ATM Modernization, Commercial

GAO: NextGen Programs $4.2 Billion Over Budget

By Emily Feliz | February 17, 2012
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More than one-third of major air traffic control acquisition programs associated with FAA's Next Generation Air Transportation (NextGen) program have gone $4.2 billion beyond their initial estimates, and half have experienced schedule delays, according to a Government Accountability Office (GAO) report issued this week. These delays and cost overruns could threaten implementation of the airspace modernization program, according to the report.

Of the 30 baselined FAA air traffic control programs GAO reviewed,19 have not increased in cost, but 11 have experienced cost increases ranging from $2 million to more than $2 billion. Those 11 programs account for more than 60 percent of FAA's total acquisition costs ($11 billion of $17.7 billion) for the 30 programs, GAO said. The 3 programs with the largest cost increases — totaling more than $4 billion — are the Standard Terminal Automation Replacement System (STARS), wide area augmentation system (WAAS), and En-Route Automation Modernization (ERAM) programs and required additional congressional appropriations or reductions in program scope. More on ERAM

Additionally, half of the programs have experienced schedule delays, of which 10 also had cost increases. These delayed programs range from the Integrated Display System, which will consolidate information from several weather subsystems into a single display, which FAA expects to be completed 2 months after its initial estimated completion date, to WAAS, which FAA estimates will be completed in 2013 — more than 14 years after its initial estimated completion date. "Recent cost and scheduling problems among some major acquisition programs, such as the En Route Automation Modernization (ERAM), which is integral to ATC modernization, have renewed concerns about the agency’s ability to manage complex multibillion-dollar procurement programs," according to the report. "These challenges, if they persist, will impede the implementation of NextGen, especially in light of the interdependencies among many acquisition programs, where cost increases or delays in one program can affect the costs and schedules of the other programs," GAO said.

In a statement released to Avionics Magazine, FAA said it has "established strict metrics that have helped to deliver all NextGen contracts from 2007–2011 with a 1.6 percent cost variance and only a 6 percent schedule variance. The GAO report includes air traffic programs that are not part of the NextGen portfolio, however, from 2004–2011, the FAA was 0.8 percent under budget across all major system acquisitions. The FAA has adopted a majority of the GAO’s cost estimation best practices, and looks forward to reviewing the GAO’s recently released scheduling best practices.”

The report blames the cost increases and schedule delays on several factors -- additional, unanticipated system requirements work; insufficient stakeholder involvement throughout system development; underestimates of the complexity of software development; and unanticipated events, including funding decreases or work stoppages. According to the report, of the 30 programs reviewed, 15 experienced cost increases, schedule delays, or both, and the agency determined cost increases or schedule delays for 11 were attributable to one or more of these factors.

Based on the findings, GAO is recommending FAA require cost and schedule risk analysis, independent cost estimated and integrated master schedules, to better estimate cost and completion dates for major acquisitions. FAA did not comment on whether or not it agreed with the recommendations, according to GAO.

GAO conducted a more in-depth review of four of the 30 baselined programs -- the Automatic Dependent Surveillance-Broadcast (ADS-B) system, the Collaborative Air Traffic Management Technologies (CATMT) system, the System Wide Information Management (SWIM) system, and WAAS -- in order to "assess the extent to which FAA’s cost estimating and scheduling processes aligned with best practices."

"Our review of the ADS-B, CATMT, SWIM, and WAAS cost estimates showed that while each program followed at least some of the four characteristics of high-quality and reliable cost estimates — well-documented, comprehensive, accurate and credible — none of the programs adhered closely enough to those characteristics to create a reliable cost estimate," according to the report.

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