The Department of Transportation's inspector general has become a key balancing force in Washington's aviation debates.
In Washington, the outcome of the political process is usually seen as a balancing of interests, which are represented by often-competing groups arguing their case to a Congress whose members cannot pretend to be impartial.
Such a process, though, can easily become controlled by the extremes: ask for twice as much as is needed and get half; take a diametrically opposed position and end up with something in the middle. Missing in this process is the impartial intermediary, something short of a wise man. While wise men will always be few in Washington, some figures have emerged as balancing forces.
Prominent among them is Ken Mead, the Inspector General of the Department of Transportation (DoT). Inspectors traditionally focus on a trinity of waste, fraud and abuse in areas such as contract overruns or employee misconduct. Such was the agenda of his predecessor, Mary Schiavo, who was noted for internal audits. Mead has transformed the office into a policy think-tank, and as a familiar figure on Capitol Hill for more than a decade, he has increasingly become a central figure in the important debates about transportation issues and funding.
Mead's previous experience, some 22 years of it, was at the General Accounting Office (GAO), where he was director of transportation issues. His time at GAO gave him credibility with the most influential members of Congress, say House transportation committee aides. The GAO, though, is a creature of Congress; its appointed investigative arm set up to respond to the wants of a committee or individual member of Congress. It is sometimes perceived as giving members of Congress and committees the ammunition they want, of telling the lawmakers exactly what they want to hear.
Institutional reform
Mead moved from the GAO to become the DoT's inspector general in May 1997, in part because the inspector decides what it will investigate and what it will study, instead of responding to Congressional requests and mandates. He explains: "Here, you're part of the institution and so have multiple opportunities to be a bit proactive, to be part of the solution-formulating process. GAO is not part of this institution, so they don't see things in as much detail or quite as early."
The freedom to select areas of investigation instead of waiting for a mandate from Congress or from the Transportation Secretary lets Mead look into some interesting areas. For instance, he has raised the issue of FAA inspections of and oversight over aircraft repair stations, based on tracking the amounts the majors spend in this area. In 1996, major air carriers spent $1.6 billion (37% of their total maintenance costs) on outsourced aircraft maintenance, but that rose in 2001 to $2.9 billion (47% of the total). "FAA needs to consider this shift in maintenance practices when planning its safety surveillance work," he believes.
Mead recently entered the long-running debate over the ownership and control of DHL Airways. The US-based affiliate of DHL, the Deutsche Post subsidiary, has US expansion plans that would face a major obstacle if the DoT were to conclude it were not fully controlled by US citizens. Although the DoT decided in 2001 that the DHL unit met citizenship requirements, the issue has since been debated.
Mead launched a probe, not of the citizenship itself but of the process by which the Department had concluded that DHL Airways was a US citizen and was less than 25% foreign-owned. He says that the issues in the case were "too complex, contentious and controversial" to be decided by the "informal proceeding" that the DoT had used. The informal process limited access to confidential documents by opponents of DHL, and such documents could detail the business arrangements, and hence degree of control, between the various DHL entities and Deutsche Post. Mead went out of his way to avoid addressing the citizenship issue itself, and instead dealt with the process. However within a day of his conclusion, the DoT reopened the case.
Mead has sought to distance the inspector general's office from the industry sources that supply much of information and data used in Washington debates. For instance, he began to post a complex series of airline metrics last year that detail 16 aspects of the performance of the domestic carriers, from operations and on-time performance to demand data, financial performance and a measure of service at small airports. Calling them "leading indicators", Mead explains: "We wanted to be an independent source, we wanted people to have a source that was not part of the industry. There is very little melding of airline financial issues with air traffic control issues. And no one was doing it."
He adds: "The level of small-community service is, to my mind, a real barometer" of industry health. Here, Mead is either foresighted or he read the political tea leaves months before they became clear to anyone else in Washington: small-community air service is going to be high on the list of issues for the leaders of the Senate aviation subcommittee.
When Mississippi's Trent Lott exercised his seniority rights early this year and took over the panel from a Texas senator, he brought a rural state into a position of power. Lott has already held one of his first hearings on the small-city service issue.
In the funding debate that will take up much of the year's congressional aviation agenda, the inspector general has already begun to assume a central role. Mead has told congressional committees that clearly the funding proposed by the Bush Administration is not going to be enough to meet both security needs and expansion desires. That is rapidly becoming the consensus view in Washington, and not simply because competing interest groups say so.
But committees perhaps should not be faced with such an either/or situation, and Mead has suggested an alternative: a revolving loan fund. "We're going to need some sort of stable continuing source of funds because we are dealing with a capital-intensive item. We may not think of an explosive detection machine as a capital item. The funding source is uncertain at present, and this would settle many concerns," he says.
Mead has been critical of the Transportation Security Administration, giving the harshest criticism heard of an agency that is treated as inviolable. Mead gave up his jurisdiction over that administration, which took over all airport security on 1 January, when it was transferred to the new Homeland Security Department in March. He says the move will let him focus on some important areas that have competed for attention with security.
On the airport front, Mead has already blunted an airport move to raise fees charged to flyers under the Passenger Facility Charge programme, a move that the airport lobby began last year to counterbalance dwindling federal funding. Although airports had spoken about such a move for years, its campaign to lift the facility charge cap entirely was a bold step. But Mead has told committees on both sides of the Capitol that this would deter passengers as much as it would aid the airlines.
His next focus is the FAA itself. Mead has warned it against seeking higher fees from users or passengers and instead to get its own house in order. "Just like the airlines have had to rethink the basics of their business, the FAA also must re-examine how it does business," he says.
The FAA's move to become a performance-based organisation, which would be a major efficiency gain and a step toward possible corporatisation, has "fallen far short" and its much-touted personnel reform has merely raised salaries, he says.
FAA cost control
Controlling FAA costs will be a major step toward any reform of the agency. Although outright privatisation or corporatisation is not about to happen, and although Mead says that personally he does not favour such moves, the Bush Administration last year laid the groundwork for larger-scale subcontracting.
That will not be possible without strict cost comparisons, which demand the credibility of reliable internal cost-accounting measures. The FAA promised to complete such a project years ago but has dragged its feet despite occasional congressional prodding. Mead's pressure should force it pick up the pace.
FAA cost controls and cost measurements will also be a major step toward regaining the agency the credibility it has lost on Capitol Hill. Contract overruns and delays such as with the STARS project, a troubled air-traffic technology marked by cost and time overruns and union objections, have demanded large amounts of congressional time. If that happens, the agency's harshest critic may turn out to be its strongest ally.
Source: Airline Business
