Air traffic technology costs seen ballooning

updated 3:23 p.m. ET Feb. 7, 2008

WASHINGTON - The government already may have underestimated by billions of dollars the cost to transition to a satellite-based air traffic control system in coming years, according to an independent industry analysis.

The Federal Aviation Administration in August awarded ITT Corp. a contract worth up to $1.8 billion to build the first portion of the system, dubbed NextGen, that will take nearly 20 years to complete. The agency has said that the new system will help improve operations and limit delays and is expected to cost between $15 billion and $22 billion.

But an independent industry analysis completed last year forecast that NextGen's software development alone could cost more than $50 billion, Transportation Department Inspector General Calvin L. Scovel III said Thursday during a House hearing on the FAA's proposed budget for 2009.

Scovel said costs "remain uncertain and FAA needs to establish reasonable expectations for NextGen investments and realistic timeframes for improvements to enhance capacity and reduce delays."

On Wednesday, the Transportation Department reported that more than 26 percent of commercial flights in the U.S. arrived late or were canceled last year, the airline industry's second-worst performance since comparable data began being collected in 1995.

Rep. Jerry Costello, D-Ill., chairman of the House aviation subcommittee, and other lawmakers expressed concern about the wide gap in cost estimates. FAA officials said they had not seen the industry estimate, and Costello asked them to review it and respond.

The Bush administration's $68 billion fiscal 2009 budget proposal for the FAA would more than double the investment in NextGen technology to $688 million. The FAA's current funding will expire on Feb. 29.

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