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

Letter

FAA Has Made Progress in Addressing the Certification Process and Regulatory Consistency Committees’ Recommendations

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

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.

FAA Has Developed Plans to Address Recommendations to Improve the Consistency of Its Regulatory Interpretations, but Progress Has Been Slow

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.

Selected U.S. Companies Reported Challenges in Obtaining Foreign Approvals, Which FAA Has Taken Steps to Address within Sovereignty Constraints

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.

U.S. Companies Reported that they Experienced FCAA-Related Process, Communications, and Cost Challenges and FAA is Attempting to Address These Challenges

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.

U.S. Companies Also Reported FAA-Related Challenges, Which FAA Is Taking Actions to Address

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.

GAO Contact and Staff Acknowledgements

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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