The OIG’s report justifying FAA’s privatization has an Elephant in it

oig report faa privatization
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As stated in the opening paragraph, the Chairman of the House Committee on Transportation and Infrastructure and the Chairman and Ranking Member of the House Aviation Subcommittee requested that the DoT OIG assess FAA’s organizational structure, including FAA’s reforms over the past 2 decades. In a memorandum addressed to the FAA Administrator, the OIG recites all of the wise reforms which the Congress mandated and which the FAA implemented. The 34 page report is well summarized by the “headlines” of the report:


FAA Has Taken Steps To Implement Reform Legislation Provisions 

FAA’s Reforms Have Not Slowed Cost Growth or Improved Operational Productivity 

FAA Has Not Effectively Leveraged Its Reform Flexibilities and Adopted Business Practices 


FAA Reports Improved Performance, but It Does Not Account for Long-Term Cost and Schedule Performance Results 

Ongoing Major Acquisitions Include Programs With Similar Performance Shortfalls 

Persistent Management Weaknesses Underlie Cost, Schedule, and Performance Problems in Delivering New Technologies and Expected Benefits 

AMS Has Gaps in Guidance and Has Not Resolved FAA’s Underlying Acquisition Management Problems 

FAA Does Not Follow Office of Management and Budget (OMB) Guidance for Major Acquisitions

oig report faa privatization

The repeated message is that the Congressional reforms are in place, but “impersonal pronouns” or organizational references are attached to the failure to achieve the desired outcome. Here are some sections of the report which show the OIG’s word choice:

p. 1

Over the past 2 decades, Congress has enacted legislation aimed at making FAA a performance-based organization that would operate effectively and efficiently while improving the delivery of air traffic services and expediting modernization efforts. FAA has undergone several reorganizations in an effort to improve operational efficiency, deliver enhanced services to users, expedite delivery of new technologies, and reduce the Agency’s costs.

p. 2

While FAA has implemented the provisions of past reform legislation, these efforts have not achieved anticipated cost savings and operational efficiencies. Since 1996, FAA has implemented performance-based compensation systems for its workforces, established the Air Traffic Organization (ATO), contracted out its flight service stations operations, and undertaken several reorganizations. Between fiscal years 1996 and 2012, FAA’s total budget grew by 95 percent, from $8.1 billion to $15.9 billion, and its total personnel, compensation, and benefits (PC&B) costs increased by 98 percent, from $3.7 billion to $7.3 billion.3 FAA’s disappointing reform outcomes are largely the result of the Agency’s failure to take full advantage of its authorities when implementing new personnel systems, and not using business-like practices to improve its operational efficiency and cost effectiveness. For example, while FAA has implemented a cost accounting system, it does not regularly analyze the operational and cost data generated to determine if it could reduce costs or improve productivity. In addition, FAA’s workforce levels have remained relatively constant over the past 2 decades, and the number of air traffic facilities the Agency operates has not changed since 2000. FAA’s organizational culture, which has been resistant to change, further deters its reform efforts.

FAA’s reforms have also fallen short in responding to legislation calling for improved delivery of new technologies and capabilities. While FAA reports improvements in its management of acquisitions, major projects continue to experience problems that delay the introduction of new technologies, such as performance-based navigation; postpone benefits to users; and defer the retirement of costly legacy systems.

[emphasis added]

oig report faa privatization

There are a plethora of other examples in which the OIG finds fault without identifying the cause! The elephant in the room is unspoken by the OIG.

Chairman Shuster issued a press release in which he interpreted this report:

 “This report shows that the FAA simply isn’t suited to successfully modernize our nation’s antiquated air traffic control system,” Shuster said. Adding the agency remains a “vast government bureaucracy” instead of a service provider, the lawmaker adds: “Over two decades of FAA personnel, organizational, and acquisition reforms have failed to slow the agency’s cost growth, improve its productivity, or improve its performance in modernizing the system. It’s clear from the DOT IG’s findings that we need transformational FAA reform if we are going to have a safe, efficient, 21st century aviation system.”

[emphasis added]oig report faa privatization

Having failed to change the efficiency by personnel, acquisition, organizational and other statutory reforms, “transformational” change equals privatization or corporatization or whatever term is used to describe the transfer of the ATO to the private sector. If the myriad of technical problems can be resolved, the transformational reform will involve the transfer (sale?) of all of the physical assets and of the human resources needed to operate the ATC system.

The OIG report’s reference to the “impersonal pronoun” is a way to avoid identifying the underlying problem. Anyone, reading the repeated OIG reports criticizing the FAA, would detect that the Office’s professional opinion of the ATO management is low. The OIG’s unstated fault is that the people of the ATO are the problem.

True or not, it is reasonable to assume that any private entity considering acquiring control of the workforce would require that the transformational ATO could hire, pay, reward and fire under private sector, not governmental, rules. That is the elephant in the room and the unions which represent the existing workforce would VEHEMENTLY oppose such legislation.

Privatization/corporatization is a brilliant theoretical and academic solution. YES, the ATO is a business which provides services to aircraft, but, NO the details of how Congress can move this on-going business to the private sector is filled with important details which must be resolved to make such a transformation effective. It will take great thought and drafting to successfully resolve this and other significant impediments to this huge public policy problem.


ARTICLE: Shuster: IG Report Underscores Need for ATC Reform

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1 Comment on "The OIG’s report justifying FAA’s privatization has an Elephant in it"

  1. Funny how the unions get blamed for things that management has 7106 control of. I hear that the controller union is for privatized ATC. Who’s against it? Who is the real elephant in the room??

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