Bloomberg News

Long-Delayed Air-Traffic Upgrade Now on Track, FAA Chief Says

August 31, 2012

Lockheed Air-Traffic Upgrade Back on Track, U.S. FAA Chief Says

An air traffic controllers at the Denver International Airport. Photographer: John Moore/Getty Images

A $2.4 billion replacement of U.S. air-traffic control computers that’s been plagued by delays and cost overruns will be completed within its revised budget and 2014 deadline, said Michael Huerta, acting chief of the Federal Aviation Administration.

The project called En Route Automation Modernization, or ERAM, is supposed to almost double the number of planes air- traffic control centers can track simultaneously. It forms the heart of NextGen, the long-term, $40 billion effort to transform the U.S. air-traffic system to one based on satellite technology from one relying on radar.

Huerta said the project, led by Bethesda, Maryland-based Lockheed Martin Corp. (LMT:US), has overcome early flaws that caused a three-year delay and a cost increase of more than $300 million. “I feel very good about where we are,” he said in an interview.

Even after Huerta’s assessment, Calvin Scovel, the Transportation Department’s inspector general, is sticking with his view expressed last October that there may be more cost overruns and delays, his spokesman, David Wonnenberg, said in an interview.

Overruns may reach as high as $500 million, or $170 million more than the FAA previously announced, and the completion date may slip to 2016, two years later than the FAA’s estimate, Scovel told a House committee at the time.

Tracking Flights

ERAM replaces a 45-year-old computer system at the 20 agency centers that direct jetliners in the cruise, or high altitude, portion of flights. The new system, initially using data from radars, will allow controllers to track 1,900 aircraft at one time, up from 1,100, and will process data from 64 radar sites, up from 24 now.

It’s operating in a quarter of the centers -- Salt Lake City, Seattle, Denver, Minneapolis and Albuquerque, New Mexico, according to the FAA. In Salt Lake City and Seattle, the FAA has disconnected the systems that ERAM replaced.

ERAM is installed and being tested in Chicago, Oakland, California; Los Angeles and Houston, with New York, Kansas City and Boston due to be added by the end of this year, according to the agency’s schedule.

The remaining eight centers in Indianapolis, Washington, Cleveland, Atlanta, Miami, Memphis, Tennessee; Fort Worth, Texas; and Jacksonville, Florida, are due to begin operations by the end of 2013. Final, continuous operations are expected at all 20 centers by August 2014, according to the FAA.

NextGen’s Heart

The agency has called ERAM the heart of NextGen because so many other parts of the project will run off it. Those include ADS-B, a satellite-based program allowing more precise tracking of aircraft in the sky; DataComm, which will enable controllers to send cockpit commands digitally; and System Wide Information Management, which will give the FAA and airlines a common platform for analyzing weather disruptions.

ERAM “really is fundamental for working with the whole suite of NextGen programs,” Huerta said.

The FAA and Lockheed, which won the ERAM contract in 2002, were supposed to finish the project in the first quarter of fiscal 2011 at a cost of $2.1 billion.

Huerta, in a January 2011 interview, said the project would be $330 million over budget and three years behind schedule. The project’s turnaround since then is because of FAA management switches, revisions in the contract with Lockheed, and improvement in the agency’s relationship with its controllers, who received a new contract under President Barack Obama, he said.

System Breakdowns

The FAA was forced to take down the system five days after turning it on at its first site, Salt Lake City, in 2010. Flight information sometimes failed to accompany aircraft targets displayed on radar scopes or would be paired with the wrong planes.

Later in 2010, ERAM had to be taken down after being activated in Seattle. Troubles there included a 27-second outage during which controllers had to rely on radios and memories for plane locations.

The software malfunctions resulted from weaknesses in the contract and the agency’s program management, Scovel told the House aviation subcommittee in October. The FAA and Lockheed underestimated the project’s complexity and ignored early warnings of trouble, and the agency didn’t adequately test the system before deployment, Scovel said.

Flaws weren’t detected before the technology reached the field because of the “lost years” of 2006 to 2009 when controllers weren’t participating in ERAM’s development, said Jim Ullmann, regional vice president for the National Air Traffic Controllers Association union. They weren’t participating because air-traffic controllers were battling FAA leaders over contract issues, he said.

Controller Collaboration

“We just weren’t even really talking to the agency, and the agency didn’t care what anyone had to say,” said Ullman, who works in the air route center in Auburn, Washington, outside Seattle.

Controllers settled the dispute, which began in the George W. Bush administration, with a new contract under Obama that began Oct. 1, 2009.

Controllers and the FAA now have an “unheard of” level of collaboration that has eased the transition of the technology into centers, Ullmann said.

In October, the FAA appointed a new contracting officer to oversee ERAM and then altered the agreement with Lockheed to tie payments to the system working properly, not just to being delivered. Lockheed must reach specified operating levels 30 and 60 days after a system is in place at centers. Previous benchmarks were tied to stages before a system went into operation, such as software design and testing.

Lockheed’s Challenge

Lockheed received about $150 million of incentive payments under the previous agreement, according to Scovel.

The company now doesn’t get incentive payments unless ERAM meets individual performance targets, said Fran Hill, the company’s program director. Even if missing a target isn’t Lockheed’s fault, the company won’t get paid, she said.

At stake are incentive fees that run as high as “upper single digits” percentages of the regular contract payments, Hill said. “It really is going to be a challenge to make the fees that we’ve made to date,” she said.

To contact the reporter on this story: John Hughes in Washington at jhughes5@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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