CANADA'S DEPARTMENT of Transport and Hughes Aircraft of Canada are renegotiating the terms of a C$659 million ($488 million) programme to install an integrated air-traffic-control system across the country.
Hughes' portion of the project is now valued at C$420 million. In documents filed with Transport Canada, however, Hughes claims that it will now cost more than C$800 million to complete its work. The company has offered to deliver a less-ambitious system for C$570 million.
Government officials say that Transport Canada may be able to add about C$100 million to the Canadian Automated Air Traffic System (CAATS), as the project is known, but the cash must come out of existing budgets.
The Government suspended payments to Hughes in December after it missed project milestones. The US Company has received C$230 million in progress payments since 1989, but with another C$100 million still owing. Transport Canada and Hughes hope to finish their financial discussions by 1 July.
The CAATS project is already two years behind schedule, in part because of extra design upgrades demanded by Transport Canada.
Hughes has also had difficulty managing the project's software development while trying to build a new Canadian business from scratch.
Under the original schedule, unveiled in 1989, Hughes was to complete installation of flight data-processing and display equipment by December, 1996.
Source: Flight International
