FAA’s safety oversight system is made up of a number of programs for airlines and other entities. Safety oversight programs for airlines provide for their initial certification, periodic surveillance, and inspection. Since 1985, FAA has used National Work Program Guidelines (NPG), its traditional inspection program for airlines, as a primary means of ensuring that airlines comply with safety regulations. In NPG, an FAA committee of program managers identifies an annual minimum set of required inspections that are to be undertaken to ensure that airlines are in compliance with their operating certificates. In 1998, the agency implemented the Air Transportation Oversight System (ATOS), which currently oversees the nation’s largest 15 commercial airlines and cargo carriers, with the goal of eventually including all commercial passenger and cargo airlines in it. ATOS emphasizes a system safety approach that extends beyond periodically checking airlines for compliance with regulations to the use of technical and managerial skills to identify, analyze, and control hazards and risks. For example, under ATOS, inspectors develop surveillance plans for each airline, based on data analysis and assessment of risks, and adjust the plans periodically based on inspection results. However, the agency has been delayed in placing a significant number of other passenger airlines in ATOS, resulting in 99 passenger airlines, which we refer to as non-legacy airlines, continuing to be overseen through NPG, a process that is not risk-based or system safety oriented. In 2002, FAA added the Surveillance and Evaluation Program (SEP) to the NPG inspection program to incorporate principles of ATOS into its oversight of non-legacy passenger airlines. The two programs are used together to establish the number of annual inspections for non-legacy airlines. (Appendix 1 describes each inspection program.) Figure 1 illustrates some typical activities covered during inspections. FAA’s safety oversight programs for other aspects of the aviation industry—including manufacturers of aircraft and aircraft parts, repair stations, flight schools, aviation maintenance technician schools, pilots, and mechanics—involve certification, surveillance, and inspection by FAA’s safety inspectors, engineers, flight surgeons, and designated representatives. FAA authorizes about 13,400 private individuals and about 180 organizations (called “designees”) to act as its representatives to conduct many safety certification activities, such as administering flight tests to pilots, inspecting repair work by maintenance facilities, conducting medical examinations of pilots, and approving designs for aircraft parts. These designees are grouped into 18 different programs and are overseen by three FAA offices—Flight Standards Service, Aerospace Medicine, and Aircraft Certification Service—all of which are under the Office of Aviation Safety (see fig. 2). Since 1990, FAA has emphasized gaining compliance from the aviation industry through cooperative means by establishing industry partnership programs with the aviation community that allow participants, such as airlines and pilots, to self-report violations of safety regulations and help identify safety deficiencies, and potentially mitigate or avoid fines or other legal action. For example, the Voluntary Disclosure Program encourages the self-reporting of manufacturing problems and safety incidents by participants that can include air carriers and repair stations. Appendix II describes the industry partnership programs. When violations of statutory and regulatory requirements are identified through inspections, through the partnership programs in certain cases, or through other methods, FAA has a variety of enforcement tools that it may use to respond to them, including administrative actions (such as issuing a warning notice or a letter of correction that includes the corrective actions the violator will take) and legal sanctions (such as levying a fine or suspending or revoking a pilot or other FAA-issued certificate). In recent reports, we found that FAA’s safety oversight system has programs that focus on risk identification and mitigation through a system safety approach, the leveraging of resources, and enforcement of safety regulations, but that the benefits of these programs are not being fully realized. In our recent report on FAA’s oversight of non-legacy airlines, we found that the focus on risk identification through the addition of SEP has many strengths and allows for enhancing the efficiency of FAA’s oversight activities. Rather than relying on NPG’s customary method of conducting a set number of inspections of an airline’s operations, SEP emphasizes a system safety approach of using risk analysis techniques. SEP allows for the efficient use of inspection staff and resources by prioritizing workload based on areas of highest risk, and it includes a requirement that inspectors verify that corrective actions have occurred. For example, FAA has developed risk assessment worksheets for SEP that are aligned with key airline systems that guide inspectors through identifying and prioritizing risks. The worksheets guide inspectors to organize the results of their previous inspections and surveillance into a number of areas such as flight operations and personnel training in order to identify specific risks in each area and target the office’s resources to mitigating those risks. The development of a system safety approach addresses a long- standing concern by us that FAA did not have a methodology for assessing airline safety risks so that it could target limited inspection resources to high-risk conditions. Another strength of SEP, consistent with findings in our past reports, is that SEP relies on teams of inspectors, which are generally more effective than individual inspectors in their ability to collectively identify concerns. However, the benefits of FAA’s system safety approach for the inspection of non-legacy airlines could be enhanced by a more complete implementation of SEP and addressing other challenges. The inspection workload for non-legacy airlines is still heavily oriented to the NPG’s non- risk based activities. For example, as shown in table 1, from fiscal years 2002 through 2004, 77 percent of inspection activities required for the top 25 non-legacy airlines in terms of the number of enplanements were identified through NPG, and the remaining percentage of inspection activities were identified based on risk through SEP. Although inspectors can replace NPG-identified activities with SEP-identified activities that they deem constitute a greater safety risk, we found that FAA inspectors interpret agency emphasis on NPG as discouraging this practice. In order to ensure that all inspectors who oversee non-legacy airlines have a complete and timely understanding of the agency’s policies relating to the inspection process, we recommended in September 2005 that FAA improve communication with and training of inspectors in this area. Another way that FAA attempts to enhance the efficiency of its oversight activities is through its designee programs. We reported that FAA maximizes its resources by allowing designees to perform about 90 percent of certification-related activities, thus allowing FAA to better concentrate its limited staff resources on the most safety-critical functions. For example, while designees conduct routine certification functions, such as approvals of aircraft technologies that the agency and designees have had previous experience with, FAA focuses on new and complex aircraft designs or design changes. In addition, the use of designees expands FAA’s access to technical expertise within the aviation community. For the aviation industry, the designee programs enable individuals and organizations to obtain required FAA certifications—such as approvals of the design, production, and airworthiness of aircraft—in a timely manner, thus reducing delays and costs to the industry that might result from scheduling direct reviews by FAA staff. For example, officials from an aircraft manufacturer told us that the use of designees has added significantly to the company’s ability to enhance and improve daily operations by decreasing certification delivery time and increasing the flexibility and utilization of company resources. In addition, designees are convenient to the aviation industry due to their wide dispersal throughout the United States. However, concerns about the consistency and adequacy of designee oversight that FAA field offices provide have been raised by experts and other individuals we interviewed. For example, designees and industry officials that we spoke with indicated that FAA’s level of oversight and interpretation of rules differ among regions and among offices within a region, which limits FAA’s assurance that designees’ work is performed uniformly in accordance with FAA’s standards and policy. Experts also ranked this issue as a top weakness. Table 2 shows the top five weaknesses identified by our experts. Experts also made a number of suggestions to strengthen the designee program, including clearly defining and following agency criteria for selecting designees and increasing penalties for designees found to violate standards or who do not exercise proper judgment. To improve management control of the designee programs, and thus increase assurance that designees meet FAA’s performance standards, we recommended that FAA develop mechanisms to improve the compliance of FAA program and field offices with existing policies and incorporate, as appropriate, suggestions from our expert panel. In response to our recommendations, FAA is planning, among other things, to form a team to identify and share best practices for overseeing designee programs. FAA also leverages its resources through its industry partnership programs. These partnership programs are designed to assist the agency in receiving safety information, including reports of safety violations. According to FAA officials, the Aviation Safety Action Program, Aviation Safety Reporting Program, and Voluntary Disclosure Reporting Program augment FAA’s enforcement activities and allow FAA to be aware of many more safety incidents than are discovered during inspections and surveillance. In addition, the Flight Operational Quality Assurance Program provides safety information in the form of recorded flight data from participating airlines. FAA has established some management controls over its partnership programs, such as procedures to track actions taken to correct safety incidents reported under the programs, but the agency lacks management controls to measure and evaluate the performance of these programs, an issue that we will discuss later in the testimony. FAA’s enforcement process, which is intended to ensure industry compliance with safety regulations, is another important element of its safety oversight system. FAA’s policy for assessing legal sanctions against entities or individuals that do not comply with aviation safety regulations is intended to deter future violations.