FAA Reveals $1.5 Billion Peraton Contract as Air Traffic Control Overhaul Gains Momentum
Washington, United States — The Federal Aviation Administration disclosed on Tuesday that its project management contract with national security firm Peraton is valued at $1.5 billion, offering the first detailed look at how the agency plans to spend its way toward a completely rebuilt air traffic control system.
FAA Administrator Bryan Bedford shared the figure during a briefing to House lawmakers, part of a broader push to update Congress on the status of the so-called Brand New Air Traffic Control System, or BNATCS — the most ambitious ATC infrastructure project the agency has undertaken in decades. Bedford told legislators that President Donald Trump personally negotiated a $200 million reduction from Peraton’s original proposed price. The firm, owned by private equity group Veritas Capital, beat out a joint bid from Parsons and IBM to win the prime integrator role in December.
“The FAA was always going to need an implementation and integration partner,” Bedford said. And the contract’s structure makes clear the agency isn’t interested in a typical government vendor arrangement. Under what officials are calling a “No Excuses” framework, Peraton’s fees are directly tied to its performance against schedule, cost control, quality benchmarks, and management targets. The company’s profit is split into three tiers — a fixed 3% base, a variable 6% contingent on meeting delivery milestones, and a 3% holdback reserved for potential damages. It’s an unusual approach for a federal contract of this scale.
The presentation Bedford shared with Congress laid out the project’s current footing. Through the end of December, some $1.6 billion had already been obligated. About 40% of the system’s telecommunications connections have been upgraded, transitioning from legacy copper wire to fiber optic and wireless links. The agency also confirmed that 612 new radar systems will be installed by June 2028, at a cost of roughly $1.1 billion. A separate $420 million contract with RTX — the defense and aerospace conglomerate formerly known as Raytheon Technologies — includes an additional $270 million in performance-based incentives.
At the heart of the modernization effort is a fundamental shift in how the FAA processes and manages air traffic data. Bedford described the current setup as a patchwork of isolated computer systems spread across 318 FAA facilities, with no ability to share data or provide a system-wide operational picture. The goal is to move everything into a secure, cloud-based architecture.
“We’ve got to get out of these tiny facility computers and into infinite compute power in the cloud,” Bedford said. “That is going to be what unlocks true airspace redesign opportunities.”
The scope of the challenge is hard to overstate. Flight-delay minutes caused by equipment failures in 2025 ran roughly 300% higher than the average from 2010 through 2024, according to FAA data. Much of the existing infrastructure dates back decades — copper wiring, aging radar arrays, and in some cases, technology that still relies on floppy disks and paper flight strips. Government audits in recent years have documented FAA facilities with leaking roofs, failing HVAC systems, and radar equipment approaching end of life.
Congress authorized the overhaul last June with a $12.5 billion appropriation under the One Big Beautiful Bill, which the administration characterizes as a “down payment.” Transportation Secretary Sean Duffy has said another $19 to $20 billion will be needed to finish the job. Bedford reiterated that message to lawmakers, noting that while the current funding covers telecommunications, radar, and the initial integration work, the full cloud migration and facility redesign will require a second round of significant investment.
But hardware and software are only part of the problem. The FAA remains approximately 3,500 controllers short of its targeted staffing levels, a deficit that has accumulated over more than a decade of insufficient hiring. Over 40% of terminal air traffic control facilities were understaffed as of September 2024. Controllers at many locations are working mandatory overtime and six-day weeks just to keep operations running. The strain showed again in late January when Nashville International Airport’s tower temporarily shut down due to a staffing shortfall — what the industry calls “ATC Zero.”
The academy pipeline isn’t helping fast enough, either. Bedford acknowledged the FAA faces a failure rate exceeding 30% at its air traffic control training academy in Oklahoma City. To address the gap, the agency has committed to hiring at least 8,900 new controllers through 2028, including 2,200 in fiscal year 2026. Starting salaries for academy trainees were raised by 30%, and the hiring process was compressed from eight steps to five. The FAA also introduced retention bonuses for retirement-eligible controllers and placement incentives for graduates assigned to the hardest-to-staff facilities.
Bedford told lawmakers the agency now tracks progress through a formal scorecard and has adopted what he described as a multi-year modernization framework — a departure from the shorter planning horizons that plagued previous efforts.
“It actually allowed the FAA to do what it needed to do all along,” he said, “which was take a multi-year approach to modernization.”
The administrator is scheduled to brief senators on Wednesday. Whether Congress ultimately approves the additional billions Duffy and Bedford are seeking will likely depend on how well the early phases of the project deliver on their aggressive timelines — and whether the “No Excuses” contract with Peraton proves to be more than just a catchy label.
Photo Credit: Beckett P
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