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SUBCOMMITTEE OF THE

COMMITTEE ON

GOVERNMENT OPERATIONS

HOUSE OF REPRESENTATIVES

NINETY-FIFTH CONGRESS

FIRST SESSION

N O VEM BER 28 AND 29, 1977

Printed for the use of the Committee on Government Operations

27-076 O

U S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 1978

4
12

COMMITTEE ON GOVERNMENT OPERATIONS

‘ JACK BROOKS,

L. H. FOUNTAIN, North Carolina

JOHN E. MOSS, California

DANTE B. FASCELL. Florida

WILLIAM S. MOORHEAD, Pennsylvania

BENJAMIN S. ROSENTHAL, New York

FERNAND J. ST GERMAIN, Rhode Island

DON FUQUA, Florida

JOHN CONYERS, J r., Michigan

LEO J. RYAN, California

CARDISS COLLINS, Illinois

JOHN L. BURTON, California

RICHARDSON PREYER, North Carolina

MICHAEL HARRINGTON, Massachusetts

ROBERT F. DRINAN, Massachusetts

BARBARA JORDAN, Texas

GLENN ENGLISH, Oklahoma

ELLIOTT H. LEVITAS, Georgia

DAVID W. EVANS, Indiana

ANTHONY MOFFETT, Connecticut

ANDREW MAGUIRE, New Jersey

LES ASPIN, Wisconsin

HENRY A. WAXMAN, California

JACK HIGHTOWER, Texas

JOHN W. JENRETTE, J r., South Carolina

FLOYD J. FITHIAN, Indiana

MICHAEL T. BLOUIN, Iowa

PETER H. KOSTMAYER, Pennsylvania

Texas, Chairman

FRANK HORTON, New York 

JOHN N. ERLENBORN, Illinois

JOHN W. WYDLER, New York 

CLARENCE J. BROWN, Ohio 

PAUL N. MCCLOSKEY, J r., California

GARRY BROWN, Michigan

CHARLES THONE, Nebraska

ROBERT W. KASTEN, J r., Wisconsin

THOMAS N. KINDNESS, Ohio

TOM CORCORAN, Illinois

DAN QUAYLE, Indiana

ROBERT S. WALKER, Pennsylvania

ARLAN STANGELAND, Minnesota „

JOHN E. (JACK) CUNNINGHAM, *

Washington

TED WEISS, New York

William M. J ones, General Counsel

J ohn E. Moore, Staff Administrator

William H. Copeniiaver, Associate Counsel

Lynne Higginbotham, Clerk

Richard L. Thompson, Minority Staff Director

J. P. Carlson, Minority Counsel

Government Activities and Transportation Subcommittee

JOHN L. BURTON, California, Chairman

GLENN ENGLISH, Oklahoma CHARLES THONE, Nebraska

RICHARDSON PREYER, North Carolina ROBERT S. WALKER, Pennsylvania

DAVID W. EVANS, Indiana ARLAN STANGELAND, Minnesota

ANDREW MAGUIRE, New Jersey

ANTHONY MOFFETT, Connecticut

JACK HIGHTOWER, Texas

FLOYD J. FITHIAN, Indiana

EX OFFICIO

JACK BROOKS, Texas FRANK HORTON, New York

Benjamin L. P alumbo, Staff Director

Miles Q. Romney, Counsel

Bruce R. Butterworth, Professional Staff Member

Cynthia M. Mora, Professional Staff Member

George Gudauskas, Professional Staff Member

Elizabeth L. Wasserman, Clerk

Cecelia Morton, Clerk

Rachel Halterman, Minority Professional Staff

(II)
C O N T E N T S

Page

Hearings held on—

November 28.....................................................................»........................... 1

November 29.................................................................................................. 225

Statement of—

Billings, Dr. Charles E., Chief, Aviation Safety Research Office, Ames

Research Center, National Aeronautics and Space Administration; accompanied by E. Gene Lyman, Director, Aeronautical Man-Vehicle

Technology Division........................ ........................................................... 225

Bond, Langhorne M., Administrator," Federal Aviation Administration;

accompanied by Charles E. Weithoner, Associate Administrator for

Administration; Jefferson W. Cochran, Associate Administrator for Engineering and Development; Richard F. Frakes, Director, Logistics Service;

Warren C. Sharp, Director, Airways Facilities Service; Richard A. Smith, 

Assistant Chief Counsel, Procurement; Richard F. Skully, Director,

Flight Standards Service; Raymond G. Belanger, Director, Air Traffic

Service; and David Sheftel, Director, Systems Research and Development

Service................................................................................................... 112, 236

Milford, Hon. Dale, a Representative in Congress from the State ofTexas.... 270

Rider, John M., special assistant, Government Activities and Transportation Subcommittee..................................................................................... 3

Stolarow, Jerome H., Deputy Director, Procurement and Systems Acquisition Division, U.S. General Accounting Office; accompanied by Sam

Pines, Assistant Director; and Leo Weintraub, Audit Manager............... 99

Letters, statements, etc., submitted for the record by—

Belanger, Raymond G., Director, Air Traffic Service, Federal Aviation

Administration: Primary and secondary radar coverage improvements at

San Francisco, San Jose, and Sacramento, Calif.................................. 266, 267

Bond, Langhorne M., Administrator, Federal Aviation Administration:

Keegan Report—Executive Summary............................................... 116-117

Transponder/encoder population......................................................... 265

Rider, John M., special assistant, Government Activities and Transportation Subcommittee:

Cost avoidance by accepting Texas Instruments proposal over General

Dynamics, table................................................................................... 98

Staff study on FAA procurement activities (particularly those relating

to the procurement of airport radars and antennas under contract

with General Dynamics Corporation)................................................. 4-84

Stolarow, Jerome H., Deputy Director, Procurement and Systems Acquisition Division, U.S. General Accounting Office:

Charts relative to the hearings............................................................104-106

Contracting activity information........................................................... 110

Information concerning Sylvania contract............................................ Ill

(III)

FEDERAL AVIATION ADMINISTRATION OPERATIONS RELATED TO SAFETY AND PROCUREMENT MANAGEMENT

MONDAY, NOVEMBER 28, 1977

House of Representatives,

Government Activities and

Transportation Subcommittee

of the Committee on Government Operations,

Washington, D.C.

The subcommittee met, pursuant to notice, at 10:05 a.m., in room

2247, Rayburn House Office Building, Hon. John L. Burton (chairman of the subcommittee) presiding.

Present: Representatives John L. Burton, Glenn English, Jack

Hightower, and Arlan Stangeland.

Also present: Miles Q. Romney, staff director; Bruce R. Butterworth, George Gudauskas, and Cynthia M. Mora, professional staff

members; Elizabeth L. Wasserman, clerk; and Rachel Halterman,

minority professional staff, Committee on Government Operations.

Mr. Burton. The subcommittee will come to order.

Ladies and gentlemen, these hearings deal with the effectiveness

of the FAA in implementing its statutory duty to promote safety in

air commerce. The hearings will focus on two related matters—

procurement management and safety. Safety and procurement are

very closely related.

When the FAA expends the taxpayers’ money on certain items

which it either does not need or it does not receive, or if money is

wasted through certain other processess, this money is not available to the agency to purchase safety equipment that it does need,

or to hire more personnel to enforce safety regulations.

To put it bluntly, wasted money can lead to wasted lives in an

agency like the FAA. These hearings are not only for the edification of this subcommittee and the Members of Congress, but also

for Mr. Bond, the new Administrator, who inherited this bag of

snakes. Certainly, we hope that the evidence that is brought out

today and tomorrow will lead him to the conclusion that there is a

great need to shake up what I consider to be a fairly slipshod 

operation.

I use the term “slipshod” because it reminds me of an incident

when I was in college. We were playing basketball, and the electric

timer went out. In the last 5 minutes of the game, it was timed

with a stopwatch. Either 2 seconds before the end of the game, or 2

seconds after the end of the game, depending on the side you were

on, the winning basket was made, and the losing coach later reel)
2

ferred to his loss as one caused by the most slipshod run athletic

system he had ever seen.

Well, in my judgment some of the procedures by which FAA

contracts are awarded, and the FAA’s clinging to the old “see and

avoid” technique to avoid midair collisions, are not unlike using a

hand stopwatch instead of an electric timer.

There are also three things that bothered me personally about

the FAA before we got into these specific hearings. They give me a

gut feeling that something might be wrong with the Administration.

On September 8 and 9, 1977, in this very room, we had a hearing t

on aviation safety and airline deregulation. At that time, the Administrator was asked whether he foresaw any additional burdens, ~

need for additional funds, or help for his agency in insuring safety

under a deregulated economic environment. The Administrator an- i

swered that he saw no foreseeable need for largely expanded duties

or expanded staff. ,

At the same time, seated next to him was Mr. Scully who, I

assume, had to be in possession of memos from each of the sections

of FAA’s Flight Standards Service that were asked to evaluate

their future manpower needs in light of the increased workload

caused by airline deregulation. Each and every one of these memos,

at one point or another, in one form or another, stated that they

thought their duties would be increased, and that they would

therefore need additional staff.

The fact that Mr. Bond was apparently not aware of these

memos when it was known that he would be testifying before this

very committee about that very factor leads me to believe that if

you have assistants like that trying to help you, you don’t need any

enemies trying to hurt you.

I am also very concerned about something that may seem trivial

to anyone else. But it gives me a feeling of unreality about the

FAA’s operation.

There was a court case in which a pilot refused to take up an

airplane because he said it was unsafe. There is an FAA regulation

which states that the pilot is in command of an aircraft, is directly

responsible for the safety of flight, and has the final authority over

the operation of that aircraft. That means, in effect, if a pilot does

not believe an airplane is safe, he can refuse to operate that plane.

The FAA actually raised in court the argument that that regulation really did not apply because the plane was on the ground, and

that therefore the pilot was not operating the plane. The plane

would have had to be up in the air before it was operating.

This seems, at best, to be idiotic. An agency that would raise that

type of an argument in court does not establish too much confidence in my mind.

These hearings will first go into certain procurement practices

and decisionmaking processes. The first witness will be John Rider,

who was especially assigned to this subcommittee to look into FAA

procedures in one particular procurement. “Procedure” is really

not a good phrase because the FAA really does not, in my judg- ,

ment, have a procedure. Sometimes they make a good buy, and

quite often, they make a bad buy. But there does not seem to be

any real procedure.
3

We will then hear from representatives of the General Accounting Office who will follow Mr. Rider. We will then hear from the

FAA.

All witnesses before the subcommittee will be sworn and will be

provided with a copy of the committee rules.

Mr. Rider, would you raise your right hand? Do you swear that

the testimony you are about to give before the subcommittee is the

truth, the whole truth, and nothing but the truth, so help you?

Mr. Rider. Yes, Mr. Chairman.

Mr. Burton. Mr. Rider was a special assistant to the subcommittee. Mr. Stolarow, Deputy Director, Procurement and Systems Division, GAO, will be accompanied by Leo Weintraub and Samuel

Pines. Then we will have Administrator Bond who will be accompanied by four of his top people.

Tomorrow’s, hearing will deal with aviation safety, such as the

“see and avoid” technique and other matters, as well as some more

discussion on the FAA’s view of airline deregulation as it might

affect aviation safety in view of the internal memorandums that

were available to the subcommittee.

Mr. Rider?

STATEMENT OF JOHN M. RIDER, SPECIAL ASSISTANT, GOVERNMENT ACTIVITIES AND TRANSPORTATION SUBCOMMITTEE

Mr. Rider. Mr. Chairman and members of the committee, my

name is John M. Rider. I appreciate the opportunity to appear

today to discuss my report, prepared for the House Government

Activities and Transportation Subcommittee on the Federal Aviation Administration’s failure to successfully procure airport surveillance radar systems—eighth generation—under a contract with

General Dynamics Corp. At the time I prepared the report, I was

on loan to the subcommittee from the U.S. General Accounting

Office.

Mr. Chairman, I would like to submit the report for the record.

Mr. Burton. Without objection, the report is received.

[The material follows:]
4

SUBCOMMITTEE ON GOVERNMENT ACTIVITIES AND TRANSPORTATION

U. S. HOUSE OF REPRESENTATIVES

COMMITTEE ON GOVERNMENT OPERATIONS

FAA PROCUREMENT ACTIVITIES

(PARTICULARLY THOSE RELATING TO THE PROCUREMENT

OF AIRPORT RADARS AND ANTENNAS UNDER CONTRACT

WITH GENERAL DYNAMICS CORPORATION)

November 18, 1977

A staff study prepared by John M. Rider
5

CONTENTS

CHAPTER TITLE PAGE

Chapter 1 In tro d u c tio n 1

Chapter 2 Background 2

Chapter 3 Findings 5

Chapter 4 Preaward 9

(a) Chronology 9

(b) P ro je c t Management 17

(c ) P ro je c t Planning 18

(d) Requirement D eterm ination 18

(e) Procurement 19

( f) P ro je c t C o o rd in a tio n /L ia is o n 19

(g) Agency Actions 20

Chapter 5 C ontract Award 21

(a) Chronology 21

(b) C ontract M on ito rin g 23

(c ) Q uestionable P ra c tice s in

M odifying GD's C o n tra c t

26

FAA V is its to C o n tra c to r

F a c il itie s

26

L e tte r M o d ific a tio n 34

(d) FAA's A d m in is tra tio n o f the

C ontract A fte r June 1975

39

Agency A lte rn a tiv e s 40

FAA A ctions 42

Chapter 6 Cost R eporting 46

Chapter 7 A n a ly s is o f FAA's R atio n a le fo r 50

M odifying the GD C o n tra c t

i
6

PAGE

APPENDIX I . PROCUREMENT REQUEST PREAWARD FOR THE ASR-8

PROCUREMENT

APPENDIX I I . ABBREVIATED CHRONOLOGY

ABBREVIATIONS

ASR-8

- A irp o rt S u rv e illa n c e Radar - 8th Generation

DOD - Department o f Defense

DOT - Department o f T ra n s p o rta tio n

FAA - Federal A v ia tio n A d m in is tra tio n

AAF - Airway F a c il itie s S e rv ic e , FAA

AFS - F lig h t Standards S e rv ic e , FAA

ALG - L o g is tic s S e rv ic e , FAA

GC - General Counsel, FAA

GD - General Dynamics C orporation

OMB - O ffic e o f Management and Budget

PMM - Peat, Harwich and M itc h e ll Company

RFA - Request fo r A ction

SC - S p e c ific a tio n Change

SRDS - Systems Research and Development Service

TAR - Technical A c tio n Request

TI - Texas In s tru m e nts , Incorporated

TSARC - T ra n s p o rta tio n Systems A c q u is itio n Review Council

RFP - Request fo r Procurement

DOTCAB - Department o f T ra n sp o rta tio n C on tra c t Appeals Board

GAO U.S. General Accounting O ffic e

GLOSSARY OF TERMS

RFA Request subm itted by a c o n tra c to r to use a non-standard

p a rt in equipment being fu rn is h e d to the Government. A

non-standard p a rt is any p a rt not lis te d in the d e ta ile d

equipment s p e c ific a tio n o r o th e r document a p p lic a b le to

the c o n tra c t.

TAR Request subm itted by a c o n tra c to r to d e v ia te from a

c o n tra c t te c h n ic a l requirem ent. I f approved by the

Government, the TAR u s u a lly re s u lts in a s p e c ific a tio n

change and m o d ific a tio n to the c o n tra c t.

SC A form al change to a te c h n ic a l s p e c ific a tio n generated

by the Government. I t can become a c o n tra c t requirem ent

o n ly through a c tio n by the C o n tra c tin g O ffic e r. Specific a tio n changes may be generated in response to a TAR,

o r may be generated on the so le i n it ia t i v e o f the

Government in response to changes in requirem ents.

i i
7

GLOSSARY OF TERMS (Cont'd)

Contract Types

Cost Plus No Fee with Ceiling - Government pays a ll costs up to a

ce ilin g with no p ro fit to the

contractor.

Fixed Price Plus Incentive - Government pays contractor to

produce a product fo r a fixed price

w ithin a prescribed delivery

schedule. Costs in excess of the

fixed price w ill be shared by the

Government and contractor up to a

ce ilin g .

Cost Type Contract - Government pays a ll costs, and

contractor must put best e ffo rt

forward to comply with the terms

of the contract.

i i i
8

CHAPTER I

INTRODUCTION

This s ta ff rep o rt is in response to a May 27, 1976, le tte r from

then-Subcommittee Chairman, W illiam J. Randall, requesting assistance

in reviewing the procurement procedures o f the Federal Avia tio n Adminis tra tio n , which apparently have contributed to the fa ilu re o f several

major system procurements. The Subcommitee id e n tifie d the ASR-8 radar

system procurement as one such system because the FAA stands to lose

about $13 m illio n w ith nothing to show fo r it s expenditure.

A d ra ft report was submitted in August o f 1976. In November 1977,

Subcommittee Chairman John L. Burton requested th a t the report be

updated.

*.

The report was prepared by John M. Rider, a GAO employee tem porarily

detailed to the Subcommittee as an in v e s tig a to r.

*****
9

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CHAPTER 2

BACKGROUND

The Subconmittee on Government A c tiv itie s and Transportation of

the House Government Operations Committee maintains a continuous watch

over Federal Aviation Administration operations to insure maximum

possible economy and efficiency. As part of this surveillance a c tiv ity

the subcommittee has periodically conducted investigations of FAA's

procurement practices. As a re s u lt, the subcommittee uncovered serious

procurement mismanagement which has cost the taxpayers many m illions

of dollars and, at times, has delayed improvements to the safety of

the National Airspace System (NAS).

In response to reports that FAA had awarded a major radar contract

to an apparently unqualified bidder, the subcommittee in itia te d a prelim inary review. As the investigation expanded and facts came to lig h t,

i t was found that FAA's procurement management had badly deteriorated.

Our review centered on the production contract fo r the eighth

generation of the a irp o rt surveillance radar system (ASR-8). The

ASR-8 is the la te st s tate-o f-the -art solid state radar system which

provides coverage to a ir tr a ffic controllers fo r a 60-mile radius

around terminals. I t d iffe rs from previous generations of ASR systems,

by improving detection of small a irc ra ft and elim inating certain
10

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interference caused by ground objects and weather.

The Department of Transportation (DOT) ordered that the ASR-8 contract be

awarded to the General Dynamics Corporation (GD) despite technical and

lo g is tic evaluations by FAA which concluded that there were very high

risks associated with GD's proposal. According to DOT'S Associate

Administrator for Administration, FAA management was unwilling at that

time to make a detailed positive determination that this bidder was

non-responsible because GD failed to show that i t could meet the delivery

schedule. Sixteen months la te r, in May of 1974, FAA learned from the

contractor that costs had almost doubled--from $18.2 m illio n to $33.7

m illio n , and that the delivery schedule had slipped by nine months.

Two weeks a fte r that, in June 1974, Texas Instruments (T I), then

successfully producing ASR-8 equipment under another FAA contract,

offered to build the radars and antennas fo r the same unit price and within

the same delivery schedule as provided in the GD contract.

In July 1974, FAA's top management decided to accept the TI o ffe r.

But i t also decided to restructure the contract with General Dynamics.

FAA modified the GD contract from 37 radar systems plus 40 antennas for

$18.2 m illio n to one (1) radar system plus 40 antennas fo r $12.8 m illio n .

The u n it price of a radar under the original contract was about $360,000.
11

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The unit price of the radar system under the restructured contract was

$10.4 m illio n . FAA's rationale fo r this action was that i t would help

maintain competition, and permit FAA to experiment with the s t i l l untested

features of the GD design. I t took FAA u n til March 27, 1975 to complete this

modification action.

Four months a fte r the m odification was signed by the FAA, GD

no tified FAA in July 1975 that (1) i t did not plan to compete in the radar

business and (2) the GD design did not o ffe r any innovations over the TI

radar. In November 1975, GD stopped a ll work, and subsequently FAA te rminated the contract.

FAA has not received any radars or antennas under this contract,

but stands to lose over $13 m illio n . FAA fa ile d in th e ir attempt to

maintain competition and the only positive resu lt o f this procurement

is that TI successfully b u ilt and in s ta lle d the ASR-8 radars to FAA's

specifications and the systems are operating s a tis fa c to rily .
12

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CHAPTER 3

FINDINGS

1) FAA's advanced planning fo r procurements is time consuming,

and lacks direction. This is evident by numerous changes to equipment

specifications, changes in the type of procurement a fte r the proposal

had been submitted to prospective bidders, and confusion and protests

by the competing bidders.

2) I t appears that FAA has fa ile d to follow procedures established

by the Department of Transportation fo r DOT review of the ASR-8 procurement contract and its subsequent m odifications, and DOT has fa ile d to

require FAA to comply with these established procedures.

3) FAA failed to adequately monitor the ASR-8 contract although

FAA's in itia l technical evaluation of the GD's proposal concluded that

the government would have to exercise an extremely high e ffo rt to monitor

this contractor's progress.

4) DOT Procurement Regulations, FAA Procurement Regulations, and

agency procurement orders fa il to contain any stated requirement fo r

conducting regular contract program reviews. Program reviews are currently

an integral part of DOD Procurement Regulations, requiring the Government

to review in-depth contract schedules and costs, to id e n tify contract
13

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status, slippages, cost overruns, and to in itia te immediate remedial

action and follow up.

5) Although FAA regulations and orders fa il to provide fo r

contract program reviews, FAA says that i t is conducting "program

reviews" on some major contracts. FAA, however, has not issued

program review guidance or defined the purpose, objective, or results

of these reviews.

6) FAA's technical o ffic e repeatedly procrastinated and delayed

in responding to the contractor's request for action on contract

specifications. These delays ranged from threo weeks to six months

and were responsible, in part, fo r contractor schedule slippages and

cost overruns.

7) FAA's top management are sometimes poorly prepared to make

sound decisions. Some decisions are made without adequate preparation and

are not based on information provided by legal, technical, and contract

personnel. Records of meetings deciding major contract changes have not

been prepared. F in a lly , FAA's top management cannot agree or recall

what happened at crucial meetings deciding major courses of action on

the ASR-8 contract.

8) FAA has inadequate procedures and guidelines fo r monitoring

contractor costs and lacks direction when n o tifie d of performance slippages

27-075 0 - 78 -2
14

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and cost overruns. In May 1974, when the contractor reported costs to

complete at $14.5 m illio n over contract ce ilin g , FAA was reporting . ■

costs to complete at $4 to $6 m illio n . When n o tifie d by GD of the $14.5 cost

figure, FAA failed to analyze this information to determine why costs to

complete had doubled. Without detailed cost information, FAA management

certainly was unable and not prepared to determine the areas causing

overruns, the costs attribu table to the Government, whether the contractor

could be price competitive, and actions to take on the GD contract.

9) FAA lacked adequate information on costs to c e rtify that the

contractor's performance was commensurate with funds expended. After

v is itin g the contractor fa c ilitie s , a FAA o ffic ia l refused to approve

payment to the contractor. Nevertheless, FAA paid the contractor $1.2

m illio n without resolving this o ffic ia l's objections.

10) FAA reportedly insisted on changing the type o f contract from

fixed price to cost, and in its contract m odification did so. This change

permitted the contractor to recoup about $2.4 m illio n withheld by the

Government since the date of award under cost sharing arrangements. Under

the fixed price contract, these funds would not have been paid to the

contractor i f he fa ile d delivery under the contract.

11) Under the modified cost type contract with GD, FAA also
deleted the requirements for cost status reports, subcontractor cost

trend reports, overhead rate reports, and progress reports.

12) There were no FAA orders or stated policy in the FAA which

details the responsibilities of the Office of the Chief Counsel fo r

approving or disapproving contract payments. Also, i t was not a matter

of practice to advise the Chief Counsel's o ffic e before a contract

payment is withheld. This seems contrary to an FAA policy, established

in 1964, that directs legal counsel and procurement personnel to

consult and coordinate during the procurement process. In the ASR-8

contract, the contractor has contended that FAA's fa ilu re

to make payments on a cost type contract was a breach of the contract.

This has created additional problems fo r the Government in its attempt

to recover funds expended.

13) Although FAA's stated objective in modifying the ASR-8

contract was to stimulate competition fo r future procurements, and to

test unique features on an advanced GD ASR-8, FAA fa ile d on both

counts. GD stated that i t did not plan to compete in the ASR market

and that the GD radar did not o ffe r any innovations over the radar system

being b u ilt by TI. In addition, FAA failed to receive antennas, but

stand to lose over $13 m illio n in this procurement.
16

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CHAPTER 4

PRE AWARD

CHRONOLOGY

In 1971, a program was prepared to develop the eighth generation

of ASR and ancillary equipment. The improved system was targeted fo r

in s ta lla tio n at 31 locations. The program plan provided that the procurement request (PR) fo r the ASR-8 would contain carefully selected stringent

qualifications and technical evaluation c rite ria . The plan also called

fo r a Request fo r Proposals (RFP) which would require proposals fo r one

prototype system on a cost type contract, with options fo r a fixed price

type contract fo r future production systems.

Such a RFP fo r ASR-8‘ s was issued to 62 potential contractors on

March 17, 1972, fo r one prototype radar system with options on 30 production

radar systems.

On March 24, 1972, the prospective offerors were invited to submit

questions to the Contracting O fficer on the RFP.

On March 30, 1972, Amendment No. 1 to the RFP was issued changing

236 certain technical requirements.
17

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377 In April and again in May, the closing date on the RFP was extended.

In April 1972, the FAA prepared a summary of risks on the design

and production of the ASR-8 radar system. The FAA stated that ASR-8

specifications were w ritten with the mandate that only known and proven

features would be included. Features requiring development e fforts

were not included. Also, the report stated that personnel in the

333 engineering area had serious doubts as to the need fo r a prototype or

pre-production system i f s tric t adherence to the specifications as w ritten

was enforced. I t was also doubtful whether the prototype route, and

especially the "double prototype" route (procuring a prototype from

two contractors) would be beneficial to the FAA.

On April 21 , 1972, the Director of FAA's Looistlcs Service- (*L»=) s t i l l

recommended, however, that the ASR-8 be procured on a cost plus incentive

306 fee (CPIF) basis fo r the f ir s t prototype system with fixed price

incentive (FPI) options fo r the production systems.

FAA reported in April 26, 1972, that the Department of Transporta310 tion was now reviewing the procurement method.

On May 2, 1972, the Office of the Secretary of Transportation (OST)

339 was briefed on those new features which might require development. FAA

stated that a ll features were either well within the state of the a rt,
d id n 't require development, or had been used on previous m ilita ry radars.

On May 10, 1972, the Director ofFAA's Airways F a c ility Service (AAF)

stated that specifications contained in the RFP did not fu lly or

accurately define the agency's technical requirements.

On May 12, 1972, Amendment No. 2 was issued alerting prospective

offerors that the government would award a contract based on in itia l

offers received, without discussion of such offers. Technical and/or

price negotiation would not be conducted at any time with any of the

offerors. Also, the amendment changed the proposed contract from

cost to fixed price incentive.

On May 20, 1972, General Dynamics (GD) submitted a target price

of $20,362,025 with a ceiling price of $22,764,099 fo r 31 ASR-8 systems

and 40 antenna assemblies.

On May 22, 1972, Texas Instruments (TI) submitted a target price

of $17,229,951 with a ceiling of $18,872,675. TI offered an accelerated

delivery schedule at no additional cost.

On May 23, 1972, the RFP was closed with only GD and TI responding.

• On June 5, the contracting o ffic e r stated that the proposed ASR-8

contract included a re la tiv e ly firm design and specification and performance
19

-12-

requirements which would permit the contractor to operate without detailed

371 control or technical direction. The contracting o ffic e r also determined

that the use of a fixed price incentive contract was lik e ly to be less

costly than the other methods of contracting.

On June 7, 1972, an FAA technical evaluation team concluded that

373 T I's proposal was complete, adequate, and responsive in a ll substantive

375 areas. I t also concluded that the GD proposal, while i t could probably

be upgraded, could not be considered complete, adequate, and responsive

387 and was considered a high ris k to the government.

On June 12, 1972, FAAfContract Division recommended that the award

376 be given to Texas Instruments.

On June 14, 1972, FAA's General Counsel o ffic e stated that

awarding the contract without negotiation would bind the FAA into a

379 contract with unacceptable technical deviations that d id n 't meet

FAA requirements.

On June 29, 1972, GD submitted a price reduction to its original

proposal. Target price was reduced to $17,118,000 and the ceiling price

was $18,624,000. This proposal was lower than the Texas Instrument's

383 proposal but the contracting o ffic e r stated that i t must be considered

late and must be assumed that to upgrade GD's proposal an increase in

costs would probably be necessary.
20

-13-

DOT

On July 12, 1972, the/Director of In s ta lla tion and Logistics,

398 stated that FAA did not have adequate price competition and TI had a

s ignificant competitive edge over GD. He believed FAA could not properly

award the contract to TI.

On July 24, 1972, DOT'S Assistant Secretary fo r Administration

stated that the proposed price to TI could not be ju s tifie d on the basis

402 of adequate price competition, and had not been ju s tifie d on the basis

of price analysis. He recommended FAA require submission of detailed

cost and pricing data, require an audit, and conduct negotiations. This

the

342 in effect reversed FAA's determination of May 9, 1972 that/award be

made without technical or price negotiations.

Letters were sent to both TI and GD as recommended and audits were

404

conducted of both firm s. The proposal date was extended by two months

405

to September 1, 1972, to include detailed cost information.

On August 16 and August 29, 1972, TI submitted le tte rs to the

FAA Administrator and Assistant Secretary of Transportation, respectively,

409

over the manner in which the pre-contract procedures were being under417 taken. Specifically, TI disapproved of the vascillating decisions

concerning the requirement fo r pricing data, audits, and negotiations.

645

Later, TI protested but was denied by the Comptroller General (GAO).
On September 1, 1972, the revised proposals were received from

TI and GD. Following is a comparison o f th e ir proposals:

Texas Instruments

General Dynamics

Target

$22,986,945

16,665,676

Price

C eiling

$25,076,668

18,180,737

On October 4, 1972, the Department o f Transportation submitted a

complete ob lig a tio n plan fo r a ll F a c ilitie s and Equipment funds to the

Subcommittee on Transportation o f the House Committee on Appropriations

This included commissioning schedules fo r ASR-8's.

On November 6, 1972, FAA requested proposals from TI and GD to

produce s ix ad ditiona l ASR-8's making a to ta l o f 37 radar systems.

From November 15-17, negotiations were held w ith both TI and GD.

On November 20, 1972, fin a l o ffe rs fo r 37 radar systems and 40

antennas were submitted as fo llow s :

Price

Target C eiling

Texas Instruments $22,871,699 $24,950,959

General Dynamics 18,053,011 19,694,197

The fin a l o ffe r a fte r negotiations was:

Price

Target C eiling

Texas Instruments $21,131,000 $23,052,000

General Dynamics 17,160,256 18,720,276
22

-15-

5io 0

n December 8, 1972, the FAA Chief of Contracts Division recommended

that TI be chosen. The technical analysis showed that the TI proposal

was technically superior, and GD's proposal was marginally acceptable.

On December 21, 1972, FAA's pre-award review of the proposed

535 contract was forwarded to the Secretary of Transportation with a strong

recommendation to award the contract to TI.

539 On December 26, 1972, FAA requested an extension of the proposal

to January 31, 1973. Both TI and GD concurred with the extension.

On January 3, 1973, FAA gave an oral and slide presentation to the

Under Secretary of Transportation, regarding the two proposals. The

540

presentation concluded that GD's probability of complying with all

technical requirements, the delivery schedule, and of furnishing

adequate technical manuals on schedule was very low. The probability

of GD exceeding delivery schedule and producing at the final target

price was extremely low; and the effort required by the government to

technically monitor the contract was extremely high. Also, FAA estimated

that costs avoided by accepting the TI proposal over GD's proposal was

about $3.5 million.

According to the DOT Associate Administrator for Administration,

552

FAA reconmended award to Texas Instruments at a $4 million higher price

than General Dynamics but was unwilling to make the determination to
23

-16-

support that position. This o ffic ia l stated that federal procurement

regulations provide that contracts shall only be awarded to responsible

prospective contractors that can comply with the proposal including th e ir

a b ility to comply with the required delivery schedule. The regulations

552

also provide that determination of "non responsibility" shall be made

by the contracting o ffic e r i f the information available to him or obtained

by him does not indicate clearly that the prospective contractor is

responsible. Thus, the burden of proof is on the bidder, and i f he

fa ils to convince the contracting o ffic e r of his a b ility , he cannot

receive the award.

According to the DOT o ffic ia l, FAA was unwilling, however, to set

down for the record those points discussed with the Under Secretary,

562-1 that in th e ir opinion, General Dynamics could not meet the delivery schedul

or fo r that matter even come close. FAA should have, but did not, make

a detailed positive determination that General Dynamics was not responsible

Without th is , an award to the highest bidder, Texas Instruments, would

have been d iffic u lt.

The Under Secretary of Transportation decided on January 10, 1973,

to award the contract to General Dynamics with instructions to prepare

the award documents inmediately.

cfi4 This decision was based on advice from the Director of FAA's AAF &

ALG Services, that (1) GD's proposal was technically acceptable, (2)
24

-17-

564 GD had the cap a bility , and (3) GD must be considered a responsible offe ro r

for th is procurement.

867

565

FAA awarded the ASR-8 contract to GD on January 12, 1973. On the

same day, TI brought to FAA a best and fin a l o ffe r. A comparison of the

TI proposal to the GD award follows:

_______ Price_________

Target Ceiling

568 Texas Instruments

General Dynamics

$19,151 ,357 $ -

17,160,256 $18,720,276

PROJECT MANAGEMENT

According to a Peat, Harwich and M itchell (PMM) Study dated

August 1974, implementation of effective project management practices

PMM

B-40 would have resulted in better control of the ASR-8 acquisition. Internal

decision making should have been rapidly coordinated, and contractor

approaches should have been clearly determined in a re la tiv e ly short

period of time. However, project progress was slow between issuances

of the in itia l procurement request in December 1971 and fin a liz a tio n of

the contract in January 1973; procurement actions progressed slowly;

technical requirements were in it ia l ly imprecisely defined, tending to

change weekly without decisive intercession by project management; and

the proposal evaluation process and contract award c rite ria were not

clearly thought through.
25

-18-

PROJECT PLANNING

According to the PMM Study, plans should be employed as both community cative devices w ith respect to p ro je c t d ire c tio n and control instruments

-42

in the sense th a t they provide the baseline against which progress is

measured. Although an e ffo rt was made in the pro je c t to accomplish some

general and sp e c ific p ro je c t planning, there is reason to question it s

content and adequacy.

An advance procurement plan was drawn in July 1971. However, i t

apparently made in s u ffic ie n t provision fo r the development o f ASR-8 proposal

evaluation c rite ria . The plan could also have been structured to re s u lt

*Hrl

in a more d e fin itiv e process (in terms o f firm dates fo r fin a liz a tio n

o f technical requirements) and less protracted con tract fin a liz a tio n

period. While i t may be argued th a t some o f the delay was the re s u lt o f

the inte rventio n of the O ffice o f the Secretary to request resubmitted

proposals subject to n e g o tia tio n , i t may also be advanced th a t, had

adequate preproposal planning been accomplished and the plan ap prop riate ly

implemented, there would have been no need fo r such in te rv e n tio n .

REQUIREMENT DETERMINATION

The PMM Study stated th a t one o f the p illa r s on which communication

w ith the contractor rests is the technical requirements document, the

s p e c ific a tio n . With respect to the ASR-8^ between the issuance o f the

RFP in March 1972 and it s closing in June, three requests fo r technical
26

-19-

change occurred, increasing the contract funding from $5 to $14 m illio n .

(See Appendix I)

Incorporating technical changes and amending RFP's is bound to

result in confusion and imprecision at the contractor's offices as well

PMM as a loss of confidence in the Agency. While such changes inevitably

B-43

occur on occasion, i t may be appropriate to introduce rigorous presubmittal specification review procedures fo r major contractual e ffo rts

such as those involving the ASR-8.

PROCUREMENT

The PMM Study also noted that the procurement process implies

a great deal more than mechanically le ttin g and monitoring contracts.

There was an advanced procurement plan but i t was largely ineffective.

PMM

B-44 I t did not force timely decisionmaking (e.g ., the 8 month delay in

ASR-8 contract award), require timely technical input (e.g.,the repeated

redefinition of ASR-8 technical requirements), or result in a supportable

decision with respect to contract award (e.g ., DOT'S overruling the

Agency and directing award to General Dynamics).

PROJECT COORUINATION/LIAISON

F inally, the PMM Study noted that although the Office of the General

Counsel (GC) took exception to specifics of the ASR-8 procurement on

PMM

B-44 two separate occasions prior to contract award, the GC position was
27

1751

1752

-20-

overruled. Although in this case, i t would seem that the GC position

has been vindicated by events, the question is not essentially one of

rig h t or wrong. Rather, questions should be asked as to whether or

not an adequate opportunity fo r input was provided and whether or not

adequate and timely quality control and review processes were in place.

AGENCY ACTIONS

The PMM Study expressed findings, and conclusions, and it.',

proposed 20 recommendations. The recommendations dealt prim arily

with the need to establish an acquisition l if e cycle system and the

need fo r improving FAA’ s acquisition management, planning process,

monitoring system, and procedural documentation. FAA's Associate

Administrators and Chief Counsel concluded that good use could be made

of these recommendations fo r improving the procurement system, but

FAA deferred any action u n til another procurement study was made.

The Soules Study was undertaken and again several specific

recommendations were made concerning procurement procedures and material

management. FAA says that some of these have been or are being implemented.

FAA says, however, that with respect to the PMM Study, "there is every

p o s s ib ility that recommendations spe c ifica lly mentioned in the PMM Study

were, coincidently converted to FAA procurement procedures." FAA,

however, was unable to id e n tify which ones were converted to FAA procedures.
28

-21-

CHAPTER 5

CONTRACT AWARD

CHRONOLOGY

On January 12, 1973, FAA awarded a fix e d price plus incen tive (FPIC)

contract to General Dynamics Corporation to design and b u ild 37 a irp o rt

567 surveillance radar systems and 40 antennas fo r a ta rg e t price o f

$18,174,437 w ith a c e ilin g price o f $19,734,423. The f ir s t system was

scheduled fo r d e live ry 24 months a fte r the award, in January 1975.

W ithin fiv e months from the date o f award, FAA inspection personnel

725

began forecasting a $1 m illio n cost overrun and serious slippages in the

d e live ry schedule.

W ithin 11 months, the c o n tra c to r's cost status reports showed a

751 m illio n overrun. Also, between October and December 1973, FAA continued

761

771 to re port s ig n ific a n t slippages in work schedules ranging up to 25 weeks

7 7 4 and concluded th a t i t was u n lik e ly th a t the d e live ry o f the f ir s t system

would be on tim e.

1538 Contractor PERT charts—de tailed schedules fo r completing items
29

1538

1559

1561

1547

1418

1002

1223

1248

-22-

called fo r in the contract--w ere found to be "success orie nted " w ith

over 185 delayed events reported in December 1973 but the end de live ry

date remained firm . FAA delays were also reported. FAA was repeatedly

reminded to respond qu ic k ly to the co n tra c to r's request fo r s p e c ific a ­

tio n changes because delays would have a d e fin ite impact on the co n tra c to r's

schedule.

By March 8, 1974, FAA personnel assigned to the co n tra c to r's

fa c i l itie s had reminded FAA's technical o ffic e th irte e n (13) times to

respond to the co n tra c to r's request fo r s p e c ifica tio n changes in a tim e ly

manner. For example, i t took FAA 6 weeks to respond to a request from

the contractor to approve a paint color and another 5 months to incorporate

th is change in to the co n tra c t. FAA technical o ffic ia ls a ttrib u te d these

delays to inte rnal procedures which required various levels o f review

and frequent subcontracting fo r analysis and response.

By March 8, 1974, the status o f request fo r actions (RFA) and

technical action requests (TAR) included:

RFA's

Submitted Approved/Disapproved Changed to TAR Outstanding

133 87 13 33

Average Time 8.7

to Respond

(weeks) (The average time to respond on the Outstanding RFA's was 10.5 weeks)

27-075 0 - 78 - 3
1248

30

-23-

TAR's

Submitted Approved/Di sapproved Outstanding

15 6 9

Average time 8.4

to Respond

(weeks) (The average time to respond on the Outstanding TAR's was 12.5 weeks)

By March 8, 1974, the average time fo r FAA to respond to the

^223 contractor on RFA's and TAR's was 8.7 weeks and 8.4 weeks, re sp e c tive ly .

Despite fu rth e r warning to respond q u ic k ly , FAA's response time increased

to 10.5 weeks on outstanding RFA's and to 12.5 weeks on outstanding TAR's.

The range in FAA's response time was from 2.6 weeks to 23 weeks fo r RFA's,

and from 7 weeks to 6 months on TAR's. FAA o ffic ia ls consider 2 to 4

weeks normal response time on RFA's and TAR's.

FAA la te r admitted th a t d e fic ie n c ie s in FAA con trac t a d m inis tra tion

860 were responsible fo r c e rta in GD schedule delays and cost overruns.

S p e c ific a lly , FAA fa ile d to act promptly on the c o n tra c to r's requests fo r

c la rify in g or modifying co n tra c t s p e c ific a tio n s .

CONTRACT MONITORING

Although FAA's technical evaluation o f the General Dynamics proposal

549

concluded th a t the government would have to exercise an extremely high

e ffo rt to monitor the GD co n tra c t, FAA did not provide fo r program reviews

in the contract and did not respond promptly by conducting these despite

repeated warnings o f co n tracto r d if fic u lt ie s . In a d d itio n , FAA inspectors
31

-24-

assigned to the contractor's plant were not provided with the technical

discussions

evaluation of the contractor's proposal to assist them in identifying

contractor weaknesses and detecting early signs of schedule delays and

when

cost overruns. I t also appeared that/FAA inspectors were reporting

contractor d iffic u ltie s lim ited action was taken to determine the

seriousness of the problem and correct the problem.

. . . FAA's technical evaluation of the GD proposal in December 1972

549

concluded that the government would have to exercise an extremely high

e ffo rt to monitor the contractor. FAA, however, failed to provide fo r

775 regularly scheduled program reviews to monitor contract progress, costs,

and schedules; to identify program deficiencies; or to in itia te immediate

remedial action and follow up.

FAA inspectors v is itin g the contractor's fa c ilitie s noted early

cost overruns and schedule slippages and recommended in October and

December 1973, and again in January 1974, that program reviews begin

immediately. Again in April 1974 (16 months into the contract), with

$4 to $6 m illio n in cost overruns and 9 to 10 months schedule delays

reported, FAA inspectors again recommended a program review. The

inspectors noted that a program review s t i l l had not been held even

though the contractor u n ila te ra lly requested a review in March of 1974.

On May 22-23, 1974, an FAA team reviewed the contract status,

plans and revised schedules and concluded that no confidence could be
32

-25-

placed on the a b ility of GO to deliver radars even within the 9 month

delays estimated by the contractor, and recommended that (1) FAA review

o

_, the subcontractor's design and test schedules with GD and the French

oU/

subcontractor and (2) FAA conduct monthly program review with the contractor.

Discussion

These recommendations were ignored.

On May 28-30, 1974, FAA inspectors reported that GD had a mediocre

8

22 investment and the e ffo rt expended was less than satisfactory. In addition,

the inspectors reported that there was l i t t l e confidence in GD's a b ility

to control timely delivery of subcontracted material and that GD lacked

the personnel who were fam iliar with FAA specification requirements.

On May 31, 1974, GD defined cost and schedule problems and reported

g p the cost to complete at $33.7 m illion -- almost twice the original target price

and $14.5 m illion over ceiling price — and a nine month schedule delay.

One month e a rlie r, FAA inspectors had estimated only a $4 to $5 m illio n

cost overrun.

On June 6, 1974, an FAA o ffic ia l reported that GD had been remiss

in reporting major problems to the FAA in accordance with contractual

requirements.

On June 10, 1974, FAA issued a le tte r to GD asking why the contract

should not be terminated for fa ilu re to meet schedules and maintain

progress under the contract. GD responded to the FAA lett, er 11 days la te r.
33

-26-

GD attributed the slippage to: specification c o n flic t and incom patibilities

227 changing the type of contract from a cost to fixed price incentive,

increased lead times fo r purchased parts, and fa u lty contract administra8 3 3

tion procedures as evidenced by FAA's management of the program and FAA's

fa ilu re to respond in a timely manner on requests fo r specification

c la rifica tio n s and changes.

In a June 13, 1974, le tte r to the Director of Airway F a c ilitie s ,

Texas Instruments (TI) then successfully producing ASR-8 equipment under

229 another FAA contract, offered to build the radars and antennas fo r the

same price and within the same schedule as provided in the GD contract.

QUESTIONABLE PRACTICES IN MODIFYING CONTRACT - DOT FA73 MA-3228

Shortly a fter FAA n o tifie d GD that the ASR-8 contract might be

terminated for GD's fa ilu re to maintain satisfactory progress, certain

events occurred which, in e ffe c t, caused the government to accept the

blame and responsibility fo r contractor cost overruns and schedule

delays. Instead of paying about $360,000 fo r each ASR-8 system, FAA

modified the contract to a cost type contract and agreed to pay about

$10.4 m illion fo r one radar system, $2.4 m illio n fo r 40 antennas, plus

give the contractor $1.5 m illio n worth of residual equipment.

FAA Visits to Contractor F a c ilitie s

1581

Between June 28 and July 3, 1974, the Director of Airway F a c ilitie s
Service and Director o f Logistics Service met with GO o ffic ia ls in Florida.

These o ffic ia ls were unable to provide a trip report or record to show

the purpose of these meetings.

However, the Director o f AAF indicated that he

ed

and the Director of ALG v is it GD's plant to make a physical inspection

o f the fa c ilitie s and to review parts lis ts and materials ordered and on

hand. After looking at the prospects to complete the contract, they 

concluded that GD couldn't produce the radars w ithin reasonable cosft or

within an acceptable delivery time frame. This o ffic ia l also indicated

that in a meeting with two high-level GD o ffic ia ls the following matters

were discussed:

(1) GD needed more money and a longer time frame,

(2) Having GD subcontract with Texas Instruments to buy the radars

and sell them to the FAA,

(3) GD stated that termination fo r default was not an acceptable

,

( i

alternative, <

•• , .(4). GD was interested in remaining in the radar business.

On July 8, 1974, the FAA technical o ffic e r rebutted GD's response

to the "show cause" le tte r stating that the original specifications were

and s t i l l are acceptable to the government; that GD's splintered operations

resulted in an overdesigned model and cost overruns, and that the only

changes in the scope of work were at the request o f GD. The technical

o ffic e r also attributed a 3 to 4-month ju s tifia b le schedule slippage to

FAA's delay in processing contractor request fo r specification changes.

<

According to an FAA document, on July 10, 1974, FAA received a verbal

proposal from GD. Again, FAA o ffic ia ls stated that no record on the details

o f th is proposal exists.
35

- 27a -

In

On July 17, 1974, the Director o f Airways F a c ility Service instructed

the technical o ffic e r to w rite an alternative action paper advocating:

(1) the rationale for procuring a prototype system, (2) on approaching GD

fo r a proposal fo r procuring the prototype and 40 additional antennas, and

(3) summarizing the verbal proposal presented to FAA as of July 10, 1974.
According to FAA, the decision to modify the GD contract fo r 1 radar and

40 antennas was made somewhere in the July 1 to July 15 time frame.

According to FAA, i t is evident from the record th a t the decision had

already been made by the July 17, 1974 conference.

Sometime between July 17 and July 25, 1974, the contracting o ffic e r

coordinated w ith the technical o ffic e who had e a rlie r a ttrib u te d some

schedule slippage to FAA, and together prepared an a lte rn a tiv e action

po s itio n paper on the ASR-8 co n tra c t. The paper recommended procuring

1 ASR-8 and 40 antennas, since according to the con tractin g o ffic e r, he

was directed to include 1 radar and 40 antennas in his recommendation. The

paper did not contain, as in s tru c te d , a summary o f the July 10, 1974 GD

verbal proposal.

Furthermore, the a lte rn a tiv e action p o s itio n paper, w hile recommending

m o d ification o f the GD co n tra c t, also recommended th a t the required

number o f ASR-8 radar be procured under a new co n tra c t w ith Texas

Instruments.

On July 23, 1974, FAA's General Counsel's o ffic e stated th a t i t

was not taking any p o sitio n on the a lte rn a tiv e action po s itio n paper

u n til technical comments were received. In the end, FAA's General
37

-29-

Counsel never o ffic ia lly expressed an opinion on the appropriateness or

Discussions

v a lid ity of positions taken by the contractor or the government, and

FAA never formally replied to the GD response to the "show cause" le tte r.

(FAA's response apparently was in the form of a cost type modified contract

fo r 1 radar system plus 40 antennas fo r $12.8 m illio n ).

In mid to late July 1974, the directors of Airway F a c ilitie s

1749 Service and Logistics Service, the Deputy Chief Counsel, the Associate

1756 Administrator for Administration and the Deputy Administrator met to

decide on the direction to take on the General Dynamics contract. The

Deputy Administrator said he adopted the alternative action position

paper (prepared sometime between 7-17 and 7-25) which recommended

procuring a prototype radar and an additional 40 antennas. (See

Analysis of FAA's Rationale fo r Modifying the GD Contract - Chapter 7).

859 FAA has no records or minutes of this meeting. Therefore, i t is impossible

to determine i f other alternative positions were presented. I t is

impossible to determine i f f u ll or partial termination were actively

considered. I t is also impossible to determine, at this time, how the

$12.8 m illion figure was arrived at.

According to the Deputy Chief Counsel, a general discussion of

various alternatives occurred at this meeting. The Deputy Chief Counsel

1749 stated that he advised on the likelihood of successfully sustaining a

default action against General Dynamics. The Chief Counsel's office

also advised that while a basic case for default could be made, the
38

-30-

1ikelihood of ultim ate success was questionable, based on evaluations

of FAA's actions during the contract period which were supplied by other

participants.

According to another o ffic ia l at this meetlna, termination was b rie fly

mentioned at the meeting but because the General Counsel's o ffice had not

received FAA's technical comments on GD's position GC could not rea lly

respond on the matter. According to this FAA o ffic ia l, the people at the

meeting couldn't answer most of the questions being asked about the

recommended course of action, including the question on the total funds 

involved. This o ffic ia l said 1t was d iffic u lt to question the rationale for

paying additional money fo r one radar because the Director o f ASF was sure

of his wants fo r the radar.

One o ffic ia l at attendance to this meeting stated that he was i l l

prepared fo r the meeting because i t wasn't his contract and he d id n 't

understand at the time the purpose of the meeting.

Another FAA o ffic ia l at this meeting stated that termination for default

was discussed but there were legal and p o litic a l implications which might tie

up la te r procurements of the ASR-8's.

According to the former Deputy Administrator, he adopted the

recommendation of the alternative action position paper to buy a radar

from GD and procure the remainder from Texas Instruments in order to

get the radars into the fie ld while maintaining competition. At the

n

July 1974 meeting with the directors of Airway F a c ility Service and

Logistic Service, the FAA Deputy Chief Counsel, the Associate Administrato r fo r Administration and the Deputy Administrator, i t was determined

that a maximum of $12-13 m illio n would be negotiated with General
39

- 31 -

Dynamics fo r the one radar and 40 antennas. The FAA Administrator at

the time, was also notified and concurred with this course of action

immediately following this July meeting.

The FAA Deputy Administrator said he was not aware of FAA's technical

rebuttal to the GD response to the "show cause" le tte r, or the paper

prepared by General Counsel which stated that (1) i t was not taking any

position u n til technical comments were received, (2) the alternatives

paper did not present the disadvantages associated with the recommended

course of action and (3) the disadvantages should be brought to the

attention of the FAA Administrator.

The Deputy Administrator believed that the presentation to him

included an analysis of when the contractor could perform, but he was

Discussion

not presented any information concerning changing the contract from

fixed price to a cost type contract. There is a question as to whether

DOT approval was given.

FAA's Deputy Administrator said that the DOT had approved, at

ggg the Under Secretary's level, FAA's approach in the ASR-8 procurement

program. This included proceeding sole source with Texas Instruments

and "must have included" procurement one radar and 40 antennas from

Discussion

General Dynamics. The Deputy Administrator also said that FAA's

proposal "must have" been reviewed by TSARC, but he did not have any

evidence of this review.
40

- 31a -

To be sure, the DOT'S Associate Administrator for Administration

said he was told by the FAA Deputy Administrator that FAA planned:

(1) to terminate GD's contract action fo r a ll radars except fo r some

Discussion

antennas and (2) to buy the ASR-8 radars from Texas Instruments at the

same price and schedule as under the GD contract. The FAA Deputy

Administrator wanted to know i f an acquisition paper would be required.

The Associate Administrator said that he then asked the DOT Linder

Secretary about th is requirement. The Under Secretary replied that he

was already fa m ilia r with the Texas Instruments procurement and no

acquisition paper was necessary.
41

-32-

At th is tim e, the former Under Secretary o f Transportation who

awarded the ASR-8 contract to GD, was now a Corporate Vice President

o f GD and was under con tracts to act as a part-tim e consultant to the

Secretary and Under Secretary o f Transportation.

The DOT Associate Adm inistrator said he had no knowledge o f subsequent FAA action on the GD con tract including it s in it ia l m o d ification ,

it s fin a liz a tio n in March 1975, continued problems in July 1975, or

term ination in November 1975. He also said th a t i f anyone in the

Department would have discussed the m atter w ith FAA, he would have known.

This o ff ic ia l said he c o in c id e n ta lly learned about GD not producing the

antennas from some Texas Instrument o ffic ia ls who mentioned they were

going to get an antenna con tract from FAA.

When questioned in July 1976, the DOT Associate Adm inistrator

contended th a t FAA wasn't required to submit the con tract through the

Transportation Systems A cq uis ition Review Council (TSARC) even though

the order establishing TSARC became e ffe c tiv e September 7, 1972.

Therefore, he said, no waiver fo r the GD action was necessary.

In a December 27, 1972, memo to the Secretary o f Transportation

on another radar co n tra c t, subsequently, awarded in January 1973,

the same DOT o ffic ia l stated th a t: "Under our source selection procedures,

the Secretary should have been the source selection o ff ic ia l in th is

procurement. However, FAA had inte rpre ted (improperly in our judgment)
certain temporary exceptions to the procedures to mean that the procedures

would not apply to any procurement action in itia te d p rior to March 1, 1972.

As a consequence, this proposed selection has been made w ithin FAA

according to the old, now superceded, FAA rules."

The DOT Associate Administrator estimated that 8 or 9 waivers of

the TSARC review requirement have been granted by the Department on other

acquisitions.

On August 8, 1974, GD submitted three proposals to the FAA "as a

resu lt o f the exchange of correspondence." GD proposed one prototype

radar plus either no antennas, 40 antennas, or 70 antennas. Cost data

on these options was also provided.

On August 15, 1974, FAA prepared a procurement reauest (PR) fo r

1 radar system plus 40 antennas at a price of $12,797,388. The

Industrial Division of FAA's Logistics Service reviewed the procurement

request and commented on August 20, 1974 that they did not know how the

drafters of the PR arrived at the figures, but speculated that i t represented

a total of:

(1) Funds expended to date.

(2) The cost to develop a single radar, and

(3) Terminating costs fo r the convenience of the government.

In addition, the division commented that since the PR states that

there was understandings between the directors of Airway F a c ilitie s and
Logistics Services and others, these understandings may have formed

the basis for the cost figures estimated in the PR. The division noted

that no provision fo r a program review was included although these

reviews were considered a necessity because of the past history of the

contractor. The division also stated that i t would not be considered

prudent to proceed on any further ASR-8 work with th is contractor without

a regularly scheduled program review, and strongly recommended that this

provision be included in the contract. The division also recomnended

that FAA require the contractor to disclose in his reports changes in

dates fo r progress accomplishments, slack time, c ritic a l paths, and

make up action. FAA, however, fa ile d to include either provision in the

contract modification.

Letter Modification

On August 20, 1974, the PR was signed fo r $12,797,388 fo r a radar

and 40 antennas. The next day, GD submitted a cost proposal to FAA to

build one radar and 40 antennas fo r $12,799,987. The proposal stated that

i t would be valid u n til August 22, 1974.

On August 24, 1974, FAA modified its contract with GD. A comparison

of major items that changed include:
Type of Contract .........................

ASR-8 Radars .................................

567

Cost ................................................

Delivery - 1st Radar.................

Payment..........................................

Contractor Reports .....................

Required

44

-35-

ORIGINAL

Fixed Price with

Incentive

37

$18.2 M illion

January 1975

Government/

Contractor Costs

shared 80/20

u n til delivery

MODIFIED

Cost

Monthly Status Reports

$12.8 M illion

January 1976

Gov. pays 100%

of a ll costs

since date

the contract

was awarded

Monthly Status

Reports

Cost Status Reports 

Subcontractor Cost Trend Reports

Overhead Rate Report

Production Progress Reports

Besides agreeing to pay almost 30 times more to GD fo r one radar

with s t i l l untested features even when i t had already decided to contract

with Texas Instruments to build ASR-8's fo r the same price and within

927 the same delivery schedule as the original ASR-8 contract, FAA changed

the GD contract from a fixed price to cost type contract.

With a cost type contract the contractor is entitle d to reimbursement for a ll costs fo r the contractors best e ffo rts on the contract.

Under a fixed price contract, the government is not lia b le fo r the

iscussion

contractor's cost on undelivered work and is e n title d to the repayment

■
45

-36-

of any progress payments. Had the contract remained fixed price, costs

due to GD's inefficiencies would have had to be absorbed by the contractor

Discussion

The conversion to a cost type contract seemed to benefit only the contractor.

T

1734

The change to a cost type contract also allowed the contractor to

receive a $2,376 m illio n lump sum payment fo r costs incurred by the contractor since the date of the award. Under the original contract, 20

k 1732 percent of the costs incurred by the contractor were not to be reimbursed

u n til the contractor completed delivery under the contract.

914

The FAA General Counsel Contracts Division Chief also questioned the

appropriateness of FAA agreeing to this type of arrangement in August 1974

and stated to the Chief Counsel, "I know, o ff hand, of no authority for

us to reform a contract in that manner."

1767

The FAA's General Counsel o ffice stated that although

this contract modification did not convert the contract from a supply

contract to a development contract, the change to a cost type contract

indicates that there was uncertainty involved in contract performance

of such magnitude that cost performance could not be estimated with

su ffic ie n t precision to permit use of a fixed price contract. This degree

of uncertainty in contract performance is also an indication that certain

development e fforts could be involved in the contract work.

27-075 0 - 78 - 4
46

937

992

1594

1596

1598

1145

1071

1738

969

1145

-37-

From the time the telex (Modification 9) modifying the GO contract

was sent on August 24, 1974, u n til the d e fin itive contract m odification

was signed on March 27, 1975, FAA management over the contract remained

without guidance.

On October 7, 1974, s ix weeks a fte r FAA modified the GD contract,

FAA inspectors at GD fa c ilitie s reported that there appeared to be a

lack of concerted e ffo rt by GD to meet th e ir established deadlines and

i t was most lik e ly that GD would push schedule deadlines forward as they

had in the past.

In November 1974, i t became evident that GD was having problems

meeting the antenna and radar specifications and in January 1975, FAA

was again reporting schedule delays of two months. Monthly meetings were

suppose to be held in Orlando and Washington in an e ffo rt to keep abreast

of a ll problems and avoid any potential delay. But, they d id n 't

m aterialize u n til a contract program review meeting with GD

personnel was held in early February 1975. At this meeting, i t again

became questionable whether GD could deliver equipment meeting the

contract specifications w ithin the delivery schedule. There were a

number of serious unresolved problems on (1) interpreting contract

requirements fo r the antenna, (2) test procedures and location of test

fa c ilitie s and (3) others. On February 7, 1975, an FAA inspector

reported that the "contractor is buying tim e." By the end of February 1975
47

1600

977

972

992

-38-

FAA determined that GD was 5 months behind schedule but that GD had the

technical capability and corporate desire to deliver on schedule, and

that GD was w illin g to absorb additional costs to complete - estimated

at $2.1 m illion over ce ilin g . Also in February 1975, the Contracting

and Technical office rs determined that the contractor's estimates were

considered reasonable fo r the completion of the one system being

furnished, and by continuing with GD future procurements would be

competitive and the FAA would be able to recoup the monies expended

fo r this procurement through lower equipment prices.

Evidently based on this determination, FAA on March 27, 1975,

signed a cost reimbursement contract with GD fo r $12.8 m illio n . Within

the next two months, FAA reported that the antenna was not manufactured

to drawings, numerous procurement and manufacturing shortages were

reported, and the specifications might have to be revised fo r GD to meet

schedules.

On May 14, 1975, FAA's Assistant Chief Counsel fo r contracts noted

that General Dynamics had expended $9.8 m illion out of the $12.8 m illio n

ceilin g and i t seemed that GD could not produce the required spec antennas

and radar within the c e ilin g , with a reasonable guess being $14-$15

m illio n . I t seemed clear to him that the contractor was attempting to

cut back performance and/or its obligation, in order to save money.

Recent attempts by the contractor to degrade the spec seemed to be an

1020
48

1020

1020

1620

-39-

e ffo rt by the company to reduce costs a t FAA's expense. He also reported

th a t given the h is to ry o f th is c o n tra c t, GD would probably seek to have

the FAA fund pa rt or a ll costs in excess o f the $12.8 m illio n c e ilin g .

The company may very well regard FAA d ire c tio n s to fo llow s p e c ifica tio n s

as changes in , and additions to , the contract requirements fo r which

i t would claim entitlem ent to an adjustment in the con tract p rice .

The Counsel recommended th a t FAA fin d out exactly where GD and

FAA stood on th is contract. I f there was going to be an overrun which

FAA would be asked to cover, the sooner FAA knew the b e tte r. He also

recommended weekly monitoring and, since the radar would not be used

o p e ra tio n a lly in the system, recommended th a t contract term ination be

considered.

On June 20, 1975, FAA reported th a t the radar and the antenna

scheduled d e liv e rie s had been delayed from 3 to 5 months.

FAA's ADMINISTRATION OF THE CONTRACT AFTER JUNE 1975

As a re s u lt o f a continuing disagreement over contractual requirements

fo r the antenna which began in A p ril 1974, (the m odified contract did not

c la rify the issue) GD e ffe c tiv e ly stopped most work on radars and antennas

in M id-July 1975 and asked fo r $2.1 m illio n to complete antenna development.

1014
49

1072

1034

1040

1068

1075

1040

-40-

In late July, the FAA directed the contractor to furnish the items in

dispute at no additional cost, but the contractor appealed the decision

before the DOT Contract Appeals Board (DOTCAB).

GD also advised FAA in July 1975 that i t (1) did not plan to

compete in the domestic or international radar business; (2) wished to

terminate the contract by July 31, 1975; (3) claimed the government did

not need the radar as the design offered no new innovations; (4) that i t

would however, continue to provide the equipment, but would require

s ig n ifica n t waivers to the specifications. GD stated that FAA could

procure an ASR-8 from TI fo r $300,000. GD also estimated that the

$12.8 m illio n ceiling would be reached in September 1975, well in

advance of any s ignificant deliveries of equipment.

Agency Alternatives

In July 1975, with knowledge of s ig n ifica n t schedule slippages

in both radar and antenna deliveries, and that the antennas were

operationally unusuable at the time, the FAA considered several courses 

of action.

I . Termination fo r default

Advantages

(1) The government would not have to pay settlement costs which

could run up to several hundred thousand dollars.
50

-41-

1041 (2) Cost avoidance of about $650,000 would be realized by

discontinuing work (Contract expenditures and obligations

were about $12,150,000).

Disadvantages

(1) Legal appeals by the contractor.

I I . Termination fo r Convenience

(Similar to termination fo r default in a cost type contract

except the contractor would be entitle d to settlement costs).

Advantages

(1) Cost avoidance of $650,000.

(2) No company pressure or legal entanglements.

1042 Disadvantages

(1) Settlement costs would be incurred by the Government.

(2) Justifica tio n of terminating contract fo r antennas

would be d iffic u lt.

I I I . Termination fo r Convenience (Predetermined Settlement)

Contractor discussed immediate termination in July 1975 with a

1042 negotiated settlement (around $10.8 m illio n ). This would prevent

further incurrence of costs and provide some recoupment from the

contractor to obtain the required antennas from another source.

Advantages

(1) Possible recoupment of program funds to apply to new

antenna purchase.

(2) No legal entanglements.
51

-42-

Disadvantages

(1) Negotiating an acceptable settlement.

IV. Continue with Present Contract

1043

This would require GD to deliver one radar and 40 antennas and

cause GD to incur s ig n ifica n t losses over contract ceiling of

$12.8 m illio n . FAA believed that GD would try to recoup some

of this overrun through the claims route. FAA also believed

that i f FAA remained firm , GD would engage in a legal battle

over the antennas involving another $2 m illio n . F ina lly , there

was the d is tin c t p o s s ib ility of receiving unusable hardware as

indicated by the test data, the requests fo r waivers, and the

contractor's attitude toward the radar business.

Advantages

(1) None

1044

Disadvantages

(1) Possibility of never receiving operationally usuable

equipment.

(2) Possibility of incurring additional cost in excess of

$12.8 m illio n .

(3) Poss ib ility of legal entanglements.

(4) Poss ib ility of s ignificant delays to this and other

programs.

FAA Actions

As a result of the July 1975 meeting with GD o ffic ia ls , and GD

stoppage of work on the radar and antennas except for an engineering

study, FAA decided to stop paying the contractor fo r his costs 1032
52

-43-

incurred a fter May 23, 1975. Paradoxically, FAA also trie d to get GD

to continue with the present contract. FAA General Counsel's office

1032 concurred with the FAA attempt to demand performance from GD afte r

July 1975. FAA's Logistics Service asked General Counsel i f they had

the rig h t to withhold payments under the contract, to which the General

Counsel's office replied that under a cost type contract, they did not

have that rig h t while the contract continued to be in e ffect.

Nevertheless, by October 28, 1975, FAA had not paid 5 vouchers «

to ta llin g $798,322. GD advised FAA that th is action was in breach of

contract and that legal action might pursue. Also, GD stated i t did

1146

not intend to furnish a GD manufactured ASR-8 radar. FAA contended

that GD had a contract; therefore, i t should proceed. On November 7,

PR #72 a FAA inspector continued to report no work on the contract.

On November 12, 1975, GD stated that additional waivers to antenna

specifications would be required, that either $2.1 m illio n be

1116

provided to finance antenna development u n til DOTCAB ruled on the contractors

appeal, or the Government furnish $1.8 m illio n , in which case

the contractor would drop the legal proceedings.

FAA counteroffered with a choice between proceeding and an $8.8

1147

m illio n total contract termination. GD responded by saying i t would not
53

-44-

be w illin g to accept a $4.0 m illion loss ($12.8 - $8.8) on the contract

1117

but would agree to a $10.4 m illion termination, in addition giving FAA

a ll residual materials. GD requested an immediate decision because of

vendor and subcontract hold-orders.

On November 25, 1975, FAA decided to issue a "show cause" le tte r as

the f ir s t step toward a possible termination fo r default. However,

1125

before the "show cause" le tte r could be issued, GD advised that i t

considered the Government in breach of contract fo r fa ilu re to make

payments and fo r fa ilu re to increase the cost of the contract to finance

the requirements. As a consequence, GD further advised that i t was

discontinuing a ll work and terminating a ll suppliers.

1128 On November 25, FAA terminated the contract fo r default in its

1130 entirety.

On December 5, 1975, the termination was submitted to the DOT

1132

Contract Appeals Board.

On January 14, 1976, FAA estimated the cost fo r GD to meet the

1152 contract requirements at $23 m illio n — almost double the price agreed

to 9 months e a rlie r.

Agency cost data on the Contract follows:
54

-4 5-

COST DATA

CONTRACT DOT FA 73 VIA 3228

GENERAL DYNAMICS

PERIOD NUMBER VOUCHERS SUBMITTED PAID

1-12-73 - 3-26-75 23 (Fixed P rice ) 6,983,953 6,983,953

3-27-75 - 7-15-75 4 (C ost) 3,619,029 3,619,029

7-16-75 - 5-28-76 10 (C ost) 1,866,169

Total Costs on GD C on tra ct 12,469,151 10,602,982

(as o f 5-28-76)

1728

1727

Estim ated co s t to re p a ir and overhaul

e x is tin g antennas th a t would have been

replaced ......................................................................

Cost to reprocure 40 antennas ...........................

Estim ated c o s t to Government to l it ig a t e

n e g o tia te and s e ttle on term inated

c o n tra c t ......................................................................

200,000

4,376,040

Im possible fo r FAA

to e stim ate

Estim ated value o f equipment a t

c o n tra c to rs f a c i l i t y ............................................ 1,410,000
55

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CHAPTER 6

COST REPORTING

FAA's program for monitoring this contractor's costs was intiscussion a (je q u a t e

. FAA d i( j n o testablish an adequate cost reporting system fo r

use by this contractor. I t also lacked procedures fo r cost analysis

and for using the information to monitor the contractor's overall

performance.

When FAA awarded the ASR-8 contract to GD in 1973, FAA required

580

the contractor to provide cost status reports, subcontract cost trend

581 reports, overhead rate reports, and production progress reports. However,

621-24

som e o1t th e s e

reports were not actively used by FAA technical and procurement personnel to evaluate and compare contract costs with performance.

I t may be that some of these reports contained in s u ffic ie n t information

fo r detailed analysis.

For example, while FAA was predicting $4-6 m illio n cost overruns

in May 1974 the cost status report prepared by the contractor showed a

$2.3 m illion cost overrun, but at the same time GD n o tifie d the FAA

that costs would exceed the contract ceiling by $14.5 m illio n .

Twenty (20) months la te r and almost two (2) months a fte r FAA terminated

the contract, FAAprepared a detailed estimate of the cost to complete

the contract. FAA estimated that costs to complete the contract would
56

-47-

total $23 million -- again, almost double the contract price. FAA,

however, was estimating $2 to $3 million cost overruns shortly before

the contractor stopped all work.

FAA claimed that the contractor failed to notify the Agency of

826 significant events affecting the contract and costs. FAA, however,

should have made sure it was more aware of GD's difficulties by

developing a better cost reporting system and by analyzing the information

it received. FAA says it needs additional qualified staff to develop

a better cost reporting system and to analyze those costs.

As a result of the August 1974 modification to the GD contract,

which reduced contract scope and price, FAA deleted the requirement

for cost status, cost trend, overhead rate, and production progress

reports. The FAA's technical branch stated, however, that it was

impractical to expect the technical officer to certify the contractor's

invoices without considerably more detail than was supplied by the

contractor. He strongly recommended that someone with a cost accounting

background accompany the technical officer on a visit to the contractor's

facility to substantiate the costs submitted by the contractor.

After visiting the contractor's facility the technical

officer stated that it could not certify the contractor's invoices for
57

-48-

payment because the contractor was not meeting inte rn a lly established

performance schedules, thereby making GD's technical progress questionable.

The technical o ffic e r also found no segregation of costs fo r people

assigned to the FAA contract and another government contract. FAA,

however, paid the contractor $1.2 m illio n two weeks la te r without

resolving the technical o ffic e r's objections.

FAA failed to provide fo r or develop independent milestone schedules 

with target costs which could be used to compare with the contractor's

schedules in order to evaluate the contractor's performance.

The contractor prepared and submitted some milestone schedules 

fo r completing actions on the contract, but FAA found these schedules 

d iffic u lt to follow and analyze. Sound contract administration

dictates, and the Office of Management and Budget now requires fo r

major acquisitions, that executive agencies assess acquisition costs,

schedules, and performance experience against predictions and make

new assessments where s ignificant costs, schedule, or performance

variances occur. Apparently, FAA did not adopt and implement these

sound policies.

FAA also failed to analyze or ve rify the accuracy of the contractor's

estimate-to-complete the contract in May 1974. FAA, however, proceeded
58

-49-

to modify the GD contract in August 1974 but without the information

necessary to determine i f the contractor was going to be able to produced

radars and antennas even within costs provided fo r in modified contract.

The contracting o ffic e r stated, in mid November 1974, that i t appeared

that the contractor's proposed costs would exceed the ceiling price and£P

he would not agree to lower the ceiling price. He concluded that the

ceiling of $12.8 m illion was the best obtainable.
59

-50-

CHAPTER 7

ANALYSIS OF FAA'S RATIONALE FOR MODIFYING THE GD CONTRACT

On August 24, 1974, FAA m odified it s contract w ith GD (Contract

No. FA 73 WA 3228) from 37 radar systems plus 40 antennas to 1 radar

system and 40 antennas, from $18.2 m illio n to $12.8 m illio n , from a

fixed price to a cost type co n tra c t, and from a scheduled d e liv e ry o f

January 1975 to de live ry in January 1976.

FAA's ra tio n a le fo r th is decision was summarized in the July 17

a lte rn a tiv e action position paper. Each ra tio n a le is s tated, and thus

analyzed below:

By purchasing the 1 GD radar, FAA:

Rationale I. Frees the ASR-7 a t NAFEC fo r in s ta lla tio n and

commissioning as an operational f a c i l it y .

This in ve s tig a tion disclosed th a t on July 23, 1974, the Acting

D irector o f FAA's Systems Research and Development Service (SRDS)

reported th a t under no circumstances did the Service believe th a t the

ASR-7 a t NAFEC should be traded fo r the prototype model being developed

by GD, but th a t i t was possible the Service could use the GD prototype

to analyze improvements being incorporated in to i t .
60

-51-

The Acting Director also reported that the ASR-7 was needed at

NAFEC because:

(1) A great deal of ongoing analysis work depends on the ASR-7.

(2) Any in-service improvement work that may be required for

the ASR-7 could not be done unless this pa rticular model was

available. *

(3) The ASR-7 w ill be a part of the DABS testing program and

would be required fo r experimentation.

(4) The removal of the ASR-7 could impact, to a s ig n ifica n t

degree, on the A ir T ra ffic Control improvement program and

the DABS work because i t would almost surely require a

shutdown of those fa c ilitie s while dismantling took place.

Rationale I I . Procuring a prototype for NAFEC w ill release for

in s ta lla tio n in the NAS system an additional

production version of the ASR-8 which has been

scheduled fo r NAFEC in the current contract.

In this way, that system can be u tiliz e d to satis fy

unexpected and, therefore, unplanned requirements

which derive from changing operational demands

and/or Congressional requests fo r locations at

which in s ta lla tio n of ASR-8 has not been

anticipated. Further, i f not used fo r either of

these purposes, the equipment w ill be available
61

-52-

to s a tis fy emergency needs under c iv i l defense or

act o f God disa s te rs .

(Apparently, th is ju s tific a tio n is based on FAA's 

plan to procure another radar system from Texas

Instruments fo r NAFEC. By procuring a "prototype"

from General Dynamics, FAA would release the TI

radar scheduled fo r NAFEC fo r in s ta lla tio n in the

National A irp o rt System.

This in ve s tig a tion disclosed th a t in October 1972, the SRDS program

required th a t the ASR-8 in s ta lle d a t NAFEC be the same ASR-8 system th a t

was to be operational in the fie ld . This was essential in order to te s t

the system fo r problems and to make improvements. Provided GD had produced 37 radar systems, a GD radar would have f u lf i l le d the SRDS requirements. However, in July 1974, a fte r the GD contract ran in to d if f ic u lt y

SRDS reported that under no circumstances would a s ingle GD radar

su b s titu te the need fo r a fie ld model radar.

In December 1974, however, the FAA assigned the General Dynamics

radar, supposedly a production radar, to NAFEC rath e r than one o f the

production systems being b u ilt by Texas Instruments.

In May 1975, two months a fte r the contract m od ific a tio n , FAA reported

th a t, assuming GD successfully delivered an ASR-8 system, there was

27-075 0 - 78 - 5
62

-53-

considerable question as to whether the GD radar could meet NAFEC and

other system testing requirements. I t was then recommended that the

Acting Administrator and his associates decide on the disposition of

the GD system.

On June 13, 1975, SRDS again advised Airways F a c ility Service

that the GD radar would not meet th e ir requirements, and requested a

production system b u ilt by Texas Instruments. By November 19, 1975,

Airways F a c ility Service had not responded to SRDS request.

FAA frequently called the GD radar system a "production" radar

rather than a "prototype" radar fo r several reasons — the need fo r

a "prototype" costing $12.8 m illio n was questionable, and FAA's authority

to change the contract from a production to a prototype contract in

its 1974 m odification. FAA's General Counsel raised this issue in

July 1974, fearing complaints by other companies that would have

submitted proposals on this program i f they were aware of the proposed

contract change from production to prototype.

The Director of Airway F a c ilitie s Service, commenting on the procure

ment of a single radar system under another contract in May 1972, stated

that procuring a one-of-a-kind system, because of its uniqueness, would

soon be unacceptable in an operational environment. This one-of-a-kind

system would s t i l l demand funding fo r tra in in g , lo g is tic s support,
63

-54-

r e lia b ility , documentation and so forth. Further, the delivery of this

single system together with the "updated performance specifications"

would not put FAA in a s ig n ific a n tly improved position. Yet, two

years la te r, this o ffic ia l recommended procuring a one-of-a-kind system

-- the GD radar.

Rationale I I I . The development of a prototype would provide for

a continued competitive base fo r future procurements. I t was anticipated that as a result of

future competitive procurements, rather than

sole source buys, the FAA would be able to at

least recoup the monies expended fo r this procurement through lower equipment prices.

Although FAA's stated objective was to maintain competition, the

contractor told the FAA three months a fte r the fina lize d contract was

signed that i t did not plan to compete in the domestic or international

radar business, that i t wanted to terminate the contract, that the FAA

did not need the General Dynamics radar because i t did not o ffe r any

new innovations, and that FAA could purchase a radar system fo r

$300,000 from TI. *

Although FAA apparently wanted to establish competition there are

factors questioning the v ia b ility of GD as a competitor:
64

-55-

(b) While GD was predicting cost overruns TI was w illin g to build

the same radar under the same schedule and prices as called

for in the original contract.

(c) I t appears that GD was w illin g to build only one radar system,

thereby handing over to its competition the production contract.

(d) FAA failed to provide fo r and perform regular detailed program

reviews to monitor contractors progress, costs, and schedules,

to id e n tify program deficiencies; or to provide fo r immediate

resolution and follow up so as to ensure that GD would meet

cost and delivery schedules and ultim ately be in a future

competitive position.

(e) FAA was told by GAO investigators in January 1975, that a

GD vice president had stated that his company could not be

price competitive with the other producer and that the future

of GD in the ASR business appeared to be zero.

Rationale IV. GD prototype w ill provide at NAFEC a terminal radar

system essentially identical in a ll operational

parameters to those produced by Texas Instruments,

thereby making available to NAFEC a un it having the
65

-56-

la te s t sophisticated design. This equipment could then

be used by NAFEC to continue its ongoing terminal radar

improvement program.

Our investigation disclosed that before the GD contract was restructured, FAA lacked evidence that GD could produce a radar system

meeting FAA's specification requirements. In late May 1974, an FAA

team reviewing the contract status concluded that (1) no confidence

could be placed on the a b ility of GD to deliver radars even within

the 9 month delays estimated by GD; and (2) the schedule depended on

the French subcontractor completing design and tests, with GD monitoring

these e ffo rts , and on GD's a b ility to build and test prototype radars.

The team recommended monthly program reviews u n til the delivery of

the f ir s t system and that the FAA review the French radar system design

with the contractor and the subcontractor. An FAA o ffic ia l stated that

the FAA ignored both recommendations.

Another FAA inspector v istin g GD manufacturing fa c ilitie s in May

1974, found the investment mediocre and the e ffo rt less than satisfactory.

He noted that GD lacked personnel fa m ilia r with FAA spec requirements.

Despite these reports, a decision was made to restructure the

contract rather than terminate.
66

-57-

I

As early as October 1974, FAA learned that GD's antenna testing

program was again behind schedule. Schedules for antenna testing were

repeatedly postponed from August to October, then to November 1974,

and then to January 1975. On April 4, 1975, FAA learned that the antenna

was not manufactured to drawing and found numerous procurement and

manufacturing shortages. In May 1975, FAA noted that the radar specifica

tions might have to be revised fo r GD to meet schedules. Failures in

the GD system continued and GD sought to cut back performance. At

this time, FAA questioned whether the GD radar could be used by NAFEC

to continue its ongoing terminal radar improvement program.

In October 1975, GO stated that FAA was not going to get a GD

manufactured radar system.

Rationale V. I t was recognized that the prototype was being

designed in various areas to meet specified

performance requirements in a considerably

d iffe re n t manner than the design provided fo r

by Texas Instruments. By comparing designs

and r e lia b ilit y , the agency would derive

valuable information in terms of detail requirements which may be incorporated in further

production contract specifications.
67

-58-

Our investigation disclosed that the improved features supposedly

contained on the General Dynamics "Cadillac" radar system (The FAA

Deputy Chief Counsel compared the GD radar to the TI radar as a "Cadillac"

to a "Model T Ford," respectively) were in s ig n ifica n t.

The features were so in s ig n ific a n t, according to the technical

o ffic e r, that i t would cost GD more to remove the design features than

to leave them in. I f GD had met FAA requirements the equipment

performance would have been essentially identical to the TI radar.

Even GD stated in July 1975 that FAA did not need the GD radar as i t

offered no new features.

Rationale VI. In the GD contract, Government specifications

in two areas appeared to be commercially impracticable to develop and would require an

adjustment to the contract price and performance

time and could impair any Government default

action against the contractor.

Also, Government specs contained certain deficiencies

which would e n title the contractor to an adjustment

in contract price and extension in the performance

period.
68

-59-

This investigation disclosed that FAA's General Counsel o ffice

stated that they d id n 't agree with the position that two areas of

commercial im practicalities could seriously impair the Government's

default action. The only thing that would be effected by the stated

im practicalities would be FAA's future litig a tio n position.

This investigation also disclosed that GD did indeed charge FAA

with specification con flic ts and incom patibilities and delays, and

that the ASR-8 specifications were drafted around the ASR-7 b u ilt by

Texas Instruments. FAA's technical o ffic e , in turn, prepared detailed

and specific responses to issues raised by the contractor and admitted

that FAA was in part responsible for certain costs and a 3 to 4 month

delay.

FAA's General Counsel's O ffice, however, d id n 't evaluate or

respond to the FAA's technical rebuttal of GD's position and d id n 't

express an opinion on the position taken by the contractor or the

government.
69

-60-

APPENDIX I

PROCUREMENT REQUESTS PREPARED FOR THE ASR-8 PROCUREMENT

PR NUMBER DATE COST TYPE CHANGE

WA4M-2-7630 12/10/71 5,246,000 Original Request

WA4M-2-7630/1 1/27/72 - Spec Changes

WA4M-2-7630/2 3/13/72 - Spec Changes

WA4M-2-7630/3 4/24/72 - Spec Changes

WA4M-2-7630/4 3/24/72 14,254,000 Method of Proc. i

Quantities

WA4M 2-7630/5 3/27/72 - Spec Changes

WA4M-2-7603/6 4/24/72 - Spec Changes

WA4M-2-7630/7 4/24/72 - Spec Changes

WA4M-2-7630/8 8/15/72 - Spec Changes

WA4M-2-7630/9 11/20.72 2,768,200

$22,268,200

Quantities and

Deliveries
70

94,377

238-271

357,360,378

375,387

-61-

APPENDIX I I

CHRONOLOGY OF EVENTS INVOLVING FAA PROCUREMENT OF AIRPORT

SURVEILLANCE RADARS (ASR-8)

1972

March 17 - R e q u e st f o r P ro c u rem e n t (RFP) was iss u e d to

62 firm s f o r p ro c u rem e n t o f a ir p o r t s u r v e i lla n c e r a d a r (ASR-8) sy stem s on a C o st P lu s

F ix ed Fee b a s is .

May 11 ----- FAA amends RFP t o ch an g e q u a n tit y (from 1 t o

31 r a d a rs) and m ethod o f p ro c u re m e n t t o fi x e d

p ri c e i n c e n t i v e .

May 23 ----- Two com p an ie s r e s p o n d e d , T ex a s I n str u m e n t ( T I ) ,

a s o l e s u p p li e r o f ASR e q u ipm e n t sin c e 1957

and G e n e ra l Dynamics (GD) - a s s is t e d b y F re n c h

s u b c o n tr a c to r f o r th e sy stem d e sig n .

Ju n e 6 ----- FAA t e c h n i c a l e v a l u a ti o n : TI p r o p o s a l was b e s t

w h ile GD's was n o t c o m p le te , a d e q u a t e , and r e ­

s p o n siv e .

J u l y 24 — Due t o th e l a c k o f c o m p e titio n th e DOT d ir e c t e d

FAA t o r e q u e st new p r o p o s a ls t o be s u b j e c t to

n e g o ti a ti o n and a u d it

402
71

-62-

6,474,491

Nov. 20-21 - TI and GD submit proposal for 37 radar

systems plus 40 antennas as follows:

TI GD

486 Target Price — 21,131,000 17,160,000

491 Ceiling Price - 23,052,000 18,720,000

6,500,510,513

Dec. ----- FAA recommends TI because of technical

superiority and GD's high risk.

1973

63-64 .

Jan. 10 --- DOT directs FAA to award contract to GD.

Both proposals technically acceptable,

therefore price becomes determining factor.

67,644,576

Jan. 12 --- Contract awarded to GD for 37 radar systems

and 40 antennas for $18.2 million. Contract

calls for first system delivery in January 

1975 with final delivery in November 1976.

725,726

June 27 --- Five months into the GD contract, FAA identified a $l-million cost overrun. FAA considers 

this normal.

766

Oct. J1 -- FAA modifies and existing contract with Texas

Instruments to build 3 ASR-8 systems instead 

of 3 ASR-7's.
55-66

Oct. 31 - FAA's General Counsel Office legally opposes

FAA's agreement to purchase ASR-8's from TI

without competition and because the modification was outside the scope of an existing contract with TI.

Nov./Dec.- FAA noted significant slippages in GD work

schedules ranging up to 25 weeks, unlikely that

the delivery of first system will be on time.

1974

561,1559

Jan. ---- FAA reports that contract appears to be in danger of a delivery schedule delay; FAA delays

in responding to the contractor's request for

action on specifications - will have definite

impact on schedules.

1538

1538

792

Jan. 18 — FAA reports that it is doubtful that subcontractors can meet GD current schedule because 

of inaccurate and incomplete design drawings 

requiring additional time to correct.

Feb. ---- GD sent a team to France to identify and correct

problem areas in the design of the ASR.

April 1 — GD notifies the FAA contracting officer of

significant cost overruns which could affect 

delivery schedules. Immediately, FAA officials 

visited GD facilities whore GD confirms a $4-$6
73

-64-

1974

million cost overrun over the contract

ceiling and a 6 month delay in delivery.

1519-1611

April — --- - FAA hau been reminded 17 times by FAA

personnel at GD contract facilites to respond to the contractor's requests for

. specification changes in a timely manner.

For example, it took FAA 6 weeks to respond to a request from the contractor to

approve a paint color.

801-05

May 14 ----- GD defines cost and schedule problems and

proposed a 9 month delay which postponed

delivery of first system from 1/75 to 10/75.

806-07

May 22-23 --- FAA team reviews the contract status, plans,

and revised schedules. The team concluded

that (1) no confidence can be placed on the

ability of GD to deliver radars even within

the 9 months delays estimated by GD, and (2)

the schedule depends on French subcontractor

completing design and tests, GD monitoring

these efforts, and GD's ability to build and

test prototype and production radars. Recom

mends:

(1) FAA perform monthly program reviews until delivery of 1st

system (Program reviews are not
74

-65-

1974

307 provided for in DOT and FAA

procurement regulations).

(2) FAA review review the radar

design with the contractor 

to determine status.

322

317-821

May 28-30 --- FAA visits GD manufacturing facilities and

finds the investment mediocre and the effort less than satisfactory. Had little confidence in GD's ability to control timely

delivery of subcontracted material. Noted

that GD lacked personnel familiar with FAA

spec requirements.

May 31 ------ GD tells FAA it will cost $33.7 million to

complete the contract-twice the original 

contract price and $15.5 million over ceiling price of $18.2 million. Concludes, in

that the performance of work on a fixed

price type contract has proved to be commercially impracticable. FAA never evaluated or verified the accuracy of these figures .

June 1 ------ FAA officials state that GD had been remiss

in reporting major problems to FAA in accordance with contractual requirements.

B27-28

June 10 FAA issues a show cause letter to GD, asking

*26
75

-66-

829-30

833-38

1579-81

1974

why the contract should not be terminated 

for failure to meet schedules and maintain progress under the contract.

June 13 ----- Texas Instruments proposes deliver of 37

ASR-8's to the FAA, meeting GD’s original 

price, spec, and delivery schedule.

June 21 ----- GD responds to FAA letter attributing slippage to:

(1) Specification conflicts and

incompatibilities.

(2) Change in the type of contract.

(3) Failure of FAA to act in a

timely manner on GD requests 

for technical changes-directly 

affecting costs and schedules.

(4) Parts suppliers lead times.

Between June

28 - July 3 — Messrs. Jefferson W. Cochran and Richard

Frakes, Director of FAA's Airway Facilities 

Service and Director of FAA's Logistics Service, respectively, met with GD officials in

Florida. There isn't a trip report or record

to show the purpose of these meetings, officials contacted, the outcome of these discus-
76

-67-

1974

sions, dr who directed that this visit

be made. Explanations of visit are inx adequate.

July 8 ------ FAA technical officer rebuts GD reasons

for slippage.

51-57,1706

July 17 ----- Apparently the decision was made to procure one prototype and 40 antennas by this

date because Mr. Cochran, Director of Airway

Facilities,directed FAA technical officials 

to write a position paper on (1) presenting 

ing rationale for procuring a prototype 

system (2) approaching GD for a proposal

for procuring the prototype and 40 additional

antennas (3) stating the areas in which GD

radar system exceeds the specs (4) the purchase of 36 systems from Texas Instruments 

and (5) summarizing the verbal proposal presented to FAA as of July 10, 1974. (This

verbal proposal was never explained).

859-71 Between July 17

& July 23 ------- FAA contracting officials prepare a list of

alternative actions to take on the ASR-8 contract with GD and recommends procuring a

prototype radar — to be used at FAA's research
77

-68-

1974

center (NAFEC) — and 40 antennas. Other

alternatives considered but rejected were:

(1) Terminate for default.

(2) Continue with present contract.

(3) Continue performance via subcontract.

(4) Continue performance via P.L. 85-804

Extraordinary Contractual Actions to

facilitate the national defense.

872-73

July 23 ----- FAA's General Counsel's (GC) office states

that it is not taking any position on GD's

response to show cause letter until technical 

comments are received. GC also finds the alternative action paper legally inaccurate,

incomplete, and not timely. FAA's General 

Counsel never expresses an opinion on the

appropriateness or validity of positions taken 

by the contractor and the government and FAA

never formally replies to the GD charges. Also,

FAA's Research and Development Service reports

that under no circumstances should the ASR-7

at NAFEC be traded for the GD prototype.

874

July 26 ----- Total costs estimated by the FAA to terminate

— $5,659,631.

27-075 0 - 78 - 6
1974

>59,1706,1756

July

1751, 859-71 .

875 August 2

78

-69-

The directors of Airway Facilities Service 

(J. W. Cochran) and Logistics Service (R.

Frakes), the Deputy Chief Counsel (Anderson),

the Associate Administrator for Administration (Weithoner), and the Deputy Administrator (Dow), met to decide on the direction to

take on the contract. The Deputy Administrator adopts the alternative courses of action 

paper prepared sometime between 7/17/74 and

7/23/74, which recommends procuring a prototype radar and an additional 40 antennas.

The Administrator agreed with this position

too. FAA, however, has no records of these

meetings, how the $12.8 million figure was 

arrived at, or why the contract was changed 

from fixed price to cost reimbursement. DOT

was told that FAA planned to terminate the

GD contract except for some antennas and to

buy the radars from TI. The alternatives

paper does not list the disadvantages of

procuring a prototype from GD as the General

Counsel recommended on 7/23/74.

General Counsel received FAA's technical 

evaluation of GD's response to the show cause

letter for legal review and recommendations.
August 8 ---- GD submits proposal for three options as a

result of exchange of correspondence. This

correspondence is not documented. Options

include:

(1) 1 prototype radar, no antennas

(2) 1 prototype radar, 40 antennas

(3) 1 prototype radar, 70 antennas

August 21 --- GD submits a cost reduction proposal from

$18.2 to $12.8 million for 1 radar atid 40

antennas. (Original contract called for

37 radars and 40 antennas).

August 24 --- FAA notified GD to produce 1 ASR-8 and 40

antennas for $12.8 million. Formal modification will follow. FAA deletes requirement 

for cost status reports, subcontract cost

trend reports, overhead rate reports, and

production progress reports. Reasons given 

for change in contract:

— Provide NAFEC with radar.

— Broaden competitive base for future

procurements.

— Faulty FAA contract administration pro

cedures.
80

-71-

>40-1

940-4

1596

947

954

iscussion

1974

Sept. 23 ---- FAA agreed to procure 40 ASR-8's from TI

on a sole source basis for about $360,000

each.

Nov. -------- FAA reports problem with GD antenna, parts

specifications, and prototype radar.

Nov. 12 ----- Director of FAA's Systems Engineering Management stated that it is mandatory that

the ASR-8 going to NAFEC come from Texas

Instruments, who was producing the operational ASR-8.

1599

•riscussion

Dec. 13 ----- Director of FAA's Airway's facility Service

stated, however, that NAFEC will receive the

GD ASR-8.

Mid-December - GAO officials visit GD facilities and officials and are advised by an engineering vice

president that the future of GD in the ASR-8

market appears to be zero because GD could 

not be price competitive with other producer.

1975

January ----- GAO verbally advises FAA of discussions with

GD vice president. FAA officials report numerous technical problems during equipment

testing and up to a 2 month delay in delivery
81

-72-

1975

February 7 -- FAA reports that "the contractor is buying

time."

February 14 — FAA official monitoring contractor progress 

at plant recommends withholding payment for

inadequate progress.

974,983,982 Late Feb. to

Mid-March --- FAA team finds GD 5 months behind schedule

with no change in final delivery. However,

GD has the technical capability and corporate 

desire to deliver a radar and 40 antennas.

992

1734

1012, 1609

March 26 ---- FAA official at GD facility again recommends

withholding payment on voucher for inadequate

progress.

March 27 ---- Definitive contract for 1 radar and 40 antennas is signed. Contract is changed from a

fixed price contract to a cost type contract.

March 31 ---- -Under cost provisions, contractor submits

voucher for $2,376,938 for costs incurred 

since date of original contract. FAA pays

voucher two weeks later.

April 4 ----- FAA reports antenna does not comply with contract specifications.
82

-73-

1975

J20-22

M a y --------- FAA reports specs might have to be revised

for GD to meet schedules, system failures

continue. Appears that GD is seeking to cut

back performance and its obligation. Recommend FAA determine contractor intentions and

FAA position. '

June 2 ------ FAA reports delay of radar and antenna, a

fact, — from 3 to 5 months.

June -------- TI delivers first ASR-8 for $380,000.

1027 . „

June 13 ----- Director of FAA's Research and Development

Service stated that the TI (ASR-8) is necessary to satisfy NAFEC's testing program and

for performing in service improvements. GD

prototype was to be used for proposed "efforts

of a feasibility nature."

‘28,1033,1734 _ ,

July 15 FAA pays GD $1,242,091 despite technical officers refusal to certify that the work performed is satisfactory from a technical 

viewpoint and that costs claimed appear

necessary for performance.

034,1040 T

, , ,

July 16 ----- GD advises FAA that (1) GD does not plan to

compete in domestic or international radar 

business, (2) GD wishes to terminate contract
1975

83

-74-

1068-69

1075-76

162,1622,

1734

143-44

1055

1625

1625

1 #72

or receive an additional $2.1 million to

complete antenna development, and (3) PAA

does not need the GD radar because it does

not offer any new innovations.

Mid-July ---- GD has closed down all work on contract except for reviewing antenna design problems.

FAA stops payment on vouchers.

Late-July --- FAA finds no advantages to continue with

contract.

August 28 --- Director of Systems Research and Development

Service (SRDS) reported that the decisions 

to provide the GD (ASR-8) to NAFEC was based 

on factors not relevant to FAA requirements

and that the funding provided by SRDS does not

cover the cost of the GD system.

Late October - FAA reports no work on radar since July 1975,

changes are needed in antenna design. Earlir 

est estimate for testing redesigned antenna 

is 5 months. GD states it does not plan to

furnish a GD manufactured radar.

November 7 -- FAA reports no work on the contract.

November 12 — FAA proposes that GD accept a termination for

6-17 C D O - J 1 1 J -----
84

1975

1128

November 25 — GD notifies FAA that it is terminating suppliers for breach of contract (stopped payment on vouchers).

^30 November 26 — FAA issues termination for default notice

to GD.

1132

December 5 -- Appealed by GD before DOT appeals board.

1976

1152-58

January 14 -- FAA estimated cost for GD to meat contract

requirements at $23 million — almost double

the modified contract.

Mr. Rider. The airport surveillance radar—eighth generation,

frequently referred to as the ASR-8, is part of the national airspace system and is the newest airport terminal radar system.

It provides radar coverage to air traffic controllers over a 60-mile

radius which enables the controllers to better detect small aircraft

and thus helps avert midair collisions. It also aids controllers by

eliminating certain interference caused by weather and ground

objects.

FAA PROCUREMENT

The FAA awarded an $18.2 million contract to the General Dynamics Corp, in January 1973, for 37 radar systems plus 40 antennas. Twenty months later, after the company ran into difficulty

producing the equipment and the costs to complete the contract

were estimated at $33.7 million, FAA modified the contract.

FAA reduced the number of radar systems from 37 to 1 and

reduced the contract price from $18.2 million to $12.8 million.

Under this revised contract, FAA agreed to pay General Dynamics 30 times the original unit price of the radar system even though

FAA: (1) Had no requirement for a single General Dynamics radar

system; (2) had determined that it could not be used operationally

in the field; (3) had stated that it could not replace the “field” ASR

equipment used for testing at NAFEC—FAA’s research and development facility; and (4) at the same time, had decided to buy the

radar system from Texas Instruments at the same unit price and
85

delivery schedule as provided in the original General Dynamics

contract.

FAA also restructured the General Dynamics contract from fixed

price plus incentive to a cost type arrangement. Generally, under a

fixed price contract, the contractor must produce or return all

funds paid by the Government. Under a cost type contract, the

Government pays all costs in return for the contractor’s best efforts.

FAA’s major rationale for this contract modification was to keep 

General Dynamics competitive with Texas Instruments Corp, in

the ASR market and to test some features of the General Dynamics radar model at NAFEC.

Several months after FAA finalized the modified contract, General Dynamics informed FAA that: (1) It wanted to terminate the

contract; (2) it did not plan to compete in the radar market; and (3)

FAA could buy the same equipment from Texas Instruments for

about $300,000 per unit. The contractor, for all practical purposes, 

stopped work on the contract, and in November 1975, FAA terminated the contract.

Although General Dynamics did not complete the 1 radar system

or the 40 antennas, or even complete the design of the ASR-8

system, FAA has paid the contractor over $10 million, and the

contractor is asking for more. The only tangible results are a large

number of drawings and parts. Furthermore, FAA has had to go

out and reprocure the radars and additional antennas from another source for $19.2 million.

PROBLEMS WITH THE INITIAL AWARD

The radar system contract was awarded to the General Dynamics Corp, despite FAA technical and logistic evaluations which 

concluded that there were very high risks associated with this

contractor’s proposals. FAA’s evaluation stated that in view of the

importance of the ASR equipment to the safety requirements of the

national airspace system and the critical need for incorporating

quality products therein as rapidly as possible, cost considerations

must play a subordinate role.

The FAA evaluation reports noted that although the G.D. proposal was at a lower cost than the other bidder, the high risk factor in

the G.D. proposal could significantly impact on the ultimate cost to

the Government.

Based on these FAA evaluation reports, the FAA Administrator

recommended to the Department of Transportation in December

1972, that the contract be awarded to Texas Instruments at a $4

million higher price than the General Dynamics proposal. FAA

estimated, however, that costs avoided by accepting the T.I. proposal would be about $3.5 million.

The Department of Transportation reviewed FAA’s recommendation but directed FAA to award the contract to General Dynamics.

According to the DOT Associate Administrator for Administration,

FAA’s management was unwilling to make a detailed, positive

determination that G.D. was nonresponsive, and without this an

award to T.I. would have been difficult.

In retrospect, it seemed that FAA’s technical and contracting

offices made detailed analyses of the two proposals and recom-
86

mended to FAA manangement that Texas Instruments be awarded

the ASR-8 contract. FAA management summarized the risks associated with the G.D. proposal and the advantages of selecting T.I.

However, FAA management apparently advised the selecting official in the Department of Transportation in January 1973 that:

(1) The General Dynamics proposal was technically acceptable; (2)

General Dynamics must be considered a responsible offeror for this

procurement; (3) the only risk identified was in meeting the delivery schedule; (4) the equipment would operate satisfactorily as

designed; and, (5) the contractor and team of subcontractors had

the technical skills and resources to execute the design.

CONTRACT MONITORING

Although FAA’s technical evaluation of the G.D. proposal before

the ASR-8 contract was awarded concluded that the Government

would have to exercise an extremely high effort to monitor the

G.D. contract, FAA did not provide for program reviews in the

contract and did not conduct them in a timely manner despite

repeated warnings from FAA inspectors and field personnel of

contractor difficulties. It also appeared that even though FAA inspectors were reporting contractor difficulties, little or no timely

action was taken to rectify the problems.

For example, FAA inspectors visiting the contractor’s facilities

noted early cost overruns and schedule slippages and recommended

to the Director of FAA’s Logistics Service in October and December

1973, and again in January 1974, that program reviews begin immediately.

Again in April 1974—16 months into the contract—with reports

of $4 to $6 million cost overruns and 9 to 10 months schedule

delays, FAA inspectors again recommended program reviews. The

inspectors noted that a program review still had not been made,

even though the contractor unilaterally requested a review in

March 1974.

In May 1974, an FAA team reviewing the contract status, plans, 

and revised schedules, concluded that no confidence could be placed 

on the ability of G.D. to deliver the radar systems even within the

9 months delays estimated by the contractor and recommended

that FAA review the subcontractors’ design and test schedules and

conduct monthly program reviews with the contractor. According

to FAA officials, these recommendations were ignored. Also in May

1974, other FAA inspectors reported that G.D. had a “mediocre

investment” and that G.D. efforts expended were less than satisfactory.

On May 31, 1974, G.D. defined cost and schedule problems and

reported the cost to complete the contract at $33.7 million—almost

twice the original target price and $14.5 million over the ceiling 

price—and a 9-month schedule delay. About the same time, however, FAA was reporting only $4 million to $6 million cost overruns.

CONTRACTOR DIFFICULTIES

With respect to the contractor difficulties and FAA actions to

correct the problems, we noted that FAA personnel located at the

contractor’s facilities repeatedly reminded FAA engineers to re-
87

spond quickly to the contractor’s request for specification changes

because FAA delays adversely impacted on the contractor’s schedule.

By March 8, 1974, FAA personnel at the contractor’s facilities

had reminded FAA’s technical office 13 times to respond to the

contractor’s request for specification changes in a timely manner.

For example, it took FAA 6 weeks to approve the contractor’s

request to change a paint color and another 5 months to incorporate this change in the contract. FAA technical officials attributed

these delays to internal procedures which required various levels of

review and frequent subcontracting for analysis and response.

By March 1974, the average time for FAA to respond to the

contractor requests for specification changes was over 8V2 weeks.

Despite additional warning to respond quickly, FAA’s average response time increased to almost 11 weeks. FAA officials consider 2

to 4 weeks as normal response time on contractors’ requests for

specification changes.

FAA later admitted that deficiencies in contract administration

were responsible for certain contractor schedule delays and cost

overruns resulting from FAA’s failing to act promptly on contractor requests.

CONTRACT MODIFICATION

After G.D. reported a $14.5 million cost overrun and a 9-month

schedule slippage in May 1974, FAA responded with a June 10,

1974, “show cause” letter to G.D. asking why the contract should 

not be terminated. On June 21, 1974, G.D. responded and claimed 

the problems were FAA’s fault.

On June 13, 1974, Texas Instruments, the company FAA originally wanted to contract with, and to which a limited contract for

three of the ASR-8’s had been awarded previously, offered to provide FAA with ASR-8’s at the same unit price and delivery schedule as provided in the original General Dynamics contract. FAA

accepted the offer and, on September 24, 1974, FAA awarded a

letter contract to T.I. to build 40 ASR-8’s.

Meanwhile, FAA also decided to modify the G.D. contract and

notified the contractor by telex on August 24, 1974, of the modification. The modification was finalized on March 27, 1975.

Terms of the modification—modification 9—to the General Dynamics contract were: First, it changed the contract from fixed

price plus incentive to a cost type arrangement; second, by changing the contract type, it caused the Government to forfeit $2.4

million to the contractor; third, it reduced the number of radar

systems from 37 to 1; fourth, it increased the unit price the Government must pay for a radar system from $360,000 to $10.4 million;

fifth, it extended the radar delivery date from January 1975 to

January 1976; and sixth, it eliminated several required contractor

reports including the cost status reports, the subcontractor cost

trend reports, the overhead rate reports, and the production progress reports.
88

ANALYSIS OF FAA’S RATIONALE

FAA gave six reasons for this course of action in lieu of terminating the G.D. contract. I have, however, consolidated them into

two categories.

First, FAA contended that the G.D. radar was needed at its lab 

at the FAA Research, Development and Experimental Facility—

NAFEC—for the purpose of testing and experimenting with the

G.D. design features. Second, FAA said that with G.D., the competitive base for future ASR equipment would be broadened.

As a result of my review of this matter, I believe that there was

a questionable need for a $10.4 million prototype at NAFEC. If a

prototype was needed, it probably could have been bought cheaper

via competitive bid.

My conclusion is based on, one, the director of FAA’s Research

and Development Service reported in July 1974 that under no

circumstances did the Service believe that the ASR-7 at NAFEC

should be traded for the G.D. prototype ASR-8; two, the improved 

features supposedly contained in the G.D. radar were considered 

insignificant by the FAA contract technical officer. The features

were so insignificant, according to this official, that it would have

cost the contractor more to remove the improved features from the

design than to leave them in; three, a few months after the modification, G.D. officials told FAA that the agency did not need the

G.D. radar as it offered no new features.

Although FAA apparently wanted to establish competition, FAA

really did not take the time to determine if G.D. was in a competitive position. For example, FAA failed to provide for and perform

regular detailed program reviews so as to insure that G.D. would

meet cost and delivery schedules and ultimately be in a future

competitive position.

At the time the modification was being considered, there were

many risks and problems which had not been resolved.

Compare the two companies. While G.D. was predicting cost

overruns, T.I. was willing to build the same radar under the same

delivery schedule and prices as called for in the original G.D.

contract.

By proposing to build only one radar system, it would seem that

G.D. was handing over to its competition any future contracts for

production.

FAA was told by GAO investigators in January of 1975 that a

G.D. vice president had stated that his company would not be price

competitive with the other producer, and the future of G.D. in the

ASR business appeared to be zero.

FAA’s failure to assure itself that G.D. could be and would be

competitive for future procurements is evident by contractor statements, only 4 months after the modification was signed, that it did

not plan to compete in the domestic and international radar business, and that it wanted to terminate the contract.

A more complete analysis of FAA’s rationale is contained in my

report submitted for the record.
89

WHEN DECISION WAS MADE

In response to a June 16, 1976, question, “When was the decision

made to modify the G.D. contract for the one radar and 40 antennas?” FAA responded to this subcommittee that, “To the best of

our knowledge, the decision was made somewhere in the July 1 to

July 15 time frame. It is evident from the record of conversation

dated July 17, 1974—previously provided—on this date the decision

had already been made.”

The Directors of FAA’s Logistics Service and Airways Facility

Service flew to Florida between June 28 and July 3, 1974, to meet

with G.D. officials. Neither official was able to provide a trip report

or an official record to show the purpose or results of the trip. They 

indicated that they wanted to review the contractor’s progress

themselves, and that they talked to G.D. officials about the situation.

According to an FAA document dated July 17, 1974, and shortly

after the trip, FAA received a verbal proposal on July 10, 1974,

from G.D. FAA officials were unable to tell from the documentation what this proposal was about.

On July 17, 1974, the Director of Airway Facilities Service instructed the contract technical officer to write an alternative

action position paper advocating the approach FAA eventually took

in its modification. He also instructed the officer to summarize the

July 10 G.D. verbal offer, but that apparently was never done.

Several high-level FAA officials met in mid to late July 1974,

and approved the alternative action position paper. However, FAA

lower staff people were either objecting or acquiescing.

The technical officer told to help prepare the alternative action

position paper wrote a rebuttal to G.D.’s response to FAA’s “show

cause” letter and admitted FAA’s fault for some contract delays.

According to this official, he and the FAA Radar Engineering

Division advocated termination. The contracting officer who also

helped develop the alternative action position paper stated he was

told to include the recommendation for 1 radar and 40 antennas in

his paper.

The FAA General Counsel Office wrote that it would not take

any position on the alternative action position paper and, furthermore, criticized the paper for not declaring disadvantages of this

modification approach. Also, this office stated that the Administrator should be made aware of the disadvantages.

The Deputy Administrator, and presumably the Administrator,

were not made aware of the above objections.

Finally, when the industrial division of Logistics Service received

the request for procurement, they questioned how the $12.8 million 

figure was determined. They mentioned that there were understandings between the Directors of Logistics Service and Airways

Facilities Service and “others.”

RESULTS OF MODIFICATION ARRANGEMENT

Problems continued to plague G.D.’s progress on the contract,

both before and after the modification was finalized on March 27,

1975.
90

FAA and G.D. disagreed over the contractual requirement for

the antenna. G.D. notified FAA in April 1974 of the antenna dispute, but the matter was not addressed by contract modification 9.

As a result, G.D. requested $2.1 million, in addition to the $12.8

million provided for in modification 9.

In late July 1975, the FAA directed G.D. to furnish the items in

dispute at no additional cost, but G.D. appealed the decision before

the DOT Contract Appeals Board.

Also in July 1975, G.D. stopped most work on the contract, so

FAA decided to stop paying the contractor for the costs he incurred

after May 23, 1975. FAA’s General Counsel Office told FAA’s Logis- ’

tics Service that under a cost type contract it did not have the

right to withhold payment. By October 28, 1975, FAA had not paid

five vouchers totaling $798,322. G.D. advised FAA that this action

was in breach of contract, and that legal action might pursue. ■<

Attempts were made by both FAA and G.D. to negotiate a termination of the contract, but neither could agree to the final dollar

settlement.

Finally, FAA decided to issue a “show cause” letter in late

November 1975, but before the “show cause” letter was issued, G.D.

advised FAA it was in breach of contract for failure to increase the

cost of the contract to finance the requirements. Therefore, G.D.

advised it was discontinuing all work and terminating all suppliers.

On November 25, 1975, FAA notified G.D. that it was terminating the contract for default in its entirety. The termination is

currently under appeal and being reviewed by the DOT Contract

Appeals Board.

Mr. Chairman, this concludes my statement. I will be happy to

answer any questions that you or other members of the committee

may have.

Mr. Burton. Thank you, Mr. Rider.

In your statement, you say that the contracting officer who 

helped develop the July 17 alternative action position paper stated

he was instructed to include a recommendation for one radar and

40 antennas in his paper. Do you know who told him that?

Mr. Rider. Mr. Chairman, he did not say who told him that.

Mr. Burton. He just said he was told?

Mr. Rider. Yes, Mr. Chairman.

Mr. Burton. Do you know who ordered the General Dynamics

verbal offer of July 10, 1974, to be summarized in the July 17

alternative action position paper and who should have had the

responsibility to see that it was included in the paper?

Mr. Rider. The former Director of Airways Facilities Service, Mr.

Jefferson Cochran.

Mr. Burton. You mentioned a meeting between FAA and General Dynamics officials in Florida. Do you know which FAA officials

were involved in these meetings? «

Mr. Rider. There is no record of the trip that was made aware to

me. However, in discussing the matter with Mr. Cochran, who is

the former Director of Airway Facilities Service, he stated that he

met with two General Dynamics officials. They were high-level

General Dynamics officials. I can furnish the names for the record:

Mr. Iverson and Mr. Goldman.

Mr. Burton. Who were the FAA officials?
91

Mr. Rider. The FAA officials who went down to Florida?

Mr. Burton. Yes.

Mr. Rider. Mr. Frakes and Mr. Cochran.

Mr. Burton. Did these gentlemen have any conversations with

you, or make any remarks to you concerning this meeting?

Mr. Rider. Yes. I talked to one of the officials making the trip,

and this official said-----

Mr. Burton. Which official would that be?

Mr. Rider. That would be Mr. Cochran. He said that he physically inspected G.D. facilities and reviewed parts lists and materials

ordered and on hand. He said that after evaluating the prospects

for General Dynamics completing the contract, both he and Mr.

Frakes concluded that General Dynamics could not produce the

radars within a reasonable cost or within an acceptable delivery

time frame.

He also said that General Dynamics officials needed more money 

and a longer time frame to complete the contract.

They also discussed having General Dynamics subcontract with

Texas Instruments to buy the radars and sell them to FAA.

Mr. Burton. General Dynamics was going to subcontract?

Mr. Rider. They discussed that, according to Mr. Cochran.

Mr. Burton. Did they mention anything to you about discussions

of the contract modification?

Mr. Rider. No, Mr. Chairman.

Mr. Burton. These meetings between Mr. Frakes and Mr. Cochran and the people from General Dynamics, and the July 10 verbal

offer from General Dynamics which preceded the July 17 alternative action position paper—how interrelated, or how important do

these events seem to be, as reflected in that alternative action

position paper?

Mr. Rider. Based on the series of events which were happening

at that time and the fact that there is an incomplete record—an

official record—on FAA’s part as to what occurred at the meeting

in Florida, and also there is apparently no official record of the

meetings which these FAA officials had with the Deputy Administrator, I would be unable to answer.

Mr. Burton. In other words, they do not have any official record

of how they traded 37 for 1?

Mr. Rider. Although there were meetings with the Deputy Administrator and Administrator, there was no record of the meetings and what transpired during the meetings. As explained to me,

they apparently adopted the alternative action position paper at

these meetings.

Mr. Burton. The time frame in which these meetings were held

seemed to be the time that a modification was discussed and agreed

to. We would not know whether agreement on contract modification happened at the June 28-July 3, 1974, Frakes/Cochran/General Dynamics meeting. But it is during that general time frame that

the modification was agreed to. We have no documents indicating

exactly how or where those decisions were arrived at. But were

they made in Florida, at that meeting? Whether they were discussed there and then brought back up and discussed further in

Washington-----

Mr. Rider. Yes; I have no knowledge-----
92

Mr. Burton. And they have no documentation?

Mr. Rider. Yes; they have no records or minutes of the meetings

or discussions they held. That is correct. At least, that is what was

related to me.

Mr. Burton. Do you have any idea if there were many facts

withheld from the Deputy Administrator when Messrs. Frakes and

Cochran presented the alternative action position paper to him

later in July?

Mr. Rider. I discussed with the Deputy Administrator what occurred in the July meetings which resulted in the modification.

According to the Deputy Administrator, he was not presented the

technical officer’s rebuttal to the “show cause” letter, and he said

he was not made aware of the General Counsel’s comments on the

alternative action position paper, which stated that there were no

disadvantages to the recommended course of action—to purchase 1

radar and 40 antennas.

Mr. Burton. So, he was not given any of the downside. He was

given an option without the rebuttals to the option or-----

Mr. Rider. He said that he adopted the alternative action position paper, and that paper does not contain the disadvantages to

the recommended course of action.

Mr. Burton. I think a contract change from 37 to 1 would be a

disadvantage, right on its face.

Do you know if the Department of Transportation had any

knowledge of or approved this modification?

Mr. Rider. I talked to the former Department of Transportation

Associate Administrator for Administration.

Mr. Burton. Who is that?

Mr. Rider. That was Mr William Heffelfinger, and I would like

to quote what he said, if you don’t mind.

When I questioned Mr. Heffelfinger in July 1976, he said that he

had no knowledge of the subsequent FAA actions on the General

Dynamics contract which included the initial modification 9 action,

its finalization in March 1975, continued problems in July 1975, or

termination in November 1975. He said that if anyone in the

Department had discussed the matter with FAA, he would have

known.

This official said that coincidentally he learned about General

Dynamics not producing the antennas from some Texas Instruments officials who mentioned they were going to get an antenna

contract from FAA.

The Deputy Administrator said that-----

Mr. Burton. Who was that?

Mr. Rider. That was Mr. Dow. He said that the Department of

Transportation had approved at the Under Secretary’s level FAA’s

approach in the ASR procurement program. This included proceeding sole source with Texas Instruments, and he said it must have

included, but he did not have any documentation, the procurement

of the 1 radar and 40 antennas.

The Deputy Administrator also said the FAA’s proposal must

have been reviewed by TSARC. I have no knowledge whether the

Department of Transportation reviewed or approved the action

taken by the FAA.
93

Mr. Burton. How much does the FAA, or better still how much

does the American taxpayer ultimately stand to lose on this contract, and how much has actually been spent? Could you provide us

with “worst” and “best” cost estimates?

Mr. Rider. Mr. Chairman, this contract has become a very complicated legal issue, and it may take years to settle. FAA could lose

quite a sum, but I am sure they will make every effort to try to

minimize their losses.

Mr. Burton. You mean that after they gave away the store they

are going to try to get back some of the candy?

Mr. Rider. I would hope so, Mr. Chairman.

They paid the contractor $10.6 million. I am rounding out figures. The contractor has requested about $1.8 million more. The

contractor also has $1.4 million in Government-furnished equipment. Also FAA has had to go out and reprocure 40 antennas. The

excess reprocurement cost for the antennas was about $2.1 million.

So it looks like they could lose much more than they have paid.

Of course, if they win, they could minimize their losses in the

courts.

Mr. Burton. The fact that they went from a fixed-price contract

to a cost type contract is what enables General Dynamics, notwithstanding the fact that they have not really returned much for the

investment, to at least attempt in court to collect for additional

costs?

Mr. Rider. I am not a lawyer, but I imagine that will complicate

the proceedings.

Mr. Burton. Well, if it had been a fixed-price contract, they

couldn’t have done anything. If they did not live up to the terms of

the contract, if they didn’t deliver the material, they would therefore have to forfeit all claims for reimbursement.

Mr. Rider. FAA could have terminated the contract for default.

Mr. Burton. And under the cost type contract, if they can prove

that they put forth their best efforts to produce it at a reasonable

cost—what were the initial and final cost proposals offered by

Texas Instruments and General Dynamics to FAA in the period of

negotiations preceding the contract award, and to what extent

could the General Dynamics offer be considered what some might

call a “buy in”?

Mr. Rider. On the chart to your left, Mr. Chairman, the initial

proposal-----

Mr. Burton. Would that be the top chart?

Mr. Rider. That is correct. Roman numeral I. The Texas Instruments proposal was about $17.3 million target price, and General

Dynamics was $20.4 million. That was for 31 systems.

In December 1972 the best and final offer by Texas Instruments

was about $21.1 million and by General Dynamics $17.2 million.

That was for 37 systems. Of course, both proposals include the 40

antennas.

I have no knowledge of a possible buy-in, but FAA’s evaluation

before the contract was awarded stated that the probability of

General Dynamics meeting the target price was very low. That is

indicated on the chart on the bottom entitled, “FAA’s summary

conclusions on the ASR-8 proposals.”

27-075 0 - 78 - 7
94

Mr. Burton. You state that at the meeting with the Department

of Transportation’s Under Secretary who directed the contract go

to General Dynamics, FAA went along with this directive, and that

in so doing FAA ignored the advice of its own technical experts.

Who were these technical experts? Do you know if their opinions

were stated at this meeting, and should their opinion have carried

a fair amount of weight? Lastly, as part of that, who was representing the FAA at the meeting with the DOT Under Secretary, and

who was the DOT Under Secretary?

Mr. Rider. Put in perspective, the Administrator sent over a

memo to the Department of Transportation recommending the

award go to Texas Instruments at a $4 million higher price tag. 

Mr. Cochran and Mr. Comulada, who was a former Director of

FAA’s Logistics Service, and some of their assistants made a presentation to the Department of Transportation which summarized

the risks involved with the General Dynamics proposal and of

accepting the Texas Instruments proposal.

However, after this meeting with the Under Secretary of Transportation—

Mr. Burton. Who was that?

Mr. Rider. That was Mr. James Beggs. After that meeting on

January 3, 1973, Mr. Beggs said that he was advised that the

General Dynamics proposal was technically acceptable, the General

Dynamics must be considered a responsible offeror for this procurement, the only risk involved was meeting the delivery schedule, the

equipment would operate satisfactorily as designed, and that the

contractor and team of subcontractors had the technical skills and

resources to execute the design.

Mr. Burton. How would he know how terrific the subcontractors

were?

Mr. Rider. I would assume it would have been in the summary

presented by FAA officials, but I do not know that.

Mr. Burton. I won’t ask you what he is doing now. [Laughter.]

The FAA inspectors who detected the contractor’s difficulties—

how frequently did the FAA inspectors visit the contractors’ facilities? What did they usually do on their visits, and to whom specifically did they pass on their findings and recommendations about

the need for program reviews?

Mr. Rider. There are two types of inspectors under the contract.

I am grouping them into two types. There is the field inspector who

is physically located at the contractor’s facilities. FAA had two

inspectors located at General Dynamics facilities. There is also the

headquarters inspector who visits the contractor’s facilities periodically.

Both of the inspectors at the contractor facilities reported biweekly to the contracting officer on the contractor’s progress, and

these officials noted contractor progress and slippage and FAA

delays. One of these inspectors, however, noted that the overall

contract progress was difficult to determine with numerous facilities and geographic distances involved. He also noted that the

amount of progress was based entirely on information contained

within reports submitted by the contractor and by other FAA

personnel.
95

In addition to these two people out in the field, FAA inspectors

from the headquarters Logistics Service—the industrial division—

made staggered visits about every 2 to 3 months to the General

Dynamics facilities and noted cost overruns as early as the summer

of 1973 and schedule slippages shortly thereafter.

These inspectors apparently realized the limited capability of the

monitoring of a small segment of the contract, and sent reports of

their visits to the director of FAA’s Logistics Service.

Mr. Burton. Do you have any idea why in the world the recommendations of the inspectors were repeatedly ignored by top FAA

officials?

Mr. Rider. No, Mr. Chairman. FAA inspectors make brief visits

to the contractor facilities. They obtain a general overview of the

contractor’s progress by reviewing the financial reports, and they

are able to identify some of the contractor’s problems.

Mr. Burton. They would identify them, report them back here,

and nothing would ever happen?

Mr. Rider. I don’t know.

Mr. Burton. That is my assumption. It seemed nothing happened.

Mr. Rider. I don’t know if nothing happened, but-----

Mr. Burton. You do not know that anything did happen?

Mr. Rider. That is correct.

Mr. Burton. You could not state for a fact that something did 

not, but certainly you could not prove that anything did happen—

that they did act expeditiously when they received these storm

signals, so to speak?

Mr. Rider. The inspectors from Washington went out in the field

periodically, and they recommended program reviews. I know these

program reviews were not made routinely, as they recommended.

Mr. Burton. I have two more questions. First, in the contract

modification, when we traded 37 for 1, there was also an agreement

that certain reports be deleted from the G.D. contract. How significant are those reports?

Mr. Rider. I would say that the FAA must have felt that the

reports were important, or they would not have required them in

the contract initially. However, from my discussions with FAA

officials, little or no analysis was performed on many of these

reports as a means of monitoring the contractor’s performance.

FAA officials indicated that they needed certain types of personnel at that time. I think they have obtained some of the personnel

who perform that kind of analysis.

After the requirement for the reports was deleted, the technical

officer stated that he did not have sufficient information to certify

payment on the contract, and he requested that he visit the contractor’s facilities, himself. If FAA did not need those reports, it

probably should have substituted some reports which it could to

better monitor the contractor’s progress. As I indicated earlier, an

FAA field inspector assigned to the contractor’s facilities indicated

that progress on the contract was made exclusively by the contractor reports and by other FAA personnel visiting the contractor’s

facilities.

Mr. Burton. It took the FAA weeks to approve a contractor’s

request to change the color of a paint and another 5 months to
96

incorporate this change into the contract. Then the FAA attributed

these delays to internal procedures which require review and frequently subcontracting.

Just for idle curiosity, you do not know whether or not they

subcontracted out the decision on whether or not to let them

change the paint color, do you?

Mr. Rider. I do not know that for a fact, Mr. Chairman.

Mr. Burton. Mr. Stangeland?

Mr. Stangeland. Thank you, Mr. Chairman.

Mr. Rider, am I to understand that T.I. came in with the low bid

on this project?

Mr. Rider. Initially, in June 1972 they submitted a low bid of

$17.3 million, and General Dynamics was the high bidder at $20.4

million.

Mr. Stangeland. Prior to putting this project up for bids, was

General Dynamics in the business of developing radar systems?

Mr. Rider. Not the type of radar system that the FAA uses for

airports. I believe that they were involved in the NASA program,

where they made different types of radar systems.

Mr. Stangeland. Was Texas Instruments the only company in

this country that was in that type of business to develop this kind

of system?

Mr. Rider. Yes. They were the only ones that were building ASR

equipment. They have been building ASR equipment since 1957.

Mr. Stangeland. Texas Instruments?

Mr. Rider. Texas Instruments was building that type of equipment.

Mr. Stangeland. What kind of review is conducted, then, to

determine that a company can deliver? I think you have touched

on it pretty generally, but how do they determine whether the

company can produce the system they want and make it work?

Mr. Rider. I can comment generally on that. FAA has certain

technical and contract evaluations which they perform, and they

are able to make certain determinations by reviewing the proposals

made by the competing contractors and then make recommendations based on the proposals. I do not have details.

Mr. Stangeland. Do you know why there was not an award

made in June 1972 based on those prices?

Mr. Rider. It was rejected by the Department of Transportation

based on the assumption that there was inadequate price competition. They made that determination. In fact, Texas Instruments

appealed to the Comptroller General, and the Comptroller General

sustained the ruling made by the Department of Transportation.

Mr. Stangeland. Then, the revised proposals—what would account for such a drastic change in the revised proposals of September 1972?

Mr. Rider. Even though there was an increase in the number of

systems-----

Mr. Stangeland. But are they not, June and September, both 31

systems?

Mr. Rider. No. June 1972 is for 31 systems, and-----

Mr. Stangeland. I am talking about September. There is a

drastic change from June to September, but both are for 31 systems.
97

Mr. Rider. There was an amendment to the request for proposals

which modified the specification requirements. That was done between the June and September time frame.

Mr. Stangeland. Is it not somewhat unrealistic to look at September 1972 and December 1972 proposals, and you increase by six

systems, and you actually decrease the dollars? I am asking for an

opinion.

Mr. Rider. Yes. I believe that FAA officials stated that General

Dynamics changed the location for producing the equipment. I

think they were going to shift some of their manufacturing facilities from one location to another location—from California to Florida, I believe. In that way they were able to lower their price.

There may be other factors that were involved, but I am not aware

of those.

Mr. Stangeland. I guess I have no other questions, Mr. Chairman.

Mr. Burton. In other words, you have so many, you don’t know

which one to pick?

Mr. Stangeland. That is about it.

Mr. Burton. On page 4 of your statement, you stated Texas

Instruments came in with an offer $4 million higher than General

Dynamics, but yet FAA estimated that the costs avoided by accepting Texas Instruments would be about $3.5 million. Then that

would have been a difference ofjust $500,000?

Mr. Rider. Yes, Mr. Chairman.

As part of their presentation to the Under Secretary of Transportation, they-----

Mr. Burton. Is that Mr. Beggs?

Mr. Rider. Yes, Mr. Chairman. FAA officials indicated not only

the competing prices in the proposals, but also indicated other

factors such as technical requirements, delivery, and other factors

which would increase or decrease FAA’s administration of the

contract.

For instance, FAA officials said the effort required by the Government to monitor the contract would be extremely high. Therefore, the administrative costs would necessarily be somewhat high.

In FAA’s technical evaluation of the best and final offer, there is

a schedule showing the details of the breakdown of $3.5 million. I

could submit that for the record.

Mr. Burton. I would like to have that.

[The material follows:]
COST AVO DI ANCE BY ACCEPT NI G Tl PROPOSAL

OVER GENERAL DYNAM CI S

1. SPARE PC BOARDS

G( D PROPOSAL-SI OK) ...............J

2. NEEDED-ANTENNA FEATURES

(FOR NI STALLAT OI N M/ A NI TENANCE) '

3. FAIL-SOFT QUAD MTI

4. REDUCED SPARE PARTS REQU RI EMENT

(PARTS PECUL AI R C/ OMMON) - COMMONAL TI Y W A/ SR-7

5. REDUCED FACTORY NI SPECT OI N

PERSONNEL

C. REDUCED WASH. OFF CI E PERSONNEL

& TRAVEL

7. REDUCED COST REPLACE ASR-4/5/6/7

ANTENNAS

8. REDUCED OUTAGE-ANTENNA

REPLACEMENTS E( ST. NI TER MI

EST MI ATE ANT. NI STALL. REQU RI ED

AT HALF ASR HI D- ENS TI Y S TI ES FOR

GD ANTENNA)

9. REDUCED TRA NI NI G - DUE TO

COMMONAL TI Y W A/ SR-7

10. H GI H DEGREE OF CONF DI ENCE NI _____ ON T MI E DEL VI ERY & SPEC. COMPL AI NCE

11. ABILITY OF CONTRACTOR TO PROV DI E

D RI ECT Si YSTEM ENG NI EER NI G ■

FOLLOW O- N SUPPORT j

20K x 37 SYSTEMS $740,000

10K x 77 SY. 770 0, 00

5 <I x 37 SY. 185 0, 00

20K x 37 740 0, 00

300 0, 00

150 0, 00

2K x 40 80,000

25K x 20 LOCAT OI N 500 0, 00 ’

SPEC FI CI VALUE

D FI F CI ULT TO DETERM NI E

SPEC FI CI VALUE

D FI F CI ULT TO DETERM NI E

SPEC FI CI VALUE

CO

oo

D FI F CI ULT TO DETERM NI E

TOTAL $3,465,000
99

Mr. Burton. Basically, the price difference in the initial offer

was $500,000. One could say that?

Mr. Rider. Yes. If you are looking at price alone.

Mr. Burton. I do not know what else Mr. Beggs could have

looked at but price, if every other indication was that General

Dynamics was not equal to Texas Instruments, as far as their

ability to handle the contract was concerned. In other words, if you 

left price out, the merits seem to be with Texas Instruments.

Mr. Rider. That is FAA’s recommendation. In retrospect, they

looked at the price and the other factors, and they found that the

Texas Instruments proposal was the best for the money.

Mr. Burton. Mr. Beggs differed with the FAA recommendation,

and he made the final award to General Dyanamics.

Mr. Rider. That is correct, Mr. Chairman.

Mr. Burton. Mr. English?

Mr. English. I do not have any questions, Mr. Chairman.

Mr. Burton. Thank you, Mr. Rider. Thank you very much for

restoring our faith in the Government.

Mr. Rider. Thank you, Mr. Chairman.

Mr. Burton. Our next witness is Mr. Jerome H. Stolarow,

Deputy Director, Procurement and Systems Acquisition Division of

the GAO. He is accompanied by Mr. Sam Pines, Assistant Director,

and Mr. Leo Weintraub, Audit Manager, Procurement and Systems

Acquisition Division, GAO.

Gentlemen, will you swear that the testimony you will give

before this subcommittee will be the truth, the whole truth, and

nothing but the truth, so help you God?

[Chorus of “I do’s” from three witnesses.]

STATEMENT OF JEROME H. STOLAROW, DEPUTY DIRECTOR,

PROCUREMENT AND SYSTEMS ACQUISITION DIVISION, U.S.

GENERAL ACCOUNTING OFFICE; ACCOMPANIED BY SAM

PINES, ASSISTANT DIRECTOR; AND LEO WEINTRAUB, AUDIT

MANAGER

Mr. Stolarow. Mr. Chairman, I would like to introduce my two

associates that are here with me. Mr. Sam Pines is our Assistant

Director in charge of this particular work, and Mr. Leo Weintraub

is the Audit Manager.

Mr. Chairman and members of the committee, we appreciate the

opportunity to appear at these hearings to discuss the Federal

Aviation Administration’s acquisition of long-range radar systems—ASR-3’s—which was the subject of a General Accounting

Office report dated August 25, 1976.

In our report, we were highly critical of FAA’s management of

this procurement. In fact, we think this is a good case study of how

not to buy major equipment because, first, FAA’s acquisition strategy was uncertain. They were not sure how they wanted to go

about acquiring the new radars.

Second, FAA permitted Westinghouse to buy into this program,

in effect limiting competition by other qualified contractors.

Third, after accepting Westinghouse’s offer to produce a prototype radar at a loss, FAA awarded a cost type contract and did not

monitor the costs. As a result, Westinghouse overran the estimated

costs and did not deliver a prototype system.
100

I would like to discuss, in some detail, the events leading to this

program and our evaluation of FAA’s procurement.

The need to improve the Nation’s air traffic control system

became apparent during the mid-1950’s because the Nation’s airspace was overcrowded and the airports, navigation aids, and air

traffic control system had become outdated.

From 1957 through 1964, the FAA had obtained long-range radar

systems from the Raytheon Co., which were designated air route

surveillance radar—ARSR-1 and 2—to improve control of aircraft

en route between terminals.

Further studies of en route air traffic control problems resulted

in the appropriation of $6 million in 1969 for the purchase of five

more advanced systems to be designated ARSR-3’s. This purchase

was postponed, however, because the Bureau of the Budget had

concern over possible duplication of the FAA system with the U.S.

Air Force system.

A joint FAA-U.S. Air Force group, in October 1970, reaffirmed

the need for a 112-unit long-range radar system consisting of existing FAA units, U.S. Air Force systems, and some new ARSR-3’s.

In February 1971, FAA’s Airways Facilities Service prepared

performance specifications and a rough cost estimate and in March 

of 1972 requested proposals for a firm fixed-price contract for 29

units, one being a preproduction unit to be field tested before the

remaining 28 would be produced.

This approach was changed in May 1972 when FAA decided to

procure a prototype ARSR-3 under a cost-type contract. The FAA

contracting officer believed the proposed new radar entailed considerable technical risk and should be viewed as a developmental

effort, even though proven subsystems were to be used.

If, in fact, there was considerable technical risk involved, this

method of procurement—a cost-type contract for a prototype—was

certainly appropriate. We noted, however, that FAA engineering

personnel did not agree with the degree of risk involved.

During the period of May through November 1972, negotiations

were conducted with four technically qualified contractors who had

submitted proposals ranging from $4.5 million to $7.1 million.

On chart No. 1, we show the history of the negotiations on the

prototype contract. During the negotiations, it became clear that

Westinghouse was proposing a price for the prototype that was less

than its estimated costs—that is a loss contract. It not only cut its

initial estimated price in half but stated it would absorb $250,000

in costs. This fact was called to the attention of the Secretary of

Transportation on December 27, 1972, and we have an excerpt

there from the memo calling that to his attention. This went from

the Assistant Secretary for Administration to the Secretary of

Transportation.

In January 1973, a prototype program was initiated by an award

of a $3.5 million cost-plus-incentive-fee contract to Westinghouse

Electric Corp.

In August 1973, about 8 months after the contract was awarded, 

Westinghouse notified FAA that its cost estimate had risen about

100 percent. In order to minimize costs, FAA then reduced the

scope of the prototype program and instructed Westinghouse to
101

proceed at a reduced level of effort to obtain design reports and

conduct tests of some experimental component assemblies.

System test, hardware fabrication, onsite installation, and operational tests were all deleted from the contract requirements. Of 69

test areas that were originally contemplated, 11 subsystem tests

were performed, and some limited component tests were completed.

In February 1974, the FAA recommended to the Department of

Transportation abandonment of the prototype program and requested that it be permitted to proceed with the procurement of 26

production ARSR-3’s. FAA stated that no major technical risks

remained, and they had design drawings suitable for final fabrication.

In April 1974, the prototype program was formally discontinued. 

The total paid to Westinghouse was $4.4 million.

The FAA issued a request for technical proposals 4 months later,

as the first part of a two-step procurement for production radars.

The second step, in March 1975, was for bids on a formally advertised contract. Three contractors submitted acceptable technical

proposals—Texas Instruments, Bendix Corp., and Westinghouse—

under the first step and subsequently submitted bids.

Westinghouse was the low bidder and, in June of 1975, was

awarded a contract to deliver and install 16 production systems.

Currently, after some 35 contract modifications, the price is estimated at about $51 million for 27 radar units. We have that

summary of the status of the current production on chart 2 there.

Installation, checkout, field testing, and reliability/maintainability demonstrations for the first ARSR-3 radar were originally

scheduled for completion in July 1977 but have been delayed until

January 1978. The first unit was supposed to go into service in

January 1978 but now is expected to go into service in February

1978.

GAO found a number of things that were wrong in the way FAA

went about acquiring the long-range radar system.

The agency lacked a sound strategy leading to the award of the

production contract for the system. Initially, it was unclear whether there was a need for a prototype radar. But because of the

contracting officer’s concern over the technical risks involved, FAA

contracted for a single prototype which has never been completed.

All major ARSR-3 subsystems had been previously used by the

military and others. But a primary purpose of the prototype program was to fabricate and test in operating ARSR-3, because the

subsystems had never been combined into an operative system.

Thus, integrated system testing was to have been a critical phase

of the prototype program.

But the program was prematurely suspended with limited results

obtained. Thus, there was no assurance that FAA would obtain

satisfactory equipment with a succeeding production contract, although FAA did state the major concerns were resolved in the

prototype’s completed design drawings.

There was a difference of opinion among FAA personnel as to

the technological risks involved in this program, and it was not

clear whether or not a prototype system was really required to

demonstrate operational capability. The contractor’s proposals

were based upon detailed specifications prepared by FAA and the
102

contractors were required to produce the prototype based on these

specifications. The use of detailed specifications on a prototype,

however, appears inconsistent with the objectives of a developmental effort.

Several Transportation officials appeared to favor continuing

prototype development. One official stated that the documentation

did not show an adequate level of additional information had been

acquired during the prototype design to support truly competitive

procurement. Another official cited the attractiveness of continuing

the prototype contract and issuing a two-step competitive contract

upon its completion because of the availability of a prototype for

evaluation.

We believe that it was, and still is, unclear whether or not a

prototype system was really required to demonstrate operational

capability of the radar. Further, in view of the technical risks that

may have been involved which FAA contends were resolved in the

prototype drawings, but not operationally, it is questionable whether a production contract should have been awarded.

We in GAO are not technically competent to judge whether or

not this was, in fact, a high risk program requiring development of

a prototype. What we, in effect, are criticizing, is that FAA never

made a clear determination of that risk and then did not design an

acquisition program consistent with the risk involved.

The second point we were highly critical of was the possibility, or

probability, of a buy-in.

The FAA, in our opinion, also permitted a buy-in by the contractor. While it may be acceptable commercial business strategy to

invest in or buy into a program in anticipation of future business,

it is incumbent upon the Government to assure that this practice is

not used to unfairly eliminate other potential contractors.

In this particular case, Westinghouse submitted a proposal to

build a prototype ARSR-3 that was clearly priced below its estimated costs. The FAA, however, aware of this fact, awarded a costtype contract, let the costs continue to rise, and then let Westinghouse off the hook after paying $4.4 million.

It is probable that this initial contract also put Westinghouse

into a favored position for bidding on the production radars because it was able to do much in the way of initial design and

engineering work.

While we cannot speculate at what price another contractor—in

a competitive environment—would have been able to produce acceptable radars for FAA, the series of events leading to this procurement precluded serious consideration of the other contractors.

FAA did not independently develop a detailed cost estimate of

the prototype system it planned to purchase. It had a rough estimate made up previously by FAA’s airways facilities engineers, but

it did not have a detailed estimate for the prototype procurement.

Lack of such an estimate limited FAA’s capability to evaluate the

reasonableness of the price proposals it received from the contractors.

Although the rough estimates indicated a prototype would cost

$7.8 million, the FAA negotiated with four qualified contractors in

an effort to reduce their bids which ranged from $4.5 million to

$7.1 million.
103

The negotiations were conducted over several months—May to

November 1972—and the contractors reduced their bids several

times.

Finally, the contract was awarded to Westinghouse at $3.5 million.

The Defense Contract Audit Agency examined the proposals and

pointed out that Westinghouse’s normal pricing policy was not to

exclude some of the factors that they did exclude in preparing their

proposal. The audit agency pointed to the possibility that the voluntary cost reductions might not materialize.

The last point I would like to discuss is the need for information

on cost to complete.

Cost-type contracts are appropriate in many cases for developmental projects. But in administering any cost-type contract, it is

essential that the agency maintain a close check over estimated

cost to complete the work, especially on a contract where the

contractor’s initial proposal was reduced by 50 percent and it was

proposing to absorb a loss.

Periodic updates of estimated costs to complete the contract are

needed to provide early visibility of potential cost growth so that

remedial action may be initiated. This close check was not accomplished on the prototype contract and, as a result, about 8 months

after contract award the contractor surprised FAA officials with its

estimate that the estimated cost had risen about 100 percent.

FAA received monthly actual and budgeted cost data and required notification from the contractor, under a limitation of costs

clause, of significant cost increases. But Westinghouse was reluctant to submit periodic estimates of the cost to complete the prototype contract because it was not required to do so.

FAA people said that the agency really had no prior advance

notice of this condition. They said also that during this period they

pressed several times for cost to complete estimates, but since there

was no contractual requirement that such estimates be made they

did not get them.

Mr. Chairman, in summary, we believe this case, at best, indicates a lack of concern on FAA’s part for good procurement practices.

It is difficult to say how much additional costs were incurred by

the elimination of any effective competition. Most important, however, is that at this date no radar systems have been delivered for

operational testing, and the Government is not yet assured of

obtaining an acceptable product.

In its final comments on our report dated November 19, 1976, the

Department of Transportation disagreed with our conclusions.

They did not agree that any additional costs were incurred, that

they permitted a buy-in, or that there is any question about obtaining acceptable systems from Westinghouse. Our analysis of their

comments, however, reveals no new information or rationale which 

would lead us to change our conclusions.

Mr. Chairman, this concludes my prepared statement. I will be

happy to answer any questions you may have.

Mr. Burton. Thank you. Without objection, the charts will be

included in the record.

[The material follows:]
TECHN CI AL RAT NI GS C. OST PROPOSALS AND

NEGOT AI T OI NS FOR PROTOTYPE

M S nW IK E BENDXI 6 E. .

TECHNCI ALRAM 86 1. 3;/ 86 1. 7". 79 7. 4;/

NI TI AI LPROPOSAL 7092 5, 26 4501 1, 84 ^ 5, 53 1. 67

NEGOTAI TEDPRCI E4 2, 91 4. 94 4029 5, 85 4 9, 02 0, 52

BERNAL 3485761 38, 980. 61 4 6, 01 4, 60

BWTNEON

8I 6. 6"«

7 1. 74 4, 67

69, 249, 88

o

CHART I
C U R R E N T E S T IM A T E O F C O S T T O C O M P L E T E C O N T R A C T W IT H 

W E S T IN G H O U S E E L E C T R IC C O R tW IW H F O R 2 7 A R S R -3 ’s _ IN M IL L IO N S 2 6 A R S R - 3 'S , D A T A A N D S P A R E P A T O > 4 k 4 " C H A N G E S P R E F A B S T E E L S T R U C T U C H A N G E F R O M F IB E R G L A S S T O F O R D E P O T S A D D IT IO N A L S P A R E P A R T S P R IC E E S C A L A T IO N O N E A D D IT IO N A L S Y S T E M R E T O T A L E S T IM A T E D C O S T S A S O F N O V . 1 9 7 7 O T H E R M O D IF IC A T IO N S C H A R T 2 > 2 . 5 3 . 5 1 .6 . 7 J . 4 O i « 5i
CHART 3

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from : ass si tant sec. fos adm ni si trat oi n

TO: TH£ SECRETARY (underscorni g added bygao)

"w e do note, however,that the west ni ghouse

PR CI E WAS NI TI AI LLY PROPOSED AT * 7 ,0 9 2 ,5 2 6 ,* WAS

CUT NI HALF W RI NI G NEGOT AI T OI NS. W H LI E T H E F A A

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FOR TH SI DRAMAT CI REDUCT OI N, TI M AY B E THAT W EST NI G -

HOUSE SI *BUV NI G NI ” NI ORDER TO OBTA NI A COMPET TI VI E

ADVANTAGE ON THE P: ROW CI nON QUANT TI Y A/ TI I OI UGH T H E

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5
107

Mr. Burton. Do we really know if FAA ever totally eliminated

the areas of risk, so that the ARSR-3 production units could be

delivered as specified in the production contract?

Mr. Stolarow. I do not think that we will know until an operational system is delivered, put into use, and is checked out. At this

point in time we cannot be certain that the risks have been eliminated.

Mr. Burton. Are we all going to be around at the time that that

happens?

Mr. Stolarow. The current estimate is that the first system will

be delivered early next year. Whether or not that occurs, I cannot

say.

Mr. Burton. What were the risks involved in the contract, and

what were the various alternative methods that the agency could

have used to eliminate these risks?

Mr. Stolarow. As best we can determine, the risks were in

putting together a number of systems, subsystems, and components, and in making sure that they all operate together properly

and give you an acceptable product. That was the basic reason for

a prototype or preproduction model that was originally required.

Certainly, in complex electronic equipment, there is a risk that

even though you think you have designed a good product, when it

is all put together and produced under factory line, does it work 

properly?

As I said in my statement, if, in fact, this was a high risk, then

the prototype approach, under a cost-type contract, is an appropriate and accepted method of procurement. Certainly, a limited production model is another compromise way of doing it. The third

way was to state that there was no risk—no high risk—and go

right into production.

Mr. Burton. When and to whom within the FAA did the DCAA

report its findings, and what did FAA-----

Mr. Stolarow. The normal procedure would be for the DCAA

report to go to the contracting officer and, in effect, they were

critical or speculative that the costs would not materialize as projected by Westinghouse.

Mr. Burton. What did FAA do with these findings?

Mr. Stolarow. I am not aware of what they did with them.

Apparently they disregarded them because they went ahead with

the award to Westinghouse.

Mr. Burton. But they did get the information?

Mr. Stolarow. Yes, sir.

Mr. Burton. Do you know what type of information the FAA

required Westinghouse to supply to them, and could this information have been used to conduct FAA cost to complete estimates?

Mr. Stolarow. In essence, the contractor supplied costs expended and budgetary data but no projection of the cost to complete. I

do not believe that the FAA personnel could have used the data

they received to project the cost overrun that Westinghouse later

estimated.

Mr. Burton. Should they not have required that information?

Mr. Stolarow. Yes, sir. We believe they should have, certainly.

But it was not required under the contract. In a cost-type contract,
108

as I mentioned in my statement, that certainly is a critical element

that should be continuously provided to the agency.

Mr. Burton. Do you know if FAA attempted .to get this information through regular contract review programs conducted by their

own personnel?

Mr. Stolarow. They tried to get it informally but were unsuccessful because the contract did not require Westinghouse to provide that type of information.

Mr. Burton. They asked Westinghouse, and Westinghouse just

said no?

Mr. Stolarow. Right. *

Mr. Burton. That seems to be a bad way to treat a big customer.

Mr. Stolarow. I think so.

Mr. Burton. Should that not have rung a bell somewhere in

FAA?

Mr. Stolarow. Yes, sir. I think so. With the history of the

negotiations and the way that the prices were negotiated downward, certainly they should have been suspicious when they could

not get a cost to complete estimate.

Mr. Burton. Your statement that there may be additional costs

incurred by the elimination of effective competition—could you

elaborate on that? In other words, would Westinghouse end up 

with a lock on the whole business and then be able to charge

whatever-----

Mr. Stolarow. That is our conclusion—that by permitting the

buy-in and eliminating competition, Westinghouse has the Government at a disadvantage as far as negotiating the production contracts for follow-on radars.

Mr. Burton. One of the theories, as I understand it, for the

giveaway to General Dynamics was to allow them to stay in a

competitive position. I do not think it is the duty of the American

taxpayers to have their money thrown away so that some business

might stay competitive. That is different from allowing somebody

to come in with a loss leader and buy in cheap.

Mr. Stolarow. That is correct.

Mr. Burton. Do you agree with my first statement that it is

improper policy—say, in the General Dynamics contract or in any

case—to, in effect, give away the money like we did with the

contract modification just so, quote, they might stay competitive in

the business?

Mr. Stolarow. I would agree with you in the case of a procurement of radars such as this. It has been shown on high volume

production-type purchases—for example, the Army did it with

rifles—that it does pay to fund a second source contractor, to set up 

the tooling and the production facilities, and that the competition

and the additional source are of benefit to the Government. But on

major high technology programs like this, I do not think there is <

any advantage to doing that.

Mr. Burton. Lastly, the Department of Transportation disagreed

with your findings. How did they disagree? Did they just say, we

disagree with you—you are wrong? According to your testimony,

they disagreed, and you looked at what they said, and they-----

Mr. Stolarow. They did not present any new facts that would

lead us to change our conclusions.
109

Mr. Burton. They just disagreed with you.

Mr. Stolarow. They sent a short letter saying that they disagreed.

Mr. Burton. Thank you. Mr. Stangeland?

Mr. Stangeland. Thank you, Mr. Chairman.

Mr. Stolarow, have the funds that have been expended in these

various procurements been properly vouchered and accounted for?

Mr. Stolarow. Mr. Stangeland, we have not checked into that. I

could not say, but we have no reason to believe that they have not

been.

Mr. Stangeland. Have you, in various studies in the past, found 

FAA procurement procedures showing similar poor judgment, and

is it a general rule, or are these examples exceptions?

Mr. Stolarow. We have had other reports about FAA procurement practices, and we were critical of the things they were doing.

Yes, sir.

Mr. Stangeland. Have you recommendations that can change

those practices?

Mr. Stolarow. We have made a number of recommendations to

the FAA. We have recommended that they, along with other agencies, use different systems to monitor contract performance and

contract costs, that they report to the appropriate committees of

the Congress when there are cost overruns or problems. Yes, sir,

we have made some recommendations.

Mr. Stangeland. Do they accept those recommendations? Are

they following them, to your knowledge?

Mr. Stolarow. I would like Mr. Pines to answer that. He is more

familiar with that.

Mr. Pines. In December of last year, we reported on major civil

projects. The recommendation was made to the Office of Management and Budget. To date, the recommendation has not been 

adopted. We are talking to people over there, and hopefully 

changes will be made in reporting systems of the civil agencies.

The Department of Defense has a fairly complex method of reporting on their major weapons systems, and we are hoping, certainly for the high priced civil systems, that civil agencies adopt

some of the same techniques.

Mr. Stangeland. I have no other questions, Mr. Chairman.

Mr. Burton. Mr. English?

Mr. English. Thank you, Mr. Chairman.

As I understand it, this decision was made back in 1972. Is that

correct?

Mr. Stolarow. Yes, sir, initially.

Mr. English. Who was the procurement officer during that

period?

Mr. Pines. We will supply it for the record. We do not have it

with us.

Mr. Stolarow. I do not have it right at hand. Do you mean the

contracting officer or the senior FAA official in charge of the

program?

Mr. English. I would like both, or if you have either of them

now, I would like to know now.

Mr. Stolarow. We will supply those names for the record.

[The information follows:]

27-075 0 - 78 - 8
110

The official responsible for the contracting activity from February 1970 to December 1973 was Mr. Paul Comulada. From January 1974 to the present time Mr.

Richard F. Frakes, Director, Logistics Service has been responsible.

The contracting officer who signed the ARSR-3 prototype contract was James E.

Chestnut in January 1973. There were 13 modifications signed for by the following:

Modifications and signed by:

Nos. 1, 3 to 7, and 9—J. E. Chestnut.

No. 2—J. J. Honeck.

Nos. 8, 10, and 11—R. A. Milograno.

No. 12—G. T. Connors.

No. 13—R. W. Caudill.

The contracting officer who signed the ARSR-3 production contract was Roy W.

Caudill in June 1975. There have been 35 modifications through September 30, 1977.

All of the modifications have been signed by Mr. Caudill except as follows:

Modifications and signed by:

No. 3—A. Kann.

No. 19—not issued.

No. 29—R. A. Milograno.

No. 34—J. F. Igoe.

Mr. Pines. The Administrator of the FAA during the period 

March 1969 to March 1973 was John H. Shafer. He is listed in the

report we issued on August 25, 1976.

Mr. English. Is he still with the FAA?

Mr. Pines. He has been succeeded by several Administrators. Of

course, Mr. Bond is the current Administrator.

Mr. English. Do you know where Mr. Shafer might be at the

present time and where he is employed?

Mr. Burton. Supervising Westinghouse operations. [Laughter.]

Mr. English. That is what I want to find out.

It is also my understanding that the prototype has never been

produced, from your testimony. Is that correct?

Mr. Stolarow. That is correct.

Mr. English. Have there been similar types of situations such as

this where a large amount of money—I am, in particular, thinking

about this 1971, 1972, 1973 period—$1 and $10 million was laid out

by the FAA for such a prototype in which no prototype was produced and in which the Government received no benefit?

Mr. Stolarow. I am not aware of any.

Mr. English. With regard to the $4 million-plus that was put

forward by the FAA, from what you could find, has there been any

benefit whatsoever received from that from a technological standpoint?

Mr. Stolarow. It is hard to say just what technological benefits

have been received. There were some tests conducted of components and subsystems. There were some drawings completed, but

far less than the original scope and intent of the contract.

Mr. English. Again, taking you back to the 1971 through 1973

period, is it not a fact that we got into a similar type of situation

with Sylvania with regard to development and what was supposedly going to be the ultimate purchase of radar simulators for the

training academy-----

Mr. Stolarow. I am not familiar with that situation at all.

Mr. English. You have not looked into that at all? Has anyone

from GAO looked at that?

Mr. Stolarow. I am not aware of it.
Ill

Mr. English. Might I say that I would urge you to do so. I think

you may find a similar pattern with regard to procurement. This is

the reason I was particularly interested in the officials who made

that decision during that period. I would also like to know, if you 

could submit this for the record, if you could find out, whether the

same individuals who were involved in the first decision to give

Sylvania the financing to develop the radar simulator were the

same ones who were involved in this particular case.

[The information follows:]

The Sylvania contract was signed for FAA in 1972 by George O’Liddy. There were

5 modifications to this contract signed by Bill Burgress.

Mr. English. Is there anything, with regard to the hundreds of

Government agencies and I suppose thousands of contracts issued

each year by the Government, that strikes you as extremely odd

about the way the FAA handled its procurement during this

period?

Mr. Stolarow. Well, I think that this particular case that we are

discussing here certainly shows a lack of concern for good procurement practices—concepts that have been built up over the years in

Government procurements of high technology systems. Certainly, it

is hard to understand why they did the things that they did. I

think that any student of the procurement process, and particularly of complicated systems, would say that it should not have been

done this way. So it is strange.

I presume that FAA procurement people have the same training

and background as in other Government agencies.

Mr. English. Would you go so far as to say this is highly unusual?

Mr. Stolarow. I think so; yes.

Mr. Burton. Y ou would hope so, would you not?

Mr. Stolarow. I would hope so. That is a better answer.

Mr. English. There has been a history, within the FAA, of a

revolving door type of approach. People have come from the industry—particularly the electronics industry— into FAA and then

from FAA into the electronics industry. This seems to revolve

around a few major companies. Is GAO aware of this history?

Mr. Stolarow. We are generally aware of that problem in agencies throughout the Government and have, on occasion issued a

number of reports on controls over conflict of interest and this type

of situation. It is not, I do not think, limited to the FAA. All of the

regulatory agencies, all of the big agencies that spend substantial

procurement dollars, have the same situation where people come

from industry and the companies that do business with the Government and are in and out of appointed positions fairly frequently. It

is a serious problem that faces the Government.

Mr. English. Are you aware of a situation existing in FAA,

within the electronics industry, I should say, that FAA has the

reputation of purchasing only from the major companies to the

exclusion of the smaller companies?

Mr. Stolarow. I am not personally aware of that situation. As I

said, we have not done that kind of work in FAA that would let me

answer that question from my own personal knowledge.
112

Mr. English. Given the situation that you have found with

regard to this particular case, did you find that kind of situation

existing?

Mr. Stolarow. Certainly the companies they dealt with were all

big producers. I am not aware of how many small companies, for

example, would be capable—technically capable and financially

responsible—to get involved in a program like this, and certainly

that is a question that has to be answered. In this case, only four of

the bigger producers were involved.

Mr. English. Given the revolving door type of situation, given

the fact that, at least, FAA has this reputation within the electronics industry, given what you have found here in this particular

case, would you agree that at least a great deal more study should

be done of the procurement practices of FAA during this period of

time?

Mr. Stolarow. Yes, sir.

Mr. English. Thank you very much, Mr. Chairman.

Mr. Burton. The next witnesses will be Administrator Bond,

accompanied by Mr. Weithoner, Associate Administrator for Administration of FAA, Mr. Cochran, Mr. Sharp, and Mr. Frakes.

What I think we will do, Mr. Bond, is have your statement,

probably break for lunch, and then come back for the questions.

Would each of you raise your right hands.

Do you, and each of you, solemnly swear that the testimony you

are about to give before this subcommittee will be the truth, the

whole truth, and nothing but the truth, so help you?

[Chorus of “I do’s” from six witnesses.]

STATEMENT OF LANGHORNE M. BOND, ADMINISTRATOR, FEDERAL AVIATION ADMINISTRATION; ACCOMPANIED BY

CHARLES E. WEITHONER, ASSOCIATE ADMINISTRATOR FOR

ADMINISTRATION; JEFFERSON W. COCHRAN, ASSOCIATE ADMINISTRATOR FOR ENGINEERING AND DEVELOPMENT; RICHARD F. FRAKES, DIRECTOR, LOGISTICS SERVICE; WARREN C.

SHARP, DIRECTOR, AIRWAYS FACILITIES SERVICE; AND

RICHARD A. SMITH, ASSISTANT CHIEF COUNSEL, PROCUREMENT

Mr. Bond. I welcome the opportunity to appear before the subcommittee to describe our system acquisition process and recent

changes made to that process to insure it will more effectively 

satisfy the mission needs and program objectives of the FAA.

I am accompanied here by, on my left, Mr. Charles E. Weithoner—Gene Weithoner—who is our Associate Administrator for

Administration; on my right, Mr. Jeff Cochran who is our Associate Administrator for Engineering Development; and Dick

Frakes—Richard Frakes—Director of our Logistics Service.

Also, sitting directly behind me, to my right, is Mr. Warren

Sharp who is head of the Airways Facilities Service—the part of

the FAA which installs and maintains hardware.

You have convened today’s hearing for the purpose of examining

apparent problems in the FAA’s procurement management. Mr.

Chairman, the FAA shares your concern that the procurement

process and the broader process of systems acquisition need continuing examination.
113

In recent years, this process has been subjected to review and

evaluation by four separate outside organizations, in addition to

our own in-house review. I am pleased to say that we are now well

along in a comprehensive overhaul of our acquisition management

process.

The five studies that I alluded to were: One, the national aviation system acquisition process study—NASAPS—conducted by an

in-house FAA study team in April 1974; two, a report by the

consulting firm of Peat, Marwick, Mitchell & Co. in September

1974; three, a report by the consulting firm of Don Sowle Associates, Inc., in September 1975; four, a report by the House Committee on Government Operations relating to the electronic voice

switching—EVS—contract of October 1975; and five, the Department of the Air Force report of the FAA Acquisition Process

Review of August 1976.

Each of these studies had a different emphasis. The NASAPS

study identified a number of deficiencies in the acquisition process,

including the need for more effective determination of requirements, preparation of specifications, management of the procurement process, and monitoring and controlling programs. The study

assumed the continuation of the present organizational structure

but made a large number of specific recommendations for changes

in acquisition procedures.

The PMM study recommended major organizational changes and

a revised formalized system of planning for and managing acquisition.

The Sowle report’s recommendations dealt primarily with procurement and material management functions of the Logistics

Service rather than the total acquisition process.

The committee’s study focused on the substantive output of the

acquisition process based upon an in-depth study of a single procurement and recommendations were made concerning the management of the acquisition process.

The most recent assessment was conducted by personnel from

the Department of the Air Force. The Air Force report is, in many

ways, a culmination and summary of the reports of previous

groups. For this reason, my remarks will be directed chiefly to that

report and its specific recommendations.

Before discussing specific details from this report, I think it

would be beneficial to describe what we mean by the “systems

acquisition process.” The process involves more than simply contracting. By the term “systems acquisition process,” we mean to

include the identification of a potential requirement, the analysis

and validation of that requirement, contracting for the development and field implementation of specific hardware and software

systems, and monitoring progress toward meeting the requirements.

Potential requirements are identified by the FAA in several

ways. They may originate internally, based upon system performance or forecasts of system growth, or they may be identified from

outside the FAA, through direct consultation with the aviation

community, other governmental agencies, congressional committees, and the general public. Once a potential requirement is identified, it must be validated by the FAA.
114

Logically, this determination must include an evaluation of mission need and operational requirements, a cost/benefit assessment,

and an analysis of basic system alternatives for fulfilling the requirement. Only after this type of examination has been completed 

is the agency prepared to commit to any “acquisition program” in

support of the requirement.

The Air Force study recommended numerous changes in the area

of requirements identification and validation and acquisition management. These recommendations were based in part upon the

results of the studies I discussed earlier. By and large, the FAA is

in agreement with most of the recommendations of the Air Force

report and has taken major steps to comply in these areas.

This report made two major recommendations with respect to

requirements determinations: one, that the FAA should reinstitute

a planning, programing and budgeting system—PPBS—and integrate it with the overall acquisition management process; and, two,

that the FAA should reorient long-range and near-term planning

directed toward identifying and refining the functional capabilities

needed for the National Airspace System.

Implementation of improvements in these areas occurred in

March of this year through the publication of FAA order 1810.1,

“System Acquisition Management,” and FAA order 1800.13a,

“Planning and Resource Allocation.”

The first order established a “System Requirements Group”

which reports directly to the Administrator. The group is charged

with the responsibility or the review and evaluation of potential

requirements for designated major acquisitions and for monitoring

the acquisition process from “concept formulation” through transition to, and implementation as, an operational system. The System

Requirements Group—SRG—membership is designed to be reflective of the views of the major operational offices within the agency.

By order 1810.1, the SRG also operates under a firm rule that

commitment to major system hardware decisions will occur only

after the SRG evaluates mission needs, assesses potential benefits, 

and considers alternative approaches. The SRG’s recommendations

are then provided to the top level management in a formal document called the system requirements statement.

The Air Force group also made two major recommendations for

improving the program decision process. These were: one, utilize

mission needs as the primary basis for selection of programs; and, 

two, redefine and update the policies which pertain to program

decisions.

Our new FAA order 1810.1 clearly states that all major system

requirements will be evaluated in accordance with mission needs.

The results of this analysis are formalized in the systems requirement statement. As noted earlier, the FAA order is new and represents a concerted effort to update our policy guidance.

The Air Force group also provided us with major recommendations concerning the management of approved programs and the

need for centralized control of major systems acquisition.

The principal recommendations in this area were: one, develop a

program management directive which sets forth the relationship

between a program manager and the FAA requiring offices, and

provide for executive level supervision of certain types of program
115

manager decisions; two, establish a program management organization on either a “centralized” or a “matrix” basis; and, three,

institute periodic program status reviews of major programs.

By and large, the FAA is in agreement with and has acted to

implement these recommendations. The system acquisition management directive clearly defines the FAA offices responsible for

program management in each major stage of system acquisition. In

analyzing the Air Force report, the FAA concluded that the

matrix-based system is best suited to FAA programs.

Finally, in order to insure timely executive review, the FAA has

instituted a periodic status briefing on major programs for the

Administrator. Major programs are also reviewed by the Transportation System Acquisition Review Council—TSARC—in accordance

with Department of Transportation directives.

To summarize under our system acquisition management directive, the development of new systems begins with the identification

of a potential requirement.

This requirement is stated in terms of functional mission needs

and is submitted to the FAA system requirements group for review

and analysis.

If the requirement survives this screening, a system requirements statement is drafted and submitted to the Administrator for

approval. Approval of the statement freezes the agency’s general

requirements so that a detailed engineering and development program plan can be drafted, and acquisition programs can be initiated in accordance with DOT procedures. An acquisition paper for a

major system development effort is based on an approved system

requirements statement.

Once the paper has been approved by the Office of the Secretary

of Transportation—OST—an “R. & D.” type procurement can be

initiated.

At this stage, and subsequently, the program will be monitored 

by the system requirements group; by OST through the TSARC

process, if applicable; and by the Office of the Administrator,

through my periodic review. Subsequent decisions to pass from the

development through the implementation stages are also monitored by these groups.

In addition to the Air Force group’s major recommendations

which emphasized front-end planning to meet mission needs, the

group also made numerous suggestions and recommendations in

the more technical area of procurement and contract administration. These recommendations, and our responses to them, are too

extensive for me to discuss in this statement. I will be pleased,

however, at your request, to provide them for the record.

Mr. Burton. Thank you. Without objection, the material will be

inserted in the record.

[The material follows:]
116

KEEGAN REPORT - EXECUTIVE SUMMARY

RECOMMENDATION;

1 . R e d e fin e and d ir e c t th e u s e of an FAA p la n n in g , program m ing, and

b u d g e tin g sy stem (PPBS) and a ssig n a c q u isiti o n p o li c y r e s p o n s i b i l i t i e s

(ru lem a k in g pow er) to a f o c a l p o in t h ig h ly v is i b l e t o th e A d m in istr a to r.

E st a b lis h an I n t e r n a l a u d it f u n c tio n u n d e r t h is e x e c u tiv e to in s u r e

e f f e c ti v e im p lem e n ta tio n o f r e d e fin e d a c q u isiti o n management d ir e c ti v e s

and to m o n ito r program outcom e s. R e o rie n t lo n g -r a n g e and n e a r te rm

p la n n in g tow a rd id e n tif y i n g needed c a p a b i l i t i e s and f e a s i b l e a l t e r n a ­

t i v e s to s a t is f y th o s e n e e d s. P ro v id e c o st/ b e n e f it a n a ly s e s (b o th

q u a n tit a ti v e and s u b j e c tiv e ) to e n a b le o b j e c tiv e and r a t i o n a l p rogram

s e l e c ti o n s from among com peting a l t e r n a t i v e s .

ACTIONS TO DATE:

The FAA h a s r e c e n tly com p le ted a s u b st a n ti a l r e v is i o n o f i t s and" a c q u is i t i o n p r o c e ss. On March 21 , 1977, FAA O rd e r 1 8 1 0 .1 , "System A c q u isitio n

M anagem ent," and FAA O rd e r 1 8 0 0 .13A, "FAA P la n n in g a n d R e so u rc e A ll o c a ti o n , "

w ere a p p ro v ed by th e A d m in istr a to r. These two m a jo r p o lic y d ir e c ti v e s o f

o f th e agency w ere th e c u lm in a tio n of e f f o r ts i n i t i a t e d in 1975, U nder

th e l e a d e rs h ip o f th e Deputy A ss o c ia te A d m in istr a to r f o r A d m in istr a tio n ,

a h ig h l e v e l ad hoc group o f p e rs o n n e l r e p r e s e n ti n g t h e v a rio u s e lem e n ts

o f th e agency d e v o te d c o n sid e r a b le e f f o r t to th e s y st e m a ti c developm ent

and c o o r d in a tio n o f an im proved a c q u isiti o n management p r o c e ss. In

December 1976, th e A d m in istr a to r rev iew ed and a p p ro v e d th e c o n c e p tu a l

fram ew ork f o r an im proved fram ew ork f o r an im proved a c q u isiti o n p ro c e ss

w hich c o n sid e r e d th e r e s u l ts o f p r e v io u s st u d i e s, in c lu d in g th e A ir F o rc e

stu d y . He d ir e c t e d t h a t a t a s k f o r c e be e st a b lis h e d to d e v elo p an im p le ­

m e n tin g agency p o lic y d ir e c t i v e . The ta s k f o r c e was a ls o d ir e c t e d to

re v iew and m odify As n e c e ss a ry th e r e v is e d agency p la n n in g and r e s o u r c e

a ll o c a ti o n p o li c y d ir e c ti v e t h a t was c u rr e n tl y in c o o r d in a tio n . The

r e s "

1

t o f th e ta s k f o r c e was th e two d ir e c ti v e s p r e v io u sly r e f e r e n c e d .

FAA O rd e r 1 8 0 0 .13A e st a b lis h e s th e agency P la n n in g a n d R e so u rc e A llo c a ­

ti o n (PRA) p ro c e ss and r e l a t e d p o l i c i e s . The PRA p r o c e ss c o v e rs th e

b ro a d s p e c trum o f a l l agency r e s o u r c e s, a p p r o p ri a tio n s and a c t i v i t i e s

from lo n g -r a n g e p la n s th ro u g h m u lti- y e a r p rogram m ing, c u rr e n t y e a r b u d g e t

s u b m issio n s, b u d g e t e x e c u tio n and e v a lu a tio n o f c om p le ted p ro g ram s. I t

a d d r e ss e s th e a n a l y sis, e v a l u a tio n , j u s t i f i c a t i o n , c o n tr o ls and p ro c e d u r e s

n e c e ss a ry to d e v elo p and e x e c u te program s in s u p p o rt o f FAA/DOT m issio n s

and o b j e c ti v e s. The PRA p ro c e ss h a s b een t i e d to t h e System A c q u isitio n

Management (SAM) p ro c e ss th ro u g h th e m andate t h a t c e r t a i n a c t i v i t i e s in

th e SAM p ro c e ss be a c c om p lish e d b e fo r e m a jo r sy stem a c q u isiti o n p rogram s

c an move fo rw a rd th ro u g h th e PRA p r o c e ss.
117

2

FAA O rd e r 1 8 1 0 .1 e st a b lis h e s th e SAM p ro c e ss and r e l a t e d a c q u isiti o n

management p o li c i e s o f th e a g en cy . The f o c a l p o in t f o r managing and

m o n ito rin g th e flow o f th e SAM p ro c e ss Is th e System R eq u irem en ts Group

(SRG). The SRG Is a h ig h l e v e l group of r e p r e s e n t a ti v e s o f each A ss o c ia te

A d m in istr a to r and th e D ir e c to r of F li g h t S ta n d a rd s c h a ir e d by th e D eputy

A ss o c ia te A d m in istr a to r f o r A d m in istr a tio n . T h is m u lti d is c i p li n a r y

group r e p o rti n g to th e A d m in istr a to r is r e s p o n sib l e f o r th e o r d e rly flo w

o f th e SAM p ro c e ss th ro u g h a l l p h a se s and e x p e d itin g th e fo c u s o f to p

management a tt e n ti o n upon th e c r i t i c a l iss u e s r e l a t e d to m ajor sy stem

a c q u isiti o n s .

The SRG is a ls o r e s p o n sib l e to i n i t i a t e and o p e r a t e a R eq u irem en ts

T r a c k in g System (RTS). The RTS w i l l in c o r p o r a t e a p p ro v e d agency sy stem

r e q u ir e m e n ts a s a b a s e lin e and tr a c k agency e f f o r ts to f u l f i l l t h e

re q u irem e n t th ro u g h a l l p h a se s o f th e SAM p r o c e ss. S i g n ifi c a n t d e v ia ­

ti o n s from th e b a s e lin e w i l l r e s u l t in SRG e f f o r ts t o e x p e d ite th e fo c u s

o f a p p r o p ri a t e management a tt e n ti o n upon any p ro b lem s t h a t may e x is t .

The A ss o c ia te A d m in istr a to r f o r A d m in istr a tio n is c h a rg e d w ith th e

r e s p o n si b il it y to p e rfo rm p e rio d i c a p p r a is a ls o f th e SAM p r o c e ss. The

a p p r a is a ls a r e in te n d e d t o a ss e ss th e adequacy o f th e SAM p ro c e d u re s and

th e o v e r a ll p e rfo rm an c e of th e p r o c e ss. The r e s u l ts o f th e s e a p p r a is a ls

a r e r e p o rt e d t o th e A d m in istr a to r.

Both th e SAM p ro c e ss and th e PRA p ro c e ss p la c e em p h a sis upon th ro u g h

lo n g -r a n g e p la n n in g , i d e n t if i c a t o i n of n e ed s and a l t e r n a t i v e s to s a t is f y

th o s e n e ed s e a rly i n th e p r o c e ss, and c om p reh en siv e a n a l y t i c a l e f f o r ts

I n c lu d in g c o s t / b e n e f i t a ss e ssm e n ts to e n a b le in fo rm e d , o b j e c tiv e d e c isio n ­

m aking.

The SAM p ro c e ss is .b ein g im plem ented on a p h a se d b a s is w ith f u l l implement a t i o n s c h e d u le d f o r March 1978. The i n i t i a l im p le m e n ta tio n p h a se in c lu d e d

th e i n tr o d u c tio n of fiv e agency program s b e g in n in g i n May 1977. These

program s a r e : F li g h t S e rv ic e S t a tio n M o d e rn iz a tio n ; M icrowave Lan d in g

S y stem s; D is c r e t e A ddre ss Beacon System ; Second G e n e r a tio n VOR/VORTAC;

and A ir p o rt S u r v e ill a n c e Radar R ep lac em en t.
118

KEEGAN REPORT - EXECUTIVE SUMMARY

RECOMMENDATION:

2 . S e l e c t program s and d e v elo p b u d g e ts to s u p p o rt m issio n n e e d s. Iss u e

and e n fo r c e a d ir e c ti v e t h a t p r e s c rib e s th e program g o -a h e a d d e c isio n

p ro c e ss and s p e c ifi e s in d e p th th e t a s k s, d u ti e s , a u t h o r i t i e s and r e s p o n sib i l i t i e s t h a t c o n sti t u t e th e e n t ir e a c q u isiti o n l i f e c y c l e .

ACTION TO DATE:

Both th e PRA and th e SAM p o lic y d ir e c ti v e s em pha siz e th e m andate t h a t

agency program s and b u d g e ts be b a s e d upon m issio n s and o b j e c tiv e s o f

th e FAA/DOT. C h a p te rs 1 and 2 o f O rd e r 1 8 0 0 .13A a d d r e ss th e n e ed f o r

th o ro u g h o b j e c tiv e a n a l y sis o f program p r o p o s a ls, c o rr e l a ti o n w ith

m issio n s, o b j e c ti v e s, p o l i c i e s , p l a n s, e t c . , and s o u r c e s o f a n a l y t i c a l

e x p e r tis e w ith in th e a g en c y . O th e r c h a p t e rs o f th e o r d e r a d d r e ss th e

o r d e rly flow o f th e PRA p ro c e ss th ro u g h i ts v a rio u s p h a s e s w ith c o n tin ­

u in g em p h a sis upon o b j e c tiv e a n a l y sis, c o rr e l a ti o n w ith m issio n s and

o b j e c ti v e s, and c r i t i c a l a ss e ssm e n t o f p ro p o se d a p p ro a c h e s to a ss u r e

t h e ir v a l i d i t y .

C h a p te r 4 o f O rd e r 1810.1 s e ts f o r t h in g r e a t e r d e t a i l th e same ty p e s

o f m andates f o r th e SAM p ro c e ss. I t s p e c ifi e s t h a t , p r i o r to v a li d a ti o n

o f a p o t e n ti a l m ajor sy stem re q u ir e m e n t, a th o ro u g h e v a l u a tio n o f m issio n

n e e d , a ss e ssm e n t of p o t e n t i a l b e n e f its and e v a l u a tio n o f o p tio n s (I n c lu d in g

n o n te c h n ic a l and n o n c a p it a l o p tio n s) must be c o m p le te d . T h is e f f o r t must

be documented i n a System R eq u irem en ts S ta tem e n t (SRS) a p p ro v ed by th e

A d m in istr a to r and tr a c k e d th ro u g h r e s o lu tio n by th e SRG. T h is docum entati o n in an SRS must be a c c om p lish e d p ri o r to e n tr y i n t o th e PRA p ro c e ss

o f a c u rr e n t y e a r b u d g e t r e q u e st f o r m ajor R&D o r p ro c u rem e n t fu n d s

(th u s p r o v id in g d is c i p li n e i n th e p r o c e ss).

S im il a rly , C h a p te r 6 o f O rd e r 18 1 0 .1 em p h a siz e s th e c o n tin u e d a ss e ssm e n t

o f th e v a l i d i t y o f th e program a l t e r n a t i v e s , im p lem e n ta tio n s tr a t e g y ,

and o th e r c r i t i c a l f a c t o rs p r i o r t o th e commitment t o im p lem e n ta tio n in

th e A c q u isitio n A u th o riz a tio n ( a ls o a p p ro v ed by th e A d m in istr a to r).

F a c to r e d i n t o t h is p ro c e ss a ls o is th e rev iew p ro c e ss o f th e O ffi c e of

th e S e c r e ta r y o f T r a n s p o rt a tio n th ro u g h th e T r a n s p o rt a tio n System s

A c q u isitio n Review C o u n c il, o th e r DOT d ir e c ti v e s and m andates and th e

p o li c i e s s e t f o r t h in 0MB C ir c u l a r A -109, M ajor System A c q u isitio n s.

The SAM p ro c e ss c l e a rl y s e ts f o r t h th e a c q u isiti o n management c y c le w ith

a p p r o p ri a t e re v iew p o i n ts, d u ti e s , r e s p o n s i b i l i t i e s , a c c o u n t a b ility and

p h a se s in C h a p te r 2 and A ppendices 1 and 2 a s w e ll a s th e more d e t a il e d

t e x t in C h a p te rs 3 -7 .
119

KEEGAN REPORT - EXECUTIVE SUMMARY

RECOMMENDATION;

3 . E st a b lis h a si n g l e e x e c u tiv e f o c a l p o in t T o r g o v e rn in g th e program

management f u n c tio n . A ccom plish t h is f u n c tio n th ro u g h e it h e r a c e n tr a li z e d

s e lf-s u p p o rtin g program management o r g a n i z a tio n o r a m a trix a p p ro a c h to

b rin g e x isti n g f u n c tio n a l g ro u p s u n d e r th e a u t h o rit y o f th e v a rio u s

program d ir e c t o rs . D evelop p r o f e ssi o n a l program m anagers th ro u g h

e d u c a tio n and c a r e e r p r o g r e ssio n , and s u p p o rt them w ith s p e c i a l is t

c a p a b ilit y ( e . g . , t e c h n i c a l, fi n a n c i a l , e t c .) . To m o n ito r and s u p p o rt

c o n tr a c to r o p e r a tio n s, p ro v id e fo rm a lly o rg a n iz e d f i e l d te am s, remove

a c c e p ta n c e a u th o rity from th e r e q u irem e n ts o r g a n i z a tio n s and c o n sid e r

th e u s e o f DOD c o n tr a c t a d m in istr a tio n o r g a n i z a tio n s.

ACTIONS TO DATE;

The ap p ro a ch o f e st a b lis h i n g c e n tr a li z e d program management o r g a n i z a tio n s

was e x te n siv e ly e v a lu a te d d u rin g b o th th e d e velopm ent o f th e SAM c o n c e p t

and th e im plem enting p o lic y d ir e c ti v e to i n s t i t u t i o n a l i z e th e SAM p r o c e ss.

Based upon th e fo llo w in g c o n sid e r a tio n s, th e A d m in istr a to r co n c lu d ed in

F e b ru a ry 1977 t h a t t h is was n o t a p r a c t i c a l a l t e r n a t i v e . A c q u isitio n o f

sy stem s is a c o rr e l a r y , a lth o u g h h ig h ly im p o rta n t, s u p p o rt a c t i v i t y f o r

accom plishm ent o f m a jo r m issio n o b j e c tiv e s. F u rth e r, th e agency doe s

n o t have a d e q u a te r e s o u r c e s a v a il a b l e to e st a b lis h a s e p a r a t e , d e d ic a te d

o r g a n i z a tio n f o r sy stem a c q u isiti o n s in d e p e n d e n t o f o t h e r a c t i v i t i e s .

T h is ty p e o f o r g a n i z a tio n is g e n e r a lly p r a c t i c a l o n ly f o r a c q u isiti o n

a c t i v i t i e s such as DOD w here a c q u isiti o n s a r e in te rm s o f b i l l i o n s of

d o l l a rs .

S e c o n d , th e complex i n t e r a c t i o n o f h a rd w a r e /s o ftw a r e sy stem s w ith th e

p r o c e d u r a l, r e g u l a to r y , o p e r a ti o n a l, la b o r r e l a t i o n s , e n v iro n m e n ta l and

u s e r / p u b li c c o o rd in a tio n a s p e c ts o f FAA a c t i v i t i e s m anda tes t h a t a c q u is i t i o n management be c o n d u c ted a s an i n t e g r a t e d p o rti o n of th e e x e c u tio n

o f o v e r a ll r e s p o n s i b i l i t i e s . The e sta b lis h m e n t o f a m u lti d is c i p li n a r y

SRG, o p e r a tin g i n c lo s e c o o r d in a tio n w ith th e f u n c ti o n a l o r g a n i z a tio n s,

o ff e r e d s u b st a n ti a l a d v a n ta g e s o v e r c e n tr a li z e d p ro g ram management

o r g a n i z a tio n s.

T h u s, th e agency s e l e c t e d th e o p tio n i n th e stu d y o f a form o f m a trix

management o r g a n i z a tio n . The SAM p ro c e ss e st a b lis h e d t h e System R e q u ir e ­

m ents G roup, a h ig h l e v e l group r e p o rti n g to th e A d m in istr a to r. T h is

com bines th e a d v a n ta g e s o f a h ig h l e v e l f o c a l p o in t f o r a c q u isiti o n

management w ith th e a d v a n ta g e s o f r e t a i n i n g th e f u n c ti o n a l a lig nm e n t

o f th e o r g a n iz a tio n and d raw ing upon many d is c i p l i n e s . The SAM p ro c e ss

m andates a w ritt e n c h a r t e r s p e c if y in g a c c o u n t a b ilit y , a u t h o rit y and

r e s p o n s i b i l i t y o f program manager (i n a c c o rd a n c e w ith OMB A -1 0 9 ). The

ta s k i n g o f o r g a n i z a tio n s is in a c c o rd a n c e w ith f u n c ti o n a l r e s p o n s i b i l i t i e s

a s d e fin e d in agency d ir e c ti v e s (O rd e r 1 1 0 0 .2 , FAA O r g a n iz a tio n ) and th e

m anager c h a rt e r r e q u ir e d by th e SAM p r o c e ss. In a d d iti o n , th e SAM

p ro c e ss m andates a R e q u irem en ts T r a c k in g System o p e r a t e d by SRG to
120

2

to p ro v id e n e c e ss a ry management in fo rm a tio n and v is i b i l i t y f o r m a jo r

p rogram a c t i v i t i e s . However, th e s p e c if i c a ssig n m e n t o f s p e c i a l is ts

is n o t c o n sist e n t w ith in t e g r a ti o n o f a c q u isiti o n a c t i v i t i e s and

o th e r agency f u n c tio n s, r e s o u r c e s a v a il a b l e to c o n d u c t agency b u sin e ss

o r th e m agnitude of agency a c q u isiti o n a c t i v i t i e s com pared t o a l l o th e r

f u n c ti o n a l r e s p o n s i b i l i t i e s .

In th e a r e a o f tr a i n i n g and d e v e lo p in g p r o f e ssi o n a l program m an ag ers,

th e agency h a s b e en im proving th e l e v e l o f aw a re n e ss and e x p e r tis e of

p rogram m an ag ers. M a te ri a l on th e o p e r a tio n and n e e d f o r th e SAM p ro ­

c e ss h a s b e en in c o rp o r a te d i n t o o u r Lawton Management T r a in in g S ch o o l

c o u rs e w ork. T h is tr a i n i n g s c h o o l in c lu d e s a s p e c i a l c o u rs e d e v o te d

s p e c if i c a l l y to program management w ith in th e a g e n c y . F u rth e r, we

a r e p la n n in g to e st a b lis h a sem in a r f o r p r o f e s si o n a l, t e c h n i c a l program

m anagers to r e l a t e th e SAM p ro c e d u re s and th e o ry w ith FAA p ro g ram s.

The q u a lit y a ss u r a n c e p o lic ym a k in g and t e c h n i c a l g u id a n c e a u th o rit y o f

th e L o g isti c s S e rv ic e h a s b e en e x te n d e d by FAA O rd e r 4 6 3 0 .8 , e n t i t l e d

"Q u a lity A ssu ra n c e P o li c y , " d a te d O c to b e r 27, 1977. I t i n d i c a t e s t h a t

i t is FAA p o lic y " t h a t a Q u a lity A ssu ra n c e Program s h a l l be p ro v id e d

f o r and in c lu d e d i n th e d o c um e n ta tio n f o r th e a c q u isiti o n o f NAS

s y stem s, equipm ent and m a t e r i a l. " The o rd e r f u r t h e r a ssig n s to th e

L o g isti c s S e rv ic e th e r e s p o n si b il it y to " fo rm u la te a n d im plem ent

agency p o li c y , sta n d a rd s and p ro c e d u re s f o r th e q u a l i t y a ss u ra n c e

program s in v o lv e d i n th e a c q u isiti o n o f NAS s y ste m s, e q u ipm e n t, and

m a t e ri a l. "

To a ss u r e com petent p e rfo rm an c e o f q u a lit y a ss u r a n c e a c t i v i t i e s in

th e f i e l d , a s w e ll a s h e a d q u a rt e rs, th e I n d u s tr i a l D iv isio n o f L o g isti c s

S e rv ic e is p ro v id in g th r e e k in d s o f a ss is t a n c e .

F i r s t , p ro c e d u r a l c o n s u lt a tio n f o r p ro c u rem e n ts i n i t i a t e d by th e r e g io n s

and c e n t e rs.

Second, t e c h n i c a l a ssist a n c e i n th e form o f Q u a lity and R e l i a b i l i t y

O ffi c e rs (QRO's) to a id R e sid e n t E n g in e e rs (R E 's) a n d T e c h n ic a l O ffi c e rs

(T O 's) i n e v a lu a tin g th e adequacy o f c o n tr a c t o rs ' o u t- o f - p l a n t o p e r a tio n s,

I n c lu d in g i n s t a l l a t i o n s i t e s . Such a ssist a n c e h a s b e e n p ro v id e d f o r

s e v e r a l p ro g ram s; i . e . , PCS f o r RML, ARSR-3, IL S.

T h ir d , tr a n s m itt a l from th e L o g isti c s S e rv ic e to t h e a c c e p ta n c e o r g a n iz a t i o n , o f c o n tr a c t o rs ' c o n tr a c tu a l q u a lit y a ss u r a n c e commitments f o r

I n s t a l l a t i o n s i t e o p e r a tio n s a s d e s c rib e d in th e Q u a lity C o n tro l System

P la n (QCSP). These a r e o b ta in e d in r e s p o n s e to FAA-STD-016, e n t i t l e d

" Q u a lity C o n tro l System R e q u ir e m e n ts," and th e y p ro v id e th e FAA o r g a n iz a tio n r e s p o n sib l e f o r in s p e c tio n and a c c e p ta n c e w ith a b a sis f o r

e v a l u a tin g th e adequacy o f c o n tr a c t o rs ' q u a lit y a ss u r a n c e o p e r a tio n s.
F o rm ally o rg a n iz e d f i e l d team s have been p ro v id e d . An example o f su ch f i e l d

team d e s c rip tio n is p ro v id e d In FAA O rd e r 6 0 1 2 .3 , e n t i t l e d " Im p lem e n ta tio n

o f Power C o n d itio n in g System s in R M L's." The d e sig n a tio n of ACO's h a s b e en

r e e v a lu a te d to a ss u r e th e a p p r o p ri a t e and e f f e c t i v e u s e o f ACO's.

T h u s,th e L o g isti c s S e rv ic e h a s ta k e n st e p s to p ro v id e f i e l d r e p r e s e n t a ti v e s

w henever c o n tr a c to r p e rfo rm an c e must be e v a lu a te d a n d c o n c u rr e n tly t o a s s is t

in e st a b lis h i n g Q u a lity A ssu ra n c e g ro u p s w ith in th e r e g io n s to o p e r a te u n d e r

th e t e c h n i c a l p o li c y g u id a n c e and sta n d a r d s o f th e h e a d q u a rte rs * L o g isti c s

S e r v ic e .

P r e c a u tio n s a r e b e in g ta k e n to a ss u r e s e p a r a tio n o f a c c e p ta n c e a u t h o rit y

f o r c o n tr a c to r goods and s e r v i c e s from th e r e q u ir e m e n ts o r g a n i z a tio n s.

S p e c ifi c a ll y , i n - p l a n t a c c e p ta n c e is a ssig n e d t o Q u a lity and R e l i a b i l i t y

O ffi c e rs (QRO's) who r e p r e s e n t th e L o g isti c s S e r v i c e . A cceptance a t

i n s t a l l a t i o n s i t e s is n o rm a lly a ssig n e d to R e sid e n t E n g in e e rs (R E 's) who

a r e s p e c if i c a l l y d e le g a te d by th e C o n tr a c tin g O ffi c e r in th e L o g isti c s

S e r v i c e . There have been some p a st c o n tr a c ts in w h ic h th e T e c h n ic a l

O ffi c e r (TO) h a s b een a ssig n e d th e a u th o rit y to fo rm a lly a c c e p t th e

f i r s t sy stem o n ly , i n o rd e r to a ss u r e a d e q u a te e v a l u a tio n o f a l l

t e c h n i c a l c o n sid e r a tio n s.

A rrangem ents have b een made w ith th e D e fe n se L o g isti c s Agency (DLA) to

u t i l i z e i ts i n - p l a n t s e r v i c e s on 24 c o n tr a c ts to d a t e . In a d d itio n , i t

is c u rr e n t p r a c ti c e to re v iew each c o n tr a c t, p r i o r to a ssig nm e n t of

Government r e s p o n si b il it y f o r in s p e c tio n and a c c e p ta n c e , to d e te rm in e

th e f e a s i b i l i t y and e ff e c tiv e n e ss o f u sin g DLA s e r v i c e s . As in d i c a t e d

a b o v e , r e sid e n t FAA r e s o u r c e s a r e d ir e c t e d tow a rd s th o s e o p e r a tio n s f o r

w hich DLA is n o t a r e a s o n a b le a l t e r n a t i v e .
122

KEEGAN REPORT - EXECUTIVE SUMMARY

RECOMMENDATION:

4 . Iss u e and e n fo r c e a d ir e c ti v e g o v e rn in g th e d e l e g a tio n o f a u th o rit y

to re p ro g ram fu n d s w hich p ro v id e s c o n sist e n t c e n tr a l v is i b i l i t y and u n iform p o l i c i e s . The FAA s h o u ld com p re h e n siv e ly re e x am in e i t s fi n a n c i a l

management p o li c i e s and p r a c ti c e s , in c lu d in g th e f u ll-f u n d i n g c o n c e p t.

ACTIONS TO DATE:

I n a d d itio n t o th e p r e v io u sly d e s c rib e d f e a tu r e s o f th e SAM p ro c e ss and

th e PRA p r o c e ss, w hich in c lu d e s g e n e r a l fi n a n c i a l management p o l i c i e s ,

FAA O rd e r 2 5 0 0 .3C d a te d A ugust 26 , 1976, "D e le g a tio n o f A u th o rity to A d ju st

Budget E stim a te s, F is c a l Programs and P r o j e c ts in F&E A p p r o p ri a tio n s, " a ls o

a p p li e s to t h is recom m endation. O rder 2 5 0 0 .3C e st a b lis h e d r e v is e d p o l i c i e s

and g u id e lin e s r e l a t e d to d e le g a tio n s of a u th o rity to re p ro g ram fu n d s. T h is

o rd e r p ro v id e s a p o rti o n o f th e c o n sist e n t c e n tr a l v is i b i l i t y and u n ifo rm

p o li c i e s r e l a t e d to d e l e g a tio n s of a u th o rity recommended by th e A ir F o r c e

r e p o rt.

The reprogram m ing o f R&D program s is c u rr e n tly a c c om p lish e d p rim a rily by

th e A ss o c ia te A d m in istr a to r f o r E n g in e e rin g and D evelopm ent w ith p o lic y

g u id a n c e and b ro a d d e c isio n s by th e Agency Review B o a rd . S p e c ifi c

reprogram m ing c r i t e r i a a r e c u rr e n tly b e in g d r a ft e d f o r Iss u a n c e .

The th e o ry o f f u ll-f u n d i n g , w hich te n d s to r e s u l t in l a r g e c a rr y o v e rs o f

fu n d s from one f is c a l y e a r to a n o th e r h a s m ajor a d v a n ta g e s f o r program

a ccom p lishm e n t. With y e a r-to - y e a r a p p r o p ri a tio n s, m a jo r p ro b lem s r e s u l t

in p a r t i a l fu n d in g w ith th e r is k of n o t b e in g a b le to com p le te th e p ro g ram

in f u tu r e y e a rs. The f u ll-f u n d in g c o n c e p t, how ever, is u n d e r stu d y and

c o n tin u a lly b e in g re v iew ed to a ss e ss i ts s u i t a b i l i t y a s b a si c f is c a l

p o lic y by FAA.

The SAM P ro c e ss fo c u s e s management a tt e n ti o n on f is c a l c o n sid e r a tio n s

e a rly i n th e a c q u isiti o n c y c le a s recommended. I t a ls o p ro v id e s a means

of c o n tin u o u s m o n ito rin g th ro u g h o u t th e l i f e of th e p ro g ram to b e t t e r

e n s u r e f is c a l i n t e g r i t y and u ltim a t e b e n e f its c o n sist e n t w ith th e

c o sts.
123

KEEGAN REPORT - EXECUTIVE SUMMARY

RECOMMENDATION:

5 . R eq u e st t h a t OST e x p e d ite i t s re v iew o f th e DOT P ro cu rem e n t R e g u la tio n s

(DOTPR) c u rr e n tly in p r o g r e ss. The A d m in istr a tio n s h o u ld c o n s o li d a t e i t s

own o rd e rs and in c o r p o r a t e them i n t o th e FAA P ro c u rem e n t R e g u la tio n s (FAPR)

c o n c u rr e n tly w ith an im m ediate u p d a te o f th e o th e r FAPR p r o v isio n s.

A c tio n to d a t e :

The rev iew o f DOT P ro cu rem en t R e g u la tio n s (DOTPR) h a s b een com p le ted . A

f u l l DOTPR u p d a te was p ri n t e d i n th e F e d e r a l R e g ist e r on Septem ber 8 , 1977.

I t is now in p ri n t i n g and is e x p e c te d to be d is tr i b u t e d by th e end of

December 1977.

The m ajor t h r u s t of th e DOTPR u p d a te was to b rin g t h e DOTPR i n li n e w ith

c u rr e n t FPR, and new c o v e ra g e on V alue E n g in e e rin g , h a n d lin g o f c l a s s if i e d

d a ta , as w e ll a s new c o v e ra g e on Government F u r n is h e d P ro p e rty and Sm all

P u r c h a s e s.

In Ja n u a ry 1978, th e DOTPR P o li c y and R e g u la tio n s Com m ittee w ill meet a g a in

An agenda is b e in g p r e p a r e d to s u g g e st t o p i c s f o r i t s c o n sid e r a tio n . The

com m ittee w i l l compare DOTPR s u b j e c ts to th e FPR t o s e e i f th e y a r e s t i l l

a d e q u a te , a r e no lo n g e r n e e d e d , o r i f a d if f e r e n t ty p e of co v e rag e is

r e q u ir e d .

A ll agency d ir e c tl y r e l a t e d p ro cu rem en t o rd e rs a r e a lr e a d y in c lu d e d i n P a rt

99 o f th e FAPR. These p ro c u rem e n t o rd e rs w hich r e l a t e to p rocurem ent

c o n c e rn s a r e b e in g i n t e g r a t e d i n t o th e FAPR.

The agency w i l l n o t in c lu d e o r d e rs iss u e d by o th e r FAA o ffi c e s in i ts

i n t e g r a ti o n o f o rd e rs i n t o th e FAPR. The FAPR is t h e d e f i n iti v e FAA

pro cu rem en t a u th o rity and g u id a n c e document and s h o u ld n o t in c lu d e o r d e rs

w hich a r e a t b e st p e rip h e r a l to p ro c u rem e n t.

O th e r FAPR p r o v isio n s a r e b e in g u p d a te d . FAPR Change 4 , which is a m ajor

ch ange, was p rin t e d and d is tr i b u t e d in A ugust 1977. Among o th e r c h a n g e s,

th e fo llo w in g w ere in c lu d e d In Change 4:

S u b s e c tio n 1 2A -1 .1003-2 was r e v is e d t o show c h a n g e s in r e q u irem e n ts

f o r s u b m ittin g s y n o p se s to th e Commerce B u sin e ss D a ily .

S e c tio n 12A -1.1202 was added to p ro v id e g u id a n c e on th e p r e q u a l if ic a tio n o f p o t e n ti a l s u p p li e rs.
124

2

Section 12A-2.106 was added to provide for management evaluation of the

of the formal advertising procurement operations In the headquarters

and regional o ffic e s. (This change brought the FAPR in lin e with the

FPR).

FAPR Change 5 dealt with small purchases authority. It was signed on

October 14, 1977, and is now being printed for distribution. Thus, continuing e ffo r ts are being made to keep the FAPR current with the Federal

Procurement Regulations, Statutes, and decisions of Courts and Boards.
125

KEEGAN REPORT - EXECUTIVE SUMMARY

RECOMMENDATION:

6 . With r e s p e c t to th e p ro p e r s e l e c ti o n o f c o n tr a c t ty p e , th e FAA

sh o u ld im m e d ia te ly re v iew th e a r e a and d e te rm in e w h a t tr a i n i n g and

r e o r i e n t a ti o n sh o u ld be a c c om p lis h e d .

ACTION TO DATE:

A re v iew o f c o n tr a c t ty p e s has b e en made, a s recommended. C u rr e n tly

th e r e h a s been an i n c r e a s e in th e u s e o f I n c e n tiv e c o n tr a c ts.

S in c e A ugust 1976, p r o f e ssi o n a l p ro c u rem e n t p e rs o n n e l have b e en

a ssig n e d more fr e q u e n tly to tr a i n i n g c o u rs e s, b o th a t th e FAA Academy

and i n th e W ashington a r e a . In a d d iti o n , many have come from o th e r

a g e n c i e s, e s p e c i a lly a g e n c ie s w ith in DOD, who have r e c e iv e d e x t e n siv e

c o n tr a c ts tr a i n i n g and e x p e rie n c e in th o s e a g e n c i e s. T e c h n ic a l p e rs o n n e l i n FAA have b een a ssig n e d to a p ro c u rem e n t o r i e n t a t i o n c o u rs e

on a r e g u l a r b a sis; t h is has s e n siti z e d them t o th e v a rio u s c o n tr a c t

ty p e s and u sag e th e r e o f.

F o rty -tw o o f th e 66 p e rs o n p r o f e ssi o n a l p ro c u rem e n t s t a f f have a tte n d e d

c o u rs e s w hich co v e r I n c e n tiv e C o n tr a c tin g and many o f th e s e p e o p le have

a tt e n d e d more th a n one c o u rs e on th e s u b j e c t.

The agency In te n d s to c o n tin u e i ts e f f o r ts in th e p r o f e s si o n a l p ro c u r e ­

ment tr a i n i n g a r e a .

Im provem ent of th e p ro c e ss f o r v a li d a ti o n and m o n ito rin g o f sy stem

r e q u ir e m e n ts was e st a b lis h e d by O rd e r 1 8 1 0 .1 . Im proved i n t e g r a ti o n

o f p la n n in g and b u d g e tin g p ro c e d u re s w ith a c q u isiti o n management was

e st a b lis h e d by O rd e r 1 8 0 0 .13A. In a d d itio n , th e A irw ay F a c i l i t i e s

S e rv ic e h a s e st a b lis h e d im proved sta n d a r d i n t e r n a l p ro c e d u r e s in two

r e c e n t p o lic y d ir e c t i v e s , AF O rd e r 6 0 1 1 .A, "F&E C o st E stim a tin g

P ro c e d u re s and Summaries Handbook" (S eptem ber 1 9 7 6 ), and AF O rd e r

6 0 1 1 .2 , "Airway F a c i l i t i e s S e rv ic e F&E F u tu r e P ro g ram D evelopm ent

P ro c e d u r e s " (J u ly 1 9 7 7 ).

27-075 0 - 78 - 9
126

KEEGAN REPORT - EXECUTIVE SUMMARY

7 . To in s u r e p rocu rem ent work f o r c e c o n tin u it y and a c o n tin u in g h ig h

l e v e l o f p e r s o n n e l q u a l if i c a t i o n , FAA management s h o u ld im m e d ia te ly

b e g in r e c r u itin g q u a l if i e d procu r em ent t r a i n e e s .

A c tio n t o d a t e :

The a g en cy h a s b e en in a r e st r a in e d r e c r u itm e n t p o st u r e f o r some tim e

a n d , th u s, h a s n o t b e en a b le t o s e t a sid e p o sit i o n s f o r a fo r m a l r e c r u it ­

m ent /t r a in e e program . There i s now a DOT Management I n t e r n Program in

e x ist e n c e from w hich p o ssib l y FAA can draw q u a l if i e d p e o p l e . A ls o ,

th e r e is an abundance o f fo rm er pro cu r em ent in t e r n s from o th e r a g e n c i e s

in th e D .C . a r e a t o draw on.

FAA h a s p la c e d st r o n g em p h a sis on t r a in in g o f i t s p ro cu r em en t work

f o r c e . C o n t r a c tin g and p rocu rem ent p e r s o n n e l a r e r e g u l a r ly s c h e d u le d t o

a tt e n d " w ith in a g en cy " and " o u tsid e a g en cy" t r a i n i n g c o u r s e s t o c o n tin u e

d ev e lop m en t o f p r o fi c i e n c y in th e p ro cu r em ent f i e l d . S in c e A ugu st 1 9 7 6 ,

FAA h e a d q u a r t e r s p rocu rem ent p e o p le h a v e c o l l e c t i v e l y a tt e n d e d some 64

c o u r s e s c o v e r in g a w id e v a r i e t y o f s u b j e c t a r e a s d e a lin g w ith th e

c o n t r a c ts and p ro cu r em ent f i e l d . P e r s o n n e l t h a t t h e FAA h a s h i r e d from

o th e r a g e n c i e s in t h e D .C . a r e a , e s p e c i a ll y from DOD, a r e h ig h ly t r a in e d

and many a r e g r a d u a te s o f o th e r a g e n c i e s' p ro cu r em ent in t e r n p ro gram s.

In a d d itio n , th e FAA d o e s p r o v id e f o r in fo r m a l o n -t h e -j o b t r a in in g w hich h a s

s u c c e s s f u l l y moved s e c r e t a r i a l / c l e r i c a l p e o p le in t o c o n t r a c ts/p r o c u r e m e n t

p o sit i o n s .
127

Keegan Report; Recommendations regarding Requirements Determination

. Planning procedures, budget development and requirements determination are not adequately Integrated.

. Recommendation:

[p. 20, 84] IA .l(a) The PPB system should be redefined and integrated “into

an overall acquisition management process. The planning

function should be placed in its proper perspective of

actively leading the acquisition process.

Action to Date:

. Order 1800.13A, Planning and Resource Allocation, revised and

reissued March 21, 1977. This policy order strengthens the tie

between resource management and acquisition management. Requires

sp e c ific acquisition management actions and documentation (System

Requirements Statement, Transition Plan and/or Acquisition

Authorization) prior to finalization of certain resource management and budget actions.

. Order 1810.1, System Acquisition Management, Issued March 21,

1977. Companion policy directive which is cross-referenced in

Order 1800.13A. Mandates sp e c ific actions and documentation

before acquisition programs can move forward to next phase of

acquisition cycle, (p. 14)

. Requirement roust be clearly identified, defined, validated and

documented in a System Requirement Statement approved by the

Administrator before a major system acquisition program can move

to fu ll-sc a le development, (p. 3)

[ ] Keegan report page ref,

( ) 1810.1 page r ef.

1
128

. Acquisition Authorization must he approved by Administrator

before full-scale Implementation. Revalidates requirement,

documents selection of alternative and establishes parameters -

(boundaries) for implementation, (p. 3, 21)

. First System Requirement Statement/Acqulsltlon Authorization

(Second Generation VORTAC) approved September 6, 1977.

. SAM process scheduled for full implementation by March 1978.

. Recommendation;

[p. 20, 84] IA.l(b) Provide realistic checks and balances in the acquisition

system by assigning rulemaking (sic) authority, Including

planning rules, to a single acquisition policy organization.

This organization should be headed by a senior executive

and should be independent of acquisition management operations such as program initiation, budgeting, technical

direction and so forth.

The PAA should also establish an internal audit capability

within the acquisition policy organization to measure compliance with acquisition directives and evaluate program

outcomes to detect the need for future system changes.

Actions to Date:

. System Requirements Group established. Consists of high-level

representatives of Associate Administrators and Director of

Flight Standards Service, chaired by Deputy Associate Administrator.

2
Responsible to the A dm inistra tor fo r managing and m onitoring

the SAM process from I d e n tific a tio n o f p o te n tia l requirem ents

through Implementation and commissioning o f major systems to

s a tisf y v a lid a te d requirem ents. (p. 3, 17)

• R e s p o n sib ility fo r o v e r a ll pro c e ss e v a lu a tio n and a p p r a is a l

assigned to th e A ssociate A dm in istra to r fo r A dm in istra tio n . Includes

assessment of the e ff e c tiv e n e ss o f SAM p rocedures, the System

Requirements Group o p e ra tio n s, need fo r changes/improvements in

o v e ra ll SAM p ro c e ss, e tc . (p. 8)

. Design and i n i t i a l implementation o f Requirements Tracking System

operated by SRG. W ill tr a c k programs in terms of v a lid a te d re q u ir e ­

ments, a ss e ss program accomplishment in terms of s a tisfy in g

e sta b lis h e d requirem ents and a ssu re continued v a lid ity of re q u ire ­

ments. (p. 22)

. Recommendation:

[p. 21, 85] lA .l( c ) The re v ised planning procedures and o th e r a c q u isitio n

guidance should recognize r e a lis ti c th re sh o ld s in program

siz e and complexity in r e q u irin g s p e c ifi c documentation o f

su p p o rtin g a n aly se s and program d e c isio n s.

A ctions to D ate:

. In developing Order 1810.1 th e ta sk fo rc e gave s p e c ifi c c o n sld e ra tlc

to the fa c t th a t documentation requirem ents must be c o n siste n t w ith

the magnitude of the procurem ent, (p. i)
130

The task force was aware of the fact that one of the Items that

led to the demise of FAA Order 1800.1 (previous procedures) was

Its Insistence upon a voluminous level of documentation for even

relatively small procurements. In this respect:

(a) Order 1810.1 applies strictly to major acquisitions only

and is intended to serve as a guideline, establishing a

logical framework for nonmajor acquisitions, (p. 1)

(b) Dollar thresholds in defining major acquisitions were

specifically avoided. Major acquisitions are selected on

a case-by-case basis after a review of impact upon the agency, 

public and the users; risk factors, dollar estimates, complexity, visibility and other critical issues. This allows

a more flexible application than would fixed dollar thresholds,

(p. 2)

Recommendation:

[p. 21, 85] XA.l(d) Planning procedures should provide for follow-up on

program results to confirm assumptions and cost estimates

employed by the planning organization.

Actions to Date:

. Following approval of the SRS and during subsequent system develop-

, ment and implementation, the System Requirements Group (SRG)

monitors, and is provided feedback, upon costs and benefits to

assure that the solution is meeting parameters. (p. 22)

. Dollar values measured during this feedback activity are used to

flag acquisitions which may be tending towards becoming cost

Ineffective. They can also be used to improve cost estimates on

future implementations.

4
Recommendation:

IA.2 Long range and ne ar term planning should be r e o rie n te d . In

p a rti c u l a r: ........... .

a . NAS fu n c tio n a l c a p a b iliti e s should be id e n tifie d and re fin e d

r a th e r than have the FAA prem aturely commit i ts e lf to

s p e c ific hardware programs.

Actio n s to D ate:

. Per Order 1810.1 major a c q u isitio n s cannot be undertaken u n til a

System Requirements Statement (SRS) is approved hy the A dm inistra tor,

(p. 3, 17)

. The SRS must s p e c ifi c a lly st a t e the m ission need in fu n c tio n a l

term s. (p. 21)

Recommendation:

lA .2(b) Planning should d e fin e the value o f needed c a p a b ilitie s in

a form s u ita b le fo r guiding subsequent c o st/b e n e fit analyses

p f competing f e a sib le s o lu tio n s. These c r it e r i a must aid

the e sta b lishm e n t o f p ri o r iti e s w ith in the e x istin g broad

c a te g o rie s o f s a f e ty , c a p a c ity , p ro d u c tio n , and so fo rth .

A ctions to D ate:

. Order 1810.1 In d ic a te s th a t requirem ents r e l a t e to f a c to rs such as

s a f e ty , c a p a c ity , and p ro d u c tiv ity , (p . 21)

P o te n tia l requirem ents can be in p u t to th e System Requirements

Group (SRG) by any FAA o ffic e /s e rv ic e /r e g io n or may come from

o u tsid e the Agency. (p. 13)
132

. Tor requirem ents deemed major, a study Is undertaken to d e lin e a t e

and attem pt to q u a n tify In d o lla r terms p o t e n tia l b e n e fits, (p . 20)

. A ll major requirem ents appearing to be c o st b e n e fi c ia l are “

summarized in an SRS. (p. 21)

. The SRS then forms a "pool o f requirem ents" upon which tjie

agency can a c t to a llo c a t e r e so u r c e s, (p. 8)

Recommendation:

Ip. 2 1 , 85] IA .2 (c ) Planning must id e n tif y the f e a sib l e a lt e r n a tiv e s fo r

s a tisf y in g fu n c tio n a l c a p a b ilit y n eed s.

A c tio n to D ate:

• The SRS and th e sup p ortin g study are s p e c ifi c a ll y requir ed to address

a l l f e a sib l e a lt e r n a tiv e s (in c lu d in g n o n c a p ita l and n o n te c h n ic a l). (p.2C

Recommendation:

[p . 21, 86] IA .2 (d ) Provide PAA management, a t ap propr iate tim e s, w ith r e a lis t i c

and com petent c o st/b e n e fit a n a ly s e s o f th o se programs

b e in g con sid ered fo r the commitment o f r e so u r c e s, thoroughly

documented fo r major programs and recorded in some u s e fu l

way fo r l e ss e r e ff o r ts.

A c tio n s t o D a te :

. The SRS a ssu r e s no major a c ti v it y is undertaken b e fo r e the requir ed

C/B stu d ie s are perform ed, (p . 20)

. Major r e so u r c e s cannot be committed b e fo r e th e SRS is approved

by the A dm inistrator , (p . 8 , 17)

6
133

The SRG c o n tin u a lly tra ck s the SRS to a ssu r e continued v a lid it y

o f the requirem ent and th a t the s o lu tio n is w ith in th e required

bounds, (p . 22)

For nonmajor e f f o r ts, the agency has been encouraged to u se -

Order 1810.1 and the SAM p ro c e ss as a gu id e . The Airway F a c ilit i e s

S e rv ic e is in the p ro c e ss o f u sin g t h is guidance to e st a b lis h an

in t e r n a l order fo r some o f it s nonmajor a c q u isitio n s, (p . i)

\

7
134

Keegan Report: Recommendations regarding Program Decision Process

. Mission needs not used as primary basis for selection of programs '

and development of budgets. _

. Recommendation:

[p. 24, 86] IIA.l Ensure that acquisition programs and budgets are developed- to

support mission needs. Even though annual budget proposals

should reflect politically realistic funding levels, the FAA’s

credibility with the Congress and their resulting support of

the FAA’s resource requests would be substantially enhanced by

a rigorous application of Planning — Programming — Budgeting

principles.

Actions to Date: .

. Budgetary procedures and methods being revised in accordance with most

recent OMB directives such as A-ll, A-109, etc.

. Major acquisition programs must have formal statement of requirements

and mission need approved by the Administrator prior to committment of

substantial funds (excluding some long range resources) in accordance

with SAM process, (p. 8, 17)

. Order 1800.13A, Planning and Resource Allocation (revised March 21,

1977) provides for an improved, systematic process of translating long

range plans and policies into current year budgets with a direct

correlation to the SAM process.

8
Recommendation

135

[p.26, 86] IIB.l Issue a new directive or completely revise FAA Order 1800.1 to

provide sound guidance to FAA managers involved in program decision

making. This document should be the roaster roadmap; it should be

dynamic; and certaintly, it must be enforced. ,

Action:

. Order 1800.1 was cancelled and replaced by 1810.1 in March 1977.

. 1810.1 addresses the entire life cycle starting at defining mission

requirements and ending at assuring the implementation has met those

requirements In a cost beneficial way.

. Programs are monitored by the SRG and problems brought to the attention

of management, (p, 22)

9
136

Keegan Report: Recommendations re g a rd in g Management o f Approved Programs -

. FAA program management c h a r a c te riz e d by la c k of c e n tr a liz e d a u th o rity

and v is i b i l i t y , la c k of p ro f e ssio n a l program managers and a sso c ia te d

program management s t a f f and no e sta b lis h e d standa rd to determine

when program Is complex enough fo r formal program management stru c tu r e .

• Recommendation .

[p . 35, 87] 1IIA.1 E sta b lis h a sin g le executive fo c a l p oint fo r developing and

m aintaining an FAA d ir e c tiv e governing the program management

fu n c tio n .

A ctions to D ate:

. 1810.1 re q u ire s the program manager be given a w ritte n c h a rte r

d e lin e a tin g sch ed u le s, g o a ls, a u th o rity , and a c c o u n ta b ility , (p. 2)

. Because o f the d iv e rs e n a tu re o f FAA a c t i v iti e s c h a rte rs w ill

have to be ta ilo r e d to each ta sk .

. The Agency (through th e seminar now being e sta b lis h e d ) is s o li c itin g

program managers Inputs on how th e se c h a rte rs should be developed

and what they should c o n ta in .

Recommendation

IIIA .2 The program management d ir e c tiv e should p re s c rib e the follow ing:

(a) Thresholds fo r id e n tify in g programs r e q u irin g form al p ro je c t

management. This should c o n c e n tra te on management comp le x ity more than simply the d o lla r value o f th e program,

b u t both c h a r a c t e risti c s should be co n sid e red .

A ctions to D ate:

. Order 1810.1 is s p e c ifi c a lly w ritte n in th a t way.

10
w

137

. M ajor sy stem s a r e d e fin e d a s th o s e " c r i t i c a l to f u l f i l l i n g agency

m issio n s, w hich e n t a i l th e a llo c a tio n o f r e l a ti v e l y la r g e r e s o u r c e s

and th o s e th a t w a rra n t s p e c i a l management a t t e n t i o n . " (p . 2)

. D o lla r lim its a r e p u rp o s e ly a v o id e d .

. Each program is e v a lu a te d on a c a s e -b y - c a s e b a sis.

Recomm e n d a tio n :

[87] IH A .2 ( h ) Program management d ir e c ti v e sh o u ld p r e s c rib e s u it a b ly

d e sig n e d p la n n in g d o cum en ta tio n f o r FAA R&D and a c q u isiti o n

p ro g ram s, and i d e n tif i c a ti o n o f when i t is r e q u ir e d . The

FAA sh o u ld a ttem p t to sta n d a r d iz e th e ty p e s o f p la n s and *

e n s u re th a t th e y meet a c c e p ta b le p la n n in g c r i t e r i a b e f o r e p e rm ittin g a program to p ro c e e d .

Act i o n :

. O rder 1810.1 sta n d a r d iz e s th e documents r e q u ir e d f o r m a jor a c q u isiti o n s.

. A ll d e c isio n documents undergo SRG re v iew . (A ppendix 2)

. Key docum ents must be approved by th e A d m in istr a to r. (A ppendix 2)

. M ajor b u d g e ta ry a c tio n s a r e n o t a llow ed u n t i l th e key docum ents have

been ap p ro v ed , (p . 8 , 17)

Recommenda t i o n :

IIIA .2 ( c ) Program management d ir e c ti v e sh o u ld p r e s c rib e th e o r g a n i z a tio n

and a u t h o rity r e l a ti o n s h i p s to be used in managing a pro g ram , (p . 35 ,8 7 )

A c tio n :

. A c c o u n t a b ility and r e s p o n s i b il it y o f th e program manager and th e SRG a r e

c l e a r l y in d i c a t e d in O rder 1 8 1 0 .1 . (p . 2 , 2 5 , 31, 37)

- The program manager is p ro v id e d a w ritt e n c h a rt e r w hich d e fin e s a u t h o rity

and a c c o u n t a b ilit y f o r th e p a r t i c u l a r program , (p . 2)

11
138

Recommends^ ion

IIIA .2 ( d ) Program management d ir e c ti v e sh o u ld p r e s c rib e e x e c u tiv e l e v e l

s u p e r v isio n o f s p e c ifi c ty p e s o f program manager d e c isio n s,

( e . g . , r e q u irem e n ts changes above a s p e c ifi e d t h r e s h o l d ), and

th e n a tu r e and c o n te n t o f program management rev iew s to be

co nduc ted by h ig h e r a u t h o rity . . . •

A c tio ns to D a te :

. The SRG u t i l i z e s a R equirem ents T ra c k in g System (RTS) in c o r p o r a tin g

p e rio d i c program rev iew s to a ss u r e th a t i t is inform ed o f program

d ev e lo pm en ts. (p . 22)

. Any item s w hich im pact th e approved re q u irem e n t (a s st a t e d in th e SRS)

must und ergo SRG re v iew , (p . 22)

. B e fo re tr a n si ti o n i n g to im p lem en ta tio n th e re q u irem e n t must be r e v a lid a t e d

(P. 32)

O b s e rv a tio n (Pro g r a m Management O rg a n lz a tio n )

. Rep o rt s t a t e s th a t agency sh o u ld p ro v id e f o r a program management

o r g a n i z a tio n w ith a d e q u a te and in d e p e n d e n t a u t h o rit y ; an d , e s t a b lis h

a management in fo rm a tio n sy stem to p ro v id e m anagers w ith v is i b i l i t y of

a c t i v i t i e s o f a l l program p a r t i c i p a n ts (Government and c o n tr a c t o r).

The program manager sh o u ld be a b l e to do som e th in g a b o u t w hat he o b s e rv e s.

T h is means he sh o u ld be a b le to t a s k a l l Government p a r t i c i p a n ts , r e ­

g a r d l e ss o f w here th e y a r e lo c a te d in th e FAA and he sh o u ld have th e

a u t h o rit y to make th e a p p r o p ri a te management d e c isio n s. Two a l t e r n a t i v e

a p p ro a c h e s w ere recommended.

12
Recommendation (A lte rn a t ive I ) ;

[p. 36, 88] IIlA .3 (a ) A c e n tr a liz e d a c q u isitio n management o rg a n iz a tio n fo r the FAA,

w ith both program managers and the ne ce ssa ry su p p o rtin g

fu n c tio n a l groups c o lle c te d under a sin g le e x e c u tiv e . "

Ac tio ns to D ate: •

. This approach ( e ss e n tia lly the "A cq u isitio n Executive" concept) was

e x te n siv e ly evalu ated during both the development o f the SAM concept

and the Implementing p o lic y d ir e c tiv e to I n stitu tio n a li z e the SAM

p ro c e ss. Based upon the follow ing c o n sid e ra tio n s, the A dm inistrator

concluded In February 1977 th a t th is was not an a cc e p ta b le a lt e r n a tiv e :

. The a c q u isitio n of hardw are/softw are systems by the agency Is

not a major m ission a re a . A c q u isitio n o f systems Is a c o ro lla ry ,

although h ig h ly Im portant, support a c tiv ity fo r accomplishment of

major m ission o b je c tiv e s. F u rth e r, the agency does not have

adequate re so u rc es a v a ila b le to e sta b lis h a s e p a ra te , dedic ated

o rg a n iz a tio n fo r system a c q u isitio n s Independent of fu n c tio n a l

a c t i v iti e s Of the agency responsive to major m issio n s.

. The complex in te r a c tio n o f hardw are/softw are systems w ith the

proc edura l r e g u la to ry , o p e r a tio n a l, la b o r r e l a tio n s, environm ental

and u s e r/p u b lic c o o rd in a tio n a sp e c ts o f FAA a c t i v iti e s mandates th a t

a c q u isitio n management be conducted as an In te g ra te d p o rtio n of the

e x ecution o f o v e r a ll fu n c tio n a l r e s p o n sib iliti e s. The e stab lishm en t

o f a m u lti- d is c ip lin a r y SRG o ffe re d s u b sta n tia l advantages over an

A c q u isitio n Executive.

. The p o rtio n o f t o t a l funds a v a ila b le to th e FAA which is dedic ated

to a c q u isitio n s is approxim ately 10 p e rc en t o f our annual budget
over $300 million F&E, R&D, etc,, of a $3 billion budget).

An organizational structure such as the type recommended in this

alternative is generally practical only for acquisition activities-*

such as DOD where acquisitions are in terms of billions of dollars.

Recommendation (Alternative II):

[p. 36, 88] IIIA.3(b) Alternatively, a matrix approach with existing organizations

now acquiring systems designating separate project management

groups dedicated to and trained for this function. They would

exercise their authority to task the supporting functional

groups through formal agreements.

Actions to Date:

. SAM process established the System Requirements Group, a high level

multidisciplinary group reporting to the Administrator (who

could be considered as a quasi-acquisition executive). Combines the

advantages of-a high level focal point for acquisition management

with the advantages of retaining the functional alignment of the

organization and drawing upon many disciplines.

. SAM process mandates a written charter specifying accountibility,

authority and responsibility of program manager (in accordance with

0MB A-109).

. Tasking of organization is in accordance with functional responsibilities

as defined in agency directives (Order 1100.2, FAA Organization).

. SAM process mandates a Requirements Tracking System operated by SRG to

provide necessary management information and visibility for major program

activities.
Recommendations

(p. 36, 88] IIIA.4 Provide program managers for major systems with certain technical

specialists having more specific reporting responsibility to them,

even if a matrix approach to contract management Is chosen. These

specialists should represent both the engineering and business

management skills. A financial management capability is

especially important. Contract management expertise, especially

in the quality assurance area, would also be very useful.

Actions to Date:

. Overall responsibilities specified in FAA organization SAM process

directives with more specific details included in program manager charter.

. Specific assignment of specialists is not consistent with integration

of acquisition activities and other agency functions, resources available to conduct agency buisiness or the magnitude of agency acquisition

activities compared to all other functional responsibilities.

Recommendation:

[p. 36, 88] IIIA.5 Develop professional program managers, with engineering and business

background as appropriate and trained for managing programs under

the FAA's business environment.

Action:

. Material on the operation and need for the SAM process has been

incorporated into our Lawton (MTS) course work. MTS school Includes

a special course devoted specifically to program management within the

agency.
. The possible use of longer term DOD courses has undergone preliminary

study and will be looked at In more depth In the near future.

. We are continuing to make use of available long term courses such “

as EPM, ICAF, the Air War College and our own ATSS program.

. Our Executive Development Program Is structured to broadening .the

experience of our roost qualified managers.

• We are planning to establish a seminar for professional, technical

program managers to relate the SAM procedures and theory with FAA

problems.

RecommendatIon:

Ip. 37, 88] IIIA.6 Institute perodic program status reviews of major programs for the

Administrator and key administration executives during which the

program manager briefs all aspects of his assigned program.

Action:

. The SRG receives periodic briefings and upon it falls most of the work

burden.

. Dnresolvable differences are elevated to the Administrator.

. Top executive time Is conserved as much as possible by having them

deal only with exceptions and problem areas. Routine reports above

the SRG level are minimized where possible.
KEEGAN REPORT: The FAA does not make optimum use of Its fi e ld r e p re ­

s e n ta tiv e s In m onitoring c o n tra c to r o p e ra tio n s, v a lid a tin g c o n tra c to r

progress re p o rts and v e rify in g conformance to c o n tra c t requirem ents.

Recommendations

1. Extend the Q.A. p o licy making and te c h n ic a l guidance a u th o rity

p. 89 o f the L o g istic s Se rv ic e to cover a l l Q u a lity Assurance a c t iv iti e s w ith in the FAA ( i . e , Including Regions and C en te rs).

The FAA should ensure th a t adequate p rocedures, competently

performed, a re uniform ly used In d e alin g w ith c o n tr a c to rs,

whether in manufacturing p la n ts, o r a t in st a ll a tio n s it e s.

Actions

1. FAA Order 4630.8, e n titl e d "Q uality Assurance P o licy" was issued

d a te d , October 27, 1977. I t in d ic a te s th a t i t is FAA policy

" th a t a Q u a lity Assurance Program s h a ll be provided fo r and

included in the documentation fo r the a c q u isitio n o f NAS system s,

equipment, and m a te ria l." The order fu rth e r assig n s to the

L o g istic s Service the r e s p o n sib ility to "form ulate and implement agency p o lic y , stan d a rd s and procedures fo r the q u a lity

assurance programs involved in the a c q u isitio n of NAS system s,

equipment, and m a te ria l."

2. To a ssu re "competent performance" of q u a lity assurance a c ti v iti e s , the In d u stria l D ividion of the L o g istic s Service Is providing th re e kinds of a ssista n c e as follow s:

a . Procedural c o n s u lta tio n fo r procurements in iti a t e d by the

regions and c e n te rs.

b. Technical a ssista n c e in the form of Q u a lity and R e lia b ility

O ffic e rs (QRO's) to aid Resident Engineers (RE's) and Techn ic a l O ffic e rs (TO's) In e v a lu a tin g the adequacy o f c o n tra c ­

to rs' o u t-o f-p la n t o p e ra tio n s, in c luding in st a ll a tio n s it e s.

Such a ssista n c e has been provided fo r s e v e ra l programs i . e .

PCS fo r RML, ARSR-3, ILS.

c . T ran sm itta l from the L o g istic s Se rv ic e to the acceptance

o rg a n iz a tio n , o f c o n tr a c to rs' c o n tra c tu a l q u a lity assurance

commitments fo r in st a ll a tio n sit e o p e ra tio n s as described in

the Q u a lity Control System Plan (QCSP). These a re obtained

in response to FAA-STD-016, e n titl e d "Q u a lity Control System

Requirem ents," and they provide the FAA o rg a n iz a tio n responsib le fo r in sp e c tio n and acceptance w ith a b a sis fo r ev alu a ­

tin g the adequacy o f c o n tr a c to rs’ q u a lity assurance o p e ra tio n s
Recommendations

2 . O r g a n iz a tio n a lly s e p a r a t e a c c e p ta n c e a u t h o rity f o r c o n tr a c to r

89 goods and s e r v i c e s from th e re q u irem e n ts o r g a n i z a tio n s to e n su re

t e c h n ic a l o b j e c ti v it y . The L o g isti c s S e r v i c e , o r w h a te v e r FAA

o r g a n i z a tio n is to e x e r c is e o v e r a ll a u t h o rity f o r the Q u a lity

A ssu ranc e f u n c tio n , sh o u ld p ro v id e tr a in e d f i e l d r e p r e s e n t a ti v e s

w h e rev e r c o n tr a c to r perform ance must be e v a lu a te d . A lt e r n a ti v e ly ,

th e FAA co u ld e s t a b lis h p r o f e ssio n a l Q u a lity A ssuranc e gro ups

w ith in th e Regions to o p e r a te u n d e r th e t e c h n ic a l p o li c y g u id a n c e

and sta n d a rd s o f th e h e a d q u a rte r ^ ' L o g isti c s S e r v ic e . The FAA

sh o u ld str o n g ly c o n sid e r th e use o f DOD C o n tr a c t A d m in istr a tio n

o r g a n i z a tio n s, w hich a lr e a d y have w e ll d ev e lo p ed t e c h n ic a l c a p ­

a b i l i t i e s and p ro c ed u re s f o r managing p l a n t a c t i v i t i e s , and

r e d ir e c t i ts own p e rs o n n e l to c o v e r i n s t a l l a t i o n and ch e ck o u t

o p e r a tio n s a t FAA f a c i l i t i e s .

A c tio n

1. P r e c a u tio n s a r e b e in g ta k en to a ss u r e s e p a r a tio n o f a c c e p ta n c e

a u t h o rity f o r c o n tr a c to r goods and s e r v i c e s from th e re q u irem e n ts

o r g a n i z a tio n s. S p e c if i c a l l y , in - p l a n t a c c e p ta n c e is a ssig n e d to

Q u a lity and R e l i a b i lit y O ffic e rs (QRO's) who r e p r e s e n t the L o g isti c s

S e r v i c e . A cceptance a t i n s t a l l a t i o n s i t e s is n o rm a lly a ssig n e d to

R e sid e n t E n g in e e rs (RE's) who a r e s p e c if i c a l l y d e le g a te d by th e

C o n tr a c tin g O ffi c e r in th e L o g isti c s S e r v i c e . The re have been some

p a st c o n tr a c ts in w hich th e te c h n i c a l o f f i c e r (TO) has been a ssig n e d

th e a u t h o rity to fo rm a lly a c c e p t th e f i r s t system o n ly , in o rd e r

to a ss u r e ad e q u a te e v a lu a tio n o f a l l t e c h n ic a l c o n sid e r a tio n s.

2 . As in d i c a t e d in A c tio n item s 2 . a . and b . above th e L o g isti c s

S e rv ic e has ta k en ste p s " to p ro v id e tr a in e d f i e l d r e p r e s e n t a ti v e s

w henever c o n tr a c to r p e rform an ce must be e v a lu a te d " and c o n c u rr e n tly

to a s s is t in e st a b lis h in g " Q u a lity A ssuranc e groups w ith in th e

Regions to o p e r a te u n der th e t e c h n ic a l p o lic y g u id a n c e and st a n ­

d a rd s o f th e h e a d q u a rte r's L o g isti c s S e r v i c e . "

3 . A rrangem ents have been made w ith th e D efense L o g isti c s Agency (DLA)

to u t i l i z e i t s in - p l a n t s e r v i c e s on 24 c o n tr a c ts to d a t e . I n

a d d itio n , i t is c u rr e n t p r a c ti c e to rev iew ea ch c o n tr a c t, p rio r

to a ssig nm e n t o f governm ent r e s p o n s i b il it y f o r in s p e c tio n and

a c c e p ta n c e , to d e te rm in e th e f e a s i b i l i t y and e ff e c tiv e n e ss o f

u sin g DLA s e r v i c e s. As in d i c a t e d ab o v e , r e sid e n t FAA r e s o u r c e s

a r e d ir e c t e d tow ards th o s e o p e r a tio n s f o r w hich DLA is n o t a

r e a s o n a b le a l t e r n a t i v e .
145

Recommendation

3 . P ro v id e fo rm a lly o rg a n iz e d f i e l d teanfs when r e p r e s e n t a ti o n

89 a t c o n tr a c to r work s i t e s is n e ed ed , and d e sig n a te a f o c a l

p o in t to c o o r d in a te and le a d the a c t i v i t i e s o f th e group

and s e rv e a s th e c h i e f Government r e p r e s e n t a ti v e to th e

c o n tr a c to r. D e le g a te a p p r o p ri a te c o n tr a c tin g o f f i c e r

a u t h o rity to the ACO when ne eded, and d e l e t e th e ACO

d e sig n a tio n when i t is n o t.

A c tio n

1. Fo rm a lly o rg a n iz e d f i e l d teams have been p r o v id e d , as

in d i c a t e d in A c tio n item 2 .b . above f o r Recommendation 1 .

An example o f su ch f i e l d team d e s c ri p tio n is p ro v id e d in

FAA O rder 6 0 1 2 .3 , e n t i t l e d " Im p lem en ta tio n o f Power Cond itio n in g System s in RM L's."

2 . The d e sig n a tio n o f ACO's has been r e - e v a lu a t e d to a ss u r e

the a p p r o p ri a te and e f f e c ti v e u se o f ACO's.

Recommendation

4 . R e o rie n t th e Q u a lity C o n tro l System C e r t if i c a ti o n Program

89 (FA O rder 4 453.1) tow ard r e s e r v in g th e r i g h t o f system

d is a p p r o v a l, r a t h e r th a n th e p r e s e n t c o n c e p t o f ap p ro v in g

th e c o n tr a c t o r 's system and th e re b y tr a n sf e rri n g some measure

o f r e s p o n si b il it y f o r i t s pe rfo rm an c e to th e FAA.

A c tio n

1. The sta n d a rd " I n s p e c tio n , A cceptance and Q u a lity A ssu ran c e "

c la u s e used in c o n tr a c ts w hich implement th e Q u a lity C o n tro l

System C e r t if i c a ti o n Program was r e v is e d in November, 1975

to comply w ith th e above recom m enda tion. I t now s t a t e s t h a t,

"The Government r e s e r v e s th e r i g h t o f d is a p p r o v a l o v e r a l l

i n t e r n a l o p e r a tin g c o n tr o ls and p ro c e d u re s used by th e Contr a c t o r to implem ent th e re q u irem e n ts o f FAA-STD-016 and

th e QCSP when su ch c o n tr o ls o r p ro c e d u re s do n o t a c h ie v e th e

o b j e c tiv e s o f th e q u a l it y c o n tr o l system d e s c rib e d t h e r e i n . "

19
Keegan R eport: Recommendations regarding F in a n c ia l Management -

. Report r e co g n iz e s th e r e are in c o n sist e n c ie s In budget c o n t r o ls over

p a r tic ip a n ts in the a c q u isitio n s p r o c e ss. P a r tic u la r a tt e n tio n to

E 4 D r e so u r c e s.

• Recommendat lons^

1 II.C .1 1. FAA should iss u e d ir e c tiv e on d e le g a tio n o f a u th o r ity to

[p . 90]

reprogram funds which:

(a) Provide c o n sist e n t and uniform p o lic y regarding management

o f E & D and F & E funded programs.

A c tion s t o Da t e :

. Order 1 8 0 0 .13A, Planning and R esources A llo c a tio n , r e v is e d ,

r e issu e d March 2 1 , 1977. This p o lic y order str en g th en s the t i e

between r e sou r c e s management and a c q u isitio n management. The

p o lic y b r in g s in to fo cus the in t e r r e la tio n s h ip between the lon ge r

range requirem ent planning p ro c e ss and the a c tu a l program management and a c q u isitio n .

. SAM p ro c e ss - Order 1 81 0.1 — issu e d March 21, 1977, as a

d ir e c t r e s u lt o f Keegan Study, A -109, e t c . P r in c ip a l P o lic y

fe a tu r e s r e la tin g to r e so u r c e s planning and c o n tr a c t.

. R e la te s the t o t a l a c q u isitio n c y c le to r e so u r c e s planning and

a llo c a tio n a t a l l st a g e s.

. R equires c l e a r id e n tifi c a tio n o f e stim a t e s r e so u r c e s b e fo r e

the requirem ent is approved.

. R equires t o t a l program p lanning in c lu d in g E & D or F 4 E is

au thor ized to proceed.
147

' . Requires the A dm in istra to r’s approval a t the I n i t i a l requirem ent

Id e n tific a tio n stag e (p rio r to expenditure of funds; except some

long range re so u rc e s) a s w ell as p e rio d ic reviews and approval

by him as program p ro g re sse s. m

. Focus on c o st b e n e fit a t I n i t i a l program sta g e .

. Requires c o n sid e ra tio n of l if e cycle c o sts as opposed to simply

a c q u isitio n c o sts in a c q u isitio n s.

. E sta b lis h SRG - Systems Requirements Group. This group,

c o n sistin g of high le v e l re p r e s e n ta tiv e s of ATF, AED, AFS, APD

and AAD manage and monitor the e n tir e SAM process from id e n tific a tio n of requirem ent and resource needs through implementation

and commissioning. Resources planned, committed and o b lig a te d

w ill be monitored by SRG. V a ria tio n s w ith approved requirem ent

statem ent w ill be re p o rte d to top management fo r a c tio n .

. Order 2500.3C, 8/2 6 /7 6 , e sta b lis h e d p o lic y and g u id e lin e s

d e le g a tin g a u th o rity fo r F & E fis c a l management inc lu d in g

reprogramming a c tio n s.

I I I .C .( l) (b) Provide c e n tr a l v is i b i l i t y w ith p o ssib le d ir e c t c o n tro l

[p. 90)

over reprogramming a c tio n s.

A ctions to D ate:

. The SRG w ill e x e r c is e degree o f c o n tro l over fis c a l management

fo r approved major a c q u isitio n s. This w ill Include R&D and F&E.

. Order 2500.3C focus on F&E reprogramming p o lic y .

. Reprogramming of R&D programs is c u rr e n tly accomplished

p rim a rily by A sso c ia te A dm inistra tor fo r Engineering and

Development w ith p o lic y guidance and broad d e c isio n s by

21
148

the Agency Review Board, S p e c ific reprogramming c r it e r ia

- '■■■■■ c u r r e n tly b e in g d ra fted fo r issu a n c e , - ■

III.C . (2 ) 2 . FAA should re-exam ine i t s fin a n c ia l management p o li c i e s

[p . 90]

p a r tic u la r ly w ith regard to f u ll- f u nding co n c ep t. Improve the

fin a n c ia l st a b i lit y o f a c q u isitio n programs.

A c tion s t o D ate:

. The theory o f fu ll-fu n d in g , which tends to r e s u lt in la r g e

ca r ryo vers o f funds from one f is c a l year to another has major

advantages fo r program accom plishm ent. With y e a r -to -y e a r

ap p r o p r ia tio n s, major problems r e s u lt in p a r tia l funding w ith

the r isk o f not bein g a b le to com plete th e program in fu tur e

y e a r s. The fu ll-fu n d in g c o n c ep t, however, is under study and

c o n tin u a lly b e in g review ed to a ss e ss i t s s u it a b i lit y a s b a sic

f is c a l p o lic y by FAA.

. The SAM Process fo cu s e s management a tt e n tio n on f is c a l co n sid e ra ­

tio n , e a r ly in the a c q u isitio n c y c le as recommended. It a ls o

p ro v id e s a means o f continuous m onitoring throughout the l i f e

o f the program to b e tt e r ensure f is c a l in t e g r it y and u ltim a te

b e n e fits c o n sist e n t w ith the c o sts.

22
149

Keegan Rep o rt; Recommendation r e g a r d in g A c q u isitio n Management I n d i c a to rs

. The Management In fo rm a tio n M anual c o n t a in s a lm o st no "management

I n d i c a to rs " d e a lin g s p e c if i c a l l y w ith, th e a c q u isiti o n p r o c e ss. - ..

. Recom m endation;

[p . 46, 90] I I I . D . l Tha t FAA i n s t i t u t e a program f o r c o n d u c tin g r e c u rri n g

management rev iew s o f th e FAA f u n c tio n a l o r g a n i z a ti o n s.

A c ti ons to P a t e :

. A s p e c if i c page t i t l e d "System A c q u isitio n M anagement" h a s been

added to th e Management I n f o rm a tio n Manual c o v e rin g th e i n i t i a l

im p lem e n ta tio n o f th e improved a c q u isiti o n p r o c e ss.

. An ex p a n sio n o f th e e x isti n g m a t e ri a l in th e Management In fo rm a tio n

Manual w ill be c o n sid e re d when th e a c q u isiti o n management p ro c e ss

is f u ll y im plem ented in March 1978.

23
150

Keegan Report: Recommendation regarding procurement management reporting.

Some important management indicators are not being collected and

reported to either middle or top management.

. Some key items of interest to AIC-300 management are currently being

collected and followed in a somewhat disjointed manner.

. Pending procurement of an automated tracking system would involve a

substantial commitment of FAA money and personnel resources if

undertaken.

. Recommendations:

1. Contracts Division should review its operations to determine which

P- 91 additional management indicators would help direct attention to

procurement management problems.

Action to date:

. A periodic report for the Administrator was instituted in October 1976.

This report provides data on a number of procurement matters,

including claims, protests, award lead time, and the 8(a) program.

. A monthly aging report on unsolicited proposals was also instituted

in August 1977.

. A summary delinquency report for equipment contracts is now furnished

monthly to ALG-1.

2 . At conclusion of design study phase, and prior to hardware procurement,

P* 91 ALG should review PITS to insure cost beneficial results can be expected.

Action to date:

The PITS design study report is due from the contractor in

January 1978. Upon its receipt, and prior to hardware procurement,

a review will be made of the cost beneficial results which can be

expected.

24
151

Keegan Report: Recommendations reg a rd in g Use o f Long-Term Contracts

w ith in the FAA

. FAA's continued use o f development and production c o n tra c ts w ith

extended m u lti-y e a r p ric e d q u a n titie s fo r production may cause

sig n ific a n t d iff i c u lti e s in the years ahead.

. Recommendations:

1. FAA should re a ss e ss i ts p r a c tic e s w ith re sp e c t to c o n tra c ts

p . 91 c a llin g fo r d e liv e rie s over many y e a rs, th e use o f long-term

fix e d p ric e production o p tio n s, and f a ilu r e to use the contr a c tin g techniques a v a ila b le to o ffs e t th e e ff e c ts o f una n tic ip a te d in fl a tio n .

2. FAA should adopt a stro n g p o lic y a g a in st the use o f extended

p . 92 c o n tra c ts p e rio d s in a l l b u t the most e x c e p tio n a l c a se s. The

use of economic p ric e adjustm ent p ro v isio n s can reduce the

ris k s o f in fl a tio n a ry c o n d itio n , b u t even th is technique cannot be expected to be very a c c u ra te fo r c o n tra c t performance

extended over a pe rio d o f fiv e years or more.

A ctions to d a te (c o n sid e r both Recos 1 and 2 ):

. The r e v isio n o f FAA Order 4400.41A on Advance Procurement Planning

o f 21 December 1976 e sta b lis h e d p o lic y and procedures to accommod a te the se recommendations o f the Report. The Order provides

th a t such plans be coord in a ted w ith a p p ro p ria te o ffic e s or s e rv ic e s

involved in the procurement to a ssu re th a t a ll aspe c ts o f the p ro ­

curement a re p ro p e rly r e la te d and in c lu d e , where a p p lic a b le , s p e c ia l

c la u s e s, e . g . , an economic p ric e a d justm ent, needed in the c o n tra c t

or p e c u lia r to the procurement. Under the procedures o f Order 4400.41A

we are striv in g to lim it the terms o f c o n tra c ts to s h o rte r p e rio d s of

perform ance, thus in most c a s e s, o b v ia tin g the need fo r use o f an

economic p ric e adjustm ent c la u s e . I f the FAA does have a r e q u ir e ­

ment th a t would re q u ire extended c o n tra c tin g , an EPA c lause can be

developed fo r the s p e c ific procurement under procedures o f Order

4400.41A.

3. Program d e c isio n p o in ts should be focused on the two recommendations

p . 92 given above w ith the aim o f en fo rc in g the FAA p o lic y .

A ction to d a te :

The c o o rd in a tio n and review procedures e sta b lis h e d in FAA Order

4400.41A, Advance Procurement P lanning, December 21, 1976, provide

th e mechanism to c o n tro l the use of long-term c o n tr a c ts. FAA Order

1810.1 (System A c q u isitio n Management) o f March 21, 1977, e sta b lis h e d

procedure fo r h ig h -le v e l o v e rsig h t and c o n tro l in the form ulation

25
152

2

sta g e o f m a jo r system re q u ir em e n ts. The O rd e r r e q u ir e s th e

a p p ro v a l o f th e A d m in istr a to r o f "m ile sto n e and d e c isio n

p o in t s c h e d u le s p ri o r to th e i n i t i a t i o n o f any a c q u isiti o n

a c tio n f o r a m a jor sy stem ." Such rev iew w ill a c t to e n fo r c e th e

recommended p o li c y .

4 . The FAA sh o u ld im m ed ia te ly rev iew and a d o p t, as p r a c t i c a l , th e

P. 92 u s e o f Economic P ric e A djustm ent (EPA) ap p ro a c h e s s im i l a r ’ to

th o s e used by o th e r a g e n c ie s o f th e E x e c u tiv e Branch f o r th o s e

FAA program s w hich s t i l l r e q u ir e ex ten d ed y e a r c o n tr a c ts. Some

o ri e n t a ti o n w ill be r e q u ir e d f o r p e rs o n n e l in v o lv e d and f u l l ad ­

v a n ta g e must a ls o b e ta k e n o f th e " l e ss o n s le a r n e d " from o th e r

a g e n c ie s u sin g th e s e te c h n iq u e s.

A c tio n to d a t e :

We b e li e v e th a t th e b e st p r a c ti c e f o r FAA is to lim it th e maximum

d u r a tio n o f o u r c o n tr a c ts to a 3 -4 y e a r p e rio d . I f th e FAA does

have a r e q u irem e n t th a t w ould r e q u ir e e x ten d ed c o n tr a c ti n g , an EPA

c l a u s e f o r th e s p e c ifi c c a s e can be p re p a re d by p ro cu rem en t p e rs o n n e l

who have e x p e rie n c e in th e deve lopm ent and a p p li c a tio n o f such

c l a u s e s. An example o f th e u sag e o f su ch an EPA c l a u s e is th e

W e sting house C o n tr a c t f o r th e ARSR-3.

26
Keegan Report: Recommendation regarding contract delinquency rate and

reporting procedures.

. Review disclosed that a significant number of contracts are delinquent.

Until recent months, reporting and corrective action on these 

delinquent contracts had not been organized.

. Recommendations:

1. Contracts Division should develop a good system for collecting contract

p. 92 delinquency information for active contracts.

Action to date:

. A system was instituted in July 1977 where the contract specialist

furnishes, on a monthly basis, a report on all contracts which are 

more than 30 days' delinquent. The report indicates extent of

delinquency, reasons for delay, and what action is being taken to

cure the delinquency.

2. That contract delinquency data be made visible to responsible FAA

p. 92 management to emphasize need to control contract delinquencies.

Action to date:

. A summary delinquency report for equipment contracts is now furnished

monthly to the Director, ALG.

. Delinquent contracts are also discussed at the monthly workload meeting

3. Potential of DOT Contract Information System (CIS) be explored to

p. 92 determine how its data base can be used to anticipate and manage

contract delinquency and close-out Issues.

Action to date:

The CIS data base was explored with DOT in April 1977 and found 

to be impracticable in anticipating and managing contract delinquency

and close-out issues. However, the delinquency reporting system

described above is responsive to the intent of the recommendation, and

contract close-out receives management attention on a continuing basis.
154

Keegan R e p o rt: Recommendation r e g a rd in g p ro p e r use o f c o n tr a c t ty p e s.

. FAA e f f e c ti v e l y e lim in a te s a l l c o n tr a c t typ e c h o ic e s betw een

th e ex trem e s o f Co st P lu s F ixed Fee (CPFF) and Firm F ix ed P ric e

(FFP).

. Recommendation:

p . 93

FAA sh o u ld Im m edia tely u n d e rta k e a rev iew o f t h e ir u se o f c o n tr a c t

ty p e s. T h is e f f o r t sho u ld d e te rm in e how th e n e c e ss a ry tr a in in g

and r e o ri e n t a tio n (in c lu d in g th e rem oval o f any u n w ritte n

a d m in istr a tiv e c o n tr o ls) can be a c com plished a t a l l l e v e ls w ith in

FAA to r e s u l t in p ro p e r s e l e c ti o n o f c o n tr a c t ty p e . One o f the

o b j e c tiv e s sho u ld be to a s s is t t e c h n ic a l and p ro cu rem en t p e rs o n n e l

in id e n tif y i n g th o s e sit u a ti o n s where fix e d p ri c e c o n tr a c ts a re

in a p p r o p ria te f o r th e t e c h n ic a l r is k s in v o lv e d and co u ld c a u se

e x c e ssiv e c o sts i f u sed .

A c tio n to d a t e :

A rev iew o f c o n tr a c t ty p e s used h a s been made as recommended.

As a r e s u l t th e r e c u rr e n tly h a s been an in c r e a s e in th e use

o f in c e n tiv e type c o n tr a c ts.

S in c e A ugust 1976, c o n tr a c tin g p e rs o n n e l have been a ssig n e d to

tr a i n i n g c o u rs e s in r e c e n t y e a rs b o th a t th e FAA Academy and

in th e W ashington a r e a . I n a d d itio n , many c o n tr a c tin g p eo p le

have come from o th e r a g e n c ie s, e s p e c i a ll y a g e n c ie s w ith in DOD

and have r e c e iv e d e x te n siv e c o n tr a c ts tr a in in g and e x p e rie n c e

th e r e . T e c h n ic a l p e rs o n n e l in FAA have been a ssig n e d on a

r e g u l a r b a sis to a pro cu rem en t o ri e n t a ti o n c o u rs e , w hich ha s

s e n siti z e d them to th e iss u e o f c o n tr a c t ty p e s.

F o rty -tw o o f th e si x t y -s i x p e rso n p r o f e ssio n a l s t a f f have

a tte n d e d c o u rs e s w hich co v e r I n c e n tiv e C o n tr a c tin g and many

o f th e s e p eo p le have a tte n d e d more than one c o u rs e on th e

s u b j e c t.

28
155

Keegan R e p o rt: Recommendation re g a rd in g Pre-Award Survey (PAS) p ro c e d u re s.

. G u id e lin e s do n o t s p e c if y when th e P ro c u rin g C o n tr a c tin g O ffic e r (PCO)

sh o u ld r e q u e st an o n -sit e PAS.

. S u p p o rtin g r a tio n a l e on d e s k -ty p e su rv e y s made a t PCO l e v e l is o ft e n

p o o rly docum ented.

. No a p p a re n t u se is made o f PAS r e s o u r c e s w hich can be made a v a il a b l e

by o th e r Government a g e n c ie s.

Recommendations:

1 . Th a t g u id e lin e s be dev e lo p ed j o i n t l y by ALG-300 and ALG-400 to

p . 93 s p e c if y w hich ty p e s o f pro cu rem en ts sh o u ld use o n -sit e (Type A) su rv ey s

A c tio n to d a t e :

. A C o n tr a c ts D iv isio n I n str u c tio n was iss u e d in A p ril 1977 to p ro v id e

g u id e lin e s on when o n -sit e pre -aw a rd su rv ey s sh o u ld be made. These

g u id e lin e s g e n e r a lly s t a t e an o n -sit e p re -aw a rd w ill be made when

de sk ty p e d a ta o r p e rs o n a l knowledge d a ta do n o t s a t isf y th e r e q u ir e ­

m ents o f th e FPR.

2 . C o n tr a c t D iv isio n sh o u ld em phasize th e need f o r improvement o f su p p o rt

p . 93 d o cum en ta tio n f o r (Type B) Pre-Award S u rv ey s.

A c tio n to d a t e :

. The abo v e -m en tio n ed I n str u c tio n r e q u ir e s th e c o n tr a c t s p e c i a list to

s t a t e in w riti n g what s o u rc e s were u sed in a ss u rin g th e adequacy of

th e (Type B) su rv e y .

3 . FAA c o n t a c t a p p r o p ri a te o f f i c i a ls and i n i t i a t e a t e s t u sin g DOD

p . 93 Pre-Award Survey r e s o u r c e s a s sup plem ent to th e e x istin g FAA p r a c ti c e s.

A c tio n to d a t e :

A m e e tin g was h e ld in June 1977 a t D efense L o g isti c s Agency (D1A)

h e a d q u a rte rs to d is c u ss a c c e p t a b ili t y o f p ro c e d u r e s. DLA is now

p e rfo rm in g a p re -aw a rd su rv e y f o r FAA. I t sh o u ld p ro v id e a v a lid

t e s t o f DLA re sp o n s e tim e .

29
Keegan R e p o rt; Recommendation r e g a rd in g Im pa ct o f Budget and Requirem ent

I n s t a b i l i t i e s on P ro cu rem en t,

. R ep o rt n o te s e x c e ssiv e I n s t a b i l i t y In th e w orkload in C o n tr a c ts

D iv isio n due to u n d e rfu n d in g o f p rocurem ent r e q u e sts, chan ge s In

t e c h n i c a l re q u irem e n ts and program c a n c e ll a ti o n when re q u irem e n ts

found I n v a lid .

• Recommendation:

[p . 6 1 , 94] I I I . J . l Top management review t h is a r e a to d e te rm in e w here

re q u irem e n ts v a li d a ti o n , program e stim a tin g a n d /o r b u d g e tin g

str a t e g y . Should rev iew ln -h o u s e c o st e stim a tin g c a p a b ility

w ith view to im prove.

A c tio n s to D a te :

. Improvement o f th e p ro c e ss fo r v a li d a ti o n and m o n ito rin g o f

system re q u irem e n ts was e st a b lis h e d by O rd e r 1 8 1 0 .1 , System

A c q u isitio n Management. (C h a p te r 4)

. Improved I n t e g r a tio n o f p la n n in g and b u d g e tin g p ro c e d u re s w ith

a c q u isiti o n management was i n s t i t u t i o n a l i z e d by O rder 1 8 0 0 .13A,

P la n n in g and R esou rce A llo c a tio n .

. The A irw ays F a c i l i t i e s S e rv ic e h a s e st a b lis h e d im proved sta n d a r d

I n t e r n a l p ro c e d u re s in two r e c e n t p o li c y d ir e c ti v e s, AF O rder

6 0 1 1 .4 , F6E Cost E stim a tin g P ro c e d u re s and Summaries Handbook

(S e p t. 1976) and AF O rder 6 0 1 1 .2 , Airway F a c i l i t i e s S e rv ic e F&E

F u tu re Program Development P ro c e d u re s (J u ly 19 7 7 ).
157

7

Keegan Report: Recommendations regarding status of DOT Procurement

Policy Guidance

. Many Department of Transportation (DOT) procurement policies and

procedures are so out of date that they cause considerable "work

around" and confusion within the FAA.

. Recommendations:

1. The FAA should request OST to expedite the review, coordination,

p. 94 approval and distribution of the DOTPR revision which is now

in process. Because the DOTPR changes mainly deal with

catch-up matters, the FAA should pursue. A comprehensive

revision of the DOTPR with the DOTPR Committee. New areas for

improved and innovative procurement policies and techniques

should be investigated. The effort should include a review

of past weaknesses in DOT procurement actions (from review

records, interviews, etc.) and a survey of techniques now

employed by other agencies, such as Design-to-Cost, "muder

boards," etc.

Action to date:

. Specific recommendations for survey of techniques used in other

agencies have been presented via FAA representative on the DOTPR

Committee.

. DOTPR update was in Federal Register on September 8, 1977. Update

in printing and expected to be distributed in November/December 1977.

\ x

31

27-075 0 - 78 - 11
158

8

2. The FAA should review other DOT procurement guidance

p. 94 documents, including the boilerplate forms, and recommend

appropriate revisions, if necessary.

Action to date:

There is a continuing, ongoing effort by both the DOT and the FAA in

this area:

. The following FAA boilerplates have been developed, issued, and are

being maintained current:

FAA P.l Fixed Price Construction Contracts greater than $10,000;

FAA P.2 Fixed Price Construction Contracts between $2,000 and $10,000;

FAA P.7 Fixed Price Supply Contracts;

FAA P.8 Utility Contracts;

FAA P.9 Architect and Engineering Contracts;

FAA P.10 Services Contracts;

The DOT has furnished copies of these boilerplate

. Amendments have been made to the following Standard Forms (SF) by the FAA.

SF 19A Labor Standards Provisions;

SF 19B Representations and Certifications;

SF 22 Instructions to Bidders;

SF 33 Representations and Certifications;

SF 33A Solicitations: Instructions and Conditions.

. Procurement guidance documents will continue to be revised and issued

as necessary.

32
159

Keegan R e p o rt: Recommendation r e g a r d in g th e s t a t u s o f FAA P rocurem en t

P o lic y G uid an c e.

. The FAA h a s a llow ed i t s p r o s p e c tiv e pro cu rem en t p o li c i e s to

become o u t- o f- d a t e . Com prehensive, u n ifo rm p o li c i e s and p ro c e d u re s

would h e lp p ro cu rem en t p e rs o n n e l to make prom p t, w e ll-in fo rm e d

d e c isio n s and im prove th e q u a lity o f FAA p ro cu rem en t.

Recommendations:

1. FAA sh o u ld fo llo w up and em phasize th e FAPR u p d a te . The key

p . 95 p e rs o n , who h a s been r e s p o n sib le f o r th e FAPR f o r many y e a rs

w ill r e t i r e so o n . New em ployees a r e b e in g tr a in e d ; a m a jo r

FAPR u p d a te would p ro v id e tr a in in g u n d e r th e l e a d e rs h ip o f

th e r e t ir i n g e x p e rt.

A c tio n to d a t e :

. Key re p la c em e n t in d iv id u a l h a s been tr a in e d .

. FAPR Change 4 - A m a jor change was p rin t e d and d istri b u t e d

in A ugust 1977. Change 5 was sig n e d O c to b e r 14 , 1977, and

is c u rr e n tly b e in g d istr i b u t e d .

2 . As p a r t o f th e FAPR u p d a te , FAA sh o u ld p ro c e e d w ith th e

P- 95 in t e g r a ti o n in to th e FAPR o f a l l FAA o r d e rs w hich d e a l w ith

p ro cu rem en t p o li c y m a tt e rs.

A c tio n to d a t e :

. The p a rts o f e x istin g o r d e rs w hich r e l a t e to p ro cu rem en t

c o n c e rn s a r e b e in g in t e g r a t e d in t o th e FAPR. F u rth e rm o re ,

a l l p ro cu rem en t o r d e rs a r e f i l e d in one s e c tio n o f th e

FAPR. F or th a t r e a s o n , a low er p r i o r i t y h a s been a ssig n e d

to th e im p lem en ta tio n o f t h is recom m endation.

3. The s u g g e ste d c o n s o lid a tio n o f p ro cu rem en t o r d e rs in t o th e

FAPR sh o u ld a ls o in c lu d e a l l o r d e rs iss u e d 'b y o th e r FAA

o ffi c e s w hich d ir e c tl y d e a l w ith p ro cu rem en t p o li c y iss u e s.

I f th e q u e stio n o f r e t a in i n g p rim a ry r e s p o n si b il it y

becomes c r i t i c a l , th o s e o r g a n i z a tio n s o u tsid e th e L o g istic s

S e rv ic e co u ld keep t h e ir a u t h o rity , b u t p r e p a r e th e g u id an c e

in th e form o f FAPR p r o v isio n s.

A c tio n to d a t e :

. The agency does n o t a c c e p t t h is recom m enda tion. The FAPR

is th e d e f i n iti v e FAA p ro cu rem en t a u t h o rity and g u id a n c e

document and sh o u ld n o t in c lu d e o r d e rs w hich a r e a t b e st

p e rip h e r a l to p ro cu rem en t.

33
160

Keegan Report: Recommendations regarding DOT Operations Overview.

. Department of Transportation's operations overview of relatively

low value procurement actions severely Impacts FAA procurement

activities. It Is questionable that this overview has provided

a substantive positive effect on the quality of FAA procurement.

. Recommend ations:

1. The FAA should continue to follow-up earlier attempts to

p. 95 persuade OST (I&L) to grant across-the-board adjustments of

the dollar thresholds for overview from source selection

activities for some major programs should also be examined

with DOT.

Action to Date:

. Follow-up has been made of earlier requests to persuade OST

(I&L) to grant across-the-board adjustments of the dollar

thresholds for overview in the operations area. A letter

was sent May 9, 1977, from AAD-1 to TAD-1, requesting that 

FAA, be allowed to review and approve all contracts above

$100,000, without further review and approval by the

Department.

. The agency in each Selection Plan submitted to the Department,

requests that Source Selection Authority be delegated to the

FAA Administrator.

2. The FAA should review and adjust, as necessary, all FAA

p. 96 controlled orders, regulations and practices which implement

OST (I&L) direction, so that the FAA requirements do not

create more stringent review than required by DOT unless

justified on the basis of sound business judgment.

Action to Date:

. The pertinent FAA and DOT orders have been reviewed. In the one 

case, where FAA procedures commenced under the minimum mandated

by DOT; FAA revised its Source Selection Order to delete that

requirement.

3. The FAA should participate with OST (I&L) and the other modal

administrations, in the recent task force on revising Contract

Review Board procedures, in developing new approaches to

operations overview by OST (I&L). The purpose be to provide

more effective visibility for the Department and establish

credibility for FAA's procurement system. If the differences

of approach and opinion can be minimized, an improving relationship between the two groups should eventually result in increasing

levels of overview responsibility being returned to FAA.

34
161

A ction to Date:

. L e tte r se n t May 9, 1977, from AAD-1 to TAD-1, which submitted

FAA recommendations on DOT's proposed implementation of d r a ft

DOT Order 4200. , on Review o f Proposed Contract Awards.

V erbal follow-up made. No DOT response to d a te .

. FAA has p a rtic ip a te d , in calendar year 1977, in a Task Group

e ff o rt in d r a ftin g the proposed implementation of 0MB C irc u la r

A-109 r e l a tiv e to Major Systems A cq u isitio n .

. The Department has re c e n tly requested the nomination of FAA

personnel to serve on a Task Group to re v is e and update DOT

Order 4200.9 regarding the T ran sp o rta tio n Systems A c q u isitio n

Review Council. The group has not y e t convened.

35
162

Keegan R e p o rt; Recommendation r e g a rd in g u se o f DOT C o n tr a c t

In fo rm a tio n System (CIS)

. C o n sid e ra b le FAA e f f o r t Is r e q u ir e d to p u t d a t a in t o th e

CIS, b u t FAA m anagers make l i t t l e d ir e c t u se o f th e CIS.

A lso , e ff e c ti v e u se o f th e CIS may be im p a ire d b e c a u se th e

system needs im provement.

. Recommendations:

1 . The FAA sh o u ld fo rm a liz e c o n tr o l o f a l l s p e c i a l r e q u e sts

p . 96 f o r " st a t u s " in fo rm a tio n on p ro cu rem en t management m a tte rs

a t some f o c a l p o in t w ith in ALG-300 o r ALG-100. R eq u e sts

sh o u ld be examined by th e f o c a l p o in t to in s u r e th e CIS

system c a n 't p ro v id e i t b e f o r e any manual s e a r c h is

u n d e rta k e n .

A c tio n to d a t e :

. L e tt e r s e n t on December 20, 1976, from ALG-1 to Heads o f

O ffic e s and S e r v ic e s, w hich a d v ise d them o f th e a v a i l a b i l i t y

o f DOT'S C o n tr a c t In fo rm a tio n System f o r p r o v id in g u p -to - d a t e

c o n tr a c t in fo rm a tio n and th a t ALG-300 is th e f o c a l p o in t o f

th e CIS to fin d o u t w h e th e r th e CIS c o n t a in s th e r e q u ir e d

d a t a .

2 . The FAA sh o u ld work w ith DOT to u p d a te th e CIS d a t a b a se

p . 96 a s n e c e ss a r y .

A c tio n to d a t e :

. FAA is c o n tin u in g to work w ith DOT to u p d a te th e CIS d a ta

b a se and more em phasis h a s now been p la c e d on th e need to

keep th e d a t a a s c u rr e n t a s p o ssi b l e .

3. The FAA sh o u ld r e q u e st OST (I&L) to b r i e f FAA p ro cu rem en t

p . 97 m anagers in some k in d o f an ex ten d ed workshop fo rm a t on th e

p o t e n ti a l CIS o ff e rs f o r in t e r n a l management c o n tr o l. The

workshop sh o u ld a llo w f o r fe ed b a ck from th e p ro cu rem en t

m anagers on how th e CIS co u ld be im proved.

A c tio n to d a t e :

. At th e 1976 and 1977 Procurem ent C o n fe re n c e s, OST b ri e f e d

c o n fe re n c e a tte n d e e s (r e g io n a l and h e a d q u a rte rs p ro cu rem en t

m an agers) on th e CIS and th e p o t e n ti a l i f o f f e rs f o r i n t e r n a l

management c o n tr o l.

. The w orkshop fo rm a t allow ed fe ed b a ck from th e p ro cu rem en t

m anagers in th e CIS.

36
163

The agency Is currently using the CIS to satisfy more of Its

Internal management control Information needs. It Is also used

to satisfy special requests from outside sources for numerical

and dollar value of contracts awarded. It Is also used to aid

evaluation teams in identifying and analyzing work loads, and

areas to be reviewed in detail during field evaluations.

37
164

Keegan Report: Recommendation regarding PAA Handbook 1100.2.

Report points out Chapter 46 (Logistics Service) of

organizational handbook contains out of date material

and document is Incorrect in key areas of delegation .

of procurement approval authority and relationships

with other PAA groups.

. Recommendation:

P. 97

Handbook 1100.2 should be revised and improper and

conflicting delegations of procurement authority not

in consonance with FAA Order 4405.IB should be removed.

Action to Date:

Change 165 to Chapter 46 issued September 22, 1976

revises limitations on delegated authority for

contracting to conform to Order 4405.IB.

Effort underway prior to Keegan Study to update other

material in Chapter 46 completed by issuance of

various minor changes.

38
165

Keegan R ep o rt: Recommendation rega rding Procurement Trainee Program.

. Report advocates small group o f procurement tra in e e s be re c ru ite d

In view of FAA procurement work fo rce averaging 45 y e ars o f age.

Recommendation:

. FAA p la c e top management emphasis on implementing procurement

p. 97 re c ru itm e n t and tra in e e program.

A ction to d a te :

. The agency h a s, fo r some tim e, been in a re str a in e d re c ru itm e n t

p o stu re and, th u s, has been unable to s e t a sid e p o sitio n s fo r a

formal r e c ru itm e n t/tr a in e e program. There is now a DOT Management

In te rn Program in e x isten c e from which FAA can p o ssib ly draw

q u a lifie d people . Also, th e re is an abundance of former procurement

in te rn s from o th e r agencies in the D.C. area to draw on.

. FAA c o n tra c tin g and procurement people a re r e g u la rly scheduled to

a tte n d agency conducted and o u tsid e the agency tr a in in g courses

to develop needed p ro fic ie n c ie s in the procurement fi e l d . Since

August o f 1976 FAA procurement people have c o lle c tiv e ly a ttended

some 64 courses covering a wide v a rie ty o f su b je c t a re as d e alin g

w ith the c o n tra c t and procurement fi e l d .

. In r e c r u itin g , the L o g istic s Service endeavors to secure th a t

balance between younger and o ld e r personnel th a t w ill provide

fo r the re d u c tio n in the average age o f i ts c o n tr a c t and procurement

work fo r c e , w ithout reducing the o v e ra ll le v e l of p ro fe ssio n a l

experience e ss e n tia l to i ts job requirem ents.

. Since August o f 1976, ten c o n tra c t and procurement personnel w ith

an average age o f 47 years have been s ep a ra ted fo r a ll causes

(r e tir e m e n t, re sig n a tio n s, tr a n sf e rs, e t c .) . Over the same period

ten new people have been h ire d w ith an average age of 42 y e a rs.

. In a d d itio n , sin ce August 1976, th re e people averaging 27 years

o f age, who have demonstrated p ro fic ie n c y fo r c o n tr a c t and

procurement work, have through an inform al in te rn a l on the job

tr a in in g program been s u c c e ssfu lly moved in to c o n tra c t/p ro cu rem en t

type p o sitio n s from s e c r e t a ri a l/ c l e ri c a l a dm in istra tiv e p o sitio n s.

39
Keegan Report: Recommendations regarding the Role of the Office of

Accounting and Audit in the FAA Procurement Process.

. The Office of Accounting and Audit, External Audit Division,

has many responsibilities in the procurement process. Although

it must continue to be available on an "as needed" basis for

all contracting matters for accounting control of external

assistance requests on reimbursement by the FAA, some streamlining is required.

Recommendations:

1. That proposed revision of FAA Order 2930.1A, Audit Participation

p. 98 in Procurement and Contracting should be approved and Implemented.

Action to date:

. FAA Order 2930.IB, Audit Participation in Procurement and Contract

lng was Issued December 27, 1976, permitting procurement personnel

to deal directly with Defense Contract Audit Agency.

2. That Logistics Service Policy Branch (ALG-110) should initiate

p. 98 appropriate revisions to FAA Order 4400.12A, Use of a Negotiated

Team, to make audit participation in negotiation sessions optional

at the discretion of either the Contracting Officer or the Office

of Accounting and Audit.

Action to date:

The agency does not agree with this recommendation and Intends

to use an auditor as a member of the negotiation team on all

negotiated procurement actions where the estimated cost exceeds
167

Keegan R e p o rt: Recommendation r e g a rd in g com puter a p p li c a tio n s In p ri c in g .

. C om pute riz ed te c h n iq u e s now a v a il a b l e In th e p ri c in g f i e l d need

to be a d o p ted by FAA and c o n s c i e n tio u sly a p p li e d .

. Recommendations:

1 . I f autom ated p ric in g c o n c e p ts a r e found p r a c t i c a l , th e n e c e ss a ry

p . 98 te rm in a ls and tr a in in g sh o u ld be a c q u ir e d . The te rm in a ls must be

p h y si c a lly lo c a te d in th e P ric in g O ffic e . F u ll a d v a n tag e sh o u ld

be ta k e n o f th e COPPER IMPACT Program s.

A c tio n t o d a t e :

. An autom ated p ric in g system was p u t in t o e f f e c t in F e b ru a ry 1977.

A te rm in a l is lo c a te d in th e p ric in g s t a f f o f f i c e . P e rso n n e l hav e

been tr a in e d in i t s u s e . F u ll ad v a n tag e was ta k e n o f th e e x istin g

COPPER IMPACT Program s.

2 . P rocurem ent li n e management c o n tin u a lly m o n ito r th e tr a i n i n g and

p . 98 u t i l i z a t i o n e f f o r t to a ss u r e maximum u se o f a l l system c a p a b i l i t i e s .

A c tio n t o d a t e :

P rocurem ent li n e management is c o n tin u a lly m o n ito rin g th e u sage

o f th e autom ated p ri c in g sy stem . A ll p ri c in g p e rs o n n e l have been

tr a in e d in i t s u s e to a ss u r e maximum u t i l i z a t i o n . In a d d itio n ,

management is c u rr e n tly rev iew in g sy stem c a p a b ili ti e s and f u tu r e

ex p a n sio n p la n s in c lu d e th e developm ent o f a c o st e stim a tin g system

and a p p li c a tio n o f le a r n in g cu rv e te c h n iq u e s on a p p r o p ri a te p ro d u c tio n

c o n tr a c ts.

41
168

Keegan Report: Recommendation regarding management review of pricing

objectives.

. There is little apparent formal review of pricing objectives for

the majority of FAA negotiated procurements.

Recommendations:

1. Contracts Division management consider adopting some form of

p. 99 pre-negotiation review of the pricing objective.

Action to date:

<

The agency agrees that there should be management review of pricing

objectives on major negotiated procurements. Implementation is in

process.

42
Keegan R e p o rt: Recommendation r e g a rd in g th e s u b je c t in d ex o f

pro cu rem en t s u b j e c ts.

• The P o lic y Branch (AIC-110) is d ev e lo p in g a t o p i c a l in d e x to

h e lp pro cu rem en t p e rs o n n e l id e n tif y and lo c a t e th e r u l e s - --

a p p li c a b l e to p rocurem ent s u b j e c ts. A lthough such an index

may have some lim it e d u s e f u ln e ss, o th e r a g e n c ie s have sometimes

found th e p r e p a r a tio n and m a in te n an c e to b e u n eco n om ic a l.

Recomraendat io n :

P- 99 . The FAA sh o u ld e v a lu a te th e to p i c a l in d e x a s i t is

p r e s e n tly c o n stitu t e d to a ss u r e th a t i t c o n tin u e s to o ff e r

c o st- b e n e fi c i a l r e s u l ts . I f n o t, th e FAA co u ld re fo rm th e

index to o b ta in g r e a t e r d e p th o r d is c o n tin u e th e p r o j e c t.

A c tio n to d a t e :

Q u e stio n n a ir e s w ere s e n t to a l l p ro curem ent o ffi c e s r e l a ti v e

to u s e f u ln e ss o f th e t o p i c a l in d e x .

Answers r e c e iv e d w ere e v a lu a te d , and th e in d e x c o n tin u e s to

b e u s e f u l to p ro curem ent p e rs o n n e l.

A r e v isio n to th e index h a s been com p leted and is in p rin tin g .
170

Keegan R e p o rt: Recommendation r e g a rd in g j o i n t u s e o f c o n tr a c ts

d istr i b u t e d w ith in th e L o g istic s S e r v ic e .

- A se em in g ly la r g e number o f c o p ie s o f each c o n tr a c t and i ts m o d ifi

c a tio n s a r e d istri b u t e d i n t e r n a l l y w ith in th e L o g istic s S e r v ic e .

G r e a te r j o i n t u se o f th e c e n tr a l c o n tr a c t f i l e s m ight be more

e c o n om ic a l.

Recommenda t i o n s:

1. C o n tr a c ts D iv isio n rev iew c u rr e n t c o n tr a c t d is tr i b u ti o n p r a c ti c e s

p . 100 to d e te rm in e i f more j o i n t u s e o f th e c e n tr a l c o n tr a c t f i l e is

p r a c t i c a l .

A c tio n to d a t e :

D istrib u tio n p r a c ti c e s have been review ed and d is tr i b u ti o n l i s t s

u p d a te d . More j o i n t u se o f th e c e n tr a l c o n tr a c t f i l e was n o t

found p r a c t i c a l due to problem s th a t co u ld be e x p e c te d w ith

i n a c c e s s i b il it y o f th e c o n tr a c t f i l e and th e m a in ten an c e and

f i l i n g o f c o n tr a c t d o cum en ta tio n .

44
171

Keegan Report: Recommendation regarding contract distribution to Vital

Records Center.

Copies of a large volume of documents generated by ALG-300 are

being collected and distributed to the Vital Records Center. The

cost of extra printing, collection, handling, mailing and storage

may be unwarranted for these routine documents.

. Recommendations:

1. Contracts Division research and reevaluate the vital records

p. 100 selection criteria for future submissions.

Action to date:

. The review made resulted in discontinuance of sending copies of

purchase orders to the Vital Records Center. The need for copies

of other documentation was confirmed and distribution of such records

continues.

2. Inquiry should be made to insure that previous submissions are

p. 100 being regularly purged on an appropriate time-phased basis.

Action to date:

. Arrangements have been made to periodically conduct on-site reviews

of materiel stored at the relocation site, directed towards purging

files of outdated mat'erlel. The last one was conducted in June 1977.

. An appropriate issuance to provide a more formal means for accomplishing

purging on a time phased basis in planned for issuance by December 31,

1977.

Mr. Bond. In your review of our procurement process, you have

indicated a desire to discuss three specific cases: FAA negotiations

with the Space Research Corp, in 1973 for a radar simulation

facility at Oklahoma City; the FAA procurement from Westinghouse of the ARSR-3; and FAA’s contract with General Dynamics

and the resulting contract dispute involving the production of

ASR-8 radars.

It is not my intention to offer a lengthy explanation of the FAA’s

decisions in these cases. Issues related to the simulators and the

General Dynamics contract are in litigation, while the ARSR-3

production contract is substantially on schedule with no unusual

problems. However, there are management issues raised in connection with these cases which are worth discussing in relation to the

SAM process.

Several years ago, the FAA, on two occasions, unsuccesfully attempted to acquire a modern simulation capability for use in training air traffic controllers. After two unsuccessful efforts, we made

a major effort to better define the training requirement and determine how that requirement might be met.

An independent group, the Institute for Defense Analysis, reviewed various technical alternatives and alternate approaches to

the agency’s training program for controllers. That group determined that much of the training could be carried out at our auto-
172

mated terminals and centers, and that a different type of simulation program should be utilized in our training academy in Oklahoma City.

Based on this new statement of requirements, we are proceeding 

to acquire a modern radar training facility. Ground will be broken

on a new building in Oklahoma City next month. We have received

competitive proposals from a number of contractors who appear to

be well qualified to provide us with equipment to provide the

simulation capability we need. We are keeping the committee staff

informed of our progress on a regular basis.

I describe these events simply to point out that if this requirement arose today, the principals of the SAM order would require

these types of alternative approaches to be explored during the

study, definition, and validation of the requirement.

The ASR-8 award to General Dynamics was an award to the low

bidder for a fixed-price type production contract. When General

Dynamics later encountered technical difficulties, the agency 

agreed to restructure the contract to obtain a single radar system

from General Dynamics on a cost type arrangement with a ceiling 

price. The contract provided that General Dynamics would proceed

to completion at its own risk if the ceiling were exceeded.

Subsequently, General Dynamics refused to perform, and a default notice was issued. The repurchase from Texas Instruments

resulted in the final systems being delivered on a schedule consistent with that in the General Dynamics contract. In this case, the

agency’s action was directed toward obtaining badly needed radars

in as short a time as possible.

I should note that today for such a major redirection of effort, 

the SAM process would insure that the analysis and alternatives

would be fully documented prior to any similar decision. In addition, such action would formally be brought to the attention of

TSARC.

I also wish to point out that the performance of the Texas

Instruments ASR-8 radar system has been completed satisfactorily

and has proven to have increased reliability compared to all other

FAA ASR systems in operation. In addition, the ASR-8’s have met

or exceeded all specified operational requirements.

With regard to ARSR-3, the first contract was awarded to Westinghouse after a competitive solicitation, on a cost-plus basis.

After an escalation in the estimated costs, the agency reduced the

scope of the general effort and added funds somewhat in excess of

those originally contemplated.

Although the work performed by Westinghouse was not complete

as originally intended, it was determined to be sufficient to allow a

competitive procurement for production quantities. Accordingly, a

two-step formal advertisement was initiated, and Westinghouse

was selected as the low responsive, responsible bidder.

It is anticipated that the first production radar, expected to be

delivered in February 1978, will test out to be an excellent product.

Under today’s new SAM process, the decision to discontinue the

prototype effort and enter a contract for production would be formally and fully documented with attendant analyses prior to the

approval by the Administrator of such action.
173

In conclusion, our accomplishments to date include a complete

revision of our acquisition management process emphasizing requirements definition, planning, and monitoring activities.

We have also revised and updated our planning and resource

allocation policies and directives at the same time. We have established a system to manage and monitor the acquisition process

which I have described.

In the procurement area, the Air Force study team made 37

specific recommendations. Most of these recommendations have

been implemented already, and several are still in process but well

underway. I believe you can see that we are moving forward and

have made substantial progress in the last year or so in improving

our acquisition management process.

I want to emphasize that these improvements I have described 

were not undertaken as the result of the Air Force study alone. As

a result of the in-house study I referred to earlier, and some of the

recommendations of the Committee on Government Operations,

work was begun in 1975 to develop the conceptual framework for

our improved acquisition management and financial management

procedures.

The system acquisition process is complex. As a result of almost

continuous study, the process has evolved to the procedures I have

outlined here today. Our process is new. But the process contains

many procedures by which it is constantly being studied, critiqued,

and revised. As Administrator, I intend to insure that the FAA’s

acquisition process is effective.

Mr. Burton. I thank you very much for your statement, Mr.

Bond. You did admirably well, considering what you had to deal

with. As I said earlier, I hope these hearings are as much for your

benefit as they are for our benefit because, although you are new,

many of the people involved in what we would consider some of the

procurement horror stories are still in responsible positions

within the agency and, hopefully, handling those responsible positions in a more responsible manner.

I have several questions related to the various procurement

issues—the ASRS-3; the ASR-8. Specifically, the ASR-8 contract

modification and what, if anything, went on in Florida, et cetera.

I would think that the best thing for the subcommittee to do

would be to recess until 1:30, so that we will have a chance for

lunch, and then we could come back immediately at 1:30. I know

that other members of the subcommittee also have several questions. So the subcommittee will be in recess until 1:30.

[Whereupon, at 12:05 p.m., the subcommittee recessed, to reconvene at 1:30 p.m., the same day.]

AFTERNOON SESSION

Mr. Burton. The subcommittee will reconvene.

I would like to just read something from a Government Operations Committee report entitled “Federal Aviation Administration’s Procurement of the Electronic Voice Switching System.” It is

a result of this subcommittee’s investigative work under the chairmanship of Jack Brooks.

This was an FAA contract. And, again, Mr. Bond, I’m sure a lot

of this will be news to you. At least, I hope that it is.

27-075 0 - 78 - 12
174

But in the EVS contract FAA blew another $12 million of the

taxpayers’ money. The chairman’s comments in the report were

rather philosophical. He wasn’t sure that FAA would ever really do

the right thing unless there were possibly even some personnel

changes.

A lot of those people are still around. You weren’t; but they are

still there.

I think this may or may not still hold true.

I have so many questions, I honestly don’t know where to start.

I would really like to find out about the modification of the

contract. I want to find out what, if anything, happened in Florida;

how did it come about; why aren’t there records? Is it really in the

national interest to, in effect, give that kind of money to a corporation so that they can stay competitive in a business in which they

weren’t even going to try to be competitive?

I guess you couldn’t answer that?

Mr. Bond. This is the General Dynamics contract?

Mr. Burton. Right.

Mr. Bond. I would like to suggest that Jeff Cochran answer that.

Mr. Burton. I would like to hear from both he and Mr. Frakes.

Mr. Cochran. In the case of the ASR-8, as Mr. Rider explained

this morning—let me start back a little bit, Mr. Burton, before the

ASR-8, because I think it’s reasonably important that we do.

We had been buying the ASR-4, 5, 6, and 7 from Texas Instruments.

There was a desire on the part of the management of the FAA—

and I believe on the part of the Department also-----

Mr. Burton. What’s the Department?

Mr. Cochran. The Office of the Secretary of Transportation.

Mr. Burton. Would that be Mr. Beggs?

Mr. Cochran. I was referring to the entire Department.

Mr. Burton. I know that; I’m referring to the initial decision.

Mr. Cochran. Well, he was in the Department of Transportation

in the Office of the Secretary.

Mr. Burton. He made the decision.

Mr. Cochran. I want to say this. There was a desire that the

ASR-8 contract be a competitive contract.

Mr. Burton. Yes; that’s very desirable.

Mr. Cochran. In other words, the desire to maintain competitiveness in the contract.

We originally solicited 64 companies to bid on the ASR-8, I

believe.

Mr. Burton. With all due respect, I am fairly up to date on this.

You could submit this for the record sometime. But we know where

we are today. We know that FAA recommended Texas Instruments

on the technical merits—notwithstanding there was a cost differential that could have been as little as $500,000.

But we know that you did recommend Texas Instruments on

what you felt were the merits, and certainly it looks like the right

decision the way things worked out. You wanted to go with Texas

Instruments; the Department of Transportation overruled that, and

the bid went to General Dynamics.

Did you object very much when this decision was made? Or how

strongly were you able to pursue your case with them?
175

Mr. Cochran. I think we presented a reasonable case for the

award of the contract to Texas Instruments to the official that

made the decision.

I think Mr. Rider has described that case pretty well in his

chart. He has described the areas pretty well as we had discussed

them. I think we had a discussion that lasted 2 or 3 hours with the

selecting official at that time, recommending the award of the

contract to-----

Mr. Burton. Who was the selecting official?

Mr. Cochran. It was Mr. Beggs.

Mr. Burton. It would help during all the testimony if you would

supply the names. If you would rather not give names, then you

can give the title. I’m going to have to ask the name if I don’t

know.

At the end of that, your arguments-----

Mr. Cochran. Our arguments did not prevail.

Since we had declared both of the contractors technically responsive to the proposal as it was submitted, the contract was awarded

on the basis of the low price by General Dynamics.

Subsequent to that time-----

Mr. Burton. The contract was awarded purely on the cost difference?

Mr. Cochran. Yes.

Mr. Burton. So you people actually couldn’t have sworn on your

children’s lives that General Dynamics might not be able to deliver?

Mr. Cochran. No, sir.

Mr. Burton. In other words, you couldn’t go that far. You had

questions, but-----

Mr. Cochran. General Dynamics was a large company and a

responsible manufacturer. They had submitted a technical proposal

that, in our view, was acceptable. Therefore, we couldn’t cite positively they couldn’t do it. We thought the risk was high.

Mr. Burton. What do you mean by acceptable and high risk?

Mr. Cochran. Both contractors had technical proposals that

were rated. We rated those two technical proposals, and rated the

Texas Instruments technical proposal considerably superior to General Dynamics.

Mr. Burton. That’s not counting the risk factor?

Mr. Cochran. That’s correct.

Mr. Burton. So in other words, if you were reading the pieces of

paper, Texas Instruments was better if there wasn’t any risk

factor. Then you take in a risk factor and it puts Texas Instruments in a much stronger position for the taxpayers’ money to be

invested in them; wouldn’t it?

Mr. Cochran. That’s correct.

Mr. Burton. I don’t know whether or not you could have pushed

hard or not. Mr. Beggs and DOT made that decision. If you had

had your way and Mr. Beggs hadn’t awarded the contract to General Dynamics, conceivably the hearing at least wouldn’t be on

ASR-8.

The modification of the contract with General Dynamics: There

seems to be no record or documentation as to when it happened,

except a statement it happened before July 17, 1974.
176

Mr. Bond. Perhaps Mr. Weithoner could address himself to that.

In his position, he oversees the contracting office, that is, our

logistics service.

Mr. Weithoner. I can at least in part, Mr. Chairman. At least I

can give you some of the background.

At the key point in the summer of 1974 when Mr. Frakes and

Mr. Cochran returned from their trip to Florida-----

Mr. Burton. Which trip was that?

Mr. Weithoner. That was the trip that was alluded to by Mr.

Rider when they went down and toured the plant and talked with

General Dynamics officials.

If my recollection is correct—it is now 3 years ago—there was a

meeting almost immediately with the Deputy Administrator, Mr.

Dow. There were two or three other people present in the room. I

was one. Mr. Cochran and Mr. Frakes were also there.

They went through what they found and explored the alternatives for Mr. Dow. He asked a lot of questions and considered what

should next be done.

There was no memorandum prepared, to my knowledge, summarizing the results of that meeting. I believe it was held immediately

after their return—I think the following morning after their

return.

Mr. Burton. Was that a discussion where options were proposed

and decisions were made?

Mr. Weithoner. Options were considered.

Mr. Burton. Such as: How do we get out of this one?

Mr. Weithoner. They looked at various ways of proceeding, yes,

sir. There was not a final decision. To the best of my knowledge,

that decision was made several days after that—after there had

been some consultation with the Administrator, Mr. Butterfield. I

was not present at that meeting.

But we did explore, and Mr. Dow considered various things, that

were brought up.

Mr. Burton. That was at the meeting immediately following the

return of Messrs. Frakes and Cochran, and then at a later meeting

with Mr. Butterfield, at which you weren’t present?

Mr. Weithoner. That’s correct.

Mr. Burton. Were you present at the meeting with Mr. Butterfield?

Mr. Cochran. Yes, sir. I was present at the meeting when Mr.

Dow presented the alternatives that were presented to he and Mr.

Butterfield.

Mr. Burton. The alternatives presented to Dow were presented

by the two of you gentlemen after your visit to the plant?

Mr. Cochran. We certainly discussed all of the alternatives. I

don’t know that we presented all the alternatives. Some of them, I

think, were suggested by others.

Mr. Burton. After hearing your reports?

Mr. Cochran. Yes.

Mr. Burton. Like what others?

Mr. Cochran. Essentially these were the alternatives that were

available: To continue with the contract with General Dynamics

for the full quantity of radars and for the antenna. To default

General Dynamics was another alternative.
177

Mr. Burton. In other words, they had breached the contract.

You were going to hold them to their contract.

Mr. Cochran. We would have attempted to. The first alternative

would have been to hold them to the contract. It was a fixed-price

contract for a fixed number, and we would have attempted to have

gotten delivery of those radars under that means.

The second alternative was to have them default. The third

alternative was to ask General Dynamics if they would consider

subcontracting for the radars with another manufacturer—Texas

Instruments.

Mr. Burton. That they should subcontract with Texas Instruments to fill an order that they originally beat Texas Instruments

out of, really doesn’t make much sense except to save somebody’s

face, does it?

I don’t think it’s an evil thing, but I also don’t think it makes

much sense. It looks like a face-saving device.

Mr. Cochran. I believe I threw that one out as a possibility that

it would have been accomplished.

If your interest is in getting the radars, as mine was, just as soon

as I could get them out in place, Texas Instruments appeared to be

in the position to manufacture radars.

Mr. Burton. For General Dynamics?

Mr. Cochran. If the price was right, I’m sure they would manufacture for anybody.

Mr. Burton. What was the other option?

Mr. Cochran. The other option was the possibility of restructuring the contract to include 1 radar set and 40 production antennas.

Mr. Burton. Who offered that one?

Mr. Cochran. I don’t recall who offered that alternative. I certainly discussed it and understood it. I don’t recall who offered it.

Mr. Burton. How did you understand it?

Mr. Cochran. I understood it well. I understood that we would

get one.

Mr. Burton. Everybody understands that. We could have bought

a radio from them for the money.

But did you understand the logic behind that type of giveaway

of-----

Mr. Cochran. The discussions that I had with General Dynamics

in a couple of meetings in our headquarters building and then the

discussion Mr. Frakes and I had with them in Florida—they represented to us that they were interested in the radar business; that

they were interested in building the ASR-8; and that they would

be a competitor in the ASR-8 field in the future.

Mr. Burton. So you felt it was your duty to the taxpayers to let

them build one at a price like that? So you let the taxpayers pay 

$10 million or so for one system that was of questionable value. 

The benefit of doing that would be that General Dynamics might

then remain competitive in the radar business. Is that FAA’s function?

Mr. Cochran. As I tried to explain at the beginning of the

statement I made about the system, it was on a lot of people’s

minds that we have competition for the radar sets. That we had

been in a sole source posture with Texas Instruments.
178

Mr. Burton. I agree with that. But is it the FAA’s responsibility

to subsidize corporations to do that?

Mr. Cochran. No, sir. I did not say that.

Mr. Burton. But that’s really what we did. That seemed to be

the logic for it—to let them remain competitive.

Mr. Weithoner. Could I answer that please?

There was another alternative proposed, I believe. I have not

discussed this with Mr. Frakes and Mr. Cochran.

Another alternative would have been to buy the 40 antennas

only and not buy the radar and not complete the radar contract.

We did have a separate need for 40 antennas, and they could have

been used without buying this 1 radar.

Mr. Burton. At the going price?

Mr. Weithoner. I think the price was around $2 million for just

the 40 antennas. It was something on that order.

Mr. Burton. So we could have paid $2 million. We might have

ended up with 7 antennas for the $2 million, but there was a

chance at least to get 40.

Mr. Weithoner. At least that was discussed as an option. I don’t

know that it was ever pursued.

The second point I would like to make is that what Mr. Cochran

has been describing is the range of alternatives that were discussed. He did not recommend or endorse the option that you just

asked him about.

Mr. Burton. When you went down and you saw the real situation at General Dynamics, did you meet with their officials? Was

there a conversation between you and their officials? Did you say

to them: “There’s no way in the world you can do this.” Or, “What

are you doing?” What kind of conversation did you have with them

when you went down there?

Mr. Cochran. To structure it just a little bit and give us a full

understanding of where we were, we had had a report from our

people who had recently—both Mr. Frakes and myself had had

people who had been to visit General Dynamics.

We went down there and conducted a fairly detailed program

review with them. We looked at the program status in considerable

detail. We made a visit to the facility to see how they were facilitated to carry out this function.

We reviewed the prospects with them there.

Part of the reason for our review at the time, Mr. Chairman, was

to have this review in front of responsible General Dynamics personnel.

Part of the reason that Mr. Frakes and I thought that we would

like to go to Orlando—and we were asked to go there by the

Deputy Administrator—was to conduct this review at a level with 

the General Dynamics people having comparable level people to

ourselves at the meeting.

The vice president of the corporation, Mr. Golden, was there and

a Mr. Iverson, whom I believe was the top man in the electronics

division of General Dynamics.

They listened to this review of their people and heard it in the

same way we did. We thought that it was rather important that

they do this. They were a responsible company, and we felt that it

would be the right thing to have this program review and to have
179

an understanding ofjust where the status of the radar was for both

ourselves and for them.

Mr. Burton. In other words, you didn’t think they knew that

they had incurred cost overruns and schedule slippages?

Mr. Cochran. Yes, sir, I think they knew that already. They had

told us that. But we were not sure. They were still saying they

could build a radar set, and they were still saying that-----

Mr. Burton. All right.

Mr. Cochran. So we wanted them to see what their people said 

in order to be able to assess the risk in the same way that we

could.

We came away from that meeting—at least I did—after looking

at the facilities that General Dynamics had in the Orlando area,

fairly well convinced that they would have some difficulty in producing the 37 radar sets.

We were not similarly convinced concerning the antennas, because they did have an established antenna range which appeared

to be coming along. They also had an electrical design of an antenna from the engineering company that had done the work for

them. It looked like there was a reasonable prospect that they

could make the antennas work.

We went into a meeting then and had lunch for about 30 minutes to 1 hour, I guess, with these two gentlemen and Mr. Frakes

and myself.

We simply had a business discussion, as anyone would have,

concerning what the prospects were and what all the alternatives

were. We certainly discussed, I think, every alternative I’ve mentioned here with them.

We came away from that meeting—we had no power to make

any commitment at that meeting.

Mr. Burton. Did they ask for commitments?

Mr. Cochran. No, sir, they did not.

Mr. Burton. What did you discuss? You said: “You guys just

can’t do it.” What did they say?

Mr. Cochran. They said that they-----

Mr. Burton. In other words, you realized when you looked at the

situation that there was not much of a chance that they could

complete the contract.

Was their continued position that they could do it?

Mr. Cochran. I think that they felt with a slip in time—9 to 12

months—and a cost overrun that they could do it. They could

produce the 37 radars and the 40 antennas.

Mr. Stangeland. Mr. Chairman, may I ask just one question?

Mr. Burton. I would be happy to yield.

Mr. Stangeland. How much longer after this point in time did

you negotiate with Texas Instruments to fulfill the contract under

the same terms as General Dynamics?

Mr. Cochran. It wasn’t too long after that.

Prior to this time, we had a contract with Texas Instruments for

three ASR-7’s on a sole source basis with them. That’s the previous

generation of radar. It was a solid state radar—a fairly good radar

set. The ASR-8 is the next generation of that system.
180

We were under contract with them for three of these ASR-7’s.

They came to use with an unsolicited proposal that they convert

this at no cost to us of the three ASR-7’s to three ASR-8’s.

We took this unsolicited proposal and converted it to a contractual modification. We were under contract with them previous to

this time for the three ASR-8’s, I believe.

Mr. Frakes might be able to fill in on the time there when we

started on negotiations.

Mr. Burton. I think we have that.

In other words, when they figured out that General Dynamics

was not going to complete the contract, and they moved over to

Texas Instruments-----

Mr. Butterworth. The first proposal was made from Texas Instruments on June 13, 1974; is that correct? The contract with

Texas Instruments was then signed on September 24, 1974. So

sometime between that offer and September 24 that decision was

made.

We have the July 17, 1974, alternative action position paper. One

of its directives, I believe, was to initiate the contract with Texas

Instruments. So the decision must have been made by that time. It

must have been made by July 17, concurrent with the decision to

modify the contract.

Mr. Frakes. We immediately started negotiations after we restructured the contract, which was August 24. The contract with

Texas Instruments was negotiated and awarded in September—I

believe September 23.

Mr. Stangeland. I guess what I want to know is when was this

meeting that you held with General Dynamics?

Mr. Cochran. July 3.

Mr. Stangeland. And you had negotiated, or Texas Instruments

at least had come to you with a proposal in June.

What I am appalled at in all of this—and I am really appalled—

is the fact that General Dynamics, you say, was a reasonable

company and all you had to do was renegotiate a contract and give

them 10 times what they had originally planned for, and get 1 out

of 37, and you have another company that can do it, and has, and

will perform.

You know big business is cutthroat among themselves, and here

we have played Santa Claus. I don’t understand that.

Mr. Burton. Eloquently put.

Mr. Stangeland. To save this company because they are reasonable and from what I see here they were totally unable to perform

and unreasonable as far as a company and there was no point in

trying to keep them in competitive business—in this area at least. 

Maybe someplace else, but not here. I just really don’t understand.

Mr. Burton. It does strike one that way, Mr. Stangeland.

Mr. Stangeland. I’m sorry for the interruption. Mr. Chairman.

Mr. Burton. That’s perfectly all right.

I have some more questions, and then I’ll yield to you gentlemen.

I am like Mr. Stangeland. I honestly just don’t understand it.

There was a verbal offer from General Dynamics on July 10?

Mr. Frakes. I am not aware of the verbal offer.

Mr. Burton. Well, how did the contract get modified? Who came

out and said: Here’s the deal?
181

General Dynamics seemed to think they could have made it, 

except that they would have breached the contract.

You said you had a good lunch like all business people do.

Unfortunately your business is the public’s business and it isn’t

supposed to be like a corporate business luncheon. We don’t know

how this decision was made. We don’t have any records. Not just

about the lunch but about the whole process. To use Mr. Stangeland’s words, we don’t know how the decision was made to bail

them out and give them the taxpayers’ money for this.

There aren’t many records floating around. There’s no memorandum of a meeting that was held when you came back. There’s no

record of what options were discussed.

It might have been like somebody coming back from Vietnam

and giving the President the “real picture/’ The fact that there

was no way they could complete the contract, and that our option

was to make them honor the contract, or maybe go for the antennas, seems sound to me.

But there’s no record as to how this happened.

I think the staff is going to point out an FAA regulation that

requires memorandums of meetings like that.

Mr. Butterworth. This regulation was at least in effect by

March 4, 1972. It is found in 41 CFR 12-1.313, “Records of Contract

Actions.”

It states: »

In compliance with the requirements of Federal Procurement Regulations 1.1—

313, each procurement office shall maintain for each procurement exceeding $2,500,

a contract file containing comprehensive records of all preaward and postaward 

actions and other data. Adherence to this policy will require the assembly of either

the original or the copy of all documents pertaining to the procurement in a file

consisting of one or more folders. It will also require documentation for the record

of all understandings, oral agreements, and any other facts or information pertinent

to the transactions.

That regulation was in effect at the time of these offers.

You made a decision, and therefore offers and proposals must

have been made, either in Florida between June 28 and July 3, or

on July 10. At least, that^ the one we know about. You apparently

also had a conversation with the Administrator. There are no

records of any of these events.

Mr. Frakes. There was a proposal made by General Dynamics in

which they offered three options. One was one ASR-8 loan-----

Mr. Burton. For how much?

Mr. Frakes. I don’t recall that right now. I could get that.

One was for an ASR-8 for 40 antennas. The third option was for

one ASR-8-----

Mr. Butterworth. Mr. Frakes, Mr. Warren Sharp of FAA stated

in a letter that the decision had been made sometime between July

1 and 15, 1974. Now there must have been offers before that time

or within that time period.

Mr. Frakes. I think August 8 was the first official proposal by

General Dynamics.

Mr. Burton. That conflicts with the only piece of information we

have in written language. That it was made before July 17, 1974.

Does anyone know about a July 10 verbal offer from General

Dyanamics?

Mr. Frakes. I’m not aware of that.
182

Mr. Cochran. No.

Mr. Bond. No.

Mr. Weithoner. No.

Mr. Burton. Who directed that the alternative action position

paper on the contract modification be written and specified its

contents?

Mr. Frakes. May I ask which?

Mr. Burton. The July 17 paper.

Mr. Frakes. Are you referring to a memo?

Mr. Burton. The alternative action position paper. The alternatives being determination for default, continuation of the con- -

tract—the things you set out; the five alternatives. Continued performance via subcontract. The various options.

I guess somebody asked somebody to write a paper setting forth

our options.

f Mr. Cochran. I think I did after the meeting with the Administrator or the Deputy Administrator. We went over the options, and

I asked someone to write them down.

Mr. Burton. And you asked them to summarize a verbal proposal presented to FAA on July 10.

Mr. Cochran. I don’t recall that part of it.

Mr. Burton. It’s in a memo. I don’t know if this is your memo.

The signature is Mr. Lamont’s.

Mr. Cochijan. He was the technical officer.

Mr. Burton. He must have known about it.

Did anybody talk to Mr. Beggs at this time?

Mr. Cochran. No, sir.

Mr. Burton. Was he with General Dyanamics at this time or

still with DOT?

Mr. Cochran. He was with General Dynamics at this time.

Mr. Burton. And no one discussed it with Mr. Beggs?

Mr. Frakes. I did not.

Mr. Burton. I guess being the guy who recommended it, he

might have been embarrassed to discuss it with anybody.

No one knows about the verbal offer.

Mr. Frakes. Mr. Chairman, I’d like t(?go back and clarify the

discussion about the group that worked on the alternatives.

Mr. Burton. First, how about the July 10 verbal offer? Nobody

knows about it, and it’s in a memo.

Mr. Frakes. I cannot recall it.

Mr. Burton. All right.

You were going to explain something; go ahead.

Mr. Frakes. When General Dynamics officially told us in May

that they had a very significant cost overrun and a schedule slippage of at least 9 months, we did put a working group together,

both from the program office, the contracting office, and General

Counsel to discuss and come up with what were our alternatives.

We needed radars, and what were our alternatives. This is when 

these were initially developed as the alternatives. It was prior to

our going to Orlando.

Mr. Burton. One of the alternatives was that you felt that Texas

Instruments could make them and could subcontract through General Dynamics—is it against the law for a Federal agency to hold a

corporation to a contract? [Laughter.]
183

Mr. Frakes. No.

Mr. Burton. That thought never entered anybody’s mind, especially when you knew you could pick up the radars from Texas

Instruments and probably have even saved the cost of postage on a

subcontract between Texas Instruments and General Dynamics?

Did that thought enter anybody’s mind—just to hold them to the

contract?

Mr. Frakes. We were advised by them that there was at least a

9-month delay. They felt strongly that the contract would have to

be restructured. The inference was that they would not perform

and deliver 37 radars at the price in the contract.

Mr. Burton. In that case they are in breach of contract; aren’t

they?

Mr. Frakes. If they had done that.

Mr. Burton. Right.

There isn’t any Federal law that says they can’t be sued for

breach of contract.

Mr. Frakes. No, sir.

Mr. Burton. It wasn’t only the 9 months schedule delay; the cost

had become a lot higher too. Isn’t that correct?

Mr. Frakes. That would have been their cost. It was much

higher; yes.

Mr. Burton. Was termination ever really discussed?

You needed radars. You knew you weren’t going to get them

from General Dynamics. So you were just, cold turkey, bailing

them out.

One of your options was to subcontract from them to Texas

Instruments who could do it. That would lead me—perhaps stupidly—to think that you could contract with Texas Instruments yourself and eliminate the middleman.

Mr. Frakes. Absolutely. We did that.

Mr. Burton. But you did that and also gave away the money to

General Dynamics, which was really just a gift of public funds.

Mr. Frakes. At the point in time about which you are talking,

Mr. Chairman, we did issue a show cause letter for default termination.

Mr. Burton. But you backed off.

Mr. Frakes. Yes, sir.

Mr. Burton. Who made that decision?

Mr. Weithoner. That was either the Administrator or the

Deputy Administrator. Either Mr. Butterfield or Mr. Dow.

Mr. Burton. And what information did they have?

Mr. Weithoner. They had the results of the discussions that I

referred to earlier.

We had gone through all these alternatives and talked pros and

cons, and they had the benefit of that discussion.

Mr. Burton. Was this information in memo form or what?

Mr. Weithoner. The part that I sat in on was an oral discussion

with about six or seven of us in the room where they went through

all of these alternatives.

Then Mr. Dow, in a smaller group, met within the next day or

two with the Administrator. As I understand it—I was not present—they reviewed at least several of the alternatives; and Mr.

Butterfield made the decision.
184

Mr. Stangeland. May I ask a question, Mr. Chairman?

Mr. Burton. Yes.

Mr. Stangeland. Mr. Cochran, you are the Associate Administrator for Engineering and Development?

Mr. Cochran. That’s correct.

Mr. Stangeland. Would it be your evaluation report that would

have recommended as to which company would have been issued

the initial contract?

Mr. Cochran. At the time we are discussing, which is back

several years, I was not the Associate Administrator for Engineering and Development. I was the Director of the Airways Facilities

Service, which was the technical organization that was trying to

buy the radars; that is correct. I had the technical program responsibility for getting the radars out in the field.

Mr. Stangeland. Is there any precedent, or is it customary, to

take anything but the low bid in other instances when two companies bid with the Government; or is it hard and fast that you have

to take the low bid?

Mr. Cochran. No, sir, it is not hard and fast. In fact, our recommendation to the Secretary of Transportation was to go with the

high bidder.

Mr. Stangeland. I realize that.

Mr. Cochran. There have been times where it has gone to someone other than the low bidder. That’s correct.

Mr. Stangeland. Now in a case like this, what expertise does

the Department of Transportation have in determining which 

should be the bidder? Is it based solely on what you recommend, or

do they do some assessment of the various companies? Do they

analyze your report saying there was a higher risk going with

General Dynamics than with Texas Instruments?

Mr. Cochran. I do not think that they made any independent

assessment of that judgment. I believe that it was strictly a review

of what we did, and then they decided to go the other way.

Mr. Stangeland. Is there any appeal procedure when an agency

that does technical work in a field like this and makes a recommendation and the upper agency rejects that recommendation, is

there any appeal procedure so that the technical agency is listened

to in these kinds of things?

Mr. Weithoner. There is no formal procedure. The Deputy Secretary, Mr. Beggs, did allow the FAA to come back, I believe, the

second time. Or at least he provided an opportunity for us to get

our word in again and as thoroughly as we wanted to. We did that,

and that’s the meeting that Mr. Cochran referred to where he went

over and spent several hours.

Might I add, sir, that the Office of the Secretary does have a

technical arm. At that time, there was an Assistant Secretary for

Research and Development who had people with technical backgrounds. I can’t say for sure what happened in this case; but in a

typical case, the proposal of the FAA would be reviewed both by

the contracting people in the Office of the Secretary and the technical people. They too would provide advice to the Deputy Secretary before he made a decision.
185

Mr. Burton. What was the date of the decision made by thenAdministrator Butterfield on the contract modification? Do you

recall that?

Mr. Weithoner. I don’t have the date itself.

Mr. Burton. There was a big meeting the day after they came

back from Florida. Then right after that, there was a small meeting?

Mr. Weithoner. Yes. I believe it was within a few days after the

return from Orlando.

Mr. Burton. That gets us to Mr. Sharp’s statement that the

decision to modify the contract was taken before July 17, and so it

couldn’t have been taken on August 30 or around that time.

Thank you. I’m sorry, Mr. Stangeland.

Mr. Stangeland. Then the safeguards that the FAA took as far

• as supervision of the program were apparently inadequate. I guess

I’m somewhat puzzled, because FAA began by assuming that General Dynamics was a higher risk organization. I would have expected that there would have been a little better monitoring of what

they were doing—or is that a wrong assumption?

Mr. Cochran. Maybe I should give you just a few bits of information that indicate to you some of the difficulty in monitoring the

contract.

One of the things that caused us some problems with the General Dynamics proposal was the method in which they proposed to do

work.

This company is essentially headquartered in San Diego. It had

decided, because it lacked some technical expertise on its own to do

the design work of a fairly complex system, that they would contract with another manufacturer for the technical design of this

radar set. So they contracted with Thompson CSF, a French organization, for the technical and engineering design of the ASR-8.

They also proposed in their proposal that they would, at the

point of receiving the technical design from the Thompson CSF

people in Paris, translate that design into language and American

manufacturing methodology—make that transition—and they

would do that by transferring some of their key people from their

San Diego plant to Orlando in order to carry this work out.

This allowed them to use Orlando, an area where they had a

plant, for something else and also an area where they considered 

the labor rates to be right. They would be able to put all this

together.

We spent quite a number of manhours trying to monitor that

contract. It wasn’t an easy contract to monitor.

It was a complicated radar; there are no two ways about it. I

wouldn’t minimize the complexity of the radar set. It is a complicated radar set.

’ We have been very demanding in the operational requirements

of radar sets for a very good reason, I think. And we’ve had good

success with radars, by the way. I don’t think anybody would

criticize us on that. We have good radar sets.

► But it was difficult to monitor that contract, just by the nature of

dispersion of the effect and by the nature of the transitioning from

one juridiction to another. The language barriers involved in that

transition were difficult for the manufacturer and for us.
186

These are part of the points that we made in originally assessing

that.

But sitting here now in retrospect, we realize that we should

have been even more diligent than we were.

Mr. Stangeland. I realize that. Hindsight is 20/20.

Mr. Burton. You were right the first time in recommending

Texas Instruments.

Mr. Stangeland. What I’m thinking now is that we should be

more concerned.

I’m concerned about what happened here. I just don’t understand

it.

But can we figure out a way for these things not to happen? I’m

sure this is only the tip of the iceberg of things that have happened

in dealing with the Federal Government, and that bothers me.

Mr. Cochran. I’m sure it is too. And that is not the only contract *

that we have, of course, and it’s not the only problem that we were

facing at the time.

The principal thing in the minds of most of us in the agency at

the time we were doing business in this ASR area was to get the

radar sets and get them delivered. I don’t think anybody can 

accuse us of not moving as aggressively as we could to develop this

other source with Texas Instruments and to be ready to transition

when we could. We did make that move; and, I think, we made it

dramatically.

We wound up by getting the last ASR from Texas Instruments 1

month ahead of when General Dynamics was originally scheduled 

to deliver the radar set. So we had actually got all of those

ASR-8’s. They are out there; they are performing. I think that’s

one thing to our credit.

I also think that when you talk about competition—and I think

it’s necessary for us to do that, because that contract for 37 radars

that we went to Texas Instruments with is now at 63 and we’re

considering 22 additional, between the time we finished that contract and 1985, we are projecting a need for 125 radars.

So when you say there is no requirement for competition, then

you’re-----

Mr. Burton. Nobody said that. We just said we didn’t think it

was the FAA’s job to give out $10 million grants.

Mr. Stangeland. To guarantee competition with a company that

couldn’t perform. That’s the point I want to make.

Let me ask you another question.

Why couldn’t Westinghouse, GE, Raytheon, and the others bid on

the ASR-8’s? Or did they bid on the ASR-8’s?

Mr. Cochran. No; they didn’t.

We solicited 62 or 63 firms. I don’t remember the exact number.

It wound up with only two bidding on it.

Mr. Stangeland. I’m not sure that this matters, but was there

anything in General Dynamics’ proposal, or were you aware, that

they didn’t have the technical expertise and the technical design

and had to farm that out? Or is that a customary procedure?

Mr. Cochran. It is customary to allow people to subcontract.

Almost every manufacturer subcontracts some aspect of his work—

almost every one of them. In fact, very few of them manufacture

large portions of it.
187

We had had radars built by others in the past. I’m not sure, but I

would venture to say, that the other manufacturers of radars have

hired consulting firms and other firms to do part of the design

work in some of the critical areas. So it is not totally unusual for

this to happen.

Mr. Stangeland. Do you know whether or not Texas Instruments has the technical design expertise to do their own, or do

they farm it out?

Mr. Cochran. Yes, sir. They have it; because, as I said, they did

the ASR-4, 5, 6, and 7 sets, which are just progressions of the radar

sets. The ASR-8 was another progression of that.

Mr. Stangeland. What kind of procedure would you recommend 

that we need to give the technical agency, such as yourself, the

appeal provision when you are overruled on a recommendation for

a contract? Do you have anything in mind for that?

It seems to me that the system has to be changed somehow.

Mr. Weithoner. There are a number of things that we have

done, or we are recommending.

One, we have proposed to the Office of the Secretary that they

consider delegating to the FAA Administrator, Mr. Bond, what we

call the source selection authority, that is, the final responsibility

for determining which contractor ought to be selected to perform

the contract.

Another thing that was raised just a moment ago, on monitoring:

We have greatly strengthened and improved our top level monitoring of contracts such as this one. For example, Mr. Frakes and Mr.

Sharp, on major contracts, now make regular program review visits

to the site to talk with the contractor people and to review how

they’re coming along and to point out the problems that we anticipate and to discuss how they’re going to be resolved. Those things

have all been developed and greatly strengthened since the time of

these critical decisions.

Mr. Stangeland. I have a couple more questions.

Do you know what the economic impact on General Dynamics

would have been had they been forced to perform or default that

contract?

Mr. Bond. Mr. Stangeland, I might just add one thing.

We have discussed with the Secretary the delegation of this final

decisionmaking authority to the FAA Administrator. It does not

now exist.

I don’t know that in the long run, over the large number of

decisions of this kind, that my decision or my predecessor’s decision

would necessarily be any better than that of the Secretary’s Office.

Jim Beggs, for example, is an electronics expert. I am not.

With the benefit of hindsight, Mr. Chairman, apparently he was

wrong.

Mr. Stangeland. Maybe commonsense would do better than

anthing else.

Mr. Burton. I would much rather he be working for Texas

Instruments than the other people.

Mr. Bond. I’m sorry; I didn’t get that.

Mr. Burton. It’s just a little of my whimsy, but I would just as

soon he was working for Texas Instruments instead of for General

Dynamics.
188

Mr. Bond. I don’t know. Perhaps he could explain that.

Mr. Burton. That thought has crossed some people’s minds.

Mr. Bond. I’ve been told that it is quite infrequent that our

proposals to the Secretary’s Office are overruled. In memory, on

only two occasions has that happened. Both of those occasions, Mr.

Chairman, are subject to this hearing today. There have been no

instances we can recall, since the ARSA-3 and the ASR-8 decisions, where the FAA’s recommendation was overturned.

The point is that I don’t believe it’s a burden or that the present

system seems to be turning up any wrong decisions. -

Mr. Stangeland. Based on those bid summaries, or whatever

you call them, what was the problem with that June 1972 bid? You

evidently recommended that one.

Mr. Cochran. Yes, sir. We recommended an award of those sets „

to Texas Instruments at that time. It was turned down because at

that time we only had the one technically responsive manufacturer. That was Texas Instruments. General Dynamics, although we

had a price from them, we considered their proposal at that time to

be technically unresponsive to the proposal. We were told that we

needed price competition and to go back and negotiate with them

into a competitive range in a technical sense.

Mr. Stangeland. DOT told you that?

Mr. Cochran. Yes, sir.

Mr. Stangeland. It looks to me like the wrong company was

low, and so we just rejected it until we got it juggled around until

the right company was low.

I’m not accusing you, sir, but I just wanted some clarification.

The whole thing smells.

Thank you, Mr. Chairman.

Mr. Burton. I have just a couple questions, and then I’ll yield to

Mr. English.

The alternatives are listed in the alternative action position

paper. The paper lists courses of action and advantages and disadvantages listed for each course. They are: determination to continue performance with subcontractor; to be able to breach the contract in the national interest; or to obtain the prototype with 40

antennas and terminate for mutual convenience, balance of equipment, and procure the rest of the antennas from Texas Instruments.

There is no disadvantage stated for that alternative. In fact, in

our copy there isn’t even an advantage.

Who came up with the $12.8 million figure? Let’s assume you

wanted to buy out. Who said that it was worth $12.8 million, or

whatever?

The decision was certainly made. There was an oral offer from

General Dyanamics that no one at the witness table knows about. ,

The proposal is mentioned in a memo signed by Mr. Lamont, that

also talks about the program in Orlando. Does anybody know if Mr.

Beggs talked to Mr. Butterfield? In other words, were any of you at

the meetings where it was decided? ,

Mr. Frakes. Mr. Chairman, if I understand your question, it is,

where did the $12.8 million figure come from? That was a number

proposed by General Dynamics as their cost to furnish the one
189

prototype radar and the 40 antennas, to complete it from that date

forward—the total dollar value.

Mr. Burton. Was that cost figure known for that option that was

chosen of the five options laid out?

Mr. Frakes. I believe it was, sir.

Mr. Cochran. I believe it was.

Mr. Burton. Were either of you at the meeting with Mr. Dow

and Mr. Butterfield where the decision was honestly made, of

which there seems to be no record anywhere?

Mr. Frakes. I was at the meeting when Mr. Butterfield made the

decision to go with one radar and one antenna.

Mr. Burton. For $12.8 million? He knew that it was $12.8 million?

Mr. Frakes. He knew that. That was the ceiling price.

Mr. Burton. Was it just quiet meditation and then a signature?

Were there any reasons given?

Mr. Frakes. I’m not sure I understand your question.

Mr. Burton. Was there any explanation or discussion?

In the future, maybe all meetings like this will conform to regulation and have memorandums and records so that historians, operating out of trivial interest, may know what happened.

What was the discussion? What information was presented to

Mr. Butterfield? The document that listed the five alternatives? Or

was it down to one alternative when it came to him?

Mr. Cochran. As I recall the meeting, I think he heard all of the

discussions and fairly well knew what the pros and cons of all the

discussions were insofar as we knew them. They haven’t changed 

an awful lot, except that we did expect them to perform and they

haven’t. So that has changed. But at that time we had representations from the company that they were going to perform.

Mr. Burton. Even if they performed, it’s an outrage. The fact

that they didn’t is almost incidental. It makes it worse. $12.8

million is a pretty big price.

Were you people just there giving options, or did you make

recommendations as to what you thought should be done?

Mr. Cochran. I don’t think we had any discussion with the

Administrator. We heared the Deputy Administrator explaining

the options and explaining the propositions. I don’t recall that-----

Mr. Burton. Did he make a recommendation?

Mr. Cochran. Yes, sir.

Mr. Burton. The Deputy Administrator, Mr. Dow?

Mr. Cochran. Yes, sir.

Mr. Burton. He recommended and then—Administrator Butterfield accepted?

Mr. Cochran. Yes, sir.

I think he explained what the other options were.

Mr. Burton. He didn’t give any reason why he recommended

this?

Mr. Frakes. His main consideration was-----

Mr. Burton. Was to keep General Dynamics competitive?

Mr. Frakes. Yes, sir. It was very important.

Mr. Burton. Absolutely. They are very competitive in this

market.

27-075 0 - 78 - 13
190

Mr. Weithoner. With regard to the earlier meeting, the one at

which I was present, I think it’s fair to tell you, sir, that neither

Mr. Frakes nor Mr. Cochran recommended the course of action

that was taken. They gave the pros and cons, as best I recall the

meeting, and all the options. They, in fact, recommended the

option of trying to procure the 40 antennas and not buying the

single radar.

Mr. Burton. I appreciate that.

Here’s the problem we have had in preparing for the hearing.

We don’t know anything. Mr. Cochran and Mr. Frakes are down in

Florida and there is no record of their meetings with General

Dynamics officials. There is some verbal offer by General Dynamics

and yet there is no record. There are meetings, and yet there is no

record. There are sweetheart deals made, and we don’t know the

facts until they are brought out today.

We started the hearing with whatever information could be gathered by Mr. Rider, and we’ve gotten a little more information today

than Mr. Rider was able to get in his interviews.

This decision is just beyond my imagination—I cannot understand how he did it.

Mr. English?

Mr. English. Thank you very much, Mr. Chairman.

Mr. Bond, I wonder, for the record, if you would have each of the

gentlemen who have accompanied you identify themselves and tell

us when they came with the FAA, as well as who they were

employed by before they came with the FAA.

Mr. Bond. I will start with myself.

I am Langhorne Bond. I am the Administrator of the FAA. May

4 is my date with the FAA. I was an employee of the State of

Illinois as secretary of transportation before that time, and for 4

years previous to that as well.

Mr. Weithoner. I am Gene Weithoner, the Associate Administrator for Administration. I have been with the FAA, this tour, for

about 5 years—not all that time in the same position I am now in.

I was the Deputy for awhile. Before that, I was in the Office of the

Secretary for about 5 years in various positions. Before that, I was

in the FAA in a personnel position and before that, with the U.S.

Civil Service Commission.

Mr. Cochran. I am Jefferson Cochran. I came to work for the

FAA on June 6, 1948, I think 3 days after I got out of college. My

entire career has been with the FAA. I was in the Army in World

War II, and I then came to work for the CAA, in those days. I have

worked as an engineer and technician in progressively responsible

positions since that time. I have served quite a number of Administrators.

Mr. Frakes. I am Richard Frakes. I came with the predecessor

organization, CAA, in 1949. I have been with the FAA up to

today—28 years. I have worked in the field for about 7 years. I

came to Washington in 1957. I have been in various organizational

elements. I am an engineer by training. I have been in my present

job since June of 1974. I was Acting Director from January to

June. Prior to that, I was Deputy Director for 3 months.

Mr. Sharp. I am Warren Sharp. I am currently Director of

Airways Facilities Service. I have been in the employ of the CAA/
191

FAA since November 1947. I was Deputy Director of Airways Facilities Service at the time of occurrence of the events we are

talking about—the 1971 to 1974 timeframe.

Mr. English. Mr. Bond, with the exception of yourself, it appears

that you are the newcomer to the group. All of you gentlemen were

with the FAA during the time that the events we’re discussing

here transpired. Is that correct? [All indicate yes.]

Mr. Bond, in looking at your testimony, I was struck by one

statement in particular. You point out that there is a comprehensive overhaul of the acquisition management process which I would

assume would be an admission, by the FAA at least, that things

were not as they should have been with regard to procurement; is

that correct?

In other words, what I’m saying is that there were some serious

problems with the procurement process as it existed before the

recognition was made and this plan was undertaken.

Mr. Bond. I think the answer to that is that it could have been 

done in a more systematic way, especially with regard to recordkeeping, as the testimony here has indicated.

I would like to take credit for it, but I must say that it was

initiated before I came here and I am happy to carry it on.

Mr. English. I would certainly agree with you, given the five

studies that were taking place—I would assume they were a result

of that. I might say that I believe this subcommittee can take some

credit for sparking those views by some outside groups.

We have had several hearings by this subcommittee over the

past couple of years, both by the current chairman and by the

previous chairman, into some difficulties with the FAA.

If you will remember, earlier this year when you came before

this committee, we had some discussions with regard to a training

simulator that was to go to Oklahoma City. You indicated at that

time that you would look into this matter and see what you could

determine about it. Have you, in fact, looked into it?

Mr. Bond. I have. It was one of the subjects that was to be

discussed at the hearing today.

I did touch on it in my prepared statement.

The current circumstances are that we are evaluating proposals

for it, and we anticipate an award for the simulators themselves in

January or February of 1978. We think we will make that target

date.

As I mentioned in my testimony before the committee, the

ground is already broken on the building for that facility in Oklahoma City.

Mr. English. Earlier we asked GAO with regard to who the

contracting officer was during the period from 1971 through 1974;

can you give us that information?

Mr. Weithoner. I can’t name an individual contracting officer.

Mr. Chestnut possibly could.

Mr. Chestnut. James E. Chestnut, Chief, Contracts Division,

FAA. There was a series of contracting officers.

Mr. English. How many contracting officers would you suspect

were in office during that period? You’re talking basically about a

3-year period.
192

Mr. Chestnut. Are you talking about simulator procurement

itself?

Mr. English. That would be one. I am interested, as well, in the

other two procurements.

Mr. Cochran. You mean the man in charge of procurement

totally; the man who had Mr. Frakes’job prior to that?

Mr. English. I would suspect that would be true. I’m looking for

the man who made the decision to make the purchases. That’s the

man I’m looking for.

Mr. Cochran. That was Mr. Paul Comulada who had that job

prior to this time.

Mr. English. Through that entire period of 1971 through 1974?

Mr. Weithoner. He would have been the Director of the Logistics Service. That means he supervises all the contracting officers

of the Procurement Division. It does not mean that he would

necessarily have made the decision to buy or not to buy on a

particular piece of equipment. He was in charge of the contracting

activity within the FAA.

Mr. English. Was he in charge of the procedures that were set

forth?

Mr. Weithoner. Generally speaking, yes, sir.

Mr. English. He was the one responsible then for carrying out

those procedures or making sure that they were carried out—let

me put it that way.

Mr. Weithoner. They were carried out in his office; yes, sir.

There were some things-----

Mr. Burton. He had the responsibility for running that office;

right?

Mr. Weithoner. For running the contracting office.

Mr. English. And this was for the entire period of 1971 through

1974?

Mr. Weithoner. 1971 through late 1973,1believe.

Mr. English. Can you tell us where he is at the present time?

Mr. Weithoner. He is retired, and I don’t know where.

Mr. English. I was struck, Mr. Bond, by your testimony with

regard to the training simulators, that on two occasions the FAA

unsuccessfully attempted to acquire modern simulation capability

for use in training air traffic controllers. Could you give us the two

instances that you were referring to?

Mr. Bond. I was referring to the arrangement with Sylvania. 

That would be the first.

Mr. English. Would you care to elaborate on that one on the

events that took place?

Mr. Bond. Perhaps I could get Mr. Weithoner to do that.

Mr. Weithoner. I wasn’t there at the time, but I know the

general history. This was about 1971 or 1972. There was a contract

signed with Sylvania to produce a number of simulators. I believe

the total value of the contract was on the order of $5 million. I

believe the contract called for the development of a prototype, or a

first model.

Sylvania got started on that one. They spent about $1 million 

and were into it something on the order of 6 months to a year. 

Then they came to the FAA with the idea that to produce the first
193

one was going to cost substantially more money and take more

time than they had earlier anticipated.

The FAA reviewed the circumstances and decided to terminate

that contract. So we spent about $1 million of the $5 million that

was originally projected.

Mr. English. Isn’t it a fact, with regard to that, that you received—let me ask this question. Did you receive anything in

return for that $1 million or $1.5 million?

Mr. Weithoner. Nothing substantial. I believe they got some

pieces of equipment or things like that which were delivered to the

academy. But there was no simulator delivered.

Mr. English. And during this period, basically from June 30,

1972, to February 14, 1973, Sylvania took $1.5 million of the taxpayers’ money; and the Government got nothing in return; is that

correct?

Mr. Weithoner. I think we got nothing substantial; yes, sir.

Mr. English. You didn’t get $1 million worth?

Mr. Weithoner. No, sir.

Mr. Burton. It depends on the price of scrap.

Mr. English. Would you care to elaborate on the second instance?

Mr. Weithoner. We then started, in 1973, with an attempt to

procure simulation capability. At that time we looked around and

made a survey of the market. We went out and looked at a number

of firms to see if they had simulators that were in existence, or

close to it, that could meet FAA purposes rather quickly.

We ended up, after surveying some 15 or so firms, entering into

negotiations with the Space Research Corp. Those negotiations extended from roughly July to November or December 1973. At the

end of that, as I’m sure you know, we did not enter into a contract.

Mr. English. Did Space Research Corp, submit a bid at the time

that the contract was awarded to Sylvania?

Mr. Weithoner. I don’t know that, sir; I would have to check it.

Mr. English. I can tell you that they did not.

Are you familiar with how Space Research Corp, got involved in

1973—in fact, the period between February 14, 1973, and July 18,

1973?

Mr. Weithoner. I may be wrong, sir, but I believe that in the

spring they submitted an unsolicited proposal to the FAA—that

would be February or March of 1973.

Mr. English. I beg your pardon, but I believe the FAA went to

Space Research Corp, in the spring of 1973.

Mr. Weithoner. OK.

Mr. English. The reason they went to Space Research Corp, in

the spring of 1973 was because Space Research Corp, was already

in their third phase of simulators. In fact, they already had simulators in place in Canada as well as other countries abroad.

Mr. Weithoner. I know they did have simulators operating in at

least several places; yes, sir.

Mr. English. I wonder why Space Research, since they already

had simulators in place and being used by the countries, when the

FAA put this thing up for bid for the first time and Sylvania got it, 

I wonder why they didn’t submit a bid.

Mr. Weithoner. I have no idea, sir.
194

Mr. English. Did any of you other gentlemen involved have any

discussions with Space Research, or are you familiar with the facts

on that?

Mr. Weithoner. I don’t believe there’s anyone here who was

involved in that procurement back in 1971 and 1972.

Mr. English. I can tell you from my discussions with Space

Research why they didn’t do it. It was basically because FAA had

the reputation throughout the electronics industry that it deals

only with major companies. And even though Space Research Corp,

does do a great deal of work with the Department of Defense, they

felt that it wasn’t worth their time and effort to submit a bid.

In the spring of 1973, after Sylvania defaulted on this particular

contract, in less than a 12-month period of time they took the

Government for over $1 million of the taxpayers’ money. They 

provided absolutely nothing in return, with the exception of a few

nuts and bolts. FAA went to Space Research Corp, and asked them

to submit a bid. Once again, they put up the very same specifications that they put the bid out for the first time.

Does that track with what you remember of the situation?

Mr. Weithoner. I wasn’t there, but it generally tracks with my

understanding of what happened; yes, sir. I thought that we had

received an unsolicited proposal, but I wouldn’t deny that we might

have made contact with them.

Mr. English. In fact, back in 1973, on September 21, in a letter

to John McFall with the Appropriations Committee, the FAA

stated that the same specifications were offered to Space Research

Corp, that GTE-Sylvania said they could not meet. This company 

said, in fact, that they could meet the specifications with very little

difficulty—and, in fact, meet them by the end of 1973 and have the

first simulator on its way to the training center in Oklahoma City

at that time. Are you familiar with that?

Mr. Weithoner. Generally speaking, yes, sir.

Mr. English. Are you also familiar with the requirements and

the device that was produced by Space Research Corp.?

Mr. Weithoner. In a very general sense. I have never seen it; I

am not an expert in that field. But I know they had a simulator.

Mr. English. Have you talked to the people who are familiar

with it?

Mr. Weithoner. Yes, sir.

Mr. English. And what were their observations?

Mr. Weithoner. At the time—this is back in the summer of

1973—at least some of the people that I talked to felt that they had

a simulator that would meet FAA requirements and that we

should go ahead and buy it. That, of course, is why we went into

the sole source negotiation with them.

Mr. English. So in September 1973, FAA technicians were satisfied with the progress being made on the simulator being developed

by Space Research; is that correct?

Mr. Weithoner. I think they felt generally that Space Research

either had or could develop fairly quickly something that would

meet our requirements.

Mr. English. Could you identify Mr. William Flener?

Mr. Weithoner. He’s the Associate Administrator for Air Traffic

and Airways Facilities.
195

Mr. English. In a question back on April 7, 1976, I asked Mr.

Flener that very question with regard to a letter that he had

written.

Basically, here is my question. This was a series of questions:

Let’s throw out the letter to SRC and take specificially your statements of June

29. Evidently you felt strongly about the SRC simulator if you were willing to say it

meets all the requirements. That is what you said.

Mr. Flener responds:

Yes. That device met all the requirements. I feel the same way today.

Do you differ with Mr. Flener’s statement?

Mr. Weithoner. In this respect, I would, sir, if I remember and

understand the situation correctly.

Was that letter you just referred to 1976?

Mr. English. This was hearings before this committee on April

7, 1976.

Mr. Weithoner. But the letter that you quoted.

Mr. English. The letter is immaterial; it doesn’t matter. Basically I was saying: “Throw out the letter. Forget about the letter.”

I’m saying that:

Evidently you felt strongly about the SRC simulator if you were willing to say it

meets all the requirements. That is what you said.

Mr. Flener responds:

Yes. That device met all the requirements. I feel the same way today.

That was a year ago. Mr. Flener said he still felt that that

simulator met all the requirements that FAA had.

Mr. Weithoner. I guess I would differ with him at least in this

respect, sir.

At that time, I believe there was a discussion of purchasing one

simulator. That was what SRC—I don’t understand. I would like to

read the correspondence and see what it is that Bill was responding to and what he said.

Mr. English. Basically, we’re talking about a simulator. The

first one was to be delivered the first of January of 1974. That was

the schedule that was set up.

So basically, you had a situation where the FAA went to SRC.

They said: We need a simulator; can you meet these requirements?

GTE-Sylvania had just bitten off $1 million and said the thing

couldn’t be built, even though this company had them in operation

throughout part of the world.

SRC said they could do it. FAA went ahead and put out the bids,

and SRC met it and started building a simulator—basically running from July 18, 1973, to a deadline for delivering the first one

the first of January 1974. That was basically less than 6 months

they were going to build one and have it in Oklahoma City and

ready to go; isn’t that correct?

Mr. Weithoner. Not quite, sir. I think that the contract would

have called for delivery perhaps 4 or 6 months after the contract

was awarded. It couldn’t have been January of 1974; it would have had to have been after the contract was awarded.

Mr. English. Again, that’s where we get into the question of

litigation as I understand it—as to whether or not a contract was

let. Isn’t that correct?
196

Mr. Weithoner. Our position, as you know-----

Mr. English. I know what your position is, but the court hadn’t

decided on that. At least I, as one member of this committee, may 

differ with you on that, being familiar with the developments and

the letters that were written on it.

But it’s my understanding at least that Space Research Corp,

had it in their heads that they were going to deliver the first one to

Oklahoma City in the first part of January of 1974. You had an

awful lot of people from FAA that were crawling all over them up 

there through the latter part of 1973 as to the requirements for

producing such a simulator.

It appeared to me that Space Research, at least, was convinced

that they had a contract; because they were doing everything they

could to comply with it. At the same time, they were building one

of them. They weren’t planning on keeping it around up in Vermont. It was supposed to go to Oklahoma City the first part of

January.

Mr. Weithoner. I’m sure they expected to get a contract.

Mr. English. All right.

Then we get down to December 1, 1973. Here we have Mr.

Flener, as he stated in 1976: “This device has met all the requirements of a training simulator.”

In fact, he feels the same way today. In 1976, he still felt the

same way—2 years after everything was canceled.

So on December 1, the thing was canceled.

Mr. Weithoner. I don’t believe that’s the correct date, sir. It was

in December of 1973 or January of 1974, but I don’t think-----

Mr. English. It was in December. The dates that we have from

the testimony we had before is that it was early December.

Mr. Weithoner. I would have to check.

Mr. English. That’s when the meeting was held.

If you could check and find out, I would appreciate it; because

the last time we had a little go-around with FAA on this, they

couldn’t even tell us who was at the meeting.

Mr. Smith. Excuse me. There was a meeting on December 17

where SRC was informed by the contracting officer that their

conclusion of negotiations did not indicate necessarily that there

would be a contract.

Mr. English. The letter, as I understand it, was dated January

30, 1974. And I’ve seen the letter.

Mr. Smith. There was a meeting on December 17, and SRC’s own

internal documents bear that out.

Mr. English. Were SRC representatives there at that meeting?

Mr. Smith. Yes.

Mr. English. They attended that meeting?

Mr. Smith. That’s right. The meeting with SRC.

Mr. English. That’s very good. Mr. Flener said he was there at

that meeting. Wasn’t he there?

Mr. Smith. No. This was a meeting having to do with the-----

Mr. Burton. Could you come up and identify yourself for the

record?

Mr. Smith. My name is Richard Smith. I am the Assistant Chief

Counsel for Procurement at FAA.

Mr. Burton. Have you been sworn?
197

Mr. Smith. Yes; I have.

Mr. English. Are you saying then that Mr. Flener was not at

this meeting?

Mr. Smith. I’m not really sure of the meeting you’re talking

about.

Mr. English. We’re talking about December 17. You’re the one

that gave us the date.

Mr. Smith. There was a meeting on December 17. That was with

SRC. It had to do with the conclusion or wrapup of negotiations

with them.

Mr. English. Are you saying then that they were notified at that

time that FAA was not going to purchase simulators from them?

Mr. Smith. They were notified—and I think I even have the

language—

The successful completion of our negotiations does not mean that there will be a

contract. Because of the energy crisis, the FAA is studying the impact of the crisis

on all FAA programs to determine a posture.

Mr. English. OK, that’s fine.

So the meeting, as I said, took place in early December. What

you’re saying here is that this was the meeting with SRC when 

they finally notified them whenever FAA started-----

Mr. Smith. Previous to that a preaward survey team had gone to

Space Research one more time to look at some technical and financial questions that were still continuing.

Mr. English. Right. One month before delivery.

Mr. Smith. But there was no contracting officer present at that

meeting.

Mr. English. Like I said, we get into this question of contracts. I

don’t want to get into the question of the legality of it since it is in

court. But I’m not sure if I were going to come out publicly, that I

would come down on your side. I think you have a pretty good idea

of which way I would come down.

The point is that the first part of December a meeting was held.

The decision was made that FAA, for some reason, would not now

purchase these training simulators.

Mr. Smith. The meeting that Mr. Weithoner attended.

Mr. English. That’s the one we’re talking about. That’s the one

we’re having trouble finding out who made the decision. Nobody

made the decision at that meeting, but all of a sudden we had to

materialize out of it a decision. Someone, by osmosis, told everybody at the meeting: We’re going to decide against carrying out

this contract.

Mr. Weithoner. I believe that meeting was in late December.

My memory may fail me, but I think it was around the 29th or

30th.

Mr. English. I think we can pull the testimony of Mr. Flener.

He told us it was early December.

Mr. Weithoner. If we’re talking about the same meeting, I think

Mr. Flener was not present at the meeting I’m talking about.

Mr. English. I’m talking about the early meeting. I’m talking

about the meeting where only FAA people were there. I’m talking

about the meeting where no records were kept. That’s the meeting

I’m talking about, and Mr. Flener says he was there. That’s when 

he says the decision was made.
198

Mr. Burton. You really ought to keep records of those meetings.

[Laughter.]

It leads us to believe the worst if we can’t prove anything else.

Mr. English. Basically, the information that you’re putting forth

about what took place in the meeting with SRC in the middle part

of December of 1973, in which you started getting worried about

the energy crunch—with the energy crunch we weren’t going to

have any airplanes flying and so we didn’t need to train any air

traffic controllers—wasn’t that the gist of the whole thing? Wasn’t

that the gist of a letter that was written, in fact, informing the

people at Space Research in January that you would not be accepting the training simulator? The one that was sitting on the loading 

docks in Vermont waiting to be shipped.

Mr. Weithoner. I wouldn’t state it quite that way.

It seems to me that in the meeting I attended, which I think was

the next to the last meeting before a final decision was made which 

was in late December, the energy crisis was one of the reasons that

was discussed at that meeting as one of the things to consider

before you decided whether to go ahead with the SRC contract or

not.

As a matter of fact, I don’t believe it was on the dock ready to be

shipped as recently as 1976.

Mr. English. Who was the Administrator in December of 1973?

Mr. Weithoner. That would have been Mr. Butterfield.

Mr. English. Where is Mr. Butterfield employed right now?

Mr. Weithoner. He’s on the west coast working in the private

sector, but I-----

Mr. English. For what company?

Mr. Weithoner. I don’t know.

Mr. English. Isn’t it Raytheon?

Mr. Weithoner. No, sir. He was not involved with Raytheon the

last time I knew.

Mr. English. He is not with an electronics company? Was he not

employed by an electronics company whenever he left the FAA?

Mr. Cochran. He consulted for a number of companies, but I

don’t believe he-----

Mr. English. Consultant means he is hired on. He’s getting paid.

That’s the same thing. It may be a fancy name to say he’s a

consultant, but he has hired on.

Mr. Weithoner. I heard him say on television that he was unemployed. That was a substantial period of time after he left the FAA.

Mr. English. It is my understanding that he was employed by an

electronics company—whether as a consultant or what I don’t

know. Whether he was drawing hourly wages or drawing a monthly check I don’t know.

Were you, or are you, aware of a contract that was supposedly

made—at least charged by Space Research Corp, shortly after the

discussions with the FAA in the spring of 1973 by Raytheon Co.?

Mr. Weithoner. No, sir. I don’t remember anything that I can

tie in with-----

Mr. English. You heard no story about that?

Mr. Weithoner. Contacts between whom? I’m not sure I understand.
199

Mr. English. By Raytheon officials contacting Space Research

Corp.

Mr. Weithoner. No, sir.

Mr. English. You’re not aware of that?

Mr. Weithoner. No, sir.

Mr. English. Are any of you gentlemen aware of that?

Mr. Cochran. No.

Mr. Frakes. No.

Mr. English. You heard no story like that at all?

Basically, as I understand the story, and, again, I would say this

was told to me by Space Research Corp., they were contacted by

officials of Raytheon. The Raytheon officials told them in effect to

either subcontract this through us or you’re not going to get your

contract completed.

Mr. Weithoner. I can’t comment on that. I never heard of the

meeting.

Mr. English. It wasn’t a meeting; it was a telephone conversation.

Mr. Weithoner. I have no knowledge.

Mr. English. Supposedly—and, like I said, this is coming from

Space Research Corp.—Space Research Corp, turned them down.

That’s the reason they feel that when it came time to ship that

training simulator out, it didn’t go anyplace.

Mr. Weithoner. I don’t think they had a simulator ready to ship 

out, Mr. English. Maybe it’s a moot point. But as recently as 1976,

when Dr. McLucas who was then the FAA Administrator, was

looking into the procurement of the one simulator that they had

finished, Dr. McLucas named a special team to go up to Troy where

the plant is to take a look at that one simulator. I did not make

that trip. As I understand it, the simulator was not operating when 

they were up there; it would not perform.

Mr. English. I know when I was up there, and I believe that this

was February of 1975 if I remember correctly. I went to North

Troy, Vt., to Space Research Corp., and I saw the training simulator then. In fact, Canadian teams came down and showed us how to

operate it and what it did and explained to us exactly how the

procedure and the process was working for them.

Mr. Weithoner. I’m sure they may well have had one operating.

All I know is that when our team went up there in 1976, it did not

operate on the day that they were there.

Mr. English. I see. It operated on the day I was there, and I was

there a year earlier.

Mr. Weithoner. I don’t know, sir.

Mr. Burton. May I ask one question?

Mr. English. Sure.

Mr. Burton. How many controllers could be trained with one

simulator?

Mr. Weithoner. I don’t know how many.

Mr. Burton. What was the cost of the simulator? Was it $5

million for all 28?

Mr. Weithoner. I believe it was a little higher than that, but

that’s somewhere in the ball park.

Mr. Burton. All right.
200

Within two recent fiscal years, you blew about $25 million in air

traffic controller attrition. Conceivably, if you had had simulator

training, maybe a little better screening, and had kept a better

track record of them, you could have saved enough money by

decreased attrition alone to pay for simulators.

Mr. Weithoner. There would be some saving, no doubt, if we had

a simulator to be used in initial screening. As you and Mr. English

know, we have started a program—almost 2 years ago in Oklahoma City.

Mr. Burton. That was right after you had the back-to-back $12

and $13 million annual loss?

Mr. Weithoner. I don’t know about the $12 and $13 million loss.

Mr. Burton. That was money lost because people we spent

money on to train to become air traffic controllers were not competent to do the job. Some probably left for other reasons.

Mr. Weithoner. We had a fairly high attrition rate.

Mr. Burton. Yes, which meant that amount of money wasted

during 2 recent fiscal years. That’s why I’m wondering if at the

same time-----

Mr. English. The chairman, I think, has made an extremely

important point with regard to the losses. The difficulty that I have

with this entire question comes down to this issue—not only of

money but of losses because of the 35- to 40-percent washout rate

that we have all the way through the program that could be saved

because of these training simulators.

As I understand it, at the present time, we don’t even know if

these people can read radar until they get through the school and

go back to the place they are going to be stationed. This, to me,

seems senseless.

Mr. Flener says in his testimony in 1976 that this “simulator

meets all the criteria put forth by the FAA.”

For some mysterious reason, I have an extremely difficult time

believing that Space Research Corp, is going to go ahead and build

you a training simulator out of the goodness of their hearts, hoping

that in December after the thing is put together that you people

are going to buy it. That’s certainly in contrast—as the chairman

commonly refers to it—to the sweetheart deals that we’ve seen 

elsewhere in this industry. It just doesn’t fit.

What it comes down to are the lives of the people who fly in

aircraft. It’s not just the loss of money but the lives and knowing 

that the air traffic controllers could do a far better job if they were

trained on radar simulators.

Mr. Burton. It would also save money.

Mr. English. Instead of coming back and trying to do OJT. And

that’s basically what they’re doing. Would you disagree with that?

Mr. Weithoner. I would disagree with the total impact of your

statement.

Could I add a couple things to it?

Mr. English. Sure.

Mr. Weithoner. Starting 2 years ago, as you know, we started a

new training program in Oklahoma City. We do not have simulators. I make no issue over that. We could do a better job if we had

simulation capability. I don’t think anyone would deny that.
201

Mr. Burton. Do you think you could rest on your attrition rate

too?

Mr. Weithoner. I’m not sure, but I can tell you the results so

far. Of the people who have completed the training we now have at

Oklahoma City, our washout rate or failure rate in the academy

without simulation is about 21 percent. It goes up and down depending on what class you have and things like that.

I think the big bulk of the attrition from people who are not able

to do that controller job we are now capturing in the first 16 weeks

of their initial training. When we add simulators, there will be

some additional people who are not able to cut the simulation

training; and they’ll be-----

Mr. Burton. The earlier you cut them, the more you save; right?

Mr. Weithoner. Yes, sir. We want to be responsible about it. We

don’t want to cut people about whom there’s a probability that

they would succeed. But right now we are washing out about 21

percent. Of course, you never know until those people have progressed through the system and get into the full developmental

position.

We believe that the great bulk of those people will become qualified and good journeyman air traffic controllers.

Mr. English. Isn’t it a fact that up until this new program you

were mentioning was first instituted that you didn’t even have a

pass-fail system?

Mr. Weithoner. We did not.

Mr. English. If an individual could stay awake down there in

that classroom, he was going to pass no matter what he learned?

Mr. Weithoner. Up until about 1969, we had a pass-fail system.

Mr. English. I believe we had testimony before this committee

back in 1976 that there was no pass-fail system and had not been

one for several years.

Mr. Weithoner. That’s what I was about to say, sir.

Up until about 1969, we had a pass-fail system. About 1969 or

1970, they dropped it. So we did go to the training program, which

was accomplished, in part, at the local facilities and, in part, some

of the trainees went to Oklahoma City. You are correct. Essentially

no one failed in Oklahoma City until about 2 years ago when we

started the new training program.

Mr. English. Isn’t it true that until that person actually graduated from the school and was sent back to his station, you didn’t

even know whether he could read the radar or not?

Mr. Weithoner. I think that’s probably true. I couldn’t say-----

Mr. English. Isn’t it also true that some people simply do not

have the capability to read radar, regardless of their training?

Mr. Weithoner. That’s my understanding, yes, sir.

Mr. English. Isn’t this part of the washout rate that you get

into?

Mr. Weithoner. It’s a part of it. We won’t know what-----

Mr. Burton. Excuse me, but this gets right back to what Mr.

English was saying.

You get them all the way through the training period, and then

you find out that they can’t read radar. As I said, within 2 years

that amounted to about $25 million. I don’t know how many simulators that money could procure.
202

Mr. Weithoner. I believe in the last 2 years, we have identified

the great majority of those people who can’t do the job of air traffic

controller.

Mr. Burton. You’re doing it earlier now.

Mr. Weithoner. Yes, sir.

Mr. Burton. What was the loss? I think it was only $8 million

recently, or something like that.

Mr. Weithoner. I’m not sure of that number.

Mr. Burton. That still seems like a lot of money. You ought to

be able to find out sooner.

Mr. Weithoner. You don’t really know until you get it. We are

washing out about 21 percent now, and I think that’s going to be

the bulk of the people who don’t have the basic capabilities. When

we add simulation, we’ll be able to do a better job. But what the

percentage will be I don’t think anybody could tell you.

Mr. English. Are you familiar with the Canadian program?

Mr. Weithoner. No, sir.

Mr. English. Are any of the gentlemen here familiar with that—

their use of training simulators?

Mr. Weithoner. We have had people up there—people from air

traffic service and our training office. I have not been up there.

Mr. English. Are you talking about, on 21 percent, from the day 

that individual was hired all the way through until he completes

his journeyman work?

Mr. Weithoner. I’m saying that 21 percent of the people are

failing as a result of the first 16 weeks of their training.

Mr. English. How long is his total training—from the time he’s

a journeyman all the way through from the first day until he

completes his journeyman work?

Mr. Weithoner. It depends on the type of facility he goes to. It

can be up to 4 years, or it can be as short as 2 years if he goes to a

low-level-----

Mr. English. That’s exactly right. It depends upon the type of

installation that he goes through. If he’s handling cross-country

flights, it may be 4 years before he completes that work. If he’s

dealing with one of the major metropolitan airports in this country, it will be less than that. Isn’t that correct?

Mr. Weithoner. I don’t think it would be less, sir.

If he goes to one of the major terminals, it still takes him several

years to progress up to-----

Mr. English. All right.

And if he ends up at one of our smaller airports?

Mr. Weithoner. Then he may get productive in something like

1

x

/2 or 2 years.

Mr. English. Now what’s the washout rate from that first 4

years, or until he completes that journeyman process?

Mr. Weithoner. The best estimate we have right now—and, of

course, you always are looking back several years because you’re

looking at people who came into the system 4 and 5 years ago—

there was about a 23-percent loss to the en route and terminal

option. Some of those people will go from one facility to another.

The statistics we have are that about 38 or 43 percent, which has

come out of a study by the Institute of Defense Analysis-----
203

Mr. English. So if he fails at one installation, he gets a transfer

or downgraded to another one to see if he can handle the job there.

Mr. Weithoner. He may not fail, sir.

Mr. English. Well, if he can’t cut the mustard. That’s basically

what it amounts to. If you don’t want to call it failing, that’s fine.

Mr. Weithoner. Some of them do fail.

Mr. English. But he’s not kicked out of the program. If he gets

into cross-country flights—if that’s the slot that he was hired for

and trained for—and he goes to work there and they suddenly find

that he can’t cut it and it’s too much for him, isn’t he then

downgraded?

Mr. Weithoner. Some of them are, yes, sir.

Mr. English. And if he can’t cut it there—say, at a major metropolitan airport—he’s downgraded again isn’t he?

Mr. Weithoner. Maybe. I think that would be relatively rare.

Some of them also drop out of their own accord. They decide they

don’t like rotating shift work; they don’t like the pressures; some of

the women get married—things like that. There are a great variety

of reasons for people dropping out.

Mr. English. There’s one other point that I want to make.

With regard to the simulators—I think this is bringing it out and

focusing on the importance and necessity of having these training

simulators in place—not only, as I said, in what it costs the country in money and washout but also what you’re talking about in

the way of lives.

The whole thing comes down to the Canadians now. They were

experiencing about the same type of washout that the United

States is now experiencing.

Keep in mind we have had the people who pass through the passfail system. Everybody was passing from most of the statistics you

have. We haven’t flunked anybody until recently. He just glides on

through school.

Basically, they’re down now to where they have less than 10

percent washout. In fact, they had one class go through where they

didn’t have a single soul who failed. Now I wonder why that is?

Mr. Weithoner. I can’t say.

We’ve had classes go through our new academy training program

in the past 2 years where virtually no one has failed. I think we

may have had one.

For the last 2 years, we’ve been grading rather tough. In fact, 

we’ve had a number of complaints about grading too tough.

Mr. English. They’re talking about from the beginning day all

the way through that journeyman period. They’re down 10 percent

or less.

It basically comes down to this. The first day before they even 

hire a guy on, they can check him out on a training simulator and

see if he can read the radar. That would seem to me to be an

elementary part. We can’t even do that. We can’t even tell if the

guy can read the radar until we’ve invested a considerable amount

of money in him.

Mr. Weithoner. I agree that we do not have anything on which 

we can test his ability to read radar.

Mr. Burton. Why don’t you?

Mr. Weithoner. We’re trying to get it, sir.
204

Mr. Burton. You’ve been messing around with the simulator

contracts for I don’t know how long. You used the case that because of the energy situation, people might not be flying as much. I

don’t know how relevant that would have been anyway. But if you

didn’t look at it as an investment in people’s lives, you could at

least have looked at it as a dollar investment and figured out how

much it would have saved by cutting down the attrition rate

among air traffic controllers.

If you don’t want to think safety, think dollars. If you don’t want

to think dollars, think safety.

The only reason you’re there is to insure safety. If you blow

dollars in one place, you can’t spend them someplace else.

Mr. English. Excuse me, Mr. Chairman.

On one point, you raised the question of money.

Isn’t it true that the Congress finally got tired of messing around

with you all?

Didn’t Congress back in 1968 and 1969 and 1970 and 1971 put up 

the money and appropriate the money to buy these training simulators? That you couldn’t get your act together and spend it, and

the Congress finally took it back? Isn’t that correct?

Mr. Weithoner. There was money appropriated in about fiscal

year 1971 of about $4.5 million.

Mr. English. Yes. And didn’t Congress finally take it back?

Mr. Weithoner. I don’t believe so.

Mr. English. They just didn’t appropriate for the next year, and

that’s basically what I mean about taking it back.

Mr. Weithoner. I believe what we did is that we used part of

that money to produce simulation capabilities in the facilities.

Mr. English. And you took $1 million of it and gave it to GTESylvania.

Mr. Weithoner. Yes, sir. I testified to that.

I would like to add, though, that we used additional parts of that

money to buy simulation capability in the facilities—where we now

have simulation capability out in the operational facilities that’s

useful in the training-----

Mr. English. That’s where you do the OJT. That’s basically

when you take the boy out and say: Here’s what a radar set looks

like. We have a little free time here, so you mess around with it a

little while.

Mr. Weithoner. I don’t believe-----

Mr. English. How long a period of time does the person stay

there?

Isn’t it true that all he’s doing is hanging around there waiting

on a class to open up in Oklahoma City. He may be there for a

year. It depends on the way that the money is flowing in his

particular region as to what time he’s going to be going there?

Mr. Weithoner. No, sir. That’s not true.

A man who goes to Oklahoma City now, in the en route and

terminal options, is on duty. He’s a GS-7; he’s the great bulk of the

people we bring in.

He is on duty in a facility for 2 weeks before he goes to Oklahoma City to take his 16 weeks of-----

Mr. English. How long has that been in effect?

Mr. Weithoner. Two years.
205

Mr. English. A full 2 years?

Mr. Weithoner. January 1976. So you have me by about a

month.

Mr. English. I believe this is another one of those areas where

the committee could take a little credit. We kind of brought that to

you all’s attention a couple of years ago.

Mr. Weithoner. You made a substantial contribution to that,

yes, sir.

Mr. English. I’m glad to hear we’re doing some good.

Mr. Burton. But there is so much yet to be done.

Mr. English. Thank you, Mr. Chairman.

Mr. Burton. You anticipate awarding a contract sometime in

February 1978?

Mr. Weithoner. Yes.

Mr. Burton. Who’s going to manage that contract; what type of

program are you going to set up to monitor it; what type of contract are you contemplating?

Mr. Weithoner. The contract will be managed by a program

manager in the Systems Research and Development Service in the

FAA. The gentleman’s name is Kassing, and he is the one who is

given overall responsibility to manage the total effort.

Mr. Burton. What kind of contract will it be?

Mr. Frakes. The contract will be a cost plus incentive fee.

Mr. Burton. That’s the best a company can get, isn’t it?

If I was in the business of manufacturing, wouldn’t that be the

most desirable type of contract?

Mr. Frakes. It’s our opinion that it’s the proper type for the type

of procurement we’re making.

Mr. Burton. It would really be terrible if the contract awarded

ends up costing a lot of money and Mr. English is really right that

there’s a simulator sitting up on a loading dock somewhere waiting

to be installed.

Now, if you had more simulators, I assume this would probably 

help you obtain more competent air traffic controllers? Ai m’t the

air traffic control facilities and centers somewhat understaffed in

some places?

Mr. Weithoner. At O’Hare, they have difficulty keeping the

number of people at the top levels—the journeyman levels. It’s a

difficult facility to staff.

Generally speaking, we are not understaffed. At O’Hare we have

an adequate staff to do the work.

Simulators would help in training.

Mr. Burton. What does that mean? You couldn’t use another

controller at O’Hare?

Mr. Weithoner. I’m sure we could always use one, but basically

the staff-----

Mr. Burton. Wouldn’t it improve safety if you had a few more?

Adequate is a very scary word when you deal with safety. Adequate is fine when you are talking about a meal. But when we’re

talking about safety, adequate is-----

Mr. Weithoner. I believe Congress is authorizing enough positions for us to do a first-class job in air traffic control and run a

safe operation. I believe the O’Hare operation is safe.

27-075 0 - 78 - 14
206

Obviously, I am not a technical expert. Those with whom I deal

in the air traffic service are very satisfied that that’s a safe operation. It’s one of the most productive in the world.

Mr. Burton. You have a lot of planes arriving and departing?

Mr. Weithoner. Yes, sir.

Mr. Burton. Let’s look at ARSR-3, for a change of pace.

The Keegan study talked about the ARSR-3. They said that the

ARSR-3 contract is an example of questionable decisionmaking. 

The Government seems to have derived very little from the $4

million prototype program. To paraphrase the Keegan study, the

objectivity of the decision to proceed to production appears questionable. The production contractor advised the FAA of financial

difficulties only 7 months after the production contract was signed,

and had begun to submit no cost engineering change proposals, and

was then predicting a 9-week delay in delivering the first and all

subsequent systems. That would tend to confirm that they’re a

little bit screwed up.

You say that the contract is now on schedule with no problems.

The GAO says that you’re at least 6 months behind. Where are you

with the ARSR-3?

Mr. Sharp. Mr. Chairman, the ARSR-3 contract is-----

Mr. Burton. Please identify yourself for the record.

Mr. Sharp. My name is Warren Sharp. I am Director of Airways

Facilities Service, which has the responsibility for the technical

functioning of this contract and delivery of the hardware.

The ARSR-3 is about 6 months behind the original contract

schedule. I believe Mr. Bond’s statement this morning said essentially on schedule, or words to this effect.

We are currently about 6 months behind the original contract

schedule for delivery of the first ARSR-3. We anticipate it will be

delivered either this December or January of 1978.

Mr. Burton. Thank you.

Right now, I guess the only person who could appear here and at

least be comfortable is Administrator Bond. He can always say he

didn’t do it, that it was before his time. The personnel in FAA

seems to be the same. Everybody here is a career employee and has

been in FAA a long time and been involved in a lot of these

problem contracts. I guess they can’t be held responsible for decisions of Mr. Dow and Mr. Butterfield, or can’t be responsible for

Mr. Begg’s decision to go against the recommendation of the FAA

in the ASR-8 contract.

But these same people are in the same kind of decisionmaking

process, at the level below that of the Administrator. What are you

going to do to change the way it’s been going all these years if you

have the same team? You’re a coach and you have the same

ballplayers.

Mr. Bond. My opening statement, Mr. Chairman, alluded to our

new procedures for handling the acquisition of major systems.

I believe, for example, in accordance with the Air Force’s recommendations, we’ll certainly provide greater documentation for the

decisions we make. The new procedures will require us to articulate and write out all the reasons for doing things—starting with

mission needs and continuing throughout the process.
207

So certainly in the future, the committee and others who are

interested will be able to track our decisions pretty well on paper.

That system will be set up regardless. We’re moving into it.

I will take a personal interest in it, of course. Other Administrators have in the past.

I don’t believe that there is any system, however, Mr. Chairman,

that can possibly be set up that will eliminate the possibility of

error or change in judgment. We will attempt to do our best to

combat that.

In going through a discussion of this kind, it occurs to me that

it’s worth noting that the FAA has procured more than $1.5 billion 

worth of hardware over the last several years and with considerable success.

I don’t mean to suggest that you or the members of this committee deny that, but there is a great-----

Mr. Burton. You do some good and some bad. But as our report

indicated, you seem to have done it by gosh and by God, that there

wasn’t a procurement system.

Mr. Bond. Mr. Chairman, that’s a good point.

Each time a bureaucratic system is overlayed on top of another

system and more formal decisionmaking processes are required, it

makes it possible to pinpoint where decisions are made. However,

it also stretches out the time requirement. It causes us to rely more

and more on written paper judgments, and possibly less on intuitive engineering and management judgments.

One portion of the testimony that I heard this morning from the

GAO was that when Under Secretary Beggs made his decision in

favor of General Dynamics, we protested that we didn’t think—Jeff

and the others—that General Dynamics could do the job and deliver the radar.

But as discussed in the earlier testimony, we were unable to

write a detailed decision document—a justification for our arguments. That’s a very difficult thing to do.

If we rely entirely on bureaucratic processes and systems, it is

sometimes just not possible to justify your intuition. What our

intuition told us, we could not satisfactorily justify for Jim Beggs.

Overall, with the FAA, we’ve had a record of-----

Mr. Burton. Would you repeat what you said about your intuition and Mr. Beggs?

Mr. Bond. It was our intuition and our strong feeling, which we

represented to the Under Secretary, Mr. Beggs, that this procurement should not be made from General Dynamics and that T.I. was

the better of the two sources.

I caught in the GAO testimony this morning that we did not

provide a document of some kind to support that. That was said.

And so Jim went forward with his own best judgment. I wasn’t

here, and I can’t testify to all that. But each time we rely more and

more on written justifications, hoping to be able to explain to later

examinations, we cause our system to slow down somewhat.

If we can make large jumps in the process, based on good judgment and not written, we will buy time in our procurement procedure.

I hope that we will be able to buy things in a timely manner

based on good judgment under the present system. I’m sure that it
208

will be helpful in recording things on paper, Mr. Chairman. I am

not so confident-----

Mr. Burton. I’m not talking about mere recording.

When there is a given amount of money, those things should be

recorded.

Out of idle curiosity, I would like to know why it took so long to

OK somebody to change the color of some paint. That one could

have been done with a phone call, I guess.

Mr. English. Would you yield, Mr. Chairman?

Mr. Burton. I’d be happy to yield.

Mr. English. Mr. Bond, from what you’re saying here—at least

the drift that I’m getting—you are kind of waltzing through this

deal. Basically what we’re talking about here is a couple of possible

mistakes that were made by some folks way back yonder. And the

reason that they made those mistakes is that these companies

really didn’t come through and really didn’t perform. And we’ve

done lots of other stuff, and we haven’t found any problems there.

But the point that comes down, and the trouble that I have with

the whole thing—and I don’t know about the other members of the

committee—is that there are some things about all three of these

arrangements that smell to high heaven They don’t smell like

mistakes to me. They smell like a great deal more.

The thing that has troubled me ever since I’ve been here, since

February 1975, which was a month after I was sworn in and just

right after I came on this committee and we first started dealing

with the FAA, there hasn’t been a blasted soul over there who has

done anything to try to dig the truth out on any of this.

That’s what it’s come down to.

We have people up here talking about this meeting on the Space

Research Corp, thing in December 1973. They give us one or two

answers. This matter is in litigation, and therefore we can’t talk

about it. And that’s what happened to the former chairman.

The chairman offered to take this committee into executive session if that’s what it took to get the truth out and to find out what

happened. They decided that wasn’t necessary. But then they

couldn’t remember, even though they kind of had some idea who

was at the meeting, who made the decision.

Now that’s part of the thing that we get down to, and that’s part

of the problem and the reason we would like to have something

written down as to who made a decision, particularly one as expensive as this one.

This has been an extremely expensive proposition for this country.

I can see absolutely no excuse when you have the Associate

Administrator, Mr. Flener, who says that this equipment is excellent equipment; but for some reason, something mysterious happened back in December of 1973 and now all of sudden FAA

decided because of the energy crisis that people aren’t going to ride

airplanes any more.

That’s about how much sense this whole thing made.

Therefore, the FAA wrote a letter and canceled out—within a 60-

day period.

Now doesn’t this cause problems for you?
209

Mr. Bond. I try to put myself in the place of the FAA Administrator during a time of worldwide oil shortage. An energy crisis is

a genuine thing. People were talking about a 50-percent reduction

in the availability of fuel for general aviation purposes, which

would clearly reduce the load on our air traffic control centers—all

of our 18 facilities.

The decision then was made that all this training wouldn’t be

necessary.

In retrospect, today, it’s obvious that it’s not right; but it certainly seemed logical in those days. I can tell you that I was in the

highway business, affected by similar energy-sensitive matters, and

it seemed to me a terribly threatening thing at that time also.

Mr. English. Let’s get down to December 1973. Is it not true that

during that period, one of the ways—and what we’re still doing

right now—to combat the energy crisis is to use public transportation? Is it not true that aircraft is a public transportation? Is is not

true that part of that cutback, or a good percentage, was going to

come as far as private aviation was concerned?

Mr. Bond. I don’t want you to think that I was a supporter of the

notion that aviation should bear the greater burden of energy

saving. I think it should bear its proportional share.

But the Government’s policy at that time, nonetheless, seemed to

have been tentatively to cut back more heavily in the use of

aviation fuels.

Mr. Burton. The issue really isn’t that the guy made a guess on

the impact of the energy crisis on the need for simulators. It’s that

we don’t know the how and why of certain decisions because we

don’t have records. And that’s what concerns us.

The appearances are what Mr. English is talking about. You

almost hope that these decisions aren’t mistakes, because then they

at least make sense somehow. If they are mistakes, it’s almost

more unforgivable.

A lot of things happened: People are doing business and having

conversations and there’s no record of the process. That’s the concern we have.

We could argue over the judgment itself, but a lot of things

happened which aren’t in the public record, when they concern the

public’s money.

Mr. Smith. Mr. Chairman, a good many of those events have

been reconstructed by affidavit in the litigation as a part of our

motion for summary judgment. We would be happy to furnish that.

Mr. Burton. They have been reconstructed out of people’s minds.

You had nothing-----

Mr. Smith. They were affidavits under oath, Mr. Chairman.

Mr. Burton. In violation, I assume, of the Federal Procurement

Regulations, there were no recorded-----

Mr. Smith. I don’t think that that particular Federal Procurement Regulation requires that every internal meeting be documented.

Mr. Burton. I think that when you’re dealing with some fairly

substantial matters, in terms of either dollars or policy—if you are

talking about going to the Redskins game, I don’t think that you

have to write a memo.

Mr. Smith. That’s correct.
210

The new procedures would insure more documentation as a

matter of course—the Systems Requirement Group and the SAM

process procedures.

But we have, as far as SRC is concerned, reconstructed many of

those events from our own documents and from SRC’s internal

documents. They are a public record. They have been filed with the

Court of Claims, and we’d be happy to furnish them.

Mr. Burton. FAA to date has designated five major systems to

be brought under your Systems Acquisition Management (SAM)

process. You also state that in March of 1978 you are scheduled to

bring in more systems.

What criteria are you going to use in deciding which systems you

will bring under the SAM process?

Mr. Bond. Mr. Chairman, we have been advised by the Air

Force, which is good at this, to go into it in a slow and systematic

way. Don’t put all our procurements in right away, or we will be

overburdened with paperwork. So we have selected five. We have a

number of candidates to put into the system as we get the process

underway.

As for the criteria, perhaps Gene could tell us.

Mr. Weithoner. One of the first ones is the dollar allocation.

Of the five we have that we’re beginning to get into the process,

all are programs that would exceed $100 million in the total life

cycle costs.

Another one would be sensitivity. It is particularly critical that

we get this procurement and get it on time and on schedule.

There is something coming up having to do with wind shear, and

that’s a candidate to be put on because it’s an important safetyrelated item.

Another one would be direct access radar channel. It’s a big

contract. It’s sensitive, and it’s the kind that we think the Administrator ought to consider whether he’s going to follow or not.

Those are the considerations we look at.

Mr. Burton. And the amount of money involved is important?

Mr. Weithoner. The amount of money is important and sensitivity to the safety mission, whether we anticipate technical problems,

whether we think we need especially to keep close watch on one to

be sure the requirements don’t change—all those things enter into

it.

Mr. Burton. There would be a lot ofjudgment calls.

Mr. Weithoner. Yes, sir.

We present a list of candidates—or we did; that was before Mr.

Bond’s time—to the gentleman who was then Administrator, Dr.

McLucas. He gave us some general guidelines on what he wanted

in there, particularly for the first cut.

Now we’ll give Mr. Bond a chance, within a few months, to add 

those that he wants to put into the system.

Mr. Burton. Will he use the old guidelines, or will he hopefully 

have some new ones?

Mr. Weithoner. Of course, the Administrator can add whatever

he wants.

Mr. Burton. Good.

The Keegan study mentioned that a number of contracts administered by the Contracts Division were delinquent. And that until
211

recent months before the report, reporting and corrective action on

those delinquent contracts hadn’t been organized.

What are you doing now, and how many delinquent contracts are

there?

Mr. Frakes. We have made a number of improvements in the

total.

Mr. Burton. It was easy to do.

Mr. Frakes. Yes.

Of the total of about 62 recommendations made, about 37 of

those did apply to the Logistics Service. We have taken action and

have implemented nearly all of those. There are still a few that are

in the process of being implemented.

Mr. Burton. How many delinquent contracts—which was the

question, I think.

Mr. Frakes. I have that data, but I don’t have it in front to me.

Mr. Burton. While you’re looking for that, I have another question.

Could you give a detailed description of how you monitor all

contracts? Do you have clear milestones against which actual progress can be measured with that originally estimated? What

prompts a review program and who would make that determination? Do you always require the contractor to supply you with

sufficient information to estimate cost to completion, or do you go

out and gather that information yourself? What’s the relationship

between the SRG and the quality assurance program conducted by

Logistics? How do you oversee and monitor the process?

Mr. Frakes. You are asking a number of questions there, Mr.

Chairman.

Mr. Burton. That’s right. I could do them one at a time.

In other words we really want to know how you monitor your

contracts. How do you find out very early on next time that a

General Dynamics is going belly up and that maybe you can only

buy one antenna?

Mr. Frakes. In the cost control area, and that was discussed

earlier in the testimony, we are now on all cost incentive contracts

requiring contractors to furnish a quarterly report of all expenditures to date and forecast for the future requirements.

Currently—and since the report is critical of our cost incentive

reporting—on selected contracts—and I will use MLS, ARTS-III

enhancement contract, DABS contract—we require the contractor

to furnish a monthly cost status report. He furnishes the cost data

against his budgeted costs and related to actual costs and then cost

to completion.

We have looked in depth at this. The Air Force has a cost

schedule reporting system. We have taken their basic system, 

which is a very complex system, and made some modifications.

Mr. Burton. They’ve had a few overruns.

Mr. Frakes. Yes, sir.

We are out to implement that, and we will have it implemented

on all cost and incentive contracts by the end of this fiscal year.

Mr. Burton. What prompts a program review?

Mr. Frakes. The contract will require a program review every 

month. The cost reporting systems are reviewed.
212

Mr. Burton. So that’s going to happen every month on the

contract?

Mr. Frakes. It is. And it’s happening today on selected contracts,

such as the DABS contract.

Mr. Burton. General Dynamics claimed that part of the schedule slippage was due to FAA delays, such as the wonderful paint

color change.

How can FAA respond more quickly to the contractor? If they

have problems, how can the FAA expedite solutions so that they

can’t later point the finger at you and say that the contract will

cost more money because, for example, they had to keep these

seven painters waiting?

Mr. Frakes. Mr. Chairman, that is a troublesome area; and it

has been a troublesome area. It needs more attention, and it’s

certainly going to be given more attention.

But in the area of specification interpretations, requests for deviations, requests for use of parts that are outside of the specification, those reviews are done by the program office. Maybe Mr.

Sharp could add a comment. But that has been a troublesome area.

Mr. Burton. Couldn’t you divide that effort into important items

and less important items like paint—or maybe paint is important; I

don’t know.

Mr. Sharp. Mr. Chairman, paint, obviously, I am unable to address. There would seem to be a simple solution to the paint

problem.

Mr. Burton. Yes, but it took a long time. I think it was either 4

or 6 months or weeks.

Mr. Sharp. I think we’re talking about perhaps 5 or 6 weeks.

Mr. Burton. Six weeks for an approval, and 5 months to get it to

the contractor.

Mr. Sharp. Yes; I believe that was the statement. But I would

suggest that’s a fairly simple example, and it probably didn’t really

make any difference to the contractor one way or the other.

I would suggest that in the case of the ASR-8, when this arose,

the specifications-----

Mr. Burton. But it didn’t make any difference to them. They 

could stop everything and say they were waiting to get an OK on

the paint from FAA. Then when it cost more money, they could

say: Don’t look at us; we’ve got this registered letter, and we’re still

waiting.

So it should have been a simple thing for you to give them an

answer.

Mr. Sharp. It should have been and I can’t respond why it was

not.

Mr. Burton. Right; it defies-----

Mr. Sharp. I would suggest though that the ASR-8 specification 

is a highly detailed specification that has many interlocking technical parameters. A request for a deviation from one portion of the

specification may involve a number of elements of the system that

are not readily apparent.

Mr. Burton. I can imagine that. The paint was the one that hit

me.

I can imagine that on fixtures or component parts there is a

great difference.
213

ASR-8 is a very complex. How much more complex is that than

the ASR-7?

Mr. Cochran. It is quite a bit more complex, Mr. Chairman, in a

number of features. It is the first time that we’ve used a dual beam

antenna system in this way; we get a significant reduction in the

clutter on the scope.

We have some fairly significant improvements in the reliability

aspects of the system by the type of design and antenna pedestal. 

The antenna itself is a single failure point in the system. We have

dual transmitters down in the building, but the antenna and the

thing that rotates is only one. So we specified a high reliability

antenna system.

The antenna itself was a very demanding antenna pattern to get

good high-angle coverage and good coverage down at the lower

angle at the same time to reduce clutter and to give us more siting

flexibility and better performance as far as the controllers were

concerned.

It also made an attempt to do some things that we hadn’t done

in the past in the way of range azimuth gating to present to the

controller the most optimum radar display possible with a particular azimuth and range of the radar set. So we could use the best

features of the radar in the areas it’s possible to use it in.

I think it is a highly flexible radar and will be a good radar set

when it’s in its operating history.

Mr. Burton. In 1974, the Director of FAA’s Research and Development Service said that under no circumstances did the Research

and Development Service believe that the ASR-7 should be traded

for the G.D. prototype ASR-8. And that the improved features of

the G.D. prototype were considered insignificant by the FAA contract technical officer, in fact, so insignificant that it would have

cost the contractor more to remove the improved features from the

design than to leave them in.

Mr. Cochran. I think we’re talking about two different things. 

We may not be. But the ASR-8 is a significantly improved radar

over the ASR-7. I don’t think there is any argument anywhere.

Mr. Sharp. May I respond, in part, to that question?

The question involved, I believe, refers to maintainability. The

improvements of concern were fairly insignificant. The manufacturer had elected, in addition to what the specifications called for,

to provide some additional features, principally from the standpoint of-----

Mr. Burton. Justifying the high cost of the one radar system?

Mr. Sharp. No, sir, I don’t believe so. His original plan had been

to provide some additional features that simplified testing and

maintenance activities. I believe these are the two or three elements we referred to as being relatively insignificant, insofar as

the use of the radar at NAFEC.

The ASR-8, as intended to be produced by General Dynamics,

was a completely different design, as far as we know, than the

traditional designs in this country. It was a design executed by

Thompson CSF, a French organization and producer of radars in

Europe. It would have been our first opportunity to have in the

agency inventory a radar with perhaps significantly different

design characteristics, in terms of approach to electronic circuitry.
214

This was the original purpose of an attempt for the use of the

prototype system at NAFEC.

Mr. Burton. So that was the rationalization.

In other words, you thought, what are we going to do? We’re

going to keep General Dynamics competitive. Then how are we

going to explain it? We’re going to have this one system that’s a

little fancier than the others and hope nobody asks any questions.

Mr. Sharp. At least different.

I don’t know about anyone asking any questions. We anticipated

it would be a substantially different radar, in terms of circuit

design and approach. That was clearly borne out by the G.D. design <

data that they had prepared.

Mr. Burton. They couldn’t meet the contract, and they’re giving

you icing on the cake.

Mr. Sharp. I believed that the icing was—as part of the original

production, to provide those additional features. And it turned out

that they-----

Mr. Burton. For nothing.

In other words, they were just throwing these features in as good

will, and they couldn’t meet the terms of the basic contract.

Mr. Sharp. The original purpose—the avowed purpose—was to

provide in the production contract those additional features, Mr.

Chairman. It turned out-----

Mr. Burton. That they fell short of the mark.

Mr. Butterworth. Mr. Chairman, I’d like to make one observation.

At this point, the FAA has spent $10.6 million on General Dynamics’ contract.

According to figures supplied by the FAA, there was $99 million 

appropriated by the Congress for the ASR-8 procurement. Now the

ASR-8 represents certain safety improvements over the seventh

generation of the same system; is that correct?

Mr. Cochran. I think any operational improvement in a system

someday winds up, of course, by being-----

Mr. Burton. Why can’t you give that question a yes or no

answer?

Mr. Cochran. I don’t want to say that the radars we have there

are not safe. They are.

Mr. Burton. Nobody was saying that. Seven seatbelts are better

than six.

Mr. Cochran. Correct.

Mr. Butterworth. The ASR-8 is better in that it would better

enable a radar controller in the tower and the approach control

center to better detect small aircraft and to avoid midair collisions.

Mr. Cochran. That’s correct.

Mr. Butterworth. How many ASR-8’s are you going to install

at terminal facilities? <

Mr. Cochran. As I told you, the number we have under contract

I don’t recall. I can look it up here.

Mr. Sharp. We currently have under contract with T.I. 63

ASR-8’s, of which 8 are to go to the military. So there are 55 being 

placed in terminal areas—55 include NAFEC, Academy, MASR

and 3 storage.

Mr. Butterworth. I’m trying to make an editorial point here.
215

The $10.6 million that went down with General Dynamics could

have been used with the current Texas Instruments contract to

provide more ASR-8’s and to provide them where they are needed.

Mr. Cochran. I think that every place that now qualifies for

radar is so in our budget and is covered if it meets the criteria.

Mr. Burton. What’s your backlog?

Chairman Brooks in 1972 asked for one for Beaumont, Tex.; and

they said they’d install it sometime in 1976. So if there was a 4-

year backlog then for Chairman Brooks, what’s the backlog for

everyone else?

Mr. Sharp. Mr. Chairman, I believe we’re in an excellent posture.

Mr. Burton. I don’t want one.

Mr. Sharp. Every approved location—approved by the Congress—is in the process of being implemented through the fiscal

year 1978 program.

Mr. Butterworth. I hate to get back into the history of the

contract once again, but I think our record needs a little more

clarification.

Mr. Cochran and Mr. Frakes, you mentioned that the $12.8 million figure came from a General Dynamics offer; but you didn’t

date that offer. You stated earlier on today that an offer had been 

made.

Mr. Burton. When we asked where the figure came from for the

settlement with General Dynamics, you said it came from them.

Mr. Butterworth. We want to know when and where.

Mr. Smith. From the records, you can see that there were discussions prior to August. Then on August 24-----

Mr. Burton. No, from the record that was made here today.

Mr. Smith. OK. But-----

Mr. Burton. Or do you have a record we don’t know about?

We’ve been having trouble finding records on this one.

Mr. Smith. On August 24, there was a telegram delivered to

General Dynamics which set forth the modifications. They accepted 

it on the 24th.

So for the purposes of documenting the contractual action that

we’re putting in the file, you take that subsequent formal modification signed 6 months later in 1975.

Mr. Burton. But when did General Dynamics say that their

figure was $12.8 million? When did they say: That’s what we want,

and you .can’t sue us for breach of contract? Because that was their

leverage against us. We could have sued them for breach of contract, because they weren’t going to fulfill the terms of the contract. Instead, they did us a favor. Instead of having us sue them,

they accepted this $12.8 million. I’m just wondering what was the

day when they made that magnanimous offer.

Mr. Smith. What we would have done would be to default them

if we had thought that that course was appropriate.

Mr. Burton. There couldn’t have been any question in anybody’s

mind when the two gentlemen came back from Florida that it was

disasterville.

They heard rumblings and went down. They came back and said 

that it was worse than they had previously thought.
216

I’m sure they didn’t say that. I don’t know what they said,

because we don’t have a memo. But I’m assuming that was it.

Because shortly thereafter, there was a telephone call. Nobody

knows about it except the fellow who signed the memo. There’s a

meeting, and the options are laid out. Dow, I guess, recommends to

Butterfield that we accept the General Dynamics offer to give us 1

radar and 40 antennas for $12.8 million.

I’m just wondering, what was the date when they said: Our

figure is $12.8 million.

Mr. Frakes. Mr. Chairman, my recollection is that officially

General Dynamics furnished a proposal and cost data on August 8 ■*

that contained that $12.8 million.

Mr. Burton. But the decision was made at a meeting that took

place sometime between your return from Florida and the July 17

meeting. There must have been a decision, and to reach that decision you asked, in effect: “What can you give us?” And they said,

“We can give you 1 radar and 40 antennas, and we’ll let you know

in a couple of months what the price is.”

In other words, we just accepted an offer and told them to fill in

the amount?

Mr. Frakes. No, sir.

Mr. Burton. Then how could you have made the decision on—

what date did you say in August?

Mr. Frakes. August 8.

Mr. Burton. The decision was made by Butterfield prior to July

17. How does that coincide with your statement?

Mr. Frakes. I don’t know. I don’t think I can answer that.

I can say this. I’m sure that the $12.8 number was given verbally; but I was only saying that officially they made a proposal with

some cost data.

Mr. Burton. Given verbally when and by whom?

Mr. Frakes. I don’t know.

Mr. Burton. In other words, you’re assuming that?

Mr. Frakes. The $12.8 number was used certainly before it was

submitted officially.

Mr. Burton. When did you first hear it bandied about?

Mr. Frakes. I don’t recall.

Mr. Burton. During the meeting with Butterfield? When Mr.

Butterfield made the decision, somebody must have known the

numbers.

Mr. Frakes. That number was used at the meeting.

Mr. Cochran. We had a budgetary estimate of some sort. I don’t

remember the exact figure. But there was a budgetary estimate of

the amount. I think it was around that figure. But I don’t remember—

Mr. Burton. Who gave the budgetary estimate?

Mr. Cochran. We talked to General Dynamics.

4 Mr. Burton. Who did you talk to at General Dynamics? Was this

when you were down there or when you came back?

Mr. Cochran. I don’t believe we talked about that figure when

we were down there.

Mr. Burton. Did you talk about any figure?

Mr. Cochran. They talked about the cost to complete the radar

contract as it was currently structured.
217

Mr. Butterworth. What figure was that?

Mr. Cochran. Around $33 million. That’s what they said it

would cost.

Mr. Burton. $33 million and 9 months.

Mr. Cochran. Nine to twelve months.

Mr. Burton. Was there a question in your mind about whether

they could have done that?

Mr. Cochran. Could have done what?

Mr. Burton. Completed the contract at $33 million in 12 months.

Mr. Cochran. Yes, sir. There was a question in my mind whether they could have or not.

Mr. Burton. I’m trying to figure what would have been a better

buy. I guess on a unit price it would have been cheaper at $33

million.

Mr. Cochran. But I don’t believe we would have had the radars

in time. We got the radars in time the way it is now.

We have the radars, and they are operating.

Mr. Burton. I guess it will remain the unanswered question.

I just can’t figure out how in God’s name Mr. Butterfield decided

to give away the people’s money to General Dynamics. Maybe the

people owe him the money for blowing the whistle on the tapes. I

just don’t believe that it should have gone to General Dynamics.

Mr. Butterworth. Mr. Chairman, I’d like to bring out a point

which has been implied throughout many of our comments. And I

think we’re concerned that the present Administrator be brought

into this discussion.

It’s my understanding that when the decision by the former

Administrator was made, it was based upon the July 17, 1974,

alternative action position paper, which you two gentlemen drew

up. At least the decision by the Deputy Administrator was primarily made on the basis of that paper. That’s what he told Mr. Rider

in an interview.

That paper was very faulty in a number of ways. First of all, I

believe it does not discuss termination for convenience. Second, it

presents no disadvantage to the alternative proposed, the procurement of 1 radar and 40 antennas for $12.8 million.

In fact, I have a letter here from FAA’s General Counsel’s office

that comments on this paper. It states: “The paper does not present

the disadvantages associated with the recommended course of

action.”

It also states: “Therefore, we are not taking any position on the

recommended course of action at this time.”

What really concerns me is the possibility of two service directors approaching the Deputy Administrator or the Administrator

with incomplete information and then allowing him to make his

decision on that basis. I should think that would concern everyone

here.

Mr. Bond. Is the question whether the briefing and information

presented to the Administrator was complete and adequate?

Mr. Butterworth. Mr. Dow told our subcommittee investigator,

detailed to us by GAO, that this decision was based primarily on

the paper prepared by Mr. Cochran. That paper was and is faulty.

FAA’s General Counsel’s office says it’s faulty.

Mr. Weithoner. Did Mr. Dow identify that as the paper?
218

Mr. Butterworth. Yes.

Mr. Weithoner. That particular piece of paper?

Mr. Butterworth. The alternative action position paper; yes.

Mr. Weithoner. And he said that was the primary basis for his

decision?

Mr. Butterworth. Yes.

Mr. Burton. Except for the omission you’re talking about, it said

here’s all we can do. We can let them do something else and other

companies will get mad at them. We can terminate, and they’ll get

mad at us. We can try to use the public law and claim it’s a

national interest necessity, but that would raise problems.

There’s no way in the world that someone could have looked at

that alternative action position paper and said that it was a

thoughtful one. It’s like a small outline of a law student.

Mr. Butterworth. I might add, as a postscript—and correct me

if I’m wrong—that the Deputy Administrator said that he was

never made aware of the General Counsel’s office paper. So he was

not aware of their views.

Mr. Weithoner. I think he was aware of at least some of the

General Counsel’s views.

Mr. Butterworth. Some of it. What about this particular document?

Mr. Weithoner. I can’t say that someone put that document in

his hand. I can say that the Counsel’s office was represented at the

meeting which I attended.

Mr. Butterworth. That’s Mr. Anderson.

Mr. Weithoner. They had full opportunity. I can also add-----

Mr. Burton. That was the very first preliminary meeting. They 

came back with the report from the battlefront.

Mr. Weithoner. That was the first meeting after the Orlando

trip, as I recall.

Mr. Burton. Right. It was when they came back. I guess they

laid out the facts as they perceived them, and everybody probably 

went back to figure out how they could get out of this one.

Mr. Weithoner. There was substantially more information.

There was a lengthy discussion. We went up and down the alternatives. Mr. Frakes and Mr. Cochran and the other people there

discussed every option at considerable length.

In my opinion—and this is my recollection, and I'm not sure how

good it is after 3 years—I believe that there was very substantial,

extended discussion of all the alternatives.

Mr. Burton. Who was pushing alternative “Santa Claus?”

Mr. Weithoner. I don’t remember that anybody was pushing

that. Everybody was trying-----

Mr. Burton. That’s the one that they ended up with. Somebody

must have put a nudge in somewhere.

Mr. Weithoner. I don’t remember anyone pushing that one, sir.

Mr. Burton. Did anybody mention it?

Mr. Weithoner. Yes, sir; it was discussed.

I believe that everyone there tried to give the Deputy Administrator the benefit of all the opinions and all the alternatives. I

believe there was a very thorough discussion on it.
219

Mr. Burton. In the discussion on which alternative to go with, 

the bottom line on the acceptance of General Dynamics’ offer was

that it would keep them competitive in the civilian radar business.

Mr. Weithoner. I believe that was Mr. Dow’s primary consideration. That weighed very heavily on the minds of Mr. Dow, and, as I

understand it, many of the other high-level officials involved. It

was a very substantial season; yes, sir.

Mr. Burton. However, you didn’t want to keep this poor company up in Troy, Vt., competitive in the simulator business.

At that meeting it was clear that Dow felt that it was very

important to save General Dynamics.

Mr. Weithoner. He felt it was important to keep another competitor in the business so that when we got to buy more ASR-8’s in

subsequent years, there would be competition to T.I.

Mr. Burton. From this company?

Mr. Weithoner. Yes, sir.

Mr. Burton. They would have been better off giving it to some

new company starting out with a small business loan and hope

they could do something.

General Dynamics blew the contract, and the money, and ripped

off the Government; so we give them the people’s money to keep 

them competitive in this business. Did you really think they were

going to be able to complete the contract?

Mr. Weithoner. I think Mr. Dow felt that the General Dynamics

Corp, was a very large corporation with an awful lot of competence; and that if they-----

Mr. Burton. Which was belied by the fact that you had to

discuss five options, one of which was to give them the people’s

money.

Mr. Weithoner. I think he felt that they were going to make a

good faith effort to deliver; they had the resources and management talent. He believed that they could deliver on the 1 radar and

the 40 antennas.

Mr. Burton. I would hope to God they could deliver the one

radar at $10.2 million, when they were supposed to cost about

$380,000.

I don’t think you were really showing a lot of faith in them. I

would think a lot of people could build one radar for $10.2 million.

Then I guess Dow recommended this course of action to Butterfield?

Mr. Weithoner. I wasn’t present.

Mr. Butterworth. I have one last question about something

which really puzzles me, and I think this is the icing on the cake.

In your view, was the ASR-8 system, as specified in the General

Dynamics contract, within the “state of the art”?

Mr. Cochran. Yes; I think it was.

Mr. Butterworth. Then why did you change the contract from a

fixed price to a cost-type contract?

Mr. Frakes. We were proceeding on a fixed price basis. When we

received their proposal with their costs estimated, it was after

evaluation by the negotiation team. It was their opinion that the

cost data, as furnished by General Dynamics, did not support $12.8

million. It was changed to a cost with a ceiling, with General
220

Dynamics obligated to complete, and any overrun over $12.8—100

percent—it was their obligation. These were auditable costs.

Mr. Butterworth. Perhaps Mr. Smith can answer on this question; as I understand it, when a cost-type contract is used it’s very

difficult to recover any of the costs incurred unless you prove that

the contractee has not put forth his “best effort.” Whereas when a

fixed price contract is used, the Government’s investment is much

more secure.

Mr. Smith. You’re touching on the centerpiece of our litigation.

Mr. Butterworth. I realize that.

Mr. Smith. The contract, as written, stated in the standard limi- *

tation-of-cost clause that the contractor would exert his best efforts.

Mr. Butterworth. It’s hard to prove that best efforts were not

put forward.

Mr. Smith. He would exert his best efforts to perform within the „

ceiling as set forth in the clause.

On top of that, the agency overlaid a requirement that he complete within that ceiling or bear the rest of the cost on his own.

Normally he’s not required to complete under a cost contract. To

write a cost contract is a risky business.

So the parties to the contract overlaid a completion requirement

on top of the general requirement that the contractor exert his

best efforts.

After he agreed to the modification and executed the formal

modification, 5 months after that, he stopped all work.

If he’s obligated to exert his best efforts, we don’t consider stopping all work to be his best efforts. It’s on that theory, much more

than any other, that we are suing to get our money back.

Now as far as the measure of damages and so forth, I must say

that I have not fully explored that, because we’re litigating now

the question of remedy before the court—whether we have cost

reimbursement types of remedies; or whether in view of his subsequent actions and the actual nature of the deal we cut, that we

have rights more like those available under a fixed price contract.

Mr. Burton. That’s exactly the term. I think somebody cut a

deal with them.

Mr. Butterworth. What I was trying to get at is, if I were in

General Dynamics’ position, this is precisely the deal that I would

want to get from FAA. I just don’t see any other way to state it.

Mr. Smith. He has a requirement to complete the contract. It is

expressly so stated.

Also, in addition, he agreed to waive all claims-----

Mr. Butterworth. In general, isn’t it more difficult to protect

the Government’s investment in a cost-type contract than it is in a

fixed-price contract?

Mr. Smith. The cost-type contract requires heavy monitoring of

the costs incurred. <

Mr. Burton. Isn’t the answer simply yes. That in a fixed-price

contract, the Government is in a better position than it is in a costtype contract?

Mr. Smith. For a number of reasons. ,

One of them is that a fixed-price contract is a completion contract. It requires a contractor to complete.
221

A normal cost reimbursement contract is not a completion contract. It is a best-efforts contract.

In this case, when the agency added a completion requirement to

the best-efforts contract, we achieved something that is halfway

between a cost reimbursement contract and a fixed-price contract.

Mr. Burton. I understand what you’re saying. I guess it was

really irrelevant. We’re giving them money and we can’t use what

they would have given us back anyway, so what’s the difference.

Mr. Bond. I might add one thing, perhaps, to clarify.

The cost of acquiring the first radar from any producer, starting

from zero and getting to the point where it is complete, is very

high.

Subsequent replications of those—that is to say, a production

order—are relatively cheap.

Whether or not Mr. Dow’s and Administrator Butterfield’s decision to seek a second manufacturer of this radar was in the public

interest is obviously subject to debate.

But always, in a decision to spend $8 million or so for radar-----

Mr. Burton. Their decision to do what?

Mr. Bond. To seek a second manufacturing production capability.

Mr. Burton. Like T.I.?

Mr. Bond. In addition to T.I. As was the case for this decision.

I just wanted to point out that the-----

Mr. Burton. That was the original decision.

Mr. Bond. The first radar is very expensive. All of the front-end

costs of getting ready to produce were inherent in that $8 million figure or so that you attach.

So if the proposal had worked out to satisfaction, subsequent

copies by General Dynamics would have come at a much, much

lower rate.

It’s not 1 for 37. The front-end costs at first are very expensive.

Mr. Burton. I understand that.

Here we are in litigation with General Dynamics. If we would

have just held them to the contract, we’d be in litigation with

them; right?

Mr. Smith. You’d be in litigation, and you might have a substantial slippage of delivery.

Mr. Burton. We figured that we were writing them off and were

going to Texas Instruments to get the radar. It was obvious General Dynamics couldn’t do the job, so the question was: Do we hold

them to the terms of the contract, or do the American people bail

them out?

The people’s Government decided to take the people’s money and

bail them out rather than hold them to the contract. And the

funny thing is that we are in court with them anyway.

Mr. Smith. As far as the last part of the statement is concerned, 

that’s exactly right.

Mr. Burton. And if we would have said, you have a contract;

deliver or you’re in breach of contract, we would be in court with

them.

Mr. Romney?

Mr. Romney. Thank you, Mr. Chairman.

Mr. Frakes, Mr. Sharp talked awhile ago about deviations from

specifications.

27-075 0 - 78 - 15
222

I would like to ask about deviation from the Federal Procurement Regulations and from the Department of Transportation Procurement Regulations. Those same regulations deal with deviations

from the regulations. In effect, they say that they must be recorded

and justified and a file must be kept. And, in any event, that these

deviations should be done as a minimum and only in cases where

special action needs to be taken.

So my question is with respect to the ASR-8 and ARSR-3 contracts. Can you give us now, or supply us for the record, the

deviation in the individualized contract cases, including the supplemental agreements which were called mod 9? Those deviations that

were requested and approved.

Mr. Frakes. I can’t give it to you now, but I can submit it to you

for the record.

Mr. Romney. You do maintain a file and a record of each such

deviation; is that correct?

Mr. Frakes. Certainly we have a file; yes.

Mr. Romney. Do you know of any specific deviations offhand?

If you look over here on the chart which is derived from Mr.

Rider’s testimony, the original contract for the ASR called for the

Government to share class 80/20. I presume that refers to the

progress payment standards in relation to the costs. That 80/20

represents the maximum under current regulations and under the

regulations then obtained.

Do you know any specific cases where deviations from the FPR

or the DOTPR occurred in these procurements?

Mr. Frakes. The 80/20 that you’re referring to relates to the

incentive clause.

Mr. Romney. What about the monthly status reports, the cost

status reports, subcontract cost trend reports, the overhead rate

reports, production progress reports, which were originally required, and the monthly status reports which were the sole residue

after Mod 9?

Mr. Frakes. I don’t know the answer to that, sir.

Mr. Romney. Then you will be prepared to submit for the record

the summary, or the specifics, on the deviations from the FPR and

the DOTPR?

Mr. Frakes. To the extent that they exist, I will attempt to

supply that for the record; yes, sir.

Mr. Romney. Thank you.

[The material is in the subcommittee files.]

Mr. Burton. That concludes the questions we have for you today.

The subcommittee will resume tomorrow to discuss certain safety

problems, including the see and avoid technique, and follow up on

the internal memorandums concerning potential workload increase

caused by deregulation.

You might want to ask Mr. Skully why he never told you about

those memos on a day when you’re going to be testifying before a

subcommittee on that very subject matter.

Mr. Frakes. Mr. Chairman, earlier you asked me the question

regarding our delinquency contracts.

Mr. Burton. Right.

Mr. Frakes. I wasn’t able to provide the answer.
223

As a result of the Keegan report, or the Air Force report, in

which they recommended that we give some emphasis and attention to delinquency, we have implemented a procedure where we

take a hard look on a monthly basis at all delinquent contracts.

Based on a criteria of 30 days, classifying those as delinquent,

the number I recall—and I think it’s accurate—is at the end of

fiscal year 1977 we had about 8 percent of our equipment contracts

that had met that criteria—that were delinquent.

Mr. Burton. Thank you very much.

Thank you, gentlemen.

Mr. Bond. Thank you, Mr. Chairman.

Mr. Burton. We will meet tomorrow at 9:30 a.m.

The hearing is recessed.

[Whereupon, at 4:20 p.m., the subcommittee adjourned, to reconvene at 9:30 a.m., Tuesday, November 29, 1977.]

FEDERAL AVIATION ADMINISTRATION OPERATIONS RELATED TO SAFETY AND PROCUREMENT MANAGEMENT

TUESDAY, NOVEMBER 29, 1977

House of Representatives,

Government Activities and

Transportation Subcommittee

of the Committee on Government Operations,

Washington, D.C.

The subcommittee met, pursuant to notice, at 9:45 a.m., in room

2247, Rayburn House Office Building, Hon. John L. Burton (chairman of the subcommittee) presiding.

Present: Representatives John L. Burton and Arlan Stangeland.

Also present: Miles Q. Romney, staff director; Bruce R. Butterworth, professional staff member; George Gudauskas, professional

staff member; Elizabeth L. Wasserman, clerk; and Rachel Halterman, minority professional staff, Committee on Government Operations.

Mr. Burton. The hearing will resume.

We will hear from Dr. Charles Billings, Chief, Aviation Safety

Research Office, NASA. With him is Mr. E. Gene Lyman, Director, 

Aeronautical Man-Vehicle Technology Division.

Dr. Billings, as soon as the second member comes in, we will

have both of you take the oath. We will issue that after you begin

so you will be sworn as to what you have told us all morning.

Today’s hearing is on aviation safety. There are two issues. The

first is the “see-and-avoid” concept—as old as flight itself—being

utilized by FAA to a great degree, and the second is the FAA’s

view of how airline safety might be impacted by economic deregulation of the industry and how it will affect FAA safety-related

duties.

Please proceed, Dr. Billings.

STATEMENT OF DR. CHARLES E. BILLINGS, CHIEF, AVIATION

SAFETY RESEARCH OFFICE, AMES RESEARCH CENTER, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION; ACCOMPANIED BY E. GENE LYMAN, DIRECTOR, AERONAUTICAL

MAN-VEHICLE TECHNOLOGY DIVISION

Dr. Billings. Thank you.

Mr. Chairman and members of the subcommittee, at the National Transportation Safety Board hearings which followed the crash

of TWA Flight 514 near Dulles Airport in December 1974, it was

learned that another airline flight crew had misinterpreted an 

approach clearance in just the way that the TWA flight did. The

(225)
226

information had been reported under a confidential, nonpunitive

safety reporting system developed by an air carrier in order to

improve the flow of safety-related information between its pilots

and management.

Mr. Burton. Excuse me. Will you both stand and raise your

right hands? Do each of you solemnly swear that the testimony

that you are about to give before this subcommittee is the truth,

the whole truth, so help you?

[Chorus of two “I do’s.”]

Dr. Billings. The belief was expressed at the NTSB hearings

early in 1975 that such a reporting system at a national level

might well be a useful safety tool. The Federal Aviation Administration, which is ultimately responsible for insuring the safety of

air transportation, acted quickly to implement a confidential aviation safety reporting program. The new program was announced

in May 1975. Operating under direct control of the Administrator,

a small group of FAA safety officers carefully screened and initiated action, where appropriate, on some 1,500 reports during the

following year.

It quickly became apparent, however, that despite stringent safeguards of confidentiality in the FAA program, many segments of

the aviation community were extremely uneasy about reporting

possible incriminating occurrences to the agency responsible for

enforcement of the Federal Air Regulations. For that reason, and

in order to enhance the flow of possibly useful safety data, the

FAA asked the National Aeronautics and Space Administration if

it would be willing to act as a neutral third party to receive,

process, and analyze aviation safety reports. After consultations

with many segments of the aviation community, NASA agreed to

implement an aviation safety reporting system.

The ASRS, which began operations on April 15, 1976, accepts

reports from any person who has observed or been involved in an

occurrence which in his or her view demonstrates the presence of

an actual or potential hazard to air safety. The system is designed

to provide timely information regarding possible deficiencies or

discrepancies in the national aviation system.

ASRS liaison with FAA is through the office of the Assistant

Administrator for Aviation Safety which provides a major part of

the funding for the system, and which follows through on all

hazard reports. The system is directed by Ames Research Center’s

Aviation Safety Research Office. Oversight and guidance on the

reporting system are provided by an advisory subcommittee whose

members represent all segments of civil and military aviation, the

FAA, and the public.

The ASRS thus represents a unique, totally cooperative effort by

the entire U.S. aviation establishment to provide early warning of

possible problems so that timely preventive or corrective actions

can be taken to improve air safety.

The aviation safety reporting system is a voluntary system.

Pilots, air traffic controllers, and others in aviation are encouraged

to report occurrences which they feel represent a problem. In 19

months, approximately 9,000 reports have been received. The quality of these voluntary reports has been high; the cooperation of

FAA and the aviation community has been outstanding.
227

It is important to note that the ASRS is not an investigative

system. The information contained in reports is evaluated carefully

by experts, but the confidentiality requirements of the system prevent us from obtaining verification. Our information describes the

perceptions of individuals as to problems in the aviation system. 

These perceptions are often illuminating, but they may or may not

be correct. Bulletins and reports prepared by ASRS, therefore,

describe possible, but not proven, hazards. These reports are disseminated to those who are in a position to investigate, verify, or

refute the existence of an alleged hazard and take appropriate

corrective action if it is called for.

Over 50 percent of the reports received to date by ASRS involve

human error in aviation. We know from countless studies of aircraft accidents over the years that human error is at least a

contributory factor in from 70 to 90 percent of them.

Because of the ASRS structure, incorporating confidentiality,

and a limited waiver of disciplinary action offered by FAA, individuals working in the national aviation system are both permitted

and encouraged to report occurrences involving errors. Because

they have learned that the system is “safe,” they are able to

discuss these errors truthfully; and there is abundant evidence that

they have done so. Though their reports may involve their perception of a situation rather than the actual situation, it is their

perceptions which are the basis for their decisions and subsequent

actions. If the perceptions are wrong, the actions are likely to be

wrong.

The aviation safety reporting system thus provides a unique way

of looking at the aviation system through the eyes of those who

work within it. It provides a mechanism for uncovering misperceptions, misunderstandings, and areas of ambiguity in the aviation

system. Once such misunderstandings, misperceptions, or ambiguities are uncovered and analyzed, we can begin to understand not

only the way errors are committed but why they are committed, 

and therefore how to take preventative action to keep them from

happening again.

The ASRS thus has the potential to provide the FAA and the

aviation community with data which will permit them to get at the

roots of problems which threaten air safety, and thus to work out

rational and effective solutions of these problems.

The study I have been asked to discuss with you today represents

an attempt to provide just such data and assist FAA in its difficult

task of maintaining the highest possible level of safety in increasingly crowded terminal airspace. The study was published in our

fourth quarterly report which was distributed late last month.

Early scans of ASRS data base entries indicated that a substantial portion—something over 50 percent—of reports concerned occurrences in terminal airspace. In the first 2,300 reports entered in

the data base, 360, or 16 percent, reported occurrences in terminal

control areas or terminal radar service areas. Examination of these

reports showed that many of these did not relate specifically to the

radar service operations environment. One hundred thirty-six reports, however, were relevant to the specific rules and operating

procedures which govern flight and air traffic control operations in

terminal control areas and terminal radar service areas.
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A major difference between these two classes of terminal airspace is that in terminal control areas all air traffic operates under

air traffic control, regardless of weather; whereas in terminal radar

service areas, participation in air traffic control by aircraft flying

under visual flight rules is voluntary. Stage III radar services and

separation between participating aircraft are provide in both types

of airspace.

Thus, in a terminal control area, all aircraft entering the area

are required to contact air traffic control, to request a clearance,

and to obey the instructions of their controller. In a terminal radar

service area, a pilot flying under visual flight rules may elect not

to receive radar services, either by refusing such services or simply 

by not communicating with air traffic control unless he is going to

or from a controlled airport in the area.

Our data indicated that many of the 136 reports relevant to

those operating rules also involved a reported conflict between

aircraft. About 70 percent of the reports involved a potential conflict; 38 percent involved a near midair collision, which we defined 

as an encounter involving an estimated miss distance of 500 feet or

less, or an encounter in which evasive action was required or in

which there was no time for evasive action. These numbers must

be seen in perspective; they describe something under 100 potential

conflicts in 6 months in terminal areas which handled roughly

64,000 aircraft per day. Nineteen of the reports involved an inability by air traffic control to visualize conflicting traffic, or a failure

by air traffic control to point out that traffic. Reports were received 

from 18 of 21 terminal control areas and from 40 of 75 terminal

radar service areas. Twenty reports involved an aircraft which had

entered a terminal control area without a clearance. About half of

the reports were thought to be primarily associated with aircraft or

pilot factors, one-third with air traffic control or controller factors;

the remainder were associated with equipment and airspace or

environmental factors.

Each of the 136 reports was carefully examined in an attempt to

discern what system or human factors might have been involved.

Some of the occurrences, indeed many of them, involved human

error; but the question facing us was why these errors and occurrences had happened, not with placing blame for them.

Looking first at aircraft and pilot factors, we found one or two

cases in which it was clear that a pilot was deliberately circumventing the rules of the system. There were three other cases in

which pilots, after contacting air traffic control, simply continued

on course in expectation of a clearance into the terminal control

area which for some reason was not forthcoming. In several of 26

cases involving terminal radar service areas, the pilot apparently

did not wish to participate in radar services. In three other cases,

pilots entered a terminal radar service area under control of air

traffic control, then canceled their flight plans and refused further

radar service in order to save time getting to their destination

airport. Controllers have remarked that this leaves them with the

sometimes difficult task of replanning traffic flow on short notice

to take account of the movements of the nonparticipant aircraft.

Another factor in certain areas was pilots whose comprehension

of English was limited. These pilots are sometimes unprepared for
229

the complexities of terminal area operations controlled in a language with with which they are unfamiliar. Three cases were

reported in which this was a factor.

The problem of nonparticipating aircraft was a factor in 50 of

the 136 reports in this study. The problem of the nonparticipant is

quite different in the two classes of terminal airspace, however.

Terminal control areas are prominently identified on both visual

and instrument charts; separate TCA charts are published and

easily available. Rules governing aircraft operation in terminal

control areas are codified in the Federal Air Regulations and summarized in the Airman’s Information Manual. It seems reasonable

to believe, therefore, that most pilots are aware to some degree of

the restrictions that apply to all such areas.

Terminal radar service areas, on the other hand, are not identified as such on visual or instrument charts. While their presence is

noted in part 3 and their limits are shown graphically in part 4 of

the Airman’s Information Manual, without immediate access to

these documents it may be difficult for pilots to know whether a

given terminal area does or does not provide stage III radar service.

Further, during visual meteorological conditions, terminal radar

service areas may contain three types of air traffic: participant

aircraft operating under instrument flight rules, participant aircraft operating under visual flight rules, and nonparticipating aircraft operating under visual flight rules.

In this respect, terminal radar service airspace is exactly like all

other low altitude airspace with radar coverage except terminal

control areas; under visual meteorological conditions, the three

categories of aircraft may coexist anywhere in terminal or en route

airspace, and radar advisories may be provided to VFR aircraft on

request, workload permitting. Safety advisories are routinely provided to aircraft under ATC control if the controller becomes aware

of the potentialy unsafe situation.

Because terminal radar service areas are relatively busy hubs,

and because participation in radar service is encouraged, the

number of participating aircraft may be larger than in other airspace. But the number of nonparticipants may also be considerable. 

As in other controlled airspace, such nonparticipants may or may 

not be known to air traffic control.

Controller factors in eight occurrences reported to ASRS included high workloads, inexperience or lack of familiarity, and misunderstandings; these factors bear a remarkable similarity to factors

in incidents involving primarily pilot factors. Coordination problems were relatively uncommon in this study, occurring in only

four cases. Inability to visualize a primary or nontransponder

target on radar was a problem in several reports.

The configuration of airspace in terminal control areas appeared

to influence considerably the behavior of pilots using, or avoiding,

the terminal control areas. The design of airspace in such a way

that it meets the needs of all users can be extremely difficult, 

particularly in the face of geographic constraints and multiple hub

airports. Four types of airspace boundary problems were reported:

those involving corridors through TCA’s, those involving aircraft

overflying the upper boundaries of TCA’s, those involving geo-
230

graphic constraints at the lateral boundaries of TCA’s, and those

involving the close proximity of hub and satellite airports. Fourteen reports were cited in which boundary problems were thought

to be relevant factors.

Equipment factors in these occurrences related primarily to

radar and the associated computer systems. The most frequent

citation—12 reports—was inability to make or maintain contact

with primary targets. Radar failures were mentioned in two reports, an environmental problem which degraded radar imagery in

one; computer problems were cited in 10 other reports.

While the air traffic control system has backup modes of operation designed to compensate for the various types of equipment

problems which can occur, the reliability of the radar and computer equipment tends to place the controller at a disadvantage when

a failure occurs, especially if it is a subtle failure. Controllers, like

pilots, learn after a time to rely on the continued correct functioning of devices that usually function correctly. This places them at a

disadvantage for a short time if the equipment fails. Perhaps more

important, their level of alertness respecting subtle failures is lowered after a long period without them. Man does not function well

as a monitor when he must look for events with a low probability

of occurrence.

Two types of problems related to ATC policies and procedures

were identified in these data. The first relates to air traffic control

procedures for handling VFR aircraft in terminal radar service

areas. Pilots flying under visual flight rules are required to comply

with all Federal Air Regulations and to advise controllers if compliance with an air traffic control instruction would cause them to

violate a regulation.

It has been pointed out to us that at night or in limited visibility 

conditions, a pilot may not be able both to maintain an assigned 

heading or altitude and also to maintain legal and appropriate

terrain and obstruction clearance. When this problem regarding a

specific terminal control area was described in FAA, the agency

took prompt corrective action. It subsequently reported to us that

this matter was under further review for possible national application of revised procedures for the handling of VFR traffic in terminal control areas.

The other problem relating to policies and procedures is a more

subtle one. It appears, from the reports submitted to ASRS, that

some of the limitations of the radar services program are not well

understood by at least some aviators. Pilots do not understand

some of the constraints governing the provisions of such services,

nor the limitations of the radar equipment itself. Pilots of aircraft

operating under instrument flight rules in particular do not understand why point-outs of a potentially conflicting VFR aircraft are

not routinely given them. They have no way of knowing, of course,

whether such an aircraft is a participant, or even whether it is

visible to the controller handling their flight.

Similarly, it appears that at least some controllers are uncertain

as to the intent of the basic policies governing terminal radar

services. They may lack an appreciation of the problems facing a

pilot as he looks for a target which has been pointed out to him;
231

they may also not understand how much a radar point-out can

assist a pilot under high workload conditions.

On the basis of the data reviewed during this study, we believe

that many of the problems associated with operations in terminal

radar service areas and terminal control areas relate to the timely

transfer of accurate information to and among those who must

make the system work.

We believe that existing methods for the dissemination of information regarding TCA and TRSA boundaries and procedures are

not optimal and that a study of available methods for disseminating such information might be useful.

Finally, we believe that a better understanding of the rationale,

policies, and procedures for the use of terminal radar services by

both general aviation and air carrier pilots would enhance the

safety and effectiveness of the system. In particular, we think a

better understanding of why the system works as it does, and of its

limitations, would be of benefit. Air traffic controllers also need to

be fully aware of the rationale and methods of terminal radar

services, and of the needs—and problems—of all classes of pilots

who may utilize airspace designated for these programs.

In summary, these ASRS reports represent the perceptions of

pilots and controllers as to problems in terminal radar service

environments. We have attempted to illuminate possible human

and system factors associated with these occurrences in the hope of

gaining a better understanding of why they happened. We do not

receive reports regarding the thousands of flights which operate

daily in these environments without incident, nor did the FAA

expect to receive such reports when it designed the aviation safety 

reporting program. Instead, it was the agency’s hope that it might

uncover small problems in the aviation system before they became

big ones with serious consequences, and that is exactly what we in

NASA and our colleagues in FAA are trying to do.

Thank you.

Mr. Burton. Assuming someone reports to you in strict confidentiality, although you are really trying to find out why something

happened, you are not really interested in—and it is not your duty

to punish the wrongdoer. Is that right?

Dr. Billings. That is correct.

Mr. Burton. How do you report this to FAA without them

figuring out exactly-----

Dr. Billings. We do not report incidents in identifiable-----

Mr. Burton. OK, fine.

What would happen if you came across an incident caused by

really gross negligence? Or, no matter what you find, are you just

like a priest or confessor? I am serious. Do you ever find yourself in

conflict where really you feel you ought to inform the FAA because

there should be some specific investigation or disciplinary action?

If you did that even once, wouldn’t it destroy the credibility of the

ASRS system?

Dr. Billings. Let me speak to it this way. We do not attempt to

evaluate whether negligence or carelessness or reckless flying is

involved in reports. The only types of reports which are forwarded 

in identifiable form are those involving aircraft accidents. Those

are forwarded to the NTSB and to FAA because they have a
232

specific statutory mandate. Also reports involving possible Federal

crimes—violations of title 18 of the United States Code—are forwarded to the Department of Justice and the FAA for further

investigation.

In other cases involving the Federal Aviation Regulations, we

have been specifically mandated to consider all such reports in

exactly the same way. All such reports are identified promptly

after we have made a determination of whether we need to talk

with the reporter further—all such reports are considered a part of

the aviation safety reporting system’s data base thereafter. They do

not remain in our system in identified form.

Mr. Burton. Do you have a rough idea of the percentage of

aircraft operating within TRSA’s that don’t participate within that

control system?

Dr. Billings. I believe Mr. Bond’s statement contains some information regarding this.

Mr. Burton. How can you better inform the aviation user of the

various aviation safety procedures they should follow?

Dr. Billings. I would prefer to let the FAA speak to that, if I

may. The only method we have is to try to identify problems.

Mr. Burton. You raised it in your statement. But, in other

words, you’re saying you don’t want to intrude; that that is for the

FAA to do and you don’t want to second-guess them right now.

Dr. Billings. That is correct. It is not the mandate of the aviation safety reporting system to make recommendations for corrections.

Mr. Burton. I was just asking for an opinion. You wouldn’t even 

feel comfortable doing that—you’d feel that you are moving out of

your-----

Dr. Billings. We feel that it needs to be done.

Mr. Burton. Do you have any ideas on how it might be done?

Dr. Billings. There is a variety of methods that the FAA has for

getting to both general aviation and air carrier pilots. I think they

are better qualified than I to speak to this.

Mr. Burton. If they were doing it, you couldn’t even raise the

point, could you?

Dr. Billings. They are doing it. They have an extensive airman

education program. What we are highlighting is certain specific

misunderstandings which may need to be emphasized in such programs.

Mr. Burton. Does it make any sense for the controller to either

see his target or be able to talk to the pilot? Shouldn’t this be some

kind of a requirement in the TRSA’s?

Dr. Billings. We know that it is very important that the controller have adequate information regarding the three-dimensional position of all aircraft within his sector in terminal radar service

areas.

Mr. Burton. How do they do that when many of, especially,

general aviation planes aren’t equipped with a transponder.

Dr. Billings. There are two ways that information can be transferred to the controller. One is by use of an encoding transponder.

The other is by verbal communications. The pilot can tell him

where he is and what altitude. He can gain the information in

either of those ways.
233

Mr. Burton. That is assuming that there are enough controllers

at that airport, and they have time to be communicating in this

way and to be watching equipment. I think two or three times

throughout your statement, which was an excellent statement, you

talked about “workload permitting.”

Dr. Billings. Yes.

Mr. Burton. What does “workload permitting” mean—that

there are enough controllers to handle the flights?

Dr. Billings. No; it does not.

The giving of advisories to aircraft respecting other aircraft

which may become a potential conflict for them is an additional

service provided by the FAA air traffic controller. That is what is

to be performed on the workload permitting basis. It is not optional

for the controller to do this; it is mandatory if his workload permits

him to.

Mr. Burton. Well, that’s what I am saying. If you have two

people instead of one, maybe with that workload there would be

time for somebody to think about draining the swamp as well as

hitting the alligators in the head. [Laughter.]

Dr. Billings. We have to consider two things here. The first is

provision of separation in terminal radar service areas and that is

not an additional service. The provision of separation to participating aircraft is a mandatory service. That’s the whole name of the

game under stage III radar services. The provision of traffic advisories specifically, as opposed to separation, is an additional service. As I indicated, that is not optional on the controller. It is

merely a matter that is something that is of less importance than

the provision of separation.

Mr. Belanger can speak to this with considerably more expertise

than I, but that’s my understanding of it.

Mr. Burton. It is mandatory that he do it, but he doesn’t have to

do it if he is too busy doing priorities A and B.

Dr. Billings. No. It is mandatory that he provide separation by

one means or another for the participating aircraft under his control.

It is not mandatory that he provide pointouts to them of all

other aircraft in their vicinity unless, in his opinion, they represent

an immediate hazard.

Mr. Burton. Then he has time to be aware of that and do that?

Dr. Bilungs. Yes.

Mr. Burton. But it would be very desirable if all controllers had

time and ability to do that and if all planes coming in knew that?

Dr. Billings. Yes, it would certainly be desirable to do so if

possible.

Mr. Burton. It probably wouldn’t be possible all the time unless

there were either more sophisticated equipment or a few more

controllers.

Dr. Bilungs. I think Mr. Belanger can speak much better than I

to the question of present workload.

Mr. Burton. I am not an expert on controllers. I am not an

expert on much, but I do know that one person can only do so

many things at one time. If something is mandatory, you are going

to do that first and if something is desirable, you’ll do that afterwards.
234

One person can do only so much work.

Dr. Billings. Right. I think that is exactly what the FAA had in

mind when it set up a schedule of priorities for the services the

controllers would provide.

Mr. Burton. Right. But under some of the circumstances, I

imagine, it would be difficult to get down to the desirable one when 

they are fighting very hard to get the mandatory items accomplished.

Do you think it would make sense to require some type of transponder equipment on all aircraft?

Dr. Billings. I’ve got to answer that question by attempting to

define the problem. The problem is to provide information on position and altitude to the ground facilities. This isn’t only true in

terminal areas.

How can this be done? It can be done either by transponders or •

by verbal communication.

What will be gained by transponders or more effective communications? Better information for the controllers, and therefore better

services to the participants.

Mr. Burton. Therefore better safety odds.

Dr. Billings. That is only true if we take full account of the

possible side effects of this.

If more transponders are found to be a viable solution to this

problem, we have to ask whether their addition to the system can 

cause new problems—possibly more severe ones than the ones we

are trying to solve.

The various components in this aviation system are highly interdependent and changing one almost always shows up as a new

problem in another.

The questions that I would have to ask before I could answer

that question adequately would be these: First, if we decide that we

are going to require more verbal communications with the controllers, can the controllers handle an additional verbal communications load? They are already heavily loaded in some areas.

Mr. Burton. My immediate gut reaction would be no.

Dr. Billings. If we go to transponders, can the controllers make

effective use of the additional visual information, or will there be

so much scope clutter that it will make their tasks more difficult or

overload them?

If they do, they will simply tune information out because man

has a limited channel capacity.

Mr. Burton. So then we add another man.

There is a school of thought that in certain areas there aren’t

enough controllers operating. When I say controllers, I really mean

journeyman controllers, not students.

Dr. Billings. That one I really can’t tell. The question has to be

asked in terms of not a simple gadget. It has to be asked in terms ‘

of the effect of that gadget on the people in the system.

Mr. Burton. And how would you implement it? In other words,

assuming that was the law, how would you deal with the problems

that would cause?

1

Dr. Billings. Which that solution creates; yes, sir.

Mr. Burton. Thank you.

Mr. Stangeland?
235

Mr. Stangeland. No questions, Mr. Chairman.

Mr. Burton. Mr. Butterworth?

Mr. Butterworth. Mr. Chairman, I would like to read a few

sections of the ASRS Fourth Quarterly Report just to give us an

idea of the type of situation we are dealing with.

One of the problems Dr. Billings mentioned was that due to the

way certain terminal control areas are configured, commercial airliners departing at high altitudes and high speeds with a busy

workload in the cockpit have a difficult time seeing general aviation aircraft. You provided one example of this in your report and

it says:

Airline aircraft A was on vectors heading 360° assigned by O’Hare Chicago 

approach control and descending from 7,200 when a co-pilot noticed a light aircraft

B at our two o’clock position westbound coming from over the lake at our altitude

very close. Both aircraft banked to avoid striking. Estimate miss at approximately

100 yards. We were not given traffic information by approach control and asked

them if they could paint the other traffic after the miss. They were unable.

Maybe you could explain that a little more. How significant is

that type of report? Does that happen often?

Dr. Billings. We have no way of knowing how often that happens. The aviation safety reporting system, because it is a voluntary system, cannot provide incidence data. It does not tell us how

often something occurs in the aviation system, nor was it designed

to. It was designed to try to ask why things of that sort happen.

These reports taken singly may or may not be significant. Taken

in a group, as here, we may be able to dissect out more information

about why those kinds of occurrences occur.

That one is one example of the VFR overflight issue which we

have raised in the report. I really can’t say very much more about

it.

Mr. Butterworth. A commercial air carrier crew is very busy

during departure from or approach into a terminal control

area-----

Dr. Billings. That is true.

Mr. Butterworth. Their eyes are inside the cockpit.

Dr. Billings. That is not necessarily true. They are very busy,

yes.

I think what you are asking about really is the see and avoid

issue.

Mr. Butterworth. That is what the hearing is about, yes.

Dr. Billings. I would like just to say this. Our reports, as well as

a great body of other evidence, speaks to it.

See and avoid has been and continues to be the primary method 

of separation assurance in most low-altitude airspace throughout

the United States.

Mr. Butterworth. Pilots are supposed to have eyeballs.

Dr. Billings. Right. It is an important aid to safety in all airspace including positive control airspace. Near midair collisions

such as the one that you have just read, occur with some frequency. Actual midair collisions are rare. They are under 1 percent of

all aircraft accidents and have been consistently.

Then there is quite a disparity between near midair collisions

and actual midair collisions. One has to ask why. Many of the
236

potential conflicts described in this study were not more serious

precisely because pilots did see and avoid other aircraft.

Mr. Butterworth. Yes. I understand that.

Mr. Burton. Mr. Stangeland has to leave and I believe the only

other witness for the day that was not already sworn in is Mr.

Skully.

STATEMENT OF LANGHORNE M. BOND, ADMINSTRATOR, FEDERAL AVIATION ADMINISTRATION; ACCOMPANIED BY RICHARD F. SKULLY, DIRECTOR, FLIGHT STANDARDS SERVICE;

RAYMOND G. BELANGER, DIRECTOR, AIR TRAFFIC SERVICE;

AND DAVID SHEFTEL, DIRECTOR, SYSTEMS RESEARCH AND

DEVELOPMENT SERVICE

Mr. Bond. Mr. Skully and Mr. Belanger will be testifying with

me.

Let me add Mr. David Sheftel.

Mr. Burton. All right.

Do each of you solemnly swear that the testimony that you are

about to give before this subcommittee is the truth, the whole

truth and nothing but the truth, so help you?

Mr. Skully. I do.

Mr. Belanger. I do.

Mr. Sheftel. I do.

Mr. Bond. I do.

Mr. Burton. You were already sworn in yesterday, Mr. Bond, so

the left hand is all right. [Laughter.]

Thank you very much, Mr. Stangeland.

Mr. English will be coming in.

Mr. Butterworth. We were describing problems involved in departures out the top of TCA’s. I assume that this same type of

problem can be encountered laterally and underneath as well.

Dr. Billings. Yes. There are potential interface problems at the

boundaries between airspace controlled in this way and other airspace surrounding it.

Mr. Butterworth. I would just like to clarify again that in

terminal radar service areas it is possible for an aircraft on visual

flight rules to transit this airspace without radio communication

and without a transponder. Is that correct?

Dr. Billings. That is correct.

Mr. Butterworth. The controller is supposed to provide traffic

advisories to all the aircraft under his control; that means, participant aircraft, workload permitting. However, because there isn’t a

transponder, he may only get an intermittent primary return on

that aircraft.

Dr. Billings. On this nonparticipant aircraft. That is correct.

Mr. Butterworth. He may have to tell a participant IFR or

VFR aircraft “Hey Charlie, I’ve got someone 10 o’clock low—lookout, I don’t know his altitude and I can’t talk to him.” That

possibility is real.

Dr. Billings. Yes, sir.

Mr. Butterworth. It has come up in your reports.

Dr. Billings. Yes.

Mr. Butterworth. I would like to read one example. This is on

page 17 of your report in the discussion of terminal radar service
237

areas. There is a lot of pilot terminology in here which is fairly

confusing. I believe this is a commercial air carrier aircraft departing from Ontario Airport near Los Angeles. I’ll begin here, paraphrasing:

Communication was with Los Angeles Center at the time, the controller said he

didn’t see it—a small aircraft, a light twin general aviation aircraft—and apologized

as other aircraft was on another code. Near mid-air was less than 200 feet. Evasive

action was required.

Now he put two notes in here—

Note.—This particular departure is one of the heaviest routes of air traffic in the

U.S.A. Local VFR inbound and outbound VFR and IFR traffic into Los Angeles,

LAX and a few other airports and many others plus military traffic use the

departure route too. In five minutes after takeoff, besides flying airplanes, this

departure required three radio frequency changes, four changes in heading, and 

three altitude restrictions. In the meantime they received several callouts of conflicting traffic to watch for.

That seems to be a fairly heavy workload for any pilot, and

particularly since in that area the weather was 5 miles visibility, 

with smoke and haze. If anyone has lived in California, they know

those conditions are typical.

Mr. Burton. That is the Ontario area—south. [Laughter.]

Mr. Butterworth. It seems to me that—just from a layman’s

point of view—these are fairly dangerous circumstances. From

what you have seen, would you agree with that?

Dr. Billings. Once again I have to return to what I said in my

statement. We have 136 reports, 95 of which related to potential

conflicts between aircraft in 6 months, these areas accommodate

from 64,000 to 65,000 operations per day.

There is no such thing as absolute safety. It is a matter of

relative safety.

Is this a dangerous circumstance?

What you read is not a desirable circumstance, but it has to be

measured against the tasks that must be performed for the number

of aircraft in the area. I can’t answer your question in absolute

terms.

Mr. Burton. Safety is the one thing that separates the FAA

from the post office. It is desirable to deliver the mail in 2 days.

But when we are dealing with safety and the FAA, something that

is desirable is more important.

I think that “desire” then carries a stronger connotation than it

would in the case of wishing to have the rural post offices open on

Saturday.

Dr. Billings. I think it has to be pointed out regarding the brief

discussion we had on see and avoid is that see and avoid is not

relied on totally in these areas. This is precisely why the FAA

implemented terminal radar service areas and terminal control

areas in an effort to provide a more effective primary method of

separation assurance. See and avoid, however, represents a very

important backup. It is what was effective in that particular instance and many others in our report. One of the reasons that the

national aviation system is as safe as it is, is precisely because it

has that kind of redundancy built into it.

Our study indicates that problems can occur when one relies too

much on radar separation. This is one of the potential human

factors problems. It is easy to assume that the controller is taking

27-075 0 - 78 - 16
238

care of you. I think therein lies the more subtle misunderstanding

about the systems.

Mr. Burton. I very much appreciate your testimony and I also

appreciate the position in which you find yourself. I assume you

not only have to keep the confidence of whomever it is who reports

to you, but you also have a duty to send some information to the

FAA. You don’t want to inform on those who report to you, and

you don’t want to start second- or triple-guessing the FAA.

I think I had one more question and then we may have more we

might submit to you in writing. Again, if you feel somehow that

answering questions in the way they are put to you might, in

effect, compromise your mission, you could let us know that. We

can then discuss whether we would like the questions answered in

the way they are put.

Thank you very much.

Rachel, did you have some questions?

Ms. Halterman. I just wanted to ask about the radio communication—it is not required on the TRSA, right?

Dr. Billings. Not unless the aircraft is entering an airport traffic area of a controlled airport.

Ms. Halterman. In a controlled airport—but if they are nonparticipants, they do not have to radio. How much of a hardship would

it be to require them to radio in to the tower?

Dr. Billings. I can’t answer that question, but I suspect the

answer would vary for different terminal radar service areas. The

question of hardship has to be asked two ways. How much of a

hardship is it on the controllers who have to handle that additional

verbal communications load and the question of hardship on the

pilots who fly.

The vast majority of aircraft do contain radio transmitters and

receivers at this point in time. This includes general aviation aircraft as well as air carrier aircraft.

Once again, whatever method may be taken to approach the

problem of the nonparticipant, if it is decided that it is a problem

that is handleable, must be assessed in terms of its consequences

on not only the system itself but on operations or the people who

make that system work. I would plead simply for consideration

oriented along those lines rather than a simplistic solution which 

may well cause more problems than it solves.

Ms. Halterman. That’s all I have. Thank you.

Mr. Burton. Thank you.

Dr. Billings. Thank you, Mr. Chairman.

Mr. Burton. I would like to make one last comment. Maybe the

simplistic solution might cause more problems than it cures, but

the problems that it causes may also be things that can be fairly

easily cured.

Our next witnesses are Mr. Bond, Mr. Skully, and Mr. Belanger.

I want to return to the regulatory reform issue. On September 8,

I asked you if you foresaw any problems for the FAA caused by

airline deregulation. You replied that you didn’t see any, or that

what problems there were, were predictable. I asked if you had any

knowledge of any memos or internal information dealing with this.

You referred me to Mr. Skully, Director of Flight Standards Service.
239

Mr. Skully, I wonder why you didn’t let Mr. Bond know of the

reports you had received from your unit when Mr. Bond was about

to testify on this very subject matter.

Mr. Skully. Mr. Bond was aware of the reports that I had

requested. I verbally briefed him before the hearing.

Mr. Burton. You did? I wonder why he didn’t mention that to

us.

Mr. Bond. Well, I guess I didn’t remember it.

Mr. Skully. I might add that I didn’t put too much credence in

the data that you focused on relative to staffing.

Mr. Burton. You don’t put any credence on your evaluation

staff. Now I don’t know exactly what the evaluation staff does, but

as I look at them they evaluate the programs and duties of the

FAA. Their memo goes through a whole litany of concerns and

talks about maintenance training. They talk about maintenance

personnel. They say that maintenance of an aircraft and maintenance personnel usually require a very large outlay of money.

Flight Standards has found it necessary to delegate more functions

to industry because of the steady decline in the number of inspectors. This has worked well because carriers are prosperous but with

the security of industry regulations being threatened they may

revert to self-survival and side with the carrier on a crucial decision.

What does the evaluation staff do? They seem to be a very 

significant unit.

Mr. Skully. They evaluate the standards that we establish. They 

go to our field offices and to our regions to determine whether or

not our district offices are complying with the instructions that we

have issued. They have also been given a number of special assignments.

Mr. Burton. They evaluate program performance, don’t they?

Mr. Skully. That’s correct.

Mr. Burton. And safety is a major criterion of program performance.

Mr. Skully. In the last weeks of July, I was on leave. When I

returned, it was August 1. I had been informed that we were going

to have hearings on the impact on deregulation or the aviation

safety problem. At a staff meeting on August 2, I requested my

special assistant to collect data or opinions on issues that might

have some bearing on deregulation. Obviously, the date of the

memo that you are reading from is August 4. It was an off-the-topof-the-head comment from a maintenance inspector who works for

Mr. Clark. Mr. Clark is very competent and has an excellent background.

Mr. Burton. Excuse me. So it’s an off-the-wall comment—he

doesn’t know what he is talking about—he just wrote down some

random thoughts.

Mr. Skully. That’s the way I read it. Yes, sir.

Mr. Burton. Then we will do away with Paul Clark. Who is Paul

Clark?

Mr. Skully. He is Chief of the Evaluation Staff, Flight Standards

Service. He signed the memo, but he didn’t write it.

Mr. Burton. He signs everything that is put in front of him?

Mr. Skully. Obviously he read it.
240

Mr. Burton. And obviously agreed with it.

Mr. Bond. Mr. Chairman, the reason this event was not brought

to your attention and not incorporated in our testimony was that

the memorandum is wrong and mistaken. Senator Cannon, who is

an expert on aviation and a pilot, said that regulatory reform and

aviation safety—the issue is a red herring.

Mr. Burton. We happen not to agree with that. As I said, the

first thing about the FAA that alarmed me was when I asked: “Do

you think you can handle all this new business because it is going

to be different.” The response was that there would be no trouble.

One of your chief staff persons disagrees with Senator Cannon.

Paul Clark is the Chief of Flight Standards Service Evaluations

Staff. He saw something. Senator Cannon, for whom I have the

greatest respect, is the author of the bill. We don’t say that deregulation means that planes are going to crash. We just feel that you

ought to know that there are going to be some problems. Clark lists

several, and he signed the memo. His job is to evaluate program

performance and his statement is fairly heavy.

Look at some of the other memos. Your positions have been 

decreased by 260 since 1971 despite a continued growth in aviation

activities. Any additional demands on the work could cause new

staff. They have laid down how they are going to cut back.

Each part of your service, sir, raises that potential very strongly. 

They don’t say they are going to need all these people. But they do

raise that possibility. You sit here and act like it isn’t going to be a

problem while they disagree. If these people are incompetent, they

all ought to be fired.

What’s the bottom line in the memos? Increased need for new

FAA manpower resources.

What’s the other one? The General Aviation Division says that

“if there were significant increases in applications, considerable

impact on field resources would result. We are not staffed to cope

with such an increase.” Further down, they almost stipulate an

expected increase and say that even an authorized increase in

personnel would be largely unproductive in the near term due to

the leadtime that it takes to start training them. This is the point

that I raised.

“To reiterate, * * *”—and this is from another one of your

groups—“the agency does not now have the resources to cope with

the problems that sudden deregulation would present * * *. Considerable leadtime would be necessary in securing and training any

additional personnel * * *.”

Then from another memo, “Increased surveillance due to ihflux

and rapid turnover of new operators.” From yet another memo:

“One area that may be affected is the planning and installation of

new navigation facilities.”

I was distressed by the fact that you didn’t see these possibilities

and that you were not planning for them. Even if we said you can 

hire everybody in the world, you would have to find and train

competent people. You just seem oblivious to the fact that airline

deregulation will necessarily cause an increased workload for the

FAA.

Mr. Bond. Mr. Chairman, the evidence put before this committee

that has been both supplied by the FAA and many expert wit-
241

nesses indicates that the workload that will come from regulatory

reform is not excessive-----

Mr. Burton. That evidence came from you. It hasn’t come from

anybody else I know, and it certainly didn’t come from your people.

Now maybe they ought to be fired. Maybe they are incompetent.

Mr. Bond. It came from the FAA and it contained a most significant statistic which I did not bring before this committee yet, and I

would like to bring it forward now.

Mr. Burton. Do it.

Mr. Bond. The requirements for the FAA to certificate Southwest Airlines, which is part 121 all jet carrier, were precisely 1,700

man-hours. Less than 1 man-year of our inspector time was required to start from scratch a new jet airline. Now we have 2,000

safety inspectors in the field and it is crazy to think-----

Mr. Burton. How many are yours and how many belong to the

airlines?

Mr. Bond. Those are our employees. They are in addition to the

designated inspectors that are on the payroll of the various air

carriers.

Less than 1 man-year to bring a new jet airline on stream. The

notion that there would be any excessive demand on the FAA

inspector forces as a result of regulatory reform, even if new airlines are formed and there is debate about that, is absolutely

unfounded.

Mr. Burton. All right. Let me read Mr. Clark who-----

Mr. Bond. Mr. Clark is wrong-----

Mr. Burton. I think he knows more about it than you do, with

all due respect.

Mr. Bond. He is untutored in the impact of the economic side of

this bill. He said to Mr. Skully that he had not considered the

legislation. He did not know what was in it-----

Mr. Burton. Let me just read his memo and we will see if what

he says is so:

Regulation reform or deregulation of aviation industry could cause an increase of

flight standard safety workload efforts under the present FAA policy of delegation

in the continued decline of FAA’s inspector manpower.

Your people have been decreasing and we are letting the industry do it.

He talks about maintenance training. In order to be competitive

with other carriers and ticket prices, the carriers could be expected 

to cut economic costs wherever possible. Anybody agree with that?

Is that really an outrageous statement?

Mr. Bond. There is a difference between economic costs and

safety-----

Mr. Burton. With that point right there, is there any doubt that

they are going to cut economic costs wherever possible?

Mr. Bond. Every air carrier I know tries to reduce its costs to the

minimized level. That is the American free enterprise system.

Mr. Burton. Through past experience, he states that the first

corner to be cut is maintenance training. Through past experience—maybe he dreamed that one up-----

Mr. Bond. He is wrong. The evidence before this committee

indicates that it has not been since 1962 as we submitted in responses to your questions, that there has been a safety problem
242

with a certificated part 121 carrier due to economic decline. Your

questions specifically asked that point and every time there has

been an economic decline or a merger or a reversal in this industry, the FAA has not been able to detect any decline in part 121 air

carrier safety operations. They have cut other things. They have

cut flight frequency. They have reduced operations. They have cut

overhead, as Eastern Airlines has done, but in spite of our vigilance, it has been 15 years since we have detected any reduction in

safety in certificated air carriers.

Mr. Burton. Then why don’t you fire this guy?

Mr. Bond. We are all entitled to be wrong, Mr. Chairman.

Mr. Burton. When you are wrong, people could lose their lives.

Mr. Bond. My job is on the line-----

Mr. Burton. No; your job isn’t on the line. If somebody’s flying a

plane his is on the line. You are in public service and taking this

job, I’m sure at an economic sacrifice, to sit and hear me go up and

down like a barometer—I’m sure that you’re also sacrificing peace

of mind.

Maintenance of aircraft and maintenance personnel are a large

outlay and affected early in any economic pinch. He is making

some strong statements and I would assume that you just can’t

dismiss this guy and say he’s right because the legislator said it

isn’t an issue.

Mr. Bond. It’s not because Senator Cannon is the author of the

legislation. It is because Senator Cannon and his committee are

recognized experts—many of them are pilots and knowledgeable in

the field of air transportation and safety. It is their years of experience and expertise—not that they are the authors of this legislation—that gives them the ability to speak to this subject.

I want to go further to say that I have not dismissed Mr. Clark’s

memorandum. We have read it. We have examined it. It is wrong

and the evidence is before this committee in its record that substantiates that.

Mr. Burton. You didn’t think it was a problem, and he said he

didn’t think it was much of a problem.

I’m not saying, and Mr. Walker, who was here, isn’t saying that

airline deregulation will decrease aviation safety. There is no

reason in the world why economic deregulation should cause safety

problems. But the fact that you don’t think there is going to be any

problem, or aren’t geared up for that possibility, is what upsets me.

Mr. Bond. We are geared up, Mr. Chairman.

Mr. Burton. How are you geared up? One of your people’s

memos say that with the continued decline in your own inspectors—

Mr. Skully. Mr. Chairman, may I say something here?

Let me go into the bureaucracy a little, which is probably an

ugly thing to do. When I made the request, I recognized that we

have various fraternities in FAA. We have various fraternities in

Flight Standards. One of these fraternities is a group called general

aviation operations inspectors. We have air carrier operations inspectors. We have air carrier maintenance inspectors. We have

general aviation maintenance inspectors. We have avionics inspectors. I’ll stop at that, but we have others.
243

I knew who wrote the memo when I read it. I knew it wasn’t Mr.

Clark; it was the maintenance inspector assigned to Mr. Clark’s

staff. He has had one field office assignment. He was at Washington National Airport for 6 years. He had been at headquarters for

two. I had to consider what he said and why he said it. He is

saying: I am a maintenance man and I feel the biggest problem in

any issue relative to safety is maintenance.

I get the same answers from the operations inspectors. I get the

same from the avionics inspectors. It is only natural to have a bias.

In other words, everybody in every one of the areas sees a potential

problem.

Mr. Burton. You are saying that Mr. Clark would sign something he knows is wrong because this guy’s got an ax to grind and

he used to be an airline mechanic.

Mr. Skully. It is an opportunity to increase the number of

people in the bureaucracy.

Mr. Bond. The issue here is not whether maintenance is important, Mr. Chairman. Everyone agrees with that. Mr. Clark is right.

The question is: What is the impact of regulatory reform? There

is no evidence whatsoever to indicate that it will derogate safety in

air carriage in any way.

Mr. Burton. Well, I guess the best thing to do is to find out why 

Mr. Clark signed this. I assume that you have respect for him

because he holds a pretty good position in the FAA. And you have

increased that type of delegation.

I assume he puts his signature on something like this that he

knows is just puffery. They talk about past experience. They talk

about the possibility that many FAA functions could be delegated

to the airlines. When the airlines are going to try to reduce costs

under dereg you are going to rely on a guy who might lose his job 

by coming to you and telling you something because be is being

paid by the airlines, rather than by the FAA.

What upsets me is that I really don’t think you believe that it

could happen—or that you aren’t ready to see that it doesn’t

happen.

It doesn’t have to happen. It really doesn’t have to happen. But

in my judgment it can happen with your attitude that it isn’t going

to happen—that its not going to be a problem.

Mr. Skully. At the last hearing in September, I commented that

when we actually see what happens, if there is an increasing

demand on our work force and we cannot handle it, then I will go

to Mr. Bond and ask for additional resources.

Mr. Burton. How long does that take in leadtime to get additional people in and train them?

Mr. Skully. Let me discuss that.

Mr. Burton. I would like you to answer it.

Mr. Skully. I will.

These folks are talking about leadtime for 10 positions we are

getting this fiscal year that will be general operations inspectors. 

They are being hired as trainees because we are trying to improve

our minority hiring. It will probably be 2 years before we can use

these 10 as journeymen. However, I can hire outstanding candidates as both maintenance inspectors and air carrier inspectors as

soon as I have a need for them. They will be technically qualified
244

the day I hire them. They will go through 5 weeks of indoctrination

to give them some of the basics on regulatory and enforcement

issues. Then we can deploy them to use immediately. Two months

after coming on board we can use them in the district office and

get a full day’s work out of them. Eastern Airlines, for example, 

has recently furloughed a number of their top engineering and

maintenance personnel.

Mr. Burton. Why is that?

Mr. Skully. They are cutting down on overhead.

Mr. Burton. You just made the point. You just absolutely made

the point.

Mr. Bond. Mr. Chairman, the point is not made by that. They 

were overstaffed. They are cutting back. There is no-----

Mr. Burton. No. They were not cutting back. They were on the

shorts. They aren’t making that kind of dough. *

Mr. Bond. Mr. Chairman, the fact that there is a change in the

staff size does not mean that adequate-----

Mr. Burton. Where do they come from?

Mr. Bond. Maybe they had too many people on the job doing not

enough work. That is the conclusion that Eastern Airlines must

have reached.

Mr. Burton. They came from the very area we are talking

about. There they are. You can hire them for safety because they

understand it—they just got furloughed by Eastern because Eastern is perhaps in an economic pinch.

Mr. Bond. We do not dictate any specific level of overhead

charges for an airline. We are primarily and solely interested in

the safety product at the end of the line. It has been uniformly

good with the American air carriers, including Eastern Airlines.

They have also laid off surplus management people at the top level

and all kinds of folks in many areas and there is no evidence that

their safety record will be derogated with all of this. Maybe they

have consolidated operations. You cannot quote the statistics without taking into hand the full picture.

Mr. Burton. I agree with that, but it just seemed odd that you

were saying that they wouldn’t do that and here—well, maybe that

is one place where you could hire all the personnel when they start

cutting back on maintenance safety and people like that-----

Mr. Bond. I was told here in my note from Mr. Belanger that

most of the people who have left Eastern Airlines were staff or

research and development folks and that they were not on the

maintenance side.

Mr. Burton. Well, I just said what he said.

Mr. Bond. Most of them.

Mr. Burton. Research and development and what?

Mr. Bond. Engineering side.

Mr. Burton. Engineering. Does that have to do with airplanes

and whether they fly safely?

Mr. Skully. In the area he is speaking of, Eastern is going to

rely more and more on the manufacturer in terms of how to extend

life of various parts of their equipment and that sort of thing.

Mr. Burton. Extended life in the equipment deals with safety, 

right?

Mr. Skully. Right—and economics.
245

Mr. Burton. Yes. That is what I say, it may or may not—in

other words, they cut back and rely on whoever builds for them.

Mr. Skully. Most companies do.

Mr. Burton. I’m not knocking that. Its just that here at one

level they even had their own people to make sure in an area-----

Mr. Skully. It wasn’t paying dividends.

Mr. Burton. It wasn’t paying dividends, but at one time they

thought it was a necessity and they did it.

Does it pay any dividends for any airline to have safety standards above your minimum?

Mr. Skully. I read the testimony of all the folks that you had

during the month of September. I think the point was made pretty

clearly by the witnesses for United Airlines. They submit a maintenance plan to the FAA on a given aircraft. We either approve it or

disapprove it. If we disapprove it, they modify it to our approval.

So in reality, the maintenance level that they are maintaining

their aircraft to is at our level. It is one and the same.

Mr. Burton. I thought most of them are above your level.

Mr. Skully. That is the chatter you heard at the hearing in

September. You heard a lot of things-----

Mr. Burton. I thought I heard that chatter even from you

people.

Mr. Skully. No. You didn’t hear it from me, sir.

Mr. Burton. Although everyone says that the pilot is in control

and can decide not to take up a plane, the law of the land under

the circuit court of appeals, Federal court, is that the pilot—in this

case, Mohawk’s—isn’t. He refused to take the plane up and was

disciplined because the plane met your minimum regulations. I was

intrigued by the FAA’s interpretation of its own regulation that

the pilot is the person who makes the sole determination of the

safety and operation of the plane, but when he disobeys an order to

take a plane up that regulation doesn’t apply because the plane is

not operating.

When an agency can make that type of argument, they can

almost make any kind.

We will go into that. I guess that I can throw these memos away

because they are self-serving. They don’t mean anything. The guy

that wrote it had his own ax to grind. Clark just signed it because

he figured, “what the heck.” The other people were looking for

help and so the memos don’t mean anything. They were so unimportant to Mr. Bond that he forgot when I asked him that you had

mentioned them to him. They just seemed very unimportant.

Mr. Skully. I mentioned the one-----

Mr. Burton. Yes, you mentioned one, but there were five.

Mr. Skully. Yes, but the same theme was there in all of them.

Mr. Burton. He thought they were so unimportant that he

didn’t even recall that you mentioned them to him. They were so

unimportant to you that you just passed it on that you had the

memos.

Mr. Skully. Yes. We have done something. I mentioned that

before. As a result of these memos and other discussions, we plan

to put together three teams to handle the certification if the workload comes upon us.

Mr. Burton. You are talking about certifying new carriers?
246

Mr. Skully. That is correct.

Mr. Burton. We are also talking about keeping track of existing

carriers.

Mr. Skully. We do.

One of the witnesses commented that we had one maintenance

inspector assigned to Eastern Airlines. I hate to pick on Eastern

but we have five maintenance inspectors and one avionics inspector

assigned there.

Mr. Burton. I am not talking about the machinists or what

somebody in the industry said. I am talking about what your own

people said. -

I am not talking about what any other witnesses said. You sent

out a request “give us your feelings” and the feelings came back.

They are at variance with what Senator Cannon and his committee

said so therefore you dismiss them.

The strongest statement came from—as I look at your table of *

organization and equipment—the individual who would really be

responsible for overseeing almost everything to make sure that

things are going.

Mr. Skully. The most knowledgeable group is the air carrier

division which also said some of those things.

Mr. Burton. Yes.

Mr. Skully. They also agreed with Mr. Macy that most of the

workload would be picked up or most of the routes will be picked

up from the existing commuters.

Mr. Burton. We are into two separate things. We will get off

this, but we are going to definitely get back into it later.

You are talking about new commuter routes. These memos are

talking about existing carriers who are going to cut down on the

booze and the films which will be a great disappointment to me.

They will probably cut down on the frills and they are going to cut

down wherever they can so that they can make money in a price

war. I’ll miss a movie before I miss a hundred mechanics.

Mr. Clark’s statement is that history indicates this will happen.

You know who really wrote it. That leaves me to believe that

either Mr. Clark agreed with him or just decided to sign it because

it didn’t matter. You asked for answers. You got answers and every 

one of them, at one point or another, including Clark’s which was

the heaviest, raised strong potential issues of concern that seem to

have some basis in commonsense, at least to me.

I don’t think that economic deregulation should impact on safety.

I can see where it could and I can see where you people really

don’t think it could because you think—what the heck—its a red 

herring. Senator Cannon and his committee said so. Have them

write your staff memos instead of your staff. I guess you either

didn’t have time to read the memos or you figured that everyone of

your staff who wrote these things is an incompetent, self-serving

bureaucrat. If that’s the case, you ought to get rid of all of them.

It’s either that, or they are really trying to tell you something. It

can’t be both ways. You either respect them and believe their

judgment or they are just people trying to perpetuate the bureaucracy. If that’s your opinion of them, they ought to be bounced. "

I wanted to get that one on the table because I couldn’t understand why Mr. Skully had not informed you about it.
247

So please proceed on today’s testimony, Mr. Bond.

Mr. Bond. Mr. Chairman, I was on the brink of reading a statement to the committee on the subject of IFR-VFR mix and TRSA’s

and TCA’s and with your permission I guess it would be appropriate to proceed with that now.

Mr. Burton. You were notified that this was going to be brought

up today?

Mr. Bond. Yes, indeed. We are quite prepared.

My understanding with your staff is that the see and avoid

concept in the TCA’s and TRSA’s and the surrounding airspace is

the main thrust of our hearing today.

These subjects have sufficient impact that they must be considered in the context of the total system. The U.S. aviation safety

record is the best in the world, and we have progressively improved

the record. For example, between 1966 and 1976, the total accident

rate for domestic scheduled airlines per 100,000 aircraft hours

flown declined by almost 70 percent; the total accident rate per

million aircraft miles flown declined by more than 75 percent. Last

year the United States achieved the lowest accidental total in the

history of commercial aviation, and the fewest fatalities in more

than 20 years.

This safety record has been achieved in an aviation environment

that dwarfs the aviation activity of any other country in the world.

For instance, about 90 percent of the world’s general aviation fleet

is U.S. manufactured; about 68 percent of the world’s air carrier

jets are U.S. manufactured. Chicago’s O’Hare air operations approximate those of Rome, Orly Airport in Paris, and London’s

Heathrow Airport combined. Operations at Columbus, Ohio, about

equal those of Tokyo and Athens combined. In fact 11 of the 12

busiest airports in the world in terms of air carrier operations are

located in the United States. The only foreign airport in the top

dozen is London’s Heathrow which ranked eighth in 1976.

Let me quickly review the parameters of the system we’re discussing, based on the most recent data available; 232.1 million air

carrier passengers; 186.4 billion revenue passenger miles; 12,000

million ton-miles; 25,300,000 IFR aircraft handled by FAA air route

traffic control centers; 66,500,000 operations at FAA towers;

30,700,000 IFR operations at FAA towers; 59,800,000 flight services;

13,400 U.S. landing areas; 744,000 FAA certificated pilots; 240,000

FAA certificated mechanics and flight engineers; 1,700 FAA certificated pilot schools; 3,500 FAA certificated repair stations; 140 FAA

certificated mechanics schools; 181,000 U.S. registered aircraft, and

17,000 air traffic and air navigation facilities of all kinds including

NAVAIDS and terminals and so on.

The FAA established terminal control areas with full cognizance

of the U.S. safety record and with the determination to improve

this record still further.

Although some of our critics would have us move faster, there

are others—and I would include in that group Dr. Billings—who

testified this morning before this committee as an impartial

expert—with a more prudent view who believe, as I do, that the

consequences of doing something hastily and wrong may be worse

than doing nothing. Our national airspace system is a complex

interdependent system, with interdependent components, which
248

often requires that painstaking, careful attention be given to all

components when addressing a safety problem. You have my promise that we will move with all deliberate speed, but we cannot, and

we will not, permit ourselves to be prodded by our critics into

taking actions before they have been properly evaluated and

tested. In this context, I have come to the conclusion that the

multifaceted air traffic control system necessitates a problem-solving approach that first requires us to determine whether the “solution” to our problems is not the genesis of a different and perhaps

much greater problem. It has happened in the economy, Mr. Chairman. The statement is as true in economics as it is true in air

traffic control. You cannot do one thing without considering its

impact on other elements.

We welcome and encourage diversity of opinion since it provides

us with vital input with which to develop the balanced safety

programs so necessary to the maintenance of a healthy air transportation industry. As I will discuss later on, I classify the NASA

analysis of the aviation safety reporting system as a very healthy,

constructive and professional effort to define problems so that we

can fine tune the system.

I would like to turn now to a discussion of the see and avoid

concept. Commonsense dictates that the see and avoid concept is a

basic touchstone within our air traffic system. It is fundamental to

it. This fundamental concept of separation has been repeatedly

reviewed by the courts and accepted as a necessary and practical

element of the air traffic system. Briefly, see and avoid requires

the pilot of any aircraft to be watchful and vigilant for the presence of other aircraft which may present the possibility of a collision. Proceeding from this commonsense foundation, the FAA has

greatly supplemented it with other procedures and requirements to

increase its effectiveness.

The importance of the see and avoid concept is felt throughout

the regulatory system of the FAA. Pilots are trained in identifying

and reacting to collision potentials. Communications are required

at all airports having a U.S. control tower. Efforts to reduce cockpit workload in terminal areas are ongoing. Rules of right-of-way

create a predictable environment for seeing and avoiding other

aircraft. Acrobatic flight is prohibited in control zones and in Federal airways. Pilots are prohibited from entering airport traffic

areas except for the purpose of landing and takeoffs, unless specifically authorized by air traffic control. Where necessary, special air

traffic patterns are prescribed to increase the ability of pilots to

anticipate and see each other.

In addition, the FAA has taken actions in two basic directions to

enhance the feasibility of seeing and avoiding. First, we have supplemented the see and avoid concept with extended control over

more and more flight operations. This has been accomplished by

progressively expanding positive control airspace, establishing terminal control areas and implementing expanded radar services in

terminal radar service areas. Positive control airspace now blankets the United States from 18,000 feet to 60,000 feet.

In addition, terminal control area airspace surrounds 21 of our

major airports handling large volumes of high performance passenger carrying aircraft. Pilots are required to obtain permission to
249

operate within these TCA areas. All aircraft operating within that

airspace are provided positive separation by air traffic control as in

the high altitude positive control airspace. Expanded radar services

in varying degrees have been implemented at over 100 other airports, and traffic advisories are issued through the system. These

actions, while considered by some to be an infringement on the

right of freedom of transit of the Nation’s airspace, were considered by the FAA and many others as essential to the safety of the

flying public. Airline operations, therefore, are conducted, for the

most part, in a controlled environment.

The second direction has been one of improving the usage of the

see and avoid concept. This has resulted in increased—I repeat,

increased—flight visibility and cloud clearance requirements as

well as regulating maximum speeds below 10,000 feet.

As stated earlier, the concept of see and avoid is only one of the

system’s requirements used to avoid midair collisions. To enhance

the ability to see and avoid, aircraft may not operate at a speed

greater than 250 knots below 10,000 feet. This restriction on speed,

coupled with the requirement that appropriate weather conditions

exist before VFR aircraft are permitted to operate, helps assure

that the see and avoid concept works. Additionally, above 3,000

feet, special rules govern VFR aircraft operations. The purpose of

these rules is to provide altitude separation between uncontrolled

aircraft by prescribing flight levels which differ depending on the

direction of flight. Generally they are even 1,000 feet plus 500.

To operate above 12,500 feet, with rare exceptions, all aircraft

must have an altitude encoding transponder which apprises the en 

route controller of aircraft position and altitude, thereby enabling

him to provide traffic advisories and vector aircraft as necessary. 

As previously stated, above 18,000 feet all aircraft are under positive control.

The subcommittee has expressed particular interest in use of the

see and avoid concept in TCA’s and TRSA’s. TCA’s have proven to

be a highly effective means of separating traffic in high density

environments. By exercising positive control over all aircraft

within a TCA, we have been able to reduce dramatically the numbers of near midair collisions within this defined airspace. For

example, in group I TCA’s, of which there are nine, statistics show

that in 1968 before TCA’s were implemented there were 242 near

midair collisions reported to the FAA. At these same locations,

only 12 were reported to the FAA during 1976. Of these 12, 7

involved an air carrier aircraft. In 1977 through June, eight near

midair collisions at these locations have been reported to FAA of

which five have involved an air carrier aircraft. With regard to

group II TCA’s, the less busy ones, of which there are presently 12,

there were 15 reported near midairs in 1973 prior to group II TCA

implementation; in 1976 there were 11 near midairs at these locations reported to the FAA. Of these 11, 6 involved an air carrier.

Through the end of June 1977, four near midairs have been reported to FAA. Two involved an air carrier aircraft.

The FAA has also implemented terminal radar service areas

which provide coverage for 102 airports within the United States.

In a TRSA, VFR aircraft pilots are provided separation from other

participating VFR aircraft and all IFR aircraft unless they specifi-
250

cally do not desire the service. The FAA urges VFR aircraft to

avail themselves of this separation service, and our figures show

that 92.4 percent of VFR arrivals and 84.4 percent of VFR departures do participate in this program. As Dr. Billings alluded to this

morning, we have a very strong educational program to get the

word out to pilots and it is clearly working, based on our statistics.

This provides a large margin of safety in addition to that afforded 

by the see and avoid concept of aircraft separation.

Before proceeding further, I think it is helpful to take a look at

the environment in which our near midair statistics have been

generated. In the past 12 months, there have been 10 million 

aircraft operations within our 21 TCA’s. Two million of these aircraft operations were controlled VFR aircraft. During this same 12-

month period, there have been over 13.5 million aircraft operations

within our TRSA’s. More than 5 million of these operations involved VFR aircraft participating in the separation program. It is

significant to note that, in the 5 years from 1973 through 1976,

terminal operations increased 23 percent. At the same time our

accident statistics are going down.

The most important statistic which should be noted is that in the

almost 5 year period from 1973 to the present there have been no

midair collisions involving an air carrier aircraft anywhere in the

United States. On the other hand, in the 5 years preceding 1973,

there were a total of 12 midair collisions involving air carrier

aircraft. Something is going right in this system, Mr. Chairman. It

speaks well for the work that has been done to reduce the hazards

of midair collisions, particularly when you consider the growth in

air traffic during that time. Just within the past 12 months, our

terminals and centers have controlled more than 120 million aircraft operations with well over 720 million radio control instructions or clearances transmitted to pilots by our controllers.

Nevertheless, we are continuing to strive for improvements in

reducing the number of near midair collisions that take place and, 

in turn, the possibility of midair collisions.

For example, TCA’s are designed for high performance aircraft

to exit and arrive through the top of the TCA, which, depending

upon the TCA, ranges in altitude from 7,000 feet to 12,500 feet.

Arriving and departing at this altitude reduces the mix of air

carrier traffic and uncontrolled VFR traffic outside the TCA since

most VFR traffic is at the lower altitudes. We are presently considering raising the ceiling for all TCA’s to 12,500 feet as we have

already done at the Atlanta TCA.

Also, within the last year we have initiated a high profile descent program which minimizes the exposure time of air carrier

aircraft to a VFR mix by using procedures which keep the high

performance aircraft at the highest possible altitude until it is

close to its destination. One of the side benefits of that, hopefully, 

is that a great deal of fuel will be saved as well. In Atlanta, this

has resulted in as much as a 50-percent reduction in time spent at

altitudes below 10,000 feet by those arriving high performance

aircraft.

The high profile descent program is being extended to all airports which accommodate large high performance aircraft. A further benefit which results from this program is that, by retaining
251

arrivals at a higher altitude until closer to the airport, departing

aircraft can more expeditiously climb out of the terminal airspace,

thereby reducing their exposure time.

I would like to turn briefly now to the mix of air carrier aircraft

and uncontrolled VFR aircraft in the airspace surrounding TCA’s

and TRSA’s. As I stated earlier, the concept of TCA’s is for high

performance aircraft to enter and exit through the top, thereby

reducing their exposure to uncontrolled general aviation aircraft. If

we do resort to rulemaking to raise all TCA ceilings to 12,500 feet, 

this would further reduce the possibility of exposure. Also, our high

profile descent program will provide further reductions in the mix

of uncontrolled VFR aircraft and air carrier aircraft at TRSA’s as

well as TCA’s.

Although we have made substantial progress in reducing the

potential of midair collisions, we are still not satisfied and will

continue to seek ways to improve upon this record both through

the continuing refinement of our air traffic control procedures and

through our research and development efforts.

I would like to take just a moment to briefly point out a few of

the other things the FAA has done recently that relate to the

subject of this hearing.

Minimum safe altitude warning—we call it MSAW. This is a

computer program which will alert the controller when a tracked

aircraft with altitude reporting transponder in the terminal environment is, or is predicted to be, below a minimum safe altitude.

MSAW became operational at all ARTS III facilities November

1977.

The expansion of Atlanta, Ga., terminal control area to a 35 mile

radius and to 12,500 feet MSL was completed.

Positive control area in Alaska was lowered to 18,000 feet on

April 21, 1977.

Conflict alert procedures for all centers were implemented on

October 1, 1976—more than a year ago. It is working.

We began feasibility testing of automated terminal services

which will provide approach and landing sequencing for

nontowered airports.

We initiated development of the software to provide for flight

plan conflict probe and resolution. This will automatically review

flight plans and provide the controller with the data on possible

conflicts and the actions to be taken to avoid a conflict—just on the

basis of the flight plan.

The initial operational testing of conflict alert capabilities for

ARTS III terminal area radar was initiated. That means that in

the terminal areas the controller will be alerted to IFR aircraft

entering a conflicting flight path with other computer followed IFR

aircraft.

Development efforts to consolidate and prioritize warning system

alerts, both audio and visual, in cockpits have been initiated. The

program is designed to eliminate the'varied types and locations of

warning devices and provide the pilot with a single system which 

will place multiple warnings in priority and directions for correction.
252

An evaluation of the utility of heads-up display in approach and

landing operations was initiated. The evaluation will establish

what safety implications the use of such devices could have.

Let me conclude, Mr. Chairman, by saying that the joint

NASA-FAA aviation safety reporting system is one of the management tools we use in taking a broad look at our system. Although

the data is somewhat coarse, and I think it must always be since it

is confidential, and a number of assumptions have to be made to

put the data into context, we still have found the reporting system

to be a helpful mechanism for assimilating as much information as

possible about how our air traffic system is working.

Mr. Chairman, that concludes my prepared statement. My associates and I are available to answer questions that you or the

members of the subcommittee may have.

Thank you very much for your attention.

Mr. Burton. Thank you very much, Mr. Bond.

In your statement somewhere you state that there were approximately 240 near misses in 1968 and only 12 in 1976. At the time of

the high figure FAA had an immunity program similar to NASA’s.

Do you give immunity now to someone who reports a near miss to

you?

Mr. Bond. If someone reports a near miss to us, I believe the

answer is no, but if it goes to NASA reporting systems, immunity

is granted. Is that right, Dick?

Mr. Skully. That is correct.

Mr. Burton. The figure 12 that you talked about—they were

reported to you?

Mr. Bond. That was an FAA near miss report—that is right. We

made the data-----

Mr. Burton. So, no immunity there, right?

Mr. Bond. No.

Mr. Burton. So somebody might have figured they might as well

keep their mouth shut. In other words, its somewhat of an apples

and oranges comparison? Or maybe an oranges and tangerines

comparison? I mean that the high figure was when they could

report near misses with immunity and the low figure is when they

could report the near miss and take their chances.

Mr. Bond. I think it is a valid point. The assumptions on all of

the reporting systems have changed from time to time over the

years.

Mr. Belanger. I think you are on track there. It really was

apples and oranges when you have an immunity program and a

nonimmunity program so that—however, when you take the quarterly report of NASA on the same airspace, if my computation was

correct, there were 22 near misses reported in TCA’s and for the

same period in 1968 the report was 185. So it is relatively close. I

am encouraged to see with an immunity reporting program at

NASA that it appears we are getting free reporting.

Mr. Burton. In other words, you may not get everything but you

understand that you get a more accurate number of near misses as

opposed to under the system where you recorded 12.

Mr. Belanger. That is correct.

I would like to make the point though. I am encouraged by the

NASA report because when I look at the 6 months of the report,
253

NASA has a total of 9,000, and we never did get that number of

reports during out total immunity program. I find that there are

only 22 near misses reported, at least as far as I could find in this

fourth quarterly report. This is opposed to 185 that were back in

the 1968 report.

Mr. Burton. Is that for the fourth quarter or is that for the

whole year?

Mr. Belanger. That is for a 6-month period.

Mr. Burton. I see.

Mr. Belanger. So, it indicates to me that our programs are

*■ effective.

Mr. Burton. Your positive control in effect on your airplanes

from 18,000 feet to 60,000 feet-----

Mr. Belanger. That is correct.

Mr. Burton. Do most of the accidents occur under the 18,000

feet?

Mr. Belanger. The midair collisions that occurred in the time

referred to before, which was before the last 5 years, were for the

most part below 18,000 feet.

Mr. Burton. And you are thinking of dropping that 18,000 foot

ceiling to 16,000 feet; as I believe I heard someone say.

Mr. Belanger. No sir. We are considering dropping it to 12,500

feet.

Mr. Burton. When they get below that 18,000, they must rely

upon see and avoid?

Mr. Belanger. They are into a see and avoid but that see and

avoid airspace between 12,500 and 18,000 is enhanced by two requirements. One is that the minimum visibility be 5 miles instead

of 3 miles and the second is that they must carry an operating

transponder with mode C and therefore visible to the aircraft

traffic control system.

Mr. Burton. For air carrier aircraft?

Mr. Belanger. No. That is any aircraft operating in that airspace.

Mr. Burton. What would be the problem in dropping positive

control down to the landing like they do in Canada and I think

elsewhere.

Mr. Belanger. I am not aware of anything like that in Canada. They still operate on see and avoid. In fact, they have less positive

control airspace than we have.

The problem would be to determine where it is required and

necessary. I think that gets into a little bit of our philosophies of

what airspace and where do we need to enhance the see and avoid

concept. See and avoid is still the major factor on avoiding collisions.

Mr. Burton. Right. It is as old as time itself.

„ Mr. Belanger. There are 700,000 pilots and roughly 170,000

aircraft, around 300,000 control operations a day, plus an unknown

number of uncontrolled aircraft, and 12,000 airports in the country,

only 425 of those with towers.

What is it that would cause a see and avoid concept not to work?

That is what we have to look at. There is visibility, bad weather—if

you can’t see out in front of the airplane due to clouds, you can’t

see and avoid. So that is the first genesis of the IFR/VFR flight

27-075 0 - 78 - 17
254

rules. Therefore the 3 miles, 5 miles, 1,000 feet and 2,000 feet—

definition of the instrument flight rules and visual flight rules.

Another thing is what else would prevent you from doing a good

job of see and avoid? The speed of the aircraft—the ability to detect

and then make a maneuver that would avoid collision after having

observed the other aircraft. That is why we got into the positive

control structure of 24,000 and later on 18,000 feet. Those aircraft

are traveling somewhere in the neighborhood of 9 miles a minute

and the ability to see and then take avoiding action based on the

speed is not too good. Therefore we said this airspace needs protection and we got into the above 18,000 feet.

Where else do we have a problem? We say speed is a problem—

the speed is related to the ability to detect and then avoid. We got

into a speed rule that says below 10,000 feet where you get into the

basic mix of VFR aircraft—the see and avoid type aircraft—we

decided we had better slow the big boys down so they can see and *

avoid. So we enhanced the see and avoid concept that way.

Another factor is the density of aircraft in a given area. We say

obviously, and it makes commonsense, that the more aircraft in a

condensed piece of airspace, the more difficult it is to see other

aircraft and avoid them because there are so many of them. Therefore, we got into the terminal control area program at the 21

locations and again we have positive control. As Mr. Bond mentioned, we are now considering bringing that terminal control airspace that contains the profile of the climb and descent of high

performance aircraft up to 12,000 feet, which will abut our consideration of the bringing it down to 12,500 feet and therefore, the

high performance aircraft will be contained in an area of protected

airspace at our major locations.

Mr. Burton. Mr. Bond, in your statement, you said: “If we do

resort to rulemaking to raise all TCA ceilings to 12,500 feet, this

would further reduce the possibility of exposure.”

It’s almost as if this is the last resort. Is it something you are

loath to do?

Mr. Bond. No.

Mr. Burton. You’re probably going to do it?

Mr. Bond. We are considering it.

Mr. Burton. What problems would there be in doing it?

Mr. Belanger. We are a democratic society. We have a due

process of notice of proposed rulemaking and-----

Mr. Burton. I am not talking about a dictatorship. I am talking

about what’s wrong with you proposing the rule.

Mr. Belanger. I think we will probably propose the rule and put

out a notice of proposed rulemaking. It is still a decisionmaking 

process within the agency. I haven’t followed up completely with

Mr. Bond yet.

Mr. Burton. In all probability you will propose a rule and then

go through the democratic process.

Mr. Belanger. In all probability.

Mr. Burton. It would only further reduce exposure to accident

which is highly desirable.

There was a statement about not wanting to abridge the freedom

to fly. In other words, there is no doubt in your mind that just as

driving is a freedom but also a privilege—because you must be
255

licensed and can’t be drunk—flying is a privilege which under law,

can have certain restrictions placed on it by your agency without

becoming a constitutional issue?

Mr. Bond. Yes, sir.

Mr. Burton. After the establishment of groups I and II the

TCA’s—there are about 21 of them—the number of midair collisions fell. I understand that the initial concept of the TCA differs

substantially from its present form and was much more restricted

and safety-conscious.

Mr. Belanger. I am not aware of the changes that were made.

* The only change that I know of was a change in the equipment

requirements in the group II TCA’s. At one time we were proposing

a mode C altitude readout and eventually came out with rulemaking that required a transponder only.

„ Mr. Burton. Then group III was dropped altogether, right?

Mr. Belanger. I beg your pardon.

Mr. Burton. Then group III was dropped altogether?

Mr. Belanger. I don’t think it was ever proposed in group III. I

could refresh my memory on this because it has been some time.

Mr. Butterworth. As I understand it, the FAA’s original grand

design for terminal control areas was set out in a notice of proposed rulemaking dated April 15, 1972. As I read it, that proposes

three groups of TCA’s. It did contain a requirement for an altitude

reporting transponder in group H’s which was later dropped in

1975.

Mr. Belanger. But no transponder at all in group III, as I recall.

Mr. Butterworth. Yes.

I will read: “Forty-two additional terminal locations equipped 

with automated radar terminal equipment and designated as terminal areas.”

I guess there are group III TCA’s.

Mr. Belanger. That is correct.

Mr. Butterworth. “These terminals would be listed in a new

sub-part * * * 8.” They are listed here, Albany, Albuquerque,

Baltimore—I see a lot of airports that instead became TRSA’s.

Mr. Belanger. That is correct.

Mr. Butterworth. At these locations a transponder was not to

be required of an IFR or VFR flight being provided separation

service. But altitude reporting transponder was to be required for

all other flights in the area. What that says to me is that if you are

controlled by the air traffic controller in group III TCA’s you must

have radio communication, and if you have radio communication,

you don’t need a transponder. If on the other hand, you’re not

controlled, then you must have a transponder. Correct me if I am

wrong; that’s the way I read it.

Mr. Belanger. You are reading it correctly.

► Mr. Butterworth. This satisfies the important commonsense

notion Dr. Billings spoke to, and that point which we were trying

to get at: The controller must be able to either talk to or see all

traffic in his area. It just makes sense.

- Mr. Belanger. That’s the reason it was written that way.

Mr. Butterworth. Then why was it dropped?

Mr. Belanger. We have never promulgated the group III

TCA’s-----
256

Mr. Butterworth. I know it is important on one of the-----

Mr. Belanger. We have never promulgated that rule because we

went into the TRSA program which is a voluntary program, as you

well know, to see to what extent that could be as effective as a

TCA requirement. Fundamentally that is the reason why we have

never promulgated group III. We have a notice of inquiry to the

public out now asking what we should do. Should we proceed with

group III or should we stick with the TRSA program?

Mr. Burton. Are they mutually exclusive?

Mr. Belanger. Yes, they are.

Mr. Butterworth. There is one other point in the April 15, 1972,

NPRM I would like to read. It was apparently anticipated that the

ceiling of the TCA’s would extend up to the floor of the 12,500-foot

positive control area. To quote:

It is anticipated that in most cases the Group II Terminal Control Area and the

terminal area airspace will ultimately extend upward to 12,500 feet to provide

maximum protection for high performance aircraft, air carrier commercial, transmitting between in route mode C altitude transponder airspace and terminal airspace. In effect, this will eliminate airspace in which there would be unknown

aircraft and will at the same time free much of the airspace around terminals for

lower performance aircraft.

In other words, it would eliminate the need of “see and avoid”

except as a backup system. You would no longer use see and avoid

as the primary system.

Mr. Belanger. We could get into a great debate about this.

Mr. Butterworth. What I am saying is that this was the original concept. Mr. Bond said that you might consider this and issue

an NPRM to implement this concept. It was an NPRM in 1972.

Mr. Belanger. Not the raising of the-----

Mr. Butterworth. The NPRM referred only to group II and III.

Mr. Belanger. Group II and III was an enabling document. The

airspace configuration of each TCA is done on an individual piece

of rulemaking so that the boundaries of that airspace is done on a

case-by-case basis.

Mr. Butterworth. OK. That makes sense but you did declare

your intention to increase the height of TCA’s.

Mr. Belanger. We were announcing an overall plan concept, if

you will.

Mr. Butterworth. All right.

Mr. Belanger. That was an enabling document that provides

basic enabling rulemaking to move as we did at Atlanta, going up 

on a case-by-case basis.

Mr. Burton. Where has this “see and avoid” concept been reviewed by the courts and accepted as a necessary and practical

element of air safety management? That is in Mr. Bond’s statement.

Mr. Belanger. It has been in litigation cases where the Government has been sued alleging that the see and avoid concept is not

adequate and the courts have found in our favor.

Mr. Burton. I wouldn’t mind getting copies of that. I am fascinated with FAA court decisions. If they are decisions, I would love

to see them.

Mr. Belanger. We would be happy to send them over.

Mr. Burton. I would love to, at some later time, find out who the

attorney was who was so intelligent to say that the pilot is not
257

operating the aircraft if he hasn’t taken off. I wouldn’t even raise

that point in a moot court argument.

In 1971 there was a midair collision between a Hughes Air West

DC-9 and a Marine Corps Phantom. In the accident report the

National Transportation Safety Board recommended then, as it has

done repeatedly, that the FAA should establish climb and descent

corridors extending from the top of the TCA to the base of the

positive control area—the 18,000. FAA responded that their plans

were to expand existing TCA’s by adding circular airspace up to

12,500 with an approximate radius of 35 nautical miles from the

prime area airports. This intention was announced in the grand

design for the TCA’s carried in that notice in 1971-72. You just did

this in 1977 for Atlanta. You say you still have this requirement

under consideration.

We realize that one of the underlying feelings of the present

FAA is that they will not be pushed into hasty action by any of

their critics. I think this is laudable. I don’t like to be pushed into

things that I even want to do. But, aren’t we moving a bit slow?

Mr. Belanger. I guess you might say deliberate. We took the

12,500-----

Mr. Burton. With all deliberate speed, right. There are still

blacks trying to get into school someplace and that was settled in a

1954 decision by the Supreme Court.

Mr. Belanger. Well, getting back to aviation, we wanted to find

out what the impact is on the agency and the user of going up to

12,500 feet. Can we handle it? How do we handle it? What is the

impact? We went into a test plan in Atlanta, although it was

finally promulgated as a permanent rule in 1977. We tested out the

concept in Atlanta for about P/2 or 2 years to ascertain what this

impact would be. Yes, maybe that is a little slow to do it, but we

moved approximately 3 years ago with the test plan and we are

satisfied that the test was a success. We converted it into permanent rulemaking this year.

Mr. Burton. Would it help the “see and avoid” concept if the

aircraft had lighted strips, something like bumper strips, on their

wings, tips or tails to make them stand out?

Mr. Belanger. You are in Mr. Skully’s area now.

Mr. Skully. We are using landing lights on aircraft below 10,000

feet within the congested terminals where we operate. This helps

the pilots to see and avoid. Most of the new aircraft today are

coming off the assembly line with strobe lights. It is not a requirement that they do, but they do.

Mr. Burton. What is easier to see—an orange flash or a light

during the day?

Mr. Skully. My observation, and that of others, has been that a

flashing, high-powered light is best. It is amazing how the landing

lights stand out even in the bright daylight. You may notice all the

aircraft coming down the river here in the Washington area. At

whatever altitudes they are flying, and regardless of the time of

day, they operate with their landing lights on.

Mr. Burton. It is not a requirement?

Mr. Skully. We have issued that as an air carrier bulletin,

which is not a mandatory thing. There are some aircraft that you

can’t have landing lights on unless the landing gear is down.
258

Mr. Burton. How about giving them an option of a landing light

or a distinctive marking or coloring? Something that might help.

Mr. Skully. I think the strobe light, which is extremely bright,

does that.

Mr. Burton. I am aware of that, but that is optional. For aircraft that can’t have their landing lights on unless the landing

gear is down, and for those that aren’t equipped with strobe lights,

what would be wrong with saying if they cannot do this, they must

have these lights as an alternative.

Mr. Skully. We have an alternative—the rotating beacon which 

is red. It is high intensity. Anything that seems to flash will catch

the pilot’s eye better than a steady light. We did a great deal of

work on fluorescent paints many years ago. Again, unless you are

looking at the object, you won’t see it. It could be in your peripheral vision and you would see a flash immediately. The painting

option really wouldn’t do a great deal to help.

Mr. Burton. When did you test that?

Mr. Skully. In the late 1950’s or early 1960’s.

Mr. Burton. We’ve made some remarkable improvements in

fluorescent paint lately.

Mr. Skully. I don’t think it is a question of paint. I think it is a

question of what the pilot sees.

Mr. Burton. Well, the FAA is responsible and comes up with the

money for these projects.

I assume some aircraft don’t have flashing lights as an

option-----

Mr. Skully. They have a rotating beacon. Some have both.

Mr. Burton. Some have neither.

Mr. Skully. They all have to have the beacon. They also have

the navigation lights which are on the wing tips and tail. However,

they are mainly for night operation because during the daylight

they really don’t stand out.

Mr. Burton. How about the planes whose landing lights don’t

operate unless the landing gear is down. What do they have?

Mr. Skully. For example, the Cessna Citation—which I frequently fly—has a strobe beacon and a rotating beacon.

Mr. Burton. They have to have either those lights or a rotating

beacon.

Mr. Skully. I don’t want to mislead you. There are about 33,000

aircraft that don’t have an electrical system. They have no lights.

Mr. Burton. How do you verify that pilots are trained to identify

and react to a potential collision.

Mr. Skully. This would be given as a part of the flight test by

either our inspectors or examiners. They note the awareness on the

part of the examinee to be vigilant for aircraft and to look before

they turn.

One of the things that Dr. Billings referred to is one of the

questions I think they will ask. We have a very active accident

prevention program that deals with the general aviation pilot. This

is a voluntary type of program. People attend meetings in the

Washington area. During the month of October, I went to one in

Alexandria. We had 250 pilots there. Earlier this month we filled

the Air and Space Museum with 700 pilots. We work with the

industry that provides us with excellent training films to increase
259

the pilot’s awareness of how to scan. In fact, the Aircraft Owners

and Pilots Association has an excellent slide presentation that

helps pilots develop a scan. During annual recurrent training of

the air carrier pilots, we emphasize increased scan training and

also sharing the workload. When the copilot is reading the checklist, the pilot has his eyes outside the cockpit under visual conditions. These are the things that we continue to emphasize.

I think now that we are getting a data base from the NASA

reporting system, we can probably obtain some training aids that

will highlight the areas where education is indeed needed.

Every pilot is required to take a biennial flight check with a

flight instructor. Here again, we can continue to increase emphasis

on the part of our flight instructors on the need for awareness.

With the data base we have, we can highlight why a greater

awareness is needed.

Mr. Burton. You hope that they go out and make sure that the

pilots are trained in identifying and keeping up.

Mr. Skully. Yes. It is a constant thing. I think we need to

continue to keep pressure on it.

Mr. Burton. You’re constantly telling your people. I wonder if

they constantly check on the other people?

Mr. Skully. I am certain that is so; yes, sir.

Mr. Burton. You were talking about your evaluation of the

utility of the heads-up displays in approach and landing operations.

The evaluation will establish what safety implications the use of

such devices should have. How long have you been working on

that?

Mr. Skully. We have had an active R. & D. program on that.

This will be only the second year. We are working with NASA on

the heads-up display. We are using their sophisticated simulator.

The program, as I see it, will run perhaps another 12 to 18 months.

Mr. Burton. Doesn’t the military do that already? Haven’t they

been doing it for years?

Mr. Skully. Yes, sir. They do it for a different purpose. They do

it for military missions to fly at very low altitudes. They stay very 

close to the terrain. They don’t have to look in the cockpit. Our

approach is to evaluate it relative to going from a very low approach minimum to making the landing in very low weather conditions.

Mr. Burton. You sat down with the military people—it looks

like they have done at least some of the work for you.

Mr. Skully. Yes, they have. We work with them in their experiments at Wright-Patterson and they are aboard with what we are

doing. What I was saying is that it is a little different approach. In 

fact, the French are probably further ahead than anyone.

Mr. Burton. How do you make sure that the general aviation

pilots are informed of the boundaries of the TCA’s and the TRSA’s.

Dr. Billings already outlined the need to get more information out

to the general aviation people. How do you do that?

Mr. Skully. We do it with the aviation news media. We have

some publications. We put out advisory circulars. I think the most

effective effort now deals with the pilot who has already passed the

examination and is certificated. Through our biennial review with
260

our flight instructors, we make sure that the pilot is aware of what

is required in TCA’s and TRSA’s.

Mr. Butterworth. Thank you Mr. Chairman.

There is a very interesting quote in the Airman’s Information

Manual, part 4, which is, as I understand it, the basic document

you use to inform all pilots of good operating practices.

There is a quote on page 118. It defines the approach area as a

place where commercial airliners descend on the published instrument approach routes.

Mr. Skully. Yes.

Mr. Butterworth. This is listed under good operating practices.

It says that conducting a VFR operation in the approach area

when the official visibility is 3 or 4 miles is not prohibited; but that

good judgment dictates that you keep out of the approach areas.

I find that to be an interesting comment. You just advise people

to stay out. Why can you not prohibit them? There probably is

good reason, but-----

Mr. Skully. I don’t know how you would enforce it. I think the

cautionary statement is one part. The approach areas, relative to

control zones, are depicted on the normal VFR chart. Also, the

normal flight chart shows where the approach paths are.

Mr. Butterworth. So you are depending upon general aviation

pilots to exercise good judgment here and not fly where the commercial airliners regularly descend?

Mr. Skully. That is correct.

Mr. Burton. Mr. Bond, when you state that communications are

required at all airports having a U.S. control tower, what does the

term “all airports” mean? Are there control towers besides U.S.

control towers?

Mr. Belanger. It means any airport under the United States

jurisdiction that is operating a Federal control tower. The aircraft

is required to establish two-way radio communications with that

tower if he enters what we term the airport traffic area which is

an area 5 miles in diameter and extends up to 3,000 feet—whether

he transits or whether he intends to land.

Mr. Burton. What airport isn’t under U.S. control?

Mr. Belanger. An airport in France, or Canada.

Mr. Burton. How about Eureka, Calif.?

Mr. Belanger. There are some non-Federal airports. There are

some private airports. I’m referring to those airports that have a

Federal tower.

Mr. Burton. Right. In other words, if you put a Federal tower in

at Eureka, then it is a Federal airport?

Mr. Belanger. It is a rule that if we have a tower owned and

operated by the FAA, that the pilot must establish two-way communications with our tower. It doesn’t mean the airport is under

the control—it means the airspace is under the control of the-----

Mr. Burton. On what basis do you determine the airports that

don’t get the towers? Does someone in Arcadia look up with binoculars and call out traffic to an approaching flight?

Mr. Belanger. We have a tower establishment criteria that

relates principally to the volume of aircraft, but it is a rather

complicated formula. I would be glad to give it to you for the
261

record, but it gives a greater weight for the number of air carrier

operations in the secondary-----

Mr. Burton. Is it based basically on volume-----

Mr. Belanger. It is a volume and the type of aircraft. It really

relates to the passengers is what it finally boils down to. So we give

a much higher weight to an air carrier that has a lot of passengers

on board. There is a formula that works this out. For example, at

both extremes of the formula, it would take 200,000 general aviation aircraft if there were no other type of aircraft in there. If it

were air carrier aircraft and there were no other type aircraft, it

would take 15,000 air carriers. I gave you the radar establishment

formula, but it is similar to that. The numbers aren’t as big. Then

you get tradeoffs. There is a formula that works in both areas.

If you would like to have that for the record, we can provide it. 

Mr. Burton. I think that I generally understand it. But when

somebody on the ground must scan the sky and call out traffic—it

makes me not want to land at Eureka as much as I used to.

Mr. Skully talked about new aircraft being equipped with strobe

lights. Do you require current aircraft to be retrofitted with strobe

lights?

Mr. Skully. We haven’t. Some aircraft would probably require

major modification to install them.

Mr. Burton. So we just leave them with whatever they have

now?

Mr. Skully. I don’t think there is a basis for requiring strobe

lights.

Mr. Burton. Then why are you doing it?

Mr. Skully. Because it is the state of the art, and its better than

what we had before.

Mr. Burton. But there is no basis for requiring it on the vast

majority of the planes in the air.

Mr. Skully. We haven’t required it. That is correct.

Mr. Burton. You say it is good enough to require it on new ones,

but not good enough to require retrofitting on present aircraft. I

assume that the majority of the planes now flying, don’t have

strobe lights.

Mr. Skully. I would say the majority do not. I think this is the

opportunity to take off on one of Dr. Billings’ comments. We have

lost aircraft because of strobe lights. Because of the fuel ignition, 

we have blown tanks. You have to be careful in designing it into

the aircraft. There are some things that you just cannot retrofit

and do safely.

Mr. Burton. The loss you incurred because of strobe lights was

on retrofitted aircraft, but not on new aircraft?

Mr. Skully. Some of them were new. Some were retrofitted, yes.

Mr. Burton. You found out that they cause problems.

Mr. Skully. We’ve had problems, yes.

Mr. Burton. In the chronology in your attempts to develop workable collision avoidance systems, there appear to be some reversals

or changes of mind. Can you explain the thought behind the original action and the reversals and also give a timetable for implementation of the DABS and BCAS system? This was in your November 15 chronology.
262

Mr. Bond. Mr. Chairman, Dave Sheftel from our research and

development office will address himself to that question. Mr. Sheftel was sworn this morning.

Mr. Burton. Thank you. How did you know I was going to ask

him that?

Go ahead, sir.

Mr. Sheftel. We did submit to Congress a letter about a year

ago that summarized FAA’s policy with respect to the current and

future outlook in the current collision avoidance program.

One of the recently completed programs has been our look at a

system called airborne collision avoidance system or ACAS. There

were three commercial organizations that have produced systems

that were competing for this capability—RCA, Honeywell and McDonnell Douglas. We tested this system and completed the tests of

it about a year ago. The finds, and I am referring somewhat now to

your point of reversal although I am not quite sure what’s intended

there, but I believe you were talking about outlook at such a

system and our determination about that system. In that case we

evaluated the systems that were supplied by these commercial

organizations and did flight tests extensively. We found that the

Honeywell system was the most satisfactory of the three. We did

recommend against them, however. The recommendation against

implementing any of these systems was on the basis of (1) it was a

very costly implementation, (2) it would take quite a long time

because in order for the system to have any significant effect it

would have to have extensive implementation. In other words, the

first aircraft that put a system on would have no protection. The

first two would be protected against each other and so forth. The

time it would take to implement all of the aircraft was a rather

lengthy process.

Probably a more important pervasive reason for not recommending to go with that system was that, while it was all ongoing, we

saw another way to do the job that would overcome a good deal of

the problems. This is what you have referred to a moment ago as

the BCAS system. The B stands for beacon, which refers to the air

traffic control beacon system, and it is based on the use of the

current transponder equipment, as you know, which is on many

aircraft.

The fundamental benefit of using a system that is based on

aircraft equipped with a beacon is that, unlike the previous system, 

the first aircraft that puts on a BCAS system is protected against

every other aircraft that has a beacon transponder with mode C.

Therefore, you get more protection in a near time and it is using

equipment that is on board.

Mr. Burton. Do you have a timetable on BCAS and DABS?

Mr. Sheftel. Yes, sir.

The BCAS equipment, of course, has been flight tested already in

various experimental versions. Right at the moment we are trying

to make a determination-----

Mr. Burton. I’m not trying to pin you down to a specific date,

but approximately when do you hope to have these things on

board?
263

Mr. Sheftel. They will be ready for FAA to decide on whether or

not to go with the proposed rulemaking, in two versions. Let me

give you two steps.

At this point we have completed enough testing so that we could

look at one possible version, a simpler version that has less overall

capacity. That could be implemented right now. We could write a

standard and industry could decide on building such a product and

this has been tested.

There is another version which I will refer to as a tri-modal. It

has more capability. I won’t go into these various capabilities. We

can supply this information for the record, but that will be ready

for a decision on the standards within about 2 years.

Mr. Burton. Which industry are we talking about?

Mr. Sheftel. These are normally the avionics types of industries.

Mr. Burton. If you came out with the rule, how could they not

decide to build it?

Mr. Sheftel. I guess they determine that based on their perception of the market.

Mr. Burton. So, in other words, they control your decision. If

they say there is no market, we’re not going to build them, you

can’t mandate something nobody will build.

Mr. Sheftel. In the rulemaking process, which I am not expert

in, but nevertheless it bears on that point, there will have to be a

decision as to whether this is mandatory equipage or voluntary

equipage. Of course, if it does become voluntary equipage, then

it-----

Mr. Burton. Then nobody will have to worry about it because

nobody has to use it.

Mr. Sheftel. It will be a question of the individual user deciding 

that he wants to—if that is the rule. Now this decision has not

been made yet.

Mr. Burton. Do you need a rule to make something voluntary?

Mr. Skully. If I could use the ground-----

Mr. Burton. Do you need a rule to make something voluntary?

Mr. Skully. Not that I know of.

Mr. Burton. So why would you use a rule to make something

voluntary?

Mr. Skully. I think Mr. Sheftel was passing the ball to me and I

was going to try to explain. With the ground proximity warning

system, we had one vendor that really had the market cornered.

That vendor was the only one that I knew of, or that anyone else

knew of, that build the device. That was at the time the rule was

put out in December 1974 to become effective for all carriers in

December 1975—1 year later. All of a sudden, within 2 or 3

months, we found four vendors in addition to the one that initially

had the market tied up. They did supply the demand.

The point is that once we put out a requirement, we will have

many vendors that will supply.

Mr. Bond. Mr. Chairman, you also asked the question about the

voluntary aspects of this.

Mr. Burton. I don’t know why you need a rule that says that

people may do something.

Mr. Bond. Well, there is an answer to that. The answer is that if

you put out a rule on a certain piece of equipment or a technique,
264

even though it is voluntary it fixes the technology. That is what

you can buy if you want. Then you can decide where it is voluntary

and where it is mandatory. The best example I can think of in that

regard is the transponder. Today it is voluntary for many aircraft

and yet, more than 75 percent of the aircraft capable of carrying

transponders, which includes the vast majority of those who fly in

controlled airspace, are equipped with transponders. Most of them

are voluntarily so equipped.

Mr. Burton. Why would you make a rule voluntary?

Mr. Bond. In the case of transponders, many, many aircraft do k

not ever come into controlled airspace. Many of them fly in Montana and the Northwest where there is no radar coverage and no

density of traffic-----

Mr. Burton. Can’t you make it mandatory with an exclusion?

Mr. Bond. For example with agricultural aircraft which don’t go

very far and they are just aerial applications-----

Mr. Burton. Can’t you make something mandatory and just

exclude crop dusters-----

Mr. Skully. Yes, sir.

Mr. Burton. Doesn’t that make more sense than making it voluntary, or is it too difficult to establish specific exclusions?

Mr. Skully. It is difficult in this respect. If you, for example, 

manufacture a crop duster in Elmira, N.Y. If we say you don’t need it when you’re doing your crop dusting work, how do you fly it

from Elmira to Texas? In other words, you would have to put in a

temporary transponder to fly in the airspace to get there. It is a

small point, but I think we could do it. For example, Mr. Bond’s

point was that most aircraft coming off the assembly line today

have transponders. They have them because customers see the

advantage to them. Transponders permit them to operate in areas

where you must have one to operate. We could conceivably require,

under certain conditions, a transponder on each new aircraft.

Mr. Burton. I just think that makes more sense than to establish a rule saying that if they want to use this, they should feel

free to do so because they could do it anyway without your rule, if

they wanted to.

Mr. Skully. A lot of the devices we put out are designed to a

technical standard order—TSO—standards which they have to

meet.

Mr. Burton. What do you mean by standards for cockpit visibility?

Mr. Skully. That is a very complex formula that we use which 

considers how much seat height the pilot has and the degree of

visibility that is available to him. All of the wide body aircraft—the

DC-10, B-747, and L-1011—have tremendous visibility. The pilots

are very pleased with this improvement.

Mr. Burton. Isn’t cockpit visibility pretty crucial to “see and

avoid”?

Mr. Skully. Yes, sir.

Mr. Burton. In other words, you really don’t have standards,

you have a formula. «

Mr. Skully. It is a standard.

Mr. Burton. It is achieved by a formula.

Mr. Skully. Yes, sir.
265

Mr. Burton. How reliable is a primary radar return on small

general aviation aircraft, like a Cessna 150, which is nontransponder equipped? You could also supply for the record, if that’s

necessary, the number of general aviation aircraft which aren’t

equipped with transponders, if you have that information.

The record will be kept open to permit this information to be

inserted upon receipt.

[The material follows:]

Transponder/E ncoder P opulation as of J anuary i , 1976

• General Aviation Fleet.................................................................................... 168,500

Cannot Carry Avionics.................................................................................... 33,000

135,500

Of 135,500, 78 percent carry transponders (105,700), 24 percent carry encoders

(32,500).

Mr. Belanger. The detection of nontransponder equipped aircraft is related to the size of the aircraft, the distance from the

antenna, the atmospherics involved, and the primary return is not

as reliable or as detectable as a transponder. Otherwise, that’s why

we require transponders and aircraft use them. The degree varies

with a host of things. But if the question is if it is as reliable as a

transponder, or as detectable as a transponder, the answer is no.

Mr. Burton. Can you estimate how many general aviation aircraft aren’t equipped with transponders?

Mr. Skully. We show 35,000 without them. In addition, there are

33,000 that have no electrical system so you cannot install them. So

the total would be about 68,000 without transponders. There are

105,000 aircraft with transponders.

Mr. Butterworth. We were speaking before about the voluntary

nature of the transponder requirement. To get someone to use

something, it should be cheap. You are more inclined to equip your

aircraft with a transponder if it costs $8,000 rather than $18,000.

Therefore it is interesting that when the FAA relaxed its requirements for an altitude-reporting transponder in group II TCA’s, it

said that it had received 12 comments against that proposed relaxation. Those comments, as summarized by the FAA in the report,

indicated that the principal argument opposing the proposal was

that limiting the transponder requirement in group II TCA’s would

create an economic hardship on the manufacturers of these components. In other words, these objectors were saying that if you don’t

require it across the board—rather like the airbag—your unit cost

will not go down.

If you require transponders in certain terminal areas so that we

can fulfill the commonsense notion that the controller should be

able to either see all aircraft or talk to all pilots, that would in

turn decrease the unit cost of transponders generally, which is the

main reason that AOPA and other general aviation groups resist

this requirement in the first place.

What is your comment on this?

Mr. Belanger. My comment is that their comments were from

the manufacturers and very parochial. They would like to see a

rule enacted that would help them sell their product, in fact,
266

require that the public buy their product. Obviously, their comments are going to be negative to that proposal.

Mr. Butterworth. Could it not also induce them to compete

with one another?

Mr. Belanger. Their statement is correct that the unit cost

would go down.

Mr. Butterworth. That is all I am saying.

Mr. Belanger. I am just getting at their motivation.

Mr. Butterworth. Motivation is always grey, if not black.

Mr. Burton. We have a little parochial question here. Have

there been any steps taken to optimize radar coverage in the San ’

Francisco area, particularly for aircraft arriving from the Northwest?

Mr. Belanger. I can almost give you an unqualified yes, but I

don’t dare do that because we have had a rather substantial

number of radar improvements that have been steadily improving

the state of the art, both in the primary radar coverage and the

secondary radar coverage. Which of those have been implemented

at San Francisco, I am not quite sure. I would prefer to be accurate

and supply that for the record.

Mr. Burton. All right.

The record will be left open to permit this information to be

inserted.

[The material follows:]

San Francisco/S an J ose

Oakland Bay TRACON is a dual ARTS III facility providing radar approach

control service to eleven Bay area airports utilizing the Oakland ASR-7 and the

Moffett ASR-5 radars.

BRITE TV remoting of the Moffett radar is being installed in the San Jose Tower

and is expected to be completed by the end of June 1978.

The Moffett ASR is a joint FAA/US Navy use radar which is located adjacent to a

landfill near Moffett Airport. As the landfill level rises, radar coverage is reduced.

The FAA and Navy have discussed relocating the Moffett ASR. The FAA favors the

San Jose Airport and the Navy favors Moffett Airport as a location.

We are considering installation of the improved ASR-8 antenna on the Moffett

radar.

Mr. Burton. In Sacramento, when I was in the State legislature,

they used an old Army radar which had a “core of silence” directly

above the radar. Then they had another radar in the Sacramento

valley, which is surrounded by mountains. They had the radar

down in the valley when it made more sense to locate it higher up

on the ridges to avoid the radar coverage being blocked. Do you

know anything about that?

Mr. Belanger. I am not familiar with the exact location. Your

analogy is correct though. If it is a long-range radar, valley sitings

are not too good as opposed if it is a terminal radar, the valley

siting would be appropriate. As to the state of the art of the radar

at Sacramento, we did have what we call ASR-III’s-----

Mr. Burton. I think we heard about that yesterday.

Mr. Belanger. No. You heard about the long range then. This is

a terminal radar. The Ill’s are being phased out and it well might

be that Sacramento had an ASR-III as opposed to ARSR-III and ,

maybe—but I would have to give that to you for the record. I really

don’t know.

Mr. Burton. Thank you.
267

[The material follows:]

Sacramento, Calif.

Sacramento (McClellan RAPCON) is a dual ARTS III facility providing radar

approach control services for six airports utilizing the ASR-4 at McClellan AFB and

the ASR-5 located at Beale AFB. In August 1977, a prototype 5 foot open array

ATCRBS antenna was installed at McClellan. A production model of the 5 foot open

array ATCRBS antenna was installed at McClellan during calendar year 1978. Also,

an improved ASR-8 antenna is scheduled for commissioning at McClellan in August

1978.

Mr. Burton. Rachel?

Ms. Halterman. Thank you, Mr Chairman, one question.

Mr. Belanger, this would be appropriate for you.

On the radio communication issue, Dr. Billings stated that in a

terminal radar service area, a pilot flying under visual flight rules

may elect not to receive radar services either by refusing such

services or simply by not communicating with air traffic control. 

Aren’t they required to communicate with air traffic control?

Mr. Belanger. The TRSA area extends from about 15 miles and

7,000 feet. The airport traffic area is a 5-mile radius and 3,000 feet.

In order to enter the airport traffic area, 5 miles and 3,000 feet,

you must communicate with the tower. The other part of the

airspace, the part that Dr. Billings was referring to, is optional.

Ms. Halterman. OK. Thank you.

Mr. Burton. The Chair is just going to have a 5-minute break.

We will be through with you gentlemen shortly.

The committee will recess for 5 minutes.

[Recess taken.]

Mr. Burton. We will resume.

With regard to your formula for installing towers—what is the

passenger limit that shouldn’t be exceeded unless you have a

tower? Ten thousand a day? Six?

Mr. Belanger. You would need a tower with 10,000 a day.

Mr. Burton. In other words, airports that only get 10,000—are

protected by visual scans? As Mel Brooks said, “that used to be one

of the good jobs in the old days, looking up in the sky.”

Mr. Belanger. As I stated a little bit earlier, it is a combination

of weight factors and finally you come up with one. I will read to

you what the formula is: If it is air carriers only, it is 15,000; if it is

air taxis only, it is 25,000; if it is general aviation aircraft, it is

200,000 operations. It can be a combination thereof with the appropriate weight at 15,000 to 200,000.

Mr. Burton. Can you ever get down? In other words, would

there be a factor

Mr. Belanger. There is a discontinuance—is that what you are

referring to?

Mr. Burton. Not taking one away, but let’s take Eureka again.

They sure have a lot of fog. There are 10 air carrier departures and

234 people enplaned daily in Eureka, so I guess under the rules it

would not need a tower.

Mr. Belanger. I would have to know the number of air taxis

operations and the number of general aviation operations also.

Mr. Burton. Ten scheduled air carriers-----

Mr. Skully. With the average daily enplanement of 234.
268

Mr. Belanger. That would be roughly 3,600 air carrier operations a year.

Mr. Burton. Right.

Mr. Belanger. I am assuming that is one in and one out-----

Mr. Butterworth. These are numbers supplied by your own

people.

Mr. Belanger. I can’t really answer off the top of my head. If

they are running 3,600 air carriers a year, they are probably getting close.

It seems to me that when you get up around 5,000 or 6,000 air

t

carriers as a rule, that almost puts you in the ball park if you have

any volume of other type air traffic. I really can’t tell you off the

top of my head as to whether they do or don’t qualify—or how

close they are, for that matter.

Mr. Burton. Why is it a problem to have towers at almost every *

airport except perhaps those which have only six or seven general

aviation operations in a day? Is it the cost to the Government, or

that the planes might not want to use them, or what?

Mr. Belanger. That is correct. It is the cost of the initial investment for the tower which is around $500,000 and the recurring

costs of a small tower which would be an annual recurring cost of

around $120,000 to $150,000.

Mr. Burton. We spill that much when we drink—some of us.

Mr. Belanger. When you add it up for the 12,000 airports that

are in the country, it is a rather monumental figure if you are

talking about all airports. If you back it off to just airports with air

carrier operations, you’re still talking in the neighborhood of $500

million to $600 million. That is on a one-shot cost. If you include

the air commuters and air taxi operators, our point is a life, a life,

a life.

Mr. Burton. Life is the most precious thing we have and when it

ends, it’s over. It is pretty tough to put a buck on it.

Mr. Belanger. Very difficult.

Mr. Burton. I have one more question and then we will wait for

one of my colleagues—Congressman Dale Milford—who expressed

a strong desire to testify, and who was going to be here about a

half-hour ago.

Getting back to those memos again, I would appreciate having, if

possible, whatever records of internal discussions you all had about

these memos. Mr. Clark’s memo said that past history indicates

that maintenance, and so forth, is the first place where airlines cut

back. I am very interested in finding out about the necessity for

this agency to really be ready and to be aware of what could

happen under deregulation. If it does happen, a lot of things may

happen that you may well want to consider beforehand—at least

this is how I understand the memos.

I would like to know your response to them and how you viewed •

them. I would like to know whether somebody really did exaggerate and did try to feather their own nest. I would like to know

whether or not they were accurate.

The fact that they all seem to indicate a decline in FAA inspec- «

tors and a greater reliance on the carriers is of interest. Again, if

they are trying to save a buck, we may not want them to be doing

some of the Government’s work for us.
269

Mr. Bond. We will be happy to send you a position paper on

that, Mr. Chairman, and also to send you whatever internal memorandums we have on the subject.

Mr. Burton. We haven’t really discussed these things much.

Mr. Bond. Mr. Chairman, as your hearing yesterday revealed, we

don’t write down everything that we say in our meetings. [Laughter.]

Mr. Burton. Did you have much discussion on those memos

except to say they are here and-----

Mr. Skully. The thing that has been glossed over is that I didn’t

ask for staffing requirements. I asked for other issues. The issues I

was talking about were whether there were any regulatory changes

that might be necessary. That sort of thing. I knew what the

answer would be if I were to ask that, if there was a 10-percent

increase in commuter activity, will we require new people. The

answer would quite obviously be yes.

Mr. Burton. The director has requested that you provide input

on the subject of regulatory reform potential issues as they relate

to flight standards.

Mr. Skully. That is correct.

Mr. Bond. I can understand, Mr. Chairman, how the recipients

of that particular memo might not feel that it is very clear-----

Mr. Burton. In other words, you said “You have a responsibility.

What issues do you see?” They raise potential issues. In fact, I

don’t think that Clark asked for any more people. He just really

pointed out problems. He pointed out some serious potential problems and didn’t ask for any more people. Some of the others

glossed over the issue and weren’t quite as strong as Clark while

talking about positions. Flight Standards say they have lost 260

positions since 1971, despite a growth in aviation activity which 

creates additional demands on the inspector work force. Any proliferation would further increase the demand. Again, I don’t think

they asked for people. They just stated what the problem was.

Mr. Skully. That is correct.

Mr. Burton. They seem to be under a heavy workload now and

any increase is going to make the workload greater.

Again, one of the things I want you to understand, Mr. Bond,

and all of you gentlemen, is that there are two parts to it. First,

the new commuters and so on, and second the existing carriers

which will be under increased competition. You will have to be

even more vigilant since you have delegated some of your responsibilities to the air carriers themselves. They may have to dismiss

the guy who has been doing FAA’s safety-related inspections. What

I am saying is that I would really love to know what past experience he had that made him say the first corner to be cut will be

maintenance training. He didn’t ask for people; his concern was

related to what regulations should be changed—it was input on the

subject of regulatory reform potential issues. That’s what you

asked for. You didn

r

t ask them to define regulations. You asked

what issues they saw and how their area might be affected. I really

don’t think they were saying they wanted more manpower.

I would like all of that information for the record.

I thank you very much for your testimony and your patience

today.
270

As I told Mr. Skully, it is nothing personal. It is just business. I

am not mad at anybody. I was just a little upset with the fact that

you failed to even think there was going to be a problem.

If you assume deregulation now and if all of a sudden, the bill

had an immediately effective date, you will need lead time which

you may or may not be given. That’s why I raised the issue. I

thank you very much for your patience and courtesy. I apologize if

you thought I was angry or upset with anyone individually, which I

wasn’t. This upset me viscerally almost more than your procurement problems because they just totally boggled everyone’s mind.

So again, thank you, gentlemen.

If the Congressman isn’t here at 1 o’clock, the committee will be

adjourned then.

Mr. Bond. Thank you, Mr. Chairman.

Mr. Burton. The record will remain open to permit insertion of

the above-mentioned material.

[See Congressional Record.]

[Recess taken.]

Mr. Burton. Congressman Milford, I am sorry for the delay. I

received your letter yesterday just as we were in the middle of our

procurement examination and informed your staff that we would

be happy to have you testify today. I missed you this morning

when you were here. Until I received that letter, I hadn’t heard

from you.

Congressman Milford, we are very pleased to have you before

this committee. One of the things we should have thought of, which

I am sure took some of your time, is to let you know that you 

didn’t have to make copies of your statement. You didn’t have to

try and run those off.

Please proceed.

STATEMENT OF HON. DALE MILFORD, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF TEXAS

Mr. Milford. Mr. Chairman, I appreciate the opportunity of

appearing before your committee and I apoligize in that I do not

have copies that I can hand out. I may have to stumble a bit as I

pull together the testimony.

Mr. Burton. With your experience in this area, Congressman, I

am sure that you’ll do a good job of providing us with some information.

Mr. Milford. Well, in any case, Mr. Chairman, I do appreciate it.

Perhaps it would be in order for me to explain to you just why I

felt so strongly about testifying before your committee. In that

respect, a little personal background information might be in

order, if you will bear with me.

In an official capacity, I feel that what you are doing here in this

committee hearing is well within the jurisdiction of two committees

on which I serve in the House of Representatives. I am privileged

to serve as chairman for one of these committees, the Subcommittee on Transportation, Aviation and Weather under Science and

Technology. That subcommittee has jurisdiction over all research

and development activities dealing in aviation. In addition, I am

privileged to be a member of the Subcommittee on Aviation under

Public Works and Transportation. This subcommittee has jurisdic-
271

tion and oversight over all other aspects of aviation. Therefore, Mr.

Chairman, when adverse charges are made concerning air safety,

procurement practices, or aviation research activities, such charges

would apply equally to the subcommittees on which I serve. These

subcommittees are directly charged with the oversight of all these

activities. One cannot charge the Federal Aviation Administration

of malfeasance or laxity without also charging the authorizing

subcommittees with failing to do their work.

Mr. Burton. If I may interrupt you at this point, Mr. Chairman,

under the rules of the House, this committee has expressly stated

oversight into the efficiency and economy of all of the areas of

Government. The committee is divided into subcommittees. This

subcommittee happens to deal with transportation and Government activities. Another subcommittee will deal with HEW, for

example. Yet another subcommittee will deal with the Department

of Defense. As expressly stated under our rule, we have jurisdiction

over the efficiency and economy of the Federal Aviation Administration and in no way are our hearings ever meant to impugn in

any way the work done by any of the other distinguished committees and subcommittees of either the House or the Senate. We have

our own responsibilities as well. They are stated further in the

rules-----

Mr. Milford. Mr. Chairman. Perhaps you misunderstand me. I

am not questioning the jurisdiction of your subcommittee. I am

stating that when certain charges are made that those charges

would also reflect directly on the subcommittees which I serve on

or chair—it is the charges that I am concerned with, not with your

committee’s jurisdiction nor, for that matter, your right to investigate or look into any of these matters. I don’t question that.

My interest goes even deeper than just a concern for the various

subcommittee jurisdictions. Unlike the vast majority of Members

serving in this body, I have never held a political office of any kind

prior to being elected to Congress in 1973. My profession consisted 

of working in two closely related fields, aviation and meteorology.

Prior to coming to Congress, I was a nationally recognized consultant in those fields with an established expertise in air safety. I

have personally logged over 6,500 flying hours in every type of

aircraft from a small two-seater, that I built myself, to DC-lO’s and

helicopters. Therefore, aviation to me is more than just a committee jurisdictional matter. I have spent my entire adult life working

in this field. My first job in 1942 was employment as an aircraft

communicator in the old CAA—that is now the FAA. I later

became an aircraft controller during World War II and a pilot

beginning with the Korean war.

Aviation to me, Mr. Chairman, is a dedication. Aviation is a very

complex field. Few people understand the airplane and most have a

natural fear of flying. There is a true mystique surrounding flying

activities. Romantics, including many of our present day pilots, like

to maintain this mysterious atmosphere by projecting an image of

the manly, brave conqueror of the wild blue yonder. The press

media is also a perpetrator of the flying mystique. People’s normal

fear of flying, when coupled with this mystique, is always good for

very dramatic news stories. This explains why even the slightest

fender-bender mishap in aviation is always given front page treat-
272

ment, regardless of whether injuries or deaths occur. Consistently,

persons not trained in aviation matters, will normally ignore some

ironclad facts about aviation. For example, it can be proven beyond

a shadow of a doubt that aviation is the safest mode of transportation available. Truly, the only dangerous element in flying is traveling to and from the airport. Yet every news story will clearly

imply or overtly point out the dangers of flying. Since coming to

Congress I have also found that congressional committees and subcommittees often misunderstand factors involving aviation. These

misunderstandings then foster misguided actions on the part of

these congressional panels. t

My own Subcommittee on Aviation and Transportation consists

of many members who have extensive aviation backgrounds. Several are experienced pilots. We have traveled throughout the country

visiting all FAA facilities, numerous airports, and aviation manufacturing establishments and we have spoken with all segments of *

the aviation community. In so doing, we have been afforded the

opportunity to see first-hand how the total air transportation

system works, through the interaction of its various components.

During the past several years the subcommittee has conducted 

numerous and thorough examinations of the areas which you are

presently concerned with today, Mr. Chairman. In fact, just this

fall, we held two separate sets of hearings concerning FAA R. & D.

programs. The first set of hearings concluded a lengthy summary

of future needs and opportunities in the air traffic control system.

The subcommittee report, including findings and recommendations,

will be printed within the next week and we will make available to

you that report at that time, Mr. Chairman.

Our second hearings marked the beginning of our annual reviews of all FAA R. & D. programs. This will be completed in

February when the President presents his annual budget to the

Congress.

Mr. Chairman, I bring this to your attention so that you may be

assured that the FAA R. & D. programs, including those that

relate to safety, are receiving the closest congressional scrutiny. I

might also point out that on the Aviation Subcommittee of Public

Works and Transportation, we have been working tirelessly in

fullfilling the regulatory jurisdictions over FAA.

Mr. Chairman, I must personally take exception to some of the

visious attacks that are unjustly directed toward the FAA. These

unjust attacks imply that the committee on which I sit are not

doing their jobs. In a sense it is a slander of the dedicated and

hardworking members of these two committees and I frankly

resent it.

It seems fashionable these days to be very critical of the activities of FAA and Government agencies in general. Indeed our own

examination led us to criticize some aspects of FAA’s programs.

However, we must constantly guard against popular misconceptions, oversimplifications, and generalizations regarding the very

complex and technical subject of air traffic safety.

For example, some critics of the FAA claim that the fine safety

record in the United States resulted not because of, but in spite of,

1

FAA. Mr. Chairman, nothing could be further from the truth. For

the past several years I have heard from just about every responsi-
273

ble aviation expert in the country and have never heard such a

statement. The facts clearly show that the FAA has had a major

role in achieving this safety record. This is not to say that there is

no room for improvement. During our recent hearings my subcommittee found that while the U.S. air traffic control system is the

best in the world, advances in sophisticated computer satellite and

avionic technology offered great potential for vast improvement

upon the present system. My subcommittee will continue to do

everything in its power to assure that all these potentials are

thoroughly evaluated and that the appropriate technologies are

implemented.

For example, for some time now, the subcommittee has been

extremely interested in a replacement for the instrument landing

system, the ILS. Approaches and landings are statistically the most

hazardous portion of a flight. The ILS has lessened the danger to a

great degree but it is old and technologically outdated. A new

system called the microwave landing system, or MLS, offers great

improvements over ILS. The sooner we get MLS installed, the more

lives we are going to save. The FAA has spent over a decade and

nearly $100 million in an effort to make MLS a reality. Their

system was selected by a technical panel at the International Civil

Aviation Organization and has now been forwarded to the worldwide body for a final vote in April. If the process is completed on

schedule, a very important step forward will have been taken in

the cause of aviation safety. Unfortunately, there are those with

selfish interests who would seek delay of the international vote. A

strong lobbying campaign which unjustly and maliciously attacked

the FAA program and the decision of the ICAO panel has found its

way into the offices of some congressional Members. This campaign

has been very successful with those who are unfamiliar with the

facts.

If allowed to continue, the results of the campaign would not

only work against the best interests of the United States but would

also improperly influence the international deliberations on MLS.

Another important area of flight, which is of great interest to

both our subcommittees, is that of collision avoidance. This area

has been receiving a great deal of attention and effort on the part

of FAA over the years and has lead to the beacon collision avoidance system, commonly called BCAS. Our recent hearings indicated

near unanimous support of aviation experts for BCAS. The FAA is

pursuing this program on schedule.

I am also aware of the substantial progress which the FAA has

made in refinement to its present air traffic control system to

minimize the possibility of midair collision. But beyond that, nearly

all the witnesses at our ATC hearings supported increased pilot

involvement in the ATC process. We found that it is now technologically possible to provide the pilot with more information and

that the pilot and the system could greatly benefit from such

information. We’ll be urging the FAA and NASA to both take a

closer look at these technological options and to report back to the

subcommittee at an early date.

Another technology, literally on the horizon that would greatly

enhance the collision avoidance capabilities, is that of the Navstar

global positioning system, or GPS. This system currently being
274

developed by BOB could eventually provide precise worldwide navigation capabilities to civil aviation. My subcommittee will be

asking FAA, NASA, DOD, and OSTP to jointly study this potential

and to seek an early executive branch decision concerning the civil

applications of Navstar. Again, this technology could significantly

improve upon our present system of collision avoidance.

Mr. Chairman, I have just cited a few examples of the present

and future technological solutions to aviation safety problems. My

subcommittee has studied many others in great depth. We realize

that any constructive solution to such complex and technical problems require such detailed study. As much as we would like to

solve all the safety related problems of aviation today, we realize

that we must move responsibly and deliberately. We have a very

serious job to perform and cannot succumb to the pressure of those

that all too often are ill informed and overly emotional.

I noted with interest recently a television network news program

that examined the FAA and air safety. As I have indicated, the

subject is extremely complex and technical and the network was

working under the handicap of a very short time spot. Therefore I

did not expect a complete and detailed examination of the FAA’s

programs. However, I was disturbed at many of the serious allegations that were leveled against the FAA. Allegations that were not

in keeping with the testimony of expert witnesses at the hearings

of my subcommittee over the past several years, and which resulted in grossly distorted and inaccurate pictures of the FAA’s programs. Because of this I asked the FAA to immediately respond to

me concerning these allegations. I have that response here with me

today, Mr. Chairman, and I would like to enter it in your record at

this point, with your permission.

Mr. Burton. Without objection, it will be made part of the

record.

[See Congressional Record.]

Mr. Burton. Do we now send that back to the people who did

the program and have them respond to the response? The purpose

of these hearings, in my mind, is not relevant to any TV specials.

They deal with two factors. But I would like those responses in the

record.

Mr. Milford. I believe that in your hearing, Mr. Chairman,

reference has been made to this particular newscast. That is why I

would like very much for the detailed response-----

Mr. Burton. I don’t think it was mentioned in the record, but I

have no problem having that put in the record and without objection, that will be the order.

Mr. Milford. Now while the document that I have just inserted

can stand on its own feet, I would like to make a few observations

based on my personal knowledge.

First, the allegation that FAA cheated in its handling of the

MLS program is totally without foundation. My subcommittee has

thoroughly investigated this charge and it simply is not true.

Second, the statement that if you fly very often you’ve nearly

crashed more than once is painfully ridiculous and has no basis in

fact. It was a statement made in the broadcast referred to.

Even a casual acquaintance with the U.S. safety record proves

the fallacy of that statement.
275

Third, the statement that pilots are afraid to speak out for fear

of reprisal is absurd. In our most recent hearings we heard from

numerous pilot associations and individual pilots who openly expressed their views whether critical or in support of the FAA

programs. I could go on ad infinitum, but I won’t belabor the point,

Mr. Chairman. The FAA document contains a complete rebuttal of

the allegations made on that NBC newscast.

I am frankly concerned, Mr. Chairman, that this subcommittee

before which I am now appearing, perhaps based on some erroneous information such as the recent telecast, may be a bit overzealous and is acting a little too hastily in its criticism of FAA.

Mr. Burton. At this point may I interrupt you, sir?

Mr. Milford. Yes, sir.

Mr. Burton. I don’t think we are being overzealous. Our dealings with the FAA have led me to have less confidence in them

than you have, and a look at the charts and how they spend the

people’s money and how they have answered some questions before

this committee just gives me cause to wonder.

We are out to find out what the facts are and if we really wanted

to have a television spectacular, that would be for someone else to

sponsor.

This subcommittee has shown an interest in the FAA over the

years and we do have an interest in them now. The record of

yesterday’s hearing on procurement management, and some of the

statements that were made today before the subcommittee, as well

as prior to this hearing, helped lead to questions we want answered. Your testimony deals with part of that.

This subcommittee, to my knowledge, hasn’t been and isn’t a

headline-grabbing subcommittee. We have a responsibility. We see

the responsibility, I guess, in a little different way because your

committees deal with how FAA spends appropriated funds. In

other words, I am a little bit surprised by your attitude toward this

committee: That we would dare to have a hearing on the FAA.

Mr. Milford. Mr. Chairman, as I stated earlier, I did not question this committee’s jurisdiction. What bothers me is that if a fair

and balanced picture of air safety is to be presented at a hearing, I

would expect to see representatives from the user groups and other

interested associations and individuals that might perhaps have

another point of view. The users are conspicuous by their absence.

Mr. Burton. The only persons who testified before this committee were a staff member who was designated by GAO to work on

the procurement giveaways, the GAO itself, NASA, and the FAA.

There has not been a “professional critic” of the FAA who has

testified before this committee at all. There were facts from the

GAO. There were facts from NASA. There were statements from

FAA. You didn’t see any of the anti-FAA groups coming in here

and testifying. In fact, several asked to testify and we said we

weren’t interested in that. We were interested in getting the facts

and getting answers to questions that FAA supplied us.

Mr. Milford. I certainly don’t want to debate with my friend

from California. I simply would like to lay forth an opinion, which 

I have tried to do here. The committee may consider it in whatever

way it wishes.
276

Mr. Burton. I just wanted to give you the facts, sir. In other

words, there were not any opponents of the FAA testifying before

this committee—unless you could call GAO’s critique of them-----

Mr. Milford. I would be perfectly willing to let the record of the

committee speak for itself and simply to offer an opinion.

I firmly believe that if we are going to do anything constructive

in the area of air safety, we must present a balanced and accurate

picture of the entire situation. I can’t help but feel that the time

for bludgeoning the FAA with a meat ax is over. I will be glad 

when the press and Members of Congress get off of that kick. This

not only applies to FAA but to other Government agencies. I

happen to believe that at least more than a few of the 50,000

employees of that agency are pretty dedicated in what they are

trying to do.

We should now, I feel, operate on the agency with a scalpel

where we cut out that area that is unhealthy and not destroy the

complete animal. It is real easy for us to criticize. I simply wanted

the full technical matter to be a part of your record which has

been submitted.

Mr. Burton. As I say, that is their response which may or not—

one of your colleagues, I think he is the ranking minority member

on the subcommittee, Mr. Goldwater, told us that at future hearings on the FAA he certainly would like to be heard and that we

would do that during a discussion of MLS which we really didn’t

have on these hearings.

The only question I had—and it turned out to be a mistake—was

how some building ended up at the Brussels Airport that was never

there. The agency admitted that it was a mistake and it really

wasn’t relevant to us.

The record for this hearing will be your testimony, the FAA’s

testimony, NASA’s testimony, GAO’s testimony, and that’s it. The

bulk of the testimony that was in any way—well, it wasn’t in any

way adverse. It was damning of the FAA, and it dealt with their

procurement policies, contracts, and so forth.

I do not have the experience in aviation that you do or with the

FAA that you do, but our initial experience here doesn’t lead to a

great deal of confidence. They didn’t find any real fault except in

their management of procurement, but their answers to certain

simple questions did not lead at least this member to have all that

basic confidence. In my judgment I didn’t see how anybody could

give that type of answer. I think today’s testimony was excellent. 

As was developed in yesterday’s testimony on the ASR-8 everybody

could point a finger at two people who weren’t here—Mr. Dow and

Mr. Butterfield.

All we are trying to do is to get the facts and try to help FAA, as

we see it, because they are a very important agency. They do have

a duty to provide safety and that is why, in some measures, they

may have to be held to a higher level of performance than some

other governmental agencies because if they do make a mistake, it

might be a dandy.

Mr. Milford. My experience with the agency is that FAA is so

aware of safety that their actions almost border on fanaticism at

times. You can determine this for yourself by a visit to any air
traffic control center where you can see the controller working.

You can see why some of them now have ulcers.

Mr. Burton. I’m not talking about those who work for the

agency. I’m talking about those who run the agency. Certainly the

traffic controllers and the others are dedicated people. I’m talking

about those that-----

Mr. Milford. Those that are now running the agency were previously working in those centers or towers or aircraft communication stations.

Mr. Burton. That is fine for then, but now they are running the

agency.

Mr. Milford. I’m not here to broadcast a total defense. I do not 

want malfeasance on the part of any agency or any member of an

agency. I simply felt that we were going at it with a meat ax

without giving any credit to that which might be good in the

agency.

Mr. Burton. The purposes of the hearings were rather established. One was procurement. It should have been gone after with

an atom bomb. I was told by the Administrator at an earlier

hearing he doesn’t see any problem in remarks made dealing with

FAA’s potential increased safety duties as a result of possible economic deregulations. I have a memo which he said he wasn’t even

aware of, and yet the person sitting next to him at that time

should have at least told the Administrator about it, if he were

aware of it. They have memos laying out some potential problems

that out of hand they seem to have dismissed.

The other part dealt with the “see and avoid” policy. If they

didn’t lose all of that money with General Dynamics, maybe they

might have some simulators down at the academy. Then they

wouldn’t lose all of that money by washing out people after such a

long time. So those were the things coming in. I don’t really believe

that we used the meat ax approach. I think that it is our responsibility to supply information to the Members of Congress, as your

subcommittee findings also will be.

Mr. Milford. I hope we won’t lose sight of what I tried to say

when I came here. One of the purposes of my coming here was to

point out the fact that we are dealing with a very complex subject.

Our committee deals solely with aviation. Recently, we began to

see some seemingly weird practices taking place in various FAA

functions and operations. On the surface the practices didn’t make

any sense at all, but from digging underneath the surface and

beyond the obvious, we found that much of the unusual practices

were dictated by past rulings from courts and product liability

lawsuits. Many of their procurement practices right now are being

controlled, not by what would normally be good business where one

would go out and buy an ILS system or an approach light system—

but because of adverse court rulings that have virtually ripped off

the U.S. taxpayer. They are now having to bend their way of doing

business to keep from buying these aviation accidents.

We have billions of dollars in claims pending against FAA right

now in lawsuit actions. They are virtually becoming the patsy of

last resort. So much of what they are having to do is dictated, not

by good business practices, but by lawsuits.
278

Mr. Burton. I have to respectfully disagree. I don’t know of any

lawsuit in the world that would have compelled FAA to give a bailout to General Dynamics at the taxpayers’ expense.

Mr. Milford. I am not applying it to any specific-;----

Mr. Burton. But the items our hearings dealt with were specific

things. In the ARS-8 procurement, there wasn’t any court decision

and there was nothing forcing them to do anything except their

own bad judgment for which the taxpayer ended up paying and for

which, in the long run-----

Mr. Milford. Isn’t there litigation pending in this procurement

action?

Mr. Burton. Yes, General Dynamics is trying to get more.

Mr. Milford. Then any FAA official sitting before this committee could be placed in a very peculiar position in that anything he

might say could be used in an adverse manner against the U.S.

taxpayer in the litigation.

Mr. Burton. Not at all. In fact, if the FAA had done the right

thing, litigation would be pending now with the Government suing

General Dynamics for breach of contract instead of giving them so

much money and then being put in a position of having General

Dynamics—who should have been down on their knees thanking

God for the gift—suing to try to pick up some more. The people

that day were very clear about that and none of the people that

were at the hearing, to the best of my knowledge, even recommended the course of action that Mr. Dow and Mr. Butterfield took. So

that is not a relevant point as it deals with ASR-8 or with the

ARSA-III or the academy simulator procurement. We were concerned somewhat that within 2 recent fiscal years they lost $25

million of the taxpayers’ money by washing people out of the

academy or having dropouts because until they got into OJT,

nobody ever really knew if they could read a radar. It didn’t seem

to make any sense, not to me anyway.

I don’t think you could find it anywhere in the record of these

hearings that there were any witnesses who testified to anything

adverse to FAA except where they dealt with their procurement

management and there is no one in the world that could dispute

the testimony of the actual facts. We specifically did not have some

of the professional FAA critics who wanted to come to the hearings. We weren’t interested in having someone stand up and say

that they were great, or they were terrible, or this or that.

There were questions raised and we wanted to get some answers

and we got answers. Unfortunately, on the General Dynamics bailout, they couldn’t come up with a satisfactory answer, but at least

they let us know what the decisionmaking process was like. That

was the purpose of the hearings.

You mentioned the BCAS. We got into that earlier and I can’t

recall how far along that was. As I recall, that one has a way to go.

Mr. Milford. They are all under study, Mr. Chairman. None of

them are fully developed. They are on schedule.

Mr. Burton. You thought that there were statements made that

reflected on the various other subcommittees of the House and, I

guess, the Senate, and I guess the appropriations subcommittees. 

Were you referring to statements within this committee’s hearings
279

or statements from outside groups or what? You mentioned that

there were statements made-----

Mr. Milford. Statements made during the process of your hearings, Mr. Chairman. If you like, I would be glad to compile specifics

to you and submit them to you in supplement.

Mr. Burton. Surely some of them must come to mind.

Mr. Milford. Primarily, they are the ones involving air safety.

Any time we have charges or even implied charges of the lack of

safety they just literally scare the heck out of people that ride on

commercial air carriers. What comes out on the evening TV newsi casts is usually misleading. These people over here with their

cameras are going to grab about 40 seconds out of what has been 

going on all day in these complex hearings. That 40 seconds will be

the most dramatic or sexiest or wildest statement that somebody

- made during these hearings. Everybody listening to that television

* newscast is going to gain the impression that flying is dangerous

and the broadcast will scare the devil out of them the next time

they ride the airlines.

Mr. Burton. They could only get that impression if the FAA

didn’t have answers to the questions.

Mr. Milford. That is the purpose of submitting the statement

that I have just put into your record. It tells the complex truth.

Mr. Burton. Right. That is a statement they made in response to

some third party’s claims against them. No one watching a video

tape of any or all of this hearing could have heard a claim from us

that it is unsafe to fly. Questions were asked of the FAA and the

only way anyone could have doubted the safety of flight would be if

the FAA gave unsatisfactory answers.

Mr. Milford. There again, I haven’t been able to be present

every minute of your hearings. After reviewing the record, I would

be glad to submit to you, in a complete form, a critique rather than

trying to provide only a partial answer to something wherein I do

not know the complete details.

Mr. Burton. Because you made the statement, I answered the

question. That was all.

Mr. Milford. My statement is exactly as I made it.

Mr. Burton. Right. I know that. I assume that you must know

what some of those things are or you wouldn’t have made the

statement.

Mr. Milford. Yes. I was reacting to the tenor of a hearing and

the way it was going and the fact that it was covering apparently

only one side of the issue. As stated to you, if you are going to

criticize FAA or call them on the carpet for something, at least

have all parties in, that had direct bearing on the subject.

Mr. Burton. We did. We had the FAA. On the questions that

dealt with FAA, we called them in and asked them how they blew

> all this money. They attempted to tell us. We asked them what the

problems were, what improvements could be made in “see and

avoid,” and some other safety-related matters. They explained that.

I wouldn’t know any better source to ask than the FAA. I didn’t

t

ask ALPA. I didn’t ask Ralph Nader. I asked the agency and the

committee asked the agency. I wouldn’t know any better way-----

Mr. Milford. When you are talking about charges with aviation

safety, who would be better qualified to tell you whether the
280

charges are true or not than those directly involved in the piloting

of airplanes, for example.

Mr. Burton. If you want to hear somebody do a number on FAA,

we could have 3 days’ testimony from those people. Also, the FAA

through their new interagency agreement with NASA has all near

misses reported with immunity so that no one ends up getting in

trouble by reporting an incident. This works out a lot better than it

did when they were having the near misses reported without immunity.

Mr. Milford. When you say anonymity and then call the researcher that is responsible for that research, you are no longer I

remaining anonymous, are you?

Mr. Burton. Yes; we are. Dr. Billings of NASA explained how

their program works. He’s happy with it. The FAA people seem to

feel that it has helped them. When they used to give immunity to .

people on reporting near misses they had 276 reports. When they ’

cut the immunity off, they were down to 12.

Mr. Milford. I am very familiar with the program.

Mr. Burton. I am sure you are, sir. The only person whose name

was mentioned in connection with that report was Dr. Billings who

was almost overly circumspect in his testimony to lay this out. He

was talking about a procedure. Nobody’s cover was blown.

Mr. Milford. Mr. Chairman, I don’t want to debate with you. I

didn’t come here-----

Mr. Burton. It seems like you did.

Mr. Milford. I came here with an opinion and I have expressed

an opinion. I will stand with it when weighed against the record as

a whole. One has to look at the record as a whole before making a

judgment. I stated my opinion and the reasons for it and the

justifications for it. Either it stands or falls.

Mr. Burton. I think you misunderstood the purpose of the hearings. You got the hearings tied up with a television series.

Mr. Milford. Maybe I did.

Mr. Burton. I really do think you did.

Mr. Milford. I had received information that the television story

itself was used as the reason for the hearings—one of the reasons

for the hearings.

Mr. Burton. Well, I’ll just give you this one under oath. The

hearings were planned before the television station even interviewed anybody.

Mr. Milford. Here again, Mr. Chairman, I have given you my

thoughts.

Mr. Burton. I will give you three facts as to what aroused my

interest and you, I think, as a legislator will understand this.

One, I told you the story of the deregulation memos.

Second, I read a court decision. This is not relevant to anybody

but me. An airline pilot refused to take up a plane because he <

thought it was unsafe. He was disciplined. He sued the FAA on the

basis of their regulation that the pilot is responsible for the safety

of the plane, et cetera. In court the FAA raised the issue that he

was being ordered to take the plane up and that while the plane j

was on the ground it wasn’t in operation, therefore that regulation

didn’t apply. That did not inspire much confidence. It is a very

minor thing, but it was convoluted thinking.
281

But I believe the testimony we got today was very good. I think

that it answered a lot of questions that this committee has. I think

it will raise more questions. We specifically avoided getting into

areas that didn’t tie into the area of procurement management.

This subcommittee under Mr. Brooks, going back years, has had

a great interest in FAA and Mr. English-----

Mr. Milford. I don’t question that.

Mr. Burton. That was it. There were no unfriendly witnesses. There may have been some questions that maybe someone as

knowledgeable as you would not have had to ask.

Mr. Milford. Again, Mr. Chairman, I make an offering and if it

is out of place, then it will be reflected as such within your record

and people will disregard it. If it is appropriate then it stands as it

is submitted. I do so without animosity to you or the committee.

You have every right to make inquiries of this nature. It is your

jurisdiction just as it is ours also. The information I had received

about your hearings was that you were going into some areas, as I

said in my statement, that reflected on us. We are involved with

this matter too, as well as the other committees.

Mr. Burton. Right. I guess that any committee of the House that

finds any mistake anywhere in Government might find that it

might be in some other committee’s jurisdiction and could be accused of that, but it is not meant to reflect on you.

Mr. Milford. I say let’s take the issues themselves and address

the issues. I am not here to debate jurisdictions with you.

Mr. Burton. What we did was address the issues and the FAA

was the only one called upon to answer the questions and make

statements, except GAO and the GAO person who was assigned to

us on the ASR-8 investigation. Dr. Billings explained the ASRS

program. It showed that they were doing some very positive things.

The FAA was asked questions and answered questions. I still

have some questions as to how they can ignore their own internal

memos.

Especially in procurement and other things, I do believe they can improve greatly. That was just it.

Could I see a copy of the FAA’s reply they wanted in this record?

When we talked to them, we made it clear to them that if they

wanted to get on a face-to-face debate with one of the networks, they could do that too—somewhere else.

Am I put in a position now, in the name of fairness to the other

people, to allow for a rebuttal?

Mr. Milford. It is your subcommittee. I simply asked you to see

it. What you have in hand there is a reply back to me after I had

requested FAA to take an NBC so-called documentary that was

aired on November 2 and November 4, and make a detailed critique statement by statement and list references. That is the result

that you have in front of you.

If I could, Mr. Chairman, you asked me for a specific a while ago

and I didn’t have it in front of me. I do now. In your press release

that you issued Monday morning, in the next to the last paragraph

it states: “Burton also noted his subcommittee’s series of hearings

may also look into recent TV network news reports focusing on

other problems confronting the aviation agency.” This was one of

the things that prompted me to ask to testify.
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Mr. Burton. Right. As it turned out in our letters to FAA, we

specifically limited it to what we were saying. If you feel that-----

Mr. Milford. I was just quoting from your news release.

Mr. Burton. I am saying that your original statement was—

things made in the hearings. Things made in the press release—I’ll

stand by that one too.

I have no further questions.

The point was raised that when we have our subcommittee and

our quorum, there are other items that have to be included other

than testimony. We will deal with putting this into the record. You

are not going to get shut out of it.

Mr. Milford. Whatever, sir. I inserted it in the Congressional

Record today.

Mr. Burton. You did? Well, that’s pretty good, I guess. I don’t

know if we need to do it then. Nevertheless, I have no objection to

it. If it is in the Congressional Record today maybe they will be

sending us some letters answering the answers because the record

will remain open.

Thank you very much.

Mr. Milford. Thank you, Mr. Chairman. I appreciate it.

Mr. Burton. The subcommittee is adjourned.

[Whereupon, at 1:55 p.m., the subcommittee adjourned, to reconvene subject to the call of the Chair.]

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