Stymied by mismanagement, the Federal Aviation Administration has squandered 15 years and at least half a billion dollars on a new air traffic control system that is still years from completion and already obsolete.

In 1981, when President Ronald Reagan dismissed 11,000 striking air traffic controllers, the Government pledged to replace many of them by overhauling and modernizing the system that guides planes from takeoff to landing.

But today, in aging control centers across the country, overworked controllers direct tens of thousands of flights each day with the same screens that were out of date 15 years ago. So fragile is the equipment that technicians who open it for maintenance fear doing more harm than good. During breakdowns, which are more and more frequent, controllers carry slips of paper around darkened control rooms or read commands aloud, instead of sending computer messages or clicking on symbols on a screen. At such times, skill and luck substitute for technology.

Even when the system works, controllers are using screens so old that they "look like all the 'Victory at Sea' movies," as the head of the biggest pilots union, J. Randolph Babbitt, has put it.

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Both the F.A.A. and the airlines say there have been no accidents they would attribute to system breakdowns. But about two dozen times in the last two years, the 25-year-old mainframes that drive the controllers' screens at five of the busiest centers have failed, delaying hundreds of planes each time, sometimes for hours. In Chicago, at the busiest center, there were seven failures last year alone, including three in mid-July.

The major airlines say that even when things run normally, there are about 20,000 delays a day due to air traffic control. Although most are short, the delays cost them up to $5 billion a year, the airlines say.

A study released last week by the National Transportation Safety Board also says that the system is safe but that its inefficiencies drive up the cost of airline operations and delay travelers.

The F.A.A.'s struggle to rebuild the air traffic control system illustrates how the Government's best intentions can be defeated when there is a constantly changing bureaucracy with a dearth of leaders who can manage complex projects.

Describing the agency's efforts, George R. Meinig Jr., a retired admiral who was part of an independent team brought in by the F.A.A. to evaluate what had gone wrong, said, "They needed some adult supervision along the way."

Senator William S. Cohen, Republican of Maine, who serves on the Committee on Governmental Affairs, said: "The F.A.A. is a victim of its own poor management. If the agency devoted more time to managing itself and less time to defending its deficiencies, the air traffic control system would have been replaced years ago."

Interviews with current and former agency officials and a review of Government documents show that the agency allocated billions of dollars to update the system and hired outside experts to help. Over the years officials labored hard on the project, which the F.A.A. regarded as the key to its future. But the records and interviews also portray an agency overwhelmed by technical problems, making ambitious and expensive plans in search of the perfect system, only to abandon them upon realizing they could not be pulled off.

The Vision Hopes of Saving A Lot of Money

The F.A.A. initially planned to save money by consolidating controllers into about 20 large centers, from more than 250 smaller ones. But after four years of work and hundreds of millions of dollars, officials discarded the idea. Consolidation required different hardware and software, and the shift wasted thousands of hours of effort.

"By the time you build what they wanted, they changed it and they want something else," said Gerald W. Ebker, who headed the division of the International Business Machines Corporation -- since sold to the defense contractor Loral Federal Systems -- that was selected to write the software.

At other times, I.B.M. also had problems separating the practical from the impossible. The new system it promised to build was supposed to replay past events, like a videocassette player, at 10 times normal speed, as an aid in analyzing traffic patterns and controller errors. But I.B.M. later said that was impossible. The agency, however, stuck to its guns and insisted on the capability, driving up the project's costs. Only much later did the agency realize that such a playback speed was unnecessary.

F.A.A. officials "somehow or other don't seem to know how to do research and development and acquire things," said Charles A. Fowler, a software expert on the independent team, which was from the CNA Corporation, a consulting group.

F.A.A. officials counter that I.B.M., which won the $3.6 billion contract to replace the system and repeatedly failed to produce working software, shares in the blame, a position CNA endorses. In hindsight, everybody agrees that the F.A.A. should have recognized the problems sooner.

Thomas C. Richards, a retired Air Force general who was the F.A.A. Administrator in the last seven months of the Bush Administration, said, "Given the amount of money involved and the importance of modernization, it should have been the No. 1 priority." But he added, "People were clearly not focused." Mr. Richards said he was in office long enough to know the project was not working, but not long enough to fix it.

Finally, in 1994, David R. Hinson, the F.A.A. Administrator, pulled the plug on the original replacement project, called the Advanced Automation System, accepting that about $500 million had been spent on software that would never be used. He authorized a slimmed-down plan, an $898 million contract to deliver about 1,000 new screens and workstations for the 3,200 controllers in the 20 largest centers, beginning in 1998.

That plan, managers say, is on track. But agency officials acknowledge that the system makes no provision for incorporating new satellite-based technology that could shorten almost every flight.

Industry experts say the failure to set an achievable goal at the beginning and follow through has been a devastating setback.

"The failure of the Advanced Automation System is going to be with the F.A.A. for a long time," said Maurice F. Connor, who became director of safety and technology at the controllers union a year ago.

"They spent 10 years fooling around with it, and now in 1995, David Hinson said quite bravely that this thing is a turkey and we're finished with it," Mr. Connor said. "It's going to take another 10 years before we get to where we should have been in 1995."

The Vision A Strike Fosters An Ambitious Plan

When President Reagan dismissed the 11,000 striking air traffic controllers in 1981, calling in substitutes, F.A.A. officials decided that they had to be able to run the system with fewer people and more sophisticated equipment. In addition, because of deregulation of the airlines and a healthy economy, air traffic was growing so fast that it was threatening to overwhelm the system. And so the Advanced Automation System was conceived.

A former F.A.A. official who served during the project's early stages said it was born about the same time as the Strategic Defense Initiative, the Reagan Administration's space-based missile-defense system.

"You've got a Government saying, 'Throw a ton of money at it, get a technofix, and have the biggest of the big do it,' " he said. "Then you have this bureaucracy at F.A.A. say to I.B.M., 'You do it; you figure it out.' "

Under the new plan, the overall method of directing air traffic would remain the same: controllers would tell pilots which way, how fast and at what altitude to fly by reading radar data, the flight plans filed by pilots before takeoff, information radioed from the planes, and weather information. But the new system would be so technologically advanced that it would allow controllers to "work smarter, not harder," said T. Allan McArtor, the F.A.A. Administrator in the beginning of the project. And, the agency promised, the new system would save $4.5 billion in labor costs over its life.

The Government solicited proposals, evaluated the results at great length and, in 1982, picked two companies, I.B.M. and Hughes Electronics, as possible contractors. It paid them a total of $450 million for a "fly-off," in which each would build a demonstration model of a proposed system. The F.A.A. set a target date of 1990 for beginning installation of the new system.

Early in 1988 I.B.M. won the contract, with its several hundred pages of specifications. The contract was the biggest from the Department of Transportation, of which the F.A.A. is a part. It was also the biggest that I.B.M. had ever received.

As is usual in such cases, Hughes appealed, and work had to stop until the appeal was resolved. The writing of the detailed software that would be the heart of the new system did not get started until October 1988. It had taken seven years to write the specifications and hire a contractor.

Writing the new software was an extremely complicated process requiring scores of programmers. But almost as soon as it began, it went awry, the CNA report said. I.B.M. let the programmers work independently, failing to coordinate their work, the report said, and the F.A.A. never noticed the problem until it was too late.

"Everybody was doing their own little bit, but no one was sewing it together," said William E. Smith, a member of the CNA team. The software factory resembled "a hobby shop," he said, with programmers wandering off on their own into whatever interested them.

But Mr. Ebker, the I.B.M. official, who has since retired, said the problem was not coordination within his organization, but a stream of changing orders from the F.A.A. "If people could have just left it alone, I think we would have delivered," he said.

By December 1990, 30 months into the project, it was 19 months behind schedule.

Not only were the programmers writing pieces of software that would not fit smoothly together, but they were also concocting a system that did not do all the things the agency said it had been promised, the CNA report said.

For example, the F.A.A. said the system had to be capable of "continuous operations," or updating the software while the software was running. But I.B.M. officials say they did not realize that was a requirement, even though the specifications referred to it.

"We were five years into the concept when continuous ops was sprung on us," Mr. Ebker said. "Even if it's obliquely in the specs, it was news to us." That misunderstanding added $350 million to the cost.

The independent report partly blamed I.B.M. for the failure to point out problems like that before they required expensive solutions, saying that the financial terms of the contract gave the company an incentive to stretch out the work.

"They had a key to the U.S. mint," said Robert S. Cooper, a participant in the study. "The cost of the program was going up at the same rate as expenditures, and no progress was being made. It was just a way of funneling money through I.B.M. Federal Systems and raking off whatever the percentage was."

Mr. Ebker said I.B.M. also lost money because of the delays. But he added, "Sure, I.B.M. should have stepped forward earlier and much more forcefully."

But Joseph W. Del Balzo, a 36-year veteran of the F.A.A. who was the Acting Administrator from January until August 1993, when he retired to become an aviation consultant, blames the F.A.A.'s structure, which he said did not reward people for coming forward early with pessimistic assessments. As a result, he said, problems became obvious only very late.

"Program managers are by nature very optimistic -- 'We're going to solve this problem by the end of the week,' " he said. " 'The last thing I want is my boss helping me, looking over my shoulder.' "

The F.A.A. has attributed much of its problems to complex Federal procurement and personnel procedures. Last fall Mr. Hinson told Congress that those procedures prevented the agency from hiring the experts it needed, because it could not pay salaries to compete with private industry. Congress has since exempted the F.A.A. from nearly all the procurement rules, but not everyone is convinced this will help.

"Regrettably, Congress bought the argument that Federal procurement and personnel policies have prevented the F.A.A. from modernizing the air traffic control systems," Senator Cohen said. "But Federal policies are not the problem." It was poor management, Mr. Cohen said.

By the early 1990's, with each month that passed, the completion date slipped three and a half weeks into the future, F.A.A. program managers say. Meanwhile, costs more than doubled, to $7.6 billion, as the project's goals expanded and each goal became tougher to achieve. The independent report said that by early 1994, the program was "schedule-driven, with little regard for the quality of the product."

The Problems Colliding Opinions, Unrealistic Goals

A major problem, one that dogged the project from the start, was the agency's inability to decide what it wanted the new system to be, the independent report found.

For example, the agency reached for the sky with the plan to consolidate its 254 terminal radar approach controls -- installations known as tracons that take jurisdiction over planes when they leave the immediate vicinity of an airport -- into its 20 air traffic control centers, which handle high-altitude, long-distance flights.

But consolidation would have reduced the ability of the sites to pinch-hit for each other, and thus would have created much higher computing demands in a single installation. I.B.M. gamely set out to do the job, but most of its effort was wasted because in 1992, after four years of work, the F.A.A. dropped nearly all the consolidation plans. The reason was apparently nontechnical: closing anything the F.A.A. operates is about as easy politically as closing a post office or a military base.

"You can't hardly close anything we have," Mr. Hinson said in an interview.

The F.A.A. could also not decide how information about airplanes would be manipulated on the controllers' screens.

The contract specified that blocks of text on the controllers' screens be movable, but did not say how. For controllers, how the text blocks were to be moved was a point of major concern because it would affect their work routines, and it was a subject on which they had divergent views.

"You get 100 controllers, you're going to get 120 opinions on something," said Will Faville, who represented the controllers union in the development process.

I.B.M. designed a system with a block that could be moved only with several keystrokes on the keyboard. But most controllers preferred a system more like the current one -- in which they move the text block with a button they can feel near the screen, without having to look away from the screen -- and they pressured the F.A.A. to get I.B.M. to change the new software.

As more software was developed, the controllers had other complaints. Management, too, was dissatisfied with much of the emerging system. Over all, there were 290 changes that required modifications to the contract, and hundreds of smaller changes, each increasing the total cost.

Another problem that doomed the project was the F.A.A.'s inability to distinguish pipe dreams of the perfect system from affordable, achievable features.

For example, the agency insisted that the new system have a reliability of 99.99999 percent, called seven nines, which meant, in theory, that it would work all but three seconds a year. But some engineers doubt that such reliability is achievable.

"Whether or not it was realistic, I don't think anyone analyzed," Mr. Del Balzo said.

An engineer brought in by the F.A.A. to help with the project, who spoke on the condition of anonymity, said, "We were asking I.B.M. to do things in that A.A.S. system that actually violated the laws of physics."

Today the F.A.A. acknowledges that seven-nines reliability is not necessary. And by 1994, when Mr. Hinson scaled down the program, the agency had decided to state the reliability goal more flexibly.

But by initially insisting on such a high level of reliability, the F.A.A. missed the opportunity to put in place a system that would be vastly more trustworthy than the one in operation now.

"The F.A.A. is so risk averse, it is shod with this idea, 'We can't field anything until it's absolutely perfect,' " said Mr. Richards, the Administrator in 1992.

The Future A Better System, But Still a Beat Behind

For top F.A.A. officials, the project was a long-term headache that was easy to overlook and pass on. J. Lynn Helms, who began the project in 1981, left office on Jan. 31, 1984, the end of the first Reagan term. Between his departure and Mr. Hinson's arrival on Aug. 10, 1993, there were three other administrators, and the office was vacant for 20 months.

Under the plan Mr. Hinson initiated in 1994, the new goal is to use hardware and software of the mid-1990's to do the same work as the existing equipment, which is from the early 1970's.

And although Loral Federal Systems, which bought the division of I.B.M. that was producing the software, continues to work on new equipment, the F.A.A. has decided to buy commercial off-the-shelf equipment to update other parts of the aging system. It has already purchased a control center for lower-altitude traffic in California.

But Mr. Hinson's efforts may not be enough to bring the F.A.A. into the 21st century. Experts say that even when the new system is finished, it will be very far from the cutting edge.

The most accurate way to determine an airplane's position now is through the Global Positioning System, in which a sensor on the plane uses satellite signals to calculate position precisely. Global positioning allows planes to fly straight from one airport to the next, rather than the way the F.A.A. directs them, from one imaginary point in the sky to the next, following a system of radio beacons that dates from 1941.

The F.A.A. has not based its new system on global positioning, which did not exist when the modernization project began.

But the agency knows it must eventually use such satellite technology. Global positioning will make it easy for planes to set their own direct courses, which would shave minutes and miles off nearly every flight.

The slimmed-down project initiated by Mr. Hinson is a step in the right direction, experts say, because even if it does not provide many new functions, it uses equipment that could eventually accommodate new features like global positioning.

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