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Preparing for the Future Automated Flight Service Stations and A-76 Due to the sharp decline in the Aviation Trust Fund, which pays for much of the FAAs budget, the Agency must look for opportunities to conserve. This document explores steps the FAA is taking to save money in the costly operation of Automated Flight Service Stations. It also details how the FAA is addressing the needs of its employees during times of change. Federal Aviation Administration Challenging Times Ahead The FAA and the aviation industry are facing a period of tight budgets. The Aviation Trust Fund, which provides the majority of the FAAs budget from taxes on airline tickets, fuel and air freight, continues to decline. As low cost carriers increase their market share, the average ticket price declines, which, in turn, also reduces the Trust Fund revenue. As a result of decreasing enplanements in recent years, and in an effort to reduce costs, carriers are also adding more midsize jets to their fleets. This affects the FAA in two ways: First, more planes means an increased workload. Second, lower ticket prices result in less Trust Fund revenue. As the agency's budgetary alottements continue to shrink and operating costs continue to rise, we find ourselves in the position where cost savings isnt just a good ideaits a necessity. The agency must find savings wherever it can. The only thing that cant be compromised is safety. Finding Safety in the FAAs Automated Flight Service Stations The FAA's Automated Flight Service Stations are a logical place to save money. These facilities provide weather briefings and flight planning ser ices, largely to general aviation pilots. Automated Flight Service Station specialists do not separate or control airplanes. Increasingly, their services are provided at a distance by telephone or computer. The workforce for these stations is unevenly distributed. Often, specialists are not located in areas where services are most needed. Of the 2500 employees being looked at under this competition, more than half are eligible to retire. General aviation supports the FAAs revenues with a federal fuel tax. According to the Aircraft Owners and Pilots Association, the total tax collected on the type of fuel burned by most general aviation pilots is $60 million a yearhardly enough to offset the annual cost to operate and maintain these stations. Many Automated Flight Service Stations are located in old buildings in need of repair. They contain outmoded equipment and out-of-date technology. Among these facilities, some have $1 per year leases that are nearing expiration. These leases must be renegotiated at todays market prices, costing the agency over $10 million annually. These stations already cost the taxpayer $502 million per yearwhich translates to an average of $25 for each contract with a pilot. The cost is simply too expensive. Studies conducted by the FAA and outside experts, including the Department of Transportations Inspector General, have selected these stations as likely candidates for savings. The Inspector General, in an impartial study, also emphasized savings could occur without diminishing safety. Tools to Save Already in Place The Federal Government has a longstanding tool in place to help determine if its services are being performed in a way that provides the best possible value for the taxpayer. The Office of Management and Budget Circular A-76, created during the Eisenhower Administration, sets forth policies and procedures used by executive branch agencies to manage a competition for services. In addition, the Federal Activities Inventory Reform Act (FAIR Act) requires government agencies to review activities annually to differentiate inherently governmental activities from commercial activities. Inherently governmental activities are those best provided by the government because they are so lined to the public good that they are required to be managed by government. In other words, it is appropriate and necessary that government do the job. Law enforcement and the military are examples of inherently governmental activities. Commercial activities are those activities that can be performed by the private sector or a commercial vendor. A-76 encourages competition as a way of bringing efficiency and cost effectiveness to services provided by the Federal Government. A-76 provides a fair, open and orderly method to manage a competition for services, whether the government offeror or the private sector wins the award. Implementing A-76 The FAA Administrator created the Office of Competitive Sourcing in February 2003 to ensure that the competition is carried out fairly. Once determination has been made to compete a service outside the agency, A-76 competitive sourcing competition determines whether the taxpayer is better served by the government employees doing the work. A performance work statement is developed describing the activities. A team formed by the government agency's own employees, called the Most Efficient Organization (MEO), prepares an offer to perform the activities. The MEO can work in partnership with a vendor to develop their offer. Their proposal is then compared to those from the private sector or other government organizations. Finally, a decision is made whether the activity will be performed by the MEO or a vendor. A Study of Automated Flight Service Stations In July, 2002, the FAA retained the services of a contractor to conduct a feasibility study. The results indicated that the Automated Flight Service Station functions could be performed by an outside vendor from the private sector. A separate assessment by the FAAs Chief Financial Officer confirmed the finding. Fifty-eight of the 61 stations are involved in the A-76 study. Three stations in Alaska are exempt from the study because of the unusual environmental factors within the state. The 2,500 employees working at the 58 stations represent over 90% of operating costs. OF those, 54% will be eligible to retire at the time of the performance decision. Prospective Service Providers On August 3, 2004 technical proposals were received from five prospective service providers: the agency's own employees (MEO) in partnership with Harris Corporation, Computer Sciences Corporation, Lockheed Martin, Northrop Grumman, and Raytheon. Cost proposals were received September 3, 2004. The performance decision deadline will be no sooner than January 1 and no later than March 17, 2005. The solicitation requires a plan which will save no less that 22% of the annual cost to operate these stations, which represents a savings of more than $478 million over the first five years of a contract and $95.7 million for each year thereafter. The agency could achieve 30% in savings, which is the historical average for this type of competition. Awarding the Contract The government will evaluate proposals in terms of four technical factors, one past performance factor and one cost factor. The MEO is not required to submit past performance information and will not be evaluated on it. The technical factors are phase-in, staffing and management, service delivery, and performance management. The FAAs Vice President of Acquisition and Business Services will determine the winner of the competition. A best value determination will be made based on the combination of impact of overall benefits, risk, and cost for the delivery of effective flight services were to support safe and efficient flight. The overriding factor in making the decision will be who provides the most efficient services as the best value. The performance decision must be made no later than 15 months after the announcement of the A-76 study is made which is March 17, 2005. Impact of a Decision on FAA Employees If the MEO win the competition, employees will remain in government service, but the number of positions and facilities will most likely be reduced. If a contractor wins the competition, employees will be separated from government service, but will have the Right of First Refusal at the prevailing wage (as protected by the Service Contract Act) for positions in the newly reorganized program. In this instance, employees that are eligible to retire may have an opportunity to earn a second income. In addition, outside vendors are not subject to the governments age 56 mandatory retirement rule so employees who would otherwise retire could continue to work. FAA Supports Employees We are committed to providing support needed to help our employees through this transition, whether the eservice is provided by the MEO or the contractor. The FAA will provide information and assistance that they need.
Given that the FAAs operating costs continue to escalate and the Aviation Trust Fund continues to decline, the agency must find savings where possible. Regardless of whether the governments MEO or a contractor wins the award, the taxpayer will save hundreds of millions of dollars. This is a smart business decision that will improve service to the flying public. For more information: The Office of Competitive Sourcing, www.faa.gov/about/office_org/headquarters_offices/ato/aca/ Human Resources A-76 www.faa.gov/about/office_org/headquarters_offices/ato/aca/ SIDEABARS: The Bottom Line: The A-76 Saves Money Historically, competitive sourcing has saved taxpayers an average of 30% on costs regardless of whether private contractors of the government agency's own employees, the Most Efficient Organization (MEO) do the work. Differentiating Automated Flight Service Stations and Air Traffic Control Towers Automated Flight Service Stations are an important network of facilities providing information to mostly private pilots. Specialists employed at 61 Automated Flight Service Station facilities around the country and in Alaska, Hawaii, and Puerto Rico provide weather briefings, flight planning services, en route communications, and Notices to Airmen. Air traffic control towers separate and control aircraft in the air and help aircraft avoid accidents on the ground. Controllers give instructions to pilots while taxiing and during takeoffs and landings. They also deliver radar information to pilots. Competitive Sourcing is NOT Privatization Competitive sourcing occurs when government retains ownership and control of an operation no matter who performs the service. In competitive sourcing, the service providers performance is monitored be the government regardless of who does the work. The government maintains primary responsibility for assuring that the winning offeror meets service quality expectations. As required by OMBs A-76 program, a quality assurance surveillance plan sets in place metrics and methods of surveillance to be carried out by government evaluators. In the case of Automated Flight Service Stations, the performance requirements summary includes 21 unique metrics that ensure safety and efficiency. The FAA also included quality incentives in the contract, such as extensions based on successful accomplishment of objectives. Privatization is NOT Competitive Sourcing Privatization takes place when government divests itself of a commercial function, including the real property associated with it. When government relinquishes control of an operation, the government becomes a customer, and purchases the services from a commercial source. ### |
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