Federal Aviation Administration: Stakeholders' Perspectives on Potentially Moving the Office of Commercial Space Transportation
Released: 2017-10-05T00:00:00

Letter

Background

In 1984, the Commercial Space Launch Act gave DOT the authority, among other things, to license and monitor the safety of commercial space launches and to promote the industry. Executive Order 12465 designated DOT as the lead federal agency for enabling private-sector launch capability. The Office of Commercial Space Transportation and its responsibilities, which were originally within the Office of the Secretary of Transportation, were transferred to FAA in 1995.

The U.S. commercial space launch industry has achieved several milestones since 1984. For example, in recent years SpaceX, a commercial space launch company, has successfully tested reusable elements of expendable launch vehicles and landed them back on land and on an off-shore landing vessel called a drone ship. In addition, the industry is changing with the emergence of some suborbital launch vehicles that are capable of being launched into space more than once and can enable space tourism. For example, Blue Origin has successfully launched and landed the vehicle it intends to use in the future for space tourism. By adding an expendable upper stage, suborbital vehicles can also be used to transport small satellites to orbit. Furthermore, although licensed launches historically took place at federal launch sites such as Cape Canaveral Air Force Station and the National Aeronautics and Space Administration’s Kennedy Space Center, launch sites now can be private spaceports or FAA-licensed launch sites. One launch site is co-located at an airport that has scheduled commercial airline flights and other spaceports are used for general aviation. As of August 2017, there were 10 licensed launch sites in the United States.

The Office of Commercial Space Transportation works with other FAA lines of business such as: the Air Traffic Organization on integrating licensed launches and permitted activities in the national airspace, the Office of Airports regarding airports that seek to be or already are licensed launch sites, and the Office of Aviation Safety on launch vehicles that follow aircraft rules and can be used for commercial space activities.

In fiscal year 2017, the Office of Commercial Space Transportation had 104 full-time equivalent positions and an operations budget of $19.8 million—an increase of 20 full-time equivalent positions and $2 million over fiscal year 2016. FAA has a staff of over 40,000 people and a budget of $16.4 billion in fiscal year 2017. According to the Office of Commercial Space Transportation, its workload has increased significantly in recent years, particularly regarding pre-application consultations for launch and launch site licenses.

The Office of the Secretary of Transportation has offices that are responsible for policy, legal, and government affairs among other issues.

In 1987, the House Appropriations Committee recommended that DOT perform a comprehensive organization and management study of the Office of Commercial Space Transportation with the objectives of eliminating duplication of activities carried out by offices within the Office of the Secretary and DOT modal administrations, and determining potential areas for streamlining operations. In 1991, DOT asked the National Academy of Public Administration to analyze and evaluate the key organizational and management issues facing the Office of Commercial Space Transportation which at that time was located in the Office of the Secretary of Transportation. The report considered organizational options for the office including establishing an independent regulatory office, merging the office into an existing operating administration such as FAA, transferring this office to bureau status in DOT, or creating a new operating administration in DOT. According to the report, three of the study’s five panel members stated that they believed that the office should be removed from the Office of the Secretary of Transportation and established as an operating administration because its mission was inconsistent with the broad and cross-cutting organizations within the Secretary’s Office that are focused on policy, budget, and administrative issues.

Stakeholders Cited Various Perspectives on Moving the Office of Commercial Space Transportation

Representatives from the commercial space launch companies and spaceports we spoke to described both potential advantages and disadvantages of moving the office, but most of them favored moving the office. On the other hand, most FAA officials we interviewed did not favor the idea. A senior official in the Office of Commercial Space Transportation said that there are advantages and disadvantages to moving the office and that whether such an action would be beneficial depended on the implementation details and the administration’s preferences. Officials from the Office of the Secretary of Transportation said they currently do not have plans to move the office. Stakeholders and officials provided perspectives on what they believe might result from a move including discussions regarding communicating with the industry and coordinating within FAA, program operations, updating regulations, and obtaining resources for the office, and other issues.

Stakeholder Perspectives on Advantages and Disadvantages of a Move

Communication and Coordination

Officials in the Office of the Secretary of Transportation said a possible advantage of moving all or part of the office would be having a unified point of contact for communicating with the industry on commercial space launch issues. Representatives from a commercial space launch company also said that rather than working with various FAA offices, they would like there to be a “one-stop shop” for commercial space launch issues and a senior official in the Office of Commercial Space Transportation indicated the office’s original purpose was to fulfill that role. Some company representatives further explained that although they generally work with the Office of Commercial Space Transportation on licensing issues and with the Air Traffic Organization on airspace access, in some cases, the lines of responsibility between the two offices are not clearly defined. Furthermore, a spaceport official said that in addition to working with the Office of Commercial Space Transportation he also needs to work with FAA’s Office of Airports, which reviews the effects of spaceports on airports, among other responsibilities.

In discussing these issues with the senior official involved in the Air Traffic Organization’s emerging technologies integration efforts, the official said that although there is overlap and a need for more communication between the Office of Commercial Space Transportation and the Air Traffic Organization, coordination between the two offices is improving. He also said that later this year or early next year, FAA plans to start an aviation rulemaking advisory committee that will help to determine airspace access priorities for all national airspace users. Similarly, an official from the Office of Airports said the office is developing standard operating procedures and a memorandum of understanding with the Office of Commercial Space Transportation to resolve issues. A spaceport official who has been working on a launch site operator’s license application for several years confirmed that coordination among various FAA offices on commercial space launch issues has significantly improved during the last 6 months.

Furthermore, several FAA senior officials said that moving the office could make it more difficult for FAA offices to coordinate on commercial space activities. For example, a senior official involved in the Air Traffic Organization’s emerging technologies integration efforts said that although such a move may increase the visibility of the Office of Commercial Space Transportation, it would not necessarily improve airspace integration. In addition, written responses to our questions from the Office of Aviation Safety indicated that their ability to interact with the Office of Commercial Space Transportation at an internal agency level may be less cumbersome than having to go through the additional communication protocols at the level of the Office of the Secretary of Transportation. Similarly, officials from the Office of Airports indicated that coordinating airspace review is an inherently FAA function that uses the experience and knowledge of subject matter experts located within the FAA, and that moving the commercial space office to the Office of the Secretary of Transportation could affect the efficiency of these reviews. Officials from the Office of the Secretary of Transportation also said that even if the commercial space transportation office were moved to their office, they would still need to work with FAA on airspace access issues and that they would not necessarily favor the industry regarding airspace issues.

Moreover, FAA officials we interviewed said they are working on improving commercial space coordination through various working groups, particularly through the Commercial Space Transportation Executive Working Group that was formed earlier this year to coordinate on commercial space issues. This group is chaired by the official directing commercial space integration in the Office of Commercial Space Transportation and is comprised of executives from across the agency, including the Air Traffic Organization, the Office of Airports, and the Office of Aviation Safety. According to the group’s chairman, this group was formed to formalize coordination on commercial space launch issues across the agency because there was confusion among commercial space stakeholders and across the agency, and commercial space launch companies were hearing different things from different FAA lines of business. The group’s chairman said that the Executive Working Group reports to FAA’s New Entrants Board, a group formed to provide status updates on activities and events as well as decide how to move forward on specific initiatives associated with new entrants to the airspace such as drones and commercial space launch vehicles and is comprised of the principal leaders of FAA lines of business working on these issues. An FAA senior official told us that he believes commercial space coordination issues will be resolved as launches become more routine. In addition, the Air Traffic Organization has formed an Emerging Technologies Integration Office to focus on integrating commercial space operations and unmanned aircraft system activities within the national airspace system. A senior official in that office said that for decades, the Air Traffic Organization was focused on airplanes and that any deviation in airplane flow was viewed as an impediment, but that his office’s goal is to shift the understanding within the organization from an airplane-only focus to the idea that several types of vehicles can use the national airspace system.

Program Operations

A representative from one commercial space launch company said that an advantage of moving the Office of Commercial Space Transportation and thereby making space transportation its own mode, is that it could facilitate a more “level playing field” for space activities operating in and through the national airspace system. The representative noted that the Air Traffic Organization is a much larger office than the Office of Commercial Space Transportation and is focused on aviation safety which is regulated differently than space activities. As a result, the representative said that companies perceive an unequal playing field between these two offices and the risk of negative effects if aviation standards are imposed on space, including airspace closures during launch and reentry. According to the representative, because of the Air Traffic Organization’s lack of familiarity with space launch operations and the mechanics of placing a spacecraft into orbit or on a trajectory to another celestial body, the office has suggested launch times be limited to certain times of day and certain days of the month as dictated by the amount of air traffic. The representative said that the Air Traffic Organization’s proposed approach is “untenable” for commercial space launches because launch times are dictated by orbital mechanics and that the Air Traffic Organization has imposed airspace restrictions during the holidays that have required launches to be rescheduled. A representative from another commercial space launch company said that an unequal playing field between these two offices results in the Office of Commercial Space Transportation not having the practical authority commensurate with its responsibility. According to this representative, the impact of this mismatch results in confusion over authority and negatively affects when commercial space companies are able to launch as well as excessive time and volume of airspace closed during a launch. A representative from a third company said that there are multiple variables to consider about moving the office. The representative said that while moving the Office of Commercial Space Transportation to the Office of the Secretary of Transportation would provide it with much more visibility, the office may still be at a disadvantage when it disagrees with larger offices in the FAA. In addition, the representative said that most launch companies would still have to work with FAA on air traffic control issues as well as hybrid vehicles and experimental aircraft licenses. Moreover, a representative from the Commercial Spaceflight Federation said that although the association does not have a consensus position on moving the Office of Commercial Space Transportation, its members are concerned that the Air Traffic Organization is attempting to treat the rapidly developing area of commercial space similarly to how it treats the mature commercial aviation industry.

In response to these comments, an Air Traffic Organization official told us that the airspace is restricted to commercial space launches for about 15 days per year during the holidays because a launch can affect hundreds of flights and that they prefer that launches occur when there are fewer effects on the national airspace system, for example, at night. However, an official said that the Air Traffic Organization has only denied one launch request over the last 5 years. An Air Traffic Organization official also said that they do not regulate the commercial space launch industry and focus on providing safe access to the airspace by all users of the national airspace system. In addition, an official involved with commercial space integration in the Office of Commercial Space Transportation and a spaceport representative told us they expect that technology will allow for more efficient use of the national airspace in the future by reducing the amount of time that the airspace will need to be shut down for launches.

Regulations

Some stakeholders said that moving the Office of Commercial Space Transportation could help accelerate the pace of updating regulations to reflect new technology, which they said was proceeding too slowly. A senior official in the Office of Commercial Space Transportation said that instead of competing with other FAA offices for rulemaking approval within the agency, moving the Office of Commercial Space Transportation to the Office of the Secretary might give the commercial space office a higher priority with regard to rulemaking. However, officials from the Office of the Secretary of Transportation also said that the regulatory rulemakings are not allocated by office but are set according to the priorities of each administration, so moving the office would not necessarily affect regulatory reform efforts.

Resources

According to some stakeholders and a senior official in the Office of Commercial Space Transportation, moving the office out of FAA could give commercial space launch issues a higher profile and more resources because FAA is focused on aviation as opposed to commercial space. One stakeholder also said moving the office out of FAA would make the office a priority as an independent organization within DOT. Furthermore, a senior official in the Office of Commercial Space Transportation said that the office has reached the limits of what it can accomplish with existing resources, policies, and authorities, and that moving the office could enable industry growth. In addition, a company representative said that the primary possible advantage of moving the office would be to have an Assistant Secretary for Commercial Space Transportation who would be in a leadership position to represent the growing industry directly to the Secretary of Transportation. However, officials from the Office of the Secretary of Transportation said that it is uncertain whether the Office of Commercial Space Transportation would receive more resources if it were moved to the Secretary’s office. In addition, some stakeholders said that if moved, the office would have to pay for support services that are currently available within FAA, such as legal, regulatory, human resources, and administrative support.

Other Issues Noted by Stakeholders and Officials

A commercial space launch company representative suggested that the Office of Commercial Space Transportation’s promotional responsibilities should be separate from its regulatory responsibilities to avoid even the appearance of a conflict of interest between regulating safety and promoting a company interest, but did not suggest that its promotional responsibilities had affected safety. In addition, a senior FAA official said that it would make sense to move the Office of Commercial Space Transportation’s promotion duties out of FAA because of an inherent conflict with the office being both a promoter and a regulator. Officials from the Office of the Secretary said transferring the policy and promotion aspects of the Office of Commercial Space Transportation’s work to the Secretary’s office, but not the launch licensing responsibilities, is one of various options regarding the office but that they have not advanced a specific proposal. A senior official in the Office of Commercial Space Transportation said there is no specific office within the Office of Commercial Space Transportation that promotes the industry and that the office’s promotional functions are part of its overall responsibilities, so moving only the promotional responsibilities would not be feasible.

A former DOT official who served in a senior position when the Office of Commercial Space Transportation was transferred to FAA in 1995 noted that one reason the office was moved was because of the belief that the Office of the Secretary of Transportation should not be involved in programmatic activities that belong in the operating agencies. However, in 2014, Congress moved a programmatic office, the Research and Innovative Technology Administration (RITA), to the Office of the Secretary of Transportation. This former DOT official also said that the Office of Commercial Space Transportation would benefit from the technological and engineering support available within FAA.

Finally, representatives from commercial space launch companies and an FAA official had different perspectives on whether the Office of Commercial Space Transportation would or should be its own modal agency within DOT or part of the Office of the Secretary of Transportation. For example, a company representative who favored moving the office said that commercial space could easily be considered its own transportation mode and not as part of aviation. Another company’s representative expected that the Office of Commercial Space Transportation, if it were moved out of FAA, would start out as its own modal agency. A third stakeholder suggested that eventually space transportation will become its own independent mode of transportation such as air, sea, rail, and roads and that moving the Office of Commercial Space Transportation out of the FAA is an inevitable first step in that direction. A senior official from the Office of Commercial Space Transportation said that moving the Office of Commercial Space Transportation would be a step toward considering commercial space transportation as a mode similar to rail or highway transportation.

Steps Can Be Taken through DOT’s Rulemaking Process to Move the Office of Commercial Space Transportation

All or part of the Office of Commercial Space Transportation can be transferred back to the Secretary’s office through a rulemaking process as was used in 1995 to amend the existing DOT delegation regulation. This process, which does not require congressional approval, was used when the Secretary of Transportation delegated the office’s responsibilities from DOT to FAA in 1995. FAA officials and the former Deputy Secretary of Transportation said moving the Office of Commercial Space Transportation from the Office of the Secretary of Transportation to FAA in 1995 was a “seamless” process. FAA and DOT officials said the following steps would need to be taken to move the office:

Equivalent salaries would need to be determined for employees who are transferring because FAA and DOT have different pay scales.

Legal, human capital, and administrative support currently provided by FAA would need to be obtained from DOT.

New physical space for the office would likely need to be obtained, as FAA and the Office of the Secretary of Transportation are in different buildings.

New processes and procedures for coordination and communication would need to be established.

Key Practices and Considerations for Organizational Changes

Our prior work has identified key practices and questions for consideration when evaluating proposals for or implementing organizational changes such as a consolidation or merger. We have previously found that implementing large-scale change management initiatives, such as mergers and organizational transformations, are not simple endeavors and require the concentrated efforts of both leadership and employees to realize intended synergies and to accomplish new organizational goals. We have found that mergers and transformations that incorporate strategic human capital management approaches will help to sustain agency efforts and improve the efficiency, effectiveness, and accountability of the federal government. These key merger and transformation practices include focusing on a key set of principles and priorities at the outset of the transformation, setting implementation goals and a timeline to build momentum and show progress, and establishing a communication plan. Questions to consider when evaluating consolidation proposals include (1) What are the goals of the consolidation? and (2) What will be the likely costs and benefits of the consolidation?

Based on these key practices and considerations, DOT and FAA, for example, would need to determine the purpose of moving the Office of Commercial Space Transportation and the costs and benefits of such a move. Furthermore, to ensure employee and management support, DOT and FAA would need to obtain the buy-in of various FAA offices involved in commercial space launch issues such as the Air Traffic Organization. In addition, to assess the costs of the transformation, DOT and FAA would need to determine the costs of any additional support that would be needed by moving to the Office of the Secretary such as legal and administrative support. Moreover, DOT could consider the risk of unintended consequences of moving the office such as incurring additional costs. In addition, a spaceport representative told us that he is more concerned about the execution of moving the office than its placement. The representative said that although conceptually moving the office to the Office of the Secretary of Transportation could bring it more visibility and resources, the move would be futile if it is executed poorly. Therefore, if a decision were made to move the office, an implementation plan would be needed, consistent with our key mergers and transformation practices. Implementing a large-scale organizational transformation requires the concentrated efforts of both leadership and employees to accomplish new organizational goals. Agencies should have an implementation plan that includes essential change-management practices such as active, engaged leadership of executives at the highest possible levels; a dedicated implementation team that can be held accountable for a strategy for capturing best practices, measuring progress toward the established goals of the consolidation, retaining key talent, and assessing and mitigating risk, among others.

Table 1 of appendix I lists the key practices and implementation steps that we have previously identified for mergers and organizational transformations. Table 2 of appendix I provides the key questions we have identified for evaluating proposals to consolidate physical infrastructure and management functions. Although moving the office does not involve a consolidation, we believe that many of these questions would apply to other organizational changes such as an office move.

Agency Comments

We provided a draft of this report to DOT for review and comment. DOT provided technical comments via email which we incorporated as appropriate.

We are sending copies of this report to the Secretary of Transportation, the Administrator of the Federal Aviation Administration, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have questions concerning this report, please contact me at (202) 512-2834 or dillinghamg@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix II.

Appendix I: Key Practices for Mergers and Organizational Transformations and Questions to Consider for Consolidations

Appendix I: Key Practices for Mergers and Organizational Transformations and Questions to Consider for Consolidations Key Questions What are the goals of the consolidation? What opportunities will be addressed through the consolidation and what problems will be solved? What problems, if any, will be created?

What will be the likely costs and benefits of the consolidation? Are sufficiently reliable data available to support a business-case analysis or cost-benefit analysis?

How can the up-front costs associated with the consolidation be funded?

Who are the consolidation stakeholders, and how will they be affected? How have the stakeholders been involved in the decision, and how have their views been considered? On balance, do stakeholders understand the rationale for consolidation?

To what extent do plans show that change-management practices will be used to implement the consolidation? (Please see table 1 for the key merger and transformation practices.)

Appendix II: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact named above, Cathy Colwell (Assistant Director); Bob Homan (Analyst-in-Charge); Maureen Luna-Long; Dave Hooper; SaraAnn Moessbauer; and Sarah Veale made key contributions to this report.