GovernmentExecutive.com

January 28, 1997

THE DAILY FED

FAA Called to Account

The Federal Aviation Administration has developed unreliable cost projections and mismanaged its accounting for the modernization of the nation's air traffic control system, the General Accounting Office reported last week.

The air traffic control system modernization, which began in 1981, will cost more than $34 billion through 2003. About $21 billion of that is targeted for information systems restructuring. Congress will have appropriated almost $15 billion of the information systems funds by the end of fiscal 1997.

The modernization program has run into major delays and cost overruns. A central project in the modernization, the Advanced Automation System, was restructured in 1994 after its costs skyrocketed from $2.5 billion to $7.6 billion.

GAO found that because FAA does not have a standard cost estimate process, various programs develop their own methods, creating an inconsistent and haphazard approach to projecting costs. FAA also does not have a uniform integrated accounting system. Different projects have different financial management procedures, and none monitor total costs, GAO reported.

FAA has established a new accounting division to address the problems.

GAO suggested that the Secretary of Transportation direct the FAA administrator "to immediately begin disclosing the inherent uncertainty and range of imprecision in all [air traffic control] projects' official cost estimates presented to executive agencies or the Congress."

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