FAA IG Report

January 11, 2011

We have discussed continuing problems the Federal Aviation Administration is having implementing a new air traffic control (ATC) system. And we’ve contrasted it with Canada’s privatized ATC system, which is one of the best in the world.

We just came across another example of FAA bungling: problems with air traffic controller training. 

A recent Department of Transportation inspector general’s audit of an FAA contract with Raytheon to train controllers—which could cost nearly $1 billion—found numerous problems: 
In designing and executing the ATCOTS program, FAA did not fully consider program requirements. As a result, FAA now faces significant challenges in achieving the program’s goals. To date, the ATCOTS contract costs and fees have exceeded baseline estimates by 35 percent during the first year of the contract (from $81 million to $109 million) and increased by 20 percent during the second year (from $91 million to $109 million). More importantly, those funds have only been sufficient to support existing training methods and procedures; innovations, such as pilot programs for new capabilities to reduce training time and cost, have not been implemented. 
Of the problems identified by the inspector general, perhaps the most egregious was the FAA’s handling of performance-based financial bonuses paid to Raytheon. The FAA awarded Raytheon bonus money for work actually performed by the FAA
FAA rewarded Raytheon for training tasks that relied on significant FAA efforts to meet the threshold for receiving an award fee. For example, only FAA has the authority to conduct on-the job-training, the quality of which impacts student pass rates. Although in evaluating this measure, FAA acknowledged its own “significant contribution” toward achieving the student pass rates, it awarded Raytheon 90 percent of the award fee pool set aside for meeting this measure… 
In total, FAA awarded Raytheon 91.9 percent of the award fee pool available in the contract for the first year for measures that were not significantly related to improving performance or achieving desired outcomes of the program. 
It’s good that the inspector general’s audit was initiated at the request of a congressman who is on the committee that oversees the FAA. But as a Cato essay on the air traffic control system discusses, the FAA’s record of mismanagement has been long-standing. The problems will likely continue, or even get worse, as long as the agency remains in its current bureaucratic government structure. Therefore, policymakers in a position to do something about the FAA need to start thinking bigger: privatization.



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