TESTIMONY-BY: ALEXIS M. STEFANI, ASSISTANT INSPECTOR GENERAL FOR
AUDITING
AFFILIATION: U.S. DEPARTMENT OF
TRANSPORTATION
BODY: Statement of
Alexis M. Stefani Assistant Inspector General for Auditing U.S. Department of
Transportation
Before the Committee on House Transportation and Infrastructure Subcommittee on
Aviation
July 23, 2002
Chairman Mica, Ranking Member Lipinski, and Members of the
Subcommittee: I appreciate the opportunity to testify today on the
Transportation Security Administration's (TSA) progress in implementing
provisions of the Aviation and Transportation Security Act (Act). We all
recognize that the mission of ensuring that our transportation systems are
secure is a tremendous task. Although TSA is charged with securing all modes of
transportation, the Agency's efforts so far have mostly focused on addressing
aviation security and meeting deadlines established in the Act. The task is one
that has never been undertaken before on a scale of this magnitude, and TSA has
very little empirical experience to draw on. It should be noted that TSA could
not be working any faster or harder than it already is. Since we last testified
before this Subcommittee in January, TSA has made progress in implementing the
requirements of the Act, but the heavy lifting still lies ahead. TSA:
Completed the deployment of Federal passenger screeners at
three airports including Baltimore/Washington International (BWI) Airport-the
first location to have a federalized passenger screener workforce.
Let three major contracts-two to Lockheed Martin for
training all passenger screeners and modifying airport checkpoints, and one to
Boeing Services Company to do site assessments, modify airports, install
equipment, and train personnel for screening checked baggage. The three
contracts have a combined total dollar value of about $1 billion, not including
contract options.
Addressed several cost concerns that
we identified, among them TSA has agreed to use part-time positions which will
help match staffing to traffic patterns at many airports.
Entered into an agreement with the Office of Special Counsel to handle
whistleblower complaints from TSA screeners.
Since we
last testified before you, it has also become apparent that the price of good
security is substantial. TSA has requested $6.8 billion for fiscal year (FY)
2002 and $4.8 billion for FY 2003. TSA anticipates that in FY 2003 the agency's
workforce will have grown to about 67,000. However, revenues from the new
passenger security fee will pay for only a fraction of these costs. Current
estimates are that the fee will generate about $900 million this year, and $1.7
billion next year. It is evident TSA will require a large infusion of cash from
the General Fund at a time when the General Fund is already strained to pay for
vastly increased fiscal needs throughout the Federal Government.
Mr. Chairman, today the deadline to have a federalized screener
workforce in place is less than 4 months away, and the deadline to begin
screening all checked baggage is just over 5 months away. While there has been
much debate as to whether these dates are achievable, we can attest that TSA is
working diligently to meet these deadlines.
Today, I
would like to discuss two areas--meeting the deadlines in the Act, and building
cost controls into the Agency's infrastructure.
Meeting
the Deadlines in the Act. As we get closer to the deadlines with only a fraction
of the airports completed, the task ahead becomes more formidable. In the next
30 to 45 days it should become clearer as to what exactly must be done airport
by airport to meet the deadlines of the Act. As TSA and the contractors begin
rolling out plans for deploying Federal screeners and installing explosives
detection equipment, it will be extremely important to communicate information
to all parties (Congress, the Administration, airports, and airlines) if
corrections are needed. Because airport assessments for the deployment of
explosives detection equipment are scheduled to be completed at the largest
airports by the end of August, and because of the current ramp-up in hiring
passenger screeners, we will be in a much better position in a month to judge
what is or is not feasible to accomplish by the deadlines.
Building in Cost Controls. The overriding goal for TSA must be to
provide tight and effective security in a manner that avoids waste and ensures
costeffective use of taxpayer dollars. TSA faces significant challenges in
overseeing the large number and dollar volume of new contracts it is letting.
Contracts associated with deploying a new Federal screener
workforce and screening all checked baggage total over $2 billion, including all
contract options; while contracts with the current screening companies are
expected to cost about $1.6 billion. Because the agency is new, it does not have
an established infrastructure that provides an effective span of control to
monitor contractor costs and performance.
The
President's proposal to create a Department of Homeland Security (which should
offer economies of scale) could have significant implications for TSA. The
implications extend to activities TSA anticipates performing and staffing up,
such as intelligence gathering and analysis, performing criminal investigations,
establishing an administrative support structure, and office space requirements
at airports. With the tremendous tasks facing TSA, it is important that the
Agency avoid extending itself beyond the basic tenets of the Act.
Meeting the Deadlines in the Act
The two most critical deadlines in the Act are federalizing the
screening workforce and the screening of all checked baggage. First, TSA is
required to have enough Federal screeners in place to conduct the screening of
passengers and their carry-on property at all commercial airports by November
19th. Second, TSA must have a sufficient number of explosives detection systems
in place to screen all checked bags by December 31st.
Hiring and Training TSA's Passenger Screener Workforce The deadline for
hiring and training all passenger screeners is November 19, 2002, less than 4
month away. TSA is estimating it will need up to 33,000 screeners and screener
supervisors to meet this requirement. As of July 13, 2002, TSA had only 2,475
passenger screeners onboard with another 4,000 having accepted offers for
employment. TSA has also hired 529 other staff, including Federal Security
Directors, attorneys, criminal investigators, program analysts, computer and
information technology specialists, and administrative staff. These figures do
not include 1,034 former employees of the Federal Aviation Administration (FAA),
which brings TSA's total to about 4,000 employees, exclusive of Federal Air
Marshals.1
Hiring Passenger Screeners. The next 30 days
will be crucial in determining if TSA will meet the deadline for a federalized
workforce. With less than 4 months left, TSA needs to hire and train more than
7,600 passenger screeners a month to meet the November 19th deadline. This is to
hire the estimated 33,000 passenger screeners needed and does not include an
estimated 21,600 checked baggage screeners that will be needed.
TSA contracted with Lockheed Martin to convert airport checkpoints to a
new Federal model and coordinate the conversion of passenger screeners to a
Federal workforce. This conversion includes both a physical reconfiguration of
screening checkpoints and deployment of Federal screeners. Currently, Lockheed
Martin has over 100 teams conducting assessments at over 200 airports during the
month of July to determine how each checkpoint needs to be reconfigured. In
addition, Lockheed Martin subcontracted with a consulting firm to develop a
computerized model to determine the number of passenger screeners needed at each
airport. A breakdown of passenger screeners per airport from the new
computerized model should be available within the next couple of weeks.
Therefore, TSA should have a better idea in August how many passenger screeners
will be needed at each airport.
TSA contracted with NCS
Pearson for recruiting and hiring. As of July 17, 2002, NCS Pearson was
accepting applications for about 250 airports, and had opened 27 centers to
assess applicants and hire screeners for 70 airports. NCS Pearson plans to begin
accepting applications for the remaining airports by July 24, 2002. NCS Pearson
also plans to open 18 additional assessment centers for 22 more airports this
week.
As of July 15, 2002, TSA had completed the hiring
process of passenger screeners for six airports. Three of these airports (BWI,
Louisville, and Mobile) are currently operating with a Federal workforce. All
passengers are being screened by Federal screeners, and all contract screeners
have been replaced at these airports. TSA plans to begin screening passengers
with Federal screeners at two additional airports--Kalamazoo, Michigan and
Bedford, Massachusetts--the week of July 22nd. Federal screeners have also been
hired to screen passengers at the airport in Chicopee, Massachusetts. In
addition to the six airports, a Federal workforce has taken over passenger
screening at three terminals at John F. Kennedy International Airport (JFK) in
New York.
There is no doubt that over the last month
the pace of hiring has increased. TSA has almost doubled the number of screeners
hired (from 1,248 to 2,475) and increased the number of airports currently in
the assessment process from 3, during the week of June 17, 2002, to 92 by the
end of this week. This pace is continuing to accelerate as more assessment
centers are opening. In addition to the screeners hired, as of July 15th TSA had
4,000 individuals that have accepted offers for employment as passenger
screeners. These employees will be added to TSA's payroll and considered hired,
upon reporting for training.
However, TSA is still
having difficulties in hiring enough screeners in major metropolitan areas such
as New York, Boston and Chicago. For example, TSA estimated it will need about
2,300 passenger screeners in total for the three largest airports in the New
York area: JFK, La Guardia, and Newark. The assessment center for these three
airports has been opened since June 24, 2002. As of July 15, 2002, TSA had 368
job offers accepted, 15 percent of the targeted amount.
The delays in hiring are largely due to the high percent of "no shows"
and the number of applicants failing the aptitude test portion of the assessment
process.
Based on experience, TSA now expects one third
of the scheduled candidates not to show up at the assessment centers. At BWI
airport, 26 percent of qualified, scheduled candidates did not show up for
assessments.
A significant number of applicants are
failing the first phase of the assessment process. The first phase of the
assessment process consists of a computerbased test for English proficiency and
overall aptitude skills. For the three New York airports, 61 percent of
applicants who completed the first phase of the assessment process failed. This
is similar to TSA's experience at BWI, where 53 percent of applicants failed the
first phase of the assessment process.
TSA is
experiencing difficulty hiring a sufficient number of women. Initially, TSA's
target was to hire 50 percent men and 50 percent women. However, of the 4,593
applicants who have accepted job offers for employment at a specific airport
(excludes the mobile screeners2) as of July 15, 2002, only 24 percent are women.
TSA has recently addressed this issue, by modifying its hiring targets to one
third women, one third men, and one third either. If TSA is successful in
getting the new mix, there should still be sufficient female screeners to ensure
that female passengers are wanded by female screeners, since screeners rotate
positions at screening checkpoints.
Training Passenger
Screeners. The May conversion at BWI to a Federal workforce provided TSA with a
valuable test of its planned process to train passenger screeners. BWI was TSA's
first attempt to locate its training operation near an airport, and for Lockheed
Martin instructors to conduct the courses. As of July 8th, there were 539
Lockheed Martin instructors who have passed the 44-hour basic screener course
and are available to conduct training classes.
Since
the beginning of July, Lockheed Martin instructors have held basic screener
training at five airport sites: Louisville, Kentucky and Mobile, Alabama the
week of July 1st; and in New York City, New York; Kalamazoo, Michigan; and
Lexington, Massachusetts the week of July 15th. Basic screener training is
planned for five airport sites and at the FAA Academy in Oklahoma City this
week. As of July 13th, TSA had about 2,260 passenger screeners who had completed
the basic training course, 1,480 in the Mobile Screener Force (MSF) and 780
permanent workforce screeners now working at three airports, BWI, Louisville and
Mobile. Approximately 200 additional screeners took the basic screening course
the week of July 15th.
While the quality of the
in-class instruction has been satisfactory, TSA experienced other difficulties
with the training.
The training contractor is not being
required to provide x-ray machines and trace machines for hands-on training
during the classroom instruction. For the training to be effective, students
need to have hands-on practice with screening equipment. TSA has addressed this
by conducting hands-on training using equipment at airport checkpoints that are
closed for the night. So far, the contractor has been able to use equipment at
the airports because TSA had taken over checkpoint operations before starting
any on- site training. However, TSA has changed its deployment procedures, due
to the number of airports it needs to convert to Federal screeners each week, so
that it will not take over checkpoint operations at an airport before it starts
the on-site training. As a result, TSA will need to work closely with airport
managers and screening contractors to get access to screening equipment and
ensure screeners receive this critical hands-on training.
The hiring contractor needs to do a better job of providing accurate
and timely information to the on-site training coordinator on the number and
identity of the personnel who are to report for training. Significant
differences have occurred between the roster of personnel scheduled for training
and the actual students who report. For example, at the training that started on
July 15th in New York, a roster listing 127 students was provided, but only 63
students reported to training. However, 21 of the 63 students reporting were not
on the roster. The training contractor had to verify that the 21 additional
students were supposed to be in training and then run the class for half as many
students as planned. This problem is occurring in the major cities where the
rate of hiring has not met initial expectations and the hiring contractor is
scheduling applicants for training within days of passing the assessment and
accepting a job offer.
Hiring Screeners in Large
Metropolitan Areas Is Presenting a Challenge. While TSA has recently made
progress in both hiring new screeners and conducting training at the airports,
it only has 4 months left to meet the November 19th deadline. TSA is having the
most difficulty in hiring screeners in large metropolitan areas.
TSA estimates that overall, it takes an average of 5 weeks to build a
Federal workforce for each airport, which includes 2 weeks to conduct
assessments, 2 weeks for new screeners to notify current employers that they are
leaving their jobs, and 1 week for classroom training. For two of three airports
federalized to date, TSA has been able to beat this estimate. It was able to
deploy a classroom trained screener workforce in Louisville and Mobile in just
over 3 weeks after starting the on-site assessment and hiring process. However,
the total passenger screener workforce for these two airports is about 200.
In the metropolitan areas of New York, Boston and Chicago,
assessment centers were open for at least 3 weeks before local screeners started
reported for training. The on-site training in these cities now is scheduled to
last several weeks. Given the hiring difficulty TSA is experiencing in
metropolitan areas, TSA should consider immediately opening assessment centers
in all major metropolitan areas to ensure that sufficient screeners are hired to
meet the November deadline.
Meeting the Deadline for
Screening All Checked Baggage
Everyone recognizes that
the challenge facing TSA in meeting the statutory December 31st deadline3 to
screen 100 percent of checked baggage is both unprecedented and monumental. An
effort of this magnitude--an estimated 1,100 explosives detection systems (EDS)
and 6,000 explosives trace detection (trace) machines to be deployed--has never
been executed in any single country or group of countries. In fact, the amount
of explosives detection equipment necessary to screen all checked baggage at
more than 400 U.S. airports is estimated to be at least three times the amount
of equipment currently deployed at airports worldwide. It is in this context
that TSA and the Department are working fervently to meet the deadline, and they
could not be working any faster or harder than they already are.
Today TSA faces the task of deploying all the necessary explosives
detection equipment in just over 5 months to more than 400 airports around the
country, and at the same time hiring and training a checked baggage screener
workforce of 21,600, not including the 33,000 passenger screening workforce that
will need to be hired and trained. To help fulfill its December 31st mandate,
TSA awarded a contract to Boeing Services Company to deploy EDS and trace
machines to the Nation's airports and to train the checked baggage screener
workforce needed to operate the equipment. In our opinion, it should become
clear by the end of next month as to what must be done_airport by airport_to
meet the December deadline, as TSA and the contractors begin rolling out airport
by airport plans for installing explosives detection equipment and for hiring
and training screeners.
The success of the deployment
effort requires that TSA effectively manage three major program activities
running on three parallel tracks. Therefore, TSA must:
Obtain the necessary funding to place the remaining equipment orders
and ensure that equipment manufacturers meet the delivery schedules laid out in
their contracts. TSA's FY 2002 emergency supplemental funding is pending, while
at the same time its FY 2003 budget is under consideration by the Committees on
Appropriations.
Ensure that Boeing executes its master
plan for deploying the necessary equipment needed to screen all checked baggage,
staying within the established timeframes for each of the major milestones in
the deployment process.
Ensure that a checked baggage
screening workforce of 21,600 is recruited, hired and properly trained.
These activities must be done in tandem given the fact
that, among other things, the deadline is just over 5 months away, and that each
activity has specific milestones allowing for little, if any, schedule slippage.
Since the activities are interrelated, schedule slippage in any one activity
affects the ability of the other activities to stay on track.
Current Deployment Status on Equipment Needed to Meet the Deadline. As
of July 9, 2002, 215 EDS and 273 trace machines were in use at 59 airports for
screening checked baggage. Nearly 60 percent of this equipment was installed
prior to the events of September 11th, over a 5-year period beginning in
February 1997. That leaves more than 1,000 EDS and over 5,600 trace machines
that will have to be installed and made operational by December 31, 2002. TSA
has an ongoing 5-airport pilot project for screening all checked baggage using
EDS, trace or some combination. Of the 5 airports selected, only 1 is considered
a large airport (but is not 1 of the 20 largest airports) with the other 4 being
medium and small airports. The five airports participating in the project are
currently screening all checked baggage using explosives detection equipment.
Of the five airports, passengers' checked baggage is being
screened using trace machines at three airports; all EDS at one airport; and a
combination of EDS and trace machines at the other airport. According to TSA,
results from the pilot project will be used to determine the "most effective
equipment layouts and best procedures to expedite the movement of passengers
through check- in screening without compromising security."
During the 5-year period when air carriers were responsible for
screening checked baggage, we testified repeatedly that the EDS machines were
woefully underutilized. During this time the majority of machines were
screening, on average, fewer bags per day than the machines were capable of
screening in 2 hours. Although we have seen a steady increase in utilization
since TSA took over the screening company contracts in February 2002, machines
continue to be underutilized.
For May 2002, the latest
available data, 77 percent of the machines in use were screening, on average,
750 bags or less per day. These machines can screen 125 bags per hour and should
be screening, at a minimum, 1,250 bags per day. Of the 100 machines for which
data were available, only 13 were screening more than 1,000 bags per day. The
following table shows usage rates for the latest available data on 100 EDS
machines for May 2002.
One of the overriding reasons
the machines are underutilized is that air carriers are only required to have
the equipment to screen the baggage of passengers requiring additional security
measures based on the Computer Assisted Passenger Prescreening Systems (CAPPS).
The air carriers are currently allowed to use alternative methods, such as
positive passenger bag match, to screen all other passengers' checked
baggage.
It makes good sense to get real world
experience by maximizing the use of machines currently in operation, especially
at large airports. Fully utilizing the installed machines will (1) assist TSA in
determining how many machines are needed to screen 100 percent of checked
baggage; (2) give TSA and the air carriers real world experience with screening
all checked baggage using lobby-installed EDS; and (3) provide insight into how
machine downtime and maintenance requirements will impact security and passenger
operations.
TSA needs to direct that the current rate
of machine usage pick- up substantially; otherwise we will miss out on the
opportunity to practice screening a higher percentage of checked baggage in
order to better understand the logistical and physical constraints of
lobby-installed machines, and the human factors involved.
Equipment Orders and Deliveries. TSA needs to place the remaining
equipment orders required to complete the deployment effort. However, funds for
remaining equipment orders are included in TSA's emergency supplemental request
for FY 2002 pending approval of Congress. With the equipment orders that are
currently placed, TSA must ensure that equipment manufacturers meet the delivery
schedules laid out in their contracts. Delivery dates under the current orders
have not always been met because of problems found with the machines during
factory acceptance testing.
Equipment Orders. As of
July 12, 2002, TSA has placed orders for 1,025 EDS, including orders for almost
400 long-lead items in the amount of $682 million; and 1,410 trace machines,
including long- lead orders in the amount of $7 million. TSA needs $427 million
to place orders for an additional 75 EDS and 4,590 trace machines to meet the
projected equipment deployment quantities.
EDS
manufacturers have certain machine components that need long- lead times, in
some cases up to 60 days. Manufacturers of trace also have certain machine
components with long-lead times of 60 to 90 days. Orders will have to be placed
by the end of September 2002 if the equipment is to be delivered, installed and
made operational by year-end.
Equipment Deliveries.
Under TSA letter contracts awarded to the two EDS manufacturers in February and
April 2002, 114 machines were to be delivered by the end of June 2002. However,
as of July 21st, 90 machines have been delivered and 29 of those have been
installed and made operational. By the end of September 2002, TSA expects to
take delivery of a total of 558 EDS. Before the February and April 2002 TSA
contracts, prior FAA contracts with one EDS manufacturer were limited to about
100 machines per order with delivery dates spread out over a 2-year period. An
average monthly production rate was about 4 to 5 machines per month. Under the
current TSA letter contract, this EDS manufacturer has an order for 418 machines
to be delivered by the end of September 2002. To meet the September delivery
deadline, a monthly average of 138 machines will have to be produced and factory
acceptance tested before TSA can take delivery. That equates to an average
production rate of about 28 times what this particular manufacturer had earlier
experienced.
Any time a manufacturer dramatically ramps
up production of complex systems such as EDS that heretofore have been produced
in limited quantities, a great deal of attention must be focused on quality
control efforts (for both software and hardware) to ensure that new systems will
work as intended. TSA is working closely with the manufacturers to resolve the
quality control issues and anticipates that the manufacturers will be able to
meet revised delivery dates. Obviously, meeting the revised delivery dates will
be key to meeting the December deadline. Deploying the Necessary Equipment
Needed to Screen All Checked Baggage.
Since we last
testified before this Subcommittee, TSA formalized its deployment strategy for
meeting the December 31st deadline to screen all checked baggage, and reported
on its plan in a May 18, 2002 report to selected committees of Congress. TSA has
also hired a general contractor to execute TSA's deployment plan for meeting the
deadline.
Deployment Strategy. TSA has planned a
two-phase approach. The initial phase is an interim solution to meeting the
deadline where some airports will use EDS, with trace machines used only for
resolving alarms; others will use trace machines exclusively; and some will use
a mix of EDS and trace machines to screen checked baggage to meet the December
31st deadline. An interim solution was selected because it was not possible for
manufacturers to produce enough EDS to screen all checked baggage, and even if
they could, there would not be enough space in airport lobbies to install the
EDS. Nor was it possible to complete the necessary modifications to baggage
handling facilities to integrate EDS into the baggage handling systems.
There are cost and staffing tradeoffs associated with
using trace instead of EDS. Trace requires much more staff than EDS to operate,
while integrating EDS machines into airport baggage handling systems takes
substantially more up-front capital. The following table shows the cost and
staffing trade-offs estimated by officials at Dallas/Fort Worth International
Airport (DFW).
The trade-offs estimated by DFW show
that lobby-installed trace machines compared to in-line EDS will require over
twice the number of screeners and annual labor costs but only one-quarter of the
costs for facility modifications and explosives detection equipment. In phase
two, at a future date not yet established, TSA will move the EDS machines into
baggage systems at the largest airports. It is unclear how much this will cost
and who will have to pay. A review of its FY 2003 budget shows that
TSA is not planning to fund any equipment relocations from
the lobby to the baggage handling facility. For now, it is also unclear whether
some airports will rely exclusively on trace machines to screen checked baggage
even in phase two. The task will not be to simply move the machines from lobbies
to baggage handling facilities but will require major facility modifications.
For example, TSA recently approved Boston's Logan International Airport proposal
for in-line EDS at an estimated cost of $100 million to the airport, while DFW
estimates nearly $196 million in facilities costs in its own EDS in-line
proposal.
Hiring a General Contractor. One major
development, since our last testimony, was the hiring of Boeing Services Company
to execute TSA deployment strategy for meeting the December 31st deadline. On
June 7th, TSA issued Boeing a cost-plus award fee contract for an estimated cost
of $508 million from now until December 31st, with $862.4 million in options
through calendar year 2007. Boeing has been tasked to (1) complete airport site
assessments at over 400 airports scheduled between early July through November
2002, with 266 airports being completed by the end of August; (2) submit to TSA
a proposal on the right mix of equipment for each airport and where the
equipment will be installed; (3) modify facilities to accommodate the equipment;
(4) install and make the equipment operational; (5) maintain the equipment; and
(6) train a workforce estimated at 21,600 to operate the equipment.
Boeing's contract does not include the purchase of
explosives detection equipment, which will be funded separately by TSA. Boeing
has been authorized to expend up to $340 million for installations and facility
modifications at airports nationwide. However, it is unclear who will pay for
any additional airport modifications in excess of the $340 million.
Beginning July 1st, Boeing started the first phase of a
six-phase deployment process. The six phases include site assessment, site
survey, design, construction, installation, and site acceptance testing of the
equipment. As part of the site assessments, Boeing will determine the equipment
mix and quantities needed at each airport. Henceforth, site assessments become
the driving force behind the actual number of machines needed to be procured and
manufactured, and the actual number of employees that need to hired and trained
for each airport. Site assessments have been started at 153 airports. Of these,
24 airports were completed as of July 18th. The next 30 days of site assessments
will tell what can and cannot be accomplished by the deadline.
The remaining 5 phases (site survey, design, construction,
installation, and site acceptance testing of the equipment) are stretched out
over the remainder of the year with 43 of the largest airports (e.g., DFW, San
Francisco, Atlanta) scheduled to be completed the last week in December. Of the
remaining 386 airports, 88 are scheduled to be completed between mid-November
and mid-December, and completion of the other 298 airports will be staggered
throughout the remainder of the year with the earliest scheduled for completion
in early August. Boeing needs to stick to its milestones for each phase.
Schedule creep in any one phase can affect the ability to meet the milestones of
the other phases and ultimately the December deadline for all airports.
Also, this is an enormous effort that requires large
amounts of money expended in a short period of time. The span of control over
this effort is far-reaching because there are numerous subcontractors. With
respect to this contract, TSA needs to ensure that three basic oversight steps
are taken:
monitoring contractor billings, especially
when such a large amount of money is being spent over a short period of time;
monitoring contractor performance with respect to cost,
schedule and quality with regards to the $31 million available in award fees;
and
drawing on work that has already been done by
Raytheon and airport operators with respect to the recently completed airport
site assessments. For example, DFW alone spent 12 weeks and over $2 million to
complete its assessment.
Hiring and Training a Baggage
Screener Workforce. TSA must ensure that a screening workforce is recruited,
hired and properly trained, and it estimates that 21,600 screeners are needed
for checked baggage screening operations. This is in addition to the 33,000
passenger screening workforce. The workforce of 21,600 screeners will be
responsible for operating EDS and trace machines used in the screening of
passengers' checked baggage at the Nation's 400-plus airports.
As of July 16, 2002, TSA has hired, trained and deployed 166 Federal
baggage screeners. That leaves more than 21,400 screeners to be recruited, hired
and trained before the December 31st deadline. That means for the next 5 months
nearly 4,300 screeners need to be recruited, hired and trained each month. It is
too early at this time to tell whether TSA will experience the same problems
hiring this workforce as it has experienced with hiring the workforce for
passenger screening, such as the high percentage of applicants failing the
aptitude test portion of the assessment process. Nevertheless, we believe the
earlier experiences with hiring passenger screeners can be instructive and
provide valuable lessons for TSA and its contractors in this effort.
It is also important to keep in mind that the driving
force behind the staffing levels for checked baggage screeners is the mix and
quantity of equipment used in screening checked baggage, whether the equipment
is all EDS, all trace or some combination. With the exception of an estimated 12
airports, the equipment mix and quantity either is not known or has not been
finalized for the remaining 400-plus airports. Boeing is currently conducting
site assessments at airports nationwide to determine what equipment is needed
and where. Once the assessments are completed, TSA will know how many screeners
will be needed at each airport.
Building in Cost
Controls
TSA has requested $6.8 billion for FY 2002 and
$4.8 billion for FY 2003. These requirements are against projected revenues from
the security fee of $900 million and $1.7 billion, respectively. Clearly, TSA
will require a large infusion of cash from the General Fund at a time when the
General Fund is already strained to pay for vastly increased fiscal needs
throughout the Federal Government. Within this context, the need for TSA to
build cost control mechanisms into its infrastructure is critical. Controls are
particularly important in terms of defining the scope of its missions,
establishing employee compensation and controlling salaries, overseeing
contracts, and utilizing space at airports.
Defining
the Scope of the Agency's Missions. With the tremendous tasks facing TSA, it is
important that the agency avoid extending itself beyond the basic tenets of the
Act's requirements. For example, while the law is only explicit about a Federal
law enforcement presence at checkpoints, we have seen TSA proposals for staffing
activities such as criminal investigations at airports and intelligence
gathering. In these instances, it is unclear what TSA's role would be or how it
would relate within the jurisdiction of other agencies such as the Federal
Bureau of Investigation or the proposed Department of Homeland Security.
The President's proposal to create a Department of
Homeland Security (which should offer economies of scale) could have significant
implications for TSA-- particularly in overlapping functions, such as
intelligence gathering and analysis, criminal investigations, administrative
support, and space requirements at airports. For example, under the President's
proposal, TSA would be merged with Customs Service and the Immigration and
Naturalization Service, which already have a combined criminal investigative
workforce of approximately 5,000.
Similarly, the
proposed Department of Homeland Security will include an Under Secretary for
Information Analysis and Infrastructure Protection whose responsibilities will
include receiving and analyzing law enforcement information and intelligence. It
may be premature for TSA to expend resources now to expand an intelligence
function beyond the existing staff of the Department and Coast Guard when that
function could be merged into the new Department of Homeland Security.
Establishing Employee Compensation and Controlling
Salaries. TSA has much flexibility in establishing salaries for newly hired
employees, and employees can be hired anywhere within the pay band for their
position. Use of this flexibility bears watching to ensure that salaries for TSA
employees are commensurate with the position duties and not arbitrarily higher
than salaries for comparable positions in other agencies. For example, we have
seen numerous reports that recruitment of Federal Air Marshals is draining other
agencies' law enforcement resources. We found that most Federal Air Marshals
were being hired at the lower half of their assigned pay band, which starts at
$36,400, excluding locality pay. However, Air Marshals also receive a 25 percent
Law Enforcement Availability Pay (LEAP) differential, which would put their
total starting salary at $45,500. This salary level is higher than law
enforcement salaries at other agencies that do not receive LEAP.
While law enforcement positions without LEAP may receive intermittent
overtime, it is important to bear in mind that LEAP is constant. TSA had
originally planned to provide LEAP to all its law enforcement positions
including checkpoint guards. However, after concerns were raised, TSA
reconsidered that approach. TSA is currently planning to provide LEAP to Air
Marshals and criminal investigators but not to checkpoint guards.
We also have concerns regarding the salary levels being
established for some general and administrative positions. As of July 13, 2002,
TSA had hired 3,004 employees--2,475 of these employees were screeners with an
average salary of $37,273.4 Of the remaining 529 employees, 321 (61 percent) had
salaries over $90,000, and 240 (45 percent) had salaries over $100,000. In fact,
within most of the job categories for general and administrative positions, the
preponderance of employee salaries were over $90,000. For example:
- Of 57 attorneys hired, 47 (82 percent) have salaries
ranging from $90,000 to $144,000.
- Of the 61 employees
hired in the General Inspection, Investigation, and Compliance series, 45 (74
percent) are receiving annual salaries between $91,421 and $141,500.
- Of 46 criminal investigators hired, 32 (70 percent) have
salaries ranging from $90,395 to $138,200, which does not include a 25 percent
LEAP differential.
It is important that TSA exercise
caution in how it structures employee compensation and benefits, since these
costs represent the largest portion of the agency's operating expenses. For a
workforce of about 67,000, these costs will be significant in 2003 and will have
a tremendous impact on future financial needs. FAA, which has similar
flexibilities in setting pay, has experienced huge cost growth in its operating
costs largely due to employee salaries. As a result, containing operating costs
has now become a critical issue for FAA.
Ensuring
Adequate Contract Oversight. TSA faces significant challenges in overseeing the
large number and dollar volume of contracts being let by the agency. For
example, the contracts with Boeing, Lockheed Martin, and NCS Pearson alone total
over $2 billion, including all contract options. In addition, TSA estimates that
the current screening contracts will cost about $1.6 billion. Because the agency
is new, it does not have an established infrastructure that provides an
effective span of control to monitor contractor costs and performance. Cost and
performance oversight are key tenets in any internal control system, and we are
prepared to assist TSA, however possible, in establishing adequate internal
controls.
One recommendation we have made is that TSA
set aside or "fence off" a specific amount to be used for overseeing contractor
performance with respect to cost, schedule, and quality. In recent hearings
before the House Appropriations Subcommittee on Transportation and Related
Agencies, we recommended that TSA reserve at least one half of one percent of
the available contract award dollars for oversight activities. For example, TSA
can contract with the Defense Contract Audit Agency for a wide variety of
services, including audits of incurred costs claimed by contractors on cost
reimbursable contracts. Because TSA has few internal staff resources to monitor
this huge contract workload, such an action would be prudent to ensure that
taxpayers' money is not wasted.
As far as the $1.6
billion screening contracts, in April, we testified before the House
Subcommittee on Transportation Appropriations that controls over the existing
security screener contracts were lacking and that improvements were drastically
needed. Since that time, we met with TSA officials who agreed that internal
controls over the screener contracts were inadequate. They stated that
additional staff would be assigned and TSA would provide more guidance to
security field representatives for reviewing contractors' on-site documentation.
TSA also set out to obtain a contractor to provide oversight of screening
contracts and contractors, and sent out staff to review contractors at three
airports. Notwithstanding these initiatives, we continue to find that further
action is needed immediately. During our visits to two airports and six
screening contractors, we saw virtually no on-site monitoring of screener
contractors by TSA employees.
While we were able to
locate all contractor employees who signed in for duty at the time of our
visits, we observed contractor employees arriving late and leaving early, but
they signed in as though they were on duty the entire time. For example, a
contractor employee arrived at 1:53, but signed in as though he arrived about an
hour earlier at 1:00. In this case, TSA would be paying for about 1 hour of work
that was not performed.
We also found that hourly and
overhead rates charged by the contractors vastly exceeded the rates they charged
before TSA assumed the contracts. The following table shows the loaded labor
rates (which include amounts paid to contractor employees and for the
contractors' overhead costs) charged by contractors before and after TSA became
responsible for screener contracts (February 17, 2002).
While contractors should recover their costs and overhead, they are
required to provide TSA with specific cost and pricing data including components
of and support for the loaded hourly rates. At the locations we visited, we
asked the contractors for support for their loaded labor rates. However, they
did not provide evidence to support their rates nor did they explain why the
overhead rates billed to TSA more than doubled under contracts to TSA, as
compared to contracts with airlines.
Because of the
urgent need for continuing coverage, when TSA took over these contracts in
February, letter contracts were originally awarded to screening contractors who
were already under contract with the airlines. Immediately after signing the
letter contracts, the screening contractors were to begin negotiating the price
and any price-related terms with the agency's contracting officer. The intent
was that these negotiations would result in definitized firm-fixed price
contracts with each company.
It is now over 5 months
since the letter contracts were issued and cost and pricing data have not been
submitted, negotiations have not been conducted, and the contracts have not been
definitized. In accordance with the terms of the Aviation and Transportation
Security Act, TSA employees must be in place performing the screening services
at the Nation's airports by November 19, 2002. After the screener contracts end,
it could be very difficult to recover any improper or unsupported payments.
Accordingly, TSA needs to take immediate action to:
(1)
require contractors to submit proposals and cost and pricing data; and
(2) definitize the contracts.
In
addition to our work, TSA's Office of Inspection performed similar reviews at
two screening contractors and three airports. These reviews also found that
internal controls were not followed, contractors billed TSA for employees who
were on vacation, and TSA was overcharged for services not performed. TSA
notified us of its intent to refer the results to our Office of Investigations.
TSA is in the process of developing a statement of work to hire a different
contractor to perform oversight of screening contractors' billings. We have
reviewed and provided comments on the statement of work, but according to TSA,
bids have not been solicited because of a funding shortage. Based on our initial
findings, the oversight contract needs to be in place quickly and clarified to
ensure that the oversight contractor verifies cost and pricing data at the
screener contractors' offices, focusing specifically on cost data used to
support the loaded labor rates. Another alternative is for TSA to enter into an
agreement with the Defense Contract Audit Agency for this work.
Additionally, TSA is planning to enter into an agreement with the
Defense Contract Management Agency to provide contract administration services.
If implemented, this would be a good step in the right direction. That concludes
my statement Mr. Chairman. I would be happy to address any questions you or
other members of the Subcommittee might have.
Document 3 of 4. 