Once the ATC system began to recover from the 1981 Professional Air Traffic Controllers (PATCO) strike and the demand for services once more began to rise, the FAA seized an opportunity to partner with the private sector for those badly needed services and created the Federal Contract Tower (FCT) program in an attempt to save bundles of cash and manpower. In 1993, Vice President Al Gore’s National Performance Review endorsed the FCT as an effective means of reinventing government services. Today, private companies taking part in the contract tower program operate 218 ATC towers using approximately 1,200 controllers. By FAA estimates, the government saves approximately $250,000 per tower per year over what it would have cost the agency to run the same facility.

Although PATCO died in 1981, a new union–the National Air Traffic Controllers Association (NATCA)– eventually rose from the ashes of that shattered labor organization and today stands much smarter and considerably more politically aware than its predecessor, representing all 15,000 of the FAA’s air traffic controllers, as well as controllers at 34 contract towers. A new version of PATCO also represents another 34 additional contract towers.

NATCA never embraced the contract tower program in the 1980s for a host of reasons, the main one being the loss of jobs the program represented. But the union hierarchy was also smart enough to realize that the organization was then too young to mount much of an offense. In succeeding years, however, as NATCA’s membership grew, the union began to flex its political muscle against contracting. In 1994 the union filed a lawsuit against the FAA challenging not only the value of contracting, but the agency’s ability to launch the program in the first place.

Ruth Marlin, NATCA’s executive vice president, said, “We have always questioned the quality of service at contract towers. We believe that controller staffing is dangerously inadequate and that controllers at contract towers are not afforded the same quality and quantity of training as FAA controllers. We know that employment standards are different and contract towers are permitted to hire controllers who would not qualify for FAA employment. We have repeatedly asked the FAA, through Freedom of Information requests, for staffing data, how it was determined and for the formulas the agency used to determine the value of contract tower cost savings. We believe their cost-saving projections are flawed and unverifiable. The FAA has not answered any of our requests.”

An FAA spokesman told AIN, “We have shared the methodology for our cost analysis with the union, but we do not intend to share the actual comparison figures since those involve proprietary information from the contractors.” FAA manager of contract towers Harold Thomas said, “Controllers [at contract facilities] get paid less and the union rules are more flexible so they can work with fewer people. Almost all other costs of running a tower remain the same.”

One Step Away from Privatization?
To NATCA, the question of value encompasses far more than simply the dollars the agency claims to be saving annually. NATCA sees contracting as just a step away from the concept of full privatization, which it regards as a threat to the entire present-day air traffic system. NATCA recently commissioned a white paper by Columbia University professor David Sclar titled “The Pitfalls of Air Traffic Control Privatization.” Sclar believes that “ATC cannot be competitively bid. The profit-making, market-based incentives for efficiency and economy that are supposed to motivate a private provider do not easily align with the government’s abiding interests in safety and security.”

In a somewhat contradictory December 2002 letter to employees, FAA Administrator Marion Blakey said, “FAA functions involving the separation and control of air traffic will be categorized as commercial [using] reason code A. Under reason code A, the Secretary has made the determination that functions involved in the separation and control of air traffic are a core capability required for the successful accomplishment of FAA’s mission to ensure the safety and security of the national airspace. Based upon the Secretary’s determination, these functions are not subject to competition and will not be contracted out.” But NATCA simply does not trust the FAA to keep its word indefinitely.

In support of its case, the FAA filed a motion in December last year to dismiss NATCA’s challenge to the contract tower program. Contained within that brief is a statement by Bill Peacock, the agency’s director of air traffic, that says, “Air traffic services at VFR towers under contract to the FAA are not governmental activities so intimately related to the public interest as to mandate performance by federal employees. These services, therefore, are not inherently governmental.” Marlin believes that “the proposed contracting out of even busier Level 2 and 3 VFR facilities will have a [detrimental] effect on the National Airspace System.” Adding insult to injury in early February, the Office of Management and Budget (OMB) also declared ATC to be a commercial activity in direct conflict with an Executive Order issued by President Bill Clinton in December 2000 that clearly stated ATC is a function of the U.S. government.

A NATCA spokesman said, “We are an inherently governmental function and refuse to accept the OMB’s designation of us as commercial. If ensuring the safety of air travel in this country is not an inherently governmental function, then what is? The word commercial implies something that could be performed for profit or even not for profit by the private sector and we want nothing to do with that.” The FAA maintains it has no plans to expand the current contract tower program because of the current litigation with NATCA.

In the FAA’s supplemental administrative record to the FAA/NATCA lawsuit, the agency disagrees with the union over the quality of service provided through the contract tower program. “FAA maintains quality control over the services provided at contracted-out VFR towers through appropriate inspections and certifications of sites, certifications and recurrent training requirements for all controllers and by requiring full compliance with all appropriate FAA regulations and policies. This results in a high degree of standardization of air traffic control services across the country, regardless of the controller’s employer.

An issue that enrages NATCA are those unverifiable contracting costs, figures that the union says sound too good to be true and are a major factor in determining overall value. At question is OMB Circular A-76, which the FAA used in its arguments. This document allows the FAA to waive a cost-comparison study if the agency determines that satisfactory commercial sources are available to perform the function and that the government has no reasonable expectation of winning the price competition. The FAA claims its in-house costs to run all of the towers now in the FCT would be $72,247,008 versus the contractors’ costs of $43,110,334 to manage those same facilities, for an overall saving of some 42 percent to the taxpayers. In documents NATCA provided AIN titled “Cost Analysis of the Federal Contract Tower,” dated November 2002, the FAA offered an analysis of the FY2002 contract costs to the estimated FAA personnel costs but cautions that the document is not meant to present absolute cost savings: “Every effort is made to ensure that in-house costs are not overestimated.”

While the battle rages over whether or not ATC is a commercial function, a look back at history shows that the idea of private-sector companies providing ATC services is not new. Early ATC functions in the dawn of the aviation industry were often performed by airline dispatchers. The military has also been contracting out ATC services since the 1970s.

Another important factor, according to Spencer Dickerson, president of the U.S. Contract Tower Association (USCTA), a division of the American Association of Airport Executives that represents the interests of airport officials, is “the contract tower program has brought ATC services to nearly 100 airports that would never have had this service without the program. And there are probably 50 to 100 more that are experiencing strong enough growth to want their own towers as well. Some 70 percent of the airport managers who have contract towers also said they’d never go back to having an FAA tower if they had a choice.”

Tom Bertelsman, NATCA’s contract tower representative said, “Safety is certainly an issue from a staffing perspective. One controller working alone is bound to make mistakes.” One contract tower controller told AIN, “There are a lot of times we get pretty busy and it would be nice to have help, but I’d still stack our tower’s controllers up against the FAA folks any day.” NATCA says contract tower controllers work alone approximately 50 percent of the time. Contract controllers interviewed by AIN peg that figure at closer to 25 percent. FAA controllers also work alone sometimes, although precise figures are not available.

NATCA believes that a contract controller working alone was directly related to the midair collision that occurred at Chicago Meigs Field in 1997. The NTSB report did not find the controller to be directly at fault for the collision. At nearby Chicago/Waukegan tower, however, the NTSB did cite the controller on duty–one of two that day–at that contract facility as a factor in a February 2000 midair that claimed the lives of three people, including Chicago radio host Bob Collins.

Fewer Errors by Contract Towers
But if operational errors and deviations (OEDs), or the lack of them, are any measure of safety, the contract tower program works. According to a USCTA report generated with National Airspace Information Monitoring System data, there were 12 OEDs last year out of 16 million operations at contract towers versus 31 OEDs in 13.3 million operations by FAA-operated facilities, making the contract towers essentially three times more error free than their FAA counterparts.

Three companies hold the contracts for towers in the various FAA regions around the U.S. Robinson Aviation employs approximately 600 controllers at 96 towers, Midwest Air Traffic Control has 300 controllers at 55 facilities and Serco Management Services employs 307 controllers at 58 contract towers. Serco opened its first contract tower in 1968 in Latrobe, Pa., and currently operates terminal approach controls at Goose Bay, Labrador and 21 additional ATC facilities worldwide. Midwest began offering ATC services in 1978. Robinson Aviation subcontracts some ATC work (22 towers) and became the subject of a special report by the Department of Transportation’s Inspector General.

The DOT IG was concerned that subcontracted towers might not receive the same level of oversight as other contract facilities. The IG reported in December 2001 that subcontracting did not adversely affect safety or service, but did note that “this was a recent decision and therefore it is too early to tell the long-term potential effects of the [subcontracting] program.” USCTA’s Dickerson said, “The IG’s office is very thorough and balanced in the way it looks at things.”

In an April 2000 report on the possible expansion of the contract tower program, the DOT watchdog addressed a previous concern about staffing in which some contractors were not delivering on the promised amount of man hours per the FAA’s agreement. The IG believed that the situation had been addressed. During interviews with many users and contract controllers at 15 towers, the IG also reported no complaints from controllers about staffing issues.

The second objective of the report was to “evaluate the accuracy and completeness of the FAA’s study of expanding the FCT to ensure all relevant costs and benefits were appropriately identified and considered.” The results of the report indicated that “contract towers continue to provide cost-effective services that are comparable to the quality and safety of FAA-operated towers.”

Despite the FAA’s current reluctance to expand the contract tower program, the IG took exception to some of the FAA’s perceptions of busier VFR towers as contracting targets, saying, “The FAA’s method- ology for determining which towers to consider did not accurately reflect the feasibility of expanding the program. It went too far in considering some busier towers and not far enough in considering towers with substantially lower levels of air traffic activity.” The IG believes there are an additional 56 towers that might at some time be ripe for contracting, noting, “It is essential that the FAA thoroughly analyze any and all opportunities to offset the rising costs of its operations. Expanding the contract tower program provides the agency with one such opportunity.” After the lawsuit with NATCA is settled, looming budget deficits are expected to increase pressure on the FAA to contract more towers.

On the Sidelines
In the FCT battle, the contractors have wisely remained on the sidelines, although they certainly offer persuasive insights into private ATC operations. Serco’s vice president of aviation, Steve Christmas, a former controller, said there are probably a dozen companies that bid on ATC service contracts when they renew every five years, most of whom are capable of performing the work. “The key to success, though, is FAA involvement as the regulator of the entire process. We don’t decide policy. We simply do the best job possible of delivering what the customer needs.”

Christmas also spoke to the issue of value and contract adherence: “I have an air traffic control quality-assurance department. We look at training and everything else identically to the way the FAA looks at its own controllers and operations.” The FAA sends evaluation teams out to inspect contract towers once every 24 months. “But on top of that,” Christmas said, “we have our own people regularly evaluating our own facilities. We also add in items such as quarterly technical appraisals.” The FAA performs these surveys on each controller only annually. “Quite honestly, if employees are not measuring up to our standards, we get rid of them.” He said Serco has terminated a number of controllers over the past few years, but declined to specify exactly how many.

During any value discussion, the government’s actual cost of services always comes up. Christmas said, “There are continuous comments about why the FAA chose the low-bid contract for ATC services. It was not awarded to the low bidder and was based upon the best value. The FAA set up a scoring system that looked at quality assurance, training, staffing and other areas. Each area offered up a maximum score. The contract price was not scored, only considered after everything else. The FAA determined which contractor would offer the best value based on all of these factors.”

Controller qualifications are another source of conflict between the FAA and NATCA, although to the untrained eye the requirements for a control tower operator (CTO) airman certificate appear clear. FAR 65.39 says a controller who has never held a CTO rating anywhere else needs at least six months of on-the-job training before being eligible for the test. Just as a pilot finds it easier to add a multi-engine rating once he holds a private pilot certificate, controllers can add a tower rating with an unspecified amount of further training. ATC contractors hire employees only with previous ATC experience. FAA controllers must also begin training by age 31 and retire from active ATC duties at age 56. Contractors are not bound by these same requirements, however.

Marlin said, “We take the controller training issue very seriously–many people are unsuccessful, too. Controllers must have adequate exposure to the different mixes of traffic–peak and slow hours and military operations, if any–and become very familiar with the particular details of the airspace.” At an FAA tower, more time is normally spent bringing a new controller up to speed before he takes his facility rating exam. The NATCA spokesman said a contract training weakness is that the FAA examiner who observes the trainee for certification has never seen that controller at work and probably never will.

The only question for users of the ATC system at proposed contracting locations, according to the IG, was that “the level of service they receive would remain the same if towers were converted to contract operations.” Bob Lamond, NBAA director of air traffic services and infrastructure, said, “Our members based at airports with contract towers are more than satisfied with the service they receive and are supportive of the program in general.”

Despite the FAA’s cost-saving claims, NATCA officials are still interested in seeing the figures that claim to give private ATC contractors an edge over the FAA, although they don’t expect much even if they do receive the data. Marlin said, “The FAA is satisfied with numbers that suit its needs and has not taken the time or interest to look at the total costs. As with any cost-benefit analysis, its findings are based primarily on the assumptions it puts into it.”

Sclar’s study predicts, “Based upon a proprietary cost model and analysis of the FAA, the [report’s] project team estimates that [additional] privatization of ATC operations in the U.S. could lead to a 30-percent cost increase, or more, if the provision of equivalent levels of ATC services were provided by private contractors.” NATCA has engaged the help of Sen. Frank Lautenberg (D-N.J.), a member of the aviation subcommittee who recently introduced S.338, declaring, “The jobs of controllers are inherently governmental functions, and I will prevent any Bush Administration attempts at privatization, a risky scheme that threatens safe skies.”

NATCA’s spokesman added, “Plain and simple, the Bush Administration has made it clear it wants to contract out upwards of 25 to 50 percent of the government work. OMB needs to fill a quota to satisfy the President’s management agenda. We don’t believe air traffic control should be a part of this policy game. Putting us on the commercial activities list basically puts our feet on the chopping block. Our head is next. We are fighting to make sure that never happens.”

Serco’s Christmas concluded, “No operation can be safe 100 percent of the time, not with FAA controllers or anyone else. But I don’t know of any accident where a contract tower was the sole issue. What makes this program successful is that the stakeholders–the airports, AAAE and everyone else–are continuously trying to improve things.” The FAA’s Thomas added, “The contract tower program is probably one of the better programs [in government] around.”