FAA Encountering Problems in Acquiring Major Automated Systems

Published by the Government Accountability Office on 1990-04-26.

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

                         United States General Accounting        Office

For Release              FAA Encountering         Problems      in
on Delivery              Acquiring    Major      Automated      Systems
Expected     at
IO:00    a.m. EDT
April    26, 1990

                          Statement     of JayEtta   Hecker,  Director,
                          Resources,     Community,   and Economic      Development
                          Information      Systems,
                          Information     Management   and Technology       Division

                          Before    the Subcommittee          on Transportation
                          and Related      Agencies,
                          Committee      on Appropriations,
                          United    States    Senate

tiAIJ/mC      - 90 - Y
                                                                                  GAO Form 160 (12/87)
Mr.    Chairman. and Members of the Subcommittee:

We are pleased            to be here to discuss                       the Federal            Aviation
Administration's               (FAA) efforts               to modernize               and upgrade        its
automated       systems.           During          the past          year      our reviews          of two air
traffic       control      modernization              projects              and a planned           general-
purpose       procurement          have uncovered                  consistent,            fundamental
weaknesses        in FAA's acquisition                      of major           automated         systems.           These
weaknesses        have contributed                  to further              delays       in delivering
important       components          for      air     traffic              control      modernization,
increased       risk      that     existing          air        traffic        control        systems        will     be
stressed       beyond their          capacities,                 and inadequately                justified           and
costly      procurements.

Mode Select,            or Mode S, is a project                       where lack             of adequate
management oversight                and action              has resulted               in the delayed
delivery       of important          air      traffic            control            system    components.             Mode
S is an air          traffic       control          surveillance               and communication                system
that      is being       developed         to provide              more accurate              aircraft         location
information          by replacing            some existing                  radars,       and to allow
controllers          and pilots           to exchange              data,       such as weather
information.             Fifteen     years          after        initiating            the Mode S concept,
FAA awarded a production                     contract            in 1984 to a Westinghouse                          and
UNISYS joint            venture     to buy 137 Mode S systems.

Over 5 years           after      FAA awarded the contract                          for         the    initial          137
systems,       the agency has spent                     about        $145 million                of the          $271-
million       contract         ceiling          price      without         receiving             the    first          system.
This      occurred       because         FAA used a high-risk                   acquisition                 strategy          and
did    not remedy contract                     problems         when they       arose.                In acquiring
Mode S, FAA did not adequately                             develop       or test               the system before
awarding       the production                  contract,         which      contributed                to later
technical       problems.

Further,       although         officials           knew of technical                  problems             as early          as
February       1987,      FAA did         not take          needed action              to correct                 them until
June 1989,        when it        warned the contractor                       that         if     contract
deficiencies           were not resolved,                   the contract             might            be terminated.
From June 1989 to April                        1990,    FAA and the contractor                          were unable              to
agree      on an approach            to overcome the contract                          problems.                  In early
1990,      as FAA was attempting                    to negotiate             contract             changes,             an
additional        l-year        delay          occurred         and the contracting                     officer
stopped       paying      the contractor                until      progress          was made.

As a result          of these        continuing             problems,          our draft               Mode S report,
sent      to the Secretary               of Transportation                  on April             11, 1990,
recommended that               the Secretary               independently             evaluate             the economic,
operational,           and technical               risks        involved       in completing                     the
contract,       considering              all     alternatives            available               to the government
--including          terminating               the contract           in whole         or in part.                     However,
on April       17, 1990,          FAA and the contractor                      agreed             to extend             the

delivery        schedule         and allow             the deployment              of less         capable,           interim
systemsbefore               the delivery               of fully         capable       ones.          Delivery          of
the first          fully      capable          system      is now scheduled                  for     April         1993,     5
years      later      than     originally              planned.          Moreover,           FAA resumed paying
the contractor.                This          action     negates         the benefit           of evaluating
contract        alternatives                 at this      time,        but FAA has agreed                   to evaluate
the technical              and operational                risks        involved       in completing                 the
program.           Currently,           it     remains       uncertain         whether             FAA's approach                to
allow      interim         deployments            is the most effective                   way to deal                with
the problems.

Even though           it    had not yet               received         the first       system,          FAA decided
in October           1988 to spend over a billion                           dollars          to buy 259 more,
bringing        the total         estimated             cost       of all      396 systems            to $1.7
billion.           This      decision          was unjustified.                   In making          this      decision,
FAA did not properly                    analyze         requirements,              did-not          adequately
consider        alternatives,                 and did      not evaluate             benefits          and costs.
Our draft          report       therefore             recommended that              the Secretary                  direct
the FAA Administrator                        to cancel         plans     to acquire           additional              Mode S
systems,        and to perform                 a thorough           analysis        of requirements,
alternatives,              benefits,           and costs.              Agency officials               have agreed                to
conduct       a complete          analysis             before       awarding        a contract               for    these
additional           systems.           However,          officials         stated      that         they      do not
intend       to cancel          existing          plans        to acquire          additional           Mode S
systems.           We continue               to believe         that     the Secretary               should         direct
the FAA Administrator                        to rescind         the requirement               for     additional

Mode S systems              and to perform              a thorough            analysis       of requirements,
alternatives,              benefits,       and costs.

The Advanced Automation                    System,           or AAS, is yet              another      project
where FAA is encountering                       delays        in the delivery              of critical
components          for     the air       traffic        control          modernization            effort.          These
delays      have the potential                  for     affecting           FAA's ability           to handle
safely      the predicted              increases         in air          traffic    into      the next

AAS is scheduled                   to replace        aging      air      traffic    control         computer
systems      with         new hardware,             software,          and controller          workstations.
Improvements              are expected          to result             primarily     from       (1) using
modern equipment                   and (2) developing                 new software         functions
intended        to automate            some controller                 functions         and allow       more
aircraft        to fly        user-preferred,                fuel-efficient              routes.        FAA awarded
competitive          contracts          to design            AAS to International                  Business
Machines        (IBM) Corporation                   and Hughes Aircraft                  Company in 1984.
During      this     design          competition         phase,         new requirements              were added,
contract        costs       doubled,       and the schedule                   was delayed          a year.          In
1988,      FAA awarded a contract                     to IBM to complete                  the design          and
production          of AAS.:          The cost        of AA.9 is estimated                 at over       $5
billion,        making        it     the most expensive                 program     in the National
Airspace        System Plan.
Less than          a year        after       the contractor                    began work on the contract,
FAA and IBM jointly                      identified            a 13-month               delay       in the.scheduled
delivery       of the           first      major        segment of three                     project       increments,
called      the      Initial            Sector     Suite           System.             The primary         causes     of this
delay      were an overly                 ambitious            software               development        schedule         and
FAA's and the contractor's                            inability            to resolve               key requirements
issues,       such as processing                      flight           plan      data       and displaying
aeronautical            charts.             The eventual                delay          in ISSS will            probably        be
greater       than      announced            because           some requirements                      issues     are still
unresolved,           and FAA has identified                            other          new requirements.

As a consequence                 of the delay                in the           first       segment,       the potential
exists      that       later       phases         of AAS to upgrade                       terminal       automation
systems       will      also       be delayed.                 This       increases               the likelihood          that
FAA will       be'forced                to operate           its       current           aging      systems      through         the
1990s and further                  delay         benefits.              As we reported                 to you last         year,
Mr. Chairman,             many of these                 current           systems           have experienced
capacity        shortfalls.1                    Indeed,        almost          70 percent             of the large,            busy
terminal        radar          approach          control           facilities,              known as TRACONs,
reported       to us that                they     had experienced                      aircraft        information
disappearing            from controllers'                      screens,               flickering        displays,         or
delayed       computer           responses            to controllers'                     attempts       to update         or
request       data.            These overload               problems             threaten           the ability       of
controllers           to maintain                safe      separation                 of aircraft..

lAir     Traffic        Control:            Comauter Caoacitv Shortfalls    Mav
ImDair      Flisht       Safetv           (GAO/IMTEC-89-63,  July 6, 1989).
To address       this         dilemma,        last         year we recommended that                      the
Secretary       of Transportation                     direct         FAA to institute                a computer
capacity       and performance                management program                     to monitor          work loads
and system utilization                      in all          facilities,            and investigate
alternatives          for       meeting       the larger               TFiACONs' air         traffic         control
requirements          for        at least          the next           10 years.         Since        our report,        FAA
has initiated            some steps           to remedy immediate                      capacity         deficiencies.

However,       regarding            the need to explore                     alternatives,              the
Department       of Transportation                        believed         that     FAA had already
developed       an appropriate                    interim        solution          in 1987 to meet TRACON
requirements            for      the next          10 years.              This     interim      solution        is not
encouraging.             It      calls      for     increasing             the capacity           of the present
systems      in larger            TRACONs by pursuing                      sole-source          contracts        to
expand current                system configurations                       to their      maximum design
limits.        This      expansion           will         require         FAA to buy 1960s-vintage
computers       similar            to existing              processors.             These antiquated
processors       have less               processing            capability           than     a desktop         computer
that      can be purchased                in a local             store.

Given the potential                     further       delay          in AAS and the clear                inadequacies
of the existing                computer           systems           in large       TRACONs, FAA is assuming
the risk       that      its       systems         will       not be able           to handle          the
increasing        air         traffic       of the 1990s.                  To prevent         this      potential
threat      to air       traffic          safety          and reduce             the possible          need to take

drastic          actions          in the          future,         such as limiting               the number of
aircraft,          we reiterate                  our recommendation                   that      FAA immediately
identify          other         alternatives                for    meeting         the larger          TRACONs' air
traffic          control          requirements               through        the 1990s.

FAA's Computer                  Resources           Nucleus            (CORN) project            is another            example
of an inadequately                    justified              general-purpose                 procurement.           With
CORN, FAA intends                    to have a contractor                         provide       and operate            computer
facilities              for     the agency's                general-purpose                data-processing
functions           such as payroll,                    personnel,               and aviation          safety
information              systems           for     the next            10 years.           The total       estimated
cost       for    the         10 years           is about         $1.5 billion,              a tenfold         increase
since        the project             was first              proposed        in 1986.            FAA anticipates               that
the CORN contract                    will        be awarded within                  the next         few months.

While        FAA'sconcept                to contract               out its         general-purpose              functions
may be acceptable,                     the CORN procurement                        is not adequately               justified
and therefore,                  we are recommending                       in a draft          report     that      a
contract          not be awarded.

FAA has identified                     a number of reasons                        to justify         procuring          CORN.
One is insufficient                      computer            capacity            causing      poor response             times
in the current                  system.            However,            project      officials          could     not
support          this         assertion,           primarily            because       FAA does not perform
needed capacity                   management and planning                          that      would     provide         data     on
computer          capacity           and explain              why users            are apparently              experiencing

slow response               times.          Our own analysis                 of the limited             data
-available          does not show evidence                         of insufficient            computer          capacity
causing       poor         response         times.           Other      problems       may be the source                 of
the perceived               poor response                 times,       such as inefficient               software            or
communications,                 which       are not subject                 to change under             CORN. This
means that            after         investing         hundreds           of millions         of dollars          in
procuring           more computer                  capacity        through     CORN, FAA may still                    end up
with      poor response                times.

 A second reason                for     procuring             CORN is FAA's claim               that      its    general-
 purpose      data-processing                      needs will          increase       by 30 percent             each year
 for     10 years,          ultimately              requiring          a system about           1300 percent
 larger      than      the current                 one.       This      is equivalent          to saying         that         in
 10 years      a system will                      be needed that            can produce         about      15 million
 printed      pages per day,                      365 days per year.                 This    projection          is based
 on sparse          data with            little        identification             of what dramatic               changes
 will      occur      in FAA's missions                    to warrant         this     steep     growth         in    later

 Other      major      unresolved                 problems      and uncertainties               could      increase
 the cost          of CORN. In particular,                             FAA's method for          validating
 bidders'          proposed           solutions           is deficient         because         information            that
 FAA provided              to vendors              to aid them in developing                    their      proposals
 was incomplete.                    Further,         the extremely            small         sample work load             that
 FAA developed                for     validating           proposals         is unrepresentative                 of the
 agency's          total       work load.              This        flawed    methodology         will      not provide

adequate       data    for     accurately           evaluating           vendors'        proposals       and
their      proposed      charges        for      data-processing             services.            This
deficiency       could        have cost          ramifications             throughout        the life       of the

FAA's cost       estimate        of $74.5 million                  for     converting        current
applications          to CORN is unreliable.                       FAA estimates            the cost      to
convert      the 15 million              lines      of existing            software       at about       $5 to $6
per line       of code,        while      industry            estimates      are usually           $15 to $20
per line       of code or higher.                   Also,       since      generating        the cost
estimate,       FAA has increased                 the amount of conversion                    work to be
performed       by the contractor                 and has doubled               the amount of time
needed to do this              without        correspondingly               increasing        the cost
estimate.        The estimate             is based on unvalidated                       assumptions       about
the availability              of FAA staff              to assist         the contractor           in the

In addition,          CORN will         not improve             the quality            of information.
Under CORN, the contractor                       will     be required           only     to move current
applications          and data bases to the new system.                                 The contractor         will
not be required              to enhance the applications,                        improve      their
performance,          or eliminate            existing          deficiencies.             Therefore,
existing       problems        with     FAA's applications                  and data        bases would
simply      be transferred             to CORN, at considerable                        expense.

In summary,            while      the COHN approach                        may have merit,              FAA's
justification                and planning             for     this         effort         has been inadeguate.
Before       it     spends hundreds                 of millions                  of dollars          to move to a new
system       that      neither        guarantees              a remedy for                 existing       deficiencies
nor improves                current        information,              FAA should              first     identify          the
causes       of perceived             problems              with     current             system      performance.

Overall,           Mr. Chairman,             FAA's acquisition                          management suffers               from
fundamental            weaknesses            that      have resulted                     in continued          delays        in
the development                 and delivery                of important                 elements      of air      traffic
control           modernization,             increased              risk         that     some existing           air
traffic           control       systems        will         be stressed                 beyond their          capacities,
and expensive                and inadequately                  justified                procurements.
Implementation                 of the National                Airspace              System Plan         is a formidable
task.        To develop           and acquire                so many large,                  complex      systems         would
challenge           the abilities              of any organization.                           To do the best              job
possible,           FAA must elevate                  the importance                     of acquisition           management
within       the agency.              It     must improve                  its      acquisition         management and
ensure       that      acquisition             has the visibility                         and involvement               of top
management within                 the organization.                         We understand              that     FAA has
recently           instituted         a reorganization                      to give         acquisition           increased
emphasis.             This      is a positive                beginning.                  However,      reorganization
must be accompanied                   by adequate                  program          management policies                  and
practices.             Until      FAA gets            its     acquisition                 house in order           and
breaks       the trend           of unjustified,                    costly,             and delayed       procurements,

the American         public    cannot     be assured        that     its     money is being    well
spent     and that      its   continued     air    safety      is ensured.

Mr. Chairman,         this    concludes     my prepared            remarks.      I will   be
pleased     to answer any questions               you or other             members of the
Subcommittee         may have at this        time.