Are FAA Expectations For Contractors Unrealistic?

According to a recent report from Transportation Department auditors, any anticipated savings from outsourcing flight service stations could be diminished by the short timeline given to Lockheed Martin to make the massive transition.

Last year, the Transportation Inspector General's office decided to perform the audit based on the sheer magnitude of the conversion process, according to online watchdog organization GovernmentExecutive.com

The audit reviewers warn an "extremely aggressive consolidation schedule" requires Lockheed Martin to consolidate the Federal Aviation Administration's flight service stations -- all 58 of them -- into three hub stations and 16 refurbished locations. Then complete, test and implement a new operating system to link the new sites.

And, to do it all within six months.

"We found that FAA has implemented effective controls over the initial transition of flight service stations to contract operations," the auditors wrote. "It is uncertain, however, if the controls put in place by FAA will be sufficient to ensure that anticipated savings are achieved during the next and most critical phase of the transition."

The FAA has projected FSS outsourcing will translate into a savings of $2.2 billion over 10 years.  

As ANN reported, Lockheed Martin began this project when it was awarded the $1.7 billion public-private outsourcing contract February 1, 2005. The company, the FAA, and the contract has been under fire pretty much ever since -- with accusations of deteriorating services, delays and contractual problems. The FAA recently promised to take a closer look at user complaints.

According to the report, Lockheed has already requested $177 million in contract adjustments; $147 million of which is linked to what the company contends were problems with the labor rates the FAA provided potential bidders. Lockheed says it based its bid on these rates.

FAA spokesman Paul Takemoto said he could not comment on any contract adjustments. But of the current status of the FSS transition, he said, "The consolidation is pretty much on schedule, [though] some facilities are delayed."

One of the delays involves the facilities' new operating system which has already seen a 10-month delay in its development phase. FAA officials have said there could possibly be another delay, as long as six-weeks that could cause a domino effect of further delays.

Auditors said any delay could incur such additional costs as building lease extensions. The FAA would likely take care of some of those additional costs, although the reason for the delay would be taken in to consideration. It was not estimated how much any of this would eat into the projected savings.

The auditors offered several recommendations to the FAA. One said the agency should make sure Lockheed has contingency plans in place in case of transition delays. Another suggested an independent means of monitoring customer service be established. It also wants the FAA to "clarify its savings estimates" as initial reports had that number at $1.7 billion instead of the current $2.2 billion.

The FAA agreed with the auditors' recommendations except for one; that it "needs to develop an oversight plan that monitors the contractor's staffing and plans for ensuring that specialists are properly trained and certified in areas that meet user demand."

The agency says programs already in place are sufficient enough to supervise service levels.

But, the auditors found, "Staffing levels at outsourced facilities were lower than what the contractor anticipated..."

Lockheed attributes this discrepancy to attrition that occurred faster than they expected.

The FSS transition, according to the current timeline, is scheduled for completion at the end of July.

FMI: www.lmafsshr.com, www.faa.gov, www.lockheedmartin.com, Read the Audit Report (.pdf)