A Federal Aviation Administration program that would transform air traffic control and contribute billions of dollars to contractors' coffers could be scaled down and delayed a decade if US$1.2 trillion in automatic federal cuts occur as scheduled on Jan. 2, according to a new report.

One of two scenarios would occur if Congress doesn't find some alternative to sequestration, according to a new report conducted by Philadelphia-based economic research company Econsult Corp., and commissioned by the Aerospace Industries Association. Both scenarios would hit the Next Generation Air Transportation System -- or NextGen -- in varying degrees.

Budget reductions will either be distributed proportionally in the agency's overall budget, two-thirds of which supports current operations and one-third of which supports NextGen development, or they will primarily be applied to research and development, with the biggest impact felt by the NextGen program, the report states.

The second scenario would obviously be more damaging to NextGen, which received US$11 billion in funding through 2015 under the FAA reauthorization legislation President Barack Obama signed in February 2012. Cuts that focus on nonoperating portions of the FAA budget -- including research and development, capital equipment and facilities -- would translate into a 10-year delay in implementing a modified, less upgraded air transportation system by 2035. The current timetable estimates full implementation would be achieved by 2025.

The cost of lost benefits realized by NextGen include reduced aircraft operating expenditures and improved system performance, totaling more than US$200 billion by the end of 2035.

Additionally, the program cuts would hurt companies that already hold NextGen contracts.

The Boeing Co., General Dynamics Corp. and Exelis Inc., for example, each won 10-year engineering contracts in May 2010 worth up to US$1 billion each to demonstrate NextGen capabilities. Exelis also won a US$2.77 development of satellite-based procedures that will allow aircraft to fly more directly to their destinations under a US$2.77 million contract from the FAA, according to a May 14 company announcement.

Also potentially affected would be Fairfax-based SRA International Inc., Chantilly-based TASC Inc. and Human Solutions Inc. in D.C. , which each won contracts to compete for up to about US$400 million in task orders to provide engineering and program management services. The contracts, which have a base period of three years and two two-year options, are just one sliver of what the FAA has planned as it transforms air traffic control through its NextGen program.

The first scenario that directly hits current operations would lead to the closure of 246 airport control towers, the layoff of 1,200 air traffic controllers and 10,600 airport screeners and inspection officers. NextGen would be affected to a much lesser degree.