Presented to: By: Date: Federal Aviation Administration FAA Update Airports Program Western-Pacific Region Association of California Airports Robin Hunt and Ruben Cabalbag September 17, 2010

2 Federal Aviation Administration FAA Update FY-10 Airport Improvement Program (AIP) Grant Performance Metrics Improper Payments FY 2011 Program

3 Federal Aviation Administration FAA Update FY-10 AIP Grants Issued to Date (by State) ArizonaCaliforniaNevadaHawaiiPacific Amount $75M$235M$46M$24M$76M # of Grants

4 Federal Aviation Administration FAA Update FY-10 AIP Projects Funded (For all States in Western-Pacific Region) Total: $456M (to Date)

5 Federal Aviation Administration FAA Update AIP Performance Metrics We are focused on fiscal accountability. Focused on timely conversion of Airport & Airway Trust Fund resources into airport improvements (safety, capacity and efficiency). Previously we relied solely on “output”-type metrics to evaluate AIP performance: —Percentage of grants based on bids —Timely programming of grants —Grant closeout within four years of appropriation —Minimize inventory of open grants —Ensure no grant inactive for 18 months These are all important policies, and will continue to be in force. But…

6 Federal Aviation Administration FAA Update AIP Performance Metrics We now have the ability to monitor rates of actual drawdown: —By grant —By sponsor —By state —By ADO —By region —Nationally Because drawdown rates should mirror project implementation, this metric provides a far more useful indicator of how swiftly the funds are being converted to useful infrastructure.

7 Federal Aviation Administration FAA Update AIP Performance Metrics The White House Office of Management and Budget (OMB) established outlay rates or “liquidation goals” for Airport Improvement Program (AIP) funds: —By end of year in which appropriated, disburse 18% of funds —By end of 1st year after appropriation, disburse 60% —By end of 2nd year after appropriation, disburse 81% —By end of 3rd year after appropriation, disburse 91% —By end of 4th year after appropriation, disburse 96% After the 4th year, all funds should be fully disbursed and the grants closed. (This is the source of the requirement that grants four years and older be closed.) Note, we generally use “grant year” as a proxy for “appropriation year.” There are minor differentiations when we get into multi-year grants, amendments and recovered funds, but generally this holds true.

8 Federal Aviation Administration FAA Update Grant Expenditure Targets

9 Federal Aviation Administration FAA Update Grant Performance Metrics (by State & Fiscal Year) Note: Grant status is as of September 10, OMB Target FY09FY08FY07FY06 40%19%9%4% Arizona 39%19%9%1% California 38%19%7%1% Nevada 38%18%5%1% Hawaii 50%58%9%1% Pacific Island 45%16%13%1%

10 Federal Aviation Administration FAA Update Benefits of the New Metric Significantly better indicator of actual conversion of Trust Fund resources into useful aviation infrastructure. Money assigned to a project but sitting in the Trust Fund isn’t helping the system. Helps articulate why the underlying policies are in place (e.g., why grants must be closed after four years). Allows us to ask the right questions (e.g., why isn’t a project being implemented as swiftly as expected?) Allows us to identify where resources are being used most effectively, and to make better decisions about where to focus future resources. Helps communicate AIP performance to decision-makers to improve program competitiveness during challenging budgeting periods.

11 Federal Aviation Administration FAA Update Improper Payments Improper payments are any payment that: –Should not have been made; or –Was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. Improper payments Include any payment made to an ineligible recipient or for an ineligible service: –Duplicate payments; –Payments for services not received; –Payments for an incorrect amount; –Payments without sufficient documentation in sponsor files.

12 Federal Aviation Administration FAA Update Improper Payments Sponsors must not draw down grant funding for the full value of a construction invoice unless the sponsor has already paid the contractor for the 10% retainage. Draw downs should only be for actual eligible expenditures. We also encourage those still requesting manual payments to switch to the electronic system. You get your payments much quicker with the electronic system.

13 Federal Aviation Administration FAA Update Improper Payment Audit Heightened Office of Inspector General and Congressional oversight in this area – everyone wants to ensure funds are only used for eligible expenses. OIG findings: Insufficient documentation Ineligible services Incorrect Amount Duplicate Payments Noncompliance with Title 49, Part 18 –Grant Procurement Regulations

14 Federal Aviation Administration FAA Update OIG Recommendations Draft Report has 7 recommendations including: a.Re-enforce FAA guidance for payment requests including supporting documentation required. b.Improve risk assessment model. c.More testing of invoices and FAA oversight. d.Ensure contract cost and price are reasonable. e.Better record keeping by sponsors.

15 Federal Aviation Administration FAA Update Planning for FY 2011 Timing of Reauthorization and 2011 Appropriation are unclear. Start Preparing Now! Be Ready to take your grant as soon as funds are available—don’t wait until the end of the year.

16 Federal Aviation Administration FAA Update Planning for FY 2011 Ensuring that ACIP Projects, to which AIP funds are to be assigned, are ready to go early (September of previous year-2010). Ready to go means: Planning is complete Project is on an approved ALP FAA Environmental approval is complete or imminent [CATEX submitted] Airspace review and Approval is complete Design is complete and project is ready to go out for bid

17 Federal Aviation Administration FAA Update Fiscal Year 2011 Program Currently very few 2011 projects have the required NEPA approval. SFO ADO has not received CatX documentation for nearly 200 projects in the 2011 ACIP. Deadline will be December 2010.

18 Federal Aviation Administration FAA Update Fiscal Year 2011 Program Submit your environmental documentation and grant application early and get started on your airport improvements. –Takes approximately 45 days from the time we get the application until the time we mail out the grant offer. –Closer you are to the end of the program the more likely your project will be pushed to the following year. The sooner we get grants programmed the more likely we are to get additional funds.

19 Federal Aviation Administration FAA Update Contact Information Robin Hunt, Manager San Francisco Airports District Office (650) x600 Ruben Cabalbag, Acting Manager Los Angeles Airports District Office (310) Mia Ratcliff Acting Manager, Safety and Standards (310) Brian Armstrong Acting Manager, Planning and Programming (310)

20 Federal Aviation Administration FAA Update Questions?