Aviation Security
Progress Made to Set Up Program Using Private-Sector Airport Screeners, but More Work Remains Gao ID: GAO-06-166 March 31, 2006In November 2004, as required by law, the Transportation Security Administration (TSA) began allowing all commercial airports to apply to use private screeners in lieu of federal screeners as part of its Screening Partnership Program (SPP). GAO's prior work found that airports and potential private screening contractors had concerns about the SPP, including whether they would be liable in the event of a terrorist attack and how roles and responsibilities would be divided among TSA airport staff and private screening contractors. This report addresses TSA's efforts to (1) provide liability protection to private screening contractors and airports and address other SPP stakeholder concerns; (2) achieve cost-savings through the SPP; and (3) establish performance goals and measures for the SPP.
DHS and Congress have begun to address whether liability protection may be offered to current and prospective private screening contractors and airports using private screeners. DHS has already provided some liability protection to three of the four current private screening contractors. However, DHS officials stated that they cannot provide additional coverage, which would render contractors virtually immune from all pertinent claims, because TSA has not finalized performance standards that would allow DHS to determine if contractors will perform as intended--a criterion that must be satisfied before providing such additional protection. Recently enacted legislation shields airports from virtually all liability resulting from the negligence or wrongdoing committed by a private screening company or its employees. TSA has also taken action to improve the screener hiring process by granting contractors and TSA airport officials more input and flexibility in the hiring process. Additionally, TSA has defined the roles and responsibilities for SPP stakeholders--TSA airport staff and private screening contractors, among others--in its August 2005 SPP transition plan. However, the details in this plan have not been shared with private screening contractors, and all four contractors we interviewed were unclear about TSA staff roles and responsibilities at the airports they served. TSA has stated that the SPP will operate at a cost that is competitive with equivalent federal operations and will achieve cost-savings where possible. Over the last 3 years, TSA has awarded cost-reimbursement contracts with an award fee component for screening services at four of the five airports currently using private screeners. The award fee is based, in part, on contractor cost-savings. However, opportunities for TSA cost-savings may be limited because under the cost-reimbursement contracts TSA bears most of the cost risk--the risk of paying more than it expected. TSA plans to shift more cost risk to contractors by competitively awarding fixed-price-award fee contracts for screening services at the four smallest airports that will participate in the SPP. TSA also plans to competitively award fixed-price contracts for screening services at larger airports, but stated that they cannot do so for up to 2 years--when officials believe that screening costs at larger airports will be better known. TSA has developed performance goals and has begun drafting related measures and targets to assess the performance of private screening contractors under the SPP in the areas of security, customer service, costs, workforce management, and innovation. For example, one of the measures would require contractors to ensure that new hires receive required training. TSA's related target for this measure is that 100 percent of new hires will complete required training. These same measures and targets will also be used by DHS to assess whether to award full liability coverage under the SAFETY Act. TSA officials stated that DHS must approve the draft performance measures and targets before they can be finalized. As of January 2006, DHS had not yet completed its review.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-06-166, Aviation Security: Progress Made to Set Up Program Using Private-Sector Airport Screeners, but More Work Remains
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United States Government Accountability Office:
GAO:
Report to the Chairman, Subcommittee on Aviation, Committee on
Transportation and Infrastructure, House of Representatives:
March 2006:
Aviation Security:
Progress Made to Set Up Program Using Private-Sector Airport Screeners,
but More Work Remains:
GAO-06-166:
GAO Highlights:
Highlights of GAO-06-166, a report to the Chairman, Subcommittee on
Aviation, Committee on Transportation and Infrastructure, House of
Representatives.
Why GAO Did This Study:
In November 2004, as required by law, the Transportation Security
Administration (TSA) began allowing all commercial airports to apply to
use private screeners in lieu of federal screeners as part of its
Screening Partnership Program (SPP). GAO‘s prior work found that
airports and potential private screening contractors had concerns about
the SPP, including whether they would be liable in the event of a
terrorist attack and how roles and responsibilities would be divided
among TSA airport staff and private screening contractors. This report
addresses TSA‘s efforts to (1) provide liability protection to private
screening contractors and airports and address other SPP stakeholder
concerns; (2) achieve cost-savings through the SPP; and (3) establish
performance goals and measures for the SPP.
What GAO Found:
DHS and Congress have begun to address whether liability protection may
be offered to current and prospective private screening contractors and
airports using private screeners. DHS has already provided some
liability protection to three of the four current private screening
contractors. However, DHS officials stated that they cannot provide
additional coverage, which would render contractors virtually immune
from all pertinent claims, because TSA has not finalized performance
standards that would allow DHS to determine if contractors will perform
as intended”a criterion that must be satisfied before providing such
additional protection. Recently enacted legislation shields airports
from virtually all liability resulting from the negligence or
wrongdoing committed by a private screening company or its employees.
TSA has also taken action to improve the screener hiring process by
granting contractors and TSA airport officials more input and
flexibility in the hiring process. Additionally, TSA has defined the
roles and responsibilities for SPP stakeholders”TSA airport staff and
private screening contractors, among others”in its August 2005 SPP
transition plan. However, the details in this plan have not been shared
with private screening contractors, and all four contractors we
interviewed were unclear about TSA staff roles and responsibilities at
the airports they served.
TSA has stated that the SPP will operate at a cost that is competitive
with equivalent federal operations and will achieve cost-savings where
possible. Over the last 3 years, TSA has awarded cost-reimbursement
contracts with an award fee component for screening services at four of
the five airports currently using private screeners. The award fee is
based, in part, on contractor cost-savings. However, opportunities for
TSA cost-savings may be limited because under the cost-reimbursement
contracts TSA bears most of the cost risk”the risk of paying more than
it expected. TSA plans to shift more cost risk to contractors by
competitively awarding fixed-price-award fee contracts for screening
services at the four smallest airports that will participate in the
SPP. TSA also plans to competitively award fixed-price contracts for
screening services at larger airports, but stated that they cannot do
so for up to 2 years”when officials believe that screening costs at
larger airports will be better known.
TSA has developed performance goals and has begun drafting related
measures and targets to assess the performance of private screening
contractors under the SPP in the areas of security, customer service,
costs, workforce management, and innovation. For example, one of the
measures would require contractors to ensure that new hires receive
required training. TSA‘s related target for this measure is that 100
percent of new hires will complete required training. These same
measures and targets will also be used by DHS to assess whether to
award full liability coverage under the SAFETY Act. TSA officials
stated that DHS must approve the draft performance measures and targets
before they can be finalized. As of January 2006, DHS had not yet
completed its review.
What GAO Recommends:
GAO is recommending that the Department of Homeland Security (DHS)
direct TSA to document and communicate roles and responsibilities for
managing screener operations under the SPP, and establish a time frame
for finalizing the SPP performance measures and targets.
DHS reviewed a draft of this report and generally concurred with GAO‘s
findings and recommendations.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-166].
[End of Section]
Contents:
Letter:
Results in Brief:
Background:
DHS and Congress Have Begun to Address Liability Protection Issue at
Airports Using Private Screeners, but Stakeholder Concerns about
Liability and Other Program Issues Remain:
TSA Provides Some Incentives to Contractors to Achieve Cost-Savings and
Plans to Shift More Cost Risk to Contractors at Larger Airports in 1 to
2 Years:
Performance Goals and Measures Developed by TSA to Assess SPP
Contractors Have Not Been Approved by DHS:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Department of Homeland Security:
Appendix III: GAO Contact and Staff Acknowledgments:
Related GAO Reports:
Tables:
Table 1: Airports That Participated in the 2-Year Private Screener
Pilot Program:
Table 2: Non-Pilot Program Airports That Applied to Use Private
Screeners to Conduct Screening Operations from November 2004 through
January 2006:
Table 3: Type of Contract and Contract Amount for the Four Private
Screening Contractors for the Period November 19, 2004, through May 18,
2006:
Table 4: TSA Performance Measures for Evaluating SPP Contractors:
Abbreviations:
ATSA: Aviation and Transportation Security Act;
DHS: Department of Homeland Security;
FAR: Federal Acquisition Regulation;
FSD: Federal security director;
GPRA: Government Performance Results Act;
SAFETY Act Support of Anti-terrorism by Fostering Effective
Technologies Act;
SPP: Screening Partnership Program;
TIP: threat image projection;
TSA: Transportation Security Administration:
United States Government Accountability Office:
Washington, DC 20548:
March 31, 2006:
The Honorable John L. Mica:
Chairman:
Subcommittee on Aviation:
Committee on Transportation and Infrastructure:
House of Representatives:
Dear Mr. Chairman:
The Aviation and Transportation Security Act (ATSA), enacted after the
terrorist attacks of 2001, required the federal government to take over
the job of screening airline passengers and their checked baggage from
the private sector.[Footnote 1] Among other things, ATSA further
required that the Transportation Security Administration (TSA) initiate
a 2-year security screening pilot program at up to five commercial U.S.
airports. The purpose of this pilot program, as defined by TSA, was to
test the feasibility of utilizing private-sector screeners to screen
passengers and their checked baggage in a post-9/11 environment, by
allowing private-sector screeners--hired and managed by private
screening companies under contract to TSA--to provide screening
services in lieu of federal screeners at selected airports, with TSA
oversight. The pilot program ran from November 2002 to November 2004.
During that time, four private screening contractors served the five
pilot program airports (one contractor served two airports).
In November 2004, as the private screener pilot program concluded, ATSA
required that TSA begin allowing all commercial airports to apply to
TSA to transition from a federal to a private screener workforce. To
support this effort, TSA created the Screening Partnership Program
(SPP) to allow all commercial airports an opportunity to apply to TSA
for permission to use qualified private screening contractors and
private-sector screeners. Currently, the four contractors that
participated in the private screener pilot program are under contract
to TSA to provide screening services at the five airports they have
already been serving, and all five airports that participated in the
pilot program have applied and been accepted to participate in the SPP.
In February 2006, TSA competitively awarded a new contract for
screening services for one of the five pilot program airports. Also,
during the 16 months since the SPP was initiated, two additional
airports have applied to the SPP. TSA approved one of these airport's
application and in December 2005 awarded a contract to a private
screening contractor--a contractor currently providing screening
services at two of the five pilot program airports--that enabled this
airport to transition from federal to private screeners in February
2006. The other airport withdrew its application.
In November 2004, we reported on TSA's preliminary efforts to allow
airports to apply to use private screening contractors to perform
passenger and checked baggage screening services through the SPP, and
how private screening contractors would compete to provide those
services. We reported that key stakeholders we interviewed--private
screening contractors, airport operators, and aviation associations--
were concerned about several aspects of the program. Specifically,
stakeholders expressed concerns about liability protection--whether and
to what extent private screening contractors and airports would be
liable in the event that threat objects or weapons were not detected at
passenger screening checkpoints or in checked baggage, leading to a
terrorist incident. At issue was whether the Support Anti-terrorism by
Fostering Effective Technologies Act of 2002 (the SAFETY Act) would
offer private screening contractors and airport operators federal
protection from potential lawsuits arising out of or resulting from
aviation-related acts of terrorism.[Footnote 2] These stakeholders also
were concerned about the degree of management control they would have
over various aspects of screening services, including how roles and
responsibilities would be divided among Federal Security Directors
(FSD)[Footnote 3] and their staff and private screening contractor
managers and staff.[Footnote 4]
In this report, we address (1) TSA's and the Department of Homeland
Security's efforts to determine whether and how liability protection
will be provided to private screening contractors and airports that
participate in the SPP, and actions taken on other stakeholder concerns
related to participation in the SPP; (2) how TSA has determined it will
achieve cost-savings goals for screener operations through the SPP,
specifically with respect to the choice of contract used, and contract
terms; and (3) TSA's progress in developing and implementing
performance goals, measures, and targets to assess the performance of
the private screening contractors who will participate in the SPP.
To satisfy our objectives, we analyzed documentation related to TSA's
SPP and the 2-year private screener pilot program that preceded the SPP
and interviewed various officials. Specifically, we interviewed 24
federal aviation officials within the Department of Homeland Security
(DHS) and TSA, including FSDs at seven airports (the five pilot program
airports and two airports that applied to participate in the SPP,
namely, Elko Regional Airport in Elko, Nevada, and Sioux Falls Regional
Airport in Sioux Falls, South Dakota); airport operators at all five
airports with private screeners and the private screening contractors
at these airports; officials with the two airports that have applied to
participate in the SPP; officials with two aviation associations that
represent hundreds of airports, including many large commercial
airports; and a major liability insurance provider. To determine how
TSA responded to stakeholder concerns about liability protection and
other issues related to participation in the SPP, we reviewed SPP
program guidance developed for airports, the SAFETY Act, and related
documents obtained from DHS. Additionally, we reviewed ATSA provisions
related to the SPP and our related reports, and interviewed DHS
officials about the SAFETY Act's applicability to the SPP. To assess
the status of TSA's efforts to achieve cost-savings in screener
operations through the SPP, we reviewed the contracts and pilot program
extension contracts TSA executed with the current private screening
contractors, TSA's contracting policies and guidance, and the Federal
Acquisition Regulation. We also reviewed an independent consultant's
study prepared for TSA that evaluated the costs of screening at 15
airports, including all 5 pilot program airports. In addition, we
interviewed TSA officials about their choice of contract type to award
for the SPP. To assess TSA's progress in developing and implementing
performance goals and measures to assess the performance of the private
screening contractors that participate in the SPP, we reviewed TSA's
draft performance quality assurance surveillance and award fee plan for
the SPP. We also reviewed our work on the Government Performance and
Results Act (GPRA) and on TSA's private sector screening pilot program
and its efforts to implement the SPP. We also interviewed TSA officials
about their efforts to develop performance goals, measures, and targets
for the SPP. Additional information on our scope and methodology is
contained in appendix I.
We conducted our work from March 2005 through March 2006 in accordance
with generally accepted government auditing standards.
Results in Brief:
DHS and Congress have begun to address whether and how liability
protection may be offered to three of the four current private
screening contractors (the fourth has not applied for coverage) and
airports, at airports where private screeners are used. Specifically,
DHS has provided contractors with some of the liability protections
available under the SAFETY Act, including a limit on the damages a
plaintiff may recover to the extent of the contractor's insurance
coverage.[Footnote 5] DHS SAFETY Act officials stated that the
department cannot provide the most extensive level of protection
available under the SAFETY Act, rendering contractors virtually immune
from all pertinent claims, because DHS cannot ascertain whether
contractors are performing as intended--a criteria that the SAFETY Act
requires before awarding such coverage. DHS officials stated they could
not determine this because---as we discuss below---TSA has not yet
finalized a standard of performance that would serve as the basis for
DHS's evaluation. While none of the private screening contractors we
interviewed stated that the lack of this additional coverage would
preclude their participation in the SPP, all four stated that some form
of SAFETY Act coverage was an essential supplement to their commercial
liability insurance policies. Regarding airport liability under the
SPP, Congress has granted airports legal protection from lawsuits.
Specifically, under the fiscal year 2006 DHS Appropriations Act,
airport operators are shielded from virtually all liability resulting
from the negligence or wrongdoing committed by a private screening
company, its employees, or federal screeners. On an additional issue of
concern to stakeholders--the screener hiring process--TSA has made an
effort to improve this process by granting contractors and FSDs more
input and flexibility in the process, such as providing two options for
assessing screener candidates and conducting more frequent screener
assessments. Although TSA made improvements to the hiring process,
however, some stakeholders, as well as FSDs at airports with federal
screeners, remain concerned about the timing of the assessments and the
length of time the assessment process takes. Stakeholders also
expressed concern about the roles and responsibilities of federal and
private-sector staff at airports using private screeners. TSA has since
defined roles for FSDs, their staff, and private screening contractors,
among others, in its August 2005 SPP transition plan, though TSA has
not communicated to or shared the details of the plan with private
screening contractors. TSA headquarters officials stated that they
presumed that FSDs had communicated this information to private
screening contractors. Furthermore, TSA officials stated that they
communicated stakeholder roles in the SPP's June 2004 guidance.
However, our review of the guidance found that it did not clearly
delineate the roles and responsibilities of TSA airport staff and the
private screening contractors. For example, the guidance did not
provide any information on the roles and responsibilities of some TSA
airport staff, such as screening managers and training coordinators, or
clarify how their roles and responsibilities would differ from those of
the private screening contractors. Additionally, the four private
screening contractors we interviewed stated that the roles of TSA staff
had not been clearly defined, and 18 of 25 FSDs we interviewed in the
past, as well as an independent consulting firm hired by TSA to assess
the pilot program, have concurred.[Footnote 6] According to our
standards for internal controls, agency management should ensure there
are adequate means of communicating with external stakeholders on
issues that may have a significant impact on the agency's ability to
achieve its goals. By not sharing detailed information on the roles and
authorities described in the SPP transition plan with private screening
contractors, TSA may be missing an opportunity to support the effective
performance and management of essential functions related to the
screening process. TSA officials stated that they plan to clearly
delineate roles and responsibilities of the FSD, FSD staff, and private
screening contractors in future SPP contracts.
TSA has documented its intention that the SPP will operate at a cost
that is competitive with equivalent federal operations and will achieve
cost-savings where possible. TSA's cost reimbursement-based contracts
for screening services at four of the five airports currently using
private screeners provide some cost incentives in the form of an award
fee tied in part to the contractor's ability to achieve cost
efficiencies and innovations. TSA could shift more cost risk from the
government to the contractors, as federal acquisition policy suggests,
by competitively awarding a different type of contract--specifically, a
fixed-price contract--which provides for a price based on the
contractor's cost experience and is not subject to any adjustment. To
this end, TSA is in the process of awarding or planning to award fixed-
price contracts to the contractors that will provide screening services
at three of the four smallest airports that will participate in the SPP
(and has already done so at the forth airport on a non-competitive
basis). TSA officials stated that they cannot award this type of
contract for screening services at larger airports for another 1 to 2
years because they stated that they do not know the costs of screening
at these airports. Officials stated that TSA would therefore be at
greater risk of awarding a fixed-price contract for a higher cost than
might actually be incurred. TSA officials acknowledged that TSA had
already identified and collected some cost and performance data on
passenger and checked baggage screening operations at 15 airports with
private and federal screeners, including all five pilot airports, and
completed a study in 2004 that estimated how much TSA spent for
screening operations at each of the five pilot screening program
airports. However, they stated that additional cost information based
on the actual costs of participating in the SPP is needed for larger
airports because the SPP contracts differ from the pilot and extension
contracts that TSA previously awarded. For example, the SPP contracts
will allow for contractors to recommend and, if approved, implement
innovations, and to select among options for assessing screener
candidates and training screeners. TSA officials said that it would be
difficult for prospective SPP contractors for larger airports to
accurately estimate the costs of providing screening services for a
fixed-price contract. As a result, TSA plans to continue using cost-
reimbursement contracts for screening services at the two largest
airports for up to 2 additional years in order to determine estimated
costs under the SPP contracts.
TSA developed performance goals and began drafting related measures and
targets to assess the performance of private screening contractors
under the SPP in the areas of security, customer service, costs,
workforce management, and innovation. However, DHS, which is currently
reviewing the performance goals, measures, and targets developed by
TSA, has not yet completed its review nor set a time frame for doing
so. According to TSA's draft quality assurance and award fee plan for
the SPP, 14 separate performance measures have been established and
performance targets--a tangible objective against which actual
achievement will be compared--have been developed for 10 of the 14
measures. For example, 1 of the 14 measures would require contractors
to ensure that new hires receive required training before assuming
screener duties. TSA's related target for this measure is that 100
percent of new hires will receive required training. TSA officials
stated that contractors will be required to meet the performance
targets set by TSA specific to the airports they serve. Working with
these airports, TSA stated that it has already established a baseline
describing how federal screeners or private screening contractors have
actually performed at individual airports, and these baseline data are
being used to set performance targets for each airport. Officials
further stated that TSA is considering providing financial incentives
to contractors for a limited time in an effort to move their airports
to meet TSA's baseline performance level. In March 2005, TSA officials
stated that they had recently submitted the performance goals,
measures, and targets to DHS. However, as of January 30, 2006, DHS had
not yet approved the SPP performance metrics, and had not set a
deadline for doing so. We asked TSA and DHS officials which office
within DHS was responsible for approving these performance metrics, but
the officials were not able to provide us with this information. Until
these goals, measures and targets are approved by DHS, TSA will not be
able to implement performance measures to evaluate private screening
contractors under the SPP. Further, these same measures and targets
will be used by DHS to determine whether to award private screening
contractors with certification status, the highest level of liability
protection available under the SAFETY Act. Until the SPP measures and
targets are finalized, DHS officials stated that they cannot determine
whether contractors will perform as intended--a criterion that must be
satisfied before awarding certification status.
To help address stakeholder concerns, we are recommending that the
Secretary of DHS direct the Assistant Secretary, TSA, to formally
document and communicate to federal and private-sector stakeholders the
roles and responsibilities for managing screener operations under the
SPP. In addition, to help ensure the completion of a performance
management framework for the SPP and to promote accountability of SPP
contractors for achieving desired program outcomes, we recommend that
the Secretary of DHS establish a time frame for completing its review
of the performance goals, measures, and targets for the SPP so that TSA
may apply them at the earliest possible opportunity.
We provided a draft copy of this report to DHS for review. DHS, in its
written comments, generally concurred with our findings and
recommendations and stated that efforts to implement our
recommendations will help to develop a more effective, efficient, and
economical administration of TSA's SPP. The full text of DHS's comments
is included in appendix II.
Background:
Statutory Provisions Related to SPP:
ATSA was enacted on November 19, 2001, in response to the September 11,
2001, terrorist attacks. ATSA established the TSA and charged it with
responsibility for strengthening security in all modes of
transportation, including aviation. One of the most significant changes
mandated by ATSA was the shift from the use of private-sector screeners
to perform airport screening operations to the use of federal
screeners. Prior to ATSA, passenger and checked baggage screening had
been performed by private screening companies under contract to
airlines. ATSA required TSA to create a federal workforce to assume the
job of conducting passenger and checked baggage screening at commercial
airports. The federal workforce was to be in place by November 2002. At
the same time, ATSA mandated that TSA establish a 2-year pilot program
using qualified private screening companies to screen passengers and
checked baggage, with TSA oversight.[Footnote 7] Pursuant to section
108 of ATSA, TSA selected five airports, one from each airport security
category, to participate in the pilot program.[Footnote 8] TSA also
competitively selected four contractors (one contractor serves two
airports) to conduct screening at the pilot airports. Table 1 lists the
airports and private screening contractors that participated in the
pilot program.
Table 1: Airports That Participated in the 2-Year Private Screener
Pilot Program:
Airport and location: San Francisco International, Calif;
Security category: X;
Contractor: Covenant Aviation Security.
Airport and location: Kansas City International, Mo;
Security category: I;
Contractor: FirstLine Transportation Security.
Airport and location: Greater Rochester International, N.Y;
Security category: II;
Contractor: McNeil Security International.
Airport and location: Jackson Hole Airport, Wyo;
Security category: III;
Contractor: Jackson Hole Airport Board.
Airport and location: Tupelo Airport, Miss;
Security category: IV;
Contractor: Covenant Aviation Security.
Source: TSA.
[End of table]
Section 108 further permitted the more than 400 commercial airports
using federal passenger and checked baggage screeners to apply to TSA
to use private rather than federal screeners at the conclusion of the
pilot.[Footnote 9] Beginning on November 19, 2004, all commercial
airports with federal security screening became eligible to apply to
opt-out of using federal screeners through the newly established SPP.
An airport operator may submit to TSA an application to have the
screening of passengers and checked baggage at an airport be carried
out by the screening personnel of a qualified private screening
company, under a contract entered into between the private screening
contractor and TSA. In addition to assessing airport applications for
using private screeners, as part of the SPP, TSA plans to select
qualified private screening companies that apply and meet ATSA and TSA
requirements to conduct screening, including airports that seek to
apply to serve as the private screening contractor.
The five airports selected to participate in the pilot program have
applied and been accepted to the SPP. TSA awarded, on a non-competitive
basis, new extension contracts (that replaced the original pilot
program contracts) to the incumbent private screening contractors at
the five pilot program airports effective November 19, 2004. The
contracts enable the four private screening contractors to continue
performing screening operations through May 18, 2006.[Footnote 10] As
in the original pilot program contracts, the new contracts require
private screening contractors to adhere to several ATSA provisions,
including that:
* the level of screening services and protection provided at the
airport under the contract will be equal to or greater than the level
that would be provided at the airport by federal government personnel;
* the private screening company be owned and controlled by a citizen of
the United States;
* the private screening company, at a minimum, meet employment
standards, compensation and benefits rates, and performance
requirements that apply to federal screeners; and:
* all private screener candidates meet the same minimum qualifications
as federal screeners, including U.S. citizenship (or being a national
of the United States), high school diploma or equivalent, English
proficiency, and pass a criminal background check.
TSA will make the final decision to approve any application submitted
for participation in the SPP and reserves the right to consider airport
specific threat intelligence and an airport's record of compliance with
security regulations and security requirements to determine the timing
of any transition to private screening. TSA may also impose a delay on
when an airport can transition to private screening based on such
factors as peak travel season and the total cost of providing screening
services at an airport.
Applicants to the SPP as of January 2006:
During the period November 2004 through January 2006, 7 out of the more
than 400 commercial airports had applied to participate in the SPP. In
addition to the five airports that participated in the pilot program,
as of January 30, 2006, two additional airports that did not
participate in the pilot program had applied to use private screeners-
-Elko Regional Airport in Nevada and Sioux Falls Regional Airport in
South Dakota.[Footnote 11] However, after discussions with TSA
officials, Elko Regional Airport submitted a letter to TSA on September
30, 2005, seeking to withdraw its application on the grounds that the
City of Elko could not qualify as a private screening company, thereby
mooting its intention that the airport would serve as the
contractor.[Footnote 12] On October 17, 2005, TSA replied back to Elko,
acknowledging Elko's withdrawal of its application to participate in
the SPP. Table 2 provides information on the two airports that applied
to the SPP, as of January 2006.
Table 2: Non-Pilot Program Airports That Applied to Use Private
Screeners to Conduct Screening Operations from November 2004 through
January 2006:
Selected airport characteristics; Elko Regional Airport;
Security category: III;
Screeners authorized in FY 2005[A]: 17;
Application date: November 2004;
Reason for applying: To act as provider of private screening services
to achieve cost-savings and staff efficiencies;
Status of application: Application withdrawn.
Selected airport characteristics; Sioux Falls Regional Airport.
Security category: II;
Screeners authorized in FY 2005[A]: 37;
Application date: April 2005;
Reason for applying: To have a private screening company provide
screening services to enhance customer service;
Status of application: Application approved and contract awarded.
Source: TSA.
[A] The number of screeners authorized is based on full-time
equivalents (FTE). One FTE is equal to 1 work year or 2,080 non-
overtime hours.
[End of table]
We did not attempt to identify the reasons that only 7 of more than 400
commercial airports that were eligible to participate in the SPP had
submitted an application. However, in our November 2004 report on the
SPP, we reported that of the 26 airport operators we interviewed, 20
said their airport would not apply to participate in the SPP in the
first year of the program, 5 were uncertain whether to apply for the
2004 cycle, and 1 said his airport planned to apply, but only for its
international passenger terminal.[Footnote 13] Among the 20, 16 said
they were satisfied with federal screeners or did not see any benefit
to applying to participate in the SPP and 13 cited concerns about
airport liability in the event of a terrorist attack.[Footnote 14]
In May 2005, TSA approved the SPP application for the Sioux Falls
airport, and in December 2005, TSA awarded a contract for passenger and
checked baggage screening services at Sioux Falls to a private
screening contractor. In February 2006, this award enabled Sioux Falls
airport to transition from TSA federal screeners to private screeners
employed by the contractor. According to the contractor, it will use 30
FTEs, 7 less than TSA's screener allocation for Sioux Falls airport,
without compromising security or customer service. The contractor
expects to achieve operational efficiencies and cost savings for its
screening operations at this airport due to the reduction in
FTEs.[Footnote 15]
In addition, during February 2006, TSA awarded a contract to a private
screening contractor at one of the five pilot program
airports.[Footnote 16] TSA is in the process of awarding contracts to
the remaining four airports that applied to use private screeners. As
of February 28, 2006, TSA received proposals from private screening
companies for the Greater Rochester International, Tupelo, Kansas City,
and San Francisco International airports. TSA also released the request
for proposals for San Francisco International airport.
TSA also approved 34 private screening companies for listing on a
qualified vendors list, which identifies that these companies are
eligible to perform passenger and checked baggage screening services in
the SPP.
Overview of TSA Budget for SPP:
DHS's fiscal year 2006 appropriations provides nearly $2.54 billion to
fund the screener workforce--about $2.4 billion for federal passenger
and checked baggage screener full-time equivalents[Footnote 17] and an
additional $139.6 million to pay for screening contractors at the five
pilot program airports. In accordance with its appropriations, TSA
plans to fund the SPP from the same budget line item as federal
screening operations to provide flexibility on the number of airports
that can participate in the program. In this manner, the costs for
contracts with private screening contractors are to be funded by the
cost of the federal operations that are being displaced.
Overview of the SAFETY Act:
The SAFETY Act, enacted as part of the Homeland Security Act of 2002,
offers liability and other protections to sellers of qualified anti-
terrorism technologies.[Footnote 18] According to DHS, services, such
as screening services, are eligible to receive liability protection
under the SAFETY Act if designated as qualified anti-terrorism
technologies, thus limiting liability risks for the private screening
contractor and its subcontractors, suppliers, vendors, and
customers.[Footnote 19] SAFETY Act protection pertains to "claims
arising out of, relating to, or resulting from an act of terrorism"
where qualified anti-terrorism technologies have been
deployed.[Footnote 20] According to DHS, the SAFETY Act reflects the
intent of Congress to ensure that the threat of liability does not
deter the potential manufacturers or sellers of anti-terrorism
technologies from developing and commercializing technologies that
could significantly reduce the risks or mitigate the effects of large-
scale acts of terrorism.[Footnote 21] The SAFETY Act does not offer
indemnification (compensation for losses incurred) to sellers of
qualified anti-terrorism technology but rather limits, and in some
instances may completely bar, claims brought against sellers of anti-
terrorism technologies that have been deployed in defense against or
response or recovery from a terrorist incident.[Footnote 22] If a
seller of a potential anti-terrorism technology wishes to be awarded
SAFETY Act protections, the seller must formally apply to the
department using the forms provided by DHS, furnish the entire
requisite supporting data and information, and successfully demonstrate
compliance with the act's requirements.
Types of Contracts Awarded by TSA:
TSA awarded one of two types of contracts for extending contractor
performance at the five pilot program airports. Both these types of
contracts were awarded on a non-competitive basis to the private
screening contractors. TSA awarded the first type of contract--cost-
plus-award-fee contracts (a type of cost-reimbursement contract)--to
the four private screening contractors providing screening services at
four of the five pilot program airports. These contracts, which are
generally used when the costs are not known, provide for payment of
allowable incurred costs, to the extent prescribed in the contract. A
cost-plus-award-fee contract provides for a fee consisting of (1) a
base amount that is a percentage of the estimated cost fixed at
inception of the contract and (2) an award amount that the contractor
may earn in whole or in part during the contract period and that is
sufficient to provide motivation for excellence in such areas as
quality, timeliness, technical ingenuity, and cost-effective
management. The actual award amount is based upon an evaluation by TSA
compared against criteria spelled out in the contract. This
determination and the methodology for determining the award fee are
unilateral decisions made solely at the discretion of the government.
TSA awarded the second type of contract--a fixed-price-award-fee
contract--to one private screening contractor. This type of contract is
generally used when the requirements are reasonably known and a
reasonable basis for firm pricing by the contractor exits. A fixed-
price award fee contract establishes a fixed price (including normal
profit) for the effort, which will be paid for satisfactory contract
performance, and an award fee. The award fee earned (if any) will be
paid in addition to that fixed-price based on periodic evaluations of
the contractor's performance against an award-fee plan. TSA awarded a
fixed-price-award-fee contract to a private screening contractor at
Tupelo airport, a security category IV airport, the smallest airport.
According to the Federal Acquisition Regulation (FAR), which generally
governs federal government procurement activities, the negotiation of
contract type and price (or estimated cost and fee) should result in
reasonable contractor risk and provide the contractor with the greatest
incentive for efficient and economical performance.[Footnote 23]A firm-
fixed-price contract, which best utilizes the basic profit motive of a
business enterprise, shall be used when the contractor risk involved is
minimal or can be predicted with an acceptable degree of certainty. The
FAR provides that when a reasonable basis for firm pricing does not
exist, other contract types (such as cost reimbursement) should be
considered, and negotiations should be directed toward selecting a
contract type that will appropriately tie profit to contractor
performance.[Footnote 24] As a service continues to be contracted over
time, however, and after experience provides a basis for firmer
pricing, the FAR advises that cost risk should shift to the contractor
and a fixed-price contract should be considered.[Footnote 25] The FAR
specifically states that contracting officers should avoid protracted
use of a cost-reimbursement contract after experience provides a basis
for firmer pricing. Additionally, under the FAA acquisition policy
followed by TSA, "[t]he use of fixed-price contracts is strongly
encouraged whenever appropriate."[Footnote 26]
DHS and Congress Have Begun to Address Liability Protection Issue at
Airports Using Private Screeners, but Stakeholder Concerns about
Liability and Other Program Issues Remain:
DHS awarded some of the liability protections available under the
SAFETY Act to three of the four private screening contractors that
applied for it and stated that it will decide the status of future
applications on a case-by-case basis in accordance with criteria
described in the act. However, DHS cannot award the most extensive
level of protection under the SAFETY Act, certification status, until
it can determine whether contractors will perform as intended--a
criterion that must be satisfied before awarding such coverage. DHS
officials stated that DHS has not been able to award SAFETY Act
certification status to contractors because TSA has not yet finalized
performance standards for assessing whether contractors have performed
as intended. While all four current screening contractors we
interviewed stated that SAFETY Act protection was important, they did
not state that they would be unwilling to participate in the SPP
without certification under the SAFETY Act. For example, one contractor
said it had too much time and money invested in providing private
screening services to not participate in the SPP. Congress has since
granted legal protection from lawsuits to all airports where TSA
conducts or oversees passenger and checked baggage screening.
Specifically, the fiscal year 2006 DHS appropriations act shields
airports from, among other things, virtually all liability related to
negligence or wrongdoing by private screening contractors, their
employees, or federal screeners. In addition, TSA made an effort to
improve the screener hiring process by granting contractors and FSDs
more input and flexibility in the hiring process, though some
contractors, as well as FSDs at airports with federal screeners, remain
concerned about the timing of the assessments and the length of time
the assessment process takes. TSA has also taken steps to clarify SPP
roles and responsibilities between federal and private sectors, but the
four private screening contractors we interviewed still had questions
about the roles and responsibilities of TSA staff at the airports they
served.
DHS Has Provided SAFETY Act Protection to Three of the Four Current
Private Screening Contractors and Will Decide Future Coverage on a Case-
by-Case Basis:
Officials at DHS' Science and Technology Division stated that all anti-
terrorism technologies submitted to the department for protection under
the SAFETY Act are evaluated--including screener services--on a case-
by-case basis, in accordance with the criteria defined by the act's two-
tiered protection status, as follows:
Designation status. Designation status protects a seller of anti-
terrorism technology in the event the technology fails to thwart an act
of terrorism by limiting the type and amount of damages a plaintiff may
recover such that a seller's potential liability cannot exceed the
amount of insurance coverage maintained by the seller.[Footnote 27] To
receive designation status, anti-terrorism technologies, including
screening services, must be evaluated by DHS against the seven criteria
set out in the SAFETY Act: (1) prior U.S. government use or
demonstrated substantial utility and effectiveness; (2) availability of
the technology for immediate deployment in public and private settings;
(3) existence of extraordinarily large or unquantifiable risk of
exposing the seller or other provider of such anti-terrorism technology
to potential liability; (4) substantial likelihood that the technology
will not be deployed unless the risk management protections of the
SAFETY Act (limited liability) are conferred; (5) the magnitude of risk
to the public if the technology is not deployed; (6) evaluation of all
scientific studies that can be feasibly conducted to assess the
capability of the technology to substantially reduce risks of harm; and
(7) anti-terrorism technology that would be effective in facilitating
the defense against acts of terrorism, including technologies that
prevent, defeat or respond to such acts.[Footnote 28]
Certification status. Once designated, qualified anti-terrorism
technologies become eligible for certification under the SAFETY Act,
which gives the seller the legal status of a government contractor and
renders the seller virtually immune from any claims that might arise in
the event the technology fails to thwart an act of terrorism, provided
the seller does not act fraudulently or with willful misconduct in
submitting information to DHS.[Footnote 29] To certify, DHS must
determine if the qualified anti-terrorism technology will (1) perform
as intended, (2) conform to the seller's specifications, and (3) be
safe for use as intended. Certification status cannot be awarded unless
these three criteria have been met. DHS places certified anti-terrorism
technologies and services on an Approved Product List for Homeland
Security.[Footnote 30]
DHS determined that the four private screening contractors serving the
five pilot program airports were eligible for SAFETY Act protection.
Once this determination was made, after November 2004, three of the
four current private screening contractors applied for and were
provided designation status under the SAFETY Act.[Footnote 31]
Contractors that apply to the SPP in the future are to be evaluated
individually, as their applications to the program are processed. TSA
awarded a contract for private screening services at Sioux Falls and
Jackson Hole airports. The status of SAFETY Act coverage for these
airports, if the contractors apply for coverage, will be determined at
a later point in time.
Contractors' Concerns about Liability Not Yet Resolved:
As of January 2006, one issue pertaining to how the SAFETY Act would be
applied to contractors remained unresolved and is a cause for concern
for one of the four contractors we interviewed. Specifically, DHS
officials stated that they have not been able to award SAFETY Act
certification status to contractors because TSA has not yet finalized
performance standards for assessing whether contractors have performed
as intended. DHS SAFETY Act officials stated that once TSA finalizes
its performance standards, the contractors that previously received
designation status may submit an application for SAFETY Act
certification. The application is to include evidence demonstrating
that they are meeting the TSA-defined performance standards. DHS will
evaluate the material submitted by the applicant against the TSA
standards. According to DHS officials, assuming the applicant is able
to demonstrate that it is performing as TSA intends, there should be no
impediment to granting certification. When the three contractors that
already have SAFETY Act designation status were asked to comment on
whether they would continue to participate in the SPP without
certification status, two contractors told us they would. One of these
two contractors said it had too much time and money invested in
providing private screening services to not participate in the SPP. The
third contractor said that its company's $50 million in general
liability insurance coverage excludes acts of terrorism,[Footnote 32]
thus the company believed it "would remain exposed to serious liability
concerns related to terrorist threats [or] risks." This contractor did
not, however, explicitly state that it would not participate in the SPP
going forward, if certification status were not awarded.
In general, contractors may offset potential liability arising from
acts of terrorism by purchasing commercially available liability
insurance.[Footnote 33] Two of the four private screening contractors
currently under contract to TSA purchased insurance policies that
protect them from acts of terrorism. Both contractors stated that their
policies were inadequate to cover the liability resulting from a major
terrorism attack and that SAFETY Act protection was, therefore,
additionally necessary to provide protection to the
contractor.[Footnote 34] As to the importance of SAFETY Act protection
to potential future participants in the SPP, in November 2004, we
reported that five of six prospective SPP private screening contractors
we interviewed--those not currently serving airports--stated that the
issue of whether they would receive liability protection was important
and would greatly affect whether they would participate in the SPP if
selected by TSA as a qualified contractor.[Footnote 35] In addition,
officials with two aviation associations representing hundreds of
airports, whom we interviewed, stated that their members believed that
SAFETY Act protection--both designation and certification--was
necessary for contractors to participate in the SPP.
DHS Appropriations Act Addresses Airports' Concerns about Liability
Exposure Issue:
The status of SAFETY Act coverage for airports, and liability coverage
in general for airports using private screeners, differs from coverage
for contractors. While DHS has determined that contractors performing
screening services are eligible to receive liability protection under
the SAFETY Act, the department has not determined whether airports that
do not perform screening services are eligible for liability coverage
under the act. In October 2005, however, Congress enacted legislation
that granted airports legal protection from lawsuits. Specifically,
section 547 of the Department of Homeland Security Appropriations Act,
2006, shields airport operators from virtually all liability relating
to the airport operator's decision on whether or not to apply to opt-
out of using federal screening, and any acts of negligence, gross
negligence, or intentional wrongdoing by either a qualified private
screening company under contract to DHS, its employees, or by a federal
screener.[Footnote 36] Prior to the enactment of this act, three of the
seven airport operators we interviewed expressed concerns about whether
the government would extend liability protection to them.[Footnote 37]
They were concerned that if a security incident arose that resulted in
litigation, they may become a party to a lawsuit. Officials with two
aviation associations, whom we also interviewed at that time, also
expressed concerns about airport liability. After the enactment of the
2006 appropriations act, one of the three airport operators that had
expressed concerns about liability told us that the protection
available under section 547 of the act had addressed its concerns about
its airport's liability. A second airport operator that we contacted
after enactment of section 547 had not yet reviewed the provision and
stated that it could not confirm whether its airport would be protected
from liability.[Footnote 38]
TSA Granted Private Screening Contractors Flexibility in Hiring
Process, but Contractor Concerns Remain:
TSA made an effort to improve the screener hiring process by granting
contractors and FSDs more input and flexibility in the hiring process,
including more frequent assessments of screener candidates and two
options for performing these assessments. Prior to November 2004, TSA
had scheduled candidate assessment forums on a regional basis 1 to 2
times a year to evaluate a pool of candidates interested in screener
positions. At that time, private screening contractors, like FSDs at
airports with federal screeners, had to rely on TSA to authorize the
hiring of screeners and establish candidate assessment forums--a
process that could take several months.[Footnote 39] Beginning in
November 2004, as part of the contract extensions, TSA began requiring
the pilot program private screening contractors to submit annual hiring
plans to TSA for review, indicating their anticipated screener staffing
needs. The intention was to use this information to plan for more
frequent and timely screener assessments conducted regionally and
locally--up to 6 times a year. Despite TSA's planned increase in the
frequency of assessments, private screening contractors, as well as
FSDs at airports with federal screeners, remain concerned about their
inability to conduct hiring on an as needed basis because TSA still
controls the scheduling of assessment forums.[Footnote 40] One
contractor, for example, stated that despite the scheduling of more
frequent assessment forums, it still could not fully implement its
hiring plan because the assessments did not necessarily coincide with
its hiring periods.
In response to contractor concerns about the candidate assessment
process, in November 2004, TSA began allowing private screening
contractors two options for evaluating screener candidates:[Footnote 41]
* Option 1: Contractors may draw screener candidates from a pool
developed by a private company under contract with TSA, which is
responsible for assessing potential screener candidates. This company
administers a computer-based aptitude test, mental and physical tests,
and conducts background checks at regional assessment centers. The
contractor is under no obligation to accept these applicants.
* Option 2: Contractors may use TSA's assessment company for the
aptitude test alone, and develop and implement additional assessment
activities on their own, provided they meet ATSA requirements and TSA
guidance.[Footnote 42]
According to TSA officials, all four private screening contractors have
selected from these two options for hiring screeners. The contractors'
views about the hiring process were mixed. For example, one contractor
we interviewed said that because TSA has allowed it to conduct its own
assessments, the length of the entire assessment process has been
reduced from several months to 2 weeks. This contractor, which was
using option two, is now conducting key parts of the assessment
process. According to this contractor, its use of option two has
resulted in a more efficient, effective, and significantly less costly
process. A second contractor using option two stated that it had
established a new hire recruitment, assessment, and training program.
According to this contractor, its use of option two has resulted in its
ability to identify more qualified screener candidates, improve
screener retention, and fill screener vacancies on an as needed basis.
However, the other two contractors remained concerned about the length
of time the assessment process lasts. One of these contractors stated
that the duration of the process was still so long that potential
screeners found other jobs first and dropped out of consideration. This
contractor, which was using option two, proposed using FSD staff to
conduct the assessments to streamline and shorten the assessment
process.[Footnote 43] According to TSA officials, TSA did not accept
this suggestion because TSA's Office of Human Resources determined it
would have been too costly to allow FSD staff to conduct the
assessments. TSA officials stated that they offered the contractor the
same assessment options that are available to all airports with federal
screeners. Officials further stated that they will continue to examine
all aspects of the assessment process in an effort to offer greater
efficiency and flexibility in screener hiring for both federal and
contract screeners.
TSA Has Taken Steps to Clarify SPP Roles and Responsibilities between
Federal and Private Sectors, but Questions about Division of Labor
Remain:
While TSA has defined the roles and responsibilities for FSDs, FSD
staff, and private screening contractors, among others, in its August
2005 SPP transition plan, the details contained in this plan have not
been communicated to or shared with private screening
contractors.[Footnote 44] TSA and SPP procurement officials stated that
they consider the transition plan to be an internal document that TSA
does not intend to distribute outside of the agency. However, officials
stated that the information on roles and responsibilities under the SPP
would be available to prospective private screening contractors as part
of the SPP contracting process. Additionally, TSA SPP officials stated
that they presumed that FSDs had communicated this information to the
current private screening contractors. Further, TSA officials stated
that TSA's June 2004 guidance on the SPP provides information on roles
and responsibilities of SPP stakeholders. However, our review of the
guidance found that it did not clearly delineate the roles and
responsibilities of TSA airport staff and the private screening
contractors. For example, the guidance did not include any information
on the roles and responsibilities of some TSA airport staff, such as
screening managers and training coordinators, and did not clarify how
their roles and responsibilities would differ from those of the private
screening contractors. Additionally, the four private screening
contractors we interviewed had questions about the roles and
responsibilities of TSA staff at the airports they served, including
screening managers and stated that, in their view, TSA had not clearly
defined the roles and responsibilities of TSA staff at airports
participating in the SPP.[Footnote 45] When asked whether FSD and FSD
staff roles and responsibilities were clear, one contractor stated that
he did not believe that TSA had recognized that the roles of training
managers and screening managers at airports using federal or private
screeners are different. A second contractor stated that, in his view,
TSA had not standardized the roles and responsibilities of TSA airport
staff across the five airports currently using private screeners.
Similarly, a third contractor stated that TSA roles and
responsibilities need to be more well-defined, particularly the role of
FSD airport staff and TSA local contract staff. Finally, the fourth
contractor stated that the separation of roles and responsibilities has
been a major challenge on a daily basis in part because TSA staff at
screening checkpoints assert control and impose operational changes at
the checkpoints--tasks that the contractor believes it is responsible
for, rather than TSA staff. This contractor identified the need for TSA
to clearly define the roles of the various stakeholders involved in the
SPP and to establish guidelines on TSA's oversight and regulatory
responsibilities at airports participating in the SPP.
In September 2005, in reporting on the ability of FSDs to address
airport security needs, we stated that TSA airport stakeholders
(including airport operators)[Footnote 46] at some of the airports we
visited stated that the FSD's role was not sufficiently clear, and at
least one stakeholder at every airport we visited said such information
had never been communicated to them.[Footnote 47] We recommended that
DHS direct TSA to communicate the authority of the FSD position, as
warranted, to FSDs and all airport stakeholders. In response, TSA
agreed to update the role of the FSD and communicate this information
to airport stakeholders. As of December 2005, however, TSA had not yet
implemented this recommendation, but stated that the matter is being
considered by a TSA steering committee. In addition, a consulting firm
that evaluated the private screening pilot program in April 2004
recommended that TSA clearly delineate the roles and responsibilities
among federal and private screening managers and their staff and
include this information in its contracts with the private screening
contractors. Based on our review of the June 2004 guidance on the SPP
and the contracts awarded to the current private screening contractors
in November 2004, TSA had not included this information. TSA officials
stated that they plan to clearly delineate roles and responsibilities
of the FSD, FSD staff, and private screening contractors in the
forthcoming SPP contracts.
According to our standards for internal controls, agency management
should ensure there are adequate means of communicating with external
stakeholders on issues that may have a significant impact on the
agency's ability to achieve its goals.[Footnote 48] By not sharing
detailed information on roles, responsibilities, and authorities
described in the SPP transition plan with all FSDs and private
screening contractors, TSA may be missing an opportunity to support the
effective performance and management of essential functions related to
the screening process. Additionally, without clear and specific
information on roles and responsibilities under the SPP, it may be
difficult for prospective SPP contractors to develop an informed
estimate of the costs of providing screener services.
TSA Provides Some Incentives to Contractors to Achieve Cost-Savings and
Plans to Shift More Cost Risk to Contractors at Larger Airports in 1 to
2 Years:
Through its contracts, TSA offers the private screening contractors
some incentives to decrease costs. Specifically, TSA's cost
reimbursement contracts for screening services at four of the five
airports currently using private screeners provide some incentives in
the form of an award fee tied in part to the contractor's ability to
achieve cost efficiencies and innovations. However, despite TSA's use
of cost-savings as a basis for a portion of the award fees,
opportunities for government cost-savings may be limited because under
the cost-reimbursement contracts the government bears most of the cost
risk--the risk of paying more than it expected. TSA plans to shift more
cost risk to contractors by competitively awarding fixed-price-award
fee contracts for screening services at the four smallest airports that
will participate in the SPP. TSA officials said they also plan to
competitively award fixed-price contracts for screening services at
larger airports, but will not do so for another 1 to 2 years--when they
believe that screening costs at larger airports will be better known.
TSA Plans to Transition from Cost-Reimbursement to Fixed-Priced
Contracts, but Stated That an Additional 1 to 2 Years Was Needed to Do
So at Larger Airports:
TSA expects that the SPP will operate at a cost that is competitive
with equivalent federal operations and will achieve cost-savings, where
possible. However, opportunities for cost savings are somewhat limited
because of various requirements that contractors must meet in
performing the contract. Specifically, under ATSA, private screening
companies must provide compensation and other benefits to contract
screeners at a level not less than that provided to federal
screeners.[Footnote 49] Further, the contracts require that contractors
ensure that security checkpoints are staffed in accordance with TSA's
standard operating procedures and other government requirements and
that the screeners have the qualifications and training established by
the government. While these government airport security standards must
be met, TSA has structured its existing contracts to provide some
incentives to contractors for cost savings. Specifically, over the last
3 years, TSA has awarded cost-reimbursement contracts with an award fee
component for screening services at four of the five airports currently
using private screeners.[Footnote 50] These contracts provide for
payment of allowable incurred costs, to the extent prescribed in the
contract (typically up to a specified cost ceiling). In addition, the
government also agrees to award a separate amount (base fee) fixed at
inception of the contract and an award amount (award fee) that the
contractor may earn in whole or in part during performance that is
sufficient to provide motivation for excellence in such areas as
quality, technical approach, and cost-effective management. The amount
of the award fee to be paid is determined by the government's
judgmental evaluation of the contractor's performance in terms of the
criteria stated in the contract.
Because cost-savings and contract management account for 20 percent of
the award fee determination for the current screening services
contracts, these contracts do provide some incentive for contractor
cost efficiency. Specifically, the award fee plan establishes the
expectation that contractors will provide screening services with cost
efficiencies and innovation, while meeting the security standards,
mission objectives, and compensation levels required by ATSA and TSA,
respectively.[Footnote 51] These cost and contract management factors
include:
* Overtime/personnel costs--evaluates the contractor's ability to
control overtime and personnel costs.
* Innovation/continuous improvement--evaluates the contractor's ability
to build on previous experiences/accomplishments and utilize innovative
approaches, techniques and tools.
* Other direct/indirect cost[Footnote 52]--evaluates the contractor's
ability to control direct labor cost and overtime costs and its ability
to effectively manage its subcontract costs through use of competition
to the greatest extent practicable and through documented cost analysis
substantiating the reasonableness of subcontract costs. Indirect cost
control evaluates the contractor's ability to control its indirect
costs.[Footnote 53]
Despite TSA's use of cost-savings as a basis for a portion of the award
fees, opportunities for government cost-savings may be limited in part
because under the cost-reimbursement contracts the government bears
most of the cost risk--the risk of paying more than it expected.
Specifically, under cost-reimbursement contracts, the government must
reimburse the contractor for all allowable costs as provided in the
contract. TSA plans to shift most cost risk to its contractors by
moving to a fixed-price-award fee contract in the next 1 to 2 years. A
fixed-price type of contract places upon the contractor the maximum
risk and full responsibility for all costs and resulting profit or
loss, providing maximum incentive for the contractor to control costs
and perform efficiently. Further, in a competitive environment, pricing
by contractors for a fixed-price contract would be subject to
marketplace pressures that would provide incentives for the contractor
to control costs and reduce prices in order to win the contract. The
award fee component of a fixed-price contract is used to motivate the
contractor by relating the amount of profit or fee payable under the
contract to the contractor's performance in the areas of operations,
management, contract compliance, and human resources. Because the
contract is fixed-priced, the award fee portion does not assess cost
management.
TSA has awarded a fixed-price-award-fee contract to the contractor
providing screening services at the smallest of the five airports using
private screeners, while the contracts for screening services for the
other four airports remain as cost-reimbursement contracts. TSA
officials stated that the fixed-price contract was awarded for the one
airport (on a noncompetitive basis) because costs there were considered
predictable and therefore a reasonable basis for firm pricing by the
contractor existed. Table 3 provides information on TSA's contracts
with current private screening contractors.
Table 3: Type of Contract and Contract Amount for the Four Private
Screening Contractors for the Period November 19, 2004, through May 18,
2006:
Private screening contractor: Covenant Aviation Security;
Type of contract: Cost-plus-award-fee: [Check];
Type of contract: Fixed-price-award- fee: [Empty];
Contract amount[A]: Base Year[B]: $79,423,995;
Contract amount[A]: Option period[C]: $58,354,170;
Airport security category: X.
Private screening contractor: Covenant Aviation Security;
Type of contract: Cost-plus-award-fee: [Empty];
Type of contract: Fixed-price- award-fee: [Check];
Contract amount[A]: Base Year[B]: $698,005;
Contract amount[A]: Option period[C]: $506,168;
Airport security category: IV.
Private screening contractor: FirstLine Transportation Security;
Type of contract: Cost-plus-award-fee: [Check};
Type of contract: Fixed-price- award-fee: [Empty];
Contract amount[A]: Base Year[B]: $34,574,108;
Contract amount[A]: Option period[C]: $25,933,623;
Airport security category: I.
Private screening contractor: McNeil Security International;
Type of contract: Cost-plus-award-fee: [Check];
Type of contract: Fixed-price-award- fee: [Empty];
Contract amount[A]: Base Year[B]: $8,983,957;
Contract amount[A]: Option period[C]: $6,793,001;
Airport security category: II.
Private screening contractor: Jackson Hole Airport Board;
Type of contract: Cost-plus-award-fee: [Check];
Type of contract: Fixed-price-award- fee: [Empty];
Contract amount[A]: Base Year[B]: $3,601,457;
Contract amount[A]: Option period[C]: $2,484,297;
Airport security category: III.
Source: TSA.
[A] The contract amounts include base fees and potential award fees and
are estimated amounts, not actual costs incurred under the cost-plus
award fee contracts.
[B] The base year is the first year of the contract.
[C] The option period is for year 2-5 of the contract.
[End of table]
TSA officials stated that as of February 2006, TSA had awarded, was
planning to award, or was in the process of awarding, additional fixed-
price contracts on a competitive basis for screening services at three
other small airports (categories II, III, and IV) under the
SPP.[Footnote 54] TSA officials acknowledged that cost-reimbursement
contracts place most of the cost risk on the government, rather than
the contractor, but said the agency would not award fixed-price
contracts for screening services at the two larger airports using
private screening contractors for another 1 to 2 years. TSA officials
stated that they would not award fixed-price contracts to these
contractors because they did not know the costs of screening at the
larger airports, where they believe costs are variable, and therefore
they believe that TSA would be at greater risk of awarding a contract
for a higher cost than might actually be necessary.[Footnote 55] TSA
officials acknowledged that TSA already had, through an independent
cost-data study, identified and collected some cost and performance
data on passengers and checked baggage screening operations at 15
airports with private and federal screeners, including four category X
and four category I airports and all five pilot program
airports.[Footnote 56] This study, which was completed in October 2004,
looked in particular at cost drivers--factors that contribute to
overall expenses.[Footnote 57] Moreover, an April 2004 study[Footnote
58]conducted for TSA by a consulting firm estimated how much TSA spent
for screening operations at each of the five pilot program airports--
including contract payments as well as costs borne by TSA--and compared
the results with estimates of how much TSA would have spent had it
actually conducted the screening operations at those airports.
TSA officials stated that the cost information identified in these two
studies provided useful data to help determine the costs of screening
at airports currently using private screeners, but said additional
information is needed to assist in transitioning to fixed-price
contracts for screening services at larger airports. Specifically, TSA
officials stated that additional cost information based on the actual
costs of participating in the SPP is needed for the larger airports
because the SPP contracts differ in two key ways from the pilot and
extension contracts that TSA previously awarded. First, the SPP
contracts will include specific performance measures and targets that
the contractors must meet. Second, the contracts will allow for
contractors to recommend and, if approved, implement innovations, and
to select among options for assessing screener candidates and training
screeners. The officials stated that it would therefore be difficult
for prospective SPP contractors for the larger airports to accurately
estimate the costs of providing screening services for a fixed-price
contract for larger airports. As a result, TSA officials stated that
they needed up to 2 additional years to determine estimated costs in
order to potentially transition to fixed-price contracts, and therefore
would continue using cost-reimbursement contracts with the largest
airports (categories X and I) for that period.[Footnote 59] By using
competitive bidding procedures to award fixed-price contracts to
qualified firms, as TSA contemplates, TSA will also help to bring
marketplace pressures to bear on competitors' proposed costs and fees
or prices and could enable TSA to maximize contractors' incentives to
control costs and ensure that the contractor, rather than the
government, will bear more of the cost risk associated with performance
of private screening operations.
Performance Goals and Measures Developed by TSA to Assess SPP
Contractors Have Not Been Approved by DHS:
TSA Has Developed Performance Measures to Evaluate Security, Cost,
Innovation, and Other Facets of Contractor Performance under the SPP,
but DHS Has Not Approved These Measures:
TSA has developed performance goals and draft measures and targets to
assess the performance of private screening contractors under the SPP,
but DHS has not yet approved them or established a time frame for doing
so.[Footnote 60] Until DHS approves these measures, TSA cannot finalize
and implement them to assess performance. Performance goals are
measurable objectives against which actual achievement can be compared.
Performance measures are the yardsticks to assess an agency's success
in meeting performance goals, while a performance target is a desired
level of performance expressed as a tangible, measurable objective,
against which actual achievement will be compared. Together, these
performance metrics are used to assess an agency's progress toward
achieving the results expected. We reported in April 2004 that without
data to assess the performance of private screening operations, TSA and
airport operators have limited information from which to plan for the
possible transition of airports from a federal screening system to a
private system. In our November 2004 report, we stated that TSA had
begun drafting performance measures for this purpose. In the current
contracts that TSA awarded to the four private screening contractors,
TSA established an award fee process to motivate contractor
performance.[Footnote 61] These contracts were modified in February and
March 2005 to implement the award fee process.
TSA's draft quality assurance surveillance and award fee plan for the
SPP, dated October 2005, identifies the performance measures TSA plans
to use to assess the performance of private screening contractors
against TSA's major goals for the program.[Footnote 62] According to
TSA, the five goals for the SPP in the areas of security, customer
service, costs, workforce management, and innovation, are:
* Ensure security.
* Provide world class customer service.
* Implement cost efficiencies.
* Respect the screening workforce.
* Create a partnership that leverages strengths of the private and
public sector.
TSA's draft quality assurance surveillance and award fee plan for the
SPP includes planned performance measures in 14 areas that are to be
applied to all private screening companies that participate in the SPP.
These performance measures, in addition to an innovation measure, are
to be used to determine the award fee provided to contractors that
participate in the SPP.[Footnote 63] Table 4 describes the performance
measures.
Table 4: TSA Performance Measures for Evaluating SPP Contractors:
Performance measure: 1. Maintenance;
Description: Equipment, property, and materials are well kept and
operational;
Performance target: 95% of inspected equipment, property, or materials
are well kept, operational, and recorded.
Performance measure: 2. Reporting;
Description: Reports and notifications are accurate and submitted in a
timely fashion;
Performance target: 95% of the reports submitted within 5 days of the
due date.
Performance measure: 3. FSD evaluation;
Description: Contractor supports the FSD in ensuring an efficient,
effective, and responsive operation;
Performance target: Score of 50 or above out of a total possible 100
points.
Performance measure: 4. Demonstrate compliance with pre-transition
activities;
Description: Contractor complies with pre-transition tasks, such as
completing recruiting activities, providing preferential treatment for
federal screeners, and completing assessments of screener candidates;
Performance target: 100% compliance.
Performance measure: 5. Demonstrate compliance with transition
activities;
Description: Contractor complies with transition tasks, such as
verifying that all equipment is fully functioning and ensuring that
screeners completed all required on-the-job training;
Performance target: 100% compliance.
Performance measure: 6. Assessment;
Description: All persons designated to be deployed as screeners meet
all statutory requirements for employment;
Performance target: 100% of screener personnel employed meet statutory
assessment requirements.
Performance measure: 7. Credentialing;
Description: All persons meet TSA specified requirements for
employment;
Performance target: 100% of contractor personnel meet credentialing
requirements for employment.
Performance measure: 8. New hire training;
Description: New hires receive the required training before assuming
screening responsibilities;
Performance target: 100% of new hires meet required training before
assuming screening responsibilities.
Performance measure: 9. Recurrent training;
Description: Screeners must meet the minimum requirement of 3 hours of
training per screener, per week, averaged over a calendar quarter;
Performance target: 100% of screeners meet recurrent training
requirements.
Performance measure: 10. Remedial training;
Description: Screeners receive a minimum of 3 hours of remediation,
provided by the contractor, for failing a national or local covert test
(unannounced, undercover test);
Performance target: 100% of screeners who fail a covert test meet
remedial training requirements.
Performance measure: 11. Passenger screening Threat Image Projection
(TIP) detection;
Description: TIP systems project images of threat objects on an x-ray
screen during actual operations and records whether screeners identify
threat objects;
Performance target: Target to be set by TSA.
Performance measure: 12. Passenger screening TIP false alarm rate;
Description: Measure of the rate of recognition of objects incorrectly
detected during TIP testing;
Performance target: Target to be set by TSA.
Performance measure: 13. Screener recertification pass rate (first
attempt);
Description: Measure of the percent of screeners passing, on their
first attempt, TSA's annual screener recertification test, which
assesses, among other things, screeners' ability to perform TSA's
passenger and checked baggage screening standard operating procedures;
Performance target: Target to be set by TSA.
Performance measure: 14. Customer satisfaction;
Description: Measure of performance on TSA's customer satisfaction
surveys, which measure customer service and public confidence
associated with TSA's aviation screening functions;
Performance target: Target to be set by TSA.
Source: TSA.
[A] TIP projects images of threat objects on an x-ray screen during
actual operations and records whether screeners identify threat objects.
[End of table]
TSA established draft performance targets for 10 of the 14 measures,
which all SPP contractors will be required to meet. TSA officials said
individual contractors that are accepted as SPP participants in the
future will be required to meet TSA's performance targets for the
remaining four measures--passenger screening threat image projection
(TIP) detection rate; passenger screening TIP false alarm rate;
screener recertification pass rates; and customer satisfaction. The
performance indicators for the four measures for which targets have not
yet been set by TSA are to be specific to each airport participating in
the SPP. TSA stated that it has established baseline data for these
four performance measures describing how federal screeners or private
screening contractors have actually performed at individual airports,
over time, as well as an overall average of performance. Using the
baseline data as a starting point, performance targets would then be
set for each airport. For example, if a baseline shows that
historically, all airports met the performance measure for screener
recertification pass rates 70 percent of the time, TSA would set the
target measure at or above 70 percent. TSA officials stated that they
are currently working to identify incentives to encourage better
results at airports that have historically not met TSA's performance
standards for passenger and checked baggage screening. TSA is
considering providing financial incentives for a limited time in an
effort to quickly move its airports to meet TSA's baseline level of
performance.
TSA officials stated that DHS must approve the draft performance goals,
measures, and targets before they can be finalized, but as of January
2006, DHS had not yet done so, and had not set a deadline for doing so.
We asked TSA and DHS officials which office within DHS was responsible
for approving these performance metrics, but the officials were not
able to provide us with the information. Until the draft performance
measures are finalized by DHS, TSA will not be able to implement its
performance measures for the SPP. According to our standards for
internal controls, agencies must have systems in place for measuring,
reporting, and monitoring program performance.[Footnote 64] In
addition, as we have reported in our prior work on the importance of
using the Government Performance Results Act (GPRA) to assist with
oversight and decision making, credible performance information is
essential for the Congress and the executive branch to accurately
assess agencies' progress toward achieving their goals.[Footnote 65]
Further, the draft measures and targets TSA developed for the SPP will
also be used by DHS to determine whether to award private screening
contractors certification status under the SAFETY Act. Until the SPP
measures and targets are finalized, DHS officials stated that they
cannot determine whether contractors will perform as intended--criteria
that must be satisfied before awarding certification status.
Conclusions:
Since initiating the SPP in November 2004, DHS and TSA have taken steps
to develop a legal, contractual, and programmatic framework that
enables the private sector to provide passenger and checked baggage
screening services, with federal oversight in place to help ensure that
security and screener performance is consistent and comparable at
airports, whether federal or private screeners are used. As of January
2006, only 7 of over 400 airports that were eligible to apply to
participate in the SPP had submitted an application. While we did not
attempt to identify the reasons for the small number of applicants to
the SPP, a contributing factor may be airports' concerns about
liability. In November 2004, we reported that half of the airport
operators we interviewed (13 of 26) were concerned about airport
liability in the event that a private screener failed to detect a
threat object that led to a terrorist incident. Aviation associations
that represent hundreds of airports have also identified liability as a
major concern among airports. Although Congress' recent effort to
shield airports from liability in the fiscal year 2006 DHS
appropriations act may address this concern, there have been no
additional applicants since the act was passed. Furthermore, by
extending a level of federal liability protection through the SAFETY
Act to current private screening contractors, DHS has laid the
groundwork for future contractors to potentially receive comparable
protection. Ongoing concerns among prospective participants in the SPP
regarding the availability of the most extensive level of protection
under the SAFETY Act--certification--may be alleviated once TSA
finalizes a standard of performance for private screening contractors
that DHS can utilize to determine if contractors have demonstrated that
they will perform as intended.
As TSA moves forward with implementing the SPP, several opportunities
exist for strengthening the management and oversight of the program.
First, SPP applicants need clear information on what their roles and
responsibilities are to be at airports where a privatized screener
workforce operates with federal oversight. The absence of such guidance
may affect the ability of responsible officials to effectively and
efficiently manage screening checkpoints and the screener program in
general. Additionally, without clear and specific information on roles
and responsibilities of private screening contractors under the SPP, it
may be difficult for prospective SPP contractors to develop an informed
estimate of their personnel needs and associated costs under the SPP--
information that is needed for the competitive bidding process.
Second, in addition to concerns about liability protection, airports in
the past expressed concerns about the degree of management control they
would have over various aspects of screening services. Since then, TSA
has provided additional operational flexibilities to private screening
contractors, such as granting contractors and FSDs more input and
flexibility in the screener hiring process. Contractors have reported
efficiencies they have achieved as a result of these flexibilities,
including using fewer screeners than authorized by TSA. Although steps
have been taken to address concerns regarding airports' liability and
the need for contractors to have additional management control over
various aspects of screening services, only two additional airports, in
addition to the five pilot program airports, applied to participate in
the SPP. We believe that identifying the underlying reasons for the
small number of applicants to the SPP may be helpful to TSA and others
in assessing what, if any, changes may be needed to the program.
Third, while TSA is not required to adhere to the Federal Acquisition
Regulation with respect to contracting practices, it has acknowledged
the advantages of fixed-price contracts in situations where costs are
reasonably understood. To this end, TSA has begun the contract award
process for the four smaller airports using a fixed-price type of
contract. TSA has decided to continue to use cost-plus-award-fee
contracts rather than fixed-price contracts with private screening
contractors providing services at the larger airports for at least an
additional 1 to 2 years so that it can continue to collect information
on the costs of screening operations at these airports. Using fixed-
price contracts, as TSA plans to do, would result in the contractors
assuming substantial cost responsibility from the government related to
screener operations and help ensure that private screening contractors
deliver the most cost-effective services, while ensuring that TSA and
ATSA requirements related to maintaining airport security are met. The
use of competitively awarded fixed-price contracts should provide a
built-in incentive for contractors to identify cost-saving
opportunities and innovations, which in turn may help reduce costs of
screening contracts at the larger airports using private screeners. TSA
could make these cost-savings opportunities available to airports with
federal screeners, as appropriate, thereby transferring the
efficiencies identified by the private sector to the federal government.
Finally, until DHS approves the performance goals, measures, and
targets for the SPP, it will not have a mechanism in place beyond the
ongoing contracts for assessing the performance of private screening
contractors. Without these performance goals, measures, and targets it
may be difficult for TSA to identify areas of screener operations that
contractors may be able to improve.
Recommendations for Executive Action:
To strengthen its administration of the SPP and to help address
stakeholder concerns, we recommend that the Secretary of DHS direct the
Assistant Secretary, TSA, to take the following actions:
* Formally document and communicate with all FSDs, current private
screening contractors, and entities that apply to the SPP, the roles
and responsibilities of all stakeholders that participate in the SPP,
pertaining to the management and deployment of screening services.
To help ensure the completion of a performance management framework for
the SPP so that TSA can assess SPP contractors and to promote
accountability of SPP contractors for achieving desired program
outcomes, we recommend that the Secretary of the Department of Homeland
Security take the following action:
* Establish a time frame for completing its review of the performance
goals, measures, and targets for the SPP so that TSA may apply them at
the earliest possible opportunity.
Agency Comments and Our Evaluation:
We provided a draft of this report to DHS and TSA for review and
comment. On March 10, 2006, we received written comments on the draft
report, which are reproduced in full in appendix II. DHS generally
concurred with the findings and recommendations in the report, and
stated that efforts to implement our recommendations will help them
develop a more effective, efficient, and economical administration of
TSA's SPP. With regard to our recommendation that TSA formally document
and communicate with all FSDs, current private screening contractors,
and entities that apply to the SPP, the roles and responsibilities of
all stakeholders that participate in the SPP pertaining to the
management and deployment of screening services, DHS identified steps
that TSA is taking to this end. Specifically, DHS stated that TSA
updated its SPP transition plan, which, among other things, further
clarifies the relationships among the FSD, FSD staff, and private
screening contractors, and other stakeholders as they relate to SPP
program management. DHS also stated that TSA has assembled a transition
team to work closely with SPP stakeholders to foster awareness and
ensure communication regarding the roles and responsibilities of all
involved parties working under the SPP. TSA's successful implementation
of these ongoing efforts should address the concerns we raised
regarding documenting and communicating roles and responsibilities
under the SPP.
In addition, regarding our recommendation that DHS establish a time
frame for completing its review of the performance goals, measures and
targets for the SPP so that TSA may apply them at the earliest possible
opportunity, DHS stated that TSA had established performance metrics
and had provided it to DHS for its review. However, DHS did not specify
a time frame for completing its review. We continue to believe that it
is important for DHS to establish a time frame for completing its
review of the performance goals, measures, and targets for the SPP.
Without these performance metrics, TSA will not have a mechanism in
place beyond the ongoing contracts for assessing the performance of
private screening contractors. Further, until performance metrics are
finalized, it remains unlikely that DHS will award such contractors
certification under the SAFETY Act.
DHS also provided updated information on the status of the SPP, which
we incorporated where appropriate.
As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 7 days
from the date of this report. At that time, we will send copies of this
report to the Secretary of the Department of Homeland Security and the
Administrator of the Transportation Security Administration and
interested congressional committees. We will also make copies available
to others upon request. In addition, the report will be made available
at no charge on GAO's Web site at [Hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-3404 or berrickc@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. GAO staff that made major
contributions to this report are listed in appendix IV.
Sincerely yours,
Singed By:
Cathleen A. Berrick:
Director:
Homeland Security and Justice Issues:
[End of section]
Appendix I: Scope and Methodology:
To assess the Transportation Security Administration's (TSA) efforts to
implement the Screening Partnership Program (SPP), we analyzed (1) the
status of federal efforts to determine whether and to what extent
liability protection will be provided to private screening contractors
and airports, and actions taken on other stakeholder concerns related
to participation in the SPP; (2) how TSA has determined it will achieve
cost-savings goals for screener operations through the SPP,
specifically through choice of contract used and contract terms; and
(3) TSA's progress in developing and implementing performance goals,
measures, and targets to assess the performance of the private
screening contractors who will be participating in the SPP.
To assess the status of federal efforts to determine whether and to
what extent liability protection should be provided to private
screening contractors and airports, and actions taken on other
stakeholder concerns related to participation in the SPP, we reviewed
Department of Homeland Security (DHS) and TSA documentation on the
Support of Anti-terrorism by Fostering Effective Technologies Act
(SAFETY Act) and the SPP. Specifically, we reviewed DHS guidance posted
on its Web site related to the SAFETY Act and other DHS documentation
on this act. We also reviewed TSA's written responses to stakeholders
frequently asked questions about the SPP, including information on
liability protection; TSA's transition plan for the SPP, which
documents internal guidance on transitioning an airport from a federal
screener workforce to a private screener workforce; TSA's
communications plan for the SPP; airport applications to the SPP; and
other guidance-related materials TSA developed for airports and private-
screening contractors. Additionally, we reviewed relevant legislation,
such as Aviation and Transportation Security Act and the SAFETY Act,
our prior reports that addressed issues related to the SPP and the use
of private sector screeners, and testimony at congressional hearing on
the SPP. Further, we interviewed DHS officials regarding the SAFETY Act
and TSA headquarters officials responsible for implementing the SPP to
determine efforts underway to address stakeholder concerns regarding
the SPP. We also conducted semi-structured telephone interviews with
the four private screening contractors currently providing passenger
and checked baggage screening services, the airport directors at the
seven airports that applied to participate in the SPP (the five pilot
program airports and two airports that applied to participate in the
SPP, namely, Elko Regional Airport in Elko, Nevada and Sioux Falls
Regional Airport in Sioux Falls, South Dakota), and the federal
security directors (FSD) at each of these airports to obtain their
views on TSA's efforts to implement the SPP and to address stakeholders
concerns. Finally, we interviewed officials from two aviation
associations--the American Association of Airport Executives and the
Airports Council International, and a major liability insurance
provider--to obtain information on the type of insurance available to
private screening contractors.
To assess the status of TSA's efforts to achieve cost-savings in
screener operations through the SPP, specifically with respect to the
choice of contract used, and contract terms, we reviewed TSA's
contracts for screening services for the four contractors currently
providing passenger and checked baggage screening services. We did not
review the contracts that TSA awarded in early 2006 to two contractors
to provide private screening services in the SPP. Additionally, we
reviewed TSA's acquisition policies and procedures, the Federal
Acquisition Regulation, and the Federal Aviation Administration's
acquisition management system, to identify standards and guidance for
contracting practices of TSA and the federal government. Further, we
reviewed TSA's transition plan and other SPP guidance to identify TSA's
current and planned approaches for identifying screening program costs.
We also reviewed TSA's activity-based costing study that assessed the
cost of passenger and checked baggage screening operations at 15
airports, including the 5 that participated in the 2-year pilot program
using private screeners. We determined that the results of the activity-
based costing study were sufficiently reliable for the purpose of our
review. Finally, to gather perspectives on opportunities for cost-
savings under the SPP, we interviewed TSA SPP and contracting
officials, the four contractors currently providing screening services,
the seven airport directors who applied to the SPP and the FSDs at
these airports, and representatives of the American Association of
Airport Executives and the Airports Council International. We did not
review TSA's actual determination of the amount of contractor award
fee. Nor did we review the conduct of TSA's performance evaluation
boards or fee determining official in evaluating contractor performance
against award fee criteria (including cost-savings) and determining the
amount of the contractors' award fee. However, we did verify that TSA
had evaluated contractor performance (including cost-savings) in making
award fee determinations.
To assess TSA's progress in developing and implementing performance
goals, measures, and targets to assess the performance of the private
screening contractors who will be participating in the SPP, we reviewed
the terms of TSA's award fee process specified in the current contracts
and TSA's draft quality assurance surveillance and award fee plan. We
also reviewed TSA's June 2004 guidance on the SPP, other guidance-
related material TSA developed for private screening contractors and
airports regarding the SPP, TSA's contracts for the private screening
contractors currently providing screening services, TSA testimony at
congressional hearings, and our prior reports that addressed issues
related to the SPP and the use of private-sector screeners. A listing
of our prior reports is contained in appendix IV. Additionally, we
interviewed TSA headquarters officials responsible for the SPP.
We performed our work from March 2005 through March 2006 in accordance
with generally accepted government auditing standards.
[End of section]
Appendix II: Comments from the Department of Homeland Security:
U.S. Department of Homeland Security:
Washington, DC 20528:
Homeland Security:
March 10, 2006:
Ms. Cathleen A. Berrick:
Director:
Homeland Security and Justice Issues:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Ms. Berrick:
Thank you for the opportunity to comment on the draft report GAO-06-
166, "Aviation Security: Progress Made to Set Up Program Using Private
Sector Airport Screeners, but More Work Remains." The Department of
Homeland Security (DHS) concurs with the recommendations and
appreciates the time and resources that the GAO has devoted to this
important review. The findings and recommendations in this report will
aid in the development of a more effective, efficient, and economical
administration of TSA's Screening Partnership Program (SPP).
Since GAO's last review in November 2004, the SPP has made significant
advances in program goals and objectives. On December 16, 2005, TSA
awarded a performance-based task order to Covenant Aviation Security,
LLC at the Sioux Falls, South Dakota airport, to conduct private
security screening operations. Covenant Aviation Security received its
certificate of full operating capability on February 12, 2006. On
February 2, 2006, TSA also awarded the Jackson Hole Airport Board a
performance-based task order to conduct private security screening
operations, after a successful competition for the contract. On March
1, 2006, Jackson Hole Airport Board received its new certificate of
full operating capability. The move from federal to private security
screening by Sioux Falls is particularly noteworthy as it represents
the first airport to make this transition outside of the five airports
participating in the original pilot program mandated by title 49 of the
United States Code, section 44919. The Jackson Hole airport is one of
the five original SPP airports. TSA is now in the process of awarding
task orders to the remaining four SPP airports.
Regarding the use of private contractors, TSA has determined that the
most appropriate contract types are either: (1) cost-plus-award-fee
(CPAF) and cost-plus-fixed-fee (CPFF), or (2) fixed-price-award-fee
(FPAF) and CPFF. The specific combination used will be determined on an
airport-by-airport basis, considering such factors as size, airport
category, and transition requirements.
The performance-based task orders for both Sioux Falls and Jackson Hole
utilize FPAF/CPFF contracts. In these instances, the FPAF vehicle was
determined to be in the best interests of the government to support the
Full Operation Capability Screening Services portion of the scope of
work, and the CPFF vehicle for the remaining line items, including pre-
transition/transition phases, assessments, and other direct costs. The
FPAF vehicle also was used because the requirements are sufficiently
defined to allow the contractor to make a realistic determination of
cost and risk. This will encourage high contract performance in the
areas of training, on-boarding, and screening services. There will also
be a semi-annual award fee which will provide a continual incentive for
improvement and excellence by the contractor.
GAO Recommendation 1: To strengthen its administration of the Screening
Partnership Program (SPP) and to help address stakeholder concerns, we
recommend that the Secretary of DHS direct the Assistant Secretary,
TSA, to take the following actions:
Formally document and communicate with all Federal Security Directors
(FSDs), current private screening contractors, and entities that apply
to the SPP, the roles and responsibilities of all stakeholders that
participate in the SPP, pertaining to the management and deployment of
screening services.
Concur. TSA will continue to fully implement this recommendation,
incorporating the stakeholder roles and responsibilities as part of
best business practices. In the fall of 2004, an integrated working
team created the "Screening Partnership Program Master Transition
Toolkit." The toolkit provides guidance for transitioning an airport's
checkpoint and baggage screening functions from federal to private
operations, maintaining security standards during the transition, and
minimizing adverse customer impact. The toolkit, currently in its third
version (latest issue August 2005), was updated most recently to
incorporate feedback and lessons learned from stakeholders. The
toolkit further clarifies the relationships among the FSD, FSD staff,
private screening contractors, and other stakeholders as they relate to
SPP program management, and provides targeted guidance to the FSDs
along these lines.
In addition, TSA has assembled a transition tear to work closely with
stakeholders to foster awareness and ensure communication regarding the
roles and responsibilities of all involved parties working under the
SPP. Finally, as part of ongoing outreach efforts, the SPP staff
provides stakeholder presentations, and the FSDs meet with stakeholders
on a regular basis.
GAO Recommendation 2: To help ensure the completion of a performance
management framework for the SPP, so that TSA can assess SPP
contractors, and to promote accountability of SPP contractors for
achieving desired program outcomes, we recommend that the Secretary of
DHS take the following action:
Establish a time frame for completing its review of the performance
goals, measures, and targets for the SPP so that TSA may apply them at
the earliest possible opportunity.
Concur. TSA has established a set of 14 performance requirements and
standards and provided them to the Department for review. TSA will
comply with all Departmental guidance regarding performance activities.
The Department and TSA's goal is to transition federal security
screening operations to private contractors as expeditiously as
possible, while maintaining security standards and minimizing any
adverse impacts to the traveling public.
Sincerely,
Signed By:
Steven J. Pecinovsky:
Director:
Departmental GAO/OIG Liaison Office:
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Cathleen A. Berrick (202) 512-3404:
Acknowledgments:
In addition to the contact named above, David Alexander, C. Jenna
Battcher, Chuck Bausell, Amy Bernstein, David Hooper, Lara Laufer,
Thomas Lombardi, Hugh C. Pacquette, Lisa Shibata, Maria Strudwick, and
Adam Vodraska made key contributions to this report.
[End of section]
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FOOTNOTES
[1] Pub. L. No. 107-71, 115 Stat. 597 (2001).
[2] Pub. L. No. 107-296, §§ 861-65, 116 Stat. 2135, 2238-42 (2002); 6
C.F.R. §§ 25.1-25.9 (2005).
[3] FSDs are the ranking TSA authorities responsible for leading and
coordinating TSA security activities at the nation's more than 440
commercial airports.
[4] GAO, Aviation Security: Preliminary Observations on TSA's Progress
to Allow Airports to Use Private Passenger and Baggage Screening
Services, GAO-05-126 (Washington, D.C.: Nov. 19, 2004).
[5] The SAFETY Act does not provide insurance; rather, sellers are
required to purchase liability insurance from the commercial market in
an amount determined by DHS.
[6] See GAO, Transportation Security Administration: More Clarity on
the Authority of Federal Security Directors Is Needed, GAO-05-935
(Washington, D.C.: Sept. 23, 2005).
[7] The 2-year pilot concluded on November 18, 2004. For purposes of
this report, we refer to these five airports as the pilot program
airports.
[8] TSA classifies the over 400 commercial airports in the United
States into one of five security risk categories (X, I, II, III, and
IV) based on various factors, such as the total number of takeoffs and
landings annually, the extent to which passengers are screened at the
airport, and other special security considerations. In general,
category X airports have the largest number of passenger boardings and
category IV airports have the smallest.
[9] ATSA codified the requirements that TSA institute a pilot program
at 49 U.S.C. § 44919 and that an opt-out option be available under the
SPP at § 44920.
[10] The base period of these new contracts expired on September 30,
2005; an option period was exercised by TSA to extend them through May
18, 2006.
[11] Elko Regional Airport applied with the intention of serving
directly as a private screening contractor. Sioux Falls Regional
Airport applied to have screening carried out separately by a private
screening contractor.
[12] TSA interprets "private screening company," as utilized in 49
U.S.C. § 44920, to exclude public companies that do not possess the
attributes of a private company or corporation and that are not
independent from the city or county in which it operates. TSA officials
stated that under this interpretation, affiliates established by
airports to provide private screening services cannot compete for and
obtain screening contracts let by TSA if TSA determines that they do
not possess the above attributes. TSA officials also stated that
whether or not an airport qualifies as a private screening company
depends upon a case-by-case factual analysis as well as the application
of state law.
[13] The 26 airport operators we interviewed do not include the 7
airport operators that applied to participate in the SPP.
[14] GAO-05-126.
[15] We did not verify that the contractor is actually using seven
fewer FTEs than TSA's screener allocation for Sioux Falls.
[16] At the time we interviewed this contractor, TSA had not awarded
the contract to conduct private screening in the SPP. Thus, the
contractor's responses are based on its experiences prior to this
contract award.
[17] A statute caps the number of full-time equivalent screeners
available to TSA at 45,000. See Pub. No. 109-90, 119 Stat. 2064, 2070
(2005). According to TSA, this cap does not include screeners at the
five pilot program airports.
[18] Aside from its liability protections, the SAFETY Act limits the
types of damages available to a plaintiff and establishes the venue in
which a plaintiff may raise such claims.
[19] The amount of liability will be capped at an amount equal to the
level of insurance DHS requires the service contractor to purchase.
[20] DHS only recognizes an anti-terrorism technology as a "qualified
antiterrorism technology" if designated under the SAFETY Act, which
requires that DHS evaluate the technology against criteria set out in §
862 (b) the act.
[21] The SAFETY Act defines "act of terrorism" as an unlawful act
causing harm to a person, property or entity in the United States (or,
in the case of a domestic U.S. air carrier, in or outside the U.S.) by
using or attempting to use instrumentalities, weapons or other methods
designed or intended to cause mass destruction, injury or other loss to
citizens or institutions of the United States.
[22] According to DHS, the SAFETY Act does not limit liability for harm
caused by anti-terrorism technologies when no act of terrorism has
occurred.
[23] FAR, 48 C.F.R. § 16.103. TSA is exempt from the FAR and most
acquisition laws. Instead, ATSA directed TSA to adopt the Federal
Aviation Administration's acquisition management system and authorized
TSA to modify it as appropriate. 49 U.S.C. § 114(o) (Supp. II 2002).
The FAA's management system, which establishes policy, processes, and
guidance for all aspects of the acquisition life cycle, and authorized
TSA to modify it as appropriate. See 49 U.S.C. § 114(o). The
acquisition laws from which FAA is exempt are listed at 49 U.S.C. §
40110(d)(2). While TSA is exempt from the FAR, the FAR provides useful
guidance for our analysis of TSA's contracting approach. The SPP
transition plan states that the criteria contained in FAR, and the size
of the airport choosing to apply to use private screeners, dictate the
type of contract vehicle.
[24] FAR, 48 C.F.R. § 16.103(b).
[25] FAR, 48 C.F.R. §§ 16.103(c), 16.104(d).
[26] FAA Acquisition Management System policy 3.2.4.2.
[27] Qualifying for protection under the SAFETY Act requires that the
seller obtain liability insurance at a level determined by DHS to
satisfy otherwise compensable third-party claims but that would not
exceed the maximum amount of liability insurance reasonably available
from private sources at prices and terms that will not unreasonably
distort the sale price of the seller's antiterrorism technology. The
SAFETY Act does not provide insurance; rather, sellers are required to
purchase liability insurance from the commercial market in an amount
determined by DHS.
[28] According to DHS, the department applies the criteria flexibly,
assigning different weights depending on the circumstances, and may
consider additional relevant facts if necessary.
[29] The United States Supreme Court, in Boyle v United Technologies
Corp., 487 U.S. 500 (1987), articulated the "government contractor
defense," which, in general and in certain circumstances, shields
government contractors from liability for design defects in equipment
if (1) the United States approved reasonably precise specifications,
(2) the equipment conformed to those specifications, and (3) the
supplier warned the United States about dangers in the use of the
equipment known to the supplier but not to the United States. The
SAFETY Act essentially codifies and makes applicable the government
contractor defense to sellers of certified qualified anti-terrorism
technologies that have been deployed in defense against or response or
recovery from and act of terrorism and from which claims that result or
may result in loss to the seller arise.
[30] Technologies and services designated for protection pursuant to
this evaluation become known as "qualified anti-terrorism
technologies." Only qualified anti-terrorism technologies are eligible
for certification.
[31] One of the four current private screening contractors--Jackson
Hole Airport Board--has not applied for SAFETY Act protection.
[32] This policy reportedly excludes acts of terrorism, such as "any
act of
one or more persons, whether or not agents of a sovereign power, for
political or terrorist purposes and whether the loss or damage
therefrom is accidental or intentional."
[33] According to TSA, the premiums paid for insurance are considered
an allowable cost for reimbursement under the contracts, assuming the
costs are reasonable and allocable in accordance with TSA cost
principles.
[34] The two contractors purchased insurance without the protections of
the SAFETY Act or the promise of indemnification at the time of
purchase.
[35] According to TSA, the premiums paid for insurance are considered
an allowable cost for reimbursement under the contracts, assuming the
costs are reasonable and allocable in accordance with TSA cost
principles.
[36] Codified at 49 U.S.C. § 44920(g). This provision does not relieve
an airport operator from liability for its own acts or omissions
related to its security responsibilities.
[37] The seven airports include the five airports that participated in
the pilot program and the two airports that applied to the SPP, but did
not participate in the pilot program. One of the two airports that did
not participate in the pilot program, Elko Regional Airport, has since
withdrawn its application to the SPP.
[38] We did not ask the third airport operator whether the 2006
appropriations act had addressed its concerns about liability because
it had withdrawn its application.
[39] At these forums, screener candidates undergo a credentialing
process consisting of a series of physical and mental exams, drug
tests, and a preliminary background check, among other things.
[40] Concerns about the screener hiring process are shared by some FSDs
at airports using federal screeners. In our September 2005 report on
the ability of FSDs to address airport security needs, we reported that
most of the 25 FSDs interviewed were satisfied with TSA's hiring
process, which provided more options for FSDs to be involved in hiring
screeners, and most stated that the hiring process in place was better
than the centralized process that existed previously. Nevertheless, 7
of the 25 FSDs said they were not satisfied because, among other
things, the hiring process continues to take too long. See our report
GAO-05-935.
[41] TSA officials said they are working on two additional options for
contractors to assess screener candidates and will notify contractors
when the options are available so that contractors may submit a
proposal to change the option they selected.
[42] These guidelines describe working conditions that passenger and
checked baggage screeners must be willing and able to function in,
physical requirements of the job (lifting heavy objects, for example),
and a requirement that applicants successfully complete a background
investigation.
[43] At the time we interviewed the contractors, the remaining
contractor was using option one.
[44] TSA provided an early draft of the transition plan to the FSD and
FSD staff at four of the five pilot program airports.
[45] Screening managers at airports with federal screeners are
responsible for (1) managing screener operations; (2) ensuring quality
and consistency of screening procedures; (3) scheduling screening
personnel to screening operations; (4) managing overall screening work
force issues; (5) managing external relationships; and (6) interpreting
technical aspects of TSA policies, regulations, and directives.
[46] Airport stakeholders interviewed for this report were airport
managers, airport law enforcement, station managers representing air
carriers, and FBI airport liaison airports, among others.
[47] GAO-05-935.
[48] GAO, Standards for Internal Control in the Federal Government,
GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).
[49] Pub. L. No. 107-71, § 108, codified at 49 U.S.C. § 44919(f)
(screening pilot program) and 49 U.S.C. § 44920(c) (opt-out program).
[50] All five contracts awarded to private screening contractors to
date were awarded and extended as part of the original private screener
pilot program, not as part of the SPP.
[51] According to TSA, contractors must ensure that security
checkpoints are staffed in accordance with TSA's standard operating
procedures and other government requirements, and that screeners meet
government qualifications and training requirements.
[52] Indirect costs include the contractor's overhead costs.
[53] An additional contract management factor not listed above is the
contractor's compliance with the contract's terms and conditions.
[54] The draft SPP contracts for Jackson Hole airport (category III)
and Sioux Falls (category II) airport state that TSA will award a
combination cost-plus-fixed-fee and fixed-price-award-fee contract for
these airports. Specifically, the pre-transition and transition phases,
such as screener assessments, leasing, travel, consumables, uniforms,
and other direct costs will be performed under the cost-plus-fixed-fee
portion of the contract. Once the SPP contractors have attained full
operational capability--full transition to private-sector screeners--
the screening services will be performed under a fixed-price award fee
contract. In December 2005, TSA awarded such a contract to a private
screening contractor to provide screening services at Sioux Falls
airport. On February 5, 2006, the contractor received a certificate of
full operational capability from TSA.
[55] TSA officials stated, however, that they are considering adding
some fixed-price line items to the new cost-reimbursement contracts
that will be awarded at the two larger airports.
[56] TSA plans to gather cost data at up to 15 additional airports with
federal screeners, but no deadline has been set. These airports could
be, but are not necessarily, future SPP participants. Additionally,
TSA's SPP transition plan indicates that TSA has developed a model they
plan to use to estimate the federal costs of screening at specific
airports for comparison purposes. The costs included in this model are
the federal costs associated with those tasks that the private
contractor would perform at a specific airport, such as screener labor
costs, including overtime; and uniforms, consumables, recruiting,
assessment, credentialing, training, and workers compensation. The data
for this model will be obtained from TSA's Office of Budget and
Performance for each specific airport that applies to participate in
the SPP.
[57] The cost drivers included in the study were redundant screenings,
equipment availability, absenteeism, and training effectiveness.
According to TSA, redundant screening occurs when a passenger undergoes
secondary screening but does not possess a prohibited item. Reducing
the number of redundant screenings will improve screening capacity and
lower the cost of the passenger screening process. Equipment
availability is the availability of screening machines. Screening
cannot work effectively when a machine is down or not working
efficiently. High absenteeism is a major cost driver; it requires TSA
to employ a larger work force than would otherwise be required.
Training effectiveness is characterized by mission focus, content, and
minimum standards of the amount of time each employee must devote to
it. Effective training results in high prohibited item detection rates,
according to TSA.
[58] Private Screening Operations Performance Evaluation Report,
Summary Report; Transportation Security Administration; April 16, 2004.
[59] The contracts with the current four private screening contractors
expire in May 2006, after which TSA intends to competitively award new
cost-plus-award-fee contracts at the larger airports.
[60] TSA officials stated that these same performance goals and
measures would be used to assess overall SPP program management as
well.
[61] TSA awarded the contracts to the four private screening
contractors in November 2004. The contractors were extended in November
2005 for an additional 6 months, in accordance with the terms of the
contracts.
[62] In March 2005, TSA officials said they had recently submitted SPP
performance measures to DHS. TSA officials were not able to provide the
date the performance measures were submitted to DHS.
[63] As part of TSA's draft award fee plan for the private screening
contractors that participate in the SPP, there is an award fee pool
available for optional contractor-provided innovation submissions.
Specifically, the contractor may submit innovative ideas that will
improve security effectiveness, cost-efficiency, or customer
satisfaction through the development of screener innovation submissions
under the contract. The plan states that contractor submissions will be
evaluated on a recurring basis by the airport FSD and submitted to the
SPP program management office on a bi-annual basis.
[64] GAO/AIMD-00-21.3.1.
[65] GAO, Managing for Results: Using GPRA to Assist Oversight and
Decisionmaking, GAO-01-872T (Washington, D.C.: June 2001).
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