A Few Years, A Few Billions


Report Blasts FAA On Cost Overruns, Performance Problems…

The FAA is years behind schedule on many of its projects, while costs increase at rates that are not sustainable or affordable, the Transportation Department’s Office of Inspector General concluded in a report issued last week. “Overall, the 20 projects we reviewed have experienced cost growth of about $4.3 billion and schedule slips from one to seven years,” according to the report. “Moreover, FAA is just starting complex, billion-dollar efforts … If FAA does not exercise more management control over its acquisitions, existing projects will be further delayed, and new projects may not start as planned.” For example, NEXCOM, the Next Generation Air/Ground Communications, involves replacing 50,000 air-to-ground radios with new multi-mode digital systems, at a cost of at least $1 billion just to get started. Costs for total implementation of NEXCOM are undetermined. Likewise, the En Route Automation Replacement Modernization (ERAM) will cost an estimated $2.1 billion, starting in 2005, to provide software and hardware for facilities that control high-altitude air traffic.

…For STARS, WAAS, Datalink, And More…

Among the projects critiqued in the report are satellite navigation systems, weather systems for controllers, and new technologies to prevent accidents on runways and taxiways. For example, STARS, the Standard Terminal Automation Replacement System, is seven years behind schedule, and its estimated cost has ballooned by 80 percent, from $940 million to $1.7 billion. The estimated cost for implementing WAAS, the GPS-based Wide Area Augmentation System, has gone up a whopping 227 percent, from under a billion to almost $3 billion, and it’s five years behind schedule. “Problems with acquisition efforts have serious consequences,” the OIG reported, “because they result in costly interim systems, a reduction in units procured, postponed benefits (in terms of safety and efficiency), or ‘crowding out’ other modernization projects.” Progress has been made with some efforts, such as Free Flight Phase 1, and the agency has made progress in reducing the time it takes to award contracts, the report acknowledged.

…And OIG Suggests Fixes

The report found that since most of the projects reviewed do not have reliable cost, schedule, or performance baselines, the “FAA cannot effectively plan, manage programs, or meet expectations for improving the safety, security, and capacity of the National Airspace System.” The agency must take steps to control costs, maximize the impact of each dollar spent, and develop methods to hold managers and contractors accountable for meeting performance goals, the report said. The OIG performed its review from December 2002 through May 2003. The report also recommended that the FAA update the cost, schedule, and performance baselines for many of its major acquisitions, including STARS, ITWS, LAAS, and WAAS at a minimum. “These baselines are misleading because they do not accurately reflect the true cost, schedule, or performance parameters for the projects,” the report said. This process may require the FAA to establish a new strategy that accelerates some projects and defers others. The OIG met with FAA officials while preparing the report, and said the officials generally agreed with the analysis and recommendations. The FAA has been asked by OIG to provide written comments to the final report.