CONTRACT TREND GIVES FAA PAUSE : VALUJET PAID OTHERS TO DO MAINTENANCE.

Byline: Adam Bryant The New York Times

With the nation's airlines farming out an increasing amount of maintenance work, the Federal Aviation Administration is struggling to monitor an intricate web of contractors that stretches around the world.

Before deregulation of the industry in 1978, airlines did most of the maintenance themselves, making it relatively simple for regulators to examine records and aircraft to ensure that procedures were being followed properly.

But now that task is far more complicated than experts predicted even five years ago. U.S. airlines are trying to save money by hiring companies domestically and overseas for major tasks like overhauling engines, and they are farming out maintenance and critical safety-related work like de-icing to various companies at the many airports they serve.

With this practice - called outsourcing - the potential for misunderstanding inevitably grows, aviation experts say, particularly because few airlines operate exactly the same way.

Federal officials believe that such a misunderstanding may have led to the May 11 crash of a ValuJet DC-9 outside Miami. ValuJet and its contractor Sabretech, a maintenance company that does work in Miami, are arguing over who was responsible for handling oxygen-generating devices that investigators suspect caused the crash, which killed 110 passengers and crew members.

The growing use of outsourcing by start-up airlines like ValuJet and major carriers is not inherently unsafe, experts say, and the FAA has responsibility for authorizing contractors in many foreign countries.

But such relationships do require more supervision. And the FAA has always assigned its front-line inspectors according to an airline's size, not its use of subcontractors.

``The nature of the beast has changed,'' said Daniel M. Kasper, an aviation consultant and a member of a 1993 presidential commission that studied the airline industry.

``While flying remains the safest form of transportation, it raises the question of whether the FAA regulatory model has changed sufficiently to oversee these virtual airlines.''

ValuJet could be considered a prime example of a ``virtual airline,'' relying heavily on contractors. Sabretech is one of six companies that ValuJet hired to do heavy maintenance, and ValuJet has also contracted with more than a dozen other companies, including airlines, to work on its planes at various airports.

ValuJet's dispute with Sabretech centers on the oxygen generators, which are small chemical reactors that produce intense heat when activated.

Sabretech, which is an FAA-authorized maintenance company, removed them from ValuJet MD-80s because the generators' shelf life had expired and ValuJet officials said they told the contractor to dispose of them.

Sabretech said it was given no such order and boxed up the generators, mislabeled them ``Oxy Canisters, Empty,'' and returned them to ValuJet. ValuJet then loaded the boxes into the cargo hold of Flight 592.

Internal FAA records show that on several occasions, inspectors were concerned about a lack of oversight by ValuJet of its contractors. An inspector found, for instance, that maintenance was not properly documented by one contractor and that ValuJet lacked procedures to make sure it was done.

The FAA also found that ValuJet did not make sure that companies it hired - including other airlines like Northwest and Carnival - were properly trained in its procedures. A company that trained ValuJet pilots did not send the airline records documenting poor performance of the ValuJet employees.

After an engine broke up in a ValuJet DC-9 that was about to take off from Atlanta in June 1995, the FAA wrote to ValuJet, telling it to develop safeguards against acquiring ``questionable assets.''

The plane was one of nine that ValuJet bought from a Turkish airline, which had worked on the faulty engine for a period when its FAA authorization had lapsed.

As part of its closer scrutiny of ValuJet after the crash, the FAA said it would conduct new inspections of ValuJet's contractors. ValuJet has suspended its contract with Sabretech, and ValuJet officials said they had improved their internal audit system for working with contractors.

Lewis H. Jordan, the airline's president, said the airline had been ``very responsive'' in addressing each of the FAA's concerns.