[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]






    EXAMINING TSA'S MANAGEMENT OF THE SCREENING PARTNERSHIP PROGRAM

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

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                        TRANSPORTATION SECURITY

                                 of the

                     COMMITTEE ON HOMELAND SECURITY
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 29, 2014

                               __________

                           Serial No. 113-81

                               __________

       Printed for the use of the Committee on Homeland Security
                                     

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                     COMMITTEE ON HOMELAND SECURITY

                   Michael T. McCaul, Texas, Chairman
Lamar Smith, Texas                   Bennie G. Thompson, Mississippi
Peter T. King, New York              Loretta Sanchez, California
Mike Rogers, Alabama                 Sheila Jackson Lee, Texas
Paul C. Broun, Georgia               Yvette D. Clarke, New York
Candice S. Miller, Michigan, Vice    Brian Higgins, New York
    Chair                            Cedric L. Richmond, Louisiana
Patrick Meehan, Pennsylvania         William R. Keating, Massachusetts
Jeff Duncan, South Carolina          Ron Barber, Arizona
Tom Marino, Pennsylvania             Dondald M. Payne, Jr., New Jersey
Jason Chaffetz, Utah                 Beto O'Rourke, Texas
Steven M. Palazzo, Mississippi       Filemon Vela, Texas
Lou Barletta, Pennsylvania           Eric Swalwell, California
Richard Hudson, North Carolina       Vacancy
Steve Daines, Montana                Vacancy
Susan W. Brooks, Indiana
Scott Perry, Pennsylvania
Mark Sanford, South Carolina
Curtis Clawson, Florida
                   Brendan P. Shields, Staff Director
                   Joan O'Hara,  Acting Chief Counsel
                    Michael S. Twinchek, Chief Clerk
                I. Lanier Avant, Minority Staff Director
                                 ------                                

                SUBCOMMITTEE ON TRANSPORTATION SECURITY

                Richard Hudson, North Carolina, Chairman
Mike Rogers, Alabama, Vice Chair     Cedric L. Richmond, Louisiana
Candice S. Miller, Michigan          Sheila Jackson Lee, Texas
Susan W. Brooks, Indiana             Eric Swalwell, California
Mark Sanford, South Carolina         Bennie G. Thompson, Mississippi 
Michael T. McCaul, Texas (ex             (ex officio)
    officio)
               Amanda Parikh, Subcommittee Staff Director
                    Dennis Terry, Subcommittee Clerk
         Brian Turbyfill, Minority Subcommittee Staff Director
         
         
         
         
         
         
         
         
         
         
         
         
         
                            C O N T E N T S

                              ----------                              
                                                                   Page

                               STATEMENTS

The Honorable Richard Hudson, a Representative in Congress From 
  the State of North Carolina, and Chairman, Subcommittee on 
  Transportation Security:
  Oral Statement.................................................     1
  Prepared Statement.............................................     2
The Honorable Cedric L. Richmond, a Representative in Congress 
  From the State of Louisiana, and Ranking Member, Subcommittee 
  on Transportation Security:
  Prepared Statement.............................................     5
The Honorable Bennie G. Thompson, a Representative in Congress 
  From the State of Mississippi, and Ranking Member, Committee on 
  Homeland Security:
  Prepared Statement.............................................     6

                               WITNESSES
                                Panel I

Ms. Cindi Martin, C.M., Airport Director, Glacier Park 
  International Airport:
  Oral Statement.................................................     6
  Prepared Statement.............................................     9
Mr. Mark VanLoh, A.A.E., Aviation Department, Kansas City 
  International Airport:
  Oral Statement.................................................    11
  Prepared Statement.............................................    13
Mr. Steve Amitay, Esq., Executive Director/General Counsel, 
  National Association of Security Companies:
  Oral Statement.................................................    15
  Prepared Statement.............................................    17
Mr. J. David Cox, Sr., National President, American Federation of 
  Government Employees:
  Oral Statement.................................................    30
  Prepared Statement.............................................    31

                                Panel II

Mr. William Benner, Screening Partnership Program, Office of 
  Security Operations, Transportation Security Administration, 
  U.S. Department of Homeland Security:
  Oral Statement.................................................    45
  Prepared Statement.............................................    46
Ms. Jennifer A. Grover, Acting Director, Homeland Security and 
  Justice, Government Accountability Office:
  Oral Statement.................................................    48
  Prepared Statement.............................................    49

                             FOR THE RECORD

The Honorable Sheila Jackson Lee, a Representative in Congress 
  From the State of Texas:
  Statement of John L. Martin, Airport Director, San Francisco 
    International Airport........................................    62
  Statement of Valarie Long, Executive Vice President, Service 
    Employees International Union (SEIU).........................    63

 
    EXAMINING TSA'S MANAGEMENT OF THE SCREENING PARTNERSHIP PROGRAM

                              ----------                              


                         Tuesday, July 29, 2014

             U.S. House of Representatives,
           Subcommittee on Transportation Security,
                            Committee on Homeland Security,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:30 a.m., in 
Room 311, Cannon House Office Building, Hon. Richard Hudson 
[Chairman of the subcommittee] presiding.
    Present: Representatives Hudson, Rogers, Miller, Brooks, 
Sanford, McCaul, Jackson Lee, Thompson, and Swalwell.
    Also present: Representative Daines.
    Mr. Hudson. The Committee on Homeland Security, 
Subcommittee on Transportation Security, will come to order.
    The subcommittee is meeting today to hear testimony on 
TSA's management of the Screening Partnership Program. I 
recognize myself for an opening statement.
    I would like to thank our witnesses for their participation 
in this hearing. We know your time is valuable, and we 
appreciate you taking the time to be here with us today.
    The long-term success of TSA's Screening Partnership 
Program is a priority for many Members of Congress and 
stakeholders around the country who understand the private 
sector is highly capable of providing efficient and effective 
screening services.
    Unfortunately, TSA's actions over the last few years seem 
to demonstrate that it does not share this goal. This hearing 
is an opportunity to examine the problems and current--that 
currently exist with the program and encourage TSA to take 
steps to enable more airports to choose private-sector 
screening.
    To be clear, this does not mean airports that participate 
in SPP are opting out of robust Federal oversight and 
regulations, which were severely lacking before 9/11. It means 
opting to use qualified private vendors to carry out day-to-day 
screening functions, which lets TSA concentrate on setting and 
enforcing security standards.
    Eighteen domestic airports currently participate in SPP. 
The law requires that contract screeners meet the same 
qualifications and receive commensurate pay and benefits to 
their Federal counterparts. SPP is a voluntary program, and 
airports must apply to participate.
    Under the FAA Modernization and Reform Act of 2012, unless 
an airport's participation in SPP would hurt security or drive 
up costs, TSA must approve all new applications. This 2012 
provision revived an otherwise lifeless SPP application process 
after the TSA administrator announced he would not expand the 
program unless there was a clear and substantive advantage to 
do so.
    While I have great respect for Administrator Pistole, as 
far as I am concerned, there will always be at least three 
clear and substantial advantages to privatized screening.
    No. 1, the private sector operates more efficiently than 
the Federal Government and can save precious taxpayer dollars.
    No. 2, the private sector provides better consumer service, 
which is severely lacking in many of our Nation's screening 
checkpoints.
    No. 3, while private screening--or with the private 
screening, TSA can stop dealing with the time-consuming human 
resources issues that come with managing a workforce of over 
50,000 screeners.
    This is not to imply that TSA has not made progress over 
the last few years. Under Mr. Pistole's leadership, TSA is 
becoming more risk-based and efficient through programs like 
TSA PreCheck. However, PreCheck operates just as well at SPP 
airports, including San Francisco International Airport, one of 
the largest and busiest airports in the country.
    There is no reason why SPP cannot be expanded to create 
even greater efficiencies under a risk-based system. In order 
to move forward with additional SPP airports in a constructive 
manner, several concerns need to be addressed in the near term.
    First, TSA has established a methodology for calculating 
Federal cost estimates for each new SPP contract based on 
requirements in the FAA Modernization Act, but that methodology 
does not include Federal retirement benefits, which we know to 
be a huge cost burden.
    TSA is also using the average screener's salary for its 
FCEs, but is allowing vendors to bid the minimum screener 
salaries, which may be unsustainable and cause significant 
issues in the long term.
    Second, TSA's Screening Partnership Program office does not 
conduct the level of outreach to airport operators as it 
should. To that end, TSA must make immediate changes that would 
include educating new airports on the benefits of SPP, 
communicating early and often with airports that are 
transitioning to SPP, and consulting the airport directors at 
existing SPP airports when selecting vendors for initial awards 
and contract recompetes.
    These are simple, but crucial, changes, and the only 
barrier to action is TSA's well-known resistance to expanding 
SPP. I look forward to discussing these and many other issues 
with our witnesses today to ensure the program is working and 
prepared to expand to additional airports.
    [The statement of Chairman Hudson follows:]
                  Statement of Chairman Richard Hudson
                             July 29, 2014
    I would like to thank our witnesses for their participation in this 
hearing. We know your time is valuable and we appreciate you taking the 
time to be here today.
    The long-term success of TSA's Screening Partnership Program (SPP) 
is a priority for many Members of Congress and stakeholders around the 
country who understand the private sector is highly capable of 
providing efficient and effective screening services. Unfortunately, 
TSA's actions over the last few years seem to demonstrate that it does 
not share this goal. This hearing is an opportunity to examine the 
problems that currently exist within the program and encourage TSA to 
take steps to enable more airports to choose private-sector screening.
    To be clear, this does not mean airports that participate in SPP 
are opting-out of robust Federal oversight and regulations, which were 
severely lacking before 
9/11. It means opting to use qualified private vendors to carry out 
day-to-day screening functions, which lets TSA concentrate on setting 
and enforcing security standards.
    Eighteen domestic airports currently participate in SPP. The law 
requires that contract screeners meet the same qualifications and 
receive commensurate pay and benefits to their Federal counterparts. 
SPP is a voluntary program, and airports must apply to participate. 
Under the FAA Modernization and Reform Act of 20l2, unless an airport's 
participation in SPP would hurt security or drive up costs, TSA must 
approve all new applications.
    This 2012 provision revived an otherwise lifeless SPP application 
process after the TSA administrator announced he would not expand the 
program unless there was a clear and substantial advantage to do so.
    While I have great respect for Administrator Pistole, as far as I 
am concerned, there will always be at least three clear and substantial 
advantages to privatized screening:
    1. The private sector operates more efficiently than the Federal 
Government and can save precious taxpayer dollars,
    2. The private sector provides better customer service, which is 
severely lacking at many of our Nation's screening checkpoints, and
    3. With private screening, TSA can stop dealing with the time-
consuming human resources issues that come with managing a workforce of 
over 50,000 screeners.
    This is not to imply that TSA has not made any progress over the 
last few years. Under Mr. Pistole's leadership, TSA is becoming more 
risk-based and efficient through programs like TSA PreCheck. However, 
PreCheck operates just as well at SPP airports, including San Francisco 
International Airport, one of the largest and busiest airports in the 
country. There is no reason why SPP cannot be expanded to create even 
greater efficiencies under a risk-based system.
    In order to move forward with additional SPP airports in a 
constructive manner, several concerns needs to be addressed in the near 
term:
    First, TSA has established a methodology for calculating Federal 
Cost Estimates (FCEs) for each new SPP contract based on requirements 
in the FAA Modernization Act, but that methodology does not include 
Federal retirement benefits, which we know to be a huge cost burden. 
TSA is also using the average screener salary for its FCEs, but is 
allowing vendors to bid the minimum screener salaries, which may be 
unsustainable and cause significant issues in the long term.
    Second, TSA's Screening Partnership Program Office does not conduct 
the level of outreach to airport operators that it should. To that end, 
TSA must make immediate changes that include:
   Educating new airports on the benefits of SPP;
   Communicating early and often with airports that are 
        transitioning to SPP;
   Consulting airport directors at existing SPP airports when 
        selecting vendors for initial awards and contract re-competes.
    These are simple but crucial changes, and the only barrier to 
action is TSA's well-known resistance to expanding SPP. I look forward 
to discussing these and many other issues with our witnesses today to 
ensure the program is working and prepared to expand to additional 
airports.

    Mr. Hudson. At this point I would ask unanimous consent 
that Mr. Daines, the gentleman from Montana, be permitted to 
participate in today's hearing. Without objection, so ordered.
    Our Ranking Member, the gentleman from Louisiana, Mr. 
Richmond, is on his way, and I will recognize him for his 
statement when he arrives.
    In the mean time, I would first like to yield to the 
gentleman from Montana, Mr. Daines, to introduce our first 
witness today.
    Mr. Daines. Thank you, Mr. Chairman. Thank you for hosting 
this important hearing this morning. It is with great pleasure 
that I get to sit in on this hearing and introduce a fellow 
Montanan.
    Cindi Martin is the director of Glacier Park International 
Airport. With nearly 30 years of experience in aviation, she 
has been a tremendous resource to my office on everything from 
air traffic control towers to the TSA and scanners. She has a 
proven record of success that the airport operations at Glacier 
have steadily increased over the past several years.
    Located 6 miles northeast of Kalispell, Montana, Glacier 
Park International Airport is an important part of the aviation 
industry that supports 19,000 jobs and creates more than $1.5 
billion of economic growth in Montana.
    Cindi has a bachelor's degree of science in professional 
aeronautics in airport management from Embry-Riddle 
Aeronautical University. Before becoming the airport director 
in one of the most beautiful areas of the world--and I kid you 
not. If you have not been to the Flathead and been up there 
where Cindi manages her operation, it is indeed one of the most 
beautiful places in America.
    Prior to being the airport director in Montana, she managed 
airports in Wyoming, Florida, California, and Washington, DC, 
metro areas. Let's just say she has seen a lot of different 
operations.
    We are really grateful to have you in Montana and here at 
this hearing this morning, Cindi.
    Thank you.
    Mr. Hudson. Thank you, Mr. Daines.
    To continue introducing our distinguished panel today, Mr. 
Mark VanLoh is the director of aviation for the Kansas City 
Aviation Department. As director, Mr. VanLoh oversees all 
aspects of the management, development, operation, and 
maintenance of Kansas City International Airport.
    Prior to his tenure in Kansas City, Mr. VanLoh served in 
leadership positions at other airports, including president and 
CEO of the Chattanooga Metropolitan Airport Authority and 
commissioner of airports for Cleveland Hopkins International 
Airport and Burke Lakefront Airport in Cleveland, Ohio.
    Mr. Steve Amitay is executive director and general counsel 
for the National Association of Security Companies, NASCO, the 
Nation's largest contract security association. Mr. Amitay is 
also the president of Amitay Consulting, a government affairs 
firm in Washington, DC.
    Since 2006, Mr. Amitay has led NASCO's efforts in working 
with Congress, Federal agencies, and the GAO on programs, 
legislation, and issues related to private security, in 
general, and, specifically, the use of private security by the 
Federal Government.
    Mr. J. David Cox is the national president of the American 
Federation of Government Employees, a position he was elected 
to in 2012. AFGE is the largest Federal employee union, 
representing 650,000 Federal and D.C. Government workers 
Nation-wide and overseas.
    AFGE provides its members with legal representation, 
legislative advocacy, technical expertise, and informational 
services. He also has ties to my home State in North Carolina.
    So I appreciate all of you being here.
    The witnesses' full written statements will appear in the 
record.
    Other Members are reminded that statements may be submitted 
for the record.
    [The statements of Ranking Member Richmond and Ranking 
Member Thompson follow:]
             Statement of Ranking Member Cedric L. Richmond
                             July 29, 2014
    Thank you, Mr. Chairman.
    Thank you for convening this hearing.
    Today, we will have an opportunity to hear from both private-sector 
and Government witnesses about the Transportation Security 
Administration's Screening Partnership Program.
    Regardless of our personal convictions about whether passenger and 
baggage screening should be conducted by Federal or contract screeners, 
we all have an interest in ensuring that TSA is operating the program 
efficiently and in accordance with the law.
    According to TSA, the agency has approved all applications from 
airports opting to participate in the Screening Partnership Program 
since changes to the controlling law were enacted in 2012.
    While I understand and appreciate concerns about how long it has 
taken TSA to solicit and award contracts for screening services 
following the initial approval of applications, my concern about this 
program is primarily focused on how the existing workforce is impacted.
    Transportation Security Officers serve on the front lines of our 
fight to protect our aviation sector.
    Through no fault of their own, they are subject to being left 
without a job or being forced to take a pay cut and lose benefits when 
an airport decides to opt out of using Federal screeners. TSA's 
decision to ignore the Department of Labor's determination that 
prevailing wage requirements should apply to all SPP contracts only 
compounds this problem.
    I would humbly submit that TSA should stick to security policy and 
allow the Department of Labor to interpret the applicability of labor 
laws to Federal contracts.
    By defying the Department of Labor on this issue, TSA is 
encouraging a race to the bottom as it relates to wages for screeners 
across the country.
    This applies to both Federal screeners who work at airports that 
may opt to participate in the SPP and those with contract screeners 
already in place.
    As contracts for screening services expire and new contracts are 
bid on, companies with existing contracts will be at a distinct 
disadvantage in submitting a competitive bid as it relates to cost.
    I am hopeful that someone in the administration will step in, do 
the right thing, and require TSA to include prevailing wage 
requirements in SPP contracts.
    Failing to do so will result in a return to the pre-9/11 system 
where screeners were compensated at the bare minimum rate, fostering 
rapid workforce turnover and an abundance of inexperienced screeners on 
the front lines.
    Protecting our aviation system should be a career option, not a 
part-time, low-paying job.
    I look forward to hearing from each of the witnesses before the 
subcommittee today about their views on TSA's management of the 
Screening Partnership Program.
    Specifically, I am eager to hear the perspective of the front-line 
workforce from AFGE national president Cox.
    As the exclusive representative for Transportation Security 
Officers, AFGE is uniquely positioned to understand the strains placed 
on the workforce when an airport opts to transition to contract 
screeners.
    I am also looking forward to hearing from Ms. Grover about how TSA 
has implemented the Government Accountability Office's recommendations 
for improvements to the program.
    Before yielding back, Mr. Chairman, I ask unanimous consent that 
testimony provided to the committee by John L. Martin, airport director 
of San Francisco International Airport, calling for TSA to comply with 
the Service Contract Act (SCA) and honor the current collectively-
bargained rates of wages and benefits for its employees, be entered 
into the record.
    Additionally, I ask unanimous consent to enter into the record 
testimony provided to the committee from Valarie Long, executive vice 
president of the Service Employees International Union, which expresses 
serious concern about the failure of TSA to comply with the Department 
of Labor decision regarding the Service Contract Act and points to the 
fundamental problems to public security that arise when employees--
whether Federal or contracted--are not adequately trained and 
compensated.
    Thank you, Mr. Chairman. I yield back the balance of my time.
                                 ______
                                 
             Statement of Ranking Member Bennie G. Thompson
                             July 29, 2014
    Thank you, Mr. Chairman.
    And thank you for holding this hearing today.
    I would also like to thank the witnesses for appearing before the 
subcommittee to discuss the Transportation Security Administration's 
Screening Partnership Program. The program at issue today, which 
affords airports the opportunity to return to the pre-9/11 model of 
using contract employees to screen passengers and baggage at our 
Nation's airports, tends to evoke strong passion on both sides of the 
aisle.
    After 9/11 it was clear to the vast majority of Members of Congress 
and the Bush administration that transitioning to a Federal screener 
workforce was the right thing to do for the security of our Nation.
    And, it worked. There has not been a successful attack against our 
aviation system on U.S. soil since 9/11. Despite that fact, Republican 
calls for returning to a contract screener workforce have increased in 
recent years.
    Indeed, in 2012, the platform adopted during the Republican 
National Convention called for the private sector to take over airport 
screening wherever feasible. Some on the other side of the aisle claim 
that transitioning to a contract workforce results in more efficient 
and friendlier screeners.
    This claim simply does not stand up to scrutiny. What actually 
happens when an airport chooses to use contract screeners is that the 
very same Transportation Security Officers working at the airport are 
recruited by the private screening company that is awarded the 
contract.
    One day they are Federal employees with the associated benefits and 
employment protections and the next they are employees of a 
corporation, likely headquartered in a far-away State, without the 
security of a Federal pension in later years. How that could make the 
screeners more effective, efficient, or friendly is beyond 
comprehension.
    I look forward to hearing what national president Cox has to say 
about Transportation Security Officers that have recently been 
recruited by the company that has been awarded the contract to conduct 
screening services at four airports in Montana. I also look forward to 
hearing from Mr. Cox about the strain placed on screeners when they are 
informed that the airport they work at will be transitioning to a 
contract screener workforce.
    In 2012, the Government Accountability Office issued a report 
highlighting deficiencies in TSA's management of the Screening 
Partnership Program. I look forward to hearing from Ms. Grover on the 
steps TSA has taken to improve the management of the program and 
implement GAO's recommendations. Specifically, I will be interested in 
understanding whether TSA is providing airports that inquire about the 
program the information they need to make an informed decision about 
whether and how to apply to the program.
    As for Mr. Benner, I am deeply concerned with TSA's recent decision 
to rebuke the Department of Labor and insist that the agency will not 
include prevailing wage requirements in SPP contracts. The Department 
of Labor directed TSA to include prevailing wage requirements in SPP 
contracts in June of 2013. I will be interested in hearing from Mr. 
Benner about why it took TSA over a year to respond to the Department 
of Labor and why the agency continues to ignore the directive.
    Finally, I would like to point out that many of the changes made to 
the law controlling for entry into the Screening Partnership Program in 
the FAA Modernization and Reform Act of 2012 were ill-informed and 
should be repealed. Chief among those is the provision allowing for 
subsidiaries of foreign-owned corporations to compete for and be 
awarded contracts for screening services.
    Earlier this Congress, I, along with Ranking Members Richmond and 
Lowey introduced the Contract Screener Reform and Accountability Act 
which would reinstate the law stipulating that a company could only get 
a contract for screening services if it was owned and controlled by a 
U.S. citizen.
    With that Mr. Chairman, I yield back the balance of my time.

    Mr. Hudson. The Chairman now recognizes Ms. Martin to 
testify.

STATEMENT OF CINDI MARTIN, C.M., AIRPORT DIRECTOR, GLACIER PARK 
                     INTERNATIONAL AIRPORT

    Ms. Martin. Chairman Hudson, Mr. Daines, thank you very 
much for the opportunity to share with the committee the 
Flathead Municipal Airport Authority's experience with the TSA 
Screening Partnership application and transition process.
    The Authority owns and operates Glacier Park International 
Airport, a Category 3 non-hub/GA airport located in northwest 
Montana, 20 minutes from Glacier National Park. The airport is 
one of 13 commercial service airports in Montana.
    Currently there are five airports in eastern Montana with 
essential air service that participate in the Screening 
Partnership Program. To date, five additional Montana 
commercial service airports have applied to the Screening 
Partnership Program.
    It is not a coincidence that most of the commercial service 
airports in Montana have applied to the program. In September 
and October 2007, TSA senior management came to Montana and 
made personal visits to every commercial service airport in the 
State to promote the Screening Partnership Program.
    TSA management encouraged each airport to apply to the 
program, citing the agency's desire to be relieved of the 
transportation security officer human resources burden so that 
the agency could concentrate on regulatory compliance and 
oversight.
    TSA's strong encouragement to apply to the program 
dovetailed with the Airport Authority's serious concerns about 
TSA's staffing levels and customer service at Glacier Park 
International Airport.
    Prior to the decision to apply to the program, the 
airport's TSA staffing members had been reduced every year, 
despite increasing passenger traffic. In the winter of 2007, 
airport management was informed that the then-current staffing 
level was again being reduced, this time by nearly half, from 
30 to 17.
    Additionally, airport management consistently received 
complaints from the flying public about poor customer service 
from TSOs and long wait times, and our incumbent air carriers 
regularly complained about flight delays caused by slow TSA 
baggage and passenger screening.
    In the summer of 2007, the Airport Authority invested in an 
expansion of the airport security checkpoint with the 
expectation that some of the passenger screening efficiencies 
would be realized, but these benefits did not materialize. 
Numerous appeals by the Airport Authority to TSA headquarters 
about staffing and customer service issues went unanswered.
    Finally, in March 2008, after engaging Montana's 
Congressional representatives, TSA headquarters informed the 
airport that screener staffing at the airport was based on 
specific data fed into the agency's staffing allocation model 
based on October official airline guide data.
    Although the airport receives year-round air service, we 
experience a large seasonal spike in passenger traffic from 
June through September. Passenger traffic from October through 
May is significantly reduced. So using October OAG flight 
schedules to plan for staffing at this airport is not 
appropriate for determining staffing levels that include the 
peak summer season.
    Given these frustrating communications with TSA 
headquarters, continued staffing problems and customer service 
complaint issues, the Airport Authority began exploring the SPP 
option in earnest.
    Following considerable due diligence, the Airport Authority 
became convinced that a private screening contractor could 
better serve the flying public and our air carrier partners' 
needs far better than TSA workforce could or would.
    In October 2009, the Authority submitted its application to 
participate in the Screening Partnership Program in accordance 
with the standards in effect at the time, and then we waited.
    On October 28, 2011, TSA leadership announced that TSA 
would not expand the Screening Partnership Program because it 
did not see a clear or substantial advantage to expanding the 
program and that the pending applications from five airports 
were denied.
    Thus, without visiting, consulting, or communicating with 
the Airport Authority or providing any substantive 
justification for its decision, TSA summarily sent the Airport 
Authority a letter denying our application.
    Numerous appeals by the Airport Authority to TSA 
headquarters and leadership inquiring about the new standard 
and the metrics used to justify the denial of our application 
went unanswered.
    In the spring of 2012, TSA announced that there was a new 
application and process for applying to the program. I 
personally was contacted by the SPP office and encouraged to 
submit a new application.
    The instructions to TSA's new application form state that, 
``Given the level of participation in the current program, and 
in order to maximize TSA's effectiveness as a Federal 
counterterrorism security agency, TSA is not inclined at this 
time to expand the Screening Partnership Program unless there 
are clear and substantial advantages to do so.''
    The instructions go on to state that, ``Therefore, your 
application must explain how private screening at your airport 
will provide those clear and substantial advantages, while 
maintaining our high standards and meeting the threats of today 
and the future.''
    Despite the fact that the airport never received an answer 
as to the substantive--the specific substantive reasons the 
first application was denied or even the substantive criteria 
against which the new application would be measured, we applied 
again on April 6, 2012.
    At approximately the same time, three other airport--
Montana airports--reapplied to the Screening Partnership 
Program: Bozeman, Butte, and West Yellowstone. Missoula 
International Airport, whose application had been denied in 
January 2011, did not reapply.
    In October 2012, the four Montana airports were informed 
that a request for proposal for SPP services at our airports 
was being issued. The RFP was released on October 23, 2012, 
with responses due on November 26, 2012.
    In mid-January 2013, the Montana airports were informed 
that the contract was being--award was being pushed back to 
late February 2013. Initial indication of a contract award was 
made by TSA to the four Montana airports in March 2013 and 
then, without warning or explanation or--the solicitation was 
canceled on April 17, 2013. There was no official reason 
offered by TSA for the cancellation, nor were we given any time 
line for the reissuance of an RFP.
    On August 30, 2013, the four Montana airports were notified 
that a second RFP for SPP services were being issued and that 
responses were due by September 30, 2013. On November 13, 2013, 
we were informed via email that the response date had been 
pushed back to November 19, 2013.
    Finally, on May 30, 2014, the four Montana airports that 
had applied to SPP program were notified that an SPP contract 
had been awarded effective June 1, 2014, and that the 
transition to SPP contractor would occur within 90 days, that 
is, by August 29, 2014, 4 years and 10 months after our first 
application to the program.
    Within days of the official notification of the award, the 
SPP contractor was on site at our airport. While the transition 
period has not been without a few hiccups, we are seeing light 
at the end of what has been a very long tunnel.
    The Authority's decision to apply for SPP was not made 
lightly. It was made in the best interest of the flying public, 
our air carrier partners, and the community. Despite the 
frustrating length of time through the fits and starts of this 
process and the lack of communication from TSA, we would do it 
all again.
    We believe in the Screening Partnership Program and firmly 
believe that SPP is the right choice for Glacier Park 
International Airport.
    That concludes my prepared statement, Mr. Chairman. I would 
be happy to answer any questions.
    [The prepared statement of Ms. Martin follows:]
                   Prepared Statement of Cindi Martin
    Chairman Hudson, Ranking Member Richmond, and Members of the 
subcommittee: Thank you for the opportunity to share with the committee 
the Flathead Municipal Airport Authority's experience with the TSA 
Screening Partnership Program (SPP) application and transition process. 
The Authority owns and operates Glacier Park International Airport, a 
Category 3, non-hub/GA airport located in Northwest Montana--20 minutes 
from Glacier National Park.
    The airport is one of 13 commercial service airports in Montana. 
Currently there are 5 airports in eastern Montana with essential air 
service (EAS) that participate in the Screening Partnership Program 
(SPP) and to-date 5 additional Montana commercial service airports have 
applied to the Screening Partnership Program (SPP).
    It is not a coincidence that most of the commercial service 
airports in Montana have applied to the program.
    In September and October of 2007, TSA senior management came to 
Montana and made personal visits to every commercial service airport in 
the State to promote the Screening Partnership Program. TSA management 
encouraged each airport to apply to the Program, citing the agency's 
desire to be relieved of the Transportation Security Officer (TSO) 
human resources burden so that the agency could concentrate on 
regulatory compliance and oversight.
    TSA's strong encouragement to apply to the program dovetailed with 
the Airport Authority's serious concerns about TSA staffing levels and 
customer service at Glacier Park International Airport.
    Prior to the decision to apply to the program, the airport's TSA 
staffing numbers had been reduced every year, despite increasing 
passenger traffic. And, in the winter of 2007, airport management was 
informed that the then-current staffing level was again being reduced, 
this time by nearly half--from 30 to 17. Additionally, airport 
management consistently received complaints from the flying public 
about poor customer service from TSOs and long wait times, and 
incumbent air carriers regularly complained about flight delays caused 
by slow TSA baggage and passenger screening.
    In the summer of 2007, the Airport Authority invested in an 
expansion of the airport's security checkpoint with the expectation 
that some passenger screening efficiencies would be realized, but these 
benefits did not materialize.
    Numerous appeals by the Airport Authority to TSA headquarters about 
staffing and customer service issues went unanswered. Finally in March 
2008, after engaging Montana's Congressional representatives, TSA 
headquarters informed the airport that screener staffing at the airport 
was based upon specific data fed into the agency's Staffing Allocation 
Model (SAM) based on October Official Airline Guide (OAG) data.
    Although the airport receives year-round air carrier service, we 
experience a large seasonal spike in passenger traffic from June 
through September. Passenger traffic from October through May is 
significantly reduced, and so using October OAG flight schedules to 
plan for staffing at this airport is not appropriate for determining 
staffing levels that include the peak summer season.
    Given these frustrating communications with TSA headquarters, 
continued staffing problems, and customer complaint issues, the Airport 
Authority began exploring the SPP option in earnest. Following 
considerable due diligence, the Airport Authority became convinced that 
a private screening contractor could better serve the flying public and 
our air carrier partners' needs far better than the TSA workforce could 
or would.
                    the authority's spp application
    In October 2009, the Authority submitted its application to 
participate in the Screening Partnership Program in accordance with the 
standards in effect at the time.
    And then we waited.
    On January 28, 2011, TSA leadership announced that TSA would not 
expand the Screening Partnership Program, because it did not see a 
clear or substantial advantage to expanding the program, and that the 
pending applications from 5 airports were denied. Thus, without 
visiting, consulting, or communicating with the Airport Authority, or 
providing any substantive justification for its decision, TSA summarily 
sent the Airport Authority a letter denying our application.
    Numerous appeals by the Airport Authority to TSA headquarters and 
leadership inquiring about the new standard and the metrics used to 
justify the denial of our application went unanswered.
    In the spring of 2012, TSA announced that there was a new 
application and process for applying to the program. I was contacted by 
the SPP office and encouraged to submit a new application.
    The instructions to TSA's new application form state that ``Given 
the level of participation in the current program, and in order to 
maximize TSA's effectiveness as a Federal counterterrorism security 
agency, TSA is not inclined at this time to expand the Screening 
Partnership Program unless there are clear and substantial advantages 
to do so.'' The instructions go on to state that ``Therefore, your 
application must explain how private screening at your airport will 
provide those clear and substantial advantages, while maintaining our 
high standards and meeting the threats of today and the future.''
    Despite the fact that the airport never received an answer as to 
the specific substantive reasons its first application was denied--or 
even the substantive criteria against which the new application would 
be measured--we applied again, on April 6, 2012. At approximately the 
same time, three other Montana airports re-applied to the Screening 
Partnership Program--Bozeman, Butte, and West Yellowstone. The Missoula 
International Airport, whose application had been denied in January 
2011, did not reapply.
    In October 2012, the four Montana airports were informed that a 
Request for Proposal (RFP) for SPP services at our airports was being 
issued. The RFP was released on October 23, 2012, with responses due on 
November 26, 2012.
    In mid-January 2013 the Montana airports were informed that the 
contract award was being pushed back to late February 2013.
    Initial indication of a contract award was made by TSA to the four 
Montana airports in March 2013. And, then without warning or 
explanation, the solicitation was canceled on April 17, 2013.
    There was no official reason offered by TSA for the cancelation, 
nor were we given a time line for the reissuance of an RFP.
    On August 30, 2013 the four Montana airports were notified that a 
second RFP for SPP services had been issued and that responses were due 
by September 30, 2013.
    On November 13, 2013 we were informed, via email, that the response 
due date had been pushed back to November 19, 2013.
    And, finally, on May 30, 2014, the four Montana airports that had 
applied to the SPP program were notified that an SPP contract had been 
awarded effective June 1, 2014, and, that the transition to the SPP 
contractor would occur within 90 days--that is, by August 29, 2014.
    Four years and 10 months after our first application to the 
program.
    Within days of the official notification of the award, the SPP 
contractor was on-site at our airport. And while the transition period 
has not been without a few hiccups, we are seeing light at the end of 
what has been a very long tunnel.
    The Authority's decision to apply for SPP was not made lightly--it 
was made in the best interest of the flying public, our air carrier 
partners and the community. And, despite the frustrating length of time 
through the fits and starts of the process and the lack of 
communication from TSA, we would do it all again. We believe in the 
Screening Partnership Program, and firmly believe that SPP is right for 
Glacier Park International Airport.
    That concludes my prepared statement, Mr. Chairman. I would be 
happy to answer any questions you or the other subcommittee Members may 
have.

    Mr. Hudson. Thank you, Ms. Martin.
    The Chairman recognizes Mr. VanLoh to testify.

STATEMENT OF MARK VAN LOH, A.A.E., AVIATION DEPARTMENT, KANSAS 
                   CITY INTERNATIONAL AIRPORT

    Mr. VanLoh. Good morning, Mr. Chairman, and Members of the 
Transportation Security Committee.
    My name is Mark VanLoh. I am the director of aviation for 
the city of Kansas City, Missouri. Thank you for inviting me to 
appear today before you.
    First I would like to describe Kansas City International 
Airport. It is one of the country's major medium hubs and 
serves approximately 10 million annual passengers. Though it 
was designed in the late 1960s, it has three separate semi-
circular passenger terminals that are not connected.
    The lack of a central concourse also creates the need for 
multiple security screening locations and does not allow a 
central screening checkpoint that is common with most modern 
airports. Several hundred screeners at several checkpoints are 
employed to perform passenger screening in Kansas City.
    My testimony today addresses the Screening Partnership 
Program based upon Kansas City's nearly 12 years of experience 
in this program. Kansas City was selected by TSA in 2002 under 
the pilot program, along with San Francisco, Rochester, Tupelo, 
and Jackson Hole. It is a partnership that has worked extremely 
well in Kansas City.
    I have been an airport operator for 30 years and, in my 
view, the Screening Partnership Program has provided a level of 
screening services and security protection at least as good as 
and, we think, better than that TSA would have provided using 
Federal personnel, and it has done so with operational 
efficiency and high levels of customer satisfaction.
    My counterparts at other airports are often envious of our 
service record and security, and I am always happy to brag 
about it.
    Often I am asked by the flying public what exactly does an 
airport director do and what does my typical day consist of. It 
is not spent on security, it is not spent on safety, and it is 
not spent negotiating with airlines.
    It is dealing with 500 employees and their personnel 
issues, performance reviews, labor relations, grievance 
hearings, disciplinary actions, family medical leave, random 
drug screening reviews, and other personnel issues. I can't 
imagine, with over 50,000 employees, what kind of time TSA 
spends on these issues.
    In my opinion, the majority of these efforts by TSA should 
be focused on intelligence gathering to reduce the threat 
against aviation and then issuing policy and procedures to 
protect our industry, not on personnel issues.
    At Kansas City, the SPP provider handles all of the 
personnel issues, leaving TSA to oversee security. The operator 
and overseer are different entities. This results in built-in 
accountability and allows each to do what they can and should 
do best.
    The advantage of the SPP program can be summarized as 
follows. Enhanced flexibility and efficiencies in personnel use 
and deployment. Greater flexibility to respond to increased or 
decreased service requirements at the checkpoints. Greater 
flexibility to cross-train and cross-utilize employees not 
subject to the Federal employee hiring freeze and employment 
caps.
    As an aside, during the recent sequestration, while other 
airports with Federal staff were subject to Federal 
regulations, we in Kansas City operated normally with no 
disruptions.
    More effective in dealing with non-performers. This may 
sound a bit harsh and insensitive, but we all know that the job 
requires an inordinate amount of attention and personnel 
skills. Occasionally, an employee may be hired that shouldn't 
be in that position.
    We can all tell the screeners at airports that enjoy their 
job and they are good at it. The SPP provider is able to make 
changes with minimal disruption to the mission. A high degree 
of customer service awareness is critical. We all want our 
passengers to enjoy their time in our airports.
    The private screening company has greater flexibility than 
the Federal Government to redeploy screeners on short notice, 
to reschedule screener shifts to and from off-hours, and to add 
or delete security checkpoints on short notice.
    It has been great from the beginning in Kansas City, but 
lately it has caused me great concern, given the issues with 
the rebidding of our contract.
    We are now almost 4 years outside the expiration of the 
recent contract in Kansas City. Even though the uncertainty of 
not knowing if they will have a job after each holiday season, 
our screeners have maintained a high level of service and 
dedication.
    It is my understanding that this solicitation is now in a 
Court of Federal Claims court for the third time. The low 
bidder selected by TSA included across-the-board pay cuts, as 
well as cuts in hours, to all of our screeners now working in 
Kansas City.
    Meanwhile, TSA recently announced pay raises for Federal 
screeners at other airports, but then selected this low bidder 
in Kansas City based on this treatment of our existing 
workforce.
    Even with the contract award issues, I firmly believe the 
program has worked well in Kansas City. There are a number of 
areas in which I think the program could be improved. Mr. 
Chairman, you mentioned a few of them.
    TSA needs to be more flexible in its supervision of private 
screening companies as to better foster improvements in 
innovation. TSA should set minimum levels of security 
standards, but give the private screeners the flexibility to 
provide the screening in new and different and innovative and 
creative ways.
    However, as we understand it, TSA requires Federal and 
private screeners to operate under the same procedures, 
including centralization procedures for hiring and assessments 
and coordination through their headquarters. I do not believe 
the law requires a one-size-fits-all approach.
    Second, the TSA should develop staffing resources based on 
the operational requirements of each airport and not 
arbitrarily system-wide based on staffing caps. Such an 
approach would be more effective to account for the unique 
requirements of each airport, including part-time and efficient 
full-time screeners.
    Again, one size doesn't fit all. For example, staffing 
requirements at Kansas City International, which does not have 
a single security checkpoint location, will be markedly 
different than other requirements for other airports.
    Third, there needs to be greater coordination with the 
airport operator. More can be done to get the operator's input 
in the operational procedures, staffing, and other critical 
activities.
    For example, in TSA's contested contract award that I 
mentioned above, TSA recently chose to replace Kansas City's 
long-time private screening company through the bid process, 
yet, never asked us our input on the incumbent's prior 
performance.
    Fourth, the choice of screening company should be based 
largely on technical capabilities and performance, not on cost. 
Basing selection primarily on cost considerations will return 
us to the poorly performing system pre-9/11 where contract 
screeners who--lacked experience, critical skills, and 
performance incentives. TSA needs to ensure that the selection 
is truly a best value.
    In conclusion, the Screening Partnership Program has worked 
well in Kansas City. It has shown that private screeners under 
the direct oversight of the TSA will perform excellent security 
and customer service at reasonable costs.
    Mr. Chairman, this concludes my prepared remarks. I would 
be happy to address any questions you and the Members may have. 
Thank you.
    [The prepared statement of Mr. VanLoh follows:]
                   Prepared Statement of Mark VanLoh
                             July 29, 2014
    Good afternoon, Mr. Chairman and Members of the Transportation 
Security Subcommittee. My name is Mark VanLoh and I am the director of 
aviation for the city of Kansas City, Missouri. Thank you for inviting 
me to appear before you today to discuss the Airport Screener 
Partnership Program.
    First, I want to describe Kansas City International Airport. It is 
one the country's major medium-hub airports and serves approximately 10 
million annual passengers. Designed in the late 1960's, it has three 
separate semi-circular passenger terminals that are not connected. The 
lack of a central concourse also creates the need for multiple security 
screening locations and does not allow for central security screening 
that is common with more modern airports. Several hundred screeners at 
several checkpoints are employed to perform passenger screening.
    My testimony today addresses the Screener Partnership Program based 
upon Kansas City's nearly 12 years of experience under the program 
since it began in 2002.
    Kansas City was selected by TSA in 2002 under the ``pilot program'' 
along with 4 other airports--San Francisco, Rochester, Tupelo, and 
Jackson Hole.
    It is a partnership that has worked extremely well at Kansas City. 
I have been an airport operator for 30 years, and in my view the 
Screening Partnership Program has provided a level of screening 
services and security protection at least as good as, we think better 
than, the levels that TSA would have provided using Federal personnel. 
And, it has done so with operational efficiency and high levels of 
customer satisfaction. My counterparts at other airports are often 
envious of our record of service and security. I am always pleased to 
brag about it.
    Often I am asked by the public what an airport director does and on 
what issue we spend the most time during a normal day. It is not 
security or safety or airline negotiations but employee issues. With 
500 employees, a considerable portion of the day consists of employee 
performance reviews, labor relations/grievance hearings, disciplinary 
actions, family medical leaves, random drug screening reviews, and 
other personnel issues. I cannot imagine what amount of time is 
consumed by TSA with over 50,000 employees. In my opinion, the majority 
of efforts by the TSA should be focused on intelligence gathering to 
reduce the threat against aviation and then issuing policy and 
procedures to protect our industry not on personnel issues. At Kansas 
City, the SPP provider handles all the personnel issues leaving TSA to 
oversee security. The operator and overseer are different entities. 
This results in built-in accountability and allows each do what they 
can and should do best.
    The advantages of the Screening Partnership Program can be 
summarized as follows:
   enhanced flexibility and efficiencies in personnel use and 
        deployment.
   greater flexibility to respond to increased or decreased 
        service requirements.
   greater flexibility to cross-train and cross-utilize 
        personnel.
   not subject to Federal employee ``hiring freezes'' and 
        employment caps. As an aside, during the recent sequestration, 
        while other airports with Federal staff were subjected to 
        Federal restrictions, we at Kansas City operated normally with 
        no disruptions.
   More effective in dealing with non-performers. This may 
        sound a bit insensitive but we all know that the job requires 
        an inordinate amount of attention and personal skills. 
        Occasionally an employee may be hired that probably shouldn't 
        be in that position. We can all tell the screeners that enjoy 
        their job and want to be there. The SPP provider is able to 
        make changes with minimal disruption to the mission. A high 
        degree of customer service awareness is critical. We all want 
        our passengers to enjoy their airport experience.
    The private screening company has greater flexibility than the 
Federal Government to re-deploy screeners on short notice, to 
reschedule screener shifts to and from off-hours, and to add or delete 
screening checkpoints on short notice.
    Based on our nearly 12 years of experience under the private 
screening program, I can report that the Screening Partnership Program 
has been very effective in providing high-quality service to our 
passengers at a level of security equal to, if not better than, the 
level that would be provided at the airport using Federal Government 
employees.
    The SPP has been great for Kansas City from the beginning, but has 
caused me great concern lately given the issues surrounding the rebid 
of the contract. We are now almost 4 years outside the expiration of 
the most recent contract. Even through the uncertainty of not knowing 
if they will have a job after each holiday season, our screeners have 
maintained their high level of service and dedication. It is my 
understanding that this solicitation is now in the Court of Federal 
Claims for the third time. The low bidder selected by TSA included 
across-the-board pay cuts as well as cuts in hours to all screeners now 
working at the airport. Meanwhile TSA recently announced pay raises for 
Federal screeners at other airports but selected this low bidder in 
Kansas City based on this treatment of our existing workforce.
    Even with the contract award issues, I firmly believe the program 
has worked well for Kansas City; there are a number of areas in which 
the program could be improved.
    First, TSA needs to be more flexible in its supervision of private-
screening companies so as to better foster improvements and innovation. 
TSA should set minimum levels of security standards and operational 
procedures, but give the private screeners the flexibility to provide 
the security in new, different, innovative, and creative ways. However, 
as we understand it, TSA requires Federal and private screeners to 
operate under the same procedures, including centralized procedures for 
screener hiring and assessments, and coordination or hiring through TSA 
headquarters. I do not believe that the law requires a one-size-fits-
all approach.
    Second, TSA should develop staffing resources based on the 
operational requirements for each airport, not on arbitrary system-wide 
staffing caps based on the National models it uses for the Federal 
workforce. Such an approach would more effectively account for the 
unique requirements of each airport, including part-time and efficient 
full-time screener schedules. Again, one size doesn't fit all. For 
example, staffing requirements for Kansas City International Airport, 
which does not have a single central security location, will be 
markedly different than the requirements for airports that have 
centralized security screening facilities.
    Third, there needs to be greater coordination with the airport 
operator. More can be done to get the airport operator's input in the 
operational procedures, staffing, and other critical activities. For 
example in TSA's contested contract award that I mentioned above, TSA 
recently chose to replace Kansas City's long-time private screening 
company through the bid process, yet never asked Kansas City for our 
input on the incumbent's prior performance.
    Fourth, the choice of screening companies should be based largely 
on technical capabilities and performance, not on cost. Basing 
selection primarily on cost considerations we will return us to the 
poorly performing system that existed pre-9/11 where contracts were 
generally awarded to the lowest-cost bidder, manned by screeners who 
lacked experience, critical skills, and performance incentives. TSA 
needs to ensure that the selection is truly a ``best value''.
    In conclusion, the Screening Partnership Program has worked well at 
Kansas City International Airport. It has shown that private screeners 
under the direct oversight of the TSA will perform excellent security 
and customer service and at reasonable costs. Mr. Chairman, this 
concludes my prepared remarks. I would be pleased to address any 
questions you and the Members of the subcommittee may have.

    Mr. Hudson. Thank you, Mr. VanLoh.
    The Chairman will now recognize Mr. Amitay to testify.

  STATEMENT OF STEVE AMITAY, ESQ., EXECUTIVE DIRECTOR/GENERAL 
      COUNSEL, NATIONAL ASSOCIATION OF SECURITY COMPANIES

    Mr. Amitay. Thank you, Mr. Chairman.
    Chairman Hudson, Congressman Daines, my name is Steve 
Amitay, and I am executive director and general counsel to 
NASCO, National Association of Security Companies.
    Founded in 1972, NASCO is the Nation's largest contract 
security trade association whose member companies employ more 
than 300,000 armed and unarmed security officers across the 
Nation.
    More specifically, NASCO members are providing security and 
screening services throughout the Federal Government for DHS 
agencies, the CIA, the FBI, NASA, the Federal judiciary, 
National labs and nuclear sites, and military installations, 
and at U.S. airports through the TSA Screening Partnership 
Program.
    The subject of today's hearing is to examine TSA's 
management of the now 12-year-old Screening Partnership 
Program, if you count the 2 pilot years, which was created in 
the Aviation Transportation Security Act, or ATSA, which also 
stood up TSA.
    However, despite its successful operation these past 12 
years, as Mark has just noted, some still like to make the 
uninformed base assertion that private screeners should not be 
used at airports.
    Well, putting aside that the use of private screeners 
allows TSA to focus more on aviation security and less on 
personnel management and putting aside that OMB does not 
consider such screening services to be inherently Governmental 
and putting aside that all cargo screening in the United States 
is done by private companies under TSA oversight and putting 
aside that virtually all other Western countries have 
determined that private screening under Government oversight is 
the most effective screening model, by law, SPP private 
screeners must meet the same employment, proficiency, and 
training requirements of Federal screeners and all the security 
screening conducted by private screening companies must be done 
in accordance with all TSA standard operating procedures and 
operational directives related to screening functions.
    No one has ever found that private screeners are not as 
effective as Federal screeners. On the contrary, the limited 
available evidence shows the opposite. As for cost, as with 
many other services, the evidence is overwhelming that the 
private sector is less costly.
    While there are serious questions about TSA's 
interpretation of the compensation requirement of ATSA, which 
can lower private screener costs, I would like to note that 
there are also some seriously false statements being made about 
the compensation being offered as part of the current 
conversion of several Montana airports from Federal screening 
to the SPP.
    First, the wages for those Federal screeners who remain 
will not be changed. Second, the health plan being offered by 
the contractor does indeed allow for screeners to use in-
network providers in Montana through the Blue Cross Blue Shield 
system of State associations, thus making the plan competitive 
and available.
    Getting back to performance and cost comparisons, in the 
fiscal year 2014 Consolidated Appropriations Act, TSA is 
directed to fund an independent performance comparison that 
shall include security effectiveness, cost, throughput, wait 
times, management efficiencies, customer satisfaction, and 
other elements.
    NASCO relishes such an independent study and, if accurate 
and comprehensive comparisons of the costs of all screeners to 
the Federal Government between Federal and private is 
conducted, NASCO believes private screeners would fare very, 
very well.
    NASCO would also like to see comparisons of attrition, 
absenteeism, and injury rates, which are huge cost-drivers and 
affect performance. The GAO has sought this, too. As GAO noted 
in its 2013 report on TSA screener misconduct, of the 9,600 
cases of misconduct from 2010 through 2012, the No. 1 category 
accounting for 32 percent of the cases was attendance and 
leave-related misconduct.
    Private screening companies employ robust attendance 
policies and other screener oversights that reduces 
absenteeism, thereby decreasing cost and increasing 
performance.
    The program, though, does face serious obstacles as a 
result of two incredibly questionable interpretations of 
governing law by TSA.
    First, TSA believes the Federal screening cost estimate, or 
FCE, which sets the required cost-efficiency price ceiling for 
private screening bids, only has to contain Federal screener 
cost borne by TSA and not all the Federal or taxpayer cost.
    Second, as to the requirement that private screener 
compensation be ``no less than such Government personnel,'' 
here TSA believes that private screening companies do not have 
to pay compensation to their screeners that is equivalent with 
such Federal screeners, but only that they must pay screeners 
the minimum or starting Federal screener wages.
    How TSA believes that its contracts for screening services 
are not subject to the Service Contract Act, even though all 
other Federal agencies' screening and security services 
contracts are subject to the SCA, is confounding. Both these 
interpretations fly in the face of a plain reading of the 
statute, the intent of Congress, and public security policy. 
They are both major threats to the program that detrimentally 
affect the acquisition and award process.
    The first interpretation concerning the FCE creates 
artificially low-bid ceilings, and the second concerning the 
minimum pay requirements encourages unnecessary low bids. Such 
a policy is not good for airports, screeners, companies, and 
passengers, and, most of all, it is not at all justified under 
the law.
    As detailed in my written testimony, if TSA's FCEs are 
accurate and the compensation requirement is enforced as 
meaning equivalent compensation, there are still many cost 
savings related to screener management and oversight and 
scheduling administration and basic differences between the 
private and public sector services world that enable private 
companies to operate at a lower cost, including with a small 
profit, but with at least the same required performance as 
Federal screeners.
    If TSA will not address the problems associated with these 
issues, then Congress should step in as it did when TSA used 
another questionable interpretation of the statutory language 
related to the application approval process to improve--to 
impede the program in the past.
    Thank you.
    [The prepared statement of Mr. Amitay follows:]
                   Prepared Statement of Steve Amitay
                             July 29, 2014
                       nasco and private security
    NASCO is the Nation's largest contract security trade association, 
whose member companies employ more than 300,000 security officers. 
Across the Nation almost 2 million private security officers, both 
contract and proprietary are at work protecting (and often screening 
persons and bags) at Federal buildings, courthouses, military 
installations, critical infrastructure facilities, businesses, schools, 
and public areas. In addition, as the Screening Partnership Program 
(SPP) has demonstrated, private companies are also effectively 
providing passenger and baggage screening services to U.S. airports. 
Formed in 1972, NASCO strives to increase awareness and understanding 
among policy-makers, consumers, the media, and the general public of 
the important role of private security in safeguarding persons and 
property. At the same time, NASCO has been the leading advocate for 
raising standards for the licensing of private security firms and the 
registration, screening, and training of security officers. At every 
level of government, NASCO has worked with legislators and officials to 
put in place higher standards for companies and officers.
    Over the past decade, NASCO has provided input to and worked with 
Congress, GAO, Federal agencies and others on issues and programs 
related to the use of contract security by Federal agencies. NASCO has 
been involved with the SPP virtually since its inception and NASCO has 
also been very active in working with Congress and the Federal 
Protective Service (FPS) to strengthen the ``public-private 
partnership'' that is the FPS Protective Security Officer Program which 
utilizes approximately 13,500 contract security officers to protect 
Federal building within the GSA portfolio.
                         background on the spp
    After 9/11 Congress passed the Aviation and Transportation Security 
Act (ATSA), which stood up TSA and authorized it to assume 
responsibility for security in all modes of transportation, including 
the creation of a Federal workforce to conduct passenger and baggage 
screening at U.S. airports. However, Congress did not make a blanket 
judgment that in going forward with more stringent airport screening 
only a Federal workforce could provide effective screening. ATSA also 
required TSA to conduct a pilot program with up to five airports, one 
from each of the five ``airport security risk categories,'' where the 
screening would be conducted by personnel from a qualified private 
screening company chosen by TSA operating under strict Federal 
standards, supervision, and oversight. At the conclusion of the 
successful pilot in 2004, TSA created the ``Screening Partnership 
Program'' which allows any airport to apply to ``opt out'' of using 
Federal screeners and instead use a qualified private screening 
selected and overseen by TSA.
    Currently, there are 18 airports, including all five of the 
airports in the original pilot program, in the SPP. By far the largest 
in the program is San Francisco International Airport (SFO) in 
California and the second largest is Kansas City International Airport 
(KCI) in Missouri. It is expected that soon awards will be made for the 
Orlando Sanford (SFB) and Sarasota (SRQ) airports in Florida, which 
will be the largest airports in the program's history to transition 
from Federal screeners to private screeners. (While SFO and MCI are 
larger airports, since they were in the pilot program, they never had 
Federal screeners). NASCO hopes that for Orlando Sanford and Sarasota 
and any other airport joining the SPP, that the TSA will take the 
necessary steps and actions needed to provide for a smooth transition 
from Federal screeners to private screeners (many of whom will likely 
make the transition to the private sector), and avoid causing problems 
for the airport, the screeners, and travelers.
    For a company to be ``qualified to provide screening services'' 
under the SPP, the company must only employ individuals ``who meet all 
the requirements . . . applicable to Federal Government personnel who 
perform screening services at airports.'' The company must ``provide 
compensation and other benefits to such individuals that are not less 
than the level of compensation and other benefits provided to such 
Federal Government personnel.'' Finally, a private company can only 
provide screening at an airport if TSA determines and certifies to 
Congress that ``the level of screening services and protection provided 
at the airport under the contract will be equal to or greater than the 
level that would be provided at the airport by Federal Government 
personnel.''\1\
---------------------------------------------------------------------------
    \1\ Aviation Transportation and Security Act Section 108 49 USC 
44920.
---------------------------------------------------------------------------
    To reiterate, at SPP airports where private screening companies are 
used it is required by law that: (1) The screeners at a minimum have 
met the same employment screening, proficiency, and training 
requirements of Federal screeners, (2) the screeners are provided 
compensation and benefits at a level no less than such Federal 
screeners, and (3) the level of screening services and protection 
provided by the company must be equal to or greater than the level that 
would be provided at the airport by Federal screeners.
    TSA fully acknowledges that these requirements are being met. At a 
January Congressional hearing on the SPP in the House Oversight and 
Government Reform Subcommittee on Government Operations, Kelly Hoggan, 
Assistant Administrator, Office of Security Operations for TSA 
testified that ``These private-sector employees [SPP screeners] were, 
and remain, subject to the qualification and compensation criteria of 
Federal Transportation Security Officers (TSOs).''\2\ And on the TSA 
website in the material on the SPP, TSA states, ``private screening 
airports use the same technology and follow the same procedures as 
Federal screening airports. Data from covert testing has confirmed that 
the performance for Federal and privatized screening is 
comparable.''\3\
---------------------------------------------------------------------------
    \2\ Testimony of Kelly C. Hoggan, Asst. Administrator for Security 
Operations House Oversight and Government Reform Hearing ``TSA 
Oversight: Examining the Screening Partnership Program'' January 14, 
2014 Serial Number 113-95.
    \3\ TSA Website Screening Partnership Program FAQ's.
---------------------------------------------------------------------------
    Therefore, when opponents of the program characterize the SPP as 
``a return to the pre-9/11 screening workforce of low paid and poorly 
trained non-Federal employees'' such criticisms are blatant falsehoods 
and/or show a complete lack of understanding of how the SPP operates 
and is governed.\4\
---------------------------------------------------------------------------
    \4\ The TSO Voice; January 20, 2010, statement of former AFGE head 
John Gage.
---------------------------------------------------------------------------
    Furthermore, while equating present-day SPP private screeners to 
pre-9/11 private screeners is specious comparison, the underlying 
accusation that private screeners are to blame for the tragedy of 9/11 
is also blatantly wrong. FAA regulations in place on 9/11 permitted the 
weapons the terrorists used to take over the planes to be brought on 
board, and the 9/11 Commission Report found that each security layer 
relevant to hijackings--intelligence, passenger prescreening, 
checkpoint screening, and on-board security--was seriously flawed prior 
to 9/11.
    In fact, over the past 12 years since airports have been using 
private screeners under the pre-SPP pilot and the SPP there is 
considerable evidence from covert testing results, GAO reports, 
independent evaluations, reports from airport operators, anecdotal 
information, and other sources that show that the public-private 
partnership of utilizing private screeners under Federal regulation and 
oversight is a superior and more cost-effective screening option for 
airports than using Federal screeners.\5\
---------------------------------------------------------------------------
    \5\ See, House Committee on Transportation and Infrastructure 
Oversight and Investigations, Staff Report: TSA Ignores More Cost 
Effective Screening Model, June 3, 2011.
---------------------------------------------------------------------------
       issues and problems related to tsa's management of the spp
    In the decade the SPP has been in operation, airports, and 
screening companies have encountered a variety of obstacles, mis-steps, 
and questionable statutory interpretations on the part of TSA that have 
hindered the program. Some of these problems have been addressed by 
Congress and/or TSA but others continue to impede the growth of the 
program and even threaten the viability of the program.
    As will be discussed in detail the two major issues impacting the 
SPP are:
    (1) TSA's questionable interpretation of the statutory language 
that requires TSA to estimate the costs of Federal screening at an 
airport (called the Federal Cost Estimate) to set a ``cost-efficiency'' 
price ceiling for private screening at that airport. TSA believes that 
it only needs to consider Federal screener costs borne by TSA and its 
budget, and not all the Federal (taxpayer costs) of Federal screening 
at an airport. In addition, the accuracy of the costs that TSA uses in 
calculating the FCE and doing Federal/private cost comparisons are an 
issue.
    (2) TSA's questionable interpretation of statutory language that 
requires private screening companies provide screeners with 
compensation ``no less than such Government personnel.'' Here, TSA 
believes that the intent was not that screeners working for private 
screening companies must receive equal (or better) compensation than 
Federal screeners, but essentially the opposite, private screening 
companies only are required to pay screeners the minimum/starting TSA 
wages.
    Both these interpretations fly in the face of a plain reading of 
the statute, the intent of Congress, and good public safety and fiscal 
policy. They are both major threats to the program. If TSA will not 
address the problems associated with these issues, then Congress should 
step in, as it did in the past, when TSA took it upon itself to impede 
the program through a very questionable interpretation of the statutory 
language related to the application approval process.
    While many airports are content with their Federal screening force, 
and Federal screeners by and large are performing their duties 
satisfactorily, airport screening is not an inherently Government 
function, nor is it a unique security function. Many Federal agencies, 
including other DHS agencies, are efficiently and effectively using 
contract security for screening and other security services.\6\ As will 
be fully detailed, even when private screening companies are required 
to provide equivalent compensation package of wages and benefits to 
their screeners, and even accounting for profit, they can still be more 
cost-efficient and more effective than Federal screeners.
---------------------------------------------------------------------------
    \6\ Not including the military services, there are approximately 
35,000 contract security officers deployed at Federal facilities. The 
largest amount of contract security officers work for FPS (approx. 
13,500), the United States Marshal Service (approx. 5,000), and the 
Department of Energy (approx. 5,000). Other Federal agencies/
instrumentalities that use contact security include: IRS, NASA, FAA, 
USDA, DOT, DOC, HHS, SSA, NARA, DOL, FDIC, U.S. Coast Guard, State, 
DIA, NRC, Holocaust Museum, and Smithsonian. Federal agencies have 
consistently and successfully utilized private security and screening 
services at Level 4 and 5 secured facilities, DoD locations requiring 
Top Secret and above clearances, the Department of Homeland Security 
Headquarters, NASA launch sites, nuclear facilities, Federal Courts, 
military installations, and FBI offices around the country.
---------------------------------------------------------------------------
                    spp application and rfp process
    As alluded to above, one of the greatest obstacles that faced that 
program that has now been resolved by Congress was TSA's former policy 
on application approvals. From around 2009 to 2012 TSA had an unstated 
and then stated policy to not approve new airports for the SPP unless 
``a clear and substantial advantage to do so emerges in the future.'' 
While the justifications for this policy were unsubstantiated and the 
policy seemed to contradict Congressional intent; nonetheless, it led 
to 5 out 6 airport SPP applications being denied and/or held up for 
years during that period. The policy was overruled by Congress with the 
enactment of the 2012 FAA Modernization Act which required TSA to 
approve an application within 60 days unless the approval would 
``compromise security or detrimentally affect the cost-efficiency or 
the effectiveness of the screening of passengers or property at the 
airport.\7\ However, TSA's interpretation of this language, which added 
the cost-efficiency element, created the follow-on problem mentioned 
above and discussed later.
---------------------------------------------------------------------------
    \7\ See Pub. L. No. 112-95,  830(a), 126 Stat. 11, 135 (2012) 
(codified at 49 U.S.C.  44920(b)).
---------------------------------------------------------------------------
    Currently, with the new application approval requirement in place 
and with TSA taking other steps to improve the application process (as 
recommended by Congress and GAO) the SPP application approval process 
is no longer problematic.
    TSA and the new SPP leadership are also to be commended for their 
public commitment, made earlier this year, to award SPP contracts 
within 1 year of an application being approved. This goal is evidently 
in line with the wishes of Congress as in the House Report accompanying 
the fiscal year 2015 DHS Appropriations Bill that was passed by the 
House last month, the committee stated ``The time taken by TSA to 
approve applications, issue contract solicitations, and make contract 
awards is unacceptable. Accordingly, TSA is directed to award 
applicable SPP contracts not later than 12 months from the date of 
receipt of such airport applications.''\8\ Currently, TSA is slated to 
make an award for Orlando Sanford Airport next month (26 months after 
application approval) and to make an award for Sarasota Bradenton 
Airport in September (17 months after application approval.) Obviously, 
the next SPP application approved will put the 1-year time requirement 
to the test.
---------------------------------------------------------------------------
    \8\ H. Rept. 113-481--Department of Homeland Security 
Appropriations Bill, 2015.
---------------------------------------------------------------------------
    Unfortunately, the solicitation and award process for the past 
several SPP RFP's have been plagued by problems involving questionable 
provisions, unexplainable adjustments, improper evaluations, and other 
issues--besides the underlying FCE and minimum pay issues--that have 
caused serious confusion, delays, pre-award protests, and set up the 
eventual awards for successful bid protests. These incidents raise 
concerns about TSA's ability to manage the procurement process and its 
commitment to the program.
    TSA's handling of the SPP contract for Kansas City International 
(MCI) is a prime example. Kansas City was an original pilot SPP airport 
and in 2010 the airport's SPP contract was put out for bid. TSA made an 
award but it was then successfully protested and voided in the U.S. 
Court of Federal Claims in 2011. The Court found that TSA ``failed to 
perform a best-value tradeoff analysis as required under the RFP; and 
(2) that the SSA failed to exercise and document her independent 
judgment in accordance with FAR 15.308.'' The TSA award was 
``essentially made on a lowest-cost technically acceptable basis not 
pursuant to the best-value determination required by the RFP.'' The 
procurement errors were ``significant'' and the Court found the award 
to be ``arbitrary, capricious, an abuse of discretion, or otherwise not 
in accordance with law.''\9\
---------------------------------------------------------------------------
    \9\ FirstLine Transportation Security Inc. v. United States, 100 
Fed Cl. 359 (2011).
---------------------------------------------------------------------------
    In 2012 TSA issued a new RFP for Kansas City. In the new RFP, TSA 
included a small business participation ``goal'' of 40% of the total 
contract value. In all past SPP RFP's that included a small business 
participation goal the amount was a percentage of the sub-contracting 
total not total contract value. The Federal Acquisition Regulations 
(FAR) also reference small business goals in terms of a percentage of 
total subcontracting dollars. This unusual and excessive set-aside 
``goal'' seemed to violate the FAR, and also contracting laws which 
require goals to be based on market research. More so, when TSA was 
asked for the RFP record ``[i]s it the TSA's intent that all large 
businesses [be] mandated to have, as a minimum, 40% small business 
participation . . . as part of their overall bid?'' TSA answered in the 
affirmative. And in other places too within the RFP the goal was 
characterized as mandatory.\10\
---------------------------------------------------------------------------
    \10\ Firstline Transportation Security, Inc v. U.S. USCFC NO. 12-
601 Nov 2012.
---------------------------------------------------------------------------
    After the set-aside provision was challenged in court in a pre-bid 
protest, TSA quickly changed its above mentioned answer to say the goal 
was not mandatory. And while the Court said it ``agrees with Plaintiff 
that the placement of this language under the heading of ``Compliance/
Responsiveness'' is in tension with TSA's otherwise abundantly clear 
assertion that the 40 percent small business participation standard 
constitutes a goal,'' the Court accepted TSA's word it would change 
that language too.\11\
---------------------------------------------------------------------------
    \11\ Ibid.
---------------------------------------------------------------------------
    The Court then looked at the issue of the amount of the ``goal'' 
and while the Court upheld it as being legal, the Court stated, ``If 
the Court were issuing this solicitation instead of this agency, it may 
well have based the rather aggressive small business goals on more 
robust market research, and it likely would have stated the goals as a 
percentage of subcontracting dollars, as FAR Part 19 authorizes.''\12\
---------------------------------------------------------------------------
    \12\ Ibid.
---------------------------------------------------------------------------
    In the next open solicitation that TSA put out (Sanford) the small 
business goal included was a percentage of subcontracting dollars (as 
it had been in past RFP's), and not total contracting dollars. Again, 
this example shows either sloppiness or a misunderstanding of the SPP 
RFP process on the part of TSA and caused unnecessary delays and 
litigation.
    The Kansas City contract was finally awarded earlier this year, but 
once again it has been protested in the U.S. Court of Federal Claims 
where it is currently being litigated.
    The Kansas City contract award has not been the only troubled SPP 
award. In its June 2013 Report on the SPP, the DHS OIG found that 
``From January 2011 to August 2012, TSA did not comply fully with 
Federal Acquisition Regulation Section 15.308 when documenting its 
decisions in awarding four SPP contracts. Specifically, in this time 
period, TSA's documentation on proposal evaluations and decisions 
related to these contract awards was missing details and included 
inaccuracies. TSA did not formalize and implement procedures to ensure 
that SPP procurements were fully documented, and it did not have 
quality control procedures to verify the accuracy of data used for 
contract decisions. As a result, TSA risks not selecting the best 
contractor offer and not ensuring that it provides the best screening 
services. In four of the five procurement files for contracts awarded 
between January 2011 and August 2012, the rationale for TSA's final 
decisions on contractor selection was not fully described in supporting 
documentation.''\13\
---------------------------------------------------------------------------
    \13\ DHS Office of Inspector General ``TSA Screening Partnership 
Program'' OIG-13-99 June 2013.
---------------------------------------------------------------------------
    One troubling theme in TSA's SPP procurement process that was 
identified by the Court in the first rejected Kansas City award and is 
an issue in the second protest, is TSA's conduct of a ``best value'' 
analysis. As stated in the first Kansas City award protest ruling, in a 
``Best Value'' determination a Government agency must compare the 
relative costs and benefits of the ``competing proposals, including 
both price and non-price factors . . . ''\14\.
---------------------------------------------------------------------------
    \14\ See Footnote 9.
---------------------------------------------------------------------------
    In the second RFP for Kansas City, TSA stated that ``Security is 
paramount'' and that ``security is always TSA's most important 
objective'' and that ``security is a `non-negotiable' '' issue.\15\ 
However, while not doubting the ability of the winning company to 
provide the level of screening services required by the contract, it is 
worth noting that both Kansas City awards went to the lowest bid. This 
is not surprising though given how TSA conduct its ``best value'' 
analysis. Obviously, if ``security is paramount'' and the ``most 
important objective'' one would think that a company's record of 
performance would be a considerable factor. However, in TSA's ``best 
value analysis'' price is the single most important factor. Price alone 
is equal to a combination of technical factors that include IN ORDER OF 
IMPORTANCE: (1) Operational Screening Management; (2) Program 
Management; (3) Logistics and Training; (4) Transition; and (5) Past 
Performance. So ``Past Performance'' is the least important factor in 
TSA's ``security is the most important objective'' best value analysis. 
In addition, while Factors 1 through 4 above are evaluated and provided 
an adjectival rating, past performance is rated on a pass/fail 
basis.\16\
---------------------------------------------------------------------------
    \15\ Airport Security Screening Services at MCI, Solicitation No. 
HST S05-12-R-SPP038 July 2012.
    \16\ Ibid. This evaluation analysis is the same in subsequent SPP 
solicitations.
---------------------------------------------------------------------------
    It is understandable that ``costs must be competitive'' and the 
award cost-efficient for the Government. As discussed already and will 
be further discussed, ATSA requires private screeners to be no more 
expensive than the cost of Federal screeners, and so as threshold 
matter, in order for a company's bid to considered, it must be lower 
that than cost of using Federal screeners at the airport (which is the 
FCE). However, once it is determined that bidders are under the FCE, 
meaning they are less expensive than Federal screeners, and if 
``security is paramount'' should price still trump all the technical 
factors combined? It goes without saying that it is in the public's 
best interest for TSA to properly award airport screening contracts 
using a true ``best value'' analysis which places a premium on 
performance capabilities as opposed making awards that are essentially 
(as Court decisions have shown) being made on a ``low price technically 
acceptable'' basis.
    Other recent RFP issues include:
    In the RFP for Sanford-Orlando 6 weeks after it was issued, TSA 
amended the solicitation to add over 10,000 hours for Behavior 
Detection Officer activities. However, in the Q&A for the solicitation, 
TSA stated that BDO activities were ``not requirement of the 
contract.'' It is estimated that the additional BDO hours added would 
$15 million in contractor costs. Accordingly, it was expected that TSA 
would also adjust the maximum bid amount (the FCE) to reflect the added 
costs of the added BDO hours. However, in subsequent amendments to the 
RFP, TSA stated that the FCE would remain ``unchanged'' and then 
further explained ``there is no change to the FCE is because the BDO 
level of effort is included in the original FCE as written in the 
Request for Proposal (RFP).''\17\ That's some glaring omission!
---------------------------------------------------------------------------
    \17\ Airport Security Screening Services at Orlando Sanford 
International Solicitation No. HSTS05-SPP004 Airport (SFB). See 
amendments 4, and 5.
---------------------------------------------------------------------------
  tsa's interpretation of spp screener compensation requirement under 
                                  atsa
    As noted in the introduction, ATSA requires that for a company to 
be ``qualified to provide screening services,'' the company must 
``provide compensation and other benefits to such individuals that are 
not less than the level of compensation and other benefits provided to 
such Federal Government personnel.'' Accordingly, in SPP RFP's under 
the ``Compensation and Benefits'' clause TSA states that ``TSA has 
interpreted the statute (ATSA) to require contract-screening companies 
to provide pay and benefits at a loaded cost (direct hour plus 
percentage cost of fringe benefits) to all screeners that equals or 
exceeds the loaded cost of the pay and benefits provided by the Federal 
Government. This approach: (1) Provides the contractor with flexibility 
to trade additional pay against other benefits, or to enhance certain 
benefits and reduce others; (2) enables the contractor to determine and 
provide the best package necessary for the recruitment and retention of 
quality private security screeners; and (3) increases flexibility while 
permitting recruitment and retention of quality private security 
screeners.''\18\ This interpretation seems plainly accurate--pay the 
same to screeners as would be provided by the Federal Government. It 
also recognizes the flexibility that the private sector has--which the 
Federal Government does not have--to balance wages and benefits to 
create a more a cost-efficient its labor force (which is discussed 
later).
---------------------------------------------------------------------------
    \18\ Ibid. See Clause H.6. Compensation and Other Benefits.
---------------------------------------------------------------------------
    However, TSA then says in the ``Compensation and Benefits'' clause 
``Therefore, the contractors shall provide at least the minimum loaded 
wage rate'' (emphasis added).\19\ Minimum screener rate? Yes. For all 
screeners? Yes. Regardless of the actual ``level of compensation and 
other such benefits provided to such personnel?'' Yes.
---------------------------------------------------------------------------
    \19\ Ibid.
---------------------------------------------------------------------------
    Under TSA's interpretation of the above ATSA language, all 
screeners, regardless of how long they have been on the job, can 
receive the ``minimum rate'' or starting TSO rate in a new SPP 
contract. Does TSA really believe that Congress intended, by using the 
phrase ``not less than . . . such Federal Government personnel'' to 
mean just not less than those TSA screeners who are making the minimum, 
starting TSO wage? So Congress intended that a screener with 12 years 
of experience could have his or her pay reduced to the starting 
screener wage whenever a private screening company took over screening 
at airport or when an existing SPP contract was re-awarded? Really?
    In ATSA Congress mandated that the training of private screeners be 
equal to Federal screeners. Congress mandated that the level of 
screener performance be equal. And it seems logical and rational that 
Congress also mandated that the level of pay be equal. Yet, TSA 
believes Congress intended that the level of pay for private screeners, 
regardless of experience, only needs to be the ``minimum rate.'' This 
seems quite illogical and irrational.
    One would think in that given the legislative history and intent 
that sought to set up parallel/equivalent private and Federal screening 
forces that less than ``such Federal Government personnel'' clearly 
connotes parallel/equivalent pay for private and Federal screeners in 
the same situation or level of experience. In a job that supports an 
important homeland security mission and where ``security is always 
TSA's most important objective'' and ``security is a `non-negotiable' 
'' TSA indeed seems to be negotiating away security with this screener 
pay requirement interpretation. Is this good public policy?
    In other DHS agencies, such as the Federal Protective Service, 
where contract security personnel, like Federal and private airport 
screeners, are being successfully utilized to provide screening 
services and serve the Department's homeland security mission, when a 
new contractor takes over a contract the incumbent security officer 
wages cannot be reduced. Contractors receive seniority lists that let 
them know what they will have to pay in wages and benefits to the 
screening force. Obviously keeping wages stable promotes retention, 
retention of more experienced personnel, reduces turnover, and overall 
helps maintain or increase performance in their security mission. 
Conversely, if wages are cut it could promote instability, greater 
turnover, and the loss of experienced personnel. Again, aside from it 
being bad policy, a plain reading of the ATSA language and the intent 
behind that language, clearly does not support TSA's interpretation.
    When asked about the issue of screeners having to take a pay cut 
with a new SPP contract, TSA stated that ``TSA only monitors minimum 
salary requirements by means of the Compensation and Other Benefits 
clause in the SPP contracts. Actual salaries and wages for employees 
supporting a SPP contract are determined, as they are with all Federal 
contracts, by direct negotiation between the company and the employee. 
The Federal Government does not get involved in wages beyond ensuring 
that the compensation rate meets the requirements of the Aviation 
Transportation Security Act (Pub. L. 107-71).''\20\
---------------------------------------------------------------------------
    \20\ Responses to Screening Partnership Program (SPP) Questions for 
the Record Submitted by the House Committee on Appropriations 
Subcommittee on Homeland Security, March 25, 2014.
---------------------------------------------------------------------------
    Obviously, a company can still submit a bid for an SPP contract 
that would pay screeners the equivalent of their Federal wages (with a 
new airport) or the equivalent of their current wages (with an existing 
SPP airport), and they are not required to bid starting screener wages. 
However, given that Price is the most important consideration that TSA 
uses in evaluating SPP bids, and the lowest bidders have been awarded 
the recent SPP contracts, for a screening company to submit a bid that 
provides ``full pay''/''equivalent pay'' seems to be a losing strategy.
    By fostering a process where screeners, regardless of their 
experience/performance, must take a pay cut when an airport goes SPP or 
there is a new SPP contractor, TSA seems to have lost sight of its 
security mission. Are not airport screeners ``front-line'' homeland 
security personnel that play a vital role in transportation security? 
Does not TSA value the work of airport screeners? A forced pay cut will 
cause better performing and experienced screeners to leave and impact 
morale and could ultimately affect performance. In addition, no private 
company or the Federal Government has a surplus or alternative source 
of screeners so keeping incumbent screeners is vital and saves on 
training and hiring costs. Why is TSA trying to provide for security on 
the cheap at SPP airports?
    If private screening companies, like contract security companies 
elsewhere in the Federal Government (and some companies are both), are 
required to bid equivalent wages and not minimum wages, and then such 
companies can beat the overall Federal screening cost number at an 
airport as required, how is this not: (1) What ATSA intended; (2) 
better for airports; (3) better for screeners; and (3) better for 
security? TSA and the Federal Government are still saving money!
                       the federal cost estimate
    TSA's definition and computation of the Federal Cost Estimate has 
been the subject of much inspection and investigation and is directly 
related to the ``debate'' as to whether the use of private screeners an 
airport is less expensive than using Federal screener. As noted above, 
the FCE was born out language in the 2012 FAA Modernization Act that 
amended ATSA and mandated that TSA approve an airport's SPP 
application, if ``the Under Secretary determines that the approval 
would not compromise security or detrimentally affect the cost-
efficiency or the effectiveness of the screening of passengers or 
property at the airport.''\21\ (Emphasis added). Accordingly, from a 
plain reading of the statutory language, the FCE represents the total 
Federal cost of using Federal screeners for ``screening of passengers 
or property at the airport'' and sets a maximum bid limit for private 
screening. It makes complete sense that if a private screening company 
bid for screening at the airport is not equal to or lower to the 
Federal costs, this would detrimentally affect the screening cost-
efficiency at the airport which would violate ATSA and the bid should 
be considered unacceptable.
---------------------------------------------------------------------------
    \21\ See Footnote 1.
---------------------------------------------------------------------------
    However, as is clearly apparent, and as TSA now readily admits, 
their computation of the FCE does not represent the complete/true cost 
of Federal screeners at an airport. It only represents an estimate of 
the costs to TSA, not the entire Federal Government (aka taxpayers). As 
stated by TSA, ``In assessing cost-efficiency, TSA (only) compares 
costs within its appropriation to private-sector costs. While TSA 
computes imputed costs such as potential retirement it does not include 
those costs as part of its cost comparison for efficiency those 
prospective obligations are not are not provided in the agency's 
appropriation.''\22\
---------------------------------------------------------------------------
    \22\ DHS Response to Questions from House Homeland Security 
Committee Chairman Michael McCaul, January 2014.
---------------------------------------------------------------------------
    Of course besides retirement, there are worker's compensation, 
legal, HR, administrative and other direct Federal (screener) costs 
being paid by taxpayers through other Federal agencies for ``screening 
of passengers or property'' at a Federalized airport. However, 
according to TSA's interpretation of the law, Congress intended 
``detrimentally affect cost-efficiency'' to just apply to TSA's costs. 
For a short time, TSA could justify this interpretation of the law by 
referencing the Report accompanying the fiscal year 2013 Continuing 
Resolution where there was language that said TSA should not approve 
new contract applications if ``the annual cost of the contract exceeds 
the annual cost to TSA of providing Federal screening services.''\23\ 
Unfortunately for TSA, Report language is not statutory language, that 
Report language expired after fiscal year 2013, and that language has 
been thoroughly reputed in subsequent Appropriations Reports.
---------------------------------------------------------------------------
    \23\ Explanatory Statement accompanying H.R. 933 Consolidated and 
Further Continuing Appropriations Act, 2013 see page S1552.
---------------------------------------------------------------------------
    In the Explanatory Statement for the fiscal year 2014 Consolidated 
Appropriations Act, TSA was directed ``to implement generally accepted 
accounting methodologies for cost and performance comparisons. As 
detailed in the House report, this includes, but is not limited to, 
comprehensive and accurate comparisons of Federal employee retirement 
costs and the administrative overhead associated with Federal screening 
services . . . With respect to TSA cost estimates, the study shall 
include indirect costs as recommended by GAO (GAO-09-27R)''.\24\
---------------------------------------------------------------------------
    \24\ Explanatory Statement on H.R. 3547, Consolidated 
Appropriations Act, 2014, See Page H932.
---------------------------------------------------------------------------
    This year the House's fiscal year 2015 DHS Appropriations Bill 
Report language is even more stern stating that TSA's use of an ``FCE 
that utilizes faulty methodology and ignores significant costs to the 
Federal Government is unacceptable.''\25\ TSA also recently told the 
House Appropriations Committee in responses to questions on how TSA 
calculates its (TSA cost-only) FCE that ``TSA is able to account for 
actual costs incurred for the majority of airport-specific costs.'' So 
what airport-specific costs are not being accounted for? And TSA said 
it is ``confident the methodology is accurately capturing the most 
significant cost factors for Federal cost estimates.'' So what is not 
capturing or not accurately capturing?\26\
---------------------------------------------------------------------------
    \25\ House Report 113-481--DEPARTMENT OF HOMELAND SECURITY 
APPROPRIATIONS BILL, 2015--Privatized Screening. ``Further, the 
Committee remains concerned with TSA's use, as it is currently 
construed, of a Federal Cost Estimate (FCE). Using a FCE that utilizes 
faulty methodology and ignores significant costs to the Federal 
Government is unacceptable. The Committee expects TSA to implement 
generally accepted accounting methodologies for cost and performance 
comparisons, as described in Public Law 113-76, which includes, but is 
not limited to, proper, comprehensive, and accurate comparisons of 
Federal employee retirement costs and the administrative overhead 
associated with Federal screening services.''
    \26\ See Footnote 20.
---------------------------------------------------------------------------
    In TSA's last public iteration of a Federal-private cost comparison 
in 2011--which was done after numerous corrective recommendations by 
GAO--TSA alleged that private screeners were 3% more expensive. 
However, even after making numerous changes to its cost-methodology at 
the recommendation of GAO (which brought the TSA figure down from 17% 
to 9% to 3%) GAO still said of that comparison ``we did not have 
confidence in the 3% figure because one of the issues that was still 
unresolved at that time was the question of uncertainty about the 
underlying estimate and the underlying assumptions going into the 
estimate.''\27\
---------------------------------------------------------------------------
    \27\ Ms. Jennifer Grover, Homeland Security and Justice, Response 
to a question at the January 14, 2014 Hearing of the Committee on 
Government Reform Subcommittee on Government Operations ``TSA 
Oversight: Examining the Screening Partnership Program. (See Footnote 
2).
---------------------------------------------------------------------------
    The DHS OIG has also found fault with TSA's cost comparisons. In a 
2013 report on the SPP the OIG reviewed five contracts awarded between 
January 2011 and August 2012 for eight airport. The OIG office said 
``we reviewed two of eight cost estimates that TSA prepared for the 
five procurements and identified discrepancies in both cost estimates. 
Specifically, there were differences in labor hours and overtime rates. 
Inaccurate cost estimates could affect TSA's evaluation of offerors. A 
document included an incorrect figure, which resulted in a $162,057 
overstatement of the cost to use private screeners. A document used to 
compare the estimated cost of private screening to the estimated cost 
of Federal screening showed TSA understated an estimate of the cost 
savings of private screening by $423,572.''\28\
---------------------------------------------------------------------------
    \28\ See Footnote 13.
---------------------------------------------------------------------------
    Given that TSA readily admits it does consider all the non-TSA 
costs associated with Federal screeners when it comes up with Federal 
screener cost estimates, and given the lack of confidence and accuracy 
even in those costs, and given the lack of confidence in TSA's cost-
comparison methodology, it is really disingenuous to say that TSA has 
found the cost of private screeners to be more expensive that Federal 
screeners. And, even with TSA only using an incomplete TSA-only FCE, 
that may or may not even capture or capture accurately the TSA airport-
specific costs, because of the many cost-efficient and cost-saving 
policies and practices that private screening companies utilize, 
private screening companies are still able to beat the TSA's incomplete 
FCE in SPP RFP's!
   why private screening companies are more cost-efficient than the 
           federal government in providing airport screening
    Even paying the same (equivalent) wages, private companies can beat 
the total cost of screening relative to TSA's actual costs, and of 
course, relative to total Federal costs. There are many reasons for 
this greater cost-efficiency. First as mentioned above, TSA allows 
contractors to provide pay and benefits at a loaded cost (direct hour 
plus percentage cost of fringe benefits) and as TSA admits ``This 
approach: (1) provides the contractor with flexibility to trade 
additional pay against other benefits . . . that enables the contractor 
to determine and provide the best package necessary for the recruitment 
and retention of quality private security screeners.''\29\ Through this 
flexibility on balancing wages and benefits, which the Federal 
Government does not have with TSA screeners, contractors are able to 
create incentives and disincentives for its workers that result in 
better attendance, timeliness, performance which all can save money. 
Take sick leave. When a screener calls in sick the usual response is to 
have to pay another screener overtime to cover the shift. It can also 
lead to lanes being opened late. To reduce such incidents private 
companies can trade sick leave for increased wages. There are other 
ways too for private employers to balance wages and benefits that will 
increase cost-efficiency.
---------------------------------------------------------------------------
    \29\ See Footnotes 17 and 18.
---------------------------------------------------------------------------
    Another area where cost-efficiencies can be realized is by reducing 
absenteeism. In a 2013 GAO Report on screener misconduct, of the 9,600 
cases of employee misconduct investigated and adjudicated from fiscal 
years 2010 through 2012, the No. 1 category that accounted for 32 
percent of the cases was attendance and leave-related misconduct.\30\ 
This backed up a 2011 OPM finding that ``Attendance issues are among 
the most common challenges for Federal supervisors.'' The OPM report 
noted that ``Employees' failure to report to work as scheduled can have 
a negative impact on an organization's ability to complete the 
mission.'' (What is interesting is that there is no mention in the 
Report of any ``negative impact'' of additional costs associated with 
Federal employee absenteeism.)
---------------------------------------------------------------------------
    \30\ GAO, TRANSPORTATION SECURITY.--TSA Could Strengthen Monitoring 
of Allegations of Employee Misconduct, GAO-13-624, July 2013.
---------------------------------------------------------------------------
    As private screening companies have to pay for absenteeism out of 
their set contract amount they are very motivated prevent and 
discourage absenteeism. As such, bonuses are provided for perfect 
attendance and robust attendance policies are maintained. There is 
little doubt that the punishment for an unexcused absence is greater in 
the private sector than in the Federal sector. In addition, not only 
does absenteeism cost money, but just one late screener can prevent the 
``critical mass'' needed to open a check point which affects 
performance. If during the ``morning rush'' at airport there are 
screening lanes not being used, it is probably a result of an unexcused 
or excused (call in sick) absence.
    Another significant cost driver is injury rates and workers 
compensation claims. While TSA does not bear the full cost of paying 
Federal screener worker compensation claims, and has no incentive to 
reduce or question those claims, again, it is the opposite with private 
screening companies. Again, SPP companies must pay for all their 
screener worker's compensation claims out of the fixed contract amount. 
Accordingly, SPP companies employ a variety of methods to reduce, 
mitigate, manage, and limit worker compensation claims. Companies use 
pre-hire physical testing protocols coupled with other at-work 
initiatives that minimize on-the-job injuries, and allow for faster 
return to work and lower workers compensation rates.
    To address widespread baggage screener injuries, one SPP company 
created a non-certified position assigned only to lift bags for the 
certified baggage screeners (significantly reducing screener injuries 
and workers compensation costs). At a Federalized airport a new OPM job 
classification would first be required for a solution. SPP companies 
also employ full-time health and safety professionals on site to 
investigate and study injuries and devise ways to mitigate them.
    Reducing attrition is another way to save money. In terms of hiring 
and retention of screeners, SPP companies do many things that TSA does 
not or cannot do. In hiring screeners, SPP companies do their own local 
recruiting and screen applicants before submitting them for the formal 
TSA screening process. Even after a prospective screener passes the TSA 
screening process, he or she can still go through a company interview 
with supervisors before being hired. SPP companies will also provide 
monetary and other incentives to retain screeners. At airports using 
Federal screeners, screeners can show up for work, sight unseen already 
hired. The additional steps that SPP companies apply to the recruitment 
process results in more successful new hire completion rates and on-
going on-the-job success. SPP companies fully realize that a stable 
workforce is more efficient, effective, and motivated. In the 2011 
Report by the House Transportation and Infrastructure Committee on the 
SPP, it was calculated that the turnover rate at the non-SPP LAX 
airport was 13.8% compared to 8.7% at the SPP San Francisco (SFO) 
airport.\31\
---------------------------------------------------------------------------
    \31\ See Footnote 5.
---------------------------------------------------------------------------
    How does TSA stack up with SPP companies in the areas of attrition, 
absenteeism and injury rates? As GAO reported at the January 2014 OGR 
GO Subcommittee hearing on the SPP it found out while doing its 2012 
Report comparing Federal and private screener performance, that even 
though contractors collect and report this information to the SPP PMO, 
the TSA Office of Human Capital does not collect the data and TSA does 
not require contractors to use the same human capital metrics as TSA, 
and comparisons are not conducted.\32\ In a follow-up to this finding, 
in a question for the record of the hearing, the Ranking Member of the 
subcommittee, Gerry Connolly the DHS OIG if TSA planned to collect this 
data ``in a consistent manner so that comparisons can be made between 
airports?'' The Response was ``Cost and screening performance are the 
two areas where the Transportation Security Administration (TSA) 
compares the Screening Partnership Program (SPP) airports and non-SPP 
airports. Metrics such as attrition, absenteeism, or injury rates are 
not included as germane to the definitions of either cost or screening 
performance and, thus, are not monitored on a consistent basis.''\33\ 
Maybe they should be. These human capital measures are huge cost 
factors and a measure of an efficient and effective workforce.
---------------------------------------------------------------------------
    \32\ Testimony of Jennifer Grover. See Footnote 2.
    \33\ Question for the Record. See Footnote 2 (Page 65).
---------------------------------------------------------------------------
    A major cost-saving advantage that SPP companies have over TSA is 
in scheduling and managing its screener force which creates cost 
savings compared to Federal screening. At Federally-screened airports, 
the number of full-time and part-time screeners (actually FTE's) is 
dictated to TSA airport directors by TSA headquarters. At SPP airports, 
the SPP company site manager can schedule screeners as needed in order 
to meet the contract requirement for total screener hours. As stated in 
SPP RFP's ``The Contractor shall schedule their workforce in a manner 
that meets demands for security screening and work closely with TSA 
staff to satisfy all operational requirements in the contract.''\34\ 
This scheduling flexibility results in numerous cost efficiencies. For 
instance, at most larger airports, the terminals are open for 20 hours. 
Under TSA's staffing model, this would require two full-time screeners 
at 8 hours per shift and one part-time screener for 4 hours to staff 
the position, with all three screeners receiving fixed benefits. On the 
other hand, at one SPP airport with such terminal operating hours, the 
SPP company is able to schedule two screeners at two 10-hour shifts 
reducing personnel and costs. TSA does not utilize such an option. SPP 
companies also take steps that TSA does not to schedule breaks and 
``relief'' more cost-efficiently.
---------------------------------------------------------------------------
    \34\ See Footnote 17. Clause C.4.2.3 Scheduling.
---------------------------------------------------------------------------
    SPP companies also use sophisticated airline industry-based 
scheduling tools, which further efficiently schedule and manage 
staffing in real time. In making their screening schedules companies 
can make pinpoint adjustments using optimization software and airline 
data. They have decision support systems that allow managers to be 
proactive. Scheduling is also tied in directly with payroll, HR, and 
training systems, which ensure full visibility of manpower resources. 
For TSA, effective and efficient scheduling is a problem due to 
centralization of the scheduling system and institutional 
inflexibility. In 2008, the DHS Office of Inspector General found that 
``TSA is overly reliant on the (National mobile) deployment force to 
fill chronic staffing shortages at specific airports in lieu of more 
cost effective strategies and solutions to handle screening 
demands.''\35\
---------------------------------------------------------------------------
    \35\ DHS Office of Inspector General, The Transportation Security 
Administration's National Deployment Force (April 2008) (OIG-08-49).
---------------------------------------------------------------------------
    All the above-mentioned cost-efficiency activities--reducing ``sick 
leave'', reducing attendance/absentee rates, reducing and mitigating 
injuries, efficient scheduling as well as efficient use of part-time 
screeners--also all contribute to one of the greatest cost-savers: 
Reducing screener overtime. Overtime costs are huge and it would great 
to see an apples-to-apples comparison of TSA and SPP overtime costs.
    While personnel and compensation costs represent by far the largest 
screening cost area, and as discussed private companies are finding 
cost efficiencies in this area, the largest relative cost-efficiencies 
for the private sector over the Federal sector is in administration and 
management functions that are not screener functions/positions. This 
includes recruiting, on-boarding, certain training, administration of 
payroll, administration of workplace injuries, administration of HR-
related employment matters (a big area), benefits administration, labor 
relations, quality control inspections, staffing management, IT 
support, accounting and budget management, and many more. While TSA 
(and other Federal agencies supporting Federal screener) also do these 
tasks, private companies are more experienced and motivated to save 
costs in these areas and, like with scheduling, they utilize the most 
efficient methods, technologies, and staff to accomplish these tasks. 
In addition, private companies control the compensation paid to its 
administrators. Also, the private sector is more cost-efficient in 
handling legal settlements and disputes (as well as workplace injuries 
as mentioned above). In April of this year, TSA just settled a case 
that started in 2010 involving the harassment and humiliation of a 
woman who, in accordance with TSA guidelines asked that her breast milk 
not be X-rayed, but instead on two successive occasions was harassed 
and humiliated by TSA screeners. It cost the Federal Government $75,000 
and who know how many hours of legal work.\36\
---------------------------------------------------------------------------
    \36\ http://www.dailybreeze.com/general-news/20140422/hermosa-
beach-mom-wins-settlement-from-tsa-over-airport-breast-feeding-
incident.
---------------------------------------------------------------------------
    What motivates private companies to find cost efficiencies in their 
screening operations and administration? First, constant competition 
from other contractors forces companies to perform well, employ best 
practices, reduce waste, and seek to constantly improve. Second, there 
is profit. And if screening companies can, as required by ATSA, 
``provide a level of screening services and protection equal to or 
greater'' than TSA screeners using private screeners ``who meet all the 
requirements . . . applicable to'' TSA screeners, and at the same time 
make a profit, then what is the problem?
    In addition, while seeking to find cost efficiencies in operations 
and administration is one way to earn a profit, another way is through 
better performance. At SPP airports, the screening operation is indeed 
a business, and better performance is good for business both tangibly 
(award fees) and intangibly (reputation and future business). SPP 
company site mangers are very vested in hiring the right people, 
monitoring performance, and striving for better-than-average 
performance. Bonuses are provided based on merit, not simply seniority. 
Employees are well aware that if they do not perform they could be out 
of a job and a culture of cohesion and teamwork within the workforce 
and peer expectations are encouraged. These employee performance and 
cost-containment drivers (especially in the areas of absenteeism and 
overtime as mentioned above) are not present in the Federal sector and 
DHS (and TSA) are beset with its own host of employee performance and 
motivation issues.\37\ At Federal airports, TSA headquarters sets 
compensation for screeners and managers and screeners have no real 
financial incentives to perform beyond the minimum requirements and 
barring the commission of a crime or serious violation of standards, 
Federal screeners and managers--like all Federal workers--have great 
job security.\38\
---------------------------------------------------------------------------
    \37\ In the December 2013 OPM Survey DHS ranked tied for the worst 
out of 37 Federal agencies in ``Intrinsic Work Experience'' which 
reflects the employees' feelings of motivation and competency relating 
to their role in the workplace. 2013 Federal Employee Viewpoint Survey 
Results; Employees Influencing Change; Governmentwide Management Report 
United States Office of Personnel Management In a December 2012 Merit 
Systems Protection Board Report, DHS ranked tied for 23rd out of 25 
agencies in an employee motivation survey. Federal Employee Engagement: 
The Motivating Potential of Job Characteristics and Rewards. A Report 
to the President and the Congress of the United States by the U.S. 
Merit Systems Protection Board, December 2012.
    \38\ Dennis Cauchon ``Some federal workers more likely to die than 
lose jobs'' USA TODAY, July 19, 2011.
---------------------------------------------------------------------------
 tsa should not be both the regulator and operator of airport screening
    One of the SPP's Guiding Principles is to ``Create a partnership 
that leverages strengths of the private and public sectors: TSA 
believes the SPP can only achieve its objectives if contract operators 
and TSA work in close partnership, leveraging private sector 
innovations and efficiencies with Government security oversight.''\39\ 
Amen. Such a cost-efficient partnership is how screening is conducted 
at virtually every other industrialized/Western nation in the world. As 
documented in the House T&I SPP Report, in other countries where the 
danger of aviation terrorism is equally of great National concern 
``Federal oversight of qualified private contract screeners has shown 
to be effective all over the world (and) almost all Western countries 
operate civil aviation security through the use of Federal oversight of 
private contract screeners. Other than Romania, Poland, and Bulgaria, 
the United States has the only Government in the Western world that 
functions as the airport security operator, administrator, regulator, 
and auditor.''\40\
---------------------------------------------------------------------------
    \39\ See Footnote 17. Orlando-Sanford RFP. Section C--Statement of 
Work, C.1 Introduction.
    \40\ See Footnote 6.
---------------------------------------------------------------------------
    There are sound policy and operational reasons for not wanting TSA 
to be both the regulator and operator of airport screening. First, the 
enormous task of managing the 55,000 or more TSA employees involved in 
airport screening diverts and denigrates TSA's ability to focus on 
critical transportation security-related functions such as setting 
security standards, technology adoption, conducting risk management 
analyses, performing oversight, enforcing standards and regulations, 
analyzing intelligence, auditing screening operations, and doing more 
to stop aviation-related terror before the terrorists get to the 
airport. Second, as the entity both conducting the screening and 
overseeing the screening, there are inherently greater risks of poor 
screener performance going uncorrected or even worse being encouraged 
or covered up by management.
    In 2011, this latter concern came to full fruition where an 
investigation at Hawaii's Honolulu International Airport uncovered a 
massive on-going security breach involving improper (lack of) screening 
of checked bags for explosives. About TSA workers at the airport were 
fired and another 15 suspended including screeners, their supervisors, 
and the Federal Security Director. The TSA screeners claimed they were 
forced to abandon required screening practices because of TSA 
management pressure.\41\ Could TSA managers at an SPP airport, 
operating at ``arm's length'', be able to pressure a private screening 
company to abandon required screening practices putting the company in 
clear default of its entire contract? Not likely. The potential loss of 
a contract and hundreds of jobs is a strong incentive for a company, 
and everyone in the company, to make sure that all employees are 
compliant with the requirements of the contract. At the Hawaii airport, 
the malfeasant Federal screeners, managers, and security director were 
simply replaced by other Federal employees.
---------------------------------------------------------------------------
    \41\ http://www.hawaiinewsnow.com/story/19778673/homeland-security-
probes-unscreened-bags-in-hawaii.
---------------------------------------------------------------------------
    TSA can and does provide effective oversight of private screening 
services. Among the tools that TSA uses to track screener performance 
are daily TSA manager reports, monthly Performance Management Reviews 
calculated against challenging metrics, and twice-yearly award fee 
reviews also calculated against challenging performance metrics. TSA 
can be assured, and indeed constantly assures itself, that SPP 
companies perform at a very high level.
          federal v. private screener performance comparisons
    As to the issue of accurate performance comparisons between Federal 
screeners and private screeners, as noted earlier this year by GAO at a 
House Oversight Subcommittee hearing, GAO said that when it did its 
2012 report on screener performance, it found that ``while TSA had 
conducted or commissioned prior reports comparing the performance of 
SPP and non-SPP airports, TSA officials stated at the time that they 
did not plan to conduct similar analyses in the future.\42\ Also, for 
the screener performance data that GAO analyzed, while they found that 
there were differences in performance between SPP and non-SPP airports, 
and those differences could not be exclusively attributed to the use of 
either Federal or private screeners.''\43\ Not particularly helpful.
---------------------------------------------------------------------------
    \42\ Testimony of Jennifer Grover at January 2014 OGR GO SC hearing 
referring to GAO Report ``SCREENING PARTNERSHIP PROGRAM: TSA Should 
Issue More Guidance to Airports and Monitor Private versus Federal 
Screener Performance'' December 2012, GAO-13-208.
    \43\ Ibid.
---------------------------------------------------------------------------
    GAO recommended that TSA develop a mechanism to develop to 
regularly monitor private versus Federal screener performance and TSA 
concurred with the recommendation. As a result, GAO reported at the 
January 2014 hearing, in January 2013, TSA issued its first SPP Annual 
Report covering fiscal year 2012, which ``compares the performance of 
SPP airports with the average performance of airports in their 
respective category, as well as the average performance for all 
airports, for three performance measures: TIP detection rates, 
recertification pass rates, and PACE evaluation results.''\44\ However, 
GAO did not elaborate on the performance comparisons (either the 
accuracy or results) nor is the SPP Annual Report in the public domain.
---------------------------------------------------------------------------
    \44\ Ibid.
---------------------------------------------------------------------------
    The lack of comparable performance or TSA's reluctance to share 
performance data that it considers to Sensitive Security Information 
(SSI) hinders the SPP. SPP companies believe that they would compare 
quite favorably in the major performance metric with Federal screeners. 
Airports interested in the SPP should be able to see the performance 
data of SPP airports and TSA should share its monthly Office of 
Security Operations Executive Scorecard with airport directors.
    While the level of communication between SPP companies and local 
TSA officials, program managers, and contracting officials remains 
high, the flow of information from TSA headquarters to screening 
companies, and airports, has diminished. The ability for the screening 
companies, airports, and TSA to work together has been limited by a 
lack of TSA sharing of important performance and service data and the 
agency often taking a ``my way or the highway approach'' to doing 
things. In addition, as TSA has become more secretive and guarded with 
its information, a few years ago TSA also took a significant step to 
limit the ability of SPP companies to share information. In SPP 
contracts there is now a clause that prohibits the SPP company from 
publicly disseminating ``publicity releases . . . in connection with or 
referring to the contract'' or ``any information, oral or written, 
concerning the results or conclusions made pursuant to the 
performance'' of the contract ``without prior written consent of the 
Contracting Officer.''\45\ This includes seminars, professional society 
meeting/conferences and even requests for information from Congress. 
Before this ``gag order'' was put in place, SPP companies were already 
prohibited from releasing protected Government information under both 
previous contract language and various Federal laws. Given the 
broadness of this clause, SPP companies are now reticent to discuss 
almost any aspect of their performance--including those type of ``good 
news'' screener stories that TSA likes to publicize about Federal 
screeners--with anyone without first receiving TSA's written 
permission. This could severely restrict the amount of information 
available to airports, Congress, and the public about the SPP.
---------------------------------------------------------------------------
    \45\ TSA Clause H.5200.205.001 ``Publicity and Dissemination of 
Contract Information''.
---------------------------------------------------------------------------
    Better performance comparisons though could be on the way. In the 
Report accompanying the fiscal year 2014 Consolidated Appropriations 
Act, ``TSA is directed to allocate resources for an independent study 
of the performance of Federalized compared to privatized screening. The 
study shall include, but not be limited to, security effectiveness, 
cost, throughput, wait times, management efficiencies, and customer 
satisfaction.''\46\ As mentioned above, TSA was also directed to 
``implement generally accepted accounting methodologies'' for its own 
future cost and performance comparison, and also to implement past GAO 
recommendations for comparing cost and performance. Of course, whether 
TSA makes the relevant data available to the study investigators, 
whether such data is accurate, whether such data is comparable, and 
then in what form the results can be provided remain to be seen.
---------------------------------------------------------------------------
    \46\ See Footnote 24.
---------------------------------------------------------------------------
    The ``customer satisfaction'' comparisons should be quite 
interesting. SPP companies realize the value of customer service and 
they teach and reinforce customer service constantly. Treating 
passengers politely is not only the right thing to do, but avoiding 
incidents and maintaining a calmer passenger base makes it easier for 
screeners and behavior detection officers to spot aberrant behavior. 
Even with the difficult protocols, SPP screeners are taught to 
implement them with customer service empathy. It is no surprise that 
Kansas City International Airport, an SPP location earned the J.D. 
Power and Associates award for highest customer satisfaction of all 
medium-sized North American airports twice in recent years. That 
airport's screening services as well as other SPP companies have 
garnered much praise from their airport directors for customer service 
and other innovations that have improved screening operations.\47\ For 
those airports wanting to join the SPP, greater customer service and 
greater accountability are major reasons. Said one airport official 
whose airport had applied to the SPP, ``As we have documented, TSA 
employees frequently have no concern for customer service. We feel that 
participating in the SPP will increase screening efficiency and 
flexibility and improve the customer service experience.''\48\
---------------------------------------------------------------------------
    \47\ See Footnote 5. T&I SPP Report. Appendix 12 SPP Testimonials.
    \48\ See Footnote 5. May 20, 2011 Letter to House T&I Committee 
from Springfield-Branson National Airport.
---------------------------------------------------------------------------
    At the January 2014 House hearing on the SPP, TSA was sharply 
criticized for the continuing customer service failures of TSA 
officers. Ranking Dem Jerry Connelly, in recounting an incident he saw 
involving a Federal screener stated that ``there is no excuse that 
someone barking orders continuously at the public at any airport in 
America who is an employee of Federal Government . . . I'd lose my job 
if I treated the public that way. And rightfully so. My staff would be 
fired if I find that they treated my public that way. And we need to 
hold ourselves to that standard. And so, I fear it's beyond 
anecdotal.''\49\
---------------------------------------------------------------------------
    \49\ See Footnote 2.
---------------------------------------------------------------------------
                               conclusion
    Many airports are satisfied with their Federal screening force and 
the ATSA language establishing the SPP in no way pushes or even 
encourages airports to use private screening companies. However, it is 
clear that Congress wanted airports to at least have a fair opportunity 
to utilize private screening which by law has to be equal to or greater 
in the level of security provided. From the experiences and lessons 
learned in the SPP, and when considering a true cost comparison it is 
clear that the use of private screening companies is viable and 
effective option for airports, and a cost-efficient option for TSA and 
the Federal Government. As TSA states, the SPP is about ``leveraging 
private sector innovations and efficiencies with Government security 
oversight.''\50\
---------------------------------------------------------------------------
    \50\ See Footnote 39.
---------------------------------------------------------------------------
    However, TSA's very questionable interpretations of SPP statutes, 
its faulty RFP and award process, as well as other actions related to 
the SPP is threatening the viability of program. While TSA's refusal to 
use a Federal cost estimate that reflects the true cost to the Federal 
Government is makes for an unfair comparison between Federal and 
private screener costs and seems to go against ATSA, it is 
understandable that TSA would not like to spend more of its budget on 
private screeners than it spends on Federal screeners. However, even 
with a TSA cost-only FCE, private screening companies, because of 
greater flexibility and other cost-efficient reasons, can beat a TSA 
cost-only Federal screening estimate. They can also beat the TSA cost-
only price if they have to pay screeners ``equivalent'' wages. Yet 
TSA's dubious belief that ATSA only requires private screening 
companies to bid (pay) minimum TSA screener wages, and TSA's focus on 
price in its ``best value'' award analyzes, is setting up a situation 
that will effectively mean every time an SPP contract awarded, 
screeners will take a pay cut. This seems completely incongruous with 
the mission of maintaining an effective screening force, it flies in 
the face of how contract security personnel are treated by other DHS 
agencies, and it will only create dissatisfied screeners and airports.
    It is therefore unfortunate and indeed ironic that at a time with 
unprecedented interest and emphasis on Government efficiency and 
sustained and meaningful private-sector job growth, the TSA is choking 
a successful public-private partnership program that is exceedingly 
efficient, effective, and customer-focused. Far from ignoring the SPP, 
in its mission to provide the best possible aviation security, the TSA 
should be embracing it.

    Mr. Hudson. Thank you, Mr. Amitay.
    The Chairman will recognize Mr. Cox to testify.

 STATEMENT OF J. DAVID COX, SR., NATIONAL PRESIDENT, AMERICAN 
               FEDERATION OF GOVERNMENT EMPLOYEES

    Mr. Cox. Mr. Chairman, Members of the subcommittee, thank 
you for the opportunity to testify today.
    It is clear that the Screening Partnership Program, SPP, 
does not improve aviation security and it does not save the 
taxpayers money. Rather, SPP harms security, costs more, and 
hurts the TSOs who bear the brunt of the outsourcing program. 
Only security contractors benefit.
    There is no demand for airports to privatize the work of 
our Nation's TSOs. Although the 2012 FAA Modernization and 
Reform Act made it easy for airports to apply to privatize 
their TSA workforce, only a handful have done so. With the 
exception of the Montana airports, over the past 2 years, only 
three airports have asked TSA for permission to switch to 
private screeners.
    But that legislation left intact the requirement that SPP 
contractors provide private screeners compensation and other 
benefits that are not less than the level of compensation and 
other benefits provided to TSOs. AFGE members at the four 
Montana airports currently transitioning from Federal to 
private have informed us this is definitely not the case.
    The right of first refusal for a job with a private 
contractor is not meaningful because, in Montana, it means a 
significant cut in pay, benefits, and career development 
opportunities. Even though CSSI FirstLine, the Montana 
contractor, has promised to match TSOs' current pay, many have 
chosen to uproot their lives and families to transfer to other 
Federal airports, retire far earlier than they had planned, or 
simply leave TSA rather than work for peanuts for the 
contractor.
    AFGE has confirmed that the benefits offered by FirstLine 
are not equivalent to those provided by TSA.
    The health insurance plan offered by the contractor is a 
high-deductible health reimbursement account whose in-network 
providers are in Tennessee, approximately 1,800 miles from 
Montana. There are no in-State providers under the plan.
    Premiums are higher and benefits are woefully inferior. TSA 
offers 11 Nation-wide plans and 2 specific to Montana, and even 
the most bare bones of these is far more generous to employees 
than the contractor plan.
    Other than vague statements that they are working on future 
pension benefit, FirstLine offers no retirement benefit, no 
defined benefit pension, no 401(k) savings plan, no profit-
sharing plan, no IRA, no employee stock ownership plan, 
nothing. In short, FirstLine refuses to make even the smallest 
gesture toward benefit equivalency that the statute demands.
    AFGE strongly supports the Contract Screener Reform and 
Accountability Act introduced by Ranking Member Bennie Thompson 
and Representative Sheila Jackson Lee and Nita Lowey, long-
standing champions of our Nation's security and the TSO 
workforce. Mr. Chairman, the TSOs' voices should not be lost in 
this committee's discussion about SPP.
    I would like to conclude my testimony by reading to you an 
excerpt from an e-mail from one of our Montana TSO members.
    ``After 9/11, I wanted to do something to ensure that that 
horror would never be repeated. So I became a screener at the 
Bozeman airport in Montana.
    ``The SPP program leaves very little for a person of my 
age. At age 58 and with almost 12 years of service with TSA, I 
will be left with very little to show for it.
    ``When I looked into working for the private company, I 
learned that FirstLine provides no retirement plan. I was told 
that that would be up to me personally, no plan and no match by 
the company. This is not comparable to TSA.
    ``Health benefits have decreased in a major way. 
FirstLine's medical plan has an $8,000 deductible for a single 
person and $11,000 deductible for a family. This deductible 
would have to be met before any health care expenses would be 
covered. This is not comparable to TSA.
    ``Transfer opportunities to other airports were limited, 
but after living here since 1993, it is not a viable option. 
Either my husband would have to leave his job of over 21 years 
or I would have to leave my home and family.
    ``I am just a little old lady who has worked her entire 
life to ensure the wellbeing of others. I believe I deserve 
better from this from TSA.''
    Mr. Chairman, I would really like to thank the subcommittee 
for the opportunity to represent the TSO workforce at this 
important hearing, and I would be happy to answer any 
questions.
    [The prepared statement of Mr. Cox follows:]
                Prepared Statement of J. David Cox, Sr.
                             July 29, 2014
    Mr. Chairman, Ranking Member Richmond, and Members of the 
subcommittee: My name is J. David Cox, Sr., and I am the national 
president of the American Federation of Government Employees, AFL-CIO 
(AFGE). On behalf of the more than 670,000 Federal and District of 
Columbia workers our union represents, including 45,000 Transportation 
Security Officers (TSOs) working to provide safe and secure travel for 
over 2 million passengers each day, I thank you for the opportunity to 
testify today on the hearing entitled ``Examining TSA's Management of 
the Screening Partnership Program (SPP).''
    Oversight of TSA's management of the SPP must extend beyond the 
ease with which contractors are approved for SPP contracts. It must 
also include a close examination of the effect of the program on 
aviation security and the TSO workforce. TSA SPP FAQs clearly state 
that ``Federal and privatized screening have comparable performance, 
and there is no measurement indicating there is a difference in 
customer service.'' SPP decisions are not based on TSO performance at a 
given airport. Private screeners follow the same standard operating 
procedures and use the same equipment as Federal TSOs. The only 
difference is that after privatization, the TSOs risk replacement by 
workers lacking their training and on-the-job experience while all 
Federal TSA management remains on the job. SPP does not exist to 
further aviation security or save taxpayer money. TSOs, the front line 
of aviation security, bear the brunt of an outsourcing program that 
benefits no party involved except security contractors.
                               background
    In the aftermath of the terrible events of September 11, 2001, 
Congress quickly enacted the Aviation and Transportation Security Act 
(ATSA) to correct the gaping holes in our Nation's security net made 
apparent by the ability of the 9/11 hijackers to hijack planes in a 
coordinated attack that killed over 2,900 people, and injured more than 
6,700. Although al-Qaeda's violent, irrational hatred for the United 
States was the root cause of the 9/11 tragedy, Congress pinpointed the 
lack of a well-trained, experienced screening workforce receiving 
adequate pay and benefits as one of the underlying issues that left our 
country vulnerable to the worst act of aviation terrorism in history. 
To resolve that issue, Congress Federalized screening duties in ATSA, 
with the belief that improved training, pay, benefits, and working 
conditions would lead to a stable workforce focused on security. TSA, 
according to a March 30, 2005, Congressional Research Service report, 
was given ``direct responsibility for passenger screening.'' The TSO 
workforce AFGE represents proves every day that Congress made the right 
decision in Federalizing screening duties.
    The SPP runs counter to the National consensus that the screening 
of passengers and baggage at our Nation's airports should be performed 
by Federal employees to tighten the aviation security safety net. There 
is no documentation of the superiority of private screeners to TSOs. 
There are no cost savings. Airports seeking to escape TSA management 
through SPP risk losing an experienced and trained screening workforce, 
yet they will retain every single layer of expensive TSA management. 
TSA's cost comparison analysis is opaque at best. Indeed, the current 
SPP upends the lives and careers of an airport's TSO workforce, leave 
the traveling public no safer, and provides no taxpayer savings.
    It is important to note that changes to the SPP included in the FAA 
Modernization and Reform Act of 2012 were never subject to the 
Congressional debate and scrutiny applied to the decision to Federalize 
aviation security. The provisions of the FAA Modernization and Reform 
Act are so broad and so biased in favor of privatization that it could 
unravel the aviation security safety net our country has worked so hard 
to achieve if not modified by Congress.
                       there is no demand for spp
    First, only 18 of the Nation's 457 commercial airports have 
private-sector security screeners. That's less than 4 percent. Except 
for San Francisco and four other airports that were part of the initial 
SPP pilot program (Kansas City International Airport, Greater Rochester 
International Airport, Jackson Hole Airport, and Tupelo Regional 
Airport), the only airports to seek privatization have been small 
airports in Iowa, New Mexico, Montana, Florida, and New Hampshire. A 
representative hearing on SPP would include the directors of our 
airports in New York, Chicago, Los Angeles, Miami, Denver, Atlanta, 
Washington, DC, and every other major gateway that have chosen to work 
with TSA and its National network of highly-qualified TSOs. None of 
these airports has shown the slightest interest in privatization, yet 
none is ever heard from in these hearings.
    Second, despite legislation passed in 2012 making it easier for 
airports to apply to privatize their TSA workforce, only a handful of 
airports have applied to do so. Aside from Montana, over the last 2 
years, only three airports--the small Orlando-Sanford and Sarasota 
Bradenton airports in Florida and the airport in Portsmouth, NH, have 
asked TSA for permission to make the switch to private screeners. The 
lack of interest was noted by the GAO in December 2012. ``Airport 
operators from 3 airports that have not applied to the SPP expressed no 
interest in the SPP, and stated that they are generally satisfied with 
the level of screening service provided by TSA,'' GAO said.
    Third, when larger airports consider SPP and then learn the facts, 
they stick with the TSOs. In 2013, the elected managers of Sacramento 
International Airport agreed to consider a proposal by their airport 
director to join SPP. But when they studied the facts of the situation, 
and how it would affect their local screeners, the Sacramento Board of 
Supervisors reversed its earlier decision and voted by a wide margin 
against TSA privatization. One of the factors they considered in 
Sacramento was precedent: No airport that large has made the switch 
from public to private. Four small airports have made the switch; but 
of these, only two, Roswell, NM, and Sioux Falls, IA, actually ``opted 
out'' of TSA and joined SPP on their own. Roswell did so because it 
wanted to hire locals at its remote location in eastern New Mexico. 
Sioux Falls, according to a 2010 staff report prepared for the Colorado 
Springs, CO, airport, had a director with an ``an anti-Federal 
Government ideology'' who was ``looking for ways to keep Federal 
screeners out of his airport.'' The other two airports that moved from 
TSA to a private screener, Marathon, FL, and Sonoma, CA, did so at the 
suggestion of TSA during the Bush administration. It's very clear from 
this history that there is simply no demand from the airport community 
at large to privatize the operations of the TSA, period.
    So where does the interest come from? It's striking how little the 
privatizers actually talk about security in their public discussion of 
the issues. Companies like Firstline constantly talk about how SPP 
provides them with ``flexibility'' to move employees around, but never 
discuss the task of securing the American flying public. That's because 
they are interested in profit, not security. And how do they make that 
profit? They make it by paying lower wages and providing fewer and less 
comprehensive benefits, such as health insurance and pensions. That 
does nothing but line the pockets of contractors and deprives airport 
security screeners of the living standards and financial security they 
deserve.
    Despite the fact that security is not improved by going private, 
the Federal Government and U.S. taxpayers are forced to bear the costs 
of any airport that shifts from Federal to private. Airports with a 
troubled relationship with TSA find little resolution to their problem 
by applying to SPP: The same TSA management, policies, and procedures 
remain after privatization. The only new factor is a very inexperienced 
workforce of private screeners.
 spp leaves the tso workforce in a ``no win'' situation with few good 
                              alternatives
    TSA accepted the joint bid of CSSI/Firstline Security to provide 
private screening at Bozeman, Bert Mooney, Glacier Park International, 
and Yellowstone airports in Montana. Despite the security issues that 
arise from the State's status as a border State, most of the commercial 
air traffic in Montana is subject to private screening under the SPP. 
The transition to SPP at the four Montana airports has provided AFGE a 
clear view of the impact of privatization on incumbent TSOs at 
privatized airports, as well as the workers contractors hire ``off the 
street'' to work at those airports. It is important to note that SPP 
contractors can only make a profit by manipulating the payroll. Federal 
law requires SPP contractors to provide ``compensation and other 
benefits'' to their employees ``that are not less than the level of 
compensation and other benefits provided'' to TSOs. AFGE has documented 
that this is simply not the case in Montana and we have reason to 
believe it is not the case at other SPP airports around the country.
    Our union has opposed the SPP since its inception. It is 
inconsistent with ATSA's goal of Federalizing the process of screening 
passengers and baggage. TSA has approved bids from contractors that 
provide substantially lower pay and benefits those received by TSOs. It 
also allows SPP contractors to deviate from the Staffing Allocation 
Model (SAM) that applies to Federal airports. It is AFGE's position 
that security contractors would be unable to show the ``cost 
efficiencies'' required under the law, if not for TSA's permissive 
allowance for lower pay, benefits that shift the cost to worker or are 
virtually non-existent, and a lack of compliance with the SAM. The 
table will be set for aviation security to devolve to pre-September 11 
levels because the low pay and benefits will drive private screeners to 
leave the security contractor for better-paying jobs with better 
benefits.
    Union members in Montana have informed us that CSSI/Firstline is 
offering new hires starting salaries that are thousands of dollars 
lower than TSA's starting rates, and that with regard to ``paid time 
off,'' the contractor's allowances are drastically inferior to what is 
provided to TSOs and other Federal employees. Federal employees with up 
to 3 years of service earn 13 days of annual leave a year and 9 days of 
sick leave. The contractor offers just 12 days total of combined ``paid 
time off (PTO)'' for employees for the first 5 years of service. 
Federal employees with more than 3 years but less than 15 years of 
service earn 20 days of annual leave per year, and 9 days of sick 
leave. The contractor provides 18 days of combined PTO for employees 
with between 6 and 10 years of service. Federal employees and TSOs with 
15 or more years of service earn 26 days of annual leave and 9 days of 
sick leave; in contrast, the contractor offers a total of 19 days of 
combined PTO for employees with 11 or more years of service.
    Importantly, Federal TSOs and other Federal employees are given 
credit for years of honorable military service in calculating their 
eligibility for annual leave accrual. Thus, a TSO who has served his 
country in the armed services for any amount of time (including both 
active duty and active duty for training) will earn annual leave 
according to tenure with includes his time served in the military. 
Agencies also have the flexibility to provide service credit for prior 
non-Federal/non-military service when determining a new employee's 
annual leave accrual rates. This is an important management flexibility 
that assists in recruitment, given the fact that Federal salaries lag 
those in the private sector.
    Federal TSOs are also eligible for leave sharing, leave transfer, 
and carrying over up to 30 days of paid time off. They receive paid 
``administrative'' time off to serve on a jury or to be a witness in a 
legal proceeding. Federal employees are also entitled to take up to 3 
days of funeral leave to arrange or attend the funeral of a close 
relative who dies as a result of military service in a combat zone.
    The health insurance benefit being offered by the contractor is 
almost laughable as health insurance, but there is nothing funny about 
how inferior it is to FEHBP's plans. Its value to the employee is far 
below that of any of the 11 Nation-wide plans currently available to 
TSOs in Montana, even the one ``high deductible'' plan from GEHA. The 
contractor's plan is a high-deductible Health Reimbursement Account 
plan, a type that is inferior even to the Health Savings Account Plans 
available in the Federal Employees Health Benefits Program (FEHBP). And 
to make matters worse, the contractor's plan's ``network'' of providers 
are all in the State of Tennessee, approximately 1,800 miles from 
Montana. Thus, participants would effectively be denied access to the 
plan's network, and thereby be forced to pay the higher, out-of-network 
costs unless they happened to be vacationing in Tennessee when a need 
for health care arose.
    The differences in the value of the health insurance benefit the 
contractor is offering and what is currently available to TSOs who work 
for TSA are enormous. We can begin our comparison by noting that the 
contractor offers only one choice; FEHBP offers 11 choices in Nation-
wide plans and an additional two specific to Montana. The contractor 
offers only a high-deductible plan with premiums of $54.39 a pay period 
for individual coverage and $190.63 for family coverage. The Nation-
wide high-deductible FEHBP plan from GEHA costs TSOs $50.87 a pay 
period for individual coverage and $116.18 for family coverage--a 40% 
difference. But the differences in premiums are only the beginning. 
Because preventive services are only covered ``in network'' in 
Tennessee in the contractor's plan at 100% without the deductible, 
participants would have to pay 50% after the deductible for all 
preventive services--including children's and women's well care, annual 
mammograms, cervical cancer screenings, prostate cancer screenings, and 
immunizations. In contrast, the GEHA plan in FEHBP available to TSOs in 
Montana pays 100% in network (with network providers in Montana 
available) and 75% after the deductible out of network. Out-of-pocket 
maximum for the contractor are $5,500 and $11,000 for individual and 
family coverage in network in Tennessee--but in Montana, out of 
network, the out-of-pocket maximum each year is $11,000 for individuals 
and a whopping $22,000 for families. In contrast, the out-of-pocket 
maximum for the GEHA high-deductible plan is $5,000 for individuals and 
$10,000 for families.
    Although there are many more differences, another important one is 
that the GEHA high-deductible plan under FEHBP allows for a Health 
Savings Account (HSA) or a Health Reimbursement Account (HRA) and the 
contractor's plan allows only a HRA. HRAs offer a vastly inferior 
economic benefit to the employee, because unlike HSAs, assets in an HRA 
do not earn interest and are forfeited by the employee if he switches 
health plans or leaves the job for reasons other than retirement. They 
belong to the employer, not the employee. An employer uses an HRA to 
pay for actual health care costs incurred by their employees. With an 
HSA, employer contributions are made whether or not the costs are 
incurred, and an employee gets to keep all unused HSA contributions 
made by both themselves and their employer when they leave the job. 
Indeed, because HRAs benefit only the employer, the ``Arrangement'' 
undermines the incentive systems on which high deductible plans are 
based. The employee has far less incentive to minimize expenditures, 
since the money belongs not to him, but rather to his boss.
    This is not nearly an exhaustive description of the ways that the 
contractor's health care plan is of inferior value to the employee as 
compared to the high-deductible plan available to TSOs in Montana under 
FEHBP. But it suffices to show how the contractor's plan does not 
comport with the statutory requirement for a ``qualified private 
screening company'' under  44920 of ATSA that benefits offered are 
``not less than the level of compensation and other benefits'' provided 
to TSOs. Of course, the benefits in FEHBP's high-deductible plan are 
less generous than those in the other 10 plans made available to TSOs. 
If one interprets the statutory language to mean the range of value of 
the benefits, than the contractor's plan is of less value than the 
least valuable FEHBP plan. TSOs in Montana now have the choice of the 
GEHA plan, as well as the following additional Nation-wide plans:
    (1) Blue Cross Blue Shield Standard Option
    (2) Blue Cross Blue Shield Basic Option
    (3) NALC
    (4) GEHA Benefit Plan
    (5) Mailhandlers Benefit Value Plan
    (6) SAMBA
    (7) Mailhandlers Standard
    (8) APWU Health Plan
    (9) Mailhandlers Benefit Plan Consumer Option
    (10) NALC Value Option Plan
    And two additional Montana plans:
    (1) Aetna Healthfund HDHP for South/Southeast/Western Montana
    (2) Aetna HealthFund CDHP and Value Plan, South/Southeast/Western 
        Mt. areas.
    While it is difficult to quantify the economic value of choice 
among 13 plans versus no choice, no one could describe an employer 
offering only one choice as providing a benefit that is ``not less than 
the level'' of benefit offered by the Federal Government.
    Thus far, we conducted an apples-to-apples comparison of the 
contractor's health insurance plan and the Government's worst plan, 
even though the contractor's plan is clearly a rotten apple. But how 
about comparing it to the best plan FEHBP has to offer TSAs--and by 
``best'' I mean most popular: Blue Cross Blue Shield's Standard option, 
the choice of over 60% of Federal employees.

                  COMPARISON OF CONTRACTOR HEALTH PLAN VS. FEHBP PLANS AVAILABLE TO TSOS AT TSA
----------------------------------------------------------------------------------------------------------------
         Type of Coverage            Contractor   Contractor   GEHA High    GEHA High       BCBS         BCBS
-----------------------------------    Plan**       Plan**    Deductible*  Deductible*   Standard*    Standard*
                                   -----------------------------------------------------------------------------
                                      Biweekly     Biweekly     Biweekly     Biweekly     Biweekly     Biweekly
                                      Employee     Employer     Employee     Employer     Employee     Employer
                                      Premium      Premium      Premium      Premium      Premium      Premium
----------------------------------------------------------------------------------------------------------------
Self Only.........................       $54.39          n/a       $50.87      $152.60       $87.82      $196.68
Self and Family...................       190.63          n/a       116.18       384.54       204.98      437.62
----------------------------------------------------------------------------------------------------------------
**CSSI Firstline Documents provided to AFGE.
*http://www.opm.gov/healthcare-insurance/healthcare/plan-information/premiums/2014/nonpostal-hmo.pdf.

    As is clear from the above, the economic value of the health 
insurance benefit, as measured by the employer cost for provision of 
the benefit, shows clearly that the contractor's plan is inferior. We 
know that the actuarial value of the benefits of both the contractor's 
plan and the GEHA high-deductible plan are lower than the Blue Cross 
Blue Shield Standard Option Plan. But we have shown that the GEHA plan 
offers superior benefits, and although we do not know the contractor's 
cost for the HRA/High Deductible plan, we know that it is far lower 
than TSA's costs for either the GEHA or the BCBS plan, and thus does 
not meet the standard in the statute.
    The contractor appears not to provide any retirement benefit at 
all. There is no mention of a pension plan: No 401(K) savings plan, no 
profit-sharing plan, no simplified employee pension plan (SEP) or IRA, 
no money purchase pension plan, no cash balance plan, no stock bonus 
plan, and no employee stock ownership plan. In short, this employer 
does not even make the smallest gesture toward the benefit equivalence 
that the statute demands in the area of retirement income security.
    Incumbent Montana TSOs report TSA management has been slow to 
respond to their many questions about the transition to SPP and often 
receive contradictory information. In comparison, TSA has held TSOs to 
tight deadlines for life-altering decisions. Although the collective 
bargaining agreement negotiated between AFGE and TSA includes a 
provision that creates a permanent Voluntary Transfer Option, TSOs were 
only given 10 calendar days to review a vacancy list (that did not 
include all TSO job vacancies listed on USAJobs), pick five airports 
and complete an on-line application. TSA failed to hold itself to the 
same timely responses required of TSOs: TSOs report that their 
airport's Human Resources (HR) offices provided delayed and 
contradictory responses to questions. TSOs were told by HR offices that 
they would not qualify for unemployment compensation because they were 
entitled to ``Priority Placement'' with CSSI/Firstline. The so-called 
``right'' of ``Priority Placement'' or ``Right of First Refusal'' is 
qualified and unenforceable, and decisions regarding unemployment 
compensation eligibility are made by the State of Montana, not TSA 
employees. Long-term TSOs report that they were repeatedly told they 
would not be eligible for severance pay if they separated from TSA, 
would be penalized for early retirement, and would not receive 
unemployment compensation.
    congress should not limit its spp oversight to the treatment of 
                              contractors
    In their January 14, 2014 testimony before the Government 
Operations Subcommittee of the Oversight and Government Reform 
Committee, GAO confirmed that TSA has failed to track the performance 
of contract screeners in the same manner that TSO performance is 
endlessly scrutinized. The SPP screener attrition rates, covert testing 
failures, TIP, and other performance measures are unknown to the 
public. Just as the news media recently reported that an intoxicated 
man impersonated a screener at the privatized San Francisco 
International Airport and groped several female passengers, the public 
was only made aware of covert test cheating and other security breaches 
at SPP airports when reported by journalists. AFGE believes that much 
of the negative public perception of TSOs by some members of the public 
is fueled by the agency's rush to report unproven allegations against 
TSOs while security contractors and their employees have never faced 
the same level of relentless scrutiny. The Contract Screener Reform and 
Accountability Act (H.R. 4115) provides the reform and transparency 
program badly needs. The bill's sponsors, Homeland Security Ranking 
Member Bennie Thompson, Committee Member Sheila Jackson Lee, and 
Appropriations Committee Ranking Member Nita Lowey, have a history of 
being champions of the TSO workforce, being fiercely committed to our 
Nation's aviation security, and have long sought transparency and 
accountability in the SPP. H.R. 4115 is a significant step in ensuring 
all of aviation security, not just that which is performed by Federal 
employees, receives the oversight necessary to protect the flying 
public.
    H.R. 4115 would make these significant improvements to the SPP 
program:
   Bans the subsidiaries of foreign-owned corporations from 
        obtaining SPP contracts.
   Requires covert testing of contract screeners and penalizes 
        cheating on those tests;
   Protects TSO jobs and benefits if a security contractor is 
        awarded a contract at their airport;
   Protects those who disclose wrongdoing by private screening 
        companies;
   Requires reporting of security breaches by private screening 
        companies; and
   Ensures transparency by requiring a cost analysis of private 
        screening companies to be conducted by the Comptroller General.
    The relevance of the Contract Screener Reform and Accountability 
Act to the SPP, the TSO workforce, and aviation security cannot be 
understated. H.R. 4115 should be passed by the House.
                               conclusion
    A video of the checkpoint at Washington-Dulles International 
Airport taken the morning of September 11, 2001 shows several hijackers 
being allowed to pass by several private screeners even though they set 
off metal detector alarms. We now know those men were allowed to board 
American Airlines Flight 77 with ``utility knives'' that they would use 
to kill innocent passengers and crew on-board the plane, and begin the 
hijacking of that flight. No individual private screener is responsible 
for the tragedy that occurred. However the country cannot turn a blind 
eye to the circumstances that led to the ultimate aviation security 
breach, including the issues raised by placing this important work in 
the hands of private security contractors. Screening of passengers and 
baggage remains inherently Governmental work that should remain with 
the Federal TSO workforce.

    Mr. Hudson. Thank you, Mr. Cox.
    We appreciate all of you being here. I now recognize myself 
for 5 minutes to ask questions.
    Let me start, Ms. Martin, by saying it should never have 
taken 5 years to be able to convert to private screeners and, 
frankly, it is an unacceptable amount of time.
    Nonetheless, I appreciate your perseverance because, like 
you, I see benefits--substantial benefits of privatized 
screening and, like you, I welcome the kind of efficiencies and 
customer service improvements that the private sector brings to 
bear in the airport environment.
    Having gone through the process yourself, what advice would 
you give other airports that are interested in the SPP program?
    Ms. Martin. Barring any changes to the current process, I 
would tell them to be prepared for a--the long haul. That is 
the best I could tell them. Unfortunately, there just isn't--
aren't any guidelines where you could tell them where they 
could find efficiencies.
    If I may, if--I would tell them to outline a process with 
TSA on the front end and then identify milestones along the way 
and to have a point person that they can contact on a regular 
basis for information about the process.
    Mr. Hudson. I appreciate that.
    Mr. VanLoh, would you like to respond to this question as 
well?
    Mr. VanLoh. I would agree with Ms. Martin. It is a long 
haul. Fortunately, Kansas City was selected right out of the 
box. If we had to go through this process--this onerous process 
now with the changing environment in our city government, I am 
not so sure we would be successful.
    Mr. Hudson. That is troubling.
    Mr. Amitay, in your testimony, you brought up that private 
companies can bring increased levels of efficiency and 
effectiveness to the security screening process.
    Why is it that private screening companies are able to do 
screening cheaper with same or better results, in your opinion?
    Mr. Amitay. Well, I think, with private screening 
companies, they just have--they are able to create incentives 
and disincentives for the workers that result in better 
attendance and timeliness and in performance, all of which can 
save money.
    A major cost-driver in any hourly operation is overtime 
cost and being able to schedule more efficiently, being able to 
staff more efficiently, having more robust attendance policies, 
you know, as Mark mentioned, greater discipline.
    That can all cut down on the personnel costs, which are the 
major factor. But, also, with the--with the management 
administrative costs, the ability of private sector to save 
over the Federal sectors is astronomical.
    You know, just take one issue such as leasing space at an 
airport. You know, TSA, I think at San Francisco, they have got 
some pretty prime space at the airport, whereas, the screening 
company--you know, they are very cost-efficient in their 
leasing. Private companies also greatly monitor workers' 
compensation claims and try to reduce injury rates. Again, that 
is another major cost-driver.
    You know, TSA really doesn't have any incentive to lower 
workers' compensation claims and, as I mentioned before with 
absenteeism, that is a major problem at TSA. Those are huge 
cost drivers.
    Mr. Hudson. When you talk about costs, you know, one of the 
constant frustrations I hear is that TSA is not counting all 
the cost to the Federal Government, as you mentioned in your 
testimony, including these retirement costs.
    I mean, why is it important for us to include all that when 
we are comparing the cost to the private sector?
    Mr. Amitay. Well, I think, as the FAA Modernization Act 
amendments to ATSA--they made a good point. They said that the 
private screener should not detrimentally affect cost 
efficiency as well as performance at an airport.
    So, therefore, yes, the private screeners need to be as 
costly or less than Federal screeners. But--so, therefore, the 
Federal Government then will set a cost ceiling for the private 
screeners at an airport, and this is the bid ceiling.
    If the--if TSA is not including all the costs of Federal 
screeners in that bid ceiling for private screening, well, then 
the private screeners will necessarily have to bid lower than 
what it costs the Federal Government.
    Now, they are able to do that because of some of these cost 
efficiencies I've mentioned, but it is making the bids 
artificially lower than they need to be.
    Mr. Hudson. Makes sense.
    Well, my time is about to expire. So I don't want to abuse 
my right. That limits my ability to gavel some of the others 
down when they go over.
    So at this time I will conclude my questions for the first 
round and recognize the gentleman from Montana, Mr. Daines, for 
any questions he may have.
    Mr. Daines. Thanks, Mr. Chairman. I appreciate that.
    Question for Ms. Martin: What is the overall level of 
interaction that you have had with TSA's SPP office?
    Ms. Martin. I am sorry. If you could repeat that.
    Mr. Daines. What is the overall level of interaction you 
have had with TSA's SPP office?
    Ms. Martin. The level?
    Mr. Daines. Uh-huh.
    Ms. Martin. Little to none. You know, we--when we started 
this process, we spoke with the folks in the SPP office 
initially. We were told where to find the application on-line.
    When we were first--took our application to the District of 
Columbia the first time, we met with the SPP office, who 
encouraged us to apply at that time so that they could lump it 
in with the seven airports in eastern Montana. We chose, along 
with the other airports in Montana, to hold our application.
    After we brought our application and applied in 2009, there 
was little to no interaction between the office except that 
which we initiated, asking where things were in the process. 
That has been pretty much the case through the entire process.
    Mr. Daines. So I think your response to my--answers the 
next question, but I will ask it anyway.
    Would you say you are generally satisfied or dissatisfied 
with the amount of information you received from TSA regarding 
the SPP process?
    Ms. Martin. I would say I was dissatisfied.
    Mr. Daines. What improvements do you think could be made to 
SPP that would make the process of applying as well as 
transitioning to private screening easier for airports without 
sacrificing the necessary security?
    Ms. Martin. You know, the application process itself is 
quite easy. I think there were a few questions on the 
application that would be more telling. As they say, when you 
have seen one airport, you have seen one airport. We all 
differ.
    Being able to identify the unique, perhaps, seasonality or 
other things that happen at that airport, that would be 
important in staffing. I think also then identifying the 
process milestones so that an applicant knows exactly when 
things are going to happen and at what point.
    It would be lovely to be involved in the--in, actually, the 
decision with regard to the final contractor to make certain 
that those things which were proposed in the scope of work 
actually do fit the needs of that airport.
    If the process is going to continue to be a lengthy one--
things actually could have changed at that airport in terms of 
seasonality or service, new carriers, what have you, that could 
actually have changed the demand from when the SOP was--the RFP 
was written and when it was actually awarded.
    Mr. Daines. So, from your viewpoint, going through this 
process--this nearly 5-year process, do you believe that 
airports are discouraged from applying and participating in SPP 
with the nature of the application and procurement process? 
Were you encouraged or discouraged to go through that process?
    Ms. Martin. You know, a number of the airport managers that 
I have talked to that have heard our story say, ``Boy, I 
wouldn't do that.'' So I believe that they are discouraged. I 
think, if more people heard our story, they would be 
discouraged.
    Mr. Daines. Could you describe the general sentiment in the 
airport community towards private screening, in general, if you 
could?
    Ms. Martin. I am sorry. Say that first part again.
    Mr. Daines. Could you describe the general sentiment in the 
airport community towards private screening, in general?
    Ms. Martin. You know, I don't know that I can speak for all 
of my counterparts at the other airports, but I think, by and 
large, we all believe that it can be done.
    Being a Federal employee doesn't make you impervious or 
make you perfect that the same people are going to do the job 
as for the private screener.
    I think we are concerned more about the management and the 
staffing, and we believe that the private screener can be 
flexible and can manage that.
    Mr. Daines. So I heard Mr. Cox's testimony as well just 
talking about the Bozeman airport. In fact, that is my home 
airport. I fly in and out of there every week. I live about 10 
miles away from the airport.
    What--what would you say in terms of kind-of the before and 
after as it relates to employee satisfaction, as it relates to 
the quality of the security now moving--transitioning to 
private screening? What is your sense of the kind-of before and 
after?
    Ms. Martin. Well, since we haven't actually made the 
transition, although roughly about 40 percent of our workforce 
is going to be going over to the private screener, they seem to 
be excited and happy. We haven't noticed any change in the 
delivery of their job.
    Those that are either deciding to leave the workforce 
completely or move to other airports cite various reasons. But 
I believe that the workforce that is staying is happy with the 
transition.
    Mr. Daines. Okay. Question for Mr. Amitay: What--I heard 
some pretty strong statements from Mr. Cox there as it relates 
to kind-of before and after there.
    What has been your experience, No. 1? No. 2, in general, 
how many different private screening companies compete for 
these contracts typically?
    Mr. Amitay. In terms of the competition, I don't have the 
exact numbers. But I would say probably a half dozen offers are 
under the FCE for a typical SPP contract. There hasn't been 
that many of them.
    You know, the Kansas City recompete and the Montana 
solicitation were some of the two most recent. I know, also, 
there is two in Florida. But it--there is a good deal of 
competition.
    Mr. Daines. Then maybe just contrasting maybe what your 
experience has been--I heard Mr. Cox talk about the experience 
in the Bozeman airport--what have you seen kind-of before and 
after, perhaps, in your experience?
    Mr. Amitay. Well, unfortunately, because of TSA's 
management of the program, there has been very few, actually, 
airports that have converted from Federal screeners to private 
screeners.
    Kansas City and San Francisco, the two largest airports 
that use private screeners, were part of that original pilot 
program. So, really, Montana--meaning that they never switched 
from private--they never had Federal screeners.
    So Montana is a little bit of a laboratory in terms of the 
transition. So people are watching that, and we are hopeful 
that, you know, it will be done effectively to benefit all the 
parties involved.
    Mr. Daines. Okay. Thank you.
    Mr. Hudson. Thank you.
    The Chairman now recognizes the gentleman from South 
Carolina, Mr. Sanford, for any questions you may have.
    Mr. Sanford. Thank you, Mr. Chairman.
    I will quickly yield my time to you, sir, or to my 
colleague from Montana, in the event he wants more time. I have 
been at conference and, therefore, did not get to hear your 
testimony.
    I do have one just general question just on private 
screening at large. It is my understanding that, basically, the 
bulk of all Western countries use private screening. So, you 
know, are there some best practices out there that you have 
identified in other countries that are worth noting?
    No. 2, you know, why is it--I remember at the time of 9/11 
calling a couple of former colleagues up here and saying, ``If 
this isn't a gut check, I don't know what is.''
    I see a former colleague from Tennessee back there, in 
fact.
    You know, the idea of Federalizing 40,000 folks just seemed 
to me a big jump without a lot of experimentation leading up to 
it.
    Why not more in the reverse, in terms of more 
experimentation from the standpoint of using private 
contractors in this particular regard?
    I would love to hear a couple of your thoughts just at 
large on that front.
    Then I will yield to you, Mr. Chairman.
    Mr. Amitay. Well, Congressman, I believe that the reason 
why people utilize private screening in other countries is 
because, first of all, the idea that the Government is both a 
regulator and the operator is very a dangerous proposition 
sometimes.
    You know, as has been the case already with TSA, you know, 
not to bring up bad stories, but, in Hawaii, it goes something 
like 39 TSA people at the airport, including the Federal 
security director and screeners and another--were fired and 
another 17 were disciplined because of, really, a large-scale 
concerted operation to not follow the proper required screening 
procedures.
    You know, when you have a--you know, when you have an 
arm's-length relationship with TSA doing--setting the policies 
and doing the regulation and then a private screening company 
doing the operations, you know, that private screening company 
is going to do what it is supposed to do because, also, it 
realizes that, you know, it could lose that contract, it could 
be debarred, or other punitive measures can be taken against it 
so it won't be able to do it anymore. This doesn't exist in the 
Federal screening world. So, you know, that--that is a major 
consideration, I think, that other countries have.
    In terms of best practices, you know, private screening 
companies, they are constantly looking for best practices 
because they constantly have to improve because they face 
constant competition, you know, from other competitors. If they 
don't employ best practices in terms of scheduling and 
screening and in terms of screener oversight----
    Mr. Sanford. I understand.
    But are there two that you would recommend to the committee 
worth noting or worth looking at either from the standpoint of 
the company or from the standpoint of a country?
    Mr. Amitay. I think everything is worth looking at, you 
know, again, with the basic premise that, you know, TSA sets--
they set the security requirements. They set the standard 
operating procedures.
    But if there are innovative and effective and efficient 
ways to meet those TSA security requirements, then they should 
be allowed to be explored.
    Mr. Sanford. I yield back, Mr. Chairman.
    Mr. Hudson. Thank you, Mr. Sanford.
    One of the issues that Mr. Cox raised was concerning to me, 
just about the compensation equivalencies. You know, obviously, 
I have had the opportunity in this job to meet a lot of TSOs.
    There are a lot of heroic, patriotic Americans working for 
TSA. You know, we certainly--you know, our concerns to find 
efficiencies and a better way of doing things through SPPs does 
not in any way reflect our opinion about these employees.
    But I don't know if--Mr. Amitay, do you want to respond to 
what Mr. Cox was saying about the situation in Montana where 
this TSO is not apparently getting equivalent compensation and 
benefits?
    Mr. Amitay. Well, I think that there are some 
misconceptions about exactly the compensation being offered to 
the TSOs who are transitioning, you know.
    I understand that those TSOs that are transitioning are 
going to get the same hourly wages and that, yeah, the benefits 
plan--it will be competitive. Will it be the exact benefits 
plan the Federal Government offers? No.
    But nobody in the private sector offers the exact benefits 
plan the Federal Government does. It is just out-of-date.
    Mr. Hudson. What about the concern about the health care 
plan only being available in Tennessee?
    Mr. Amitay. That is absolutely untrue. I--you know, 
whatever evidence or proof you need that it is untrue I can 
provide. I mean, that absolutely makes no sense.
    You know, this is a Blue Cross Blue Shield plan and, 
through Blue Cross Blue Shield--even though it might be 
administered out of Tennessee or based through the Tennessee 
plan, they have these reciprocity agreements through these Blue 
Cross Blue Shield State associations.
    So, therefore, you know, those Montana Blue Cross Blue 
Shield, you know, providers, you know, are considered to be in-
house providers under a Tennessee Blue Cross Blue Shield plan.
    Mr. Hudson. All right. Well, I appreciate that.
    Mr. VanLoh, you talked about the contract award process you 
are involved in now and is back in litigation and the concerns 
that, because the standard is sort-of the minimum pay scale, 
you have got a lot of employees who have been there maybe even 
12 years now with the current contractor, and you expressed 
some of the concerns you have with what that impact will have 
on the workforce.
    Do you want to elaborate on that a little bit?
    Mr. VanLoh. Thank you, Mr. Chairman.
    Well, that is absolutely true. When you have got a 
screening supervision staff that may have been there for the 
entire 12 years since 9/11, those senior--that senior 
capability will be gone because the company that was the 
apparent low bidder even low-bid the TSA's own estimate by far, 
by several million dollars.
    So, naturally, with a labor-intensive contract, the way you 
are going to save is cutting salaries and hours of work. So 
we--we see a mass migration of our senior-experience screeners 
to other employment because of the cuts just to make the 
contract work.
    Mr. Hudson. Well, in the initial SPP contract, you were 
able to give input in terms of vendor, is my understanding. Was 
that not part of the process when you--when you are renewing 
this or rebidding this?
    Mr. VanLoh. I have been involved with two renewal contracts 
since I have been in Kansas City 11 years. Usually, a 1- to 2-
day session where all the bidders come into town, we are not 
part of that. We have no idea of who is actually bidding on the 
contract. We are not asked about our incumbent on how they are 
doing.
    We get the letters from the public. TSA usually doesn't get 
complaint letters. We do. So we know how we are performing. We 
are not asked. Then we read about it on-line or in the papers 
on who the low bidder is and the new contract award. That is 
how the airport finds out.
    Mr. Hudson. That doesn't seem to make sense to me, 
especially, when you do a new SPP bid, the airport is allowed 
to comment on it. I don't know why there wouldn't be input 
allowed later when it actually would be more-informed comments, 
in my opinion. So I appreciate that.
    Mr. Sanford, are you interested in a second round?
    Mr. Sanford. I defer to you right now.
    Mr. Hudson. Okay. Well, in that case, I want to thank the 
witnesses for your time and your testimony. I think this was 
very informative. I appreciate you being here with us today.
    At this time I will dismiss the first panel and call up the 
second panel. Thank you.
    I will now call the second panel. First, we have Mr. 
William Benner, who currently serves as the director of the 
Screening Partnership Program. He joined TSA in 2002 and has 
served in numerous positions. Prior to joining TSA, Mr. Benner 
spent 21 years as an army military police officer and public 
affairs officer. In his final military assignment, Mr. Benner 
served as a DOD liaison to the newly-created FBI 
counterterrorism division, where he cultivated collaborative 
relationships between DOD, FBI, and other Federal agencies.
    Ms. Jennifer Grover is an acting director of GAO's Homeland 
Security and Justice Team, leading a portfolio of work on 
transportation security issues. Prior to this position, Ms. 
Grover was an assistant director of GAO's health care team, 
where she led reviews on a diverse range of health care-related 
issues. Ms. Grover joined GAO in 1991.
    The witnesses' full statements will appear in the record. 
Thank you both for joining us. The Chairman now recognize Mr. 
Benner to testify.

  STATEMENT OF WILLIAM BENNER, SCREENING PARTNERSHIP PROGRAM, 
    OFFICE OF SECURITY OPERATIONS, TRANSPORTATION SECURITY 
      ADMINISTRATION, U.S. DEPARTMENT OF HOMELAND SECURITY

    Mr. Benner. Chairman Hudson, Ranking Member Richmond, and 
Members of the subcommittee. I am pleased to appear before you 
today to discuss the TSA Screening Partnership Program. The SPP 
is a voluntary program under which airports may apply to 
utilize private-sector, rather than TSA employees to conduct 
passenger screening.
    Upon an airport's acceptance into the program, TSA selects 
a company that meets statutory requirements to conduct 
screening services under contract with the Federal Government.
    Regardless of whether an airport has private or Federal 
employees conducting passenger screening operations, TSA 
maintains responsibility for transportation security.
    SPP participation depends on interest from airport 
operators. Eighteen airports are currently participating in SPP 
and either have private contract screeners in place or are in 
the process of transitioning to contract screeners.
    These 18 airports represent approximately 4.5 percent of 
TSA's annual passenger volume. Airport operators interested in 
participating in the SPP may find the application on the TSA 
website, along with an overview of the application process and 
additional relevant information.
    TSA also utilizes the Federal Business Opportunities 
website to communicate with a wide range of vendors on SPP-
related topics. For example, TSA advertised and held an SPP-
specific industry day in January 2014, which was attended by 
approximately 100 vendors. The industry day provided an 
overview of the program's direction and goals, informed 
industry of the acquisition process, and offered a forum for 
obtaining feedback and insight into industry capabilities.
    TSA has also met with vendors in other forums, such as the 
National Association of Security Companies' annual Washington 
Summit and the Washington Homeland Security Roundtable, both 
held in June 2014.
    The FAA Modernization and Reform Act of 2012 provided 
standards for approval of an SPP application, a time line for 
approving or denying applications, and specific actions to take 
in the event an application is denied. Additionally, under the 
act, the TSA administrator must determine that the approval 
would not compromise the security or detrimentally effect the 
cost efficiency or effectiveness of the screening of passengers 
or property at the airport.
    In order to maintain cost efficiency, as required by the 
FAA authorization, TSA includes the Federal cost estimate of 
the airport screening operations in all requests for proposals. 
This practice demonstrates compliance with the law by ensuring 
that all offerors are evaluated on proposed costs as well as 
their ability to perform airport screening according to TSA 
standards.
    The methodology used to develop Federal cost estimates is 
continually validated and refined to conform with changes to 
the law, as well as to incorporate improvements resulting from 
audits conducted by the GAO and the DHS Office of Inspector 
General.
    TSA's goal is to award a contract within 1 year of 
receiving a new SPP application, assuming all legal 
requirements are met, and a qualified contractor is identified 
during the procurement process.
    While this is an aggressive time line, given the Federal 
Acquisition Regulation requirements, the goal is a reflection 
of our commitment to ensure airports that choose to have 
contract screeners can move expeditiously in that direction.
    The first opportunity to meet that 1-year goal is with the 
application we recently received from the Portsmouth 
International Airport in June 2014. It is my responsibility as 
the senior executive in charge of SPP to ensure the program is 
managed with an appropriate focus on both cost and security. I 
appreciate the work that the GAO and this committee have done 
in partnering with us to achieve the goal.
    Thank you for the opportunity to appear here today. I'll be 
happy to answer your questions.
    [The prepared statement of Mr. Benner follows:]
                  Prepared Statement of William Benner
                             July 29, 2014
    Chairman Hudson, Ranking Member Richmond, and Members of the 
subcommittee, I am pleased to appear before you today to discuss the 
Transportation Security Administration (TSA) Screening Partnership 
Program (SPP).
    As you know, TSA is a high-performing counterterrorism agency 
charged with facilitating and securing the travel of the nearly 1.8 
million air passengers each day. Our workforce carries out the 
important mission of protecting the transportation system to ensure 
freedom of movement for people and commerce. TSA's security measures 
comprise a multi-layered system that identifies, manages, and mitigates 
risk. Combined, these layers form a strong, secure system designed to 
deter and prevent terrorist attacks.
              screening partnership program (spp) history
    Congress, through the Aviation and Transportation Security Act 
(ATSA) (Pub. L. 107-71), established TSA and determined that passenger 
screening should be a predominantly Federal responsibility. ATSA also 
authorized a pilot program for privatized passenger screening (see 49 
U.S.C.  44919). TSA selected five airports to participate in the pilot 
program, representing five airport security risk categories as defined 
by the TSA administrator. Companies that met statutory qualifications 
were then selected to conduct screening services under contract with 
the Federal Government. Further, these private-sector employees are 
required to maintain the qualification criteria of Federal 
Transportation Security Officers (TSOs), and to receive compensation no 
less than such Federal personnel. This provision was formalized into 
the Screening Partnership Program after the 2-year pilot period 
concluded.
    The Federal Aviation Administration (FAA) Modernization and Reform 
Act of 2012 (Pub. L. 112-95) amended 49 U.S.C.  44920 to provide 
standards for approval of an SPP application, a time line for approving 
or denying applications, and specific actions to take in the event an 
application is denied. Additionally, the TSA administrator must 
determine ``that the approval would not compromise the security or 
detrimentally affect the cost-efficiency or the effectiveness of the 
screening of passengers or property at the airport.''
    The SPP is a voluntary program whereby airports may apply for SPP 
status and employ private security companies to conduct airport 
screening according to TSA standards. Participation depends on interest 
from airport operators. Since the program began in 2004, 31 airports 
have applied, including the original statutory 5 pilot airports. Of 
those 31, 18 are currently participating in the SPP program, and either 
have private contract screeners in place or are in the process of 
transitioning to contract screeners. Of these 18 airports, 8 fall 
within the smallest airport classification (Category IV--which means 
they enplane between 2,500 and 10,000 passengers a year). The 18 
airports currently participating in SPP represent approximately 28.9 
million passengers per year, or 4.5% of TSA's annual passenger volume. 
The cumulative contract value for these 18 airports is currently $661 
million over a 5-year period.
    Of the remaining 13 airports that have applied to the program, one 
is currently in the application adjudication phase, two are in the 
source selection phase, and the remaining 10 have either discontinued 
commercial air service, have been denied, or have withdrawn their 
applications prior to contract award.
    Regardless of whether an airport has private or Federal employees 
conducting passenger screening operations, TSA maintains overall 
responsibility for transportation security. As new and emerging threats 
are identified, we must be able to adapt and modify our procedures 
quickly to protect the traveling public. Federal Security Directors 
oversee the contracted security screening operations to ensure 
compliance with Federal security standards throughout the aviation 
network.
                  transparency and industry engagement
    Airport operators interested in participating in the SPP, may find 
the application on the TSA website along with an, an overview of the 
application process, and additional information relevant to airport 
operators contemplating participation. Additionally, the TSA website 
provides a listing and map of SPP airports, recent news regarding SPP 
(such as contract awards), links to Requests for Proposals (RFPs) 
postings, and employment opportunities at SPP service providers. TSA 
also utilizes the Federal Business Opportunities website to communicate 
with a wide range of vendors on SPP-related topics. For example, TSA 
advertised and held an SPP-specific Industry Day on January 10, 2014. 
This meeting was attended by approximately 100 vendors and provided a 
general overview of the program's direction and goals, informed 
industry of the acquisition process, and also offered a forum for 
obtaining feedback and insight into industry capabilities. TSA has also 
met with vendors in other forums, such as the National Association of 
Security Companies Annual Washington Summit and the Washington Homeland 
Security Roundtable, both held in June 2014.
                            cost efficiency
    In order to maintain cost efficiency as required by the FAA 
authorization, restrain costs from exceeding those incurred by TSA for 
Federal screening, and creating an unfunded requirement, the agency 
includes the Federal cost estimate of the airport screening operation 
in the RFP. This new practice demonstrates compliance with the law by 
ensuring that bidders are evaluated on costs as well as their ability 
to conduct airport screening according to TSA standards. Estimates are 
developed in accordance with standard methodology using the most recent 
and actual data from the airport. The methodology is continually 
validated and refined to conform with changes to the law, as well as to 
incorporate improvements resulting from audits conducted by the 
Government Accountability Office (GAO) and the Department of Homeland 
Security Office of the Inspector General (OIG).
                        program accomplishments
    In his January 2014 testimony, TSA's assistant administrator for 
the Office of Security Operations, Kelly Hoggan, stated that TSA's goal 
is to award a contract within 1 year of receiving a new SPP 
application, assuming all legal requirements are met and a qualified 
contractor is identified during the procurement process. While this is 
an aggressive time line given the requirements of the Federal 
Acquisition Regulation, the goal is a reflection of our commitment to 
ensure airports that choose to have contract screeners can move 
expeditiously in that direction. The first opportunity to meet that 1-
year goal is with the application we recently received from Portsmouth 
International Airport in June 2014.
    Our programmatic efforts in recent months have been focused on 
completing the procurement process for airport applications that have 
already been approved. I am pleased to report that TSA awarded a 
contract for four Montana airports, also known as Montana West, which 
became effective on June 1, 2014. We are currently in the transition 
phase for converting the screening operations at these airports from 
Federal to contractor. Two more airports are nearing the end of the 
procurement process: Orlando Sanford International Airport and Sarasota 
Bradenton International Airport. TSA expects to award those contracts 
in the coming months, assuming we identify a qualified vendor from the 
procurement process.
    TSA also closed out its remaining OIG recommendation to streamline 
the SPP application review process. In closing the recommendation, we 
instituted improvements in our processes for application review that 
will facilitate meeting the aggressive 1-year goal to award a contract 
on new applications. Process improvements include reducing the number 
of offices required to review and provide data for application 
decisions to only those essential to meet legislative requirements 
(security and cost efficiency) and co-locating the program and 
acquisitions teams that participate in the application review and 
procurement functions to enhance collaboration in planning and 
execution.
    I would also like to mention that the Joint Statement of Managers 
accompanying the fiscal year 2014 Appropriations directed TSA to 
allocate resources for an independent study of the performance of 
Federalized compared to privatized airports in a number of areas, to 
include cost and security effectiveness. TSA awarded a contract in June 
2014 to begin that study. We expect the contractor to publish the first 
of two reports in November 2014. The first report directly answers the 
Joint Statement of Managers and will be provided to GAO for review and 
subsequent reporting to Congress. The second report, focused on 
reviewing TSA's methodology for comparing performance and costs, will 
be completed in March 2015.
                               conclusion
    TSA strives to maximize security by keeping ahead of current 
threats identified by intelligence and by maintaining security systems 
that focus its resources on areas where they will yield the greatest 
benefit. This is consistent with our risk-based approach to security 
and critical in times of budget austerity. It is my responsibility as 
the senior executive in charge of SPP to ensure that the program is 
managed with an appropriate focus on cost and security. I appreciate 
the work that the Government Accountability Office and this committee 
have done in partnering with us to achieve this goal.
    Thank you for the opportunity to appear here today. I will be happy 
to answer your questions.

    Mr. Hudson. Thank you, Mr. Benner.
    The Chairman recognizes Ms. Grover to testify.

  STATEMENT OF JENNIFER A. GROVER, ACTING DIRECTOR, HOMELAND 
     SECURITY AND JUSTICE, GOVERNMENT ACCOUNTABILITY OFFICE

    Ms. Grover. Good morning Chairman Hudson, other Members, 
and staff. I am pleased to be here today to discuss TSA's 
implementation and oversight of the Screening Partnership 
Program.
    My remarks today reflect the findings from GAO's previous 
studies of SPP. We have recently started a new study to examine 
TSA's current approach to comparing the cost of providing 
screening services at SPP and non-SPP airports.
    At the end of 2012, GAO found weaknesses, both in TSA's 
implementation and in its oversight of SPP. First, regarding 
implementation, we found that TSA was not providing airports 
with clear guidance on how to apply to SPP. This is important 
to ensure that all airports have a full and fair opportunity to 
participate.
    TSA offered on-line frequently asked questions, but little 
else. Airports told us that they needed help with several 
issues, such as understanding whether or not they were good 
candidates, how to complete the application, and what type of 
information that they were required to submit about costs.
    Industry representatives echoed those concerns, noting that 
airports didn't want to invest in the application process when 
they were unsure about how they would be evaluated. But since 
then, consistent with our recommendation, TSA has posted 
additional guidance on its website, including examples of 
helpful information submitted by previous applicants, details 
about how applications will be assessed, and clarification 
about the requirements for submitting cost information.
    Second, regarding oversight, in 2012, we found that TSA did 
not evaluate the relative performance of private and Federal 
screeners. This is important because private screeners must be 
providing a level of services and protection that is equal or 
greater to that provided by the Federal screeners.
    Therefore, we recommended that TSA regularly monitor 
screener performance at the SPP airports compared to non-SPP 
airports. At the time, they did have some performance 
measurements in place. They used a scorecard performance system 
to regularly assess screeners at every airport on numerous 
performance measures, but the result from that was a point-in-
time snapshot of performance at that airport relative to its 
goals and relative to National averages, but not a comparison 
to the other airports in this category.
    So, to address the question of comparative performance, GAO 
reviewed several years of performance data for the then 16 SPP 
airports on four different measures. We found that the private 
screeners did slightly better than Federal screeners on some 
measures and slightly worse on others.
    Since then, TSA has started issuing its SPP annual reports, 
which, consistent with our recommendation, include performance 
data for each SPP airport relative to other airports in its 
category.
    We are pleased that TSA's changes address our 
recommendations. These changes may assist TSA in making future 
improvements to the program. For example, with greater clarity 
and transparency in the application process, additional 
airports may be encouraged to apply. It may also help ensure 
that the application process is carried out in a consistent 
manner. With the new comparative performance data, TSA may be 
better-equipped to identify best practices, as well as to 
identify SPP airports that require additional attention to 
improve their performance.
    Finally, one issue that remains unresolved is the question 
of the relative cost of screening operations at SPP versus non-
SPP airports. Over the years, TSA has faced challenges in 
accurately comparing these costs. In previous work, we noted 
limitations in TSA's analysis, such as the need to analyze how 
changes in their underlying assumptions would affect cost 
estimates.
    Since then, TSA has reported additional modifications to 
its cost estimation methodology. In our newly-initiated study, 
we will monitor TSA's progress in this area, and provide the 
committee with updated information.
    Thank you for the opportunity to testify this morning. I 
look forward to your questions.
    [The prepared statement of Ms. Grover follows:]
                Prepared Statement of Jennifer A. Grover
                             gao highlights
    Highlights of GAO-14-787T, a testimony before the Subcommittee on 
Transportation Security, Committee on Homeland Security, House of 
Representatives.
Why GAO Did This Study
    TSA maintains a Federal workforce to screen passengers and baggage 
at the majority of the Nation's commercial airports, but it also 
oversees a workforce of private screeners at airports who participate 
in the SPP. The SPP allows commercial airports to apply to have 
screening performed by private screeners, who are to provide a level of 
screening services and protection that equals or exceeds that of 
Federal screeners.
    This testimony addresses the extent to which TSA: (1) Provides 
guidance to airport operators for the SPP application process, (2) 
assesses and monitors the performance of private versus Federal 
screeners, and (3) compares the costs of Federal and private screeners. 
This statement is based on reports and a testimony GAO issued from 
January 2009 through January 2014.
What GAO Recommends
    GAO has made several recommendations since 2009 to improve SPP 
operations and oversight, which GAO has since closed as implemented 
based on TSA actions to address them.
 screening partnership program.--tsa has improved application guidance 
 and monitoring of screener performance, and continues to improve cost 
                           comparison methods
What GAO Found
    Since GAO's December 2012 report on the Screening Partnership 
Program (SPP), the Transportation Security Administration (TSA) has 
developed guidance for airport operators applying to the SPP. In 
December 2012, GAO found that TSA had not provided guidance to airport 
operators on its SPP application and approval process, which had been 
revised to reflect statutory requirements. Further, airport operators 
GAO interviewed at the time identified difficulties in completing the 
revised application, such as obtaining cost information requested in 
the application. GAO recommended that TSA develop application guidance 
and TSA concurred. In December 2012, TSA updated its SPP website with 
general application guidance and a description of TSA's assessment 
criteria and process. The new guidance addresses the intent of GAO's 
recommendation.
    TSA has also developed a mechanism to regularly monitor private 
versus Federal screener performance. In December 2012, TSA officials 
stated that they planned to assess overall screener performance across 
all commercial airports instead of comparing the performance of SPP and 
non-SPP airports as they had done previously. Also in December 2012, 
GAO reported differences between the performance at SPP and non-SPP 
airports based on screener performance data. In addition, GAO reported 
that TSA's across-the-board mechanisms did not summarize information 
for the SPP as a whole or across years, making it difficult to identify 
changes in private screener performance. GAO concluded that monitoring 
and comparing private and Federal screener performance were consistent 
with the statutory provision authorizing TSA to contract with private 
screening companies. As a result, GAO recommended that TSA develop a 
mechanism to regularly do so. TSA concurred with the recommendation and 
in January 2013, issued its SPP Annual Report, which provided an 
analysis of private versus Federal screener performance. In September 
2013, TSA provided internal guidance requiring that the report annually 
verify that the level of screening services and protection provided at 
SPP airports is equal to or greater than the level that would be 
provided by Federal screeners. These actions address the intent of 
GAO's recommendation.
    TSA has faced challenges in accurately comparing the costs of 
screening services at SPP and non-SPP airports. In 2007, TSA estimated 
that SPP airports cost about 17 percent more to operate than airports 
using Federal screeners. In January 2009, GAO noted strengths in TSA's 
methodology, but also identified seven limitations that could affect 
the accuracy and reliability of cost comparisons. GAO recommended that 
TSA update its analysis to address the limitations. TSA generally 
concurred with the recommendation. In March 2011, TSA described efforts 
to address the limitations and a revised cost comparison estimating 
that SPP airports would cost 3 percent more to operate in 2011 than 
airports using Federal screeners. In March 2011, GAO found that TSA had 
taken steps to address some of the limitations, but needed to take 
additional actions. In July 2014, TSA officials stated that they are 
continuing to make additional changes to the cost estimation 
methodology and GAO is continuing to monitor TSA's progress in this 
area through on-going work.
    Chairman Hudson, Ranking Member Richmond, and Members of the 
subcommittee: I appreciate the opportunity to discuss our work on the 
Transportation Security Administration's (TSA) Screening Partnership 
Program (SPP). TSA, a component of the Department of Homeland Security 
(DHS), is responsible for ensuring the security of the traveling public 
through, among other things, screening passengers traveling by aircraft 
for explosives and other prohibited items. To fulfill this 
responsibility, TSA maintains a Federal workforce of screeners at a 
majority of the Nation's commercial airports, but also oversees a 
smaller workforce of private screeners employed by companies under 
contract to TSA at airports that participate in TSA's SPP.\1\ The SPP, 
established in 2004 in accordance with provisions of the Aviation 
Transportation Security Act (ATSA), allows commercial airports an 
opportunity to ``opt out'' of Federal screening by applying to TSA to 
have private screeners perform the screening function.\2\ At airports 
with private screeners, the screening of passengers and baggage is 
performed by private screening contractors selected and approved by 
TSA; however, TSA continues to be responsible for overseeing airport 
security operations and ensuring that the private contractors provide 
effective and efficient screening operations in a manner consistent 
with law and other TSA requirements at these airports.\3\ As of July 
2014, there are currently 18 airports participating in the program, 14 
of which are currently operating with contracted screeners and four of 
which that have not yet transitioned to private screeners. Two 
additional approved airports are awaiting the selection of a screening 
contractor and one application is pending.\4\
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    \1\ For purposes of this report, a commercial airport is any 
airport in the United States that operates pursuant to a TSA-approved 
security program in accordance with 49 C.F.R. Pt. 1542 and at which TSA 
performs or oversees the performance of screening services. There are 
approximately 450 commercial airports as of July 2014. We refer to 
airports that are participating in the SPP as SPP airports and the 
screeners in those airports as private screeners. We refer to airports 
not participating in the SPP as non-SPP airports and the screeners in 
those airports as Federal screeners.
    \2\ See Pub. L. No. 107-71,  108, 115 Stat. 597, 611-13 (2001) 
(codified as amended at 49 U.S.C.  44919-20). TSA established the SPP 
in 2004 after concluding a 2-year pilot program through which four 
private screening companies performed screening operations at 5 
commercial airports (one contractor served 2 airports).
    \3\ The SPP contractor's responsibilities include recruiting, 
assessing, and training screening personnel to provide security 
screening functions in accordance with TSA regulations, policies, and 
procedures. SPP contractors are also expected to take operational 
direction from TSA to help ensure they meet the terms and conditions of 
the contract.
    \4\ In May 2014, TSA awarded contracts to 4 airports: Bert Mooney 
Airport, Bozeman Yellowstone International Airport, Glacier Park 
International Airport, and West Yellowstone Airport and in June 2014, 
TSA received a new application for Portsmouth International Airport. 
According to TSA, this application is in the adjudication phase with 
the decision to be made no later than October 2014.
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    The standard by which TSA evaluates airport applications for 
participation in the SPP has changed since the program's inception in 
2004. First, in January 2011, the TSA administrator announced his 
decision not to expand the SPP beyond the 16 airports that were 
participating in the program at that time ``unless a clear and 
substantial advantage to do so emerges in the future.'' In so doing, 
the administrator cited his interest in helping the agency evolve into 
a ``more agile, high-performing organization that can meet the security 
threats of today and the future'' as the reason for his decision. Of 
the 6 airports that submitted applications from March 2009 through 
January 2012 and that were evaluated under the ``clear and substantial 
advantage'' standard, TSA approved the application of 1 airport and 
denied the applications of the other 5. Second, according to TSA 
officials, the Federal Aviation Administration Modernization and Reform 
Act of 2012 (FAA Modernization Act), enacted in February 2012, prompted 
TSA to change the standard by which it evaluates SPP applications and 
requires, among other things, that the TSA administrator approve an SPP 
application submitted by an airport operator if the administrator 
determines that the approval would not compromise security or 
detrimentally affect the cost-efficiency or the effectiveness of the 
screening of passengers or property at the airport.\5\
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    \5\ See Pub. L. No. 112-95,  830(a), 126 Stat. 11, 135 (2012) 
(codified at 49 U.S.C.  44920(b)). The term airport operator means a 
person that operates a ``commercial airport,'' as that term is used in 
this report. See also 49 C.F.R.  1540.5 (defining the term ``airport 
operator'').
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    My testimony today addresses the extent to which TSA: (1) Provides 
guidance to airport operators for the SPP application process, (2) 
assesses and monitors the performance of private versus Federal 
screeners, and (3) compares the costs of private and Federal 
operations. This statement is based on reports and a testimony we 
issued from January 2009 to January 2014.\6\ Our March 2011 report was 
based on our review of TSA's updated cost analysis, which was provided 
in response to recommendations in our January 2009 report, as well as 
discussions with agency officials. For our December 2012 report, among 
other things we analyzed past and current SPP application forms and 
instructions and interviewed airport operators, screeners, SPP 
contractors, SPP applicants, TSA headquarters officials, and Federal 
security directors (FSD).\7\ More detailed information on the scope and 
methodology appears in our January 2009, March 2011, and December 2012 
reports, and our January testimony. For the January 2014 testimony, we 
obtained related documentation, such as the SPP Annual Report issued in 
January 2013, and interviewed agency officials on progress made to 
implement the recommendations from our December 2012 report related to 
application guidance and monitoring of private versus Federal screener 
performance.
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    \6\ GAO, Aviation Security: TSA's Cost and Performance Study of 
Private-Sector Airport Screening, GAO-09-27R (Washington, DC: Jan. 9, 
2009); Aviation Security: TSA's Revised Cost Comparison Provides a More 
Reasonable Basis for Comparing the Costs of Private-Sector and TSA 
Screeners GAO-11-375R (Washington, DC Mar. 4, 2011); Screening 
Partnership Program: TSA Should Issue More Guidance to Airports and 
Monitor Private Versus Federal Screener Performance, GAO-13-208 
(Washington, DC: Dec. 6, 2012); and Screening Partnership Program: TSA 
Issued Application Guidance and Developed a Mechanism to Monitor 
Private Versus Federal Screener Performance, GAO-14-269T (Washington, 
DC: Jan. 14, 2014).
    \7\ FSDs are TSA officials that provide day-to-day operational 
direction for security operations at the airports within their 
jurisdiction, including those participating in the SPP.
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    We conducted the work on which this statement and the underlying 
products are based in accordance with generally accepted Government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a reasonable 
basis for our findings and conclusions based on our audit objectives.
                               background
    On November 19, 2002, pursuant to ATSA, TSA began a 2-year pilot 
program at 5 airports using private screening companies to screen 
passengers and checked baggage.\8\ In 2004, at the completion of the 
pilot program, and in accordance with ATSA, TSA established the SPP, 
whereby any airport authority, whether involved in the pilot or not, 
could request a transition from Federal screeners to private, 
contracted screeners. All of the 5 pilot airports that applied were 
approved to continue as part of the SPP, and since its establishment, 
21 additional airport applications have been accepted by the SPP.\9\
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    \8\ See 49 U.S.C.  44919. The pilot program was to assess the 
feasibility of having qualified private screening companies provide 
airport security screening services in lieu of Federal screeners. The 
following airports from each security risk category were selected to 
participate: (1) San Francisco International Airport--Category X, (2) 
Kansas City International Airport--Category I, (3) Greater Rochester 
International Airport--Category II (now a Category I airport), (4) 
Jackson Hole Airport--Category III, and (5) Tupelo Regional Airport--
Category IV. TSA classifies commercial airports in the United States 
into one of five security risk categories (X, I, II, III, and IV) based 
on various factors, such as the total number of takeoffs and landings 
annually, and other special security considerations. In general, 
Category X airports have the largest number of passenger boardings, and 
Category IV airports have the smallest.
    \9\ A total of 26 airports have been approved to participate in the 
SPP since its inception in 2004, including the 18 airports currently 
participating in the SPP (of which 4 airports have not yet transitioned 
to private screening), and 2 airports approved for participation and 
awaiting the selection of a screening contractor as of July 2014. Of 
the remaining 6 approved airports, 4 airports had participated in the 
SPP but left the program after commercial air service was discontinued 
at the airport and 2 withdrew their applications after being approved. 
For more information on the history of application to the SPP, see GAO-
13-208.
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    In March 2012, TSA revised the SPP application to reflect 
requirements of the FAA Modernization Act, enacted in February 
2012.\10\ Among other provisions, the act provides the following:
---------------------------------------------------------------------------
    \10\ See generally Pub. L. No. 112-95,  803, 126 Stat. at 135-36.
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   Not later than 120 days after the date of receipt of an SPP 
        application submitted by an airport operator, the TSA 
        administrator must approve or deny the application.
   The TSA administrator shall approve an application if 
        approval would not: (1) Compromise security, (2) detrimentally 
        affect the cost efficiency of the screening of passengers or 
        property at the airport, or (3) detrimentally affect the 
        effectiveness of the screening of passengers or property at the 
        airport.
   Within 60 days of a denial, TSA must provide the airport 
        operator, as well as the Committee on Commerce, Science, and 
        Transportation of the Senate and the Committee on Homeland 
        Security of the House of Representatives, a written report that 
        sets forth the findings that served as the basis of the denial, 
        the results of any cost or security analysis conducted in 
        considering the application, and recommendations on how the 
        airport operator can address the reasons for denial.
    All commercial airports are eligible to apply to the SPP. To apply, 
an airport operator must complete the SPP application and submit it to 
the SPP Program Management Office (PMO), as well as to the FSD for its 
airport. Figure 1 illustrates the SPP application process.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Although TSA provides all airports with the opportunity to apply 
for participation in the SPP, authority to approve or deny the 
application resides in the discretion of the TSA administrator. 
According to TSA officials, in addition to the cost-efficiency and 
effectiveness considerations mandated by FAA Modernization Act, there 
are many other factors that are weighed in considering an airport's 
application for SPP participation. For example, the potential impacts 
of any upcoming projects at the airport are considered. Once an airport 
is approved for SPP participation and a private screening contractor 
has been selected by TSA, the contract screening workforce assumes 
responsibility for screening passengers and their property and is 
required to adhere to the same security regulations, standard operating 
procedures, and other TSA security requirements followed by Federal 
screeners at non-SPP airports.
    tsa has developed program application guidance to help improve 
  transparency of its process and assist airports in completing their 
                              applications
    TSA has developed guidance to assist airport operators in 
completing their SPP applications, as we recommended in December 2012. 
Specifically, in December 2012, we reported that TSA had developed some 
resources to assist SPP applicants, but it had not provided guidance on 
its application and approval process to assist airports. As it was 
originally implemented in 2004, the SPP application process required 
only that an interested airport operator submit an application stating 
its intention to opt out of Federal screening as well as its reasons 
for wanting to do so. In 2011, TSA revised its SPP application to 
reflect the ``clear and substantial advantage'' standard announced by 
the administrator in January 2011. Specifically, TSA requested that the 
applicant explain how private screening at the airport would provide a 
clear and substantial advantage to TSA's security operations.\11\ At 
that time, TSA did not provide written guidance to airports to assist 
them in understanding what would constitute a ``clear and substantial 
advantage to TSA security operations'' or TSA's basis for determining 
whether an airport had met that standard.
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    \11\ For more on the specific wording of this and other questions 
from the application, see GAO-13-208.
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    As previously noted, in March 2012 TSA again revised the SPP 
application in accordance with provisions of the FAA Modernization Act, 
which became law in February 2012. Among other things, the revised 
application no longer included the ``clear and substantial advantage'' 
question, but instead included questions that requested applicants to 
discuss how participating in the SPP would not compromise security at 
the airport and to identify potential areas where cost savings or 
efficiencies may be realized. In December 2012, we reported that while 
TSA provided general instructions for filling out the SPP application 
as well as responses to frequently asked questions (FAQ), the agency 
had not issued guidance to assist airports with completing the revised 
application or explained to airports how it would evaluate applications 
given the changes brought about by the FAA Modernization Act. For 
example, neither the application instructions nor the FAQs addressed 
TSA's SPP application evaluation process or its basis for determining 
whether an airport's entry into the SPP would compromise security or 
affect cost efficiency and effectiveness.
    Further, in December 2012, we found that airport operators who 
completed the applications generally stated that they faced 
difficulties in doing so and that additional guidance would have been 
helpful.\12\ For example, one operator stated that he needed cost 
information to help demonstrate that his airport's participation in the 
SPP would not detrimentally affect the cost-efficiency of the screening 
of passengers or property at the airport and that he believed not 
presenting this information would be detrimental to his airport's 
application. However, TSA officials at the time said that airports do 
not need to provide this information to TSA because, as part of the 
application evaluation process, TSA conducts a detailed cost analysis 
using historical cost data from SPP and non-SPP airports. The absence 
of cost and other information in an individual airport's application, 
TSA officials noted, would not materially affect the TSA 
administrator's decision on an SPP application.
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    \12\ For our December 2012 report, we interviewed four of the five 
airport operators that applied to the SPP since TSA revised its 
application after enactment of the FAA Modernization Act. All five of 
the applications were subsequently approved by TSA. We reported that 
three of the four operators we interviewed struggled to answer the 
application questions related to the cost-efficiency of converting to 
the SPP because they did not have data on Federal screening costs, 
while the fourth airport operator did not need additional information 
or guidance to respond to the question. Further, three of the four 
airport operators we interviewed said that additional guidance would 
have been helpful in completing the application and determining how TSA 
evaluates the applications. See GAO-13-208 for more information.
---------------------------------------------------------------------------
    Therefore, we reported in December 2012 that while TSA had approved 
all applications submitted since enactment of the FAA Modernization 
Act, it was hard to determine how many more airports, if any, would 
have applied to the program had TSA provided application guidance and 
information to improve transparency of the SPP application process. 
Specifically, we reported that in the absence of such application 
guidance and information, it may be difficult for airport officials to 
evaluate whether their airports are good candidates for the SPP or 
determine what criteria TSA uses to accept and approve airports' SPP 
applications. We concluded that clear guidance for applying to the SPP 
could improve the transparency of the application process and help 
ensure that the existing application process is implemented in a 
consistent and uniform manner. Thus, we recommended that TSA develop 
guidance that clearly: (1) States the criteria and process that TSA is 
using to assess whether participation in the SPP would compromise 
security or detrimentally affect the cost efficiency or the 
effectiveness of the screening of passengers or property at the 
airport, (2) states how TSA will obtain and analyze cost information 
regarding screening cost efficiency and effectiveness and the 
implications of not responding to the related application questions, 
and (3) provides specific examples of additional information airports 
should consider providing to TSA to help assess an airport's 
suitability for the SPP.
    TSA concurred with our recommendation and, in January 2014, we 
reported that TSA had taken actions to address it. Specifically, TSA 
updated its SPP website in December 2012 by providing: (1) General 
guidance to assist airports with completing the SPP application and (2) 
a description of the criteria and process the agency will use to assess 
airports' applications to participate in the SPP. While the guidance 
states that TSA has no specific expectations of the information an 
airport could provide that may be pertinent to its application, it 
provides some examples of information TSA has found useful and that 
airports could consider providing to TSA to help assess their 
suitability for the program. Further, the guidance, in combination with 
the description of the SPP application evaluation process, outlines how 
TSA plans to analyze and use cost information regarding screening cost 
efficiency and effectiveness. The guidance also states that providing 
cost information is optional and that not providing such information 
will not affect the application decision. As we reported in January 
2014, these actions address the intent of our recommendation.
   performance between spp and non-spp airports varied; tsa recently 
   developed a mechanism to monitor private versus federal screener 
                              performance
    In our December 2012 report, we analyzed screener performance data 
for four measures and found that there were differences in performance 
between SPP and non-SPP airports, and those differences could not be 
exclusively attributed to the use of either Federal or private 
screeners. The four measures we selected to compare screener 
performance at SPP and non-SPP airports were Threat Image Projection 
(TIP) detection rates; recertification pass rates; Aviation Security 
Assessment Program (ASAP) test results; and Presence, Advisement, 
Communication, and Execution (PACE) evaluation results (see Table 1). 
For each of these four measures, we compared the performance of each of 
the 16 airports then participating in the SPP with the average 
performance for each airport's category (X, I, II, III, or IV), as well 
as the National performance averages for all airports for fiscal years 
2009 through 2011.\13\
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    \13\ Additional information on these performance measures and how 
we selected them can be found in our December 2012 report. See GAO-13-
208.

 TABLE 1.--PERFORMANCE MEASURES USED TO COMPARE SCREENER PERFORMANCE AT
 SCREENING PARTNERSHIP PROGRAM (SPP) AND NON-SPP AIRPORTS, DECEMBER 2012
------------------------------------------------------------------------
     Performance Measure                      Description
------------------------------------------------------------------------
Threat Image Projection (TIP)  TIPs are fictional threat images (guns,
 detection rates.               knives, improvised explosive devices,
                                etc.) superimposed onto carry-on baggage
                                as it passes through the X-ray machine.
                                While screening carry-on baggage,
                                screeners identify that a potential
                                threat has been spotted by selecting a
                                ``threat'' button. If the identified
                                image is a TIP, the X-ray machine
                                informs the screener that the threat was
                                fictional. Otherwise, a screener will
                                search the bag, as the threat object may
                                be real.
Recertification pass rates...  In order to maintain their certification
                                to screen passengers and baggage, all
                                screeners (at both SPP and non-SPP
                                airports) must pass several
                                recertification tests on an annual
                                basis. These tests include assessments
                                of threat detection skills on carry-on
                                and checked baggage X-ray machines as
                                well as role-playing scenarios to assess
                                other job functions, such as physical
                                bag searches, pat-downs, and screening
                                passengers with disabilities.
Aviation Security Assessment   ASAP tests are covert performance
 Program (ASAP) tests results.  assessments conducted at both screening
                                checkpoints and checked baggage
                                screening areas. Tests are implemented
                                locally by unrecognizable role players
                                who attempt to pass standard test items,
                                such as knives, guns, or simulated
                                improvised explosive devices, through
                                the screening checkpoints or checked
                                baggage screening areas.
Presence, Advisement,          PACE evaluations are used to assess
 Communication, and Execution   screener performance on various elements
 (PACE) evaluations.            that may affect security and a
                                passenger's overall traveling
                                experience. PACE evaluators visit a
                                checkpoint covertly and assess the
                                screening personnel on a variety of
                                elements, such as whether the officers
                                provide comprehensive instruction and
                                engage passengers in a calm and
                                respectful manner when screening.
                                Because PACE evaluations began as a
                                baseline assessment program in fiscal
                                year 2011 and had been implemented only
                                at Category X, I, and II airports, our
                                analysis for this measure was limited to
                                the 6 SPP airports in those categories
                                during fiscal year 2011.\1\
------------------------------------------------------------------------
Source: GAO analysis of TSA information. GAO-14-787T.
 
\1\ The 6 Category X, I, and II SPP airports in fiscal year 2011 are San
  Francisco International Airport (X), Kansas City International Airport
  (I), Greater Rochester International Airport (I), Key West
  International Airport (II), Joe Foss Field (II), and Jackson Hole
  Airport (II).

    As we reported in December 2012, on the basis of our analyses, we 
found that, generally, screeners at certain SPP airports performed 
slightly above the airport category and National averages for some 
measures, while others performed slightly below. For example, at SPP 
airports, screeners performed above their respective airport category 
averages for recertification pass rates in the majority of instances, 
while at the majority of SPP airports that took PACE evaluations in 
2011, screeners performed below their airport category averages.\14\ 
For TIP detection rates, screeners at SPP airports performed above 
their respective airport category averages in about half of the 
instances. However, we also reported in December 2012 that the 
differences we observed in private and Federal screener performance 
cannot be entirely attributed to the type of screeners at an airport, 
because, according to TSA officials and other subject-matter experts, 
many factors, some of which cannot be controlled for, affect screener 
performance. These factors include, but are not limited to, checkpoint 
layout, airline schedules, seasonal changes in travel volume, and type 
of traveler.
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    \14\ For recertification pass rates, the term ``instance'' means 
performance by an airport during a particular year or fiscal year, 
while for TIP detection rates, the term means performance by an airport 
during a particular fiscal year for a specific type of screening 
machine.
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    We also reported in December 2012 that TSA collects data on several 
other performance measures but, for various reasons, the data cannot be 
used to compare private and Federal screener performance for the 
purposes of our review. For example, passenger wait time data could not 
be used because we found that TSA's policy for collecting wait times 
changed during the time period of our analyses and that these data were 
not collected in a consistent manner across all airports.\15\ We also 
considered reviewing human capital measures such as attrition, 
absenteeism, and injury rates, but did not analyze these data because 
TSA's Office of Human Capital does not collect these data for SPP 
airports. We reported that while the contractors collect and report 
this information to the SPP PMO, TSA does not validate the accuracy of 
the self-reported data nor does it require contractors to use the same 
human capital measures as TSA, and accordingly, differences may exist 
in how the metrics are defined and how the data are collected. 
Therefore, we found that TSA could not guarantee that a comparison of 
SPP and non-SPP airports on these human capital metrics would be an 
equal comparison.
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    \15\ TSA's policy for measuring wait time changed in March 2010. 
Instead of collecting precise wait times every hour, TSA began only 
recording instances in which the wait time was more than 20 or 30 
minutes. Further, through our site visits conducted for the December 
2012 report, we learned that TSA collects airports' wait time data in 
different ways. For example, at some airports TSA calculates the wait 
time from the end of the queue until the passenger reaches the travel 
document checker podium; at other airports, TSA calculates the time 
from the end of the line until the passenger passes through the 
walkthrough metal detector or the Advanced Imaging Technology. See GAO-
13-208.
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    Moreover, in December 2012, we found that while TSA monitored 
screener performance at all airports, the agency did not monitor 
private screener performance separately from Federal screener 
performance or conduct regular reviews comparing the performance of SPP 
and non-SPP airports. Beginning in April 2012, TSA introduced a new set 
of performance measures to assess screener performance at all airports 
(both SPP and non-SPP) in its Office of Security Operations Executive 
Scorecard (the Scorecard). Officials told us at the time of our 
December 2012 review that they provided the Scorecard to FSDs every 2 
weeks to assist the FSDs with tracking performance against stated goals 
and with determining how performance of the airports under their 
jurisdiction compared with National averages.\16\ According to TSA, the 
10 measures used in the Scorecard were selected based on input from 
FSDs and regional directors on the performance measures that most 
adequately reflected screener and airport performance.\17\ Performance 
measures in the Scorecard included the TIP detection rate and the 
number of negative and positive customer contacts made to the TSA 
Contact Center through e-mails or phone calls per 100,000 passengers 
screened, among others.\18\
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    \16\ Although FSDs provide day-to-day operational direction for 
security operations at the airports within their jurisdiction, 
including those participating in the SPP, FSDs have responsibility for 
overall security at SPP airports but do not have direct control over 
workforce management. Rather, the SPP contractor is contractually 
obligated to effectively and efficiently manage its screening 
workforce.
    \17\ Prior to the Scorecard, from 2006 through April 2012, FSDs 
used three performance measures in the Management Objective Report 
(MOR) to assess screener and airport performance. The MOR included 
three measures that assessed screener performance, including TIP 
detection rates, Advanced Imaging Technology checkpoint utilization, 
and layered security effectiveness. For more on these performance 
measures, see GAO-13-208.
    \18\ The TSA Contact Center handles these customer contacts for all 
of TSA, not only those related to passenger and baggage screening. For 
more on the Scorecard performance measures, see GAO-13-208.
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    We also reported in December 2012 that TSA had conducted or 
commissioned prior reports comparing the cost and performance of SPP 
and non-SPP airports. For example, in 2004 and 2007, TSA commissioned 
reports prepared by private consultants, while in 2008 the agency 
issued its own report comparing the performance of SPP and non-SPP 
airports.\19\ Generally, these reports found that SPP airports 
performed at a level equal to or better than non-SPP airports. However, 
TSA officials stated at the time that they did not plan to conduct 
similar analyses in the future, and instead, they were using across-
the-board mechanisms of both private and Federal screeners, such as the 
Scorecard, to assess screener performance across all commercial 
airports.
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    \19\ Bearing Point, Inc., Private Screening Operations Performance 
Evaluation Report (Apr. 16, 2004); Catapult Consultants, LLC, Private 
Screening Operations: Business Case Analysis, Transportation Security 
Administration, Screening Partnership Program (Arlington, Virginia: 
Dec. 14, 2007); and TSA, A Report on SPP Airport Cost and Performance 
Analysis and Comparison to Business Case Analysis Finding (Arlington, 
Virginia: Feb. 1, 2008).
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    We found that in addition to using the Scorecard, TSA conducted 
monthly contractor performance management reviews (PMR) at each SPP 
airport to assess the contractor's performance against the standards 
set in each SPP contract. The PMRs included 10 performance measures, 
including some of the same measures included in the Scorecard, such as 
TIP detection rates and recertification pass rates, for which TSA 
establishes acceptable quality levels of performance. Failure to meet 
the acceptable quality levels of performance could result in corrective 
actions or termination of the contract.
    However, in December 2012, we found that the Scorecard and PMR did 
not provide a complete picture of screener performance at SPP airports 
because, while both mechanisms provided a snapshot of private screener 
performance at each SPP airport, this information was not summarized 
for the SPP as a whole or across years, which made it difficult to 
identify changes in performance. Further, neither the Scorecard nor the 
PMR provided information on performance in prior years or controlled 
for variables that TSA officials explained to us were important when 
comparing private and Federal screener performance, such as the type of 
X-ray machine used for TIP detection rates. We concluded that 
monitoring private screener performance in comparison with Federal 
screener performance was consistent with the statutory requirement that 
TSA enter into a contract with a private screening company only if the 
administrator determines and certifies to Congress that the level of 
screening services and protection provided at an airport under a 
contract will be equal to or greater than the level that would be 
provided at the airport by Federal Government personnel.\20\ Therefore, 
we recommended that TSA develop a mechanism to regularly monitor 
private versus Federal screener performance, which would better 
position the agency to know whether the level of screening services and 
protection provided at SPP airports continues to be equal to or greater 
than the level provided at non-SPP airports.
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    \20\ See 49 U.S.C.  44920(d) (providing further that private 
screening companies must be owned and controlled by a citizen of the 
United States, subject to a waiver of this requirement by the TSA 
administrator in certain circumstances).
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    TSA concurred with the recommendation, and has taken actions to 
address it. Specifically, in January 2013, TSA issued its first SPP 
Annual Report. The report highlights the accomplishments of the SPP 
during fiscal year 2012 and provides an overview and discussion of 
private versus Federal screener cost and performance. The report also 
describes the criteria TSA used to select certain performance measures 
and reasons why other measures were not selected for its comparison of 
private and Federal screener performance. The report compares the 
performance of SPP airports with the average performance of airports in 
their respective category, as well as the average performance for all 
airports, for three performance measures: TIP detection rates, 
recertification pass rates, and PACE evaluation results. Further, in 
September 2013, the TSA assistant administrator for security operations 
signed an operations directive that provides internal guidance for 
preparing the SPP Annual Report, including the requirement that the SPP 
PMO must annually verify that the level of screening services and 
protection provided at SPP airports is equal to or greater than the 
level that would be provided by Federal screeners. We believe that 
these actions address the intent of our recommendation and should 
better position TSA to determine whether the level of screening 
services and protection provided at SPP airports continues to be equal 
to or greater than the level provided at non-SPP airports. Further, 
these actions could also assist TSA in identifying performance changes 
that could lead to improvements in the program and inform decision 
making regarding potential expansion of the SPP.
 tsa continues to address limitations in the methodology for comparing 
            the costs of spp and non-spp screening services
    TSA has faced challenges in accurately comparing the costs of 
screening services at SPP and non-SPP airports. In 2007, TSA estimated 
that SPP airports would cost about 17 percent more to operate than 
airports using Federal screeners. In our January 2009 report we noted 
strengths in the methodology's design, but also identified seven 
limitations in TSA's methodology that could affect the accuracy and 
reliability of cost comparisons, and its usefulness in informing future 
management decisions.\21\ We recommended that if TSA planned to rely on 
its comparison of cost and performance of SPP and non-SPP airports for 
future decision making, the agency should update its analysis to 
address the limitations we identified. TSA generally concurred with our 
findings and recommendation. In March 2011, TSA provided us with an 
update on the status of its efforts to address the limitations we cited 
in our report, as well as a revised comparison of costs for screening 
operations at SPP and non-SPP airports. This revised cost comparison 
generally addressed three of the seven limitations and provided TSA 
with a more reasonable basis for comparing the screening cost at SPP 
and non-SPP airports. In the update, TSA estimated that SPP airports 
would cost 3 percent more to operate in 2011 than airports using 
Federal screeners. In March 2011, we found that TSA had also taken 
actions that partially addressed the four remaining limitations related 
to cost, but needed to take additional actions or provide additional 
documentation. In July 2014, TSA officials stated they are continuing 
to make additional changes to the cost estimation methodology and we 
are continuing to monitor TSA's progress in this area through on-going 
work.
---------------------------------------------------------------------------
    \21\ TSA's study design: (1) Did not consider the impact of 
overlapping administrative personnel on the costs of SPP airports; (2) 
underestimated costs to the Government for non-SPP airports by not 
including all costs associated with providing passenger and baggage 
screening services; (3) included more uncertainty in the cost estimates 
for non-SPP airports than for SPP airports, but did not account 
explicitly for uncertainty, or analyze or report the effect of 
uncertainty in its estimates; (4) did not include an analysis to 
determine how changes in underlying assumptions would affect the size 
of the estimate, and its cost comparison did not account for 
differences in screening performance or analyze the costs associated 
with a particular level of performance; (5) was based on data from a 
single fiscal year (2007) with uncertainty in how representative the 
costs for a single year may be; (6) did not ensure that cost data 
collected were reliable and did not prepare documentation of its 
costing methodology called for in Federal accounting standards; (7) and 
did not document key assumptions and methods used in sufficient detail 
to justify the reasonableness of costs. See GAO-09-27R.
---------------------------------------------------------------------------
    Chairman Hudson, Ranking Member Richmond, and Members of the 
subcommittee, this completes my prepared statement. I would be happy to 
respond to any questions you may have at this time.

    Mr. Hudson. Thank you, Ms. Grover.
    We appreciate you both being here today.
    I now recognize myself for 5 minutes to ask questions.
    Mr. Benner, according to TSA's cost comparison of SPP 
versus non-SPP airports last year, which one was less expensive 
and by what percentage?
    Mr. Benner. The overall average for last year, SPP airports 
were approximately 2 percent less--0.2 percent less, excuse me, 
than non-SPP airports. But I do want to mention, as Ms. Grover 
mentioned, that there really is a point in time. That could 
change between airport to airport, because some airports are a 
little higher, some airports are a little lower. That also 
could change year over year based on a number of different 
variables, just as one example is as TSA on the Federal side is 
reaping the benefits of the RBS program, it takes just a little 
bit longer through contract modifications to reap the same 
benefits on the SPP side of the house.
    So, any given year, you are going to have a little bit of a 
difference between the cost between SPP and non-SPP. If we had 
a very static environment that we worked in, then the cost 
would remain relatively the same cost comparison, but we don't, 
we have a fluid environment.
    Mr. Hudson. Can you explain the methodology and sort-of the 
specific elements used to produce your cost comparison?
    Mr. Benner. Are you talking about the FCEs, sir?
    Mr. Hudson. Sure.
    Mr. Benner. So included in the FCE are all the actual costs 
at an airport and the benefits; so the actual wages at the 
airport, the actual benefits at the airport, less those that 
are not paid by TSA. For instance, TSA includes in its Federal 
cost estimate the retirement cost that TSA actually pays into 
the system.
    What it does not include, however, are the unfunded 
retirement liabilities that are not paid by TSA; they are 
actually paid by OPM. So that entire Federal cost estimate does 
include all costs for which TSA is appropriated funds in one 
form or another for that particular airport.
    Mr. Hudson. Well, do you agree if you are not adding the 
retirement costs into the comparison that SPP airports actually 
would be even more cost-effective than what the current 
comparison seems to show?
    Mr. Benner. Sir, not necessarily. Because what would happen 
if we included--hypothetically, if we were to include the 
unfunded retirement liability, and there are a couple other 
minor imputed costs that we don't cover as well. We would 
probably have to include those costs in the bottom line ATSA 
rate, which is paid, for instance, that would increase that 
ATSA rate as the floor that TSOs are actually paid so it would 
also increase that. So the relative distance between the 
ceiling and the floor would remain probably relatively stable.
    Mr. Hudson. I might follow up with you on that later.
    I want to get to the next question. I am sure you heard the 
first panel. A lot of concerns were raised. Ultimately, it is 
your responsibility to address the stakeholder concerns so I 
want to give you an opportunity to respond to some of these. 
Just to summarize, the airports were not being kept in the loop 
during the contracting process was one. Companies were 
frustrated with TSA's cost methodology, which we touched on 
here. The process of awarding contracts takes far too long, and 
there is skepticism about the validity of TSA's best-value 
analysis of SPP proposals. How confident are you that TSA is 
selecting the bast value proposal on evaluating SPP bids as 
opposed to simply selecting the lowest price offer?
    Mr. Benner. Is there a particular place you want me to 
start there?
    Mr. Hudson. Yeah, that was a lot. Starting with I guess 
evaluating SPP bids.
    Mr. Benner. If I might, Mr. Chairman, I did listen to the 
comments of the previous panel, and I do have to say that being 
in charge of the SPP program, having been in the position now 
for 6\1/2\, 7 months, I kind of take it personally. I feel 
badly if is there is a perception that the reason that folks 
aren't participating in the program is because of something we 
are doing wrong.
    I think we have had a lot of improvements in the SPP 
program, particularly within the last couple of years. Are we 
perfect? Absolutely not. Are we getting better? I am convinced 
we are. So, just as an example, since the FAA Modernization 
Act, Congress has stipulated we had 120 days to approve an 
application. What we have done within TSA, and I think our 
administrator testified to this earlier and then our system 
administrator in January of this year, that we have set our own 
internal goal to process all the way from application to 
contract award, assuming that we can find a qualified vendor 
within 12 months.
    That is a very aggressive time line, given the fact that we 
have to follow all the requirements of the Federal Acquisition 
Regulation, but I think it is a reflection of our commitment to 
try to do this and do it right.
    Some of the problems that we have had in the past, surely 
some of them we have owned, and we have had some missteps. But 
also some was calculated decisions based on if there was new 
legislation that came out, and we felt--for instance, with the 
FAA Modernization Act, that we weren't meeting the strict 
requirements of the new legislation, then we decided to take a 
pause, take those procurement actions that were actually out 
there in the procurement phase, pull them back and make sure 
that we were in compliance with the new legislation before we 
put them back out again.
    Sometimes this would take a year or 2 in order to turn 
everything--turn all those procurements around and get them out 
there again. I have a little bit different mind-set in that I 
think that if we have a procurement action that is out there 
and we have a slight change in legislation or there a slight 
change in report via report from Congress, that the first thing 
we should be doing is checking with Congress to say, do you 
really want us to hold up or can we continue on with the 
current methodology and then when we go to the next round of 
procurements, integrate that?
    That is actually what we did during for the 2014 
appropriations report. We actually checked with the 
appropriations staff to see if they wanted us to hold fast with 
some of the guidance I had in the report or continue on with 
the appropriations that we had on-going. The consensus was, 
keep moving, but wait until the independent study is done, that 
is on-going right now, and then make any necessary changes 
after that. I am sorry, I hope that answered your question.
    Mr. Hudson. I didn't give you enough time to answer it 
completely. But I appreciate that very much.
    My time has expired. At this point, I will recognize the 
gentlelady from Texas, Ms. Jackson Lee, for any questions she 
may have.
    Ms. Jackson Lee. Mr. Chairman, thank you so very much and 
thank you for this hearing, I thank my colleagues, and thank 
Mr. Richmond as well, and to the witnesses to the previous 
panel that I know is already gone. I am in the middle of 
another hearing which I will have to depart for, but I know 
this is very important.
    I want to thank the two witnesses, Ms. Grover for her 
testimony and Mr. Benner for his testimony.
    Let me pursue the issue--you made a point so let me just 
quickly raise the point. We really don't have a refined 
assessment of whether the SPP program is less expensive. Is 
that correct? We can't really stand on the table and bang on 
the table and say, that is the case.
    Mr. Benner. Ma'am, we have an assessment methodology that 
we can compare SPP and non-SPP airports. What I was trying to 
say is that we can't say that that difference between SPP and 
non-SPP airports is going to remain the same year over year.
    Ms. Jackson Lee. Right, and I understand that. What I am 
saying is we could not make a declarative, firm, final 
statement that one is less expensive than the other or the SPP 
is less expensive than the other approach.
    Mr. Benner. Correct.
    Ms. Jackson Lee. Thank you very much.
    I want to know, Mr. Benner, TSA recently sent a letter to 
the Department of Labor stating that the agency was not 
considering prevailing wage requirements in SPP contracts, 
despite a directive of the Labor's wage and hour division 
instructing TSA to do so. Will you now reassess that and 
actually go back and look at requiring prevailing wages for 
those workers?
    Mr. Benner. Ma'am, I understand a letter went out a couple 
of weeks ago. As recently as yesterday, there has been some 
discussion within the Executive branch or a number of different 
agencies involved to talk about the legal and policy--have a 
legal and policy discussion concerning the relationship between 
ATSA and SCA.
    I think between Department of Homeland Security, Department 
of Labor, and TSA, those discussions are on-going right now, so 
it would be a little premature for me to have any declarative 
statement at this point.
    Ms. Jackson Lee. Well, let me try to help you out in 
getting a more firm statement. There is a lot of discussions. 
Is it your understanding that DHS, TSA is reconsidering a 
decision that did not utilize prevailing wages with all the 
discussions going on, and in actuality, those are discussions 
that are now going on are to discuss the utilization of 
prevailing wages?
    Mr. Benner. Ma'am, I don't know that TSA and DHS are 
reconsidering. I do know that there are discussions on-going, 
and there will be a resolution at some point as to what the 
position will be for the Executive branch.
    Ms. Jackson Lee. Are you engaged in those discussions which 
do not advocate for including the prevailing wage?
    Mr. Benner. No, those discussions principally within TSA 
are on-going between our Office of Acquisitions, which is 
principally responsible for instituting the SCA, and our legal 
department.
    Ms. Jackson Lee. Okay. So can I understand from your 
testimony that the issue utilizing the prevailing wage is now 
being considered or discussed at this time?
    Mr. Benner. It is being discussed, yes, ma'am.
    Ms. Jackson Lee. Let me offer to say that I think that is a 
very important point for the competency and quality of the 
individuals. I've always raised the question of the adequacy of 
privatizing the security of our airports, pre-9/11 and post-9/
11, and I know this is your responsibility, and I thank you for 
the work you are doing.
    This is not a critiquing of your work. It is to say to my 
colleagues that I stand firm in opposition to privatizing and 
you have made the record today by saying you cannot determine 
whether there is any, if you will, cost savings at all. I would 
never suggest that any airport is on the cheap, but if you 
wanted to use that kind of language, and I am not going to use 
that kind of language, you would make the argument that, why do 
it that way, except for the fact that some airports have been 
grandfathered in?
    I accept the grandfathering. I want to make that very 
clear. But going forward, I think you have all that you can 
handle and that we should in fact be able to do it in a 
different way.
    Mr. Chairman, before I end, I would like to ask unanimous 
consent that testimony provided to the committee by John L. 
Martin, airport director of San Francisco International 
Airport, calling for TSA to comply with the Service Contract 
Act, SCA, and honor the current collectively bargaining rates 
of wages and benefits for its employees, be entered into the 
record. I ask unanimous consent.
    Mr. Hudson. Without objection.
    [The information follows:]
     Statement of John L. Martin, Airport Director, San Francisco 
                         International Airport
                             July 29, 2014
    Thank you for the opportunity to provide written testimony 
regarding the Transportation Security Administration's (TSA) management 
of the Screening Partnership Program (SPP). San Francisco International 
Airport (SFO) has been an ``opt out'' airport since 2002, when the 
original airport pilot program authorized in the Aviation 
Transportation Security Act (ATSA) was implemented.
    In order to maintain the highest levels of safety and security, as 
well as continuing with a stable and experienced workforce and 
excellent customer service, SPP bid parameters for SFO should include 
the following:
   Honor current collective bargained rates of wages and 
        benefits.
   Implement a Cost Plus Fixed Fee contract, the competition 
        for which would remove wages as a bid item and focus on the 
        qualifications of the management firm and its fees.
    Twelve years since the ``opt-out'' program started, the TSA's 
original private screening contractor, Covenant Aviation Security 
(CAS), continues to provide screening services at SFO. Importantly, a 
large percentage of the original starting screener workforce at SFO 
continues to work for CAS under TSA supervision.
    A core philosophy at SFO is teamwork and collaboration. From the 
inception of the SPP there has been a partnership approach comprised of 
TSA, CAS, SFO, and the union representing the workers, Service 
Employees International Union (SEIU). This team has developed a strong 
working relationship, creating a stable and secure workforce across all 
airport operations, enhancing our ability to maintain a safe and secure 
environment for the public and passengers. The dynamic environment of a 
large hub airport like SFO is extremely complicated and the ability to 
enhance teamwork and maintain a stable workforce through high retention 
rates is a key to our collective success.
    According to the recently-released Request for Information (RFI) 
from TSA, the Agency plans to issue an RFP on August 14 of this year. 
The contract for screening services at SFO will be for a 1-year term 
with four 1-year options to extend. My primary concern is that the 
contract will be a fixed price with a ``not to exceed ceiling'' which 
may be based on TSA's entry-level minimum loaded wage rate factored for 
San Francisco. This rate may be lower than both CAS's current starting 
level rate and the average rate for the long-time employees who have 
been on the job at SFO for many years.
    This lower threshold may incentivize bidders to assume the lowest 
available wage rate--the entry-level Federal screener rate. Our 
preferred approach would be to remove the wage rates from the 
competitive process and instead focus the selection on safety and 
security qualifications. TSA could also focus on competitive management 
fees.
    Another troubling aspect of the RFP for screening services at SFO 
is the contract term of 1 year with four 1-year options to extend which 
could theoretically allow TSA to reset the wages and benefits several 
times during the next 5 years. This creates instability in the 
workforce and a strong element of uncertainty going forward. SFO is a 
major international gateway hub and we seek out the most qualified, 
skilled contractors available. It is essential that we create a stable 
work environment to ensure safety and security.
    Our concerns, particularly with respect to the wage rates, would be 
addressed, in part, if the TSA followed the Service Contract Act (SCA). 
The TSA, however, has concluded that under ATSA it has the authority to 
establish wage rates for Federal screeners and is therefore exempt from 
the SCA. The SCA generally applies to every contract entered into by 
the Federal Government that has a principle purpose of furnishing 
services in the United States through the use of service employees. The 
SCA requires that Federal contracts include provisions setting forth 
minimum monetary wages and fringe benefits for the service employees in 
accordance with the prevailing rates for such employees in the 
locality.
    The incumbent provider CAS has negotiated a Collective Bargaining 
Agreement (CBA) with SEIU, which would, in every other Federal service 
contract, automatically trigger prevailing wage requirements. By not 
following the SCA, the TSA would lower the wage and benefit rates which 
are then factored into the ``not to exceed ceiling'' costs. This 
interpretation of the ATSA could prohibit the incumbent and other 
potential competitors from bidding on the RFP for screening services at 
SFO as the CBA establishes wage and benefit rates higher than TSA's 
entry-level wage and benefit packages.
    This effort by TSA to restrain costs to the SPP program would 
require the contract awarded in all likelihood to reduce the wages of 
the current workforce by up to 15-20%. This loss of wages by the 
current workforce would be disruptive, unfair, and difficult to manage. 
To my knowledge, TSA is not attempting to re-set the wages of Federal 
screeners at any other airport.
    In closing, I urge the TSA to carefully consider the parameters 
ofthe SPP RFP for SFO to ensure a stable and productive workforce by 
honoring the current collective bargained rates of wages and benefits 
and implementing a Cost Plus Fixed Fee contact, the competition for 
which would remove wages as a bid item and focus on the qualifications 
of the management firm and its fees.
    We look forward to supporting TSA in this process.

    Ms. Jackson Lee. I ask, additionally, Mr. Chairman, I ask 
unanimous consent to enter into the record testimony provided 
to the committee from Valarie Long, executive vice president of 
Service Employees International Union, which expresses serious 
concerns about the failure of TSA to comply with the Department 
of Labor decision on service contracts and points to the 
fundamental problem to public security that arises when 
employees, Federal or contracted, are not adequately trained 
and compensated. I ask unanimous consent.
    Mr. Hudson. Without objection, so ordered.
    [The information follows:]
Statement of Valarie Long, Executive Vice President, Service Employees 
                       International Union (SEIU)
                             July 29, 2014
    Thank you Chairman Hudson, Ranking Member Richmond, and Members of 
the subcommittee for the opportunity to submit written testimony for 
today's hearing examining the Transportation Security Administration's 
(TSA) management of the Screening Partnership Program. My name is 
Valarie Long, executive vice president of the Service Employees 
International Union, representing more than 250,000 workers across 
North America who clean, maintain, and provide security for commercial 
office buildings, co-ops, and apartment buildings, as well as public 
facilities like theaters, stadiums, and airports. I am pleased to 
submit testimony on behalf of the more 1,100 private security screeners 
at San Francisco International Airport (SFO), represented by SEIU-
United Service Workers West and employed by Covenant Aviation Security.
    We are writing to share our serious concerns about TSA's failure to 
abide by a Department of Labor ruling that the Service Contract Act 
(SCA) applies to security contracts entered into as part of the 
Screening Partnership Program, and to provide the subcommittee with 
detailed information about the potential threat this decision may pose 
to passengers and personnel at SFO. Our view has long been that whether 
the work is performed by direct Federal employees or by contract 
employees, screeners should be adequately trained and compensated to 
ensure we retain their abilities to protect passengers and the public.
                     sfo: a partnership for quality
    The private security screeners at SFO may wear different uniform 
insignia than screeners employed by TSA, but these brave men and women 
selflessly serve our country. They have been proud union members since 
2000 when we helped launch SFO's Quality Standards Program (QSP), a 
partnership between the city of San Francisco, the Airport Commission, 
private contractors and unions representing SFO workers. QSP was 
designed to improve safety and security at SFO as well as improve the 
conditions of the SFO labor market, by establishing compensation, 
recruitment, and training standards beyond those then-required by the 
FAA, for a wide range of airport employees.\1\
---------------------------------------------------------------------------
    \1\ Michael Reich, Peter Hall, and Ken Jacobs, ``Living Wages and 
Economic Performance: The San Francisco Airport Model,'' Institute of 
Industrial Relations, University of California, Berkeley, 2003, http://
laborcenter.berkeley.edu/livingwage/living_wage_performance.pdf.
---------------------------------------------------------------------------
    Since its inception in 2000, QSP has succeeded in its goal of 
producing a stable, experienced, quality screener workforce. Prior to 
its launch, screeners' wages were low and the turnover rate among was 
high. By 9/11, just 17 months after program implementation began in 
April 2000--and at the moment when the rest of the world learned of the 
tragic effects of low-road contracted-out screening--the annual 
turnover rate of SFO security screeners plummeted from 110 percent in 
1999 to about 25 percent.\2\ Turnover rates continued to decline; a 
2003 study of security screeners at SFO found that the turnover rate 
continued dropping to 18.7 percent.\3\ In addition to lower turnover 
rates, airport employers at SFO reported improved overall work 
performance (35%), better employee morale (47%), fewer disciplinary 
issues (44%), and improved customer service (45%) in the first year of 
the living wage law, a key feature of the QSP.\4\
---------------------------------------------------------------------------
    \2\ Living Wages and Airport Security. Preliminary report. Michael 
Reich, Peter Hall, Ken Jacobs, Institute of Labor and Employment. 
University of California, Berkeley, September 20, 2001, p. 5. http://
www.irle.berkeley.edu/research/livingwage/air_sep01.pdf.
    \3\ Living Wages and Economic Performance: The San Francisco 
Airport Model. Michael Reich, Peter Hall, Ken Jacobs, Institute of 
Industrial Relations at the University of California, Berkeley, March 
2003; and Aviation Security: Long Standing Problems Impair Airport 
Screeners' Performance. GAO. June 2000, p. 25.
    \4\ Living Wages and Economic Performance: The San Francisco 
Airport Model. Michael Reich, Peter Hall, Ken Jacobs, Institute of 
Industrial Relations at the University of California, Berkeley, March 
2003. http://www.irle.berkeley.edu/research/livingwage/sfo_mar03.pdf.
---------------------------------------------------------------------------
    As a result of QSP, the SFO screener workforce has been recognized 
for excellent performance, high morale--which reduces absenteeism and 
increases willingness to adapt flexibly--and quality customer 
service.\5\ According to researchers, ``[o]ne of the main advantages of 
the SFO program is the breadth of its impact. By linking wage 
improvements to training and accreditation programs, the program has 
gone a long way to improving morale and performance across the entire 
airport.''\6\
---------------------------------------------------------------------------
    \5\ Michael Reich, Peter Hall, and Ken Jacobs, ``Living Wages and 
Economic Performance: The San Francisco Airport Model,'' Institute of 
Industrial Relations, University of California, Berkeley (2003). http:/
/www.irle.berkeley.edu/research/livingwage/sfo_mar03.pdf.
    \6\ Living Wages and Airport Security. Preliminary report. Michael 
Reich, Peter Hall, Ken Jacobs, Institute of Labor and Employment. 
University of California, Berkeley, September 20, 2001, p. 6. http://
www.irle.berkeley.edu/research/livingwage/air_sep01.pdf.
---------------------------------------------------------------------------
    In the years since 2000 screeners and their employers at SFO have 
bargained collectively to improve wages, benefits, and working 
conditions. Our current estimate of turnover among the full-time 
screener workforce at SFO is 2.8 percent and average experience over 
4.8 years. This compares to a turnover rate among full-time TSA 
screeners of between 12 and 13 percent in 2013.\7\ Taken as a whole, 
the workforce at SFO has 3,619 person-years of experience.
---------------------------------------------------------------------------
    \7\ According to the testimony of Mr. Kelly Hoggan, Assistant 
Administrator for Security Operations, TSA ``TSA Oversight: Examining 
the Screening Partnership Program,'' House Committee on Oversight and 
Government Reform, Subcommittee on Government Operations, January 14, 
2015.
---------------------------------------------------------------------------
                          one screener's story
    Euell Lim has served as a Transportation Security Officer (TSO) at 
SFO since 2009, where he applies the security standards of the Federal 
Government to properly screen passengers onto their flight. ``I follow 
strict standard operating procedures,'' he says, ``as a passenger goes 
through the security checkpoint, and to be able to provide customer 
service which is very important.''
    Learning the job has been a process, Euell says, ``like when you go 
to school. We're not going to graduate in a week, a month, or a year . 
. . It's a learning process and that takes time.'' There is ``a huge 
gap between one who's experienced and one who's just starting. There 
are mistakes that can be done if they're not trained properly, if 
they're not attended to.'' Fortunately, Euell was ``blessed'' with a 
great training mentor, a senior employee who ``was very attentive and 
very specific and very detail-minded.'' And behind the mentor was a 
good support system and a great training staff.
    For Euell, the passengers are the beneficiaries of his training. 
``There's a sense of security. There's a sense of respect. The way you 
conduct yourself in a professional manner, done by proper training. You 
earn the respect of the traveling public . . . And I think just to be 
able to absorb that time with passengers and being able to have the 
right positive experiences, can contribute to something more 
constructive.''
    Euell's hourly wage is $22.01, which allows him ``a little bit more 
freedom than other people I'm aware of who work in the airport. I'm 
able to pay off my credit card, my bills. I'm able to provide for my 
son.'' His wage provides something intangible, but equally important,

``I'm almost forty and from my experiences in life, on the jobs I've 
worked, and the hats that I've worn throughout my life, I feel that 
earning a respectable wage and comfortable living is within everyone's 
right to function in our society. Just to have a little bit of self-
respect, and to provide the respect for my family and children. Being a 
part of what I do here, I feel I have a significant role in defending 
and providing the dignity and respect for the coworkers that I have 
grown to be accustomed to.''

    Euell Lim bears testament to the palpable advances in the quality 
of screening made at SFO over the last 15 years.
  sfo's experienced workforce at risk as a result of tsa's failure to 
                  comply with the service contract act
    Unfortunately, we understand that TSA has held that the Service 
Contract Act's (SCA) prevailing wage standards do not apply to private 
security screening contracts, despite being directed to do by the 
Department of Labor's Wage and Hour Division.\8\ The McNamara-O'Hara 
Service Contract Act requires contractors and subcontractors performing 
services on prime contracts in excess of $2,500 to pay service 
employees in various classes no less than the wage rates and fringe 
benefits found prevailing in the locality, or the rates (including 
prospective increases) contained in a predecessor contractor's 
collective bargaining agreement.\9\ At SFO this would mean that the 
economic provisions of the CBA would continue, regardless of who wins a 
contract to provide security screening services.
---------------------------------------------------------------------------
    \8\ See Letter from Timothy J. Helm, Chief, Branch of Government 
Contracts Enforcement, Division of Enforcement Policy and Procedures, 
Wage and Hour Division, U.S. Department of Labor, to Francine Kerner, 
Chief Counsel, Transportation Security Administration, June 6, 2013; 
and Letter from Ronald B. Gallihugh, Head of the Contracting Activity, 
Transportation Security Administration, to Timothy J. Helm, Chief, 
Branch of Government Contracts Enforcement, Wage and Hour Division, 
U.S. Department of Labor, July 3, 2014.
    \9\ 41 U.S.C. 6703(1).
---------------------------------------------------------------------------
    On June 6, 2013, the Department of Labor's Wage and Hour Division 
issued an opinion that the Service Contract Act applies to all private 
security screening contracts entered into by TSA, and directed TSA ``to 
take all necessary steps to ensure the applicable contracts contain the 
SCA's prevailing wage standards.''\10\ TSA responded earlier this month 
that SCA standards do not apply.\11\
---------------------------------------------------------------------------
    \10\ Letter from Timothy J. Helm, Chief, Branch of Government 
Contracts Enforcement, Division of Enforcement Policy and Procedures, 
Wage and Hour Division, U.S. Department of Labor, to Francine Kerner, 
Chief Counsel, Transportation Security Administration, June 6, 2013.
    \11\ TSA does accept SCA applicability to clerical staff associated 
with SPP contracts. Under the Aviation and Transportation Security Act 
of 2002 (ATSA). Letter from Ronald B. Gallihugh, Head of the 
Contracting Activity, Transportation Security Administration, to 
Timothy J. Helm, Chief, Branch of Government Contracts Enforcement, 
Wage and Hour Division, U.S. Department of Labor, July 3, 2014.
---------------------------------------------------------------------------
    TSA's failure to apply SCA standards to the security contracts at 
SFO will erode the quality advancements made and significantly 
undermine this highly-trained workforce. TSA's refusal to apply the SCA 
will likely result in significant wage reductions for SFO screeners. In 
the absence of SCA standards, and if a contractor follows TSA's 
recommendation and bids at TSA minimum direct labor rates,\12\ wages 
for virtually all screeners at SFO could be cut from 7% to as much as 
27%. For example,
---------------------------------------------------------------------------
    \12\ See, for example, ``Airport Security Screening Services at MCI 
[Kansas City International Airport], Solicitation Number: HSTS05-12-R-
SPP038, Department of Homeland Security, Transportation Security 
Administration, p. 81. For TSA recommendations to prospective bidders, 
see: Amendment 3 Mod/Amendment: FINAL-MCI_QandA[1] Description: 
Attached are the questions and answers submitted in response to HSTS05-
12-R-SPP038.
---------------------------------------------------------------------------
   Lead Screeners and CTX 9000 Specialists, currently earning 
        $62,649.60 would suffer a nearly 27% cut ($16,748.61);
   Beginning Screeners and CTX Operators, currently earning 
        $43,097.60 would suffer a 19% cut ($8,265.39);
   Screeners and CTX Operators with 10 years or more longevity, 
        currently earning $47,507.20 would suffer a 26% cut 
        ($12,674.99);
   Behavior Detection Officers currently earning $49,316.80 
        would suffer a 7% wage cut ($3,415.81);
   Of the 150 full-time employees who are at or above TSA's Pay 
        Band F:
     108 have at least 2 years' experience.
     Of these, 61 Lead Screeners and CTX 9000 Specialists have 
            10 years or more experience.
   Of the 561 full-time employees at or above TSA's Pay Band D 
        for TSO:
     521 have at least 3 years' experience.
     Of these, 168 have 10 years or more experience.\13\
---------------------------------------------------------------------------
    \13\ Methodological discussion: Wage Comparison.--(1) At SFO, 
Covenant Aviation Security (CAS) employs SFO security workers in 
specific CAS Titles and CAS Steps defined by collective bargaining 
agreement (CBA). For each position held, the CAS Hourly wage rate was 
multiplied by 2080 hours (TSA's standard for a non-leap year) to 
produce the CAS Annual Wage. (2) TSA wages were calculated based on the 
Wage Determination for Screeners (2012-07-23 TSA-MCI Solicitation 1 
HSTS05-12-R-SPP038, p. 81). That is, the 2014 minimum annual direct 
labor rates for Pay Band D and Pay Band F, respectively, adjusted for 
Locality Pay (35.15%). Experience.--(1) CAS provided the number of 
workers in each CAS Title and CAS Step, as defined by the CBA. In most 
cases, the title and step define the minimum experience necessary to 
hold that position. The years of experience defined by title and step 
were multiplied by the number of persons holding that position to 
produce CAS Full Time Experience, expressed in person-years. (a) 
Because the CBA does not define steps between 3 and 10 years of 
experience, the actual experience of SFO security screeners is likely 
to be substantially higher. (b) For positions corresponding to TSA Pay 
Band F (Lead Screener, CTX Lead, or CTX 9000 Specialist), even those 
workers indicated as having zero (0) years of experience in that 
position probably have substantial relevant experience. In general, 
workers enter these positions after having experience in positions 
corresponding to TSA Pay Band D (Screener or CTX Operator).
---------------------------------------------------------------------------
    Ensuring SCA requirements apply to private screening contracts is 
the best way to retain the high standards for screeners built at SFO. 
However, if TSA is permitted to disregard the findings of the 
Department of Labor that the Service Contract Act applies to private 
screeners, prospective bidders could massively undercut the wages of 
the screener workforce at SFO. And the largest cuts would fall 
disproportionately on those workers--like Euell--with the most 
experience. This is precisely the workforce TSA should strive to 
retain.
    Workers are profoundly wage-sensitive, and cuts of this magnitude 
would be deeply painful--to themselves and to the passengers and public 
whom they serve. These workers would have many employment options, 
given their seniority and the prevailing wages elsewhere in San 
Francisco's security industry; many would likely leave the job, taking 
their critical skills and experience with them.
    Such a massive loss of talent at SFO, as experienced officers leave 
for employment elsewhere, could have a potentially catastrophic impact 
on the quality of service. The importance of retaining quality 
screeners was one of the 9/11 Commission's important findings. The 
commission found that one potential hijacker was turned back as he 
tried to enter the United States by an immigration inspector who relied 
on intuitive experience to ask questions. ``Good people who have worked 
in such jobs for a long time understand this phenomenon well,'' the 
commission found,

``Other evidence we obtained confirmed the importance of letting 
experienced gate agents or security screeners ask questions and use 
their judgment. This is not an invitation to arbitrary exclusions. But 
any effective system has to grant some scope, perhaps in a little extra 
inspection or one more check, to the instincts and discretion of well-
trained human beings.''\14\
---------------------------------------------------------------------------
    \14\ Report, National Commission on Terrorist Attacks Upon the 
United States,'' July 22, 2004, p. 387.
---------------------------------------------------------------------------
    The importance of experience was again demonstrated during the 
November 1, 2013 attack at LAX which took the life of TSA Officer 
Gerardo Hernandez. Two other officers were also shot by the 
perpetrator, yet despite their wounds, continued to help people to 
safety:\15\ Officer Tony Grigsby, a Master Behavior Detection Officer 
(MBDO), started at TSA in 2004. Officer James Speer, a Master Security 
Training Instructor, joined TSA in 2008.
---------------------------------------------------------------------------
    \15\ See, ``Honoring Our Fallen TSO,'' November 8, 2013, posted by 
Transportation Security Administration Administrator John Pistole.
---------------------------------------------------------------------------
    Application of the Service Contract Act to the screener workforce, 
which would require bidders to incorporate the wage rates and fringe 
benefits contained in a predecessor contractor's collective bargaining 
agreement, would be the most effective means to ensure the retention of 
the experienced, quality private screener workforce at SFO.
                               conclusion
    This workforce is the product of the deliberate decision made in 
2000 by the city of San Francisco, the Airport Commission, and 
representative unions to form the Quality Services Program. While it 
took more than a decade to build it, the workforce could be destroyed 
very rapidly. And it would be extremely difficult--if not impossible--
to recreate it. On behalf of the more than 1,100 security screeners at 
SFO, I urge you to ensure that this dedicated, highly-trained, and 
skilled workforce can continue to provide the safe and secure airport 
experience on which passengers depend. I ask that you take every effort 
to ensure that TSA and the Screening Partnership Program are in 
compliance with the requirements of the Service Contract Act. Thank you 
for the opportunity to submit written testimony on the Screening 
Partnership Program and the continued successes at San Francisco 
International Airport.

    Ms. Jackson Lee. I thank the Chairman.
    I thank the witnesses for your very important testimony.
    I yield back, Mr. Chairman.
    Mr. Hudson. I thank the gentlelady.
    This time, the Chairman recognizes the gentleman from South 
Carolina, Mr. Sanford, for any questions he may have.
    Mr. Sanford. Thank you, Mr. Chairman.
    It just strikes me that in analyzing any program, the 
bottom line is in part driven by results. So if I could, just 
in terms of giving broad, broad picture, with the SPP program, 
what percentage of all airports out there are under Federal 
contract versus private contract?
    Mr. Benner. We have 18 airports that are under private 
contract, out of 450 total airports.
    Mr. Sanford. Yeah, but they may be minuscule in Montana 
and--nothing against Montana, but with one employee. I mean, 
how about overall employees?
    Mr. Benner. We don't measure the SPP airports by number of 
employees. But perhaps I can explain it by saying that about 
4.5 percent of all passenger throughput through the U.S. 
aviation system is through SPP airports. I think that's 
probably a fair way to look at it.
    Mr. Sanford. So that would be 4.5 percent of all airports, 
but that may not take into consideration overall hours worked, 
number of employees at those airports.
    With most programs out there, if you said: Look, you know, 
96 percent or 95 percent of it is being done one way and 5 
percent is being done this other way, you would say well, it is 
sort of a rounding error. You have three standard deviations in 
the world of statistics, and you are still at sort of zero. So 
it is sound of a rounding error for lack of a better term.
    It just strikes me to the linchpin of the reason it is a 
rounding error I think is in large part tied to what the 
Chairman was just getting at in the cost differential. It still 
seems to me that it is not a really robust competition given 
the fact that you are taking out a lot of what any Federal 
worker would rightfully consider the package of benefits that 
go with Federal employment, and that is retirement and so 
associated benefits. How can that be a real competition? I 
think the numbers suggest it is not a real competition.
    Mr. Benner. Well, through ATSA, as you know, there is a 
minimum compensation level that is set. That is a threshold. 
Above that, you have the FCE, which is the ceiling of which it 
would cost----
    Mr. Sanford. I understand. Why don't we do this, I would 
like to get in written form submitted to the committee the 
break-out on that front, because you have alluded to it with 
the Chairman, and you are alluding to me now. Let's just go, 
back of the envelope. You are a Federal worker, what if we just 
took out your retirement benefits, what would you say?
    Mr. Benner. The compensation package----
    Mr. Sanford. No, I am asking what you would say, yea or 
nay?
    Mr. Benner. It depends on my particular situation. In my 
case, you know, I have a spouse who has got a good compensation 
package, so I could live with the wages. I think that is kind 
of a flexibility actually that the contractors and vendors 
actually have.
    Mr. Sanford. How many real people, say, I will give up my 
retirement pay, not going to worry about that, my spouse will 
cover it, and we are not going worry about that package of 
dollars I would otherwise get on a yearly--how many real-world 
people say that?
    Mr. Benner. But that is a flexibility that the vendors--the 
contractors can actually have, is they can have more of a 
variance in terms of what they offer is pieces of their 
compensation package.
    Mr. Sanford. I know, but it still leaves in place the 
differential in a Federal worker not having accounted against 
them, I am getting this package of benefits and I am going to 
compete with the private worker who is going to--you are going 
have offer 401(k) plans or whatever it might be.
    So it still strikes me and I would love to get in written 
form, because I am down to a minute and 16, a breakdown in your 
eyes on that, because I still don't have any arms around it. I 
don't think you fully explained it to the Chairman either.
    Two other quick questions in my minute left, one is to the 
GAO: In your study of performance, it still strikes me that 
this, too, is an apples-and-oranges comparison. So I think we 
have an apples-and-oranges phenomenon with regard to 
compensation package that disadvantaged private vendors that 
you end up in 95/5 split in terms of overall distribution of 
folks employed.
    But it still seems to me the same exists with the GAO 
report because if you had a start-up, which in many of these 
SPP programs are, and you are competing against a group of TSA 
workers, some of who may have been employed for 10 or more 
years, there would be a level of competency that would go with 
those years of work, and those skills acquired, and you are 
competing against folks who may not have as many years. So it 
strikes me that while you said slightly better in some cases, 
slightly worse than others. Did you extrapolate out the years 
worked within those respective populations or no?
    Ms. Grover. In the performance data, there is no 
controlling for the difference in the years of experience.
    Mr. Sanford. So then, I mean, most folks from a statistical 
standpoint would say that is not really an apples-and-apples 
comparison, and I see I am 15 seconds over.
    You may have closing comments on that, and I thank you for 
the time, Mr. Chairman.
    Mr. Hudson. Ms. Grover, please feel free to answer.
    Ms. Grover. The performance data does not show overarching 
trends in difference in performance between SPP airports an 
non-SPP airports. The SPP airports were stronger in some areas, 
not as strong as others, but on the whole, they do seem to 
perform at an equivalent level regardless of the number of 
years of experience on the workforce.
    I do think with regard to----
    Mr. Sanford. Which if I might, and, I'm over on time and 
will yield back, but then that would suggest to me that the 
private vendors were doing that much better than the GAO report 
even says, because you are competing with folks who, in many 
cases, had many more years of work experience.
    With that, I yield back, Mr. Chairman.
    Mr. Hudson. Thank you.
    At this time, the Chairman will recognize the gentleman 
from Alabama, Mr. Rogers, for any questions that he might have.
    Mr. Rogers. Ms. Grover, you talked about the comparative 
study. I know initially you said it was a snapshot in time, but 
then they accepted your recommendations to do it over a 
different period of time. What period of time was that 
subsequent review done?
    Ms. Grover. Yes, sir, the first review looked at 2012, and 
then the second one just came out looking at the data from 
2013.
    Mr. Rogers. So you do feel like those were long-enough 
periods of time to get a pretty comfortable----
    Ms. Grover. Uh-huh, what TSA is doing is they are trying to 
look back, and they are seeing in general over this year, how 
did SPP airports perform as a group, compared to non-SPP 
airports sort-of by category.
    Mr. Rogers. How many airports had SPP presence?
    Ms. Grover. That would be 14 underway now with contracts up 
and running.
    Mr. Rogers. Are they all Category X airports?
    Ms. Grover. No, sir. I believe one is Category X and the 
rest are smaller.
    Mr. Rogers. Okay. Now, I know you talked a little while ago 
about folks being able to transfer over from TSA status to an 
SPP program. When you have that happen, and this could be for 
Mr. Benner, on average, how many employees choose to leave the 
agency and go over to the private company when that happens, 
when there is a transfer?
    Mr. Benner. Yes, sir, the last time we actually did that, 
you had a conversion from Federal to contractor, I believe was 
actually back in 2007. So you got to go through a span of time 
in order to get there.
    We are in the process right now of transitioning to a 
number of Montana airports. There are approximately give-or-
take 81 employees at four Montana airports. I don't know of the 
final number that are going to be--that would be transferring, 
but I would guess it would be around 50 percent, maybe slightly 
more.
    Mr. Rogers. Well, I have been on this committee for a very 
long time, and one of the things that we have found with TSA is 
a retention problem. Do we see that same retention problem by 
the SPP programs?
    Mr. Benner. Sir, I can't say that we do because we don't 
track HR, human resource kinds of functions with the SPP 
airports. That is one of the things that the vendor is actually 
responsible for, is all the HR functions, attrition, 
absenteeism, things like that, so we don't track that.
    Mr. Rogers. The cost of the HR function, is that calculated 
into your comparative of values or expenses with the two 
programs? The administrative portion of what it costs to have a 
Federal employee as opposed to just sending a check every month 
to a contractor?
    Mr. Benner. In the sense that when an airport goes SPP, 
there is a review done of that particular airport to see what 
support functions are being provided to that airport, and what 
may no longer be necessary, given now we have gone to a 
contract screener force.
    Mr. Rogers. Well, that is not what I am getting at. My 
point is this, if you have got Federal employees, like at 
Reagan National, that are performing the TSA function, there 
are some administrative expenses associated with that, other 
than just their pay and their benefits package. That is you 
have to have the infrastructure for the human resources to do 
the hiring, the monitoring, the evaluation, you have to have a 
payroll department to do that. You get my point. Were those 
associated costs added into the cost of having a Federal 
employee?
    Mr. Benner. Yeah it is included as part of the FCE, the 
Federal Cost Estimate. All those costs were included in there. 
It is up to the contractor, of course, to decide how much he or 
she wants to expand it.
    Mr. Rogers. I recognized the contractor, you are writing a 
check. That is the extent of your responsibility.
    Mr. Benner. Yes, that is correct.
    Mr. Rogers. Ms. Grover, TSA's original cost estimate stated 
that cost of screening was 17 percent higher at SPP airports 
than at non-SPP airports. Their updated 2011 estimated stated 
that was closer to 3 percent. More recently they have said 
there is barely any difference. What led to the difference in 
these estimates? Was it that more broad review that you did, as 
opposed to the snapshot in time? What accounts for that?
    Ms. Grover. Well, the cost estimate is really all driven by 
the assumptions that you are making. So, in the first 17 
percent difference, that is when TSA was including only the 
costs to TSA. Then GAO came in and said, you know, we have 
concerns about these other costs are aren't being included. All 
of the Federal financial accounting standards that tell us, 
they tell us that whenever you are making a comparison of cost, 
it really needs to be a full accounting for both costs on both 
sides.
    So TSA updated the estimate, including the total Federal 
cost, and as a result, the difference between the SPP and the 
non-SPP airports shrank to 3 percent. The current numbers--the 
current estimate now is essentially the costs would be about 
the same for this past year. But it is all driven by the 
assumptions that you make.
    So, for example, in the most recent SPP annual report, one 
of the things that TSA talks about is how they recently learned 
that attrition in the non-SPP airports was higher. As a result, 
they had to increase the assumption of what their costs would 
be for that. So this is one of the things that we will be 
looking at in our study going forward and just trying to 
understand how reasonable those assumptions are and how they 
result in the cost differences and estimates.
    Mr. Rogers. Well, it appears to me that the better you get 
at looking at this, the more cost beneficial the SPP airports 
are, the more you are able to focus on where the real costs are 
in the Federal programs.
    Thank you very much, a very good job. I appreciate you, and 
I yield back.
    Mr. Hudson. I thank the gentleman.
    Without objection, I would like to do another round of 
questions if that is okay with the witnesses.
    Mr. Benner, on the previous panel, Mr. VanLoh testified 
that during the rebid of the contract to Kansas City, TSA did 
not request Kansas City airport's input on the incumbent's 
prior performance before awarding the contract to a new private 
bidder. I am just curious.
    He also said that TSA chose the lowest bidder, despite 
TSA's recently announcing pay increases for Federal screeners 
at other airports. Is it standard practice for TSA to not 
request the input the airport operator regarding the 
performance of incumbent screening company during a rebid 
contract?
    Mr. Benner. The evaluation of vendors who propose a 
contract--who propose to have a contract, they may submit a 
number of different references and they also talk about their 
past performance.
    Certainly, we talked to the FSD. We expect the FSD, Federal 
Security Directors, to be talking to the airports as well to 
get feedback. In addition to that, we also look at various 
Government-wide systems to see what the history of the vendor 
is for potentially other contracts.
    Mr. Hudson. Is there a formal process where the FSD is 
tasked with communicating with airport directors-- because that 
is the first time I have heard that.
    Mr. Benner. No, there is not. We expect the FSD's to 
interacting with their airport directors all the time. We 
expect that of all our FSDs, not just the ones that have SPP 
airports.
    Mr. Hudson. It just seems to me to it would inform the 
decision have more input from the airport operator, like the 
FSD is there, it just seems the more information you could 
have, the more transparency, the better decision that could be 
made on that contract. Whether it is positive or negative about 
the incumbent vendor, it just seems to me there ought to be 
more of that in this process as an observation.
    Mr. Brenner and Ms. Grover, do you think it would be viable 
to hear from airport--do you think it would add value to have 
more input from airport? I guess I will ask Ms. Grover what you 
think, based on my comments and the question we just presented.
    Ms. Grover. I think more input is always useful.
    Mr. Hudson. Okay, gavel down, input is good.
    Getting back to the question--I sort of ran through like 10 
questions at you the last time. How confident are you that TSA 
is selecting the best value proposal when evaluating the SPP 
bids as opposed to simply taking the lowest bid offer?
    Mr. Benner. I am glad you put it that way, sir, because we 
do select the best value. That does not mean the lowest bid. 
There is three general criteria that we use to evaluate: There 
is a technical solution that the offeror provides; there is the 
past performance; and then there is the cost. All those three 
are actually evaluated.
    Then you have different teams that actually evaluate each 
of those. Then that goes to a source selection authority, who 
then compares all those relative to each other and makes a 
final selection.
    In some cases, there is even another level, a source 
selection evaluation board, which is in the case of--the last 
time we went through MCI, there was another level of 
observation there as well. So I am confident that we are 
selecting the vendor who had the best proposal overall and 
provides the best value to the Government. Does that mean that 
it won't be protested? Absolutely not. Because any vendor can 
obviously protest it, any time if they feel they have been 
wronged or the process has been wronged, but I am confident in 
the process that we use.
    Mr. Hudson. Well, I don't want to inject myself into any 
specific case or especially one that is in the courts now, but 
an example of Kansas City, hearing the airport director talk 
about the fact they have folks who have been there may be 12 
years now, have a lot of experience whose compensation is 
probably reflecting that. Then you have got the standard that 
requires what the minimum level pay is. If you bring in a new 
vendor--and I will say hypothetically, let's not talk about 
Kansas City specifically--but if you were to bring in a new 
vendor at that minimum pay level, TSA pay level, they couldn't 
afford to retain these experienced workers that worked in these 
same checkpoints who have this better experience. So, even if 
you are selecting a new vendor, with all this information, you 
are sort of precluding your best screeners from being able to 
continue to be employed there by a different vendor.
    I think on one hand, I am not sure we are taking into 
account that experience level of that vendor. We kind-of 
addressed that, but even if you then decide there is better 
value of a new vendor, I have concerns that these minimum 
standards mean we are not even going to be able to keep our 
best screeners. There are sort of two questions here that as I 
heard the testimony today and really concern me. I don't know 
if you would like to address that or----
    Mr. Benner. Well, again, I want to be clear on the ATSA 
minimum that we actually set is actually the Federal equivalent 
plus the locality pay. So that is a fairly robust minimum. But 
you are absolutely correct, Mr. Chairman, that the difference 
between that number there and the FCE at the very top gives the 
vendor the latitude to design the compensation package that he 
or she feels is best to run the screening operation of that 
particular airport.
    Now, on the flip side, if we were to require everybody to 
get the exact same amount of pay that they had gotten, say, in 
their previous job, whether they were Federal or whether they 
were contractor, we have now moved the floor and the ceiling so 
close together, if you will, that there would be many vendors 
that could probably not compete or wouldn't want to compete 
because the profit margin just wouldn't be there.
    Mr. Hudson. I certainly understand that. That is kind-of my 
concern. If you continue to look at it this way, I don't see 
how an experienced vendor could ever get reissued their 
contract because you are always going to have incentive for the 
new vendor to always undershoot the number, and all they have 
to do is hire an inexperienced staff and pay them lower to win 
that contract.
    It seems to me it would make more sense to have an average 
to give flexibility to the vendors so they can make decisions 
about how they are going to meet the cost rather than setting 
this minimum floor that, again, is going to make it--I don't 
see how any existing vendor is going to be able get renewed if 
they have got someone willing to come in and undershoot them. 
It seems we ought to be looking at averages, maybe, instead of 
system as you described it.
    Mr. Benner. Sir, if I may, I am afraid I am maybe not being 
clear in how I am articulating this.
    Mr. Hudson. I may be slow in hearing what you are saying.
    Mr. Benner. I doubt that. I doubt that. So the FCE, the 
Federal Cost Estimate, is actually based on the actual. So, in 
other words, the entire pay that everybody is getting at that 
particular airport, whether it is an SPP or it is Federal, is 
actually taken into that Federal Cost Estimate. That becomes 
the ceiling. So, theoretically, that vendor has the latitude to 
pay all the way up to that. So they could hypothetically be 
paid----
    Mr. Hudson. But if they are trying to win a bid, they are 
going to go as low as possible in order to get the business, 
and so there is an incentive then to have--so if you are not 
taking into account this bidding process the experience of the 
current vendor, the input of the airport director of the 
quality of that vendor, then I could start a fly-by-night 
company and go in there and underbid and get the contract, but 
I wouldn't be able to afford to pay any experienced screeners. 
So I am just afraid there is a perverse incentive set-up that 
penalizes you for being experienced and having good employees 
you have retained, but it is an incentive for any upstart 
company to come in and undershoot that. Again, I am not talking 
any airport specifically. It is just that these issues made me 
question the overall process.
    Mr. Benner. May I respond?
    Mr. Hudson. Sure, please.
    Mr. Benner. So that would be I think entirely true, if in, 
in fact, it was based only on low price. But you also in the 
evaluation process have a technical proposal that needs to be 
provided by a vendor, as well as past performance. So it 
doesn't mean strictly someone who submits the low bid 
automatically wins the contract.
    Mr. Hudson. I certainly appreciate that. I would love to 
have more discussions with you sort-of about the input from 
when we do these--reissue these contracts and making sure we 
are getting input from the airport directors and all sources. I 
think my approach with Government is the more sunlight, the 
more input, the more discussion, the better decisions are made.
    I appreciate the time you have taken today to answer our 
questions. I would ask that both of you be willing to respond 
in writing to any questions the committee may want to submit. I 
want to continue this discussion, because again, I do believe 
in this program. I do believe private screening is more 
efficient. I think it can be more effective. I think it is 
where we need to go in the future as we try to deal with 
continued threats in aviation security, as we try to address 
those, giving the best deal to the taxpayers, best security to 
the American people.
    I believe the strength of this program is important. I want 
to see it grow, but I want to work with you to make sure there 
aren't structural concerns. I want to make sure there aren't 
biases within TSA against this program. I think it is an 
important component in our overall safety footprint. So it is 
an issue that is very important to me and something I think we 
need it continue to talk about and continue to work on. But I 
thank both of you for being here today and your testimony in 
this.
    So, with that, the subcommittee stands adjourned.
    [Whereupon, at 11:15 a.m., the subcommittee was adjourned.]

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