the Next GeNeratioN of fliGht - Federal Aviation Administration...positions by posting classified ads on MySpace.com, Monster.com, CareerBuilder.com, and Craigslist.com; advertising

Fy 2007 PerFormance and accountability HiGHliGHtS

the Next GeNeratioN of fliGht

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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

http://www.faa.gov

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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


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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


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.


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Today’sFAAfacesthechallengeofexpandingthecapacityofouraviationsystemtomeetfuturedemandwithoutcompromisingsafetyorharmingour

environment.Withaviationandrelatedindustriessupporting11millionjobsandcontributing$640milliontoourannualeconomy,oursuccessiscritical.


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.


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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.


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.


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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.


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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.


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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.


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)


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


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.


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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


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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


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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


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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


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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.


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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.


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.


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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%

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1.00%N/A20082002 2003 2004 2005 2006

Fiscal Year

Actual

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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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Target

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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.


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

nt Re

ducti

on (C

umula

tive)

–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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umula

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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

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15

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25

30

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$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

llions

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.


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

enta

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EMPLOYEE ATTITUDE SURVEYScore in Areas of Management

E�ectiveness and Accountability


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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


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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.


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

Actual

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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

Actual

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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%

2007 20082003 2004 2005 2006

Fiscal Year

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Target

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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.


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

ber

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.


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.


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.


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


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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.


http://www.faa.gov/regulations_policies/reauthorization/

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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.


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


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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


http://www.faa.gov/about/plan_reports/

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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


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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/.


http://www.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$


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$


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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MD DE

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MA CT

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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

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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].

http://www.faa.gov

http://www.faa.gov/about/office_org/

http://faa.gov/about/office_org/headquarters_offices/arc/

http://faa.gov/about/office_org/headquarters_offices/ato/publications/oep/

http://www.faa.gov/about/plans_reports/media/FPP_Flight%20Plan%202008-2012.pdf

http://ntl.bts.gov/

www.dot.gov


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

http://www.faa.gov
