IG warns the FAA to fix telecom transition

An inspector general audit released today asks the Federal Aviation Administration to gain control of a faltering telecommunications reconstruction project. The audit recommends that the FAA develop a new schedule and decide whether the program should be altered or terminated.

The project, known as the FAA Telecommunications Infrastructure program, is to replace existing systems that let air traffic controllers communicate with pilots. FTI was supposed to reduce operating costs by consolidating multiple telecom networks into one operated by Harris. The FAA originally planned to complete the consolidation by December 2007.

But the FAA's expected $102 million in cost savings for fiscal 2006 will not materialize unless FAA managers accelerate their transition to the new system, the IG audit report states.

Theodore Alves, Transportation Department's principal assistant IG for auditing and evaluation, issued the final report after a lengthy investigation. His report states that FTI is a high-risk program that will likely miss its deadline and fail to deliver expected benefits.

The FAA awarded the FTI contract to Harris in July 2002. The agency is still paying MCI, now known as Verizon Business, as much as $604 million for use of an older system while Harris builds and installs the new one.

Alves questioned whether the FTI investment is still cost effective.

"Given that the FTI transition is experiencing schedule delays and the benefits are eroding, it is important for FAA to develop and validate FTI cost, schedule and benefit information that reflects the current status of the program,” Alves wrote. “Should FAA continue to experience delays transitioning to FTI, the agency needs to develop a contingency plan that includes a determination of the cost of maintaining both legacy and FTI networks."

Citing a Mitre analysis of the FTI program, Alves wrote that if the FAA does not finish the FTI program by December 2007, each delayed year could increase the FAA's telecom costs $100 million.

Because the FAA is paying Harris for incremental installations of hardware and not for successful service activation, the program has not yielded the benefits promised, according to the report. In addition, it states, terms of the original contract did not assign Harris specific due dates.

"To achieve the December 2007 completion date for the FTI transition, FAA must accelerate FTI service cutover and legacy circuit disconnect rates by almost 10-fold in [fiscal] 2006, as compared to actual disconnects” through fiscal 2005, Alves wrote.

In addition, IG officials want the FAA to change the existing contract to require Harris to provide monthly earned value management reports to the FAA for the fixed-price elements of the contract. At present, the contract does not require data for fixed-price components. Those represent more than 90 percent of the contract’s value.

Earned value management data would have helped the FAA monitor cost overruns, the report states.

Harris is not the only stakeholder that the IG wants the FAA to watch closer.

The FTI program office needs to better coordinate with its field offices and with Verizon Business to ensure that service disruptions do not occur when services move to FTI, the report states.

To account for delays so far, the FAA will have to exercise a one-year option in its existing contract with Verizon Business and may need to retain Verizon's services longer than that extra year. The IG wrote that the FAA will not be able to estimate how long it will need Verizon Business’ services until it devises a new schedule.

IG officials recommended that the FAA develop a realistic master schedule and an effective FTI transition plan that requires the FTI program office to coordinate with Harris, Verizon Business and FAA regional offices to manage and execute the FTI transition.

In responding to a draft of the report, FAA officials said they plan to negotiate with Verizon Business before March 2007 to extend the contract through March 2008. The extension will include options for periods beyond that date to ensure Verizon's services are available no matter how long the transition takes.

The audit report states that the FAA has not forced Verizon Business to fully comply with the existing contract. In the original contract, the FAA foresaw the need for Verizon to cooperate with the agency and Harris to ensure a clean transition. Therefore, the contract required Verizon to deliver a transition plan to the FAA. But the agency never asked for or received the transition plan from Verizon, according to the IG report.