a

GAO

United States Government Accountability Office

Report to the Chairman and Ranking 

Minority Member, Committee on 

Government Reform, House of 

Representatives

November 2004 AIR TRAFFIC 

CONTROL

FAA’s Acquisition 

Management Has 

Improved, but Policies 

and Oversight Need 

Strengthening to Help 

Ensure Results

GAO-05-23
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-23.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact JayEtta Z. 

Hecker 512-2834 or heckerj@gao.gov. 

Highlights of GAO-05-23, a report to the 

Chairman and Ranking Minority Member, 

Committee on Government Reform, 

House of Representatives 

November 2004

AIR TRAFFIC CONTROL 

FAA’s Acquisition Management Has 

Improved, but Policies and Oversight 

Need Strengthening to Help Ensure 

Results 

FAA’s Acquisition Management System (AMS) is broader and less 

prescriptive than the Federal Acquisition Regulation (FAR), but both afford 

managers flexibility. AMS establishes an acquisition life-cycle management 

system, including both a contracting and program management system, 

whereas the FAR is primarily a contracting system. In addition, AMS takes 

the form of guidance—it is not regulatory, while the FAR is a set of 

published regulations—a legal foundation that has the force and effect of 

law that most federal agencies are required to follow. 

AMS provides some discipline for acquiring major ATC systems; however, it 

does not ensure a knowledge-based approach to acquisition found in the 

best commercial practices for managing commercial and DOD product 

developments that we have identified in numerous past reports. Best 

practices call for (1) use of explicit written criteria to attain specific 

knowledge at key decision points and (2) use of this knowledge by 

executives at the corporate level to determine whether a product is ready to 

move forward. Attainment and use of such knowledge by executives helps to 

avoid cost, schedule, and performance shortfalls that can occur if they 

commit to a system design prematurely. While AMS has some good features, 

including calling for key decision points, it falls short of best practices. 

GAO’s review of seven major ATC systems and analysis of FAA’s 

performance in acquiring major systems found that AMS has not resolved 

longstanding problems it experienced prior to its implementation of AMS—

including developing requirements and managing software—and is just 

beginning to focus on how these acquisitions will improve the efficiency of 

ATC operations. While FAA has made progress by providing guidance for 

avoiding past weaknesses, it has not applied these improvements 

consistently. According to FAA officials, reorganization under and improved 

oversight by FAA’s new performance-based Air Traffic Organization should 

help ensure greater consistency and an increased focus on results. Past 

GAO reports have demonstrated that the success of an acquisition process 

depends on good management, whether it be under AMS or the FAR. 

The Federal Aviation 

Administration’s (FAA) 

multibillion-dollar effort to 

modernize the nation’s air traffic 

control (ATC) system has resulted 

in cost, schedule, and performance 

shortfalls for over two decades and 

has been on GAO’s list of high-risk 

federal programs since 1995. 

According to FAA, performance 

shortfalls were due, in part, to 

restrictions imposed by federal 

acquisition and personnel 

regulations. In response, Congress 

granted FAA exemptions in 1995 

and directed it to develop a new 

acquisition management system. 

In this report, GAO compared 

FAA’s AMS with (1) the FAR and 

(2) commercial best practices for 

major acquisitions, and (3) 

examined FAA’s implementation of 

AMS and its progress in resolving 

problems with major acquisitions. 

What GAO Recommends

GAO recommends that the 

Secretary of Transportation advise 

FAA to, among other things, (1) 

improve its development of 

requirements and management of 

software and (2) more closely align 

AMS with commercial best 

practices. 

In commenting on a draft of this 

report, FAA generally agreed with 

the report’s contents and said that 

our recommendations would be

helpful to them as they continue to 

refine AMS. They also provided us 

with technical comments, which we

have incorporated as appropriate. 
Page i GAO-05-23 Air Traffic Control

Contents

Letter 1

Results in Brief 3

Background 6

AMS Is Broader and Less Prescriptive Than the FAR 8

AMS Provides Some Discipline but Does Not Ensure a 

Knowledge-Based Approach to Acquisition 14

As Implemented, AMS Has Not Resolved Long-standing Acquisition 

Problems, but FAA Is Beginning to Focus More on Results 21

Conclusions 39

Recommendations for Executive Action 40

Agency Comments 41

Appendixes

Appendix I: FAA Has Begun Analyzing Spending Trends to Take a More 

Strategic Approach to Procurement 43

Appendix II: Objectives, Scope, and Methodology 46

Appendix III: Comparison of the Scope and Flexibility of FAA’s Acquisition 

Management System and the Federal Acquisition Regulation 

Process 48

Background 48

AMS Defines an Investment/Life-Cycle Project Management

System 49

Only a Portion of AMS Deals Directly with the Procurement 

Process 51

AMS States a Nonregulatory FAA Policy 51

AMS Chapter 3 Parallels a Subset of the FAR 52

AMS Includes a Less Rigorous Competition Requirement Than Does 

the FAR 53

The FAR Gives Procurement Professionals Tighter Control over 

Procurement Decisions 53

Although FAA Project Managers View AMS as More Efficient and 

Flexible Than the FAR, Some Procurement Officials We 

Interviewed Do Not Agree 54

Appendix IV: How FAA’s Acquisition Policy Adapted Key 

Recommendations Made by GAO and DOT (1996-2003) 55

FAA Refined AMS in Response to Recommendations 55

Appendix V: Status of the Seven ATC Modernization Acquisitions That 

GAO Reviewed 64
Contents

Page ii GAO-05-23 Air Traffic Control

Appendix VI: Key Contributors 73

GAO Contacts 73

Staff Acknowledgments 73

Tables Table 1: Structure of Best Practices Model for Major Product 

Developments 7

Table 2: Structure of AMS 8

Table 3: Knowledge-Based Approach Called for in Our Best 

Practices Model 16

Table 4: AMS’s Decision Points, Information Sources, and 

Oversight Reviews 17

Table 5: Description and Status of Seven Selected ATC 

Acquisitions 22

Table 6: Internal and External Reviews of FAA’s Use of AMS for 

Acquiring Major ATC Systems 31

Table 7: Program Costs for the Seven Systems We Reviewed 47

Table 8: Comparison of AMS and the FAR 52

Table 9: Key Recommendations Made to Improve FAA’s Acquisition 

Processes 56

Figures Figure 1: Scope of AMS and the FAR 9

Figure 2: Review Process under Our Best Practices Model and 

under AMS 20

Figure 3: Key Milestones for Selected ATC Acquisitions Initiated 

before and after AMS 24

Figure 4: Our Analysis of FAA’s Progress as of 2003 in 

Implementing Key Elements of Training for Its 

Acquisition Workforce 37

Abbreviations

AMS Acquisition Management System

ASR-11 Airport Surveillance Radar, Model 11
Contents

Page iii GAO-05-23 Air Traffic Control

ATC air traffic control

ATO Air Traffic Organization

ATOP Advanced Technologies and Oceanic Procedures

BOE Cost Basis of Estimate 

CFO Chief Financial Officer

CIO Chief Information Officer

COO Chief Operating Officer

CMMI CMMI Capability Maturity Model Integration

COTS Commercial-off-the-shelf

DOD Department of Defense

DOT Department of Transportation

DOTIG Department of Transportation Office of Inspector General

ERAM En Route Automation Modernization

F&E Facilities and Equipment

FAA Federal Aviation Administration

FAR Federal Acquisition Regulation

FMFIA Federal Managers' Financial Integrity Act of 1982

iCMM integrated Capability Maturity Model

ISC Initial System Configuration 

IT Information Technology

ITIM Information Technology Investment Management framework

ITWS Integrated Terminal Weather System

JRC Joint Resources Council

LAAS Local Area Augmentation System

NEXCOM Next Generation Air/Ground Communications System

NDI Non-developmental Item

OMB Office of Management and Budget

RE&D Research, Engineering and Development

SEI Software Engineering Institute

SFFAS 4 Statements of Federal Financial Accounting Standards no. 4 

STARS Standard Terminal Automation Replacement System

WAAS Wide Area Augmentation System

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately.
Page 1 GAO-05-23 Air Traffic Control

United States Government Accountability Office

Washington, D.C. 20548

A

November 12, 2004er Letr

The Honorable Tom Davis

Chairman

The Honorable Henry A. Waxman

Ranking Minority Member

Committee on Government Reform

House of Representatives

In late 1981, the Federal Aviation Administration (FAA) began a 

modernization program to replace and upgrade the National Airspace 

System’s (NAS) equipment and facilities to meet the expected increase in 

traffic volume, enhance the margin of safety, and increase the efficiency of 

the air traffic control (ATC) system—the principal component of the NAS. 

Historically, the modernization program has experienced cost overruns, 

schedule delays, and performance shortfalls of large proportions and has 

been on our list of high-risk programs since 1995. To date, FAA has spent 

$41 billion and expects to spend an additional $7.6 billion through fiscal 

year 2007 to, among other things, finalize key modernization projects 

designed to replace radar, navigation, communications, and informationprocessing systems.1

According to FAA, the performance shortfalls in its modernization program 

were due, in part, to restrictions imposed by federal acquisition and 

personnel requirements. In response, Congress passed legislation in 1995 

that granted FAA unique acquisition and personnel exemptions, or 

flexibilities, and directed FAA to develop a new acquisition management 

policy. FAA issued its new acquisition management policy, called the 

Acquisition Management System (AMS), in 1996 and began using the new 

system instead of the Federal Acquisition Regulation (FAR). To further 

address long-standing weaknesses in the ATC modernization program, the 

President and Congress in 2000 directed FAA to reorganize and establish a 

new organization. FAA has just begun to do so. 

Now that FAA has had several years to implement the earlier procurement 

flexibilities, as well as some time to reorganize, some results of its 

acquisition reform should be discernable. Moreover, FAA’s experiences in 

1

GAO, Major Management Challenges and Program Risks: Department of Transportation, 

GAO-03-108, (Washington, D.C.: Jan. 2003). 
Page 2 GAO-05-23 Air Traffic Control

exercising its acquisition flexibilities could provide valuable information to 

Congress in overseeing the use of these flexibilities. 

You asked us to review the steps that FAA has taken to reform its 

acquisition of major ATC systems and the impact of the reforms on FAA’s 

acquisition outcomes. Specifically, you asked us to (1) compare the scope 

and flexibility of AMS and the FAR, (2) compare AMS with commercial best 

practices for major acquisitions, and (3) examine FAA’s implementation of 

AMS and progress in addressing long-standing problems with major 

acquisitions. In addition, you asked us to review FAA’s general procurement 

of goods and services; we cover this topic in appendix I. 

To address the first objective, we compared the topics addressed by, and 

the implementation options afforded to contracting and procurement 

officials under AMS and the FAR. To address the second objective, we used 

a model of best practices that we derived from our body of work on how 

leading private firms manage costly and complex product developments 

and how the Department of Defense (DOD) manages major weapon 

systems acquisitions.2

 We used this model to assess the extent to which 

FAA’s acquisition management policy mirrors the acquisition policies of 

high-performing organizations in the public and private sectors. This model 

consists of four phases: (1) concept and technology development; (2) 

product development, which includes both integration and demonstration 

activities; (3) production; and (4) operations and support. In between these 

four phases are three key knowledge decision points at which commercial 

firms and the government must have sufficient knowledge to make large 

investment decisions. To address the third objective, we selected the seven 

ATC systems with the largest budgets to explore the results of FAA’s 

implementation of its acquisition management policy and procedures and 

to determine how FAA has addressed issues found to have contributed to 

cost, schedule, or performance problems. In selecting these seven systems, 

we ensured that some were initiated before and some after April 1996, 

when FAA implemented AMS. While the results of these analyses are not 

generalizable to all of FAA’s major ATC acquisitions, they indicate the 

extent to which the agency has made progress in addressing long-standing 

problems we have identified. To further assess both the implementation 

2

For example, Best Practices: Capturing Design and Manufacturing Knowledge Early 

Improves Acquisition Outcomes, GAO-02-701, (Washington, D.C.: July 15, 2002) and Best 

Practices: Better Matching of Needs and Resources Will Lead to Better Weapon System 

Outcomes, GAO-01-288, (Washington, D.C.: Mar. 8, 2001).
Page 3 GAO-05-23 Air Traffic Control

and the impact of FAA’s acquisition reforms, we reviewed our work on 

FAA’s major ATC acquisition efforts since 1996 as well as the work of the 

Department of Transportation’s Office of Inspector General (DOTIG), FAA, 

and others. We also reviewed the actions that FAA has taken to refine AMS 

in response to internal and external reviews. Finally, to review FAA’s 

procurement of goods and services across the agency, we used a 

commercial best-practices model for taking a more strategic approach to 

procurement, along with interviews with key agency officials, to determine 

whether FAA has begun to analyze spending trends to identify 

opportunities to leverage its buying power. We conducted our work from 

December 2003 through November 2004 in accordance with generally 

accepted government auditing standards. See appendix II for additional 

information on our objectives, scope, and methodology.

Results in Brief AMS consists of broad guidance for acquisition life-cycle management—

from defining the requirements for a system through fielding (deploying) 

and decommissioning it (removing it from service). This broad guidance 

contrasts with the rather more detailed and prescriptive contract-formation 

and contract-administration requirements contained in the FAR. AMS is 

broader in scope because it addresses, among other areas of life-cycle 

management, both contract and program management, providing both 

policies and procedures for contracting and a toolset of recommended 

practices for managing individual acquisition projects over their life cycles. 

By contrast, the FAR focuses in far greater detail on contracting policies 

and procedures. FAA managers believe they have greater flexibility in 

interpreting and applying AMS than they would have under the FAR, in part 

because, in areas addressed by both, AMS is less directive than the FAR. 

For example, although AMS states a “preference” for competition, FAA 

personnel may use single-source contracting when necessary to fulfill 

FAA’s mission. By contrast, other federal agency contracting officials 

operating under the FAR are generally required to seek “full and open 

competition”—a more rigorous standard. These other agency officials can 

generally use sole-source or limited-competition contracting only after 

higher-level agency procurement officials have approved a written 

justification. In addition, FAA contracting personnel operate as part of 

acquisition teams that are responsible to program managers; under the 

FAR, contracting decisions are made by contracting personnel who are 

responsible only to contracting officials. Nonetheless, the FAR also affords 

flexibility because it encourages innovation and addresses a wide selection 

of contracting methods; therefore, procurement officials can choose the 

approach that they consider most appropriate to their procurement. 
Page 4 GAO-05-23 Air Traffic Control

According to some current and former FAA procurement officials with 

experience in using both the FAR and AMS, the FAR may appear inflexible 

and cumbersome to inexperienced managers, but those who are familiar 

with it can navigate it effectively. 

AMS provides some discipline through its various phases, activities, and 

decision points for acquiring major ATC systems; however, it does not 

ensure the use of a knowledge-based approach found in the best practices 

for managing commercial product developments and DOD acquisitions3

that we have identified in numerous past reports. Commercial best 

practices call for specific knowledge to be captured and used by corporatelevel decision-makers to determine whether a product has reached a level 

of development (product maturity) sufficient to demonstrate its readiness 

to move forward in the acquisition process. The capture of such knowledge 

and its use by executives helps to avoid cost overruns, schedule slips, and 

performance shortfalls that can occur if decision-makers commit to a 

system design before acquiring critical technology, design, or 

manufacturing knowledge. AMS has some good features, which indicate a 

process that has some elements of discipline. For example, like the best 

practices model, AMS identifies critical junctures that it terms “decision 

points,” the first three of which call for the preparation of detailed 

technical and programmatic information that FAA’s corporate executivelevel body, the Joint Resources Council,4

 can use to assess whether or not 

FAA should initiate an acquisition program. However, AMS departs from 

recognized best practices primarily by (1) not requiring the attainment of 

specific knowledge satisfying explicit written criteria for decision-makers 

to use at each key decision point and (2) not requiring corporate executivelevel oversight at all key decisions. For example, AMS allows the Joint 

Resources Council to delegate two key decisions—the decision to begin 

production and the decision to place a system in service. FAA maintains 

that this approach gives program managers flexibility, expedites decisionmaking, and allows those executives with the most knowledge about a 

major acquisition to make key decisions about its continued development. 

3

In this report, we refer to both commercial product developments and federal agency 

acquisitions as acquisitions. 

4

The Joint Resources Council is an executive body consisting of associate and assistant 

administrators, acquisition executives, the chief financial officer, the chief information 

officer, and legal counsel. The council makes corporate-level decisions, including those that 

determine whether an acquisition meets a mission need and should proceed. The council 

also approves changes to a program’s baseline, budget submissions, and the National 

Airspace System’s architecture baseline. 
Page 5 GAO-05-23 Air Traffic Control

FAA’s reliance on delegation assumes that managers will inform their 

superiors if they are unable to meet the performance schedules and system 

requirements approved by the Joint Resources Council. However, best 

practices call for more than this, including the use of measurable criteria at 

key points in the acquisition process to ensure that specific knowledge has 

been captured and the independent review of this knowledge by corporate 

executive-level decision-makers before the acquisition moves forward in its 

development. These criteria and reviews are particularly important for 

acquisitions that require a large funding commitment, such as those that 

include the production of multiple costly units (e.g., radars and controller 

workstations). In addition, oversight at the corporate-executive or 

agencywide level is needed to ensure consideration of an acquisition’s 

likely impact on other agency projects or operations. These departures 

from best practices put FAA’s major ATC acquisitions at risk of cost, 

schedule, and performance shortfalls. We are making recommendations to 

the Secretary of Transportation to align AMS more closely with commercial 

best practices.

According to our review of seven major ATC systems and analysis of FAA’s 

performance in acquiring major systems, AMS has not resolved 

management problems that FAA experienced before it implemented AMS, 

but the agency is beginning to focus more on the expected results of its 

major acquisitions. (See table 5.) Specifically, our review found that AMS 

did not call for requirements that were specific enough to minimize the 

development of further requirements (requirements growth) or unplanned 

work in five of these systems. This lack of specificity resulted in the 

inadequate development or definition of requirements, requirements 

growth, unplanned work, or a reduction in performance for five of these 

systems. In addition, for three of these systems, FAA underestimated the 

difficulty of modifying available software to fulfill its mission needs. 

Consequently, FAA encountered unexpected software development needs, 

higher costs, and schedule delays. Because AMS guidance was not 

sufficient to account for the risks associated with modifying available 

software, the two systems we reviewed that were initiated after AMS’s 

implementation—though currently meeting cost and schedule 

milestones—are nevertheless showing symptoms of FAA’s past problems 

with developing requirements and managing software. It is too soon to tell 

if these two systems will remain within their cost, schedule, and 

performance parameters. In addition, our work on FAA’s major 

acquisitions, along with that of the DOTIG and others, has shown that many 

of the problems FAA experienced in acquiring major systems before 1996 

persist under AMS and that effective acquisition management, rather than 
Page 6 GAO-05-23 Air Traffic Control

the use of a specific contracting process (e.g., the FAR or AMS) is the key 

to successful acquisitions. To its credit, FAA is beginning to focus more on 

results, largely through its new Air Traffic Organization, which has been 

charged with taking a more performance-based approach to managing the 

agency’s major acquisitions. This approach includes implementing a 

training framework for FAA’s acquisition workforce. While FAA has taken 

some steps to develop an evaluation program with criteria for measuring 

the extent to which this framework is achieving organizational goals by 

improving the knowledge base of FAA’s acquisition workforce, at the time 

of our audit FAA had no plans to conduct a comprehensive evaluation. We 

are making recommendations to the Secretary of Transportation to 

improve FAA’s development of requirements and management of complex 

software, and to comprehensively evaluate FAA’s implementation of the 

training framework to ensure that it is having the intended effect of 

improving the knowledge base of FAA’s acquisition workforce. In 

commenting on a draft of this report, FAA said that it generally agreed with 

the report’s contents and said that our recommendations would be helpful 

to them as they continue to refine AMS. 

Background Maintaining that federal procurement requirements contributed to some of 

its cost, schedule, and performance problems in the 1980s and early 1990s, 

FAA sought a statutory exemption from the federal acquisition system,5

including the FAR, and those parts of title 5 of the United States Code, parts 

II and III, that govern federal civilian personnel management. According to 

FAA, exemptions from these requirements would enable it to streamline its 

acquisition processes, be more responsive to the airline industry’s needs, 

and increase the efficiency of ATC operations while maintaining safety. 

Congress enacted legislation in November 1995 that exempted FAA from 

key federal procurement statutes and the FAR, and directed FAA to 

develop a new acquisition management system. In response to these 

legislative initiatives, FAA implemented a new, streamlined acquisition 

process—the Acquisition Management System (AMS)— on April 1, 1996. 

We developed a knowledge-based model of commercial best practices 

based on our findings about how leading private firms manage costly and 

complex acquisitions effectively—that is, within cost, schedule, and 

5

The term “federal acquisition system” is used to refer to the various statutes and 

regulations that govern procurement practices by federal government agencies—the 

controlling regulation is the FAR. 
Page 7 GAO-05-23 Air Traffic Control

performance targets. The use of this knowledge-based model has been 

found to reduce the risks associated with developing products and increase 

the likelihood of successful outcomes. The model divides the product 

development cycle into four phases and related activities. Table 1 presents 

these phases and activities and explains what takes place during each.

Table 1: Structure of Best Practices Model for Major Product Developments

Source: GAO.

AMS provides guidance for selecting and overseeing investments over their 

life cycle. Like our best practices model, it is divided into phases and 

activities, although the divisions sometimes occur at different points. Table 

2 summarizes AMS’s phases and activities.

Phase/Activity What occurs during this phase or activity

1.Concept and technology development Leading companies work to understand their mission needs and confirm that 

the technologies to be used are mature; that is, the technologies needed to 

meet essential product requirements have been demonstrated to work in their 

intended environment.

2. Product development

• Integration Components and subsystems are integrated into the product to stabilize the 

overall system design and show that the design can meet the product 

requirements.

• Demonstration Tests show that the product will work as required and can be manufactured 

within targets.

3. Production Operational test articles are built.

4. Operations and support Our best practices model does not explicitly cover operations and support 

activities; however, this phase focuses on maintenance of the system through 

its retirement.
Page 8 GAO-05-23 Air Traffic Control

Table 2: Structure of AMS

Source: FAA.

To implement the new, performance-based organization for managing ATC 

modernization and operations, as the President and Congress directed in 

2000, FAA appointed a chief operating officer in August 2003 and formally 

established the Air Traffic Organization (ATO) in February 2004. ATO, 

under the direction of a six-member executive council, is now responsible 

for further implementing acquisition reforms for major ATC systems. 

AMS Is Broader and 

Less Prescriptive Than 

the FAR

AMS establishes an acquisition life-cycle management system that 

encompasses both contracting and program management, whereas the 

FAR is primarily a contracting system that focuses on contract formation 

and contract administration. As a result, AMS is broader in scope than the 

FAR. See figure 1. In addition, AMS takes the form of guidance. This 

guidance is expressed in documentation of FAA policy, handbooks, 

templates, flowcharts, forms, and standard contract language. It is not 

regulatory. By contrast, the FAR is a set of published regulations—a legal 

foundation that has the force and effect of law for the federal agencies that

Phase/Activity What occurs during this phase or activity

Needs and solution identification

• Mission analysis FAA identifies a capability shortfall and determines that it needs an investment to better 

carry out its mission. Recently, FAA began analyzing its mission needs within the 

context of its overall goals for the National Airspace System.

• Investment analysis FAA, using an investment analysis team, evaluates alternatives, selects practical and 

affordable solutions, and develops a baseline of cost, schedule, and performance 

requirements. This document is called the acquisition program baseline.

Solution implementation

• System integration Both hardware and software components and subsystems are integrated into a 

product. Also, intra- and intersystem compatibility are tested and analyzed.

• System demonstration Tests show that the product can work as required and be manufactured within targets.

• System production All activities are carried out to produce needed quantities. Each end item is tested 

before it leaves the factory to verify that it conforms to specifications and is free from 

manufacturing defects. 

In-service management All required activities are carried out, including directly operating, providing 

maintenance functions (both scheduled and unscheduled), and furnishing technical 

and logistics support for the maintenance of FAA systems, subsystems, services, or 

equipment. 
Page 9 GAO-05-23 Air Traffic Control

are required to follow it.6 Furthermore, the FAR is more detailed and 

prescriptive in establishing contracting requirements and can require more 

administrative involvement. This fundamental difference between AMS and 

the FAR may suggest to some that AMS is more flexible. FAA personnel can 

choose how to apply AMS’s provisions to a major acquisition. Nonetheless, 

procurement officials under the FAR also have flexibility because the FAR 

encourages innovation consistent with its direction (and other applicable 

legal requirements), provides a wide selection of contracting solutions, and 

permits contracting officials to choose the methods that they consider 

most suitable for a given situation. 

Figure 1: Scope of AMS and the FAR

Note: AMS provides policy for the four phases of life-cycle management, as well as 14 functional 

areas, (e.g., test and evaluation, human factors, procurement, real estate, security, and systems 

engineering).

a

The NAS in-service decision is a key program milestone that authorizes the deployment of a system 

into the National Airspace System after thoroughly testing the system to verify its operational 

readiness.

6

Currently, the FAR applies to all federal executive agencies except FAA and the 

Transportation Security Administration.

Contract ni g practices covered by both AMS and the FAR

Program management tools covered only by AMS

Contract

formation

Source

selection

Contract

administration

Mission

analysis

Investment

analysis

Change management

Logistics

support

Service life

management

NAS In-service

decisiona

Source: GAO.
Page 10 GAO-05-23 Air Traffic Control

AMS Addresses Both 

Procurement and Project 

Management, Whereas the 

FAR Focuses Primarily and 

in Far Greater Detail on 

Procurement

AMS comprises six policy sections and five appendixes.7 The procurement 

policy section of AMS covers a range of topics, including contract funding 

and administration, contracting with small and disadvantaged businesses, 

and compliance with labor laws. According to this section, competition is 

FAA’s preferred method of contracting, but single-source contracting is 

permitted when appropriate to fulfill the agency’s mission. This policy 

section also describes the procurement of commercially available or 

nondevelopmental items. 

Other sections of AMS cover project management tools that the FAR does 

not address, such as investment analysis, configuration management,8

 and 

integrated logistics support.9 AMS also addresses areas that fall outside 

project management and procurement, including real property 

management—an area that becomes important when FAA must lease or 

purchase real property so that it can install ATC systems such as radars or 

antennas on property that it does not currently own. FAA’s policy directs 

FAA staff to “conduct this business in a fair and equitable manner following 

best practices.” 

Although the FAR includes requirements that address procurement 

planning10 and major systems acquisition,11 it does so only in the context of 

government procurement policy and procedure. Agencies subject to the 

FAR find the broader program planning requirements, which appear in 

AMS but not in the FAR, in documents such as the Office of Management 

and Budget’s Circular A-109 and in their own planning guidance. For

7

The six sections provide an overview and address life-cycle acquisition management, 

procurement, configuration management, real property, and integrated logistic support. 

AMS also includes implementing guidance, flow charts, handbooks, clauses, forms, and 

other information that expands, illustrates, or supplements policy. 

8

A management process for establishing and maintaining the consistency of a product's 

performance and physical attributes with its requirements, design, and operational 

information throughout its life.

9

Integrated logistics support (ILS) is a critical functional discipline that establishes and 

maintains a support system for all FAA products and services. Elements of ILS include spare 

parts, training, supply support, manuals and documentation, maintenance, and repair.

1048 C.F.R. pt. 7.

1148 C.F.R. pt. 34.
Page 11 GAO-05-23 Air Traffic Control

example, DOD has issued a series of directives and instructions on this 

subject.12

The contracting procedures set forth in section 3 of AMS do not prescribe 

detailed contracting procedures for various categories of procurements, as 

do those detailed under the FAR. Instead, AMS provides two basic 

contracting models for obtaining products and services through FAA’s 

contracting process. The first model is called “Complex and 

Noncommercial Source Selection” and is used for complex, large-dollar, 

developmental, noncommercial items and services. This is the model that 

typically would be used for investments approved by the Joint Resources 

Council. The second model is called the “Commercial and Simplified 

Purchase Method” and is typically used for commercial items that are less 

complex and less costly. Procurements of such products or services may be 

routine in nature and are generally purchased on a fixed-price basis. 

Generally, source selection under AMS follows a screening process, with 

the awardee being selected on a “best value” basis from among those who 

remain in consideration when the selection is made. 

AMS Provides Broad 

Guidance While the FAR 

Establishes Detailed 

Requirements, but Managers 

Have Flexibility under Both

AMS sets out a nonregulatory FAA policy that is binding on FAA personnel 

as FAA employees. AMS also sets out other guidelines that FAA states 

should be followed unless there is a rational basis for doing otherwise. 

AMS is subject to such internal controls and enforcement as the 

Administrator decides and to general overarching legal requirements, such 

as the Government Performance and Results Act of 1993 (GPRA).13FAA has 

also deemed certain acquisition laws applicable to its procurements 

(sometimes with modifications), such as the Service Contract Act.14 There 

is also a legal requirement, created by the 1995 legislation exempting FAA 

from the FAR, that small and socially or economically disadvantaged firms 

be given all reasonable opportunities to receive contract awards. FAA has 

adopted a dispute resolution process with some legal underpinnings.15

Otherwise, as the preface to AMS states, “nothing in this document creates 

12DOD’s 5000 series consists of DOD Directive 5000.1, the Defense Acquisition System, and 

DOD Instruction 5000.2, Operation of the Defense Acquisition System.

13P. L. 103-62, 107 Stat. 285.

14P.L. 89-286, 79 Stat. 1034.

1514 C.F.R. pt. 17.
Page 12 GAO-05-23 Air Traffic Control

or conveys any substantive [legal] rights.” In short, although FAA is subject 

to the general legal requirement that government decisions cannot be 

arbitrary or capricious, AMS does not establish regulatory requirements for 

the conduct of procurements and does not create or convey substantive 

legal rights. 

In contrast to AMS, the FAR is a set of published regulatory requirements. It 

has the force and effect of law, and agencies that are subject to it are bound 

to follow it. The FAR’s requirements provide for a range of procurement 

strategies and approaches. In addition to negotiated procurement methods, 

it allows two-step sealed-bid and two-phase design-build methods,16 among 

others. It includes streamlined procedures for soliciting and evaluating 

offers to furnish commercial items, as well as permits the use of simplified 

acquisition procedures in a broad range of procurements. Furthermore, the 

FAR supports a diverse selection of available contract types, producttesting tools, and other tools that an agency’s contracting personnel may 

select when conducting an acquisition to meet the agency’s needs. 

Although contracting personnel in agencies subject to the FAR are required 

to comply with it, they enjoy broad discretion in their management of 

procurements. For example, the FAR allows wide latitude in drafting 

requirements statements, from performance-based statements of work to 

design specifications as necessary. It allows broad discretion in framing 

solicitations and in conducting procurements, including scoring proposals, 

determining how negotiations will be conducted, eliminating firms whose 

proposals are not competitive, and selecting the awardees whose proposals 

afford the government the best value when evaluated against the selection 

criteria established in the solicitations.

Because AMS consists of broad guidance while the FAR comprises detailed 

and prescriptive regulatory requirements, FAA managers view AMS as 

giving them more flexibility than they would have under the FAR, 

particularly in two areas—competition and oversight. Whereas the FAR 

generally requires full and open competition, AMS calls for providing 

“reasonable access to” competition to firms interested in obtaining 

16In two-step sealed bid procurements, the acquisition process is divided into two parts. In 

the first step, proposals are solicited and evaluated to determine their acceptability without 

evaluating price. In the second step, offerors who submitted acceptable step-one proposals 

compete for award on the basis of price. Two-phase design-build selection procedures are a 

selection method in which a limited number of offerors is selected during the first phase 

(design) to submit detailed proposals for the second phase (construction).
Page 13 GAO-05-23 Air Traffic Control

contracts—a less rigorous standard than full and open competition. AMS 

further states that the “preferred” method of selecting sources is to 

compete requirements among two or more sources. By contrast, full and 

open competition requires that all responsible sources be permitted to 

compete.17 Under AMS, there is no policy that firms that want to participate 

actually get a chance to do so. Rather, FAA told us that its system is 

beneficial because the agency can use screening requests to preselect 

competing firms, eliminating those firms that FAA believes are not likely to 

receive an award. The following example illustrates the differences 

between AMS and the FAR in their respective requirements on exceptions 

to competition. FAA may contract with a single source when this approach

is determined to be in the best interest of FAA.18 The FAR, however, allows 

exceptions to full and open competition only for certain specified 

conditions (such as unusual and compelling urgency or the availability of 

only one source). The FAR describes in detail the circumstances of these 

conditions and the requirements for using them as justification for not 

providing for full and open competition. The FAR also requires the 

contracting officer to prepare a justification document that must generally 

be approved by higher-level agency procurement officials (up to the 

agency’s senior procurement executive) depending on the estimated dollar 

value of the procurement. The content of this justification is prescribed by 

the FAR. When not providing for full and open competition, the contracting 

officer is required under the FAR to solicit offers from as many potential 

sources as is practicable under the circumstances. The FAR prohibits 

contracting if the justification for less than full and open competition 

results from a lack of advanced planning. For a more detailed comparison 

of AMS and the FAR, see appendix III. 

Although some of the FAA personnel we interviewed see AMS as more 

efficient and flexible than the FAR, other current and former FAA 

procurement officials we interviewed who have experience using both the 

1748 C.F.R. § 2.101 (definition of “full and open competition”).

18A rational basis for such action may be based on emergencies, standardization, or that a 

source is the only source available to satisfy the requirement within the time required, 

which are necessary and important to support FAA's mission. The decision to contract with 

a single source may be made as part of the overall program planning. The rational basis 

must be documented and approved as a part of the acquisition strategy paper, a 

procurement plan, or as a separate document. The AMS states that if an acquisition strategy 

paper is not required, and the service organization determines that a procurement plan is 

unnecessary, an independent single-source justification should be documented and 

endorsed by the service organization and approved by the contracting officer.
Page 14 GAO-05-23 Air Traffic Control

FAR and AMS did not agree that AMS is more flexible than the FAR. 

According to these officials, the FAR may appear inflexible and 

cumbersome to persons who lack experience with it, but those who are 

familiar with it are able to navigate its complexities effectively. The FAR 

requires full and open competition, but as experienced procurement 

personnel know, the system does not break down when emergencies 

necessitate quick and decisive action. For example, we recently reported 

that agencies generally complied with applicable FAR requirements in 

awarding new contracts for work in Iraq using other than full and open 

competition.19 In some circumstances, the government’s legitimate need for 

prompt action was sufficient to justify selecting a contractor on an 

expedited basis from among the firms that appeared able to meet the 

government’s emergency need. In other cases, the agencies reasonably 

determined that only one source could meet their requirements.

AMS Provides Some 

Discipline but Does 

Not Ensure a 

Knowledge-Based 

Approach to 

Acquisition 

AMS provides some discipline through its various phases, activities, and 

decision points for acquiring major ATC systems; however, it does not 

ensure the use of a knowledge-based approach found in the best practices 

for managing commercial product developments and DOD acquisitions that 

we have identified in numerous past reports.20Commercial best practices 

call for specific knowledge to be captured and used by corporate-level 

decision-makers to determine whether a product has reached a level of 

development (product maturity) sufficient to demonstrate its readiness to 

move forward in the acquisition process. The capture of such knowledge 

and its use by executives helps to avoid cost overruns, schedule slips, and 

performance shortfalls that can occur if decision-makers commit to a 

system design before acquiring critical technology, design, or 

manufacturing knowledge. The absence of these key best practices under 

AMS puts FAA’s major ATC acquisitions at risk of cost overruns, schedule 

slips, and performance shortfalls.

19GAO, Rebuilding Iraq: Fiscal Year 2003 Contract Award Procedures and Management 

Challenges, GAO-04-605, (Washington, D.C.: June 1, 2004). 

20For example, GAO, Best Practices: Capturing Design and Manufacturing Knowledge 

Early Improves Acquisition Outcomes, GAO-02-701, (Washington, D.C.: July 15, 2002) and 

Best Practices: Better Matching of Needs and Resources Will Lead to Better Weapon 

System Outcomes, GAO-01-288, (Washington, D.C.: Mar. 8, 2001). 
Page 15 GAO-05-23 Air Traffic Control

Best Practices for Managing 

Acquisitions Call for a 

Knowledge-Based 

Approach, Including Criteria 

for Knowledge Needed and 

Oversight at the Corporate 

Executive Level 

Commercial best practices call for managing acquisitions using a 

knowledge-based approach, including (1) using established criteria to 

attain specific knowledge at three critical junctures in the acquisition cycle, 

which we call knowledge points, and (2) requiring oversight at the 

corporate executive level for each of these knowledge points. For example, 

at each knowledge point, successful product developers apply specific 

indicators, or criteria, to determine whether they have attained the 

knowledge they need to move to the next phase or activity in the 

acquisition process. Such developers also conduct corporate executivelevel reviews to ensure that they obtain the insights and perspectives of 

stakeholders throughout their organization. If the knowledge attained does 

not meet the criteria for advancement or if the executive reviewers 

determine that further development is inconsistent with their priorities, the 

acquisition does not move forward. Table 3 summarizes the knowledge 

points, criteria, oversight reviews, and timing of oversight reviews included 

in our model of best practices for major acquisitions. 
Page 16 GAO-05-23 Air Traffic Control

Table 3: Knowledge-Based Approach Called for in Our Best Practices Model

Source: GAO.

Experience with commercial best practices has shown that to the extent 

that the level of knowledge called for at each knowledge point is not 

attained, organizations take on risks in the form of unknowns that will 

persist into the later stages of development, where they will take more time 

and money to resolve if they become problems. Such problems lead to cost 

increases and schedule delays. 

AMS Has Some Good 

Features but Does Not 

Ensure That High Levels of 

Knowledge Are Attained 

Before Major Commitments 

Are Made

AMS has some good features, including phases and key decision points 

indicative of an acquisition process that has some elements of discipline; 

however, AMS does not ensure that high levels of knowledge are attained 

and that corporate executive-level reviews occur before major 

commitments of agency resources are made. For example, like the best 

practices model, AMS identifies critical junctures, which it terms “decision 

points.” Three of these decision points occur during the initial acquisition 

phase (mission need, initial investment, and the final investment decision). 

Knowledge point Criteria Oversight review Timing of oversight review

1. Resources and 

needs matched 

• Match customers’ needs with available 

resources—technology, design, time, and 

funding. 

• Demonstrate that technologies needed to meet 

essential product requirements can work in 

intended environment.

• Complete a preliminary product design using 

systems engineering to balance customers’ 

desires and available resources.

Executive-level review 

required to initiate the 

program.

Knowledge point 1 should 

precede the commitment to 

begin product development.

2. Product design 

stable

• Complete 90 percent of design drawings by 

critical design review.

• Obtain stakeholders’ concurrence that drawings 

are complete and producible.

• Review subsystem and system designs. 

• Demonstrate with prototype that design meets 

users’ requirements. 

• Identify critical manufacturing processes.

Executive-level review 

required to move to 

demonstration.

Knowledge point 2 should 

precede the commitment to 

build prototypes to 

demonstrate the design.

3. Production 

processes mature

• Demonstrate manufacturing processes.

• Build and test production prototypes.

• Test production-representative prototypes to 

achieve reliability goals.

• Test production-representative prototypes to 

demonstrate product performance in operational 

environment.

• Collect statistical process control data.

Executive-level review 

required to move to 

production.

Knowledge point 3 should 

precede the commitment to 

begin production.
Page 17 GAO-05-23 Air Traffic Control

A fourth decision point occurs before production, and a fifth decision point 

occurs before the start of the final acquisition phase (in-service 

management). AMS also calls for detailed technical and programmatic 

information that decision-makers can use at the first three decision points 

to assess whether or not FAA should initiate an acquisition program. This 

information includes a final requirements document, a final acquisition 

program baseline, a final investment analysis report, an acquisition strategy 

paper, and an integrated program plan. Finally, AMS, like our best practices 

model, calls for senior executives to review the information and determine 

whether the acquisition is ready to move forward. The FAA executives who 

make the decisions at these points include associate and assistant 

administrators, acquisition executives, the chief financial officer, the chief 

information officer, and legal counsel; they form the Joint Resources 

Council (JRC), FAA’s senior decision-making body for major ATC 

acquisitions. Table 4 summarizes this information. 

Table 4: AMS’s Decision Points, Information Sources, and Oversight Reviews 

Decision point by phase/activity Information sources and oversight reviews

Phase: Needs and solution identification

• Activity: Mission analysis

Decision point: Mission need decision Information sources: Input from users in the field and mission need statement.

Oversight review: JRC review called for to move from mission analysis to 

investment analysis.

• Activity: Investment analysis

Decision Point: Initial investment decision Information sources: Initial investment analysis report, initial life-cycle program 

baseline for the most viable alternative, updated initial requirements document 

and action plan for final investment analysis. 

Oversight review: JRC review called for to select a preferred solution. 

Decision point: Final investment decision Information sources: Final requirements document, final acquisition program 

baseline, final investment analysis report, acquisition strategy paper, integrated 

program plan.

Oversight review: JRC review called for to move from investment analysis to 

solution implementation.

Phase: Solution implementation

• Activity: System integration

• Activity: System demonstration

Decision point: Production decision Information sources: Determined by JRC.

Oversight review: JRC may retain or delegate decision making authority.

• Activity: System production
Page 18 GAO-05-23 Air Traffic Control

Source: GAO analysis of FAA data.

Note: In this report, we place FAA's "mission analysis" and "investment analyses" activities in the 

"Needs and Solution Identification" phase to facilitate comparison with the "concept and technology 

development" phase in our best practices model. Similarly, we place “system integration” and “system 

demonstration” in the solution implementation phase for comparative purposes.

AMS departs from the best practices model in two key ways—it does not 

call for high levels of knowledge to be attained at three critical junctures 

(knowledge points), and does not call for corporate executive-level 

oversight at one of five junctures. Specifically, AMS does not establish 

explicit, written criteria for (1) the information needed to determine 

technology maturity at solution implementation, (2) releasable drawings at 

critical design review and production process controls at production. Our 

best practices model calls for attaining specific knowledge and setting out 

criteria for what information should be available to help organizations 

minimize risks in the form of unknowns. Risks associated with such 

unknowns can persist into the later stages of development, where they can 

take more time and money to resolve if they become problems, potentially

leading to cost increases and schedule delays. 

In addition, AMS does not provide for corporate executive-level oversight 

reviews at two of the three key junctures where our best practices model 

calls for such reviews. Although AMS calls for three Joint Resources 

Council reviews during the initial acquisition phase—while our model calls 

for a single corporate executive-level review—AMS allows the council to 

delegate its oversight responsibility later in the acquisition process to the 

program managers within the service organization responsible for an 

acquisition. By contrast, our model calls for two corporate executive-level 

reviews later in the acquisition process. 

According to FAA, its approach gives program managers flexibility, 

expedites decision-making, and allows the executives with the most 

knowledge about a major acquisition to make key decisions about its 

continued development. FAA’s reliance on this approach assumes that the 

program managers will inform higher-level managers if they are unable to 

meet the performance schedules and systems requirements approved by 

the Joint Resources Council. However, although program managers may 

Decision point by phase/activity Information sources and oversight reviews

Decision point: In-service decision Information Sources: Determined by JRC.

Oversight Review: JRC review called for to move from solution implementation to 

in-service management; however, the JRC may retain or delegate decision making 

authority.

Phase: In-service management

(Continued From Previous Page)
Page 19 GAO-05-23 Air Traffic Control

have the most knowledge about their particular acquisition, they may not 

have the agencywide perspective of the Joint Resources Council members. 

Having an agencywide perspective, including a broad understanding of an 

acquisition’s potential impact on other agency projects and operations, is 

especially critical when an acquisition includes the production of multiple 

units and requires a substantial commitment of agency resources, as do 

FAA’s primarily multimillion-dollar acquisitions, such as controller 

workstations and radars. 

Because decisions about moving a major acquisition forward require both a 

program manager’s specific knowledge of the acquisition itself and a senior 

executive’s understanding of the acquisition’s potential impact on other 

agency projects and operations, our best practices model calls for both 

measurable criteria at key points in the acquisition process to ensure that 

specific knowledge has been captured and corporate executive-level 

reviews to ensure that senior decision-makers have the opportunity to 

independently consider this knowledge. Without higher-level reviews such 

as our best practices model recommends and the Joint Resources Council 

could provide later as well as early in the acquisition process, FAA cannot 

ensure that it has fully considered the impact of advancing an acquisition 

on other agency projects and operations. This opportunity for full 

consideration is a central advantage of managing acquisitions as a 

portfolio, as we concluded in our August 2004 report on FAA’s information 

technology investment management process.21

Figure 2 contrasts FAA’s process for reviewing an acquisition’s progress 

under AMS with the process that we found leads to successful commercial 

acquisitions. 

21GAO, Information Technology: FAA Has Many Investment Management Capabilities in 

Place, but More Oversight of Operational Systems Is Needed, GAO-04-822, (Washington, 

D.C.: Aug. 20, 2004). 
Page 20 GAO-05-23 Air Traffic Control

Figure 2: Review Process under Our Best Practices Model and under AMS

a

To facilitate the comparison of AMS with out best practices model in this report, we have done the 

following: (1) placed FAA's "Mission Analysis" and "Investment Analyses" activities in the "Needs and 

Solution Identification" phase to make it comparable with the "concept and technology development" 

phase in our best practices model; (2) depicted only the final investment decision point, recognizing 

that the investment analysis phase includes an initial investment decision; and (3) placed “system 

integration” and “system demonstration” in the solution implementation phase. 

b

AMS does not explicitly call for a design review decision point, which would fall between system 

integration and system demonstration.

c

The in-service decision is a key program milestone. It authorizes the deployment of a system into the 

National Airspace System. At times, the JRC delegates its decision authority for the production and inservice decisions to service organizations. 

To its credit, FAA continues to improve its AMS process. For example, the 

agency is currently modifying its mission needs activity to make the 

selection of major ATC acquisitions more consistent with the overall goals 

of modernizing the National Airspace System. In addition, the Air Traffic 

Organization has established an executive council to review major 

acquisitions before they are sent to the Joint Resources Council. This 

review is designed to screen acquisitions to determine which ones are 

important enough to warrant higher-level review by the Council. Finally, 

FAA is currently revising AMS to bring it in line with the Office of 

Management and Budget’s guidance. Specifically, the agency is 

incorporating OMB Exhibit 300, which provides the investment 

justifications and management plans required for major ATC acquisitions. 

Product Development Production Operations

and

Support

Concept and Technology

Development

Knowledge

p oint

3 on

Needs and Solution Identificationa Solution Implementation In-service

Management

Mission

Analysis

System

monstration

System

roduction

Knowledge

p oint

1

Final

Investment

decision

FAA framework

Best practices model

Mission

need

decision

executive

review

required

executive

review

required

executive

review

required

executive

review

required

Sources: FAA, GAO.

Knowledge

p oint

2

executive

review

required

Production

decisionc

In-service

decision ! c no

decision point

b
Page 21 GAO-05-23 Air Traffic Control

As Implemented, AMS 

Has Not Resolved 

Long-standing 

Acquisition Problems, 

but FAA Is Beginning 

to Focus More on 

Results

According to our review of seven major ATC systems and analysis of FAA’s 

performance in acquiring major systems, AMS has not resolved the longstanding problems that FAA experienced before implementing AMS, but 

the agency is beginning to focus more on the expected results of its major 

acquisitions. (See table 5.) Specifically, our review found that AMS 

guidance did not call for requirements that were specific enough to 

minimize requirements growth or unplanned work for five of these 

systems. This lack of specificity resulted in the inadequate development or 

definition of requirements, growth in requirements, unplanned work, or a 

reduction in performance for five of these systems. In addition, for three of 

these systems, FAA underestimated the difficulty of modifying available 

software to fulfill its mission needs. Because AMS guidance was not 

sufficient to account for the risks associated with modifying available 

software, FAA encountered unexpected software development needs, 

higher costs, and schedule delays. The two systems we reviewed that were 

initiated after AMS was implemented are currently meeting cost and 

schedule milestones; however, both systems are showing symptoms of 

FAA’s past problems with developing requirements and managing software, 

and it is too soon to tell if these programs will remain within their cost, 

schedule, and performance parameters. In addition, our work on FAA’s 

major acquisitions, along with that of the DOTIG and others has shown that 

the problems FAA experienced before 1996 in acquiring major systems 

persist under AMS and that effective acquisition management, rather than 

the use of a specific contracting process (e.g., the FAR or AMS) is key to 

successful acquisitions. To its credit, FAA is beginning to focus more on 

results, largely through its new Air Traffic Organization, which has been 

charged with taking a more performance-based approach to managing the 

agency’s acquisitions. 
Page 22 GAO-05-23 Air Traffic Control

Table 5: Description and Status of Seven Selected ATC Acquisitions 

Dollars in millions 

Project and 

description Original cost Current cost

Original 

schedule

Current 

schedule Acquisition issues and status

STARS--new 

controller and 

maintenance 

workstations to 

replace the legacy 

system at terminal air 

traffic control facilitiesa

$940.0 $1,460.0 1998 2003 STARS is a joint FAA and DoD program. 

STARS delays and cost increases resulted 

from poor requirements definition and 

schedule estimates. STARS is fully operational 

at 25 FAA terminal radar facilities and 17 DoD 

facilities. Only 50 of the planned 172 systems 

are being deployed. STARS had difficulties in 

achieving many human factor requirements for 

improving system efficiency and safety.

ASR-11--digital radar 

for terminal 

environments

$743 $891.7 1997 2013 ASR-11 was approved for its in-service 

decision in September 2003 and is being 

deployed at 108 sites. These systems are 

being deployed at a slower pace than originally 

planned because of budget cuts and deferrals. 

ITWS--computer 

processors and 

displays to automate 

weather data near the 

airport 

$276.1 $288.3 September 

2001

 2002 Currently, six ITWS systems are operational. In 

May 2004, the ATO Executive Council 

rebaselined the program to include a new 

weather-forecasting capability into the 

production baseline. FAA proposes to defer 12 

of the 34 systems it planned to procure. 

LAAS--a precision 

approach and landing 

system that augments 

the Global Positioning 

System

$530.1 $696.1 2002 Deferred at 

least until 

2009

LAAS has been adversely affected by poor 

requirements development, a lack of 

understanding of its technical complexity, 

incomplete software development, and an 

unrealistic development schedule. Unresolved 

radio interference precludes the safe operation 

of LAAS. As a result, FAA has delayed national 

deployment to continue further research on 

this issue. 

NEXCOM--digital 

radios to improve air 

traffic communications

$318.4 $318.4 October 2002 2004 NEXCOM program delays were due to 

misunderstanding of a program requirement 

and testing procedures. NEXCOM was 

recently approved for its in-service decision in 

July 2004. 

ATOP--new 

workstations and 

processing capability 

to control ocean air 

traffic

$548.2 $548.2 June 2004 2004 ATOP achieved its acquisition program 

baseline objectives; however, this baseline 

does not reflect program delays and cost 

increases resulting from poor requirements 

development, unrealistic schedule estimates, 

and inadequate evaluation of software 

complexity. 
Page 23 GAO-05-23 Air Traffic Control

Source: GAO analysis of FAA data.

a

Terminal air traffic control facilities, known as Terminal Radar Approach Control (TRACON) facilities, 

direct aircraft in the airspace that extends from the point where the tower’s control ends to about 50 

nautical miles from the airport. A TRACON can be located at or outside an airport.

Our Reviews of Seven Major 

Systems Show That 

Problems with 

Requirements and Software 

Management Persist under 

AMS

Our reviews of seven of FAA’s costliest ATC system acquisitions found that 

the problems FAA experienced with requirements and software 

management and their related impact on cost, schedule, and performance 

goals persist today under AMS.22Figure 3 identifies these seven acquisitions 

and their milestones, which are expressed in terms of AMS decisions even 

when the acquisitions were initiated before AMS was implemented. (See 

app. V for a description and the status of each of these projects.) 

Specifically, for 6 of these 7 major ATC acquisitions, FAA did not 

consistently (1) clearly define system requirements at the investment 

decision point or (2) adequately assess software complexity. Moreover, as 

FAA has acknowledged, it has never managed its major acquisitions by 

focusing on how each would improve the efficiency of ATC operations 

while maintaining or improving safety. Although FAA has made progress in 

improving its acquisition of major ATC systems—by, for example, 

improving the maturity of its processes for acquiring software, using a 

“build a little, test a little” approach to acquisitions as it did for Free Flight 

Phase 1,23 and restructuring its organization to minimize stovepipes—longstanding problems persist in these areas. In addition, the two systems we 

Project and 

description

Original cost Current cost Original 

schedule

Current 

schedule Acquisition issues and status

ERAM--upgrades the 

existing en route 

system with improved 

hardware and software

$3,649.0 $3,649.0 December 

2009

December 

2009

To date, ERAM has not breached any cost 

and schedule parameters. However, it 

remains a high-risk program because of 

the large amount of software that must be 

developed. The ERAM contractor is 

experiencing software engineering 

difficulties as a result of lower-thanexpected productivity and software code 

growth.

(Continued From Previous Page)

22Performance deficiencies in relation to the final requirements or system specifications are 

used to assess whether the agency’s goals have been met. Such deficiencies may not 

degrade the mission standards needed to ensure the safety and efficiency of the National 

Airspace System.

23Free Flight Phase 1, completed in 2002, provided new information-exchange systems and 

automated controller tools. 
Page 24 GAO-05-23 Air Traffic Control

reviewed that were initiated after AMS’s implementation are currently 

operating within cost and schedule goals; however, they are showing 

symptoms of past problems with developing requirements and managing 

software complexity. Moreover, our work for more than two decades—

before and after AMS’s implementation—has cited these types of 

weaknesses as central reasons for the agency’s long history of cost, 

schedule, and performance shortfalls. This work has also found that the 

effectiveness of an agency’s acquisition management has had a greater 

impact on the success of its major acquisitions than the contracting 

process used (e.g., the FAR or AMS). 

Figure 3: Key Milestones for Selected ATC Acquisitions Initiated before and after AMS 

Transitional

ASR-11

STARS

ITWS

LAAS

NEXCOM

Post-AMS

ATOP

ERAM

1992 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1993

4/93 9/95

1992 4/95 6/97

5/92

3/95

11/97

11/97 6/03 12/09

5/01 Mid 2005

5/98 7/04

12/99

9/02

7/93 3/96 10/99 6/03

9/03

(LAAS was redefined, and

has no in-service decision date)

Mission need decision

Investment decision

Re-baseline

In-service decision

Source: FAA.

AMS

April 1996

2/96

8/01

3/02
Page 25 GAO-05-23 Air Traffic Control

Inadequate Development or 

Definition of Requirements 

Led to Requirements 

Growth or Unplanned Work 

for Five Acquisitions

For five of the seven acquisitions we reviewed, AMS guidance did not call 

for requirements that were specific enough to minimize requirements 

growth or unplanned work. For four of these five acquisitions—STARS, 

LAAS, NEXCOM, and ATOP—incomplete and poorly defined requirements 

in the final requirements documents, used at the investment decision point 

to assess an acquisition’s readiness to enter the development phase, led to 

requirements growth, unplanned development work, or a reduction in 

system performance.24 For the fifth acquisition—ASR-11—FAA misjudged 

the extent to which the high-level requirements that were used to support 

the commercial-off-the-shelf/nondevelopmental item (COTS/NDI) 

procurement by the Department of Defense could result in a product 

capable of meeting FAA’s mission or user needs. As a result, unplanned 

software changes were required. 

• FAA’s cost estimate for STARS has grown from its original estimate of 

$0.94 billion in 1996 to $1.46 billion in 2004 and will deploy only 50 of the 

172 STARS initially planned. Much of the cost growth has been due to 

FAA requirements creep. As a result, the STARS program has 

experienced delays of more than five years from its original plan, in part 

due to added requirements to the commercial-off-the-shelf Initial 

System Configuration (ISC). However, the STARS ISC was satisfactory 

for use by the Department of Defense as deployed.

• A final requirements document was approved, and the development of 

LAAS was scheduled to begin in 1999. However, poorly established 

requirements resulted in the addition of 113 new requirements to the 

initial specification, entailing significant software and hardware 

changes. Furthermore, LAAS may not achieve its promised capabilities 

because FAA has been unable to develop technologies necessary to 

warn pilots of a disruption in the LAAS signal. Until this technology is 

developed, LAAS cannot be operated safely. As a result, FAA recently 

cut the fiscal year 2005 funding for LAAS, and the program will revert to 

a research and development effort. 

24We reported in August 2004 that FAA had implemented sound requirements development 

and management practices on four other systems, but noted that process improvement 

initiatives such as these were not institutionalized across the agency. See GAO, Air Traffic 

Control: System Management Capabilities Improved, but More Can Be Done to 

Institutionalize Improvements, GAO-04-901, (Washington, D.C.: Aug. 20, 2004).
Page 26 GAO-05-23 Air Traffic Control

• FAA developed a final requirements document for the NEXCOM system, 

but the requirements lacked the specificity needed to assess the 

development risk. According to a NEXCOM contractor program official, 

this led to miscommunication about the program requirement relating to 

signal interference. This official stated that they misunderstood this 

requirement and had not planned on the additional development work 

for the NDI solution to meet such program objectives and delayed the 

program 21 months. Another program requirement involved the 

NEXCOM radios meeting or exceeding the operational coverage area of 

the existing voice system. The existing radios had power output levels of 

50 watts but the NEXCOM contractor could only achieve 34 watts of 

power to meet the coverage requirement. A program official stated that 

the contractor and FAA had not agreed on the testing procedures to 

assess the power levels. This posed an “unacceptable consequence” and, 

as a result, FAA performed additional testing or flight checks of the 

reduced radio performance (50 watts versus 34 watts) and determined 

that the performance reduction should not affect NEXCOM’s mission or 

its coverage requirement.

• FAA did not follow the AMS guidelines that call for completing a final 

requirements document before proceeding to the development phase 

for ATOP. The Joint Resources Council approved a delay in developing 

the final requirements until after contract award. This decision resulted 

in schedule delays and additional unplanned software development. The 

ATOP program office asserted that the requirements remained very 

stable and that the program is within cost and schedule objectives 

established by the Council. However, FAA’s internal documents revealed 

that the requirements were not adequately defined. For example, the 

ATOP Investment Analysis Study reported to the Joint Resources 

Council prior to contract award that the lack of more detailed ATOP 

requirements at this stage of acquisition added risk and was of concern 

to the investment analysis team. Under AMS, this team is responsible 

for, among other things, conducting risk analyses for the various 

acquisitions. Furthermore, an ATOP Assessment Team conducted a 

study in March 2003 and determined that at the ATOP contract award, 

“requirements were written at a high level and not mutually understood 

by FAA and the contractor.” However, FAA management allowed the 

ATOP program to proceed to solution implementation without the final 

requirements document and, according to the contractor, this resulted 

in schedule delays and growth in the amount of software needing 

development. 
Page 27 GAO-05-23 Air Traffic Control

• The high-level requirements for ASR-11, jointly generated by FAA and 

the Department of Defense, to support a COTS/NDI acquisition, resulted 

in a product that did not initially meet the FAA mission or user needs. 

The software changes that were required to meet FAA’s target detection 

needs, as well as significant hardware design changes, parts 

obsolescence, and production issues, added approximately two years to 

system qualification and acceptance.

FAA Underestimated Software 

Complexity for Three Systems

For three of the seven major ATC acquisitions we reviewed—ITWS, LAAS, 

and ATOP—FAA’s AMS guidance was not sufficient to address the risks 

associated with modifying available software25 to fulfill FAA’s mission 

needs. In all three cases, FAA officials underestimated the difficulty of 

modifying available software. Our work has shown that underestimates are

likely to result in unexpected software development, higher costs, and 

schedule delays. 

• ITWS experienced delays from the beginning because of the complexity 

of its software development. Although the program appeared to be 

progressing according to its baseline, immediately after the critical 

design review in September 1998, the contractor revealed that it had 

exceeded the target cost by $4 million. In addition, the contractor 

claimed that the program did not recognize that the computer processor 

originally planned for the program was becoming outdated, that the 

manufacturer planned to discontinue its production because the market 

was demanding a processor with greater processing and storage 

capability, and that as a result, the original computer processor would 

not be available to the program. Consequently, ITWS experienced cost 

increases, schedule delays, and performance shortfalls. According to the 

contractor and the original acquisition plan, all systems were scheduled 

for delivery by December 2001, but that date has now stretched to after 

2009. 

• LAAS’s technology maturity was not adequately assessed, and further 

development was needed. Specifically, the potential for radio 

25Available software refers to commercial-off-the-shelf (COTS) and/or nondevelopmental 

items (NDI). AMS defines COTS as a product or service that has been developed for sale, 

lease, or license to the general public. The product is currently available at a fair market 

value. AMS defines an NDI as an item that was previously developed for use by a 

government (federal, state, local, or foreign) and requires limited further development. For 

example, the Army’s SINCGARS radio is the core of FAA’s NEXCOM radio, and the software 

FAA selected for ATOP was NDI software from the New Zealand air system.
Page 28 GAO-05-23 Air Traffic Control

interference through the atmosphere was not understood and could 

limit LAAS’s operations. FAA has now placed all LAAS activities in 

research and development. FAA did not adequately assess LAAS’s 

software development. At the time of the contract award, the contractor 

and FAA estimated that 80 percent of the software that LAAS required 

had been developed. FAA later determined that only 20 percent had 

been developed. FAA and the contractor attribute this discrepancy to a 

lack of communication on the steps necessary to satisfy the program’s 

requirements. FAA agrees that it should have conducted a software 

audit and a software capabilities assessment, but pressures to keep 

LAAS on schedule resulted in an inadequate assessment. 

• The ATOP contractor underestimated by about half the extent to which 

legacy nondevelopmental item software, which is the core of the ATOP 

system, met the program’s 1,036 requirements. As a result, a significant 

amount of unanticipated new software code development and other 

modifications were required.26

ATC Systems Have Required 

Multiple Rebaselining Decisions 

to Address Delays and Cost 

Growth

As figure 3 illustrates, FAA initiated at least one rebaselining decision for 

three of the five acquisitions that were begun before AMS was implemented 

and were later transitioned to AMS. These rebaselining decisions 

responded to delays and cost growth—problems that arise when 

requirements are not stable, a program’s design is not fixed, or software 

code growth is not controlled. For example, FAA rebaselined STARS two 

times—first in 1999 and again in 2002. Similarly, 2 years after the 

investment decision for ITWS, FAA rebaselined the program twice, in 1997 

and again in 2001. Given the frequency of these past rebaselining decisions 

for major ATC systems and the number of years that elapsed before or 

between the rebaselining decisions (3 to 4 years), it is too soon to tell 

whether the two systems that were initiated under AMS—ATOP and 

ERAM—will require similar rebaselinings and ultimately meet their cost, 

schedule, and performance goals. Although both programs are currently 

operating within their cost and schedule goals and have not yet been 

rebaselined, FAA has had problems with managing its major acquisitions in 

the past and is currently having difficulties developing requirements and 

managing software complexity. Furthermore, as we reported in May 2004, 

26ATOP is under a fixed-price contract, but the contractor has experienced over $20 million 

in cost overruns during the development phase. Also, FAA renegotiated the terms of the 

contract to ensure that the initial software development phase, known as build 1, would 

meet its June 2004 Initial Operating Capability milestone.
Page 29 GAO-05-23 Air Traffic Control

FAA’s budget increased from $9 billion in 1998 to $14 billion in 2004 but will 

be constrained for the foreseeable future. In such a constrained budget 

environment, cost growth and schedule problems can have serious 

negative consequences for ongoing modernization efforts—postponed 

benefits, costly interim systems, delays in funding other systems, or 

reductions in the number of units purchased.

Internal and External 

Reviews Have Found That 

FAA Has Made Some 

Progress but Continues to 

Experience Problems in 

Acquiring Major ATC 

System under AMS

Reviews of FAA’s acquisition process, conducted by FAA, GAO, the DOTIG, 

and others have shown that FAA has improved its management of major 

ATC acquisitions in recent years but continues to experience cost overruns, 

schedule slips, and performance shortfalls under AMS. Table 7 summarizes 

the results of 22 internal and external reviews of FAA’s major ATC 

acquisitions. According to these reviews, issued from 1997 through 2004, 

the same problems have persisted over many years, despite various 

initiatives to address them, and FAA needs to strengthen its management 

controls. For example, a key FAA review of eight major ATC acquisitions, 

published in 1999, 3 years after AMS was implemented, found that these 

acquisitions, though on track to meet their performance goals, were not 

meeting their cost and schedule baselines. FAA attributed these cost and 

schedule issues to new or poorly understood requirements, underestimates 

of the acquisitions’ technical complexity, and funding shortfalls. 

In addition, our reviews of major FAA acquisitions—initiated before and 

after AMS was implemented—have found for more than two decades that 

FAA’s failure to meet schedule, cost, and performance baselines for major 

ATC acquisitions has been due to shortfalls in planning, weak management 

controls, and a lack of systematic processes for acquiring new systems, 

including inadequate requirements management, cost-accounting data, and 

estimates of technical difficulty. As we reported in August 2004, judged 

against the criteria of GAO’s framework for information technology (IT) 

investment management, which measures the maturity of an organization’s 

investment management processes, FAA has established about 80 percent 

of the basic selection and control practices that it needs to manage its 

mission-critical investments for the National Airspace System.27 For 

example, FAA’s business units actively monitor projects throughout their

27AMS does not call for critical design reviews, but they can be done at the program’s 

discretion. 
Page 30 GAO-05-23 Air Traffic Control

life cycles.28 However, the agency’s senior IT investment board does not 

regularly review investments that are in the “in-service management,” or 

operational phase, and this creates a weakness in FAA’s ability to oversee 

more than $1 billion of its IT investments. In addition, the agency has not 

yet established the practices that would enable it to effectively manage its 

annual IT budget of about $2.5 billion, and agency executives lack 

assurance that they are selecting and managing the mix of investments that 

best meets the agency’s needs and priorities. DOT has responded to our 

recommendations to FAA to strengthen its IT investment management 

capability.

Moreover, other reviews, such as those by Booz-Allen & Hamilton and 

MITRE, have identified other shortfalls, which reflect a lack of proper 

management controls and planning. For example, in 1997, Booz-Allen & 

Hamilton found, among other things, that FAA had not clearly defined 

organizational roles and responsibilities within the various phases of AMS 

and that greater guidance and training under AMS were warranted. In 1999, 

Booz-Allen & Hamilton reported that FAA had not demonstrated 

improvement in adhering to planned costs and schedules under AMS and 

that the agency needed to better manage its development of requirements 

and address persistent funding shortfalls. Moreover, in 2001, a MITRE 

report on selected major acquisitions found inadequate management 

controls and deficiencies in both contractors’ performance and in FAA’s 

measurement of acquisition performance. See table 7 for a chronological 

listing of the reviews.

28GAO, Information Technology: FAA Has Many Investment Management Capabilities in 

Place, but More Oversight of Operational Systems Is Needed , GAO-04-822, (Washington, 

D.C.: Aug. 20, 2004).
Page 31 GAO-05-23 Air Traffic Control

Table 6: Internal and External Reviews of FAA’s Use of AMS for Acquiring Major ATC Systems 

Review Selected findings Contributing factors

GAO, Air Traffic Control: Improved Cost 

Information Needed to Make Billion-Dollar 

Modernization Investment Decisions,

GAO/AIMD-97-20, (Washington, D.C.: Jan. 

22, 1997).

FAA’s cost-estimation practices do not 

satisfy recognized estimating requisites, 

increasing the likelihood of poor acquisition 

selection decisions.

FAA’s cost-accounting practices do not 

provide for the proper accumulation of actual 

project costs.

GAO, Air Traffic Control: Complete and 

Enforced Architecture Needed for FAA 

Systems Modernization, GAO/AIMD-97-30, 

(Washington, D.C.: Feb. 3, 1997).

Incompatibilities exist between current and 

planned ATC acquisitions, resulting in high 

costs and reduced performance. 

FAA lacks a complete systems architecture 

or overall “blueprint” to guide and constrain 

the development and maintenance of ATC 

acquisitions.

GAO, Air Traffic Control: Immature Software 

Acquisition Processes Increase FAA System 

Acquisition Risks, GAO/AIMD-97-47, 

(Washington, D.C.: Mar. 21, 1997).

Planned acquisitions frequently are not 

delivered on time and within budget.

Weaknesses in some key process areas, 

such as planning, requirements 

development, and management, limit FAA’s 

ability to consistently acquire softwareintensive ATC systems on time and within 

budget.

FAA, Evaluation of FAA Acquisition 

Reform—The First Year: April 1996 - March 

1997, (Washington, D.C.: May 1997).

AMS addresses 15 of the 17 problems 

facing acquisitions.

Inadequate management has not enabled 

FAA to meet its goals of reducing acquisition 

deployment time by 50 percent and cost by 

20 percent.

FAA, Evaluation of FAA Acquisition 

Reform—The First Two Years: April 1996 - 

March 1998, Report #1998-02, 

(Washington, D.C.: May 29, 1998).

Further improvements are necessary if 

acquisition reform is going to allow FAA to 

meet its cost and schedule goals.

Procedural weaknesses limit FAA’s ability to 

achieve cost and schedule goals.

GAO, Air Traffic Control: Observations on 

FAA’s Air Traffic Control Modernization 

Program, GAO/T-RCED/AIMD-99-137, 

(Washington, D.C.: Mar. 25, 1999). 

From the inception of its modernization 

efforts, FAA has not consistently followed a 

disciplined management approach for new 

acquisitions.

Weaknesses persist in key areas, such as 

how FAA monitors the status of its 

acquisitions throughout their life cycles.

GAO, Air Traffic Control: FAA’s 

Modernization Investment Management 

Approach Could Be Strengthened, 

GAO/RCED/AIMD-99-88, (Washington, 

D.C.: Apr. 30, 1999).

AMS contained weaknesses in the selection 

of acquisitions and in the review of 

acquisitions’ performance during the 

postimplementation phase.

FAA lacked adequate cost data for making 

selection decisions; adequate management 

controls, and a defined, documented 

process for conducting reviews during the 

in-service management phase.

FAA, Evaluation of FAA Acquisition 

Reform—The First Three Years: April 1996 - 

March 1999, Report #1999-04, 

(Washington, D.C.: May 28, 1999).

FAA’s cost and schedule plans were not on 

track, but performance plans were met.

Requirements changed or were 

misunderstood; technical difficulties were 

underestimated; and funding fell short.

Booz-Allen & Hamilton, Independent 

Assessment of the Federal Aviation 

Administration’s Acquisition Management 

System, (McLean, VA: July 6, 1999). 

FAA has yet to implement a seamless lifecycle approach to acquisitions 

management. 

AMS is not being consistently implemented 

across all life-cycle phases. 

GAO, National Airspace System: Persistent 

Problems in FAA’s New Navigation System 

Highlight Need for Periodic Reevaluation, 

GAO/RCED/AIMD-00-130, (Washington, 

D.C.: June 12, 2000). 

FAA experienced delays and cost increases 

in developing its global positioning 

navigation system; as a result, it is unclear 

whether the benefits of the system will 

outweigh the cost.

FAA lacks a comprehensive plan with 

checkpoints for reviewing the contractor’s 

approach to meeting the system’s 

performance requirements.
Page 32 GAO-05-23 Air Traffic Control

Source: GAO analysis.

Review Selected findings Contributing factors

GAO, National Airspace System: Problems 

Plaguing the Wide Area Augmentation 

System and FAA’s Actions to Address 

Them, GAO/T-RCED-00-229, (Washington, 

D.C.: June 29, 2000).

FAA experienced cost and schedule 

problems in developing this navigational 

system because of unplanned software 

development needs and a requirement to 

warn pilots of any system failure that would 

provide misleading information.

FAA underestimated the complexity of 

developing the acquisition.

GAO, National Airspace System: Free Flight 

Tools Show Promise, but Implementation 

Challenges Remain, GAO-01-932, 

(Washington, D.C.: Aug. 31, 2001). 

Three acquisitions that are components of 

FAA’s planned new approach for air traffic 

management have uncertain potential 

benefits and may not be worth FAA’s 

investment.

FAA needs better data collection and 

analysis processes to ensure that benefits 

are realized.

GAO, National Airspace System: Better Cost 

Data Could Improve FAA’s Management of 

the Standard Terminal Automation 

Replacement System, GAO-03-343, 

(Washington, D.C.: Jan. 31, 2003). 

The reliability of the life-cycle cost estimate 

for STARS is uncertain because cost data 

obtained from the contractor do not reflect 

the current status of the contract.

The development cost estimate is based on 

the contractor’s projections, which FAA has 

not yet independently analyzed, as called for 

under AMS.

GAO, National Airspace System: Current 

Efforts and Proposed Changes to Improve 

Performance of FAA’s Air Traffic Control 

System, GAO-03-542, (Washington, D.C.: 

May 30, 2003). 

FAA was unable to hire a chief operating 

officer to head the ATO. 

Uncertainties about the position’s 

responsibilities, reporting relationships, and 

performance measurement criteria 

hampered the hiring.

DOT/OIG, Status of FAA’s Major 

Acquisitions, AV-2003-045, (Washington, 

D.C.: June 26, 2003).

Cost growth, schedule delays, and 

performance problems continue with FAA’s 

major acquisitions. 

Cost and schedule baselines are not 

reliable, and decisions are being made with 

unclear data.

GAO, Air Traffic Control: FAA’s 

Modernization Efforts—Past, Present, and 

Future, GAO-04-227T, (Washington, D.C.: 

Oct. 30, 2003). 

Systemic management issues, including 

inadequate management controls and 

human capital issues, have contributed to 

major ATC acquisitions’ persistent cost 

overruns, schedule delays, and performance 

shortfalls.

FAA lacked the information technology and 

financial management systems that would 

have helped it reliably determine the 

acquisitions’ technical requirements and 

estimate and control their costs and 

schedules; and the agency’s organizational 

culture discouraged collaboration among 

technical experts and users.

GAO, Information Technology: FAA Has 

Many Investment Management Capabilities 

in Place, but More Oversight of Operational 

Systems Is Needed, GAO-04-822, 

(Washington, D.C.: Aug. 20, 2004).

Although weaknesses remain, FAA has 

established about 80 percent of the basic 

practices needed to manage its missioncritical acquisitions so that it can be assured 

that it is selecting and managing the mix of 

investments that best meets its needs and 

priorities.

Remaining weaknesses include inadequate 

management controls and the lack of a 

defined, documented process for conducting 

reviews during the in-service management 

phase.

GAO, Air Traffic Control: System 

Management Capabilities Improved, but 

More Can Be Done to Institutionalize 

Improvements, GAO-04-901, (Washington, 

D.C.: Aug. 20, 2004).

FAA made progress in improving its system 

management capabilities, but can do more 

to institutionalize process improvement 

initiatives. 

Process improvement efforts have not been 

institutionalized. 

(Continued From Previous Page)
Page 33 GAO-05-23 Air Traffic Control

FAA’s ATO Is Taking Steps 

to Improve Major ATC 

Acquisitions

FAA’s recent reorganization, which brought ATC acquisitions and 

operations together in the ATO,29 is expected to help the agency address 

many of the concerns we have identified for more than two decades, 

including those identified in this report. For example, the ATO is continuing 

to develop and refine specific guidance for critical areas, such as 

requirements management, software development, and cost estimation. In 

addition, as the overseer of both ATC acquisitions and operations, the ATO 

is in a position to facilitate more effective management of major ATC 

acquisitions than has occurred in the past. The ATO is attempting, for 

example, to link acquisition decisions directly with expected 

improvements in operational efficiency without compromising safety. This 

is important, given that FAA has spent about $2.5 billion on ATC 

modernization per year since 1996 while operating costs have continued to 

rise—from $4.6 billion to $7.5 billion over the past decade. FAA had not 

completed its reorganization or implemented all of its initiatives at the time 

of our audit. 

Improvements to Requirements 

Development

With the establishment of the ATO, FAA consolidated requirements 

development from two organizations (the organization sponsoring an 

acquisition and the former agencywide acquisition organization) into a 

single new organization—the Air Traffic System Requirements Service.30 In 

addition, the ATO developed guidance to better manage requirements 

during the middle phase of AMS (solution implementation). According to 

FAA officials, some more complex development efforts may need to 

develop systems requirements and a more detailed requirements document 

than AMS currently calls for in the final requirements document. More 

important, in January 2003, FAA issued guidance on requirements 

management, Roles in Requirements Management During Solution 

Implementation Phase, which provides for integrated requirements teams 

that maintain responsibility for requirements management throughout an 

acquisition’s life cycle. According to this guidance, when the final 

requirements document is accepted by the Joint Resources Council at the 

investment decision point, a requirements baseline is established and any 

29FAA is organized into five business units that include: Airports; Regulation and 

Certification; Commercial Space Transportation; the Office of Security and Hazardous 

Materials; and the Air Traffic Organization.

30Merging the former Air Traffic Services and the Research and Acquisitions organizations formed 

the ATO; individual organizations within FAA sponsor specific acquisitions to meet identified needs 

(e.g., controller workstations and radars).
Page 34 GAO-05-23 Air Traffic Control

proposed changes to the requirements must be assessed for their impact on 

the program and shown to be operationally suitable, affordable, 

executable, and justifiable. An FAA official on an integrated requirements 

team stated that any changes that may affect an acquisition’s cost and the 

schedule require approval by the Executive Committee. The FAA official 

also stated that this guidance has already helped to stabilize NEXCOM’s 

requirements during the solution implementation phase. Other FAA 

officials representing the Joint Resources Council acknowledged that the 

guidance should ensure greater control over program requirements 

growth, but said that not all program offices have consistently applied it. 

Improvements to Managing 

Software and System Acquisition 

and Development

To better manage software programs for ATC modernization acquisitions, 

FAA established a centralized process improvement office that reports to 

the Chief Information Officer (CIO).31 This office developed an FAA 

integrated capability maturity model (i-CMM), a software development and 

management model that is similar to a model developed by Carnegie 

Mellon University called the Capability Maturity Model Integration 

(CMMI®), which is used to appraise the maturity of an organization’s 

processes for acquiring software. However, FAA’s i-CMM goes beyond 

Carnegie Mellon’s model to reflect international standards. The CMMI® 

appraisal methodology calls for assessing process areas—such as project 

planning, requirements management, and quality assurance—by 

determining whether key practices are implemented and overarching goals 

are satisfied. Both the i-CMM model and CMMI® appraisal methodologies 

provide a logical framework for measuring and improving key processes 

needed for achieving quality software and systems. 

However, as we reported in August 2004,32 FAA projects are not required to 

use the capability maturity model for process improvement, and individual 

projects that use the i-CMM model are allowed to choose which process 

areas they seek to improve and to determine when they are ready for an 

appraisal of their progress. To date, fewer than half of FAA’s major ATC 

projects have used this model. The recurring weaknesses we identified in 

our project-specific evaluations are due in part to the flexibility these 

projects were given in deciding whether and how to adopt this process 

31The CIO is not part of the ATO; however, the CIO’s efforts to improve FAA’s acquisition and 

management of software for major ATC systems are directly related to the ATO’s efforts to 

improve the agency’s acquisition of major ATC systems.

32GAO, Air Traffic Control: System Management Capabilities Improved, but More Can Be 

Done to Institutionalize Improvements, GAO-04-901, (Washington, D.C.: Aug. 20, 2004).
Page 35 GAO-05-23 Air Traffic Control

improvement initiative. Furthermore, after combining its ATC 

organizations into a single performance-based organization (the ATO), FAA 

is reconsidering prior policies, and it is not yet clear whether process 

improvement will remain a priority. Without a strong senior-level 

commitment to process improvement and a consistent, institutionalized 

approach to implementing and evaluating it, FAA cannot ensure that key 

projects will continue to improve systems acquisition and development 

capabilities. As a result, FAA will continue to risk the project management 

problems—including cost overruns, schedule delays, and performance 

shortfalls—that have plagued past acquisitions. To address these 

shortcomings, we recommended that the Secretary of Transportation 

address specific weaknesses and institutionalize FAA’s process 

improvement initiatives by establishing a policy and plans for 

implementing and overseeing process improvement initiatives.

Improvements to Estimating 

Costs

FAA has taken steps to improve its cost estimation for major ATC projects 

by issuing guidance on how to develop and use pricing under AMS. For 

example, AMS policy calls for audit trails to record and explain the values 

that are used as inputs to cost models. In addition, it calls for agency 

officials, when reporting to executive oversight agencies and Congress, to 

disclose the level of uncertainty and imprecision that are inherent in cost 

estimates for major ATC systems. According to AMS policy, estimators 

record the procedures, ground rules and assumptions, data, environment, 

and events that underlie their development or update of a cost estimate. 

This information supports the credibility of the cost estimate, aids in the 

analysis of changes in program costs, enables reviewers to assess the cost 

estimate effectively, and contributes to the population of FAA databases 

that can be used for estimating the cost of future programs. Finally, despite 

a delay of many years, FAA officials told us that they are in the final stages 

of completing the agency’s cost-accounting system and plan to have it in 

place across the agency by the end of this calendar year, which will bring 

FAA into compliance with the Federal Managers' Financial Integrity Act of 

1982. This measure will help reduce the likelihood of cost overruns or 

improper payments for unallowable costs and provide decision-makers 

with critical information. As we have reported in the past,33 a costaccounting system is critical to managing major ATC acquisitions, because 

without it, FAA lacks the information it needs to reliably estimate operating 

costs over an acquisition’s life cycle. 

33GAO, Air Traffic Control: FAA’s Modernization Investment Management Approach 

Could be Strengthened, GAO/RCED/AIMD-99-88, (Washington, D.C.: April 30, 1999).
Page 36 GAO-05-23 Air Traffic Control

Other Improvement Efforts In May 2004, the FAA Administrator testified to Congress that, to date, in 

attempting to improve the efficiency of ATC operations while maintaining 

safety, FAA had not managed its major ATC acquisitions to be aware of 

their cost implications for its operations. The Administrator said, however, 

that the agency was taking its first steps to fundamentally change how it 

makes acquisition decisions by adopting a more results-oriented approach. 

Under this approach, the agency plans to link its decisions to fund major 

acquisitions directly with their expected contribution to improving 

operational efficiency and controlling escalating operating costs. Whereas, 

in the past, FAA measured results in terms of its progress in completing and 

deploying a major ATC system, it was now going to focus on how a given 

system improved operational efficiency. Such an approach holds promise 

for helping FAA more effectively manage its portfolio of major ATC 

acquisitions by providing a sound basis for choosing among competing 

priorities. However, because FAA has only recently begun to incorporate 

this type of analysis of acquisitions’ costs and operational efficiency into its 

decision-making and management processes, it is still too early to assess 

the results.

In addition, to its credit, FAA has created a training framework for its 

acquisition workforce, which we found mirrors human capital best 

practices that we have identified. In January 2003, we reported on FAA’s 

efforts to define and train its workforce to meet the requirements of the 

Clinger-Cohen Act of 1996.34 This act required FAA and other civilian 

agencies to establish education, training, and experience requirements for 

their acquisition workforce. Our work on public and private best practices 

has identified six elements of training as critical to acquisition. These 

elements include (1) prioritizing the acquisition initiatives most important 

to the agency, (2) securing top-level commitment and resources, (3) 

identifying those who need training on specific initiatives, (4) tailoring 

training to meet the needs of the workforce, (5) tracking training to ensure 

it reaches the right people, and (6) measuring the effectiveness of training.

These six elements are crucial for successfully implementing acquisition 

initiatives and reforms. Agencies that do not focus their attention on these 

critical elements risk having an acquisition workforce that is ill equipped to 

implement new processes. The probability of success is higher if training is 

well planned rather than left to chance. In 2003, we found that FAA’s model 

for training its acquisition workforce largely mirrored public and private34GAO, Acquisition Management: Agencies Can Improve Training on New Initiatives, 

GAO-03-281, (Washington, D.C.: Jan. 15, 2003).
Page 37 GAO-05-23 Air Traffic Control

sector best practices and that the agency had highly developed processes 

for four of these six elements. See figure 4. 

Figure 4: Our Analysis of FAA’s Progress as of 2003 in Implementing Key Elements 

of Training for Its Acquisition 

1. Prioritize initiatives most important to the agency

2. Demonstrate top-level commitment and provide resources

3. Identify those who need training on specific initiatives and set training requirements

4. Tailor training to meet the needs of the work force

5. Track training to ensure it reaches the right people

6. Measure the effectiveness of training

Key elements

High process development - An established, identifiable process exists within the agency for

systematically or routinely accomplishing this element

Some process development - The agency has taken some action but has not developed a clearly

defined process for accomplishing this element

Little process development - No identifiable, established process exists within the agency to

accomplish this element. Little evidence exists of substantial activity or efforts toward the development

or improvement of this activity

Source: GAO.

Workforce

Since 2003, FAA has taken some steps to measure the effectiveness of its 

training. For example, the agency collects and reviews participants’ 

assessments of the knowledge they have gained, the extent that learning 

objectives were achieved and the applicability and usefulness of the 

training. In addition, members of FAA’s Intellectual Capital Investment Plan 

Council35 have attempted to make qualitative judgments about the impact 

of the training on the effectiveness or efficiency of their organizations. 

However, FAA is still developing an evaluation program with metrics to 

measure the extent to which organizational goals are achieved when 

individual training objectives are met. Industry and government experts 

believe training and human capital investments are prerequisites for 

35In October 1997, FAA created the Intellectual Capital Investment Plan Council to address 

the development needs of staff in its research and acquisition organization. The council is 

made up of directors and deputy directors from the agency’s acquisition and research 

programs.
Page 38 GAO-05-23 Air Traffic Control

successfully introducing and implementing effective acquisition best 

practices. FAA’s acquisition workforce plays a critical role in addressing 

long-standing weaknesses that we and others have identified with FAA’s 

acquisition of major ATC systems. Given the importance of training for 

acquisition workforces, it will be important for the ATO to put mechanisms 

in place to comprehensively evaluate the effectiveness of the training it 

provides to improve the knowledge base of FAA’s acquisition workforce. 

To improve its investment management decision-making and oversight of 

major ATC acquisitions, the ATO also initiated the following procedures: 

• Integrate AMS and the Office of Management and Budget’s Capital 

Planning and Investment Control Process36 to develop a process for 

analyzing, tracking, and evaluating the risks and results of all major 

capital investments made by FAA.

• Conduct Executive Council reviews of project breaches of 5 percent in 

cost, schedule, and performance to better manage cost growth;

• Issue monthly variance reports to upper management to keep them 

apprised of cost and schedule trends.

• Monitor progress in meeting the goals identified in FAA’s Flight Plan, the 

agency’s blueprint for action through 2008. The Executive Council 

tracks this progress monthly and reports to the Administrator, using a 

color-coded system to keep her apprised of how well FAA is meeting its 

goals. Green denotes that a goal will be met, yellow denotes that some 

of the activities leading to a main goal may be in jeopardy but the overall 

goal can be achieved, and red denotes serious concerns about reaching 

a goal without major intervention. A formal progress report is issued 

quarterly and made publicly available on the agency’s Web site; and

36Capital Planning and Investment Control is a disciplined process that links planning to 

budgeting to procurement to operations, maintenance, and management.
Page 39 GAO-05-23 Air Traffic Control

• Increase the use of cost monitoring or earned value management 

systems37 to improve oversight of programs.

Despite FAA’s current and planned efforts to improve its acquisition of 

major ATC systems under the ATO, given the newness of these efforts and 

the agency’s poor track record in this area for more than two decades, it is 

critical for FAA to (1) modify AMS to more fully reflect the best practices 

followed by high-performing acquisition organizations, (2) follow through 

on planned improvement initiatives, and (3) adopt a continuous 

improvement approach to acquiring new ATC systems. 

Conclusions In the early 1990s, FAA contended that it needed relief from the FAR to 

remedy long-standing problems with cost, schedule, and performance 

shortfalls in its major ATC acquisitions; however, our work for more than 

two decades in this area has found that acquiring major ATC systems 

successfully depends more on managing an acquisition process well than 

on using a specific contracting process (e.g., the FAR or AMS). While our 

recent work has shown some improvement in FAA’s management of major 

ATC system acquisitions, some key problems that existed before 1996 

persist under AMS—including difficulty with clearly defining system 

requirements at the investment milestone and adequately assessing 

complex software requirements. These problems continue to make these 

acquisitions vulnerable to cost, schedule, and performance shortfalls. 

Without further measures to improve the development and management of 

requirements and to better estimate the complexity of the software 

development needed for major ATC systems, such shortfalls are likely to 

persist. 

Although AMS provides some discipline for acquiring major ATC systems 

through its various phases, activities, and decision points, it does not 

require that (1) specific knowledge be attained using explicit written 

criteria and (2) corporate executive-level oversight be provided to 

determine—independently from the program offices—whether a system 

37Earned value management compares the actual work performed at certain stages of a job 

to its actual costs—rather than comparing budgeted and actual costs, the traditional 

management approach to assessing progress. By measuring the value of the work that has 

been completed at certain stages in a job, earned value management can alert program 

managers, contractors, and administrators to potential cost overruns and schedule delays 

before they occur and to problems that need correcting before they worsen. 
Page 40 GAO-05-23 Air Traffic Control

has reached a level of development (product maturity) sufficient to move 

forward in the acquisition process. Commercial best practices call for such 

knowledge-based decision-making at the corporate executive-level to help 

ensure that acquisitions are not moved into the development phase 

prematurely, to obtain greater predictability in ATC system program costs 

and schedules, to improve the quality of the ATC systems that are deployed, 

and to deliver new capability to the National Airspace System faster. A 

knowledge-based approach is also important because it provides assurance 

that agency decision-makers have critical information about an 

acquisition’s ability to meet a mission need and FAA’s readiness to move 

forward in the acquisition process before making large commitments of 

agency resources. Absent such an approach, FAA lacks assurance that it 

has obtained the critical technological, design, or manufacturing 

knowledge that best practices call for to avoid cost overruns, schedule 

slips, and performance shortfalls. As a result, FAA is not doing all that it 

can to systematically address persistent shortcomings in its management of 

major ATC acquisitions. Moreover, although FAA has established a 

framework for training its acquisition workforce under the ATO, it has not 

yet developed comprehensive performance criteria to evaluate how 

effectively it has implemented this framework. As a result, the agency lacks 

assurance that its use of this framework is having the intended effect of 

improving the knowledge base of this workforce. 

Recommendations for 

Executive Action

We are making five recommendations to the Secretary of Transportation. 

To reduce the risk of persistent cost and schedule shortfalls in major ATC 

system acquisition programs, to improve the quality of the ATC systems 

that are deployed, and to deliver new capability to the National Airspace 

System faster, we recommend that the Secretary of Transportation advise 

the FAA Administrator to take the four following actions:

• Modify AMS to specify that requirements be more clearly defined for 

major ATC systems, including providing more detailed guidance on 

setting clear, objective, and measurable requirements that reflect 

customers’ needs, before making large investments of agency resources.

• Establish a strategy for identifying and measuring all additional 

development needed for complex software (e.g., commercial-off-theshelf or nondevelopmental items) used for major ATC systems.
Page 41 GAO-05-23 Air Traffic Control

• Develop explicit written criteria for the key decision points called for 

under best practices, including the capture of specific design and 

manufacturing knowledge. 

• Require corporate executive-level decisions at these key decision points 

(before an acquisition moves from integration to demonstration and, 

again, before it moves to production). 

In addition, to assure FAA that the training framework it has adopted for 

the ATO’s acquisition workforce is improving the knowledge base of this 

workforce as intended, we recommend that the Secretary advise the 

Administrator to develop performance criteria to comprehensively 

evaluate the framework’s effectiveness. 

Agency Comments We provided copies of a draft of this report to DOT for review and 

comment and met with Department and FAA officials, including the ATO's 

Vice President for Acquisition and Business Services, to obtain their 

comments. FAA officials told us that they have made great strides in 

improving their acquisition of major ATC systems under AMS; however, 

they recognize that there is room for improvement and are firmly 

committed to implementing best practices for acquisitions. These officials 

generally agreed with the report's findings and conclusions and said that 

our recommendations would be useful to them as they continue to refine 

their acquisition management system, including training their acquisition 

workforce. The agency provided us with oral comments, primarily 

technical clarifications, which we have incorporated as appropriate. 

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies of this report to interested 

congressional committees, the Secretary of Transportation, and the 

Administrator, FAA. We will also make copies available to others upon 

request. In addition, the report will be available at no charge on the GAO 

Web site at http://www.gao.gov.
Page 42 GAO-05-23 Air Traffic Control

Please call me at (202) 512-2834 if you or your staff have any questions 

concerning this report. Key contributors to this report are listed in 

appendix VI.

JayEtta Z. Hecker

Director, Physical Infrastructure Team
Page 43 GAO-05-23 Air Traffic Control

Appendix I

FAA Has Begun Analyzing Spending Trends to Apendxies

Take a More Strategic Approach to 

Procurement ApendxiI

Our review of the Federal Aviation Administration’s (FAA) general 

procurement of goods and services focused on the Air Traffic Organization 

(ATO) and its predecessor offices. According to FAA officials, the ATO has 

recently begun to consider ways to better leverage its buying power by 

taking a more strategic approach to procurement. While FAA uses the 

Acquisition Management System (AMS) for all FAA acquisitions, including 

the procurement of such goods and services as office supplies, computers, 

telephone services, and engineering and technical support services, these 

procurement activities take place in a decentralized environment of 

independent, transaction-oriented buying processes. Each FAA unit 

determines its need for goods and services and procures them as necessary, 

leaving headquarters with limited oversight of the agency’s total 

procurement spending. For example, in 2003, FAA units carried out over 

346,000 procurement actions for goods and services and purchase 

cardholders1

 made an additional 335,000 transactions. This fragmented 

environment does not permit the agency to leverage its buying power 

through lower-cost, consolidated contracts, at the local, regional, or 

national level and to rationalize the number of suppliers best suited to meet 

the agency’s needs. At the same time, as part of a strategic procurement 

effort, FAA can use spend analysis to monitor trends in small and 

disadvantaged business participation so that it can balance the goals of 

lower-cost contract consolidation and promoting small business 

contracting opportunities.

Spend analysis, a tool used in a strategic approach to procurement, 

provides knowledge about how much is being spent for what goods and 

services, who the buyers are, who the suppliers are, and where the 

opportunities are to leverage buying power. Our past work2

 shows that 

private companies are using spend analysis as a foundation for employing a 

strategic approach to procurement. The analysis identifies where 

numerous suppliers are providing similar goods and services—often at 

varying prices—and where purchasing costs can be reduced and 

performance improved by better leveraging buying power and reducing the 

1

Through the purchase card program, agency personnel can acquire the routine goods and 

services they need directly from vendors as long as the purchase is $2,500 or less.

2

GAO, Best Practices: Using Spend Analysis to Help Agencies Take a More Strategic 

Approach to Procurement, GAO-04-870, (Washington, D.C.: Sept. 16, 2004); Best Practices: 

Improved Knowledge of DOD Service Contracts Could Reveal Significant Savings, GAO03-661, (Washington, D.C.: June 9, 2003); and Best Practices: Taking a Strategic Approach 

Could Improve DOD’s Acquisition of Services, GAO-02-230, (Washington, D.C.: Jan. 18, 

2002). 
Appendix I

FAA Has Begun Analyzing Spending Trends to 

Take a More Strategic Approach to 

Procurement

Page 44 GAO-05-23 Air Traffic Control

number of suppliers to meet the company’s needs. Our research on 

commercial best practices has found that spend analysis is an important 

driver of strategic planning and execution. As part of an overall strategic 

procurement effort, companies use spend analysis to (1) define the 

magnitude and the characteristics of their spending, (2) understand their 

internal clients and supply chain, (3) create lower-cost consolidated 

contracts, and (4) monitor spending with small and disadvantaged 

businesses to achieve socioeconomic procurement goals. 

We previously reported3 that six agencies, including DOT, did not take 

advantage of opportunities to obtain more favorable prices on purchase 

card buys with frequently used vendors—vendors where an agency spends 

more than $1 million annually. In these six agencies, which accounted for 

over 85 percent of federal government purchase card spending, frequently 

used vendors accounted for purchases totaling nearly $3 billion in 2002. We 

recommended several actions—including conducting spend analysis using 

available data and gathering additional information where feasible—that 

could ultimately help these agencies achieve $300 million annually in 

potential savings. 

In fiscal year 2003, FAA procured nearly $4 billion in goods and services 

and spent an additional $132 million using purchase cards. According to 

senior FAA officials, the agency has just begun to implement a strategic 

approach to general procurements. Other federal agencies are beginning to 

use strategic tools such as spend analysis to improve their spending for 

goods and services, and some have initiatives under way to obtain more 

favorable prices on purchase card buys. According to a senior FAA 

acquisition official, FAA has to balance the need of its units to 

independently make purchases that pertain solely to unit requirements 

with the agency’s need to aggregate purchases of goods and services that 

are used by more than one unit. FAA has hired a consultant to help begin 

the use of spend analysis. This effort could reduce the agencywide costs for 

mobile wireless services by 40 percent—an effort expected to save the 

agency $8 to $10 million annually. FAA intends to expand its use of spend 

analysis to target other procurement category savings opportunities, 

including information technologies, training, facilities, and professional 

services, as its accounting systems improve. 

3

GAO, Contract Management: Agencies Can Achieve Significant Savings On Purchase 

Card Buys, GAO-04-430, (Washington, D.C.: Mar. 12, 2004).
Appendix I

FAA Has Begun Analyzing Spending Trends to 

Take a More Strategic Approach to 

Procurement

Page 45 GAO-05-23 Air Traffic Control

FAA has taken some preliminary steps to set up a spend analysis program; 

however, progress has been challenging for FAA because of deficiencies in 

its accounting systems. For example, because the agency’s accounting 

system did not identify all of the mobile wireless services for which it was 

being billed, the contractor implementing the spend analysis had to obtain 

this information from the wireless providers. FAA will need to expedite its 

efforts in this area to fully realize potential savings. Our prior research has 

shown that setting up a spend analysis program can be challenging. 

Companies have had problems accumulating sufficient data from internal 

financial systems that do not capture information on all of what a company 

buys or is using in different, unconnected parts of the company. Despite 

these challenges, companies that have developed formal, centralized spend 

analysis programs have been able to track their costs and identify areas for 

strategic sourcing and savings opportunities. 

In our recent report on spend analysis,4 we found that DOT, at the time of 

our review, had not yet begun to collect the data needed for a strategic 

approach to procurement; however, the department is engaged in ongoing 

efforts to improve procurements, and its top leadership is committed to 

using spend analysis to change the way goods and services are purchased. 

One obstacle to using spend analysis that the department cited during our 

review was a lack of comprehensive and reliable spending data. However, 

since we completed our review, the department reports stepping up efforts 

to use currently available data and evaluate business intelligence software 

to overcome those obstacles. In commenting on our report, 

Transportation’s senior procurement executive told us that the department 

is expanding its spend analysis efforts. For example, his office recently 

reviewed purchase card spending data to identify volume discount 

opportunities and is now using the results to negotiate new discount 

agreements with several office product vendors. In addition, he told us that 

to facilitate future agencywide purchase card spend analyses, DOT 

awarded a task order in June 2004 to one bank card company that will 

provide purchase-card audit software and enhanced data-mining 

capabilities. He also indicated that the department’s leadership supports 

fiscal year 2005 funding to enhance spend analysis capabilities and that 

software options for the new agencywide spend analysis system are now 

being evaluated as part of an ongoing financial and procurement review.

4

GAO, Best Practices: Using Spend Analysis to Help Agencies Take a More Strategic 

Approach to Procurement, GAO-04-870, (Washington, D.C.: Sept. 16, 2004). 
Page 46 GAO-05-23 Air Traffic Control

Appendix II

Objectives, Scope, and Methodology ApendxiI

To compare FAA’s Acquisition Management System (AMS) with the Federal 

Acquisition Regulation (FAR), we reviewed AMS and changes in it over 

time. We also compared FAA’s acquisition authority under the FAR and 

under AMS. In addition, we identified relevant recommendations from 

reports that we, the Department of Transportation’s Inspector General 

(DOTIG), and others have issued to determine which recommendations 

have been implemented, rejected, or left open, and to evaluate how those 

recommendations have modified FAA’s acquisition policies and practices. 

We also collected and summarized published reports and analyzed 

available life-cycle management data on the current status of major and 

nonmajor acquisitions being carried out under AMS.

To determine the ways in which FAA’s acquisition policies compare with 

our best practices model, we used information from several of our 

products that examine how commercial best practices can improve 

outcomes for acquisition programs. This model consists of four phases: (1) 

concept and technology development; (2) product development, which 

includes both integration and demonstration activities; (3) production; and 

(4) operations and support. In between these four phases are three key 

knowledge points at which commercial firms must have sufficient 

knowledge to make large investment decisions. We also reviewed and 

analyzed AMS, accessible at http://fast.faa.gov. Furthermore, to clarify the 

content of FAA’s acquisition process, we met with various FAA vicepresidents and officials from FAA's Acquisition Planning and Policy 

Division. Next, we compared and contrasted FAA's acquisition policies 

with the best practices for commercial acquisitions identified in our past 

reports. Our analysis focused on whether FAA's policies contained the 

measurable criteria and management controls necessary to achieve FAA's 

intent of minimizing cost, schedule, and performance risks. We also 

interviewed current and former FAA procurement officials that have 

experience using both the FAR and AMS. 

To determine if FAA has effectively implemented its new acquisition 

authority and improved its acquisition outcomes, we reviewed seven of 

FAA’s most expensive major ATC acquisitions, including the Airport 

Surveillance Radar 11 (ASR-11), Standard Terminal Automation 

Replacement System (STARS), Integrated Terminal Weather System 

(ITWS), Local Area Augmentation System (LAAS), Next Generation 

Air/Ground Communications System (NEXCOM), Advanced Technologies 

and Oceanic Procedures (ATOP), and En Route Automation Modernization 

(ERAM). See table 7 for specific program costs.
Appendix II

Objectives, Scope, and Methodology

Page 47 GAO-05-23 Air Traffic Control

Table 7: Program Costs for the Seven Systems We Reviewed 

Source: GAO analysis.

Note: These amounts are for facilities and equipment only (not operations and maintenance). 

We also selected these seven acquisitions because we considered them to 

fall into two basic categories-pre-AMS and post-AMS. Five of the 

acquisitions were initiated before AMS was implemented in April 1996 and 

were transitioned into AMS at various times before their completion. The 

two remaining acquisitions—ATOP and ERAM—were initiated and have 

remained completely under AMS. We then reviewed program documents 

and reports and interviewed program and agency officials responsible for 

developing these acquisitions, as well as other acquisitions experts in the 

private sector. For some acquisitions, we discussed programmatic issues 

with representatives of the primary contractor for the specific acquisition 

to obtain information on the practices and procedures used for the 

acquisition. In addition, we interviewed some current and former FAA 

procurement officials with experience using both the FAR and AMS to 

obtain their views on the use of each contracting process and how the two 

compare. Furthermore, to see how FAA has progressed in addressing 

problems with its acquisitions, we reviewed our work on acquisitions over 

the last 20 years, as well as reports by the DOTIG, FAA, Booz-Allen & 

Hamilton, and MITRE. Because the data in this report on cost, schedule 

and performance are used as background information or to otherwise 

provide a description of acquisitions, we did not assess their reliability. 

The effect of the current budget process on FAA’s ability to successfully 

modernize the National Airspace System, including acquiring major ATC 

systems is not within the scope of this review. 

Dollars in millions

Program Total program cost as of 9/30/04

STARS $1,460.0

ASR-11 891.7

ITWS 288.3

LAAS 696.1

NEXCOM 318.4

ATOP 548.2

ERAM 2,154.6

Total $6,357.3
Page 48 GAO-05-23 Air Traffic Control

Appendix III

Comparison of the Scope and Flexibility of 

FAA’s Acquisition Management System and 

the Federal Acquisition Regulation Process ApendxiI

Background FAA’s business processes, including its acquisition of major systems, differ 

significantly from the business processes followed by most other federal 

agencies. FAA relies on its Acquisition Management System (AMS), which 

establishes FAA internal acquisition policy. AMS resulted from the adoption 

of language in the Department of Transportation and Related Agencies 

Appropriations Act,1

 which directed the FAA Administrator to develop and 

implement an acquisition management system for FAA. The adoption of 

this language (section 348) followed FAA’s assertions that the requirement 

that it conduct procurements in accordance with the Federal Acquisition 

Regulation (FAR) was at least a contributing factor in its repeated failure to 

complete air traffic control (ATC) and other modernization programs on 

schedule. The Administrator was directed to put in place a system that 

would address the “unique needs of the agency” that FAA contended 

prevented its acquisitions from being timely and cost-effective.

Section 348 distinguished FAA from other federal agencies by removing 

FAA from the federal acquisition system. Under section 348, FAA was no 

longer subject to title III of the Federal Property and Administrative 

Services Act of 1949,2

 which among other things requires that the 

government procure supplies and services competitively. It removed FAA 

as an agency subject to the Office of Federal Procurement Policy Act3 and 

eliminated the requirement that FAA comply with the FAR. While 

mandating that FAA conduct its acquisitions so that “all reasonable 

opportunities to be awarded contracts shall be provided to small business 

concerns and small business concerns owned and controlled by socially 

and economically disadvantaged individuals,” section 348 eliminated the 

requirement that FAA comply with the Small Business Act.4

 Furthermore, it 

made the procurement protest system of the U.S. Government 

Accountability Office inapplicable to FAA, although disappointed offerors

1

P. L. 104-50, § 348, 109 Stat 436 (1995). Included in the United States Code as 49 U.S.C. § 

40110.

2

41 U.S.C. Ch. 4.

3

41 U.S.C. Ch. 7.

4

15 U.S.C. Ch. 14A.
Appendix III

Comparison of the Scope and Flexibility of 

FAA’s Acquisition Management System and 

the Federal Acquisition Regulation Process

Page 49 GAO-05-23 Air Traffic Control

can still file protests with FAA’s Office of Dispute Resolution for 

Acquisition.5

AMS Defines an 

Investment/Life-Cycle 

Project Management 

System

Much of AMS guidance concerns project, financial, and property life-cycle 

management issues. In fact, FAA’s policy describes AMS as applying to all 

investment programs regardless of cost or the appropriation funding them. 

It recognizes that a single investment program may span multiple 

procurements and projects. It applies, according to its terms, to the 

activities associated with needs analysis, determination of requirements, 

analysis of investment alternatives, establishment of investment programs, 

allocation and expenditure of resources, procurement and deployment of 

needed products and services, in-service management of fielded capability, 

and eventual disposal of obsolete products. 

AMS focuses on the following key program milestones:

• Mission Analysis—encompasses those key corporate and service-level 

processes that define, coordinate, and integrate the work of service 

organizations,6

 thereby providing strategic direction to keep FAA 

responsive to the service needs of its customers. Mission analysis is 

used to update a mission need statement, which in turn may identify 

capability shortfalls or technological opportunities, that is, unmet needs. 

Unmet needs are presented to the Joint Resources Council (JRC) for a 

mission need decision. To be approved, the unmet need should be 

supported by the updated mission need statement and the initial 

requirements document, including a concept of use, and the initial 

investment plan.

• Investment Analysis—builds on the results of the mission need decision 

by developing detailed plans and final requirements for each proposed 

investment program and by defining an acquisition program baseline 

that establishes cost, schedule, performance, benefit, and riskmanagement boundaries for the program. AMS calls for planning the 

entire solution—an effort that may use market survey data but is based 

5

14 C.F.R. pt. 17.

6

AMS views FAA as consisting of numerous service-level organizations, which in turn are 

organizational subunits that deliver services within FAA, to industry or to the public, 

including technical as well as nontechnical service providers. 
Appendix III

Comparison of the Scope and Flexibility of 

FAA’s Acquisition Management System and 

the Federal Acquisition Regulation Process

Page 50 GAO-05-23 Air Traffic Control

in large measure on FAA’s assumptions and data. The service 

organization produces a final implementation and life-cycle support 

strategy. A detailed program plan and an acquisition program baseline 

are also produced. The results are presented to the JRC for a “final 

investment decision.”7

• Solution Implementation—encompasses acquiring, accepting, 

deploying, installing and preparing for the operational use of an 

approved investment. Approval of the investment carries with it 

authorization for the service organization to conduct all acquisitions 

needed to execute the investment decision, subject to any constraints 

established in the final investment decision.

• In-Service Decision—is an FAA system qualification milestone, which is 

achieved when an otherwise operational investment is satisfactorily 

tested to demonstrate its operational effectiveness and suitability before 

it is placed in service in the National Airspace System. The JRC 

designates the decision maker.

• In-Service Management—covers activities throughout a system’s life 

cycle, starting at the time that an investment becomes operational. Inservice product improvements may eliminate latent defects, fix systemic 

problems, and enhance the utility of the investment. These changes may 

be made within the approved acquisition program baseline without 

corporate-level approval. In-service management also includes planning, 

programming, and developing supporting budget input; monitoring and 

assessing performance, cost of ownership, and support trends; and 

planning for service-life investment decisions. 

• Service Life Extension—seeks a new investment decision by the JRC 

when a current capability is unable to satisfy demand or when another 

solution may be more effective. The JRC can decide to revalidate the 

mission need satisfied by the solution by upgrading or refurbishing 

fielded capability or by replacing that capability with another equivalent 

or new superior solution. The JRC may also decide that the capability 

should be retired.

7

Investment analysis also includes identifying and analyzing alternatives; developing lifecycle cost estimates; assessing net present value, return on investment, and benefits; 

assessing affordability; analyzing risk; evaluating the impact of an alternative on enterprise 

architecture; and planning for deployment and implementation.
Appendix III

Comparison of the Scope and Flexibility of 

FAA’s Acquisition Management System and 

the Federal Acquisition Regulation Process

Page 51 GAO-05-23 Air Traffic Control

Only a Portion of AMS 

Deals Directly with the 

Procurement Process

Although the FAR includes requirements addressing procurement planning 

and major system acquisition, AMS as just outlined differs significantly 

from the FAR in its focus and scope. The FAR addresses planning8

 and 

major system acquisition9 in the context of government procurement policy 

and procedure. Agencies other than FAA find the broader program 

planning and management issues addressed in AMS outside of the FAR, in 

documents such as the Office of Management and Budget’s (OMB) Circular 

A-109, in their own planning guidance, such as the Department of Defense’s 

(DOD) 5000 series,10 and in established knowledge-based best practices. As 

indicated earlier, much of AMS focuses on just such issues. Only AMS 

section 3 addresses procurement policy and procedure.11

AMS States a 

Nonregulatory FAA 

Policy

A further significant foundational difference between AMS and the FAR is 

that AMS sets out a nonregulatory FAA policy, whereas the FAR was 

adopted and is maintained as a set of published governmentwide regulatory 

requirements, which form a legal basis for federal agencies’ contract 

decision-making. AMS is binding on FAA personnel as FAA employees and 

establishes other guidelines that FAA states should be followed unless 

there is a rational basis for doing otherwise. AMS is subject to such internal 

controls as the Administrator chooses to enforce and general overarching 

legal requirements, such as the Government Performance and Results Act 

of 1993 (GPRA).12 There is a legal requirement, created by section 348, that 

small and socially or economically disadvantaged firms be given all 

reasonable opportunities to receive contract awards. FAA in its Office of 

Dispute Resolution for Acquisition has adopted a dispute resolution 

process with some legal underpinnings.13 Otherwise, as the preface to AMS 

states, “nothing in this document creates or conveys any substantive [legal] 

8

48 C.F.R. pt. 7.

9

48 C.F.R. pt. 34.

10DOD’s 5000 series consists of DOD Directive 5000.1, The Defense Acquisition System and 

DOD Instruction 5000.2, Operation of the Defense Acquisition System.

11Section 5 of AMS focuses on the acquisition of real property, a subject that is also not 

covered by FAR.

12P. L. 103-62; 107 Stat. 285.

1314 C.F.R. pt. 17. 
Appendix III

Comparison of the Scope and Flexibility of 

FAA’s Acquisition Management System and 

the Federal Acquisition Regulation Process

Page 52 GAO-05-23 Air Traffic Control

rights.” In short, FAA has assumed no legal obligation to follow AMS other 

than to ensure that its actions are not arbitrary and capricious or contrary 

to law. By contrast, the FAR has the force and effect of law, and agencies 

that are subject to the FAR are bound to follow it. 

AMS Chapter 3 

Parallels a Subset of 

the FAR

When FAA personnel apply the procurement methodology in AMS chapter 

3, they are applying guidance that closely parallels some of the procedures 

set out in the FAR. The AMS Chapter 3 acquisition process parallels a 

subset of the varied selection of procurement methods available under the 

FAR, requiring that all competitive FAA contracts be negotiated with the 

awardee being selected on a “best value” basis. The FAR also provides a 

much more detailed set of information and guidance than does AMS. A 

comparison of high-level differences and similarities between AMS and the 

FAR is presented in table 8. 

Table 8: Comparison of AMS and the FAR 

AMS FAR

Best value source 

selection

Yes, following screening. Yes, although other methods are also available for 

use when appropriate.

Public announcement of 

requirement

Public announcement through Internet or other 

means when value of contract is anticipated to 

exceed $100,000.

Yes, for proposed contract actions expected to 

exceed $25,000.

Competition FAA's policy is to provide reasonable access to 

competition for firms interested in obtaining 

contracts. In selecting sources, the preferred method 

of procurement is to compete requirements among 

two or more sources.

Full and open competition—all responsible sources 

are permitted to compete. 

Sole-source procurement Yes, when deemed to be in FAA’s “best interest” as 

determined by the service organization on the basis 

of “adequate objective supporting data.” 

Yes, full and open competition need not be obtained 

under certain specified conditions based upon a 

written justification from the contracting officer that is 

approved at an appropriate level of authority.

Prequalification Yes, qualification information screens for those 

vendors that meet FAA's stated minimum capabilities 

or requirements for providing a given product or 

service. 

Yes, for products or manufacturers when justified in 

writing and conducted in a manner that meets 

requirements justifying the use of qualifications 

requirements.

Basic methodology in 

negotiated procurement

FAA issues one or more “screening requests,” which 

may include requests for binding offers from 

competing firms.

Agency issues a solicitation, usually a request for 

proposals.

Methodology for 

negotiation

FAA encourages one-on-one communications 

throughout the process provided that no offeror is 

given an “unfair advantage.”

Clarification and discussions are permitted; one 

offeror cannot be favored over another.
Appendix III

Comparison of the Scope and Flexibility of 

FAA’s Acquisition Management System and 

the Federal Acquisition Regulation Process

Page 53 GAO-05-23 Air Traffic Control

Source: GAO analysis.

AMS Includes a Less 

Rigorous Competition 

Requirement Than 

Does the FAR

As table 8 indicates, AMS incorporates a less rigorous competition 

standard than the FAR imposes on the rest of the government. AMS states 

that it is FAA's policy to provide reasonable access to competition for firms 

interested in obtaining contracts. According to AMS, in selecting sources, 

the preferred method of procurement is to compete requirements among 

two or more sources. However, there is no requirement to ensure that firms 

that want to participate actually get a chance to do so. Instead FAA may 

limit competition for further consideration in its screening process to firms 

with known capabilities or past performance.

The FAR Gives 

Procurement 

Professionals Tighter 

Control over 

Procurement Decisions 

AMS states that authority is delegated to appropriate levels. Once the final 

investment decision is made, and subject only to any constraints imposed 

by that decision, the service-level organization is responsible for 

conducting required acquisitions. Contracting personnel as well as other 

specialists are then assigned to teams that are responsible to a program 

manager within the service-level organization. FAA states that this 

approach increases the pace of doing business. By comparison, the FAR 

gives contracting professionals clear control over contracting decisions by 

requiring that procurement decisions be made by procurement 

professionals—typically contracting officers or their superiors. 

AMS FAR

Evaluation and award 

selection

Selection is based on evaluation in accord with 

criteria identified in the screening request. The 

selection decision is a judgmental decision made by 

the source selection official.

Selection is based on evaluation in accord with 

criteria identified in the request for proposals. The 

selection decision is a judgmental decision made by 

the source selection official.

Use of simplified 

acquisition methods

Commercial and simplified purchases are used for 

commercial items or for products or services that 

have been sold at established catalog or market 

prices and are generally purchased on a fixed-price 

basis.

Generally required for purchases up to $100,000, for 

noncommercial items, or on a test basis, up to 

$5,000,000 for commercial items competition is to be 

obtained to the maximum practicable extent.

Use of credit card 

purchases

Permitted. Permitted.

Procurement methodology AMS does not include the level of detail found in the 

FAR. It does not prescribe many of the procurement 

methods and techniques permitted under the FAR, 

but encourages use of “any method of procurement 

deemed appropriate.”

Provides a broad selection of procurement methods 

and techniques suitable for use in most 

circumstances. 

Responsibility Awards to responsible offerors only. Awards to responsible offerors only.

(Continued From Previous Page)
Appendix III

Comparison of the Scope and Flexibility of 

FAA’s Acquisition Management System and 

the Federal Acquisition Regulation Process

Page 54 GAO-05-23 Air Traffic Control

Although FAA Project 

Managers View AMS as 

More Efficient and 

Flexible Than the FAR, 

Some Procurement 

Officials We 

Interviewed Do Not 

Agree

As part of our work, we interviewed project management personnel within 

FAA as well as current and former FAA procurement officials that have 

experience using both the FAR and AMS. Generally, FAA personnel see 

AMS as more efficient and flexible than the FAR, although 9 years after 

AMS’s adoption, many FAA officials have only limited knowledge of and 

experience with the FAR. The FAA project managers we interviewed see 

AMS as more efficient and flexible than the FAR,14 but some procurement 

officials with experience in applying both AMS and the FAR did not agree 

with the view that the FAR was unduly rigid. According to these officials, 

the FAR may appear inflexible and cumbersome to persons who are 

inexperienced with it, but those who are familiar with it are able to 

navigate its complexities effectively. For example, even though the FAR 

generally requires full and open competition—a process that can take time 

to give all interested firms an opportunity to participate—contracting 

officers may be able to expedite the procurement process by using 

authorized streamlined procedures or, if circumstances warrant, by 

justifying sole-source or limited competition.

14And up to $10,000,000 under limited special circumstances.
Page 55 GAO-05-23 Air Traffic Control

Appendix IV

How FAA’s Acquisition Policy Adapted Key 

Recommendations Made by GAO and DOT 

(1996-2003) ApendxiIV

FAA Refined AMS in 

Response to 

Recommendations 

Since FAA developed and implemented AMS in 1996, GAO and the DOTIG 

have made recommendations to improve FAA’s acquisition processes. FAA 

has adopted many of these recommendations and incorporated them into 

AMS (see table 9). These implemented recommendations address four 

main themes: 

• Developing a strategy for culture change that relies on successfully 

integrating the various elements of acquisition, including specific 

responsibilities and performance measures for all stakeholders, and 

providing the incentives needed to promote the desired changes. 

• Establishing an effective management structure for developing, 

maintaining, and enforcing the ATC systems architecture to provide an 

overall plan for the National Airspace System (NAS). This management 

structure should assign the responsibility and accountability to develop, 

maintain, and enforce a complete and unified ATC system by ensuring 

that every project conforms to the overall plan.

• Improving cost and schedule tracking to provide data for estimating the 

costs and schedules of programs. To estimate the costs and time needed 

for projects, a historical database that includes cost and schedule 

estimates, revisions, reasons for revisions, actual cost and schedule 

information, and relevant contextual information is needed.

• Improving the management of modernization projects, including the use 

of project reviews, milestones, and baselines, and cost-accounting 

information to ensure that programs can be adjusted as needed.

The reports identified in table 10 provide recommendations to address 

problems we and the DOTIG have identified under these four themes. 
Appendix IV

How FAA’s Acquisition Policy Adapted Key 

Recommendations Made by GAO and DOT 

(1996-2003)

Page 56 GAO-05-23 Air Traffic Control

Table 9: Key Recommendations Made to Improve FAA’s Acquisition Processes

Key recommendation Evidence of policy change Rationale for change

Aviation Acquisition: A Comprehensive 

Strategy Is Needed for Cultural Change at 

FAA 

August 22, 1996,

(GAO/RCED-96-159)

FAA should develop a comprehensive 

strategy for cultural change. This strategy 

should include specific responsibilities and 

performance measures for all stakeholders 

throughout FAA and provide the incentives 

needed to promote the desired behaviors 

and to achieve agencywide cultural change.

FAA issued an organizational culture 

framework in 1997 and is working to 

implement it.

Over the past 15 years, FAA’s ATC 

modernization projects have experienced 

substantial cost overruns, lengthy 

schedule delays, and significant 

performance shortfalls. We found that 

FAA’s organizational culture has been an 

underlying cause of the agency’s 

acquisition problems. Its acquisitions 

were impaired because employees acted 

in ways that did not reflect a strong 

commitment to mission focus, 

accountability, coordination, and 

adaptability.
Appendix IV

How FAA’s Acquisition Policy Adapted Key 

Recommendations Made by GAO and DOT 

(1996-2003)

Page 57 GAO-05-23 Air Traffic Control

Air Traffic Control: Improved Cost Information 

Needed to Make Billion Dollar Modernization 

Investment Decisions

January 22, 1997,

(GAO/AIMD-97-20)

Because the success of FAA’s investment 

analysis and decision-making process 

depends in large measure on the reliability of 

ATC project cost information, FAA should 

institutionalize defined processes for 

estimating ATC projects’ costs. At a 

minimum, these processes should include 

the following six institutional process 

requisites, developed for organizations that 

are building or acquiring software-intensive 

systems by Carnegie Mellon University’s 

Software Engineering Institute (SEI), an 

institution recognized for its expertise in 

software processes. Each of these requisites 

is described in more detail in this report: 

• a corporate memory, or historical 

database(s), which includes cost and 

schedule estimates, revisions, reasons for 

revisions, actual cost and schedule 

information, and relevant descriptive 

information; 

• structured approaches for estimating 

software size and the amount and 

complexity of existing software that can be 

reused; 

• cost models calibrated/tuned to reflect 

demonstrated accomplishments on past 

projects; 

• audit trails that record and explain all 

values used as cost model inputs;

• processes for dealing with externally 

imposed cost or schedule constraints in 

order to ensure the integrity of the 

estimating process;

• data collection and feedback processes 

that foster capturing and correctly 

interpreting data from work performed. 

Chapter 19 of FAA’s Pricing Handbook 

embodies SEI’s philosophy, which maintains 

that developing credible software estimates 

is a function of how thorough and disciplined 

an organization’s estimating processes are. 

SEI’s six institutional process requisites are 

designed to ensure that organizations 

consistently produce reliable cost estimates 

for software-intensive systems. These 

requisites are as follows:

• a corporate memory, or historical 

database(s), for cataloging cost estimates, 

revisions, reasons for revisions, actual cost 

and schedule information, and other 

descriptive information, such as any 

constraints or trends that affect the project;

• structured processes for estimating 

software size and the amount and 

complexity of existing software that can be 

reused;

• cost models calibrated/tuned to reflect 

demonstrated accomplishments on similar 

past projects;

• audit trails that record and explain the 

values used as cost model inputs;

• processes for dealing with externally 

imposed cost or schedule constraints to 

ensure the integrity of the estimating 

process;

• data collection and feedback processes 

that foster capturing and correctly 

interpreting data from work performed.

We found that FAA’s ATC modernization 

program’s cost estimating processes do 

not satisfy recognized estimating 

requisites, and its cost-accounting 

practices do not provide for proper 

accumulation of actual costs. The result is 

an absence of reliable project cost and 

financial information that the Congress 

has legislatively specified and that 

leading public-sector and private-sector 

organizations point to as essential to 

making fully informed investment 

decisions among competing ATC 

projects. Not having this information, 

increases the likelihood of poor ATC 

investment decisions, not only when a 

project is initiated but also throughout its 

life cycle. It also means that Congress 

does not have reliable cost information to 

use in making funding decisions about 

FAA. Such a situation is unacceptable 

when making small investments, but is 

especially egregious when making 

multimillion or billion-dollar investments in 

mission-critical ATC systems. 

(Continued From Previous Page)

Key recommendation Evidence of policy change Rationale for change
Appendix IV

How FAA’s Acquisition Policy Adapted Key 

Recommendations Made by GAO and DOT 

(1996-2003)

Page 58 GAO-05-23 Air Traffic Control

FAA should immediately begin disclosing the 

inherent uncertainty and range of 

imprecision in all ATC projects’ official cost 

estimates presented to executive oversight 

agencies or Congress.

Chapter 19 of FAA’s Pricing Handbook 

incorporates our recommendation and refers 

explicitly to GAO/AIMD-97-20 and the work 

of other experts. The handbook suggests 

where to incorporate audit trails, constraint 

processes, and the inherent uncertainty and 

range of imprecision in all ATC cost 

estimates. The handbook advocates that 

staff qualify early project estimates by 

disclosing the level of uncertainty associated 

with them and refining the estimates as the 

project is completed and the uncertainty 

eliminated. 

FAA should acquire or develop and 

implement a managerial cost-accounting 

capability that will satisfy the requirements of 

Statement of Federal Financial Accounting 

Standards no. 4 (SFFAS 4) Managerial Cost 

Accounting Concepts and Standards for the 

Federal Government. This system capability 

should provide the cost-accounting and 

financial management information needed by 

FAA management and those who make 

investment decisions. Such information 

should include full life-cycle costs, which 

include the costs of resources consumed by 

a project that directly or indirectly contribute 

to the output and the costs of identifiable 

supporting services provided by other 

organizations within the reporting entity.

The Department of Transportation is in the 

process of meeting key objectives of the 

Federal Managers’ Financial Integrity Act 

(FMFIA) of 1982. A key material weakness 

was FAA’s oversight of cost reimbursable 

contracts. FAA made significant progress in 

the closeout of past cost reimbursable 

contracts. To resolve this material weakness, 

FAA needs to complete the close out of old 

contracts and increase the use of cost 

incurred audits. Additionally, FAA needs to 

ensure that appropriate audits are obtained 

for all active contracts. These steps will help 

reduce the likelihood of cost overruns or 

improper payments for unallowable costs.

FAA should report its lack of a costaccounting capability for its ATC 

modernization as a material internal control 

weakness in the Department’s fiscal year 

1996 Federal Managers’ Financial Integrity 

Act (FMFIA) report and in subsequent 

annual FMFIA reports until the problem is 

corrected.

FAA should report to the Secretary of 

Transportation and FAA’s authorizing and 

appropriation committees on its progress in 

implementing these recommendations as 

part of its fiscal year 1999 budget 

submission.

(Continued From Previous Page)

Key recommendation Evidence of policy change Rationale for change
Appendix IV

How FAA’s Acquisition Policy Adapted Key 

Recommendations Made by GAO and DOT 

(1996-2003)

Page 59 GAO-05-23 Air Traffic Control

Air Traffic Control: Complete and Enforced 

Architecture Needed for FAA Systems 

Modernization

February 3,1997,

(GAO/AIMD-97-30)

FAA should ensure that a complete ATC 

systems architecture is developed and 

enforced expeditiously before deciding on 

the architectural characteristics of a 

replacement for the Host Computer System. 

FAA should also take the following steps to 

establish an effective management structure 

for developing, maintaining, and enforcing 

the complete ATC systems architecture:

• Assign the responsibility and accountability 

needed to develop, maintain, and enforce a 

complete ATC systems architecture to a 

single FAA organizational entity. 

• Provide this single entity with the 

resources, expertise, and budgetary and/or 

organizational authority needed to fulfill its 

architectural responsibilities. 

• Direct this single entity to ensure that every 

ATC project conforms to the architecture 

unless careful, thorough, and documented 

analysis supports an exception. Given the 

importance and the magnitude of the IT 

initiative at FAA, a management structure 

similar to the department-level chief 

information officer (CIO) structure 

prescribed in the Clinger-Cohen Act should 

be established for FAA. 

AMS states the National Air Space (NAS) 

Configuration Control Board shall approve 

changes to NAS technical documentation, 

and shall ensure the traceability of 

requirements from the NAS level to the 

system and subsystem level. This 

responsibility begins with the approval of the 

technical architecture by the Joint Resources 

Council at the investment decision and 

continues throughout the life of the program.

AMS states that the Joint Resources Council 

approves FAA budget submissions for 

Research, Engineering and Development 

(RE&D) and Facilities and Equipment (F&E) 

appropriations, participates in the 

development of FAA budget submissions for 

the operations appropriation, and approves 

the NAS architecture baseline.

AMS states that a configuration control 

board with an approved charter and 

operating procedures shall be the official 

FAA-wide forum used to establish 

configuration management baselines and to 

approve or disapprove subsequent changes 

to those baselines. 

FAA lacks a complete system 

architecture, or overall blueprint, to guide 

and constrain the development and 

maintenance of the many interrelated 

systems that make up its ATC 

infrastructure. To its credit, FAA is 

developing one of the two principal 

components of a complete systems 

architecture, namely, the “logical” 

description of FAA’s current and future 

concept of ATC operations as well as 

descriptions of the ATC business 

functions to be performed, the associated 

systems to be used, and the information 

flows among systems. However, FAA is 

not developing, nor does it have plans to 

develop, the second essential 

component—the ATC-wide “technical” 

descriptions that define all required 

information technology (IT) and 

telecommunications standards and 

critical ATC systems’ technical 

characteristics. 

We also found that an architecture is the 

centerpiece of sound systems 

development and maintenance;

FAA is developing a logical architecture 

component for ATC modernization and 

evolution; FAA lacks a technical 

architectural component to guide and 

constrain ATC modernization and 

evolution; without a technical ATC 

architecture, costly system 

incompatibilities have resulted and

will continue; and FAA lacks an effective 

management structure for developing and 

enforcing an ATC systems architecture. 

(Continued From Previous Page)

Key recommendation Evidence of policy change Rationale for change
Appendix IV

How FAA’s Acquisition Policy Adapted Key 

Recommendations Made by GAO and DOT 

(1996-2003)

Page 60 GAO-05-23 Air Traffic Control

Air Traffic Control: Immature Software 

Acquisition Processes Increase FAA System 

Acquisition Risks 

March 21, 1997,

(GAO/AIMD-97-47)

Given the importance and the magnitude of 

IT at FAA, this report reiterates our earlier 

recommendation calling for the 

establishment at FAA of a CIO management 

structure similar to the department-level CIO 

structure prescribed in the Clinger-Cohen 

Act of 1996.

To improve its ability to acquire software for 

its ATC modernization, FAA should

• assign responsibility for software 

acquisition process improvement to the 

agency’s CIO;

• provide the CIO with the authority needed 

to implement and enforce ATC 

modernization software acquisition process 

improvement; 

• require the CIO to develop and implement a 

formal plan for ATC modernization software 

acquisition process improvement that is 

based on the software capability evaluation 

results contained in this report and 

specifies measurable goals and time 

frames, prioritizes initiatives, estimates 

resource requirements, and assigns roles 

and responsibilities; 

• allocate adequate resources to ensure that 

planned initiatives are implemented and 

enforced; and

• require that, before being approved, every

ATC modernization acquisition project have 

software acquisition processes that satisfy 

at least Software Acquisition Capability 

Maturity Model (SA-CMM) level 2. 

FAA states that the CIO:

• serves as the principal adviser to the 

Administrator, Deputy Administrator, and 

FAA offices on information management 

and technology across the agency. As the 

agency's senior management official, 

serves as the spokesperson on IT matters 

before Congress, other agencies, and the 

public;

• leads and directs agencywide strategic 

planning for IT;

• oversees IT investments to ensure 

optimization across all agency groups and 

the full range of cost trade-offs;

• creates and maintains an IT strategy to 

guide research, development, 

maintenance, and sharing of information 

systems, applications, data, and other 

resources across the lines of business and 

throughout the agency;

• leads the establishment of world-class 

software and information systems 

engineering methodologies including 

Capability Maturity Models, and applies 

them to agency systems, operations, and 

processes to provide continuous 

improvement of IT performance; and

• leads and directs agencywide efforts on 

information systems security, ensuring that 

standards and policies are in place to 

provide security for the critical information 

architecture of the agency.

To accommodate forecasted growth in air 

traffic and replace aging equipment, FAA 

embarked on an ambitious ATC 

modernization program in 1981. FAA 

estimated that it would spend about $20 

billion to replace and modernize softwareintensive ATC systems between 1982 

and 2003. Our work over the years has 

chronicled many FAA failures in meeting 

ATC projects’ cost, schedule, and 

performance goals, largely because of 

software-related problems. As a result of 

these failures as well as the tremendous 

cost, complexity, and mission criticality of 

FAA’s ATC modernization program, we 

designated the program as a high-risk IT 

initiative in our 1995 and 1997 report 

series on high-risk programs.

Software quality is governed largely by 

the quality of the processes involved in 

developing or acquiring, and maintaining 

it. SEI has developed models and 

methods that define and determine 

organizations’ software process maturity. 

Together, they provide a logical 

framework for baselining an 

organization’s current process 

capabilities (i.e., strengths and 

weaknesses) and providing a structured 

plan for incremental 

rocess improvement.

We found that

• FAA’s ATC modernization software 

acquisitions processes are immature 

and

• FAA’s approach for improving AT

modernization software acquisition 

processes is not effective.

(Continued From Previous Page)

Key recommendation Evidence of policy change Rationale for change
Appendix IV

How FAA’s Acquisition Policy Adapted Key 

Recommendations Made by GAO and DOT 

(1996-2003)

Page 61 GAO-05-23 Air Traffic Control

Air Traffic Control: FAA’s Modernization 

Investment Management Approach Could Be 

Strengthened,

April 30, 1999,

(GAO/RCED/AIMD-99-88)

FAA should implement a comprehensive 

investment management approach through 

AMS that includes the following actions:

• Establish a complete portfolio of 

investments—including existing systems 

funded by the operations budget account 

as well as projects funded by the facilities 

and equipment account—and require the 

Joint Resources Council to periodically 

review the baseline status and merits of 

each of these investments throughout their 

entire life cycle. As part of this portfolio, 

cost baselines for operating and 

maintaining all projects should be 

developed, and this information should be 

included in the agency’s financial plan for 

its investments and in its annual budget 

request to Congress. 

FAA’s AMS states that five decisions are 

always made at the corporate level by the 

Joint Resources Council: the mission need 

decision, the investment decision, the 

decision to approve a change to an 

acquisition program baseline, approval of the 

RE&D and F&E budget submissions, and 

approval of the NAS Architecture baseline. 

The selection of a solution to satisfy a 

mission need, the investment of resources 

into a fully funded program, and the possible 

need to cancel other programs to 

accommodate a new program make the 

investment decision the most important in 

the life-cycle management process.

Over the past 17 years, FAA’s 

modernization projects have experienced 

substantial cost overruns, lengthy delays, 

and significant performance shortfalls. 

Because of FAA’s contention that some of 

its modernization problems were caused 

by federal acquisition regulations, the 

Congress enacted legislation in 

November 1995 that exempted the 

agency from most federal procurement 

laws and regulations and directed FAA to 

develop a new acquisition management 

system. In response, FAA implemented 

AMS on April 1, 1996. AMS provides 

high-level acquisition policy and guidance 

for selecting and controlling investments 

throughout all phases of the acquisition 

life cycle.

GAO found that:

• FAA’s AMS is designed to provide a 

discipline, structured process for 

selecting and controlling investments;

• Lack of oversight of the operations 

portion of projects prevents FAA from 

managing investments as a complete 

portfolio;

• Weaknesses in selection, control, and 

evaluation phases limit FAA’s 

effectiveness in managing its portfolio. 

• Improve the selection process by (1) 

establishing clearly defined procedures for 

validating each project’s cost, schedule, 

benefit, performance, and risk information 

and (2) requiring documentation of the 

results of the validation procedures applied 

to each project. 

• FAA’s AMS states that the investment 

analysis team develops an initial acquisition 

program baseline (i.e., performance, cost, 

schedule, benefits, and risk) for each 

alternative solution offering superior value 

and benefit to FAA and its customers. 

Service organization members of the 

investment analysis team lead the 

development of cost and schedule baselines 

using FAA’s work breakdown structure and 

other applicable standards.

(Continued From Previous Page)

Key recommendation Evidence of policy change Rationale for change
Appendix IV

How FAA’s Acquisition Policy Adapted Key 

Recommendations Made by GAO and DOT 

(1996-2003)

Page 62 GAO-05-23 Air Traffic Control

• Strengthen control over investments by (1) 

revising the acquisition program baseline 

requirements to include project risks and to 

add milestones for project reviews during 

the operations phase and (2) ensuring that 

project officials fully track and document 

estimated versus actual results for all the 

elements (i.e., cost, schedule, benefit, 

performance, and risk) contained in the 

baseline documentation. 

• AMS states that the acquisition program 

baseline should include cost, schedule, 

performance, benefits, and risk information. 

It also should include all events that are key 

to satisfying mission need, providing 

intended operational capability, and accruing 

benefits, as well as events crucial to 

interrelated programs or NAS systems. Once 

an estimate has been completed and a 

project started, FAA establishes reporting 

and performance measures to compare 

estimated and actual costs, schedules, and 

performance.

• Initiate post implementation evaluations for 

projects within 3 to 12 months of 

deployment or cancellation to compare the 

completed projects’ cost, schedule, 

performance, and mission improvement 

outcomes with the original estimates. 

• Incorporate key information from the 

selection process (e.g., mission need 

statements, cost-benefit analyses, and risk 

assessments) into FAA’s management 

information system for investments. 

• FAA published a methodology for conducting 

such evaluations entitled An Approach for 

Developing a Standard Method for 

Conducting Post-Implementation Reviews, 

Report #2001-13, June 6, 2001.

Major Management Challenges and Program 

Risks, Department of Transportation 

January 2001, 

(GAO-01-253)

FAA should develop a comprehensive plan 

that would include established checkpoints at 

which the agency would determine, among 

other things, whether users’ needs have 

changed and whether other technologies 

have matured and could better meet users’ 

needs and the agency’s requirements for 

satellite navigation. FAA should also have an 

external organization evaluate its progress at 

established checkpoints and include the 

results of this evaluation in its request for 

future funding of the navigation system. 

FAA has appointed an independent board—

consisting of external experts in satellite 

navigation, safety certification, and radio 

spectrum—that reports directly to the FAA 

Administrator. The board is tasked with 

reviewing the soundness of the panel’s 

recommendations and with revalidating the 

future path for WAAS. However, given the 

past problems in developing this system and 

the long-term effort that is still required, we 

believe that continued oversight by an 

independent group of experts is warranted. It 

is not clear whether the current independent 

board will fulfill this role. We will continue to 

evaluate FAA’s progress on this and other 

system acquisition efforts.

DOT’s management of its major 

acquisitions and assets needs 

improvement in several areas. FAA and 

the U.S. Coast Guard are undertaking 

costly, long-term programs to modernize 

and replace aging equipment. Over the 

past 19 years, FAA’s multibillion-dollar 

ATC modernization program has 

experienced cost overruns, delays, and 

performance shortfalls of large 

proportions. FAA is making progress in 

addressing some of our 

recommendations, but its reform efforts 

are not complete, and major projects 

continue to face cost, schedule, and 

performance problems. Because of its 

size, complexity, cost, and problemplagued past, we designated FAA’s IT 

program as a high-risk IT initiative in 

1995. 

(Continued From Previous Page)

Key recommendation Evidence of policy change Rationale for change
Appendix IV

How FAA’s Acquisition Policy Adapted Key 

Recommendations Made by GAO and DOT 

(1996-2003)

Page 63 GAO-05-23 Air Traffic Control

Source: GAO analysis.

Status of FAA’s Major Acquisitions

DOT/OIG, AV-2003-045, 

June 26, 2003 

Update the cost, schedule, and performance 

baselines for many of FAA’s major 

acquisition, including STARS, ITWS, LAAS, 

and WAAS at a minimum. Develop—and 

use—performance goals for assessing 

progress with its major acquisitions. This 

should involve holding staff and contractors 

accountable for keeping projects within cost 

and schedule, as appropriate.

FAA officials generally agreed with the 

analysis and recommendations in this report. 

FAA is implementing this recommendation. It 

updated the baseline of STARS in April 2004 

and updated the baselines of ITWS and 

WAAS in May 2004. The LAAS program was 

deferred because of budget cuts. 

FAA has made progress with a number of 

acquisitions, including Free Flight Phase 

1 and new information exchange systems 

that link FAA and airline operations 

centers. However, other modernization

programs have experienced cost, 

schedule, and performance problems. 

Problems with acquisition efforts have 

serious consequences because they 

result in costly interim systems, reduce 

the number of units procured, postpone 

benefits, or “crowd out” other 

modernization projects.

Status Report on FAA’s Operational 

Evolution Plan

DOT/OIG, AV-2003-048, 

July 23, 2003 

Develop realistic cost estimates, and link the 

Operational Evolution Plan (OEP) with FAA’s 

budget in order to set priorities for what can 

be accomplished in the short term.

Determine—in concert with the aviation 

community—how to move forward (and at 

what pace) with systems that require 

airspace users to purchase and install new 

technologies.

Determine and maximize the benefits 

associated with airspace design changes, 

new procedures, and capabilities currently 

onboard aircraft to enhance system capacity.

FAA officials generally agreed with the 

analysis and recommendations in this report. 

FAA is currently updating the OEP, which 

includes design changes to the National 

Airspace to, for example, enhance capacity.

The OEP is an important effort because it 

will shape FAA and industry investments 

over the next decade. However, much has 

changed since the OEP was introduced.

The demand for air travel has declined, 

major network carriers are in financial 

distress, and Aviation Trust Fund 

revenues have declined sharply. The 

Inspector General found that fundamental 

assumptions about the OEP, such as the 

cost, schedule, and benefits of key efforts 

as well as the ability of airspace users to 

pay for and equip with new technologies 

in the near term, are no longer valid and 

need to be revised.

(Continued From Previous Page)

Key recommendation Evidence of policy change Rationale for change
Page 64 GAO-05-23 Air Traffic Control

Appendix V

Status of the Seven ATC Modernization 

Acquisitions That GAO Reviewed ApendxiV

1

Standard Terminal Automation Replacement System (STARS)

Purpose and Status 

STARS is a joint FAA and Department of Defense (DOD) 

program. It will replace aging legacy terminal FAA and 

DOD automation systems with terminal ATC systems. Civil 

and military air traffic controllers across the nation are using 

STARS to direct aircraft near major airports. 

In June 2003, FAA commissioned STARS for use at the 

Philadelphia International Airport in Pennsylvania. 

Currently, STARS is fully operational at 24 FAA terminal 

radar control facilities and 17 DOD facilities. Under the 

ATO’s new business model of breaking large and complex 

programs into smaller phases to control cost and schedule, 

STARS is a candidate for further deployment to about 120 

FAA and DOD operational facilities. In May 2004, FAA 

changed STARS’s cost and schedule estimates for the third 

time and estimates that it will cost $1.46 billion to deploy 

STARS at 50 operational facilities. 

Contractor: Raytheon. 

STARS Display Monitor 

Baseline Changes to STARS Scope, Schedule and Cost 

Date

Number of FAA 

facilities receiving 

STARS

Projected date for 

first deployment

Projected date for 

last deployment 

Estimated cost 

 (F&E)a

February 1996 172 1998 2005 $0.94 billion

October 1999 188 2002 2008 $1.4 billion

March 2002 73 2002 2005 $1.33 billion

April 2004 50 2003 2008 $1.46 billion

Total change - 122 + 5 years + 3 years +$0.52 billion

Source: GAO’s presentation of FAA data. 

a

FAA’s Facilities and Equipment (F&E) account funds capital projects.

Risks and Challenges 

Certification issues – FAA also experienced problems in certifying STARS, in part because of 

aggressive scheduling. FAA’s approach to certifying STARS was oriented to rapid deployment to meet 

critical needs. To meet these needs, FAA compressed its original 32-month development and testing 

schedule into 25 months. This compressed schedule left only limited time for human factor evaluations 

and not enough time for computer human interface issues and involvement of controllers and 

maintenance technicians. 
Appendix V

Status of the Seven ATC Modernization 

Acquisitions That GAO Reviewed

Page 65 GAO-05-23 Air Traffic Control

2

Airport Surveillance Radar Model–11 (ASR-11) 

Purpose and Status 

ASR-11 will provide high-quality digital data to terminal controllers in terminal environments. It will also 

provide a more reliable replacement for aging analog radars like ASR-7 and ASR-8; it will also provide 

digitized radar data for the new automation systems such as STARS. In addition, ASR-11 will provide 

six levels of weather information, a significant improvement over the current two levels. The ASR-11 

program is a joint program with DOD—that is, DOD is managing the program to joint specifications, 

and FAA will provide DOD with the funds to procure 112 units. ASR-11 is a nondevelopmental item. 

The in-service decision was made in 2003, and the radar is being deployed to 108 sites. The ASR-11 

program is scheduled to be rebaselined for cost and schedule in fiscal year 2005. 

Contractor: Raytheon.

ASR-11 Scope, Schedule, and Cost 

Date

Number of facilities 

receiving ASR-11 

Projected date for 

first deployment

Projected date for 

last deployment 

Estimated cost

(F&E)

March 2002 112 2000 2005 $743.3 million

 July 2004 112 2003 2013 $891.7 million

Total change 0 3 years 8 years $148.4 million

Source: GAO’s presentation of FAA data.

Risks and Challenges 

The Capital Investment Plan does not support the service as required in the current Acquisition 

Program Baseline, which could put the program in jeopardy. 
Appendix V

Status of the Seven ATC Modernization 

Acquisitions That GAO Reviewed

Page 66 GAO-05-23 Air Traffic Control

3

Integrated Terminal Weather System (ITWS)

Purpose and Status 

ITWS provides automated weather information for use by air traffic controllers and supervisors in 

airport terminal airspace (60 miles around the airport.) It provides products that require no 

meteorological interpretation to air traffic controllers, air traffic managers, pilots, and airlines. ITWS 

provides a comprehensive current weather situation and highly accurate forecasts of expected weather 

conditions for the next 30 minutes. 

Current FAA plans call for the installation of 34 systems that will service various airports. Six systems 

are operational, and feedback from users is satisfactory. In May 2004, the ATO Executive Council 

rebaselined the program to include a weather-forecasting capability in the production baseline, a new 

requirement to provide operational support for the New York prototype, and change the operations and 

maintenance cost baseline for the program. However, the council did not include additional funding, 

and therefore, in order to stay within the capital improvement program’s (CIP) funding levels, the 

program has proposed to defer 12 of the planned 34 systems installations. 

Contractor: Raytheon. 

Baseline Changes to ITWS Scope, Schedule, and Cost

Date

Number of facilities 

receiving ITWS

Projected date for 

first deployment

Projected date for 

last deployment 

Estimated cost 

(F&E)

June 1997 34 Sep 01 – Mar 02 Jan 03 – Jul 03 $276.1 million

August 2001 34 December 2002 May 2004 $282.2 million

May 2004 34 December 2002 2009+ $288.3 million

Total change 0 1+ years 6+ years $12.2 million

Source: GAO’s presentation of FAA data. 

Risks and Challenges 

Funding issues –The program requested and obtained approval to rebaseline. The baseline is being 

modified to incorporate the Terminal Convective Weather Forecasting (TCWF) capability into the 

production baseline. As directed by the ATO Executive Council, responsibility for funding operational 

support for the New York prototype system is also being added to the baseline. The ATO Executive 

Council also directed that the cost of the program remain at the current CIP funding levels for fiscal 

years 2005, 2006, and 2007. In order to stay within the CIP funding levels, the program proposed to 

defer 12 of the planned 34 systems installations.

Schedule issues – Because of constrained funding, 12 airports will not receive ITWS capabilities until 

after 2009.
Appendix V

Status of the Seven ATC Modernization 

Acquisitions That GAO Reviewed

Page 67 GAO-05-23 Air Traffic Control

4

Local Area Augmentation System (LAAS)

Baseline Changes to LAAS Schedule and Cost

Date

Projected date for 

first deployment 

Projected date for 

last deployment 

Estimated cost 

(F&E) 

January 1998 2002 TBD $530.1 million 

September 

1999

2003 TBD $696.1 million 

Total change 1 year +$166 million 

Source: GAO presentation of FAA data. 

Risks and Challenges 

Cost adequate requirements development in the early stages of the program, a lack of under of a 

mission software development, and an unrealistic development schedule. standing of a mission 

degradation issue, incomplete software development, and an 

Cost issues – LAAS cost estimates are not reliable, reflecting inadequate requirements development in 

the early stages of the program, a lack of understanding of a mission degradation issue, incomplete 

software development, and an unrealistic development schedule. 

Schedule issues – The LAAS schedule was not realistic. Specifically, FAA lacked an understanding of 

the integrity requirement and software development, which were the two biggest technological maturity 

issues facing the LAAS program. 

Performance Issues – FAA has not resolved the integrity requirement that ensures pilots are alerted in a 

timely manner when the LAAS signal is not reliable. FAA has not been able to prove that the system is 

safe during solar storms. An analysis of the effects of solar storms on the LAAS signal’s integrity is 

under way, but an atmospheric monitoring device that could address this issue may not be available 

until fiscal year 2009. 

Purpose and Status 

LAAS is a precision approach and landing system that will augment the Global Positioning System 

(GPS) to broadcast highly accurate information to aircraft on the final phases of a flight. LAAS consists 

of both ground and avionics components. Ground components include GPS reference receivers, which 

monitor and track GPS signals; very-high-frequency transmitters for broadcasting the LAAS signal to 

aircraft; and ground station equipment, which generates precision approach data and is housed at or 

near an airport. Aircraft will be equipped with avionics to receive LAAS signals. 

FAA’s fiscal year 2005 budget eliminated funding for LAAS, and remaining fiscal year 2004 funds will 

continue to validate LAAS requirements and address radio frequency interference issues. FAA officials 

will reconsider national deployment when more research results are completed. 
Appendix V

Status of the Seven ATC Modernization 

Acquisitions That GAO Reviewed

Page 68 GAO-05-23 Air Traffic Control

5

Next Generation Air/Ground Communications (NEXCOM) 

Purpose and Status 

The Next Generation Air/Ground Communications (NEXCOM) project is to replace the existing analog 

ATC communications system with a new digital system that would have greater capabilities. The initial 

development, of a multimodal digital radio (MDR), is to be followed by the development of aircraft 

avionics and ground systems. NEXCOM is expected to increase the number of available 

communications channels, provide simultaneous voice and data transmission between controllers and 

pilots, and require a digital form of authentication, designed to prevent “phantom controllers” from 

gaining access to the communications system. FAA plans to deploy 6,000 MDR pairs (a radio pair is 

one receiver and one transmitter) during the first phase, which will provide voice channels to aircraft in 

the en route environment. 

NEXCOM completed Independent Operational Test and Evaluation assessment of the radio 

component at the Santa Barbara, California, Remote Center Air/Ground Communications facility, and 

radios were approved for in-service and national deployment in July 2004. The avionics component’s 

development is scheduled to be completed by 2006. However, proposed funding cuts to FAA’s fiscal 

year 2005 budget required the termination of the ground station development, which would enable 

communications in the more efficient digital mode. 

Contractor: ITT for MDR. 

Baseline Changes to NEXCOM Scope, Schedule, and Cost

Date

Number of radio 

pairs deployed 

Date first site 

Initial Operating 

Capability

Date of

In-Service 

Decision 

Estimated cost 

(F&E)

May 2000 6,000 July 2002 October 2002 $318.40 milliona

February 2004 6,000 March 2004 July 2004 $318.40 million 

Total change 0 20 months 21 months $0 

Source: GAO presentation of FAA data. 

a

Estimated cost is only for the NEXCOM MDR. The NEXCOM ground station contract was canceled in 

March 2004 and is being terminated.

Risks and Challenges 
Appendix V

Status of the Seven ATC Modernization 

Acquisitions That GAO Reviewed

Page 69 GAO-05-23 Air Traffic Control

6

Schedule issues—FAA planned to base the MDR on a nondevelopmental item (NDI), and the initial 

schedule allowed only limited development. However, FAA’s requirement that communications 

channels be free of signal interference (“quiet channels”) was more demanding than the NDI solution 

was capable of achieving. As a result, further development was necessary, delaying the initial 

operational capability and in-service decision by 21 months. 

Performance—The NEXCOM radio meets its operational requirement for coverage. However, to 

achieve this requirement FAA determined that the NEXCOM radios would have to achieve the same 

power output level (50 watts) that the existing radios produced. The contractor is delivering radios that 

put out no more than 34 watts per channel. This posed an “unacceptable consequence” and FAA 

performed additional tests or flights checks and determined that the reduced power would not 

adversely affect operations and has approved the use of the lower-output radios. 
Appendix V

Status of the Seven ATC Modernization 

Acquisitions That GAO Reviewed

Page 70 GAO-05-23 Air Traffic Control

7

Advanced Technologies and Oceanic Procedures (ATOP)

Purpose and Status 

The Advanced Technologies and Oceanic Procedures (ATOP) program introduces new controller 

workstations, data-processing equipment, and software designed to enhance the control and flow of 

oceanic air traffic to and from the United States. ATOP processes aircraft position updates 

automatically, whereas currently, oceanic traffic control operations are performed manually and 

updated via paper flight strips. ATOP is designed to present flight data “electronically” in a format 

similar to these paper strips. 

ATOP completed operational testing at its first site, the Oakland Air Route Traffic Control Center 

(ARTCC) and achieved initial operational capability (IOC) on June 30, 2004. Currently, ATOP is in 

limited use for 4 hours a day 5 days a week in one of nine sectors under Oakland’s control. Plans to 

fully transition ATOP to all nine sectors depend upon feedback from the initial trials and sector-bysector capabilities. Other operational considerations still to be resolved are additional staff needs, 

ATOP’s training schedule, and coordination with North American Aerospace Defense Command on an 

interface device. FAA is currently in the early phases of installing ATOP at the New York ARTCC and 

is scheduled to achieve IOC in March 2005. Additional software that will incorporate radar data into 

ATOP is under development and scheduled to be completed by November 2004. This software is 

expected to be operational at the final site, the Anchorage ARTCC, in March 2006. 

Contractor: Lockheed Martin Transportation and Security Solutions.

Baseline Changes ATOP Scope, Schedule, and Cost

Date

Number of facilities 

receiving ATOP

Date for first 

deployment 

Date for last 

deployment site 

Estimated cost

(F&E)

May 2001 

(baseline) 

3 June 2004 

Oakland ARTCC

March 2006 $548.2 million

July 2004 3 June 2004 March 2006 $548.2 million

Total change 0 None None $0

Source: GAO presentation of FAA data. 

Risks and Challenges 
Appendix V

Status of the Seven ATC Modernization 

Acquisitions That GAO Reviewed

Page 71 GAO-05-23 Air Traffic Control

8

Cost issues—Although the contractor’s costs to develop ATOP have grown by approximately $20 

million, FAA is not responsible for these cost increases because it has a fixed-price contract 

arrangement with the contractor. 

Schedule issues— ATOP achieved its initial operational capability milestone of June 2004 but a more 

aggressive development schedule was agreed to with the ATOP contractor to achieve this milestone by 

April 2003 or 14 months earlier. An ATOP Assessment Team determined that the contractor could not 

achieve this earlier date due poor requirements development, unrealistic schedule estimates, and 

inadequate evaluation by the contractor of the software complexity. The development delay has 

exacerbated the scheduled transition from the current oceanic system to the ATOP and would cost an 

additional $4 million a year to operate and maintain the old system until ATOP is fully operational. 

Program officials told us they were not certain when the transition could be achieved because several 

operational issues needed to be resolved including ATOP operational trials sector by sector, training 

schedule, and filling new controller positions, and budgetary allocations to support these activities. 

Performance – ATOP achieved initial operational capability in June 2004 and is limited basis in 

one of nine sectors of the Oakland Air Route Traffic Control Center. 
Appendix V

Status of the Seven ATC Modernization 

Acquisitions That GAO Reviewed

Page 72 GAO-05-23 Air Traffic Control

9

En Route Automation Modernization (ERAM)

Purpose and Status 

The En Route Automation Modernization (ERAM) program will enable air traffic controllers to provide 

ATC services to users of en route airspace (generally, high-altitude airspace at 10,000 feet or above). 

Services provided to users include separation, routing, and advisory services needed to meet FAA’s 

mission of providing safe, efficient, and reliable air traffic management. Specifically, ERAM is to 

replace the hardware and software in the current en route Host computer system, the direct-access 

radar channel, and associated infrastructure. This replacement will result in the installation of new 

system en route automation architecture at each air route traffic control center (ARTCC). In concert 

with other en route programs, ERAM will modernize the en route infrastructure to provide a 

supportable, open-standards-based system that will be the basis for future capabilities and 

enhancements. ERAM is to be deployed at 20 ARTCCs in the continental United States. 

FAA awarded a letter contract to Lockheed Martin in December 2002. To date, ERAM has not 

breached any JRC cost or schedule parameters. However, the ERAM program is highly software 

intensive, requiring the writing of over 1 million lines of software code. In addition, Lockheed Martin is 

behind schedule because of software design and production control issues that Lockheed expects to 

resolve. Lockheed Martin officials stated that it does not expect any downstream impact from the 

current negative schedule variance of about $1 million. 

Contractor: Lockheed Martin Transportation and Security Solutions. 

Baseline Changes to ERAM Scope, Schedule, and Cost 

Date

Number of facilities 

receiving ERAM

Projected date for 

first deployment

Projected date for 

last deployment 

Estimated cost 

(F&E and O&M)

June 2003 20 December 2009 December 2010 $3.649 billion

Total change None None None None

Source: GAO’s presentation of FAA data. 

[Need another set of data to determine any change.] 

Risks and Challenges 

Software Issues – Software development is one of ERAM's major risk items. The ERAM program is a 

high-risk effort because of its size and the amount of software code – over 1 million lines of software 

code expected. Lockheed Martin is experiencing cost variances because of software engineering 

difficulties. According to its cost performance report, software engineering costs are being hampered 

by lower productivity than originally planned and by software code growth across the program. 

However, according to FAA officials, these additional software development costs can be easily 

absorbed within the contractor’s management reserve that is currently on the contract. 
Page 73 GAO-05-23 Air Traffic Control

Appendix VI

Key Contributors ApendxiVI

GAO Contacts JayEtta Z. Hecker, (202) 512-2834

Beverly L. Norwood, (202) 512-2834

Staff 

Acknowledgments

In addition to the individuals named above, Tamera Dorland, Elizabeth 

Eisenstadt, Brandon Haller, Bert Japikse, Carolyn Kirby, Steve Martinez, 

Richard Scott, Adam Vodraska, and Dale Yuge made key contributions to 

this report.

(540072)
GAO’s Mission The Government Accountability Office, the audit, evaluation and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and policies; 

and provides analyses, recommendations, and other assistance to help 

Congress make informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

Obtaining Copies of 

GAO Reports and 

Testimony

The fastest and easiest way to obtain copies of GAO documents at no cost 

is through GAO’s Web site (www.gao.gov). Each weekday, GAO posts 

newly released reports, testimony, and correspondence on its Web site. To 

have GAO e-mail you a list of newly posted products every afternoon, go to 

www.gao.gov and select “Subscribe to Updates.”

Order by Mail or Phone The first copy of each printed report is free. Additional copies are $2 each. 

A check or money order should be made out to the Superintendent of 

Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 

more copies mailed to a single address are discounted 25 percent. Orders 

should be sent to:

U.S. Government Accountability Office

441 G Street NW, Room LM

Washington, D.C. 20548

To order by Phone: Voice: (202) 512-6000 

TDD: (202) 512-2537 

Fax: (202) 512-6061

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Contact:

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Congressional 

Relations

Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400

U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Washington, D.C. 20548

Public Affairs Susan Becker, Acting Manager, BeckerS@gao.gov (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548