FAA catalogs its acquisition programs in its annually updated Capital Investment Plan (CIP). The CIP identifies planned capital investment in the National Airspace System (NAS) for the next 5 years consistent with the amount requested in the agency’s annual budget submission. Appendix C of the CIP, which identifies the anticipated budget line items, is divided into five activities: (1) Engineering, Development, Test, and Evaluation; (2) ATC Facilities and Equipment; (3) Non-ATC Facilities and Equipment; (4) Facilities and Equipment Mission Support; and (5) Personnel Compensation, Benefits and Travel. The CIP for fiscal years 2012 through 2016 contains 106 funded acquisition programs with estimated total budgets (through 2016) of more than $14 billion. Of these 83 acquisition programs FAA considers ATC related, 18 involve Engineering, Development, Test and Evaluation and 65 involve ATC Facilities and Equipment. The 83 programs include 30 that have had program baselines approved by FAA’s Joint Resources Council (JRC), which is responsible for approving major programs. These 30 baselined programs include communications, navigation, and surveillance systems that are key to ATC operations. FAA considers 5 of the programs to be foundational parts of NextGen, and all are key to modernizing the existing ATC system. Figure 1 illustrates the universe of FAA acquisitions for fiscal years 2012-2016. FAA has developed and uses its Acquisition Management System (AMS) to provide policies and guidance for managing ATC system programs through all phases of the programs’ life cycles (see table 1). The Air Traffic Organization (ATO) within FAA is responsible for operating, maintaining, and modernizing the nation’s current ATC system. The acquisition program baseline defines the cost, schedule and performance baselines for the investment program. The JRC which determines whether to approve a cost and schedule baseline also approves rebaselining, through which the agency documents and approves major changes to a program’s previously approved budget or schedule. Rebaselining resets the estimated costs and schedule used to determine how the program will be held accountable and can occur before the program is deployed. Once a program is rebaselined, FAA reports on the performance of the program based on the revised cost and schedule. Although the rationale for rebaselining can be reasonable, as, for example, when a program’s scope has been expanded, reporting a program’s performance based on a rebaselined cost or schedule can also skew or conceal from Congress and other stakeholders the program’s actual total costs or overall timeline. We previously reported that the absence of this information on rebaselining in ATO’s performance reporting could cause managers and other stakeholders, including Congress, to think that performance was better than it actually was. We recommended that FAA regularly report on the overall, long-term performance in acquiring ATC systems by providing in FAA’s annual Performance and Accountability Report the original budget and schedule baselines for each rebaselined program and the reasons for the rebaselining. In response to our recommendation, FAA currently provides this information in Appendix D of its CIP, where it details baseline cost and schedule information for major acquisition programs. NextGen involves changes to every aspect of air transportation (see fig. 2). NextGen requires the acquisition of new integrated systems (both software and hardware), flight procedures, aircraft performance capabilities, and supporting infrastructure to transform the current air transportation system into one that uses satellite-based surveillance and navigation operations instead of ground-based radar. are intended to increase the efficiency and capacity of the air transportation system while maintaining safety and accommodating anticipated future growth. The planning for NextGen began in 2003 and is now focused on implementing improvements in the midterm (by 2018) and in the far term (by 2025). GAO, Next Generation Air Transportation System: Challenges with Partner Agency and FAA Coordination Continue, and Efforts to Integrate Near, Mid-, and Long-term Activities Are Ongoing, GAO-10-649T (Washington, D.C.: Apr. 21, 2010). Of the 30 baselined FAA ATC programs we reviewed,19 have not increased in cost, but 11 have experienced cost increases ranging from $2 million to over $2 billion. And of the 19 programs whose costs have not increased, 7 experienced a cost decrease while the remainder have not changed significantly. However, the 11 programs that exceeded their initial estimated costs account for over 60 percent of total program costs for the 30 baselined programs—$11 billion of $17.7 billion. These 11 programs are among the most complex of FAA’s major acquisitions in that each involves a large amount of software engineering. (See table 3.) The 3 programs with the largest cost increases—totaling more than $4 billion—are key to ATC modernization. Several factors contributed to cost overruns for the Standard Terminal Automation Replacement System (STARS), WAAS, and ERAM programs and required additional congressional appropriations or reductions in program scope. Our previous work disclosed that the near tripling of the STARS’s budget resulted from insufficient involvement of stakeholders and requirements growth. The WAAS program began in 1998 with an initial cost estimate of $1 billion and a current estimate of $3 billion. We reported previously that FAA’s lack of scientific and technical expertise resulted in unplanned work and contributed to cost increases as well as delays in the deployment schedule. Additionally, FAA changed how it accounted for certain costs in the capital budget in 1999, which further raised the cost estimate to $3.3 billion. FAA recently revised that estimate down to the current $3 billion during the 2009 rebaselining because, according to FAA officials, they had met certain program requirements in 2006. As previously mentioned, ERAM is a key modernization system and will be the backbone of the NextGen system. FAA originally submitted to Congress an estimated cost of $2.1 billion in 2003, and the program is now expected to cost about $2.4 billion––an increase of about $330 million. According to FAA, various software issues (e.g., unsuccessful transmission messages and inaccurate data pairing of aircraft and traffic display), as well as problems interfacing with other facilities and systems, have contributed to the cost increases and delays. The extent to which unanticipated requirements, unplanned work, and underestimates of the complexity of software development, among other factors, have contributed to other FAA ATC acquisition program cost overruns and scheduling delays is discussed later in this report. We found that 15 of the 30 baselined programs either have experienced no change in schedule or were completed early or on time; however, the other 15 programs are projected to be completed later than originally estimated. These delayed programs range from the Integrated Display System, which will consolidate information from several weather subsystems into a single display, which FAA expects to be completed 2 months after its initial estimated completion date, to WAAS, which FAA estimates will be completed in 2013—more than 14 years after its initial estimated completion date (see table 4). Ten of the 15 programs with schedule delays also experienced cost increases. However, even if a schedule delay does not result in a direct cost increase to that program, the delay can lead to increased costs for FAA because FAA staff must continue to manage the acquisition over the longer term as it is being implemented, as well as maintain any legacy system that the program is replacing. Because of program interdependencies, a schedule delay can also affect how and when other programs will be implemented. Cost increases and schedule delays occurred because of several factors, all of which have been long-standing challenges for FAA and some of which continue to affect programs despite FAA efforts to mitigate the factors. Specifically, these factors include (1) additional, unanticipated system requirements work; (2) insufficient stakeholder involvement throughout system development; (3) underestimates of the complexity of software development; and (4) unanticipated events, including funding decreases or work stoppages (see table 5). Of the 30 programs we reviewed, 15 experienced cost increases, schedule delays, or both, and we were able to determine that cost increases or schedule delays for 11 were attributable to one or more of these factors. Following are some examples of how these contributing factors led to cost increases or schedule delays in some of FAA’s ATC baselined programs: Unanticipated requirements or work: For nine of the programs in table 5, FAA has had to undertake substantially more development work than planned because FAA program officials originally misjudged the extent to which commercial off-the-shelf nondevelopmental solutions, such as those procured by another agency, would meet FAA’s needs. For example, although WAAS was being developed by an integrated product team that included representatives from several FAA offices, the team did not effectively resolve problems in meeting a required performance capability—that pilots be warned in a timely manner when a system may be providing them with potentially misleading and possibly hazardous information. These actions resulted in unanticipated work and contributed to the rise in WAAS’s cost from the original estimate of $509 million in 1994 to about $2 billion in 2005. Insufficient stakeholder involvement: As we previously reported, ERAM was designed at a time when air traffic controllers did not participate in efforts to design and test new systems. Because active users of the system from different locations could not provide insight early on, issues that could have been addressed early in the design phase were not addressed. In response, FAA has taken steps to improve the testing of new systems in order to reduce the likelihood of larger-than-anticipated software issues arising during system implementation. For example, FAA and the controllers’ union recently entered into a memorandum of understanding to bring controllers into the testing and evaluation phase of ERAM.