1. 1 Federal Aviation Administration Airport Improvement Program Program Status and Key Issues and Policies Presented to: Eastern Region Airports Conference By: Matthew Thys, Manager, Airport Improvement Program Date: March 2, 2011

2. 2 Federal Aviation Administration Airport Improvement Program Presentation Overview Grant Payments System Audits ACIP FY11 Program Status

3. 3 Federal Aviation Administration Airport Improvement Program Key Policies and Issues – Grant Payments New DOT Wide Grant Payment System –Multi-year DOT Department-wide program to improve financial management. Grant Payments processing the first out of 11 Key Process Areas to be reengineered DOT-wide. –Implementation of a new Oracle Financials E-Business Suite platform –Streamlining of policies, processes, and related systems across DOT –Opportunity for DOT to recognize significant cost savings and efficiencies

4. 4 Federal Aviation Administration Airport Improvement Program Key Policies and Issues – Grant Payments Why I -Supplier? –DOT issues $50 billion of grants payments annually –Non-standard processes resulting in numerous audit findings –Process, material impact on financial statements –Cost savings/avoidance –Financial processing at DOT is evolving to take advantage of improvements inherent in new IT capabilities –Reduce processing time –Increase accuracy in grants payments and reporting –Ability to monitor, track, and reconcile grants payments enhanced

5. 5 Federal Aviation Administration Airport Improvement Program Benefits to be realized by I-Supplier –Electronic Payment Request Submission –Grantee Self Service –Email notifications for request approval or rejection based on funds check –Document Attachment –Unified Platform across all DOT Modal Administrations Key Policies and Issues – Grant Payments Key process improvements of I-Supplier –ECHO (current grants payment system) is being replaced by I-Supplier –Electronic submissions for all grant payment requests –FAA will perform payment request reviews and approvals electronically, as necessary –Roll out of the new functionality should begin by late 2011 (subject to change)

6. 6 Federal Aviation Administration Airport Improvement Program Key Policies and Issues – Grant Payments Payment Request Funds Check Review/ Approval Payment Transmission Payment Grantee submits payment request Grantee submits payment request including supporting information Current Process New Process ECHO Manual Paper Submission I-Supplier FAA Inputs Inputs Pay Request Manual Approval at Regional or District Office Auto-Approval in some cases with post-payment post-paymentverification Electronic FAA approval within the system DELPHIDELPHI Electronic payment

7. 7 Federal Aviation Administration Airport Improvement Program Up Coming Communications Stakeholders will be kept informed Lines of communication will be kept open via the web http://www.faa.gov/airports/news_information/conferences_events Provide feedback; address questions and concerns Key Policies and Issues – Grant Payments Training on the New Payment Process Blended learning approach will be used Web-based training, supplemental support documents, help desk support Training program logistics available once finalized and approved by FAA and DOT Prior to training testing will be conducted with identified testers nation-wide

8. 8 Federal Aviation Administration Airport Improvement Program Key Policies and Issues - Audits OIG’s 2008-2010 Improper Payment Audit – Final Report issued on December 1, 2010 –OIG began an improper payment audit of FAA in 2008 Survey phase – 5 locations Full audit in 2009 – 18 location –An “improper payment” is defined in the Improper Payment Information Act of 2002 and the Improper Payments Elimination and Recovery Act of 2010 as: (A) means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (B) includes any payment to an ineligible recipient, any payment for an ineligible service, any duplicate payment, payments for services not received, and any payment that does not account for credit for applicable discounts.

9. 9 Federal Aviation Administration Airport Improvement Program Key Policies and Issues - Audits The OIG Final Report Made 7 Recommendations: 1)Reinforce FAA guidance to AIP grantees for preparing “construction” payment requests, including supporting documentation to be maintained for both the quantity and quality of the work/materials reimbursed under AIP 2)Identify the funds that can be recovered from the improper payments identified in this report and develop and implement a plan to maximize the recovery of these payments 3)Develop a procedure to prevent duplicate AIP payments to grantees that submit manual payment requests and draw- down funds electronically under the same grant –CONTINUED>

10. 10 Federal Aviation Administration Airport Improvement Program Key Policies and Issues - Audits 4)Revise risk-management procedures to require: ADO program managers to review annually the risk- assessments for their grantees. ADO program managers to review and approve payment supporting documents submitted by moderate-risk grantees within 30 days of payment All low-risk grantees requesting payment to prepare a summary listing of invoices and other eligible charges for each payment to include: (1) a brief work summary, (2) vendor names, (3) dates of service, (4) billed amounts, (5) applicable payment dates, and (6) a calculation of the Federal share ADO program managers to review on a periodic basis the invoices or a summary listing of invoices and eligible charges for AIP payments to low-risk grantees –CONTINUE>

11. 11 Federal Aviation Administration Airport Improvement Program Key Policies and Issues - Audits 5)Initiate a review to determine if the final contract price for the third runway embankment contract at the Seattle-Tacoma International Airport was fair and reasonable. Within 30 days, provide a report to the Office of the Inspector General detailing the results of this review and planned actions. 6)Revise the AIP Handbook to clarify what information is required to assist grantees in determining contract cost or price reasonableness, and further outline the responsibility for FAA ADO program managers to verify that contract costs are reasonable. Develop training for grantees and program managers to reinforce these provisions, if needed. 7)Re-emphasize to ADO management the AIP Handbook requirements for contacting OIG when conditions warrant a “Review for Bid Improprieties”

12. 12 Federal Aviation Administration Airport Improvement Program Key Policies and Issues - Audits Regular Ongoing FAA Audits –Financial Statements Audits Review of various accounting, operational, and procedural documents –OMB Circular A-123 Audit Evaluation of agency internal controls –FAA Internal Improper Payment Audit Annual reviews on the susceptibility of AIP and related activities as well as identifying improper payment amounts.

13. 13 Federal Aviation Administration Airport Improvement Program Key Policies and Issues - Audits ARRA Audits –OIG has initiated an ARRA Improper Payment Audit –OIG Completed an ARRA Project Selection Audit –GAO completed a ARRA Project Description Study –GAO is initiating a review of the use and impact of Recovery Act Transportation funding

14. 14 Federal Aviation Administration Airport Improvement Program Key Polices and Issues – ACIP Preparation for the FY 2012 – FY 2014 ACIP is underway –Your RO/ADO has probably been working with you to collect updated information over the last few months. Up Coming Changes to the ACIP Order –ACIP Order (FAA Order 5100.39A) –Combining with NPIAS Order (FAA Order 5090.3C)

15. 15 Federal Aviation Administration Airport Improvement Program AIP Program Status P.L. 111- 322, Continuing Appropriations and Surface Transportation Extensions Act of 2011 –Part A: $1.4 Billion through March 4 th P.L. 111-329, Airport and Airway Extension Act of 2010, Part IV –Authorization through March 31 st

16. 16 Federal Aviation Administration Airport Improvement Program AIP Program Status FY 11 ‘Part A’ Apportionments are allocated and are ready to be programmed –Report Intentions on Entitlement Funds by February 22, 2011 –Last day to obligate funds is March 17, 2011 ( 76 FR 6178)

17. 17 Federal Aviation Administration Airport Improvement Program AIP Program Status Quick Reminder: Central Contracting Registration (CCR) Required for All FY 2011 Grant Recipients –Any sponsor receiving a grant in FY 2011 and beyond must be registered in the Central Contracting Registration (CCR) system prior to the grant offer letter.

18. 18 Federal Aviation Administration Airport Improvement Program AIP Program Status Over 6,250 outstanding grants with 10,117 active projects. Approximately $3.5 billion of AIP funding remaining in outstanding grants.

19. 19 Federal Aviation Administration Airport Improvement Program ARRA Program Status Awarded $1.1 billion to fund 372 projects. Grant recipients expended 94% of obligated funds—$1.031 billion by February 2011 on work completed. Approximately 95% of the 372 projects are substantially complete Created thousands of jobs with grant recipients reporting over 6 million job hours funded through ARRA projects

20. 20 Federal Aviation Administration Airport Improvement Program Closing Remarks - Questions