MANAGEMENT’S DISCUSSION AND ANALYSIS

GOVERNMENT ACCOUNTABILITY OFFICE
HIGH RISK ISSUES

Since 1990, the Government Accountability Office (GAO) has provided to Congress a report on government programs and operations that in some cases are high risk due to their greater vulnerability to fraud, waste, abuse and mismanagement. In recent years, GAO also has identified high-risk areas to focus on the need for broad-based transformations to address major economy, efficiency, or effectiveness challenges.

In January 2007, GAO presented a new high risk list to Congress, which included concerns about FAA’s modernization program. According to GAO, over the years this modernization program, which includes the acquisition of new systems and facilities, has experienced cost overruns, schedule delays and performance shortfalls. GAO has reported on the root causes of these problems, including (1) immature capabilities for acquiring systems, (2) lack of an institutionalized architecture, (3) inadequate cost estimating and accounting practices, (4) an incomplete investment management process, and (5) an organizational culture that impairs modernization efforts.

FAA has been actively addressing these issues for several years and much has been done already. The following summarizes FAA’s activities in FY 2008.

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FAA’S ACTION PLAN FOR STRENGTHENING ITS MODERNIZATION PROGRAMS

Problem: FAA Modernization Programs were not meeting cost and schedule targets.

Goal: Improve the FAA’s ability to identify, build, and field air traffic control systems in a timely and cost-effective manner through institutionalizing acquisition management best practices and meeting targets to deploy air traffic control systems.

FAA has designated six areas to focus on in addressing this issue: acquisition processes and capabilities, enterprise architecture, cost estimating/accounting, information technology investment processes, human capital, and deployment.

1. Acquisition Processes and Capabilities

Lead Organization: Air Traffic Organization, Vice President for Acquisition and Business Services

Focus area goals: Implement improved acquisition processes in the areas of measurement and analysis, verification and validation, quality assurance, risk management, contractor management, program management, and requirements on selected pilot programs. Additionally, develop and implement an approach for institutionalizing processes across the Air Traffic Organization for all new programs.

Expected Outcomes:

• Selected in-process major programs and all new acquisition programs follow a standard acquisition management process based on industry best practices.
• Institutionalize compliance assessment capability.

FY 2008 Accomplishments:

• Nov 2007: Implemented risk management, contractor management, program management, and requirements processes across eight major ATC programs.
• Dec 2007: Developed and integrated quality assurance and risk policy, process, procedures, information into the FAA standard Acquisition Management System (AMS) found on its website.
• Mar 2008: Established a compliance assessment approach and began implementation of same. Developed and integrated contractor management, measurement and analysis policy, process, and procedures information into the FAA AMS.
• Jul 2008: Document Intensive Reviews completed on five new programs.
• Sep 2008: Completed update of Verification and Validation (V&V) Protocol of Operations.

2. Enterprise Architecture

Lead Organization: Air Traffic Organization, Director, Systems Engineering and Safety

Focus area goals: Implement and enforce a complete enterprise architecture (EA), which will provide a view of how well investments are meeting the organization’s business needs, as well as guiding future investments.

Expected Outcomes:

• Achieve Stage 3 of the GAO EA Maturity Model.

FY 2008 Accomplishments:

• Dec 2007: Independent validation and verification (IV&V) completed on EA. outside the National Air Space (NAS).
• Mar 2008: IV&V completed on NAS EA.
• Aug 2008: Selected and procured best in class EA tool.
• Sep 2008: Received final IV&V report for NAS EA from MITRE.

3. Cost Estimating / Accounting

Lead Organizations: Assistant Administrator for Financial Services/CFO and Air Traffic Organization, Director of Investment Planning and Analysis

Focus area goal: Improve cost estimating and cost accounting practices and obtain a clean financial audit.

Expected Outcomes:

• Publish and implement a lifecycle cost model that will be used with all major investments based on a database of historical cost estimates.
• Implement quarterly reporting on the status of programs staying within annual cost targets at Flight Plan reviews.
• Obtain a clean audit of our financial statements for fiscal year (FY) 2007 and lift the qualification of the FY-06 statements.

FY 2008 Accomplishments:

• Nov 2007: Audit report lifted the qualifications from 2006 but identified a material weakness for 2007.
• Feb 2008: Improved the timeliness of cost accounting system (CAS) reports delivered to users to within 38 days of the end of the quarter.
• Mar 2008: Improved the processes for accrual of expenses. Air Traffic Organization is performing accruals on a monthly basis.

4. IT Investment Processes

Lead Organization: Assistant Administrator for Information Services/CIO

Focus area goals: Implement and enforce stage 3 of the GAO’s Information Technology Investment Maturity (ITIM) model, a summary of best practices for investing in information technology. The model allows agencies and GAO to assess to what degree of maturity (from stage 1, the lowest) to stage 5 (the highest) agencies are following these best practices. To date, no agency has been assessed at stage 3 or higher.

Expected Outcomes:

• Establish a process for the FAA’s investment review board, the Joint Resources Council (JRC), and subordinate boards, to regularly review the performance of IT systems throughout their lifecycles and take corrective actions when expected performance is not being met.

FY 2008 Accomplishments:

• Nov 2007: JRC delegated responsibility for Information Technology Executive Board (ITEB) portfolio.
• Jan 2008: Documented and approved ITEB investment management process.
• Jan 2008: ‘Go to Green’ Tiger Team formed to produce an action plan to achieve most of the stage 3 requirements of the GAO ITIM model this year.
• Feb 2008: Completed processes for instituting the ITEB.
• Mar 2008: ‘Go to Green’ Plan for Stages 2 and 3 developed and approved.
• May 2008: Conducted Operational Analyses and budget verification on top 29 investments in ITEB portfolio (92 percent of portfolio dollar value).
• May 2008: JRC approved ITEB portfolio.
• Jun 2008: JRC approved Investment Selection Criteria.
• Jun 2008: Implement process of Meet Business Needs.
• Jun 2008: Capture Investment Information.
• Jul 2008: Portfolio management policy and initial portfolio criteria approved.
• Sep 2008: Selected IT investments

5. Human Capital

Lead Organization: ATO, Director, Leadership & Professional Development

Focus area goals: Overcome human capital challenges including how to develop the technical and contract management expertise needed to define, implement, and integrate FAA’s numerous complex programs and systems.

Expected Outcomes:

• Contracting professionals have required training and skill sets and the FAA has sufficient bench strength to meet future needs.
• Program/Project managers are certified according to standards set by the Project Management Institute (PMI) and assigned in accordance with OMB and related agency documented policy and processes.

FY 2008 Accomplishments:

• Dec 2007: Developed an FAA Project and Program Manager Career Path and associated PM career development and certification policy.
• Jan 2008: Developed an agency strategy for recruiting, selecting & assigning program managers to capital investment projects.
• Jan 2008: Developed an audit process to evaluate organizational compliance to established program manager policy and guidance.
• Feb 2008: Received Office of Personnel Management approval to use reemployed annuitants to fill contracting vacancies.
• May 2008: Developed interim action plan to address National Academy of Public Administration’s (NAPA) Phase 1 findings.
• Sep 2008: Received final NAPA report.
• Sep 2008: FAA personnel in the contracting series, contracting officer’s technical representative, and program/project managers participated in the Federal Acquisition Management 2008 FAI Competency Assessment.

6. Deployment

Lead Organization: ATO, Director of Capital Expenditures Programs

Focus area goal: Improve the ability of FAA to estimate, plan, and meet target cost and schedule for major programs.

Expected Outcomes:

• Earned value management (EVM) implemented for all major acquisitions.
• Breach reporting (cost or schedule variance greater than 5 and 10 percent) implemented.

FY 2008 Accomplishments:

• Dec 2007: All major programs which were assessed in April 2005, and are still in development, are in full compliance with EVM ANSI Standards.
• Dec 2007: Developed and implemented EVM Surveillance and Certification processes.
• Dec 2007: Conducted strategic reviews on 22 of the 30 major programs.
• Jul 2008: Developed and provided GAO with deployment schedules and associated milestones for 15 agreed upon major programs.
• Sep 2008: Developed a Standard Operating Procedure (SOP) for Air Traffic Organization Program Control and Baseline Management to address Program Planning, Baseline Management, Program Performance Reporting, and Variance Analysis. SOP in the process of being vetted throughout ATO.