Aviation Security: Progress Made to Set Up Program Using
Private-Sector Airport Screeners, but More Work Remains
(31-MAR-06, GAO-06-166).
In November 2004, as required by law, the Transportation Security
Administration (TSA) began allowing all commercial airports to
apply to use private screeners in lieu of federal screeners as
part of its Screening Partnership Program (SPP). GAO's prior work
found that airports and potential private screening contractors
had concerns about the SPP, including whether they would be
liable in the event of a terrorist attack and how roles and
responsibilities would be divided among TSA airport staff and
private screening contractors. This report addresses TSA's
efforts to (1) provide liability protection to private screening
contractors and airports and address other SPP stakeholder
concerns; (2) achieve cost-savings through the SPP; and (3)
establish performance goals and measures for the SPP.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-06-166
ACCNO: A50538
TITLE: Aviation Security: Progress Made to Set Up Program Using
Private-Sector Airport Screeners, but More Work Remains
DATE: 03/31/2006
SUBJECT: Airport personnel
Airport security
Airports
Baggage screening
Contractors
Cost control
Liability insurance
Passenger screening
Performance management
Performance measures
Program evaluation
Liability (legal)
Security services contracts
Public/private partnerships
TSA Screening Partnership Program
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GAO-06-166
* Results in Brief
* Background
* Statutory Provisions Related to SPP
* Applicants to the SPP as of January 2006
* Overview of TSA Budget for SPP
* Overview of the SAFETY Act
* Types of Contracts Awarded by TSA
* DHS and Congress Have Begun to Address Liability Protection
* DHS Has Provided SAFETY Act Protection to Three of the Four
* Contractors' Concerns about Liability Not Yet Resolved
* DHS Appropriations Act Addresses Airports' Concerns about Li
* TSA Granted Private Screening Contractors Flexibility in Hir
* TSA Has Taken Steps to Clarify SPP Roles and Responsibilitie
* TSA Provides Some Incentives to Contractors to Achieve Cost-
* TSA Plans to Transition from Cost-Reimbursement to Fixed-Pri
* Performance Goals and Measures Developed by TSA to Assess SP
* TSA Has Developed Performance Measures to Evaluate Security,
* Conclusions
* Recommendations for Executive Action
* Agency Comments and Our Evaluation
* GAO Contact
* Acknowledgments
* GAO's Mission
* Obtaining Copies of GAO Reports and Testimony
* Order by Mail or Phone
* To Report Fraud, Waste, and Abuse in Federal Programs
* Congressional Relations
* Public Affairs
Report to the Chairman, Subcommittee on Aviation, Committee on
Transportation and Infrastructure, House of Representatives
United States Government Accountability Office
GAO
March 2006
AVIATION SECURITY
Progress Made to Set Up Program Using Private-Sector Airport Screeners,
but More Work Remains
GAO-06-166
Contents
Letter 1
Results in Brief 4
Background 7
DHS and Congress Have Begun to Address Liability Protection Issue at
Airports Using Private Screeners, but Stakeholder Concerns about Liability
and Other Program Issues Remain 15
TSA Provides Some Incentives to Contractors to Achieve Cost-Savings and
Plans to Shift More Cost Risk to Contractors at Larger Airports in 1 to 2
Years 24
Performance Goals and Measures Developed by TSA to Assess SPP Contractors
Have Not Been Approved by DHS 30
Conclusions 34
Recommendations for Executive Action 36
Agency Comments and Our Evaluation 37
Appendix I Scope and Methodology 39
Appendix II Comments from the Department of Homeland Security 42
Appendix III GAO Contact and Staff Acknowledgments 45
Related GAO Reports 46
Tables
Table 1: Airports That Participated in the 2-Year Private Screener Pilot
Program 8
Table 2: Non-Pilot Program Airports That Applied to Use Private Screeners
to Conduct Screening Operations from November 2004 through January 2006 10
Table 3: Type of Contract and Contract Amount for the Four Private
Screening Contractors for the Period November 19, 2004, through May 18,
2006 27
Table 4: TSA Performance Measures for Evaluating SPP Contractors 32
Abbreviations
ATSA Aviation and Transportation Security Act DHS Department of Homeland
Security FAR Federal Acquisition Regulation FSD Federal security director
GPRA Government Performance Results Act SAFETY Act Support of
Anti-terrorism by Fostering Effective Technologies Act SPP Screening
Partnership Program TIP threat image projection TSA Transportation
Security Administration
This is a work of the U.S. government and is not subject to copyright
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separately.
United States Government Accountability Office
Washington, DC 20548
March 31, 2006
The Honorable John L. Mica Chairman Subcommittee on Aviation Committee on
Transportation and Infrastructure House of Representatives
Dear Mr. Chairman:
The Aviation and Transportation Security Act (ATSA), enacted after the
terrorist attacks of 2001, required the federal government to take over
the job of screening airline passengers and their checked baggage from the
private sector.1 Among other things, ATSA further required that the
Transportation Security Administration (TSA) initiate a 2-year security
screening pilot program at up to five commercial U.S. airports. The
purpose of this pilot program, as defined by TSA, was to test the
feasibility of utilizing private-sector screeners to screen passengers and
their checked baggage in a post-9/11 environment, by allowing
private-sector screeners-hired and managed by private screening companies
under contract to TSA-to provide screening services in lieu of federal
screeners at selected airports, with TSA oversight. The pilot program ran
from November 2002 to November 2004. During that time, four private
screening contractors served the five pilot program airports (one
contractor served two airports).
In November 2004, as the private screener pilot program concluded, ATSA
required that TSA begin allowing all commercial airports to apply to TSA
to transition from a federal to a private screener workforce. To support
this effort, TSA created the Screening Partnership Program (SPP) to allow
all commercial airports an opportunity to apply to TSA for permission to
use qualified private screening contractors and private-sector screeners.
Currently, the four contractors that participated in the private screener
pilot program are under contract to TSA to provide screening services at
the five airports they have already been serving, and all five airports
that participated in the pilot program have applied and been accepted to
participate in the SPP. In February 2006, TSA competitively awarded a new
contract for screening services for one of the five pilot program
airports. Also, during the 16 months since the SPP was initiated, two
additional airports have applied to the SPP. TSA approved one of these
airport's application and in December 2005 awarded a contract to a private
screening contractor-a contractor currently providing screening services
at two of the five pilot program airports-that enabled this airport to
transition from federal to private screeners in February 2006. The other
airport withdrew its application.
1Pub. L. No. 107-71, 115 Stat. 597 (2001).
In November 2004, we reported on TSA's preliminary efforts to allow
airports to apply to use private screening contractors to perform
passenger and checked baggage screening services through the SPP, and how
private screening contractors would compete to provide those services. We
reported that key stakeholders we interviewed-private screening
contractors, airport operators, and aviation associations-were concerned
about several aspects of the program. Specifically, stakeholders expressed
concerns about liability protection-whether and to what extent private
screening contractors and airports would be liable in the event that
threat objects or weapons were not detected at passenger screening
checkpoints or in checked baggage, leading to a terrorist incident. At
issue was whether the Support Anti-terrorism by Fostering Effective
Technologies Act of 2002 (the SAFETY Act) would offer private screening
contractors and airport operators federal protection from potential
lawsuits arising out of or resulting from aviation-related acts of
terrorism.2 These stakeholders also were concerned about the degree of
management control they would have over various aspects of screening
services, including how roles and responsibilities would be divided among
Federal Security Directors (FSD)3 and their staff and private screening
contractor managers and staff.4
In this report, we address (1) TSA's and the Department of Homeland
Security's efforts to determine whether and how liability protection will
be provided to private screening contractors and airports that participate
in the SPP, and actions taken on other stakeholder concerns related to
participation in the SPP; (2) how TSA has determined it will achieve
cost-savings goals for screener operations through the SPP, specifically
with respect to the choice of contract used, and contract terms; and (3)
TSA's progress in developing and implementing performance goals, measures,
and targets to assess the performance of the private screening contractors
who will participate in the SPP.
2Pub. L. No. 107-296, S:S: 861-65, 116 Stat. 2135, 2238-42 (2002); 6
C.F.R. S:S: 25.1-25.9 (2005).
3FSDs are the ranking TSA authorities responsible for leading and
coordinating TSA security activities at the nation's more than 440
commercial airports.
4GAO, Aviation Security: Preliminary Observations on TSA's Progress to
Allow Airports to Use Private Passenger and Baggage Screening Services,
GAO-05-126 (Washington, D.C.: Nov. 19, 2004).
To satisfy our objectives, we analyzed documentation related to TSA's SPP
and the 2-year private screener pilot program that preceded the SPP and
interviewed various officials. Specifically, we interviewed 24 federal
aviation officials within the Department of Homeland Security (DHS) and
TSA, including FSDs at seven airports (the five pilot program airports and
two airports that applied to participate in the SPP, namely, Elko Regional
Airport in Elko, Nevada, and Sioux Falls Regional Airport in Sioux Falls,
South Dakota); airport operators at all five airports with private
screeners and the private screening contractors at these airports;
officials with the two airports that have applied to participate in the
SPP; officials with two aviation associations that represent hundreds of
airports, including many large commercial airports; and a major liability
insurance provider. To determine how TSA responded to stakeholder concerns
about liability protection and other issues related to participation in
the SPP, we reviewed SPP program guidance developed for airports, the
SAFETY Act, and related documents obtained from DHS. Additionally, we
reviewed ATSA provisions related to the SPP and our related reports, and
interviewed DHS officials about the SAFETY Act's applicability to the SPP.
To assess the status of TSA's efforts to achieve cost-savings in screener
operations through the SPP, we reviewed the contracts and pilot program
extension contracts TSA executed with the current private screening
contractors, TSA's contracting policies and guidance, and the Federal
Acquisition Regulation. We also reviewed an independent consultant's study
prepared for TSA that evaluated the costs of screening at 15 airports,
including all 5 pilot program airports. In addition, we interviewed TSA
officials about their choice of contract type to award for the SPP. To
assess TSA's progress in developing and implementing performance goals and
measures to assess the performance of the private screening contractors
that participate in the SPP, we reviewed TSA's draft performance quality
assurance surveillance and award fee plan for the SPP. We also reviewed
our work on the Government Performance and Results Act (GPRA) and on TSA's
private sector screening pilot program and its efforts to implement the
SPP. We also interviewed TSA officials about their efforts to develop
performance goals, measures, and targets for the SPP. Additional
information on our scope and methodology is contained in appendix I.
We conducted our work from March 2005 through March 2006 in accordance
with generally accepted government auditing standards.
Results in Brief
DHS and Congress have begun to address whether and how liability
protection may be offered to three of the four current private screening
contractors (the fourth has not applied for coverage) and airports, at
airports where private screeners are used. Specifically, DHS has provided
contractors with some of the liability protections available under the
SAFETY Act, including a limit on the damages a plaintiff may recover to
the extent of the contractor's insurance coverage.5 DHS SAFETY Act
officials stated that the department cannot provide the most extensive
level of protection available under the SAFETY Act, rendering contractors
virtually immune from all pertinent claims, because DHS cannot ascertain
whether contractors are performing as intended-a criteria that the SAFETY
Act requires before awarding such coverage. DHS officials stated they
could not determine this because---as we discuss below---TSA has not yet
finalized a standard of performance that would serve as the basis for
DHS's evaluation. While none of the private screening contractors we
interviewed stated that the lack of this additional coverage would
preclude their participation in the SPP, all four stated that some form of
SAFETY Act coverage was an essential supplement to their commercial
liability insurance policies. Regarding airport liability under the SPP,
Congress has granted airports legal protection from lawsuits.
Specifically, under the fiscal year 2006 DHS Appropriations Act, airport
operators are shielded from virtually all liability resulting from the
negligence or wrongdoing committed by a private screening company, its
employees, or federal screeners. On an additional issue of concern to
stakeholders-the screener hiring process-TSA has made an effort to improve
this process by granting contractors and FSDs more input and flexibility
in the process, such as providing two options for assessing screener
candidates and conducting more frequent screener assessments. Although TSA
made improvements to the hiring process, however, some stakeholders, as
well as FSDs at airports with federal screeners, remain concerned about
the timing of the assessments and the length of time the assessment
process takes. Stakeholders also expressed concern about the roles and
responsibilities of federal and private-sector staff at airports using
private screeners. TSA has since defined roles for FSDs, their staff, and
private screening contractors, among others, in its August 2005 SPP
transition plan, though TSA has not communicated to or shared the details
of the plan with private screening contractors. TSA headquarters officials
stated that they presumed that FSDs had communicated this information to
private screening contractors. Furthermore, TSA officials stated that they
communicated stakeholder roles in the SPP's June 2004 guidance. However,
our review of the guidance found that it did not clearly delineate the
roles and responsibilities of TSA airport staff and the private screening
contractors. For example, the guidance did not provide any information on
the roles and responsibilities of some TSA airport staff, such as
screening managers and training coordinators, or clarify how their roles
and responsibilities would differ from those of the private screening
contractors. Additionally, the four private screening contractors we
interviewed stated that the roles of TSA staff had not been clearly
defined, and 18 of 25 FSDs we interviewed in the past, as well as an
independent consulting firm hired by TSA to assess the pilot program, have
concurred.6 According to our standards for internal controls, agency
management should ensure there are adequate means of communicating with
external stakeholders on issues that may have a significant impact on the
agency's ability to achieve its goals. By not sharing detailed information
on the roles and authorities described in the SPP transition plan with
private screening contractors, TSA may be missing an opportunity to
support the effective performance and management of essential functions
related to the screening process. TSA officials stated that they plan to
clearly delineate roles and responsibilities of the FSD, FSD staff, and
private screening contractors in future SPP contracts.
5The SAFETY Act does not provide insurance; rather, sellers are required
to purchase liability insurance from the commercial market in an amount
determined by DHS.
TSA has documented its intention that the SPP will operate at a cost that
is competitive with equivalent federal operations and will achieve
cost-savings where possible. TSA's cost reimbursement-based contracts for
screening services at four of the five airports currently using private
screeners provide some cost incentives in the form of an award fee tied in
part to the contractor's ability to achieve cost efficiencies and
innovations. TSA could shift more cost risk from the government to the
contractors, as federal acquisition policy suggests, by competitively
awarding a different type of contract-specifically, a fixed-price
contract-which provides for a price based on the contractor's cost
experience and is not subject to any adjustment. To this end, TSA is in
the process of awarding or planning to award fixed-price contracts to the
contractors that will provide screening services at three of the four
smallest airports that will participate in the SPP (and has already done
so at the forth airport on a non-competitive basis). TSA officials stated
that they cannot award this type of contract for screening services at
larger airports for another 1 to 2 years because they stated that they do
not know the costs of screening at these airports. Officials stated that
TSA would therefore be at greater risk of awarding a fixed-price contract
for a higher cost than might actually be incurred. TSA officials
acknowledged that TSA had already identified and collected some cost and
performance data on passenger and checked baggage screening operations at
15 airports with private and federal screeners, including all five pilot
airports, and completed a study in 2004 that estimated how much TSA spent
for screening operations at each of the five pilot screening program
airports. However, they stated that additional cost information based on
the actual costs of participating in the SPP is needed for larger airports
because the SPP contracts differ from the pilot and extension contracts
that TSA previously awarded. For example, the SPP contracts will allow for
contractors to recommend and, if approved, implement innovations, and to
select among options for assessing screener candidates and training
screeners. TSA officials said that it would be difficult for prospective
SPP contractors for larger airports to accurately estimate the costs of
providing screening services for a fixed-price contract. As a result, TSA
plans to continue using cost-reimbursement contracts for screening
services at the two largest airports for up to 2 additional years in order
to determine estimated costs under the SPP contracts.
6See GAO, Transportation Security Administration: More Clarity on the
Authority of Federal Security Directors Is Needed, GAO-05-935 (Washington,
D.C.: Sept. 23, 2005).
TSA developed performance goals and began drafting related measures and
targets to assess the performance of private screening contractors under
the SPP in the areas of security, customer service, costs, workforce
management, and innovation. However, DHS, which is currently reviewing the
performance goals, measures, and targets developed by TSA, has not yet
completed its review nor set a time frame for doing so. According to TSA's
draft quality assurance and award fee plan for the SPP, 14 separate
performance measures have been established and performance targets-a
tangible objective against which actual achievement will be compared-have
been developed for 10 of the 14 measures. For example, 1 of the 14
measures would require contractors to ensure that new hires receive
required training before assuming screener duties. TSA's related target
for this measure is that 100 percent of new hires will receive required
training. TSA officials stated that contractors will be required to meet
the performance targets set by TSA specific to the airports they serve.
Working with these airports, TSA stated that it has already established a
baseline describing how federal screeners or private screening contractors
have actually performed at individual airports, and these baseline data
are being used to set performance targets for each airport. Officials
further stated that TSA is considering providing financial incentives to
contractors for a limited time in an effort to move their airports to meet
TSA's baseline performance level. In March 2005, TSA officials stated that
they had recently submitted the performance goals, measures, and targets
to DHS. However, as of January 30, 2006, DHS had not yet approved the SPP
performance metrics, and had not set a deadline for doing so. We asked TSA
and DHS officials which office within DHS was responsible for approving
these performance metrics, but the officials were not able to provide us
with this information. Until these goals, measures and targets are
approved by DHS, TSA will not be able to implement performance measures to
evaluate private screening contractors under the SPP. Further, these same
measures and targets will be used by DHS to determine whether to award
private screening contractors with certification status, the highest level
of liability protection available under the SAFETY Act. Until the SPP
measures and targets are finalized, DHS officials stated that they cannot
determine whether contractors will perform as intended-a criterion that
must be satisfied before awarding certification status.
To help address stakeholder concerns, we are recommending that the
Secretary of DHS direct the Assistant Secretary, TSA, to formally document
and communicate to federal and private-sector stakeholders the roles and
responsibilities for managing screener operations under the SPP. In
addition, to help ensure the completion of a performance management
framework for the SPP and to promote accountability of SPP contractors for
achieving desired program outcomes, we recommend that the Secretary of DHS
establish a time frame for completing its review of the performance goals,
measures, and targets for the SPP so that TSA may apply them at the
earliest possible opportunity.
We provided a draft copy of this report to DHS for review. DHS, in its
written comments, generally concurred with our findings and
recommendations and stated that efforts to implement our recommendations
will help to develop a more effective, efficient, and economical
administration of TSA's SPP. The full text of DHS's comments is included
in appendix II.
Background
Statutory Provisions Related to SPP
ATSA was enacted on November 19, 2001, in response to the September 11,
2001, terrorist attacks. ATSA established the TSA and charged it with
responsibility for strengthening security in all modes of transportation,
including aviation. One of the most significant changes mandated by ATSA
was the shift from the use of private-sector screeners to perform airport
screening operations to the use of federal screeners. Prior to ATSA,
passenger and checked baggage screening had been performed by private
screening companies under contract to airlines. ATSA required TSA to
create a federal workforce to assume the job of conducting passenger and
checked baggage screening at commercial airports. The federal workforce
was to be in place by November 2002. At the same time, ATSA mandated that
TSA establish a 2-year pilot program using qualified private screening
companies to screen passengers and checked baggage, with TSA oversight.7
Pursuant to section 108 of ATSA, TSA selected five airports, one from each
airport security category, to participate in the pilot program.8 TSA also
competitively selected four contractors (one contractor serves two
airports) to conduct screening at the pilot airports. Table 1 lists the
airports and private screening contractors that participated in the pilot
program.
Table 1: Airports That Participated in the 2-Year Private Screener Pilot
Program
Airport and location Security category Contractor
San Francisco International, X Covenant Aviation Security
Calif.
Kansas City International, I FirstLine Transportation
Mo. Security
Greater Rochester II McNeil Security
International, N.Y. International
Jackson Hole Airport, Wyo. III Jackson Hole Airport Board
Tupelo Airport, Miss. IV Covenant Aviation Security
Source: TSA.
Section 108 further permitted the more than 400 commercial airports using
federal passenger and checked baggage screeners to apply to TSA to use
private rather than federal screeners at the conclusion of the pilot.9
Beginning on November 19, 2004, all commercial airports with federal
security screening became eligible to apply to opt-out of using federal
screeners through the newly established SPP. An airport operator may
submit to TSA an application to have the screening of passengers and
checked baggage at an airport be carried out by the screening personnel of
a qualified private screening company, under a contract entered into
between the private screening contractor and TSA. In addition to assessing
airport applications for using private screeners, as part of the SPP, TSA
plans to select qualified private screening companies that apply and meet
ATSA and TSA requirements to conduct screening, including airports that
seek to apply to serve as the private screening contractor.
7The 2-year pilot concluded on November 18, 2004. For purposes of this
report, we refer to these five airports as the pilot program airports.
8TSA classifies the over 400 commercial airports in the United States into
one of five security risk categories (X, I, II, III, and IV) based on
various factors, such as the total number of takeoffs and landings
annually, the extent to which passengers are screened at the airport, and
other special security considerations. In general, category X airports
have the largest number of passenger boardings and category IV airports
have the smallest.
9ATSA codified the requirements that TSA institute a pilot program at 49
U.S.C. S: 44919 and that an opt-out option be available under the SPP at
S: 44920.
The five airports selected to participate in the pilot program have
applied and been accepted to the SPP. TSA awarded, on a non-competitive
basis, new extension contracts (that replaced the original pilot program
contracts) to the incumbent private screening contractors at the five
pilot program airports effective November 19, 2004. The contracts enable
the four private screening contractors to continue performing screening
operations through May 18, 2006.10 As in the original pilot program
contracts, the new contracts require private screening contractors to
adhere to several ATSA provisions, including that:
o 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;
o the private screening company be owned and controlled by a
citizen of the United States;
o the private screening company, at a minimum, meet employment
standards, compensation and benefits rates, and performance
requirements that apply to federal screeners; and
o all private screener candidates meet the same minimum
qualifications as federal screeners, including U.S. citizenship
(or being a national of the United States), high school diploma or
equivalent, English proficiency, and pass a criminal background
check.
TSA will make the final decision to approve any application submitted for
participation in the SPP and reserves the right to consider airport
specific threat intelligence and an airport's record of compliance with
security regulations and security requirements to determine the timing of
any transition to private screening. TSA may also impose a delay on when
an airport can transition to private screening based on such factors as
peak travel season and the total cost of providing screening services at
an airport.
10The base period of these new contracts expired on September 30, 2005; an
option period was exercised by TSA to extend them through May 18, 2006.
Applicants to the SPP as of January 2006
During the period November 2004 through January 2006, 7 out of the more
than 400 commercial airports had applied to participate in the SPP. In
addition to the five airports that participated in the pilot program, as
of January 30, 2006, two additional airports that did not participate in
the pilot program had applied to use private screeners-Elko Regional
Airport in Nevada and Sioux Falls Regional Airport in South Dakota.11
However, after discussions with TSA officials, Elko Regional Airport
submitted a letter to TSA on September 30, 2005, seeking to withdraw its
application on the grounds that the City of Elko could not qualify as a
private screening company, thereby mooting its intention that the airport
would serve as the contractor.12 On October 17, 2005, TSA replied back to
Elko, acknowledging Elko's withdrawal of its application to participate in
the SPP. Table 2 provides information on the two airports that applied to
the SPP, as of January 2006.
Table 2: Non-Pilot Program Airports That Applied to Use Private Screeners
to Conduct Screening Operations from November 2004 through January 2006
Selected airport Sioux Falls Regional
characteristics Elko Regional Airport Airport
Security category III II
Screeners authorized in 17 37
FY 2005a
Application date November 2004 April 2005
Reason for applying To act as provider of private To have a private
screening services to achieve screening company
cost-savings and staff provide screening
efficiencies. services to enhance
customer service.
Status of application Application withdrawn Application approved
and contract awarded
Source: TSA.
aThe number of screeners authorized is based on full-time equivalents
(FTE). One FTE is equal to 1 work year or 2,080 non-overtime hours.
11Elko Regional Airport applied with the intention of serving directly as
a private screening contractor. Sioux Falls Regional Airport applied to
have screening carried out separately by a private screening contractor.
12TSA interprets "private screening company," as utilized in 49 U.S.C. S:
44920, to exclude public companies that do not possess the attributes of a
private company or corporation and that are not independent from the city
or county in which it operates. TSA officials stated that under this
interpretation, affiliates established by airports to provide private
screening services cannot compete for and obtain screening contracts let
by TSA if TSA determines that they do not possess the above attributes.
TSA officials also stated that whether or not an airport qualifies as a
private screening company depends upon a case-by-case factual analysis as
well as the application of state law.
We did not attempt to identify the reasons that only 7 of more than 400
commercial airports that were eligible to participate in the SPP had
submitted an application. However, in our November 2004 report on the SPP,
we reported that of the 26 airport operators we interviewed, 20 said their
airport would not apply to participate in the SPP in the first year of the
program, 5 were uncertain whether to apply for the 2004 cycle, and 1 said
his airport planned to apply, but only for its international passenger
terminal.13 Among the 20, 16 said they were satisfied with federal
screeners or did not see any benefit to applying to participate in the SPP
and 13 cited concerns about airport liability in the event of a terrorist
attack.14
In May 2005, TSA approved the SPP application for the Sioux Falls airport,
and in December 2005, TSA awarded a contract for passenger and checked
baggage screening services at Sioux Falls to a private screening
contractor. In February 2006, this award enabled Sioux Falls airport to
transition from TSA federal screeners to private screeners employed by the
contractor. According to the contractor, it will use 30 FTEs, 7 less than
TSA's screener allocation for Sioux Falls airport, without compromising
security or customer service. The contractor expects to achieve
operational efficiencies and cost savings for its screening operations at
this airport due to the reduction in FTEs.15
In addition, during February 2006, TSA awarded a contract to a private
screening contractor at one of the five pilot program airports.16 TSA is
in the process of awarding contracts to the remaining four airports that
applied to use private screeners. As of February 28, 2006, TSA received
proposals from private screening companies for the Greater Rochester
International, Tupelo, Kansas City, and San Francisco International
airports. TSA also released the request for proposals for San Francisco
International airport.
13The 26 airport operators we interviewed do not include the 7 airport
operators that applied to participate in the SPP.
14GAO-05-126.
15We did not verify that the contractor is actually using seven fewer FTEs
than TSA's screener allocation for Sioux Falls.
16At the time we interviewed this contractor, TSA had not awarded the
contract to conduct private screening in the SPP. Thus, the contractor's
responses are based on its experiences prior to this contract award.
TSA also approved 34 private screening companies for listing on a
qualified vendors list, which identifies that these companies are eligible
to perform passenger and checked baggage screening services in the SPP.
Overview of TSA Budget for SPP
DHS's fiscal year 2006 appropriations provides nearly $2.54 billion to
fund the screener workforce-about $2.4 billion for federal passenger and
checked baggage screener full-time equivalents17 and an additional $139.6
million to pay for screening contractors at the five pilot program
airports. In accordance with its appropriations, TSA plans to fund the SPP
from the same budget line item as federal screening operations to provide
flexibility on the number of airports that can participate in the program.
In this manner, the costs for contracts with private screening contractors
are to be funded by the cost of the federal operations that are being
displaced.
Overview of the SAFETY Act
The SAFETY Act, enacted as part of the Homeland Security Act of 2002,
offers liability and other protections to sellers of qualified
anti-terrorism technologies.18 According to DHS, services, such as
screening services, are eligible to receive liability protection under the
SAFETY Act if designated as qualified anti-terrorism technologies, thus
limiting liability risks for the private screening contractor and its
subcontractors, suppliers, vendors, and customers.19 SAFETY Act protection
pertains to "claims arising out of, relating to, or resulting from an act
of terrorism" where qualified anti-terrorism technologies have been
deployed.20 According to DHS, the SAFETY Act reflects the intent of
Congress to ensure that the threat of liability does not deter the
potential manufacturers or sellers of anti-terrorism technologies from
developing and commercializing technologies that could significantly
reduce the risks or mitigate the effects of large-scale acts of
terrorism.21 The SAFETY Act does not offer indemnification (compensation
for losses incurred) to sellers of qualified anti-terrorism technology but
rather limits, and in some instances may completely bar, claims brought
against sellers of anti-terrorism technologies that have been deployed in
defense against or response or recovery from a terrorist incident.22 If a
seller of a potential anti-terrorism technology wishes to be awarded
SAFETY Act protections, the seller must formally apply to the department
using the forms provided by DHS, furnish the entire requisite supporting
data and information, and successfully demonstrate compliance with the
act's requirements.
17A statute caps the number of full-time equivalent screeners available to
TSA at 45,000. See Pub. No. 109-90, 119 Stat. 2064, 2070 (2005). According
to TSA, this cap does not include screeners at the five pilot program
airports.
18Aside from its liability protections, the SAFETY Act limits the types of
damages available to a plaintiff and establishes the venue in which a
plaintiff may raise such claims.
19The amount of liability will be capped at an amount equal to the level
of insurance DHS requires the service contractor to purchase.
20DHS only recognizes an anti-terrorism technology as a "qualified
antiterrorism technology" if designated under the SAFETY Act, which
requires that DHS evaluate the technology against criteria set out in S:
862 (b) the act.
Types of Contracts Awarded by TSA
TSA awarded one of two types of contracts for extending contractor
performance at the five pilot program airports. Both these types of
contracts were awarded on a non-competitive basis to the private screening
contractors. TSA awarded the first type of contract-cost-plus-award-fee
contracts (a type of cost-reimbursement contract)-to the four private
screening contractors providing screening services at four of the five
pilot program airports. These contracts, which are generally used when the
costs are not known, provide for payment of allowable incurred costs, to
the extent prescribed in the contract. A cost-plus-award-fee contract
provides for a fee consisting of (1) a base amount that is a percentage of
the estimated cost fixed at inception of the contract and (2) an award
amount that the contractor may earn in whole or in part during the
contract period and that is sufficient to provide motivation for
excellence in such areas as quality, timeliness, technical ingenuity, and
cost-effective management. The actual award amount is based upon an
evaluation by TSA compared against criteria spelled out in the contract.
This determination and the methodology for determining the award fee are
unilateral decisions made solely at the discretion of the government.
TSA awarded the second type of contract-a fixed-price-award-fee
contract-to one private screening contractor. This type of contract is
generally used when the requirements are reasonably known and a reasonable
basis for firm pricing by the contractor exits. A fixed-price award fee
contract establishes a fixed price (including normal profit) for the
effort, which will be paid for satisfactory contract performance, and an
award fee. The award fee earned (if any) will be paid in addition to that
fixed-price based on periodic evaluations of the contractor's performance
against an award-fee plan. TSA awarded a fixed-price-award-fee contract to
a private screening contractor at Tupelo airport, a security category IV
airport, the smallest airport.
21The SAFETY Act defines "act of terrorism" as an unlawful act causing
harm to a person, property or entity in the United States (or, in the case
of a domestic U.S. air carrier, in or outside the U.S.) by using or
attempting to use instrumentalities, weapons or other methods designed or
intended to cause mass destruction, injury or other loss to citizens or
institutions of the United States.
22According to DHS, the SAFETY Act does not limit liability for harm
caused by anti-terrorism technologies when no act of terrorism has
occurred.
According to the Federal Acquisition Regulation (FAR), which generally
governs federal government procurement activities, the negotiation of
contract type and price (or estimated cost and fee) should result in
reasonable contractor risk and provide the contractor with the greatest
incentive for efficient and economical performance.23A firm-fixed-price
contract, which best utilizes the basic profit motive of a business
enterprise, shall be used when the contractor risk involved is minimal or
can be predicted with an acceptable degree of certainty. The FAR provides
that when a reasonable basis for firm pricing does not exist, other
contract types (such as cost reimbursement) should be considered, and
negotiations should be directed toward selecting a contract type that will
appropriately tie profit to contractor performance.24 As a service
continues to be contracted over time, however, and after experience
provides a basis for firmer pricing, the FAR advises that cost risk should
shift to the contractor and a fixed-price contract should be considered.25
The FAR specifically states that contracting officers should avoid
protracted use of a cost-reimbursement contract after experience provides
a basis for firmer pricing. Additionally, under the FAA acquisition policy
followed by TSA, "[t]he use of fixed-price contracts is strongly
encouraged whenever appropriate."26
23FAR, 48 C.F.R. S: 16.103. TSA is exempt from the FAR and most
acquisition laws. Instead, ATSA directed TSA to adopt the Federal Aviation
Administration's acquisition management system and authorized TSA to
modify it as appropriate. 49 U.S.C. S: 114(o) (Supp. II 2002). The FAA's
management system, which establishes policy, processes, and guidance for
all aspects of the acquisition life cycle, and authorized TSA to modify it
as appropriate. See 49 U.S.C. S: 114(o). The acquisition laws from which
FAA is exempt are listed at 49 U.S.C. S: 40110(d)(2). While TSA is exempt
from the FAR, the FAR provides useful guidance for our analysis of TSA's
contracting approach. The SPP transition plan states that the criteria
contained in FAR, and the size of the airport choosing to apply to use
private screeners, dictate the type of contract vehicle.
24FAR, 48 C.F.R. S: 16.103(b).
25FAR, 48 C.F.R. S:S: 16.103(c), 16.104(d).
26FAA Acquisition Management System policy 3.2.4.2.
DHS and Congress Have Begun to Address Liability Protection Issue at Airports
Using Private Screeners, but Stakeholder Concerns about Liability and Other
Program Issues Remain
DHS awarded some of the liability protections available under the SAFETY
Act to three of the four private screening contractors that applied for it
and stated that it will decide the status of future applications on a
case-by-case basis in accordance with criteria described in the act.
However, DHS cannot award the most extensive level of protection under the
SAFETY Act, certification status, until it can determine whether
contractors will perform as intended-a criterion that must be satisfied
before awarding such coverage. DHS officials stated that DHS has not been
able to award SAFETY Act certification status to contractors because TSA
has not yet finalized performance standards for assessing whether
contractors have performed as intended. While all four current screening
contractors we interviewed stated that SAFETY Act protection was
important, they did not state that they would be unwilling to participate
in the SPP without certification under the SAFETY Act. For example, one
contractor said it had too much time and money invested in providing
private screening services to not participate in the SPP. Congress has
since granted legal protection from lawsuits to all airports where TSA
conducts or oversees passenger and checked baggage screening.
Specifically, the fiscal year 2006 DHS appropriations act shields airports
from, among other things, virtually all liability related to negligence or
wrongdoing by private screening contractors, their employees, or federal
screeners. In addition, TSA made an effort to improve the screener hiring
process by granting contractors and FSDs more input and flexibility in the
hiring process, though some contractors, as well as FSDs at airports with
federal screeners, remain concerned about the timing of the assessments
and the length of time the assessment process takes. TSA has also taken
steps to clarify SPP roles and responsibilities between federal and
private sectors, but the four private screening contractors we interviewed
still had questions about the roles and responsibilities of TSA staff at
the airports they served.
DHS Has Provided SAFETY Act Protection to Three of the Four Current Private
Screening Contractors and Will Decide Future Coverage on a Case-by-Case Basis
Officials at DHS' Science and Technology Division stated that all
anti-terrorism technologies submitted to the department for protection
under the SAFETY Act are evaluated-including screener services-on a
case-by-case basis, in accordance with the criteria defined by the act's
two-tiered protection status, as follows:
Designation status. Designation status protects a seller of anti-terrorism
technology in the event the technology fails to thwart an act of terrorism
by limiting the type and amount of damages a plaintiff may recover such
that a seller's potential liability cannot exceed the amount of insurance
coverage maintained by the seller.27 To receive designation status,
anti-terrorism technologies, including screening services, must be
evaluated by DHS against the seven criteria set out in the SAFETY Act: (1)
prior U.S. government use or demonstrated substantial utility and
effectiveness; (2) availability of the technology for immediate deployment
in public and private settings; (3) existence of extraordinarily large or
unquantifiable risk of exposing the seller or other provider of such
anti-terrorism technology to potential liability; (4) substantial
likelihood that the technology will not be deployed unless the risk
management protections of the SAFETY Act (limited liability) are
conferred; (5) the magnitude of risk to the public if the technology is
not deployed; (6) evaluation of all scientific studies that can be
feasibly conducted to assess the capability of the technology to
substantially reduce risks of harm; and (7) anti-terrorism technology that
would be effective in facilitating the defense against acts of terrorism,
including technologies that prevent, defeat or respond to such acts.28
Certification status. Once designated, qualified anti-terrorism
technologies become eligible for certification under the SAFETY Act, which
gives the seller the legal status of a government contractor and renders
the seller virtually immune from any claims that might arise in the event
the technology fails to thwart an act of terrorism, provided the seller
does not act fraudulently or with willful misconduct in submitting
information to DHS.29 To certify, DHS must determine if the qualified
anti-terrorism technology will (1) perform as intended, (2) conform to the
seller's specifications, and (3) be safe for use as intended.
Certification status cannot be awarded unless these three criteria have
been met. DHS places certified anti-terrorism technologies and services on
an Approved Product List for Homeland Security.30
27Qualifying for protection under the SAFETY Act requires that the seller
obtain liability insurance at a level determined by DHS to satisfy
otherwise compensable third-party claims but that would not exceed the
maximum amount of liability insurance reasonably available from private
sources at prices and terms that will not unreasonably distort the sale
price of the seller's antiterrorism technology. The SAFETY Act does not
provide insurance; rather, sellers are required to purchase liability
insurance from the commercial market in an amount determined by DHS.
28According to DHS, the department applies the criteria flexibly,
assigning different weights depending on the circumstances, and may
consider additional relevant facts if necessary.
29The United States Supreme Court, in Boyle v United Technologies Corp.,
487 U.S. 500 (1987), articulated the "government contractor defense,"
which, in general and in certain circumstances, shields government
contractors from liability for design defects in equipment if (1) the
United States approved reasonably precise specifications, (2) the
equipment conformed to those specifications, and (3) the supplier warned
the United States about dangers in the use of the equipment known to the
supplier but not to the United States. The SAFETY Act essentially codifies
and makes applicable the government contractor defense to sellers of
certified qualified anti-terrorism technologies that have been deployed in
defense against or response or recovery from and act of terrorism and from
which claims that result or may result in loss to the seller arise.
DHS determined that the four private screening contractors serving the
five pilot program airports were eligible for SAFETY Act protection. Once
this determination was made, after November 2004, three of the four
current private screening contractors applied for and were provided
designation status under the SAFETY Act.31 Contractors that apply to the
SPP in the future are to be evaluated individually, as their applications
to the program are processed. TSA awarded a contract for private screening
services at Sioux Falls and Jackson Hole airports. The status of SAFETY
Act coverage for these airports, if the contractors apply for coverage,
will be determined at a later point in time.
Contractors' Concerns about Liability Not Yet Resolved
As of January 2006, one issue pertaining to how the SAFETY Act would be
applied to contractors remained unresolved and is a cause for concern for
one of the four contractors we interviewed. Specifically, DHS officials
stated that they have not been able to award SAFETY Act certification
status to contractors because TSA has not yet finalized performance
standards for assessing whether contractors have performed as intended.
DHS SAFETY Act officials stated that once TSA finalizes its performance
standards, the contractors that previously received designation status may
submit an application for SAFETY Act certification. The application is to
include evidence demonstrating that they are meeting the TSA-defined
performance standards. DHS will evaluate the material submitted by the
applicant against the TSA standards. According to DHS officials, assuming
the applicant is able to demonstrate that it is performing as TSA intends,
there should be no impediment to granting certification. When the three
contractors that already have SAFETY Act designation status were asked to
comment on whether they would continue to participate in the SPP without
certification status, two contractors told us they would. One of these two
contractors said it had too much time and money invested in providing
private screening services to not participate in the SPP. The third
contractor said that its company's $50 million in general liability
insurance coverage excludes acts of terrorism,32 thus the company believed
it "would remain exposed to serious liability concerns related to
terrorist threats [or] risks." This contractor did not, however,
explicitly state that it would not participate in the SPP going forward,
if certification status were not awarded.
30Technologies and services designated for protection pursuant to this
evaluation become known as "qualified anti-terrorism technologies." Only
qualified anti-terrorism technologies are eligible for certification.
31One of the four current private screening contractors-Jackson Hole
Airport Board-has not applied for SAFETY Act protection.
In general, contractors may offset potential liability arising from acts
of terrorism by purchasing commercially available liability insurance.33
Two of the four private screening contractors currently under contract to
TSA purchased insurance policies that protect them from acts of terrorism.
Both contractors stated that their policies were inadequate to cover the
liability resulting from a major terrorism attack and that SAFETY Act
protection was, therefore, additionally necessary to provide protection to
the contractor.34 As to the importance of SAFETY Act protection to
potential future participants in the SPP, in November 2004, we reported
that five of six prospective SPP private screening contractors we
interviewed-those not currently serving airports-stated that the issue of
whether they would receive liability protection was important and would
greatly affect whether they would participate in the SPP if selected by
TSA as a qualified contractor.35 In addition, officials with two aviation
associations representing hundreds of airports, whom we interviewed,
stated that their members believed that SAFETY Act protection-both
designation and certification-was necessary for contractors to participate
in the SPP.
32This policy reportedly excludes acts of terrorism, such as "any act of
one or more persons, whether or not agents of a sovereign power, for
political or terrorist purposes and whether the loss or damage therefrom
is accidental or intentional."
33According to TSA, the premiums paid for insurance are considered an
allowable cost for reimbursement under the contracts, assuming the costs
are reasonable and allocable in accordance with TSA cost principles.
34The two contractors purchased insurance without the protections of the
SAFETY Act or the promise of indemnification at the time of purchase.
35According to TSA, the premiums paid for insurance are considered an
allowable cost for reimbursement under the contracts, assuming the costs
are reasonable and allocable in accordance with TSA cost principles.
DHS Appropriations Act Addresses Airports' Concerns about Liability Exposure
Issue
The status of SAFETY Act coverage for airports, and liability coverage in
general for airports using private screeners, differs from coverage for
contractors. While DHS has determined that contractors performing
screening services are eligible to receive liability protection under the
SAFETY Act, the department has not determined whether airports that do not
perform screening services are eligible for liability coverage under the
act. In October 2005, however, Congress enacted legislation that granted
airports legal protection from lawsuits. Specifically, section 547 of the
Department of Homeland Security Appropriations Act, 2006, shields airport
operators from virtually all liability relating to the airport operator's
decision on whether or not to apply to opt-out of using federal screening,
and any acts of negligence, gross negligence, or intentional wrongdoing by
either a qualified private screening company under contract to DHS, its
employees, or by a federal screener.36 Prior to the enactment of this act,
three of the seven airport operators we interviewed expressed concerns
about whether the government would extend liability protection to them.37
They were concerned that if a security incident arose that resulted in
litigation, they may become a party to a lawsuit. Officials with two
aviation associations, whom we also interviewed at that time, also
expressed concerns about airport liability. After the enactment of the
2006 appropriations act, one of the three airport operators that had
expressed concerns about liability told us that the protection available
under section 547 of the act had addressed its concerns about its
airport's liability. A second airport operator that we contacted after
enactment of section 547 had not yet reviewed the provision and stated
that it could not confirm whether its airport would be protected from
liability.38
36Codified at 49 U.S.C. S: 44920(g). This provision does not relieve an
airport operator from liability for its own acts or omissions related to
its security responsibilities.
37The seven airports include the five airports that participated in the
pilot program and the two airports that applied to the SPP, but did not
participate in the pilot program. One of the two airports that did not
participate in the pilot program, Elko Regional Airport, has since
withdrawn its application to the SPP.
38We did not ask the third airport operator whether the 2006
appropriations act had addressed its concerns about liability because it
had withdrawn its application.
TSA Granted Private Screening Contractors Flexibility in Hiring Process, but
Contractor Concerns Remain
TSA made an effort to improve the screener hiring process by granting
contractors and FSDs more input and flexibility in the hiring process,
including more frequent assessments of screener candidates and two options
for performing these assessments. Prior to November 2004, TSA had
scheduled candidate assessment forums on a regional basis 1 to 2 times a
year to evaluate a pool of candidates interested in screener positions. At
that time, private screening contractors, like FSDs at airports with
federal screeners, had to rely on TSA to authorize the hiring of screeners
and establish candidate assessment forums-a process that could take
several months.39 Beginning in November 2004, as part of the contract
extensions, TSA began requiring the pilot program private screening
contractors to submit annual hiring plans to TSA for review, indicating
their anticipated screener staffing needs. The intention was to use this
information to plan for more frequent and timely screener assessments
conducted regionally and locally-up to 6 times a year. Despite TSA's
planned increase in the frequency of assessments, private screening
contractors, as well as FSDs at airports with federal screeners, remain
concerned about their inability to conduct hiring on an as needed basis
because TSA still controls the scheduling of assessment forums.40 One
contractor, for example, stated that despite the scheduling of more
frequent assessment forums, it still could not fully implement its hiring
plan because the assessments did not necessarily coincide with its hiring
periods.
In response to contractor concerns about the candidate assessment process,
in November 2004, TSA began allowing private screening contractors two
options for evaluating screener candidates:41
39At these forums, screener candidates undergo a credentialing process
consisting of a series of physical and mental exams, drug tests, and a
preliminary background check, among other things.
40Concerns about the screener hiring process are shared by some FSDs at
airports using federal screeners. In our September 2005 report on the
ability of FSDs to address airport security needs, we reported that most
of the 25 FSDs interviewed were satisfied with TSA's hiring process, which
provided more options for FSDs to be involved in hiring screeners, and
most stated that the hiring process in place was better than the
centralized process that existed previously. Nevertheless, 7 of the 25
FSDs said they were not satisfied because, among other things, the hiring
process continues to take too long. See our report GAO-05-935 .
41TSA officials said they are working on two additional options for
contractors to assess screener candidates and will notify contractors when
the options are available so that contractors may submit a proposal to
change the option they selected.
o Option 1: Contractors may draw screener candidates from a pool
developed by a private company under contract with TSA, which is
responsible for assessing potential screener candidates. This
company administers a computer-based aptitude test, mental and
physical tests, and conducts background checks at regional
assessment centers. The contractor is under no obligation to
accept these applicants.
o Option 2: Contractors may use TSA's assessment company for the
aptitude test alone, and develop and implement additional
assessment activities on their own, provided they meet ATSA
requirements and TSA guidance.42
According to TSA officials, all four private screening contractors have
selected from these two options for hiring screeners. The contractors'
views about the hiring process were mixed. For example, one contractor we
interviewed said that because TSA has allowed it to conduct its own
assessments, the length of the entire assessment process has been reduced
from several months to 2 weeks. This contractor, which was using option
two, is now conducting key parts of the assessment process. According to
this contractor, its use of option two has resulted in a more efficient,
effective, and significantly less costly process. A second contractor
using option two stated that it had established a new hire recruitment,
assessment, and training program. According to this contractor, its use of
option two has resulted in its ability to identify more qualified screener
candidates, improve screener retention, and fill screener vacancies on an
as needed basis. However, the other two contractors remained concerned
about the length of time the assessment process lasts. One of these
contractors stated that the duration of the process was still so long that
potential screeners found other jobs first and dropped out of
consideration. This contractor, which was using option two, proposed using
FSD staff to conduct the assessments to streamline and shorten the
assessment process. 43 According to TSA officials, TSA did not accept this
suggestion because TSA's Office of Human Resources determined it would
have been too costly to allow FSD staff to conduct the assessments. TSA
officials stated that they offered the contractor the same assessment
options that are available to all airports with federal screeners.
Officials further stated that they will continue to examine all aspects of
the assessment process in an effort to offer greater efficiency and
flexibility in screener hiring for both federal and contract screeners.
42These guidelines describe working conditions that passenger and checked
baggage screeners must be willing and able to function in, physical
requirements of the job (lifting heavy objects, for example), and a
requirement that applicants successfully complete a background
investigation.
43At the time we interviewed the contractors, the remaining contractor was
using option one.
TSA Has Taken Steps to Clarify SPP Roles and Responsibilities between Federal
and Private Sectors, but Questions about Division of Labor Remain
While TSA has defined the roles and responsibilities for FSDs, FSD staff,
and private screening contractors, among others, in its August 2005 SPP
transition plan, the details contained in this plan have not been
communicated to or shared with private screening contractors.44 TSA and
SPP procurement officials stated that they consider the transition plan to
be an internal document that TSA does not intend to distribute outside of
the agency. However, officials stated that the information on roles and
responsibilities under the SPP would be available to prospective private
screening contractors as part of the SPP contracting process.
Additionally, TSA SPP officials stated that they presumed that FSDs had
communicated this information to the current private screening
contractors. Further, TSA officials stated that TSA's June 2004 guidance
on the SPP provides information on roles and responsibilities of SPP
stakeholders. However, our review of the guidance found that it did not
clearly delineate the roles and responsibilities of TSA airport staff and
the private screening contractors. For example, the guidance did not
include any information on the roles and responsibilities of some TSA
airport staff, such as screening managers and training coordinators, and
did not clarify how their roles and responsibilities would differ from
those of the private screening contractors. Additionally, the four private
screening contractors we interviewed had questions about the roles and
responsibilities of TSA staff at the airports they served, including
screening managers and stated that, in their view, TSA had not clearly
defined the roles and responsibilities of TSA staff at airports
participating in the SPP.45 When asked whether FSD and FSD staff roles and
responsibilities were clear, one contractor stated that he did not believe
that TSA had recognized that the roles of training managers and screening
managers at airports using federal or private screeners are different. A
second contractor stated that, in his view, TSA had not standardized the
roles and responsibilities of TSA airport staff across the five airports
currently using private screeners. Similarly, a third contractor stated
that TSA roles and responsibilities need to be more well-defined,
particularly the role of FSD airport staff and TSA local contract staff.
Finally, the fourth contractor stated that the separation of roles and
responsibilities has been a major challenge on a daily basis in part
because TSA staff at screening checkpoints assert control and impose
operational changes at the checkpoints-tasks that the contractor believes
it is responsible for, rather than TSA staff. This contractor identified
the need for TSA to clearly define the roles of the various stakeholders
involved in the SPP and to establish guidelines on TSA's oversight and
regulatory responsibilities at airports participating in the SPP.
44TSA provided an early draft of the transition plan to the FSD and FSD
staff at four of the five pilot program airports.
45Screening managers at airports with federal screeners are responsible
for (1) managing screener operations; (2) ensuring quality and consistency
of screening procedures; (3) scheduling screening personnel to screening
operations; (4) managing overall screening work force issues; (5) managing
external relationships; and (6) interpreting technical aspects of TSA
policies, regulations, and directives.
In September 2005, in reporting on the ability of FSDs to address airport
security needs, we stated that TSA airport stakeholders (including airport
operators)46 at some of the airports we visited stated that the FSD's role
was not sufficiently clear, and at least one stakeholder at every airport
we visited said such information had never been communicated to them.47 We
recommended that DHS direct TSA to communicate the authority of the FSD
position, as warranted, to FSDs and all airport stakeholders. In response,
TSA agreed to update the role of the FSD and communicate this information
to airport stakeholders. As of December 2005, however, TSA had not yet
implemented this recommendation, but stated that the matter is being
considered by a TSA steering committee. In addition, a consulting firm
that evaluated the private screening pilot program in April 2004
recommended that TSA clearly delineate the roles and responsibilities
among federal and private screening managers and their staff and include
this information in its contracts with the private screening contractors.
Based on our review of the June 2004 guidance on the SPP and the contracts
awarded to the current private screening contractors in November 2004, TSA
had not included this information. TSA officials stated that they plan to
clearly delineate roles and responsibilities of the FSD, FSD staff, and
private screening contractors in the forthcoming SPP contracts.
According to our standards for internal controls, agency management should
ensure there are adequate means of communicating with external
stakeholders on issues that may have a significant impact on the agency's
ability to achieve its goals.48 By not sharing detailed information on
roles, responsibilities, and authorities described in the SPP transition
plan with all FSDs and private screening contractors, TSA may be missing
an opportunity to support the effective performance and management of
essential functions related to the screening process. Additionally,
without clear and specific information on roles and responsibilities under
the SPP, it may be difficult for prospective SPP contractors to develop an
informed estimate of the costs of providing screener services.
46Airport stakeholders interviewed for this report were airport managers,
airport law enforcement, station managers representing air carriers, and
FBI airport liaison airports, among others.
47 GAO-05-935 .
TSA Provides Some Incentives to Contractors to Achieve Cost-Savings and Plans to
Shift More Cost Risk to Contractors at Larger Airports in 1 to 2 Years
Through its contracts, TSA offers the private screening contractors some
incentives to decrease costs. Specifically, TSA's cost reimbursement
contracts for screening services at four of the five airports currently
using private screeners provide some incentives in the form of an award
fee tied in part to the contractor's ability to achieve cost efficiencies
and innovations. However, despite TSA's use of cost-savings as a basis for
a portion of the award fees, opportunities for government cost-savings may
be limited because under the cost-reimbursement contracts the government
bears most of the cost risk-the risk of paying more than it expected. TSA
plans to shift more cost risk to contractors by competitively awarding
fixed-price-award fee contracts for screening services at the four
smallest airports that will participate in the SPP. TSA officials said
they also plan to competitively award fixed-price contracts for screening
services at larger airports, but will not do so for another 1 to 2
years-when they believe that screening costs at larger airports will be
better known.
TSA Plans to Transition from Cost-Reimbursement to Fixed-Priced Contracts, but
Stated That an Additional 1 to 2 Years Was Needed to Do So at Larger Airports
TSA expects that the SPP will operate at a cost that is competitive with
equivalent federal operations and will achieve cost-savings, where
possible. However, opportunities for cost savings are somewhat limited
because of various requirements that contractors must meet in performing
the contract. Specifically, under ATSA, private screening companies must
provide compensation and other benefits to contract screeners at a level
not less than that provided to federal screeners.49 Further, the contracts
require that contractors ensure that security checkpoints are staffed in
accordance with TSA's standard operating procedures and other government
requirements and that the screeners have the qualifications and training
established by the government. While these government airport security
standards must be met, TSA has structured its existing contracts to
provide some incentives to contractors for cost savings. Specifically,
over the last 3 years, TSA has awarded cost-reimbursement contracts with
an award fee component for screening services at four of the five airports
currently using private screeners.50 These contracts provide for payment
of allowable incurred costs, to the extent prescribed in the contract
(typically up to a specified cost ceiling). In addition, the government
also agrees to award a separate amount (base fee) fixed at inception of
the contract and an award amount (award fee) that the contractor may earn
in whole or in part during performance that is sufficient to provide
motivation for excellence in such areas as quality, technical approach,
and cost-effective management. The amount of the award fee to be paid is
determined by the government's judgmental evaluation of the contractor's
performance in terms of the criteria stated in the contract.
48GAO, Standards for Internal Control in the Federal Government,
GAO/AIMD-00-21 .3.1 (Washington, D.C.: November 1999).
49Pub. L. No. 107-71, S: 108, codified at 49 U.S.C. S: 44919(f) (screening
pilot program) and 49 U.S.C. S: 44920(c) (opt-out program).
Because cost-savings and contract management account for 20 percent of the
award fee determination for the current screening services contracts,
these contracts do provide some incentive for contractor cost efficiency.
Specifically, the award fee plan establishes the expectation that
contractors will provide screening services with cost efficiencies and
innovation, while meeting the security standards, mission objectives, and
compensation levels required by ATSA and TSA, respectively.51 These cost
and contract management factors include:
o Overtime/personnel costs--evaluates the contractor's ability to
control overtime and personnel costs.
o Innovation/continuous improvement--evaluates the contractor's
ability to build on previous experiences/accomplishments and
utilize innovative approaches, techniques and tools.
o Other direct/indirect cost52--evaluates the contractor's
ability to control direct labor cost and overtime costs and its
ability to effectively manage its subcontract costs through use of
competition to the greatest extent practicable and through
documented cost analysis substantiating the reasonableness of
subcontract costs. Indirect cost control evaluates the
contractor's ability to control its indirect costs.53
50All five contracts awarded to private screening contractors to date were
awarded and extended as part of the original private screener pilot
program, not as part of the SPP.
51According to TSA, contractors must ensure that security checkpoints are
staffed in accordance with TSA's standard operating procedures and other
government requirements, and that screeners meet government qualifications
and training requirements.
52Indirect costs include the contractor's overhead costs.
Despite TSA's use of cost-savings as a basis for a portion of the award
fees, opportunities for government cost-savings may be limited in part
because under the cost-reimbursement contracts the government bears most
of the cost risk-the risk of paying more than it expected. Specifically,
under cost-reimbursement contracts, the government must reimburse the
contractor for all allowable costs as provided in the contract. TSA plans
to shift most cost risk to its contractors by moving to a
fixed-price-award fee contract in the next 1 to 2 years. A fixed-price
type of contract places upon the contractor the maximum risk and full
responsibility for all costs and resulting profit or loss, providing
maximum incentive for the contractor to control costs and perform
efficiently. Further, in a competitive environment, pricing by contractors
for a fixed-price contract would be subject to marketplace pressures that
would provide incentives for the contractor to control costs and reduce
prices in order to win the contract. The award fee component of a
fixed-price contract is used to motivate the contractor by relating the
amount of profit or fee payable under the contract to the contractor's
performance in the areas of operations, management, contract compliance,
and human resources. Because the contract is fixed-priced, the award fee
portion does not assess cost management.
TSA has awarded a fixed-price-award-fee contract to the contractor
providing screening services at the smallest of the five airports using
private screeners, while the contracts for screening services for the
other four airports remain as cost-reimbursement contracts. TSA officials
stated that the fixed-price contract was awarded for the one airport (on a
noncompetitive basis) because costs there were considered predictable and
therefore a reasonable basis for firm pricing by the contractor existed.
Table 3 provides information on TSA's contracts with current private
screening contractors.
53An additional contract management factor not listed above is the
contractor's compliance with the contract's terms and conditions.
Table 3: Type of Contract and Contract Amount for the Four Private
Screening Contractors for the Period November 19, 2004, through May 18,
2006
Contract
Private Type of contract amounta Airport
screening Cost-plus- Fixed-price- Base Option security
contractor award-fee award-fee yearb periodc category
Covenant $79,423,995 $58,354,170 X
Aviation
Security
Covenant 698,005 506,168 IV
Aviation
Security
FirstLine 34,574,108 25,933,623 I
Transportation
Security
McNeil Security 8,983,957 6,793,001 II
International
Jackson Hole 3,601,457 2,484,297 III
Airport Board
Source: TSA.
aThe contract amounts include base fees and potential award fees and are
estimated amounts, not actual costs incurred under the cost-plus award fee
contracts.
bThe base year is the first year of the contract.
cThe option period is for year 2-5 of the contract.
TSA officials stated that as of February 2006, TSA had awarded, was
planning to award, or was in the process of awarding, additional
fixed-price contracts on a competitive basis for screening services at
three other small airports (categories II, III, and IV) under the SPP.54
TSA officials acknowledged that cost-reimbursement contracts place most of
the cost risk on the government, rather than the contractor, but said the
agency would not award fixed-price contracts for screening services at the
two larger airports using private screening contractors for another 1 to 2
years. TSA officials stated that they would not award fixed-price
contracts to these contractors because they did not know the costs of
screening at the larger airports, where they believe costs are variable,
and therefore they believe that TSA would be at greater risk of awarding a
contract for a higher cost than might actually be necessary.55 TSA
officials acknowledged that TSA already had, through an independent
cost-data study, identified and collected some cost and performance data
on passengers and checked baggage screening operations at 15 airports with
private and federal screeners, including four category X and four category
I airports and all five pilot program airports.56 This study, which was
completed in October 2004, looked in particular at cost drivers-factors
that contribute to overall expenses.57 Moreover, an April 2004
study58conducted for TSA by a consulting firm estimated how much TSA spent
for screening operations at each of the five pilot program
airports-including contract payments as well as costs borne by TSA-and
compared the results with estimates of how much TSA would have spent had
it actually conducted the screening operations at those airports.
54The draft SPP contracts for Jackson Hole airport (category III) and
Sioux Falls (category II) airport state that TSA will award a combination
cost-plus-fixed-fee and fixed-price-award-fee contract for these airports.
Specifically, the pre-transition and transition phases, such as screener
assessments, leasing, travel, consumables, uniforms, and other direct
costs will be performed under the cost-plus-fixed-fee portion of the
contract. Once the SPP contractors have attained full operational
capability-full transition to private-sector screeners-the screening
services will be performed under a fixed-price award fee contract. In
December 2005, TSA awarded such a contract to a private screening
contractor to provide screening services at Sioux Falls airport. On
February 5, 2006, the contractor received a certificate of full
operational capability from TSA.
TSA officials stated that the cost information identified in these two
studies provided useful data to help determine the costs of screening at
airports currently using private screeners, but said additional
information is needed to assist in transitioning to fixed-price contracts
for screening services at larger airports. Specifically, TSA officials
stated that additional cost information based on the actual costs of
participating in the SPP is needed for the larger airports because the SPP
contracts differ in two key ways from the pilot and extension contracts
that TSA previously awarded. First, the SPP contracts will include
specific performance measures and targets that the contractors must meet.
Second, the contracts will allow for contractors to recommend and, if
approved, implement innovations, and to select among options for assessing
screener candidates and training screeners. The officials stated that it
would therefore be difficult for prospective SPP contractors for the
larger airports to accurately estimate the costs of providing screening
services for a fixed-price contract for larger airports. As a result, TSA
officials stated that they needed up to 2 additional years to determine
estimated costs in order to potentially transition to fixed-price
contracts, and therefore would continue using cost-reimbursement contracts
with the largest airports (categories X and I) for that period.59 By using
competitive bidding procedures to award fixed-price contracts to qualified
firms, as TSA contemplates, TSA will also help to bring marketplace
pressures to bear on competitors' proposed costs and fees or prices and
could enable TSA to maximize contractors' incentives to control costs and
ensure that the contractor, rather than the government, will bear more of
the cost risk associated with performance of private screening operations.
55TSA officials stated, however, that they are considering adding some
fixed-price line items to the new cost-reimbursement contracts that will
be awarded at the two larger airports.
56TSA plans to gather cost data at up to 15 additional airports with
federal screeners, but no deadline has been set. These airports could be,
but are not necessarily, future SPP participants. Additionally, TSA's SPP
transition plan indicates that TSA has developed a model they plan to use
to estimate the federal costs of screening at specific airports for
comparison purposes. The costs included in this model are the federal
costs associated with those tasks that the private contractor would
perform at a specific airport, such as screener labor costs, including
overtime; and uniforms, consumables, recruiting, assessment,
credentialing, training, and workers compensation. The data for this model
will be obtained from TSA's Office of Budget and Performance for each
specific airport that applies to participate in the SPP.
57The cost drivers included in the study were redundant screenings,
equipment availability, absenteeism, and training effectiveness. According
to TSA, redundant screening occurs when a passenger undergoes secondary
screening but does not possess a prohibited item. Reducing the number of
redundant screenings will improve screening capacity and lower the cost of
the passenger screening process. Equipment availability is the
availability of screening machines. Screening cannot work effectively when
a machine is down or not working efficiently. High absenteeism is a major
cost driver; it requires TSA to employ a larger work force than would
otherwise be required. Training effectiveness is characterized by mission
focus, content, and minimum standards of the amount of time each employee
must devote to it. Effective training results in high prohibited item
detection rates, according to TSA.
58Private Screening Operations Performance Evaluation Report, Summary
Report; Transportation Security Administration; April 16, 2004.
59The contracts with the current four private screening contractors expire
in May 2006, after which TSA intends to competitively award new
cost-plus-award-fee contracts at the larger airports.
Performance Goals and Measures Developed by TSA to Assess SPP Contractors Have
Not Been Approved by DHS
TSA Has Developed Performance Measures to Evaluate Security, Cost, Innovation,
and Other Facets of Contractor Performance under the SPP, but DHS Has Not
Approved These Measures
TSA has developed performance goals and draft measures and targets to
assess the performance of private screening contractors under the SPP, but
DHS has not yet approved them or established a time frame for doing so.60
Until DHS approves these measures, TSA cannot finalize and implement them
to assess performance. Performance goals are measurable objectives against
which actual achievement can be compared. Performance measures are the
yardsticks to assess an agency's success in meeting performance goals,
while a performance target is a desired level of performance expressed as
a tangible, measurable objective, against which actual achievement will be
compared. Together, these performance metrics are used to assess an
agency's progress toward achieving the results expected. We reported in
April 2004 that without data to assess the performance of private
screening operations, TSA and airport operators have limited information
from which to plan for the possible transition of airports from a federal
screening system to a private system. In our November 2004 report, we
stated that TSA had begun drafting performance measures for this purpose.
In the current contracts that TSA awarded to the four private screening
contractors, TSA established an award fee process to motivate contractor
performance.61 These contracts were modified in February and March 2005 to
implement the award fee process.
TSA's draft quality assurance surveillance and award fee plan for the SPP,
dated October 2005, identifies the performance measures TSA plans to use
to assess the performance of private screening contractors against TSA's
major goals for the program.62 According to TSA, the five goals for the
SPP in the areas of security, customer service, costs, workforce
management, and innovation, are:
60TSA officials stated that these same performance goals and measures
would be used to assess overall SPP program management as well.
61TSA awarded the contracts to the four private screening contractors in
November 2004. The contractors were extended in November 2005 for an
additional 6 months, in accordance with the terms of the contracts.
o Ensure security.
o Provide world class customer service.
o Implement cost efficiencies.
o Respect the screening workforce.
o Create a partnership that leverages strengths of the private
and public sector.
TSA's draft quality assurance surveillance and award fee plan for the SPP
includes planned performance measures in 14 areas that are to be applied
to all private screening companies that participate in the SPP. These
performance measures, in addition to an innovation measure, are to be used
to determine the award fee provided to contractors that participate in the
SPP.63 Table 4 describes the performance measures.
62In March 2005, TSA officials said they had recently submitted SPP
performance measures to DHS. TSA officials were not able to provide the
date the performance measures were submitted to DHS.
63As part of TSA's draft award fee plan for the private screening
contractors that participate in the SPP, there is an award fee pool
available for optional contractor-provided innovation submissions.
Specifically, the contractor may submit innovative ideas that will improve
security effectiveness, cost-efficiency, or customer satisfaction through
the development of screener innovation submissions under the contract. The
plan states that contractor submissions will be evaluated on a recurring
basis by the airport FSD and submitted to the SPP program management
office on a bi-annual basis.
Table 4: TSA Performance Measures for Evaluating SPP Contractors
Performance measure Description Performance target
1. Maintenance Equipment, property, and 95% of inspected
materials are well kept and equipment, property,
operational. or materials are well
kept, operational, and
recorded
2. Reporting Reports and notifications are 95% of the reports
accurate and submitted in a submitted within 5
timely fashion. days of the due date
3. FSD evaluation Contractor supports the FSD Score of 50 or above
in ensuring an efficient, out of a total
effective, and responsive possible 100 points
operation.
4. Demonstrate Contractor complies with 100% compliance
compliance with pre-transition tasks, such as
pre-transition completing recruiting
activities activities, providing
preferential treatment for
federal screeners, and
completing assessments of
screener candidates.
5. Demonstrate Contractor complies with 100% compliance
compliance with transition tasks, such as
transition activities verifying that all equipment
is fully functioning and
ensuring that screeners
completed all required
on-the-job training.
6. Assessment All persons designated to be 100% of screener
deployed as screeners meet personnel employed
all statutory requirements meet statutory
for employment. assessment
requirements
7. Credentialing All persons meet TSA 100% of contractor
specified requirements for personnel meet
employment. credentialing
requirements for
employment
8. New hire training New hires receive the 100% of new hires meet
required training before required training
assuming screening before assuming
responsibilities. screening
responsibilities
9. Recurrent training Screeners must meet the 100% of screeners meet
minimum requirement of 3 recurrent training
hours of training per requirements
screener, per week, averaged
over a calendar quarter.
10. Remedial training Screeners receive a minimum 100% of screeners who
of 3 hours of remediation, fail a covert test
provided by the contractor, meet remedial training
for failing a national or requirements
local covert test
(unannounced, undercover
test).
11. Passenger TIP systems project images of Target to be set by
screening Threat threat objects on an x-ray TSA
Image Projection screen during actual
(TIP) detection operations and records
whether screeners identify
threat objects.
12. Passenger Measure of the rate of Target to be set by
screening TIP false recognition of objects TSA
alarm rate incorrectly detected during
TIP testing.
13. Screener Measure of the percent of Target to be set by
recertification pass screeners passing, on their TSA
rate (first attempt) first attempt, TSA's annual
screener recertification
test, which assesses, among
other things, screeners'
ability to perform TSA's
passenger and checked baggage
screening standard operating
procedures.
14. Customer Measure of performance on Target to be set by
satisfaction TSA's customer satisfaction TSA
surveys, which measure
customer service and public
confidence associated with
TSA's aviation screening
functions.
Source: TSA.
aTIP projects images of threat objects on an x-ray screen during actual
operations and records whether screeners identify threat objects.
TSA established draft performance targets for 10 of the 14 measures, which
all SPP contractors will be required to meet. TSA officials said
individual contractors that are accepted as SPP participants in the future
will be required to meet TSA's performance targets for the remaining four
measures-passenger screening threat image projection (TIP) detection rate;
passenger screening TIP false alarm rate; screener recertification pass
rates; and customer satisfaction. The performance indicators for the four
measures for which targets have not yet been set by TSA are to be specific
to each airport participating in the SPP. TSA stated that it has
established baseline data for these four performance measures describing
how federal screeners or private screening contractors have actually
performed at individual airports, over time, as well as an overall average
of performance. Using the baseline data as a starting point, performance
targets would then be set for each airport. For example, if a baseline
shows that historically, all airports met the performance measure for
screener recertification pass rates 70 percent of the time, TSA would set
the target measure at or above 70 percent. TSA officials stated that they
are currently working to identify incentives to encourage better results
at airports that have historically not met TSA's performance standards for
passenger and checked baggage screening. TSA is considering providing
financial incentives for a limited time in an effort to quickly move its
airports to meet TSA's baseline level of performance.
TSA officials stated that DHS must approve the draft performance goals,
measures, and targets before they can be finalized, but as of January
2006, DHS had not yet done so, and had not set a deadline for doing so. We
asked TSA and DHS officials which office within DHS was responsible for
approving these performance metrics, but the officials were not able to
provide us with the information. Until the draft performance measures are
finalized by DHS, TSA will not be able to implement its performance
measures for the SPP. According to our standards for internal controls,
agencies must have systems in place for measuring, reporting, and
monitoring program performance.64 In addition, as we have reported in our
prior work on the importance of using the Government Performance Results
Act (GPRA) to assist with oversight and decision making, credible
performance information is essential for the Congress and the executive
branch to accurately assess agencies' progress toward achieving their
goals.65 Further, the draft measures and targets TSA developed for the SPP
will also be used by DHS to determine whether to award private screening
contractors certification status under the SAFETY Act. Until the SPP
measures and targets are finalized, DHS officials stated that they cannot
determine whether contractors will perform as intended-criteria that must
be satisfied before awarding certification status.
64 GAO/AIMD-00-21 .3.1.
Conclusions
Since initiating the SPP in November 2004, DHS and TSA have taken steps to
develop a legal, contractual, and programmatic framework that enables the
private sector to provide passenger and checked baggage screening
services, with federal oversight in place to help ensure that security and
screener performance is consistent and comparable at airports, whether
federal or private screeners are used. As of January 2006, only 7 of over
400 airports that were eligible to apply to participate in the SPP had
submitted an application. While we did not attempt to identify the reasons
for the small number of applicants to the SPP, a contributing factor may
be airports' concerns about liability. In November 2004, we reported that
half of the airport operators we interviewed (13 of 26) were concerned
about airport liability in the event that a private screener failed to
detect a threat object that led to a terrorist incident. Aviation
associations that represent hundreds of airports have also identified
liability as a major concern among airports. Although Congress' recent
effort to shield airports from liability in the fiscal year 2006 DHS
appropriations act may address this concern, there have been no additional
applicants since the act was passed. Furthermore, by extending a level of
federal liability protection through the SAFETY Act to current private
screening contractors, DHS has laid the groundwork for future contractors
to potentially receive comparable protection. Ongoing concerns among
prospective participants in the SPP regarding the availability of the most
extensive level of protection under the SAFETY Act-certification-may be
alleviated once TSA finalizes a standard of performance for private
screening contractors that DHS can utilize to determine if contractors
have demonstrated that they will perform as intended.
65GAO, Managing for Results: Using GPRA to Assist Oversight and
Decisionmaking, GAO-01-872T (Washington, D.C.: June 2001).
As TSA moves forward with implementing the SPP, several opportunities
exist for strengthening the management and oversight of the program.
First, SPP applicants need clear information on what their roles and
responsibilities are to be at airports where a privatized screener
workforce operates with federal oversight. The absence of such guidance
may affect the ability of responsible officials to effectively and
efficiently manage screening checkpoints and the screener program in
general. Additionally, without clear and specific information on roles and
responsibilities of private screening contractors under the SPP, it may be
difficult for prospective SPP contractors to develop an informed estimate
of their personnel needs and associated costs under the SPP-information
that is needed for the competitive bidding process.
Second, in addition to concerns about liability protection, airports in
the past expressed concerns about the degree of management control they
would have over various aspects of screening services. Since then, TSA has
provided additional operational flexibilities to private screening
contractors, such as granting contractors and FSDs more input and
flexibility in the screener hiring process. Contractors have reported
efficiencies they have achieved as a result of these flexibilities,
including using fewer screeners than authorized by TSA. Although steps
have been taken to address concerns regarding airports' liability and the
need for contractors to have additional management control over various
aspects of screening services, only two additional airports, in addition
to the five pilot program airports, applied to participate in the SPP. We
believe that identifying the underlying reasons for the small number of
applicants to the SPP may be helpful to TSA and others in assessing what,
if any, changes may be needed to the program.
Third, while TSA is not required to adhere to the Federal Acquisition
Regulation with respect to contracting practices, it has acknowledged the
advantages of fixed-price contracts in situations where costs are
reasonably understood. To this end, TSA has begun the contract award
process for the four smaller airports using a fixed-price type of
contract. TSA has decided to continue to use cost-plus-award-fee contracts
rather than fixed-price contracts with private screening contractors
providing services at the larger airports for at least an additional 1 to
2 years so that it can continue to collect information on the costs of
screening operations at these airports. Using fixed-price contracts, as
TSA plans to do, would result in the contractors assuming substantial cost
responsibility from the government related to screener operations and help
ensure that private screening contractors deliver the most cost-effective
services, while ensuring that TSA and ATSA requirements related to
maintaining airport security are met. The use of competitively awarded
fixed-price contracts should provide a built-in incentive for contractors
to identify cost-saving opportunities and innovations, which in turn may
help reduce costs of screening contracts at the larger airports using
private screeners. TSA could make these cost-savings opportunities
available to airports with federal screeners, as appropriate, thereby
transferring the efficiencies identified by the private sector to the
federal government.
Finally, until DHS approves the performance goals, measures, and targets
for the SPP, it will not have a mechanism in place beyond the ongoing
contracts for assessing the performance of private screening contractors.
Without these performance goals, measures, and targets it may be difficult
for TSA to identify areas of screener operations that contractors may be
able to improve.
Recommendations for Executive Action
To strengthen its administration of the SPP and to help address
stakeholder concerns, we recommend that the Secretary of DHS direct the
Assistant Secretary, TSA, to take the following actions:
o Formally document and communicate with all FSDs, current
private screening contractors, and entities that apply to the SPP,
the roles and responsibilities of all stakeholders that
participate in the SPP, pertaining to the management and
deployment of screening services.
To help ensure the completion of a performance management framework for
the SPP so that TSA can assess SPP contractors and to promote
accountability of SPP contractors for achieving desired program outcomes,
we recommend that the Secretary of the Department of Homeland Security
take the following action:
o Establish a time frame for completing its review of the
performance goals, measures, and targets for the SPP so that TSA
may apply them at the earliest possible opportunity.
Agency Comments and Our Evaluation
We provided a draft of this report to DHS and TSA for review and comment.
On March 10, 2006, we received written comments on the draft report, which
are reproduced in full in appendix II. DHS generally concurred with the
findings and recommendations in the report, and stated that efforts to
implement our recommendations will help them develop a more effective,
efficient, and economical administration of TSA's SPP. With regard to our
recommendation that TSA formally document and communicate with all FSDs,
current private screening contractors, and entities that apply to the SPP,
the roles and responsibilities of all stakeholders that participate in the
SPP pertaining to the management and deployment of screening services, DHS
identified steps that TSA is taking to this end. Specifically, DHS stated
that TSA updated its SPP transition plan, which, among other things,
further clarifies the relationships among the FSD, FSD staff, and private
screening contactors, and other stakeholders as they relate to SPP program
management. DHS also stated that TSA has assembled a transition team to
work closely with SPP stakeholders to foster awareness and ensure
communication regarding the roles and responsibilities of all involved
parties working under the SPP. TSA's successful implementation of these
ongoing efforts should address the concerns we raised regarding
documenting and communicating roles and responsibilities under the SPP.
In addition, regarding our recommendation that DHS establish a time frame
for completing its review of the performance goals, measures and targets
for the SPP so that TSA may apply them at the earliest possible
opportunity, DHS stated that TSA had established performance metrics and
had provided it to DHS for its review. However, DHS did not specify a time
frame for completing its review. We continue to believe that it is
important for DHS to establish a time frame for completing its review of
the performance goals, measures, and targets for the SPP. Without these
performance metrics, TSA will not have a mechanism in place beyond the
ongoing contracts for assessing the performance of private screening
contractors. Further, until performance metrics are finalized, it remains
unlikely that DHS will award such contractors certification under the
SAFETY Act.
DHS also provided updated information on the status of the SPP, which we
incorporated where appropriate.
As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 7 days from
the date of this report. At that time, we will send copies of this report
to the Secretary of the Department of Homeland Security and the
Administrator of the Transportation Security Administration and interested
congressional committees. We will also make copies available to others
upon request. In addition, the report will be made available at no charge
on GAO's Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact
me at (202) 512-3404 or [email protected] . Contact points for our Offices
of Congressional Relations and Public Affairs may be found on the last
page of this report. GAO staff that made major contributions to this
report are listed in appendix IV.
Sincerely yours,
Cathleen A. Berrick Director, Homeland Security and Justice Issues
Appendix I: Scope and Methodology
To assess the Transportation Security Administration's (TSA) efforts to
implement the Screening Partnership Program (SPP), we analyzed (1) the
status of federal efforts to determine whether and to what extent
liability protection will be provided to private screening contractors and
airports, and actions taken on other stakeholder concerns related to
participation in the SPP; (2) how TSA has determined it will achieve
cost-savings goals for screener operations through the SPP, specifically
through choice of contract used and contract terms; and (3) TSA's progress
in developing and implementing performance goals, measures, and targets to
assess the performance of the private screening contractors who will be
participating in the SPP.
To assess the status of federal efforts to determine whether and to what
extent liability protection should be provided to private screening
contractors and airports, and actions taken on other stakeholder concerns
related to participation in the SPP, we reviewed Department of Homeland
Security (DHS) and TSA documentation on the Support of Anti-terrorism by
Fostering Effective Technologies Act (SAFETY Act) and the SPP.
Specifically, we reviewed DHS guidance posted on its Web site related to
the SAFETY Act and other DHS documentation on this act. We also reviewed
TSA's written responses to stakeholders frequently asked questions about
the SPP, including information on liability protection; TSA's transition
plan for the SPP, which documents internal guidance on transitioning an
airport from a federal screener workforce to a private screener workforce;
TSA's communications plan for the SPP; airport applications to the SPP;
and other guidance-related materials TSA developed for airports and
private-screening contractors. Additionally, we reviewed relevant
legislation, such as Aviation and Transportation Security Act and the
SAFETY Act, our prior reports that addressed issues related to the SPP and
the use of private sector screeners, and testimony at congressional
hearing on the SPP. Further, we interviewed DHS officials regarding the
SAFETY Act and TSA headquarters officials responsible for implementing the
SPP to determine efforts underway to address stakeholder concerns
regarding the SPP. We also conducted semi-structured telephone interviews
with the four private screening contractors currently providing passenger
and checked baggage screening services, the airport directors at the seven
airports that applied to participate in the SPP (the five pilot program
airports and two airports that applied to participate in the SPP, namely,
Elko Regional Airport in Elko, Nevada and Sioux Falls Regional Airport in
Sioux Falls, South Dakota), and the federal security directors (FSD) at
each of these airports to obtain their views on TSA's efforts to implement
the SPP and to address stakeholders concerns. Finally, we interviewed
officials from two aviation associations-the American Association of
Airport Executives and the Airports Council International, and a major
liability insurance provider-to obtain information on the type of
insurance available to private screening contractors.
To assess the status of TSA's efforts to achieve cost-savings in screener
operations through the SPP, specifically with respect to the choice of
contract used, and contract terms, we reviewed TSA's contracts for
screening services for the four contractors currently providing passenger
and checked baggage screening services. We did not review the contracts
that TSA awarded in early 2006 to two contractors to provide private
screening services in the SPP. Additionally, we reviewed TSA's acquisition
policies and procedures, the Federal Acquisition Regulation, and the
Federal Aviation Administration's acquisition management system, to
identify standards and guidance for contracting practices of TSA and the
federal government. Further, we reviewed TSA's transition plan and other
SPP guidance to identify TSA's current and planned approaches for
identifying screening program costs. We also reviewed TSA's activity-based
costing study that assessed the cost of passenger and checked baggage
screening operations at 15 airports, including the 5 that participated in
the 2-year pilot program using private screeners. We determined that the
results of the activity-based costing study were sufficiently reliable for
the purpose of our review. Finally, to gather perspectives on
opportunities for cost-savings under the SPP, we interviewed TSA SPP and
contracting officials, the four contractors currently providing screening
services, the seven airport directors who applied to the SPP and the FSDs
at these airports, and representatives of the American Association of
Airport Executives and the Airports Council International. We did not
review TSA's actual determination of the amount of contractor award fee.
Nor did we review the conduct of TSA's performance evaluation boards or
fee determining official in evaluating contractor performance against
award fee criteria (including cost-savings) and determining the amount of
the contractors' award fee. However, we did verify that TSA had evaluated
contractor performance (including cost-savings) in making award fee
determinations.
To assess TSA's progress in developing and implementing performance goals,
measures, and targets to assess the performance of the private screening
contractors who will be participating in the SPP, we reviewed the terms of
TSA's award fee process specified in the current contracts and TSA's draft
quality assurance surveillance and award fee plan. We also reviewed TSA's
June 2004 guidance on the SPP, other guidance-related material TSA
developed for private screening contractors and airports regarding the
SPP, TSA's contracts for the private screening contractors currently
providing screening services, TSA testimony at congressional hearings, and
our prior reports that addressed issues related to the SPP and the use of
private-sector screeners. A listing of our prior reports is contained in
appendix IV. Additionally, we interviewed TSA headquarters officials
responsible for the SPP.
We performed our work from March 2005 through March 2006 in accordance
with generally accepted government auditing standards.
Appendix II: Comments from the Department of Homeland Security
Appendix III: GAOA Appendix III: GAO Contact and Staff Acknowledgments
GAO Contact
Cathleen A. Berrick (202) 512-3404
Acknowledgments
In addition to the contact named above, David Alexander, C. Jenna
Battcher, Chuck Bausell, Amy Bernstein, David Hooper, Lara Laufer, Thomas
Lombardi, Hugh C. Pacquette, Lisa Shibata, Maria Strudwick, and Adam
Vodraska made key contributions to this report.
Related GAO Reports
Aviation Security: Significant Management Challenges May Adversely Affect
Implementation of the Transportation Security Administration's Secure
Flight Program. GAO-06-374T . Washington, D.C.: February 9, 2006.
Aviation Security: Federal Air Marshal Service Could Benefit from Improved
Planning and Controls. GAO-06-203 . Washington, D.C.: November 28, 2005.
Aviation Security: Federal Action Needed to Strengthen Domestic Air Cargo
Security. GAO-06-76 . Washington, D.C.: October 17, 2005.
Transportation Security Administration: More Clarity on the Authority of
Federal Security Directors Is Needed. GAO-05-935 . Washington, D.C.:
September 23, 2005.
Aviation Security: Flight and Cabin Crew Member Security Training
Strengthened, but Better Planning and Internal Controls Needed. GAO-05-781
. Washington, D.C.: September 6, 2005.
Aviation Security: Transportation Security Administration Did Not Fully
Disclose Uses of Personal Information During Secure Flight Program Testing
in Initial Privacy Notes, but Has Recently Taken Steps to More Fully
Inform the Public. GAO-05-864R . Washington, D.C.: July 22, 2005.
Aviation Security: Better Planning Needed to Optimize Deployment of
Checked Baggage Screening Systems. GAO-05-896T . Washington, D.C.: July
13, 2005.
Aviation Security: TSA Screener Training and Performance Measurement
Strengthened, but More Work Remains. GAO-05-457 . Washington, D.C.: May 2,
2005.
Aviation Security: Secure Flight Development and Testing Under Way, but
Risks Should Be Managed as System Is Further Developed. GAO-05-356 .
Washington, D.C.: March 28, 2005.
Aviation Security: Systematic Planning Needed to Optimize the Deployment
of Checked Baggage Screening Systems. GAO-05-365 . Washington, D.C.: March
15, 2005.
Aviation Security: Measures for Testing the Impact of Using Commercial
Data for the Secure Flight Program. GAO-05-324 . Washington, D.C.:
February 23, 2005.
Transportation Security: Systematic Planning Needed to Optimize Resources.
GAO-05-357T . Washington, D.C.: February 15, 2005.
Aviation Security: Preliminary Observations on TSA's Progress to Allow
Airports to Use Private Passenger and Baggage Screening Services.
GAO-05-126 . Washington, D.C.: November 19, 2004.
General Aviation Security: Increased Federal Oversight Is Needed, but
Continued Partnership with the Private Sector Is Critical to Long-Term
Success. GAO-05-144 . Washington, D.C.: November 10, 2004.
Aviation Security: Further Steps Needed to Strengthen the Security of
Commercial Airport Perimeters and Access Controls. GAO-04-728 .
Washington, D.C.: June 4, 2004.
Transportation Security Administration: High-Level Attention Needed to
Strengthen Acquisition Function. GAO-04-544 . Washington, D.C.: May 28,
2004.
Aviation Security: Challenges in Using Biometric Technologies. GAO-04-785T
. Washington, D.C.: May 19, 2004.
Nonproliferation: Further Improvements Needed in U.S. Efforts to Counter
Threats from Man-Portable Air Defense Systems. GAO-04-519 . Washington,
D.C.: May 13, 2004.
Aviation Security: Private Screening Contractors Have Little Flexibility
to Implement Innovative Approaches. GAO-04-505T . Washington, D.C.: April
22, 2004.
Aviation Security: Improvement Still Needed in Federal Aviation Security
Efforts. GAO-04-592T . Washington, D.C.: March 30, 2004.
Aviation Security: Challenges Delay Implementation of Computer-Assisted
Passenger Prescreening System. GAO-04-504T . Washington, D.C.: March 17,
2004.
Aviation Security: Factors Could Limit the Effectiveness of the
Transportation Security Administration's Efforts to Secure Aerial
Advertising Operations. GAO-04-499R . Washington, D.C.: March 5, 2004.
Aviation Security: Computer-Assisted Passenger Prescreening System Faces
Significant Implementation Challenges. GAO-04-385 . Washington, D.C.:
February 13, 2004.
Aviation Security: Challenges Exist in Stabilizing and Enhancing Passenger
and Baggage Screening Operations. GAO-04-440T . Washington, D.C.: February
12, 2004.
The Department of Homeland Security Needs to Fully Adopt a Knowledge-based
Approach to Its Counter-MANPADS Development Program. GAO-04-341R .
Washington, D.C.: January 30, 2004.
Aviation Security: Efforts to Measure Effectiveness and Strengthen
Security Programs. GAO-04-285T . Washington, D.C.: November 20, 2003.
Aviation Security: Federal Air Marshal Service Is Addressing Challenges of
Its Expanded Mission and Workforce, but Additional Actions Needed.
GAO-04-242 . Washington, D.C.: November 19, 2003.
Aviation Security: Efforts to Measure Effectiveness and Address
Challenges. GAO-04-232T . Washington, D.C.: November 5, 2003.
Airport Passenger Screening: Preliminary Observations on Progress Made and
Challenges Remaining. GAO-03-1173 . Washington, D.C.: September 24, 2003.
Aviation Security: Progress Since September 11, 2001, and the Challenges
Ahead. GAO-03-1150T . Washington, D.C.: September 9, 2003.
Transportation Security: Federal Action Needed to Enhance Security
Efforts. GAO-03-1154T . Washington, D.C.: September 9, 2003.
Transportation Security: Federal Action Needed to Help Address Security
Challenges. GAO-03-843 . Washington, D.C.: June 30, 2003.
Federal Aviation Administration: Reauthorization Provides Opportunities to
Address Key Agency Challenges. GAO-03-653T . Washington, D.C.: April 10,
2003.
Transportation Security: Post-September 11th Initiatives and Long-Term
Challenges. GAO-03-616T . Washington, D.C.: April 1, 2003.
Airport Finance: Past Funding Levels May Not Be Sufficient to Cover
Airports Planned Capital Development. GAO-03-497T . Washington, D.C.:
February 25, 2003.
Transportation Security Administration: Action and Plan to Build a
Results-Oriented Culture. GAO-03-190 . Washington, D.C.: January 17, 2003.
Aviation Safety: Undeclared Air Shipments of Dangerous Goods and DOT's
Enforcement Approach. GAO-03-22 . Washington, D.C.: January 10, 2003.
Aviation Security: Vulnerabilities and Potential Improvements for the Air
Cargo System. GAO-03-344 . Washington, D.C.: December 20, 2002.
Aviation Security: Vulnerability of Commercial Aviation to Attacks by
Terrorists Using Dangerous Goods. GAO-03-30C . Washington, D.C.: December
3, 2002.
Aviation Security: Registered Traveler Program Policy and Implementation
Issues. GAO-03-253 . Washington, D.C.: November 22, 2002.
Airport Finance: Using Airport Grant Funds for Security Projects Has
Affected Some Development Projects. GAO-03-27. Washington, D.C.: October
15, 2002.
Commercial Aviation: Financial Condition and Industry Responses Affect
Competition. GAO-03-171T . Washington, D.C.: October 2, 2002.
Aviation Security: Transportation Security Administration Faces Immediate
and Long-Term Challenges. GAO-02-971T . Washington, D.C.: July 25, 2002.
Aviation Security: Information Concerning the Arming of Commercial Pilots.
GAO-02-822R. Washington, D.C.: June 28, 2002.
Aviation Security: Vulnerabilities in, and Alternatives for, Preboard
Screening Security Operations. GAO-01-1171T . Washington, D.C.: September
25, 2001.
Aviation Security: Weaknesses in Airport Security and Options for
Assigning Screening Responsibilities. GAO-01-1165T . Washington, D.C.:
September 21, 2001.
Homeland Security: A Framework for Addressing the Nation's Efforts.
GAO-01-1158T . Washington, D.C.: September 21, 2001.
Aviation Security: Terrorist Acts Demonstrate Urgent Need to Improve
Security at the Nation's Airports. GAO-01-1162T . Washington, D.C.:
September 20, 2001.
Aviation Security: Terrorist Acts Illustrate Severe Weaknesses in Aviation
Security. GAO-01-1166T . Washington, D.C.: September 20, 2001.
(440393)
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Highlights of GAO-06-166 , a report to the Chairman, Subcommittee on
Aviation, Committee on Transportation and Infrastructure, House of
Representatives
March 2006
AVIATION SECURITY
Progress Made to Set Up Program Using Private-Sector Airport Screeners,
but More Work Remains
In November 2004, as required by law, the Transportation Security
Administration (TSA) began allowing all commercial airports to apply to
use private screeners in lieu of federal screeners as part of its
Screening Partnership Program (SPP). GAO's prior work found that airports
and potential private screening contractors had concerns about the SPP,
including whether they would be liable in the event of a terrorist attack
and how roles and responsibilities would be divided among TSA airport
staff and private screening contractors. This report addresses TSA's
efforts to (1) provide liability protection to private screening
contractors and airports and address other SPP stakeholder concerns; (2)
achieve cost-savings through the SPP; and (3) establish performance goals
and measures for the SPP.
What GAO Recommends
GAO is recommending that the Department of Homeland Security (DHS) direct
TSA to document and communicate roles and responsibilities for managing
screener operations under the SPP, and establish a time frame for
finalizing the SPP performance measures and targets.
DHS reviewed a draft of this report and generally concurred with GAO's
findings and recommendations.
DHS and Congress have begun to address whether liability protection may be
offered to current and prospective private screening contractors and
airports using private screeners. DHS has already provided some liability
protection to three of the four current private screening contractors.
However, DHS officials stated that they cannot provide additional
coverage, which would render contractors virtually immune from all
pertinent claims, because TSA has not finalized performance standards that
would allow DHS to determine if contractors will perform as intended-a
criterion that must be satisfied before providing such additional
protection. Recently enacted legislation shields airports from virtually
all liability resulting from the negligence or wrongdoing committed by a
private screening company or its employees. TSA has also taken action to
improve the screener hiring process by granting contractors and TSA
airport officials more input and flexibility in the hiring process.
Additionally, TSA has defined the roles and responsibilities for SPP
stakeholders-TSA airport staff and private screening contractors, among
others-in its August 2005 SPP transition plan. However, the details in
this plan have not been shared with private screening contractors, and all
four contractors we interviewed were unclear about TSA staff roles and
responsibilities at the airports they served.
TSA has stated that the SPP will operate at a cost that is competitive
with equivalent federal operations and will achieve cost-savings where
possible. Over the last 3 years, TSA has awarded cost-reimbursement
contracts with an award fee component for screening services at four of
the five airports currently using private screeners. The award fee is
based, in part, on contractor cost-savings. However, opportunities for TSA
cost-savings may be limited because under the cost-reimbursement contracts
TSA bears most of the cost risk-the risk of paying more than it expected.
TSA plans to shift more cost risk to contractors by competitively awarding
fixed-price-award fee contracts for screening services at the four
smallest airports that will participate in the SPP. TSA also plans to
competitively award fixed-price contracts for screening services at larger
airports, but stated that they cannot do so for up to 2 years-when
officials believe that screening costs at larger airports will be better
known.
TSA has developed performance goals and has begun drafting related
measures and targets to assess the performance of private screening
contractors under the SPP in the areas of security, customer service,
costs, workforce management, and innovation. For example, one of the
measures would require contractors to ensure that new hires receive
required training. TSA's related target for this measure is that 100
percent of new hires will complete required training. These same measures
and targets will also be used by DHS to assess whether to award full
liability coverage under the SAFETY Act. TSA officials stated that DHS
must approve the draft performance measures and targets before they can be
finalized. As of January 2006, DHS had not yet completed its review.
*** End of document. ***