We have found that en route inspections are invaluable in presenting a cross section of an entire air carrier's operations including such vital factors as: proficiency of its crews; flight planning; condition and operation of aircraft; handling of the flight by ground stations, dispatcher and maintenance personnel; adequacy of communication, airborne and ground navigational aids; condition of airports and the adequacy of airways and traffic control procedures, etc. Further, the opportunity of observing the intangible human quality of judgment by the flight crews is realistically brought forth under the stress of actual operations. The foregoing are but a few of the many areas observed that relate to the air carriers compliance with the applicable Civil Air Regulations, particularly those on which certification of the air carrier by the FAA was originally based. The en route inspection also provides an opportunity to work closely with the industry in our constant effort to improve and increase the level of safety. The inspectors performing these inspections are highly trained specialists, fully competent and rated in the type of aircraft employed and well qualified to analyze and evaluate all aspects of the air carriers operating practices and procedures.

The frequency with which these inspections are conducted is dictated by the availability of man-hours, and the comparative emphasis assigned to the program as governed by overall industry performance, trends, and attitudes. At the present time, this program has been assigned a high priority. Specifically, for fiscal year 1963, we have directed our field inspectors to observe 4 percent of all air carrier en route operations. The forecast shows that the airlines will fly some 4,323,000 hours during this period. This means that our inspectors should devote at least 32,400 hours to en route inspections, during fiscal year 1963, which is a sizable figure. It represents flight time only and does not include preflight briefing, post flight debriefing, report writing or inspector travel time.

Our field inspectors have also been directed to place special emphasis on observing the en route operations of supplemental air carriers. We have impressed upon our inspectors the importance of fast and firm followup action in correcting deficiencies observed during en route inspections of these air carriers. We have also directed our inspectors to place special emphasis on observing the turbojet operations of the scheduled airlines. Here again, fast and firm action is imperative in correcting observed deficiencies. The corrective action taken in these cases could range from verbal admonishment to immediate suspension of the pilot's certificate. Observed deficiencies may be traceable back to the air carrier (e.g. marginal training, poor dispatch procedures, substandard maintenance, etc.). Here, followup action is of the highest priority since the deficiency might affect the carrier's entire operation.

ACCRUAL ACCOUNTING IN THE FAA

Mr. BROOKS. That answers that question pretty carefully, and I appreciate very much your being here.

Mr. Halaby, I would like now to discuss with you accrual accounting, which is a part of a simpler subject, but it is important and it is significant.

Mr. HALABY. Yes, sir?

Mr. BROOKS. And they are a long way behind in it.

Public Law 84-863 provides, and I quote:

As soon as practicable after August 1, 1956, the head of each executive agency shall, in accordance with principles and standards prescribed by the Comptroller General, cause the accounts of such agency to be maintained on an accrual basis to show the resources, liabilities, and costs of operations of such agency with a view to facilitating the preparation of cost-based budgets as required by section 24 of this title. The accounting system required by this subsection shall include adequate monetary property accounting records as an integral part of the system. At this point, I place in the record an FAA "Schedule to Implement Public Law 863". According to this schedule, FAA will not be in compliance with this statute until 1970.

(The schedules, exhibit 10, referred to follow :)

SUMMARY BY DATE OF THE MILESTONES IN THE "SCHEDULE TO IMPLEMENT P. L. 863"

STARTING AND COMPLETION DATES
AS OF JUNE 30 (J) AND DEC, (D)

Mr. BROOKS. Is this approximately correct?

Mr. HALABY. May I have join me at this point two of my brothers, Brother Dean, who is the Deputy Administrator for Administration, who is the architect of this Agency in that he was in the Bureau of the Budget when it was first a gleam in the eye of Mr. Curtis and General Quesada, and Brother Harper, who is our distinguished Director of the Budget.

You will find, as we get down to the working level, you may get some real facts in detail.

May I give you just one general introductory statement, and that is that we want to go to accrual accounting because we think it is a good management tool.

We have done so at four of our major facilities-at our National Aviation Experimental Center, that is at Atlantic City-at our Aeronautical Center at Oklahoma City, at the two airports, Washington National and the new airport, and in our new southern region.

We have gone to cost accounting at those two airports, at the research and development shop at Atlantic City, the hangars at the Aeronautical Center and the printing plant here.

We have gone to cost budgeting at the two airports and we are moving ahead.

We are not just sitting, waiting, and doing nothing.

Mr. BROOKS. I understand, Mr. Halaby, that this actual motion did not begin until about 1960, just before you took over, and it has been continuing at this level.

If I am wrong, you can correct me, and him, but I believe that is correct. I have heard that one of the reasons why FAA has taken so many years and has projected a good, long period of time getting into this accrual accounting system is that the administration, as such, has not issued a comprehensive policy statement on it. I am wondering if maybe you have one such in mind?

I think that the GAO representatives indicated very clearly that a policy outlining the basic objectives of policies, principles, plans, and priorities for implementation and specific personnel responsible for the program has not yet been issued, and that until such is done, there is naturally some problem about implementing it.

Mr. Harper may be standing by some department which does not want to make that change.

I am just wondering, but this, as I understand it, is the nub of the problem.

Have you decided on such a policy statement, or are they working on one?

Mr. HALABY. Yes.

Mr. BROOKS. It has not yet been issued?

Mr. HALABY. It has not been issued.

Mr. BROOKS. You are working on it now?

Mr. HALABY. It is underway.

We have determined to move this date back to 1968, which seems like an awful long way off to me.

Mr. BROOKS. Yes.

Mr. HALABY. But it is at least 2 years sooner than it was going to be. I have put Mr. Dean, who is Mr. Harper's boss, in charge of "ramroding" this, and there are resistances and there are difficulties.