[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



 AIRLINE PASSENGER BAGGAGE SCREENING: TECHNOLOGY AND AIRPORT DEPLOYMENT 
                                 UPDATE

=======================================================================

                                (109-86)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                                AVIATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 29, 2006

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure












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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                      DON YOUNG, Alaska, Chairman

THOMAS E. PETRI, Wisconsin, Vice-    JAMES L. OBERSTAR, Minnesota
Chair                                NICK J. RAHALL, II, West Virginia
SHERWOOD L. BOEHLERT, New York       PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee       ELEANOR HOLMES NORTON, District of 
WAYNE T. GILCHREST, Maryland         Columbia
JOHN L. MICA, Florida                JERROLD NADLER, New York
PETER HOEKSTRA, Michigan             CORRINE BROWN, Florida
VERNON J. EHLERS, Michigan           BOB FILNER, California
SPENCER BACHUS, Alabama              EDDIE BERNICE JOHNSON, Texas
STEVEN C. LaTOURETTE, Ohio           GENE TAYLOR, Mississippi
SUE W. KELLY, New York               JUANITA MILLENDER-McDONALD, 
RICHARD H. BAKER, Louisiana          California
ROBERT W. NEY, Ohio                  ELIJAH E. CUMMINGS, Maryland
FRANK A. LoBIONDO, New Jersey        EARL BLUMENAUER, Oregon
JERRY MORAN, Kansas                  ELLEN O. TAUSCHER, California
GARY G. MILLER, California           BILL PASCRELL, Jr., New Jersey
ROBIN HAYES, North Carolina          LEONARD L. BOSWELL, Iowa
ROB SIMMONS, Connecticut             TIM HOLDEN, Pennsylvania
HENRY E. BROWN, Jr., South Carolina  BRIAN BAIRD, Washington
TIMOTHY V. JOHNSON, Illinois         SHELLEY BERKLEY, Nevada
TODD RUSSELL PLATTS, Pennsylvania    JIM MATHESON, Utah
SAM GRAVES, Missouri                 MICHAEL M. HONDA, California
MARK R. KENNEDY, Minnesota           RICK LARSEN, Washington
BILL SHUSTER, Pennsylvania           MICHAEL E. CAPUANO, Massachusetts
JOHN BOOZMAN, Arkansas               ANTHONY D. WEINER, New York
JIM GERLACH, Pennsylvania            JULIA CARSON, Indiana
MARIO DIAZ-BALART, Florida           TIMOTHY H. BISHOP, New York
JON C. PORTER, Nevada                MICHAEL H. MICHAUD, Maine
TOM OSBORNE, Nebraska                LINCOLN DAVIS, Tennessee
KENNY MARCHANT, Texas                BEN CHANDLER, Kentucky
MICHAEL E. SODREL, Indiana           BRIAN HIGGINS, New York
CHARLES W. DENT, Pennsylvania        RUSS CARNAHAN, Missouri
TED POE, Texas                       ALLYSON Y. SCHWARTZ, Pennsylvania
DAVID G. REICHERT, Washington        JOHN T. SALAZAR, Colorado
CONNIE MACK, Florida                 JOHN BARROW, Georgia
JOHN R. `RANDY' KUHL, Jr., New York
LUIS G. FORTUNO, Puerto Rico
LYNN A. WESTMORELAND, Georgia
CHARLES W. BOUSTANY, Jr., Louisiana
JEAN SCHMIDT, Ohio

                                  (ii)



                        SUBCOMMITTEE ON AVIATION

                    JOHN L. MICA, Florida, Chairman

THOMAS E. PETRI, Wisconsin           JERRY F. COSTELLO, Illinois
HOWARD COBLE, North Carolina         LEONARD L. BOSWELL, Iowa
JOHN J. DUNCAN, Jr., Tennessee       PETER A. DeFAZIO, Oregon
VERNON J. EHLERS, Michigan           ELEANOR HOLMES NORTON, District of 
SPENCER BACHUS, Alabama              Columbia
SUE W. KELLY, New York               CORRINE BROWN, Florida
RICHARD H. BAKER, Louisiana          EDDIE BERNICE JOHNSON, Texas
ROBERT W. NEY, Ohio                  JUANITA MILLENDER-McDONALD, 
FRANK A. LoBIONDO, New Jersey        California
JERRY MORAN, Kansas                  ELLEN O. TAUSCHER, California
ROBIN HAYES, North Carolina          BILL PASCRELL, JR., New Jersey
HENRY E. BROWN, Jr., South Carolina  TIM HOLDEN, Pennsylvania
TIMOTHY V. JOHNSON, Illinois         SHELLEY BERKLEY, Nevada
SAM GRAVES, Missouri                 JIM MATHESON, Utah
MARK R. KENNEDY, Minnesota           MICHAEL M. HONDA, California
JOHN BOOZMAN, Arkansas               RICK LARSEN, Washington
JIM GERLACH, Pennsylvania            MICHAEL E. CAPUANO, Massachusetts
MARIO DIAZ-BALART, Florida           ANTHONY D. WEINER, New York
JON C. PORTER, Nevada                BEN CHANDLER, Kentucky
KENNY MARCHANT, Texas                RUSS CARNAHAN, Missouri
CHARLES W. DENT, Pennsylvania        JOHN T. SALAZAR, Colorado
TED POE, Texas                       NICK J. RAHALL II, West Virginia
JOHN R. `RANDY' KUHL, Jr., New       BOB FILNER, California
York, Vice-Chair                     JAMES L. OBERSTAR, Minnesota
LYNN A. WESTMORELAND, Georgia          (Ex Officio)
DON YOUNG, Alaska
  (Ex Officio)

                                 (iii)



























                                CONTENTS

                               TESTIMONY

                                                                   Page
 Baer, Susan M., General Manager, Newark Liberty International 
  Airport........................................................     8
 Berrick, Cathleen A., Director, Homeland Security and Justice 
  Issues, Government Accountability Office.......................     8
 Britz, William W., Project Manager, Aviation Security Systems, 
  Raytheon Technical Services Company, LLC.......................     8
 Cooke, Dennis, President, GE Security, Homeland Protection 
  Division.......................................................    36
 Ellenbogen, Michael, Chief Executive Officer, Reveal Imaging 
  Technologies, Inc..............................................     8
 Hauptli, Todd, Senior Vice President, Airport Legislative 
  Alliance.......................................................    36
 Null, Randy, Assistant Administrator for Operational Process and 
  Technology, Transportation Security Administration.............     8
 Ripp, Thomas, President, Security and Detection Systems 
  Division, L-3 Communications, Inc..............................    36
 Wood, John W., Jr., President and Chief Executive Officer, 
  Analogic Corporation...........................................    36

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Carnahan, Hon. Russ, of Missouri.................................    95
Costello, Hon. Jerry F., of Illinois.............................    96
Oberstar, Hon. James L., of Minnesota............................   116

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

 Baer, Susan M...................................................    48
 Berrick, Cathleen A.............................................    60
 Britz, William W................................................    89
 Ellenbogen, Michael.............................................    99
 Hauptli, Todd...................................................   105
 Null, Randy.....................................................   111
 Ripp, Thomas....................................................   120
 Wood, John W., Jr...............................................   127

                        ADDITIONS TO THE RECORD

Kamen, Hershel I., Staff Vice President, Security and Regulatory 
  Affairs, Continental Airlines, Inc., statement.................   133
Parker, A. Louis, President and CEO, GE Security, statement......   139

























 
 AIRLINE PASSENGER BAGGAGE SCREENING: TECHNOLOGY AND AIRPORT DEPLOYMENT 
                                 UPDATE

                              ----------                              


                        Thursday, June 29, 2006

        House of Representatives, Committee on 
            Transportation and Infrastructure, Subcommittee 
            on Aviation, Washington, D.C.
    The committee met, pursuant to call, at 10:00 a.m., in room 
2167, Rayburn House Office Building, the Hon. John L. Mica 
[chairman of the committee] presiding.
    Mr. Mica. Good morning. I would like to call this hearing 
of the House Aviation Subcommittee to order. We have two 
panels, a rather full schedule this morning.
    The order of business will be opening statements by members 
and then we will turn to our first panel. With that, I would 
like to welcome everyone. The topic of today's hearing is 
airline passenger baggage screening, and we are going to look 
at technology and airport deployment and its current schedule, 
get an update.
    This morning's hearing, as I said, will focus on the 
Transportation Security Administration, TSA's process, for 
certifying, testing and deploying and funding integrated in-
line explosive detection systems for screening checked baggage. 
It has been just under two years since this Subcommittee last 
considered this issue, and some four and a half years since 
Congress passed the Aviation and Transportation Security Act, 
which we helped author and establish the TSA.
    The Act set some very tight deadlines for screening 100 
percent of the checked baggage for explosives. The TSA's first 
step was to waste, unfortunately, $1 billion to contract for 
airport EDS installation designs, and unfortunately, most of 
those designs and plans still sit on shelves, and many of those 
plans will never be used. One of the things I intend to do as a 
result of this hearing is ask the Inspector General in GAO to 
investigate and review this contract and what took place, what 
went wrong.
    Now, some of all of this was done in a rush to meet 
Congressionally-mandated deadlines. And in that rush, TSA 
unfortunately created a hodgepodge of systems and we now have 
in place explosive trace detection equipment at some airports, 
and we have standalone EDS machines at others, and various 
combinations. Even more unfortunately, the vast majority of 
airports in the Country are still in a state of disarray today. 
We still have crowded airport lobbies, some of them packed with 
the variety of equipment and procedures that I just mentioned. 
We have inconvenienced passengers and we have enormous 
headaches for airport operators and also for airlines.
    This patchwork system has also resulted in a small array of 
personnel costs with more baggage screeners, I think we are up 
to 16,800 just behind the scenes screening baggage out of a 
work force, a small army of 45,000. We have increased on the 
job injury rates, and huge worker compensation costs. As I 
said, we are looking at somewhere about 16,800 employees by TSA 
behind the scenes, and unfortunately, we have seen in addition 
to the workers comp rates, we have seen vacancy rates on 
average of 24 percent.
    The Occupational Safety and Health Administration, OSHA, 
has projected that more than 16 percent of TSA employees will 
report a job related injury or illness by the end of fiscal 
year 2006. That happens to be, as we understand it, the highest 
percentage in the Federal Government. For 2007, the TSA has 
requested $20 million in back payments to reimburse the 
Department of Labor for prior workers compensation claims filed 
in just 2005. The 2007 budget request also includes $55 million 
for workers compensation. That is a 40 percent increase from 
the 2006 request.
    Unfortunately, that picture is pretty grim, and it is also 
pretty costly. The situation has even impacted the Nation's 
Federal security directors, they have become completely 
overwhelmed by personnel matters.
    Quite frankly, the TSA's current baggage screening system 
continues to show no ability to adapt or keep pace with the 
ever-changing demands of the aviation industry. That is where 
today we come into the picture, trying to keep the planes and 
passengers moving on time and their baggage with them.
    At the same time that that patchwork system is getting 
bogged down by its own efficiencies, there is in fact growing 
evidence that it does not even afford us more effective 
security screening. The whole purpose for this multi-billion 
dollar effort and huge army of personnel is again good 
screening. And unfortunately, that isn't the case.
    Testing by TSA and the Department of Homeland Security has 
repeatedly demonstrated the advantage of fully integrated in-
line checked baggage EDS systems, especially at large airports. 
In-line EDS systems have also proven to be highly efficient, 
extremely cost-effective and more accurate, again, at the 
primary purpose for all of this, the detection of dangerous 
items.
    They also have a lower maintenance cost, require fewer 
screeners and have less out of time service. TSA has estimated 
that at the nine airports that received letters of intent, 
LOIs, the TSA will recover its initial investment in just over 
a year and will save $1.26 billion over seven years. These are 
some incredible figures.
    The GAO has reported that in-line EDS systems at nine LOI 
airports they looked at would reduce the number of TSA 
personnel, screeners and supervisors, by an astounding 78 
percent. That could mean a reduction in as many as 13,000 TSA 
baggage screeners, saving millions, in fact billions of 
dollars.
    Yet despite the mounting evidence in the two years since 
this Subcommittee last held a hearing on this topic, the TSA 
reports that only an additional 15 airports, for a total of 23 
airports out of 441 commercial airports, have converted to full 
in-line EDS systems. That sounds like a bad picture, but you 
have to remember that there are 29 airports in this Country 
that handle 75 percent of all passengers. Only nine have full 
in-line EDS systems. Of those nine airports, eight funded the 
EDS projects on their own. That is eight of the nine, funded 
them on their own, and received letters of intent to be 
reimbursed by the TSA over a three to five year period. That is 
an absolutely dismal record for the Federal Government.
    I am extremely disappointed with Congress, and I have to 
take a lot of the responsibility in this, and also with the TSA 
for their lack of progress in this program. We must examine the 
reasons for delay. First, of course, funding remains an issue, 
and through fiscal year 2006, Congress has appropriated a total 
of $3.851 billion for EDS purchase and installation. Of those 
funds, however, no more than half a billion of those dollars 
were used by TSA on the short-term challenges associated with 
meeting the 100 percent baggage screening deadline.
    Just an aside, this is one reason why I tried to get that 
deadline extended, and some people imposed the deadline. When 
we first debated this, we knew exactly what would happen as we 
put a hodgepodge system in place at great expense, using a huge 
army of personnel. And that is exactly what we have gotten, and 
very few automated, good performing systems.
    In fiscal year 2007, the TSA requested $435 million for EDS 
purchase and installation. However, TSA plans to use only $156 
million for EDS installations at the remaining 432 non-LOI 
airports. Yet based on the strategic planning framework for the 
electronic baggage screening program provided to Congress by 
TSA in February 2006, between $4 billion to $6 billion will be 
needed to achieve the optimal EDS systems. We have right now a 
2019 schedule.
    The top 25 airports requiring EDS installation will cost 
approximately $1.4 billion. Furthermore, according to the 
strategic plan deployment model, approximately 200 airports 
still require some form of in-line system. As a result of the 
lack of funding for installation of in-line EDS systems, 
airports are using a variety of funding mechanisms, alone 
sometimes and also in combination, to pay for in-line system 
installation. They use airport improvement funds, AIP money, 
other transactional agreements, OTAs, and with the TSA, 
sometimes with their own revenue and sometimes using passenger 
facility charges, or PFCs.
    This funding dilemma has further complicated the already 
hodgepodge EDS system TSA has put in place. I have said it 
before, and I am sure I will say it again, but TSA and OMB must 
think outside the box and use modern financing tools available 
to the Federal Government to leverage scarce dollars.
    But the lack of progress is also attributable to the amount 
of time it takes for TSA to certify, test, to conduct a pilot 
or demonstration project and also to deploy some of these 
systems. Despite the fact that a number of manufacturers are 
developing alternative technologies to complement the existing 
EDS systems, and they are also experimenting with different 
system configurations, progress in testing and deploying the 
innovations is frustrating and any real progress made in 
research and development also lags behind. We are going to 
hear, I have hauled in the folks where there was a Reveal demo 
today, and we are going to hear a great example of a disaster 
in that corridor.
    For instance, in September 2004, as part of Phase I of the 
Manhattan II project, TSA awarded ten cooperative agreements 
totaling approximately $5.2 million for the development of new 
technologies. Phase I ended in December of 2005, yet after six 
months, TSA has not provided any funding for Phase II.
    Our research and development also to complete this 
certification process, unfortunately is just as tedious. I am 
told that TSA technology certification process can take up to 
nine months to complete. TSA also seems to get bogged down in 
piloting and demoing technology, but then fails to develop and 
issue minimum technology standards that can be utilized by the 
security and aviation industries. TSA's oversight and follow-
through on some of their pilot programs has been absolutely 
disappointing.
    Today, as I said, we are going to hear about the disastrous 
Reveal pilot program at Newark Liberty International Airport. 
My goal in this is to review and analyze what went wrong at 
Newark. I hope that this will provide a template for future TSA 
pilot programs to not repeat the same mistakes.
    The bottom line is, our Nation's aviation security system 
must become smarter and more efficient. We absolutely must make 
better use of limited resources and come up with a more 
efficient and speedy process for testing and certifying and 
deploying new security technologies. Continuing to follow the 
slow, jumbled and disconnected path taken by TSA in the last 
four and a half years is no longer acceptable. It is providing 
a real drain on the system and to the aviation industry. A 
patchwork approach will inevitably lead to weaknesses in the 
system and possibly even disaster.
    Long comments, but background necessary for this 
Subcommittee and this hearing. I am pleased to yield at this 
time to the Ranking Member.
    Mr. Costello. Mr. Chairman, thank you. And I thank you for 
calling this hearing today.
    I do have a lengthy statement that I will submit for the 
record. We have two panels of witnesses here and I look froward 
to hearing from them. There are a number of problems associated 
with the deployment of the various systems at our airports. 
Part of, I think the blame can be shared by TSA, part of it can 
be shared by the Administration, part of it can be shared by 
the Congress. Because we often times talk about security 
priorities, but do not follow up with the appropriation in 
order to purchase the equipment that is needed and the 
personnel in order to carry out the job.
    But with that, I will submit my statement for the record 
and yield at this time the balance of my time for an opening 
statement to Mr. Pascrell.
    Mr. Pascrell. Thank you, Mr. Chairman, Mr. Ranking Member.
    I appreciate your decision to hold a hearing on the status 
of the explosive detection systems for baggage at our Nation's 
airports. This issue has been of great concern, as you know, at 
Newark Liberty International Airport in New Jersey. The initial 
deployment EDS machines are set up throughout lobbies and other 
common areas in three terminals at Newark Airport. This has 
created, charitably, an awkward system. It hurts efficiency at 
the airport, the safety of the travelers in the lobbies. It is 
not the best way to go about screening baggage.
    However, Newark Airport has made the best of these initial 
circumstances. Given the limited physical capacity for 
expansion, the airport has worked to improve the baggage 
screening system with the best technology available. It is 
generally agreed that in-line EDS machines are the gold 
standard for screening. However, to retrofit many of the 
Nation's older airports costs in the neighborhood of between 
$100 million and $200 million apiece. In fact, installation of 
an integrated, in-line EDS would require extensive terminal 
modifications. Some do not have the physical capacity nor the 
infrastructure to support the changes.
    So far, the Federal Government has not provided appropriate 
resources to facilitate in-line system implementation. It would 
seem that this is against our own self-interest. According to 
the GAO, if TSA were to fund in-line EDS systems at the nine 
airports with which it has letters of intent agreements, the 
Federal Government would recover its initial investment in just 
over one year and save over $1.26 billion every seven years. 
The GAO has stated that very clearly.
    This is an investor's dream. But with $4 billion to $6 
billion in needs remaining, $435 million a year will not cut 
it. You can't do it. So we are only kidding ourselves. Why? We 
have not made this a priority. Why? There are other priorities. 
Why? It is important that Barry Bonds gets a $72,000 tax cut, 
and you know what I am talking about.
    You may shrug all you want, that is a fact of life. When 
everything is a priority, nothing is a priority. If this is 
going to be a priority, if we want to protect the customers, 
then we have to invest the money.
    Clearly, there is room for improvement. I am positive that 
this Committee will continue to be a strong advocate of 
providing our airports with the resources they need. I hope the 
appropriate officials here today are listening.
    However, many airports have made the decision to move ahead 
on their own, to better the inefficient and precarious 
hodgepodge system created by the original placement of the EDS 
machines. In Newark, the airport has gone about purchasing and 
installing 23 new EDS machines to form a system integrated with 
the checked baggage system. Last year, as part of this upgrade, 
Newark participated in a TSA pilot program using the new 
technology. In the end, this program was not successful. The 
reasons remain unclear.
    I look forward to a vigorous discussion with our panel 
members about the unfortunate outcome of this program. This is 
particularly frustrating, Mr. Chairman, and I thank the Ranking 
Member for yielding.
    Mr. Mica. Thank you. And I hope you stay, Mr. Pascrell, to 
hear about the whole Newark fiasco. Because it is not always 
how much money we spend, it is how we spend it. Newark was to 
be our premier demonstration of new technology. That is one 
reason why I asked them all to come here, because I have heard 
five or six different stories. And we are going to hear the 
whole truth and nothing but the truth today.
    Mr. Ehlers.
    Mr. Ehlers. Thank you. I will try to speak the truth and 
nothing but the truth.
    Thank you for having this hearing. It is a very important 
issue. And putting it in the broader context, I think we have 
done rather well overall across this Nation in dealing with 
aviation security. That doesn't mean it is good. It is just 
that we have so many good targets in this Nation, because we 
live in a free and open society, that we are never going to be 
able to reduce all the threats. We can just try to handle them 
as best we can and try to prioritize. I appreciate the work 
that has been done by all Government agencies trying to do 
that.
    I am continually impressed, since I fly at least four 
flight segments a week, at how many, and I tend to have a 
devious mind, I might add, a devious scientific mind. I am 
continually surprised at how many weaknesses I identify in the 
system and how easily I could devise ways to bypass the system 
and get contraband material on board. I will not share that 
with you or with anyone else. It is bad enough having a devious 
mind without sharing it.
    But it just illustrates the extent of the problem. We 
cannot make aviation perfectly safe. We cannot make our ports 
perfectly safe. But what we can do is make it difficult for 
anyone to do wrong. And that is what I think we are beginning 
to do effectively. We have a long way to go on the ports. We 
have a good start in aviation.
    But having said that, then we get down to the Chairman's 
concerns and my concerns as well. Are we doing it effectively, 
are we doing it cost-effectively? And that is something where I 
think we have fallen down in many areas. So I look forward with 
interest to the testimony today.
    With that I yield back.
    Mr. Mica. I thank the gentleman.
    Mr. Honda.
    Mr. Honda. Thank you, Mr. Chairman and Ranking Member 
Costello, for scheduling this hearing, which is of enormous 
importance to Mineta San Jose International Airport and 
airports all across this Country. It is good to see you, Dr. 
Null. I just want to let you know parenthetically that TSA 
leadership at the airport is great.
    Properly securing our Nation's airports is wrought with 
challenges that can only be addressed with adequate funding, 
innovative thinking and a strong Federal and local partnership. 
Following the terrorist attacks of September 11th, I convened a 
blue ribbon task force on aviation security and technology, 
comprised of aviation experts and also Silicon Valley 
executives. This task force called together the brightest minds 
of Silicon Valley, the heart of our technology revolution, to 
brainstorm about the future of aviation security.
    In 2002, the task force issued a final report. Some of the 
recommendations in the report were taken up by TSA as pilot 
programs, including the use of GPS to track vehicles on the 
tarmac. Other recommendations unfortunately have not been 
pursued for reasons that I can't understand at this time.
    The task force placed great importance on providing strong 
security in a traveler-friendly manner. I am concerned that 
TSA, for financial or other management reasons, has not taken 
the same approach. Dr. Null is very familiar with San Jose 
Airport, and the great strides the airport has made to improve 
the baggage screening process. That task has not been easy at 
at least one of the airport's terminals, which was constructed 
to address the capacity concerns of pre-9/11.
    The airport and the city of San Jose have undertaken the 
task of dramatically renovating and expanding the airport. They 
have added an international arrival terminal and are in the 
process of improving existing terminals. San Jose's airport's 
efforts have managed to keep the security process out of the 
terminal lobbies, resulting in a more efficient flow of the 
pedestrian traffic.
    One of the airport's top priorities will be secure Federal 
support for an on-line screening system to improve their 
efficiency and eliminate double handling of baggage. I 
understand that San Jose is one of the top 24 airports in the 
Country being considered for fiscal year 2007 funding to 
construct their system. I hope that TSA will continue to work 
cooperative with San Jose airport as they move forward into the 
construction phase of the new EDS system.
    I thank you, Mr. Chairman, for this opportunity, and I 
yield back.
    Mr. Mica. Thank you. Are there any other opening 
statements?
    OK. This morning I am going to swear in our witnesses. 
Would you stand, please, raise your right hand.
    [Witnesses sworn.]
    Mr. Mica. Let's for the record indicate that all the 
witnesses answered in the affirmative.
    We take this matter pretty seriously. We don't have the 
representative of Continental Airlines here. We do have a 
written statement by Hershel Kamen. I ask unanimous consent 
that that entire statement be entered into the record by Mr. 
Costello. Without objection, so ordered.
    And we will also call that witness in, swear that witness 
under oath and question that witness about, again, one of the 
pending oversight issues that we are going to address.
    With that, we have our first two witnesses. One is Mr. 
Randy Null, he is the Assistant Administrator for Operational 
Process and Technology of TSA. And then we have Ms. Cathleen A. 
Berrick, she is the Director of Homeland Security and Justice 
Issues at the U.S. Government Accountability Office.
    We will hear first from Randy Null, with TSA. Welcome, and 
you are recognized.

     TESTIMONY OF RANDY NULL, ASSISTANT ADMINISTRATOR FOR 
  OPERATIONAL PROCESS AND TECHNOLOGY, TRANSPORTATION SECURITY 
    ADMINISTRATION; CATHLEEN A. BERRICK, DIRECTOR, HOMELAND 
SECURITY AND JUSTICE ISSUES, GOVERNMENT ACCOUNTABILITY OFFICE; 
  MICHAEL ELLENBOGEN, CHIEF EXECUTIVE OFFICER, REVEAL IMAGING 
TECHNOLOGIES, INC.; WILLIAM W. BRITZ, PROJECT MANAGER, AVIATION 
  SECURITY SYSTEMS, RAYTHEON TECHNICAL SERVICES COMPANY, LLC; 
 SUSAN M. BAER, GENERAL MANAGER, NEWARK LIBERTY INTERNATIONAL 
                            AIRPORT

    Mr. Null. Good morning, Mr. Chairman, Congressman Costello 
and distinguished members of the Subcommittee. I am pleased to 
have the opportunity to appear before you today on behalf of 
the Transportation Security Administration, to provide you with 
an update on our electronic baggage screening program.
    Since the initial deployment of TSA's checked baggage 
screening technologies, we have pushed hard for innovation and 
investment intended to dramatically improve the system. Today, 
51 airports are either operational or deploying some form of 
advanced in-line baggage screening systems. Additionally, TSA 
has certified two new explosive detection systems and is 
testing others that if certified, will provide additional 
capabilities.
    We continue to search for answers outside the box and ways 
to better utilize existing technology and work in partnership 
with airports and airlines to address pressing needs, take 
advantage of special opportunities and develop innovative, 
cost-effective solutions appropriate for unique operating 
circumstances. We have learned valuable lessons in the last 
three years about the operational nature of advanced in-line 
explosive screening and adapted. Research into both short-term 
and long-term technological solutions continues. Several 
vendors are developing equipment upgrades to increase the life 
span and efficiency of our current equipment.
    Our long-term development strategy places an emphasis on 
developing EDS technologies that can process greater than 900 
bags per hour and employ revolutionary threat detection 
concepts to lower false alarm rates. Laboratory results thus 
far indicate that those are indeed achievable goals.
    TSA continues to take action on several fronts to ensure 
that optimal sufficient screening solutions are provided to 
airports. Through eight letters of intent, we have collaborated 
closely with stakeholders at nine airports to develop, design 
and install advanced in-line baggage screening systems. Our 
funding commitment to the nine LOI airports runs through the 
end of fiscal year 2007, completing a Federal investment of 
almost $1 billion for facility modifications.
    Furthermore, we have developed and relocated equipment to 
increase screening capacity, reduce worker injuries and 
increase screening efficiency. Finally, when airport operators 
or tenants are able to fund a significant portion of the 
expense necessary to build an in-line system, either during new 
construction or renovation, TSA has offered financial 
assistance through the use of other transactional agreements 
for smaller projects. Under these efforts, the 51 airports are 
either operational or are deploying some type of in-line 
baggage screening system throughout an entire airport or on a 
terminal basis.
    In February of 2006, we delivered to the Congress a 
strategic planning framework for the checked baggage screening 
program that has already begun to influence our investment and 
deployment decisions. This framework details TSA's long-term 
planning philosophy for the development and implementation of 
optimal baggage screening solutions at the Nation's top 250 
airports. The goals of the plan are straightforward: reduce 
total life cycle costs by deploying optimized and customized 
screening solutions; expand the amount of baggage screened by 
EDS technology; develop and publish planning and design 
guidelines for in-line systems, incorporating lessons learned; 
accelerate and leverage next generation technology matched to 
those best practice designs; and work actively with 
stakeholders to collaboratively manage and oversee the design 
of optimally scaled screening systems.
    Under this framework, TSA has prioritized airports based 
upon projected passenger growth and estimates of peak capacity 
needs. Using these estimates, we can make a general 
determination of the optimal screening solution for each 
airport, taking into account reasonable assumptions of 
development in EDS technologies. These estimates have largely 
been completed, although they must continually be updated to 
reflect current operational conditions.
    Use of these estimates is beginning to provide flexibility 
to deploy optimized solutions to airports based upon priority, 
with the understanding that changes in operational conditions, 
as well as increased stakeholder participation at a particular 
airport may alter that listing.
    A large component of the strategic plan is a specialized 
study on alternative financing solutions. This cost sharing and 
investment study required by the Intelligence Reform and 
Terrorism Prevention Act of 2004, and developed in coordination 
with aviation industry stakeholders, will be completed in the 
summer of 2006.
    As you are aware, authorization of the Aviation Security 
Capital Fund created by Vision 100, Century of Aviation 
Reauthorization Act, expires in fiscal year 2007. The funds 
provided that the first $250 million collected in passenger 
security fees is used to fund airport security improvement 
projects, to include checked baggage screening projects. We 
support a three year extension of the fund through fiscal year 
2010, with the proviso that the allocation requirements 
contained in the fund and which are not specifically tied to 
aviation security needs are eliminated.
    Finally, as you are aware, the 100 days between Memorial 
Day and Labor Day represents the busiest time at airports 
across the Country. TSA expects to screen more than 200 million 
passengers and their bags during this time. In light of this 
increase in passenger flow, TSA has taken aggressive actions to 
manage airport conditions this summer by increasing our 
staffing through local hiring initiatives, deploying members of 
our national screener force to support airports with passenger 
volume challenges and reconfiguring screening lanes at some 
airports to speed passenger floor.
    Peak wait times have remained consistent with the average 
peak wait times between 15 and 20 minutes and only sporadic 
instances of wait times over 30 minutes. TSA is fully prepared 
for the summer travel season, and we are working with our 
industry partners to ensure that the people have a positive 
travel experience.
    Thank you for the opportunity to testify today, and I will 
be pleased to respond to any questions.
    Mr. Mica. We will hold questions and we will hear next from 
Cathleen Berrick. She is with the Government Accountability 
Office. Welcome, and you are recognized.
    Ms. Berrick. Thank you, Mr. Chairman, Congressman Costello, 
and members of the Subcommittee, for inviting GAO to discuss 
TSA's progress in planning for and deploying optimal checked 
baggage screening solutions at U.S. airports, including in-line 
baggage screening systems.
    The benefits of in-line systems are widely known and 
include a significant reduction in transportation security 
officers, or screeners, needed to operate screening equipment, 
increased baggage throughput, increased security and reductions 
in on the job injuries. In-line systems can also reduce the 
need for TSA to use alternative screening procedures, which 
involve security trade-offs and are sometimes used when large 
volumes of bags or passenger crowds create security 
vulnerabilities.
    With the issuance of its strategic planning framework in 
February of this year, TSA has begun to systematically plan for 
the optimal deployment of checked baggage screening systems, as 
we previously recommended. In this framework, TSA identified 
the optimal screening solution for 250 airports with the 
highest checked baggage volume. These screening solutions vary 
by airport and range from fully automated, high speed in-line 
systems to standalone EDS and ETD equipment.
    TSA also prioritized the top 25 airports that should first 
receive Federal funding for in-line systems. TSA reported that 
if these airports do not receive in-line systems, they will 
require additional screening equipment to be placed in airport 
lobbies and additional screeners in order to continue to 
electronically screen 100 percent of checked baggage.
    Regarding potential savings from the installation of in-
line systems, we reported in March 2005 that TSA estimated it 
could save about $1.3 billion over seven years for nine 
airports that were constructing in-line systems. Since that 
time, TSA has determined that many of the initial in-line 
systems have not produced level screener savings sufficient to 
offset the up-front capital cost of constructing the systems. 
TSA believes that the keys to reducing future costs are 
establishing best practice design guidelines for in-line 
systems and using newer EDS technology, both of which should be 
available in the near-term.
    Currently, TSA estimates that it can achieve a savings of 
about $4.7 billion over 20 years for the 250 airports reviewed 
by installing optimal screening solutions, to include in-line 
systems. TSA further estimates that it will cost $22.4 billion 
to install these solutions over this time frame. As you know, 
despite the benefits of in-line systems, resources have not 
been made available to fund these systems on a large-scale 
basis. TSA reported that under current investment levels, 
installation of the optimal screening solutions at airports 
will not be completed until the year 2024.
    TSA further reported that unless investment is accelerated, 
a substantial funding requirement for replacing old EDS 
machines will compete with funding needs for new in-line 
systems in about eight to nine years. TSA is currently 
collaborating with airport operators, airlines and other key 
stakeholders, to identify funding and cost-sharing strategies 
for the installation of in-line systems. They expect to 
complete this effort by the fall of 2006.
    Some of the financing options being considered include 
equipment leasing, sharing and savings from in-line systems 
with airports, enhancing the eligibility of passenger facility 
charges and tax credit bonds. Due to the substantial efficiency 
and security benefits that can be achieved, and the demands 
expected to be placed on existing screening systems due to 
protected airline traffic growth, continuing partnerships 
between TSA and airport stakeholders will be critical for the 
ultimate deployment of optimal screening solutions.
    Mr. Chairman, this concludes my opening statement, and I 
will be happy to respond to any questions.
    Mr. Mica. OK. Here is what we are going to do. I have these 
three other panelists with the Newark situation. We have heard 
from TSA, and you have given us an update on what you are 
doing, and GAO has reviewed what they are doing.
    Part of the reason for this hearing was what we uncovered 
as the disaster with our demonstration project, our pilot 
project at Newark. We have been buying this equipment, which is 
pretty expensive, L-3 or InVision equipment, at almost a 
million dollars a copy. It is the size of a Volkswagen. Most of 
the members of the panel have seen it. And it is expensive to 
integrate it into these in-line systems, and Congress has 
balked at funding it.
    So for several years we have tried to encourage 
certification, getting other competitors into bringing it into 
competition and lowering the cost. One company was Reveal, that 
spent at least a year, I guess, getting certified, maybe 
longer, through the certification process. Finally that was 
done a couple of years ago. They got their certification.
    We wanted to deploy it, because it was about a quarter of 
the size, a quarter of the cost. A decision was made to acquire 
that.
    Some of the airline industry and some of the large airports 
said this was a solution, and it was important that we try 
installing it at large airports, maybe a medium size airport in 
a smaller, independent use of the equipment, standalone use of 
the equipment. One of the great hopes was to try it at Newark 
Airport, which is one of our highest traffic areas. We were 
encouraged by Continental and others that this would be a 
solution.
    The gentleman, we have one gentleman from Reveal, Michael 
Ellenbogen, and then we have Mr. William Britz, with Raytheon. 
Now, Reveal provided the equipment, Raytheon was hired by TSA 
to do the installation of the system. And then we have Susan 
Baer, with the airport. And the airport agreed to participate 
in this project.
    Now, why this is so important is again, because this was 
going to be the hope of putting this less costly equipment in 
place. I found out by accident that something had gone awry a 
few months ago, went up and looked at it, had staff go up and 
look at it. Can we put a slide up and show, this is what the 
vendor proposed. If you see the counters, I guess the counters 
would be at the very bottom. The idea here would be to have 
very little lifting from the counter where the bag is checked 
in, be put on a conveyor, and then the three white slashes 
there are the Reveal machines. You see one Reveal machine in a 
horizontal position.
    So the agent would merely take it, it would get set by the 
passenger, actually down there, it would go on a conveyor belt, 
and then the black lines are additional conveyor belts. This is 
a less costly configuration than going in and gutting the 
insides of the airport, putting these million dollar copies in 
there. This may seem like a small point to some folks, but this 
is very important, that we see how this works in larger 
airports, again, looking at less cost. So this is what the 
vendor, I am told, recommended, the installation.
    Can you go to the next slide? This is what we ended up at. 
This isn't a good slide, because it doesn't show, if you see 
these two sort of, they look like little torches here, are the 
conveyor belts, and actually, the counters are out in front. So 
the conveyor belts don't connect with the counters, and you 
have another piece of equipment off to the left. There was 
originally supposed to be five Reveal pieces of equipment. We 
ended up with three.
    What you don't see off to the right is they ended up 
putting two InVision 5500's, the big equipment, off to the 
right in the configuration. Those are almost million dollar 
copies. So this is nothing like the Reveal, the producer of the 
equipment envisioned, nothing like Congress envisioned. It is 
an absolute disaster, in my opinion, because we have no airport 
now with high volume showing how this could possibly work.
    It took about nine months to a year to get this in place. 
We will hear exactly that period of time. And whatever money 
was spent. So we have got the equipment certified, we spent 
this time on a demo project that doesn't demonstrate anything. 
And I got different answers from different people. That is why 
I have asked these folks to come in today.
    Finally, just show the configuration. This is the way it is 
in the lobby. Again, it makes me absolutely flip out when I see 
it, because you see you actually have to lift up the bags and 
put them into the machine. None of the equipment is put 
together, connected together, integrated. There is no 
integration whatsoever. And there was supposed to be one spot 
for resolution in the original. That would be where the 
machines are connected and networked together, and one spot for 
resolution where you would have one or two people reading.
    Instead, this requires one person to lift the bag and 
another one to do resolution independent. I mean, again, I just 
completely lost it when I saw this. This is just an 
unbelievable waste of time and money. It is an incredible 
setback for us, nationally. This is an incredible setback for 
us nationally, because we have no demonstration of this 
technology and we are three years into the thing. It just 
drives me out of my gourd.
    So I sent staff up there, I have been up there, when I 
heard about it. And we have had Homeland Security staff up 
there.
    So this today is to figure out what went wrong, pardon my 
phraseology. But you can tell, this is one of the biggest 
frustrations, biggest fiascos I have ever seen. We need to find 
out what went wrong.
    So that lays the groundwork for the members on the panel, 
sorry for taking this time, but I had to get everybody to 
understand the importance of this, and then the mess that you 
see at Newark International Airport. Did you want to comment at 
all? Then I am going to hear from these three witnesses and we 
will get Continental's folks later.
    Mr. Costello. Mr. Chairman, I would agree that it is a 
mess. But I think there are reasons why that it is, and I----
    Mr. Mica. We want to hear that.
    Mr. Costello.--have questions for our witnesses, not only I 
think is there blame again to be shared by TSA, but I think by 
Raytheon and by Reveal as well. I question really if this 
equipment was the appropriate equipment to be placed at this 
facility, at this airport. There are those who say that it 
probably will not work at hub airports, but at mid-size 
airports is probably where it is best, the CT-80 machines are 
best used.
    And there is also some question about TSA may have in the 
contractual agreement that was executed by Reveal, maybe the 
expectations were set too high. Because we will hear from 
hopefully the people at Reveal what they advertised the 
capacity of the CT-80, how many bags per hour that they can 
throughput. I understand the web site says that they can 
throughput somewhere around 100 bags per hour, where the 
contract required them to do 120 bags per hour. There is a 
question, too, if the location at the airport, if there was 
enough space physically to put five of these machines, 
physically in the space that was designated.
    So there are a number of questions, and there is a lot of--
I don't want members who may have to leave early to think, 
well, it is just TSA's fault or it is Raytheon's fault or it is 
Reveal's fault. It seems to me that there is enough blame to go 
around. And we will get into that when we get into questions.
    Mr. Mica. Thank you for those excellent comments. Again, 
with that introduction, I want to hear from Michael Ellenbogen, 
President and CEO from Reveal. You have heard some of the 
questions raised here, all three witnesses. So we will hear 
from you first and then we will go to the other witnesses. 
Thank you.
    Mr. Ellenbogen. Mr. Chairman, you are not an easy act to 
follow, sir.
    Members of the Committee, thank you very much for inviting 
me to testify today. My name is Michael Ellenbogen, I am the 
founder and President of Reveal Imaging Technologies.
    Reveal is a three and a half year old, privately financed 
company. We designed the CT-80 to offer flexible options for 
checked baggage screening. TSA funded much of the CT-80 
development and certified the system in December of 2004.
    TSA's certification is focused on detection and false alarm 
rates. Newly developed systems, upgrades, features, et cetera, 
are then tested by the TSA through their pilot program. The 
goal of the 30 day pilot program was to verify the CT-80's 
operational performance, reliability, real world throughput and 
false alarm rates, as I understand it. TSA identified three 
different airports--Newark, JFK, and Gulfport, Biloxi, 
Mississippi--to test the CT-80's operational characteristics 
after it was certified.
    Eight systems were installed and tested last summer. And 
these pilots were successful in demonstrating that the CT-80 is 
able to operate reliably in both low and high throughput 
environments. The successful pilot resulted in a procurement 
contract and an order for 73 of the CT-80 systems.
    Mr. Chairman, the CT-80 offers a variety of flexible 
installation options for checked baggage screening at airports 
of different sizes. We are actively working with TSA to 
demonstrate and deploy the most cost-effective solutions 
possible, and I look forward to answering any questions you 
might have. Thank you.
    Mr. Mica. Thank you. We will hear now from Mr. Britz.
    Mr. Britz. Thank you, Mr. Chairman and members of the 
Subcommittee. My name is Bill Britz. I am a project manager for 
the Aviation Security Systems for Raytheon Technical Services 
Company, LLC, who I will refer to in the rest of my document as 
RTSC. RTSC is a solely-owned subsidiary of Raytheon Company.
    Thank you for giving me the opportunity of testifying 
before the Subcommittee today on RTSC's role in the Reveal 
pilot project at Newark International Airport. In the interest 
of time, the testimony I will give you today is an abridged 
version of the written testimony previously submitted to the 
Subcommittee.
    Under a competitive contract, RTSC provided a broad range 
of engineering services, including project management, 
engineering design, site preparation, installation supervision 
and data collection and analysis. Under my leadership, RTSC 
performed all these services for the Reveal pilot project at 
Newark International Airport.
    Stakeholders in the project included TSA, the Port 
Authority of New York and New Jersey, Continental Airlines, 
Reveal Imaging and RTSC. The goal of the project was to verify 
the capabilities of integrating the Reveal machines, CT-80's, 
into a baggage handling system in a live airport environment. 
Up to this point, the Reveal machines had been tested in two 
other pilot sites, Gulfport and JFK, but only in a standalone 
configuration.
    In the Reveal pilot sites, a trade-off was made on the 
number of machines to test. Three machines were chosen because 
of the cost and space constraints at Newark. Two machines of 
the three were configured in an exit-integrated configuration 
and one in a more expensive fully integrated configuration. The 
fully integrated configuration added an automatic storage 
conveyor, an in-feed conveyor, so that the Continental Airlines 
ticket agents could place several bags on the storage conveyor 
at one time and the bags could automatically feed into the 
machine when the machine was ready to accept them. The addition 
of the storage conveyor increased the time the ticket agent 
could spend helping passengers in check-in.
    During the design phase, the pilot project, under other 
configurations were considered, including ones proposed by 
Reveal Imaging and Continental Airlines. Ultimately the 
configurations that were chosen for the project were those that 
allowed the project to meet the goals at the lowest cost 
installation-wise.
    The Reveal machines were installed around August 2005 and 
were ready for use before the conveyors and control systems 
needed for the integrated configurations were available. When 
this situation became clear, TSA decided to add a preliminary 
test phase to the project in which the Reveal machines were 
first tested in a standalone configuration. The standalone 
configuration ran from August to October 2005, which included 
about 2,600 bags that were scanned at the time. The integrated 
configuration ran from October to November 2005, during which 
time 20,000 bags were scanned.
    One concern that arose during the project was getting the 
Continental ticket agents to use the Reveal machines. Using the 
machines required the agents to take the additional 
responsibility of moving and lifting the bags to the machines. 
Prior to the pilot project, passengers were responsible for 
taking their bags over to the large explosion detection 
systems, the CT-5500's, located adjacent to ticket counters.
    In summary, the Reveal project at Newark International 
Airport was successful in validating the exit and fully 
integrated configurations in an operational environment, which 
until this point had not been tested at any other Reveal pilot 
test sites. This is a significant step forward in demonstrating 
the capabilities of the Reveal machine.
    Mr. Chairman, I would like to thank the Subcommittee and 
you for giving me the opportunity to testify. I would be 
pleased to answer any questions you may have or your members 
may have. Thank you very much.
    Mr. Mica. Thank you. And we will hear from our other 
witness, which is Susan Baer with Newark Airport. You are 
welcome and recognized.
    Ms. Baer. Thank you. Chairman Mica, Congressman Pascrell, 
and the other distinguished members of the Subcommittee, good 
morning. I am Susan Baer, General Manager of Newark Liberty 
International and Teterboro Airports for the Port Authority of 
New York and New Jersey.
    On behalf of the Port Authority, I would like to thank you 
for calling this hearing and giving me the opportunity to 
testify today. As an aside, thank you, Congressman Pascrell, 
for your comments recognizing the hard work that we have done 
in cooperation with the TSA and the airlines at Newark to 
improve our overall baggage screening from a rocky beginning. 
It has certainly gotten much, much better.
    My comments will be brief, and I request that my entire 
statement be read into the record.
    The Port Authority of New York and New Jersey is a bi-State 
public authority that was created by our States with the 
consent of Congress. Its mission on behalf of the States of New 
York and New Jersey is to identify any critical transportation 
and infrastructure needs of the bi-State region and provide 
access to the rest of the Nation and the world.
    The role of the agency's aviation department is to run four 
airports that are critical to the Nation's trade, travel, 
commerce and tourism: the rapidly growing global gateway, JFK; 
a major domestic and international hub, Newark Liberty 
International; the premier business airport, LaGuardia; and a 
vital corporate and general aviation reliever, Teterboro; as 
well as an urban helipad, the downtown Manhattan Heliport.
    These facilities handle aircraft as diverse as a Piper Cub, 
a Sikorsky S-76, and the Boeing 747. They were used by nearly 
100 million passengers in 2005, an increase of over 6 percent, 
making our airport system the busiest in the Nation.
    Newark is now leading this growth with almost 15 percent 
more passengers using our airport so far this year. This 
activity produces annually an astounding $62 billion in 
economic activity and directly and indirectly supports more 
than 375,000 jobs in the New York-New Jersey metropolitan 
region.
    The Port Authority and the TSA are joined together in a 
common pursuit: exploring new territory and meeting difficult 
challenges to provide the best possible security at our 
airports. Like all partnerships, to be successful, the parties 
need to agree on objectives, share with each other our concerns 
and provide mutual support. To cultivate and sustain our good 
relations with the TSA at New York Liberty, as well as our 
other airports, we hold weekly conference calls, conduct bi-
weekly inspections, organize tabletop problem solving exercise 
and cross-train TSA and Port Authority staff in an effort to 
continue to improve communications and cooperation.
    Now, as operator of one of the Nation's busiest airport 
systems, it is vital to us that the aviation screening system 
be responsive to our increasing passenger and cargo traffic. It 
needs to be effective, customer-focused, performance-driven, 
risk-based and be given adequate resources to fulfill its 
mission. We are concerned that at a time when our passenger 
traffic is on the rise, TSA staffing strategies are still 
subject to a cap. Currently, the hard-working TSA screeners at 
Newark are screening 40,000 bags per day.
    The TSA continues to face enormous physical capacity 
challenges at the airports, as passenger traffic rose rapidly. 
Some of our older terminals, like those at the airports across 
the Country, there is often a lack of adequate space for 
checkpoint and baggage screening. It is difficult and expensive 
to reconfigure existing facilities, and sometimes it is just 
not possible to add security lanes without undertaking 
expensive capital construction, a project that neither the 
financially ailing airline industry nor we are well equipped to 
undertake.
    We also need to reconfigure bag rooms to provide for the 
installation of equipment that is currently located and still 
located in some of our passenger terminal lobbies. We are doing 
just that in the terminal we run at Newark with in-line 
screening in place by 2008 in Terminal B. But we need not look 
just to physical expansions but also to embracing technology to 
achieve the same or better results. We strongly support the 
implementation of the Department of Homeland Security Office of 
the Inspector General March 2005 audit findings that call for 
the greater deployment of technology.
    As has been noted, Newark has served as the pilot airport, 
or one of the pilot airports, for the Reveal baggage machines. 
The Port Authority was not a partner in that pilot, but I know 
others on this panel can speak to this project and its results. 
We were eager for this test, and many others, because we firmly 
believe that the TSA must test equipment at very busy O&D 
airports like Newark, to ensure that new technology is up to 
the rigors of a system that is at capacity much of the day and 
is expanding quickly.
    The Port Authority, as I have noted, is committed to 
serving as the DHS-TSA test bed for technology to enhance 
security. We have participated in tests of biometric access 
control, vehicle tracking, video situational awareness, radio 
frequency identification technology, cargo tracking, cargo 
radiation detection, ASDE-3 radar use for perimeter 
surveillance and many more. We urge the Government's continued 
investment in pilots of promising technology, and ask the TSA 
to facilitate the exchange of information among airports about 
the results and lessons learned from pilot tests.
    Some technologies that can have demonstrable benefits to 
securing our airports are not so new, and it confounds us that 
resources have not been made available. Our experience with 
costly terminal evacuations due to breaches of security 
screening points has convinced us that closed circuit 
television surveillance of both the screening points and the 
baggage rooms is a necessity. The costs of terminal evacuations 
or delayed flights are enormous. One of the ways to resolve 
issues at checkpoints is to go to the video tape. But sadly, 
the TSA has not installed such surveillance, nor has it been 
planned for the future.
    We at the Port Authority are committed to CCTV and it is a 
commitment that is shared by our local TSA staff. As a result, 
the Port Authority has begun to dedicate some of our capital 
resources to begin installation of cameras in areas where we 
think it is appropriate.
    Again, I would like to thank the Committee for this 
opportunity to share some of our views. We look forward to 
working with the Committee in the future on our shared goal of 
effective, customer-focused and performance driven risk-based 
security.
    Mr. Mica. We want to thank you, and I want to thank the 
other witnesses.
    We have three votes. We will be back at 11:30, so take a 
breather. This Subcommittee will stand in recess until that 
time.
    [Recess.]
    Mr. Mica. The Subcommittee will come back to order.
    We have heard now from all the panelists. We can get into 
questions. I will start with a few.
    Let's start with Reveal. I want to concentrate some on the 
Newark situation and then I have some more general questions.
    Reveal, how long did it take to get your equipment 
certified?
    Mr. Ellenbogen. The process took about nine months.
    Mr. Mica. About nine months. And I have you were certified 
in December of 2004, approximately?
    Mr. Ellenbogen. Correct.
    Mr. Mica. Did you all come up with the initial 
configuration, recommended configuration for the Newark 
installation?
    Mr. Ellenbogen. I believe we may have.
    Mr. Mica. This is your configuration here?
    Mr. Ellenbogen. I believe so.
    Mr. Mica. As I see it, it was to be networked and there was 
to be one point of resolution, is that correct?
    Mr. Ellenbogen. That was the intention of the design, yes.
    Mr. Mica. OK. Now, you have been up to Newark and seen, of 
course, the way it is installed. It doesn't look anything like 
this. And I talked to your folks and they said one of the 
reasons that it doesn't look like this is because TSA only 
allowed it three machines, so it is impossible to have this 
configuration. So that was the first decision to influence the 
configuration we ended up with, is that correct?
    Mr. Ellenbogen. I know TSA allocated three machines. I 
believe their intention, though, was really to test the 
operation of the equipment as opposed to this particular 
configuration of the equipment.
    Mr. Mica. But it would be impossible with three machines to 
do this configuration. You did not do the installation, did 
you?
    Mr. Ellenbogen. We did not.
    Mr. Mica. So TSA did the installation, and Mr. Britz, you 
did the installation. You were just, when you came, or Raytheon 
came into this, there was a three-unit decision previously 
made, is that correct?
    Mr. Britz. That is correct.
    Mr. Mica. The space that they have in your first proposal 
probably isn't any larger, I have been there, than what the 
space they are now using with three Reveal pieces of equipment 
and two InVision 5500, is that--I mean, the footprint is about 
the same, isn't it?
    Mr. Britz. I will answer that. The CTX5500's were put in 
over a year ago, prior to the Reveal machines. So they were 
running as the primary baggage screening machine.
    Mr. Mica. That wasn't my question. My question is the 
footprint would be about the same as if we had five of these 
Reveals.
    Mr. Britz. The five Reveal machines, from our point of 
view, wouldn't fit in this constraint, in the space there, as 
well as the cost consideration.
    Mr. Mica. But again, I could put this configuration, the 
original recommended, in the same footprint that you have now, 
with the two 5500's?
    Mr. Britz. I--you can get five machines in there, but there 
are requirements that the five machines won't fit in there.
    Mr. Mica. You had two 5500's sitting out on the right side. 
There are three, now, you don't see them here, do you?
    Mr. Britz. They are in front of the ticket counter. They 
are not even behind the ticket counters. They are way out in 
front.
    Mr. Mica. They are off to this side, it would be in front 
of us. But they take up a lot of space. They are at least three 
times as big as Reveal, aren't they, two, three times?
    Mr. Ellenbogen. Approximately.
    Mr. Mica. OK. So my point is, again, if you have 5500's 
that are taking up as much space, so we never got the 
configuration, TSA, do you want to respond to why? Well, first 
of all, again, from our standpoint, we have no place in the 
Country now where we have a major airport, where we have Reveal 
installed in an integrated fashion and to demonstrate its 
capability of this type of proposed use. Is that correct, Mr. 
Null?
    Mr. Null. That is correct. The current installations are 
the Newark installation and JFK installation, which essentially 
integrate the back end of the machine but not the front end of 
the machine.
    Mr. Mica. We also had Continental Airlines, who said that 
this was going to be a model, too, of using this newer, less 
costly--they sat right at that table right in that area there, 
they are not here today, and said that this was going to be 
tried at a larger airport, in fact, one of their biggest hubs, 
and it would result in less cost, less personnel.
    With this configuration, Mr. Ellenbogen, the way I saw it, 
you have to have one person to do the resolution and then one 
person to handle and feed the bags, is that correct? Except at 
one point. There is only one conveyor that is connected to the 
machine.
    Mr. Ellenbogen. I believe that is the way TSA is operating 
them today.
    Mr. Mica. So this configuration requires two people at each 
machine. It was anticipated that actually the baggage handler 
and possibly one person could serve a couple of the lanes, and 
making certain that the, I said lanes, the conveyor belts, to 
make sure that the bags went incorrectly. So you have to use 
twice as many personnel in this configuration, is that right, 
Mr. Ellenbogen?
    Mr. Ellenbogen. I am not familiar enough with the 
installation requirements.
    Mr. Mica. Well, I am telling you, that is what they told me 
it requires.
    Mr. Britz. The number of resolution people required by how 
many bags are alarmed. Normally in design, that is normally 
between 20 and 30 percent of the bags that we have to assume 
are alarms. That drives how many people are in the resolution 
area. If you have that many machines, if you have five 
machines, you will have a lot more than one person doing 
resolution.
    Mr. Mica. No question about it. But resolution, TSA 
resolution on this was not at each machine. It obviously takes 
more at each one with each machine. If we had had five and they 
did it in a half-baked configuration, it would take five 
people, right? If it isn't networked and remote? And we do have 
that in-line, we have remote resolution, do we not?
    Mr. Null. We have remote resolution for the larger machines 
today, the multi-plexing. This was a year ago when this went 
in, and the reality is that we did not have the multi-plexing 
capability in place at that point in time, which would have 
required five TSOs, one at each of the machines, for resolution 
at that point.
    Mr. Mica. So is your equipment, Mr. Costello said your 
equipment doesn't have a high enough throughput rate. But with 
the configuration and conveyor from the counter to the machine, 
is it possible for an agent to do more than the machine's 
capability? What is your capability for throughput?
    Mr. Ellenbogen. The system was certified at 80 bags an hour 
originally. We currently have software going through 
recertification.
    Mr. Mica. So it was certified by TSA at 80 bags an hour?
    Mr. Ellenbogen. That is correct.
    Mr. Mica. And everyone thought that that would be a good 
application, that an agent really couldn't do many more bags 
than that per hours with this configuration?
    Mr. Ellenbogen. In the configuration that is currently 
being shown, that would be sufficient to keep up with a couple 
of ticket agents.
    Mr. Mica. OK. So we use two times as much personnel. What 
about the networking?
    Mr. Ellenbogen. I think there might be a misunderstanding. 
What we deliver, the product, the system and the software, it 
then goes through TSA approval process. And at the time that 
this installation happened as part of the pilots, we had not 
yet been through the complete approval process for all the 
multi-plexing and the networking.
    Mr. Mica. So there was no capability at that time?
    Mr. Ellenbogen. It hadn't been approved yet.
    Mr. Mica. Did anybody from Reveal ask or Raytheon ask if 
that was a feature that we wanted incorporated?
    Mr. Ellenbogen. That was not a feature that we were testing 
here or required to test at the site.
    Mr. Mica. So TSA set the parameters, basically?
    Mr. Britz. Because the machine wasn't ready at the time for 
that capability.
    Mr. Mica. Is it capable now?
    Mr. Ellenbogen. It is, yes.
    Mr. Mica. Was this configuration just something pie in the 
sky that your guys made up, or is it possible to have this 
configuration work?
    Mr. Ellenbogen. It is possible to have it work.
    Mr. Mica. To have it networked and have remote resolution?
    Mr. Ellenbogen. It is possible to have it work, networked, 
with the remote resolution and these are some of the 
capabilities that we needed to pass with TSA.
    Mr. Mica. I see Mr. Null shaking his head affirmatively, 
yes.
    Mr. Null. Yes, sir. In fact, in Jackson Hole, we will be 
evaluating the full----
    Mr. Mica. OK, Jackson Hole, Gulfport, Gulfport may be a 
nice installation for that nice size. My problem is, I only 
have a handful of our major airports that are completed with 
in-line expensive systems. This was a machine that cost a third 
less or whatever it is and takes up less space. It has the 
potential for saving us billions of dollars for installation at 
a large airport. That was the whole reason for the Newark 
experiment. But I do not have, we do not have that in place in 
any large airport.
    Do you think we could try this at one airport to see if it 
is possible? And I am told the machine works very well. I heard 
the resolution is excellent, the imaging, all its capabilities 
meet or exceed the L-3 and the InVision.
    Mr. Null. Mr. Chairman, the Jackson Hole implementation has 
eight Reveal machines. So we will get a large enough sample to 
evaluate the scalability of this system in a large airport.
    Mr. Mica. Are you going to do it at one of the 29 big 
airports? Or should we just say forget this, we will throw it 
away and that is not a solution?
    I mean, this takes billions of dollars, whether it is one 
point X billion for his equipment and maybe his equipment won't 
work. Or it is going to take us multiple billions to go in and 
gut the bowels of some of these major airports and put the big 
equipment in, in-line system.
    The worst part about all this, and most of this is 
classified, I can't speak to, is that the system that we have 
now in place, the failure rate is just totally disastrous. The 
hand processing with these 16,800 people, the results we have 
that have been made public, it is disastrous. Where you have 
the in-line systems, and we have seen the results with the good 
equipment, the high-tech equipment, it is just the opposite. 
And the whole purpose of this isn't to employ 16,800 people and 
have bags go through some process that is farcical. It is to 
actually achieve some detection of dangerous materials.
    Well, I will go on. Let me just give a shot to Mr. Costello 
and then we will get back.
    Mr. Costello. Thank you, Mr. Chairman. Let me follow up on 
your comment about the success and failure rate, and it is 
classified, and we have had briefings. I do want to point out 
that while it is unacceptable, let me say that I firmly believe 
that it is a far better system than it was prior to 9/11. So I 
want to go on record saying that and make sure that everyone 
understands that.
    Mr. Mica. I am with you there, too.
    Mr. Costello. So let me go on. Dr. Null, I want to clarify 
a few things here. It may not be important to everyone in the 
room, but I think for the record we need to clarify some 
things. Number one, did TSA ever agree to supply five CT-80's 
at Newark for the pilot program?
    Mr. Null. No, sir. No, we did not.
    Mr. Costello. And so without question, there was no 
agreement to provide five machines?
    Mr. Null. Not following the analysis that we did on the 
required throughput.
    Mr. Costello. OK. Mr. Britz, in follow-up to the Chairman's 
question about the space issue here, who chose the space for 
the five machines? Number one, there was no agreement to 
provide five CT-80's. But space that they were going in, you 
were saying from your perspective that the space was not 
adequate, did not meet the regulations to place five machines 
in that space, is that correct?
    Mr. Britz. That is correct, in regard to the requirements 
of the maintenance of the machines, the requirements of the 
controls that are required for the machines, and the resolution 
space that is required between the machines, those machines 
are, as we feel, the layout was too tight, and that they 
wouldn't fit in the space.
    Mr. Costello. So you are saying that Continental chose a 
site that was too small to accommodate all five CT-80's, if 
five CT-80's were to be set up, is that right?
    Mr. Britz. That is correct.
    Mr. Costello. Let me, Ms. Berrick, let me ask you, as the 
Chairman pointed out correctly, and we all know that it has 
been two years since TSA has been required to screen all 
checked bags, using explosive detection systems, including EDS 
and ETD, one, does TSA in fact check all bags using the 
explosive detection system, 100 percent of the time, just for 
the record?
    Ms. Berrick. The answer is no, TSA doesn't electronically 
screen 100 percent of checked baggage, 100 percent of the time 
using EDS and ETD. What I can say publicly is that the vast 
majority of the time they are screening baggage with EDS and 
ETD, but there is a small percentage of time that they use what 
they call alternative screening procedures. Those are 
essentially procedures involving the use of EDS and ETD in non-
standard ways. It could be canine explosive searches, it could 
be physically opening the bag and searching its contents.
    There are some trade-offs in security effectiveness with 
these procedures that we have found. We have made some 
recommendations to TSA and their management of alternative 
screening procedures. One is that they conduct covert testing 
in an operational environment to get more data on how effective 
these procedures are. And we also recommended that TSA 
strengthen their process for monitoring the extent to which 
alternative screening procedures are used, because we have 
found weaknesses in how that information is recorded.
    Mr. Costello. In order for TSA to meet the requirement, 
they are mandated by the Congress to meet the requirement, what 
do they need in order to comply, in terms of equipment and 
staff, in your judgment?
    Mr. Null. Well, I think the issue that we face today is the 
fact that there are always events that will occur that sort of 
exceed and go beyond your normal operating capability. If 
equipment goes down, then what would normally be able to cover 
a load, then we have to respond and have some type of 
alternative procedures to manage risk in that fashion.
    I think our main challenge today is to be able to stay 
ahead of the growth and to be able to preserve that level of 
coverage. We do use, as Ms. Berrick had said, typically 
electronic screening, but it uses protocols that are different 
in order to achieve higher throughput. That is all based on 
security issues that may be generating because of bags piling 
up or safety issues.
    Mr. Costello. I have a few more questions for you, Dr. 
Null, but the same question to you, Ms. Berrick.
    Ms. Berrick. Thank you. I would agree. TSA will always have 
to use alternative screening procedures to some degree, because 
equipment breaks down, there will be unforeseen events, there 
will be some crowding. What would help in mitigating the use of 
that is the deployment of these optimal screening solutions. 
TSA estimates that if they are not able to deploy these 
solutions that they will have to field more EDS equipment and 
put it in airport lobbies, they will need more screeners.
    Another factor that could help prevent the use of 
alternative screening procedures, or not prevent it, but reduce 
it, is increased technology, higher throughput, lower alarm 
rates. There are some technologies that offer that and should 
be available within two to three years.
    Mr. Costello. Dr. Null, according to TSA and GAO, the 
throughput Reveal CT-80 screens about, or has the capacity to 
do about 80 bags per hour. There is some confusion. We have TSA 
and GAO saying 80 bags an hour, we have Reveal's web site that 
says that the equipment does 100 bags an hour. Apparently, I am 
informed that the contract on the pilot project at Newark 
required Reveal to screen 120 bags per hour. Is that correct?
    Mr. Null. That is my understanding, sir.
    Mr. Costello. So TSA was requiring Reveal to screen 120 
bags per hours, knowing that the equipment could not screen 120 
bags per hour?
    Mr. Null. It certainly was our objective, as a part of the 
pilot, to work with Reveal to get to that level. And we are 
continuing to work with them in a number of changes and 
upgrades to both their software as well as their hardware, to 
achieve that number.
    Mr. Costello. TSA has informed me that ``a plan was in 
place for Reveal to meet their contract. They have not, so a 
monetary penalty is currently in place.'' Is that correct?
    Mr. Null. That is correct.
    Mr. Costello. And what is the monetary penalty that has 
been assessed against Reveal for its failure to comply?
    Mr. Null. I am sorry, sir, I don't have that ready, so I 
will have to get back with you on that exact value. Mr. 
Ellenbogen may have the answer to that, but I don't recall at 
this point.
    Mr. Costello. Can I ask you if Reveal knows?
    Mr. Ellenbogen. Reveal knows.
    [Laughter.]
    Mr. Costello. And?
    Mr. Ellenbogen. I believe it is a 10 percent holdback on 
the contract value. I just would like to clarify for the 
purpose of this discussion, the pilots took the output of the 
Phoenix program, which was the Reveal CT-80 at 80 bags an hour, 
to test its operational throughput. The pilot contract did not 
require 120 bags an hour. There was not a throughput 
requirement on that pilot contract.
    We then entered into a procurement contract in September, 
after the pilots were done, a procurement contract we started 
shipping against in December. During the course of that 
contract, we were required to come up to 120 bags an hour. That 
software has been delivered to the TSA, it is currently going 
through their approval process, and has been for some time.
    We are actively working with TSA to get that approved and 
deployed, so we can live up to our end of the contract 
requirement and release the holdback.
    Mr. Costello. So back to my question, has there been a 
monetary penalty assessed against Reveal?
    Mr. Ellenbogen. Not for the pilot program, no.
    Mr. Null. For the procurement side. I stand corrected. The 
120 was in the procurement contract, rather than in the pilot 
contract. That 10 percent holdback is on the procurement that 
we have underway with Reveal at this point.
    Mr. Costello. Let me ask you also, from Reveal's 
standpoint, in fiscal year 2005, the DHS appropriations 
conference report said that Reveal's CT-80 should be deployed 
particularly in medium and small airports. Do you believe that 
the CT-80's are better suited for the medium size to small 
airports, and not the major hub airports in the Country today?
    Mr. Ellenbogen. I believe the CT-80 is idea for medium to 
small airports and for certain larger airports with particular 
requirements, we can help solve some of those challenging 
problems with in-line screening options. And we are working 
with TSA to demonstrate that capability.
    Mr. Costello. Dr. Null, would you want to comment on that, 
is the CT-80 more appropriately used at small to medium or at 
large?
    Mr. Null. I think in terms of general deployment, medium 
and small are the right sweet spot for that capability. I think 
at larger airports, as you look at optimizing how you are going 
to do baggage screening, there certainly will be locations 
where Reveal is a good solution for a part of an overall 
solution, but not for large scale, common infrastructure with 
high, high volumes.
    Mr. Costello. I have a few other questions, Mr. Chairman, 
but my time is more than up. Hopefully we will come back with a 
second round.
    Mr. Mica. Are there other members with questions? Mr. 
Pascrell.
    Mr. Pascrell. Mr. Null, if the capacity of the product was 
in question, why did you choose to fund the project using this 
technology at one of the Nation's most busy airports, busiest 
airport?
    Mr. Null. Well, sir, we had a specific application with the 
Continental location here. The reason, first of all, that we 
went from five to three is that three would meet the capacity 
requirements of that checkpoint environment. So we were really 
looking in this pilot to do operational utility testing, to 
look at different configurations of the equipment. And we were 
not throughput constrained by the equipment by going with the 
three.
    Mr. Pascrell. Who was responsible for the design of these 
machines?
    Mr. Null. The design was a cooperative design that was 
agreed to by Continental, ourselves and Reveal.
    Mr. Pascrell. So you consulted with Continental Airlines 
and Newark Airport in designing the machine?
    Mr. Null. Everybody signed off on the design, sir.
    Mr. Pascrell. They signed off on the design?
    Mr. Null. Yes, sir.
    Mr. Pascrell. So your answer to that question is yes?
    Mr. Null. Yes.
    Mr. Pascrell. Thank you very much.
    I would like to talk about the GAO report, Ms. Berrick. A 
clarification. You say on page four of your testimony that TSA 
report that, in May of this year, TSA report under current 
investment levels, I just want to make this clear in my mind, 
installation of optimal checked baggage screening systems would 
not be completed until approximately 2024, given the cost of 
each of these machines, if we continued to go on the same pace 
that we are going right now, investing the same capital money, 
we would not complete this project until 2024. Is that 
accurate?
    Ms. Berrick. That is correct. That is what TSA estimates.
    Mr. Pascrell. And then you said that the TSA is currently 
collaborating with airport operators, airlines, et cetera, in 
an effort, that TSA expects to complete by early fall of 2006. 
So if there was some cost sharing here, we are just talking 
about what is designed right now, what is on the boards right 
now. If you want to do this with all the airports, it will take 
us until 2024?
    Ms. Berrick. The estimate about 2024 is related 
specifically under current investment levels, what has been 
appropriated. The effort that is underway right now is TSA is 
partnering with airports and other stakeholders to try to 
identify some creative financing and alternative financing 
solutions. That effort, which is supposed to be completed in 
the fall, is supposed to put forth recommendations on how they 
can better fund and support the installation of these systems.
    So hopefully the optimal screening solutions can be 
deployed before 2024.
    Mr. Pascrell. Because that doesn't say much for the system 
we are putting into effect, if we are going to have to wait 
until 2024, luckily, in order that it be completed in the 
airports that we want to do this.
    Ms. Berrick. It is really how much the up-front capital 
investment that is required to do----
    Mr. Pascrell. Well, let's talk about the up-front capital. 
Where is the money, give me general percentage numbers of where 
the money is coming from.
    Ms. Berrick. There are a few sources. One is through the 
letter of intent agreement. TSA awarded eight LOIs for nine 
airports, which resulted in a funding obligation for the 
Federal Government of about $950 million.
    There is also the Airport Improvement Program, which is no 
longer available to support the installation of in-line 
systems. Quite a few airports did get in-line systems through 
the AIP funding.
    TSA also uses a mechanism called Other Transaction 
Agreements, where they fund portions of in-line systems, 
usually for smaller systems. So if you break that out, the 
Federal Government spent about $950 million, or will through 
the end of next year, through the LOI process. And they have 
spent about $350 million through the Airport Improvement 
Program and Other Transaction Agreements.
    Mr. Pascrell. And it is obvious that we are not going to 
get this system anywhere near done unless there is capital 
investment from the Federal Government.
    Ms. Berrick. The money will need to come from somewhere. 
And that is why it is important----
    Mr. Pascrell. You know the budget for 2007, then, that has 
been proposed by the Administration. Is there sufficient money 
in there to continue the project to the degree that you and I 
and everyone else is talking about here?
    Ms. Berrick. I don't know the extent to which the funding 
request would support TSA's top 25 airports where they want to 
fund in-line systems.
    Mr. Pascrell. Otherwise, the money has to come from the 
airlines and the airport?
    Ms. Berrick. That is right.
    Mr. Pascrell. And they are just jumping for joy to do that, 
right?
    Ms. Berrick. Well, hopefully through this study that is 
going on right now, there will be some recommendations coming 
forth on how to more creatively finance these systems.
    Mr. Pascrell. Any time we hear study, particularly in terms 
of the Department of Homeland Security or TSA, we are holding 
our breath as to when it will be completed and what will it 
show in the results. So I take you for full granted, and I 
accept the research of the GAO. You do a terrific job, all of 
you do a terrific job in terms of helping us in our oversight 
responsibilities.
    Mr. Ellenbogen, given that your technology was designed for 
this low throughput, what adjustments are needed, do you need 
to make, to compensate for the high traffic at Newark Airport? 
And what were your expectations for the performance of your 
technology in an integrated EDS system?
    Mr. Ellenbogen. The system was intended as an alternative 
to the large in-line approach. And with the configuration that 
you see up on the screens now, there isn't a requirement for 
high throughput. As we have described in the past, it is like a 
PC approach, networked computing approach, as compared to a 
mainframe approach.
    We are not claiming it is a panacea. It is not the only 
solution. It is an alternative. It offers some flexibility. The 
original certification was at 80 bags an hour. We anticipate 
upcoming certification at approximately 110 to 120, going 
toward 140 bags an hour. So we are increasing the throughput of 
the system to apply to different ways of deploying it to 
optimize its utility to TSA.
    Mr. Pascrell. You would agree with the Chairman's analysis 
and description of the convoluted system that now exists at 
Newark Airport? Do you agree with his description of what 
exists there right now, or do you disagree with it?
    Mr. Ellenbogen. I think what exists there now was designed 
for the pilot application, to test the system's reliability and 
operational capability. I think it can be optimized.
    Mr. Pascrell. By?
    Mr. Ellenbogen. I would have to sit down and work with TSA 
to understand what the trade-offs might be.
    Mr. Pascrell. Let me ask a question, if I may, Mr. 
Chairman, to Ms. Baer. It is my understanding that the Port 
Authority's role in the Reveal pilot project was not as 
partner, we heard that term used very loosely in here, but it 
was mainly an administrative role. Would you agree or disagree 
with that?
    Ms. Baer. I would agree with that. While we have been 
partners in some of the technology enhancements at the airport, 
in this one, our only role was to do the kind of review that 
you would do if someone wanted to put a piece of equipment in a 
lobby floor, to make sure the floor could support it, that the 
electrical systems are adequate, and that sort of review. So we 
did a review, but not of the operation, just of the physical 
entities.
    Mr. Pascrell. So this separation of activities at Newark 
Airport, we have to go through two processes. That is not 
acceptable to you, is it? Or is it?
    Ms. Baer. We always do those kinds of reviews, because as 
the landlord of the airport, we need to ensure that the 
physical plant of the airport maintains its integrity. So that 
kind of process we would always do.
    We are then often partners in technology applications, but 
not necessarily. Some are more appropriate than others. We run 
a terminal, there it is more appropriate for us to be very 
involved.
    Mr. Pascrell. Let me tell you what my concern is, in 
conclusion. And I have overstayed my welcome here, but let me 
take a shot at this. My observation is this. The issue is the 
way Raytheon set up the machines. They are not configured to be 
fully integrated. I think that this is a simple conclusion.
    Full integration was the whole point of the pilot project, 
that I remember. So it seems that we got off on the wrong foot 
in the first place. Why do you think Raytheon did this? Was it 
because of the configuration of the airport? Was it limited 
space? Why?
    Ms. Baer. I think I have to defer to Raytheon on that.
    Mr. Pascrell. Well, you were there.
    Ms. Baer. I actually wasn't there when this decision was 
made.
    Mr. Pascrell. Well, you should have been. My point is this. 
I am looking at Newark Airport, this is what is on the table 
right now. And I am wondering if we are trying to squeeze too 
much in a small box. I don't know how much Newark is capable 
of. We are talking about a lot of jobs here. I want to make 
sure it is safe. We are trying to do the best that we can, all 
of us here in this room. We thank everybody for their service.
    I am not so sure that, for instance, that this particular 
problem, I can think of several others, is not reflective of an 
airport that is trying to squeeze too much out of its assets 
and resources. I am not so sure about that. I want it to grow. 
We can't. There is no place to put another runway. Everybody 
wants the land at Newark Airport. That is easy to say. We are 
backed up to Cleveland, for crying out loud, making landings 
around 4:00, 5:00, 6:00 o'clock at night, 7:00 o'clock.
    I just would ask you to take a look at that, so it is fair 
to everybody here, so that we are not simply kidding ourselves. 
We are going to have to make some capital investments at Newark 
Airport in order to expand the place, the area, where we can 
put any machines, correct?
    Ms. Baer. Absolutely.
    Mr. Pascrell. Thank you, Mr. Chairman.
    Mr. Mica. Mr. Honda.
    Mr. Honda. Thank you, Mr. Chairman. I have three quick 
questions. They are questions with San Jose Airport in mind. So 
you can take the questions in that context.
    There is about $156 million ultimately that would be 
available in fiscal year 2007 for EDS installation at 9, 10, 11 
airports. About how many airports would you expect to fund in 
the coming year and how does that compare against the number of 
high priority airports that will be ready to begin work next 
year?
    Mr. Null. Well, sir, first of all, the reason we only have 
150 is that it is the final year of the LOI payments. And then 
things would free up later at the current level, if that were 
the case.
    I think that it will depend very dramatically on what 
airports we do. Now, we have got 25 airports that are the high 
priority. Those will float, depending on the ability or the 
willingness of the particular airport to participate. So how 
far down we get will be somewhat driven over the next few 
months of getting a better feel for who can participate, who 
will be willing to participate and we will develop our 2007 
spending plan.
    So it is difficult, depending on whether it is a $14 
million project or a $100 million project, that list will vary 
dramatically. We should know that within the next few months.
    Mr. Honda. OK, then as TSA makes decisions on the 
allocation of the 2007 EDS installation funds, exactly what 
criteria will you be using and how significant are factors like 
construction readiness, integration into ongoing terminal 
renovation, or significant local financial share of the 
project, as San Jose is?
    Mr. Null. Well, the first priorities are all about security 
and safety. So we will look for those airports where we know 
that we will have the most restricted capacity, where the 
growth will be pushing us to the limit to maintain baggage 
screening. So those will be at the top of the list. We also are 
looking for those airports where we have the highest injury 
rates, and those have a level of higher level of priority as 
well.
    We have to be very opportunistic in how we manage that 
priority list. And when we have airports that are ready to step 
up and have, we can intercept a greenfield terminal or new 
airport, those are important things for us, and we will shift 
the priorities based on the ability to get that local funding 
and to intercept a construction project.
    Mr. Honda. OK. Some airports will have TSA-validated 
designs for EDS installation, ready to begin construction by 
the end of this year. If TSA is not using letters of intent to 
commit future funding, how can those airports move forward 
without losing the possibility of these 75 percent Federal 
reimbursement to which they would be entitled, if they simply 
waited for another year or two? And is it possible to enter 
into, I guess what you call the other transaction agreements, 
or other agreement now, that protects their full reimbursement 
from future appropriations, assuming those appropriations 
ultimately are made?
    Mr. Null. Mr. Honda, that is exactly the cost study, 
sharing study that we have underway right now with the airports 
and air carriers. We are looking at a number of potential 
vehicles to achieve funding levels similar to LOI shares. And 
those will all be sort of put on the table here in the next few 
months.
    So we are not going to leave anything off the table. We are 
going to sort of put it all out there, look at what may be 
potential multiple vehicles for doing the funding and as a part 
of that study, we are also making sure that we understand those 
airports who have stepped up and invested early how they will 
play in that going forward as well.
    Mr. Honda. Well, San Jose is in that mix of 25?
    Mr. Null. Yes, sir.
    Mr. Honda. So how all these factors play together will 
determine where San Jose may end up in terms of the lineup. It 
doesn't sound like there is a priority in terms of who is 
first, who is second. But it is based upon a mixture of 
criteria.
    Mr. Null. Well, the top 25 are based on capacity and peak 
demands that we know we are going to hit over the next few 
years. That will shuffle based on the availability of funds and 
willingness of local airports. So where that is going to end up 
will be a result of a number of discussions with different 
airports over the next few months to see how that final 
shakeout will look.
    Mr. Honda. Thank you, Dr. Null.
    Mr. Mica. Thank you.
    I am going to ask a few questions and then yield to Mr. 
DeFazio and others that have questions.
    First of all, I have the record from Continental. 
Continental worked with Reveal in November and December of 2004 
to devise a pilot plan. That pilot plan that is on the board 
there, that says EWR. What does that stand for, Ms. Baer?
    Ms. Baer. That is the designator for Newark Airport, EWR.
    Mr. Mica. OK. That is not LAX, that is not Phoenix, it is 
not Denver, it is not O'Hare. That was devised for Newark. Then 
it says in February they met, it took them until, they had to 
wait until February to meet with TSA to discuss the proposal. 
And then somewhere, someone made a decision that they wouldn't 
get, basically this plan was rejected, is that correct? Was 
there ever any plan to use five machines, Mr. Ellenbogen? Was 
there any plan to use five machines, or is that something you 
just dreamed up?
    Mr. Ellenbogen. There was a lot of discussion with 
Continental about how we could configure the systems.
    Mr. Mica. Who did this plan? Did Continental do that plan? 
Did the airport? Where did this plan--and there is more to this 
plan, because there is a whole report. I have seen the report. 
I want a copy of that report for the record. All I have got is 
that. Can you provide me with that?
    Mr. Ellenbogen. I am not sure which report you are 
referring to, sir.
    Mr. Mica. The rest of the details that go with this 
proposed configuration. This is for Newark Airport. Who has it? 
Do you have one, Mr. Null?
    Mr. Null. I will certainly find out, and if we do we will 
supply that.
    Mr. Mica. I want the rest of the plan. Because this just 
didn't come out--and I don't have Continental here, but I have 
the scenario of how this was developed. And then they went to 
TSA.
    Somewhere, TSA made a decision, and I heard that, and it 
may have been funding or something that they only received from 
Congress enough for eight machines. Is that correct?
    Mr. Null. The plan was to utilize eight machines for across 
the three pilots. But that was not the reason for the three 
machine decision at Newark.
    Mr. Mica. Well, somewhere--they sat down, here is the 
testimony, and I am going to have them in and swear them in, 
they sat down and developed this configuration for a large 
airport. This is all about a large airport.
    You sat here and said that you believed that it may not be 
suited, or you said it would be suited only for medium and 
small?
    Mr. Null. And I think there will be situations----
    Mr. Mica. Well, we will never know. We will never know. How 
will we know? The whole purpose of this was to have in one 
place at one large airport--we know it will work in small 
airports. We know it probably will work in medium airports. The 
whole reason for this, for having another vendor even 
qualified, and you were qualified at--just for the record, 
where were you certified at, 80?
    Mr. Ellenbogen. That is correct.
    Mr. Mica. And you met that. TSA certified that, didn't 
they? Did you certify 80?
    Mr. Null. Yes, sir.
    Mr. Mica. Yes, you did. So this is--don't put a lot of 
mumbo-jumbo on the table here. You certified that you had the 
equipment that would do that. And it was supposed to be 
installed in one airport, because this Congress is going to 
have to spend billions of dollars, billions of dollars. How 
much would it cost to change out your entire system and put an 
in-line with a large InVision or L-3 equipment?
    Ms. Baer. Throughout the entire airport?
    Mr. Mica. Yes, throughout your entire airport.
    Ms. Baer. Right now we have----
    Mr. Mica. How much would it cost----
    Ms. Baer.--59 EDS machines at the airport. Hundreds of 
millions of dollars.
    Mr. Mica. Hundreds of millions of dollars.
    Ms. Baer. Yes, it would.
    Mr. Mica. And we encouraged the private sector to come up 
with developing equipment that would be less costly. What is 
your, just ballpark, a third of the cost of an L-3, is that 
right?
    Mr. Null. Yes, sir.
    Mr. Mica. A third? OK. Just for the record. So we will 
never know, and we have gone through this planning process, we 
have gone through buying the equipment, we will never know how 
much it is going to cost us. We have 3 major airports done out 
of the 29 that handle 75 percent of all our air passenger 
traffic. And Congress is trying to find a way to install 
efficient equipment? That is just not acceptable to me.
    Somewhere, and I think it is TSA, if I see TSA going after 
Reveal in any way, and you are being awfully quiet, and I 
probably know why, because you are put in the middle of all 
this. All you supplied was the machines, is that right?
    Mr. Ellenbogen. That is correct.
    Mr. Mica. And you worked with them on this, whether you 
admit it or not, you worked with them?
    Mr. Ellenbogen. With Continental, yes.
    Mr. Mica. With Continental, OK. And you got the contract 
from them to install it the way they said, and they made the 
decision for the three machines, right?
    Mr. Britz. That is correct.
    Mr. Mica. OK. And you provided the space. And don't tell me 
that equipment will not fit in that space. I will go out and 
walk it with anybody here and some other folks. It will fit. 
And if you can fit two 5500's at the end and make the 
passengers walk around, don't tell me it won't take as much 
space. You can fit it in that blueprint.
    So this is an absolute fiasco, a farce, it has set the 
entire Country back and 20 some major airports, because we do 
not know today whether this equipment in fact will work with 
that configuration. You would think somebody would look at 
that, now, wouldn't you, and say, do we need to, now, you said 
that you didn't have the ability to network this and do the 
remote resolution. But somebody could look at it and say, that 
is the way it should be done, Mr. Null, wouldn't you say 
someone should have looked at that then and said that?
    Mr. Null. Well, certainly once we get the multi-plexing 
system, that will give us a lot more economies of scale and 
there will be some big advantages. The challenge that we have 
here, sir, is the fact that----
    Mr. Mica. If anybody in TSA could just think of what we are 
trying to do, and put this together, in one location we could 
see if we could save billions of dollars and have a system that 
would work. But we may never know, because again, we have spent 
18 months, almost 2 years with this disaster.
    I have to scoot, and besides that, I am losing my cool. But 
let me yield to Mr. DeFazio. Mr. DeFazio, I will match you for 
emotion on any day. Thank you.
    [Laughter.]
    Mr. DeFazio. It is the Italian, Mr. Chairman.
    [Laughter.]
    Mr. DeFazio. I have already vented for the week. So I may 
be a little mellow today on other issues.
    Generically, to Ms. Berrick, just broadly, we have 
confirmed through ongoing analyses that an investment in EDS 
generally at at least the 25 largest airports could have a 
payback, quite a short payback period, to TSA in terms of 
savings, is that correct?
    Ms. Berrick. Right. TSA initially estimated that for the 
nine LOI airports, they could recover the up-front investment 
in little under a year. But there have been some lessons 
learned since those systems were installed. TSA realized the 
need to develop best practice design guidelines for installing 
in-line systems. That would help and make the process more 
efficient.
    They also realize that better technology with increased 
throughput and lower alarm rates would help facilitate cost 
savings. They are working right now on developing best practice 
design guidelines. There is some technology in the pike that 
will increase throughput significantly.
    So the common knowledge is that there are still significant 
savings that can be achieved, not only savings, but also 
security benefits through underlying systems. But initial 
estimates may have been a little high. There have been a lot of 
lessons learned since then. But still, the savings are 
significant.
    Mr. DeFazio. Well, and from further reading your report, we 
expect the earlier generations of these machines apparently are 
going to have a useful life of maybe 10 years. I don't know 
about the later ones. But let's just say, let's use 10 years. 
So for capital investment that has a 10 year expected life, 
perhaps within a third of that time period, the Federal 
Government could recapture its investment in operating savings 
in terms of personnel and other attributable costs?
    Ms. Berrick. That is possible.
    Mr. DeFazio. So if we were running Government like a 
business, which the Republicans always tell us they want to do, 
we would probably be thinking about making these investments.
    So Mr. Null, I am curious, you said you are looking at 
other potential vehicles for funding. I am curious what you 
might recommend, because Chairman Mica and I have mulled this 
over at great length. We tried to make a run on some Federal 
bonding and we were turned down by OMB and others. We feel that 
the Federal Government has an obligation to carry a substantial 
portion of the cost of these machines, not the airports, not 
the airlines. We are looking for some cost sharing, but not 
putting the whole bill on them.
    So can you give us a couple of hints about what these 
potential vehicles might be?
    Mr. Null. I think as Ms. Berrick had indicated earlier in 
her discussion, there are a number of possible ways as far as 
service contracts, buy-leaseback options, potentially tax 
credit bonds, LOIs or something that would still be put on the 
table and then what we will have to understand and what are 
either the legislative or the scoring issues that would have to 
be addressed in order for those vehicles to be implemented.
    So none of them are clean. So our challenge is to identify 
what the options are and then understand what actions will have 
to be taken in order to utilize those.
    Mr. DeFazio. If we think this whole thing through and 
obviously baggage is not the only place we have a problem, I 
have tremendous concerns about carry-on bags, passenger 
screening in terms of explosives, and as the Chairman and I 
both said, two or three years ago now, when the Chechen 
terrorists took down the planes in Russia, this is probably our 
last wakeup call before somebody does that here in the United 
States.
    What do you think the economic cost, anybody up there, the 
economic cost to the United States of America would be if two 
or three planes were blown out of the sky one day by 
terrorists? There were two in Russia, let's just be 
conservative and say two. Short-term, total interruption of air 
service and all that, let's say we decide a week or 10 days we 
can put planes up again, with some new measures of security. 
What are we looking at in terms of, when we look at how much it 
would cost to install this equipment? Anybody think that the 
cost would be less than the cost of building up these systems 
quickly?
    I don't think so. Neither do I.
    I guess the question is, when we are looking at prevention 
of terrorist acts and tragedy, when we are going to kind of 
look at what the potential downside is versus the annual 
scoring and/or that, and buy-leasebacks. We have seen what 
happened with the Boeing deal, not too great. Sometimes it is 
better for the Federal Government just to make the investment 
straightway up front. If we need to borrow some money to make 
that kind of investment, looking at the savings we are going to 
recoup, the benefits, the taxes that will accrue, we should do 
it.
    With that, we have a problem with back injuries, big 
problems documented at TSA in terms of lost time, workers comp, 
injuries, all that. We have already talked about the issue of 
potential savings. So I guess what I am puzzled about here is, 
when we look at in-line systems, they will work some places. In 
some places they have the room to do it.
    But GSA says here that up to 50 percent of the cost is for 
facilities and infrastructure modifications. And I assume that 
is not a worst case, that is an average? Because at some 
places, there isn't really any place to put them, right?
    Mr. Null. That is true.
    Mr. DeFazio. So it could be considerably higher?
    Mr. Null. It can run considerably higher.
    Mr. DeFazio. So I guess I am wondering why we wouldn't 
perhaps revisit or put more effort into this dispersed idea. I 
am not saying it is going to be most appropriate everywhere, 
but at an airport where the costs are going to be, where 75 or 
80 percent of the cost are going to be in modifying the 
facility versus the cost of the equipment, why wouldn't we put 
out a relatively small amount of money to more adequately test 
in a proper configuration these sorts of systems?
    Because I am just thinking that a mixed system where we 
avoid extraordinary costs at certain airports would be 
valuable. We always talk about, is it St. Louis, Jerry, that 
everybody has their own gate and we have all the security 
scattered around?
    Mr. Null. It is Kansas City.
    Mr. DeFazio. Kansas City, sorry. So every airport is a 
little bit different, and it just seems to me we might want 
some more flexibility than trying to drive everybody toward the 
EDS, which we know works great. I have been to San Francisco, I 
have been to Heathrow and Manchester and seen those systems. 
They are great. But they aren't maybe the solution everywhere.
    Do you think that this was a realistic test of the 
potential for dispersed technology, given the constraints on 
the number of machines we had? Do you think we disproved the 
possibility of doing it this way, since we didn't follow this 
original design, whoever created it?
    Mr. Null. First of all, as part of the strategic plan, we 
talk about optimized systems, not only in-line systems. So we 
recognize that these big central in-line systems are not the 
answer for every airport and we certainly would not propose 
that.
    I don't think that this pilot has done anything to 
eliminate the possibility of utilizing this configuration in 
large airports. At the time we were setting this pilot up, it 
was to prove the technology's reliability, our ability to 
integrate into the takeaway systems and to match the throughput 
from the ticket counters to the capacity that we put in place.
    Mr. DeFazio. So then this isn't a definitive test of 
whether or not a dispersed technology, particularly using well 
designed dispersed points, could possibly avoid a whole lot of 
structural costs and delays in terms of terminal modifications 
and those sorts of things?
    Mr. Null. And in fact, the Jackson Hole implementation will 
give us a fairly large scale test of integrated systems with 
multi-plexing capability and allow us to project what would 
happen in a much larger airport at the same time. Then we can 
look for future possibilities where we would do that.
    Mr. DeFazio. OK. So then this isn't definitive. I think the 
Chairman fears that we are going to somehow, going to disregard 
this possibility or this particular manufacturer because of the 
disappointments we had in this particular test. You don't find 
it definitive and you are not making any sweeping conclusions 
that would lead to that?
    Mr. Null. Not at all. We continue to work with Reveal on 
their ongoing system improvements and changes and we feel that 
Reveal is a critical part of one of the arrows in our quiver of 
how we are going to deliver optimized systems in the future.
    Mr. DeFazio. OK. Well, as I do to all of the Administration 
folks who come before us on the Committee to talk about these 
issues, and I do it both here and in Homeland Security, I just 
urge you and/or your superiors to give us an honest assessment 
of what it would cost, how are we going to get there and it 
should not be constrained by the people at OMB. We are big boys 
and girls here, you give us a big bill, we can look at it and 
say, we can't do that, you will have to come up with something 
else. Or we are going to say, yes, maybe it would be worth it 
to avoid what happened in the Soviet Union here in the United 
States, or Russia, excuse me. The Soviet Union doesn't exist 
any more. You know, it would be worth that cost, and we will 
figure out a way to find the money and borrow it. We are the 
ones who should make that decision. I hope it doesn't get 
backstopped. So I just would give you that counsel.
    Thank you, Mr. Chairman.
    Mr. Kuhl. [Presiding] As you can see, the Chairman has 
regained his Kuhl. No pun on that.
    [Laughter.]
    Mr. Kuhl. I will yield to Mr. Costello.
    Mr. Costello. Thank you, Mr. Chairman. I do have a few 
questions, but let me yield quickly for a quick question from 
Mr. Pascrell.
    Mr. Pascrell. Thank you, gentleman from Illinois.
    Mr. Britz, what adjustments did Raytheon have to make to 
the integrated placement design after a normal six to nine 
month delay and missing the peak travel time at Newark? And the 
second question is, what was the main cause of the delay?
    Mr. Britz. The systems were ready. We were installing 
systems at both JFK and Gulfport at the same time. We had to do 
the site preparation at the site, which is running all kinds of 
conduits and running power to all the machine areas. We had to 
get the design ready for integration, which was getting control 
panels built, fabricated and installed. And as well as conveyor 
belts fabricated and installed. That all took place over a 
period of time.
    Mr. Pascrell. Well, you know that before.
    Mr. Britz. Yes, we did.
    Mr. Pascrell. Well, you still had a delay of six to nine 
months.
    Mr. Britz. We installed the first machine in Newark in the 
August time frame and had it operational.
    Mr. Pascrell. This system was supposed to be ready in when, 
exactly? When was this originally supposed to be in place?
    Mr. Britz. I don't think there was a fixed date of when it 
had to be in place.
    Mr. Pascrell. There was no fixed date?
    Mr. Britz. That I remember. I don't know.
    Mr. Pascrell. For the record, that is what you are telling 
us?
    Mr. Britz. I don't have one in my notes right now.
    Mr. Pascrell. Well, then, how could it be delayed?
    Mr. Britz. The project was initially slated to get done in 
the summer. We finished the installation and had the first 
machine in August and the second and third machines installed 
in August and operational in August at a standalone 
configuration. We didn't delay the project in regards to the 
integration. We ran it as a standalone configuration until the 
integration equipment was ready and then we installed the 
integration equipment. And then the machine was fully 
integrated and available for full integration testing in 
October.
    Mr. Pascrell. Is the system at this day, at this point in 
time operable?
    Mr. Britz. I haven't been involved with the project since 
then, but I understand it is still running.
    Mr. Pascrell. Mr. Ellenbogen?
    Mr. Ellenbogen. The system is being used every day to 
screen bags, yes.
    Mr. Costello. Thank you.
    Dr. Null, let me just ask a couple of questions again for 
the record concerning the pilot at Newark. I understand that 
one of the machines did have entry integration. One, is that 
correct?
    Mr. Null. That is correct. The machine that was servicing 
the kiosks.
    Mr. Costello. And why didn't all three of them have both 
entry and exit integration?
    Mr. Null. Well, first of all, the machine with the entry 
integration services a number of kiosks. So there were multiple 
load points that were all supplied to that single machine. The 
reason that we did not integrate them into the ticket counter 
is because of matching the speed of the ticket counter 
processing with the capacity of the equipment required only two 
more machines, not four more machines.
    So from a capital utilization standpoint, our cost per bag 
standpoint, we could achieve comparable throughput with only 
two machines rather than four machines. So that is why we did 
not integrate those machines.
    Mr. Costello. And what did it cost TSA to provide entry 
integration on the one machine?
    Mr. Null. It was approximately $400,000, somewhere a little 
over that. And that is a very specialized belt to deal with, a 
90 degree turn, which is why it is a little more expensive.
    Mr. Costello. And why weren't the machines at Newark multi-
plexed?
    Mr. Null. We were at a stage where the software had not 
been finalized through the approval process or through the 
testing process. So we were not able to multi-plex those over 
to a single resolution point.
    Mr. Costello. And who made that decision, TSA or Raytheon?
    Mr. Null. Oh, that is a joint issue between Reveal and TSA 
and where they are at in their development process and where 
they are through the testing process with TSA.
    Mr. Costello. Mr. Chairman, I have no further questions, 
but I would like to give each of our witnesses the opportunity 
to make a final comment, very brief comment at this time, if 
any of them would care to.
    Mr. Kuhl. Do any of the panelists wish to make a final 
comment?
    Mr. Ellenbogen. No, sir.
    Mr. Kuhl. Dr. Null?
    Mr. Null. No, sir.
    Mr. Kuhl. Mr. Britz? Ms. Baer?
    Well, on behalf of the Chairman, thank you for coming and 
participating. I know the information that you have provided 
will be helpful as we move ahead in this Subcommittee. So I 
appreciate your coming and participating again.
    And Mr. Ellenbogen, I think you are staying for the next 
panel. A glutton for punishment, I guess. We understand that 
you have already submitted your one written statement, so it 
will not be necessary for you to retestify. Thank you for 
coming. We appreciate it.
    If we could, we will move on to the second panel. I would 
like to move right along, because we are getting the 
preliminary signals from the floor that there will be some 
upcoming votes in about an hour, maybe shortly before that. So 
at this point, if Mr. Todd Hauptli, Mr. John Wood, Mr. Louis 
Parker, Mr. Ellenbogen, you can retain your position right 
there in the center, and Mr. Tom Ripp, if they would like to 
take their positions.
    Mr. Hauptli, I think I have it here that you are the Senior 
Vice President of Airport Legislative Alliance, the American 
Association of Airport Executives and Airports Council 
International-North America. We appreciate your participating 
this afternoon. Mr. John Wood, the Chief Executive Officer, 
Analogic Corporation. Mr. Louis Parker, President and CEO of GE 
Security. And Mr. Tom Ripp, who is the President of Security 
and Detection Systems, L-3 Communications Corporation.
    Mr. Cooke, I don't have a bio on you. If you could just 
give me your allegiance at this point.
    Mr. Cooke. Yes, I am sitting in for Mr. Parker. I am 
President of GE Security's Homeland Protection Division.
    Mr. Kuhl. OK, great, and welcome.
    So to move right along, Mr. Hauptli, in accordance with the 
normal procedure, you have five minutes. We appreciate your 
participating.

   TESTIMONY OF TODD HAUPTLI, SENIOR VICE PRESIDENT, AIRPORT 
 LEGISLATIVE ALLIANCE; JOHN W. WOOD, JR., PRESIDENT AND CHIEF 
    EXECUTIVE OFFICER, ANALOGIC CORPORATION; DENNIS COOKE, 
 PRESIDENT, GE SECURITY, HOMELAND PROTECTION DIVISION; THOMAS 
 RIPP, PRESIDENT, SECURITY AND DETECTION SYSTEMS DIVISION, L-3 
                      COMMUNICATIONS, INC.

    Mr. Hauptli. Thank you, Vice Chairman Kuhl. And for the 
record, I was laughing hard inside at your joke earlier.
    [Laughter.]
    Mr. Hauptli. I want to make one general observation and 
three specific recommendations. The general observation, a 
number of the points were already made this morning. Three 
hundred million more passengers coming through the system 
within the next decade--today we are already leaving bags 
behind as planes are taking off, because they are not able to 
get through the screening process.
    The Federal Government took this responsibility over and 
has frankly botched it. Two billion dollars has been spent on a 
$5 billion to $10 billion problem. And by TSA's own admission, 
it is 2024 at the current spend rate before we get this problem 
solved, which is completely unacceptable. The Federal budget 
process is getting in the way of real life economics. As was 
pointed out earlier today, anywhere from a year to three to 
four years is the payback period for putting in-line systems in 
place. Yet we don't have either the will or the resources, and 
it is probably a combination of both, to put these systems in 
place.
    OK, for recommendations, three. One, we need to extend and 
expand on the current aviation security capital fund. The $250 
million that is mandatory that is guaranteed is very helpful. 
This Committee attempted to make that $500 million, and the 
Appropriations Committee bested you, unfortunately. We have to 
scramble every year and try to get crumbs on the table beyond 
that $250 million.
    So that program, which terminates next year, needs to be 
extended and strengthened. And parenthetically, I would add for 
the record, as we look to the FAA reauthorization bill next 
year, this mandatory spending issue--the guaranteed funding--it 
shows you how important it is to continue and strengthen the 
guaranteed funding in Vision 100, to make sure that the capital 
programs of the FAA are funded. Because otherwise they will be 
traded off against other transportation needs.
    Secondly, we need these creative financing solutions, 
whether it is tax credit bonds, the letter of intent program or 
other mechanisms; the Federal Government is not doing its job 
on its own. And the private sector is willing to step in and 
help in that regard. But we need to have some meaningful 
programs that will work.
    The TSA baggage screening investment study that Ms. Berrick 
and Dr. Null talked about earlier, we may see something out of 
that in the next few weeks. I would encourage this Committee to 
push hard to make sure that that study receives appropriate 
attention in Congress rather than simply sit on a shelf at TSA.
    And then finally, I think we need to modify the screening 
partnership program that is currently in place, to make that a 
more meaningful option for airports. Specifically as it relates 
to the subject at hand today, we need somehow to be able to 
capture and utilize the personnel savings from putting in-line 
systems in place to pay for both the initial capital investment 
and the debt service on putting in-line systems in.
    With that, I will yield back my time.
    Mr. Kuhl. Thank you.
    Mr. Wood?
    Mr. Wood. Thank you. On behalf of Analogic, we appreciate 
the chance to testify. I would like to touch on four programs.
    There has been considerable discussion about the 
Government's very large investment in in-line EDS systems and 
working with our partners, L-3 Communications, we have had a 
TSA approval of a year ago for an upgrade for these systems. We 
provided about half of them in U.S. use. This was certified at 
600 bags per hour, which I will point out is 6 to 8 times the 
throughput rate that preoccupied the last panel, with a 25 
percent improvement in false alarm rate. It is multi-plexed, it 
is networked. It provides archived bag images of every bag that 
goes on an airliner for a 48 hour period. Many advancements.
    We look forward to this being fielded. We are completing 
testing of this in a networked version, actually finished 
standalone testing. We have online networked testing underway 
at John Wayne Airport. We believe this is ready. And this will 
preserve and enhance the TSA's investment in these machines to 
make them continue to operate online for years to come.
    Moving to next generation, we have developed, with TSA 
support, an extra large bore machine, shown here, able to 
process 1,100 bags per hour. And although there is some debate 
as to whether the Airbus Jumbo will be widely deployed, there 
is no debate over the fact that passenger throughput rates are 
climbing. There is a need to process many more bags and larger 
bags. This can handle a bag up to one meter by .6 meters, the 
largest snowboards, golf clubs, as well as small cargo, and do 
this at a very high rate in a very cost effective manner. And 
we expect to have this at the Transportation Systems Laboratory 
for certification early next year.
    Our next challenge is to take the well proven CT Computer 
Tomography technique to the checkpoint, which I think everyone 
would agree is primitive, and that we are using the same two-
dimensional x-ray techniques that were developed over 30 years 
ago for the hijacking crisis. Screeners are unable to find 
threats with this and it is very time consuming. So we have 
developed Cobra. It has several advantages. One, your laptop 
would not have to be removed from a briefcase as a traveler. 
Much higher throughput rate, 300 bags per hour.
    And we tackled what we view as a very simple problem, and 
that the bin handling by TSA employees. It seems ironic to us 
that many TSA employees at checkpoints are not really 
participating in the screening process, but they are hauling 
plastic tubs back and forth. And a relatively straightforward 
bin retrieval system would take care of this, in addition to 
providing a much higher quality screening system. We had this 
system installed at Logan Airport, screened 37,000 bags. There 
are many things that screeners at an official TSA checkpoint 
missed, they were doing the best they could. But with 
conventional, two-dimensional x-ray, you are limited in what 
you can do.
    This can be integrated into a smart checkpoint, and we are 
working with others to incorporate information, say, from a 
personnel screening system. Of course, there is talk of RFID 
tags, advanced techniques. And we believe that we can make the 
screening process much more pleasant for the traveler and 
provide a much more accurate screening process by using CT, so 
widely deployed and approved in checked baggage, and it is time 
to deploy that in carry-on baggage. And we have a system to do 
that. A lot of extensive field testing and going for 
certification again early next year.
    Again, the previous panel had a lot of discussion about the 
secondary airports. And we would not suggest that in-line 
systems are appropriate for all airports. In fact, we have been 
engaged with the TSA to develop a version of our Cobra machine 
that would handle the secondary airports, but do it at a much 
higher throughput rate than the existing systems, namely, 300 
to 350 bags per hour, a CT based solution. It doesn't occupy 
much floor space, it doesn't have to go behind the scenes. And 
in all of these systems, I would suggest that the issue that 
Chairman Mica raised, the 16,800 people working in the back 
office, the over 40,000 screeners working combined, we offer 
the prospective of greatly reducing that by not requiring a 
screener to look at every single bag, but rather look at only 
the alarmed bags and clear those.
    So we have four programs underway. We would encourage 
Congress to provide TSA the funding to do the laboratory to 
bring these not only to the operational readiness trials, but 
also to bring those to implementation to provide better safety 
and a more economical approach to airline screening.
    Thank you very much.
    Mr. Kuhl. Thank you, Mr. Wood.
    Mr. Cooke?
    Mr. Cooke. Thank you, Mr. Chairman, Congressman Costello 
and members of the Subcommittee, for this opportunity to 
discuss the current status and the future of checked baggage 
screening at our Nation's airports.
    I will share with you GE Security's perspectives on the 
current deployment of EDS systems and how technology available 
today needs to be more widely deployed to increase efficiency, 
quality and security in air travel. Finally, I will discuss the 
need for research and development that will result in 
technology that significantly increases both security and 
productivity for the future of baggage screening.
    Let's start by describing the known problems in baggage 
screening today. This picture that we have up shows one of the 
many standalone lobby-based EDS systems that we have at our 
Country's airports today. These lobby systems require manual 
handling of the baggage. Their throughput is significantly 
lower than with in-line EDS systems. And as you can see, the 
process can become quite chaotic during peak load times.
    The process is inefficient and can lead to flight delays or 
bags missing planes. In fact, on a recent flight out of 
Washington Dulles, a pilot came on and announced to the 
passengers that in fact the flight would not have an on-time 
departure because over 3,000 bags needed to be loaded on 
awaiting aircraft, and their aircraft was one of those 
aircraft.
    Flight delays due to inefficient bag screening was 
highlighted in a 2005 Washington Post article, where a 
Lufthansa spokesman said that it is not uncommon for an 
aircraft to wait 45 minutes to an hour, waiting for the checked 
baggage to be loaded on. Just to put that in perspective, the 
cost to an airline is estimated to be $760 per minute for a 
wide body aircraft. That means $45,000 per hour.
    And then there is the additional cost of finding and 
delivering a delayed bag. IATA and SITA's WorldTracer service 
estimates that the average cost to the airline is $100 per bag.
    In addition, the manual loading and unloading of baggage 
contributes to an alarming rate that has been discussed at this 
Committee of injuries and associated workmen's compensation 
claims that the TSA is facing, which is the highest in the 
Federal Government. In 2007, the budget is $55 million, it is 
estimated, as discussed earlier. This is an increase of 40 
percent in just one year.
    Fortunately, the industry has a solution that has been 
discussed for these problems, and that is in-line EDS systems. 
However, as this map shows, that we have put up, several of the 
Nation's top airports do not have letters of intent for Federal 
funding to implement in-line EDS systems. These include 
airports in New York, Washington, D.C. and Miami.
    There has been some progress made. This is a picture of the 
lobby at the San Francisco International Airport. After 
installing the in-line EDS system, you can see how much the 
lobby was improved. It is dramatic. There is no longer a 
bottleneck for checked bags or passengers.
    After installing in-line EDS systems, San Francisco saw 
injury claims for baggage screeners decline by 42 percent, and 
the total cost for workmen's compensation claims went down an 
amazing 77 percent. Just imagine if we had in-line systems at 
all of our major airports throughout the Country what could 
happen.
    Options for the future, let me transition and talk about 
that. The problems are likely to escalate, driven by the 
increased enplanements, which will further stress the 
inefficient processes that we have in place today. The FAA 
projects that we will reach 1 billion enplanements in the U.S. 
by 2015. The current screening systems will be overwhelmed long 
before this if we don't act now to fund the deployment of 
automated screening solutions.
    There is no more space for additional people or machines in 
lobbies. Automated technologies for improved security with less 
real estate and cost is the answer.
    Finally, I would like to talk about technology development. 
Technology has progressed significantly in recent years, and is 
poised to make great advances in the near future. Since GE last 
testified before this Subcommittee in 2004, we have made a 
number of advancements. Each step in our technology road map is 
upgradeable to ensure that your investments are not wasted.
    We recently released the CTX9400, which is currently in TSA 
certification. Its two major benefits include a projected 25 
percent relative reduction in false positives, and a 50 percent 
reduction in shield alarms. And as you know, with shield 
alarms, they are the hardest to resolve and require opening up 
of the bag. The release of the CTX9800 is scheduled for 2008, 
and it will further increase throughput and lower operational 
costs.
    GE certified the first actual next generation EDS 
technology and x-ray diffraction system which automates threat 
resolution. Broader leaps in EDS technology are being developed 
through the longer range Manhattan II program. GE participates 
in this important DHS R&D effort.
    In summary, the future of checked baggage screening, 
passenger checkpoints, rail, public transit and other security 
technology applications depends on investing in a development 
path that leads to affordable, effective, non-intrusive 
security solutions. As air traffic grows, the throbbing 
headache that we feel today is going to become a full-blown 
migraine. The pain will even be felt by smaller airports due to 
the hub and spoke system that we have.
    Eventually, another terrorist event or the crushing weight 
of an inefficient system will force a less desirable reactive 
response. GE stands ready to work with the U.S. Government and 
all stakeholders to increase security through effective and 
cost-saving technology.
    Thank you, Mr. Chairman.
    Mr. Kuhl. Thank you, Mr. Cooke.
    Mr. Ripp.
    Mr. Ripp. Thank you, Mr. Chairman, members of the 
Committee.
    I am very pleased to have this opportunity to appear before 
you to discuss what we can do to improve passenger baggage 
screening. As you know, since its certification by the FAA in 
1998, L-3 has been one of two suppliers to the TSA of high 
throughput explosive detection systems. Since that time, we 
have deployed over 625 systems. We are the first to go into an 
in-line configuration at Boston's Logan Airport, and we are the 
first to develop a networking capability, enabling central 
screening operations, all the while providing systems to the 
TSA for the lowest cost, lower by $300,000 versus similar 
systems.
    Rather than read my entire testimony, I would like to 
summarize for you what I believe to be some of the key points. 
First, we need to focus on detection and operational 
efficiency, which translates into reduced overall cost to 
deploy and operate. If we continue to deploy without an 
operational focus, the long-term costs of our Nation's aviation 
security infrastructure will become an overwhelming burden, 
which it already is.
    Second, a simple review of the TSA budget clearly indicates 
the problem areas, the people costs. The cost are high, I 
believe the budget has greater than $2.5 billion next year, and 
it will continue to grow unless security leverages the 
efficiency current technology is capable of providing.
    Third, we need to deploy more EDS systems for in-line 
installation. I think the number of airports with in-line EDS 
has been talked about here at about 23. That leaves about 80 of 
our Nation's largest airports with inefficient standalone 
installations. Both the TSA and the GAO have reported that in-
line baggage screening could reduce the dependence on TSA 
screeners by up to 78 percent. The math is pretty simple. The 
sooner in-line EDS systems are implemented, the sooner the TSA 
can begin to save significant annual recurring costs.
    Fourth, currently deployed explosive detection systems are 
preferable to existing trace detection systems. Why? Trace 
detection is slower, it is labor intensive and has poorer 
detection capability. Again, as noted by the GAO, replacing 
trace detection equipment with EDS units will increase 
security, increase throughput and reduce the number of 
screeners required.
    Fifth, save costs and increase the value of current assets 
by refurbishing the older, standalone units. Why do this? These 
systems can be brought to as-new condition and be upgraded with 
the latest software releases for approximately one half the 
cost of purchasing a new EDS. If the TSA procures new systems 
for transition to the more cost-effective in-line 
installations, the standalone systems can then be refurbished 
and redeployed to those airports that are growing and require 
greater levels of capacity.
    Sixth and lastly, focus development dollars on the 
deployment of alternate technologies, which when added to the 
currently deployed systems, offer very effective paths to 
increased detection capabilities with much lower false alarm 
rates. For the most part, next generation development programs 
will focus on the introduction of bigger and higher throughput 
machines. I believe these machines will have a higher cost base 
and therefore a limited applicability to the general airport 
market worldwide. Instead, work with industry to develop lower 
cost alternate technology which utilizes the existing platforms 
as its base. The result will be cheaper and far more effective 
as we strive to provide more flexible capability.
    The bottom line is we need to more widely deploy our 
current technology to improve the overall level of airport 
security. If we simply develop bigger, faster systems, which 
cannot be cost effectively deployed across the majority of our 
air travel system, we will leave gaps that may be exploited. As 
an example of less than optimal approach to technology is our 
Nation's checkpoints. Industry continues to offer emerging 
technologies that when deployed, do little to improve overall 
detection and worse yet, slow down throughput. L-3 is creating 
and will pilot shortly an advanced checkpoint solution, which 
incorporates multiple technologies for screening of both 
passengers and their carry-on baggage.
    We have simple goals. We want to accommodate 300 plus 
passengers per hour in a single system that reduces screener 
requirements at the checkpoint by 40 percent, all with improved 
detection. This advanced checkpoint would screen both people 
and their carry-on baggage at a targeted cost of little more 
than the carry-on baggage screening systems currently under 
development.
    I appreciate having this opportunity to share our views, 
and I look forward to answering your questions.
    Mr. Kuhl. Thank you, Mr. Ripp.
    Mr. Ellenbogen, given the four previous statements, did you 
have anything you wanted to add before we go to questions?
    Mr. Ellenbogen. All I wanted to add was that Reveal was 
also one of TSA's two selected partners to develop carry-on 
baggage inspection EDS systems, under their CAMBRIA program. We 
will be delivering the first CT-80FX this fall, which will 
automatically look for explosives and weapons in carry-on 
baggage.
    We share the other witnesses' desires to improve the 
overall performance of our checkpoints, while reducing labor 
and see that as a great opportunity to do so as we move 
forward.
    What we have learned over the last few years it that 
stakeholders must work together. There is great advantage to be 
had with TSA, the airports, airlines and the manufacturers to 
work together to optimize these systems. I don't think we have 
taken advantage of all those opportunities in the past. So I 
appreciate the opportunity to speak here today.
    Mr. Kuhl. Thank you.
    Let me yield at this time to Mr. Costello.
    Mr. Costello. Thank you, Mr. Chairman.
    Mr. Hauptli, let me ask you, you mentioned in your written 
testimony about a number of in-line financing alternatives, 
including the reauthorization, as you mentioned in your 
testimony here, of the Aviation Security Capital Fund. Is it 
your opinion that reauthorizing the capital fund is the best 
and simplest and most direct alternative for financing the EDS?
    Mr. Hauptli. Yes, sir, and it would be optimal if it could 
be increased.
    Mr. Costello. Very good. Other than providing more funding 
for the in-line EDS, what are some of the other things? Is 
there anything else that you believe that TSA could do to get 
the EDS system installed?
    Mr. Hauptli. What can TSA do to improve the installation 
process?
    Mr. Costello. Yes, other than money and financing, what 
does TSA need to do in order to bring the EDS system online?
    Mr. Hauptli. There aren't that many problems in this area 
that money can't solve, Mr. Costello.
    Mr. Costello. So it is money?
    Mr. Hauptli. It is mostly money, yes, sir, resources. 
Again, TSA has tried, but they are within the Department of 
Homeland Security. The Department of Homeland Security is 
within the Administration. The Office of Management and Budget 
has put its heavy boot on TSA and TSA hasn't figured out a way 
to lift that off. So the LOI process has been stifled and there 
are a lot of airports with very much pent-up demand for systems 
that we are just short of funding on.
    Mr. Costello. Mr. Wood, what is the cost of the AN6400 
field upgrade, and how much savings, in your opinion, would the 
TSA realize by utilizing these upgrades?
    Mr. Wood. We estimate the cost of the kit, Mr. Costello, at 
$150,000 and estimate the install cost at around $25,000. I 
think the answer to your second question is more difficult, 
because for instance, we were certified, as I mentioned, at 600 
bags per hour. The question is, can the airport's baggage 
handling system fully take advantage of this capacity, does 
this allow increase or are they maxed out for other reasons. 
And I think it will take some field testing to see what this 25 
percent in false alarm rate results in.
    I would say one of the key advantages is networking or 
multi-plexing. In other words, when an alarmed bag pops up in 
one EDS, that bag will be displayed in the next available 
screen. An if on-screen resolution is permitted, then it moves 
along its way. So I look forward to being able to answer that 
question more quantitatively.
    Mr. Costello. You mention in your testimony that 
contractual and other issues have resulted in delaying the 
AN6400 upgrade at John Wayne Airport. I wonder if you might 
elaborate on that.
    Mr. Wood. Yes, sir. As I mentioned, we have tested 
successfully in a standalone operation at the Southwest counter 
at the Phoenix Sky Harbor airport, but are looking forward to 
the TSA accelerating the implementation and the placement of a 
contract so that we can get four of the machines in a networked 
application, because well, as I mentioned, we were certified a 
year ago. We believe that, we expect no glitches, no bugs in 
the operational testing. We are ready to go. So as soon as the 
TSA is able to complete that testing, we believe the Government 
budget provides perhaps for 60 of these machines to be modified 
with a kit, and we understand that perhaps 150 to 200 are in 
in-line applications now and would greatly benefit from this 
upgrade.
    Mr. Costello. When do you expect Analogic's carry-on 
baggage real-time assessment, Cobra and King Cobra, to be 
certified?
    Mr. Wood. Next spring. We began this development on our own 
company's money. As a result of close collaboration with the 
TSA, we have modified it, the TSA is looking for new and 
additional threats, as you know. So we have made quite a number 
of changes. We have one of these devices at the laboratory as 
we speak. As I mentioned, we have screened 37,000 bags at 
Boston Logan Airport, and we would hope to pass the hurdle of 
formal certification testing early next year.
    Mr. Costello. Will the King Cobra fit behind the ticket 
counter like the Reveal CT-80?
    Mr. Wood. I believe it is somewhat bigger, three times the 
throughput rate. And so one of these machines would accommodate 
two or three of the existing x-ray machines, or the current 
version of the Reveal machine. So I would suggest, sir, that 
you could find a place to put it and have the same throughput 
rate without expanding the floor space requirements.
    Mr. Costello. Mr. Ripp, how many DX6000's are in existence 
right now, being used?
    Mr. Ripp. We have close to over 700 systems installed 
worldwide.
    Mr. Costello. And how many are used here in the United 
States?
    Mr. Ripp. About 625 are installed in the United States.
    Mr. Costello. Very good. Mr. Chairman, that is all the 
questions that I have at this time, thank you.
    Mr. Kuhl. Thank you, Mr. Costello.
    I don't want Mr. Ellenbogen to feel left out, so I will 
start with you. As you look back at your experience now, Mr. 
Ellenbogen, obviously you have had a little bit of trial and 
error through the process here of the implementation of this 
new kind of screening process, I am interested in what you 
think the Government should do differently in that experience 
that you had. How can we make this operation go smoother? I 
would just appreciate your thoughts.
    Mr. Ellenbogen. I would say the amount of time that it 
takes to go from submittal of a system into the certification 
and approval process, followed by actual certification into 
what they call FAT&E, which is first article acceptance, then 
into pilot, then into procurement. That cycle is long, to state 
it simply.
    So streamlining that process would certainly help every 
supplier at this table.
    Mr. Kuhl. Anything as it relates to you being a small 
business, in your operation, that we could do differently that 
would make it easier?
    Mr. Ellenbogen. Nothing in particular about being a smaller 
business. Reveal, we have been very pleased with the process we 
have gone through with TSA. In the last six months, we have 
deployed more than 60 machines. We are shipping at a rate of a 
dozen systems a month right now and they are going into the 
airports, they are being installed quickly and inexpensively, 
as advertised.
    And we believe that TSA has moved this process along very 
quickly. It is always too slow for a small company, but from a 
Government perspective, it has been lightning fast.
    Mr. Kuhl. I appreciate that.
    Mr. Ripp, let me just follow up. You had talked a little 
bit about refurbishment. I am interested from an economic 
standpoint what you see as cost savings, if you can give me 
some sort of an example, as we talk about taking some of the 
existing equipment out, refurbishing. What are we talking about 
as far as savings go, percentages if you have them, dollars if 
it is easier to explain it that way.
    Mr. Ripp. Sure. We have estimated if we take a system out 
of a standalone configuration, some of the ones that are in-
line are difficult to peel out of the conveyor belt systems in 
place. But the standalones can be brought back, we believe we 
can upgrade those, worst case, for about half the cost, which 
is about $450,000. Right now we sell a new system for $880,000. 
So we estimate about half the cost.
    It is a mechanical upgrade, and it a software upgrade. It 
is important to note that software upgrades are available to 
also increase detection capability and lower false alarm rates 
now, which we could include in equipment to reduce, again, 
screener content.
    It is our thought that that equipment could then be 
redeployed to the mid-size airports that where capacity 
requirements dictate the need for a machine that can do, in 
standalone configuration, let's say 350 bags per hour, or in an 
in-line configuration, to 650.
    I also want to note that there are smaller airports where 
they hook up and connect to a very simple baggage handling 
system where the cost is not the millions of dollars that we 
heard on the earlier panels, but maybe $500,000 to $1 million 
just to hook up, so that the system can be fed automatically.
    Mr. Kuhl. OK. Do you view essentially reselling the 
equipment, then, after you refurbish it, to another airport?
    Mr. Ripp. We would envision that the TSA would then 
redeploy this equipment to airports that are heavily dependent 
upon trace or want higher throughput EDS. We have not looked at 
the possibility of reselling the equipment off to another 
vendor.
    One of the advantages of TSA is, of course, we could offer 
extending the warranties. And as was mentioned earlier, I 
believe, by one of the members, using the assets that have 
already been purchased wisely and extending their useful life.
    Mr. Kuhl. Good, thank you.
    Mr. Cooke, a question, what do you think the biggest 
problem or hurdle is relative to the implementation of the new 
technologies?
    Mr. Cooke. You are thinking of in-line EDS in particular, 
Mr. Chairman?
    Mr. Kuhl. That is what I am thinking, yes.
    Mr. Cooke. I think frankly it is financing, it is 
leveraging the dollars we talked about earlier. I mean, 
clearly, the bottleneck is getting airports ready for the 
equipment and the economics are staggering. So there has to be 
a way, and I know there is a working group looking at it, and 
we are participating, getting ideas through our GE capital arm, 
at how to finance these in-line EDS installations.
    Mr. Kuhl. So it is the finance side of it? That was Mr. 
Hauptli's comment, that there is not enough money out there for 
people really to make the conversion or the introduction of the 
equipment.
    Mr. Cooke. I think the business case is compelling, as 
everybody has talked about. It is execution now from a finance 
point of view. And the appropriations dollars are just not 
there, so let's look at financing alternatives.
    Mr. Kuhl. Any thoughts, given your perspective, and maybe 
Mr. Hauptli, you would like to jump in as a comment to Mr. 
Costello about financing not being enough, you talked about the 
$250 million levels. Is $500 million enough, or is it going to 
take more than that?
    Mr. Hauptli. Sir, it is going to take more than that. 
Again, the Federal Government has contributed $2 billion to 
this problem that ranges, estimates range from it being 
anywhere between $4 billion and $10 billion. So would we like 
to get it in billion dollar chunks? You bet. But is half a 
billion dollars a year better than a quarter of a billion 
dollars? It is a start.
    Mr. Kuhl. I guess my question really kind of goes to, OK, 
what can you spend. We could appropriate, we do it every week, 
practically, another $10 billion here, or whatever, for 
whatever purpose it may be. But often times, when we 
appropriate money, it just can't go out the door fast enough. 
So I guess the question, what I am looking really for is what 
level is really a good level of anticipated ability to actually 
expend and acquire the equipment that is necessary to process? 
It is like a bridge, you can only build it so fast, or a 
building, you can only build it so fast. So you can only spend 
the money so fast.
    Mr. Hauptli. Mr. Kuhl, I would submit to you that the 
companies represented at this table would have no trouble 
whatsoever ramping up to spend a billion dollars a year, and we 
could get this done in 2 to 3 years, as opposed to the next 16 
years, which is the pace that we are currently on.
    Mr. Kuhl. OK. That is a great answer. That is what I was 
looking for.
    Mr. Wood, do you want to chip in on that one?
    Mr. Wood. Yes, sir, I would.
    Mr. Kuhl. Notice that play on words there?
    Mr. Wood. Yes, thank you, very good.
    [Laughter.]
    Mr. Wood. I will chip in. I would suggest that it is not 
necessarily new money being appropriated, but how the existing 
money is being spent. I believe that the Government peaked or 
began with 60,000 screeners shortly after 9/11, and it is now 
down to a little over 40,000 consuming, I believe, still close 
to half of the TSA's budget. I think you have heard from 
panelists here the prospect of greatly reducing that by 
automating the process, in the case of checkpoint, not looking 
at every single bag, sometimes with two screeners, but only the 
alarmed bags. So I think if you consider the life cycle costing 
concept, this equipment pays for itself in a very orderly 
basis.
    Mr. Kuhl. OK, good.
    Mr. Costello?
    Mr. Costello. No other questions, but I am sure the first 
panel would have preferred you to be in the chair instead of 
Mr. Mica.
    [Laughter.]
    Mr. Costello. Let me just thank the witnesses for being 
here today. Mr. Chairman, I have no further questions. I am 
sure that we will be revisiting this issue many times in the 
future.
    Thank you.
    Mr. Kuhl. And gentlemen, on behalf of the Chairman, let me 
thank you for your willingness to come and testify. Like Mr. 
Costello said, this issue is not totally completed at this 
point. There is a lot of issues and a lot of work to be done. 
We appreciate your willingness to help us make the right 
decisions.
    So thank you again for coming and your participation. This 
hearing is adjourned.
    [Whereupon, at 1:20 p.m., the subcommittee was adjourned.]



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