The Commission made 14 recommendations in the general area of aviation safety. Foremost among these is establishing a national goal to reduce the fatal accident rate by 80 percent within 10 years. This is a very challenging goal, particularly in the light of the projected increases in the amount of air traffic in the coming decade. We applaud the Commission’s adopting such a goal for accident reduction and endorse many of its recommendations for improving safety. These recommendations include, for example, expanding FAA’s inspection program to cover not only aging aircraft’s structural integrity but also such areas as electrical wiring, fuel lines, and pumps. A number of these recommendations resonate with safety and efficiency improvements that we and others, including FAA, have suggested over the years. However, we believe that, as FAA tries to fundamentally reinvent itself as the Commission contemplates through some of its recommendations, FAA and the aviation industry will be challenged in three areas: (1) FAA’s organizational culture and resource management, (2) FAA’s partnerships with the airline industry, and (3) the costs of and sources of funding to implement the recommendations. A number of recent studies and the FAA itself have pointed to the importance of culture in the agency’s operations. Last year, our review of FAA’s organizational culture found that it had been an underlying cause of the agency’s persistent acquisition problems, including substantial cost overruns, lengthy schedule delays, and shortfalls in the performance of its air traffic control modernization program. Furthermore, the lack of continuity in FAA’s top management, including the Administrator and some senior executive positions, has fostered an organizational culture that has tended to avoid accountability, focus on the short term, and resist fundamental improvements in the acquisitions process. Similarly, a 1996 report issued by the Aviation Foundation and the Institute of Public Policy stated that the recent actions taken to reorganize FAA have done nothing to change the long-term structural problems that plague the organization. The study concluded that FAA does not have the characteristics to learn and that its culture does not recognize or serve any client other than itself. As FAA’s own 1996 report entitled Challenge 2000 points out, it will take several years to overcome the many cultural barriers at FAA, determine the skill mix of the workforce of the 21st century, and recruit the necessary talent in a resource-constrained environment. In the light of these studies’ results, we would caution that the organizational and cultural changes envisioned by the Commission may require years of concerted effort by all parties concerned. In connection with resource management, FAA’s fiscal year 1998 budget request reveals some difficult choices that may have to be made among safety-related programs. For example, FAA proposes increasing its safety inspection workforce by 273 persons while decreasing some programs for airport surface safety, including a program designed to reduce runway incursions. The National Transportation Safety Board has repeatedly included runway incursions on its annual lists of its “most wanted” critical safety recommendations. FAA’s budget request includes a reduction in the Runway Incursion program from $6 million in fiscal year 1997 to less than $3 million in fiscal year 1998. Although FAA set a goal in 1993 to improve surface safety by reducing runway incursions by 80 percent by the year 2000 from the 1990 high of 281, the results have been uneven; there were 186 runway incursions in 1993 and 246 in 1995. As was shown by the November 1994 runway collision in St. Louis, Missouri, between a commercial carrier and a private plane, such incidents can have fatal consequences—2 people lost their lives. It is unclear what progress will be made in this area, given the proposed budget cuts. Similarly, we have reported since 1987 that the availability of complete, accurate, and reliable FAA data is critical to expanding the margin of safety. However, funding for FAA’s National Aviation Safety Data Analysis Center, a facility designed to enhance aviation safety by the rigorous analysis of integrated data from many aviation-related databases, is slated to be reduced from $3.7 million in fiscal year 1997 to $2 million in fiscal year 1998. The Commission’s report stresses that safety improvements cannot depend solely on FAA’s hands-on inspections but must also rely on partnerships with the aviation industry in such areas as self-monitoring and certification. Several programs for the airlines’ self-disclosure of safety problems have already contributed to identifying and resolving some of these types of problems. For example, one airline’s program for reporting pilot events or observations—a joint effort by the airline, the pilot union, and FAA—has identified safety-related problems, the vast majority of which would not have been detected by relying solely on FAA surveillance. The discovery of these problems has resulted in safety improvements to aircraft, to the procedures followed by flight crews, and to air traffic patterns. As the Commission has recognized, however, such information will not be provided if its disclosure threatens jobs or results in punitive actions. However, FAA’s role in some broader partnerships with industry has also raised some questions. For example, FAA’s cooperative process working with Boeing on the 777 aircraft helped enable the manufacturer to meet the planned certification date, but FAA was also criticized by some FAA engineers and inspectors for providing inadequate testing of the aircraft’s design. In the case of self-disclosure programs, decisions will have to be made on which aviation entities are best suited to such partnership programs, how to monitor these programs and make effective use of the data they offer, how to balance the pressure for public disclosure against the need to protect such information, and how to standardize and share such information across the aviation industry. With broader cooperation between FAA and the aviation industry, the Congress and FAA need to be on guard that the movement toward partnerships does not compromise the agency’s principal role as the industry’s regulator. Finally, it is important to point out that the costs associated with achieving the accident reduction goal and who should pay for these costs have not yet been determined. In accordance with the Commission’s call for more government-industry partnerships, government, the industry, and the traveling public would likely share in these costs. For example, FAA’s partnership programs involve significant costs for both the agency and the industry. In the case of equipping the cargo holds of passenger aircraft with smoke detectors, the cost would fall initially on the industry, while the costs associated with the recommendation that children under the age of 2 be required to have their own seats on airplanes would fall more directly on the traveling public. Regardless of who bears the cost of the proposed improvements, the Commission has correctly recognized that additional safety improvements may sometimes be difficult to justify under the benefit-cost criteria applied to regulatory activities. The Commission recommended that cost not always be the determining factor or basis for deciding whether to put new aviation safety and security rules into effect. Specifically, the Commission notes that the potential reduction in the fatal accident rate merits a careful weighing of the options for improving safety in terms of the benefits that go beyond those traditionally considered in benefit-cost analyses. However, we also believe that it is important to recognize that the recommendation (1) represents a significant departure from traditional processes, (2) could result in significant cost increases for relatively modest increases in the safety margin, and (3) could rest on a limited empirical justification. In effect, this recommendation may increase the number of instances in which the primary factor determining whether or not to go forward with a safety or security improvement is what might be referred to as a public policy imperative rather than the result of a benefit-cost analysis. One instance of such a decision is the Commission’s recommendation to eliminate the exemption in the Federal Aviation Regulations that allows children under 2 to travel without the benefit of an FAA-approved restraint. The Commission also reviewed the modernization of the air traffic control (ATC) system. FAA is in the midst of a $34 billion dollar, mission-critical capital investment program to modernize aging ATC equipment. This program includes over 100 projects involving new radars, automated data processing, and navigation, surveillance, and communications equipment. We believe this modernization is also important for attaining the next level of safety by replacing aging equipment and providing controllers and pilots with enhanced communication and better information. Recognizing that new technology, such as satellite-based navigation and new computers in ATC facilities and in aircraft cockpits, offers tremendous advances in safety, efficiency, and cost-effectiveness for users of the ATC system and for FAA, the Commission recommended accelerating the deployment of this new technology. According to FAA’s current plan, many of these elements would not be in place until the year 2012 and beyond. However, the Commission has recommended that these technologies be in place and operational by the year 2005—7 years ahead of FAA’s planned schedule. The Commission’s goal is commendable, but given FAA’s past problems in developing new ATC technology and the technical challenges that lie ahead, there is little evidence that this goal can be achieved. We have chronicled FAA’s efforts to modernize the air traffic control system for the past decade. Because of the modernization effort’s size, complexity, cost, and past problems, we designated it as a high-risk information technology initiative in 1995 and again in 1997. Many of FAA’s modernization projects have been plagued by cost-overruns, schedule delays, and shortfalls in performance that have delayed important safety and efficiency benefits. We reported last year that the agency’s culture was an underlying cause of FAA’s acquisition problems. FAA’s acquisitions were impaired because employees acted in ways that did not reflect a strong commitment to, among other things, the focus on and the accountability to the modernization mission. More recently, we have identified other important factors that have contributed to FAA’s difficulty in modernizing the ATC system. For example, FAA’s lack of effective cost-estimating and -accounting practices forces it to make billion-dollar investment decisions without reliable information.