DOT IG Says FAA "Faces Challenges" on NextGen Development

Lou E. Dixon, the U.S. Department of Transportation's assistant inspector general for aviation and special program audits, wrote in a recent report to Congress that the FAA "faces challenges" in developing NextGen, just as it does in completing existing modernization projects while maintaining existing facilities.

To help meet these challenges, Ms. Dixon recommended that the agency develop written criteria for selecting project milestones, and metrics for measuring NextGen progress; complete a gap analysis of the current NAS and planned NextGen enterprise architectures; and establish the priorities needed for an interim architecture.

The IG acknowledged that the FAA has done a better job of managing cost growth and schedule delays with its major acquisitions since it last reported - because it has taken a more incremental approach to investment decisions.  However, some key projects that will serve as platforms for NextGen are still at risk of cost growth, schedule slips, or diminishing benefits, the IG's report warned.  It also found that FAA's metrics for measuring progress with acquisitions have limitations.

Costs remain uncertain for NextGen, and the FAA is still evaluating the best ways to obtain many of NextGen's capabilities. The report notes that over 30 existing capital projects will form platforms for NextGen, and the FAA needs to make several decisions between now and 2009 to determine how to achieve NextGen's capacity-enhancing potential.

Since 2005, the FAA's capital account has remained steady at $2.5 billion annually and has mainly focused on sustaining the existing system.  As its capital account has stayed relatively flat, the agency has deferred, cancelled, or postponed decisions on new projects.

The overarching issue for the capital account now involves developing NextGen.  The FAA's plans call for the capital account to grow to an average of $3 billion per year, representing $15.4 billion for FY 2008 through 2012. A large portion of the increase is to fund NextGen projects, slated to cost $4.6 billion for that period.

The FAA spends about $400 million annually to maintain its current aging facilities, or about 15 percent of its capital budget. As of last year, FAA's en route operations reported a $120 million backlog in facility sustainment requirements, and FAA's terminal operations reported a $124 million backlog.

While the agency is taking a more incremental approach with its acquisitions, several major programs are facing significant cost and schedule risks or diminishing benefits, the report says. While the IG isn't seeing the significant cost growth and schedule slips that have occurred in the past, since inception, six of the 18 programs have experienced cost growth of close to $4.7 billion and schedule delays of one to 12 years.

One reason for this overall improvement is that FAA's use of "rebaselining" (i.e., making formal cost or schedule adjustments) or approving segments of major efforts, which reduces the number of systems procured or postponing investment decisions on remaining portions of projects.

As a result, straightforward comparisons of many projects' original and revised cost and schedule baselines no longer represent all requirements. While this approach may reduce risk in the near term, it has left several programs with no clear end-state and less visibility into how much programs will cost.

The entire IG report, "Air Traffic Control Modernization," can be found on the DOT's Office of Inspector General Web site.  04-21-2008.

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