[IP] Audit says TSA has wasted a quarter billion dollars

[Dave Farber <dave@farber.net>]

http://www.latimes.com/news/nationworld/nation/la-na-tsa8apr08,1,5308708.sto
ry?coll=la%2Dheadlines%2Dnation%2Dmanual

     
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http://www.latimes.com/news/nationworld/nation/la-na-tsa8apr08,1,5308708.sto
ry?coll=la%2Dheadlines%2Dnation%2Dmanual

Airport Security Agency Is Accused of Waste

Audit reports suggest that $250 million may have been misspent by the
federal transportation body.
By Ricardo Alonso-Zaldivar and Mark Fineman
Times Staff Writers

April 8, 2003
WASHINGTON -- Nestled in farm country near Thomas Jefferson's mountaintop
estate, the Charlottesville, Va., airport handles about 470 departing
passengers a day.
When the airlines paid for security at Charlottesville-Albemarle Airport,
they managed to check passengers with a staff of 15 screeners. But since the
federal government took over airport security, it deploys 39, a daily
average of 12 passengers per screener.
Around the country, federal air marshal field offices use government-leased
sport utility vehicles. That costs taxpayers about $200,000 more per year
than if the marshals switched to sedans, auditors found. But the
Transportation Security Administration says SUVs are needed to reach rugged
rural shooting ranges where the marshals practice.
Last year's federal takeover of airport security by the TSA has been hailed
as a success in the war on terrorism, after the new agency met what many
said were impossible deadlines set by Congress.
Now, audit reports and interviews with investigators and lawmakers indicate
that TSA may have wasted as much as $250 million.
Created in a climate of urgency and fear, the TSA was given the challenge of
securing 429 airports in record time. Each airport had its own
vulnerabilities. Given the magnitude of the task, some funds were perhaps
bound to be misspent. Yet even by that standard, the extent of the TSA's
largess has been surprising.
From overstaffing rural airports to paying security companies at inflated
rates to buying more than 1,000 baggage scanners built with dated technology
for $1 million each, the agency let spending get out of control, critics
charge. Some in Congress cite the TSA as a classic example of federal
gold-plating, at a time when cities and states cannot afford to fund
counter-terrorism needs.
"Millions, millions," have been wasted, said Rep. John L. Mica (R-Fla.),
chairman of the House aviation subcommittee. "We've been trying to get it
under control."
Rep. Harold Rogers (R-Ky.), who heads the appropriations subcommittee
responsible for the TSA's budget, has blasted the agency for "budget
estimates pulled from thin air" and "wild funding swings."
One government official familiar with the numbers said the estimate of a
quarter of a billion dollars in questionable costs is a "reasonable" figure.
Inadequate oversight of massive contracts with private companies is behind
much of the problem, said the official, who asked not to be identified.
The main contract last year for recruiting federal security screeners
ballooned from an initial estimate of $100 million to about $700 million,
according to the Transportation Department's inspector general. The
escalation resulted partly from having to hire some 60,000 screeners instead
of 30,000, as originally expected.
A separate inspector general audit found as much as $305 million in
potential overbilling by airport security companies hired by the government
to fill in until federal screeners could be deployed.
Critics have also raised questions about minivan-sized scanners used to
examine luggage for hidden explosives, which are prone to false alarms and
maintenance problems.
The TSA bought about 1,110 machines at $1 million apiece to meet an
end-of-year deadline, for inspecting all checked bags. Transportation
Department Inspector General Kenneth Mead has said their performance remains
"a significant unknown."
Sen. Ron Wyden (D-Ore.) is a critic of TSA spending. "Nobody is saying they
ought to eat peanut butter sandwiches and live in pup tents," he said, "but
at a time when so many programs are being devastated, you've got to show you
are being responsible with taxpayers' dollars." The TSA rejects charges that
it allowed waste and abuse to spread. At the inspector general's urging, it
has brought in two Defense Department agencies to oversee and audit a
portfolio of $8.5 billion in contracts. And it announced plans to trim the
screener workforce by 3,000. Spokeswoman Heather Rosenker said the agency
will go after contractors that overcharged.
"I think TSA has been an excellent steward of the taxpayers' money,"
Rosenker said. "Nobody knew the magnitude of what we were getting into."
However, Elaine Duke, the TSA's director of acquisitions, acknowledged at a
recent Washington conference that there was little or no planning for
procurement during the drive to take over airport security. "I think when
you do things that quickly," added Duke, "there are some things ... you have
to live with later."
Through it all, the companies that won billions in TSA contracts have reaped
substantial profits.
InVision, the California manufacturer of explosives scanners for baggage,
reported 2002 profits of $78.3 million, 10 times higher than its 2001 net
earnings. NCS Pearson Government Solutions, an international personnel and
education firm that won the screener-recruitment contract, reported revenues
of more than $300 million from the deal.
The TSA began last year with a handful of its own employees and several
hundred staffers inherited from the Federal Aviation Administration's
security branch. By December, it had grown into a $5-billion agency with
some 70,000 employees and a mission reaching around the globe. Its troubles
are rooted in that rapid growth.
To meet the congressional deadlines, the TSA was dependent on the goodwill
of its contractors. Surprises popped up almost immediately. Because not
enough of the baggage scanners could be built in time, the TSA was forced to
hire twice the number of screeners originally envisioned.
The government's $100-million estimate for the NCS Pearson screener hiring
contract quickly became irrelevant.
"I don't think anybody had any clue as to the $100-million estimate," said
Rosenker, the TSA spokeswoman. "People were kind of reaching in the sky to
say what it might cost. There was no track record there."
While the mission unquestionably got bigger, the inspector general has
criticized the Pearson contract for its lack of penalties or other
incentives to curb costs. Mac Curtis, president of NCS Pearson, said the
company was careful with taxpayers' money.
"I think some of the criticism is based on not really understanding the
facts," Curtis said. "We stepped up to the plate and got the job done."
Having to hire tens of thousands of additional screeners drove the growth in
costs, Curtis said. "There was absolutely no blueprint for how to do this,"
he added.
A stay at a luxury resort by recruiters working for Pearson has prompted two
senators to call for an investigation. The recruiters spent five weeks at
the Wyndham Peaks Resort and Golden Door Spa near Telluride, Colo.,
evaluating job candidates for five Colorado and New Mexico airports. Out of
283 screener candidates assessed at the resort, 50 were hired.
Pearson and the TSA defend the recruiting trip, first disclosed by the Wall
Street Journal. The Wyndham was the only area facility that offered the
right combination of space, secure high-speed communications and geographic
proximity to job seekers, they said. The recruiters got a government room
rate of $147 per night.
This year, the TSA rejected Pearson's bid to renew the contract, but Curtis
said the cost spiral was not a factor. The TSA has yet to pay about $70
million billed under the contract, he added, and some of that may be
challenged by auditors.
While the TSA was spending hundreds of millions to hire the new federal
screeners, security companies filling in at the airports were billing the
government up to $305 million more than they had charged the airlines for
similar work.
An audit by the inspector general found that six of 13 companies that
provided most of the security guards increased their hourly billing rates by
58% to 97%. The other seven billed the same or slightly higher rates than
they had charged the airlines. Failure to monitor the contracts was cited as
a significant weakness by auditors. The agency put $90 million in payments
to the companies on hold, on the advice of auditors.
"Basically, the government got ripped off by some of these same low-budget,
substandard companies that were providing crummy security for the airlines,"
said Rep. Peter A. DeFazio of Oregon, the ranking Democrat on the House
aviation subcommittee.
One of the companies under scrutiny is Aviation Safeguards, a subsidiary of
Command Security Co. of New York. The parent company filed documents with
the Securities and Exchange Commission disclosing it was being audited over
the "base wage rate" it charged the government, which was holding back $3
million in billings.
"We don't think we did anything inappropriate," said William C. Vassel,
chief executive officer of Command Security. "The government asked us to
bid. And they accepted the bid. They could have said no."
The companies had to charge more because the government required additional
training and staffing, and also mandated higher wages, Vassel said.
TSA is no longer rushing to meet congressional deadlines, but Inspector
General Mead warns that the potential for runaway costs is still there.
Hundreds of the explosives detection scanners for checked bags, hurriedly
installed in airport lobbies last year, must be moved and linked to luggage
conveyor belts. Cost estimates start at $3 billion.
"The heavy lifting and costs still lie ahead," Mead told a Senate committee
this year.

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