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Notice

Pilot Program To Permit Cost-Sharing of Air Traffic Modernization Projects

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AGENCY:

Federal Aviation Administration (FAA), DOT.

ACTION:

Notice of program guidance for air traffic modernization cost-sharing pilot program for fiscal years 2002 and 2003.

SUMMARY:

On December 6, 2000, the FAA issued proposed program guidance on Section 304 of the Wendell H. Ford Aviation and Investment Reform Act for the 21st Century (AIR-21), which authorizes a pilot program for cost-sharing of air traffic modernization projects. The initial program was for fiscal years 2001, 2002, and 2003. The FAA is now issuing updated program guidance based upon the lessons learned from the first year of program implementation and is requesting sponsors' expressions of interest for cost-sharing projects for fiscal years 2002 and 2003. The purpose of section 304 is to improve aviation safety and enhance mobility by encouraging non-Federal investment on a pilot-program basis in air traffic control facilities and equipment. Under the pilot program, the Secretary of Transportation may make grants to eligible project sponsors for not more than ten eligible projects. Each eligible project is limited to Federal funding as highlighted in section 2.3.1 with the Federal cost share not to exceed 33 percent of the project's facilities and equipment (excluding operations and maintenance) cost. A project sponsor may be a public-use airport (or a group of public-use airports), or a joint venture between a public-use airport (or a group of public-use airports) and one or more U.S. air carriers.

DATES:

The FAA's Air Traffic System Requirements Service should receive initial sponsors' expressions of interest on/or before February 8, 2002. Failure to meet the proposal submission deadline will not result in automatic disqualification, but may cause disapproval due to decisions made by the FAA on proposals in hand when Phase 1 deliberations are made. Potential sponsors are encouraged to submit proposals as soon as possible.

ADDRESSES:

Sponsors' expressions of interest/proposal should be mailed or delivered, in duplicate, to the Federal Aviation Administration, Office of Aviation Policy and Plans (Attention: APO-200), 800 Independence Ave SW., Washington, DC 20590. Electronic submissions will be accepted for Phase 1 expression of interest/proposal, but must be followed up with a signed paper copy within five working days, to the address listed above. The Phase 1 electronic submissions should be mailed to Debra.Griffith@faa.gov. Electronic submissions for Phase 2 formal application will not be accepted. Deliveries may be made between 8:30 am and 5 pm weekdays, except Federal holidays.

An electronic copy of this notice may be downloaded using a modem and suitable communications software from the FAA regulations section of the FedWorld electronic bulletin board service (telephone: 703-321-3339) or the Government Printing Office's electronic bulletin board service (telephone: 202-512-1661).

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FOR FURTHER INFORMATION CONTACT:

Debra Griffith or Joann Kansier (202-385-7600), Research and Requirements Development Directorate (ARQ), Federal Aviation Administration, 800 Independence Avenue, SW., Washington, DC 20590.

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SUPPLEMENTARY INFORMATION:

1. Background

In performing its mission of providing a safe and efficient air transportation system, the FAA operates and maintains a complex air traffic control system infrastructure. Section 304 of the Wendell H. Ford Aviation and Investment Reform Act for the 21st Century (AIR-21) authorizes a pilot program to permit cost-sharing of air traffic modernization projects, under which airports and airport/airline joint ventures may procure and install facilities and equipment in cooperation with the FAA. The purpose of Section 304 is to establish a pilot program, to improve aviation safety and enhance mobility in the air transportation system by encouraging non-Federal investment in air traffic control facilities and equipment. The pilot program is intended to allow project sponsors to achieve accelerated deployment of eligible facilities or equipment, and to help expand aviation infrastructure.

1.1 Program Participants in Selection Cycle—Round One

The following airport/Projects were selected to participate in round one of the AIR-21 Cost Share Pilot Program:

  • Tampa International Airport—upgrade RW18L ILS to Cat II/III
  • Minneapolis-St Paul International Airport—ALSFs on RW12L and 12R
  • Chicago O'Hare International Airport—develop surface movement management system based on multilateration technology
  • John F. Kennedy Airport—feasibility study and environmental issues analysis for RW22R and La Guardia Airport RW22/RW 13 ILS upgrades; La Guardia RW31 Glideslope
  • Olive Branch Airport, Mississippi—construct Air Traffic Control Tower

The average FAA share for a round one project is $1.5 million. The FAA is authorized to approve five more projects under Section 304 of AIR-21. Those Start Printed Page 1801sponsors whose projects were approved in the first round may submit additional proposals expanding upon their initial projects. All proposals that were not accepted during the FY 01 consideration will be reconsidered upon a written request from the sponsor. All sponsors who anticipate resubmitting last year's request should review the updated criteria in sections 2.1 and 2.2 before submission and modify the proposal as appropriate. Sponsors may submit additional proposals if they desire or update their original proposal.

2. Final Program Guidance

This section restates, in part, the statutory language of AIR-21 Section 304 and outlines FAA's supplementary criteria for the pilot program. The sponsor eligibility, project eligibility, and evaluation and screening criteria are outlined in Sections 2.1, 2.2 and 2.6 respectively of this notice.

2.1 Eligible Project Sponsors

2.1.1 Statutory Provisions for Sponsor Eligibility

The term ‘project sponsor’ means a public-use airport or a joint venture between a public-use airport and one or more air carriers.

2.1.2 Supplementary FAA Criteria for Sponsor Eligibility

An eligible project sponsor is a public-use airport (or group of airports), either publicly or privately owned, action on its own or in a joint venture with one or more U.S. air carriers. All landing facilities meeting these criteria are eligible, including but not limited to commercial service airports, reliever airports, general aviation airports, heliports, etc. All eligible sponsors are encouraged to participate. If selected for the pilot program, the sponsor must be willing to enter into a Memorandum of Agreement with the FAA outlining the specific goals to be accomplished, the roles and responsibilities of each party, schedule milestones, and funding contributions of the parties. An eligible sponsor must have an available source of funds to execute the pilot program.

2.2 Eligible Projects

2.2.1 Statutory Provisions for Project Eligibility

The term ‘eligible project’ means a project relating to the Nation's air traffic control system that is certified or approved by the Administrator and that promotes safety, efficiency, or mobility. Such projects may include:

a. Airport-specific air traffic facilities and equipment, including local area augmentation systems,* instrument lands systems, weather and wind shear detection equipment, lighting improvements, and control towers

b. Automation tools to effect improvements in airport capacity, including passive final approach spacing tools* and traffic management advisory equipment; and

c. Facilities and equipment that enhance airspace control procedures, including consolidation of terminal radar control facilities and equipment, or assist in en route surveillance, including oceanic and offshore flight tracking.

* Note these projects will be eligible, assuming availability and viability of the equipment with the time limitation highlighted in 2.2.2.b.

2.2.2 Supplementary FAA Criteria for Project Eligibility

a. The project should be consistent with FAA's air traffic equipment/systems infrastructure and architecture and should be a validated project of a FAA program. The project, when commissioned, should provide measurable benefits that benefit regional or local objectives/interests and the FAA NAS.

b. The project shall be initiated within two years of project approval and completed/commissioned within five years of project approval (allowing for an environmental impact study (if necessary), acquisition, supply support, training programs, etc.).

c. Equipment and facilities should meet applicable FAA advisory circulars and specifications.

d. The project should serve the general welfare of the flying public; it should not be used for the exclusive interest of a for-profit entity.

e. Any facility/equipment acquired under the project should be a new asset, not an asset that the sponsor has already acquired or committed to acquiring.

f. The project should have a useful and expected life of ten years or more, notwithstanding the possible need to replace project components during its operating life.

g. The cost-share program is not the correct forum for requesting development of RNAV procedures.

h. A sponsor may submit a multiple component project (as outlined in paragraph 2.5) where each component forms part or all of an integrated system. The FAA reserves the option to accept one or multiple components of a proposal.

i. A project may not be co-mingled with other FAA cost-sharing programs (e.g., the provisions of AIR-21 Section 131 that authorize cost-sharing programs for airport traffic control tower operations and construction).

j. All equipment and structures should meet appropriate OSHA standards for employee safety and fire protection. Where land is involved, the property should meet all environmental compliance requirements, including noise, hazardous material, property access, and zoning rights.

k. A project should not increase the controller or airways facility workforces during the pre-transfer period (see section 2.4 below titled “Transfer of Facility or Equipment to FAA”).

2.3 Funding

2.3.1 Statutory Provisions for Funding

The Federal share of the cost of an eligible project carried out under the pilot program shall not exceed 33 percent. No project may receive more than $15,000,000 in Federal funding under Section 48101(a) of Title 49, United State Code (FAA's Facilities and Equipment appropriation). The Secretary shall use amounts appropriated under Section 48101(a) for fiscal years 2001 through 2003 to carry out the program.

The sponsor's non-Federal share of the cost of an eligible project shall be provided from non-Federal sources, including revenues collected pursuant to Section 40117 of Title 49, United States Code (passenger facility charges).

2.3.2 Supplementary FAA Criteria for Funding

FAA is not obligated to fund one-third of the total project costs; rather, FAA's share may not exceed this threshold. The project sponsor must provide two-thirds or more of the total project cost. The Federal and non-Federal shares of project cost may take the form of in-kind contributions. Equipment in FAA's inventory that has not been previously deployed qualifies as eligible equipment. If selected for the pilot program, a sponsor may use passenger facility charge (PFC) revenues to acquire and install eligible facilities and equipment, but not to fund their operation or maintenance. Normal PFC processing procedures under Federal Aviation Regulation 14 CFR Part 158 will be used to approve the imposition of a PFC or the use of PFC revenue as the non-Federal share of a pilot program project.

Project funding may be effected through a grant, a cooperative agreement, or other applicable instrument. Federal contributions applied to any other Federal project or grant may not be used to satisfy the sponsor's cost share under this pilot program.Start Printed Page 1802

The following criteria apply to the calculation of the cost-sharing ratio:

a. Project are limited to those costs that the FAA would normally incur in conventional facilities and equipment funding (e.g., if land/right-of-way must be acquired or leased for a project, its cost can be included in the cost-sharing ratio only if FAA would otherwise incur it in conventional program funding).

b. Operations and maintenance costs of the project, both before and after any sponsor-elected project transfer to the FAA, will not be considered as part of the cost-share contribution.

c. Non-federal funding may include cash, substantial equipment contributions that are wholly utilized as an integral part of the project, and personnel services dedicated to the proposed project prior to commissioning, as long as such personnel are not otherwise supported with Federal funds. The non-federal cost may include in-kind contributions (e.g., buildings). In-kind contributions will be evaluated as to whether they present a cost that FAA would otherwise incur in conventional facilities and equipment funding.

d. Aside from in-kind contributions, only funds expended by the sponsor after the project approval date will be eligible for inclusion in the cost-sharing ratio.

e. Unless otherwise specified by these criteria, the principles and standards for determining costs should be conducted in accordance with OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments.

f. As with other U.S. DOT cost-sharing grants, it is inappropriate for a management/administrative fee to be included as part of the sponsor's contribution. This does not prohibit appropriate fee payments to vendors or others that may provide goods or services to support the project.

By statute, funding to carry out the Federal share of the program may be available from amounts authorized to be appropriated under 49 U.S.C. 48101(a) (FAA's Facilities and Equipment authorization) for fiscal years 2001 through 2003. FAA funding decisions will be made in concert with the project evaluation and project selection processes discussed later in this notice. FAA may choose to use specifically appropriated funds, to re-program funds from within existing facilities and equipment project appropriations, or to fund from within existing budget line items.

Unless otherwise stipulated in the agreement executed between the sponsor and the FAA, liability for cost over-runs will be shared between the FAA and the sponsor in accordance with their project cost shares.

The U.S. Department of Transportation and the Comptroller General of the United States have the right to obtain and assess all documents pertaining to the use of Federal and non-Federal contributions for selected projects. Sponsors should maintain sufficient documentation during negotiations and during the life of the project to substantiate costs.

2.4 Transfer of Facility or Equipment to FAA

2.4.1 Statutory Provisions for Facility or Equipment Transfer

Notwithstanding any other provision of law, project sponsors may transfer, without consideration, to the FAA, facilities, equipment, and automation tools, the purchase of which was assisted by a grant made under this section. The FAA shall accept such facilities, equipment, and automation tools, which shall thereafter be operated and maintained by the FAA in accordance with criteria of the FAA.

2.4.2 Supplementary FAA Criteria for Facility or Equipment Transfer

Project transfers to the FAA will be at the sponsor's election and in accordance with the criteria listed below.

a. At the time of transfer, the project should be operable and maintainable by the FAA and should comply with FAA Order 6700.20, Non-Federal Navigational Aids and Air Traffic Control Facilities, or any successor Order then in effect.

b. In the event of transfer, software code, data rights, and support tools should be provided to the FAA at no cost to the FAA.

If the project is not transferred to the FAA, the sponsor remains liable for all operations and maintenance costs, including the costs of capital sustainment.

2.5 Application Procedures

The following application procedures will be used when applying for the cost-share:

a. Application to the pilot program consists of two phases, as described below. The purpose of Phase 1 is to allow the FAA to gauge the level of interest, to provide preliminary responses to potential sponsors to avoid causing applicant sponsors to expend excessive resources on project applications that have very limited changes of acceptance because of need or cost, and to plan for subsequent program implementation. In Phase 1 the FAA will review the application based upon its individual merit.

b. The purpose of Phase 2 project review is to conduct comparative analysis of the individual applications accepted during Phase 1. In Phase 2, sponsors will provide more detailed applications, and final FAA evaluations/project selections will be completed.

c. Airport sponsors may submit multiple projects and projects with multiple components, but each piece of equipment/activity must be identified and costed separately and should be listed in priority order. An example of a multiple component project would be an instrument landing system (ILS) project that may include in addition to the ILS equipment, middle markers and runway lighting for a complete package. The FAA reserves the option to accept one or multiple pieces of each proposal.

d. Projects that would be good candidates for this program may include equipment and systems that monitor weather, support runway incursion reduction, and support regional interest.

e. Under this pilot program, either the FAA or the sponsor may acquire and/or install facilities or equipment. In the case where the FAA manages the procurement, existing FAA contracts will be used where possible.

f. Proposals for new air traffic control towers will only be considered if they enhance the National Airspace System. Per FAA Order 6030.1, FAA Policy on Relocation, movement of an existing air traffic control tower for the convenience/benefit of only the airport will not be considered. Requests for towers will be considered utilizing the criteria in Order 7031.2C, Airway Planning Standards Number One (APS-1).

2.5.1 Phase 1: Sponsor's Submission of Proposal and Initial Project Review

Proposal packages should be no more than 20 pages in length. Although not binding the Phase 1 submission should reflect accurate estimates of project cost and sponsor contributions. The FAA may verify with the sponsor the cost estimate if it does not appear to be consistent with the FAA's estimate, and thus provide the sponsor time to revalidate its proposal before Phase 2. Sponsors should submit written expressions of interest in accordance with the sections captioned DATES and ADDRESSES provided earlier in this notice. A sponsor's initial proposal should include the following:

a. Identity of sponsor (including point-of-contact's name, mailing address, telephone number, fax number, and e-mail address) and all participating authorities or entities in the case of joint ventures.Start Printed Page 1803

b. Description and location of the proposed project.

c. Statement of need for the project, including an assessment of the projected benefits—site-specific, regional, and the national airspace systems. Preferred project schedule, including start date, completion date, and any significant interim milestone dates.

d. Statement of intent to transfer the project to the FAA, including envisioned date, or intent not to transfer the project to the FAA.

e. Schedule of estimated project costs, including: (1) Up-front costs divided into proposed shares between the sponsor and the FAA, and (2) annual and life-cycle operations and maintenance costs (both before and after transfer if the sponsor elects to transfer the project to the FAA). Cost should be outlined separately for each major activity (e.g., each ILS).

f. Self-assessment of the ability to acquire and commit the non-Federal share of funding.

g. Brief description of sponsor's internal approval/coordination process for establishing a formal cost-sharing agreement with the FAA and the estimated time-frame for completion.

h. If requesting establishment of an air traffic control tower, sponsor must indicate how the facility is to be staffed. Acceptance for the Cost Share Pilot Program does not automatically qualify an airport for the FAA contract tower program to staff the tower with contract air traffic controllers.

The FAA will review and evaluate the expressions of interest submitted during Phase 1, using a panel of technical experts and senior managers. The panel will review the submission considering the technical feasibility, program feasibility, schedule, projected operational benefits, and cost. The FAA will contact the sponsor if it has questions or has suggestions on how the sponsor may improve its proposal. Following its evaluations and preliminary selections, the review panel will recommend to the Director of FAA's Airway Facilities Service and the Director of FAA's Office of System Architecture and Investment Analysis those applicant sponsors who should be invited to participate in Phase 2, as described below. These officials will notify and invite selected sponsors to participate in Phase 2. Following Phase 1, the FAA may conduct on-site visits to work with the sponsor in order to have a dialogue on the proposal before Phase 2 submission.

2.5.2 Phase 2: Formal Application and Selection of Projects

Only proposals that have been reviewed in Phase 1 will be considered during Phase 2. Phase 2 proposals should not be more than twenty pages in length. During Phase 2 each sponsor that has been invited to participate should submit an expanded application with the following elements needed by the FAA to evaluate the merits of each application.

a. Project Description: The project description should contain: (1) The identity of the submitting sponsor (including point-of-contact's name, mailing address, telephone number, fax number, and e-mail address) and all participating authorities or entities in the case of joint ventures; (2) project name and location; (3) a detailed project description.

b. Projected Benefits: All applications should describe the need for the project and demonstrate its safety, efficiency, capacity, productivity, and other benefits, as applicable, at the airport, regional, and system-wide levels. The sponsor may conduct its own analysis, may opt to summarize existing analyses from FAA's acquisition management system, and/or may use the investment criteria in FAA Order 7031.2C, Airway Planning Standard Number One.

c. Economic Analysis: Supporting the projected benefits review the applicant should conduct an economic analysis. The analysis should include a schedule of project costs, including: (1) Up-front costs broken down into proposed shares between the sponsor and the FAA; and (2) annual and life-cycle operations and maintenance costs before and after transfer to the FAA (if the sponsor elects to transfer). The level of effort devoted to the analyses should be tailored to the scope and cost of the project. For complex programs FAA guidance can be found in Report FAA-APO-98-4, Economic Analysis of Investment and Regulatory Programs—Revised Guide, and Report FAA-APO-98-8, Economic Values for Evaluation of Federal Aviation Administration Investment and Regulatory Programs

d. Schedule: The Schedule should list all significant proposed project dates, including the start date, completion date, date of project transfer of the FAA (if applicable), and key interim milestone dates.

e. Financial Plan: The Financial Plan should contain: (1) The proposed local and Federal cost shares, (2) evidence of the sponsor's ability to provide funds for its cost share (e.g., approved local appropriation or Memorandum of Agreement); and (3) any commitment the sponsor might choose to offer for the assumption and liability of cost overruns aside from the liability criterion provided earlier in this notice.

f. Letter of Commitment: Sponsors should demonstrate a commitment to the project, as evidenced by a Letter of Commitment signed by all project participants (including any participating air carriers). The letter should, at a minimum, include a list of the participating agencies and organizations in the proposed project; the roles, responsibilities and relationship of each participant; and the name, address, and telephone number of the individual representing the sponsor.

g. Letter of Acknowledgment/Support: The application will include a letter of acknowledgment/support from the applicable State Department of Transportation and/or other appropriate jurisdiction (to avoid circumventing State and metropolitan planning processes). It is the intent of FAA Headquarters for the appropriate projects to include the FAA's Regional Office in the project review cycle. It would be in the best interest of the applicant to pre-coordinate the projects with the appropriate FAA Regional Office.

The FAA will review and evaluate the Phase 2 applications using a panel of technical program experts and senior managers based on the criteria outlined below in Section 2.6. Following its evaluations, the review panel will prioritize and recommend to the FAA's Associate Administrator for Air Traffic Services and the Associate Administrator for Research and Acquisition those applications that it believes should be accepted. If the FAA selects a project for inclusion in the pilot program, an agreement will be executed between the sponsor and the FAA.

2.5.3 Subsequent Application and Selection Cycles

If fewer than the statutorily-limited ten projects have been approved following the second round of Phase 1 and 2 applications, FAA will repeat the Phase 1 and 2 application processes, until the earlier of: May 15, 2003, or that point in time when the ten project limit is reached (see Schedule Summary in Section 2.7 below). The May 15, 2002, cutoff date is based on an allowance of time for FAA to process Phase 2 applications and make selections prior to the statutory authorization expiring at the end of fiscal year 2003. FAA cannot and does not extend any assurance or implication that any residual authority will remain following the first round of Phase 1 and 2 applications.Start Printed Page 1804

2.6 Application Evaluation and Screening Criteria

During Phase 1 the FAA will review each of the applications based upon the individual merit of the application. The FAA will consider the following elements in evaluating Phase 1 applications:

a. Compliance with statutory criteria, FAA's supplemental criteria, and application procedures.

b. Degree to which the project provides benefits to support the FAA's strategic goals for safety, efficiency, and mobility, as well as the national airspace system architecture.

c. Likelihood of project success.

d. Ability of sponsor to provide its cost share.

The Phase II review involves a comparative analysis of the individual applications to each other. Phase II application evaluation will include the following additional elements in evaluating the applications.

a. Benefit to the airport, region, and national airspace system.

b. Ease of administration (acquisition, installation, etc.).

c. Evidence that the project can be implemented in accordance with the proposed schedule.

d. Availability of FAA resources.

e. Degree of Federal leveraging (degree to which the proposal minimizes the ratio of Federal costs to total project costs).

f. Cost to the FAA: (1) up-front cost-share (a sponsor's willingness to pay a higher percentage of the project will increase its competitiveness when compared to other projects; and, if applicable, (2) post-transfer life-cycle operating and maintenance costs.

g. Equity and diversity with respect to project type, geography, and population served.

2.7 Schedule Summary

MilestoneDate
Second-Round of Applications
Phase 1 Applications due to FAA2/21/02
FAA Responses to Sponsors' Phase 1 Applications4/22/02
Phase 2 Applications due to FAA6/3/02
FAA Announcement of Second-Round Approvals9/3/02
Third-Round of Applications (if needed)
Phase 1 Applications due to FAA12/13/2002
FAA Responses to Sponsors' Phase 1 Applications2/14/2003
Phase 2 Applications due to FAA5/15/2003
FAA Announcement of Third-Round Approvals7/15/2003

2.8 Project Implementation Information

During the life of the project, the FAA may collect data from the sponsor and conduct (with non-project funds) independent evaluations of the project's impact on safety, efficiency, and mobility objectives. This will allow the FAA to ascertain the success of the pilot program. The selection of projects is currently limited by AIR-21 to the end of the fiscal year 2003.

3. Impact of Revised Guidelines

Potential costs and benefits of the final guidelines have been reviewed consistent with the intent of Executive Order 12866 (Regulatory Planning and Review), the Regulatory Flexibility Act of 1980, Executive Order 13132 (Federalism), Office of the Secretary of Transportation direction on evaluation of international trade impacts, and the Unfunded Mandates Reform Act of 1995. The rationale for compliance with these guidelines was provided in the Federal Register notice dated December 6, 2000 which remains unchanged and can be found in that Federal Register or is available from the FAA office listed in the ADDRESSES section of this announcement.

4. References

The following list outlines references cited above:

OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, revised August 29, 1997.

Report FAA-APO-98-4, Economic Analysis of Investment and Regulatory Programs—Revised Guide. Available upon request from the FAA's Office of Aviation Policy and Plans, telephone 202-267-3308. It may also be found on the Internet at: http://api.hq.faa.gov/​apo_​pubs.htm.

Report FAA-APO-98-8, Economic Values for Evaluation of Federal Aviation Administration Investment and Regulatory Programs. Available upon request from the FAA's Office of Aviation Policy and Plans, telephone 202-267-3308. It may also be found on the Internet at: http://api.hq.faa.gov/​apo_​pubs.htm.

FAA Order 6030.1, FAA Policy on Relocation. Available upon request from the FAA, telephone 202-646-2310.

FAA Order 7031.2C, Airway Planning Standard Number One, through Change.

12. Available upon request from the FAA's Office of Aviation Policy and Plans, telephone 202-267-3308.

FAA Order 6700.20, Non-Federal Navigational Aids and Air Traffic Control Facilities. Available upon request from the FAA's NAS Operations Program Office, telephone 202-267-3034.

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Issued in Washington, DC, on January 9, 2002.

Joann Kansier,

Program Director for Research and Requirements Development, ARQ-1.

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[FR Doc. 02-863 Filed 1-11-02; 8:45 am]

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