Distributed to some depository libraries in microfiche.

Distributed to some depository libraries in microfiche.

GAO discussed the proposed establishment of a government-owned corporation to operate, maintain, and modernize the nation's air traffic control (ATC) system, focusing on: (1) whether exempting the Federal Aviation Administration (FAA) from federal procurement regulations will substantially accelerate modernization; (2) how FAA can better position itself to meet the ATC system's future needs; and (3) how the proposed incorporation will affect FAA financing and safety issues. GAO noted that: (1) FAA would not be able to significantly accelerate the installation of ATC equipment if it was exempt from federal procurement regulations; (2) many factors, including underestimating the technical complexity of ATC system development, contribute to ATC modernization delays; (3) FAA capital and strategic goals are well-organized and defined and in accordance with federal legislation; (4) many FAA financing and safety oversight issues will need to be resolved if an ATC corporation is created; (5) FAA will need to define how it will accelerate investments, ensure that revenues and expenditures assumptions are accurate, determine the government's potential liability for corporation losses and debt, define the new divisions of responsibility between the corporation and the new FAA agency, and limit the risks that could affect the safety margins in the current system; and (6) the proposed FAA corporation will need to require the performance of safety-related activities regardless of its financial condition, establish safety standards for judging compliance, address weaknesses in its proposed oversight model, and complete controller and maintenance workforce staffing standards.

GAO discussed proposals to reform the air traffic control (ATC) system, focusing on the administration's proposal to create a privatized ATC system. GAO noted that: (1) under the proposal, the Federal Aviation Administration (FAA) would continue to provide safety oversight, but a self-sufficient government corporation would operate the ATC system; (2) the corporation could be viable if the proposals' budget, cost, and revenue estimates are accurate; (3) the proposal's revenue estimates are sensitive to future economic growth and the extent of business travel; (4) the corporation would need to be exempt from the Budget Enforcement Act's spending caps; (5) the corporation would have to borrow from the private sector to increase the pace of ATC system modernization; (6) it is concerned over how FAA and the corporation would divide safety responsibilities and resolve regulatory disputes; (7) FAA has had problems in proactively identifying safety problems and attracting skilled staff; (8) FAA would have to compete with the corporation for skilled personnel; and (9) the corporation would have little incentive to maintain services to general aviation and small airports, since the value of the services provided to those users would be greater than the value of the revenue they generated.