FAA competition yields $1.9 billion deal

Lockheed Martin win could affect 2,500 federal employees

Lockheed Martin's $1.9 billion competitive sourcing contract to run the Federal Aviation Administration's automated flight service stations will affect 2,500 FAA employees, some of whom will lose their federal retirement benefits.

Under the new contract, FAA officials said, some flight service stations will be closed and the agency's workforce reduced, although FAA officials have not yet announced details of those reductions.

Union officials said several hundred of the affected employees might become FAA air traffic controllers and keep their benefits. Some will retire with government benefits. Others will be given the option of becoming Lockheed Martin employees but will lose their federal retirement benefits.

Flight service employees provide pre-flight weather briefings, flight planning services, in-flight radio communications, and search and rescue services, mostly to corporate and commercial pilots who do not fly for major airlines. "One can reasonably conclude that fewer than 2,500 people will be doing this in two years," said FAA spokesman William Shumann.

Under the contract announced this month, Lockheed Martin will take over the operation of FAA's automated flight service stations beginning in October. The company's work will include upgrading computers and reducing the number of stations from 58 to 20, FAA officials said.

The closing of 38 flight service stations, expected to occur from April 2006 to March 2007, could save up to $2.2 billion during the 10-year contract, FAA officials said.

They say the FAA spent about $500 million on flight service operations in fiscal 2003, and federal fuel taxes from general aviation offset only about $60 million of that amount.

A new automated flight service operations network to be built using commercial hardware and software will improve flight planning and reduce costs, said Joe Wagovich, a Lockheed Martin spokesman.

Chris Dancy, a spokesman for the Aircraft Owners and Pilots Association, said FAA employees are doing the best they can using an outdated and costly system. Under the new contract, he said, "we expect better use of current technology, so [pilots] get a better briefing."

Among employees affected by the contract, a few hundred might continue at the FAA to compensate for a shortage of air traffic controllers, said Kate Breen, president of the National Association of Air Traffic Specialists, which represents flight service station employees. Those who take advantage of that option will find association members eager to greet them.

"We want those flight service employees to know that we will welcome them into our ranks," said Doug Church, a spokesman for the association. Last summer, a Government Accountability Office report predicted that half of all controllers — about 7,000 people — would retire during the next decade and that the nation's busiest airports would suffer the most.

Breen said 1,000 of the employees affected will be eligible to retire with benefits. Another 1,000 employed by Lockheed Martin will lose their federal life insurance and health benefits in exchange for company pensions and benefits.

The sourcing competition was conducted under the Office of Management and Budget's Circular A-76 guidelines. Competitive sourcing pits federal employees, in this case 2,500 FAA workers, against companies that offer bids to replace federal workers with private employees.

Besides Lockheed Martin and the employees group, Computer Sciences Corp., Northrop Grumman and Raytheon submitted proposals.

Stan Soloway, president of the Professional Services Council, an industry association, said this kind of competition is almost unheard of in A-76 bids. "You had five major competitors here," he said. "When you have that kind of competition, you're going to get real innovation."

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FAA sets the bar high

Lockheed Martin, which has worked with Federal Aviation Administration officials on terminal and en route area automation systems for 40 years, must adhere to high performance standards to avoid losing its new contract with the FAA for automated flight services.

For example, it must meet the following service standards:

Radio calls must be acknowledged within five seconds.

Requested information must be delivered to pilots within 15 seconds.

Urgent weather reports for pilots must be entered into the system within 15 seconds.

Flight plans have to be entered into the system within three minutes of the request to file.

— Aliya Sternstein

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