Every day it seems there is a new media report of a federal department or agency that can’t seem to do its job correctly. Even when entities manage to take care of their day-to-day responsibilities they often have real challenges spending the public’s money efficiently. The Department of Defense, for example, has struggled for decades to overcome the burden of a byzantine and often ineffective acquisition system that all too often results in programs that are too costly, too complex and too late.
So it is important to call out examples of government agencies that do their jobs well and, in particular, are doing acquisition right. One of these is the Federal Aviation Administration (FAA), a part of the Department of Transportation. Generally, the FAA only makes the news when there is an aviation incident. What tends to pass without acknowledgement, much less gratitude, is the excellent job that the agency and its contractors do managing the increasingly crowded skies. Every day an average of 87,000 flights are in the skies in the United States. U.S. airports experience on the order of 65 million takeoffs and landings each year. The air traffic control system handles some 28,000 commercial flights, 27,000 general aviation flights (private planes), 25,000 air taxi flights, 5,200 military flights and 2,100 air cargo flights daily.
The FAA is in the midst of an ambitious and massive modernization program involving virtually every aspect of its air operations. Called NextGen, this program involves bringing modern technology and management practices to bear on virtually all aspects of flight operations in order to increase the number of flights the FAA can support at one time while simultaneously reduce the costs. After a not unexpected rocky start, the key elements of NextGen are being implemented smoothly, on time and at or under projected costs.
One of the least known but most interesting aspects of the FAA’s support of American aviation is the Automated Flight Services Station (AFSS) system. This is a network of facilities that provides timely pilot weather briefings, enroute communications and information, and search and rescue services for the general aviation community.
It is remarkable that such a service exists at all. What is truly amazing is that a decade ago, the FAA undertook to bring the AFSS system into the 21st Century, improving its services while at the same time slashing its costs. After conducting a rigorous business case analysis, the FAA leadership conducted an A-76 competition, meaning that both government entities and private companies competed for the work. Since the modernization program began in 2005, the contractor, Lockheed Martin, has improved services while saving the American taxpayer nearly $2 billion. When was the last time you heard of a government program that improved the quality of services provided while reducing the costs?
One of the boldest steps the FAA took was how it wrote the contract with Lockheed Martin. Rather than specifying a host of requirements, predetermining how the job was to be performed and what technologies were to be used, the FAA simply defined a set of goals or milestones with respect to what AFSS had to do and the cost reduction that had to be achieved. They left it up to the contractor to figure out how to meet the objectives. This was a fixed-price incentive fee contract. If Lockheed Martin achieved additional savings, these would be shared with the government; if it incurred additional costs, the company had to eat them. As a consequence, Lockheed Martin had every reason to out figure ways of making AFSS more efficient. While exercising its rights as the customer, the FAA also established a relationship with Lockheed Martin based on trust and collaboration.
The AFSS contract should be studied by every other federal department and agency, particularly the Department of Defense (DoD). Pentagon acquisition officials continually complain that they can’t write good contracts that allow industry to innovate and also reduce costs. Perhaps they should outsource their contracting activities to the FAA. Even then, the DoD would need to work on its basic lack of trust of the private sector.
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