0 $5,000 $10,000 $15,000 $20,000

Aero /

Defense

Financial

Consumer

Staples

T-Bill

30 Day

Healthcare

Value Today with Total Annual Return in parentheses

$16,208 (10.1%)

$13,732 (6.5%)

$12,380 (4.4%)

$11,379 (2.6%)

$11,349 (2.6%)

$9,039 (-2.0%)

$6,479 (-8.3%)

Source: Morgan Stanley Figure 7-2 Aerospace/Defense Sector as a

Percentage of the S&P 500 Market Cap

Figure 7-3 Total Five-Year Return on

Investment by Sector (1997-2002)—Value

today of $10,000 investment made in 1997.

Source: Morgan Stanley
7-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 7 – Business: A New Model for the Aerospace Sector

recession. History suggests that the sector will

decline as the broader economy recovers. Where history will fail, however, is in support of the assumption that a call to action may be unnecessary—that

industry will endure and recover as it has through

past cyclical declines without immediate and substantial attention—because history does not accurately reflect the current weakened state of the industry throughout its entire supply

chain.

Without significant change to

the business model upon which

the sector relies, the industry

will be unable to survive the

next downturn in either the

commercial or military aerospace cycle. The Commission

has identified several elements of

U.S. government policy as well

as industry practice that, if implemented, would significantly improve the industry’s position in the capital markets.

Objective: Aerospace Industry

Attractive to Investors

Innovative industry-government initiatives are

required now to sustain the preeminence of the

American aerospace industry, ensuring industry

health and producing sustained contributions to

both the economic performance and national security of the United States. The U.S. government must

initiate measures to establish and maintain a stable

and predictable budget for aerospace investment 

and remove government constraints to reasonable

profitability, thereby reducing risk and improving

returns such that the industry can better attract capital. A government focus on essential core competencies will stimulate long-term investment in both

facilities and the best and the brightest talent, ultimately spawning new cycles of exciting technology

development.

Innovative partnerships among global suppliers of

advanced technology are needed to assure the interoperability of systems while fostering the pursuit of

new opportunities through assured open market

access. Efficiency within the industry can be stimulated by a further revolution in business affairs that

transforms all processes and practices to a single,

integrated industry-government model that employs

the maximum use of commercial business practices and innovations. A solid framework 

of balanced export and tax 

policies will safeguard vital

national security information

and protect intellectual property

while allowing successful industry competition in the global

economy.

The future economic vitality

and national security of the United States depends

on a strong, vibrant, and flexible aerospace industry.

The Commission views these initiatives as essential

steps necessary to establish a successful and enduring

government-industry partnership.

The future economic vitality

and national security of the

United States depends on a

strong, vibrant, and flexible

aerospace industry.
7-4

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Figure 7-4 20 Years of Industry Consolidation

* Merger Pending Approval

Boeing

Raytheon

Lockheed

Martin

Northrop

Grumman

General

Dynamics

Lockheed Martin

GD Ft. Worth

MEL Defense Systems

Sanders Associates

Lockheed

GE Aerospace Business

Martin Marietta

Gould (Ocean Systems)

GD Space Systems

Honeywell (Electric-Optics)

Fairchild Westan Systems

Loral

Goodyear Aerospace

BDM International

Librascope

LTV (Missile Business)

IBM Federal Systems

Unix (Defense Electronics)

Comsat

Boeing

Hughes Electronics Satelite

Jeppensen Sanderson

Hughes Helicopters

McDonnell Douglass

Boeing

Argo Systems

Litton Precision Gear

Rockwell International - Aerospace

Automatic

Raytheon

Marine Sys Grp of Allian Tec

CAE Link

Magnavox Electronics

GD (Missile Business)

Radiffusion Simulation

Hughes Aircraft

GM (Hughes Aircraft)

Corporate Jets

Raytheon

E-Systems

Chrysler Tech Airborne

TI Defense

Northrop Grumman

Avondale Industries

TASC

PRC

GI Defense

Litton Industries

Varian (Solid State Elec.)

Sperry Marine (Storage)

Grumman

Northrop

Voight Aircraft

Westinghouse Defense

Syscon

Logicon

Geodynamics

Ryan Aeronautical

Comptek

federal data

Steering Software

Aerojet

Newport News Shipping

TRW*

General Dynamics

Princess Technologies

GTS Govt Systems

NASCO Holdings

Teledse Vehicle Systems

Bath Iron Works

Cesna Aircraft

Chrysler Defense

General Dynamics

Ceridian's Computing Devices Int'l

Defense & Anament Sys

Advanced Technology Sys

Gulf Stream Aerospace

K-C Aviation

Galaxy Aerospace

Motorola Info Sys Group

1980 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1996 1997 1998 1999 2000 2001 1981 1995

L-3 Communication

FIRST WAVE SECOND WAVE
7-5

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 7 – Business: A New Model for the Aerospace Sector

Issues

The U.S. government budgeting and procurement

system is extraordinarily complex and inefficient,

driving up the cost of needed national security systems while delaying the introduction of new capabilities. This observation is hardly new. Since shortly

after the end of World War II, about a dozen major

studies and literally thousands of lesser assessments

have cited this finding. Furthermore, sound government acquisition reform initiatives have been proposed and debated for more than 40 years, but only

marginally implemented. Because we have failed to

sustain the will necessary to secure lasting change, we

are today spending more for national security and

getting less. 

To the casual observer, this proposition may seem

dramatically counterintuitive—do we not have the

finest, best equipped military on earth? The direct

answer is “yes”, but it was purchased decades ago

under conditions that do not exist today. Many of

the systems in use now are a result of the Reagan

defense build up of the 1980’s when defense spending was approximately 5 percent to 8 percent of

Gross Domestic Product (GDP). Today that spending is about 3 percent.1

A greater proportion of total spending then was

devoted to “investment funds”, i.e., Research and

Development and Procurement, which expanded

scientific frontiers, engineered leading edge 

solutions, attracted talent to the industry, stimulated interest by the capital markets, and fielded

capabilities that won the Cold War and performed

superbly well in Operation Desert Storm. Today

more funds flow to Operations and Maintenance,

the fastest growing segment of the defense budget,

the bulk of which pays for health care, military training, support of aging systems, equipment maintenance, and other support activities.

The overall budget, therefore, remains insufficient to

maintain existing capabilities, meet operational

tempo needs, fulfill our commitments to military

personnel, protect our homeland, and assure transformational capabilities are fielded in a timely manner to meet 21st century threats across a broadening

and increasingly complex spectrum. Funding sources

must be adequate, reliable, and stable. Acquisition

and program management practices require simplification and reform. Trade and tax policies need to be

streamlined and harmonized. 

The Commission has strong and unanimous conviction that without immediate initiatives to address the

long-term health of this indispensable industry, the

U.S. aerospace sector will lag in the capital markets,

lose global market share, provide a reduced contribution to the U.S. balance of trade and the U.S.

economy, atrophy its essential core competencies,

and lose high-tech and high-paying jobs to overseas

competition. The Commission believes this downward drift and dissipation of potential, no matter

how difficult to discern on a day-to-day basis, is

nonetheless occurring and constitutes an unacceptable risk to the U.S. economy and national security.

ISSUES

• Budgeting and Funding

– Investment funding

– Financial Flexibility

– Program Management

• High-Tech Partners and Suppliers

– Contract Reform

– Privatization, Competitive Sourcing, and Public-Private

Partnerships

– Commercial Acquisition Practices

• Domestic and International Business Climate

– Foreign Sales Corporation (FSC)/Extra Territorial Income (ETI)

Resolution

– Research & Experimentation Tax Credit

– Percent of Completion Tax Accounting

– Export Control

– Airline Bankruptcy and User Fees

• Long-Term Growth and Financial Health

– Personnel Training

– Global Mergers and Acquisitions
7-6

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Budgeting and Funding: Unpredictable and

Unstable

The overall defense budget has two broad provisions:

one for near-term personnel, operations maintenance costs, and one for investments to fulfill our

long-term need for technological advancement

through research and development (R&D) and procurement. Despite budget increases over the last

decade, growth in investment funding remains relatively small, especially as a share of the federal

budget. 

In the past, the Department of Defense’s (DoD)

promised growth in investment funding has not

materialized adding to the complexity of capacity

planning and labor force management while diminishing overall efficiency. At the same time, system

costs continue to be underestimated by both the

government and industry due to the pressure to

adopt the optimistic scenarios necessary to accommodate limited funding, the progressively aggressive

bidding behavior that results as companies with

excess capacity resist being marginalized in the competition for a diminishing number of new program

opportunities, and the desire to incorporate ever

increasing program capability requirements. Within

this unpredictable framework, many programs are

also changed annually through the Congressional

authorization and appropriation process or reprogrammings. See Figure 7-5.

Government-unique acquisition processes and procedures are cumbersome and unnecessarily complex,

adding time and expense to systems development,

and are not complementary to healthy commercial

practices. Finally, any failure to perform on contract,

at times induced by program and budget instability,

exacerbates the tensions between government and

industry and heightens the tendency to impose even

more oversight and financial penalties on contractors. These factors create a cycle that contributes to

the diminished return on the government’s investment in national security capabilities and serves as an

impediment to long-term industry excellence.

90

85

80

75

70

65

60

55

50

45

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Constant FY03 $B

Actual Projected

Fiscal Year

Figure 7-5 Actual Procurement Spending has Consistently Fallen Below Projections

Source: Morgan Stanley
7-7

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 7 – Business: A New Model for the Aerospace Sector

The government must stabilize program requirements and protect adequate long-term investment

funding, enact reforms that increase the financial

flexibility of companies and the government, and

improve program management stability and continuity. Industry must focus on performance and execution and deliver on contract commitments. These

changes will help provide the resources necessary to

drive competition, incentivize research and development, and enhance industry’s performance on contract and in the investment markets.

Protect Investment Funding. As discussed in

Interim Report #2, a stable long-term investment

budget is critical to the modernization and transformation goals of the Armed

Services. However, the

bulk of recent DoD funding increases has been consumed by costs associated

with operations, fuel, pay

raises, and health-care. To

protect investment funding, the Commission reiterates its recommendations

contained in the interim report, that government

establish and maintain a stable investment budget in

the Future Years Defense Program (FYDP), protected from reductions to cover unbudgeted operations and support (O&S) and other support and personnel costs. In addition, the Commission suggests

that DoD study the management of O&S costs, with

the goal of better estimating and annually budgeting

for these costs, rather than continuing to tap the

investment accounts to pay unanticipated, unbudgeted “must pay” O&S bills.

The Commission also reiterates its recommendation

in the interim report that DoD require industry and

the military Services to develop realistic cost estimates and fully budget for those program costs in the

FYDP. The Commission believes this action is necessary to reduce the current tendency to understate

program costs in order to include unaffordable

programs within the FYDP, and will also preclude

contractor and DoD investment in programs that

cannot be realistically completed.

Increase Financial Flexibility. The Commission

believes that both the government and contractors

must do a better job of realistically estimating 

program costs. The Commission also believes the

current financial system is overly restrictive in that it

allows only very limited financial flexibility, once the

budget is formalized, to address unanticipated costs

or requirements as individual programs progress

through execution. The “color of money” and inadequacy of program reserves preclude program 

managers from making common-sense adjustments within a program, and decades-old reprogramming limitations preclude the government from

effectively managing its budget to reflect changes 

in program priorities or performance.

The Commission advocates

increasing the government’s

financial flexibility to make

funding adjustments

among and within programs. Program managers

should have the authority

to move funds from procurement to R&D to cover

unanticipated development and sustainment costs,

or to apply unused R&D funds to procuring the

weapon system. Reprogramming thresholds for all

accounts should, as a minimum, be doubled to

account for 20 years of inflation since their last

adjustment. Such action will provide government

with the needed flexibility to meet higher priority

requirements as they arise, make the best use of cost

savings in any program phase, and resolve problems

earlier. 

Streamlining cost principles, the elimination of

statutory cost principles, and the use of Generally

Accepted Accounting Principles will benefit the sector by eliminating unnecessary and duplicative

requirements and allow government contractors who

also have significant commercial business to use a

single accounting system across the enterprise. The

Commission concludes that the government should

develop a proposal to implement cost principles and

accounting standards that are more commercially

oriented.

Reprogramming thresholds for all

accounts should, as a minimum, be

doubled to account for 20 years of

inflation since their last adjustment.
7-8

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Realignment of the Defense Working Capital Fund

(DWCF) will provide DoD managers with accurate

and reliable cost information to manage their operations, while improving weapon system readiness and

the total cost of ownership. The fund had been

designed to provide an effective mechanism for

financing, budgeting, accounting for, and controlling the costs of goods and services. In practice, the

DWCF is structured to support and maintain logistics stovepipes in terms of supply management,

maintenance, and transportation, thus limiting the

ability to meet DoD customers’ new product support challenges. The Commission urges ongoing

General Accounting Office (GAO) management

review of the DWCF, as well as an allowance for

restructured costs and a shift to performance or

price-based acquisition structures.

Revise Program Management. As discussed in the

Commission’s Third Interim Report, the

Commission believes the use of multi-year funding

and contracting for both procurement and R&D

programs will not only improve program stability

and performance, but produce needed cost savings.

The Commission reiterates its recommendations

from Interim Report #3 for expanded use of multiyear procurement contracts and milestone-to-milestone budgeting for development programs, including the incorporation of spiral development and

evolutionary acquisition principles into these longterm contracts.

In addition, the Commission supports the immediate repeal of the June 2002 DoD Financial

Management Regulation that establishes an artificial

and unnecessary ceiling on unfunded cancellation

costs in multi-year contracts. The Commission

believes the prudent use of multi-year contracting,

applied to stable programs that are performing well,

makes unnecessary the establishment of financing

limitations that will stifle innovative acquisition

strategies. 

The ability of the government to become a “world

class” buyer of research, products and services is an

essential element of acquisition excellence. A

Commission-sponsored study on the application of

Smart Price-Based Acquisition reviews the current

cost-based and price-based approaches to government procurement and recommends a progressive

and evolutionary roadmap for implementing

changes to more fully capitalize on the price-based

acquisition of goods and services. 

The report cites the wide variance in federal department and agency contracting that is in need of

review, and recommends moving to price-based,

rather than cost-based acquisition under certain conditions. First, the government must be able to clearly

and adequately define its requirements for the product or service. Second, there must be a commercial

market for the product or service, or the government

through past or ongoing government unique efforts

must have a sufficient basis of price comparison. 

The report correctly states that, while the utility of

price-based acquisition for government procurements is evident, it is not meant to be viewed as an

across the board solution for all government procurements. For example, research and development

initiatives where requirements cannot be clearly and

adequately defined due to dynamic situational analysis and/or there is high risk in the potential utilization of technologies, must remain cost-based. The

report also cites the reluctance of the DoD to leverage its buying power and the power of electronic

commerce by utilizing the General Services

Administration’s (GSA) Federal Supply Schedule and

Federal Technology Services for certain procurements, as permitted by current law. While some

agencies are required to purchase items through GSA

schedules, the DoD—through the Defense Federal

Acquisition Regulations—does not mandate the use

of GSA schedules and continues to issue their own

contracts for GSA-available items.

The report cautions that, if the requirements of

smart price-based acquisition are to be met, the government must have a procurement workforce that

understands market prices and the capabilities of the

market. In order to create an appropriately trained

procurement workforce, the organizational structure
7-9

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 7 – Business: A New Model for the Aerospace Sector

for federal procurement must be redesigned to focus

on development and maintenance of market knowledge. The ability of the government to leverage its

buying power and centralize “smart buying” functions will enable better performance management of

its many providers.

The Commission views the recommendations in this

report as one of many possible approaches to streamlined acquisition of products and services, especially

when procured as part of a stable program involving

low-risk technology and clear requirements. As a

general rule, the Commission does not endorse

greater use of fixed-price contracting for programs

that do not meet these criteria. The Commission further believes that the report supports the existing

Federal Acquisition Regulations (FAR), concerning

price-based acquisitions. Neither does the

Commission view the report as advocating such an

approach across-the-board. Instead, the Commission

reads the report as recommending an option for a

streamlined acquisition process that could produce

not only a more efficient and less burdensome contracting process, but could also produce savings in

personnel costs and time that could be allocated to

higher-priority national security requirements. 

Other reforms to be considered include:

• Implementation of a requirements process that is

supportive of evolutionary acquisition and spiral

development.

• Development of an acquisition approach for system-of-systems efforts, rather than a componentbased approach.

• Provide adequate profit on R&D contracts so contractors do not wait until production contracts to

recoup lost profits.

• Separately funding R&D on key components and

sub-systems that are not integral parts of major

systems.

• Facilitating incorporation of commercial technology in current weapons systems by expanding use

of the FAR (Part 12, commercial buying) for

R&D.

• Expanding the potential for contractors to earn

higher profit margins and providing other incentives to drive and reward positive performance.

The following table summarizes recommended

reforms, the specific participants responsible for each

reform, and the near and long-term actions necessary

to achieve the objectives earlier described. 

Reforms Actors 18-month Enabling Actions Long-term Actions

Budget

Reform

Financial

Reform

Program

Strategy

Reform

OMB

DoD

NASA

Congress

OMB

DoD

Congress

Industry

DoD

NASA

Congress

•Establish/maintain stable top-line for DoD investment

in the FYDP (see June 26, 2002 interim report)

•Fully fund programs within the FYDP

(see June 26, 2002 interim report)

•Enact proposals to increase DoD financial flexibility

(see June 26, 2002 interim report)

•Realign Defense Working Capital Fund

•Expand the use of multiyear procurement contracting,

and implement multiyear milestone budgeting for

development programs.

•Repeal the June 2002 Financial Management

Regulation establishing a 20% ceiling on unfunded

liability costs in multiyear contracts.

•Expand use of performance-based acquisition.

•Allow contractors to earn higher profit

•Develop and implement a new system-of-systems

acquisition approach.

•Provide adequate profits on R&D contracts

•Study and develop methods for

centralized management of

non-program specific O&S costs.

•Streamline cost principles, and

eliminate statutory cost principles.

•Revise cost accounting standards

to move toward GAAP.

•Develop and implement an

evolutionary/spiral requirements

process.

•Expand FAR Part 12 commercial

buying for R&D.

•Separate R&D funding for

components that are not integral

parts of major systems.
7-10

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

High-Tech Partners and Suppliers: Difficult to

Attract and Retain 

While it is sometimes convenient to refer to the aerospace industry through the short hand of the “Big 5”

referring to the five largest aerospace systems companies, it is important to note that the government and

commercial “industry” for aerospace products and

services in fact extends through a network of purchasers, subcontractors, suppliers, and partners,

sometimes referred to as the supply chain. Each of

the participants in the sector is intrinsically tied to

the factors affecting the industry. Encouraging a climate that is attractive to new entrants while stable

enough for current players will promote competition

and innovation, add to efficiencies, and lower costs.

In addition, steps must be taken to establish a stable

and predictable business climate (see section entitled

“Long-term Growth and Financial Health: In

Jeopardy” for additional information).

Contract Reform Must Focus on Simplification

and Innovation. Successful implementation of

acquisition reform is a profound challenge that

involves two distinct and interdependent elements.

The first, culture change, involves evolving 

the behavior of acquisition personnel from the traditional “buying of resources under a design specification” to the “buying of results under a performance

specification”. Today, an extraordinary amount 

of government talent, time, and resources are

devoted to the process of refining and detailing comprehensive design specifications. Despite good intentions and considerable effort, this practice yields

questionable value added and should be discontinued. Contemporary acquisition management practice demands a shift away from the emphasis on 

purchasing assets to a focus on the delivery of capabilities. Second, the implementation of new 

contracting rules will foster understanding of the

conceptual and pragmatic nature governing the

buyer-seller relationship.

Building on the Commission’s earlier findings concerning expanded use of multi-year contracting, the

Commission calls for the consideration of multi-year

leasing arrangements as well as multi-year contracts

for the procurement of goods and services.

Developing stable baselines and establishing and

protecting current and future year funding for 

programs not only provides cost savings, but allows

for the use of innovative procurement strategies such

as buy-to-budget in which quantities procured are

limited only by available funding. Long-term excellence in this area is further enabled by near-term

reforms, such as utilization of “other transaction

authority” and implementation of efficiency savings

and share-in-saving strategies that recognizes the

benefits of productivity improvements and rightsizing of workforce and facilities, that can improve,

streamline and strengthen technology access, encourage open-market competition and implement technology-driven prototyping. 

The Commission notes that certain changes to

DoD’s “shared savings” initiative since the

Commission’s endorsement of that effort in its

March 20, 2002 interim report have caused the

Commission to reconsider its recommendations.

The Commission is concerned that these changes to

the efficiency savings initiative will so limit its applicability and utility as to make the effort almost negligible and ineffective in incentivizing contractor

investment in right-sizing and productivity improvements. The Commission urges DoD to reevaluate

this initiative and consider once again including program-specific initiatives to provide the greatest possible incentives and broadest application of the policy.

Finally, a vital element of effective contract reform is

directly related to reforming regulations regarding

returns on government contracts. The Commission

asks that DoD strongly consider proposing and

implementing changes to permit: increased award

fees, carryover of unearned award fees into the next

rating period, elimination of fixed price development

contracts, elimination of profit take backs and withholds on Cost Plus Fixed Fee (CPFF) contracts far in

excess of requirements to protect the government,

and revised profit guidelines for fee bearing

Independent Research & Development (IR&D).
7-11

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 7 – Business: A New Model for the Aerospace Sector

Other reforms that should be considered include:

• Create a liability limitation for sales to all government agencies, as well as state, local, and commercial entities, to facilitate incorporation of homeland security technologies across America. 

• Repeal/reform Civil False Claims Act to increase

the number of high technology suppliers to government.

• Allow prime contractors to waive flow-down to

lower-tier suppliers of unnecessary and costly

terms and conditions. 

• Minimize reliance on cost data. 

• Facilitate the use of common subcontracting

processes.

• Investigate leasing as an acquisition tool. 

Privatization, Competitive Sourcing, and PublicPrivate Partnerships. Widespread business practice

overwhelmingly supports the economic and performance benefits that result when enterprises focus

on the essential core competencies through which it

fulfills its mission and creates

value. Indeed the goal of every

contemporary organization

includes an intense focus on

defining and cultivating the

core while realigning roles and

responsibilities accordingly.

The Commission believes that

there are many opportunities

for redefinition and prioritization of routine non-core governmental activities currently

performed by government

agencies. Private sector providers specializing in military

base maintenance, facility firefighting services, payroll and accounting, and human

resources management can perform such services.

The Commission calls for a government-wide review

of functions and services to identify those functions

that are not “core” to the effective execution of the

mission and which could best be performed by the

private sector. 

The Commission has significant philosophical reservations regarding public-private competition, and

believes such competitions under current regulations

disadvantage all parties. 

Office of Management and Budget (OMB) Circular

No. A-76, “Performance of Commercial Activities,”

establishes federal policy for the performance of

recurring commercial activities, and provides guidance and procedures for determining whether recurring commercial activities should be operated under

contract with commercial sources, in-house using

government facilities and personnel, or through

inter-service support agreements (ISSAs). In principle, Circular A-76 is not designed to simply contract

out. Rather, it is designed to: (1) balance the interests

of the parties to a make or buy cost comparison, (2)

provide a level playing field between public and private offerors to a competition, and (3) encourage

competition and choice in the management and performance of commercial activities. 

The A-76 process was established in an era where

cost was the principal award determinant for all

competitions. Reliable cost and

past performance information

is crucial to the effective management of government operations and to the conduct of

competitions between public or

private sector offerors.

Unfortunately, this information

has not been generally available

and/or has often been found to

be unreliable. In today’s era of

best value procurements, which

recognize that cost is but one of

many important factors that

assure taxpayer interests are

most appropriately served, the

old “cost-based” decision tree is no longer valid. 

The Commission believes that it is vital for government agency competition with private offerors of

goods or services to be conducted on the basis of

truly comparable cost accounting practices, past performance and best value. In addition, the process

Widespread business practice

overwhelmingly supports the

economic and performance

benefits that result when

enterprises focus on the 

essential core competencies

through which it fulfills its 

mission and creates value.
7-12

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

should be kept as high-level and streamlined as possible, avoiding the excessively detailed, overly mechanistic, aspects of the current A-76 procedure. The

Commission supports reform of A-76 procedures to

achieve these goals. 

As changes to outsourcing

competitions are developed

and implemented, the

Commission believes that

defense and aerospace industry must work with government organizations to

develop effective partnering

relationships. To the maximum extent possible, these

public-private partnerships

should be founded on best

business practices and should

focus on enabling both government and industry to provide the products and services best suited to their

organizational characteristics. Public-private partnerships will be required to integrate best provider government organizations, satisfy statutory requirements, and provide access to unique facilities,

infrastructure and technical expertise. These partnerships will also foster a more business-like relationship, reduce administrative and life-cycle costs and

reallocate risks, and assist in the evolution of government and industry roles and responsibilities. Recent

changes to Title 10 U.S. Code regarding “hold harmless” will facilitate the use of conventional contractual arrangements and partnerships between industry and government. The Commission recommends

that both industry and government vigorously pursue such partnerships, and supports changes in law

or regulation that would facilitate increased use of

public-private partnerships.

Commercial Acquisition Practices. One of the

goals of acquisition reform is streamlining and simplifying the procurement process in order to reduce

development and production cycle times and life

cycle program costs, and to strengthen the technology and industrial base through increased access to,

and use of, advanced commercial items. The FAR

developed a broad range of “unique” controls and

requirements for its contractors and subcontractors

over the past 50 years. The government is now

attempting to realign these

purchasing processes to lower

costs and gain access to new

technology by eliminating, or

at least lowering, barriers that

make government business

inefficient and unattractive to

commercial firms and inhibit

greater integration of commercial and military production lines. The Commission

supports these efforts, but recognizes that the government

must make this transformation while maintaining good

faith and stewardship of the

public dollar.

The Commission supports these enabling actions:

• Eliminate government unique contract requirements. 

• Expand use of commercial like terms and 

conditions. 

• Establish a presumption that products and services

purchased from predominantly commercial companies are commercial vs. government enabling

commercial contracting processes.

• Eliminate FAR cost principles that are administratively burdensome and discouraging to typical

non-government contractors. 

• Broaden available contract types under FAR (Part

12) to include standard commercial-type contract

vehicles.

• Accelerate implementation of e-business 

environment. 

• Streamline all payments with electronic processing

and payments.

As changes to outsourcing

competitions are developed and

implemented, the Commission

believes that defense and

aerospace industry must work

with government organizations

to develop effective partnering

relationships. 
7-13

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 7 – Business: A New Model for the Aerospace Sector

Domestic and International Business Climate:

Burdensome 

Certain U.S. tax and trade laws and regulations that

affect a wide variety of industries weigh particularly

heavily on defense and aerospace,

both in competition with domestic commercial entities as well as

in the international markets. 

The complex U.S. Tax Code does

little to reward or incentivize private investment in maintaining

and enhancing our nation’s technological edge, either military or

commercial. The Tax Code also

fails to recognize the unique

nature of defense development

and production. In addition, a proposed resolution

to a long-standing trade dispute with the European

Union threatens to place military and aerospace

exporters at a distinct disadvantage in the global

marketplace. 

Outdated and restrictive U.S.

export control laws and regulations do little to protect vital

national security technologies

and, at the same time, adversely

affect the ability of defense firms

to export military products to our

allies and friends, and negatively

impact the ability of the government to pursue vigorously efforts

to improve the military readiness

and interoperability of our allies.

Finally, high-tech companies are

discouraged from doing business with the U.S. 

government, and current contractors are unfairly

Reforms Actors 18-month Enabling Actions Long-term Actions

Contract

Reform

Competitive

Sourcing

Commercial

Acquisition

Practices

OMB

DoD

Congress

Industry

OMB

DoD

Congress

Industry

OMB

DoD

Congress

Industry

•Develop and enact laws and regulations limiting

contractor liability for homeland security sales to all

government agencies, as well as state, local, and

commercial entities.

•Minimize use of certified cost or pricing data.

•Facilitate use of common subcontracting processes.

•Expand use of “other transaction authority”.

•Reevaluate changes in DOD Shared Savings initiative.

•Revise government profit policy to permit increased

award fees, unearned award fee carryover, higher profit

guidelines for fee-bearing IR&D.

•Eliminate fixed price development contracts, profit

takebacks, and withholds on CPFF contracts in excess of

requirements to protect the government.

•Formulate effective share-in-savings policies;

reevaluate changes in efficiency savings initiative

•Conduct a government-wide study of activities and

services performed by government civilian and military

personnel, and develop recommendations for privatization

of non-core functions and services.

•Reform OMB Circular A-76 to provide for more equitable

and effective public-private competitions

•Incentivize and expand the use of public-private

partnerships

•Eliminate government unique contract requirements.

•Continue the implementation of e-business environment.

•Implement electronic processing and payments for

all transactions.

•Expand use of commercial practices.

•Revise FAR part 12 to include standard commercialtype contract vehicles.

•Eliminate burdensome FAR cost-based principles.

•Expand commercial item definition to include all products

and services purchased from commercial companies

•Study the use of leasing as an

acquisition tool.

•Repeal/reform Civil False

Claims Act.

•Authorize prime contractors to

waive flow down to lower-tier

suppliers of unnecessary and costly

terms and conditions.

•Expand multiyear contracting to

leasing and procurement of goods

and services.

•Develop and implement proposals

to allow “buy to budget”.

•Enact proposals to privatize

non-core functions and services.

•Fully implement e-business

practices.

The complex U.S. Tax Code

does little to reward or

incentivize private

investment in maintaining

and enhancing our nation’s

technological edge.
7-14

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

penalized, by the laws and regulations governing

rights to inventions and technology developed under

government contract.

The Commission believes the government should 

act promptly to replace these burdensome tax laws

and outdated trade laws, as necessary, with laws and

regulations that remove unnecessary administrative

burdens from industry and recognize the unique

contribution of defense and aerospace companies to

our nation’s defense and economic security. Enacting

or implementing the proposals outlined below

would remove some of the clearest impediments to

defense/aerospace industry health.

Ensure FSC/ETI Resolution Maintains Industry

Benefit. As discussed in the Commission’s Second

Interim report, U.S exporters face possible sanctions

totaling up to $4 billion per year in tariffs on the sale

of U.S. goods if the Foreign Sales Corporation (FSC)

Repeal and Extra Territorial Income (ETI) Exclusion

Act of 2000 (FSC/ETI), which was ruled an illegal

export subsidy by the World Trade Organization

(WTO), is not repealed. 

In Interim Report #2, the Commission recommended that the U.S. Trade Representative seek a

delay in imposition of any sanctions on U.S. exports

to allow government and industry the time to

develop a resolution of the FSC/ETI issue. The

Commission is concerned that, while sanctions may

not be imposed in the near term, the threat of significant sanctions will negatively impact the U.S.

economy and other trade issues with our European

allies. The Commission also reaffirms its belief that

loss of the FSC/ETI benefit would have a serious

adverse impact on the ability of U.S. defense and

aerospace companies to compete in the global marketplace. 

The Commission therefore strongly concludes that

the Administration, Congress, and industry engage

in serious discussions to develop an equitable resolution of this issue that maintains the current level of

benefits for defense and aerospace companies. The

Commission considered several proposals that could

benefit defense and aerospace companies, while

meeting the test of WTO compliance. The proposals

favored by the Commission are an enhanced

National Security R&D credit, the National Foreign

Trade Council (NFTC) wage credit proposal, and

the NFTC Footnote 59 changes. 

Enhance the Effectiveness of the Research and

Experimentation (R&E) Credit. The Commission

emphasizes the recommendations contained in its

Second Interim report for improving the utility of

the current research and experimentation tax credit

for defense and aerospace companies. Expanding on

its earlier recommendations to make the R&E credit

permanent and increase the rates for the current

Alternative Incremental Research Credit, the

Commission sees value in an additional alternative

credit that would allow defense and aerospace companies to enjoy the same level of benefit as other

industries—currently a 6 percent average credit. The

Commission believes there should be a new alternative tax credit of 12 percent of the excess of currentyear qualified research expenditures (QRE) over 50

percent of the average QRE for the prior three years,

or 6 percent of current-year QRE for start-up taxpayers. 

Repeal Percent of Completion (POC) Tax

Accounting Method. One area of particular complexity in the U.S. Tax Code is the Percentage-ofCompletion method under Section 460 of the

Internal Revenue Code (the “POC method”) that

was enacted in 1986 when the “Competed Contract

method” was repealed. Under the POC method, taxpayers are required to perform a complicated set of

calculations involving estimated costs, price, and revenues to derive a percentage that is used to determine

the amount of annual tax due on each contract.

Many defense and aerospace contracts must be handled under the POC method, either because they are

long-term contracts (requiring more than 12 months

to complete) or because the items being produced are

“unique” items not normally carried in inventory. 

Section 460 imposes an unfair burden on defense

and aerospace companies, as well as certain other

industries, by requiring them to pay tax before profit

is earned. In addition, complicated look-back and
7-15

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 7 – Business: A New Model for the Aerospace Sector

other requirements impose a compliance burden on

taxpayers and a correspondingly large administrative

burden on the Internal Revenue Service to monitor

and enforce compliance, for relatively little revenue

gain. 

The Commission welcomes the

Administration’s expression of

interest in reviewing Section 460

of the Tax Code. The Commission concludes that the POC

method should be repealed,

allowing defense contractors to

be treated similarly to all other

businesses. At the very least, the

method should apply only to contracts involving

items that take a very long time to manufacture, i.e.,

three years vice the current one-year limit in law. 

Export Control Reform. Export controls have a

real and direct impact on the defense and aerospace

industry’s ability to establish and maintain international partnerships, meet market demand and stay

competitive, and address the requirements of existing

overseas partners and customers. Current export

licensing policies and procedures are complicated

and inefficient, and erode the competitive position

of U.S. companies in the global marketplace.

The Commission believes that protection of our

national security and technological edge in key capabilities must continue to be the principal focus of our

export control laws. However, without a fundamental restructuring of the current

system, American companies will

lose out to foreign competition

and our nations own industrial

and high technology base will be

significantly undermined. Refer

to Chapter 6, Global Markets for

a detailed consideration of the

Commission’s recommendations

on this critical topic.

Airline Industry Bankruptcy and User Fees. The

Commission also considered the plight of the U.S.

airline industry, which is in the midst of a financial

crisis. If left unchecked, this crisis will have a serious

negative impact on the entire American economy.

The impact could become more serious very quickly

if more airlines are forced to declare bankruptcy leading to payment delays or defaults on debts owed to

labor, manufacturers, and service providers. U.S. airlines lost $7.1 billion in 2001, and, according to the

Air Transport Association, will lose an estimated $9.0

billion in 2002. The airline loss of revenue has been

exacerbated by the combined effects of the terrorist

Source: U.S. Tax Code via www.airlines.org

Tax/Fee

Passenger Ticket Tax*

Passenger Flight Segment Tax*

Passenger Security Surcharge

Passenger Facility Charge

Passenger Facility Charge

International Arrival Tax

INS User Fee

Customs User Fee

APHIS Passenger Fee

Cargo Waybill Tax*

Frequent Flyer Tax

APHIS Aircraft Fee

Jet Fuel Tax*

LUST Fuel Tax*

Air Carrier Security Fee

1972

8.0%

-

-

-

$3.00

-

-

-

-

5.00%

-

-

-

-

-

1992

10.0%

-

-

$3.00**

$6.00

-

$5.00

$5.00

$2.00

6.25%

-

$76.75

-

0.1¢/ga

-

2002

7.5%

$3.00

$2.50

$4.500**

$13.00

$13.20

$7.0

$5.0

$3.10

6.25%

7.5%

$65.25

4.3¢/gal

0.1¢/gal

TBD

R/T***

7.5%

$12.00

$10.00

$18.00**

$13.20

$13.20

$7.00

$5.00

$3.10

6.25%

7.5%

$65.25

4.3¢/gal

0.1¢/gal

TBD

*Tax Applies Only to Domestic Transportation **Legislative Maximum ***Single-Connection Rountrip With $4.50 Passenger Facility Charge

Figure 7-7 Increases in Taxes and Fees Over Time Have Reduced Airline Profits

Left unchecked, the airline

industry crisis will have a

serious negative impact on

the entire American 

economy.
7-16

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

attacks of September 2001, the current economic

slump and chronically high internal cost structure.

On the manufacturing side, the surplus of commercial aircraft is at a record level and worldwide production continues to exceed demand. The

Commission has been told by experts that they

expect demand to pick up with an eventual rebound

in the economy. Most believe evolving market forces

will eventually lead to a major restructuring of the

airline and aviation servicing industries. 

The Commission finds that one cause of the current

financial condition of the industry relates to the federal government’s over-taxation of the industry, principally in the form of aviation and security-related

user fees. Testimony before the

Commission indicated that for a

$100 airline ticket, approximately 40 percent of that cost is

the result of government

imposed fees. See Figure 7-7.

The Commission believes that

the Administration and

Congress should review and

consider reducing these user fees

on the airlines and their customers. The government should

also look at how to mitigate

problems caused by the scheduling cost and lack of

availability of terrorism insurance.

The Commission is aware of concerns that, in future

bankruptcies, airlines may be pressured to give foreign creditors preferential treatment over domestic

creditors. The Commission urges the government to

ensure that all creditors are fairly and equitably

treated. 

Long-Term Growth and Financial Health: In

Jeopardy

In order to create a stable and predictable business

climate that enables growth and fosters the longterm financial health of the industry, government

and industry must first recognize

that the global marketplace itself

drives this very dynamic, complex, and innovative business

environment. Challenges can no

longer be simply viewed as issues

between the U.S. government

and American business. We

must consider whether governing policies and regulations support or weaken good business

practices, and whether these

same rules support or weaken

Today’s aerospace industry

demands a dynamic, results

oriented workforce with the

talents, multidisciplinary

knowledge, and up-to-date

skills to enhance an 

organization's value.

Reforms Actors 18-month Enabling Actions Long-term Actions

FSC / ETI

R & E Credit

Section

460 Repeal

 / Reform

Airline

Reform

Treasury

Congress

Treasury

Congress

USTR

Treasury

Congress

Industry

Industry

Congress

Commerce

FAA

•Convene working group of

Administration/Congress/Industry negotiations to

develop resolution that maintains benefit for

defense/aerospace industry by enacting one of

four suggested alternatives.

•Propose and enact legislation making the R&E

credit permanent, increasing the AIRC rates, and

creating a new alternative credit of 12% of taxpayers’

excess QRE over 50% of the average QRE for the

prior three years, or 6% for start-up taxpayers.

•Conduct a review and hearings on Section 460 of

the Tax Code.

•Propose and enact legislation to repeal or

substantially reform Section 460.

•Conduct study of airline user fees impact on

commercial aviation.

•Urge early Congressional action on terrorism

re-insurance

•Negotiate a change in inequitable

WTO rules regarding treatment of

direct and indirect taxes that put

U.S. exporters at a competitive

disadvantage.

•Periodically evaluate the

effectiveness and equity of the

R&E credit in incentivizing

private sector investment in

new technology.

•Develop U.S. policy regarding

airline debt payments to foreign

creditors.
7-17

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 7 – Business: A New Model for the Aerospace Sector

the technological capabilities of the aerospace industrial base. A healthy, competitive, and innovative

industry meeting defense and aerospace needs must

be closely integrated with the global commercial

marketplace. Reduction in the uncertainty of ongoing business and future aerospace markets enables

government and industry to make the necessary

investments in people, technology, and facilities, to

continue to ensure “world class” aerospace products

today and for the future.

Major challenges to this desired climate include the

need for dramatic personnel and training reform—

how will we attract and retain necessary intellectual

capital, sustain a robust workforce for the future, and

attract highly and specifically qualified individuals to

government service; and merger and acquisition policy reform—a global perspective and approach to

mergers and acquisitions for a

globally driven industrial

base.

The Commission concludes

that investors and the technology industry will continue

to direct their focus toward

the global commercial marketplace if specific reforms

are not implemented in the

near term, thus depriving the

government and the aerospace industry of the best and

brightest personnel, innovative ideas and technologies, and capital investments.

The Commission has outlined a desired end-state

within each of these areas and has provided a specific

framework for long-term excellence.

Personnel and Training—The Engine for

Change. Today’s most successful organizations are

defining in very specific terms what they want to

accomplish and what kind of structures are necessary

for success. They are also defining a shared vision for

the future, focusing on core values, goals, and strategies and communicating this shared vision clearly,

constantly, and consistently. Top organizations 

then choose the best strategies for integrating their

organizational structures, activities, core processes,

and resources to support mission accomplishments. 

Aerospace-oriented organizations in both the public

and private sectors recognize that people are an organization's key asset. Today’s aerospace industry

demands a dynamic, results-oriented workforce with

the talents, multidisciplinary knowledge, and up-todate skills to enhance an organization's value to its

customers and to ensure that it is equipped to

achieve its mission. Because mission requirements,

customer demands, technologies, and other environmental influences change rapidly, a performancebased organization must continually monitor its talent needs. It must also be alert to the changing

characteristics of the global (not just U.S.) labor

market and identify the best strategies for filling its

talent needs through recruiting and hiring, and follow up with the appropriate

investments to develop and

retain the best possible workforce. 

The Commission believes

that a primary barrier to

accomplishing many of the

other recommendations in

this report is the lack of

understanding by the government and industry workforces about the roles,

responsibilities, and challenges facing their counterparts. The Commission is also concerned about

reported instances of government acquisition personnel failing to recognize business realities, such as

the need for adequate profit margins. 

Government and industry should work together to

develop and implement training and exchange programs that would educate and expose their workforces to their respective challenges and responsibilities. These programs should include internship and

fellowship programs, cooperative training programs,

and personnel exchanges to provide firsthand experience for both workforces in the others’ day-to-day

activities. 

Government and industry

should work together to develop

and implement training and

exchange programs that would

educate and expose their

workforces to their respective

challenges and responsibilities.
7-18

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

The Commission also concludes that government

acquisition personnel should be required to be

knowledgeable about the characteristics of the integrated civil contracting model, and that industry

acquisition personnel be fully trained in the complexities of the government acquisition system. The

Commission also believes that all government officials with budget and program acquisition, management, or review responsibilities, both appointed and

elected, should have either a business or financial

background or be provided access to expert advice in

these areas. The Commission urges each new

President to take these criteria into account when

making selections for relevant positions. Both the

executive and legislative branches are encouraged to

create training programs so that personnel in relevant

positions are fully knowledgeable about business

practices and financial issues.

The Commission also believes that investments in

new, contemporary learning systems should be

immediately established to respond to the backlog of

new policies and regulations that urgently need

greater cultural understanding and further skill

development. System focus should include: emphasis

on the “how to” practical aspects of applying new

rules and techniques, clear treatment of both culture

change and new process, maximum use of technology based learning tools, mechanisms for validating

learning tools and measuring the effectiveness of 

the learning process, and incorporation of joint

buyer-seller learning scenarios in selected critical

areas. Additionally, judicious use of outsourcing to

access private sector education and training capability, aggressive use of government-industry exchange

mechanisms to best leverage each side’s knowledge,

and finally, skills and sustained management attention and accountability including requirement for

business and financial backgrounds and training for

all government personnel responsible for program

acquisition and financial management should be

implemented.

A Global Approach to Merger and Acquisition

Policy. Just as the global marketplace drives our

business environment, a global approach to mergers

and acquisitions is fundamental. Today’s economy is

comprised of multi-national corporations, operating

across all time zones and financial markets. No one

country or corporation has a corner on technology,

innovation, or management processes. Access to

global best practices and markets is an absolute

necessity in today’s environment.

The Commission believes the government must

develop and implement a policy regarding international cooperation in defense and aerospace that recognizes the global industrial base. The Commission

urges the Administration to undertake a review of

the current policy regarding both domestic and

international business combinations, based on an

analysis of the U.S. defense industrial base, including

the supplier industrial base.

Reforms Actors 18-month Enabling Actions Long-term Actions

Personnel

& Training

Reform

Merger &

Acquisition

Policy

Reform

Admin.

DoD

State

Commerce

DoD

Industry

OMB

Congress

Implement government/industry internship, fellowship,

and exchange programs for acquisition personnel.

Require training for government acquisition personnel

in integrated civil contracting, and require training for

industry personnel in government acquisition processes

and systems.

Require all government officials with budget or program

acquisition, management, or review responsibilities to

have a business or financial background or training.

Initiate/update/complete studies on U.S. defense

industrial base.

Initiate/update/complete studies on U.S. supplier base.

Conduct study of U.S. policy on domestic and

international mergers and acquisitions.

Develop and implement

contemporary learning systems to

rapidly disseminate information

about new policies and regulations

Develop U.S. policy regarding

global mergers and acquisitions.
7-19

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 7 – Business: A New Model for the Aerospace Sector

Conclusions

The Commission concludes that for our aerospace

industry to be globally preeminent, now and in the

future, it must be able to attract vitally needed capital at a reasonable cost. We further conclude that the

defense and aerospace sector is viewed as a low

growth industry with low margins, unstable revenue

and a capricious major customer, the government.

Without a significant change in the business model,

the future of the aerospace industry, so critical to our

national economic and homeland security, is uncertain and at risk.

Provide Investment Opportunities. Predictability,

stability and performance are critical to the health

and growth of a robust aerospace industry. The government must stabilize program requirements and

protect adequate long-term investment funding,

enact reforms that increase the financial flexibility of

industry and the government, and improve program

management stability. 

Enable Industry to Attract and Retain HighTech Partners and Suppliers. The future of the

aerospace industry is intrinsically tied to the ability

of the sector to attract and retain high-tech partners

and suppliers throughout the supply chain. The government should pursue near-term reforms to realign

purchasing processes to lower costs and gain access to

new technology by eliminating, or at least lowering,

barriers that make government business inefficient

and unattractive to commercial firms. DoD should

implement changes to permit greater profitability

and financial flexibility of industry working on 

government efforts. A government-wide review of 

functions and services should be conducted to identify those functions that are not “core” to the 

effective operation of government and those functions that could best be performed by the private 

sector. 

Create a favorable Domestic and International

Business Climate. Certain U.S. tax and trade laws

and regulations that affect a wide variety of industries weigh particularly heavily on defense and aerospace, both in competition with domestic commercial entities as well as in the international markets.

The government should act promptly to replace burdensome tax laws and outdated trade laws with laws

and regulations that remove unnecessary administrative burdens from industry and recognize the unique

contribution of defense and aerospace companies to

our nation’s defense and economic security. In addition, the Administration and Congress should review

and consider reducing user fees on airlines and their

customers.

Ensure Long-Term Growth and Financial

Health. Government and industry must recognize

that a healthy, competitive, and innovative industry

meeting security and aerospace needs must be closely

integrated with the global commercial marketplace.

Major challenges to this desired climate include the

need for dramatic personnel and training reform and

recognition of the dynamic interrelated global environment. Government and industry should work

together to develop and implement training and

exchange programs that would educate and expose

their workforces to those challenges and responsibilities. All government officials with budget and program acquisition, management, or review responsibilities, both appointed and elected, should be

required to have a business or financial background

or training. Finally, government must develop and

implement a policy regarding international cooperation in defense and aerospace that recognizes the

global industrial base. The Administration is urged

to undertake a review of the current policy regarding

both domestic and international business combinations, based on an analysis of the U.S. defense industrial base, including the supplier industrial base.

RECOMMENDATION #7

The Commission recommends a new business

model designed to promote a healthy and growing U.S. aerospace industry. This model is driven

by increased and sustained government investment and the adoption of innovative government

and industry policies that stimulate the flow of

capital into new and established public and private companies. 

8-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 8 – Workforce: Launch the Future

The Commission believes the intellectual preparation of the American workforce is the cornerstone for

the industry’s future and the nation’s economic wellbeing. The aerospace industry greatly enhances the

vitality of the national economy by providing hundreds of thousands of high-skilled, well-compensated

manufacturing jobs and by constantly developing

sophisticated new technologies that benefit the entire

economy, increase productivity and enhance national

security. It is clear, therefore, that in the 21st century,

the U.S. must continue to have a highly skilled, stable, secure, and growing aerospace workforce and a

citizenry that is well prepared in mathematics and

science. 

Government, industry, labor, and academia must

work together to identify and develop needed skills

at all levels and create programs and strategies to

keep the aerospace workforce “pipeline” filled. This

will ensure a world-class workforce ready to lead in a

global economy.

Objective: Well Educated, Scientifically

Literate and Globally Competitive

Workforce

Aerospace workers will continue to be the most

knowledgeable and the most productive in the

world. U.S. students will be the world’s best in mathematics, science and technology. The U.S. will have

a vibrant aerospace industry that will once again be

attractive to future workers.

Chapter 8

Workforce: Launch

the Future

RECOMMENDATION #8: The Commission recommends the nation immediately reverse the

decline in, and promote the growth of, a scientifically and technologically trained U.S. aerospace

workforce. In addition, the nation must address the failure of the math, science and technology

education of Americans. The breakdown of America’s intellectual and industrial capacity is a

threat to national security and our capability to continue as a world leader. Congress and the

Administration must therefore:

• Create an interagency task force that develops a national strategy on the aerospace workforce

to attract public attention to the importance and opportunities within the aerospace industry;

• Establish lifelong learning and individualized instruction as key elements of educational

reform; and

• Make long-term investments in education and training with major emphasis in math and science so that the aerospace industry has access to a scientifically and technologically trained

workforce. 

Our policymakers need to acknowledge

that the nation’s apathy toward

developing a scientifically and

technologically trained workforce is

the equivalent of intellectual and

industrial disarmament, and is a direct

threat to our nation’s capability to

continue as a world leader. 
8-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Issues

Today’s Aerospace Workforce: In Jeopardy

Clearly, there is a major workforce crisis in the aerospace industry. Our nation has lost over 600,000 scientific and technical aerospace jobs in the past 13

years.1 These layoffs initially began as a result of

reduced defense spending following the end of the

Cold War. But subsequent contraction of the industry through mergers and acquisitions and the events

of September 11 have made the situation worse. A

consequence of this environment has been an overall

aging of the aerospace workforce, which risks the loss

of intellectual capital. In addition, the industry has

shifted from one reliant upon defense sales to one in

which a significant portion of sales are commercial,

making U.S. aerospace industries vulnerable to foreign competition. All of this has placed our workforce in jeopardy.

Cyclical Nature of the Industry. The aerospace

industry has historically been cyclical and strongly

driven by defense spending, with increases corresponding to national conflicts and the military

build-up in the Reagan-Bush years. Sales within the

commercial industry have been cyclical as well, as has

been government spending on space science and

exploration.

Aerospace procurement by the military (expressed in

constant dollars), for example, fell nearly 53 percent

from 1987 to 2000.2 The Department of Defense

(DoD) also reduced its overall investment in

research, development, testing, and evaluation by

nearly 20 percent from 1987 to 1999.3

These reductions dramatically decreased the relative

contribution of DoD to the aerospace industry, and

contributed heavily to manpower losses in both 

the commercial and military sectors. However, aerospace procurements by DoD have recently begun to

rebound, with an estimated 8.5 percent increase

from 2000 to 2002.4

In addition to the reduced aerospace spending by the

federal government, the aerospace industry itself cut

investment in developing new technologies.

Industry-funded aerospace research and development fell by 37 percent from $8.1 billion in 1986 to

$5.1 billion in 1999 (in inflation adjusted dollars).5

In response to decreased government spending, the

aerospace industry started consolidating in the mid1990s through company mergers and buy-outs, 

further contributing to job losses. The number of

major U.S. aerospace prime contractors shrank from

ISSUES

• Today’s Aerospace Workforce 

– Cyclical Nature of the Industry

– Global Competition

– Offsets

– The Aging Workforce

– Failure to Attract and Retain Workers

• Tomorrow’s Aerospace Workforce

– Failure of Mathematics and Science Education in 

the K-12 System

– Higher Education in Aerospace Disciplines

1989 1991 1993 1995 1997 1999 2002

1200

1000

600

200

0

800

400

1400

Source: Aerospace Industries Association*

* Chart uses AIA definition of aerospace workers that includes all occupations 

 under manufacturing SIC codes. 

Number of Aerospace Workers (in thousands)

Figure 8-1 Total Employment in the Aerospace

Industry (1989 – 2002)
8-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 8 – Workforce: Launch the Future

more than 50 to just five: Boeing, General

Dynamics, Raytheon, Lockheed Martin, and

Northrop Grumman. Aerospace firms continue to

consolidate to maximize resources, eliminate excess

capacity, and access new market segments. Parts 

suppliers have also undergone contraction and 

consolidation. 

This consolidation has eroded the U.S. industry’s

technology base and competitiveness. With fewer

aerospace employers, many skilled engineers and

technical experts have left the industry, resulting in a

loss of intellectual capital. The most senior workers

retired, while the most junior workers were laid off

and migrated to other more promising industries. 

The attacks of September 11, 2001 deepened the

industry’s economic downturn. Airlines have cancelled plane orders and two have filed for bankruptcy. Aerospace industry representatives noted that

the total announced layoffs since September 11 have

exceeded 100,000 workers across the industry.6

Global Competition. Global competition has risen

rapidly since 1989, most notably from Europe, and

is likely to grow in the future. According to the

European Association of Aerospace Industries, the

U.S. share of world aerospace markets as measured

by annual revenue fell from over 70 percent in the

mid-1980s to below 50 percent in 2000.7 In 2001,

Airbus, the European consortium, commanded 

38 percent of large commercial aircraft market deliveries. Since mid-1997, market share, as measured by

order backlog, has shifted from Boeing to Airbus. At

the end of 2001, Airbus had a backlog of 1,575

orders versus 1,357 for Boeing.8 European Union

(EU) increases in research and development investment may well challenge the U.S. lead in commercial

aircraft. This competition has resulted in consolidation and rationalization in both countries. 

1980 1985 1990 1995 2000

1,200,000

1,000,000

600,000

200,000

0

Employees

800,000

400,000

United States European Union

1,400,000

Source: MIT / LARA

Figure 8-2 U.S. and EU Aerospace

Employment (1980 – 2001)

A CASE STUDY OF AEROSPACE WORKFORCE BARRIERS

The story of Sandra Goins, a Boeing employee from 1989 to 2001,

illustrates how the aerospace industry’s instability contributes to its

workforce difficulties.

After eight years in Boeing’s copy center, Ms. Goins entered a labormanagement sponsored technical apprenticeship program, seeking

more valuable skills, interesting work, and a secure future. In the next

four years, Ms. Goins completed 8,000 hours of apprenticeship training and a college degree and passed Boeing’s initial assessment for

entry-level management jobs.

But in December 2001, soon after completing her apprenticeship, Ms.

Goins joined the 30,000 Boeing employees laid off due to 9/11. Now

pursuing a teaching career, she says people will avoid the aerospace

industry until its jobs are secure.
8-4

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Canada and Brazil, both with steadily growing aerospace workforces, have taken a leadership role in producing regional jets. This indicates that the future

global aerospace industry is likely to have a growing

number of niche products tied to particular nations

or regions. Japan has long had such a niche status,

centered on avionics. And while employment data

from the Commonwealth of Independent States

(CIS, the former Soviet Union) and China are not

readily available, it is clear that they have major aerospace industries. In short, the aerospace industry

now has four major clusters—U.S., Europe, CIS,

and China—along with several regional centers,

including Canada, Japan, Brazil, and others. 

Offsets. Offset agreements represent a very complicated aspect of global competition in the aerospace

industry. Such agreements, many of which shift production of aircraft parts

to nations that buy finished U.S. aircraft, are a

key ingredient in many

foreign sales agreements.

Manufacturers argue that

offsets are a cost of doing

business internationally.

Labor unions contend

that offsets are a major

cause of job loss, compromise national security, and hurt our ability to remain

dominant in aerospace by giving other nations the

technology to produce aircraft and weapons. 

Subcontractors and suppliers are concerned with offsets because foreign outsourcing means fewer sales

for American producers

and lead to overcapacity

in the market. By one

estimate, 11 percent 

of the U.S. aerospace

jobs lost from 1989 to

1997 were traceable to

increased imports.9

While the offset issue is

controversial, it must be

noted that since the 1970s, no large U.S. commercial

aircraft or jet engine has been developed without

major participation by foreign firms in technology

development, manufacturing, or marketing.10 Offsets

are likely to grow in the future, due to global trends

in the commercial aircraft market, and it is expected

that “newly emerging markets” (developing nations)

will soon order more aircraft than industrialized

nations, enabling them to impose heavier offset

requirements.11 For additional details on the subject

of offsets, see Chapter 6.

The Aging Aerospace Workforce. Statistics from a

variety of sources indicate that the aerospace workforce is “aging” and that 26-27 percent of aerospace

workers are eligible to retire by 2008. The average

age of production workers is 44 in the commercial

“If the aerospace industry cannot

attract and retain the best and the

brightest, then the industry doesn’t

have a future.”

Commissioner Tillie Fowler

ISLANDS OF EXCELLENCE

BOEING/IAM QUALITY THROUGH TRAINING PROGRAM

In 1989, the International Association of Machinists and Aerospace

Workers (IAM) and the Boeing Corporation created a joint training

program through their collective bargaining agreement to train the

workforce in new technology through apprenticeship programs and

other training venues. The program, financed by a fund that collects

4 cents per payroll hour from all bargaining unit employees, had a

$25 million training budget in 1999.
8-5

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 8 – Workforce: Launch the Future

sector, 53 in defense12 and 51 at the National

Aeronautics and Space Administration (NASA).13 In

addition, the proportion of workers age 30 or

younger dropped by almost two-thirds, from 18 percent in 1987 to 6.4 percent in 1999.14

These statistics reflect a legitimate concern about the

loss of intellectual capital in the aerospace industry.

Intellectual capital may be the most important factor

determining the competitive success of aerospace

and other industries. Tangible aspects of intellectual

capital include a firm’s investments, such as patents,

proprietary processes, and training. Intellectual capital also includes knowledge created through collaborative work, relationships with suppliers, individual

workers’ expertise, and the firm’s reputation. New

employees may have the credentials to do the work,

but the knowledge and relationships built through

years of experience are difficult to replace. The pending retirements of so many aerospace scientists, engineers, and production workers pose a real threat to

an industry already fraught with widespread layoffs

and few new hires. 

Further compounding the challenges around 

intellectual capital are longer product life cycles, a

declining number of new platforms being developed,

and reduced overall spending on research and development. These factors also diminish the ability 

of the industry to attract the best candidates to 

aerospace.

Failure to Attract and Retain Workers. The

U.S. aerospace sector, once the employer of choice

for the “best and brightest” technically trained workers, now finds it presents a negative image to 

potential employees. Surveys indicate a feeling of disillusionment about the aerospace industry among its

personnel, whether they are production/technical

workers, scientists or engineers. The majority of

newly dislocated workers say they will not return to

aerospace. In a recent survey of nearly 500 U.S. aerospace engineers, managers, production workers, and

technical specialists, 80 percent of respondents said

they would not recommend aerospace careers to

their children.15

Engineering students also gave the aerospace industry low ratings for its physical work facilities, exciting

and meaningful tasks, opportunities for professional

development and growth, and supportive and

encouraging management.16 Consequently, U.S. students have migrated to other technical fields.

“NASA has three times as many technicians over the age of

sixty as under the age of thirty.”

Sean O’Keefe

NASA Administrator

ISLANDS OF EXCELLENCE

ROCKWELL COLLINS KNOWLEDGE MANAGEMENT

Rockwell Collins has a company-wide initiative underway to record

and document hard-to-replace competencies and skills. The initiative

includes a computer-based training system that gives employees

24/7 access to training and information; skills assessment software

that enables salaried employees to track the skills within their

department and diagnose their own individual training needs; and

Quick Learns, a CD-ROM based lesson series of video segments

taught by actual hourly employees demonstrating how they perform elements of their work. Aerospace companies are also setting

up communities of practice, executive succession planning, and

mechanisms to capture workers' knowledge before they retire.

SPACE CAMP

In Alabama, children ages 9 and up can experience shuttle missions

and space stations at five-day programs. Campers build a lunar colony

and fly their own rocket. They learn about the history of space flight,

shuttle and space station basics, and they experience lunar gravity.

These stimulating activities educate young people about the space program and aviation, instilling an interest at an early age about the

exciting careers in space that they may want to pursue when they are

adults. 
8-6

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

While there are no immediate solutions to the aerospace employment concerns, the Commission

believes additional study of workforce issues is warranted. As the Commission recommended in

Interim Report #3, steps are needed to help stabilize

the aerospace workforce. We need to consider the

impact on U.S. aerospace employment of domestic

and international policies and reaffirm the goal of

stabilizing and increasing the number of good and

decent jobs in the industry. The Commission also

recommended the establishment of an interagency

task force on workforce issues in the aerospace industry. The task force should be comprised of representatives from the U.S. Departments of Labor,

Defense, Commerce, Transportation, Education,

and Energy, NASA, National Science Foundation

(NSF) and other departments and agencies as appropriate. Additionally, we believe the government

should develop a national strategy to attract public

attention to the importance and opportunities

within the aerospace industry.

Tomorrow’s Aerospace Workforce: Unprepared 

Failure of Mathematics and Science Education

in the K-12 System. Written 20 years apart, two

prestigious national Commission reports cited below

highlight the continuing problems in the U.S. in

developing a solid base of competence in mathematics and science required for a quality workforce and

needed for general public support of research and

development across the economy. One aspect of this

crisis is low student achievement. In 1995, the Third

International Math and Science Study found that

U.S. students scored above the international average

in 4th grade, slightly above it in 8th grade, but near

the bottom in 12th grade.17

These data and numerous other national and state

reports lead one to conclude that our K-12 system is

doing an abysmal job of educating our children and

that our nation, 20 years after “A Nation at Risk,” is

still at risk.

“If an unfriendly foreign power had attempted to

impose on America the mediocre educational performance that exists today, we might well have viewed it 

as an act of war... We have, in effect, been committing an act of unthinking, unilateral educational 

disarmament.” 

A Nation at Risk, 1981

“The harsh fact is that the U.S. need for the highest

quality human capital in science, mathematics and

engineering is not being met... Second only to a

weapon of mass destruction detonating in an American

city, we can think of nothing more dangerous than 

a failure to manage properly science, technology, 

and education for the common good over the next 

century.”

Road Map for National Security, 2001
8-7

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 8 – Workforce: Launch the Future

There are multiple reasons for this failure: 

• Differential funding in the 50 states and the 

nearly 15,000 separate school districts in the U.S.; 

• Shortages of math and science teachers and the

large number of uncertified teachers in the classrooms; 

• Lack of competitive salaries for math and science

teachers who have increasing job opportunities

outside the classroom; 

• Difficult work environments in many schools; 

• Lack of respect for those who chose to teach; and

• Complex, decentralized management/delivery system for federal aid in math, science, and technology education systems that lacks sufficient funding, a comprehensive overview and a sense of

mission.

Substantive research indicates that the most consistent predictors of student math and science achievement (and college success) are a teacher’s full certification and a major in the subject they teach. Yet in

U.S. high schools, more than one in four math

teachers and one in five science teachers lack even a

minor in their teaching field.18

Both the Hart-Rudman Report, “Road Map to

National Security,” and the Glenn Report, “Before it

is Too Late,” highlight this fact. “Thirty-four percent

of public school math teachers and nearly 

40 percent of science teachers lack an academic

major or minor in these fields and a serious shortage

of K-12 teachers exists in science and math. About

56 percent of high school students taking physical

sciences are taught by out-of-field teachers, as are 27

percent of those taking mathematics.”19

The prevalence of out-of-field math and science

teachers is much greater in high-poverty areas and

schools where a high proportion of students are

4th

Grade

8th

Grade

12th

Grade

75

25

0

Percentile Score

100

50

Science Math

Source: Council on Competitiveness, U.S. Competitiveness 2001

12th

Advanced Math

and Physics

Figure 8-3 U.S. Students Science & Math Performance

Relative to Other Countries

No Major in Math No Major in Science Not Certified in Math Not Certified in Science

30

25

15

5

0

20

10

Source: Council on Competitiveness, U.S. Competitiveness 2001

Schools with Less than 20% Minority Students

Schools with 20% or More Minority Students

Percent

Figure 8-4 Percent of Public School Math and Science

Teachers Without a Major or Certification in Class Subject
8-8

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

members of racial minority groups. According to the

U.S. Council on Competitiveness, boosting the 

participation of women and minorities in the science

and engineering workforce presents the single greatest opportunity to expand the nation’s pool of technical talent.20 Sadly, for the past 20 years, this 

country has been on a flat or declining trajectory in

K-12 math and science teaching. 

Teacher shortages in these disciplines are likely to

worsen in the near future. Because of retirements,

attrition, job changes, and other reasons, U.S. school

districts will need to hire 240,000 middle school and

high school math and science teachers between now

and 2010.21 Even with innovative efforts such as the

Defense Department’s “Troops to Teachers” and

alternative certification programs in most states,

there will continue to be a shortage of qualified

teachers. 

The Commission applauds the recent government

efforts to address these problems including the “No

Child Left Behind” legislation, proposed increases to

the NSF budget for science and technology education and the recently passed “Tech Talent Act.”

Unfortunately, these steps are likely to be negated by

the growing financial crisis that exists in many states

and school districts. 

The failure of the educational system to engage 

U.S. students in math and science has a cascading,

negative impact on U.S. technological leadership

and foretells an ever-shrinking cohort of engineers,

mathematicians and scientists. Additionally, this

means that many employers must assume remediation and retraining costs, which have been estimated

to be over $60 billion a year.22 Consequently, the

Commission believes that if we are to remain a global

leader in aerospace science, engineering and technology, we must address the immediate and critical

national crisis in our K-12 education system. 

Lifelong Learning and Individualized Instruction. The Commission believes that increased efforts

must be made to teach math and science in a contextual way that engages students in workplace applications. Understanding and solving problems using

real world examples (e.g., the ballistics of a baseball,

computing gas mileage in Corvettes, the chemistry

of cosmetics, etc.) provokes student interest in core

scientific areas and applications. Institutional software packages can be used to overcome lack of familiarity with the subject matter by some teachers. The

Commission especially encourages the development

of curricula using aerospace problems and examples

as the basis for teaching these subjects.

Additionally, the Commission believes that emphasis

must be placed on the concepts of “lifelong learning”

and “individualized instruction” as key elements of

education reform. It is likely that individuals now

entering the workforce will hold five or more jobs 

in their lifetime. The education system must be 

ISLANDS OF EXCELLENCE

AVIATION HIGH SCHOOL

Aviation High School, located just outside New York City, is a unique

public magnet high school that prepares students to enter the aviation field. Students take all the academic course requirements to

earn a high school diploma, plus vocational course requirements to

earn a Federal Aviation Administration (FAA) aircraft mechanic

license. More than 90 percent of graduates pass the FAA certification

exams and 75 percent of graduates go on to either a four-year university or attend a two-year college or technical school.
8-9

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 8 – Workforce: Launch the Future

prepared to deliver training and education to meet

these changing skill requirements and meet labor

market needs. U.S. community colleges are doing

this job well. They are adept at designing and delivering the workforce training and individualized

instruction called for in this kind of effort.

Higher Education in Aerospace Disciplines.

From technician to Ph.D., the growth in technology,

coupled with pending retirements, are driving a need

for a well-educated, highly-skilled workforce. 

Vocational Education and Apprenticeships. Vocational

aerospace programs have had declining enrollments

over the past 10 years, even though 50 percent of the

current aerospace workforce is made up of workers in

installation, maintenance, repair and production.23

Most of these workers have completed stand-alone

apprenticeship programs, or intensive training programs that combine on-the-job training with classroom instruction leading to an Associates degree

from a community college. 

While some of the major aerospace companies have

apprenticeship programs to train production and

technical personnel, few currently have apprentices

in their programs due to the downturn in the 

economy. The need to replace retiring workers over

the next 10 years, however, demonstrates the crucial

need to start refilling the “pipeline” of qualified

workers now. Analysis of the economic benefits of

apprenticeship programs shows an impressive $50

return for every dollar of federal investment.24 As

stated in Interim Report #3, the Commission

believes that the nation should make investments in

vocational education to develop workforce skills

needed by the industry, promote registered apprenticeship programs for technical and skilled occupations, and target tax credits for employers who invest

in needed skills.

Undergraduate Education. At the undergraduate

level, degrees awarded to U.S. students in science

and engineering programs have been flat or declining. From a peak of 441,205 in l983, undergraduate

ISLANDS OF EXCELLENCE

HONEYWELL SCHOOL-TO-APPRENTICESHIP PROGRAM

Honeywell, a leading global aerospace business based in Phoenix,

AZ, invests in an innovative apprenticeship program that begins

with high school seniors and takes them through a four-year program ending with an associate’s degree in Manufacturing

Technology.

Honeywell pays participants’ wages during the training, as well as

course tuition costs. Upon completion, these apprentices will be

state-certified machinists or maintenance journey workers.

1987 1988 1989 1990 2001

300

250

150

50

0

200

100

350

Source: Dr. Bernard Grossman, Aerospace Department Chair Association, Testimony to the Commission on the Future of the Aerospace Industry, May 2002

400

450

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Enrollments

Figure 8-5 Aerospace Undergraduate Enrollment Trends (1987 – 2001)
8-10

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

enrollment in engineering declined by more than 20

percent, to 361,991 in 1998.25 In contrast, engineering enrollments are rising at universities in other

countries. Since 1975, the U.S. has dropped from

third to 13th in the world in terms of proportion of

24 year-olds who hold engineering degrees.26

Within the United States, the number of aerospace

engineering degrees awarded fell 47 percent from

1991 to 2000.27 Although there has been a slight

increase in undergraduate enrollment since 1997, it

is not known whether this increase will continue.

There has not been a corresponding increase in

graduate enrollment.

This overall downward trend raises a serious concern

about the availability of an educated engineering

cohort to maintain U.S. leadership in science 

and technology and in the aerospace industry in 

particular.

Graduate Education. U.S. graduate enrollment in science and engineering fields has also been flat or in

decline. From the mid-1990s, the number of doctorate degrees awarded annually in engineering declined

by 15 percent.28 The number of doctorates in

physics declined by 22 percent, and there were

declines in mathematics and computer science

degrees as well.29

While the total numbers of advanced graduate

degrees awarded in science and engineering to U.S.

students are declining, the proportion of those

degrees awarded to foreign students has increased

dramatically. In engineering, fewer U.S. citizens

earned doctorates in 2000 than in 1970: 2,514 in

1970 and 2,206 in 2000. Meanwhile, the number of

engineering doctorates earned by foreign students on

temporary visas grew substantially, from 471 in 1970

to 2,444 in 2000.30

ISLANDS OF EXCELLENCE

SPACETEC

A consortium of community colleges, led by Brevard Community

College (near the Kennedy Space Center in Florida), is implementing

an industry-driven technical education system for aerospace technicians. Through a grant from the National Science Foundation,

SpaceTEC will formalize aerospace technical education nationally 

and establish a skills-based standards program that is recognized

and endorsed by industry. SpaceTEC will work with K-12 and postsecondary institutes to coordinate curriculum development and

instructional materials.

THE AVIATION CENTER OF EXCELLENCE

Florida Community College in Jacksonville has developed four programs to address the shortages of aviation mechanics, managers,

administrators and professional pilots in the state. The Aviation

Center of Excellence is certified by the FAA and offers Associate of

Science degree programs in Aviation Maintenance Management,

Aviation Operations, Professional Pilot Technology and a Post

Secondary Adult Vocational certificate in Aviation Maintenance

Technology. The program works with discharged military personnel

as part of their recruitment efforts and offers short-term customized

courses to address specific employer and student needs.

100,000

40,000

80,000

60,000

Source: NSF, Science and Engineering Indicators, 2002

120,000

140,000

1992 1993 1994 1995 1996 1997 1998 1999

Social Sciences

Engineering

Natural Science

Math & Computer Sciences

Enrollments

Figure 8-6 Graduate Enrollment in Science and

Engineering Fields (1992 – 1999)
8-11

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 8 – Workforce: Launch the Future

In the physical sciences, which include math and

computer sciences, the numbers are also startling. In

1970, 4,631 U.S. citizens and 568 foreign nationals

earned doctorates.31 In 2000, 3,260 U.S. citizens

and 2,161 foreign nationals earned doctorates.32

Foreign students now comprise over 40 percent of 

all Ph.D’s awarded in science and engineering.33

This situation presents two problems for the aerospace workforce. First, a significant percentage of

these highly educated scientists and engineers return

to their home countries. Second, many of the foreign

Ph.D. graduates who stay in the United States 

cannot obtain the security clearances required for

some aerospace positions. Consequently, a considerable amount of the talent being trained at our universities cannot contribute to the U.S. aerospace

industry or to the long-term development of the

U.S. economy.

The purpose of this discussion is not to criticize the

foreign students seeking advanced degrees from some

of the best universities in the world, or the U.S. universities that award the degrees. But serious reflection is called for when too few of our own citizens

pursue the scientific and technological skills and credentials needed to maintain this country’s global

leadership.

The Commission believes that the U.S. government

must make substantive, long-term investments in

education and training with major emphasis on

mathematics and science, so that the aerospace

industry has access to a scientifically and technologically trained workforce, second to none in the world.

Conclusions

Clearly, there is a major workforce crisis in the aerospace industry. Our nation has lost over 600,000 scientific and technical aerospace jobs in the past 

13 years. These layoffs initially began as a result of

reduced defense spending following the conclusion

of the Cold War. This led to an industry shift from

reliance on defense sales to one dependent upon

commercial markets. Increasing foreign competition

in the commercial aerospace market has led to contractions in the industry, resulting in mergers and

acquisitions. Job losses from this consolidation have

been compounded by the cyclical nature of the

industry. 

Due to these uncertainties, most of the workers 

who have lost their jobs are unlikely to return to the

industry. These losses, coupled with pending retirements, represent a devastating loss of skill, experience, and intellectual capital to the industry. 
8-12

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Reverse the Decline and Promote the Growth

of Today’s Aerospace Workforce. The

Commission was unable to agree to any immediate

solutions to help stem the loss of jobs within the

industry. It hopes that its recommendations for a

high-level federal management structure focused on

establishing a national aerospace consensus (Chapter 5) and other actions to promote the industry will

have a positive effect in the future. What is clear is

that industry, government, and labor must begin to

work now to restore an aerospace industry that will

be healthy, stable, and vibrant. 

U.S. policy towards domestic aerospace employment

must reaffirm the goal of stabilizing and increasing

the number of good and decent jobs in the industry.

The Administration and the Congress should consider the impact of domestic and international policies on U.S. aerospace employment.

Address the Failure of the Math, Science, and

Technology Education. The aerospace industry

must have access to a scientifically and technologically trained workforce. In the long term, the

Commission stresses that action must be taken to

improve mathematics and science instruction across

the entire education range—K-12 through graduate

school. These actions and investments should

include scholarships and internship programs to

encourage more U.S. students to study and work in

mathematics, science, and engineering fields. In

addition, investments should be made in vocational

education to develop a highly skilled workforce,

including registered apprenticeship programs for

skilled and technical occupations. Further, as 

recommended in Commission Interim Report #3,

targeted tax credits should be made available to

employers who invest in the skills and training programs needed by the industry. 

In addition, the Commission concludes that emphasis must be placed on the concepts of “lifelong learning” and “individualized instruction” as key elements

of education reform. It is likely that individuals now

entering the workforce will hold five or more jobs in 

their lifetime and the education system must be 

prepared to deliver training and education to meet

these changing skill requirements and meet labor

market needs. U.S. community colleges are adept at 

designing and delivering workforce training and

individualized instruction.

Our policymakers need to acknowledge that the

nation’s apathy toward developing a scientifically

and technologically trained workforce is the equivalent of intellectual and industrial disarmament and is

a direct threat to our nation’s capability to continue

as a world leader. 

RECOMMENDATION #8: The Commission recommends the nation immediately reverse the

decline in, and promote the growth of, a scientifically and technologically trained U.S. aerospace

workforce. In addition, the nation must address

the failure of the math, science and technology

education of Americans. The breakdown of

America’s intellectual and industrial capacity is a

threat to national security and our capability to

continue as a world leader. Congress and the

Administration must therefore:

• Create an interagency task force that develops

a national strategy on the aerospace workforce

to attract public attention to the importance

and opportunities within the aerospace 

industry;

• Establish lifelong learning and individualized

instruction as key elements of educational

reform; and

• Make long-term investments in education and

training with major emphasis in math and science so that the aerospace industry has access

to a scientifically and technologically trained

workforce. 
8-13

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 8 – Workforce: Launch the Future

9-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 9 – Research: Enable Breakthrough Aerospace Capabilities

Aerospace is a technology-driven industry. Longterm research and innovation are the fuel for technology. U.S. aerospace leadership is a direct result of

our preeminence in research and innovation. 

Think of what we have achieved since the Wright

brothers first flew. Aerospace technology has transformed the way we live, work and play. Today, we

routinely travel thousands of miles by air in a matter

of hours; mail and cargo can be delivered almost anywhere in the world overnight; people can communicate with others around the world instantaneously;

and air and space systems play an integral role in our

national security and homeland defense. Satellites

monitor the health of the planet and its atmosphere

and provide global information about the weather;

robotic spacecraft visit the planets; space telescopes look back at the origins of the solar system;

and the International Space Station orbits the 

Earth as the first permanent international habitat in

space. 

The U.S. aerospace sector has achieved many firsts

over the last century, but it could have done even

more. Man walked on the moon 30 years ago, but we

have failed to return. We built the SR-71 “Blackbird”

aircraft, and 30 years later it still holds the speed

record. Aerospace infrastructure built decades ago is

still the mainstay of our capability. If our next 100

years are to be as exciting as the last, we must continue to sustain the U.S. research capability to produce new breakthroughs in technology. 

Government policies and investments in long-term

research are essential if the United States is going 

to maintain its global aerospace technology leadership. Long-term research enables breakthroughs in

new capabilities and concepts and provides new

knowledge and understanding, often resulting in

Chapter 9

Research: Enable Breakthrough

Aerospace Capabilities

RECOMMENDATION #9: The Commission recommends that the federal government significantly increase

its investment in basic aerospace research, which

enhances U.S. national security, enables breakthrough

capabilities, and fosters an efficient, secure and safe

aerospace transportation system. The U.S. aerospace

industry should take a leading role in applying research

to product development.

RESEARCH: Scientific investigation aimed at

discovering and applying new facts, techniques and natural laws.

McGraw-Hill Dictionary of

Scientific and Technical Terms
9-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

unexpected applications in other industries, and in

the creation of new markets. Research is an indispensable part of the U.S. innovation engine for generating new ideas and knowledge and for accelerating

their transformation into new products, processes

and services. But, government and private investments in long-term research have not kept pace with

the nation’s technological needs.

Industry has the responsibility for leveraging government and university research and for transforming it

into new products and services, quickly and affordably. But, the U.S. aerospace industry has not

invested sufficiently to transition research into marketable products and services. 

Academia has the responsibility for educating the

nation’s scientists and engineers and for partnering

with government and industry on long-term, highrisk research. But, they are dependent on government and industry investments.

Objective: U.S. Preeminence in Research

and Innovation

U.S. preeminence in research and innovation will

provide revolutionary aerospace capabilities in the

21st century—safe, secure, fast, clean, quiet. 

Imagine a future in which: 

• You can travel wherever and whenever you want

on Earth or in space;

• You will be able to get from your doorstep to your

destination on time and without delay;

• You will be able to have customized products delivered to you where and when you need them;

• You will know the weather accurately days in

advance; 

• Rogue nations and terrorists will no longer

threaten the free world because their actions are

monitored continuously and, if necessary, are

responded to instantaneously wherever they are,

day or night;

• We will have not only answered fundamental 

questions about our universe but also will 

have explored new worlds and reaped their untold

treasures; 

• You have clean and quiet aerospace vehicles; and 

• Our nation’s “best and brightest” seek out the

excitement provided by careers in aerospace.

All of these are possible if the nation invests in the

future. 

Issues

Over the last several decades, the U.S. aerospace sector has been living off the research investments made

primarily for defense during the Cold War, which

enabled intercontinental ballistic missiles, the 

Saturn V, SR-71, space-based reconnaissance, missile

defense systems, global positioning systems, stealth,

and unmanned aerial vehicles. In the past, the aerospace sector led the technology revolution primarily

because of large public investments in research

directed at national security imperatives and goals. 

Today, we have no integrated national aerospace consensus to guide policies and programs. This has

resulted in unfocused government and industry

investments spread over a broad range of long-range

research programs and associated aging infrastructure. Meanwhile, foreign governments realize the

importance of public investments in research and

infrastructure. As a result, they are defining their 

ISSUES

• Public Funding For Long-Term Research and Infrastructure

– Long-Term Research

– Infrastructure

• National Technology Demonstration Goals

• Transition of Government Research to Aerospace Sector

– Information Transfer

– Public-Private Partnerships

– Product Development Process
9-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 9 – Research: Enable Breakthrough Aerospace Capabilities

priorities and increasing their investments.1 The

European Union, for example, has made increased

funding of civil aeronautics research a priority in its

openly stated drive for world leadership in the aerospace industry. Asia, likewise, has targeted aerospace

as a strategic industry and increased government

research and development (R&D) investments in its

national manufacturers. 

The war on terrorism has created a new national

imperative that demands we make aerospace a 

national priority again and focus our resources on 

developing new products and processes as fast as 

possible. Because of the unique capabilities it can

provide, aerospace can help us win the war on terrorism while simultaneously strengthening our economy. This can only be done if we unleash the aerospace sector’s full potential.

Public Funding for Long-Term Research and

Infrastructure: Insufficient and Unfocused 

Many in government and on Wall Street view the

aerospace sector as “mature.” They view government

investments in research as “corporate welfare” and

not as an opportunity to make major breakthroughs

in aerospace capabilities that could open new 

markets and usher in a new era of U.S. global aerospace leadership. The lack of sufficient and sustained

public funding for research and associated research,

development, test and evaluation (RDT&E) infrastructure limits the nation’s ability to address critical

national challenges and to enable breakthrough 

aerospace capabilities. 

Long-Term Research. Most of our aerospace capabilities today are the result of breakthrough technologies developed in the 1940-1960s for military

applications, including the jet engine, radar, space

launch, and satellites. In many cases, these capabilities gradually migrated into civil and commercial

applications in the 1960s through the 1990s. This

includes commercial jet aircraft, the air traffic control system, telecommunications, and space-based

commercial remote sensing.

Countless breakthrough capabilities are possible over

the next 100 years. But, they will only be of military

and economic benefit, if the United States maintains

its preeminence in conducting long-term basic

research that delivers revolutionary, breakthrough

aerospace capabilities to market faster than its international competition. Aerospace research that will

enable these breakthrough capabilities include: 

Information Technology. The information revolution

will ultimately be as important to transportation as

the invention of the automobile and the jet engine.2

High performance computers will enable us to

model and simulate new aerospace vehicle designs,

prototype them and field them quickly. High confidence systems and high-bandwidth communications, including lasers, will ensure that 

communication links between space, air and ground

elements are secure from cyber attack. Large-scale

networks will enable the development of system-ofsystems solutions for defending America, projecting

power globally, and moving aircraft around the

world when and where needed. 

“But it is not really necessary to look too far into the

future; we see enough already to be certain that it

will be magnificent. Only let us hurry and open the

roads.”

Wilbur Wright

Speaking to the Aero-Club de France

November 5, 1908

LONG-TERM AEROSPACE RESEARCH

• Information Technology

• Propulsion and Power

• Noise and Emissions

• Breakthrough Energy Sources

• Human Factors

• Nanotechnology
9-4

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Advanced engineering tools will make software more

reliable, robust and fault tolerant. Micro- and nanocomputers and sensors will revolutionize flight systems, enabling them to acquire, process, and automatically fly aerospace vehicles. New integrated air,

space and ground networks will enable us to acquire

large volumes of data, process that data and 

then make it available to decision makers anywhere

in the world, in near-real time. Computer and 

network technologies will revolutionize the workplace, increasing individual and organizational 

productivity.

Propulsion and Power. Advances in aerospace propulsion and power have been foundational in achieving

nearly every significant breakthrough in aerospace

capability over the past century. The piston engine

enabled the Wright brothers to inaugurate the age of

powered flight. Development of the turbine engine

ushered in the jet age. Rocket propulsion opened 

our access to space. And nuclear generated electric

power made possible our initial exploration of the

solar system.

In the next century, advances in propulsion and

power will remain the critical enabling technology to

revolutionary aerospace capabilities. These advances

will come in four flight regimes: subsonic and supersonic flight (gas turbine/pulse detonation engines),

hypersonic flight (ramjets/scramjets), access-to-space

(rocket/combined cycle systems), and travel through

space (nuclear, plasma, and anti-matter propulsion

and power).

• Subsonic and Supersonic Flight. Advanced airbreathing propulsion systems will enable a new

generation of quiet, clean, affordable, and highly

capable military and civil aircraft. Since the 1950s,

aggressive gas turbine engine technology efforts

have increased production engine performance by

a factor of three and improved fuel efficiency by 

70 percent. Further substantial improvements in

the capability and cost of hydrocarbon-fueled turbine engines are being actively pursued under the

newly formed Versatile, Affordable, Advanced

Turbine Engines (VAATE) Program, which

focuses Department of Defense (DoD), National

Aeronautics and Space Administration (NASA),

and industry investments on a common set of

national goals.

• Hypersonic Flight. Ramjet/scramjet technology

offers the potential for new classes of aircraft and

weapons that can provide the military with global

reach and time critical strike capabilities. In addition, dual-use benefits can be derived within the

civil aviation sector, permitting significantly

reduced transit times around the world. U.S. 

Advances in propulsion will remain the critical enabling

technology to revolutionary aerospace capabilities. Antimatter propulsion holds promise as a means of enabling

faster travel through space.

Artist concept of a hypersonic missile.
9-5

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 9 – Research: Enable Breakthrough Aerospace Capabilities

ramjet/scramjet technology efforts over the past

decade have been limited and unfocused. An

aggressive and sustained investment is needed in

this arena, with the objective of overcoming the

critical technical barriers of high-speed flight and

providing the demonstrations necessary to validate

the operational feasibility of hypersonic systems.

The Commission supports the joint DoD and

NASA National Aerospace Initiative objective of

achieving Mach 12 capability by 2012. This initiative should begin as soon as possible.

• Access-to-Space. Affordability will be key to seamless, on-demand space access, as well as the future

successful commercialization of space. New families of rocket-based and air-breathing propulsion

technologies are needed to support development of

the reusable and expendable launch vehicle concepts that can provide order-of-magnitude reductions in payload-to-orbit cost. Single- and twostage-to-orbit configurations offer the potential for

airline-like operations not achievable with current

launch systems. 

• Travel Through Space. The lengthy transit times

that result from the use of currently available

propulsion systems make human exploration of

our solar system difficult, if not infeasible. While

propulsion concepts, such as ion and plasma, and

power sources, such as nuclear, offer the potential

of cutting transit times for space exploration 

by half or more—they are unable to significantly

reduce the duration of deep-space missions. New

propulsion concepts based on breakthrough

energy sources, such as anti-matter energy systems,

could result in a new propulsion paradigm that

will revolutionize space transportation. See Figure

9-1.

Noise and Emissions. Quiet and clean aircraft 

offer the potential to greatly expand the capacity of

the national airspace system—making airports

sought-after centers of economic activity. With the 

advent of the high-bypass turbofan engine, aircraft

propulsion systems noise and emissions have been

greatly reduced. Advanced vehicle concepts—such as

blended-wing-body, strutbrace-wing, and noise cancellation technologies—could produce further

reductions. Research investments are needed to further mitigate jet noise, sonic boom, and emissions.

Near zero-emissions aircraft may someday be possible through the introduction of breakthrough energy

sources, such as hydrogen.

Breakthrough Energy Sources. In the 20th century,

hydrocarbon-based fuels served as the predominant

energy sources for aerospace applications. In the 21st

century, new energy sources must be developed in

order to achieve revolutionary new air and space

capabilities.

THE NATIONAL AEROSPACE INITIATIVE 

• High-Speed/Hypersonics

• Space Access

• Space Technology 

Chemical Nuclear /

Plasma

Antimatter

30

10

0

40

20

Weeks

Figure 9-1 Transit Time From Earth to Mars

THE COMING HYDROGEN ECONOMY:

Hydrogen may be the next breakthrough energy source for aircraft. Hydrogen-fueled engines produce zero emissions of carbon dioxide, the primary gas of concern for global warming.

Hydrogen-fuel-cell-powered aircraft would eliminate the combustion cycle altogether, thereby producing no combustion

emissions and drastically reducing engine noise. 
9-6

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

• Air Applications. In the near term, hydrogen fuel

cell technology can be used to provide aircraft auxiliary power, increasing aircraft safety and propulsion system efficiency. Aircraft use of hydrogen can

be an important step in establishing a hydrogen

economy that could free the U.S. from dependence on foreign sources of energy. The benefits of

moving from hydrocarbon-fueled to hydrogenpowered aircraft clearly justify an expanded and

accelerated program to make aerospace a leader in

hydrogen energy research. 

• Space Applications. In the nearer-term, nuclear fission and plasma sources should be actively pursued

for space applications. In the longer-term, breakthrough energy sources that go beyond our current

understanding of physical laws, such as nuclear

fusion and anti-matter, must be credibly investigated in order for us to practically pursue human

exploration of the solar system and beyond. These

energy sources should be the topic of a focused

basic research effort.

Human Factors. In the final analysis, all technology

involves the human. 

• Human-Centered Design. Automated systems can

increase capacity and safety of aerospace systems,

but not without human factors research. In air

traffic management, for example, one of the main

constraints on system capacity is human cognitive

workload limitations. A typical air traffic controller can only maintain awareness of four 

to seven aircraft at a time. Automation could

remove this limitation but would change the controllers’ function. This will require human factors

research to examine: human-automation interaction; the display, exchange and interpretation of

information; the role of the operator; and operator

selection and training. 

Advanced engine exhaust nozzles like the one in this NASA

test chamber will help reduce the noise near airports. 

New cockpits will be radically different

from those of today.

Ion engines may propel future spacecraft.
9-7

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 9 – Research: Enable Breakthrough Aerospace Capabilities

Improving safety is possible using automation to

compensate for and to assist humans. To achieve

this, human factors research is needed to advance

our fundamental understanding of how people

process information, make decisions, and collaborate with human and machine systems. The 

result will be enhanced performance and situational awareness of the human—in and out of the

cockpit.

• Space Radiation Effects. Radiation is a significant

limiting factor for long-duration human space

missions. Human factors research is needed to better understand and counteract/overcome the

effects of radiation to maximize crew physical

health, psychological integrity, protection and survival during long-duration space flight. 

Nanotechnology. Not only did microtechnology lead

to computers and the Internet during the second half

of the 20th century, but it

also brought us to the

beginning of an exciting

scientific revolution we

now call “nanotechnology.” Microtechnology

helped develop scientific

instruments that make it

possible for the first time

to image, manipulate, and

probe objects that can be

more than one thousand

times smaller than the

microcircuits of the most

advanced computers. These objects have dimensions

on the scale of nanometers, 1/100,000th the width

of a human hair.

Recent discoveries indicate that, at the nano scale,

devices and systems have completely different electrical, mechanical, magnetic, and optical properties

from those of the same material in bulk form. This

could lead to over an order of magnitude increase 

in material strength which could revolutionize 

aerospace vehicle structural design and performance.

See Figure 9-2. In addition, they will enable the

development of miniaturized, inherently radiationhardened materials and electronic components. They

could also help eliminate aviation noise, provide

morphing-capable airframes, reduce the cost of space

access and help bring about a new, highly advanced

generation of small satellites for surveillance and

atmospheric monitoring.

The benefits of research may not be realized for

decades but are critical to innovation and to keeping

the nation’s intellectual capital “ever green.”

Research needs to be world-class and be increasingly

interdisciplinary in nature. 

Infrastructure. Maintaining a world-class national

aerospace RDT&E infrastructure is needed to ensure

that this country’s research programs can be performed successfully. Testimony before the

Commission and studies conducted by the federal

government over the last decade have found that the

nation’s research infrastructure is aging, locally optimized, and unable to meet our future needs. 

Aging. Much of the U.S. RDT&E infrastructure is

40 to 50 years old and marginally maintained. The 

nation must properly fund: routine maintenance 

and upgrades; the development of advanced 

computational/simulation tools and the integration

into the research facilities and test processes; the

development of new test technology and associated

instrumentation; and the implementation of these

new technologies in national research assets. Nanotechnology is the creation of

functional devices on the nanometer

length scale (1-100 nanometers). Figure 9-2 Past and Projected Strength of

Materials for Air and Spacecraft Structures

1860 1900 1940 1980 2020 2060

1000

200

0

1200

600

400

800

Source: Langley Research Center, NASA

Strength Per Unit Mass

Wood Aluminum Composite

Carbon

Nanotubes

Single Crystal Carbon Nanotubes
9-8

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Locally Optimized. Government and industry managers optimize their infrastructure resources locally

and not from a national perspective. The federal 

government needs a process to ensure that the U.S.

aerospace RDT&E infrastructure is right-sized,

state-of-the-art, affordable, and supports joint government-industry use in achieving our national

objectives.

Unable to Meet Future Needs. The nation needs to

identify and invest in a new infrastructure that supports U.S. government and aerospace industry needs

so our infrastructure does not become a constraint

on our country’s technology advancement. For

example, the nation will need production-oriented

wind tunnels, with test capabilities beyond those

currently available, to design and test new hypersonic vehicles and systems.

The Commission believes that the White House and

the Congress must increase and sustain funding in

long-term research and associated RDT&E infrastructure to develop and demonstrate new breakthrough aerospace capabilities.

National Technology Demonstration Goals: 

Do Not Exist

Long-term research and the associated RDT&E

infrastructure are the building blocks for developing

breakthrough aerospace capabilities and is an indispensable part of the U.S. innovation process. Just as

the government invested in aerospace capabilities

that transformed the second half of the 20th century

(e.g., jets, radar, space launch, satellites), it must

invest in capabilities that will transform the first part

of the 21st century. To focus our aerospace research

investments on developing these breakthrough capabilities, the Commission suggests the Administration

adopt—as a national priority—the achievement of

the following aerospace technology demonstration

goals by 2010.

Air Transportation

• Demonstrate an automated and integrated air

transportation capability that would triple capacity

by 2025;

• Reduce aviation noise and emissions by 90 

percent;

• Reduce aviation fatal accident rate by 90 percent;

and 

• Reduce transit time between any two points on

earth by 50 percent.

Space

• Reduce cost and time to access space by 50 

percent; 

• Reduce transit time between two points in space

by 50 percent; and 

• Demonstrate the capability to continuously monitor and surveil the earth, its atmosphere and space

for a wide range of military, intelligence, civil and

commercial applications.

Time to Market and Product Cycle Time

• Cut the transition time from technology demonstration to operational capability from years and

decades to weeks and months.

Wind tunnels at NASA’s Ames Research Center, some

of which are over 50 years old.
9-9

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 9 – Research: Enable Breakthrough Aerospace Capabilities

Figure 9-3 shows how the research areas discussed

earlier support the demonstration goals.

Transition of Government Research to 

Aerospace Sector: Slow 

The Commission believes that the U.S. aerospace

industry must take the leadership role in transitioning research into products and services for the nation

and the world. To assist them, the government must

provide industry with insight into its long-term

research goals and programs. With this information,

the industry needs to develop business strategies that

can incorporate this research into new products and

services. Industry also needs to provide an input to

the government on its research priorities. Lastly, government and industry need to create an environment

that will facilitate acceleration of technology transition into application.

Information Transfer. The government has

attempted to transfer technology that it develops for

its unique department and agency missions to indusAerospace Demonstration Goals for 2010

Information Technology

 Modeling and simulation

 Software engineering

 HPCC

 Large scale networks

 Smart and brilliant

 Individualized instruction

Propulsion and Power

 Subsonic / Supersonic

 Hypersonic

 Access to space

 Travel through space

Human Factors

 Radiation effects of space

 Automated systems

 Assisting humans

Noise and Emissions

 New sources of power

 Vehicle design

 Active / passive surface control

Nanotechnology

 Intrinsically radiation hardened

 New structure (morphing)

 Energy storage

 Sensors and computers

Breakthrough Energy Sources

 Hydrogen

 Nuclear (fusion) / Plasma

 Anti-matter, zero-point

Research Areas

Automate and

integrate air

transportation

to triple

capacity

(by 2025)

Reduce

aviation

noise

and

emissions

by

90 percent

Reduce

aviation

fatal

accident

rate

by

90 percent

Reduce

transit

time

between

two

points

on 

earth

by half

Reduce

cost

and

time to

access

space

by half

Reduce

transit

time

between

two

points in 

space

by half

Continuously

monitor and

surveil the

earth,

atmosphere

and space

Reduce

technology

-tosystem

transition

time

from

months

to weeks

Air Transportation Space Cycle Time

Primary Contributor

Supporting Contributor

Figure 9-3 Aerospace Research Areas vs. Demonstration Goals
9-10

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

try through various mechanisms, such as cooperative

agreements. These mechanisms, however, tend to be

cumbersome and slow, which many times results in

technology being obsolete before the agreements are

signed and the products fielded. In addition, industry has been slow to utilize technology from federal

laboratories as part of their products and services.

Government and industry need to develop new ways

of transferring research and technology developed in

federal laboratories and in academia.

In the future, new ideas and knowledge will be translated directly into prototype products and services 

for customer testing. Industrial design, modeling,

simulation, and computer-aided manufacturing and

software development will become major elements in

an integrated and streamlined innovation process

that can apply “tomorrow’s ideas to today’s products

and services.” 

These opportunities, plus the dramatic improvements in individual and group productivity through

automation, networking, and modeling, will radically alter the way we apply research to develop new

and innovative products and services. Information

(and intellectual capital) will become the new “transfer” function of the 21st century. This new function

will enable industry to transition research into new

products and services quickly.

Public-Private Partnerships. Government, industry, labor and academia need incentives that encourage them to think and act in the common interest of

the nation. They need to be motivated and rewarded

for performing world-class research, for reengineering product-development processes, for taking a

national perspective and for delivering quality products and services quickly and affordably. In short,

they need incentives for change, so 

that they can deliver more for less, quickly and

affordably. 

For example, to encourage industry and academia to

work together, the government should consider providing tax incentives to the industry for both

research sponsorship and capital investments that

they make in universities. This would provide

trained technical staff and focused research products

for the industry, while providing more resources for

academia to perform cutting-edge research.

Under the leadership of the White House, the government, industry, labor and academia need to work

together to transform the way they do business,

allowing the nation to capitalize on the best ideas

available and apply them rapidly to new products,

processes and services. Each plays an important role

in the process, but each often has conflicting goals

and objectives. These goals and objectives need to be

reconciled and an environment established that permits joint governance over the process. The government and industry should jointly publish these goals

and objectives with a set of metrics and milestones to

measure the success of the process.

Product Development Process. Government,

industry, labor and academia view long-range science

and technology research as a separate function from

acquisition, rather than an integral part of a larger

product-development process. Furthermore, they

view science (“S”) and technology (“T”) as separate

functions, further hindering the application of 

new ideas and concepts to the development and

manufacture of new products and services. See

Figure 9-4.

VAATE: A MODEL FOR PUBLIC-PRIVATE PARTNERSHIPS

• Addresses a critical dual-use technology

• Has well-defined goals, objectives, and milestones

• Integrates a variety of disciplines (e.g., materials and structures, aerodynamics, computational fluid dynamics, etc.)

• Coordinates government/industry efforts

• Provides near-term payoffs to existing systems and enabling

technologies for new systems

• Possesses strong government (DoD/NASA) leadership/oversight
9-11

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 9 – Research: Enable Breakthrough Aerospace Capabilities

The aerospace sector in the 21st century will be

driven by the need for speed, quality, service, cost

and innovation. If government is to help industry be

competitive, it must think and act on the same time

scale as industry—days, weeks and months as

opposed to years and decades. 

Global competition dictates that the U.S. transition

from a research, development and acquisition

process that is fragmented, serial, and functionallyoriented to an innovative process that is dramatically

simpler, integrated, and streamlined. The public and

private sectors need a process

that enables them to apply the

best ideas available domestically and internationally in

order to provide the very best

quality products and services

to their customers faster and

cheaper. See Figure 9-5.

The Commission believes that

the nation needs a new, more

flexible and integrated product-development process

that stimulates new ideas and turns them into new

aerospace products and services faster than our international competition. Essential characteristics of this

new process are:

• Coordinated national goals;

• The aggressive use of information technologies;

• Incentives for real government, industry, labor and

academia partnering; and

• An acquisition process that integrates science and

technology as part of the acquisition—or product

development—process.

Conclusions

The United States must maintain its preeminence in

aerospace research and innovation to be the global

aerospace leader in the 21st century. This can only

be achieved through proactive government policies

and sustained public investments in long-term

research and state-of-the-art

RDT&E infrastructure that will

result in new breakthrough

aerospace capabilities. 

Over the last several decades,

the U.S. aerospace sector has

been living off the research

investments made primarily for

defense during the Cold War—

intercontinental ballistic missiles, the Saturn V, space-based reconnaissance, the

global positioning system, stealth and unmanned

aerial vehicles. The challenges posed by our rapidly

changing world—asymmetric threats, international

competition, environmental awareness, advances in

technology—demand that we, like the Wright brothers 100 years ago, look at the challenges as opportunities for aerospace and turn them into reality.

Government... must think

and act on the same time

scale as the industry—days,

weeks and months as opposed

to years and decades.

Customers & Markets

(Goals)

Public-Private

Partnerships (Capability

Demonstration and

Deployment

Science, Engineering

and Technology

Research

Customer / 

Market Pull

Customer / Market

Pull & Capability Push

Capability Pull & Research Push

Time to Market - Months

Cycle Time - Days to Weeks

Figure 9-5 New Innovation Process for the

Aerospace Sector

Product

Manufacturing / 

Distribution

Customers

Demonstration

Technology

Development

Applied

Research

Basic

Research

Oversight /

Rework

Technology Pull

and Research Push

Time to Market - Decades

Cycle Time - Years to Decades

Figure 9-4 Traditional Linear U.S. Science &

Technology and Acquisition Model
9-12

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Government policies and investments in long-term

research have not kept pace with the changing world.

Our nation does not have bold national aerospace

technology goals to focus and sustain federal research

and related infrastructure investments. It lacks a

streamlined innovation process to transform those

investments rapidly into new aerospace products,

processes and services. 

The United States has unlimited opportunities to

revolutionize aerospace in the 21st century, opening

up new markets and launching a new era of U.S.

global aerospace leadership. The nation needs to capitalize on these opportunities, and the federal government needs to lead the effort. Specifically, it needs

to invest in long-term enabling research and related

RDT&E infrastructure, establish national aerospace

technology demonstration goals, create an environment that fosters innovation and provide the incentives necessary to encourage risk taking and rapid

introduction of new products and services. 

Increase Public Funding for Long-Term

Research and RDT&E Infrastructure. The

Administration and Congress need to sustain significant and stable funding in order to achieve national

technology demonstration goals, especially in the

area of long-term research and related RDT&E

infrastructure. Research areas that provide the potential for breakthroughs in aerospace capabilities

include: 

• Information Technology;

• Propulsion and Power;

• Noise and Emissions;

• Breakthrough Energy Sources;

• Human Factors; and

• Nanotechnology.

Establish National Technology Demonstration

Goals. The Administration and Congress should

adopt the following aerospace technology demonstration goals for 2010 as a national priority. These

goals, if achieved, could revolutionize aerospace in

the next half century much like the development of

the jet, radar, space launch, and satellites did over the

last half-century.

Air Transportation

• Demonstrate an automated and integrated air

transportation capability that would triple capacity

by 2025;

• Reduce aviation noise and emissions by 90 

percent;

• Reduce aviation fatal accident rate by 90 percent;

and 

• Reduce transit time between any two points on

earth by 50 percent.

Space

• Reduce cost and time to access space by 50 

percent; 

• Reduce transit time between two points in space

by 50 percent; and 

• Demonstrate the capability to continuously monitor and surveil the earth, its atmosphere and space

for a wide range of military, intelligence, civil and

commercial applications.

Time to Market and Product Cycle Time

• Reduce the transition time from technology

demonstration to operational capability from years

and decades to weeks and months.

Accelerate the Transition of Government

Research to the Aerospace Sector. The U.S. aerospace industry must take the leadership role in transitioning research into products and services for the 

nation and the world. Government must assist by

providing them with insight into its long-term

research programs. The industry must aggressively

develop business strategies that can incorporate this

research into new products and services. Industry

also needs to provide input to government on its

research priorities. Together industry and government need to create an environment that will accelerate the transition of research into application. The

Departments of Defense, Transportation, Commerce

and Energy, NASA, and others need to work with

industry and academia to create new partnerships

and transform the way they do business. 
9-13

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Chapter 9 – Research: Enable Breakthrough Aerospace Capabilities

RECOMMENDATION #9 

The Commission recommends that the federal

government significantly increase its investment

in basic aerospace research, which enhances U.S.

national security, enables breakthrough capabilities, and fosters an efficient, secure and safe

aerospace transportation system. The U.S. aerospace industry should take a leading role in

applying research to product development. 
FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
N-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Notes

Notes
N-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Chapter 1

No notes

Chapter 2

1. Department of Transportation, Bureau of Transportation Statistics (www.bts.gov).

2. Aircraft Owners and Pilots Association (www.aopa.org). Assumes an average of 2.5 passengers

per GA departure.

3. DRI.WEFA, Inc. (in collaboration with the Campbell-Hill Group), The National Impact of Civil

Aviation, (July 2002).

4. Air Transport Association, Office of Economics.

5. Ibid.

6. Federal Aviation Administration, Operational Evolution Plan, Version 4.0, (December 2001).

7. RTCA Inc., Final Report of RTCA Task Force 4 Certification, (February, 1999).

8. Statement by the American Association of Airport Executives and Airports Council International

– North America, before the Committee on Transportation and Infrastructure, Subcommittee

on Aviation, U.S. House of Representatives, May 24, 2001.

9. Russ Shaver, Rand Corporation, presentation to Commission on the Future of the U.S.

Aerospace Industry staff.

10. NASA Langley Research Center, Small Aircraft Transportation System Program Office.

11. DRI.WEFA. Inc.

12. Ibid.

13. Ibid.

14. Federal Aviation Regulations, Section 121.195.

15. George Donohue, George Mason University, report to Commission on the Future of the U.S.

Aerospace Industry.

16. FAA Office of Environment and Energy.

17. General Accounting Office Report GAO-01-1053, Aviation and the Environment, September

2001.

18. National Aeronautics and Space Administration, NASA Aeronautics Blueprint, February 2002.

19. NASA Office of Aerospace Technology.
N-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Notes

Chapter 3

1. NASA Office of Space Flight, Electronic Mail message, November 20, 2001.

2. Singer, Jeremy, “U.S. Air Force Planning Space Surveillance System,” Space News, August 12,

2002, p. 11 and Leonard David “SAIC Report Envisions Earth Impact Warning Center,” Space

News, August 12, 2002, p. 26.

3. Kennedy Space Center/Cape Canaveral Air Force Station presentation to Commission on the

Future of the U.S. Aerospace Industry staff, March 2002.

4. Ibid.

5. Federal Aviation Administration, Commercial Space Transportation: 2001 Year in Review, U.S.

Department of Transportation, January 2002.

6. Federal Aviation Administration, 2002 Commercial Space Transportation Forecasts, May 2002, pp.

1-3.

7. Caceres, Marco, Teal Group, “Industry Insight, Drop in Planned Payloads Reflects Stagnant

Market,” Aerospace America, July 2002, pp. 44-46.

8. Weber, Derek, “New Study Data Identifies Commercial Growth Sector,” Electronic Mail message, August 28, 2002.

Chapter 4

1. In their 1993 book, War and Anti-War, the authors, Alvin and Heidi Tofler noted that “the way

we make war reflects the way in which we create wealth,” (New York: Warner Books, 1993), 

p. 2. The question of whether advanced technology, especially IT, contributes to economic

growth or is simply a reflection of it has been an intensely studied empirical controversy in economics. A recent review of the data by the Federal Reserve Bank of New York suggests that the

evidence now supports the hypothesis that a positive and causal link exists between information

intensity and productivity. See K. J. Stiroh, “Investing in Information Technology; Productivity

Payoffs for US Industries,” Current Issues in Economics and Finance, Federal Reserve Bank of New

York, June 2001. A recent study by Brian Harding of the Warwick Business School reported in

a survey of 46 UK and 184 US high tech firms (including aerospace) from 1987-2000, that total

shareholder returns were strongly correlated with R&D intensity. The study findings are summarized in C. Cookson, “R&D Scoreboard: Spending rises despite steep fall in profits,”

Financial Times, 14 October 2002, p. 10.

2. President’s National Security Strategy, www.whitehouse.gov/nsc, September 20, 2002.

3. Statement of the Honorable Donald Rumsfeld, Secretary of Defense, before the Defense

Subcommittee of the Appropriations Committee, U.S. House of Representatives, “Fiscal 2003

Defense Budget Testimony,” February 14, 2002.
N-4

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

4. Statement of General Thomas S. Moorman, USAF (Retired), Vice President, Booz-Allen &

Hamilton, before the Commission on the Future of the U.S. Aerospace Industry, “The Health

of the Space Industrial Base – An Update,” May 14, 2002.

5. Statement of Dr. Thomas Kochan, Co-director, Labor Aerospace Research Agenda, MIT, before

the Commission on the Future of the U.S. Aerospace Industry, “Developing and Maintaining

the 21st Century Workforce,” May 14, 2002.

6. National Opinion Research Center, University of Chicago, Doctorate Recipients from United

States Universities: Summary Report, 2000, 2001.

7. “Space Research and Development Industrial Base Study,” Booz-Allen & Hamilton under the

direction of Deputy Undersecretary of Defense, Industrial Policy (DUSD/IP) and the National

Reconnaissance Office, Advanced Systems and Technology Directorate(NRO/AS&T), February

2002, McLean Virginia.

8. Statement by the Honorable Donald Rumsfeld, Secretary of Defense, before the National

Defense University, Washington D.C., “21st Century Transformation of the U.S. Armed

Forces,” January 31, 2002.

9. Aerospace Industries Association, “Total Employment in the Aerospace Industry,” Statistics: 02-

31, Series 12-03, August 7, 2002. 

10. Statement of the Honorable Donald Rumsfeld, Secretary of Defense, before the Armed Services

Committee, United States Senate, “Fiscal 2003 Defense Budget Testimony,” February 5, 2002.

11. The Honorable Donald Rumsfeld, Secretary of Defense, Legislative Priorities for Fiscal Year 2004,

September 17, 2002.

Chapter 5

No notes

Chapter 6

1. U.S. Department of Commerce.

2. General Aviation Manufacturers Association.

3. Aerospace Industries Association, “Worldwide Space Launchings Which Attained Earth Orbit or

Beyond”, Aerospace Facts & Figures 2001/2002.

4. U.S. Department of Commerce U.S. Industrial Outlook 2000, p. 29-2.

5. “World Military Aircraft Census”, Flight International 12-18 Feb, 2002; based on 2001 World

Air Forces Directory.

6. U.S. Industrial Outlook 2000, p. 29-4.

7. Directorate General for Research, European Commission. 
N-5

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Notes

8. European Commission Decision to approve France’s application for EU State Aid approval for

25 million ECU aid to Sextant issued December 3, 1997 (N 584/97).

9. U.S. Department of Commerce, Office of Aerospace, From analysis drawn on multiple sources.

10. European Commission State Aid N 120/01, C(2001)3266 fin [EC notification of aid approval].

11. U.S. Department of Commerce, Office of Aerospace, from analysis drawn on multiple sources.

12. Status Report of the Presidential Commission on Offsets in International Trade, January 18, 2001.

13. U.S. Department of Commerce, Office of Aerospace, from analysis drawn on multiple sources.

Chapter 7

1. Budget of the U.S. Government, FY 2003, Historical Tables.

Chapter 8

1. Aerospace Industries Association. “Total Employment in the Aerospace Industry,” Statistics: 02-

31, Series 12-03, August 7, 2002.

2. Aerospace Industries Association. Aerospace Facts and Figures, 2001-2002, (2001).

3. Statement of Phil Odeen before the Commission on the Future of the U.S. Aerospace Industry,

May 14, 2002.

4. Aerospace Industries Association. “Aerospace Industry Sales by Customer, Calendar Years 1986-

2002” Statistics 01-63, Series 02-01. 

http://aia-aerospace.org/stats/yr_ender/tables/2001/table2.cfm.

5. Aerospace Industries Association. Aerospace Facts & Figures, 2001/2002, (2001).

6. Chilinguerian, Maryan, “The Changing Employment Picture,” www.WashingtonPost.com,

(2002); and Bernard Hodes Group, (2002).

7. “Recent Trends in U.S. Aeronautics Research and Technology,” Committee on Strategic

Assessment of U.S. Aeronautics, Aeronautics and Space Engineering Board, Commission on

Engineering and Technical Systems, and National Research Council, (1999).

8. Aerospace Industries Association, Statistics Series 23-01, (2001).

9. Scott, Robert E., The Effects of Offsets, Outsourcing, and Competition on Output and

Employment in the U.S. Aerospace Industry.

10. Lean Aerospace Research Agenda and Lean Aerospace Initiative, Developing a 21st Century

Aerospace Workforce: Policy White Paper, (Massachusetts Institute of Technology, 2001), p. 26.

(Attributed to David Mowery of the University of California, Berkeley).
N-6

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

11. Pritchard, David, The Global Decentralization of Commercial Aircraft Production: Implications for

U.S. Based Manufacturing Activity, May 2002.

12. Statement of Dr. Thomas Kochan, Co-Director, Labor Aerospace Research Agenda, MIT before

the Commission on the Future of the U.S. Aerospace Industry, “Developing and Maintaining

the 21st Century Workforce,” May 14, 2002.

13. Written statement of Elliot G. Pulham, presented to the Commission on the Future of the U.S.

Aerospace Industry, “Space and the Workforce of the Future,” May 14, 2002.

14. Aerospace Industries Association, Attracting and Retaining Qualified Personnel in the Aerospace

Industry, 2001.

15. Lean Aerospace Research Agenda and Lean Aerospace Initiative. p. 11.

16. Hastings, Roberts, Ross, Saleh, Myles, and Weigel, The Job Seeker’s Report Card on the Aerospace

Industry: A College Student’s Perspective, (Massachusetts Institute of Technology, 2001).

17. A Report to Congress, “Unlocking Our Future: Toward a New National Science Policy,”

September 24, 1998, p. 42. See also Harold W. Stevenson, Thomas B. Fordham Foundation.

“ATIMSS Primer: Lessons and Implications for U.S. Education,” (July 1998).

18. National Commission on Mathematics and Science Teaching for the 21st Century. Before It’s Too

Late: A Report to the Nation (Washington, D.C.: September 2000), p. 19. See also Harold W.

Stevenson, Thomas B. Fordham Foundation. “ATIMSS Primer: Lessons and Implications for

U.S. Education,” July 1998.

19. U.S. Commission on National Security/21st Century, Road Map for National Security: Imperative

for Change (Washington, D.C.: February 2001), p. 35.

20. U.S. Council on Competitiveness, U.S. Competitiveness 2001: Strengths, Vulnerabilities and Long

Term Priorities, (2001), p. 46.

21. National Science Foundation, Science and Engineering Indicators, (2002), p. 5.

22. Quoted in National Commission on Mathematics and Science Teaching for the 21st Century, 

p. 13. See also Ohio Mathematics and Science Coalition, Finding the Solution: A Call for

Collaboration (Bringing Mathematics and Science Education in Ohio into the 21st Century),

(2001), p. 5.

23. U.S. Department of Labor, ATELS, Review of Aerospace Apprenticeship and Vocational Education

Programs, (Summer 2002).

24. U.S. Department of Labor, Bureau of Apprenticeship Training. “Registered Apprenticeship: A

Solution to the Skills Shortage,” Fact Sheet, (1995).

25. Statement by Dr. Bernard Grossman, Executive Director, Aerospace Department Chairs

Association, before the Commission on the Future of the U.S. Aerospace Industry, May 14,

2002.
N-7

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Notes

26. National Opinion Research Center, University of Chicago, Doctorate Recipients from United

States Universities: Summary Report, 2000, (2001).

27. Ibid.

28. Ibid.

29. Ibid.

30. National Science Foundation, Survey of Federal Funds for Research and Development for FY 1998,

1999, 2000 (2001), p. 42.

31. National Opinion Research Center, University of Chicago, Doctorate Recipients from United

States Universities: Summary Report, 2000, (2001), p. 42.

32. Ibid, p. 42.

33. U.S. Council on Competitiveness. U.S. Competitiveness 2001: Strengths, Vulnerabilities and Long

Term Priorities, (2001), p. 45.

Chapter 9

1. Group of Personalities, European Commission, European Aeronautics: A Vision For 2020,

(January 2001).

2. The Federal Transportation Advisory Group, Vision 2050: An Integrated National Transportation

System, (Washington, D.C.: February 2001).
FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
V-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Additional Commissioner Views

Additional Commissioner

Views
V-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Commissioner R. T. Buffenbarger – Dissenting Views

This Commission was formed to address a variety of issues facing the future of the United States aerospace

industry. Among them, the Commission was directed to “study the issues associated with the future of the U.S.

aerospace industry in the global economy...; and assess the future importance of the domestic aerospace industry for the economic and national security of the United States.”1 The Commission was also required to make

“recommendations for actions by federal departments and agencies to support the maintenance of a robust

aerospace industry in the United States in the 21st Century...”2

Despite the Commission’s mandate, its final report fails to adequately address the current crisis facing U.S.

aerospace workers. While the Report acknowledges that several hundred thousand jobs have been lost in this

industry over the past decade, this statistic captures only part of the problem. In states like Washington, Texas

and California, that contain high concentration levels of the aerospace industry, the loss of aerospace jobs has

been devastating. In Washington, more than 30% of jobs in the aircraft and parts sectors, almost 36,000, were

lost between July 1992 and July 2002. In California, more than half the jobs, over 67,000, have been lost in

this sector; and in Texas, over 30%, almost 20,000, jobs have been lost in the same sector.3 The failure to

address these job losses in a meaningful way signals an ominous future for U.S. aerospace workers. It is estimated that nearly 180,000 additional aerospace workers could lose their jobs by 2010.4

The Report does not contain comprehensive and “immediate solutions” to the job crisis in the U.S. aerospace

industry. Its failure to sufficiently recognize and provide meaningful solutions for the aerospace employment

crisis is a serious and glaring omission. Without well-thought out, practical recommendations for increasing

the number of jobs in this industry in the short, medium, and long term, the future of the U.S. aerospace

industry is in doubt. If U.S. aerospace workers have no future, the U.S. aerospace industry has no future. 

I am particularly troubled by the number of proposals contained in the Report that, if implemented, would

lead to further erosion of U.S. aerospace jobs and increase the economic pain currently being experienced by

a generation of U.S. aerospace workers. While this dissent does not provide a comprehensive list of my objections, I would like to note some particular concerns.

• The Commission’s Report encourages privatization, competitive sourcing, and public-private partnerships

with respect to “Business: A New Model for the Aerospace Sector.” However, it fails to recognize that private sector business goals do not always coincide with the public interest or governmental program goals. As

a result, proposals in this area would result in layoffs and the erosion of basic wage and benefit standards for

workers and a concomitant loss of service to the public. 

• If not closely restricted, provisions regarding the “shared savings” initiative have a great potential to further

damage the employment situation in the U.S. by using the government to encourage private sector contractors to layoff workers or hold down wages and benefits. Some contractors could receive great windfalls, at a

great cost to their workers, with U.S. taxpayers paying the bill. This is not the way to improve cost-effectiveness.

1 Public Law 106-398

2 Id.

3 U.S. Department of Labor, Bureau of Labor Statistics, data extracted on October 17, 2002, Series ID:

SAU5300003372031 (not seasonally adjusted).

4 Testimony of Jeff Faux, Commissionon the Future of the United States Aerospace Industry, Public Meeting, May 14, 2002;

hereinafter, referred to as “Public Meeting May 14, 2002.
V-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Additional Commissioner Views

• Provisions that encourage the U.S. aerospace industry to transfer work and/or technology to other countries

and to utilize foreign sourcing through a variety of means (e.g., procurement, international collaboration,

mergers and teaming, global partnerships, joint ventures, and other proposals contained throughout the

Report) are shortsighted. The U.S. aerospace industry should be encouraged to maintain production at home

and to use U.S. suppliers (and products made and assembled in the U.S.) whenever possible. While the

“globalization” of the aerospace industry is a reality, the impact of globalization on U.S. jobs and our security must be taken seriously. 

• Other proposals and comments which I take issue with include, but are not limited to, export control

reform, “open skies,” and references to labor relations issues concerning the air traffic system. 

I am also deeply troubled that three of my recommendations were “tabled” by the Commission without a full

discussion on the substance of the recommendations.5 These recommendations involved common sense proposals that would assist our Nation’s policymakers in formulating meaningful solutions to the current and

future crisis facing the industry and its workforce. I am particularly disappointed that they were not substantively considered by the Commission. As a result, the Commission missed a valuable opportunity to discuss,

exchange ideas, and deliberate on three important workforce related proposals.

My first recommendation concerned the issue of offsets and outsourcing—both of which are significant in the

U.S. aerospace industry. These activities threaten the U.S. workforce and our nation’s economy and national

security by, among other things, transferring production and technology to other countries. To facilitate a constructive dialogue on these points, I recommended that the Commission support the “establishment of a permanent, high-level Commission consisting of representatives of industry, government, labor, and academia to

develop a comprehensive policy to address the numerous issues related to offsets and outsourcing.” The purpose of such a Commission would be to “advance a policy that will mitigate the negative impact that offsets

pose for U.S. aerospace workers now and in the future.” The Commission tabled my proposal and rejected my

efforts to “remove” the recommendation from being tabled.

The second recommendation I offered regarded the use of economic impact statements. It is my firm belief

that various agencies of the U.S. Government must be accountable to the taxpayers. This means that taxpayers should know whether their hard-earned dollars are going to support good jobs at home or are going to create jobs in other countries. Unfortunately, as I explained to the Commission, information gathered by the U.S.

Government with respect to the number of aerospace and aerospace-related jobs that are created (or lost) by

Government programs is often imprecise. Accordingly, I urged the Commission to recommend the adoption

and implementation of more effective methods of gathering data to evaluate the impact of Government programs on jobs in the U.S. The Commission also tabled this proposal and rejected my efforts to “remove” the

recommendation from the table—thus barring substantive discussion of this important matter. 

Finally, I proposed that the Commission recommend that internationally recognized labor standards be honored and enforced. The need to recognize and enforce international labor standards implicates significant social

and economic issues. It also raises the related trade issue of “fairness”. U.S. aerospace workers should not have

to compete with workers in other countries where basic human rights are neither recognized nor respected. The

fundamental rights to freedom of association and collective bargaining do not exist in many foreign countries.

Moreover, it should be no surprise, decent wages and rules to ensure even moderately safe and healthy work5 See, Public Meetings of May 14, 2002 and September 17, 2002.
V-4

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

ing conditions are nonexistent in these countries. Even basic prohibitions on child labor, discrimination, and

the use of forced or prison labor often fail to be recognized or effectively enforced. 

I fear that if these internationally recognized labor standards are not uniformly respected, there will be a rapid

race to the bottom as labor standards in the United States are dragged down towards the labor standards in far

off lands. The aerospace industry should be a model for lifting the standard of living up for workers everywhere. It was my hope that this Commission in devising its proposals for the future of the U.S. aerospace

industry, would at least discuss these very important standards. Sadly, a majority of the Commission tabled the

recommendation and left it to die on the table, along with my other two recommendations. 

I am heartened by the words of people like Denny Lee-Si Reyes, a high school student who testified before the

Commission that “[U]ltimately my dream is to not only become part of the team that designs the travel of the

future, but to become part of the dream that redefines it.6 I am pleased that the future of the U.S. aerospace

industry rests with Mr. Lee-Si Reyes and others like him but fear that unless work is done to ensure that the

aerospace workforce remains strong and healthy here in the U.S., they will see their dreams disappear along

with the aerospace jobs in the U.S. 

This is not acceptable. The U.S. aerospace industry is about more than corporate profits. It is about the workers and their communities that have made this industry so successful. It is the workers and their communities,

after all, that are key to our nation’s economic security and our nation’s national security. Today, aerospace

workers are in a deep, deep crisis. We urgently need effective solutions for resolving this state of affairs and preventing future crises in this industry. This Commission wasted a valuable opportunity to meet this great need.

6 Testimony of Denny Lee-Si Reyes, Public Meeting, May 14, 2002
V-5

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Additional Commissioner Views

Commissioner John W. Douglass

ASSURING THE SECURITY OF OUR AVIATION SYSTEM PROPERLY RESTS WITH THE UNITED STATES GOVERNMENT

I am submitting these additional views to the commission in recognition of the fact that the crisis in civil aviation has intensified as the commission is writing its final report. They should not be construed as opposed to

any recommendation of the commission.

The attacks on the United States that took place on September 11, 2001, were just that -attacks on our country and all that it stands for around the world. Although the instruments of the attacks were highjacked aircraft, the purpose and effect were no different than an attack on our nation by hostile foreign forces. In my

opinion, defending against such attacks—defending against foreign aggression and providing for our common

defense—is the responsibility of the United States government, a responsibility expressly provided for in the

Constitution.

For over thirty years, international terrorists, intent upon attacking the United States, have, unfortunately,

selected and utilized our airlines and their customers as surrogate targets. Throughout this period, the aviation

industry, working cooperatively with the government, has attempted to do its part to counteract this threat.

Fundamentally, however, the United States government has within its sole discretion and unique competence

virtually all of the means available to counteract the threat of aviation terrorism—diplomacy, intelligence gathering, economic sanctions, military action, covert action and general law enforcement powers all reside exclusively with the government.

In addition to the inherent responsibility of the Federal government for security, the government controls or

regulates many of the costs associated with air travel.

Under normal conditions the relationship between the government and the industry has yielded an ever more

efficient air transportation system for our nation. Safe, secure, reliable, and affordable air transportation has

become a key ingredient in the American standard of living and the international competitiveness of our economy.

The commission report deals correctly with the developing challenges of the air transportation system concerning air traffic management, airport construction, safety regulation, and research and development.

However, in my view the ongoing economic crisis warrants further action.

There is no question that the airline industry was in poor economic condition prior to the 9/11 attacks as a

consequence of the softened economy. The industry has survived similar economic downturns in the past, but

the meltdown that has occurred since 9/11 is without precedent. The combination of the economic downturn

and post 9/11 government policy decisions produced an untenable situation for the industry. Looking just at

estimated industry pre-tax costs for 2002, airline industry executives have testified that those well-intentioned

policies have resulted in billions in post 9/11 costs and lost revenues, and account for a great majority of the

projected $9 billion in 2002 industry losses. These massive and mounting losses reveal the absence of pricing

power within the airline industry and the fallacy of government assumptions concerning customer absorption

of additional security fees and costs.
V-6

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

The economic downturn and the substantial added security burden have combined to disrupt the economic

balance of the airline industry. As a result, the airlines have been forced to borrow on a massive scale just to

fund their continuing operations. The nine largest passenger airlines now carry over $100 billion in debt on

their balance sheets, but only have a total market capitalization of approximately $15 billion. As the forced

contraction of the industry continues, smaller and midsize communities across the country are being disconnected from the national air transportation system that is vital to their economies. In addition, manufacturers

and aviation suppliers have been seriously affected by the crisis in the airline industry. The impact is now rippling through the rest of the economy.

The effects of the terrorist threat are not limited to the airline industry. General aviation has been seriously

affected as well. Fixed base operators of all sizes have suffered in varying degrees, some being forced out of business. As in the case of the airlines, measures have been imposed without a thorough analysis of whether or not

specific measures will be effective in helping to achieve security objectives, and whether the incremental benefit of a specific measure is commensurate with its incremental cost. The long term consequences of onerous

restrictions on general aviation that do not produce a corresponding increase in national security will be a further isolation of towns and regions that have lost commercial air service. 

Further, the traditional source of new pilots for the airlines—former U.S. military pilots—is increasingly being

supplemented if not replaced by civilian training organizations. Actions that reduce or destroy the economic

viability of the general aviation community, including small airport operators and flight school operators, will

have a long term impact on the ability of airlines to find qualified pilots.

If we are to avoid the economic dislocations that are virtually certain to result from the continuing meltdown

of the airline industry, decisive action must be undertaken immediately in two vital areas:

• First, the airline industry must continue to eliminate unnecessary costs and deal aggressively with the vast

array of critical business issues. Only the airline industry with the cooperation of labor can address these matters.

• Second, and just as importantly, the United States government must assume the full costs and responsibility for assuring the protection of our aviation system against terrorist attack. At the same time, the government must adopt rational security measures that facilitate public access to the system and thereby encourage

rather than discourage air travel. The government must reject the false premise that the airlines and their customers can or should bear this national defense burden, if for no other reason than to maintain the health

of our broader, transportation-dependent economy.

Finally, the government must work with the aviation community to develop a framework to enable cooperative real-time analysis of security threats and effective means to defeat them. The FAA Safer Skies program has

developed such a framework, which enables the government and private sector to work together to identify

and implement the most effective ways to improve aviation safety. The government should also establish a security forum based on this model. Aviation is complex. Those who use the aviation system and make it work are

the ones who have the greatest understanding of that complexity. They can provide the insight that will enable

the government to develop measures that can improve security while ensuring the economic viability of the

aviation industry in the United States.
V-7

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Additional Commissioner Views

Commissioner Tillie K. Fowler

I commend the hard work and deliberations of the Commission on the Future of the United States Aerospace

Industry and particularly the dedication and vision of Chairman Robert Walker. I strongly believe the

Commission has fulfilled its statutory mandate to examine the role of the domestic aerospace industry as part

of the nation’s overall economic and national security. 

While I agree with the majority of the Commission’s findings and recommendations contained in this final

report, I am concerned with several assertions that have a direct impact on our armed forces. In particular, in

Chapter 6, the report states that “current export controls are increasingly counter-productive to our national

security interests in their current form and under current practices of implementation.” I agree that the economic and national security environment has changed radically since Congress passed the 1979 Export

Administration Act and believe a thorough revision of our export control policies is warranted. At minimum,

I support a regular review of the Munitions List and a more expeditious license review process. However, I

firmly believe that national security interest must always take precedence over economic or foreign policy considerations in application of the export control process. 

While the United States should not, as a matter of course, seek to control commodities with wide foreign availability or mass-market penetration, the export control system must focus on sophisticated technologies and

equipment that have limited foreign availability and pose a potential threat to the U.S. and its allies. For these

reasons, the Department of Defense must continue to be a full partner in the process to guarantee that national security equities are considered when approving, denying or conditioning an export license. 

In Chapter 7, the report states there are “many opportunities for redefinition and prioritization of routine noninherently governmental activities currently performed by government agencies.” While the government must

continuously examine cost savings to be derived from outsourcing, I believe it is essential that risks associated

with the process of shifting functions to the private sector are properly weighed. Notably, in the mid 1990s,

the Department of Defense endorsed outsourcing of its commercial functions as a means to fund modernization. At that time, DoD adopted the procedures contained in OMB Circular A-76 to accomplish this task and

contended that, irrespective of the public/private outcome of the competitions, there would be substantial savings. Unfortunately, these savings never fully materialized and modernization and readiness suffered as a result. 

The Commission’s call for a comprehensive review to identify functions and services that are not “core” to the

effective execution of the government’s mission raises a number of significant questions. Congress has repeatedly voiced concern that the military services have not adequately or uniformly applied criteria to determine

the definition of “core” with respect to warfighting capability. I am also concerned with the process by which

competitive sourcing decisions can be authoritatively made by the Department of Defense. In particular, the

military services have struggled to provide dependable technical data on the performance of military depot

workloads. Accordingly, using such unreliable data as the basis for public-private competitions may jeopardize

the nation’s military readiness and surge capability. As recent history has demonstrated, combat is not a “justin-time business,” and adequate stocks of munitions, parts, and spares are essential to achieving mission success. The remaining military depot facilities are unique in their workforce flexibility, capability, and commitment to the warfighter and must be sustained as an integral part of the nation’s critical defense infrastructure. 
V-8

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Commissioner John J. Hamre

Any commission report is necessarily the product of compromises and cannot reflect totally the views of any

one commissioner. I agree with the general thrust of this report and the bulk of its findings and recommendations. There are some findings and recommendations (e.g. mining asteroids, anti-gravity propulsion, etc)

that would not be in this report, were I its single author. But commission products are stronger by the collective judgment that informs its work, and I endorse this report.

My larger concern, however, is that this report is too general and diffuse to have the impact that I believe is

needed. I believe that the American aerospace industry is in deep trouble. Satellite and space-launch manufacturers are in serious financial difficulty and the industry is near collapse. The entire aerospace industry is choking under a blanket of ineffective and increasingly obsolete export control and technology regulations.

Government regulations are now effectively isolating American industry and limiting its competitiveness. The

American airline industry is near collapse, with operations unprofitable and service in decline. These are fundamental issues, yet too much of our report is devoted to secondary and tertiary concerns.

I still commend the reader to the report because I believe it does touch on some of the central challenges facing this critical industry. My purpose in filing additional views is to highlight the exceptional challenges the

American aerospace industry is facing and the need for urgent action on behalf of the government to deal with

them. This report offers a starting point.
V-9

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Additional Commissioner Views

Commissioner Robert J. Stevens

Although I agree with and support virtually every aspect of the commission’s report, there are a number of

issues raised in Chapter 3 that I believe require additional clarification. Although the chapter on space does

highlight the continuing decline in expected launch service demand, I believe that the situation is actually more

serious than depicted in the report. Additionally, the report does not address critical steps that must be taken

in the near-term to address these problems.

I am concerned that Chapter 3 does not fully address the continuing deterioration of the space launch industry base. An estimate published in May 2002 by the Commercial Space Transportation Advisory Committee

(COMSTAC), forecasts that only 30 commercial payloads in total are available for launch in 2003, amounting to only 24 worldwide commercial launches (including all payload classes to all orbits). Even this estimate

may be overly optimistic, based on trends that we are seeing as we approach the end of 2002 (See Figure 1).

To date, there have been only two commercial satellite sales during 2002, with limited prospects for additional

sales before the end of the year. This reinforces my concern that the trend is getting worse. As the Federal

Aviation Administration and others have documented, during 2001, there were only 16 commercial launches

worldwide, with little hope for reversal of this trend in the near or intermediate future (10 years).

Chapter 3 correctly points out that decreasing launch costs has been a fundamental goal for the space launch

industry. The Air Force’s Evolved Expendable Launch Vehicle (EELV) program established a goal of reducing

launch costs by 25-50 percent, a goal that Atlas V has already met. I am concerned, however, by the view stated

in the report that lowering cost to orbit would reverse negative trends in launch demand. While this may be

true over an extended period of time (perhaps decades), there is no evidence that recent reductions in launch

costs have in any way altered deteriorating demand. The market conditions that prevail today appear to be relatively insensitive to reductions in launch costs (See Figure 2). Of course, as the commission correctly indicates, it is possible that a new launch paradigm, involving affordable, reusable launch vehicles, could ultimately

help usher in a new paradigm in the satellite sector that would entail significant increases in launch demand.

In the near-term, however, the United States must address the critical state of the existing launch industrial

base. In particular, the United States government must take steps to sustain our assured and reliable access to

space for critical national security missions.

1998 1999 2000

Forecast Year

2001 2002

70

60

50

40

30

20

Average Launches/Year

*Compilations of Government, Industry and Research Analyst data 1990 1995 2000

Year

>50%

Decline

15K

10K

5K

0

Launch Market Prices ($/lb to GTO) *Based on actual launch vehicle transactions

$20K Delta III

Entry

Sea Launch

Entry

Delta IV

Entry

Ariane 5

Failure/Price Cut

Figure 1 Decline in Annual Forecasts for

2002 – 2007 Launches Figure 2 Launch Market Prices ($/lb to GTO)
V-10

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

The EELV program is the Defense Department’s assured access solution for the foreseeable future. EELV is

designed to be more responsive and affordable than current launch vehicles. With EELV, the Air Force has

adopted a commercial launch services approach, with the contractors financing the majority of the development costs associated with the next generation launch vehicles (Atlas V and Delta IV). In 1997, at a time when

worldwide projections envisioned 70 launches per year, the Air Force decided to retain both EELV contractors

rather than selecting a single provider. The commercial satellite marketplace, it appeared, would provide adequate sustainment for the U.S. space launch industrial base, thereby justifying the large contractor investments

in EELV, and providing the DOD a more robust assured access capability for a relatively modest investment.

As indicated above, since 1997, such launch projections have deteriorated by approximately 65 percent. The

current market situation is inadequate to sustain two healthy U.S. launch providers in a globally competitive

market (See Figure 3). Therefore, in the interest of U.S. national security, it is imperative that the United States

government address this problem immediately.

Fortunately, the Department of Defense is in fact

developing an assured access program to help sustain the U.S. launch infrastructure and industrial

base, while preserving the principal tenets of the

EELV program. The key to this effort is the maintenance of two financially stable launch service

providers to keep the U.S. competitive in the global

market and provide backup for any technical or

operational problems that may be encountered

with either of the EELV systems. This effort is also

essential for preserving the technological and

industrial base needed to bring about further

improvements in the flexibility and affordability of

space launch. The Defense Department’s assured access to space initiative is the single most important nearterm element of a broader strategy for preserving U.S. competitiveness and innovation in the space launch

arena.

*Based on actual launch transactions and industry capacity analysis

20%

UnderCapacity

>50%

OverCapacity

1998

Capacity Demand

Launch Vehicles

Capacity Demand

2002

Figure 3 Launch Market Capacity/Demand
V-11

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Notes

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendices

Appendices

A. Commission Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

B. Commission Interim Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

B1 – Interim Report #1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-3

B2 – Interim Report #2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-5

B3 – Interim Report #3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-25

C. Aerospace Sector Breakout (Office of Management and Budget). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1

D. Scoping Aerospace (RAND) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1

E. U.S. Aerospace and Aviation Industry: A State-by-State Analysis (Content First). . . . . . . . . . . . . . . . . E-1

F. Federal Departments and Agencies with Aerospace Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

G. Congressional Committees with Aerospace Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G-1

H. Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-1

I. Summary of Commission Activities and Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

J. Aerospace-related Websites—Partial List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J-1

K. Acknowledgements and Commission Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . K-1
FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
A-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix A – Commission Charter

Appendix A

Commission Charter
A-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
A-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix A – Commission Charter
A-4

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
A-5

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix A – Commission Charter
A-6

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
Appendix B

Commission Interim

Reports

B1 – Interim Report #1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-3

B2 – Interim Report #2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-5

B3 – Interim Report #3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-25

B-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports

B1 – Interim Report #1
B-4

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-5

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports

B2 – Interim Report #2
B-6

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-7

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-8

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-9

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-10

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-11

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-12

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-13

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-14

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-15

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-16

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-17

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-18

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-19

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-20

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-21

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-22

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-23

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-24

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-25

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports

B3 – Interim Report #3
B-26

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-27

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-28

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-29

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-30

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-31

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-32

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-33

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-34

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-35

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-36

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-37

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-38

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-39

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-40

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-41

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-42

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-43

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-44

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-45

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-46

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
B-47

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix B – Commission Interim Reports
B-48

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
C-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix C – Aerospace Sector Breakout (Office of Management and Budget)

Appendix C

Aerospace Sector

Breakout 

Prepared by: Office of Management and Budget
C-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
D-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix D – Scoping Aerospace (RAND)

Appendix D

Scoping Aerospace 

Prepared by: RAND

Full report available at www.ita.doc.gov/aerospace/aerospacecommission
D-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Unpublished RAND research and analysis of federal aerospace 

procurements and personnel expenditures for the past ten years were

conducted in support of Aerospace Commission deliberations by 

Dr. Donna Fossum and Mr. Lawrence Painter in 2001.”
D-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix D – Scoping Aerospace (RAND)
D-4

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
D-5

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix D – Scoping Aerospace (RAND)
D-6

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
D-7

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix D – Scoping Aerospace (RAND)
D-8

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
E-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix E – U.S. Aerospace and Aviation Industry: A State-by-State Analysis (Content First)

Appendix E

U.S. Aerospace and Aviation

Industry: A State-by-State

Analysis

Prepared by: Content First

Full report available at: www.ita.doc.gov/aerospace/aerospacecommission
E-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
E-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix E – U.S. Aerospace and Aviation Industry: A State-by-State Analysis (Content First)
E-4

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
F-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix F – Federal Departments and Agencies with Aerospace Responsibilities

Appendix F

Federal Departments and

Agencies with Aerospace

Responsibilities
F-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Agencies of the Executive Office of the President • Central Intelligence Agency (e.g., communications, intelligence)

• Council of Economic Advisors

• Council on Environmental Quality

• Domestic Policy Council

• National Economic Council

• National Security Council

• Office of Management and Budget

• Office of Science and Technology Policy

– National Science & Technology Council

– President’s Advisory Council on Science & Technology

• Office of the U.S. Trade Representative

Executive Departments • Department of Agriculture (e.g., remote sensing for agricultural, rangeland and forestry resources; precision farming using GPS; positive train control for expedited shipment of crops to market) 

• Department of Commerce (e.g., weather services, trade promotion, telecommunication and information administration)

– National Oceanic and Atmospheric Administration

• Department of Defense (e.g., space support, force enhancement, space control, force applications)

– Office of the Secretary

• Defense Advanced Research Projects Agency

• Missile Defense Agency

• National Reconnaissance Office

• National Security Agency

– Joint Chiefs of Staff

• U.S. Strategic Command

– U.S. Air Force

– U.S. Army

– U.S. Marine Corps

– U.S. Navy

• Department of Education (e.g., distance learning, individualized instruction)

• Department of Energy (e.g., non-proliferation, nuclear energy, energy and material sciences, space

radiation effects on human and materials)

• Health and Human Services (e.g., distance medicine, research on new medicines and drugs)

• Housing and Urban Development (e.g., regional and urban planning)

• Department of Interior (e.g., geodetics, fish and wildlife preservation, mining reclamation and

enforcement, national park surveys)

– U.S. Geological Survey
F-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix F – Federal Departments and Agencies with Aerospace Responsibilities

• Department of Justice (e.g., law enforcement, immigration, border patrol)

• Department of Labor (e.g., aerospace apprenticeship programs)

• Department of State (e.g., international treaty and standards development, transportation of foreign

service professionals and dignitaries)

• Department of Transportation (e.g., civil air navigation, commercial space transportation, ground and

sea transportation applications, law enforcement)

– Federal Aviation Administration

– Federal Highway Administration (e.g., intelligent transportation system)

– Federal Motor Carrier Safety Administration (e.g., truck safety)

– Federal Railroad Administration (e.g., positive train control)

– Federal Transit Administration (e.g., intelligent transportation system)

– Maritime Administration (e.g., maritime commerce)

– National Highway Traffic Safety Administration (e.g., automobile safety)

– Research and Special Programs Administration (e.g. pipelines and hazardous material safety)

– Transportation Security Administration (e.g., security, law enforcement)

– U.S. Coast Guard (e.g., search and rescue, law enforcement)

• Department of Treasury (e.g., customs, secret service)

• Department of Veteran Affairs (e.g., telecommunication)

Independent Agencies • Environmental Protection Agency (e.g., environmental monitoring for developing regulations and for

enforcement) 

• Federal Emergency Management Agency (e.g., emergency response)

• General Services Administration (e.g., government aircraft services)

• NASA (e.g., space science, space transportation, aeronautics research and development)

• National Science Foundation (e.g., aerospace-related research)

• Tennessee Valley Authority (e.g., flood control, river way management, environmental research,

forestry and wildlife management)

G-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix G – Congressional Committees with Aerospace Responsibilities

Appendix G

Congressional Committees with

Aerospace Responsibilities
G-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Full Committees of the Senate

Appropriations

Armed Services • Aeronautical and space activities peculiar to development of weapon systems or military operations

• Departments of the Army, Navy, Air Force

• Military Research and Development

Banking, Housing, and Urban Affairs

• Economic stabilization and defense production

• Export and Foreign Trade

• Export Controls

• Financial aid to commerce and industry

• Renegotiation of government contracts

Budget

Commerce, Science and Transportation • Interstate commerce

• Non-military aeronautical and space sciences

• Oceans, weather and atmospheric activities

• Regulation of interstate common carriers, including civil aviation

• Science, Engineering, Technology research, development, and policy

• Transportation

Energy and Natural Resources • Energy research and development

• Nuclear energy

• Solar energy

Environment and Public Works • Air pollution

• Noise pollution

• Regional Economic Development

Finance • Customs and ports of entry

• Reciprocal trade agreements

• Tariffs and import quotas

• Transportation of dutiable goods

Foreign Relations • Measures to foster commercial intercourse with foreign nations and to safeguard American business

interests abroad
G-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix G – Congressional Committees with Aerospace Responsibilities

Governmental Affairs

• Census and collection of statistics, including economic statistics

• Intergovernmental relations

• Organization of the Executive Branch

• Government efficiency, economy, effectiveness

• Relationships between the US, states, and municipalities

Health, Education and Labor

• Measures relating to education and labor

• Labor standards and statistics

• Labor disputes

• Pension plans

• Student loans

Judiciary

• Patents, trademarks and copyrights

• Protection of trade and commerce against unlawful restraint and monopolies

Small Business and Entrepreneurship

Select Committees of the Senate

Intelligence

Full Committees of the House of Representatives

Appropriations

Armed Services • Army, Navy, Air Force generally

• Intelligence related activities of DoD

• Scientific research and development pertaining to the military

Budget

Energy and Commerce • Interstate and foreign commerce

• Energy generally

• Travel and tourism

Education and the Workforce

• Labor

• Education 

• Mediation of disputes
G-4

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Financial Services

• Economic stabilization and defense production

• Financial aid to commerce and industry [other than transportation]

Government Reform • Government management and accounting generally

• Economy and efficiency of government

• Transportation of mail

• Public information and records

• Organization of the Executive Branch

International Relations

• Export controls and trading with the enemy

• Commercial intercourse abroad and safeguarding American business interests abroad

• International economic policy

Judiciary • Patents, trademarks and copyrights

• Protection of trade and commerce against unlawful restraints and monopolies

Science • Energy research

• Astronautical research and development, including resources, personnel, equipment, and facilities;

Outer space exploration and control

• Civil aviation research and development

• Environmental research and development

• NASA

• National Space Council

• National Science Foundation

• National Weather Service

• Science scholarships

• Scientific research and development, demonstrations and projects

Small Business

Transportation and Infrastructure • Public works in support of navigation

• Transportation, including civil aviation, safety and infrastructure

• Transportation regulatory agencies

Ways and Means

• Customs and ports of entry

• Reciprocal trade agreements

• Transportation of dutiable goods
H-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix H – Acronyms

Appendix H

Acronyms
H-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

ATA Air Transport Association

AIR-21 Aviation Investment and Reform Act

for the 21st Century

ADS-B Automatic Dependent SurveillanceBroadcast

AFB Air Force Base

ASCM Agreement on Subsidies and

Countervailing Measures

ATC Air Traffic Control

ATM Air Traffic Management

ATOS Air Transportation Oversight System

CBO Congressional Budget Office

CCAFS Cape Canaveral Air Force Station

CIS Commonwealth of Independent States

CNS Communications, Navigation and

Surveillance

COCOM Coordinating Committee of NATO

CPFF Cost Plus Fixed Fee

CRV Current Replacement Value

DARPA Defense Advanced Research Projects

Agency

dB Decibel

DELG Defense Export Loan Guarantee

DISC Domestic International Sales

Corporation

DNL Day-Night Level

DoD U.S. Department of Defense

DOE U.S. Department of Energy

DOT U.S. Department of Transportation

DSB Defense Science Board

DSR Display System Replacement

DWCF Defense Working Capital Fund

EADS European Aeronautic Defense and

Space Company

EC European Commission

ECA Export Credit Agency

EELV Evolved Expendable Launch Vehicle

ELV Expendable Launch Vehicle

EPA Environmental Protection Agency

ETI Extra Territorial Income

EU European Union

Ex-Im Bank Export-Import Bank

FAA Federal Aviation Administration

FAR Federal Aviation Regulations

Federal Accounting Regulations

Federal Acquisition Regulations

FMS Foreign Military Sales

FP Framework Program

FSC Foreign Sales Corporation

FTM Freight and Express Ton Miles

FY Fiscal Year

FYDP Future Year Defense Program

GAO Government Accounting Office

GATT General Agreement on Tariffs and

Trade

GDP Gross Domestic Product

GPRA Government Performance and Results

Act

GPS Global Positioning System

GSA General Services Administration

HPCC High Performance Computing and

Communications

IAM International Association of

Machinists

ICAO International Civil Aviation

Organization

ICGS International Coast Guard System

INAS International Airspace System

IR&D Independent Research and

Development

IRS Internal Revenue Service

ISS International Space Station

ISSA Inter-Service Support Agreement

ITAR International Traffic in Arms

Regulations

JSF Joint Strike Fighter
H-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix H – Acronyms

JTIDS Joint Tactical Information

Distribution System

K-12 Kindergarten through Twelfth Grade

KSC Kennedy Space Center

LCA Large Civil Aircraft

LEO Low Earth Orbit

LOI Letter of Intent

MEO Medium Earth Orbit

NAI National Aerospace Initiative

NATO North Atlantic Treaty Organization

NASA National Aeronautics and Space

Administration

NEO Near-Earth Object

NFTC National Foreign Trade Council

NOAA National Oceanic and Atmospheric

Administration

NOx Nitrogen Oxide

NSC National Security Council

NSF National Science Foundation

O&S Operations and Support

OECD Organization for Economic

Cooperation and Development

OEP Operational Evolution Plan

OMB Office of Management and Budget

OSTP Office of Science and Technology

Policy

PCC Policy Coordinating Counsel

PFC Passenger Facility Charge

P.L. Public Law

POC Percent of Completion

PPBS Planning, Programming and

Budgeting System

QRE Qualified Research Expenditure

R&D Research and Development

R&D Research and Experimentation

RDT&E Research, Development, Test and

Evaluation

RLV Reusable Launch Vehicle

RNP Required Navigation Performance

RPM Revenue Passenger Miles

S&T Science and Technology

SLI Space Launch Initiative

SSAs Special Security Agreements

S&P Standard and Poors

STARS Standard Terminal Automation

Replacement System

UK United Kingdom

UN United Nations

U.S. United States

USAF U.S. Air Force

USC U.S. Code

USML U.S. Munitions List

VAATE Versatile, Affordable, Advanced

Turbine Engine Program

VAT Value-Added Tax

WTO World Trade Organization

Airport Acronyms

ATL Hartsfield Atlanta International

Airport

BWI Baltimore-Washington International

Airport

CLT Charlotte/Douglas International

Airport

DEN Denver International Airport

DFW Dallas-Ft. Worth International

Airport

DTW Detroit Metropolitan Wayne County

Airport

EWR Newark International Airport

IAD Washington Dulles International

Airport

JFK New York John F. Kennedy

International Airport

LAS Las Vegas McCarran International

Airport

LAX Los Angeles International Airport
H-4

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

LGA New York LaGuardia Airport

MEM Memphis International Airport

MSP Minneapolis-St. Paul International

Airport

ORD Chicago O’Hare International Airport

PHL Philadelphia International Airport

PHX Phoenix Sky Harbor International

Airport

PIT Greater Pittsburgh International

Airport

SEA Seattle-Tacoma International Airport

SFO San Francisco International Airport

SLC Salt lake City International Airport

STL Lambert St. Louis International

Airport
I-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix I – Summary of Commission Activities and Contracts

Appendix I

Summary of Commission

Activities and Contacts
I-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

During the period from September 2001 through November 2002, the Commission: held six (6) public

hearings and nine (9) administrative/preparatory meetings; conducted fact-finding trips to the Kennedy

Space Center and Cape Canaveral Air Force Station, various U.S. aerospace companies, Europe, and Asia;

received informational briefings and issue papers from over 100 companies, government organizations, and

aerospace interest groups; heard testimony from over 60 witnesses; met with over 50 government and industry organizations from seven (7) foreign countries; briefed over 45 groups on Commission activities and

progress; and had over 150,000 “hits” on the Commission’s website. Based on the extensive inputs received

from these activities and contacts, the Commission issued three (3) Interim Reports and its Final Report to

the President and the Congress. A listing of these contacts is provided, by category, below:

I. INFORMATIONAL BRIEFINGS/DISCUSSIONS/MEETINGS IN THE U.S.

A. U.S. Aerospace Industry and Financial Organizations

Aerospace Corporation Analytical Graphics International

The Boeing Company Cessna

Credit Suisse First Boston Eclipse Aviation

General Electric Company Honeywell

Kistler Aerospace Corporation Lockheed Martin Corporation

Microcosm Morgan Stanley

Northrop Grumman Orbital Science Corporation

Raytheon Rolls-Royce North America

Spectrum Astro The Teal Group

TRW Vought

United Technologies Corporation 

B. Federal and State Government Organizations

California Space Authority

Central Intelligence Agency (CIA)

Department of Commerce (DOC)

Department of Defense (DoD)

– Acquisition Reform

– Ballistic Missile Defense Organization (BMDO)

– Defense Advanced Research Projects Agency (DARPA)

– Defense Intelligence Agency (DIA)

– Defense Science Board (DSB)

– Defense Technology Security Agency (DTSA)

– Director, Defense Research and Engineering (DDR&E)

– Industrial Affairs

– Joint Aeronautical Commanders Group (JACG)

– Joint Strike Fighter (JSF) Program Office

– National Reconnaissance Office (NRO)
I-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix I – Summary of Commission Activities and Contracts

– National Security Space Architect (NSSA)

– Office of Net Assessment

– Operational Test and Evaluation (OT&E)

– U.S. Army

– U.S. Navy

– U.S. Air Force

Department of State (DOS)

Federal Aviation Administration (FAA)

National Aeronautics and Space Administration (NASA)

National Oceanic and Atmospheric Administration (NOAA)

National Research Council (NRC) Aerospace Roundtable

Office of Management and Budget (OMB) (the White House)

Spaceport Florida Authority

Texas Aerospace Commission

U.S. Congress

– House of Representatives Members/Staffs

– Senate Members/Staffs

C. Foreign Governments And Industry

Airbus Industries

Arianespace

CNES (French Space Agency)

European Aerospace Defense Systems (EADS)

European Commission

French Embassy

International Civil Aviation Organization (ICAO)

NAV Canada

UK Ministry of Defence

D. Labor And Industry Organizations

Aerospace Industries Association (AIA)

Advisory Group on Electronic Devices (AGED)

Aircraft Electronics Association

Aircraft Owners and Pilots Association (AOPA)

Air Transportation Association (ATA)

General Aviation Manufacturers Association (GAMA)

International Association of Machinists and Aerospace Workers (IAM&AW)

National Air Transportation Association (NATA)

National Business Aircraft Association (NBAA)
I-4

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

National Center for Advanced Technologies (NCAT)

National Defense Industry Association (NDIA)

National Science Teachers Association (NSTA)

Radio Technical Commission for Aeronautics, Inc. (RTCA)

Space Transportation Association (STA)

Space Foundation

E. Academia

George Mason University

Industrial College of the Armed Forces (IDAF)/National Defense University (NDU)

Massachusetts Institute of Technology (MIT)

F. The Media

Aviation Week

Defense News

Space News

G. Professional Societies

American Helicopter Society (AHS)

American Institute of Aeronautics and Astronautics (AIAA)

American Society of Mechanical Engineers (ASME)

Society of Automotive Engineers (SAE)

H. Others

Booz-Allen & Hamilton

Centennial of Flight Commission

Content First

Center for Strategic & International Studies (CSIS)

Institute for Creative Technologies

Institute for Defense Analyses (IDA)

Jet Propulsion Laboratory (JPL)

JSA Associates

Lunar Exploration, Inc

NASA Aero Support Team

Eric Newsom

Jim Oberg

Rand Corporation

Science Applications International Corporation (SAIC)
I-5

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix I – Summary of Commission Activities and Contracts

Synthesis Partners

Team Vision Corporation

Will Trafton

CEF Mission Aerospace

II. INTERNATIONAL BRIEFINGS/DISCUSSIONS/MEETINGS ABROAD

A Belgium

European Commission

Euro-Control

Foreign NATO Representatives

U.S. Ambassador to NATO

B. China

American Chamber of Commerce Aerospace Forum

Aviation Industry Corporation I

Aviation Industry Corporation II

Civil Aviation Administration of China

China National Aero-Technology Import and Export Corporation

Commission on Science and Technology for National Defense

U.S. Embassy

C. France

Arianespace

Centre National d’Etudes Spatiales (CNES)

European Aerospace Defense Systems (EADS)

European Space Agency (ESA)

French Transport Minister

Groupement Des Industries Francaises Aeronautiques et Spatiales (GIFAS)

U.S. Embassy

D. Japan

American Chamber of Commerce in Japan

Council for Science and Technology Policy

Japanese Association of Defense Industries

Japanese Defense Agency

Ministry of Economy, Trade and Industry

Ministry of Education, Culture, Sports, Science and Technology

Ministry of Land, Infrastructure and Transport
I-6

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Ministry of Public Management, Home Affairs, Posts and Telecommunications

Space Activities Commission

Society of Japanese Aerospace Companies

Technical Research & Development Institute

U.S. Embassy

E. Russia

American Chamber of Commerce in Russia

Aviation and Space Agency (Rosaviakosmos)

Boeing Engineering Design Center

Khrunichev Research and Production Center

National Investment Council (NIC)

Star City Astronaut Training Center

U.S. Embassy

F. United Kingdom

BAE Systems

Civil Aviation Authority

Defense Procurement Agency

Department of Transport

The Economist Technology/Defense Writers

European Association of Aerospace Industries

Foreign Office (Aviation Section)

National Air Traffic Services (NATS)

Treasury Office (Defense, Diplomacy and Intelligence)

U.S. Embassy

III. PUBLIC TESTIMONY

A. Public Hearing November 27, 2001

1. Administration Testimony

Dr. John H. Marburger, III, Director, OSTP, Executive Office of the President

2. Congressional Testimony 

The Honorable Dave Weldon (R-FL) 

3. Executive Branch Testimony

Joseph Bogosian, Deputy Assistant Secretary (Transportation and Machinery),

Commerce Department

Ralph Braibanti, Director, Office of Space and Advanced Technology,

State Department
I-7

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix I – Summary of Commission Activities and Contracts

The Honorable Edward C. “Pete” Aldridge, Jr., Under Secretary of Defense

(Acquisition Technology & Logistics), Department of Defense

Samuel L. Venneri, Associate Administrator, Office of Aerospace Technology, NASA 

Steven Zaidman, Associate Administrator for Research and Acquisitions, FAA

B. Public Hearing February 12, 2002

1. Air Transportation Capacity/Infrastructure Discussions

Mr. Charles Keegan, Operational Evolution Plan Program Manager, FAA

Mr. Charles Barclay, Executive Director, American Association of Airport Executives

Dr. Linton Wells, Principal Deputy to the Assistant Secretary of Defense

(Command, Control, Communications and Intelligence)

Mr. Vern Raburn, President, Eclipse Aviation

Mr. John Hayhurst, President, Boeing ATM

2. Export Control Discussions

Government

Matthew Borman, Deputy Assistant Secretary (Export Administration), Commerce Department

Gregory Suchan, Principal Deputy Assistant Secretary (Political-Military Affairs), 

State Department

Lisa Bronson, Deputy Under Secretary (Defense for Technology Security Policy and Counter 

Proliferation), DoD

Industry

LGEN (ret.) Larry Farrell, President & CEO, NDIA

Hon. David McCurdy, President, Electronic Industries Alliance

Robert Bauerlein, Chairman, International Council, AIA

C. Public Hearing May 14, 2002

1. Space Discussions

The Hon. Sean O’Keefe (NASA)

The Hon. Peter Teets (Under Secretary of the Air Force-NRO)

GEN Ed Eberhart, USAF, CINCSPACECOM

The Hon. Ron Sega (DoD/DDR&E)

GEN (ret.) Tom Moorman, Space Industrial Base

The Hon. Bill Nelson (D-FL) 

2. Space Vision for 2050

Mr. W. David Thompson, President & CEO, Spectrum Astro

Dr. Wesley Huntress, Director, Geophysical Laboratory, Carnegie Institute of Washington 

The Hon. Tidal McCoy, Chairman of the Board, Space Transportation Association

Mr. Martin P. Kress, Chair, Public Policy Committee, AIAA
I-8

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Ms. Lori Garver, President, American Astronautical Society

Dr. John Lewis, Professor of Planetary Science, University of Arizona 

3. Industrial Base Discussions

The Hon. Norm Dicks (D-WA)

Jeff Foote, President, ATK Aerospace

Dain Hancock, President, Lockheed Martin Aerospace Co

Jerry Daniels, President & CEO, Military Aircraft & Missile Systems, Boeing

4. 21st Century Aerospace Workforce Discussions 

Labor Panel

Dr. Jeff Faux, Economic Policy Institute 

Dr. Tom Kochan, MIT/Sloan School of Management 

Government Panel

Dr. John Bailey, Director of Education Technology, Department of Education

Emily DeRocco, Assistant Secretary for Employment and Training Administration, 

Department of Labor 

GEN (ret.) Sam Armstrong, NASA 

Educators Panel

Dr. Bernard Grossman, Exec. Dir., Aerospace Department Chairman’s Association

Dr. Albert Koller, Exec. Dir., Aerospace Programs at Brevard Community College

Dr. Abe Nisanci, Program Director for Engineering, Division of Undergraduate Education, 

National Science Foundation 

Student Panel

Ms. Sandra Goins, Apprentice, Seattle, WA

Mr. Denny Reyes, Aviation High School, New York

Ms. Annalisa Weigel (Ph.D. Candidate, Aerospace Engineering), MIT 

D. Public Hearing August 22, 2002

1. Aviation (Airlines, Pilots, Controllers) Discussions

Duane Woerth, President, Airline Pilots Association

John Olcott, President, National Business Aircraft Association 

John Carr, President, National Air Traffic Controllers

Mac Armstrong, Executive VP, Air Transportation Assoc. of America 

2. Aeronautics and Space Engineering Board (National Academy of Science)

GEN (ret.) Ronald R. Fogleman, Chairman, Committee on Aeronautics Research and

Technology 

3. Suppliers Discussions

Ms. Judy Northup, Vice President, Vought Aircraft Industries

Mr. Mike Grosso, CEO, DynaBil Industries

Mr. Joe Murphy, Chairman of the Board, Ferco Tech Corporation
I-9

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix I – Summary of Commission Activities and Contracts

Mr. Peter Rettaliata, President, Air Industries Machining Corp. 

4. Space/Planetary Discussions

Thomas F. Rogers, Chairman, The Sophron Foundation 

BGEN Simon “Pete” Worden, Deputy Director of Operations, US Space Command 

5. RDT&E Infrastructure Discussions

David Swain, Senior VP of Engineering and Chief Technology Officer, Boeing 

Philip Coyle, former Director, Operational Test & Evaluation, DoD 

James Beggs, former NASA Administrator 

Thomas Christie, Director, Operational Test & Evaluation, DoD

General Lester L. Lyles, Commander, Air Force Materiel Command

IV. BRIEFINGS BY COMMISSIONERS AND STAFF

A. Federal/State Government

Air Force Aeronautical Systems Center Corporate Board

AST Forecast Conference

DOC Aerospace Industry Sector Advisory Committee

FAA Commercial Space Transportation Conference

National Academies Space Studies Board

National Academies Air and Space Engineering Board

National Security Council

NAASC Air Surveillance Data Sharing Working Group

NASA Administrator Sean O’Keefe 

NASA Project Management Shared Experience Program 

NRO/AIAA Forum

Ohio Aerospace and Defense Advisory Council

PEO/Systems Command Commanders’ Conference

Small Payload Rideshare Conference

Transportation Research Board/FAA Forecasting Workshop

Tri-Service Turbine Engine Technology Symposium

U.S. Space Command

U.S. Congress (Members and Staff)

Vice President Richard Cheney

White House Office of Science & Technology Policy (Dr. Marburger)

White House Staff

B. Labor/Industry Organizations

AIA Annual Fall Conference (Commission Panel)

AIA Compensation Practices Committee
I-10

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

AIA Communications Council

AIA Space Council

AIA Annual Spring Conference (Commission Panel)

IAM&AW

Space Foundation (Commission Panel)

C. Professional Groups/Societies

AHS Chapter Meeting

AIAA Aerospace Sciences Meeting Fast-Track Tutorial

AIAA Congressional Visits Day

AIAA Global Air & Space 2002 Symposium

AIAA Speakers Day

Air Traffic Controllers Association Conference

ASME International Workshop

ASME Inter-Council Committee on Federal R&D

California Space Authority 

International Space University 7th Annual Symposium

International Space Group

Maryland Space Business Roundtable

National Space Club – Florida Chapter

National Space Society Governors Meeting

Small Launch Vehicle Consortium

Society of Satellite Professionals International Meeting

Space Foundation Symposia

Space Transportation Association

U.S. Chamber Workshop (Market Opportunities in Space: The Near-Term Roadmap)

U.S. Chamber Space Enterprise Council

Washington Space Business Roundtable

Western Ohio Senior Executives Association

Women and Aerospace Symposium 

D. U.S. Industry

Aerospace Corporation

SAIC Managers Meeting

Schafer Corporation Innovations in Space Symposium 
I-11

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix I – Summary of Commission Activities and Contracts

E. The Media

Atlantic Monthly

Aviation News Today (TV Show)Business Week

Flight Daily International

IEEE USA Policy Perspectives

McGraw-Hill Editorial Board

Newsweek

Popular Science

St. Louis Post-Dispatch

USA Today

Washington Post

F. Academia 

MIT
I-12

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission
J-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix J – Aerospace-related Websites—Partial List

Appendix J

Aerospace-related

Websites—Partial List

Academia

U.S. Colleges & Universities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J-2

Foreign Colleges & Universities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J-4

The National Academies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J-5

Air Carriers and Airports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J-6

Associations & Societies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J-6

Directories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J-8

Foreign Governments, Agencies & Multinational Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J-9

News and Print Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J-10

U.S. Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J-10

U.S. Government

Agencies of the Executive Office of the President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J-14

Executive Branch Departments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J-14

Executive Branch Independent Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J-19

Congress. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J-19

State Government. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J-21
J-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Academia Website Addresses

U.S. Colleges & Universities

Arizona State University – 

College of Engineering & Applied Science http://www.eas.asu.edu

Auburn University – 

Department of Aerospace Engineering http://www.eng.auburn.edu/aero

Brown University – Center for Fluid Mechanics, 

Turbulence and Computation http://www.cfm.brown.edu/

California Institute of Technology http://www.caltech.edu

California Institute of Technology – 

Graduate Aeronautical Laboratories http://www.galcit.caltech.edu

California State Polytechnic University, Pomona – 

Aerospace Engineering http://www.aro.csupomona.edu

Case Western Reserve University – Department of 

Mechanical & Aerospace Engineering http://mae1.cwru.edu/mae/

Columbia University – School of Engineering 

and Applied Sciences http://www.columbia.edu/cu/mechanical

Cornell University – Sibley School of Mechanical 

& Aerospace Engineering http://www.mae.cornell.edu

Embry-Riddle (Arizona) http://www.pr.erau.edu/

Embry-Riddle (Florida) http://www.db.erau.edu

Florida Institute of Technology – Division of 

Engineering Sciences http://www.fit.edu/AcadRes/engsci/

George Mason University http://www.gmu.edu

Georgia Institute of Technology – School of 

Aerospace Engineering http://www.ae.gatech.edu

Harvard University – Division of Engineering & 

Applied Sciences http://www.deas.harvard.edu

Iowa State University – Department of Aerospace 

Engineering and Engineering Mechanics http://www.aeem.iastate.edu

John Hopkins University – School of Engineering http://www.wse.jhu.edu

Lansing Community College – Aviation Center http://alpha.lansing.cc.mi.us/~whitehead/avmaint.html

Louisiana Tech – Department of Professional 

Aviation http://www.aviation.latech.edu/

Massachusetts Institute of Technology – 

Department of Aeronautics and Astronautics http://web.mit.edu/aeroastro/www/

Massachusetts Institute of Technology – 

School of Engineering http://web.mit.edu/engineering/

Mississippi State University – 

Engineering Research Center http://www.erc.msstate.edu

North Carolina State University – 

Mechanical & Aerospace Engineering http://www.mae.ncsu.edu
J-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix J – Aerospace-related Websites—Partial List

Ohio State University – Department of Aerospace 

Engineering & Aviation http://www.aerospace.ohio-state.edu/

Old Dominion University – College of 

Engineering & Technology http://www.odu.edu

Penn State University – Aerospace Engineering http://www.aero.psu.edu

Polytechnic University – Department of 

Mechanical Engineering http://media.poly.edu/mechanical/page/template/

HomeBody.cfm

Princeton University – 

Mechanical & Aerospace Engineering http://www.princeton.edu

Purdue University – School of Aeronautical and 

Astronautical Engineering http://roger.ecn.purdue.edu/AAE/

San Diego State University – Department of 

Aerospace Engineering http://www.engineering.sdsu.edu/aerospace

San Jose State University – 

College of Engineering http://www.engr.sjsu.edu/

Stanford University- Department of Aeronautics 

and Astronautics http://aa.stanford.edu

State University of New York – Farmingdale http://www.farmingdale.edu

Texas A&M University – Department of 

Engineering http://aggieengineer.tamu.edu/

United States Naval Academy http://www.usna.navy.mil

United States Air Force Academy http://www.usafa.af.mil

University of Akron – School of Engineering http://www.ecgf.uakron.edu

University of Alabama – 

Aerospace Engineering & Mechanics http://aem.eng.ua.edu/

University of Alaska, Anchorage – 

Aviation Technology Division http://www.uaa.alaska.edu/aviation/

University of Arizona – Department of Aerospace 

& Mechanical Engineering http://www.ame.arizona.edu

University of California, Berkeley – 

Mechanical Engineering http://www.me.berkeley.edu

University of California, Irvine – 

Henry Samueli School of Engineering http://mae.eng.uci.edu

University of California, San Diego – 

Department of Mechanical & 

Aerospace Engineering http://maeweb.ucsd.edu/index.html

University of Cincinnati – 

Aerospace Engineering & Engineering 

Mechanics http://www.ase.uc.edu

University of Colorado at Boulder – 

Aerospace Engineering Sciences http://aerospace.colorado.edu
J-4

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

University of Illinois (Urbana-Champaign) – 

Dept. of Aeronautical & Astronautical 

Engineering http://www.aae.uiuc.edu

University of Kansas – School of Engineering http://www.engr.ku.edu

University of Maryland – 

Department of Aerospace Engineering http://www.enae.umd.edu

University of Michigan – College of Engineering http://www.engin.umich.edu

University of Minnesota – Department of 

Aerospace Engineering & Mechanics http://www.aem.umn.edu

University of Missouri-Rolla – Mechanical & 

Aerospace Engineering and Engineering 

Mechanics http://web.umr.edu/~maeem/

University of North Dakota – 

School of Aerospace Sciences http://www.aero.und.edu/

University of Notre Dame – 

Aerospace and Mechanical Engineering http://www.nd.edu

University of Southern California – Department 

of Aerospace & Mechanical Engineering http://ae-www.usc.edu/

University of Texas – Aerospace Engineering & 

Engineering Mechanics http://www.ae.utexas.edu

University of Texas, Arlington – Department of 

Mechanical & Aerospace Engineering http://www-mae.uta.edu

University of Washington – Department of 

Aeronautics and Astronautics http://www.aa.washington.edu

Virginia Tech – Department of Aerospace and 

Ocean Engineering http://www.aoe.vt.edu/

Wichita State University – Department of 

Aerospace Engineering http://www.engr.twsu.edu/ae

Foreign Colleges & Universities

Australia – Royal Melbourne Institute of 

Technology – Department of Aerospace 

Engineering http://www.aero.rmit.edu.au

Australia – University of New South Wales – 

School of Mechanical & Manufacturing 

Engineering http://www.eng.unsw.edu.au/research/schools/mech.htm

Australia – University of Queensland – 

Department of Mechanical Engineering htpp://www.uq.edu.au/mecheng/

Australia – University of Sydney – Aerospace, 

Mechanical & Mechatronic Engineering http://www.ae.su.oz.au

Belgium – Katholieke Universiteit Leuven http://www.mech.kuleuven.ac.be/default_en.phtml

Belgium – Universite de Liege – 

Aerodynamics Group http://www.ulg.ac.be/aerodyn/
J-5

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix J – Aerospace-related Websites—Partial List

Canada – Carleton University – Department of 

Mechanical & Aerospace Engineering http://www.mae.carleton.ca

Canada – Ryerson University http://www.ryerson.ca

Canada – University of Toronto – 

Institute for Aerospace Studies http://www.utias.utoronto.ca

Finland – Helsinki University of Technology – 

Aeronautical Engineering http://www.aeronautics.hut.fi/

France – ENSICA http://www.ensica.fr/index2fr.htm

France – International Space University http://www.isunet.edu

France – SUPAERO http://www.supaero.fr/

Germany – Institut fur Luft- und Raumfahr http://keynes.fb12.tu-berlin.de

Germany – University of Stuttgart – 

Institute for Statics & Dynamics http://www.isd.uni-stuttgart.de/

Japan – Civil Aviation College http://www.kouku-dai.ac.jp/

Japan – Tokyo Metropolitan College of 

Aeronautical Engineering http://www.kouku-k.ac.jp/index_e.html

Netherlands – Delft University of Technology – 

Aerospace Engineering http://www.delftaerospace.com

Sweden – Chalmers University – 

Department of Thermo & Fluid Dynamics http://www.tfd.chalmers.se/

Sweden – Lulea University of Technology – 

Division of Fluid Mechanics http://www.luth.se/depts/mt/strl/

Sweden – Royal Institute of Technology – 

Department of Aeronautics http://www.flyg.kth.se/

Turkey – Middle East Technical University http://www.metu.edu.tr/

UK – Bristol University – Department of 

Aerospace Engineering http://www.aer.bris.ac.uk/

UK – Cambridge University – 

Department of Engineering http://www.eng.cam.ac.uk

UK – Cranfield University – 

Computational Fluid Dynamics http://www.cranfield.ac.uk/sme/cfd/

UK – Imperial College of Science, 

Technology, and Medicine – 

Department of Aeronautics http://www.ae.ic.ac.uk/

UK – Loughborough University – Department of 

Aeronautical and Automotive Engineering http://info.lut.ac.uk/departments/tt/index.html

UK – University of Glasgow – 

Department of Aerospace Engineering http://www.aero.gla.ac.uk/

The National Academies

Aeronautics and Space Engineering Board http://www7.nationalacademies.org/aseb/

National Academy of Engineering http://www.nae.edu/
J-6

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

National Academy of Sciences http://www4.nationalacademies.org/nas/nashome.nsf

National Research Council http://www.nas.edu/nrc/

Space Studies Board http://www.nas.edu/ssb/ssb.html

Transportation Research Board http://www.nas.edu/trb/

Air Carriers and Airports Website Address

Air Carriers & Airports – Aerolink Directory http://www.aerolink.com/catairports.html

Associations & Societies Website Addresses

Aeronautical Repair Station Association http://www.arsa.org/

Aerospace Department Chairman's Association http://www.princeton.edu/~asmits/ADCA/adca.html

Aerospace Industries Association of America http://www.aia-aerospace.org/

Aerospace Industries Association of Canada http://www.aiac.ca/

Air Force Association http://www.afa.org/

Air Line Pilots Association https://www.alpa.org/home/index.html

Air Traffic Control Association http://www.atca.org/

Air Transport Association http://www.air-transport.org

Aircraft Electronics Association http://www.aea.net/

Aircraft Owners and Pilots Association http://www.aopa.org/

Airline Dispatchers Federation http://www.dispatcher.org/

Airports Council International http://www.aci-na.org

American Association for the 

Advancement of Science http://www.aaas.org/

American Association of Airport Executives http://www.airportnet.org/Index.htm

American Astronautical Society http://www.astronautical.org/

American Bar Association http://www.abanet.org/scitech/home.html

American Helicopter Society, International http://www.vtol.org/

American Institute of Aeronautics and 

Astronautics http://www.aiaa.org/

American Museum of Natural History – 

Rose Center for Earth & Space http://www.amnh.org/rose

American Society of Mechanical Engineers, 

International http://www.asme.org/offices.shtml

American Society of Travel Agents http://www.astanet.com/

Army Aviation Association of America http://www.quad-a.org/

Association for Women in Aviation Maintenance http://www.awam.org/

Aviation Distributors and Manufacturers 

Association http://www.adma.org/

Business Executives for National Security http://www.bens.org/
J-7

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix J – Aerospace-related Websites—Partial List

Canadian Aeronautics and Space Institute http://www.casi.ca/

Electronic Industries Alliance http://www.eia.org

European Association of Aerospace Industries 

(AECMA) http://www.aecma.org

FAA Council of African American Employees http://www.faa.gov/acr/cae.htm

FAA National Coalition of Federal Aviation 

Employees with Disabilities http://www.faa.gov/acr/ncfaed.htm

FAA National Native American/Alaska Native 

Coalition of Federal Aviation Employees http://www.faa.gov/acr/naan.htm

FAA Technical Women's Organization http://two.faa.gov

Federal Managers Association http://www.fedmanagers.org/

Federation of American Scientists http://www.fas.org/

Flight Safety Foundation http://www.flightsafety.org/home.html

General Aviation Manufacturers Association http://www.generalaviation.org/main.shtml

Helicopter Association International http://www.rotor.com/

Institute of Electrical and Electronics Engineers http://www.ieee.org/

International Air Transport Association http://www.iata.org

International Association of Machinists and 

Aerospace Workers http://www.iamaw.org

International Civil Aviation Organization (ICAO) http://www.icao.org

International Council of Aircraft Owner and 

Pilot Association http://www.iaopa.org/

International Council of the Aeronautical Sciences http://www.icas.org

International Society of Women Airline Pilots http://www.iswap.org/

National Aeronautic Association http://www.naa-usa.org/website/

National Agricultural Aviation Association http://www.agaviation.org/

National Air Traffic Controllers Association http://www.natcadc.org/

National Air Transportation Association http://www.nata-online.org/

National Association of Air Traffic Specialists http://www.naats.org/

National Association of Flight Instructors http://www.nafinet.org/who/contactus.html

National Association of State Aviation Officials http://www.nasao.org

National Business Aviation Association http://www.nbaa.org/

National Center for Advanced Technologies http://www.ncat.com

National Council for Science and the Environment http://www.cnie.org/NLE/

National Defense Industrial Association http://www.adpa.org/

National Education Association http://www.nea.org/

National Hispanic Coalition of Federal Aviation 

Employees http://www.nhcfae.com/

National Science Teachers Association http://www.nsta.org/

Navy League of the United States http://www.navyleague.org/index_flash.php
J-8

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Professional Airways Systems Specialists http://www.passnational.org

Professional Women Controllers, Inc. http://www.pwcinc.org

Radio Technical Commission for Aeronautics http://www.rtca.org/

Regional Airline Association http://www.raa.org/

Royal Aeronautical Society http://www.raes.org.uk/

Smithsonian Institution – National Air & Space 

Museum http://www.nasm.si.edu/

Society of Airway Pioneers http://www.airwaypioneers.com/

Society of Automotive Engineers, International http://www.sae.org/servlets/index

Society of Women Engineers http://www.swe.org/

Space Foundatioon http://www.spaceconnection.org

Space Frontier Foundation http://www.space-frontier.org

Space Transporation Association http://www.spacetransportation.org

Women in Aviation http://www.womeninaviation.com

World Air Sports Federation (Federation 

Aeronautique International) http://www.fai.org

Directories Website Addresses

AERADE Aerospace and Defense Resources http://www.aerade.cranfield.ac.uk

Aero Images Military Library http://www.aeroimages.com/imagmili.htm

Aerolink – the Internet's Commercial Aviation 

Directory http://www.aerolink.com

Aeroseek – Aviation Search Engine http://www.aeroseek.com

Astronomical Pictures & Animation http://graffiti.u-bordeaux.fr/MAPBX/roussel/astro.html

Astronomy.com http://www.astronomy.com

Aviation Image Archives http://www.landings.com/_landings/pages/images.html

Dictionary of Technical Terms http://roland.lerc.nasa.gov/~dglover/dictionary//

content.html

Embry Riddle Virtual Libraries http://www.erau.edu/libraries/virtual/Aerospace/

Federal Agencies Directory http://www.lib.lsu.edu/gov/fedgov

Gateway to U.S. Government Science & 

Technology Websites http://www.scitech.gov

Great Aviation Quotes http://www.skygod.com/quotes/index.html

International Aviation Directory http://www.infomart.net/av/

Internet Aerospace Links http://www.alumni.caltech.edu/~padam/htmls/

AeroLinks.html

Jane's Information Group http://www.janes.com

Landings Pages database http://www.landings.com

Library of Congress http://lcweb.loc.gov

Russian Space Science Internet http://www.rssi.ru/
J-9

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix J – Aerospace-related Websites—Partial List

Science, Technology & Engineering – 

Kennedy Space Center http://ftp.ksc.nasa.gov

Space Jobs, Inc. http://www.spacejobs.com

U.S. Space Walk of Fame http://www.spacewalkoffame.com

WWW Virtual Library of Logistics http://www.logisticsworld.com/logistics

Foreign Governments, Agencies, and 

Multinational Organizations Website Addresses

Aeronautics for Europe http://europa.eu.int/comm/research/growth/

aeronautics/en

Australia – Defense Science & 

Technology Organization http://www.dsto.defence.gov.au/

Belgium – Office of Scientific, Technical and 

Cultural Affairs http://www.belspo.be

Brasil National Institute for Space Research http://www.inpe.br/english

Canadian Herzberg Institute of Astrophysics http://cadcwww.dao.nrc.ca

Canadian Space Agency http://www.space.gc.ca/

China National Space Administration http://www.cnsa.gov.cn

CNES – Centre National d'Etudes Spatiales http://www.cnes.fr

CSIRO Australia – Scientific & Industrial 

Research Organization http://www.csiro.au

Euroconsult http://www.euroconsult-ec.com

European Aeronautic Defence and Space Company 

(EADS) http://www.eads.com/eads/index_nof.htm

European Commission http://europa.eu.int

European Space Agency http://www.esa.int

GIFAS – Groupement Des Industries Francaises 

Aeronautiques et Spatiales http://www.gifas.asso.fr

Indian Space Research Organization http://www.isro.org

International Astronautical Federation http://www.iafastro.com

International Civil Aviation Organization http://www.icao.int

National Space Development Agency of Japan http://www.nasda.go.jp/index_e.html

North Atlantic Treaty Organization (NATO) http://www.nato.int/

NATO Research & Technology Organization http://www.rta.nato.int/

Netherlands – National Aerospace Laboratory http://www.nlr.nl

Russian Aviation Page http://aeroweb.lucia.it/~agretch/RAP.html

Russian Space Agency http://www.rosaviakosmos.ru/english/eindex.htm

Russian Space Research Institute http://www.iki.rssi.ru

UK Ministry of Defence http://www.mod.uk
J-10

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

United Nations http://www.un.int/

International Telecommunications Union http://www.itu.int/home/index.html

World Meteorological Organization http://www.wmo.ch/index-en.html

von Karmen Institute for Fluid Dynamics http://www.vki.ac.be

News and Print Media Website Addresses

Aerospace Online – Marketplace for Industry 

Professionals http://www.aerospaceonline.com/

AeroSpaceNews http://www.aerospacenews.com/

Aerotech News and Review http://www.aerotechnews.com/

AeroWorldNet – Daily Aerospace Magazine 

on the Internet http://www.aeroworldnet.com/

Air & Space Smithsonian Magazine http://www.airspacemag.com/

Aviation Today http://www.aviationtoday.com/index.html

Aviation Week and Space Technology http://www.awgnet.com/aviation

Aviation Week's AviationNow http://www.aviationnow.com/

Avweb http://www.avweb.com/

Defence Systems Daily http://www.defence-data.com/index2/index2.shtml

Defense News http://www.defensenews.com

DoD DefenseLINK News http://www.defenselink.mil/news/

Financial Times News and Analysis http://news.ft.com/home/us/

Global Defence Review http://www.global-defence.com

GlobalAir.com – Connecting the Aviation Industry http://www.globalair.com/

Key Publishing, Ltd. http://www.keypublishing.com/flash.html

Space News http://www.space.com/spacenews/

Space.com http://www.space.com/

World Spaceflight News http://members.aol.com/wsnspace/index.htm

U.S. Industry Website Addresses

AAI Corporation http://www.aaicorp.com

Aerojet http://www.aerojet.com

Aerospace Corporation http://www.aero.org

AeroVironment, Inc. http://www.aerovironment.com

Aircraft Technical Publishers http://www.atp.com

Airtechnics, Inc. http://www.airtechnics.com

Alaska Aerospace Development Corporation http://www.akaerospace.com

Alliant Techsystems Incorporated http://www.atk.com

American Pacific Corporation http://american-pacific-corp.com

Analytical Graphics International http://www.analyticalgraphics.com
J-11

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix J – Aerospace-related Websites—Partial List

Andrews Space and Technology http://www.spaceandtech.com

Arete Associates http://www.arete.com

Argo-Rech Corporation http://www.aero-tech.com

AstroVision International, Incorporated http://www.astrovision.com

ATK-Thiokol http://www.thiokol.com

Atlantic Research Corporation http://www.atlantic-research.com

Aviall Incorporated http://www.aviall.com

Avidyne Corporation http://www.avidyne.com

AXA Space http://www.axa.com

B.H. Aircraft Company, Incorporated http://www.bhaircraft.com

B/E Aerospace http://www.beaerospace.com

BAE Systems, North America Incorporated http://www.na.baesystems.com

Ball Aerospace & Technologies Corporation http://www.ball.com/aerospace

Barnes Aerospace http://www.barnesaero.com

Battelle http://www.battelle.org/

BF Goodrich Aerospace http://www.goodrich.com

Boeing http://www.boeing.com

Boeing Business Jets http://www.boeing.com/commercial/bbj

Bombardier Learjet, Inc. http://www.aerospace.bombardier.com

CAE SunyFlite Training International, Inc. http://www.simuflite.com

Century Flight Systems http://www.centuryflight.com

Cessna http://www.cessna.com

Commander Aircraft Company http://www.commanderair.com

Computer Sciences Corporation http://www.csc.com

Cordiem, LLC http://www.cordiem.com

Crane Aerospace http://www.craneaerospace.com

Cubic Corporation http://www.cts-nordic.dk

Curtiss-Wright Corporation http://www.curtisswright.com

Dassault Falcon Jet Corporation http://www.dassaultfalcon.com

DeCrane Aircraft Holdings, Inc. http://www.decraneaircraft.com

DRS Technologies, Incorporated http://www.drs.com

Ducommun Incorporated http://www.ducommun.com

Dukes Aerospace http://www.dukesaerospace.com

Dupont Company http://www.dupont.com

Eclipse Aviation http://www.eclipseaviation.com

EDO Corporation http://www.edocorp.com

EFW Incorporated http://www.efw.com

Embraer Aircraft Holding, Incorporated http://www.embraer.com
J-12

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

ESIS Incorporated http://www.esis.com

Esterline Technologies http://www.esterline.com

Exostar LLC http://www.exostar.com

Fairchild Corporation http://www.fairchildcorp.com

FlightSafety International http://www.flightsafety.com

GARMIN International http://www.garmin.com/

General Atomics Aeronautical Systems 

Incorporated http://www.ga.com/asi/aero.html

General Dynamics Corporation http://www.generaldynamics.com

General Electric – Aircraft Engines http://www.geae.com

GKN Aerospace Services http://www.aero.gknpic.com

Goodrich Corporation http://www.aerospace.goodrich.com

Groen Brothers Aviation, Incorporated http://www.gbagyro.com

Gulfstream Aerospace Corporation http://www.gulfstream.com

Hamilton-Sundstrand Corporation http://www.hamiltonsundstrand.com

Harris Corporation http://www.harris.com

Hartzell Propeller, Inc. http://www.hartzellprop.com

HEICO Corporation http://www.heicocorp.com

Hexcel Corporation http://www.hexcel.com

Honeywell http://www.honeywell.com

Hughes http://www.hughes.com

i2 Technologies http://www.i2.com

ITT Industries Defense Electronics & Services http://www.ittind.com/business

Jeppesen http://www.jeppesen.com

KAMAN Aerospace Corporation http://www.kamanaero.com

Kelly Aerospace http://www.kellyaerospace.com

Kistler Aerospace Corporation http://www.kistleraerospace.com

L-3 Communications http://www.l-3com.com

Lockheed Martin http://www.lockheedmartin.com

Lockheed Martin Space Systems http://lmms.external.lmco.com

Martin-Baker America Incorporated http://www.martin-baker.com

MatrixOne Incorporated http://www.matrix-one.com

MD Helicopters, Incorporated http://www.mdhelicopters.com

Meggitt Avionics/S-TEC http://www.s-tec.com

Microcosm, Inc. http://www.smad.com

MOOG Incorporated http://www.moog.com

Northrop Grumman Corporation http://www.northgrum.com/

Omega Air, Incorporated http://www.omegaair.ie

Omega Airline Software http://www.omegaair.ca
J-13

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix J – Aerospace-related Websites—Partial List

Orbital Sciences Corporation http://www.orbital.com

Parker Aerospace http://www.parker.com/ag

Parker Hannifin Corporation http://www.parker.com

PerkinElmer Fluid Sciences http://wwwl.perkinelmer.com

PPG Industries Aerospace http://www.ppg.com

Pratt & Whitney http://www.pratt-whitney.com/

Precision Aerospace Corporation http://www.prec-aero.com

Raytheon http://www.raytheon.com

Raytheon Aircraft Company http://www.raytheon.com/rac

Remmele Engineeering, Incorporated http://www.remmele.com

Rockwell Collins, Inc. http://www.collins.rockwell.com

Rockwell International http://www.rockwell.com

Rolls-Royce North America http://www.rolls-royce.com

Sabreliner Corporation http://www.sabreliner.com

Safe Flight Instrument Corporation http://www.safeflight.com

Sea Launch Company LLC http://www.sea-launch.com

Sikorsky Aircraft http://www.sikorsky.com

Silicon Graphics, Incorporated http://www.sgi.com

Smiths Aerospace http://www.smiths-aerospace.com

Smiths Aerospace Actuation Systems – Yakima http://www.dowty.com

Smiths Group Actuation Systems http://www.si-act-sys.com

Space Systems/Loral http://www.ssloral.com

Spectrum Astro http://www.specastro.com

Spirent Systems Wichita, Inc. http://www.spirent-systems.com

Stellex Aerostructures, Incorporated http://www.stellex.com

Teledyne Continental Motors http://www.tcmlink.com

Teledyne Technologies http://www.teledyne.com

Teleflex Incorporated http://www.telflex.com

Textron Lycoming http://www.lycoming.textron.com

The Aerostructures Corporation http://www.theaerocorp.com

The New Piper Aircraft, Inc. http://www.newpiper.com

The NORDAM Group http://www.nordam.com

The Purdy Corporation http://www.purdycorp.com

Triumph Group, Incorporated http://www.triumphgroup.com

TRW Incorporated http://www.trw.com

Unison Industries http://www.unisonindustries.com

United Defense http://www.uniteddefense.com

United Technologies Corporation http://www.utc.com/index1.htm
J-14

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Universal Avionics Systems http://www.uasc.com

UPS Aviation Technologies, Inc. http://www.upsat.com

Vertical Aeronautics International http://www.heliports.com

Vought Aircraft Industries http://www.vought.com/

Vought Aircraft Industries http://www.vought.com/

W.L. Gore & Associates, Incorporated http://www.wlgore.com

Williams International http://www.williams-int.com/

Woodward Governor Company http://www.woodward.com

U.S. Government Website Addresses

Agencies of the Executive Office of the President

Central Intelligence Agency http://www.odci.gov/

Council of Economic Advisors http://www.whitehouse.gov/cea

Council on Environmental Quality http://www.whitehouse.gov/ceq

National Economic Council http://www.whitehouse.gov/nec/

National Security Council http://www.whitehouse.gov/nsc/

Office of Management and Budget http://www.whitehouse.gov/omb/budget

Office of Science and Technology Policy http://www.ostp.gov/

National Science & Technology Council http://www.ostp.gov/NSTC/html/NSTC_Home.html

President's Advisory Council on Science & 

Technology http://www.ostp.gov/pcast/pcast.html

Office of the U.S. Trade Representative http://www.ustr.gov

Executive Branch Departments

Department of Agriculture http://www.usda.gov

Department of Commerce http://www.commerce.gov

International Trade Administration http://www.ita.doc.gov

National Oceanic & Atmospheric 

Administration – Satellites http://www.noaa.gov/satellites.html

Critical Infrastructure Assurance Office http://www.ciao.gov/

Department of Defense http://www.dod.mil/

Secretary & Deputy Secretary of Defense http://www.defenselink.mil/osd/topleaders.html

Under Secretary of Defense (Acquisition, 

Technology & Logistics) http://www.acq.osd.mil/

Deputy Undersecretary of Defense, 

Acquisition Reform http://www.acq.osd.mil/ar/

Deputy Undersecretary of Defense, 

Industrial Affairs http://www.acq.osd.mil/ia/

Director, Defense Research and 

Engineering http://www.dod.mil/ddre/
J-15

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix J – Aerospace-related Websites—Partial List

Director, Operational Test and Evaluation http://www.dote.osd.mil/

Director, Defense Procurement http://www.acq.osd.mil/dp/

National Security Space Architect http://www.acq.osd.mil/nssa/

Under Secretary of Defense (Comptroller) http://www.dtic.mil/comptroller/

Assistant Secretary of Defense (Command, 

Control, Communications & Intelligence) http://www.c3i.osd.mil/

Assistant Secretary of Defense (C3I) 

Space Policy Director http://www.c3i.osd.mil/org/c3is/spacepol/

Under Secretary of Defense (Policy) http://www.defenselink.mil/policy

Assistant Secretary of Defense 

(International Security Affairs) http://www.defenselink.mil/policy/isa/

Defense Technology Security 

Administration http://www.dtra.mil/

Advisory Committees

Advisory Committee to Assess Domestic 

Response to Terrorism Involving WMD – 

Charter http://www.odam.osd.mil/omp/pdf/5277.pdf

Ballistic Missile Defense Advisory 

Committee – Charter http://www.odam.osd.mil/omp/pdf/2.pdf

Defense Policy Board Advisory 

Committee – Charter http://www.odam.osd.mil/omp/pdf/412.pdf

Defense Science Board http://www.acq.osd.mil/dsb

Defense Agencies

Missile Defense Agency http://www.acq.osd.mil/bmdo/

National Imagery & Mapping Agency http://www.nima.mil/

Defense Intelligence Agency http://www.dia.mil/

Defense Advanced Research Projects 

Agency http://www.arpa.mil/

DARPA Tactical Technology Office http://www.darpa.mil/tto/

National Security Agency http://www.nsa.gov/

National Reconnaissance Office http://www.nro.gov/

Joint Service Schools

National Defense University http://www.ndu.edu

Joint Chiefs of Staff http://www.dtic.mil/jcs/

Joint Vision 2020 http://www.dtic.mil/jv2020/

Program Executive Offices

Joint Strike Fighter Program Office http://www.jast.mil/IEFrames.htm

Unified Commands

United States Strategic Command http://www.stratcom.mil/

United States Transportation Command http://www.transcom.mil/
J-16

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

United States Air Force http://www.af.mil/

US Air Force Vision 2020 http://www.af.mil/vision/

Office of the Secretary of the Air Force – 

Acquisition (SAF/AQ) http://www.safaq.hq.af.mil/

Assistant Secretary of the Air Force – 

Space Operations (SAF/USI) http://www.asaf.space.hq.af.mil/

Air Force Scientific Advisory Board – 

Charter http://www.odam.osd.mil/omp/pdf/439.pdf

Office of Scientific Research http://www.afosr.af.mil

Air Combat Command http://www.af.mil/sites/acc.shtml

Air Education and Training Command http://www.aetc.randolph.af.mil/

Air Force Space Command Headquarters http://www.spacecom.af.mil/hqafspc/Default2.asp

Air Force Link – Library http://www.af.mil/lib_af/index.shtml

Air Force Research Laboratory http://www.afrl.af.mil

Arnold Engineering Development 

Center http://www.arnold.af.mil/

Air National Guard http://www.ang.af.mil/

Air War College http://www.au.af.mil/au/awc/awchome.htm

Air Force Institute of Technology http://www.afit.edu

US Air Force – Thunderbirds http://www.airforce.com/thunderbirds/

United States Army http://www.army.mil/

US Army Vision http://www.army.mil/vision/default.htm

US Army Science Board – Charter http://www.odam.osd.mil/omp/pdf/389.pdf

US Army Materiel Command http://www.amc.army.mil/

US Army Parachute Team http://www.usarec.army.mil/hq/goldenknights/

United States Navy http://www.navy.mil/

US Navy Vision – From the Sea http://www.chinfo.navy.mil/navpalib/policy/

fromsea/forward.txt

CNO Executive Panel – Charter http://www.odam.osd.mil/omp/pdf/401.pdf

CNO Space, Information Warfare, 

Command & Control Directorate (N6) http://cno-n6.hq.navy.mil

Office of Naval Research http://www.onr.navy.mil/

Naval Research Laboratory http://www.nrl.navy.mil/

Naval Research Advisory Council – 

Charter http://www.odam.osd.mil/omp/pdf/425.pdf

Naval Air Systems Command http://www.navair.navy.mil/

Naval Air Warfare Center – 

Aircraft Division http://www.nawcad.navy.mil/

Naval Air Warfare Center – 

Weapons Division http://www.nawcwpns.navy.mil/
J-17

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix J – Aerospace-related Websites—Partial List

US Navy – Flight Test http://flighttest.navair.navy.mil/

Naval Center for Space Technology http://www.ncst.nrl.navy.mil/

Naval Facilities Engineering Command http://www.navfac.navy.mil/

Naval Network & Space Operations 

Command http://www.nnsoc.navy.mil

Naval Sea Systems Command http://www.navsea.navy.mil/

Space & Naval Warfare Systems 

Command http://enterprise.spawar.navy.mil/spawarpublicsite/

Naval Test Pilot School http://www.usntps.navy.mil/

Naval Postgraduate School http://www.nps.navy.mil

US Navy – Blue Angels http://www.navy.com/blueangels/

index.jsp?hasFlash=true

US Navy – Leap Frogs http://www.sealchallenge.navy.mil/leapfrogs.htm

United States Marine Corps http://www.usmc.mil/

USMC Vision http://www.usmc.mil/templateml.nsf/25241abbb036

b230852569c4004eff0e/$FILE/strategy.pdf

Department of Education http://www.ed.gov/index.jsp

Department of Energy http://www.energy.gov/

National Nuclear Security Administration http://www.nnsa.doe.gov/

National Security http://www.energy.gov/security/index.html

Office of Defense Nuclear Non-Proliferation http://www.nnsa.doe.gov/na-20/

National Laboratories http://www.energy.gov/aboutus/org/natlabs.html

Ames Laboratory http://www.ameslab.gov/

Argonne National Laboratory http://www.anl.gov/

Brookhaven National Laboratory http://www.bnl.gov/world/

Ernest Orlando Lawrence Berkeley 

National Laboratory http://www.lbl.gov/

Fermi National Accelerator Laboratory http://www.fnal.gov/

Idaho National Engineering & 

Environmental Laboratory http://www.inel.gov/

Lawrence Livermore National Laboratory http://www.llnl.gov/

Los Alamos National Laboratory http://www.lanl.gov/worldview

National Energy Technology Laboratory http://www.netl.doe.gov/

National Renewable Energy Laboratory http://www.nrel.gov/

Oak Ridge National Laboratory http://www.ornl.gov/

Princeton Plasma Physics Laboratory http://www.pppl.gov/

Sandia National Laboratory http://www.sandia.gov

Stanford Linear Accelerator Center http://www.slac.stanford.edu/

Department of Health and Human Services http://www.hhs.gov

Centers for Disease Control & Prevention http://www.cdc.gov/
J-18

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

National Institute for Occupational 

Safety & Health http://www.cdc.gov/niosh/homepage.html

Department of Housing and Urban Development http://www.hud.gov

Department of Interior http://www.doi.gov

U.S. Geological Survey http://www.usgs.gov

Department of Justice http://www.usdoj.gov/ag/index.html

Department of Labor http://www.dol.gov/

Department of State http://www.state.gov/

Bureau of Political-Military Affairs http://www.state.gov/t/pm/

Department of Transportation http://www.dot.gov

Assistant Secretary for Aviation & 

International Affairs http://ostpxweb.dot.gov/aviation/

Office of Intermodalism http://www.dot.gov/intermodal/

Transportation Science & Technology http://scitech.dot.gov/

Federal Aviation Administration http://www.faa.gov/

FAA Associate Administrator for 

Research and Acquisitions (ARA) http://www.faa.gov/ARA/INDEX.htm

FAA Office of Aviation Research (AAR) http://research.faa.gov/aar/

FAA Office of Intelligence & Security 

(OIS) http://152.122.41.10/

FAA William J. Hughes Technical Center http://www.tc.faa.gov/

FAA Air Traffic Services (ATS) http://www.faa.gov/ats/

FAA Associate Administrator for 

Commercial Space Transportation http://ast.faa.gov/

FAA Civil Aviation Security http://cas.faa.gov/

FAA Office of Airports http://www.faa.gov/arp/arphome.htm

FAA Office of Regulation and 

Certification (AVR) http://www.faa.gov/avr/index.cfm

Federal Highway Administration http://www.fhwa.dot.gov

Federal Railroad Administration http://www.fra.dot.gov/site/index.htm

Federal Transit Administration http://www.fta.dot.gov/

Research and Special Programs 

Administration http://www.rspa.dot.gov

Volpe National Transportation Systems 

Center http://www.volpe.dot.gov

Transportation Security Administration http://www.tsa.dot.gov

United States Coast Guard http://www.uscg.mil/uscg.shtm

US Coast Guard – Vision 2020 http://www.uscg.mil/Commandant/2020/contents.htm

Department of the Treasury http://www.ustreas.gov/

Department of Veteran Affairs http://www.va.gov
J-19

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix J – Aerospace-related Websites—Partial List

Executive Branch Independent Agencies

Environmental Protection Agency http://www.epa.gov/

Federal Emergency Management Agency http://www.fema.gov/

General Services Administration http://www.gsa.gov/

National Aeronautics and Space Administration http://www.nasa.gov/

NASA Headquarters http://www.hq.nasa.gov/

NASA Technology Plan http://technologyplan.nasa.gov/default.cfm?id=frontend

NASA Centers http://www.nasa.gov/hqpao/nasa_centers.html

NASA Ames Research Center http://www.arc.nasa.gov/

NASA Dryden Flight Research Center http://www.dfrc.nasa.gov/

NASA Glenn Research Center http://www.lerc.nasa.gov/

NASA Goddard Institute for Space Studies http://www.giss.nasa.gov/

NASA Goddard Space Flight Center http://www.gsfc.nasa.gov/

NASA Independent Verification & 

Validation Facility http://www.ivv.nasa.gov/index.shtml

NASA Jet Propulsion Laboratory http://www.jpl.nasa.gov/

NASA John C. Stennis Space Center http://www.ssc.nasa.gov/

NASA Johnson Space Center http://www.jsc.nasa.gov/

NASA Kennedy Space Center http://www.ksc.nasa.gov

NASA Langley Research Center http://www.larc.nasa.gov/

NASA Marshall Space Flight Center http://www1.msfc.nasa.gov/

NASA Wallops Island Flight Test Facility http://www.wff.nasa.gov

NASA White Sands Test Facility http://www.wstf.nasa.gov/

Center for AeroSpace Information http://www.sti.nasa.gov/RECONselect.html

NASA Library Documents http://www.aero-space.nasa.gov/library/index.htm

Technical Briefs http://www.nasatech.com/

Great Images in NASA http://grin.hq.nasa.gov

National Science Foundation http://www.nsf.gov/

National Transportation Safety Board http://www.ntsb.gov/

Tennessee Valley Authority http://www.tva.gov

Congress

United States Senate http://www.senate.gov

Senate Committee on Appropriations http://appropriations.senate.gov/

Senate Committee on Armed Services http://www.senate.gov/~armed_services/

Senate Committee on Banking, Housing 

& Urban Affairs http://www.senate.gov/~banking/

Senate Committee on Commerce, Science 

& Transportation http://www.senate.gov/~commerce/
J-20

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

Senate Committee on Energy & Natural 

Resources http://www.senate.gov/~energy/

Senate Committee on Environment & 

Public Works http://www.senate.gov/~epw/

Senate Committee on Finance http://www.senate.gov/~finance/

Senate Committee on Foreign Relations http://www.senate.gov/~foreign/

Senate Committee on Governmental Affairs http://www.senate.gov/~gov_affairs/

Senate Committee on Health, Education, 

Labor & Pensions http://www.senate.gov/~labor/

Senate Committee on Small Business & 

Entrepreneurship http://sbc.senate.gov/

Senate Committee on the Budget http://www.senate.gov/~budget/

Senate Committee on the Judiciary http://www.senate.gov/~judiciary/

Senate Select Committee on Intelligence http://intelligence.senate.gov

United States House of Representatives http://www.house.gov

House Committee on Appropriations http://www.house.gov/appropriations

House Committee on Armed Services http://www.house.gov/hasc

House Committee on Education and the 

Workforce http://edworkforce.house.gov/

House Committee on Energy and Commerce http://www.house.gov/commerce/

House Committee on Financial Services http://www.house.gov/financialservices/

House Committee on Government Reform http://www.house.gov/reform/

House Committee on International Relations http://www.house.gov/international_relations/

House Committee on Science http://www.house.gov/science/welcome.htm

House Committee on Small Business http://www.house.gov/smbiz/

House Committee on the Budget http://www.house.gov/budget/

House Committee on the Judiciary http://www.house.gov/judiciary/

House Committee on Transportation & 

Infrastructure http://www.house.gov/transportation

House Committee on Ways and Means http://waysandmeans.house.gov/

Joint Committees, Offices and Agencies of 

Congress

Congressional Budget Office http://www.cbo.gov

General Accounting Office http://www.gao.gov

Government Printing Office http://www.access.gpo.gov/

Library of Congress http://www.loc.gov/
J-21

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix J – Aerospace-related Websites—Partial List

Commissions and Reports

Centennial of Flight Commission http://www.centennialofflight.gov

Commission on Domestic Response to 

Terrorism Involving Weapons of Mass 

Destruction http://www.rand.org/nsrd/terrpanel/

Commission on National Security in the 

21st Century http://www.nssg.gov

Commission on the Future of the U.S. 

Aerospace Industry http://www.ita.doc.gov/aerospace/

aerospacecommission

Commission on United States National 

Security Space Management & Organization http://www.defenselink.mil/pubs/spaceabout.html

State Government

California Department of Transportation – 

Division of Aeronautics http://www.dot.ca.gov/hq/planning/aeronaut/

California Space Authority http://www.californiaspaceauthority.org

Florida Spaceport Authority http://www.spaceportflorida.com/

Texas Aerospace Commission http://www.tac.state.tx.us

Virginia Space Flight Center http://www.vaspace.org

K-1

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix K – Acknowledgements and Commission Staff

Appendix K

Acknowledgements

and Commission Staff
K-2

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission

The Commissioners would like to acknowledge the

contribution of the following federal departments

and agencies who provided support to the

Commission: The Department of Commerce, The

Department of Defense, the Department of

Education, the Department of Labor, the

Department of State, the Department of

Transportation and its Federal Aviation

Administration, and the National Aeronautics and

Space Administration. Particular thanks goes to the

Department of Defense for its generous contributions of funding, personnel, facilities and administrative support, and to the National Aeronautics

and Space Administration for its generous contribution of personnel and funding. Following are the

individual staff members, and their organizations,

that played an important part in the work of the

Commission. 

Designated Federal Official

Mr. Charles H. Huettner, Executive Director

Executive Office of the President/National Science

& Technology Council

Senior Staff

Mr. Paul F. Piscopo, Staff Director

Department of Defense/Office of the Director,

Defense Research & Engineering

Ms. Melissa A. Sabatine, Deputy Staff Director and

Communications Director

Department of Defense/Washington Headquarters

Services

Dr. E. Fenton Carey, Deputy Director for

Production

Department of Transportation/Federal Aviation

Administration

Permanent Staff

Mr. William J. Bihner, Jr., Space Chapter Lead

National Aeronautics and Space

Administration/Headquarters

Mr. Douglas L. Bowers, Investments Team Leader

Department of Defense/Air Force Research

Laboratory

Dr. Allen P. Cissell, Human Capital Team 

Co-Leader, Department of Education

Mr. Blair B. Gloss, Infrastructure Team Co-Leader

National Aeronautics and Space

Administration/Langley Research Center

Mr. Charles A. Gorton, Global Issues Team 

Co-Leader, Department of Defense/Naval Air

Systems Command

Mr. Theron A. Gray, General Counsel

Department of Transportation/Federal Aviation

Administration

CDR Sue E. Hegg, Technology Team Co-Leader

Department of Defense/U.S. Naval Reserve

Mr. Joseph P. Jolley, Chief Financial Officer

Department of Defense/Army Aviation & Missile

Command

Mr. Michael S. Lewis, Technology Team Co-Leader

National Aeronautics and Space

Administration/Langley Research Center

Mr. Jon N. Montgomery, Global Issues Team 

Co-Leader, Department of Commerce

Ms. Lee A. Olson, Infrastructure Team Co-Leader

Department of Transportation/Federal Aviation

Administration

Mr. Peter J. Ouzts, Government Chapter Lead

National Aeronautics and Space

Administration/Glenn Research Center

Ms. Cynthia W. Waters, Meetings and Archiving

Coordinator

Department of Defense/Washington Headquarters

Services
K-3

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Appendix K – Acknowledgements and Commission Staff

Non-Resident Staff

Ms. Sue Allison, Human Capital Team Co-Leader

Department of Labor

Mr. Evan Foster

Department of Commerce

Ms. Laura Ginsburg

Department of Labor

Ms. Thuy Hia

Department of State

Mr. Mark Logan

Hicks and Associates, Inc.

Ms. Mona Lush

Department of Defense/Office of the Director,

Acquisition Resources and Analysis

Dr. Frances Sherertz

Department of Transportation/Federal Aviation

Administration

Dr. John Stubstad

Department of Defense/National Missile Defense

Agency

Mr. Steve Thompson

Department of Defense/Office of the Deputy

Under Secretary (Industrial Policy)

Ms. Dawn Vehmeier

Department of Defense/Office of the Deputy

Under Secretary (Industrial Policy)

Administrative Support Staff

Ms. Karen Barbour

Washington Headquarters Services/Contractor

Support

Ms. Diane C. Long

Washington Headquarters Services/Contractor

Support

Ms. Elizabeth C. Owen

Department of Defense/Washington Headquarters

Services

Ms. Carole Portis

Washington Headquarters Services/Contractor

Support

Computer Support Contractor Team - Affiliated

Computer Services, Inc. (ACS)

Mr. Lamonica Bell

Mr. Al Gardner

Mr. Sam Nayar

Ms. Angela Pruitt

The Commissioners would also like to acknowledge

the following contractors who contributed their

time and talent in support of the Commission:

Hicks and Associates, Inc., DFI International, Inc.

and The Flowers Group, RAND Corporation,

Content First, Massachusetts Institute of

Technology, Aviation Systems Engineering, 

Dr. Marianne Pietras, Biznews24, and 

LiveWire Corporate Communications, Inc.
K-4

FINAL REPORT OF THE COMMISSION ON THE

FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY

Aerospace Commission