Impact Technologies, with support from the Georgia Institute of Technology and Honeywell, propose to develop and demonstrate a suite of real-time Fault Contingency Management (FCM) algorithms for application within an Integrated Vehicle Health Management (IVHM) system. The proposed FCM software will implement a novel vehicle subsystem fault accommodation approach based on a seamless integration between real-time system health identification and adaptive controller techniques. Specifically, the continuous health assessment algorithms include a real-time adaptive recursive system identification algorithm and an enhanced real-time moving horizon estimation (MHE) algorithm that will be developed and implemented on a prototype embedded system. The proposed FCM software hierarchy will act from the subsystems level up through the vehicle level and will implement fault-accommodating control, health management, and contingency management to accomplish its goal. The significant technology advancement proposed herein is based on the use of dynamic simulation models in a real-time computing environment to not only update health status predictions, but also to determine "on the fly" how accommodate for them. At the conclusion of Phase I, the project team will deliver a proof-of-concept demonstration of the proposed techniques running on an embedded platform using high fidelity propulsion and aircraft simulation models.