Aviation Certification: Issues Related to Domestic and Foreign Approval of U.S. Aviation Products
Published: 2015-04-21T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: FAA issues certificates for new U.S.-manufactured aviation products, based on federal aviation regulations. GAO has previously reviewed the efficiency of FAA's certification process and the consistency of its regulatory interpretations. As required by the 2012 FAA Modernization and Reform Act, FAA chartered two aviation rulemaking committees in April 2012—one to improve certification processes and another to address regulatory consistency—that recommended improvements in 2012. FAA also assists U.S. aviation companies seeking approval of their FAA-certificated products in foreign markets. FAA has negotiated BASAs with many FCAAs to provide a framework for the reciprocal approval of aviation products. However, U.S. industry stakeholders have raised concerns that some countries conduct lengthy processes for approving U.S. products.
This testimony focuses on (1) FAA's reported progress in implementing the aviation rulemaking committees' 2012 recommendations regarding its certification process and the consistency of its regulatory interpretations and (2) the challenges that selected U.S. companies reported they have faced when attempting to obtain foreign approvals of their products, and how FAA is addressing some of the reported challenges. It is based on GAO products issued from 2010 to 2015, selectively updated in April 2015 based on FAA documents and information from FAA officials and selected industry stakeholders.
section_title: What GAO Found
paragraphs: The Federal Aviation Administration (FAA) has made progress in addressing the Certification Process and the Regulatory Consistency Committees' recommendations, but as GAO reported in January 2015, challenges remain that could affect successful implementation of FAA's planned actions.
FAA is implementing 14 initiatives for addressing 6 certification process recommendations. According to an April 2015 FAA update, 13 initiatives have been completed or are on track to be completed, and 1 will not meet planned milestones.
In January 2015, FAA published a detailed implementation plan for addressing six regulatory consistency recommendations. According to the plan, FAA closed two recommendations—one as not implemented and one as implemented in 2013—and plans to complete the remaining four by July 2016.
While FAA has made some progress, it is too soon for GAO to determine whether FAA's planned actions adequately address the recommendations. However, industry stakeholders indicated concerns regarding FAA's efforts, including concerns about a lack of communication with and involvement of stakeholders as FAA implements the two committees' recommendations. Since GAO reported in January 2015, FAA has been addressing these concerns.
In January 2015, GAO also reported that representatives of 15 selected U.S. aviation companies that GAO interviewed reported facing various challenges in obtaining foreign approvals of their products, including challenges related to foreign civil aviation authorities (FCAA) as well as challenges related to FAA.
Reported FCAA-related challenges related to (1) the length and uncertainty of some FCAA approval processes, (2) the lack of specificity and flexibility in some of FAA's bilateral aviation safety agreements (BASA) negotiated with FCAAs, (3) difficulty with or lack of FCAA communications, and (4) high fees charged by some FCAAs. Although FAA's authority to address some of these challenges is limited, FAA has been addressing many of them. For example, FAA created a certification management team with its three major bilateral partners to provide a forum for addressing approval process challenges, among other issues. FAA has also taken action to mitigate the challenges related to some BASAs by holding regular meetings with bilateral partners and adding dispute resolution procedures to some BASAs.

section_title: Letter
paragraphs: I am pleased to be here today to testify on the status of the Federal  Aviation Administration’s (FAA) efforts to improve its processes for  certifying new aviation products for domestic use, and the challenges  faced by U.S. aviation companies seeking product approvals in foreign  countries. The 2012 FAA Modernization and Reform Act required FAA to  work with industry to resolve issues related to the efficiency of FAA’s  certification processes and varying interpretations and applications of its  regulations in making compliance decisions during certification. In  response to the mandated provisions in the 2012 FAA Modernization and  Reform Act, in April 2012, FAA chartered two aviation rulemaking  committees—one to address certification processes (the Certification  Process Committee) and another to address regulatory consistency (the  Regulatory Consistency Committee)—which recommended  improvements in 2012. FAA also assists U.S. aviation companies in  getting their U.S.-certificated products approved for sale and export to  foreign countries. However, some U.S. industry stakeholders have raised  concerns that some countries do not accept the FAA certification and  conduct their own approval processes for U.S. products, which can be  lengthy and provide no additional safety benefit.
subsections: section_title: FAA Has Made Progress in Addressing the Certification Process and Regulatory Consistency Committees’ Recommendations
subsections: section_title: FAA Reports that Most of the Initiatives to Improve Its Aircraft Certification Processes Have Been Implemented, but It Is Too Early to Assess Whether Expected Outcomes Will Be Achieved
paragraphs: As you know, among its responsibilities for aviation safety, FAA’s Aircraft  Certification Service (Aircraft Certification) grants approvals (called type  certificates) for new aircraft, engines, and propellers. Certification  projects, which involve the activities to determine compliance of a new  product with applicable regulatory standards and to approve products for  certificates, are typically managed by one of Aircraft Certification’s local   Figure  offices (generally known as aircraft certification offices, or ACOs).1 lists the key phases in FAA’s process for issuing certificates for aviation  products. As depicted in the figure, both the applicant company and  Aircraft Certification staff are involved in each phase.
Studies published since 1980, our prior work, industry stakeholders, and  experts have long raised questions about the efficiency of FAA’s  certification processes and varying interpretations and applications of its  regulations in making compliance decisions during certification. Over  time, FAA has implemented efforts to address these issues, but as we  reported in July 2014,demand and its overall workload has increased. In 2013, FAA published a  detailed implementation plan for addressing the six certification process  recommendations, and, in January 2015, published a detailed  implementation plan for addressing the six regulatory consistency  recommendations.   they persist as FAA faces greater industry  As of April 2015, FAA has made progress in addressing the Certification  Process Committee’s recommendations, but as we reported in January  2015, challenges remain that could affect successful implementation of  the recommendations. FAA is implementing its plan for addressing the 6  certification process recommendations, which involves completing 14  initiatives. According to an April 2015 update that FAA provided to us, 13  initiatives were completed or were on track to be completed, and one will  not meet planned milestones. Figure 2 illustrates the evolving status of the 14 initiatives based on the update reported by FAA.
As figure 2 above indicates, 5 of the 14 certification process initiatives are  related to improving FAA’s organization designation authorization (ODA)  program. As of April 2015, FAA had completed three of the five ODA- related certification process initiatives, while the remaining two are  expected to be completed by the end of 2015. In January 2015, we noted  that industry stakeholders had emphasized the need for FAA to expand  its use of the ODA program to better leverage its available resources in  other needed areas (e.g., staff and other resources for processing foreign  approval applications—which will be discussed later in this statement).  For example, one aircraft manufacturer told us it is a practical necessity  for FAA to expand its ODA program to (1) better utilize private sector  expertise to keep pace with the growing aviation industry, (2) allow more  aerospace products to reach the market sooner, and (3) increase the  efficiency of the agency’s scarce resources. According to the General  Aviation Manufacturers Association (GAMA), the key strength of ODA is  FAA’s ability to delegate, at its discretion, certain certification activities  and test data reviews to qualified individuals or specific manufacturers’  employees. In doing so, FAA can leverage its resources by delegating  more of the lower priority work during the certification process, thereby  enabling FAA to better concentrate its limited staff resources on the most  pressing aspects of certification projects. Another manufacturer noted that  without expanded use of the program by FAA, the additional cost  associated with maintaining an ODA has begun to outweigh the benefits  of having the authorization.
As we found in July 2014, industry union representatives we spoke to  also reported concerns about the lack of FAA resources to effectively  expand the program.  While one labor union agreed with the concept of ODA, representatives had concerns related to expanding the program in  other areas because they contended that oversight of the program  required significant FAA resources. Furthermore, the representatives told  us that due to staffing shortages and increased workload, FAA did not  have enough inspectors and engineers to provide the proper surveillance  of the designees who had already been granted this authority. However,  as we reported in January 2015, it is too soon for us to determine whether  FAA’s initiatives adequately address the recommendations as intended,  and in this case, specifically for expanding the use of the ODA program.
section_title: FAA Has Developed Plans to Address Recommendations to Improve the Consistency of Its Regulatory Interpretations, but Progress Has Been Slow
paragraphs: According to the January 2015 regulatory consistency implementation  plan, FAA closed two recommendations—one as not implemented and  one as implemented in 2013—and plans to complete the remaining 4 by  July 2016. Table 1 provides a summary of the recommendations and  FAA’s plans for addressing them.
As we found in January 2015, while FAA has made some progress, it is  too soon for us to determine whether FAA’s planned actions adequately  address the recommendations. However, in that report, we also found  that challenges remain that could affect the successful implementation of  FAA’s planned actions. Industry representatives continued to indicate a  lack of communication with and involvement of stakeholders as a primary  challenge for FAA in implementing the committees’ recommendations,  particularly the regulatory consistency recommendations. However, FAA  noted that the processes for developing and updating its plans for  addressing the certification process and regulatory consistency  recommendations have been transparent and collaborative, and that FAA  meets regularly with industry representatives to continuously update them  on the status of the initiatives and for seeking their input. We also  reported in January 2015 that several industry representatives told us that  FAA had not effectively collaborated with or sought input from industry  stakeholders in the agency’s efforts to address the two sets of  recommendations, especially the regulatory consistency  recommendations. For instance, some stakeholders reported that FAA  did not provide an opportunity for them to review and comment on the  certification process implementation plan updates, and did not provide an  opportunity for them to review and offer input on the regulatory  consistency implementation plan. However, FAA reported meeting with  various industry stakeholders in October 2014 to brief them on the  general direction and high-level concepts of FAA’s planned actions to  address each regulatory consistency recommendation.
Since we reported in January 2015, FAA officials met with stakeholders of  the Regulatory Consistency Committee in March 2015 to brief them and  further clarify the plan to implement the regulatory consistency  recommendations. According to FAA, they are planning to conduct  quarterly briefings with the Committee stakeholders, starting in June  2015, to provide updates on the progress for addressing the four  remaining recommendations. FAA officials also noted that while the  implementation plan lists a completion date of March 2016 for the  recommendation for developing the Master Source Guidance System— which FAA calls the Dynamic Regulatory System—this completion date is  specifically for FAA’s efforts to determine the feasibility of including Office  of Chief Counsel letters in the system. In terms of completing the  development of the system, the officials told us they are currently ahead  of the schedule outlined in the implementation plan and are working on  finalizing the design concept for the new system. Once this process is  completed, they would be able to provide a more accurate completion  date for deployment of the system. According to one Committee  stakeholder, it is important that FAA remain committed to creating the  Master Source Guidance System, which was the Committee’s primary  recommendation.
section_title: Selected U.S. Companies Reported Challenges in Obtaining Foreign Approvals, Which FAA Has Taken Steps to Address within Sovereignty Constraints
paragraphs: In January 2015, we reported that, according to GAMA, the U.S. has  historically been viewed as setting the global standard for the approval of  aviation products internationally. Once U.S. aviation companies obtain a  type certificate from FAA to use an aviation product in the United States,  the companies often apply for approvals for the same products for use in  other countries. In 2012, the U.S. aerospace industry contributed $118.5  billion in export sales to the U.S. economy, with this sector remaining  strong in the European markets and growing in the emerging markets of  Asia and the Middle East. Some countries accept the FAA approval  outright as evidence that the product is safe for use in their country. Some  other countries, however, do not accept the FAA certification and conduct  their own approval processes for U.S. products, which can be lengthy,  according to some U.S. industry stakeholders. These stakeholders have  raised concerns that such practices provide no additional safety benefit  and result in U.S. companies facing uncertainty and costly delays in  delivering their products to foreign markets. FAA has taken steps to  address these concerns, but FAA’s authority to address some of the  challenges is limited because each country retains control of its basic  regulatory framework for approving aviation products and ensuring the  safety of those products for use in their countries—effectively a  recognition of the sovereignty of each country.
As counterparts to FAA, other countries’ civil aviation authorities—which  we will refer to as foreign civil aviation authorities (FCAA)—approve  domestically-manufactured aviation products for use in their respective  countries. FCAAs also approve U.S. aviation products for use in their  respective countries. These approvals are typically conducted within the  parameters of bilateral aviation safety agreements (BASA), which are  negotiated between FAA and other FCAAs. partnership agreements that provide a framework for the reciprocal  approval of aviation products imported and exported between the U.S.
According to FAA, it has 21 BASAs that affect 47 countries, including one BASA with the  European Aviation Safety Agency that covers the European Union (EU) member nations. and other countries.approvals of U.S. aviation products from FCAAs.
subsections: section_title: U.S. Companies Reported that they Experienced FCAA-Related Process, Communications, and Cost Challenges and FAA is Attempting to Address These Challenges
paragraphs: Representatives of the 15 selected U.S. aviation companies we  interviewed for our January 2015 statement reported that their companies  faced challenges related to process, communications, and cost in  obtaining approvals from FCAAs. The processes involved included  FCAAs’ individual approval processes as well as the processes spelled  out in the relevant BASAs. In our January 2015 statement, we identified  some efforts FAA is making to address these challenges, such as holding  regular meetings with some bilateral partners—i.e., countries for which  FAA has a BASA in place—and setting up forums in anticipation of issues  arising.
Reported FCAA process challenges. Of the 15 companies we  interviewed, representatives from 12 companies reported mixed or  varied experiences with FCAAs’ approval processes, and 3 reported  positive experiences. Thirteen companies reported challenges related  to delays, 10 reported challenges with approval process length, and 6  reported challenges related to FCAA staffs’ lack of knowledge or  uncertainty about the approval processes, including FCAA requests  for data and information that, in the companies’ views, were not  needed for approvals. FAA has taken actions aimed at alleviating  current and heading off future challenges related to foreign approval  processes. For example, in September 2014, FAA—along with Brazil,  Canada, and the EU—established a Certification Management Team  to provide a forum for addressing approvals and other bilateral  relationship issues. FAA also recently established a pilot program that  allows a U.S. company to work concurrently with multiple FCAAs for  obtaining approvals and to identify key FCAA approval needs and  ensure adequate FAA support.
Reported issues related to some BASAs. Although representatives  from 11 of the 15 U.S. companies and the 3 foreign companies we  interviewed reported being satisfied with the overall effectiveness of  having BASAs in place or with various aspects of the current BASAs,  representatives of 10 U.S. companies reported challenges related to  some BASAs lacking specificity and flexibility, 2 raised concerns that  there is a lack of a formal dispute resolution process, and 1 noted a  lack of a distinction between approvals of simple and complex aircraft.
Companies suggested several ways to address these issues,  including updating BASAs more often and making them clearer. FAA  has taken action to improve some BASAs to better streamline the  approval process that those countries apply to imported U.S. aviation  products. For instance, according to FAA officials, they meet regularly  with bilateral partners to address approval process issues and are  working with these partners on developing a common set of approval  principles and to add specific dispute resolution procedures in the  agreements with some countries. FAA officials also indicated that they  are working with longstanding bilateral partners—such as Brazil,  Canada, and the EU—to identify areas where mutual acceptance of  approvals is possible.
Reported Challenges in Communicating with FCAAs. Representatives  from 12 U.S. companies reported challenges in communicating with  FCAAs. Representatives from six U.S. companies reported, for  example, that interactions with developing countries can be confusing  and difficult because of language and cultural issues. Representatives  from two companies noted that they hire local representatives as  consultants in China to help them better engage the Civil Aviation  Administration of China (CAAC) staff with their approval projects and  to navigate the CAAC’s process. One company’s representative also  reported having better progress in communications with FCAAs in  some Asian countries, such as India Japan, and Vietnam, when a  local “third-party agent” (consultant) is involved because it provides a  better relationship with the FCAAs’ staff. Representatives from three  companies also reported that, in general, some FCAAs often do not  respond to approval requests or have no back-ups for staff who are  unavailable. They noted that potential mitigations could include a  greater FAA effort to develop and nurture relationships with FCAAs.  According to FAA officials, they are working with the U.S.-China  Aviation Cooperation Program to further engage with industry and  Chinese officials.
Reported Challenges Related to Foreign Approval Costs.
Representatives from 12 of the 15 U.S. companies and 2 of the 3  foreign companies indicated challenges with regard to approval fees  charged by FCAAs. They specifically cited EASA—the EU’s  counterpart to FAA—and the Federal Aviation Authority of Russia. For  example, they noted that EASA’s fees are very high (up to 95 percent  of the cost of a domestic EASA certification)—especially relative to  the amount levied by other FCAAs—are levied annually, and are  unpredictable because of the unknown amount of time it takes for the  approval to be granted. The fees are based on the type of product  being reviewed for approval and can range from a few thousand  dollars to more than a million dollars annually. Representatives from  two companies also noted that EASA lacks transparency for how the  work it conducts to grant approvals aligns with the fees it levies for  recovering its costs. FAA officials indicated to us that a foreign  approval should take significantly less time and work to conduct than  the work required for an original certification effort—roughly about 20  percent—and that they have initiated discussions with EASA officials  about making a significant reduction in the fees charged to U.S.  companies. However, recently, FAA indicated that it is more important  to work with EASA to ensure its fees are commensurate with the  actual costs of the services being provided and those incurred by  EASA.
section_title: U.S. Companies Also Reported FAA-Related Challenges, Which FAA Is Taking Actions to Address
paragraphs: As mentioned previously, FAA provides assistance to U.S. companies by  facilitating the application process for foreign approvals of aviation  products. Although FAA seeks to provide an efficient process, companies  we interviewed for our January 2015 statement reported challenges that  they faced related to FAA’s role in this process. FAA-related challenges  cited by the companies we interviewed fell into three main categories:  process, resources, and staff expertise.
Process for facilitating foreign approvals. Most of the U.S. companies  in our selection (12 of 15) reported challenges related to FAA’s  process for handling foreign approvals. These included concerns  about foreign approvals not being a high enough priority for FAA staff,  a lack of performance measures for evaluating BASAs, and an  insufficient use of FAA’s potential feedback mechanisms. For  example, representatives of three companies told us that sometimes  FAA is delayed in submitting application packets to FCAAs because  other work takes priority; one of these companies indicated that  sometimes FAA takes several months to submit packets to FCAAs. In  another example, representatives of four companies cited concerns  that BASAs do not include any performance measures, such as any  expectations for the amount of time that it will take for a company’s  foreign approval to be finalized. With regard to FAA using feedback  mechanisms to improve its process for supporting foreign approvals,  representatives of one company told us that applicant companies are  not currently asked for post-approval feedback by FAA, even though it  would be helpful in identifying common issues occurring with foreign  approvals.
Available resources. Most of the U.S. companies in our selection (10  of 15) reported challenges related to the availability of FAA staff and  other resources. These include limited FAA travel funds and limited  FAA staff availability to process foreign approval applications.  According to FAA officials, FAA is responsible for defending the  original type certification and, more broadly, for handling any disputes  that arise with FCAAs during the foreign approval process. In doing  so, FAA is also responsible for working with an FCAA in an authority- to-authority capacity, and communications should flow through FAA to  the applicant company. However, representatives of five companies  noted that due to a lack of FAA travel funds, FAA staff are generally  not able to attend key meetings between U.S. companies and FCAAs  conducted at the beginning of the foreign approval process. These  representatives noted that this can complicate the process for  companies, which then have to take on a larger role in defending the  original type certificate issued for a product. Representatives of two  companies also noted that when there is limited FAA staff availability  at the time a foreign approval application is received, it contributes to  delays in obtaining their approvals. In fact, the Certification Process  Committee made recommendations to encourage FAA to include the  expansion of delegation in its efforts for improving the efficiency of its  certification process. As previously discussed, FAA does have  initiatives under way related to expanding the use of delegation, but  concerns continue to exist about the lack of FAA resources to  effectively do so.
Staff expertise. Some of the U.S. companies in our selection (7 of 15)  reported issues related to FAA staff expertise. These issues cited  included limited experience on the part of FAA staff in dispute  resolution as well as limited expertise related to intellectual property  and export control laws. For example, representatives of three  companies told us that FAA staff sometimes lack technical knowledge  due to having little or no experience with some aviation products,  while a representative of another company argued that increased  training for FAA staff in dispute resolution could be very helpful,  especially for disputes involving different cultural norms. In another  example, representatives of two companies described situations in  which FAA staff were ready to share information with an FCAA that  the applicant company considered proprietary, until the company  objected and other solutions were found.
In January 2015, we found that FAA has initiatives under way aimed at  improving its process for supporting foreign approvals that may help  address some of the challenges raised by the U.S. companies in our  review. Specifically, FAA’s current efforts to increase the efficiency of its  foreign approval process could help address reported challenges related  to FAA’s process and its limited staff and financial resources. For  example, FAA is planning to address its resource limitations by focusing  on improving the efficiency of its process with such actions as increasing  international activities to support U.S. interests in global aviation, and by  implementing its 2018 strategic plan, which includes the possibility of  allocating more resources to strengthening international relationships.  FAA has also initiated efforts to improve the robustness of its data on  foreign approvals, to further improve the efficiency of its process for  supporting these approvals. With more complete data, FAA aims to track  performance metrics, such as average timeframes for foreign approvals,  and to better evaluate its relationships with bilateral partners.
As we concluded in January 2015, to its credit, FAA has made some  progress in addressing the Certification Process and Regulatory  Consistency Committees’ recommendations, as well as in taking steps to  address challenges faced by U.S. aviation companies in obtaining foreign   It will be critically important for FAA to follow  approvals of their products.through with its current and planned initiatives to increase the efficiency  and consistency of its certification processes, and its efforts to address  identified challenges faced by U.S. companies in obtaining foreign  approvals. Given the importance of U.S. aviation exports to the overall  U.S. economy, forecasts for continued growth of aviation exports, and the  expected increase in FAA’s workload over the next decade, it is essential  that FAA undertake these initiatives to ensure it can meet industry’s future  needs. It is also important that FAA continue to demonstrate that it is  making progress on these important initiatives, as well as enhance its  data tracking for monitoring the effectiveness of its bilateral agreements  and partnerships.
Going forward, we will monitor FAA’s progress, highlight the key  challenges that remain, and identify potential steps that FAA and industry  can take to find a way forward on the issues covered in this statement as  well as other issues facing the industry. As we noted in our October 2013  statement, however, some improvements to the certification processes  will likely take years to implement and, therefore, will require a sustained  commitment as well as congressional oversight. findings in these areas will assist this Subcommittee as it develops the  framework for the next FAA reauthorization act.
We are hopeful that our  Chairwoman Ayotte, Ranking Member Cantwell, and Members of the  Subcommittee, this concludes my prepared remarks. I would be happy to  answer any questions you or other members of the Subcommittee may  have.
GAO-14-142T.
section_title: GAO Contact and Staff Acknowledgements
paragraphs: For future contacts regarding this statement, please contact Gerald L.  Dillingham, Ph.D., at (202) 512-2834 or dillinghamg@gao.gov. In  addition, contact points for our Offices of Congressional Relations and  Public Relations can be found on the last page of this statement.
Individuals making key contributions to this testimony statement include  Vashun Cole, Assistant Director; Jessica Bryant-Bertail; Jim Geibel; Josh  Ormond; Amy Rosewarne; and Pamela Vines. Other contributors  included Kim Gianopoulos, Director; Dave Hooper; Stuart Kaufman; and  Sara Ann Moessbauer.
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