The Federal Aviation Administration’s (FAA) primary mission is to ensure safe and efficient air travel throughout the United States. FAA’s ability to fulfill this mission depends on the adequacy and reliability of the nation’s air traffic control (ATC) system, which FAA is responsible for managing and maintaining. Growth in air traffic operations and deteriorating equipment have strained the current ATC system and FAA’s ability to sustain its exemplary safety record. These factors have increased the urgency for FAA to modernize ATC equipment. FAA began its program to modernize the ATC system in the early 1980s. The program included the acquisition of new radars and automated data processing, navigation, and communications equipment. As of March 1996, FAA estimated that from 1982 through 2003, the total cost of this modernization program will be about $35 billion. Through fiscal year 1996, the Congress will have provided FAA with approximately $22 billion of the $35 billion. We have been involved in evaluating FAA’s acquisitions of major systems since FAA began its ATC modernization program. We have chronicled how FAA’s modernization program has experienced substantial cost overruns, lengthy schedule delays, and performance shortfalls. Our reviews have traditionally focused on the technical difficulties and managerial weaknesses that caused these problems. Until undertaking this review, we had examined the role of an underlying managerial factor—organizational culture—in acquisition management at other federal agencies but not at FAA. The most vivid example of FAA’s cost, schedule, and performance problems was FAA’s effort to replace existing display and computer systems in ATC facilities across the nation. The Advanced Automation System (AAS), the long-time centerpiece of the modernization program and the most costly project, was restructured in 1994 after costs tripled to an estimated $7.6 billion from the 1983 estimate of $2.5 billion and after the planned implementation of key components was up to 8 years behind the original 1983 schedule. The critical Initial Sector Suites System segment of the AAS project, intended to replace controllers’ existing work stations at en-route centersand provide controllers with new hardware and software, including radar displays, was particularly troublesome. Before scaling back this segment, FAA was attempting to address several serious technical problems, such as (1) ensuring that 210 separate work stations would communicate in a stable network, (2) reducing the need to revise each software code (on average, every line of software needed to be rewritten once), and (3) converting a system for communicating flight information on printed paper strips to an electronic system. Unplanned cost increases have characterized many other FAA acquisitions. Per-unit costs increased substantially for eight of the nine key projects that we have tracked in our annual status reports on the ATC modernization program. (Table 1.1 shows the percentage change in unit costs for the nine projects.) Since beginning the ATC modernization program in the early 1980s, FAA has completed smaller projects, but efforts to develop and implement most major acquisitions—such as replacing automated systems and communications equipment—have suffered extensive delays. As of March 1996, 74 projects totaling $5.1 billion—only about 15 percent of the modernization program’s overall cost—were completed, and 147 projects remained active. For the nine acquisitions cited above, delays have averaged almost 5 years per project from original estimates. (Table 1.2 shows the schedule delays experienced by these nine projects.) Performance shortfalls have also affected many projects and have caused rework, redesign, and even cancellation of projects. The following three key projects that we have reviewed are examples. The Automated Surface Observing System (ASOS) is designed to (1) measure wind speed, temperature, cloud height, visibility, and the types and amounts of precipitation near airport runways and (2) send computer-generated information to pilots. Although FAA had procured more than 350 ASOS units by May 1995, few had been commissioned by the end of that year because of technical difficulties. For example, we reported in April 1995 that six of the eight sensors in the system did not meet key contract specifications for accuracy or performance. Furthermore, the system’s overall reliability during testing was only about one-half or less of the required levels. The Air Route Surveillance Radar-4 (ARSR-4) is designed to track aircraft and weather. Persistent technical problems—most recently, difficulties in developing software and integrating this radar with other ATC systems—have delayed its implementation for years. The Mode Select (Mode S) radar is designed to (1) identify, locate, and track aircraft by using radar signals to obtain information from up to 700 individual aircraft at a time and (2) provide users with a communications channel between aircraft and ground facilities. Although FAA awarded a production contract in 1984, technical difficulties prevented FAA from fielding a full-performance radar until this past year. Our work over the years has pointed to technical difficulties and weaknesses in FAA’s management of the acquisition process as primary causes for FAA’s recurring cost, schedule, and performance problems. In terms of technical difficulties, FAA has underestimated the complexity of developing systems, especially highly ambitious ones that involved extensive software development, such as AAS. FAA’s difficulties in developing software have caused cost overruns and schedule delays for numerous acquisitions of major systems. We have also reported recurring weaknesses in FAA’s management of the acquisition process. FAA did not historically manage its acquisitions of major systems in accordance with the business-like principles embodied in Office of Management and Budget Circular A-109 and FAA’s own acquisition policies. For example, FAA did not analyze its mission needs and performed flawed or limited analyses of alternative approaches for achieving those needs. FAA also did not perform realistic testing before proceeding into full production of systems and found out later that the systems did not meet the agency’s specifications. Other managerial weaknesses include inadequate oversight of contractors’ performance, difficulties in resolving issues related to requirements for FAA’s various systems, and problems with securing sites to install equipment. Organizational culture is one managerial factor we have examined in reviews of acquisition management at other federal agencies but not at FAA. We have defined organizational culture as the underlying assumptions, beliefs, values, attitudes, and expectations shared by an organization’s members that affect their behavior and the behavior of the organization as a whole. In our 1992 report on the acquisition of weapon systems at the Department of Defense, we found that the Department’s organizational culture contributed to cost increases, schedule delays, and performance shortfalls. In our view, individuals acted in response to incentives related to their careers, jobs, program support, organizational influence, and budget levels. Collectively, these incentives created an environment that encouraged “selling” and starting new programs and pushing existing programs ahead despite development, production, and implementation problems. In our 1992 report on the Department of Energy, we concluded that the Department’s contract management problems would require a change in its business philosophy and that its efforts to instill a new organizational culture were an acknowledgement of the systemic nature of the problems.Similarly, we reported that the National Aeronautics and Space Administration would have to change its organizational culture in order for its contract management improvement efforts to succeed. Since then, our preliminary work in evaluating the implementation of the Government Performance and Results Act of 1993 has shown that effective implementation of this act will require fundamental changes in the culture of government management—changing management’s focus from what federal employees are doing to what they are accomplishing. Organizational theory and behavioral science describe an interdependent relationship between employees’ beliefs, values, and attitudes and their individual and collective behaviors. Moreover, these beliefs, values, attitudes, and behaviors do not operate in a vacuum but are affected by forces both within and outside of an organization. Internal forces include policies and procedures, an organization’s structure and incentive systems, and leadership exercised by top management. External forces include the needs of customers and, in the case of government agencies, congressional committees and Members of Congress. Organizational theory and research show that an organization’s culture is more constructive when employees’ underlying values, attitudes, and beliefs cause individuals and the organization as a whole to behave more often in ways that have desirable results—both for the organization and its customers. Employees in these organizations demonstrate a stronger commitment in the following four areas: mission focus, accountability, coordination, and adaptability. Mission focus refers to the employees’ pursuit of goals that define the best course of action for an organization. An agency’s mission provides the agency with purpose and meaning and promotes short- and long-term commitment by its employees. In a more constructive culture, employees are more likely to think ahead and plan, emphasize quality over quantity, and subordinate their own needs to the agency’s overall mission. Accountability refers to the value an organization places on involvement, participation, and ownership among its members. A greater sense of commitment to the organization fosters the employees’ willingness to be held accountable for decisions and actions. In a more constructive culture, employees are more likely to take responsibility and work to achieve self-set goals, give positive rewards to others, and help others to think for themselves. Coordination refers to the consistency of behavior and the sharing of beliefs and values by individuals and groups within an organization. Such consistency facilitates the exchange of information and fosters coordinated efforts. In a more constructive culture, employees are more likely to involve others in decisions affecting them, openly share information, resolve differences collaboratively, cooperate with others in the organization, and pursue common purposes. Adaptability refers to the employees’ capacity to respond positively to changing demands and opportunities posed from within and outside the organization. Adaptability enables an organization to adopt new behaviors and processes (e.g., in response to emerging technologies and the changing needs of its customers).