TECHNOLOGY - Dec. 15, 1992

FAA Contract: Hughes Aircraft Co.’s Fullerton operation might have an opportunity to benefit if the Federal Aviation Administration follows through on a threat to strip a $4-billion-dollar air-traffic control contract from IBM.

The FAA warned IBM in a letter last month that it must fix software problems and get back on schedule or face the loss of the contract. Hughes’ Fullerton operation lost out when the FAA awarded IBM the contract in July, 1988. Hughes had based its strategy for diversification and worldwide expansion on getting the federal job. The company invested four years of its time and $250 million in its bid to win the contract.

Hughes had planned to hire 700 employees if it won the program; instead, it eliminated or reassigned several hundred workers. Hughes is now building an air-traffic control system for Canada under a $325-million contract.

“We are aware of the situation,” Dan Reeder, spokesman at Hughes in Fullerton, said of the FAA warning. He would not comment further.