Department of Homeland Security 

Office of Inspector General 

Management of 


the Transportation Security Administration's 


Logistics Center 


OIG-10-14 November 2009 

 

 

 

 

Table of Contents/Abbreviations 

Executive Summary.............................................................................................................1
 

Background..........................................................................................................................2 


Results of Audit ...................................................................................................................3 


Deployment, Redeployment, and Disposal of Equipment.............................................4 


Planned TSA Actions.....................................................................................................6 


Recommendations..........................................................................................................7 


Management Comments and OIG Analysis ..................................................................8 


Appendices 

Appendix A: Purpose, Scope, and Methodology.......................................................10 


Appendix B: Management Comments to the Draft Report.......................................11 


Appendix C: Major Contributors to This Report ......................................................15 


Appendix D: Report Distribution ..............................................................................16 


Abbreviations

 DHS Department of Homeland Security 


OIG Office of Inspector General 


TSA Transportation Security Administration
 
OIG
 

Department of Homeland Security 

Office of Inspector General 

Executive Summary 

We performed an audit of the Transportation Security 

Administration’s Logistics Center as a result of the Property, Plant, 

and Equipment material weakness reported in the Transportation 

Security Administration FY 2008 financial statement audit. The 

Logistics Center is a staging area for transportation security 

equipment and related components. This report addresses the 

efficacy of Transportation Security Administration’s efforts to 

deploy, redeploy, and dispose of transportation security equipment 

through its Logistics Center. 

The Transportation Security Administration did not efficiently 

deploy, redeploy, or dispose of transportation security equipment 

through its Logistics Center. Specifically, the Transportation 

Security Administration stored new equipment more than 3 years 

without written transition plans for its deployment; did not perform 

timely assessments of the condition of used equipment to 

determine whether these items could be redeployed; and stored 

excess transportation security equipment longer than necessary. 

This occurred because the Transportation Security Administration 

did not have standard guidance for the deployment, redeployment, 

and disposal of its transportation security equipment. As a result, 

the Transportation Security Administration may have lost utility of 

equipment as it aged in storage and did not have an accurate 

accounting of its inventory. In addition, the need to store excess 

equipment contributed to the Transportation Security 

Administration’s decision to lease additional warehouse space in 

FY 2009 at a cost of $2 million. 

The Transportation Security Administration chartered an 

Integrated Property Management team in January 2009 to establish 

guidance for warehouse equipment management and risk 

mitigation strategies. However, the Transportation Security 

Administration was still developing this guidance during our audit. 

We made three recommendations to the Transportation Security 

Administration. The Transportation Security Administration 

concurred with the recommendations. 

Management of the Transportation Security Administration’s Logistics Center 

Page 1 
Background 

Transportation security equipment is central to Transportation 

Security Administration’s (TSA) mission to protect the Nation’s 

transportation systems. TSA personnel use six major categories of 

transportation security equipment to screen air passengers, 

baggage, and cargo: ready x-rays, advanced technology x-ray, 

explosive trace detection systems, explosive detection systems, 

bottle liquid scanners, and enhanced metal detectors. As of 

January 2009, TSA had approximately 13,650 units of 

transportation security equipment at 457 airports nationwide and 

2,302 units of transportation security equipment stored in 

warehouses at the TSA Logistics Center in Dallas, Texas. In FY 

2008, TSA shipped 1,721 units of transportation security 

equipment valued at about $253 million through the Logistics 

Center to individual airports. 

TSA generally directs manufacturers of transportation security 

equipment to ship equipment to the Logistics Center for processing 

before personnel deploy it to airports. TSA also stores used 

equipment awaiting repair or redeployment and equipment 

awaiting disposal at the Logistics Center. Warehouse operations 

are managed by a TSA contractor using the contractor’s 

information management systems. TSA contracted for its first 

warehouse for equipment storage at the TSA Logistics Center in 

February 2005. As inventory increased, TSA added a second 

warehouse in FY 2007 and a third warehouse in FY 2009. 

As illustrated in the table below, 224 units (10%) of equipment at 

the Logistics Center had been stored for more than 2 years and 826 

units (36%) had been stored for more than 1 year as of January 

2009. 

Management of the Transportation Security Administration’s Logistics Center 


Page 2
 
 

 

 

 

Transportation Security Equipment 

 Time in Storage as of January 2009 

Class Type < 1 

Yr. 

> 1 

Yr. 

> 2 

Yrs. 

> 3 

Yrs 

. 

Purchase 

Price ($) 

New Explosive Detection Systems 88 5 3 - 55,188,328 

Explosive Trace Detection Systems 48 316 17 12 11,953,792 

Ready X-rays 136 2 - - 15,526,293 

Enhanced Metal Detectors - 9 - - 34,374 

Explosive Trace Portals - - - 2 358,128 

Subtotal of New 272 332 20 12 83,060,915 

Used Explosive Detection Systems 47 5 13 9 69,185,000 

Explosive Trace Detection Systems 74 78 7 1 4,634,452 

Ready X-rays 365 7 1 - 14,735,481 

Enhanced Metal Detectors 189 117 44 8 2,351,579 

Explosive Trace Portals 1 1 - - 280,000 

Subtotal of Used 676 208 65 18 91,186,512 

Pending 

Disposal 

Explosive Detection Systems 33 35 7 11 

60,200,000 

Explosive Trace Detection Systems 416 2 2 1 11,237,134 

Ready X-rays 46 1 3 - 2,086,085 

Explosive Trace Portals 33 24 60 23 24,678,320 

Subtotal of Pending Disposal 528 62 72 35 98,201,539 

Total 2302

 100% 

1476 

64% 

602 

26% 

157

 7% 

67

 3% 

272,448,966 

We performed this audit as a result of the Property, Plant, and 

Equipment material weakness reported in the TSA FY 2008 

financial statement audit. The material weakness resulted from 

impaired equipment not being properly segregated from other 

equipment in the warehouse and the carrying value of those assets 

not being adjusted to net realizable value. As a result, 

TSA management was not able to assert to the valuation of the 

property and equipment reported on DHS' consolidated balance 

sheet and related footnotes. The independent public accounting 

firm performing the financial statement audit under contract to the 

OIG concluded that material weakness conditions at DHS related 

to the valuation of property and equipment contributed to DHS' 

disclaimer of opinion on the financial statements. 

Results of Audit 

TSA did not efficiently deploy, redeploy, or dispose of transportation 

security equipment through its Logistics Center. Specifically, TSA stored 

new equipment more than 3 years without written transition plans for its 

deployment; did not perform timely assessments of the condition of used 

equipment to determine whether these items could be redeployed; and 

stored excess transportation security equipment longer than necessary. 

This occurred because TSA did not have standard guidance for the 

Management of the Transportation Security Administration’s Logistics Center 


Page 3 

deployment, redeployment, and disposal of its transportation security 

equipment. As a result, TSA may have lost utility of equipment as it aged 

in storage and did not have an accurate accounting of its inventory. In 

addition, the need to store excess equipment contributed to TSA’s decision 

to lease additional warehouse space in FY 2009 at a cost of $2 million. 

In response to the material weakness reported in the FY 2008 financial 

statement audit, TSA chartered an Integrated Property Management team 

in January 2009 to establish guidance for warehouse equipment 

management and risk mitigation strategies. However, TSA was still 

developing this guidance during our audit. 

Deployment, Redeployment, and Disposal of Equipment 

Deployment of New Equipment 

TSA did not always deploy new equipment efficiently or take 

action to resolve deployment delays. In some instances, new 

equipment was stored for years before TSA program office 

personnel designated an airport to receive it. For example, during 

the first 3 months of 2007, the TSA Logistics Center received eight 

explosive detection systems units at a cost of about $7 million. As 

of January 2009, all eight explosive detection systems units 

remained in storage at the Logistics Center. TSA officials said that 

the explosive detection systems units were not deployed because 

the airports were not ready to receive them and that TSA program 

office personnel have now identified airports that are ready to 

receive seven of the eight units. As of January 2009, TSA also had 

345 new explosive trace detection systems units, which cost about 

$10.6 million, in storage for at least 1 year; some of these units had 

been in storage for more than 2 years. 

Deployment of this equipment has been delayed because TSA does 

not have written transition plans for the explosive detection 

systems units and did not develop an equipment transition plan for 

deploying explosive trace detection systems units until January 

2009. As a result, TSA may have lost utility of equipment as it 

aged in storage. TSA needs to develop guidelines for processing 

new equipment and develop standards for the maximum length of 

time that new equipment should remain at the Logistics Center 

before deployment. TSA also needs to ensure that equipment 

transition plans are developed for all of its major categories of 

transportation security equipment. 

Management of the Transportation Security Administration’s Logistics Center 


Page 4 

Redeployment of Used Equipment 

TSA did not perform timely assessments of the condition of the 

used equipment to determine whether these items could be 

redeployed or should be disposed. For example, as of January 

2009, 291 units of used transportation security equipment had been 

stored at the Logistics Center for more than 1 year. Further, 142 

used explosive detection systems conveyor units, which cost 

approximately $4.1 million, had been stored at the Logistics Center 

longer than 2 years. TSA personnel stated that the Logistics 

Center also stored equipment components for the explosive 

detection systems units that may no longer be needed and that the 

contractor’s inventory system incorrectly classified some 

equipment that was no longer useable as available for 

redeployment. Further, TSA disposed of more than 250 used units 

of equipment that were classified for redeployment. 

This occurred because at the time of our review TSA did not have 

procedures in place to ensure that inventory was periodically 

reviewed or properly classified for redeployment or disposal. As a 

result, inventory was sent to a warehouse, assigned a condition 

code, and then never reviewed again to ensure that the equipment 

was still useful. In addition, equipment redeployment capability is 

determined through a variety of informal processes because no 

formal, agency wide guidance exists. For example, equipment 

redeployment capability is frequently determined through verbal 

discussions between the contracting officer’s technical 

representative and a program manager in the Life Cycle Support 

group. As a result, TSA’s property and financial systems did not 

contain an accurate inventory of items that are available for use, 

allow TSA management to make informed deployment, 

redeployment, and disposal decisions, or ensure that TSA disposes 

of equipment components that are no longer needed. TSA should 

be performing periodic reviews of inventory to ensure that 

inventory is correctly classified. 

Equipment Disposal 

According to the Office of Management and Budget Capital 

Programming Guide1

, asset disposal decisions should generally be 

part of a systematic plan that is integrated into the agency’s 

1

 Office of Management and Budget Circular A-11 (June 2008), Supplement to Part 7 (June 2006). 

Management of the Transportation Security Administration’s Logistics Center 


Page 5 

broader capital resource management plan. Management should 

monitor how well an asset is performing throughout its lifecycle. 

If the asset becomes uneconomical to keep in service or fails to 

meet performance criteria, the agency should determine whether it 

should be retired or replaced. Once the agency decides to dispose 

of an asset, it should address the removal of the asset from service 

and plan for a replacement if required, redeploy it to elsewhere in 

the agency, or finally remove the asset from the agency’s property 

inventory. Agency property specialists, guided by internal policy 

and applicable laws and regulations, should work closely with 

agency executives to ensure cost-effective and timely asset 

disposal. 

TSA did not efficiently dispose of excess transportation security 

equipment stored at the Logistics Center. Although TSA personnel 

began developing a disposal plan in coordination with the 

Department of Defense in May 2005, the first equipment disposal 

did not take place until November and December 2008. This was 

due to the difficulty in establishing an agreement with a 

government organization possessing the capabilities to properly 

destroy sensitive national security equipment and completing a 

review of hazardous material disposal requirements. In November 

and December 2008, Logistics Center personnel disposed of about 

3,000 units of equipment. More than 1,300 of these 3,000 units 

had been at the Logistics Center for more than 2 years. As of 

January 2009, 697 units of equipment were awaiting disposal at the 

Logistics Center. Of those 697 units, 169 had been at the Logistics 

Center for more than 1 year. This occurred because TSA had not 

developed consistent guidance for equipment disposal. As a result, 

the space occupied by the combination of new, used, and excess 

equipment at the Logistics Center was a contributing factor in 

TSA’s decision to lease an additional warehouse in FY 2009 at a 

cost of $2 million. TSA officials stated that disposals will continue 

through FY 2009, and that the goal is to have a continuous process 

for disposals. TSA needs to ensure that it adequately monitors 

units pending disposal to ensure that they are disposed of 

promptly. 

Planned TSA Actions 

As a result of the Property, Plant, and Equipment material weakness 

reported in TSA’s FY 2008 financial statement audit, TSA chartered a 

Transportation Security Equipment Integrated Property Management 

Team in January 2009. The team’s objective is to ensure that TSA stores 

and deploys transportation security equipment appropriately and that 

Management of the Transportation Security Administration’s Logistics Center 


Page 6 

equipment is controlled, accounted for, and reported pursuant to 

applicable laws and regulations. Planned deliverables in the team charter 

included a Warehouse Management Gap Analysis, Warehouse Manual, 

Disposal Process Document, and TSA Security Equipment Management 

Manual. The Integrated Property Management Team completed the 

Warehouse Management Gap Analysis in March 2009, the Warehouse 

Management Procedures and Oversight Manual in July 2009, the 

Property Disposition Process and Procedures Document, and the Security 

Equipment Management Manual in August 2009. However, these 

documents were in draft during the audit and were completed after the 

issuance of the draft report. TSA scheduled training in September 2009 to 

familiarize personnel with new procedures contained in the approved 

Integrated Property Management Team documents. 

In addition, TSA officials have a draft equipment transition plan that 

outlines the roles, responsibilities, and processes for the redeployment and 

decommissioning of existing explosive trace detection systems and ready 

x-ray units. The draft transition plan includes the following: 

•	 Deployment strategy, planning, and execution for new technologies; 

•	 Decommissioning strategy for equipment displaced from the field, 

including requirements for re-evaluation of decommissioned 

equipment; 

•	 Specific decommissioning strategy and procedures for ready x-rays 

and explosive trace detection systems units; 

•	 Quantity of ready x-rays and explosive trace detection systems units 

TSA will need to maintain in inventory to meet airports’ needs; and 

•	 Alternatives to long-term storage of excess units at the Logistics 

Center. 

TSA officials said that their draft equipment transition plan addresses the 

assessment of redeployment capability for ready x-ray units and explosive 

trace detection systems units. TSA completed its final equipment transition 

plan on May 28, 2009. 

However, the equipment transition plan only addresses transportation security 

equipment for the ready x-rays, advanced x-rays, and explosive trace detection 

systems units. TSA has not developed separate transition plans for the bottle 

liquid scanners, explosive detections systems, and enhanced metal detector 

units. 

Recommendations 

We recommend that the Assistant Secretary for TSA: 

Management of the Transportation Security Administration’s Logistics Center 


Page 7 

 

•	 Recommendation #1: Develop, implement, and monitor procedures 

for the efficient deployment, redeployment, and disposal of all 

transportation security equipment through the Logistics Center. 

•	 Recommendation #2: Perform periodic reviews of inventory to make 

sure inventory is correctly classified. 

•	 Recommendation #3: Develop a recurring process to redeploy or 

dispose of any excess equipment at the Logistics Center. 

Management Comments and OIG Analysis 

TSA’s comments on a draft of this report are included in Appendix B. 

TSA concurred with the recommendations and recognizes that 

improvements are needed in the management of security equipment. As 

such, TSA has initiated corrective action to address each of the 

recommendations. TSA also provided technical comments to the report. 

TSA’s Comments to Recommendation #1: 

TSA concurred with this recommendation and completed two 

corrective actions to address this recommendation: a Warehouse 

Management Procedures and Oversight Manual and a Property 

Disposition Process and Procedures Document. 

OIG Analysis: TSA’s implementation of the standardized policies 

and procedures described in its Warehouse Management 

Procedures and Oversight Manual and its Property Disposition 

Process and Procedures Document should improve its ability to 

reduce the time inventory is stored in warehouses. The manual and 

disposition procedures meet the intent of our recommendation and 

are sufficient to resolve and close this recommendation. 

TSA’s Comments to Recommendation #2: 

TSA concurred with this recommendation and reported that its 

Property Disposition Process and Procedures Document requires a 

quarterly review of warehouse inventory to ensure property 

condition codes are accurately classified. Based on this review, a 

determination may be made to reclassify property condition; for 

example, from “repairable” to “salvage”. 

OIG Analysis: We recognize the improvements TSA has made to 

ensure the accuracy of the property condition codes. We agree that 

Management of the Transportation Security Administration’s Logistics Center 


Page 8 

the quarterly reviews required by its recently issued Property 

Disposition Process and Procedures Document are sufficient to 

resolve this recommendation. We will consider closing this 

recommendation once TSA provides us with a quarterly review of 

warehouse inventory. 

TSA’s Comments to Recommendation #3: 

TSA concurred with this recommendation and reported that its 

Warehouse Management Procedures and Oversight Manual 

requires a quarterly review of warehouse inventory levels. The 

review will validate and confirm equipment deployment quantities 

and schedules. Any equipment in excess of future requirements 

will be dispositioned as surplus according to the Property 

Disposition Process and Procedures Document. 

OIG Analysis: We agree that TSA developed a recurring process 

to redeploy or dispose of any excess equipment at the Logistics 

Center as described in its Warehouse Management Procedures and 

Oversight Manual and its Property Disposition Process and 

Procedures Document. The process described in these documents 

is sufficient to resolve and close this recommendation. 

TSA’s Technical Comments: 

TSA provided technical comments that were incorporated into the 

report as appropriate, except for the following comment: “In the 

section on ‘Redeployment of Used Equipment,’ TSA disputes the 

implication that x-ray units may have been inappropriately sent to 

disposal because the contractor’s inventory system classified the 

property as useable.” 

OIG Analysis: Our finding that TSA disposed of equipment that 

was classified as available for redeployment in the inventory 

system was based on documents provided by TSA during our 

fieldwork. TSA’s response did not provide evidence to 

demonstrate that the equipment disposed of was suitable for 

disposal and thus we did not update this section of the report as 

requested. However, we agree that the new Property Disposition 

Process and Procedures that TSA implemented is sufficient to 

resolve the property coding issue. 

Management of the Transportation Security Administration’s Logistics Center 


Page 9 

Appendix A 

Purpose, Scope, and Methodology 

We performed this audit as a result of the Property, Plant, and 

Equipment material weakness reported in the TSA FY 2008 

financial statement audit. Although TSA owns all types of 

equipment, transportation security equipment represents the 

majority of the agency's investment in capital property. Issues 

contributing to the material weakness included excessive levels of 

inactive assets on hand, inadequate processes for redeploying used 

assets not planned for disposal, and improper recording and 

accounting for all equipment and the associated costs necessary to 

deploy and operate that equipment. The objective of our audit was 

to determine whether TSA is efficiently deploying, redeploying, 

and disposing of equipment through TSA Logistics Center. 

We performed the audit at the TSA Logistics Center in the Dallas, 

Texas area and at TSA Headquarters in Arlington, Virginia. Our 

review included analysis of the work processes, procedures, data 

sources, and reports for TSA Logistics Center operations. 

To evaluate internal controls relevant to our audit objective, we 

gathered information about the programs through interviews, 

analysis, and document reviews. We conducted interviews with 

various officials in the Office of Security Technology and Office 

of the Chief Procurement Officer, including contract officers and 

contract officer technical representatives. We researched 

applicable laws and regulations and evaluated various planned 

initiatives. We conducted walkthroughs of the three warehouses at 

the Logistics Center and performed limited inventory testing. We 

analyzed TSA procedures and management reporting. We 

reviewed contracts for the leasing of warehouses. We examined 

the inventory records for new equipment, used equipment, and 

equipment awaiting disposal at the Logistics Center as of January 

22, 2009. We reviewed the Memorandums of Understanding 

relating to the disposal of transportation security equipment. We 

analyzed the records for the equipment disposed of during 

November and December 2008. 

We conducted the audit fieldwork between December 2008 and 

March 2009 according to generally accepted government auditing 

standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a 

reasonable basis for our findings and conclusions based on our 

audit objectives. We validated the reliability of inventory data by 

observing an inventory and believe within the scope of this audit 

that we can reasonably rely on the data. We also believe that the 

evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. 

Management of the Transportation Security Administration’s Logistics Center 


Page 10 

Appendix B 

Manai?ement Comments to the Draft Report 

FOR OFFICIAL USE ONLY 

U.S. Department of Homeland Security 

60 I South i 21h Street 

Arlington, VA 20598 

Transportation


SEP 3 0 2009 Security


Administration
 

INFORMATION
 

MEMORANDUM FOR:	 Richard Skinner 

Assistant lnspectòr General for Audits 

U.S. Deparment of Homelaild Security 

FROM:	 Gale D. Rossidesb if () ¡J . .g,~

Acting Administrl~tz~~c' 

Transportation Sècurity Administration ¡' 

SUBJECT:	 Draft Letter Report: j'vfanagementarthe Transportation Security 

Administration's (TSA) Logistics Center-For Official Use Only 

Purpose 

This memorandum constitutes the Transportation Security Administration's (TSA) formal 

Agency response to the U.S. Department of Homeland Security (DHS), Offce ofInspector 

General (GIG) draft letter report, Management of the Transportation Security Administration's 

Logistics Center-For Official Use Only, dated August 1 i, 2009. TSA recognizes its 

responsibility for effective management. of 
 TransportatIon Security Equipment (TSE), and we 

appreciate the opportunity to review and provide comments to your draft report. 

Background 

TSA is charged with countering terrorist threats to aviation security with technologies and 

procedures that prevent, deter, or render ineffective any attempt to sabotage civil avÎation. The 

development, acquisition, and deployment ofTSE is central to TSA's mission to protect 

U.S. transportation systems. TSA personnel use equipment to screen air passengers, baggage, 

and cargo, including x-rays, explosives trace detection systems, explosives detection systems, 

bottled liquid scanners, and enhanced walk-through metal detectors. TSE is evolving rapidly 

with changing threats and advances i~ technology that can result in equipment becoming

obsolete before the end of Îts useful 
 life. As of January 2009, TSA had. approximately 13,650 

units ofTSE at 457 airports nationwide and 2,302 units of equipment staged at the TSA 

Logistics Center (TLC) in Dallas, TX. ~ 

The TLC is a facility composed of three warehouses used to temporarily stage new and used 

screening equipment for deployment or redeployment Lo airports, and for processing surplus and 

obsolete equipment for disposaL. TLC warehouses are operated by a TSA contractor that uses a 

contractor information management system to track Government inventory. Over time, and as 

inventory increased, the TLC grew from one warehouse in February 2005, to three warehouses 

today. 

FOR OFFICIAL USE ONL Y
 

Management of the Transportation Security Administration's Logistics Center 

Page 11
 

'" 
Appendix B 

Management Comments to the Draft Report 

2 

FOR OFFICIAL USE ONLY 

OIG performed this audit as a result of the Property, Plant, and Equipment material weakness 

reported in the TSA fiscal year (FY) 2008 financial statement liUdit. process. Independently, and 

in response to that material weakess, TSA chartered an Integrated Property Management Team 

(IPT) in January 2009 to establish guidance to ensure that TSE is warehoused and deployed 

appropriately and that equipment is controlled, accounted for, and reported in accordance with 

applicable laws and regulations. The IPT established a Management Action Plan (MAP) to 

create deliverables to strengthen existing procedures or develop new ones to improve the 

effectiveness and efficiency of existing TSA property management 
 and accounting procedures.

The OlG audit results found that TSA did not efficiently deploy, redeploy, or dispose of 

transportation security equipment through its Logistics Center. Specifically, TSA stored new 

equipment more than 3 years without \\Titten plans for its deployment, did not perform timely 

assessments of the condition of used eq uipment to determine whether these items could be 

redeployed, and stored excess TSE longer than necessary due to a lack of, 
 standard guidance. As 

a result, TSA leased additional warehouse space in FY 2009 at a cost or$2 milion to store 

excess equipment, may have lost utilty of 
 equipment as it aged in storage, and did not have an 

accurate accounting of its inventory. 

Discussion 

While TSA concurs with OIG's recommendations, we are providing comments on statements 

within the five sections of the report: "Results of Audit," "Deployment of 
 New Equipment," 

"Redeployment of Used Equipment," "Equipment Disposal," and "Planned TSA Actions," that 

we belicve require clarification or correction. 

The "Results of Audit" sectìon of the report states that as a result ofa lack of standard guidance 

for the deploymcnt, redeployment, and disposal of transportation security equipment, TSA leased 

additional warehouse space in FY 2009 at a cost of$1.97 milion. While it is accurate that 

additional spacc was leased in October 2008, the GIG findings in this area were not the sole 

cause orTSA's additional space requirement, and it would be unfair to characterize TSA's 

perceived lack of standard guidance for deployment, redeployment, and disposal of TSE as the 

sole cause ofTSA's additional space requirements. Nonetheless, TSA does believe it was a 

contributing factor and has taken steps to address the issue. 

In the "Deployment orNew Equipment." section, please change the term "Warehouse Operations 

personnel" and "Logistics Center personnel" to "TSA program offce personneL." TSA program 

offce personnel designate airports to receive new equipment, and Logistics Center and 

Warehouse Operations personncl are contractors. 

In the scction on "Redeployment of 
 Used Equipment:' TSA disputes the implication that x-ray 

units may have been inappropriately sent to disposal because the contractor's inventory system 

classified the property as useable. At the time of 
 the audít, TSA procedures did .not require the 

contractor to change the property condition code in their inventory system for equipment being 

sent to disposaL. Rather, the equipment was tagged for disposal and entercd by TSA into the 

Inactive Asset Module of the Sunflower Asset Management System (SAMS), the official TSA 

,Property Management system of 
 record. As such, surplus or obsolete equipment approved by 

TSA for disposal was stil in the contractor's inventory system w1der the most recently assigned 

property condition code (for example, useable, repairable) prior to the disposal decIsion. Since 

FOR OFFICIAL USE ONL Y
 

Management of the Transportation Security Administration's Logistics Center 

Page 12
 
Appendix B 

Manai?ement Comments to the Draft Report 

3 

FOR OFFICIAL USE ONL y' 

the audit, TSA has adopted the use of 
 property condition code "X" to specifically designate

property going to disposal, in compliance with the TSA Property Management ManuaL. This 

procedure is discussed in Section 3.2.3.3 of 
 the Property Disposition Process and Procedures

Document, dated August 4, 2009, one of 
 the documents prepared by the TSA 1PT. The 

Contracting Offcer's Technical Representative (COTR) for the TLC warehouse contract has 

also directed the contractor to change a property's condition code to "X" in their inventory 

system upon receiving disposal notification from TSA. Going forward, this new procedure 

should ensure that condition codes for disposal equipment agree in both TSA's and the 

contractor's inventory systems, which wil avoid the discrepancy that was noted by the auditors. 

To more accurately describe the circumstances of 
 this discrepancy, TSA recommends replacing 

the fifth and subsequent sentences of the first paragraph of this section with the following: "TSA 

personnel did not require the contractor to update its inventory system to change the property 

condition code for equipment that was approved for disposaL. As a result, more thtin 200 x-ray 

units approved for disposal by TSA were stil shown in the contractor's inventory system with a 

property condition code of 'usable. 'l 

Also, in the section on "Redeployment of Used Equipment," the second paragraph states that 

"TSA did not have procedures in place to ensure that inventory..." Here, 0 rG correctly 

references this shortcoming in the 
 past tense, but TSA recommends adding the qualifying 

language "at the time" preceding this statement, which properly takes into account the 

subsequent corrective action taken by TSA. 

In the section on "Equipment Disposal," the second paragraph noted the extended time between 

the commencement of initial disposal planning and actual equipment disposaL. Admittedly, the 

time period was long, so TSA would like to offer clarification to better explain some of the 

contributing factors. TSA recommends replacing the second sentence with, "Although TSA 

personnel began developing a disposal plan in coordination with the Department of Defense in 

May 2005, the first equipment disposal did not take place until November 2008, due to the 

diffculty in establishing an agreement with a Governent, organization possessing the 

capabilities to properly destroy sensitive national security eq'uipment and completing a review of 

hazardous material disposal requirements. Tn November and December 2008, Logistics Center 

personnel disposed of approximately 3,000 units of equipment." 

The section on "Planned TSA Actions" acknowledges the work of the TSA IPT in preparing 

deliverables to address TSE warehouse storage and disposaL. The 1PT meets monthly and has 

completed four key deliverables since the audit. As such, TSA would like to recommend a text 

change to reflect the progress of 
 the 1PT and its near-term plans. TSA recommends replacing the 

last sentence of this section with the tollowing:"The Integrated Property Management T ear 

completed the Warehouse i'v.fancigement Gap Analysis in March 2009, the Warehouse 

Management Procedures and Oversight l\tJanual in July 2009, the Property Dispositon Process 

and Procedures Document and the Security Equipment Management Manual in August 2009. 

Training is scheduled tòr September 2009 to familarize TSA personnel with new procedures 

contained in the approved IPT documents so they may be fully implemented 
 by December 31, 

2009." (Documents attached.) 

Overall, your recommendations will help us continue to strengthen policies and procedures fòr 

deployment,redeployment, and disposal operations at the TLC. We concur with your 

recommendations and have already taken steps to address them. 

FOR OFFrClAL USE ONLY 

Management of the Transportation Security Administration's Logistics Center 

Page 13
 
Appendix B 

Manai?ement Comments to the Draft Report 

4 

FOR OFFICIAL USE ONLY 

Recommendation 1: Develop, implement, and monitor procedures for the effcient 

, deployment, redeployment, and disposal of all transportation security equipment through 

the Logistics Center. 

TSA Concurs: The TSA 1PT produced two deliverables that address this recommendation. The 

first deliverable was the r'Varehouse lvfanagement Procedures and Oversight Manual requires a 

new quarterly evaluation of 
 warehouse inventory levels against projected operational 

requirements to ensure equipment dbes not remain in storage longer than necessary. While the 

complex and dynamic circumstances of deploying security screening equipment makes it 

diflcuIt to assign a IÌxed, maximum length of storage time, the procedures do require an 

escalated level ofapproval to store equipment in the warehouse for longer than 180 days. The 

quarerly evaluation will ensure warehouse inventory levels are continuously monitored so ' 

equipment may be reassigned to an altemate deployment site if events occur that would delay 

deployment to the primary site (for example, permitting, airport constniction, etc.). The second 

deliverable was the Property Dispositon Process and Procedures Document, which covers the 

property disposal process from equipment decommissioning through the update of property and 

financial records to reflect the actual disposal of 
 the property. The document addresses 

disposition process phases, the assignment of propert condition codes, the periodic reevaluation 

of warehouse inventory, disposition methods, and the treatment of accounting and property 

records for disposal equipment. The procedures in these two documents wìl improve the 

efficiency ofTSA deployment, redeployment, and disposal operations through the Logistics 

Center as recommended by GIG. 

Recommendation 2: Perform periodic reviews of inventory to make sure inventory is 

correctly classified. 

TSA Concurs: The Property Dispositon Process and Procedures Document requires a 

quarerly review of 
 warehouse inventory to ensure property condition codes are accurately
 

classified. Based on this review, a determination may be made to reclassify property condition
 

(for example, from "repairable" to "salvage"). 

Recommendation 3: Develop a recurring process to redeploy or dispose of any excess 

equipment at the Logistics Center. 

TSA Concurs: The Warehouse Management Procedures and Oversight lvfcmual requires a 

quarterly review of 
 warehouse inventory levels. The review will validate and coníìrm equipment 

deployment quantities and schedules. Equipment quantities in excess of 
 future deployment
 

requirements wil be dispositoned as surplus in accordance with the Property Dispositon
 

Process and Procedures Document. 

Attachments 

\ 

FOltOFFICIAL USE ONLY 

Management of the Transportation Security Administration's Logistics Center 

Page 14
 
Appendix C 

Major Contributors to This Report 

Linda Howard, Director 

Gene Wendt, Audit Manager 

Stephanie Christian, Program Analyst 

Enrique Leal, Program Analyst 

Gary Crownover, Program Analyst 

Michael Lugo, Auditor 

Lisa Vonder Haar, Desk Officer 

Management of the Transportation Security Administration’s Logistics Center 


Page 15 

Appendix D 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff for Operations 

Chief of Staff for Policy 

General Counsel 

Executive Secretariat 

Director, GAO/OIG Liaison Office 

Assistant Secretary for Office of Policy 

Assistant Secretary for Office of Public Affairs 

Assistant Secretary for Office of Legislative Affairs 

Transportation Security Administration 

Assistant Secretary Transportation Security Administration 

TSA Audit Liaison 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as 

appropriate 

Management of the Transportation Security Administration’s Logistics Center 


Page 16 

ADDITIONAL INFORMATION AND COPIES 

To obtain additional copies of this report, please call the Office of Inspector General (OIG) at (202) 254-4100, 

fax your request to (202) 254-4305, or visit the OIG web site at www.dhs.gov/oig. 

OIG HOTLINE 

To report alleged fraud, waste, abuse or mismanagement, or any other kind of criminal or noncriminal 

misconduct relative to department programs or operations: 

• Call our Hotline at 1-800-323-8603; 

• Fax the complaint directly to us at (202) 254-4292; 

• Email us at DHSOIGHOTLINE@dhs.gov; or 

• Write to us at: 

DHS Office of Inspector General/MAIL STOP 2600, 

Attention: Office of Investigations - Hotline, 

245 Murray Drive, SW, Building 410, 

Washington, DC 20528. 

The OIG seeks to protect the identity of each writer and caller.