oversight

National Airspace System: Questions Concerning FAA's Wide Area Augmentation System

Published by the Government Accountability Office on 1997-08-07.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

 United States
 General Accounting Office
 Washington, D.C. 20548                                 'Ii

 Resources, Community, and                                      159135
 Economic Development Division


B-276928


August 7, 1997


Congressional Requesters

Subject:   National Airspace System: Questions Concerning FAA's Wide Area
           Augmentation System

The Federal Aviation Administration (FAA) is planning a transition to satellite-
based navigation guidance, using satellite signals generated by the Department
of Defense's Global Positioning System (GPS). The GPS network of 24
satellites transmits radio signals that allow properly equipped air, land, and sea
users to calculate the time and their position and speed in any location and
weather condition. However, as currently designed for military purposes, GPS
does not satisfy civil aviation requirements. FAA is developing a Wide Area
Augmentation System (WAAS) to enhance GPS by correcting signal errors,
increasing satellite coverage, and providing timely warnings to users of system
malfunctions.

FAA expects to use GPS, when augmented, to replace a variety of costly
ground-based navigation systems that were built on technologies dating back to
the 1950s and before. Satellite-based navigation will improve the safety of flight
operations, allow fuel-efficient routing, and increase airport and airspace
capacity to meet future air traffic demands.

The basic concept and operational feasibility of WAAS has been demonstrated,
and a contract for the development of the operational system was awarded to
Wilcox Electric in August 1995. Because of concerns about the contractor's
performance, FAA terminated the contract in April 1996 and in May 1996
entered into an interim contract with Hughes Aircraft. The interim contract
with Hughes was subsequently expanded and finalized in October 1996. The
final $483.5 million contract provides for a three-phase development effort.
Development costs are estimated to be $220.9 million for Phase 1, $94.1 million
for Phase 2, and $168.5 million for Phase 3 of the contract.


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                             96?Q1          //            35
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Concerned about the cost of WAAS' development and FAA's replacement of the
contractor, you asked us to respond to the following questions: (1) What is the
history of WAAS cost estimates and major factors in cost changes? (2) What is
the history of WAAS program requirement changes and sources for these
changes? (3) What were the factors in FAA's decision to terminate the Wilcox
contract? (4) What would be the implications of ending WAAS' development at
the completion of Phase 1? We briefed your staff on these issues during the
week of July 7, 1997 (see enc. I).

BACKGROUND

WAAS is a single system comprised of a network of ground stations and
communications satellites. The ground stations will receive and monitor the
GPS signals. The integrity and accuracy of the signal data will be assessed, and
integrity warnings and satellite corrections will then be transmitted to aircraft
via communications satellites. The satellites will also serve as additional
sources of GPS signals to provide greater coverage for all aircraft. (See fig. 1.)

Figure 1: WAAS Architecture

Communication
Satellite
WAAS Signal

Ground
Earth
Station




Wide Area Ground
Station Network

Source: Federal Aviation Administration.

Under the Hughes contract, the system was scheduled to reach an initial
operational capability (Phase 1 WAAS) in December 1998. FAA expects this
schedule to be delayed, however, because of engineering change proposals that

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are pending approval. Phase 1 WAAS will be able to support the navigation of
planes for all phases of flight through Category I precision approaches.' But it
will not have the back-up capability to continue operations in the event of
equipment failures and will have to be backed up by FAA's current ground-
based system.

To make WAAS capable of serving as FAA's only system for air navigation
guidance, the agency plans to expand the system in Phases 2 and 3 of the
contract. Phase 3 is scheduled for completion by 2001. FAA intends to use
options in the WAAS contract for increasing the number of ground stations and
also plans to acquire or lease additional communications satellites. The agency
expects to phase out its old ground-based systems for navigation guidance over
a period of approximately 5 years, beginning in 2005.

HISTORY OF WAAS COSTS

According to FAA, the estimated facilities and equipment (F&E) cost of the
WAAS program grew from $507.9 million in December 1994 to $957.4 million in
April 1997-a cost growth of over $400 million, or almost 90 percent. The major
factors responsible for the estimated cost growth were increases of (1) over
$200 million in unanticipated development costs to build greater reliability into
WAAS' ground component to help ensure that the system will be available even
in the event of equipment failures, (2) $77 million for additional program
support for FAA's oversight of the program and the WAAS contractor,
(3) $75 million for work performed by Wilcox and the estimated settlement
costs of terminating the contract, and (4) $65 million for satellite upgrades and
improvements recommended by the White House Commission on Aviation
Safety and Security (Gore Commission). 2 The Gore Commission recommended
developing an additional radio frequency on the next generation of GPS
satellites and adding GPS-like signals to existing communications satellites.




'FAA categorizes the approach and landing of an aircraft according to the
aircraft's height above touchdown and range of visibility. A Category I
precision approach is one in which an aircraft receives guidance as it descends
to a height of 200 feet or higher when the runway's visibility is at least 1,800
feet.

2The Gore Commission, established by President Clinton, issued a report in
February 1997 that made over 30 recommendations concerning aviation safety,
security, and air traffic control.

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As discussed above, FAA attributes a significant portion of WAAS' cost growth
to unanticipated development costs. These additional development costs would
not be viewed as increases if FAA had used a range of high and low estimates
to project program costs in December 1994. By using ranges, FAA could have
conveyed the level of uncertainty that existed in the program cost estimates
because WAAS was in its early stages of development. 3

In addition to the F&E costs, FAA's December 1994 estimate included
$96.4 million in operations and maintenance (O&M) costs for communications-
bringing total program costs to $604.3 million. Although FAA's April 1997
estimate reduced O&M costs for communications to $65.4 million because of
lower expected costs for satellite communications, higher F&E estimates
pushed total program costs to $1.02 billion. Neither the December 1994 nor the
April 1997 estimate included the $2 billion in O&M costs now projected for the
life cycle of the system.

In May 1997, FAA proposed a change to the WAAS cost estimate that would
reduce estimated total costs from $1.02 billion to $842.1 million. This proposal
would transfer $50.3 million of F&E costs for satellite communications to a
separate budget line item for communications, navigation, and surveillance.
FAA believes that transferring funds to a separate line item will encourage
other FAA projects that use communications satellites to share the F&E costs
of these satellites. The proposal would also eliminate $65 million of satellite
improvements recommended by the Gore Commission because (1) a second
radio frequency was not identified in time to be included in the next group of
GPS satellites and (2) FAA has not made its requirements for the WAAS
communications satellites final. Furthermore, because the May 1997 estimate
reflects only F&E costs, it does not include the $65.4 million in O&M costs for
communications services that were previously included in the program's cost
estimate.

HISTORY AND SOURCES OF CHANGES
IN WAAS REQUIREMENTS

The final system that is to be delivered in 2001 under the Hughes contract will
be fundamentally the same system that FAA originally contracted for with
Wilcox, with no degradation in air navigation service or safety. However, to



3 Seediscussion on the use of cost ranges in Air Traffic Control: Improved Cost
Information Needed to Make Billion Dollar Modernization Investment Decisions
(GAO/AIMD-97-20, Jan. 22, 1997).

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hold down the costs of WAAS, the agency decided to assume responsibility for
acquiring communications satellites and integrating these services with the
ground component of WAAS-a role formerly assumed by Wilcox. FAA
estimates that it will save $11 million by contracting directly for these satellites.
The contract periods of the Wilcox and Hughes contracts are also essentially
the same, with some differences in the phasing of development activities. The
system that was to be developed in two phases under the Wilcox contract will
now be developed in three phases, with some operations and maintenance
requirements deferred from Phase 1 to Phase 2. According to the systems
engineering team leader of FAA's WAAS program, requirements were deferred
to Phase 2 to even out the contractor's workload. However, because of delays
caused by the termination of the Wilcox contract, the schedules for an initial
WAAS operational capability and a final system were extended by about a year.

Some technical requirements changed when FAA made the transition from the
Wilcox to the Hughes contract; however, these revisions are not expected to
affect the final operational capability of WAAS. These changes included
(1) stating certain requirements as goals in the interim contract and
subsequently reestablishing them as requirements in the final contract and (2)
revising some requirements that were originally set too conservatively or were
not cost-effective. For example, the precision approach requirement for the
Phase 1 effort was stated as a goal in the interim Hughes contract to conserve
funds and because FAA expected that there would be no equipment on board
aircraft capable of supporting WAAS precision approaches by 1998. These
requirements were later restored on the basis of a reassessment of program
funding and risks and discussions with the FAA Satellite Operational
Implementation Team about the likely availability of onboard equipment by
1998. Other revisions include allowing more interruptions in the WAAS signal
during Phase 1 because the requirement was originally set too conservatively
and deleting the requirement for equipment status monitors at remote WAAS
locations to reduce costs.

FACTORS IN FAA'S DECISION TO TERMINATE
THE WILCOX CONTRACT

FAA terminated the Wilcox contract because the contractor did not provide
effective project management. FAA identified the following factors as
indicators of the contractor's poor management of the WAAS project:
(1) inadequate staffing of the contract, (2) failure to award key subcontracts as
scheduled, (3) probable cost overruns of at least $100 million and schedule
delays, (4) failure to meet contract milestones for system design review and


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delivery of cost and schedule baselines, and (5) inadequate cost and schedule
reporting.

IMPLICATIONS OF ENDING WAAS DEVELOPMENT
AT THE COMPLETION OF PHASE 1

Ending the development of WAAS after its initial operating capability is
delivered at the end of Phase 1 would have programmatic and operational
consequences with financial implications for FAA. From a programmatic
standpoint, FAA would not save the entire $262.6 million cost of Phases 2 and 3
of the WAAS contract because approximately $75 million of this amount must
be spent on activities involving hardware and software to support the Phase 1
system. Outside of the contract, FAA will need to spend $32 million to lease
communications satellites and $40 million to develop GPS landing procedures
and other guidance for implementing a GPS-based navigation system to support
Phase 1 of WAAS. If the development of WAAS is ended at Phase 1, FAA may
jeopardize existing and future agreements with U.S. border countries to
contribute ground stations to the WAAS architecture, which would increase the
number of stations that FAA would ultimately have to provide and fund.

Ending the development of WAAS at the completion of Phase 1 would also have
operational implications. First, at the end of Phase 1, WAAS would not have
the capabilities to serve independently as an air navigation system. As a result,
it could not replace the current system of navigation aids, and FAA would incur
O&M costs for operating two navigation systems. According to FAA, over a
20-year period, O&M expenses would total approximately $4.2 billion for the
present system and $2 billion for a Phase 1 WAAS. FAA would also incur F&E
costs to replace aging ground-based navigation aids. Second, stopping WAAS'
development would have an impact on FAA's transition to a new air traffic
management system, which is built on more direct routing of aircraft.
According to FAA's National Airspace System architecture, satellite-based
navigation (made possible by WAAS) is one of the key capabilities required for
this transition. Therefore, many of the benefits associated with the new air
traffic management system, such as the fuel-efficient routing of aircraft and an
increased airspace capacity, may not be fully realized if WAAS does not become
the sole source of navigation guidance. Finally, the safety benefits of having
WAAS landing signals at airports that currently have no such capability may not
be fully realized.




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OBSERVATIONS

Several concerns about how FAA reports program costs and sets performance
requirements came to light during our review of this project. With respect to
cost reporting, because FAA presents WAAS' cost estimates as firm, discrete
point estimates, FAA is implying a level of precision that cannot be supported,
particularly in light of the uncertainties existing early in the system's
development cycle. Fully disclosing the range of imprecision and uncertainty in
the WAAS program estimates would increase the value of these estimates to
investment decisionmakers in the Congress and at FAA. In addition, we are
concerned that reporting the $50.3 million in F&E costs for WAAS
communications satellites in a budget line item that is distinct and separate
from the WAAS program will make it difficult for decisionmakers to readily
identify the full cost of the WAAS acquisition. Because satellite
communications is a key component of WAAS, we question FAA's rationale for
distinguishing these costs from WAAS program requirements in the agency's
budget.

With respect to the WAAS performance requirements, we noted that some
contract requirements have been set at higher levels than those needed to meet
FAA's operational requirements. As a result, any changes that lower system
requirements after the contract was awarded give the appearance that the
requirements are being compromised, when in reality no degradation of air
navigation service or safety is expected. For example, one requirement
establishing the level of continuity for WAAS' correction signal exceeded the
level needed to meet FAA's performance standards for Phase 1. This
requirement was later revised on the basis of the FAA Satellite Operational
Implementation Team's recommendations. FAA's lowering of the requirement
also raises the question of whether setting system requirements too
conservatively has cost implications, especially when a higher level of
requirements increases the technical difficulty and engineering effort required to
meet performance standards.

SCOPE AND METHODOLOGY

To develop information on cost changes, we reviewed the WAAS cost estimates
presented by FAA in congressional briefings and the agency's draft request for a
change in the WAAS baseline. However, we did not validate these estimates or
examine the integrity of FAA's cost-estimating process. Regarding differences
in contract requirements, we reviewed the Wilcox and Hughes contracts,
contract modifications, and summaries FAA prepared. In addition, we obtained
FAA's correspondence with Wilcox delineating the contractor's deficiencies and

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all documents supporting the agency's decision to terminate the Wilcox
contract. Regarding the implications of ending the development of WAAS at the
completion of Phase 1, we reviewed FAA's plans for decommissioning the
current ground navigation aids and the costs associated with maintaining these
systems. We also reviewed the activities and costs associated with Phases 2
and 3 of WAAS' developraent, FAA's implementation of WAAS, and FAA's plans
for using GPS to support its National Airspace System architecture and more
fuel-efficient routing. We performed our review during July 1997 in accordance
with generally accepted government auditing standards.

AGENCY COMMENTS AND OUR EVALUATION

We received oral comments on a draft of this report from officials of the
Department of Transportation and FAA, including FAA's Acting Director of the
Office of Communication, Navigation, and Surveillance Systems and the Deputy
Program Manager of the GPS Integrated Product Team. These officials
expressed general agreement with the findings of the report and provided
clarifying and technical suggestions, which we incorporated as appropriate.



We will send copies of the report to interested congressional committees, the
Secretary of Transportation, and the Administrator of FAA. We will also make
copies available to others on request.

If you or your staff have any questions or need additional information, please
call me at (202) 512-3650. Major contributors to this report were Robert Levin,
Debra Ritt, Peter Espada, Greg Carroll, and David Hooper.




Gerald L. Dillingham,Ph.]
Associate Director, Transportation Issues

Enclosure




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List of Requesters

The Honorable Richard C. Shelby
Chairman
The Honorable Frank Lautenberg
Ranking Minority Member
Subcommittee on Transportation
Committee on Appropriations
United States Senate

The Honorable Slade Gorton
Chairman
The Honorable Wendell H. Ford
Ranking Minority Member
Subcommittee on Aviation
Committee on Commerce, Science, and Transportation
United States Senate

The Honorable John J. Duncan, Jr.
Chairman
The Honorable William 0. Lipinski
Ranking Minority Member
Subcommittee on Aviation
Committee on Transportation and Infrastructure
House of Representatives




9                             GAO/RCED-97-219R FAA's Wide Area Augmentation System
ENCLOSURE I                                              ENCLOSURE I




GAD Resources, Community, and Economic
    Development Division
     FAA's Wide Area Augmentation
     of the Global Positioning
     System

     Briefing for Congressional Requesters




10                   GAO/RCED-97-219R FAA's Wide Area Augmentation System
ENCLOSURE I                                               ENCLOSURE I




GAO Questions for GAO Assessment of
    WAAS

     * What is the history of WAAS cost
       estimates and major factors in cost
       changes?
     * What is the history of WAAS program
       requirement changes and sources for
       these changes?




11        -           GAO/RCED-97-219R FAA's Wide Area Augmentation System
ENCLOSURE I                                                ENCLOSURE I




GAO Questions for GAO Assessment of
       WAAS

     * What were the factors in FAA's decision
       to terminate the Wilcox contract?
     * What would be the implications of ending
       WAAS development at the completion of
       Phase 1?




12                     GAO/RCED-97-219R FAA's Wide Area Augmentation System
ENCLOSURE I                                                                                  ENCLOSURE I




GAO WAAS Cost Estimates
    (in millions of dollars)
                                                    Dec.             May      April          May
                                                   1994          1996         1997         1997 a
        WAAS development                         $228.8        $341.2       $483.5        $483.5b
        Communications (F&E)                       84.0           N/A         59.8           9.5c
        Program support                            42.4          83.1        118.9          118.9
        NAS implementation                        152.7         143.3        155.2          155.2
        Wilcox sunk/
        termination costs                            N/A             N/A      75.0            75.0
        Gore Commission
        recommendations                             N/A           N/A         65.0              Od
        Total F&E                                  507.9         567.6       957.4           842.1
        Communications (O&M)                        96.4         129.3        65.4              Oe

        Total program                            $604.3        $696.9      $1,022.8        $842.1

     aFrom FAA's Financial Baseline Change Notice; not approved by Joint Resources Council.
     bRecent engineering changes could increase contract costs.
     c$50.3 million of F&E associated with communications, navigation, and surveillance satellite communications
      will be a separate budget line item.
     dGore Commission changes regarding the second civil frequency and dedicated satellite
      upgrades were dropped.
     eDoes not include $2 billion in O&M costs for 20-year period.




13                                              GAO/RCED-97-219R FAA's Wide Area Augmentation System
ENCLOSURE I                                                 ENCLOSURE I




GAO    WAAS Cost History


      * April 1997 estimate projects total WAAS
        costs to be over $1 billion--a growth of
        $418.5 million since the 1994 estimate.
      * May 1997 estimate reduces WAAS
         program costs to $842 million.
        * Reduction caused by removal of Gore
          Commission changes and
          communications costs.




14                     GAO/RCED-97-219R FAA's Wide Area Augmentation System
ENCLOSURE I                                              ENCLOSURE I




GAO Major Factors in Cost Changes
    (Dec. 1994 to April 1997)
     * Over $200 million increase in WAAS
       development to build in greater
       redundancy in architecture
     * $77 million increase in program support
       because of underestimated costs
     * $75 million increase from sunk costs and
       terminating Wilcox contract
     * $65 million increase to implement Gore
       Commission recommendations




15                   GAO/RCED-97-219R FAA's Wide Area Augmentation System
ENCLOSURE I                                              ENCLOSURE I




GAO Major Revisions to WAAS
    Requirements
     * Final system is expected to be
       fundamentally the same as one that was
       originally proposed.
     * Contract periods for Wilcox and Hughes
       are essentially the same, but current
       WAAS schedule extended a year largely
       because of Wilcox termination.
     * Some changes have occurred, but with
       no impact on the system's operational
       capability.




16        -          GAO/RCED-97-219R FAA's Wide Area Augmentation System
 ENCLOSURE I                                                             ENCLOSURE I




GAO:    Major Revisions to WAAS
        Requirements
       Contract           Wilcox                Changes in Hughes
       provision          contract              contract
       Uplinks and        Wilcox would          Government would provide
       communications     provide capability    capability to reduce costs
       satellites         through
                          subcontractor
       WAAS development   Two phases: Initial   Three phases: IWAAS
       phases             WAAS (IWAAS)          becomes Phase 1;
                          completed by end      operations and maintenance
                          of 1998 and           requirements, previously under
                          end-state WAAS        IWAAS, moved to newly created
                          (EWAAS)               Phase 2 to even out workload
                          completed by 2001     during 1999-2000; EWAAS
                                                becomes Phase 3




17                                GAO/RCED-97-219R FAA's Wide Area Augmentation System
 ENCLOSURE I                                                                  ENCLOSURE I




GAi     Major Revisions to WAAS
        Requirements

        Contract             Wilcox           Changes in Hughes-
        provision            contract         contract
        Phase 1 precision    Requirement      Made goal in interim contract
        approach                              because avionics might not be
        capability                            available by 1998, but later
                                              restored to requirement in final
                                              contract
        Average time to      Requirement      Made goal in Hughes interim
        repair and restart                    contract based on Wilcox
        system after                          experience, but later restored to
        outages                               requirement in final contract
        Probability for      Requirement      Lowered in Hughes interim
        WAAS signal                           contract at Satellite Operational
        continuity through                    Implementation Team
        nonprecision                          recommendation, but later
        approaches for                        restored to a requirement in final
        IWAAS/Phases 1                        contract
        and 2




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ENCLOSURE I                                                                      ENCLOSURE I




GAD Major Revisions to WAAS
    Requirements
       Contract             Wilcox              Changes in Hughes
       provision            contract            contract
       Equipment status     Requirement         Deleted--status indicators to be
       indicators at                            integrated into overall FAA
       remote WAAS                              facilities monitoring capability
       locations
       Minimum              2 satellites        1 satellite; dual coverage not
       communications                           necessary for initial system
       satellite coverage
       for IWAAS/Phase 1
       precision landings

       Full back-up         Requirement         Dropped--level of redundancy not
       system at each                           cost-effective
       WAAS location
       Atmospheric data     Requirement         Reduced amount of data collected
       collection for                           -- atmospheric model would
       signal error                             provide needed data
       determination




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ENCLOSURE I                                                                ENCLOSURE I




GAO Major Revisions to WAAS
    Requirements

       Contract                Wilcox            Changes in Hughes
       provision               contract          contract
       Electronic data transfer Requirement      Data to be transferred by disk
       to National Geodetic
       Survey
       Maximum delay for       Requirement       Deleted as a cost-cutting measure
       user receipt of WAAS
       corrections
       WAAS signal             N/A               Changed to conform with RTCA
       specifications                            recommendations
       WAAS safety             N/A               Proposed engineering changes to
       architecture                              increase safety/redundancy of
                                                 WAAS system




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ENCLOSURE I                                                 ENCLOSURE I




GAO FAA's Rationale for Wilcox Termination

       Failed to provide effective program
       management
         Did not deliver the contractor team as
         proposed:
        * staff reorganized
        . understaffed
        * staff unqualified




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 ENCLOSURE I                                                 ENCLOSURE I




G)O     FAA's Rationale for Wilcox Termination

        = Failed to award key subcontracts as
         scheduled
        * Potential cost overruns of at least $100
          million
        * Predicted schedule delay of at least 10
          months
       * Failed to complete system design
         review - 6 months overdue




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ENCLOSURE I                                                ENCLOSURE I




GAO FAA's Rationale for Wilcox Termination

       * Failed to establish program cost and
         schedule baseline
       * Failed to provide adequate
         cost/schedule reporting




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 ENCLOSURE I                                                 ENCLOSURE I




GAD Implications of Ending WAAS at the
    Completion of Phase 1
     Programmatic and financial:
    * Within the contract, approximately $75
      million of the remaining $262.6 million
      cost of Phases 2 and 3 is needed to
      support Phase 1 WAAS.
         ยท WAAS hardware must be
           upgraded/replaced as planned in
           Phase 3 ($25 million).
         * WAAS software development planned
           for Phase 3 still needed ($50 million).




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ENCLOSURE I                                                ENCLOSURE I




GAO    Implications of Ending WAAS at the
       Completion of Phase 1
         Outside of the contract:
        * FAA would still have to contract for
          additional communications satellites
          ($32 million/year).
        * FAA would still have to spend $40
          million for planned National Airspace
          System implementation (e.g.,
          instrument landing procedures) in
          Phases 2 and 3.




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ENCLOSURE I                                                ENCLOSURE I




GADO Implications of Ending WAAS at the
     Completion of Phase 1
         Potential linkages and agreements
         with other countries' wide area
         augmentations could be jeopardized.
       Operational and financial:
         *FAA would operate two navigation
          systems.
        * $4.2 billion potential O&M to maintain
           current ground-based navigation aids
           (over 20 years).




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ENCLOSURE I                                                ENCLOSURE I




GAD Implications of Ending WAAS at the
    Completion of Phase 1
        * $2 billion to maintain Phase I WAAS
          (over 20 years).
     * Loss of some user benefits related to
       avionics cost savings, fuel savings, and
       direct flight.
     * Limited increases in airspace capacity to
       meet future air traffic demands.




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ENCLOSURE I                                                   ENCLOSURE I




GAO Implications of Ending WAAS at the
    Completion of Phase 1
           * Transition to direct routing dependent
             on full WAAS capability.
           * Full safety enhancements will not be
             realized, particularly for regional
             airlines and smaller airports.




(348041)
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