Next Generation Air Transportation System: Preliminary Analysis of Progress and Challenges Associated with the Transformation of the National Airspace System
Published: 2006-07-25T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The health of our nation's air transportation system is critical to our citizens and economy. However, the current approach to managing air transportation is becoming increasingly inefficient and operationally obsolete. In 2003, Congress created the Joint Planning and Development Office (JPDO) to plan for and coordinate, with federal and nonfederal stakeholders, a transformation from the current air traffic control (ATC) system to the "next generation air transportation system" (NGATS). Housed within the Federal Aviation Administration (FAA), JPDO has seven partner agencies that make up JPDO's senior policy committee: the Departments of Transportation, Commerce, Defense, and Homeland Security; FAA; the National Aeronautics and Space Administration (NASA); and the White House Office of Science and Technology Policy. This testimony, which provides preliminary results from GAO's ongoing work on JPDO, provides information on (1) the status of JPDO's efforts to plan for NGATS, (2) the key challenges facing JPDO as it moves forward with its planning efforts, and (3) the key challenges facing FAA as it implements the transformation while continuing its current operations. The statement is based on GAO's analysis of JPDO documents, interviews, and the views of a panel of experts, as well as on past GAO work.
section_title: What GAO Found
paragraphs: JPDO has developed a framework for planning and coordination with its federal partner agencies and nonfederal stakeholders that is consistent with the requirements of its authorizing legislation--Vision 100--and with several practices that our previous work has shown can facilitate federal interagency collaboration and the development of an enterprise architecture (i.e., system blueprint). JPDO's framework includes an integrated plan that provides a vision for NGATS, an organizational structure and processes for leveraging the resources and expertise of federal and nonfederal stakeholders, and an enterprise architecture that defines the specific requirements for NGATS. As JPDO moves forward, it will face leadership, leveraging, and commitment challenges. Currently, JPDO lacks a permanent director and a permanent chairperson of its senior policy committee to provide the leadership needed to overcome barriers to interagency coordination. In addition, despite early successes, JPDO may have difficulty continuing to leverage its partner agencies' resources and expertise for NGATS because these agencies have missions and priorities in addition to NGATS and JPDO does not yet have signed, long-term agreements with the partner agencies on their respective roles and responsibilities. Finally, JPDO faces the challenge of convincing nonfederal stakeholders that the government is fully committed to implementing NGATS, given that, in some instances, it has discontinued work on new technologies for the national airspace system. FAA faces challenges in institutionalizing recent improvements in its management and acquisition processes, as well as in obtaining the expertise and resources necessary to implement NGATS. First, institutionalizing FAA's process improvements is critical to successfully implementing NGATS. Second, FAA may lack the expertise needed to manage the NGATS effort. GAO has identified two potential approaches for FAA to supplement its capabilities that FAA is considering. Third, achieving cost savings is critical to funding the implementation of NGATS.

section_title: Letter
paragraphs: We appreciate the opportunity to participate in today’s hearing to discuss  the status of efforts by the Joint Planning and Development Office (JPDO)  to plan for and coordinate the transformation of the nation’s current air  traffic control (ATC) system to the “next generation air transportation  system” (NGATS)—a system intended to safely accommodate an expected  tripling of air traffic by 2025. Authorized in 2003, JPDO is housed within  the Federal Aviation Administration (FAA), whose Air Traffic Organization  (ATO) is responsible for modernizing and operating the nation’s current  ATC system. According to Vision 100, the legislation that authorized  JPDO, the transformation to NGATS will be completed by 2025 with the  assistance of seven organizations that make up JPDO’s senior policy  committee: the Departments of Transportation, Commerce, Defense, and  Homeland Security; FAA; the National Aeronautics and Space  Administration (NASA); and the White House Office of Science and  Technology Policy. As JPDO plans the transformation to NGATS and  coordinates the related efforts of its partner agencies, FAA will be  responsible for both implementing the transformation and safely operating  the current ATC system 24 hours a day, 7 days a week.
My statement today focuses on three key questions. (1) What is the status  of JPDO’s efforts to plan for NGATS? (2) What key challenges does JPDO  face in moving forward with its planning efforts? (3) What key challenges  does FAA face in transitioning from the current ATC system and in  implementing NGATS? My statement is based on our analysis of  documents provided by JPDO and its partner agencies; the perspectives of  agency officials and stakeholders with whom we have spoken; the results  of a panel of experts that we convened; and our review of relevant  literature, including JPDO’s December 2004 integrated plan and March  2006 progress report. The statement also draws on our prior work on  FAA’s program for modernizing the national airspace system, which we  have listed as a high-risk program since 1995. To assess JPDO’s  framework for facilitating coordination among its partner agencies,  obtaining the participation of nonfederal stakeholders, and conducting  technical planning for NGATS, we compared JPDO’s practices with those  that we have found to be effective in facilitating federal interagency  collaboration and enterprise architecture development. We also reviewed  the National Research Council’s 2005 report on JPDO, which provided a  technical assessment of the research, development, and technology  components of JPDO’s integrated plan. Later this year, we expect to issue  a report on our assessment of the status of JPDO’s efforts to plan for the  development of NGATS. We are performing our work in accordance with  generally accepted government auditing standards.
The following summarizes our findings to date:    JPDO has developed a framework for planning and coordination with its  partner agencies and nonfederal stakeholders that is consistent with the  requirements of Vision 100 and with several practices that our previous  work has shown can facilitate federal interagency collaboration and  enterprise architecture development. Vision 100 established JPDO as a  planning and coordinating body and outlined elements for creating NGATS  and managing the related work. These elements, which make up JPDO’s  framework, include an integrated plan that provides a vision for NGATS,  an organizational structure and processes for leveraging the resources and  expertise of federal and nonfederal stakeholders, and an enterprise  architecture that defines the specific requirements for NGATS.
JPDO faces leadership, leveraging, and commitment challenges as it  moves forward with planning for NGATS. Currently, two leadership  positions critical to JPDO’s success are vacant: JPDO has not had a  permanent director for over 6 months, and since the Secretary of  Transportation resigned, the senior policy committee has been without a  permanent chairperson. In addition, despite early successes in leveraging  its partner agencies’ resources and expertise for NGATS initiatives, JPDO  may have difficulty continuing to do so because its partner agencies have a  variety of missions and priorities in addition to NGATS, and JPDO does  not yet have formal, signed agreements with the agencies on their  respective roles and responsibilities. JPDO also faces the challenge of  convincing nonfederal stakeholders that the government is fully  committed to NGATS because, in the past, the government has  discontinued work on new technologies for the national airspace system,  including one technology in which a nonfederal stakeholder had already  invested.
FAA faces challenges in institutionalizing recent improvements in its  management and acquisition processes, as well as in obtaining the  expertise and resources needed to implement NGATS. First, the successful  implementation of NGATS will depend on FAA’s incorporating the  improved processes into its organizational structure and culture. Second,  FAA may not have the expertise needed to manage the NGATS  implementation effort. Our work has identified, and FAA is considering,  two approaches for addressing this challenge—contracting with a lead  systems integrator and obtaining technical advice from federally funded  research and development corporations. Third, FAA will need resources to  implement NGATS, some of which may have to come from savings in  operating and maintaining the current ATC system.
subsections: section_title: Background
paragraphs: In late 2003, recognizing that the current approach to managing air  transportation is becoming increasingly inefficient and operationally  obsolete, Congress created JPDO to plan NGATS, a system intended to  accommodate the threefold increase in air traffic demand expected by  2025. JPDO’s scope is broader than that of traditional ATC modernization  in that it is “airport curb to airport curb,” encompassing such issues as  security screening and environmental concerns. Additionally, JPDO’s  approach will require unprecedented collaboration and consensus among  many stakeholders—federal and nonfederal—about necessary system  capabilities, equipment, procedures, and regulations. Each of JPDO’s  partner agencies will play a role in the transformation to NGATS. For  example, the Department of Defense has deployed “network centric”  systems, originally developed for the battlefield, that are being considered  as a conceptual framework to provide all users of the national airspace  system—FAA and the Departments of Defense and Homeland Security— with a common view of that system.
Vision 100 required the Secretary of Transportation to establish JPDO  within FAA to manage work related to NGATS. The Director of JPDO  reports to the FAA Administrator and to the Chief Operating Officer within  ATO. JPDO began operating in early 2004.
section_title: JPDO Has Made Progress in Planning for NGATS
paragraphs: JPDO has developed a framework for planning and coordination with its  partner agencies and nonfederal stakeholders that is consistent with the  requirements of Vision 100 and with several practices that our work has  shown can facilitate federal interagency collaboration and enterprise  architecture development. This framework includes an integrated plan, an  organizational structure, and an enterprise architecture.
subsections: section_title: As Required by Vision 100, JPDO Developed an Integrated Plan and Reported on the Progress of That Plan
paragraphs: Vision 100 calls for the development of an integrated plan for NGATS and  annual updates on the progress of that plan. JPDO’s partner agencies  developed an integrated plan and submitted it to Congress on December  12, 2004. The plan includes a vision statement for meeting the predicted  threefold increase in demand for air transportation by 2025 and eight  strategies that broadly address the goals and objectives for NGATS. In  March 2006, JPDO published its first report to Congress on the progress  made in carrying out the integrated plan.
The integrated plan is consistent with effective collaboration practices we  have identified. According to our research on federal interagency  collaborations, agencies must have a clear and compelling rationale for  working together to overcome significant differences in their missions,  cultures, and established ways of doing business. In working together to  develop JPDO’s integrated plan, the partner agencies agreed on a vision  statement to transform the air transportation system and on broad  statements of future system goals, performance characteristics, and  operational concepts.
section_title: JPDO Developed an Organization for Involving Federal and Nonfederal Stakeholders
paragraphs: Vision 100 includes requirements for JPDO to coordinate and consult with  its partner agencies, private sector experts, and the public. Accordingly,  JPDO established an organizational structure to involve federal and  nonfederal stakeholders throughout the organization. This structure  includes a federal interagency policy committee, an institute for  nonfederal stakeholders, and integrated product teams (IPT) that bring  together federal and nonfederal experts to plan for and coordinate the  development of technologies that will address JPDO’s eight broad  strategies.
JPDO’s senior policy committee was formed and is headed by the  Secretary of Transportation, as required in Vision 100. The committee  includes senior-level officials from JPDO’s partner agencies and has met  three times since its inception.
The NGATS Institute (the Institute) was created by an agreement between  the National Center for Advanced Technologies and FAA to incorporate  the expertise and views of stakeholders in private industry, state and local  governments, and academia. The NGATS Institute Management Council,  composed of top officials and representatives from the aviation  community, oversees the policy and recommendations of the Institute and  provides a means for advancing consensus positions on critical NGATS  issues. In March 2006, the Institute held its first public meeting to solicit  information from the public and other interested stakeholders who are not  involved in the council or the IPTs. These types of meetings are designed  to address the Vision 100 requirement that JPDO coordinate and consult  with the public.
The IPTs are headed by representatives of JPDO’s partner agencies and  include more than 190 stakeholders from over 70 organizations, whose  participation was arranged through the Institute.
Figure 1 shows JPDO’s position within FAA and the JPDO structures that  bring together federal and nonfederal stakeholders, including the Institute  and the IPTs.
JPDO’s organizational structure incorporates some of the practices we  have found effective for federal interagency collaborations. For example,  our work has shown that mutually reinforcing or joint strategies can help  align partner agencies’ activities, core processes, and resources to  accomplish a common outcome. Each of the eight IPTs is aligned with one  of the eight strategies outlined in JPDO’s integrated plan, and each is  headed by a partner agency that has taken the lead on a specific strategy.  Our research has also found that collaborating agencies should identify  the resources needed to initiate or sustain their collaborative effort. To  leverage human resources, JPDO has staffed the various levels of its  organization—including JPDO’s board, the IPTs, and technical divisions— with partner agency employees, many of whom work part time for JPDO.  Finally, our work has shown that involving stakeholders can, among other  things, increase their support for a collaborative effort. The Institute  provides for involving nonfederal stakeholders, including the public, in  planning NGATS.
section_title: JPDO Has Begun to Leverage the Resources of Its Partner Agencies for NGATS
paragraphs: Vision 100 requires JPDO to coordinate NGATS-related programs across  the partner agencies. To address this requirement, JPDO conducted an  initial interagency review of its partner agencies’ research and  development programs during July 2005 to identify work that could  support NGATS. Through this process, JPDO identified early opportunities  that could be pursued during fiscal year 2007 to coordinate and minimize  the duplication of research programs across the partner agencies and  produce tangible results for NGATS. For example, one identified  opportunity is to align aviation weather research across FAA, NASA, and  the Departments of Commerce and Defense; develop a common weather  capability; and harmonize and incorporate into NGATS those agency  programs designed to seamlessly integrate weather information and  aircraft weather mitigation systems. In addition, the Automatic Dependent  Surveillance-Broadcast (ADS-B) and System Wide Information System  (SWIM) programs at FAA were identified as opportunities for accelerated  funding to produce tangible results for NGATS. JPDO is currently working  with the Office of Management and Budget to develop a systematic means  of reviewing the partner agencies’ budget requests so that the NGATS- related funding in each request can easily be identified. Such a process  would help the Office of Management and Budget consider NGATS as a  unified federal investment, rather than as disparate line items distributed  across several agencies’ budget requests.
JPDO’s effort to leverage its partner agencies’ resources for NGATS  demonstrates another practice important to sustaining collaborations. Our  work on collaborations has found that collaborating agencies, by assessing  their relative strengths and limitations, can identify opportunities for  leveraging each others’ resources and thus obtain benefits that would not  be available if they were working separately. JPDO’s first interagency  review of its partner agencies’ research and development programs has  facilitated the leveraging of technological resources for NGATS. The  budget process under development with OMB provides a further  opportunity to leverage resources for NGATS.
section_title: Consistent with Vision 100, JPDO Is Developing an Enterprise Architecture
paragraphs: Vision 100 requires JPDO to create a multiagency research and  development roadmap for the transition to NGATS. To comply with Vision  100, JPDO has been working on an enterprise architecture and expects to  complete an early version of the architecture by September 2006. Many of  JPDO’s future activities will depend on the robustness and timeliness of  this architecture development. The enterprise architecture will describe  FAA’s operation of the current national airspace system, JPDO’s plans for  NGATS, and the sequence of steps needed for the transformation to  NGATS. The enterprise architecture will provide the means for  coordinating among the partner agencies and private sector  manufacturers, aligning relevant research and development activities, and  integrating equipment.
JPDO has taken several important steps to develop the enterprise  architecture—one of the most critical planning documents in the NGATS  effort. For example, JPDO has drafted a concept of operations—a  document that describes the operational transformations needed to  achieve the overall goals of NGATS. JPDO has used this document to  identify key research and policy issues for NGATS. For example, the  concept of operations identifies several issues associated with automating  the ATC system, including the need for a backup plan in case automation  fails, the responsibilities and liabilities of different stakeholders during an  automation failure, and the level of monitoring needed by pilots when  automation is ensuring safe separation between aircraft. As the concept of  operations matures, it will be important for air traffic controllers and other  affected stakeholders to provide their perspectives on this effort so that  needed adjustments can be made in a timely manner. JPDO officials  recognize the importance of obtaining stakeholders’ comments on the  concept of operations and are currently incorporating stakeholders’  comments into the concept of operations. JPDO expects to release its  initial concept of operations by the end of July.
Another step that JPDO has taken to develop the enterprise architecture is  to form an Evaluation and Analysis Division (EAD), composed of FAA and  NASA employees and contractors. This division is assembling a suite of  models to help JPDO refine its plans for NGATS and iteratively narrow the  range of potential solutions. For example, EAD has used modeling to begin  studying how possible changes in the duties of key personnel, such as air  traffic controllers, could affect the workload and performance of others,  such as airport ground personnel. According to JPDO officials, the change  in the roles of pilots and controllers is the most important human factors  issue involved in creating NGATS. JPDO officials noted that the Agile  Airspace and Safety IPTs include human factors specialists and that  JPDO’s chief architect has a background in human factors. However, EAD  has not yet begun to model the effect of the shift in roles on pilots’  performance because, according to an EAD official, a suitable model has  not yet been incorporated into the modeling tool suite. According to EAD,  addressing this issue is necessary, but will be difficult because data on  pilot behavior are not readily available for use in creating such models.  Furthermore, EAD has not yet studied the training implications of various  NGATS-proposed solutions because further definition of the concept of  operations for these solutions is needed. As the concept of operations and  enterprise architecture mature, EAD will be able to study the extent to  which new air traffic controllers will have to be trained to operate both the  old and the new equipment.
To develop and refine the enterprise architecture for NGATS, JPDO is  following an effective technology development practice that we identified  and applied to enterprise architecture development.  This phased, “build a  little, test a little” approach is similar to a process we have advocated for  FAA’s major system acquisition programs. This phased approach will also  allow JPDO to incorporate evolving market forces and technologies in its  architecture and thus better manage change. Consequently, additional  refinements are expected to be made to the enterprise architecture.
section_title: As Required by Vision 100, JPDO Has Begun Efforts to Estimate the Costs of NGATS
paragraphs: Vision 100 requires JPDO to identify the anticipated expenditures for  developing and deploying NGATS. To begin estimating these expenditures  realistically, JPDO is holding a series of investment analysis workshops  with stakeholders to obtain their input on potential NGATS costs. The first  workshop, held in April 2006, was for commercial and business aviation,  equipment manufacturers, and ATC systems developers. The second  workshop is planned for August for operators of lower-performance  aircraft used in both commercial and noncommercial operations. The third  workshop, planned for early September, will focus on airports and other  local, state, and regional planning bodies.
Although these workshops will help JPDO develop a range of potential  costs for NGATS, a mature enterprise architecture is needed to provide the  foundation for developing NGATS costs. Several unknown factors will  drive these costs. According to JPDO, one of these drivers is the  technologies expected to be included in NGATS. Some of these  technologies are more complex and thus more expensive to implement  than others. A second driver is the sequence for replacing current  technologies with NGATS technologies. A third driver is the length of time  required for the transformation to NGATS, since a longer period would  impose higher costs. JPDO’s first draft of its enterprise architecture,  expected in September 2006, could reduce some of these variables,  thereby allowing improved, albeit still preliminary, estimates of NGATS’  costs.
Although the enterprise architecture for NGATS is not yet complete, both  FAA and its Research, Engineering and Development Advisory Committee  (REDAC) have developed preliminary cost estimates, which officials of  both organizations have emphasized are not yet endorsed by any agency.  FAA estimates that the facilities and equipment cost to maintain the ATC  system and implement the transformation to NGATS will be about $66  billion, or about $50 billion in constant 2005 dollars. The annual cost  would average $2.7 billion per year in constant 2005 dollars from fiscal  year 2007 through fiscal year 2025, or about $200 million more each year  than FAA’s fiscal year 2006 facilities and equipment appropriation.
REDAC’s Financing NGATS Working Group has developed a $15 billion  average annual cost estimate for NGATS that includes costs not only for  facilities and equipment but also for operations; airport improvement; and  research, engineering, and development—the remaining three components  of FAA’s appropriation. As table 1 indicates, the working group began with  FAA’s facilities and equipment estimate and went on to calculate the  remaining costs for FAA to maintain the current ATC system and  implement the transformation to NGATS.  REDAC’s estimate for NGATS’s  total cost averages about $1 billion more annually than FAA’s total  appropriations for fiscal year 2006.
Besides being preliminary, these estimates are incomplete—FAA’s more  than REDAC’s because FAA’s does not include any costs other than those  for facilities and equipment. An FAA official acknowledged that the agency  would likely incur additional costs, such as for safety certifications or  operational changes responding to new NGATS technologies. Additionally,  FAA’s facilities and equipment cost estimate assumes that the  intermediate technology development work, performed to date by NASA,  has been completed. As I will discuss shortly, it is currently unclear who  will now perform this work, but if FAA assumes responsibility for the  work, REDAC has estimated additional FAA funding needs of at least $100  million a year. Furthermore, neither FAA’s nor REDAC’s estimate includes  the other partner agencies’ costs to implement NGATS, such as those that  the Department of Homeland Security might incur to develop and  implement new security technologies. Finally, these estimates treat  NGATS’s development and implementation period as an isolated event.  Consequently, the costs drop dramatically toward 2025. In reality, officials  who developed these estimates acknowledge that planning for the  subsequent “next generation” system will likely be underway as 2025  approaches and the actual modernization costs could therefore be higher  in this time frame than these estimates indicate.
section_title: JPDO Faces Leadership, Resource, and Commitment Challenges as It Moves Forward with Planning for NGATS
paragraphs: JPDO faces several challenges in planning for NGATS, including  addressing leadership vacancies, leveraging resources and expertise from  its partner agencies, and convincing nonfederal stakeholders that the  government is fully committed to NGATS.
subsections: section_title: Two Key JPDO Leadership Positions Are Vacant
paragraphs: JPDO has not had a permanent director since January 2006 and, with the  recent resignation of the Secretary of Transportation, the senior policy  committee is without a permanent chairperson. Our work has shown that,  to overcome barriers to interagency coordination, committed leadership  by individuals at the top of all involved organizations is critical. Leadership  will also be important to provide a “champion” for JPDO and to sustain the  partner agencies’ focus on and contributions to the transformation to  NGATS. Moreover, without a chairperson of the senior policy committee,  no one within JPDO is responsible for sustaining JPDO’s collaboration and  overseeing its work.
These vacancies raise concerns about the continued progress of JPDO and  NGATS. After ATO was authorized, we reported that without a chief  operating officer, FAA was unable to move forward with the new air traffic  organization—that is, to bring together the ATC system’s acquisition and  operating functions, as intended, into a viable performance-based  organization (PBO). This PBO was designed to be part of the solution to  the chronic schedule delays, cost overruns, and performance shortfalls in  FAA’s ATC modernization program. We believe that filling the two vacant  positions is critical to ensure continued progress for JPDO and NGATS.
section_title: Leveraging Resources and Expertise Poses a Challenge over Time
paragraphs: JPDO officials view leveraging the partner agencies’ resources and  expertise as one of their most significant challenges. According to JPDO  officials, leveraging efforts have worked well so far, but JPDO’s need for  resources and expertise will increase with the development of NGATS,  and for at least two reasons, JPDO may have difficulty meeting this need.  First, JPDO’s partner agencies have a variety of missions and priorities in  addition to NGATS, and their priorities may change. Recently, for  example, NASA reduced its aeronautics budget and decided to focus on  fundamental research, in part because the agency believes such research  is more in keeping with its mission and unique capabilities. These changes  occurred even though NASA’s current reauthorization act requires the  agency to align its aviation research projects to directly support NGATS  goals. In light of the changes, it is unclear what fundamental research  NASA will perform to support NGATS and who will perform the  development steps for that research—that is, the validation and  demonstration that must take place before a new technology can be  transferred to industry and incorporated into a product. JPDO and FAA  officials said that not enough is understood about NASA’s plans to assess  the impact of NASA’s action on NGATS, but many experts told us that  NASA’s new focus on fundamental research creates a gap in the  technology development continuum. Some believe that FAA has neither  the research and development infrastructure nor the funding to do this  work. As I previously mentioned, REDAC, in a draft report, estimated that  FAA would need at least $100 million annually in increased funding to  perform this research and development work.  REDAC further estimated  that establishing the necessary infrastructure within FAA could delay the  implementation of NGATS by 5 years.
Second, JPDO may have difficulty leveraging its partner agencies’  resources and expertise because it does not yet have formal, long-term  agreements with the agencies on their roles and responsibilities in creating  NGATS. According to JPDO officials, they are working to establish  memorandums of understanding (MOU) signed by the heads of the partner  agencies that will broadly define the partner agencies’ roles and  responsibilities at a high level. JPDO is also developing more specific  MOUs with individual partner agencies that lay out expectations for  support on NGATS components, such as information sharing through  network-centric operations.
Obtaining the specialized expertise of some stakeholders poses an  additional challenge for JPDO. Air traffic controllers, for example, will  play a key role in NGATS, but their union is not participating in JPDO.  Currently, the ATC system relies primarily on air traffic controllers to  direct pilots to maintain safe separation between aircraft. Under NGATS,  this premise could change and, accordingly, JPDO has recognized the need  for human factors research on issues such as how tasks should be  allocated between humans and automated systems and how the existing  allocation of responsibilities between pilots and air traffic controllers  might change. The input of current air traffic controllers who have recent  experience controlling aircraft is important in considering human factors  and safety issues because of the controllers’ familiarity with existing  operating conditions.
The air traffic controllers’ labor union, the National Air Traffic Controllers  Association (NATCA), has not participated in NGATS since June 2005,  when FAA terminated a labor liaison program that assigned air traffic  controllers to major system acquisition program offices and to JPDO. FAA  had determined that the benefits of the program were not great enough to  justify its cost. The NGATS Institute Management Council includes a seat  for the union, but a NATCA official told us that the union’s head had been  unable to attend the council’s meetings. According to JPDO officials, the  council has left a seat open in hopes that the controllers will participate in  NGATS as the new labor-management agreement between NATCA and  FAA is implemented.
section_title: Convincing Nonfederal Stakeholders That the Government Is Fully Committed to NGATS Presents Another Challenge
paragraphs: Convincing nonfederal stakeholders that the government is fully  committed to NGATS poses a challenge because, in the past, the  government has stopped some modernization efforts, including one in  which an airline had already invested in supporting technologies.  Specifically, FAA developed a datalink communications system that  transmitted scripted e-mail-like messages between controllers and pilots.  One airline equipped some of its aircraft with this new technology, but  because of funding cuts, among other things, FAA canceled the program.
Moreover, as we have reported, some aviation stakeholders have  expressed concern that FAA may not follow through with its airspace  redesign efforts and are hesitant to invest in equipment unless they are  sure that FAA will remain committed to its efforts. One expert suggested  that the government might mitigate this issue by making an initial  investment in a specific technology before requesting that airlines or other  industry stakeholders purchase equipment.
Stakeholders’ belief that the government is fully committed to NGATS will  be important as efforts to implement NGATS technologies move forward.  Achieving many of the benefits of NGATS will require users of the  system—airlines and general aviation—to purchase NGATS-compatible  technologies, such as ADS-B. This new air traffic surveillance system,  which JPDO has identified as one of the early core technologies for  NGATS, requires aircraft to be equipped with components that will be  implemented in two phases. FAA anticipates significant cost savings from  the implementation of the first phase, but the airlines do not expect to  benefit until the second phase is complete. The technology should then  allow pilots to fly more precise routes at night and in poor visual  conditions. Another early core technology for NGATS, SWIM, is also  intended to produce benefits for users, but again, it is not expected to do  so for many years. Nonfederal stakeholders’ support for these and other  NGATS technologies will be important, and their support will depend, in  part, on their assurance of the government’s full commitment.
section_title: FAA Faces Institutionalization, Expertise, and Resource Challenges as It Transitions to NGATS
paragraphs: FAA faces challenges in implementing NGATS, including institutionalizing  recent improvements in its management and acquisition processes,  acquiring expertise to implement highly complex systems, and achieving  cost savings to help fund NGATS technologies.
subsections: section_title: Institutionalizing Recent Improvements in Management and Acquisition Processes Will Be Critical to the Successful Implementation of NGATS
paragraphs: With the establishment of ATO and the appointment of a Chief Operating  Officer (COO) for it, FAA put a new management structure in place and  established more businesslike management and acquisition processes to  address the cost, schedule, and performance shortfalls that have plagued  ATC modernization over the years. Under the new structure, FAA is a  flatter organization, with fewer management layers, and managers are in  closer contact with the services they deliver. FAA has also taken some  steps to break down the vertical lines of authority, or organizational  stovepipes, that we found hindered communication and coordination  across FAA. For example, the COO holds daily meetings with the  managers of ATO’s departments and holds the managers collectively  responsible for the success of ATO through the performance management  system.
FAA has revised its management processes to increase accountability. For  example, it has established a cost accounting system and made the units  that deliver services within each department responsible for managing  their own costs. Thus, each unit manager develops an operating budget  and is held accountable for holding costs within specific targets. Managers  track the costs of their unit’s operations, facilities and equipment, and  overhead and use this information to determine the costs of the services  their unit provides. Managers are evaluated and rewarded according to  how well they hold their costs within established targets. Our work has  shown that it is important, when implementing organizational  transformations, to use a performance management system to assure  accountability for change.
Finally, FAA is revising its acquisition processes, as we recommended,  and taking steps to improve oversight, operational efficiency, and cost  control. To ensure executive-level oversight of all key decisions, FAA has  revised its Acquisition Management System to incorporate key decision  points in a knowledge-based product development process. Moreover, as  we have reported, an executive council now reviews major acquisitions  before they are sent to FAA’s Joint Resources Council. To better manage  cost growth, this executive council also reviews breaches of 5 percent or  more in a project’s cost, schedule, or performance. FAA has issued  guidance on how to develop and use pricing, including guidelines for  disclosing the levels of uncertainty and imprecision that are inherent in  cost estimates for major ATC systems. Additionally, FAA has begun to  base funding decisions for system acquisitions on a system’s expected  contribution to controlling operating costs. Finally, FAA is creating a  training framework for its acquisition workforce that mirrors effective  human capital practices that we have identified, and the agency is taking  steps to measure the effectiveness of its training.
Since 2004, FAA has met its acquisitions performance goal—to have 80  percent of its system acquisitions on schedule and within 10 percent of  budget. To sustain this record, FAA will need to institutionalize its  reforms—that is, provide for their duration beyond the current  administration at FAA and ATO by ensuring that the reforms are fully  integrated into the agency’s structure and processes at all levels and have  become part of its organizational culture. Our work has shown that  successfully institutionalizing change in large public and private  organizations can take 5 to 7 years or more.
section_title: Despite Recent Process Improvements, FAA Faces Challenges in Obtaining the Expertise Needed to Implement a System as Complex as NGATS
paragraphs: In the past, a lack of expertise contributed to shortfalls in FAA’s  management of ATC modernization projects. Although the personnel  flexibilities that Congress authorized in 1995 allowed FAA to establish  criteria for outstanding performance and match industry pay scales for  needed expertise, industry experts have questioned whether FAA will have  the technical expertise needed to implement NGATS—a task of  unprecedented complexity, according to JPDO, FAA, and other aviation  experts. In 2004, we found that FAA could not ensure that its own best  practices were consistently used in managing acquisitions and, as a result,  its major acquisitions were still at risk of cost overruns, schedule  slippages, or performance shortfalls. These findings are consistent with  concerns about the expertise of acquisition managers governmentwide.  According to a 2005 study by the Merit Systems Protection Board, at least  50 percent of the government personnel who currently manage technical  contracts reported needing training in areas such as contract law,  developing requirements, requesting bids, developing bid selection criteria  and price determinations, and monitoring contractor performance.
Recognizing the complexity of the NGATS implementation effort and the  possibility that FAA may not have the in-house expertise to manage it  without assistance, we have identified potential approaches for  supplementing FAA’s capabilities. One of these approaches is for FAA to  contract with a lead systems integrator (LSI). Generally, an LSI is a prime  contractor that would help to ensure that the discrete systems used in  NGATS will operate together and whose responsibilities may include  designing system solutions, developing requirements, and selecting major  system and subsystem contractors. The government has used LSIs before  for programs that require the integration of multiple complex systems. Our  research indicates that although LSIs have certain advantages, such as the  knowledge, understanding, skills, and ability to integrate functions across  various systems, their use also entails certain risks. For example, because  an LSI may have significantly more responsibility than a prime contractor  usually does, careful oversight is necessary to ensure that the  government’s interests are protected and that conflicts of interest are  avoided. Consequently, selecting, assigning responsibilities to, and  managing an LSI could pose significant challenges for JPDO and FAA.
Another approach that we have identified involves obtaining technical  advice from federally funded research and development corporations to  help the agency oversee and manage prime contractors. These nonprofit  corporations are chartered to provide long-term technical advice to  government agencies in accordance with various statutory and regulatory  rules to ensure independence and prevent conflicts of interest.
FAA officials indicated that they are considering at least these two  approaches to help address any possible gaps the agency may have in its  technical expertise. Given the complexity of implementing NGATS, we  believe that FAA’s consideration of these approaches to filling any gaps in  its technical expertise is appropriate. We believe that either of these  approaches could reduce the risks associated with implementing NGATS.
section_title: FAA Will Require Resources to Implement NGATS
paragraphs: The cost of operating and maintaining the current ATC system while  implementing NGATS will be another important challenge in transitioning  to NGATS—a system that, as noted, is broader in scope than the current  ATC system and will require funding for security technologies and  environmental activities as well as ATC technologies. Although additional  funding for the current ATC system and for NGATS may come from  increased congressional appropriations, some industry analysts expect  that most of the funds for implementing NGATS will have to come from  savings in operating and maintaining the current ATC system.
FAA is currently seeking to reduce costs by introducing infrastructure and  operational efficiencies and expects to use the savings from these efforts  to help fund the implementation of NGATS. For example, FAA has begun  to decommission ground-based navigational aids, such as compass  locators, outer markers, and nondirectional radio beacons, as it begins to  move toward a satellite-based navigation system. In fiscal year 2005, FAA  decommissioned 177 navigational aids, claiming savings of $2.9 million.  According to one expert, FAA could additionally generate revenue from  these sites by leasing them for warehouses or cell phone towers. FAA also  expects to reduce costs by streamlining its operations. For example, it is  consolidating its administrative activities, currently decentralized across  its nine regions, into three regions, and anticipates an annual savings of up  to $460 million over the next 10 years. Our work analyzing international air  navigation service providers has shown that additional cost savings may  be possible by further consolidating ATC facilities such as terminal radar  approach control (TRACON) facilities and ATC centers. According to one  estimate of potential FAA savings, consolidating the existing 21 air route  traffic control centers into 6 centers could save approximately $600  million per year. Finally, FAA expects to save costs through outsourcing.  For example, it outsourced its automated flight service stations to a  private contractor and expects to achieve savings of $1.7 billion over 10  years. In addition, it expects savings of $0.5 billion from 400 staffing  reductions that occurred between the time the outsourcing began and the  time the new contract was actually implemented. The agency expects to  receive $66 million—the first installment of these cost savings—in fiscal  year 2007.
Until FAA has completed its estimates of both NGATS costs and the cost  savings it will be able to achieve between now and 2025, it will not be able  to determine how far these cost savings will go toward financing NGATS.  Nonetheless, one analyst has preliminarily estimated that FAA’s expected  savings through infrastructure and operational efficiencies will fall far  short of the amount needed to finance NGATS. While more information is  needed to estimate the amount of any shortfall with greater confidence,  these preliminary and incomplete estimates signal the extent of the  resource challenge.
Mr. Chairman, this concludes my statement. We would be pleased to  answer any questions that you and Members of the Subcommittee may  have.
section_title: Contact and Staff Acknowledgments
paragraphs: For further information on this testimony, please contact Gerald  Dillingham at (202) 512-2834 or dillinghamg@gao.gov. Individuals making  key contributions to this statement include Kevin Egan, Elizabeth  Eisenstadt, David Hooper, Heather Krause, Elizabeth Marchak, Edmond  Menoche, Faye Morrison, Taylor Reeves, and Richard Scott.
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