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The Alexander Hamilton Award Nominees

Nomination for FY 2003 PCIE Award

Nominating entity:       Department of Transportation, Office of Inspector General
Award: Alexander Hamilton Award
Contact: Alexis M. Stefani
Principal Assistant Inspector General for Auditing and Evaluation
Nominees: David A. Dobbs, Assistant Inspection General for Aviation Audits
Lou E. Dixon, Program Director
Tina B. Nysted, Project Manager
Thomas D. Jefferson, Senior Auditor
Mike J. Leibrecht, Senior Analyst
Mark A. Gonzales, Analyst
Curtis Gelber, Analyst
Brian J. Huckaby, Auditor
Katherine A. Yutzey, Analyst
Citation: For outstanding teamwork and exceptional performance in enhancing Federal Aviation Administration and Transportation Security Administration oversight of safety and security of aircraft repair stations.

Nomination Statement

The Aviation Safety/Repair Station audit team's exemplary performance resulted in outstanding achievements in improving the efficiency and effectiveness of the Federal Aviation Administration (FAA) and Transportation Security Administrations' (TSA) oversight of safety and security of aircraft repair stations. The audit team completed a complex, highly technical audit that resulted in two significant audit reports: one to TSA on repair station security and a second to FAA that identified weaknesses in FAA's oversight structure for monitoring repair stations.

Background. Currently, there are approximately 650 foreign and 4,600 domestic repair stations certified by the Federal Aviation Administration (FAA). Repairs by FAA-certified repair stations are highly regarded throughout the world. To obtain FAA certification, repair stations must demonstrate that they have equipment, personnel, manufacturers' maintenance instructions, and inspection systems to ensure repairs will be completed using FAA standards.

Air carriers have used repair stations for many years both because repair stations can complete repairs for less cost and because repair stations can provide specialized expertise in areas, such as engine repairs, that would otherwise require air carriers to have specialized equipment and staff. The use of repair stations is becoming an integral and fundamental part of air carriers' operations, with major air carriers now using outsourced facilities for up to 47 percent of their maintenance costs. Although FAA has placed significant emphasis on improving its oversight of air carriers' in-house maintenance programs, FAA has not placed a similar focus on its oversight of aircraft repair stations. As air carriers take aggressive steps to reduce operating costs, it is clear the trend toward increased use of repair stations is likely to continue.

Results. The audit team and an aviation consultant evaluated security procedures at 21 aircraft repair stations in the U.S. and abroad. This proved to be a challenging task because each repair station had its own procedures and practices and because there are no specific requirements for security at aircraft repair stations. The team evaluated the ability of the repair stations to (1) safeguard aircraft being repaired and (2) monitor and control employee access to airport property and aircraft. The team identified security vulnerabilities at repair stations located at commercial and general-aviation airports and off airport property. We recommended that TSA conduct risk-based security assessments as a first step in determining the actions needed to address repair-station security.

The audit team also evaluated maintenance practices at 21 foreign and domestic repair stations to assess FAA's oversight of these facilities. This was an enormous undertaking that required creativity and ingenuity by the team members to develop an efficient and effective means of evaluating complex aircraft repairs. To perform a comprehensive analysis of each facility's operations, the team devised a method of reviewing repair work by selecting recently completed repairs and reviewing the repairs through the entire repair process (i.e., from the time a part was received by the facility to the final inspection of the completed repair). Using this procedure, the team was able to determine whether repair stations maintained current maintenance manuals, used the proper parts, trained its personnel and properly calibrated the tools and equipment used. The team disclosed weaknesses in repair procedures and practices at 18 of the 21 repair stations visited that indicated FAA must take steps to enhance its oversight of these facilities.

The team determined that these weaknesses in repair station oversight occurred because FAA inspectors did not place adequate emphasis on these facilities as part of their surveillance. The team determined that FAA had no mechanism in place to obtain information on how much work is sent to repair stations domestically or overseas so that FAA could adjust its surveillance resources as needed. To overcome this obstacle, the team developed a way to determine the amount of maintenance air carriers outsource by using publicly available financial data submitted by air carriers to the Bureau of Transportation Statistics (BTS). To evaluate trends in air carriers' outsourced maintenance practices, the team gathered 6 years of air carrier financial data collected by BTS for nine major air carriers. The team compared the amount air carriers incurred for outside airframe and engine repairs to the amount the carriers incurred for total direct maintenance expense from 1996 to 2002. As a result of the audit team's resourcefulness, the team found that air carriers increased the percentage of maintenance costs outsourced from 37 percent in 1996 to 47 percent in 2002. This data substantiated that FAA could make better use of its surveillance resources if it performed similar trend analyses to determine where air carriers have their maintenance work performed and adjust its resources accordingly.

Agency Actions. Because of the thorough and convincing manner in which the team presented its findings, FAA agreed to evaluate the various data currently available to analyze aircraft maintenance trends and to use this data to adjust its inspector resources, as needed. To further enhance the efficiency of its surveillance, FAA will now also develop a process to identify which repair stations air carriers use to perform significant repairs and use this data to target inspector resources. In addition, FAA will develop procedures to improve information sharing between FAA offices and to more thoroughly document repair station inspections, which will improve historical tracking of inspections. All of these improvements will enhance FAA's inspection process and significantly improve safety oversight of both domestic and foreign repair stations.

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