FAA's Lockheed Equipment Upgrade to Cost $330 Million More as Flaws Found

A Lockheed Martin Co. air-traffic upgrade will cost $330 million more than planned and take three years longer to complete after flaws were detected during the system’s first activation in 2010, the Federal Aviation Administration’s deputy administrator said today.

Replacement of computers at 20 centers where controllers direct traffic at high altitudes, a linchpin of the agency’s $40 billion modernization effort called NextGen, was supposed to be completed in fiscal 2011 at a cost of $2.1 billion.

The agency instead will spend $2.43 billion and retire the old computer system, which has operated since 1967, in fiscal 2014, said Michael Huerta, the FAA deputy administrator, in an interview. Glitches forced the FAA to take down the new system five days after activation March 14, 2010, in Salt Lake City.

“We ran into some operational challenges,” Huerta said. Controllers worked with the agency to resolve flaws and no more delays or cost increases are expected, he said. The upgrade is working in Salt Lake City, where it was re-activated in October, and Seattle, where it has operated since November, Huerta said.

Cost growth in the program, one of the FAA’s largest acquisitions, may force the agency to use money slated for other air-traffic upgrades, Transportation Department Inspector General Calvin Scovel told lawmakers in a letter last month.

“It’s going to be difficult to manage this delay without impacting NextGen schedules,” Bill Voss, president of the nonprofit Flight Safety Foundation, and former FAA director of air traffic systems development, said in an interview.

‘Met Our Milestones’

Lockheed said in a statement e-mailed by spokeswoman Lauren Condoluci that “we met our milestones on time and on budget.” The FAA’s new plan “will ensure that the system meets the users’ expectations” and “will help minimize program risks moving forward,” the company said.

Bethesda, Maryland-based Lockheed, one of the largest FAA contractors, won the job almost a decade ago of replacing computers the FAA has called the “backbone” of the airspace system because they process radar data and send the information to air-traffic controllers’ screens. The project aims to improve safety and efficiency in the world’s busiest airspace.

Called En Route Automation Modernization, or ERAM, the upgrade was on time and on budget for years, until controllers noticed flaws when the system was activated. Flight details were sometimes paired with the wrong plane image on controllers’ screens or wouldn’t transfer when a worker handed off a flight to a colleague.

Identifying Glitches

“These glitches would have been identified at a much earlier stage” had the FAA involved controllers in the upgrade sooner, said Patricia Gilbert, executive vice president of the National Air Traffic Controllers Association. She faulted President George W. Bush’s administration, which was engaged in a contract dispute with controllers at the time ERAM was being developed, for not involving the workers.

“There are still some software concerns that need to be fixed,” Gilbert said. In Seattle last month, there was a 27- second outage, during which controllers needed to rely on their radios and memories of plane locations, she said.

Huerta said the system had to be taken down briefly in Seattle last month before being re-activated. He called it a “mistake” that controllers weren’t involved earlier and said the original roll-out schedule was “extremely aggressive” for such a complex system. He said he “absolutely” doesn’t expect delays in other modernization due to the ERAM cost increase.

Voss, whose non-profit safety group is based in Alexandria, Virginia, called the cost overrun “nearly inconsequential” when compared with the potential billions of dollars it cost the agency to work with software outdated two decades ago.

“If they can finally solve their problem with a 15 percent cost growth and a three-year schedule change, it will be a relief to everyone,” he said.

The upgrade will go in five other centers in the year that ends Sept. 30, including Albuquerque, New Mexico; Minneapolis, Houston, Chicago and Denver, Huerta said. It will go in six centers in fiscal 2012 and seven in fiscal 2013, he said.

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

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

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