United States Government Accountability Office

GAO Report to Congressional Committees

AVIATION SECURITY

Cost Estimates 

Related to TSA 

Funding of Checked 

Baggage Screening 

Systems at Los 

Angeles and Ontario 

Airports 

March 2007 

 

GAO-07-445 
Contents 

Letter 1

Summary of Findings 3

Scope and Methodology 5 

Agency Comments and Our Evaluation 5 

Appendix I GAO Contact and Staff Acknowledgments 9 

Appendix II Briefing Slides 10 

Appendix III Comments from Los Angeles World Airports 32 

Abbreviations 

DHS Department of Homeland Security 

EDS explosive detection system 

GAO Government Accountability Office 

LAWA Los Angeles World Airports 

LAX Los Angeles International Airport 

LOI letter of intent 

LOI/MOA letter of intent/memorandum of agreement 

MOA memorandum of agreement 

ONT Ontario International Airport 

TSA Transportation Security Administration 

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Page i GAO-07-445 Baggage Screening Cost Estimates at Los Angeles Airports
United States Government Accountability Office

Washington, DC 20548 

March 30, 2007 

The Honorable Robert C. Byrd 

Chairman 

The Honorable Thad Cochran 

Ranking Minority Member 

Subcommittee on Homeland Security 

Committee on Appropriations 

United States Senate 

The Honorable David E. Price 

Chairman 

The Honorable Harold Rogers 

Ranking Minority Member 

Subcommittee on Homeland Security 

Committee on Appropriations 

House of Representatives 

To meet the mandate to screen all checked baggage for explosives by 

December 31, 2003, the Transportation Security Administration (TSA) 

placed minivan-sized explosive detection systems (EDS) and other 

screening equipment in airport lobbies.1

 However, these interim lobby 

solutions have caused operational inefficiencies, in part because they 

require a large number of screeners. According to TSA, in-line baggage 

screening—where EDS machines are integrated with an airport’s baggage

conveyor system—can be a more cost-effective and efficient alternative to

lobby-based, stand-alone equipment. For example, in-line systems can 

increase the efficiency of airport, airline, and TSA operations, and lower 

costs by reducing the number of screeners. Moreover, in-line explosive 

detection systems can enhance security because they reduce congestion in

airport lobbies, thus removing a potential target for terrorists. 

However, installing in-line systems can have large up-front costs, related to 

the need for airport modifications. To help defray these costs, in 2003, 

Congress authorized TSA to reimburse airports up to 75 percent of the 

cost to install these systems by entering “letter of intent” (LOI) 

 1

See 49 U.S.C. § 44901(d). 

Page 1 GAO-07-445 Baggage Screening Cost Estimates at Los Angeles Airports
agreements.2 An LOI, though not a binding commitment of federal funding, 

represents TSA’s intent to provide the agreed-upon funds in future years if

the agency receives sufficient appropriations to cover the agreement. 

TSA has issued eight letters of intent to help defray the costs of installing 

in-line systems at nine airports as of February 2007, but none since 

February 2004. In September 2003, TSA and the City of Los Angeles signed 

an LOI and an attached memorandum of agreement (LOI/MOA) in which 

TSA agreed to pay an amount not to exceed 75 percent of the agreed upon 

estimated total project cost of $341 million (about $256 million) to install 

in-line checked baggage screening systems at both Los Angeles (LAX) and 

Ontario (ONT) International Airports. However, in December 2003,

officials from the City of Los Angeles’ airport authority—Los Angeles 

World Airports (LAWA)—informed TSA that aspects of the design concept 

were infeasible and that additional construction modifications would be 

needed. LAWA subsequently submitted a revised cost estimate to TSA in 

April 2005 and requested that TSA amend the LOI/MOA to increase the 

federal reimbursement by about $122 million. TSA has not amended the 

LOI to provide for additional reimbursements; however, as of February 

2007, TSA had obligated the $256 million for the City of Los Angeles 

LOI/MOA in accordance with the schedule agreed to in the LOI and had 

reimbursed LAWA for about $26 million in expenses. 

Senate Report 109-273 directs us to review the reasons for the differences

between the original 2003 cost estimate and the revised 2005 cost estimate 

submitted by LAWA.3

 In response and as agreed with committee offices,4

we identified the key factors that contributed to the differences between

the two cost estimates. On January 23, 2007, we briefed staff of the Senate 

Subcommittee on Homeland Security, Committee on Appropriations, on 

the results of our work (see app. II).

 2

See Consolidated Appropriations Resolution, 2003, Pub. L. No. 108-7, § 367, 117 Stat. 11, 

423-24. See also 49 U.S.C. § 44923. 

3

See S. Rep. No. 109-273, at 44 (2006) (accompanying H.R. 5441, as passed by the Senate; 

subsequently enacted into law as the Department of Homeland Security Appropriations 

Act, 2007, Pub. L. No. 109-295, 120 Stat. 1355 (2006)). 

4

Our Congressional Protocols state that GAO will work with the majority and minority of

the designated committee to clarify the scope of work, reporting objectives, and time 

frames. 

Page 2 GAO-07-445 Baggage Screening Cost Estimates at Los Angeles Airports
A key reason for the difference between the 2003 total project cost 

estimate and the revised 2005 estimate to install in-line baggage screening 

systems at LAX and ONT was that the 2003 estimate was developed at an 

early stage in the design process and was therefore based on preliminary 

data and assumptions that were subject to change. Consequently, the 

estimate did not adequately foresee some of the costs of retrofitting new 

systems into existing buildings or allow for sufficient space for the EDS 

machines, baggage inspection rooms, and conveyor belts. LAWA officials 

stated that they were under a tight timeframe to apply for the LOI because

TSA had told them that federal funding was limited and that 17 other 

airports were competing for the funding. The 2003 total project cost 

estimate used concepts and construction estimates developed in about 

12 weeks by Boeing, TSA’s contractor. LAWA relied on designs and 

estimates developed by Boeing and its subcontractors to determine the 

total project cost estimate because the company had expertise in 

integrating EDS equipment into airports. According to TSA and LAWA 

officials, both TSA and Los Angeles signed the LOI/MOA knowing the 

preliminary nature of the cost estimate. 

Summary of Findings 

According to construction industry guidance, an estimate’s accuracy 

depends on the quality of information known about the project at the time 

the estimate is prepared.5

 The 2003 estimate was made at the “concept 

development” stage where the final project cost can be expected to range 

from 50 percent under to 100 percent over the estimated cost, according to

this guidance. The 2005 revised estimate was made at the “design 

development” stage where the range of the final project cost estimate can 

be expected to be more accurate—from 20 percent under to 30 percent 

over the estimated cost. 

In December 2003, LAWA presented TSA with a summary of inadequacies

it had found in the original Boeing concept and the associated potential 

cost and scheduling impacts. LAWA then began an engineering study to 

update the in-line system concepts at LAX and ONT, the results of which it 

presented to TSA in September 2004. TSA reviewed these updated 

concepts and determined that they would meet its performance 

requirements; however, TSA’s review did not address cost issues. LAWA 

used these updated concepts to develop its 2005 estimate, which was 

based on more definitive information about terminal design requirements 

 5

Improving Early Estimates Research Team, Improving Early Estimates: Best Practices

Guide, Construction Industry Institute, September 1998. 

Page 3 GAO-07-445 Baggage Screening Cost Estimates at Los Angeles Airports
than the 2003 estimate. According to LAWA, new construction and 

excavation included in the 2005 designs increased the estimated costs. 

Among the design changes, LAWA determined that the placement of EDS 

machines in the 2003 concepts was infeasible in five of nine of the LAX 

terminals and both ONT terminals. In addition, the 2005 estimate included

20 additional baggage inspection rooms, 9 rooms for on-screen resolution 

of EDS alarms, and 10 computer rooms at LAX and ONT terminals. The 

2005 estimate also included over $11 million in computer networking costs 

and costs associated with on-screen resolution of EDS alarms, which the 

2003 estimate did not foresee. TSA also highlighted two additional factors

that caused differences between the two estimates—cost increases due to

the delay in beginning construction of the project and the escalation of 

construction costs between 2003 and 2005. LAWA also determined that 

TSA’s contractor and subcontractor made a mathematical error in the 2003 

concept development estimate: construction costs were only included for

one of the two baggage screening facilities and neither of the connected 

tunnels at ONT. TSA officials told us in January 2007 they were not able to

substantiate this error.

Further, according to LAWA, system redesigns were required because 

TSA’s guidance on in-line baggage screening systems changed between the 

2003 and 2005 estimates, leading to higher estimates. Because few in-line 

systems were in use at the time of the September 2003 LOI/MOA, only 

limited information on the capabilities of the in-line EDS machines, 

including actual bags screened per hour and false alarm rates, was 

available for modeling the systems. In June 2006, TSA produced the 

Recommended Security Guidelines for Airport Planning, Design and 

Construction to guide future construction of in-line checked baggage 

screening systems based on its past experiences. TSA also expects to 

release more detailed guidelines for in-line system planning and design in 

a few months. 

The LOI/MOA affords TSA flexibility to amend the agreement to account 

for changed circumstances. However, under the terms agreed to in the 

LOI/MOA, TSA has no obligation to amend the LOI/MOA or to reimburse 

the City of Los Angeles for any additional costs beyond those agreed to in 

the LOI/MOA, and TSA officials have stated that the agency does not have

plans for such reimbursement. 

Page 4 GAO-07-445 Baggage Screening Cost Estimates at Los Angeles Airports
To review key factors that contributed to the differences between the 2003 

and 2005 cost estimates, we reviewed TSA and LAWA documents used in 

developing the cost estimates, including design plans, reports, briefings, 

and emails. We interviewed officials from TSA and LAWA, as well as TSA 

contractors and other relevant officials who participated in the costestimation process to learn about the factors that contributed to the 

increased estimate of the cost of in-line checked baggage screening 

systems at LAX and ONT. We visited LAX and ONT to obtain a first-hand 

perspective of the modifications needed to install the in-line EDS systems 

at both airports. Additionally, we examined industry guidance on 

estimating costs for construction projects. We did not independently verify 

the 2003 or 2005 cost estimates. 

We conducted our work in accordance with generally accepted 

government auditing standards from October 2006 through March 2007. 

We provided a draft of this report to LAWA and the Department of 

Homeland Security (DHS) for review and comment. LAWA provided 

written comments which we have included in their entirety in appendix III. 

DHS provided no written comments. TSA provided e-mail comments. In 

addition, LAWA and TSA provided technical comments concerning facts in

the report which we incorporated as appropriate. 

Scope and 

Methodology 

Agency Comments 

and Our Evaluation 

In its March 8, 2007, comments, LAWA wrote that it believes the draft did 

not paint an accurate or complete picture of the facts. In general, LAWA 

raised three points: (1) TSA has the authority to revise the LOI to reflect 

accurate cost figures and explicitly anticipated doing so during the 

LOI/MOA development process, (2) the report fails to assign specific 

responsibility for initial designs and any errors, as directed by the Report

of the Senate Appropriations Committee, and (3) the report does not 

recognize that LAWA responded to TSA urgency in completing the 

agreements and, as a result, used preliminary design and cost estimates as 

the basis for entering into the LOI/MOA. 

We do not agree with LAWA’s comments. With respect to its first point, it 

is true that the LOI/MOA agreements afford TSA flexibility to amend the 

agreements to account for changed circumstances. As stated in our report, 

however, under the terms of the LOI/MOA and in accordance with the law, 

TSA is under no obligation to amend the LOI/MOA or to reimburse LAWA 

for any costs beyond those agreed upon in the LOI/MOA. To date, as noted 

in our report, TSA has not indicated any intent to amend the LOI/MOA 

agreements to provide LAWA with additional funding for this project. 

Page 5 GAO-07-445 Baggage Screening Cost Estimates at Los Angeles Airports
LAWA states that it did not believe it would be held financially responsible 

for increases in eligible and allowable costs due to reasons beyond its 

control. When subsequent estimates revealed that the project costs would 

exceed the LOI/MOA-estimated amount, LAWA requested an amendment 

to the LOI to receive a 75 percent federal reimbursement of the 

$485 million revised estimate. 

LAWA also commented that a senior TSA official provided written 

assurances that the agency “would have the opportunity to cover an 

increase in costs due to design changes” and referenced an April 2004 

e-mail from a TSA official to LAWA in support of this assertion. LAWA 

noted that it relied on this and other assurances from TSA, “reinforced in 

various discussions,” at the time it concluded the LOI/MOA process. 

While the April 2004 e-mail cited above did note that LAWA would not “be 

held to estimates that do not prove to be right on the mark,” this particular 

statement was made at least seven months after TSA and LAWA had 

concluded the LOI/MOA process and entered into the agreements. 

Furthermore, the MOA clearly provides that the agreement signed by both 

parties constitutes the “complete integration of all understandings 

between the parties.” More generally, it provides that any prior, 

contemporaneous, or subsequent changes, whether written or oral, have 

no force or effect, and that any changes or modifications to the MOA must 

be in writing, signed by the TSA Contracting Officer, and duly executed by 

the City of Los Angeles to have such force or effect. Neither LAWA nor 

TSA presented any documentation suggesting that steps prescribed in the

MOA had been (or were anticipated to be) taken to amend the LOI/MOA 

with respect to the reimbursable amount. 

LAWA also stated that the report does not reflect the extensive and 

protracted discussions LAWA had with TSA, leaving the impression that 

LAWA simply presented a new set of design concepts to TSA in September 

2004. Our objective in this report, as agreed with congressional offices, 

was to identify the key factors that contributed to the differences between 

the 2003 and the 2005 cost estimates. As such, we reported that LAWA 

reported the findings of its engineering study in September 2004 and that

TSA approved the concepts. We believe this statement sufficiently 

demonstrates the agreement between TSA and LAWA on the revised 

designs.

In its second point, LAWA suggests that the GAO report avoids assigning 

responsibility to TSA or its contractors and, as a result, “failed to answer 

the Senate Committee’s direction to provide a detailed explanation of the 

Page 6 GAO-07-445 Baggage Screening Cost Estimates at Los Angeles Airports
reasons for any differences the original estimate, including identification 

of and the party responsible for any material mistakes, omissions, and 

infeasible design concepts in the original estimate.” 

The objective of the report, as agreed with the appropriate congressional 

offices in accordance with our Congressional Protocols, was to identify 

factors contributing to differences between the estimates. To the extent 

appropriate, we identified the roles and responsibilities of the various 

parties. Specifically, we noted that Boeing produced the conceptual 

designs that served as the basis for the 2003 estimate agreed to in the 

LOI/MOA. We noted that these designs had been developed at an early 

stage of the design process, which assumes costs that can differ greatly 

from final project costs. The report also states that LAWA had determined 

that Boeing had made a mathematical error in the Ontario estimate. 

Further, we determined that both TSA and LAWA had signed the LOI/MOA 

knowing of the preliminary nature of the cost estimate. Finally, as 

referenced in our scope and methodology and as agreed with the 

congressional offices, in identifying factors associated with the estimates, 

we did not independently verify the 2003 or 2005 cost estimates. 

In its third point, LAWA suggests the report does not recognize that LAWA

responded to TSA urgency in completing the agreements and, as a result, 

used preliminary design and cost estimates as the basis for entering into 

the LOI/MOA. 

The report notes that “LAWA officials stated that they were under a tight 

timeframe because TSA had told them that federal funding was limited and 

17 other airports were competing for the funding.” We identified this as a 

factor associated with the preliminary nature of the 2003 estimate. LAWA 

also commented that it was essentially required to accept the Boeing 

design and cost estimates. The report states that TSA and LAWA used the

Boeing estimate to provide the basis for the estimate agreed to in the 

September 2003 LOI/MOA. Neither TSA nor LAWA provided evidence

suggesting that TSA had required LAWA to accept the Boeing design and 

cost estimates. 

In its e-mail comments, TSA stated that concept development for in-line 

solutions at all of the airports with LOIs was a collaborative effort between 

TSA and the respective airport entity. TSA further stated that most of the 

LOI estimates were developed early in the concept development phase. We 

incorporated a comment into the report to acknowledge that TSA viewed 

the development of the concepts as a partnership; however, we did not 

review concept development at other airports. 

Page 7 GAO-07-445 Baggage Screening Cost Estimates at Los Angeles Airports
In its comments, TSA also states that there were only two changes in its 

guidance between 2003 and 2005. The first was the addition of the use of

On-Screen Alarm Resolution Protocol during the alarm resolution process, 

which TSA acknowledged required redesign and associated cost increases. 

The second was the increase in the baggage throughput number per EDS 

which led to the deletion of 13 EDS machines from the quantity estimated 

in the 2003 concepts. According to TSA, this would have a significant 

impact on lowering the overall project cost, which would be supported by 

decreasing required space, baggage handling system infrastructure 

(generally up to $4 million per machine on average) and associated 

electrical, mechanical, data and other infrastructure. 

In its comments, TSA described two additional factors that caused 

differences between the two estimates— cost increases due to the delay in 

beginning construction of the project and the escalation of construction 

costs between 2003 and 2005. We incorporated this comment into the 

report. 

Finally, TSA stated in its comments that it had reviewed the mathematical 

error LAWA determined Boeing made in the 2003 concept for ONT, and 

had not been able to validate that the error had been made. In our report 

we acknowledge that TSA was not able to substantiate the error. 

We will send copies of this report to the Secretary of Homeland Security 

and the Assistant Secretary, Transportation Security Administration, and 

interested congressional committees. We will send a copy of the report to 

LAWA and will also make copies available to others upon request. In 

addition, the report will be available at no charge on GAO’s Web site at 

http://www.gao.gov. If you have any questions or need additional 

information, please contact me at (202) 512- 2757 or goldenkoffr@gao.gov. 

Contact points for our Offices of Congressional Relations and Public 

Affairs may be found on the last page of this report. Key contributors to 

this report are acknowledged in appendix I. 

Robert Goldenkoff 

Acting Director 

Homeland Security and Justice Issues 

Page 8 GAO-07-445 Baggage Screening Cost Estimates at Los Angeles Airports
Appendix I: 

A

GAO Contact and Staff 

cknowledgments 

Page 9 GAO-07-445

Appendix I: GAO Contact and Staff 

Acknowledgments 

Robert Goldenkoff (202) 512-2757 

In addition to the contact named above, Charles Bausell, Kevin Copping, 

Kimberly Cutright, Glenn Davis, Terrell Dorn, Maria Edelstein, 

Richard Hung, Julian King, Brian Lipman, Thomas Lombardi, 

Amanda Miller, and Linda Miller made key contributions to this report. 

GAO Contact 

Acknowledgments 

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides Appendix II: Briefing Slides 

Review of Cost Estimates for Installing 

Baggage Screening Systems at

Los Angeles and Ontario Airports

Briefing for Congressional Committees 

Page 10 GAO-07-445 Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 11 GAO-07-445

2

Introduction

• Pursuant to 49 U.S.C. § 44901(d), all checked baggage at U.S. airports was to be

screened using explosive detection systems by December 31, 2003.

• We have reported that, according to the Transportation Security Administration's

(TSA) analysis, in-line baggage screening—where explosive detection systems 

(EDS) are integrated with an airport’s baggage conveyor equipment—can be more 

cost-effective compared to placing EDS machines in airport lobbies.1

• However, installing in-line EDS systems can involve large up-front costs. 

• To help defray the cost of installing in-line baggage screening systems, in 2003,

Congress authorized TSA to reimburse airports up to 75 percent of the systems’ cost

by issuing “letters of intent” (LOI).2

• An LOI, though not a binding commitment of federal funding, represents TSA’s intent

to provide funds in future years if they are appropriated by Congress. TSA has

signed 8 letter of intent agreements for the installation of in-line checked baggage 

screening systems at 9 airports (one LOI covered both LAX and ONT).

2 See Consolidated Appropriations Resolution, 2003, Pub. L. No. 108-7, § 367, 117 Stat. 11, 423-24. See also 49 U.S.C. § 44923.

1 GAO, Aviation Security: Systematic Planning Needed to Optimize the Deployment of Checked Baggage Screening Systems, GAO-05-365

(Washington, D.C.: Mar.15, 2005).

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 12 GAO-07-445

3

Introduction (cont.)

• In September 2003, TSA and the City of Los Angeles signed a LOI and an

attached memorandum of agreement (MOA) to help fund the installation of 

in-line checked baggage screening systems at Los Angeles (LAX) and

Ontario (ONT) International Airports. 

• Under the LOI/MOA, TSA agreed to pay for 75 percent of the estimated 

total project cost of $341 million (about $256 million).

• In April 2005, the City of Los Angeles’ airport authority– Los Angeles World

Airports (LAWA)– submitted to TSA a revised cost estimate of $485 million 

and requested that the LOI/MOA be amended to increase the federal 

reimbursement to about $378 million to reflect increased estimated total 

project costs.

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 13 GAO-07-445

4

Objectives

• Senate Report 109-273 directs GAO to review the 

differences between the original 2003 cost estimate 

and LAWA’s revised 2005 cost estimate.3

• As agreed with committee offices, GAO identified the 

key factors that contributed to the differences in the two 

estimates.

3 See S. Rep. No. 109-273, at 44 (2006) (accompanying H.R. 5441, as passed by the Senate; subsequently enacted into law as

the Department of Homeland Security Appropriations Act, 2007, Pub. L. No. 109-295, 120 Stat. 1355 (2006)).

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 14 GAO-07-445

5

Scope and Methodology

• To address the objective, we

• reviewed key TSA and LAWA documents used in developing the cost

estimates, including design plans, reports, briefings, and emails;

• interviewed TSA, LAWA, and other officials who participated in the cost- estimation process;

• visited LAX and ONT to obtain a first hand perspective of the modifications 

needed to install the in-line EDS Systems at both airports; and

• reviewed industry guidance on estimating costs for construction projects.

• We did not independently verify the 2003 or 2005 cost estimates for installing the 

in-line EDS systems or the reasonableness/adequacy of the designs.

• We conducted our work in accordance with generally accepted government auditing 

standards from October 2006 through March 2007.

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 15 GAO-07-445

6

Results in Brief

• The rise in the estimate between 2003 and 2005 was primarily related to the fact that the 2003 

estimate was developed at an early stage in the design process and was therefore based on 

preliminary data and assumptions that were subject to change. 

• LAWA officials stated that they were under a tight timeframe to apply for the LOI because TSA

had told them that federal funding was limited and that 17 other airports were competing for the 

funding.

• The 2003 estimate did not adequately foresee some of the costs of retrofitting new systems into

existing buildings.

• Further, TSA’s guidance on in-line baggage screening systems changed between the 2003 and 

2005 estimates, which contributed to changes in terminal designs and related cost estimates. 

• According to TSA and LAWA officials, both TSA and Los Angeles signed the LOI/MOA knowing 

the preliminary nature of the cost estimate.

• The LOI/MOA affords TSA the flexibility to amend the agreements to account for changed 

circumstances. However, under the terms agreed to in the LOI/MOA, TSA has no obligation to

amend the LOI/MOA or to reimburse Los Angeles for any costs beyond those agreed to in the

LOI/MOA and does not have plans to do so. 

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 16 GAO-07-445

7

Background

In-line EDS systems are 

advantageous because they can:

• Increase the efficiency of 

airport, airline, and TSA

operations.

• Lower costs by reducing the 

number of transportation 

security officers required to 

screen checked baggage.

• Move screening equipment 

out of airport lobbies where it

causes overcrowding, creating

a potential target for terrorists.

Source: GAO

In-line EDS systems are integrated with airports’ baggagehandling conveyor systems.

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 17 GAO-07-445

8

Background (cont.)

• TSA and LAWA initiated discussions about in-line solutions for LAX and 

ONT in January 2003 in order to replace stand-alone EDS machines in the

airports’ lobbies.

• LAWA used concepts and construction estimates developed by TSA’s

contractor, Boeing, for the LAX and ONT in-line baggage screening 

systems because of Boeing’s and its subcontractors’ expertise in

integrating explosive detection systems into airports.

• TSA reported that concepts for LAX and ONT were developed through a 

partnership between LAWA and the agency.

• Boeing’s 2003 cost estimate consisted of $260 million for LAX and $24 

million for ONT. LAWA and TSA agreed to add another $57 million (or 20 

percent) for estimated administrative expenses for a total project cost of

$341 million.

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 18 GAO-07-445

9

Background (cont.) 

• In December 2003, LAWA presented TSA with a summary of inadequacies

it had found in the original concepts, and the associated potential cost and 

scheduling impacts. 

• In April 2005, LAWA submitted a revised cost estimate to TSA based on

TSA approved concepts from a September 2004 LAWA engineering study. 

• This revised cost estimate included a request that TSA amend the

LOI/MOA to increase the federal reimbursement by about $122 million, a 

sum that would raise the total federal reimbursement to about $378 million.4

• As of February 2007, TSA has obligated $256 million in accordance with

the schedule set forth in the LOI/MOA for Los Angeles. As of October 

2006, TSA had reimbursed LAWA for about $26 million in expenses from

the total amount obligated. 

4 In comments on a draft of this report, LAWA wrote that it requested 75 percent federal reimbursement of the $485 million, an increase 

of around $107 million. This amount differs from the almost $122 million it requested in its April 19, 2005, letter to TSA.

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 19 GAO-07-445

10

Development of the 2003 Estimate

• LAWA officials stated that they were under a tight timeframe to 

apply for the LOI because TSA told them that federal funding was

limited and that 17 other airports were competing for the funding. 

• TSA’s Boeing contracting team spent about 12 weeks from January

to April 2003 to develop initial drawings (known as concept 

development drawings) and construction cost estimates. Between 

April and September 2003, TSA and LAWA negotiated the addition

of administrative and contingency costs to the estimate.

• TSA’s in-line system design guidance was evolving while the

estimate was being developed, requiring frequent changes to the 

conceptual drawings. 

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 20 GAO-07-445

11

Accuracy of Cost Estimates Depends on 

Completeness and Maturity of Information

• The accuracy of an estimate depends on the quality of information 

known about the project at the time the estimate is being prepared. 

• The 2003 estimate was made at the “concept development” stage 

where the final project cost can be expected to range from 50 

percent under to 100 percent over the estimated cost based on 

construction industry guidance.

5

• The 2005 estimate was made at the “design development” stage 

where the final project cost can be expected to range from 20 

percent under to 30 percent over the estimated cost. (See fig.1.)

5 Construction Industry Institute, Improving Early Estimates Research Team, Improving Early Estimates: Best Practices Guide, (September 1998.)

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 21 GAO-07-445

12

Figure 1: 2003 Estimate Was Conducted at an 

Early Stage of the Design Process 

Source: GAO analysis based on Construction Industry Institute, Improving Early Estimates Research Team,

Improving Early Estimates: Best Practices Guide (September 1998).

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 22 GAO-07-445

13

The Use of Preliminary Information Limited 

the Precision of the 2003 Estimate

Due to the preliminary information on which it was based, the 2003 estimate 

did not foresee some of the challenges of retrofitting new systems into

existing buildings and did not include space for various screening 

operations.

• LAWA determined that the 2003 concepts for each terminal did not

allow for sufficient space for the EDS machines, conveyor belts, and 

the construction of baggage inspection rooms, rooms for computer

monitors for on-screen resolution of EDS alarms and rooms for 

computer routers and servers. 

• LAWA determined that the placement of EDS machines in the 2003 

concepts needed to be changed in five of the nine terminals at LAX 

and both ONT terminals. 

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 23 GAO-07-445

14

The 2005 Estimate Was Based on More 

Definitive Information 

The revised 2005 estimate was based on concepts approved by TSA in 2004 which included more definitive 

information about terminal design requirements than the 2003 estimate.

• The 2005 estimate designs included new construction and excavation, leading to cost estimate increases. 

• The 2005 estimate included the incorporation of 20 additional baggage inspection rooms, 9 on-screen 

resolution rooms and 10 computer rooms at LAX and ONT terminals.

• The 2005 estimate included over $11 million in networking costs and costs associated with on-screen

resolution of EDS alarms.

TSA also highlighted two additional factors that impacted the estimates—cost increases due to the delay in

beginning construction of the project and the escalation of construction costs between 2003 and 2005. 

In 2004, LAWA determined that Boeing had made a mathematical error in the 2003 concept development

estimate: construction costs were only included for one of the two baggage screening facilities and neither

connecting tunnel at ONT. In January 2007, TSA officials told us that they were not able to substantiate 

the mathematical error in the 2003 concept development estimate.

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 24 GAO-07-445

15

Table 1: Estimated Costs for LAX and ONT 

Terminals–2003 and 2005

Source: GAO analysis of LAWA data. 1 Number reflects the total cost for terminals 1 and 2.

• 2005 LAWA review determined that terminal 

would need to be modified to accommodate

the EDS machines and conveyor belts.

• 2005 LAWA review also determined electrical 

upgrades were needed to accommodate EDS

power requirements.

• 2005 LAWA design modifications included the 

construction of a structure for new baggage

inspection and screening rooms. 

5.8 

(13 percent)

Terminal 3 45.0 50.8

(LAX)

Terminal 2 30.1

(LAX)

• 2003 concept envisioned separate

screening areas for each terminal.

• 2004 LAWA review determined the concept for 

terminal 1 was infeasible.

• 2005 LAWA design consolidated the screening

area in one new building between the

terminals.

$35.1

(48 percent)

$108.1 1 Terminal 1 $42.9

(LAX)

Design changes/ key reasons for estimate

increase based on GAO review of LAWA

documentation

Rise in

estimated cost

(dollars in millions)

2005 

estimate

(dollars in millions)

2003 LOI/MOA

estimate

(dollars in millions)

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 25 GAO-07-445

16

Table 1: Estimated Costs for LAX and ONT 

Terminals–2003 and 2005 (cont.)

• 2003 concept envisioned above ground and

elevated EDS machine location.

• 2004 LAWA review determined that space 

constraints and construction disruptions

made the 2003 concept infeasible.

• 2005 design envisioned constructing a building 

below ground level to accommodate the required 

EDS machines. This excavation required constructing tunnels and reinforcing the roof of the

building to support the tarmac.

31.6

(150 percent)

Terminal 4 21.0 52.6

(LAX)

Design changes/ key reasons for estimate

increase based on GAO review of LAWA

documentation

Rise in

estimated cost

(dollars in millions)

2005 

estimate

(dollars in millions)

2003 LOI/MOA

estimate

(dollars in millions)

• 2005 design included additional control software

needed to integrate baggage handling system.

• 2005 design extended roofing to cover baggage

handling system.

• 2005 design included construction of

new baggage inspection and screening rooms.

• LAWA believes that the 2003 estimate for the 

conveyor system was substantially low and

inconsistent with estimates for similar LAX

terminals.

22.2

(123 percent)

Terminal 5 18.0 40.2

(LAX)

Source: GAO analysis of LAWA data.

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 26 GAO-07-445

17

Table 1: Estimated Costs for LAX and ONT 

Terminals–2003 and 2005 (cont.)

• 2005 designs include additional space to

accommodate the baggage screening system.

• Baggage system control room added in 2005 

designs.

8.2

(22 percent)

Terminal 6 37.8 46.0

(LAX)

Design changes/ key reasons for estimate

increase based on GAO review of LAWA

documentation

Rise in

estimated cost

(dollars in millions)

2005 

estimate

(dollars in millions)

2003 LOI/MOA

estimate

(dollars in millions)

• For the 2005 design, LAWA determined that

the terminal building would need to be

expanded to accommodate required EDS

machines.

• 2005 design included construction of

new baggage inspection and screening rooms.

• LAWA believes that the 2003 estimate for the 

conveyor system was substantially low and

inconsistent with estimates for similar LAX

terminals.

14.7 

(82 percent)

Terminal 7 17.8 32.5

(LAX)

Source: GAO analysis of LAWA data.

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 27 GAO-07-445

18

Table 1: Estimated Costs for LAX and ONT 

Terminals–2003 and 2005 (cont.)

• 2004 LAWA review determined that the 2003 

concept was infeasible because of space 

constraints. 

• 2005 design included modification and

demolition work on the terminal building.

• 2005 design incorporated the construction of a

baggage inspection room and an addition to

the terminal building to accommodate the EDS

machines.

• LAWA believes that the 2003 estimate for the 

conveyor system was substantially low and

inconsistent with estimates for similar LAX

terminals.

11.0 

(174 percent)

Terminal 8 6.3 17.3

(LAX)

Design changes/ key reasons for

estimate increase based on GAO review

of LAWA documentation

Rise in

estimated cost

(dollars in millions)

2005 

estimate

(dollars in millions)

2003 LOI/MOA

estimate

(dollars in millions)

• 2005 design included new buildings to

accommodate a second baggage inspection 

room and EDS machines for re-screening

checked baggage from international flights.

0.6 

(1 percent)

Tom Bradley 91.2 91.8

International 

Source: GAO analysis of LAWA data.

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 28 GAO-07-445

19

Table 1: Estimated Costs for LAX and ONT 

Terminals–2003 and 2005 (cont.)

• 2003 concept development estimate drawings

envisioned constructing a below ground 

checked baggage screening facility,

including conveyor tunnels for both terminals.

• In 2004, LAWA determined that Boeing had 

made a mathematical error in 

the 2003 concept development estimate:

construction costs were only included 

for one of the two baggage screening facilities

and neither connecting tunnel. In January

2007, TSA officials told us that they were not

able to substantiate this error.

• The 2005 design envisioned constructing an 

above ground EDS facility at each terminal.

24.8 

(87 percent)

ONT 28.5 53.3

Design changes/ key reasons for estimate

increase based on GAO review of LAWA

documentation.

Rise in

estimated cost

(dollars in millions)

2005 

estimate

(dollars in millions)

2003 LOI/MOA

estimate

(dollars in millions)

Source: GAO analysis of LAWA data.

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 29 GAO-07-445

20

Changes in TSA Guidance and Evolving 

Technologies Contributed to Rise in Estimate

• According to LAWA, changes in TSA guidance on in-line system

designs after the LOI/MOA was signed necessitated system

redesigns. 

• Because few in-line systems were in use at the time of the

LOI/MOA, limited information on the capabilities of the in-line EDS 

machines, including actual bags screened per hour and false alarm 

rates, was available for modeling the systems.

• In June 2006, TSA produced Recommended Security Guidelines

for Airport Planning, Design and Construction to guide future

construction of in-line checked baggage screening systems. TSA

also expects to release more detailed guidelines for in-line system

planning and design in a few months.

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 30 GAO-07-445

21

Concluding Observations

• The rise in the estimate between 2003 and 2005 was primarily

related to the fact that the 2003 estimate was developed at an early

stage in the design process and was therefore based on preliminary

data and assumptions that were subject to change.

• According to TSA and LAWA officials, both TSA and Los Angeles

signed the LOI/MOA knowing the preliminary nature of the cost

estimate.

• The LOI/ MOA affords TSA flexibility to amend the agreements to 

account for changed circumstances. However, under the terms

agreed to in the LOI/MOA, TSA has no obligation to amend the 

LOI/MOA or to reimburse Los Angeles for any additional costs

beyond those agreed to in the LOI/MOA and does not have plans to

do so.

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix II: Briefing Slides 

Page 31 GAO-07-445

22

Time Line of Key Events from the 2003 and 

2005 Cost Estimates

2/03

TSA 

authorized 

to issue

LOIs.

9/03

City of Los

Angeles and 

TSA sign

LOI/MOA.

9/04

TSA approves 

design 

assumptions 

for LAX and

ONT.

12/04

LAWA requests TSA to amend the 

LOI/MOA for a time extension and

additional funding.

4/05

LAWA submits revised cost estimate

to TSA and requests amendment to

LOI/MOA for additional funding.

12/03

LAWA presents

TSA summary of

inadequacies in

2003 estimate.

2003 2004 2005

4/03

Concept

development

presented to TSA.

Source: GAO analysis of TSA and LAWA data.

Baggage Screening Cost Estimates at Los Angeles Airports
Appendix III: Comments from Los Angeles Appendix III: Comments from Los Angeles World Airports

World Airports 

Page 32 GAO-07-445 Baggage Screening Cost Estimates at Los Angeles Airports
Appendix III: Comments from Los Angeles 

World Airports

Page 33 GAO-07-445 Baggage Screening Cost Estimates at Los Angeles Airports
Appendix III: Comments from Los Angeles 

World Airports

Page 34 GAO-07-445 Baggage Screening Cost Estimates at Los Angeles Airports
Appendix III: Comments from Los Angeles 

World Airports

(440591) Page 35 GAO-07-445 Baggage Screening Cost Estimates at Los Angeles Airports
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