THE FLC COMPLIED WITH A TCASII RA TO DSND AND THE INTRUDING ACFT WAS BELOW SENDING A FALSE ENCODING ALTIMETER SIGNAL THAT HE WAS ABOVE.

Narrative

WE HAD JUST TAKEN OFF FROM MDW AND WERE LEVEL AT 6000 FT ON A 350 DEG HDG. THE TCASII GAVE A TA. LOOKING AT THE TCASII VSI DISPLAY; I SAW A TARGET AT 1 O'CLOCK AND +500 FT; BUT WHEN I LOOKED OUTSIDE I SAW TFC (AN E120) AT 1 O'CLOCK AND ABOUT 500 FT BELOW OUR ALT. WE THEN GOT AN RA TO DSND. THE CAPT STARTED DOWN; AND I POINTED OUT THE TFC BELOW US. I KEPT SCANNING FOR TFC ABOVE US WHILE I INFORMED ORD DEP OF OUR DSCNT. THE CAPT KEPT THE LOWER TFC IN SIGHT DURING THE DSCNT. AFTER WE PASSED THE LOWER TFC THE TCASII ANNOUNCED 'CLR OF CONFLICT.' THE ORD DEP CTLR SAID; 'SOMETHING IS NOT RIGHT HERE -- I AM GOING TO FIND OUT WHAT HAPPENED.' WE RETURNED TO OUR ORIGINAL HDG AND ALT. THE CTLR CALLED US BACK AND SAID THE OTHER ACFT (THE E120) HAD AN ERRONEOUS ALT READOUT FROM ITS XPONDER AND THE CTLR WAS ABLE TO CONFIRM THE OTHER ACFT'S XPONDER PROB. THIS IS A SIT THAT DUE TO A MALFUNCTION IN 1 ACFT THE TCASII COULD HAVE CAUSED A MIDAIR COLLISION. I DON'T KNOW HOW CLOSE WE WOULD HAVE COME TO THE OTHER ACFT HAD WE BEEN IN IMC. BUT I DO KNOW THE CAPT DID NOT DSND THE ACFT AT THE RATE INDICATED ON THE TCASII VSI DISPLAY (HE DSNDED LESS); IN ORDER TO MAINTAIN A SAFE DISTANCE FROM THE E120. BECAUSE OF POTENTIAL PROBS LIKE THIS; A SYS INSIDE THE ACFT MAY BE NECESSARY TO ALLOW THE PLTS TO CHK OR MONITOR THE ALT READOUT OF THE XPONDER.