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The Weekly of Business Aviation

Audit Warns Of 'High Risk' For Overruns In New FAA Programs

By Business Aviation Staff

July 28, 2003

AUDIT WARNS OF 'HIGH RISK' FOR OVERRUNS IN NEW FAA PROGRAMS - Unless FAA
improves its management practices, there will be further delays on
existing programs and major new modernization initiatives, planned to
start soon, could suffer the same fate, according to a new government
audit of FAA's largest acquisition programs.

In a recent report, the Department of Transportation Office of Inspector
General (OIG) outlined cost and timetable overruns in most of FAA's
major acquisition programs. The OIG, which has hammered this theme
before, this time raised red flags about massive programs - such as en
route automation modernization (ERAM) - that have barely begun.

ERAM will be one of the "most expensive, software-intensive acquisitions
FAA has embarked on," OIG said, and its size and complexity make it "a
high-risk effort" that will need close agency scrutiny. The OIG said it
would begin a review of ERAM this year. The latest cost estimate is
$2.15 billion, with deployment in 2009-2010.

The next generation communications (NEXCOM) program is another embryonic
initiative OIG said needs attention. This program will cost $986 million
for the first stage alone and involves replacing all existing
air-to-ground communications with digital systems. NEXCOM has been
controversial with airlines because of the timing of an FAA rulemaking
that will require carriers to install new radios; they also have
"concerns about FAA's preferred technology."

The FAA generally agreed with the OIG's findings, and FAA spokesman Greg
Martin said, "Both the [DOT] secretary and the [FAA] administrator place
a premium on performance, accountability and results, and there are
efforts under way to inject these" into new programs like ERAM and
NEXCOM. "With both programs in their early stages, the opportunity is
there to establish some hard performance criteria and set realistic and
manageable baselines," Martin said.

In an environment of tightening funds, the agency must cope with
programs that have been delayed for several years while it begins these
new, expensive efforts, the OIG said. Continued cost growth could
"impact or crowd out future projects." Of 20 major acquisitions
reviewed, 14 experienced cost growth totaling more than $4.3 billion.

While the first Standard Terminal Automation Replacement System was
deployed at Philadelphia recently, it's still uncertain what will happen
with the second half of the deployment program. "FAA officials must make
a smart business decision on how to complete terminal modernization in
the most cost-effective manner possible," OIG said.

A decision also is expected this summer about the integrated terminal
weather system, the report said, adding, "FAA cannot execute the program
as intended," and unless there is additional funding, it may buy fewer
systems and defer planned improvements. The advanced technologies and
oceanic procedures program also is behind schedule. The OIG said FAA
"must take a number of steps to control costs of acquisitions and get as
much as it can with each acquisition dollar." The agency should update
the cost, schedule and performance baselines for major programs, which
"may require the FAA to establish a new strategy that accelerates some
projects and defers others."

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