Summary: Pursuant to a congressional request, GAO responded to questions concerning the Federal Aviation Administration's (FAA) Wide Area Augmentation System's (WAAS) development costs and the FAA's decision to replace the contractor, focusing on the: (1) history of WAAS cost estimates and major factors in cost changes; (2) history of WAAS program requirement changes and sources for these changes; (3) factors in FAA's decision to terminate the Wilcox contract; and (4) implications of ending WAAS' development at the completion of Phase I.
GAO noted that: (1) according to the FAA, the estimated facilities and equipment (F&E) cost of the WAAS program grew from $507.9 million in December 1994 to $957.4 million in April 1997, a cost growth of over $400 million, or almost 90 percent; (2) FAA attributes a significant portion of WAAS' cost growth to unanticipated development costs; (3) in addition to the F&E costs, FAA's December 1994 estimate included $96.4 million in operations and maintenance (O&M) costs for communications, bringing total program costs to $604.3 million; (4) although FAA's April 1997 estimate reduced O&M costs for communications to $65.4 million, because of lower expected costs for satellite communications, higher F&E estimates pushed total program costs to $1.02 billion; (5) the final system to be delivered in 2001 under the Hughes contract will be fundamentally the same system that FAA originally contracted for with Wilcox, with no degradation in air navigation service or safety; (6) however, to hold down the costs of WAAS, the FAA decided to assume responsibility for acquiring communications satellites and integrating these services with the ground component of WAAS, a role formerly assumed by Wilcox; (7) some technical requirements changed when FAA made the transition from the Wilcox to the Hughes contract; (8) however, these revisions are not expected to affect the final operational capability of WAAS; (9) FAA terminated the Wilcox contract because the contractor did not provide effective project management; (10) ending the development of WAAS after its initial operating capability is delivered at the end of Phase 1 would have programmatic and operational consequences with financial implications for FAA; (11) from a programmatic standpoint, FAA would not save the entire $262.6 million cost of Phases 2 and 3 of the WAAS contract because approximately $75 million of this amount must be spent on activities involving hardware and software to support the Phase 1 system; (12) if the development of WAAS is ended at Phase 1, FAA may jeopardize existing and future agreements with U.S. border countries to contribute ground stations that FAA would ultimately have to provide and fund; (13) ending the development of WAAS at the completion of Phase 1 would also have operational implications; (14) many of the benefits associated with the new air traffic management system may not be fully realized if WAAS does not become the sole source of navigation guidance; and (15) the safety benefits of having WAAS landing signals at airports that currently have no such capability may not be fully realized.
