Labor Relations at the FAA: An Expensive Program Without Internal Controls

A new report indicates the labor relations system at FAA lacks internal controls and that there is no effective system for tracking or anticipating new costs.

The relationship between air traffic controllers and the Federal Aviation Administration (FAA) has been contentious but ultimately profitable for air traffic controllers working for the agency.

On August 5, 1981, President Ronald Reagan fired 11,345 air traffic controllers after a two-day strike. President Reagan had offered an 11 percent increase in wages, though this was not enough for the union representing the air traffic controllers at the time—the Professional Air Traffic Controllers Organization (PATCO). The union had demanded a pay increase of 100% among other concessions.

The National Air Traffic Controller’s Association (NATCA) was formed in 1987, following the decertification of PATCO as a result of the 1981 air traffic controllers’ strike.

In 2003, the Inspector General (IG) for the Department of Transportation identified hundreds of Memoranda of Understanding (MOUs), negotiated primarily at individual facilities, that resulted in $23 million in overtime costs, $1.8 million in cash awards, $30 million in additional salary incentives, and 65,000 hours in time off awards. As a result of that report, the Federal Aviation Administration (FAA) instituted internal controls, including requiring that all MOUs be reviewed by senior Agency officials prior to agreement and include an estimate of the cost impact of these agreements.

Another IG report in 2011 again reported the agency was not monitoring its air traffic controller labor agreements and could not reliably estimate the costs of all provisions included in its 2009 collective bargaining agreement with the air traffic controller’s union.

How have these internal controls worked in practice? According to a new report from the agency’s Inspector General (IG), the “reforms” have largely been ignored.  Moreover, no disciplinary actions could be found by the IG when the new “requirements” to impose some semblance of order on the labor relations system were routinely ignored.

The new IG report, dated June 19, 2014 finds that despite earlier investigations and reports, the “FAA continues to risk unanticipated costs” as a result of mid- term bargaining agreements with the union and the rules for setting pay for air traffic controllers. The IG report concludes that the FAA’s internal controls for managing negotiations with NATCA are ineffective because the Agency has not followed its own procedures, especially with regard to conducting the required budget analysis and legal reviews on all MOUs prior to reaching agreement with the union. These memoranda are usually mid-term agreements covering topics that are not addressed in the basic collective bargaining agreement.

How much has this lack of control cost the agency? No one really knows. Here is what has happened since the 2003 IG report identified the problems and the new internal controls were put into place.

  • “39 of the 40 national MOUs contained no budget analysis prior to agreement. Some of these agreements are potentially costly, but without a budget analysis, it is not possible to determine what their cost impacts are on FAA.” No action was taken against any manager for not following the required procedures according to the IG.
  • There is no nationwide tracking of the mid-term bargaining agreements. [N]one of the 40 national MOUs we reviewed had been entered” into the agency’s labor relations database. “As a result, FAA lacks a complete central record of the number and total cost implications of its negotiated agreements with NATCA since the 2012 CBA extension.”
  • While managers are responsible for ensuring that labor agreements meet all legal requirements by coordinating with a Labor Management Relations representative prior to bargaining with the union, “many facility managers reached agreements with NATCA without consulting” within the agency prior to the negotiations.
  • FAA managers generally re-use their local agreements each year with little analysis. FAA’s opportunities to identify potential improvements in staffing efficiency and reduce overtime costs are often ignored.
  • The FAA lacks a standard method for conducting comprehensive cost analysis for negotiated agreements at the local facility level. Generally, managers renew prior agreements and cite no additional costs because the agreement had not changed.

FAA does not have a system for holding managers accountable for adhering to its internal control requirements. The investigation did not find any examples of disciplinary action as a result of ignoring these internal controls, despite numerous violations of the system and that failing to comply with these controls often results in unanticipated additional costs for the Agency.

Examples of increased costs to the agency are included in the IG report. The FAA negotiated an MOU increasing pay at three air traffic control towers located within the New York metropolitan area based on an increase in air traffic at LaGuardia airport. The agreement resulted in $1.3 million in back pay and $16 million more in additional pay over 10 years for controllers at LaGuardia as well as for controllers at John F. Kennedy and Newark air traffic towers. According to the report “LaGuardia was the only control tower of the three that had the increased traffic volume and complexity to justify the pay increase.”

A second example of the financial impact of the lack of control within the agency resulted in an additional seven million dollars of expense at one location. A facility’s air traffic manager at the Washington Air Route Traffic Control Center negotiated an agreement providing 40-hour time off awards to about 440 employees for completing a required airspace redesign. The budget analysis conducted by the facility manager indicated the agreement would be cost effective. During the period covered by this agreement, the FAA incurred almost $2 million in additional salaries and benefits and over $5 million dollars in extra overtime—even though the time controllers spent controlling traffic and performing other duties did not change significantly.

The recommendations of the new IG report? The agency has again been advised to implement internal controls, enforce its existing procedures, and provide more training for managers that interact with the union. The agency concurred with the findings of the IG.

As similar recommendations over the past decade were ineffective, and no disciplinary actions were found by the IG during this time for agency managers ignoring previous requirements that were implemented to attempt to exert some control into the labor relations process at the FAA, it is not clear why the structure or results within the agency will actually change in the future any more than they have in the past decade. That issue is not addressed in the report or the agency’s response.

FAA-NATCA Agreement Audit

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47