The Department of Transportation (DOT) has awarded technology company Peraton a $12.5 billion contract to modernize and replace legacy air traffic control (ATC) systems, the department announced on Thursday.
Peraton competed against a joint-bid from Parsons and IBM for the contract, which was funded under the One Big Beautiful Bill earlier this year.
Secretary of Transportation Sean Duffy said that he wants the project to be completed by the end of 2028. The contract directly ties profit to performance and will penalize Peraton for poor results or unnecessary delays, according to the DOT, which said it drafted a “first-of-its-kind” contract that “will incentivize results.”
“Our highly-skilled, dedicated, and talented team of engineers, technologists, and mission experts stands ready to hit the ground running to deliver a system Americans can count on – one that is more secure, more reliable, and a model for the world to follow,” Peraton CEO and President Steve Schorer said in a statement.
The “brand-new” ATC systems will add high-speed network connections, radios, digital voice switches, and advanced radars. Upgrades include new surface radars at 44 airports, surveillance technology at 200, flight data tools at 89, information display systems at 435 towers, and simulation systems at 113 towers.
The plan also establishes a new consolidated Air Route Traffic Control Center – the first since the 1960s – and expands Alaskan weather coverage with 110 more stations and 64 camera sites.
Modernization efforts will occur simultaneously, though the department noted that telecommunication is its top priority.
A request for information was recently published by the department for the second phase of its ATC modernization, asking for details on industry’s common automation platform (CAP) solutions.
The first phase of DOT’s initiative – which Peraton won the contract for – will address critical vulnerabilities in national airspace by replacing legacy equipment and facilities, while the second phase will design and build new air route traffic control centers and integrate six of those into a new CAP.
DOT said that it needs an additional $20 billion to complete all its work. Bipartisan lawmakers have expressed skepticism about the FAA’s proposed $22 billion fiscal year 2026 request, warning that it seems to fall short of what is needed to modernize its systems without making trade-offs for safety, research, and workforce.