Contract Towers

Contract Towers

Chair of USCTA talks about the program, following a favorable government report

By John F. Infanger, Editorial Director

July 2000

MOSINEE, WI — James Hansford, A.A.E., knows contract towers. He's operated one since 1992 at the Central Wisconsin Airport here. And, he serves as the current chairman of the U.S. Contract Tower Association, a sister of the American Association of Airport Executives. He sat down recently with AIRPORT BUSINESS to talk about the status of the program, and to discuss a recent Inspector General's report that endorsed the program as one that saves money, is safe, and should be a candidate for expansion.

Hansford, 56, has been at Central Wisconsin 18 years. As the name implies, his airport is centrally located in Wisconsin, a regional feeder to Milwaukee and Chicago to the south. He has been involved in lobbying and informational efforts on behalf of airports with contract towers — before the Federal Aviation Administration, the National Air Traffic Controllers Association, and others.

Contract towers have been a hot topic of late. Two aircraft incidents earlier this year — at Van Nuys, CA, and Waukegan, IL — brought contract towers to the attention of the media and Washington. FAA, at press time, was nearing a decision on awarding new contracts for companies providing air traffic services to the program.

And, in April, the DOT Office of Inspector General released an Audit Report that, in essence, applauded the program and called for seriously considering expanding it. It also chided FAA for a Draft Study the agency performed which basically downplayed the benefits of the Contract Tower Program. It also questioned FAA's intent with its study, coming on the heels of an agreement with NATCA that guarantees minimum staffing (union) levels for FAA-operated towers.

Following is an edited transcript of our discussion with James Hansford ...

AIRPORT BUSINESS: Tell us about your history with the program.

Hansford: Back in 1981, when the controllers went on strike, we got into a situation where a number of airports lost air traffic services. At the time I was at Evansville (IN); our tower was closed for awhile. Even after it got operational, it was quite constrained. A lot of airports simply lost their service.

Then the folks in Kentucky and New Mexico put together enough political punch to get the FAA to actually contract out the services of their towers so that they could reopen. So, what they did in those days was, take a closed FAA tower facility, the FAA would contract with the airport, and the airport would either provide the controllers or select a subcontractor to provide controllers to reopen the tower, and the FAA would maintain the equipment and the tower facility.

Of course, the cost of those towers went down from fees paid by FAA to really minimal fees to operate it under the contract, and that was impressive to AAAE and a number of airport managers. So, we put a bit of pressure on our friends at FAA to try to expand the program. It became apparent that FAA on its own was not going to expand the program, so political pressure was put on by various airports that simply had a need for air traffic services; they couldn't continue to operate as they were. Individual towers were slowly but surely reopened under the contract program.

Then, there were several airports that said, we've never had a tower but we're active enough that we need a tower. We'll build a tower and we want to be in the contract tower program. Bellingham, WA; Central WI Airport; and others. So, through Congression-al intervention, those locations built the facilities, equipped the facilities, and then entered into a contract with the FAA to operate it.

FAA then went into the national contract in 1996 and started contracting a segment of the 160 or so Level 1 towers. When they did, a number of airports that had been sole-source opted to go to the national contract, and a number remained sole-source. We remain sole source because we have an interest in doing some things on our own that we wouldn't be able to do if we were a national contract, such as operating an ATIS and AWOS jointly so that we save money and make it simpler for pilots.

AB: As a sole-source contract tower, how does FAA assist in paying for the cost of your tower operations?

Hansford: FAA pays for operation of the tower in cost of the controllers; they do not pay for the operation of the tower, nor do they pay for contruction of the tower. They don't pay for the maintenance of the tower. They pay for the maintenance and operation of the towers that were previously FAA towers.

AB: Typically, who are the people manning these towers?

Hansford: We have two 1981 retirees; we have three ex-military controllers. Generally, the turnover from the military and some of the turnover from the FAA want to get back into air traffic control. They have met the demand so far.

AB: What are your thoughts about the Inspector General's rather favorable report on contract towers?

Hansford: I think it assures us of longevity, without a doubt. There's always that pall hanging over us that FAA will not have sufficient funding to keep all of the contract towers operational. I think the indication from the Inspector General's report is quite strong that, number one, contract towers work very well, and they work very economically. This report and other reports have very graphically shown that they improve safety at airports, that they are one of the least expensive and most functional safety enhancements you can provide at an airport. That's what I think we get out of it.

AB: What are some of the issues you still have related to the program?

Hansford: There's certainly the issue that a number of airports have, such as mine, where we maintain the tower and the equipment, and supply all of the equipment. There are a lot of the towers in the program that are maintained and supplied by the FAA. Do we want to get to the point of FAA maintaining and supplying our tower? Probably not, because we do it at a third the cost or less than the FAA can. I would like some help in doing that, but I don't want to get into the position of paying the astronomical fees that the FAA does for tower equipment and maintanance.

When we built that tower, FAA was adamant that we couldn't do it for less than $2 million. The equipment list that they gave us was $988,000. The folks from Washington told our Congressional delegation and our airport board that we simply couldn't do it for less than that. And we have a $701,000 tower that's been operating since 1991 one hundred percent of the time.

To equip the towers with off-the-shelf economical equipment, and provide for its maintenance locally, might save an additional $45 million — easily. And there's no reason not to.

AB: Is there a level at which we stop expanding the program?

Hansford: Whether or not we see the program move into Level 2 and Level 3 towers — well, they have air traffic services. USCTA's main interest is to make sure that communities and airports that have a need for air traffic services get the opportunity to provide them.

The more economical we can make it, the more areas of service we can provide. If we can save another $45 million, we can open a few more control towers and just make a larger portion of the country safer.

Excerpts from the Inspector General's Report
The DOT Office of Inspector General recently performed a review of the contract tower program, as well as an evaluation of an FAA draft study on the merits of the program. Here are a few excerpts from the I.G. findings.
• "We found that contract towers continue to provide services that are comparable to the quality and safety of FAA-operated towers."
• "We also found that FAA's study did not fully consider several key factors of expanding the program that should be further analyzed and reported to Congress. We are recommending that FAA revise its draft study of expanding the Contract Tower Program to provide Congress a better perspective of the feasibility, costs, and benefits of expanding the program."
• "FAA's estimated cost savings were understated because the agency used FY1998 cost figures. We estimate that annual average savings would be approximately $881,000 per tower. However, these savings would be subject to several offsetting expenses."
• "To have credibility, FAA's study should have given much greater weight to the potential impact that controllers from contracted VFR towers could have in offsetting future increases in system demand and addressing existing staffing shortfalls."
• "It is essential that 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."
• "In its study, FAA concluded that no savings could be realized from expanding the Contract Tower Program because of a July, 1998, Memorandum of Agreement between FAA and NATCA (National Air Traffic Controllers Association). As a result of those requirements, FAA concluded there could be no net savings from expanding the program because the agreement prohibits a decrease in the number of FAA personnel."
• "We found that FAA's new contract solicitation contains specific provisions requiring contractors to report and certify monthly the number of controllers at each location and the hours they worked. These procedures should help ensure that contractors adhere to required facility staffing plans under the new contract."
• "Users at contract locations continue to be supportive of the Contract Tower Program and believe the services they receive are comparable to FAA-operated towers."

Origins of the Program; Potential for Expansion
BALTIMORE — Spencer Dickerson serves as executive director of the U.S. Contract Tower Association, as well as executive VP of the American Association of Airport Executives. He recently shared his thoughts on the contract tower program during AAAE's annual convention.

On the origins of the contract tower program ...
"The program has been around since 1982, and for a number of years there were only 20 or 30 contract towers, so nobody paid attention to it. Toward the late ’80s it started to grow, and it really started to take off after the National Performance Review that the Vice President headed up in 1993. An item in the report said: Expand the contract tower program. OMB (Office of Management & Budget) had been pushing it for a number of years; GAO (General Accounting Office) said FAA was missing opportunities to do further contracting. But it was the NPR that really got it going.

"Now we're up to 189 contract towers. I think that number will be 210, 220 sometime next year. Enplanements are up, general aviation activity is increasing significantly, so a lot of these facilities that didn't have towers are seeing a need. And, there's already about 40 or 50 non-fed towers out there. So, there's still a big market of facilities for this program, just from non-fed towers. Towers that are over the 1.0 (benefit/cost qualifying formula) that aren't in the program are waiting for funding.

"The whole thing is VFR versus IFR. The FAA determined that VFR service is inherently non-governmental. Once a government agency determines something is non-governmental, then you do a cost analysis of who can do it more economically — government or the private sector.

"The advantage of getting in the FAA program is that then they are inspected by FAA, the controllers are all certified by FAA. So, there are now safety enhancements because it's now under the FAA umbrella, versus a non-federal tower in which they can basically do what they want."

On expanding the program ...
"The issue of expansion is a very interesting one. Our official position is we're silent on the issue. It's not something we should be pushing and advocating, because FAA needs to make sure they're comfortable with the decision in terms of cost-savings, safety, and the overall operation of the system.

"One of the things that we're going to be pursuing is making tower construction at those airports that are eligible for the contract tower program eligible for AIP entitlements. Right now, AIP money cannot be used to build a tower. We're saying, make it eligible for entitlements only at airports that are eligible for the contract tower program."

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