Washington Report: Costs, delays still plague FAA projects

 - August 5, 2008, 8:34 AM

Even though Congress exempted the FAA from standard procurement rules in 1996, the agency remains mired in cost overruns and schedule slippages on many of its major acquisitions, including the wide-area augmentation system (WAAS), standard terminal automation replacement system (Stars), local-area augmentation system (LAAS) and integrated terminal weather system (ITWS).

“Problems with acquisition efforts have serious consequences 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,” said the Transportation Department’s inspector general in a report that covers 20 major programs that have a current combined estimated cost of about $14.1 billion.

In the seven years since the procurement reform, the DOT IG found that the FAA has made progress in reducing the time it takes to award contracts and made progress in some acquisitions, such as those for Free Flight Phase 1. But the agency has failed to hold managers accountable, or use the flexibilities and benefits written into the acquisition reform law to control its costs and schedule slips.

“We found that cost growth, schedule delays and performance problems continue with the FAA’s major acquisitions,” the report said. “Overall, the 20 projects we reviewed have experienced cost growth of about $4.3 billion and schedule slips from one to seven years. Billion-dollar cost growth with acquisitions is not sustainable or affordable in light of declining [aviation] trust fund revenues.”

The audit called on the FAA to update costs, schedules and performance parameters for many of its major acquisitions, including Stars, ITWS, LAAS and WAAS, at a minimum. “This process may require the FAA to establish a new strategy that accelerates some projects and defers others,” the DOT IG said, adding that the FAA should hold staff and contractors accountable for keeping projects within cost and schedule.

The report warned that if the FAA does not exercise more managerial control over its acquisitions, existing projects will be further delayed and new projects may not start as planned. Several billion-dollar projects are just getting started and have potential for cost growth because of their size and complexity.

At an estimated cost of $2.1 billion, the en route automation replacement modernization, which will control high-altitude traffic, is one of the most expensive and software-intensive projects since the largely failed advanced automation system. The next-generation air/ground communications (Nexcom) is a complex effort to replace all of the existing air-to-ground communications in the National Airspace System (NAS) with digital systems. It involves replacing 50,000 radios with new multimode ones and will require airspace users to equip with new radios. The current cost estimate of $986 million reflects only the first stage of a larger program.

The Transportation Department’s inspector general acknowledged that the FAA has made progress with a number of acquisitions, including Free Flight Phase 1, which introduced, among other things, new automated controller tools, and new information exchange systems that link the FAA and airline operations centers. Progress with Free Flight builds on the successful deployment of the display system replacement (DSR), which provided new controller displays at en route centers. However, other modernization programs have experienced cost, schedule and performance problems.

The cost of WAAS ballooned from about $900 million to almost $3 billion, although it includes the cost to acquire geostationary satellites. The ILS-like landing system was commissioned just last month, five years behind schedule and with the full implementation schedule yet to be determined. Stars increased from $940 million to almost $1.7 billion, seven years behind schedule.

Originally, WAAS was to provide a Cat I precision approach down to a 200-foot decision height with a visibility minimum of one-half mile at the majority of the nation’s airports. But the capability now is expected to be 250 feet and three-quarters of a mile visibility. And additional ground reference stations will be needed eventually to cover the entire U.S. and most of Alaska, expected by 2006.

Stars has been operating at the Philadelphia Tracon since November, and controllers laud its reliability and improvements over the old system. But the FAA has scaled back its original plan for 180 installations and only seven are to be deployed this year.

Meanwhile, LAAS, a new precision approach and landing system, was expected to deliver Cat I services next year. According to the IG’s second annual report, it is now clear that this milestone cannot be met because of additional development work, evolving requirements and unresolved issues regarding how the system will be certified as safe for pilots to use.

Cat II/III services (planned for 2005) are now a research and development effort with an uncertain end date. This means that benefits associated with the new precision approach and landing system will be postponed, the IG said. The report
said FAA officials “generally agreed” with the findings.