Going Direct: Case Study: When Private Companies Were Given A Big FAA Job

Think privatization is the way to go for more efficient operation? Consider this case from just 20 years ago.

One of the major arguments for President Trump’s proposed ATC Modernization plan is that private companies are inherently more efficient than governmental agencies. The example for this case is the FAA’s slow moving Nex-Gen airspace modernization program. Critics claim with some justification that the program is way behind schedule and over budget. But the argument then that making air traffic control operations a private venture doesn’t seem to jibe with the FAA’s recent history on this subject. Indeed, instead of private industry saving the day, in several noteworthy cases, the FAA was forced to cancel programs for non-performance and take charge of getting the program back on track.

No example of this is perhaps more dramatic than that of the development of WAAS. Today, we take for granted the wide area augmentation system, which is the technological backbone of the augmented GPS system that is the foundation for many elements of Nex-Gen, from RNAV approaches to RNP to ADS-B and runway safety technologies. But the success of WAAS was far from a given.

The original 1995 contract was issued to Wilcox Electric, which performed so badly the FAA had to cancel its $1.8 billion contract for cause within a year of Wilcox getting to work on it. The next player, Hughes Electronics, was under fire for years after it assumed ownership of the program—Hughes was later acquired by Raytheon Systems. Under its auspices, the program was late by several years and went billions over budget. The FAA’s original cost estimate for WAAS was less than a billion dollars. Within five years, in 2000, Congress was investigating program delays and cost overruns. At that point, the program under Raytheon was 15 months behind schedule and around $4 billion over budget.

Originally scheduled for deployment in 1999, WAAS finally launched for public use in mid-2003, four years late and billions over budget.

The FAA has traditionally blamed at least part of its program completion and cost overrun problems on its revolving funding mechanism, which is tied to annual budgetary battles, so while Congress is fond of slamming the FAA for its failures, many of them, the FAA has long pointed out, are at least partially the fault of Congress itself.

So the administration’s claims that a private sector firm will be able to “more quickly and securely implement Next Generation (NextGen) technology” flies in the face of the story of the private industry’s poor record of performance in the development of WAAS.

But perhaps of even greater concern to general aviation advocates is the administration’s claim that a privatized ATC will be able to “expand the availability of the National Airspace System (NAS) for all users.”

There is no record of private firms overseeing ATC operations in the United States, but if the record of countries like Australia, Canada and many in the EU is any indication, private industry’s performance on this count could be even tougher to achieve.

If you want more commentary on all things aviation, go to our Going Direct blog archive.

11 thoughts on “Going Direct: Case Study: When Private Companies Were Given A Big FAA Job

  1. This is what happens when Government Employees keep clamouring for More Pay- Less Work. I have been trying, for quiet some time, to tell folks, “Do your jobs. Do not make waves! Now, you may have ruined the prospects for your sons and daughters to get these Not highly paid but reasonably paid, secure government jobs!!!
    I would like to sympathize with you. But cannot. You have only yourselves to blame.
    Under Private management, Tardiness, sleeping on the job etc will Never be Tolerated!!!!!!!!

  2. George,
    I’ll bet you haven’t spent any or much time in an ATC. ATCs are understaffed, and, yes, underpaid, and have one of the highest stress level jobs over all professions.
    Making waves can save lives. Under private management, contrary to your opinion, there will be more waste, less access to ATC services (unless, of course, you are one of those that can afford inflated user fees), not to mention that privatization will lead to deregulation… and a significant increase in aircraft accidents.
    Oh, and if everyone would pay their fair share of taxes hiring more staff, paying a fair wage, and open skies would benefit everyone without burdening anyone.

  3. Your info is discouraging but stale, and only speaks to alleged incompetence of private companies (countered by relative success in out-sourcing FSS to LMFS AKA Leidos – agreed not technically demanding, but who’s counting accurate relevancy of examples in this debate).

    The elephant in the room is “Will privatization bring GA User fees?” Unfortunately neither you nor any other writer has recently provided DETAILED info on the exorbitant GA User fees introduced by privatized ATC organizations.

    I would MUCH prefer to read DETAILED examples of such User fees imposed by other countries that did what Trump is proposing to do. I know such examples exist (e.g. GA fees levied by UK CAA) but no-one provides chapter-and-verse to counter the polly-annas. AOPA has equivalent organizations in EACH country so affected. Why can’t AOPA use these contacts to gather this info and publish HARD FACTS on User fees suffered by GA in affected countries?

  4. You are preaching to the choir, but unfortunately the choir and the congregation are far too small to influence this national decision. It is clear that facts on their own merits will never influence this administration. GA must fight this fight on the political battlefield armed with lobbyists and smart leadership. Moaning amongst ourselves will have no effect.

  5. If the Govt is going to Outsource ATC, it should do so like the break up of Ma Bell. Instead of having a single Public Corporation running ATC, it should compete each Center and not permit any one organization from having one third of the contracts. That way you generate a competitive environment which will truly reduce costs and strive for innovations to improve profit.
    A single large public corporation is the worst of both worlds.

  6. Mike Allen’s comment regarding actual fee history is valid. Also the smallness of GA in the big picture is a valid point. But we do have friends in Congress and they are the ones who need the detailed facts of private systems work.
    I suspect that many in the airlines, not necessarily pilots, but the “bean counters” and others who are far removed from actual use of airspace really do not like GA and would be happy to have it shut down completely. These kinds of people, who can’t see the whole big picture are just promoting what’s best for their little niche, are the enemies.
    Also GA is a very practical demonstration of unique US personal freedoms that most of the world knows nothing about. But even here in the US there are many who do not like or want to trust anybody with freedom and individual responsibilities in any area of life.
    Privatizing the FAA in the US as the solution to current Air Traffic’s perceived problems has little chance of success and a very high prospect for disaster!

  7. I am a Canadian pilot, and have been listening to the rhetoric about FAA ATC privatization. We have NavCanada running Canada’s ATC and parts of Oceanic Control. As a Private Pilot who owns a C182 I pay $68 per YEAR for unlimited use of NavCanada’s services; Master Flight plans, all my personal and aircraft information is on file, I can have flight plan (VFR) in minutes; almost total coverage for FISE (Flight Information Services Enroute) on route weather, pireps, hazardous weather broadcasts, open and close flight plans, REGIONAL FSS with local knowledge; extensive online services, Metars, TAF, radar, satellite. NavCanada is also the lead agency for satellite based ADS-B that will have world wide coverage, better that ground based and less expensive.
    If FAA privatizes ATC, you should be suggesting or demanding they contract with NavCanada or follow their lead.

  8. Ken Johnson: How much would you have to pay to NavCanada per flight-plan filed, for IFR flight-plans? And separately for each instrument approach?
    In UK CAA insists that pilots pay UKP17 (approx US$22) per instrument approach (a figure personally validated 3 years ago – has probably increased since then) – with either billing details already on-file or provided to ATC before the approach starts (i.e. in practice, before taking-off).
    Those are the kind of QUANTIFIED details of financial levies and administrative burdens I wish to see publicized to the GA community, to wake up all the sleepy-heads who will otherwise respond with the same “resigned to inevitability” attitude as Mark Smith. Incidentally, even the FAA encourages the pilot community to recognize that “resigned to inevitability” is a hazardous attitude!

  9. The NavCanada annual fee is based upon gross weight of the a/c. The fee for a/c up to, I believe, 6000 pounds is $68 per year for ALL services, including IFR. There are no additional charges for approaches or landings. The only changes for GA landings at the 6 major airports in Canada, the largest in Canada, such as Vancouver BC and Toronto. I personally don’t like playing with 777s and 380s, so I always go to a nearby GA airport anyway.
    GA has a seat on the NavCanada board and COPA (Canadian Owners and Pilots) is regularly consulted on changes and issues.

  10. I have worked over 30 years for the federal government, and am currently a new hire (April 2017) at the FAA. I can tell you that I have N-E-V-E-R experienced a federal agency with such dedication to its stated mission: keeping America’s airmen and their passengers safe.

    My experiences as a recently certificated private pilot mirror what I’ve seen as an FAA technician. FAA air traffic controllers go to extraordinary lengths and endure pilots’ myriad shortcomings to ensure the safest airspace in the world stays that way. Their civilian counterparts – at least from my perspective – make W-A-Y more money and have a far more lackadaisical attitude about passenger & pilot safety.

    Corporate fliers and general aviation pilots should keep in mind that once the airline companies completely call the shots, you will be pushed to the sidelines. The flying public’s safety will be delegated to the same companies that treat their passengers like a mere commodity – to be packed in like sardines, physically manhandled at will, and exploited like mere data points on a bar graph.

    Four years ago, Congress commissioned the National Academy of Engineering, a prestigious public-private consortium, to study FAA staffing levels and working conditions. Rather than put my spin of their findings, I’ll let you read it for yourself: do an Internet search for “ATSS + National Academy of Engineering”.

    I suggest that every member of the flying public join the AOPA or EAA, then write their congressional representatives to tell them to keep the FAA a public entity. Ultimately, FAA funding problems are not of its own doing; our purse strings are controlled by Congress. Perhaps it is time to put public agencies on budgets that exceed the normal two-year cycle. Your safety as an airline passenger may very well depend upon it.

  11. This article’s case study is really examining the merits of contracting out taxpayer funds and not privatization. It’s no wonder this system gets abused all the time because the private entities benefiting aren’t the same entities who bear the costs of the innovation.

    In privatization the entrepreneur reaps the financial benefits if any are to be had but is also on the hook for the costs involved. This article clearly shows that the taxpayer is still footing the bill while the financial gain is the only part that is privatized. Real privatization means that both the cost and profit side of the equation are borne by the private company.

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