September 5, 2017
Required by the FAA Modernization and Reform Act of 2012
Greater Adherence to ADS-B Contract Terms May Generate Better Performance and Cost Savings for FAA
In 2007, the Federal Aviation Administration (FAA) awarded a more than $1.8 billion contract to develop and implement the Automatic Dependent Surveillance-Broadcast (ADS-B) system. ADS-B is a foundational component of FAA’s Next Generation Air Transportation System, and FAA envisions ADS-B eventually becoming its principal means of aircraft surveillance. As required by the FAA Modernization and Reform Act of 2012, we reviewed FAA’s award and oversight of the ADS-B contract, focusing specifically on whether (1) the ADS-B contract provides FAA the ability to monitor whether the contractor is providing required ADS-B products and services; and (2) FAA’s procedures are adequate for determining whether payments to the contractor are reasonable.
We found that while the ADS-B contract provides FAA the ability to monitor whether the contractor is providing required ADS-B products and services, FAA has made only limited use of these provisions. For example, while the contract identifies seven specific measures for evaluating ADS-B performance, and specifies that the contractor should validate that all seven requirements are being met, FAA required reports from the contractor on only three of the seven measures. We also found that while the ADS-B contract contains provisions that can help FAA ensure that payments are reasonable, FAA did not effectively use these contractual tools. For example, FAA is paying monthly subscription fees for ADS-B services despite system performance gaps and negotiated an incentive agreement that pays additional amounts on top of monthly subscription fees. FAA also did not seek adjustments to service volume subscription fee payments when the contractor decided to use shared radio stations that support multiple service volumes.
FAA concurred with all nine of our recommendations to improve FAA’s oversight and management of the ADS-B contract and provided target action dates for eight of them. We are requesting additional information for one recommendation.