November 16, 2016
FAA Achieved Most of the Anticipated Cost Savings From Contracting Out Flight Service Stations, but Needs To Determine the Future Direction of the Program
In February 2005, the Federal Aviation Administration (FAA) awarded a contract to Lockheed Martin Services, Inc. (Lockheed Martin) to operate the Agency’s 58 flight service stations. By contracting these services, FAA anticipated cost savings of approximately $2.2 billion over 13 years. In a 2007 audit, we found that FAA had implemented effective controls over the transition to contractor operations but could not be certain that the controls would maintain quality of services or that the Agency would achieve anticipated savings. We conducted this audit as a follow-up to our 2007 audit. Our objectives were to (1) determine whether FAA achieved the original contract’s anticipated cost savings, and (2) assess FAA’s oversight of the program. We also reviewed information regarding FAA’s future plans for the program.
FAA has achieved most of the anticipated cost savings from contracting out flight services operations. It has saved approximately $2.13 billion over 13 years—$59 million less than the initial estimate. FAA achieved the savings through reorganization of flight service operations and facility and equipment modernization, including service station consolidation and reduced staffing levels. FAA has also implemented effective controls for oversight of Lockheed Martin and flight services, including 22 measures that evaluate Lockheed Martin’s performance. FAA also has several oversight mechanisms that monitor the program’s safety and operations. Lastly, pilots and other users have multiple methods available to them to provide input on the program.
FAA has not decided how it will provide flight services and program oversight under its next contract. The original contract expired in September 2015, and FAA awarded Lockheed Martin a series of contract options that could extend the current program through September 2019. Increased use of Web-based applications has significantly reduced the demand for services from flight service specialists, and consequently, FAA is considering phasing out most specialists and relying on the internet to deliver services. However, FAA has not yet decided what changes it will make to the program or developed a corresponding oversight approach for the contractor and services, and as a result, may not have the appropriate mechanisms in place to ensure the program’s safety and efficiency.
We made three recommendations to help FAA ensure the program’s safety and efficiency and the Agency concurred with our recommendations.