Politicians and newspapers talking about upcoming scheduled cuts in government spending are concentrating on the dire consequences from any cuts to the Federal Aviation Administration (FAA). The implication is that this is an agency with no fat and any cuts will go straight to the bone. (They probably felt that way in Spain when they couldn’t pay air traffic controllers $1.2 million per year anymore; in 2011 they started a process of competitive bidding for control tower operation and the results have been a roughly 50 percent cost saving (source).)
This gives me a chance to recycle my June 2011 posting about how three FAA employees came out to my house on two separate occasions and from as far away as Florida in order to make sure that I was surprising myself with random drug tests… of myself. Also to point out the 2004 Government Accounting Office report that says “Historically, the modernization program has experienced cost overruns, schedule delays, and performance shortfalls of large proportions and has been on our list of high-risk programs since 1995. To date, FAA has spent $41 billion and expects to spend an additional $7.6 billion through fiscal year 2007.” Have things improved since then? This fiscal year 2013 report says “Increasing airspace capacity and reducing flight delays depend on the successful implementation of the En Route Automation Modernization program (ERAM)—a $2.1 billion system to replace hardware and software at FAA’s facilities that manage high-altitude traffic. FAA originally planned to complete ERAM by the end of 2010. However, software problems have impacted the system’s ability to safely manage and separate aircraft and raised questions as to what capabilities ERAM will ultimately deliver. FAA rebaselined the program in 2011, which pushed its expected completion to 2014 and increased cost estimates by $330 million.” Four years and $330 million over budget… but actually “If software problems persist, the program’s cost growth could exceed $500 million, and delays could stretch out to 2016.”
It seems safe to assume that the FAA is representative of other federal agencies, neither dramatically worse or better in terms of efficiency.
If the unprecedented did occur and federal spending were to be cut it would be interesting to see what these agencies would do. Companies get more efficient when revenue falls but they have to worry about competitors. A government agency with no competition could simply cut back on services delivered. On the other hand, the agency could do that even without a budget cut if they were truly indifferent to output and productivity. Perhaps it is fear of being privatized or having responsibilities assumed by another agency that drives government agencies to try to deliver services. If so, in the event of a cut they should be motivated to do as much as possible with the available funds.