Department of Transportation: Key Issues and Management Challenges, 2013
Published: 2013-03-14T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The nation's transportation system--including highways, airways, pipelines, and rail systems that move both people and freight--is critical to the economy and affects the daily lives of most Americans. However, this system is under growing strain, and estimates of the cost to repair and upgrade the system to meet current and future demands are in the hundreds of billions of dollars. At the same time, traditional funding sources--in particular motor fuel and truck-related taxes--are eroding and the federal government faces long-term fiscal challenges. Addressing these challenges will require looking across federal activities and reexamining all types of federal spending and tax expenditures.
DOT is the principal agency responsible for implementing national transportation policy and administering most federal transportation programs. This statement discusses four key management challenges facing DOT: (1) leveraging surface transportation investments to further national interests, (2) improving surface and aviation transportation safety, (3) effectively implementing the Next Generation Air Transportation System and (4) improving information security. This statement is based on GAO's previous reports and testimonies, which are listed at the end of the statement. GAO has made a number of recommendations to DOT to more effectively leverage the departments' investments and enhance the safety of the traveling public, among other areas. DOT actions underway to address these recommendations are described in this statement.
section_title: What GAO Found
paragraphs: Leveraging surface transportation investments to further national interests : The Department of Transportation (DOT) faces several challenges leveraging investment in surface transportation networks to meet national goals and priorities. For example, DOT has to transition to a goal-oriented, performance-based approach for highway and transit programs, as required by the Moving Ahead for Progress in the 21st Century Act (MAP-21). Successfully implementing a performance-based approach entails new responsibilities for DOT since, as GAO has previously reported, its program oversight has generally been process-oriented rather than outcome-oriented. DOT also faces challenges related to targeting funds to priorities like the nation's freight network, effectively managing discretionary grant and credit assistance programs, and effectively overseeing other programs, such as the federal-aid highway program.
Improving surface and aviation transportation safety : GAO's recent work on safety across all modes has highlighted the need for improved data reliability and oversight. For example, data are critical for identifying commercial motor vehicles that pose the highest safety concerns. In 2012, GAO recommended that the Federal Motor Carrier Safety Administration (FMCSA) develop a data-driven approach to target carriers operating illegally by attempting to disguise their former identities and expand this approach to examine all new motor carriers. FMCSA is currently working to develop such a data-driven approach. Aviation safety-data collection and oversight also can be improved. For example, limitations in flight activity (e.g., flight hours) and other data preclude a complete assessment of general aviation safety. GAO recommended, among other things, that the Federal Aviation Administration (FAA) require the collection of general aviation aircraft flight-hour data in ways that minimize the impact on the general aviation community and set safety improvement goals for individual general aviation-industry segments, which FAA is working to address.
Effectively implementing the Next Generation Air Transportation System (NextGen) : NextGen is intended to transform the current radar-based system to an aircraft-centered, satellite navigation-based system. FAA faces three key challenges going forward. One challenge is delivering procedures and capabilities that provide aircraft operators with a return on investment in NextGen avionics to incentivize further investments. FAA also faces challenges keeping key NextGen acquisitions within cost estimates and on schedule. NextGen implementation will be affected by how well FAA manages the program's interdependencies, as delays in one program can affect timeframes for other programs and overall acquisition and maintenance costs. Finally, FAA faces challenges managing the transition to NextGen. FAA will have to balance its priorities to ensure that NextGen implementation stays on course while continuing to maintain current equipment and facilities. FAA's modeling indicates that even if all NextGen technologies are implemented, 14 airports--including some of the 35 busiest--may not be able to meet projected increases in demand.
Improving information security : DOT faces challenges effectively protecting its computer systems and networks. GAO and others have found that DOT has not consistently implemented effective controls to ensure that financial and sensitive information is adequately protected from unauthorized access and other risks.

section_title: Letter
paragraphs: I appreciate the opportunity to participate in this hearing to discuss key  issues and management challenges facing the Department of  Transportation (DOT), as Congress deliberates transportation policy and  funding issues. A safe and efficient transportation system is critical to our  economy and affects the daily lives of most Americans. Our nation has  built vast systems of roadways, airways, railways, transit systems,  pipelines, and waterways that help move people and goods. However,  these systems are under growing strain, and the cost to repair and  upgrade them to meet current and future demands is estimated in the  hundreds of billions of dollars. The economic and environmental  implications are significant—including wasted fuel, lost time, and  increased costs to businesses—as cars idle in traffic and airline  passengers confront delays.
The need for increased investment to repair and upgrade the  transportation system is occurring at the same time the federal  government faces long-term fiscal challenges. Absent policy changes, the  federal government will confront increasingly large, persistent, and  ultimately unsustainable federal deficits and debt. Addressing these  challenges will require looking across federal activities and reexamining  all types of federal spending and tax expenditures. To a large degree,  our transportation programs operate on a “user pay” system, wherein  users contribute to the building and upkeep of transportation systems. For  surface transportation programs, for example, motor fuel and other truck- related taxes support the Highway Trust Fund. However, Congress has  transferred general revenues to the Highway Trust Fund in recent years  to avoid shortfalls and sustain authorized levels of funding. Such transfers  may not be sustainable given competing demands for funds and the  federal government’s fiscal challenges. Congress and the administration  need to agree on a long-term plan for funding surface transportation; for  this and other reasons, funding surface transportation remains on GAO’s  High Risk List in 2013.
Although our nation’s transportation system is owned and operated by  multiple levels of government and the private sector, DOT is the principal  agency responsible for implementing national transportation policy and  administering most federal transportation programs. My statement today  focuses on four key issues and management challenges DOT faces:  leveraging surface transportation investments to further national  interests, improving surface and aviation transportation safety, effectively implementing the Next Generation Air Transportation  System (NextGen), and improving information security.
My statement is based on a body of work that we have completed from  June 2007 through March 2013, including recommendations we have  made to both DOT and Congress. This body of work was conducted in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives. A list of related GAO products  is included as an appendix to this statement, along with footnoted  references to these products throughout the statement.
subsections: section_title: Leveraging Surface Transportation Investments to Further National Interests
paragraphs: Given the condition and needs of the transportation system and the  federal government’s fiscal outlook, DOT faces several challenges in  leveraging investment in surface transportation networks to further  national interests. More specifically, DOT faces challenges related to   (1) transitioning to a goal-oriented, performance-based approach,   (2) targeting funds to national priorities such as our freight network,   (3) effectively managing discretionary grant and credit assistance  programs, and (4) effectively overseeing programs and spending.
Since I testified on this topic last year, there has been progress in  clarifying federal goals and roles and linking federal programs to  performance, as GAO has recommended. In past work, we reported that  many federal transportation programs do not effectively address key  challenges, have unclear federal goals and roles, and lack links to  performance. As a result, we made several recommendations and  matters for congressional consideration to address these findings. In July  2012, the President signed into law the Moving Ahead for Progress in the  21st Century Act (MAP-21) that included provisions to move toward a  more performance-based highway and transit program. For highways, for  example, the act identified seven national performance goals for areas  including pavement and bridge conditions, fatalities and injuries, and  traffic congestion. MAP-21 also provides for the creation of performance  measures and targets and links funding to performance, thus enhancing  accountability for results.
Successfully implementing a performance-based approach entails new  responsibilities for DOT and its operating administrations. For example,  MAP-21 requires that the Secretary of Transportation initiate a rulemaking  to establish the required performance measures for highways in  consultation with states and others. After performance measures are set,  states and other grantees must establish performance targets for those  measures and report their progress to the Secretary. While some  operating administrations, such as the National Highway Traffic Safety  Administration (NHTSA), have been working toward such a performance- based framework for several years, the work to implement MAP-21  requirements will require collaborating with multiple nonfederal partners  over several years. DOT also faces institutional challenges in  implementing performance-based programs. First, its administration and  oversight of programs have tended to be process-oriented, rather than  outcome-oriented. For example, we have reported that the Federal  Highway Administration’s (FHWA) and the Federal Transit  Administration’s (FTA) oversight of statewide and metropolitan planning  focuses on process rather than specific transportation outcomes, making  it unclear if states’ investment decisions are improving the condition and  performance of the nation’s transportation system. For FTA’s triennial  review program, which evaluates grantee adherence to federal  requirements, we found that FTA evaluates the process—specifically, the  timeliness of steps in the process—but not the outcome and quality of the  program. Second, based on our work on FHWA’s oversight of the  federal-aid highway program, FHWA will have to overcome risks related  to its partnership approach with the states to move to a more  performance-based approach to monitor states’ progress and hold states  accountable for meeting performance targets. We found advantages to  FHWA’s partnership approach with the states but also identified risks  such as lax oversight, a reluctance to take corrective action, and a lack of  independence in decision making.
Recent actions, including those set forth in MAP-21, also provide  opportunities to better align investments in areas of national interest— such as the freight network—to national goals. The movement of freight  over highways, railroads, and waterways is critical to the economy and  the livelihood of Americans who rely on freight transportation for food,  clothing, and other essential commodities. We have previously reported  that the fragmented federal approach to freight surface transportation has  resulted in programs having different oversight and funding requirements  and a lack of coordination. Last year, MAP-21 established a national  freight policy and mandated that DOT develop a National Freight  Strategic Plan including national goals and performance targets, as GAO  has recommended. In order to implement this more holistic,  performance-based approach, DOT will have to effectively coordinate  sector transportation agencies at the federal, state, and local levels and  private sector entities that play a role in freight mobility. These entities  and agencies have not necessarily worked in a coordinated manner in the  past. DOT will also have to work with the U.S. Army Corps of Engineers  (Corps), the lead federal agency responsible for maintaining and  improving navigable waterways. DOT and the Corps signed a  memorandum of understanding in March 2012 to identify and capitalize  on opportunities to improve the nation’s marine transportation  infrastructure investments. Specifically, DOT and the Corps agreed to  develop project prioritization criteria and coordinate project evaluation and  selection processes as they relate to DOT grant programs and the Corps’  project prioritization. Historically, however, there has been limited  coordination between the two agencies. Involving the Corps is essential,  since the vast majority of the nation’s freight is imported and exported via  navigable waterways through our nation’s ports.
Beyond challenges associated with implementing these changes driven  primarily by MAP-21, DOT also faces challenges effectively managing  existing discretionary grant programs. Most federal surface-transportation  funding has been delivered through formula grant programs that have  only an indirect relationship to needs and allow states and other grantees  considerable flexibility in selecting projects to fund. Meritorious projects of  national or regional significance, in particular those that connect  transportation modes or cross geographic boundaries, may not compete  well for these formula grants. Therefore, allocating some portion of  federal funds for surface transportation on a competitive basis—as is  done in many discretionary programs—for projects of national or  regional significance in particular, is a direction we have recommended to  more effectively address the nation’s surface transportation challenges.  Below we highlight key issues based on our work on two DOT  discretionary programs.
Transportation Investment Generating Economic Recovery (TIGER)  program: The TIGER program represented an important step toward  investing in projects of regional and national significance on a merit- based, competitive basis. Since 2009, DOT has held four rounds of  competition and awarded more than $3 billion in grants to highway,  transit, rail, port, and other projects. In March 2011 we reported that  while DOT developed a sound set of criteria to evaluate applications  and select grantees, there was a lack of documentation of final award  decisions. As a result, we recommended that DOT better document  these decisions. DOT has not implemented this recommendation. In  its work on the TIGER program, DOT’s Office of the Inspector General  (OIG) found that while grantees had developed performance  measures, as required, these measures were generally not outcome  based and thus could not be used to assess whether projects were  meeting the expected outcomes articulated in their applications, such  as improving the state of infrastructure and enhancing safety. Going  forward, documenting key decisions for all major steps in the review of  competitive grant applications will help improve transparency and help  to ensure the credibility of DOT’s award decisions. In addition,  establishing a process for evaluating program performance based on  project outcomes will be important for DOT to be able to measure the  impacts of these investments.
High Speed Intercity Passenger Rail (HSIPR) grant program: The  HSIPR program, administered by the Federal Railroad Administration  (FRA), provides funds to states and others to develop high-speed rail  and inter-city passenger-rail corridors and projects. Congress  appropriated $8 billion for high-speed rail and inter-city passenger rail  in the American Recovery and Reinvestment Act of 2009 (Recovery  Act) and $2.5 billion in the fiscal year 2010 DOT Appropriations Act.  As of October 2012, about $9.9 billion has been obligated for 150  projects in 34 states and the District of Columbia—with more than one  third designated for a single project in California. While most of the  program’s funds have been obligated, we have highlighted key  challenges that FRA faces managing this program. In 2009, we  recommended that FRA develop guidelines and methods for ensuring  reliability of ridership and other forecasts used to determine the  viability of high-speed rail projects. According to FRA, this  recommendation is in the process of being implemented, and FRA  officials stated that the agency is working to develop a comprehensive  approach for improving the reliability of ridership forecasts. The DOT  OIG reported that FRA faces substantial challenges to ensure the  HSIPR program meets reporting, transparency, and program and  financial management requirements under the Recovery Act and that  Recovery Act funding that has been obligated for HSIPR projects is  not wasted. In addition, FRA will have to transition from its role of  awarding grants to overseeing the implementation of HSIPR-funded  projects, including overseeing the implementation of the California  High Speed Rail project, which has a current cost estimate of $68.4  billion.
In addition, DOT faces challenges implementing and managing changes  to the Transportation Infrastructure Finance and Innovation Act (TIFIA)  program, which provides direct loans, loan guarantees, and lines of credit  to surface transportation projects. MAP-21 made several changes to the  TIFIA program, including a dramatic increase in the funding available for  the program. Such changes—coupled with TIFIA’s already complex  mission to leverage limited federal resources and stimulate private capital  investment in transportation infrastructure by providing credit assistance  to projects of national or regional significance—constitute new  challenges. MAP-21 authorized $750 million for fiscal year 2013 and $1  billion for fiscal year 2014 to pay the subsidy cost of credit assistance,  compared to $122 million in authorized budget authority in previous  years. MAP-21 also made changes to the process DOT uses to select  projects and increased the portion of project costs TIFIA loans can cover  from 33 to 49 percent. As we reported in 2012, with the increase in  budget authority, DOT will likely have a higher number of applications to  review and credit agreements to negotiate. DOT faces challenges  implementing these changes—including updating guidance, issuing new  regulations, and ensuring that adequate staff and expertise exist to  efficiently manage the expanded program—all while TIFIA credit  assistance remains in high demand. Moreover, as the TIFIA portfolio  grows, now totaling more than $10 billion in loans and other assistance,  DOT will have to monitor an increasing number of projects as they  proceed through what is expected to be decades of loan repayment to  manage current and future risk from potential nonrepayment.
DOT also faces challenges overseeing other programs going forward.  The federal-aid highway program, and thus FHWA’s oversight role, has  expanded over the years to encompass broader goals, more  responsibilities, and a variety of approaches. FHWA has taken steps to  improve its approach to managing this program’s risks by, for example,  requiring field offices to identify risks, assess them based on their  potential impact and the likelihood they will occur, and develop response  strategies in their planned oversight activities. However, in addition to  overcoming the risks associated with its partnership with the states,  opportunities for improvement in other areas remain. In 2011, for this  Subcommittee, we reviewed FHWA’s Emergency Relief Program, which  provides funds to states to repair roads damaged by natural disasters and  catastrophic failures, and were unable to determine the basis on which  FHWA made many eligibility determinations because of missing or  incomplete documentation. Without clear and standardized procedures  for FHWA officials to make and document eligibility decisions, FHWA  lacks assurance that only eligible projects are approved to receive scarce  relief funds. In June 2012, in response to a GAO recommendation,  FHWA reviewed each state’s balance of unused emergency relief funds  on a monthly basis so that unused funding can be more easily identified  and withdrawn. This resulted in savings of about $231 million in unused  allocations in fiscal year 2012, which was made available to other priority  Emergency Relief Program projects. In addition, FTA is implementing a  new Public Transportation Emergency Relief Program established in July  2012 in MAP-21, for which Congress recently appropriated this  program’s first funds—$10.9 billion—to restore transit services affected  by Hurricane Sandy. As FTA implements this new program and  distributes funds, assurance that only eligible projects receive funds and  that processes support effective and efficient delivery of relief services is  of particular importance.
section_title: Improving Surface and Aviation Transportation Safety
paragraphs: Another challenge that DOT and the states continue to face is improving  safety. The vast majority of transportation-related fatalities and injuries  occur on our roadways, involving drivers and passengers in cars and  large trucks, motorcyclists, pedestrians, and cyclists. We have seen a  remarkable decline in traffic fatalities and injuries in recent years.  Specifically, traffic fatalities and injuries decreased nearly 24 percent over  the last decade, from about 43,000 fatalities and 2.9 million injuries in  2002 to about 32,000 fatalities and 2.2 million injuries in 2011. (See fig.  1.) While these trends are encouraging, NHTSA’s early estimates of  traffic fatalities for the first 9 months of 2012 project a 7 percent increase  in fatalities, which would be the first increase since 2005. Continued  federal and state efforts to reduce traffic fatalities and injuries are needed,  particularly in areas where the risks of crashes, fatalities, and injuries are  high, such as motorcyclist, teen-driver, and distracted-driving crashes.
While other surface transportation modes—such as rail, transit, and  pipeline—are relatively safe when compared to roadways, accidents can  and do occur. For example, a natural gas pipeline explosion in San  Bruno, California, in September 2010 killed 8 people and damaged or  destroyed over 100 homes, and a hazardous liquid pipeline rupture near  Marshall, Michigan, in July 2010 spilled over 840,000 gallons of crude oil  into a wetland area. Likewise, although 2012 was the safest year in rail  industry history, three notable freight rail accidents occurred during the  summer of 2012—including the derailment of a freight train in Columbus,  Ohio, which caused the evacuation of homes in the area because of a fire  caused by exploding ethanol tank cars.
In addition, while the nation’s aviation system is one of the safest in the  world, with air travel projected to increase over the next 20 years, efforts  to ensure continued safety are increasingly important. To enhance safety,  the Federal Aviation Administration (FAA) is shifting to a data-driven, risk- based safety oversight approach—called a safety management system  (SMS) approach. Implementation of SMS is intended to allow FAA to  proactively identify system-wide trends in aviation safety and manage  emerging hazards before they result in incidents or accidents.
Our recent work on transportation safety across all modes has highlighted  the need for improvement in data and oversight. With the move toward a  more performance-based approach in MAP-21, high-quality data are  essential to identify progress and ensure accountability. As DOT moves  closer to a data-driven, performance-based structure, a robust oversight  approach is critical to ensure that states are establishing appropriate  goals and making sufficient progress toward those goals.
For traffic safety data, states maintain six core types of data systems  that are used to identify priorities for highway and traffic safety  programs. In 2010, we reported that NHTSA’s periodic assessments  designed to help states evaluate the quality of their data systems  were in some cases incomplete or inconsistent. We recommended  actions for DOT to make those assessments more useful for states,  and DOT plans to complete implementation of those actions this  spring.
Data are also critical for the Federal Motor Carrier Safety  Administration (FMCSA) to target resources and identify which of the  hundreds of thousands of commercial motor vehicles operating on our  nation’s roads pose the highest safety concerns. For example, we  recently reported that FMCSA only examines about 2 percent of new  motor carrier applicants that register annually to identify carriers  operating illegally under new identities. We recommended that  FMCSA develop a data-driven approach to target new carriers  attempting to disguise their former identities and expand this new  approach to examine all motor carriers. FMCSA is currently  developing a plan to enhance its ability to identify unsafe motor  carriers that try to disguise their former identities and expects to  complete the development of a data-driven approach by February  2013. Further, industry representatives, shippers and brokers, and  other stakeholders are questioning the validity of certain aspects,  such as the accuracy and consistency of data inputs and the reliability  of carrier performance scores resulting from FMCSA’s Compliance,  Safety, Accountability (CSA) initiative—a data-driven approach to  select the highest risk carriers for intervention. We are currently  evaluating this approach and plan to report on this and other aspects  of the CSA program later this year.
FRA is responsible for overseeing efforts made by railroads in  developing positive train control (PTC), a communications-based  system designed to prevent some serious train accidents; progress in  these efforts has been a concern. Federal law requires major freight  and passenger railroads to implement this system on most major  routes by the end of 2015. In 2010, we reported that delays in  developing some system components as well as costs that publicly  funded commuter railroads would incur to implement the system  raised the risk that railroads would not meet the 2015 deadline. In  2012, in response to our recommendation, FRA reported to Congress  on the railroads’ progress in implementing PTC noting that it was  unlikely most railroads would be able to meet the 2015 deadline.  Further, FRA identified obstacles and recommended factors to  consider in developing additional legislation. We are currently  reviewing how FRA estimated the costs and benefits of PTC in its  rulemaking process and to what extent railroads will be able to  leverage PTC technology to achieve benefits in addition to the  anticipated safety improvements.
MAP-21 authorized FTA to establish and enforce basic safety  standards for transit rail systems and required the agency to develop  a new safety oversight program, with a continued role for state safety  oversight offices that meet certain requirements. We have noted that  FTA would face challenges in building up its internal capability to  develop and carry out such a program, and that state safety oversight  agencies would face similar challenges. As FTA moves forward,  reliable rail-transit safety data as well as clear and specific goals and  measures based on these data will be essential in allowing FTA to  monitor safety trends, determine whether safety programs are  achieving their intended purposes, target resources, and make  informed decisions about the safety strategy. In 2011, we  recommended improvements in FTA’s rail-transit safety database and  related goals and measures. FTA officials have informed us that  they have taken steps to improve this database, including establishing  the appropriate internal controls over their data collection process to  prevent data-reporting errors. FTA officials have also informed us that,  as part of their efforts to develop their new safety strategy, they are  working on developing new goals and measures for the agency’s rail- transit safety efforts.
Data collection and oversight for the safety of our nation’s 2.5-million  mile pipeline network can also be improved. For example, while the  Pipeline and Hazardous Materials Safety Administration (PHMSA)  requires pipeline operators to develop incident response plans to  minimize the risks of leaks and ruptures, PHMSA has not linked  performance measures or targets to measurable response-time goals  and does not collect reliable data on actual incident response times.  In January 2013, we recommended that PHMSA improve incident  response data and use these data to evaluate whether to implement a  performance-based framework for incident response times. In  addition, part of the nation’s pipeline network consists of more than  200,000 miles of onshore “gathering” pipelines, many of which are not  federally regulated because they have generally been located away  from populated areas and operate at relatively low pressures.  However, urban development is encroaching on these pipelines, and  the increased extraction of oil and natural gas from shale deposits is  resulting in new gathering pipelines that can be larger in diameter and  operate at higher pressures. Thus, in March 2012, we recommended  that PHMSA collect data on these pipelines to assess their safety  risks. In response, PHMSA has initiated a rulemaking to collect data  on gathering pipelines.
Our work has found that FAA continues to experience data-related  challenges that affect oversight efforts, including limitations with the  analysis it conducts and the data it collects, as well as the absence of  data in some areas. For example, we reported that several challenges  remain that may affect FAA’s ability to implement SMS in an efficient  and timely matter, challenges related to data sharing and data quality,  capacity to conduct SMS-based analyses and oversight, and  standardization of policies and procedures. As a result, in September  2012 we made several recommendations to FAA regarding the  implementation of SMS that FAA is working to address. We also  identified data and oversight concerns in FAA’s efforts to reduce the  general aviation accident rate. For example, while we can draw some  conclusions about general aviation accident characteristics, limitations  in flight activity (e.g., flight hours) and other data preclude a complete  assessment of general aviation safety. GAO has recommended,  among other things, that FAA require the collection of general aviation  aircraft flight-hour data in ways that minimize the impact on the  general aviation community, set safety improvement goals for  individual general aviation-industry segments, and develop  performance measures for significant activities that aim to improve  general aviation safety. FAA is currently working to implement these  recommendations. FAA’s data-related challenges are affecting other  efforts, such as the development of standards for unmanned aerial  systems (UAS) operations, a key step in the integration of these  systems into the national airspace system. The standards- development process has been hindered, in part, because of FAA’s  inability to use safety, reliability, and performance data from the  Department of Defense, by the need for additional data from other  sources, and by the complexities of UAS issues in general. FAA is  working to address these data limitations; its success in doing so is  important in moving forward with the standards-development process  as well as supporting research and development efforts needed to  address the obstacles affecting safe integration of UAS operations.
section_title: Effectively Implementing the Next Generation Air Transportation System (NextGen)
paragraphs: Another area that I would like to address is the implementation of  NextGen. This complex multiagency undertaking is intended to transform  the current radar-based system into an aircraft-centered, satellite  navigation-based system and is estimated to cost between $15 billion and  $22 billion through 2025. FAA has taken several steps to improve  NextGen implementation and is continuing to address critical issues that  we, stakeholders, and others have identified, including three key  challenges that affect NextGen implementation: delivering and  demonstrating NextGen benefits, keeping key NextGen acquisitions  within cost estimates and on schedule, and balancing NextGen  implementation with maintaining and operating the current air traffic  control system during the transition.
subsections: section_title: Delivering and Demonstrating NextGen Benefits
paragraphs: FAA must deliver systems, procedures, and capabilities that provide  aircraft operators with a return on their investments in NextGen avionics.  For example, a large percentage of the current fleet is equipped to fly  more precise performance-based navigation (PBN) procedures, which  use satellite-based guidance to route aircraft and improve approaches at  airports, and can save operators money through reduced fuel use and  shorter flight time. However, operators have expressed concern that FAA,  to date, has not produced the most useful or beneficial PBN routes and  procedures, and therefore, operators do not yet see benefits resulting  from their investments in advanced avionics systems. As a means to  leverage existing technology, to provide immediate benefit to the industry,  and to respond to industry advisory group recommendations, FAA began  an initiative to better use PBN procedures to resolve airspace problems in  and provide benefits to 13 selected areas around multiple busy airports,  known as “metroplexes.” FAA is working to design its metroplex and  other PBN initiatives to avoid some of the challenges—such as lack of air  traffic controller involvement—that have limited the use of PBN  procedures and, in turn, limited the potential benefits of existing PBN  procedures. If operators cannot realize benefits from existing equipment  investments, they may be hesitant to invest in the new technologies  necessary to fully realize NextGen benefits.
While some operational improvements can be made with existing aircraft  equipment, realizing more significant NextGen benefits requires a critical  mass of properly equipped aircraft. Reaching that critical mass is a  significant challenge because the first aircraft operators to purchase and  install NextGen-capable technologies will not obtain a return on their  investment until many other operators also adopt NextGen technologies.  FAA estimates that the NextGen avionics needed on aircraft to realize  significant midterm NextGen capabilities will cost private operators about  $6.6 billion from 2007 through 2018. However, aircraft operators may be  hesitant to make these investments if they do not have confidence that  benefits will be realized from their investments. The FAA Modernization  and Reform Act of 2012 created a program to facilitate public-private  financing for equipping general-aviation and air-carrier aircraft with  NextGen technologies. According to FAA, the goal for such a program  would be to encourage deployment of NextGen-capable aircraft sooner  than would have occurred without such funding assistance in place. FAA  is soliciting industry input about how to design and implement a loan  guarantee program but has yet to decide on how to incentivize this  transition.
As we have previously reported, FAA should regularly provide  stakeholders, interested parties, Congress, and the American people with  a clear picture of where NextGen’s implementation stands, and whether  the capabilities being implemented are resulting in positive outcomes and  improved performance for operators and passengers. We have  recommended that FAA develop a timeline and action plan to work with  industry and federal partner agencies to develop an agreed-upon list of  outcome-based performance metrics, as well as goals for NextGen both  at a broad level and in specific NextGen improvement areas. In addition,  the FAA Modernization and Reform Act of 2012 requires FAA to report on  measures of the agency’s progress in implementing NextGen capabilities  and operational results. FAA has taken steps to establish NextGen  metrics, but much work remains, including finalizing agency targets for  specific improvement areas and making a link between NextGen  performance goals and metrics and NextGen improvements. For  example, publicly available information about FAA’s plans for  implementing additional capabilities through 2018 lacks specifics about  the timing and locations of implementation; this lack of details has been  cited as an obstacle to incentivizing aircraft operators to equip with new  technologies. Measuring performance of near-term NextGen  improvements will be critical for FAA management and stakeholders to  assess impacts, make investment decisions, and monitor NextGen  progress. We will report on this issue in more detail as part of our ongoing  near-term NextGen implementation work for the Congress.
section_title: Keeping Key NextGen Acquisitions within Cost Estimates and on Schedule
paragraphs: NextGen has significantly increased the number, cost, and complexity of  FAA’s acquisition programs; it is imperative that these programs remain  on time and within budget, particularly given current budget constraints  and the interdependencies of many NextGen-acquisitions. Since our  February 2012 report on major air traffic control acquisition programs, the  key NextGen-related acquisition programs have generally continued to  proceed on time and on budget. However, past delays with the En  Route Automation Modernization (ERAM) program—a critical program for  NextGen—illustrate how delays can affect overall acquisition and  maintenance costs as well as time frames for other programs. As we  previously reported, ERAM’s delayed implementation from December  2010 to August 2014 and cost increase of $330 million were associated  with insufficient testing to identify software issues before deployment at  key sites and insufficient stakeholder involvement during system  development and deployment. The delays with ERAM added an  estimated $18 million per year to the costs of maintaining the system that  ERAM was meant to replace and delayed other key NextGen  acquisitions. Since new budget and schedule baselines for the ERAM  program were established in June 2011, according to FAA reports, the  program has made progress toward its deployment goals. The successful  implementation of NextGen—both in the midterm (through 2020) and in  the long term (beyond 2020)—will be affected by how well FAA manages  such program interdependencies.
section_title: Managing the Transition to NextGen
paragraphs: Particularly in light of constrained budget resources, FAA will have to  balance its priorities to help ensure that NextGen implementation stays on  course. Sustaining the current legacy equipment and facilities remains  critical, as these will continue to be the core of the national airspace  system for a number of years, and some of the components will be part of  NextGen. For example, while FAA transitions to satellite-based aircraft  surveillance through the deployment of Automatic Dependent  Surveillance-Broadcast Out (ADS-B Out) technology, the agency expects  to continue to operate and maintain current radar technology through at  least 2020. At that time, FAA is scheduled to make decisions about which  radar systems the agency will decommission and which will be  maintained as the back-up system for ADS-B. If either ADS-B’s  deployment or airlines’ efforts to purchase and install this technology is  delayed, then FAA may have to maintain and operate some of its radars  longer than expected.
In addition, to fully realize NextGen’s capabilities, facilities that handle air  traffic control must be reconfigured. In November 2011, FAA approved an  initial plan to consolidate en route centers and terminal radar approach- control facilities (TRACONs) into large, integrated facilities over the next  two decades. However, FAA has yet to make key decisions on how to  proceed with this consolidation, and has delayed its decision on where to  build the first integrated facility until June 2013. While FAA develops its  facilities plan, it faces the immediate task of maintaining and repairing  existing facilities so that the current air-traffic control system continues to  operate safely and reliably during the NextGen transition. According to  FAA, in 2011, 65 percent of its terminal facilities and 74 percent of its en  route facilities were in either poor or fair condition with a total deferred- maintenance backlog of $310 million for these facilities. Once FAA  develops and implements a facility consolidation plan, it can identify  which legacy facilities to repair and maintain and, in doing so, potentially  reduce overall facility repair and maintenance costs. FAA has  acknowledged the need to keep long-term plans in mind so that it does  not invest unnecessarily in facilities that will not be used for NextGen.
Although NextGen is projected to keep delays at many airports from  getting worse than would be expected without these improvements,  NextGen alone is not likely to sufficiently expand the capacity of the  national airspace system. For example, FAA’s NextGen modeling  indicates that even if all ongoing and planned NextGen technologies are  implemented, 14 airports—including some of the 35 busiest—may not be  able to meet the projected increases in demand (table 1). The  transformation to NextGen will also depend on the ability of airports to  handle greater capacity. For example, decisions regarding using existing  capacity more efficiently include certifying and approving standards that  allow the use of closely spaced parallel runways. At some airports,  policies may need to be developed to address situations where demand  exceeds capacity (e.g., pricing, administrative rules, service priorities).  Infrastructure projects to increase capacity, such as building additional  runways, can be a lengthy process and will require substantial advance  planning as well as safety and cost analyses. Also, the improved  efficiency in runway and airspace use that should result from some  NextGen technologies may exacerbate other airport capacity constraints,  such as taxiways, terminal gates, or parking areas. Finally, increasing  capacity must be handled within the context of limiting increases in  emissions and noise that can affect the communities around airports.
section_title: Improving Information Security
paragraphs: DOT relies extensively on more than 400 computerized information  systems to carry out its financial and mission-related operations. Effective  information security controls are required to ensure that financial and  sensitive information is adequately protected from inadvertent or  deliberate misuse, fraudulent use, and improper disclosure, modification,  or destruction. Ineffective controls can also impair the accuracy,  completeness, and timeliness of information used by management. The  need for effective information security is further underscored by the  evolving and growing cyber threats to federal systems and the increase in  the number of security incidents reported by DOT and other federal  agencies.
DOT has been challenged to effectively protect its computer systems and  networks. Our analysis of Office of Management and Budget (OMB), OIG,  and GAO reports shows that the department has not consistently  implemented effective controls in accordance with National Institute of  Standards and Technology (NIST) and OMB guidance in response to the  Federal Information Security Management Act (FISMA). For example, in  March 2012, OMB reported that DOT had a 44.2 percent compliance rate  with certain FISMA requirements. Although this is a 14.4 percent  increase from fiscal year 2010, it is still below many other major federal  agencies. In addition, OMB reported that DOT’s implementation of  automated continuous-monitoring capabilities for asset and configuration  management were both below 50 percent of the agency’s information  technology assets. Further, we have reported on the need for federal  agencies, including DOT, to improve their workforce planning, hiring, and  development activities for cybersecurity personnel. We recommended  that DOT, among other things, update its departmentwide cybersecurity  workforce plan or ensure that departmental components have plans that  fully address gaps in critical skills and competencies and that support  requirements for its cybersecurity workforce strategies. The department  neither concurred nor nonconcurred with our recommendations.
In summary, as the principal agency responsible for implementing  national transportation policy and administering most federal  transportation programs, DOT faces several key challenges going forward  in leveraging surface transportation investments, improving surface and  aviation transportation safety, effectively implementing NextGen, and  improving information security. Addressing these challenges in an  environment of increasing need and increasing fiscal challenges will  require looking at the entire range of federal activities and reexamining  federal spending and tax expenditures to improve and enhance these  systems that are vital to the nation’s economy.
Chairman Latham, Ranking Member Pastor, and Members of the  Subcommittee, this concludes my prepared statement. I would be  pleased to answer any questions that you may have at this time.
section_title: GAO Contact and Staff Acknowledgments
paragraphs: For further information on the statement, please contact Phillip R. Herr at  (202) 512-2834 or herrp@gao.gov. Contact points for our Congressional  Relations and Public Affairs offices may be found on the last page of this  statement. Individuals making key contributions to this statement were  Melissa Bodeau, Jonathan Carver, Steve Cohen, Matthew Cook, Gerald  Dillingham, Susan Fleming, Judy Guilliams-Tapia, Brandon Haller, Nicole  Jarvis, Heather Krause, Hannah Laufe, Edward Laughlin, Joanie Lofgren,  Maureen Luna-Long, Heather MacLeod, Maria Mercado, SaraAnn  Moessbauer, Sara Vermillion, Dave Wise, Gregory Wilshusen, and Susan  Zimmerman.
section_title: Related GAO Products
paragraphs: High-Risk Series: An Update. GAO-13-283. Washington, D.C.: February  2013.
Unmanned Aircraft Systems: Continued Coordination, Operational Data,  and Performance Standards Needed to Guide Research and  Development. GAO-13-346T. Washington, D.C.: February 15, 2013.
Pipeline Safety: Better Data and Guidance Needed to Improve Pipeline  Operator Incident Response. GAO-13-168. Washington, D.C: January 23,  2013.
Highway Trust Fund: Pilot Program Could Help Determine Viability of  Mileage Fees for Certain Vehicles. GAO-13-77. Washington, D.C.:  December 13, 2012.
The Federal Government’s Long-Term Fiscal Outlook, Fall 2012 Update.  GAO-13-148SP. Washington: D.C.: December 3, 2012.
Maritime Infrastructure: Opportunities Exist to Improve the Effectiveness  of Federal Efforts to Support the Marine Transportation System.  GAO-13-80. Washington, D.C.: November 13, 2012.
General Aviation Safety: Additional FAA Efforts Could Help Identify and  Mitigate Safety Risks. GAO-13-36. Washington, D.C.: October 4, 2012.
Next Generation Air Transportation System: FAA Faces Implementation  Challenges. GAO-12-1011T. Washington, D.C.: September 12, 2012.
Surface Transportation: Financing Program Could Benefit from Increased  Performance Focus and Better Communication. GAO-12-641.  Washington, D.C.: June 21, 2012.
Highway Infrastructure: Federal-State Partnership Produces Benefits and  Poses Oversight Risks. GAO-12-474. Washington, D.C.: April 26, 2012.
Pipeline Safety: Collecting Data and Sharing Information on Federally  Unregulated Gathering Pipelines Could Help Enhance Safety.  GAO-12-388. Washington, D.C.: March 22, 2012.
Motor Carrier Safety: New Applicant Reviews Should Expand to Identify  Freight Carriers Evading Detection. GAO-12-364. Washington, D.C.:  March 22, 2012.  2012 Annual Report: Opportunities to Reduce Duplication, Overlap and  Fragmentation, Achieve Savings, and Enhance Revenue.  GAO-12-342SP. Washington, D.C.: February 28, 2012.
Air Traffic Control Modernization: Management Challenges Associated  with Program Costs and Schedules Could Hinder NextGen  Implementation. GAO-12-223. Washington, D.C.: February 16, 2012.
Cybersecurity Human Capital: Initiatives Need Better Planning and  Coordination. GAO-12-8. Washington, D.C.: November. 29, 2011.
Highway Emergency Relief: Strengthened Oversight of Eligibility  Decisions Needed. GAO-12-45. Washington, D.C.: November 8, 2011.
Aviation Safety: Enhanced Oversight and Improved Availability of Risk- Based Data Could Further Improve Safety. GAO-12-24. Washington,  D.C.: October 5, 2011.
Highway Trust Fund: All States Received More Funding Than They  Contributed in Highway Taxes from 2005 to 2009. GAO-11-918.  Washington, D.C.: September 8, 2011.
NextGen Air Transportation System: Mechanisms for Collaboration and  Technology Transfer Could be Enhanced to More Fully Leverage Partner  Agency and Industry Resources. GAO-11-604. Washington, D.C.: June  30, 2011.
Surface Transportation: Competitive Grant Programs Could Benefit from  Increased Performance Focus and Better Documentation of Key  Decisions. GAO-11-234. Washington, D.C.: March 30, 2011.
Intercity Passenger Rail: Recording Clearer Reasons for Awards  Decisions Would Improve Otherwise Good Grantmaking Practices.  GAO-11-283. Washington, D.C.: March 10, 2011.
Rail Transit: FTA Programs Are Helping Address Transit Agencies’ Safety  Challenges, but Improved Performance Goals and Measures Could  Better Focus Efforts. GAO-11-199. Washington, D.C.: January 31, 2011.
Statewide Transportation Planning: Opportunities Exist to Transition to  Performance-Based Planning and Federal Oversight. GAO-11-77.  Washington, D.C.: December 15, 2010.
NextGen Air Transportation System: FAA’s Metrics Can Be Used to  Report on Status of Individual Programs, but Not of Overall NextGen  Implementation or Outcomes. GAO-10-629. Washington, D.C.: July 27,  2010.
High Speed Rail: Learning From Service Start-ups, Prospects for  Increased Industry Investment, and Federal Oversight Plans.  GAO-10-625. Washington, D.C.: June 17, 2010.
Aviation Safety: Improved Data Quality and Analysis Capabilities Are  Needed as FAA Plans a Risk-Based Approach to Safety Oversight.  GAO-10-414. Washington, D.C.: May 6, 2010.
Traffic Safety Data: State Data System Quality Varies and Limited  Resources and Coordination Can Inhibit Further Progress. GAO-10-454.  Washington, D.C.: April 15, 2010.
Rail Transit: Observations on FTA’s State Safety Oversight Program and  Potential Change in Its Oversight Role. GAO-10-314T. Washington, D.C.:  December 10, 2009.
Metropolitan Planning Organizations: Options Exist to Enhance  Transportation Planning Capacity and Federal Oversight. GAO-09-868.  Washington, D.C.: September 9, 2009.
Federal-Aid Highways: FHWA Has Improved Its Risk Management  Approach, but Needs to Improve Its Oversight of Project Costs.  GAO-09-751. Washington, D.C.: July 24, 2009.
Public Transportation: FTA’s Triennial Review Program Has Improved,  But Assessments of Grantees’ Performance Could Be Enhanced.  GAO-09-603. Washington, D.C.: June 30, 2009.
High Speed Passenger Rail: Future Development Will Depend on  Addressing Financial and Other Challenges and Establishing a Clear  Federal Role. GAO-09-317. Washington, D.C.: March 19, 2009.
Surface Transportation: Clear Federal Role and Criteria-Based Selection  Process Could Improve Three National and Regional Infrastructure  Programs. GAO-09-219. Washington, D.C.: February 6, 2009.
Surface Transportation: Restructured Federal Approach Needed for More  Focused, Performance-Based, and Sustainable Programs. GAO-08-400.  Washington, D.C.: March 6, 2008.
Freight Transportation: National Policy and Strategies Can Help Improve  Freight Mobility. GAO-08-287. Washington, D.C.: January 7, 2008.
Railroad Bridges and Tunnels: Federal Role in Providing Safety Oversight  and Freight Infrastructure Investment Could Be Better Targeted.  GAO-07-770. Washington, D.C.: August 6, 2007.
Intermodal Transportation: DOT Could Take Further Actions to Address  Intermodal Barriers. GAO-07-718. Washington, D.C.: June 20, 2007.
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