FY 2007 PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS THE NEXT GENERATION OF FLIGHT
Fy 2007 PerFormance and accountability HiGHliGHtS
the Next GeNeratioN of fliGht
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�CHAPTER HEADING
Established 1958
Headquarters 800 Independence Avenue, SW Washington, DC 20591
www.faa.gov
FY2007Budget(enacted) $14.537 billion
TotalEmployees 45,416
Headquarters 5,465 employees
RegionalandFieldOffices 35,416 employees
TechnicalCenter 1,089 employees AtlanticCity,NJ
AeronauticalCenter 3,446 employees OklahomaCity,OK
FY2007Passengerson 763.5 million (estimate)U.S.Carriers
FY2007TowerOperations 61 million arrivals and departures (estimate)
FAA AT A GlANCE
MISSION Toprovidethesafest,mostefficientaerospacesystemintheworld.
VISIONToimprovecontinuouslythesafetyandefficiencyofaviation,whilebeingresponsive
toourcustomersandaccountabletothepublic.
VAlUESSafety is our passion. Weareworldleadersinaerospacesafety.
Quality is our trademark. Weserveourcountry,ourcustomers,andeachother.
Integrity is our character. Wedotherightthing,evenifnooneislooking.
People are our strength. Wetreateachotheraswewanttobetreated.
On the Cover—Credit: FAA Image Library; Getty Images
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TA�lE OF CONTENTS
3 A MESSAGE FROM THE ADMINISTRATOR
6 MANAGEMENT’S DISCUSSION AND ANAlySIS
FAA Organization 7
A Year in Highlights 8
Integrating Performance and Financial Information 12
Alignment of FAA Costs and Goals 14
Risks and Trends 15
Performance Highlights 16
Safety 18
Capacity 22
International Leadership 27
Organizational Excellence 29
President’s Management Agenda 34
FY 2007 Inspector General’s Summary of Challenges and FAA Actions 37
40 FINANCIAl HIGHlIGHTS
A Message From the Chief Financial Officer 41
Financial Highlights 43
Summary Financial Information 48
Notes to the Summary Financial Information 51
52 ORGANIZATION AND lOCATIONS
TA�lE OF CONTENTS
state-of-the-art air traffic control towers, like this one at Hartsfield-Jackson Atlanta International Airport, are helping air traffic controllers better guide current air traffic as well as accommodate future growth, making the safest aviation system even safer.Credit: Greg Haire, Airway transportation system specialist, technical Operations, Hartsfield-Jackson Atlanta International Airport
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A MESSAGE FROM THE ADMINISTRATORAviationhasneverbeenbusier.Withoutadoubt,thisisthemostexciting,dynamic,andchallengingperiodinFederalAviationAdministration(FAA)history.Passengertrafficexceedspre-9/11levelsatmostofthenation’stopairports.Passengertotalsareheadedup:They’reexpectedtomorethandoubleinthenextdecade.Commercialaviationwillbeflyingmorethanabillionpassengersby2015.
Theplanesthatdotourskiesarechangingaswell.Smallerbusinessjetsflyinrecord
numbers.Commercialindustriesarelookingtounmannedaircraftasapartofdailybusiness.
Butthere’sacatchtoallofthis.Airtravelcangrowonlyifaviationcapacitygrowswithit.FAAisaheadofthiscurve,withthelaunchofthenextgenerationairtransportationsystem(NextGen)wellunderway.NextGenisdesignedtohandleuptothreetimesthetrafficloadofwhatweseetoday,anditwillhandleitefficiently.Inanutshell,NextGentransitionsusfromthe1960’seraground-basedsystemofradarintosatellite-basedairtrafficmanagement.
Asyouwillreadinthisreport,wearedeterminedtomeettheincreaseddemandsonourairspaceandensuretravelersgettotheirdestinationswithminimaldelayswithoutcompromisingsafety.Todothis,wearetransformingourairspacethroughthemostradicaltechnologicalchangesFAAhaseverexperienced.Itisnotaneasytask,butitisonetowhichall45,416menandwomenoftheFAAarefullycommitted.
FY 2007 Accomplishments
• NextGen. TheopeningstagesoftransformationtoNextGenlaythegroundworkfordevelopingasystemthatwillbesafer,abletomeetgrowingdemand,andresponsivetoevolvingbusinessmodels.Thenewsystemwillintegratesatellite-basednavigation,surveillance,andnetworking.Thisyear,theFAA’sJointPlanningandDevelopmentOffice(JPDO)completedNextGen’sthreeplanningdocumentsthatwillguideusthroughthenext15yearsandbeyond.WealsocreatedapartnershipofFAAexecutivesandanewexecutive-levelpositiontoguidetheimplementationoftheNextGenplan.
• Flight Plan Goals. Wemadesignificantprogressinachievingthefourgoalsdetailedinourstrategicplan—theFAAFlightPlan:ensuringsafety,increasingcapacity,demonstratinginternationalleadership,andachievingorganizationalexcellence.AlloftheseachievementsplayanintegralroleinoureffortstoimplementNextGen.
Robert A. Sturgell Acting Administrator
A MESSAGE FROM THE ADMINISTRATOR
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• Safety. Overthepast5years,wehaveachievedthehighestsafetystandardsinthehistoryofaviation.Evenso,ourgoalis—asalways—tocontinuetoimprovesafety.Thenumberofgeneralaviationfatalaccidentsisbelowournot-to-exceedceilingagainthisyear,endingat314fatalaccidents.WhileaviationaccidentsinAlaskadecreased9%fromthepastfiscalyear,wehad10fatalaccidents:4inPart135(commuterandon-demandoperations)and6ingeneralaviation.
• Capacity. FY2007sawa6%increaseinNationalAirspaceSystem(NAS)-relatedflightdelaysoverlastyear,anindicatorthatthesystemisrapidlyreachingcriticalmass.Capitalprojects,includingtheopeningoftworunwaysandaninnovativenewtypeoftaxiway,haveexpandedcapacityatthreeofthenation’sbusiestairports.
• International Leadership. Collaborationwithaviationauthoritiesthroughouttheworldisessentialtoshapingaseamlessglobalaerospacesystem.WegainedapprovaltoopenanofficeinBrazil,ourfirstofficeinLatinAmericain10years.WealsohirednewseniorrepresentativestoleadofficesinAbuDhabi,Moscow,andDakar.Wesignedcooperativeagreementswithseveralkeynationsacrosstheworld,whichwillallowustospuracceptanceofNextGentechnologies.
• Organizational Excellence. Wecontinuetotransformbusinesspracticestoimproveefficiencythroughouttheagency.Newinitiativesthisyearresultedin$82millionincostefficiencies.Consolidationofourfinancialaccountingandworkers’compensationfunctionsresultedinover$20millionincostefficiencies.
Ourworkplaceandourworkforcearechanging,andwemustberobustandflexibleenoughtocompeteforandretainqualified,highqualityemployees.WehadsuccessrecruitingdiverseapplicantsforAirTrafficControllerandAviationSafetyInspectorpositionsbypostingclassifiedadsonMySpace.com,Monster.com,CareerBuilder.com,andCraigslist.com;advertisinginnewspapersandontheradio;andreachingouttostudentsatmorethan800collegesanduniversities.
OurPerformanceandAccountabilityHighlightsreceivedafourthconsecutiveawardfromtheLeagueofAmericanCommunicationsProfessionals.TheawardrecognizesourFY2006publicationasoneofthetopannualreportsinNorthAmerica.
Future Challenges
Theaccomplishmentsofthisyearhavecreatedawaterline,abenchmarkforperformancethatmustbeexceeded.WewillusethisphilosophyasadrivingforceaswemoveforwardtoconquerthemanychallengeswefaceinFY2008andbeyond.
• Safety. Safetyisourfirstpriority.Withthepushforgreatercapacity,wemustcontinueoureffortstomeetandsurpassoursafetygoalsandurgetheaviationindustrynottolosesightoftheirsafetyimprovementefforts.
• NextGen.WemustensureourNextGensystemisharmonized,interoperable,andcompatiblewithcountriesandregionsthroughouttheworld;continuetoprepare
A MESSAGE FROM THE ADMINISTRATOR
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FAAemployeesfortheradicalchangesNextGenwillbringtotheirjobs;andkeepoureyeonthefinalgoaltomeetcapacitydemandswithoutsacrificingsafety.WithlongleadtimesforNextGeninitiatives,complexandcostlysystems,andinterdependentelements,itisimperativethatwestayonourplannedcourse.
• Financing of NextGen.WeneedadequatefundingtopayforNextGen’slong-termcapitalinvestments.Toensurethis,wemustcreateastable,cost-based,andequitablerevenuestreambasedonactualservicesprovided,ratherthanrelyonanunpredictableandunstablesystemfundedthroughataxonairlineticketprices.
• Environment.Wemustpushtoworktogetherwithothercountriesasaninternationalteamtoaddressaviation’sroleinreducinggreenhousegasemissions.
• Controller Retirement. Toaddresstheexpectedswellofcontrollerretirementsoverthenextdecade,wemustcontinueoureffortstorecruit,hire,andretainqualifiedstaffforthesepositions.
OurFY 2007 Performance and Accountability Highlights providesanaccountingofourservicetoboththeflyingpublicandtheaviationindustry.Weachieved24outof30goalslistedintheFlight Plan.
InFY2006,wereceivedaqualifiedopiniononourfinancialstatementsrelatedtotheaccuracyofourConstructioninProgress(CIP)balance.WealsoreceivedarelatedmaterialweaknessinFY2006forlackofsupportingdocumentationandaneedtostrengthenpoliciesandproceduresinthecapitalizationprocess.Afteranintensive,year-longefforttoreviewanddocumenttheCIPbalance,improvepoliciesandprocedures,andrestateourFY2006financialstatements,Iampleasedtoreportthattheauditorshaveissuedarevisedopinion—nowunqualified—onourrestatedFY2006financialstatements.
Inaddition,wereceivedanunqualifiedopiniononourFY2007financialstatements.However,weincurredamaterialweaknessrelatedtothetimelyprocessingoftransactionsandaccountingofProperty,Plant,andEquipment,includingtheCIPaccount.Toaddressthisweakness,wehaverestructuredrolesandresponsibilitiesandreallocatedresourcestomakeadditionalimprovementstoourcapitalizationprocesses.TheneworganizationalchangewillenablemoreaccountabilityandtransparencyinthecapitalizationprocessandenableustokeepourCIPbalancecurrentandaccurate.
Asthisreportmakesclear,ourgoalistoprovideasafe,secure,andefficientglobalaerospacesystem.Wemaintainasteadfastcommitmenttoefficiencyandintegrity.WewillensurethatFAAispreparedtohandlethechallengesofthenextgenerationofflightandtocontinuetodeliveranexceptionalreturnoninvestmentfortheAmericantaxpayer.
RobertA.SturgellActingAdministratorNovember5,2007
A MESSAGE FROM THE ADMINISTRATOR
Every day, FAA safely guides approximately 60,000 flights through the world’s preeminent National Airspace system (NAs).Credit: Jon Ross, FAA Image Library
MANAGEMENT’S DISCUSSION AND ANAlySIS
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FAA ORGANIZATION
ThemissionoftheFederalAviationAdministration(FAA),anagencyoftheU.S.DepartmentofTransportation(DOT),istoprovidethesafest,mostefficientaerospacesystemintheworld.FAAprovidesairtrafficcontrolservices,establishesandenforcesregulations,andoverseesinspectionsthatmaintaintheintegrityandreliabilityofthatsystem,whichhasfueledoureconomyandhelpedensureournation’sprosperityfor50years.
Weoperate24hoursaday,7daysaweek,365daysayear.Wehaveasystemcomposedofmorethan67,000facilitiesandpiecesofequipmentwithFAA-operatedorcontracttowersatalmost500airports,andweareresponsibleforinspectingandcertifyingabout240,000aircraftand585,000pilots.Withalmost7,000takeoffsandlandingsperhour,andmorethan760millionpassengersand40billioncargorevenuetonmilesoffreightayear,wesafelyguideapproximately60,000flightsthroughtheworld’spreeminentNationalAirSpace(NAS)everyday.
Wefulfillourmissionthroughfourlinesofbusinessthatworktogethertocreate,operate,andmaintaintheNAS.Theselinesofbusinessare
• Air Traffic Organization (ATO): Responsibleformovingairtrafficsafelyandefficiently.Thecustomersofthisperformance-basedorganizationarecommercial,private,andmilitaryaviation.ATOisalignedaroundtheservicesdeliveredtothesecustomers.Approximately34,000ATOemployeesprovidetheseservices—thecontrollers,technicians,engineers,researchers,andsupportandmanagementpersonnelwhosedailyeffortskeepaircraftmoving.
• Aviation Safety (AVS): Overseesthesafetyofaircraftandthecredentialsandcompetencyofpilotsandmechanics,developsmandatorysafetyrules,andsetsthestandardsthathavehelpedmakeairtraveloneofthesafestmodesoftransportationinhistory.
• Airports (ARP): Providesleadershipinplanninganddevelopingasafe,secure,andefficientairportsystem;managestheAirportImprovementProgram(AIP),whichprovidesgrantstostateandlocalgovernments;enhancesenvironmentalqualityrelatedtoairportdevelopment;developsstandardsforthedesignandconstructionofairportfacilities;andestablishesregulationsforthesafeoperationofcommercialserviceairportsandinspectsairportsforcompliance.
• Commercial Space Transportation (AST): Overseesthesafetyofcommercialspacelaunches;regulatestheU.S.commercialspaceindustry,includinghumanspaceflight;andencourages,facilitates,andpromotesU.S.commercialspacetransportation.
From1926,whenPresidentCalvinCoolidgeinitiatedFederaloversightofairsafetyintheUnitedStatesbysigningtheAirCommerceAct,tothecreationoftheFederalAviationAgencyin1958,toourmodern-dayincarnation,FAAandtheaviationcommunityhavegrownandworkedtogether.Wehaveshapedanindustrythat—likeshippingandrailbeforeit—conquereddistanceinanewway,loweredtransportationcosts,andcreatednewopportunitiesthattransformedthecommerciallandscape.
MANAGEMENT’S DISCUSSION AND ANAlySIS
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Today’sFAAfacesthechallengeofexpandingthecapacityofouraviationsystemtomeetfuturedemandwithoutcompromisingsafetyorharmingour
environment.Withaviationandrelatedindustriessupporting11millionjobsandcontributing$640milliontoourannualeconomy,oursuccessiscritical.
MANAGEMENT’S DISCUSSION AND ANAlySIS
A yEAR IN HIGHlIGHTSOurworkforceof45,416professionalsoperatesandmaintainsthemostcomplexairtrafficcontrolsystemintheworldwithanannualbudgetofapproximately$14.5billion.Morethanhalfoftheworld’sairtrafficismanagedby14,874controllers,whoensureever-increasinglevelsofsafety.Weconductresearchtoimproveaviationsafetyandefficiencyandprovidegrantstoimprove3,364eligiblepublic-useairportsintheUnitedStates.FAAalsoregulatescommercialspacelaunchactivitiestoensurepublicsafety.
FAAachievedanumberofsignificantaccomplishmentsinFY2007.
NextGen Accomplishments
PlanningandimplementationofNextGeniscriticaltothetransformationoftheNAS.TheJointPlanningandDevelopmentOffice(JPDO),amulti-agencytaskforcechargedwithdevelopingtheNextGenvision,completedthreevitalNextGendocuments—theConceptofOperations(ConOps),theEnterpriseArchitecture,andtheIntegratedWorkplan.Thesedocumentsexplainandguidefutureresearchandthecapitalinvestmentsneededtotransformourairtransportationsystem.TheConOpsisatechnicaldocumentthatdescribeshowNextGenwillworkfromanoperationalstandpointandwhatitwilllooklikeintheyear2025;theEnterpriseArchitectureisablueprintforNextGenthatdescribeshowitssystemswillworktogetherin2025;andtheIntegratedWorkplanistheplanand
timelineforthecompletionofwork,byallagencies,toimplementNextGen.
EachmemberagencyoftheJPDO—FAA,DepartmentofTransportation,DepartmentofDefense,DepartmentofCommerce,DepartmentofHomelandSecurity,NationalAeronauticsandSpaceAdministration(NASA),andtheWhiteHouseOfficeofScienceandTechnologyPolicy—hasresponsibilityforsectionsoftheoverallIntegratedWorkplan.ToensureimplementationofFAA’scommitmentsandthatallemployeesunderstandandarecommittedtoNextGen,wecreatedtheOperationalEvolutionPartnership(OEP)andanewseniorexecutivepositiontoleadit.AlllinesofbusinesshavearepresentativeontheOEPwhocommitshis/herorganizationtofulfillingitsroleinNextGenimplementationandtoensuringcross-agencycoordination.TheOEPplanalignstothelong-termviewoftheNextGenConOpsandfocusesoncorecommitments,prototypes,pilotprojectsandactivitiesawaitingpolicydecisions,aswellasresearchanddevelopmentactivities.Currently,theplanfocusesonsolutionsforthemid-termyearsof2012–2018inthreekeytransformationalareas:
• Airport Developmentfocusesontrackingnewairportsurfaceinfrastructurethatprovidessignificantcapacityincreasessuchasnewrunways,runwayextensions,andtaxiwaysathightrafficairports.Italsoincludesprojectsinplanningandenvironmentalassessmentphases.
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• Air Traffic Operationsfocusesonnewoperationalcapabilities,presentingabigpictureviewoftheinterdependenciesofkeyenablingprogramsandtechnologies.
• Aircraft and Operator RequirementswillhelpaircraftoperatorsmakeinformedequipagedecisionsbydevelopingacommonviewofavionicsrequirementsandtimelinestoprovidetheoperationalcapabilitiesdemandedbyNextGen.Theavionicsrequirementswillincludecommunications,navigationandsurveillancecapabilities,andrefinedweatherequipmentanddisplays.
TheOEPisalsoaconduitforsharinginformationandideaswithoversightorganizationsand,inparticular,withtheaviationcommunity.Airlines,cargocarriers,airports,manufacturers,businessandgeneralaviationpilots,andindustrymustunderstandwhatiscoming,andwhen,topreparethemselvestoparticipateinNextGen.
InFY2007,wefurtheredtheimplementationoftwocriticalNextGentechnologies:AutomaticDependentSurveillance–Broadcast(ADS-B)andSystemWideInformationManagement(SWIM).
• InAugust2007,FAAapprovedacontractwithITTCorporationtoprovideADS-Bservices.Underthecontract,ITTwillinstall,own,andmaintainthegroundinfrastructure,whileFAApaysforthesurveillanceandbroadcastservices.WeissuedaNoticeofProposedRulemaking(NPRM)inOctober2007tomandateADS-Bavionicsinthecockpitforcontrolledairspaceandbusyairports.(LearnmoreaboutADS-Bonpage10).
• WefullyfundedthedevelopmentofSWIM,anetworking-basedinitiativethatisanessentialpartofNextGen’sinitialNetwork-EnabledOperations(NEO)capabilityandahighpriorityfortheJPDOandtheNextGenpartneragencies.InanInternet-likefashionSWIMlinksinformation,suchasaircraftposition,weather,andrestrictedairspacenotices,toallrelevantusersinthesystem.ItmovesinformationwithinFAAtootherGovernmentagenciesfaster,better,andmoreeconomicallyandprovidesbetterdatatomoredecision-makers—whetheritbethecontroller,thepilot,ortheotheragenciesdealingwithsecurityornationaldefense.MuchliketheWorldWideWebrevolutionizedAmericancommerce,SWIMlaystheaviationinformationsuperhighwaythatwillleadtodramaticimprovementsinairtransportationsafety,security,andcapacity.
Capacity-buildingcapitalprojectsarenecessarytomeettoday’sgrowingpassengerdemand.InNovember2006,anewrunwayatBostonLoganAirportwascommissioned,providingdelayreductionbenefits.InApril2007,aninnovativetypeoftaxiway,knownasanend-aroundtaxiway,openedatAtlanta’sHartsfield-JacksonInternationalAirport,eliminatingabout600runwaycrossingsperdayandtherebyincreasingthesafetyandefficiencyofthebusiestairportintheUnitedStates.InFY2008,thesouthsidereconfigurationofLosAngelesInternationalAirportwillbecompleted.Thisreconfigurationincludesrelocationofarunway,whichwascompletedinApril2007,andconstructionofanewcenterfieldtaxiwaytoimprovetheairport’ssafetyandefficiency.
MANAGEMENT’S DISCUSSION AND ANAlySIS
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Aviationisaglobalindustry.NextGentechnologiesandconceptsmustbeharmonized,interoperable,andcompatiblewithotherinternationalsystems.Weareworkingwithaviationofficialsfromcountriesthroughouttheworldtoensurethishappens.Wesignedaformalagreementestablishingatrilateral,cooperativeNextGenstrategygroupwithCanadaandMexico.Thisgroupwillshareinformationregardingstrategicroadmaps,technologies,andenvironmentalmetrics,aswellascoordinateNorthAmerica’sInternationalCivilAviationOrganization(ICAO)harmonizationefforts.Wealsocreatedanewinternationalprogramaimedatfurtherreducingaviation’senvironmentalimpact.TheAtlanticInteroperabilityInitiativetoReduceEmissions(AIRE),ascientificandresearchventurebetweenFAA,theEuropeanCommission,andindustrypartners,willfocusonupgradingairtrafficcontrolstandardsandproceduresfortrans-Atlanticflights.
TheexpirationofthetaxesthatfueltheAirportandAirwayTrustFund(AATF)onSeptember30,2007,presenteduswithanhistoricopportunitytotransformthefutureofFAAandaviation.Wespent2yearsdevelopinganewfinancingproposalthatwouldbeinthelong-termbestinterestofthetravelingpublic,theaviationindustry,FAA,andtaxpayers.ThisnewsystemwouldenableustoimplementvitalNextGentechnologiesinanexpeditiousmanneroverthenexttwodecadeswhilestilloperatingandmanagingtrafficgrowthwithinthecurrentsystem.Weareconductingbroadoutreachtotheaviationcommunitytoexplorefundingoptionsandwillusethatinputtodevelopasystembasedonastable,cost-based,andequitablerevenuestreamratherthanonunpredictabletickettaxes.WepresentedreauthorizationlegislationtoCongressinFebruarystressing
ADS-B—the BAckBone of the next GenerAtion Air trAnSportAtion SyStem
(nextGen)
After years of research and development, FAA is ready to make Automatic Dependent Surveillance–Broadcast (ADS-B), one of the most crucial components of NextGen, operational throughout the National Airspace System (NAS). General aviation pilots have been using ADS-B in Alaska and the Ohio River Valley since 2000.
ADS-B’s implementation will turn the NextGen vision into reality by enabling the aviation industry to move to a new surveillance system that uses Global Positioning System (GPS) satellites. The new satellite-based system updates information every second. The current system, which uses 1950’s radar technology, only updates every 3 to 12 seconds. Some companies already using ADS-B in their operations, such as UPS, are realizing savings in jet fuel and faster delivery schedules.
With ADS-B, both pilots and controllers will see the same radar-like displays with highly accurate traffic data from satellites. These displays update in real time and do not degrade with distance or terrain. The system will also give pilots access to weather services, terrain maps, and flight information services. With the improved situational awareness it provides, pilots will be able to fly at safe distances from one another with less assistance from air traffic controllers.
The gains in safety, capacity, and efficiency resulting from the move to a satellite-based system will enable FAA to meet the tremendous growth in air traffic predicted for coming decades while reducing the cost of the infrastructure needed to operate the NAS. Specifically, ADS-B will provide surveillance for remote or inhospitable areas that do not currently have coverage by radar; allow for reduced separation and greater predictability in departure and arrival times; and support common separation standards, both horizontal and vertical, for all classes of airspace. It also will improve the ability of airlines to manage traffic and aircraft fleets and to plan arrivals and departures far in advance. Because ADS-B is a flexible and expandable platform, it will change and grow with the evolving aviation system.
MANAGEMENT’S DISCUSSION AND ANAlySIS
Pilots can use cockpit ADs-B displays to view their real-time position relative to other aircraft, bad weather, and terrain.
Credit: FAA Image Library
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thevitallinkbetweenitspassage,thesuccessofNextGen,andthewell-beingofournation’seconomy.WecontinuetoworkwithCongresstoensurepassageoflegislationtoreauthorizeFAA’sprogramsandrevenuesources.
Other Major Accomplishments
Withthefirstprivatehumanspaceflightsexpectedtotakeplacein2009,weissuedregulationsforcrewandspaceflightpassengerswhowanttoexperiencethistypeoftravel. ThenewrulesmaintainFAA’scommitmenttoprotectthesafetyoftheuninvolvedpublicandcallformeasuresthatenablepassengerstomakeinformeddecisionsabouttheirpersonalsafety.
Overthenextdecade,approximately72%oftheairtrafficcontrollerworkforcewillbecomeeligibletoretire.Tomeetthechallengesofthiswaveofretirementsandtheincreasingdemandforairtravel,weupdatedtheAir Traffic Controller Workforce Plan,whichprovidesacomprehensivestrategytomakesurewehavetherightnumberofcontrollersintherightplaceattherighttime.Theplancallsforhiringandtrainingmorethan15,000newairtrafficcontrollersoverthenext10years.
WealsoareimplementingcreativestrategiestorecruitAirTrafficControllersandAviationSafetySpecialists.Wemarketedemploymentopportunitiesatuniversities,militarytransitioncenters,stateandlocalemploymentservices,andGovernmentrecruitmentcenters.We’vealsousedtechnologytoexpandourreachandhavepromotedtheagencyonMySpace,FaceBook,andCraigsList,aswellasthroughnewspaperandradioads.
FAAachievedcertificationthisyearinmanagingtheintergenerationalworkforce.InMay,managersparticipatedinanew
leadershiptrainingprogramofferedbytheOfficeofHumanResourcescalled“WhenGenerationsCollide.”ForthefirsttimeinAmericanhistory,fourgenerations—Traditionalists,BabyBoomers,GenXers,andMillennials—areallintheworkplacetogether.Thismixingofgenerationsaddsvaluablediversitytotheworkforce,butitalsocanleadtoconflictsandcomplications.Byunderstandingtheirdifferencesandrecognizinggenerationalclashpoints,FAAmanagersandsupervisorswillbeabletoleveragetheirstrengthsandweaknessestoleadmoreeffectively,encouragecollaboration,andimproveemployeesatisfaction.Ultimately,thisnewunderstandingwillallowtheagencytorecruitandretainatalented,diversifiedworkforce.
Basedontheresultsofpublicandemployeesurveys,weenhancedexternalandinternalcommunications.WeredesignedFAA’spublicandemployeewebsitestomakethemmoreuserfriendlyandtoimprovenavigability.Weintroducedadailyemployeeonlinenewsupdate,whichreplacesabi-weeklyonlinenewsletter.WealsointroducedHRRadio,aweekly10-minuteIntranetbroadcastthatdetailsinformationaboutbenefitsandservices.Allhavebeenpositivelyreceived.
FAA’seffortsoverthepast4yearstooperatemorelikeabusinesshavepaidrealdividends,notjusttotheflyingpublicbuttothetaxpayeraswell.Byimplementingimprovedmanagementtools,includingbettercostaccountingsystems,andbyinstitutingapay-for-performanceprogram,wehavemademoreefficientuseofourresources.Wecontinuetoimprovebusinesspracticestohelpcontrolcostsandincreaseefficiency,asdescribedinthesectionthatfollows.
MANAGEMENT’S DISCUSSION AND ANAlySIS
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INTEGRATING PERFORMANCE AND FINANCIAl INFORMATION
Efficiency and Cost-Effectiveness
Over the past several years, we have made significant progress in making cost control a priority throughout FAA. Since FY 2005, FAA has included a cost control target among the 30 major Flight Plan goals we track each month. As a result of this emphasis, part of the broader effort to operate more like a business, we have been able to achieve $150 million in recurring savings from efforts put in place in FY 2005 and 2006, as well as $82 million from efforts initiated during FY 2007. A detailed discussion of our continuing efforts to ensure efficiency and cost effectiveness appears in our FY 2007 Performance and Accountability Report.
Ourareasoffocusincludeconsolidationofstaffingandfacilities,laborcostmanagement,strategicsourcinganddemandmanagement,improvingthereliabilityoftheCostAccountingSystem,andouroveralloperatingefficiencyandfinancialperformance.
Consolidation of Services and Facilities
• Workers’ Compensation Consolidation.Wecompletedthecentralizationofallstaffresponsibleforworkers’compensation-relatedefforts.AsaresultoftheconsolidationcompletedinDecember2006,allclaimsarenowhandledthroughheadquartersforanFY2007costavoidanceofapproximately$20million.
• Information Technology (IT) Consolidation.FAAisconsolidatingcomputerserversaswellasthephysicalfacilitiesthatsupportthem.Theapproachincludesidentifying,targeting,andshuttingdownunnecessaryservers,datacenters,andapplications.FAAalsoisreducingthecostofhelpdeskandcallcentersbymovingtoasingleproviderabletomeetthedemandsoftheagency.Whencomplete,weanticipatereductionsinthenumberofstaffneededforhelpdesksupport,agreaterrelianceonautomatedtoolstoreducecostsbyprovidinghelpdesksupportremotely,andmorestandardizationofhelpdeskanddesktopsupport.
• Air Traffic Organization (ATO) Service Area Consolidation.In2004,inanefforttomaximizeefficientuseofourresources,FAAbegantorestructuretheATOserviceareaofficesandcentralizethemanagerial,administrative,andbusinesssupportfunctions.InFY2006,ATOstartedconsolidatingtheadministrativeandstaffsupportfunctionsfrom27unitsin9regionalofficesto3unitsin3regionaloffices.Thenetresultisadecreaseof266fulltimesupportpositions,whichwillsavemorethan$360millionoverthenext10yearsandallowustoprovidebetter,moreconsistentservicetocustomersthroughstreamlinedprocesses.StartupcostsincurredinFY2007offsetourinitialsavings,butinFY2008,weanticipatesavingsof$29millionfromserviceareaconsolidation.
MANAGEMENT’S DISCUSSION AND ANAlySIS
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• Accounting Consolidation. TheconsolidationoftheaccountingfunctionintotheMikeMonroneyAeronauticalCenterinOklahomaCityresultedin$4.6millioninsavingsannually.
• Real Property Management.FAA,onbehalfoftheDepartmentofTransportation(DOT),continuedtoprovideinventoryinformationandperformancemeasuresfortheapproximately69,500DOTrealpropertyassetsinoneconsolidateddatabase.DuringFY2007,DOTestablisheditsfirst-everfullinventoryofrealpropertyassetsandtransmittedthedataforinclusionintheFederalrealpropertyinventorydatabase.InaccordancewithDOT’sAssetManagementPlanandtheThree-YearTimelineforRealProperty,FAAperformedperiodicreviewsoftherealpropertyassetdata.TheseniorRealPropertyOfficeridentifiedpropertiesfordisposalbasedontheFAAassetinventoryandparticipatedinreviewsofbothGeneralServicesAdministration(GSA)andnon-GSAleases.Wealsodevelopedapriorityinvestmentlistforourassetportfolios.
Labor Cost Management
Whilelaborcostscontinuetoincrease,primarilyduetotheannualFederalpayraise,wehavebeguntoreducetherateofgrowththroughbettermanagementofourpayrollcosts.Wecontinuetoexploreandimplementnewprocedurestobettermanagethesecostsincludingincreasingthepercentageofstaffonthepayforperformancesystemandminimizingfraudandabuseofsickleaveandworkers’compensation.
Strategic Sourcing and Demand Management
TheStrategicSourcingfortheAcquisitionofVariousEquipmentandSupplies(SAVES)initiativeisanambitiouseffortbeguninFY2006toimplementbestpracticesfromtheprivatesectorintheprocurementofadministrativesupplies,equipment,IThardware,andcourierservices.FAAhasawardedsevennationalcontractsinfivedifferentcategoriesandachievedover$6millionincostsavingsforFY2007,withexpectedannualizedcostsavingsof$7millioneachyearthereafter.
Intheareaofexpensecontrols,FAAimplementedthreecriticalmeasurestostrengthenacquisitionoversight—theChiefFinancialOfficermustreviewallprocurementsof$10millionormoretoensuretheinvestmentisappropriateandhasadequatefinancialcontrols;theDeputyAdministratormustapproveallsupportservicecontractsof$1millionormorewithfewerthanthreebids;andtheChiefInformationOfficermustreviewanyacquisitionforinformationtechnologyresourcesexpectedtoexceed$250,000invalue.Together,thesethreerequirementsrepresentamajorefforttobettermanagetheagency’sresourcesandensurethatwemakesoundbusinessdecisions.
ThesinglelargesteffortbyFAA,andthelargestnonmilitaryoutsourcinginitiativeintheFederalGovernment,involvedtheA-76sourcingof58flightservicestationstoLockheedMartin.Thisinitiativeisexpectedtoresultinacostsavingsofover$2.2billionfrom2003through2015.FAAsavedapproximately$66millioninFY2007.
MANAGEMENT’S DISCUSSION AND ANAlySIS
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Cost Accounting System (CAS)
FAAmadesignificantprogressinimprovingthereliabilityofitscostdataandinallocatingthosecoststoNationalAirspaceSystem(NAS)users.InFY2007,FAAexceededacorporatecompliancerateof92.5%oflaborhourstobechargedtovalidprojectsandactivities.FAAintroducedanewrequirementthateachlineofbusinessmustreportbacktotheCFOonhowtheyareusingcostaccountingdatatomanagecosts.FAAalsomadeaconcertedefforttoimprovetheaccuracyandtimelinessofcapitalizationcosts.Thisdirectlyimpactsthereliabilityandtimelyrecordingofoperatingcostdatabecauseallagencyexpendituresareclassifiedeitherasoperatingorascapital.FAAconductedanintensivereviewofitsConstructioninProgress(CIP)balanceandintroducedpolicy/proceduralchanges,alongwithtraining,toensuretheagencykeepscapitalizationeffortscurrent.
Operating Efficiency and Financial Performance
ThePerformanceImprovementinitiativeofthePresident’sManagementAgenda
(formerlyknownasBudgetandPerformanceIntegration)encouragesagenciestodevelopefficiencyinexecutingprogramsandachievingresults.Theinitiativeusesperformancemeasurestotrackprogramviability.Insupportofthisinitiative,FAAintegratesperformanceinformationintobudgetarydecision-making.BudgetsubmissionsarepreparedtoshowhowtheactivitiesacrossDOT’ssixgoalareasworktogetherandtoprovidedetailedinformationonhowincreasesordecreasesinfundingwillaffectthoseactivitiesanddriveperformance.
Overthepast5years,FAAhasinstitutedfinancialandoperatingmeasurestoassessoperationsanddeterminetrendsinourfinancialperformance.InFY2007,wereviewedprogressmadeandrefinedthemeansbywhichtheagencycanmeasureandincreaseefficiency.AsacomponentoftheFY 2007–2011 Flight Plan,weexpandedtheprogramtorequireeachFAAorganizationtodevelop,track,andreportquarterlyacomprehensivemeasureofitsoperatingefficiencyorfinancialperformance.
MANAGEMENT’S DISCUSSION AND ANAlySIS
AlIGNMENT OF FAA COSTS AND GOAlS
ThealignmentofFAA’scostswithitsfourstrategicgoalareasiscapturedintheCAS.ProjectsenteredintotheCASbyeveryorganizationarelinkedtooneormoregoals,andthepercentageoffundsthatsupporteachgoalisidentified.
Justunder$10.2billion,or69%ofthe$14.8billionintotalnetcostforFY2007,wasdevotedtoourprimarygoalofensuringasafeNAS.ATOspent$7.1billion,largelytosupportkeepingaircraftsafelyseparated
intheairandontheground.ARPdirectedover$2billiontoestablishsafeairportinfrastructure.AVSspentslightlymorethan$990milliononitsprogramstoregulateandcertifyaircraft,pilots,andairlines,directlysupportingthesafetyofcommercialandgeneralaviation.
Nearly$4.4billion,about30%oftotalnetcosts,wasassignedtosupportFAA’sgoalofimprovingthecapacityoftheNAS.ATOspent$2.5billion,largelytosupportits
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facilitiesandequipmentprojects.ARPspentabout$1.9billiontoenhancethecapacityofthecountry’sairportsthroughrunwayprojectsandotherefforts.
ThebulkofFAA’sremainingnetcosts,justover$200million,supporteditsorganizationalexcellencegoal.Nearlyallthelinesofbusinessandstaffofficescontributedtothisgoal.FAAspenttheremainder,about$43.7million,topromoteitsinternationalleadershipgoal.
NET COSTS BY STRATEGIC GOAL AREAas of September 30, 2007
(Dollars in Thousands)
Safety69% ($10,177,453)
International Leadership<1% ($43,656)
Capacity30% ($4,392,897)
OrganizationalExcellence1% ($200,448)
MANAGEMENT’S DISCUSSION AND ANAlySIS
RISkS AND TRENDS
FAAfacesanumberofchallengesinimplementingtheFlight Planandachievingresults.Thesechallengesincludethefollowing:
• Airtraffichassurpassedpre–September11,2001,levels.Currently,thesystemhandles740millionenplanementsonU.S.carrierseachyear,andthenumberofpassengersisexpectedtoclimbto1billionby2015.DealingwiththeseincreaseswilldemandevenmorefromalreadystrainedFAAresources.
• Capacitymustbeexpandedtomeetincreaseddemand.WewillmeettheseneedsbydevelopingnewtechnologiestosupporttheIntegratedWorkPlanforNextGen.TheIntegratedWorkPlanisanevolutionaryplanthatwillleverageavailablefundingandallowustoprovideanationalaviationsystemthatcanhandlethesafety,capacity,andsecurityneedsintoourfuture.
• Thefinancialdifficultiesfacingtheairlinesandaviationmanufacturersaffecttheirabilityandwillingnesstoequipaircraftwithnewtechnologiestofurtherenhancesafetyandcapacity.
• FAAneedsastable,cost-basedrevenuestreamthatensuresfundingforlong-termcapitalneedsandisrelatedtothecostofoperatingthesystem.Stakeholderinvolvementcanhelpusensurethatweareconcentratingonservicesthatthecustomerwantsandiswillingtopayfor.FAAsentlegislationtoCongressthataccomplishesthesegoalsandfullyfundsNextGen.
• TheabilitytoimprovesafetyorexpandcapacityintheUnitedStatesandintheinternationalarenadependsinpartonthewillingnessofauthoritiesatthestate,local,andinternationallevelstocooperateandcollaborateinareassuchasbuildingnewairports,expandingrunways,andimplementingnewtechnologies.
• Concernoveraviation’scontributiontolocalairqualityissuesandpotentialimpactonglobalclimatechangecontinuestogrow.MeasuringandtrackingfuelefficiencyfromaircraftoperationsallowsFAAtomonitorimprovementsinaircraft/enginetechnologyandoperationalproceduresandenhancementsintheairspacetransportationsystem.
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fy 2007 performAnce At A GLAnce
performance measure fy 2007 target
fy 2007 results
fy 2007 Status
fy 2008 target1
SAfety
Commercial Air Carrier Fatal Accident Rate (rate per 100,000 departures) 0.010 0.0222 <0.010
General Aviation Fatal Accidents 331 3142 325
Alaska Accidents (number of fatal and nonfatal accidents) 110 922 104
Runway Incursions (rate per million operations) 0.530 0.3933 0.509
Commercial Space Launch Accidents (number of fatalities, injuries, or damage to the uninvolved public)
0 0 0
Operational Errors (rate per million activities) 4.27 4.083 4.27
Safety Risk Management (number of significant changes in the NAS) 3 3 6
cApAcity
Average Daily Airport Capacity (35 OEP airports) 101,562 102,5393 101,868
Average Daily Airport Capacity (7 metropolitan areas) 63,080 62,3513 63,386
Annual Service Volume (ASV) (operations accommodated/number of runway projects)
1.00% 2 projects
1.57% 2 projects
1.00% 1 project
Adjusted Operational Availability (service hours for facilities supporting the 35 OEP airports)
99.70% 99.82%3 99.70%
NAS On-Time Arrivals (flights arriving no more than 15 minutes late) 87.67% 86.32%3 88.00%
Noise Exposure (cumulative reduction in persons exposed to significant noise) −8.00% −27.00%4 −12.00%
Aviation Fuel Efficiency (cumulative reduction in fuel burned per kilometer flown)
−5.00% −10.82% −5.00%
PERFORMANCE HIGHlIGHTS
MANAGEMENT’S DISCUSSION AND ANAlySIS
FAAischargedwithpromotingthesafetyandefficiencyofthenation’saviationsystem.Withbroadauthoritytoenforcesafetyregulationsandconductoversightofthecivilaviationindustry,wemaintainthesystem’sintegrityandreliability.Astrategicplan,annualbusinessplans,humancapitalplans,andtheannualPerformance and Accountability Reportcreatearecurringcycleofplanning,programexecution,measurement,verification,andreporting.Thisstronglinkbetweenresourcesandperformanceshowsouraccomplishments
andreinforcesaccountabilityforthewaywespendtaxpayermoney.
Thisyear,FAAhad30performancemeasuresandtargetsinitsFlight Planthatfocusedoureffortstoachieveenhancedaviationsafety,increasesystemcapacity,provideinternationalleadership,andensureorganizationalsuccess.Ourgoalwastomeetatleast90%or27outof30.Weachieved24(80%).
ThePerformanceataGlancechartprovidesasnapshotofourresults.
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fy 2007 performAnce At A GLAnce
performance measure fy 2007 target
fy 2007 results
fy 2007 Status
fy 2008 target1
internAtionAL LeADerShip
Aviation Safety Leadership (number of safety enhancements implemented by China)
7 10 5
Bilateral Safety Agreements (number of new or expanded agreements) 3 3 2
External Funding (millions of dollars secured) $12.00 M $13.36 M $ 15.00 M
NextGen Technologies (number of countries implementing technologies) 1 1 1
orGAniZAtionAL exceLLence
STRATEGIC MANAGEMENT OF HUMAN CAPITAL
Employee Attitude Survey (percentage of positive responses) 38.00% N/A TBD
Mission-Critical Positions (reduction in time to fill selected positions) −1.00% −30.91% −3.00%
Reduce Workplace Injuries (injury and illness cases per 100 employees) 2.76 per 1002.56 per
1005 2.68 per 100
Grievance Processing Time (reduction in average days to complete processing)
−10.00% −61.64% −15.00%
Air Traffic Controller Workforce Plan (variance between plan and actual workforce level)
0% to 2% over plan
0.45%over plan
0% to 2% over plan
IMPROVED FINANCIAL PERFORMANCE
Cost Reimbursable Contracts (percentage of contracts closed out) 85.00% 95.00% 85.00%
Cost Control (number of activities per organization) 1 1 1
Clean Audit With No Material Weaknesses (NMW)Clean Audit
w/ NMW
Clean Audit with one material
weakness
Clean Audit w/ NMW
ACQUISITION MANAGEMENT
Critical Acquisitions on Budget (percentage within projections) 87.50% 100% 90.00%
Critical Acquisitions on Schedule (percentage meeting project milestones) 87.50% 97% 90.00%
CUSTOMER SATISFACTION AND OPERATIONAL CAPABILITY
Customer Satisfaction (score on the American Customer Satisfaction Index for pilots)
66 64 67
Information Security (number of cyber security events) 0 0 0
Green: Goal Achieved Red: Goal Not Achieved
note: TBD: To be determined.
1 FY 2008 targets are from FY 2007–2011 Flight Plan.2 Preliminary estimate. Final data will be available in March 2009.3 Preliminary estimate. Final data will be available in January 2008. 4 Projection from trends. Final data will be available in May 2008.5 Projection from trends. Final data will be available in November 2007.
MANAGEMENT’S DISCUSSION AND ANAlySIS
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SAfetyGoAL: Achieve the lowest possible accident rate and constantly improve safety.
Safetyisnotonlyatoppriority,itisalsoaneconomicnecessity.Peoplewillonlyflyiftheyfeelsafe.Overthepast5years,nearly3billionairlinepassengersreachedtheirdestinationsafely.AsthestewardsofaviationsafetyintheUnitedStates,FAAanditsindustrypartnershavebuiltasystemthatoperatesnearly32,000scheduledcommercialflightsdailyandhasreducedtherisksofflyingtoall-timelows.
commercial Air carrier fatal Accident rateGoAL: Limit the 3-year rolling average fatal accident rate to 0.010 fatal accidents per 100,000 departures.
reSULtS: not Achieved
WedidnotmeetourFY2007CommercialAirCarrierFatalAccidentRatetargetof0.010.BytheendofFY2007,weachievedarateof0.022fatalaccidentsper100,000departures(preliminary).
In1997,theWhiteHouseCommissiononAviationSafetyandSecurityissuedachallengetoFAAandtheaviationindustrytoreducetheaircarrierfatalaccidentrateby80%in10years.Thisyearmarkedtheendofthat10-yearperiod.Althoughwedidnotachievethetarget,wedidreducecommercialaircarrierfatalaccidents57%in10years.ThroughthecontinuingeffortandcooperationofallparticipantsintheaviationindustryandFAA,wehaveachievedthesafestperiodinaviationhistory.TheCommercialAviationSafetyTeam(CAST)hasfocusedattentiononfindingrootcausesofaccidentsandsolvingthem.Rulesandregulationshavealsoledtosaferequipmentandprocedures.
Inaddition,thetransitionofcommercialaircarrierstotheAirTransportationOversightSystemhashelpedfocussafetyoversight.Thisnewandinnovativeprogrambeganwiththenation’s10largestairlinesandwillultimatelyincludeallU.S.passengercarriers.FAAinspectorsnowlookatanairlineasawholetodeterminehowthe
COMMERCIAL AIR CARRIER FATAL ACCIDENT RATEPer 100,000 Departures
Fatal Accident Rate .01620.068 0.043 0.077 0.017 0.059 0.033 0.017 0.028 0.027
3-Year Average .0222
Rate
0.058 0.051 0.063 0.046 0.051 0.037 0.037 0.026 0.024
0.009
0.021
0.017
0.017
Target 0.046N/AN/AN/AN/A 0.0100.045 0.043 0.038 0.033 0.028 0.023
2007
N/A
N/A
<0.010
20081995 1996 1997 1998
Fiscal Year
1999 2000 2001 2002 2003 2005
0.0341
0.0201
0.018
20062004
1 Preliminary estimate until March 2008.2 Preliminary estimate until March 2009.
0.000
0.020
0.040
0.060
0.080
0.100
MANAGEMENT’S DISCUSSION AND ANAlySIS
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manyelementsofitsoperationinteracttomeetFederalstandards.
General Aviation fatal AccidentsGoAL: Reduce the number of general aviation and nonscheduled Part 135 fatal accidents to 331.
reSULtS: Achieved
FAAoverseesthesafetyofalmost300,000generalaviationaircraftintheUnitedStates.Generalaviationaircraftincludesingle-seat,home-builtairplanes;rotorcraft;balloons;andhighlysophisticatedextended-rangeturbojets.Generalaviationactivitiesincludestudenttraining,cropdusting,firefighting,lawenforcement,newscoverage,sightseeing,industrialwork,on-demandairtaxiservice,corporatetransportation,aswellaspersonaluseandrecreationalflying.
InFY2007,wemetourtarget,endingtheyearwithatotalof314accidents(preliminary).Rotorcraft,includingEmergencyMedicalServiceflights,showedasharpdeclineoverthepreviousyear.Itisalsoimportanttonotethatsincetheagencybegantrackingthisperformancetarget6yearsago,theceilinghasbeenexceededonlyonce.
Alaska AccidentsGoAL: Reduce accidents in Alaska for general aviation and all Part 135 operations to no more than 110 per year.
reSULtS: Achieved
AviationplaysavitalroleinAlaska,butthestate’stopographyandweatherpresentuniquesafetychallengestopilots.Therewere92accidentsinAlaskainFY2007(preliminary),belowthetargetof110.Alaskaexperiencedatotalof10fatalaccidentsthisyear,4innonscheduledPart135(commuterandon-demandoperations)and6ingeneralaviation.
Num
ber
NUMBER OF GENERAL AVIATION FATAL ACCIDENTS
200
250
300
350
400
450
500
340 354 2991
N/A N/AN/AN/AN/A 3253313142 N/A436 384 378 390 364 343 359 348 366
379 379 379 374 349 343 337
2007 20081995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
1 Preliminary estimate until March 2008.2Preliminary estimate until March 2009.
Fiscal Year
Actual
Target
Num
ber
NUMBER OF GENERAL AVIATION ALASKA ACCIDENTSFatal and Nonfatal Accidents
50
100
150
98 128 1021
110922
125 120 115
2007
104N/A
20082004 2005 2006
1 Preliminary estimate until March 2008.2 Preliminary estimate until March 2009.
Fiscal Year
Actual
Target
MANAGEMENT’S DISCUSSION AND ANAlySIS
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ThereisanurgentneedtomodernizeflightservicesinAlaska,wheregeneralaviationprovidesthetransportationinfrastructureessentialtoeverydaylife.TheAlaskaFlightServiceModernizationprogramiscurrentlyworkingtomeetAlaska’suniqueaviationneedswithexpandedorenhancedflightservicesonparwiththoseavailableinthecontinentalUnitedStates.
ContinuedemphasisontrainingthroughtheMedallionandCircleofSafetyprograms,aswellastheintroductionofnewtechnology,hassignificantlyimprovedthegeneralaviationoperatingenvironment.Inaddition,theAlaskaCapstoneProgramevaluatestechnologiesandproceduresdesignedtoenhancegeneralaviationsafetythatmaywellbepartofaviation’sfuture,suchasADS-B.TheprimarybenefitofADS-BinAlaskaisthedeliveryofgeneralaviationairtrafficcontrolserviceatloweraltitudesinareaswhereradarisnotcurrentlyavailableorwouldbetoocostlytodeploy.ADS-Bprovidespilotswithasituationalawarenesstoolthatdisplaysrealtimeinformationandcanalsobeusedtoimproveaccuracyandtimelinessofsearchandrescueactivity.
runway incursionsGoAL: Reduce Category A and B (most serious) runway incursions to a rate of no more than 0.530 per million operations.
reSULtS: Achieved
Theagencyhasbeenaggressivelyaddressingthisissueandhasmadeprogressinreducingthemostseriousincidents,particularlythoseinvolvingcommercialaircraft.InFY2007,FAAmetthetarget,endingthefiscalyearwitharateof0.393(preliminary)permillionoperations.Thenumberofseriousrunwayincursionshasbeenreducedbymorethan50%withinthepast6years.
Arunwayincursionisanyoccurrenceatanairportinvolvinganaircraft,vehicle,person,orobjectonthegroundthatcreatesacollisionhazardorresultsinalossofseparationwithanaircrafttakingoff,intendingtotakeoff,landing,orintendingtoland.Reducingrunwayincursionslessenstheprobabilityofaccidentsthatpotentiallyinvolvefatalities,injuries,andsignificantpropertydamage.
Rate
RUNWAY INCURSION RATEPer Million Operations
Highest Severity—Category A & B
0.35
0.40
0.45
0.50
0.55
0.60
0.570 0.510
N/AN/A0.444
N/A
2002 2003 2004
0.460N/A
2005
0.5071
0.551
2006
0.3932
0.530
2007
N/A0.509
2008Fiscal Year
1Revised fom preliminary estimate of 0.458.2Preliminary estimate until January 2008.
Actual
Target
MANAGEMENT’S DISCUSSION AND ANAlySIS
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Whilewearemeetingourtargetsforreducingthemostseriousrunwayincursions,somerecentincidentsareofconcern.Toaddressthis,wearefocusingonimprovedprocedures,increasedtrainingforairlinepersonnel,andmorerapiddeploymentoftechnologythatcouldreducerunwayincursions.
commercial Space LaunchesGoAL: No fatalities, serious injuries, or significant property damage to the uninvolved public during licensed or permitted space launch and reentry activities.
reSULtS: Achieved
ProtectingthepublicduringlaunchoperationsisanFAAsafetymissionobjective.Weachievedthisgoalforthefourthconsecutiveyear.InFY2007,atotalof14U.S.launchesoccurred.Ofthese,10involvedexperimentaltestflightsofsuborbitalreusablelaunchvehicles.Noneoftheselaunchesresultedinapubliccasualtyorinjury.
ThelicensingprocessisamajorreasonforFAA’ssterlingcommercialspacetransportationsafetyrecord.FY2007wasthefirstyearthattheFAAissuedexperimentalpermitsauthorizingindustrytoconducttestflightsofsuborbitalreusablelaunchvehicles.Safetyinspectionsalsocontributesignificantlytoourabilitytoverifythatlicenseesandpermiteesremaininregulatorycomplianceandcontinuetooperatesafely.Further,wepartnerwithotherGovernmentagenciessuchasNASAandtheDepartmentsofStateandDefensetoensurethatlicensedoperationsoperateinaccordancewithU.S.nationalsecurityandforeignpolicyinterests.
operational errorsGoAL: Reduce the rate of Category A and B (most serious) operational errors to a rate of no more than 4.27 per million activities.
reSULtS: Achieved
Oneofthefundamentalprinciplesofaviationsafetyisseparation—maintainingasafedistancefromotheraircraft,terrain,obstructions,andrestrictedairspace.
Rate
3.9
4.0
4.1
4.2
4.3
4.4
4.5
Fiscal Year
4.18 4.42 4.06
N/A N/A N/A
2002 2003 2004
4.311
N/A
2005
4.09
4.27
2006
4.082
4.273
2007
N/A
4.273
2008
Actual
Target1Revised from original estimate of 4.27.
2Preliminary estimate until January 2008.3Targets revised in FY 2007.
OPERATIONAL ERROR RATEPer Million Activities
Highest Severity—Category A & B
MANAGEMENT’S DISCUSSION AND ANAlySIS
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Airtrafficcontrollersemployrulesandproceduresthatdefineseparationstandardsforthisenvironment.Anoperationalerror(OE)occurswhencontrollersfailtofollowproceduresthatenforceseparationandallowaircrafttocometooclosetoeachotherortoanobstruction.TheFY2007preliminaryestimatesindicate4.08operationalerrorsoccurredpermillionactivities.
FAAhashistoricallytriedtounderstandandmitigatetheincidenceofoperationalerrors,focusingonthecriticalcomponentofthesystem—theclosestpersontotheairtrafficsituationandthelastpointofprevention—theairtrafficcontroller.Wefocusattentiononidentifyingcausalfactors,recreatingevents,developingmetricstocategorizeseverity,andsponsoringperformanceenhancementprograms.
Safety risk managementGoAL: Apply safety risk management to at least three significant changes in the NAS.
reSULtS: Achieved
FAAstrivestoimprovesafetyandminimizerisk.InFY2007,wemetourperformancetargetandappliedSafetyRiskManagement(SRM)tothreesignificantchangesintheNAS.WeconductedanSRMassessmentandprepareddocumentsfor“EnhancedBackupSurveillance”incasetheprimarysystemfails.WecompletedasafetyriskanalysisforthelocationofanewtowerattheLoneStarExecutiveairport.WealsoperformedariskanalysisandpreparedSRMdocumentationfor“OperationalUseofADS-BtoRadarSeparationProcedures,”whichensuresappropriateseparationbetweenaircraft.
cApAcityGoAL: Work with local governments and airspace users to provide increased capacity in the U.S. airspace system that reduces congestion and meets projected demand in an environmentally sound manner.
InFY2007,thedemandsonourNASwerenevergreaterandthechallengetoincreasecapacityintensified.Theoverallgrowthinnumbersofaircraft,thediversityintheperformanceandtypeofaircraftoperating(e.g.,regionaljets),andtheincreasinggrowthoflow-costcarriersfurtherexacerbatedanalreadytenuousNAS.Alongwiththesefactors,adverseweatherconditionswereamajorcontributingfactortotheincreaseinairportdelaysthisyear.
TheFederalGovernment’scommitmenttobeingreadyforthefutureisgatheredunderonevision—NextGen.TheconceptofNextGenisawiderangingtransformationoftheentireNAStomeetfuturedemandsandavoidgridlockintheskyandatourairports.NextGen’sgoalsfocusonsignificantlyincreasingthesafety,security,andcapacityofairtransportationoperationswhilereducingenvironmentalimpacts,therebyimprovingtheoveralleconomicwell-beingofthecountry.
Ourobjectiveissimpleanddirect:getpeopleandgoodswheretheyneedtogoassafelyandefficientlyaspossible.FAAworkstoreducedelaysandeliminatecongestioneveryday,startingliterallyfromthegroundup.Wearebuildingnewrunways,installingnewtechnology,andputtingnewproceduresinplacetofacilitatecapacity,efficiency,andenvironmentalenhancements.Tocombataviationcongestion,ourstrategycallsformajortechnologyupgradesandcapacityimprovementprojectsatmajorairports,allwhilemanagingcongestionatkeyhotspots.
MANAGEMENT’S DISCUSSION AND ANAlySIS
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Average Daily Airport capacity (35 oep Airports)
GoAL: Achieve an average daily airport capacity for the 35 Operational Evolution Partnership (OEP) airports of 101,562 arrivals and departures per day.
reSULtS: Achieved
WemetourFY2007target,achievinganaveragedailycapacityof102,539arrivalsanddepartures(preliminary).
Capacity-increasingeffortsincludedredesigningairspace;publishingAreaNavigationRoutes(RNAV),whichpermitaircrafttoflyoptimumroutes;providingtrafficmanagerswithIntegratedTerminalWeatherSystemtechnology,whichmakesairtrafficflowmoreefficientinperiodsofadverseweather;openingnewrunways;andexploringairportexpansionandinnovativeapproachestoreducecongestionincludingimplementationofNextGentechnologies.
Average Daily Airport capacity (7 metropolitan Areas)
GoAL: Achieve an average daily airport capacity for the seven major metropolitan areas of 63,080 arrivals and departures per day.
reSULtS: not Achieved
Everyyearafterthoroughdataanalysis,FAAidentifiesthemetropolitanareasthatwillmostaffecttotalsystemaviationdelays.InFY2007,wefocusedonNewYork,Philadelphia,SouthCentralFlorida,Chicago,Baltimore/Washington,LosAngelesBasin,andSanFranciscoBaymetropolitanareas.
TheaveragedailyairportcapacityatthesevenmajormetropolitanareasinFY2007was62,351arrivalsanddepartures(preliminary).Therefore,wedidnotmeetourFY2007target.Thiswasduetotwofactors:inaccuratebaselinesettingandinclementweather.TheFY2007baselinesettingeffortsetthetargetusinghistoricaldatathathaveproventobesomewhatinaccuratecomparedtotheAirportArrivalRates(AAR)andAirportDepartureRates(ADR)thatwereusedbythefacilitiesandenteredintotheAviationSystemPerformanceMetricsdatabaseduringthisfiscalyear.Inresponse,weimplemented
Capa
city
AVERAGE DAILY AIRPORT CAPACITYArrivals and Departures at the 35 OEP Airports
92,000
96,000
100,000
104,000
108,000
Fiscal Year
99,538 98,488 100,041 101,463 101,932
N/AN/A N/A 99,892 101,191
2002 2003 2004 2005 2006
102,5391
101,562
2007
N/A
101,868
2008
Actual
Target1Preliminary estimate until January 2008.
MANAGEMENT’S DISCUSSION AND ANAlySIS
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aqualityassuranceprocesstoensurethedataweremoreaccurate.Inclementweather,suchaslowceilings,lowvisibility,thunderstorms,wind,fog,andrain,alsowasafactorinnotmeetingthistarget.
Annual Service VolumeGoAL: Commission two runways, increasing the Annual Service Volume of the 35 OEP airports by at least 1%.
reSULtS: Achieved
InFY2007,weopenedarunwayinBostonandareplacementrunwayinLosAngeles,increasingAnnualServiceVolume(ASV)by1.57%.Additionally,withtheopeningofanendaroundtaxiwayinAtlanta,theairporteliminatedabout600runwaycrossingsperday,significantlyimprovingsafetyandefficiency.
ASVestimatesthebenefit,intermsofadditionalaircraftoperations,fromrunwayconstructionprojects.Arunwayconstructionprojectincludesnewrunways,runwayextensions,andairfieldreconfigurations.Aircraftoperationsincludeaircarrier,commuter,airtaxi,generalaviation,andmilitaryaircraft.TheASVmeasureisintendedtoestimateandtracktheincreaseinairportcapacityatthe35OEPairports.
Adjusted operational AvailabilityGoAL: Sustain adjusted operational availability at 99.70% for the reportable facilities that support the 35 OEP airports.
reSULtS: Achieved
WemetourFY2007goalbysustainingadjustedoperationalavailabilityat99.82%(preliminary).Thisperformancemeasureshowsthepercentoftimethatairtrafficcontrolequipmentwasavailableversustheamountoftimewhentheequipmentwasnotfunctional.
TheavailabilityoftheequipmentnecessarytoprovideservicedirectlyaffectstheperformanceoftheNAS.Lossofradarorcommunicationsequipmentwillaffectthespeedandnumberofaircraftthatcanbehandledwherethatlossoccurs.TheabilityoftheNAStoprovidecontinuousguidanceiscrucialandaffectsbothsafetyandcapacity.
0
.5
1.0
1.5
2.0
1.07% 1.01% 1.67%1.00%1.57%0.28% 0.67%
N/A N/A 1.00% 1.00% 1.00%
2007
1.00%N/A20082002 2003 2004 2005 2006
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ANNUAL SERVICE VOLUMEPercentage Increase per Year
99.2
99.0
98.8
99.4
99.6
99.8
100.0
100.2
99.72% 99.76% 99.78%99.70%99.82%199.83% 99.74%
N/A N/A 99.00% 99.00% 99.50%
2007
99.70%N/A
20082002 2003 2004 2005 2006Fiscal Year
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ADJUSTED OPERATIONAL AVAILABILITYPercentage of Service Hours for Facilities
Supporting the 35 OEP Airports
1Preliminary estimate until January 2008.
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nAS on-time ArrivalsGoAL: Achieve a NAS On-Time Arrival rate of 87.67% at the 35 OEP airports.
reSULtS: not Achieved
Commercialaviationdelaysareestimatedtocostairlinesover$3billionperyear.Missedflightconnections,missedmeetings,andlossofpersonaltimedirectlyaffectpassengersandournationalsystemcapacitytomeetairdemands.Airtrafficvolumeandadverseweatherconditionsarethemajorcausesofaviationdelays.
WedidnotmeetourFY2007target,achievinganon-timerateof86.32%(preliminary).Aflightisconsideredontimeifitarrivesnolaterthan15minutesafteritspublished,scheduledarrivaltime.Adverseweatherconditionsplayedasignificantpartinairportdelays,increasingweather-relateddelaysfrom2006to2007.
Tohelpachievethistargetinthefuture,FAAcontinuestoevaluatenewtoolsandtechnologiestoimprovearrivaltimessuchasgrounddelayprogramsandairspaceflowprogramsusedtocombattheimpactofthunderstormsonoperations.Inaddition,FAAcontinuestoevaluateseparationstandards,implementationofimproved
weatherinformationtools,andairspaceredesignwherebeneficial.AirspaceredesignisoneofthekeycomponentsinoptimizingtheU.S.airspaceandallowingforincreasedcapacity.Efficientairspaceoperationswillrequireredesigningroutesandchangingthesizeandshapeoftheairspace.Thisincreasedflexibilitywillhelpaddressvolume,congestion,andweatherinenrouteairspace.
noise exposureGoAL: Reduce the number of people exposed to significant noise, as measured by a 3-year moving average, to 8% below the 3-year average for calendar years 2000–2002.
reSULtS: Achieved
Aircraftnoiseisanundesiredby-productofmobility,andFAAactstoreducethepublic’sexposuretosignificantnoiselevels.Publicconcernandsensitivitytoaircraftnoisearoundairportscontinuestogrow,evenasmoreAmericansvalueanddependonairtransportation.
WeexceededourFY2007performancetarget,achievinga27%reduction(projection).Thesignificantreductioninnoiseexposuresincethebaseyear2000–2002averagehasbeendrivenbyaircarrierfleetandoperationalchangesthattookplaceintheaftermathofSeptember11,2001.Itwasexpectedthatareturntomoretypicalfleetcompositionsandareturntoairtrafficgrowthwouldnarrowthe“positivegap.”However,thereturnoffleetcompositionandairtraffictopre-9/11levelshasnotoccurredatthepaceexpected.Consequently,theactualnumberofresidentsexposedtosignificantnoiseremainswellbelowthecurrenttarget.
88.088.590.0
87.087.5
86.586.0
88.44% 88.36%87.67%86.32%1
87.40% 87.40%
2007
88.00%N/A
20082005 2006
Fiscal Year
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NAS ON-TIME ARRIVALSPercentage of Flights No More
Than 15 Minutes Late
1Preliminary estimate until January 2008.
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InFY2007,afterreviewinghistoricalnoisereductionsandtakingintoaccountrecenttrends,weincreasedtheFY2007targetfroma1%toa4%annualreduction.Thenewtargetalsoreflectsrelocationofpeopleawayfromareasofsignificantexposureandchangesincommercialfleetsandoperations.FAAcontinuestopursueaircraftnoisecontrol,incooperationwiththeaviationcommunityandlocalgovernments.WhileFAAisauthorizedtoprovidefundsforairportnoisecompatibilityprojects,eachprojectmustbelocallysponsored.
Achievingsignificantnoisereductioninthefuturewillbeachallenge.OurabilitytodevelopNextGentechnologiesandtohavethebroadestarrayofnoisemitigationapproachesatourdisposalwilldetermineoursuccessatmakingcontinuedimprovementsinaviationnoiseexposure.
Aviation fuel efficiency GoAL: Improve aviation fuel efficiency per revenue plane-mile by 5%, as measured by a 3-year moving average from the 3-year average for calendar years 2000–2002.
reSULtS: Achieved
AVIATION FUEL BURNED PER MILECumulative Percentage Reduction From Baseline
Perce
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umula
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–6.00
–7.00
–8.00
–9.00
–10.00
–11.00
–5.00
–4.00
–3.00
–2.00
–1.000
Fiscal Year
–3.46%1
–1.00%
2004
–5.84%
–2.00%
2005
–8.23%
–5.00%
2006
–10.82%
–5.00%
2007
N/A
–5.00%
2008
Actual
Target1Revised from original result.
Perce
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NUMBER OF PEOPLE EXPOSED TO SIGNIFICANT NOISECumulative Percentage Reduction From Baseline
–25
–30
–20
–15
–10
–5
0
5
2005 2006
Fiscal Year
20042003
–28.00%2–15.00%1 –28.00%1 –29.00%2
–1.00% –2.00% –3.00% –4.00%
2007
–27.00%3
–8.00%
2008
N/A
–12.00%3Projection to be �nalized in May 2008.
4Target revised during FY 2007.
1Revised from original result.2Revised from projection.
Actual
Target
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Concernoveraviation’scontributiontolocalairqualityissuesandpotentialimpactonglobalclimatechangecontinuestogrow.MeasuringandtrackingfuelefficiencyfromaircraftoperationsallowsFAAtomonitoremissionsimprovementsinaircraft/enginetechnologyandoperationalproceduresandenhancementsintheairspacetransportationsystem.
WeachievedtheFY2007targetbyimprovingaviationfuelefficiencyby10.82%.Improvementswereinfluencedbyagrowthinthenumberofflightsovershorterdistances.Aircraftflownforthesetypesofflightstendtobemoreefficientonafuelburnedperdistancebasis.
internAtionAL LeADerShipGoAL: Increase the safety and capacity of the global civil aerospace system in an environmentally sound manner.
InternationalleadershipisthewayFAAadvancessafetyandefficiencyaroundtheworld,towhereverAmericansmighttravel.Weprovidetechnicalassistancetoothercivilaviationauthoritiesandplacecontinuedemphasisonbilateralagreementstohelpharmonizeaviationsafetyandenvironmentalqualityaroundtheworld.Today,wehaveoperationalresponsibilityforabouthalfoftheworld’sairtraffic,havecertifiedmorethantwo-thirdsoftheworld’slargejetaircraft,andhaveprovidedassistancetomorethan130countriestoimprovetheiraviationsystems.
WhilesafetyisFAA’stopprioritydomesticallyandinternationally,wecannotoverlookthepotentialthatglobalaviationhaswithrespecttotradeandcommerce.Aviationsystemswithinandamongnationsarelifelinestothefuture,freertrade,acceleratedeconomicgrowth,andgreater
culturalexchange.Seamlessglobalaviationiscriticaltoanincreasinglyglobaleconomythathingesonefficientsupplychainsandjust-in-timemanufacturing.
Aviation Safety LeadershipGoAL: Assist China in implementing at least seven of the mutually agreed upon safety enhancements to its aviation system.
reSULtS: Achieved
ForFY2007,FAAandChinaagreedonatargetofimplementingatleastsevenCASTSafetyEnhancements(SEs)withinChina.TheChinesegovernmentimplemented10.TheseSEsincludednewrules,regulations,training,andequipmenttoflyintheChineseairspacesystem.SomeexamplesincludeTerrainAwarenessandWarningSystems,AirborneCollisionAvoidanceSystem,andread-backrequirementsforairtrafficcontrolinstructions.
FAA’seffortsinChinaarebutoneexampleofhowwehaveaglobalimpact.FAAworkswithavarietyofcountriesinanadvisorycapacitytoimprovesafetysystemsandprocessesaroundtheworld.
Bilateral Safety AgreementsGoAL: Conclude at least three new or expanded bilateral aviation safety agreements (BASAs) that will facilitate an increase in the ability to exchange aviation products and services.
reSULtS: Achieved
InFY2007,forthefourthconsecutiveyear,FAAachieveditsperformancetarget,concludingthreeneworexpandedBilateralAviationSafetyAgreements(BASAs)withSingapore,Japan,andMexico.
ABASApromotesaviationsafetyandenvironmentalquality,enhances
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cooperation,andincreasesefficiencyincivilaviationmatters.TheagreementsarebasedonrecognizedcomparabilityofU.S.andforeignsystemsforapprovalandsurveillanceoftheaviationindustry.ImprovedglobalunderstandingofU.S.safetyregulations,processes,andproceduresleadstobetterinternationalregulatoryoversight.TheseagreementslaytheessentialgroundworkforcooperationbetweentheUnitedStatesandtherespectivetargetcountry’saviationauthorities.
external fundingGoAL: Secure $12 million in international aviation development funding to strengthen the global aviation infrastructure.
reSULtS: Achieved
OftencountriesthatcouldbenefitthemostfromFAAtechnicalassistancearetheleastabletoaffordourhelp.ThisexternalfundinginitiativeseekstoleveragethelimitedresourcesweareabletocontributetointernationalsafetyandcapacityeffortswithtechnicalandfinancialassistancefromU.S.Governmentorganizations,
multilateralbanks,andindustrytosupportglobalaviationsysteminfrastructureprojects.
InFY2007,wesurpassedFAA’s$12milliontargetbysecuring$13.36millioninfundsfortechnicalassistance,aviationcooperationprograms,andinfrastructuredevelopmentprojects.FY2007highlightsinclude$3.2millionfromtheDepartmentofStatefortheSafeSkiesforAfricaprogram,$1.8millionfromtheU.S.TradeandDevelopmentAgencyfortheU.S./ChinaAviationCooperationProgram,and$6millionfromtheWorldBank,theAsianDevelopmentBank,andtheSwedishInternationalDevelopmentCooperationAgencytorevitalizeAfghanistan’saviationsystem.
nextGen technologiesGoAL: Expand the use of NextGen technologies and procedures to one priority country.
reSULtS: Achieved
InFY2007,FAAachieveditsperformancetargetofexpandingNextGentechnologytooneprioritycountrybyconcludingabilateralagreementwithChinaontheimplementationofReducedVerticalSeparationMinima(RVSM).InadditiontopromotingdevelopmentofChina’sairspaceinfrastructure,RVSMisakeycomponentofthevisionandplansforNextGenintheUnitedStates.OurpartnershipallowsustoassistChinawiththesafeimplementationofRVSMbasedonU.S.standardsandpracticesandalsobenefitsbothU.S.carriersandcitizensflyinginChina.RVSMwasthehighestpriorityitemforChina’sAirTrafficManagementBureaubecauseitiscriticaltomanagingtheexpectedincreaseinairtrafficvolumeforthe2008BeijingSummerOlympicGames.TofurtherChina’sRVSM
5
10
15
20
25
30
35
$11.97 M $19.51 M $33.04 M$12.00 M$13.36 M
$6.00 M $14.36 M $23.41 M
2007
$15.00 MN/A
20082004 2005 2006
Fiscal Year
Actual
Target
In Mi
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EXTERNAL FUNDING1
Funding Secured per Year
1Targets rebaselined and revised from percentage increase to dollar value in FY 2007.
Previous targets and results converted to dollars also.
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efforts,weparticipatedinseveralICAORVSMTaskForceMeetingsandotherAsia-Pacificregionalforumstoreinforceoursupport.
orGAniZAtionAL exceLLenceGoAL: Ensure the success of FAA’s mission through stronger leadership, a better trained workforce, enhanced cost-control measures, and improved decision-making based on reliable data.
Organizationalexcellenceisanongoingchallenge.OureffortsthisyearfocusedonsubmittingtoCongresstheNextGenReformActof2007toprovidefortransformationofairtransportationtotheNextGensystemandworkingwithusersofthesystemtogetnewlegislationpassedbeforeOctober1,2007.Wealsotargetedairtrafficcontrollerrecruitmentandplacementandhaveafullpipelineofnewcontrollersacrossthecountry.
Strategic management of human capitalemployee Attitude Survey
GoAL: Increase the score of the Employee Attitude Survey measure for the areas of management effectiveness and accountability to 38% positive.
reSULtS: not Achieved
Theemployeeattitudesurvey(EAS)isoneof30FAAFlight PlangoalsusedtoassessagencyperformanceaswellasafactorindeterminingtheamountoftheOrganizationalSuccessIncrease(OSI).IthasbeendeterminedthattheFY2007EASresultswerecompromised,renderingtheminvalid.Asaresult,theEASresultswillnotbeconsideredindeterminingtheagency’sOSI.FAAorganizationswill,however,continuetoimplementtheirEASActionPlansthatarebasedonthe2006EASresults.Inaddition,wearerevisingourFY2008Flight Planperformancetargetforleadershipandaccountability.Theseactionsensurethatwecontinueoureffortstofosterbetteremployeerecognitionandgreatermanagementeffectivenessandaccountability.
mission-critical positions
GoAL: Reduce the time it takes to fill mission-critical positions by 1% (to 54 days) from the current FY 2006 baseline of 55 days.
reSULtS: Achieved
Onecrucialelementofensuringsafetyandgreaterefficiencythroughorganizationalexcellenceisanefficientandhigh-qualityhiringprocessforfillingmission-criticalpositions(MCPs).Withmoreemployeesbecomingretirement-eligibleeachyear,itisintheagency’sbestinteresttoensurethatmission-criticalhiringisaccomplishedinatimelymannerandnetsthequalifiedindividualsneededtoachievemissionresults.
TheagencymetitsFY2007targettoreducethetimetofillmission-criticalpositionsby1%(to54days)overtheFY2006baselineof55days.Thisperformancetargetmeasuresthetime-to-fillMCPs(excludingAirTrafficControllers)fromthedateanactionto
3233343536373839404142
37.0% 34%38%N/A
36.5% 38%
2007
TBDN/A
20082005 2006
Fiscal Year
Actual
Target
Perec
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EMPLOYEE ATTITUDE SURVEYScore in Areas of Management
E�ectiveness and Accountability
MANAGEMENT’S DISCUSSION AND ANAlySIS
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fillapositionisreceivedfromthehiringorganizationtothedatethejobisofferedtotheindividualwhofillsthejob.
reduce Workplace injuries
GoAL: Reduce the total workplace injury and illness case rate to no more than 2.76 per 100 employees by the end of FY 2007.
reSULtS: Achieved
InFY2007,FAAmetitstarget,achievingaworkplaceinjuryrateof2.56(projection).FAA’seffortstoreduceworkplaceinjuriesincludeacomprehensiveprogramconsistingoftopmanagementleadership,policy,oversight,andprogramplanning.Inaddition,weincreasedeffortstotrainemployeesonhowtoworksafelyandtoensuretheyhavethenecessarypersonalprotectiveequipmenttoperformtheirjobs.Facilityinspectionsareconductedregularlytoidentifyandabatehazards.Whenaccidentsandincidentsoccur,theyarethoroughlyinvestigatedtoensurethatappropriatecorrectiveactionistaken.
However,preventionisthekeytoavertingworkplaceinjuries.Bearingthisinmind,FAAhastakenstepstoremovehazardsfromtheworkplaceinordertoimproveoverallsafety.Injuryreductionisachievedthroughouttheorganizationwhenemployeeawarenessandparticipationishigh,leadershipsupportsoccupationalsafetyandhealthactivities,andrisksareidentifiedandmitigated.
Grievance processing time
GoAL: Reduce average grievance processing time by 10% to 131 days from the FY 2006 baseline of 146 days.
reSULtS: Achieved
InFY2007,wemetourtargetbyreducingtheaveragegrievanceprocessingtimeby61.64%to56days.Thegoalofanygrievanceprocedureistoresolveemployeeandunioncomplaintsatthelowestlevelpossible,withtheleastamountoftime,resources,anddisruptiontotheworkenvironmentandmission.Thewidemarginbywhichweexceededthetargetisattributedtotargetinggrievanceswithprocessingtimesthatexceeded100daysandtrainingontheGrievanceElectronicTrackingSystem(GETS),whichwasdeployedinFY2006.
Air traffic controller Workforce plan
GoAL: Maintain the air traffic control workforce at or up to 2% above the projected annual totals in the Air Traffic Controller Workforce Plan.
reSULtS: Achieved
InFY2007,FAAachieveditstargetwithanend-of-yearairtrafficcontrollerworkforcelevelat0.45%overtheplan.Whiletheactualnumberofhiresexceededthehiringtarget,attrition,duetohigherthanexpectedlossestooperationsandsupervisorstaff,retirements,andtrainingfailures,alsoexceededtheplan’stargets.However,hiresoutpacedlosses,enablingustosurpassourfullyearstaffingtarget.
ThiswasdueinlargeparttorecruitingdiverseapplicantsforAirTrafficControllerpositionsbyrecruitingthenextgenerationofworkersthroughthechanneltheyknowbest—theInternet.Usingthisrecruitingsource,weareseeinghighlyqualified
MANAGEMENT’S DISCUSSION AND ANAlySIS
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applicantsandhaveexperiencedahighlevelofsuccessinrecruitingeffortsasaresult.Wealsopurchasedprintadvertisingandconductedoutreachtostudentsatmorethan800collegesanduniversities,andmarketedemploymentopportunitiesatmilitarytransitioncenters,stateandlocalemploymentservices,andGovernmentrecruitmentcenters.
improved financial performancecost reimbursable contracts
GoAL: Close out 85% of eligible cost reimbursable contracts.
reSULtS: Achieved
InFY2007,FAAachieveditstargetandclosed60cost-reimbursablecontracts,or95%ofthecontracts.Toachievethisgoal,wefocusedonmaintainingappropriatelyhighclose-outratestoavoidsuchissuesasthelossofexpiredfunds,lossoffiledocuments,lossofvendor’scorporateknowledge,orchangesinthecontractor’sbusinessstatus.
Closingcontractsonatimelybasissupportsorganizationalexcellencebyimprovingfinancialmanagementoftheagency’scontracts.Ahighnumberofunclosed
contractscancreatepotentiallylargeliabilitieswherefinalamountsareduetoorfromthecontractor,inadditiontolosingtheuseoffundsthatcouldotherwiseberecouped.Byfocusingoncontractseligibleforcloseout,contractsareadministeredmoreefficientlyandtheagency’sliabilityisreduced.
cost control
GoAL: Organizations throughout the agency will continue to implement cost control initiatives by applying at least one cost control activity per organization.
reSULtS: Achieved
InFY2007,FAAmetthistarget.Organizationsthroughouttheagencyimplementedatleastonecostsavingoravoidanceactivity,accruingtotalsavingsandavoidanceof$60million.Thesesavingsresultedfromstrategicsourcingofselectedproductsandservices,consolidationsoffacilitiesandservices,reductioninhelpdeskoperatingcosts,eliminationofobsoletetechnology,andreductioninITcosts.
clean Audit With no material Weaknesses
GoAL: Obtain a clean audit (unqualified opinion with no material weaknesses) on the agency’s financial statements each fiscal year.
reSULtS: not Achieved
Theunqualifiedauditopiniontargetisacriticalindicatorofanagency’sfinancialcondition,becauseitindependentlyassessesthefairpresentationofFAA’sfinancialstatementsand,inconnectionwiththatprocess,considerstheinternalcontrolsoverfinancialreporting.
After5yearsofunqualifiedauditopinions,wereceivedaqualifiedopiniononour
100
150
125
175
170.00% 102.00%85.00%95.00%
85.00% 85.00%
2007
85.00%N/A
20082005 2006
Fiscal Year
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COST REIMBURSABLE CONTRACTSPercentage of Eligible Contracts Closed Out
75
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FY2006financialstatementsduetothelackofdocumentationsupportingourConstructioninProgress(CIP)balance.Wehavebeentransparentinourpublicdisclosureaboutboththequalifiedopinionandtheimmediateremediationinitiativeweundertooktocorrectthedeficiency.Afteranintensive,year-longefforttoreviewthebalanceandrestateourFY2006financialstatements,theauditorsissuedarevisedopinion—nowunqualified—onourrestatedFY2006financialstatements.
Inaddition,wereceivedanunqualifiedopiniononourFY2007financialstatements.However,weincurredamaterialweaknessrelatedtothetimelyprocessingoftransactionsandaccountingofProperty,Plant,andEquipment,includingtheCIPaccount.Toaddressthisweakness,werestructuredrolesandresponsibilitiesandreallocatedresourcestomakeadditionalimprovementstoourcapitalizationprocesses.TheneworganizationalchangewillenablemoreaccountabilityandtransparencyinthecapitalizationprocessandenableustokeepourCIPbalancecurrentandaccurate.
Acquisition managementcritical Acquisitions on Budget/on Schedule
GoAL: Ensure that 87.5% of critical acquisition programs are on schedule and 87.5% of critical acquisition programs are within 10% of budget as reflected in the Capital Investment Plan.
reSULtS: Achieved
FAAexceededtheFY2007performancetargetsformajoracquisitionscostandschedule.Wetracked67milestonesagainst37acquisitionprograms.Weaccomplished65ofthe67milestones(97%)onschedule.Forthecostgoal,noprogramreflectedavarianceofmorethan10%incost,resultingina100%performancerating.
Oneofthemostimportantstepsincontrollingcostsisensuringthatcapitalprogramsareeffectivelymanaged.Theseprogramsprovidenavigation,surveillance,computerprocessingcapabilities,toolsforairtrafficcontrollers,telecommunicationsinfrastructure,andweatherinformationtomaketheNASrunsmoother.Bytrackingcostandschedulemilestones,FAAensuresthattaxpayerdollarsspentthroughitsacquisitionprogramsachieverequiredperformanceoutcomes.
75
80
85
90
95
100
105
100.00% 97.00% 100.00%87.50%
100.00%88.00%80.00% 80.00% 80.00% 85.00%
2007
90.00%N/A
20082003 2004 2005 2006
Fiscal Year
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CRITICAL ACQUISITIONS ON BUDGETPercentage of Programs Within Planned Budget
75
80
85
90
95
100
105
91.50% 92.00% 97.44%87.50%97.00%
90.00%N/A77.00%
80.00% 80.00% 80.00% 85.00%
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Fiscal Year
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CRITICAL ACQUISITIONS ON SCHEDULEPercentage of Programs
Meeting Scheduled Milestones
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customer Satisfaction and operational capability
customer Satisfaction
GoAL: Increase agency scores on the American Customer Satisfaction Index to 66.
reSULtS: not Achieved
FAAdidnotmeetitsFY2007target,achievingascoreof64.Thiswasonlythesecondtimethatthescoredidnotincreasesince1999.ThescoredroppedinFY2007primarilybecauseoflowerratingsintheareaofPolicy,Standards,andRegulations.
TheagencyusestheAmericanCustomerSatisfactionIndex(ACSI)tomeasurecustomersatisfactionwithpilotswhoholdcurrentcommerciallicensesandfirst-orsecond-classmedicalcertificates.Thesepilotsareaskedtoratetheirsatisfactionwithairtrafficcontrolpersonnelandservices,pilotcertificationprocesses,andtheclarityofregulationsandtheircontributiontoaviationsafety.
Thesurveyaspresentlystructureddoesnotprovidethereasonspilotsrespondedthewaytheydid.Wewillrefinethesurveytobetterunderstandissuesidentifiedbyexperiencedpilots.
information Security
GoAL: Zero cyber security events that significantly disable or degrade FAA services.
reSULtS: Achieved
DuringFY2007,therewereapproximately5millionattemptsmadeeachmonthtodisruptserviceonournetwork,yetforthethirdconsecutiveyear,wemetourtargetofnosuccessfulcyberevents.
FAAhasaninformationsecuritymandatetoprotecttheagency’sITassetsinaccordancewithnumerousexecutiveandlegalrequirements.Accordingly,FAA,whosemissionistoensurethesafeandefficientmovementofaircraft,mustbeprotectedagainstthethreatofcyberattacks.Toachievesuccessandtomeetstatutoryrequirements,wecompleted100%ofthesecurityreviewsofourITsystemsandensuredthat100%oftheITsystemstargetedforre-certificationandauthorizationwerecompleted.
Num
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50
55
60
65
70
75
65 66 70
N/A 66
6458 56 59 64 64N/A N/A 60 62 63 64 65
2007
67
N/A
20081999 2000 2001 2002 2003 2004 2005 2006
Fiscal Year
Actual
Target
CUSTOMER SATISFACTION INDEX SCORE FORCOMMERCIAL PILOTS
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PRESIDENT’S MANAGEMENT AGENDA
ThePresident’sManagementAgenda(PMA)isasetofinitiativesdesignedtomaketheFederalGovernmentmorecitizen-centered,results-oriented,andmarket-based.TheorganizationalexcellencetargetsintheFlight PlansupportDOT’sgoaltoachieve“green”onthePMA.Todothis,DOTasksFAAtosettargetsandmeasureperformanceasawaytoholdthemaccountableforresults.Whilethereare13agencieswithintheDOTthatcontributetotheoverallPMA,FAA’scontributionissignificantandhasamajorimpactontheratingresults.Forexample,fortheFederalRealPropertyAssetManagementinitiative,FAAhasover99%oftherealpropertywithinDOT,effectivelydrivingtheinitiativeanditsresults.DetailsofFAA’saccomplishmentstowardthePMAcanbefoundintheFY 2007 Performance and Accountability Report.
MANAGEMENT’S DISCUSSION AND ANAlySIS
Initiative: Strategic Management of Human Capital
Addressworkforcegaps,eliminateskillgaps,developperformance-basedincentives,ensurecitizen-centeredorganizations,andensurearobustleadershippipeline.
FAA Accomplishments
TheDOT/FAAhumancapitalaccomplishments,suchasenhancingrecruitmenteffortsandagencyworkforceplanning,helpedtoearnDOTa“green”statusratingonthePresident’sManagementAgendaforafourthconsecutiveyear.
Initiative: Competitive Sourcing
Developacompetitivesourcingplanforactivitiesdesignatedcommercialinnature,withthegoalofprovidinghigherquality,morecost-effectiveservicestothepublic.
FAA Accomplishments
FAAstrengthenedtheFederalActivitiesInventoryReformActinventorysubmissionbyensuringthecriteriausedtodeterminefunctionandreasoncodesforboth“inherentlygovernmental”and“commercial-exempt”werefullyjustified.TheFY2007inventoryforFAAtotaled45,195full-timeequivalents.Wecontinuetoevaluateourcompetitivepositionsinvariousfunctionsandlinesofbusinessforcompetitiveoutsourcingopportunities.
Initiative: Improved Financial Performance
Implementfinancialmanagementsystemscapableofproducingmoretimelyandaccurateinformationfordecision-making,andmaintainunqualifiedopinionsonfinancialstatements.
FAA Accomplishments
FAAdevelopedanaggressiveactionplantocorrectandrestateaqualifiedopiniononitsFY2006consolidatedfinancialstatements.Wealsodevelopedlong-termpolicyandprocedurechanges.InFY2008,wewilladoptefficiencymeasuresinthe
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capitalizationprocess,increaseuseofautomation,implementorganizationalchanges,andaddresources.
WecontinuedoureffortstoautomateourBudgetarytoProprietaryreconciliationtoolsandfurtherreducedthevariances,totheextentthatalleightofourinternalmetricsreachedgreenstatus.
FAAimprovedthereliabilityofcostdataandallocationofthecoststoNASusers.Toensurecostdataarecurrent,weestablishnewprojectcodeswhenmanagementneedstotrackthecostofaprojectoractivity.CustomersareroutinelyconsultedtoincorporatesystemchangerequestsintofutureCASreleasesandimprovemanagerialcostreporting.
MANAGEMENT’S DISCUSSION AND ANAlySIS
Initiative: Expanded Electronic Government
BetterjustifyandtrackITprojectsandparticipateinGovernment-wideinitiativestoautomatetransactions,reduceredundancies,andincreaseefficiencies.
FAA Accomplishments
InFY2005,FAAassessedallmajorcapitalinvestmentsandsubmittedaplantoimplementfullearnedvaluemanagementonallprogramsthathavesignificantOfficeofManagementandBudget(OMB)Development/Modernization/EnhancementspendingbyDecember2007.FAAisontracktomeetthisplan.WecreatedourfirstITportfolio,whichconsistsofover60administrativeITinvestmentsexceeding$250million.WearealsoworkingwiththeOfficeoftheSecretaryofTransportation(OST)andOMBto
havetheNASModernizationProgram,acollectionofprojectsworthmorethan$2billionannually,takenofftheGovernmentAccountingOffice’sHighRiskList.Wearecurrentwithcertification,authorization,recertification,andself-assessmentsonallofourITsystems.WecontinuetoparticipateinDOT’scompliancereviewprocessandareresponsibleforkeepingtheDOTEnterprisePortalup-to-datewithrespecttoFAAITsystems.
FAAcontinuestoparticipateineGovernmentinitiativesthatcontributetoOST’ssuccessfuleGovernmentscorecardincludingeGrantsExecutiveCommittee,OST’splanningteamforthemigrationofthecurrentDocketManagementSystemtotheFederalDocketManagementSystem,andsurveystoassessFederalneedsforgeospatialproductsandservice.WealsoarecollaboratingwiththeNationalArchivesandRecordsAdministrationtodevelopprocessesandbestpracticesforE-recordsmanagement.
Initiative: Performance Improvement
Improvemanagementthroughregular,systematicmeasurementandaccountabilityforprogramperformancecomparedtopredeterminedgoals.
FAA Accomplishments
FAAworkstoimproveperformanceandaccountabilityinavarietyofwayssuchasconductingmonthlyFlight Planmeetingsonthestatusofourperformancegoals;preparingaseparatePerformance and Accountability Report,whichprovidesdetails
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ofFAA’sperformanceonall30Flight Plan performancegoals;andlinkingpayraisesandreviewstotheagency’sachievementofperformancetargets.InresponsetoOMB’sProgramAssessmentRatingTool(PART)reviewofFAA’sR,E,&Dprogram,theagencyhasdevelopedefficiencymeasurestobettermanagetheprogram’soverheadcost.InFY2007,OMBconductedaPARTassessmentoftheATO’sterminalprograms,whichdirectairtrafficflowsandassistwithaircraftoperationsnearairportsandcontroltowers.Theprogramobtainedamoderatelyeffectiverating,thesecondhighestcategory.PARTreviewswillbeconductedoftherestofATOinthenext2years.
MANAGEMENT’S DISCUSSION AND ANAlySIS
Initiative: Eliminating Improper Payments
Reduceimproperpaymentsthroughidentificationofat-riskprogramsandestablishmentofaplanforcorrectiveaction.Setrecoverytargetsand,whereappropriate,worktomeetthem.
FAA Accomplishments
OurexcellentrecordofkeepingimproperpaymentstoaninsignificantamountcausedOMBandDOTtochangethefocusofourimproperpaymentseffortstograntpaymentsmadeunderourAirportImprovementProgram(AIP).InFY2006,ouractivitiescenteredonresearchingpaymentsmadebygrantsponsorstohelpdevelopastatisticalsamplingandtestingmethodologythatwouldbeusedforfuturereviews.DuringFY2007,weappliedthatknowledgeandmethodologytoacomprehensiveefforttotest10statisticallyselectedairportimprovementprojectsacrossthenation.Thevalidityandappropriatenessofpaymentsrelativetothetermsofthe
grantagreementwerereviewedandnoimproperpaymentswereidentified.
Initiative: Federal Real Property Asset Management
Promoteefficientandeconomicaluseofrealpropertyassets;ensuremanagementaccountabilityforrealpropertymanagementthroughestablishmentofcleargoalsandobjectives,andimprovedpoliciesandlevelsofaccountability;developandimplementAssetManagementPlanstoensureefficientandeffectivemanagement;developcommonperformancemeasures;andestablishasinglecomprehensiverealpropertyinventorydatabase.
FAA Accomplishments
FAA,onbehalfofDOT,continuedtoprovideinventoryinformationandperformancemeasurestotheFederalRealPropertyCouncilincludingmetricsfortheapproximately69,500DOTrealpropertyassetsandreportedperformanceinformationforeachrealproperty.FAAestablishedDOT’sfirst-everfullinventoryofrealpropertyassetsforinclusioninthefullFederalrealpropertyinventorydatabase.InaccordancewithDOT’sAssetManagementPlanandtheThree-YearTimelineforRealProperty,FAAparticipatedinperiodicreviewsoftherealpropertyassetdata.Inadditiontodisposalactivities,FAAdevelopedapriorityinvestmentlistforitsassetportfolio.
ForamoredetaileddescriptionofthePresident’sManagementAgenda,seetheOMBwebsiteat www.Whitehouse.gov/omb/budintegration/pma_index.html.
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Fy 200� INSPECTOR GENERAl’S SUMMARy OF CHAllENGES AND FAA ACTIONS
InFY2006,theDOTOfficeofInspectorGeneral(OIG)identifiedfivemanagementchallengesfacingFAAinthecomingyears.AsummaryofFAA’sactionstowardresolvingeachofthechallengesfollows.AdetaileddiscussionappearsinFAA’sFY 2007 Performance and Accountability Report.
Challenge: Defining, Developing, and Implementing Strategies To Improve Congested Conditions on the Nation’s Highways, Ports, Airways, and Borders
FAA Actions
• FAAsubmittedtoCongresstheNextGenerationAirTransportationFinancingReformActof2007,whichcontainsproposalsdesignedtoreducecongestion,acceleratethetransitiontoNextGen,andimprovetheefficiencyandoversightofthesystem.Theproposalincludesanewfinancingsystem,whichtiespaymentsthatNASusersmakeforairtrafficcontrolservicesmorecloselytoactualcostsandcreatesincentivesformoreefficientuseoftheairtrafficcontrolsystem,includingtheuseofmarket-basedmechanisms,suchasauctionsorcongestionpricing,atcongestedairports.
• WecreatedtheOperationalEvolutionPartnership(OEP),FAA’splanforimplementingNextGen,tokeepcapacity-enhancinginitiativesonschedule.OEPwillfocusonproducingnewoperationalcapabilities,whichwilltransformourcurrentairtransportationsystemfromground-basedsurveillance
andnavigationtonewandmoredynamicsatellite-basedsystems.Theforecastedandactualbenefitsoftheplan’sactivitiesaremeasuredannually,andanFAAteamensureseachprogramisimplementedonschedule.
• Wecontinuetosupporttheconstructionofrunways,taxiways,andmajorrunwayextensions,whicharecurrentlythemosteffectivemethodofincreasingthroughput.Wealsocontinuetofosterthedevelopmentofenhancementstoimprovecapacity,reducedelays,andimproveaccessatairports.
Challenge: FAA Reauthorization—Reaching Consensus on a Financing Mechanism To Fund FAA and Establishing Funding Requirements
FAA Actions
• FAA’sreauthorizationproposalincludesasetofuserfeesforcommercialoperatorsandfueltaxesforgeneralaviationthatmoreaccuratelyreflecttheirrespectiveuseoftheaviationsystem.Userfeeswould,undertheproposal,takeeffectin2009.
• NextGenrequiresahighlydeliberateandintegratedplanningprocessthat,inthenearterm,resultsinproductsthatinformthedesign,policy,andinvestmentdecision-makingrequiredtolaunchandimplementthenewsystem.TheJointPlanningandDevelopmentOffice(JPDO)madeprogressindeveloping,advancing,anddelivering
MANAGEMENT’S DISCUSSION AND ANAlySIS
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criticalfoundationalproductswithcooperationandcollaborationacrossGovernment.DocumentsdetailingcriticalNextGenrequirementswerereleasedlastsummer.ThesedocumentshaveenabledtheJPDOtobegintounderstandandprojectthecostsandbenefitsofNextGen.
• FAAcontinuesitseffortstoaddresstheexpectedsurgeinAirTrafficControllerattrition.Inanticipation,weupdatedourControllerWorkforcePlantoprovidestaffingrangesforeachofFAA’s314facilities.Theplanalsoincludesanestimatefortotalsalary,premium,andbenefitcostsforallcontrollersintraining.
• WeareusingourCostAccountingSystemtocontrolcostsandimproveoperations.Thisincludesassigninglaborhourstoprojectsandestablishingnewandspecificlaborcodestotrackcosts,whichhasenabledustobetterallocatecoststoNASusers;improvingtheaccuracyandtimelinessofcapitalizationcosts;andpublishingourcostallocationstudyof2005airtrafficcosts(availableatwww.faa.gov/regulations_policies/reauthorization/).
Challenge: Aviation Safety—Performing Oversight That Effectively Uses Inspection Resources and Maintaining Aviation System Safety
FAA Actions
• FAAcontinuestoadvancerisk-basedoversightsystemsforaircarriersandexternalrepairfacilitiesandisonscheduletohaveall120aircarriersregulatedunder14CFRPart121transitionedtotheAirTransportationOversightSystem(ATOS)bythe
endof2007.ATOSimprovesthecertificationandsurveillanceprocessesforaircarriersandassessesthesafetyofaircarrieroperatingsystems.FAAredesignedATOSinFY2007toprovidetheflexibilitynecessarytomanagethemanytasksrequiredtoevaluateaircarriersofallsizesintheirdiverseoperatingenvironments.
• InOctober2006,FAAissuedabulletinprovidingguidancetoprincipalinspectorsassignedto45CFRParts121and135aircarrierswhooutsourcesomeoralloftheirmaintenance.Theseinstructionsprovidedadditionaloversightofeachaircarrier’soutsourcedmaintenancearrangements.Inaddition,principalinspectorsarenowrequiredtoevaluatetheaircarrier’soutsourcedmaintenanceprogramstoensureworkperformedbycertificatedandnon-certificatedrepairfacilitiesisaccomplishedwithinthescopeofthecontractandincompliancewiththeaircarrier’smaintenanceinstruction.Thenoticealsorequiresevaluationoftheaircarrier’soversight,authorization,andtrainingproceduresfornon-certificaterepairfacilities.
• FAAprovidedtoCongressa10-yearAviationSafetyWorkforcePlantoensureadequatesafetystaffismaintainedandtoaddressinspectorattritionandanticipatedchangesintheaviationindustry.FAAcloselymonitorsretirementsandistakingstepstohirethenextgenerationofsafetyinspectors.
• Astrafficcontinuestoincrease,FAAcontinuestorefineexistingand/orimplementnewtechnologies,equipment,andprocedurestoreducetheriskofaccidentsonthegroundandintheair.
MANAGEMENT’S DISCUSSION AND ANAlySIS
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Challenge: Improving Acquisition and Contract Management To Reduce Costs and Eliminate Improper Payments
FAA Actions
• FAAestablishedtheContractOversightfunctioninFY2007toprovideoversightandevaluationofcontractoperationswithintheagency.InFebruary2007,FAA’sAcquisitionExecutivedirectedthattheNationalAcquisitionEvaluationProgram(NAEP)beestablishedintheagency.NAEP’sgoalistoensureconsistentimplementationofAcquisitionManagementSystem(AMS)policyandguidancebyFAAofficesandtoidentifyinnovativeprocessesoropportunitiesforimprovements.ANAEPTeamdevelopedStandardOperatingProcedures(SOP)tobefollowedbyevaluationteamsinconductingcontractandprogramevaluations,developedanEvaluationWorkPlanthatlistsproposedcontractevaluationsoverthenext3years,anddevelopeditsfirstevaluationreportontheresultsofayearlyassessmentoftheconsistencybetweenthehiringofcontractorpersonnelascomparedtothelaborcategoriesandratescontainedinsupportservicescontracts.
• FAAisestablishingasupportservicescontractvehicletobeusedtohirecontractsupporttoassistthecontractofficersandspecialistsinconductingpriceanalysis.Thiscontract,alongwiththeadditionalexperiencedcontractofficers,willstrengthenFAA’scapacitytoconductpriceanalysisbeforecontractawards.
Challenge: Protecting, Monitoring, and Streamlining Information Technology Resources
FAA Actions
• InFY2007,FAAmetthestatutoryrequirementtorecertifyitsITsystemsontheir3-yearanniversariesoruponmajorsystemchange.Specifically,FAArecertified100%ofits84ITsystems,includingtheairtrafficcontrolsystems.FAA’sremainingsystemswillundergoannualself-assessmentsasprescribedbytheNationalInstituteofStandardsandTechnology(NIST).
• InFY2007,FAAimplementedtheBusinessContinuityPlan(BCP)andestablishedtheBusinessContinuityProgramOfficetoaddresspotentialprolongedITservicedisruptionsatenroutecenters.Primaryinfrastructureisinplace.EnrouteBCPoperationalrequirementsarebeingvalidatedwithfieldAirRouteTrafficControlCenters.FAAwillprovideallmission-essentialservicesfortheaffectedfacilitywithagoaltoreconstituteoperationsat80%ofpreviouscapacitywithina3-weekperiod.
• FAAhadplannedtovisitasignificantnumberoffacilitiestoauditITsecuritydifferencesbetweensystemsatterminalandtowerfacilitiesrelativetolaboratoryconditions.However,afterthoroughstudy,FAAconcludedthatthereturnoninvestmentwouldnotsupporttheexpectedcost,whichwouldexceed$2.5million.Thisdecisionwasalsosupportedbyresultsofsimilareffortsatenroutefacilities,wheretherewaslessthana10%variance.
MANAGEMENT’S DISCUSSION AND ANAlySIS
FINANCIAl HIGHlIGHTS
With passenger totals expected to more than double in the next decade, FAA is determined to meet the increased demands on our airspace and ensure travelers get to their destination with minimal delays without compromising safety.Credit: FAA Image Library
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A MESSAGE FROM THE CHIEF FINANCIAl OFFICER
TheU.S.economydependsonasafe,efficient,andreliablenationalairspacesystem.NextGenisourroadmapforthefuture—anditisanextraordinaryundertaking.Initialcostestimatestoimplementtheplanthroughtheyear2025areasmuchas$22billion.Werecognizethattosupportthisextraordinaryeffort,weneedtooperatemorelikeabusinessusingbestpracticesfromtheprivateandpublicworld.Iamproudofourmanyachievementsthisyear,particularlythesignificantstrideswehavemadetostrengthenfinancialcontrolsandincreaseoperationalefficiencies.Weknowthateverydollarsavedenablesustocommitmoretoincreasedsafetyandcapacity.DuringFY2007,we
• AchievedanunqualifiedopinionwithonematerialweaknessonourFY2007financialstatements.
• ReceivedourfourthconsecutiveawardfromtheLeagueofAmericanCommunicationProfessionalsfortheFY 2006 Performance and Accountability Highlights,recognizingitasoneofthetopGovernmentannualreportsinthecountry.
• Realized$150millioninannualrecurringcostcontrolsavingsfromeffortsinitiatedinFY2005andFY2006.Inaddition,weintroduced$82millioninefficiencies.Toobtainthesesavings,we
• Consolidatedservicessuchashumanresources,IT,administration,andaccounting.
• ContinuedtheSAVESinitiativetoimproveourprocurementprogramforadministrativesupplies,equipment,IThardware,andcourierservices.Weawardedsevencontractsinfivedifferentcategoriesandexpecttoachieveover$6millionincostsavingsforFY2007,withannualizedsavingsofover$7millioneachyearthereafter.
Ramesh k. Punwani Assistant Administrator for Financial services/ Chief Financial Officer
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• ImprovedfinancialcontrolsbystrengtheningtheapprovalprocessformajorinvestmentsandbyrequiringCFO-approvalonallpotentialcontractsover$10million.
After5yearsofunqualifiedauditopinions,wereceivedaqualifiedopiniononourFY2006financialstatementsrelatedtotheaccuracyofourConstructioninProgress(CIP)balance.WealsoreceivedarelatedmaterialweaknessinFY2006forlackofsupportingdocumentationandaneedtostrengthenpoliciesandproceduresinthecapitalizationprocess.Wehavebeentransparentinourpublicdisclosureaboutthequalifiedopinion,materialweakness,andtheimmediateremediationinitiativeweundertooktocorrectthedeficiency.Afteranintensive,year-longefforttoreviewanddocumenttheCIPbalance,improvepoliciesandprocedures,andrestateourFY2006financialstatements,Iampleasedtoreportthattheauditorshaveissuedarevisedopinion—nowunqualified—onourrestatedFY2006financialstatements.
Inaddition,wereceivedanunqualifiedopiniononourFY2007financialstatements.However,weincurredamaterialweaknessrelatedtothetimelyprocessingoftransactionsandaccountingofProperty,Plant,andEquipment,includingtheCIPaccount.Toaddressthisweakness,wehaverestructuredrolesandresponsibilitiesandreallocatedresourcestomakeadditionalimprovementstoourcapitalizationprocesses.TheneworganizationalchangewillenablemoreaccountabilityandtransparencyinthecapitalizationprocessandenableustokeepourCIPbalancecurrentandaccurate.
Consistentlyachievingfinancialexcellenceisanongoingchallenge,butonewhichwetakeveryseriously.Everydayourdedicatedstaffworktoimprovethesoundnessofourpoliciesandtheefficiencyofourprocessestoensuretheaccuracyofourfinancialdata.ThatisourcommitmenttoeveryAmericantaxpayer—anditiswhatcontinuestomakeFAAaworldclassorganization.
RameshK.PunwaniAssistantAdministratorforFinancialServices/ChiefFinancialOfficerNovember5,2007
FINANCIAl HIGHlIGHTS
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FINANCIAl HIGHlIGHTS
HighlightsofourFY2007financialperformanceappearonthepagesthatfollow.ForamoredetaileddiscussionofFAA’sfinancialstatementsandaccompanyingnotes,seeourFY 2007 Performance and Accountability Report,whichisavailableontheFAAwebsiteat www.faa.gov/about/plan_reports/.
TheAirportandAirwayTrustFund(AATF)providedapproximately81.3%ofFAA’sFY2007budget.CreatedbytheAirportandAirwayRevenueActof1970,theAATFderivesitsmoniesfromexcisetaxesandearnedinterest.Itprovidesastablesourceofrevenuetofinanceinvestmentsintheairportandairwaysystem.Totheextentfundsareavailable,thefundalsocoverstheoperatingcostsoftheairwaysystem.Aviationexcisetaxes,whichincludetaxesondomesticpassengertickets,freightwaybills,generalandcommercialaviationfuel,andinternationaldeparturesandarrivals,aredepositedintothefund.TheDepartmentoftheTreasurymaintainsthefundandinvestsitsmoniesinGovernmentsecurities,andinterestearnedisalsodepositedintothefund.MoniesarewithdrawnasneededandtransferredintoeachFAAappropriationtocoverobligations.
FAAisfinancedthroughannualandmultiyearappropriationsauthorizedbyCongress.TheFY2007enactedbudgetof$14.537billionwasslightlylessthan2%higherthantheFY2006enactedlevel.TheCombinedStatementofBudgetaryResourcesreflectsfundingenactedbytheFY2007ContinuingResolutionH.J.Res.20.
FAAhasfourappropriations.Thelargest,Operations,isfundedbyboththeTreasury’sGeneralFundandtheAATF.In
FY2007,theAATFprovidednearly67%oftherevenueforOperations.TheAATFisthesolerevenuesourceforFAA’sthreecapitalinvestmentappropriations:Grants-in-AidforAirports(AIP),FacilitiesandEquipment(F&E),andResearch,Engineering,andDevelopment(R,E,&D).
Operations. TheOperationsappropriationfinancesoperatingcosts,maintenance,communications,andlogisticalsupportfortheairtrafficcontrolandairnavigationsystems.ItfundsthesalariesandcostsassociatedwithcarryingoutFAA’ssafetyinspectionandregulatoryresponsibilitiesaswell.TheaccountalsocoversadministrativeandmanagerialcostsforFAA’sinternational,medical,engineering,anddevelopmentprogramsandforpolicyoversightandoverallmanagementfunctions.TheFY2007Operationsappropriationwas$8.4billion,approximately3%overFY2006,andprimarilyattributabletopayrollandinflationcosts.
AIP. TheSecretaryofTransportationisauthorizedtoawardgrantsforplanninganddevelopmenttomaintainasafeandefficientnationwidesystemofpublicairports.Thesegrantsfundapproximatelyone-thirdofall
FAA ENACTED BUDGET—FY 2007Dollars in Thousands
Facilities & Equipment (F&E)$2,517,520
Grants-in-Aid for Airports (AIP)$3,514,956
Operations$8,374,217
Research, Engineering, & Development (R,E,&D)$130,234
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capitaldevelopmentatthenation’spublicairports.Grantsareissuedtomaintainandenhanceairportsafety,preserveexistinginfrastructure,andexpandcapacityandefficiencythroughoutthesystem.Theprogramalsosupportsnoisecompatibilityandplanning,themilitaryairportprogram,relieverairports,andairportprogramadministration.FY2007fundingforAIPwasjustover$3.5billion—thesameastheFY2006level.Similarly,fundingfortheSmallCommunityAirServiceprogramhasremainedneartheFY2006levelof$10million.
F&E. TheprogramsfundedbytheF&EappropriationareFAA’sprincipalmeansofmodernizingandimprovingairtrafficcontrolandairwayfacilities.Theaccountalsofinancesmajorcapitalinvestmentsrequiredbyotheragencyprogramsaswellasotherimprovementstoenhancethesafetyandcapacityofthenationalairspacesystem.F&Ewasfundedat$2.5billioninFY2007,approximatelythesamelevelasinFY2006.MajorsystemsincludedAutomaticDependentSurveillance–Broadcast,SystemWideInformationManagement,EnRouteAutomation,TerminalAutomation,OceanicAutomation,theWide-AreaAugmentationSystem(WAAS),ASDE-X,AirportSurveillanceRadar,theFAATelecommunicationsInfrastructure(FTI)project,andTerminalAirTrafficControlFacilitiesreplacement.
R,E,&D.TheFY2007appropriationforR,E,&Dwasslightlyinexcessof$130million—almost5%lessthanFY2006.R,E,&Dfundswereappliedtoresearchprogramstoimprovethesafetyandeffectivenessoftheairtrafficcontrolsystem.InFY2007,programsfocusedontheenvironmentandenergy,weatherinitiatives,JPDOactivities,humanfactors,andaircraftsafety.
FAA’ssummarizednetcostofoperationsisshownonpage50.ForthefiscalyearsendingSeptember30,2007and2006asrestated,FAA’snetcostswere$14.8billionand$14.1billionrespectively.Netcostistotalprogramcostlessrelatedearnedrevenue.
TheComposition of Net CostchartaboveillustratesthedistributionofcostsamongFAA’slinesofbusiness.
COMPOSITION OF NET COSTas of September 30, 2007
Air Tra�c Organization65%
Regions and Center Operations, & All Other1%
Aviation Safety7%
Airports27%
NET COST COMPARISONDollars in Thousands
20072006
$0 $3,000,000 $6,000,000 $9,000,000 $12,000,000
Airports
Aviation Safety
Air Tra�c Organization
Regions and Center Operations, & All Other
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TheNet Cost Comparisonchartonpage44comparesFY2007andFY2006netcosts.
Withanetcostof$9.7billion,theAirTrafficOrganizationisFAA’slargestlineofbusiness,comprising65%oftotalnetcosts.AirTrafficOrganization’snetcostsincreasedby$383.0millioninFY2007primarilyfromcostsrelatedtoFTI,whichprovidesefficienttransmissionofvoice,data,radar,weather,andotherinformationcriticaltotheoperationsofFAAatasignificantcostsavingsovertime.
Withanetcostof$3.9billionasofSeptember30,2007,whichis27%ofFAA’stotalnetcosts,AirportsisFAA’ssecondlargestlineofbusiness.Netcostsincreased$71.7millionfromtheprioryearandarecomposedmostlyofAviationInsuranceProgramgrantdisbursements.
ThenetcostofAviationSafetyrepresents7%ofFAA’stotalnetcosts,whileRegionandCenterOperationsandAllOthercomprise1%oftotalnetcosts.ThenetcostsofRegionandCenterOperationswere$159.3milliongreaterthaninFY2006,asofSeptember30,2007.Grosscostsremainedrelativelyconstantwhileintragovernmentalrevenuesdecreasedby$179.4million.ThenetcostofAviationSafetyincreasedby$69.5million.
FAA’ssummarizedassets,liabilities,andnetpositionarealsoshownonpage50.
Totalassetswere$27.7billionasofSeptember30,2007.FAA’sassetsaretheresourcesavailabletopayliabilitiesorsatisfyfutureserviceneeds.TheComposition of Assetschartdepictsmajorcategoriesofassetsasapercentageoftotalassets.
TheAssets ComparisonchartbelowpresentscomparisonsofmajorassetbalancesasofSeptember30,2006and2007.
Fund balance with Treasury(FBWT)represents14%ofFAA’scurrentperiodassetsandconsistsoffundingavailablethroughDepartmentofTreasuryaccountsfromwhichFAAisauthorizedtomakeexpenditurestopayliabilities.Italsoincludespassengerticketandotherexcise
COMPOSITION OF ASSETSas of September 30, 2007
Investments32%
Other4%
Property, Plant,& Equipment50%
Fund Balance with Treasury14%
ASSETS COMPARISONDollars in Thousands
Investments
Other
Property, Plant,& Equipment
Fund Balancewith Treasury
$0 $4,000,000 $8,000,000 $12,000,000 $16,000,000
20072006
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taxesdepositedtotheAirportandAirwayTrustFund(AATF),butnotyetinvested.FBWTincreased$400.9millionprimarilybecauseoftimingdifferencesbetweeninvestmentsofexcisetaxreceipts,thetimingofredemptionsofinvestmentstofundFAAdisbursements,andtheactualconfirmationofdisbursementsbytheDepartmentofTreasury.
At$8.9billion,Investmentsrepresent32%ofFAA’scurrentperiodassetsandareprincipallyderivedfrompassengerticketandotherexcisetaxesdepositedtotheAATF.TheseamountsareusedtofinanceFAA’soperationstotheextentauthorizedbyCongress.Investmentsincreasedby$229.6million.TheincreasewasprimarilyduetothefactthatexcesstaxrevenuescollectedhaveexceededtheannualfundsappropriatedfromtheAATF,leavingmorefundsavailableforinvestments.
At$13.9billion,Property, plant, and equipment,net(PP&E)represents50%ofFAA’sassetsasofSeptember30,2007,andisprimarilycomposedofconstruction-in-progressrelatedtothedevelopmentofNASassets,andcapitalizedrealandpersonalproperty.Therewasanincreaseof$.2billioninthetotalcompositionofPP&E
aspurchasesofequipmentandadditionstoCIPthroughthenormalcourseofbusinesswereoffsetbyretirements,depreciation,andCIPcorrectiveactionsduringFY2007.
AsofSeptember30,2007,FAAreportedliabilitiesof$3.8billion.Liabilitiesareprobableandmeasurablefutureoutflowsofresourcesarisingfrompasttransactionsorevents.TheComposition of LiabilitieschartdepictsFAA’smajorcategoriesofliabilitiesasapercentageoftotalliabilities.
TheLiabilities ComparisonchartbelowpresentscomparisonsofmajorliabilitybalancesbetweenSeptember30,2006,andSeptember30,2007.Followingisadiscussionofthemajorcategories.
COMPOSITION OF LIABILITIESas of September 30, 2007
Employee-Relatedand Other Liabilities33%
Environmental Liabilities15%
Grants Payable17%
Accounts Payable11%
Federal Employee and Veterans Bene�ts24%
LIABILITIES COMPARISONDollars in Thousands
$0 $500,000 $1,000,000 $1,500,000
Federal Employee andVeterans Bene�ts
Grants Payable
Environmental Liabilities
Employee-Related andOther Liabilities
Accounts Payable
20072006
FINANCIAl HIGHlIGHTS
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At$1.2billion,Employee-Related and Other Liabilitiesrepresent33%ofFAA’stotalliabilities.TheseliabilitiesremainedstableandasofSeptember30,2007,arecomprisedmainlyof$148.4millioninAdvancesReceived,$199.2millioninFederalEmployees’CompensationActpayable,$257.9millioninAccruedPayrollandBenefits,$456.1millioninAccruedLeaveandBenefits,and$72.1millioninCapitalLeaseLiability.
At$884.0million,Federal Employee and Veterans Benefitsrepresent24%ofFAA’scurrentyearliabilitiesandconsistofFAA’sexpectedliabilityfordeath,disability,andmedicalcostsforapprovedworkers’compensationcases,plusacomponentforincurredbutnotreportedclaims.TheDepartmentofLabor(DOL)calculatestheliabilityforDOT,andDOTattributesaproportionateamounttoFAAbasedonactualworkers’compensationpaymentstoFAAemployeesoverthepreceding4years.Thisliabilityisupdatedonanannualbasisatyearend.
FAA’s grants payableareestimatedamountsincurredbutnotyetclaimedbyAirportImprovementProgram(AIP)grantrecipientsandrepresent17%ofliabilities.Grantspayableincreased$104.0milliononacomparativebasis.
Environmental Liabilitiesrepresent15%ofFAA’stotalliabilities,andwererelativelystableat$566.9millionasofSeptember30,2007,comparedwith$573.3millionayearearlier.Environmentalliabilitiesincludeacomponentforremediationofknowncontaminatedsitesandtheestimatedenvironmentalcosttodecommissionassetspresentlyinservice.
Accounts payableincreased$134.1millionandareamountsFAAowestootherentitiesforunpaidgoodsandservices.
FAA’ssummarizedchangesinnetpositionareshownonpage50.Netpositionpresentsthoseaccountingitemsthatcausedthenetpositionofthebalancesheettochangefromthebeginningtotheendofareportingperiod.Variousfinancingsourcesincreasenetposition.Thesefinancingsourcesincludeappropriationsreceivedandnon-exchangerevenue,suchasexcisetaxesandimputedfinancingfromcostsabsorbedonFAA’sbehalfbyotherFederalagencies.Theagency’snetcostofoperationsandnettransferstootherFederalagenciesservetoreducenetposition.
FAA’scumulativeresultsofoperationsfortheperiodendingSeptember30,2007,increased$29.3million,onacomparativebasis,dueprimarilytoacombinationofincreasesinbeginningbalancesof$379.7millionandfinancingsourcesof$328.6millionoffsetbyanincreaseinnetcostof$679.0million.Unexpendedappropriationsincreased$670.6millionprimarilyduetotheFY2007adoptedpracticeofreportingtheuseoftrustfunddollarspriortoGeneralFunddollars.
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SUMMARy FINANCIAl INFORMATIONFAA’sindependentauditor,KPMG,LLP,renderedanunqualifiedauditopiniononFAA’sFY2007financialstatementswithonematerialweakness.TheDOTOfficeofInspectorGeneralpresentedKPMG’sauditreporttotheFAAAdministratoronNovember5,2007.
ThesummaryfinancialinformationinthishighlightsreportwasderivedfromFAA’sauditedFY2007andrestatedFY2006financialstatements,whichwerepreparedpursuanttotherequirementoftheChiefFinancialOfficerActof1990andtheGovernmentManagementReformActof1994.
Summarized Net Cost of Operations presentstheannualcostofoperatingFAA’slinesofbusiness.
Summarized Assets, Liabilities, and Net Positionpresentstheresourcesavailabletouse(assets)againsttheamountsowed(liabilities)andtheamountsthatcomprisethedifference(netposition).
Summarized Changes in Net Position representsthedifferencebetweenFAA’sfinancingsourcesanditsnetcostofoperations.
FY 2006 Restatement
FAAhasrestatedcertainbalanceswithinPP&E,netcostandnetpositionasofSeptember30,2006,tocorrectanerrorinaccountingforConstructioninProgress(CIP).TheeffectsofthiscorrectionresultedinareductionandrestatementofCIP,aspresentedinthebalancesheetatSeptember30,2006,totaling$2,593.7million.ThisreductionofCIPiscomposedofareclassificationof$1,696.3millionfromCIPtootherPP&Ecategoriesforcompletedprojects,togetherwithanincreaseinaccumulateddepreciationof$56.6million,and$897.4millionofnon-capitaltransactionschargedtoexpense.
The$954.0millioncombinedeffectofthe$56.6milliondepreciationadjustmentandthe$897.4millionnon-capitalexpenseisreflectedasa$317.8millionreductionoftotalnetcostaspresentedontheFY2006Consolidated Statement of Net Costanda$1,271.8millionreductiontothebeginningbalanceofcumulativeresultsofoperationsontheFY2006Consolidated Statement of Net Position.
TheauditedconsolidatedfinancialstatementsareavailableinFAA’sFY 2007 Performance and Accountability Report,whichisavailablefromFAA’sOfficeofFinancialManagement(seecontactinformationontheinsidebackcoverofthispublication).
FAA’sFY 2007 Performance and Accountability ReportisalsoavailableontheFAAwebsiteatwww.faa.gov/about/plans_reports/.
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KPMG LLP 2001 M Street, NW Washington, DC 20036
KPMG LLP, a U.S. limited liability partnership, is the U.S. member firm of KPMG International, a Swiss cooperative.
Independent Auditors’ Report
Administrator, Federal Aviation Administration:
We have audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated financial statements of the U.S. Department of Transportation Federal Aviation Administration (FAA) as of, and for the years ended, September 30, 2007 and 2006 (not presented herein) and have issued our report thereon dated November 5, 2007. That report included emphasis paragraphs related to the following: 1) the FAA changed its method of reporting the reconciliation of budgetary resources obligated to the net cost of operations in fiscal year 2007; 2) the FAA changed its method of accounting for transfers between its trust and operations funds, affecting the presentation of balances on the combined statement of budgetary resources in fiscal year 2007; and 3) the FAA restated certain balances previously reported to correct an error in accounting for its construction in progress (CIP), a component of property, plant and equipment.
In our report dated November 3, 2006, we expressed an opinion on the FAA’s fiscal year 2006 consolidated financial statements that was qualified for the effects of such adjustments, if any, as might have been determined to be necessary had management completed its review of the FAA’s CIP balance as of September 30, 2006, and related transactions affecting the FAA’s net cost and net position that may have occurred during the year, and provided us with sufficient evidence necessary to complete our audit of CIP balances and related transactions. During FY 2007, the FAA has completed its review of CIP balances and related transactions, and as a result restated the fiscal year 2006 consolidated financial statements to correct an error in its accounting for CIP. Accordingly, our opinion on the consolidated financial statements, including the FAA’s fiscal year 2006 restated consolidated financial statements (not presented herein), is different from that expressed in our previous report.
The accompanying summary financial information of the FAA as of, and for the years ended, September 30, 2007 and 2006, as explained in the notes thereto, is not a presentation in conformity with U.S. generally accepted accounting principles. In our opinion, the accompanying summary financial information is fairly stated, in all material respects, in relation to the portion of the financial statements from which it has been derived.
November 5, 2007
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20072006
as RestatedLines of Business
Air Traffic Organization 9,680,476$ 9,297,439$ Airports 3,923,605 3,851,902 Aviation Safety 1,012,749 943,242Commercial Space Transportation 10,768 15,249
Non Line of Business ProgramsRegions and center operations and other programs 186,856 27,585
Net Cost of Operations 14,814,454$ 14,135,417$
(dollars in thousands)
Federal Aviation AdministrationSummarized Net Cost of OperationsFor the Years Ended September 30
20072006
as RestatedAssets
Fund balance with Treasury 3,895,095$ 3,494,227$ Investments 8,904,357 8,674,729 Accounts receivable, advances, and other, net 482,556 294,427Inventory and related property 507,527 628,110Property, plant, and equipment, net 13,891,770 13,677,986
Total Assets 27,681,305$ 26,769,479$
LiabilitiesAccounts payable 1,061,205$ 823,028$Environmental cleanup costs 566,886 573,264Employee related, legal, and other 1,243,659$ 1,259,362 Federal employee and veterans benefits 883,982 888,082
Total Liabilities 3,755,732 3,543,736
Net PositionUnexpended appropriations 1,099,916 429,351Cumulative results of operations 22,825,657 22,796,392Total net position 23,925,573 23,225,743
Total Liabilities and Net Position 27,681,305$ 26,769,479$
(dollars in thousands)
Federal Aviation AdministrationSummarized Assets, Liabilities, and Net Position
As of September 30
2007 2006 as Restated
Net Position—Beginning of Year 23,225,743$ 24,957,476$ Beginning Balance After Restatement 23,685,633Financing Sources
Excise taxes and associated revenue 12,373,567 10,701,709Appropriations received 2,746,317 2,645,000Net transfers out (74,434) (127,718)Imputed financing and other 468,834 456,536Total financing sources 15,514,284 13,675,527
Net Cost of Operations (14,814,454) (14,135,417)
Net Position—End of Year 23,925,573$ 23,225,743$
(dollars in thousands)
Federal Aviation AdministrationSummarized Changes in Net Position
For the Years Ended September 30
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NOTES TO THE SUMMARy FINANCIAl INFORMATION
Reporting Entity.FAA,createdin1958,isacomponentoftheDOT,acabinet-levelagencyoftheExecutiveBranchoftheUnitedStatesGovernment.FAAaccomplishesitsmissionthroughthefourlinesofbusinessdescribedonpage7.
Basis of Presentation. ThesummaryfinancialinformationisintendedtoprovideusersanoverviewofthefinancialstatusandactivitiesofFAAandisderivedfromandshouldbereadinconjunctionwiththefinancialstatementscontainedinFAA’sFY 2007 Performance and Accountability Report.ThesummaryfinancialinformationisnotapresentationinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.
Assets. Fund balance with TreasuryconsistsoffundingavailablethroughDepartmentofTreasuryaccountsfromwhichFAAisauthorizedtomakeexpenditurestopayliabilities.
InvestmentsconsistprimarilyofAirportandAirwayTrustFund(AATF)excisetaxcollections,whichCongresshasnotappropriatedtoFAAandwhichisinvestedinU.S.Treasurysecurities.Accounts receivable, advances, and other, netconsistprimarilyofamountsowedtoFAAbyotherFederalagenciesandthepublic,andadvancepaymentstootherFederalentitiesforagencyexpensesnotyetincurred,orforgoodsandservicesnotyetreceived.Property, plant, and equipment, netconsistsprimarilyofequipmentandrelatedpropertythatFAAusestooperatethenation’sairtrafficcontrolsystem.Repairparts,usedtokeeptheairtrafficcontrolsystemoperational,constitutethemajorityofInventory and related property.
Liabilities.Accounts payablerepresentsamountsowedtovendorsforgoodsand
servicesthatFAAhasreceived.Environmental cleanup costsrepresentstheaccruedcoststocorrectknownenvironmentalhazardsanddecommissionexistingassets.Employee related, legal, and otherconsistsprimarilyofaccruedpersonnelcompensationandlegalliabilitiesconsideredprobableofloss.Federal employee and veterans benefitsrepresentstheactuarialliabilityforfuturebenefitspayablefordeath,disability,medical,andmiscellaneouscostsforFAAemployeesundertheFederalEmployeesCompensationAct.
Budgetary Financing Sources. FAAisfundedprimarilyfromexcisetaxescollectedbytheInternalRevenueServicefromairwaysystemusersanddepositedtotheAATF.Annually,Congressenactsannual,multi-year,andno-yearappropriationsfromtheAATFandtheGeneralFundoftheU.S.Treasurytobeused,withinstatutorylimits,tofundFAA’snetoperatingandcapitalexpenditures.Net transfers outrepresentamountstransferredbetweenFAAandotherFederalentities.Imputed financing and otherprincipallyincludesFAAcostspaidbyotherFederalentities,suchastheOfficeofPersonnelManagement,whichfundsaportionofretirementcostsforFederalemployees.
Net Position. Netpositionconsistsofunexpendedappropriationsandcumulativeresultsofoperations.AsofSeptember30,2007and2006,Unexpended appropriationswere$1,099.9millionand$429.4million,andCumulative results of operationswere$22,825.7millionand$22,796.4million,respectively.CumulativeresultsofoperationsrepresentcertainassetsoftheFAA,lessliabilitiesthatwillbefundedbyfuturebudgetaryresourcesandcongressionalappropriations.
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WA
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WIMI
MNND
SD
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CA NV
AZ
NM OKAR
MS AL GASC
NCTN
KY WV VA
MD DE
NJPA
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VT NH
ME
MA CT
RI
FL
LA
TX
ID MT
ANM (Northwest
Mountain)
ACE (Central)
AWP(Western-Paci�c)2
ASW(Southwest)
AEA(Eastern)
ANE(New England)
AAL(Alaskan) 1 Includes Puerto Rico, the
Republic of Panama, and the Virgin Islands
2 Includes Wake, Samoa, and Guam
Atlanta
Ft. Worth
Oklahoma City
Los Angeles
Seattle
Kansas City
Jamaica, NY Atlantic City
Washington, DC
LEGENDRegional O�ce
Mike Monroney Aeronautical Center
William J. Hughes Technical Center
National Headquarters (DC)
Boston
Chicago
AGL (Great Lakes)
ASO(Southern)1
HI
AKAnchorage
feDerAL AViAtion ADminiStrAtion reGionAL mAp
ORGANIZATION AND lOCATIONS
ADMINISTRATORAOA
DEPUTY ADMINISTRATORADA
AVIATION SAFETY
AVS
AIRPORTS
ARP
COMMERCIAL SPACETRANSPORTATION
AST
AIR TRAFFIC ORGANIZATION
ATO
LINES OF BUSINESS
Chief Counsel
AGC
Civil Rights
ACR
Government & IndustryAffairs
AGI
Communications
AOC
InternationalAviation
API
Security &Hazardous Materials
ASH
Financial Services
ABA
Information Services
AIO
Human Resource Management
AHR
Regions & CenterOperations
ARC
Aviation Policy,Planning & Environment
AEP
Alaskan Region
AAL
Central Region
ACE
Eastern Region
AEA
Great Lakes Region
AGL
New England Region
ANE
Northwest Mountain Region
ANM
Southern Region
ASO
Mike MonroneyAeronautical Center
AMC
REGIONAL OFFICES AND AERONAUTICAL CENTER
Southwest Region
ASW
Western-PacificRegion
AWP
STAFF OFFICES
feDerAL AViAtion ADminiStrAtion orGAniZAtion
ORGANIZATION AND lOCATIONS
INTERNET lINkS
FederalAviationAdministration:www.faa.gov/
FAAOffices:www.faa.gov/about/office_org/
FAARegionalOfficesandCenters:www.faa.gov/about/office_org/headquarters_offices/arc/
FAAOperationalEvolutionPartnership:www.faa.gov/about/office_org/headquarters_offices/ato/publications/oep/
FAAFlight Plan:www.faa.gov/about/plans_reports/media/FPP_Flight%20Plan%202008-2012.pdf
NationalTransportationLibrary:http://ntl.bts.gov/
U.S.DepartmentofTransportation:www.dot.gov
ACkNOwlEDGMENTS
FAA’sFY 2007 Performance and Accountability HighlightsisacollaborativeendeavoronthepartofmanyFAAemployeesandcontractors.Wewouldliketoacknowledgeandthankthemfortheirhardworkandcommitmentinsuccessfullypreparingthisreportandsupportingtheauditofthefinancialstatements.
wE wElCOME yOUR COMMENTS!
ThankyouforyourinterestinFAA’sFY 2007 Performance and Accountability Highlights.Wewelcomeyourcommentsonhowwecanmakethisreportmoreinformativeforourreaders.
Pleasesendyourcommentsto
Mail: OfficeofFinancialManagement,AFM-1 FederalAviationAdministration 800IndependenceAvenue,SW Room612 Washington,DC20591
Phone: (202)267-3018
E-mail:[email protected]
Fax: (202)493-4191
ThisandprioryearPerformance and Accountability ReportsandPerformance and Accountability HighlightsareavailableontheFAAwebsiteatwww.faa.gov/about/plans_reports/.
Foraprintedcopy,call(202)[email protected].
U.s. Department of transportationFederal Aviation Administration800 Independence Avenue, sWWashington, DC 20591
this report and reports from prior years are available on the FAA website at www.faa.gov/about/plans_reports/.
www.faa.gov
HQ-08323A