FAA’S AIR TRAFFIC CONTROLLER OPTIMUM 

TRAINING SOLUTION PROGRAM: 

SOUND CONTRACT MANAGEMENT PRACTICES ARE 

NEEDED TO ACHIEVE PROGRAM OUTCOMES

Federal Aviation Administration

Report Number: AV-2010-126

Date Issued: September 30, 2010
U.S. Department of

Memorandum

Transportation

Office of the Secretary

of Transportation

Office of Inspector General

Subject: ACTION: FAA’s Air Traffic Controller Optimum 

Training Solution Program: Sound Contract 

Management Practices Are Needed To Achieve 

Program Outcomes

Federal Aviation Administration

Report Number AV-2010-126

Date: September 30, 2010

From: Jeffrey B. Guzzetti

Assistant Inspector General 

 for Aviation and Special Program Audits

Reply to 

Attn. of: JA-10

To: Federal Aviation Administrator

The Federal Aviation Administration (FAA) plans to hire and train nearly 

15,000 new air traffic controllers through fiscal year (FY) 2018 to replace the 

large pool of air traffic controllers who were hired after the 1981 strike and are 

now retiring. In September 2008, FAA awarded a contract to the Raytheon 

Technical Services Corporation (Raytheon) to provide training support for new 

and existing controllers and to assist FAA in modernizing its controller training 

program. The contract for the Air Traffic Controller Optimum Training Solution

(ATCOTS) is for a period of up to 10 years (with a 5-year base period and 

5 option years) at a total potential cost of $859 million. 

Under terms of the contract, Raytheon provides classroom, laboratory, and 

simulator instruction; training support; course and curriculum development; and 

administrative and program support services at the FAA Academy and air traffic 

facilities nationwide. Key ATCOTS goals for controller training include reducing 

total cost and time, improving quality and consistency, and developing flexible 

training systems that can be adapted to new technologies—particularly those 

related to the Next Generation Air Transportation System (NextGen). 

In January 2009, Representative Jerry F. Costello, Chairman of the House 

Subcommittee on Aviation, requested that we review the ATCOTS program. 

Chairman Costello stated that while ATCOTS could bring positive changes to 

FAA’s training program, given its importance, a better understanding of the 

financial and contractual aspects is needed. Accordingly, our audit objectives 
2

were to determine (1) whether effective management and contract controls are in 

place to ensure program goals are achieved and (2) if the program has improved

training methods currently provided to the controller workforce. 

We conducted this review between April 2009 and August 2010 in accordance 

with government auditing standards prescribed by the Comptroller General of the 

United States. Exhibit A details our scope and methodology. Exhibit B lists the 

air traffic facilities we visited or contacted.

RESULTS IN BRIEF

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)1

• During its acquisition planning, FAA did not fully address issues that could

impact the contract outcomes. For example, FAA awarded the contract 

without mitigating staffing and cost risks identified during the source selection 

review. Specifically, Raytheon’s proposal called for reducing instructor 

staffing levels by 30 percent during the first 3 years of the contract. FAA’s 

management evaluation team identified this reduction as a high risk, indicating 

that there was a 60- to 80-percent likelihood that training needs would not be 

achieved due to the limited staffing hours proposed. However, FAA did not 

require Raytheon to update its staffing proposal. 

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. This occurred for a number of reasons: 

• FAA awarded the contract without adequately defining its training 

requirements. The contract solicitation stated that bidders were expected to 

train approximately 4,000 developmental controllers annually and allowed for 

cost adjustments only if that number deviated by more than 10 percent. 

However, FAA underestimated its initial training requirements, including the 

number and types of controllers that Raytheon and other bidders of the contract 

were expected to train. During the first year of the contract alone, Raytheon 

estimated that about 5,620 controllers needed training—41 percent more than 

FAA originally estimated. 

 1 According to FAA’s computations, about $7 million of increased costs (excluding fees) for Year 1 occurred because 

the actual labor rates paid by Raytheon were greater than those included in Raytheon’s bid support. 
3

• FAA did not initially implement adequate controls to oversee contractor 

services or to ensure that fees paid for performance were justified. While the 

ATCOTS contract contains an award fee and incentive fee designed to 

motivate contractor performance, FAA did not ensure these remained effective 

mechanisms to control costs as the contract evolved. For example, although 

FAA significantly increased the number of training hours the contractor was 

expected to provide, FAA did not revise the cost target to reflect this change. 

Since FAA never reestablished a realistic cost target based on changes in 

requirements for the first year until near the end of that year, the incentive fee 

was an ineffective mechanism for controlling costs. Further, FAA did not 

include performance measures for earning award fees that were related to the 

goals of the ATCOTS program, such as reducing the total cost of training. 

FAA also initially allowed the contractor to select the performance measures 

and data by which it would be evaluated for earning award fees and did not 

verify whether the measures would help meet the expected outcomes of the 

program.

FAA is taking actions to address many of the issues identified during our audit. 

For example, FAA has added additional program staff to oversee the contract and 

a new planning tool for evaluating the level of instructor staffing at air traffic 

facilities. FAA is also establishing training priorities to ensure that costs remain

within the base estimates. However, unless there is a significant decrease in its 

current training requirements, it will be difficult for FAA to achieve the original 

ATCOTS program goals or any training innovations without significantly 

modifying the existing contract. We are making a series of recommendations for 

improving oversight of the ATCOTS contract. 

BACKGROUND

In February 2008, FAA began soliciting offers for the ATCOTS contract to 

replace two separate contracts supporting the controller training program. On 

September 9, 2008, FAA awarded the contract to Raytheon. The performancebased contract consists of a 5-year base period, worth $437 million, and two

option periods (a 3-year period and a 2-year period), worth $422 million. The 

contract includes an award fee for Raytheon meeting acceptable levels of 

performance related to training outcomes and quality metrics and an incentive fee 

related to the cost of the services provided. The ATCOTS contract also allows 

Raytheon to suggest improvements to modernize the controller training program in 

areas such as hardware and software modifications, curriculum development and 

delivery, web-based training, and technology enhancements. In addition, the 

contract includes an option to institute a pilot program that allows these proposed 

changes to be tested and validated before being implemented on a larger scale. 

While Raytheon is involved with nearly every aspect of controller training, FAA 
4

retains control for the overall training program as well as for recruiting and hiring 

controller candidates, conducting performance verification at the FAA Academy, 

and conducting on-the-job training2

FAA DID NOT FULLY CONSIDER PROGRAM RISKS AND 

REQUIREMENTS DURING ACQUISITION PLANNING

at air traffic facilities. 

Understanding requirements and mitigating risks are fundamentals of acquisition 

planning so that Government agencies can effectively measure a contractor’s 

performance, ensure that future adjustments to programs are warranted, and limit 

cost increases. However, FAA did not take fundamental steps needed to 

accomplish this in planning and executing the ATCOTS acquisition, including 

mitigating risks that were evident during the source selection process and 

adequately defining the number of controllers who needed training. Those issues 

led to unforeseen changes in the contract’s costs and services. 

FAA Did Not Address Risks Its Source Selection Team Identified Prior 

to Contract Award

While FAA followed its Acquisition Management System (AMS) guidance to 

identify potential cost and staffing risks prior to contract award, it did not follow 

through—as also specified by AMS—to reduce those risks to an acceptable level. 

The risks that FAA’s source selection team noted in the Raytheon proposal 

included the following: 

• Instructor Staffing Levels: Raytheon’s proposal called for reducing instructor 

staffing levels by 30 percent during the first 3 years of the contract. FAA’s 

Technical Management Evaluation Team identified this reduction as a high 

risk, indicating that there was a 60- to 80-percent likelihood that training needs 

would not be achieved due to the limited staffing hours proposed. However, 

FAA never required Raytheon to update its staffing proposal. The ATCOTS 

Source Selection Board eventually lowered the risk, in part, because it could 

not definitively conclude that training needs would go unmet due to 

Raytheon’s reduced staffing hours. The Board determined that specific 

Raytheon weaknesses, such as those identified within the transition plan and its 

spoke and hub services delivery structure, could be overcome. Further, the 

Board concluded that Raytheon’s inability to demonstrate knowledge of how 

En Route Automation Modernization (ERAM) could impact training would 

also be overcome when FAA issued training requirements via a detailed Work 

Plan at contract award.3

 2 On-the-job training requires a Certified Professional Controller (or CPC) to observe and instruct trainee controllers 

individually as they work a control position at their assigned facility.

 Despite the risk initially associated with the proposed 

3 For year 1, Raytheon incurred 77,736 more hours than included in its bid estimate due to underestimated ERAM 

training requirements.
5

labor hours, FAA concluded that Raytheon’s technical and management 

approach was ultimately the same as its closest competitor and decided to use 

lowest costs as the final determinate for awarding the contract.

• Costs: Raytheon’s cost proposal was nearly $358 million, or 29 percent lower 

than FAA’s own independent Government cost estimate (IGCE).

4

FAA DID NOT ADEQUATELY DEFINE ITS TRAINING 

REQUIREMENTS

 According 

to FAA guidance, a deviation of more than 15 percent from the Government’s

estimate requires FAA to address any estimated cost discrepancies. For 

example, an acceptable remedial action would have been to make Raytheon 

aware of any potential errors and ask for a revised proposal. However, FAA 

never took actions to remedy the discrepancy and awarded Raytheon the 

contract based on a proposal for fewer hours. Additionally, after the contract

was awarded, the Office of Financial Controls—an independent review team 

reporting to FAA’s Chief Financial Officer—recommended that the ATCOTS 

program office address the 29-percent cost difference between the cost 

proposal and IGCE. At the time of our review, however, the program office 

had not responded to the review team’s recommendations. 

Problems with the execution of the ATCOTS contract were further compounded 

by poorly defined requirements. FAA’s contract solicitation stated that bidders 

were expected to train approximately 4,000 total developmental controllers 

annually. It also allowed for cost adjustments only if the total number of 

developmental controllers in training per year deviated by more than 10 percent. 

However, FAA underestimated its initial training requirements, including the 

number and types of controllers that Raytheon and other bidders of the contract 

were expected to train. This included training for certified controllers transferring 

to different facilities that were not included in FAA’s original baseline training 

estimate. These controllers, known as certified professional controllers in training 

(CPC-ITs), must train and certify at their new facilities before they are allowed to 

control air traffic at that location. During the first year of the contract, Raytheon 

estimated there were a total of 5,620 controllers who needed training, or 

41 percent more than FAA originally estimated.5

FAA also did not have a sufficient method for updating its training requirements 

on an ongoing basis. The contract requires FAA to specify the training and 

administrative services it needs the contractor to provide through an Annual Work 

 

 4 The Government uses independent cost estimates to determine if contractors’ bids are reasonable. 5 FAA disagrees with Raytheon’s estimate, claiming there were only 4,375 total controllers in training during the first 

year of the contract. However, FAA’s figure only includes those controllers in training as of the end of August 

2009; it does not include those controllers who either completed or discontinued training prior to that date.
6

Plan (AWP), which is updated monthly by the FAA Academy and individual air 

traffic facilities. However, the ATCOTS program office did not provide clear 

guidance to air traffic facilities regarding how to submit the data or what types of 

training and administrative services should be requested. This led to wide 

variances in facility requests, including some facilities not requesting contract 

support even though they needed it.

The lack of clear requirements resulted in some facilities not receiving adequate—

or, in some cases, any—support from the contractor. These included facilities 

with longstanding training support issues and those in need of training on new 

technologies, such as the following:

•New York Center: Facility managers stated that there were not enough 

contract instructors to meet the training needs of the facility, requiring them to 

pull 10 controllers from managing traffic to help conduct training, which 

resulted in increased overtime at the facility. 

•New York Terminal Radar Approach Control (TRACON): Facility 

officials stated that the TRACON did not have enough contract support to train 

the developmental controllers assigned to the facility and did not anticipate 

receiving additional support. Unlike the New York Center, however, they 

stated that due to staffing issues, they could not pull controllers from managing 

traffic to help with training. This delayed training for developmental 

controllers in the facility’s lab by 5 weeks.

•Denver Tower: The facility was scheduled to receive a new training simulator 

last summer, requiring contract support to operate the simulator and build 

training scenarios for new controllers to practice. However, FAA and 

Raytheon officials at the facility stated that there were not enough contract 

instructors to meet current training demands and that, due to an instructor

hiring freeze instituted by Raytheon, they were not scheduled to receive 

additional support to operate the simulator.

In addition, Raytheon organizes its personnel at terminal facilities under a “hub 

and spoke” system to take advantage of the geographical proximity of facilities, 

allowing Raytheon personnel to provide services at multiple locations. For 

example, contractor personnel at the Cleveland, Ohio, Tower hub can provide 

training and support services to smaller facilities in Akron, Columbus, Mansfield, 

Toledo, and Youngstown. However, some terminal facilities under Raytheon’s 

hub and spoke system were not receiving any training or administrative support. 

These facilities included the following:
7

• John F. Kennedy (JFK) Tower: Under Raytheon’s staffing model, the JFK 

Tower was supposed to receive contract support from personnel located at the 

New York TRACON. However, because the TRACON did not have enough 

contract support to meet its own training needs, the Tower was left with no 

training support, even though 50 percent of its workforce was developmental 

controllers.

•Las Vegas Tower: The Las Vegas Tower was not receiving support despite the 

fact that it is in the same building as the Las Vegas TRACON, which was 

receiving support. While the Tower’s management officials had not requested 

Raytheon’s services, their understanding was that the Tower was not under the 

ATCOTS contract, so it could not receive service.

•Akron/Canton Tower: At the time of our review, half of the 26 controllers 

employed at the Tower were new controllers in training. Despite this, the 

facility did not receive any Raytheon support from the Cleveland Tower and 

planned to use two of its own controllers to conduct classroom training.

FAA’s Underestimated Requirements Resulted in Increased Contract 

Costs and Reduced Services

Because FAA underestimated its training requirements, Raytheon requested an 

equitable adjustment to the contract and implemented a hiring freeze for additional 

instructors and other personnel at FAA facilities. FAA eventually agreed to the 

equitable adjustment, increasing the first year cost and fees of the contract by 

35 percent—from $81 million to $109 million. The second year amount also 

increased from $91 million to $109 million, an increase of 20 percent. To partially 

offset these cost increases and in anticipation of fewer controller retirements, FAA 

and Raytheon agreed to further service reductions. FAA stated that it also made 

this decision because there were 28 percent fewer retirements from the controller 

workforce in FY 2009 than the Agency had projected (520 actual retirements 

versus 726 projected retirements). Therefore, FAA will reduce the number of new 

controllers it will hire for FY 2010, from 1,702 to 1,027 (a drop of nearly 

40 percent), and will also reduce the number of introductory training classes at the 

Academy. 

As a result of this reduction in new controller hiring, coupled with a limit on the 

program’s funding, in January FAA and Raytheon reduced the contractor’s fulltime equivalent (FTE) employees at the FAA Academy and air traffic facilities by 

nearly 350. Most of the reduction took place at individual facilities, where 

251 FTEs were reduced, with the majority of the cuts occurring at en route centers. 

As shown in table 1, some facilities lost more than half of their Raytheon support.
8

Table 1. Examples of Raytheon Service Reductions at Select Air Traffic Facilities

Facility Previous Contractor 

Staffing Level (FTEs)

New Contractor 

Staffing Level % Adjustment

Minneapolis Center 22.7 6.0 -73.6%

Seattle Center 27.4 11.0 -59.9%

Fort Worth Center 26.9 11.0 -59.1%

Chicago Center 26.7 17.0 -36.3%

Source: FAA/Raytheon

Along with these reductions, FAA and Raytheon also redistributed training 

support and added staff to 39 facilities, including the JFK, Denver, and Las Vegas 

Towers. FAA is attempting to resolve future requirements issues by negotiating 

with Raytheon on ways to better determine its training needs and establishing 

training priorities to ensure that costs remain within the base estimates. FAA is 

also refining how its requirements will be communicated from the field to the 

contractor by providing additional guidance to facilities and implementing new 

oversight measures over the AWP. Finally, FAA implemented a planning tool that

allows the Agency to evaluate instructor staffing at its air traffic facilities and 

make appropriate adjustments.

FAA’S OVERSIGHT CONTROLS AND CONTRACTOR 

PERFORMANCE MEASURES DID NOT ACCOUNT FOR 

SERVICES PROVIDED OR REFLECT PROGRAM GOALS

Effective management oversight ensures that the contractor provides quality 

services and that the program meets financial and outcome goals. However, FAA 

did not implement effective controls to oversee the contract or establish 

performance measures focused on program goals with justified award fees. 

FAA Did Not Initially Have Effective Oversight of Services Provided

FAA did not initially have effective controls in place to monitor the quality of 

services provided by the contractor or to make modifications as needed. The 

contract requires FAA to conduct semi-annual evaluations of the quality of 

Raytheon personnel at the FAA Academy as well as individual air traffic facilities. 

While evaluations were being performed at the FAA Academy, most air traffic 

control facilities were not notified of this requirement until midway through the 

first year of the program. In addition, most of the facilities that then completed the 

evaluations did not send the results to the program office for review. This 

prevented the program office from identifying training and administrative 

problems and taking appropriate corrective actions. 
9

FAA also did not have controls in place to ensure it received services as billed by 

Raytheon, such as requiring documentation for costs claimed. During the first 

year of the contract, the ATCOTS program office authorized payment for 

11 contractor invoices, totaling $45 million, without the FAA Academy verifying 

whether the services billed were actually provided. While the FAA Academy was 

subsequently provided with staff to review invoices, Academy officials stated that 

they could only verify work performed by Raytheon in the classroom or 

simulators. They could not verify billed hours that occurred either before or after 

this formal instruction took place because much of the contractor’s class 

preparation was done outside the facility. As a result, Academy officials could 

only estimate whether the hours billed were reasonable. In addition, some air

traffic facility officials stated that they were not reviewing contractor invoices at 

all and had not been instructed by the program office to verify whether the 

services for hours billed by Raytheon were actually provided.

Finally, FAA did not ensure there was enough qualified acquisition personnel to 

administer the contract. For example, the ATCOTS program office has seen 

significant turnover in its staff but did not fill key positions to oversee the 

contractor. Since April 2009, the program office has had three program directors. 

FAA is aware of the need for additional resources in the program office to 

effectively oversee the contract and is adding a program lead, a permanent 

contractor officer technical representative, and a quality assurance specialist. 

FAA Used Ineffective Incentive and Award Fees

Motivating contractor excellence for performance-based acquisitions includes 

using monetary awards, such as incentive fees, to control costs. However, FAA 

did not adhere to its own contracting criteria or follow guidance from the Office of 

Management and Budget (OMB) when designing its incentive and award fees. 

These criteria emphasize that incentives should reward contractors for excellent 

performance in reaching key program goals and that this performance should be 

measured in terms of quality and timeliness in addition to controlling costs.6

In awarding the ATCOTS contract, FAA used an incentive fee to reward the 

contractor for keeping costs near or below the Government’s established cost 

target for the first year of the contract. However, because FAA added a significant 

number of additional training hours after contract award, first-year costs far 

 

 6 According to FAA’s AMS, award fees should be designed to motivate the contractor by offering additional profit for 

excellent performance in key areas that support the Government’s desired acquisition outcomes. OMB guidance 

also requires that agencies consider an incentive for performance-based acquisitions that is most likely to motivate 

efficient and economical performance and that this incentive fee should be used when a cost target can be predetermined and a formula can be used to adjust the negotiated fee over an established cost range. OMB guidance 

also stipulates that an award fee with performance measures designed to encourage economical performance should 

be considered when it is not feasible to determine objective cost targets to motivate the contractor through incentive 

fees.
10

exceeded the fixed target for earning incentive fees. Since FAA did not

reestablish a realistic cost target based on the changes in requirements until near 

the end of the first year, the incentive fee was an ineffective mechanism for 

controlling costs. FAA awarded the contractor a portion of the incentive fees 

(1.5 percent) based on the actual requirements and associated costs incurred, for 

the first year of the contract even though the cost of the contract increased by 

44 percent over original target cost. 

In addition to using an incentive fee, FAA used award fees to motivate contractor 

performance. However, during the first year of the contract, FAA allowed the 

contractor to both establish the standards of performance required to earn the 

award fee and select the data by which the contractor would be evaluated.7

 FAA’s 

program officials were unfamiliar with implementing a performance-based 

contract and stated that while the contractor should have significant leeway when 

implementing its methodology, they intended to revise the performance measures 

for future performance evaluation periods. However, allowing the contractor to 

simply use its own measures conflicts with FAA contracting guidance stating that 

the Government should evaluate the performance measures before awarding the 

contract to ensure they are measurable and likely to improve the outcomes of the 

program.

8

As a result, 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. 

This conflicts with AMS guidance, which states that the contractor should not be 

rewarded for work performed by the Government. 

 

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. For 

example, a key goal of the ATCOTS program is to provide training to all air traffic 

controllers regardless of their location. Yet, the performance measure for staffing, 

which was established by Raytheon, only requires the contractor to staff 

95 percent of training facilities adequately. 

Prior to contract award, FAA’s internal review team warned that this 95 percent 

target would not ensure that hard-to-staff facilities received adequate training 

 7 The first evaluation period for computing award fees was 12 months (Contract Year 1). Subsequent evaluation 

periods are 6 months each. 8 FAA’s AMS Procurement Guidance on Incentive Contracts.
11

support. However, FAA never changed this measure. As a result, several hightraffic facilities essential to the National Airspace System—such as New York 

Center and Denver TRACON—experienced significant instructor staffing 

shortages that compromised the training programs at each location. Despite these 

staffing shortages, Raytheon was able to demonstrate that it met the 95-percent 

standard, and FAA awarded 90 percent of the award fee associated with this 

measure. Table 2 shows our analysis of award fees paid for problematic 

performance measures during the first year of the contract. 

Table 2. OIG Analysis of Award Fees Paid for Year 1 Measures

Problems with Period 1 Performance Metrics

Performance 

Measure 

(Weight)

Inadequate link to 

program goals

Fails to motivate 

excellent performance 

Inaccurate 

or 

incomplete 

data sources

Raytheon 

rewarded 

for FAA’s 

efforts

% of 

Available 

Award Fee 

Paid9

INSTRUCTOR 

STAFFING 

EFFICIENCY 

(35%)

• • • 90.0%

INSTRUCTOR 

EVALUATION 

SCORES 

(15%)

• • • 96.0%

STUDENT 

ASSESSMENT 

SCORES 

(10%)

• • 100.0%

STUDENT 

PASS RATES 

(15%)

• • • 90.0%

TIME TO 

TRAIN (25%) • • • • 90.0%

Source: OIG analysis of ATCOTS contract TOTAL 91.9%

After negotiating with Raytheon, FAA revised the performance measures for the 

second evaluation period. However, the new measures still did not ensure that 

contractor performance was linked to the program outcomes, and some were so 

easy to achieve that they normally would not warrant a financial reward. For 

example, one revised performance measure allowed Raytheon to earn a financial 

award if as few as half of all developmental controllers at terminal facilities 

completed training on time. However, according to an FAA program manager, the 

percentage of terminal developmental controllers who complete training on time 

was historically higher than 50 percent. As a result, this measure requires 

 9 The ATCOTS Performance Evaluation Plan contains a provision that allows FAA to reassign up to 35 percent of the 

award fee pool per period for unilaterally directed tasks. FAA has not implemented the clause for any of the 

completed performance periods.
12

Raytheon to achieve a passing rate that is actually lower than the historical 

average and is not an incentive for accomplishing exceptional performance. 

In total, half of the revised performance measures awarded Raytheon fees for 

mirroring the previous contractor’s performance levels rather than encouraging it

to improve upon historical performance. As a result, FAA may potentially award 

Raytheon 45 percent of the total award fee for meeting past performance levels, 

leaving little in the award-fee pool to encourage the contractor to exceed 

expectations.10

FAA recently finalized the performance measures for the third performance 

evaluation period, even though this finalization occurred more than halfway 

through that period. The ATCOTS performance evaluation plan requires that any 

changes to the performance measures be established at least 45 days before the 

start of an evaluation period. FAA claims that the performance measures for the 

third period show vast improvement over the prior two periods. However, except 

for two measures to improve cost efficiency, the proposed measures still do not 

adequately link to the desired outcomes of the program or motivate excellent 

contractor performance. For example, six of eight revised performance measures 

would award Raytheon for meeting basic contract requirements, such as 

management reports and other tasks, rather than assess whether the contractor 

measurably improves the quality and timeliness of the training. The performance 

measures include tasks such as: 

 

• establishing a monthly Joint Risk Board tasked with monitoring and tracking 

program risks;

• delivering a new report on instructor time use for 16 separate instructor tasks—

successful delivery results in “exceeds” for this measure; and 

• incorporating FAA-supplied population data by site, defining algorithms into a 

model, and running the model to quantify student training volume.

All of the eight measures for the third period require additional work and must be 

funded directly through the contract rather than with the award fee, which is 

intended to motivate contractor performance. 

Additionally, four performance measures use “input factors,” a type of evaluation 

criteria that FAA award fee guidance warns is less desirable than other types of 

performance measures.11

 10 FAA has not yet provided us with the actual incentive and award fees provided to Raytheon for Award Fee Period 2.

 Input factors require the contractor to complete 

11 FAA’s Award-Fee Contracting Guidance, dated September 28, 2007, states that input factors are not always true 

indicators of the contractor’s ultimate performance and so should be relied on with caution.
13

intermediate processes or procedures, which are not always true indicators of the 

contractor’s performance in relation to the program goals. For example, one 

performance measure assesses whether the contractor can submit a quality 

management program and quality manual; this measure evaluates intermediate 

processes rather than the quality of the program itself. FAA’s latest set of 

performance measures is not measureable or sufficiently designed to appropriately 

incentivize the contractor to improve the outcomes of the training program.

We estimate that $22.6 million of funds could be put to better use by improving 

the award fee and incentive fee structures.12

Innovations to Controller Training Methods Have Not Been Realized

 This includes $11.9 million in award 

fees put to better use if FAA develops performance measures that relate to the 

desired outcomes of the program, such as improving training quality and reducing 

costs; motivates improved contractor performance; and establishes realistic 

performance targets. In addition, $10.7 million in incentive fees can be put to 

better use if the Agency incorporates realistic and objective cost targets that will 

motivate the contractor to control costs. 

A key goal of the ATCOTS program is to develop new training technologies and 

procedures to meet the changing environment in which controllers operate. 

However, the $859 million baseline cost of the contract does not include funding 

to make large-scale, technological improvements to the training program or to 

train controllers on future NextGen technologies, such as Required Navigational 

Performance (RNP/RNAV).13

Under terms of the contract, Raytheon is only required to mirror the services that 

were provided by previous contractors. The consolidation of two existing 

contracts into a single training contract was intended to enable the contractor to 

better integrate training activities and suggest ways to improve the training 

process. However, any change to the training program, such as developing a new 

training curriculum, requires FAA approval before implementation. Because of 

this clause, Raytheon has not expanded its training and administrative services 

beyond those offered by previous contractors. While Raytheon submitted five 

proposals for redesigning parts of the training program, FAA did not approve any 

of them due to the increasing costs of the contract and eliminated the planned pilot 

 

 12 Detailed computations of the savings estimates are available upon request and are excluded from this report for 

proprietary reasons. The $22.6 million estimate represents incentive and award fees (funds) that would be more 

effectively used by designing realistic cost targets based on actual requirements and by designing performance 

measures that are linked to the overall programmatic goals of the ATCOTS program. The incentive fee would 

encourage excellence in contractor performance by rewarding Raytheon for keeping costs near or below the target

and meeting the ATCOTS strategic goal of reducing training costs. The award fee structures, based on measurable 

criteria for improving effectiveness and efficiency, would better achieve FAA’s program goals for modernizing the 

training program. 13 RNAV and RNP provide a basis for designing and implementing flight paths that can enhance airspace capacity. 
14

program for introducing new training techniques and technologies because it 

would have required costs outside of the current contract. FAA and Raytheon are 

discussing large-scale changes to the controller training program, such as 

redesigning the tower training curriculum. If changes are made, however, it would 

require expanding the current contract and would likely result in cost increases.

Unless there is a significant decrease in its current training requirements, it will be 

difficult for FAA to achieve the original ATCOTS program goals or any training 

innovations without significantly modifying the existing contract. As a result, 

before the end of the contract base period in 2013, FAA will need to (1) determine 

if the existing contract mechanism can be effectively modified to achieve 

ATCOTS program goals within the current estimate of $859 million or (2) update 

cost estimates and requirements of its training needs and develop criteria for 

determining whether the Agency should exercise options in the contract. These 

actions will put $422 million in option year funds to better use. 

CONCLUSION

FAA faces significant challenges in executing its plans to hire and train 

15,000 new controllers by 2018. ATCOTS is a critical component of this effort. 

Unless FAA exercises sound contract management practices and holds contractors 

accountable for achieving program outcomes, FAA runs the risk of failing in its 

efforts to maintain a sufficient cadre of well-trained, qualified controllers to safely 

and efficiently meet the growing demands of the National Airspace System. 

RECOMMENDATIONS

We recommend that FAA:

1) Determine (a) if the existing contract mechanism can be effectively modified 

to achieve ATCOTS program goals within the current estimate of $859 million

or (b) update cost estimates and requirements for its training needs and develop 

criteria for determining whether the Agency should exercise options in the 

contract. 

To adequately identify its ongoing training requirements and to provide sufficient 

oversight during the remaining base period, we recommend that FAA:

2) Evaluate Raytheon’s staffing methodology to determine if facilities are 

receiving sufficient training and administrative support and develop an action 

plan for addressing those locations that need additional support. 

3) Implement procedures to ensure that the Academy and facilities are properly 

entering training requirements into the Annual Work Plan.
15

4) Develop performance measures for award fees that directly link Raytheon’s 

performance to improvements in the controller training program and goals of 

the ATCOTS program.

5) Develop improved and reliable performance baselines and benchmarks in 

formulas for computing award fees to better compare and measure the 

contractor’s performance.

6) Implement internal procedures to require independent verifications of whether 

the contractor is achieving its performance measures.

7) Modify the contract to include incentive fees with predetermined cost targets 

based on accurately defined requirements; if this is not feasible, then include a 

performance measure(s) that provides an award fee for economical contract 

performance.

8) Ensure that the ATCOTS program office has enough qualified personnel to 

oversee the contractual, financial, and operational aspects of the program.

9) Develop a short- and medium-term “roadmap” detailing potential changes to 

its controller training program and the impact those changes will have on the 

ATCOTS contract. The roadmap should include the impact that NextGen and 

other modernization programs will have on training new and existing 

controllers.

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE

We provided FAA with our draft report on August 24, 2010, for comment and 

received FAA’s response on September 17, 2010. In its response, FAA noted that 

it faced considerable challenges in implementing ATCOTS, including 

transitioning from a time-and-materials contract to a performance-based contract 

and underestimating the full scope of its training requirements. FAA also stated 

that it has put new processes and tools in place to improve the ATCOTS program 

and its controller training program. These include developing a resource 

surveillance tool and training priority index for each air traffic facility, revamping 

its formal processes for updating its Annual Work Plan requirements for controller 

training, and issuing task orders to transform the controller training program. 

These actions represent positive steps towards meeting ATCOTS goals; however, 

we agree with FAA’s assessment that it is not clear whether these initiatives will 

enable the Agency to meet its training needs within the existing cost of the current 

contract.
16

In addressing our recommendations, FAA fully concurred with all but one. FAA 

partially concurred with recommendation 7, stating that it was not feasible to 

establish predetermined cost targets based on accurately defined requirements due 

to multiple factors outside the control of the ATCOTS program office, such as 

hiring freezes and class cancellations. However, as we recommended, FAA 

proposed including award fee performance measures beginning in the third period 

that will require more economical contractor performance each contract year.

ACTIONS REQUIRED

FAA provided acceptable actions and timeframes for recommendations 1, 4, 5, 6, 

7, 8, and 9, and we consider them resolved but open until the planned actions are 

completed. For recommendations 2 and 3, FAA has already taken actions 

consistent with the recommendations, and we consider them closed. 

We appreciate the courtesies and cooperation of FAA and Raytheon 

representatives during this audit. If you have any questions concerning this report, 

please contact me at (202) 366-0500 or Dan Raville, Program Director, at (202) 

366-1405.

#

cc: FAA Deputy Administrator

Anthony Williams, AAE-001

Martin Gertel, M-100
17

Exhibit A. Scope and Methodology

EXHIBIT A. SCOPE AND METHODOLOGY

We conducted this performance audit in accordance with Generally Accepted 

Government Auditing Standards prescribed by the Comptroller General of the 

United States. As required by those standards, we obtained evidence that we 

believe provides a reasonable basis for our findings and conclusions based on our 

audit objectives. The audit was conducted between April 2009 and August 2010, 

and included site visits to the FAA Academy in Oklahoma City, OK, 30 out of 

295 Terminal Services facilities (Towers and TRACONs), and 7 out of 21 En 

Route Centers. A list of air traffic facilities we visited or contacted during this 

audit, which were judgmentally selected based on the geographic location of the 

facilities and number of developmental controllers at those sites, can be found at 

exhibit B.

To determine whether effective controls are in place to ensure that the training and 

financial goals of the program are met, we reviewed the ATCOTS contract and 

related documents to determine what contractual controls exist for the program. 

This included reviewing the contract terms and subsequent modifications, the 

contractual performance measures, and pre-contract award documents. We also 

interviewed officials from FAA Headquarters, including the ATCOTS program 

office, the Air Traffic Organization’s Terminal and En-Route Services Branches, 

and pre-contract award review teams, as well as training and contracting officials 

from the FAA Academy to determine the specific controls that were implemented 

to oversee the program. While at the Academy, we also reviewed 11 invoices 

provided to FAA by Raytheon at the time of our April 2009 site visit, training 

plans, and evaluation forms to evaluate the controls over the program. In addition, 

we conducted site visits and interviewed FAA air traffic officials at air traffic 

control facilities (see exhibit B) to determine if effective controls were in place 

and properly working. Finally, we met with Raytheon officials to examine how 

FAA oversees their work and the interaction between the two organizations.

To determine how the training program will differ from what was provided the 

controller workforce, we reviewed the contract to examine what specific changes 

and costs are included in the contract as well as the procedures for making changes 

to the program. We also interviewed FAA and Raytheon officials from 

Headquarters, the FAA Academy, and at individual air traffic facilities regarding 

the progress made in changing the training program, as well as the service the 

contractor provides. In addition, during site visits to the FAA Academy and air 

traffic facilities we interviewed FAA and Raytheon officials and reviewed 

documentation provided by Raytheon to determine how controller training has 

changed at those facilities since the implementation of ATCOTS and whether 

these facilities were receiving adequate service from the contractor.
Exhibit B. FAA Air Traffic Facilities Visited or Contacted

18

EXHIBIT B. FAA AIR TRAFFIC FACILITIES VISITED OR 

CONTACTED

Potomac TRACON Washington En-Route Center

New York En-Route Center John F. Kennedy Tower

LaGuardia Tower New York TRACON

Albuquerque Tower/TRACON Albuquerque En-Route Center

Portland (OR) Tower/TRACON Las Vegas TRACON

Las Vegas Tower North Las Vegas Tower

Los Angeles En-Route Center Los Angeles Tower

Southern California TRACON Seattle TRACON

Seattle Tower Santa Monica Tower

Burbank Tower San Diego Tower

Santa Barbara Tower/TRACON Tampa Tower/TRACON

Southwest Florida Tower/TRACON Miami En-Route Center

Fort Lauderdale Tower Cleveland En-Route Center

Cleveland Tower/TRACON Canton/Akron Tower/TRACON

Toledo Tower/TRACON Columbus (OH) Tower

Ashville (NC) Tower Raleigh Tower

Charlotte Tower/TRACON Denver En-Route Center

Denver TRACON Denver Tower
19

Exhibit C. Reductions in Raytheon Support at Select FAA Air Traffic Facilities

EXHIBIT C. REDUCTIONS IN RAYTHEON SUPPORT AT SELECT 

FAA AIR TRAFFIC FACILITIES

Facility

Previous 

Contractor 

Staffing Level 

(FTEs)

New 

Contractor 

Staffing Level 

(FTEs)

Percentage 

Adjustment

Anchorage Center 14.2 0.0 -100%

Des Moines 

Tower/TRACON 1.7 0.2 -88.2%

Minneapolis Center 22.7 6.0 -73.6%

Seattle Center 27.4 11.0 -59.9%

Fort Worth Center 26.9 11.0 -59.1%

Kansas City Center 16.7 7.0 -58.1%

Cleveland Center 17.2 12.0 -55.9%

Houston Center 20.5 10.0 -51.5%

Baltimore-Washington 

Tower 2.0 1.0 -50.0%

Washington Dulles 

Tower 1.8 1.0 -44.4%

Portland (OR) 

Tower/TRACON 1.8 1.0 -44.4%

Washington Reagan 

Tower 1.7 1.0 -41.2%

Chicago Center 26.7 17.0 -36.3%

Atlanta Center 37.1 29.0 -21.8%

Los Angeles Tower 8.5 7.0 -17.6%

Oakland Center 26.7 24.0 -10.1%

New York Center 27.4 25.0 -8.8%

Source: FAA/Raytheon
20

Exhibit D. Major Contributors to This Report

EXHIBIT D. MAJOR CONTRIBUTORS TO THIS REPORT 

Terrence Letko Program Director

Name Title

Daniel Raville Program Director

Frank Danielski Project Manager

Masha Pastuhov-Pastein Project Manager

Christopher Frank Senior Auditor

Thomas Wiener Senior Analyst

Katherine Yutzey Senior Analyst

Doneliya Deneva Auditor

David Lahey Auditor

My Phuong Le Analyst

Christina Lee Analyst

Andrea Nossaman Writer/Editor
21

Appendix. Agency Comments

APPENDIX. AGENCY COMMENTS 

Federal Aviation 

Administration 

Memorandum

Date: September 17, 2010

To: Jeffrey B. Guzzetti, Assistant Inspector General for Aviation and Special 

Program Audits

From: Clay Foushee, Director, Audit and Evaluation

Prepared by: Anthony Williams, x79000

Subject: OIG Draft Report: Air Traffic Controller Optimum Training Solution: Sound

Contract Management Practices Are Needed To Achieve Program Outcomes

The FAA remains steadfastly committed to ensuring National Airspace System (NAS) safety 

and controller workforce viability. The Air Traffic Controller Optimum Training Solution 

(ATCOTS) contract provides a necessary supplement to FAA instructor and training

resources. Since fiscal year 2005, consistent with the Controller Workforce Plan, the agency 

has hired more than 8,200 controllers. Over 4,400 of them are now fully qualified as certified

professional controllers (CPCs). The Federal Aviation Administration (FAA) has successfully

produced new controllers at the volume and speed described in the plan and replaced about 28

percent of the workforce with a new generation of fully qualified controllers - while 

maintaining exceptionally high certification standards.

The FAA faced considerable challenges in transitioning from two legacy Time-and-Materials

programs to the FAA’s first-ever Performance-Based contract for air traffic training. As noted 

in the report, Raytheon’s proposal called for a 30 percent reduction in instructor staffing 

levels during the first year of the contract. However, to ensure operational safety and training

continuity, the FAA prescribed contractor performance requiring a nearly one-for-one 

transition of contract staff. Also, because of a rapidly changing training environment, the 

FAA underestimated the full scope of training requirements. In addition, the contract 

explicitly required Raytheon to mirror previous training support levels and focus on program 

transition and not on large-scale learning transformation. While these issues contributed to 

higher-than anticipated costs, FAA’s management focused first and foremost on maintaining 

system safety.
Appendix. Agency Comments

22

The FAA remains committed to achieving intended economies and efficiencies as it gains

experience using this type of contracting mechanism in this context. FAA has put into place 

new processes and tools that position the agency for achieving these economies and 

efficiencies while improving the training process and outcomes. These efforts are responsive 

to many of the issues discussed in the draft report and could be more fully discussed in the 

Office of Inspector General’s (OIG) final report. These include:

• Establishing the Technical Training Organization. The FAA hired a Vice President for 

Technical Training and is staffing the organization with highly qualified and 

motivated employees. These employees possess competencies such as business 

management, program analysis, communications, metrics oversight and project 

execution. The Air Traffic Organization (ATO) Technical Training also introduced a 

strategic framework for training and placed increased management emphasis on 

supporting customer requirements.

• Developing formalized processes. The FAA revamped - and in some cases, created -

formal processes delineating how the agency determines and updates Annual Work 

Plan requirements for controller training, communicates changes to training 

requirements, adjusts staffing levels, coordinates facility visits, disseminates program 

communications and answers customer questions.

• Creating joint work groups. To improve collaboration and communication, the FAA 

formed a joint Risk and Opportunities Management Board and a joint 

Communications Working Group. These groups meet routinely to discuss matters 

from the contractor or from the government perspective and jointly work toward 

resolving the issues.

• Launching new work tools to monitor resources. The FAA developed a Resource 

Allocation Tool and training priority index for each air traffic facility. Also, the 

Resource Surveillance Tool allows facilities to independently (and on-demand) 

forecast or evaluate Raytheon’s staffing methodology to determine if the sites are 

receiving sufficient training and administrative support.

• Improving Acceptable Performance Levels for Award Fees and realigning program 

metrics. The contract’s requirement for continuous reevaluation of award fee criteria 

every six months ensures that the FAA retains the flexibility to adjust and improve 

contractor performance measurement over time. The FAA and Raytheon conducted indepth discussions on the goals of the ATCOTS program and as a result, the contractor 

has aligned its goals and initiatives with the ATO Technical Training mission and 

strategic framework. Per the contract, the FAA continues to retain 35 percent of the 

award fee for metrics of its own choosing.

• Commissioning learning transformation projects. The ATCOTS Program Office spent 

the first and second contract years establishing processes and the framework for 

learning transformation projects. The FAA has issued task orders for the first 

programs under learning transformation and anticipates the initiatives will result in 
Appendix. Agency Comments

23

reduced expenditures in the future and improved training effectiveness and efficiency. 

Transformation remains a key priority for Contract Year Three.

We understand the OIG’s review team conducted much of its work during the contract’s first year 

while the primary focus was on the formidable requirements of transitioning from the old 

contracts and not on training transformation. While it is not yet clear if the results of the initiatives 

listed above will enable the FAA to meet training needs within the existing budget parameters for 

the life of the contract, each of these steps are appropriate given the FAA’s objectives and the 

constraints presented by the ATCOTS contract acquisition process.

The following comments are provided in direct response to OIG recommendations:

Recommendation 1: Determine (a) if the existing contract mechanism can be effectively

modified to achieve ATCOTS program goals within the current estimate of $859 million or 

(b) update the cost estimates and requirements of its training needs and develop criteria for

determining whether the Agency should exercise options in the contract.

FAA Response: Concur. The challenges the ATCOTS Program Office successfully overcame

during the first two contract years demonstrate that the existing contract mechanism provides 

an adequate framework to support air traffic training development and delivery as well as 

learning transformation. While costs have challenged the program office, and made it difficult 

to execute to the $859 million baseline, the program office directed numerous initiatives to 

rein in costs and provide more effective vendor performance. The ATO Technical Training 

office initiated a number of transformation efforts such as redesigning Air Traffic Basics, 

TRACON Academy training and En Route facility training, that are intended to reduce costs 

while improving training outcomes. The FAA may re-baseline the contract if the increase in 

requirements becomes unsustainable, but cost increases under the government’s direction 

should not be used to determine whether the FAA exercises its options in the contract. 

Instead, the decision on whether ATCOTS continues under the option years will be based on 

the government’s satisfaction with contractor performance, which the FAA continues to 

evaluate through the Quality, Metrics and Risk programs. Estimated completion date: 

September 30, 2011.

Recommendation 2: Evaluate Raytheon’s staffing methodology to determine if facilities are

receiving sufficient training and administrative support. Develop an action plan for addressing

those locations that are in need of additional support.

FAA Response: Concur. The FAA has completed actions that fulfill the intent of this

recommendation. The ATCOTS Program Office developed a resource allocation tool and

training priority index for each air traffic facility based on numerous factors that include air

traffic complexity, staffing, training load and impact to the NAS. The FAA can use this databased analytical tool to validate a facility’s staffing request and enable the program office to

easily and rapidly target resource allocation to ensure key needs are met. It is important to

recognize that current and projected funding levels cannot fulfill all training requests at all

facilities. The FAA can also employ the tool to validate Raytheon’s staffing methodology and

change requests. The program office also has procedures to redirect resources when 

warranted.
Appendix. Agency Comments

24

For example, in May, ATO Technical Training successfully reallocated staffing to the

Philadelphia district due to a documented and validated need for additional support. The FAA

also designed a surveillance tool for field training managers and the Academy team that 

captures contractor hours (by month, by position, by site, by district, by service area) and 

provides an analysis that shows impact of staffing adjustments. Additionally, the program 

office has assigned tower and terminal radar approach control facilities to districts and has 

given district managers the flexibility to staff resources based on local requirements, taking 

into account FAA self-performance ability and unique operational circumstances, such as a 

new runway or an airspace reconfiguration, at the sites. Actions pursuant to this 

recommendation are considered complete.

Recommendation 3: Implement procedures to ensure that the Academy and facilities are

properly entering training requirements into the Annual Work Plan.

FAA Response: Concur. The ATCOTS Program Office has implemented a more straightforward process to communicate Contract Year 3 requirements in the Annual Work Plan as 

well as monthly updates. This process is documented, coordinated with the contractor and has 

been tested prior to the start of Contract Year 3. The program office continues to evaluate 

using automation, other databases, and the web to improve data entry of training requirements 

and continual resource monitoring. Actions pursuant to this recommendation are considered

complete.

Recommendation 4: Develop performance measure for award fees that directly link 

Raytheon’s performance to improvements in the controller training program and goals of the 

ATCOTS program.

FAA Response: Concur. Cost efficiency, completion of training transformation initiatives,

individual competency, and training quality are all measures for award fees. These measures 

are linked to the program’s Performance Evaluation Plan and are aligned with the ATO 

Technical Training strategic framework. The ATCOTS Program Office concurs and has 

already revised Period Four metrics (September 2010 to March 2011) to evaluate underlying 

processes and to better connect to program goals. The program office adjusts criteria for each 

six-month performance period based on focus areas determined by the FAA, and those 

measures were the key requirements at the time. The FAA’s approach to revise award fees 

addresses two factors: (1) to define metrics for which the contractor is responsible, and (2) to 

adopt metrics that evaluate training efficiency and effectiveness that are quantifiable through 

gathered data, which the ATCOTS Program Office mandated during previous performance 

periods. Estimated completion date: September 30, 2011.

Recommendation 5: Develop improved and reliable performance baselines and benchmarks 

in formulas for computing award fees in order to better compare and measure the contractor’s

performance.

FAA Response: Concur. The ATCOTS Program Office redesigned its Acceptable 

Performance Levels for the third award fee performance period (March to September 2010) to 

include clarified expectations for computing award fees. Because the training dynamics 
Appendix. Agency Comments

25

between contractor delivery of training and FAA self-performance vary across domains 

(Terminal, En Route, Academy) as well as location (e.g., Alaska compared with Southern 

California or New York), it is very difficult to separate the responsible parties when quoting 

global (or average) metrics. The ATCOTS Program Office is analyzing existing metrics to 

determine the best measures, baselines and benchmarks to compare and hold accountable 

contractor’s performance in future performance periods. Estimated completion date: 

September 30, 2011.

Recommendation 6: Implement internal procedures to require independent verifications of

whether the contactor is achieving its performance measures.

FAA Response: Concur. The FAA is currently collecting metrics in this area in order to 

refine data and measure contractor performance. The ATCOTS Program Office continues to 

build a robust Quality Assurance program that includes participation in Raytheon quality 

assurance site visits and audits, a joint risk and opportunities management program, semiannual instructor evaluations and breakdown of instructor utilization by specific type of 

instruction. Also, to augment our existing voucher review process, the program office recently 

secured third-party cost and production audit assistance providing dedicated analyses to 

ensure direct and indirect costs paid under the ATCOTS contract are allowable and 

appropriate. These actions offer the potential to identify cost savings that could be redirected 

to fund training development and delivery. Estimated completion date: September 30, 2011.

Recommendation 7: Modify the contract to include incentive fees with predetermined cost

targets based on accurately-defined requirements; or, if not feasible, a performance 

measure(s) that provides an award fee for economical contract performance.

FAA Response: Partially Concur. The contract’s design provides incentive fees to drive cost

performance and award fees to address training quality - a balance to ensure the contractor 

will not cut corners in quality to lower costs. It is not feasible to establish predetermined cost 

targets based on accurately-defined requirements due to multiple factors outside the control of 

the ATCOTS program management or the contractor that cause those requirements to 

fluctuate (such as hiring freezes, class cancellations and training progression). The ATCOTS 

Program Office included award fee performance measures to drive cost containment 

beginning with the third performance period (March to September 2010). In order for the 

contractor to receive a significant portion of award fees, it must ensure cost does not exceed 

baseline funding each contract year. Per the contract, the FAA continues to retain control of

35 percent of the award fee for metrics of its own choosing. Estimated completion date: 

December 31, 2010.

Recommendation 8: Ensure that the ATCOTS program office has sufficient number of

qualified personnel to oversee the contractual, financial and operational aspects of the 

program.

FAA Response: Concur. Current staffing levels in ATO Technical Training have increased in

recent months; however, staffing remains insufficient to support a performance-based costplus contract of this magnitude, scope and complexity. To partially mitigate this, the program 
Appendix. Agency Comments

26

office has designated permanent program leads for quality, business management and contract

oversight and boosted contract support staff to better handle both strategic and day-to-day

program activities. ATO Technical Training considers ensuring the ATCOTS Program Office

has adequate staffing levels with the right qualifications a priority. The organization will 

develop a staffing model to provide for a right-sized ATCOTS team. Estimated completion 

date: December 31, 2011.

Recommendation 9: Develop a short- and medium-term road map detailing potential 

changes to its controller training program, and the impact those changes will have on the 

ATCOTS contract. The road map should include the impact that NextGen and other 

modernization programs will have on training new and existing controllers.

FAA Response: Concur. ATO Technical Training has assigned a liaison specialist to be a

consultant on NextGen projected training requirements and development issues. The ATO

Technical Training liaison has also coordinated with all seven NextGen Program Element

Activities on impact analysis of NextGen technologies on training procedures and NAS

infrastructure (space and equipment requirements). To ensure that Technical Training 

strategies are aligned with NextGen short- and mid-term initiatives, ATO Technical Training 

developed a background paper outlining next steps needed to assess how NextGen and other 

modernization programs affect how the FAA trains new and existing controllers. The 

ATCOTS Program Office will communicate possible impact on ATCOTS training 

development and delivery strategies to the NextGen liaison. Estimated completion date: 

September 30, 2012.